Wärtsilä - Interim report (Q1 and Q3)

Wärtsilä's Interim Report January-March 2024

Wärtsilä Corporation, Interim Report January-March 2024, 26 April 2024 at 8:30
(EEST)

Wärtsilä's Interim Report January-March 2024

This release is a summary of Wärtsilä's Interim Report January-March 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.

DOUBLE-DIGIT COMPARABLE OPERATING MARGIN AND CONTINUED STRONG ORDER INTAKE

Highlights from January-March 2024

  · Order intake increased by 11% to EUR 1,924 million (1,739), and the organic
growth was 17%
  · Service order intake increased by 7% to EUR 949 million (889)
  · Order book at the end of the period increased by 19% to EUR 7,294 million
(6,153)
  · Net sales decreased by 10% to EUR 1,321 million (1,465), and the organic
decrease was 6%
  · Book-to-bill amounted to 1.46 (1.19)
  · Comparable operating result increased by 50% to EUR 132 million (88), which
represents 10.0% of net sales (6.0)
  · Operating result increased by EUR 35 million to EUR 127 million (92), which
represents 9.6% of net sales (6.3)
  · Basic earnings per share increased to 0.14 euro (0.09)
  · Cash flow from operating activities increased to EUR 258 million (145)

WÄRTSILÄ'S PROSPECTS

Marine

Wärtsilä expects the demand environment for the next 12 months (Q2/2024-Q1/2025)
to be better than that of the comparison period.

Energy

Wärtsilä expects the demand environment for the next 12 months (Q2/2024-Q1/2025)
to be better than that of the comparison period.

HÅKAN AGNEVALL, PRESIDENT & CEO: BECOMING A MORE FOCUSED AND PROFITABLE COMPANY

“Wärtsilä continued to make good progress during the first quarter of 2024. Our
profitability improved, cash flow from operations increased and our order book
ended up at a new all-time high driven by a continued strong order intake. We
also made good progress in services, with service net sales growing by double
-digits in both Marine and Energy.

The headwinds for the global economy continued during the quarter. In the energy
market, the current macroeconomic situation caused uncertainty and delayed
decision-making. On the positive side, the global energy transition advances
steadily. The move to renewables, combined with significant volumes of
traditional inflexible assets nearing retirement, has resulted in a need for
more flexibility in energy systems around the world. This creates ample growth
opportunities for Wärtsilä in the mid to long term. In March, we signed a
contract continuing our successful collaboration with our customer Lower
Colorado River Authority (LCRA) in Texas, USA. We will provide another ten
Wärtsilä 50SG engines to LCRA, generating an output of approximately 190 MW. The
fast-starting Wärtsilä engines will provide dispatchable power to balance the
increasing amount of intermittent renewables introduced into the system.

In the marine market, trade flows around the world have been impacted by the
conflicts in the Middle East, the attacks on ships in the Red Sea, and the
drought affecting the Panama Canal, which have led to longer average shipping
distances, increased transportation costs, and delays to global supply chains.
Driven by the increasing demand for ship capacity and decarbonisation-related
ship renewal, investments in new ships were clearly higher than in the first
quarter of 2023. Higher capacity utilisation and a continued increase in
shipyard capacity supported the growth in ship delivery volumes. The market
sentiment continued to develop favourably for Wärtsilä's key segments,
especially on the passenger side, with good development in passenger volumes
creating demand for new vessels in both cruise and ferry. The uptake of
alternative fuels remained at a healthy level. From January 1st, shipping has
been included in the EU ETS, an emissions trading system that obliges shipping
companies operating in the EU to purchase and use emission allowances based on
their CO2 or CO2-equivalent emissions. This incentivises shipping companies to
reduce emissions and modernise fleets, either through renewals or retrofits. As
an established technology leader, and with a wide range of technologies and
specialised services Wärtsilä is well positioned to support customers on their
decarbonisation journeys.

