wärtsilä corporation 2005

© Wärtsilä

Wärtsilä Corporation 2005

Ole Johansson, President & CEO

7 February 2006

2© Wärtsilä

Mission and Vision

MissionWe provide lifecycle power solutions to enhance the business of our customers, whilst creating better technologies that benefit both the customer and the environment.

VisionWe will be the most valued business partner of all our customers.

3© Wärtsilä

Highlights of the year 2005

Power Businesses

� Order intake grew 25.1% to EUR 3,491.1 million (2,791.4)

� Order book reached all-time high, EUR 2,905.7 million (1,855.3), up 56.6% on the previous year

� Net sales rose to EUR 2,520.3 million (2,224.7)

� Profitability (EBITA) reached target level 8.0% (3.9)

Group

� EPS EUR 1.80 (1.42)

� The Board of Directors proposes a dividend of EUR 0.90 per share and an extra dividend of EUR 0.60 per share, total EUR 1.50 per share

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Markets in 2005 (1/2)

Ship Power

� The good demand in the shipbuilding industry continued

� Number of orders for full year at good level, declining towards end of the year

� High activity level;

� Offshore � Passenger and RoPax vessels � LNG

� Trend from large to smaller vessels in containerships

� Decrease in volume for tankers and bulk carriers

Market trend towards smaller vessels favoured Wärtsilä

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Markets in 2005 (2/2)

� Power Plants

� Power plant markets active globally

� Global gas power plant market grew

� Wärtsilä’s technology in the gas market beingrecognized

�

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Power Businesses

MEUR Q4/2005 Q4/2004 Change

Net sales 773.5 739.4 4.6%

Operating income 86.1 90.8 -5.2%

% net sales 11.1% 12.3%

Order intake 1,100.5 716.0 53.7%

MEUR 2005 2004 Change

Net sales 2,520.3 2,224.7 13.3%

Operating income 202.5 87.7

% net sales 8.0% 3.9%

Order intake 3,491.1 2,791.4 25.1%

Order bookend of period 2,905.7 1,855.3 56.6%

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Power Businesses – Key figures

Net sales

MEUR

0

200

400

600

800

1000

1200

Q4/04 Q4/05

Order intake

716.0

1,100.5

63.7%

71.8%

22.6%

0

400

800

1200

1600

2000

2400

2800

3200

31.12.2004 31.12.2005

Order book

2,905.7

104.1%

25.5%

4.5%

0

100

200

300

400

500

600

700

800

900

Q4/04 Q4/05

ServicePower PlantsShip Power

24.3%

-31.6%

31.4%

773.5739.4

1,855.3

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0

500

1000

1500

2000

2500

3000

2001 2002 2003 2004 2005

OtherAmericaEuropeAsia

Power businesses’ net sales by market area 2001-2005

MEUR

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0

2000

4000

6000

8000

10000

12000

14000

2001 2002 2003 2004 2005

ServiceEngine-divisionPower PlantsShip Power

Power businesses’ personnel development 2001 - 2005

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Power Businesses - Order book distribution

0

200

400

600

800

1000

1200

1400

1600

1800

2000

Next year deliveryNext year + delivery

MEUR

31.12.2004 31.12.2005

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0

500

1 000

1 500

2 000

2 500

3 000

3 500

4 000

4 500

2001 2002 2003 2004 2005 E2006

Power Plants Ship Power Estimate

MW

Delivered engine megawatts from own factories

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Wärtsilä Group

12Q1/2003 presentaatio

2005 2004Power Imatra

MEUR Businesses Steel Group Group

Net sales 2,520.3 119.1 2,638.8 2,478.2

EBITA 202.5 21.8 224.3 112.0

% of Net sales 8.0% 18.3% 8.5% 4.5%

Profit before taxes 212.4 217.3

EPS (EUR) 1.80 1.42

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MEUR 2005 2004 Cash flow fromoperating activities 76.0 220.1

Cash flow from investing activities -178.3 85.0

Cash flow from financing activities 47.6 -284.9

Liquid funds at the end of period 119.6 169.6

Cash flow

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0

0,1

0,2

0,3

0,4

0,5

0,6

01 02 03 04 05

Gearing

Gearing

0

5

10

15

20

25

30

35

40

45

50

01 02 03 04 05

Solvency

Solvency

Solvency and gearing

NOTE: 2001-2003 according to FAS, 2004- IFRSConvertible subordinated debentures treated as equity

