Welcome to Wärtsilä Q3 2024 Pre-Silent Call. I'm Hanna-Maria Heikkinen, and I'm in charge of investor relations. Today, our CFO, Arjen Berends, will start with key messages, and after that, there is a possibility to ask questions. So in the case you have a question, please use raise your hands functionality in Teams, and in the case you don't have possibility to use that functionality, you can also send an email to me. Please, Arjen, time to start. All right. Thank you, Hanna-Maria. A few comments up front before we go to Q&A. I would say third quarter pretty much developed in line with our expectations. Good development in both end markets, I would say. Marine service environment continues to be stable. Equipment side, good momentum continues, basically supported also by the decarbonization journey and the pressure from regulation coming in, but also, let's say, fuel efficiency, as I've been talking about also earlier. We see good activities in key segments for us, let's say, cruise, ferries, offshore, et cetera. Also good to note, many of you might have seen it already, Clarksons, sorry, published, let's say, updated estimates earlier, last week, actually. Now projecting, let's say, ordering of vessels in 2024 to be close to 2,200 vessels, and now I'm talking vessels bigger than 2,000 gross ton. So really up, let's say, what was it? I think it was about 15%-17% up from what they expected in March, so really good. Also for the years after, actually, the contracting levels are adjusted upwards, so there is clearly more expectations of ordering and going to the higher levels. Now, the latest Clarksons forecasts, and then I'm talking Clarksons forecasts, including offshore, is that for all the years between now and 2028, at least I remember by heart, contracting of vessels is well over 2,000 per year. Also, newbuild orders for container ships have been also revised up substantially, actually, which is also good for us. Let's say we are very active in that market now, also with auxiliary engines. So all in all, I think it's a positive sign, let's say, this upgrade by Clarksons and supported well, let's say, our anticipated volume development as well. Lack of yard capacity, we have been talking about that quite much over the past months, I would say. It's also good to. If you have access to Clarksons material, there was also some good material there as well about yard capacity. There is a graph somewhere in that material that in 2011, basically, global yard capacity reached its maximum. If you would say that is 100%, then the low point was actually in 2020, 2021, around. That's about then 60% of that 100%. Since then, capacity has been growing. Now we are slightly over 70% at the end of, let's say, this year, estimated. And the estimation by Clarksons is that by 2030, we will be around 80-85% of, let's say, 2011 peak level again, where it's quite remarkable that China is growing most, or it's actually not remarkable, but that's typically their strategy. So actually, if the China line or the China yard capacity expands as it is in that statistics, China on its own will be higher than their peak level in 2011, so they are clearly the fastest growing. Renewal is required. We have been very old, average fleet age. I think it's about 17 years for the average fleet. And never in history the fleet has been, on average, that old. So I do believe that also yards understand that something needs to happen, and there is an opportunity ahead. In energy, let's say the outlook remains good for both EPP and ES&O. Lumpiness is always there, has always been there. I would even say it's increasing because order sizes tend to get bigger. So that's something to keep in mind. On the service side, the utilization of our installed base is quite stable, actually, which is a good thing. Despite the fact that, let's say, more of the installed base is used for balancing power, let's say our running hours stay rather stable, actually. That's a good thing, and combining that with moving up the service value ladder gives also still good opportunities for growth. Also in energy, I think it's good to remember, and it's actually also applicable to marine, but let's say I would say even more for energy, that also lumpiness in service can be an issue. Let's say typically, when we have lifecycle agreements, we book 24 months, let's say, as order intake, but we only book it, let's say, when the plant is operational. So if you sell a new build plant still to be built, let's say we only book the order intake once, let's say, the plant is ready to run, so to say. Yeah, good progress, I would say, towards our financial targets. I think you've seen it over the past quarters. I do expect that will also continue going forward. I'm confident that we will reach all our financial targets. We do already for most of it, but let's say the profit part is still some way to go, but I'm confident on that one as well. Cash flow continues on a good level. Quite happy with that as well. Again, I've said it now many times, negative working capital, I would not consider the normal. Will it change this year? Most likely not. At least I don't foresee it, but somewhere in next year I expect that we move slightly into, let's say, positive working capital numbers again. That's it in short from my side. Open to any questions. Thank you, Arjen. So now we are open for questions, so in the case you have a question, please use the raise your hand functionality. I do not see any thumbs up yet. Oh, Johan Eliason. Thank you, Johan, you are the first one. Please go ahead. I'll shoot. You didn't say anything about the strategic review you are doing with businesses left and right. I think it's now almost a year since you announced it. Yeah. No, let's say, we have said before that, let's say, when there is news to say, we will come with that all in one go to everybody at the same time, and so far there is not any news to announce. We are still looking into it. Then you're still expecting a lot of equipment