Wartsila Oyj Abp · OMXHEX:WRT1V
Wartsila Oyj Abp — Wärtsilä — Non-Deal Roadshow (December 2022)
54 slides from Wartsila Oyj Abp's roadshow presentation, December 2022
Slide 1: Shaping the decarbonisation of Marine and Energy
Wärtsilä Shaping the decarbonisation of Marine and Energy Roadshow presentation December 2022 1 © Wärtsilä
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: 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 Leverage market recovery and growth 3 © Wärtsilä
Slide 4: Transform: Decarbonisation creates new business opportunities
TRANSFORM Decarbonisation creates new business opportunities ▪ Maritime is going through an First Wärtsilä GridSolv unprecedented rate of 3 Quantum delivered in change, which is the USA accelerated by regulations and the demand for green transport. First real-life digital port call ▪ Also, the energ
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: Set to deliver long term shareholder value
Set to deliver long term shareholder value We have clear Our balance sheet We have clear financial targets and financing capital allocation and are committed structure supports principles to realising them strategy execution 6 © Wärtsilä
Slide 7: New financial targets reflect growth opportunities and increased profitability
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 7 © Wärtsilä
Slide 8: 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 cu
Slide 9: We will reach our profitability target while maintaining R&D investments
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 10: Ambitious decarbonisation targets for 2030
Ambitious decarbonisation targets for 2030 To provide a product portfolio which will To become carbon neutral in be ready for zero carbon fuels our own operations 10 © Wärtsilä
Slide 11: Supporting decarbonisation in marine
SUPPORTING DECARBONISATION IN MARINE OWNERS WILL DECIDE MOVE FROM A SINGLE-FUEL INDUSTRY TO A MULTI-FUEL ONE ON TECHNOLOGY Distribution of fuel types for Decarbonisation 2050 (1.5ºC scenario), exajoule PARTNERS NOW: Carbon neutral and zero carbon fuels in maritime ▪ Vessel life is 25-30 years HFO (H
Slide 12: Vessel contracting forecast
Vessel contracting forecast No of ships, 2,000+ dwt Continuing accelerated fleet renewal 3,000 Accelerating fleet supported by the fleet age profile and renewal and steady potential increased consensus over demand growth fuelling and technology choices Continued firm container & 2,500 LNG carrier or
Slide 13: Supporting decarbonisation in energy
SUPPORTING DECARBONISATION IN ENERGY ▪ Wind and solar are intermittent power sources THE KEY STEPS TO FRONT-LOAD NET ZERO Utilise Power-to-X and flexible thermal plants to provide carbon ▪ Flexible balancing power neutral long-term storage. 5 Curtailment of needed to stabilize the power renewable sy
Slide 14: Renewable energy plays a key role in energy sector emissions abatement
Renewable energy plays a key role in energy sector emissions abatement Estimated growth of the addressable annual markets of thermal balancing (GW) and energy storage (GWh) 2020–2030: +30% p.a. Source: Bloomberg New Energy Outlook 2020, Source: Bloomberg New Energy Outlook 2021 Wärtsilä estimates at
Slide 15: Order intake and order book improved
ORDER INTAKE AND ORDER BOOK IMPROVED MEUR 7,000 6,000 5,000 4,000 3,000 2,000 1,000 0 2017 2018 2019 2020 2021 LTM/Q322 Marine Energy Portfolio Business Total order intake Order book 15 © Wärtsilä
Slide 16: Increasing adoption of intermittent renewable energy is accelerating need for balancing power
Increasing adoption of intermittent renewable energy is accelerating the need for flexible balancing power Omaha PPD 156 MW - USA AGL 250 MWh - Australia Wärtsilä’s technology The battery energy with fast-starting storage system will internal combustion support both thermal and engines will be used
Slide 17: Good demand in energy storage – market expected to grow 30% annually
Good demand in energy storage – market expected to grow 30% annually in this decade MEUR 350 Wärtsilä Energy storage ▪ Long-proven track record of grid scale system installations 300 globally, integrated with wind, solar, hydro & thermal generation. 250 ▪ Powered by the advanced GEMS Digital Energy
