WÄRTSILÄ CORPORATION INTERIM REPORT JANUARY -...

Wärtsilä Corporation INTERIM REPORT 20 October 2010 at 8.30 local time

POSITIVE DEVELOPMENTS CONTINUED - STRONG QUARTER AT ALL LEVELS

THIRD QUARTER HIGHLIGHTS
- Order intake EUR 1,004 million (725), +38%
- Net sales EUR 1,039 million (1,167), -11%
- Operating result EUR 117 million (133), 11.2% of net sales (11.4)
- Earnings per share amounted to 0.83 euro (0.87)

HIGHLIGHTS OF THE REVIEW PERIOD JANUARY-SEPTEMBER 2010
- Order intake EUR 3,002 million (2,468), +22%
- At the end of the period the order book totalled EUR 4,243 million (5,351),
-21%
- Net sales EUR 3,091 million (3,741), -17%
- Operating result EUR 328 million (419), 10.6% of net sales (11.2)
- Earnings per share amounted to 2.36 euro (2.82)
- All time high cash flow from operating activities EUR 491 million (142)

All numbers above are shown excluding nonrecurring items. Wärtsilä recognised
EUR 2 million of nonrecurring items related to restructuring measures during the
third quarter and a selling profit of EUR 32 million from the divestment of its
Sampo Group holding. Wärtsilä recognised EUR 59 million (6) of nonrecurring
restructuring items during the review period January-September 2010.

OLE JOHANSSON, PRESIDENT AND CEO:
"The third quarter was strong for Wärtsilä at all levels, as net sales developed
according to plan, profitability was strong, and cash flow from operating
activities was at an all time high level. As a result of this positive
development we now expect our profitability to exceed 10% for the year 2010. The
improvements in Wärtsilä's market environment that started in the second quarter
have continued, and we expect the order intake for the full year to clearly
exceed last year's levels. Despite this, structural changes in the market,
intense competition and price pressure support our restructuring and efficiency
improvement measures which will ensure our competitiveness also in the future."


WÄRTSILÄ'S PROSPECTS FOR 2010 IMPROVED
Based on the current order book and a stable service business we expect net
sales to decline by approximately 15 percent in 2010 and our operational
profitability (EBIT% before nonrecurring items) to be better than earlier
expected and to exceed 10%.



ANALYST AND PRESS CONFERENCE AT 10.45 AM FINNISH TIME
An analyst and press conference will be held today, Wednesday 20 October 2010,
at 10.45 a.m. Finnish time (8.45 a.m. UK time), at the Wärtsilä headquarters in
Helsinki, Finland. The combined web- and teleconference will be held in English
and can be viewed on the internet at the following address:


http://storm.zoomvisionmamato.com/player/wartsila/objects/69c5tpfv/

To participate in the teleconference please call: [phone] and enter
the Conference ID: 877660. If you want to ask questions during the
teleconference, press the *-button followed by the 1-button on your phone to
register for a question and the # -key to withdraw a question. The event title
for the call is: Quarter 3 Results. 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 register for the
conference in advance at the following address:
https://eventreg2.conferencing.com/webportal3/reg.html?Acc=158744&Conf=202787

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 - SEPTEMBER 2010


THIRD QUARTER 7-9/2010 IN BRIEF

MEUR                   7-9/2010    7-9/2009    Change

Order intake              1 004         725       38%

Net sales                 1 039       1 167      -11%

Operating result            117         133      -13%

% of net sales            11.2%       11.4%

Profit before taxes         140         125

Earnings/share, EUR        0.83        0.87



REVIEW PERIOD JANUARY - SEPTEMBER 2010 IN BRIEF

MEUR                                1-9/2010 1-9/2009 Change  2009

Order intake                           3 002    2 468    22% 3 291

Order book at the end of the period    4 243    5 351   -21% 4 491

Net sales                              3 091    3 741   -17% 5 260

Operating result                         328      419   -22%   638

% of net sales                         10.6%    11.2%        12.1%

Profit before taxes                      298      388          558

Earnings/share, EUR                     2.36     2.82         4.30

Cash flow from operating activities      491      142          349

Interest-bearing net debt

at the end of the period                  91      575          414

Gross capital expenditure                 54       98          152


Operating result and EPS in the above tables are shown excluding nonrecurring
items.  Wärtsilä recognised EUR 2 million of nonrecurring items related to
restructuring measures during the third quarter and a selling profit of EUR 32
million from the divestment of its Sampo Group holding. Wärtsilä recognised EUR
59 million (6) of nonrecurring restructuring items during the review period
January-September 2010.


