Notes to the Consolidated Financial Statements

1. Segment information
             
The business of Wärtsilä consists of one business area, the Power Businesses. The Power Businesses are subdivided into two mutually supportive market areas, Ship Power and Power Plants. These offer customers the same product concept modified for specific applications. The main products for both these markets are gas and diesel engines and related services. The market segments are highly dependent on each other.
             
In the Power Businesses, the design-related research and development and manufacturing required for the engines sold to both markets take place in the same R&D centres and factories. The manufacturing process is the same for each market. Similarly, the same Group companies are responsible for the distribution of these products and the services related to them. Capacity costs cannot be reliably allocated to the two different markets. These costs are significant and vary between the two units in different years. Customers in both markets are capital-intensive corporations with global operations. Development of the two market areas is strongly linked to global economic trends.
             
As geographical information, Wärtsilä reports the geographical areas Finland, other European countries, Asia, Americas and other continents. In the geographical information net sales is split by the customer’s destination and non-current assets by origin.
             
Geographical information
2010            
MEUR Finland Other European countries Asia Americas Other Total
Net sales 26 1 239 1 754 1 034 499 4 553
Non-current assets* 256 879 122 47 8 1 311
             
             
2009            
MEUR Finland Other European countries Asia Americas Other Total
Net sales 37 1 618 1 937 1 176 493 5 260
Non-current assets* 273 856 113 45 6 1 293
             
* Non-current assets consist of goodwill, intangible assets, property, plant and equipment, investment properties and investments in associates and joint ventures.
             
Business area information
             
Internal management reporting is used to monitor the development of operations on the basis of market based business areas. Reporting serves goal setting and budget control and is thus a management tool rather than an actual external economic indicator.
             
Wärtsilä’s highest operative decision maker (CODM, Chief Operating Decision Maker according to IFRS 8) is the Group President with the support of the Board of Management and, in some cases, the Board of Directors. The Group President assesses the Group’s financial position and its development as a whole, not based on the results of the business areas. As the Group’s level of integration is high, the reported indicators from business areas do not give a true picture of the business areas’ financial position and development. It is also considered that they are of limited value to an external reader due to poor comparability, for example.
             
Against this background, Wärtsilä’s business cannot be divided into separate operative segments with individual reporting.
             
During the financial year 1 January-31 December 2010 and 1 January-31 December 2009, Wärtsilä did not have individual significant customers or lands according to the definition of IFRS 8.
             
Net sales            
             
MEUR 2010 2009        
Ship Power 1 201 1 767        
Power Plants 1 525 1 645        
Services 1 823 1 830        
Other 4 17        
Total 4 553 5 260