#1WELCOME TO WÄRTSILÄ CHINA INVESTORS VISIT IN SHANGHAI (SEP. 23 2015) James Han President of Wärtsilä China 1 © Wärtsilä Investors visit Sep. 23 2015 WÄRTSILÄ#2Wärtsilä China Today 20+ years history in China Well positioned for SP and Service business One of Wartsila biggest market with annual revenues of ~10% of group sales MAERSK LINE 2 © Wärtsilä Investors visit Sep. 23 2015 THULF THIALF Broad manufacturing footprint through JVs and fully owned companies. In the marine market, certain leading Chinese ship owners and shipyards are not only Wärtsilä customers, but also JV partners. WÄRTSILÄ#3Major Milestone of Wärtsilä in China 1978 Signing of licensee agreement 1986 Establishing Wärtsilä Diesel (China) Ltd., Hong Kong as Joint Venture with Kemklen between Sulzer with Hong Kong CSSC 1994 Establishing Shanghai Representative Office, Beijing Representative Office, Wärtsilä Diesel Panyu Service Station (Joint Venture) 1996 First Investment in Taicang Electric Power Co., Ltd. (partial ownership) 1982 1991 Wärtsilä Diesel (China) Ltd., Hong Kong became a wholly Developing agent owned company relationship with under Wärtsilä Kemklen Diesel Finland Industrial Suppliers Ltd., Hong Kong Oy, Helsinki 1995 Setting up Hong Kong Service Station 1997 Merging with New Sulzer Diesel Hong Kong Ltd. 1998 Establishing Dalian Office Representative 2002 Integration of John Crane-Lips operation in Shanghai following global acquisition in April 2002 1999 Upgrading Shanghai Representative Office to Wärtsilä NSD Engine (Shanghai) Ltd. with business scope of trading and servicing Setting up Waigaoqiao Workshop in Shanghai 2004 Wärtsilä-CME Zhenjiang Propeller Co. Ltd. founded in June. In the JV Wärtsilä has 55% and CME has 45% ownership 3 © Wärtsilä Investors visit Sep. 23 2015 WÄRTSILÄ#4Major Milestone of Wärtsilä in China 2005 Wärtsilä acquired Deutz medium and high speed engine marine service business and started to handle the business from April. Inauguration of Wärtsilä Propulsion (Wuxi) Co. Ltd. (wholly owned) in June 2007 Inauguration of Tangzhen Service 2010 Station in March Wärtsilä China Engineering Center was setup 2011 2012 Wärtsilä acquired the Hamworthy plc group. JV Contract Signed to establish Wärtsilä Yuchai Engine Company Ltd. Inauguration of CPP production at Wärtsilä-CME Zhenjiang Propeller Co., Ltd. In June 2006 Inauguration of Wärtsilä Qiyao Diesel Co., Ltd (Shanghai) (a 50/50 JV with CSIC SMDERI to manufacture marine auxiliary engines) in June 2006 4 © Wärtsilä 2008 The top management of Wärtsilä Ship Power moved to China Investors visit Sep. 23 2015 2009 Inauguration of Qingdao Qiyao Wärtsilä MHI Linshan Marine Diesel Co Ltd (QMD) in April. (CSIC 50%, Wärtsilä 27% and Mitsubishi 23%) Inauguration of Wärtsilä Ship Design (Shanghai) Co. in June Zhoushan Services Station was setup in Sept. Signing of Strategic Cooperation Framework Agreement with CSSC in Nov 2014 Wärtsilä announced new joint venture with CSSC for manufacturing medium speed diesel engines in July Wärtsilä and CSSC to join forces in 2- stroke engine joint venture to take over Wärtsilä's 2-stroke engine business Wärtsilä divested its shares in QMD 2- stroke joint venture in July Inauguration of Wärtsilä Yuchai Engine Company Ltd. In September WÄRTSILÄ#5Wärtsilä Footprints in China WCN, Dalian Rep. Office WCN Shanhaiguan Shipyard Service Station WCN, Beijing Rep. Office Wärtsilä Services (Shanghai) Co Ltd Tianjin Representative Office Wärtsilä Ventures Joint Ventures Wärtsilä CME Zhenjiang Propeller Co Ltd FPPS, CPPS, shaft lines, blades and hubs Cosco-Shipyard Total Automation Co Ltd Wärtsilä Services (Shanghai) Co Ltd Wärtsilä Ship Design (Shanghai) Co Ltd Wärtsilä HRDD Services Station Wärtsilä Zhoushan IMC-YY Services Station Wärtsilä (Suzhou) Ltd. Formal name is Hamworthy (Suzhou) Ltd. Sewage Water Treatment Plant, Inert Gas System, Control Panel 5 JVs, 2 fully-owned factories 9 service centers 1500+ employees CSSC Wärtsilä Engine (Shanghai) Co. Ltd Wärtsilä Qiyao Diesel Shanghai Co Ltd Wärtsilä Auxpac 20 and 26 gensets Wärtsilä Propulsion (Wuxi) Co Ltd TTS, LCTs, seals & bearings and components Wärtsilä Services (Shanghai) Co Ltd, Nansha Office WCN Chengxi Guangzhou Service Station WCN Yiulian (Shekou) Dockyards Service Station Wärtsilä China Ltd. (H.K) -Wärtsilä Yuchai Engine Co., Ltd Wärtsilä 20, Wärtsilä 26 and Wärtsilä 32 series of medium speed engines 5 © Wärtsilä Investors visit Sep. 23 2015 NANTSLA CHI#6Chinese Economy and Market Update . • • China economy further slowed down with headwinds both externally and internally, despite 7% GDP expansion in H1. Export fell by 6.1% yoy in Aug and imports shrank by 13.6%. However exports to US and ASEAN increased by 6.1% and 5.6% respectively. PMI slipped to 49.7 in Aug from 50 for July, the lowest in 36 months since 8/2012. However, sub PMI for high tech manufacturing (52.2) and consumption sector (54.6) remain in expansion Medium and long term still look positive, as service sector now accounts for 50% of GDP and private consumption contributes more than 60% of GDP growth. Slowdown is necessary to make structural transition from export/investment to more sustainable consumption/service mode. Government has sufficient tools to stimulate economy to avoid hard landing. China shipbuilding industry facing huge challenges. First 8 months in 2015, new contract order dropped 68.3% yoy to 15 million DWT and order book decreased 12.1% to 135 million DWT. However total completion increased by 14.6% to 25.31 million DWT. In terms of order book, China still holds the largest market share (39.7 million CGT), followed by Korea (31.8 million CGT) and Japan (19.77 million CGT). Main challenges from weak demand, overcapacity, difficult for private yards to get financing, low oil price, etc. Power Market has great potential for gas and renewable energy. China's installed gas- fired power capacity reached 55.67 GW in 2014, accounting for 4.1% of total power mix, increased from 3.4% in 2013. Gas consumption in H1 increased bit slow by 3.3%, but the continued decline of imported gas price could boost consumption. 13th five year plan will focus on further expansion of renewable energy. By 2020, wind power would be tripled from current 75 GW to 200 GW and solar would jump from 15 to 100 GW. © Wärtsilä Investors visit Sep. 23 2015 WÄRTSILÄ#7Growth opportunities in China MOVE TO A URBANIZATION & SUSTAINABLE ECONOMIC GROWTH SURGING OF MIDDLE CLASS FOCUS ON GREEN ECONOMY PATTERN DRIVE FOR INNOVATION & HIGH END MANUFACTURING Transform from Invest/export focused to domestic consumption Shift to a sustainable, quality & efficient growth (6-7 % GDP growth) Deepen economic and political reforms 70% of population will live in the cities by 2035 ~ 200 cities > 1 million habitants 700 m middle class by 2020 and 1.4 b by 2030 · Shift to renewable and clean energy • Increase energy efficiency and reduce pollution . Invest 8 trillion RMB (1.28 trillion USD) in green economy over the 12th Five-Year Plan Period (2011- 15). . • • Move up the labor value chain Heavy investment in R&D and focus on domestic brand creation From "made in China" to "innovated in China" 7 © Wärtsilä Investors visit Sep. 23 2015 WÄRTSILÄ#8The most important market for Marine Solutions WORLD LEADING POSITION • No.1 trading nation with biggest shipping fleets Largest shipbuilding country (37% of world order book by Jan-Aug 2015) POSITIVE DEVELOPMENTS TO MEET CHALLENGES ⚫ Shift from Merchant to offshore and special, • • from standard low value to complex