Wärtsilä Oyj Abp ($WRT1V)

Good morning. Can you hear me?

Yes, we can hear you. So welcome to Wärtsila's CEO Strategy Call. I'm Hanna-Maria Heikkinen, and I'm in charge of Investor Relations. Today, our CEO, Hakan Agnevall, will discuss some of our key long-term opportunities. And after Hakan's key messages, there's a possibility to ask questions. As a reminder, we will host pre-silent call in 2 weeks on June 23, together with our CFO, Arjen Berends. So let's leave the questions related to recent trading and detailed financials to that call. [Operator Instructions] Hakan, please time to start.

Yes. In my time, it's good morning. I'm in the U.S. I can't tell you where because I might be doing data centers, as you know, they are secret. And as you see behind me, we go deep and we fly high. I mean this is from the big [ Technical Difficulty ] our recent safety initiative. We have that rolling all the time. And now we have a theme of data care, basically having the courage to tell your colleague that maybe you're doing something here that you should think more than twice before you do it. And of course, we have our underwater service business, as you can see behind us the divers there. And in diving, if you dive, you know the value check, and that's the analogy we use there. And then some of you are immediately thinking of diving, is that a profitable business? It is. If you combine it with engineering, it's profitable. So it's accretive to the EBIT margin of that segment. All right. Let's start like I normally do with a short summary on the state of the nation and the market, et cetera, from our perspective, and then let's move into the Q&A. And if we start on the demand side, I think we still see the consistency in the demand side. Strong demand, if we start on energy. Yes, we talk a lot about data centers. I'm sure you will have questions on that. It's still the same dynamic market, buoyant, but dynamic projects come and go depending on permitting and -- but we are well positioned. We will continue to grow. But our energy storage, as I highlighted before, it's not only about data centers. It's this broader narrative. I mean, general electrification, transport industry, air conditioning, we talk about that Southeast Asia, IEA, International Energy Agency, keep on referring to their report, they actually predict that air conditioning could be even bigger growth driver than data centers going forward. Let's see. But it's going to -- it's only a driver. Then we have the aging power generation infrastructure in the U.S. As you know, U.S. market was deregulated around 2000. And 26 years later, there is updates to be made, upgrades and replacements to be made. There's a bit of that in Europe as well. And then the balancing narrative, as you know, it's -- we advocated this for a long time. And now it really happens. I mean, as the share of renewables is growing, I would say, in most parts of the world, you need balancing to keep the system stable. And we continue to see strong demand for balancing power in the U.S., but also Australia. Australia is the recent example. I think I talked about that before. I was there a couple of weeks back. And Australia is moving away from coal gradually and putting in a lot of renewables, but they have clearly understood now the value of balancing, not only in batteries, it's one of our biggest battery storage market, but now also there are several tenders for thermal balancing with engines, it's engines RFP. They've seen the light. So that's on the energy side. So it's a broad growth narrative. On the marine, and as you know, we guided 12 months going forward better than the previous one. On the marine side, it's also a good demand situation. Our core segments, cruise, ferries holding up. Yes, cruise is filling up, so to say, the shipyards, but there are still orders awarded further out in the future. And it's not only that you see offshore coming back, a bit of awakening there. and LNG carriers probably come back, et cetera, et cetera. And then we have the decarb story, and that continues to play a role certainly as well. Yes, MEPC, the vote was postponed, but owners have a 30-year time horizon and fuel flexibility and fuel efficiency is certainly very high on the agenda. And we are the technology leader in that area. So it's generating growth. We have guided similar, but that -- I mean, on the demand side, but that is on a fairly high level. So for us, I would say it's rather positive. On the services side, we continue to move up the service value ladder. And you know the ladder from transactional spare part business, the different type of service agreements, retrofits and then the performance based, and we are moving customer up that service value ladder, and it's continuing to fuel our growth. I mean one area where clearly the MEPC and the vote has had an impact is on the retrofit business on the marine side. There, it's slowing down a bit. But the other disciplines of services in Marine is still growing. So that's the general outlook. Then what have we done lately? Well, you've seen that we concluded the divestments -- the 2 remaining divestments in our portfolio business, Water and Waste and Gas Solutions. So that's now closed. So now there are no additional assets in portfolio. I think we've divested 11 business units over 5, 6 years here. So that's ticking the box. Then what more have we done? We have, of course, announced our capacity expansion, our second -- our sequel, let's see if it's going to be like Star Wars. I don't know how many are there. But we take them one by one. And you could see it as a proof point of our confidence in the future market, so to say. We are now -- if you compare to the 2025 baseline, so to say, production capacity, by 2029, we will have expanded it with 120%, so to say. So it's quite a big step. And of course, it's not only about our own production facilities, but it's also ramping up the supply chain. But the team is on the board, and we are moving. And we are -- we are already sold out for '28 basic. I mean you're certainly looking at the lead time for 3 years if you want to contract with us. Another key point because I know that there is a lot, of course, and that is really exciting -- attention from the community on megawatts and order backlogs, et cetera, et cetera. I think our approach is that we announced firm orders. We are not selling slots. We don't work with slot compensation contrary to some of our competitors. And I know there are some institutes that are compiling statistics. And at least from what we see, they try to do a good job, but there's a bit of mix of firm orders and potential orders and frame agreements, et cetera, et cetera. On our side, we will try to be consistent, and that is we only announce firm orders. And sometimes, as you know, our customers won't even allow us to do that, so to say, but that's a different topic. Another important topic before I open up for Q&A is that we once again underline we have great order intake, but we are taking further and further out in the future. So when you look at the sales conversion and the conversion from order intake to sales, it's stretching longer and longer out in the future. I think that's a really key message. And as you know, in our quarterly reporting, we've been trying to give some additional data around that to really underline that. All right. That's my summary. So handing over you to Hanna.

