Solid first quarter for Wärtsilä

Wärtsilä has reported a positive first quarter, with improvements in orders, service business, net sales and profitability.

Wärtsilä has reported solid results for the first quarter of 2023. (Photo: Wärtsilä)

According to the company’s interim report for January through March:

- Order intake increased by 26% to €1.739 billion, with organic growth of 29%.

- Service order intake increased by 21% to €889 million.

- Orders at the end of the period were stable at €6.153 billion.

- Net sales increased 19% to €1.465 billion, with organic growth of 20%.

“Although facing continued uncertainties in the operating environment, we successfully delivered growth and higher profitability,” said Håkan Agnevall, Wärtsilä president and CEO. “The global economic headwinds continued despite some improvements, including the reopening of China and decreasing energy costs. Cost inflation continued to burden the order backlog of our new equipment business.

“Our order intake increased by 26% supported by good development both in services and equipment. Net sales increased by 19% with growth in Marine Power and Energy. The good development in services has supported our profitability and our comparable operating margin improved to 6.0%. Nevertheless, cost inflation continued to burden the order backlog of our new equipment business.

Håkan Agnevall

Looking at the company’s business segments, Agnevall said demand is expected to be similar to last year in both the energy and marine markets.

“In the energy market, the investment environment remains uncertain, especially for new power plants,” he said. “Price pressure on fuel and raw material cost has eased during the beginning of the year, but rising interest rates have caused further uncertainty. On the other hand, investments in the energy transition have been at a high level, and supportive policies regarding battery energy storage and clean hydrogen has continued to develop during the first quarter of the year.”

In the marine market, Agnevall said that “economic headwinds continued to limit growth, as rising newbuild prices combined with limited shipyard capacity continued to hamper newbuild ordering activity.

“Nevertheless, the market sentiment remained positive for Wärtsilä’s key segments with improving utilization rates. Decarbonization continues to be a major driver for our customers. As an example, we will supply the engines for Celebrity Cruises’ new ship, capable of operating with methanol fuel in addition to two other conventional fuel types. We thus continue advancing the use of alternative fuels for the cruise industry.”

Looking ahead, Agnevall said, “we expect the demand environment for the next 12 months to be similar to that of the comparison period, in both the Marine (including Marine Power and Marine Systems) and Energy businesses. Although our operating result margin is still clearly below our target, we are taking actions to improve our profitability step by step. As we have seen in the first quarter, we continue to grow our service business and deliver the part of our order backlog that has been significantly impacted by cost inflation. The turnaround of our energy storage business continues in the right direction and the decarbonization transformation will have a positive impact on our business going forward.”