WÄRTSILÄ CORPORATION INTERIM REPORT JANUARY -...

Wärtsilä Corporation INTERIM REPORT 21 July 2010 at 8.30 local time

STRONG SECOND QUARTER - CLEAR SIGNS OF MARKET RECOVERY

SECOND QUARTER HIGHLIGHTS
- Order intake increased 42% to EUR 1,117 million (785)
- Net sales decreased by 15% to EUR 1,131 million (1,333)
- Operating result decreased to EUR 117 million (155), 10.4% of net sales (11.7)
- Earnings per share amounted to 0.86 euro (1.06)

HIGHLIGHTS OF THE REVIEW PERIOD JANUARY-JUNE 2010
- Order intake EUR 1,998 million (1,743), an increase of 15%
- At the end of the period the order book totalled EUR 4,315 million (5,829),
-26%
- Net sales decreased to EUR 2,052 million (2,574), -20%
- Operating result decreased to EUR 211 million (286), 10.3% of net sales (11.1)
- Earnings per share amounted to 1.53 euro (1.94)
- Cash flow from operating activities EUR 270 million (-72)

All numbers above are shown excluding nonrecurring items. Wärtsilä recognised
EUR 12 million (6) of nonrecurring items related to restructuring measures
during the second quarter and EUR 56 million (6) of nonrecurring items during
the review period January-June 2010.

OLE JOHANSSON, PRESIDENT AND CEO:
"The second quarter of 2010 was strong for Wärtsilä in terms of ordering
activity and it confirms clear signs of improvement in our operating
environment. The recovery in the global economy is reflected in the contracting
activity of the shipping industry where activity has clearly picked up during
this year. The Power Plant markets have continued to be active and we closed
several large contracts during the period. With the Services markets continuing
to be stable, and following through restructuring measures to improve our
efficiency and competitiveness globally, we reiterate our prospects for 2010."


WÄRTSILÄ'S PROSPECTS FOR 2010 REITERATED
Based on the current order book, a stable service business and proper adaptation
of capacity we expect net sales to decline by 10-20 percent in 2010 and our
operational profitability (EBIT% before nonrecurring items) to be between
9-10%, well within the upper end of our long-term target range.


ANALYST AND PRESS CONFERENCE AT 10.45 AM FINNISH TIME
An analyst and press conference will be held today, Wednesday 21 July 2010, at
10.45 a.m. Finnish time (8.45 a.m. UK time), at the Wärtsilä headquarters in
Helsinki, Finland. The conference will be combined with a web- and
teleconference which will be held in English and can be viewed on the internet
at the following address:


http://storm.zoomvisionmamato.com/player/wartsila/objects/bw0j5r2z/

To participate in the teleconference please call: [phone] and enter
the Conference ID: 870359. If you want to ask questions during the
teleconference, press the number 1 on your phone to register for a question and
the # -key to withdraw a question. The event title for the call is: Results Q2
2010. Please be ready to state your details and the name of the conference to
the operator. If problems occur, please press the *-button followed by the
0-button. We would recommend that you would register for the conference in
advance at the address:
https://eventreg2.conferencing.com/webportal3/reg.html?Acc=158744&Conf=202013

An on-demand version of the webcast will be available on the company website
later the same day.

For further information, please contact:

Raimo Lind
Executive Vice President & CFO
Tel: [phone]
[e-mail]
Joséphine Mickwitz
Director, Investor Relations
Tel: [phone]
[e-mail]

For press information, please contact:

Atte Palomäki
Group Vice President, Communications & Branding
Tel: [phone]
[e-mail]



Wärtsilä in brief
Wärtsilä is a global leader in complete lifecycle power solutions for the marine
and energy markets. By emphasising technological innovation and total
efficiency, Wärtsilä maximises the environmental and economic performance of the
vessels and power plants of its customers. In 2009, Wärtsilä's net sales
totalled EUR 5.3 billion with more than 18,000 employees. The company has
operations in 160 locations in 70 countries around the world. Wärtsilä is listed
on the NASDAQ OMX Helsinki, Finland.










WÄRTSILÄ CORPORATION INTERIM REPORT JANUARY - JUNE 2010


SECOND QUARTER 4-6/2010 IN BRIEF

MEUR                   4-6/2010    4-6/2009    Change

Order intake              1 117         785       42%

Net sales                 1 131       1 333      -15%

Operating result            117         155      -25%

% of net sales            10.4%       11.7%

Profit before taxes         109         141

Earnings/share, EUR      0.86        1.06



REVIEW PERIOD JANUARY - JUNE 2010 IN BRIEF

MEUR                                1-6/2010 1-6/2009 Change  2009

Order intake                           1 998    1 743    15% 3 291

Order book 30 June                   4 315*)    5 829   -26% 4 491

Net sales                              2 052    2 574   -20% 5 260

Operating result                         211      286   -26%   638

% of net sales                         10.3%    11.1%        12.1%

Profit before taxes                      158      263          558

Earnings/share, EUR                     1.53     1.94         4.30

Cash flow from operating activities      270      -72          349

Interest-bearing net debt

at the end of the period                 328      759          414

Gross capital expenditure                 36       72          152

*) Cancellations amounting to EUR 162 million have been eliminated from the
order book during the period January-June 2010.

