It seems that these icebreaker orders from the USA will materialize in the near future, and are not just empty talk. Whether the order goes to Finnish shipyards
or elsewhere.
So, doesn’t Wärtsilä have an excellent competitive advantage as an engine supplier with its LNG/diesel engine combination? Or are there other engines/manufacturers competing in the same market? I don’t have information on this. So, it would be nice to hear comments from someone knowledgeable about engine suppliers for icebreakers.
Caterpillar is a competitor to Wärtsilä in engines that would become the main power sources for icebreakers. One must hope that Trump does not demand that Caterpillar supplies the engines even if the ships were built in Finland.
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Energy business to be separated into two independent segments
As a result of a strategic assessment, the Energy reporting segment will be separated into two independent reporting segments: Energy, focusing on the power plant business and its lifecycle business, and Energy Storage, focusing on the energy storage business and its lifecycle business. Energy Storage operates in a market with different dynamics than the Energy business, and the synergies between these businesses are limited. Separating Energy Storage into an independent reporting segment provides a better opportunity to focus on this business in a rapidly developing industry. Wärtsilä remains committed to developing Energy Storage, which will continue to focus on profitable growth, successful project deliveries, and first-class performance, as well as increasing lifecycle revenue.
In connection with the change, Tamara de Gruyter will become the President of the Energy Storage segment on April 1, 2025. She will continue as a member of Wärtsilä’s Board of Management and will report to Wärtsilä’s President & CEO Håkan Agnevall. At the same time, Tamara de Gruyter will leave her current position as President, Portfolio Businesses, and with her new role, she will relocate to the United States. Bernd Bertram, who leads Wärtsilä Marine’s Propulsion business unit, will start as President, Portfolio Businesses on April 1, 2025, alongside his current role. In his role as President, Portfolio Businesses, he will report to Wärtsilä’s President & CEO Håkan Agnevall, but he will not be a member of the Board of Management. Anders Lindberg will continue as President, Energy segment.
As of April 1, 2025, Wärtsilä will have three reporting segments: Wärtsilä Marine, Wärtsilä Energy, and Wärtsilä Energy Storage. Portfolio Businesses will continue to be reported as other businesses. The change in reporting structure will be reflected in Wärtsilä’s financial reporting starting from the second quarter of 2025. Restated financial information for 2024 and the first quarter of 2025 will be published during the second quarter of 2025.
Wärtsilä introduces new financial targets
The Marine and Energy businesses will continue to have similar development trends for their growth and profitability and strong operational synergies. Both businesses will continue to implement their strategies as previously communicated.
As a result of the clear improvement in the profitability of the Marine and Energy businesses and with the new organizational structure, Wärtsilä’s Board of Directors has approved the company’s new combined financial targets for the Marine and Energy businesses and separate new financial targets for the Energy Storage business.
Marine and Energy, combined financial targets
- Annual organic growth 5%
- Operating profit margin 14%
Energy Storage, financial targets
- Low double-digit annual organic growth
- Operating profit margin 3–5%
Group financial targets
- Net gearing below 0.5
- Dividend payout ratio at least 50% of earnings
The operating profit margin targets are long-term targets. In the short term, selected expansion into new markets and related investments are expected to negatively impact the profitability of the Energy Storage business.
Previously, Wärtsilä’s financial targets applied to the entire company and were 5% annual organic growth, 12% operating profit margin, net gearing below 0.5, and a dividend payout ratio of at least 50% of earnings.
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Apologies for my laziness, but I don’t have time now to dig up (and it might not even be quickly available) the shares of these two in the total revenues. So, how is the revenue divided between Maritime Transport & Energy vs Energy Storage? The main reason I’m interested is what the target operating profit margin is for the entire Energy.
The following is mentioned in Pauli Lohi’s fresh comment above:
Regarding the largest businesses, Marine and Energy, the company aims for 5% annual organic growth and a 14% operating profit margin going forward.
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Technology group Wärtsilä has signed a renewal of its Operation and Maintenance (O&M) Agreement covering the 165 MW Attock Gen Limited (AGL) power plant in Rawalpindi, Pakistan. The extension of this agreement will ensure the plant’s operational performance throughout AGL’s remaining 9-year power purchase agreement (PPA) to supply electricity to the national grid. The order was booked by Wärtsilä in March 2025.
The plant operates with nine Wärtsilä 46 engines, with heat recovery boilers on each, and one 11.6 MWe steam turbine which makes it a highly efficient power plant.
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I slightly corrected the morning’s comment regarding the growth target for Energy Storage. The growth target for the Energy Storage business is thus “low double-digit annual organic growth,” meaning it could be between 10-15%.
The market growth for energy storage in Wärtsilä’s key geographies is approximately 15%, meaning the company aims for selective growth with an emphasis on profitability. I find the set growth target quite reasonable and in line with our forecasts. The profitability target, however, was slightly more moderate than our forecasts for Energy Storage.
For Wärtsilä as a whole, the share of Energy Storage in the results is low, so the significance of these targets for the overall picture is not particularly great.