deliveries in the second half of this year, I assume. So is the message on the margin sort of not necessarily peaking in the second half of this year still the same or? Yeah, let's say we have stated that at the end of Q2. Let's say it, it's a relative margin. It's not the absolute margin. Let's say it's the percentage that is, let's say, you could say, pushed down due to the fact that the mix between new build and services is, yeah, going more to new build in the second half of the year. That's correct. Anything on, on the quarters, will it be very Q4 tilted or will you start already in Q3 with the deliveries? I will not comment on that. Let's say that needs to be seen. Yeah. And then the final question, just on you mentioned the container vessels being interesting for you from the auxiliary point of view. I mean, they have two-stroke engines. Is there in any way somehow that you have a cooperation with the buyer of your two-stroke business so that makes it a little bit easier for you to sell the auxiliary and the service for both the main and the auxiliary, or that's just not connected? I think it has a lot to do with the fact. Actually, it has a lot to do with decarbonization and let's say the new fuels. If you take methanol-enabled, for example, let's say that's more complex. So actually, the decarbonization is, you could say, de-commoditizing, let's say, what used to be a very, commoditized business, which is auxiliary engines. Main engines is totally different, but auxiliary was very commoditized. But with technology proceeding and getting more complex, let's say our capabilities and let's say our opportunities are also getting better. And that you can also see, I think, if you look at the roadshow material, and you look at market shares, if you take the market shares without or let's say exclude, let's say purely focused on the new fuels, it's bigger than, let's say, what it is if you include everything. Which clearly shows that, let's say, the technology getting more complex is helping us in sales. Okay. Thank you. Thank you, Johan. Next question comes from Daniela Costa. Please go ahead. Hi. Good afternoon. Thanks for hosting this again. I have a question, it's more like on competitive landscape, on energy storage, rather than on Q3 or anything, but just maybe to understand a little bit better who you consider they're your main competitors, because I've been seeing sort of slightly conflicting data. For example, BloombergNEF lists you within the top energy storage manufacturers and integrators. But for example, Wood Mackenzie lists companies like Sungrow and Fluence, but not Wärtsilä. Is the competitive landscape changing, or are we looking at different parts? I wonder, particularly on the Chinese, if you are seeing them outside of China, given they seem to have a pretty good access to the underlying battery technology? It's a very good question, and it's not so clear picture, to be honest. Let's say we used to be top three player, basically, Fluence, Tesla, and Wärtsilä. I would say also due to our, yeah, you could say selective approach that we have been taking some years back already. I think we are now top six, seven, or something like that. Depends a bit on, let's say, what kind of statistics you look at. Good to remember that our track record, let's say with execution, has been super. Let's say we have no incidents, no nothing, let's say, and I think that cannot be said by anybody else. I think we are still considered by many customers as the tier one supplier. Well, let's say now a lot of newer entrants come in, typically battery suppliers that also believe they can do system integration. You could call them tier two, tier three, or even sometimes, I think. Future still needs to say or tell or prove that they can deliver according to, to plan. I think if that fails, I think customers will be very, very hesitant to, to continue with those. So yes, there is a lot of entrants, there is a lot of newcomers, but quality is questionable, I would think. I believe I've asked this before, but just wanted to double-check I'm not missing it. Have you ever disclosed who you supply batteries, the batteries from. Who you buy them from? We have-- Not even on region? No, we have multiple suppliers. Okay, that's very helpful, thank you. That was just that for me this time. Thank you. Thank you, Daniela. The next question comes from Panu Laitimäki. Please go ahead. Thank you. I have two, actually. Firstly, starting with the margins, I guess this is something we have asked earlier, but given that you were at, like, 10.7% for the first half, and you have 12%, and you just said you are confident, can you once again walk us through kind of what will get you to 12%? Because you had mixed tailwind, service was big, and then we know that the equipment will probably grow more going forward, and you have been saying that service is the biggest driver, but how does it kind of add up? Do you see that your margin within service will increase so much that you get to 12%, or? Yeah, this was the question. It's a very good question. I believe that, let's say, our moving up the service value ladder has not come to an end. I think there's still a lot more opportunities that we can harvest on. There are other items as well. Let's say the Trieste closure, but that's already actually in the books. That was also part of, let's say, that journey. Let's say turning around, let's say the Voyage business, I can tell you now that, let's say if you combine. Because now the old Voyage business part is in portfolio business, part is in Marine. If you combine it together, actually we are now profitable, and we have been loss-making, deeply loss-making, I would say, for a long time. So, then also on the newbuild side, let's say the recovery, let's say the move that we have done with energy to move more from, let's say, EPC to EEQ, let's say deliveries clearly helps, let's say, the profitability. The risk profile with civil and engineering on an EPC