All numbers in the tables above are shown excluding nonrecurring items. Wärtsilä
recognised EUR 12 million (6) of nonrecurring items related to restructuring
measures during the second quarter and EUR 56 million (6) of nonrecurring items
during the review period January-June 2010.

OPERATING ENVIRONMENT AND DEMAND DEVELOPMENT

SHIP POWER

Markets are recovering
During the second quarter, new vessel ordering activity continued to recover
with approximately 100 vessels being ordered per month. This is a clear
improvement compared to 2009 when only some 400 vessels were ordered during the
whole year. Contracting activity has been especially strong in the bulk carrier
segment with competitive new building prices, improved financing availability,
and healthier earnings levels making investments attractive. Last years'
renegotiations and cancellations of vessel orders have left the current vessel
orderbooks at levels where the imbalance between fleet capacity and demand will
be less than earlier expected.

Activity in the offshore segment has continued strong and recovery in the more
specialised tonnage continues.

Ship Power market shares
Wärtsilä's  share of the medium speed  main engine market increased from 35% (at
the  end of the previous quarter) to  37%. The market share in low speed engines
increased  to 15% (11). In the auxiliary engine market Wärtsilä's share remained
at 1% (1). Due to the very low contracting volumes, market shares are still very
sensitive to individual orders.

POWER PLANTS

The Power Plants markets remain solid
The Power Plants market activity continued to be at a good level during the
second quarter of 2010 and several large contracts were closed. The large
projects were mainly flexible power generation plants for utilities and IPP's.
Orders for small industrial captive power plants started to pick up, with the
main orders coming from the textile and cement industries.
SERVICES

Steady service market focusing on savings
In the marine industry, activity is slowly recovering in the major hubs as well
as in the merchant market as vessels are returning to normal operations.
Nevertheless, the pressure to reduce maintenance costs through postponing
overhauls and focusing only on essential repairs remains. The power plant
service market is active and there is an increased interest in efficiency
improvements and the outsourcing of plant operations and management. During the
second quarter, market activity was very strong in the Americas, especially in
Brazil. Demand in Europe showed signs of a pick-up in a challenging market.

ORDER INTAKE

Good growth in order intake

Wärtsilä's order intake for the second quarter totalled EUR 1,117 million (785)
an increase of 42%.

Ordering activity for Ship Power showed clear signs of a pick-up and the order
intake totalled EUR 213 million (67), 215% above the corresponding period last
year. During the quarter, Wärtsilä Ship Power signed a major contract with the
Brazilian industrial group QUIP to supply a total integrated power solution for
a new FPSO (Floating Production Supply and Offloading) vessel. The vessel is
unique in that it will be the first FPSO vessel ever to operate on more than
100 MWe of installed power, produced by gas engines. During the quarter Wärtsilä
Ship Power registered 14% of its orders in the Merchant segment and 57% in the
Offshore segment. Orders from the Navy segment represented 6%, Cruise&Ferry
segment 8%, the Special vessels segment 11% and Ship design 3% of Ship Power's
total order intake. Compared to the first quarter 2010 order intake grew by
136% (EUR 90 million during the first quarter of 2010). For the review period
January-June 2010 Ship Power's order intake was EUR 303 million (194), an
increase of 56% from the corresponding period last year.

The order intake for Power Plants for the second quarter totalled EUR 437
million (257), which was 70% higher than for the corresponding period last year.
During the second quarter, the largest power plant orders were received from
Brazil, the Caribbean and from Bangladesh. Compared to the previous quarter, the
order intake for Power Plants increased by 64% (EUR 267 million in the first
quarter of 2010). The order intake for the review period January-June 2010 was
EUR 704 million (577), which is 22% higher than in 2009.

Order intake for the Services business totalled EUR 465 million (458) in the
second quarter, a growth of 2% compared to the corresponding period 2009. During
the second quarter Wärtsilä Services signed several important Operations &
Management contracts in Brazil and several conversion contracts in Europe.
 Compared to the first quarter, order intake fell 11% (EUR 522 million in the
first quarter of 2010). Services' order intake for the review period
January-June totalled EUR 988 million (965), an increase of 2% over the
corresponding period in 2009.

For the review period January-June 2010 Wärtsilä's total order intake amounted
to EUR 1,998 million (1,743), which represents an increase of 15% compared to
the corresponding period 2009.


ORDER BOOK
At the end of the review period Wärtsilä's total order book stood at EUR 4,315
million (5,829), a decrease of 26%. The Ship Power order book stood at EUR
2,157 million (3,602), -40%. During the review period January-June 2010,
cancellations of EUR 162 million materialised and were deducted from the order
book. As the remaining orders at risk have reached the levels of normal business
and as some of the recent cancellations were renegotiated and converted to new
orders, Wärtsilä will cease reporting the risk and the actual cancellations. At
the end of the review period, the Power Plants order book amounted to EUR 1,438
million (1,705), which is 16% lower than at the corresponding date last year.
The Services order book totalled EUR 720 million (522) at the end of the review
period, an increase of 38%.

