Wärtsilä Oyj Abp (WRT1V) Earnings Call Transcript & Summary

Everybody, and welcome to this news conference for Wärtsilä Results 2023. My name is Hanna-Maria Heikkinen, and I'm in charge of Investor Relations. Today, our CEO, Håkan Agnevall, will start with the group highlights, business performance. And after that, our CFO, Arjen Berends, will continue with the key financials. After the presentation, there is a possibility to ask questions. Please, Håkan, time to start.

Yes. Thank you, Hanna-Maria, and a warm welcome to today's session. Focusing on 2023, it was a good step in the right direction for Wärtsilä. We improved in many areas, and we managed to have all-time high order intake, net sales, and cash flow. And we are improving our profitability. We have a clear path to our 12% operating margin target, but more about that. So order intake, all-time high at over EUR 7 billion. Net sales at all-time high at over EUR 6 billion. And we continue to see the good progress on the service business, where the service order intake increased by 15% and the net sales on services by 13%. Comparable operating results increased by 53%. So we are on our journey and cash flow, you will see Arjen smiling more than usual today. We had a fantastic cash flow with EUR 822 million. So let's look at the summary of the numbers and let's make some comments first now zooming in a little bit on the quarter and then also some summaries on the full year. So if we look on the quarter, order intake up 13%. And it's both in services and equipment. You see that equipment is up 16%. And yes, energy power plants, they had a stronger order intake in the second half of the year compared to the first half of the year. We had a really strong run towards the very end of the year on the energy power plant side. Order book continues to develop positively. We will have a stronger order book going into 2024 compared to going into 2023. And the book-to-bill continues to be above 1 -- 1.13. And now it's the 11th consecutive quarter that we have actually had a book-to-bill above 1. Net sales is down 7% and you see services continue to go up, but it's the equipment side that is down. We will see more about that later on. Operating results up quite significantly and comparable operating results at 10.8%. Going back then to the full year. We talked EUR 7 billion. Order intake up 16% for the full year. Net sales at 6%, up 3% and the operating -- comparable operating result landing at EUR 497 million, 8.3%. So it's a step to the 12% still, but we are on our journey. If we look at the marine market, the market sentiments remain positively for our key segments. And in general, the appetite for new ships has increased. So the number of vessels ordered in the period increased to 1,977. That's compared to 1,538 in the comparison period, so to say. So going in the right way. The uptake of alternative fuels remain more limited. So the share was down from 30% to 23% but that's more driven by the mix of vessels that was awarded. There was more bulkers and tankers and less LNG. So it's not a -- the trend is still very strong. We'll talk more about that later on the decarbonization journey in Marine. There is a growing pressure to decarbonize. And we can clearly see that it supports the demand both for newbuild and services, across the Wärtsilä key segments. And decarbonization investments have been made in additional fleet capacity, in direct fleet replacements, efficiency upgrades, fuel conversions, and also in maintenance activities to keep the existing fleet compliant and competitive. Also interesting trend is that the yard capacity, especially in China and South Korea continues to increase. And that helps to remove constraints from newbuild ordering across vessel segments as slots become available. And also, we see a deacceleration of the price increases, basically. If we look on the energy side, we see solid long-term opportunities in the energy market. And the energy transition outlook is improving amid a fragile global economy. Our market share remained stable at 13%. And as global orders for natural gas and liquid-fuelled power plants decreased by 22% to 10 gigawatt during the 12-month period. And this -- and you know this is a project business. It can swing quite significantly. It's going to -- we see a positive demand situation going forward. Price volatility, inflation, and interest rates have moderated. Global natural gas prices have decreased from previous year's extreme levels, but they are still above the pre-2021 levels. On the policy side, energy and climate policies around the world continue to evolve towards decarbonization targets. And the mid-term energy transition looks strong. Climate policies reached new milestones in Q4 when 120 countries pledged to triple renewable energy capacity by 2030, and at COP28, and which really supports the need for balancing power. And I think the decisions, the commitments that was -- were made during COP28, they are clearly in line with Wärtsilä's net zero strategy and front-loading net zero. The coal phase-out is progressing. And since 2018, the installed coal capacity outside of China has decreased by almost 40 gigawatts. Organic order intake increased by 21%. So if you look at -- from an organic perspective, it really increased even more. We had FX effects. So if you take that into consideration, order intake growth of 13%, equipment order intake increased by 16%, and service order intake increased by 11%. We have a strong order book and rolling book-to-bill continues to trend up. The order book for the year 2024 is certainly higher than 2023. So it is a positive development. Organic net sales decreased by 3%. So net sales decreased by 7%. Equipment net sales decreased by 19%. Service net sales increased by 8%. Profitability continues to improve. And when net sales decreased by 7%, our comparable operating results increased by 90%. If we look at technology and partnership highlights, it's all about enabling the industry decarbonization. One interesting example here is how we continue to evolve our product portfolio. And we enable the acceleration of marine's transition to sustainable fuels with the introduction of 4 methanol engines. So we are broadening our portfolio. So we will introduce 4 new methanol engines to our portfolio, setting a new industry benchmark with the broadest methanol engine portfolio currently available in the market. So in addition to our Wärtsilä 32 methanol engine launched last year, we will add the Wärtsilä 20, the Wärtsilä 31, the 46F and the 46TS to our portfolio of engines enable to operate on methanol fuels. And we are clearly one of the very few players in the marine engine market with extensive experience for -- of methanol engines. And these 4 new engine types that will be available, they will be available for deliveries at different points from 2025 onwards. Now on storage, we continue to grow, and we continue to invest in new technology to