Wärtsilä Corporation, Financial Statements Bulletin January-December 2023, 31
January 2024 at 8:30 (EET)
Wärtsilä's Financial Statements Bulletin January-December 2023
This release is a summary of Wärtsilä's Financial Statements Bulletin
January-December 2023. The complete report is attached to this release as a pdf
file. It is also available on the company website at www.wartsila.com.
ALL-TIME HIGHS IN ORDER INTAKE, NET SALES AND CASH FLOW IN 2023
Highlights from October-December 2023
· Order intake increased by 13% to EUR 1,856 million (1,638), and the organic
growth, which excludes FX impact and the impact of acquisitions and divestments,
was 21%
· Service order intake increased by 11% to EUR 876 million (791)
· Net sales decreased by 7% to EUR 1,644 million (1,770), and the organic
decrease was 3%
· Book-to-bill amounted to 1.13 (0.93)
· Comparable operating result increased by 90% to EUR 177 million (93), which
represents 10.8% of net sales (5.3).
· Operating result increased by 248% to EUR 128 million (37), which represents
7.8% of net sales (2.1).
· Basic earnings per share increased to 0.16 euro (0.05)
· Cash flow from operating activities increased to EUR 389 million (51)
Highlights from January-December 2023
· Order intake increased by 16% to EUR 7,070 million (6,074), and the organic
growth was 22%
· Service order intake increased by 15% to EUR 3,519 million (3,066)
· Order book at the end of the period increased by 13% to EUR 6,694 million
(5,906)
· Net sales increased by 3% to EUR 6,015 million (5,842), and the organic
growth was 7%
· Book-to-bill amounted to 1.18 (1.04)
· Comparable operating result increased by 53% to EUR 497 million (325), which
represents 8.3% of net sales (5.6)
· Operating result increased by EUR 427 million to EUR 402 million (-26),
which represents 6.7% of net sales (-0.4)
· Basic earnings per share increased to 0.44 euro (-0.11)
· Cash flow from operating activities increased to EUR 822 million (-62)
· Dividend proposal 0.32 euro per share (0.26)
WÄRTSILÄ'S PROSPECTS
Marine
Wärtsilä expects the demand environment for the next 12 months (Q1/2024-Q4/2024)
to be better than that of the comparison period.
Energy
Wärtsilä expects the demand environment for the next 12 months (Q1/2024-Q4/2024)
to be better than that of the comparison period.
HÅKAN AGNEVALL, PRESIDENT & CEO: IMPROVING PROFITABILITY AND CONTINUING SERVICE
GROWTH
“In 2023, Wärtsilä continued to develop positively in many ways. Our financial
performance improved steadily throughout the year, and we achieved all-time
highs in order intake, net sales, and cash flow from operating activities. We
improved our profitability through growing services, improving the quality of
revenues, and progressing in turning around Energy Storage & Optimisation and
former Voyage operations. We mitigated the headwinds from cost inflation,
geopolitical concerns, and a slowdown of global economic growth. The market
sentiment for our businesses remained fairly positive in both marine and energy,
and we maintained our focus on executing our strategy and supporting our
customers in their decarbonisation journeys.
In the energy market, climate policy reached new milestones in 2023. At COP28,
the United Nations Climate Change Conference, more than 120 countries pledged to
triple global renewable energy capacity by 2030. The COP28 final declaration
also called for transitioning away from fossil fuels, in line with Wärtsilä's
vision of a 100% renewable energy future and our readiness to enable engines to
run on future fuels. During the year, the macroeconomy caused uncertainty in the
overall investment environment, delaying decision-making especially in the
engine power plants business. After a slow first three quarters of the year, our
engine power plants business significantly picked up and achieved good order
intake during the fourth quarter. As an example, we signed a contract to supply
two 30 MW power plants for Indonesian state-owned utility PLN, each of them
operating with three Wärtsilä 31DF dual-fuel engines. Wärtsilä's engines will
deliver high efficiency, reliable power generation, and fuel flexibility to
contribute to Indonesia's decarbonisation efforts.
In the marine market, the investment appetite for new ships remained healthy in
2023, despite capacity limitations at the main shipyards in South Korea and
China and further increases in newbuild prices. In July, the International
Maritime Organisation (IMO) updated its strategy on cutting greenhouse gas
emissions from ships, with a more stringent goal of reaching net zero emissions
by or around 2050. As a result, stakeholders are now more aligned globally on
the requirements and investments needed to decarbonise the industry. This will
accelerate the decarbonisation transition in marine where Wärtsilä solutions can
make a real difference. Decarbonisation provides notable opportunities, not only
for newbuilds, but also for retrofits and conversions as shipowners and
operators seek to keep their existing fleets compliant and competitive. As an
example, during the fourth quarter we agreed to retrofit ten tankers for the
Singapore head-quartered global tanker operator Hafnia with our EnergoFlow and
EnergoProFin propulsion solutions. With these Wärtsilä's solutions, fuel
efficiency is improved, emissions are reduced, operating costs are lowered, and
both the Carbon Intensity Indicator (CII) rating and Energy Efficiency Existing
Ship Index (EEXI) value are improved.