Thank you, Hakan. So now we are ready to take questions. [Operator Instructions]

Everything is super clear. That's fantastic.

Tom Skogman, thank you for the help. Luckily, there are some questions coming. Please, Tom, go ahead.

This is Tom Skogman from DNB Carnegie. I was just wondering when you talk about this capacity addition, I know you have some other marine products. So I think it would just help us to do the modeling to know how large share of the marine equipment business is really engines because otherwise, we get fool here basically.

No, we don't want to fool you. Then, I'm not sure we are giving out either, so to say. So I mean, clearly, the capacity expansion that we are doing now, it's in STH in Vaasa 100% related to engines. And then the majority of that expansion is for energy, but not the only thing because, as you know, we can do both engines for marine and energy in STH in Vaasa. But Tom, to your point, we deliver other equipment as well. I mean, propulsion systems, gearboxes, et cetera, et cetera, for marine applications and after treatment systems, et cetera. But that is the clear minority of our sales, so to say. So the dominant portion is on the [ engine side ]. I don't know, Hanna, if we are giving what we have said in the past about the split.

Yes, we haven't disclosed the split. We have just communicated that engines are the biggest product of the new build in marine.

And it's also the area that is growing. We have growth in many areas actually, but engines is clearly the dominating growth driver right now.

And can you give your view on pros and cons with your engines and Jenbacher's engines, which are also gas...

Absolutely. I mean yes. So I have deepest respect. I think they've done a great job, and we all know the listing here. I think that's good. So there will be more comparables for us. Then, of course, our engines are a bit bigger. So we have an overlap somewhere in the 10-megawatt area. But when we go above 10, they are not there. So -- and I think they highlighted quite a lot the data center growth, which makes a lot of sense. I mean, 2 years ago, you know that Tom, we've been talking about that about 2 years ago, we were not in data centers because as we know, data centers were smaller and it was the off-grid, et cetera. I think in, they have been much longer a viable player in data centers than we have. So -- and if you look at some of the data, it's a significant portion. So I mean, they make good gas engines, so do we. Ours are a bit bigger. And as you know, the size of the data centers are growing, and we are talking about hundreds of megawatts. And I've been saying and I'm consistent with that, that the sweet spot is -- I mean, the market is moving into our sweet spot. So I think we will see some competition in the lower end of it. But as the data centers are growing, I think I'm smiling on behalf of us.

But perhaps a bit more on manufacturing footprint and sales is how it's organized and energy efficiency in engines?

