Siemens Energy Aktie

Good afternoon, and welcome to the Siemens Energy's Pre-Close Group Call for the Fourth Quarter and Fiscal Year 2026.

Before we begin, please note that today's call is being recorded. The recording will be available on Siemens Energy's website until the fiscal year results are published.

Before we start, I would like to remind you that the information and forward-looking statements disclaimer, which applies to the comments made during this call. At this time, I would like to hand over to your host today, Mr. Tobias Hang. Please go ahead, sir.

Thank you so much, [ Moritz ]. Good afternoon and good evening to those joining us from Asia, and a warm welcome to the Siemens Energy Pre-Close Call for the fourth quarter and fiscal year 2026.

The purpose of today's call is to reinforce our previously communicated guidance and to recap the key messages that we have consistently shared since our Q3 results. We plan to publish our Q4 and fiscal year 2026 results on Wednesday, November 11 at 7:00 a.m. CET, with the webcast scheduled for 10:00 a.m. CET that morning, which will be extended to 90 minutes.

We will take you through the major developments during Q4 fiscal year 2026, but also provide you with our fiscal year 2027 outlook and fiscal year 2030 targets based on the individual business areas performance as well as an updated capital allocation framework until fiscal year 2030.

As usual, we will share our company compiled consensus 1 week ahead of the earnings release and our quiet silent period will begin immediately after this call.

Let me briefly guide you through today's agenda. I will start by recapping the key messages that we have consistently communicated over recent weeks and share our view of the current market environment.

I will then review the performance and market dynamics across Gas Services, Grid Technologies, Transformation of Industry and Siemens Gamesa. I will then address fourth quarter seasonality and cash flow and conclude with a few additional remarks. We will finish with a short Q&A session to clarify statements already made during the quarter.

Please remember that we cannot provide information beyond what has already been communicated. Together with our management team, we have held numerous investor meetings over the past few weeks. Let me therefore, recap the 4 key messages we have consistently communicated.

First, our markets remain structurally strong and diversified. Rising electricity demand, electrification, resilience and infrastructure replacement provide the foundation of the strong markets while data center activities add further upside.

Second, execution is becoming a key determinant of value creation. Our focus is on converting our record backlog into revenue, profit and cash with disciplined project delivery, capacity ramp-ups and operational excellence. Third, the profitable growth expansion runway extends well beyond the current order cycle. Today's gas services equipment orders will be installed base for recurring service revenues and cash generation well into the next decade.

Grid Technologies benefits from long-term infrastructure investment, multiyear visibility and enduring electrification trends. Fourth, stronger earnings and cash generation provide increasing strategic flexibility. We are balancing investments in profitable growth, portfolio development and sustainable shareholder returns while preserving the balance sheet strength required for our long-cycle project business.

Overall, Siemens Energy is entering its next phase from a position of strength, supported by favorable market fundamentals, disciplined execution, a long duration growth runway and increasing financial flexibility. Let me now focus on the current environment. Our core message remains unchanged. We continue to operate in structurally growing electricity markets supported by electrification, rising power consumption, the need for reliable and dispatchable generation, grid expansion and the replacement of aging infrastructure.

Demand remains broad-based across geographies, customer groups and applications. Data centers are an important additional driver, but they are not the foundation of our outlook. General high electricity demand, resilience, security of supply, regulated grid investment and replacement demand remain the primary structural drivers.

In addition, the increasingly frequent periods of extreme temperature experienced across Europe and other regions globally in recent months reinforce our expectation that cooling and air conditioning will account for an increasing share of global electricity demand in the years ahead.

Across our markets, the principal constraint is not underlying demand. It is the pace at which physical infrastructure can be permitted, financed, built, connected and commissioned. Across the industry, customer demand continues to exceed the pace at which generation, transmission and supporting infrastructure can realistically be brought to market.

We continue to apply disciplined project selection to ensure attractive pricing conditions, long-term service opportunities and contractual protection. The execution of our record backlog is therefore a core message as we close the fiscal year.

Our priority is to convert backlog into revenue, profit and cash with disciplined project execution, timely factory ramp-ups and operational excellence. Let's now turn to the broader market environment. For gas turbines, our planning assumptions remains an annual market of around 110 to 120 gigawatts over the coming years with a further 10 to 20 gigawatts of potential upside from data centers. Electricity demand growth, grid replacement, coal-to-gas shift and the increasing need for dispatchable capacity provide a broad and durable foundation for the gas turbine market and account for up to 80 gigawatts.

The remainder of the above-mentioned demand forecast is driven by the build-out of data center infrastructure. The gas market remains supply constrained as industry capacity additions continue to be orderly. Smaller players in small to midsized trains are benefiting from the current market opportunity, but this does not alter the structural market balance for large gas turbines, which dominate the market due to their efficiency and lower life cycle costs.

Pricing in Gas Services remains very strong. Attractive delivery renewals continue to command a premium, especially in the United States and elevated U.S. pricing also supports other regions. At the same time, order intake per gigawatt should not be used as pricing indicator because frame size, geography, [ first ] rating, scope and the new units and service mix can materially distort the metric.

During our Q4 earnings call, we will provide, as usual, the dynamics of the backlog margin improvement year-over-year. In Grid Technologies, pricing trends are slightly differentiated by region.

In the U.S. market, we continue to see premium pricing overall and especially where delivery slots are available while pricing dynamics in regulated markets such as Europe have stabilized at a high level.

Going forward, margin expansion will increasingly be driven by backlog conversion, cost management, capacity utilization and operational excellence rather than further broad-based price increases. Let's now have a deeper dive into Gas Services. Demand continues to be exceptionally strong and diversified.

Contractual terms and conditions remain favorable and the fiscal year 2027 project pipeline provides strong visibility. As communicated, the fourth quarter order intake is expected to be below the exceptionally strong levels in the first 3 quarters.

This reflects normal project phasing and the large project nature of the business, not a change in the underlying market. Order intake should, therefore, be assessed on a full year basis rather than on a single quarter.

[ Reservation ] agreements remain an important part of our commercial process. They are structured commitments rather than speculative reservations and are generally intended to convert into firm orders within a defined period, typically around 6 months.

Reservation fees and advance payments provide economic protection and our project selection process remains highly disciplined to ensure that the projects we select are viable and can support 15 to 20 years of long-term service revenues.

We have not seen any delays or cancellations of previously signed slot reservation agreements or orders. During the first 3 quarters, we booked around 40 gigawatts of firm gas turbine orders, including 15 gigawatts in Q3. Total customer commitments, including reservation agreements stood at 95 gigawatts and are trending towards our communicated approximately 100 gigawatts by fiscal year-end.

Our capacity discipline remains unchanged. We continue to target approximately 30 gigawatts of annual delivery capacity by 2030. The focus is now on executing the capacity expansion announced at the Capital Markets Day, including strengthening critical supply chain through vertical integration and expanded in-house manufacturing capabilities.

In parallel, we are unlocking additional capacity and efficiency from our existing gas turbine facilities through automation, robotics and continued productivity improvements. This approach allows us to support growth while maintaining disciplined capital allocation and attractive returns. During previous quarters, there have been many discussions about the industry supply of blades and vanes.

We are strengthening vertical integration and have signed framework agreements with our suppliers to support deliveries into the 2030s. All key components are multi-sourced to avoid dependency on individual suppliers. Our investment in the in-house blades and vanes production capabilities position us well, particularly as the long-term service business requires around 70% of blades and vanes. The new unit production capacity itself, however, is usually not shared with the service business as the inspections typically take place at the customer site.

Medium-sized gas turbine capacity has increased from around 50 units in fiscal year 2025 to around 80 units this year. The large gas turbine expansion from 35 to 50 units remains fully on track and will contribute from fiscal year 2027 onwards. As we experienced in the third quarter, revenues were positively impacted by higher medium-sized turbine capacity. For this quarter, we expect this to remain at similar levels.

On profitability, the unit margins continue to expand. Orders booked today carry better margins than both, backlog executed in the past and orders signed in the first half of the fiscal year. Margins embedded in current slot reservation agreements also continue to be higher. Backlog conversion over the next 2 to 3 years and over longer periods for larger gas turbines, therefore, support further sustainable margin progression. Service remains highly attractive and recurring part of the business. Long-term service agreements average around 17 years.

And at last year's CMD, we have communicated that the lifetime service opportunity is around EUR 400 million per gigawatt. The service benefit follows the delivery, installation and warranty phases, which means the full contribution from today's new unit orders develops gradually over time.

Please consider that depending on the frame size, installation takes 12 to 24 months and the warranty phase normally lasts another 24 months. This means the first long-term service revenue streams typically start 3 to 4 years after our products leave the factory, while modification and upgrade opportunities arise only after 6 to 7 years.

More broadly, each unit delivered today expands the installed base and that will generate recurring service revenues, cash flows and customer engagement opportunities for decades to come. Let me now turn to Grid Technologies. The market environment remains strong, supported by regulated grid investments, the replacement of 30- to 40-year-old assets, interconnection, grid stabilization and resilience.

Data centers are additive to the story, but they are not the foundation. Our momentum continues to be led by the products business, particularly large power transformers with Europe and North America remaining the strongest regions. Visibility is structurally long. HVDC and large power transformers provide multiyear visibility into the early 2030s, while Switchgear is more transactional, but supported by predictable grid investment plans.

As expected, in the fourth quarter, we did not book an HVDC project, so order intake remains similar to previous quarters without any large project one-offs. We are happy to report that the first brownfield expansions for large power transformers and gas-insulated switchgears started to come online in Q3.

We are also expanding our solutions and EPC capacity, particularly in the fast-growing U.S. market. The U.S. continues to deliver strong growth, driven by new generation, data center demand and the need for stronger connections and grid reinforcement. The brownfield expansions are supporting a further increase in fourth quarter revenue and higher profitability, consistent with the Grid Technologies guidance upgrade announced in the second quarter.

Profitability development continues to be driven by higher volumes, a better margin profile in the executed backlog and disciplined execution. With pricing at an elevated level, operational excellence, capacity utilization and cost management will become even more important drivers for further improvements. Europe continues to be a strong and attractive market for Grid Technologies with significant growth opportunities driven by sustained interconnection and grid investment needs.

Following a period of substantial project awards in HVDC, customers and the industry are actively advancing execution and position the supply chain for the next phase of growth. We remain confident in the long-term demand outlook and in our planned execution capacities. As previously communicated, we expect to book the next HVDC order in early fiscal year 2027.

Our digital grid strategy is deliberately focused on intelligent, digitally enabled equipment rather than a broad software platform. Camlin and Noedra's capabilities, combined with our collaboration with NVIDIA, strengthen and accelerate this focused approach. Let's continue with Transformation of Industry.

Transformation of Industry continues to be a strong and reliable earnings and cash contributor, supported by a balanced new units and service portfolio as well as attractive end markets. As communicated, Siemens Energy is preparing the legal and operational separation of the business. The objective is to establish a self-sustaining industrial energy solutions company with greater strategic and financial flexibility.

The range of options includes co-investors or private ownership as well as capital market transaction. Siemens Energy intends to deconsolidate Transformation of Industry by retaining a meaningful minority stake.

This will support continuity and customer trust in businesses with long-term service commitments while preserving participation and potential future value creation. The strategic rationale remains clear. The electricity business had increasing capital requirements while Transformation of Industry serves different markets, customers and investment priorities with limited customer and sales synergies.

The stand-alone setup would sharpen strategic focus and provide greater flexibility and access to capital. No final decision is expected before around mid-calendar 2027. We are initiating the process from a position of strength. The business is profitable, cash generative and has a good order book, giving us flexibility to pursue the option that creates the greatest value. Now let's move to Siemens Gamesa. First positive quarterly results since the fourth quarter of fiscal year 2022 marked a significant turnaround milestone. Our full year breakeven target remains firmly on track.

Turnaround is not yet complete and execution discipline, quality management and cost efficiency remain key priorities. In offshore, fiscal year 2026 order intake has been below our expectation as project decisions have shifted to the next fiscal year. The underlying opportunities remain intact with many projects now positioned to support order intake in fiscal year 2027.

The current European offshore build-out of around 4 to 5 gigawatts per year remains below the level required for a more sustainable market, which would be closer to 8 to 9 gigawatts annually. We will book one large offshore order this quarter, but do not expect full catch-up for the offshore orders that have been pushed out for fiscal year 2027.

In onshore, our approach remains selective and service-led rather than volume-led. Building a structurally attractive margin profile takes time because new unit deliveries must first expand an installed base and the future service portfolio. Longer term, the margin potential remains attractive, particularly in offshore, supported by longer product cycles, better industrialization and sufficient annual market volume.

In parallel, our immediate priorities are to derisk execution, reach cash breakeven and improve market visibility. Let me now briefly address fourth quarter phasing. Following an exceptionally strong third quarter, we are confident that fourth quarter group margins will remain around the solid first half level fully in line with our consistent communication.

This reflects expected business mix and project pacing, normal service seasonality in Gas Services, planned corporate costs and the anticipated year-end ramp-up in capital expenditure. The improved margin quality in the backlog, higher volumes and continued operational excellence support further progression over time.

Capital expenditure is back-end loaded into Q4. However, lower than communicated at the CMD and consistent with a typical fiscal year pattern, including the ramp-up of our capacity expansion programs. Overall, we confirm that we expect group profitability to be at the upper end of the guidance range. Let me briefly touch on cash flow and capital allocation.

Fourth quarter includes back-end loaded capital expenditure and the usual working capital phasing. It's also important to distinguish between cash items and noncash accruals. The Q3 other line included reservation fees as well as personnel-related accruals that affected profit but were not cash effective.

Growing profitability and disciplined cash conversion are the structural foundation of our cash generation. Reservation fees provide additional support while we continue to target cash conversion above 1 throughout the cycle to remain a net cash company.

On 24th of September, we started the third tranche of our previously announced share buyback program of up to EUR 6 billion. This tranche comprises a volume of up to EUR 2 billion and is scheduled for completion no later than March 31, 2027.

Our dividend policy remains unchanged and with a payout of 40% to 60% of net income attributable to Siemens Energy shareholders. For fiscal year 2026, total shareholder returns of more than EUR 3.6 billion include the fiscal year 2025 dividend paid this March and the 2 share buyback program tranches of EUR 3 billion, which have been concluded in fiscal year 2026, plus the lately initiated third share buyback tranche.

We continue to review our capital allocation framework. A more comprehensive update together with the full year financial framework and our midterm ambitions will be provided with fiscal year results in November. Finally, a few additional remarks. In the United States, demand remains strong and projects continue to advance as permitting, interconnection time lines and EPC capacity progress.

We have seen no data center project cancellations and our reservation fees, advance payments and termination provisions provide robust economic protection. The U.S. power equipment executive order is targeted rather than a blanket ban with key implementation details still to come.

Against the backdrop of strong U.S. transformer demand that exceeds current domestic production capacity, the order's current focus on equipment, components and digital access from sanctions or security sensitive jurisdictions would strengthen the position of trusted suppliers and create additional opportunities for Siemens Energy.