fuel the growth. So we have launched the Quantum High Energy storage systems with advanced safety features, and we're also increasing the energy density. As you know, one of the key differentiator for the Wärtsilä storage system is around thermal stability and fire safety. We have launched our Quantum High Energy, a next-generation of energy storage systems with advanced safety features and enhancing energy density, furthering also our industry-leading track record on commitments to safety. And there are new QuantumHE is compatible with GEMS, with the Digital Energy Management Platform, which is a cutting-edge tool to monitor and control and optimize energy assets, both on-site and on portfolio level. We are the third largest energy storage system integrator, according to S&P Global, with 7.5 gigawatt hours of energy storage capacity awarded, contracted, or in deployment. Now let's look at how the different businesses have been performing, and we start with Marine Power. So we have seen a good development in order intake and net sales. So both equipment and service net sales increased. And please note that the comparable operating margin declined due to a less favorable mix between equipment and services. We've been growing both services and equipment, but equipment has been growing more, and that has this mix effect. So we can see order intake up 13%, net sales up 17%. And if we look at the comparable operating results, services, good performance in services has really supported the improvement in operating results, but we have also increased our R&D costs. I mean, from 3% to 4% of net sales for the group level. And here, it is affecting, of course, Marine Power. If we look on the services side, we see a good -- if continued good development on Marine Power service agreements. And the net sales on agreement installation is all-time high. And you can see here, we continue the growth. So services is more than 60% of Marine Power sales. And so for 29%, about that -- about 30% of our engine installed base is covered. So there are ample growth opportunities. And I think the strong proof points that we are adding value is the renewal rates for our service agreements, because it's around 90%. For me, that is the ultimate proof that we -- customers see and feel that we are adding value, and that's why they keep on renewing. Really excited about this milestone, you could say in Wärtsilä's history, of engine development. It is -- and we clearly continue to set the pace for marine decarbonization with the launch of the world's first 4-stroke engine-based ammonia solution. So it's not only the engine, it's the fuel handling, it's the after-treatment system, so it's a whole system. So we are introducing the marine sector's first commercially available 4-stroke engine based on ammonia as a fuel. And it's now part available on the Wärtsilä 25 engine platform. It enables a significant advance in sustainable shipping operation during a time when shipowners are really seeking the viable options among the green fuels. So the solution, it includes the AmmoniaPac fuel gas supply system. It's also the Wärtsilä Ammonia Release Mitigation System and also the NOx Reducer, and of course, combined with engine. And we have our first intent to customer -- we signed a letter of intent with Viridis Bulk Carriers. And they're going to be the world's first zero emission shipping company. And it is intended to be the first shipowner that benefit from the new ammonia solution. So going over to Marine Systems. Equipment order intake increased. That's a positive one. But equipment net sales decreased, and we also have one challenging projects in gas solutions to deal with. So order intake up with 5%. Net sales down 46%. Scrubbers, gas solutions, a bit of cyclicality. If we look at comparable operating results, it's clearly diminishing lower net sales, but the significant negative impact is this EUR 19 million provisions for a single sizable turnkey project in gas solutions that we have to make in Q4. And it's the same project that we also made a sizable provision for in Q2. So we have made 2 provisions, Q2 and Q4. The good story -- a good part of the story, this project is now coming to an end. And yes, painful as it is, we move on. Energy. Energy comparable operating results at a record high. So Energy really making a strong comeback. Order intake up 34%. Net sales down 16%. And if you look at the profitability, you could see that it's really good performance in services. Now when we compare to Q4 last year, you remember that we had to take a provision for the Olkiluoto 1 and 2 projects, EUR 40 million. That was a project that we captured in 2013. It's an old legacy project. It's now stabilized. But of course, it makes the comparison a bit special. We also, in Q4 last year, I mean, Q4 2022, we still were heavily affected by a portfolio impacted by cost inflation. But we can see Energy is on the right path and clearly stepping up in profitability, also moving into 2024 with a project portfolio with 80% EEQ instead of EPC. And that is basically a doubling of the share since -- when we went into 2023. So Energy on a good roll. On energy storage, the comparable operating result is positive and the margin is positive, and profitability is improving. The strategic review that we communicated at the end of last year, we continue it. Nothing new to report. It goes on. And -- but I would say the demand side here is evolving in a positive way, and storage is doing a great job. If we look at Energy services, we also see here about 30% of our installed base. We have under agreements, and we are growing it and there is significantly additional growth potential. Wärtsilä, this is one of many examples. But this is really core of agreement business, what it's about. So we secured a 12-year agreement extension with a power plant operation in Pakistan. So it's the operations and maintenance team. They signed the agreement with Sindh Nooriabad Power Company in Pakistan, which is an independent power producer, and where they have extended this service contract for another 12 years. We started the agreements in 2017 and I think the extension and also the length of extension extend -- reflects SNPC satisfaction with the services we are providing, the value that we can create. So the agreement covers 2, SNPC 1 and 2 power plants located in the Sindh Province. And it's 5, that's Wärtsilä 34SG engines and 1 steam turbine generator. And basically, the combined output of this plant is 100 megawatt. The order was booked in Wärtsilä in Q4. And we have many of these, so to say, type of orders, and it's really driving our agreements business. Now to sum it all up, here's the bridge from, you could say, Q4 2022 to Q4 2023 from the 5.3% to 10.8%. So an increase by 90%. I think what is also very interesting, look at Marine Power, 11.9%. Look at Energy, 12.4%. We are on a solid path to 12% for the whole group. Now Arjen, please, other financials.

