1 © Wärtsilä

WÄRTSILÄ CORPORATIONINTERIM REPORT JANUARY-JUNE 2010

OLE JOHANSSON, PRESIDENT & CEO21 JULY 2010

2 © Wärtsilä

Q2/10 Highlights

• Order intake EUR 1,117 million (42%)

• Net sales EUR 1,131 million (-15%)

• Operating result* EUR 117 million (-25%),

10.4% of net sales

• EPS* 0.86 euro (1.06)

• Cash flow from operating activities

EUR 89 million (-95)

* Excluding nonrecurring items

3 © Wärtsilä

Good growth in order intake

0

500

1000

1500

2000

2500

3000

3500

4000

4500

5000

5500

6000

2006 2007 2008 2009 1-6/2010

MEUR

Power Plants Ship Power ServicesOrder intake

0

200

400

600

800

1000

1200

Q2/2009 Q2/2010

42%

70%

215%

2%

Second quarter development

785

MEUR

1 117

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0

1000

2000

3000

4000

5000

6000

7000

8000

2006 2007 2008 2009 30.6.2009 30.6.2010

MEUR

Order book Power Plants Ship Power Services

Order book unchanged compared to the previous quarter

-26%

5 829

-40%

-16%

38%

*)

*) Cancellations amounting to EUR 162 million have been deducted from the order book during the review period.

4 315

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0

1000

2000

3000

4000

5000

Delivery current year Delivery next year +

Order book distribution

30.6.2009 30.6.2010

MEUR

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MEUR

Net sales Power Plants Ship Power Services

Net sales developed as expected

0

500

1000

1500

2000

2500

3000

3500

4000

4500

5000

5500

2006 2007 2008 2009 1-6/2010

Second quarter development

0

200

400

600

800

1000

1200

1400

Q2/2009 Q2/2010

1 333

-15%

-1%

-42%

3%

MEUR

18%

23%

14%

1 131

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Net sales by business 1-6/2010

Ship Power27% (33)

Power Plants31% (32)

Services42% (35)

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0

20

40

60

80

100

120

140

160

180

200

220

Q1 Q2 Q3 Q4

20082006 2007

Good profitability

2009

MEUR

Operating result before nonrecurring items

10.4%

2010

0

5

10

15

20

25

30

-

50

100

150

200

250

300

350

400

450

01.0

504

.05

07.0

510

.05

01.0

604

.06

07.0

610

.06

01.0

704

.07

07.0

710

.07

01.0

804

.08

07.0

810

.08

01.0

904

.09

07.0

910

.09

01.1

004

.10

Mill

ion

DW

T

# of

ves

sels

All vessels MerchantOffshore Cruise and FerrySpecial vessels 3 months moving average in DWT

0

20

40

60

80

100

120

140

01.0

903

.09

05.0

907

.09

09.0

911

.09

01.1

003

.10

05.1

0

# of

ves

sels

Source: Clarkson Research Services

Ship Power market - vessel order developmentContinued recovery in ordering activity

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0

100

200

300

400

500

600

700

800

900

2004 2005 2006 2007 2008 2009 2010

Q2Q1

Ship Power order intake – clear signs of pick-up

MEUR

Q3 Q4

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Ship Power order intake by segment Q2/2010

Offshore57%

Total EUR 213 million (67)

Ship Design3%

Merchant14%

Special vessels11%

Cruise & Ferry8%

Navy 6%

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Wärtsilä37%(35)

Medium-speed main engines

Others37%(31)

MAN Diesel22%(26)

Caterpillar(MAK)4%(8)

MAN Diesel82%(82)

Wärtsilä15%(11)

Mitsubishi3%(7)

Wärtsilä1%(1)

Others99%(99)

Low-speed main engines Auxiliary engines

Wärtsilä’s market shares are calculated on a 12 months rolling basis, numbers in brackets are from the end of the previous quarter. Wärtsilä’s own calculation is based on Marine Market Database.

Ship Power marketMarket position of Wärtsilä’s marine engines

Total market volume last 12 months:5,667 MW (6,206)

Total market volume last 12 months:553 MW (1,138)

Total market volume last 12 months:1,795 MW (2,311)

13 © Wärtsilä

Ship Power order book June 30, 2010All vessel segments represented

Cruise & Ferry8%

Offshore28%

Special vessels8%

Navy 6%

Bulkers11%

Cargo13%

RoRo4%

Tankers8%

Containers7%

LNG7%

Merchant50%

Ship Design1%

Total EUR 2,157 million (3,602)

Order intake

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Power Plants order intake by application

0

200

400

600

800

1000

1200

1400

1600

1800

2000

2006 2007 2008 2009 1-6/2010

MEUR

Oil 100%

0

100

200

300

400

500

Q2/2009 Q2/2010

Second quarter development

Industrial self-generation

Flexible baseload Oil & Gas

Grid stability & peaking

70%

-17%

-74%

2489%

* No orders from Oil & Gasindustry in Q209

MEUR

257

437

*

Order intake by fuel Q2/2010

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0

100

200

300

400

500

600

2004 2005 2006 2007 2008 2009 2010

Q2Q1

Power Plants quarterly order intakeStrongest order intake since mid 2008

MEUR

Q3 Q4

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Europe 118 (320)Asia 659 (0)

