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Net sales and profitability

Sales developed as expected

Wärtsilä's net sales for January-December 2010 totalled EUR 4,553 million (5,260), -13%. This was well in line with Wärtsilä's estimate of a decrease of approximately 15%. Ship Power's net sales decreased by 32% and totalled EUR 1,201 million (1,767). Net sales for Power Plants totalled EUR 1,525 million (1,645), a decrease of 7%. Net sales from the Services business remained at last year's level and amounted to EUR 1,823 million (1,830). Ship Power accounted for 26%, Power Plants for 34% and Services for 40% of the total net sales.

Of Wärtsilä's net sales for January-December 2010, approximately 70% was EUR denominated, 12% USD denominated, with the remainder being split between several currencies.

Solid profitability

The operating result before nonrecurring expenses was EUR 487 million (638) for the financial period. The operating margin (EBIT) was 10.7% of net sales (12.1), well in line with Wärtsilä's estimate for 2010. Including nonrecurring expenses, the operating result was EUR 412 million or 9.1% of net sales. Wärtsilä recognised EUR 75 million of nonrecurring expenses related to the restructuring measures during the financial period.

Based on the new, leaner structure, its good position in the markets and its efficient services organisation, Wärtsilä has redefined its long-term EBIT margin target to be 14% at the peak of the cycle. At the trough of the cycle Wärtsilä's target is to keep the operating profit margin above 10%. This replaces the previous target of 8-10% +/-2% over the cycle.

Financial items amounted to EUR -13 million (-34). Net interest totalled EUR -12 million (-17). Dividends received totalled EUR 7 million (6). The deviation in financial items is mainly due to exchange rate differences, which were negative during the corresponding period of 2009 as well as lower net interest expenses. Profit before taxes amounted to EUR 548 million (558). Taxes in the reporting period amounted to EUR 151 million (161). The profit for the financial period amounted to EUR 397 million (396). Earnings per share were 3.91 euro (3.94) and equity per share was 16.61 euro (15.17). Return on investment (ROI) was 26.0% (29.9). Return on equity was 25.0% (29.2).