Ship tech firm Wartsila misses earnings expectations; eyes Rolls-Royce unit
Finnish ship technology and power plant maker Wartsila missed first-quarter earnings expectations on Tuesday and said geopolitical uncertainty was slowing demand in the marine market.
In a phone interview following the quarterly report, Chief Executive Jaakko Eskola said Wartsila aimed to grow through acquisitions and that it continued to look at Rolls-Royce’s (RR.L) marine business, which the British company is reviewing for a possible sale.
Wartsila said the marine sector, which has been hit by overcapacity and lack of financing, was recovering, but not at the pace the company had anticipated.
“We are seeing that this geopolitical uncertainty impacts customers’ decision-making … merchant and offshore segments’ activity is not growing as we had thought,” Eskola said.
“It is a concern. Talks about trade war … they create uncertainty and make customers consider purchases a little longer.”
First-quarter earnings before interest, taxes and amortisation (EBITA) rose 9 percent to 98 million euros ($120 million), but fell short of the 118 million euros expected by analysts in a Reuters poll.
“Wartsila’s profitability was a disappointment … we had also anticipated an improvement in their (marine) outlook,” said Inderes analyst Erkki Vesola, who has a “reduce” rating on the stock.
Eskola, however, said Wartsila was well-positioned for future growth and would look for further deals after announcing last month a plan to acquire navigation company Transas for 210 million euros.
Asked about Rolls Royce’s loss-making marine business, he said: “We will investigate all possible acquisition cases if they would support our strategy. Rolls-Royce Marine is of course very close to our strategy.”
Rolls-Royce Marine last year had sales of 1.1 billion pounds ($1.5 billion). Wartsila generated revenue of 1.3 billion euros at its Marine Solutions unit, but made roughly the same amount of service sales from ship customers.
Source: Reuters (Reporting by Jussi Rosendahl; Editing by Louise Heavens and Mark Potter)