So I think they have a different -- as far as I understand it, they have somewhat different sales models because they use a distributor or middleman in between at least for some of the business, you should ask them. But we only have a direct sales model, so to say. So there is a bit of a difference there. I mean, we are not shy on our fuel efficiency clearly. And for us, it's still about the total life cycle cost. So yes, that's basically -- manufacturing footprint, I think they are more diversified than we are. And they have announced scaling up as far as I know, and you know it better in various geographies. We focus a bit more in Vaasa, and that is because of the supply chain, and we talked about that. I mean many -- our machines are bigger. So they have somewhat different or quite a different supply chain. And that's why we are concentrating more to one place, so to say.

So them growing very quickly is not a problem in your own supply chain basically that you would share a lot of suppliers.

No, it's not a supply chain issue for us.

The next question comes from Sven Weier.

I'm sorry, I could only join a bit later because I had some teams issues. So apologies if you mentioned that already. The first question I had is just in terms of the capacity to follow-up. Maybe to ask Tom's question a little bit differently. I mean when you think about the total capacity increase that you put in now until 2029, I mean, do you allocate this equally between the 2 segments? Or are you going to allocate the vast majority of the capacity increase then to energy?

So I think the majority will go to energy. I don't know if [indiscernible] you heard it then. But if you look at our manufacturing system, it's rather flexible. We can do both -- manufacture both marine -- and we do. We manufacture both marine and energy engines in the same plant, so to say. So we have a big flexibility. But if you look on the growth and the capacity expansion, the clear majority will go to energy.

Because I remember in the past, you also said, of course, we need to do justice to the other energy applications. We need to do justice to marine. So I'd imagine if you now kind of sold out for 2028, that's because of energy. If you sold out for 2029, it's going to be of energy. I just wonder how much flexibility then you still have for any shorter lead time marine orders [indiscernible] some segments are still doing well.

Yes. No, no. So I mean what we -- when we talk about our kind of strategy for how we serve our customer and customer base. I've said it before, we're going to diversify. We will not put all our eggs in the data center basket, so to say, because we think long term, it's more viable. And I guess as an analyst, you would agree, it's good to diversify. So we will do that. So that also means that we have long-term strategic customers that we will continue to work with both on the marine and the conventional energy side, if I may say so. And of course, we will work with the data center customers. There is not one fixed formula. I mean this is -- of course, it's -- this is a leadership call how we allocate, but we're going to diversify. And we're not going to, all of a sudden, say to our core marine customers that engines are not available. However, with the dialogue that we are having and that we are having both with energy and marine customers that it is a very buoyant market, and it's -- the lead times for placing orders is stretching out. And you need to take that -- as a customer, you need to take that in consideration when you plan your projects. And then we suggest let's have an open dialogue because lead times are stretching out regardless of the industry. There is, of course, a spillover effect clearly.

The next question I had is just when you think about the market concerns about the engine makers in this whole data center topic, I think one of the things you regularly hear is that I think investors are afraid that when it comes to the outer years to 2029 and 2030, that the clients might reserve the place for turbines becoming available again or grid becoming available. And I think the narrative goes that the clients wouldn't place engine orders so far out because they would hope that something else becomes available again. Do you sense that...

Sorry, at least on my side, you're breaking up.

Can you hear me, Hakan?

I can hear you at least.

I don't know. Is it on my side or...

I can hear Sven. Maybe a little bit breaking.

I close my camera. So Sven, I heard part of what you said. So sorry, but if you can repeat the whole question again.

Of course. Of course, no problem. No, the question was when you talk about clients about deliveries more in the outer years '29, 2030. And the question is, do you see more reservation of clients to go with engines and kind of them banking the grid to become available again? Or do you say the same motivation clients going for engines also longer term?

Yes. So I also mentioned that before. I don't know if you're in the call, but we don't do slot reservations. We only do firm contracts. And I know it's a bit contrary to some of what competition is doing, but that's our business approach. So when we look '29, '30, we are talking about firm contracts. And I don't see -- I mean, as you kind of alluded to that because we know gas turbines will come into the market, I mean, I don't see our customers are going away from us to some of our gas turbine competition. Not so far, absolutely not. Because remember, it is this -- we talked about it before, when people try the new candy, they will like it. I mean the fuel efficiency is there. The flexibility is there. No need for water, don't derate at all. Those fundamentals, they are real. So -- and are we the best solution for all customers? No, obviously not, but we will grow.

