© 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
4© Wärtsilä
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
5© Wärtsilä
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
�
6© Wärtsilä
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%
7© Wärtsilä
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
8© Wärtsilä
0
500
1000
1500
2000
2500
3000
2001 2002 2003 2004 2005
OtherAmericaEuropeAsia
Power businesses’ net sales by market area 2001-2005
MEUR
9© Wärtsilä
0
2000
4000
6000
8000
10000
12000
14000
2001 2002 2003 2004 2005
ServiceEngine-divisionPower PlantsShip Power
Power businesses’ personnel development 2001 - 2005
10© Wärtsilä
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
11© Wärtsilä
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
12© Wärtsilä
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
13© Wärtsilä
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
14© Wärtsilä
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
%
15© Wärtsilä
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
17© Wärtsilä
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%
18© Wärtsilä
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
19© Wärtsilä
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]
20© Wärtsilä
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
21© Wärtsilä
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%
22© Wärtsilä
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)
Total market volume last 12 months:22,703 MW (24,863)
Total market volume last 12 months:5,220 MW (3,540)
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%
23© Wärtsilä
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
Power Businessesnet sales
2005: 2,520.3
Services: 43 %
24© Wärtsilä
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
25© Wärtsilä
Active engine base development
0
20000
40000
60000
80000
100000
120000
140000
160000
180000
2001 2002 2003 2004 2005
MW
26© Wärtsilä
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 % %
27© Wärtsilä
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%
Power Businessesnet sales
2005: 2,520.3
Power Plants: 28 %
28© Wärtsilä
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
29© Wärtsilä
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!