Second quarter order intake by business

MEUR                            4-6/2010 4-6/2009 Change

Ship Power                           213       67   215%

Power Plants                         437      257    70%

Services                             465      458     2%

Order intake, total                1 117      785    42%


Order intake Power Plants

MW                        4-6/2010 4-6/2009 Change

Oil                          1 021      426   140%

Gas                             14       51   -72%

Renewable fuels                  0        0



Order intake for the review period by business

MEUR                                   1-6/2010 1-6/2009 Change 1-12/2009

Ship Power                                  303      194    56%       317

Power Plants                                704      577    22%     1 048

Services                                    988      965     2%     1 917

Order intake, total                       1 998    1 743    15%     3 291


Order intake Power Plants

MW                        1-6/2010 1-6/2009 Change 1-12/2009

Oil                          1 100      770    43%     1 172

Gas                            374      294    27%       800

Renewable fuels                 19        0               35


Order book by business

MEUR                   30 June 2010 30 June 2009 Change 31 Dec. 2009

Ship Power                    2 157        3 602   -40%        2 553

Power Plants                  1 438        1 705   -16%        1 362

Services                        720          522    38%          576

Order book, total           4 315*)        5 829   -26%        4 491

*) Cancellations amounting to EUR 162 million have been eliminated from the
order book during the review period January-June 2010.


NET SALES
As expected, Wärtsilä's net sales for the second quarter decreased by 15% to EUR
1,131 million (1,333) compared to the corresponding period last year. Net sales
for Ship Power totalled EUR 276 million (479), a decrease of 42%. Power Plants'
net sales for the second quarter totalled 390 million (379), which is 3% higher
than in the corresponding quarter last year. The second quarter net sales for
Services amounted to EUR 463 million (469), a decrease of 1%.

Wärtsilä's net sales for January-June 2010 fell by 20% and totalled EUR 2,052
million (2,574). Ship Power's net sales decreased by 35% and totalled EUR 554
million (852). Net sales for Power Plants totalled EUR 627 million (810), a
decrease of 23%. Net sales from the Services business decreased 3% from last
year's strong level and amounted to EUR 872 million (902). Ship Power accounted
for 27%, Power Plants for 31% and Services for 42% of the total net sales.

Of Wärtsilä's net sales for January-June 2010 approximately 70% was EUR
denominated, 11% USD denominated with the remainder being split between several
currencies.

Second quarter net sales by business

MEUR                                 4-6/2010 4-6/2009 Change

Ship Power                                276      479   -42%

Power Plants                              390      379     3%

Services                                  463      469    -1%

Net sales, total                        1 131    1 333   -15%



Net sales for the review period by business

MEUR                                1-6/2010 1-6/2009 Change 1-12/2009

Ship Power                               554      852   -35%     1 767

Power Plants                             627      810   -23%     1 645

Services                                 872      902    -3%     1 830

Net sales, total                       2 052    2 574   -20%     5 260


FINANCIAL RESULTS
The second quarter operating result before nonrecurring expenses was EUR 117
million (155), 10.4% of net sales (11.7). For the review period January-June
2010, the operating result before nonrecurring expenses was EUR 211 million
(286), which is 10.3% of net sales (11.1). Including nonrecurring expenses, the
operating result decreased to EUR 155 million or 7.5% of net sales. Wärtsilä
recognised EUR 56 million of nonrecurring expenses related to the restructuring
measures during the first part of the year.

Financial items amounted to EUR 3 million (-16). Net interest totalled EUR -5
million (-10). Dividends received totalled EUR 7 million (5). The deviation in
other financial items is mainly due to gains from exchange rates, which were
negative in the corresponding period of 2009. Profit before taxes amounted to
EUR 158 million (263). Taxes in the reporting period amounted to EUR -45 million
(-73). Earnings per share were 1.10 euro (1.90) and equity per share was 14.75
euro (12.68).

BALANCE SHEET, FINANCING AND CASH FLOW
Wärtsilä's cash flow from operating activities developed favourably amounting to
EUR 270 million (-72) in January-June 2010. Net working capital at the end of
the period totalled EUR 314 million (591). Advances received at the end of the
period totalled EUR 860 million (1,143). Liquid reserves at the end of the
period amounted to EUR 331 million (118).

Wärtsilä had interest bearing loans totalling EUR 678 million at the end of June
2010. The existing funding programmes include long-term loans of EUR 599
million, unutilised Committed Revolving Credit Facilities totalling
EUR 555 million, and Finnish Commercial Paper programmes totalling EUR 700
million. The total amount of short-term debt maturing within the next 12 months
is EUR 79 million.

The solvency ratio was 38.1% (32.7) and gearing was 0.24 (0.61).

