Wärtsilä Oyj Abp

Annual Report (ESEF) • Feb 19, 2025

Annual report 743700G7A9J1PHM3X223 2024-01-01 2024-12-31 743700G7A9J1PHM3X223 2024-12-31 743700G7A9J1PHM3X223 2023-12-31 743700G7A9J1PHM3X223 2023-01-01 2023-12-31 743700G7A9J1PHM3X223 2022-12-31 743700G7A9J1PHM3X223 2023-12-31 ifrs-full:IssuedCapitalMember 743700G7A9J1PHM3X223 2024-12-31 ifrs-full:IssuedCapitalMember 743700G7A9J1PHM3X223 2023-12-31 ifrs-full:SharePremiumMember 743700G7A9J1PHM3X223 2024-12-31 ifrs-full:SharePremiumMember 743700G7A9J1PHM3X223 2023-12-31 ifrs-full:ReserveOfExchangeDifferencesOnTranslationMember 743700G7A9J1PHM3X223 2024-01-01 2024-12-31 ifrs-full:ReserveOfExchangeDifferencesOnTranslationMember 743700G7A9J1PHM3X223 2024-12-31 ifrs-full:ReserveOfExchangeDifferencesOnTranslationMember 743700G7A9J1PHM3X223 2023-12-31 ifrs-full:ReserveOfCashFlowHedgesMember 743700G7A9J1PHM3X223 2024-01-01 2024-12-31 ifrs-full:ReserveOfCashFlowHedgesMember 743700G7A9J1PHM3X223 2024-12-31 ifrs-full:ReserveOfCashFlowHedgesMember 743700G7A9J1PHM3X223 2023-12-31 ifrs-full:ReserveOfRemeasurementsOfDefinedBenefitPlansMember 743700G7A9J1PHM3X223 2024-01-01 2024-12-31 ifrs-full:ReserveOfRemeasurementsOfDefinedBenefitPlansMember 743700G7A9J1PHM3X223 2024-12-31 ifrs-full:ReserveOfRemeasurementsOfDefinedBenefitPlansMember 743700G7A9J1PHM3X223 2023-12-31 ifrs-full:RetainedEarningsMember 743700G7A9J1PHM3X223 2024-01-01 2024-12-31 ifrs-full:RetainedEarningsMember 743700G7A9J1PHM3X223 2024-12-31 ifrs-full:RetainedEarningsMember 743700G7A9J1PHM3X223 2023-12-31 ifrs-full:EquityAttributableToOwnersOfParentMember 743700G7A9J1PHM3X223 2024-01-01 2024-12-31 ifrs-full:EquityAttributableToOwnersOfParentMember 743700G7A9J1PHM3X223 2024-12-31 ifrs-full:EquityAttributableToOwnersOfParentMember 743700G7A9J1PHM3X223 2023-12-31 ifrs-full:NoncontrollingInterestsMember 743700G7A9J1PHM3X223 2024-01-01 2024-12-31 ifrs-full:NoncontrollingInterestsMember 743700G7A9J1PHM3X223 2024-12-31 ifrs-full:NoncontrollingInterestsMember 743700G7A9J1PHM3X223 2022-12-31 ifrs-full:IncreaseDecreaseDueToChangesInAccountingPolicyRequiredByIFRSsMember ifrs-full:RetainedEarningsMember 743700G7A9J1PHM3X223 2022-12-31 ifrs-full:IncreaseDecreaseDueToChangesInAccountingPolicyRequiredByIFRSsMember ifrs-full:EquityAttributableToOwnersOfParentMember 743700G7A9J1PHM3X223 2022-12-31 ifrs-full:IncreaseDecreaseDueToChangesInAccountingPolicyRequiredByIFRSsMember 743700G7A9J1PHM3X223 2022-12-31 ifrs-full:IssuedCapitalMember 743700G7A9J1PHM3X223 2022-12-31 ifrs-full:SharePremiumMember 743700G7A9J1PHM3X223 2022-12-31 ifrs-full:ReserveOfExchangeDifferencesOnTranslationMember 743700G7A9J1PHM3X223 2023-01-01 2023-12-31 ifrs-full:ReserveOfExchangeDifferencesOnTranslationMember 743700G7A9J1PHM3X223 2022-12-31 ifrs-full:ReserveOfCashFlowHedgesMember 743700G7A9J1PHM3X223 2023-01-01 2023-12-31 ifrs-full:ReserveOfCashFlowHedgesMember 743700G7A9J1PHM3X223 2022-12-31 ifrs-full:ReserveOfRemeasurementsOfDefinedBenefitPlansMember 743700G7A9J1PHM3X223 2023-01-01 2023-12-31 ifrs-full:ReserveOfRemeasurementsOfDefinedBenefitPlansMember 743700G7A9J1PHM3X223 2022-12-31 ifrs-full:RetainedEarningsMember 743700G7A9J1PHM3X223 2023-01-01 2023-12-31 ifrs-full:RetainedEarningsMember 743700G7A9J1PHM3X223 2022-12-31 ifrs-full:EquityAttributableToOwnersOfParentMember 743700G7A9J1PHM3X223 2023-01-01 2023-12-31 ifrs-full:EquityAttributableToOwnersOfParentMember 743700G7A9J1PHM3X223 2022-12-31 ifrs-full:NoncontrollingInterestsMember 743700G7A9J1PHM3X223 2023-01-01 2023-12-31 ifrs-full:NoncontrollingInterestsMember 743700G7A9J1PHM3X223 2022-12-31 ifrs-full:RetainedEarningsMember ifrs-full:PreviouslyStatedMember 743700G7A9J1PHM3X223 2022-12-31 ifrs-full:EquityAttributableToOwnersOfParentMember ifrs-full:PreviouslyStatedMember 743700G7A9J1PHM3X223 2022-12-31 ifrs-full:PreviouslyStatedMember iso4217:EUR xbrli:pure iso4217:EUR xbrli:shares Financial review Translated, non- official version of Wärtsilä Corporation’s Annual Financial Reports 2024 presented in the ESEF forma t Financial review BUSINESS MODEL Wärtsilä provides the marine and energy markets with innovative technologies and lifecycle solutions. In the energy industry, Wärtsilä offers power system optimisation with a portfolio of future fuel enabled thermal balancing power solutions, hybrid solutions, as well as energy management and storage systems preferably on an equipment only basis. The marine offering includes power and propulsion systems, voyage optimisation solutions, as well as exhaust treatment applications and shaft line solutions. Wärtsilä has the capabilities needed to combine its marine products into larger integrated systems and solutions. Wärtsilä’s portfolio of services ranges from spare parts and field service to performance- based agreements that ensure a maximised installation lifetime, increased efficiency, and guaranteed performance. The company aims to maximise environmental and economic performance by emphasising innovation in sustainable technology and services. To support its geographically dispersed customer base, Wärtsilä’s sales and service network covers more than 230 locations in 77 countries around the world. Wärtsilä operates primarily through its subsidiaries and strategic joint ventures. The company’s manufacturing model is assembly-based, thus emphasising the importance of developing long-term relationships with its global network of suppliers, which includes approximately 5,500 global direct procurement suppliers. Wärtsilä’s personnel is made up of approximately 18,300 employees comprising 128 nationalities. By recruiting and retaining the best talent, Wärtsilä can be the most valued business partner to its customers, and the employer of choice for current and future employees. Wärtsilä is committed to conducting its business in a responsible manner, and requires its suppliers and business partners to follow the same high legal and ethical standards and business practices. STRATEGY Strategy implementation in 2024 Our strategy, the Wärtsilä Way, remains intact. The company’s value creation potential is based on two strategic themes: Transform and Perform. Transform refers to attractive growth opportunities arising from the decarbonisation transformation. It involves leveraging growth in electricity generation, balancing power, green marine transport and related service businesses. The Perform theme centres around a clear path for operational improvements and increased profitability, as well as the company’s commitment to both financial and sustainability targets. Wärtsilä’s purpose to enable sustainable societies through innovations in technology and services, is well connected to the Transform and Perform themes. The company’s five strategic priorities emphasise customer value, high-performing teams, decarbonisation, service growth, and continuous improvement. Wärtsilä is proceeding towards its target to become more stable, focused and profitable company. As of 1 January 2024, Wärtsilä simplified its organisation and reporting structure and has now two reporting segments: Marine and Energy. Portfolio Business continues to be reported as other business activities. As another milestone towards being a more focused company, Wärtsilä announced in December that it has agreed to divest its Automation, Navigation and Control System (ANCS) business, reported under Portfolio Business. Subject to approvals, the transaction is expected to be completed in the second quarter of 2025. In late 2023, Wärtsilä announced a strategic review of Energy Storage & Optimisation to accelerate its profitable growth in a way that benefits customers, employees, and value creation for Wärtsilä shareholders. This review is still ongoing. Targets Development in 2024 Development in 2023 Organic growth in net sales 5% 9% 7% Operating margin 12% 11.1% 6.7% Gearing below 0.50 -0.31 0.02 Dividend payment at least 50% of earnings per share over the cycle 51.6% 73.2% Proposal of the Board of Directors Wärtsilä remains committed to R&D activities and continues to invest ~4% of net sales in R&D. Wärtsilä has a comprehensive development programme for sustainable industry fuel technologies, with proven 4-stroke engine technology for operating with LNG, LPG, methanol, and ammonia. In 2024, the company introduced to the marine market a new ultra-low emissions version of already efficient Wärtsilä 25DF engine. This is the second Wärtsilä dual- fuel engine, after the Wärtsilä 31DF engine, to be made available with NextDF technology. Wärtsilä introduced in 2023 the marine sector’s first commercially available 4-stroke engine-based solution for ammonia fuel, and will supply an equipment conversion project to Norwegian shipowner Eidesvik. This will be the world’s first ammonia-fuelled platform supply vessel conversion. As an illustration of Wärtsilä’s broad range of solutions supporting the decarbonisation transition, the company will supply the electrical systems needed to convert two Scandlines ferries to plug-in hybrid operation. This supports Scandlines’ vision to realise zero emissions in all its operations by 2040. While much of the decarbonisation work still lies ahead, Wärtsilä already has solutions and technologies that enable 100% renewable power systems and fuel flexibility to support decarbonisation. Wärtsilä’s engine power plants can already use 100% synthetic and carbon-neutral methane and methanol. They are also capable of using hydrogen/natural gas blends containing up to 25% hydrogen. In 2024, Wärtsilä launched the world’s first BOARD OF DIRECTORS' REPORT Financial review large-scale 100% hydrogen-ready engine power plant concept, which is expected to be available for delivery from 2026. Moving up the service value ladder has an important role in Wärtsilä’s strategy, with significant growth opportunities on all steps of the service value ladder. During the year, Wärtsilä signed a five- year performance-based lifecycle agreement with Royal Caribbean Group covering 37 of the company’s cruise ships. Wärtsilä also renewed its Operations and Maintenance agreement with QIT Madagascar Minerals S.A. and expanded it to include a decarbonisation agreement. Wärtsilä regards collaboration with industry stakeholders as an essential element in the development of technologies needed to meet changing market requirements. Wärtsilä will be leading a five- year collaboration of more than 200 Finnish companies, industrial organisations, research institutes, and universities in a “Wide & Intelligent Sustainable Energy” (WISE) project. The project partners will together develop autonomous zero-emission balancing solutions for the energy transition by utilising data analytics and artificial intelligence, thereby strengthening the Finnish energy sector to become a world-leader in energy innovation. Wärtsilä is also committed to supporting the maritime industry in offering advanced technology and training solutions for education. Wärtsilä has ambitious climate targets. The company’s goal is that by 2030 it will become carbon-neutral in its own operations, and be able to provide a product portfolio ready for zero-carbon fuels. Wärtsilä’s efforts in 2024 focused on low and medium cost measures, such as purchasing green electricity, taking low- emission company vehicles into use, and reducing the time needed for R&D and factory engine testing. Furthermore, while the fuel flexibility of engines powering the marine and energy sectors is key to enabling the transformation, Wärtsilä’s products and solutions will meet the most stringent environmental requirements. The health and safety of personnel is a priority for Wärtsilä, and zero lost-time injuries continues to be the company’s global target. In 2024, the corporate total recordable injury frequency rate (TRIF) was 2.20 (2.62). One of the proactive measures to further strengthen Wärtsilä's safety culture, is management safety walks, the number of which in 2024 increased by 27% compared to 2023. In 2024, Wärtsilä celebrated its tenth annual Safety Day with the theme "Mind your head". The focus was both on physical head safety, as well as psychological safety and wellbeing. Financial targets and outcome in 2024 Wärtsilä introduced its financial targets in 2021 and reconfirmed them in 2023. The targets include annual organic growth of 5% and an operating margin of 12%. Furthermore, the target is to maintain gearing below 0.50, and to pay a dividend of at least 50% of earnings per share over the cycle. Wärtsilä’s organic growth target was met in 2024 as net sales increased organically by 9%. Wärtsilä’s operating profit amounted to EUR 716 million, which represents 11.1% of net sales. The gearing resulted to -0.31. The Board of Directors proposed a dividend of EUR 0.44 per share. THE YEAR 2024 Operating environment General macro environment In 2024, the rate of global economic growth remained stable year- over-year supported by declining inflation and interest rates. The sustained growth momentum in global trade was driven by growth in exports from China and other Asian countries and strong demand for goods especially in the United States. The OECD sees the global economic outlook continuing to be positive and resilient but the outlook comes with heightened uncertainty and downside risks due to the elevated geopolitical tensions, US trade policy uncertainty and increasing debt distress for some emerging and low-income economies. Marine market The growth in global trade volumes, combined with a shift in trade flows resulted in a significant boost in demand for ship capacity in 2024. The seaborne trade flows shifted due to the sanctions on Russia, the wars in Ukraine and the Middle East, attacks on ships in the Red Sea, and limited access to the Panama Canal. The longer average shipping distances drove up transportation costs and created delays to global supply chains. Investments in new ships were clearly above the levels seen in 2023, driven by the increasing demand for ship capacity, growing pressure to decarbonise operations, continued healthy earnings for shipowners, low orderbooks in the ferry, offshore, tanker and bulk carrier segments, and continued fleet renewal. In total, 2,765 new ship contracts were reported between January–December, compared to 1,977 contracts signed in 2023. Despite the efforts to increase shipyard capacity and output, especially in China, but also in South Korea, shipyard capacity utilisation rates remain high and shipyard orderbooks remain long, indicating that a shortage of yard capacity still exists. According to Clarksons Research, global shipyard capacity reached its low point in 2020 at around ~60% of 2011 peak level. It is currently at ~70% of the peak and could increase to 80-85% by 2030, mainly as a result of yard reactivations and expansions in China. The regulatory drive to decarbonise shipping pushed shipowners to increase their investments in ships that can use alternative fuels, or which can be later converted to use alternative fuels or other energy saving technologies. In 2024, 653 orders for new alternative fuel capable ships were reported, accounting for 24% (23) of all contracted vessels and 49% (43) of the capacity of contracted vessels. In the cruise segment, market sentiment remained very positive due to the continued strong demand for cruise vacations. The strong growth in demand and a positive outlook for the sector increased the appetite for ordering new cruise ship capacity. Furthermore, the demand for service was supported by the continued growth in active fleet capacity, as well as interest in efficiency improvements needed for regulatory compliance and lower operational costs. In the ferry segment, the positive market sentiment was driven by the continued but gradual recovery in economic activity across key markets. This coupled with the aging fleet and the regulatory drive to cut carbon emissions, drove an increase in the appetite for new ship capacity. The demand for service was supported by the operator interest in maintaining and improving the efficiency of their aging fleets. In the offshore segment, energy prices supported the sentiment in the oil & gas market. The continued strength in demand for Financial review offshore assets especially in South America and Asia, to support exploration activity, enabled day rates to pass previous record highs, while supporting the utilisation rates for existing assets. Newbuild contracting activity increased compared to 2023 but high prices, the cost and availability of finance, as well as the shortage of yard capacity limited the overall appetite. Sentiment in the Asian and European offshore wind sector was supported by the easing of inflation and lower interest rates leading to improved project economics. However, uncertainty over the near-term outlook for the sector in the USA had a negative impact on the sentiment. The investment appetite for newbuild vessels was mixed, with activity in Construction Service Operation vessels (CSOV) remaining strong while overall activity declined. The demand for service across offshore sub-segments was driven by high utilisation and day rates, as well as interest in retrofits to improve the efficiency of assets. In the LNG carrier segment, market sentiment remained softer than in previous years, as strong fleet capacity growth clearly exceeded growth in demand which led to a decline in the utilisation rate of the mostly older steam turbine-powered ships. However, the appetite for newbuild capacity was clearly above 2023 levels as a result of further capacity requirements to cater for the demand in expanding LNG liquefaction capacity. Service demand was supported by the growth in active fleet capacity and continued interest in service agreements. In the container ship segment, sentiment was positive as trade volumes and the rerouting of ships away from the Red Sea contributed to higher-than-expected demand for ship capacity. Supported by the positive sentiment and the drive to replace older tonnage, the investment appetite for newbuilds clearly picked up compared to 2023. The sentiment in demand for service was supported by the growth in active fleet capacity and earnings, as well as by shipowner interest in retrofits to existing fleets. Across all the above segments, the growing pressure to decarbonise operations supported the demand for both newbuilds and service. This has resulted in investments in additional fleet capacity, direct fleet replacements, efficiency upgrades or fuel conversions, and maintenance activities to keep the existing fleet compliant and competitive. Energy market The energy transition continued to advance, with wind and solar expected to post record installations in 2024 and 2025. Combined capacity additions from wind and solar are expected to be between 650 GW and 800 GW in 2025 according to the International Energy Agency (IEA) and Bloomberg New Energy Finance (BNEF). The transition towards renewables is expected to continue to accelerate, since the main driver for wind and solar capacity additions is favourable economics. Energy-related macroeconomic development in 2024 was impacted by elevated risks in the geopolitical environment. Uncertainty increased in the fourth quarter due to US trade policy, as the incoming administration signalled its intention to impose or increase broad tariffs on imports to the United States. While the scale and scope of the potential tariffs remain uncertain, they may have widespread impacts on energy markets in and outside the US. The impact of the new US administration on the energy transition globally is likely to be muted. While the macroeconomic environment has made project financing difficult, decreasing inflation and interest rates are expected to encourage investment decisions in the mid- to long-term. In 2024, commodity prices were relatively stable compared to the previous few years. Global natural gas prices increased in the second half of the year. Prices for lithium continued to decrease after declining significantly already the previous year. In engine power plants, market demand for equipment in 2024 improved compared to the previous year, while demand for services remained stable. In the balancing segment, the pace of the renewable energy transition continued to be an important demand driver. The total market for thermal balancing in the first three quarters of 2024 was larger than in any previous full year according to data from the McCoy Power Report and gathered internally. The drivers for balancing demand are also expected to develop favourably in 2025. The baseload segment remains a strong source of demand for thermal power. Reciprocating engines are important providers of baseload generation, particularly in remote locations and other locations where access to grid power is uncertain or time-sensitive. Baseload generation demand is expected to remain stable. In battery energy storage, demand is closely linked to the increasing share of intermittent renewables in the energy system, which continued to progress strongly. The market for utility-scale battery storage is expected to continue with strong volume growth this decade and onwards, with the Global Energy Storage and Grids Pledge at COP29 having targeted a cumulative 1,500 GW of energy storage capacity by 2050. Financial review 0 1,000 2,000 3,000 4,000 5,000 6,000 7,000 2020 2021 2022 2023 2024 MEUR -2 0 2 4 6 8 10 12 -100 0 100 200 300 400 500 600 700 2020 2021 2022 2023 2024 % MEUR Comparable operating result Operating result Result before taxes Operating result, % Order intake and order book Order intake increased by 14% to EUR 8,072 million (7,070). Service order intake increased by 8% to EUR 3,812 million (3,519), driven primarily by growth in Marine. Equipment order intake increased by 20% to EUR 4,260 million (3,550) supported by higher equipment order intake in Energy, Marine and Portfolio Business. The order book at the end of the year increased by 25% to EUR 8,366 million (6,694). Net sales and operating result Net sales increased by 7% to EUR 6,449 million (6,015). Service net sales increased by 9% to EUR 3,422 million (3,148), supported by growth in Marine, Energy and Portfolio Business. Equipment net sales increased by 6% to EUR 3,027 million (2,867), supported by Portfolio Business and Marine. Of Wärtsilä’s net sales, 54% was EUR denominated and 32% USD denominated, with the remainder being split between several currencies. The operating result amounted to EUR 716 million (402) or 11.1% of net sales (6.7). The comparable operating result totalled EUR 694 million (497) or 10.8% of net sales (8.3). The comparable operating result was supported by increases in Energy, Portfolio Business and Marine. Items affecting comparability amounted to EUR 23 million (-95) and were mostly related to the asset held for sale classification of the Automation, Navigation and Control Systems (ANCS) business unit and the restructuring of engine manufacturing in Europe. The comparable adjusted EBITA amounted to EUR 712 million (518) or 11.0% of net sales (8.6). Purchase price allocation amortisation amounted to EUR 19 million (20). Financial items amounted to EUR -29 million (-37). Net interest totalled EUR 7 million (-14). The result before taxes amounted to EUR 687 million (364). Taxes amounted to EUR -180 million (-95), implying an effective tax rate of 26.2% (26.1). The result for the financial year amounted to EUR 507 million (269). Basic earnings per share totalled EUR 0.85 (0.44). The return on investment (ROI) was 23.7% (13.9), while the return on equity (ROE) was 21.3% (12.3). Group net sales devel o pment Result Financial review Financing and cash flow Cash flow from operating activities totalled EUR 1,208 million (822), supported by the better result and improved working capital. Working capital totalled EUR -787 million at the end of the year (- 169). Advances received totalled EUR 898 million (774). Wärtsilä aims to ensure sufficient liquidity at all times through efficient cash management, and by maintaining the availability of sufficient committed and uncommitted credit lines. Refinancing risk is managed by having a balanced and sufficiently long loan portfolio. Cash and cash equivalents amounted to EUR 1,554 million (819). Additionally, EUR 4 million of cash and cash equivalent pertained to assets held for sale (0). Unutilised committed credit facilities totalled EUR 644 million (644). Wärtsilä had interest-bearing debt totalling EUR 766 million at the end of the year (858). The total amount of short-term debt maturing within the next 12 months was EUR 142 million. Long-term loans amounted to EUR 624 million. Additionally, EUR 15 million of interest-bearing liabilities pertained to assets held for sale (0). Net interest-bearing debt totalled EUR -777 million (35). Gearing was - Maturity profiles of long-term loans Committed revolving credit facilities (end of period) 0.31 (0.02), while the solvency ratio was 37.4% (37.0). Equity per share was EUR 4.29 (3.78). Loans Gearing 66% 66% 66% 61% 65% 48% 48% 40% 45% 45% 44% 45% 0 300 600 900 1,200 1,500 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 2022 2023 2024 MEUR % = Fixed portion of loans (incl. derivatives) Floating rate loans Fixed rate loans -0.40 -0.30 -0.20 -0.10 0.00 0.10 0.20 0.30 0.40 0.50 2020 2021 2022 2023 2024 0 20 40 60 80 100 120 140 160 25 26 27 28 29 30 31 32 33 34 35 36+ MEUR Annual repayments of long-term loans 0 150 300 450 600 750 2024 2025 2026 2027 2028 2029 2030 MEUR Financial review 0.0 1.0 2.0 3.0 4.0 5.0 0 50 100 150 200 250 300 2020 2021 2022 2023 2024 % MEUR R&D expenditure Percentage of net sales 0 100 200 300 400 2020 2021 2022 2023 2024 MEUR Related to acquisitions Other capital expenditure Depreciation, amortisation, and impairment Capital expenditure Capital expenditure related to intangible assets and property, plant, and equipment amounted to EUR 170 million (148). Depreciation, amortisation, and impairment amounted to EUR 131 million (193), including depreciation of right of use assets of EUR 51 million (49). Gross capital expenditure In 2025, capital expenditure related to intangible assets and property, plant, and equipment is expected to be at around the same level as depreciation, amortisation, and impairment. Innovations, research and development Wärtsilä is committed to helping minimise the environmental footprint of the marine and energy industries. Investments in R&D are central to securing Wärtsilä’s future positioning and will continue despite the prevailing market uncertainty. Developing the use of alternative, commercially viable clean fuels for the future is a key focus area of research and development, as is improving the connectivity, efficiency, sustainability, and safety of customer operations through the increased use of digital solutions. Research and development expenditure totalled EUR 296 million (258) in 2024, which represents 4.6% of net sales (4.3). In February, it was announced that Wärtsilä will be leading a five- year collaboration of more than 200 Finnish companies, industrial organisations, research institutes, and universities. The partners in this “Wide & Intelligent Sustainable Energy” (WISE) project will together develop autonomous zero-emission balancing solutions for the energy transition by utilising data analytics and artificial intelligence, strengthening the Finnish energy sector to become a world-leader in energy innovation. In March, Wärtsilä introduced Quantum2, a fully integrated high- capacity battery energy storage system designed and optimised for global large-scale deployment. In September, Wärtsilä launched Quantum3, with new safety, cybersecurity, energy density, and sustainability design features. The high energy density of both solutions means that fewer units are needed onsite. Both solutions leverage Wärtsilä’s GEMS Digital Energy Management Platform, which includes streamlined monitoring, control, and performance insights to the battery, safety, and thermal management systems. In June, Wärtsilä launched the world’s first large-scale 100% hydrogen-ready engine power plant. This solution can currently use natural gas to provide flexibility and balancing, and can be later converted to run on hydrogen, thereby future-proofing the journey to net zero. The concept is based on the Wärtsilä 31 engine platform. In August, Wärtsilä announced a landmark deal with Eidesvik to supply the equipment for the conversion of an offshore platform supply vessel to operate with ammonia fuel. Wärtsilä will supply the engine and complete fuel gas supply system and exhaust after- treatment needed for the conversion. The vessel, ‘Viking Energy’, is set to become the world's first ammonia-fuelled in-service ship in 2026. The innovative NextDF feature for the Wärtsilä 25DF dual-fuel engine, introduced by Wärtsilä in October, has set an industry benchmark for low methane slip by reducing methane emissions to less than two per cent of fuel use across all load points. LNG is considered an important transitional marine fuel, bridging the gap between conventional diesel fuels and future carbon-neutral or carbon-free alternatives. However, the main component of LNG is methane, and when burned as a fuel, a very small amount may not fully combust, leading to methane escaping into the atmosphere. Over the years, Wärtsilä has developed engine technology aimed at minimising methane emissions. Research and development expenditure * Figure in the comparison period 2021 has been restated to reflect a change in the definition of research and development expenditure. Strategic projects Wärtsilä actively manages its business portfolio to support the strategy and financial targets. In October 2023, Wärtsilä announced the commencement of a strategic review of the Energy Storage and Optimisation business. The strategic review aims to assess options to accelerate the profitable growth of the ES&O business in a way that benefits its customers, employees, and the value creation for Wärtsilä shareholders. The review is still ongoing. Wärtsilä has not set a timetable for the completion of the strategic review. In December 2024, Wärtsilä announced the divestment of its Automation, Navigation and Control System (ANCS) business, reported as a part of Portfolio Business. In 2023, the annual revenue of ANCS was close to EUR 200 million. Subject to approvals, the transaction is expected to be completed in the second quarter of 2025. Related party transactions Loans for Group companies are current and unsecured, interest rates are at arm's length. Further information is presented in Notes Financial review 0 5,000 10,000 15,000 20,000 2020 2021 2022 2023 2024 Personnel at the end of the financial period Personnel on average Personnel in Finland to the parent company financial statements, Note 18. Related party loans and other commitments. Personnel Wärtsilä had 18,338 (17,807) employees at the end of the year. On average, the number of personnel totalled 18,110 (17,666) in the year 2024. Of Wärtsilä’s total number of employees, 23% (23) were located in Finland and 36% (37) elsewhere in Europe. Personnel employed in Asia represented 21% (22) of the total, personnel in the Americas 14% (13), and personnel in other countries 5% (5). Personne l Changes in management In January, Wärtsilä announced the decision by Ms Saara Tahvanainen, Executive Vice President, Marketing and Communications and member of the Board of Management, to leave Wärtsilä for a position outside the Group by latest 15 July, 2024. Wärtsilä began the search for her successor immediately. In July, Wärtsilä appointed Ms Nora Steiner-Forsberg (b. 1973, LLM, Master of European Law) as Executive Vice President, Legal and Compliance, and a member of the Wärtsilä Board of Management. She will start in her role latest on 1 April, 2025. Kari Hietanen continues as a member of the Board of Management as Executive Vice President, Public Affairs and Sustainability. In August, Wärtsilä appointed Ms Anu Sirkiä, (b. 1974, BBA, MBA) as Executive Vice President, Marketing and Communications and a member of the Wärtsilä Board of Management. She assumed the position in November. Financial review Reporting segments Wärtsilä Marine Order intake increased by 12% to EUR 3,637 million (3,261). Service order intake increased by 15% to EUR 2,307 million (2,004) driven by growth in the navy and ferry segments. Equipment order intake increased by 6% to EUR 1,329 million (1,257) supported mainly by the cruise segment. The order book at the end of the year increased by 21% to EUR 3,409 million (2,808). Net sales increased by 9% to EUR 3,053 million (2,800). Service net sales increased by 10% to EUR 2,050 million (1,862) supported mainly by the offshore segment. Equipment net sales increased by 7% to EUR 1,002 million (938) driven by the merchant segment. The comparable operating result amounted to EUR 360 million (312) or 11.8% of net sales (11.2). The result was supported by higher service volumes and better operating leverage stemming from increased net sales, but negatively impacted by the increased R&D cost to support the development of decarbonisation technology. The comparable operating margin improved, supported by a favourable mix between equipment and services. Items affecting comparability totalled EUR 4 million (-36) and were mainly related to the restructuring of engine manufacturing in Europe. Wärtsilä Energy Order intake increased by 11% to EUR 3,366 million (3,041). Service order intake remained stable at EUR 1,291 million (1,306) . The comparison period included a few sizable agreements and upgrade projects. Equipment order intake increased by 20% to EUR 2,076 million (1,735), mainly driven by improved demand for balancing power in Engine Power Plants and higher orders in Energy Storage & Optimisation. The order book at the end of the year increased by 27% to EUR 3,413 million (2,693). Net sales increased by 3% to EUR 2,690 million (2,610). Service net sales increased by 7% to EUR 1,173 million (1,095), supported by higher volumes in spare parts and upgrade projects. Equipment net sales remained stable at EUR 1,517 million (1,515), with increased equipment sales in Engine Power Plants and lower equipment sales in Energy Storage & Optimisation. About 80% of the net sales in 2024 consisted of extended equipment supply (EEQ), compared to about 50% in 2023. The comparable operating result amounted to EUR 302 million (219) or 11.2% of net sales (8.4), supported by higher service volumes, shift from EPC (engineering, procurement and construction) to EEQ (extended equipment supply) deliveries, and improved project execution capability in Energy Storage & Optimisation. The result was negatively impacted by the increased R&D cost to support the development of decarbonisation technology. The comparable operating margin improved, supported by a favourable mix between equipment and services. Other business activities Wärtsilä Portfolio Business Wärtsilä Portfolio Business consists of business units which are run independently with the aim of accelerating performance improvement and unlocking value through divestments or other strategic alternatives. Currently Portfolio Business includes Automation, Navigation & Control Systems (ANCS), Gas Solutions, Marine Electrical Systems and Water & Waste. In the December 2024, Wärtsilä announced that it had agreed to divest Automation, Navigation and Control System (ANCS) business to the Swedish investment company Solix Group AB. Subject to approvals, the transaction is expected to be completed in the second quarter of 2025. Order intake increased by 39% to EUR 1,069 million (768), driven by good development in all business units. Services order intake was stable at EUR 214 million (209), while equipment order intake increased by 53% to EUR 855 million (559). The order book at the end of the year increased by 30% to EUR 1,544 million (1,192). Net sales increased by 17% to EUR 706 million (604) driven by good development in all business units. Services net sales increased by 4% to EUR 198 million (191), while equipment net sales increased by 23% to EUR 508 million (413). The comparable operating result amounted to EUR 32 million (-34) or 4.5% of net sales (-5.7). The increase was supported by good development in the Gas Solutions and the Automation, Navigation and Control Systems (ANCS) business units. Items affecting comparability totalled EUR 20 million (-49), related mainly to the asset held for sale categorisation of the Automation, Navigation and Control Systems (ANCS) business unit. The items affecting comparability in the comparison period were related to the impairment of goodwill and other non-current assets in Portfolio Business. The result in the comparison period was hampered by a total provision of EUR 48 million taken for a single sizable turnkey project in the Gas Solutions business unit. Financial review Risks and business uncertainties The ongoing wars in Ukraine and the Middle East have resulted in a range of risks to the demand and supply environment of various commodities globally. The prolonged and elevated geopolitical tensions, and uncertainty over trade policies, exacerbated by the outcome of November’s US elections, have increased risks related to further global fragmentation and uncertainty to the macroeconomic outlook. Business operations globally are being impacted by continued inflationary pressure, changing trade flows and volumes, tighter monetary policies, concerns over the health of the Chinese economy, rising protectionism, the sanctions in place and planned against Russia, and the rising trade tensions globally. These factors are all contributing to uncertainty in the global economic growth. Further escalation of any of the forementioned factors could result in increased uncertainty over future demand for the equipment and services provided by Wärtsilä. Furthermore, the volatility of the geopolitical environment, and the enforcement of sanctions or embargos, pose a risk to the company’s customer relations and international business activities. With the rapidly growing use of data in shipping and shipbuilding, as well as in the energy markets, cyber threats can potentially result in various forms of financial, operational, or reputational damage to the business. Changes in the regulatory environment, financiers' policies, or market sentiment could negatively impact the availability and cost of financing for Wärtsilä and Wärtsilä’s customers, which could result in a lower demand for Wärtsilä's solutions. The shipping and shipbuilding markets are under increasing pressure to reduce carbon emissions because of regional regulations such as the EU’s Fit for 55, the revised and more ambitious greenhouse gas strategy from the International Maritime Organisation, green financing, and the individual sustainability goals of end-customers. This, coupled with longer trade distances resulting from increased geopolitical tensions and disruptions at key waterways, may lead to increased costs for shipowners and operators that cannot be fully passed on to end customers. The constraints on shipyard capacity, the development and deployment of sustainable future technologies, a lack of clarity at the global level around decarbonisation-related financial incentives, and the need to find the optimal pace and timing of investments based on financial feasibility and compliance with emission regulations may affect the investment appetite of ship owners and operators. This concerns both newbuilding programmes and the management of existing fleets and may pose a risk of the global shipping fleet not reaching targeted emission reduction levels. Ship owners and operators, as well as shipyards, may face risks to their business profitability due to the limited ability or desire of people to travel, a lower demand for goods because of persistent high inflation or economic slowdown, as well as higher voyage, operating and financing costs. Highly indebted shipowners, operators or shipyards may not withstand the potential risk of slower than expected growth in demand, higher financing costs or a lowered credit rating. Uncertainty around the longer-term demand for crude oil, oil price volatility, and the pressure to decarbonise are pushing oil majors to re-evaluate their spending on exploration activities and operational costs. This may lead to lower future demand for offshore drilling or support assets, and related tanker ships, and can hinder newbuild investments due to concerns regarding residual asset values. The overarching trend in the energy markets is the transition to renewable energy sources, such as wind and solar. The pace of this shift is the principal driver in the growth of battery energy storage and thermal balancing technologies. New technology innovations, as well as the price and availability of fuels and raw materials, affect Wärtsilä’s business. High and volatile gas prices directly impact the relative competitiveness of the portfolio against other generating technologies, especially in thermal baseload plants. Similarly, policies related to the energy and electricity markets have direct and indirect impacts on future energy capacity and the generation mix. For example, energy and climate policies may speed or delay the energy transition. Recent years have highlighted the impact of geopolitical tensions on energy market policy and investment decisions. Concentrated supply chains in some countries and the tight competitive situation impose direct risks on Energy. Energy commodities and supply chains have been at the heart of trade policies lately, presenting risks for all energy technologies. While the scale and scope of potential tariffs related to current US trade policy remain uncertain, they may impact Wärtsilä’s Energy business particularly in the US. Competition between and among energy technologies presents price pressure. Uncertainty related to any of the aforementioned factors tends to delay investment decisions. The Group is a defendant in a number of legal cases that have arisen out of, or are incidental to, the ordinary course of its business. These lawsuits mainly concern issues such as contractual and other liability, labour relations, property damage, and regulatory matters. From time to time, the Group receives claims of different amounts and with varying degrees of substantiation. There is currently one unusually sizeable claim. It is the Group’s policy to provide for amounts related to the claims as well as for litigation and arbitration matters when an unfavourable outcome is probable, and the amount of loss can be reasonably estimated. The Risks and Risk Management section of the annual report contains a more detailed description of Wärtsilä’s risks and risk management. Financial review Wärtsilä shares on Nasdaq Helsinki 31/12/2024 Number of shares outstanding Number of treasury shares Number of shares and votes Number of shares traded 1-12/2024 WRT1V 589,080,815 2,642,575 591,723,390 217,792,247 1.1.-31.12.2024 High Low Average Close Share price 20.60 12.61 17.42 17.11 Trade -weighted average price Market capitalisation 31/12/2024 31/12/2023 MEUR 10,124 7,766 Foreign shareholders 31/12/2024 31/12/2023 % 57.7 52.7 Shares and shareholders In 2024, the number of shares traded on Nasdaq Helsinki was 217,792,247, equivalent to a turnover of EUR 3,729 million. Wärtsilä’s shares are also traded on alternative exchanges, including Turquoise, BATS, Chi-X and CBOE DXE. The total trading volume on these alternative exchanges amounted to 98,204,022 shares. Flagging notifications Under the provisions of the Finnish Securities Markets Act, shareholders of listed companies have an obligation to notify both the Finnish Financial Supervision Authority and the listed company of changes in their holdings when crossing predefined thresholds. Flagging notifications Transaction date Shareholder Threshold Direct holding, % Total holding, % 2.1.2024 BlackRock, Inc. Above 5% 4.90% 5.00% 3.1.2024 BlackRock, Inc. Below 5% Below 5% Below 5% 22.1.2024 BlackRock, Inc. Above 5% 4.97% 5.08% 23.1.2024 BlackRock, Inc. Below 5% Below 5% Below 5% 26.1.2024 BlackRock, Inc. Above 5% 4.91% 5.01% 29.1.2024 BlackRock, Inc. Above 5% 5.16% 5.26% 1.10.2024 BlackRock, Inc. Above 5% 5.40% 5.49% 17.10.2024 Varma Mutual Pension Insurance Company Below 5% 4.77% 4.77% All flagging notifications received by Wärtsilä during 2024 can be found on the table on this page. Financial review DECISIONS TAKEN BY THE ANNUAL GENERAL MEETING Wärtsilä’s Annual General Meeting, held on 7 March 2024, approved the financial statements for the year 2023, reviewed the Remuneration Report 2023 for Governing Bodies, and discharged the members of the Board of Directors and the company’s President & CEO from liability for the financial year 2023. The Annual General Meeting decided that the Board of Directors shall have eight members. The following were elected to the Board: Karen Bomba, Morten H. Engelstoft, Karin Falk, Johan Forssell, Tom Johnstone, Mats Rahmström, Tiina Tuomela, and Mika Vehviläi nen. The audit firm PricewaterhouseCoopers Oy was elected as the auditor of the Company for the year 2024 and the same firm was elected as the sustainability auditor. The Annual General Meeting approved the proposed changes to the Articles of Association. They relate to the remuneration and election of the sustainability auditor as well as to the possibility to organise remote general meetings. Dividend distribution The Annual General Meeting approved the Board of Directors’ proposal to pay a dividend of EUR 0.32 per share, with the dividend to be paid in two instalments. The first instalment of EUR 0.16 per share was paid on 18 March 2024. The second instalment of EUR 0.16 per share was paid on 18 September 2024. Authorisation to repurchase the company’s own shares The Board of Directors was authorised to resolve to repurchase a maximum of 57,000,000 shares in the Company. Shares may be repurchased also otherwise than in proportion to the shareholders’ holding in the Company. The authorisation to repurchase the Company’s own shares shall be valid until the close of the next Annual General Meeting, however no longer than for 18 months from the decision by the Annual General Meeting. Authorisation to issue shares The Board of Directors was authorised to resolve to issue a maximum of 57,000,000 shares in the Company. The shares can be issued for consideration or without consideration. They can also be issued in deviation from the shareholders’ pre-emptive rights by way of a directed issue if there is a weighty financial reason for the Company to do so. A directed issue may be decided upon to develop the capital structure of the Company or to finance or carry out acquisitions or other arrangements. Additionally, the authorisation can also be used as part of the Company’s incentive schemes for up to 10,000,000 shares, which represents 1.69% of all the shares in the Company. The authorisation for the Board of Directors to issue shares shall be valid for 18 months from the decision by the Annual General Meeting. However, the authorisation regarding incentive schemes shall be valid for five years from the decision. This authorisation revokes the authorisation given by the Annual General Meeting on 9 March 2023 to issue shares. Organisation of the Board of Directors Convening after the Annual General Meeting, the Board of Directors elected Tom Johnstone as its Chair and Mika Vehviläinen as the Deputy Chair. The Board decided to establish an Audit Committee and a People Committee. The Board appointed from among its members the following members to the committees: Audit Committee: Chair Tiina Tuomela, Karen Bomba, Morten H. Engelstoft People Committee: Chair Tom Johnstone, Karin Falk, Mika Vehviläinen Financial review WÄRTSILÄ'S PROSPECTS Marine Wärtsilä expects the demand environment for the next 12 months (Q1/2025-Q4/2025) to be better than that of the comparison period. Energy Wärtsilä expects the demand environment for the next 12 months (Q1/2025-Q4/2025) to be better than that of the comparison period. However, Wärtsilä underlines that the current high external uncertainties make forward looking statements challenging. BOARD OF DIRECTORS’ DIVIDEND PROPOSAL The Board of Directors proposes that a dividend of EUR 0.44 per share shall be paid for the financial year 2024. The parent company’s distributable funds total EUR 1,249,416,973.27, which includes EUR 363,279,404.71 in net profit for the year. There are 589,080,815 shares with dividend rights. The dividend shall be paid in two instalments. Dividend The free share issue approved by Wärtsilä Corp. Annual General Meeting on 2018 increased the total number of Wärtsilä shares to 591,723,390. Figures for the comparison periods 2011 -2017 have been adjusted to reflect the increased number of shares. The first instalment of EUR 0.22 per share shall be paid to the shareholders who are registered in the list of shareholders maintained by Euroclear Finland Oy on the dividend record date of 17 March 2025. The payment day proposed by the Board for this instalment is 24 March 2025. The second instalment of EUR 0.22 per share shall be paid in September 2025. The dividend record day of the second instalment shall be 17 September 2025, and the second instalment of the dividend shall be paid to shareholders who are registered in the list of shareholders maintained by Euroclear Finland Oy on such day. The Board proposes the second instalment is paid on 24 September 2025. 0.40 0.43 0.46 0.48 0.48 0.20 0.24 0.26 0.32 0.44 -0.25 0.00 0.25 0.50 0.75 1.00 15 16 17 18 19 20 21 22 23 24 EUR Dividend per share Basic earnings per share Financial review Sustainability Statement Content in this section: 1. GENERAL INFORMATION 1.1. Wärtsilä’s approach to sustainability 1.2. Basis for preparation (ESRS2, BP-1, BP-2) 1.3. Governance (ESRS2 GOV-1-5) 1.4. Strategy, impacts risks and opportunities (ESRS2 SBM-1) 1.5. Stakeholder engagement (ESRS2 SBM-2) 1.6. Results of double materiality assessment (ESRS2 SBM-3, E1 SBM-3; E2 IRO-1; S2 SBM-3) 1.7. Description of the process to identify and assess material impacts, risks and opportunities (ESRS2, IRO- 1) 1.8. Resilience analysis (E1 IRO-1) 1.9. Disclosure Requirements in ESRS covered by the undertaking’s sustainability statement (ESRS2 IRO-2) 2. ENVIRONMENTAL INFORMATION 2.1. EU Sustainable Finance Taxonomy disclosures 2.2. Climate change (ESRS E1) 2.3. Pollution (ESRS E2) 3. SOCIAL INFORMATION 3.1. General information on Wärtsilä’s employees (S1-6) 3.2. Occupational health and safety (ESRS S1) 3.3. Skills and career development (ESRS S1) 3.4. Occupational health and safety: Value chain workers (ESRS S2) 1. GENERAL INFORMATION 1.1 . Wärtsilä’s approach to sustainability Wärtsilä is a purpose-driven organisation, with sustainability at the core of the company’s purpose and strategy. Along with the company’s values, principles, and sustainability objectives, they create the framework for a strong drive towards decarbonisation and responsible business practices. Wärtsilä’s sustainability strategy is based on three closely interrelated pillars: economic, environmental, and social performance. With the company’s strong emphasis on decarbonising the marine and energy markets, innovative and efficient solutions play a central role in the positive contribution towards a low carbon future. Wärtsilä businesses focus on developing and providing solutions and services that optimise the environmental and economic performance of fleets and individual vessels, power plants, and entire energy systems. This focus is further enhanced through the use of lifecycle data, analytics, and artificial intelligence. Wärtsilä aims at having a working culture, where ethics and compliance are at the core of the company’s business practices. Wärtsilä’s Code of Conduct e-learning programme provides information about the Code and its themes, as well as guidance for employees on making the right decisions in their everyday work. Employees are required to participate in the mandatory training programme every second year, as well as signing an individual Code of Conduct Undertaking letter. The Code of Conduct covers areas such as respecting human and labour rights, preventing corruption and bribery, and competition regulation. Wärtsilä maintains an extensive training programme that is mandatory for all employees on anti-corruption principles and applicable legislation, as well as the relevant company policies and procedures. The company also has in place a competition compliance programme for managing risks relating to competition law. 1.2 . Basis for preparation (BP-1, BP-2) This sustainability statement has been prepared on a consolidated basis, with the scope of consolidation being the same as for the financial statements. Regarding value chain reporting, in accordance with Wärtsilä’s double materiality assessment, the material topics are covered as follows: ◾ Climate change: covers upstream and downstream value chain; ◾ Energy: covers downstream value chain; ◾ Pollution to air, water and soil: covers downstream value chain; ◾ Substances of concern: covers upstream and downstream value chain; ◾ Occupational health and safety covers upstream value chain; and ◾ Skills and career development covers Wärtsilä’s own operations. Wärtsilä has not used the option to omit a specific piece of information corresponding to intellectual property, know-how or the results of innovation, nor the exemption from disclosure of impending developments or matters in the course of negotiation, as provided for in articles 19a(3) and 29a(3) of Directive 2013/34/EU. Time horizon deviations: On climate change related E1.SBM-3 and E1.IRO-1 disclosures on Wärtsilä’s process for evaluating climate change related risks and opportunities, and the company’s strategy’s resilience analysis, the following time horizons have been used in order to be aligned with the Taskforce on Climate Change related Financial Disclosures (TCFD) recommendations: Short term: year 2025; Medium term: year 2030, and Long term: year 2050. Metric including value chain data estimates: Scope 3 category 4, upstream transportation: 7% is calculated based on primary data i.e. fuel consumption and fuel factors for the fuel used. 93% is calculated on actual distances of all separate legs in the transport chain and fuel factors from reported primary data are used. For purchased outbound logistics, the emissions for logistics services are calculated mainly based on the Global Logistics Emissions Council (GLEC) Framework, the global method for the calculation and reporting of logistics emissions. Furthermore, primary emissions data from transport vehicles has been collected to improve the data quality. Data coverage is 65% of the total transportation spend and extrapolation is made for the remaining share. The only quantitative metrics subject to a high level of measurement uncertainty are the Scope 3, category 11 emissions: CO2e emissions data from the use of sold products, which is Financial review calculated based on the number of engines sold in the reporting year, related engine running hours, engine output and engine load multiplied with relevant emission factors. The emissions from sold engines as direct use-phase emissions were accounted for. Sources of estimation and outcome uncertainty: When quantifying the future scope 3 emissions from category 11 use of sold products, this involves assumptions and the actual emissions from the use of sold products largely depend on the availability of sustainable fuels and the choices Wärtsilä’s customers make. Reporting on E1-9 and E2-6 omitted for the first year. This statement has been made in accordance with the ESRS Standards and Finnish Accounting Act section 7. 