Can I have the clicker. All right, other financials. After almost crying in 2022 about the operating cash flow being negative, now I can really smile. Let's say, EUR 822 million operating cash flow for the year is an all-time high record. Håkan mentioned it already. And as you can see from these numbers, in particular, then the quarter number, a big portion of it came actually in Q4. And if you go deeper in Q4, actually, it was a lot actually in December, to be very frank. We got a lot of milestone payments as well as advances from actually customers that we actually anticipate in this year, but actually came in 2023. That also had an impact on the working capital, which is also now lending, let's say, on a negative number, which is, in a way, you could say, a bit of extraordinary. Good cash flow supported, let's say, also our net debt situation. We improved it to EUR 35 million. We paid back in the year about EUR 90 million on the loans, and our cash increased actually with about EUR 350 million. Good cash flow support, then, of course, also the gearing now standing at 0.02, and also solvency improving to 37%. Basic earnings per share, EUR 0.44 on the full year. Of course, a significant improvement compared to 2022. But it's good to remind that in 2022, it was, of course, heavily burdened by EUR 200 million provision for the Russia closure of activities and all the projects related to it as well as about EUR 90 million related to Trieste. If we look at the graphs, basically, it's the same story. We saw a very good trend line, the orange line on the left, on cash flow in 2023 after, let's say, a very declining trend line in 2022. If you look at the right side, let's say we see 2 bars with negative working capital, actually, the first one, minus EUR 100 million in 2021. That was actually the year that we had the previous operating cash flow record at EUR 731 million, and now we beat it with EUR 822 million. So really, the working capital is a big contributor to the improved cash flow besides, of course, also significantly improving on the profitability side. Final slide from my side, dividend. The Board proposes to the AGM EUR 0.32 of dividend, which is then very well in line with our financial target of paying at least 50% of EPS out as dividend. Over to you again, Håkan.

Thank you, Arjen. So if we look at the prospects, so we guide on the demand environment for the next 12 months. And we guide for Marine, it's going to be better than that of the comparison period. So it's an upgrade. And on the Energy side, we also guide that the demand environment will be better compared to the previous comparison period. So that sums up the presentation. And let's go into the -- and open up for the Q&A.