contract is so much higher, that. And that can clearly be seen. So I see still a lot of opportunities to further grow, both on the newbuild side as well as on the service side, both in volume as well as in margin. Okay, thanks. Just to clarify, so Voyage, like the legacy business as total, is now profitable? Correct. So what we used to have as a separate division, basically Voyage business, it's now, let's say, distributed, as I said, portfolio business as a piece and then Marine as a piece. But if you now would combine it together, it's profitable. Okay, so it's a big change. Yes. The second question is on the Energy. I mean, Håkan told us a few weeks ago that you see good sentiment in the Energy business, but you are not able to announce all the orders, and now we have seen some order announcements. So basically, the question is that, have you now announced all you got, or how does it kind of look like for-- I think this is always a bit of a difficult prediction. I would say we never announce everything we got, because we simply don't get the approvals from the customer. But we actually try with basically any and all big order, but many customers don't want to have this out. So where we can, we do, and okay, now it was coincidentally perhaps a little bit more than what you're used to, but it's not all we have received. You're happy about Q3? At least I cannot complain. Thank you. Can always have more, but, I will not complain. Thank you, Panu. The next question comes from Erkki Vesola. Thank you, Arjen and Hanna. Regarding your gas solutions, it's-- The order intake has been actually very active. Do you have second thoughts on the business position within Wärtsilä, as it is still to be divested? No, we have no second thoughts of any of these businesses. They have been quite well reviewed, let's say, from, you could say, all angles. They don't fit our strategy. They don't decarbonize, and they don't support, let's say, moving up the service value ladder. The gas installations, being it regasification or reliquefaction on its own, don't decarbonize. They might be a piece in the chain, but that's not good enough for us. We want products that support decarbonization, and, yeah, then they fall out. And the fact that they are to be divested, it doesn't kind of hinder you from getting new orders? No, let's say it would be stupid not to accept new orders. Let's say if you can get the business more profitable, you can get a better price, and a good order book is also helpful. So yes, let's say we continue business as usual until it's sold. Makes sense. Thanks so much. Thank you, Erkki. The next question comes from Tomi Railo. Please go ahead, Tomi. Hi, Arjen and Hanna. Tomi from DNB. A couple of questions, starting with the order-related ones. You announced this Origin battery order to Australia. Can you comment just is it booked for already second quarter, first quarter, or is it something for third quarter? No, that was in the second quarter already, I think. Yeah. So it's all been already booked in-- That's in the books already, yes. Okay. And then, the Royal Caribbean order for lifecycle agreement, can it be or should we compare it to the Carnival order you booked years and years ago, which was for 12 years agreement, EUR 900 million, 79 ships? Is there any kind of help for us how should we expect you to book that? And is it similar kind of value per vessel and so on? Any help there? No, I will not. I will not open that up. Let's say it's, it's of course much less vessels. Let's say, I think it's 37 vessels by heart instead of-- In the Carnival in the start, I think we had 70 vessels, in my memory, so it's almost double, let's say, in Carnival case. In Carnival, let's say we also have, let's say, sharing the fuel benefit. The Royal agreement is not like that. It's more like a guaranteed asset performance, agreement, so there are clearly differences. But otherwise, I will not open it up in more detail money-wise. Thanks. That's helpful, but you will book something at least. Yeah For that, enter? Sure. These are operating vessels, so there is no-- Yes, exactly No reason to pull back. Good. Okay. And then the third question, back to the profitability and your commentary on the second half, and maybe on the fourth quarter specifically. I understand the mix, but I would also assume that your equipment profitability is improving year on year. As especially last third quarter, you still had those lower quality legacy deliveries. These in mind, you would still assume that the equipment profitability improvement year on year is not enough to kind of offset the margin pressure from the mix point of view? I'm not sure if I follow. Yes, you're right. Let's say last year, Q3, we still were burdened by, let's say, this costing projects, the final sale of it. So that is clearly, let's say, a benefit now in Q3 this year. But yes, margin improve in that sense, but yeah, it all depends on the mix. Let's say there is a lot more new build expectation in the second half than, let's say, what we saw in the first half. So the mix will change it. So the 10.7% that we saw in the first half of the year will be a lower percentage in the second half of the year. All right. Although the mix is improving, so the equipment is improving. Yes, but also, let's say we have a lot of equipment, and not all the equipment makes the same margin either, so there are also differences within projects. Understand. Okay, thank you very much. Thank you. Thank you. The next question comes from Antti Kansanen. Please go ahead. Thank you. I had just a question on something that you mentioned, Arjen, and you talked about kind of the lumpiness and the size of the deals increasing on the power plant side. Could you talk a little bit more how what is causing this? And I mean, your demand is transitioning to balancing side, which probably is not as big orders as on the base load. Just maybe a clarification on what's driving this trend. I would say it's mainly related to the storage