1.3. Governance (ESRS 2, GOV-1-5) Board of Directors (GOV-1) Responsibility for the management of the company and the proper organisation of its operations lies with the company’s Board of Directors, which is composed of five to ten members. Board members serve for one year at a time and are elected by the General Meeting. The Board elects a chair and a deputy chair from among its members. The Board steers and supervises the company’s operations and decides on policies, goals, and strategies of major importance. The members of the Board of Directors at the end of 2024 were Tom Johnstone (Chair of the Board); Mika Vehviläinen (Deputy Chair of the Board); Karen Bomba, Morten H. Engelstoft, Karin Falk, Johan Forssell, Mats Rahmström and Tiina Tuomela. There is no representation of employees or other workers in the Board of Directors. All eight Board members are non-executive and were determined to be independent of the company. Five members, i.e. 63%, were determined to be independent of significant shareholders. For the Board of Directors to discharge its duties in the most effective manner, the Board must be highly qualified and sufficiently diverse. The members of the Board of Directors have extensive and diverse experience relevant to Wärtsilä’s strategy, such as from Marine and Energy industries and from international capital goods companies. When preparing its proposal for the Board’s composition, the Shareholders’ Nomination Board considers the educational and professional background of the individual candidates, as well as their international experience, so that the composition of the Board represents a wide variety of competencies and qualifications. The Shareholders’ Nomination Board also considers the candidates’ age, as having different seniority levels on the Board is considered beneficial in terms of ensuring a mutually complementary experience. With regards to gender, Wärtsilä’s objective is to have a balanced representation of both genders in the Board. In December 2024, Wärtsilä had three female and five male board members. In addition, the Nomination Board reviews and adjusts the diversity principles of the Board of Directors, as necessary, and does successor planning of the directors. Roles and responsibilities of the Board of Directors The principles applied by the Board to its regular work are set out in the Board Charter. The Board also approves the rules of procedure applied by the Board’s committees setting out their main tasks and working principles. In addition to matters requiring its decision, the Board is given updates on the Group’s operations, financial position, and risks at its meetings. The Board considers all matters stipulated to be the responsibility of a board of directors by legislation, other regulations, and the company’s Articles of Association. The most important of these are: ◾ the annual and interim financial statements ◾ matters to be put before the General Meetings of shareholders ◾ the appointment of the President & CEO, the Executive Vice Presidents, and the CEO’s deputy, if any ◾ the organisation of financial supervision within the company The Board is also responsible for considering any matters that are so far-reaching with respect to the area of the Group’s operations that they cannot be considered to fall within the scope of the Group’s day-to-day administration. Examples of such matters include: ◾ approval of the long-term goals of the Group and its businesses, as well as the strategies to achieve them ◾ monitoring the developments, opportunities, and threats in the external environment, as well as their impact on goals and strategy ◾ approval of the annual business plan and target setting for the Group ◾ approval of risk management principles ◾ monitoring and assessing the performance of the President & CEO ◾ approval of the remuneration and pension benefits of the President & CEO, Executive Vice Presidents, and the CEO’s deputy, if any ◾ approval of the corporate governance principles ◾ overseeing that the company complies with legal and regulatory requirements, its Code of Conduct, and other established values and ethical principles in its operations ◾ discussing and monitoring the research and product development plans of the company ◾ appointing the Board committees ◾ granting charitable donations ◾ approval of other matters that are strategically or financially important, such as significant investments, acquisitions, or divestments. The Board of Directors appoints annually an Audit Committee and a People Committee among its members. Audit committee The Audit Committee monitors the financial statement and sustainability reporting processes, as well as the efficiency of the internal control, internal audit, and risk management systems. Furthermore, the Committee reviews the description of the main features of the internal control and risk management systems pertaining to the financial and sustainability reporting processes, monitors the statutory audit, evaluates the independence of the Financial review statutory audit firm, and prepares the proposal for resolution on the election of the auditor. Other duties of the Audit Committee include reviewing the accounting principles of the company and approving any amendments to them, reviewing the interim and financial statements of the company and the reports prepared by the auditor for the Audit Committee, as well as evaluating the processes aimed at ensuring compliance with laws and regulations and monitoring the company’s credit position and taxation. The Audit Committee also reviews the company’s Corporate Governance Statements and reviews and resolves any special issues raised by the Board of Directors that fall within the competence of the Audit Committee. In addition, the Audit Committee monitors assurance of the consolidated sustainability reporting. The Audit Committee is regularly informed on the progress of the sustainability reporting and the assurance by the Public Affairs and Sustainability function and the assurance providers. The Chair of the Audit Committee reports to the Board of Directors on the Committee’s meetings and proposals. People committee The Board defines the duties of the People Committee. The People Committee prepares for the Board of Directors, as necessary, matters concerning the appointment of the President & CEO, the CEO’s deputy, if any, and other members of the Board of Management. The Committee prepares for the Board of Directors proposals concerning the remuneration principles, incentive schemes, and remuneration that apply to the President & CEO and the members of the Board of Management. Furthermore, the People Committee reviews the organisation’s development needs and corporate culture alignment with strategy, monitors talent management processes and strategies, as well as reviews leadership development strategies and succession plans. External consultants used by the Committee are independent of the company and management. Diversity among the members of the Board of Directors and Board of Management Members of the Board of Management (BoM) and Board of Directors (BoD) by gender in 2024 BoM (%) BoD (%) Female 37.5 37.5 Male 62.5 62.5 Members of the Board of Management (BoM) and Board of Directors (BoD) by age group in 2024 BoM (%) BoD (%) < 30 years 0 0 30-50 12.5 0 > 50 years 87.5 100 Board of Management (GOV-1) The members of the Board of Management at the end of 2024 were Håkan Agnevall (President & CEO); Arjen Berends (Executive Vice President and Chief Financial Officer); Tamara de Gruyter (President, Portfolio Business and Executive Vice President); Kari Hietanen (Executive Vice President, Corporate Relations and Legal Affairs); Roger Holm (President, Wärtsilä Marine and Executive Vice President); Anders Lindberg (President, Wärtsilä Energy and Executive Vice President); Teija Sarajärvi (Executive Vice President, Human Resources); Anu Sirkiä (Executive Vice President, Marketing and Communications). The members of the Board of Management are appointed by the company’s Board of Directors, which also approves their remuneration and other terms of employment. The Board of Management is chaired by the President & CEO, and all members are executives. There is no representation of employees or other workers in the Board of Management. The members of the Board of Management have diverse and extensive experience related to Wärtsilä’s strategy, both within the company as well as in relevant industries. Several members of the Board of Management have experience in Wärtsilä of over 20 years, providing the Board of Management with ample expertise on Wärtsilä's sector, products and geographic locations. Roles and responsibilities of the Board of Management The President & CEO The Board of Directors appoints a President for the Group, who is also its Chief Executive Officer. The President & CEO is in charge of the day-to-day management of the company and its administration in accordance with the company’s Articles of Association, the Finnish Companies Act, and the instructions of the Board of Directors, and is assisted in this work by the Board of Management. Board of Management The members of the Board of Management are appointed by the company’s Board of Directors, which also approves their remuneration and other terms of employment. The Board of Management is chaired by the President & CEO. It considers strategic issues related to the Group and its businesses, as well as investments, product policy, and the Group’s structure and corporate steering systems. It also supervises the company’s operations. The Chief Financial Officer’s main areas of responsibility include group accounting and control, treasury (including project and customer financing), taxation, process development, corporate planning, and investor relations. The Executive Vice Presidents of the businesses are each responsible for the sales volumes and profitability of their respective global business, deploying the capabilities of the Group’s worldwide subsidiaries. The main areas of responsibility of the Executive Vice President, Corporate Relations & Legal Affairs are public and legal affairs, intellectual asset management and sustainability, environmental and occupational health and safety, as well as security, including cyber security. The Executive Vice President, Human Resources is responsible for people related processes. The main areas of responsibility of the Executive Vice President, Marketing and Communications are external and internal communications, as well as branding and marketing. Responsibilities for oversight of impacts, risks and opportunities (ESRS2, GOV-1) Impacts, risks and opportunities are governed by the Board of Directors and the Board of Management. The Board of Directors is responsible for the strategic management of the company and is assisted in its work by the Board Committees. The Board of Directors has the responsibility for oversight of the Group’s risk profile with regular reviews and it also oversees implementation of the sustainability agenda and reviews major related issues Financial review annually. The Board of Directors appoints annually an Audit Committee and a People Committee. The Board of Management reviews the most important risks and their mitigation plans, regularly gives guidance, and sets priorities as needed to ensure the sufficiency of risk management actions and controls. The Board of Management has also overall responsibility for sustainability performance and approves guiding group-level policies and action plans. The business and global function management teams ensure the execution of target actions. The Board of Management can leverage the corresponding expertise for each material impact, risk and opportunity through the different functions and businesses. For climate change, energy and pollution related topics, mainly the businesses’ strategic leads and technology departments, as well as the global functions of risk management, supply management and group sustainability, provide the Board of Management with the relevant expertise. For occupational health and safety topics the group sustainability function along with the businesses’ Quality, Environment, Health and Safety (QEHS) organisations provide the necessary expertise, and for skills and career development related issues the expertise comes from the global human resources organisation. Sustainability Governance Sustainability is governed by the Board of Directors and the Board of Management. The Board of Directors oversees implementation of the sustainability agenda and reviews major related issues annually. Wärtsilä’s Board of Management has overall responsibility for sustainability performance and approves guiding group-level policies and action plans. Wärtsilä's sustainability targets, and the company’s progress towards them, are reviewed by the Board of Management and Board of Directors at least once a year. The business and global function management teams ensure the execution of target actions. All the targets have nominated target owners, who prepare action plans, oversee their implementation, and report on the proceedings. In addition to the Board of Management’s weekly and monthly meetings, there are ten thematic Boards, as well as four Business Reviews a year for each business and three Functional Reviews a year for each Global Function. Sustainability issues are discussed within the Corporate Affairs Board, which is sponsored from the Board of Management by the Executive Vice President, Corporate Relations and Legal Affairs, and in Functional reviews. Sustainability-related issues for the Corporate Affairs Board meetings are prepared by the cross-functional Corporate Relations and Sustainability Committee. In 2024, the committee convened three times and the Corporate Affairs Board twice. Wärtsilä’s sustainability function is responsible for providing the necessary information to management, identifying development needs, as well as for coordinating sustainability programmes and preparing instructions. The function cooperates closely with the businesses, human resources, legal affairs and compliance, and central supply management. It also collects and consolidates sustainability data from the subsidiaries and is responsible for sustainability reporting. Risk management framework and governance Wärtsilä’s Board of Directors bears ultimate accountability for defining the Group’s overall risk appetite and tolerance level, and they have the responsibility for oversight of the Group’s risk profile with regular reviews. The President & CEO, together with the Board of Management, is responsible for setting the premise for a risk awareness culture at Wärtsilä, and for ensuring that risk management is deeply embedded in all operations and processes with the appropriate tools and resources. The Board of Management quarterly reviews the Group’s risk profile i.e. the most important risks and their mitigation plans, regularly gives guidance, and sets priorities as needed to ensure the sufficiency of risk management actions and controls. The businesses at Wärtsilä are responsible for performing according to their strategies and achieving their set operational and financial targets. Equally, the businesses and their management teams are responsible for the deployment of continuous risk management actions to identify, manage, and treat all material risks. This work is cascaded further down in the organisation to the business unit level and beyond. Each business presents its risk profile to the President & CEO, the Chief Financial Officer, and the rest of the Board of Management on a regular basis. The Corporate Risk Management function at Group Treasury is responsible for the enterprise risk management framework including the Global policy, risk reporting process, and for supporting the businesses and their underlying organisations in risk management. The function also leads the internal risk management peer group that, together with business representatives, ensures proper alignment, knowledge sharing, and the continuous improvement of risk management at Wärtsilä. Opportunity governance Strategy is governed by the Board of Directors and Board of Management. The Board of Directors reviews strategy annually and oversees its implementation monthly. Board of Management has overall responsibility for group strategy and execution. In addition to Board of Management’s weekly and monthly meetings, there is a specific thematic Board for strategy, as well as quarterly Business Reviews and three Functional Reviews annually to review strategy execution. The thematic Board for strategy is sponsored by the President & CEO. The business and global function management teams ensure their respective strategy execution. All the businesses have a clear profit and loss responsibility, enabling decisions to be made close to where the customer value is created. Material impacts, risks and opportunities addressed by the Board of Directors and Board of Management (ESRS2, GOV -2) Both Board of Management and Board of Directors consider the impacts, risks and opportunities as a part of their overall decision making process when overseeing strategy, its decisions on major transactions, and its risk management process. In addition, especially risks are considered in detail in the due diligence process accompanying every major transaction such as mergers and acquisitions. Every major decision includes considering trade- offs associated with the impacts, risks and opportunities. Major items on the agenda of the Board of Directors in 2024 included sustainability strategy and regulatory, technological and market developments. Assessing the progress of existing sustainability targets, like the Set for 30 Program, and reviewing new sustainability targets, as well as the implementation of the CSRD requirements have been an important part of the 2024 attention areas. Matters relating to the organisation, for example the Wärtsilä Code of Conduct, people processes and remuneration principles, and health and safety of personnel have been central priorities as well. Major items on the agenda of the Board of Management included occupational health and safety, sustainability strategy, sustainability targets and their follow-up, as well as risks related to those topics. Financial review Incentive schemes and remuneration policies linked to sustainability matters for the Board of Management (ESRS2, GOV-3) Board of Directors The members of the Board are not covered by incentive programmes and do not receive performance-based remuneration, nor do they have a pension scheme arranged by Wärtsilä. Board of Management Core elements of due diligence Paragraphs in the sustainability statement a) Embedding due diligence in governance, strategy and business model ESRS 2 GOV-2 : 1.3. Material impacts, risks and opportunities addressed by the Board of Directors and Board of Management; ESRS 2 GOV-3 : 1.3. Incentive schemes and remuneration policies linked to sustainability matters for the Board of Management; ESRS2 SBM-3, E1 SBM -3; E1 IRO-1; E2 IRO-1; S2 SBM -3 : 1.6. Results of double materiality assessment b) Engaging with affected stakeholders in all key steps of the due diligence ESRS 2 SBM-2 : 1.5. Stakeholder engagement; ESRS 2 IRO-1; E2 IRO-1 : 1.7. Description of the process to identify and assess material impacts, risks and opportunities; ESRS 2 MDR-P: 2.2.2. Policies on climate change; 2.3.1. Policies on pollution ; 3.2.1. Occupational health and safety policy ; 3.3.1. Policy on skills and career development; 3.4.1 . Polic y on value chain workers’ occupational health and safety c) Identifying and assessing adverse impacts ESRS2 SBM-3, E1 SBM -3; E1 IRO-1; E2 IRO-1; S2 SBM -3 : 1.6. Results of double materiality assessment d) Taking actions to address those adverse impacts ESRS 2 MDR-A: 2.2.3. Actions and resources related to climate change mitigation and adaptation ; 2.3.2. Actions related to pollution; 3.2.4. Health and safety actions ; 3.3.4. Action plans and resources to manage skills and career development; 3.4.4. Actions and resources on value chain workers e) Tracking the effectiveness of these efforts and communicating ESRS 2 MDR-M: after each metric; ESRS 2 MDR- T: 2.2.4. Climate change targets; 3.2.5. Safety target ; 3.3.5. Target for Individual Development Plan ; 3.4.5. Targets on value chain workers Due diligence mapping (ESRS 2, GOV -4) Long-term incentive (LTI) schemes are established and approved by the Board of Directors annually. Each incentive scheme comprises a Performance Share Plan (PSP) with a three-year performance period, designed to align the interests of participants with those of Wärtsilä’s shareholders. At the end of 2024, Wärtsilä had three active long-term incentive schemes including sustainability related targets for the Board of Management, for periods 2022-2024, 2023-2025 and 2024-2026. These incentive schemes measure Economic Value Added (EVA) and sustainability targets connected to Wärtsilä’s decarbonisation strategy, namely to become carbon neutral in the company’s own operations, and to have a product portfolio ready for zero carbon fuels. The People Committee reviews, and the Board of Directors approves, the scheme realization against the set targets before the pay-out. The pay-out is made shortly following the performance period and can be made in cash and/or in shares. The long-term incentive schemes for periods 2022-2024, 2023- 2025 and 2024-2026 are performance share plans. The participants are granted company shares if the pre-determined minimum level in company’s Economic Value Added (85% weight) and Sustainability targets linked to decarbonisation (15% weight) are reached, as well as employment requirement for the period is met. The number of shares depends on the level of achievement and is capped to 175% of the target level. There is also a cap set to the pay-out in relation to individuals’ base pay at grant date. On target level, the 2022-2024 scheme would entitle the participants to a total reward of 996,716 shares, the 2023-2025 scheme to a total reward of 1,636,801 shares and the 2024-2026 scheme to a total reward of 1,086,233 shares . In certain countries the equivalent reward would be settled in cash due to local legislation. The fair value of the share determined at grant date for accounting of 2022- 2024 scheme is EUR 9.53, of 2023-2025 scheme is EUR 7.82. and 2024-2026 scheme is EUR 13.32 . Financial review Risk management and internal controls over sustainability reporting (ESRS2, GOV-5) Internal controls over sustainability reporting are based on the identification and assessment of risks. The sustainability risk profile consists of findings from external and internal audits as well as process descriptions of material metrics and the assessment of related risks. The risk assessment related to sustainability reporting encompasses all phases of the reporting process, from preparing the reporting instructions and manuals, through data collection and calculation, to compilation of the sustainability report. The risks are identified for each process phase and prioritised based on their impact on data quality, timeliness of data availability, and the materiality of the information. Therefore, the risks that could affect the correctness and availability of the material information receive the highest level of scrutiny. Wärtsilä has defined and implemented controls at programme, topic and metric level. Control activities at different levels are needed to directly mitigate risks at the respective levels. Control activities include training, instructions, automated checkpoints, access controls, data reviews and the documentation of calculation principles. For critical risks associated with the accuracy and completeness of material information, enhanced controls are adopted. These can include, for example, cross-verification of data. Sustainability reporting is managed by the Group sustainability function. Environmental and partly social data are collected from subsidiaries using an online sustainability reporting system, for which each Group subsidiary has nominated a responsible person for the collection and consolidation of the data. Social data is collected also from HR data collection systems while economic data is based mainly on audited financial accounts. The sustainability function collects, consolidates and reviews the sustainability information and is responsible for preparing the Sustainability Statement. In addition, the sustainability function monitors the risks and internal controls of the reporting process and reports on the findings to the respective process owners or subsidiaries through info calls, KPI reporting or feedback discussions. The governance model adopted to ensure effectiveness of the internal control environment over sustainability reporting complies with Wärtsilä’s common principles. Audit Committee of the Board of Directors oversees the financial and sustainability reporting processes and monitors the assurance of the consolidated sustainability reporting. Audit Committee is regularly informed on the progress of the sustainability reporting and the assurance by the Public Affairs and Sustainability function and the assurance providers. In addition, Audit Committee assesses and assures the adequacy and effectiveness of Wärtsilä’s internal controls and risk management. The Internal Audit function assists the Audit Committee in this work by performing regular audits of Group legal entities, businesses, and support functions in accordance with its annual plan. Wärtsilä’s senior management regularly monitors the company’s overall sustainability performance. The Board of Management reviews the progress of the sustainability reporting, including the findings of the risk assessment and internal controls, in its periodic meetings. The Managing Directors of Group subsidiaries are responsible for ensuring that the subsidiary’s operations fulfil the requirements stipulated in the Group processes, including the quality and timeliness of sustainability reporting. 1.4. Strategy, impacts, risks and opportunities (SBM-1) Wärtsilä’s strategy, The Wärtsilä Way, remains intact. The company’s value creation potential is based on two key strategic themes: Transform and Perform. Transform refers to attractive growth opportunities at the centre of the decarbonisation transformation by leveraging growth in electricity generation, balancing power, greener marine transport and related service businesses. The Perform theme centres around a clear path for operational improvements and increased profitability, leveraging on market growth and the company’s commitment to financial and sustainability targets. Wärtsilä’s purpose, to enable sustainable societies through innovation in technology and services is well connected to the Transform and Perform themes. The company’s five strategic priorities emphasise customer value, high-performing teams, decarbonisation, service growth, and continuous improvement. Wärtsilä’s most significant sustainability related goal for its products is the target to provide a product portfolio ready for zero carbon fuels by 2030. Carbon neutral fuels can be used already today, and the development of the product portfolio further continues so that zero carbon fuels, such as for example, ammonia and hydrogen, can be widely used by 2030. The most important product groups in this regard are related to power generation, i.e. engines and their auxiliary equipment. Wärtsilä Marine is a major actor in power supply, propulsion and lifecycle solutions for the maritime sector. The company develops industry-leading technologies, that enable the maritime industry transition to new fuels and a net zero GHG emissions future. Wärtsilä offers a comprehensive portfolio of maritime products, including fuel flexible engines, fuel supply systems, propulsion systems, electrical systems for hybrid and full electric vessels, shaft line solutions, exhaust gas treatment - including on-board carbon capture, and digital technologies such as fleet optimisation solution, which delivers the efficiency, reliability, safety, and environmental performance the maritime industry requires. Wärtsilä also offers maintenance services supported by a global network of field services, workshops and expertise centres, spare parts logistics centres as well as advanced digital capabilities. The maintenance agreements are configured to address customers' most pressing individual needs, including performance-based agreements focused at minimising fuel consumptions and emissions, while maximising asset reliability and uptime. Wärtsilä can improve efficiency and environmental performance of existing fleet through a wide range of retrofit packages including energy saving devices, shore power, hybridisation, power derating and engine upgrades. Wärtsilä Decarbonisation Services offering includes analysis of current fleet focusing on environmental compliance or decarbonisation modelling based on real operational data to see how vessel is currently operated and an evaluation of which would be needed solutions to reach compliance. Wärtsilä Marine provides solutions for the entire Marine industry, and leads the industry in the high-end vessel segments, such as passenger vessels, LNG carriers, special purpose vessels, and offshore. Wärtsilä puts a strong focus on being close to ship operators throughout the entire vessel lifecycle, starting as early as the vessel design stages by advising on optimal and most sustainable technical solutions, through construction for integration and commissioning, up until vessels’ lifetime with Wärtsilä agreements and retrofit solutions. The company manufacturing and assembly model is asset-light. A strong focus is put on developing long-term relationships with the global network of suppliers, which includes approximately 5,500 global direct procurement suppliers. Financial review Wärtsilä Energy aims to lead the transition towards a 100% renewable energy future. Wärtsilä helps societies and customers to accelerate their decarbonisation journeys through the company’s market-leading renewables balancing technologies and power system modelling expertise. Wärtsilä Energy’s solution portfolio covers lifecycle and decarbonisation services, sustainable fuel enabled power plants, and energy storage and optimisation technology, including the GEMS Digital Energy Platform. Wärtsilä’s R&D has a focus on sustainable fuels, ensuring that there are future-proof engines available that can be converted to run on sustainable fuels such as green hydrogen and its derivatives, when they become available. Wärtsilä Energy’s lifecycle services are designed to guarantee operational performance, increase efficiency, promote reliability, and ensure availability and optimisation of assets. Wärtsilä Energy’s track record comprises 79 GW of installed power plant capacity and 130+ energy storage systems delivered to 180 countries around the world. In the Engine Power Plant business Wärtsilä operates as an OEM (Original Equipment Manufacturer) and service provider. This includes the design, manufacturing, and supply of engines and power plants, and providing spare parts and lifecycle services to customers. The main customer segments are utilities, Independent Power Producers (IPP), and industrial companies generating power for energy markets, end-users, or for own use. In the Energy Storage and Optimisation business Wärtsilä operates as a system integrator by providing battery energy storage solutions and lifecycle services. This includes procurement and integration of battery modules, equipment, battery management and power conversion systems to Wärtsilä-designed energy storage hardware, installation, and optimisation of assets. Energy Storage and Optimisation business focuses on large-scale battery energy storage system projects with customers that value safety and reliability in selected target markets. Overall, Wärtsilä Energy’s solutions enable customers to supply energy reliably, gain benefits from flexibility, and advance in the energy transition. To support its geographically dispersed customer base, Wärtsilä’s sales and service network covers more than 230 locations in 77 countries around the world. Wärtsilä operates primarily through its subsidiaries and strategic joint ventures. Wärtsilä’s personnel is made up of approximately 18,900 employees comprising 128 nationalities. By recruiting and retaining the best possible talent, Wärtsilä can be a valued business partner to its customers, and the employer of choice for current and future employees. Wärtsilä is committed to conducting its business in a responsible manner and requires its suppliers and business partners to follow the same high legal and ethical standards and business practices. Wärtsilä’s revenue in 2024 was EUR 6,449 million. At the end of 2024, Wärtsilä had 18,913 employees. MEUR Marine Energy Portfolio business Total Net sales 3,053 2,690 706 6,449 Market area Headcount of employees Global 18,913 Europe 11,532 Asia 4,006 Americas 2,514 Other 861 Accounting principles for employees Data on Wärtsilä employees is reported as headcount at the end of the reporting period and is mainly derived from the global Employee Central SuccessFactors. Less than 1% of employees, the amount varying between indicators, don’t have all their employment details in the global HR databases. No measurements of the metrics are validated by an external body other than the assurance provider. Supply chain management Suppliers and business partners are an important and integral part of the total value chain for Wärtsilä’s products and services. The supply base is extensive with almost 24,000 active suppliers, with most key suppliers being located in Europe. Wärtsilä expects and takes measures for its suppliers to conduct their businesses in compliance with the same high legal and ethical standards and business practices as its own. Wärtsilä has mandatory supplier requirements for areas of compliance with legislation, environmental aspects, quality, occupational health and safety management, social performance, and cyber security. Compliance with these requirements is assessed, both in the selection and onboarding of new suppliers, as well as in the company’s continuous supplier performance management. The supplier requirements are included in the standard supply agreements. In addition, Wärtsilä has product and service-specific requirements, for which compliance is assessed as part of the above-mentioned continuous supplier performance management process. In the supplier assessment, Wärtsilä utilises a number of methods and tools. These include online and offline questionnaires, global database searches, onsite evaluations, and various audits, which are completed with mitigation plans being made together with the suppliers for any findings identified. The supplier assessment is completed with a supplier rating being applied. The responsible category management teams carry out the assessment together with other functions within Wärtsilä and with the suppliers. Activities in fossil fuel, chemical, controversial weapons or tobacco industries Wärtsilä is not active in the fossil fuel, chemicals production, controversial weapons or tobacco industries. 1.5. Stakeholder engagement (ESRS2 SBM-2) Active engagement with Wärtsilä’s stakeholders is vital for the development of the company’s business activities, as well as for exchanging information, building long-lasting relationships, and contributing to sustainable societies. At the corporate level, Wärtsilä’s most important stakeholders are customers, personnel, investors and financiers, suppliers, media, and local societies. Wärtsilä subsidiaries define their own primary stakeholders. In addition to those mentioned above, these typically include residents close to production plants, educational institutes, and public authorities. Wärtsilä engages with its stakeholders in numerous ways, including meetings and events, joint projects, communication channels, and collaboration platforms. Wärtsilä also participates and holds memberships in organisations that are significant to the company’s business strategies and markets. Wärtsilä engages in activities organised by various international and national organisations and associations through the daily work, board and working group activities, as well as meetings, seminars, and conferences. In addition to regular meetings, dedicated communications, workshops, joint projects and social media channels, each year, Financial review Wärtsilä’s representatives meet customers at global industry- related events, including international and national seminars, exhibitions, and conferences. The company also has a customer feedback system and continually arranges customer satisfaction and quality surveys. Dialogue with employees takes place in many formats. These include discussions, communication channels, meetings, and events. In relation to occupational health and safety, local health and safety committees, made up of company management and personnel representatives, are the main means for local dialogue. Every Wärtsilä employee has access to Wärtsilä WeCare reporting system, a global application for reporting occupational health and safety incidents, near miss cases, unsafe conditions and safety observations, both negative and positive. The data collected is utilised locally to improve, and when needed to remedying the situation, as well as consolidated and analysed on regional, business and global levels by EHS professionals and responsible management representatives. Other ways for employees to give their input are the global MyVoice survey conducted every two years, as well as pulse surveys conducted regularly. The MyVoice and pulse surveys also convey employees’ views and interests about skills and career development. In addition, Wärtsilä's European Works Council handles issues that affect at least two Wärtsilä companies located in the EU and those affecting the Group as a whole. Wärtsilä interacts regularly with investors and financiers during roadshows and meetings to present the company and its business model, strategy, and financial performance. Wärtsilä publishes annually several reports: two interim reports, a half-year financial report, a financial statements bulletin, an annual report, and stock exchange releases to provide accurate, sufficient, and up-to-date information on the development of Wärtsilä’s business operations, strategy, markets, and financial position. Wärtsilä’s website is the main channel for up-to-date information, providing equal access to all investors. Furthermore, Wärtsilä’s top management and the Investor Relations (IR) team conduct regular discussions, and host events with analysts and investors, both globally and locally. Wärtsilä also aims to have close and excellent relationships with key suppliers around the world. Apart from financial benefits, engaging closely with suppliers stimulates knowledge sharing, creates an environment of innovation, and allows strategic suppliers to integrate more strongly into the company’s value chain. In addition to periodical supplier assessments conducted at minimum every three years, Wärtsilä is in regular dialogue on their performance, provides development support and arranges Supplier Days. If during supplier visits or audits non-compliances related to occupational health and safety are discovered, corrective actions are required. Although listening to suppliers’ needs is very important for a fruitful cooperation, the views and interests of value chain workers cannot be claimed to have a direct impact on Wärtsilä’s strategy or business model. Wärtsilä does not consider that its strategy and business model play a role in creating, exacerbating or mitigating significant material impacts on value chain workers. Wärtsilä interacts actively with trade media, as well as with general/financial media. Topics related to the company’s sustainability work are a common interest. Wärtsilä regularly arranges interviews for the media with company experts. Moreover, the company’s experts meet trade press representatives at exhibitions/webinars. Annual surveys are conducted among business journalists, and quarterly media visibility and share of voice reporting. Wärtsilä also aims to contribute towards the well-being of the local communities where it is present. The means for this include, for example, creating employment, providing training and education to employees, co-operating with local stakeholders, and supporting local development. The company also engages with public officials on issues such as the environment and occupational health and safety, holds open door days, gives sponsorships to e.g. local youth and educational activities, and conducts local communications. Approach to stakeholder engagement The core purpose of stakeholder engagement is understanding the needs of Wärtsilä’s stakeholders and also learn of most effective ways to meet those needs. The way Wärtsilä sees the most important needs of its stakeholders in relation to the company’s activities, and Wärtsilä’s approach to meeting those needs, can be summarised in a following manner: Customers : Customers in both marine and energy markets aim to succeed in their endeavours, and Wärtsilä customers’ success is the way for Wärtsilä to be successful. In order to support the company’s customers succeeding, Wärtsilä must truly understand their businesses, and an important part of this is listening and talking with them. This means, that engaging with the customers actively is a crucial part of having a fruitful strategy and business model in place, as well as for having the ability to modify them when the customers’ needs evolve. Wärtsilä has recognised that through regulatory developments and the customers’ needs, supporting its customers in decarbonising their operations through having reliable and efficient solutions is one of the key factors for the customers’ success, which in turn enables Wärtsilä’s success. Employees : Innovating in sustainable technology and services to help Wärtsilä’s customers continuously improve their environmental and economic performance requires engaged and highly competent workforce. Wärtsilä’s employees are pivotal to the performance of Wärtsilä and its long-term success. Based largely on the feedback from the employees, Wärtsilä has concluded that the company’s People Strategy should be built on four main pillars called People Priorities are: Fostering continuous learning, creating an inclusive culture, building leadership for impact, and matching the right talent to the right roles at the right time. It is the company’s understanding that striving for these goals makes Wärtsilä an attractive employer for current and future employees and ensures that Wärtsilä has people with the required competences and motivation. Wärtsilä is committed to creating and maintaining a safe and healthy workplace for its employees, contractors and other partners, wherever the company operates. Investors and financiers : Having active engagement with investors and financiers gives valuable input about their views on Wärtsilä's strategy and its implementation. Wärtsilä regularly requests feedback from investors and analysts in connection with meetings and events in order to better understand their views and potential concerns. Based on the received feedback, Wärtsilä can improve its disclosure and materials in order to provide a good understanding of Wärtsilä's strategy. Wärtsilä’s events are available and open for the whole investor community. The summaries of key messages and questions and answers related to events are published on its website. Suppliers : The continuous engagement with suppliers ensures that Wärtsilä is aware and up-to-date on especially the key suppliers’ capabilities in delivering the goods and services according to Wärtsilä’s requirements. Through this collaboration detailed understanding is gained of i.a. their technical capabilities, capacity restrictions, as well as potential risks to their Financial review corresponding supply chain. Wärtsilä actively works with the suppliers aiming to support them where possible, however, when recognising risks which may not be mitigated sufficiently through the collaboration, Wärtsilä may consider other options how to overcome those by e.g. diversifying the supplier base. This is a continuous process which is always considered case by case. Media : Interacting actively with media provides Wärtsilä with a valuable way to communicate the company’s purpose, strategy, and how the company approaches reaching its strategic goals. It also works the other way by giving the company input on how the general public sees Wärtsilä’s activities, and in case there are negative viewpoints Wärtsilä can either clarify misunderstandings or take them into account in its strategy or business model development going forward. Local communities : Similarly, engaging actively with the representatives of the local societies informs Wärtsilä about their views on how the company conducts its business activities. If it turns out that the company is locally seen as having the possibility to improve its way of working Wärtsilä may gain valuable insight on how to develop the company’s activities and thus strengthen its license to operate. This both ensures fulfilling all the local regulatory requirements as well as improving Wärtsilä’s reputation which is important for i.a. recruiting local employees. Wärtsilä’s Board of Management and Board of Directors are informed about views and interests of affected stakeholders with regard to sustainability-related impacts through various means. Generally speaking, the Board of Directors receives information from all relevant topics mainly from the Board of Management. The Board of Management meets key customers regularly to discuss the relationships holistically, and sustainability related topics are almost always on the agenda. They are informed about views and interests of other customers by the businesses’ sales organisations through business management teams, leaders of which are members of the Board of Management themselves. Especially the customers’ decarbonisation activities and how Wärtsilä can support those are often on the agenda of such meetings, but many other sustainability topics are often covered as well. Wärtsilä employees’ views and interests are collected globally through MyVoice survey which is conducted every two years, and this survey includes also sustainability related matters. There are also Pulse Surveys conducted more often, usually every six months, to gather employees’ views and interests on more specific topics. These results are consolidated and analysed, and they are provided to the Board of Management by the Executive Vice President, Human Resources. The Board of Management utilises this information in making strategic decisions related to employees’ working conditions, health and safety and wellbeing, among other topics. The Board of Directors’ People Committee made up of three of its members reviews the organisation’s development needs and corporate culture alignment with strategy, monitors talent management processes and strategies, as well as reviews leadership development strategies and succession plans. The People Committee arranges its own meetings where relevant people from the Group Management are invited based on identified needs case by case. The Board of Management receives an investor relations-report twice a quarter from Investor Relations team, which consolidates received feedback and views from meetings and discussion with the investor community. The Board of Management also receives comments from important investors when they arise. In addition, the members meet investors and participate in investor and financier events actively by giving presentations and sharing Wärtsilä’s views on sustainability related issues among others. Suppliers’ views and interests, including those related to sustainability, are mainly gathered through continuous supplier assessments and audits, in regular business dialogue, and through Supplier Days. Supply Management function reports on the most salient issues to the board of Management. It is also worth mentioning that in the customer – supplier relationship the clear majority of the requirements are nominated by the customer, in this case Wärtsilä. Where there any requirements from suppliers, they will naturally be taken into consideration in business dialogues as well. Media’s views and interests are taken into account by the Board of Management mainly by the information gathered and provided by the Marketing and Communications function, the Executive Vice President of which is a member of the Board of Management. Naturally, both the Board of Management’s and Board of Directors’ members follow relevant media channels actively themselves, and in case of Wärtsilä they are very often related to sustainability matters. When it comes to local communities, sustainability related issues vary greatly from country and location to another, and it is the local management’s role to stay informed about both the local authorities’ as well as residents’ views and interests on sustainability related issues, which are in turn communicated to the higher levels in the relevant Businesses. Each Business head is a member of the Board of Management, and it is that person’s responsibility to inform the rest of the Board members in case a topic is seen as having sufficient importance for the Board of Management to consider. 1.6 . Results of double materiality assessment (ESRS2 SBM-3, E1 SBM-3; E2 IRO-1; S2 SBM-3) Wärtsilä has identified as its most material sustainability matters being related to greenhouse gas (GHG) emissions, energy consumption, air pollution, substances of concern, occupational health and safety, and skills and career development. These sustainability matters are covered in the following topical ESRS Standards: ESRS E1 Climate change, ESRS E2 Pollution, ESRS S1 Own workforce and ESRS S2 Workers in the value chain. The impacts, risks and opportunities included in this statement are covered by the ESRS Disclosure Requirements, and thus Wärtsilä has not created any entity-specific disclosures. Material impacts, risks and opportunities Climate change Looking at Wärtsilä’s most material impacts on environment, climate change related GHG emissions is clearly the most important area, along with the closely related topic of energy consumption. The impacts are mainly due to Wärtsilä engines consuming fuels and emitting GHG when in use either in a vessel or a power plant. On top of the downstream emissions that Wärtsilä’s products generate, its supply chain generates meaningful amounts as well, while they are still small compared to the use phase. According to several lifecycle assessments conducted on Wärtsilä engines in various setups in different types of vessels and powerplants, the results consistently show that over 99% of their lifecycle GHG emissions when running on fossil fuels arise during the operation phase of their long lifetimes of 25 – 30 years. Wärtsilä’s own operations also lead to GHG emissions, but they are in turn smaller than its supply chain’s. Many Wärtsilä decarbonisation-related solutions have a positive impact on the overall GHG emissions of its customers, such as biogas solutions, Financial review digital voyage optimisation, decarbonisation services, and battery energy storage and system optimisation solutions. The convertability of Wärtsilä’s engines and auxiliary systems to run with several zero-carbon fuels in the future enables customers to already plan on moving to such energy sources, reducing the risk of stranded assets. Material impacts, risks and opportunities in Wärtsilä’s value chain ESRS Topic ESRS Sub-topic Impact, risk or opportunity Desription of impact, risk or opportunity Location in value chain Expected time -horizon Upstream Own operations Down- stream Short Medium Long E1 Climate change Climate change mitigation Opportunity Opportunity related to decarbonising customer operations X X Actual negative impact Impact of GHG emissions from product use and supply chain X X X X X Energy Actual negative impact Impact of energy consumption in product use X X X X E2 Pollution Pollution to air Actual negative impact Impact of pollution to air from product use X X X X Substances of concern Risk Risk related to potential ban on substances in products X X X Actual negative impact Impact of hazardous substances used in products in supply chain and end-of-life X X X X X S1 Own workforce Occupational health and safety Actual negative impact Impact of OHS hazards in own operations X X X X Training and skills development Actual positive impact Impact of employee skills and career development X X X X S2 Workers in the value chain Occupational health and safety Actual negative impact Impact of OHS hazards in supply chain X X X X Even though in the double materiality assessment climate related risks were not assessed as exceeding the materiality threshold Wärtsilä has conducted a resilience analysis covering all Wärtsilä’s operations including its upstream and downstream value chain by implementing the recommendations of the Task Force on Climate- Related Financial Disclosures (TCFD). The analysis included two climate scenarios, “Very low Greenhouse Gas (GHG) emissions scenario ”which starts from the assumption that the global average temperature will be limited to 1.5°C above preindustrial levels by 2100, and “Very high GHG emissions scenario”, which assumed that global GHG emissions will keep increasing at the current rate, leading to a minimum 4°C increase in global average temperatures by 2100, compared to pre-industrial levels. The time horizons considered in the analysis were short: year 2025, medium: year 2030, and long: year 2050. While the energy consumption as such does not create a meaningful financial risk for Wärtsilä, the GHG emissions do, although not amounting to a material risk according to the double materiality assessment. First and foremost are the transition risks in the area of legislation, in practice stricter GHG emission regulations, including a potential ban on the use of fossil fuels. Other transition risks in this field include competitors commercialising similar technologies faster or more successfully than Wärtsilä, or even creating new, disruptive technologies that could compete with Wärtsilä’s product portfolio. A third transition risk area identified is raw material cost and availability, which may stem from the global green transition leading to scarcity of certain materials as well as climate change related regulations such as the EU Carbon Border Adjustment Mechanism (CBAM). Wärtsilä has also identified two main physical climate risks to its facilities and employees: increased global average temperatures, and an increased frequency and intensity of heatwaves and flooding due to extreme precipitation events. However, altogether they still do not create a major financial risk to Wärtsilä. Climate change, on the other hand, is seen as creating major, material opportunities for Wärtsilä through its strategy’s main pillar of decarbonising marine and energy industries. While the transitional regulatory risks clearly exist, the continuously tightening GHG emission regulations create significant opportunities for Wärtsilä already today in providing customers with decarbonisation solutions on a wide front, and Wärtsilä sees this at the core of its strategy also going forward. Although the impacts of GHG emissions keep building up, there is uncertainty related to the speed of regulatory developments in the future, especially in the longer time horizon, which will have an effect on both the risks and opportunities in this area. Overall, at the moment, Wärtsilä estimates both the risks and opportunities as generally increasing in the short to medium time horizon, and further to long time horizon. The company also sees attracting and retaining talented employees due to its climate change mitigating profile and brand image as an opportunity. Currently the effects of the impacts, risks and opportunities related to climate change are all intertwined. The impacts of GHG emissions of all human activity, where Wärtsilä is a part of, lead to climate change, which creates the need for regulatory bodies Financial review around the world to adopt ever stricter regulations limiting GHG emissions, which in turn leads to customers in both marine and energy industries needing to decarbonise their activities. Wärtsilä’s business model has remained largely similar for some years, and the company’s strategic response to both transition risks and opportunities related to climate change is similar: Its extensive R&D investments towards developing low emission technologies both prepares Wärtsilä for the tightening GHG emission regulations and gives the company a competitive advantage. The rigorous R&D activities will continue generating substantial costs for Wärtsilä, but at the same time will improve its future business potential. Substances of concern Substances of concern and substances of very high concern have been assessed as a material impact related to Wärtsilä’s business activities. Substances of concern can cause adverse effects on humans or the environment at any point in their life cycle: during extraction, production, use, or finally as waste. There are thousands of these substances identified to be harmful to different degrees and some of these substances of concern are present in Wärtsilä products. Wärtsilä has assessed that the main impact of these substances takes place downstream from Wärtsilä, i.e. at the end of the products’ lifecycles when they are dismantled and given end-of-life treatment, where there is a potential health risk to the workers, as well as a risk of environmental contamination if the waste treatment is not performed according to applicable environmental protection standards. Wärtsilä eliminates and restricts certain substances of concern in its products to comply with EU REACH and international regulations (e.g. International Maritime Organisation (IMO) regulations) and provides its customers with information on the substances of very high concern in the products. The negative impacts caused by these substances are greater in the company’s supply chain than in Wärtsilä’s own operations. Wärtsilä´s policies to restrict substances of concern in Wärtsilä products are valid also to Wärtsilä´s suppliers. Of all the topics assessed in the double materiality assessment the substances of very high concern is the only one seen as creating a material financial risk for Wärtsilä. The risk arises from the proposal to restrict per- and polyfluoroalkyl substances (PFAS) in the EU/EEA. An initial open consultation on the restriction dossier was completed in September 2023, and the European Chemicals Agency’s (ECHA) scientific committees are now conducting risk assessment and socio -economic analysis. Wärtsilä has participated in the consultation process and explained that the PFAS -containing fluoropolymer materials are present in Wärtsilä´s components to guarantee the safety and reliability of the products. PFAS materials are essential in eliminating leakages of flammable or toxic fuels, preventing fires in electrical systems, securing energy generation in critical applications, and ensuring the maneuverability of marine vessels. Failures in these critical components could lead to severe consequences, impacting human lives and the environment. In many Wärtsilä applications, there are no alternative materials available that can fulfill the stringent safety and reliability requirements. PFAS containing fluoropolymer materials are also needed in developing technologies that enable reaching the EU and global decarbonisation goals. Wärtsilä has requested exemptions and the maximum derogation time for fluoropolymers and perfluoropolyethers in Wärtsilä applications. In the unlikely event that the PFAS included in Wärtsilä’s products would be banned without any exemptions or time-limited derogations, this would create a very significant risk to Wärtsilä. This would prohibit many of the company’s core products from being manufactured or sold eventually. In the short term, the risks related to substances of concern is deemed low but will increase greatly in the medium and long-time horizons. In preparation for this risk Wärtsilä will search for alternative materials and products to replace the ones containing substances of concern. Pollution Pollution of air, water and soil was also assessed as a material impact related to Wärtsilä’s business activities. Pollution, which excludes GHG emissions, for Wärtsilä means mostly air pollution, part of which also end up in water bodies or soil. Similarly as with GHG emissions, lifecycle assessments show that the clear majority of these are emitted during the products’ use phase, mainly by engines in customer vessels or power plants. In other words, although there certainly is pollution emitted along the supply chain, and also in Wärtsilä’s own operations, most of the pollution in the value chain originates from downstream in customer use. Taking this into account, Wärtsilä did not use external consultations nor conduct site -specific assessments for pollution, while it should be noted that all Wärtsilä production sites and workshops follow the local regulations and environmental permits in their operations. Through developing more efficient products as well as emissions reduction technologies, the impacts are expected to reduce from short to long time horizon. Occupational health and safety Occupational health and safety is an area where Wärtsilä assesses its business operations are having a material impact on people. In the industries where Wärtsilä operates, there are material health and safety risks along the value chain. Wärtsilä’s own operations at production facilities and workshops, as well as at shipyards and customer installations, inherently involve health and safety hazards to Wärtsilä’s own workforce, mainly blue-collar workers. This understanding does not have a direct impact on Wärtsilä’s strategy or business model but requires that processes are in place to minimise the hazards and ensure employee safety. Wärtsilä is working continuously to improve occupational health and safety processes and ways of working, and thus the negative health and safety impacts are expected to decrease continuously over time. Suppliers and business partners are an important part of the total value chain for Wärtsilä’s products and services. The supply base is extensive with almost 24,000 active supplier accounts. The company expects and takes measures for its suppliers to conduct their businesses in compliance with the same high legal and ethical standards and business practices as Wärtsilä. Wärtsilä has not developed an understanding on specific types of workers particularly at risk in the supply chain, but generally assumes that the main health and safety impacts apply to workers doing manual labour. Wärtsilä’s assessment is that the negative health and safety impacts of value chain workers mostly occur in operations such as raw material extraction, processing of the raw materials in multiple phases, manufacturing components, and all the way until logistics suppliers’ deliveries to Wärtsilä. Value chain workers are subject to health and safety impacts also when working on Wärtsilä project sites on shipyards, at power plants or energy storage sites, where Wärtsilä’s operational control varies based on the project scope. At sites where Wärtsilä has operational control, the same health and safety standards apply to external workers as own employees. In cases where another entity is controlling the working environment Wärtsilä’s possibilities to affect the working conditions are more limited. However, Wärtsilä has set guidelines for operations at customer premises and expects that its employees and contractors follow Wärtsilä health and safety standards and ways of working. Everyone working for Wärtsilä has the responsibility and authority to intervene and stop work in an unsafe situation. Downstream, the employees of Wärtsilä’s customers, as well as the workers handling the end-of- Financial review life treatment of the products, are also subject to health and safety impacts. These impacts are influenced by Wärtsilä’s ability to design and produce safe, quality products. Skills and career development The last material topic for Wärtsilä is ‘skills and career development’, an area where the impact mainly is on Wärtsilä’s employees. In CSRD terms the material impact is related to professional growth and non-discrimination. Possessing the essential skills to perform one's job effectively and safely is pivotal to the company's success. Also, providing Wärtsilä’s employees with career development opportunities is a critical factor in attracting and retaining talent in the company. Skills and career development are interconnected, as one needs to continuously develop new skills to be able to take on more challenging tasks. Wärtsilä aims at strengthening the continuous learning mindset and enable fair and non-discriminating opportunities to encourage professional growth and to recruit and retain talent in the company, which is believed to further improve the impact in this area going forward. 1.7 . Description of the process to identify and assess material impacts, risks and opportunities (ESRS2 IRO-1; E2 IRO-1) Wärtsilä conducted its first Double Materiality assessment in 2023. In the assessment the company endeavored to mark out what sustainability matters are most significant for Wärtsilä in the sense of its impacts on people or the environment, and which create the greatest risks and opportunities for it. The process was divided into three phases, each of which involved a varying group of internal experts and leaders to ensure having all the necessary knowledge and strategic insight available for the process to properly evaluate the wide range of different aspects in the field of sustainability. The process was led by the group sustainability function, which conducted the first phase of setting the context internally. In addition, group sustainability collected and analysed the stakeholder views as well as the information from the enterprise risk management system and compliance data for the second phase. They also created the evaluation process for the third phase. The process did not focus on specific activities, business relationships, geographies or other factors that give rise to heightened risk of adverse impacts due to Wärtsilä’s global presence and various business activities. The double materiality assessment process was created by Corporate Sustainability function, and reviewed by Board of Management and Audit Committee of Board of Directors. The results for the double materialty assesment and proposal for the threshold were approved by Board of Management, Audit Committee of Board of Directors, and finally by the Board of Directors. The first phase was setting the sustainability context for Wärtsilä. It included mapping of sustainability aspects and impacts on a general level over Wärtsilä’s value chain, considering extractive industry, suppliers, service providers, contractors, business partners, logistics partners, Wärtsilä’s own operations, customers and end-of-life service providers. The mapping results were compared with the list of European Sustainability Reporting Standards (ESRS) matters, and at this phase certain obviously irrelevant topics were removed from further assessment. Here it was also considered whether any entity-specific topics were necessary to be created, but no need for such was found. The second phase was mapping of potential sustainability aspects for the final phase of detailed evaluation. In this phase the key stakeholders for Wärtsilä were decided on, and information on their interests on Wärtsilä were collected in relation to the various sustainability matters through a questionnaire to internal key stakeholder contacts. External experts were not consulted. Here impacts having strategic importance to Wärtsilä were also identified, as well as recognized risks and opportunities. The third and final phase was to conduct a detailed materiality assessment for the list of potential material aspects. This was done through a series of workshops involving people from various relevant functions in Wärtsilä, in which the company’s impacts on environment and people were assessed, as well as relevant risks and opportunities. Certain assumptions were applied in the process, main ones being that the climate change will keep on developing roughly along the current lines; that the international regulatory environment related to climate change will keep tightening; and that the regulations related to hazardous substances will become stricter in the future. In the assessment the sustainability impacts, risks and opportunities were assessed by the various criteria required, and each impact, risk and opportunity ended up with a specific value. For each sustainability aspect, first the impacts were assessed, followed by the related risks and opportunities caused by those impacts. Then risks and opportunities were assessed separately from the impacts in the sense that a risk or opportunity related to a topic may arise independently from Wärtsilä’s impacts on the topic. For the impacts, upstream, own operations and downstream were each evaluated separately on their scale, scope, irremediability and probability were assessed on a scale of 1-5, and for risks and opportunities their likelihood and potential magnitude also on a scale of 1-5 each, per three time horizons. All the relevant sustainability risk areas were assessed in cooperation with Corporate Risk Management function, by using the same evaluation scales as in the Enterprise Risk Management system (ERM). Risks identified in the ERM were also taken into consideration in the double materiality assessment. The input for opportunities’ evaluation came mainly from the participating strategy leaders from the Businesses. A threshold was set for the final values for impacts, risks and opportunities, and the ones exceeding the threshold were deemed material. Finally, the material sustainability aspects were compared to the list of sustainability topics in the ESRS Standards to define the reporting content based on the double materiality assessment. The list of material topics identified in the double materiality assessment are also used as the basis for setting corporate level targets and related action plans where deemed necessary. ESRS 2 Appendix C: IRO-1 Additional double materiality assessment information related to certain non-material topics: ESRS E3 Water and marine resources Non-material topic. The double materiality assessment did not include detailed screening of Wärtsilä’s assets and activities in order to identify its actual and potential water and marine resources-related impacts, risks and opportunities in its own operations and its upstream and downstream value chain, as the topic was excluded in an early phase of the process from detailed assessment. No consultations were conducted related to water and marine resources. ESRS E4 Biodiversity and ecosystems Non-material topic. The double materiality assessment did not include detailed assessment of actual and potential impacts on biodiversity and ecosystems at own site locations and in the upstream and downstream value chain, dependencies on biodiversity and ecosystems, transition or physical risks and opportunities related to biodiversity and ecosystems, systemic risks, consultations with affected communities. Wärtsilä has two sites near bio-diversity sensitive areas: One in Italy, Trieste, which Financial review is located adjacent to a protected area of high biodiversity value, and another on in Le Havre, France, which is located six kilometers from such protected area. Neither site has been identified as having any impact to the protected areas. Thus it has been concluded that it is not necessary to implement biodiversity mitigation measures. ESRS E5 Resource use and circular economy Non-material topic. The double materiality assessment did not include detailed screening of its assets and activities to identify its actual and potential impacts, risks and opportunities in its own operations and its upstream and downstream value chain. No consultations were conducted related to resource use and circular economy. ESRS G1 Business Conduct Non-material topic. The double materiality assessment was based on considering unethical conduct related to i.a. corruption, anti- competitive behaviour or trade sanctions evasion. Location, activity, sector or the structure of a specific transaction were not considered separately. 