From the beginning of 2024, we simplified our organisation and reporting
structure to two segments, Marine and Energy, both focused on decarbonising
their respective industries. Portfolio Business will continue to be reported as
other business activities. In the first quarter, Wärtsilä's order intake grew
organically at 17% supported by good equipment order intake in Marine and engine
power plants, as well as continued growth in service. Net sales decreased
organically by 6%. While we saw growth in service net sales, equipment net sales
decreased in both Energy and Marine, with the largest decrease in Energy Storage
& Optimisation (ES&O).

As we have communicated before, the Energy equipment business is lumpy by
nature, which means that order intake, but also revenue recognition, can vary
significantly from one quarter to another. In 2024, equipment deliveries and
revenue recognition in Energy will be tilted towards the second half of the
year, both in engine power plants and ES&O. In Marine, the lead times from
equipment order intake to net sales are currently slightly longer, due to
remaining constraints in shipyard capacity.

The comparable operating result increased by 50% to EUR 132 million with a
comparable operating margin of 10.0%. The improved margin was supported by a
more favourable mix between equipment and services, but negatively impacted by
lower operating leverage during the quarter. The financial performance also
improved in our businesses to be divested reported under Portfolio Business.
Cash flow from operating activities significantly improved to EUR 258 million.
The improvement was driven by a better operating result, but also by the very
good level of received customer payments related to the strong order intake, and
strong service sales generating a good inflow of cash.

In October of 2023, we announced a strategic review of ES&O to accelerate its
profitable growth in a way that benefits customers, employees, and value
creation for Wärtsilä shareholders. This review is still ongoing.

We have continued our significant investments in R&D to develop sustainable and
future-proof technologies. During the quarter, we launched Quantum2, a fully
integrated high-capacity battery energy-storage system designed and optimised
for global large-scale deployment. The high energy density of Quantum2 means
fewer units are needed onsite. In February, it was announced that Wärtsilä will
be leading a five-year collaboration of more than 200 Finnish companies,
industrial organisations, research institutes, and universities. The partners in
this “Wide & Intelligent Sustainable Energy” (WISE) project will together
develop autonomous zero-emission balancing solutions for the energy transition
by utilising data analytics and artificial intelligence, strengthening the
Finnish energy sector to become a world-leader in energy innovation.

We expect the demand environment for the coming 12 months to be better than the
comparison period in both Marine and Energy. We are on a clear path to reach our
financial targets, and we remain very well positioned for the future. We will
continue to execute our strategy to make Wärtsilä a stronger, more focused, and
more profitable company. 2024 is a special year for Wärtsilä, as it marks our
190th anniversary. Our two centuries have been characterised by continually
transforming ourselves and the industries we have operated in, supported by the
innovative spirit of our people. The transformation that we are driving today,
towards carbon-neutral shipping and to a 100% renewable energy future, is
probably the most critical we have faced in our long history, as it is vital for
ensuring the sustainable societies of tomorrow.”

KEY FIGURES

MEUR                  1-3/20  1-3/20  Change   2023
                          24      23
Order intake           1,924   1,739     11%  7,070
of which services        949     889      7%  3,519
of which equipment       975     850     15%  3,550
Order book, end of     7,294   6,153     19%  6,694
period
Net sales              1,321   1,465    -10%  6,015
of which services        833     736     13%  3,148
of which equipment       489     729    -33%  2,867
Book-to-bill            1.46    1.19           1.18
Comparable adjusted      137      93     47%    518
EBITA*
% of net sales          10.4     6.4            8.6
Comparable operating     132      88     50%    497
result
% of net sales          10.0     6.0            8.3
Operating result         127      92     38%    402
% of net sales           9.6     6.3            6.7
Result before taxes      118      84     41%    364
Basic                   0.14    0.09           0.44
earnings/share, EUR
Cash flow from           258     145            822
operating activities
Net interest-bearing     -79     477             35
debt, end of period
Gearing                -0.04    0.24           0.02
Solvency, %             34.8    33.4           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, on
Friday 26 April 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/q1-2024/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=50048991

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
anne.alarotu@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 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

Attachments:

04268637.pdf