HOLDINGS
Wärtsilä owns 7,270,350 B shares in Assa Abloy, or 2.0% of the total. This
holding has been booked in the balance sheet at its market value at the end of
the reporting period, EUR 120 million.

CAPITAL EXPENDITURE
Gross capital expenditure in the review period totalled EUR 36 million (72),
which comprised EUR 4 million (15) in acquisitions and investments in
securities, and EUR 32 million (58) in production and information technology
investments. Depreciation amounted to EUR 58 million (61).

Maintenance capital expenditure for 2010 will be below depreciation. Wärtsilä
continues to pursue its strategy to expand the Services offering and network,
and any acquisition opportunities in this market may affect total capital
expenditure for the year.


STRATEGIC STEPS, ACQUISITIONS AND EXPANSION OF NETWORK
In May, Wärtsilä signed a joint venture agreement with the Russian company
Transmashholding (TMH) to manufacture modern and multipurpose diesel engines in
Russia. The engines, including a new and technically advanced version of the
Wärtsilä 20-engine, will be used in shunter locomotives and for various marine
and power applications. The two companies will jointly engineer the railway
application. Wärtsilä and TMH will also evaluate broadening the activities of
the joint venture to include the development and manufacturing of other diesel
engine models in the future. The value of Wärtsilä's investment in the joint
venture is approximately EUR 30 million and production of the engines is planned
to start in 2012. The closing of the agreement is subject to the relevant
regulatory approvals, which are expected during the coming months.

During the review period, Wärtsilä continued expanding its service network with
the inauguration of a new office and workshop facility in Panama.

RESTRUCTURING PROGRAMMES
In January, Wärtsilä announced plans to adjust its manufacturing footprint to
the fundamental changes in the market. Wärtsilä plans to eliminate approximately
1,400 jobs globally as part of this programme during 2010.
Wärtsilä plans to move the majority of its propeller production and W20
generating set production to China, close to the main marine markets. The
current propeller manufacturing in Drunen, and the component manufacturing DTS
in Zwolle, both in The Netherlands, will be closed. Adjusting the entire
organisation to current market developments means that 570 jobs are to be
reduced in the Netherlands from a total of 1,500. During the second quarter, the
consultation process was concluded and the closure of Drunen and DTS are
entering the implementation stage. The entire production restructuring programme
in the Netherlands will be finalised by the end of 2010. The Wärtsilä 20
generating set production in Vaasa Finland has been moved to China in order to
stay competitive in this market.

Various restructuring measures in other locations have been carried out during
the spring. Temporary lay-offs are currently underway in Finland and Norway. In
France, Wärtsilä plans to close the Mulhouse workshop and reduce the workforce
by 116 jobs. In addition to these, other readjustment programmes are also
ongoing in a number of countries around the world.

With these restructuring measures, Wärtsilä is looking for annual cost savings
of approximately EUR 80-90 million. The effect of the savings will start to
materialise gradually during 2010, and will take full effect in the first half
of 2011. The total nonrecurring costs related to the restructuring will be
approximately EUR 140 million, out of which EUR 40 million non-cash write-offs
were recognised in 2009 and EUR 100 million will be recognised in 2010. During
the review period January-June, EUR 56 million was recognised.

The programme to evaluate all Wärtsilä's global staff functions with the aim of
streamlining processes, decreasing overlaps, and improving the cost efficiency
of Wärtsilä's operations is proceeding according to plan.

The adjustment programme announced in May 2009 to reduce 400-450 jobs in Ship
Power is proceeding according to plan and the majority of the savings have
materialised. The annual savings of EUR 30 million will take full effect by the
end of 2010.

PERSONNEL
Wärtsilä had 17,905 (19,016) employees at the end of June 2010. On average
personnel for January-June 2010 totalled 18,295 (18,910). Ship Power employed
1,010 (1,321) people. The number of personnel in Ship Power has decreased as a
result of the restructuring measures initiated in May 2009. Power Plants
employed 851 (839) people, Services 11,318 (11,316) and manufacturing and R&D
(Wärtsilä Industrial Operations) 4,328 (5,098) people.

Of Wärtsilä's total number of employees, 18% (19) were located in Finland, 8%
(9) in the Netherlands and 31% (32) in the rest of Europe. Personnel employed in
Asia represented 30% (29), out of which 6% (7) were in China, in India 6% (6),
in Singapore 5% (6), and in the rest of the Asia 12% (11).

RESEARCH & DEVELOPMENT
During the second quarter, Wärtsilä's WFC20 fuel cell unit was installed onboard
" the Udine", a car carrier owned by Swedish Wallenius Lines and managed by
Wallenius Marine. This unique power unit is the first of its kind in the world,
and during the test period will provide the vessel with auxiliary power while
producing close to zero emissions.

