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TRANSCRIPT
Wärtsilä Capital Markets Day1 © Wärtsilä
STRATEGIC ROADMAPOLE JOHANSSON, PRESIDENT & CEO
Wärtsilä Capital Markets Day2 © Wärtsilä
Outlook 2008
• Orderbook for 2008 solid• Service growth continues
• Power plants market active
• Economic uncertainty continues• Ship orders down
• Power Plants financing?
Guidance for 2008 reiterated
+/- High level of activity and capacity constraints continue
Wärtsilä Capital Markets Day3 © Wärtsilä
Outlook 2009
• Orderbook for 2009 approx. 3,800 MEUR
• Service continues to grow by10-15%
• Supplier capacity in place
• Raw material and componentprices peaked
• Financial constraints may trigger cancellations and/or postpone-ments
• Supplier strength requires monitoring
• Slower economic activity mayaffect shipping and marineservices
2009 net sales estimated to grow 10-20%
Wärtsilä Capital Markets Day4 © Wärtsilä
SHIPPOWER
POWERPLANTS
SERVICES
Balanced portfolio for continued growth
Wärtsilä Capital Markets Day5 © Wärtsilä
Shipbuilding Trends: Shipyards’ perspective
0
100
200
300
400
500
600
700
1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008
Contracts Size of Orderbook
Million DWT
Orderbook and Contracting
Source: Clarkson Research Services
Wärtsilä Capital Markets Day6 © Wärtsilä
Shipbuilding Trends: Shipyards’ perspective
0
25
50
75
100
125
150
175
200
1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
Historical Scheduled according to Orderbook
Million DWT
Deliveries
Source: Clarkson Research Services
Wärtsilä Capital Markets Day7 © Wärtsilä
0 50 100 150 200 250 300 350 400
Cruise
Ferry
RoRo
Vehicle
Container
Other dry
General cargo
Bulker
Other tanker
LNG
LPG
Pure Chemical
Chemical/Products
Products
Crude
Shipbuilding trends: Owners’ perspective
Fleet Orderbook
Million Gt
Orderbook and share of fleet, MGt
Source: SAI, The Institute of Shipping Analysis
41%
50%
47%
56%
27%
44%
23%
67%
21%
8%
51%
43%
18%
10%
28%
Wärtsilä Capital Markets Day8 © Wärtsilä
Shipbuilding trends: Owners’ perspective
510.00
610.00
710.00
810.00
910.00
1,010.00
1,110.00
1,210.00
1,310.00
1,410.00
1,510.00
10/80 10/82 10/84 10/86 10/88 10/90 10/92 10/94 10/96 10/98 10/00 10/02 10/04 10/06
$/DWT
Average Newbuilding Prices $/DWT
Source: Clarkson Research Services
Wärtsilä Capital Markets Day9 © Wärtsilä
Ship Power’s Competitive Edge
A highly diversified customer base
Strong product portfolio
A true lifecycle service provider: from pre-design and sales to delivery, commissioning and after-sales services
Strong on total efficiency:energy, operational, environmental and safety efficiency
Wärtsilä Capital Markets Day10 © Wärtsilä
Merchant OffshoreCruise
and FerryNavy
SpecialVessels
Wärtsilä Ship Power’s offering covers all key segmen ts
Wärtsilä Capital Markets Day11 © Wärtsilä
Ship Power’s Competitive Edge
Power distribution
Powerdrives
Automation PropulsionEngines Seals & bearings
Special vessels
Merchant
Offshore
Navy
Cruise & Ferry
Segment specific• Concepts• Applications• Project execution models• System integration
capabilities• Engineering services• Third party supplies
R&D
Ship design
Productengineering
Strategic purchasing
Wärtsilä components
Wärtsilä Capital Markets Day12 © Wärtsilä
Ship Design is key to early entry and full lifecycl e presence
BUILDOPERATE
Wärtsilä’s envisagedlifecycle entry point
Wärtsilä’shistoricallifecycleentry point
DESIGN
Wärtsilä Capital Markets Day13 © Wärtsilä
Owners demanding environmentally sound solutions
Environmental awareness and regulations call for:• Solutions to reduce emissions (SOx, NOx, CO2 and PM)• Alternatives to HFO: gas, biofuels, fuel cells• Flexibility in fuel usage: dual fuel • Solutions to maximize efficiency of components• Optimization of vessel design
Wärtsilä Capital Markets Day14 © Wärtsilä
World electricity consumption
10000
12000
14000
16000
18000
20000
22000
1991 1992 1993 1994 1995 1996 1997 1998 2000 2001 2002 2003 2004 2005 2006 2007
Actual Trend
TWh
World Electricity Generation
Wärtsilä Capital Markets Day15 © Wärtsilä
Flexible baseload
48%
Industrial self-generation18%
Oil & gas2%
Power Plants order intake by application
0
200
400
600
800
1000
1200
1400
1600
1800
2004 2005 2006 2007 1-9/2008
MEUR
Gridstability & peaking32%
Oil61%
Gas36%
Renewable3%
Wärtsilä Capital Markets Day16 © Wärtsilä
Power plant business outlook
• Domestic consumption should continue to grow
• Industrial sector demand may decrease
+/- Population growth, rising living standards andsubstitution should keep electricity demand growing
Electricity demand and economic growth correlate almost 1:1
Wärtsilä Capital Markets Day17 © Wärtsilä
Wärtsilä’s competitive advantages
• Flexibility of– Fuels– Plants sizing, modularity– Operation mode– Delivery scope incl. EPC– Operation & Maintenance support
• High product efficiency and reliability• Global presence and experience
from developing world
Wärtsilä Capital Markets Day18 © Wärtsilä
Custom
er Relationship
Managem
ent
Training Services
Reconditioning Services
Operations & Management
Propulsion Services
Automation Services
Engine Services
Ship Services
Boiler Services
Custom
ers
Value to customer’s business
We become the most valued business partner…
… by understanding Customers’ needs andassembling the appropriate solution to solve them.