Slide 18: Net sales and comparable operating result increased
Net sales and comparable operating result increased MEUR MEUR % 6,000 700 14 5,000 600 12 500 10 4,000 400 8 3,000 300 6 2,000 200 4 1,000 100 2 0 0 0 2017 2018 2019 2020 2021 LTM/Q322 Equipment sales Service sales Comparable operating result Comparable operating result, % of net sales 18 © Wärtsilä
Slide 19: Service net sales by business
Service net sales by business MEUR 3,000 2,500 2,000 1,500 1,000 500 0 2017 2018 2019 2020 2021 LTM Q3/22 Marine Power Marine Systems Voyage Energy Portfolio Business Services 19 © Wärtsilä
Slide 20: Service orders and sales both increasing
Service orders and sales both increasing Order intake Net sales MEUR MEUR, 12m rolling MEUR MEUR, 12m rolling 1,600 3,500 1,600 3,500 1,400 3,000 1,400 3,000 1,200 1,200 2,500 2,500 1,000 1,000 2,000 2,000 800 732 800 664 1,500 589 1,500 578 600 521 600 499 1,000 1,000 400 400 200 500 200 500 0 0 0
Slide 21: 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 22: Positive development in both Marine and Energy service business
Positive development in both Marine and Energy service business Marine Power net sales from installations under agreement Energy service agreements MEUR, 12m rolling 400 MW 18,000 28% 350 16,000 27% 300 14,000 26% 250 12,000 25% 200 10,000 24% 8,000 150 23% 6,000 100 22% 4,000 50 2,000 21% 0 0 20% 2
Slide 23: Wärtsilä to support 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 24: CBO Group and Wärtsilä sign Decarbonisation Service agreement
CBO Group and Wärtsilä sign Decarbonisation Service agreement to speed up fleet sustainability ▪ Wärtsilä and Rio de Janeiro based Companhia Brasileira de Offshore (CBO) have signed an agreement for Decarbonisation Modelling. ▪ The objective is to support and accelerate CBO’s journey towards decarbo
Slide 25: Strong balance sheet
Strong balance sheet MEUR 7-9/2022 7-9/2021 1-9/2022 1-9/2021 Cash flow from operating activities 100 49 -113 360 Working capital 108 107 Net interest-bearing debt 377 309 Gearing 0.18 0.14 Solvency, % 34.5 39.3 Basic earnings/share, EUR 0.00 0.08 -0.16 0.19 25 © Wärtsilä
Slide 26: Committed to providing shareholder returns
COMMITTED TO PROVIDING SHAREHOLDER RETURNS EUR 1.00 0.90 0.80 0.70 0.65 0.63 0.60 0.50 0.46 0.48 0.48 0.40 0.37 0.33 0.30 0.24 0.23 0.20 0.20 0.10 0.00 2017 2018 2019 2020 2021 Earnings per share Dividend per share 26 © Wärtsilä
Slide 27: Strong presence in sustainable development indices
Strong presence in sustainable development indices S&P Europe 350 ESG Index 27 © Wärtsilä
Slide 28: Wärtsilä is very 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 29: We continue investing in innovation
WE CONTINUE INVESTING IN INNOVATION TO ENSURE A BROAD, INDUSTRY-LEADING SOLUTION OFFERING 3.7 2.9 175 141 2017 2018 2019 2020 2021 R&D expenditure, MEUR % of net sales © Wärtsilä
Slide 30: 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 30 © Wärtsilä
Slide 31: 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 Battery Fuel type @ 20°C Natural Gas @ 20°C @ -33°C Hydro
Slide 32: Wärtsilä's 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 33: Sustainability is integrated into our strategy and purpose
Sustainability is integrated Environment into our strategy and purpose 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 34: 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 35: 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 36: 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 communication Anti-corruption ▪ Effective compliance programmes Human and Labour Rights A responsible employer Equal oppo
Slide 37: Wärtsilä's 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 pertaining to the appointment and Elected by the Annual General Meeting to decision-making body. remuneration of th
Slide 38: Significant value creation potential
SIGNIFICANT VALUE CREATION POTENTIAL 38 © Wärtsilä
Slide 39: Financial development in Q3