OPERATING ENVIRONMENT AND DEMAND DEVELOPMENT

SHIP POWER

Market recovery continues
During the third quarter, new vessel ordering activity continued to recover with
more than 100 vessels being ordered per month. By the end of the third quarter,
1,150 vessels have been ordered which is notably more than for the full year
2009. Contracting activity continued to be good in the bulk carrier segment,
supported mainly by Chinese ship owners. Backed by the recovery in trade volumes
and attractive new building prices a pick-up was seen in the container vessel
segment and this development is expected to continue.  Some LNG vessel contracts
were signed during the quarter after a long silent period.
Activity in the offshore segment continued to be strong, and recovery in the
more specialised tonnage continues.

China continued to strengthen its position in the shipbuilding industry, and for
the first time this year China dominated the market both in terms of number of
vessels and tonnage (DWT). China's market share in number of vessels was 49%,
Korea's 30%, Japan's 7% and Europe's 5%. During the review period, emerging
shipbuilding regions, such as Brazil, Russia and the Philippines secured 9% of
all contracts.

Ship Power market shares
Wärtsilä's  share of the medium speed  main engine market decreased from 37% (at
the  end of the previous quarter) to  32%. The market share in low speed engines
decreased to 12% (15). In the auxiliary engine market Wärtsilä's share increased
to 3% (1).
POWER PLANTS

Good activity in the Power Plants market continues
The Power Plants market activity continued to be at a good level during the
third quarter of 2010 and several large and medium size projects were closed.
Industrial output is increasing in most emerging markets, which is driving the
need for more power generation. The installed base of wind power generation has
also increased which is creating need for additional flexible power generation.
The financial crisis led to postponing of investments for power generation in
2009 and this is now creating demand for shorter delivery times in several
markets.

SERVICES

Services' customers continue to focus on savings
Although activity in the marine industry has started to recover and the number
of idle vessels has decreased there is still pressure to reduce maintenance
costs through postponing overhauls and focusing only on essential repairs. At
the same time, marine customers are increasingly looking for optimisation of
their assets to reduce both costs and their environmental footprint. Rising fuel
prices and overcapacity have spurred containership lines to operate more of
their ships at slow speeds.
The power plant service market is active, and there is an increased interest in
efficiency improvements and the outsourcing of plant operations and management.

ORDER INTAKE

Strong growth in order intake

Wärtsilä's order intake for the third quarter totalled EUR 1,004 million (725)
an increase of 38%. The book-to-bill ratio for the third quarter was 0.97
(0.62).

The recovery in Ship Power continued and the order intake for the third quarter
totalled EUR 176 million (68), 160% above the corresponding period last year.
During the quarter, Wärtsilä noted increased activity in the Offshore segment
and secured several offshore orders. Wärtsilä is traditionally well positioned
in this segment. Some of the orders featured Dual-Fuel engine technology that
enables vessels to run on clean LNG fuel, and in general the orders highlighted
the success of Wärtsilä's strategy to be a systems integrator, ship designer and
solution provider. The Offshore segment represented 43% of the total orders,
Merchant 33%, Special vessels 18%, and Cruise&Ferry and Ship Design represented
2% and 3% respectively. Compared to the second quarter 2010, order intake fell
by 17% (EUR 213 million during the second quarter of 2010).

