Capital Market 2008

8/10/2019 Capital Market 2008

1/20

POWER PLANTS UPDATE ,

Wrtsil Capital Markets Day1 Wrtsil


2/20

Agenda

1. Demand drivers

2. Wrtsils competitive advantages

3. New market focus and positioning4. Why is it different this time?



3/20

The demand drivers

Economic develo ment

Growth in Electricity Generationin the World

5%

6% Electricity demand growth and eco-

nomic growth correlate almost 1:1

4%

Industrial sector demand may

decrease

2%

3%

continue to grow unless the

recession becomes long

1%

o a consump on grow may

cease but will hardly become

negative

91 93 95 97 99 01 03 05 07 onstruct on o arge ong- ea

time projects (coal, CCGT,

nuclear) will slow downActual Trend Average



4/20


5/20

Wrtsils competitive advantages

Fuel flexibility

Ability to use available fuels

Competit ive capital cost

Standardized solutions

Ability to use low cost fuels

Ability to convert from one fuel to

Modularity

Professional delivery

Backup fuel capability

Operational flexibili ty

Compliance with all

norms, incl. California

ynam c ea ures Continuous base load

Delivery flexibility

e a y va a y Proven products

O&M services

Scope of supply

Competitive delivery times

Local service

Global service network close to

Sustainable power generation and

high fuel prices demand and favor

24/7 service



6/20

Wrtsils competitive advantages

Global EPC

Wrtsil is the only power plant

High Business Entry Barrier

Prime mover development, 3-5 year

contractor delivering EPC in the

whole developing world

Main enablers

R&D

Modular, standardized power plant

products

Modular pre-fabricated power

plant product. Minimized site work

Global sales and service network

Global experience in project

developing countries 40,000 MW reference base



7/20

Power Plants Mission

We provide superior value to our customers with our

distributed, flexible, efficient and environmentally advanced

energy solutions, which enable a global transition to a more

sustainable and modern energy infrastructure.



8/20

Power Plants repositioning

We take an active role in im rovin the world

through active market development

We focus on products and services, businesses

and ro ects that rovide un uestionableenvironmental benefits, and make economical

sense

We osition ourselves as the active ENABLER of

Renewables (Wind, Solar, Hydro) and

Other sustainable and modern energy

,

Distributed power

Nuclear power safety

Grid stability

Energy security



9/20

New market focus and positioning

Wrtsils has 4 legs with different

customers and industr c cles

1. OIL power plants

2. GAS power plants

3. Renewable power plants

4. OIL & GAS industry applications



10/20

Wrtsils legs

1. HFO ower lants LFO ower lants

2 separate markets:

Islands and remote areas:

Demand steady despite high oil

prices. Mainly stand-by

availability of other practical fuel

options

Reserve capacity constraints in

Europe open a new market

depends more on oil price as

the projects often compete withLBF power plants

Prices for existin LBF have

options

Wrtsils market share

increased and slowed down the

demand

Competition: MAN



11/20

HFO Power lant market

HFO Power Plants / 1-60 MW Engines2008

incl. crude

4000

4500

Wrtsil Recip. Competitors Gas Turbines

Gas

Turbines

5%

Wrtsil

2000

2500

3000

3500

MW

Recip.

Competitors

46%

49%4050MW

500

1000

1500

Gas

Turbines

9%

2007

1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008

Recip.

Competitors

53%

Wrtsil

38%

Market size

1520MWCumulative power plant market since 1996

35000Gas Turbines

Reci . Com etitors

GasTurbines

13%

2006

20000

25000

30000

MW

Wrtsil

Recip.

Competitors

53%

Wrtsil

34%

Market size

3180MW

5000

10000

15000


0

1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008


12/20

LFO Power lant market includin bio-oils

LFO & LBF Power Plants / 3.5-60 MW Engines

2008

1600

1800


Gas

Turbines

21%

Wrtsil

20%

Market size

1000

1200

1400

MW

Recip.

Competitors

1300MW

200

400

600

Gas

Turbines

24%

Wrtsil

24%

2007

0

1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008

14000

Gas Turbines

Recip.

