Wartsila to cut jobs and vows to stay independent
HELSINKI (Reuters) - Finnish industrial engine maker Wartsila (WRT1V.HE), the target of a failed bid by Britain's Rolls-Royce (RR.L), said it was cutting 1,000 jobs and was strong enough to remain independent despite weak demand and stiff competition.
Wartsila itself was planning acquisitions and had identified a number of targets, Chief Executive Bjorn Rosengren told Reuters, and he hoped some deals would be done this year.
"Wartsila is a strong standalone company. We don't need to go together with any other company to be succesful," he said.
Rosengren declined to say whether talks with Rolls-Royce might start up again but said that Fiskars' (FIS1V.HE) and Investor AB's (INVEb.ST) jointly owned, 22-percent stake would prevent any hostile takeover.
However, customers in power plant markets were pushing back investment decisions and pricing pressures were affecting its vessel contracting business, he said, forcing the 5 percent cut in its workforce in the hope of saving about 60 million euros ($82 million) a year.
"In an environment of slow growth and intense competition, we must take steps to adjust our cost structure accordingly,"
Rosengren said. "Unfortunately redundancies cannot be avoided."
Wartsila shares rose 1 percent on the back of that, having risen about 18 percent on news of the Rolls-Royce talks. They are valued at about 19 times forward earnings, compared to the average multiple of about 17 among Finnish industrial companies.
Sales are expected to grow by as much as 10 percent this year and operating profit margins will be flat at about 11 percent, Wartsila said, roughly in line with analyst forecasts.
Fourth-quarter operating profit, excluding one-off items, rose 7 percent from last year to 201 million euros, missing an average forecast of 215 million, and a proposed dividend of 1.05 euros was 5 cents lower than expected.
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