%

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EPS and dividend/share

*Board’s proposalNOTE: 2001-2003 according to FAS, 2004- IFRS

-1,0

-0,5

0,0

0,5

1,0

1,5

2,0

2,5

3,0

3,5

4,0

Extra dividendDividendEPS

EUR

* 2001 2002 2003 2004 2005

© Wärtsilä

Businesses

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Ship Power – High level of demand

MEUR Q4/2005 Q4/2004 Change

Net sales 265.5 202.1 31.4%

Order intake 475.1 276.5 71.8%

MEUR 2005 2004 Change

Net sales 710.3 631.2 12.5%

Order intake 1,545.3 836.7 84.7%

Order book, end of period 1,658.5 812.7 104.1%

2004 presentation

Power Businessesnet sales

2005: 2,520.3

Ship Power: 28%

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Vessel orders 2000 Vessel orders 2004 Vessel orders 2005

Global Market Development

China 6%

China 15%China 21%

Japan 30%

Japan 41% Japan 26%

Korea 52% Korea 31% Korea 39%

Others 3% Others 5% Others 4%Europe 9% Europe 7%Europe 10%

Market share of dwt. Vessels > 100gt.Source: Lloyd's register - Fairplay, December 2005

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Vessel Orders, # of vessels #

of v

esse

ls

Source: Based on data from Clarkson Research Studies

0

50

100

150

200

250

300

01-0

3

04-0

3

07-0

3

10-0

3

01-0

4

04-0

4

07-0

4

10-0

4

01-0

5

04-0

5

07-0

5

10-0

5

0

2

4

6

8

10

12Tankers Bulk carriers Containers Others 3 months moving average dwt

Volum

e [million D

WT]

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Vessel Orders, other vessels # of vessels#

of v

esse

ls

Source: Based on data from Clarkson Research Studies

Volum

e [Million D

WT]

0

25

50

75

01-0

3

04-0

3

07-0

3

10-0

3

01-0

4

04-0

4

07-0

4

10-0

4

01-0

5

04-0

5

07-0

5

10-0

5

0

1

2

LNG carriers LPG carriers Reefers Other dry > 5,000 dwtOffshore & other Cruise vessels Ro-Ro ferries 3 months moving average dwt

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Net sales of Ship Power by vessel type

0

200

400

600

800

2000 2001 2002 2003 2004 2005

Tankers Bulk carriers Container ships Others

Cruise & Ferry24%

General cargo10%

LNG3%

Offshore15%

Special vessels & other

14%

Container ships17%

Bulk carriers4%

Tankers13%

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The market position of Wärtsilä’s marine engines Q4/2005

OwnOwn productionproduction

Medium speed main engines

Wärtsilä 24% (18)

Production by licensees

Low speed main engines

OwnOwn productionproduction

Medium speed auxiliary engines

Total market volume last 12 months:6,676 MW (3,990)



Wärtsilä 45% (34) Wärtsilä 8% (9)

Wärtsilä’s own calculation is based on: Lloyd’s Register – Fairplay, Clarkson’s Research Studies and BRL Shipping Consultants.Market shares based on installed power, numbers in brackets are from 12 months ago.

Comp. 124%

Comp. 218%

Others13% Comp. 1

73%

Comp. 23%

Others92%

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Services

MEUR Q4/2005 Q4/2004 Change%

Net sales 315.0 253.3 24.3%

MEUR 2005 2004 Change%

Net Sales 1,093.1 936.8 16.7%

Personnel, end of period 7 200 6 378 12.9%

2004 presentation


2005: 2,520.3

Services: 43 %

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Services-development

� DEUTZ marine service acquisition

� Acquisition of automation company Gerhardt Holding Co. Inc, USA

� New service companies in key ports: HongKong and Tallinn

� First global O&M contract in maritime industrywith Reederei Blue Star GmbH

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Active engine base development

0

20000

40000

60000

80000

100000

120000

140000

160000

180000

2001 2002 2003 2004 2005

MW

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Services - accelerating growth

0

5

10

15

20

25

30

Q1/03 Q2/03 Q3/03 Q4/03 Q1/04 Q2/04 Q3/04 Q4/04 Q1/05 Q2/05 Q3/05 Q4/050

10

20

30

40

50

60

Services growth per Q Services share of Power Businesses' sales % %

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Power Plants

MEUR Q4/2005 Q4/2004 ChangeNet sales 193.7 283.0 -31.6%Order intake 346.6 211.7 63.7%Order intake, MW

heavy fuel oil 489 252 93.9%gas 345 207 66.5%

BioPower, MWth + MWe 17 36 -51.4%

MEUR 2005 2004 ChangeNet sales 710.3 651.9 9.0%Order intake 865.2 1,019.5 -15.1%Order intake, MW

heavy fuel oil 1,134 1,664 -31.9%gas 924 649 42.3%

BioPower, MWth + MWe 117 110 6.7%

Order book, end of period 943.9 752.4 25.5%


2005: 2,520.3

Power Plants: 28 %

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Power Plant Market 1-60 MW Unit SizeReciprocating Engines

