Wärtsilä: Low oil & gas prices still burden the marine industry

TIN news:  According to Wärtsilä ‘s Interim Report, efficiency is expected to partially offset lower volumes in the marine markets. However, Wärtsilä says that will continue to focus on improving efficiency. Although the pricing environment in Energy Solutions’ markets has stabilised, the order book is still impacted by the competitive pressure seen in previous years.

According to the report, during the first quarter of 2017, 145 contracts for new vessels were registered (77). Despite a gradual improvement in freight rates in the conventional merchant markets, overcapacity and low oil and gas prices continue to burden the marine industry. Nevertheless, activity remained on a good level in the cruise segment, thanks to the growing interest in cruise travel in the USA and Asia.

Moreover, contracting developed well also in the ferry and Ro-Ro segments, supported by healthy earnings, ageing fleets, planned regulatory developments, and attractive newbuilding prices.

In terms of compensated gross tonnage, China remained the largest shipbuilding nation in the first quarter with 29% of all confirmed contracts. South Korea’s share was 23% and Italy’s 16%. Low vessel contracting volumes are likely to continue to result in the consolidation of yards in the major shipbuilding countries.

Marine Solutions’ market shares Wärtsilä’s share of the medium-speed main engine market was 45% (51% at the end of the previous quarter). The market share in auxiliary engines increased to 20% (18% at the end of the previous quarter), thanks to Wärtsilä’s focus on this product area. Wärtsilä is also well positioned in other key product and solution areas, such as electrical and automation systems and gas systems.

Summing up the overall demand for Wärtsilä’s services and solutions in 2017 is expected to be relatively unchanged from the previous year. Demand by business area is anticipated to be as follows:

• Solid in Services with growth opportunities in selected regions and segments.
• Good in Energy Solutions (previously solid), thanks to increasing electricity demand in the emerging markets and the global shift towards renewable energy sources, which will support the need for distributed, flexible, gas-fired power generation.
• Soft in Marine Solutions.