Skip to main content

INCORPORATING

WÄRTSILÄ REPORTS LOWER THAN ANTICIPATED PERFORMANCE

Friday, October 25, 2019 

Wärtsilä’s third quarter interim report says that the Finnish group has been burdened by project related challenges and low equipment demand, although services activity in general remains sound.

Order intake and net sales both saw a decrease over the previous year, while the company warned that the full-year operating result will be impacted by a one-time charge related to project cost overruns in the Marine and Energy Businesses.

In the marine business sector, results were impacted by low vessel contracting volumes and a decline in the demand for scrubber solutions compared to last year’s exceptionally high level. Activity in the marine services market is expected to be stable.

Jaakko Eskola (pictured), President and CEO, said: “The third quarter proved to be challenging for Wärtsilä, both in terms of equipment demand trends and financial performance. The decline in order intake reflected weak vessel contracting and softened demand for scrubber systems, as well as continued slow decision-making in the energy markets. While the project pipeline is healthy in both businesses, visibility on order intake timing is limited and competition is intensifying. Price pressure remains a headwind in the prevailing market environment. I am pleased to note that despite the challenges we face in the equipment businesses, services related activity remained sound.

“The full-year result will be impacted by a one-time charge amounting to €150 million, of which €84 million has already been recognised. A review of the projects in question revealed incorrect underlying assumptions in cost estimates, insufficient risk identification, and supplier related challenges. We have taken corrective actions to prevent similar issues from occurring in the future. These include introducing tighter controls on technical assessments and the supplier approval process, as well as strengthening the project management organisation. With these measures, we aim to improve our project execution quality and ensure better upfront identification of risks and opportunities. I am confident that this will enable us to live up to our reputation for providing high quality and value enhancing solutions.”

Reader Comments (0)

There are currently no comments on this article. Why not be the first and leave your thoughts below.

Leave Your Comment

Please keep your comment on topic, any inappropriate comments may be removed.

Return to index

Web Analytics