Across all businesses, value over volume remains our guiding commercial principle. We continue to apply strict project selectivity, pricing discipline and close customer engagements. Let me conclude with the key messages. First, demand across our core markets remains structurally strong, global and diversified.

The gas market continues to be supply constrained. Grid Technologies continues to benefit from multiple long-term growth drivers and data centers provide additional upside without being the sole foundation of either growth story.

Second, execution is a key priority. Capacity expansions are progressing as planned. Backlog quality continues to improve and disciplined conversion of backlog into revenue, profit and cash underpins the next phase of value creation. Third, our business-specific investment theses remain unchanged.

Gas Services continues to benefit from strong demand, attractive pricing and resilient recurring service revenues. Grid Technologies delivers sustained growth and margin expansion through operational execution. Siemens Gamesa remains on track to achieve full year breakeven. Our Transformation of Industry continues to perform well as we prepare the business for a potential separation from a position of strength.

Finally, we reaffirm our upgraded fiscal year 2026 outlook. We continue to expect comparable revenue growth of 14% to 16% and a profit margin before special items of 10% to 12%, trending towards the upper end, net income of around EUR 4 billion and free cash flow pretax of around EUR 8 billion.

With that, we will start today's question and answer session. [Operator Instructions] I would just call right now Max Yates from Morgan Stanley for the first question.

So I guess just my first question is on the market outlook comments. Could you clarify about 110 to 120 gigawatt [Technical Difficulty] 10 to 20 gigawatts of additional demand on top of that...

Sorry, the connection was quite bad. I know it's just on...

I was just saying, so your market that you've talked about is 100 to 110 gigawatts. But I thought you also said that maybe there was an additional 10 to 20 gigawatts of demand on top of that, which sounded big to me. So I was just checking that I heard that okay or is that not right?

Thanks a lot. Then I heard it correctly. So we continue to say that we have now or increased the market from the last capital market view to 110 to 120 gigawatts, but we see additional potential upside from data centers of 10 to 20 gigawatts.

So that means potentially it might be a market of roughly 130 to 140 depending on how the data center demand will be turning out.

Okay. And maybe just one clarification. Obviously, grid margin [Technical Difficulty].

I think I lost you, sorry.

Can you hear me now?

Yes, I hope, I hope.

Yes. Okay. Well, just very quickly, Q4 in Grid has a very wide range of outcomes because of the guidance. The guidance is quite wide. I guess what I'm trying to understand is when we think about sort of sequential margin progress, do you see yourself trending towards the upper end of the full year grid guidance or more midpoint or more lower end, just to get a kind of sense of rough ballpark for that Q4 because obviously, it's a very wide range of outcomes depending on where you come.

I mean -- thanks, Max, for this question. Generally, I mean, as you might have noticed, we have not really specified further the guidance for the individual business area.

So that means we didn't really show or talk about any trends there. What you still have to consider though is and this is what we already mentioned in Q3 is that the additional revenue growth we could see from the capacity additions, which came online from our brownfield expansions, certainly, on the one hand, provided us additional revenue and therefore, also a certain margin expansion.

So therefore, I think it was quite easy in Q2 when we upgraded our margin to somehow do the math where we should be getting into, if you, let's say, would take it to the midpoint of the guidance.

So therefore, I would expect that there is a certain margin progression continuing due to the fact that we have higher revenues within Grid Technologies after the capacity expansion.

That's great. Thank you.

Thank you so much. As we -- as I'm seeing that everything seems to be quite clear so far. I mean, I also have to admit we had quite a long intro. I don't see any additional questions.

So therefore, thank you so much for participating in today's call. And with that, we will conclude our pre-close call today. Thank you very much for your participation and your continued engagement. Have a wonderful evening or afternoon, and please mark in your calendars again, November 11, 2026, where we will have our Q4 full year results released. Thanks a lot, and have a good afternoon. Bye-bye.

With that, we will conclude our pre-close call today. Thank you very much for your participation and for your continued engagement. Have a wonderful evening or afternoon, and please mark your calendar again on November 11, 2026. Goodbye.

Good morning, ladies and gentlemen, and welcome to the Siemens Energy's Q3 Fiscal Year 2026 Analyst Call. As a reminder, this call is being recorded. Before we begin, I would like to draw your attention to the safe harbor statement on Page 2 of the Siemens Energy presentation. This conference call may include forward-looking statements, these statements are based on the company's current expectations and certain assumptions and are therefore subject to certain risks and uncertainties. At this time, I would like to turn the call over to your host today, Mr. Tobias Hang. Please go ahead, sir.

Thank you so much, [ Moritz ]. Good morning, and a warm welcome to the Siemens Energy Q3 Results Analyst Call for fiscal year 2026. We published our fiscal year '26 results this morning at 7:00 a.m. on our website. Our President and CEO, Christian Bruch and our CFO, Maria Ferraro are here with me. Christian and Maria will take you through the major developments during Q3 fiscal year 2026. This will take approximately 30 minutes. Thereafter, Christian and Maria are available to answer your questions. For the entire conference call, we have allowed 1 hour. Christian, over to you.

Thank you, Tobias, and good morning, everyone, and thank you for joining us today. Siemens Energy delivered another outstanding quarter with record orders, record revenue and further margin expansion. I'm very, very proud of the Siemens Energy team, our team, Purple, which is converting the strong demand environment into profitable growth, cash generation and sustainable value creation. A special achievement this quarter, after 15 quarters, Siemens Gamesa has closed a profitable quarter. And there are the 3 messages I would like you to take away from today's presentation. First, the structural drivers behind our markets remain firmly intact. Our -- second, our pricing discipline and project selectivity support profitable growth and third, our capacity expansion projects are executed as planned, allowing us to successfully convert our backlog into higher revenue and earnings.

Our investment case is increasingly benefiting from the next phase of value creation, stronger earnings, cash generation and shareholder returns supported by our growing backlog capacity investments and structural market growth. The question is not only how strongly these markets grow, but also how effectively we translate these opportunities into sustainable value for our shareholders. And I'm pleased with the progress we are making. And let me now turn to the key achievements of the quarter. Supported by continued strong market demand, Siemens Energy delivered another record quarter. orders reached approximately EUR 17.9 billion, driven particularly by gas services and technologies.

And at the same time, revenue reached a record EUR 11.4 billion, the highest quarterly revenue level we have delivered so far. And the investments in capacity expansions and operational improvements over the past years are really translating into tangible revenue growth and improved financial performance. Profitability strengthened considerably. Profit before special items more than tripled the year-over-year and the margin before special items reached 14.2% and this reflects the improving earnings quality and operational leverage we are building across the portfolio.

As a result, basic earnings per share rose to EUR 1.28 from EUR 0.71 in the prior year quarter, reflecting the significant improvement in profitability and the value we are creating for our shareholders. As mentioned, I'm very proud of the progress that Siemens Gamesa has achieved. For the first time since the fourth quarter of fiscal year 2022, Siemens Gamesa delivered a positive quarterly result. And this is an important milestone and is based on the tremendous efforts of the entire team. While we remain focused on the work ahead, this achievement clearly demonstrate that the turnaround measures are delivering tangible results and breakeven for the full fiscal year is firmly on track.

And cash generation remains robust. Year-to-date, free cash flow pretax reached approximately EUR 7.2 billion, reflecting disciplined operational execution and working capital management. This robust cash generation provides significant financial flexibility and enables us to translate operational success into tangible value for our shareholders. Execution of the second EUR 1 billion share buyback tranche is progressing well and is nearing completion. Together with the first EUR 2 billion tranche and our dividend policy of distributing 40% to 60% of net income attributable to Siemens Energy shareholders, this underscores our commitment to attractive and sustainable shareholder distributions.

Including the dividend paid earlier this year for fiscal year 2025, we remain on track to return up to EUR 3.6 billion to shareholders during fiscal year 2026. Based on our performance, the continued favorable market environment, we reaffirm our fiscal year 2026 outlook with profitability trending towards the upper end of our guided 10% to 12% profit margin before special items. Before turning to the market environment that we briefly address 1 strategic milestone that also supports the next phase of our journey.

Siemens Energy has started preparations for its transition to an independent brand. And going forward, Siemens Energy and Siemens Gamesa Renewable Energy, will be united under a single name and brand identity. The name will be Omterra and the transition will begin later this calendar year and will be implemented in phases. And currently, the existing license agreement remains in place.

Let me now turn to our capacity expansion program, which continues to progress according to plan and is increasingly translating into revenue and financial performance. The investments we have made over the past several years are coming into operational execution with additional capacity brought online. And we are seeing a growing contribution to revenue especially in the second half of fiscal year 2026 and beyond.

Starting with Gas Services, we successfully brought additional medium-sized gas turbine capacity online during the quarter. And this is an important milestone increasing annual production capacity from around 50 units in fiscal year 2025 to approximately 80 units this year and further expansion planned over the coming years, as we had shown in our last year's Capital Market Day. So we stay on the communicated plan. And this additional capacity is highly valuable in the current market environment. Medium-sized gas turbines are often selected for distributed power generation and data center applications that customers require reliable power solutions that can be deployed quickly.

The key advantage of products such as our SGT-800 is their ability to operate in a combined cycle setup, significantly improving efficiency and making them a highly attractive solution for a wide range of electricity generation needs. The additional capacity enables us to capture this growing demand while maintaining the same disciplined approach to project selection and execution. And at the same time, our large gas turbine expansion program continues to be fully on track and will begin contributing from fiscal year 2027 onwards. It provides sufficient flexibility to support the demand outlook we have today.

[Audio Gap] every gas turbine store today creates long-term service with substantial business opportunity in maintenance, upgrades and operational support throughout their lifetime. And as a result, the capacity investments we are making today not only support equipment revenue growth but also expand the installed base that will drive recurring service revenues for many years to come. Turning to Grid Technologies. We are executing our capacity expansion program across multiple product areas the first meaningful brownfield expansions are now coming online, adding capacity for products such as large power transformers and gas-insulated switchgear.

We continue to execute successfully the brownfield and greenfield expansion projects, which we announced on the Capital Market Day to further expand our manufacturing footprint through the end of the decade. The increased capacity is needed to reflect the high level of demand visibility we experienced across our markets. And based on the increased capacity, the revenue growth in the relevant business continues to accelerate and Grid Technologies delivered another significant step-up in revenue during the third quarter.

In short, the capacity we are adding today enables us to capture the market opportunities ahead of us. And let me now turn to the market environment. The overall demand environment remains very robust across our key markets and regions. And while the Americas was again a major growth driver, led by the United States, momentum was also solid in the other regions, and I'm satisfied with the balance of our project portfolio. And Europe, demand remains supported by structural trends, such as grid expansion, electrification and energy security and looking specifically at Europe, prior year order intake benefited from several large offshore wind awards.

In contrast, and as discussed previously, we still expect a number of major offshore projects to shift into fiscal year 2027, impacting the year-over-year comparison in the current fiscal year. In Gas Services, market demand is still exceptionally strong. We booked 15 gigawatt of orders during the quarter, including conversion of previously signed reservation agreements into firm customer orders. Demand is being driven by the need for reliable and dispatchable power generation in the United States as well as by large combined cycle and independent power producer projects in the Middle East and Asia.

In the Middle East, we see several countries investing further in additional generation capacity to strengthen security of supply. It is important to remember that the conventional power market is our primary growth driver. It represents the largest share of our backlog and benefit from strong structural demand driven by electrification, rising electricity consumption and the need for reliable baseload and dispatchable capacity. At the same time, our visibility is improving.

Our backlog, slot reservation agreements and project pipeline provide a clear line of sight well beyond the current fiscal year, where volume stands at historically high levels. And while order intake might fluctuate from quarter-to-quarter, as we expected for quarter 4, my view remains unchanged. The project pipeline for fiscal year 2027 looks very promising. Pricing remains attractive. And at the same time, we prioritize value over volume, maintaining strict project selectivity and pricing discipline.

This supports the quality of our backlog and laser foundation for further sustainable margin expansion as our service business is expected to make a larger contribution to profitability over time. Turning to Grid Technologies. The market environment remains equally compelling. Order momentum during the quarter was driven by the product business, primarily large power transformers, and demand related to data center infrastructure remained healthy and additional brownfield capacity investments supported further revenue growth.

Regionally, growth was primarily driven by Europe and North America. Grid Technologies is really getting an execution machine. The business combines structural demand, improving margins, enhanced cash generation and exceptionally backlog visibility. So the overall message is straightforward. Demand across our key end markets remains robust, and the underlying growth drivers are structural rather than cyclical. And our focus remains on converting this opportunity into profitable growth, stronger cash generation and long-term shareholder value creation.

And with that, let me hand over to Maria for the financial review.

Thank you very much, Christian, and good morning, everyone, from my side. It's a pleasure to be here with you. As Christian mentioned, Q3 was another very strong quarter for Siemens Energy, and I will now take you through the group financials, the order backlog, cash flow and capital allocation and then briefly comment on the individual business areas and the outlook. .

So starting with group performance. Q3 was a record quarter across all key financial metrics. Orders reached EUR 17.9 billion, supported by strong demand in Gas Services and Grid Technologies. This translated into a book-to-bill ratio of 1.57 and lifted our order backlog to another all-time high of EUR 162 billion. Over the last 12 months, our order backlog has grown by almost 20%. Revenue reached EUR 11.4 billion, up 19% year-over-year on a comparable basis. Growth was broad-based across all segments, led by Grid Technologies and Gas Services.

Q3 included only minor foreign exchange headwinds primarily driven by a weaker U.S. dollar, weighing on revenue by roughly 50 basis points year-over-year. To clarify, currency movements continue to have no material impact on our profitability. Again, this is due to our global footprint with strong local for local sourcing and effective hedging strategies. Profit before special items more than tripled to EUR 1.6 billion, corresponding to a margin before special items of 14.2%. This is the highest quarterly group margin in our history and a 910 basis points improvement year-over-year.

This very strong development was driven by excellent project execution and supported by improvements across all segments. And again, noteworthy with Siemens Gamesa making the largest year-over-year contribution to the improvement. Net income also rose by more than 70% year-over-year to EUR 1.188 billion. Free cash flow pretax stood at EUR 2.3 billion, again, very strong, more than 5x last year's level. This was supported by improved cash effective profit and a higher cash conversion rate as well as customer advanced payments, including reservation fees associated with the strong order intake.

Now let us take a closer look at our order backlog and move to the next slide. So from Q2 to Q3, we added EUR 26 billion to our order backlog. And at the end of Q3, our order backlog, as mentioned, reached EUR 162 billion. This provides an exceptional foundation for future growth. It also provides very high visibility for fiscal year '26 and fiscal year '27 with a significant portion of expected revenues already covered by existing orders and visibility extends even further across parts of our portfolio, lead times are now 3 to 4 years and beyond, providing a clear line of sight well into the end of the decade and the beginning of the next.

This highlights the strategic importance of the capacity expansions announced last November at our Capital Market Day. These investments are already contributing to revenue growth today, and they also ensure that we are well positioned to capture the substantial service opportunities that will emerge from our expanding installed base and record backlog in the years ahead.

