Wärtsilä Oyj : Result presentation Q3 2023

Wärtsilä Corporation Interim report January-September 2023

Håkan Agnevall, President & CEO

Arjen Berends, CFO

31 October 2023

1 ©

Improved profitability, strong cash flow and good development in services

• Order intake increased by 11%
• Good progress in services continued:
• • Service order intake increased by 15%
  • Service net sales increased by 15%
• The comparable operating result increased by 53%
• • Supported by good development in services
  • Energy storage business profitable*
• Cash flow from operating activities improved

*LTM comparable operating profit

2 ©

Good development in key figures

MEUR	7-9/20237-9/2022 CHANGE 1-9/20231-9/2022 CHANGE
Order intake	1,787	1,616	11%	5,214	4,436	18%
of which services	842	732	15%	2,644	2,275	16%
of which equipment	946	884	7%	2,570	2,161	19%
Order book				6,594	6,229	6%
of which current year deliveries				1,570	1,651
Net sales	1,452	1,433	1%	4,371	4,072	7%
of which services	762	664	15%	2,305	1,991	16%
of which equipment	690	769	-10%	2,066	2,080	-1%
Book-to-bill	1.23	1.13		1.19	1.09
Operating result	117	10	1123%	274	-62
% of net sales	8.0	0.7		6.3	-1.5
Comparable operating result	125	82	53%	320	232	38%
% of net sales	8.6	5.7		7.3	5.7

3 ©

Marine market sentiment remained positive for Wärtsilä's key segments

Low capacity available at shipyards combined with further escalation of newbuild prices have limited investments

• The number of vessels ordered in the review period increased to 1 356 (1 095 in the corresponding period in 2022, excluding late reporting of contracts).
• Mostly driven by the changed mix of contracted vessels. The uptake of alternative fuels remained more limited with 316 orders reported, representing 23% (30%) of all contracted vessels and 44% (58%) of vessel capacity.
• Demand for new cruise ship capacity remained limited as cruise lines are focused on managing the current orderbook and deleveraging their business.
• In July, the International Maritime Organisation (IMO) revised its strategy on greenhouse gas emission reduction from ships which puts pressure on shipping companies to increase their investments to decarbonise their operations.

Total and specialised vessel contracting

Number of vessels 1,400

1,200

1,000

800

600

400

200

0

Sep-23

Jun-23

Mar-23

Dec-22

Sep-22

Jun-22

Mar-22

Dec-21

Sep-21

Jun-21

Mar-21

Dec-20

Sep-20

Jun-20

Mar-20

Dec-19

Sep-19

Jun-19

Mar-19

Dec-18

Sep-18

Jun-18

Mar-18

Dec-17

Sep-17

Total 12 months rolling (excluding late contracting)

Specialised vessels 12 months rolling (excluding late contracting)

Source: Clarksons Research, 12m rolling contracting as per 6th of October 2023 (+100 gt, excluding late reporting of contracts) Specialised vessels include LNG carriers, LPG carriers, cruise & ferry, offshore, and special vessels.

©

Solid long-term opportunities in energy market

Energy transition outlook improving amid fragile global economy

• Market share stayed at 13% (13%), as global orders for natural gas and liquid-fuelled power plants decreased by 22% to 10.0 GW during the twelve-month period ending in June 2023.
• Market decrease from the high levels of 2022 was driven by Europe and Asia.
• Global natural gas prices witnessed significant price volatility in Q3, showcasing the market's remaining sensitivity to disruptions in supply and demand.
• The trend in transition to renewable energy sources continues globally, being a key driver in the development of battery energy storage and thermal balancing technologies.
• The energy transition outlook in the mid-term remains strong.

Contracting for gas and liquid fuelled power plants 5-400 MW

MW, 12m rolling
16,000									14%
14,000									12%
12,000
					10%
10,000
					8%
8,000
					6%
6,000
					4%
4,000
								2%
2,000
0									0%
			H1 2020H2 2020H1 2021H2 2021H1 2022H2 2022H1 2023
		Wärtsilä		Other engines		Gas turbines		Wärtsilä-%

The market data includes prime movers over 5 MW in size in up to 400 MW gas and liquid-fuelled gas turbine plants and engine plants of all sizes. The gas turbine data is gathered from the McCoy Power Report, reported with a one quarter delay due to data availability. Engine data is collected from press releases and Wärtsilä sales teams. Output of steam turbines for combined cycles is estimated. Power plant market share reporting was updated this quarter to reflect our most relevant markets more accurately. Previously, market shares included gas turbine plants up to 500 MW but did not include non-Wärtsilä engine plants.