1.8 . Resilience analysis (E1.IRO-1) Resilience analysis In line with the double materiality assessment, where c limate change mitigation is seen as the only material opportunity for Wärtsilä, a resilience analysis was conducted on the company’s strategy. Although in the double materiality assessment climate related risks were not assessed as exceeding the materiality threshold, Wärtsilä has evaluated its climate related risks in the resilience analysis. The resilience analysis is intended to cover all Wärtsilä’s operations and sites. The analysis was first conducted during 2023 by implementing the recommendations of the Task Force on Climate-Related Financial Disclosures (TCFD) and the scenario analysis was updated in 2024. Scenario analysis The process of scenario analysis included the assessment of climate risks and opportunities through the review of relevant information, key stakeholder engagement in workshops and interviews, and a survey. An extensive list of chronic and acute physical, and transitional risks was considered to build a long list of climate-related topics, which was further reviewed to prioritise key risks and opportunities based on probability and impact. Two climate scenarios were built based on widely accepted, scientific scenarios (Intergovernmental Panel on Climate Change (IPCC)’s SSP) informed by data from other scenarios (NGFS and IEA). Three time horizons selected for the assessment were reviewed based on Wärtsilä’s business cycles, approach to budgeting and strategy planning. Scenario assessment for transitional risks was made qualitatively for both probability and impact, referring to socio -economic trends and available statistical data and information. For physical risks, in addition to above, statistical data was used to consider hazards (see below). Costs related to Wärtsilä’s climate mitigation activities were also considered, mainly caused by R&D efforts to develop products and solutions supporting Wärtsilä customers’ decarbonisation efforts. These costs are seen as crucial in ensuring Wärtsilä’s competitiveness going forward. Identification and assessment of climate-related risks and opportunities Those participated in the process included representatives from business strategy functions, key sites and operations including finance and risk management. Site interviews were conducted to better understand physical risks on Wärtsilä and its supply chains, based on the materiality and geographical locations. Wärtsilä’s whole product portfolio was considered in the assessment. The probability and impact over three time-horizons of transition and physical risks and opportunities were considered, taking into account regulatory developments, key industry trends, technology among other factors. For the physical risks of climate change, following information was also considered: ◾ Wärtsilä risk management function’s data-base on facilities globally; ◾ Analysis of material sites based on quantitative and qualitative information using the site level data based on coordinates and climate indices; and ◾ Interviews with representatives from most critical production sites. Physical risks related to upstream and downstream in Wärtsilä’s value chain were considered during the interviews with site and risk management leaders. Wärtsilä’s Business Continuity Plan, applicable to key suppliers and delivery centres, includes assessment of physical risks which can be caused by climate change, providing Wärtsilä with the understanding of physical risks facing them as well as to develop mitigation plans together with suppliers. Climate scenarios used The analysis included two climate scenarios developed by the IPCC. The scenarios were selected to present different ends of possible temperature pathways: Very low GHG emissions scenario which starts from the assumption that the global average temperature will be limited to 1.5°C above pre-industrial levels by 2100 (IPCC SSP1-1.9); Very high GHG emissions scenario : which assumed that global GHG emissions will keep increasing at the current rate, leading to a minimum 4°C increase in global average temperatures by 2100, compared to pre-industrial levels (IPCC SSP5-8.5). The ”Very low GHG emissions” scenario (SSP1-1.9) assumes i.a. that: ◾ extreme weather events may be common, but the effects of climate change are not likely to be critical, ◾ the average global sea-level rise will reach 0.28–0.55 m by 2100 relative to the 1995–2014 average; and ◾ rigorous and tightening regulations globally surrounding GHG emissions and relevant technologies and products contributing to GHG emissions The “Very high GHG emissions” scenario (SSP5-8.5) assumes i.a. that: ◾ extreme weather events are common and the impacts of climate change are likely to be critical; Financial review ◾ the average global sea-level rise will reach 0.63–1.01 m by 2100 relative to the 1995–2014 average; and ◾ regulations on GHG emissions may become stricter in the short term, then halt at those levels, and no further significant policy tightening will be introduced globally. Time horizons The time horizons considered in the analysis were: Short : Up to year 2025, Medium : Up to year 2030, and Long : Up to year 2050. Wärtsilä’s main decarbonisation targets are set for 2030. Analysis of resilience Very low GHG emissions scenario Based on the results of the scenario analysis, Wärtsilä’s considers that its business model and strategy are clearly fit for the “Very low GHG” scenario, where climate change related transition opportunities with regards to customer demand, R&D and innovation, and regulations are expected to increase substantially over time. In the marine industry, for example, the International Maritime Organisation (IMO) has already introduced regulations to drive the green transformation. Wärtsilä’s broad portfolio of engines, digital technologies, propulsion systems, hybrid technology, and integrated powertrain systems aim to deliver the efficiency, reliability, safety, and environmental performance needed to support its customers during the transformation and beyond. In the energy industry, Wärtsilä envisions a 100% renewable energy future under the very low GHG emission scenario. Wärtsilä aims to support its customers in decarbonisation by sustainable- fuel enabled balancing power plants, hybrid solutions, as well as with energy storage and optimisation technology. For both industries, Wärtsilä aims to have a product portfolio ready for zero carbon fuels by 2030. However, in this scenario there is a transition risk of raw material costs starting to increase by 2030, mainly due to EU regulations on emissions, such as the Carbon Border Adjustment Mechanism (CBAM), and a plausible scarcity of battery materials in case supply chains do not function as expected. To this, Wärtsilä aims to respond by ensuring material availability and cost visibility end-to- end of the supply chain by entering into long-term supply agreements and diversifying the supply base. Another considerable transition risk is competitors commercialising similar technologies faster or more successfully than Wärtsilä particularly in the long run. There may be disruptive technologies emerging, impacting the future of low to zero emission technologies. Wärtsilä aims to continue and even increase the R&D efforts related to zero carbon fuel/decarbonisation-related products and services to mitigate this risk. Regulations aimed at limiting GHG emissions can also be seen as a transition risk. The level of impact will depend on the strictness of the regulations, for example whether new installations running on fossil fuels can be sold at all. For Wärtsilä, overall, the possibilities to overcome future transition risks will also depend on the availability of green, zero carbon fuels and the infrastructure readiness for them, as well as the company’s capabilities to develop technologies fulfilling the regulatory requirements. The probability of physical risks creating a significant impact on Wärtsilä is considered very limited in this scenario. Very high GHG emissions scenario Wärtsilä’s business outlook under this scenario is considered to be more challenging, and related risks may require Wärtsilä to partially reconsider its current strategy and R&D programmes. However, it should be noted that customer demand may still increase in this scenario, for example by customer demand for energy solutions and dual fuel power generating solutions positively impacting Wärtsilä’s EBIT in the short to medium term. Also, in this scenario, R&D would still present opportunities, although smaller, in for example engine performance improvement. The probability of physical risks, such as heatwaves and flooding due to extreme precipitation events, is greater in this scenario, impacting Wärtsilä’s supply chain and customers to varying degrees. However, Wärtsilä will aim to mitigate the impact by way of precautionary measures. While it is anticipated that some of the most heavily affected, smaller sites may turn unproductive or costly to run, and relocation may be considered, Wärtsilä expects to benefit from the fact that it mostly leases rather than owns facilities. No stranded assets or business activities were identified in neither scenario, with an unlikely but possible exception of an immediate, complete ban on fossil fuels in the short term. The convertibility of Wärtsilä’s engines and auxiliary systems to run with several zero- carbon fuels in the future enables customers plan ahead on moving to such energy sources, reducing the risk of stranded assets for Wärtsilä or its customers. Wärtsilä’s different GHG emission sources and amounts are disclosed in section 2.2.6, followed by their accounting principles. In the financial statements there are no critical climate-related assumptions made in relation to the climate scenarios. Overview of risks and opportunities identified, and Wärtsilä’s response The table below lists the most relevant risks and opportunities related to climate change for Wärtsilä, as well as the strategic responses to mitigate these risks and maximise the possibility to realise the full potential of such opportunities. Each risk and opportunity is presented for the three time-horizons on two consecutive rows, the first based on the “Very low GHG” scenario, and the following row on the “Very high GHG” scenario. The risk and opportunity exposure values are expressed on a scale with five levels: “VL-Very low”, “L-Low”, “M-Medium”, “H-High” and “VH-Very High”. Financial review Wärtsilä’s climate change risks and mitigation actions – physical risks Risk Description Climate scenario Risk exposure Mitigation actions 2025 2030 2050 Increasing global average temperature and increased frequency and intensity of heatwaves. Heatwaves can burden health and emergency services and also increase strain on water, energy and transportation resulting in power shortages or even blackouts. Food and livelihood security may also be strained if people lose their crops or livestock due to extreme heat. Very low GHG VL L L Health related effects need to be taken into consideration, i.e. sufficient breaks, cool/ shaded rest areas, drinking water availability, first aid to heat stress, suitable PPE. Affected sites provided necessary water tanks, emergency generators and cooling. Very high GHG VL L H As above, with more emphasis on the precautionary measures. Most heavily affected sites may turn unproductive/ costly and relocation may be considered – in these cases Wärtsilä not owning i.e. renting the facilities is a strategic benefit. Flooding due to increased severity of extreme precipitation events. Flooding can lead to i.a. possible property damage, or interruptions to production or supply chain. Very low GHG VL L M When establishing or acquiring new sites consider locations that are less prone to flooding or on higher ground and can withstand future changes in flooding. Investing in flood control infrastructure, including grey infrastructure like seawalls and levees if needed, as well as green infrastructure solutions like green roofs, holding ponds and enhancing tree canopy to be studied. Limiting the use of non- permeable surfaces like pavement and concrete, and taking flood insurance where necessary. Very high GHG VL L M As above, with more emphasis on the precautionary measures. Most heavily affected sites may turn unproductive/ costly and relocation may be considered – in these cases Wärtsilä not owning i.e. renting the facilities is a strategic benefit. Wärtsilä’s climate change risks and mitigation actions – transition risks Risk Description Climate scenario Risk exposure Mitigation actions 2025 2030 2050 Regulations or claims Stricter regulations on GHG emissions (incl. possible fossil-fuel ban). Very low GHG VL M M Set for 30: Become carbon neutral in own operations by 2030. Provide a product portfolio that will be ready for zero carbon fuels by 2030. Until that continue developing products and services supporting the customers’ decarbonisation journey. Very high GHG VL L M Continue developing efficient and reliable products and services. Competitors Competitors commerciali sing similar technologies faster or more successfully (incl. disruptive technologies). Very low GHG VL M H Continue or even increase the R&D efforts related to zero carbon fuel/decarbonisation related products and services Very high GHG VL M H Continue developing efficient and reliable products and services. Raw material cost and availability Raw material availability for certain, e.g. Battery materials, may become limited, also leading to cost increase. Costs also elevated, including through higher cost of logistics, by regulations (e.g. CBAM). Very low GHG L M H Ensure material availability and cost visibility end to end of the supply chain by entering into long -term supply agreements and diversifying the supply base. Very high GHG L L M Ensure material availability and cost visibility end to end of the supply chain by entering into long -term supply agreements and diversifying the supply base. Financial review Wärtsilä’s climate change opportunities and the company’s response Opportunity Description Climate scenario Exposure Wärtsilä’s response 2025 2030 2050 Regulations or claims Stricter GHG -emissions regulation (incl. the ban on the use of fossil fuels). Very low GHG VL M H Set for 30: Become carbon neutral in own operations by 2030. Provide a product portfolio that will be ready for zero carbon fuels by 2030. Until that continue developing products and services supporting the customers’ decarbonisation journey. Very high GHG VL L M Continue developing efficient and reliable products, as customer demand for such will remain, and energy prices may increase. R&D and innovation New low emission technologies via R&D and innovation in own operations (incl. disruptive technologies). Very low GHG VL M H Provide a product portfolio that will be ready for zero carbon fuels by 2030. Until that continue developing products and services supporting the customers’ decarbonisation journey. Undertake further R&D programs in order to stay a leading technology compa ny. Very high GHG VL L M In medium term go through with developing a product portfolio that will be ready for zero carbon fuels by 2030, as the regulations get stricter for some years still. A partial strategic review when the regulatory tightening stalls. Customer demand Increased customer demand for low-carbon energy or products. Very low GHG L M H Starting from short -term onwards, Wärtsilä is well positioned by its current and upcoming offerings to benefit from customer needs for support in efforts to decarbonise their energy and marine portfolios. Very high GHG L M L In short -to -medium term Wärtsilä is well positioned by its current and upcoming offerings to benefit from customer needs for support in efforts to decarbonise their energy and marine portfolios. A partial strategic review when the customer demand reduces after the regulatory tightening stalls. Attracting or retaining talent Attracting or retaining employees because of company climate risk profile and brand image. Very low GHG L M M Increase efforts to decarbonise the company’s value chains, building a strong brand image based on mitigating climate change. Very high GHG L L L Remain a leading technology company attracting talent in the short -term based on the company’s decarbonisation efforts. In the longer term, when the regulatory tightening stalls keep other aspects of sustainability at the centre of R&D and operational development efforts. Financial review 1.9 . Disclosure Requirements complied with in preparing the sustainability statement (ESRS2 IRO-2): Wärtsilä has included all material data-points in the ESRS standards related to material topics in accordance with the double materiality assessment. Standard Disclosure Requirement ESRS 2 BP-1 BP-2 GOV-1 GOV-2 GOV-3 GOV-4 GOV-5 SBM-1 SBM-2 SBM-3 IRO-1 IRO-2 ESRS E1 E1.GOV-3 E1-1 E1.SBM-3 E1.IRO-1 E1-2 E1-3 E1-4 E1-5 E1-6 E1-7 E1-8 Standard Disclosure Requirement ESRS E2 E2.IRO-1 E2-1 E2-2 E2-3 E2-4 ESRS S1 (OHS) S1.SBM-2 S1.SBM-3 S1-1 S1-2 S1-3 S1-4 S1-5 S1-6 S1-14 ESRS S2 (OHS) S2.SBM-2 S2.SBM-3 S2-1 S2-2 S2-3 S2-4 S2-5 ESRS S1 (Skills and career development) S1.SBM-2 S1.SBM-3 S1-1 S1-2 S1-3 S1-4 S1-5 Standard Disclosure Requirement S1-6 S1-13 S1-16 S1-17 Financial review Datapoints that derive from other EU legislation (ESRS2 IRO-2) Disclosure Requirement and related datapoint SFDR reference Pillar 3 reference Benchmark Regulation reference EU Climate Law reference Section/ Not material ESRS2 GOV-1 Board's gender diversity paragraph 21 (d) Indicator number 13 of Table #1 of Annex 1 Commission Delegated Regulation (EU) 2020/1816 , Annex II 1.3. Governance ESRS2 GOV-1 Percentage of board members who are independent paragraph 21 (e) Delegated Regulation (EU) 2020/1816, Annex II 1.3. Governance ESRS2 GOV-4 Statement on due diligence paragraph 30 Indicator number 10 Table #3 of Annex 1 1.3. Governance ESRS2 SBM-1 Involvement in activities related to fossil fuel activities paragraph 40 (d) i Indicators number 4 Table #1 of Annex 1 Article 449a Regulation (EU) No 575/2013; Commission Implementing Regulation (EU) 2022/245328Table 1: Qualitative information on Environmental risk and Table 2: Qualitative information on Social risk Delegated Regulation (EU) 2020/1816, Annex II 1.4. Strategy, impacts, risks and opportunities ESRS2 SBM-1 Involvement in activities related to chemical production paragraph 40 (d) ii Indicator number 9 Table #2 of Annex 1 Delegated Regulation (EU) 2020/1816, Annex II 1.4. Strategy, impacts, risks and opportunities ESRS2 SBM-1 Involvement in activities related to controversial weapons paragraph 40 (d) iii Indicator number 14 Table #1 of Annex 1 Delegated Regulation (EU) 2020/1818 , Article 12(1) Delegated Regulation (EU) 2020/1816, Annex II 1.4. Strategy, impacts, risks and opportunities ESRS2 SBM-1 Involvement in activities related to cultivation and production of tobacco paragraph 40 (d) iv Delegated Regulation (EU) 2020/1818, Article 12(1) Delegated Regulation (EU) 2020/1816, Annex II 1.4. Strategy, impacts, risks and opportunities ESRS E1-1 Transition plan to reach climate neutrality by 2050 paragraph 14 Regulation (EU) 2021/1119, Article 2(1) 2.2.1. Transition plan ESRS E1-1 Undertakings excluded from Paris-aligned Benchmarks paragraph 16 (g) Article 449a Regulation (EU) No 575/2013; Commission Implementing Regulation (EU) 2022/2453 Template 1: Banking book Climate Change transition risk: Credit quality of exposures by sector, emissions and residual maturity Article12.1 (d) to (g), and Article 12.2 2.2.1. Transition plan Financial review Disclosure Requirement and related datapoint SFDR reference Pillar 3 reference Benchmark Regulation reference EU Climate Law reference Section/ Not material ESRS E1-4 GHG emission reduction targets paragraph 34 Indicator number 4 Table #2 of Annex 1 Article 449a Regulation (EU) No 575/2013; Commission Implementing Regulation (EU) 2022/2453 Template 3: Banking book – Climate change transition risk: alignment metrics Delegated Regulation (EU) 2020/1818, Article 6 2.2.4. Climate change targets ESRS E1-5 Energy consumption from fossil sources disaggregated by sources (only high climate impact sectors) paragraph 38 Indicator number 5 Table #1 and Indicator n. 5 Table #2 of Annex 1 2.2.5. Energy data ESRS E1-5 Energy consumption and mix paragraph 37 Indicator number 5 Table #1 of Annex 1 2.2.5. Energy data ESRS E1-5 Energy intensity associated with activities in high climate impact sectors paragraphs 40 to 43 Indicator number 6 Table #1 of Annex 1 2.2.5. Energy data ESRS E1-6 Gross Scope 1, 2, 3 and Total GHG emissions paragraph 44 Indicators number 1 and 2 Table #1 of Annex 1 Article 449a; Regulation (EU) No 575/2013; Commission Implementing Regulation (EU) 2022/2453 Template 1: Banking book – Climate change transition risk: Credit quality of exposures by sector, emissions and residual maturity 2.2.6. GHG emissions data ESRS E1-6 Gross GHG emissions intensity paragraphs 53 to 55 Indicators number 3 Table #1 of Annex 1 Article 449a Regulation (EU) No 575/2013; Commission Implementing Regulation (EU) 2022/2453 Template 3: Banking book – Climate change transition risk: alignment metrics Delegated Regulation (EU) 2020/1818, Article 8(1) 2.2.6. GHG emissions data ESRS E1-7 GHG removals and carbon credits paragraph 56 Regulation (EU) 2021/1119, Article 2(1) 2.2.7. GHG removals, storage, carbon credits and internal pricing ESRS E1-9 Exposure of the benchmark portfolio to climate- related physical risks paragraph 66 Delegated Regulation (EU) 2020/1818, Annex II Delegated Regulation (EU) 2020/1816, Annex II 1st. year omitted Financial review Disclosure Requirement and related datapoint SFDR reference Pillar 3 reference Benchmark Regulation reference EU Climate Law reference Section/ Not material ESRS E1-9 Disaggregation of monetary amounts by acute and chronic physical risk paragraph 66 (a); E1-9 Location of significant assets at material physical risk paragraph 66 (c) Article 449a Regulation (EU) No 575/2013; Commission Implementing Regulation (EU) 2022/2453 paragraphs 46 and 47; Template 5: Banking book - Climate change physical risk: Exposures subject to physical risk. 1st. year omitted ESRS E1-9 Breakdown of the carrying value of its real estate assets by energy-efficiency classes paragraph 67 (c). Article 449a Regulation (EU) No 575/2013; Commission Implementing Regulation (EU) 2022/2453 paragraph 34;Template 2:Banking book -Climate change transition risk: Loans collateralised by immovable property - Energy efficiency of the collateral 1st. year omitted ESRS E1-9 Degree of exposure of the portfolio to climate related opportunities paragraph 69 Delegated Regulation (EU) 2020/1818, Annex II 1st. year omitted ESRS E2-4 Amount of each pollutant listed in Annex II of the EPRTR Regulation (European Pollutant Release and Transfer Register) emitted to air, water and soil, paragraph 28 Indicator number 8 Table #1 of Annex 1 Indicator number 2 Table #2 of Annex 1 Indicator number 1 Table #2 of Annex 1 Indicator number 3 Table #2 of Annex 1 2.3.3. Pollution data from Wärtsilä’s own operations ESRS E3-1 Water and marine resources paragraph 9 Indicator number 7 Table #2 of Annex 1 Not material ESRS E3-1 Dedicated policy paragraph 13 Indicator number 8 Table 2 of Annex 1 Not material ESRS E3-1 Sustainable oceans and seas paragraph 14 Indicator number 12 Table #2 of Annex 1 Not material ESRS E3-4 Total water recycled and reused paragraph 28 (c) Indicator number 6.2 Table #2 of Annex 1 Not material ESRS E3-4 Total water consumption in m3 per net revenue on own operations paragraph 29 Indicator number 6.1 Table #2 of Annex 1 Not material ESRS 2- IRO 1 - E4 paragraph 16 (a) i Indicator number 7 Table #1 of Annex 1 Not material ESRS 2- IRO 1 - E4 paragraph 16 (b) Indicator number 10 Table #2 of Annex 1 Not material ESRS 2- IRO 1 - E4 paragraph 16 (c) Indicator number 14 Table #2 of Annex 1 Not material ESRS E4-2 Sustainable land / agriculture practices or policies paragraph 24 (b) Indicator number 11 Table #2 of Annex 1 Not material ESRS E4-2 Sustainable oceans / seas practices or policies paragraph 24 (c) Indicator number 12 Table #2 of Annex 1 Not material ESRS E4-2 Policies to address deforestation paragraph 24 (d) Indicator number 15 Table #2 of Annex 1 Not material Financial review Disclosure Requirement and related datapoint SFDR reference Pillar 3 reference Benchmark Regulation reference EU Climate Law reference Section/ Not material ESRS E5-5 Non -recycled waste paragraph 37 (d) Indicator number 13 Table #2 of Annex 1 Not material ESRS E5-5 Hazardous waste and radioactive waste paragraph 39 Indicator number 9 Table #1 of Annex 1 Not material ESRS 2- SBM3 - S1 Risk of incidents of forced labour paragraph 14 (f) Indicator number 13 Table #3 of Annex I Not material ESRS 2- SBM3 - S1 Risk of incidents of child labour paragraph 14 (g) Indicator number 12 Table #3 of Annex I Not material ESRS S1-1 Human rights policy commitments paragraph 20 Indicator number 9 Table #3 and Indicator number 11 Table #1 of Annex I 3.2.1. Occupational health and safety policy 3.3.1. Policy on skills and career development ESRS S1-1 Due diligence policies on issues addressed by the fundamental International Labor Organisation Conventions 1 to 8, paragraph 21 Delegated Regulation (EU) 2020/1816, Annex II Not material ESRS S1-1 Processes and measures for preventing trafficking in human beings paragraph 22 Indicator number 11 Table #3 of Annex I Not material ESRS S1-1 Workplace accident prevention policy or management system paragraph 23 Indicator number 1 Table #3 of Annex I 3.2.1. Occupational health and safety policy ESRS S1-3 Grievance/complaints handling mechanisms paragraph 32 (c) Indicator number 5 Table #3 of Annex I 3.2.3. Processes to remediate negative impacts and channels for own workforce to raise concerns 3.3.3. Channels to raise concerns ESRS S1-14 Number of fatalities and number and rate of work-related accidents paragraph 88 (b) and (c) Indicator number 2 Table #3 of Annex I Delegated Regulation (EU) 2020/1816, Annex II 3.2.6. Occupational health and safety management system, data ESRS S1-14 Number of days lost to injuries, accidents, fatalities or illness paragraph 88 (e) Indicator number 3 Table #3 of Annex I 1st. year omitted ESRS S1-16 Unadjusted gender pay gap paragraph 97 (a) Indicator number 12 Table #1 of Annex I Delegated Regulation (EU) 2020/1816, Annex II 3.3.7. Remuneration metrics ESRS S1-16 Excessive CEO pay ratio paragraph 97 (b) Indicator number 8 Table #3 of Annex I 3.3.7. Remuneration metrics ESRS S1-17 Incidents of discrimination paragraph 103 (a) Indicator number 7 Table #3 of Annex I 3.3.8. Number of complaints to raise concerns, cases of discrimination including harassment, and fines, penalties and compensation for damages ESRS S1-17 Non -respect of UNGPs on Business and Human Rights and OECD paragraph 104 (a) Indicator number 10 Table #1 and Indicator n. 14 Table #3 of Annex I Delegated Regulation (EU) 2020/1816, Annex II Delegated Regulation (EU) 2020/1818 Art 12 (1) Not material ESRS 2- SBM3 – S2 Significant risk of child labour or forced labour in the value chain paragraph 11 (b) Indicators number 12 and n. 13 Table #3 of Annex I Not material Financial review Disclosure Requirement and related datapoint SFDR reference Pillar 3 reference Benchmark Regulation reference EU Climate Law reference Section / Not material ESRS S2-1 Human rights policy commitments paragraph 17 Indicator number 9 Table #3 and Indicator n. 11 Table #1 of Annex 1 3.4.1. Policy on value chain workers’ occupational health and safety ESRS S2-1 Policies related to value chain workers paragraph 18 Indicator number 11 and n. 4 Table #3 of Annex 1 Not material ESRS S2-1 Nonrespect of UNGPs on Business and Human Rights principles and OECD guidelines paragraph 19 Indicator number 10 Table #1 of Annex 1 Delegated Regulation (EU) 2020/1816, Annex II Delegated Regulation (EU) 2020/1818, Art 12 (1) Not material ESRS S2-1 Due diligence policies on issues addressed by the fundamental International Labor Organisation Conventions 1 to 8, paragraph 19 Delegated Regulation (EU) 2020/1816, Annex II Not material ESRS S2-4 Human rights issues and incidents connected to its upstream and downstream value chain paragraph 36 Indicator number 14 Table #3 of Annex 1 3.4.4. Actions and resources on value chain workers ESRS S3-1 Human rights policy commitments paragraph 16 Indicator number 9 Table #3 of Annex 1 and Indicator number 11 Table #1 of Annex 1 Not material ESRS S3-1 Non-respect of UNGPs on Business and Human Rights, ILO principles or and OECD guidelines paragraph 17 Indicator number 10 Table #1 Annex 1 Delegated Regulation (EU) 2020/1816, Annex II Delegated Regulation (EU) 2020/1818, Art 12 (1) Not material ESRS S3-4 Human rights issues and incidents paragraph 36 Indicator number 14 Table #3 of Annex 1 Not material ESRS S4-1 Policies related to consumers and end-users paragraph 16 Indicator number 9 Table #3 and Indicator number 11 Table #1 of Annex 1 Not material ESRS S4-1 Non -respect of UNGPs on Business and Human Rights and OECD guidelines paragraph 17 Indicator number 10 Table #1 of Annex 1 Delegated Regulation (EU) 2020/1816, Annex II Delegated Regulation (EU) 2020/1818, Art 12 (1) Not material ESRS S4-4 Human rights issues and incidents paragraph 35 Indicator number 14 Table #3 of Annex 1 Not material ESRS G1-1 United Nations Convention against Corruption paragraph 10 (b) Indicator number 15 Table #3 of Annex 1 Not material ESRS G1-1 Protection of whistleblowers paragraph 10 (d) Indicator number 6 Table #3 of Annex 1 Not material ESRS G1-4 Fines for violation of anti-corruption and anti- bribery laws paragraph 24 (a) Indicator number 17 Table #3 of Annex 1 Delegated Regulation (EU) 2020/1816, Annex II) Not material ESRS G1-4 Standards of anticorruption and anti- bribery paragraph 24 (b) Indicator number 16 Table #3 of Annex 1 Not material Financial review 2. ENVIRONMENTAL INFORMATION 2.1. EU Sustainable Finance Taxonomy disclosures Wärtsilä has carried out an assessment regarding its economic activities against the EU Sustainable Finance Taxonomy’s Delegated Acts, as required by the Delegated Act on Article 8. Wärtsilä Taxonomy KPIs for the year 2024 are presented in the tables on the following pages. KPI Identified eligible economic activities Notes Turnover • Energy storage business (CCM 3.4) • Biogas solutions (CCM 3.6) • Digital voyage optimisation solutions (CCM 8.2) Wärtsilä considers its energy storage business as a Taxonomy eligible economic activity. Wärtsilä energy storage solutions and energy management systems enable the effective storage of renewable electricity. Wärtsilä biogas solutions are considered to be eligible through the “manufacturing of other low carbon technologies” category. Digital voyage optimisation solutions are considered to be eligible through the “data driven solutions for GHG reduction” category. Wärtsilä did not consider any multifuel engine solutions to be eligible at this point. CapEx • New buildings (CCM 7.1) • Passenger cars and light commercial vehicles (CCM 6.5) • Capitalised R&D costs related to energy storage (CCM 3.4) • Capitalised R&D costs related to voyage optimisation (CCM 8.2) • Capitalised R&D costs related to sustainable fuels (CCM 4.7) Any capital expenditure for a new building or a new vehicle is eligible. With respect to the capitalised R&D, eligibility follows the same logic as with the identified turnover KPI eligible activities. However, capitalised R&D costs related to the engines’ capability to run on fu ture green and zero-carbon fuels was considered eligible because these fuels enable Wärtsilä’s customers to generate electricity from renewable non-fossil gaseous and liquid fuels in the future. No capital expenditure related to taxonomy eligible manufacturing was identified. OpEx • Non -capitalised R&D costs related to energy storage (CCM 3.4) • Non -capitalised R&D costs related to biogas solutions (CCM 3.6) • Non -capitalised R&D costs related to voyage optimisation (CCM 8.2) • Non -capitalised R&D costs related to sustainable fuels (CCM 4.7) With respect to the non-capitalised R&D, eligibility follows the same logic as with the identified turnover KPI eligible activities. However, operating expenditure related to non-capitalised R&D for the engines’ capability to run on future green and zero-carbon fuels was considered eligible because these fuels enable Wärsilä’s customers to generate electricity from renewable non- fossil gaseous and liquid fuels in the future. No operating expenditure related to taxonomy eligible manufacturing was identified. Major parts of Wärtsilä’s economic activities, such as services, are currently not covered in the Delegated Acts. Services accounted for 53% of Wärtsilä’s turnover in 2024. Services are a key enabler of installation uptime, reliability, reduced fuel consumption, and lower emissions. Wärtsilä has a key role to play in decarbonising vessel operations and the overall shipping value chain. The company’s extensive product and solutions portfolio, including engines, digital technologies, propulsion systems, hybrid solutions, integrated powertrain systems, and emission abatement solutions are key contributors to making zero-emissions shipping possible. However, they are all outside the taxonomy scope since only the manufacturing of vessels – not vessel technologies or components – is included. In Energy, engines ready for carbon-neutral fuels, running on natural gas or other fossil fuels, are also excluded. In total, 14 % of Wärtsilä’s turnover was estimated to be eligible, including the energy storage business, biogas solutions, and digital voyage optimisation solutions. For capital expenditure, capitalised R&D costs related to energy storage, digital voyage optimisation and sustainable fuels development, as well as new buildings and new vehicles were deemed eligible. For operating expenditure, non-capitalised R&D costs related to energy storage, biogas solutions, digital voyage optimisation solutions and sustainable fuels development were deemed eligible. None of the categories could be considered as aligned. Turnover CapEx OpEx Non-eligible 86% 64% 89% Eligible 14% 36% 11% Aligned 0% 0% 0% In order to report this information, Wärtsilä has assessed its economic activities against the economic activities included in the Delegated Acts. Eligible economic activities have been identified by comparing the referred NACE codes in the Delegated Acts to Wärtsilä’s economic activities. Turnover, capital expenditure, and operating expenditure for eligible economic activities were collected from the accounting system. As the next step, Wärtsilä compared the economic activities against the technical screening criteria, including the ‘do no significant harm’ criteria and minimum social safeguards, and have searched for supporting proof points. With the approach being a stringent interpretation of the alignment criteria provided by the European Union regulation on taxonomy, Wärtsilä cannot claim any of the taxonomy-eligible turnover streams in 2024 as being also taxonomy-aligned. The same applies to both capital and operational expenditures in 2024. Despite the low taxonomy coverage Wärtsilä’s products and services play a key role in decarbonising the energy and marine sectors and Wärtsilä invests significant R&D funds to support and enable the transition. Financial review Proportion of turnover from products or services associated with Taxonomy -aligned economic activities - disclosure covering year 2024 Financial year 2024 2024 Substantial contribution criteria DNSH Criteria ('Does Not Significantly Harm') Economic activities Code (a) Turnover Proportion of turnover, year 2024 Climate change mitigation Climate change adaptation Water Pollution Circular economy Biodiversity Climate change mitigation Climate change adaptation Water Pollution Circular economy Biodiversity Minimum safeguards Proportion of Taxonomy aligned (A.1.) or eligible (A.2.) turnover, Year 2023 Category enabling activity Category transitional activity Text MEUR % Y; N; N/EL (b) (c) Y; N; N/EL (b) (c) Y; N; N/EL (b) (c) Y; N; N/EL (b) (c) Y; N; N/EL (b) (c) Y; N; N/EL (b) (c) Y/N Y/N Y/N Y/N Y/N Y/N Y/N % E T A. TAXONOMY -ELIGIBLE ACTIVITIES A.1. Environmentally sustainable activities (Taxonomy -aligned) No aligned activity 0 0% 0% Turnover of environmentally sustainable activities (Taxonomy- aligned) (A.1) 0 0% 0% 0% 0% 0% 0% 0% 0% Of which enabling 0 0% 0% 0% 0% 0% 0% 0% 0% E Of which transitional 0 0% 0% 0% T A.2 Taxonomy -Eligible but not environmentally sustainable activities (not Taxonomy -aligned activities) (g) EL; N/EL (f) EL; N/EL (f) EL; N/EL (f) EL; N/EL (f) EL; N/EL (f) EL; N/EL (f) Manufacture of batteries CCM 3.4 794 12% EL N/EL N/EL N/EL N/EL N/EL 15% Manufacture of other low carbon technologies CCM 3.6 53 1% EL N/EL N/EL N/EL N/EL N/EL 1% Data-driven solutions for GHG emissions reductions CCM 8.2 41 1% EL N/EL N/EL N/EL N/EL N/EL 1% Turnover of Taxonomy -eligible but not environmentally sustainable activities (not Taxonomy -aligned activities) (A.2) 888 14% 14% 0% 0% 0% 0% 0% 17% A. Turnover of Taxonomy eligible activities (A.1+A.2) 888 14% 14% 0% 0% 0% 0% 0% 17% B. TAXONOMY -NON-ELIGIBLE ACTIVITIES Turnover of Taxonomy -non -eligible activities 5,561 86% EL = Eligible; N/EL = Non- eligible Total 6,449 100% Turnover in 2024: EUR 6,449 million is also reported in Financial statements, Consolidated statement of income. Financial review Proportion of CapEx from products or services associated with Taxonomy -aligned economic activities - disclosure covering year 2024 Financial year 2024 2024 Substantial contribution criteria DNSH Criteria ('Does Not Significantly Harm') Economic activities Code (a) CapEx Proportion of CapEx, year 2024 Climate change mitigation Climate change adaptation Water Pollution Circular economy Biodiversity Climate change mitigation Climate change adaptation Water Pollution Circular economy Biodiversity Minimun safeguards Proportion of Taxonomy aligned (A.1.) or eligible (A.2.) CapEx, Year 2023 Category enabling activity Category transitional activity Text MEUR % Y; N; N/EL (b) (c) Y; N; N/EL (b) (c) Y; N; N/EL (b) (c) Y; N; N/EL (b) (c) Y; N; N/EL (b) (c) Y; N; N/EL (b) (c) Y/N Y/N Y/N Y/N Y/N Y/N Y/N % E T A. TAXONOMY -ELIGIBLE ACTIVITIES A.1. Environmentally sustainable activities (Taxonomy -aligned) No aligned activity 0 0% 0% CapEx of environmentally sustainable activities (Taxonomy -aligned) (A.1) 0 0% 0% 0% 0% 0% 0% 0% 0% Of which enabling 0 0% 0% 0% 0% 0% 0% 0% 0% E Of which transitional 0 0% 0% 0% T A.2 Taxonomy -Eligible but not environmentally sustainable activities (not Taxonomy -aligned activities) (g) EL; N/EL (f) EL; N/EL (f) EL; N/EL (f) EL; N/EL (f) EL; N/EL (f) EL; N/EL (f) Construction of new buildings. CCM 7.1 16 7% EL N/EL N/EL N/EL N/EL N/EL 1% Transport by motorbikes, passenger cars and light commercial vehicles CCM 6.5 8 3% EL N/EL N/EL N/EL N/EL N/EL 3% Manufacture of batteries CCM 3.4 28 12% EL N/EL N/EL N/EL N/EL N/EL 7% Data-driven solutions for GHG emissions reductions CCM 8.2 6 3% EL N/EL N/EL N/EL N/EL N/EL 2% Electricity generation from renewable non-fossil gaseous and liquid fuels CCM 4.7 27 11% EL N/EL N/EL N/EL N/EL N/EL 10% CapEx of Taxonomy -eligible but not environmentally sustainable activities (not Taxonomy -aligned activities) (A.2) 85 36% 36% 0% 0% 0% 0% 0% 23% A. CapEx of Taxonomy eligible activities (A.1+A.2) 85 36% 36% 0% 0% 0% 0% 0% 23% B. TAXONOMY -NON-ELIGIBLE ACTIVITIES CapEx of Taxonomy -non -eligible activities 152 64% EL = Eligible; N/EL = Non-eligible Total 237 100% Financial review Proportion of OpEx from products or services associated with Taxonomy -aligned economic activities - disclosure covering year 2024 Financial year 2024 2024 Substantial contribution criteria DNSH Criteria ('Does Not Significantly Harm') Economic activities Code (a) OpEx Proportion of OpEx, year 2024 Climate change mitigation Climate change adaptation Water Pollution Circular economy Biodiversity Climate change mitigation Climate change adaptation Water Pollution Circular economy Biodiversity Minimun safeguards Proportion of Taxonomy aligned (A.1.) or eligible (A.2.) OpEx, Year 2023 Category enabling activity Category transitional activity Text MEUR % Y; N; N/EL (b) (c) Y; N; N/EL (b) (c) Y; N; N/EL (b) (c) Y; N; N/EL (b) (c) Y; N; N/EL (b) (c) Y; N; N/EL (b) (c) Y/N Y/N Y/N Y/N Y/N Y/N Y/N % E T A. TAXONOMY -ELIGIBLE ACTIVITIES A.1. Environmentally sustainable activities (Taxonomy -aligned) No aligned activity 0 0% 0% OpEx of environmentally sustainable activities (Taxonomy -aligned) (A.1) 0 0% 0% 0% 0% 0% 0% 0% 0% Of which enabling 0 0% 0% 0% 0% 0% 0% 0% 0% E Of which transitional 0 0% 0% 0% T A.2 Taxonomy -Eligible but not environmentally sustainable activities (not Taxonomy -aligned activities) (g) EL; N/EL (f) EL; N/EL (f) EL; N/EL (f) EL; N/EL (f) EL; N/EL (f) EL; N/EL (f) Manufacture of batteries CCM 3.4 19 7% EL N/EL N/EL N/EL N/EL N/EL 7% Manufacture of other low carbon technologies CCM 3.6 2 1% EL N/EL N/EL N/EL N/EL N/EL 0% Data-driven solutions for GHG emissions reductions CCM 8.2 1 0% EL N/EL N/EL N/EL N/EL N/EL 0% Electricity generation from renewable non-fossil gaseous and liquid fuels CCM 4.7 10 4% EL N/EL N/EL N/EL N/EL N/EL 5% OpEx of Taxonomy -eligible but not environmentally sustainable activities (not Taxonomy -aligned activities) (A.2) 31 11% 11% 0% 0% 0% 0% 0% 12% A. OpEx of Taxonomy eligible activities (A.1+A.2) 31 11% 11% 0% 0% 0% 0% 0% 12% B. TAXONOMY -NON-ELIGIBLE ACTIVITIES OpEx of Taxonomy -non -eligible activities 249 89% EL = Eligible; N/EL = Non- eligible Total 280 100% Financial review Nuclear and fossil gas related activities Row Nuclear energy related activities 1. The undertaking carries out, funds or has exposures to research, development, demonstration and deployment of innovative electricity generation facilities that produce energy from nuclear processes with minimal waste from the fuel cycle. NO 2. The undertaking carries out, funds or has exposures to construction and safe operation of new nuclear installations to produce electricity or process heat, including for the purposes of district heating or industrial processes such as hydrogen production, as well as their safety upgrades, using best available technologies. NO 3. The undertaking carries out, funds or has exposures to safe operation of existing nuclear installations that produce electricity or process heat, including for the purposes of district heating or industrial processes such as hydrogen production from nuclear energy, as well as their safety upgrades. NO Fossil gas related activities 4. The undertaking carries out, funds or has exposures to construction or operation of electricity generation facilities that produce electricity using fossil gaseous fuels. NO 5. The undertaking carries out, funds or has exposures to construction, refurbishment, and operation of combined heat/cool and power generation facilities using fossil gaseous fuels. NO 6. The undertaking carries out, funds or has exposures to construction, refurbishment and operation of heat generation facilities that produce heat/cool using fossil gaseous fuels. NO Financial review 2.2. Climate change (ESRS E1) 2.2.1. Transition plan (E1-1) Wärtsilä has a transition plan called ‘Set for 30’ for climate change mitigation that for scope 1 and 2 GHG emissions is considered being in line with the Paris Agreement. Scope 3 targets cannot be considered being in line with the Paris Agreement since they are not quantitative. The transition plan has been approved by the Board of Directors. Wärtsilä is not excluded from EU Paris-aligned Benchmarks. Wärtsilä has defined its transition plan for scope 1 and 2 emissions and targets at becoming carbon neutral in its own operations by 2030. Related to products, Wärtsilä’s target set in 2021 is to provide a product portfolio ready for zero carbon fuels by 2030. Decarbonisation is a priority in the company’s product and product portfolio development, including abatement technologies. Wärtsilä is developing a broad range of technologies and solutions to support its customers in their decarbonisation transition. Carbon neutral fuels can be used already today, and the development of the product portfolio further continues so that zero carbon fuels, such as for example, ammonia and hydrogen, can be widely used by 2030. Wärtsilä’s transition plan is well aligned with the company’s strategy, which has decarbonisation at the core. Main decarbonisation levers and key actions The main emission reduction categories in own operations’ (Scope 1 and 2 emissions) decarbonisation pathway are the following: ◾ Energy efficiency and energy savings ◾ Switching to low emission company vehicles ◾ Utilisation of self-generated energy and the purchase of green electricity (for renewable electricity, Wärtsilä uses both unbundled energy attribute certificates (EAC) and direct power purchase agreements.) ◾ Reducing the time needed for R&D and factory engine testing ◾ Utilisation of heat pumps in heating ◾ Replacing fossil fuels with sustainable fuels in factory and R&D engine testing ◾ Utilisation of various technologies to reduce greenhouse gas (GHG) emissions in engine testing Core elements of Wärtsilä’s product development related (Scope 3) decarbonisation actions are the following: ◾ Products and services: Offering innovative technologies and lifecycle solutions with high efficiency and low emissions ◾ R&D: Developing sustainable and future-proof technologies ◾ System level solutions: Improving and optimising overall efficiency and lowering emissions at system level ◾ Operational measures: Targeting carbon neutrality and continual environmental improvements ◾ Collaboration: Joining forces with stakeholders in promoting climate and environmental actions Significant operational expenditures (Opex) and (or) capital expenditures (Capex) required for implementation of action plan Own operations: ◾ Costs for green electricity in 2024: 112 TEUR (OpEx) ◾ Installation of solar panels in 2024: Wuxi, phase 2 (China), Khopoli (India), Gazipur (Bangladesh), Cape Town (South Africa): 253 TEUR (CapEx) Products: ◾ During 2024, R&D expenditure totalled EUR 296 million, which represents 4.6% of net sales. The majority of these investments targeted improved environmental performance. Sustainable fuels related R&D costs amounted to Capital expenditures of 27 MEUR and operational expenditures of 10 MEUR (also included in the EU Sustainable Finance Taxonomy disclosures). It should be noted that the CapEx and OpEx amounts reported in the EU Sustainable Finance Taxonomy disclosures include costs outside the transition plan described above even though these other costs also contribute to climate change mitigation in other ways . Currently Wärtsilä has no plans for aligning its economic activities with the criteria established in Commission Delegated Regulation 2021/2139 (29). Locked-in GHG emissions from key assets and products Wärtsilä considers that there are no significant locked-in GHG emissions in the company’s key assets or products, as for a long time already the products and solutions have been designed to be “future-proof”. This means, that the production facilities can quite easily be modified to accommodate production of i.a. zero-carbon fuel products, and the products themselves can also be upgraded for use with the sustainable fuels. Thus, Wärtsilä does not consider any locked-in GHG emissions jeopardising the company's GHG emissions reduction targets. Progress in implementing transition plan Own operations (Scope 1 and 2): During 2024, Wärtsilä was able to reduce its GHG emissions by 50,163 tCO2e compared to the baseline. The GHG reductions since the launch of the transition plan make up 50% of the final target, which is in line with the company’s target. Products (Scope 3): The development of concepts for pure hydrogen for land-based power plants continued throughout 2024. Market release was given in mid-2024, and the concept for industrialisation will be selected during 2025. Progress towards the target is seen to be proceeding well, although details of the plan are continuously being modified according to business needs, market situation and technology developments. 2.2.2. Policies on climate change (E1-2) Wärtsilä’s values and principles in relation to the material climate change mitigation impact and related opportunities are defined in the Code of Conduct that covers all of the company’s activities, is publicly available on the company’s website and has a separate section on climate change: “ Wärtsilä recognises the urgent need to address climate change in society and across our operations. We are committed to mitigating climate change by developing technologies and services to decarbonise the energy and marine markets, as well as by decarbonising our own operations. We set measurable emission Financial review reduction targets, which also cover our supply chain, and we monitor the progress. We actively work towards reducing greenhouse gas emissions by investing in continuous research and development, supporting customers on decarbonisation solutions, advancing energy efficiency and the use of green energy, and making choices that prioritise climate and environmental considerations. Additionally, we take necessary actions to adapt to the impacts of climate change on our operations .” This sets the stage for the company’s continuous endeavors towards creating sustainable products and solutions, while also minimising the environmental footprint in its operations. For Wärtsilä mitigating climate change is at the core of these efforts. Board of Management carries the ultimate accountability of implementing the Code of Conduct as well as well as the Quality, Environmental, Health and Safety (QEHS) policy. Wärtsilä’ QEHS policy, also covering all of the company’s activities, emphasizes the importance of protecting the environment, setting objectives, and reducing risks. 2.2.3. Actions and resources related to climate change mitigation and adaptation (E1-3) Wärtsilä has a transition plan called ‘Set for 30’ for climate change mitigation, which comprises of two targets and the related action plans: To become carbon neutral in its own operations and to provide a product portfolio that will be ready for zero carbon fuels by 2030. Wärtsilä’s decarbonisation levers related to own operations The annual decarbonisation action plans are approved by the Board of Management. These actions drive Wärtsilä Code of Conduct’s policy objective of mitigating climate change. The outcomes of developing a product portfolio ready for zero carbon fuels by 2030 will naturally not have materialised yet in terms of reduced GHG emissions. For Scope 1 and 2 GHG emissions, the main emission reduction categories in Wärtsilä’s decarbonisation pathway are: ● Energy efficiency and energy savings : Energy savings are mainly based on reduced electricity or heat consumption and the implementation of energy efficiency measures. In line with the Code of Conduct’s objective of “ advancing energy efficiency ”, in the beginning of 2017, Wärtsilä Board of Management set an energy saving target to reduce energy consumption by at least 7% in terms of absolute consumption (GWh) from 2015 levels by 2025. At the end of 2024, permanent energy savings of 14.5 GWh have been reached, representing 49 % of the final 2025 target. ● Switching to low emission company vehicles : Wärtsilä introduced a vehicle policy that actively supports the move to electric vehicles. The policy applies to Wärtsilä-owned and leased vehicles, such as cars, trucks, vans, cranes, and forklifts. All sites are requested to review their existing infrastructure for charging electric vehicles and to start planning for the increased use of electric vehicles in the future. Many Wärtsilä sites are already preparing for this development. ● Utilisation of self-generated energy and the purchase of green electricity : Wärtsilä uses electricity in its manufacturing operations, for example in machining components, and in service workshops and offices. Both the electrical and the heat energy generated during engine test runs can be utilised. Wärtsilä’s aim is to use the electrical energy for its own purposes while also selling part of this electrical energy to local power companies. For many Wärtsilä countries, solar panels are an attractive alternative because of their self- sufficient nature and payback time. For example, in 2024, Wärtsilä Wuxi, China, (phase 2) installed a 300 kW solar power generation system on the factory roof, which generates green electricity for daily operations. Solar panels installed at Wärtsilä’s site in Japan cover the whole roof space, and the generated electricity represents 30 to 40% of the factory’s total electricity consumption. Additional sites that installed solar panels in 2024 are Khopoli (India), Hattem (Netherlands), Cape Town (South Africa), Bermeo (Spain) and Frauenfeld (Switzerland). Wärtsilä has developed a purchasing model for green electricity purchases, where the company has defined its approach for acquiring Guarantees of Origins (GOs), Renewable Energy Certificates (RECs), and International Renewable Energy Certificates (I -RECs). In 2024, Wärtsilä in Denmark, Finland, Italy, Norway, and the Netherlands acquired Guarantees of Origins. In addition, several other Wärtsilä sites use green electricity. Out of the total electricity consumption 64% (58,525 MWh ) was from renewable sources. ● Reducing the time needed for R&D and factory engine testing : In the Sustainable Technology Hub in Finland, fuels are used mainly for R&D and factory engine testing. Wärtsilä has identified and taken measures to contribute to energy savings, such as reducing running times during engine testing. ● Utilisation of heat pumps in heating : In Denmark, natural gas boilers were used for heating the office, but the boilers were coming to their end and needed replacement. The company wanted to utilise a more sustainable heating option and therefore opted for electric heat pumps. In addition, Wärtsilä Denmark buys certified green electricity which guarantees that the electricity used for heating in all Denmark facilities is CO2 neutral. ● Replacing fossil fuels with sustainable fuels in factory and R&D engine testing : R&D and factory engine testing generated 75% of Wärtsilä’s Scope 1 emissions in 2024. Several actions related to the reduction of GHG emissions from engine testing are underway, and results can already be seen. Wärtsilä reached an important milestone in sustainable fuel product development by investing in new methanol research and engine testing capabilities in its Sustainable Technology Hub in Vaasa, Finland. Sustainable fuels, such as methanol, play a vital role in helping the maritime industry to reduce its greenhouse gas emissions and accelerate the green transition. In addition, Wärtsilä continues with its technology and product development of other sustainable fuels, such as ammonia and pure hydrogen. Climate change adaptation Wärtsilä has risk management assessments and processes in place following and considering possible impacts of climate change to the company’s assets and employees. Where necessary, Financial review precautions are taken, such as in Kampen, Netherlands, where Wärtsilä has a storage of sandbags ready in case of flooding, and exercises are being held for the employees to know how to act when needed. Wärtsilä has heat stress management guidelines in place in response to having identified an increasing number of heat related illnesses. The guidelines highlight the importance of assessing heat risk, hydration, the use of cooling devices and ventilation, and having proper rest periods. They also include check lists of things to be agreed upon before work in hot conditions begins at customer sites and what is to be checked during the work. Overall, however, Wärtsilä has evaluated the climate change physical risks as not posing a significant risk to the company’s operations currently. Key actions taken in the reporting year ◾ Green electricity purchasing ◾ Installation of solar panels ◾ Energy efficiency and energy savings ◾ Reducing the time needed for R&D and factory engine testing ◾ Investment in a new methanol research and engine testing capabilities in its Sustainable Technology Hub in Vaasa, Finland Own operations: During 2024, Wärtsilä was able to reduce its Scope 1 and 2 GHG emissions by 50,163 tCO2e compared to the baseline, which is in line with the company’s target. Further, expected emission reductions by 2030 for Scope 1 and 2 are about 49,837 tCO2e . Products: The development of concepts for pure hydrogen for land- based power plants continued throughout 2024. Market release was given in mid-2024, and the concept for industrialisation will be selected during 2025. All the actions described cover Wätsilä’s own operations globally unless locations have been stated specifically, have started and will be finalised by 2030. Availability and allocation of resources towards ability to implement actions Actions planned for the future: ◾ Energy efficiency and energy savings ◾ Switching to low emission company vehicles ◾ Utilisation of self-generated energy and the purchase of green electricity (for renewable electricity, Wärtsilä uses both unbundled energy attribute certificates (EAC) and direct power purchase agreements.) ◾ Reducing the time needed for R&D and factory engine testing ◾ Utilisation of heat pumps in heating ◾ Replacing fossil fuels with sustainable fuels in factory and R&D engine testing ◾ Renewable district heating ◾ Carbon offsetting Own operations: Wärtsilä will gradually switch to green electricity in all countries, considering the availability of green electricity in different markets. The time schedule to switch to sustainable fuels in engine testing depends on availability and costs. Products: For shipping, Wärtsilä’s latest analysis of the market provides a picture of when each fuel type is likely to become available, while Wärtsilä’s modelling tool predicts their likely cost. First Wärtsilä expects to see biofuels, produced from non-food or non-feed organic sources, with large growth predicted to become available in the 2030s. This includes diesel-like biofuels, biomethanol and biomethane, but also bioethanol, which is already produced today in significant quantities, especially in Brazil and the US. Next will emerge ‘blue’ fuels, such as blue ammonia. Produced using fossil fuels, with CO2 captured and stored, they are simpler to scale than synthetic fuels, and benefit from the upstream infrastructure of the oil and gas industry. Green synthetic fuels will only arrive at significant volumes from the late 2030s. Produced from emissions-free ‘green’ hydrogen made using renewable electricity, they will likely be produced mostly in locations with high solar and wind resources. In power generation, at the moment, hydrogen is the most promising candidate of the Power-to-X (P2X) fuel for power plants. One key concern with green hydrogen is how long it will take to build the needed infrastructure and ensure green hydrogen in adequate amounts. Significant operational expenditures (Opex) and (or) capital expenditures (Capex) required for implementation of action plan Own operations: ◾ Costs for green electricity in 2024: 112 TEUR (OpEx) ◾ Installation of solar panels in 2024: Wuxi, phase 2 (China), Khopoli (India), Gazipur (Bangladesh), Cape Town (South Africa): 253 TEUR (CapEx) Products: ◾ During 2024, R&D expenditure totalled EUR 296 million, which represents 4.6% of net sales. The majority of these investments targeted improved environmental performance. Sustainable fuels related R&D costs amounted to Capital expenditures of 27 MEUR and operational expenditures of 10 MEUR (also included in the EU Sustainable Finance Taxonomy disclosures). For 2025 these expenditures are estimated at about 29 MEUR as capital expenditures and 18 MEUR as operational expenditures. It should be noted that the CapEx and OpEx amounts reported in the EU Sustainable Finance Taxonomy disclosures include costs outside the transition plan described above even though these other costs also contribute to climate change mitigation in other ways. Currently Wärtsilä has no plans for aligning its economic activities with the criteria established in Commission Delegated Regulation 2021/2139 (29). 2.2.4. Climate change targets (E1-4) Wärtsilä has defined its transition plan, ‘Set for 30’, for Scope 1 and 2 emissions and targets at becoming carbon neutral in its own operations by 2030. The target was set in 2021 and approved by the Board of Directors, with annual GHG emissions of own operations from a baseline of about 100,000 tons CO2eq. Scope 2 emissions considered here are market-based. Based on an assessment of its GHG emissions Wärtsilä outlined its Financial review decarbonisation roadmap that included defining Wärtsilä's decarbonisation targets. As part of the company’s decarbonisation actions, Wärtsilä evaluates the timing and maturity of various measures, dependencies with different projects, as well as the cost effects of each greenhouse gas (GHG) reduction measure. In 2024, Wärtsilä’s actions focused on low and medium cost measures, such as purchasing green electricity, low emission company vehicles, and reducing time in R&D and factory engine testing. In 2024, out of the total electricity consumption 64 % was from renewable sources. In line with the Code of Conduct’s imperative for “advancing energy efficiency”, in the beginning of 2017, Wärtsilä Board of Management approved an energy saving target to reduce total energy consumption in own operations by at least 7% in terms of absolute consumption from 2015 (428 GWh) level by 2025. The target is not based on conclusive scientific evidence, and no stakeholders were directly involved in setting the target. At the end of 2024, permanent energy savings of 14.52 GWh have been reached, representing 49% of the final 2025 target. Energy savings are mainly based on reduced electricity or heat consumption and implementation of energy efficiency measures. Currently the energy saving target supports the overall carbon neutrality target described above. GHG emissions reduction targets by 2030 GHG emission scope Reduction target Achieved reduction by 2024 Scope 1 + 2 100% 50% Accounting principles: Data is collected on a site level, based on permanent GHG emissions reduction measures, and either calculated or estimated (Scope 1 and 2). For defining the baseline value for ‘Set for 30’ target on becoming carbon neutral in own operations Wärtsilä uses a baseline value that is derived from a 3-year average (2019-2021), as this increased the representativeness of the base line emissions. One reason for choosing a 3-year average was to better take into account the business impact of Covid-19. No measurements of the metrics are validated by an external body other than the assurance provider. Related to products, Wärtsilä’s ‘Set for 30’ target set in 2021 is to provide a product portfolio ready for zero carbon fuels by 2030. Baseline year or value are not relevant in this context. Decarbonisation is a priority in the company’s product and product portfolio development, including abatement technologies. Wärtsilä is developing a broad range of technologies and solutions to support its customers in their decarbonisation transition. Carbon neutral fuels can be used already today, and the development of the product portfolio further continues so that zero carbon fuels, such as for example, ammonia and hydrogen, can be widely used by 2030. The targets support Wärtsilä in living up to the Code of Conduct’s “urgent need to address climate change. As an example of a current solution, Wärtsilä has developed and introduced to the market a new ultra-low emissions version of its already efficient Marine Wärtsilä 31DF engine. When operating on LNG, this new version can further reduce methane emissions on a 50% load point by up to 56%. On a weighted average, this new technology can reduce methane emissions by 41% more than the standard Wärtsilä 31DF engine, which has already the lowest emission levels on the market. Independent studies show that Wärtsilä’s four-stroke engines are world-leading in methane slip reduction. In 2024 Wärtsilä Board of Directors approved a new target in line with the Code of Conduct’s “urgent need to address climate change” for 25% reduction of suppliers’ GHG emissions by 2030 compared to the 2024 baseline. The target covers Tier 1 direct suppliers of Wärtsilä and their scope 1 and 2 GHG emissions related to deliveries to Wärtsilä. It is a relative target, for which baseline is defined by Wärtsilä allocated GHG emissions and spend. The data for the 2024 baseline will be collected from suppliers during 2025. The exact methodology for following up on the progress against the target is still being developed. The target is not based on conclusive scientific evidence. During the target setting process, stakeholders were involved including interviews with selected suppliers. The company has not set a science-based target for the GHG emissions but considers the scope 1 and 2 targets being compatible with limiting global warming to 1.5°C from pre-industrial levels although not based on conclusive scientific evidence. The ‘set for 30’ targets have been externally assured. No stakeholders were directly involved in setting the targets unless specifically mentioned. No climate scenarios were considered in setting the targets. Progress in implementing transition plan Own operations: During 2024, Wärtsilä was able to reduce its Scope 1 and 2 GHG emissions by 50,163 tCO2e compared to the baseline, which is in line with the company’s target. Further, expected emission reductions by 2030 for Scope 1 and 2 are about 49,837 tCO2e . Scope 1 and 2 emissions are reported and monitored on a quarterly basis to understand whether the progress is in line with the target. The main contributors to reducing Scope 1 and 2 emissions were purchasing green electricity and reducing emissions from R&D and factory engine testing. On the energy saving target, by the end of 2024, energy savings of 14.52 GWh were achieved, representing 49% of the final 2025 target. Energy saving actions are reported in an online tool and annually reviewed by Group sustainability. The energy savings target is currently lagging from the initially planned progress. Products: The development of concepts for pure hydrogen for land- based power plants continued throughout 2024. Market release was given in mid-2024, and the concept for industrialisation will be selected during 2025. Progress towards the target is seen to be proceeding well, although details of the plan towards the target are continuously being modified according to the business needs, market situation and technology development. GHG emissions reduction target status and expected levers (own operations) Data point Data Base year 3-year average (2019 -2021) Baseline value Total scope 1 + 2: 100,000 tCO2e Scope 1: 55,000 tCO2e Scope 2: 45,000 tCO2e Percentage of total GHG emission s reduction target Scope 1: 100% Scope 2: 100% (market -based) Achieved reductions by the end of 2024 Scope 1: 17,934 tCO2e (33%) Scope 2: 32,229 tCO2e (72%) Total Scope 1 + 2: 50,163 tCO2e (50%) Expected lever: Energy efficiency and energy savings 1% Expected lever: Switching to low emission company vehicles 3% Financial review Expected lever: Utilisation of self- generated energy and the purchase of green electricity 40% Expected lever: Reducing the time needed for R&D and factory engine testing 6% Expected lever: Utilisation of heat pumps in heating 3% Expected lever: Replacing fossil fuels with sustainable fuels in factory and R&D engine testing 8% Expected lever: Renewable district heating 7% Expected lever: Carbon offsetting 32% * 3-year average (2019 -2021); rounded figure Accounting principles: Reduction of GHG emissions data is collected on a site level, based on permanent GHG emissions reduction measures, and either calculated or estimated (Scope 1 and 2). For defining the baseline value for ‘Set for 30’ target on becoming carbon neutral in own operations Wärtsilä uses a baseline value that is derived from a 3-year average, as this increased the representativeness of the baseline emissions. One reason for choosing a 3-year average was to better take into account the business impact of Covid-19. No climate scenarios were considered in setting the targets. Reduction of energy consumption data is collected on a site level, based on permanent energy saving actions, and either calculated or estimated. No measurements of the metrics are validated by an external body other than the assurance provider. 