Wartsila Oyj Abp · OMXHEX:WRT1V
Wartsila Oyj Abp — Wärtsilä — Investor Day (June 2006)
20 slides from Wartsila Oyj Abp's investor day presentation, Jun 16, 2006
Slide 1: Strategy in the light of numbers
Strategy in the light of numbers Executive Vice President, CFO Raimo Lind Capital Markets Day, 16 June 2006 Wärtsilä’s Capital Markets Day 2006
Slide 2: Current EBIT level provides a strong ROI
Current EBIT level provides a strong ROI Wärtsilä Power businesses: EBIT % versus 2005 ROI 20,0% 16,0% 2005A EBIT 8,0% -> 2005A ROI 18,9% Wärtsilä could satisfy a 12,0% ROI > cost of capital criteria ROI at a significantly lower EBIT 8,0% Cost of capital 4,0% 0,0% 0% 2% 4% 6% 8% 10% EBIT % Source: W
Slide 3: Sales growth is developing well
Sales growth is developing well Wärtsilä Power businesses: 2000-06 sales development Power businesses (Eur 000) 3 500 2000-06 E 1996-06 E CAGR CAGR Power businesses 4,8% 8,4% 3 000 +20% +13% 2 520 2 500 2 288 2 320 2 174 2 156 2 225 2 000 1 500 1 000 500 2000 2001 2002 2003 2004 2005 2006 E 2007 Sou
Slide 4: Good growth record from M&A
Good growth record from M&A Acquired sales 2000 – 2006 EUR millions 450 CAGR = 9.9% Acquired sa les 400 Budge t 2006 350 300 250 380 MEUR of sales Additional growth 200 180 MEUR CAGR 150 = 9.6% CAGR 100 = 16% 50 0 Propulsors Engine service Automation* * Includes Total Automation Wärtsilä’s Capital M
Slide 5: Strong operating cash flow
Strong operating cash flow Cash flow In % versus from operating group sales activities (Eur 000) (Eur 000) 250 10,0% 220 209 192 200 8,0% 150 6,0% Average MEUR 130 or 5.2% of sales 100 4,0% 76 55 50 2,0% 28 0 0,0% 2000 2001 2002 2003 2004 2005 Cash flow from operating activities in % versus group sa
Slide 6: Working capital at a low level
Working capital at a low level Wärtsilä working capital as of December 2005 Ship Power Power Plants Service Inventory ++ + +++ Total: + + + MEUR 639 Working Accounts ++ ++ +++ capital Receivables Total: TOTAL: MEUR 876 + + + MEUR 199 or 7.5% of Accounts --- --- -- 2005 sales Payable1 Total: MEUR 128
Slide 7: Maintenance capital expenditure reasonable
Maintenance capital expenditure reasonable Wärtsilä Power businesses: Gross capital expenditure / depreciation 2001-2006E 2001 2002 2003 2004 2005 2006E Gross capital expenditure 57 59 51 56 76 90 Gross capital expenditure Depriciation Depreciation 64 68 59 57 67 74 Gross Grosscapital capitalexpendi
Slide 8: Solvency could be at a lower level
Solvency could be at a lower level Current EBIT level provides a strong ROI Sales growth is developing well + Reported Q1/06 gearing at 0,41 (or Good growth record from M&A 0,10 if all shares sold) at respective values Strong operating cash flow booked in Q1/06 Working capital at a low level Mainten
Slide 9: Investment grade rating at 35% solvency (I)
Investment grade rating at 35% solvency (I) Wärtsilä figures versus Standard & Poor’s credit rating bands = Wärtsilä As reported (Q106) AA Wärtsilä with a A BBB solvency of 41,9% BB (Q106, last 12m) B Probable investment CCC grade rating EBIT IC(x) EBITDA IC Op. Inc. % Debt / Net Debt / Total Sales
Slide 10: Investment grade rating at 35% solvency (II)
Investment grade rating at 35% solvency (II) Wärtsilä figures versus Moody’s credit rating bands Wärtsilä with a Wärtsilä with a solvency of 41,9% solvency of 35,0% (Q106, last 12m) (Q106, last 12m adjusted1) Financial policy, liquidity and capital structure: Gross debt / Book capital (Cash & market
Slide 11: Funding in place (I)
Funding in place (I) Loan portfolio as of 31 December 2005: Average interest rate 3.0% Average maturity Short-term loans (average <1 year) MEUR 141 Long-term loans (average 4.25 years) MEUR 263 Committed credit lines (average 4.7 years) MEUR 385 (all undrawn) Interest rate hedges Amount MEUR 210 Ave
Slide 12: Funding in place (II)
Funding in place (II) Wärtsilä’s Capital Markets Day 2006 12
Slide 13: Tax assets unused
Tax assets unused Total not recognized tax assets amount to MEUR 71.8 as of December 2005 of which MEUR 25.5 was realised during Q1 2006 Run rate for income taxes is between 26 and 30% on the group level Wärtsilä’s Capital Markets Day 2006 13
Slide 14: USD currency exposure limited
USD currency exposure limited Impact of changes in USD/Eur fx rate rather limited Short-term Wärtsilä invoiced sales in 2005 a) impact hedged Others 10% Long-term GBP 2% a) 5% decrease in the USD/Eur fx rate translates INR 2% CHF 2% into a 1% long-term decrease in sales Nordics 5% b) indirect impact
Slide 15: Comprehensive approach to risks
Comprehensive approach to risks EXTERNAL INTERNAL Financial Strategic risks risks Hazard Operational risks risks Wärtsilä’s Capital Markets Day 2006 15
Slide 16: Capital distribution & acquisitions
Capital distribution & acquisitions NOTE: Only theoretical scenario for discussion purposes only Excess cash MEUR 240 at 35% solvency Capital distribution Acquisitions Assumptions: - MEUR 240 used for acquisitions - Purchase price (EV) = 8x 2005A EBIT - Target EBIT = 10% EBIT Dividends Assumptions:
Slide 17: Sales growth will continue in 2007
Sales growth will continue in 2007 Wärtsilä Power businesses: 2000-07E sales development Power businesses (Eur 000) 3 500 +10-15% 3 000 +20% +13% 2 520 2 500 2 288 2 320 2 174 2 156 2 225 2 000 1 500 1 000 500 2000 2001 2002 2003 2004 2005 2006 E 2007 E Source: Wärtsilä Wärtsilä’s Capital Markets Da
Slide 18: 2007 outlook
2007 outlook Based on current order book, project pipeline and outlook for the service business; we foresee 10-15% growth in net sales Capacity increase, available mid 2007, makes further growth possible in 2008 Wärtsilä’s Capital Markets Day 2006 18
Slide 19: We target an average EBIT of 8% over the business cycle
We target an average EBIT of 8% over the business cycle Power businesses reported EBIT 2000-05 EBIT / sales Eur m The following structural improvements have 9,0% 300,0 8,0% 8,0% an impact on the level of the EBIT % from Structural 250,0 7,0% improvements 2004 onwards 5,7% 6,0% 200,0 Restructuring im
Slide 20: Thank you!
Thank you! Wärtsilä’s Capital Markets Day 2006 20