The ongoing war in Ukraine and the conflict in the Middle East have resulted in
various risks to both the demand and supply environment. The heightened
geopolitical tensions have increased risks related to further geopolitical
fragmentation and increased overall uncertainty to the macroeconomic outlook. We
have also seen disruptions at key waterways, which have led to longer trade
distances and increased costs for shipowners and operators.
In 2023, order intake grew organically at 22%, and net sales organically at 7%.
Equipment net sales decreased in Marine Systems and engine power plants. The
comparable operating result increased by 53% to EUR 497 million with a
comparable operating margin of 8.3%. This was mostly driven by continued growth
in services and improved quality of revenues. Services accounted for 52% of our
net sales, and we see additional growth opportunities by continuing to move up
the service value ladder. Around 30% of our installed base is now under
agreement coverage, and we are very proud that the customer renewal rate for our
agreements is around 90%. This is a proof point of the value we are creating for
our customers. After continued growth and operational improvements, our Energy
Storage & Optimisation (ES&O) business is now profitable, and the turnaround of
the business activities that earlier formed Voyage is now also going according
to plan. Additionally, the delivery projects that we captured before the
acceleration of cost inflation, and which burdened our profitability in 2022 and
for the first three quarters of 2023, are delivered and are no longer a part of
our orderbook. Our profitability was hampered by a single sizeable turnkey
project in Gas Solutions, for which we took a total provision of EUR 48 million
in 2023. Gas Solutions ceased offering turnkey projects several years ago, and
the project in question is nearing completion. Cash flow from our operating
activities significantly improved to EUR 822 million, driven by a better
operating result, good level of received customer payments, and our continued
working capital optimisation.
During the year, we actively managed our business portfolio to best support our
strategy. Earlier in the year, the Automation, Navigation & Control Systems
(ANCS) and the Marine Electrical Systems business units were moved from Marine
Systems to Portfolio Business in preparation for a divestment. In November, we
announced that the Gas Solutions business unit will also be moved to Portfolio
Business, while the remaining two Marine Systems business units - Shaft Line
Solutions and Exhaust Treatment - will be moved to Marine Power. From the
beginning of 2024, Wärtsilä has two reporting segments: Marine and Energy.
Portfolio Business will continue to be reported as other business activities. In
October, we announced a strategic review of ES&O to accelerate its profitable
growth in a way that benefits its customers, employees, and the value creation
for Wärtsilä shareholders. This review is still ongoing, during which all
potential alternatives will be considered. Such alternatives could include
different ownership options of the ES&O business from continued full ownership
to potential full or partial divestment of the business or other possible
strategic alternatives.
To support our decarbonisation technology development, we have increased our R&D
spending from the historical average of ~3% of net sales to ~4%. In 2023, we
launched the world's first 100% 4-stroke ammonia solution for marine
applications, which will enable a significant advancement in sustainable
shipping operations. We also introduced another four methanol-ready engines to
our portfolio, setting a new industry benchmark with the broadest methanol
engine portfolio. In 2025, we will deliver an engine concept ready for operating
with pure hydrogen. We have also been testing our maritime carbon capture and
storage (CCS) system at a 70% capture rate. We are preparing for the first pilot
installation to take place in 2024 with the intention of launching the product
in 2025. While much of the decarbonisation work is still ahead, Wärtsilä already
today has solutions and technologies that enable the transition to low-emission
shipping and 100% renewable power systems.
We expect the demand environment for the coming 12 months to be better than the
comparison period in both the Marine business and in the Energy business. We are
on a clear path to reach our financial targets. Key drivers for reaching our
profitability target will be to continue moving up the service value ladder,
improving the newbuild business supported by the decarbonisation transformation,
increasing the profitability of Energy Storage & Optimisation, and continuing
the divestments of our Portfolio Businesses. Wärtsilä is an established
technology leader in the decarbonisation transformation. We can make a
difference in our industries and the world, while securing our financial
performance and delivering attractive long-term shareholder value. I would like
to sincerely thank our customers for your trust in our solutions and services,
all my Wärtsilä colleagues for your commitment towards reaching our common
goals, and our shareholders for your confidence in Wärtsilä's future success.”