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I don’t understand the stock reaction. Wärtsilä made a decision based on a strategic assessment, and the market reacted like that. Or is it just part of a general trend? I would think that at this point, one could also be pleased with a good decision that the management has made based on the best possible information.
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How is that energy storage so low-margin? You’d think it’s the hottest thing right now. Are the Chinese driving down prices?
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Roughly 70% of the value of the solutions comes from batteries, which are purchased from Chinese suppliers. It’s difficult to make a very thick margin on that. Additionally, the share of lifecycle services is low. Wärtsilä typically achieves good profitability in services, whereas new equipment sales are an activity with rather modest profitability.
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Share prices can react almost any way to any news. I believe those disappointed with the decision were expecting the storage business to be sold at a good price. Now that it will become its own separate business area, these people then decided to divest or reduce their ownership. The situation might be different in a few days.
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Does Wärtsilä then expect something to improve there in the long term, or synergy benefits? Given that profitability is much weaker compared to other segments? Or is it now easier to sell if a buyer emerges?
@Camelman
I did not expect such a negative share price reaction. In my opinion, there was nothing significantly negative in the information provided by the company, other than the fact that a buyer for Energy storage could not be found at a sufficiently attractive valuation. In the current market situation, selling this business, in my estimation, is not very easy above the group’s valuation level (EV/EBIT 10x). At this valuation level, the business’s value would be 400 MEUR (based on 2024 realized earnings), which corresponds to just under 5% of the group’s EV. Today’s share price change (-5.6%) could thus be explained if the market, before the announcement, had expected the business divestment to occur at double the valuation compared to the group (EV/EBIT 20x 2024 = 800 MEUR) and, with the announcement, corrected its fair value determination to half of the previous. The share price fluctuation is also likely partly influenced by tariff concerns and general downward pressure on industrial companies’ share prices.
@enska
The storage business can be grown by expanding into new geographies and doing regular work for growth. The market growth outlook is also good. While storage certainly complements Wärtsilä’s energy offering, I don’t see strong operational synergies. My own assessment is that the valuation achievable from a sale would simply have been relatively low (close to the group’s average valuation level). In this type of project business, the information asymmetry between the buyer and seller of the business is, in my view, accentuated, because success or failure in one or a few large projects can significantly affect profitability.
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Technology company Wärtsilä has signed a five-year lifecycle agreement with Viking Line for the M/S Viking Glory vessel. Wärtsilä has been responsible for the maintenance of several of Viking Glory’s equipment since the vessel was commissioned in 2021. The new agreement further expands the companies’ partnership and the benefits brought by the agreement. The order was booked into Wärtsilä’s order intake for the first quarter of 2025.
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Today, an open theme call for everyone regarding new financial targets and the completion of the Energy Storage strategic review. Welcome to join - visible directly on Inderes TV or if you want to ask questions, you need to register via the link below.
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Here are Pauli’s comments from yesterday’s strategy call. 
On Wednesday, Wärtsilä held a strategy call where it revealed the latest turns in its strategy. Compared to expectations, the biggest change in the company’s strategy is the retention of the Energy Storage (ES) business as part of the company for the time being, as well as the organic growth of said business through geographical expansion. The strategic fate of the ES business was considered for about 1.5 years, during which time, in our estimation, the company also explored sales opportunities for the business. Wärtsilä’s equity story remains primarily dependent on the development of its two other segments, Marine and Energy, for which the company provided new financial targets at the beginning of the week.
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Wärtsilä Gas Solutions, part of technology group Wärtsilä, will supply and install the bioLNG production solutions for two large-scale biogas projects in Finland. The plants have been ordered by Suomen Lantakaasu Oy, a joint venture between the biomethane company St1 Biokraft and dairy and food company, Valio. The two projects will each have the capacity to produce 25 tons of bioLNG per day. The orders with Wärtsilä were booked in Q1.
The feedstock for the biogas will be mainly manure and food processing waste. The residue product is an odour-free biofertilizer to be used by the farmers that supply the manure. When operational, the plants will enable more widespread use of a biogas-powered transport fleet. By utilising manure in biogas production, the carbon footprint of milk production is significantly reduced, when the emissions reduction of both agriculture and transport is taken into account.
These biogas plants are greenfield projects and will be built in Nurmo and Kiuruvesi, located in western and central parts of Finland respectively. Both plants are expected to be in operation by the second half of 2026.
In addition to the biogas upgrading and liquefaction plants, Wärtsilä will also supply 300m3 capacity storage tanks, as well as an export station. Earlier, Wärtsilä has only supplied biogas upgrading and biogas upgrading plus liquefaction plants to St1 Biokraft in Sweden and Norway.
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I asked analyst Pauli Lohela for his thoughts on the impact of tariffs on Wärtsilä. In addition, the energy storage business was allowed to remain in-house for now, although its sale later is very possible.
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Hi! Why isn’t there a comprehensive report available about Wärtsilä, @Pauli_Lohi? 
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We primarily maintain up-to-date extensive reports only on corporate clients. Wärtsilä is not a corporate client for us in our analysis operations.
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