Strategic Exposure to Industrial Tech Leaders in a Shifting Global Landscape

The global industrial sector is undergoing a seismic shift, driven by twin forces: decarbonization and digital transformation. As nations and corporations race to meet net-zero targets and integrate AI-driven technologies into their operations, two companies—KONE and Wärtsilä—stand out as exemplars of strategic agility. Their Q2 2025 results and sustainability innovations not only reflect the challenges of a volatile macroeconomic environment but also underscore the opportunities for investors who prioritize long-term resilience over short-term volatility.

KONE: Resilience Through Service and Modernization

KONE, the Finnish elevator and escalator giant, has demonstrated remarkable adaptability in a market still grappling with post-pandemic volatility and China's economic headwons. Despite a 0.5% decline in orders in Q2 2025 (at actual exchange rates), the company achieved a 3% growth at comparable exchange rates, driven by robust demand in Asia-Pacific, the Middle East, and Africa. This performance highlights KONE's ability to pivot its geographic focus and capitalize on urbanization trends in emerging markets.

The real story lies in its Service and Modernization segments. Service sales grew nearly 10%, while Modernization sales surged by 20% year-over-year. These segments now represent KONE's largest revenue contributors, reflecting a shift from capital-intensive new installations to recurring revenue models that align with ESG (Environmental, Social, Governance) priorities. Investors should note that 60% of KONE's deliveries now include regenerative drives, a technology that reduces energy consumption and Scope 3 emissions, directly addressing the decarbonization imperative.

Moreover, KONE's digital transformation is accelerating. With 38% connectivity in its maintenance base and the deployment of AI-driven tools for predictive maintenance, the company is enhancing customer satisfaction while optimizing operational efficiency. This digital edge is critical as urban infrastructure becomes increasingly data-driven.

Wärtsilä: Pioneering the Hydrogen-Ready Future

While KONE is redefining urban mobility, Wärtsilä is reshaping the energy transition. The Finnish engineering firm reported a 10.5% revenue increase in Q2 2025, with organic growth of 13%, driven by demand for hydrogen-ready power plants and marine decarbonization solutions. Its adjusted operating margin of 12.0%—up from 11.3% in 2024—demonstrates pricing power in high-margin decarbonization technologies.

Wärtsilä's hydrogen-ready engines, capable of running on up to 100% hydrogen by 2025, position the company as a linchpin in the global shift from fossil fuels. These engines are already being integrated into power grids that balance intermittent renewables, a critical need as the G20 aims to deploy 11,000 GW of wind and solar by 2030. The company's recent launch of a carbon capture solution for maritime vessels further cements its role in reducing emissions across hard-to-abate sectors.

Equally compelling is Wärtsilä's investment in R&D. A €50 million expansion of its Sustainable Technology Hub in Finland will accelerate the development of ammonia-fueled engines and battery energy storage systems (BESS), both of which are essential for achieving grid stability and maritime zero-emission goals. With operating cash flow surging by 92.6% in Q2, Wärtsilä has the liquidity to fund these innovations while maintaining financial discipline.

Strategic Alignment with Global Megatrends

Both companies are not only responding to market shifts but actively shaping them. KONE's focus on service and modernization aligns with the growing demand for sustainable infrastructure, while Wärtsilä's hydrogen and BESS solutions address the urgent need for decarbonization in energy and maritime sectors. Their EBIT margins—11.9% for KONE and 12.0% for Wärtsilä—suggest strong operational efficiency, a critical factor in an era where margins are under pressure from supply chain disruptions and interest rate volatility.

For investors, the key question is whether these firms can scale their innovations while maintaining profitability. KONE's 2–5% sales growth guidance for 2025 and Wärtsilä's optimism about Marine and Energy Storage demand suggest both are well-positioned to do so. However, risks remain. KONE's China exposure—where New Building Solutions demand is soft—could weigh on its long-term growth, while Wärtsilä's reliance on regulatory tailwinds in decarbonization means policy shifts could disrupt its momentum.

A Call for Diversified Exposure

In a world where industrial tech is increasingly defined by sustainability and digital integration, KONE and Wärtsilä offer complementary opportunities. KONE's urban infrastructure focus and Wärtsilä's energy transition expertise together provide a diversified exposure to the decarbonization megatrend. Their earnings momentum, coupled with innovation pipelines that address both environmental and operational challenges, makes them compelling additions to a portfolio seeking resilience and growth.

Investors should monitor key metrics: KONE's service and modernization order growth, and Wärtsilä's hydrogen project deployments. Both companies are betting on the future, and for those who recognize the urgency of the energy transition and the digital revolution, their strategies offer a roadmap for navigating—and profiting from—a rapidly changing industrial landscape.