high value Increasing focus on fuel efficiency and environmental performance Strong demand from domestic ship-owners from offshore, special, and LNG . GOVERNMENT POLICY SUPPORTING MARINE INDUSTRY Drive technology innovation • Accelerate industry restructure to reduce the overcapacity •Develop "Green Ships" (high efficiency with low emission and fuel consumption. • Push for 80% local content for marine equipment by 2015 8 © Wärtsilä Investors visit Sep. 23 2015 WÄRTSILÄ#9Power market opportunities for Energy Solutions WORLD LEADING POSITION SMART POWER GENERATION Energy Efficiency NATIONAL POLICY PUSH FOR CLEAN ENERGY STRONG GROWTH FROM GAS-FIRED POWER PLANT Fuel Flexibility Operational Flability 9 • Largest power production & consumption country Overtook US in 2009 as the largest investor in clean tech industries Leading position in renewable energy (wind and solar) creates potential for smart power generation Develop >1,000 NGDE projects with 50 GW new capacity by 2020 Increase Gas-fired from 3.9% to 8.3% Construct a strong and smart national grid Current installed gas ~36 GW, will reach 150 GW by 2020 Gas projects are also driven by provincial, local level and big SOES • 1/3 of power in Beijing (38%) coming from gas-fired (3.5GW) • Jiangsu Province installed 5.3 GW with 8 gas-fired GT and 10 CHP co-gen plants 9 © Wärtsilä Investors visit Sep. 23 2015 WÄRTSILÄ#10Wärtsilä Services in China 10 © Wärtsilä Investors visit Sep. 23 2015 We provide total and 24/7 services WÄRTSILÄ Engine Services WÄRTSILÄ Propulsion System WÄRTSILÄ Automation WÄRTSILÄ Boiler Shanhaiguan Dalian HRDD WÄRTSILÄ In-situ Machining Shanghai WÄRTSILÄ Training WÄRTSILÄ Reconditioning Guangzhou Longxue Zhoushan Taipei Kaohsiung Yiulian Hong Kong 50 largest Repair Yards in China that dock foreign ships Wärtsilä presence WÄRTSILÄ#11Major Wärtsilä Services workshops in China WARTSILA WÄRTSILA Shanghai • Established: 1999 • • Location: Tangzhen Shanghai Main activities: ― Reconditioning External Field Services In-situ and Afloat repair Automation Commissioning and Start-ups Guangzhou • Established: 1994 • Location: Nansha, Guangzhou •Field service covering southern China Specialized in servicing Woodward governors and ABB/Napier Turbo Chargers ⚫ Workshop reconditioning of entire gensets Hong Kong • Established: 1991 • Located in Hong Kong United Dockyards (HUD) Supporting visiting vessels, Hong Kong ship owners and ship management companies 11 © Wärtsilä Investors visit Sep. 23 2015 WÄRTSILÄ#12Service cooperation with Chinese shipyards H SHG HRDD CSSC 上海華潤大東船務工程有限公司 Shanhaiguan 2008 2010 HUARUN DADONG DOCKYARD CO., LTD. Zhoushan 2011 Shanghai 2010 IMC-YY Shenzhen 2011 Guangzhou INE In order to serve customers better, Wärtsilä China entered a cooperation with major shipyards in China. A team of Wärtsilä experts is permanently stationed there and jointly provide a full range of field services. 12 © Wärtsilä Investors visit Sep. 23 2015 WÄRTSILA#13Wärtsilä China manufacturing facilities WÄRTSILA We provide market leading products 13 © Wärtsilä Investors visit Sep. 23 2015 WÄRTSILA#14- Delivery Centre – Thrusters, Seals, Bearings / Wuxi WARTSILA Wärtsilä Propulsion (Wuxi) Co., Ltd Inauguration phase 2 November 2007 Employees: 161 (April 2013) 14 © Wärtsilä Investors visit Sep. 23 2015 WÄRTSILÄ#15Delivery Centre - CPP & FPP / Zhenjiang Wärtsilä CME Zhenjiang Propeller Co., Ltd Founded in 2004 and new CPP factory inauguration in June 2011 Employees: 407 (April 2013) Joint Venture (Wärtsilä 55%, CSSC1 45%) 15 © Wärtsilä Investors visit Sep. 23 2015 Note: CSSC1=China State Shipbuilding Corporation WÄRTSILÄ#16Delivery Centre - Auxpac 20 & 26 / Shanghai CO SOSC/SL WARTSILA QIYAO Wärtsilä Qiyao Diesel Company Ltd. (Shanghai) Shang Inaugurated in 2006 Employees: 141 (April 2013) Joint Venture (Wärtsilä 50%, CSIC1 50%) WARTSILA Note: CSIC1=China Shipbuilding Industry Corporation 16 © Wärtsilä Investors visit Sep. 23 2015 WÄRTSILÄ#17. Delivery Centre- Environment & Safety Product/Suzhou Inauguration in 1998 (former Hamworthy Suzhou) Employee: 103 (April 2013) Products: sewage water treatment plants, inert gas systems, control panels 17 © Wärtsilä Investors visit Sep. 23 2015 Hamworthy WÄRTSILA WÄRTSILÄ#18Wärtsilä Yuchai Engine Co., Ltd / Zhuhai • . . . 