side, where we see really the size increase. Sorry, I was not clear perhaps there, but it's mainly on the storage side. Okay, well, that makes sense. And then, secondly, on the marine services, I guess we're seeing an acceleration, especially on the project side, and I guess this refers to the retrofit. Correct. But is this something that you're going forward seeing growing the fastest? And is there something on the, let's say, more transactional side, which is maybe slowing down? I mean, there has been a little bit of an earlier seasonality this year on the vessel traffic, so anything on that? Yeah, I would say it's always a bit difficult to predict exactly, let's say, how it goes, but we clearly anticipate, let's say, in the project side, let's say good growth, and that is driven by retrofits. We do quite many retrofits, and the need for retrofits is also increasing quite significantly, being it hybrid installations, being it two-stroke derating solutions, being it all kind of other, let's say, energy-saving devices. So, I would believe that is also typically one of the first steps that customers take in order to, let's say, improve on their CII rating and improve their fuel efficiency. The ultimate is, of course, let's say, the new fuels, but a lot needs to happen also in the ecosystem to make that, let's say, really accelerate. So I believe strongly in a good growth of the retrofit business. Also, okay, it's happening already, but I also believe that that will continue. Yeah, 'cause I wanted to understand better, 'cause on the services side, you obviously have this drive to get more agreement-based services, and then you're also seeing growth on this more project type of a business. So does that have, and what kind of implication it has on margins? 'Cause I'd assume that you value the visibility on the agreement side versus on the transactional, the margins can be extremely good. And now, then on the project type of work, we don't really kind of the profitabilities can vary quite a lot. Is it more like a new equipment type of margins, more like a service type of margin? So you probably won't give any numbers, but any t alk on, yeah. No, let's say, you're fully right, Antti. There is a hierarchy in margins also within service. So mix within service, yeah, has an impact on the whole, let's say, overall service margin, yeah, quarter on quarter, basically. Although, let's say, if you look long-term, it's a rather stable development. Of course, if the retrofits, which are not as profitable as, let's say, spare parts, that I can say, but more profitable than new build, typically. Yeah, if they suddenly ramp up significantly, yeah, that has a mixed impact within the service revenue streams. That's a fully correct assumption. Okay. And then the last one for me is the working capital side, and if you could walk us through what will normalize going into 2025 and 2026 on the working capital elements, which is on a very extraordinary levels at this point of time? Yeah, that's a good question, and I can say, predicting working capital is one of the most difficult things. Let's say, of course, it relates to cash flow as well. We have been doing a lot of good things, let's say, in the past years, I would say, with working capital. Let's say the way we deal with receivables, let's say, of course, let's say, inventory optimization. If you now have, let's say, one factory less, we can everything, let's say in one place instead of having it in two places. Much more flexibility within the production. Suppliers being, let's say, very close to our STH as well. There are lots of things happening over the past years that really support, let's say, us having a much better working capital level than what we used to have. Not to forget that, let's say, we are also have been spending quite a lot of effort with sales people, basically, to educate them on the importance of payment terms. You don't win always on payment terms, but I can clearly see and notice that also our sales force is much more aware of, let's say, cash flow and okay, getting the best cash flow out of a project, basically. Instead of just having a down payment and a milestone payment at delivery, we get more and more, let's say, also midterm delivery payments or even more than one. There are lots of actions that have resulted in where we are. At some point of time, if you have, let's say, very good down payments, which we clearly have, at some point of time, you need to, yeah, buy the equipment to build the installation. So that's why I say, okay, we have been probably a little bit now too much benefiting from all these good advances. Of course, on top of, let's say, all the other good actions that we have done. And that's why I'm a little bit skeptical that, let's say, this will not last forever as a negative working capital. It's not normal. If you look long-term history, let's say, over the past, yeah, I would say 10 years or so, I think our working capital to sales ratio has been about 80%. If you look at the quarterly graph, I think on a five-year horizon, it's about just below four, if I remember right. Now we are negative. I would say that the new normal is probably not, let's say, back to the eight, the long-term average. I think the new normal is probably between zero and the, call it, five-year average. I would say that's probably where normal would be, well, in my view. But let's say in working capital, as I'm sure you understand, there are so many moving parts. We have so many businesses and so many moving parts. It's not that easy to exactly say when this will exactly happen. But, I mean, you're not exactly guiding weakening demand. And as long as the demand is good, you will get orders, and you will get an advance payments and your book-to-bill will be above 1x, so. Fully correct. And then also the fact that, let's say, service is growing, which is transactional, and that converts much faster from, let's say, contract to order basically, and delivery and cash in. That