SUSTAINABLE DEVELOPMENT
Wärtsilä is well positioned to reduce the use of natural resources and
emissions, thanks to its various technologies and specialised services. Wärtsilä
continues to focus on the development of advanced environmental technologies.
During the second quarter Wärtsilä started a joint project, the aim of which is
to develop an innovative compact selective catalytic reduction (SCR) system
especially tailored to operation with 2-stage turbocharging. Wärtsilä also
joined, as a first associated partner, in the World Bank-led Global Gas Flaring
Reduction (GGFR) organisation, which strives to reduce the flaring or burning of
natural gas associated with oil production and thus reduce greenhouse gas
emissions.

During the second quarter Wärtsilä in co-operation with the Baltic Sea Action
Group (BSAG) arranged an environmental conference to seek shipping solutions
that can benefit the seriously polluted Baltic Sea.

SHARES AND SHAREHOLDERS

SHARES ON HELSINKI EXCHANGES
30 June 2010                      Number of    Number of Number of shares traded

                                     shares        votes                1-6/2010
--------------------------------------------------------------------------------
WRT1V                            98 620 565   98 620 565              58 139 484



1 Jan. -30 June 2010                   High          Low   Average 1)      Close
--------------------------------------------------------------------------------
 Share price                          39.99        28.19        35.09      37.47

1) Trade-weighted average price



                                            30 June 2010 30 June 2009
----------------------------------------------------------------------
Market capitalisation, EUR                         3 695        2 262
million

Foreign shareholders                               48.2%        46.1%



DECISIONS TAKEN BY THE ANNUAL GENERAL MEETING
Wärtsilä's Annual General Meeting held on 4 March 2010 approved the financial
statements and discharged the members of the Board of Directors and the
company's President & CEO from liability for the financial year 2009. The
Meeting approved the Board of Directors' proposal to pay a dividend of 1.75 euro
per share. The dividend was paid on 16 March 2010.

The Annual General Meeting decided to change the eighth article of the Articles
of Association so that the publication of the notice for the general meeting
will be no later than three weeks, but at least  nine (9) days before the record
date of the general meeting. The change is due to a change in the Finnish
Limited Liability Companies Act.

The Annual General Meeting decided to change the fourth article of the Articles
of Association so that the maximum number of members of the Board of Directors
was increased to ten, and that the Board of Directors consists of 5-10 members.

The Annual General Meeting decided that the Board of Directors shall have nine
members. The following were elected to the Board: Ms Maarit Aarni-Sirviö, Mr
Kaj-Gustaf Bergh, Mr Alexander Ehrnrooth, Mr Paul Ehrnrooth, Mr Ole Johansson,
Mr Antti Lagerroos, Mr Bertel Langenskiöld, Mr Mikael Lilius and Mr Matti
Vuoria.

The firm of public auditors KPMG Oy Ab was appointed as the company's auditors.

The Annual General Meeting authorised the Board to resolve on donations of EUR
1,500,000 at the maximum to be made to universities during 2010. The primary
recipient of the donations is Aalto University.

Organisation of the Board of Directors
The Board of Directors of Wärtsilä Corporation elected Antti Lagerroos as its
chairman and Matti Vuoria as the deputy chairman. The Board decided to establish
an Audit Committee, a Nomination Committee and a Compensation Committee. The
Board appointed from among its members the following members to the Committees:

Audit Committee:
Chairman Antti Lagerroos, Maarit Aarni-Sirviö, Alexander Ehrnrooth, Bertel
Langenskiöld

Nomination Committee:
Chairman Antti Lagerroos, Kaj-Gustaf Bergh, Paul Ehrnrooth, Matti Vuoria

Compensation Committee:
Chairman Antti Lagerroos, Bertel Langenskiöld, Mikael Lilius, Matti Vuoria

RISKS AND BUSINESS UNCERTAINTIES
Wärtsilä expects that its business environment will continue to improve in
2010. If the recovery in the global economy is interrupted by a new downturn, it
might affect new projects under negotiation.

Although the risks have decreased substantially, the main risks within Ship
Power remain the slippage of shipyard delivery schedules, as well as the risk of
cancellation of existing orders.

In the Power Plant business, the consequences from the financial crisis can
still be seen in the timing of bigger projects.

In Services, the biggest risk continues to be the uncertainty in the marine
markets.

The annual report for 2009 contains a thorough description of Wärtsilä's risks
and risk management.

MARKET OUTLOOK
In the marine industry, attractive new building prices, healthy earnings levels,
and a more balanced vessel orderbook have led to a pick-up in market activity in
all main vessel segments and this development is expected to continue throughout
the year. For Wärtsilä, the most interesting developments are in specialised
tonnage and in the offshore area.

Even though markets have bottomed out, the prevailing conditions will maintain
ordering volumes at lower levels than during the previous peak years.
Competition and price pressure among shipbuilding suppliers will remain intense.
Wärtsilä expects Ship Power's order intake to clearly improve compared to 2009.
The  power  generation  market  recovery  is  expected  to continue in 2010. The
recovery  will happen at a varying pace  in different regions and countries. The
emerging  markets are anticipated to be in the forefront of the recovery and the
Flexible  baseload and Grid stability & peaking segments are expected to pick-up
first.  Western Europe  and the  USA are  not expected  to recover during 2010.
Wärtsilä estimates its Power Plants' order intake to improve in 2010.

