Wärtsilä (WRT1V) Pre-silent call summary

Executive summary

• Q3 performance aligned with expectations, with stable marine services and strong equipment momentum driven by decarbonization and regulatory trends.

• Vessel ordering forecasts for 2024 and beyond have been revised upward, indicating robust demand in key marine segments.

• Yard capacity is recovering, with China leading growth; global capacity expected to reach 80-85% of 2011 peak by 2030.

• Energy outlook remains positive, with stable service utilization and increasing order size lumpiness.

Trading performance and revenue trends

• Marine equipment and service markets are performing well, with notable activity in cruise, ferry, and offshore segments.

• Container ship newbuild orders have increased, supporting anticipated volume growth.

• Energy segment shows steady order intake, though not all orders are publicly announced due to customer preferences.

• All marine service segments are trading well, with low scrapping rates and high vessel utilization.

Profitability and margins

• Progress continues toward financial targets, with most achieved except for profit, which is expected to improve.

• Margins in H2 will be lower than H1 due to a higher share of newbuild deliveries, though absolute revenues and earnings may rise.

• Service margins benefit from moving up the value ladder and improved profitability in the legacy Voyage business.

• Retrofit projects are less profitable than spare parts but more profitable than newbuilds, impacting service margin mix.