Wärtsilä Danmark A/S

Ledelsesberetning

Financial highlights DKK'000 2023 2022 2021 2020 2019 Key figures Gross profit 119 552 102 864 101 662 98 890 82 291 Ordinary operating profit 38 003 28 256 26 804 24 056 13 088 Profit/loss from financial income and Expenses -136 -354 -657 -975 -475 Profit before tax 37 867 27 902 26 148 23 081 12 613 Profit for the year 29 032 21 713 20 776 21 261 12 185 Non-current assets 7 264 6 720 6 897 8 614 10 658 Investment in property, plant and equipment 4 048 3 172 1 621 2 363 13 408 Current assets 124 348 116 088 168 266 135 597 132 648 Total assets 131 612 122 808 175 163 144 211 143 306 Share capital 500 500 500 500 500 Equity 51 469 42 437 41 724 39 948 30 687 Provisions 1 227 1 836 1 934 1 404 73 Current liabilities other than provision 75 918 76 878 128 768 98 143 103 620 Return on invested capital 30,6% 19,4% 17,2% 17,3% 10,0% Current ratio 163,8% 151,0% 130,7% 138,2% 125,4% Solvency ratio 39,1% 34,6% 23,8% 27,7% 21,4% Return on equity 61,8% 51,6% 50,9% 60,2% 41,9% Average number of full-time employees 74 69 73 78 77 The financial ratios stated in the survey of financial highlights have been calculated as follows: Return on invested Capital Operation profit/loss x 100 Average invested capital Current ratio Current assets x 100 Current liabilities Solvency ratio Equity at year end x 100 Total equity and liabilities at year end Return on equity Profit/loss for the year x 100 Average equity Principal activities of the Company Wärtsilä Corporation Wärtsilä is a global leader in complete lifecycle power solutions for the marine and energy markets. By emphasising technological innovation and total efficiency, Wärtsilä maximizes the environmental and economic performance of vessels and power plant across the world. In 2023, Wärtsilä’s net sales totalled EUR 6,015 million. The Company employs 17,800 people at operations around the world. The Wärtsilä Corporation is headquartered in Helsinki, Finland and is listed on the NASDAQ OMX Helsinki, Finland. The Wärtsilä Group's main activities include Marine and Energy. Wärtsilä delivers turnkey engine room solutions as well as shafts, propellers, and control systems for both commercial vessels in the merchant fleet as well as for offshore units, including both mobile and stationary units. The Wärtsilä Group delivers power plant for decentralised energy production, which includes both electricity as well as heating depending on customer demand. The Wärtsilä facilities are able to produce within a range from a few hundred kW up to several hundred mW, either as turnkey projects or component delivery of natural gas, diesel oil, heavy oil or a mixture thereof as fuel. Wartsila Danmark A/S The main activities of Wärtsilä Danmark A/S, owned by Wärtsilä Corporation, are sales and service of a comprehensive portfolio of products and solutions for the maritime industry, the offshore industry, and the power plant market. Field Service activities are performed on-site, either by field service engineers employed by Wärtsilä Danmark A/S or by other global Wärtsilä service entities. Wärtsilä Danmark A/S makes use of the global Wärtsilä network of workshop and competence centres for machining, re-conditioning, calibration and programming jobs when required as part of specific service jobs. Wärtsilä Danmark A/S takes advantage of modern and well-functioning inventory of spare parts available 24/7 via the global consolidation and logistic centres, ensuring prompt delivery of spare parts globally. Wärtsilä Danmark A/S' head office is located at Kystvejen 100 in Nørresundby with approximately 58 employees and an office located in Copenhagen with 16 employees, bringing the total number of employees to 74. Wärtsilä Lyngsø Marine A/S located in Hørsholm and Wärtsilä Danmark A/S are separate companies. Development in activities and financial position The operating result in 2023 (EBIT) was DKK 38,003 thousand compared to DKK 28,256 thousand in 2022. This reflects the activities in 2023 where the service business increased to a high level and decarbonization related activities grew significantly. 