So handing over to the operator, please.

[Operator Instructions] The next question comes from Vivek Midha from Citi.

And I'd like to start on the marine demand outlook upgrade, if I may. Would you be able to comment as to which you expect to be growing faster over the next 12 months, equipment or service? And just could you help us understand how much of the upgrade is driven by better underlying demand from customers, for example, in cruise compared to easing of supply with better shipyard capacity?

So I don't think we go -- I understand your question, but we don't go into the specifics if service is going to grow faster than the newbuild. I would say -- and how much that are done. I would say both will be growing. And you could say that the growth is fueled by our core segments. So it's about cruise and ferry. It's about offshore and that's basically the focus. When it comes to the shipyard capacity, that is being expanded gradually. As you know, there is a long story of -- if you take the 10-, 15-year perspective, there was a lot of expansion, then there was construction. But now this contraction, I think the turning point was around 2020 and now slowly, but it is expanding. And that is easing the situation in general for many different segments, energy, carriers, containers, offshore, et cetera. And we do see that there was accelerating price increases when it comes to vessels. That is clearly leveling off, so to say. Arjen, do you have further comments?

No, I think you're right. Let's say it's growth in both areas. And coming back to the shipyard capacity, we have been talking about that a lot also in single individual, let's say, investor meetings. And the low point was 2020. And since then, let's say, basically, we see increases, in particular, in China, 8% to 10% increase according to, let's say, Clarkson and about 4% in Korea and Japan. And that is also needed because it's really needed also to facilitate the decarbonization of the whole marine industry. You need yard capacity to facilitate that. And I think also yards understand that need, and that's why it's increasing.

I fully agree. And I would say there is another dimension to your capacity. That is, of course, there is a new build piece to the equation, but there will also be a retrofit piece to the equation because we know -- I mean, if we look at the total fleet of certain tonnage, the bigger ships is about 100,000 vessels, maybe 50,000 needs to be upgrade -- or it makes financial sense to upgrade. That's something also that will require quite a lot of shipyard capacity if we take 10-, 15-year perspective.

That's great. And finally, just a quick follow-up from me. On the energy power plant business, where you've had a very strong end to the year. You highlighted the Indonesian power plant orders. Which other markets contributed to the order intake in the quarter?

So it's actually -- I mean, we highlighted Indonesia, but it's the Middle East. There are many to put it like that. Smaller orders in many different geographies. But you could say it's some of our core geographies in Southeast Asia, Middle East, also a little bit in Latin America. And also looking into 2024, we see a solid pipeline on the power plant side. There is a lot of activities in Americas, and that continues also to be activities in Indonesia and Southeast Asia.

The next question comes from Daniela Costa from Goldman Sachs.

I hope you can hear me and hope you're all well. My questions are -- my 1.5 question is regarding storage. First, I guess, just looking at the profitability, which you said about 1.9%, and it was negative still at the first half. So it looks like in the second half, you're doing sort of maybe mid-single digits. I know it's difficult depending on the volumes. But can you talk to whether you think sort of this is like steady state? What's the potential upside that we still have? How further away are we from covering fixed costs in storage? And then maybe an update on sort of what have you been doing in terms of the strategic review in the last 3 months to the extent that you can just give us some further color there? And if you have views on the time line on when this might finish.

So if I start from the -- with your second question, so the review is ongoing. I mean, we have engaged people. We are talking to different parties. I cannot go through the details. We still -- it's still the same message. We haven't communicated a clear deadline for the review, because we want to give us the opportunity to explore different avenues. I can also reiterate what we said. Triggering point. We reached EUR 1 billion. It's now in profit. It's a good time to take a step back, how do we continue to grow this business to support our customers, but also, of course, to create shareholder value. There are ample growth opportunities. And then as part of the review, we will look at different ownership alternatives. One alternative is clearly we keep storage as we have it today, and we continue to operate. But we will also look at alternatives, which means partial or full divestments. So it's the same scope. Then coming to how the business is developing operationally. I mean, step by step, we are taking it in the right direction. You've seen the volumes go up. And I would say that storage profitability is on a positive trajectory in general.

Yes. I would say so, let's say, there's clearly possibilities to further improve. And we are working hard on that, let's say, by different means.

