July 17, 2020 / 11:02 AM / 21 days ago

Finland's Wartsila sees challenging H2, shares drop

FILE PHOTO: Wartsila CEO Jaakko Eskola speaks during the press conference in Helsinki, Finland January 30, 2019. Lehtikuva / Vesa Moilanen via REUTERS

(Reuters) - Finland’s Wartsila (WRT1V.HE) sees the second half of the year as ‘extremely challenging’, its chief executive said on Friday, after the engineering firm reported smaller-than-feared 51% drop in April-June profits.

The ship technology and power plants maker said the effects of the pandemic on its 2020 numbers would be material and CEO Jaakko Eskola told analyst call he saw a tough second half of the year ahead, sending the shares 3% lower.

Like-for-like operating profit for April-June fell to 55 million euros ($62.6 million), but still beat the 44.6 million analysts had expected in a Refinitiv poll.

“The decline in demand was especially strong in the cruise industry, as travel bans and other mitigation measures have kept most passenger vessels idle for the past few months,” Eskola said in a statement.

Wartsila’s order intake fell 27% from a year ago to 1.0 billion euros, while revenues held at last year’s level at 1.22 billion as the firm delivered orders placed before the pandemic.

Analysts had forecast revenues to fall to 976 million euros.

“Overall, the report was slightly positive in terms of numbers, but market uncertainty remains high,” Inderes analyst Erkki Vesola said in a note.

The company said it has focused on receivables collection, with cashflow from operating activities increasing to 293 million euros from 2 million negative a year before.

Reporting by Tarmo Virki in Tallinn; Editing by Toby Chopra

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