Wärtsilä CEO sees signs of ‘stabilization’ in marine, energy markets

By Jack Burke28 January 2022

Wärtsilä saw net sales rise 4% in 2021 after a big boost in fourth-quarter activity.

Sales hit €4.77 billion in the year, €1.6 billion coming in the final three months of 2021. The fourth quarter saw a year-over-year order intake increase of 92%.

“In 2021, the Covid-19 pandemic continued to affect our end markets, our operations, and our financial performance,” said Håkan Agnevall, the company’s president & CEO. “New virus variants reminded us that the pandemic is not yet over. However, we saw signs of stabilization and recovery in both the marine and energy markets, and the order intake improved towards year-end.”

Energy markets stabilized

Agnevall said the energy markets have stabilized and the company saw strong demand for energy storage solutions, as well as some important thermal power plant orders. While energy storage orders were received throughout the year, the major multi-fuel power plant orders for Mexico, and the thermal balancing power plants for Brazil were highlights of the fourth quarter, he said.

“These orders provided a clear indication of the recovery of demand for power plants operating with flexible internal combustion engines,” Agnevall said. “Nevertheless, many investments in new power plant capacity were postponed due to the pandemic, especially in the emerging markets.”

Marine segment showed ‘mixed’ results

In the marine markets, activity was mixed across different vessel segments. Vessel ordering activity overall improved, largely driven by containerships. At the same time, activity in key vessel segments remained relatively low, particularly in the important cruise industry.

The progress in Covid-19 vaccination programs and the lifting of travel restrictions accelerated the reactivation of existing cruise and ferry fleets in the second half of the year. The active cruise fleet capacity increased from around 20% at the end of June to around 70% at the end of December, which supports the company’s service business going forward. However, new Covid-19 variants pose a risk to recovery.

Wärtsilä reported a surge in orders during the fourth quarter of 2021 and saw net sales grow by 4% over the full year. (Photo: Wärtsilä)

“Looking at our full-year performance, it was encouraging to see that the total order intake increased by 32%, supported by all our core businesses, albeit from earlier low levels,” Agnevall said. “The increase in order intake was mainly related to equipment, with an impact on sales mix in 2022. Demand for services was solid, resulting in a 17% growth in service order intake. Net sales increased by 4%, driven by an 11% growth in service sales. We also saw clear improvement in profitability. The operating result increased by 34%, largely driven by a more favorable sales mix between equipment and services, as well as improved service capacity utilization.”

Key strategies

Agnevall noted that one key activity during 2021 was the launch of a new strategic framework, the Wärtsilä Way, combined with the introduction of new financial and decarbonization targets. The Wärtsilä strategy is focused on shaping the decarbonization of marine and energy industries.

“We emphasize customer success, innovation in technology and services, diverse teams making a difference, as well as continuous improvement,” he said. “This strategy enables us to accelerate the marine decarbonization and the shift to a 100% renewable energy future.”

Going forward, Agnevall said the company is aiming for 5% organic growth annually and to reach a 12% operating margin.

“We see the biggest growth opportunities in energy storage, thermal balancing power, and both energy and marine services,” he said. “Our continued R&D investments in sustainable fuel technologies position us well for the green transition in both the energy and marine businesses. Growth in these areas will contribute to reaching our profitability target.”

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