Wärtsilä (WRT1V) Pre-silent call summary

Executive summary

• Q4 performance aligned with expectations, with stable markets and positive trends in key marine segments, especially cruise and ferry, driven by fleet replacement and regulatory tightening.

• Energy segment faces uncertainty due to potential U.S. tariffs, but demand for balancing power and storage remains strong, supported by electrification and coal replacement.

• Divestment of ANCS announced; financial details to be disclosed with Q4 earnings.

• Strategic review of storage business ongoing, with clarity expected by 2025, preferably sooner.

Trading performance and revenue trends

• Marine segment continues to see robust demand across cruise, ferry, offshore, and container vessels, with regulatory changes driving further activity.

• Yard capacity remains a headwind but is gradually improving; order books now average 3.7 years, up from 2 years previously.

• Energy segment maintains strong demand for storage and engine power plants, with balancing power needs rising due to renewables.

• Aftermarket and service businesses show sustained growth, with book-to-bill ratios above one across all service streams.

Profitability and margins

• Comparable operating margin typically peaks in Q4, but no such seasonality expected for 2024; no material deviation from previous guidance.

• Selectivity in order intake for storage ensures margin protection; not all orders are accepted if risk or price is unfavorable.

• Portfolio businesses have transitioned from loss-making to profitable, supporting improved future sale prices.