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Wartsila Corp WRT1V

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Morningstar’s Analysis

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Wartsila’s New Financial Targets Are Largely Unchanged; We Raise Our Fair Value Estimate Slightly

Matthew Donen, CFA Equity Analyst

Analyst Note

| Matthew Donen, CFA |

Narrow-moat Wartsila revealed new financial targets at its investor day, which does not materially differ from previous ambitions. Management aims to achieve 5% annual revenue growth over the business cycle at a 12% operating margin. However, management was unable to provide the timing of achieving the margin, which is partially dependent on uncontrollable factors such as decarbonization regulation and a recovery in the cruise segment. New EBIT margin guidance of 12% is at the midpoint of the group’s prior target of between 10% and 14%. We believe 12% is ambitious in the near term due to current cost inflation and a fast-growing but loss-making energy storage business. We slightly raise our fair value estimate to EUR 10.8 from EUR 10.2 to account for the rapid growth of Wartsila’s energy storage business, which we expect to persist but keep our margin estimates largely unchanged. Shares are currently fairly valued.

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Company Profile

Business Description

Wartsila is a global manufacturer of critical equipment and services for the marine and energy markets with operations in over 70 countries. Approximately one half of the group’s sales are derived from the sale of services and spare parts through its network of 258 sales and service network locations. Wartsila is listed on the Nasdaq Helsinki exchange in Finland. Approximately 1 in 3 oceangoing vessels has a Wartsila solution on board, translating into an installed base of over 50,000 vessels and 10,000 customers.

Hiililaiturinkuja 2
Helsinki, FI-00180, Finland
T +358 107090000
Sector Industrials
Industry Specialty Industrial Machinery
Most Recent Earnings Sep 30, 2021
Fiscal Year End Dec 31, 2021
Stock Type
Employees 17,303