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This is the market outlook from the Financial Statement Bulletin 2007 that was published on February 5th, 2008
The strongly growing fleet has for a longer period of time already, suggested a weakening flow of new vessel orders. Despite the expectations of normalised demand, activity in the shipping and shipbuilding markets continued to be very high until the end of the year. During the autumn the sentiment in the market has become more cautious and slightly softened freight rates have also had an impact. The US credit crisis has tightened the financial market and also impacted the attractiveness of new investments, although it should be noticed that ship owners have operated on very profitable markets for a long period of time and are therefore not directly dependent on the credit market for funding new investments. Even though ordering levels seem to have normalised during the last month of 2007 it is still too early to judge whether this is an indication of a start of a more stable period or if the market is temporarily catching its breath. For Wärtsilä Ship Power ordering activity remains on a good level and a stable order flow is expected to continue for at least the next quarter. During the latter part of the spring some slow down in ordering activity might be seen.
The main drivers for continued growth in the power plant market remain world economic growth as well as the need to increase efficiency and versatility in power generation due to high fuel prices. Other drivers for the power plant market demand are environmental concerns and fuel availability issues. Flexible baseload as well as industrial self-generation are forecasted to remain active market segments throughout the Middle East, Africa and the Americas. Power Plants sees continued growth potential in the grid stability services market in North Americas as well as other developed countries. It is foreseen that the liquid bio-fuel market will remain active in Central Europe. The growth economies Brazil, Russia, India and China offer interesting market potential for Wärtsilä. Wärtsilä’s power plant solutions are ideally suited for today’s markets which require high efficiency and operational flexibility as well as environmental sustainability. For Wärtsilä Power Plants continued high ordering activity is expected in all segments during at least the first half of 2008.
Due to the long order book Wärtsilä has time to react to potential fluctuations in the market. This is supported by the flexible manufacturing model and the solid growth in the Services business. The Services business will continue to constitute a considerable share of Wärtsilä’s net sales.
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