Good market demand has naturally contributed to this success. The number of new ship orders continued to grow for the sixth consecutive year. Several years of neglected or insufficient investment in the energy sector resulted in a steep increase in the amount of power plants ordered. We expect contracting activity to stay solid at least for the first part of the year 2008 with strong power plant activity offsetting a possible weakening of ship power demand. For our Services business, a high ship and power plant utilisation rate offers ample opportunity for development and growth.

Emissions high on R&D agenda

During recent years, Wärtsilä has grown to become a leading global provider of a broad range of ship, ship machinery, and power plant services. In combination with our advanced, environmentally sound liquid fuel and gas engines and power plants, efficient propulsion packages, and automation systems, this platform makes us an attractive business partner. We consider sustainability of our products and services to be not only a necessity or opportunity, but rather our duty as a leading provider of equipment to the world’s seagoing fleet and many important power plant markets. As a consequence, improved engine efficiency and exhaust gas cleaning methods, as well as fuel cell development, are high on our research agenda.

Investments in assembly efficiency supports growth

Being able to take advantage of strong demand, and at the same time adding value to our customers’ businesses, requires careful homework. Capacity has been increased during the year. The main projects were the renewal of engine assembly facilities in Trieste, Italy and Vaasa, Finland, and the upgrading of propeller and thrusters production in Drunen, Holland and in China. The investment programs have largely concentrated on assembly efficiencies. Total capital expenditure amounted to EUR 166 million compared to EUR 107 million in 2006. Our subcontractors have initiated capacity increase programmes worth at least the same amount. The steep ramp up of capacity throughout the supply chain has, from time to time, caused shortages resulting in delays or an inability to respond to customers demands. We expect the supply chain to be highly utilized throughout 2008.

Three issues top our strategic agenda:
• The broadening of our products and services offering, both in terms of number of products and geographical spread
• The constant need to upgrade our services and products for improved sustainability
• Availability of key personnel in all parts of the world to support growth

Wärtsilä is dedicated to maintaining growth based on customer confidence. Success in these areas will determine our future position as a key player in this demanding market place.
    I would like to thank our customers for their continued trust and support, our employees for their commitment, and our shareholders for their confidence in our company.



Ole Johansson
President and CEO