Financial development in Q3 39 © Wärtsilä
Slide 40: Good order intake – cost inflation and business mix burdened profitability
Good order intake – cost inflation and business mix burdened profitability ▪ Order intake increased by 36% ▪ Net sales increased by 30% ▪ Good progress in services: ▪ Service order intake increased by 27% ▪ Service net sales increased by 13% ▪ Comparable operating result decreased by 6% ▪ Intensifyi
Slide 41: Key figures
Key figures MEUR 7-9/2022 7-9/2021 CHANGE 1-9/2022 1-9/2021 CHANGE Order intake 1,616 1,186 36% 4,436 3,584 24% of which services 732 578 27% 2,275 1,868 22% Order book 6,229 5,325 17% of which current year deliveries 1,651 1,402 18% Net sales 1,433 1,103 30% 4,072 3,181 28% of which services 664 58
Slide 42: Third quarter highlights
Third quarter highlights Net sales Comparable operating result MEUR %, 12m rolling Net sales EUR 1,433 MEUR MEUR, 12m rolling million 2,000 6,000 180 12.0% 1,800 160 ▪ 13% increase in 1,600 1,433 5,000 140 10.0% service sales 1,400 4,000 120 8.0% 1,200 1,103 995 100 1,000 3,000 87 82 6.0% Comparable
Slide 43: Order intake increased by 36%
Order intake increased by 36% Equipment Services MEUR MEUR, 12m rolling MEUR MEUR, 12m rolling ▪ Equipment order 1,600 4,000 1,600 4,000 intake increased by 1,400 3,500 1,400 3,500 45% 1,200 3,000 1,200 3,000 1,000 ▪ Service order intake 884 2,500 1,000 2,500 800 2,000 732 2,000 increased by 27% 800
Slide 44: Strong order book
Strong order book Order book by business Order book delivery schedule MEUR MEUR 8,000 1.25 3,500 7,000 1.20 3,000 6,000 1.15 2,500 5,000 1.10 2,000 4,000 1.05 1,500 3,000 1.00 1,000 2,000 1,000 0.95 500 0 0.90 0 30.9.2020 31.3.2021 30.9.2021 31.3.2022 30.9.2022 Delivery current year Delivery next ye
Slide 45: Governance
Governance 45 © Wärtsilä
Slide 46: Board of Management
Board of Management Håkan Agnevall, Arjen Berends, Chief Tamara de Gruyter, President, Kari Hietanen, Corporate Roger Holm, President, President & CEO Financial Officer Wärtsilä Marine Systems Relations and Legal Affairs Wärtsilä Marine Power Hannu Mäntymaa, Atte Palomäki, Communications, Teija Sara
Slide 47: Board of Directors
Board of Directors Tom Johnstone CBE, Chair Risto Murto, Deputy Chair of the Karen Bomba, President Morten H. Engelstoft, CEO & of the Board, President and Board, President & CEO of Varma of Smiths Interconnect EVP of A.P. Møller - Mærsk CEO of AB SKF 2003–2014 Mutual Pension Insurance Company 2017–
Slide 48: Largest shareholders December 2022
Largest shareholders 6 December 2022 (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 15,121,503 2.56% 4 Elo Keskinäinen Työeläkevakuutusyhtiö 6,898,000 1.17% 5 The Social Ins
Slide 49: Wärtsilä in brief
Wärtsilä in brief 49 © Wärtsilä
Slide 50: Key figures 2021
KEY FIGURES 2021 MEUR 8,000 7,000 Order intake 6,000 5,735 MEUR 5,000 2021 4,000 Net sales, Net sales 3,000 geographical 4,778 MEUR 2,000 1,000 0 Comparable operating result 2017 2018 2019 2020 2021 357 MEUR Net sales Order intake Europe Asia Americas Other 7.5% of net sales Order book 2021 Net sale
Slide 51: Dividend, financial targets, track record in innovations
Clear financial Robust capital Strong track record in innovations Solid balance sheet targets and strong allocation principles commitment to MEUR and active portfolio Investing ~3% of net sales on R&D realise them management 800 35% yearly 700 30% Notable Extensive service network, 600 25% Today: en
Slide 52: 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 INNIO Siemens Fluence Schottel CUSTOMER BASE MARINE BUSINESSES ENERGY Ship owners Utilities Ship operators Independent Power Producers (IPPs) Ship management compani
Slide 53: For more information, call us or visit our Investors page
For more information, call us or visit our Investors page Next upcoming IR events ▪ 3 January 2023, Pre-silent call with CFO ▪ 31 January 2023, Financial Statements Bulletin 2022 Wärtsilä Investor Relations Hanna-Maria Heikkinen, Vice President, Investor Relations tel. +358 10 709 1461, email: hanna
Slide 54: WARTSILA
re, WARTSILA