The order intake for Power Plants in the third quarter totalled EUR 393 million
(170), which was 131% higher than for the corresponding period last year. During
the third quarter, the largest power plant orders were received from the
Caribbean, Russia and Bangladesh. Compared to the previous quarter, the Power
Plants business order intake decreased by 10% (EUR 437 million in the second
quarter of 2010).

Order intake for the Services business totalled EUR 433 million (483) in the
third quarter, a decrease of 10% from the corresponding period 2009. Compared to
the second quarter, order intake fell 7% (EUR 465 million in the second quarter
of 2010). As an example of the customers' increased focus on cost savings and
reducing their environmental footprint, Wärtsilä signed a turnkey contract with
Tarbit Shipping of Sweden to convert a product tanker to LNG propulsion. The
conversion of the 25,000 dwt product tanker 'Bit Viking' will enable the vessel
to qualify for lower emission taxes under the Norwegian government's fund
scheme. The project to convert the ship's main propulsion to LNG is the first of
its kind in the world.
In the third quarter, Wärtsilä also signed a landmark contract with the A.P.
Moller Maersk Group. The order covers the installation of Wärtsilä Slow Steaming
Upgrade Kits to 34 more of the company's large container vessels. The upgrade
kits will lead to fuel savings as well as reduced CO2 emissions.
Wärtsilä expects environmental upgrades and conversions to continue.
In the power plant service market Wärtsilä signed several important Operations &
Management contracts in Brazil during the quarter. Wärtsilä now has O&M
agreements for power plants with a combined output of 1,500 MW in the country.
Several contracts were also signed in Europe.

For the review period January-September 2010, Wärtsilä's total order intake
amounted to EUR 3,002 million (2,468), which represents an increase of 22%
compared to the corresponding period 2009. The book-to-bill ratio for the review
period was 0.97 (0.66). Ship Power's order intake was EUR 479 million (262), an
increase of 83% from the corresponding period last year. Power Plant's order
intake was EUR 1,097 million (748), which is 47% higher than in 2009. Services'
order intake for the review period totalled EUR 1,421 million (1,448), a
decrease of 2% over the corresponding period in 2009.

ORDER BOOK
At the end of the review period Wärtsilä's total order book stood at EUR 4,243
million (5,351), a decrease of 21%. The Ship Power order book stood at EUR
2,038 million (3,230), -37%. At the end of the review period, the Power Plants
order book amounted to EUR 1,517 million (1,549), which is 2% lower than at the
corresponding time last year. The Services order book totalled EUR 689 million
(571) at the end of the review period, an increase of 21%.

Third quarter order intake by business

MEUR                           7-9/2010 7-9/2009 Change

Ship Power                          176       68   160%

Power Plants                        393      170   131%

Services                            433      483   -10%

Order intake, total               1 004      725    38%


Order intake Power Plants

MW                        7-9/2010 7-9/2009 Change

Oil                            475      109   335%

Gas                            393      174   126%

Renewable fuels                  0       35


Order intake for the review period by business

MEUR                                   1-9/2010 1-9/2009 Change 1-12/2009

Ship Power                                  479      262    83%       317

Power Plants                              1 097      748    47%     1 048

Services                                  1 421    1 448    -2%     1 917

Order intake, total                       3 002    2 468    22%     3 291


Order intake Power Plants

MW                        1-9/2010 1-9/2009 Change 1-12/2009

Oil                          1 574      879    79%     1 172

Gas                            767      468    64%       800

Renewable fuels                  1       35   -97%        35


Order book by business

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

Ship Power                     2 038         3 230   -37%        2 553

Power Plants                   1 517         1 549    -2%        1 362

Services                         689           571    21%          576

Order book, total              4 243         5 351   -21%        4 491



NET SALES
As expected, Wärtsilä's net sales for the third quarter decreased by 11% to EUR
1,039 million (1,167) compared to the corresponding period last year. Net sales
for Ship Power totalled EUR 277 million (378), a decrease of 27%. Power Plants'
net sales for the third quarter totalled 321 million (360), which is 11% lower
than in the corresponding quarter last year. The third quarter net sales for
Services amounted to EUR 435 million (424), an increase of 3%.

