Wärtsilä’s record orderbook drives growth
Updated: Decarbonisation regulation is benefiting company, as shipowners take strategic decisions to increase energy efficiency and order alternatively fuelled engines and hybrid systems, says chief executive
The four-stroke specialist said it expected shipbuilding demand to remain high into 2025 compared to 2024
A RECORD orderbook drove Wärtsilä’s operating result to €716m ($745.4m) for 2024, up 78% on 2023’s operating result of €402m.
Wärtsilä’s order intake increased 14% to just over €8bn, taking the Finnish manufacturer’s orderbook to €8.3bn, a 25% increase on 2023’s final figure.
Those numbers were buoyed by a healthy fourth quarter, particularly for the company’s equipment order intake, which increased 51% on the same period in 2023.
Wärtsilä said it expected newbuilding demand to be even stronger in 2025, supported by the ongoing renewal of an ageing fleet. Shipyard capacity is increasing too. It is now at 70% of the 2011 peak and could hit 80%-85% by 2030, as China continues to reactivate and expand yards.
Chief executive Håkan Agnevall highlighted the strong newbuilding activity within its core sectors of cruise, ferry and offshore vessels as one reason behind this optimistic view of the future.
But Agnevall told Lloyd’s List that decarbonisation regulation was also benefiting his company. Shipowners were taking strategic decisions, he said, to increase energy efficiency, including ordering alternatively fuelled engines and hybrid systems.
Agnevall said the raft of decarbonisation regulation that had entered into force in the EU this year had led to greater interest in his company’s LNG upgrades with a view to reducing methane slip, as well as orders for hybrid solutions, for example, combining battery power with traditional combustions engines.
Just under half of all gross tonnage ordered was for alternatively fuelled ships, including the world’s largest cement carrier, which will be methanol capable, ordered in the fourth quarter of 2024 by NovaAlgoma Cement Carriers.
While the growth in alternative fuel orders was consistent, Agnevall admitted that the lack of supply of ammonia and methanol was “a bottle neck” that was holding back the decarbonisation journey. At the moment, “quite a few” of those vessels that had methanol-enabled engines were still running on heavy fuel oil, Agnevall said.
“The first thing we will see now is the growth of LNG, because it’s available,” he said.
But it’s not just alternative fuel orders that have grown on the back of greater decarbonisation focus. Wartsila’s service sector has grown 12% over the past two years and now almost matches the equipment side.
Agnevall said he expected this to grow further in the near future too, as owners chased efficiency when penalties started hitting their wallets.
“If we take a five-plus-year perspective, because of the CII and EEXI regulations, there will be investments in upgrading vessels,” he told Lloyd’s List.
“You need to do that to be more energy efficient, to bring in new fuels, hybrid solutions, to stay relevant, because otherwise the CII goes down.”
Wärtsilä confirmed that it would be launching its carbon capture system commercially later this year and was conducting pilot testing “as we speak”.
But Agnevall admitted there were still questions about how the technology would be used.
“Of course, when you bring it to shore, what do you do with it? Do you put it back in some well, or you use it as a raw material for new fuel production?”
Wärtsilä’s technology was just one part of a wider ecosystem that still required plenty of development, he said.
Wärtsilä said it was continuing to grow its profitability, which was 10.8% of net sales in 2024. A somewhat weak fourth quarter in that regard was explained by a “poor mix” of equipment.
Some newbuildings had different margins to others, so a particular combination of some types of vessels could lead to a less profitable period, chief financial officer Arjen Berends said.
