Engine maker Wartsila sees headwinds from China lockdowns

HELSINKI (Reuters) -Finland's Wartsila, a top global marine and energy equipment maker, posted a first-quarter operating loss on Thursday and said market conditions were uncertain due to recent COVID-19 lockdowns in China and Russia's invasion of Ukraine.

Wartsila's loss of 147 million euros reflected a previously announced writedown of around 200 million euros of its Russian assets. It plans to exit Russia gradually to ensure business continuity, Chief Executive Hakan Agnevall told a conference call.[L2N2WI0S9]

Wartsila said its comparable operating profit increased 61% to 65 million euros ($68.25 million), roughly in line with a mean estimate of 67.2 million from 14 analysts in a Vara Research poll commissioned by the company. Net sales increased by 30% to 1.23 billion euros, ahead of analysts expectations.

The company said prevailing global market conditions made its outlook uncertain, while it expects demand in the second quarter to be similar to that in the previous year.

"The continued impact from COVID-19 and the Russian attack into Ukraine in the first quarter of 2022 intensified overall uncertainty in the global business environment and amplified concerns related to cost inflation and global economic development," CEO Hakan Agnevall said in a statement.

Analysts said the results were mixed and said challenges from exiting Russia may make it difficult to recharge the business. The company's shares were trading slightly higher at 0.7% in the morning trade after initially dipping 3.6%.

In the energy markets, sanctions against Russia and unexpected price volatility hit global supply chains, with the price of lithium nearly doubling in the first quarter, the company said.

The knock-on impact of higher prices for the company's products caused customers to slow purchasing decisions, especially in the energy storage business, Wartsila said.

"In the energy markets, the sanctions and an unforeseen price volatility had a negative impact on global supply chains," the company said in a statement.

Higher prices also slowed newbuild investments and limited shipyard capacity in the company's marine markets where fuel prices soared and COVID-19 infections buffeted the cruise industry, the company said.

($1 = 0.9524 euros)

(Reporting by Anne Kauranen in Helsinki and Michael Kahn in Prague; editing by Jason Neely and Elaine Hardcastle)