Wärtsilä’s Half-year financial report January–June 2024
This release is a summary of Wärtsilä’s Half-year financial report January–June 2024. The complete report is attached to this release as a pdf file. It is also available on the company website at www.wartsila.com.
ORDER INTAKE, PROFITABILITY AND CASH FLOW ALL IMPROVED
Highlights from April–June 2024
Highlights from January–June 2024
WÄRTSILÄ'S PROSPECTS
Marine
Wärtsilä expects the demand environment for the next 12 months (Q3/2024-Q2/2025) to be better than that of the comparison period.
Energy
Wärtsilä expects the demand environment for the next 12 months (Q3/2024-Q2/2025) to be better than that of the comparison period.
HÅKAN AGNEVALL, PRESIDENT & CEO: MAKING PROGRESS ON THE PATH TO FINANCIAL TARGETS
“The market environment remained stable for Wärtsilä’s businesses during the second quarter of 2024. The headwinds for the global economy continued, but economic activity has proven to be relatively resilient.
In the energy market, the quarter was characterised by an increase in protectionist policies, with trade risks elevated by developments such as the recently imposed import tariffs by the US and EU. The market for engine power plants was stable, with good activity especially in the US. The rapid growth of artificial intelligence (AI) is having a sizable impact on the global electricity demand. According to the IEA, data centres consume approximately 1-2% of global electricity at present, potentially doubling in share by 2026. In May, we signed a co-operation agreement with AVK, the largest and fastest-growing supplier of power solutions for data centres in Europe, to deliver on-site power generation for European data centres. The combination of AVK’s track record in power system design for data centres and Wärtsilä’s leading expertise in designing and manufacturing high-efficiency medium-speed engines has interesting potential moving forward.
Flexible power generation solutions play a vital role in balancing intermittent renewable energy sources. It is crucial for our customers that the solutions we sell are future-proof, and in the case of engine power plants, ready to run on sustainable fuels when these fuels become readily available. In June, Wärtsilä reached a significant milestone by launching the world’s first large-scale 100% hydrogen-ready engine power plant concept. This solution can use natural gas today to provide flexibility and balancing, and can be converted to run on hydrogen, thereby future-proofing the journey to net zero.
In the marine market, trade flows continued to be heavily impacted by the sanctions on Russia, and attacks on ships in the Red Sea. Global trade is facing challenges from longer average shipping distances, higher transportation costs, and delays to global supply chains, which have ultimately increased the demand for ship capacity. Investments in new ships during the first half of the year were clearly higher than in the comparison period, and the uptake of alternative fuels remained at a healthy level. Despite a continued increase in shipyard capacity and output, especially in China and South Korea, newbuild ship prices continued to be high, indicating a shortage of yard capacity. Market sentiment continued to develop favourably for Wärtsilä, with momentum building in our key segments, and with decarbonisation-related retrofits and longer trade routes supporting services. For instance, in May, we announced that we will supply the electrical systems needed to convert two Scandlines ferries to a plug-in hybrid solution, the world’s largest conversion project of its kind. Ship hybridisation is one of the solutions for decarbonisation, and with this project, we can help Scandlines towards their target of achieving emission-free operations on the route by 2030.
Wärtsilä’s order intake in the second quarter increased organically by 12%. Service order intake increased, supported by good activity in Marine. Equipment order intake increased, supported by higher equipment order intake in Marine, Engine Power Plants, and Portfolio Business. Equipment order intake in Energy Storage & Optimisation decreased, resulting from lower battery material prices.
Net sales in the second quarter increased organically by 9%, with growth in both service and equipment. In Energy, the equipment business is lumpy by nature, which means that order intake, as well as revenue recognition, can vary significantly from one quarter to another. We expect that the equipment deliveries in the second half of 2024 will grow faster than the service deliveries. This is driven by equipment deliveries in Energy, both for Engine Power Plants and Energy Storage & Optimisation, being tilted towards the second half of 2024. In Marine, the lead times from equipment order intake to net sales are slightly longer, due to the remaining constraints in shipyard capacity.
The comparable operating result increased by 63% to EUR 176 million with a comparable operating margin of 11.3%. The comparable operating result increased in both Marine and Energy, and also in our businesses to be divested, reported under Portfolio Business. During recent years, Wärtsilä’s comparable operating margin percentage has typically reached its high in the fourth quarter of each year. In 2024, we do not expect to see that normal seasonality, given the mix impact from increasing equipment deliveries in the second half of the year.
Cash flow from operating activities significantly improved to EUR 216 million during the second quarter. The improvement in cash flow was driven by a better operating result, but also by our good working capital development. Over the past twelve months, Wärtsilä has generated over a billion euros of cash flow from its operating activities.
In October 2023, we announced a strategic review of Energy Storage & Optimisation to accelerate its profitable growth in a way that benefits customers, employees, and value creation for Wärtsilä shareholders. This review is still ongoing.
