Wartsila Oyj Abp · OMXHEX:WRT1V
Wartsila Oyj Abp — Wärtsilä — Non-Deal Roadshow (October 2023)
75 slides from Wartsila Oyj Abp's roadshow presentation, October 2023
Slide 1: Shaping the decarbonisation of marine and energy
Wärtsilä Shaping the decarbonisation of marine and energy Roadshow presentation October 2023 1 ©
Slide 2: Wärtsilä – Shaping the decarbonisation of marine and energy
Wärtsilä – Shaping the decarbonisation of marine and energy Committed to financial targets Key figures Wärtsilä businesses: Marine Power, Marine Systems, Energy, and Portfolio Business Net sales 5% annual organic growth MEUR % A global leader in innovative technologies and lifecycle solutions in mar
Slide 3: 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 4: Our value creation potential is based on two strategic themes
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 4 ©
Slide 5: 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 6: Perform: On a path to deliver the set targets
Perform On a path to deliver the set targets #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 financial targ
Slide 7: Wärtsilä key figures by reporting segments
Wärtsilä key figures by reporting segments Marine Power Marine Systems Energy Our offering of engines, propulsion We offer our customers high quality We support the change towards a future systems, hybrid technologies and products and lifecycle services related to where electricity is produced with
Slide 8: Geographical breakdown of net sales
Wärtsilä’s position as a global company is reflected in the geographical breakdown of our net sales Geographical net sales, 2022 Europe 29% Americas 35% Asia 25% Other 10% 8 ©
Slide 9: Financials
Pa) WARTSILA Financials 9 © WARTSILA
Slide 10: Financial targets reflect growth opportunities and increased profitability
Financial targets reflect growth opportunities and increased profitability Targets Net sales 5% annual organic growth Profitability 12% operating margin Capital structure Gearing below 0.50 Dividend At least 50% of earnings 10 ©
Slide 11: Good growth opportunities in services, energy, and marine new build recovery
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 12: Reaching profitability target while maintaining R&D at ~3%
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 13: 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 / ▪ Lower engine production both the energy and marine trade wars volume
Slide 14: 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 14 ©
Slide 15: Performance-based agreements have significant 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 16: Marine highlights
WARTSILA Marine highlights 16 © WARTSILA
Slide 17: 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 18: 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 19: Wärtsilä Hybrid Market Position
Wärtsilä 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 26% for engine-battery hybrid marine projects ▪ Further growth expected in future years a
Slide 20: Vessel contracting forecast
Vessel contracting forecast No of ships, 2,000+ dwt/GT, Accelerating fleet Ship-shaped mobile offshore vessels only. Continuing accelerated fleet renewal renewal and steady supported by the fleet age profile and demand growth Stronger order activity than expected driven by potential increased consen
Slide 21: Vessel utilisation rates driving Wärtsilä's 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 Using slow steaming to 100 100 1,800 manage active fleet 90 90 1,600 capacity and/or to limit 80 80 1,4
Slide 22: Share of installations under agreement is expanding faster than installed base
The share of installations under agreement is expanding faster than the installed base organic growth rate Number of vessels under agreement 2022 sales to vessels under agreement, MEUR1) Key considerations Gas Tankers Cruise Vessels Other Marine GAP OMA TMA ESA ▪ 29% of our engine installed base is
Slide 23: Create unique customer value and drive 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 Waiting times port operations Routing & planning Wind Fuel Power Thrust Resistance Waves Hull fouling Maintenance Upgrades
Slide 24: Wärtsilä Expert Insights
Wärtsilä Expert Insights: combining data analytics capabilities with product know-how and OEM expertise Decreased customer’s costs of unscheduled Advanced analytics combined with OEM Continuous measurement enables maintenance with Wärtsilä Expert Insight1) expertise enhance customer value prediction
Slide 25: Energy highlights
Pa) WARTSILA Energy highlights 25 © WARTSILA
Slide 26: Supporting decarbonisation in Energy
Supporting decarbonisation in Energy ▪ Wind and solar are intermittent power sources 5 4 ▪ Flexible balancing power needed to Phase out stabilize the power system: balancing fossil fuels power market expected to grow by Convert to 10X 1) 3 sustainable fuels ▪ Reciprocating engines ideally suited Pha