2023 has been a significant year in many ways. The result for 2023 exceeded our expectations. We expected an increase of 5% but the increase was 34%. High order intake in 2022 led to a higher sales volume in 2023. The company managed to utilize the workforce in an efficient way, leading EBIT to a significantly higher level than previous years. At the same time, continuous improvements and savings led to good earnings. The Board of Directors believe that the Company's positive result shows strong evidence of the going concern assumption. The total balance sheet is DKK 131,612 thousand, with equity of DKK 51,469 thousand corresponding to a solvency ratio of 39,1%. Wärtsilä Danmark A/S has enough liquidity to conduct its activities and operations based on the 2024 budget. Outlook for 2024 Wärtsilä Danmark A/S is anticipating continuing the stable high service level, at the same time the extraordinary decarbonization activity will continue at a high level. We generally observe a high level of activity in the markets we operate in for new buildings, retrofits, and maintenance activity. We notice a growing positive demand from our customers for decarbonisation solutions to comply with the new legislation and increase the efficiency to save fuel. The orderbook by the end of 2023 shows a significant drop compared to 2022 with only 30% of the value. This is due to losing one of the biggest customers in the service segment. However, earnings are expected to be back to 2022 level, as 2023 was a unique year for the whole corporation. Consequently we expect a decrease in result of 25% compared to 2023. The war in Ukraine remains with little effect on Wärtsilä Danmark A/S’ direct business. Likewise, the conflict between Israel and Palestine, and the implications for shipping in the red sea and Panama, seems to have little effect on Wärtsilä Danmark A/S’ direct business. The indirect effects of higher costs and supply chain difficulties have so far had a minor impact on the business. Events after the balance sheet date No events occurred after balance sheet date. Financial risks The activities of Wärtsilä Danmark A/S involve the use of financial instruments for trade receivables and payables both in Danish kroner and foreign currencies as well as balances with group entities, credit institutions and banks. It is company policy not to engage actively in speculation in financial risks. Wärtsilä Danmark A/S financial management solely aims at managing financial risks already assumed. Currency risks Wärtsilä Danmark A/S occasionally hedges currency risks while taking projected future cash flows into consideration. Any hedging is made via forward exchange contracts. Currency transactions are not entered into for speculative purposes. No hedges were used for 2023. International sales activities are primarily settled in DKK, EUR and USD. Suppliers are primarily paid in DKK, EUR and USD. Foreign exchange fluctuations are deemed not to significantly affect Wärtsilä Danmark A/S' results. Credit risks Wärtsilä Danmark A/S strives to limit credit risks by means of effective credit management or credit insurance or alternative collateral, when deemed necessary. As part of Group agreement, the Company has transferred receivables to factoring company. IT risks Wärtsilä Danmark A/S is to comply with the IT policy of Wärtsilä Group. The interrelationship to Wärtsilä Group in relation to SAP, email, internet and intranet is run via a closed network. Wärtsilä Danmark A/S is thcertified in Cyber Essentials by IASME Consortium Ltd on the 11 of December 2023. Environment Wärtsilä Danmark A/S has maintained its certifications at Det Norske Veritas (DNV Managing Risk) according to DS/EN ISO 14001 (environment) as well DS/EN ISO 45001 (working environment). Intellectual capital and organisation Employees and their insight as well as knowledge are important resources to Wärtsilä Danmark A/S. Committed and qualified employees are vital to the further development of Wärtsilä Danmark A/S. Consequently, development, education and empowerment are given a high priority. Wärtsilä Danmark A/S constantly strives to attract and retain current and new employees. Regardless of gender, background, religion, nationality or disability, all employees in Wärtsilä Danmark A/S have the same rights and possibilities. The Company promotes freedom from discrimination based on race, ethnic or national origin, colour, gender, family status, sexual orientation, creed, disability, age or political beliefs, or other characteristics protected by law. Wärtsilä Danmark A/S fosters equal opportunities and employees are selected and treated on the basis of their abilities and merits. The Company continues to employ fair employment practices, and these are in the essence of Wärtsilä's code of conduct. Recruitment & resourcing policies and practices support the actions that encourage the hiring of more females in senior and technical roles. Quality Wärtsilä Danmark A/S has maintained its certifications at Det Norske Veritas (DNV Managing Risk) to DS/EN ISO 9001 (quality).