Wärtsilä expects third quarter to be better

By Jack Burke20 July 2021

Company announces first-half earnings

Wärtsilä’s CEO expressed guarded optimism that the third quarter will be stronger, but uncertainty over the path of COVID-19 is still weighing on the markets.

“During the second quarter of 2021, we saw signs of stabilization and recovery in our markets, despite the prevailing uncertainty,” said Hakan Agnevall, president and CEO of the company.

In the first half of 2021, the company’s order intake grew by 6% to €2398 million and service order intake increased by 17% to €1308 million over the same period in 2020. But net sales were down 13%.

Hakan Agnevall

Agnevall said that in power generation, the market situation stabilized, but many investments in new power plant capacity still continued to be postponed. Meanwhile, activity in the energy storage market continued at a good level. Demand for services was also at a good level, and customers continued to show interest in long-term agreements, thereby bringing stability to the business during low market volumes.

“Furthermore, the recent order for a 156 MW multi-fuel power plant in Nebraska and the commencement of execution of the 380 MW project for Metaenergia in Italy show how flexible thermal balancing power enables the increased share of wind and solar energy in power systems in different parts of the world,” Agnevall said.

In the marine markets, vessel ordering activity improved, although activity in the company’s key vessel segments remained relatively low. In particular, the important cruise industry is still heavily affected by COVID-19 related restrictions. The demand for services has developed positively across vessel segments, supported by improved vessel activity and earnings, Agnevall said.

“While net sales decreased, we succeeded in improving our profitability, and our comparable operating profit increased by 30%,” Agnevall said. “Marine Power and Energy clearly improved their results, while Marine Systems suffered from low net sales driven by postponed scrubber retrofits. Customers’ interest towards smarter, digitalized, greener, and safer solutions supported the growth in Voyage’s order intake and net sales. The number of vessels connected to our cloud solutions increased by 78%. Our cash flow from operating activities was very strong. Wärtsilä’s asset-light business model, strong cash generation ability, and high service volumes deliver overall operational stability.”

During the second quarter, Agnevall said the company continued its systematic investments in R&D and participated in several international and local research alliances. Wärtsilä is doing extensive testing with ammonia, hydrogen and methanol as potential future fuels for Wärtsilä’s fuel-flexible combustion engines. Clean fuels, combined with Wärtsilä’s strengths in outcome-based service agreements, provide our customers with major opportunities to improve environmental footprint while boosting profitability.

“We expect the demand environment in the third quarter to be better than that of the corresponding period in the previous year,” Agnevall said. “In the longer term, we see exciting opportunities driven by the decarbonization transformation of both the marine and energy industries. With our focus on a holistic system approach, technology leadership, and fuel flexible solutions, we are committed to supporting our customers to succeed in this transformation.”

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