ICEDenmark, 2008
Marine PropellerSouth Africa, 2007
Decam BVThe Netherlands, 2004
Deutz AGGermany, 2005
Total AutomationSingapore, 2006
McCall PropellerUnited Kingdom, 2007
Wärtsilä Capital Markets Day19 © Wärtsilä
Acquisitions & Joint Ventures
Marine Propeller LtdSouth AfricaSenitec AB
SwedenMcCall Propeller Ltd
United KingdomElectrical PowerEngineering LtdUnited Kingdom
Stockholmsfartygreparationer ABSwedenINTEC Injectortechnic GmbHGermanyWärtsilä BLRT ServicesKlaipeda UAB (JV)LithuaniaTotal Automation LtdSingapore
JMC Marine A/SDenmark
CGL Industries LtdCanada
MetalockSingapore Ltd
Singapore
Decam B.V.Netherlands
Elco Systems B.VNetherlands
Gerhardt Holding Co.USA
DEUTZ AG.Germany
Wärtsilä BLRTBaltica (JV)
Estonia
Caltax MarineDiesel BV
NetherlandsCiserv ABSweden
International CombustionEngineering A/SDenmark, DubaiClaus D. ChristophelMess- und Regeltechnik GmbHGermany
MaritimeService ASNorwayNavelec SASLe Havre,France
2001 2002 2003 2004 2005 2006 2007 2008
Wärtsilä Capital Markets Day20 © Wärtsilä
We are continuously developing our Services network
70 countries � > 160 locations � > 10’000 people � > 7’000 field service forces
0-100
300-500+
100-300
Manpower densityper country
Wärtsilä Capital Markets Day21 © Wärtsilä
AMERICAS EUROPE & AFRICA ASIA & MIDDLE EAST
300-500+
100-300
0-100
We are continuously developing our Services networkN
umbe
r of
Fie
ld S
ervi
ce p
erso
nnel
per
cou
ntry
70 countries � > 160 locations � > 10’000 people � > 7’000 field service forces
Wärtsilä Capital Markets Day22 © Wärtsilä
SHIPPOWER
POWERPLANTS
SERVICES
Mission
”We provide lifecycle power solutions
to enhance the business of our customers, whilst creating better
technologies that benefit both the
customer and the environment.
Wärtsilä Industial Operations - a flexible provider o f products
Wärtsilä Capital Markets Day23 © Wärtsilä
0
1000
2000
3000
4000
5000
6000
7000
2001 2002 2003 2004 2005 2006 2007 1-9/2008
Power PlantsShip Power Full-year estimate
MW
Delivered engine megawatts from own factories
Wärtsilä Capital Markets Day24 © Wärtsilä
Capacity utilization alternative - What if?
Services Retrofit Power Plants Ship Power Lost
Engine, % Propulsion, %
As-is Could-Be As-is Could-Be
Wärtsilä Capital Markets Day25 © Wärtsilä
Interchangeability between Marine and Power plant e ngine
Cost %
Sales phase4-7 mo
1-2 mo
Time
Bill of Material
Ex Works Delivery
Configurationfrozen
Wärtsilä Capital Markets Day26 © Wärtsilä
Competitive landscape is changing
• Performance requirements increase
• Complexity of installations increase
• Uncertainty about fuel price supports engine solutions
• Quality services in high demand
Competition adding engine andpropeller capacity
• Hyundai
• MAN• Rolls Royce
Services competition increasing
• Himsen / Goltens
• MAN investments