Wartsila Oyj Abp Theme Call Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Daniela Costa - Goldman Sachs International - Analyst : Hi. Good afternoon. Thank you so much for hosting this call. I have three questions. They're quick, hopefully. But the first one -- I'll ask them one at a time. The first one was just to, I mean, you're clear that the Marine & Energy margin target is higher, 14%, and you've explained why. But then, when we look at integrated for the group, the implied seems to be lower than the 12% you've had before. Is it like your fundamental view on the profitability storage change throughout this process, or are we just looking at the math the wrong way? But maybe I'll start there.

Question: Daniela Costa - Goldman Sachs International - Analyst : Okay. And then in terms of the process, can you kind of clarify, was there ever a sales process being considered, or it was just more of all of an internal process of thinking about the pros and cons? Just curious on that.

Question: Daniela Costa - Goldman Sachs International - Analyst : Got it. Thank you. And then finally, just -- you mentioned some investment burdens on storage in the short term in the release. Can you elaborate a little bit more about what exactly those are? How should we think about like modeling them? Thank you.

Question: Daniela Costa - Goldman Sachs International - Analyst : But you expect to remain profitable?

Question: Daniela Costa - Goldman Sachs International - Analyst : Got it. Thank you so much.

Question: Daniela Costa - Goldman Sachs International - Analyst : Thank you.

Question: Sven Weier - UBS - Analyst : Yes, hi. Thanks for taking my questions. I have a few follow-up questions on Daniela's. Let me just follow up on the last question regarding storage. I mean, when you say you make investments, are we thinking also about price investments that you see more price pressure, you're taking share on price? Or what kind of investments do you have in mind when you say investment? That's the first one. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. APRIL 02, 2025 / 11:00AM, WRT1V.HE - Wartsila Oyj Abp Theme Call

Question: Sven Weier - UBS - Analyst : But it's not that these new markets are more competitive in general than those that you are focusing on right now?

Question: Sven Weier - UBS - Analyst : Okay, thanks for this. The second follow-up is also coming back to storage. I mean, I'm not expecting you to talk about who you spoke to, but I still wonder if the Trump election was a pivotal moment in the process and that after the election it was simply no longer possible to find any buyer in this environment. Is that maybe also fair to say?

Question: Sven Weier - UBS - Analyst : But could we -- I mean, could look at the new divisional structure also in a way that you reserve flexibility in the long term? Because obviously, with a separate business, it would also be easier to do the same again.

Question: Sven Weier - UBS - Analyst : Final follow-up, if I may, is just also on the margin target because, I mean, the 12% was always an all-in target, including storage, including portfolio. Now, of course, portfolio is no longer part of any of those margin targets, and that alone has a certain accretive effect. I mean, if I do the simulation, I would get to like 12.5% group target long term, but that would not be an increase because it would be excluding portfolio, which would have always been like a 50 basis points accretion. And so, is it not fair to say that basically the overall profitability targets are basically unchanged? Arjen Berends - Wartsila Oyj Abp - Chief Financial Officer, Executive Vice President, Member of the Board of Management No, I would not say so. Like I explained to Daniela when she put the question on, if you go back in time, I think on the scope that we are looking at here, it's clearly an improvement. Then, of course, let's say when you go to portfolio business, there has been a lot of in and out. We also in 2021 had Voyage. A piece of Voyage went into portfolio business, which is now basically recently sold as ANCS. And also Marine systems pieces moved into portfolio business. And all these businesses at that time, or at least most of them, were loss-making or very small profit businesses. So I would say it's not so easy to compare the scope one-on-one. But let's say if you do the simulation from 2021 onwards on this scope, what we have here on the screen, clearly it's an ambitious target.

Question: Antti Kansanen - SEB Enskilda Equities - Analyst : Good afternoon. Thank you for taking my question. I only have one, and it's regarding the 14% EBIT margin target. And I just wanted to know, how should we conceptually think about it? I mean, sales mix has a very big role on your margins, obviously. And if we look at last year, the mix was very favorable. So should we think about the 14%? I mean, you don't have any firm year or a timeframe to achieve it. So would we look at the 14% as a level that you expect to fluctuate around depending on the mix? Or is it more a few year ambition to step up to that level, and then let's see what happens next?

Question: Antti Kansanen - SEB Enskilda Equities - Analyst : Okay. And maybe I'll follow up in the sense that, obviously, if we look at the four businesses within the power plant business, the marine equipment, and then the respective aftermarket businesses, can you rank, in terms of like-for-like profit improvements, where do you kind of see the most potential? I mean, obviously, if the mix improves, then you're moving closer to the targets. But from like-for-like basis, which of the businesses has the most potential?

Question: Antti Kansanen - SEB Enskilda Equities - Analyst : Sure. Okay, thank you very much.