Finnish ship systems and technology giant Wartsila is expecting a "really silent" first half for newbuilding orders, but its scrubber business is still ticking over at lower levels.
Retrofits of the exhaust cleaning systems were badly hit by coronavirus lockdowns in China in February and March, but activity is now returning to normal, the company said.
Tamara de Gruyter, president of Wartsila's marine systems business, told TradeWinds the company is still able to manufacture scrubbers.
"Our supply chain has of course suffered a bit but overall I would say it's pretty okay still," she said.
"One of the good things is that Chinese yards are actually back to almost full capacity. Yards are very busy working overtime to catch up with delays."
De Gruyter added: "Most of the equipment has already arrived there, so maybe the bigger challenge for us is the fact we can't easily travel cross-border. How do we get people there for commissioning and that kind of thing? We are working on all kinds of solutions to get the right people there."
The company booked a few scrubber orders in the first quarter, but "not a lot compared to the first quarter of last year when we had a tsunami," the executive said.
"The fuel spread has been getting smaller, so it has slowed down a little bit. Let's see how the economy and the whole thing evolves and hopefully it will pick up."
No cancellations
Norwegian tanker owner Stolt-Nielsen said last week that it is looking to cancel scrubber installations to preserve cash during the pandemic.
De Gruyter said that Wartsila has suffered no cancellations so far, however, and that retrofits can still be carried out this year for new orders.
"So from that angle we're in a good place," she added.
In terms of newbuildings, Wartsila's president of marine power Roger Holm told TradeWinds that order levels are set to halve from last year, when they were already at a historically low ebb.
"I don't foresee huge activities during the first half of the year going forward so it will be a really, really long first half of the year. It will be really, really silent," he said.
"And then everything will depend on how quickly the world will open up again, how quickly we will see the economy start growing again."
Global vessel contracting declined to 127 registered deals in the period, against 227 a year ago, the company said.
Savings being made
The company has said it is saving €100m ($107m) during the pandemic, from reducing working hours and initiating temporary layoffs, as well as by limiting the use of external personnel and consultants.
Discretionary spending will also be reduced, and non-critical development projects will be postponed.
"It's very much about where we see demand going down or where we can hold development projects," Holm said.
"It's very much focusing like everyone else on cash generation. If there is no business then we try to be flexible."
The cruiseship business has been severely hit, which will impact its cruise service business.
But Holm said in general ships are still seeing fairly good operating activity. "Not everything will stop," he said.
First quarter net profit fell to €29m from €59 a year ago.
The order intake decreased by 12% to €1.24bn from €1.41bn, while revenue was down 2% at €1.17bn.
Wartsila withdrew its market outlook for 2020 on 31 March due to the virus.
Chief executive Jaakko Eskola said demand was "reasonable considering the prevailing market conditions".
