Wärtsilä’s Interim report January–March 2023
This release is a summary of Wärtsilä’s Interim report January–March 2023. The complete report is attached to this release as a pdf file. It is also available on the company website at www.wartsila.com.
PROFITABILITY IMPROVED, GOOD DEVELOPMENT IN SERVICES
HIGHLIGHTS FROM JANUARY–MARCH 2023
WÄRTSILÄ'S PROSPECTS
Marine
Wärtsilä expects the demand environment for the next 12 months (Q2/2023–Q1/2024) to be similar to that of the comparison period.
Energy
Wärtsilä expects the demand environment for the next 12 months (Q2/2023–Q1/2024) to be similar to that of the comparison period.
HÅKAN AGNEVALL, PRESIDENT & CEO: PROFITABILITY IMPROVED
“Although facing continued uncertainties in the operating environment, we successfully delivered growth and higher profitability. The global economic headwinds continued despite some improvements, including the reopening of China and decreasing energy costs. Cost inflation continued to burden the order backlog of our new equipment business.
In the energy market, the investment environment remains uncertain, especially for new power plants. Price pressure on fuel and raw material cost has eased during the beginning of the year, but rising interest rates have caused further uncertainty. On the other hand, investments in the energy transition have been at a high level, and supportive policies regarding battery energy storage and clean hydrogen has continued to develop during the first quarter of the year. Notably, we signed a contract to provide an energy storage system to the United Kingdom, the first project in the world to deliver stability services using a transmission-connected battery system. The service business in Energy continued to develop positively, and we signed several service agreements.
In the marine market, economic headwinds continued to limit growth, as rising newbuild prices combined with limited shipyard capacity continued to hamper newbuild ordering activity. Nevertheless, the market sentiment remained positive for Wärtsilä’s key segments with improving utilisation rates. Decarbonisation continues to be a major driver for our customers. As an example, we will supply the engines for Celebrity Cruises’ new ship, capable of operating with methanol fuel in addition to two other conventional fuel types. We thus continue advancing the use of alternative fuels for the cruise industry.
Our order intake increased by 26% supported by good development both in services and equipment. Net sales increased by 19% with growth in Marine Power and Energy. The good development in services has supported our profitability and our comparable operating margin improved to 6.0%. Nevertheless, cost inflation continued to burden the order backlog of our new equipment business. The cash flow from operating activities improved, supported by higher result and reduced working capital.
Wärtsilä is highly committed to support customers to decarbonise their operations. The transition to carbon-neutrality is progressing step-by-step. The International Maritime Organization’s new regulations regarding carbon intensity and energy efficiency in the maritime business, the Carbon Intensity Indicator (CII) and the Energy Efficiency Existing Ship Index (EEXI), came into force at the beginning of this year. We offer many solutions to help vessels meet these requirements. For example, we have introduced a derating retrofit solution for 2-stroke engines called Wärtsilä Fit4Power. This solution extends the emissions-compliant lifetime of merchant vessels by significantly improving combustion efficiency (15%), which in turn reduces both fuel consumption and greenhouse gas emissions. In addition to promoting the transition to carbon-neutrality for our customers, our goal is to become carbon-neutral in our own operations as well. Our aim is to be able to provide a product portfolio ready for zero-carbon fuels by 2030.
We continue to take actions to improve our profitability. Voyage was merged into Marine Power in the beginning of this year. After a strategic review, we have also decided to focus on end-to-end voyage optimisation and moving other parts of the Voyage business activities to the Portfolio Business. Additionally, we are planning to move Marine Electrical Systems, currently part of the Marine Systems business, to the Portfolio Business. These changes are expected to be completed during the second quarter of the year.
We expect the demand environment for the next 12 months to be similar to that of the comparison period, in both the Marine (including Marine Power and Marine Systems) and Energy businesses. Although our operating result margin is still clearly below our target, we are taking actions to improve our profitability step by step. As we have seen in the first quarter, we continue to grow our service business and deliver the part of our order backlog that has been significantly impacted by cost inflation. The turnaround of our energy storage business continues in the right direction and the decarbonisation transformation will have a positive impact on our business going forward.”
KEY FIGURES
| MEUR | 1–3/2023 | 1–3/2022 | Change | 2022 |
| Order intake | 1,739 | 1,380 | 26% | 6,074 |
| of which services | 889 | 732 | 21% | 3,066 |
| of which equipment | 850 | 648 | 31% | 3,008 |
| Order book, end of period | 6,153 | 6,107 | 1% | 5,906 |
| Net sales | 1,465 | 1,231 | 19% | 5,842 |
| of which services | 736 | 631 | 17% | 2,775 |
| of which equipment | 729 | 600 | 22% | 3,067 |
| Book-to-bill | 1.19 | 1.12 | 1.04 | |
| Comparable adjusted EBITA* | 93 | 72 | 29% | 349 |
| % of net sales | 6.4 | 5.9 | 6.0 | |
| Comparable operating result | 88 | 65 | 34% | 325 |
| % of net sales | 6.0 | 5.3 | 5.6 | |
| Operating result | 92 | -147 | 163% | -26 |
| % of net sales | 6.3 | -11.9 | -0.4 | |
| Result before taxes | 84 | -147 | 157% | -32 |
| Basic earnings/share, EUR | 0.09 | -0.24 | -0.11 | |
| Cash flow from operating activities | 145 | -122 | -62 | |
| Net interest-bearing debt, end of period | 477 | 276 | 481 | |
| Gearing | 0.24 | 0.14 | 0.23 | |
| Solvency, % | 33.4 | 35.3 | 35.3 |
*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, Tuesday 25 April 2023, at 10:00 a.m. Finnish time (8:00 a.m. UK time).
If you only wish to view the stream, please register at: http://www.mediaserver.fi/live/wartsila.
If you plan to view the stream and ask questions in the Q&A session, please register at: https://register.gotowebinar.com/register/2530561625928697437.
Please register using only one of the links above, not both. Once you have registered, you will receive a confirmation email that includes specific joining instructions.
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Please note that there will be no separate audio (phone) line for the event. The Q&A session will use the audio in the GoToWebinar tool itself. In case you are joining via mobile, you may need to install the free GoToWebinar app from the app store.
To enter into the questions and answers queue, please use the raise your hand function in the webinar platform and unmute your microphone when the moderator announces your name. Please remember to lower your hand once your question has been answered.
For more information on joining and setting up your audio for Q&A, you may visit the official GoToWebinar attendee joining guide at: https://support.goto.com/webinar/how-to-join-attendees. Instructions on Q&A related functionalities can be found at: https://support.logmeininc.com/gotowebinar/help/raise-your-hand.
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:
Saara Smura
Vice President, Corporate Communications
Tel. +358 50 363 5577
saara.smura@wartsila.com
Sari Luhanka
Manager, Global Media Relations
Tel. +358 50 386 0353
sari.luhanka@wartsila.com
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 their environmental and economic performance. Our dedicated and passionate team of 17,500 professionals in more than 240 locations in 79 countries shape the decarbonisation transformation of our industries across the globe. In 2022, Wärtsilä’s net sales totalled EUR 5.8 billion. Wärtsilä is listed on Nasdaq Helsinki. www.wartsila.com
Wärtsilä Interim Report January-March 2023