Final question I had, if I may, is just on how you've seen the competitive environment evolving since you got the first order in July. I mean, have you seen -- I mean, obviously, we see also now the Asians, Weichai, Hyundai, a few others entering the scene. So that's part of the question. Have you seen this more engine competition in the meantime? And the second part of the question is, I mean, why are the clients still buying high-speed engines? I mean, somehow I don't get it because if your engines are much more powerful, you need less of them, you need less space. So I'm kind of struggling to understand why these operators place more than 1 gigawatt orders with much smaller engines than you do. It doesn't really -- I don't get it, to be honest.

No. No. I mean it's a very good question. But I will try to explain it. I mean your fundamental kind of reservation, I support it, as you know. But okay, I mean, right now, we don't -- there is so much demand for energy generation. And the key parameter is lead time. That's lead time. Number two is lead time. So if high-speed engines can deliver to a certain time schedule closer into the future, they absolutely -- they are selling. I mean, right now, if you're a little bit broad stroke, you could say if you can -- if you have some device that generates energy, you can sell it right now if you can deliver it on time. So that's the key focus. Now my proposition, which I'm fully aligned with you, Sven, is that gravity will still pull through after a while, i.e., fuel consumption, fuel efficiency, complexity, the flexibility, all those core values, it will pull through. But right now, it continues to be such a buoyant market that anybody can sell.

Thank you, Sven. Then I have received a couple of questions by e-mail. Can I ask how the content in euro per vessel or euro per megawatt varies for offshore versus other segments in Marine? If we see this segment picking up near term, will it be margin accretive for the group, so offshore versus other segments in Marine?

Yes. No. So first of all, offshore, what we see is on FSRUs and similar type of special vessels, so to say, because this is where we participate and generate engines. I mean we are not so much on oil tankers, et cetera, because, of course, there you use 2-stroke tankers instead. But this type of oil handling vessels, special vessels, I think we are seeing a bit of a pickup there. And in general, oil and gas, it's accretive to our margins.

Then a follow-up by another e-mail question. How much dilution we will see in power margins, meaning the Energy segment margins from the next few years being more equipment driven as data center aftermarket is only coming in 4 to 5 years?

Yes. So I mean the logic is right in the sense that both new build and services are growing now, but new build is growing faster than service. And as you point out, service, and we talked about that before, kicks in, in a meaningful way, 4 to 5 years later. We also underline that data centers is a really interesting service business because, of course, they run with high uptime reliability 24/7. Then we have not -- so you will have more new build, then services is growing. So there will be a bit of margin impact on that. Then on the other side, the margin in our order backlog for new build is also going up. So we are not guiding on the net effect, so to say. So there are some driving it down. The mix is one, but then you have increasing profit margin in our backlog. So that goes the other way.

Thank you, Hakan. Then...

I mean, just -- and overall, we are saying that you could say we are very close to reaching our financial targets of 14% for Marine and Energy combined, but we are confident that we will get there. And then we will have a discussion on what the next goals will be.

Then I see a couple of hands raised. Those are from people who have been calling by mobile in who has the phone number, which is ending by 1917. Please go ahead. So the whole number is +44-207-425-1917. I think it's Max Yates.

Can you hear me now?

Yes, we can hear you now.

Yes, we can hear you.

So look, I guess maybe the first thing, and I know we've talked a lot about the kind of different scope of orders. I guess maybe just hopefully a simple question. On your data center orders since you have started taking them, how is the pricing on a like-for-like basis of the data center orders? I assume they're not sort of totally different, but just trying to get a sense of how that pricing has evolved since you started winning those orders just qualitatively on the data center business.

I think in general, in these market situations, margins are going up. I've talked about it before. We have good opportunities for margin realization. Then of course, there is always another balancing effect that it needs to make sense for our customers in the business case. But yes, we have good opportunities for price realization.

Maybe just a sort of second question just around service contracts. So what is your latest thinking on kind of when -- if or when you would sign service contracts alongside these data center orders? Because my understanding is you sort of haven't really yet. And I was just wondering, is that just a timing effect? Is that because they plan to service these differently? Just how your thinking has evolved kind of relative to that -- on that point?

No, it's more of a timing effect. You will certainly most likely, very high likelihood see service contracts signed by us for data center this year.

