Wartsila Oyj Abp · OMXHEX:WRT1V
Wartsila Oyj Abp — Wärtsilä — Non-Deal Roadshow (May 2023)
67 slides from Wartsila Oyj Abp's roadshow presentation, May 2023
Slide 1: Shaping the decarbonisation of marine and energy
Wärtsilä Shaping the decarbonisation of marine and energy Roadshow presentation May 2023 1 ©
Slide 2: Market fundamentals
Market fundamentals MARINE will move with unprecedented speed towards decarbonisation ENERGY is moving towards a 100% renewables future Policies & regulations Policies & regulations ▪ IMO target ▪ EU: Carbon neutral by 2050 ▪ Access to capital ▪ USA: carbon free electricity ▪ Cost of carbon producti
Slide 3: Two strategic themes: Transform and Perform
Our value creation potential is based on two strategic themes 1 TRANSFORM Decarbonisation creates new business opportunities 2 PERFORM On a path to deliver the set targets 3 ©
Slide 4: Transform: Decarbonisation creates new business opportunities
Transform Decarbonisation creates new business opportunities ▪ Maritime is going through an unprecedented rate of change, which is 3 Launch of the new Wärtsilä 32 methanol accelerated by regulations engine and the demand for green transport. ▪ Also, the energy sector is 1 Gas fuelled engines to prov
Slide 5: Perform: ready to leverage market recovery and growth
Perform We are ready to leverage market recovery and growth #1-3 in global markets "SET FOR 30" DECARBONISATION TARGETS: FINANCIAL TARGETS: ▪ carbon neutral in our own ▪ 5% annual organic growth operations by 2030 ▪ 12% operating margin ▪ a product portfolio ready for zero carbon fuels by 2030 Clear
Slide 6: Supporting decarbonisation in marine
Supporting decarbonisation in marine Owners will decide on Move from a single-fuel industry to a multi-fuel one technology partners now: Distribution of fuel types for Decarbonisation 2050 (1.5ºC scenario), exajoule Carbon neutral and zero carbon fuels in maritime ▪ Vessel life is 25-30 years ▪ Crit
Slide 7: Fuel conversions will play a vital role in the fuel transition
Fuel conversions will play a vital role in the fuel transition for both existing and new vessels built during this and next decade. Fuel selection impacts the vessel structure Heavy Fuel Oil Liquified Methanol Ammonia Liquid Compressed Marine Fuel type @ 20°C Natural Gas @ 20°C @ -33°C Hydrogen Hydr
Slide 8: Wärtsilä Hybrid Market Position
Wärtsila Hybrid Market Position We are maintaining our market leadership in Hybrid Systems ▪ Number of hybrid vessels on order and in operation is ~81 vessels with 115MWh batteries ▪ Our current market share is 25% for engine-battery hybrid marine projects ▪ Further growth expected in future years a
Slide 9: Creating unique customer value and driving decarbonisation of marine
Together we can create unique customer value and drive decarbonisation of marine VESSEL AND TRANSPORT EFFICIENCY Engine efficiency Propulsion efficiency Voyage efficiency, incl (Marine power) (Marine power & voyage) port operations Waiting times (Voyage) Routing & planning Wind Fuel Power Thrust Res
Slide 10: Vessel contracting forecast
Vessel contracting forecast Continuing accelerated fleet renewal supported by the fleet age profile and No of ships, 2,000+ dwt/GT, potential increased consensus over Ship-shaped mobile offshore vessels only. Accelerating fleet fuelling and technology choices renewal and steady 3,000 Continued firm
Slide 11: Vessel utilisation rates driving service business
Vessel utilisation rates driving Wärtsilä’s service business Typically there is some delay between changes in utilisation rate and Wärtsilä service net sales Cruise and passenger ferries Offshore Increasing slow steaming will require drive up the 100 90 100 1,800 utilisation rate of existing 90 1,60
Slide 12: Supporting decarbonisation in energy
Supporting decarbonisation in energy ▪ Wind and solar are intermittent The key steps to front-load net zero power sources ▪ Flexible balancing power needed to stabilize the power system: balancing power market expected to grow by 10X 1) ▪ Reciprocating engines ideally suited to provide balancing pow
Slide 13: Renewable energy plays a key role in emissions abatement