Uncertainty will continue in 2010 with regards to larger service projects, as
many customers are still adapting to the consequences of the economic crisis.
Services development is expected to remain steady. Though the size of the active
fleet remains stable, the scrapping of older tonnage and its replacement with
new tonnage, which is still under warranty and has lower maintenance needs, may
impact Services. Power plant installations continue to be run at high operating
levels. Environmental compliance and economic considerations have been the main
drivers of this business, and will remain so in the foreseeable future. Wärtsilä
is continuously developing its portfolio in these areas. Customers are
increasingly looking for remote management and optimisation of their assets, as
this allows them to simultaneously reduce both their costs and environmental
footprint. Wärtsilä also sees an increased interest in maintenance partnerships,
which reduce the fixed costs for our marine, offshore and power plant customers.

WÄRTSILÄ'S PROSPECTS FOR 2010 REITERATED
Based on the current order book, a stable service business and proper adaptation
of capacity we expect net sales to decline by 10-20 percent in 2010 and our
operational profitability (EBIT% before nonrecurring items) to be between
9-10%, well within the upper end of our long-term target range.

WÄRTSILÄ INTERIM REPORT JANUARY - JUNE 2010
This interim financial report is prepared in accordance with IAS 34 (Interim
Financial Reporting) using the same accounting policies and methods of
computation as in the annual financial statements for 2009. All figures in the
accounts have been rounded and consequently the sum of individual figures can
deviate from the presented sum figure.

Use of estimates
The preparation of the financial statements in accordance with IFRS requires
management to make estimates and assumptions that affect the valuation of the
reported assets and liabilities and other information, such as contingent
liabilities and the recognition of income and expenses in the income statement.
Although the estimates are based on the management's best knowledge of current
events and actions, actual results may differ from the estimates.

Of the amended International Financial Reporting Standards (IFRS) and
interpretations mandatory as of 1 January 2010 the following are applicable on
the Group reporting:
  * Revised IFRS 3 Business Combinations
  * Amendment to IAS 27 Consolidated and Separate Financial Statements
  * Amendment to IAS 39 Financial Instruments: Recognition and Measurement:
    Eligible Hedged Items
  * IFRIC 18 Transfers of Assets from Customers

   -    Amendments to IFRIC 9 Reassessment of Embedded Derivatives and IAS 39
Financial Instruments: Recognition and Measurement - Embedded Derivatives
The adaption of the revised standards and interpretations does not have any
material effect on the interim report.


This interim report is unaudited.

CONDENSED INCOME STATEMENT

MEUR                                                   1-6/2010  1-6/2009   2009
--------------------------------------------------------------------------------
Net sales                                                 2 052     2 574  5 260

Other income                                                 18        19     50

Expenses                                                 -1 859    -2 254 -4 559

Depreciation and impairment                                 -58       -61   -165

Share of profit of associates and joint ventures              1         2      6

Operating result                                            155       280    592

Financial income and expenses                                 3       -16    -34

Profit before taxes                                         158       263    558

Income taxes                                                -45       -73   -161
--------------------------------------------------------------------------------
Profit for the financial period                             114       190    396
--------------------------------------------------------------------------------


Attributable to:

Owners of the parent                                        109       187    389

Non-controlling interest                                      5         3      8
--------------------------------------------------------------------------------
Total                                                       114       190    396
--------------------------------------------------------------------------------




Earnings per share attributable to equity holders of the parent company:
--------------------------------------------------------------------------------
Earnings per share, EUR (basic and diluted)                1.10      1.90   3.94
--------------------------------------------------------------------------------




STATEMENT OF COMPREHENSIVE INCOME

Profit for the financial period                             114       190    396

Other comprehensive income after tax:

Exchange differences on translating foreign
operations                                                   22         5     18

Investments available for sale                               17        10     34

Cash flow hedges                                            -14        12     20

Share of other comprehensive income of associates and joint ventures           1
--------------------------------------------------------------------------------
Other comprehensive income for the period                    24        28     73


--------------------------------------------------------------------------------
Total comprehensive income for the period                   138       219    469
--------------------------------------------------------------------------------


Total comprehensive income attributable to:

Owners of the parent                                        131       214    460

Non-controlling interest                                      7         5      9
--------------------------------------------------------------------------------
                                                            138       219    469


CONDENSED BALANCE SHEET

MEUR                                      30 June 2010 30 June 2009 31 Dec. 2009
--------------------------------------------------------------------------------
Non-current assets

Intangible assets                                  787          801          779

Property, plant and equipment                      461          462          457

Equity in associates and joint ventures             62           48           56

Investments available for sale                     179          118          151

Deferred tax receivables                            95           80           88

Other receivables                                   30           25           15
--------------------------------------------------------------------------------
                                                 1 614        1 536        1 548

Current assets

Inventories                                      1 590        1 823        1 577

Other receivables                                1 202        1 522        1 287

Cash and cash equivalents                          331          118          244
--------------------------------------------------------------------------------
                                                 3 122        3 463        3 108