50/50 Joint venture owned by Wärtsilä and Yuchai Marine Power Co., Ltd (YCMP), a subsidiary of Guangxi Yuchai Group. Location: Zhuhai, Guangdong Province, China Products: Wärtsilä 20, Wärtsilä 26, Wärtsilä 32 series of engines and generating sets. Total annual capacity(engine): 400 Total annual capacity(MW): 1,000 Production area (square meters): 22,616 WÄRTSILA YUCHAI 18 © Wärtsilä Investors visit Sep. 23 2015 S WÄRTSILÄ#19Wärtsilä China Growth Strategy ■ Launch key initiatives to support long term growth ◉ Strengthen high level customer contacts and external relationships (government, JV partners, etc) to ensure business success. Simplify operating model with entrepreneurial driven organization to be more agile and react faster ■ Create a strong China organization by introducing best practices, professionalism and high performance culture Attract develop and retain the best talents to create highly motivated workforce 19 19 © Wärtsilä Investors visit Sep. 23 2015 WÄRTSILA#20Development of partnership in China continues: CWEC, a new 4-stroke engine Joint Venture between CSSC and Wärtsilä Joining the forces of two major players in marine business sector CSSC ➤ Largest shipbuilding group in China and in the world ➤ 10 shipyards covering over 25% of China shipbuilding order book WÄRTSILÄ ➤ Global leader in complete lifecycle power solutions for marine industry ➤ Market leader in 4s marine engines and gas, DF technologies and solutions, optimized for offshore, LNGC, C&F 20 20 © Wärtsilä Investors visit Sep. 23 2015 W26 W32 W34DF W46F, W46DF WÄRTSILÄ#21CWEC Video ME4 21 © Wärtsilä Investors visit Sep. 23 2015 CSSC WÄRTSILÄ Play Video WÄRTSILÄ#22Bring Germic faction pleats FLUG Jethy LNG carriers WÄRTSILÄ MARINE SOLUTIONS 22 22 Hans Laheij, Area Sales Director, Marine Solution Sales, Middle East and Asia Receiving Rower plant Laling stations for trucks a trains Bunkering LUG Filled WÄRTSILÄ#2323 Market environment#24China, South Korea and Japan dominate in the shipbuilding market Builder Country shares (CGT) Others ■ Europe U.S.A United Kingdom South Korea Japan China P.R Other Asia 100% Other Asia 90% United Kingdom 80% 70% 60% 50% 40% 30% 20% 10% 0% U.S.A Europe Others 1950 1952 1954 1956 1958 1960 1962 1964 1966 1968 1970 1972 1974 1976 1978 1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 Source: Clarksons 24 24 Japan China P.R CGT 37.4% GT 40% CGT 21.1% GT 22.2% South Korea CGT 27.9% GT 29.4% 2004 2006 2008 2010 2012 2014 WÄRTSILÄ#25Number of vessels Contracting Activity Development - All vessels 250 200 150 100 50 50 76 69 Merchant Offshore Cruise and Ferry Special vessels 3 months moving average in CGT 5,0 118 12928 99 101 92 117 113 122 76 167 162 227 21 45 4,5 4,0 187 126 123 122 123 113 114 102 94 88 88 23 23 10 13 23 25 31 45 46 38 32 53 05.09 78 71 70 70 64 102 94 3 07.09 09.09 11.09 01.10 03.10 52 47 05.10 07.10 59 50 94 88 82 77 75 71 64 09.10 11.10 27 01.11 03.11 46 05.11 07.11 09.11 11.11 01.12 03.12 05.12 07.12 09.12 о 01.09 03.09 Source: Clarksons 25 © Wärtsilä 134 10607 102 3,5 3,0 2,5 107 2,0 75 71 71 68 1,5 60 57 56 54 55 51 46 1,0 11.11 01.13 03.13 05.13 07.13 August 2015 contracts: 51 vessels and 1,4 million CGT 09.13 11.13 01.14 03.14 05.14 07.14 09.14 11.14 01.15 03.15 05.15 