Renewable energy plays a key role in energy sector emissions abatement 60,000 Other Carbon removals Fuel switching 50,000 Other renewables Wind 40,000 Solar Nuclear CCS 30,000 Hydrogen Bioenergy Efficiency/recycling 20,000 Electrification Estimated growth of the Oil addressable annual markets of 10,
Slide 14: Supporting integration of renewables into Japan's power mix
Wärtsilä to support integration of renewables into Japan’s power mix by providing balancing power gas engines ▪ The new Japanese plant will operate with ten Wärtsilä 34SG gas engines. It will replace a 100 MW combined cycle gas turbine that was formerly located on the project site. ▪ The fast-starti
Slide 15: Flexible generation supporting renewables in Latin America
Wärtsilä flexible generation will support the transition to renewable energy in Latin America ▪ The plant will operate with 18 Wärtsilä 50SG gas engines, which in simple cycle deliver an output of 339 MW ▪ Initially, the plant will provide baseload power to the grid, but the rapid start-up flexibili
Slide 16: Wärtsilä Energy Storage competitive advantages
Wärtsilä Energy Storage competitive advantages Our key differentiators ▪ Integration and scalability: Wärtsilä’s GridSolv Quantum is a fully- integrated energy storage solution. Its modular and scalable design enables ease of deployment and optimisation. It integrates storage to other energy assets
Slide 17: Wärtsilä Energy Storage offering
Wärtsilä Energy Storage offering GridSolv Quantum Wä rtsilä-designed and assembly s ubcontracted Our role in the value chain ▪ Our core offering consists of 1) battery energy storage hardware, 2) GEMS Digital Energy Platform, and 3) lifecycle services, ▪ We are an energy storage system integrator, a
Slide 18: Good demand in energy storage
Good demand in energy storage – market expected to grow 30% annually in this decade MEUR MEUR 600 1200 Wärtsilä Energy storage ▪ Long-proven track record of grid scale system 500 992 1000 installations globally, integrated with wind, solar, hydro 892 & thermal generation. 807 400 785 800 ▪ Powered b
Slide 19: Wärtsilä Energy Storage's direction
Wärtsilä Energy Storage’s direction Key drivers towards higher profitability 1. Selective approach in project acceptance 2. Value differentiation 3. Volume growth supporting better cost leverage and better economics of scale in procurement and assembly 4. Continuous R&D to secure latest technology a
Slide 20: Well-positioned for the decarbonisation transformation
Wärtsilä is very well-positioned for the decarbonisation transformation Leader in Pioneer in ▪ Carbon neutral & zero carbon fuels ▪ Marine electric drivetrain - Available today: biofuels, methanol, up to 25% hydrogen blends - 2023: ammonia concept ▪ Marine carbon capture - 2025: 100% hydrogen concep
Slide 21: Investing in innovation (R&D expenditure)
We continue investing in innovation to ensure a broad, industry-leading solution offering 4.1 3.2 241 165 2018 2019 2020 2021* 2022 R&D expenditure, MEUR % of net sales * Figure in the comparison period 2021 has been restated to reflect a change in the definition of research and development expendit
Slide 22: Front-runner in alternative fuel engine technology
Front-runner in alternative fuel engine technology 2021 2022 2023 2024 2025 Diesel FAME/HVO1) LNG Bio-methane Synthetic methane LPG Hydrogen blends Hydrogen 100% Technical concept Engines Ammonia Technical concept Methanol 1) FAME, HVO: biodiesel 22 ©
Slide 23: New financial targets
New financial targets reflect growth opportunities and increased profitability New targets Net sales 5% annual organic growth Profitability 12% operating margin Capital structure Gearing below 0.50 Dividend At least 50% of earnings 23 ©
Slide 24: Growth opportunities in services, energy and marine
Good growth opportunities in services, energy, and marine new build recovery. Our installed base provides a strong foundation for services growth Key drivers Storage ▪ Fast growing demand for energy storage and power system optimisation solutions Services ▪ Increased share of wallet from existing St
Slide 25: Reaching the profitability target while maintaining R&D
We will reach our profitability target while maintaining R&D investments at ~3% of net sales Key drivers ▪ Marine and Energy Services growth ▪ Thermal balancing power growth ▪ Storage growth Starting point: Target: Operating margin 5.9% ▪ Voyage turnaround and digital growth 12% operating margin (LT