2.2.5. Energy data (E1-5) Energy consumption and mix MWh / % / intensity Fuel consumption from coal and coal products (MWh) 0 Fuel consumption from crude oil and petroleum products (MWh) 80,483 Fuel consumption from natural gas (MWh) 67,121 Fuel consumption from other fossil sources (MWh) 35 Consumption of purchased or acquired electricity, heat, steam, or cooling from fossil sources (MWh) 44,202 Total fossil energy consumption (MWh) 191,841 Share of fossil sources in total energy consumption (%) 76 Consumption from nuclear sources (MWh) 2,782 Share of consumption from nuclear sources in total energy consumption (%) 1 Fuel consumption from renewable sources (MWh) 0 Consumption of purchased or acquired electricity, heat, steam, and cooling from renewable sources (MWh) 57,026 Consumption of self -generated non-fuel renewable energy (MWh) 2,231 Total renewable energy consumption (MWh) 59,257 Share of renewable sources in total energy consumption (%) 23 Total energy consumption (MWh) 253,879 Non-renewable energy production (MWh) 12,203 Total energy consumption from activities in high climate impact sectors (MWh) 253,879 Energy intensity from activities in high climate impact sectors (total energy consumption per total net revenue (MEUR)) 39 * All Wärtsilä’s activities fall within high climate impact sector NACE-code C28.1.1. - Manufacture of engines and turbines, except aircraft, vehicle and cycle engines. Revenue in 2024: 6,449 MEUR is also reported in Financial statements, Consolidated statement of income. Accounting principles: Total energy consumption includes both direct and indirect energy usage. The direct energy usage includes the fuels used by Wärtsilä subsidiaries. Lower heating values (LHV) are used to calculate the energy consumption of fuels. LHVs are based on information supplied by vendors or results of fuel analysis for engine testing and R&D purposes, and for other fuel consumption the source is the UK Department for Environment, Food and Rural Affairs (Defra). The indirect energy usage includes the purchased electricity and heat. Since the efficiency of purchased electricity and heat generation is not known, the energy conversion is done directly from the purchased values. All of Wärtsilä’s energy consumption is derived from activities in high climate impact sectors. No assumptions are made, and the energy consumption data is collected through the global sustainability reporting tool. Methodology for each energy metric: Consumption of purchased or acquired electricity, heat, steam, and cooling from fossil sources: Purchased electricity from fossil sources = Purchased electricity – electricity from renewable and nuclear sources; Purchased district heat from fossil sources = Purchased district heat – renewable district heat. Share of fossil sources in total energy consumption = Total energy consumption from fossil sources/Total energy consumption. Consumption from nuclear sources: The share of nuclear energy for all countries with Wärtsilä operations is determined by the Association of Issuing Bodies (AIB) and International Atomic Energy Agency (IAEA). Share of consumption from nuclear sources in total energy consumption = Total energy consumption from nuclear sources/Total energy consumption. Consumption of purchased or acquired electricity, heat, steam, and cooling from renewable sources: Electricity and district heat consumption from renewable sources. Consumption of self-generated non-fuel renewable energy: Self- generated electricity from solar panels. Share of renewable sources in total energy consumption = Total energy consumption from renewable sources/Total energy consumption. Non-renewable energy production: Fossil fuels used for self- generated electricity and heat. Energy intensity describes the ratio of total internal energy consumption divided by the total net sales of Wärtsilä (MWh/ MEUR). All of Wärtsilä’s energy consumption is derived from activities in high climate impact sectors. Financial review All energy consumption data is reported in Wärtsilä’s sustainability reporting tool and is based on either invoices or measured values, with the exception of roughly 0.2% of total energy consumption estimated. No measurements of the metrics are validated by an external body other than the assurance provider. Financial review 2.2.6. GHG emissions data (E1-6) Retrospective Milestones and target years Base year Comparative ** N (N/N-1) 2025 2030 (2050) Annual % target / Base year Scope 1 GHG emissions Gross Scope 1 GHG emissions (tCO2eq) 55,000 n/a 37,066 n/a 49,000 (combined Scope 1 + 2) 0 n/a n/a Percentage of Scope 1 GHG emissions from regulated emission trading schemes (%) 0% n/a 0% Scope 2 GHG emissions Gross location -based Scope 2 GHG emissions (tCO2eq) *** * n/a n/a 19,849 n/a n/a n/a n/a n/a Gross market -based Scope 2 GHG emissions (tCO2eq) ** 45,000 n/a 12,771 n/a 49,000 (combined Scope 1 + 2) 0 n/a n/a Significant scope 3 GHG emissions Total Gross indirect (Scope 3) GHG emissions (tCO2eq) n/a 88,938,000 n/a 1 Purchased goods and services n/a n/a 2,008,600 n/a 3 Fuel and energy -related activities (not included in Scope 1 or 2) n/a 10,000 n/a 4 Upstream transportation and distribution n/a 82,900 n/a 6 Business traveling n/a 50,500 n/a 11 Use of sold products n/a 86,786,000 n/a Total GHG emissions Total GHG emissions (location-based) (tCO2eq) n/a 88,994,916 n/a Total GHG emissions (market-based) (tCO2eq) n/a 88,987,838 n/a * The baseline values are based on 3-year average values (2019 -2021); rounded figure . Starting from 2024, the boundaries include companies with less than 10 employees that were not included in the base year calculations. ** Due to the transitional provisions the comparative information is not reported *** The emission factors applied to Scope 2 or 3 do not separate the percentage of biomass or biogenic CO2 *** * The target is based on market -based emissions *** ** Out of the total electricity consumption 64% (58,525 MWh) was from renewable sources in form of self -generated electricity (solar panels), bundled and unbundled energy attribute certificates purchased (EAC). Out of the purchased green electricity, 92% is related to unbundled energy attribute certificates (EAC) and 8% related to bundled EAC. Financial review Accounting principles: The reported figures for R&D and engine testing are mainly based on measured values, based on which specific emission factors are determined. The specific emission factors have been determined for various fuels and engine types through measurements, and they have been externally assured (DNV). The emissions of the heating boilers are calculated based on the fuel consumption. The data is measured/collected in each Wärtsilä company and reported by a named person in a global reporting tool. Wärtsilä uses the operational control approach to establish the organisational boundary for GHG reporting. As defined by the GHG Protocol, Wärtsilä includes operations where the company has the full authority to introduce and implement operating policies. Investees such as associates, joint ventures, or unconsolidated subsidiaries are excluded from the reporting. Scope 1 and 2, and Scope 3 GHG emissions for energy are calculated by Sphera's Corporate Sustainability Software. Scope 1 emissions are reported based on the Greenhouse Gas (GHG) Protocol and cover all direct emissions of greenhouse gases from Wärtsilä. Scope 2 emissions are reported based on the GHG Protocol and include indirect GHG emissions from the generation of power, heat, and steam purchased and consumed by Wärtsilä. For electricity consumption the location-based Scope 2 emissions are calculated by using the emission factors from the International Energy Agency (IEA), and the market-based Scope 2 emission are calculated by using the residual mix emission factors, where available (for Europe and USA), and for other countries the IEA emission factors. For district heating the Scope 2 emissions are calculated by using the emission factors from Defra. The reporting of Scope 3 emissions covers five categories: Category 1: Purchased Goods and Services, Category 3: Fuel- and Energy-Related Activities, Category 4: Upstream Transportation and Distribution, Category 6: Business Travel, and for the first time in 2024, category 11: Use of sold products . 0,1% of GHG Scope 3 emissions have been calculated using primary data. Category 1: GHG emissions of purchased goods and services are calculated by using the spend-based method. The economic value of goods and services purchased is multiplied by the industry- average emission factors obtained from the EXIOBASE database (v3.8.2). Spend data is broken down according to Wärtsilä’s internal purchasing categories and allocated to the most appropriate product group category available within the EXIOBASE database. Category 3: The energy-related GHG emissions are calculated by using the emission factors from IEA, MLC and DEFRA. Category 4, upstream transportation: 7% is calculated based on primary data i.e. fuel consumption and the fuel factors for the fuel used. 93% is calculated on actual distances of all separate legs in the transport chain and fuel factors from reported primary data are used. For purchased outbound logistics, the emissions for logistics services are calculated mainly based on Global Logistics Emissions Council (GLEC) Framework, the global method for calculation and reporting of logistics emissions. Furthermore, primary emission data from transport vehicles has been collected to improve the data quality. Data coverage is 65 % of the total transportation spend and extrapolation is made for the remaining share. Category 6: Emissions of air travel are based on calculations by Wärtsilä’s travel agency and are based on Thrust Data defined emission factors. Category 11: GHG emissions data from the use of sold products is calculated based on number of engines sold in the reporting year, related engine running hours, engine output and engine load multiplied with relevant emission factors. The emissions from sold engines as direct use-phase emissions were accounted for. The calculated lifetime emissions consider the decrease in GHG emissions intensity during the engines’ 25-year lifetime. The reduction targets outlined in the FuelEU Maritime regulation were applied to determine the emissions reduction rate until 2050. The emission factors used are: Lifecycle CO2e emissions per kWh of fuel used Well to tank (WtT) emission factors: ◾ Default emission factors provided in the Fuel EU maritime, Annex II are used for LNG, diesel and methanol. ◾ A separate emission factor was calculated for pipeline gas that is used for engines sold to the energy sector Tank to wake (TtW) emission factors: ◾ Wärtsilä maintains performance manuals for its engines that provide information on engine fuel consumption and emissions data (e.g. CO2, Total Hydrocarbon Content (THC)). THC is used to describe the quantity of the measured hydrocarbon impurities present and the data is used to determine the methane slip in gas operated engines. Wärtsilä engines are tested in accordance with ISO 8178 standard reference conditions and information on CO2e for each engine type, fuel type and engine load are available. Conversion factors from Marine Environment Protection Committee (MEPC). ◾ The effect of methane slip is considered in engines powered by LNG: GWP for CH4 is 28 (over 100 years) Scope 3 categories excluded from reporting: Excluded category Explanation 5. Waste generated in operations Calculated but less than 0.1% of total scope 3 emissions. 7. Employee commuting Calculated but less than 0.1% of total scope 3 emissions. 8. Upstream leased assets Upstream leased assets are not material for Wärtsilä. 9. Downstream transportation and distribution Calculated but less than 0.1% of total scope 3 emissions. 10. Processing of sold products Wärtsilä does not sell any intermediate products. Wärtsilä's products are not processed downstream. 12. End -of-life treatment of sold products Calculated but less than 0.1% of total scope 3 emissions. 13. Downstream leased assets Wärtsilä has no relevant downstream leased assets that are reported on Group level. 14. Franchises Wärtsilä is not using any franchises. 15. Investments Wärtsilä has no investments that would account to relevant GHG emissions. Financial review Note on value chain data estimations: Wärtsilä continuously strives to improve data accuracy by increasing the amount of primary data used in the Scope 3 calculations. For Category 1: Purchased goods and services, Wärtsilä aims to be able to change the basis for calculations from spend-based to weight-based data for purchased goods as soon as the company has developed the primary data on weights to an accurate level. For Category 4: Upstream transportation, Wärtsilä aims at collecting more primary data from the logistic service providers, but this depends on the further development of the service providers’ reporting capabilities. No measurements of the metrics are validated by an external body other than the assurance provider. Contractual instruments used for purchase of energy Percentage of contractual instruments of total electricity consumption (MWh) 74% Bundled energy attribute certificates (EAC) 4,358 MWh Unbundled energy attribute certificates (EAC) 51,936 MWh Percentage of contractual instruments used for sale and purchase of energy bundled with attributes about energy generation in relation to total electricity consumption (MWh) 6% Percentage of contractual instruments used for sale and purchase of unbundled energy attribute claims in relation to total electricity consumption (MWh) 68% Disclosure of types of contractual instruments used for sale and purchase of energy bundled with attributes about energy generation or for unbundled energy attribute claims Bundled energy attribute certificates (EAC): Guarantees of origin (GOs) Unbundled energy attribute certificates (EAC): Guarantees of origin (GOs), IRECs GHG emissions intensity GHG intensity per net revenue Comparative N % N / N-1 Total GHG emissions (location -based) per net revenue (tCO2eq/Meur) n/a 13,800 n/a Total GHG emissions (market-based) per net revenue (tCO2eq/Meur) n/a 13,799 n/a * Revenue in 2024: 6,449 MEUR is also reported in Financial statements, Consolidated statement of income. ** Due to the transitional provisions the comparative information is not reported GHG emissions intensity describes the ratio of total greenhouse gas emissions (Scope 1, 2 and 3) divided by Wärtsilä’s total net sales in the reporting year (tCO2e/MEUR). No measurements of the metrics are validated by an external body other than the assurance provider. 2.2.7. GHG removals, storage, carbon credits and internal pricing (E1-7, E1-8) Within the company’s value chain, Wärtsilä is developing the industry’s first onboard carbon capture and storage (CCS) technology. Outside Wärtsilä’s value chain, the company considers purchasing carbon credits as a last resort, after other measures to reduce or avoid emissions have been explored. High-quality carbon reduction projects will be selected together with a credible supplier if carbon offsetting is needed. Wärtsilä has not implemented internal carbon pricing and no carbon credits were used in 2024. 2.3 . Pollution (ESRS E2) According to the double materiality assessment pollution to air from Wärtsilä’s products (downstream) and substances of (very high) concern in Wärtsilä’s supply chain (upstream) and at end-of-life treatment of sold products (downstream) are material impacts for Wärtsilä. In addition, the substances of (very high) concern is a material risk. 2.3.1. Policies on pollution (E2-1) Wärtsilä’s approach to pollution is highlighted by two public policies, which have been approved by the Board of Management which also carries the ultimate responsibility for implementing them. The policies are available on the company’s website. Wärtsilä’s Code of Conduct, also approved by the Board of Directors, has a section on environment: “Wärtsilä is committed to continuously improving the environmental performance of its products, solutions, and operations. We play an important role in society by providing solutions for sustainable energy production, and by driving the development of green marine transport. To protect the environment and reduce adverse impacts, we seek to raise environmental awareness, prevent pollution, enhance the sustainable use of natural resources, and substitute and minimise the use of hazardous substances. Moreover, we proactively evaluate and mitigate environmental risks in our operations by adhering to our policies and instructions, taking precautionary measures, and reporting and properly managing environmental issues.” Also, according to Wärtsilä’s Quality, Environmental, Health and Safety policy “ Protecting the environment, enhancing customer business, and contributing to a sustainable future is the essence of what we do. Our solutions and operations area safe, reliable, efficient, environmentally sound, and compliant with regulatory and other applicable requirements .” These global policies apply to all Wärtsilä employees, and the Code of Conduct also states in relation to all suppliers, that suppliers and business partners “ are required to apply similar principles of ethical business behaviour as reflected in this Code .” In addition, Wärtsilä Supplier Requirements covering all suppliers globally state, that “as a minimum, the supplier shall have an environmental management system that complies with the international standard ISO 14001 or Eco-management and Audit Scheme (EMAS) latest edition .” This is the main means for addressing the avoidance of incidents and emergency situations, and controlling and limiting their impact on people and the environment. The ISO standard covers, among other things, environmental risk management. As regards substances of concern and very high concern, in addition to the Supplier Requirements, Wärtsilä’s “Environment, health and safety requirements” for suppliers states that ”Wärtsilä has to eliminate and restrict certain hazardous substances in its products to comply with these regulations, and provide to its customers information on hazardous substances found in the products. This information can Financial review only be collected with the help of Wärtsilä's suppliers .” Thus, co- operation with suppliers is crucial in order for Wärtsilä to have a complete understanding of the substances of concern in its products. These requirements also contain “Wärtsilä Black & Grey list”, which indicates to suppliers the substances classified as restricted and prohibited at Wärtsilä. The Black & Grey list is updated continuously to ensure that all restrictions and obligations related to substances of concern are followed. The requirements address, therefore, the substituting and minimising use of substances of concern in Wärtsilä’s supply chain. As regards downstream, the company’s product design is the only means for having an impact. There is no direct requirement to phase out substances of concern as such, but this comes naturally through following applicable regulations. Wärtsilä needs to simultaneously work on finding new substances to replace those that may be restricted in the future. 2.3.2. Actions related to pollution (E2-2, E2-3) For two decades already, Wärtsilä has been a significant contributor in technology development and deployment of LNG- fuelled marine propulsion. The use of LNG fuel has significantly reduced pollution levels compared to the technologies it displaces, such as steam turbines and HFO-fuelled engines. In 2024, 70% of engine MW’s delivered to Marine customers were capable of operating on cleaner gas fuels. For Energy deliveries, the share was 91% (deliveries also include the engines sold by Wärtsilä which have been manufactured in two joint ventures, which have otherwise been excluded from this statement). For Wärtsilä, considering the lifecycles of the company’s products which can be up to 30 years or even longer, the vast majority of pollution is emitted by engines run by customers. Wärtsilä works actively on developing more efficient products, which in turn, reduces emissions of pollutants. The company also develops and improves a number of existing pollution prevention technologies, which include for example, the Ultra-low-Nox catalysator capable of reducing Nitrogen Oxides down to the levels required by today’s most stringent regulations applied globally. In its own global operations, Wärtsilä strictly follows local regulations on pollution limits. Any possible deviations from these limits are recorded, reported, and rectified as soon as possible. Wärtsilä actively follows the development of global emission regulations, especially from the EU, the International Maritime Organisation (IMO) and the USA Environmental Protection Agency (EPA). Wärtsilä also actively engages with the decision makers on pollution related topics, informing them about ongoing technological emission reduction developments. Based on this new technologically feasible emission limits can be imposed. Wärtsilä emphasises that pollution levels need to be decreased at system level and regulations should have this as an aim. As a good example of a current solution, Wärtsilä has developed and introduced to the market a new ultra-low emissions version of its already efficient Marine Wärtsilä 31DF engine. When operating on LNG, in addition to a significant reduction in methane emissions, this new version can further reduce nitrogen oxide (NOx) emissions at a 50% load point by up to 86%. The most important development actions ongoing are those related to Wärtsilä’s ‘Set for 30’ commitment to develop a product portfolio that will be ready for zero carbon fuels by 2030. Although Wärtsilä has not set a specific target for pollution reduction as such, the emerging sustainable fuels will also lower overall pollution levels. Compared to diesel, methanol and ammonia will reduce NOx levels and have significantly lower levels of SOx and particulates. Compared to natural gas hydrogen is expected to have similar NOx levels but VOC emissions, for example, are drastically reduced. The development of concepts for pure hydrogen for land-based power plants continued throughout 2024. Market release was given in mid-2024, and the concept for industrialisation will be selected during 2025. Altogether Wärtsilä’s R&D expenses in 2024 were EUR 296 million, which represents 4.6 % of net sales. The clear majority of the total sum is directed towards developing more sustainable products in various ways. The ‘Set for 30’ R&D programme to have a product portfolio running on zero carbon fuels by 2030 amounted to capital expenditures of 27 MEUR and operational expenditures of 10 MEUR. For 2025 these expenditures are estimated at about 29 MEUR as capital expenditures and 18 MEUR as operational expenditures. These R&D costs are not reported separately in Wärtsilä’s financial reporting. There is no public target related to substances of concern or substances of high concern. Nevertheless Wärtsilä ensures compliance with all regulations restricting the use of such substances. The company sees no significant opportunities related to hazardous substances, and ensuring regulatory compliance is therefore seen as sufficiently addressing the issue. Regarding pollution there is no separate target as Wärtsilä’s strategic focus is on decarbonisation. However, as explained above, the R&D efforts towards sustainable fuels should also lead to pollution reduction. 2.3.3. Pollution data from Wärtsilä’s own operations (E2-4) Emissions (t) 2024 Nitrogen oxides 440 Sulphur oxides 3 Total hydrocarbons 76 Particulates 4 VOC 15 Accounting principles: The reported figures for R&D and engine testing are mainly based on measured values, based on which specific emission factors are determined. The specific emission factors have been determined for various fuels and engine types through measurements, and they have been externally assured. No other measurements of the metrics have been validated by an external body other than the assurance provider. The emissions from heating boilers are calculated based on their fuel consumption. Other than the GHG emissions of vehicles, emissions are calculated by using the Technical Research Centre of Finland’s (VTT) Lipasto database emission factors. The data is measured and collected in each Wärtsilä company and reported by a named person via a global reporting tool. Financial review 3. SOCIAL INFORMATION 3.1 . General information on Wärtsilä’s employees (S1-6) Characteristics of undertaking's employees - number of employees by gender Headcount at year end 2024 Total 18,913 Male 15,360 Female 3,553 Number of employees in countries with 50 or more employees representing at least 10% of Wärtsilä’s total number of employees Country Headcount at year end Finland 4,745 Information on employees by contract type and gender Number of employees by employment contract and gender in 2024 Permanent Temporary Non- guaranteed hours Total 17,166 1,290 457 Male 14,018 1,021 320 Female 3,148 268 137 Number of employees who have left Wärtsilä during the reporting period and the rate of employee turnover No. of employees that left Wärtsilä 1,310 Turnover rate 7.7% Accounting principles: Employees and non-employees: Data on Wärtsilä employees is reported as headcount at the end of the reporting period and is mainly derived from the global Employee Central SuccessFactors. Less than 1% of employees, the amount varying between indicators, lack having all their employment details in the global HR databases. Their gender, employment and contract types have been assumed as being the same as an average global employee. The numbers of employees that have left do not include estimates of employees whose employment or resignation has not been formally recorded. Data on non-employees has been omitted from this statement. Employee turnover is calculated by dividing the headcount number of employees having left the company voluntarily or due to dismissal, retirement, or death in service during the reporting period by the total headcount of permanent employees at the end of the reporting period. No measurements of the metrics are validated by an external body other than the assurance provider. 3.2 . Occupational health and safety (ESRS S1) 3.2.1. Occupational health and safety policy (S1-1) Wärtsilä’s occupational health and safety principles are defined in the company’s Code of Conduct, and the Quality, Environmental, Health and Safety (QEHS) Policy and in the Wärtsilä Environmental, Health and Safety Directive. According to Wärtsilä Code of Conduct, “Wärtsilä is committed to creating and maintaining a safe and healthy work environment for our employees, contractors, and other partners, wherever we operate. We believe all accidents can be prevented by promoting a strong safety culture, improving our performance, and by applying high-level occupational health and safety standards. We follow health, safety, and security requirements, proactively identify safety hazards, and report near misses to ensure effective risk management measures. Everyone has the responsibility and authority to intervene and stop work in an unsafe situation. We also maintain high product safety standards to guarantee the safety of our customers and end-users. Furthermore, we promote personal growth, wellbeing, and a work- life balance. We take action to maintain a healthy and caring workplace that supports our daily activities and enhances a safe and inclusive culture.” Both the Code of Conduct and QEHS Policy are updated when necessary and approved by the Board of Management which is also ultimately accountable for implementation of the policies. The Code of Conduct is also approved by the Board of Directors. Code of Conduct training is mandatory for all employees every second year, and both the Code of Conduct and the QEHS Policy are available on Wärtsilä intranet as well as external webpages, and are widely communicated by, for example, posters at production facilities. The Code of Conduct also states, that Wärtsilä is committed to respecting internationally recognised human rights and standards as outlined in the International Bill of Human Rights, the International Labor Organization’s Declaration on Fundamental Principles and Rights at Work, and the United Nations Guiding Principles on Business and Human Rights. Occupational health and safety is a topic covered by the said standards, and thus respecting them means in practice minimising occupational health and safety hazards. Engagement with employees in this regard takes place by various means, including open communication between employees and company management, and in most Wärtsilä companies in the occupational health and safety committees. The remedy in cases of occupational injuries or ill health is comprised mainly of ensuring proper treatment and insurance coverage for the employees. The insurance coverage varies from country to country but is always as a minimum at the required level specified by each country’s legal requirements. 3.2.2. Engagement with employees on health and safety (S1-2) In addition to the health and safety management system, Wärtsilä companies also apply occupational health and safety programmes as required by local legislation. These are normally developed by occupational health and safety committees made up of company management and personnel representatives. Altogether, 84% of all Wärtsilä companies currently have an occupational health and safety (OHS) committee. The composition of the committee, the frequency of committee meetings, as well as assessing the effectiveness of the committee’s decisions vary between Financial review companies and is based on the needs identified. In addition to the local health and safety committees, another way for employees to give input regarding their views on health and safety topics on a high level are the global MyVoice survey conducted every two years, pulse surveys, and via safety culture surveys conducted when the need arises. Wärtsilä also has a European Works Council. 3.2.3. Processes to remediate negative impacts and channels for own workforce to raise concerns (S1-3) Health and safety is part of the new hire introduction programme for all new employees. ‘Basics of Health & Safety’ e-learning introduces Wärtsilä’s guidelines and approach to health and safety, including Wärtsilä Life-saving rules and Stop work authority, as well as the reporting process in WeCare, a global application for reporting incidents and near miss cases. The completion rate of the Basics of Health & Safety course is tracked monthly. To ascertain how well employees trust Wärtsilä’s processes to raise their concerns or needs, and to have them addressed, the global MyVoice survey, conducted every two years, includes a safety question "Safety risks are quickly corrected in my company". In the 2024 survey 85% of respondents gave a positive response to this question. The remedy in cases of occupational injuries or ill health comprises mainly of ensuring proper treatment and insurances for the employees. The insurance coverage varies from country to country, but at a minimum, is always at the level required by each country’s legal requirements. All Wärtsilä employees have access to Wärtsilä WeCare, a global application for reporting occupational health and safety incidents, near miss cases, unsafe conditions and safety observations, both negative and positive. For each case reported there is a responsible line manager automatically contacted to investigate, and when needed to remedy the situation. The information received through the WeCare system is also consolidated and analysed at regional, business, and global levels by EHS professionals and responsible management representatives. 3.2.4. Health and safety actions (S1-4) In 2023, Wärtsilä initiated a four-year safety programme ‘Success through safety’. The programme has actions in four streams: employee safety, contractor safety, product safety, and occupational health. 2024 actions included the following: ◾ Released an improved digital tool, Job Safety Analysis, for Field Service to support risk assessment when working at customer sites and on vessels. The goal is to enable more thorough risk assessment in a simplified manner, and to follow the latest Wärtsilä safety guidelines. ◾ Developed and implemented a new corporate guideline regarding Noise Exposure Management aimed at reducing exposure to noise. ◾ Developed and implemented a new safety awareness training programme, "One Winning Team", to engage frontline employees and their supervisors. Wärtsilä is committed to continuing implementation of this training programme, and aims to have all front-line employees trained by the end of 2025. ◾ Launched a global framework for frequent traveler health checks. The company is committed to continuing the implementation of this programme in 2025 to ensure full coverage. Every year Wärtsilä organises a Safety Day to enhance safety awareness, promote safety and wellbeing measures, strengthen the company safety culture, and celebrate success in safety. The tenth annual Safety Day took place from 7-13 October 2024 with the theme "Mind your head". The focus was both on physical head safety as well as psychological safety and wellbeing. Global activities included townhall sessions with board of management members, and a keynote presentation. Each Wärtsilä location organised a programme relevant to their needs, and these included, for instance, safety walks, expert training sessions and first aid training sessions. In cases of actual incidents, proper care has always been arranged and the persons involved may have received compensation from insurance. However, due to privacy restrictions, Wärtsilä has no clear visibility to monetary compensations. Wärtsilä aims to provide a healthy working environment that supports growth, wellbeing, and a work-life balance. In 2024, a new global Wellbeing framework was launched. The framework consists of six specific wellbeing elements that will be embedded into existing processes and practices. In 2024, the focus was on selected target groups, frequent travellers and management teams, and on mental health topics. The governance model for wellbeing and Wellbeing KPIs were defined during 2024, and an implementation roadmap was developed. The new framework helps Wärtsilä lead and measure wellbeing. The framework has no set timeframe for completion. The indicators used to measure occupational health and safety performance include the number of accidents, lost workdays due to accidents, the frequency of accidents, and the number of near miss and hazard observations, as well as the number of management safety walks. Wärtsilä also measures the completion rates of the global health and safety training programme. Those Wärtsilä companies having an OHS committee follow their performance within the company and take all necessary steps to improve the OHS processes locally. The safety performance of each business and company is monitored monthly, and the results are reviewed by Wärtsilä’s Board of Management. Health and safety topics are managed in Wärtsilä on multiple levels of the organisation. Business Management Teams in each Business secure the management system framework by communication, promotion, support, and engagement. Business Management Teams set QEHS targets and regularly monitor the effectiveness and performance of the management systems. Line management is responsible for implementing the EHS management system within their own operations and operative actions on EHS issues. Line Managers have overall responsibility for, and are held accountable for, the health and safety of people working for them. Each Wärtsilä company has a responsible EHS manager to support local implementation of the health and safety policies, processes, and actions. Business EHS organisations are responsible for acting on global and regional issues. The group sustainability function, in co-operation with the global EHSS Team, creates global guidelines, training sessions, and decisions on ways of working covering all relevant employees. Wärtsilä’s Board of Management has ultimate responsibility for ensuring that necessary resources are allocated to health and safety activities, as well as setting relevant global targets. Financial review Wärtsilä establishes and monitors EHS objectives based on significant environmental aspects and EHS risks and opportunities taking into consideration Wärtsilä’s QEHS Policy, strategy, audit reports, legal and other requirements, technical and financial options, operational and business requirements and stakeholder feedback. Health and safety hazards are identified and risks assessed regularly. EHS action plans are prepared for each objective. The EHS action plans are approved by the respective management team. The EHS action plans are reviewed regularly and are updated in case of significant changes in activities, products, services or operating conditions. EHS objectives are set at different organisational levels; corporate, business / business units, and subsidiary levels. All corporate level objectives and programmes are approved by Wärtsilä’s Board of Management. Corporate level objectives can be set to directly apply to businesses, business units or subsidiaries as such or allocated in a case-specific manner. Wärtsilä employees and partners have the responsibility and authority to stop work when identifying a hazard, which could jeopardise the safety of personnel, partners and/or public in general. Wärtsilä is committed to this Stop Work authority by preventing any retaliation in response to exercising this authority. It is not possible to state the exact costs of these activities, which are incurred as a part of hundreds of Wärtsilä employees’ working time. 3.2.5. Safety target (S1-5) The Board of Management has set a long-term corporate level target of zero injuries for Wärtsilä own employees in line with the Code of Conduct and QEHS Policy. This target is a long-term commitment by the company to strengthen its safety culture, and it requires actions from all Wärtsilä companies, businesses, and employees. Employee representatives were not directly involved in setting the target or tracking performance against it on a global level. At local levels, the employee representatives in health and safety committees, made up of company management and personnel representatives, cooperate in developing local health and safety programmes based on local circumstances. Altogether, 84% of all Wärtsilä companies currently have an occupational health and safety (OHS) committee. Characteristics of Wärtsilä’s employees (S1-6) S1-6 information has been reported in section 3.1. 3.2.6. Occupational Health and Safety management system, data (S1-14) Wärtsilä’s subsidiaries are required to have in place a management system that conforms to both the QEHS Policy and the EHS Directive. The main aspects of the management system relate to compliance with legislation, identifying and minimising occupational health and safety risks, personnel training, implementing effective health and safety programmes and instructions, recording, and investigating occurred incidents, emergency response, and the continual improvement of occupational health and safety performance. At the end of 2024, 74 Wärtsilä companies, representing roughly 89 % of Wärtsilä’s total workforce, were operating with a certified ISO 45001 occupational health and safety management system in place. Type of injury and rates of injuries, and number of work-related fatalities 2024 No. of fatalities of own employees, and other workers working on Wärtsilä premises, as a result of work-related injuries and work- related ill health 0 No. of recordable work-related accidents for own employees 81 Rate of recordable work-related accidents for own employees/ million working hours 2.20 Accounting principles: Number of recordable work-related accidents for own workforce: a work-related injury that results in any of the following: fatality, days away from work, restricted work or transfer to another job, and medical treatment beyond first aid. Commuting injuries are not included in the recordable work-related accidents. Rate of recordable work-related accidents for employees is expressed as total recordable injuries per million working hours. The working hours are actual paid working hours. No measurements of the metrics are validated by an external body other than the assurance provider. 3.3 . Skills and career development (ESRS S1) 3.3.1. Policy on skills and career development (S1-1) Wärtsilä’s professional growth approach encourages employees to identify development drivers, set development goals, and find their development opportunities. Equal treatment and non-discrimination are integral parts of Wärtsilä’s professional growth approach, as everyone is entitled to learn new skills, develop their careers and grow professionally. The Code of Conduct has a section, in addition to respecting general human and labour rights, on ‘Fair employment practices’: “We promote a workplace where every employee feels valued and respected by fostering equal opportunities, and by creating a diverse and inclusive work environment that embraces everyone’s contributions. We apply fair and equitable remuneration principles that consider the various geographical areas in which we operate. Our employees are selected based on merit, competencies, potential, and role fitment. We continuously invest in our people’s development. Wärtsilä prohibits bullying, harassment, inappropriate treatment and violence. Wärtsilä is dedicated to ensuring an environment free from discrimination based on race, ethnicity or national origin, colour, gender, family status, sexual orientation, creed, disability, age, or religious or political beliefs.” The Code of Conduct is available on Wärtsilä’s intranet as well as on the company’s public webpages, and Code of Conduct training is mandatory for all employees to take at a minimum every two years. The Board of Management is ultimately accountable for implementation of the Code. Employees who report a potential Code of Conduct violation in good faith will not suffer harassment, retaliation, or adverse employment consequences. All reported incidents are investigated, and appropriate corrective actions are taken, as necessary. The promotion rate at Wärtsilä was 7.4% in 2024, implying that employees can advance their careers and develop their skills internally. In addition to promotions, employees can move between Financial review businesses and functions to progress their careers. The organisational mobility rate was 1.2% in 2024. Accounting principles Promotion rate: Promotion is defined as the advancement of employees in an organisation. Often it involves a higher rank and increased responsibilities, and a higher salary. Technically , promotion results in a Wärtsilä job grade increase. The promotion rate is the proportion of employees at the end of the previous year that were given a promotion during the succeeding year. Organisational mobility rate: Organisational mobility takes place when an employee moves between organisations. It includes moves between businesses and functions but not within them (for example, it does not include moves from one business unit to another within the same business). The organisational mobility rate is the proportion of employees at the end of the previous year that moved between organisations during the succeeding year. 3.3.2. Wärtsilä’s listening strategy (S1-2) Wärtsilä’s Code of Conduct calls for ongoing and open dialogue between the company's management and employees, which aims to enable employees to openly discuss with their line managers any issues they might have in relation to, among other things, their skills and career development. The overall responsibility for employee engagement lies with the Executive Vice President, Human Resources, as do ensuring that related activities take place and that their outcomes are informed to the Board of Management. The effectiveness of engagement with the company’s workforce is assessed through employee engagement surveys every second year, which provide insights through five KPIs (engagement, wellbeing, inclusion, intent to stay and overall experience) and 25 Driver themes (including for example, communication, collaboration, ethics, and growth & development). In addition, through the driver themes, leadership is also assessed and receives an overall score. In 2024, the response rate for the MyVoice employee engagement survey was 88%. The employee engagement score was 82%. Based on the survey results, Line Managers are responsible for implementing action plans and initiatives together with their teams, the aim being to address concerns or enhance positive outcomes. Additionally, the progress of these initiatives is tracked through yearly engagement Pulses, ensuring follow-up on measurable improvements, and contributing to a stronger, more motivated workforce. 3.3.3. Channels to raise concerns (S1-3) Wärtsilä employees are encouraged to voice their concerns relating to any potential violations of the Code of Conduct and its underlying policies and instructions. The primary means for reporting suspected misconduct incidents is via line management. However, employees also have alternative reporting routes. These include an externally hosted whistleblowing channel, which allows reporting in any language, reporting directly to the compliance function, or by informing legal affairs. Employees who report a potential Code of Conduct violation in good faith will not suffer harassment, retaliation, or adverse employment consequences. All reported incidents are investigated, and appropriate corrective actions are taken, as necessary. 3.3.4. Action plans and resources to manage skills and career development (S1-4) Employee Value Proposition In 2024, Wärtsilä launched its Employee Value Proposition (EVP), "Fuel Your Power," aimed at fostering a sustainable, people- centered work environment that aligns individual growth with organisational success. With over 3,000 employees hired annually in a highly competitive talent market, standing out is crucial to establishing Wärtsilä as an employer of choice. The EVP serves as a holistic messaging framework, integrating key areas such as performance management, professional growth, and wellbeing into a clear commitment to both current employees and future talent. It is designed to attract, engage, and retain top talent, ensuring the long-term success of the organisation. The two main elements of the EVP, Growth and Impact, are reinforced by fact-based proof points, highlighting the opportunities for personal development and making a meaningful contribution – critical factors in convincing talent to join and stay with Wärtsilä. In 2024, the MyVoice employee engagement survey results indicate that 81% of all employees wish to stay at Wärtsilä for longer than three years. This is 14.8 pp above global benchmarking, and as such is the top scoring item against the global benchmark. Leading performance and growth Wärtsilä’s Performance Management drives business success by ◾ setting performance goals that are aligned to the strategic goals of the organisation ◾ reviewing and assessing progress, removing obstacles, and taking action when required ◾ ensuring continuous dialogue and feedback ◾ and developing the knowledge, skills, and abilities of employees. The Performance and Development Dialogue Process links The Wärtsilä Way with the strategic business priorities to team and individual performance and development. The process starts at the beginning of the year when the performance and development goals are set. Through dialogue, the Line Manager and employee build a common understanding of how the employee’s work and individual goals contribute to team and business success. Everyone deserves to have clarity on what is expected of them in their roles i.e., what good performance looks like. The goal setting dialogue is followed by discussions and feedback throughout the year and ends with a Performance and Development Review. Well- defined development goals with clear action plans, also referred to as Individual Development Plans, support all employees in knowing how they can develop their skills and competences. In 2024 efforts have been made to improve the quality of Performance Management by making enhancements to the annual process (e.g. adding elements of professional growth and talent identification) and building leadership capability through impactful training efforts. In 2023, Wärtsilä also introduced a renewed concept for addressing underperformance, as well as a Performance Improvement Plan process. A programme for leading a high-performance culture was initiated in January 2024. The primarily target group consists of 2500 Line Mangers, and through them the same dialogues and exercises are conducted within their teams. The programme contains several interactive workshops, of which one is dedicated to Professional Growth. By the end of 2024, 2000+ Line Managers had participated and received training on how to lead performance and enable professional growth in their teams. This programme is expected to Financial review continue in 2025, after which it will be incorporated into the company´s onboarding practices. Building leadership for impact The Wärtsilä Leadership Model supports the company’s strategic growth by outlining the desired leadership behaviour. The model consists of three areas, and in total there are 15 descriptive leadership qualities. It provides Wärtsilä leaders with direction and guidance on how to collaborate, communicate, and lead in different situations. An eLearning on the Leadership Model is available in 12 languages for all Wärtsilä employees. It is made mandatory for Line Managers, and has currently been completed by 89% of all Line Managers. The expected outcome of this eLearning is to strengthen leadership by making sure the leaders have a thorough understanding of the model, and know how to apply the desired leadership behaviour. The key leadership development programmes - Orchestrator, Accelerator and Wärtsilä Leader, are essential for bringing leadership behaviour to life, thereby supporting the leaders in acquiring the desired competences. Additionally in 2024, Wärtsilä continued to deploy the Leadership Model within key people practices. The model has been integrated into the Wärtsilä 360-leadership assessment, the Talent Review process, and the Performance and Development Dialogue process. To reach Wärtsilä’s ambition of being the employer of choice for current and future employees, the company is continuously enhancing its talent management practices. In 2024, the Talent Review process covered 1,160 senior leaders and individual contributors, of which 8% were identified as key talents. The gender diversity of this group is higher than for all assessed; females 35% (28.8%) and males 65% (71.2%). In 2024 the focus has been on improving process quality, building line manager competencies in succession planning, and on implementing impactful talent management practices, for example, internal career mobility. Building a learning organisation A learning organisation is a state of being, where everyone commits to learning, unlearning, sharing, and improving. Wärtsilä aims to become a learning organisation, to stay competitive and innovative, and to inspire its people to make a difference. The company wants to empower its people to stay curious and develop their skills and competences. Learning is a continuous process, and the 70-20-10 learning principle supports us in knowing how to learn effectively, learn by doing (70%), by sharing (20%) and by studying (10%). In the MyVoice employee engagement survey, the favourability score for the statement ‘I have good opportunities to learn and develop at this company’ is impressive. The score has steadily been improving, and from 2020 to 2024 it grew by 21.3 percentage points (pp). 80% of Wärtsilä employees say that they agree or strongly agree with the statement, this is 6.9pp above the global external benchmark. Wärtsilä’s work to become a learning organisation clearly gives visible results and is valued by its employees. The development programme ‘Grow – Building our Learning Organisation’ has been pivotal for Wärtsilä when collectively creating an understanding of what a learning organisation is and how the company can foster psychological safety, growth mindset, feedback culture, and continuous improvement. By the end of 2024, a total of 537 employees had participated in the programme. In 2023 the Wärtsilä Continuous Improvement Model was launched. The Wärtsilä Continuous Improvement model is built on values, principles, methods and results. It is a mindset of continuously wanting to find ways to better serve customers. At the end of 2023 the WCI Foundation learning programme was launched. It consists of 11 eLearnings, and they are intended for all Wärtsilä employees, with the purpose being to become familiar with the WCI model and mindset. In the beginning of 2024, the WCI Transformatio n learning programme targeting leaders was launched. It consists of seven eLearnings and dives deeper into WCI knowledge, and how to apply the principles in practice. By the end of 2024, 8,490 persons had completed all WCI Foundation eLearnings, and 3,042 persons had completed all eLearnings in WCI Transformation. In 2024, Wärtsilä continued to build its coaching and mentoring capabilities to foster an open culture where growth and development are valued, and to deliberately invest in it. Coaching and mentoring provide several benefits to the organisation. Wärtsilä expects, that these include helping people unlock their personal potential, building relationships and collaboration between colleagues, enabling the cross-border transfer of knowledge, fostering leadership and professional growth, as well as expanding the professional network within the organisation. In 2024, Wärtsilä’s internal coach pool remained on a sizable level of almost 50 coaches and around 150 pairs have gone through the coaching process to date. In 2024, there were three formal mentoring programmes, with 157 mentor /mentee pairs. 21 mentees participated in the Catalyst group mentoring programme where Board of Management members act as mentors. To further strengthen the development of skills and competences at Wärtsilä, a global Competence Management framework with a renewed global competence catalogue will be built during 2025- 2026. This framework will be leveraged by many people processes at Wärtsilä, for example when setting the development goals, people can assess competences, thereby identify development needs and matching development opportunities. For this, a Career Management framework will be established during 2025-2026. The Career Management framework will support Line Managers in discussing career aspirations with employees, and in guiding them on how to create forward-looking career development plans based on their interests and needs. By visualising dynamic career pathways, employees will see different options for advancing in their careers; moving up, laterally and diagonally. This will be important for Wärtsilä in providing employees with career development opportunities, which is crucial for retaining talent. Wärtsilä employees attended a total of 16.3 formal learning hours per employee in 2024. The average amount spent on formal training and development per employee headcount was EUR 647 in 2024. However, it is important to recognise that the major part of learning takes place during the everyday flow of work, and not in formal training. Wärtsilä prides itself on offering numerous opportunities for its people to learn and develop in accordance with the 70-20-10 learning principle. Most learning takes place outside the classroom and cannot, therefore, be measured in terms of conventional training hours or learning days. As the programmes and activities described above have been created and are being run as a part of many employees’ working time, it is not possible to state their exact costs. Preventing negative impacts on employees, in this context non- discrimination, is based on Wärtsilä Code of Conduct. Employees who report a potential Code of Conduct violation in good faith will not suffer harassment, retaliation, or adverse employment Financial review consequences. All reported incidents are investigated, and appropriate corrective actions are taken, as necessary. No cases of actual discrimination requiring remedial action were reported in 2024. 3.3.5. Target for Individual Development Plan (S1-5) Well-defined development goals with clear action plans, also referred to as Individual Development Plans, support employees in knowing how they can develop their skills and competences. In line with the Code of Conduct, which states that “ we continuously invest in our people’s development ”, Wärtsilä’s new public target is to achieve a long-term goal of 100% Individual Development Plan coverage for the eligible population. The target was formulated by the Human Resources Leadership Team and approved by the Board of Management in August 2024. Employee representatives have not been involved in setting or following this target. Characteristics of Wärtsilä’s employees (S1-6) S1-6 information has been reported in section 3.1. 3.3.6. Skills and career development data (S1-13) Performance and career development reviews 2024 Coverage of employees (% of total headcount) 96 Male (% of male headcount) 97 Female (% of female headcount) 95 Individual Development Plan coverage for eligible population 2024 Coverage (% of eligible population) 57.8 Male (% of eligible male population) 57.7 Female (% of eligible female population) 58.1 Training hours / employee 2024 All employees 16.3 Male 17.0 Female 13.6 3.3.7. Remuneration metrics (S1-16) Gender pay gap -0.23% Annual total remuneration ratio of the highest paid individual (CEO) to the median annual total remuneration for all employees 43.6/1 * Employees’ remuneration data excludes benefits, pension s and overtime payments. 