Wartsila Earnings: Improved Marine Market Conditions Yield Buoyant Order Intake in Late 2023

Marine market conditions continued to normalize for wide-moat Wartsila in late 2023, spurring strong fourth-quarter new order intake that tracked largely in line with our full-year expectations. New orders grew 16% year on year in 2023 to EUR 7.1 billion as Wartsila’s marine businesses continued to rebound from the significant drop in demand experienced during the pandemic as the cruising industry was idled and seaborne trade volumes continued to grow. Equally, Wartsila’s energy segment benefited from strong demand for its energy storage solutions, helping offset weak new orders for gas-fired power plants. Full-year 2023 top-line growth of 3% was somewhat short of our forecast, with delivery of orders in late 2023 tracking slower than we’d anticipated. Notwithstanding, the firm’s order book stood at a healthy EUR 6.7 billion at year-end 2023—13% higher year on year—setting up a strong year for Wartsila in 2024. The group’s full-year 2023 EBIT margin firmed to 8.3%—up appreciably from a cyclically depressed 5.6% a year earlier—tracking ahead of our expectations with the energy business’ margins demonstrating swifter improvement than we’d factored in.