Competitors

52%

Market size

1685MWCumulative power plant market since 1996

8000

10000

12000

MW

Recip. Competitors

Wrtsil

Gas

Wrtsil

23%

2006

2000

4000

6000 Turbines

45%

Recip.

Competitors

Market size

1195MW


0

1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008


13/20

Wrtsils legs

2. GAS ower lants Wind ower rowth o ens u a

2 separate markets

Developing world:

new market for dynamic

resources

Reci rocatin en ines are the

construction expands the

markets to gas power plants

best technology option

Wrtsil position: Strong

Contender .

Distributed power model due

to lack of grid capacity

Competition: Aeroderivate gasturbines

r s pos on very s rong

Competition: GE-Jenbacher,

CAT, gas turbines

based power opens doors for

Nuclear power

Industrialized world

Traditionally industrial CHP

and large CCGTs

ecentra zat on o pea ng

reserve capacity with small gas

power plants



14/20

Recip.

GAS Power Plants / 3.5-60 MW EnginesGAS Power plant market (incl. Dual)

Competitors

4%Wrtsil

8%

16000

18000


Gas

Turbines

Market size

15630MW

8000

10000

12000

14000

MW

88%

20072000

4000

6000

Recip.

Competitors

4%

Wrtsil

12%

140000

Gas Turbines

Cumulative power plant market since 1996

0

1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008

Cumulative power plant market since 1996Gas

Turbines

Market size

10860MW

80000

100000

120000 Recip. Competitors

Wrtsil

Recip.

Competitors5%Wrtsil

8%

2006

20000

40000

60000

M

Gas

Turbines

Market size

10370MW


0

1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008


15/20

Wrtsils legs

3. Renewable power plants

BioPower serves the market within Euro e and other subsidized

regions

R&D for small scale gasification & reciprocating engine based power



16/20

Wrtsils legs

4. OIL & GAS industry applications Industr c cle different from electricit business

High investments on exploration and transportation infra

Wrtsil a niche player in Gas compression in selected markets

Field power applications in South America, Africa, Russia

Selected um in a lications world wide

Expansion opportunities

Product capable to combust crude oil and flare gases directly without on-

s e ue rea men

High efficiency engines with reciprocating compressor enable major

savings in pipeline gas compression compared to traditional gas turbine

cen r uga compressor. ma es a o a y new pro uc s ze

(12000 hp) available for this business



17/20

All fuels, Power Plants / Engines2008

ue s, ower p an mar e - , . - , . -

25000


Recip.

Competitors

Wrtsil

17%

Market size

15000

20000 Gas

Turbines

67%

16%

5000

10000

M

Wrtsil

16%

2007

180000 Gas Turbines

0

1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 Gas

Turbines

69%

Recip.

Competitors

15%

Market size

14065MW

Cumulative power plant market since 1996

120000

140000

160000Recip. Competitors

Wrtsil

Wrtsil15%

2006

40000

60000

80000MW

Gas

Turbines

68%

Recip.

Competitors

17%

Market size

14750MW


0

20000

1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008


18/20

All fuels, Power Plants / Engines

Market share changes, linear average

51.3%

60.1%

51.6%

.

52.0% 51.6%

60.0%

.%

36.6%

44.6% 46.5%

47.4%

40.2%

47.4%44.5%

40.0%

50.0%

16.3%

22.9%

15.0% 16.3% 16.7%20.0%

30.0%

11.3% 11.7% . . .

9.8%7.9%

10.4%

10.0%

.

1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008

Wrtsil share, Recips Wrtsil share, Recips + GT



19/20

Why is it different this time?

Wrtsils has 4 Legs with different customers and industry cycles

OIL

Power Plants

GAS

Power Plants

Renewable

Power Plants

OIL & GAS

Industry

Opportunistic Focused New focus areas

Standardized modular products enable customization Total accessible markets are growing due to

,

wind and nuclear

Mind set change in large (western) utilities

Grid capacity optimization Locate peaking units inside the load pockets

Wind firming requires a new type of dynamic generation segment in the portfolio


ccess o gas n eve op ng coun r es ue o gas n ras ruc ure eve opmen


20/20

Documents

Capital Market 2008