also clearly supports. So there are many elements that work in our favor at the moment. Okay. But, negative, I still claim is not normal. It will not probably go positive this year, but next year I would expect it to happen. Makes sense. Thanks so much. Thank you, Panu. Now, I do not see any. Oh, yes, we have. So Panu Laitimäki, please go ahead. Yes, thank you. Maybe not related to Q3, but I mean, we have seen that new cruise ships are being ordered, and they are bigger than they used to be. So I assume they need bigger engines or more of them. So what would be kind of the value of a potential order for you currently from a cruise ship, and how does that compare to what it was like five years ago? It's typically not bigger engines. I think the biggest engines are already in there. It's typically more engines, and it's gen sets. So basically, you drive a generator for the whole electricity on board a vessel. From a value point of view, it can go up even to, let's say, EUR 30 million - EUR 40 million, I believe. And I think there is a slide actually in our roadshow deck that has a bit of indication of, let's say, what we could score per vessel type. Okay, thank you. Thank you. The next question comes from Mikael Doepel. Please go ahead. By the way, regarding Arjen's comment about our roadshow material, so as a reminder, our roadshow material, it's always on the cover page for investor relations, and there on slide number 34, you can see the typical Wärtsilä marine ordering per vessel, so please take a look at that slide. But sorry, Michael, now your time. Yeah, no worries. Just wanted to ask a couple of questions on the marine service business. So you talked about the retrofits, that's being a very strong demand right now, and also looking forward, you expect that to continue. But how would you describe the demand situation across the other, I mean, let's call it, segments within service, transactional and so on? Is that very strong as well, or how would you describe the situation there by segment, anyway? I would actually say that all segments. I cannot just out of my sleeve even recall a segment that is not doing so well, actually. Actually, all segments are trading quite nicely. Let's say, if you look also at scrapping rates, they are very low, so that means that vessels are sailing, and vessels are sailing is running hours and running hours of service business. So, okay, it used to be offshore, typically, that was low, but most of the offshore vessels have been reactivated, so that's also good. So I would not immediately say any segment is in a really down situation, so to say. Right. And then the second question there, just thinking about your service business, and I was thinking about the two-stroke engines. How big part of your overall service business in marine does that represent today? We have not, let's say, opened it up, but it's a well-contributing portion. But it's not the majority, that is clear. Okay, probably-- The clear majority comes from, let's say, yeah, Wärtsilä four-stroke engine propulsion, et cetera. Okay, okay. But still, it could be about-- Yeah, but it, it's a very nice, let's say, contributor. Definitely. Okay, good. Very, very good. Thank you. Thank you. The next question comes from Johan Eliason. Yeah, hi again. Just curious about the M&A, not your divestments, but how would you characterize the M&A market right now, also from a buyer's point of view? I mean, are you interested in buying something? We know Volkswagen has been. MAN Diesel has been talked about historically, but and would you say that the prices are okay now, or high or low, or any input would be appreciated? Let's say, if you look at our strategy, decarbonization and moving up the service value ladder and being, let's say, front runner, thought leader, et cetera, in this whole journey, and the go-to party for customers, I believe we have what it takes. I don't think we miss any real big item or competence or, yeah, we don't miss that. I think we can do this journey. Of course, we might do bolt-ons, let's say, on a specific competence or something new, let's say, coming to market or. But I would say that these are small bolt-ons. I don't see any, let's say, big things like, let's say, several hundred thousand euro in an acquisition. EUR 100 million, sorry, in an acquisition. MAN, we have always been open about that. Let's say, for sure, if it comes to market, it's an interesting thing to look into, not at any price. And then, okay, Volkswagen has said that until 2024, they will own it, and then, okay, now it's 2024. There is some noise in Volkswagen, as I'm sure you have heard. Will this open the door? Difficult to say. We are, of course, trying also to, let's say, put our eyes and ears out in the market, what's happening. Yeah, it's, how would I say? It's, there is noise in the Volkswagen Group, but let's say there is no clear, let's say, path for MAN, at least not that we know of. But for sure, if it comes to market, we will look at it. I think Wärtsilä as a company cannot say, "Okay, we won't look at this." This is still an interesting thing to check. Again, not at any price, but interesting to look, and we will look. Okay. Thank you. Thank you. The next question comes from Monika Goel. Please go ahead, Monica. Hi. So I have two questions. One is going back to the equipment revenue. As you know, like, there was some recovery in the second quarter, and if you look at the split, marine equipment was good, like really much better than the energy equipment. How is the environment now, and what can we think of, say, the next, the second half or going into 2025? I think it's very difficult to, let's say, put them in one basket, equipment deliveries. Let's say marine equipment deliveries, net sales, and energy net sales are completely two different things. In energy, we have many projects that work with percentage of completion, so it's not really the physical delivery. Of course, physical delivery is also part of it, but. But there