Wartsila Oyj Abp Q1 2022 Earnings Presentation Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Sebastian Kuenne - RBC Capital Markets, Research Division - Analyst : Can you hear me now?

Question: Sebastian Kuenne - RBC Capital Markets, Research Division - Analyst : Okay. Sorry. Yes, a question in Marine on the fuel spreads and what it means for the scrubber demand. If I look at the numbers, MGO to high sulfur, fossil fuels, spreads are now $300, $400 per tonne. So incredibly high levels. Wouldn't that mean strong demand for refitting? And what do you expect for -- well, for the rest of the year for next year? That would be my first question.

Question: Sebastian Kuenne - RBC Capital Markets, Research Division - Analyst : Understood. And then you mentioned the downscaling of Russia. Can you just confirm that the EUR 200 million write-down covers your entire Russian business, and there is no further potential of write-downs on Russia?

Question: Sebastian Kuenne - RBC Capital Markets, Research Division - Analyst : Understood. I understand.

Question: Sebastian Kuenne - RBC Capital Markets, Research Division - Analyst : Understood. My last question is on Energy. You mentioned margins will be affected by product mix. Does that comments -- is that comment mainly triggered by the energy storage business where you say, okay, we have more deliveries this year. Margins in that business are still negative on EBIT level. Therefore, we have that product mix? Or is there also other reasons or other triggers that would make you think that the energy business seems more incremental pressure?

Question: Antti Kansanen - SEB, Research Division - Analyst : Hopefully, you can hear me good.

Question: Antti Kansanen - SEB, Research Division - Analyst : Yes. Coming back to the question on the equipment business and the cost inflation that you are seeing. So could you perhaps, provide a bit more color on where the challenge is in terms of adapting to the inflation are the highest, whether it be on certain divisions or certain type of equipment businesses, long lead time projects and so forth? And what are kind of the key elements in the input cost inflation, the other biggest concern to you regarding certain materials or certain components. So a bit more color on this one, please. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. APRIL 28, 2022 / 7:00AM, WRT1V.HE - Q1 2022 Wartsila Oyj Abp Earnings Presentation

Question: Antti Kansanen - SEB, Research Division - Analyst : Yes, I was just thinking, for example, on the large thermal energy projects that you booked late last year, and I guess you are rolling out them this year and start of next one. Are those contracts something that have clauses and things that you can adapt, if kind of the input cost level rises throughout that you're executing that projects? Or are you totally fixed?

Question: Antti Kansanen - SEB, Research Division - Analyst : Okay. And then the second one, perhaps on the crude services. And I guess you referred to the 70% utilization rate that the marketplace had on the first quarter. And I'm surely, this is expected to trend positively going into the summer season. Is 70% a good proxy on where you are, if you think about what you expect -- where you expect to be or where you will recall it in terms of the service revenues or orders in that business?

Question: Antti Kansanen - SEB, Research Division - Analyst : Yes, I was maybe more referring, I mean, we've been previously talking about that it's quite linear kind of between your service revenues and kind of the cruise traffic. But is there something that you have already seen benefiting, let's say, more than the utilization rate would kind of imply -- you mentioned that the customers are preparing for the summer season and so forth. So are you actually running at a higher level than what the utilization would imply?

Question: Antti Kansanen - SEB, Research Division - Analyst : Okay. And then last one for me is regarding the guidance. Should we kind of think about that the recovery after the initial COVID shock has now kind of run its course and the market is stabilizing on a certain level? Or did kind of the renewed macro uncertainties, the war, the Chinese lockdowns and all of those kind of had an incremental negative impact if you would compare Q1 to Q2 this year?

Question: Sebastian Kuenne - RBC Capital Markets, Research Division - Analyst : Yes. Two more questions from my side. On Energy storage, I mean, we hear stories that the Chinese battery manufacturers have their own problem, sourcing. And I was wondering if there's a risk of actually supplies being cut or delayed to WSrtsilS for the installation of your batteries? And what that could mean in terms of penalty risk for the projects that you have currently in the order book? Could there be severe delays that could result in penalties? And the other question is relating again to the EUR 200 million write-down or provision, it looks like it's not tax deductible. Would that be correct? Because when I compare pretax profit and net profit, the impact seems to be very similar. Could you just elaborate a little bit on that?

Question: Sebastian Kuenne - RBC Capital Markets, Research Division - Analyst : I understand, but the availability of batteries is fine from -- currently for you?

Question: Erkki Vesola - Inderes Oyj, Research Division - Analyst : Can you hear me?

Question: Erkki Vesola - Inderes Oyj, Research Division - Analyst : Yes. Good. Then my question is linked to the question already represented. My question is how long can the storage projects be postponed altogether. I mean, if there's a renewable project like a wind farm being built as there are so many globally, when will they have to start building storage capacity? No matter with the cost, just to ensure uninterrupted electricity supply in future?

Question: Erkki Vesola - Inderes Oyj, Research Division - Analyst : Okay. So if I guess that the postponement would be, say, in the ballpark of 6 to 12 months, not -- we're not talking about several years.