HIGHLIGHTS FROM APRIL–JUNE 2023

• Order intake increased by 17% to EUR 1,687 million (1,440), of which organic growth was 21%
• Service order intake increased by 13% to EUR 913 million (811)
• Net sales increased by 3% to EUR 1,454 million (1,407), of which organic growth was 7%
• Book-to-bill amounted to 1.16 (1.02)
• Comparable operating result increased by 26% to EUR 108 million (85), which represents 7.4% of net sales (6.1).
• Operating result decreased by 12% to EUR 66 million (75), which represents 4.5% of net sales (5.3).
• Basic earnings per share decreased to 0.05 euro (0.09)
• Cash flow from operating activities increased to EUR 75 million (-90)

HIGHLIGHTS FROM JANUARY–JUNE 2023

• Order intake increased by 22% to EUR 3,427 million (2,820), of which organic growth was 25%
• Service order intake increased by 17% to EUR 1,802 million (1,543)
• Order book at the end of the period increased by 5% to EUR 6,249 million (5,936)
• Net sales increased by 11% to EUR 2,919 million (2,639), of which organic growth was 13%
• Book-to-bill amounted to 1.17 (1.07)
• Comparable operating result increased by 30% to EUR 196 million (151), which represents 6.7% of net sales (5.7)
• Operating result increased by EUR 230 million to EUR 158 million (-72), which represents 5.4% of net sales (-2.7)
• Basic earnings per share increased to 0.14 euro (-0.16)
• Cash flow from operating activities increased to EUR 219 million

WÄRTSILÄ’S PROSPECTS

Marine

Wärtsilä expects the demand environment for the next 12 months (Q3/2023–Q2/2024) to be similar to that of the comparison period.

Energy

Wärtsilä expects the demand environment for the next 12 months (Q3/2023–Q2/2024) to be similar to that of the comparison period.

HÅKAN AGNEVALL, PRESIDENT & CEO: TRANSFORMING WÄRTSILÄ TO A MORE PROFITABLE AND STABLE COMPANY

“The market sentiment remained fairly positive during the second quarter of 2023, and we succeeded to improve our performance. The continued growth in service and positive development in the energy storage business supported our profitability improvement.

In the energy market, higher interest rates, volatile gas prices and longer permitting times continued to hamper new projects, especially in the power plants business. In Energy storage, the decrease of battery raw material prices during the first half of the year has resulted in orders being postponed as certain customers wait for even lower price levels. Interest in balancing technologies remains high as supportive energy and climate policies around the world continue to evolve towards decarbonisation targets. The Energy service business continued to develop well. For example, we signed a two-year renewal of an Operations & Maintenance agreement with the Brazilian independent energy producer, Gera Amazonas. We also signed our largest ever energy storage deal to-date with an Australian customer, Origin Energy.

In the marine market, the increasing cost of new ships and limited capacity at shipyards continued to limit the investment appetite in some segments. However, the market sentiment remained positive in Wärtsilä’s key segments due to continued investments in new Liquefied Natural Gas (LNG) terminals, improving sentiment in the passenger travel segment, and the continued growth in demand for offshore assets. Shipping companies face increasing pressure to decarbonise their operations, but more incentives are required to accelerate the pace of investments. Recent IMO MEPC meeting sharpened 2030 targets by introducing additional targets to reduce overall GHG emissions by 20% and revised the long-term goal to be net zero by or around 2050. The clear rise in the ambition supports Wärtsilä’s strategy and accelerates our decarbonisation opportunities.

Q2 order intake increased by 17%, supported by good development both in equipment and services. Net sales increased by 3% with solid growth in services and decline in equipment. The comparable operating result increased by 26% with the comparable operating margin amounting to 7.4%, with strong contribution from services and energy storage. We managed to improve our profitability despite taking a 19 MEUR provision in a single turnkey project in the Gas Solutions business unit belonging to Marine Systems. Cash flow from our operating activities also improved.

Wärtsilä is committed to decarbonise shipping operations, and we have continued to invest in our engine portfolio to be capable of utilising carbon neutral and zero carbon fuels. Swedish ferry operator Stena Line contracted us to convert some of its vessels to operate with methanol fuel. This includes the fuel supply system and engine modifications, as well as integrating the new installations with the ships’ existing systems. Converting ferries for methanol fuel will enable them to be compliant with various existing and upcoming regulations, including the Carbon Intensity Indicator (CII), FuelEU Maritime, and IMO 2050 GHG reduction target. In the energy storage industry where safety is a major priority, Wärtsilä’s technology is designed to meet and exceed stringent safety and quality standards. During the quarter, our GridSolv Quantum energy storage technology attained a new NFPA 69 fire safety standard. In June, Wärtsilä was recognised by TIME Magazine as one of the 100 most influential companies in the world for the continuous pursuit and focus on innovation and for shaping the decarbonisation of the energy and marine sectors.

As announced during the first quarter, we completed the transfer of parts of the Voyage business activities (previously part of Marine Power) and Marine Electrical Systems business unit (previously part of Marine Systems) to the Portfolio Business. By doing this, we will accelerate the performance improvement of these units and unlock their value through divestments or other strategic alternatives.

In June, two new members joined our Board of Management. Anders Lindberg was appointed as President of the Energy business, and Saara Tahvanainen as Executive Vice President, Marketing and Communications. I am very happy to welcome Anders and Saara to the Wärtsilä team and look forward to developing our business together with them.

We expect the demand environment for the next 12 months to be similar to that of the comparison period, in both Marine (including Marine Power and Marine Systems) and Energy businesses. We are step by step moving towards our profitability target. Services continues to grow profitably and we are delivering the part of our order backlog that has been significantly impacted by cost inflation. Energy storage is improving its profitability and the decarbonisation transformation continues to gain momentum in marine and energy. As a technology leader in decarbonisation, Wärtsilä is very well positioned for the future and will benefit from the transformation that lies ahead.”

Wärtsilä presents certain alternative performance measures in accordance with the guidance issued by the European Securities and Markets Authority (ESMA). The definitions of these alternative performance measures are presented in the Calculations of financial ratios section.

Source: Wärtsilä