07.15 0,5 0,0 WÄRTSILÄ Million CGT#26Contracting Activity - Builders 2015 total contracting activity = 692 vessels and 19,0 Million CGT Builders 2015 YTD, Number of vessels YTD Builders, No of vessels Builders 2015 YTD, CGT Vietnam 2% RoW 12% Philippines 2% Spain 3% Netherlands 3% China P.R. 32% Japan 21% South Korea 25% Germany 3% Spain YTD Builders, CGT 1% Finland 3% Philippines 3% RoW 5% Japan 22% China P.R. 24% South Korea 39% Intensifying competition in China It is becoming increasingly difficult to operate as a private-owned shipyard in China in recent years due to growing competition especially from China's state-owned shipyards, in addition to Japan and South Korea. Source: Clarksons 26 © Wärtsilä WÄRTSILÄ#27Contracting Activity - Owners Source: Clarksons 27 © Wärtsilä 2015 total contracting activity = 692 vessels and 19,0 Million CGT Owners 2015 YTD, Number of vessels Row 49% Japan 13% Owners 2015 YTD, CGT China P.R. 11% RoW 39% Greece 9% Singapore 5% Norway 5% South Korea Denmark Germany 5% 4% 4% Japan 17% China P.R. 10% Greece 9% Denmark 9% Germany Hong Kong 5% 6% WÄRTSILÄ#28Source Bloomberg business $44.68 WÄRTSILÄ#29Oil Price Development Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Source: Bloomberg business 29 © Wärtsilä 80.00 70.00 60.00 50.00 40.00 09/18 44.68 WÄRTSILÄ#30160 140 120 100 80 60 40 20 0 Offshore is Highly Sensitive to Oil Price Development Break-even oil price for offshore projects (fields not yet in production, Q1 2015) 30% 33%-73 % of offshore projects feasible between 60 and 80 USD/bbl 25% 0%-33% of offshore projects feasible with the price below 20% 60 USD/bbl More than 73% of offshore projects feasible when the price climbs above 80 USD/bbl 15% 25,4% 27,0% 10% 17,5% 12,7% 5% 3,2% 4,8% 4,9% 4,6% 0% <40 USD USD 40-50 USD 50-60 USD 60-70 USD 70-80 USD 80-90 USD 90-100 USD 100+ EIA oil price forecast (North Sea Brent crude, USD/bbl) 2014 2015 2016 2017 2018 2019 2020 Source: Clarksons, EIA (oil price development in constant USD values) 30 © Wärtsilä 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036 2037 2038 2039 2040 EIA predicts the price of Brent crude to stay below 80 USD/bbl until 2021 WÄRTSILÄ#31Examples of significant projects in China Evergas 27'500cbm LEG Carrier Full SCOPE on main equipment 31 © Wärtsilä DESTINATION GOTLAND GOTLAND ROPAX Ferry Full scope on main equipment Length 200m LNG powered speed 28.5 knots 1650 PAX 1750 Lane m. Propulsion Boil off gas compressors LNG fuel system LNG Gearbox Auxiliary gensets Main engines Cargo pumps WÄRTSILÄ Reliquefaction plant (Ethane & LPG) Energy recovering system Cargo handling system EVERGAS WÄRTSILÄ#32NO SMOKING Wärtsilä Marine Solutions VASTERA WÄRTSILÄ Marine Solution Hans Laheij MASTERA#3333 Wärtsilä Marine Solution's Strategic Goal Marine Solution's strategic goal To be recognized as the leading provider of innovative products and integrated solutions in the marine and offshore oil & gas industry. THROUGH OFFERING LEADER IN Efficiency Gas and dual-fuel solutions Environmental solutions O Lifecycle solutions for ship owners and operators Integrated solutions for the shipbuilding industry, owners and operators The most competitive products and delivery process for the marine industry WÄRTSILÄ#3434 The most complete marine offering on earth INERT GAS OIL SEPARATION POWER ELECTRIC SYSTEMS PROPULSORS PUMPS&VALVES GEARS SERVICES MARINE LIFECYCLE SOLUTIONS INTEGRATED SOLUTIONS SHIP DESIGN 800 DO 00 SEALS, BEARINGS &STERN TUBES WASTE & FRESH WATER MANAGEMENT AUTOMATION BALLAST WATER MANAGEMENT PROJECT MANAGEMENT ENGINES& GENERATING SETS EXHAUST GAS CLEANING GAS SYSTEMS COMPRESSORS WARTSILA#35A Comprehensive Product Portfolio 35 WARTSHA Automation Ballast water management Compressors Engines & generating