Third one -- I'm sorry, I've just got 2 more sort of quick ones. So energy storage, you talked about kind of needing to win kind of orders relatively quickly. We read a lot about kind of the market in the U.S. being relatively buoyant, but just wanted to understand, I know your business has become increasingly skewed outside of the U.S. So how is that market evolving from your perspective?

We are still struggling from an order intake perspective, so to say. I do agree that especially on the data center side, there is a market there, and we are still looking into it. But I would say that we are still -- the challenges that we have talked about before about order intake remains.

And just maybe sort of last question. When -- obviously, you referenced in your Vaasa facility, we know you produce both the marine and the data center engines. Obviously, you've got some of your other competitors, Hyundai, who are moving into the data center space. I guess what would your view be on the thesis that because demand for these engines, it's driving up capitalization for all of these engine types in these factories. Does that actually give you the ability to charge your marine customers more for the same engines? Because ultimately, the marine customers are competing with the energy engine customers for the same capacity. So just trying to understand sort of to what extent from a pricing and a margin perspective, are they isolated? Or actually does that sort of pull-through in demand into the energy space give you a margin uplift on the new engines in marine?

There is a bit of overhearing or whatever you would call it, because obviously, when capacity is running scarce, you get that type of effect. So it is a bit of it. Then there is another element, and I think Tom, you pointed that out also -- Tom Skogman, that there, of course, operational leverage also because our volumes are going up, and that benefits only energy, but also marine.

Then the next question comes also somebody calling by mobile from Sweden plus +46 -- it looks like that -- it's Johan Eliason. I heard that Sven Weier had a follow-up question. So maybe Sven, let's continue with you.

Yes. Can you hear me?

Yes.

Yes. Maybe to follow up on energy storage. I was just wondering, we obviously had this announcement from Siemens, Fluence and NVIDIA as a reference design for the future architecture to design in their battery storage. I mean, could you see a similar opportunity? Are you working on something similar to have such a reference? Or do you think that was more specific to Fluence and their architecture?

I think it's a little bit more specific to them. I must say -- I must also say I don't understand all the details around that announcement. But of course, those are the questions you need to ask them. So I think this is specific to Fluence.

And if I remember correctly, I think you said last call that there should be an update on what you intend to do on battery storage before the Capital Markets Day. Is that still the most likely outcome? Or should we wait until the CMD?

Yes, absolutely.

So before, yes?

Correct.

And then second question from me is just, obviously, we had another IMO meeting, also discussions around decarbonization and still seems hard to go ahead. I was just wondering how this continues to impact maybe also on the service side, refurbishment business and those type of orders that had been a bit struggling in the last couple of quarters. Did that have any impact? Or doesn't this make any impact at all?

So overall, the narrative there, I mean, if you build a new vessel today, it's going to be around for 30 years. So you need to have a strategic review. I think it's fair -- many owners are assuming that things will evolve. I mean, regulations and fuel prices, et cetera. So the whole topic of fuel flexibility and fuel efficiency is certainly there. And that is supporting our business. Now if you look on our service side, services is growing, but we talk about these 4 different areas in services and one of them is retrofits. And that has been on the marine side, negatively impacted by the postponements of votes and decisions in IMO. And that the same message that we [indiscernible] before.

Have you also seen clients switching back from methanol to the normal dual fuel engines because we saw Pacific Basin canceling their methanol order and switching it back to conventional fuel because [indiscernible] really going ahead.

Yes. No, I would say that the clear focus now is on LNG and gas as a fuel. I think methanol, the pendulum has certainly swing back. I mean, among the Chinese operators is still strong. But for many other operators, the focus is these days on gas. So -- and it's a little bit -- we foresee, as when we talk -- we take the 5- to 10-year perspective, this pendulum will swing a little bit back and forth as we go. That is, of course, part of our strategy. That's why we have the broad offering, so to say. So yes. So methanol will still be there. But right now, the pendulum is swinging back to gas.

Johan Eliason, please go ahead. Johan, for me, it looks like that you are still muted. You can also send the questions for me by e-mail. And everybody else, if you have to raise your hand functionality, please send questions by e-mail to me. I have received some questions already. So continuing by the e-mail questions. Did you mention that you are largely sold out for 2028? Does this mean that you expanded capacity in 2028 is already close to fully booked from capacity utilization point of view or that you are selling 2029 start-up due to other constraining factors?

