Finland’s Wartsila said U.S. tariffs were impacting its battery storage business while rising trade tensions could push back clients’ investment decisions, after its quarterly operating earnings missed market expectations on Friday.
Shares of Wartsila, which builds ship engines and power plants, fell up to 4.5% in volatile early trading, but flattened by 0940 GMT.
Wartsila’s CEO Hakan Agnevall told Reuters that he saw no major direct impact from U.S. tariffs on the marine business, as its ship building operations and most of its customers are located outside of the United States.
But the battery storage unit, the other leg of its energy business, faces a clear tariff hit as it ships a lot of materials from Asia to its U.S. facilities.
“With significant import duties imposed on China, you could say that that market is basically at standstill, and it will probably remain standstill for a quarter or two,” Agnevall said.
Some 15% to 20% of Wartsila’s sales come from the United States.
Despite the tariff concerns, Wartsila said it expected demand in both marine and energy divisions to improve over the next year.
RBC analysts said they were “somewhat surprised” about the positive expectations for the energy business.
Wartsila, which offers systems and services for navies and governmental marine organisations, saw positive sentiment around Europe’s rising defence spending, although Agnevall said it would take time for it to concretely affect the company.
“From the starting point of budgets being allocated, then trickling through the system, then getting into concrete orders, and those orders materialized for revenue bottom line impacts. That takes time,” he said.
The navy business makes up less than 4% of Wartsila’s overall sales.
Its comparable operating earnings grew 29% to 171 million euros ($194.36 million) in the first quarter, while analysts polled by Vara were expecting 172.7 million on average.
