Wartsila Oyj Abp · OMXHEX:WRT1V
Wartsila Oyj Abp — Wärtsilä — Non-Deal Roadshow (February 2023)
51 slides from Wartsila Oyj Abp's roadshow presentation, February 2023
Slide 1: Shaping the decarbonisation of Marine and Energy
Wärtsilä Shaping the decarbonisation of Marine and Energy Roadshow presentation February 2023 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: 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 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 Battery Fuel type @ 20°C Natural Gas @ 20°C @ -33°C Hydro
Slide 8: We are maintaining our market leadership in Hybrid Systems
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
Slide 9: Together we can 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, Waiting times (MARINE POWER) (MARINE POWER & VOYAGE) INCL PORT OPERATIONS (VOYAGE) Routing & planning Navigation Wind Fuel Power
Slide 10: Vessel contracting forecast and Wärtsilä's order intake in Marine
Continuing accelerated fleet renewal supported by the fleet age profile and Vessel contracting forecast potential increased consensus over fuelling and technology choices No of ships, 2,000+ dwt Accelerating fleet 3,000 renewal and steady demand growth Continued firm container & 2,500 LNG carrier or
Slide 11: 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 12: Renewable energy plays a key role in energy sector emissions abatement
Renewable energy plays a key role in energy sector emissions abatement MtCO2 60,000 Other Carbon removals Fuel switching 50,000 Other renewables Wind 40,000 Solar Nuclear CCS 30,000 Hydrogen Bioenergy Efficiency/recycling Estimated growth of the 20,000 Electrification addressable annual markets of O
Slide 13: 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 14: Wärtsilä flexible generation will support the transition 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 15: Good demand in energy storage
Good demand in energy storage – market expected to grow 30% annually in this decade MEUR 600 900 Wärtsilä Energy storage 807 785 745 800 ▪ Long-proven track record of grid scale system installations 775 500 globally, integrated with wind, solar, hydro & thermal 700 628 617 generation. 400 531 600 ▪
Slide 16: 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 17: We continue 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 18: 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 18 © Wärtsilä
Slide 19: 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 19 © Wärtsilä
Slide 20: 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 21: 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 22: 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 22 © Wärtsilä
Slide 23: 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 24: 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 450 MW 18,000 27% 400 16,000 350 26% 14,000 300 25% 12,000 250 24% 10,000 200 8,000 23% 150 6,000 22% 100 4,000 21% 50 2,000 0 0 20% 2
Slide 25: 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 / trade • Costs of energy: both the energy and marine markets wars o fue
Slide 26: Strong presence in sustainable development indices
Strong presence in sustainable development indices S&P Europe 350 ESG Index 26 © Wärtsilä
Slide 27: 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 28: 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 29: 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 30: 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 31: 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 32: 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 33: Significant value creation potential
SIGNIFICANT VALUE CREATION POTENTIAL 33 © Wärtsilä
Slide 34: Advantages of Wärtsilä 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 start, ▪ Ramp rate = the rate at which a power plant can increase or whereas combustion engine power plants can start and reach full dec
Slide 35: Financial development in Q4
Financial development in Q4 35 © Wärtsilä
Slide 36: A challenging year with strong annual growth
A challenging year with strong annual growth ▪ Order intake increased by 6% ▪ Net sales increased by 22% ▪ Good progress in services: ▪ Service order intake increased by 17% and exceeded equipment order intake in absolute terms ▪ Service net sales increased by 12% ▪ The comparable operating result d
Slide 37: Key figures
Key figures MEUR 10-12/2022 10-12/2021 CHANGE 1-12/2022 1-12/2021 CHANGE Order intake 1,638 2,150 -24% 6,074 5,735 6% of which services 791 747 6% 3,066 2,615 17% Order book 5,906 5,859 1% of which current year deliveries 3,871 3,763 3% Net sales 1,770 1,597 11% 5,842 4,778 22% of which services 784
Slide 38: Fourth quarter highlights
Fourth quarter highlights Net sales Comparable operating result MEUR %, 12m rolling Net sales EUR 1,770 MEUR MEUR, 12m rolling million 2,000 7,000 180 12.0% 1,800 1,770 160 158 ▪ 4% increase in 1,597 6,000 1,600 140 10.0% service sales 1,400 5,000 1,220 120 8.0% 1,200 103 4,000 100 93 1,000 6.0% Com
Slide 39: Order intake decreased by 24%
Order intake decreased by 24% Equipment Services MEUR MEUR, 12m rolling MEUR MEUR, 12m rolling ▪ Equipment order 1,600 4,000 1,600 4,000 1,404 intake decreased by 1,400 3,500 1,400 3,500 40% from an all-time 1,200 3,000 1,200 3,000 high quarter last year 1,000 2,500 1,000 2,500 800 848 2,000 747 791
Slide 40: Strong order book, rolling book-to-bill still above 1
Strong order book, rolling book-to-bill still above 1 Order book by business Order book delivery schedule MEUR MEUR 8,000 1.30 4,500 7,000 1.20 4,000 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 31.12.2020 30.6.2021 31.12.2021 30.
Slide 41: January–December order intake by customer segment
January–December order intake by customer segment Special Marine Businesses Gas carriers Cruise & ferry Offshore Navy vessels Merchant Other Marine Power Equipment 14% (7) 23% (28) 2% (3) 11% (9) 14% (21) 35% (31) 0% (0) Services 15% (17) 21% (19) 15% (14) 9% (10) 11% (13) 27% (24) 1% (2) Marine Sys
Slide 42: Governance
Governance 42 © Wärtsilä
Slide 43: Board of Management
Board of Management Håkan Agnevall, Arjen Berends, Chief Tamara de Gruyter, President, President & CEO Financial Officer Wärtsilä Marine Systems Kari Hietanen, Corporate Roger Holm, President, Teija Sarajärvi, Human Relations and Legal Affairs Wärtsilä Marine Power Resources 43 © Wärtsilä
Slide 44: 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 45: Largest shareholders January 2023 (Euroclear)
Largest shareholders 31 January 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 12,826,503 2.17% 4 Elo Keskinäinen Työeläkevakuutusyhtiö 6,802,000 1.15% 5 The Social Ins
Slide 46: Wärtsilä in brief
Wärtsilä in brief 46 © Wärtsilä
Slide 47: Key figures 2022
KEY FIGURES 2022 MEUR 8,000 7,000 Order intake 6,000 6,074 MEUR 5,000 2022 4,000 Net sales, Net sales 3,000 geographical 5,842 MEUR 2,000 1,000 0 Comparable operating result 2018 2019 2020 2021 2022 325 MEUR Net sales Order intake Europe Asia Americas Other 5.6% of net sales Order book 2022 Net sale
Slide 48: Financial targets, dividend and balance sheet
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 49: 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 50: For more information, call us or visit our Investors page
For more information, call us or visit our Investors page Next upcoming IR events ▪ 23 February 2023, Roadshow in London (by Handelsbanken) ▪ 7 March 2023, Carnegie conference in Stockholm ▪ 9 March 2023, Annual General Meeting ▪ 30 March 2023, Pre-silent call with CFO Wärtsilä Investor Relations Ha
Slide 51: WARTSILA
re, WARTSILA