Capital Markets Day

Recap of Capital Markets Day 2021

Wärtsilä held a Capital Markets Day on 18 November 2021. The event consisted of presentations by the President and CEO Håkan Agnevall, CFO Arjen Berends, Marine Power President Roger Holm, and Energy President Sushil Purohit.

Wärtsilä held a Capital Markets Day on 18 November 2021. The event consisted of presentations by the President and CEO Håkan Agnevall, CFO Arjen Berends, Marine Power President Roger Holm, and Energy President Sushil Purohit. The recording of the event and the presentation materials are available here:

Our CEO Håkan Agnevall kicked off the event by explaining Wärtsilä’s strategy, which is focused on shaping the decarbonisation of marine and energy. Decarbonisation will transform both the energy and marine industries: by 2030 the balancing power market is estimated to grow by more than 10X, and in marine there will be an unprecedented rate of change in newbuild and existing fleet due to regulations and increasing demand for green transport. Having a strong commitment to R&D, Wärtsilä is very well positioned for the decarbonisation transformation. Håkan also presented Wärtsilä’s ambitious sustainability targets for 2030: providing a product portfolio which will be ready for zero-carbon fuels, and becoming carbon-neutral in our own operations.

After Håkan’s presentation, CFO Arjen Berends entered the stage. He further explained Wärtsilä’s new financial targets that were announced the day before the event:

  • Net sales: 5% annual organic growth (NEW)
  • Profitability: 12% operating margin (NEW)
  • Capital structure: gearing below 0.50
  • Dividend: at least 50% of earnings

Some of the key drivers that enable us to reach the ambitious growth target are energy storage, services, thermal balancing power, and marine newbuild market recovery. The demand for energy storage and power system optimisation solutions is growing fast, but that does not mean that there would no longer be demand for thermal balancing solutions. In fact, the demand for thermal balancing power is expected to increase due to coal shut-downs, and it also has an important role in complementing energy storage solutions. The service business is also an important growth driver. We expect that an increased share of wallet, deeper penetration of the installed base, decarbonisation retrofits, and new business models will drive growth in services going forward.

Roger Holm, President of Marine Power, had a clear message in his presentation: maritime industry is on a decarbonisation path that has never been seen before. The key to succeed on this path is to provide fuel-flexible engine technology, which is Wärtsilä’s core knowledge area. Moving up the service value ladder and performance-based agreements provide a strong foundation for growth in services. Marine Power’s current service agreement renewal rate is 94%, reflecting the value we can provide to our customers. There are also increasing opportunities in the service business due to the decarbonisation of the existing fleet, which will further drive profitability and growth in Marine Power.

Sushil Purohit, President of Energy, started his presentation with a reflection of his own experience of the massive blackout in Texas last February. The blackout left 4.5 million homes and businesses without power, heat, and even water, causing economic losses of USD 130 billion. Almost everything in the power system failed, except for the Wärtsilä engine-based power plant, which kept running during the blackout. This example shows how important it is to have flexible balancing power supporting renewable power systems.

Our latest orders show that there is strong demand for thermal power: on 10 November, we announced two major contracts for power plant deliveries to Latin America with a combined value of approximately EUR 480 million. On 18 November, it was further announced that Wärtsilä will supply three gas engine power plants with a combined output of 150 MW to Brazil.

The energy storage business has been growing rapidly, and Wärtsilä maintains a global top three position in the market. The addressable market for energy storage is expected to grow by 30% per year, and the complexity is also driving demand for advanced energy management systems. The expected order intake for Wärtsilä’s energy storage business for 2021 is more than EUR 700 million. Although the business is currently loss-making, we expect it to be profitable within a few years.

The event ended with a Q&A session, where all the presenters took part in. Many questions were received both from the live audience as well as from the online participants. Thank you to all participants for active participation and a lively discussion!