Wärtsilä published its Half-year Financial Report for January–June 2025 on Friday 18 July 2025 at 8:30 am EEST. Here are the key messages and Q&A on the report.
General/market environment
The second quarter of 2025 was strong for Wärtsilä, with increases in order intake, net sales, operating result and cash flow. We ended the quarter with an all-time-high order book of EUR 8,764 million. However, the global economic outlook remained uncertain due to increased trade barriers and policy uncertainty. This, combined with the risk of further protectionism, could add to inflationary pressures and dampen growth in global economic activity.
In the energy market, the rising global electricity demand is driving the need for new power generation capacity. The ongoing global energy transition is expected to continue, with renewables meeting most of the upcoming capacity growth, as these are the most affordable way to generate electricity. This trend will continue to support the demand for Wärtsilä's balancing power offering, which includes both engine power plants and battery energy storage systems. However, the US market for battery energy storage is currently facing challenges due to increased tariffs, leading to heightened competition in other markets. Our medium-speed engines also provide an excellent baseload solution for data centres, a rapidly expanding market with unique power requirements. We secured our first data centre order from the US during the second quarter. The data centre segment continues to offer interesting business potential for Wärtsilä in both equipment and services.
In the marine market, the uncertain global economic outlook has dampened demand for new ship capacity in 2025. Slowing demand for tonnage, coupled with uncertainties in global trade policies and a strong supply of new ships, has led to mixed market conditions across many vessel segments. However, activity in Wärtsilä's key segments, such as cruise and ferry, remains supportive. In April, the 83rd session of the Marine Environment Protection Committee of the International Maritime Organization proposed a set of measures to drive the decarbonisation of global shipping. Although these measures are still awaiting adoption in October 2025, they underscore the regulatory push to reduce emissions and encourage shipowners to continue their investments in decarbonisation.
Order intake, net sales, operating result and cash flow
Order intake in the second quarter increased organically by 20%. Equipment order intake increased as a result of strong equipment orders in Energy and Marine. Service order intake decreased mainly due to lower project-oriented activities in retrofits and upgrades. All other service disciplines continue to grow, with rolling 12-month book-to-bill ratios above 1. Net sales increased organically by 13%, with increases in both equipment and service net sales.
The comparable operating result increased by 18% to EUR 207 million, representing 12.0% of net sales. The result was supported by increases in Energy, Marine and Portfolio Business. Cash flow from operating activities almost doubled, following the improved result and a good level of received customer payments. The current negative working capital level is very favourable for our business, and we expect it to normalise going forward. We will continue our active efforts to manage working capital to maintain it clearly below the long-term historical average.
Outlook
Marine
Wärtsilä expects the demand environment for the next 12 months (Q3/2025-Q2/2026) to be better than in the comparison period.
Energy
Wärtsilä expects the demand environment for the next 12 months (Q3/2025-Q2/2026) to be similar to that of the comparison period.
Energy Storage
Wärtsilä expects the demand environment for the next 12 months (Q3/2025-Q2/2026) to be better than in the comparison period. However, the current geopolitical uncertainty particularly impacts this business and may affect growth.
In general, Wärtsilä underlines that the current high external uncertainties make forward-looking statements challenging. Due to high geopolitical uncertainty, the changing landscape of global trade, and the lack of clarity related to tariffs, there are risks of postponements in investment decisions and of global economic activity slowing down.
Q&A
You expect the demand environment to be “better” for the next 12 months (Q3/2025–Q2/2026) for Marine. What are the main drivers for this?
- We see that Wärtsilä’s key segments continue to perform well. There is still uncertainty regarding a potential slowdown in container trade between China and the USA. However, this is not expected to have a significant immediate impact on Wärtsilä.
- The outcome of the International Maritime Organisation’s (IMO) MEPC83 meeting and the proposed global carbon fee for global shipping supports the continued decarbonisation journey.
- Solutions that drive fuel efficiency continue to see good demand, benefitting both the current economics of the vessel as well as lowering carbon emissions.
- In service business, we see good opportunities with our strategy of moving up the service value ladder and supporting our customers in improving their operational efficiency.
- In general, we underline that the current high external uncertainties make forward-looking statements challenging. Due to high geopolitical uncertainty, the changing landscape of global trade, and the lack of clarity related to tariffs, there are risks of postponements in investment decisions and of global economic activity slowing down.
You expect the demand environment to be “similar” for the next 12 months (Q3/2025–Q2/2026) for Energy. What are the main drivers for this?
- The growing demand for electricity driven by the ongoing electrification in many industries is expected to continue.
- Renewable energy (wind and solar) is anticipated to be the most affordable way to generate electricity going forward. The growing share of renewable energy in the system requires balancing power to cover for intermittency.
- Data centres offer interesting baseload business potential due to grid capacity limitations and delayed connectivity.
- There is a good pipeline, but it is good to note that order intake during the last 12 months has been very strong, especially in Q2/2025 with all-time high quarterly order intake. Equipment business is lumpy by nature and the timing of a single order may have a large impact on the quarterly order intake.
- Most customer segments in the US are continuing investments, but there are differences in sensitivity to tariff impact.