sets Exhaust gas cleaning Gas systems VING GRACE Gears Inert gas Oil separation Power electric systems Propulsors Pumps & valves Seals, bearings & stern tubes Waste & fresh water management Ship design services Zav.No PAAE 072636#36Wärtsilä Marine Solutions in China " Wärtsilä Marine Solutions has been growing fast in China. In order to further grow it is important to focus on key differentiators that will ensure Marine Solutions continued success in China. Marine Solutions at Wärtsilä in CHINA Our Offering Optimized solutions with local capabilities in project engineering and project management Standardized products for larger volume markets with lean delivery process through local factories People • Entrepreneurial mindset. Make things happen. Empower a qualified local organization in order to capture and deliver customer satisfaction towards (Chinese) customers. Customer communication Fast response during delivery process Fast engineering documentation Local commissioning support and local site supervision Easy to deal with WÄRTSILÄ Marine Solution / Hans Laheij WÄRTSILÄ#37Wärtsilä Qiyao Diesel Company Ltd. (Shanghai) 37 37 EM 二期用地#3838 Shareholder Information - Wärtsilä & SMDERI / CSIC CSIC 七一一研究所 SMDERI WÄRTSILÄ Wärtsilä is a global leader in complete lifecycle power solutions for the marine and energy markets Wärtsilä's vision is to be the most valued business partner of all the customers. Business segment: Ship Power, Power Plant, Services with the support of an effective and flexile manufacturing structure designed to cope with varying market demand In 2014, Wärtsilä's net sales totaled EUR4.779 billion with 17,700 employees Wärtsilä has operations in 200 locations in 70 countries around the world. Wärtsilä is listed on the NASDAQ OMX Helsinki, Finland. 11 CSIC (China Shipbuilding Industry Corporation): a state owned enterprise group and one of China's largest shipbuilding and ship repairing groups in China. CSIC has 3 listed companies, 28 non- listed companies and 28 R&D institutes in China, with in total personnel of 150,000. 2014 CSIC sales revenue over USD. 32 billion (USD30 billion in 2013). SMDERI (Shanghai Marine Diesel Engine Research Institute): a subsidiary of CSIC with roughly 2000 employees, and is the only research institute on marine diesel engine in China. SMDERI is specialized in marine diesel engine, power plant, etc. and engaged in R&D, manufacturing, technical service, turnkey project. SMDERI's main business activities include diesel engine, special engine, power system solutions, engine-room automation system, thermal engineering and energy service#3939 Letter of Intent 3.2.2005 Ground breaking 23.9.2005 100th Auxpac20 4.12.2007 生技术有限公司 合资合同签字仪式 Inauguration 29.06.2006 JV Contract 21.4.2005 WQDC Milestones 2005-2015 Introduction of Wartsila20 Genset 15.1.2010 Auxpac 16 launch event 2.12.2013 E5:0.0 AUXPAC 500th genset delivery 21.12.2009 by Dyse Diesel Campeny Lt. Shangha 1000 1000 AUXPACO 1000th genset delivery 28.6.2012 30.3.2015 Delivery 1st Auxpac 16#40Business Scope ■The scope of business is to produce, assemble and finish the AUXPAC generating sets and relevant parts and assemblies designed by Wärtsilä, and to sell & commission its own products in China. Portfolio products: Wärtsilä Auxpac 20 10 40 Wärtsilä Auxpac 26 Wärtsilä 20 genset Wärtsilä Auxpac 16 Wärtsilä 20 main engine#4141 Business Scope ■The Wärtsilä auxpac range is a pre-engineered generating set ■WQDC manufactures A16, A20 and A26 The Wärtsilä 20 "classic" genset is a custom designed generating set often used for special vessels and offshore Wärtsilä 20 Main Engine application for customers located in China.