Wartsila Oyj Abp · OMXHEX:WRT1V
Wartsila Oyj Abp — Wärtsilä — Investor Day (2007)
23 slides from Wartsila Oyj Abp's investor day presentation, 2007
Slide 1: Wärtsilä as an investment case
Wärtsilä as an investment case RAIMO LIND, EXECUTIVE VICE PRESIDENT AND CFO 1 © Wärtsilä
Slide 2: Themes for discussion
Themes for discussion Guidance 2008 Conversion of order book to sales Growth Growth over the cycle Acquisitions as a growth vehicle Profitability over the cycle Profitability From operating profit to ROI Guidance 2008 Working capital drivers Cash flows Breakdown of cash flows Maintenance vs. growth
Slide 3: Wärtsilä's prospects
Wärtsilä’s prospects Prospects for 2007 unchanged • Based on the strong order book, Wärtsilä’s net sales are expected to grow this year by around 15%. Profitability will exceed 9% Prospects for 2008 • In 2008 Wärtsilä’s net sales will grow about 25%, profitability will improve • Investments in capac
Slide 4: Order book to sales 2007 and beyond
Order book to sales 2007 and beyond Order book 3000 EUR million 2500 2000 1500 1000 500 0 2007 2008 2009 and beyond Note: Based on order book end of Q3/2007 4 © Wärtsilä
Slide 5: Financial targets set in 2001
Financial targets set in 2001 • The average growth target for corporate annual sales is 6–7%. • The growth target of the Ship Power and Power Plants businesses is 4%, and for the Services business 10–15%. • Operating profit target (EBIT) is 8% of net sales over the cycle. • Dividend target 50% of op
Slide 6: Growth over the cycle
Growth over the cycle Sales New Acquisitions Growth % (incl. acquisitions) Sales EUR millions Sales growth 4000 40% 3500 35% 3000 CAGR = 30% 6,8%* 27% 2500 25% 2000 21% 20% 1500 15% 15% 13% 1000 10% 7% 500 5% 3% 3% 0 0% -3% -500 -5% -5% -7% -1000 -10% 1997 1998 1999 2000 2001 2002 2003 2004 2005 200
Slide 7: Growth over the cycle
Growth over the cycle Sales New Acquisitions Growth % (incl. acquisitions) Sales EUR millions Sales growth 5000 40% 35% 4000 CAGR = 30% 8,4%* 27% 25% 3000 21% 20% 2000 15% 15% 13% 10% 1000 7% 5% 3% 3% 0% 0 -3% -5% -5% -7% -1000 -10% 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007E 2008E • His
Slide 8: Added capabilities
Acquisitions build global capabilities Added capabilities Development to date of selected acquisitions (2001 – 2007) Automation and electrical Reconditioning Sales Product / Propulsion services (Eur m)* service category <10 Reconditioning 10-30 Automation and electrical 30-100 Propulsion services En
Slide 9: Acquisitions 2002–2006 – A catalyst for growth
Acquisitions 2002–2006 – A catalyst for growth Sales Growth of acquisitions (cumul.) New acquisitions (cumul.) 800 EUR millions 700 600 500 400 300 200 100 0 2002 2003 2004 2005 2006 2007E Organic growth of acquisitions has averaged 22% per annum, Wärtsilä overall (excl. acquisitions) 8% Note: Inclu
Slide 10: Themes for discussion
Themes for discussion Guidance 2008 Conversion of order book to sales Growth Growth over the cycle Acquisitions as a growth vehicle Profitability over the cycle Profitability From operating profit to ROI Guidance 2008 Working capital drivers Cash flows Breakdown of cash flows Maintenance vs. growth
Slide 11: Revised profitability target over the cycle
Revised profitability target over the cycle SALES Operating profit 6 000 12% EUR millions EBIT % Elements of a more robust 5 000 10% business model: • Business mix more stable • Offering in all businesses 4 000 8% broadened • Services’ share of sales increased 3 000 6% • Global presence increased •