In Gas Services, our long-term service agreements now have an average duration of 17 years, underpinning highly recurring and predictable revenue streams. However, it's not, as you know, only about backlog size. It is the combination of size, duration and improving market quality that count. New orders in almost all businesses continue to enter the backlog up margins above the historical portfolio average, supporting future earnings expansions as these executors -- orders are executed into the future.

Together, these factors strengthen our confidence in the durability of Siemens Energy's energy profile well beyond fiscal year 2026. Again, we look forward to providing further details on our order backlog quality with our midterm ambitions in our end-of-year call in November. So now let us turn to our cash generation, capital allocation and improved credit profile.

So over the past years, Siemens Energy has significantly improved its free cash flow generation. For fiscal year 2026, we continue to expect around EUR 8 billion free cash flow. Cash generation is a key pillar of our strategy. It provides us with the flexibility to invest in profitable growth, strengthen our balance sheet and deliver attractive shareholder returns. The substantial progress we have made continues to be recognized by our rating agencies.

In June, Moody's reaffirmed Siemens Energy's Baa1 rating and changed its outlook from stable to positive. In July, S&P upgraded Siemens Energy to BBB+ with a stable outlook. These ratings reflect the improved quality of our earnings our substantial cash generation and our significantly strengthened balance sheet. They further enhance our financial flexibility and support efficient access to capital markets.

Again, at the same time, returning capital to our shareholders remains a clear priority. During fiscal year '26, we expect total shareholder returns of approximately EUR 3.6 billion, this consists of our share buyback program in 2026 and the dividend paid in March of this year for fiscal year 2025. Our dividend policy remains unchanged targeting a payout ratio of 40% to 60% of the net income attributable to Siemens Energy shareholders.

As Christian mentioned earlier, execution of the share buyback remains firmly on track. We successfully completed the first EUR 2 billion tranche in May and expect the second EUR 1 billion tranche for this fiscal year to be completed within the coming weeks. Our capital allocation framework is balanced, disciplined and focused on long-term value creation. We invest where we see attractive returns to strengthen our financial position to create sustainable value and return capital to our shareholders.

An update regarding Siemens Energy India. On June 8, 2026, we completed the second and final Siemens India Limited and Siemens Energy India Limited share swap increasing our stake in Siemens Energy India Limited by 1.02%. In addition, on June 23, 2026, we acquired a further 3.98% stake from Siemens AG for EUR 428 million. The transaction was structured to adhere to India's 5% annual acquisition threshold.

As a result, Siemens Energy ownership stake in Siemens Energy India Limited now stands at 16%, again, further strengthening our position in one of the most attractive growth markets for energy infrastructure globally. Our strong cash generation, investment-grade credit profile and disciplined investment in growth opportunities and attractive shareholder returns underscore the financial strength of Siemens Energy and remain a core pillar of our equity story going forward. More to come in November.

So now moving on to our BAs. Let me start, please, with our Gas Services business, which delivered another outstanding quarter and continued its exceptional momentum across all key performance indicators. Orders were up by 62% year-over-year to EUR 10 billion, making another record for this business. This resulted in a book-to-bill ratio of 2.7 and drove the order backlog to an all-time new high of EUR 73 billion, again, providing excellent revenue visibility for the years ahead.

The market for gas turbines greater than 10 megawatt, again, exhibited remarkable strength during the third quarter. This quarter, in total, Gas Services booked 73 gas turbines for power generation and oil and gas including 25 large gas turbines and 48 industrial gas turbines. Driven by the strong momentum in large gas turbine orders, our market share in gas turbines above 100 megawatts reached 42% in Q3.

Revenue for Gas Services grew by 21% year-over-year to EUR 3.8 billion, representing the highest ever quarterly revenue for them. Growth was supported by strong execution in new units, while our service business continued to deliver healthy double-digit growth with both a key contributor to profitability. The service share revenue stood at 60%. This was slightly below last year's level, but again reflecting the higher volume of new unit deliveries. As we indicated before, this is expected given the very strong new unit bookings in previous quarters.

Profit before special items improved significantly by 60% to EUR 648 million, resulting in a margin of 17.3%. This is up 420 basis points versus the prior year. This demonstrates Gas Services' ability to sustain strong profitability throughout the year, underpinned by solid execution and a favorable business mix. Free cash flow reached EUR 1.7 billion, significantly above last year, benefiting from strong operational performance, reservation agreements and advanced payments on large customer orders.

The combination of sustained market demand, expanding capacity, growing the installed base and long-term service revenues makes gas services one of our most attractive businesses and a key driver of sustainable value creation.

Moving on now to Grid Technologies. Now Grid Technologies once again delivered an outstanding quarter. Orders increased by 28% year-over-year to EUR 5.4 billion, Growth was broad-based across all the businesses with the strongest contribution coming from the Transformer business. The book-to-bill ratio reached 1.48 and order backlog grew further to a record EUR 51 billion. This backlog again provides exceptional visibility and reflects the structurally attractive demand environment, we continue to see across electrification, grid expansion, renewable integration and data center infrastructure.

Revenue reached a record EUR 3.6 billion, up 29% year-over-year. This is driven primarily by the product business. And profit before special items reached EUR 722 million. This is a corresponding margin of 19.9%, an improvement of 400 basis points year-over-year. This was driven by higher volumes an improved margin profile with the executed order backlog and the positive effects of disciplined execution.

This strong performance is the basis as you know, for raising our full year margin guidance to 18% to 20% at the half year for this business. Free cash flow pretax amounted to EUR 896 million, again supported by strong profit and milestone payments. So now moving to transformation of Industry. This business delivered a strong quarter characterized by solid order intake, continued revenue growth and an improvement in profitability. Order intake reached EUR 1.8 billion, up 32% over year-over-year. The main contributor here was new units in compression, which benefited from large orders in the Americas and in the Middle East.

As a result, the book-to-bill ratio reached 1.19, while the order backlog remains stable at around EUR 8 billion. Revenue increased by 12% to EUR 1.5 billion with all businesses contributing. Growth was supported by both the new units and service businesses, again highlighting the balanced nature of the portfolio and transformation of industries. Profitability strengthened in the third quarter to EUR 218 million. This resulted in a margin of 14.3%.

Free cash flow pretax amounted to EUR 180 million, broadly in line with the prior year level, reflecting continued cash conversion and disciplined execution. And overall, transformation of industry does continue to demonstrate its ability to generate reliable earnings and cash flow while capturing opportunities in attractive end markets.

So now turning to Siemens Gamesa. Here, the third quarter marks an important milestone in the turnaround journey. For the first time since Q4 fiscal year '22, as Christian mentioned, Siemens Gamesa delivered a positive quarterly result. Reaching this point has required significant operational improvements, disciplined execution and tremendous commitments from the entire organization.

While the turnaround is not yet complete, the improvements delivered over the past quarters are clearly visible in the financial performance [Audio Gap] is for the quarter amounted to EUR 1.1 billion, and we're below the exceptionally high prior year level. It's important to note that Q3 last year benefited from 2 large offshore orders with a combined value of more than EUR 3 billion. While the current quarter did not include any comparable awards.

This has resulted in a book-to-bill ratio below 1. Order backlog, however, stood at EUR 31 billion at the quarter end and now looking at revenue, this increased by 14% year-over-year to EUR 2.7 billion, driven primarily by the offshore business. Growth was led by higher service revenues, while the new unit business also delivered a clear increase. Profitability, as mentioned, improved substantially. Profit before special items reached EUR 75 million compared to a loss of EUR 430 million in the prior year quarter. The margin reached positive 2.7%.

This is representing a year-over-year improvement of more than 20 percentage points. So free cash flow pretax was negative EUR 518 million compared to negative EUR 758 million in the prior year. As discussed previously, cash flow developments remains influenced by project and milestone timing effects. While we are encouraged by the progress, and we're very proud of that, we focused and keep our feet on the ground. Execution discipline in Siemens Gamesa quality management and cost efficiency remain key priorities as we continue to improve the business.

That said, the direction of travel is clear. The return to positive profitability in the third quarter is a proof point that the turnaround measures are delivering results. Siemens Gamesa's continued improvement is becoming an increasingly important element of the Siemens Energy investment case. As profitability improves and execution risks continue to decline, Siemens Gamesa will now contribute to the predictable, resilient and high-quality earnings profile of the group.

So now with that, please let me take a look at the outlook. So following the strong performance in the first 9 months of the fiscal year, we are reaffirming the outlook that we just raised after the first half of the fiscal year. For Siemens Energy, we continue to expect comparable revenue growth of 14% to 16% and a profit margin before special items of 10% to 12%. Based on our performance year-to-date, we now expect to land towards the upper end of the margin range. We also continue to expect net income of around EUR 4 billion and free cash flow pretax of around EUR 8 billion for fiscal year 2026. The progress we have demonstrated throughout fiscal year 2026 is increasingly validating the assumptions that underpin our midterm and medium-term ambitions.

The operational proof points are becoming visible and again, we will discuss the full financial framework in November. So with that, thank you very much for your attention. And let me hand now back to Christian for the closing remarks. Thank you.

Thank you, Maria. And let me close with a broader message of today's results. Quarter 3 was another excellent quarter for Siemens Energy with record orders, record revenue, record profitability and excellent cash generation. But for me, the most important point is not only the level of these numbers, but what they demonstrate about the development of the company. We are seeing more consistent performance across the portfolio Gas Services continues to benefit from a highly attractive market environment and disciplined execution.

Grid Technology is translating structural demand into higher volumes, stronger margins and robust cash flow. Siemens Gamesa has reached an important milestone in its turnaround, reducing volatility and execution risk for the group and transformation of industry continues to show strong and consistent performance. And taken together, these developments show the transition we want investors to recognize. Siemens Energy is driven by structural growth, stronger execution, improving earnings quality significant cash generation and disciplined capital allocation.

And our focus is clear, converting backlog into revenue, revenue to earnings and earnings into cash flow. And this is translating into higher earnings per share and tangible value creation for our shareholders. And our backlog gives us visibility. Our capacity investments support future growth and our service base creates long-duration earnings potential and our cash flow generation gives us the flexibility to invest in the business while returning capital to shareholders.

And this gives us confidence for the remainder of fiscal year 2026 and provides a solid foundation for the medium-term framework we will discuss with you in November, as Maria has underlined that we will provide more detail on the next phase of Siemens Energy's value creation journey. I would like every quarter but this quarter, in particular, to thank all our teams across Siemens Energy, great job, Team purple. And the progress we are discussing today is the result of their commitment, their operational focus and their execution discipline.

We're entering the next phase of Siemens Energy's development from a position of strength, and we look forward to discussing that next chapter with you in November. Tobias, over to you for questions and answers.

Thank you so much, Christian and Maria. So now we will start our today's Q&A session. [Operator Instructions] So first 3 questions, go to Max Yates from Morgan Stanley, Philip Buller from JPMorgan and Gael de-Bray from Deutsche Bank. So Max, please go ahead.

Thank you, Tobias, my question is just around the gas margins. So it's a really good step change this quarter in terms of the profitability. I just wanted to ask kind of bigger picture, if we look at kind of the margin progression that you've been seeing in 300 base -- more than 300 basis points in 2025, it looks like you're going to do another 300 basis points margin improvement this year. Just when you think about kind of the composition of the backlog, how pricing has evolved in the last sort of 2 to 3 years and what you're going to be delivering in the next 2 to 3 years.

I guess my question is, is there any reason when we think you leverage in the service business, the margins in the backlog that, that kind of progression can't continue at these levels. Is there anything as to why the margin progression should have been particularly front-loaded in '25 and '26 and basically why we shouldn't continue at these kind of margin expansion levels?

Simple words, I would say no. I think this is our expectation that we really continue on this margin progression. We see it obviously embedded in the backlog, and you have seen the margin backlog continuously growing over quarter by quarter by quarter. And this is why we hammer so much also on execution and operational excellence because it's important that we unleash this potential that sits in the backlog. And that is obviously something which is, let's say, in the plan, and we share this obviously, on the November quarterly call, the execution of the project and all the backlog, you always have to keep in mind, it takes 2 to 3 years. And in certain areas with the bigger turbines no even longer. So it will obviously give us a good base really to continue to expand margin.

And maybe just to add to that, Max, because looking absolutely in terms of midterm, but again, just to underline, we still do see seasonality in Q4. As mentioned at the half year, we see that less pronounced, of course, as new units even proportionately are higher as a percentage of revenue. But don't forget, I think absolutely, as we continue, we see absolutely margin expansion see that orders we're booking today have higher margins than yesterday. But just again, just to underline that we do see some seasonality in Q4. .

Next question goes to Philip Buller from JPMorgan.

I'd like to explore this demand topic a little bit further, please, beyond what's already you mentioned, Christian, the 2027 pipeline looks very promising, and I hear you on the operational execution side. But can you share any subtleties on the nature of the discussions you're having on that 2027 pipeline. Is pricing still trending positively? Are the payment terms, the slot reservation agreements still favorable. Maria, I think you mentioned that the service contract duration is now 17 years. I think it was 15 years, a year ago. So is there anything at all that's trending backwards as you look at 2027 at a contractual level?

No. At the moment, it's really not, right? And this is where we see positively into 2027. What are the things we're talking about, one thing that, for example, is the German coffee strategy, right, the power plants to be built in Germany. Obviously, this is an alignment agreement phase or reservation agreement phase now is not converted into orders yet. This will come into 2027. But these are these examples, right?

And as I always said, I mean, absolutely, we had seen over the last quarters, a lot of capacity going into data centers and the U.S. But also keep in mind that this led to the situation that a lot of other applications are have pushed out decision-makings. And this is why we see Asia coming up. We see the Middle East things coming up. And absolutely, this supports our positive view on 2027.

So next question goes to Gael de-Bray from Deutsche Bank.

It's obviously great to see Gamesa back in the green this quarter. But I'd like to get your thoughts on the recent new merger guidelines from the European Commission, which emphasizes benefits from corporate scale. So do you think further consolidation is required in the wind industry?

Could you repeat the last sentence because you were cut off in the middle and we had a glitch here?

Sorry about this. I was just asking about the merger guidelines from the European Commission, the new 1 on the wind side and whether you think that some further consolidation would be needed eventually in the wind industry to better compete against the Chinese.

Look, I think this discussion is on, at least since I'm with Siemens Energy and rightly so because obviously, competition is particularly on the onshore side, super aggressive. It depends on the region in the world. And I do not see the boundary conditions at the moment in Europe on this discussion like the wind Airbus, which you sometimes hear, right? I mean consolidating the whole industry, is that something was going to come? I don't know.

That is more a political discussion than a business discussion that we need to think about how to position ourselves in a very aggressive market onshore and offshore, absolutely clear. But I do not see anything at the moment changed from a regulation environment in that regard. So this is not where we are at the moment. And I also would see it a bit different in offshore and onshore and offshore very clearly. And I think you indicated it, we are really trying also to convey to regulators and governments, you need to get these offshore projects off the ground.

Projects are slipping. That's not good. This need to come. And in onshore, it's more about really what is the most competitive setup, not only from an onshore new unit perspective but really also from a service perspective. This discussion will be with us for the next years to come, I would say. But at the moment, I don't see the environment yet in the regulatory market.

