Wärtsilä as an investment case

Transcription

1 Wärtsilä as an investment case RAIMO LIND, EXECUTIVE VICE PRESIDENT AND CFO 1 Wärtsilä

2 Themes for discussion Growth Profitability Cash flows Room to maneuver Guidance 28 Conversion of order book to sales Growth over the cycle Acquisitions as a growth vehicle Profitability over the cycle From operating profit to ROI Guidance 28 Working capital drivers Breakdown of cash flows Maintenance vs. growth capex Balance sheet strength Growth capex capacity Acquisition capacity 2 Wärtsilä

3 Wärtsilä s prospects Prospects for 27 unchanged Based on the strong order book, Wärtsilä s net sales are expected to grow this year by around 15%. Profitability will exceed 9% Prospects for 28 In 28 Wärtsilä s net sales will grow about 25%, profitability will improve Investments in capacity expansion, process improvements and maintenance approximately EUR 2 million 3 Wärtsilä

4 Order book to sales 27 and beyond Order book 3 EUR million and beyond Note: Based on order book end of Q3/27 4 Wärtsilä

5 Financial targets set in 21 The average growth target for corporate annual sales is 6 7%. The growth target of the Ship Power and Power Plants businesses is 4%, and for the Services business 1 15%. Operating profit target (EBIT) is 8% of net sales over the cycle. Dividend target 5% of operational earnings per share 5 Wärtsilä

6 Growth over the cycle Sales New Acquisitions Growth % (incl. acquisitions) 4 Sales EUR millions Sales growth 4% 35 35% 3 25 CAGR = 6,8%* 27% 3% 25% 2 21% 2% % 15% 15% 1% 7% 3% 3% 5% % -3% -5% -5% -7% -1% E Historic growth around 1.35 x GDP (incl. acquisitions) * Including acquisitions; growth excluding acquisitions 5.7% Note: World nominal GDP growth averages 5.6% (source: IMF) 6 Wärtsilä

7 Growth over the cycle Sales New Acquisitions Growth % (incl. acquisitions) 5 Sales EUR millions Sales growth 4% 35% % CAGR = 8,4%* 27% 3% 25% 2% % 15% 7% 3% 3% -3% -5% -7% E 28E 15% 1% 5% % -5% -1% Historic growth around 1.7 x GDP (incl. acquisitions) Major acquisitions provide additional growth * Including acquisitions; growth excluding acquisitions 7.4% Note: World nominal GDP growth averages 5.6% (source: IMF) 7 Wärtsilä

8 Acquisitions build global capabilities Added capabilities Automation and electrical Reconditioning Propulsion services Development to date of selected acquisitions (21 27) Sales (Eur m)* Product / service category Engine services < >1 Reconditioning Automation and electrical Propulsion services Engine services Technologies** Added presence Local leading enterprises consolidated and grown further in size and reach to create global business lines * Annualized, ** Integrated to enhance broader offering globally 8 Wärtsilä

9 Acquisitions A catalyst for growth Sales Growth of acquisitions (cumul.) New acquisitions (cumul.) 8 7 EUR millions Wärtsilä E Organic growth of acquisitions has averaged 22% per annum, Wärtsilä overall (excl. acquisitions) 8% Note: Includes the following transactions: John Crane Lips, Ciserv Gothenburg, Metalock Singapore, CGL, JMC, Caltax, Ciserv Baltica (JV), Decam, Deutz Marine Services, Gerhardt, Akpas, and Total Automation

10 Themes for discussion Growth Profitability Cash flows Room to maneuver Guidance 28 Conversion of order book to sales Growth over the cycle Acquisitions as a growth vehicle Profitability over the cycle From operating profit to ROI Guidance 28 Working capital drivers Breakdown of cash flows Maintenance vs. growth capex Balance sheet strength Growth capex capacity Acquisition capacity 1 Wärtsilä