3.3.8. Number of complaints to raise concerns on discrimination, cases of discrimination including harassment, and fines, penalties and compensation for damages (S1-17) Number of incidents of discrimination 0 Number of complaints on discrimination filed through channels for people in own workforce to raise concerns 1 Number of complaints on discrimination filed to National Contact Points for OECD Multinational Enterprises 0 Amount of material fines, penalties, and compensation for damages as result of violations regarding discrimination 0 Accounting principles: Performance and Development Dialogue process: ◾ The process starts at the beginning of the year when the performance and development goals are set. Through dialogue, the Line Manager and employee build a common understanding of how the employee’s work and individual goals contribute to team and business success. The performance and development goals are mutually agreed upon, and are documented in the SuccessFactors application. ◾ The goal setting dialogue is followed by discussions and feedback throughout the year. Comments, feedback, possible adjustments etc. can be documented in the SuccessFactors application. ◾ The process is concluded with a Performance and Development Review at the end of the year. The review starts with the employee filling out a self-assessment in the SuccessFactors application to evaluate his/her own performance during the past year. Thereafter, a dialogue is held where the performance goals are evaluated, and their progress discussed. Individual Development Plan: One of the outcomes of the Performance and Development Dialogue process is the Individual Development Plan, with well-defined development goals and clear action plans to achieve the development needs. Everyone is encouraged to create a long-term plan that includes the development of competences, skills, and career in line with business strategy and one’s own aspirations. At Wärtsilä the 70-20- 10 development model guides development, meaning that the employees develop through formal training sessions and programmes (10% of the learning), as well as informally by sharing and learning from others (20% of the learning), and on the job experience (70% of the learning). Most of the learning takes place on the job. When following up the training days per employee, since on the job experience and learning from others are intangible, Wärtsilä focuses on measuring the formal training and programmes. Performance and Development Dialogue process coverage: The Performance and Development Dialogue process covers the eligible population. Progress and completion of the process is followed via SuccessFactors (Wärtsilä’s global HR information system). The process completion deadlines for current year goal setting and previous year goal evaluation is by the end of February each year. Individual Development Plan (IDP) coverage: As a part of the Performance and Development Dialogue process, each employee within the eligible population having joined Wärtsilä before 30 September of the reporting year, should have an Individual Development Plan. The coverage percentage is calculated by the following formula: (Employees in the eligible population having completed the process with at least one recorded development Financial review goal/ those employees active in the reporting year and having had the form for recording IDP opened for the respective reporting year) * 100 Eligible population for Performance and Development Dialogue process and Individual Development Plan: By default, Wärtsilä's active employees globally participate in the Performance and Development Dialogue process. The following employee groups are excluded from the eligible population: Trainees, blue collars, new hires after 30 September, employees who do not have access to SuccessFactors, employees on a long leave of absence (If an employee is on a long leave of absence, the goals are set only when the person returns to work) and employees who are leaving. Training hours: Formal training hours are reported in Wärtsilä’s Learning Management System referred to as WeLearn. Training costs: The average amount spent on formal training and development per employee is calculated based on costs from training expenses / headcount of employees. Costs are reported in EURO. Gender pay gap: This is calculated with the following formula: (Average gross hourly pay level of male employees – average gross hourly pay level of female employees)/ (Average gross hourly pay level of male employees) * 100. Annual total remuneration ratio of the highest paid individual (CEO) to the median annual total remuneration for all employees: This is calculated with the following formula: Annual total remuneration for the undertaking’s highest paid individual / Median employee annual total remuneration (excluding the highest paid individual). Number of complaints to raise concerns on discrimination, cases of discrimination including harassment, and fines, penalties and compensation for damages: The data source for these figures is Wärtsilä compliance function’s database. No measurements of the metrics are validated by an external body other than the assurance provider. 3.4 . Occupational health and safety: Value chain workers (ESRS S2) 3.4.1. Policy on value chain workers’ occupational health and safety (S2-1) According to the Code of Conduct, “ Wärtsilä is committed to creating and maintaining a safe and healthy work environment for our employees, contractors, and other partners, wherever we operate ”. In addition, the Code of Conduct states that Wärtsilä’s suppliers and business partners “ are required to apply similar principles of ethical business behaviour as reflected in this Code ”. Thus the occupational health and safety principles of Wärtsilä’s Code of Conduct extend also to the company’s suppliers’ and other business partners’ employees. The Code of Conduct has been approved by the Board of Directors and is available on Wärtsilä’s website. As regards engagement with value chain workers, the Code of Conduct states, that “ At Wärtsilä, we build trust with all our stakeholders by providing information that is clear, honest, and accurate. We also promote openness and transparency, as well as continuous dialogue with our stakeholders and employees .” The Code is also aligned with internationally recognised instruments as follows: “ We are committed to respecting internationally recognised human rights and standards as outlined in the International Bill of Human Rights, the International Labor Organization’s Declaration on Fundamental Principles and Rights at Work, and the United Nations Guiding Principles on Business and Human Rights. We strive to identify, prevent, and mitigate adverse impacts on human rights within our activities and business relationships .” 3.4.2. Engagement with value chain workers (S2-2) Engagement with Wärtsilä’s customers and suppliers is described in section 1.5 Stakeholder engagement. During supplier evaluations Wärtsilä’s Supply Management personnel are in close contact with supplier representatives, where discussions and evaluations also cover OHS topics, but there is no formal process for direct engagement with value chain employees. 3.4.3. Processes for providing or contributing to remedy (S2-3) Wärtsilä’s anonymous, externally hosted, online whistle-blowing channel is open also for its suppliers, consultants and other people having a work connection to the company. However, Wärtsilä is not able to ensure that the channel is available in every workplace of value chain workers without internet connection, or that they are aware and trust the channel as a way to raise their concerns or needs and have them addressed. The whistleblowing channel which can be found on Wärtsilä’s external webpage, is continuously monitored by the compliance function, and all cases are investigated according to an internal process, which depends on the type of incident reported. The process phases are: 1. Report receiving and assessment, 2. Investigation, 3. Decision making, and 4. Range of corrective actions. The way Wärtsilä contributes towards remedying cases of a realised accident is through requiring suppliers to provide the remedy according to their applicable legislation, and by requiring compliance with the law. Beyond this there are no other methods to assess that the remedy provided is effective. Value chain workers have not been involved in creating or following up on the effectiveness of the whistle-blowing channel. As regards value chain workers’ using the whistleblowing channel, although no policy exists today for their protection against retaliation, this is provided in the form of possibility for anonymous reporting. 3.4.4. Actions and resources on value chain workers (S2-4) In Supply Management, category teams are responsible for managing suppliers, and for evaluating Occupational Health and Safety (OHS). This OHS evaluation is carried out by Supplier Development Engineers, who are members of the category teams. Currently, there are over 60 Supplier Development Engineers. EHS experts in Business Units support them when necessary. As Wärtsilä’s Supply Management function conducts the assessments on OHS issues as part of the overall Supplier Compliance Assurance Process (SCA) process, it is not possible to quantify the expenses specifically for OHS purposes. Wärtsilä’s approach towards furthering and maintaining proper occupational health and safety processes and practices in its value chain is mainly based on the SCA, through which, alignment with Wärtsilä’s Supplier Requirements is ensured by the responsible category purchasing team. Starting from 2024, the SCA Financial review questionnaire has included questions on injury and near-miss data and employee competences, as well as documentation on Health and safety management. As guided by Wärtsilä Code of Conduct, whenever Supply Management personnel are visiting suppliers’ premises, they are required to pay attention to the safety of the operations, and raise their observations to the attention of the relevant management of the supplier. Wärtsilä’s continuous target is to have 96% of all Global Direct Procurement spend (making up 67% of total materials and services spend in 2024) evaluated and rated through the SCA process. In 2024 a coverage of 93% of the spend rated was reached. Wärtsilä’s aim and expected outcome is to ensure proper OHS management in the supplier base through the selection of suppliers fulfilling these criteria. Where this is not already the case when selecting a supplier, the supplier is provided the chance to improve their processes in order to fulfil Wärtsilä’s requirements, thus encouraging positive change in the suppliers’ OHS management. The realised improvements in a supplier’s OHS management processes and practices depend on each specific case, i.e. what is needed to fulfil Wärtsilä’s requirements. During supplier visits or audits, any identified risks related to occupational health and safety are promptly communicated to the supplier's management, and corrective actions are mandated. These observations and their follow-up actions are documented in audit or rating reports, or in the WeCare system. Ultimately, if a supplier fails to fulfil Wärtsilä’s requirements after having a chance to do so, it will be banned from being a supplier to Wärtsilä. However, Wärtsilä is currently unable to ensure that processes to provide or enable remedy in the event of health or safety incidents in its value chain are always available and effective in their implementation and outcomes. Wärtsilä has not taken action in 2024 to provide or enable remedy in relation to an actual injury or occupational illness case in its supply chain besides arranging proper care for all contractor injuries taking place on Wärtsilä controlled work sites. Outside the company’s contractors Wärtsilä has no means to receive information about possible injuries or fatalities in its supply chain. Wärtsilä Code of Conduct is referred to in General Terms and Conditions - Supply and Purchase, where other OHS obligations are also included. These are included in every purchase order. In addition, Wärtsilä Supplier Requirements, which are largely also included in the supplier agreements are publicly available on Wärtsilä’s external webpages. These requirements set the demands for every supplier’s occupational health and safety management, including that a supplier: ◾ shall support and respect the protection of human rights, as defined in the United Nation’s Universal Declaration on Human Rights, and support basic labour rights as defined by the International Labour Organization, ◾ has a certified OHS management system (ISO45001), or if such management system is not in place, a supplier must have policies/ procedures for OHS management, including a valid and implemented safety plan, and these are examined in detail for each supplier, ◾ shall be fully responsible for its liabilities as an employer, ◾ of complex equipment shall have installation and commissioning instructions, containing clearly stated safety precautions, ◾ shall have adequate and fully operational safety equipment for the protection of its employees and facilities, ◾ shall ensure the sufficient competence of its employees to perform their tasks safely, and to respond to emergency situations, ◾ shall ensure that accidents and near-misses are reported and that appropriate actions are taken as a result of these reports, ◾ shall be aware of, and follow, local OHS legislation and applicable regulations, and be able to provide evidence of compliance. 3.4.5. Targets on value chain workers (S2-5) Wärtsilä’s continuous target is to have 96% of all Global Direct Procurement spend (making up 67% of total materials and services spend in 2024) evaluated and rated through the SCA process. In 2024 a coverage of 93 % of the spend rated was reached. The SCA ratings remain valid for three years unless there is a decline in performance or other significant changes. For target setting, the Central Supply Management team proposes key performance indicators (KPI) and related target setting calculation logics for approval by the Corporate Supply Management board. Following approval, the KPI's are communicated to the entire supply management organisation who then use these as input for target setting for teams and individual employees. Supply chain performance is monitored on several levels monthly: by global category teams, the Corporate Supply Management forum, local category teams and business unit organisations. When an external workforce is working in a Wärtsilä facility or a project site controlled by Wärtsilä, such as a turn-key power plant delivery project, Wärtsilä’s OHS management practices apply to these employees as well, including reporting through the WeCare platform on unsafe situations, near-misses or incidents. In 2023, Wärtsilä initiated a four-year safety programme ‘Success through safety’. The programme has actions in four streams: employee safety, contractor safety, product safety, and occupational health. In 2024 a new sustainability target related to contractor safety was launched: "Zero Injuries to contractors: we aim to reduce the total recordable injury frequency on a yearly basis". This is a continuous, long-term target aimed at reducing the total recordable injury frequency to meet Wärtsilä Code of Conduct’s commitment of "creating and maintaining a safe and healthy work environment for its employees, contractors, and other partners, wherever it operates". The baseline year of the target is 2024, with baseline value of TRIF 5.01 (34 total recordable injuries). Value chain workers have not been involved in setting or following the targets, nor identifying improvements based on performance against them. A contractor is defined as “Any company or individual not being an employee of Wärtsilä, who is engaged to carry out work for Wärtsilä inside Wärtsilä premises or under Wärtsilä supervision in customer premises or on worksites.” This definition of a contractor includes also non-employees who meet the above criteria. Contractors mainly perform production or service work at Wärtsilä factories, workshops, and warehouses, or are assigned to projects at Wärtsilä's customers' sites. Additionally, external workers are employed for maintenance services at Wärtsilä premises or for professional services in sectors such as IM, finance, engineering, and project management. Workers are hired through labour-hire agencies or provided by Wärtsilä's contractors, and the work agreements can be short-term or long-term Financial review Accounting principles: Number of recordable work-related accidents for contractors (Number of Contractor TRI): a work-related injury to a contractor is one that results in any of the following: fatality, days away from work, restricted work or transfer to another job, or medical treatment beyond first aid. Commuting injuries are not included as recordable work-related accidents. Contractor injuries are reported in the WeCare reporting tool by a Wärtsilä representative. Some contractors have access to the tool, and can report cases by themselves, but it is always Wärtsilä’s responsibility to ensure reporting in WeCare. Rate of recordable work-related accidents for contractors (Contractor TRIF) is expressed as total recordable contractor injuries per million working hours. The working hours are actual paid working hours. Contractor hours are collected by local subsidiaries or by project organisation in Energy projects. Contractor TRIF is reviewed on a yearly basis based on the previous year's results. No measurements of the metrics are validated by an external body other than the assurance provider. Financial review FIVE YEARS IN FIGURES Wärtsilä provides certain financial performance measures, which are accounting measures that are not defined by IFRS Accounting Standards. These alternative performance measures, such as comparable operating result, comparable adjusted EBITA, cash flow from operating activities, and gearing, are followed and used by management to measure the Group's performance and financial position. In addition, Wärtsilä's targets of financial performance are linked to, for example, comparable operating result and gearing. Thus, these alternative performance measures provide useful information to the capital markets. The alternative performance measures should not be evaluated in isolation from the corresponding Accounting Standards measures. The alternative performance measure calculation definitions are disclosed in Calculations of financial ratios. MEUR 2024 2023 2022 2021 2020 Net sales 6,449 6,015 5,842 4,778 4,604 of which outside Finland % 98.4 98.3 99.2 98.5 97.9 Exports from Finland 2,466 2,060 1,975 1,845 1,702 Personnel on average 18,110 17,666 17,482 17,461 18,307 of which in Finland 4,187 3,957 3,808 3,687 3,706 Order book 8,366 6,694 5,906 5,859 5,057 From the consolidated statement of income Depreciation, amortisation and impairment 131 193 263 162 174 Share of result of associates and joint ventures 12 9 6 3 3 Comparable operating result 694 497 325 357 275 as a percentage of net sales % 10.8 8.3 5.6 7.5 6.0 Operating result 716 402 -26 314 234 as a percentage of net sales % 11.1 6.7 -0.4 6.6 5.1 Comparable adjusted EBITA 712 518 349 388 308 as a percentage of net sales % 11.0 8.6 6.0 8.1 6.7 Financial income and expenses -29 -37 -6 -18 -43 Result before taxes 687 364 -32 296 191 as a percentage of net sales % 10.7 6.1 -0.5 6.2 4.2 Result for the financial period 507 269 -58 193 133 as a percentage of net sales % 7.9 4.5 -1.0 4.0 2.9 From the consolidated statement of financial position Non-current assets 2,581 2,551 2,558 2,539 2,427 Current assets 4,928 4,247 3,997 3,982 3,706 Assets held for sale 184 5 54 2 99 Total equity attributable to equity holders of the parent company 2,525 2,225 2,136 2,315 2,177 Non-controlling interests 6 8 12 8 11 Interest-bearing debt 766 858 949 973 1,327 Non-interest-bearing liabilities 4,264 3,713 3,489 3,227 2,648 Liabilities directly attributable to assets held for sale 132 22 68 Total equity and liabilities 7,694 6,803 6,608 6,523 6,232 From the consolidated statement of cash flows Cash flow from operating activities 1,208 822 -62 731 681 Cash flow from investing activities -149 -138 -151 -128 -55 Cash flow from financing activities -323 -308 -289 -580 -44 Gross capital expenditure 170 149 161 143 117 as a percentage of net sales % 2.6 2.5 2.8 3.0 2.5 Research and development expenditure 296 258 241 196 153 as a percentage of net sales % 4.6 4.3 4.1 4.1 3.3 Dividends paid 259 188 153 142 118 Financial ratios Earnings per share (EPS), basic EUR 0.85 0.44 -0.11 0.33 0.23 Earnings per share (EPS), diluted EUR 0.85 0.44 -0.11 0.33 - Dividend per share EUR 0.44 0.32 0.26 0.24 0.20 Dividend per earnings % 51.5 73.2 -234.9 73.2 88.2 Interest coverage 12.3 9.2 7.3 15.0 7.1 Return on investment (ROI) % 23.7 13.9 0.1 9.7 7.1 Return on equity (ROE) % 21.3 12.3 -2.6 8.6 5.8 Solvency ratio % 37.4 37.0 35.3 38.6 38.1 Gearing -0.31 0.02 0.23 0.00 0.18 Equity per share EUR 4.29 3.78 3.62 3.92 3.68 Working capital (WCAP) MEUR -787 -169 179 -100 257 The financial ratios include assets and liabilities pertaining to assets held for sale. * Figure in the comparison period 2021 has been restated to reflect a change in the definition of research and development expenditure. ** Proposal of the Board of Directors. Financial review QUARTERLY FIGURES MEUR 10–12 /2024 7–9 /2024 4–6 /2024 1–3 /2024 10–12 /2023 7–9 /2023 4–6 /2023 1–3 /2023 10–12 /2022 Order intake Marine 918 902 901 916 844 902 771 744 Marine Power 693 Marine Systems 126 Energy 1,335 553 705 774 868 679 750 744 646 Portfolio Business 239 348 248 234 144 207 166 252 173 Total 2,491 1,803 1,854 1,924 1,856 1,787 1,687 1,739 1,638 Order book at the end of the financial period Marine 3,409 3,289 3,155 3,008 2,808 2,751 2,535 2,493 Marine Power 2,273 Marine Systems 434 Energy 3,413 2,803 3,120 3,033 2,693 2,620 2,548 2,483 2,376 Portfolio Business 1,544 1,491 1,332 1,252 1,192 1,222 1,165 1,177 823 Total 8,366 7,583 7,607 7,294 6,694 6,594 6,249 6,153 5,906 Net sales Marine 847 739 759 708 759 671 701 669 Marine Power 589 Marine Systems 207 Energy 817 804 617 452 720 613 633 645 856 Portfolio Business 190 175 179 162 165 168 120 151 118 Total 1,854 1,718 1,556 1,321 1,644 1,452 1,454 1,465 1,770 Share of result of associates and joint ventures 3 4 3 2 2 2 3 1 3 Comparable adjusted EBITA 214 181 180 137 182 130 113 93 99 as a percentage of net sales 11.5 10.6 11.6 10.4 11.1 8.9 7.8 6.4 5.6 Depreciation, amortisation and impairment -21 -38 -37 -35 -45 -34 -81 -33 -56 Purchase price allocation amortisation -5 -5 -5 -5 -5 -5 -5 -5 -5 Comparable operating result 209 177 176 132 177 125 108 88 93 as a percentage of net sales 11.3 10.3 11.3 10.0 10.8 8.6 7.4 6.0 5.3 Items affecting comparability, total 20 15 -8 -5 -49 -8 -42 4 -56 Operating result 229 192 168 127 128 117 66 92 37 as a percentage of net sales 12.4 11.2 10.8 9.6 7.8 8.0 4.5 6.3 2.1 Financial income and expenses -11 -2 -8 -9 -8 -9 -12 -8 -2 Result before taxes 219 190 160 118 120 107 53 84 35 Income taxes -58 -47 -43 -32 -24 -25 -24 -23 -7 Result for the financial period 161 144 117 86 96 82 30 61 28 Earnings per share (EPS), basic and diluted, EUR 0.27 0.24 0.20 0.14 0.16 0.14 0.05 0.09 0.05 Gross capital expenditure 59 37 39 36 51 31 35 32 49 Investments in securities and acquisitions 1 Cash flow from operating activities 437 296 216 258 389 213 75 145 51 Working capital (WCAP) at the end of the financial period -787 -501 -420 -329 -169 43 134 105 179 Personnel at the end of the financial period Marine 10,794 10,702 10,817 10,657 10,602 10,530 10,441 10,369 Marine Power 9,157 Marine Systems 1,584 Energy 5,669 5,639 5,571 5,460 5,430 5,416 5,380 5,342 5,320 Portfolio Business 1,875 1,830 1,835 1,792 1,774 1,750 1,732 2,002 1,520 Total 18,338 18,171 18,224 17,909 17,807 17,696 17,553 17,713 17,581 The segment related comparison figures for 2023 have been restated to reflect the current organisational structure. Financial review CALCULATIONS OF FINANCIAL RATIOS Operating result Net sales + other operating income – expenses +/– result from net position hedges – depreciation, amortisation and impairment +/– share of result of associates and joint ventures Earnings per share (EPS), basic Result for the financial period attributable to equity holders of the parent company Number of shares outstanding, average over the financial period Earnings per share (EPS), diluted Result for the financial period attributable to equity holders of the parent company Number of shares outstanding, average over the financial period + number of potential ordinary shares with dilutive effect Items affecting comparability Certain income and expenses are presented as items affecting comparability when they have significant impact on the consolidated statement of income. Items affecting comparability consist of income and expenses, which result from restructuring activities aiming to adjust the capacity of Wärtsilä’s operations. They may also include other income and expenses incurred outside Wärtsilä’s normal course of business, such as impairment charges, acquisition related costs, settlements recognised as a result of legal proceedings with third parties or unforeseen obligations from earlier discontinued businesses. Comparable operating result Operating result – items affecting comparability Comparable adjusted EBITA Operating result – items affecting comparability – purchase price allocation amortisation Gross capital expenditure Investments in securities and acquisitions + investments in intangible assets and property, plant and equipment Net interest-bearing debt Total of non-current and current lease liabilities + total of non-current and current other interest-bearing debt – interest-bearing receivables – cash and cash equivalents Equity per share Equity attributable to equity holders of the parent company Number of shares outstanding at the end of the financial period Solvency ratio Total equity x 100 Total equity and liabilities – advances received Gearing Interest-bearing liabilities – cash and cash equivalents Total equity Return on investment (ROI) Result before taxes + interest and other financial expenses x 100 Total equity and liabilities – non-interest-bearing liabilities – provisions, average over financial period Return on equity (ROE) Result for the financial period x 100 Total equity, average over the financial period Order intake Total amount of orders received during the financial period to be delivered either during the current financial period or thereafter. Order book The presentation in value of orders that are placed by customers but not yet delivered. For service agreements, only the expected net sales for the next 24 months are included in the order book. Working capital (WCAP) (Inventories + trade receivables + current tax receivables + other non-interest-bearing receivables) – (trade payables + advances received + pension obligations + provisions + current tax liabilities + other non- interest-bearing liabilities – dividend payable) Financial review Interest coverage Result before taxes + depreciation, amortisation and impairment + interest and other financial expenses Interest and other financial expenses Dividend per share Dividends paid for the financial period Number of shares outstanding at the end of the financial period Dividend per earnings Dividend per share x 100 Earnings per share (EPS), basic Effective dividend yield Dividend per share x 100 Adjusted share price at the end of the financial period Price/earnings (P/E) Adjusted share price at the end of the financial period Earnings per share (EPS), basic Price/carrying amount per share (P/BV) Adjusted share price at the end of the financial period Equity per share Financial review FINANCIAL STATEMENTS CONSOLIDATED FINANCIAL STATEMENTS Consolidated statement of income MEUR 2024 2023 Note Net sales 6,449 6,015 2.1., 2.2. Other operating income 75 96 2.3. Materials and services -3,474 -3,419 2.4. Employee benefit expenses -1,493 -1,456 2.5. Result from net position hedges 0 -9 Depreciation, amortisation and impairment -131 -193 3.5. Other operating expenses -720 -641 2.3. Share of result of associates and joint ventures 12 9 6.5. Operating result 716 402 as a percentage of net sales 11.1 6.7 Financial income 44 31 5.1. Financial expenses -73 -68 5.1. Result before taxes 687 364 Income taxes -180 -95 2.6. Result for the financial period 507 269 Attributable to: equity holders of the parent company 503 258 non-controlling interests 4 12 507 269 Earnings per share attributable to equity holders of the parent company: Earnings per share (EPS), basic and diluted, EUR 0.85 0.44 2.7. The notes are an integral part of these consolidated financial statements. Financial review Consolidated statement of comprehensive income MEUR 2024 2023 Note Result for the financial period 507 269 Other comprehensive income: Items that will not be reclassified to the statement of income Remeasurements of defined benefit liabilities -9 1 4.7. Tax on items that will not be reclassified to the statement of income 2 Total items that will not be reclassified to the statement of income -7 1 Items that may be reclassified subsequently to the statement of income Exchange rate differences on translating foreign operations for equity holders of the parent company 31 -25 for non-controlling interests -2 transferred to the statement of income -11 Associates and joint ventures, share of other comprehensive income 1 -2 Cash flow hedges measured at fair value -80 20 5.5. transferred to the statement of income 17 4 Tax on items that may be reclassified to the statement of income Cash flow hedges measured at fair value 12 -2 transferred to the statement of income -3 -1 Total items that may be reclassified to the statement of income -22 -19 Other comprehensive income for the financial period, net of taxes -29 -17 Total comprehensive income for the financial period 478 252 Total comprehensive income attributable to: equity holders of the parent company 474 247 non-controlling interests 3 4 478 252 The notes are an integral part of these consolidated financial statements. Financial review Consolidated statement of financial position MEUR 31.12.2024 31.12.2023 Note Assets Non-current assets Goodwill 1,299 1,273 3.1. Other intangible assets 446 402 3.2. Property, plant and equipment 306 307 3.3. Right-of-use assets 251 255 3.4. Investments in associates and joint ventures 41 33 6.5. Other investments 17 19 5.2. Interest-bearing investments 0 4 5.2. Deferred tax assets 175 212 4.6. Trade receivables 6 2 4.2., 5.2. Other receivables 39 46 4.3. Total non-current assets 2,581 2,551 Current assets Inventories 1,483 1,485 4.1. Trade receivables 1,018 991 4.2., 5.2. Current tax receivables 32 35 Contract assets 571 630 4.2. Other receivables 269 287 4.3. Cash and cash equivalents 1,554 819 5.3., 5.4. Total current assets 4,928 4,247 Assets held for sale 184 5 6.4. Total assets 7,694 6,803 Equity and liabilities Equity Share capital 336 336 5.5. Share premium 61 61 5.5. Translation differences -156 -188 5.5. Fair value reserve -23 31 5.5. Remeasurements of defined benefit liabilities -29 -4 4.7. Retained earnings 2,337 1,989 Total equity attributable to equity holders of the parent company 2,525 2,225 Non-controlling interests 6 8 Total equity 2,531 2,232 Liabilities Non-current liabilities Lease liabilities 215 224 3.4., 5.4. Other interest-bearing debt 409 515 5.2., 5.4., 5.6. Deferred tax liabilities 57 69 4.6. Pension obligations 82 83 4.7. Provisions 144 126 4.5. Contract liabilities 121 126 4.2. Other liabilities 12 16 3.4., 4.4. Total non-current liabilities 1,041 1,159 Current liabilities Lease liabilities 43 44 3.4., 5.4. Other interest-bearing debt 99 76 5.2., 5.4., 5.6. Provisions 207 246 4.5. Trade payables 793 686 4.4., 5.2., 5.6. Current tax liabilities 84 75 Contract liabilities 1,825 1,534 4.2. Other liabilities 938 751 3.4., 4.4. Total current liabilities 3,990 3,412 Total liabilities 5,030 4,571 Liabilities directly attributable to assets held for sale 132 6.4. Total equity and liabilities 7,694 6,803 The notes are an integral part of these consolidated financial statements. Financial review Consolidated statement of cash flows MEUR 2024 2023 Note Cash flows from operating activities: Result for the financial period 507 269 Adjustments for: Depreciation, amortisation and impairment 131 193 3.5. Financial income and expenses 29 37 5.1. Gains and losses on sale of intangible assets and property, plant and equipment and other changes 5 -1 Share of result of associates and joint ventures -12 -9 6.5. Income taxes 180 95 2.6. Other non-cash adjustments 15 -4 Cash flows before changes in working capital 856 581 Changes in working capital: Receivables, non -interest-bearing, increase (-) / decrease (+) 19 209 Inventories, increase (-) / decrease (+) -71 -134 4.1. Liabilities, non-interest -bearing, increase (+) / decrease (-) 552 275 Changes in working capital 501 350 Cash flows from operating activities before financial items and taxes 1,357 931 Financial items and taxes: Interest income 33 13 Interest expenses -29 -23 Other financial income and expenses -25 -17 Income taxes paid -128 -82 Financial items and paid taxes -149 -109 Cash flows from operating activities 1,208 822 Cash flows from investing activities: Acquisitions 0 -1 6.2. Investments in property, plant and equipment and intangible assets -170 -148 3.2., 3.3. Proceeds from sale of property, plant and equipment and intangible assets 11 3 3.2., 3.3. Proceeds from sale of shares in subsidiaries 0 7 6.3. Proceeds from sale of other investments 6 1 Loan receivables, increase (-) / decrease (+), and other changes 4 Cash flows from investing activities -149 -138 Cash flows after investing activities 1,059 683 Cash flows from financing activities: Repayments to non-controlling interests 0 -5 Repurchase of own shares 0 -10 Proceeds from non -current debt 0 176 Repayments and other changes in non -current debt -124 -321 5.6. Loan receivables, increase (-) / decrease (+) -4 1 Current loans, increase (+) / decrease (-) -1 7 Dividends paid -194 -156 Cash flows from financing activities -323 -308 Change in cash and cash equivalents, increase (+) / decrease (-) 736 375 Cash and cash equivalents at the beginning of the financial period 819 464 Exchange rate changes 2 -19 Cash and cash equivalents at the end of the financial period 1,557 819 * Cash and cash equivalents include the cash and cash equivalents pertaining to assets held for sale. The notes are an integral part of these consolidated financial statements. Financial review Consolidated statement of changes in equity Total equity attributable to equity holders of the parent company Non-controlling interests Total equity MEUR Share capital Share premium Translation differences Fair value reserve Remeasure - ments of de- fined benefit liabilities Retained earnings Total Equity on 1 January 2024 336 61 -188 31 -4 1,989 2,225 8 2,232 Result for the financial period 503 503 4 507 Other comprehensive income Translation differences 32 32 32 Cash flow hedges net change in fair value, net of taxes -67 -67 -67 transferred to the statement of income, net of taxes 13 13 13 Defined benefit plans -7 -7 -7 Other changes -18 18 Other comprehensive income, total 32 -54 -25 18 -29 -29 Total comprehensive income for the financial period 32 -54 -25 521 474 3 478 Transactions with equity holders of the parent company and non-controlling interests Dividends paid -188 -188 -6 -194 Share-based payments 15 15 15 Equity on 31 December 2024 336 61 -156 -23 -29 2,337 2,525 6 2,531 Financial review Total equity attributable to equity holders of the parent company Non-controlling interests Total equity MEUR Share capital Share premium Translation differences Fair value reserve Remeasure - ments of de- fined benefit liabilities Retained earnings Total Equity on 31 December 2022 336 61 -156 9 -5 1,889 2,135 12 2,146 Restatement due to IAS 12 1 1 1 Equity on 1 January 2023 336 61 -156 9 -5 1,891 2,136 12 2,148 Result for the financial period 258 258 12 269 Other comprehensive income Translation differences -27 -27 -2 -29 Translation differences transferred to the statement of income -6 -6 -5 -11 Cash flow hedges net change in fair value, net of taxes 19 19 19 transferred to the statement of income, net of taxes 3 3 3 Defined benefit plans 1 1 1 Other comprehensive income, total -33 22 1 -10 -7 -17 Total comprehensive income for the financial period -33 22 1 258 247 4 252 Transactions with equity holders of the parent company and non-controlling interests Dividends paid -153 -153 -3 -156 Repurchase of own shares -10 -10 -10 Share-based payments 4 4 4 Other changes -5 -5 Equity on 31 December 2023 336 61 -188 31 -4 1,989 2,225 8 2,232 Additional information on share capital, share premium, translation differences and fair value reserve is presented in Note 5.5. Equity. The notes are an integral part of these consolidated financial statements. Financial review Notes to the consolidated financial statements 1. Accounting principles and other disclosure requirements Content in this section: 1.1. ENTITY INFORMATION 1.2. BASIS OF PREPARATION 1.3. NEW AND AMENDED IFRS ACCOUNTING STANDARDS 1.4. MANAGEMENT JUDGEMENT AND USE OF ESTIMATES Majority of the accounting principles applied to the consolidated financial statements, as well as the most significant judgements, estimates, and assumptions made by the management, are presented in the relevant notes to provide readers a better understanding of the financial statements. 1.1. ENTITY INFORMATION Wärtsilä Corporation is a Finnish listed company organised under the laws of Finland and domiciled in Helsinki . The address of its registered office is Hiililaiturinkuja 2, 00180 Helsinki . Wärtsilä Corporation is the ultimate parent company in the Wärtsilä Group. Wärtsilä is a global leader in innovative technologies and lifecycle solutions for the marine and energy markets. By emphasising sustainable innovation, total efficiency and data analytics, Wärtsilä maximises the environmental and economic performance of the vessels and power plants of its customers. In 2024, Wärtsilä ’s net sales totalled EUR 6.4 billion with 18,338 employees. The company has operations in over 230 locations in 77 countries around the world. Wärtsilä is listed on Nasdaq Helsinki. These consolidated financial statements were authorised for release by the Board of Directors of Wärtsilä Corporation on 4 February 2025, after which, in accordance with the Finnish Corporate Act, the shareholders have a right to approve or reject the financial statements in the Annual General Meeting. The Annual General Meeting also has the possibility to decide upon changes to the financial statements. Financial review 1.2. BASIS OF PREPARATION The consolidated financial statements are prepared in accordance with international accounting standards, which were in force on 31 December 2024. International accounting standards are defined in EU regulation (EC) No. 1606/2002 and embodied in Finnish accounting legislation. They refer to IFRS® Accounting Standards, IAS® Standards, SIC® Interpretations and IFRIC® Interpretations developed by International Accounting Standards Board (IASB). The consolidated financial statements also comply with the Finnish corporate legislation. All intragroup transactions, dividend distributions, receivables and liabilities, as well as unrealised margins, are eliminated in the consolidated financial statements. In the consolidated statements of income and comprehensive income, non-controlling interests have been separated from the result and the total comprehensive income for the financial period. In the consolidated statement of financial position, non- controlling interests are shown as a separate item under equity. Reporting is based on the historical cost convention. Exceptions are the financial assets and liabilities at fair value through the statement of income, the assets and liabilities arising from pension plans, hedged items under fair value hedging, the cash- and share-settled share-based payment transactions measured at fair value, and assets held for sale measured at the lower of the carrying amount and the fair value less costs to sell. The figures are in millions of euros except Note 7.2. Related party disclosures, which is presented in thousands of euros. 1.3. NEW AND AMENDED IFRS ACCOUNTING STANDARDS In 2024, the Group has adopted the following amended Accounting Standards issued by IASB. Amendments to IAS 1 Presentation of Financial Statements (effective for financial periods beginning on or after 1 January 2024) clarify that liabilities are classified as either current or non-current, depending on the rights that exist at the end of the reporting period. Classification is unaffected by the expectations of the entity or events after the reporting date. The amendments have no impact on the consolidated financial statements. Amendments to IFRS 16 Leases (effective for financial periods beginning on or after 1 January 2024) specify the requirements that a seller-lessee uses in measuring the lease liability arising in a sale and leaseback transaction. The amendments have no impact on the consolidated financial statements. Supplier Finance Arrangements amends IAS 7 Statement of Cash Flows and IFRS 7 Financial Instruments: Disclosures. The amendments increase the transparency of supplier finance arrangements and their effects on liabilities, cash flows and exposure to liquidity risk. The amendments merely increase the amount of disclosed information. Other new or amended Accounting Standards already effective do not have a significant impact on the consolidated financial statements or other disclosures. In 2025 or later, the Group will adopt the following new or amended Accounting Standards issued by IASB. Lack of Exchangeability amends IAS 21 The Effects of Changes in Foreign Exchange Rates (effective for financial periods beginning on or after 1 January 2025). The amendment specifies how an entity should assess whether a currency is exchangeable and how it should determine a spot exchange rate when exchangeability is lacking. If a currency is not exchangeable into another currency, an entity is required to estimate the spot exchange rate at the measurement date. The amendments will have no impact on the consolidated financial statements. Amendments to IFRS 9 Financial Instruments and IFRS 7 Financial Instruments: Disclosures (effective for financial periods beginning on or after 1 January 2026) clarify that a financial asset or liability is recognised or derecognised on the settlement date, and introduce an option to derecognise financial liabilities settled through electronic payment system at an earlier date if certain criteria is met. The amendments also clarify how to assess the contractual cash flow characteristics of certain financial assets, such as ESG-related, and affect disclosure requirements. The amendments are not expected to have a significant impact on the consolidated financial statements. New Accounting Standard IFRS 18 Presentation and Disclosure in Financial Statements (effective for financial periods beginning on or after 1 January 2027) improves the quality of financial reporting by requiring defined subtotals in the statement of profit or loss and disclosure about management-defined performance measures, as well as adding new principles for aggregation and disaggregation of information. The standard merely changes the presentation of disclosed information and increases the amount of disclosed information. Other new or amended Accounting Standards not yet effective are not expected to have a significant impact on the consolidated financial statements or other disclosures. * Not yet endorsed for adoption by the European Commission as of 31 December 2024. 1.4. MANAGEMENT JUDGEMENT AND USE OF ESTIMATES Preparation of the financial statements in accordance with the IFRS Accounting Standards requires management to make judgements, estimates, and assumptions that affect the valuation of the reported assets and liabilities, as well as other information, such as contingent assets and liabilities and the recognition of income and expenses in the statement of income. Although these continuously evaluated judgements, Financial review estimates, and assumptions are based on management’s past experience and best knowledge of current events and actions, as well as expectations of future events, actual results may differ from the estimates. For Wärtsilä, the most significant judgements, estimates, and assumptions made by the management relate to the items listed below, more information can be found in the corresponding note: - revenue recognition, especially project estimates for long-term projects and agreements (Note 2.2. Revenue recognition), - uncertain tax positions (Note 2.6. Income taxes), - impairment testing (Note 3.1. Goodwill), - estimating useful lives and assessing indication of impairment (Notes 3.2. Other intangible assets and 3.3. Property, plant and equipment), - determining the length of lease terms (Note 3.4. Leases), - valuation of inventories (Note 4.1. Inventories), - valuation of trade receivables (Note 4.2. Trade receivables and contract assets and liabilities), - recognition of warranty provisions and provisions for legal cases (Note 4.5. Provisions), - expected results on tax audits and deferred tax assets from tax losses (Note 4.6. Deferred taxes), and - defined pension benefit obligations (Note 4.7. Pension obligations), In addition, accounting for business combinations may require significant management judgement (Note 6.2. Acquisitions). Financial review 2. Group financial performance Content in this section: 2.1. SEGMENT INFORMATION 2.2. REVENUE RECOGNITION 2.3. OTHER OPERATING INCOME AND EXPENSES 2.4. MATERIAL AND SERVICES 2.5. EMPLOYEE BENEFIT EXPENSES 2.6. INCOME TAXES 2.7. EARNINGS PER SHARE 2.1. SEGMENT INFORMATION Wärtsilä’s reportable segments are Wärtsilä Marine and Wärtsilä Energy. Furthermore, Wärtsilä reports Wärtsilä Portfolio Business as other business activities. The segments and other business activities cover both equipment sales and services for the respective business. In Wärtsilä, the operating segments are also reportable segments. As of 1 January 2024, business units Exhaust Treatment and Shaft Line Solutions have been transferred from Wärtsilä Marine Systems to Wärtsilä Marine Power, and business unit Gas Solutions has been transferred from Marine Systems to Wärtsilä Portfolio Business. Consequently, Wärtsilä Marine Systems no longer constitutes an organisational unit or a reporting segment, and the name of Marine Power has been changed to Marine. The segment-related comparison figures for 2023 have been restated to reflect the current organisational structure. Wärtsilä's highest operative decision maker (CODM, Chief Operating Decision Maker) is the President and CEO, with the support of the Board of Management, and in some cases the Board of Directors. Marine, Energy, and Portfolio Business are each led by their President. Discrete financial information on each business is provided to the CODM to support decision-making. The segment information presented by Wärtsilä reflects internal management reporting. Segment information is reported to the level of operating result, as items below operating result are not allocated to the businesses. Internal sales between segments and other business activities are not reported in management reporting, but revenue and costs of sales are booked directly to the respective customer projects and orders. The main Financial review factors affecting the allocation of indirect and administration costs to the segments and other business activities are net sales and the number of personnel. Management considers these allocation principles to be the most suitable means for reflecting the costs carried by each segment and other business activities. The allocation principles are reviewed regularly. Wärtsilä Marine Wärtsilä’s marine customer base covers all the main vessel segments, including traditional merchant vessels, gas carriers, cruise & ferry, navy, and special vessels. In the oil & gas industry, Wärtsilä is active in serving offshore installations and related industry vessels, as well as land-based gas installations. Wärtsilä’s customers comprise ship owners, shipyards, and ship management companies. Marine has seven business units: Power Supply, Propulsion, Parts and Field Service, Performance Services, Voyage Services, Project Services and Shaft Line Solutions. The Marine setup has been specifically designed to support its customers throughout the entire lifecycle of their vessels: from designing, developing, and delivering high quality products and solutions that ensure superior performance and that are capable of meeting evolving environmental requirements, to assisting customers with a wide service network supplying spare parts, competent field service personnel, and product and solution upgrades, as well as reducing operational risk. Marine focuses on Wärtsilä’s comprehensive range of engine and propulsion solutions. Its offering, which includes engines, generating sets, gearboxes, propulsion equipment, as well as LNG fuel handling, power management, and NOx reduction technologies, positions Marine as a leading partner for its customers in the decarbonisation of the maritime industry, particularly through fuel flexibility and hybrid solutions. Wärtsilä Energy Energy leads the transition towards a 100% renewable energy future. Wärtsilä develops market-leading technologies, including flexible power plants, energy management and storage systems, as well as lifecycle services that enable increased efficiency and guaranteed performance. Wärtsilä’s three main customer segments in the energy markets are utilities, independent power producers, and industrial customers. The company’s solutions are used for a wide variety of applications, including baseload generation, capacity for grid stability, peaking and load-following generation, and to support the greater integration of wind and solar power. Wärtsilä provides its customers with a comprehensive understanding of energy systems, including fully integrated assets and software, complete with value adding lifecycle services. Wärtsilä Portfolio Business Wärtsilä reports Portfolio Business as other business activities. Wärtsilä Portfolio Business consists of Water & Waste, Marine Electrical Systems, Gas Solutions, and Automation, Navigation and Control Systems. The business units are run independently to accelerate performance improvement and unlock value through divestments or other strategic alternatives. 2024 MEUR Marine Energy Portfolio Business Total Net sales 3,053 2,690 706 6,449 Depreciation and amortisation -101 -37 -14 -151 Impairment -1 20 19 Share of result of associates and joint ventures 12 12 Operating result 364 300 52 716 as a percentage of net sales (%) 11.9 11.1 7.4 11.1 Items affecting comparability 4 -2 20 23 Comparable operating result 360 302 32 694 as a percentage of net sales (%) 11.8 11.2 4.5 10.8 2023 MEUR Marine Energy Portfolio Business Total Net sales 2,800 2,610 604 6,015 Depreciation and amortisation -90 -33 -15 -137 Impairment -10 -45 -56 Share of result of associates and joint ventures 9 9 Operating result 276 209 -83 402 as a percentage of net sales (%) 9.9 8.0 -13.8 6.7 Items affecting comparability -36 -10 -49 -95 Comparable operating result 312 219 -34 497 as a percentage of net sales (%) 11.2 8.4 -5.7 8.3 Alternative performance measures Wärtsilä provides certain financial performance measures, which are not defined by Accounting Standards. These alternative performance measures are followed and used by management to measure the Group's performance and financial position, and also to provide useful information to the capital markets. The alternative performance measures should not be evaluated in isolation from the corresponding Accounting Financial review Standards measures. The alternative performance measure calculation definitions are disclosed in Calculations of financial ratios. Wärtsilä discloses certain comparable performance measures to enhance comparability between periods. Certain income and expenses are presented as items affecting comparability when they have significant impact on the consolidated statement of income. Items affecting comparability consist of income and expenses, which result from restructuring activities aiming to adjust the capacity of Wärtsilä’s operations. They may also include other income and expenses incurred outside Wärtsilä’s normal course of business, such as impairment charges, acquisition related costs, settlements recognised as a result of legal proceedings with third parties or unforeseen obligations from earlier discontinued businesses. The reconciliation of the comparable operating result to the operating result is presented in the following table. Measures of profit and items affecting comparability MEUR 2024 2023 Comparable adjusted EBITA 712 518 Purchase price allocation amortisation -19 -20 Comparable operating result 694 497 Items affecting comparability: Social plan costs 35 -42 Impairment and write-downs 19 -43 Gains and losses from disposals 2 11 Other costs -35 -21 Items affecting comparability, total 23 -95 Operating result 716 402 Items affecting comparability include EUR 20 million of reversal of impairment related to non-current assets in Portfolio Business, EUR 8 million of net income related to the restructuring of engine manufacturing in Europe, and EUR -6 million of other income and other costs. Entity wide information In addition to segment information, Wärtsilä reports the service net sales for all segments and for other business activities. Wärtsilä continues to report information on the geographical areas Finland, other European countries, Asia, the Americas, and other. In the geographical information provided, net sales are split by customer destination and non-current assets by origin. Non-current assets consist of goodwill, intangible assets, property, plant and equipment, right-of-use assets, and investments in associates and joint ventures. Geographical information During the financial period 1 January - 31 December 2024 and 1 January - 31 December 2023 Wärtsilä did not have any individual significant customers. Of the total net sales, sales to the USA represented 19% (17) and sales to China 9% (9). MEUR 2024 2023 Net sales Finland 100 100 Other European countries 1,998 1,854 Asia 1,698 1,678 The Americas 1,835 1,757 Other 818 627 Total 6,449 6,015 Non-current assets Finland 641 604 Other European countries 1,302 1,317 Asia 119 108 The Americas 277 235 Other 4 5 Total 2,343 2,270 Service net sales MEUR 2024 2023 Net sales Marine, service 2,050 1,862 Energy, service 1,173 1,095 Portfolio Business, service 198 191 Total 3,422 3,148 Financial review 2.2. REVENUE RECOGNITION Accounting principles Revenue is recognised when control of the goods or services is transferred to the customer at an amount that reflects the consideration to which the Group expects to be entitled in exchange for those goods and services. The Group recognises revenue when it satisfies an identified performance obligation by transferring promised goods or services to the customer. The control is transferred either at a point in time or over time. Revenue recognised by the end of the reporting period corresponds to the benefit of the service provided by Wärtsilä to the customer. Revenue is presented net of indirect sales taxes, liquidated damages, and discounts. Revenue recognised over time is measured in accordance with the input method (progress measured based on costs incurred) when the outcome of the contract can be estimated reliably. When the outcome cannot be reliably determined, the costs arising are expensed in the same reporting period in which they occur, but the revenue is recognised only to the extent that the company will receive an amount corresponding to actual costs. Any losses are expensed immediately. The transfer of control for revenue recognised at a point in time is based mainly on transferring risks and rewards according to the delivery terms. Most of the contracts Wärtsilä enters with its customers contain one performance obligation. Under certain circumstances, multiple performance obligations can be identified when a contract contains multiple units of delivery or installations. The transaction price may often include variable considerations, such as liquidated damages, performance bonuses and discounts. In long-term agreements, different variable fees are common, such as fees based on power plant running hours or megawatts produced in Energy, and on vessel running hours in Marine. These estimated fees are based on customer future load plans or other parameters, such as historical demand trends. Variable consideration is included in the revenue only to the extent that it is highly probable that the amount will not be subject to significant reversal. Transaction prices including variable components are reassessed at the end of each reporting period. Wärtsilä often requires advance payments from its customers or invoices customers based on milestones. Advances received or contract assets do not contain financing component as payment schedules follow the timing of the performance obligation to be satisfied. Wärtsilä focuses on the marine and energy markets with products, solutions, and services. Revenue from contracts with customers is derived from four revenue types: products, goods and services, projects, and long-term agreements. All these revenue types are represented within all reportable segments and other business activities: Marine, Energy and Portfolio Business. Product sales consist of sales of spare parts and standard equipment, for which the revenue is recognised at a point in time when the control of the product has transferred to the customer, in general upon delivery of the goods. Goods and services -type of revenue involves short-term field service jobs, including the delivery of a combination of service and equipment. The revenue is recognised at a point in time when the service is rendered. Projects are of both short- and long-term in duration. Depending on the contract terms and the duration of the project, the revenue is recognised at a point in time or over time. Revenue from tailor-made equipment delivery projects is recognised at a point in time when the control of the equipment is transferred, in general upon delivery. Tailor -made equipment sales are mainly in Marine, for example, engine, propulsion and scrubber system sales. In long-term projects, such as large-scale systems, that is power plants and energy storages in Energy, and gas solutions construction contracts in Portfolio Business or equipment deliveries which require engineering, the revenue is recognised over time as the asset produced does not have alternative use and the Group has an enforceable right to payment. The progress is measured by using the cost-to-cost method, where sales and profits are recognised after considering the ratio of accumulated costs to estimated total costs to complete the performance obligation. Revenue from service-related projects, such as modernisation and upgrade projects, are recognised over time because the customer typically controls the asset that is enhanced. Long-term agreements include long-term operating and maintenance agreements for which the revenue is recognised over time because the customer simultaneously receives and consumes the service provided. Measuring progress is based on cost-to-cost method, costs of actual services provided as a proportion of the costs of total services to be rendered. Contracts with customers often include warranties in line with Wärtsilä’s General terms and conditions, which are regarded as part of the promise to the customer. Typically, the standard warranty period is one year to three years from the delivery onwards. The Group also applies the practical expedient stated in IFRS 15.94 according to which an entity can recognise the incremental costs of obtaining a contract as an expense when incurred if the amortisation period of the asset that the entity would have recognised is one year or less. Wärtsilä has not incurred any costs for obtaining a contract to be recognised as an asset. Information on contract assets and liabilities is available in Note 4.2. Trade receivables and contract assets and liabilities. Financial review Accounting estimates and judgements Revenue from certain projects and long-term agreements is recognised over time according to the input method when the profit on the project or agreement can be reliably determined. The progress and the profitability are based on management’s estimates, which require significant judgement concerning the stage of completion, the cost to complete, and the time of completion. These estimates are reviewed regularly. Revenue and costs recognised are adjusted during the project when assumptions concerning the outcome of the entire project are updated. Changes in assumptions relate to changes in the project’s or agreement’s schedule, the scope of supply, technology, costs, and any other relevant factors. Establishing whether distinct goods or services are considered as separate performance obligations requires judgement and might impact the timing and amount of revenue recognition. Project business contracts usually involve elements of variable consideration. At the end of each reporting period, management reassesses the transaction price, which requires significant judgement as it affects the timing of the revenue recognition. The valuation of accounts receivables also includes estimates mainly concerning the recoverability of receivables. Determining whether different contracts with the same customer are accounted for as one contract involves the use of judgement, as it requires an assessment of whether the contracts are negotiated together or linked in any other way. The timing and amount of revenue recognition can vary depending on whether two contracts are accounted for separately, or as one single arrangement. Warranty provisions are recognised when goods and services have been rendered to the customer. The provision is based on the accumulated experience of the level of warranty needed to manage future and current cost claims. Products can contain new and complex technology that can affect warranty estimates, with the result that earlier recognised provisions are not always sufficient. Net sales by revenue type and timing of satisfying performance obligations 2024 MEUR Marine Energy Portfolio Business Total At a point in time Products 1,005 490 122 1,616 Goods and services 528 110 92 730 Projects 1,171 490 100 1,762 Total 2,703 1,090 314 4,107 Over time Projects 63 1,154 380 1,597 Long-term agreements 286 447 11 744 Total 349 1,600 391 2,341 Total 3,053 2,690 706 6,449 2023 MEUR Marine Energy Portfolio Business Total At a point in time Products 962 427 86 1,475 Goods and services 486 122 88 697 Projects 1,023 330 97 1,450 Total 2,472 879 271 3,622 Over time Projects 65 1,297 326 1,688 Long-term agreements 264 434 7 705 Total 329 1,731 333 2,393 Total 2,800 2,610 604 6,015 The segment related comparison figures for 2023 have been restated to reflect the current organisational structure. 2.3. OTHER OPERATING INCOME AND EXPENSES Accounting principles Other operating income and expenses do not directly relate to the operating activities. Other operating income includes, for example, gains from the sale of assets and regular incomes, such as rental income, and gains relating to business combinations, which have not been derived from primary Financial review activities. Other operating income includes also grants. Governmental and other grants are recognised in the statement of income on a systematic basis in the same periods in which the expenses are incurred. Other operating expenses include, for example, travel costs, legal and consultancy costs, rental costs, voluntary personnel related costs, and administrative costs. Also, expenses related to short-term lease contracts and lease contracts of low-value assets are recognised in other operating expenses. In addition, losses related to the sale of assets, as well as losses arising from modifications and terminations of lease agreements, are recognised in other operating expenses. Other operating income MEUR 2024 2023 Capital gains 7 1 Government grants 20 15 Sale of scrapped material 2 2 Sale of by-products 2 3 Rental income 2 2 Insurance indemnities 3 5 Gains on derivatives not included in hedge accounting and ineffective hedging 11 24 Other 28 45 Total 75 96 * The portion of ineffective hedging is EUR 2 million (3). ** In 2023, other includes EUR 11 million of income related to the liquidation of Wärtsilä-CME Zhenjiang Propeller Co. Ltd., a subsidiary of the Group. Other operating expenses MEUR 2024 2023 Travel costs 180 159 Rental costs 45 49 Legal and consultancy costs 109 99 Information technology costs 87 79 Other personnel related costs 73 68 Administrative costs 43 44 Temporary labour 43 38 Losses on derivatives not included in hedge accounting and ineffective hedging* 17 23 Other 123 82 Total 720 641 * The portion of ineffective hedging is EUR 2 million (8). ** In 2024, other includes loss on sales of fixed assets of EUR 12 million. 