Wärtsilä's net sales for January-September 2010 fell by 17% and totalled EUR
3,091 million (3,741). Ship Power's net sales decreased by 32% and totalled EUR
831 million (1,230). Net sales for Power Plants totalled EUR 948 million
(1,169), a decrease of 19%. Net sales from the Services business decreased 1%
from last year's level and amounted to EUR 1,307 million (1,326). 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-September 2010 approximately 70% was EUR
denominated, 11% USD denominated, with the remainder being split between several
currencies.

Third quarter net sales by business

MEUR                                7-9/2010 7-9/2009 Change

Ship Power                               277      378   -27%

Power Plants                             321      360   -11%

Services                                 435      424     3%

Net sales, total                       1 039    1 167   -11%



Net sales for the review period by business

MEUR                                1-9/2010 1-9/2009 Change 1-12/2009

Ship Power                               831    1 230   -32%     1 767

Power Plants                             948    1 169   -19%     1 645

Services                               1 307    1 326    -1%     1 830

Net sales, total                       3 091    3 741   -17%     5 260


FINANCIAL RESULTS
The third quarter operating result before nonrecurring expenses was EUR 117
million (133), or 11.2% of net sales (11.4). For the review period January-
September 2010, the operating result before nonrecurring expenses was EUR 328
million (419), which is 10.6% of net sales (11.2). Including nonrecurring
expenses, the operating result decreased to EUR 269 million or 8.7% of net
sales. Wärtsilä recognised EUR 59 million of nonrecurring expenses related to
the restructuring measures during the review period January-September 2010.

Financial items amounted to EUR -3 million (-25). Net interest totalled EUR -8
million (-14). Dividends received totalled EUR 6 million (5). The deviation in
other financial items is mainly due to gains from exchange rates, which were
negative during the corresponding period of 2009. Profit before taxes amounted
to EUR 298 million (388). Taxes in the reporting period amounted to EUR 80
million (111). Earnings per share were 2.13 euro (2.77) and equity per share was
15.77 euro (13.86).

BALANCE SHEET, FINANCING AND CASH FLOW
Wärtsilä's cash flow from operating activities was very strong amounting to EUR
491 million (142) in January-September 2010. Net working capital at the end of
the period totalled EUR 229 million (511). Advances received at the end of the
period totalled EUR 813 million (1,039). Liquid reserves at the end of the
period amounted to EUR 578 million (262).

Wärtsilä had interest bearing loans totalling EUR 688 million at the end
of September 2010. The existing funding programmes include long-term loans of
EUR 599 million, unutilised Committed Revolving Credit Facilities totalling
EUR 565 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 89 million.

The solvency ratio was 40.5% (35.4) and gearing was 0.07 (0.43).

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 135 million. During the third quarter Wärtsilä sold
its holding in Sampo Group for EUR 35 million.

CAPITAL EXPENDITURE
Gross capital expenditure in the review period totalled only EUR 54 million
(98), which comprised EUR 5 million (15) in acquisitions and investments in
securities, and EUR 49 million (82) in production and information technology
investments. Depreciation amounted to EUR 87 million (91).

Capital expenditure excluding acquisitions for 2010 will be approximately EUR
95 million, which is well below depreciation. Depreciation for 2010 is expected
to be approximately EUR 115 million. 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.

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

RESTRUCTURING MEASURES
Following the global financial crisis, Wärtsilä began adjusting its capacity and
cost structure in May 2009 to reflect lower demand and intensified these efforts
in January 2010.
The first steps taken were to reduce the number of jobs in Ship Power, the
business that had been the most severely hit by the market downturn.
In January 2010, measures continued by starting to adapt manufacturing capacity
both to the structural changes in the market and to a lower demand environment.
Some of the manufacturing capacity has been moved to China and two factories in
the Netherlands will be closed. New and more efficient ways to operate have been
introduced, thus enabling the closure of smaller units and the consolidation of
operations to larger entities in various countries. Temporary lay-offs have
mainly been used in Finland and Norway. Lower capacity utilisation has also
triggered an evaluation of all Wärtsilä's global staff functions with the aim of
streamlining processes, decreasing overlaps, and improving the cost efficiency.
After the review period, Wärtsilä has initiated processes to reduce
approximately 400 jobs globally in its support functions.