--------------------------------------------------------------------------------
Assets                                           4 737        4 998        4 655
--------------------------------------------------------------------------------






Shareholders' equity

Share capital                                      336          336          336

Other shareholders' equity                       1 118          915        1 160
--------------------------------------------------------------------------------
Total equity attributable to equity
holders of the parent                            1 454        1 251        1 496



Minority interest                                   21           12           16
--------------------------------------------------------------------------------
Total shareholders' equity                       1 476        1 262        1 512



Non-current liabilities

Interest-bearing debt                              599          682          591

Deferred tax liabilities                            95           86           93

Other liabilities                                  211          281          258
--------------------------------------------------------------------------------
                                                   905        1 049          941

Current liabilities

Interest-bearing debt                               79          208           73

Other liabilities                                2 277        2 479        2 129
--------------------------------------------------------------------------------
                                                 2 356        2 687        2 202



Total liabilities                                3 261        3 736        3 143


--------------------------------------------------------------------------------
Shareholders' equity and liabilities             4 737        4 998        4 655
--------------------------------------------------------------------------------

CONDENSED CASH FLOW STATEMENT

MEUR                                                     1-6/2010  1-6/2009 2009
--------------------------------------------------------------------------------
Cash flow from operating activities:

Profit before taxes                                           158       263  558

Depreciation and impairment                                    58        61  165

Financial income and expenses                                  -3        16   34

Selling profit and loss of fixed assets and other
adjustments                                                     4        -6   -7

Share of profit of associates and joint ventures               -1        -2   -6

Changes in working capital                                    238      -305 -179
--------------------------------------------------------------------------------
Cash flow from operating activities before financial
items and taxes                                               453        28  564

Net financial items and income taxes                         -184      -100 -215
--------------------------------------------------------------------------------
Cash flow from operating activities                           270       -72  349
--------------------------------------------------------------------------------


Cash flow from investing activities:

Investments in shares and acquisitions                         -4       -15  -16

Net investments in tangible and intangible assets             -31       -58 -133

Proceeds from sale of shares                                            -20  -21

Cash flow from other investing activities                      10         3    7
--------------------------------------------------------------------------------
Cash flow from investing activities                           -25       -90 -163
--------------------------------------------------------------------------------


Cash flow from financing activities:

New long-term loans                                            26       239  263

Amortization and other changes in long-term loans             -27           -106

Changes in short term loans and other financing
activities                                                      6        -2 -141

Dividends paid                                               -175      -156 -156
--------------------------------------------------------------------------------
Cash flow from financing activities                          -171        81 -140
--------------------------------------------------------------------------------

--------------------------------------------------------------------------------
Change in cash and cash equivalents, increase (+) /
decrease (-)                                                   74       -80   47
--------------------------------------------------------------------------------



--------------------------------------------------------------------------------
Cash and cash equivalents at beginning of period              244       197  197

Exchange rate changes                                          12         1

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

STATEMENT OF CHANGES IN
SHAREHOLDERS' EQUITY

                Total equity attributable to equity holders of
MEUR            the parent                                       Minority  Total

                                                                 interest equity
--------------------------------------------------------------------------------
                                                 Fair

                          Share                 value

                  Share   issue Translation and other   Retained

                capital premium differences  reserves   earnings
--------------------------------------------------------------------------------
Shareholders'
equity on 1
January 2010        336      61          -6        99      1 006       16  1 512

Dividends                                                   -173       -2   -175

Total
comprehensive
income for the
period                                   19         3        109        7    138
--------------------------------------------------------------------------------
Shareholders'
equity on 30
June 2010           336      61          13       102        942       21  1 476
--------------------------------------------------------------------------------

--------------------------------------------------------------------------------
Shareholders'
equity on 1
January 2009        336      61         -27        50        764       15  1 199

Dividends                                                   -148       -8   -156

Total
comprehensive
income for the
period                                    9        18        187        5    219
--------------------------------------------------------------------------------
Shareholders'
equity on 30
June 2009           336      61         -18        68        803       12  1 262
--------------------------------------------------------------------------------

Geographical distribution of net sales Europe Asia Americas Other Group

MEUR
-----------------------------------------------------------------------
Net sales 1-6/2010                        578  739      473   262 2 052

Net sales 1-6/2009                        792  947      537   298 2 574
-----------------------------------------------------------------------

INTANGIBLE ASSETS AND PROPERTY, PLANT & EQUIPMENT

MEUR                                        1-6/2010  1-6/2009 2009
-------------------------------------------------------------------
Intangible assets

Book value at 1 January                          779       793  793

Changes in exchange rates                         21        14   26

Acquisitions                                                12   12

Additions                                          7         8   24

Depreciation and impairment                      -21       -29  -62

Disposals and intra-balance sheet transfer                   2  -14
-------------------------------------------------------------------
Book value at end of period                      787       801  779
-------------------------------------------------------------------


