Hanna-Maria Heikkinen
Management
Good morning, and welcome to this news conference Wärtsilä Q3 results. My name is Hanna-Maria Heikkinen, and I am in charge of investor relations. Today, our CEO, Håkan Agnevall, will go through the group highlights and then followed by the business performance. After that, our CFO, Arjen Berends, will continue with the key financials. After the presentation, there is a possibility to ask questions. You may have recognized that we also announced our new financial targets this morning, but we will kindly ask you to leave the questions regarding financial targets to our Capital Markets Day, which will take place next week. All of you are warmly welcome to our Capital Markets Day. But now, starting with results. Please, Håkan. Håkan Agnevall: Thank you, Hanna-Maria, and welcome, everybody. I think we have had a really strong Q3, both from an order intake perspective, but also on our journey to continued improved profitability. So, continued increasing profitability and continued strong order intake momentum. Order intake increased by 33% to EUR 2.4 billion. Actually, it is up 41% organically. Service order intake increased by 11% to EUR 950 million. And we are now at an all-time high order book of close to EUR 9.9 billion. Service continue the rolling book-to-bill above one, so now we are at 1.1. Net sales increased by 7% to EUR 1.5 billion. And we continue to improve our profitability. Comparable operating results increased by 19% to EUR 212 million, and that is 14.2% of net sales. Operating results increased by 4% to EUR 222 million, which corresponds to 14.9% of sales. Cash flow, we continue to have a strong cash flow from operating activities amounting to EUR 583 million. And on our ROCE journey, return on capital employed, we are now at 94%. So let us look a little bit deeper into the numbers. If we start with Q3, we see order intake is up 33% to EUR 2.4 billion. You can see that service order intake is up with 11% to EUR 950 million, and equipment up 53% to EUR 1.4 billion. The increasing order intake is primarily driven by energy. We now stand at an order book at EUR 9.9 billion. Net sales up 7% in the quarter from EUR 1.4 billion-EUR 1.5 billion. Services is a bit flat, EUR 850 million-EUR 802 million, so -2%, but I would say flat. Equipment up 19% from EUR 580 million to close to EUR 700 million. Book-to-bill continuously improving from 1.27-1.59. We are translating the sales to increased profitability. Comparable operating result up 19% from EUR 179 million-EUR 212 million, and that corresponds to 14.2% of net sales, improving from 12.8%. On the operating results, up also 4% to EUR 222 million, which is 14.9% on net sales. If we just quickly look at some of the key numbers for the full year, so to say, order intake is up 26% from EUR 5.6 billion-EUR 7.3 billion. Net sales is up 2%. Organically, it is actually up 9%, so from EUR 4.4 billion-EUR 4.5 billion. Then if we look at the comparable operating results, up 12% from EUR 558 million-EUR 623 million, 13.9%, also very close to the operating results, which lands at 13.8%. So good development, I would say, in all key figures. If we look quickly on marine and energy, the market. On the marine side, the market sentiment remains supportive of our key segments. Shipping has remained resilient despite the macroeconomic headwinds caused by the Middle East conflict. The number of vessels ordered increased to 2,500, up from 1,200 last year. The Middle East conflict has certainly lengthened the shipping routes, continues to do so, supporting demand and improving earnings. The market sentiment remains supportive and ordering appetite continue to be on a good level in Wärtsilä's key segments. Contracting in these segments is expecting to remain well above the 10-year average levels. The service market remained active, and overall vessel utilization stayed at a good level. Increased fuel prices reduced short-term service spending in some segments, while higher shipping rates led to postponements of some service activities. You will see that on our marine service order intake, it's impacting that. In January to September, 446 orders, well, for new alternative fuel-capable ships, which is about 30% of the capacity of the contracted vessel. That also reflects the mix of the vessels being ordered. On the energy side, clearly increased demand drives energy transition investments. We see a structural shift here in general electricity demand, and that translates into a very strong market for Wärtsilä. Electricity demand grows, and future projections have increased substantially, creating market opportunities for equipment providers. Two key themes have stood out in the recent macroeconomic development: load growth and increased tariff-related uncertainty. The diverse set of load growth drivers includes electrification of industry, transportation, cooling, and heating, as well as data center. We see it as a structural growth. It's not only data centers that are driving this growth. In engine power plants, market demand for equipment has been strong. The base load segment remains a consistent source of demand for thermal power, while the drivers for balancing demand are also expected to continue to develop favorably. Renewable energy investments continue to shape energy markets, with investments outside of China at record levels in the first half of the year of 2026. We, as Wärtsilä, we continue to see a strong demand from data centers globally with a dynamic pipeline of opportunities. The resulting growth in the installed base also support, as we talked about before, a significant lifecycle services business that will extend well beyond 2030. So looking at the numbers in graphs, the organic order intake increased by 41%, order intake increased by 33, marine order intake remained stable, whereas energy order intake increased by 121%. Very strong. Equipment order intake increased by 53%, and the organic equipment order intake was up 66%. Service order intake increased by 11%, and the organic service order intake growth was 13%. We have a strong order book development. Rolling book-to-bill continues to be well above one, and the