Slide 26: Service net sales by business
Service net sales by business MEUR +11% 3,000 2,500 2,000 1,500 1,000 500 0 2017 2018 2019 2020 2021 2022 Marine Power Marine Systems Voyage Energy Portfolio Business Services 26 ©
Slide 27: Performance-based agreements growth potential
Performance-based agreements have significant growth potential, both in Marine and Energy 25% of Spend ratio installed base Enablers for growth EUR/kW 2-5X ▪ Optimised asset performance for our customers Agreements & Performance-based agreements ▪ Leveraging connectivity, big data, machine learning
Slide 28: Positive development in Marine and Energy service business
Positive development in both Marine and Energy service business Marine Power net sales from installations under Energy service agreements agreement MEUR, 12m rolling MW 500 20,000 29% 18,000 28% 450 16,000 27% 14,000 26% 400 12,000 25% 10,000 350 24% 8,000 23% 300 6,000 4,000 22% 250 2,000 21% 0 20%
Slide 29: Profitability drivers for 2023
Profitability drivers for 2023 + Supporting drivers + / - Uncertainties - Negative factors ▪ Growth of service business ▪ Geopolitical tensions ▪ Wage inflation ▪ Continued decarbonisation push in ▪ Potential trade restrictions / ▪ Costs of energy: both the energy and marine trade wars ▪ fuel costs
Slide 30: Strong presence in sustainable development indices
Strong presence in sustainable development indices S&P Europe 350 ESG Index 30 ©
Slide 31: ESG Agenda in brief
Wärtsilä’s ESG Agenda in brief Ambitious Good Corporate Effective decarbonization Citizen and Governance targets for 2030 Responsible model ▪ Portfolio ready for Employer ▪ Sustainability zero carbon fuels matters embedded ▪ High ethical ▪ Carbon neutrality in standards own operations ▪ Diversity in
Slide 32: Sustainability integrated into strategy and purpose
Sustainability is integrated into our strategy and purpose Environment Being a forerunner in ▪ Innovative solutions sustainable innovation and for a low carbon economy furthermore reduce emissions ▪ High environmental in our customers’ operations performance and efficiency and in societies overall.
Slide 33: Decarbonising our own operations: Set for 30
Decarbonising our own operations requires a wide range of actions ”SET FOR 30” OUR MAIN DECARBONISATION INITIATIVES 2021 2030 Energy efficiency measures +/€ Low emission company vehicles +/€ Heat pumps in heating +/€€ R&D and factory engine testings – reduced time +/€ Self-generation and green elect
Slide 34: Set for 30 is progressing well
Wärtsilä “Set for 30” is progressing well Variety of concrete actions have been taken – some examples Environmental Green electricity Solar panel standards for purchasing fully in investment in selecting new use in Finland Bermeo Spain facilities in use Electric Vehicle Heat pumps Intelligent energy
Slide 35: Focus on social responsibility
Wärtsilä’s focus on social responsibility Strong ethical culture Fair competition ▪ Clear policies and instructions Trade compliance ▪ Ethical training programmes and transparent Anti-corruption communication ▪ Effective compliance programmes Human and Labour Rights A responsible employer Equal oppo
Slide 36: Governance Model
Wärtsilä’s Governance Model Annual General Meeting Shareholders’ Nomination Board The Annual General Meeting is Wärtsilä’s ultimate The Nomination Board prepares matters External Audit decision-making body. pertaining to the appointment and Elected by the Annual General Meeting remuneration of the B
Slide 37: Significant role in decarbonisation transformation
Wärtsilä has a significant role in decarbonisation transformation 37 ©
Slide 38: Advantages of power plants over combined cycle gas turbines
Advantages of Wärtsilä power plants over combined cycle gas turbines Faster startup time Higher ramp rate ▪ Combined cycle gas turbines can take over 30 minutes to ▪ Ramp rate = the rate at which a power plant can increase or start, whereas combustion engine power plants can start and decrease outpu
Slide 39: Financial development in Q1
Financial development in Q1 39 ©
Slide 40: Profitability improved, good development in services
