Wärtsilä Minor model adjustments
We have updated our estimates, owing to restated 2019 figures based on the new reporting structure including the Portfolio business, which was previously comprised by Marine and Energy (EUR236m in sales and close to breakeven in 2019). We do not consider these changes to be material, and we have not changed our HOLD or EUR7 target price. Minor estimate changes. We have made only marginal group order, sales and earnings estimate changes relating to the new reporting structure announced on 25 March. On 31 March, Wartsila announced that Covid-19 would have a material impact on 2020 sales and earnings, starting in March. It withdrew its 2020 market outlook (soft for Marine and Energy), and targets EUR100m in temporary cost savings through various measures to minimise the negative impact on its operations. Q1 results due at 07:30 CET on 21 April. We expect Q1 clean EBIT of EUR74m, down from EUR105m in Q1 2019. We expect sales to fall by c9% YOY, with a decline of 12% for Equipment and 7% for Service. We expect order intake of EUR1,139m, down 20% YOY. Detailed consensus estimates are not yet available. An investor briefing is due to be held at 09:00 CET on 21 April, and participation can be registered at /registration/6094129.Wartsila provides lifecycle power solutions for the marine and energy markets. Co.'s operations can be divided into three segments: Power Plants, in which Co. is a supplier of flexible baseload power plants of up to 600 MW operating on various gaseous and liquid fuels; Ship Power, in which Co. is a provider of products and integrated solutions such as medium-speed diesel and gas engines, low-speed engines, propulsion systems and gears, and seals and bearings; as well as Services, in which Co. supports its customers throughout the life cycle of their installations and provides services including spare parts to operational and maintenance service for both the energy and marine markets.
DNB Markets is the investment banking arm of DNB Bank ASA and is focused primarily on the Nordic region, as well as internationally on niches such as global shipping, energy and related services, and seafood. DNB Markets offers services in FICC, Equities and Investment Banking advisory from offices in Oslo, Stockholm, London, Singapore and New York. Equity research coverage is offered on c250 Nordic companies. DNB was ranked no.2 in Extel Nordic Research 2017. The DNB Markets’ Credit and FICC Macro & FX Research teams are repeatedly highly rated by Prospera Nordic Institutional Investor Surveys.
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