Wärtsilä eyes Rolls-Royce

Feb 02 2018

Wärtsilä has not ruled out a move for Rolls-Royce’s loss making marine division.

Speaking on Wednesday about the potential acquisition of Rolls-Royce’s business, Jaakko Eskola President & CEO said that Wärtsilä would “…need to look at what is available there and what is going to be their final plan. If we see an interesting player in the market, who would fit well into our strategy… we would definitely look at it.”

The previous talks on combining the two companies fell through, as the Finish technology group believed the move would not result in “incremental value” to the company.

Last month, Rolls-Royce alerted the market by saying it would launch a strategic review of available options for its commercial maritime division.

Wärtsilä’s reported that its 2017 order intake had increased 15% to €5.64 bill and net sales were up by 3% to €4.92 bill.

Comparable operating result for 2017 increased to €590 mill from €583 mill, which represented 12% of net sales. Cash flow from operating activities fell to €430 mill from €613 mill.

The order book at the end of the year had increased 8% to €5,064 mill, compared to € 4,696 mill in 2016.

Wärtsilä said that demand for its services and solutions in 2018 is expected to improve somewhat from the previous year. Demand by business area is anticipated to be as follows:

*Good in Services thanks to growth opportunities in selected regions and segments.

*Good in Energy Solutions. The global shift towards renewable energy sources and increasing electricity demand in the emerging markets support the need for distributed and flexible power capacity, including gas-fired generation, energy storage, and smart integration technology.

*Solid in Marine Solutions. Despite improving sentiment, the marine market environment remains challenging due to overcapacity and lack of financing.

Wärtsilä’s current order book for 2018 deliveries is €3,171 mill, which mainly comprises equipment deliveries. Services’ business is largely transactional, with only around 30% of annual net sales coming from the orderbook.

Eskola, said; “The year 2017 developed according to our expectations. Increased power plant deliveries supported some growth in net sales, while profitability was in line with the previous year, due in part to a positive business mix in the fourth quarter. The favourable order trends seen throughout the year continued in the fourth quarter, providing us with a solid basis from which we can develop our business.

“Activity in the service markets improved in the second half, despite low volumes in the offshore and merchant segments. I am especially pleased with the healthy growth in Services’ orders received, which demonstrates that our customers are increasingly seeing the value of longer-term partnerships.

“Energy Solutions’ order intake was boosted by both increased investments in modernising power infrastructures in the emerging markets, and the growing need for flexible power capacity to support the transition into renewable energy sources. In the marine industry, the sentiment among merchant customers improved during the latter part of the year. This, together with a healthy demand in the cruise and gas carrier segments, supported the growth of Marine Solutions’ order intake.

“During the year, we introduced our smart marine and smart energy visions, which emphasise Wärtsilä’s commitment to promoting a low emission economy and providing intelligent ways of producing and using energy. The launch of our marine hybrid module, the development of our capabilities for remote vessel operation, the introduction of new service concepts, and the expansion into energy storage and software solutions are all concrete examples of how we increase customer value with energy efficiency, lifecycle optimisation and innovative solutions.

“Looking ahead, I believe that developing smart technology and integrating new business models into our offering will be at the core of our long-term value creation, both for our shareholders and society at large. In terms of 2018, our demand outlook has improved somewhat. We continue to see growth opportunities in our service business, based on our portfolio of long-term agreements and the increasing technological sophistication of our installed base. The demand for our energy solutions is anticipated to be at a good level, supported by a healthy project pipeline and favourable market trends. Market conditions are expected to improve in the marine industry, thus supporting a solid demand outlook,” he concluded.

In addition, the group has launched the global Wärtsilä Customer Support Centre (CSC).

This new centre provides all Wärtsilä customers with easily accessible, transparent, and high-quality support. In addition to the existing support channels, it responds to all enquiries regarding any products and solutions belonging to the Wärtsilä family, such as spare parts, field services, technical support, and Wärtsilä Online Services, the company explained.

As an additional customer support channel, it complements contacting, for example, the Account Manager or other appointed Wärtsilä contact persons. During business days, the CSC can be reached around the clock via several channels and Wärtsilä Online Services. During non-business days, the centre is available via phone.

“Enhanced availability and usability of customer service result in an increased peace of mind and increased customer satisfaction. With the fast technology- and acquisition-driven expansion of Wärtsilä products and services, the Wärtsilä Customer Support Centre enables our customers to concentrate on their core business,” said Pierpaolo Barbone, President & EVP, Wärtsilä Services. 


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