Wärtsilä’s Financial Statements Bulletin January–December 2022
This release is a summary of Wärtsilä’s Financial Statements Bulletin January–December 2022. The complete report is attached to this release as a pdf file. It is also available on the company website at www.wartsila.com.
A CHALLENGING YEAR WITH STRONG ANNUAL GROWTH
HIGHLIGHTS FROM OCTOBER–DECEMBER 2022
HIGHLIGHTS FROM JANUARY–DECEMBER 2022
WÄRTSILÄ'S PROSPECTS FOR 2023
Wärtsilä expects the demand environment for the next 12 months in the Marine business (including Marine Power and Marine Systems) to be similar to that of last year. For the Energy business, Wärtsilä expects the demand environment to be better than last year.
HÅKAN AGNEVALL, PRESIDENT & CEO: GOOD GROWTH IN SERVICES
“The year 2022 was characterised by geopolitical tensions and uncertainty in the global business environment. The war in Ukraine has had a strong direct and indirect impact on the markets we operate in, especially the energy markets. Following Russia’s attack on Ukraine, we exited from the Russian market. However, despite the continuing challenging market conditions, demand has remained at a good level both for equipment and services.
In the energy markets, the market situation remained volatile during the year. The war in Ukraine, the consequent sanctions on Russia and the Covid-19 pandemic contributed to global cost inflation as well as price volatility in the energy markets. At the same time, climate policies around the world continue to evolve towards more ambitious decarbonisation targets. We have seen that the demand for balancing power has been growing and we have signed important orders for both thermal balancing power and energy storage solutions throughout the year. In the fourth quarter, for example, we signed a contract to deliver a new grid-scale energy storage facility in the UK, and dual-fuel balancing engines for two new power plants in the USA, among others.
In the marine market, the market sentiment continued to improve throughout 2022. Ordering activity was supported by record-high orders for LNG carriers, especially in terms of order value. Increasing demand for tonnage, improved volumes in the passenger travel segment and continued fleet reactivations developed favourably. This also supported our service business. The active cruise fleet has been 94% at the end of 2022 compared to around 70% at the end of 2021. Decarbonisation continues to be an increasingly important topic for our customers. One proof point of our ability to support our customers’ environmental targets is the announced order for hybrid propulsion systems for four new heavy lift vessels. This innovative hybrid system will minimise the ships’ CO2 emissions, thus supporting the marine sector’s decarbonisation ambitions.
We were able to grow our order intake by 6% and net sales by 22% during the year. We were especially successful in the service business, where our order intake grew by 17% exceeding the equipment order intake in absolute terms. Service net sales grew by 12%, with growth in all businesses. Interest in long-term agreements has been high, and our service agreement renewal rates in both the Marine and Energy businesses were more than 90%. Equipment net sales increased by 33% and was strongly supported by growth in Energy equipment deliveries. The comparable operating result decreased by 9%, supported by higher sales volumes and burdened by cost inflation, a less favourable sales mix between equipment and services, and a cost provision related to the Olkiluoto 1 and 2 nuclear project. Particularly the profitability of projects taken before the acceleration of cost inflation in the beginning of 2022 has suffered.
In July, we announced our plan to centralise our 4-stroke engine manufacturing in Europe to Vaasa, Finland and to scale down manufacturing in Trieste, Italy. The estimated full annual cost savings are expected to be approximately EUR 35 million by 2025 and the associated transformation costs approximately EUR 130 million, out of which the cash flow impact is approximately EUR 75 million.
In July, we announced that we have completed the orderly exit from the Russian market following our announcement of scaling down activities in April 2022. All adjustments and closures of Wärtsilä’s operations were completed in accordance with local regulations. We have made a write-down of approximately EUR 200 million in the first quarter related to the exit from Russia, which has an impact on our operating result for the year.
In October, we announced that we are further strengthening the marine end-to-end lifecycle offering by integrating the Voyage business into Marine Power as a business unit. By linking the unique digital expertise in Voyage with our well-established Performance Services, we are taking the next step in creating end-to-end digital solutions for maritime customers. The integrated organisation became effective as of January 1, 2023.
We have continued to invest in R&D despite the prevailing market uncertainty. In June, we opened our new Sustainable Technology Hub in Vaasa, Finland. The technology centre enables agile development and efficient research of sustainable solutions for the marine and energy industries. We introduced the new Wärtsilä 25 medium-speed 4-stroke engine, designed to accelerate and support the maritime sector’s efforts in achieving decarbonised operations. It is the first Wärtsilä engine to run on ammonia as a fuel, but it is already capable of operating on diesel, LNG or on gas or liquid carbon-neutral biofuels.
