Finland-based technology major Wärtsilä Corporation said that project related challenges and low equipment demand burdened its third quarter of 2019 financials.
The company noted that its order intake plunged by 29% to EUR 979 million from EUR 1.37 billion reported in the same period a year earlier.
Net sales were down by 16% to EUR 1.11 billion, compared to EUR 1.33 billion reported in the third quarter of 2018, while operating result decreased to EUR 39 million from EUR 141 million a year earlier.
In September, Wärtsilä said that its full-year operating result would be impacted by a one-time charge related to project cost overruns in the Marine and Energy Businesses amounting to EUR 150 million. Of the total amount, EUR 84 million was booked in the period January-September and EUR 65 million in the third quarter.
Looking forward, the company noted that the demand for its services and solutions in the coming 12 months is expected to be somewhat below that of the previous 12 months.
Demand by business area is anticipated to be soft in Wärtsilä Marine Business, due to lower vessel contracting volumes and a decline in the demand for scrubber solutions from last year’s exceptionally high level. Activity in the marine services market is expected to be stable.
Wärtsilä’s current order book for 2019 deliveries is EUR 1.7 billion, compared to EUR 1.36 billion from last year, comprised mainly of equipment deliveries. The comparable operating result for the full year 2019 is expected to be EUR 100 million lower than in the previous year when it stood at EUR 577 million.
“The third quarter proved to be challenging for Wärtsilä, both in terms of equipment demand trends and financial performance. The decline in order intake reflected weak vessel contracting and softened demand for scrubber systems, as well as continued slow decision-making in the energy markets,” Jaakko Eskola, President and CEO, said.
Despite the challenges the company faces in the equipment businesses, services related activity remained sound.