Through all of these measures initiated in different phases, Wärtsilä is
reducing the number of personnel by approximately 1,800 employees.

When fully implemented, it is estimated that the reductions will decrease costs
by approximately EUR 110-120 million. Of these cost savings, Wärtsilä estimates
that about EUR 30 million will materialise by the end of 2010. The rest of the
savings will gradually materialise during 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. In January-September
Wärtsilä recorded EUR 59 million nonrecurring items related to restructuring
measures.


PERSONNEL
Wärtsilä had 17,704 (18,806) employees at the end of September 2010. On average,
the personnel for January-September 2010 totalled 18,116 (18,897). Ship Power
employed 974 (1,209) people. Power Plants employed 845 (848) people, Services
11,157 (11,318) and manufacturing and R&D (Wärtsilä Industrial Operations)
4,347 (4,988) people.

Of Wärtsilä's total number of employees, 19% (19) were located in Finland, 7%
(9) in the Netherlands and 31% (32) in the rest of Europe. Personnel employed in
Asia represented 31% (30), out of which 7% (7) were in China, in India 6% (6),
in Singapore 5% (5), and in the rest of the Asia 13% (12).

RESEARCH & DEVELOPMENT
During the quarter, Wärtsilä signed an exclusive agreement with Turboden of
Italy to jointly develop, market, and distribute the Wärtsilä Marine Engine
Combined Cycle (ECC) product. With the Marine ECC in operation, fuel consumption
and exhaust gas emissions will be significantly lowered. Turboden is a Pratt &
Whitney Power Systems company. The joint development work will initially focus
on applying the technology for ship applications, and is expected to enter the
market during 2011.

NEW PRODUCT LAUNCHES
During the third quarter, Wärtsilä launched its new Communication and Control
Centre, the first system to integrate the entire vessel's control into one
solution.

In September Wärtsilä launched the latest addition to its gas engine portfolio,
the Wärtsilä 18V50SG engine. The engine has an electrical output of 18,321 kW,
making it the largest gas powered generating set in the world.

During the quarter, Wärtsilä launched the Wärtsilä Ballast Water Treatment
solution which provides customers with a reliable means to respond to the
requirements set by the International Maritime Organization, and to additional
requirements by maritime authorities.

The new Propulsion Condition Monitoring Service, adapted from the remote
monitoring architecture Wärtsilä developed for its engine monitoring service, is
the first of its kind in the marine propulsion market


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


SHARES AND SHAREHOLDERS

SHARES ON HELSINKI EXCHANGES
30 Sept. 2010                    Number of     Number of Number of shares traded

                                    shares         votes                1-9/2010
--------------------------------------------------------------------------------
WRT1V                           98 620 565    98 620 565              78 094 206



1 Jan. -30 Sept. 2010                 High           Low    Average 1)     Close
--------------------------------------------------------------------------------
 Share price                         48.50         28.19         36.86     47.87

1) Trade-weighted average price



                                           30 Sept. 2010 30 Sept. 2009
-----------------------------------------------------------------------
Market capitalisation, EUR                         4,721         2,905
million

Foreign shareholders                               49.4%         49.5%



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
No major changes occurred in Wärtsilä's business environment in the third
quarter and Wärtsilä expects that its business environment will continue to
improve.

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 closing 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, contracting activity is expected to improve slightly. A
shift in the mix of vessel types ordered is expected as contracting for bulk
carriers decreases from current levels and containership ordering continues to
increase. The outlook for offshore contracting activity is positive with strong
demand expected to materialise in new orders.

