Wartsila Reports Strong Order Growth but Path Toward EBIT Margin Target Is Uncertain; FVE Maintained

Narrow-moat Wartsila reported an impressive 32% increase in order intake for the full year and 92% higher than the fourth quarter of last year, exceeding company-compiled consensus. Full-year operating profit grew 30% at an EBIT margin of 7.5%, which fell in line with our expectations. However, concerns remain on the path toward the group’s operating margin target of 12% set at its Capital Markets Day in November 2021. The strong order intake in the fourth quarter was driven by demand for new equipment and the group’s loss-making energy storage solutions, which will have a dilutive impact on profitability in the current year. We maintain our EUR 10.8 fair value estimate and view shares as fairly valued.