We continue to promote the transition to carbon-neutrality both in our own operations as well as for our customers. Our goal is to become carbon-neutral in our own operations and to be able to provide a product portfolio ready for zero-carbon fuels by 2030. We already took the decision to purchase fully green electricity in Finland and have developed processes to utilise all heat and power from engine testing while exploring ways to shorten the time needed for test runs. Our products and solutions will meet the most stringent environmental requirements. Decarbonisation will transform our industries and we have a key role to play in driving that transformation. Hybridisation is one way of shaping decarbonisation in the marine industry, ensuring fuel savings, in addition to substantial reductions in emissions. Today, we are the market leader in marine hybrid installations with 25% market share, measured in MWh battery capacity installed.
Whereas global economic and political uncertainty is set to continue, our strong order book in both equipment and services will support our ambitions for 2023. At the same time, the share of equipment orders taken before the acceleration of cost inflation in the beginning of 2022 will be significantly smaller. We aim to improve profitability by climbing the service value ladder, and by turning around the Energy Storage and Voyage business units.”
KEY FIGURES
| MEUR | 10–12/ 2022 |
10–12/ 2021 |
Change | 1–12/ 2022 |
1–12/ 2021 |
Change |
| Order intake | 1,638 | 2,150 | -24% | 6,074 | 5,735 | 6% |
| of which services | 791 | 747 | 6% | 3,066 | 2,615 | 17% |
| Order book, end of period | 5,906 | 5,859 | 1% | |||
| Net sales | 1,770 | 1,597 | 11% | 5,842 | 4,778 | 22% |
| of which services | 784 | 751 | 4% | 2,775 | 2,467 | 12% |
| Book-to-bill | 0.93 | 1.35 | 1.04 | 1.20 | ||
| Operating result | 37 | 144 | -75% | -26 | 314 | -108% |
| % of net sales | 2.1 | 9.0 | -0.4 | 6.6 | ||
| Comparable operating result | 93 | 158 | -41% | 325 | 357 | -9% |
| % of net sales | 5.3 | 9.9 | 5.6 | 7.5 | ||
| Comparable adjusted EBITA* | 99 | 165 | -40% | 349 | 388 | -10% |
| % of net sales | 5.6 | 10.4 | 6.0 | 8.1 | ||
| Result before taxes | 35 | 134 | -74% | -32 | 296 | -111% |
| Basic earnings/share, EUR | 0.05 | 0.14 | -0.11 | 0.33 | ||
| Cash flow from operating activities | 51 | 370 | -62 | 731 | ||
| Net interest-bearing debt, end of period | 481 | 4 | ||||
| Gross capital expenditure | 161 | 143 | ||||
| Gearing | 0.23 | 0.00 | ||||
| Solvency, % | 35.3 | 38.6 | ||||
| Personnel, end of period | 17,581 | 17,305 | 2% |
*Comparable adjusted EBITA excludes items affecting comparability and purchase price allocation amortisation.
Wärtsilä’s financial information for the year 2021 has been adjusted to reflect a change in categorisation between equipment and services in Wärtsilä Marine Power and Wärtsilä Marine Systems. This restatement has no impact on the group’s total financial figures.
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.
BOARD OF DIRECTORS’ DIVIDEND PROPOSAL
The Board of Directors proposes that a dividend of EUR 0.26 per share be paid for the financial year 2022. The parent company’s distributable funds total EUR 1,080,636,552.76, which includes EUR 196,530,548.11 in net profit for the year. There are 590,023,390 shares with dividend rights. The dividend shall be paid in two instalments.
The first instalment of EUR 0.13 per share shall be paid to the shareholders who are registered in the list of shareholders maintained by Euroclear Finland Oy on the dividend record date of 13 March 2023. The payment day proposed by the Board for this instalment is 20 March 2023.
The second instalment of EUR 0.13 per share shall be paid in September 2023. The dividend record day of the second instalment shall be 13 September 2023 and the second instalment of the dividend shall be paid to shareholders who are registered in the list of shareholders maintained by Euroclear Finland Oy on such day. The Board proposes the second instalment is paid on 20 September 2023.
ANALYST AND PRESS CONFERENCE
A virtual analyst and press conference will be held as a webinar today, Tuesday 31 January 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://attendee.gotowebinar.com/register/2984383948907077980.
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.
***
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:
Atte Palomäki
Executive Vice President, Communications, Branding & Marketing
Tel. +358 10 709 5599
atte.palomaki@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 Financial Statements Bulletin 2022