Slide 27: 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 28: 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 a
Slide 29: Wärtsilä Energy Storage offering
Wärtsilä Energy Storage offering GridSolv Quantum Wärtsilä-designed and assembly subcontracted 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, add
Slide 30: Good development in energy storage
Good development in energy storage Quarterly development Rolling 12 months development MEUR MEUR % of net sales 400 1,200 5 350 1022 4 328 992 321 1,000 975 892 3 300 281 275 807 257 785 775 2 245 252 800 745 250 1 203 617 200 193 600 0 531 170 168 146 -1 150 128 134 117 400 109 -2 100 72 -3 200 50
Slide 31: 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 32: Strong agreement coverage growth in energy services
Strategic focus in energy long-term service agreements is resulting in strong agreement coverage growth Significant growth in agreement coverage during 2021 22,000 32% and 2022 20,000 18,000 30% ▪ Converting non-agreement customers to agreement 16,000 28% customers resulted in an agreement coverage
Slide 33: Operating installed base is growing
Operating installed base is growing and operating hours are anticipated to remain stable driven by growth in certain customer segments Current running profile of installed base 60 Industrial 50 IPP’s (Independent 40 Power Producers) Utilities 30 Others 20 60 GW 10 0 Baseload 2019 2020 2021 2022 Bala
Slide 34: Advantages 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 35: R&D
© WARTSILA a R& © WARTSILA,
Slide 36: Continued investing in innovation
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 37: 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 37 ©
Slide 38: Q2 development
co WARTSILA Q2 development 38 © WARTSILA
Slide 39: Improved profitability and continued growth in services
Improved profitability and continued growth in services ▪ Order intake increased by 17% ▪ Net sales increased by 3% ▪ Good progress in services continued: ▪ Service order intake increased by 13% ▪ Service net sales increased by 16% ▪ The comparable operating result increased by 26% ▪ Supported by go
Slide 40: Good development in key figures
Good development in key figures MEUR 4-6/2023 4-6/2022 CHANGE 1-6/2023 1-6/2022 CHANGE Order intake 1,687 1,440 17% 3,427 2,820 22% of which services 913 811 13% 1,802 1,543 17% of which equipment 774 629 23% 1,625 1,277 27% Order book 6,249 5,936 5% of which current year deliveries 2,589 2,732 Net
Slide 41: Market sentiment remained positive for key segments
Market sentiment remained positive for Wärtsilä’s key segments Higher prices of new ships and available capacity at shipyards limited growth in newbuild investments ▪ The number of vessels ordered in the review period Total vessel contracting increased to 773 (701 in the corresponding period in Numb
Slide 42: Energy market outlook – solid long-term opportunities
Energy market outlook – solid long-term opportunities Commodity markets ease while interest rates rise Contracting for gas and liquid fuelled power ▪ H1/2023 has brought relief in some commodity plants <500 MW prices, especially in battery raw materials, while MW, 12m rolling rising interest rates i
Slide 43: Order intake increased by 17%
Order intake increased by 17% Equipment Services Equipment order MEUR MEUR, 12m rolling MEUR MEUR, 12m rolling intake increased by 23% 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 13% 1,000 2,500 1,000 913 2,500 774 811 800 2,000 800 2,000
Slide 44: Strong order book, rolling book-to-bill above 1
Strong order book, rolling book-to-bill continues above 1 Remaining order book for the current year lower than last year Order book by business Order book delivery schedule MEUR MEUR 8,000 1.30 3,000 7,000 1.20 2,500 6,000 1.10 2,000 5,000 1.00 4,000 0.90 1,500 3,000 0.80 1,000 2,000 0.70 500 1,000
Slide 45: Second quarter highlights
Second quarter highlights Net sales Comparable operating result Net sales increased by MEUR MEUR, 12m rolling MEUR %, 12m rolling 3% 2,000 7,000 180 12.0% Comparable operating 1,800 6,000 160 10.0% result increased by 1,600 1,407 1,454 140 26% 1,400 5,000 120 8.0% 108 1,200 1,131 4,000 100 85 6.0% 1
Slide 46: Marine Power: good development in comparable operating result
Marine Power: good development in comparable operating result Good service performance continued Order intake Comparable operating result Comparable operating result +21% 12m rolling MEUR MEUR 2,696 MEUR MEUR 12m rolling 10.2% 90 10.5% 1,000 3,000 800 697 575 80 2,000 600 463 + Good service performa
Slide 47: Marine Systems: order intake increased
Marine Systems: order intake increased Comparable operating result declined due a provision taken for a single sizable turnkey project in Gas Solutions Order intake Comparable operating result Comparable operating result 12m rolling +21% MEUR 12m rolling 5.1% MEUR MEUR 597 MEUR 400 800 20 10.0% 300
Slide 48: Energy: order intake and comparable operating result increased