So it's correct that we are -- we have already sold a big chunk of our 2028 capacity. We still have some, but we have sold quite a bit. And so we are still selling '28 and starting selling '29 as well.

Thank you. Capacity increases and step-by-step approach. What are you exactly investing in or growing in the most recent 2029 expansion? And are there any constraining factors around Vaasa factory that would limit opportunities for further step-by-step expansions? So even additional...

No, we can continue to expand if we want to in Vaasa. And I mean the investments are in -- I mean, the latest here, it's more related to the -- some extent to STH and the equipment that goes into STH, but also a large chunk is the supply chain where we buy certain machining and we put it with our suppliers. So these are the type of investments.

Then there's a request to talk a bit more about your data center-related pipeline. How has it evolved? What are your expectations in terms of conversions in near term?

Yes, near-term conversions, I mean, I can't talk about that. I mean it's the same. We have -- it's a buoyant market, strong demand side. We have a very active pipeline of opportunities, everything from early stage to very late stage where we are negotiating to close. So it's the same kind of structure as before. It's very active and dynamic. It's a positive market. And we will receive more orders for sure.

It's still, I think Johan Eliason, who has raised their hand. Johan, please go ahead. Please send me questions by e-mail. Maybe while we are still waiting for additional questions, maybe one question to Hakan. So first of all, now we have almost closed the portfolio. So all of those divestments have been done. So any thoughts about the capital allocation now?

No. I mean we do have a strong balance sheet, and we want to have a strong balance sheet. We are in a project business. We have received -- we are receiving down payments from our customers, but we need to deliver the projects. So we are well funded for R&D. I mean, 4.8% of net sales is R&D. And organic acquisition has been our focus. We haven't done that many. It's our strategy is really focusing on organic growth. Of course, we have a radar with bigger ticket items, but it's a lot about timing. Yes, we are not involved in Netherlands, I can say. I mean, that's a normal question that comes. There are a number of PE players as we read about in media. So our strategy is really focused on organic growth. What about dividends, et cetera, in the future? I mean that's a broad topic, so to say. And I mean, we do foresee that we will continue with the negative working capital that we've been talking about. I know that some got a little bit concerned after Q1 when it was not as strong, but this is a long-term trend with a strong working capital situation.

Johan Eliason, you can once again start.

Can you hear me now?

Yes, we can hear you. Fantastic.

Fantastic. Sorry, some technical issues on my side. A lot of my questions have obviously been asked already, but I was just curious a little bit about the engine plant in Vaasa and the capacity expansions you talked about. You indicated you also invest with your subsuppliers. But you have these [indiscernible] engines JVs in China, in Shanghai. Isn't it possible to sort of move some capacity there? Or are they very dedicated to the local client base?

No, we can move marine and they are actually running at fairly high utilization right now. So there -- but there is some opportunities to move capacity there, clearly on the marine side. Absolutely. But it's a smaller adjustments -- I mean, when you compare it with the steps we are taking in Vaasa. So that's -- we are not announcing all the smaller things we are doing. We are announcing the bigger things we are doing.

Excellent. And then just coming back a little bit, you obviously talked about there should be some sort of spillover effect on the marine margins as well when Vaasa capacity utilization goes up, et cetera. But will it also be obviously so that with scarce capacity that you will also be skimming the marine market and basically taking the engine orders on that side with good margins with obviously what you commented earlier that...

It's a mix. It's a mix, Johan. It certainly, for some, for some are more strategic -- so it's going to be a mix, I can say that. I mean the operational leverage is certainly there. When it comes to price realization and new build in the marine market, yes, there will be some spillover, but it's going to be a mix between different customer segments.

Good. And sorry, I also missed the first part of your presentation. Did you say anything about any segments in the marine that are looking positive right now? I think you talked about cruise and ferry for some time. Is there any other segments you highlighted earlier?

Yes. No, I talked about offshore FSRUs and similar type of vessels that we see some uptick in that, where we basically generate the energy for, you could say, the chemical plants. I mean, we are not in tankers. I mean, this is 2 stock applications. But those more special vessels in oil and gas, we see uptick in activities.

And just for everybody, so after this call, my colleague, Noora, she will send a recording of this and publish it on our website. So if somebody missed the beginning of the meeting, it will be very shortly available. But then Tom Skogman has raised his hand. Please go ahead.

