Wärtsilä gives up on energy storage business divestment

It has taken 17 months for Wärtsilä to complete the strategic review of its Energy business, during which it considered various options that would accelerate the profitable growth of its energy storage unit, including full or partial divestment.

On Monday, the Finnish marine and energy solutions specialist said that it had decided to separate its Energy segment into two reporting segments: Energy and Energy Storage, and introduce new financial targets.

“Energy Storage operates in a market with distinct dynamics compared to Energy, and the two businesses have limited operational synergies. Separating Energy Storage into an independent reporting segment will drive further focus on this business in a rapidly evolving industry,” the company said.

Effective from April 1, 2025, Wärtsilä will have three reporting segments: Wärtsilä Marine, Wärtsilä Energy, and Wärtsilä Energy Storage. Portfolio Business continues to be reported as other business activities. The change in the reporting structure will be reflected in Wärtsilä’s financial reporting starting from the second quarter of 2025. 

Going forward, Marine and Energy will have combined financial targets, including 5% annual organic growth and 14% operating margin. Energy Storage will have a separate financial target, including low double-digit annual organic growth and 3-5% operating margin.

Previously, Wärtsilä’ financial targets were set for the whole group and included 5% annual organic growth, 12% operating margin, gearing below 0.5 and a dividend distribution of at least 50% of earnings.  

The fact that Wärtsilä will stay committed to energy storage and keep this unit in-house may suggest that other strategic alternatives on the table, which included potential full or partial divestment, were not tempting enough compared to the potential growth opportunities seen in the sector.

The move has also laid bare the big discrepancy between operating margins in various segments, with the energy storage business having a three times lower figure than that of marine and energy.

In reaction to the announcement, the value of Wärtsilä’s shares has fallen by more than 5% on Monday.