Energy: order intake and comparable operating result increased Good development in service continued Order intake Comparable operating result Comparable operating result +15% 12m rolling MEUR MEUR 2,946 MEUR MEUR 12m 12mrolling rolling3.7% 1,200 4,000 70 7.3% 9.0% 1,000 750 3,000 800 654 60 8.0% 600
Slide 49: Prospects
Prospects Marine ▪ Wärtsilä expects the demand environment for the next 12 months (Q3/2023-Q2/2024) to be similar to that of the comparison period. Energy ▪ Wärtsilä expects the demand environment for the next 12 months (Q3/2023-Q2/2024) to be similar to that of the comparison period. 49 ©
Slide 50: January–June order intake by customer segment
January–June order intake by customer segment Special Marine Businesses Gas carriers Cruise & ferry Offshore Navy vessels Merchant Other Marine Power Equipment 9% (18) 24% (22) 5% (3) 13% (1) 5% (15) 41% (36) 3% (4) Services 16% (17) 23% (22) 18% (14) 6% (7) 11% (11) 24% (27) 1% (2) Marine Systems E
Slide 51: Order intake
Order intake Second quarter development 5% (6) 41% Marine Power (40) Marine Systems Services Order intake 46% Order intake 44% by business Energy (44) by business type 54% Equipment (45) (56) Portfolio Business 9% (9) 51 ©
Slide 52: Net sales
Net sales Second quarter development 5% (6) Marine Power 44% 45% Services Net sales (37) Marine Systems Net sales by business (51) by business type Equipment 44% Energy 55% (49) (45) Portfolio Business 7% (12) 52 ©
Slide 53: Second quarter development by business type
Second quarter development by business type Order intake Net sales 28% Spare parts Spare parts 32% (27) (28) Field service Field service 34% Marine 38% Marine (43) Service agreements Service agreements Businesses (37) Businesses EUR 742 million Service projects EUR 856 million Service projects (693)
Slide 54: Orders received for Energy equipment globally
Orders received for Energy equipment globally Europe 257 (114) Americas Asia 219 (365) 294 (50) Utilities IPP’s Africa and (Independent Middle East Power Producers) 48 (71) Industrials Others Equipment order intake 1-6/2023: MEUR 818 (599) 54 ©
Slide 55: Sustainability
Cg WARTSILA Sustainability 55 © WARTSILA
Slide 56: Ambitious decarbonisation targets for 2030
Ambitious decarbonisation targets for 2030 Provide a product portfolio Become carbon neutral which will be ready for zero in our own operations carbon fuels 56 ©
Slide 57: Strong presence in sustainable development indices
Strong presence in sustainable development indices S&P Europe 350 ESG Index 57 ©
Slide 58: Decarbonising our own operations requires a wide range of actions
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 59: Wärtsilä "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 60: Wärtsilä's ESG Agenda in brief
Wärtsilä’s ESG Agenda in brief Ambitious Good Corporate Effective decarbonisation 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 61: Sustainability is integrated into our 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 ▪ High environmental emissions in our customers’ performance and efficiency operations and in societies ▪ Partner
Slide 62: Wärtsilä's 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 63: Governance
Pa) WARTSILA Governance © WARTSILA,
Slide 64: Board of Management
Board of Management Håkan Agnevall, Arjen Berends, Tamara de Gruyter, President, Kari Hietanen, Corporate President & CEO Chief Financial Officer Wärtsilä Marine Systems Relations and Legal Affairs Roger Holm, President, Anders Lindberg, President, Teija Sarajärvi, Saara Tahvanainen, Wärtsilä Marine
Slide 65: 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– of A.P. Møller - Mærsk A/S, APM of AB SKF 2003–2014 Cargotec Oyj 2013-2023 T
Slide 66: Largest shareholders October 2023
Largest shareholders 1 October 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 13,541,503 2.29% 4 Keskinäinen Työeläkevakuutusyhtiö Elo 7,692,000 1.30% 5 The Social Insu
Slide 67: Appendix
© WARTSILA Appendix 67 © WARTSILA,
Slide 68: 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 69: For more information, call us or visit our Investors page
For more information, call us or visit our Investors page Next upcoming IR events ▪ 5 October, Pre-silent call Q3 ▪ 9 November, Capital Markets Day ▪ 5 December, GS Industrials Conference ▪ 5 – 7 December, US Roadshow Wärtsilä Investor Relations Hanna-Maria Heikkinen, Vice President, Investor Relati
Slide 70: Key figures in 2022
Cg WARTSILA Key figures in 2022
Slide 71: Key figures 2022
MEUR KEY FIGURES 2022 8,000 10% 6,000 30% Order intake 2022 4,000 6,074 MEUR Net sales, geographical 2,000 35% Net sales 5,842 MEUR 0 25% 2018 2019 2020 2021 2022 Comparable operating result Net sales Order intake Europe Asia Americas Other 325 MEUR Order book 2022 5.6% of net sales % 48% Net sales
Slide 72: 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 73: 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 74: 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 75: WARTSILA
re, WARTSILA