Thanks so much. So the next 3 questions go to Alex Jones from Bank of America. Sebastian Growe from BNP Paribas and Ajay Patel from Goldman Sachs. Alex, please go ahead.

We talked a little bit about capacity, please. You seem quite emphatic this morning that you're not adding more gas capacity, but your messaging today and in prior months has been the demand is higher than you expected at CMD last November. And clearly, your 2 largest peers have reacted to that by announcing more capacity. Is there a reason why you wouldn't follow them in announcing a little bit more debottlenecking or brownfield expansion into 2030? And can you comment on how much of the capacity you're already adding to 2030 will be required for aftermarket needs as you move into fifth next decade?

Thanks, Alex. We always convey a clear message. We're expanding existing sites. And the other thing is on gas. And we are strengthening the supply chain in the sense of a vertical element look on this. And this journey, we continue. As we communicated in the Capital Markets Day, and I see no reason to change that. Absolutely, we're trying to squeeze out everything out of existing sites in terms of driving productivity measures. We do a lot about robotics at the moment and thinking about application of AI on the shop floor. And these will obviously be things which hopefully drive more productivity.

And with this, we get 1 or 2 more turbines out, but this is all about productivity, productivity, productivity and leveraging the existing footprint what we have. We do investments, obviously, in the gas service as we announced in the Capital Market Day, but this is all about making existing sites more productive. And that is an important pillar to keep, and I see at the moment no reason to change that.

The next question goes to Sebastian Growe.

On the segment as opposed to the group margin guidance for the year. So the 10%, 12% range has been confirmed. I was wondering if you could provide more color with regard to the views on the assumptions for the 4 segments, which I think will be a bit more heterogeneous year-to-date as what you have been guided for the full year, particularly, if you could comment on Grid Technologies and what you see for the fourth quarter.

Hello Sebastian. I have to admit the quality wasn't good. I hope you hear, do you hear me? .

Clear .

Okay. So I think your question was regarding the overall margin development looking at Q4. And based on what we've seen so far this year and essentially what to expect. I think, again, correct, and what I said earlier is that we do expect Q4, again, to have a bit of a moderation effect rather than -- if you think about it, Q3 was quite strong, exceptionally strong, let's say, based on a number of factors. And if you look at Q4, we're looking at it rather around the level if you have from the first half.

And I think this reflects more of this phasing and mix effects that we've discussed year-over-year, but as I mentioned, it's a little more moderate this year. And Q3 did benefit from a few favorable project timing, and this is typical in our business, as you know, for example, in TI and/or in other areas, and of course, don't forget, we do have the seasonality in the service environment and Gas Services predominantly where we see typically a weaker Q4.

And also, there's also other seasonality not to get into more detail, but things like corporate costs, Also, with respect to cash, right? I mean CapEx is a lot of it's back-end loaded. So all of these factors, if you'd like, kind of come into play in the current quarter again, but I do want 1 last point, please. Q3 is by no means a peak. That's not what I'm saying, and there's more in full, of course, to come in November. Again, we see margins further expanding. We absolutely see the orders that are being booked today with margin expansion. And of course, that will come into play in the next quarters and years. But again, as mentioned, more to come in November.

Thanks so much. So the next question goes to Ajay Patel.

In just on the cash flow. I was looking at the cash flow statement at the back of the presentation. And there's an other line of about EUR 1.1 billion of positive cash flow just under half of the cash flow you delivered for the quarter, I just wanted to know what that was and then you delivered 90% of free cash flow for the full year. So I'm just trying to understand what reverses maybe could happen in Q4 that keeps you to that EUR 8 billion target? Because on the performance you're delivering, I would have maybe expected to even have a shot.

No. Again, I hope I got everything. But again, when you look we're in a very good position on cash, no doubt, right, at EUR 7.2 billion year-to-date. But don't forget, there are other things in there. that from Q4 perspective that are still to come. I mean, on CapEx, I do have to underline, we have a very heavy and of course -- and don't forget there's also in the other line in the cash flow statement. We have things like reservation fees included, et cetera, and things like other related accruals, which perhaps or profit negative, but not cash effective, like personnel-related accruals and so on. So it is a bit of a mixed bag.

But again, when you look at cash for us, I've said around EUR 8 million. Yes, we're in a good position, all things remaining equal, around EUR 8 million also means above EUR 8 million. So maybe that kind of puts it into perspective. But we do have some, like I said, puts and takes to consider. .

And that EUR 1.1 billion in Q3 and the Q3 numbers on the other line...

That's what I'm saying, the EUR 1.1 billion, again, in the other line, you do have reservation fees included and also other personnel-related accruals, like I mentioned, again, having a profit impact, but not cash effectiveness, not cash...

So the next 3 questions go to Chris Leonard from UBS, Vivek Midha from Citi and Will Mackie from Kepler Cheuvreux.

Can I focus maybe on the slot momentum you showed incremental new slots Q3 up to 11 gigawatts. And could you maybe update us as you spoke to a strong pipeline for order growth into 2027. How do you anticipate those slots will perform through Q4 and how it's going to date in Q4? And equally, any further commentary on sort of pricing and how that's progressing on those slots between the quarters so far this year?

I'm not sure whether I understood everything because honestly, it was very difficult to understand. If it's about -- I hope I interpret correctly. I mean, obviously, looking on the fourth quarter, we believe the fourth quarter will be lower, not unexpected. And then we look positively into the first half of '27 in terms of orders, but definitely with all the trajectories that we've seen quarter 4 little lower than we are, let's say, somewhere around, what is it, 100 gig right towards the end of the year. This is what we're trending towards. And as you also look into our bookings, what you potentially notice is that, obviously, we try to keep the, let's say, reservation agreements in terms of [ gigament ] relatively Limited is a wrong word, but we obviously more look on orders than on the filing of the reservation agreement, and this is how the structure looks like. I hope I got everything because as I said, quality was not good. .

Yes. I was focusing on the slot reservations and how you expect those to trend into Q4? And I guess you sort of answered it there, but equally .

Yes, it's a little bit honestly, looking out of the window, right? I mean it's -- I don't see any different trends in terms of the reservation agreements as we have seen in the last quarter. It depends more in terms of, okay, when finally decisions comes, so I would not really quarterly plan this.

Now going over to Vivek, please. .

My question is again on gas. I was just wondering if you could elaborate on rough split between new units and service orders in the quarter. You said in the report that in both new units and service orders grew substantially in the quarter, but I was hoping you could give us a rough indication as well as around the pricing within the new units you've booked and any mix effects that may have been within that.

Thank you. I'm trying now is to do it from the top of my head, Maria is looking for the exact numbers, but I would say over proportionately new units and this also has a consequence because, obviously, the service -- Okay. Thank you, 2/3 is new unit. And obviously, this has a consequence because obviously, going forward, it means service agreement is going to be booked later, right? And this is still to come.

Correct. But the good news is, as mentioned, that the margins on new units continue to expand, as mentioned. So even with a higher proportionate share of 2/3 and 1/3 in this particular quarter, we still see that as, let's say, accretive today and for the future in our backlog. .

So next question goes to Will Mackie.

Yes, question comes to capacity expansion and the execution of your plans. Thank you for the details on Slide 5 of the presentation and the update from the CMD very useful. You said you delivered 6 gigawatts in Q3. So could you at least put a rough estimate of what you expect to deliver in terms of gigawatts for the full year and against the backdrop of the big step-up in LGTs and the expansion in MGT what we should expect roughly as a delivery achievement into '27 given your current planning?

And then any additional color you could give on how you're finding progress with your suppliers in the supply chain on long lead time items like forging or casting?

Thanks, Will. Obviously, let me start with the second point on the forgings and castings, and this has really had made good progress. I mean it was a big area of my concern 6 to 9 months ago. A lot of things have been done since then. It's still obviously -- we will see this growth teething pains in this supply chain still for several quarters. It will take time. But the things are on the way. And I'm pleased now to see what's coming in place. and we will also continue to look into the areas of our own control, like the ceramic core, our own casting house and so forth, which we have in temper and this is something, but where I would say that's good.

It's still obviously has to grow further thing this enormous amount of new units. And keep in mind, at the end, when all of this is in place, the vast majority of these parts will go into service business, not into the new units. And this is why it makes so much sense in terms of investing into that. And on the capacity delivery this year, I would scratch my bits around [indiscernible] 15 around say, around 15, maybe 16, something like this, a gigawatt type of range, I would believe you're going to see.

Thank you so much. So the next 3 questions go to Alex Virgo from Evercore, Richard Dawson from Berenberg and Alasdair Leslie from Bernstein. Alex, please go ahead.

I wonder if I could just push you a little bit more on selling prices. I guess, optically it's a bit difficult to gauge given we don't have the details specifically, but optically, it looks as if pricing has come down a little bit Q-on-Q. So I just wondered if you could help us understand some of the moving parts that might affect that number even if reluctant to actually guide on the price increases as you're seeing. I accept that margins are higher in the order intake, but I'd be just to hear your comments on pricing.

And you are particularly addressing gas, I would assume or...

Yes. Sorry, Christian. Yes, yes.

Yes. Thanks, Alex. No, it did not come down. Absolutely not. But it's very difficult, and I'm not sure whether you are doing this. If you look on order intake and try to divide it by gigawatt numbers and seeing a trend in it, that is such a convoluted number because so many different things go into this. don't interpret too much into that. This is what I always have to clearly say because it combines frame size, frequency, scope balance between new units and service and all the likes. So no pricing trend is intact in gas, absolutely. We see this, so no change compared to last quarter. .

So next question goes to Richard Dawson, please.

I wanted to ask about the name change to Omterra, does starting the transition to the new name now, I mean you can end that trademark license agreement with Siemens AG earlier than 2030, which I believe was when that agreement is due to end anyway.

Look, that is so early in the process, and we just started it. We not even launched the brand. So we just -- we said we started the preparation. The reason we announced it was that -- we don't want to put everybody under NDA who is working on it and overly say, it's too early in the process. We're working on it. .

So the next question goes to Alasdair Leslie.

Question on Gas Services and the service opportunity. You touched upon it earlier in your prepared remarks. But last year, I think you quantified the lifetime service opportunity of around EUR 400 million per gigawatt of backlog, I think, just given how that backlog is kind of evolving potentially in terms of the duration possibly pricing. Is that still the right number now? Or should we be thinking about maybe a meaningfully higher service opportunity per gigawatt going forward?

No, thanks for the question and also for kind of reminding us about our statement on that because it's very relevant. We don't see -- it's still around that mark, of course. I think you're absolutely right. The average duration going up by 2 years is a positive thing. This is something that we see with the momentum that customers are opting for a long-term service program, but around the EUR 400 million more or less mark still remains intact. .

So we got over 5 people in the queue. The next 3 will be Ben Uglow from Oxcap, Lucas Ferhani from Jefferies; and then Sean McLoughlin from HSBC.

It's a big picture question around how you guys are seeing the kind of capacity situation in the market. If we look at large gas turbines first, in the autos, we used to think about every company having a natural market share, but at the moment, we're seeing big increases kind of across the board. Do you see the capacity plans of the bigger companies and indeed, some of the smaller ones, too, in gas turbines as kind of orderly?

And then secondly, on the, let's call it, on the engine fuel side, on the non-large cast turbine market, we are seeing some dramatic expansion, 60 gigawatts plus. What do -- how do you think about that 2 years from now, does this all simply evaporate when your capacity comes on stream because of efficiency? Or is this going to be a sort of persistent issue as we move forward.

Thanks, Ben, for your question. And congratulations to be the first 1 with a video out in the morning on the results. I'm always impressed by that. Well, is it an orderly increase? I believe, yes, right? If I see particular about the big players, I think we literally all do the same in terms of really driving productivity that I see from the colleagues, and that makes sense for me. And so on that regard so far, so good, and it's also investments with short payback times. Will there be a point in time when potentially the market is not 120 or 130 giga, yes, at one point in time, might be, but I think I see it all orderly in that regard.

Now you see, obviously, in particular this quarter, you have seen, let's say, to smaller size, turbine frames coming and pushing big orders with obviously to new players or not to players who do not always have listed there. And that is something which I see influenced simply by the high demand. And I would absolutely believe that is impacted afterwards, 1 once the total capacity is on stream and maybe the demand is a bit more balanced in there, absolutely agreed.

How much the smaller companies now expand capacities. I can only see it, let's say, or cannot fully judge on, what I would say, it's using the opportunity type of thing, which I fully understand, but it's not a structural completely changed. While we will see, and this is, I think, important also absolutely, we will see more players trying to position themselves in the midsized gas turbine and push and maybe push the size a bit up and this is why it's for us important also to stay in forefront of our offerings from a technology perspective.

We will continue to work on this with having our strong turbines, even better and but that is normal -- it's more business as usual, I would say.

Thanks so much. I mean, as we are almost out of time, let's do a really quick round of questions and answers. The next 1 will be Lucas Ferhani, please.

Just had 1 on grids. I'm just wondering on your EPC capabilities versus the full year '26 base, are you also increasing capacity there to do more kind of HVDC project? Or is it only on the product side? And then when we think about the margin progress as those new volumes come, I think you talked before about pricing kind of normalizing a bit more in that segment. Are you still able to price kind of ahead or well ahead of inflation and to push margins or is aiming productivity story in grids?

Yes. Thanks for the question very quickly. increases also in the Solutions part or EPC part. Yes, we started this 3 years ago because obviously, the wave was visible. Obviously, this also means execution capabilities for example, in the U.S., which is a strong growing market, we will continue to build while we continue also to be interested to be a strong product company. But yes, we have increased also on that side, margin development or pricing development, not much on pricing development on that side is -- the pricing is intact, it's plateauing on a high level as we have said.

And there's always opportunities, particularly on the data center side, if you can deliver things fast. I mean that is then an opportunistic element, but it's obviously also same message as in the quarters before plateauing on a high level.

Very quick question to Sean McLoughlin, please.

You had flagged previously a weaker Q4 in Gas Services with a pickup in Q1 or certainly early in 2027. How should we think about this quarter on quarter fade from such a strong number. And particularly given your comments around pipeline, should this be just a 1-quarter blip with several quarters of similar strengths ahead in Gas Services?

Sean, thank you for the question. And Yes, I think I said that before, it's great to have [Audio Gap] billion slices, but we don't expect that each and every quarter. So there will be, let's say, a moderate or like a bit of a soft landing in Q4, as mentioned. So you should think of it that way. However, the pipeline remains super strong for fiscal year '27, especially in the first half. And so therefore, it is kind of indeed, in line with the rest of the seasonality for Q1 and then fiscal year '27 strong pipeline indeed. .

So the last 2 questions go to Kulwinder Rajpal from Bard and Vlad Sergievskii so ask from Barclays. Thanks much for your quick question to Kulwinder.

I just wanted to be a little bit around the backlog margin development, particularly on transformation of industry -- so I wanted to understand what the moving parts there were and then we wanted to reconcile this with Maria's statement about that we have not seen peak margins yet. So does that also apply for the TI business?