Americas 499 (262)

Africa and Middle East 216 (482)

Flexible baseload Industrial self-generation Oil & gasGrid stability & peaking

Order intake 1-6/2010: 1,492 MW (1,064)

Power Plants order intakeAsia strongest region

72

118

494

55

110

6

47164

357

70

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Services – Net sales steady

0

200

400

600

800

1000

1200

1400

1600

1800

2000

2006 2007 2008 2009 1-6/2010

MEUR

Second quarter development

0

100

200

300

400

500

Q2/2009 Q2/2010

469-1%

MEUR0%

22%

18%

463

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Services – Net sales per quarter

MEUR

0

100

200

300

400

500

600

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

Q1 Q2 Q3 Q4

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Services – Net sales distribution 1-6/2010

Spare parts 54%

Field service 24%

Contracts 13%

Projects9%

2%

4%

6%

8%

10%

12%

14%

16%

18%

20%

Nov.08

Jan.09

Mar.09

May.09

Jul.09

Sep.09

Nov.09

Jan.10

Mar.10

May.10

Anchored Idle

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ServicesLevel of laid-up vessels starting to normalise

% o

f Fl

eet

* Anchored (reported navigation status at anchor). Source Bloomberg (AISLive). More than 25 000 vessels (>299 GT) covered.

** Idle (no movement for 19 days for containerships, others 35 days). Source Lloyd’s MIU. Around 15 000 vessels (>299 GT) covered.

* **

MEUR 4-6/10 4-6/09 1-6/10 1-6/09 2009

Cash flow fromoperating activities 89 -95 270 -72 349

Cash flow from investing activities -14 -44 -25 -90 -163

Cash flow from financing activities -3 108 -171 81 -140

Cash and cash equivalents at end of period 331 118 331 118 244

21 © Wärtsilä

Strong cash flow

Net working capital development

206 155212 176

102

267

482

0%

5%

10%

15%

20%

25%

0

200

400

600

800

1000

1200

1400

1600

1800

2000

2003 2004 2005 2006 2007 2008 2009

Working Capital

MEUR

Total Inventories Advances Received Working Capital / Net Sales

All figures relate to the Power Businesses

0

200

400

600

800

1000

1200

1400

1600

1800

314

30 June 2010

7.6%*

* Annualised Working Capital / Net Sales

9.5%

7.0%8.4%

2.7%

5.5% 5.8%

MEUR

9.2%

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23 © Wärtsilä

Committed loans June 30, 2010

0

200

400

600

800

1000

1200

1400

MEUR

Total EUR 678 milliondrawn

555

599

781

Drawn long-term loans

Drawn short-term loans

Undrawn revolving credits

Current portionof long-termloans

At the end of the reporting period, drawn revolving credits amounted to 0 euros. In addition there are Finnish Commercial PaperPrograms of EUR 700 million (uncommitted).

24 © Wärtsilä

Financial position

0

5

10

15

20

25

30

35

40

45

50

2006 2007 2008 2009 30.6.2010

%

Solvency Gearing

-0,10

0,00

0,10

0,20

0,30

0,40

0,50

0,60

0,70

2006 2007 2008 2009 30.6.2010

Restructuring programmes

• Ship Power adjustment program • Reduction of 400-450 jobs• Expected annual savings of EUR 30 million, will take full effect by the end of 2010• Programme proceeding according to plan, majority of savings have materialised

• Reducing manufacturing capacity• Plans to reduce 1,400 jobs globally within the Group during 2010 (570 in the

Netherlands)• Expected annual savings of approx. EUR 80-90 million, with full effect in the first half of

2011• Implementation:

• Closure of Drunen and DTS in Zwolle entering implementation stage. The entire restructuring of the production will be finalised by the end of 2010.

• The W20-generating set production in Vaasa has been moved to China• Various restructuring measures in other locations

• Adjusting staff functions - Programme proceeding according to plan

Initiated 2009

Initiated 2010

25 © Wärtsilä

26 © Wärtsilä

• Ship Power: Ordering volumes will remain at lower levels than during the previous peak years. Competition and price pressure will remain intense. Order intake expected to clearly improve compared to 2009.

• Power Plants: The power generation market recovery is expected to continue in 2010. Order intake estimated to improve in 2010.

• Services: Uncertainty will continue in 2010 with regards to larger service projects. Services development is expected to remain steady. Scrapping of older tonnage and its replacement with new tonnage may impact Services. Power plant installations continue to be run at high operating levels. Increased interest in maintenance partnerships seen.

Market outlook

27 © Wärtsilä

• Net sales expected to decline by 10-20 percent.

• Operational profitability (EBIT% before nonrecurring items) between 9-10%, well within the upper end of our long-term target range.

Prospects for 2010 reiterated

Presentation name / Author

IR Contact:Joséphine MickwitzDirector, Investor Relations Tel. +358 (0)10 7095216E-mail:josephine.mickwitz@wartsila.com