Even though markets have bottomed out, the prevailing conditions will result in
ordering volumes being maintained at lower levels than during the previous peak
years. Competition and price pressures among shipbuilding suppliers will remain
intense. Wärtsilä expects Ship Power's order intake in 2010 to clearly improve
over 2009.

The power generation market recovery is expected to continue. The recovery will
happen in 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. A recovery
in Western Europe and in USA is not expected during 2010. Wärtsilä expects Power
Plants' order intake in 2010 to clearly improve over 2009.

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 accordingly. 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 its marine, offshore and power plant customers.

WÄRTSILÄ'S PROSPECTS FOR 2010 IMPROVED
Based on the current order book and a stable service business we expect net
sales to decline by approximately 15 percent in 2010 and our operational
profitability (EBIT% before nonrecurring items) to be better than earlier
expected and to exceed 10%.

WÄRTSILÄ INTERIM REPORT JANUARY - SEPTEMBER 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                                                   1-9/2010  1-9/2009   2009
--------------------------------------------------------------------------------
Net sales                                                 3 091     3 741  5 260

Other income                                                 31        39     50

Expenses                                                 -2 769    -3 279 -4 559

Depreciation and impairment                                 -87       -91   -165

Share of profit of associates and joint ventures              3         5      6

Operating result                                            269       413    592

Financial income and expenses                                -3       -25    -34

Net income from assets available for sale                    32

Profit before taxes                                         298       388    558

Income taxes                                                -80      -111   -161
--------------------------------------------------------------------------------
Profit for the financial period                             218       277    396
--------------------------------------------------------------------------------


Attributable to:

Owners of the parent                                        210       273    389

Non-controlling interest                                      8         4      8
--------------------------------------------------------------------------------
Total                                                       218       277    396
--------------------------------------------------------------------------------




Earnings per share attributable to equity holders of
the parent company:
--------------------------------------------------------------------------------
Earnings per share, EUR (basic and diluted)                2,13      2,77   3,94
--------------------------------------------------------------------------------




STATEMENT OF COMPREHENSIVE INCOME

Profit for the financial period                             218       277    396

Other comprehensive income after tax:

Exchange differences on translating foreign
operations                                                   12        13     18

Investments available for sale                               7*        21     34

Cash flow hedges                                              4        24     20

Share of other comprehensive income of associates and
joint ventures                                                                 1
--------------------------------------------------------------------------------
Other comprehensive income for the period                    23        58     73


--------------------------------------------------------------------------------
Total comprehensive income for the period                   240       336    469
--------------------------------------------------------------------------------


Total comprehensive income attributable to:

Owners of the parent                                        232       331    460

Non-controlling interest                                      9         5      9
--------------------------------------------------------------------------------
                                                            240       336    469

*of which transferred to income statement EUR -21 million

CONDENSED BALANCE SHEET

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

Intangible assets                                  773          791          779

Property, plant and equipment                      449          465          457

Equity in associates and joint ventures             61           53           56

Investments available for sale                     156          134          151

Deferred tax receivables                            98           77           88

Other receivables                                   30           26           15
--------------------------------------------------------------------------------
                                                 1 568        1 545        1 548

Current assets

Inventories                                      1 473        1 843        1 577

Other receivables                                1 092        1 285        1 287

Cash and cash equivalents                          578          262          244
--------------------------------------------------------------------------------
                                                 3 143        3 390        3 108


--------------------------------------------------------------------------------
Assets                                           4 711        4 935        4 655
--------------------------------------------------------------------------------






Shareholders' equity

Share capital                                      336          336          336

Other shareholders' equity                       1 220        1 031        1 160
--------------------------------------------------------------------------------
Total equity attributable to equity
holders of the parent                            1 556        1 367        1 496



Minority interest                                   22           12           16
--------------------------------------------------------------------------------
Total shareholders' equity                       1 578        1 379        1 512



Non-current liabilities

Interest-bearing debt                              599          622          591

Deferred tax liabilities                            93           89           93

Other liabilities                                  242          284          258
--------------------------------------------------------------------------------
                                                   934          994          941