And I would highlight one thing that, of course, we are proud about, that the team has done a great job. I think we have consistency in execution. That is the feedback that our customers are giving us in terms of being able to deliver with the right quality, on time, meet your expectations and also do that with the risk -- right risk reward balance in our project portfolio and consistency in the financial journey.

The next question comes from Akash Gupta from JPMorgan.

I have 2 as well. I'll ask one at a time. The first one is on storage, where I see your orders are kind of plateauing at around to 60-ish level average for the year. Maybe a question on why we are not seeing sequential growth here. Are there any internal factors such as constraint on sourcing of battery cells or labor or cost? Or there are external factors such as lower market activity or maybe some peers maybe a bit more aggressive than you. So maybe if you can elaborate. And just as a follow-up to that, with book-to-bill falling to 1.4x in 2023, shall we expect a more normal or more modest growth in 2024 in the range of maybe low teens?

So when we look at the order intake for storage, we need to acknowledge it's a project business. So it can vary quite a lot up and down. I think, as I said, there are ample growth opportunities. We focused on disciplined growth. As you know, we have a focused geographical strategy, U.S., Australia, U.K., and we continue to execute consistently along that. I don't see supply chain bottlenecks, so to say. I think the partnerships that we have with our supply chain is definitely supporting our continued growth. So it is about discipline, taking the right opportunities in the right markets and then make sure that we execute. And where we differentiate, we talked about it, if you -- when I talk to our customers, is our capability to execute consistently. It is our fire safety and thermal stability. I mean, we are taking new steps there in the next quantum generation that we are having. And it's also with GEMS, our capability to really integrate the battery storage with other generating assets. Like renewals but also with thermal generation. And we have a couple of examples with customers that they had tried storage, but they haven't got the full benefit and then they come to us and ask how we can help them, so to say.

I think we are confident about the growth. And I think that's clear. And also, the market is clearly supporting it. We have a good pipeline. But it is a project business, as Håkan says, and let's say, size is very different by project. And then also, let's say, timing is very difficult to exactly estimate when it will come, let's say, between, let's say, first negotiations and final contract it can sometimes be even, let's say, years in between. So exact momentum determines also very much, let's say, when orders are booked. But I think for us, we are confident in the growth. The market is supporting it and timing is then a bit difficult to estimate, but we will see growth going forward.

And my second question is on the recent a press news flow regarding methane emission in cruise ship powered by LNG. So I'm wondering if you can share your thoughts on this topic and there were some studies by ICCT that we're showing that cruise ship engines have an estimated mid-teens slip of 6.4% on average. And maybe if you can say how it compare in your study or in your engines? And finally, on the same topic, this methane slippage, is this some KPI or something as part of contracts? So like for example, if your engines are having more methane slippage, could this bring any consequences later on. I don't know if this is something you are promising in your order intake. So anything on that would be helpful.

So, I mean, methane slip should be taken very seriously, first of all. Secondly, there is a significant -- I mean, if you look at the Wärtsilä development over time, the methane slips have reduced significantly over time. And just the last year, we have taken further steps to even further reduce it. And there are independent studies, and we could share them with you and I think we should by reputable academic institutions, where basically shows that Wärtsilä is world leading in methane slip on 4-stroke. And we are now getting very close to 1 gram per kilowatt hour, which is basically outstanding. We will continue the journey. So when -- and it's good to have this focus on methane slip, but you need to look at the performance of the engines from different suppliers, and you also need to look at the vintage of the engines because a new LNG fuel engine is something completely different than an LNG engines maybe 10 years ago, so to say. When it comes to guarantees, et cetera. I think we are very confident on the type of performance guarantees that we are giving our customers. I mean, we are so confident that we also signed performance agreements on them. And so, I see that we have the risks clearly under control.

The next question comes from Max Yates from Morgan Stanley.

Could I just ask a quick question on the provisions. So the EUR 19 million that you've taken. There's a comment in the release that talks about the provisions being EUR 38 million -- sorry, EUR 48 million for the full year rather than EUR 38 million, which I would guess kind of you took one in Q2 that was EUR 19 million, another one this quarter that was EUR 19 million, so it should be EUR 38 million, not EUR 48 million. I'm just trying to understand what was the full year provision number for the projects in Gas Solutions.