I think the question was around the confirmation of the expansion, the backlog margin. It was really difficult to hear you. But perhaps I'll just reiterate to say that, yes, when we look at, especially in both Gas and Grid, the orders that are being booked today are at higher margins than yesterday. We will give and please come dial in for November. We will give, as we always do, annually the insight into the backlog margin expansion by business area. .

So last question goes to Vlad, please.

Appreciate you squeezing me in. You increased your forecast for addressable market for gas turbines to about 110 to 120 gigawatts per year going forward based on preclose call. Would you be able to give us some rough color on the geographical speed of this addressable market? And in particular, what proportion of this 110 to 120 could be coming from the U.S. .

Yes, let's say, simple question at the moment. If I look on it, the 120 giga probably see around half is U.S., right? I mean -- so it will be in a substantial market going forward. I would say it's -- there is a kind of additional 20 gig even upside potential, seeing what data centers going to do, right? I mean so there is a corridor on this. And -- but U.S. continues to be a strong market in that regard. .

Thanks so much for your patience and staying with us so long. So are there any final remarks from you, Christian? .

I hope a lot of you still have the vacation ahead of you. If so, then I wish you a great summer vacation for those of you who had it. I hope you enjoyed it and thanks for being with us and looking forward to see you all in the quarter for call for a longer discussion there. .

Thanks so much, Christian. Also from my side, everybody -- have a great summer. The IR team is available in case you have any questions within August. From September onwards, we are on several roadshows and conferences. So looking forward to seeing you then. And with that, we conclude today's call. Thank you so much.

Thank you, everyone. Take care. Bye-bye.

Ladies and gentlemen, that will conclude today's conference call. Thank you for participation. A recording of this conference call will be available on the Investor Relations section of Siemens Energy website. The website address is www.siemensenergy.com/investor relations. Goodbye.

Ladies and gentlemen, welcome to today's question-and-answer session from Siemens Energy AG on Q3 for fiscal 2026.

[Operator Instructions]

This call is being recorded. I'd now like to hand over to our moderator, Tim Proll-Gerwe.

Good morning, everyone, from Berlin, and welcome to today's press call for Q3 from Siemens Energy, not Siemens AG, which was incorrectly mentioned. This format will be the same as last time around. There will be no presentation. We will just go directly to the Q&A with our CEO, Christian Bruch.

We published our financial figures at 7:00 this morning. We increased order intake and revenue and we have EUR 17.9 billion, and this is the amount of revenue we had. Profitability increased considerably once again. Profit before special items was triple that of last year and the margin before SI was 14.2% in Q3. Wind for the first time in 14 -- in 15 quarters, achieved a positive result. And preparing for our transition to a stand-alone brand, we will -- Siemens Energy that is and Siemens Gamesa will be using the name Omterra. A lot has happened, and I'm quite sure that there are some questions for this quarter. So now I'd like to let you ask -- you can ask your questions of CEO, Christian Bruch.

[Operator Instructions]

I'd just like to remind you once again that this is only for journalists. Only journalists can ask questions. We've seen that some shareholders have also asked questions. These will not be answered today. Analysts can ask their questions later on today in the analyst calls and employees can ask their questions at town hall meetings and shareholders, of course, at the AGM.

For the sake of completeness, I'd like to remind you of the safe harbor statement with regard to future related statements. You can see this in the webcast now. And now we can enter in to our Q&A session.

[Operator Instructions]

And I see that we already have a question from Christoph Steitz from Reuters.

I have a couple of questions. Maybe I'll start with the Middle East. Mr. Bruch, can you tell us how the demand from the Middle East has changed? So can you quantify that? What was the impact of the Middle East in Q3? Because it's been mentioned before. And it would be good to understand how the gas business was dependent on the Middle East. And the second question, the increasingly important slot reservations for capacities is something that's very critical. Can you squeeze more out of your customers? Because usually, it's 10% to 15% of revenue that is relevant for reservations. Now my question would be, given the current demand in the market, could you get more from them? And if not, why not?

I have another question on Transformation of Industry. There are considerations to carve out that segment. Now my question would be from your point of view, what would be the advantage of a stand-alone business of transformation of industry. You don't want to do it for Siemens Gamesa, but Transformation of Industry has a good margin, 17%. So it's going well. What would be the advantage of a stand-alone business of TI? Is it -- does it not fit into your portfolio? And if so, why not?

And if I may, a final question on Siemens Gamesa. Can you give us some gist here because the guidance says breaking even in 2026? And the first month in the third quarter now so the fourth quarter, do you stay with your optimistic guidance?

Well, thank you very much, Mr. Steitz. We mean Mr. Steitz, we can do these calls on our own, can't we. Now the Middle East and how has that driven our business. Let me try to say that on the top of my head. It's several gigawatts of large projects for the overall quarter on gigawatts, it would be 30%. I mean, that's a rough estimate now when it comes to gigawatts. So it's very substantial. Those are large power station things happening in that part of the world now. And the Middle East has always been an important region, especially Saudi Arabia, UAE, Oman and Qatar. And that truly is something that we see going forward now.

Now the conflict hasn't changed anything to that, I have to say. Quite on the contrary, there is now a discussion of creating a resilient energy structure in that region. And this will preoccupy us going forward. Can you get more from customers? No, we are not squeezing anything out of our customers, if you want to put it like that. What we are trying to do is to tap this positive market momentum and at the same time, also to arrange for a good setup with our customers. Let's say, 10% to 20% that is currently discussed about in terms of reservation agreements means that at the end of the day, we want to make sure that this looks like a down payment, but that down payment will lapse if you don't buy the turbine in other words. But of course, we are interested in the cash profile of the entire project, and it has to be right and has to fit our balance sheet.

So if you will, this is a rather calm process. We are not doing any windfall profit optimization. That is not our business model. We have a long-term relationship with our customers, and that's very important because we're in a business here that is done for decades, and it's not a short-term optimization thing.

TI. Well, let me contextualize that. And generally, if you look at Siemens Energy as a company, this is an organization that over the past 6 years has changed a lot, and we're going to change going forward as well because we are working in 2 areas and 2 business areas, which are certainly different. There are some segments that are driven by electricity, by gas, wind, grids. And transformation of industry is a segment that is focusing on industry and industry development. Both segments are working differently and they're subject to different cycles. But the beauty of Siemens Energy at the moment is that both segments are very profitable. They're growing. They're very successful, but they're battling for the same resources when it comes to capital investments. And we need and want to make sure that in the next 3 or 5 or 10 years, those businesses can compete well in a competitive environment that is ambitious. And this is always the question we're asking.

And when we are seeing an opportunity where not everyone can be catered to accordingly, we need to respond. But we are not doing this -- seeing quick wins at the moment. If we want to be successful in electricity, we need different portfolio elements. And these discussions will be here to stay going forward, and that's quite a natural thing. And of course, there will be questions from our investors about what will happen to the wind business. But I'd like to take this rushness out of it. This needs to be a calm business. Every business needs to have a good opportunity to flourish in the future, and we'd like to do just that. And this is how we are leading this discussion at the moment with very successful turnarounds in mind or the experience of that we've had.

Now the question is, how do we make sure that our business continues to flourish in the next 3 or 5 or 10 years. This is what our discussion is currently focusing on, and we are proceeding step by step. In terms of our guidance, we're very confident because we said before, at the upper range of our profit margin is where we're going to see the guidance. And you have seen, if you look at the first 3 quarters of the year that we're doing really very well. We assume that there will be a certain seasonality in our profits. And this is also why we didn't change the guidance range. But as I said before, we're very confident because all the general conditions bode very well. We are on a good way forward. On the other hand, there's always fluctuation between the individual quarters, and that will also mean for quarter 4.

And Mr. Steitz also asked the question about breakeven in the wind business. Yes, we're on a good way. If you take the total of the first 3 quarters, it's a small double-digit loss. But the team is working very hard on it. I'm totally proud of what our wind team has achieved, but still tough work ahead of us. And it's to turn that into a highly profitable business. A lot remains to be done, but it's a super milestone, I must say that.

Next question comes from Axel Höpner of Handelsblatt.

I have 2 questions. First, the data center effect, can you quantify that in that quarter? And can you tell us what your time line will be for transformation of industry?

Data centers. Now when we look at gas turbines, because gas turbines is what most of the discussions focus on, if I remember correctly, it was 20% of our orders when it comes to capacities. So a little less than in the previous quarter because we are trying to strike a balance here consciously. And when it comes to transformers, it's always lower than it is in gas as far as percentages are concerned. So what I'm saying is it's an important segment, and we believe it's here to stay. But it's not as dominating as some reporting would suggest out there. Albeit this is a market that no one has seen 5 years ago. So this market will be here to stay. So it fits nicely with our balance sheet.

As far as the time lines are concerned, you're always well informed, you guys, I must say that. But we don't have a time line saying something is going to happen now or at a certain date. We are rightly now in discussions with our supervisory organizations, with our employees, with employee representatives, works council. So this is an internal discussion more than anything right now. And we're looking at the long-term future of this business. But of course, we are very much interested in being very clear to our workforce and tell them, look, this is how we are going to continue. But one thing is still abundantly clear, nothing is going to happen rashly overnight and quickly because what we are talking about is so important. And when things are up for discussion, we take our time.

But let me say this again very clearly. We are here -- we are working in 2 very good segments, but those are entirely different in terms of how they work, how they operate. And we need to massively invest in all segments and competitors are doing this as well. So we need to address that. But again, this is going to happen step by step. As soon as we have decisions and we have more clarity, we'll reach out to the press. But today is not the day to do that, and we cannot talk about decisions yet.

The next question comes from the chat from Michael Duelund from EnergiWatch in Denmark. And he's basically got 2 questions. We hear about a possible European merger in wind and the Chinese competition there in order to counter the Chinese competition. How do you see that? How do you see the discussions? Would Siemens Gamesa be interested in such consolidation? And he would also like to know about what Henrik Andersen said from Vestas, and they said that the European antitrust law might have a problem with regard to such a giant in the wind section.

Well, this has been a discussion that's been going on as long as I've been with Siemens Energy. And this is something where -- well, I can't really comment on that. And Henrik is correct. This, of course, is a question of antitrust questions. What do we want in Europe. And the point we have to deal with here is we're in a market now where the Chinese competitors are massively joining the market, and we cannot beat their prices with regard to the assets cost, for example. And that, of course, is quite obvious. But this is a discussion which I think it's not the manufacturers to have this discussion. I think it's also the EU that has to discuss this. What do we want in this respect?

I don't see the underlying conditions there right now where we really can have such a discussion successfully if we say, I'm going to take all of the wind companies in Europe together, put them all together. That won't work in terms of antitrust regulation. So we have these discussions in European Airbus, for example, or wind Airbus. And here, this is something we haven't gotten there yet. And I think at the end of the day, this is a political discussion.

Christof Ruhrmair from the German Press Agency.

The first question is, we're talking about transformation of industry. And this reminds me of Mr. Kaeser when he spoke about energy. So it sounds quite similar that something is going to happen. And I probably won't get any information from you on that. And when we talk about the question of order intake, is this something that is below revenue? It's not only the EUR 3 billion project from the previous year that you don't see this year. Do we have to be concerned about that, about order intake being under revenue?

Well, thank you for the question. I wasn't there when Mr. Kaeser said something many years ago. But let's -- remember this, of course, it's our job. We're managers, and we have to see how we're going to continuously develop our portfolio. And you've seen that in the last quarter or a couple of quarters ago, companies were acquired to add to our portfolio. That's my job to see what will secure our company and keep us successful and secure jobs over the next several years. That's my job. And we have these discussions quite frequently. And that's why I believe that -- well, I put the question somewhat differently. Of course, it's a natural process, and that's management's job to do this.

Gamesa order intake. We mentioned this a number of times. In terms of -- well, let me put it this way. We have a very careful look at order intake at offshore. A lot of projects that were originally planned are slipping and because companies -- and we also consider interest rates, they play a role there as well. They're not willing to make the final investment decisions right now. Offshore wind projects tend to be very large as individual projects. So once one project is shifted, then it's a big difference, and it's different with onshore. That's where we say we really have to add some speed to this. That's why we're calling upon the government, the 16 gigawatts that were auctioned. These are not going to be constructed. And that's why we can only say this again and again.

The other thing that you have to see, and this is a question of timing. Of course, in onshore, we have a very slow ramp-up after we interrupted and said stop. Now this is beginning to pick up again. Yes. We can see the first projects are coming in. And of course, that's the second effect that you see. But offshore, absolutely something needs to happen there. There's been a lot of discussion what's going to happen in '27 and '28. But we really need to make sure that we don't just say in 6 months or in 12 months' time. No, what we need now is the awareness that offshore wind is to be added on.

The question as to order intake came from EnergiWatch. So that question has also been answered. Now we have [indiscernible] from [indiscernible].

I also have some questions on the possible carve-out of transformation of industry. The first question is, what -- didn't it surprise the head force that things were so well advanced and that the employee representatives are not excited about this. They seem to be rejecting it. How do you want to get them on board?

My second question on this would be, can you imagine transformation of energy and splitting it up and having -- selling it to different -- to various different purchasers. You could say that there are very many different businesses included in transformation of industry, Marine, for example. This is something which is very sensitive and you can only consider certain purchasers for this.

My third question would be, if you sell them, then you'll be losing your hydrogen business. And that's an important building block in your green story and a good supplement.

Are you still there? You seem to have -- we seem to have lost the connection. But I think the question was asked, but is the conference still -- I think we've lost her. Can you see what's going on?

Can you hear us? If you can hear us, there seems to be -- you seem to have been cut off. I apologize for that. Can you hear me? Is the journalist still with us? Can you hear me? Can the participants hear me as well? We're going to put -- we're going to continue.

Ladies and gentlemen, we now continue with our conference call.

Okay. I hope you can hear us. Apparently, we have had a technical glitch, we apologize. But I see all journalists are still on the line. [indiscernible] had asked 3 questions before on the Supervisory Board and the rumors about TI, whether a breakup of TI would be an option. And you also referred to the hydrogen business, which is an important sustainable factor for the future. That's what you said. Did you have -- were there more questions? Yes, 3 questions. And Mr. [indiscernible] is here with us now?

Yes, I do. I do. Those were exactly my questions. You're right. Sorry. Sorry, I thought I said something wrong because no one answered.

No, no, no, no. We're very transparent, very open, no doubt about it. Now obviously, this is a discussion because there are always changes here and there, and we need time in order to address those change processes. Now the best example for a successful business, a stand-alone business is Siemens Energy. We would not be at this point where we are now if we had to fight for funds from Siemens AG. So we have to explain this very well, of course. And I very appreciate this exchange with our employee representatives because they have good experience with working for this company. They know the business really well. And yes, it is a critical but constructive discussion we're having.

So with that in mind, we need to explain that there's a price you need to pay for inaction. And we need to tell people where we're headed, what we want to achieve. And I'm not going to say, and I don't know what the result is going to be. But again, this is about different scenarios we're looking at. And it's a process. A process that rightly so will take time. But I am confident because at the end of the day, this is about keeping a successful business successful. And that is different from earlier discussions. We're not talking about -- because we always got this sticker when it started that we are the junk store of the industry. We're not. It's not a junk store. We have 2 extremely profitable businesses, lines of business, and we're investing money like crazy to continue growing.