#42WQDC - State of the art factory Our WQDC assembly & testing factory designed and build according to Wärtsilä best practices Engine assembly takes place by means of "Lean" production lines WQDC has a high level of focus on EHS in all aspects of the factory design and operations Transport of engines in the factory takes place with "air cushions" to minimize lifting for the engines 222 42#43Technical area Dispatching Test run WQDC Factory layout Painting room ||| Storage ||. Elec. Ass. Assembly area Small Washing Quality Insp. Goods Reception Step 0 Step 0 Finishing Office building. Sanitary facilities. Auxpac 20 & Wartsila 20 Assembly Line Wartsila 16/20/26 Assembly Line Total construction area: 9800 m Workshop: ~8000 m Office: 1800 m Total site area: ~31000 m WARTSILA Big Washing Machine#44Bulk carriers Wartsila Auxpac 16 Wartsila Auxpac 20 Wartsila Auxpac 26 Research vessels Wartsila Auxpac 16 Wartsila Auxpac 20 Wartsila Auxpac 26 Wartsila 20 genset Wartsila 20 main engine HHR KURS SINOTRANS&CSC INDUSTRY BSIC WQDC genset applications Other small & medium size Merchant vessels Wartsila Auxpac 16 Wartsila Auxpac 20 Wartsila Auxpac 26 CHINARE BLACKY AUSTRAL ASIA LINE Tankers Wartsila Auxpac 16 Wartsila Auxpac 20 Wartsila Auxpac 26 Offshore applications - PSV, Drilling barge Wartsila 20 genset SKANDI BUCKL#4545 Wärtsilä's support throughout WQDC o per at ions Material Supply Production WQDC Vital Functions Finance WÄRTSILÄ Wärtsilä Supply Management Human Resource Project & Contract Management WÄRTSILÄ Quality WÄRTSILÄ MS 4 stroke JV Engineering Centre China WÄRTSILÄ Marine Solutions Sales WÄRTSILÄ Services WÄRTSILÄ Human Resources Sales & Marketing Customers#46Wärtsilä's support throughout WQDC o per at ions Wärtsilä Supply Management Our entire supply base is managed by Wärtsilä. From supplier selection, making frame contracts, supplier quality, supplier development and sourcing of new suppliers Wärtsilä Quality & EHS Management Wärtsilä work processes and way of working are fully implemented in WQDC. WQDC uses the QDMS system and participates in Wärtsilä programs such as LEAN, ZIP, safety reviews and other continuous improvement programs WÄRTSILÄ DESIGN, BRAND & QUALITY Manufactured by WQDC Wärtsilä Engineering Engineering information for each order will be received from Wärtsilä engineering department. WQDC has on site Wärtsilä engineering support to facilitate trouble shooting and quick assistance Wärtsilä Service Full support for the lifecycle and operation of the vessel including the warranty obligations will be taken care of by Wärtsilä's global service network. Where ever, when ever! 46 46#4747 Quality of the Components in our engines The engine quality is largely defined by the quality of the components that are assembled together. The selection of the supplier is done by Wartsila global sourcing as well as the continuous development of these suppliers In WQDC our engines include approx 65% western brand parts •Imported from Europe •Western brands that have a factory in China#4848 Sales channels WQDC delivers engines worldwide depending upon customer needs The majority of our products are delivered in China since most Merchant ships are manufactured in China WQDC has 2 sales channels: our own WQDC Sales Team and Wärtsilä Marine Solutions Sales Team Customers inside China for only WQDC scope of supply WQDC Sales Organization Customers outside China or customers inside China with package sales Wärtsilä Marine Solutions Organization#4949 Sales Department Market development Customer relationship Commercial negotiations WQDC organisation set-up Managing Director Assigned by Wärtsilä Financial Controller Assigned by SMDERI Finance Department Business Control & reporting Financial planning Accounting & bookkeeping Project management Department TS & quotation management Project management Auxpac 16 