0

2000

4000

6000

8000

10000

12000

14000

16000

18000

20000

2000-2001 2001-2002 2002-2003 2003-2004 2004-2005

from June to May

MW

LFOGasHFO

37.9%

13.6%

1.4%

49.3%

19.2%

1.9%

54.8%

22.3%

2.0%

74.0%

19.3%

0.8%

Inside the colums, Wärtsilä’s share in percentage

53.0%

19.8%

0.6%

Source: Diesel and Gas Turbine Magazine

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Power Plants -order intake 1-12/2005: 2,075 MW (2,313)

Gas Oil

104(302)

204(100)

Europe308

(402)

184(290)

705(150)

Asia889

(439)

9(154)

317 (193)

Americas325

(347)

Africa and Middle East552

(1,125)

106 (44)

446(1,082)

30© Wärtsilä

Power Plants - Some selected orders from 2005

BANGLADESH

Narsingdi, Comilla

BASELOAD

Types: GAS, 2x16V34SG, 3x20V34SG

Output: 1*13,9 MW, 1*26,2 MW

AZERBAIJAN

Sheki, Xatchmaz, Nakhtchivan, Baku, Astara

BASELOAD

Types: GAS, 4pcs of 10xW34SG, 10xW20V34SG

Output: 4 x 87 MW, 1* 104,7 MW

BRAZIL

2 x Manaus

BASELOAD

Types: DUAL FUEL, 2pcs of 5x18V46

Output: 2* 85 MW

CAMBODIA

2 x Phnom Penh

BASELOAD

Types: HFO, 6xW18V32, 2xW18V32

Output: 1*47,8 MW, 1*16,1 MW

HFO DUALGAS

DOMINICAN REPUBLIC

Pimentel

BASELOAD

Type: HFO, 4x18V32C

Output: 31,4 MW

IRAN

Shahid Mohammadi, Shahid Mostafavi

BASELOAD, MECHANICAL DRIVES

Types: GAS, 2x20V34SG, 3x20V34SG

Output: 1*18 MW, 1*27 MW

LFO

JAPAN

Tsuchiura-City

BASELOAD

Type: LFO, 5xW18V32

Output: 41,4 MW

PAKISTAN

Khairpur, Iskendarabad

BASELOAD

Types: DUAL FUEL, 2x18V50DF

Output: 2*16,5 MW

PAKISTAN

Dera Ghazi Khan

BASELOAD

Types: GAS, 3x20V34SG

Output: 25,5 MW

CRUDE

RUSSIA

Varandey

BASELOAD

Type: CRUDE-OIL, 4xW18V32

Output: 32 MW

SAUDI ARABIA

2 x Riyadh

BASELOAD

Type: HFO, 6xW20V32, 6xW20V32

Output: 1*45,3 MW, 1*46,7 MW

BIO

ITALY

Conselice, ValSenales

BASELOAD, INTERMEDIATE

Type: BIO-OIL, 2x18V46, 1x6L20

Output: 1*34,2 MW, 1*0,8 MW

31© Wärtsilä

Wärtsilä’s holdings

� The new company was accounted for as an associated company from 1st of May 2005

� Wärtsilä’s ownership in the company is 26.5%. Wärtsilä’s share of the associated company’s result was EUR 10.4 million (5-12/2005)

� The holding’s balance sheet value EUR 106.1 million (31st December2005)

� Wärtsilä has granted a shareholders’ loan of EUR 21.2 million to Ovako

� Wärtsilä owns 4.7% of Assa Abloy shares

� The holding’s market value EUR 229.9 million (31st December 2005)

32© Wärtsilä

Ship Power� Demand remains strong, however uncertainty in

general shipbuilding market increases

� Active segments in shipbuilding are offshore, LNG and cruise & ferry

Power Plants� The power plant market continues to be globally

active

� Demand remains stable for HFO market and growing demand for gas

Market outlook 2006

33© Wärtsilä

� Demand in the ship power and energy markets looks likely to remain favourable for Wärtsilä for at least the first half of the current year

� Based on the strong order book, Wärtsilä’s net sales are expected to grow this year by as much as 20%

� The profitability level reached in 2005 will remain

� Net sales growth is expected to continue in 2007

Wärtsilä Outlook 2006

THANK YOU!

wärtsilä corporation 2005

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