2.4. MATERIAL S AND SERVICES Accounting principles Materials and services expenses relate to purchases of goods and consumables from suppliers for manufacturing less discounts and tax refunds related to purchases. Exchange gains or losses on accounts payable are included. MEUR 2024 2023 Purchases during the financial period -2,215 -2,194 Change in inventories -46 3 Change in inventories of finished goods & work in progress 17 98 Work performed by the Group and capitalised 27 31 External services -1,257 -1,356 Total -3,474 -3,419 2.5. EMPLOYEE BENEFIT EXPENSES Accounting principles Employee benefits are all forms of consideration given in exchange for services rendered by employees or for the termination of employment. In addition, the Group has personnel expenses related to share-based payments and other personnel expenses. The measurement of the share-based long-term incentive schemes is dependent on the terms of the respective scheme. Incentive rights, which are settled in company’s shares, are measured at fair value at grant date. Incentive rights, which are settled in cash, are measured at fair value at the end of each reporting period, and the change is recognised in the statement of income. Financial review Market based vesting conditions, such as share price development, are considered when determining the fair value of the incentive right. Non-market vesting conditions, such as Economic Value Added, or service time required are considered when estimating the number of shares to vest. Estimates of the number of shares to vest are revised at the end of each reporting period and the change is recognised through the statement of income. Cost of the share-based long-term incentive schemes is recognised in the statement of income as employee benefit expenses over the service period required in the scheme. For incentive rights settled in company’s shares, the expense is recognised against equity, and for incentive rights settled in cash, the expense is recognised against liabilities. When company is obliged to withhold and settle in cash employee’s tax obligation associated with the shares vested to tax authority, the portion is accounted in the same manner as the portion which is settled in shares. The Group companies have various pension and other post-employment benefit plans in accordance with local conditions and practices worldwide. These plans are classified either as defined contribution plans or defined benefit plans. In defined contribution plans, the Group pays fixed contributions into a separate entity, such as an insurance company. The Group has no legal or constructive obligation to pay further contributions if the fund does not hold sufficient assets to pay employee benefits. The contributions are recognised in the statement of income as employee benefit expenses in the period to which they relate. Accounting principles for defined benefit plans are presented in Note 4.7. Pension obligations. MEUR 2024 2023 Wages and salaries 1,271 1,187 Pension costs Defined benefit plans 9 8 Defined contribution plans 97 93 Other compulsory personnel costs 116 168 Total 1,493 1,456 Management remuneration is specified in Note 7.2. Related party disclosures. Long-term incentive schemes Wages and salaries include EUR 20 million (6) in expenses arising from share-based long-term incentive schemes. At the end of 2024, Wärtsilä had four active long-term incentive schemes. The long-term incentive scheme for period 2022-2024 is a performance share plan. The participants are granted company shares if the pre-determined minimum level in company’s Economic Value Added (85% weight) and Sustainability targets (15% weight) are reached, as well as employment requirement for the period is met. The number of shares depends on the level of achievement and is capped to 175% of the target level. There is also a cap set to the pay-out in relation to individuals’ base pay at grant date. On target level, the scheme would entitle the participants to a total reward of 991,716 shares. In certain countries the equivalent reward would be settled in cash due to local legislation. The fair value of the share determined at grant date for accounting of the scheme is EUR 9.53. The long-term incentive scheme for period 2023-2025 is a performance share plan. The participants are granted company shares if the pre-determined minimum level in company’s Economic Value Added (85% weight) and Sustainability targets (15% weight) are reached, as well as employment requirement for the period is met. The number of shares depends on the level of achievement and is capped to 175% of the target level. There is also a cap set to the pay-out in relation to individuals’ base pay at grant date. On target level, the scheme would entitle the participants to a total reward of 1,636,801 shares. In certain countries the equivalent reward would be settled in cash due to local legislation. The fair value of the share determined at grant date for accounting of the scheme is EUR 7.82. The long-term incentive scheme for period 2024-2026 is a performance share plan. The participants are granted company shares if the pre-determined minimum level in company’s Economic Value Added (85% weight) and Sustainability targets (15% weight) are reached, as well as employment requirement for the period is met. The number of shares depends on the level of achievement and is capped to 175% of the target level. There is also a cap set to the pay-out in relation to individuals’ base pay at grant date. On target level, the scheme would entitle the participants to a total reward of 1,086,233 shares. In certain countries the equivalent reward would be settled in cash due to local legislation. The fair value of the share determined at grant date for accounting of the scheme is EUR 13.31. Wärtsilä has a restricted share plan for retention of individually selected key employees in specific situations. The restricted share plan 2023-2025 entitles participants to a total reward of 630,035 shares. The reward will be payable after the retention period of three years. If the individual’s employment with Wärtsilä terminates before the payment of the reward, the individual is not entitled to any reward based on the respective plan. In certain countries the equivalent reward would be settled in cash due to local legislation. The fair value of the share determined at grant date for accounting of the plan is EUR 9.32. - 2024 2023 Personnel on average, full-time equivalent 18,110 17,666 Personnel at the end of the financial period, full-time equivalent 18,338 17,807 Financial review 2.6. INCOME TAX ES Accounting principles The statement of income includes taxes payable based on the Group’s consolidated taxable income for the financial period in accordance with local tax regulations, tax adjustments for previous financial periods, and changes in deferred taxes. Tax effects related to transactions recognised through the statement of income and other events are recognised in the statement of income. Tax effects related to transactions or other events to be presented as components of other comprehensive income or directly in equity are also recognised, respectively, in other comprehensive income or directly in equity. The current income tax charge is calculated according to tax laws enacted, or substantively enacted, at the end of the reporting period in the countries where the company and its subsidiaries operate and generate taxable income. Accounting estimates and judgements The Group is subject to income taxes in several jurisdictions and the computation of the Group´s income tax expense and income tax liabilities require judgement and estimation. Income tax positions are regularly evaluated by management to identify situations when there might be uncertainty due to tax regulation being subject to interpretation. Provisions for these uncertain tax positions are recognised when it is considered more likely than not that the positions will be challenged by the tax authorities. The provision recognised is based on the estimation of the amount of the final taxes to be paid to the tax authorities. MEUR 2024 2023 Income taxes for the financial period -128 -105 for prior financial periods -13 -10 Change in deferred tax origination and reversal of temporary differences -38 19 changes in tax rates -2 -1 Total -180 -95 Reconciliation of effective tax rate: Result before taxes 687 364 Tax calculated at the domestic corporate tax rate 20.0% -137 -73 Effect of changed tax rates -2 -1 Effect of different tax rates in foreign subsidiaries -10 -4 Effect of income not subject to tax and non -deductible expenses -5 7 Effect of share of result of associates and joint ventures 2 2 Utilisation of previously unrecognised tax losses carried forward 3 2 Unrecognised taxes on losses carried forward -4 -6 Other taxes -9 -11 Other temporary differences -5 -2 Income taxes for prior financial periods -13 -10 Tax charge in the consolidated statement of income -180 -95 Effective tax rate (%) 26.2 26.1 * Other taxes consist mainly of withholding taxes not utilised and taxes not directly based on taxable income. Income taxes related to other comprehensive income are presented in Consolidated statement of comprehensive income. Changes in deferred tax assets and liabilities are presented in Note 4.6. Deferred taxes. In some countries Wärtsilä is subject to tax audits, which can result in tax reassessment decisions and obligations to pay additional taxes and related payments. Wärtsilä is within the scope of the OECD Pillar Two Model Rules since 1 January 2024. Wärtsilä has applied the mandatory exception to recognising and disclosing information about deferred tax assets and liabilities arising from Pillar Two income taxes. Wärtsilä has assessed its tax exposure considering Pillar Two Model Rules in jurisdictions where the Group operates. The Group´s effective tax rate is above 15% in all major locations except for subsidiaries located in United Arab Emirates, Puerto Rico and Saudi Arabia. According to the Group, the amount of top-up taxes is not significant and has no significant current tax impact for year 2024. 2.7. EARNINGS PER SHARE Earnings per share (EPS) is calculated by dividing the result for the financial period attributable to equity holders of the parent company by the weighted average number of shares outstanding during the period. Financial review Equity-settled share-based payments Wärtsilä has long-term incentive schemes, which can be settled in company shares. These contingently issuable ordinary shares and unvested shares are issuable when certain pre-defined conditions in the incentive programmes are met during a timeframe set in the incentive programmes’ conditions. If the settlement were to happen at the reporting date, it would result in issuing 1,883,981 shares. These shares are considered as potential ordinary shares causing dilutive effect on the EPS. MEUR 2024 2023 Result for the financial period attributable to equity holders of the parent company 503 258 Weighted average number of shares outstanding during the period 589,071,715 589,343,965 Weighted average number of dilutive potential ordinary shares during the period 1,883,981 280,427 Weighted average number of shares outstanding during the period to be used in the calculation of diluted EPS 590,955,696 589,624,392 Earnings per share attributable to equity holders of the parent company: Earnings per share (EPS), basic and diluted, EUR 0.85 0.44 Additional information on the number of shares is presented in Note 5.5. Equity. Financial review 3. Intangible and tangible assets Content in this section: 3.1. GOODWILL 3.2. OTHER INTANGIBLE ASSETS 3.3. PROPERTY, PLANT AND EQUIPMENT 3.4. LEASES 3.5. DEPRECIATION, AMORTISATION AND IMPAIRMENT 3.1. GOODWILL Accounting principles Goodwill is the difference between the aggregate of the acquisition-date fair value of the consideration transferred, and the acquirer’s share of the company’s net identifiable assets and liabilities measured at fair value on the acquisition date. The consideration is measured at fair value, including also the acquirer’s previously held equity interest. Goodwill allocation Goodwill arising from business acquisitions has been allocated to the operating segments and other business activities, which are also the Group’s cash generating units (CGU) in impairment testing of goodwill. These are Marine, Energy, and multiple individually smaller CGUs, which are aggregated with Portfolio Business for disclosure purposes. Impairment of goodwill The carrying amount of goodwill allocated to cash generating units is reviewed annually for signs of possible impairment, or more frequently should any indication of impairment arise. If any such indication exists, the recoverable amount of the goodwill is estimated. In order to define a possible impairment, the Group’s assets are divided into the smallest possible cash generating units, which are mainly independent of other units, and the cash flows of which are separately identifiable and to a large extent independent of the cash flows of other similar units. An impairment loss is recognised when the carrying amount of an asset is greater than its recoverable amount. The recoverable amount is the higher of an asset’s fair value less costs to sell and its value in use. The value in use for goodwill is based on the expected discounted future net cash flows resulting from the asset or cash generating unit. Financial review A pre-tax rate, which reflects the markets’ position on the time value of money and asset-specific risks, is used as the discount rate. An impairment loss is recognised immediately in the statement of income as depreciation, amortisation and impairment. An impairment loss recognised for goodwill is not reversed under any circumstances. Accounting estimates and judgements The recoverable amounts of goodwill are determined for all cash generating units annually, or more often if there is an indication of an impairment, where its value in use is determined. The value in use is determined using estimates of future cash flows, which are impacted by future market development, such as growth and profitability, as well as other significant factors. The most important factors underlying such estimates are the net sales growth in the market area, the operating margin, the useful life of the assets, future investment needs, and the discount rate. Changes in these assumptions can significantly affect the expected future cash flows. Goodwill 2024 MEUR 2024 Wärtsilä Group Wärtsilä on 1 January 1,273 Changes in exchange rates 5 Wärtsilä on 31 March 1,277 Changes in exchange rates 22 Wärtsilä on 31 December 1,299 Goodwill allocation and intermediate impairment testing of goodwill during the first quarter of 2024 As of 1 January 2024, business units Exhaust Treatment and Shaft Line Solutions were transferred from Wärtsilä Marine Systems to Wärtsilä Marine Power, and business unit Gas Solutions was transferred from Marine Systems to Wärtsilä Portfolio Business. Consequently, Wärtsilä Marine Systems no longer constituted an organisational unit or a reporting segment, and the name of Marine Power was changed to Marine. Due to the new organisational structure, Wärtsilä performed an intermediate impairment testing of goodwill during the first quarter of 2024 for cash generating unit Marine Systems. As a result of the impairment test, no impairment loss for the CGU was recognised for the reporting period ended 31 March 2024. During the first quarter of 2024, goodwill relating to CGU Marine Systems was allocated to CGUs Marine and Gas Solutions (latter included in Portfolio Business). The reallocation of goodwill has been performed using a relative value approach, in which the goodwill is allocated to businesses based on the fair values of the businesses at the reallocation date. MEUR Marine Marine Power Marine Systems Energy Portfolio Business Total Wärtsilä on 31 December 2023 588 160 511 13 1,273 Wärtsilä on 31 March 2024 723 513 42 1,277 Wärtsilä on 31 December 2024 735 522 43 1,299 Annual impairment testing of goodwill The Group performed its annual impairment testing of goodwill during the third quarter of the year. Wärtsilä compared the recoverable amount of each CGU against its carrying amount to define whether there were any indications of goodwill impairment. For Marine and Energy, the recoverable amounts were defined based on the discounted cash flow method, derived from the order book and five-year cash flow projections from strategic plans. The estimated cash flows of the CGUs were based on the utilisation of existing property, plant and equipment in their current condition with normal maintenance capital expenditure, excluding any potential future acquisitions. Cash flows beyond the five-year period were calculated using the terminal value method. Also, for CGUs under Portfolio Business, the recoverable amounts were defined based on the discounted cash flow method. Cash flows beyond the five-year period were calculated using the terminal value method. The terminal growth rate used in projections is based on management’s assessment on conservative long-term growth. The terminal growth rate used in the calculations were: Terminal growth rate, % 2024 Marine 1.5 Energy 2.0 Portfolio Business (average for CGUs) 1.3 The key driver for the valuation is growth in the global economy, and in particular, the development of the global power market, the global shipbuilding industry, and the demand for any related services. The projected development of total costs in the market affects the profitability, whereas no single cost item is considered to have a material impact. The valuation driver for new equipment sales is growth in the global economy, whereas for after sales the drivers also include the demand for related services and the projected development in labour costs. Financial review The applied discount rates are the weighted average pre-tax cost of capital (WACC) for each CGU as defined by Wärtsilä. The components of the WACC rates are risk-free rate, market risk premium, industry specific beta, cost of debt, and debt equity ratio. Wärtsilä has used the following WACC rates for each CGU: WACC rate, % 2024 Marine 11.0 Energy 10.4 Portfolio Business (average for CGUs) 11.2 As a result of the impairment test, no impairment loss for the CGUs was recognised for the financial period. The recoverable amounts of CGUs Marine and Energy exceeded their respective carrying amounts substantially. Also, the recoverable amounts of CGUs included in Portfolio Business exceeded their respective carrying amounts. There are no indications of impairment of goodwill after the annual impairment testing. Sensitivity analysis Management has assessed that no reasonable possible changes in the key assumptions for CGUs Marine or for Energy would cause the carrying amount of any CGU to exceed its recoverable amount. A sensitivity analysis has been carried out for Portfolio Business for the valuation of the recoverable amount of each CGU by changing the assumptions used in the calculation. A change in an assumption that would cause the recoverable amount to equal the carrying amount in the CGU, which is closest to the break-even point is presented in the following table. - Change Portfolio Business Pre-tax discount rate increase more than 15 percentage points Terminal growth rate decrease more than 19 percentage points Profitability decrease more than 53 percentage The defined recoverable amounts of CGUs within Portfolio Business also exceeded the carrying amounts of the units in the annual impairment test. The key assumptions for CGUs within Portfolio Business relate to terminal growth rate of each unit, and to profitability used for terminal value of each unit. Key assumptions used in the testing for terminal values are the average terminal growth rate of 1.3% and that the average terminal value profitability of CGUs, that is comparable operating result as a percentage of net sales, would amount to 4.6% on average. Any future negative changes in these assumptions would have an adverse impact on the valuation of the business. In addition, when CGUs included in Portfolio Business would be classified as assets held for sale in the future, the possible impairment would be dependent on the selling price on cash-free debt-free basis. In management’s opinion, the changes in the basic assumptions shall not be seen as an indication that these factors are likely to materialise. The sensitivity analyses are hypothetical and should therefore be treated with caution. Goodwill 2023 MEUR 2023 Wärtsilä Group Wärtsilä on 1 January 1,288 Changes in exchange rates -7 Wärtsilä on 31 March 1,281 Changes in exchange rates 8 Impairment -15 Wärtsilä on 30 June 1,273 Changes in exchange rates -1 Wärtsilä on 31 December 1,273 Impairment of goodwill relates to the additional impairment testing of goodwill performed during the second quarter of 2023 for CGU Portfolio Business. Additional impairment testing was performed due to the new organisational structure. As a result of the impairment test, an impairment of EUR 45 million was recognised, of which EUR 15 million related to goodwill and the rest to other non-current assets. Goodwill allocation During the first quarter of 2023, goodwill relating to CGU Voyage has been allocated to CGU Marine Power as Voyage was integrated with Marine Power as of 1 January 2023. During the second quarter of 2023, a part of Marine Power, as well as a part of Marine Systems, have been moved to Portfolio Business. The reallocation of goodwill has been performed using a relative value approach, in which the goodwill is allocated to businesses based on the fair values of the businesses at the reallocation moment. MEUR Marine Power Marine Systems Voyage Energy Portfolio Business Total Wärtsilä on 31 December 2022 544 168 59 511 5 1,288 Wärtsilä on 31 March 2023 600 168 509 5 1,281 Wärtsilä on 30 June 2023 588 160 511 13 1,273 Wärtsilä on 31 December 2023 588 160 511 13 1,273 Financial review Intermediate impairment testing’s during first half of the year As of 1 January 2023, Voyage has been integrated with Marine Power. Due to the new organisational structure, Wärtsilä performed an intermediate impairment testing of goodwill during the first quarter of 2023 for CGU Voyage. As a result of the impairment test, no impairment loss for the CGU was recognised for the reporting period ended 31 March 2023. During the second quarter of 2023, a part of Marine Power (NACOS Navigation, NACOS Automation, Dynamic Positioning and sensors) has been integrated into a new business unit and moved to Portfolio Business. Additionally, business unit Marine Electrical Systems was moved from Marine Systems to Portfolio Business due to its limited strategic fit with the rest of the Group. Due to the new organisational structure, Wärtsilä performed an intermediate impairment testing of goodwill during the second quarter of 2023 for CGU Portfolio Business. As a result of the impairment test, an impairment of EUR 45 million was recognised, of which EUR 15 million related to goodwill and the rest to other non-current assets. Annual impairment testing of goodwill The Group performed its annual impairment testing of goodwill during the third quarter of the year. Wärtsilä compared the recoverable amount of each business against its carrying amount to define whether there were any indications of goodwill impairment. For Marine Power, Marine Systems and Energy, the recoverable amounts were defined based on the discounted cash flow method, derived from the order book and five-year cash flow projections from strategic plans. The estimated cash flows of the CGUs were based on the utilisation of existing property, plant and equipment in their current condition with normal maintenance capital expenditure, excluding any potential future acquisitions. Cash flows beyond the five-year period were calculated using the terminal value method. Also, for CGUs under Portfolio Business, the recoverable amounts were defined based on the discounted cash flow method. Cash flows beyond the five-year period were calculated using the terminal value method. The terminal growth rate used in projections is based on management’s assessment on conservative long-term growth. The terminal growth rate used in the calculations were: Terminal growth rate, % 2023 Marine Power 1.5 Marine Systems 1.5 Energy 2.0 Portfolio Business (average for CGUs) 1.5 The key driver for the valuation is growth in the global economy, and in particular, the development of the global power market, the global shipbuilding industry, and the demand for any related services. The projected development of total costs in the market affects the profitability, whereas no single cost item is considered to have a material impact. The valuation driver for new equipment sales is growth in the global economy, whereas for after sales the drivers also include the demand for related services and the projected development in labour costs. The applied discount rates are the weighted average pre-tax cost of capital (WACC) for each CGU as defined by Wärtsilä. The components of the WACC rates are risk-free rate, market risk premium, industry specific beta, cost of debt, and debt equity ratio. Wärtsilä has used the following WACC rates for each CGU: WACC rate, % 2023 Marine Power 12.1 Marine Systems 12.6 Energy 12.5 Portfolio Business (average for CGUs) 12.2 As a result of the impairment test, no impairment loss for the CGUs was recognised for the financial period. The recoverable amounts of CGUs Marine Power, Marine Systems, and Energy exceeded their respective carrying amounts substantially. Also, the recoverable amounts of CGUs included in Portfolio Business exceeded their respective carrying amounts. Sensitivity analysis Management has assessed that no reasonable possible changes in the key assumptions for CGUs Marine Power, Marine Systems, or for Energy would cause the carrying amount of any CGU to exceed its recoverable amount. A sensitivity analysis has been carried out for Portfolio Business for the valuation of the recoverable amount of each CGU by changing the assumptions used in the calculation. A change in an assumption that would cause the recoverable amount to equal the carrying amount in the CGU, which is closest to the break-even point is presented in the following table. - Change Portfolio Business Pre-tax discount rate increase more than 2 percentage points Terminal growth rate decrease more than 3 percentage points Profitability decrease more than 20 percentage The defined recoverable amounts of CGUs within Portfolio Business also exceeded the carrying amounts of the units in the annual impairment test. There was no additional impairment recognised after the additional impairment testing conducted during the second quarter of 2023. Financial review The key assumptions for CGUs within Portfolio Business relate to terminal growth rate of the unit, and to profitability used for terminal value of each unit. Key assumptions used in the testing for terminal values are the average terminal growth rate of 1.5% and that the average terminal value profitability of CGUs, that is comparable operating result as a percentage of net sales, would amount to 4.5% on average. Any future negative changes in these assumptions would have an adverse impact on the valuation of the business. In addition, when CGUs included in Portfolio Business would be classified as assets held for sale in the future, the possible impairment would be dependent on the selling price on cash-free debt-free basis. In management’s opinion, the changes in the basic assumptions shall not be seen as an indication that these factors are likely to materialise. The sensitivity analyses are hypothetical and should therefore be treated with caution. Intermediate impairment testing after annual impairment test In November 2023, Wärtsilä announced its plan to simplify its organisation and reporting structure. Marine Systems is to be discontinued as a reportable segment. Due to the new organisational structure valid from 1 January 2024 onwards, Wärtsilä performed an intermediate impairment testing of goodwill during the fourth quarter of 2023 for CGU Marine Systems. As a result of the impairment test, no impairment loss for the CGU was recognised for the reporting period ended 31 December 2023. There are no other indications of impairment of goodwill after the annual impairment testing. 3.2. OTHER INTANGIBLE ASSETS Accounting principles Research and development costs Research costs are expensed in the reporting period during which they occur. Development costs are capitalised when it is probable that the development project will generate future economic benefits for the Group and when the related criteria, including commercial and technological feasibility, have been met. These projects involve the development of new or significantly improved products or production processes. Earlier expensed development costs are not capitalised. Capitalised development costs are measured at cost less accumulated amortisations and impairment. Capitalised development costs are amortised and the cost of buildings, machinery, and facilities for development depreciated on a straight-line basis over their expected useful lives of 5-10 years. Amortisations are started when the asset is completed and can be taken into use. Before that, the asset is tested annually for impairment. Grants received for research and development are reported as other operating income. Grants related to capitalised development costs are netted with the costs incurred before the capitalisation. Other intangible assets Other intangible assets are recognised at cost if the cost is reliably measurable and the future economic benefits for the Group are probable. Wärtsilä’s other intangible assets include patents, licenses, software, customer relations and other intellectual property rights that can be transferred to a third party. These are measured at cost, except for intangible assets identified in connection with acquisitions, which are measured at the fair value at the acquisition date. The cost of intangible assets comprises the purchase price and all costs that can be directly attributed to preparing an asset for its intended use. Other intangible assets are amortised on a straight-line basis over their estimated useful lives. Intangible assets, for which the time limit for the right of use is agreed, are amortised over the life of the contract. Intangible assets identified in connection with acquisitions are amortised over their delivery times or estimated useful lives. The general guidelines for scheduled amortisation are: • Software 3-7 years • Development expenses 5-10 years • Other intangible assets 5-20 years The amortisation of intangible assets is discontinued when an item is classified as held for sale. A gain or loss arising from the sale of intangible assets is recognised as other operating income or other operating expenses in the statement of income. Impairment of assets The carrying amounts of assets are reviewed annually for signs of possible impairment or more frequently should any indication of impairment arise. If any such indication exists, the recoverable amount of the asset is estimated and compared to the carrying amount of the asset. An impairment loss is recognised when the carrying amount of an asset is greater than its recoverable amount. The recoverable amount is the higher of an asset’s fair value less costs to sell and its value in use. An impairment loss is recognised immediately as depreciation, amortisation and impairment in the statement of income. In connection with the recognition of the impairment loss, the useful life of the amortisable asset is reassessed. An earlier impairment loss recognised for an asset is reversed if the estimates used to determine the recoverable amount change. However, any reversal of impairment shall not exceed the asset’s carrying amount if no impairment loss would have been recognised. Financial review Accounting estimates and judgements Assessing the probability of expected future economic benefits and the useful lives of intangible assets require management judgement. The estimated useful lives and the residual values are reviewed at least at the end of each reporting period, and if they differ significantly from previous estimates, the amortisation periods are adjusted accordingly. Also, assessing any indication of impairment requires management judgement. 2024 MEUR Develop- ment expenses Construc- tion in progress and advances paid Other intangible assets Total Cost on 1 January 2024 282 209 796 1,287 Changes in exchange rates 0 1 7 8 Additions 9 92 6 106 Decreases and other changes -4 0 -8 -12 Reclassification to assets held for sale -17 -11 -3 -30 Other reclassifications 78 -90 11 0 Cost on 31 December 2024 349 201 808 1,359 Accumulated amortisation and impairment on 1 January 2024 -175 -15 -695 -885 Changes in exchange rates 0 0 -6 -6 Reclassification to assets held for sale 3 1 1 5 Accumulated amortisation on decreases and other changes 4 0 7 11 Amortisation during the financial period -26 0 -27 -54 Impairment 10 3 1 14 Accumulated amortisation and impairment on 31 December 2024 -185 -10 -718 -913 Carrying amount on 31 December 2024 165 191 91 446 Development costs for internally generated assets capitalised during the financial period amounted to EUR 79 million (70). The related depreciation amounted to EUR 26 million (18), and the carrying amount was EUR 318 million (272). Internally generated assets are included in development expenses, as well as in construction in progress as part of them. Purchase price allocation amortisation amounted to EUR 19 million (20) and the related carrying amount was EUR 49 million (67). In 2024, an impairment of EUR 17 million was reversed related to other intangible assets in Portfolio Business. 2023 MEUR Develop- ment expenses Construc- tion in progress and advances paid Other intangible assets Total Cost on 1 January 2023 245 176 829 1,249 Changes in exchange rates -1 -4 -6 Additions 17 74 4 95 Decreases and other changes -15 1 -39 -54 Reclassifications 36 -41 7 2 Cost on 31 December 2023 282 209 796 1,287 Accumulated amortisation and impairment on 1 January 2023 -153 -1 -704 -857 Changes in exchange rates 3 3 Accumulated amortisation on decreases and other changes 14 38 51 Amortisation during the financial period -18 -28 -46 Impairment -18 -14 -4 -36 Accumulated amortisation and impairment on 31 December 2023 -175 -15 -695 -885 Carrying amount on 31 December 2023 107 194 101 402 3.3. PROPERTY, PLANT AND EQUIPMENT Accounting principles Property, plant and equipment acquired by the Group are measured in the statement of financial position at cost less accumulated depreciation and impairment losses. The cost of an asset includes costs directly attributed to preparing the asset for its intended use. Grants received are reported as a reduction in costs. The property, plant and equipment of acquired subsidiaries are measured at their fair value at the acquisition date. The borrowing costs that are directly attributable to the asset acquisition, construction or Financial review production, and to the completion of the asset for its intended use or sale requiring necessarily a considerable length of time, will be capitalised in the statement of financial position as part of the cost of the asset. Other than directly attributable borrowing, costs are expensed in the period in which they are incurred. Subsequent expenditure is included in the cost of an asset only if the future economic benefits are probable and the costs are reliably measurable. Expenditure related to regular, extensive inspections and maintenance is treated as an investment, capitalised and depreciated during its separately estimated useful life. All other expenditure, such as ordinary maintenance and repairs, is recognised in the statement of income as an expense as incurred. Depreciation is based on the following estimated useful lives: • Buildings 10-40 years • Machinery and equipment 5-20 years • Other tangible assets 3-10 years Depreciation is expensed on a straight-line basis over the estimated useful lives of the assets. Land is not depreciated, as its useful life is considered as infinite. The estimated useful lives and the residual values are reviewed at least at the end of each reporting period, and if they differ significantly from previous estimates, the depreciation periods are adjusted accordingly. Depreciation of property, plant and equipment is discontinued when an item is classified as held for sale. A gain or loss arising from the sale of property, plant and equipment is recognised as other operating income or other operating expenses in the statement of income. Impairment of assets The carrying amounts of assets are reviewed annually for signs of possible impairment, or more frequently should any indication of impairment arise. If any such indication exists, the recoverable amount of the asset is estimated and compared to the carrying amount of the asset. An impairment loss is recognised when the carrying amount of an asset is greater than its recoverable amount. The recoverable amount is the higher of an asset’s fair value less costs to sell and its value in use. An impairment loss is recognised immediately as depreciation, amortisation and impairment in the statement of income. In connection with the recognition of the impairment loss, the useful life of the depreciable asset is reassessed. An earlier impairment loss recognised for an asset is reversed if the estimates used to determine the recoverable amount change. However, any reversal of impairment shall not exceed the asset’s carrying amount if no impairment loss would have been recognised. Accounting estimates and judgements Assessing the probability of expected future economic benefits and useful lives of property, plant and equipment require management judgement. The estimated useful lives and residual values are reviewed at least at the end of each reporting period, and if they differ significantly from previous estimates, the depreciation periods are adjusted accordingly. Also, assessing any indication of impairment requires management judgement. 2024 MEUR Land and water Build- ings and struc- tures Machin- ery and equip- ment Construc- tion in progress and ad- vances paid Other tangible assets Total Cost on 1 January 2024 22 256 810 57 33 1,177 Changes in exchange rates 0 1 -1 0 0 0 Additions 0 2 30 30 2 64 Decreases -2 -66 -178 0 -2 -247 Reclassification to assets held for sale 0 -1 -5 0 0 -6 Other reclassifications 0 2 35 -32 0 5 Cost on 31 December 2024 20 193 691 54 32 991 Accumulated depreciation and impairment on 1 January 2024 -1 -198 -644 -27 -870 Changes in exchange rates 0 0 1 0 0 1 Accumulated depreciation on decreases and disposals 0 56 164 0 1 221 Depreciation during the financial period 0 -7 -37 0 -2 -47 Impairment 0 3 2 0 0 5 Reclassification to assets held for sale 0 0 3 0 0 4 Other reclassifications 0 0 0 0 1 0 Accumulated depreciation and impairment on 31 December 2024 -1 -146 -511 0 -27 -685 Carrying amount on 31 December 2024 20 47 180 54 5 306 In 2024, an impairment of EUR 3 million was reversed related to property, plant and equipment in Portfolio Business. In addition, an impairment of EUR 3 million was reversed related to the restructuring of engine manufacturing in Europe. Financial review 2023 MEUR Land and water Build- ings and struc- tures Machin- ery and equip- ment Construc- tion in progress and advances paid Other tangible assets Total Cost on 1 January 2023 22 235 758 90 31 1,136 Changes in exchange rates -3 -8 -11 Additions 1 20 31 2 54 Decreases -1 -1 -41 -43 Reclassifications 24 80 -64 41 Cost on 31 December 2023 22 256 810 57 33 1,177 Accumulated depreciation and impairment on 1 January 2023 -1 -170 -636 -25 -832 Changes in exchange rates 2 7 9 Accumulated depreciation on decreases and disposals 1 41 43 Depreciation during the financial period -8 -32 -2 -42 Impairment -1 -3 -4 Other reclassifications -23 -21 -44 Accumulated depreciation and impairment on 31 December 2023 -1 -198 -644 -27 -870 Carrying amount on 31 December 2023 21 58 166 57 5 307 3.4. LEASES Accounting principles The Group's capitalised lease agreements consist mainly of land, buildings used as office premises, factories, workshops, vehicles, and production machinery and equipment. The average lease period for buildings is approximately eight years, and for machinery and equipment approximately four years. The Group recognises a right-of-use (ROU) asset and a lease liability at the commencement of the lease. Whether a contract contains a lease is determined based on whether Wärtsilä has the right to control the use of an identified asset for a period of time. At the commencement date, a right-of-use asset as defined by IFRS 16 is measured at cost. The cost of the right-of-use asset shall comprise the amount of the initial measurement of the lease liability, any lease payments made at or before the commencement date (less any lease incentives received), any initial direct costs incurred by the lessee and an estimate of costs to be incurred by the lessee in dismantling and removing the underlying asset, restoring the site on which it is located or restoring the underlying asset to the condition required by the terms and conditions of the lease, unless those costs are incurred to produce inventories. The nominal lease liability is initially measured at the present value of the lease payments over the lease term. The lease payments include fixed payments, amounts to be expected to be paid under residual value guarantees, the exercise price of reasonably certain extension options, and payments of penalties for terminating a lease in case this reflects the lease term. The lease payments are discounted using the interest rate implicit in the lease if this rate can be readily determined. Otherwise, the lessee´s incremental borrowing rate is used. The incremental borrowing rates used are the sum of relevant interbank rates and the average margin of the Group loan portfolio and are currency specific. The initial measurement of the lease payments does not include possible variable elements. Variable lease payments not included in the initial measurement of the lease liability are recognised directly in the statement of income as other operating expenses. The lease term is the non-cancellable period of the lease together with the period covered by an option to extend or terminate if the lessee is reasonably certain to exercise the option. Subsequently, the right-of-use assets are measured at initial measurement less accumulated depreciation and impairment losses. The right-of-use assets are depreciated and interest on lease liabilities recognised in interest expenses in the statement of income over the lease term. The lease liabilities are subsequently measured at initial recognition less occurring lease payments that are allocated to the principal. Lease payments are presented as repayments of liabilities and related interest expenses. The lease payments are presented in the cash flow from financing activities, and the interest related to leases are presented in the cash flow from operating activities. Lease payments related to short-term leases, low-value assets, and variable payments are presented in the cash flow from operating activities. Contracts may combine different kinds of obligations to the supplier, which might be a combination of lease components or a combination of lease and non-lease components. These lease and non-lease components are accounted for separately and the consideration is allocated between the components based on relative stand-alone selling prices. The selection of separating the non-lease component or not from the lease, is applied to the whole asset class, buildings, and machinery and equipment. Financial review Modifications to lease agreements may result in adjustments to existing right-of-use assets and lease liabilities. A gain or loss arising from a modification or a termination of a lease agreement is recognised as other operating income or other operating expenses in the statement of income. In a sale-and-leaseback transaction, the seller-lessee sells the asset to the buyer-lessor and leases that asset back. The underlying asset is derecognised, and the right-of-use asset retained is measured through the leaseback of the item as a proportion of its carrying amount. Only the amount of gain or loss related to the rights transferred are recognised in the statement of income in such a transaction. The same accounting policies described above apply to the lease liabilities recognised in a sale-and-leaseback situation, as well as to subsequent modifications of these. The Group applies the two available exemptions, which relate to either short-term contracts, in which the lease term is less than 12 months, or low-value assets, which are expensed to other operating expenses. Accounting estimates and judgements Management is required to consider the duration of the lease term if there is an option for extension, early termination or purchase, as well as determine the lease term for agreements with indefinite lease term. When evaluating the probability of the option being exercised and, therefore, the duration of the lease term, management considers all known facts and circumstances, for example, businesses’ short- and long-term strategies that create a financial incentive to exercise, or not to exercise the option. MEUR 2024 2023 Land and buildings, right-of-use assets Carrying amount on 1 January 246 248 Changes in exchange rates 0 -3 Additions 58 50 Depreciation and impairment -44 -45 Decreases and reclassifications -21 -5 Carrying amount on 31 December 240 246 Machinery and equipment, right -of-use assets Carrying amount on 1 January 9 10 Additions 9 6 Depreciation and impairment -6 -6 Decreases and reclassifications -1 -1 Carrying amount on 31 December 11 9 Lease liabilities Carrying amount on 1 January 268 266 Changes in exchange rates 0 -2 Additions 62 56 Interest expenses 0 2 Payments -49 -48 Other adjustments -8 -6 Reclassification to assets held for sale -15 Carrying amount on 31 December 258 268 Total lease liabilities Non-current 215 224 Current 43 44 MEUR 2024 2023 Amounts recognised in statement of income Depreciation and impairment of right-of-use assets -50 -51 Interest expenses -10 -8 Expense - short-term leases -28 -31 Expense - leases of low-value assets -6 -6 Expense - variable lease payments -8 -9 The lease for the Sustainable Technology Hub in Vaasa contains a floating interest rate, and therefore the related lease liability is remeasured at the end of each interest period. The floating interest rate is partially hedged. The residual value guarantees related to the Sustainable Technology Hub that are not considered in capitalised lease payments are disclosed in Note 7.1. Collateral, contingent liabilities, and other commitments. Financial review 3.5. DEPRECIATION, AMORTISATION AND IMPAIRMENT MEUR 2024 2023 Development expenses 26 18 Purchase price allocation amortisation 19 20 Other intangible assets 9 7 Buildings and structures 7 8 Land and buildings, right-of -use assets 45 44 Machinery and equipment 37 32 Machinery and equipment, right -of-use assets 6 6 Other tangible assets 2 2 Impairment -20 56 Total 131 193 Financial review 4. Working capital and other balance sheet items Content in this section: 4.1. INVENTORIES 4.2. TRADE RECEIVABLES AND CONTRACT ASSETS AND LIABILITIES 4.3. OTHER RECEIVABLES 4.4. TRADE PAYABLES AND OTHER LIABILITIES 4.5. PROVISIONS 4.6. DEFERRED TAXES 4.7. PENSION OBLIGATIONS 4.1. INVENTORIES Accounting principles Inventories are valued at the lower of cost and net realisable value. Net realisable value is the estimated selling price in the ordinary course of business, less the estimated costs of completion and costs necessary to make the sale. Materials and consumables are valued at weighted average cost or at moving average price. Finished products are valued at direct purchasing and manufacturing costs plus allocated purchasing and manufacturing overhead costs. Work in progress includes costs for direct labour and material costs, and allocated overhead costs related to manufacturing and purchasing when control has not yet been transferred to the customer. Inventories are presented net of provision for obsolete inventories. Accounting estimates and judgements Valuation of inventory, mainly concerning obsolete stock and future selling price of stock items, requires management judgement. Writing down inventories to net realisable value due to obsolete and excess stock, is performed based on management’s best estimate at the end of the reporting period taking into consideration the business and market specific circumstances and outlook. A systematic and continuous evaluation of inventory ageing, turn-over, and composition compared to anticipated future use, is the basis for the estimates . Financial review MEUR 2024 2023 Materials and consumables 665 708 Work in progress 673 656 Finished products 42 40 Advances paid 102 81 Total 1,483 1,485 In 2024, EUR 4 million (6) impairment for obsolete inventories has been recognised in the statement of income. In 2024, the total value of inventories related to assets held for sale amounted to EUR 77 million . 4.2. TRADE RECEIVABLES AND CONTRACT ASSETS AND LIABILITIES Accounting principles Trade receivables are recognised when the right to consideration becomes unconditional. The Group’s trade receivables are measured at amortised cost, which is the original invoiced amount less an estimated valuation allowance for impairment. The Group assesses any possible increase in the credit risk for trade receivables and contract assets measured at amortised cost at the end of each reporting period individually. The methodology applied depends on whether there has been a significant increase in credit risk. If there has been a significant increase in credit risk, the loss allowance is estimated at an amount equal to lifetime expected credit losses at the end of the reporting period. For trade receivables and contract assets, a simplified approach is used, and the loss allowance is measured at the estimate of the lifetime expected credit losses. The Group uses a provision matrix for estimating the expected credit loss where receivables are segregated depending on the ageing category and the origin of the receivable. The Group has an effective collection process in place which decreases the possible risk of credit losses. Also, to mitigate the credit risk, advance payments and payment guarantees are in use. In calculating the expected credit loss rates, the Group considers historical loss rates for each category, and adjusts for forward looking macroeconomic data. Based on the analysis, for trade receivables not due, or a maximum of 359 days overdue, as well as contract assets, an impairment of 0.1%-2.0% is made. In addition to that, trade receivables more than 360 days old are assessed individually for impairment. Examples of events giving rise to impairment include debtor’s serious financial problems, and a debtor’s probable bankruptcy or other financial arrangement. Trade receivables are permanently written off when there is no reasonable expectation of recovery. The Group may sell undivided interests in trade receivables on an ongoing and one-time basis to lending institutions. Financial assets sold under these arrangements are excluded from trade receivables in the statement of financial position at the time of payment from the acquirer, providing that substantially all risks and rewards have been transferred. If the acquirer has not settled payment to the extent that the ownership, risk, and control over the receivable have been substantially transferred, then such financial assets sold are re-recognised in the statement of financial position at the end of the reporting period. Contract assets and liabilities are related to contracts with customers. When control over goods or services is transferred to a customer before the customer pays the consideration, the receivable is recognised as a contract asset. The contract asset represents the right to a future consideration. Contract assets primarily relate to the Group’s right to consideration for transferred goods or services, but which are not yet invoiced at the end of the reporting period. The contract assets are transferred to trade receivables when the rights become unconditional. Contract liabilities include advances received (payments received in advance) and deferred revenue (invoicing in excess of revenue recognised). Contract liabilities are recognised as revenue when the Group performs under the contract. Accounting estimates and judgements Estimated expected credit loss provisions are based on management’s best judgement. Management judgement includes past years’ experience and a forward-looking understanding of the client’s payment behaviour and economic situation. In addition, assessing whether it is probable that the consideration from contracts with customers will be collected requires judgement, and might impact the timing and amount of revenue recognition. Contract assets and liabilities MEUR 2024 2023 Trade receivables 1,025 993 Contract assets 571 630 Contract liabilities Advances received 898 774 Deferred income 1,048 886 Trade receivables and contract assets Non-current 6 2 Current 1,590 1,622 Contract liabilities Financial review Non-current 121 126 Current 1,825 1,534 Revenue recognised in the financial period that was included in the contract liability on 1 January 1,534 1,145 Unsatisfied performance obligations, all revenue types 10,365 8,487 of which remaining performance obligations from projects and contracts under execution 5,440 5,126 The contract assets and liabilities arise i.a., from long-term agreements and projects recognised over time, such as gas solutions construction contracts, integrated solutions projects, and energy solutions turnkey contracts. EUR 5,075 million (4,208) of unsatisfied performance obligations is expected to be recognised during next year, and the remaining later. Ageing of trade receivables - 2024 2023 MEUR Trade receivables of which impaired Trade receivables of which impaired Not past due 783 1 706 3 Past due 1–30 days 123 0 139 Past due 31–180 days 113 9 129 1 Past due 181–360 days 18 5 15 1 Past due 1 year 54 51 62 53 Total 1,091 66 1,050 57 In 2024, the result impact of write-offs was EUR -2 million (-6). Impairment MEUR 2024 2023 Impairment on 1 January 57 87 Money received -8 -33 Increase in loss allowance recognised 19 10 Receivables written off during the financial period as uncollectible -2 -6 Impairment on 31 December 66 57 The Group sells trade receivables in an amount that is currently not significant compared to the trade receivables as a whole. Sold receivables have been de-recognised in the statement of financial position. 4.3. OTHER RECEIVABLES Accounting principles Other receivables are recognised at amortised cost with the exception for derivatives and defined benefit plan assets. Accounting principles for derivatives are presented in Note 5.2. Financial assets and liabilities by measurement category, and for defined benefit plan receivables in Note 4.7. Pension obligations. MEUR 2024 2023 Derivatives 15 49 Interest and other financial items 3 3 Insurance receivables 3 3 Rental accruals 2 4 Prepaid expenses 3 2 Other accruals 42 34 Loan receivables 1 1 Defined benefit plans 14 16 VAT receivables 156 160 Other 68 62 Total 308 332 Non-current 39 46 Current 269 287 * Other includes payroll related tax receivables of EUR 7 million (8) in Brazil, which are not likely to be utilised within a year. Financial review 4.4. TRADE PAYABLES AND OTHER LIABILITIES Accounting principles Trade payables are initially recognised at fair value and subsequently measured at amortised cost. Accounting principles for derivatives are presented in Note 5.2. Financial assets and liabilities by measurement category. Other liabilities are initially recognised at fair value and subsequently measured at amortised cost. MEUR 2024 2023 Trade payables 793 686 Accrued expenses 410 334 Personnel costs 263 232 Derivatives 72 16 Interest and other financial items 8 9 Other accruals 59 46 VAT liabilities 49 38 Other 89 93 Total 1,743 1,454 Non-current 12 16 Current 1,731 1,437 Wärtsilä has several supplier finance arrangements with its banks under which the banks acquire rights to trade receivables from suppliers. Suppliers choosing to participate in the supplier finance arrangements can benefit from accelerated payment by discounting receivables it has assigned to the bank. Wärtsilä pays the receivables to the banks by their original payment due dates. Wärtsilä’s payment terms for trade payables related to supplier finance arrangements are not impacted by the suppliers’ decisions to sell receivables under the arrangements. Wärtsilä is not a party to the receivable purchase agreements between the banks and the suppliers and therefore has no visibility of financing terms nor control over the occurrence of payments from the banks to the suppliers. 31.12.2024 Carrying amount of trade payables under supplier finance arrangements, MEUR 350 Range of payment term dates, in days Trade payables under supplier finance arrangements 90 ‒ 180 Comparable trade payables not under supplier finance arrangements 0 ‒ 150 Wärtsilä sees very limited liquidity risk associated with the supplier finance arrangements provided by its long- term relationship banks. Additional information on liquidity risk related to supplier finance arrangements is presented in Note 5.8. Financial risks. 4.5. PROVISIONS Accounting principles Provisions are recognised in the statement of financial position when the Group has a present legal or constructive obligation as a result of a past event, and it is probable that an outflow of economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation. Provisions can arise, for example, from warranties, environmental risks, litigation, foreseeable losses on projects, and restructuring costs. The amount to be recognised as provisions corresponds to management’s best estimate of the expenses that will be necessary to meet the existing obligation at the end of the reporting period. Warranty provisions include estimated future warranty costs relating to products delivered. Typically, the standard warranty period is 1-3 years from the delivery onwards. Onerous contracts are contracts in which the unavoidable costs of meeting the obligations exceed the economic benefits expected. The present obligation under the contract is measured and a provision is recognised to reflect the expected loss. Provisions for restructuring costs are made once the restructuring plan has been approved and the implementation started, or the personnel concerned have been informed of the terms. The plan must indicate which activities and personnel will be affected, as well as the timing and cost of implementation. The Group is a defendant in a number of legal cases which arise out of, or are incidental to, the ordinary course of its business. These lawsuits concern mainly issues, such as contractual and other liability, labour relations, property damage and regulatory matters. The Group receives from time to time claims of different amounts and with varying degrees of substantiation. It is the Group’s policy to provide for amounts related to the claims, as well as for the litigation and arbitration matters when an unfavourable outcome is probable and the amount of loss can be reasonably estimated. Accounting estimates and judgements Provisions are accounted for based on management’s best estimate of the future outcome concerning the expected expenses in a specific situation. Management uses judgement and relies on estimates based on accumulated historical experience, situation specific circumstances, estimated risks, uncertainties, and future events, such as changes in the law or development of a technology. Warranty provisions are based Financial review on management’s best estimate of future warranty costs. These estimates rely on accumulated historical experience of warranty cost occurrence concerning similar deliveries. Management judgement is also required in estimating provisions for legal cases. A provision for a court case is recognised when an unfavourable result is probable, and the loss can be determined with reasonable certainty. The Group is a defendant in a number of legal cases arising from its business operations. The final result from these cases can differ from these estimates. 2024 MEUR Litigation Warranties Onerous contracts Restruc- turing Other provisions Total Provisions on 1 January 2024 5 144 66 62 96 373 Changes in exchange rates 0 0 0 0 1 0 Additions 4 74 62 2 33 175 Used provisions -1 -69 -40 -15 -15 -140 Released provisions 0 -3 -46 -6 -55 Provisions on 31 December 2024 7 149 85 2 109 352 Non-current 144 Current 207 In 2023, the provisions for restructuring included EUR 58 million related to the ramp-down of manufacturing in Trieste, Italy. During 2024, EUR 46 million of them have been reversed and EUR 11 million used. There is currently one unusually sizeable claim, but it is highly unlikely that the outcome of it will be unfavourable. 2023 MEUR Litigation Warranties Onerous contracts Restruc- turing Other provisions Total Provisions on 1 January 2023 12 155 88 62 80 397 Changes in exchange rates -2 -1 -1 -3 Additions 3 53 79 18 46 199 Used provisions -4 -62 -87 -17 -19 -188 Released provisions -6 -13 -1 -11 -32 Provisions on 31 December 2023 5 144 66 62 96 373 Non-current 126 Current 246 The comparison figures for warranties have been restated to reflect the categorisation between non-current and current provisions. 