5 ©

Order intake increased by 11%

Equipment		Services
MEUR	MEUR, 12m rolling	MEUR	MEUR, 12m rolling

Equipment order intake increased by 7%

1,600									4,000	1,600
1,400									3,500	1,400
1,200									3,000	1,200
1,000				884				946	2,500	1,000
800									2,000	800
608
600									1,500	600
400									1,000	400
200									500	200
0									0	0
Q321	Q421	Q122	Q222	Q322	Q422	Q123	Q223	Q323

									4,000
									3,500
									3,000
								842	2,500
				732
								2,000
578									1,500
									1,000
									500
Q321	Q421	Q122	Q222	Q322	Q422	Q123	Q223	Q323	0

Service order intake increased by 15%

Organic order intake growth 18%

Equipment order intake				Service order intake
Equipment order intake, 12m rolling MEUR 3,418				Service order intake, 12m rolling MEUR 3,435

6 ©

Strong order book, rolling book-to-bill continues to trend up

Remaining order book for the current year lower than last year

Order book by business

MEUR
8,000				1.30
7,000				1.20
6,000				1.10
5,000				1.00
4,000				0.90
3,000				0.80
2,000				0.70
1,000				0.60
0				0.50
30.6.2021	31.12.2021	30.6.2022*	31.12.2022*	30.6.2023

Marine Power Marine Systems Voyage Energy Portfolio Business

Book-to-bill, 12m rolling 1.12

Order book delivery schedule

MEUR

3,500

3,000

2,500

2,000

1,500

1,000

500

0

Delivery current year	Delivery next year		Delivery after next
							year
		30.9.2021			30.9.2022		30.9.2023

*As of 1 January 2023, Voyage has been integrated with Marine Power. During the second quarter of 2023, further organisational changes have been implemented: a part of Marine Power,

as well as a part of Marine Systems, have been moved to Portfolio Business. The segment related comparison figures for 1-3/2023 and 2022 have been restated to reflect the current organisational structure. The segment related comparison figures for 2021 have not been restated accordingly.

7 ©

Net sales increased by 1%

Equipment									Services
MEUR							MEUR, 12m rolling	MEUR							MEUR, 12m rolling
1,100										3,500	1,100										3,500
1,000										3,000	1,000										3,000
900										900
				769														762
800								690	2,500	800									2,500
												664
700										700
										589
									2,000									2,000
600	514									600
500										500
									1,500										1,500
400										400
300										1,000	300										1,000
200										500	200										500
100										100
0	Q321	Q421	Q122	Q222	Q322	Q422	Q123	Q223	Q323	0	0	Q321	Q421	Q122	Q222	Q322	Q422	Q123	Q223	Q323	0

Equipment net sales			Service net sales
Equipment net sales, 12m rolling MEUR 3,053			Service net sales, 12m rolling MEUR 3,089

Equipment net sales decreased by 10%

Service net sales increased by 15%

Organic net sales growth 7%

8 ©

Profitability continued to improve

Net sales

Comparable operating result

MEUR							MEUR, 12m rolling	MEUR							%, 12m rolling
2,000									7,000	180									12.0%
1,800									6,000	160									10.0%
1,600
				1,433				1,452	140
															125
1,400									5,000
								120									8.0%
1,200	1,103
							4,000	100	87
1,000												82				6.0%
								3,000	80
800
									60									4.0%
600									2,000
								40
400																		2.0%
								1,000
									20
200
0									0	0									0.0%
	Q321	Q421	Q122	Q222	Q322	Q422	Q123	Q223	Q323		Q321	Q421	Q122	Q222	Q322	Q422	Q123	Q223	Q323

Net sales			Comparable operating result
Net sales, 12m rolling MEUR 6,142			Comparable operating result, 12m rolling 6.7%

Net sales increased by 1%

Comparable operating result increased by 53%

9 ©

Technology and partnership highlights

Enabling industry decarbonisation

Wärtsilä solutions chosen for world's first methanol fuelled hybrid RoRo vessels

• Wärtsilä will supply an integrated hybrid propulsion system for two new hybrid RoRo vessels being built for Swedish shipping company Stena RoRo.
• Each vessel will be equipped with two Wärtsilä 32M multi-fuel engines capable now of operating on methanol fuel and with ammonia ready notation.
• The combination of new sustainable fuels and electrification is in line with the company's sustainable operations target.
• Wärtsilä has a strong relationship with Stena RoRo, and as early as 2015 Wärtsilä converted the Stena Germanica to operate on methanol fuel.

Wärtsilä's long-standing relationship with Brazilian customer enhanced with renewal of Operation & Maintenance agreement

• Wärtsilä has signed a renewal of its Operation & Maintenance agreement with Brazilian independent energy producer Geradora de Energia do Amazonas (Gera Amazonas).
• The agreement covers the UTE Ponta Negra power plant in Manaus and has been in place since 2006 when the plant was commissioned.
• The two-year renewal ensures that Gera Amazonas can meet its power purchase obligations with Eletronorte.
• Originally the plant operated on heavy fuel oil, but in 2013 it was converted to operate with gas/diesel technology. The plant now operates in 24/7 baseload mode delivering 60 MW to the system.

10 ©