11 Revised profitability target over the cycle SALES EUR millions Operating profit EBIT % 12% 1% 8% Elements of a more robust business model: Business mix more stable Offering in all businesses broadened 3 6% Services share of sales increased Global presence increased 2 1 4% 2% Mutliple fuel offering (fuel oils, bio-oil, gas, multifuel) Capacity outsourcing in Industrial Operations More flexible business model in Power Plants 24 * E % An operating profit of 8-1% over the cycle, with a variation of +/- 2 % points, is now possible * 24 according to IFRS, restructuring costs adjusted 11 Wärtsilä

12 Power Business EBIT and ROI development 4 EBIT EUR millions ROI / EBIT % 4% % 3% 25% 2% 15% 1% 5% 25 26* 27E % EBIT ROI EBIT % * 26 ROI has been corrected by eliminating the net income from Assets available for sale and Share of profit of associates ( 123,9M and 67,4M), the related assets have been eliminated also from holdings (25: 385,3M and 26: 22,M) 12 Wärtsilä

13 Themes for discussion Growth Profitability Cash flows Room to maneuver Guidance 28 Conversion of order book to sales Growth over the cycle Acquisitions as a growth vehicle Profitability over the cycle From operating profit to ROI Guidance 28 Working capital drivers Breakdown of cash flows Maintenance vs. growth capex Balance sheet strength Growth capex capacity Acquisition capacity 13 Wärtsilä

14 Investment CAPEX analysis Acquisitions Other shares Investments in maintenance Investments in growth / process development Investments % of sales (no acq. & shares) Depreciation Investments and depreciations EUR millions Investments % of sales 9% 8% 7% 6% 5% 4% 3% 2% 1% E % Maintenance CAPEX has historically been low, and always below depreciation 14 Wärtsilä

15 Power Businesses Working capital 12 EUR millions 3% 1 25% 8 2% 6 15% ,5% 155 7,% 8,4% 212 5,5% 176 3,% 111 1% 5% Q3/27 % Working Capital Total Inventories Advances Received Working Capital / Net Sales 15 Wärtsilä

16 Power Businesses Working Capital 14 EUR millions % 7% 12 6% ,1% 4,4% 24,% 24,% 36,9% 26,6% 34,9% 24,2% 3,9% 2,9% 5% 4% 3% 2% ,4% ,5% 7,% 5,5% 111 3,% Q3/27 1% % Working Capital Accounts Receivable - Trade Accounts payable & other non-ib items (excl. adv rec) Working Capital / Net Sales Accounts Receivable Trade / Net Sales Accounts payable & other non-ib items (excl. adv rec) / Net Sales 16 Wärtsilä

17 Work in progress and Advances received Wärtsilä Power Businesses EUR millions WIP Advances Received 17 Wärtsilä

18 Net sales, Currency distribution Wärtsilä Group EUR millions EURO USD NO SGD CHF GBP SAR Other 18 Wärtsilä

19 Hedges for major currencies Hedges per for major currencies Estimate Sales Orderbook 8 7 EUR millions Net loans Equity hedging USD NOK CHF 19 Wärtsilä

20 Themes for discussion Growth Profitability Cash flows Room to maneuver Guidance 28 Conversion of order book to sales Growth over the cycle Acquisitions as a growth vehicle Profitability over the cycle From operating profit to ROI Guidance 28 Working capital drivers Breakdown of cash flows Maintenance vs. growth capex Balance sheet strength Growth capex capacity Acquisition capacity 2 Wärtsilä

21 Strong balance sheet gives us room to maneuver Wärtsilä has a strong balance sheet Capex requirements of the business are moderate and continued organic growth can easily be funded out of cash flows A growth strategy driven by synergistic mid-sized acquisitions is possible to execute during the next few years while retaining investment grade status Alternatively, if feasible acquisitions can t be made, there is room to increase dividend payouts 21 Wärtsilä

22 Dividends Dividend/share Dividend yield 3,5 EUR 16, 3 14, 2,5 12, 2 1, 8, 1,5 6, 1 4,,5 2, , Wärtsilä

23 Wärtsilä has been an excellent investment 1 EUR Total Return Reinv Divs Security Price (EUR) /11/2 31/6/3 31/3/4 3/11/4 29/6/5 31/3/6 3/11/6 31/6/7 Source: Bloomberg 23 Wärtsilä