Wartsila Projects 2016 Profit Growth

Posted by Joseph Keefe January 27, 2016

Finnish industrial engine maker Wartsila reported higher quarterly earnings on Wednesday and forecast improved margins this year, hoping growth in services would offset sluggish demand for ship technology.

The company said it expected 2016 sales to be at worst unchanged to five percent higher and that adjusted operating margins would be in the range of 12.5-13.0 percent, up from a margin of 12.2 percent in 2015.

Chief Executive Jaakko Eskola said while low crude prices continued to curb demand for new offshore drilling vessels the outlook was brighter for the company's services and power plant businesses.

"On the power plant side, we are seeing good activity in the United States, Mexico and Africa," Eskola, who became CEO in November, told Reuters.

On the marine side, he said demand from cruise ships and ferries looked positive amid a recovery in Europe and increased interest for cruises in Asia.

"Offshore is totally down. Containers were okay last year but this year they will be more challenging. In some segments, like bulk carriers, nothing is happening, the oversupply is huge," he said.

Eskola also said the company was on the look out for acquisitions.

Wartsila's fourth-quarter adjusted operating profit rose 10 percent from a year ago to 215 million euros ($233 million), below the average analyst forecast of 225 million euros in a Reuters poll.

The company proposed a dividend of 1.20 euros per share for 2015, up from 1.15 euros a year earlier.

Shares in the company rose 1.4 percent by 1111 GMT.

Last year, 43 percent of Wartsila's sales came from services, 34 percent was generated by its marine division and about 24 percent came from its energy business.