Profitability improved, good development in services ▪ Order intake increased by 26% ▪ Net sales increased by 19% ▪ Good progress in services: ▪ Service order intake increased by 21% ▪ Service net sales increased by 17% ▪ The comparable operating result increased by 34% ▪ Supported by good developme
Slide 41: Key figures
Key figures MEUR 1-3/2023 1-3/2022 CHANGE Order intake 1,739 1,380 26% of which services 889 732 21% of which equipment 850 648 31% Order book 6,153 6,107 1% of which current year deliveries 3,325 3,334 Net sales 1,465 1,231 19% of which services 736 631 17% of which equipment 729 600 22% Book-to-bi
Slide 42: Order intake increased by 26%
Order intake increased by 26% Equipment Services Equipment order MEUR MEUR, 12m rolling MEUR MEUR, 12m rolling intake increased by 31% 1,600 4,000 1,600 4,000 1,400 3,500 1,400 3,500 Service order intake 1,200 3,000 1,200 3,000 increased by 21% 1,000 2,500 1,000 889 2,500 850 800 2,000 800 691 732 2
Slide 43: Strong order book, book-to-bill above 1
Strong order book, rolling book-to-bill continues above 1 Order book by business Order book delivery schedule MEUR MEUR 8,000 1.30 4,000 7,000 1.20 3,500 6,000 1.10 3,000 5,000 1.00 2,500 4,000 0.90 2,000 3,000 0.80 1,500 2,000 0.70 1,000 1,000 0.60 500 0 0.50 0 31.3.2021 30.9.2021 31.3.2022 30.9.20
Slide 44: First quarter highlights
First quarter highlights Net sales Comparable operating result Net sales increased by MEUR, 12m rolling MEUR %, 12m rolling 19% MEUR 2,000 7,000 180 12.0% Comparable operating 1,800 6,000 160 10.0% result increased by 1,600 1,465 5,000 140 34% 1,400 1,231 120 8.0% 1,200 4,000 100 946 88 1,000 6.0% 3
Slide 45: Economic headwinds moderate growth in marine markets
Economic headwinds moderate growth in marine markets Utilisation rates in Wärtsilä’s key segments improving ▪ The number of vessels ordered in the review period Total vessel contracting decreased to 255 (274 in Q1/2022, excluding late Number of vessels reporting of contracts). 1,400 1,200 ▪ Continue
Slide 46: Energy market outlook
Energy market outlook – solid long-term opportunities Fuel price pressure easing but not over ▪ The last quarter has brought some relief in fuel and Contracting for gas and liquid fuelled power raw material prices whereas rising interest rates plants <500 MW have come to cause further uncertainty. M
Slide 47: Marine Power: good development in services
Marine Power: good development in services Service order intake increased by 15% and service net sales increased by 18% Order intake Comparable operating result Comparable operating result +11% 12m rolling MEUR MEUR 2,779 MEUR MEUR 12m rolling 8.3% 90 12.0% 1,000 3,000 800 738 666 80 2,000 600 446 1
Slide 48: Marine Systems: order intake increased
Marine Systems: order intake increased Net sales and comparable operating result declined Order intake Comparable operating result Comparable operating result 12m rolling +21% MEUR MEUR 696 MEUR MEUR 12m rolling 6.5% 400 1,000 30 12.0% 300 800 239 198 600 200 153 25 10.0% 400 100 200 + Good developm
Slide 49: Energy: all key figures improved
Energy: all key figures improved Service order intake increased by 38%, service net sales increased by 17% Order intake Comparable operating result Comparable operating result +47% 12m rolling MEUR MEUR 2,849 MEUR MEUR 12m 12mrolling rolling3.5% 1,200 4,000 70 7.3% 9.0% 1,000 744 3,000 800 60 8.0% 6
Slide 50: Prospects
Prospects Marine ▪ Wärtsilä expects the demand environment for the next 12 months (Q2/2023-Q1/2024) to be similar to that of the comparison period. Energy ▪ Wärtsilä expects the demand environment for the next 12 months (Q2/2023-Q1/2024) to be similar to that of the comparison period. 50 ©
Slide 51: January–March order intake by customer segment
January–March order intake by customer segment Special Marine Businesses Gas carriers Cruise & ferry Offshore Navy vessels Merchant Other Marine Power Equipment 11% (9) 29% (22) 4% (6) 18% (4) 3% (22) 31% (32) 4% (4) Services 19% (14) 21% (26) 18% (12) 7% (7) 10% (10) 22% (27) 3% (4) Marine Systems
Slide 52: Order intake
Order intake First quarter development 1% (1) 42% Marine Power 43% (48) Marine Systems Order intake Services Order intake 49% (37) by business by business type 51% Equipment Energy (47) (53) Portfolio Business 14% (14) 52 ©
