Wärtsilä aims to be the leader in complete lifecycle power solutions for the global marine markets and selected energy markets worldwide. We see growth opportunities in gas power plants as part of our Smart Power Generation concept, as well as in gas-fuelled engines and related systems for the marine market. We also seek growth in environmental solutions, including scrubbers and ballast water treatment systems. Our strengths are our technological leadership, an integrated product and service offering, our close and long-standing customer relationships, and our unparalleled global presence. Our production and supply chain management serves both our end markets, and we constantly seek ways to maintain cost efficiency and high quality – often in co-operation with leading industrial partners in our key growth markets. Our R&D provides another source of synergies, allowing us to stay at the forefront of technology and innovation in our industry.

We are determined to capture growth opportunities within our end markets, while maintaining a solid profitability.

Strategic projects, acquisitions, joint ventures and expansion of the network in 2011

In November 2011, Wärtsilä inaugurated its new spare parts distribution centre in Kampen, the Netherlands. The Central Distribution Centre integrates eight previously localised spare parts warehouses into one global supply chain operation. It covers the entire material flow, from order confirmation until the point of delivery at the customer’s doorstep. The new centre will shorten transportation distances, reduce spare parts traffic between warehouses, and improve management of the entire supply chain. Wärtsilä’s total investment in the new distribution centre has been approximately EUR 70 million. Wärtsilä is currently optimising the operations of the distribution centre.

In June, Wärtsilä and Jiangsu CuiXing Marine Offshore Engineering Co. Ltd. agreed to establish a joint venture for the manufacturing of Wärtsilä 26 and Wärtsilä 32 medium-speed marine engines in China. The set up of the joint venture is proceeding according to plan.

In July, Wärtsilä acquired Cedervall, one of the leading manufacturers of shaft seal and bearing systems for the marine industry. This acquisition strengthens Wärtsilä’s leading position in the global service market, in line with its strategy. The combination of Wärtsilä’s and Cedervall’s businesses will create market leadership in oil and water lubricated seals and bearings and sterntubes. The total preliminary consideration of the transaction is EUR 81 million.

During the review period, Wärtsilä continued to expand its Services network. A new workshop was inaugurated in Gdansk, Poland during the second quarter. During the third quarter, a new workshop facility was opened in Helsinki, Finland.

On 22 November 2011, Wärtsilä announced that it had reached agreement with the Board of Hamworthy in regards to a recommended cash offer for the acquisition of Hamworthy, a global provider of specialist equipment and services to the marine, oil & gas and industrial sectors. Under the terms of the acquisition Hamworthy shareholders will receive 825 pence in cash for each Hamworthy share. Hamworthy is listed on the London Stock Exchange’s Alternative Investment Market. The acquisition will be effected by means of a Scheme of Arrangement under English law. On 9 January 2012, all the resolutions proposed received the strong support of Scheme Shareholders at both the Court Meeting and General Meeting of Hamworthy plc. The Court sanctioned the Scheme on 26 January 2012. Subject to the Court hearing confirming the associated Reduction of Capital on 30 January 2012, the Scheme is expected to become effective and the control transferred to Wärtsilä on 31 January 2012.

Long-term financial targets

Our target is to grow faster than global GDP. Our operating profit margin (EBIT%) target is 14% at the peak of the cycle. Even at the trough of the cycle, our target is to keep the operating profit margin above 10%. Our target is to maintain gearing below 50%. Our target is to pay a dividend equivalent to 50% of earnings.

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