is a different methodology, where in marine, basically, I would say almost everything on the equipment side, if not all. I cannot even recall one project that is percentage of completion on the marine side. So that's all completed contract method, actually. So I think they are not comparable. If you ask me about, let's say, "Okay, how does it look?" Yes, we are steadily delivering our order book out, and we are delivering on time, so we are not late with our deliveries, and that's all the guidance I will give. Great. Thank you. And then the second question is more on, again, kind of a little bit on a tricky, like a, a nitty-gritty bit on this. The adjustments that we do, or you do to get to the adjusted EBITDA, the items affecting comparability, have been quite low in the first half, and there have been, of course, quite a range of things that happened in 2022. And then, I mean, it's quite bumpy. Is there any color? Like, there's a line item within that items affecting comparability, other costs, which is we don't have much visibility on what goes into other costs. But is there any color that you could provide, kind of what to expect for second half? Could there be some numbers there or like, I'm just trying to kind of tie where the consensus is and what, what is there in this items affecting comparability for second half? Of course, historically, let's say a lot of big things have happened here. For example, the exit from Russia. T he closure of Trieste. And of course, those costs, let's say, develop over time. I think these are really, let's say, extraordinary items. There are, of course, also, let's say, smaller sized items, like reorganizations and stuff like that, that we also typically, let's say, put there. If you ask me about, let's say, the coming, let's say over the second half of the year, I would not expect, let's say, big amount changes. There will be something, but no, no big items, at least I don't anticipate. Got it. Thank you. Thank you. And regarding the items affecting comparability, if you take the page number 23 in our half-year report, so in there you can see a little bit more details for those, especially for the comparison period. So actually, the impairment and write-downs were quite significant during the first half of last year. Yeah. So my recommendation is to take a look at that page. Will do that. Yeah. Thank you. Thank you. Thank you. The next question comes from Antti Kansanen. Yeah, thanks. I wanted to follow up on the storage side, and you mentioned that you've been a bit more selective, and that your track record and execution has been best in the industry. So why isn't that leading to, let's say, market share gain or stronger market position, in a sense that have the competitors kind of executed as good, but their pricing just has been more competitive? Why isn't that good track record kind of bringing more business into it? And what are actually the choices that you have made? Are they industry, geographical? What type of a selection are you doing in that business? No, I would say geography, I would say it's U.S., Australia, Europe, I would say dominantly. Of course also some, let's say, parts of Asia, also in the Caribbean, certain islands that also, let's say, have ongoing projects or prospects, actually. As I said, we have been selective. Let's say we want to make sure that, let's say, when we take an order, we can deliver that order without any problems and any issues, and so far, that is a really good track record. We have no fire incidents. We have no breakdowns. So we're really doing well, and that is also well-recognized. Of course, we could also take a lot more. If you drop the price, you can get a lot more orders. But we are not, let's say, very keen on competing with, let's say, Tier 2 and Tier 3 suppliers, because what do you gain? You gain nothing, actually. So we are very selective in what we take and what we not take, and I think that approach will continue going forward. And customers that have a high regard for, let's say, quality and uptime and also, of course, let's say, a good software, typically come to us. But, I mean, these are quite critical stuff that you are talking about, delays and fires and all of that, and the lost revenue for the client is quite substantial, so shouldn't this kind of a track record actually drive market share up? Yeah, but then, of course, it depends what the customer is willing to pay for. Let's say if you want a Wärtsilä solution, it's not as cheap as a solution from a Tier 2 or Tier 3. And then, of course, also what do you get through from an investment board point of view in your company? So yeah, it's not that simple. Let's say there are a lot of factors that, yeah, need to come together, basically. Okay, thanks. Thank you. The next question comes from Akash Gupta. Please, go ahead. Yes, hi, good afternoon, and thanks for your time. I have a question on demand, capacity situation in Marine. So again, demand in Marine is quite strong, and as you pointed out, that Clarksons is calling for even higher market, so, I think demand side, it is clear. But I'm wondering if you can talk about how does the supply situation look like, and do you have enough capacity to meet this demand? How easy or difficult it is to meet, and, what sort of flexibility do you have both on the manufacturing side and supply chain side that we should be aware of? Thank you. Good question, and let's, we are not, let's say, nervous about it. Let's put it that way. We have a new factory in Vaasa. I'm actually at it right now. Very flexible. We are running it at about, what is it? 70%-75% of technical capacity, so there is room to improve and to expand. I also believe that, and this is also based on, let's say, the, let's say, Roger Holm, let's say, heading our marine division, which also includes, of course, the whole capacity of the factories, has been saying that, the good thing is that, let's say, there is time to adjust. Let's say if you book orders now, let's say