Yes. This is Tom again. I would just like to understand a bit better this kind of industry habit of slot reservations. Is it so that you don't use anything like that? And what is kind of the money involved in slot reservations in this industry? Is it like one...

You will have to ask GE and Siemens and what -- how they do it and others. We don't do it. And why we don't do it, I think it's to have stability because it feels good to sell the slots, but there is always a dynamic, especially when the market turns. So we've seen that also in the past. So that's the logic. I mean what is worth noting is that -- and this is public, you can see it that if you take GE and you look -- I don't know what term they use, but reserved or whatever capacity, it's almost 50-50 between firm orders and slot reservation. So I mean, we will be consistent on our side. We're only going to talk about firm orders.

And do you increase the advance payment anyway when delivery times stretch out further and further out into the future to make it even more vulnerable for customers to walk away?

Yes. I mean, I don't think that we have good payment terms. And even if deliveries are coming later, the down payments, which customers are paying, you still pay them at signing or shortly after signing. So that's -- even if deliveries happen later. I don't see us in a major way increasing the down payments. But of course, once you sign a contract, if you don't take the deliveries, you have to cancel -- I mean, the customer need to cancel the contract. And of course, we have provisions in our contracts to provide -- to protect ourselves and our profitability.

And do you want to disclose any size of those compared to...

No, no. because they...

That matching what you promise to your suppliers then in that case? So how does it work?

That is too much internal, so I won't comment.

Thank you. Then one follow-up question by e-mail. Could you talk a bit more about how do you see data center opportunities within energy storage business?

I mean there is certainly -- it's a tool -- the battery storage is a tool in the toolbox that the data center builders will use in many cases, to deal with the high variability of the load. So for the really big ones, you will have -- you might have some CCGT -- I mean, closed cycle gas turbines, then you have some -- they should run completely evenly and then you will have some engines. And then on top of that, you will have the battery storage. And because the batteries, they deal with shorter swings in the milliseconds and seconds area. There are a number of other -- those flexibility devices in that tranche, so to say, where you have the batteries. But batteries will be there, clearly. And from our side, we are looking on how and if and how we engage in this market segment for the batteries.

Still have 14 minutes time. So if somebody has a question, please use your functionality or you can also send e-mail to me. Maybe as a one more question, still waiting for the final question. So Hakan you have been meeting many of these U.S. customers who are repetitive customers for us. So what is the customer feedback typically from those?

No, I think that they appreciate our capability to deliver on the fundamentals, so to say, deliver on time and get the equipment working and the equipment is delivering on the performance that is expected. I think this is why repeat customers keeps coming back. We are project companies, okay, we are very careful with terms and conditions. I think that some of our customers, they comment that sometimes we have to spend quite a lot of time negotiating with Wärtsilä. But yes, we've been around for 190 years. There's a reason for it. So -- but I think the repeat customers, they really see the value that we are providing.

And also good service network, as I have understood. That's something they appreciate.

No. Clearly, if we talk about our U.S. service setup, I mean, we have our headquarters in Houston. This is where we have a logistics center for the U.S. We have service crew all over the U.S., and we are expanding it in a very rapid pace. I mean now we have taken and that has been announced before, our first operation and maintenance contracts in the U.S. So service -- if you go back a couple of years, and I've talked about that also, we didn't do too much service it was more the transactional. So I mean it was the first step on the service value ladder. But now we really started to do. And I would say, yes, the last 3 or 4 years, we are clearly moving up the service value ladder with different type of agreements, sometimes even operations. And as I talked about before, the data centers, I mean, they haven't even started operating yet. But when they start to go in operation, they will also have present really good service opportunities in the U.S.

Thank you, Hakan. For me, it looks like that there are no further questions. So there seems to be -- there have been some technical challenges on this call. So like I said, my colleague, Noora, will send you shortly the recording of the whole call. And as a reminder, we will host a pre-silent call on June 23 together with our CFO, Arjen Berends. So looking forward to meet you there. And then Q2 results will be published on July 21. So I hope you can enjoy also the summer a little bit before that. It's rainy and still quite cold in Finland. I hope that you can see the sun. But thank you for this call.

Thank you, everybody. Take care.

Bye.