Wärtsilä Oyj Abp

Q2 order intake increased 33% to EUR 2.8 billion, an all-time high quarter, with Energy order intake close to EUR 1.7 billion and Marine order intake at EUR 1.2 billion. Net sales were EUR 1.6 billion and described as stable reported, while organic net sales increased 5%; reported service sales were down 6% and equipment sales were up 3%. Comparable operating result rose 7% to EUR 218 million, operating result increased 14% to EUR 209 million, and the comparable operating margin was 14% versus 12.7% previously. Cash flow was EUR 497 million and ROCE was 73%. For the first half, order intake was up 23% to EUR 4.9 billion, order book was close to EUR 9 billion, and comparable operating result increased 13% to EUR 399 million. Full-year/next-12-month guidance called for the Marine and Energy demand environment to be similar to the comparison period, with management emphasizing that Energy demand remains very strong and supported by capacity expansion.

Håkan Agnevall framed the quarter as very strong, repeatedly pointing to record order intake, record order book, and better profitability. He highlighted that both Marine and Energy are seeing strong demand, especially from data centers and balancing power, and said Wartsila is a technology leader in alternative fuels, hydrogen, and ammonia. His tone was confident and upbeat, but he also stressed that the company is expanding capacity step by step because current demand is pushing against production limits.

Arjen Berends focused on the financial quality of the quarter: EUR 497 million operating cash flow, lower net interest-bearing debt, and continued improvement in working capital. He said the working capital to sales ratio was 3.8%, negative working capital was EUR 1.257 billion and was supported by about EUR 1.8 billion of advances, and that excluding advances working capital would be positive at about EUR 0.5 billion. He also said the portfolio divestments of Water and Waste and Gas Solutions close the multi-year portfolio exit, and that the energy storage JV is expected to have a EUR 40 million to EUR 50 million negative impact on 2026 operating results, split between associated-company results and items affecting comparability.

Analysts focused heavily on the disclosed more than 500 basis point improvement in the Energy equipment backlog gross margin and how to reconcile that with price-per-kW discussions. Management said the gain reflects a combination of pricing and execution, that the figure applies to new-build backlog only, and that it will flow into EBIT with a lag, mainly in 2028 and beyond. Questions also probed whether the strong Q2 energy demand guidance was conservative, whether capacity is now the main constraint, and how much of the improvement came from shifting away from EPC; management said the market remains very strong, the firm is sold out in 2028 and already booking 2029 and 2030, and that most of the EPC shift happened before 2025. On data centers and engines versus turbines, management said market share is hard to measure because of secrecy, but argued engines are winning on fundamentals like fuel efficiency, low water use, and no thermal derating, even if lead times currently favor other solutions.