Wärtsilä: Scrubber ordering driven by container newbuilds
The order intake in the scrubber sector is mainly driven by the newbuilding market of container shipping vessels at the moment, which has rebounded considerably from the last year’s lows.
“For container newbuilds, the scrubber solution is the selected solution,” Håkan Agnevall, President and CEO of Wärtsilä Corporation, said while speaking on the developments in the scrubber market during a Q1, 2021 business results presentation.
As explained, the retrofit market is lagging behind as the price differential between high- and low-sulfur fuels needs to stabilize above $100 per tonne before it can make a significant comeback.
Due to lower scrubber volumes and delays in energy equipment deliveries, Wärtsilä’s equipment net sales decreased by 31% to EUR 397 million (577) in the first quarter of 2021.
Agnevall explained that the company’s sales of scrubbers in this period were down due to ongoing retrofit contracts for existing vessels. Namely, due to very high rates in the container sector, a great deal of these have been postponed as owners look to seize on the profitability of the current market.
“Although the earnings differential for vessels fitted with scrubbers has widened as a result of lower fuel costs, the market for scrubber contracting is still characterised by a high degree of uncertainty, mostly due to the limited visibility on future fuel price spreads,” the company said.
However, the technology has a great potential to be repurposed on a different front, namely, carbon capture and storage (CCS).
In March, Wärtsilä revealed it was conducting extensive research and development work in exploring ways by which carbon capture and storage can be developed and scaled in the maritime industry.
Based on the initial findings, CCS on ships is technically viable for the sector to pursue.
To further accelerate the development, Wärtsilä is installing a 1 MW pilot plant at its test facility in Moss, Norway, and test its CCS technologies in a range of scenarios and conditions.
The outcome of the research is set to pave the way for manufacturers to design and upgrade scrubbers to capture carbon at the point of exhaust, the company believes.
“During the first quarter of 2021, the prolonged COVID-19 pandemic continued to pose challenges to our business operations, our people, and our financial performance. The cruise industry remained depressed, customers held up investments in new power plant capacity, deliveries were delayed, and profitability remained low due to cost inflation and fixed cost under absorption,” Agnevall commented, adding that were some signs of stabilisation and recovery.
HIGHLIGHTS OF JANUARY–MARCH 2021
- Order intake EUR 1,244 million (1,247)
- Order book at the end of the period decreased by 6% to EUR 5,399 million
- Net sales decreased by 19% to EUR 946 million (1,170)
- Comparable operating result decreased by 28% to EUR 41 million
- Operating result decreased by 30% to EUR 36 million
“Vessel ordering activity in general improved, and the demand for services and energy storage solutions was at a good level. As a result, our order intake remained stable compared to the first quarter of 2020, despite the pandemic having a larger impact during the first quarter of 2021. Vaccination programmes are ongoing in many countries, although at varying speeds. This makes us cautiously optimistic about further recovery in the marine markets, while recovery in many of our core energy markets is expected to take longer,” he added.