Slide 12: Power Business – EBIT and ROI development
Power Business – EBIT and ROI development EBIT EUR millions ROI / EBIT % 400 40% 350 35% 300 30% 250 25% 200 20% 150 15% 100 10% 50 5% 0 0% 2005 2006* 2007E EBIT ROI EBIT % * 2006 ROI has been corrected by eliminating the net income from ‘Assets available for sale’ and ‘Share of profit of associates
Slide 13: Themes for discussion
Themes for discussion Guidance 2008 Conversion of order book to sales Growth Growth over the cycle Acquisitions as a growth vehicle Profitability over the cycle Profitability From operating profit to ROI Guidance 2008 Working capital drivers Cash flows Breakdown of cash flows Maintenance vs. growth
Slide 14: Investment CAPEX analysis
Investment CAPEX analysis Acquisitions Other shares Investments in growth / process development Investments in maintenance Investments % of sales (no acq. & shares) Depreciation Investments and depreciations EUR millions Investments % of sales 450 9% 400 8% 350 7% 300 6% 250 5% 200 4% 150 3% 100 2%
Slide 15: Power Businesses – Working capital
Power Businesses – Working capital 1200 30% EUR millions 1000 25% 800 20% 600 15% 9,5% 400 8,4% 10% 7,0% 5,5% 206 212 155 176 200 3,0% 5% 111 0 0% 2003 2004 2005 2006 Q3/2007 Working Capital Total Inventories Advances Received Working Capital / Net Sales 15 © Wärtsilä
Slide 16: Power Businesses – Working Capital
Power Businesses – Working Capital 1400 70% EUR millions % 1200 60% 1000 50% 42,1% 40,4% 800 36,9% 40% 34,9% 30,9% 600 26,6% 30% 24,2% 20,9% 400 24,0% 24,0% 20% 206 212 8,4% 155 176 200 5,5% 10% 111 9,5% 3,0% 7,0% 0 0% 2003 2004 2005 2006 Q3/2007 Working Capital Accounts Receivable - Trade Accounts
Slide 17: Work in progress and Advances received
Work in progress and Advances received Wärtsilä Power Businesses 2004 - 2007 EUR millions 1000 921 900 800 700 600 572 500 421 400 371 316 300 237 214 192 200 100 0 31.12.2004 31.12.2005 31.12.2006 30.9.2007 WIP Advances Received 17 © Wärtsilä
Slide 18: Net sales, Currency distribution
Net sales, Currency distribution Wärtsilä Group 3 500 EUR millions 3 000 2 500 2 000 1 500 1 000 500 0 31.12.06 30.09.2007 EURO SGD SAR USD CHF Other NO GBP 18 © Wärtsilä
Slide 19: Hedges for major currencies
Hedges for major currencies Hedges per 30.9.2007 for major currencies Estimate Sales Orderbook Net loans Equity hedging 800 EUR millions 700 600 500 400 300 200 100 0 USD NOK CHF 19 © Wärtsilä
Slide 20: Themes for discussion
Themes for discussion Guidance 2008 Conversion of order book to sales Growth Growth over the cycle Acquisitions as a growth vehicle Profitability over the cycle Profitability From operating profit to ROI Guidance 2008 Working capital drivers Cash flows Breakdown of cash flows Maintenance vs. growth
Slide 21: Strong balance sheet gives us room to maneuver
Strong balance sheet gives us room to maneuver • Wärtsilä has a strong balance sheet • Capex requirements of the business are moderate and continued organic growth can easily be funded out of cash flows • A growth strategy driven by synergistic mid-sized acquisitions is possible to execute during th
Slide 22: Dividends
Dividends Dividend/share Dividend yield 3,5 16,0 EUR 3 14,0 12,0 2,5 10,0 2 8,0 1,5 6,0 1 4,0 0,5 2,0 0 0,0 2002 2003 2004 2005 2006 2002 2003 2004 2005 2006 22 © Wärtsilä
Slide 23: Wärtsilä has been an excellent investment
Wärtsilä has been an excellent investment Total Return Reinv Divs Security Price (EUR) 100 EUR 75 50 25 0 29/11/02 31/06/03 31/03/04 30/11/04 29/06/05 31/03/06 30/11/06 31/06/07 Source: Bloomberg 23 © Wärtsilä