Slide 53: Net sales
Net sales First quarter development 1% (1) Marine Power 44% Services Net sales (42) Marine Systems Net sales 44% 50% 50% by business by business type Equipment (43) Energy (49) (51) Portfolio Business 11% (13) 53 ©
Slide 54: First quarter development by business type
First quarter development by business type Order intake Net sales 24% Spare parts Spare parts 29% (29) (31) Field service Field service Marine Marine 42% Service agreements 44% Service agreements Businesses Businesses (41) (44) EUR 799 million Service projects EUR 977 million Service projects (678)
Slide 55: Governance
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Slide 56: Board of Management
Board of Management Håkan Agnevall, Arjen Berends, Tamara de Gruyter, President, President & CEO Chief Financial Officer Wärtsilä Marine Systems Kari Hietanen, Corporate Roger Holm, President, Teija Sarajärvi, Relations and Legal Affairs Wärtsilä Marine Power Human Resources 56 ©
Slide 57: Board of Directors
Board of Directors Tom Johnstone CBE, Chair of Mika Vehviläinen, Deputy Chair of Karen Bomba, President of Morten H. Engelstoft, CEO & EVP the Board, President and CEO the Board, President & CEO of Smiths Interconnect 2017–2020 of A.P. Møller - Mærsk A/S, APM of AB SKF 2003–2014 Cargotec Oyj 2013-20
Slide 58: Largest shareholders May 2023
Largest shareholders 2 May 2023 (Euroclear) # Name Shares Share % 1 Invaw Invest AB 104,711,363 17.70% 2 Varma Mutual Pension Insurance Company 31,768,252 5.37% 3 Ilmarinen Mutual Pension Insurance Company 16,116,503 2.72% 4 Keskinäinen Työeläkevakuutusyhtiö Elo 6,835,000 1.16% 5 The Social Insuranc
Slide 59: Wärtsilä in brief
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Slide 60: Wärtsilä Marine Power
Wärtsilä Marine Power – Leading the path towards decarbonisation by developing state of the art technology and enabling adoption of clean fuels Key figures in 2022 Share of total net sales in 2022 Offering ▪ Multi-fuel 4-stroke engines ▪ Propulsion systems Order intake ▪ Catalyst systems 2,707 MEUR
Slide 61: Wärtsilä Marine Systems
Wärtsilä Marine Systems – Solutions for our customers decarbonisation and optimisation journey Key figures in 2022 Share of total net sales in 2022 Offering ▪ Gas solutions 13% ▪ Cargo handling systems for gas Order intake Marine Systems carriers 654 MEUR ▪ Liquefaction and gasification systems 87%
Slide 62: Wärtsilä Energy
Wärtsilä Energy – Towards a 100% renewable energy future Key figures in 2022 Share of total net sales in 2022 Offering • Future-fuel enabled grid balancing power plants Order intake Energy • Hybrid solutions 53% 47% 2,612 MEUR • Energy storage and optimisation Other technology, including the GEMS Di
Slide 63: Key figures 2022
KEY FIGURES 2022 MEUR 8,000 10% Order intake 6,000 30% 6,074 MEUR 2022 4,000 Net sales, Net sales geographical 2,000 35% 5,842 MEUR 0 Comparable operating result 2018 2019 2020 2021 2022 25% 325 MEUR Net sales Order intake Europe Asia Americas Other 5.6% of net sales Order book 2022 48% Net sales by
Slide 64: Strong track record in innovations, solid balance sheet
Clear financial Robust capital Strong track record in innovations Solid balance sheet targets and strong allocation principles commitment to and active portfolio Investing ~3% of net sales on R&D MEUR realise them management yearly 800 35% 700 30% Notable Extensive service network, Today: engines ru
Slide 65: Main competitors and customer base
Main competitors Engines Other marine solutions Other energy solutions MAN Kongsberg GE Himsen Alfa Laval Siemens Rolls-Royce GE Tesla Siemens Fluence Schottel Customer base Marine businesses Energy Ship owners Utilities Ship operators Independent Power Producers Ship management (IPPs) companies Ind
Slide 66: For more information, call us or visit our Investors page
For more information, call us or visit our Investors page Next upcoming IR events ▪ 8 May – 11 May 2023, US Roadshow ▪ 5 June 2023, IR theme call: Service ▪ 6 June 2023, Site visit to Schiedam, Netherlands ▪ 8 June 2023, JP Morgan CEO conference ▪ 29 June 2023, Silent period begins Wärtsilä Investor
Slide 67: WARTSILA
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