It's a very good observation. So the overall provision is EUR 48 million for the full year. And you're fully correct that we did EUR 19 million in Q2 and EUR 19 million in Q4. So we have -- along the way, we have also done an additional EUR 10 million. So EUR 19 million plus EUR 19 million plus EUR 10 million, EUR 48 million. And EUR 19 million has not been material enough that we have disclosed this in our quarterly reporting. So that's why it's adding up to EUR 48 million.

The additional EUR 10 million, you mean.

Yes, the addition of EUR 10 million.

Correct.

So we have disclosed the EUR 19 million, EUR 19 million, not the EUR 10 million. But now we disclose everything. So that's the mathematics behind. And then also just to reiterate also some of the background. I mean, this is 1 singular project in Gas Solutions. It's an EPC project. We have stopped selling EPC in Gas Solutions since many, many years since, I think, 3 years now. And this project is coming to an end.

Okay. That's clear. Just the second question is around sort of what you're seeing on the lithium prices in your battery or your energy storage business. So I guess I just wanted to understand, when I look at your order intake, are you seeing any sizable sort of price decrease, because I imagine you will need to adjust your prices to reflect battery costs. So I'm just trying to understand, actually, when we look at your energy storage kind of order numbers, are we actually seeing volumes grow and prices down? Or -- and how should we think about that going forward?

No, prices are clearly down, because the lithium ion costs have been coming down. And I mean, after the dynamics that we had in the second -- I mean, first half of 2022, I mean, the general principle of having material indices are clearly established in the market. And I think you've also seen, Max that we delivered -- if you look full year, I think there is 4.5 gigawatt hours. And if you compare to the fee, and you see that the sales revenues are a little bit up. You clearly see the mathematics there that prices for a megawatt hour, gigawatt hours is going down. But it is related -- and that is related much of it to the raw material prices and indices that are passed through the system.

Okay. And just my final question -- sorry, I've got 2 really quick ones, hopefully. Just on your working capital to sales. Could you just give us an idea? Because I mean, obviously, negative working capital is not normal for a business like this. Could you give us just an idea of over the cycle, what do you think is the right working capital to sales for your business?

We are not guiding on working capital. But let's say, clearly, let's say, a negative, as I mentioned, is an extraordinary situation. We have the same extraordinary situation in 2021 at the year-end, which was the previous record on operating cash flow very much driven by, let's say, payments that we received in both years actually, which were actually expected, let's say, in the year after -- beginning of the year after. What is a normal level? I think, it's -- it would be pretty good to look at, let's say, the graph that we are producing every quarter on, let's say, what is an average level. And I think you can extract pretty much a range from there. I will not be guiding exactly on what is the right percentage or turnover days.

Okay. And maybe just a very quick final one on sort of components and what's happening in the Red Sea with obviously the disruption of the shipping. How should we think about that affecting your business? I remember when you had sort of quite a lot of component inflation, it was mostly actually because of your kind of European component suppliers. So I guess, firstly, kind of how much -- or what is the risk of actually components imported from China? Are there sort of quite a lot of those, if those are being disrupted. And are you seeing anything so far? And then secondly, thinking about sort of shipping the other way, are you -- what percentage of your sales is sort of seafreight and do you use that kind of Europe to Asia channel quite extensively. So any -- how to think about, that would be helpful.

So I mean, first of all, I mean, you're fully right that if you look on our supply chain, it is Euro centered with 1 exception, and that is, of course, the storage, but it's Euro centered. Then of course, on Tier 2 and Tier 3 level, they are sourcing from China, electronics. And I think we saw that, that impacted us to a certain extent when we had the previous disruption of supply chains. I mean, however, we haven't seen major impact so far. We follow the situation very closely. But no major impact so far, I would say.

I think, it's let's say, it's different dimensions to it as well. Let's say, of course, let's say, from a running hours point of view, if they have to go all around Africa, that's, of course, running hours relates to service business, so that's a positive one. But it's clearly, let's say, the risk is in the delivery times and potential delays that you run into, and that might impact. But so far, as Håkan says, we don't see any major financial impact.

The next question comes from Sven Weier from UBS.

Yes. It's Sven. A few questions from my side, if I may. The first one is a follow-up question on storage. I was just wondering, I mean, I understand there is no clear deadline from you on when you have to come up with an announcement here. But is it not fair to assume that if you go the disposal route for the business that you have to do it rather sooner than later with a view to the U.S. election risk? That's the first question.

No. I think we delineate the U.S. election from us, the [indiscernible] I don't think we will let that kind of macro event affect the time schedule.