Group Management Report

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Trends in the markets for Power Engineering

In the Power Engineering Business Area, we generally expect market conditions to remain difficult – although we believe they will improve slightly – in 2023. The impact of the Russia-Ukraine conflict, the trend in energy and commodity prices as well as the possible repercussions of the Covid-19 pandemic are generating continued uncertainty in nearly all market segments.

Based on estimates of a higher volume of sea trade, combined with calls for high energy efficiency and low pollutant emissions, the 2023 market volume in the merchant shipping segment is expected to reach a slightly higher level than in the reporting year. The market segments excluding merchant shipping are also expected to reach a slightly higher level than in 2022. An improvement is likewise anticipated in the cruise ship segment as travel continues to return to normal levels. The passenger ferry sub-market is also expected to grow slightly. We continue to anticipate a high level of stable demand for government vessels. In the offshore sector, further new order volumes for special applications are expected, such as for special offshore ships for wind turbines. Overall, we predict that the marine market will reach a somewhat higher level than that seen in the reporting year, with sustained competitive pressure.

Exceedingly challenging conditions are projected for the energy generation market in 2023. The Russia-Ukraine conflict and its impact on energy and commodity prices as well as inflation are creating continued uncertainty, which in turn is affecting investment decisions. Dependence on Russian gas and the associated shortages are generating increased readiness to invest in technologies that will enable medium- to long-term autonomy. Solutions such as power-to-X and balancing facilities to support grids for renewable energy will be essential here, leading to rising demand for these technologies going forward. Demand for decentralized, sustainable gas power plants will continue, but with the clear requirement that these can subsequently be retrofitted for renewable fuels. Growth in the power generation market will be driven by renewable energy in particular. The irregularity of power produced in this way will require an increase in energy storage systems and control reserve facilities, which will result in a corresponding expansion of the market for engines, turbocompressors and turboexpanders.

We are expecting a sustained high level of demand for turbomachinery in 2023 due to an investment backlog and strong demand for raw materials amid rising prices. It is expected that the production plants of market participants will be well utilized. This should result in a continuous relaxation of the competition which had been intensified by the pandemic.

Both in the after-sales market for engines in the marine and power plant business, and in the after-sales market for turbomachinery, we expect healthy demand in 2023 above the level prior to the Covid-19 pandemic, though the energy sector and the geopolitical situation in Eastern Europe will generate uncertainty.

For the period 2024 to 2027, we expect to see growing demand in the power engineering markets. However, the extent and timing of this growth will vary in the individual business fields. It also remains to be seen how long the market will be impacted by the major influential factors: the Russia-Ukraine conflict, trends in the energy sector and the Covid-19 pandemic.