Property, plant and equipment

Book value at 1 January                          457       446  446

Changes in exchange rates                         18         1    3

Acquisitions                                                 1    1

Additions                                         25        49  112

Companies sold                                             -32

Depreciation and impairment                      -37           -103

Disposals and intra-balance sheet transfer        -2        -3   -2
-------------------------------------------------------------------
Book value at end of period                      461       462  457
-------------------------------------------------------------------

GROSS CAPITAL EXPENDITURE

MEUR                                                 1-6/2010  1-6/2009 2009
----------------------------------------------------------------------------
Investments in securities and acquisitions                  4        15   16

Intangible assets and property, plant and equipment        32        58  136
----------------------------------------------------------------------------
Group                                                      36        72  152
----------------------------------------------------------------------------

Wärtsilä centralises warehousing and logistics of spare parts by investing in a
new distribution centre in the Netherlands. The investments to the new
distribution centre amounted to EUR 8 million during the review period and
commitments related to the investment were EUR 27 million at the end of the
review period.

INTEREST-BEARING LOAN CAPITAL

MEUR                          30 June 2010 30 June 2009 31 Dec. 2009
--------------------------------------------------------------------
Long-term liabilities                  599          682          591

Current liabilities                     79          208           73

Loan receivables                       -20          -14           -6

Cash and bank balances                -331         -118         -244
--------------------------------------------------------------------
Net                                    328          759          414
--------------------------------------------------------------------

FINANCIAL RATIOS                             1-6/2010  1-6/2009  2009
---------------------------------------------------------------------
Earnings per share, EUR (basic and diluted)      1.10      1.90  3.94

Equity per share, EUR                           14.75     12.68 15.17

Solvency ratio, %                                38.1      32.7  40.0

Gearing                                          0.24      0.61  0.28
---------------------------------------------------------------------

PERSONNEL

                  1-6/2010  1-6/2009   2009
-------------------------------------------
On average          18 295    18 910 18 830

At end of period    17 905    19 016 18 541
-------------------------------------------

CONTINGENT LIABILITIES

MEUR                                  30 June 2010 30 June 2009 31 Dec. 2009
----------------------------------------------------------------------------
Mortgages                                       56           56           56

Chattel mortgages                               18           10           10
----------------------------------------------------------------------------
Total                                           74           66           66
----------------------------------------------------------------------------


Guarantees and contingent liabilities

on behalf of Group companies                   681          647          678

on behalf of associated companies                9                         8

Nominal amount of rents according

to leasing contracts                            79           67           77
----------------------------------------------------------------------------
Total                                          770          714          763
----------------------------------------------------------------------------

NOMINAL VALUES OF DERIVATIVE INSTRUMENTS

MEUR                               Total amount of which closed
---------------------------------------------------------------
Interest rate swaps                          20

Foreign exchange forward contracts        1 422             429

Currency options, purchased                  40               7

Currency options, written                     7               7
---------------------------------------------------------------

CONDENSED INCOME STATEMENT,
QUARTERLY

MEUR                 4-6/2010     1-3/2010 10-12/2009 7-9/2009 4-6/2009 1-3/2009
--------------------------------------------------------------------------------
Net sales               1 131          922      1 519    1 167    1 333    1 241

Other income               11            7         11       20       13        5

Expenses               -1 007         -851     -1 280   -1 026   -1 167   -1 087

Depreciation and
impairment                -28          -30        -73      -31      -30      -30

Share of profit of
associates and joint
ventures                                 2          1        3        1        1

Operating result          105           49        179      133      149      130

Financial income and
expenses                    4                      -9       -9       -9       -7

Profit before taxes       109           49        170      125      141      123

Income taxes              -31          -14        -51      -38      -39      -34
--------------------------------------------------------------------------------
Profit for the
financial period           79           35        119       87      102       89
--------------------------------------------------------------------------------


Attributable to:

Owners of the parent       76           32        115       86      100       87

Non-controlling
interest                    3            2          4        1        2        1
--------------------------------------------------------------------------------
Total                      79           35        119       87      102       89
--------------------------------------------------------------------------------


Earnings per share attributable to equity
holders of the parent company:
--------------------------------------------------------------------------------
Earnings per share,
EUR                      0.77         0.33       1.17     0.87     1.01     0.89
--------------------------------------------------------------------------------

CALCULATION OF FINANCIAL RATIOS



Earnings per share (EPS)

Profit for the period attributable to equity holders of the parent
company
-------------------------------------------------------------------------
Adjusted number of shares over the
period



Equity per share

Equity attributable to equity holders of the parent company
-------------------------------------------------------------------------
Adjusted number of shares at the end of the period



Solvency ratio

Shareholders' equity
-------------------------------------------------------------------------x 100
Balance sheet total - advances received



Gearing

Interest-bearing liabilities - cash and bank balances
-------------------------------------------------------------------------
Shareholders' equity


20 July 2010
Wärtsilä Corporation
Board of Directors



[HUG#1433061]





    Interim Report Q2/2010: 

http://hugin.info/131481/R/1433061/379022.pdf



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Source: Wärtsilä Oyj Abp via Thomson Reuters ONE