Current liabilities

Interest-bearing debt                               89          230           73

Other liabilities                                2 110        2 331        2 129
--------------------------------------------------------------------------------
                                                 2 199        2 561        2 202



Total liabilities                                3 133        3 556        3 143


--------------------------------------------------------------------------------
Shareholders' equity and liabilities             4 711        4 935        4 655
--------------------------------------------------------------------------------


CONDENSED CASH FLOW STATEMENT

MEUR                                                     1-9/2010  1-9/2009 2009
--------------------------------------------------------------------------------
Cash flow from operating activities:

Profit before taxes                                           298       388  558

Depreciation and impairment                                    87        91  165

Financial income and expenses                                   3        25   34

Selling profit and loss of fixed assets and other
adjustments                                                   -31        -8   -7

Share of profit of associates and joint ventures               -3        -5   -6

Changes in working capital                                    333      -204 -179
--------------------------------------------------------------------------------
Cash flow from operating activities before financial
items and taxes                                               687       289  564

Net financial items and income taxes                         -195      -147 -215
--------------------------------------------------------------------------------
Cash flow from operating activities                           491       142  349
--------------------------------------------------------------------------------


Cash flow from investing activities:

Investments in shares and acquisitions                         -5       -15  -16

Net investments in tangible and intangible assets             -44       -82 -133

Proceeds from sale of shares                                   36       -19  -21

Cash flow from other investing activities                       9         4    7
--------------------------------------------------------------------------------
Cash flow from investing activities                            -3      -113 -163
--------------------------------------------------------------------------------


Cash flow from financing activities:

New long-term loans                                            37       229  263

Amortization and other changes in long-term loans             -24       -67 -106

Changes in short term loans and other financing
activities                                                      2        30 -141

Dividends paid                                               -175      -156 -156
--------------------------------------------------------------------------------
Cash flow from financing activities                          -159        36 -140
--------------------------------------------------------------------------------

--------------------------------------------------------------------------------
Change in cash and cash equivalents, increase (+) /
decrease (-)                                                  329        65   47
--------------------------------------------------------------------------------



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

Exchange rate changes                                           5        -1

Cash and cash equivalents at end of period                    578       262  244
--------------------------------------------------------------------------------


STATEMENT OF CHANGES IN
SHAREHOLDERS' EQUITY

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

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

                                                  value

                            Share
                  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                                     11        10      210        9    240
--------------------------------------------------------------------------------
Shareholders'
equity on 30
Sep. 2010           336        61           5       110    1 044       22  1 578
--------------------------------------------------------------------------------

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

Dividends                                                   -148       -8   -156

Total
comprehensive
income for the
period                                     16        41      274        5    336
--------------------------------------------------------------------------------
Shareholders'
equity on 30
Sep. 2009           336        61         -11        91      890       12  1 379
--------------------------------------------------------------------------------

Geographical distribution of net sales Europe  Asia Americas Other Group

MEUR
------------------------------------------------------------------------
Net sales 1-9/2010                        896 1 130      719   346 3 091

Net sales 1-9/2009                      1 120 1 385      907   329 3 741
------------------------------------------------------------------------


INTANGIBLE ASSETS AND PROPERTY, PLANT & EQUIPMENT

MEUR                                               1-9/2010  1-9/2009 2009
--------------------------------------------------------------------------
Intangible assets

Book value at 1 January                                 779       793  793

Changes in exchange rates                                16        16   26

Acquisitions                                                       12   12

Additions                                                10        13   24

Depreciation and impairment                             -32       -43  -62

Disposals and intra-balance sheet transfer                             -14
--------------------------------------------------------------------------
Book value at end of period                             773       791  779
--------------------------------------------------------------------------


Property, plant and equipment

Book value at 1 January                                 457       446  446

Changes in exchange rates                                 9         1    3

Acquisitions                                                        1    1

Additions                                                40        69  112

Depreciation and impairment                             -54       -49 -103

Disposals and intra-balance sheet transfer               -3        -4   -2
--------------------------------------------------------------------------
Book value at end of period                             449       465  457
--------------------------------------------------------------------------