KEY FIGURES
MEUR 10-12/ 10-12/ Change 1-12/2 1-12/2022 Change
2023 2022 023
Order intake 1,856 1,638 13% 7,070 6,074 16%
of which services 876 791 11% 3,519 3,066 15%
of which equipment 980 848 16% 3,550 3,008 18%
Order book, end of 6,694 5,906 13%
period
Net sales 1,644 1,770 -7% 6,015 5,842 3%
of which services 843 784 8% 3,148 2,775 13%
of which equipment 800 987 -19% 2,867 3,067 -7%
Book-to-bill 1.13 0.93 1.18 1.04
Comparable adjusted 182 99 85% 518 349 48%
EBITA*
% of net sales 11.1 5.6 8.6 6.0
Comparable operating 177 93 90% 497 325 53%
result
% of net sales 10.8 5.3 8.3 5.6
Operating result 128 37 248% 402 -26 1673%
% of net sales 7.8 2.1 6.7 -0.4
Result before taxes 120 35 242% 364 -32 1240%
Basic 0.16 0.05 0.44 -0.11
earnings/share, EUR
Cash flow from 389 51 822 -62
operating activities
Net interest-bearing 35 481
debt, end of period
Gearing 0.02 0.23
Solvency, % 37.0 35.3
*Comparable adjusted
EBITA excludes items
affecting
comparability and
purchase price
allocation
amortisation.
Wärtsilä presents certain alternative performance measures in accordance with
the guidance issued by the European Securities and Markets Authority (ESMA). The
definitions of these alternative performance measures are presented in the
Calculations of financial ratios section.
BOARD OF DIRECTORS' DIVIDEND PROPOSAL
The Board of Directors proposes that a dividend of EUR 0.32 per share shall be
paid for the financial year 2023. The parent company's distributable funds total
EUR 1,074,016,204.80, which includes EUR 157,126,640.44 in net profit for the
year. There are 589,023,390 shares with dividend rights. The dividend shall be
paid in two instalments.
The first instalment of EUR 0.16 per share shall be paid to the shareholders who
are registered in the list of shareholders maintained by Euroclear Finland Oy on
the dividend record date of 11 March 2024. The payment day proposed by the Board
for this instalment is 18 March 2024.
The second instalment of EUR 0.16 per share shall be paid in September 2024. The
dividend record day of the second instalment shall be 11 September 2024, and the
second instalment of the dividend shall be paid to shareholders who are
registered in the list of shareholders maintained by Euroclear Finland Oy on
such day. The Board proposes the second instalment is paid on 18 September 2024.
ANALYST AND PRESS CONFERENCE
A virtual analyst and press conference will be held as a webinar today,
Wednesday 31 January 2024, at 10.00 a.m. Finnish time (8.00 a.m. UK time).
The service provider for the conference has changed. New service supports
participating and stating questions both via web interface and by dialling in
with a telephone. Please use the teleconference dial-in option only if you
experience issues with the web participation or your organisations firewalls set
limitations for the web participation.
Participating via the web
Register and login to the web interface via the web address below. When you
register, you are prompted to participate as a listener or as an active Q&A
participant. Once the event starts, the event page will switch to the
presentation mode automatically.
https://wartsila.videosync.fi/q4-2023
If you are participating via the web, you can enter the Q&A que by clicking the
raise hand button on the bottom-right corner of the video/audio player. Once the
event host announces your name, please open your microphone from the bottom-left
corner of the video/audio player to be able to be heard.
Participating via the teleconference
You can access the teleconference by registering on the link below. After the
registration you will receive an email with the dial-in numbers and your
personal PIN code to access the conference.
http://palvelu.flik.fi/teleconference/?id=10012487
If you are participating via the dial-in teleconference, you can enter the que
by clicking *5 (star-five) in the telephone keypad, and if you want to withdraw
your question, click *6 (star-six) respectively.
A recording of the webcast will be available on the company website as soon as
possible after the event.
For further information, please contact:
Arjen Berends
Executive Vice President & CFO
Tel. +358 10 709 5444
arjen.berends@wartsila.com
Hanna-Maria Heikkinen
Vice President, Investor Relations
Tel. +358 10 709 1461
hanna-maria.heikkinen@wartsila.com
For press information, please contact:
Saara Tahvanainen
Executive Vice President, Communications and Marketing
Tel. +358 40 589 0223
saara.tahvanainen@wartsila.com
Wärtsilä in brief
Wärtsilä is a global leader in innovative technologies and lifecycle solutions
for the marine and energy markets. We emphasise innovation in sustainable
technology and services to help our customers continuously improve environmental
and economic performance. Our dedicated and passionate team of 17,800
professionals in more than 280 locations in 79 countries shape the
decarbonisation transformation of our industries across the globe. In 2023,
Wärtsilä's net sales totalled EUR 6.0 billion. Wärtsilä is listed on Nasdaq
Helsinki. www.wartsila.com