it's not that you need to deliver them, let's say, the next quarter. Typically you can plan forward, and that's also what we, on a very regular basis, do with our supply chain, that we have a sales and operations planning meeting internally, what do we foresee? And then actually we involve also, let's say, critical suppliers in the same exercise, so to say. So they are also quite well in advance informed about, let's say, what do we see on the demand side, so that they can also have or that they also have time to adjust. So far we don't see any problems with that. And maybe a follow-up to that, same goes to labor as well. Like, so let's say if you have to add additional shift, you don't see problems in hiring people, to e xpand production? No, no. I don't see any problems there. Thank you. We can clearly expand shifts as well. No, no issue with that. The bottleneck in the factory typically is the testing capacity. So how quick can you go through, let's say, testing? It's not the people. Thank you, Arjen. Then we have received one question by email. "Can you please comment on your exposure to the U.S. port strikes? How does this impact your business if it lasts a week? How about two? Yeah, it's a good question, and difficult to answer. Of course, we will have some effect of it, through, let's say the--i n particular, I would say on the service business that we need to execute in the U.S. Deliveries, let's say, of equipment to the U.S., I'm not seeing immediate, let's say, impact. Of course, the longer it takes, the more severe it gets, so difficult to put a number to it. At least so far, if it lasts a week, I would say yes, it's a bit itchy. I'm not sure if it's a good word, but, nothing dramatic at least so far. But of course, we keep our eyes and ears open on it as well. Thank you, Arjen. Now I do not see any thumbs up, or there are no questions by email, so in the case somebody has a question, please use raise your hand functionality or send me an email. Erkki Vesola, please go ahead. Thank you. Coming back to the capacity situation, is it so, as a general rule of thumb, that it's never up to Wärtsilä's delivery capacity? That's not the bottleneck, so it's always up to the shipyard capacity when it comes to lead times the customers demand? No, I think it can be many. Of many. Of course, if yard expansion would happen suddenly, or let's say if our market share in auxiliary engines would go from, let's say, 12%-13% suddenly to 50%, you have a lot more load in your factory. That has nothing to do with yard capacity. It's more that you gain market share. So I think it's difficult to give an answer. Also, good to remember that, let's say, our engine factory is not just making marine engines. We are making marine and energy engines in the mix, basically. So I would not say that's correct, actually. I'd say it's not the yard capacity that is per se the limiting factor. It can be us as well, and the supply chain as well. But that's why you do an, let's say, a thorough S&OP planning. But currently, as you indicate, you don't see your capacity in t he bottleneck. No, at the moment, we don't, and not in the near future, I don't see any problems with capacity. Okay, very good. Thank you. Thank you. Then, next question comes from Johan Eliason. Please go ahead. Yeah, just nitty-gritty on the storage business again. Have you communicated the book value? And, I mean, it's now I think you've said it's sort of there's no real assets. It's a business that's been assembled by subcontractors, and then you do the installations. So I guess, and it's a project business, so net working capital should probably sort of run at a very low level. But you capitalize R&D. Is that sort of the main item on the balance sheet really for the storage business? That is clearly a key item, correct? Yeah. Yeah. Okay, thanks. Yeah. Thank you. The next question comes from Sebastian Kuenne. Please go ahead. Thank you for taking my question. Can you hear me? Yes. Yes, we can hear you. Yeah, I have one question on the carbon capture. So there are now more projects coming up also for onshore carbon capture. There was something in the news for the U.K. for two large projects and a GBP 22 billion subsidy from the government. I was wondering if Wärtsilä is also tendering for carbon capture outside the shipping field and also onshore. And related to that, maybe you can give us a brief update on what the demand currently is for carbon capture in the testing phase. Thank you. The first part of your question, the answer is no, we are not offering for land-based installations. Actually, let's say our carbon capture commercial launch will only be next year. Let's say we are now currently, let's say, selling pilot installations. Some of them have been announced, I think. So to learn, that's typically what you do in a pilot installation. Anticipation is that, let's say, commercial launch will happen next year. So let's say on current orders, we are not, not active. And land-based, not. Yeah. We are specializing on the marine industry. Thank you. And then a question on the engine ratio, let's say, for your sales. I guess you still sell, you know, simple mono fuel or, you know, marine gas oil engines into the market. But clearly the trend goes towards multi-fuel, you know, even ammonia, methanol, and so on. Can you give us an idea of what the current ratio is, and whether you can ask for a price premium for these more modern, sophisticated technology leading engines? Thank you. Of course, if you're unique in your offering, you can get clearly, let's say, a better price, and that's of course what we will utilize as well, and we are utilizing already. Let's say on the fuel journey, engines that we deliver to the market are dual fuel. If you look at alternative fuels, I would say the main one is still LNG. Okay, now I take alternative fuels definition as also Clarkson is using it, that includes LNG. That's clearly, let's say, the main one. Then I would say methanol is the second