Wartsila Oyj Abp Pre-Silent Call Transcript

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

Question: Antti Kansanen - SEB, Research Division - Analyst : Arjen, I was about to ask pretty much the same questions as Sven. But maybe a follow-up on the power plant side. I mean you've been previously talking about some of the Asian countries, some of the Latin American countries. And are these kind of orders related to a bigger energy transition programs that these countries are planning. So is it an interest rate kind of project recalculation that is shifting forward? Or is it a political process that is being delayed? If you can open up it a little bit further.

Question: Antti Kansanen - SEB, Research Division - Analyst : Okay. But you are talking about orders that you have already kind of made the calculation, and you're just waiting for the signature of the adopted plant, yet? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies.

Question: Antti Kansanen - SEB, Research Division - Analyst : Okay. Okay. That makes sense. And then kind of -- if we see kind of further delays on this front, and it will continue to impact the workload situation on the engine manufacturing. What kind of options do you have to kind of protect your profitability? I assume that on the Trieste side, they are already furloughs in place. So what are your kind of plan Bs going forward?

Question: Antti Kansanen - SEB, Research Division - Analyst : Wanted to follow-up a bit on the comments on storage being an active market. You obviously haven't announced a lot anyways during Q3. So is this more like permission thing? Or is it more of a collection of smaller deals that you are now getting? I mean the previous quarter was great, but it was only 1 order. So just trying to reflect what should be a good comparison time period? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies.

Question: Antti Kansanen - SEB, Research Division - Analyst : Okay. Okay. And then maybe a bit about profitability. I mean it's been trending well last 12 months, but the growth on the revenue side, on the volume side has been good as well. So from here onwards, is that continuing to be the primary driver? I mean, are there any scope of improving your gross margin by being more selective or by whatever it would be? Or is it -- for you still a volume gain to continue the margin expansion?

Question: Antti Kansanen - SEB, Research Division - Analyst : Yes, storage specifically.

Question: Antti Kansanen - SEB, Research Division - Analyst : Okay. And I guess you probably won't comment on this, but any kind of progress on the local content side in the U.S. storage market securing supply? Or how do you look at it?

Question: Antti Kansanen - SEB, Research Division - Analyst : How do you actually see it kind of progressing in a sense that when do you think it's going to be meaningful enough to actually differentiate before getting deals? I mean it's a long road to build up that supply chain and have it in place. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies.

Question: Tomi Markus Railo - DNB Markets, Research Division - Analyst : It's Tomi from DNB. A couple of questions. Firstly, just confirming, you mentioned the continued service momentum, we should read that as order intake still growing in the third quarter?

Question: Tomi Markus Railo - DNB Markets, Research Division - Analyst : Okay. And then maybe also on the plant side, just checking the numbers and comments. Would you say that the power plant orders on sort of unannounced basis are better in -- as you see at the moment compared to the second and first quarter? And really the moving part is the announced bigger orders, which caused volatility.

Question: Tomi Markus Railo - DNB Markets, Research Division - Analyst : So would you say that the underlying plant orders, which you don't announce. So the unannounced base activity is improving from the first and second quarter levels. And then the moving parts really comes, and the volatility comes from the announced orders, which you indicate is sort of -- maybe a moving target from third to fourth quarter?

Question: Tomi Markus Railo - DNB Markets, Research Division - Analyst : Okay. Then if you could comment -- cash flow development. I mean it improved in the second quarter and maybe the quite low working capital-to-sales ratio. Is that sort of -- how sustainable in a way is that level, what you are currently seeing?

Question: Tomi Markus Railo - DNB Markets, Research Division - Analyst : Okay. And the final question, have your customers started to ask price reductions from you? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies.

Question: Antti Kansanen - SEB, Research Division - Analyst : A couple of questions, still on the power plant side, 1 short term and 1 maybe longer-term. And Arjen, I'm sorry if you mentioned this already, but just looking into kind of revenues and fixed cost absorption in second half of the power plant side, how -- is it a substantial drop on kind of revenues out of backlog because of the weak order intake? Is that something that we should really kind of be conscious on not to get overexcited on the profitability prospects on all of the other things that are moving on the right direction?

Question: Antti Kansanen - SEB, Research Division - Analyst : Okay. And the second question was maybe on -- kind of the demand outlook and kind of the postponements. I mean you seem to be quite confident on that something will come in your book still in, whether it would be Q4 or Q1, but isn't there a point of concern that this kind of interest rate hike will lead to much more substantial postponements. I mean, the demand side for power generation is not really booming, like, growing right now, the rates are going up and you see kind of a lot of negative news flow even with the renewable space in the U.S. and so forth. So what's really behind that confidence? Is there any way to open up -- what are the business cases on the orders that you are close to signing or anything more concrete?