Wärtsilä Reports Strong Results in Q3 2024, Focused on Growth

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Wärtsilä Reports Strong Results in Q3 2024, Focused on Growth

Wärtsilä Corporation (HEL: WRT1V), a global leader providing smart technologies and full lifecycle solutions for marine and energy markets, reported strong financial performance in the third quarter of 2024. Net sales increased by 18% to €1.7 billion, while comparable operating results rose by 41% to €177 million.

The order book remained robust at €7.6 billion, with an order-to-sales ratio of over 1 for the 14th consecutive quarter. Despite facing challenges such as a decline in order intake in the Energy Storage segment and margin pressures in marine, the company remains optimistic about its future growth, focusing on decarbonization and innovative energy solutions.

Key Points:

  • Net sales increased by 18% to €1.7 billion.
  • Comparable operating results rose by 41% to €177 million.
  • The order book stands at €7.6 billion with an order-to-sales ratio above 1.
  • Service net sales rose by 6%, while equipment net sales increased by 32%.
  • Increased demand for new vessels indicates positive market sentiment.
  • A significant contract was signed for the conversion of a vessel to ammonia fuel.
  • Operating cash flow reached €1.16 billion last year.
  • Management expects positive demand in the Marine and Energy sectors.
  • The Energy Storage segment faces challenges from falling lithium prices and increased competition.
  • The company is diversifying its supply chain to comply with upcoming U.S. regulations.

Company Outlook: Wärtsilä anticipates continued strong underlying demand. The company focuses on decarbonization and innovative energy solutions. Management is optimistic about a rebound in order intake in the fourth quarter.

Negative Aspects:

  • Order intake in Q3 fell below expectations due to the timing of large orders.
  • Marine margins saw a sequential decline of approximately 100 basis points.
  • Growth in energy service order intake diminished in Q3.

Positive Aspects:

  • Strong demand in core segments such as cruise and offshore activities.
  • Renewal of operations and maintenance agreements for the Ndola power plant in Zambia.
  • Positive market sentiment driven by an increase in new vessel orders in the marine segment.

Shortcomings:

  • Order intake in the Energy Storage segment decreased by 19%.
  • Local content regulations in the U.S. could impact future tenders.

Q&A Highlights: Management addressed the decline in average sales prices in Energy Storage and stated that margins remain stable. Executives discussed backlog orders in the marine segment and their impact on margins. Explanations concerning marine engine delivery timelines and production capacity were provided. The divestiture process for certain non-core businesses is ongoing. Development of "scrubber 2.0" technology for carbon capture is underway.

Wärtsilä's CEO Hakan Agnevall and CFO Arjen Berends shared insights on the company's strong third-quarter performance and future strategies. Despite challenges such as pressure on marine margins and a decline in energy storage order intake, the company's financials and order book remain strong. Wärtsilä's strategic focus on decarbonization, innovative energy solutions, and service improvements positions it well for continued growth in marine and energy markets.