Departing Wärtsilä CEO puts faith in vaccine roll-outs after tough 2020

Order intake plunged almost 30 percent in the fourth quarter for Wärtsilä in an overall tough 2020 for the supplier. Early 2021 looks challenging, though the vaccine roll-out is expected to have a positive impact later in the year.

Photo: PR/Wärtsilä

Finnish Wärtsilä exits 2020 with a big setback in order intake in a year when the coronavirus pandemic took a bill on the supplier's activities.

Most recently, order intake plunged 28 percent in the fourth quarter, compared to the same period last year, and this impacted the top as well as bottom line.

Altogether, company's order intake dropped 18 percent in 2020, to around EUR 4.4 billion, as Wärtsilä noted among other things that "vessel contracting decreased to record low levels", while scrubber sales also decreased.

The coronavirus outbreak meant that Wärtsilä during 2020 launched a series of cost reduction measures to limit the impact of the pandemic. This included a reduction of work hours and "temporary layoffs."

From the beginning of 2021, Wärtsilä CEO Jaakko Eskola also expects that demand will be severely challenged, with "near-term demand similar to the levels seen in early 2020."

Vaccines will boost market

In the longer term, the CEO hopes that the global vaccine roll-out will push the market in then right direction, though it remains very difficult to make predictions about this development.

"We expect to see this having a positive effect on our business during the course of 2021, as country level vaccination programmes are implemented on a global scale," says Eskola in a financial statement:

"Looking further ahead, I remain confident that our strategy, and the organisational changes we implemented last year, position us well to capture opportunities arising from decarbonisation efforts in both the marine and energy markets."

Following publication of the annual report on Thursday, Wärtsilä announced an order for "more than EUR 100 million" to supply dual fuel engines for six new LNG ships, which will be built for the Arctic LNG 2 project in Russia's Arctic waters.

As for the bottom line, Wärtsilä finished the fourth quarter with a profit of EUR 78 million before taxes, down almost 50 percent from EUR 153 million in the same period 2019. For 2020 as a whole, the company delivers a profit of EUR 191 million, against EUR 315 million the year before.

Despite the setback, Wärtsilä says that the board of directors proposes a dividend payout of EUR 0.2 per share for 2020. On Thursday, the company also says that the board will establish a share-based incentive program for the company's management and select key employees.

Eskola will be replaced as CEO by Håkan Agnevall on Feb. 1. Eskola has headed Wärtsilä since 2015 and he will continue as advisor to the board and management until the end of June, when he will retire, announced the company recently.

English Edit: Daniel Logan Berg-Munch

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