Wärtsilä Q4'25 preview: Continuing order growth increasingly challenging

Translation: Original published in Finnish on 1/20/2026 at 9:55 pm EET.

Wärtsilä will report its Q4 financial statements on Wednesday, February 2. We expect the company to have a strong quarter in terms of revenue and earnings because Energy's equipment deliveries were concentrated in Q4 this year. We believe that the new guidance will be one of the key stock drivers in the earnings release. Although market activity appears to have remained favorable, we anticipate that the high comparison figures for 2025 may result in more cautious guidance than before, particularly in Energy. We incorporated the divestment of Gas Solutions and the latest data center order in Energy into our forecasts, resulting in stronger long-term earnings growth projections. Nevertheless, we expect new equipment orders in Energy to decline slightly from the 2025 peak in the coming years and do not believe data center demand should be priced into the stock as a permanent revenue growth driver yet. We reiterate our Reduce recommendation and raise our target price to EUR 30 (previously EUR 26).

Strong organic growth expected for Q4

We forecast that Wärtsilä's Q4 revenue has increased by 10%, despite the divestments in the portfolio businesses. In organic terms, we estimate that the combined revenue of Marine and Energy has grown by as much as 23%, particularly due to the strong concentration of Energy's new equipment deliveries in Q4 of last year. We project 19% order growth for Marine and Energy, essentially entirely driven by a large data center power plant order in the US in Q4. In Energy Storage, orders finally picked up in Q4 after a slow start to the year. However, we estimate that the order intake for Q4 will still be significantly lower (-58%) than the exceptionally strong level of the comparison period.

Scale and demand support profitability of new equipment sales

We expect Q4 adjusted EBIT to have risen to 250 MEUR (a 20% growth) and the EBIT margin to have improved by 1.0 percentage points. We estimate that the profitability of Energy's new equipment sales has strengthened in particular, supported by a favorable demand environment. Operational leverage also supports profitability. We forecast the dividend per share to increase to EUR 0.52 (2024: 0.44 €), which is 50% of the forecasted result, in accordance with the company's policy. Our Q4 forecasts are largely in line with the Vara Research consensus.

Achieving order growth in 2026 will be increasingly difficult

From Wärtsilä's recent investor calls, we have gathered that market activity remains good in Marine and Energy. However, we believe it is possible that the company will lower its demand guidance for Energy in its Q4 report, given the substantial order from a data center customer in Q4 and otherwise strong order intake comparison figures in the past 12 months. Regarding Marine and Energy Storage, we believe guidance will likely remain upward. Our current projections assume Marine orders will grow 2% in 2026, while Energy orders will decline 1%, relative to a very strong comparison period. Despite the negative growth, we forecast that Energy's new equipment orders in 2026-27 will be ~2.4 times higher than the 2020-23 level (consensus ~3x).

Valuation would require sustained data center demand long into the future

In our view, the valuation has recently become tight, despite the strong outlook for earnings growth in the coming years. Predicted earnings growth is partly based on improved profitability in new equipment sales, but this may not be a sustainable assumption in the long term if demand driven by data centers slows down. While strong deliveries are expected in 2027, the EV/EBIT 16x valuation for that year provides no upside in our view, as significant earnings growth would be required to maintain it. Geopolitics and tariffs may also hinder customer decision-making, weighing on the share price in the short term, though the constantly changing tariff environment should not be given too much weight when making investment decisions.