Wärtsilä Falls Short of Estimates as Engine Deliveries Stall

Wartsila-Sulzer RTA96-C turbocharged two-stroke diesel engine

(Bloomberg) — Wärtsilä Oyj, the world’s biggest maker of ship motors and power plants, fell the most in a year as customers postponed deliveries during the second quarter amid a shaky global economy.

Wärtsilä slid as much as 10 percent for the biggest decline on the OMX Helsinki 25 Index. The shares were down 9.6 percent at 24.44 euros as of 2:03 p.m. in the Finnish capital.

“Many of our customers are trying to delay things a little bit, not opening a letter of credit, for instance,” Chief Executive Officer Bjoern Rosengren said in an interview today. “The issue is probably more severe in the power plant market.”

Orders for power generation projects were down 33 percent from a year earlier, Wärtsilä said today. Total order intake, including for ship engines and services, rose 2 percent in the quarter, for a 7 percent gain so far this year.

Power plant orders were “surprisingly low” after the company announced yesterday its largest-ever contract on a single power plant and booked the order in the second quarter, Pohjola Bank Oyj said in a note to clients today.

Wärtsilä’s second-quarter net income of 76 million euros fell short of the average 82.3 million-euro estimate of nine analysts, according to data compiled by Bloomberg.

“Timing issues are likely to explain a large part of the result shortfall,” Jan Kaijala, an analyst at Nordea Bank AB, said today in a note. Earnings were “slightly on the weak side again.”

Wärtsilä reiterated full-year guidance for net sales to increase 5 percent to 10 percent, and for the earnings before interest and taxes margin to be 10 percent to 11 percent, before non-recurring items.

“Don’t be too nervous if you see a bit weaker third quarter,” Rosengren said. “We’re planning to meet our guidance anyway” on an increase in deliveries in the fourth quarter, he said.

“We don’t expect a lot of delays turning into cancellations as long as the world economy doesn’t get even worse,” the CEO said.

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