Jaakko Eskola, President & CEO

“2020 proved to be an unprecedented year, with Wärtsilä’s end markets heavily affected by the coronavirus (COVID-19) outbreak and the measures taken globally to contain the pandemic. Vessel contracting decreased to record low levels, investments in new power plant capacity were postponed, and maintenance activities were pushed out, as the utilisation of installations declined and travel restrictions limited the mobility of service engineers. Although Wärtsilä’s order intake declined as a result, I am pleased to note some areas of resilience. Activity in the energy storage market held up well, driven by the increasing need for short-term flexible capacity, while the marine markets’ digital transformation accelerated along with the adoption of new technologies and digital applications in response to restrictions in physical travel and to enhance competitive positioning.

Not surprisingly, the impact of the pandemic on our financial performance for the year was significant. Net sales decreased because of lower service volumes and disruptions to equipment deliveries. While fourth quarter profitability improved sequentially, the seasonal pick-up in service activity was, as anticipated, weaker than in previous years. The operating result and profitability for the full year came in well below that of 2019, the main reasons being a less favourable sales mix, under absorption of fixed costs, and COVID-19 driven cost inflation. To mitigate the financial effects of COVID-19, we have implemented temporary actions to create savings in the form of reduced discretionary spending, worktime reductions, and temporary layoffs. We also placed a significant focus on decreasing credit risk and improving working capital, particularly in the areas of inventory management and receivables collection. As a result, our operating cash flow reached record high levels.

Despite the disruptions to our operations, our commitment to R&D activities has remained unchanged. Last year saw the launch of many solutions aimed at delivering higher efficiency, greater reliability, and better environmental sustainability to enhance the business of our customers. I am also pleased with the progress we have made in future-proofing engine technology, in line with the global trend towards the decarbonisation of the energy and marine markets. During the year, we initiated full-scale testing of ammonia as a fuel in our 4-stroke combustion engines and announced our intention to develop the gas engine combustion process to enable them over time to burn 100% hydrogen fuel. In the energy markets, we have stepped up our efforts to support our customers in understanding and accelerating the energy transformation. An example of this is the launch of the Energy Transition Lab, a platform that provides a better understanding of the implications on electricity generation, demand, and pricing resulting from the increased integration of energy from renewable sources, such as wind and solar.

The demand environment is likely to remain challenging in the short term, with near-term demand similar to the levels seen in early 2020. However, vaccine developments have provided some relief to the markets. We expect to see this having a positive effect on our business during the course of 2021, as country level vaccination programmes are implemented on a global scale. Looking further ahead, I remain confident that our strategy, and the organisational changes we implemented last year, position us well to capture opportunities arising from decarbonisation efforts in both the marine and energy markets.

This being the last results to be published before my retirement, I would like to take the opportunity to thank all my colleagues throughout Wärtsilä for your dedication and support. In particular, your help in navigating our way through the past challenging year is highly appreciated. It has been a true pleasure to work with you in developing Wärtsilä into the smart technology company it is today.”

Full report here https://news.cision.com/wartsila-corporation/r/wartsila-s-financial-statements-bulletin-january-december-2020,c3274093