GROSS CAPITAL EXPENDITURE

MEUR                                1-9/2010     1-9/2009                   2009
--------------------------------------------------------------------------------
Investments in securities and
acquisitions                               5           15                     16

Intangible assets and property,
plant and equipment                       49           82                    136
--------------------------------------------------------------------------------
Group                                     54           98                    152
--------------------------------------------------------------------------------
Wärtsilä centralises warehousin  and logisti s of spare p rts by investing in a
new distribution centre in the  etherlands.  he investmen s to the new
distribution centre amounted to EUR 16 million during the review period and
commitments related to the investment were EUR 17 million at the end of the
review period.

INTEREST-BEARING LOAN CAPITAL

MEUR                            30 Sep. 2010 30 Sep. 2009           31 Dec. 2009
--------------------------------------------------------------------------------
Long-term liabilities                    599          622                    591

Current liabilities                       89          230                     73

Loan receivables                         -19          -15                     -6

Cash and bank balances                  -578         -262                   -244
--------------------------------------------------------------------------------
Net                                       91          575                    414
--------------------------------------------------------------------------------

FINANCIAL RATIOS                             1-9/2010  1-9/2009  2009
---------------------------------------------------------------------
Earnings per share, EUR (basic and diluted)      2,13      2,77  3,94

Equity per share, EUR                           15,77     13,86 15,17

Solvency ratio, %                                40,5      35,4  40,0

Gearing                                          0,07      0,43  0,28
---------------------------------------------------------------------

PERSONNEL

                  1-9/2010  1-9/2009   2009
-------------------------------------------
On average          18 116    18 897 18 830

At end of period    17 704    18 806 18 541
-------------------------------------------

CONTINGENT LIABILITIES

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

Chattel mortgages                               18            9           10
----------------------------------------------------------------------------
Total                                           74           66           66
----------------------------------------------------------------------------


Guarantees and contingent liabilities

on behalf of Group companies                   619          809          678

on behalf of associated companies                9            8            8

Nominal amount of rents according

to leasing contracts                            75           81           77
----------------------------------------------------------------------------
Total                                          703          897          763
----------------------------------------------------------------------------

NOMINAL VALUES OF DERIVATIVE INSTRUMENTS

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

Foreign exchange forward contracts              1 252             299

Currency options, purchased                        27               7

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

CONDENSED INCOME
STATEMENT, QUARTERLY

MEUR           7-9/2010  4-6/2010 1-3/2010 10-12/2009 7-9/2009 4-6/2009 1-3/2009
--------------------------------------------------------------------------------
Net sales         1 039     1 131      922      1 519    1 167    1 333    1 241

Other income         13        11        7         11       20       13        5

Expenses           -910    -1 007     -851     -1 280   -1 026   -1 167   -1 087

Depreciation
and impairment      -29       -28      -30        -73      -31      -30      -30

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

Operating
result              114       105       49        179      133      149      130

Financial
income and
expenses             -6         4                  -9       -9       -9       -7

Net income
from assets
available for
sale                 32

Profit before
taxes               140       109       49        170      125      141      123

Income taxes        -35       -31      -14        -51      -38      -39      -34
--------------------------------------------------------------------------------
Profit for the
financial
period              104        79       35        119       87      102       89
--------------------------------------------------------------------------------


Attributable
to:

Owners of the
parent              101        76       32        115       86      100       87

Non-
controlling
interest              3         3        2          4        1        2        1
--------------------------------------------------------------------------------
Total               104        79       35        119       87      102       89
--------------------------------------------------------------------------------


Earnings per share attributable
to equity holders of the parent
company:
--------------------------------------------------------------------------------
Earnings per
share, EUR         1,03      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


19 October 2010
Wärtsilä Corporation
Board of Directors



[HUG#1453323]





Interim Report January-September 2010: 


http://hugin.info/131481/R/1453323/393887.pdf




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Source: Wärtsilä Oyj Abp via Thomson Reuters ONE