So this is a number of challenges out there that we have in the changing environment. And this is what we need to understand. We're in the process, and I'm confident that we will continue this constructive discussion. Now the breakup in the mixed bag or the general store, as you called it. Well, you have a product view on that. I don't. I'm looking at the customers and the customer groups that we work with.

One is industry and the other one is electricity or power customers. Now in transformation of industry, the general line is that you always work with industry customers and industry customers will buy a compressor here and a steam turbine there and an electrification solution there. And this is exactly what we are trying to keep together. We believe there's an intrinsic value in it. And this is why we have set up transformation of industry. And I understand why this discussion is out there. But our logic is we want to create an industry customer business. That's our idea here.

Now in whatever shape and form is a different discussion. But this is what transformation of industry is doing today, and we believe it's a good thing. Now when you talk about hydrogen, yes, I agree. Hydrogen is important. Unfortunately, it's a business where we need to witness that the market is not quite there where we expected it to be 3, 4, 5 years ago. We always said it's going to be difficult, but it's different now. At the end of the day, this business in itself needs to be successful.

And again, I said it before, it's not so much a question of do I believe in this business, but really what's the shape and form and structure of that business and who's focusing on doing one. So we have to explain this. We have to discuss this and then take a decision, but we were not there yet at this point. That's important to underscore again because sometimes the newspapers are saying as everything is cut and dried, it's not.

Angela Maier is next from Börsen-Zeitung. She's standing in for Mr. [indiscernible], who is on holiday today.

I have a couple of questions. One on Siemens Gamesa. We have good orders there, EUR 31 billion, which is melting down now just because you're getting fewer orders in now compared to revenue. Now can you say a word about your orders in terms of onshore and offshore? Have you seen cancellations and delays? So just to get an understanding of what's happening in the wind power business. Now the free cash flow of Siemens Gamesa in the third quarter is still minus EUR 518 million over 9 months. So it's EUR 1.7 billion of minus cash flow, so a lot of cash burn. Why is that? Why are you still burning cash? Why is it still so extremely high? And then going forward, how is that going to change? So when do you expect a cash flow breakeven?

Second question, you said there are portfolio elements missing in electricity. So what portfolio elements would you like to see in the electricity segment?

And the third question on your forecast. Now in 2 areas, we are very much ahead after 9 months in margin. You already have 12.6%, which is actually much more than the 10% to 12% that you guided for the remainder of the year. And for free cash flow, you're at EUR 7.2 billion after 9 months. So if you are still guiding for the EUR 8 billion for the overall year, it's only EUR 800 million left that you need to bake in, in the last quarter. So would you, in the fourth quarter, expect any collapses in cash flow, but why don't you adjust your guidance?

Ms. Maier First off, of course, the order backlog will diminish. We're executing it, of course. And in our press trip, we talked just about that. '27, '28 is what we currently have on our order books. For '29, we have to obviously make sure that we win new orders for offshore, very important. And this is also what we tell the federal government in our conversations with them. So we're very attentively looking at that because at some time, we need new orders. And now we see projects as such. So we see something happening.

In terms of Germany, the challenge is that the old auction or bidding conditions were very difficult for companies. And there's a discussion now with the German government about addressing this. Because it would be clear what was originally to be built and just the conditions are not right at the moment, and it doesn't work, therefore. But of course, if that were to continue, that would be a problem at some point when it comes to capacity utilization. Again, it's not a short-term thing, but in the medium term, yes.

As far as the portfolio is concerned, we always try to explain this. For grid technologies, we try to broaden our base, especially for digital grids. You may have seen that we purchased Camlin, which is a company that works precisely in this area. We did the closing just this quarter, and we continue to work on that and to broaden our portfolio. When it comes to gas services, we try to drive a vertical logic. So in the sense, can we make sure as far as the supply chain is concerned, that we are in robust shape. I think it was 2 or 3 quarters ago, we purchased a company in England, CIC that are producing ceramic cores just to make sure that our service business is catered too well.

Now those are investments that are driving our service business on the long end, and there is this logic there, slightly different across the 2 segments. Now as far as the cash flow is concerned, please bear in mind that we have significant CapEx spending in the fourth quarter. We continue to invest in our plants, out of which a few things will materialize in quarter 4. So those EUR 8 billion, I think, are still a robust guidance.

Cash breakeven, another question, right? Yes, I think we mentioned that at the Capital Market Day, 2028. I think that's correct. 2028, that's when we expect cash breakeven to occur. And this was quite obvious to us. And this is also influenced by order intake. You have to keep that in mind as well, but that is our plan and continues to be the plan. One more question from the chat. If you want to ask a question over the phone -- actually Bloomberg has another question. We'll have that in a minute.

[Operator Instructions]

And from the chat from [indiscernible] from [indiscernible]. And this is a rather general question. Could you explain to us why Siemens Energy is so successful? He wants to know the 5 main success factors. Maybe you can give us 3.

Okay. Well, First of all, in the last 5 years, we've put a lot of effort and work into being good in operational excellence. How do we do things? How do we execute products? How do we reduce some of the costs? How do we carry out effective engineering? That's much more important than many people think. How does a plant work properly? How do we get good productivity and productivity gains? That's the most important thing in order to turn order backlogs into revenue and profit. We've put a lot of work into this and our employees do an excellent job. And I think this is something that we cannot say often enough.

Now of course, we have a cycle, the electricity cycle. We would call this a super cycle. And this is what we believe will continue. We're at the beginning of electrification, this major [ wave ] of electrification. And we see that the share of electricity in the overall energy demand is growing continuously. This, of course, drives demand for our products. And now -- and this is something that we're trying to achieve is that what we want is to say for the next few years, we really want to manage to have the best portfolio for this electricity market.

And that brings me to the third point. I think we've worked well continuously in adjusting our portfolio. Everybody talks about transformation of industry, but we've continuously been working on this to see we need to do something, where do we need to do something in order to be in the proper position. And this is a lever which we have been able to use well and continuously over the last 6 years in a market that is growing. And of course, that is good. And for me, it's a question now of taking the long-term aspects, long-term growth and continuous profitability, less a question from one quarter to the next. Long term, we want to have a strong, stable, resilient company.

Thank you very much. Let's move over to Bloomberg, Marilen Martin.

Maybe you could give us some information on free cash flow. In terms of structure, is it higher? Or is this just due to reservation slots? That's my first point.

And then on 2027, maybe you could give us some more information on demand. Is this going to continue? And what are your expectations there? And when it comes to order backlog, how much of the order backlog is reservations? And what -- how much is this in terms of reservation fees and firm orders? Thank you.

Well, let me talk about cash flow structure. This is the reflection of order intake and revenue, and this is -- this reflects our business. And I said this in Q4, we also have to consider how much capital is invested, and it's not the same in every quarter because it depends on when we begin and when we complete a project. So that CapEx in one quarter might be clearly higher than in another quarter, but this reflects "the normal structure of our business and good new orders." Now for 2027, we are carrying out the plans right now. We see this as positive and the market will remain so. And that's why we are also optimistic when it comes to 2027. And of course, these are our initial observations for Q4. In November, we'll give you the outlook and guidance for 2027 and medium-term prospects. So we hope that you will join us again in November, we can give you more specific information then.

Order backlog and reservations. Reservations in the order backlog. No, the reservations are not included in the order backlog. The EUR 162 billion that we have in the order backlog are orders. And what we're trying to do is to not have too much in terms of reservations. That's our strategy. We see more orders than reservations. Not every company does it that way, but that's our approach.

We have a final question from the chat. [ Richard ] wants to know whether the tender in Denmark is a positive one. Well, maybe I can say that every bid that turns into a project is positive for the market anyway. But there is a question from [indiscernible] and EnergiWatch. The onshore turbine, [ SG 7.0-170 ], which is the continuation of the 5.X. What about that turbine going forward? So what's the plan? And what are the sales figures? So just an outlook on the onshore market.

Now for the 4.X and the 5.X, we have the successor model 4.X. Obviously, the successor to the 4.X in sales numbers is higher. SG 7.0 is currently launching now just -- well, because there have been a number of customer or approval processes until they turn out to be orders. So I'm still talking about smaller selling numbers at the moment, but a lot of discussions ongoing relating to them. And across the different countries, we see future projects that will obviously make a contribution to this. But what I'm saying is we're just at the beginning of that whole process. I'm very positive, though. The turbine is going down really well, very positively with our customers in the market, but it takes time, and that's the challenge.

Thank you very much. We have one more question from NTV coming in a second, but we need to wrap up. You'll be live with NTV in a moment, so people can tune in there. Thank you very much to everyone for joining and for your interest. If you have more questions, my press team and myself are available. Please talk to us. And I need to apologize again for our technical glitches we've had before. Our analyst call with Christian Bruch and our CFO, Maria Ferraro, already begins at 10:00 today. So please dial in, but you cannot ask questions. You'll find the link on our website. The next regular meeting for journalists is our annual press conference on the 11th of November. So that's not long.

But before that, I'd like to wish you a great holiday season. I'll be on vacation soon. Thank you very much, and have a great day.

Ladies and gentlemen, this is the end of the conference call. Thank you very much for attending. Goodbye.

Ladies and gentlemen, good afternoon, and welcome to the Siemens Energy's Pre-Close Group Call for the Third Quarter of Fiscal Year 2026. Before we begin, please note that today's call is being recorded. The recording will be available on the Siemens Energy's website until the quarterly results are published.

Before we start, I would like to remind you of the information and forward-looking statements disclaimer, which applies to the comments made during this call. At this time, I would like to turn over to your host today, to Mr. Tobias Hang. Please go ahead, sir.

Thank you so much, Moritz. Good afternoon, good evening, and a warm welcome to the Siemens Energy Pre-Close Call for the Third Quarter of Fiscal year 2026. The purpose of today's call is to reinforce our previously communicated guidance and to recap the key messages that we have consistently shared over the course of the quarter, including during our Q2 results at conferences and in our ongoing investor interactions. We plan to publish our Q2 -- Q3 fiscal year '26 results on Wednesday, August 5 at 07:00 a.m. CEST, with the webcast scheduled for 10:00 a.m. CEST that morning. As usual, we will share our company compiled consensus one week ahead of the earnings release, and our silent period will begin immediately after this call.

Let me briefly guide you through today's agenda. I will start with a short update on the current environment, followed by our perspective on market developments, demand and pricing trends across all businesses. I will then touch on seasonality and conclude with a few additional remarks related to the third quarter. We will conclude the call with a short Q&A session to clarify some of the statements given during the call.

Please remember that we cannot provide additional information on the information we have already provided during the quarter.

Let me start with the current environment. From a business perspective, the impact from the Middle East conflict continues to be limited. As in the previous quarter, any effects are primarily related to logistics and timing rather than underlying demand, consistent with what we have communicated before. At the same time, we continue to see strong interest in new projects across the region. In addition to local initiatives such as Vision 2030, which are accelerating the shift from oil to gas, disruptions to the existing power infrastructure during the Iran conflict have further increased the need for additional capacity and higher reserve margins.

Against this backdrop, we were recently selected to provide gas and steam turbine technology for the 2.6 gigawatt Taweelah C independent power producer project in Abu Dhabi, a project that we booked in Q3. Importantly, we see no major operational disruptions. And overall, no material impact on our guidance, underlining the stability and resilience of our organization, which resulted in a smooth execution in recent months.

Let us now turn to the broader market environment. Our core message remains unchanged. We are operating in a structurally growing electricity markets driven by electrification and long-term demand trends. Market momentum remains very strong. Based on the current visibility, we now see a sustained gas turbine market in the range of around 110 to 120 gigawatts on average per annum for the upcoming years. Importantly, demand is not driven by a single customer group. Our data centers and AI-related demand remains an important contributor. Order intake continues to be well diversified across geographies and customer types.

The gas market remains clearly supply constrained. While tighter supply conditions are attracting additional entrants including smaller players and alternative technologies, this is expected given the market conditions. However, we do not see this as a meaningful competitive threat. Announced capacity additions for large gas turbines meet our current market view and the overall market behavior is very rational. The additional capacity additions we are seeing in the industrial gas turbine space do not affect the overall supply-demand imbalance.

As those products cannot substitute large gas turbines in the medium term, when capacity, efficiency and total life cycle costs are more important factors than short-term availability. Pricing across our markets remains favorable. In particular, faster delivery continues to command a premium reflecting that for many customers, speed is currently more critical than efficiency.

This is especially visible in projects related to hyperscalers and data centers, where pricing remains particularly strong. This accounts for Gas Services and Grid Technologies, products and solutions. Overall, we continue to see no sign of demand weakness and order visibility remains high, well beyond the current fiscal year. As we already mentioned, we see a strong project pipeline for Gas Services for fiscal year 2027.

Let me now dive deeper into Gas Services. As already indicated during our Q2 results call, we expect the third quarter to be another strong quarter, and this view remains unchanged. We continue to see that the strong market demand has carried into Q3, and we do not observe any slowdown. A friendly reminder of the quarterly order intake may be volatile due to the large project nature of the business.

As mentioned before, this can result in timing shifts of projects between quarters. Accordingly, performance should be assessed on a full-year basis rather than focusing on individual quarters. From a structural perspective, the market remains supply constrained rather than demand constrained with strong backlog visibility and the growing number of commitments, including reservation agreements.

It is also important to clarify that slot reservations are not speculative in nature but rather represent structured agreements that are typically converted into firm orders within a defined time frame. Siemens Energy's focus in relation to slot reservation agreements, the conversion of those into orders with an average of 6 to 12 months. It is also visible in our order backlog of around 60 gigawatts as of Q2 fiscal year 2026. This short-term conversion offers us the opportunity to benefit from increasing pricing dynamics and a better planning horizon.

Generally, we apply a rigorous project selection process, enabling us to work with a limited number of clients and maintain long-term engagements supported by sustained service opportunities. We have also continued to expand capacity in a disciplined manner. The capacity additions we have announced in recent years are not only justified but necessary to address the market's structural supply-demand imbalance, even with the additional capacity coming into the market, we continue to see tight supply conditions. The progress on our capacity expansion is running well.

In the second half of this fiscal year, the first phase of the medium-sized gas turbine expansion will come online, adding 30 additional units to the 50 we were producing for a year before. This offers us the opportunity to increase our deliveries by more than 1 gigawatt in comparison to the previous quarters.

A big step-up in capacity additions will take place in fiscal year 2027. And we will be able to produce around 50 large gas turbines per year in comparison to around 35 units before.

Turning to profitability. Current quarter may see benefits from stronger operational performance as we observed already in Q2, including potential positive FX effects. Typically, service revenues based on long-term service agreements follow up the lag consisting of turbine delivery and warranty phase, which means that the full benefit of today's order intake will materialize in January, 3 years after installation. However, we already see the pricing strength in new unit business is carrying over into service contracts, which supports a gradual improvement in service margins over time.

