HIGHLIGHTS OF JULY–SEPTEMBER 2020

• Order intake was stable at EUR 981 million (979)
• Net sales decreased by 11% to EUR 995 million (1,118)
• Book-to-bill amounted to 0.99 (0.88)
• Comparable operating result increased by 55% to EUR 61 million (39), which represents 6.1% of net sales (3.5)
• Earnings per share increased to 0.04 euro (-0.01)
• Cash flow from operating activities increased to EUR 114 million (-61)

WÄRTSILÄ'S PROSPECTS FOR 2020 REINSTATED

Wärtsilä expects the near-term demand in the marine and energy markets to improve from current levels. However, visibility remains limited, and the prevailing market conditions make the outlook uncertain.

Based on its current order book, Wärtsilä expects net sales for 2020 to decline by approximately 10% (EUR 5,170 million in 2019). Profitability is expected to continue to be burdened by the effects of COVID-19 and, while service demand is anticipated to improve, the seasonal pick-up is unlikely to be as strong as in previous years.

JAAKKO ESKOLA, PRESIDENT AND CEO

“The COVID-19 pandemic continued to limit the appetite for investments in both the marine and energy markets in the third quarter, resulting in depressed vessel contracting and the postponement of decisions on new power plant capacity. Furthermore, despite some easing of mobility restrictions, low vessel utilisation, power plant site access constraints, and customers’ focus on conserving cash led to soft demand for services.

The difficult market backdrop was reflected in the low level of orders received during the third quarter, as well as in the decline in net sales from services and some delays in equipment deliveries. Profitability remained low due to COVID-19 driven cost inflation, fixed cost underabsorption, and a higher share of equipment deliveries within the net sales mix. However, a better than anticipated service mix contributed to sequential improvement, as did the ongoing temporary cost saving actions. I am pleased to note that our efforts to improve working capital, particularly in the areas of inventory management and receivables collection, resulted in yet another quarter of positive cash flow development.

Looking at the months ahead, our solid order book will contribute to a reasonable level of equipment deliveries. However, as service activity is likely to remain subdued, we expect the resulting unfavourable sales mix to put pressure on profitability. Visibility into demand development remains low, due to widespread concerns over escalating virus infection rates and the longer-term implications of the COVID-19 pandemic. Thus, our near-term focus will be on ensuring both a sound financial position and an optimal cost structure for the prevailing market conditions. Simultaneously, we will continue to invest in developing our digital offering and fuel flexible solutions, enabling us to capture future growth opportunities related to the decarbonisation and transformation of the marine and energy industries.”