4.6. DEFERRED TAXES Accounting principles Deferred tax liabilities and assets are calculated on temporary differences arising from the difference between the tax basis of assets and liabilities, and the carrying values using the enacted or substantially enacted tax rates at the end of the reporting period. The statement of financial position includes deferred tax liabilities in their entirety and deferred tax assets at their estimated probable amount. Deferred tax assets and liabilities are offset when the deferred tax assets and liabilities relate to income taxes levied by the same taxation authority on either the same taxable entity, or different taxable entities which intend to settle the balances on a net basis. Accounting estimates and judgements Estimates of tax liabilities and receivables relate mainly to the expected results of ongoing tax audits, and to the recognition of deferred tax receivables from tax losses. Deferred tax assets on unutilised tax losses and other temporary differences are recognised to the extent it is highly probable that taxable profit is available. No deferred tax assets are recognised from tax losses when there is uncertainty of their utilisation. Financial review Changes in deferred taxes during 2024 MEUR 1 January 2024 Recog- nised in the con- solidated statement of income Recog- nised in the con- solidated statement of compre- hensive income Recog- nised in the con- solidated statement of financial position Transla - tion dif- ferences Acquisi- tions and disposals 31 December 2024 Deferred tax assets Tax loss carry-forwards 41 -20 20 Pension obligations 17 -2 2 17 Provisions 49 -6 -1 43 Elimination of intragroup margin in inventories 9 1 10 Fair value reserve 1 2 3 Lease liabilities 59 -1 1 60 Other temporary differences 92 -10 1 83 Reclassification to assets held for sale -3 Set-off of deferred tax assets related to lease liabilities -56 -57 Total 212 -37 3 1 175 Deferred tax liabilities Intangible assets and property, plant and equipment 32 -2 30 Fair value reserve 7 -7 Right-of-use assets 56 1 59 Other temporary differences 30 4 33 Reclassification to assets held for sale -7 Set-off of deferred tax liabilities related to right-of -use assets -56 -57 Total 69 3 -7 1 57 Net deferred tax assets/liabilities 143 -40 10 118 On 31 December 2024, the Group had unrecognised deferred taxes on temporary differences totaling EUR 96 million (87), as it is uncertain if they will be realised. Most of the unrecognised deferred tax assets are related to cumulative tax losses. Of these, EUR 11 million (8) will expire within the next five years and the rest will expire later or never. Most of the cumulative tax losses on which deferred tax assets have been booked will never expire. Changes in deferred taxes during 2023 MEUR 1 January 2023 Recog- nised in the con- solidated statement of income Recog- nised in the con- solidated statement of compre- hensive income Recog- nised in the con- solidated statement of financial position Transla - tion dif- ferences Acquisi- tions 31 December 2023 Deferred tax assets Tax loss carry-forwards 41 1 -1 41 Pension obligations 10 7 17 Provisions 62 -12 -1 49 Elimination of intragroup margin in inventories 8 1 9 Fair value reserve 1 1 Lease liabilities 60 -10 9 -1 59 Other temporary differences 73 23 -5 92 Set-off of deferred tax assets related to lease liabilities -58 -56 Total 197 11 1 9 -8 212 Deferred tax liabilities Intangible assets and property, plant and equipment 32 2 -1 32 Fair value reserve 4 3 7 Right-of-use assets 58 -11 9 56 Other temporary differences 29 2 -1 30 Set-off of deferred tax liabilities related to right-of -use assets -58 -56 Total 65 -10 3 9 -2 -1 69 Net deferred tax assets/liabilities 132 21 -2 -6 1 143 Financial review 4.7. PENSION OBLIGATIONS Accounting principles Group companies in different countries have various pension plans in accordance with local conditions and practices. These pension plans are classified either as defined contribution or defined benefit plans. Defined benefit plans are funded through contributions to pension funds or pension insurance companies. Defined benefit plans may be unfunded or wholly or partly funded. The present value of the obligation arising from the defined benefit plans is determined per each plan using actuarial techniques, the projected unit credit method. The Group recognises the defined benefit obligation, net of fair value of the plan assets, at the end of the financial period. Actuarial gains and losses and other re-measurements of the net defined benefit obligation are recognised immediately in the statement of other comprehensive income. Current service cost is the present value of the post-employment benefit, which is earned by the employees during the year. The Group determines the net interest expense on the net defined benefit plan by applying the discount rate used to measure the defined benefit obligation. Service cost is recognised in employee benefit expenses and the net interest in financial expenses. The defined benefit plans are calculated by qualified actuaries. In addition to defined benefit plans, Wärtsilä has other long-term employee benefits, which are presented separately from the defined benefit plans. As with the accounting for a defined benefit plan, for any other long-term benefit the Group recognises a liability for the obligation, net of the fair value of the plan assets, if any. Changes in other long-term employee benefits are recognised in the statement of income. Accounting principles for defined contribution plans are presented in Note 2.5. Employee benefit expenses. Accounting estimates and judgements Estimates of pension obligations regarding each defined benefit plan are based on actuarial estimates of factors, including future salary increases, discount rates, and return on plan assets. Changes in these assumptions can significantly affect the Group’s pension obligations and pension costs. MEUR 2024 2023 Net defined benefit assets on 31 December 14 16 Net defined benefit liabilities on 31 December 82 83 Liability for other long-term employee benefits on 31 December 46 43 Wärtsilä has defined benefit plans for its employees mainly in Europe and Asia. The major plans are located in Switzerland, Germany, United Kingdom and Sweden. The Swiss defined benefit plan accounts for 41% of the Group's total defined benefit obligations and 65% of the plans' assets. Most of the plans provide a lifetime pension to the members at the normal retirement age, but there are also plans that provide a lump sum payment at the retirement date. Most of these defined benefit pension plans are managed by pension funds. Their assets are not included in the Group's assets. The plans' assets are typically invested according to the investment strategies approved by the funds' Board of Trustees, or in some cases are completely administered by insurance companies. Wärtsilä Group companies make their payments to pension funds in accordance with local legislation and practice. Authorised actuaries in each country have performed the actuarial calculations required for the defined benefit plans. The Swiss plan Wärtsilä operates a defined benefit plan in Switzerland in accordance with the local pension laws and regulations. The plan provides benefits to the members in the form of a pension payable after retirement. The level of benefits provided depends on the accrued retirement savings capital, which is a result of contributions paid up to retirement plus respective interest. The plan is run as a pension fund by the Board of Trustees separately from the company. Contributions to the plan are paid both by the employees, as well as by the employers based on a percentage of the insured salary as defined in the pension fund regulations. Contributions by the employers vary depending on the age of the employee, and cover on average two thirds of the total contributions. The investment strategy for a pension fund's asset is the responsibility of the Board of Trustees. Assets are invested in accordance with the strategy and the corridors for different investment categories as defined by local laws. Other risks of the plan are the longevity of plan members, as well as the death or disability of employees before their retirement. The pension plan is reinsured for the risk of death and disability until 31 December 2024. Inflationary increases for pensions in payment are at the discretion of the Board of Trustees when benefits paid by the plan are exceeding the minimum level required by law. The German plans Wärtsilä operates defined benefit plans in Germany in accordance with local pension laws and regulations. The plans provide benefits to the members in the form of a pension payable after retirement. The level of benefits provided depends on the accrued retirement savings capital, which is a result of contributions paid up to retirement plus respective interest. The plans vary from unfunded plans to a plan run as a pension fund. In some of the plans, contributions are paid to the plan, both by the employees and the employers based on a percentage of the insured salary as defined in the pension fund regulations. However, in some plans only the employer is obliged to make the payments. Contributions by the employers vary depending on the age of the employee, the duration of the employment, and also on the position of the employee. The main risks of the plans are the longevity of plan members, and the death or disability of employees before their retirement. In a funded plan, the investment strategy chosen also includes certain risk. Inflationary increases for pensions in payment are valuated on a yearly basis. Financial review MEUR 2024 2023 Present value of unfunded defined benefit obligations 71 71 Present value of funded defined benefit obligations 153 146 Fair value of plan assets -157 -151 Net liability in the statement of financial position 67 66 % Present value of defined benefit obligations Fair value of plan assets Switzerland 41 65 Germany 16 Other Europe 29 20 Asia 13 15 Total 100 100 MEUR Present value of defined benefit obligation Fair value of plan assets Net defined benefit liability Balance on 1 January 2023 210 -142 71 Changes in exchange rates 4 -5 -1 Recognised in the statement of income: Current service cost 7 7 Past service cost (- credit) 1 1 Gains (-) / losses (+) on curtailments and settlements -1 -2 -2 Interest cost (+) / interest income (-) 7 -4 2 Remeasurements recognised in other comprehensive income: Return on plan assets, excluding interest income -3 -3 Experience adjustments 1 1 Changes in financial assumptions 3 3 Contribution paid by the plan members 2 -2 Contribution paid by the employer -4 -4 Benefits paid -13 8 -5 Balance on 31 December 2023 220 -151 66 Balance on 1 January 2024 220 -151 66 Changes in exchange rates -1 1 Other adjustments -3 -3 Recognised in the statement of income: Current service cost 8 8 Gains (-) / losses (+) on curtailments and settlements 1 1 Interest cost (+) / interest income (-) 7 -4 3 Remeasurements recognised in other comprehensive income: Return on plan assets, excluding interest income -5 -5 Experience adjustments 1 1 Changes in financial assumptions 12 12 Contribution paid by the plan members 2 -2 Contribution paid by the employer -6 -6 Benefits paid -15 9 -6 Reclassification to assets held for sale -4 -4 Balance on 31 December 2024 228 -158 67 Plan assets invested in: % 2024 2023 Shares and other equity instruments 17 16 Bonds and other debt instruments 43 44 Property 20 19 Other assets 20 21 The main actuarial assumptions at the end of the financial period are (expressed as weighted averages): % 2024 2023 Discount rate 2.88 3.45 Future salary growth 2.22 2.18 Future pension growth 0.98 0.92 Financial review On 31 December 2024, the weighted average duration of the defined benefit obligation was 8 years (8). The Group expects to contribute EUR 3 million (3) to the plans during the next financial period. Assumptions regarding future mortality are set based on actuarial advice in accordance with the published statistics and experience in each country. These assumptions translate into a weighted average life expectancy in years for a pensioner at the retirement age as follows: - 2024 2023 Plan participants retiring at the end of the financial period: Male 17.2 17.4 Female 19.2 19.6 Plan participants retiring 20 years after the end of the financial period: Male 16.1 17.2 Female 18.5 19.2 The following table presents a sensitivity analysis for each significant actuarial assumption showing how the defined benefit obligation would have been affected by changes in the relevant actuarial assumption that were reasonably possible at the end of the financial period. This sensitivity analysis applies to the defined benefit obligation only and not to the net defined benefit pension liability in its entirety. Sensitivity analysis - Effect to defined benefit obligation, MEUR Change in assumption 2024 2023 Discount rate increase 1% -25 -22 Discount rate decrease 1% 24 29 Future salary growth increase 1% 7 8 Future salary growth decrease 1% -6 -8 Future pension growth increase 1% 18 14 Future pension growth decrease 1% -8 -7 Financial review 5. Capital structure and financial items Content in this section: 5.1. FINANCIAL INCOME AND EXPENSES 5.2. FINANCIAL ASSETS AND LIABILITIES BY MEASUREMENT CATEGORY 5.3. CASH AND CASH EQUIVALENTS 5.4. NET DEBT RECONCILIATION 5.5. EQUITY 5.6. MATURITY ANALYSIS OF FINANCIAL LIABILITIES 5.7. DERIVATIVE FINANCIAL INSTRUMENTS 5.8. FINANCIAL RISKS 5.1. FINANCIAL INCOME AND EXPENSES Accounting principles The net interest related to pension obligations is recognised in the financial statement as financial expenses. Also, gains and losses from fair valuation and disposal and impairments of other shares are included in financial income and expenses. Changes in the fair value of interest rate hedges against Wärtsilä Group’s loan portfolio are immediately recognised in financial income or expenses in the statement of income. The fair value of interest rate swaps is calculated by discounting the future cash flows. Exchange rate differences related to financial assets and financial liabilities are reported as financial items in the statement of income, except exchange rate differences related to non-current debt that is part of the Group's net investment in a subsidiary. MEUR 2024 2023 Interest income on loans and receivables 1 4 Interest income on financial assets at fair value through the statement of income 14 15 Interest income on investments at amortised cost 33 10 Changes in fair values of financial assets/liabilities at fair value through the statement of income -5 -3 Exchange rate differences 0 2 Financial review Other financial income 1 3 Total financial income 44 31 Interest expenses on financial liabilities recognised at amortised cost -17 -18 Interest expenses on lease liabilities recognised at amortised cost -10 -8 Interest expenses on financial liabilities at fair value through the statement of income -33 -32 Net interest from defined benefit plans -3 -2 Changes in fair values of financial assets/liabilities at fair value through the statement of income -1 Exchange rate differences -2 Fee expenses -1 -2 Other financial expenses -4 -5 Total financial expenses -73 -68 Total -29 -37 * In 2024, exchange rate differences from unhedged internal loans, EUR -2 million (-3), were included in exchange rate differences. 5.2. FINANCIAL ASSETS AND LIABILITIES BY MEASUREMENT CATEGORY Accounting principles Financial instruments Financial instruments are initially recognised at fair value. Subsequently, financial assets are classified and measured at amortised cost or at fair value through statement of income. The classification of financial assets is defined by the business model and the cash flow characteristics of the asset. Financial liabilities are subsequently classified and measured at amortised cost or at fair value through statement of income. Financial instruments are classified as current financial instruments unless the maturity of the financial instrument exceeds 12 months from the end of the reporting period. Financial instruments are derecognised only when the financial instrument is extinguished, or when the contractually specified right or obligation is discharged, cancelled, or when it expires. The status of financial instruments is evaluated at the end of each reporting period. Financial instruments at amortised cost Financial assets Financial assets measured at amortised cost include cash and cash equivalents, investments in debt instruments, commercial papers, trade receivables and other receivables. The assets are initially recognised at fair value less the transaction costs, and are subsequently measured at amortised cost by using the effective interest rate method. These assets are held for collecting contractual cash flows, which are solely payments of principal and interest. Interest income is recognised as financial income in the statement of income. The expected credit losses associated with investments in debt instruments and commercial papers carried at amortised cost are assessed on a forward-looking basis based on investment maturity dates and counterparty credit risk on a quarterly basis. The Group applies the simplified method in IFRS 9 for the expected credit losses from its trade receivables. This requires expected lifetime credit losses to be recognised from the initial recognition of the receivables, as defined in Note 4.2. Trade receivables and contract assets and liabilities. Financial Liabilities Financial liabilities measured at amortised cost include trade and other payables, loans, and borrowings. These liabilities are initially recognised at fair value less the transaction costs related to the acquisition of these liabilities. The liabilities are subsequently classified and measured using the effective interest rate method by amortising the discounted interest payments over the maturity of the liabilities. Interest expense is recognised in the financial expense in the statement of income. Financial instruments at fair value through the statement of income Financial assets Financial assets measured at fair value through the statement of income include other financial investments, other short-term cash investments and derivatives. These financial investments include Wärtsilä’s investments in other companies (both listed and unlisted shares). Changes in fair value and gains and losses at derecognition of these financial assets are recognised in the statement of income. Gains and losses from fair valuation and the disposal of shares that are attributable to operating activities are included in operating income, while gains and losses from fair valuation and the disposal of other shares are included in financial income and expenses. Financial liabilities Financial liabilities recognised at fair value through the statement of income include derivatives that are not eligible for hedge accounting. Financial review Changes in fair value and gains and losses at derecognition of these financial assets are recognised in the statement of income. Information on measurement categories of derivatives and financial instruments in hedge accounting are presented in Note 5.7. Derivative financial instruments. 2024 MEUR Measured at amortised cost At fair value through the statement of income Carrying amounts of the statement of financial position items Fair value Non-current financial assets Trade receivables 6 6 6 Derivatives, included in hedge accounting 10 10 10 Derivatives, no hedge accounting 2 2 2 Other investments 17 17 17 Other receivables 1 1 1 Current financial assets Trade receivables 1,018 1,018 1,018 Trade receivables for sale 1 1 1 Derivatives, included in hedge accounting 1 1 1 Derivatives, no hedge accounting 2 2 2 Other financial receivables 3 3 3 Cash and cash equivalents 1,538 16 1,554 1,554 Carrying amount by measurement category 2,566 49 2,616 2,616 Non-current financial liabilities Interest-bearing debt 624 624 621 Derivatives, no hedge accounting 8 8 8 Current financial liabilities Interest-bearing debt 142 142 142 Trade payables 793 793 793 Derivatives, included in hedge accounting 36 36 36 Derivatives, no hedge accounting 28 28 28 Other financial liabilities 8 8 8 Carrying amount by measurement category 1,567 72 1,639 1,636 * In 2024, the Group had also cash and cash equivalents measured at amortised cost of EUR 4 million related to assets held for sale. 2023 MEUR Measured at amortised cost At fair value through the statement of income Carrying amounts of the statement of financial position items Fair value Non-current financial assets Interest-bearing investments 4 4 4 Trade receivables 2 2 2 Derivatives, included in hedge accounting 13 13 13 Derivatives, no hedge accounting 4 4 4 Other investments 19 19 19 Other receivables 1 1 1 Current financial assets Trade receivables 989 989 989 Trade receivables for sale 2 2 2 Derivatives, included in hedge accounting 20 20 20 Derivatives, no hedge accounting 12 12 12 Other financial receivables 3 3 3 Cash and cash equivalents 809 10 819 819 Carrying amount by measurement category 1,804 83 1,887 1,887 Non-current financial liabilities Interest-bearing debt 739 739 733 Derivatives, no hedge accounting 12 12 12 Current financial liabilities Interest-bearing debt 119 119 119 Trade payables 686 686 686 Financial review Derivatives, included in hedge accounting 3 3 3 Derivatives, no hedge accounting 2 2 2 Other financial liabilities 9 9 9 Carrying amount by measurement category 1,553 16 1,569 1,563 Fair value hierarchy Accounting principles Wärtsilä uses the following categorisation for determining and disclosing the fair value of financial instruments by valuation technique: Level 1: The quoted prices for the financial instruments are directly and regularly available on active publicly traded markets or other publicly available sources. Level 2: The prices for the financial instruments are determined by using a valuation method for which the input data is directly or indirectly available on a publicly traded markets or other publicly available sources. Level 3: The financial instruments are categorised into level 3 fair value if the prices for the inputs of the valuation method are not publicly available, and when the financial instruments are measured using an independent valuation method. Specific valuation techniques used to value financial instruments include: • the fair value of forward foreign exchange contracts is determined by using forward rates at the end of the reporting period • the fair value of interest rate swaps is calculated as being the present value of the estimated future cash flows based on observable yield curves • the use of quoted market prices or dealer quotes for similar instruments - 2024 2023 MEUR Level 2 Level 3 Level 2 Level 3 Financial assets Other investments 17 19 Interest-bearing investments, non-current 4 Other receivables, non-current 1 1 Derivatives 15 49 Financial liabilities Interest-bearing debt, non-current 621 733 Derivatives 72 16 * Measured at amortised cost in the statement of financial position. Additional information on financial liabilities is presented in Note 5.6. Maturity analysis of financial liabilities. Other investments Other investments include unlisted shares carried at fair value. These investments are valued using certain DCF models where critical assumptions relate to WACC level and expected cash flows from future dividends. However, the results from different scenarios vary a lot. The management therefore considers that the valuation at amortised cost is the best estimate of fair value. MEUR 2024 2023 Carrying amount on 1 January 19 19 Disposal of shares -1 Carrying amount on 31 December 17 19 In 2024, the cost for other unlisted shares (level 3) was EUR 17 million (19), and the market value of them was EUR 17 million (19). 5.3. CASH AND CASH EQUIVALENTS Accounting principles Cash and cash equivalents comprise cash in hand, deposits held at call with banks, and other short-term cash investments. Other short-term cash investments are highly liquid investments that are subject to only minor fluctuations in value, and which have a maturity of up to three months on the date of acquisition. Cash in hand and deposits held at call are presented at amortised cost. Other cash investments are mainly measured at fair value, except for commercial paper investments that are presented at amortised cost. Credit accounts related to Group cash pool accounts are included in current financial liabilities. MEUR 2024 2023 Cash and bank balances 1,538 809 Cash equivalents 16 10 Total 1,554 819 * EUR 196 million (185) of cash and bank balances relate to cash in countries where repatriation is limited due to local regulation and, consequently, the cash is not immediately available to the parent company. There are no restrictions to use the cash and bank balances locally. Financial review In 2024, the Group also had cash and cash equivalents of EUR 4 million related to assets held for sale. 5.4. NET DEBT RECONCILIATION Net interest-bearing debt MEUR 2024 2023 Lease liabilities, non-current 215 224 Other interest-bearing debt, non-current 409 515 Lease liabilities, current 43 44 Other interest-bearing debt, current 99 76 Interest-bearing liabilities pertaining to assets held for sale 15 Total interest-bearing liabilities 781 858 Interest-bearing receivables -4 Cash and cash equivalents -1,554 -819 Cash and cash equivalents pertaining to assets held for sale -4 Total interest-bearing assets -1,558 -823 Total net interest-bearing debt -777 35 Net debt reconciliation 2024 MEUR Carrying amount on 1 January 2024 Cash flows Changes in exchange rates Other non-cash move- ments Acquisi- tions and disposals Carrying amount on 31 December 2024 Lease liabilities 268 -60 1 65 273 Other interest-bearing debt, non-current 515 -99 -7 409 Other interest-bearing debt, current 76 23 -1 99 Interest-bearing receivables -4 4 Cash and cash equivalents -819 -736 -2 -1,557 Net debt 35 -868 -9 65 -777 * Lease liabilities include EUR 15 million and cash and cash equivalents EUR 4 million pertaining to assets held for sale. 2023 MEUR Carrying amount on 1 January 2023 Cash flows Changes in exchange rates Other non-cash move- ments Acquisi- tions and disposals Carrying amount on 31 December 2023 Lease liabilities 266 -55 -2 59 268 Other interest-bearing debt, non-current 517 15 -17 515 Other interest-bearing debt, current 166 -98 -2 2 7 76 Interest-bearing receivables -4 1 -4 Cash and cash equivalents -464 -379 19 4 -819 Net debt 481 -517 -1 61 11 35 5.5. EQUITY Equity consists of share capital, share premium, translation differences, fair value reserve, remeasurements of defined benefit liabilities and retained earnings. Share capital and number of shares At the beginning of 2024, the total amount of own shares held by the Company was 2,700,000. The shares are to be used for pay-outs under the share-based incentive programmes of Wärtsilä Corporation. During the year, 57,425 own shares were used to settle share-based payments resulting in the total amount of 2,642,575 at the end of the reporting period. MEUR Share capital Share capital Share premium Total 1 January 2023 336 61 397 31 December 2023 336 61 397 31 December 2024 336 61 397 Financial review Number of shares and votes Number of shares outstanding on 1 January 2024 589,023,390 Share-based payments settled in company shares 57,425 Number of shares outstanding on 31 December 2024 589,080,815 Weighted average number of shares outstanding during the period 589,071,715 Wärtsilä's share does not have a nominal value. Wärtsilä has one series of shares. Each share is assigned one vote in the Annual General Meeting and has an equal right to dividend. Share Capital The subscription price of a share received by the company in connection with share issues is credited to the share capital, unless it is provided in the share issue decision that a part of the subscription price is to be recorded in the fund for invested non-restricted equity. Share Premium Share premium is restricted equity. It may be reduced in accordance with the rules applying to decreasing share capital in accordance with the Finnish Limited Liability Companies Act. It can also be used to increase the share capital. Translation differences Translating foreign subsidiaries' financial statements by using different exchange rates in the statement of comprehensive income and in the statement of financial position causes translation differences, which are recognised in equity. Translation differences of foreign subsidiaries’ acquisition cost eliminations and post- acquisition gains and losses are also presented in equity. Also, translation differences arising from subsidiary net investments and non-current subsidiary loans without agreed settlement dates are presented in equity. The change in translation differences is recognised in other comprehensive income. Fair value reserve Fair value reserve includes the changes in fair value of derivative financial instruments if the hedging is effective and eligible for hedge accounting, and the hedge relationship is still continuing. The changes in items included in fair value reserve are recognised in other comprehensive income. MEUR Foreign exchange hedges Interest rate hedges Total cash flow hedges Fair value reserve on 1 January 2023, gross -7 21 13 Taxes related to fair value adjustments 1 -4 -4 Fair value reserve on 1 January 2023, net -7 17 9 Transferred to the statement of income or financial position as basis adjustments, net of taxes 3 3 Fair value adjustments 27 -7 20 Taxes related to fair value adjustments -3 1 -2 Fair value reserve on 31 December 2023, net 20 11 31 Transferred to the statement of income or financial position as basis adjustments, net of taxes 14 14 Fair value adjustments -77 -3 -80 Taxes related to fair value adjustments 12 1 13 Fair value reserve on 31 December 2024, net -31 8 -23 Parent company's distributable funds Accounting principles The dividend proposed by the Board of Directors is deducted from distributable equity when approved by the company’s Annual General Meeting. Unpaid dividends are presented as liability in the consolidated financial statements. After the balance sheet date, the Board of Directors proposed that a dividend of EUR 0.44 per share be paid for the financial period 2024, the total dividend payable being EUR 259 million based on shares outstanding on 31 December 2024. The remaining part of the retained profits will be carried further in the unrestricted equity. For the result for the financial period 2023, a dividend of EUR 0.32 per share was distributed, totalling EUR 188 million, and the rest of the retained profits were carried further in the unrestricted equity. Additional information on equity is presented in Notes to the parent company financial statements, in Note 10. Shareholders' equity. Financial review 5.6. MATURITY ANALYSIS OF FINANCIAL LIABILITIES 2024 Current Non- current MEUR < 1 year 1–3 years 3–5 years > 5 years Total Loans from other financial institutions 99 201 156 52 508 Lease liabilities 55 85 59 121 320 Trade payables 793 793 Interest rate derivatives, payable 81 108 2 0 192 Interest rate derivatives, receivable -66 -102 -6 0 -174 Foreign exchange forwards, payable 2,418 2,418 Foreign exchange forwards, receivable -2,368 -2,368 Other liabilities 8 8 Total 1,020 292 211 173 1,696 * Estimated interest expenses, total 12 16 7 1 35 Estimated contractual cash flows 1,032 307 218 174 1,731 2023 Current Non- current MEUR < 1 year 1–3 years 3–5 years > 5 years Total Loans from other financial institutions 75 239 200 75 590 Lease liabilities 53 81 58 128 320 Trade payables 686 686 Interest rate derivatives, payable 5 87 103 196 Interest rate derivatives, receivable -6 -76 -104 -1 -188 Foreign exchange forwards, payable 1,953 1,953 Foreign exchange forwards, receivable -1,978 -1,978 Other liabilities 9 9 Total 797 331 258 202 1,588 * Estimated interest expenses, total 16 23 10 2 53 Estimated contractual cash flows 813 354 268 204 1,641 * Interest expenses for long-term loans are calculated by using the average interest rate prevailing at the end of the financial period. Fair values of financial liabilities, as well as information on measurement categories of financial liabilities, are presented in Note 5.2. Financial assets and liabilities by measurement category. 5.7. DERIVATIVE FINANCIAL INSTRUMENTS Accounting principles Derivatives and hedge accounting Derivatives including embedded derivatives are initially recognised on the statement of financial position at fair value and are subsequently classified and measured at their fair value at the end of each reporting period. Gains and losses from the fair value measurement are recognised in the statement of income as determined by the purpose of the derivatives. Wärtsilä has a guideline in place to identify embedded derivatives. Hedge accounting Wärtsilä hedges in net position its sales and purchases in foreign currencies with foreign exchange forwards or currency options, and Wärtsilä applies hedge accounting according to IFRS 9 to the majority of these foreign exchange forwards. Forward points are excluded from the hedge relationship and they are booked directly in the statement of income as financial income or expenses. In case of a hedge being fully or partially discontinued, the discontinued portion is immediately recognised in the statement of income as other operating income or expenses. The Group documents the relationship between each hedging instrument and the hedged item upon entering into a hedging arrangement, along with the risk management objective and the strategy applied. Through this process, the hedging instrument is linked to the relevant assets and liabilities, projected business transactions, or binding contracts. Wärtsilä designates its hedge relationships of foreign exchange hedges as either hedges of highly probable forecast transactions or firm commitments. Hedge accounting relationships are designated up to the point of recognition of the related receivable or payable. The Group uses a hedge designation for foreign exchange hedging, where critical terms, currency and amount, match or are closely aligned between the hedging instrument and the hedged item. Additionally, Financial review hedge designation documentation includes the time period when forecasted transactions are expected to affect the statement of income. The hedge ratio is typically 100%. Since underlying risks match, hedging instruments are considered to offset any changes related to the hedged transactions. However, Wärtsilä applies a roll-forward strategy where derivatives are roll-forwarded or terminated early to match these underlying transactions. Hedge effectiveness requirements are assessed in accordance with IFRS 9 requirements, including requirements for economic relationship, credit risk and hedge ratio. As external hedges are typically made for short maturities (up to 1 year) and only high credit quality (A- minimum rating requirement) counterparties are utilised, counterparty credit risk is expected to have minimal effect on hedge valuations. Due to some underlying hedged cash flows having longer maturities than related hedges, the changes in present value of the hedge and the underlying cash flow do not always fully offset each other during the lifetime of a hedge. This source of ineffectiveness is calculated on a quarterly basis and recognised in the statement of income as other operating income or expenses on Group level. Additionally hedge accounting may be applied to interest rate hedges. In these cases, critical terms, floating rate reference rate, and amortisation schedule, are matched so the hedge is expected to be highly effective. As only high credit quality counterparties under ISDA Master Agreements are utilised, counterparty credit risk is expected to have minimal effect on hedge valuations. Cash flow hedge Changes in the fair value of derivative contracts designated and qualifying as cash flow hedges are recognised in other comprehensive income and presented in the fair value reserve in equity, provided that the hedging is effective. In the case of foreign exchange forwards, the spot element is included for the hedging relationship whereas forward points have been excluded from the hedge designation. Any gain or loss in the fair value reserve related to derivatives accumulated through other comprehensive income is reported in the statement of income in the same period as any transactions relating to the hedged obligations or estimates. Result from net position hedges is reported on a separate line in the statement of income. Basis adjustments related to derivatives are reported in contract assets, contract liabilities, and inventories, according to the hedged item. The ineffective portion is immediately recognised in the statement of income as other operating income or expenses. Changes in fair value of foreign exchange derivatives due to interest rate differentials (impact of forward points) are recognised in the statement of income as financial income or expenses. Cash flow hedge against a variable interest rate in a lease contract is included in the statement of income as other operating income and financial income and expenses. More information on fair value adjustments related to cash flow hedges is presented in Note 5.5. Equity, and more information on the ineffective portion of cash flow hedges is presented in Note 5.1. Financial income and expenses. The Group applies hedge accounting to the majority of its foreign currency forward contracts. The open operative currency positions including financing are hedged by using derivative financial instruments according to the table below. Nominal amounts for hedged foreign exchange items and hedging instruments 2024 2023 MEUR Against hedge accounting Against net loans Against other items Against hedge accounting Against net loans Against other items Currency forwards, nominal amount (both legs) EUR 1,578 478 290 1,276 527 157 USD 963 201 663 305 NOK 222 209 196 96 GBP 75 76 12 54 88 17 CHF 180 187 114 90 8 CNY 2 8 58 10 AUD 5 18 5 9 MXN 51 72 12 SGD 13 6 7 3 SEK 11 1 21 28 1 9 CAD 25 31 14 Other currencies 69 102 38 26 Total amount of currency derivatives (single leg) 1,598 478 317 1,278 527 161 * EUR is not considered to be a currency risk for the parent company. ** Other currencies do not include any material single currencies. Net loans include non-euro intragroup loans and deposits given by the parent company. Hedge accounting has been applied to EUR 1,598 million (1,278) currency forwards. In 2024 and 2023, no options were used for hedging. A 5% change in the exchange rates would cause from these currency forwards an approximately EUR 105 million (66) impact on the equity related to hedge accounting. As all material fixed sales and purchase contracts are hedged, the profit and loss sensitivity of foreign exchange from operations (excluding internal financing) is considered minimal. Financial review From currency forwards related to cash flow hedging, EUR -77 million (27) has been recognised in other comprehensive income as cash flow hedges measured at fair value, and in 2023, EUR -9 million was recognised in the statement of income as result from net position hedges. EUR -1 million (-2) has been recognised in the statement of financial position as a change in contract liabilities. At year-end, currency forwards related to cash flow hedging recognised in contract liabilities amounted to EUR -5 million (-4). In 2023, a net of EUR -6 million was recognised in the statement of income as other operating income or expenses due to discontinued cash flow hedges. 2024 2023 MEUR Hedged cash flows, net amount Hedges, net amount Hedges, gross amount Hedged cash flows, net amount Hedges, net amount Hedges, gross amount Nominal amounts EUR 536 567 1,578 262 274 1,276 USD 959 957 963 582 578 663 NOK 192 192 222 165 161 196 GBP 77 75 75 29 31 54 MXN 55 51 51 73 72 72 DKK 40 40 43 14 10 10 SEK 15 11 11 4 8 28 CNY 1 2 2 5 9 58 AUD 2 5 5 23 18 18 SGD 17 13 13 11 7 7 CHF 146 146 180 100 99 114 CAD 23 25 25 29 31 31 Other currencies 30 22 26 31 28 28 Total 2,092 2,107 3,195 1,328 1,327 2,556 MEUR 2024 2023 External currency forwards under hedge accounting by year 2024 - 1,278 2025 1,598 - Hedged highly probable forecasted cash flows by year 2024 - 2,075 2025 2,899 384 2026 626 94 2027 184 45 2028 57 1 * Includes 2028 and later for comparison period. Derivatives MEUR 2024 of which closed 2023 of which closed Nominal values of derivative financial instruments (level 2) Interest rate swaps, included in hedge accounting 118 118 Interest rate swaps, no hedge accounting 50 50 Cross currency swaps 153 160 Non-deliverable forwards, included in hedge accounting 4 Currency forwards, included in hedge accounting 1,594 949 1,278 667 Currency forwards, no hedge accounting 795 207 688 238 Total 2,714 1,156 2,294 905 Fair values of derivative financial instruments (level 2) Interest rate swaps, included in hedge accounting 10 13 Interest rate swaps, no hedge accounting 2 4 Cross currency swaps -22 -12 Currency forwards, included in hedge accounting -35 17 Currency forwards, no hedge accounting -12 10 Total -57 33 In addition, the Group had copper swaps amounting to 1,665 tons (1,130) valued at EUR 14 million (9). Foreign currency forward contracts are against transactional risks and fall due during the following 12 months (12). A currency forward is considered closed when there are offsetting cash flows in the same currency with the same value date. Interest rate swaps are denominated in euros and their average maturity is 62 months (57). The average maturity for cross currency swaps is 24 months (36). Financial review Changes in the market value of interest rate derivatives are usually immediately recognised in the statement of income as financial income or expenses. However, cash flow hedge accounting in accordance with IFRS 9 is applied to a EUR 118 million (122) amortising interest rate swap maturing in 2031. The interest rate hedge swaps variable interest payments of a large lease agreement, to fixed interest payments. As the hedge and the underlying cash flow have matching critical terms, the hedge ratio is 1:1 and the hedge is expected to be highly effective. In 2024, a EUR 10 million (14) fair value adjustment related to cash flow hedge was recognised in other comprehensive income. Realised and accrued interest of EUR 3 million (3) was recognised in the statement of income as other operating income, and EUR 1 million (1) as financial income or expenses. In 2024 and 2023, no embedded derivatives were identified. Normally all of the Groups' derivatives are carried out according to International Swaps and Derivatives Association's Master Agreements (ISDA). In case of an event of default under these agreements, the non- defaulting party may request early termination and set-off of all outstanding transactions. These agreements do not meet the criteria for offsetting in the statement of financial position. The following table sets out the carrying amounts of recognised financial instruments that are subject to the above agreements. MEUR 2024 2023 Gross fair values of derivative financial instruments subject to ISDAs Assets Interest rate swaps 12 17 Currency forwards 3 32 Total 15 49 Liabilities Cross currency swaps -22 -12 Currency forwards -49 -4 Copper swaps -1 Total -72 -16 Net fair values of derivative financial instruments subject to ISDAs Assets 7 41 Liabilities -64 -8 Total -57 33 5.8. FINANCIAL RISKS General Wärtsilä has a centralised Group Treasury, which has two main objectives: 1) to arrange adequate funding for the Group’s underlying operations on competitive terms and 2) to identify and evaluate the financial risks within the Group and implement the hedges for the Group companies. The objective is to hedge against unfavourable changes in the financial markets and to minimise the impact of foreign exchange, interest rate, credit, and liquidity risks on the Group’s cash reserves, profits, and shareholder equity. The Financial Risk Policy is approved by the Board of Directors. The Group Treasury employs only such instruments whose market value and risk profile it can reliably monitor. Foreign exchange risk Foreign exchange exposures are monitored on business level, hedged on a subsidiary level against the Group Treasury, and then netted and covered externally on Group level by the Group Treasury. All material sales and purchase contracts with fixed foreign currency amounts, including both future cash flows and related accounts receivable and payable, are hedged. The estimated future commercial exposures are evaluated by the Businesses, and the level of hedging is decided by the Board of Management. Hedge accounting in accordance with IFRS 9 is applied to most of the hedges of these exposures. The hedges cover such time periods that both the sales prices and purchase costs can be adjusted to new relevant exchange rates. These periods vary among Group companies mainly from one month to two years. The Group also hedges its position of the statement of financial position, which includes cash balances, loans/deposits, as well as other receivables and payables denominated in foreign currencies. As field service work is invoiced in local currencies, there is some foreign exchange change related volatility in the consolidated net sales. However, the effect on the profitability is limited as the related costs are in the same currency. Spare part sales are based on a euro price list and related purchases in non-euro currencies are hedged, so the effect from foreign currency rate changes on spare part sales is minimal. As project/hardware sales/purchases, as well as estimated currency exposures from long-term agreements, are hedged, the Group does not expect significant gains/losses from foreign exchange rate changes in 2024 related to its operations, excluding internal financing. The instruments, and their nominal values, used to hedge the Group’s foreign exchange exposures are listed in Note 5.7. Derivative financial instruments. Since Wärtsilä has subsidiaries and joint ventures outside the euro zone, the Group’s equity, goodwill and purchase price allocations are sensitive to exchange rate fluctuations. At the end of 2024, the net assets of Wärtsilä’s foreign subsidiaries and joint ventures outside the euro zone totalled EUR 1,261 million (989). In Financial review addition, goodwill and purchase price allocations from acquisitions nominated in foreign currencies amounted to EUR 805 million (785). In 2024, the translation differences recognised in other comprehensive income mainly come from changes in the GBP exchange rate. Approximately 54% (57) of sales and 53% (52) of operating costs were denominated in euros, and approximately 32% (28) of sales and 23% (24) of operating costs were denominated in US dollars. The remainder were split between several currencies. The Group’s profits and competitiveness are also indirectly affected by the home currencies of its main competitors. As Wärtsilä's operations are global , they often involve currency risks. The largest operative currency positions (excluding financing) open as of 31 December 2024 by currency pair are listed below. 2024 - Statement of financial position Estimated cash flows MEUR Base currency received Base currency paid Base currency received Base currency paid Net EUR/USD 173 250 225 1,425 1,276 EUR/NOK 75 42 344 1 376 USD/NOK 28 10 422 440 EUR/CNY 26 23 124 127 EUR/GBP 28 33 64 22 37 EUR/CHF 17 6 97 108 EUR/DKK 6 9 94 91 USD/HKD 6 12 88 82 EUR/SGD 16 17 41 41 EUR/HKD 11 10 39 1 39 EUR/JPY 11 7 35 7 32 USD/MXN 5 2 50 53 EUR/CAD 4 9 6 34 33 EUR/AED 14 9 26 31 USD/CNY 3 1 24 19 7 USD/JPY 3 2 37 38 2023 Statement of financial position Estimated cash flows MEUR Base currency received Base currency paid Base currency received Base currency paid Net EUR/USD 109 159 140 907 817 EUR/NOK 69 42 218 1 244 USD/NOK 14 303 318 EUR/CNY 19 21 85 16 67 EUR/GBP 25 40 61 7 38 USD/MXN 18 9 78 87 EUR/CHF 24 14 54 64 EUR/HKD 9 11 55 1 52 USD/HKD 1 2 71 71 EUR/DKK 7 7 57 1 56 GBP/USD 44 5 18 21 EUR/JPY 11 7 42 3 43 EUR/SGD 17 14 31 33 EUR/AED 27 9 23 1 40 EUR/SEK 22 7 27 42 EUR/AUD 9 9 37 2 34 Base currency received: ● if functional currency is EUR, payable is in USD ● if functional currency is USD, receivable is in EUR Base currency paid: ● if functional currency is EUR, receivable is in USD ● if functional currency is USD, payable is in EUR As the main funding currency for the Group, including the Group Treasury, is the euro and since the subsidiaries are normally funded in their home currencies by the Group Treasury, the Group Treasury had the following related open currency positions as of 31 December 2024. Financial review 2024 2023 MEUR Loans Deposits Net Loans Deposits Net Intragroup loans/deposits USD 27 242 216 41 354 313 GBP 102 27 76 113 25 88 CHF 188 188 90 90 MXN 8 5 3 3 16 13 AUD 1 1 5 5 SGD 9 9 8 8 CNY 11 11 10 10 CAD 9 8 17 17 Other currencies 1 1 1 1 External loans/deposits JPY 153 160 160 160 Total 478 304 672 408 436 703 * The other currencies do not net as they are of different currencies. ** External JPY loans are fully hedged with cross currency swaps. Some Group companies in countries whose currencies are not fully convertible, such as Brazil, Philippines, and South Korea, have unhedged, intercompany loans nominated either in EUR or USD, which may result in some foreign exchange differences. The total amount of these loans is EUR 61 million (68). Wärtsilä does not hedge translation risk. The most significant currencies for Wärtsilä are presented in Note 6.6. Exchange rates. Interest rate risk Wärtsilä is exposed to interest rate risk primarily through market value changes to the net debt portfolio (price risk), as well as through changes in interest rates (re-fixing on rollovers). Interest rate risk is managed by constantly monitoring the market value of the financial instruments and by using sensitivity analysis. Interest-bearing loan capital at the end of 2024 totalled EUR 508 million (590). The average interest rate was 2.6% (3.0) and the average re-fixing time 5 months (7). Wärtsilä spreads its interest rate risk exposure by taking both fixed and floating rate loans. The share of fixed rate loans as a proportion of the total debt can vary between 30 and 70%. Wärtsilä hedges its loan portfolio by using derivative instruments, such as interest rate swaps, futures and options. MEUR 2024 2023 Fixed rate loans 100 108 Floating rate loans 408 483 Derivatives 127 127 Share of fixed rate loans of total loans (including derivatives), % 45 40 At the end of 2024, a one percentage point parallel decrease/increase of the yield curve would have resulted in a EUR 2 million (5) increase/decrease in the value of the net debt portfolio, including derivatives. A one percentage point change in the interest level would cause a EUR 3 million (4) change in the following year’s interest expenses from the debt portfolio, including derivatives. In both analyses, the debt portfolio as of 31 December 2024 is used. As the main funding currency of the Group is Euro, the IBOR reform does not have a significant impact on the Group’s financial arrangements. Due to the reform, the reference interest rate of long-term JPY loans and the related cross currency swaps have been amended, and the reference rates for the Group’s cash pool bank accounts have been changed in cases where a rate would have been discontinued. Additional information related to loans can be found in Note 5.2. Financial assets and liabilities by measurement category and Note 5.6. Maturity analysis of financial liabilities. Information on interest rate derivatives is presented in Note 5.7. Derivative financial instruments. Liquidity and refinancing risk Wärtsilä ensures sufficient liquidity at all times by efficient cash management and by maintaining sufficient available committed and uncommitted credit lines. Refinancing risk is managed by having a balanced and sufficiently long loan portfolio. The existing loan facilities include: • Committed Revolving Credit Facilities totalling EUR 642 million (644). • Finnish Commercial Paper programmes totalling EUR 850 million (850). The average maturity of the non-current debt is 30 months (37) and the average maturity of the confirmed credit lines is 32 months (31). Additional information in Note 5.6. Maturity analysis of financial liabilities. Financial review Wärtsilä sees very limited liquidity risk associated with the supplier finance arrangements provided by its long- term relationship banks. All are reputable and creditworthy banks that have operated and/or participated as investors to the supplier finance arrangements as their customary and continuous offering, and there is no reason to assume that the banks would become unwilling or unable to provide these arrangements in the future. In case of an unexpected withdrawal or reduction by a bank, Wärtsilä can opt to organise supplier finance arrangement to its suppliers through its other banks. At year-end, the Group had cash and cash equivalents totalling EUR 1,554 million (819). The Group also had EUR 642 million (644) of non-utilised committed credit facilities, as well as cash and cash equivalents of EUR 4 million related to assets held for sale. Commercial Paper Programmes were not utilised on 31 December 2024 nor on 31 December 2023. Committed Revolving Credit Facilities, as well as the parent company's long-term loans, include a financial covenant (solvency ratio). The solvency ratio is expected to remain clearly over the covenant level for the foreseeable future. Revolving credit facilities MEUR 2024 2023 Year Maturing Available (end of period) Maturing Available (end of period) 2023 - - 644 2024 642 130 514 2025 100 542 100 414 2026 102 440 104 310 2027 140 300 140 170 2028 120 180 120 50 2029 150 30 50 2030 30 - Credit risk Responsibility for managing the credit risks associated with ordinary commercial activities lies with the Businesses and the Group companies. Major trade and project finance credit risks are minimised by transferring risks to banks, insurance companies, and export credit organisations. The credit risks related to the placement of liquid funds and to trading in financial instruments are minimised by setting explicit limits for the counterparties, and by making agreements only with the most reputable domestic and international banks and financial institutions. As only high credit quality (A- minimum rating requirement) counterparties are utilised for derivative financial instruments, and the transactions are made under ISDA Master Agreements, no credit losses are expected from these instruments. The Group companies deposit the maximum amount of their liquid financial assets with the centralised treasury when local laws and central bank regulations allow it. The Group’s funds are placed in instruments with sufficient liquidity (current bank deposits or Finnish Commercial Papers) and rating (at least single-A rated instruments or other instruments approved by the Group’s CFO). These placements are constantly monitored by the Group Treasury, and Wärtsilä does not expect any future defaults from the placements. The expected credit losses associated with investments carried at amortised cost are assessed on a forward- looking basis based on investment maturity dates, and counterparty credit risk on a quarterly basis. As of 31 December 2024, the expected credit loss was not material. The expected credit losses are presented in Note 4.2. Trade receivables and contract assets and liabilities. Equity price risk Wärtsilä has equity investments totalling EUR 12 million (12) in power plant companies, most of which are located in developing countries and performing well according to expectations. Additional information is given in Note 5.2. Financial assets and liabilities by measurement category. Capital risk management Wärtsilä’s policy is to secure a strong capital base, both to maintain the confidence of investors and creditors and for the future development of the business. The capital is defined as total equity, including non-controlling interests and net interest-bearing debt. The target for Wärtsilä is to maintain gearing below 0.50 and to pay a dividend of at least 50% of earnings over the cycle. MEUR 2024 2023 Total interest-bearing liabilities 781 858 Total interest-bearing assets -1,558 -823 Total net interest-bearing debt -777 35 Total equity 2,531 2,232 Gearing -0.31 0.02 In the capital management Wärtsilä also follows the gearing development: Equity and liabilities 7,694 6,803 Financial review Advances received -923 -774 6,770 6,030 Solvency ratio, % 37.4 37.0 The figures in the above table include assets and liabilities pertaining to assets held for sale. More information on net interest-bearing debt is available in Note 5.4. Net debt reconciliation. Financial review 6. Group structure Content in this section: 6.1. SUBSIDIARIES 6.2. ACQUISITIONS 6.3. DISPOSALS 6.4. ASSETS HELD FOR SALE 6.5. INVESTMENTS IN ASSOCIATES AND JOINT VENTURES 6.6. EXCHANGE RATES 6.1. SUBSIDIARIES Accounting principles The consolidated financial statements include the parent company Wärtsilä Corporation and all subsidiaries over which the Group has control. The Group controls an entity when the Group is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power to direct the activities of the entity. When the Group has less than a majority of voting or similar rights in an entity, the Group considers all relevant facts and circumstances in assessing whether it has power over an entity, including the contractual arrangements, voting rights, and potential voting rights. The Group reassesses whether it controls an entity if facts and circumstances indicate that there are changes to the elements of control. The financial information from subsidiaries in countries with hyperinflation are adjusted according to IAS 29, when the impact of the hyperinflation is considered significant for the consolidated financial statements. Geo- graph- ical area Company name Location Activities Share % Europe Wärtsilä Cyprus Limited Cyprus Sales and services 100.0 Wärtsilä Danmark A/S Denmark Sales and services 100.0 Wärtsilä Lyngsø Marine A/S Denmark Sales and services 100.0 Wärtsilä BLRT Estonia Oü Estonia Sales and services 51.7 Wärtsilä Energy Storage Finland Oy Finland Sales and services 100.0 Financial review Wärtsilä Finland Oy Finland Production, sales and services 100.0 Wärtsilä Projects Oy Finland Sales and services 100.0 Wärtsilä Solutions Oy Finland Sales and services 100.0 Wärtsilä Technology Oy Ab Finland Holding 100.0 Wärtsilä Voyage Oy Finland Sales and services 100.0 Wärtsilä France S.A.S. France Sales and services 100.0 Wärtsilä Voyage Mediterranean SAS France Sales and services 100.0 Wärtsilä Deutschland GmbH Germany Sales and services 100.0 Wärtsilä SAM Electronics GmbH Germany Sales and services 100.0 Wärtsilä Serck Como GmbH Germany Sales and services 100.0 Wärtsilä Voyage Germany GmbH Germany Sales and services 100.0 Wärtsilä Voyage GmbH Germany Sales and services 100.0 Ships Electronic Services Ltd the United Kingdom Sales and services 100.0 Wartsila Defence Solutions Ltd the United Kingdom Sales and services 100.0 New Wartsila Energy Storage UK Limited the United Kingdom Sales and services 100.0 Wärtsilä Guidance Marine Ltd the United Kingdom Sales and services 100.0 Wärtsilä UK Limited the United Kingdom Production, sales and services 100.0 Wärtsilä Voyage UK Limited the United Kingdom Sales and services 100.0 Wärtsilä Water Systems Ltd the United Kingdom Sales and services 100.0 Wärtsilä Greece S.A. Greece Sales and services 100.0 Wärtsilä Hungary Kft. Hungary Sales and services 100.0 Wärtsilä Voyage Limited Ireland Sales and services 100.0 Wärtsilä APSS S.r.l Italy Sales and services 100.0 Wärtsilä Italia S.p.A. Italy Sales and services 100.0 Trident Italia Srl Italy Sales and services 100.0 Wärtsilä Moss AS Norway Production, sales and services 100.0 Wärtsilä Norway AS Norway Production, sales and services 100.0 Wärtsilä Gas Solutions Norway AS Norway Sales and services 100.0 Wärtsilä Valmarine AS Norway Sales and services 100.0 Wärtsilä Polska Sp. z o.o Poland Sales and services 100.0 Wärtsilä Portugal, S.A. Portugal Sales and services 100.0 Wartsila Voyage doo Beograd Serbia Sales and services 100.0 Wärtsilä Ibérica S.A. Spain Production, sales and services 100.0 Burriel Navarro, S.L. Spain Sales and services 100.0 Trident Las Palmas S.L. Spain Sales and services 100.0 New Wärtsilä Gas Solutions Sweden AB Sweden Sales and services 100.0 Wärtsilä Sweden AB Sweden Production, sales and services 100.0 Wärtsilä Voyage Sweden AB Sweden Sales and services 100.0 Wärtsilä Services Switzerland AG Switzerland Sales and services 100.0 Quantiparts B.V. The Netherlands Sales and services 100.0 Wärtsilä Netherlands B.V. The Netherlands Production, sales and services 100.0 Trident B.V. The Netherlands Sales and services 100.0 The Americas Wärtsilä Argentina S.A. Argentina Sales and services 100.0 Wartsila Brasil Ltda. Brazil Production, sales and services 100.0 Altyn Consulting Inc. Canada Sales and services 100.0 Wärtsilä Canada Inc. Canada Sales and services 100.0 Wärtsilä Chile Ltda. Chile Sales and services 100.0 Wärtsilä Colombia S.A. Colombia Sales and services 100.0 Wärtsilä Dominicana, S.R.L. Dominican Republic Sales and services 100.0 Wärtsilä Ecuador S.A. Ecuador Sales and services 100.0 Wärtsilä El Salvador, S.A. De C.V. Guatemala Sales and services 100.0 Wärtsilä Operations Guyana Inc. Guyana Sales and services 100.0 Wärtsilä de Mexico S.A. de C.V. Mexico Sales and services 100.0 Wärtsilä Panama Services, S.A. Panama Sales and services 100.0 Wärtsilä Peru S.A. Peru Sales and services 100.0 Wärtsilä Caribbean, Inc. Puerto Rico Sales and services 100.0 Wärtsilä Uruguay S.A. Uruguay Sales and services 100.0 Defense Maritime Solutions, Inc. USA Sales and services 100.0 Guidance Marine LLC USA Sales and services 100.0 LOCK-N-STITCH Inc. USA Sales and services 100.0 New NACOS USA, LLC USA Sales and services 100.0 Wartsila Energy Storage, Inc. USA Sales and services 100.0 Wartsila Voyage Americas Inc USA Sales and services 100.0 Wärtsilä North America, Inc. USA Sales and services 100.0 Asia PT. Wärtsilä Indonesia Indonesia Sales and services 100.0 Wärtsilä Azerbaijan LLC Azerbaijan Sales and services 100.0 Financial review Wärtsilä Bangladesh Limited Bangladesh Sales and services 100.0 Wärtsilä Management (Shanghai) Co., Ltd. China Sales and services 100.0 Wärtsilä Propulsion (Wuxi) Company Limited China Production, sales and services 100.0 Wärtsilä Services (Shanghai) Co. Ltd. China Sales and services 100.0 Wärtsilä Suzhou Limited China Production, sales and services 100.0 Wärtsilä Voyage Shanghai Co., Ltd. China Sales and services 100.0 Wärtsilä China Ltd. Hong Kong Sales and services 100.0 Wärtsilä India Private Limited India Production, sales and services 100.0 Wärtsilä Japan Ltd. Japan Production, sales and services 100.0 Wärtsilä Malaysia Sdn. Bhd. Malaysia Sales and services 100.0 Wärtsilä Myanmar Company Ltd. Myanmar Sales and services 100.0 Wärtsilä Pakistan (Private) Limited Pakistan Sales and services 100.0 Wärtsilä Philippines Inc. Philippines Sales and services 100.0 Wärtsilä Doha L.L.C. Qatar Sales and services 49.0 Wärtsilä Power Contracting Company Ltd. Saudi Arabia Sales and services 60.0 New NACOS Marine Singapore Pte. Ltd. Singapore Sales and services 100.0 Wärtsilä Singapore Pte Ltd Singapore Sales and services 100.0 Wärtsilä Voyage Pacific Pte Ltd Singapore Sales and services 100.0 Wärtsilä Korea Ltd. South Korea Sales and services 100.0 Wärtsilä Lanka (Pvt) Limited Sri Lanka Sales and services 100.0 Wärtsilä Taiwan Ltd. Taiwan Sales and services 100.0 Wärtsilä - ENPA A.S. Turkey Sales and services 51.0 Wärtsilä Gulf FZE United Arab Emirates Sales and services 100.0 Wärtsilä Hamworthy Middle East (FZE) United Arab Emirates Sales and services 100.0 Wartsila LLC United Arab Emirates Sales and services 100.0 Wartsila Ships Repairing & Maintenance LLC United Arab Emirates Sales and services 100.0 Wartsila Voyage Middle East DMCEST United Arab Emirates Sales and services 100.0 Wartsila Samarkand Energy LLC Uzbekistan Sales and services 100.0 Wärtsilä Vietnam Company Limited Vietnam Sales and services 100.0 Other Wärtsilä Australia Pty Ltd. Australia Sales and services 100.0 New Wartsila Energy Storage Australia Pty Ltd Australia Sales and services 100.0 Wärtsilä Burkina Faso Burkina Faso Sales and services 100.0 Wärtsilä Central Africa Plc Cameroon Sales and services 100.0 Wartsila Installations and Constructions Egypt Sales and services 100.0 Wärtsilä Central Africa Gabon Gabon Sales and services 100.0 Wärtsilä West Africa Guinea S.A. Guinea Sales and services 100.0 Wärtsilä Eastern Africa Limited Kenya Sales and services 100.0 Wärtsilä Energy Mauritanie SAU Mauritania Sales and services 100.0 Wärtsilä Mauritanie SA Mauritania Sales and services 100.0 Wärtsilä Mocambique Limitada Mozambique Sales and services 100.0 Wärtsilä Muscat S.P.C Oman Sales and services 100.0 Wärtsilä New Zealand Ltd New Zealand Sales and services 100.0 Wärtsilä Marine & Power Services Nigeria Limited Nigeria Sales and services 100.0 Wärtsilä PNG Limited Papua New Guinea Sales and services 100.0 Wärtsilä West Africa S.A. Senegal Sales and services 100.0 Wartsila Southern Africa Proprietary Ltd South Africa Sales and services 100.0 Wärtsilä South Africa Pty Ltd South Africa Sales and services 75.0* Wärtsilä Tanzania Limited Tanzania Sales and services 100.0 * Despite share percentage being less than 100, the subsidiary is considered to be fully controlled by the Group. Non-controlling interests are not significant in the Group's activities and cash flows in individual subsidiaries. The list excludes subsidiaries, which do not have a significant impact on the result or assets of the Group. A complete list of shares and securities in accordance with the Finnish Accounting Ordinance is included in the official financial statements of the parent company prepared in accordance with the Finnish Accounting Standards (FAS). 6.2. ACQUISITIONS Accounting principles Acquired and established companies are accounted for using the acquisition method. Accordingly, the purchase price and the acquired company’s identifiable assets, liabilities, and contingent liabilities are measured at fair value on the date of acquisition. In the acquisition of additional interest, where the Group already has control, the non-controlling interest is measured either at fair value or at the non-controlling interests’ proportionate share of the identifiable net assets. The difference between the purchase price, Financial review possible equity attributable to the non-controlling interests, and the acquired company’s net identifiable assets, liabilities and contingent liabilities measured at fair value, is goodwill. The purchase price includes the consideration paid, measured at fair value. The consideration does not include transaction costs, which are recognised in the statement of income. The transaction costs are expensed in the same reporting period in which they occur, except those costs resulting from issued debt or equity instruments. In significant business combinations, the Group has used external advisors when estimating the fair values of property, plant and equipment and intangible assets. For property, plant and equipment, comparisons have been made of the market prices of similar assets, and the depreciation of the acquired assets due to ageing, wear, and other similar factors has been estimated. The fair value measurement of intangible assets is based on estimates of the future cash flows associated with the assets. The acquired identifiable intangible assets typically include technology, customer relationships, and trademarks. Any contingent consideration (additional purchase price) related to the combination of businesses is measured at fair value on the date of acquisition. It is classified either as a liability or equity. Contingent consideration classified as a liability is measured at fair value on the last day of each reporting period, and the resulting loss or gain is recognised through the statement of income. Contingent consideration classified as equity is not re-measured. The acquired subsidiaries are included in the consolidated financial statements from the day the Group has control. Accounting estimates and judgements Accounting for the business combinations may require estimates of the fair value of acquired assets and the expected amount of realised contingent consideration. 2024 In 2024, there were no acquisitions. 2023 In 2023, there were no acquisitions. 