On the supply chain, volumes are increasingly secured well into the beginning of the next decade. Supply chain constraints remain present, but are significantly less severe as we are focusing on having the framework agreements in place to serve our new units and service activities with external and our internal supply.

Let me now turn to Grid Technologies. The underlying market remains extremely strong and continues to be driven by the global need to expand transmission capacity, integrate new renewables and replace aging infrastructure. Grid is still, in our view, somewhat underappreciated by the market, despite being one of the most attractive long-term growth opportunities. Regionally, Europe is currently ahead in terms of investment while momentum in the U.S. is clearly picking up and several other markets are showing strong growth.

In the U.S., we saw strong demand also from data center-related projects. We have booked around EUR 2 billion orders related to data centers in the first half of the year, which reflects almost the same amount as for the entire fiscal year 2025. As mentioned, customers in the U.S. are willing to pay a premium when the equipment can be delivered faster. Our portfolio for data center consists of power transformers, circuit breakers, STATCOMs and general solutions to connect the equipment.

From an operational perspective, we continue to be very well booked with high backlog visibility and strong book-to-bill ratios over multiple years. Capacity expansions are progressing well. The benefits from these investments are increasingly visible in both growth and margin developments. We could raise our guidance to a revenue growth of 25% to 27% from 19% to 21% before. And the profit before special items targets to 18% to 20% from 16% to 18% before for fiscal year 2026, already meeting our midterm target for fiscal year 2028, 2 years earlier. Margins continue to improve steadily driven primarily by operating leverage, productivity gains and execution improvements rather than pricing alone.

Another important factor is our continuous capacity expansion, which is taking place globally. We are expecting a step-up in revenue in the second half of the year as several brownfield expansions in Austria, Italy, China and Saudi Arabia come online.

During 2026 and 2030, we will further increase capacities for large power transformers and switch gears by 50%, which accounted to 45% of the revenues in fiscal year 2025. Overall, growth remains limited by execution capacity rather than demand and we continue to see a very robust outlook for this business.

Let me now turn to Siemens Gamesa. As already communicated, on order intake, a significant portion of offshore orders has shifted to fiscal year 2027. As a result, order intake in the third quarter is expected to be mainly driven by our general baseline orders in onshore, related mainly to repowering orders in the U.S. comparable to Q2 fiscal year 2026. For Siemens Gamesa, our priorities remain the same. Focus in onshore remains on execution and the cautious rollout of the new products. In offshore, we continue to invest in capacity and productivity to deliver the existing backlog, while service focused on profitable operations after negative impact from the years before to the fixing and mitigation of quality issues and the installed 4.X and 5.X fleet.

Our key message remains unchanged. We expect profitability to improve over the course of the year with a negative first half, a positive second half and a breakeven result for the full year. Cash flow, however, is expected to remain negative, turning positive in fiscal year '28, as mentioned previously.

Let me briefly comment on transformation of industry. The business has shown a strong operational turnaround and continues to deliver solid margins and stable growth. However, in the context of our overall portfolio, it remains less central for our electrification strategy compared to other businesses.

Let me briefly comment on the article published on transformation of industry a couple of weeks ago. Siemens Energy routinely reviews its portfolio to ensure every business has the best strategic and financial conditions to compete, invest and grow over the long term. As part of this ongoing work, we are assessing the best long-term setup to accelerate the growth journey for transformation of industry business area, always guided by what best serves our customers, employees and shareholders. No decisions have been made. We, therefore, continue to focus on operational excellence and active portfolio management in the segment.

Let me now briefly address seasonality. In Gas Services, the historical pattern slightly changed over the past quarters, mainly driven due to a higher ratio of new unit business, which was visible in the second quarter.

At the same time, the new units running through the P&L are coming with a better margin profile, uplifting also the margins in the quarter, there are less transactional services are conducted. Therefore, the lower margins in the second half of the year are expected to be less pronounced than in prior years. We continue to expect Gas Services orders in Q4 to be below the strong levels for the first 3 quarters, reflecting normal project phasing as we saw in the previous fiscal year. However, we anticipate a strong start to fiscal year 2027. Q3 remains a very robust quarter as previously highlighted.

For Grid Technologies, revenues are expected to increase in the second half of the fiscal year, driven by brownfield expansions that add capacity to existing assets and support a corresponding improvement in margins. CapEx for fiscal year '26 remains at around EUR 2.2 billion. Given that we spend only around EUR 700 million in the first half, CapEx will increase significantly in the second half of the year. As indicated at the beginning of the year, we expect the reconsolidation line at profit before special items to be around negative EUR 400 million. We see it more pronounced in Q3 but still peaking towards the end of the fiscal year as in previous years.

Let me briefly touch on cash flow and capital allocation. Our key message to remain unchanged. Cash generation and structural and supported by strong profitability, advanced payments and a growing backlog. We expect cash conversion to remain strong for the full year. Even after dividends, share buybacks and ongoing investments, we expect the business to remain in a solid net cash position. After we finished our first EUR 2 billion share buyback tranche shortly after our Q2 results, we already started the accelerated EUR 1 billion share buyback early June. After we finish this share buyback tranche, shareholders' returns in fiscal year 2026 will be at EUR 3.6 billion, including dividends. We have upgraded our free cash flow guidance to around EUR 8 billion from EUR 4 billion to EUR 5 billion before. We continue to review our capital allocation framework, and we'll provide a more detailed update at our extended Q4 analyst call later this year.

Finally, a few additional remarks. In the United States, we continue to see a very busy market environment, with strong demand but also capacity constraints on the EPC side and typical permitting delays. Importantly, we have not seen any cancellations or any delays on our sites and our contractual structures provide a high degree of protection. In Germany and Europe, more broadly, demand remains robust despite ongoing discussions around energy policy. We continue to expect meaningful order intake, including several gigawatts of gas turbine orders in Germany over the course of the calendar year. Overall, we continue to operate with a strong focus on selectivity, pricing discipline and close customer engagement across all regions.

Finally, a brief comment on foreign exchange. As we guide on comparable revenue growth, excluding currency translation and portfolio effects, we continue to see higher comparable growth and nominal growth. For the third quarter, we expect comparable revenue growth to be around 200 basis points higher than nominal growth to group level compared with 560 basis points in Q2.

Let me conclude the key messages. Demand across all markets remain structurally strong, global and diversified. Market momentum continues to be very robust and the supply-constrained environment supports strong pricing and visibility. In Gas Services, demand remains strong with continued service momentum supporting the margins. In Grid Technologies, execution continues to drive both growth and profitability, supported by strong structural markets. In Siemens Gamesa, order timing explains current volatility, while the underlying turnaround remains on track. Overall, our performance continues to be driven by disciplined execution translating into improving profitability and strong cash generation. With that, we will start today's Q&A session.

[Operator Instructions]

So the next two people in the line in order to ask a question will be: First, Max Yates from Morgan Stanley and then Alex Jones from Bank of America. Max, please go ahead.

I just wanted to check on the grid orders because it didn't -- it felt like there wasn't maybe a sort of explicit comment there. I guess you benefited from a large order in the last quarter. So is there any framing you would give us in terms of maybe what you would consider an underlying order rate in grid and also whether you've had any large orders and then maybe just a very quick sort of clarification. When you talk about the good order levels from Q2 being sustained in Gas, is that a gigawatt comment? Or is that a number in terms of kind of absolute euro value?

Thanks, Max, for these questions. On the one hand, you're right that in Q2, we had the Bornholm order in Grid Technologies as one of the large HVDC orders. And as you know, these HVDC orders are always in the amount of around EUR 1 billion-plus, also benefiting in that's order intake. This quarter, we announced, let's say, an HVDC order, but if you read the news release very precisely, you will also see that will be only booked in fiscal year 2027. So therefore, the overall level should be probably on the same level as you would see Q1 or Q2, excluding, let's say, the larger HVDC global order continuing as we saw that in the previous 2 quarters.

So I think the -- overall, I think we have already mentioned also before that the targets or when we had our order intake from the last year in total, given that we should be at least at the same level. So I think if you take out this large HVDC in Q2, we should be going into the same similar direction.

Referring to your Gas Service order amount. I mean, in general, as we mentioned, of course, on the one hand, there is a certain relation between gigawatts and let's say, euro order intake. At that point in time, I mean, we rather -- they have certainly our visibility on a euro basis, while the gigawatt number will be something we will be certainly -- we're still not at the quarter's end. So therefore, that is something that we see in the future. So therefore, we are currently talking about, let's say, certain levels that we will be always rather based on a euro basis. Next question goes to Alex Jones from Bank of America.

Just two clarifications as well. Firstly, on the grid capacity, should we expect that to progressively ramp up over H2, so Q3 a step-up and then Q4 higher than that? Or is there any sort of particular skew to that between the quarters?

And then just a second clarification, you talked about German orders there on the gas side and several gigawatts. I think you said before the end of the calendar year. Is that already reflected in your commentary about Q4 gas orders being a step down compared to the first 3 quarters?

Yes. Thanks a lot, Alex. Yes, first of all, I mean, in reference to the, let's say, step up of capacities in Grid Technologies. That will be something where, let's say, the capacities might have been even, say, opened up in Q2 and then you really have the efficiency ramp up moving on so that we should be there at full capacity of these new brownfield additions by Q3, so that should be the -- therefore, you can expect that after a certain ramp-up in Q3, it should be at a similar basis than going forward.

In reference to the large gas turbine orders we might be expecting from the German infrastructure package in Germany, which we normally communicated somewhere between 4 to 5 gigawatts, that is something which we rather see, let's say, at the end of the calendar year. So therefore, that being nothing we will be currently reflecting in Q4.

Thank you.

So the next 2 questions go first to Will Mackie from Kepler Cheuvreux then from Kulwinder Rajpal from Alpha. So Will, please go ahead.

So my first question would be to go back and clarify your commentary about the balance of profitability within Gas Service, H2 versus H1 if you could put some more color around why it would be perhaps less seasonal this year and less of a typical drop-off in profitability as we approach the year-end.

Yes, sure. Thanks a lot, Will. On the one hand, what we already saw in Q2 and that's what we tried to explain, was that even though, let's say, the ratio of the service business went down from 67% to 57%. You still saw that the, let's say, comparable margin profile between fiscal year '25 and fiscal year '26 for Q2 was on a comparable level, mainly driven by, also, the higher-margin projects we already signed for the new unit business. And therefore, as you see, let's say, a step up in the new units business, that is something where the higher margin profile of these projects running through will certainly also have a certain impact on the margin level. So -- and that will certainly, even though you might not have the regular outage season in the second half of the year, improve there, the overall margin profile.

On the other hand, as you certainly see that, let's say, right now, there is a high interest in having the equipment still running. There might be also some factors, which might be benefiting, for example, service business also in, let's say, not seasonal outage seasons. But I think these are, let's say, maybe 2 factors plus the FX effect we might be seeing, which might be impacting the margins also on the second half of the quarter. So that the seasonal we saw in previous years are not, let's say, always the same anymore.

So Kulwinder, over to you.

Yes. Thank you, Tobias. So I just wanted to understand the comment around the annual market in the gas turbine business. So I think previously, we were pointing towards 90 to 100 gigawatts. And now this is clearly a step-up when you're talking about 110 at the minimum. So I wanted to understand if just Middle East is the main driver? Or there are other drivers across the globe that are playing out and that is something maybe the market has missed.

I think on the one hand, certainly, the step-up we saw on our interest for projects, for new projects in the Middle East is one factor, but one of the major drivers might be also, especially the data center related topic. As we always mentioned, also already in Q4 2024 that we see a base market of somewhere around 70 to 80 gigawatts and let's say, the -- which is -- which should also include, let's say, the interest you see in the Middle East, for example, from the Vision 2030 due to the oil-to-gas shift, the coal-to-gas shift in other regions.

And then on top of that, there's certainly the high demand we are currently seeing from data center-related topics where you could also see a big step-up in, let's say, investment decisions taken by some of the hyperscalers or data center-related companies. So therefore, the main driver for the step-up will be rather related to AI data center topics.

The next 2 questions will go to Sean McLoughlin from HSBC and then Chris Leonard from UBS. Sean, please go ahead.

Thank you for the time. Just a question on the slot reservation agreements. I mean you've previously talked about this normalizing and your -- I think you're suggesting effectively, it is. These are structured agreements. Should we expect a lot more -- I mean, how do we compare year-on-year for the overall orders? Should we be looking at growth in the total slot agreements as well as the firm backlog in the quarter? Or is this more about conversion of those slot agreements into firm orders? That's the first question.

As mentioned during, let's say, the script before, our main focus is really on converting slot reservation agreements as fast as possible into orders. On the other hand, I think we also gave a certain guidance on what we're expecting as total commitment for the whole year of 90 to 100 gigawatts. So therefore, we are certainly still targeting to convert those reservations quite quickly. In reference to the 90 to 100 gigawatts at that point in time, I cannot provide any additional color on that if that is now slot reservations or direct orders. But in general, as I also mentioned that we did this -- or will do -- have a certain step up in deliveries. You can roughly see how much they will be still open in order to reach 90 gigawatts or 100 gigawatts on a yearly basis to our target.

Yes. And on your -- the idea of premium for quick delivery, again, is this just a question of how can I say, fast-tracking RSAs into firm orders? Or how is this conversion happening?

No, I mean that's really mainly driven by slot availability. So in case you have any short-term slots, and that will be certainly then automatically also drive short-term conversion of slot reservations or direct orders for these slots. That is really driving it. So that means the short-term availability of slots in GT or in GS are the major drivers for these premiums.

So next one will be Chris Leonard and then the last question afterwards goes to Vivek Midha from Citi.

Just a follow-up on the slot question. So previously, you've obviously said order intake or slots can be lumpy, but should we expect a pickup in slots looking into Q3 and probably especially into Q4 if you do expect orders to slightly phase and slow down at the end of the year. Should slots be picking up if you're saying that the overall market demand is heading higher towards 110 gigawatts, 120 gigawatts. Would that be a fair assumption?

Thanks a lot, Chris. I mean you always have to consider in case, let's say, we are seeing continuing growth or strong demand in this quarter, which would be reflected as Max asked at the beginning. And on the euro basis, you can already see, let's say, what kind of gigawatts might be booked in kind of what range. So therefore, if you then do the math, I mean, right now, we don't really have any additional information on slots or developing exactly. But I think that gives you rough expectation in case, let's say, there's a similar trend as we saw before on a euro basis. Unfortunately, I cannot give you any additional flavor on that.

So as we have over time, last question will be now going to Vivek, and I have one more person on the call, Richard Dawson. If you have a quick one, that as well. But first Vivek, please go ahead.

Just a quick follow-up on your comments around supply-demand, if I may. You obviously gave us an indication around demand staying around 110 to 120 gigawatts. At the CMD, last year, you'd given an indication that maybe industry capacity was around -- tending towards about 85 gigawatts or so. Do you have any updated view on where supply is heading?

