Page 8: of Maritime Reporter Magazine (December 2011)

Wärtsilä, a leading global provider of power solutions for ships and power plants, is a global market leader in some of its segments. On the maritime side, the group has over the years expanded from its core products, that of producingmedium- and low-speed engines, into a provider of a wide portfolio of related products, such as propellers, waterjet propulsion, shaft seals, gears, automa-tion, ship design, scrubbers and ballastwater treatment systems, to mention some. This has taken place through the acquisition of key companies in these sectors, and through own development work. Production is increasingly built up in Asia. The lifecycle of the products is empha- sized by the group, and services have be- come a major part of its business. Research and Development are key ele- ments of operations, providing solutions to meet the continuous need for increasedefficiency and for decreased environ- mental footprint, and to develop new products. The growing LNG segment, the use of liquefied natural gas as engine fuel, is gaining much focus, and much work is also directed at bio-fuels and on fuel-cell power. Maritime Reporter met with Mr. Rosengren a few weeks after he had pre- sented the third quarter results of his new employer, the Wärtsilä Group, at the headquarters in Helsinki, Finland. "Sum-marizing the third quarter results I thinkthey were quite good considering how the surrounding world looks like today, with all the question marks that are out there.The strong cards were that we still seegood growth in order intake, which is im- portant, and we also see good profitabil- ity, in relation to our sales. The basis feels right," Mr. Rosengren reflects. The year to date for Wärtsilä's Ship Power and Power Plants businesses have shown good order intake, relatively speaking, already matching that of 2009,and expected to beat the figures of 2010, some EUR4b. The sales figures are down year on year by four percent on grouplevel, but profitability remains a high eleven percent. Particularly positive de- velopment has been seen in the Power Plants segment, a more even develop- ment in Services, but not so in Ship Power, which Rosengren also points out. "There are sectors with bigger challengesand one of them is of course the maritimesector, not the least because many shipowners today have difficulties with their profitability. Overcapacity and low freight rates result in the need to save in costs as much as possible, in investments and in costs in general. This is seen partly in our Services sector but also in the new- building orderbooks at the shipyards." At the Q3 presentation Mr. Rosengren had shown a graph of the development of global contracting activity within the maritime sector, reminding the analysts in the audience of the gloomy prevailing conditions, with the ship contracting vol- umes of 2010 and 2011, so far, only a third or a fourth of the boom levels a few years back. For the third quarter, the curves were pointing further down, par- ticularly in deadweight tons if not in thenumber of vessels. "There are segments which perform better. One has been off- shore and another is the LNG sector," Rosengren points out. Both of these areas are strong for Wärt- silä, which has offset the effects of the current tough times "so far relatively well," as Rosengren puts it. For the first time Wärtsilä also reported numbers from their joint ventures in en- gine manufacturing, and the reason for this was clear. "The order intake from the joint venture side was this quarter roughly the same size as that of our ShipPower operations. This is a result of our strategy which has now started to show results," Rosengren notes. Wärtsilä has a 50/50-owned joint venture for the manu- facturing of dual-fuel engines for LNG carriers, with Hyundai Heavy Industries in South Korea. "44 of these ships were order during the third quarter, which is fantastic, and in this quarter we have al- ready received engine orders for 16 of these vessels. Our market share in these engines is nearly 90 percent, so I believe we will receive some more engine orders for these vessels in the coming quarters." Wärtsilä also operates a joint venture in Shanghai, Wärtsilä Qiyao Diesel Com- pany, which focuses on auxiliary engine manufacturing. The total order intake from these joint ventures in the third quarter was EUR182m, nearly as much as that of Ship Power. The company's activities in China also include production of low-speed engines, through a 27% share in a joint venture with China Shipbuilding Industry Corpo- ration (50%) and Mitsubishi (23%). Also thrusters and propellers are produced inChina. The company is currently build- ing up a new joint venture in Nantong for the assembly of the Wärtsilä 32 and Wärtsilä 26 types of medium-speed ma-rine engines, for the Chinese market. "This is very important for us. We talk about our 32 engine, which is our crown jewel. We set up this joint venture to strengthen our market shares in China," Rosengren points out. The partners of Wärtsilä are the local community Nantong, the State, and a pri-vate investor. Wärtsilä provides the en- gine know-how and is also to build an industrial park around the plant, to pro-vide the possibility for key suppliers to start manufacturing locally. INTERVIEWBjörn Rosengren President and CEO, Wärtsilä Corporation Wärtsilä - Global Growth Through Ever Stronger Presence in Asia Björn Rosengren was appointed President and CEO at Wärtsilä Cor- poration, as from September 1 this year. In a recent interview he told Maritime Reporter his views on the current business environment, the markets and about tasks ahead. By Henrik Segercrantz8Maritime Reporter & Engineering News MR Dec.11 # 1 (1-9):MR Template 12/6/2011 4:54 PM Page 8