- The utilisation of our Energy installed base is stable, providing good opportunities for services going forward.
- In general, we underline that the current high external uncertainties make forward-looking statements challenging. Due to high geopolitical uncertainty, the changing landscape of global trade, and the lack of clarity related to tariffs, there are risks of postponements in investment decisions and of global economic activity slowing down.
You expect the demand environment to be “better” for the next 12 months (Q3/2025–Q2/2026) for Energy Storage. What are the main drivers for this?
- The need for energy storage systems has grown rapidly and is expected to further increase driven by the energy transition.
- However, the current geopolitical uncertainty particularly impacts this business and may affect growth.
- The US market is facing significant headwinds due to the uncertainty around tariffs. This is also leading to increased competition in other markets.
- Order intake during the comparison period (last 12 months) has been low, impacted by the US tariffs and timing of orders. Project business is lumpy by nature, and the timing of a single order may have a large impact on the quarterly order intake.
- In 2025, equipment order intake is expected to improve in the second half of the year.
- In general, we underline that the current high external uncertainties make forward-looking statements challenging. Due to high geopolitical uncertainty, the changing landscape of global trade, and the lack of clarity related to tariffs, there are risks of postponements in investment decisions and of global economic activity slowing down.
You had very good equipment order intake in Energy, what supported that? Are there more data centre orders now coming through?
- Equipment order intake was very strong and increased by 303% compared to Q2/2024. This was supported by the very high closing activity of projects during the second quarter. In the second quarter, we signed the first data centre order in the US, as well as a large EPC baseload order in Pakistan, among others. In total, order intake in Energy was all-time high.
- We have ongoing discussions regarding several data centre projects, which are at various stages of negotiations. Finalising these negotiations typically takes time.
- Equipment business is lumpy by nature and the timing of a single order may have a large impact on the quarterly order intake.
Why did service order intake decrease?
- The rolling 12 months book-to-bill ratio for all service revenue streams other than retrofits and upgrades continued to be well above 1 indicating continued growth
- Service order intake decreased mainly due to lower project-oriented activities in retrofits and upgrades, with this specific book-to-bill being less than 1. The decrease was driven by strong comparison period in 2024.
- There was continued good development in the other service revenue streams (spare parts, field service and agreements), particularly agreements on rolling 12-months basis.
How will Automation, Navigation and Control Systems (ANCS) and Marine Electrical Systems (MES) divestments impact your figures?
- The divestment of Automation, Navigation and Control Systems (ANCS) was announced in December 2024 and completed on 1 July 2025. Thus, ANCS is still included in Wärtsilä figures in Q2/2025. In 2024 the annual revenue of the business was close to EUR 230 million. ANCS has clearly been the most profitable unit in Portfolio Business, representing ~80% of Portfolio Business’s operating result during the first half of the year 2025. The divestment is estimated to have a positive impact of approximately EUR 30 million on items affecting comparability in Q3/2025, subject to post-closing adjustments.
- The divestment of Marine Electrical Systems was announced on 17 July 2025 and closing is estimated by Q4/2025. In 2024, the annual revenue of the business was EUR 100 million. In Q2/2025, Wärtsilä recorded EUR -17 million items affecting comparability related to the asset held for sale categorisation of MES.
Why was the order intake for Energy Storage so low?
- Order intake in Energy Storage decreased by 79%. The US market is facing headwinds driven by tariff uncertainty, which is also leading to increased competition in other markets. In 2025, equipment order intake is expected to improve in the second half of the year.
- However, the current geopolitical uncertainty particularly impacts this business and may affect growth.
- In the current intensifying competition, we are focusing on markets and customer segments which value our core proposition of excellence in execution, reliability and thermal safety.
- It is good to remember, that this is project business where the timing of single order may have a significant impact on the quarterly order intake. The average size of a project has increased which has even larger impact on the lumpiness.
Marine and Energy combined showed good development and you are already quite close to your profitability target. Are you reaching the target already during this year?
- We have set clear financial targets for Marine and Energy combined being 5% annual organic growth and 14% operating margin.
- Q2/2025 was a step to the right direction, as we witnessed solid growth and operating margin improvement in both businesses. The annual organic growth for the last 12 months was 19% and the operating margin for the last 12 months was 13.1% (11.6).
- We have not communicated an exact timeline for reaching these targets, but we are making good progress and are confident that we will reach those targets.
You had very strong cash flow from operating activities in Q2, where does that come from and what are your expectations going forward?
- Cash flow from operating activities almost doubled to EUR 416 million, compared to EUR 216 million a year ago. The good development was supported by the improved result and a good level of received customer payments. Working capital further improved and was EUR -924 million at the end of Q2.
- It is good to note that the current negative working capital level is very favourable for Wärtsilä. Our mid to long term historical working capital to net sales ratio has always been positive, while we closed 2023 and 2024 on a negative level.
- Continuous actions on all elements of working capital (payment terms, receivables, payables, inventories, etc.) have supported us to further reduce the working capital level in 2025.
- Even though many of these working capital actions are sustainable improvements, such as stock optimisation, lower overdue receivable balances, and faster throughput times, we believe it will normalise to a less negative or potentially slightly positive working capital / sales ratio in the mid to long term.
