Wartsila Oyj Abp Pre Silent Call Q1 Transcript

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

Question: Sebastian Kuenne - RBC Capital Markets - Analyst : Arjen, there was a discussion a couple of weeks ago that in marine, you have this new hybrid system where you want to bring back the four-stroke engines into LNG carriers. When I look at the order book at Clarksons for LNG carriers, I don't see any bookings for these four-stroke solutions. Can you confirm that? And what type of LNG carrier are you aiming for? And is there a much larger market to be developed here? Thank you. Arjen Berends - Wartsila Oyj Abp - Chief Financial Officer, Executive Vice President, Member of the Board of Management It's a good question. And yes, I think we have a very advantageous solution for, let's say, LNG carriers with four-stroke engine and hybrid electric basically, giving extra cargo space, doing fuel savings, of course, improving the footprint. So there are many advantages. First order still to be sold, and that has to do with the fact that, let's say, the order book at yards are already pretty full, with respect to LNG carriers. And let's say, you need to get into, let's say, the next one basically. And for many -- or not for -- yeah, I don't know exactly, but I think there are several LNG carriers in yard order book where equipment orders still need to be placed. Of course, this change means a radical change in the design. So it depends very much, let's say, in what stage you enter the negotiation. We are clearly working with end customers on this solution. And I'm very hopeful that, let's say, we will get our space back into this market. Timing is a little bit difficult to say. But looking at, let's say, Clarksons now, also they lifted up actually the LNG -- LNG contracting expectations. So yeah, let's see. I'm very positive about this. It gives so much benefits that -- it's almost logical that you would go for a solution, I would say. But that's, of course, from my perspective, easy to say.

Question: Sebastian Kuenne - RBC Capital Markets - Analyst : Yeah. Thank you, for taking my follow up. I have another question on the LNG uptake or, let's say, alternative fuel uptake. If I look at the fleet currently, there's literally no like alternative fuel vessels out there. And then in the backlog, it's now -- we're now talking a third of the backlog is alternative fuel or multi-fuel engines. Now I wonder what holds or what makes the customer switch to WSrtsilS if the main engine comes from a two-stroke or two-stroke MAN engine and the auxiliary engines would also be offered by MAN? So what makes the customer switch over to WSrtsilS? Are your engines more efficient? Would not MAN say, okay, I make you a nice deal. If you take out two-strokes, I give you three of the auxiliary engines, four-stroke engines. What makes a customer switch? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. MARCH 26, 2025 / NTS, WRT1V.HE - Wartsila Oyj Abp Pre Silent Call Q1 And the second question is on data centers, so energy side. You seem to be in discussions for providing four-stroke engines as power plants for data centers in the US. Could you give us an update what the current discussions are and how far progressed you are in the discussions there? Thank you very much. Arjen Berends - Wartsila Oyj Abp - Chief Financial Officer, Executive Vice President, Member of the Board of Management On your first question, I think it's good to remind that, let's say, MAN, the two-stroke main engine is a license business. So it's the yard that, let's say, builds basically the engine because it's too big to lift. You cannot build it in a factory and then lift it into the ship. the biggest engines, they are, what is it, 11 meters high and 20 meters long. So it's just too heavy to lift. So the yard basically, let's say, builds the engine in the vessel as part of the vessel construction and pays a license fee to MAN. The four-stroke part of MAN -- and sorry, just to add to that, MAN two-stroke is located in Denmark and the four-stroke part of MAN is located in Germany. And the four-stroke part is in general, some exceptions, I will come back to that. But in general, it's a traded business like we do. Let's say, we sell engines from our factory and MAN does the same four-stroke engines from the factory to the yard basically. There are some exceptions because MAN has also four stroke licenses in, I think, China and Korea, but they are very old engine types. So they are not meeting, let's say, regulatory requirements as, let's say, today is required in many places of the world, and they get more stringent. So the license engines, I would anyhow rule out as auxiliary engines and definitely for, let's say, international sailing ships, perhaps for, let's say, coastal ships in China, that might be fine, but not for international going vessels. And then it's more a matter of, okay, how differentiating can we be in our auxiliary engines versus MAN. And what we do more and more, and you can see that in our agreement coverage as well is that we negotiate already at the start of new build projects also with the potential future owner, even though that's one year out because the vessel still needs to be built that can we go for a life cycle agreement. And through that, we -- our intent is, of course, to prove to the operator owner that the best total cost of ownership for that operator or owner is going with WSrtsilS engines. So making the owner say to the yard, yes, I want your ship, but I want WSrtsilS engines because that's the best total cost of ownership or it has, let's say, a differentiating technology that, let's say, suits me better than the MAN version. But that's typically how we work in contracting. Now I forgot your energy question.