product ownership Taxation Quality & EHS Department Quality Control & Assurance Management systems Classification EHS Material Supply Department Operative Purchasing Goods reception & warehousing Logistics Auxpac 16 sourcing Production Department Assembly Testing Commissioning HR & Admin Department HR Admin IM-IT#5050 50 Management Systems LÅ DNV DNV BUSINESS ASSURANCE MANAGEMENT SYSTEM CERTIFICATE Certificate Nu. 4699-2008-AQ-RGC-RVA This is to certify that Wärtsilä Qiyao Diesel Company Ltd. (Shanghai) Registration Address: No. 215, Nan Lu Road, Pu Dong New District, Neonghi, PR China Na Activity) Business Adress: No. 2988, Jing Shan Road, Lingang New City, Shanghai, P.R. China has been found to conform to the Management System Standard ISO 9001:2008 This Certificate is valid for the following product or service ranges: Manufacture of Generating Sets -ALXPAC & Wartsila 20 LÅ DNV DET NORSKE VERITAS MANAGEMENT SYSTEM CERTIFICATE Certificate No. 61590-2009-AE-RGC-RVA This is to certify that Wärtsilä Qiyao Diesel Company Ltd. (Shanghai) No. 2988. liang Shan Road, Lingang Narhui District, Shanghai 201306, P.R. China has been found to conform to the Management System Standard: ISO 14001:2004 This Certificate is valid for the following product or service ranges Manufacture of Generating Sets-AUXPAC LÅ DNV DET NORSKE VERITAS MANAGEMENT SYSTEM CERTIFICATE Certificate No. 61595-2009-HSO-RGC-DNV This is to certify that The Occupational Health and Safety Management System of Wärtsilä Qiyao Diesel Company Ltd. (Shanghai) No. 2988, Jiang Shan Road, Lingang. Nanhui District, Shanghai 201306. P.R. China has been found to conform to the Management System Standard OHSAS 18001: 2007 This Certificate is valid for the following product or service ranges. Imaal Certification A June 9, 2008 This Certificate svad June 9th 2017 The end hos beva performed under the supervisioning Yu Meng Chun Anditor MGMI SYS HvA C024 Place an Shanghai, June 5, 2014 for the Accredit DNV CERTIFICATION B.V.. THE NETHERLANDS Inial Certification din September 27, 2009 This Certificate is valid unt September 27, 2012 Chen Yi anagement Reprezenta ack of a car of ecnditions as set on Be Catoction Agroot may render la Ca WHEN Yes 124HR. Tix Smear 12 0292100www.cas The cut has been performed under the supervision of Wang Yong Lead Auditor MGMT. SYS RVA C024 Place unte Shanghai, October 9, 2009 Manufacture of Generating Sets - AUXPAC Initial Certification date for the Accredited nit. DNV CERTIFICATION B.V.. THE NETHERLANDS September 25, 2009 This Certificate is valid until September 25, 2012 Chen Yi hugement Representative Lack of fulfilment of conditions as set out in the Certification Agreement may render this Certificate invalid. DORSET VIITAS CERVATION. Zywy 1,29 Lanch The Nethod 191102122688-ww.dw.com/www.andh The and has been performed under the supervision of Place and dine Shanghai, October 9th, 2009 for Det Norske Veritas Wang Yong Lead Auditor Chen Yi Management Representative Lack of fulfilment of conditions as set out in the Certification Agreement may render this Centificate invalid. DET NORSKE VERITAS 1904 Road Shan 23 PR-613-92112#5151 54 QUALITY, DELIVERY & COST - IN THAT ORDER! 1041 WQDC#52Thank you for your attention! Any questions or comments? 52 62#5353 63 Rules for today's factory tour * No PPE's are needed since factory activities are temporarily stopped SAFETY FIRST * Please walk through the middle of the factory * We will first walk to the goods reception area so that can start our tour by follow the production process Technical area Dispatching Test run Finishing Painting room Elec. Ass. Step 5 Storage Assembly area Step 4 Step 3 Step 2 Step 1 Small Washing Quality Insp. Step 0 Step 0 Goods Reception Big Washing Machine Factory tour