6.3. DISPOSALS Accounting principles The disposed subsidiaries are included in the consolidated financial statements until control is lost. 2024 In 2024, there were no disposals. 2023 On 1 May, Wärtsilä divested business unit American Hydro to Enprotech Corp, a wholly owned subsidiary of publicly traded ITOCHU Corporation (ITC). The divestment was announced in December 2022. Classifying business unit American Hydro as assets held for sale in 2022 had an impact of EUR -24 million on the result for the financial period 2022. Business unit American Hydro belonged to Portfolio Business. 6.4. ASSETS HELD FOR SALE Accounting principles Non-current assets held for sale and discontinued operations are presented separately in the statement of financial position if their carrying amounts are expected to be recovered primarily through sale rather than through continuing use. Classification as held for sale requires that the asset (or disposal group) must be available for immediate sale in its present condition subject only to terms that are usual and customary for sales of such assets (or disposal groups) and its sale must be highly probable. Prior to classification as held for sale, the assets or assets and liabilities related to a disposal group in question are measured according to the respective Accounting Standards. From the date of classification, non-current assets held for sale are measured at the lower of the carrying amount and the fair value less costs to sell, and the recognition of depreciation and amortisation is discontinued. Non-current assets held for sale are presented in the statement of financial position separately from other items. The comparison figures for the statement of financial position are not restated. 2024 Wärtsilä has classified business unit Automation, Navigation and Control System (ANCS) as assets held for sale. In December 2024, Wärtsilä announced the divestment of business unit ANCS to the Swedish investment company Solix Group AB. ANCS is a global leader in innovative hardware and software technologies for marine navigation and automation, with solutions including integrated navigation and automation systems, advanced sensors enhancing safety and situational awareness, and dynamic positioning systems enabling precise vessel station keeping. Wärtsilä acquired ANCS in 2015 as part of Marine Systems International. In 2024, the annual revenue of ANCS was close to EUR 230 million. Financial review During the second quarter of 2023, Wärtsilä performed an intermediate impairment testing of goodwill for CGU Portfolio Business due to the new organisational structure. As a result of the impairment test, an impairment of EUR 45 million was recognised, of which EUR 15 million related to goodwill and the rest to other non-current assets. During the fourth quarter of 2024, Wärtsilä assessed if there has been a change in the estimates used to determine the asset’s recoverable amount. As a result of the assessment, Wärtsilä recognised a reversal of an impairment loss related to other non-current assets amounting to EUR 20 million. The reversal is recognised in the statement of income as reduction of depreciation, amortisation and impairment, and considered as an item affecting comparability. Subject to approvals, the transaction is expected to be completed in the second quarter of 2025. ANCS belongs to Portfolio Business. All assets held for sale are valued at the lower of book value or fair value. 2023 Since July 2022, certain non-current assets related to the ramp-down of manufacturing in Trieste, Italy have been classified as assets held for sale. Engine manufacturing in Trieste belongs to Marine Power. All assets held for sale are valued at the lower of book value or fair value. Items in the statement of financial position MEUR 31.12.2024 31.12.2023 Non-current assets Other intangible assets 25 Property, plant and equipment 2 5 Right-of-use assets 14 Deferred tax assets 3 Total non-current assets 45 5 Current assets Inventories 77 Trade receivables 44 Current tax receivables 1 Contract assets 9 Other receivables 5 Cash and cash equivalents 4 Total current assets 139 Assets held for sale 184 5 Non-current liabilities Lease liabilities 12 Deferred tax liabilities 7 Pension obligations 4 Total non-current liabilities 24 Current liabilities Lease liabilities 3 Provisions 8 Trade payables 18 Tax liabilities 1 Contract liabilities 53 Other liabilities 26 Total current liabilities 109 Liabilities directly attributable to assets held for sale 132 Net assets 52 5 6.5. INVESTMENTS IN ASSOCIATES AND JOINT VENTURES Accounting principles Associated companies are all entities over which the Group has significant influence but not control or joint control. This is generally the case where the Group holds between 20% and 50% of the voting rights. A joint venture is a joint arrangement whereby the parties that have joint control of the arrangement have rights to the net assets of the joint venture. Joint control is established by contractual agreement. Associated companies and joint ventures are included in the consolidated financial statements using the equity method from the date the Group’s significant influence or joint control commences until the date it Financial review ceases. Investments in associates are initially recognised at cost, and the carrying amount is increased or decreased according to the Group´s share of changes in the net assets of the associate after the date of the acquisition. The Group’s share of the associated company’s or joint venture’s result for the reporting period is shown as a separate item before the Group’s operating result, on the line Share of result of associates and joint ventures. The Group’s share of the associated company’s or joint venture’s changes recognised in other comprehensive income is recognised in the Group’s other comprehensive income. Wärtsilä’s proportion of the associated company’s or joint venture’s post-acquisition accumulated equity is included in the Group’s equity. If the Group’s share of the associated company's or joint venture's losses exceeds its interest in the company, the carrying amount is written down to zero. After this, losses are only recognised if the Group has incurred obligations from the associated company or joint venture. The accumulated exchange rate differences arising from the consolidation of associated companies and joint ventures, which are recognised in equity, are recognised in the statement of income as part of the gain or loss when change in ownership occurs. MEUR 2024 2023 Carrying amount on 1 January 33 29 Share of result 12 9 Dividends -4 -3 Translation differences 1 -2 Carrying amount on 31 December 41 33 Summary of financial information (100%): 2024 MEUR Hold- ing % Non- current assets Current assets Equity Non- current liabilities Current liabilities Net sales Result for the financial period Joint ventures Wärtsilä Qiyao Diesel Company Ltd. China 50.0 6 86 30 63 83 10 CSSC Wärtsilä Electrical & Automation Co., Ltd. China 49.0 29 4 25 23 1 CSSC Wärtsilä Engine (Shanghai) Co., Ltd. China 49.0 64 388 49 31 371 189 13 Repropel Sociedad de reparacao de helices Portugal 50.0 1 1 1 1 CSSC Wärtsilä Engine (Shanghai) Co., Ltd. manufactures medium and large bore medium speed diesel and dual-fuel engines at its factory in Lingang, Shanghai, China. Wärtsilä Qiyao Diesel Company Ltd. manufactures marine auxiliary engines in Shanghai, China. CSSC Wärtsilä Electrical & Automation Co., Ltd. manufactures advanced electronical and automation solutions for the cruise industry. 2023 MEUR Hold- ing % Non- current assets Current assets Equity Non- current liabilities Current liabilities Net sales Result for the financial period Joint ventures Wärtsilä Qiyao Diesel Company Ltd. China 50.0 5 63 25 44 57 7 CSSC Wärtsilä Electrical & Automation Co., Ltd. China 49.0 14 3 11 25 CSSC Wärtsilä Engine (Shanghai) Co., Ltd. China 49.0 63 297 37 32 291 165 10 Repropel Sociedad de reparacao de helices Portugal 50.0 1 1 1 6.6. EXCHANGE RATES Accounting principles Translating the transactions in foreign currencies The items included in the financial statements are initially recognised in the functional currency, which is defined for each Group company based on its primary economic environment. The presentation currency of the consolidated financial statements is the euro, which is also the functional and presentation currency of Wärtsilä Corporation. Foreign subsidiaries The income and expenses for statements of income and statements of comprehensive income of foreign subsidiaries are translated into euros at the quarterly average exchange rates. Statements of financial position are translated into euros at the exchange rates prevailing at the end of the reporting period. The translation of the result for the reporting period and other comprehensive income using different exchange rates in the statement of comprehensive income and the statement of financial position causes translation differences, which are recognised in equity and in other comprehensive income as change. Translation differences of foreign subsidiaries’ acquisition cost eliminations and post-acquisition profits and losses are recognised in other comprehensive income and are presented as a separate item in equity. The goodwill generated in the acquisition of foreign entities and their fair value adjustments of assets and liabilities are considered as assets and liabilities of foreign entities, which are translated into euros using the exchange rates prevailing at the end of the reporting period. When a foreign subsidiary is sold, the accumulated Financial review exchange rate differences recognised in the equity related to the subsidiary are recognised in the statement of income as a part of the gain or loss on sale. Transactions and balances in foreign currencies Transactions denominated in a foreign currency are translated into the functional currency using the exchange rates prevailing at the dates of the transactions. Receivables and liabilities are translated at the exchange rates prevailing at the end of the reporting period. Exchange rate gains and losses related to trade receivables and liabilities are reported on the applicable line in the statement of income and are included in the operating result. Exchange rate differences related to financial assets and financial liabilities are reported as financial items in the statement of income, except exchange rate differences related to non- current debt that is part of the Group's net investment in a subsidiary. Those are recognised in other comprehensive income and reported as translation differences in equity. In the consolidated financial statements, there are approximately 60 currencies consolidated. The most significant currencies are presented here. - Closing rates Average rates 31 December 2024 31 December 2023 2024 2023 AED UAE Dirham 3.81546 4.05833 3.97399 3.97213 AUD Australian Dollar 1.67720 1.62630 1.63995 1.62848 BRL Brazilian Real 6.42530 5.36180 5.82679 5.40162 CHF Swiss Franc 0.94120 0.92600 0.95261 0.97173 CNY Yuan Renminbi 7.58330 7.85090 7.78626 7.65907 DKK Danish Krone 7.45780 7.45290 7.45888 7.45099 GBP Pound Sterling 0.82918 0.86905 0.84659 0.86991 IDR Indonesian Rupiah 16,820.88000 17,079.71000 17,154.13000 16,480.35000 INR Indian Rupee 88.93350 91.90450 90.53074 89.32487 JPY Yen 163.06000 156.33000 163.81736 151.94211 NOK Norwegian Krone 11.79500 11.24050 11.62684 11.42430 RUB Russian Ruble 113.85000 99.94680 100.20892 92.09110 SAR Saudi Riyal 3.89899 4.14353 4.05991 4.05721 SEK Swedish Krona 11.45900 11.09600 11.43090 11.47281 SGD Singapore Dollar 1.41640 1.45910 1.44567 1.45235 USD US Dollar 1.03890 1.10500 1.08205 1.08158 Financial review 7. Other notes Content in this section: 7.1. COLLATERAL, CONTINGENT LIABILITIES, AND OTHER COMMITMENTS 7.2. RELATED PARTY DISCLOSURES 7.3. AUDITORS’ FEES AND SERVICES 7.1. COLLATERAL, CONTINGENT LIABILITIES, AND OTHER COMMITMENTS Accounting principles Contingent liabilities are possible obligations resulting from previous events, the existence of which will only be ascertained once the uncertain event that is beyond the Group’s control materialises. Existing obligations that are not likely to require the fulfilment of a payment obligation, or the amount of which cannot be reliably determined, are also considered contingent liabilities. - 2024 2023 MEUR Debt in the statement of financial position Collateral Debt in the statement of financial position Collateral Mortgages given as collateral for liabilities and commitments Other commitments 20 10 21 10 Total 20 10 21 10 Chattel mortgages and other pledges and securities given as collateral for liabilities and commitments Other commitments 32 13 Total 32 13 MEUR 2024 2023 Guarantees and contingent liabilities on behalf of Group companies 1,237 997 Total 1,237 997 Financial review Nominal amounts of lease liabilities Low-value lease liabilities 13 12 Short-term lease liabilities 3 4 Leases not yet commenced, but to which Wärtsilä is committed 14 14 Residual value guarantee 104 90 Total 134 120 7.2. RELATED PARTY DISCLOSURES Related parties comprise the parent company, subsidiaries, the associated companies, and joint ventures. Related parties also include the Board of Directors, the President and CEO, the Board of Management, their family members, and entities controlled directly or indirectly by them. Management remuneration TEUR 2024 2023 President and CEO Salaries and other short-term benefits 1,056 1,021 Short-term incentive schemes 687 Share based bonuses 172 Statutory pension costs 299 160 Voluntary pension costs 315 300 Other members of the Board of Management Salaries and other short-term benefits 2,645 2,464 Short-term incentive schemes 1,070 Share based bonuses 212 Statutory pension costs 554 374 Voluntary pension costs 509 311 Total 7,520 4,631 Board of Directors on 31 December 2024 Tom Johnstone, Chairman 243 224 Mika Vehviläinen, Deputy Chairman 129 110 Karen Bomba, member 114 97 Morten H. Engelstoft, member 109 96 Karin Falk, member 104 92 Johan Forssell, member 93 92 Mats Rahmström, member 91 87 Tiina Tuomela, member 121 112 Board of Directors, until 9 March 2023 Risto Murto, member 2 Total 1,006 910 Management remuneration, total 8,526 5,541 In 2024, an accrual of EUR 2,267 thousand (1,708) has been recognised in the statement of income as employee benefit expenses related to the short-term incentive schemes for the management. Additionally, EUR 3,478 thousand (1,104) has been recognised as employee benefit expenses in the statement of income related to management’s long-term incentive schemes, of which EUR 1,187 thousand (77) relates to long-term incentive scheme ending 31 December 2024. Remuneration of the President and CEO consists of fixed pay (a monthly base salary, pension and benefits) and variable pay (short- and long-term incentives). Benefits include a mobile phone benefit, a car benefit, and various insurance policies. The holdings of Wärtsilä shares of the President and CEO, and the members of the Board of Directors and Board of Management were 395,709 shares (362,999) at year-end, dividends totalling EUR 124 thousand (94). The President and CEO is entitled to retire on reaching 63 years of age. The members of the Board of Management are entitled to retire on reaching the statutory retirement age. One member of the Board of Management is entitled to retire earlier, on reaching 60 years of age. The Group has no loan receivables from the executive management or the Board of Directors. No pledges or other commitments have been given on behalf of management or shareholders. Business transactions with the associated companies and joint ventures MEUR 2024 2023 Sales to the associates and joint ventures 76 43 Purchases from the associates and joint ventures 25 49 Receivables from the associates and joint ventures 16 10 Financial review Advances paid to the associates and joint ventures 37 29 Payables to the associates and joint ventures 21 18 Detailed financial information on the associated companies and joint ventures is presented in Note 6.5. Investments in associates and joint ventures. 7.3. AUDITORS’ FEES AND SERVICES The following remuneration was paid to auditors and accounting firms for audits based on applicable legislation and for other services. In 2024, the AGM appointed the audit firm PricewaterhouseCoopers Oy as Wärtsilä Corporation's auditor. PricewaterhouseCoopers Oy has provided non-audit services totalling EUR 0.5 million (0.3) to entities of Wärtsilä Group. These services include tax services of EUR 0.1 million, sustainability assurance services and a minor amount related to other services. - 2024 2023 MEUR PwC Others PwC Others Audit 4.8 1.7 3.7 1.3 Tax advisory 0.1 0.3 0.1 0.6 Other services 0.4 0.0 0.2 0.0 Total 5.3 2.0 3.9 1.9 Financial review PARENT COMPANY FINANCIAL STATEMENTS (FAS) Parent company income statement MEUR 2024 2023 Note Net Sales 119 103 Other operating income 24 15 1 Personnel expenses -57 -70 2 Depreciation, amortisation and impairment -3 -4 3 Other operating expenses -133 -101 4 Operating result -51 -57 Financial income and expenses 283 197 5 Result before appropriations and taxes 233 140 Appropriations 135 21 Result before taxes 368 161 Income taxes -4 -4 6 Result for the financial period 363 157 Parent company balance sheet MEUR 2024 2023 Note ASSETS Fixed assets 7 Intangible assets Other long-term expenditure 7 7 Intangible assets and construction in progress 36 17 43 24 Tangible assets Land and water 2 2 Machinery, equipment and other tangible assets 1 1 Construction in progress 1 5 4 Financial assets Shares in Group companies 1,450 950 Other shares and securities 2 2 1,452 952 Total fixed assets 1,500 980 Non-current receivables Other long-term receivables 13 18 14 19 Current receivables Receivables from Group companies 1,927 2,139 8 Prepaid expenses and accrued income 13 41 9 1,940 2,180 Cash and bank balances 1,304 583 Financial review Total current assets 3,244 2,763 Assets 4,758 3,761 MEUR 2024 2023 Note EQUITY AND LIABILITIES Equity 10 Share capital 336 336 Share premium reserve 61 61 Reserve for own shares -28 -29 Retained earnings 914 946 Result for the financial period 363 157 Total equity 1,646 1,471 Provisions 21 23 Liabilities 11 Non-current Loans from credit institutions 409 515 Other long-term liabilities 9 13 418 528 Current Loans from credit institutions 99 75 Trade payables 14 14 Liabilities to Group companies 2,463 1,618 13 Other current liabilities 3 1 Accrued expenses and deferred income 94 32 12 2,672 1,740 Total liabilities 3,090 2,268 Equity and liabilities 4,758 3,761 Parent company cash flow statement MEUR 2024 2023 Cash flow from operating activities: Result before appropriations and taxes 233 140 Adjustments for: Depreciation and amortisation 3 4 Financial income and expenses -283 -196 Other adjustments 1 Cash flow before changes in working capital -47 -52 Changes in working capital: Assets, non-interest -bearing, increase (-) / decrease (+) -31 2 Liabilities, non-interest -bearing, increase (+) / decrease (-) 66 32 35 34 Cash flow from operating activities before financial items and taxes -12 -18 Interest and other financial expenses -164 -119 Dividends received from operating activities 252 160 Interest and other financial income from operating activities 181 152 Income taxes paid -3 -4 266 189 Cash flow from operating activities 254 171 Cash flow from investing activities: Investments in tangible and intangible assets -23 -17 Investments in subsidiaries -500 Loan receivables, increase -18 -1 Loan receivables, decrease 408 58 Cash flow from investing activities -133 40 Financial review Cash flow after investing activities 121 211 Cash flow from financing activities: Current loans, increase (+) / decrease (-) 843 355 Proceeds from non -current borrowing 176 Repayments and other changes of non -current loans -75 -265 Purchase of own shares -10 Group contributions 21 7 Dividends paid -189 -153 Cash flow from financing activities 600 112 Change in cash and bank balances, increase (+) / decrease (-) 721 324 Cash and bank at beginning of period 583 259 Cash and bank at end of period 1,304 583 Accounting principles for the parent company The financial statements of the parent company, Wärtsilä Corporation, have been prepared in accordance with the provisions of the Finnish Accounting Standards (FAS). The preparation of the financial statements requires management, in compliance with the regulations in force and good accounting practice, to make estimates and assumptions that affect the measurement and timing of the reported information. Actual results may differ from these estimates. Transactions denominated in foreign currencies and derivatives Business transactions in foreign currencies are recorded at the rates of exchange prevailing on the transaction date. Receivables and payables on the balance sheet date are valued at the exchange rates prevailing on that date. Exchange gains and losses related to business operations are treated as adjustments to other operating income and operating expenses. Exchange gains and losses related to financing operations are entered under financial income and expenses. Derivatives are measured at fair value. Open currency derivatives, including interest components, are valued at the balance sheet date. The fair value of interest rate swaps is calculated by discounting the future cash flows. Derivative changes in fair value are immediately recognised in financial income or expenses in the statement of income. Research and development costs Research and development costs are expensed in the financial period in which they occur. Receivables Receivables are valued to acquisition cost or to a lower probable value. Revenue recognition Net sales consist of service charges to Group companies. Wärtsilä Oyj Abp’s service charges include management service fee and information management service fee. Revenue is recognised for the period during which the service is performed. Fixed assets and depreciation and amortisation Fixed assets are valued in the balance sheet at their direct acquisition cost less accumulated depreciation and amortisastion. Certain land areas also include revaluations. Fixed assets are amortised on a systematic basis over their estimated useful life. Financial review Depreciation and amortisation is based on the following useful lives: Other long-term expenditure 3-10 years Buildings 20-40 years Machinery and equipment 5-20 years Leasing Lease payments are treated as rentals. Provisions Provisions in the balance sheet comprise those items which the company is committed to covering either through agreements or otherwise, but which are not yet realised. Changes to provisions are included in the income statement. Income taxes Income taxes in the income statement include taxes calculated for the financial year based on Finnish tax provisions, as well as adjustments to taxes in prior years. Income taxes also include parent company state top- up taxes in accordance with the income calculation rule (IIR). Dividends Dividends proposed by the Board of Directors are not recorded in the financial statements until they have been approved by the Annual General Meeting. Notes to the parent company financial statements 1. OTHER OPERATING INCOME MEUR 2024 2023 Rental income 3 3 Re-invoicing to Group companies 20 11 Other 1 1 Total 24 15 2. PERSONNEL EXPENSES MEUR 2024 2023 Wages and salaries -46 -41 Pension costs -8 -6 Other compulsory personnel costs -4 -23 Total -57 -70 Salaries and remunerations paid to senior management Salaries and remunerations paid to the President and CEO and members of the Board of Directors was EUR 3 million (2). The President and CEO has the right to retire at the age of 63 years. The members of the Board of Management are entitled to retire on reaching the statutory retirement age. One member of the Board of Management is entitled to retire earlier, on reaching 60 years of age. The company's Board of Directors decides the remunerations of the President and CEO and his immediate subordinates. Additional information on Management remuneration can be found in Consolidated Financial Statements Note 7.2. Related party disclosures. Personnel on average during the year was 402 (392). Financial review 3. DEPRECIATION AND AMORTISATION MEUR 2024 2023 Depreciation and amortisation according to plan Other long-term expenditure -2 -2 Machinery and equipment -1 -2 Total depreciation according to plan -3 -4 Tax depreciations -3 -3 4. OTHER OPERATING EXPENSES MEUR 2024 2023 Information technology costs -41 -31 Rental costs -5 -5 Legal and consultancy costs -36 -21 Services from Group Companies -34 -34 Other administrative costs -16 -10 Total -133 -101 5. FINANCIAL INCOME AND EXPENSES MEUR 2024 2023 Dividend income From Group companies 252 160 Total 252 160 Other interest income From Group companies 105 102 From other companies 31 8 Total 136 111 Other financial income From Group companies 38 32 From other companies 9 10 Total 46 42 Exchange gains and losses -2 1 Interest expenses To Group companies -75 -45 To other companies -14 -15 Total -89 -60 Other financial expenses To Group companies -23 -22 To other companies -36 -35 Total -59 -57 Financial income and expenses, total 283 197 6. INCOME TAXES MEUR 2024 2023 Income taxes For the previous periods 1 For the financial period -5 -4 Total -4 -4 Income taxes for the financial period include top-up taxes of EUR 1 million in accordance with OECD Pillar Two rules. Financial review 7. FIXED ASSETS Intangible assets MEUR Other long-term expendi- tures Intangible assets and construc- tion in progress 2024 2023 Acquisition cost on 1 January 113 17 130 118 Additions 3 19 22 16 Disposals -16 -16 -4 Acquisition cost on 31 December 100 36 137 130 Accumulated amortisation on 1 January -107 -107 -109 Accumulated amortisation on disposals and other changes 16 16 4 Amortisation during the financial period -2 -2 -2 Accumulated amortisation on 31 December -93 -93 -107 Carrying amount on 31 December 2024 7 36 43 Carrying amount on 31 December 2023 7 17 24 Tangible assets MEUR Land and water Buildings and structures Machinery, equipment and other tangible assets 2024 2023 Acquisition cost on 1 January 2 1 11 12 12 Additions 1 1 Disposals -1 -1 Acquisition cost on 31 December 2 1 12 12 Accumulated depreciation on 1 January -1 -9 -10 -9 Amortisation during the financial period -1 -1 -2 Accumulated depreciation on 31 December -1 -9 -10 -10 Carrying amount on 31 December 2024 2 2 5 Carrying amount on 31 December 2023 2 2 4 Shares and securities MEUR Shares in Group companies Shares in other companies 2024 2023 Acquisition cost on 1 January 950 2 952 952 Additions 500 500 Acquisition cost on 31 December 1,450 2 1,452 952 Carrying amount on 31 December 2024 1,450 2 1,452 Carrying amount on 31 December 2023 950 2 952 In 2024, Wärtsilä Corporation made an additional investment of EUR 500 million in the equity of its fully owned subsidiary Wärtsilä Technology Oy Ab. 8. CURRENT RECEIVABLES FROM GROUP COMPANIES MEUR 2024 2023 Trade receivables 54 48 Loan receivables 1,634 2,025 Derivatives 80 23 Other receivables 141 23 Prepaid expenses and accrued income 18 20 Total 1,927 2,139 9. PREPAID EXPENSES AND ACCRUED INCOME MEUR 2024 2023 Derivatives 3 32 Other 10 9 Total 13 41 Financial review 10. SHAREHOLDERS’ EQUITY MEUR 2024 2023 Share capital Share capital on 1 January 336 336 Share capital on 31 December 336 336 Share premium reserve Share premium reserve on 1 January 61 61 Share premium reserve on 31 December 61 61 Reserve for own shares Reserve for own shares on 1 January -28 -29 Reserve for own shares on 31 December -28 -29 Retained earnings Retained earnings on 1 January 1,103 1,099 Dividends paid -188 -153 Result for the financial period 363 157 Retained earnings on 31 December 1,278 1,103 Total shareholders' equity 1,646 1,471 Distributable equity 1,249 1,074 On 31 December 2024, the number of own shares held by Wärtsilä Corporation was 2,642,575 (2,700,000) and the book value of these shares was EUR 28 million (29). 11. LIABILITIES MEUR 2024 2023 Non-current Interest-bearing 409 515 Non-interest-bearing 9 13 Total 418 528 Current Interest-bearing 2,486 1,620 Non-interest-bearing 185 121 Total 2,672 1,740 Debt with maturity profile MEUR 2024 2023 Loans from financial institutions: 508 590 Current <1 year 99 75 Long-term 1-5 years 357 440 >5 years 52 75 Total 508 590 12. ACCRUED EXPENSES AND DEFERRED INCOME MEUR 2024 2023 Derivatives 64 4 Personnel costs 17 15 Interest and other financial items 4 6 Other 8 7 Total 94 32 13. LIABILITIES TO GROUP COMPANIES MEUR 2024 2023 Trade payables 22 17 Other current liabilities 2,387 1,544 Derivatives 48 51 Accrued expenses and deferred income 6 6 Total 2,463 1,618 Financial review 14. FINANCIAL ASSETS AND LIABILITIES BY MEASUREMENT CATEGORY 2024 MEUR Measured at amortised cost At fair value through the statement of income Carrying amounts of the statement of financial position items Fair value Non-current financial assets Derivatives 12 12 12 Derivatives from Group companies 26 26 26 Current financial assets Interest-bearing receivables from Group companies 1,634 1,634 1,634 Trade receivables from Group companies 54 54 54 Derivatives 3 3 3 Derivatives from Group companies 54 54 54 Other receivables from Group companies 158 158 158 Cash equivalents 0 Cash and bank 1,304 1,304 1,304 Carrying amount by category 3,151 95 3,246 3,246 Non-current financial liabilities Interest-bearing debt 409 409 406 Derivatives 15 15 15 Derivatives from Group companies 19 19 19 Current financial liabilities Interest-bearing debt 99 99 99 Interest-bearing debt to Group companies 2,387 2,387 2,387 Trade payables 14 14 14 Trade payables to Group companies 22 22 22 Derivatives 57 57 57 Derivatives to Group companies 28 28 28 Other liabilities 6 6 6 Other liabilities to Group companies 0 Carrying amount by category 2,937 119 3,057 3,054 2023 MEUR Measured at amortised cost At fair value through the statement of income Carrying amounts of the statement of financial position items Fair value Non-current financial assets Derivatives 17 17 17 Derivatives from Group companies 5 5 5 Current financial assets Interest-bearing receivables from Group companies 2,025 2,025 2,025 Trade receivables 0 Trade receivables from Group companies 48 48 48 Derivatives 32 32 32 Derivatives from Group companies 18 18 18 Other receivables from Group companies 42 42 42 Cash equivalents 0 Cash and bank 583 583 583 Carrying amount by category 2,697 72 2,770 2,770 Non-current financial liabilities Interest-bearing debt 515 515 509 Derivatives 12 12 12 Derivatives to Group companies 23 23 23 Current financial liabilities Interest-bearing debt 75 75 75 Interest-bearing debt to Group companies 1,544 1,544 1,544 Trade payables 14 14 14 Trade payables to Group companies 17 17 17 Derivatives 4 4 4 Derivatives to Group companies 27 27 27 Other liabilities 6 6 6 Other liabilities to Group companies 6 6 6 Carrying amount by category 2,177 67 2,244 2,238 Information on the fair value hierarchy and valuation principle can be found in Consolidated Financial Statements Note 5.2. Financial assets and liabilities by measurement category. Financial review 15. DERIVATIVE FINANCIAL INSTRUMENTS 2024 MEUR With external financial institutions With Group companies 2024 Nominal values of derivative financial instruments Non-Deliverable Forward 4 4 Currency forwards, transaction risk 2,370 3,766 6,136 Interest rate swaps 168 121 290 Cross currency swaps 153 153 Total 6,580 Fair values of derivative financial instruments (level 2) Non-Deliverable Forward Currency forwards, transaction risk -46 43 -4 Interest rate swaps 12 -10 2 Cross currency swaps -22 -22 Total -25 2023 MEUR With external financial institutions With Group companies 2023 Nominal values of derivative financial instruments Currency forwards, transaction risk 1,961 2,599 4,560 Interest rate swaps 168 124 293 Cross currency swaps 160 160 Total 5,013 Fair values of derivative financial instruments (level 2) Currency forwards, transaction risk 27 -14 14 Interest rate swaps 17 -14 3 Cross currency swaps -12 -12 Total 5 Foreign currency forward contracts are against transactional risks and are matched against the hedged cashflows. Interest rate swaps are denominated in euros and the average interest-bearing period for external contracts is 62 (57) months and 83 (95) months for intragroup contracts. The average maturity for cross currency swaps is 24 (36) months. 16. FINANCIAL RISKS General Wärtsilä has a centralised Group Treasury with two main objectives: 1) to arrange adequate funding for the Group’s underlying operations on competitive terms and 2) to identify and evaluate the financial risks within the Group and implement the hedges for the Group companies. The Group Treasury is organisationally within the parent company. The details about the management of the Group's financial risks are in Note 5.8. of the Consolidated Financial statements. As the Group's liquidity and interest rate risks are managed at the parent company level, the Group reporting applies fully to the parent company. Foreign exchange risk Operative foreign currency risks are followed and hedged at the subsidiary level. The Group Treasury acts as a counterparty to these hedges, if that is allowed by local regulations. To enable netting of intragroup currency flows and to reduce the amount of external transactions the Group Treasury is allowed to have minor unhedged exposures in different currencies. Any gains/losses from the Group Treasury's operations are booked directly into the financial items and we do not expect any material foreign exchange gains/losses from the Group Treasury's operations. 17. COLLATERAL, CONTINGENT LIABILITIES AND OTHER COMMITMENTS MEUR 2024 2023 Guarantees and contingent liabilities On behalf of Group companies 6,965 5,887 Total 6,965 5,887 Future nominal lease payments Payable within one year 3 3 Payable after one year 8 11 Total 12 14 Financial review 18. RELATED PARTY LOANS AND OTHER COMMITMENTS There are no loans receivables from senior management and the members of the Board of Directors. No pledges or other commitments were given on behalf of senior management or shareholders. In Note 7.2. in Consolidated Financial Statements, related party disclosures are specified. Related parties comprise the Board of Directors, the President and CEO, the Board of Management, as well as the associated companies and joint ventures. In Notes 8 and 13 in parent company financial statements, receivables and liabilities from Group companies are specified. 19. AUDITORS’ FEES AND SERVICES In 2024, the AGM appointed the audit firm PricewaterhouseCoopers Oy as Wärtsilä Corporation's auditor. The following fees were paid to auditors and accounting firms for audits and other services. Auditors' fees TEUR 2024 2023 Audit 1,649 646 Tax advisory 22 Other services 268 40 Total 1,939 685 Financial review PROPOSAL OF THE BOARD The parent company’s distributable funds total EUR 1,249,416,973.27, which includes EUR 363,279,404.71 in net profit for the year. There are 589,080,815 shares with dividend rights. The Board of Directors proposes to the Annual General Meeting that the company’s distributable earnings be disposed of in the following way: EUR A dividend of EUR 0.44 per share be paid, making a total of 259,195,558.60 That the following sum be retained in shareholders’ equity 990,221,414.67 Totalling 1,249,416,973.27 The dividend shall be paid in two instalments. The first instalment of EUR 0.22 per share shall be paid to the shareholders who are registered in the list of shareholders maintained by Euroclear Finland Ltd on the dividend record date of 17 March 2025. The payment day proposed by the Board for this instalment is 24 March 2025. The second instalment of EUR 0.22 per share shall be paid in September 2025. The dividend record day of the second instalment shall be 17 September 2025 and the second instalment of the dividend shall be paid to shareholders who are registered in the list of shareholders maintained by Euroclear Finland Ltd on such day. The Board proposes the second instalment is paid on 24 September 2025. No significant changes have taken place in the company’s financial position since the end of the financial year. The company’s liquidity is good and in the opinion of the Board of Directors the proposed dividend will not put the company’s solvency at risk. Financial statements are prepared according to IFRS (Group) and Finnish Accounting Standards FAS (Parent Company) and it gives a true and fair view of the assets, liabilities, financial position, and profit or loss of the company and the entities included in its consolidated financial statements, the annual report includes an accurate description of the development and result of the business activities of both the company and the entities included in its consolidated financial statements, as well as a description of the most significant risks and uncertainties and other matters concerning the company, and the sustainability report included in the annual report has been prepared in accordance with the reporting standards referred to in Chapter 7 and Article 8 of the Taxonomy Regulation. Helsinki, Finland, 4 February 2025 Tom Johnstone Mika Vehviläinen Karen Bomba Morten H. Engelstoft Karin Falk Johan Forssell Mats Rahmström Tiina Tuomela Håkan Agnevall, President and CEO Auditor’s Report (Translation of the Finnish Original) To the Annual General Meeting of Wärtsilä Corporation Report on the Audit of the Financial Statements Opinion In our opinion • the consolidated financial statements give a true and fair view of the group’s financial position, financial performance and cash flows in accordance with IFRS Accounting Standards as adopted by the EU • the financial statements give a true and fair view of the parent company’s financial performance and financial position in accordance with the laws and regulations governing the preparation of financial statements in Finland and comply with statutory requirements . Our opinion is consistent with the additional report to the Audit Committee. What we have audited We have audited the financial statements of Wärtsilä Corporation (business identity code 0128631 -1) for the year ended 31 December 2024. The financial statements comprise : • the consolidated statement of financial position, statement of income, statement of comprehensive income, statement of changes in equity, statement of cash flows and notes, which include material accounting policy information and other explanatory information • the parent company’s balance sheet, income statement, cash flow statement and notes. Basis for Opinion We conducted our audit in accordance with good auditing practice in Finland. Our responsibilities under good auditing practice are further described in the Auditor’s Responsibilities for the Audit of the Financial Statements section of our report. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. Independence We are independent of the parent company and of the group companies in accordance with the ethical requirements that are applicable in Finland and are relevant to our audit, and we have fulfilled our other ethical responsibilities in accordance with these requirements. To the best of our knowledge and belief, the non-audit services that we have provided to the parent company and group companies are in accordance with the applicable law and regulations in Finland and we have not provided non-audit services that are prohibited under Article 5(1) of Regulation (EU) No 537/2014. The non-audit services that we have provided are disclosed in note 7.3 to the Financial Statements . Our Audit Approach Overview • We have applied an overall group materiality of € 25 million. • We performed audit procedures at 24 reporting components in 14 countries based on our overall risk assessment and materiality. • Revenue recognition of long-term contracts • Valuation of goodwill • Valuation of trade receivables As part of designing our audit, we determined materiality and assessed the risks of material misstatement in the financial statements. In particular, we considered where management made subjective judgements; for example, in respect of significant accounting estimates that involved making assumptions and considering future events that are inherently uncertain . Materiality The scope of our audit was influenced by our application of materiality. An audit is designed to obtain reasonable assurance whether the financial statements are free from material misstatement. Misstatements may arise due to fraud or error. They are considered material if individually or in aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of the financial statements. Based on our professional judgement, we determined certain quantitative thresholds for materiality, including the overall group materiality for the consolidated financial statements as set out in the table below. These, together with qualitative considerations, helped us to determine the scope of our audit and the nature, timing and extent of our audit procedures and to evaluate the effect of misstatements on the financial statements as a whole. Overall group materiality € 25 million (previous year € 25 million) How we determined it Profit before tax and net sales Rationale for the materiality benchmark applied We chose profit before tax and net sales as benchmarks because, in our view, they are relevant benchmarks against which the performance of the group is commonly measured by users of the financial statements . How we tailored our group audit scope We tailored the scope of our audit, taking into account the structure of the Wärtsilä Group, the accounting processes and controls, and the industry in which the group operates. Using this criteria we selected group companies and accounts into our audit scope and at the same time ensured that we get sufficient coverage to our audit, in order to issue an audit opinion for the consolidated financial statements . Key Audit Matters Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the financial statements of the current period. These matters were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. As in all of our audits, we also addressed the risk of management override of internal controls, including among other matters consideration of whether there was evidence of bias that represented a risk of material misstatement due to fraud. Key audit matter in the audit of the group How our audit addressed the key audit matter Revenue recognition of long-term contracts Refer to the consolidated financial statements note 2.2. The group has significant revenue from construction contracts and long-term operating and maintenance agreements. These long-term contracts are often complex customised solutions and meet the definition for revenue recognition over time in accordance with IFRS 15 . Revenue related to these construction contracts and long-term operating and maintenance agreements is recognised using the percentage of completion method, where progress is determined by comparing actual costs incurred to date, with the total estimated costs of the project. Our revenue testing included both testing of the company’s controls, as well as substantive audit procedures targeted at selected major long-term projects. Our substantive testing focused on estimates applied by management in the accounting. Our procedures included, among others things, the following : • Ensured that the revenue recognition method applied was appropriate based on the terms of the arrangement; • Agreed the total project revenue estimates to sales agreements, including amendments as appropriate; Revenue recognition for long-term contracts includes management judgment in a form of estimates, which are subject to management experience and expectations of future events. The most important judgment relates to the estimated total costs of the project . Revenue recognition of long-term contracts is a key audit matter in the audit due to the high level of management judgement involved in the project estimates. • We obtained an understanding of the processes and tested relevant controls, which impact the revenue recognition; • We assessed the reliability of management’s estimates by comparing the actual results of delivered projects to previous estimates; • We challenged the management estimates and assumptions in projects, which were considered to include specific risk factors; and • Recalculated the revenue based on the stage of completion of the projects. Ensured that the stage of completion is correct by comparing actual costs per the company’s accounting records to the estimated total costs of the projects . Valuation of goodwill Refer to the consolidated financial statements note 3.1. Goodwill is one of the most significant consolidated balance sheet items. The determination and whether an impairment charge is required involves significant management judgement, including identifying on which cash Our audit focused on assessing the reasonableness of the determination of cash generating units, which forms the basis for the goodwill impairment testing and assessing the appropriateness of management’s judgments and estimates used in the goodwill impairment analysis. Our generating unit level the goodwill is tested and estimating the future performance of the business and the discount rate applied to these future cash flows. Valuation of goodwill is a key audit matter in the audit due to the size of the goodwill balance and the level of management judgement involved in the impairment testing . procedures relating to the impairment analysis included the following : • We tested the methodology applied in the goodwill impairment analysis as compared to the requirements of IAS 36, Impairment of Assets; • We evaluated the process by which the future cash flow forecasts were drawn up, including comparing them to the latest Board approved targets and long term plans; • We tested the key underlying assumptions for the cash flow forecasts, including sales and profitability forecasts, discount rate used and the implied growth rates beyond the forecasted period; • We compared the current year actual results included in the prior year impairment model to consider whether forecasts included assumptions that, with hindsight, had been optimistic; and • We considered whether the sensitivity analysis performed by the management around key assumptions of the cash flow forecast was appropriate by considering the likelihood of the movements of these key assumptions. Valuation of trade receivables Refer to the consolidated financial statements note 4.2. Trade receivables is one of the most significant consolidated balance sheet items, including an impairment provision. Part of the trade receivables include long-term receivables. Trade receivables are recognised at their anticipated fair value, which is the original invoiced amount less an estimated valuation allowance. Valuation of trade receivables is a key audit matter in the audit due to the size of the trade receivable balance and the level of management judgement used in determining the impairment provision . For trade receivables and the management’s estimations for trade receivables impairment provision, our key audit procedures included the following: • We obtained trade receivables balance confirmations; • We analysed the aging of trade receivables; and • We obtained a list of long outstanding receivables and assessed the recoverability of these through inquiry with management and by obtaining sufficient corroborative evidence to support the conclusions . We have no key audit matters to report with respect to our audit of the parent company financial statements. There are no significant risks of material misstatement referred to in Article 10(2c) of Regulation (EU) No 537/2014 with respect to the consolidated financial statements or the parent company financial statements. Responsibilities of the Board of Directors and the Managing Director for the Financial Statements The Board of Directors and the Managing Director are responsible for the preparation of consolidated financial statements that give a true and fair view in accordance with IFRS Accounting Standards as adopted by the EU, and of financial statements that give a true and fair view in accordance with the laws and regulations governing the preparation of financial statements in Finland and comply with statutory requirements. The Board of Directors and the Managing Director are also responsible for such internal control as they determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. In preparing the financial statements, the Board of Directors and the Managing Director are responsible for assessing the parent company’s and the group’s ability to continue as a going concern, disclosing, as applicable, matters relating to going concern and using the going concern basis of accounting. The financial statements are prepared using the going concern basis of accounting unless there is an intention to liquidate the parent company or the group or to cease operations, or there is no realistic alternative but to do so. Auditor’s Responsibilities for the Audit of the Financial Statements Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with good auditing practice will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements . As part of an audit in accordance with good auditing practice, we exercise professional judgment and maintain professional skepticism throughout the audit. We also: • Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. • Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the parent company’s or the group’s internal control. • Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management. • Conclude on the appropriateness of the Board of Directors’ and the Managing Director’s use of the going concern basis of accounting and based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the parent company’s or the group’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the parent company or the group to cease to continue as a going concern. • Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the financial statements represent the underlying transactions and events so that the financial statements give a true and fair view. • Plan and perform the group audit to obtain sufficient appropriate audit evidence regarding the financial information of the entities or business units within the group as a basis for forming an opinion on the group financial statements. We are responsible for the direction, supervision and review of the audit work performed for purposes of the group audit. We remain solely responsible for our audit opinion. We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit. We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards. From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditor’s report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication . Other Reporting Requirements Appointment We were first appointed as auditors by the annual general meeting on 2 March 2017. Our appointment represents a total period of uninterrupted engagement of eight years. Other Information The Board of Directors and the Managing Director are responsible for the other information. The other information comprises the report of the Board of Directors and the information included in the Annual Report, but does not include the financial statement s and our auditor’s report thereon. Our opinion on the financial statements does not cover the other information. In connection with our audit of the financial statements, our responsibility is to read the other information identified above and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit, or otherwise appears to be materially misstated. With respect to the report of the Board of Directors, our responsibility also includes considering whether the report of the Board of Directors has been prepared in compliance with the applicable provisions, excluding the sustainability report information on which there are provisions in Chapter 7 of the Accounting Act and in the sustainability reporting standards. In our opinion, the information in the report of the Board of Directors is consistent with the information in the financial statements and the report of the Board of Directors has been prepared in compliance with the applicable provisions. Our opinion does not cover the sustainability report information on which there are provisions in Chapter 7 of the Accounting Act and in the sustainability reporting standards. If, based on the work we have performed, we conclude that there is a material misstatement of the other information, we are required to report that fact. We have nothing to report in this regard. Other Statements We support that the financial statements should be adopted. The proposal by the Board of Directors regarding the use of the profit shown in the balance sheet is in compliance with the Limited Liability Companies Act. We support that the Members of the Board of Directors and the President and CEO should be discharged from liability for the financial period audited by us. Helsinki 11 February 2025 PricewaterhouseCoopers Oy Authorised Public Accountants Lauri Kallaskari Authorised Public Accountant (KHT) Independent Auditor’s Reasonable Assurance Report on Wärtsilä Corporation’s ESEF Financial Statements (Translation of the Finnish Original) To the Management of Wärtsilä Corporation We have been engaged by the Management of Wärtsilä Corporation (business identity code 0128631 -1) (hereinafter also “the Company”) to perform a reasonable assurance engagement on the Company’s consolidated IFRS financial statements for the financial year 1 January – 31 December 2024 in European Single Electronic Format (“ESEF financial statements”) . Management’s Responsibility for the ESEF Financial Statements The Management of Wärtsilä Corporation is responsible for preparing the ESEF financial statements so that they comply with the requirements as specified in the Commission Delegated Regulation (EU) 2019/815 of 17 December 2018 (“ESEF requirements”). This responsibility includes the design, implementation and maintenance of internal control relevant to the preparation of ESEF financial statements that are free from material noncompliance with the ESEF requirements, whether due to fraud or error . Our Independence and Quality Management We have complied with the independence and other ethical requirements of the International Code of Ethics for Professional Accountants (including International Independence Standards) issued by the International Ethics Standards Board for Accountants (IESBA Code), which is founded on fundamental principles of integrity, objectivity, professional competence and due care, confidentiality and professional behaviour. Our firm applies International Standard on Quality Management 1, which requires the firm to design, implement and operate a system of quality management including policies or procedures regarding compliance with ethical requirements, professional standards and applicable legal and regulatory requirements . Our Responsibility Our responsibility is to express an opinion on the ESEF financial statements based on the procedures we have performed and the evidence we have obtained. We conducted our reasonable assurance engagement in accordance with the International Standard on Assurance Engagements (ISAE) 3000 (Revised) Assurance Engagements Other than Audits or Reviews of Historical Financial Information . That standard requires that we plan and perform this engagement to obtain reasonable assurance about whether the ESEF financial statements are free from material noncompliance with the ESEF requirements. A reasonable assurance engagement in accordance with ISAE 3000 (Revised) involves performing procedures to obtain evidence about the ESEF financial statements compliance with the ESEF requirements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material noncompliance of the ESEF financial statements with the ESEF requirements, whether due to fraud or error. In making those risk assessments, we considered internal control relevant to the Company’s preparation of the ESEF financial statements. We believe that the evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. Opinion In our opinion, Wärtsilä Corporation ESEF financial statements for the financial year ended 31 December 2024 comply, in all material respects, with the minimum requirements as set out in the ESEF requirements. Our reasonable assurance report has been prepared in accordance with the terms of our engagement. We do not accept, or assume responsibility to anyone else, except for Wärtsilä Corporation for our work, for this report, or for the opinion that we have formed. Helsinki 11 February 2025 PricewaterhouseCoopers Oy Authorised Public Accountants Lauri Kallaskari Authorised Public Accountant (KHT) Assurance Report on the Sustainability Report (Translation of the Finnish Original) To the Annual General Meeting of Wärtsilä Corporation We have performed a limited assurance engagement on the group sustainability report of Wärtsilä Corporation (business identity code (0128631 -1) that is referred to in Chapter 7 of the Accounting Act and that is included in the report of the Board of Directors for the reporting period 1.1.–31.12.2024 . Opinion Based on the procedures we have performed and the evidence we have obtained, nothing has come to our attention that causes us to believe that the group sustainability report does not comply, in all material respects, with 1) the requirements laid down in Chapter 7 of the Accounting Act and the sustainability reporting standards (ESRS); 2) the requirements laid down in Article 8 of the Regulation (EU) 2020/852 of the European Parliament and of the Council on the establishment of a framework to facilitate sustainable investment, and amending Regulation (EU) 2019/2088 (EU Taxonomy) . Point 1 above also contains the process in which Wärtsilä Corporation has identified the information for reporting in accordance with the sustainability reporting standards (double materiality assessment) . Our opinion does not cover the tagging of the group sustainability report in accordance with Chapter 7, Section 22, of the Accounting Act, because sustainability reporting companies have not had the possibility to comply with that requirement in the absence of the ESEF regulation or other European Union legislation . Basis for Opinion We performed the assurance of the group sustainability report as a limited assurance engagement in compliance with good assurance practice in Finland and with the International Standard on Assurance Engagements (ISAE) 3000 (Revised) Assurance Engagements Other than Audits or Reviews of Historical Financial Information . Our responsibilities under this standard are further described in the Responsibilities of the Authorised Group Sustainability Auditor section of our report. We believe that the evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. Authorised Group Sustainability Auditor’s Independence and Quality Management We are independent of the parent company and of the group companies in accordance with the ethical requirements that are applicable in Finland and are relevant to our engagement, and we have fulfilled our other ethical responsibilities in accordance with these requirements. Our firm applies International Standard on Quality Management ISQM 1, which requires the firm to design, implement and operate a system of quality management including policies or procedures regarding compliance with ethical requirements, professional standards and applicable legal and regulatory requirements . Responsibilities of the Board of Directors and the Managing Director The Board of Directors and the Managing Director of Wärtsilä Corporation are responsible for: ● the group sustainability report and for its preparation and presentation in accordance with the provisions of Chapter 7 of the Accounting Act, including the process that has been defined in the sustainability reporting standards and in which the information for reporting in accordance with the sustainability reporting standards has been identified ● the compliance of the group sustainability report with the requirements laid down in Article 8 of the Regulation (EU) 2020/852 of the European Parliament and of the Council on the establishment of a framework to facilitate sustainable investment, and amending Regulation (EU) 2019/2088; ● such internal control as the Board of Directors and the Managing Director determine is necessary to enable the preparation of a group sustainability report that is free from material misstatement, whether due to fraud or error. Inherent Limitations in the Preparation of a Sustainability Report In reporting forward -looking information in accordance with ESRS, management of the Company is required to prepare the forward-looking information on the basis of assumptions that have been disclosed in the sustainability report about events that may occur in the future and possible future actions by the Group. Actual outcomes are likely to be different since anticipated events frequently do not occur as expected. Responsibilities of the Authorised Group Sustainability Auditor Our responsibility is to perform an assurance engagement to obtain limited assurance about whether the group sustainability report is free from material misstatement, whether due to fraud or error, and to issue a limited assurance report that includes our opinion. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the decisions of users taken on the basis of the group sustainability report. Compliance with the International Standard on Assurance Engagements (ISAE) 3000 (Revised) requires that we exercise professional judgment and maintain professional skepticism throughout the engagement. We also: ● Identify and assess the risks of material misstatement of the group sustainability report, whether due to fraud or error, and obtain an understanding of internal control relevant to the engagement in order to design assurance procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the parent company’s or the group’s internal control. ● Design and perform assurance procedures responsive to those risks to obtain evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control . Description of the Procedures That Have Been Performed The procedures performed in a limited assurance engagement vary in nature and timing from, and are less in extent than for, a reasonable assurance engagement. The nature, timing and extent of assurance procedures selected depend on professional judgment, including the assessment of risks of material misstatement, whether due to fraud or error. Consequently, the level of assurance obtained in a limited assurance engagement is substantially lower than the assurance that would have been obtained had a reasonab le assurance engagement been performed . Our procedures included for example the following: ● We interviewed the company’s management and the individuals responsible for collecting and reporting the information contained in the group sustainability report at the group level and in subsidiaries, as well as at different levels and business areas of the organization to gain an understanding of the sustainability reporting process and the related internal controls and information systems. ● We familiarised ourselves with the background documentation and records prepared by the company where applicable, and assessed whether they support the information contained in the group sustainability report. ● We performed site visits at the company’s sites in Finland and Spain and interviewed on-line representatives from the company’s subsidiary in France. ● We assessed the company's double materiality assessment process in relation to the requirements of the ESRS standards, as well as whether the information provided about the assessment process complies with the ESRS standards. ● We assessed whether the sustainability information contained in the group sustainability report complies with the ESRS standards. ● Regarding the EU taxonomy information, we gained an understanding of the process by which the company has identified the group's taxonomy-eligible and taxonomy-aligned economic activities, and we assessed the compliance of the information provided with the regulations . Helsinki 11 February 2025 PricewaterhouseCoopers Oy Authorised Sustainability Auditors Karsten Westerling Authorised Sustainability Auditor