We expect the demand environment for the coming 12 months to be better than for the comparison period in both Marine and Energy. Innovation in sustainable technology remains at the heart of Wärtsilä as we continue our focus on helping our customers to continuously improve their environmental and economic performance. We are focused on executing our strategy and remain very well positioned for the transformation towards carbon-neutral shipping and a 100% renewable energy future.”
KEY FIGURES
| MEUR | 4–6/2024 | 4–6/2023 | Change | 1–6/2024 | 1–6/2023 | Change | 2023 |
|---|---|---|---|---|---|---|---|
| Order intake | 1,854 | 1,687 | 10% | 3,778 | 3,427 | 10% | 7,070 |
| of which services | 982 | 913 | 8% | 1,931 | 1,802 | 7% | 3,519 |
| of which equipment | 872 | 774 | 13% | 1,847 | 1,625 | 14% | 3,550 |
| Order book, end of period | 7,607 | 6,249 | 22% | 6,694 | |||
| Net sales | 1,556 | 1,454 | 7% | 2,877 | 2,919 | -1% | 6,015 |
| of which services | 834 | 807 | 3% | 1,666 | 1,543 | 8% | 3,148 |
| of which equipment | 722 | 647 | 12% | 1,211 | 1,376 | -12% | 2,867 |
| Book-to-bill | 1.19 | 1.16 | 1.31 | 1.17 | 1.18 | ||
| Comparable adjusted EBITA* | 180 | 113 | 60% | 317 | 206 | 54% | 518 |
| % of net sales | 11.6 | 7.8 | 11.0 | 7.1 | 8.6 | ||
| Comparable operating result | 176 | 108 | 63% | 308 | 196 | 57% | 497 |
| % of net sales | 11.3 | 7.4 | 10.7 | 6.7 | 8.3 | ||
| Operating result | 168 | 66 | 156% | 295 | 158 | 87% | 402 |
| % of net sales | 10.8 | 4.5 | 10.2 | 5.4 | 6.7 | ||
| Result before taxes | 160 | 53 | 200% | 278 | 137 | 103% | 364 |
| Earnings per share (EPS), basic and diluted, EUR | 0.20 | 0.05 | 0.34 | 0.14 | 0.44 | ||
| Cash flow from operating activities | 216 | 75 | 475 | 219 | 822 | ||
| Net interest-bearing debt, end of period | -250 | 462 | 35 | ||||
| Gearing | -0.11 | 0.23 | 0.02 | ||||
| Solvency, % | 35.3 | 33.5 | 37.0 | ||||
| *Comparable adjusted EBITA excludes items affecting comparability and purchase price allocation amortisation. | |||||||
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.
ANALYST AND PRESS CONFERENCE
A virtual analyst and press conference will be held as a webinar today, Friday 19 July 2024, at 10.00 a.m. Finnish time (8.00 a.m. UK time).
Participating via the web
Register and login to the web interface via the web address below. When you register, you are prompted to participate as a listener or as an active Q&A participant. Once the event starts, the event page will switch to the presentation mode automatically.
wartsila.videosync.fi/q2-2024/register
If you are participating via the web, you can enter the Q&A que by clicking the raise hand button on the bottom-right corner of the video/audio player. Once the event host announces your name, please open your microphone from the bottom-left corner of the video/audio player to be able to be heard.
Participating via the teleconference
Please use the teleconference dial-in option only if you experience issues with the web participation or your organisations firewalls set limitations for the web participation.
You can access the teleconference by registering on the link below. After the registration you will receive an email with the dial-in numbers and your personal PIN code to access the conference.
palvelu.flik.fi/teleconference/?id=50048992
If you are participating via the dial-in teleconference, you can enter the que by clicking *5 (star-five) in the telephone keypad, and if you want to withdraw your question, click *6 (star-six) respectively.
A recording of the webcast will be available on the company website as soon as possible after the event.
For further information, please contact:
Arjen Berends
Executive Vice President & CFO
Tel. +358 10 709 5444
arjen.berends@wartsila.com
Hanna-Maria Heikkinen
Vice President, Investor Relations
Tel. +358 10 709 1461
hanna-maria.heikkinen@wartsila.com
For press information, please contact:
Anne Alarotu
Head of External Communications
Tel. +358 50 487 1308
Wärtsilä in brief
Wärtsilä is a global leader in innovative technologies and lifecycle solutions for the marine and energy markets. We emphasise innovation in sustainable technology and services to help our customers continuously improve environmental and economic performance. Our dedicated and passionate team of 17,800 professionals in more than 280 locations in 79 countries shape the decarbonisation transformation of our industries across the globe. In 2023, Wärtsilä’s net sales totalled EUR 6.0 billion. Wärtsilä is listed on Nasdaq Helsinki. www.wartsila.com