order book is at an all-time high, driven a lot by energy, and it's the same theme as we talked about before. The order book is building further and further out in the future, and we have broken it down here on marine and energy, where the existing order book will generate sales that are distributed further and further in the future. You certainly see here to the right side for energy, later deliveries is really building up. This, we will come back to at the Capital Markets Day. You also see on marine, there is a buildup of later deliveries. Organic net sales increased by 16%. Net sales increased by 7%. Marine net sales increased by 5%. Energy net sales increased by 52%. Equipment was up with 19%. On the organic equipment, net sales growth was 39%. Service net sales remained stable. Also, the organic service net sale remained stable. On the profitability side, we continue our journey of improving our profitability. Net sales increased, as we talked about before, by 7%, comparable operating results increased by 19%, and comparable operating margin 12-month rolling are now at 13.8%, up from 12.2%. On technology and partnerships, some interesting orders and cooperations in the latest quarter. First of all, Australia. We will deliver Australia's largest-ever engine power plant to support the country's energy transition. As you might know, Australia is on a journey of reducing coal power and building up renewables. They have invested a lot in battery storage. We have been there with our battery storage business, but they have also realized that you need this mix that Wärtsilä has been talking about for many years. You need both batteries and reciprocating engines to provide the balancing power. We will see a market breakthrough in Australia here going forward for balancing power. Maybe also for data centers, but certainly for balancing power. We are talking about flexible and highly efficient 46TS engines that will be supplied to Australia's largest-ever reciprocating engine power plant. It's 300 MW that will provide critical grid balancing and system security in Australia. The fast-starting, flexible capacity provided by our engines will enable greater integration of renewables into the power system. It's really about balancing power, and we booked the order in the third quarter. Now, in different parts of the world, we received an order to integrate and optimize Aruba's generating assets for reliable and sustainable energy. This is, you could say, a microgrid application where we have signed an agreement with WEB Aruba, the Caribbean island's energy provider, to advance decarbonized operations through the integration, optimization, and control of Aruba's power-generating assets. This comprehensive solution includes engineering, procurement, and construction work, as well as service agreements. We booked this order in the third quarter. The final taking over is scheduled in the second quarter of 2028. Now, looking a little bit closer on Marine and then Energy and Development. On the Marine side, comparable operating results increased. Equipment order intake declined due to periodization of orders. You know there is lumpiness both in Energy and Marine, and we continue to see good growth opportunities, but order intake was rather flat due to the periodization of orders. While the service order intake remained stable. You see the order intake -2%, net sales continue to grow at 5%. We see the comparable operating results up to 13%. On the positive side, we certainly see better operating leverage, higher equipment sales, and better joint venture results also. Now, what is dragging us down, but I think for very good reasons, is we continue to increase our R&D efforts to continue to be the technology leader in the industry. If we look at the Marine service book-to-bill, it continues to be above one, and our Marine service order book increased by 10% compared to the third quarter in 2025. If we see the last three years, we have had 6% CAGR, and we will see continued growth going forward. You also see to the right, the graphs of the different disciplines in services. Here we can see the big swings. We see the curve that has been deep in the red, and that's the retrofits and upgrades. It really comes back now. We talked about it's lumpy. Many of these retrofit contracts are rather big, and when they come or not come, they have a big impact. On the agreements lately, we have been down a bit. On the Energy side, looking closer there, order intake, net sales, comparable operating results all increased, and the equipment order intake increased, supported by strong demand, both from data centers and balancing applications. Order intake up 121%, net sales up 52%, and you can also see the comparable operating result at 16%. Here we have same positive driver, better operating leverage, higher equipment sale. I would like to highlight this one, solid project execution. We have an Energy today that is really world-class in executing. Solid project execution means basically we deliver our projects at lower cost than we had budgeted for, and then we can improve our profitability. Really good teamwork by the Energy business. Overall, Energy service book-to-bill continues to be above one, and Energy service order book increased by 28% compared to the third quarter. That is, as you can see to the right, very much driven by retrofits and upgrades. Here we have had a couple of very big orders coming in the third quarter. You could say that those are type of one-timers. We also say it comes back making the point that the retrofit and upgrade business, it can swing quite a lot. If we look to the left on the journey over three years, we have had 4% CAGR in the Energy Service business. The bridge of the comparable operating result from Q3 last year to Q3 now, we see we are going from 12.8%-14.2%. We see Marine is down a little bit from 12.4%-12.1%. Energy, big step up from 15.9%-17.5% margins. Then we have a bit of still an impact of portfolio business, but that's the last year. We have now closed portfolio business, divested 11 business units. So comparable operating results increased by 19%. Arjen, over to you on the key financials.