A pre-silent call for the third quarter of 2025 was held on 30 September 2025 with our CFO Arjen Berends. In this blog post, we summarise the main messages and questions from the call. The recording of the call is available here and the presentation materials here.
Before the Q&A session, Arjen discussed the recent development of Wärtsilä’s businesses and the market trends. Wärtsilä has reported continued positive momentum in both Marine and Energy during the quarter, although the broader market environment remains uncertain, making it difficult to provide firm forward-looking statements.
Wärtsilä continues with strategy execution and portfolio streamlining: ANCS no longer contributing to Q3/2025 figures
Wärtsilä has been continuing its strategy execution in Portfolio Business with divestments. As announced in Q2/2025 interim report, the divestment of Automation, Navigation and Control Systems (ANCS) business to Solix was completed on 1 July. The divestment is estimated to have a positive impact of EUR 30 million on the result for the reporting period 2025 subject to post-closing adjustments, to be reported in items affecting comparability in Q3/2025. Annual revenue of the business was close to 230 MEUR in 2024. ANCS has clearly been the most profitable unit in Portfolio Business, representing ~80% of Portfolio Business’ operating result during the first half of the year 2025. ANCS is no longer contributing to Q3/2025 figures. Group order book to be adjusted accordingly (impact approximately -260 MEUR).
The divestment of Marine Electrical Systems to Vinci is also progressing and is expected to close in Q4 2025. Once finalised, it will be removed from Wärtsilä’s financials. This leaves only two remaining units in the portfolio business, Gas Solutions and Water & Waste, with plans to divest them as soon as feasible.
Marine and Energy show resilience amid market shifts
Operationally, both Marine and Energy businesses are supported by strong order books, considering the volumes for the second half of the year. In Marine, the outlook is especially good for equipment deliveries. Energy deliveries are expected to peak in Q4. With a shift from EPC (Engineering, Procurement, and Construction) to EEQ (Equipment-only delivery) deliveries now well established, this transition also changes the revenue recognition method, moving from percentage-of-completion to completed contract. It is good to note both in Marine and Energy, that the longer in time order book gets, the longer it takes to convert order intake to sales.
In Energy Storage, the US market have remained stagnant, pushing competitors into active regions and intensifying competition. Tariff discussions add further complexity, making the environment challenging to navigate.
The latest Clarksons forecast published in September shows only minor adjustments in ship contracting volumes in comparison to the March forecast with slight increase for 2025 by 2.6%, or 48 vessels, to 1,913 vessels (>2,000 dwt/GT) and slight decrease for 2026 forecast to 1,952, down by 1.6% or 31 vessels. Overall, the trend remains stable, and we see good opportunities for our key segments. Cruise shows strong renewal potential due to aging fleets, LNG vessels is expected to pick up as new export projects come online, and offshore services continue to show healthy activity.
Decarbonisation remains a key driver across both Marine and Energy. While the upcoming IMO decision on a global carbon fee may influence certain technologies like carbon capture, the broader push for fuel efficiency and emissions reduction continues to gain traction. Wärtsilä is seeing good opportunities for moving up the service value ladder.
In Energy, renewables remain the most affordable form of electricity generation, and balancing power is essential for stabilising the grid. Wärtsilä’s solutions are well-positioned to meet that need. A promising new opportunity is emerging in the data center space, with global interest growing rapidly. The utilisation of our installed base is continuing on a good level, around 4,000 hours per installation.
For now, tariffs are expected to have a limited impact on Wärtsilä, also regarding the latest aluminium and steel tariffs, but the situation remains fluid.
Finally, Wärtsilä is expanding its R&D and manufacturing facilities in Vaasa, reinforcing its commitment to sustainable technology and future growth.
Q&A
What is your announcement policy for data center orders, does the absence of an announcement mean there are no orders, or could there be backdated ones?
We don’t have a specific communication policy for data center orders. We aim to publish all orders we’re allowed to, but it depends on customer consent. Some customers prefer confidentiality, while others allow announcements. The absence of an announcement doesn’t necessarily mean there are no orders. It could be that the customer hasn’t approved publication yet. We only announce when both parties agree, and timing can vary.
What are the current delivery times and manufacturing capacity for the Energy business?
Delivery times depend on the type and size of the order. For example, a 200 MW power plant could still be delivered by Q4 next year. Not all engine types are available for every configuration, and the mix of marine vs. energy orders affects capacity. The main bottleneck is testing capacity, which is being optimised. Overall, capacity is not yet fully utilised, and the company can still handle more volume.
How should we interpret your guidance for Energy in light of strong demand, especially from data centers?
The guidance reflects a realistic and balanced view. Large orders are lumpy, and timing is unpredictable, they can shift by several quarters. Wärtsilä prefers to be cautious and realistic in its outlook, aiming to overdeliver rather than overpromise.
How should we think about net working capital development going forward?
Wärtsilä has seen unusually strong negative working capital, driven by factors like customers preferring cash upfront instead of payment guarantees, and long yard order books leading to early down payments. These factors positively impact cash flow today but may not be sustainable. While earlier expectations were for normalisation, we now anticipate maintaining negative working capital for some time.
What does the shift from EPC to EEQ mean for revenue and earnings recognition in Energy?
Under EPC (Engineering, Procurement, and Construction), revenue is recognised progressively based on project completion, resulting in more linear revenue and margin recognition. With EEQ (Equipment-only delivery), revenue is recognised at the point of delivery, leading to more fluctuation quarter by quarter. This shift creates more variability in both revenue and earnings timing.
How flexible is your cost base in Energy Storage, especially given the slowdown in the US market?
The cost base isn’t strictly tied to the US. While the US slowdown affects the market, most opportunities were already outside the US even before tariffs. The business model is more consultancy and design-oriented, not asset-heavy. However, global competition has intensified, leading to price pressure. Wärtsilä focuses on customers who value execution quality, performance guarantees, and safety.
Is the current low US demand causing margin pressure in other regions in Energy Storage?
Yes, increased supply and reduced battery demand from the EV sector have led to cheaper solutions flooding the market. This creates margin pressure globally. Wärtsilä continues to serve customers who prioritize reliability and performance over lowest cost.
Will the upcoming IMO meeting and potential carbon tax affect your marine backlog or pipeline?
Not directly. Customers are already focused on fuel efficiency, which improves both economics and emissions. Even without a global carbon fee, future fuels will be more expensive, and efficiency will be key throughout a vessel’s lifetime. Wärtsilä is actively consulting customers on how to balance retrofits and ratings to prepare for gradual implementation of carbon fees.
How does the situation for Marine service business look like currently and are there any changes in the operating environment, such as shipping routes?
Last quarter, retrofits and upgrades order intake decreased due to a very strong comparison period, as 37% of order intake in 2024 was booked for Q2/2024. In general, comparing service order intake on quarterly basis is not giving the best view on the development of the business, as in particular for retrofits and agreements, the timing of orders has a large impact on quarterly figures. It is better look at the trend, and nothing has changed in there.
