Wärtsilä Marine Engine

Wärtsilä Comes Clean: Finnish Ship Engine Manufacturer Admits Manipulation of Fuel Consumption Tests

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March 7, 2016

File photo: Wärtsilä

ReutersBy Jussi Rosendahl and Tuomas Forsell

HELSINKI, March 7 (Reuters) – Finnish engineering company Wartsila said workers at one of its businesses in Italy had manipulated a small number of fuel consumption tests for its ship engines before they were delivered to customers.

“This is a hit to our brand and reputation,” Chief Executive Jaakko Eskola told a conference call, apologising for the actions.

A ‘couple of hundreds’ of engines had been affected by manipulated tests over several years at the Wartsila Delivery Centre Trieste in northeast Italy, he added, playing down the potential financial impact.

Wartsila’s statement is the latest evidence of increased scrutiny of practices in the transport sector after carmaker Volkswagen admitted to manipulating emission tests for diesel vehicles last year.

It also comes after fellow Finnish company Nokian Tyres last month admitted it had supplied special high quality tyres for tests by motoring journalists, leading to stronger test scores that helped to garner good publicity.

Shares in Wartsila fell 1.8 percent by 1130 GMT after the company said its internal audit revealed that 2 percent of its ship engine deliveries may have been affected by the manipulations, and the deviations in the readings were on average 1 percent of fuel consumption.

The company declined to specify the timeframe, or comment on possible disciplinary action relating to the wrongdoing.

The company estimated that the customer impact of the deviations would be marginal. Juha Kinnunen, analyst at Inderes Equity Research, however said that some customers were likely to feel aggrieved.

“For shipping customers fuel costs are a major operating expense, and a critical element in all engines deals,” he said, adding however that he believed the issue should not have a significant impact on Wartsila.

Wartsila, which also makes power plants and has a large service business, said it had found no deviations in its other operations. Last year, ship engine sales represented 12 percent of the company’s total revenue. (Editing by Keith Weir)

(c) Copyright Thomson Reuters 2016.


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