Wärtsilä warns of order cancellations

Finnish marine engine maker Wärtsilä has reported ?51m ($68m) in engine cancellations from its ship power division during the first quarter 2009, and said a further ?1bn of orders could be axed.

The Helsinki-listed company reported net sales growth of 46% to ?1.2bn and operating profit up 60% to ?130m for the first three months of the year. The strong quarter came from its existing order book, land-based power sales and its growing services division.

Chief executive Ole Johansson said that while the first quarter figures were strong, with all businesses developing favourably, cancellations and postponements were due to the continued rebalancing of tonnage by shipowners, which began last autumn.

Overall order intake for the group dropped by 51% over the quarter to ?958m. In the ship power division orders dropped 83% to ?127m, compared with a high of ?758m seen in the first quarter of 2008.

The company also expects to see owners continue with scrapping and laying up redundant tonnage. Within the company’s marine services division, the reduction in tonnage capacity has led to some reduction in maintenance volumes and demand for spare parts, although it reported that the impact has so far been limited. Nevertheless, the orderbook for the group as a whole remained strong and the company expected to see up to 20% growth in net sales for 2009.