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WÄRTSILÄ REPORTS FAIR START TO THE YEAR, BUT BLEAK PROSPECTS

Tuesday, April 21, 2020 

The Wärtsilä group has published its interim financial report for the first quarter of 2020, which shows that, despite stable net sales figures, the coronavirus pandemic is expected to have a significant negative impact for the rest of the year.

The full financial impact cannot be quantified, as it will depend on the duration and severity of the measures taken to contain the virus spread, and the pace of the eventual market recovery.

Jaakko Eskola (pictured), President and CEO, said: “During the first quarter of 2020, Wärtsilä’s business environment was characterised by a sudden increase in uncertainty related to the coronavirus pandemic and its longer-term impact on the global economy. Net sales increased slightly from the corresponding period last year, thanks to growth in both equipment deliveries and service activity in the Marine Business. Measures taken to contain the spread of COVID-19 have resulted in factories running at lower than usual capacity and in restricted mobility of field service personnel.

"Demand in the first quarter was reasonable considering the prevailing market conditions. The decline in marine order intake was largely due to the lack of scrubber investments, as fuel spreads have narrowed. The effects of the coronavirus pandemic are increasingly becoming visible in the demand environment of our markets. The cruise segment in particular has been severely affected by the actions taken to contain the virus spread. The risk of weakening economic activity has caused shipowners and operators to re-evaluate their investment plans.

"The weakened demand outlook, in combination with anticipated delivery postponements and challenges in accessing customer sites, will have a material effect on our financial development this year. To mitigate this impact, we have taken proactive steps to lower our cost base with approximately €100 million by reducing working hours and initiating temporary layoffs, as well as by limiting the use of external personnel and consultants.

"While adjustments to our cost base are necessary, we must also secure our ability to capture future growth opportunities. In this context, the progression of our Marine Business reorganisation into three independent businesses is central. It will allow us to accelerate strategy execution and simplify the business structure in order to increase the agility and speed of our decision-making. In addition, although we are reducing discretionary spending, we remain committed to investing in R&D projects that are critical to our long-term success.”

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