one. But let's say if you take ammonia, for example, we just launched in April, or sorry, in August, and that's also published the first pilot installation for ammonia with Eidesvik in Norway. That's really in the, you could say, infancy side. In order for these new fuels to, let's say, really, grow very fast, you need an ecosystem development as well. This will not be something of, let's say, a few months or a few quarters. This will be a decade, I would say, at least before this really starts to ramp up. But would it-- But it all start with technology providers like Wärtsilä. Let's say if the, if there is no technology providers like Wärtsilä that says, "Okay, these fuels can run in our engines," there is no fuel producer that says, "Okay, now I'm going to scale these marine fuels," and there will not be any, let's say, port that says, "Okay, I will make sure that there is bunkering facility for this." It starts with the technology providers. We have been doing this now for basically all the fuels that you can think of. The only ones that are still pending, I would say, is ammonia. Okay, now we have launched the first pilot, and then the next is hydrogen. But with time, those will come as well. But aren't you a little bit independent of whether the infrastructure does exist? Because your clients can put on their books, "Oh, I got an amazing methanol engine from Wärtsilä. I'm green now. I know that there's no infrastructure in the port, but as a ship owner, I did my part in the green transition. Whether the ports follow or not, is a secondary question. And I have to use marine gas oil, although the engine could run on methanol, but I want to push that agenda forward, therefore, I invest in new ships with new engines. So it could be kind of an independent, let's say, adoption of the market, right? Yes, sure. And of course, let's say, CII rating and regulations, et cetera, let's say the enablement also helps. And there are for sure also customers, I cannot mention names that, yeah, do this also from a marketing perspective. Yeah. Those are typically the forward-leaning ones. I would still claim that the marine industry in general is a very conservative market. They are really thinking, "Okay, what's in it for me? Yeah. There are always exceptions, and there are front runners, and Eidesvik as an example, where we now sold the first ammonia pilot, is clearly, let's say, a front runner. Has been a front runner in the past as well. I know it very well. So yeah, that's always the case. Yes, it can be from a marketing perspective very appealing, and also from a financing perspective. Understood. Thank you very much. Thank you. The next question comes from Mikael Döpel. Please go ahead. Yes. Just coming briefly back to the commentary around margins, and I'm sorry if you already answered this, because my line was cracking when you did that. So just wanted to be clear there on what you said about the H2. So if I understand you correctly, what you're saying is that the margin will be lower for H2 compared to H1, but in absolute terms, revenues and earnings could actually be higher. But is this all kind of tilted to Q4, the weaker margins? So could actually Q3 be in line with Q2, and then the weakness comes in Q4 when you have a lot of deliveries, for example, of storage or anything else? What did you really say about that? Because I didn't really catch it. Sorry about that. It's exactly as you say, but we will not specify which quarter. It's in the second half. We made the comment on the second half. Right. Okay. And yeah, right. Everything else, what I said, stands? Correct. Very good. Thank you very much. Thank you. Then, next question comes from Robin Fiedler. Please go ahead. Hi. Thank you. Just a question on energy storage. So I do understand the strategy of not wanting to compete with the lower priced Chinese, but curious how you guys are faring against other Western integrators, like Tesla and Fluence, who are growing shipping volumes, you know, well above 50%. Is that a level that we can expect out of you guys, or maybe just talk about competition against those players? Thanks. No, let's say we are, of course, always competing with those, I would say, classical ones, which are also well reputable. I would call them also, let's say, Tier 1 suppliers, like batteries, and sometimes you win and sometimes you lose. And if you take a competitor like Tesla, it's a bit unpredictable as well. Let's say if Elon Musk wants to have an order, he takes the order. Maybe just to follow up, I mean, in thinking through your answer to a question earlier in the call, but it kind of sounds like Wärtsilä might be losing some share in storage, but Marine Services continues to do really well. So is it fair to assume that maybe group margins might actually be coming out a bit better than you expected a few months ago, just on that mix alone? No, I will not comment on margin outlook. Sorry. No problem. Thanks. So then I have received one more question by email. So, "Can you comment on activity levels in tankers, on equipment and service? Activity levels in tankers? Okay, not specifically. Tankers is typically, let's say, two-stroke engines, and tankers we have, let's say, auxiliary engines, but not that many. I've not heard, like I said earlier, that, let's say, the tanker segment is really down. I don't think so. I think the ships are sailing. There is little scrapping, but it goes all through all segments. That's all I can say out of my head, actually. Thank you, Arjen. Then I think, Sebastian, I'm not sure whether this all comes for you, or do you have a follow-up question? Things like that. Now, how about Robin? Do you have a follow-up question, or was this... Is this your only time, so to say? Sorry, I didn't lower it. Okay, no worries. So actually, time is running, so we have used already this one hour. So thank you, Arjen. Thank you for all of the good questions. Thank you. Thank you Thank you very much, and thanks for good questions. Bye-bye. Bye.