Well, I mean, we are mainly focusing on our own supply. We were certainly seeing that there were some discussions on other supplies. As I also mentioned that, let's say, you have new entrants in the markets. But generally, right now, we're seeing that all the other players we are seeing as direct peers are behaving very rational and based on their brownfield expansion should be meeting roughly the market demand so that we at least do not see any path towards old capacities mark, but rather all the capacity additions might still be some higher demand than supply. Maybe, but generally, that is really where we're focusing on that we are using our brownfield expansion is behaving very rational, so that there should be a pretty close demand and supply balance. Excellent. So now the last question goes to Richard Dawson.

Just a quick clarification on these reservation agreements because I understand that short-term availability of these slots drives a premium in pricing for those gas turbine orders, but what creates a slot availability in the short term? Is this orders so firm orders slipping to the right? Or cancellations just create that slot availability.

Thanks a lot for the question, Richard. That's a very good question. I mean on the one hand, as we are booked out until '28 and let's say, '29 and 2030 is filling up very quickly. There's always a question what is short-term slot, so '29 might be already short-term slot where you have a lot of players being very interested in these slots. In case, let's say, project might conceptually shift, and you would have a short-term slot available due to something that might be certainly something where you certainly also get a higher premium on if, for example, something will be available in 2027, theoretically. But now, already now 2029 slots is something which is seen as short-term availability, especially if you talk about large gas turbines.

Thank you so much. So with that, we will conclude our pre-close call today. Thank you very much for your participation and for your continued engagement. And for that, now I wish you some -- hopefully, not as hot weeks as we had in the last couple of weeks and a nice summer, and then we talk to each other probably on August 5. And have a wonderful evening or afternoon. Thank you so much.

Ladies and gentlemen, this concludes today's call. A recording of this call will be shortly available on the Siemens Energy website. Thank you for joining, and have a pleasant evening. Goodbye.

Good morning, and a warm welcome to the Siemens Energy Q2 and Half Year Results Analyst Call for Fiscal Year 2026. Following the prerelease of our preliminary figures on April 23, 2026, we published our full and final Q2 fiscal year 2026 results, along with the half year report this morning at 7:00 a.m. on our website.

Our President and CEO, Christian Bruch; and our CFO, Maria Ferraro, are here with me. Christian and Maria will take you through the major developments during Q2 fiscal year 2026. This will take approximately 30 minutes. Thereafter, Christian and Maria are available to answer your questions. For the entire conference call, we have allowed 1 hour. Christian, over to you.

Thank you very much, and good morning, everyone, and thank you for joining us today. Siemens Energy has delivered another strong quarter, and I'm very proud how our team is executing successfully on the strong backlog, driving capacity expansion and managing through geopolitical challenges day after day.

Let me flag up some highlights from the last quarter before Maria dives into the details of our quarter 2 results. We achieved a record order intake of EUR 17.7 billion and with that, a record order backlog of EUR 154 billion. That record backlog comes with increasing backlog margins across all businesses.

The demand for our products in the different regions remain strong with good pricing and with Gas services and Grid Technologies contributing materially. We continue to build a diversified backlog comprising different customer segments and regions and I will refer to this later in the presentation.

In the last quarter, I also spent time with our teams in the Middle East and seeing how they support our customers while keeping everybody safe in a demanding situation gives me a lot of confidence in our path forward. From a business perspective, the financial impact of the Middle East conflict has been very limited, and we continue to see solid interest in new projects across the region.

We achieved broad-based revenue growth across all business areas based on digital execution and increasing capacities coming out of our factories. In line with our expectations, we delivered EUR 10.3 billion revenue in quarter 2 despite FX headwinds. Given the strong momentum, we raised our full year comparable revenue growth guidance to 14% to 16%.

Our profitability continues to increase year-over-year, driven by a favorable business mix and steady productivity gains. We delivered a profit margin before special items of 11.3%. Grid Technologies was a key contributor with margins of more than 17%, and we expect margin progression to continue throughout the year.

The technology is our fastest-growing and most profitable business area with a broadening portfolio, including more digital solutions. Gas Services once again achieved profitability levels at the top end of the industry. And I would like to highlight the continued progress at Siemens Gamesa, where business is clearly on its planned trajectory to breakeven, reducing losses in the quarter to EUR 44 million.

Also transformation of industry continues to execute profitably. Over the past months, I visited several of our sites and was truly impressed by the progress in our factory expansions. As communicated before, we invest more than EUR 2 billion in fiscal year 2026 to build up production capacities across the different regions.

And as a result, we expect a clear step-up in revenues over the coming months, particular in Grid Technologies and Gas Services. Our earnings qualities and cash generation remains strong and free cash flow in quarter 2 came in at around EUR 2 billion. Year-to-date, we have in fiscal year 2026 already returned around EUR 2.4 billion to our shareholders through dividends and share buybacks.

And we are planning on accelerating the share buyback this year by an additional up to EUR 1 billion. And Maria will afterwards share some comments on that. Across all businesses, we execute our Elevate program to further drive operational excellence and resilience. And I'm really excited about the potential that AI provides us to transform the way we operate.

AI is being increasingly embedded into our operations and decision-making, allowing us to get better every day. And it is not just business operations. We're also pushing AI application across all corporate functions, and I'm pleased to see how people take it up. And this will show tangible benefits in future and the teams are really on it.

As a global leader in energy technology, we are on track to position Siemens Energy as best-in-class industrial company for the long term. Overall, based on strong demand, improving visibility and disciplined execution, we raised our 2026 full year outlook across all key financial metrics.

As mentioned before, the market environment in quarter 2 remained highly favorable, with strong demand for our products across the different regions and continued strong pricing. Growth was again led by the Americas, in particular, the United States.

Asia and Australia also delivered solid contributions with strong order intake growth. Revenue comparisons were impacted by strong prior year offshore wind projects in Taiwan. In EMEA, order intake was slightly lower year-over-year, mainly reflecting some shifts in parts of the Middle East. Overall demand in the region remains intact. And Gas Services and Grid Technologies clearly stand out in performance.

Let me start with Gas Services. Three drivers underline the strong performance in the second quarter. First, Gas Services remains one of the most profitable players in the industry and is well on track to meet its profitability target.

Second, we continue to see strong conversion from reservation agreements into firm orders with a current split of roughly 70% firm orders and 30% reservations. Third, pricing dynamics for new projects remain very attractive, and we expect this to continue for the foreseeable future.

In quarter 2, Gas Services delivered another record quarter with EUR 8.9 billion in orders across 12 countries. Demand was strong in the Middle East and Europe. And obviously in the United States. U.S. demand was largely driven by data centers with excellent pricing conditions. The 5 gigawatt of order intake in quarter 2 brings our total data center-related commitments to 24 gigawatts that is orders and reservations.

In total, we booked 77 turbine orders in quarter 2, including 26 large, 45 medium and 6 small turbines, resulting in 12 gigawatts of new turbine orders, with the majority linked to traditional applications. We successfully convert reservation agreements going forward. During the quarter, 9 gigawatts were converted into firm orders ending quarter 2 with 27 gigawatts of reservation agreements.

Our focus remains on short-term conversion, allowing us to fully benefit from the favorable pricing environment.

The margins of new unit and service agreements we booked in quarter 2 improved significantly relative to current backlog margin levels. In total, we now have 87 gigawatts of commitments in place after delivering more than 3 gigawatts during the quarter.

By the end of the fiscal year, we expect total commitments to reach 90 gigawatts to 100 gigawatts. Our supply chain expansion is progressing well and supports the already announced capacity expansion in the coming years.

Let me now turn to Grid Technologies. Technologies continues to outperform in both growth and margin expansion. And this leads us to upgrade our guidance for the full year significantly. We now expect to reach a profit margin before special items of 18% to 20% already in fiscal year 2026. The level originally targeted for fiscal year 2028. At the same time, we target comparable revenue growth of 25% to 27% for the current year.

The business benefits from long-term structural drivers, electrification, large-scale grid replacement, renewable integration [indiscernible] from data centers. Reliable and resilient grid infrastructure is also a critical enabler for data centers.

And as a result, demand for grid connections, transformers and grid stabilization solutions is accelerating. In the first half of fiscal year 2026, this translated already into nearly EUR 2 billion of data center orders in grid technologies. Global supply remains constrained supporting pricing discipline and operating leverage.

We see stable but elevated prices in Europe, while we observed higher average pricing levels in North America due to increased demand related to data centers. And this underpins our decision to continue investing heavily in U.S. capacity but the demand does not only come from 1 region.

The rising demand is visible in many parts of the world. We see an attractive long-term growth outlook well beyond the current investment cycle. To meet this sustained demand, we are expanding manufacturing capacities globally and our transformer and switchgear capacity will increase by around 50% between 2026 and 2030.

Looking ahead, we expect a clear acceleration in Grid Technologies performance during fiscal year 2026 driven by, first of all, higher revenue conversion from backlog and second, new production capacities coming online such as in Austria, Italy, Saudi Arabia or China.

And third, obviously, the operating leverage and productivity gains we have because of the great backlog. And this underpins our confidence in delivering 18% to 20% margins already in fiscal year 2026. Grid Technologies is now not only the fastest-growing business in our portfolio but also one of the most profitable with visibility extending well into the next decade.

And while we are expanding capacity for our products and solutions in Grid Technologies at record speed, we are simultaneously broadening our digital portfolio. The electricity grids in the different regions of the world are transforming, and the electricity demand is accelerating rapidly, driven by electrification, the energy transition and data centers.

At the same time, renewable generation is increasing volatility and complexity and power flows. All of this offers us opportunities for new products to help our customers through this transformation.

And besides the capacity expansion in our factories, we develop digital offerings to make the grid infrastructure more capable for the future. And we have recently launched our new software suite Noedra for Grid Technologies in the logic that these digital applications create the mind of the grid.

Noedra adds a digital intelligence layer that helps customers operate increasingly complex grid systems smarter and more efficiently.

It brings together 4 high-value software and service layers, Noedra Shield, which secures the grid end-to-end with cybersecurity and compliance, Noedra Flow, which optimizes transmission with real-time insights and dynamic capacity Noedra Node, which digitizes substations and turning them into intelligent self-monitoring assets; and Noedra Atlas, which supports the strategic grid planning and the energy transition.

And together, this is a platform play, moving us towards recurring higher-margin digital revenue while unlocking value from our installed base. And 4 weeks ago, we inaugurated our own grid AI lab in Orlando together with customers and partners like NVIDIA.

And this investment accelerates how we apply artificial intelligence across the power grid. The lab combined Siemens Energy's deep domain expertise with NVIDIA's advanced AI infrastructure. It enables us to deliver real-time insights, digital twins and predictive models that address pressing customer needs.

And this is where we develop and train the intelligence behind Noedra, turning complex, multi-source grid data into actionable insights across operations, planning and system optimization. Customer feedback clearly confirms tangible value and practical relevance of our digital and AI-driven approach for day-to-day grid operations.

Overall, this gives us strong confidence that digital solutions and Noedra in particular, enables the next chapter of the grid digitalization, scalable by design and anchored and clear customer value. And with that becoming an important growth driver for our Grid Technologies business. So exciting times and lots of opportunities ahead of us. And with that, I will hand it over to Maria.

Thank you, Christian, and good morning, everyone, from my side. Hope you're all doing well. Thank you for joining us today. We are continuing fiscal year 2026 with very strong momentum. In the second quarter, we delivered another record quarter in orders, continued high profitability and very strong cash flow generation.

Now let me take you through the key financial developments for Q2 and the first half of the year. Moving to next slide, looking at the group performance. Q2 was another exceptional quarter. Orders reached EUR 17.7 billion, setting yet another quarterly record for Siemens Energy.

The increase was driven by strong demand in the new units business at Gas Services and Grid Technologies. From a regional perspective, as Christian mentioned, the U.S. was a main contributor with order intake more than doubling compared with prior year quarter.

Our book-to-bill ratio was 1.72 and our order backlog hit an all-time high of EUR 154 billion. That's 8 billion more in just one quarter, again, giving us excellent visibility for fiscal year '26 and beyond. Quarterly revenue increased to EUR 10.3 billion up 9% year-over-year on a comparable basis, with all segments contributing to the revenue growth, but primarily driven by Gas Services and Grid Technologies. We did experience some foreign exchange headwinds primarily driven by a weaker U.S. dollar. This weighed on the top line by roughly 550 basis points year-over-year.

For clarification, currency movements continue to have no material impact on our profitability. This is due to our effective hedging strategies, which leave us with only minimal unhedged exposure and, of course, our global footprint with strong local for local sourcing. Profit for the group before special items was EUR 1.164 billion with a margin of 11.3%. This is up 220 basis points compared to Q2 of prior year.

This substantial increase was supported by broad-based improvements across the portfolio and with Siemens Gamesa delivering the most pronounced improvement year-over-year. Again, just a word on the Middle East exposure, as Christian already mentioned, we continue to monitor the situation closely. And to date, the impact on orders, revenue and profitability have been limited.

Net income for the group increased to EUR 835 million. This is up more than EUR 330 million year-over-year. Free cash flow pretax was very strong and reached EUR 2 billion. a significant improvement versus last year result. This was driven by the profit of Gas Services and Grid Technologies, customer advanced payments and reservation fees given the high order intake.

Now let's take a quick look at our order backlog on the next slide. During the past year, our order backlog grew by EUR 21 billion, again, for that record EUR 154 billion in the quarter. 44% of the backlog is service related, supporting recurring revenues and attractive margin characteristics. Backlog margins continue to improve further across all business areas.

In fiscal year '26, we now have approximately 93% revenue coverage for the second half of the year, and we are already just shy of 80% coverage for fiscal year '27. Now let me turn to free cash flow development. So as mentioned, the free cash flow generation continued to be strong in the second quarter, amounting to EUR 2 billion, and we reached EUR 4.8 billion for the first half of fiscal year '26. This performance again was supported by strong profit growth, increased customer advance payments and reservation fees.

Driven by our strong order momentum and a positive outlook for the group's profitability, we revised our full year pretax free cash flow guidance upward from EUR 4 billion to EUR 5 billion to approximately EUR 8 billion. The share buyback program announced at the Capital Markets Day in November of up to EUR 6 billion through fiscal year '28, is progressing as planned.

Since March 2026, approximately 11.6 million shares have been repurchased at an average price of EUR 157.1 million on May 8. As a result, the first EUR 2 billion tranche of the EUR 6 billion program is now substantially completed.

Considering this year's strong free cash flow performance, we are pleased to confirm an acceleration of the share buyback program with additional repurchases of up to EUR 1 billion in our Siemens Energy shares anticipated during the current fiscal year. As a result, we expected total shareholder returns in fiscal year 2026, including the EUR 0.6 billion dividend paid in March will increase to approximately EUR 3.6 billion. So now let me review the individual business areas.

Looking at Gas Services. Christian mentioned quite a bit here already. However, Gas Services delivered an outstanding performance and another strong quarter in Q2 of fiscal year '26. Again, orders were EUR 8.9 billion. This is up 32% year-over-year. and the highest order intake ever for Gas Services. The book-to-bill ratio for Q2 was 2.55, again, leading to a record order backlog for gas services of EUR 66 billion. The market for gas turbines greater than 10 megawatts saw remarkable strength during the second quarter.

This quarter, Gas Services booked a total of 77 gas turbines for power generation, oil and gas, 26 of those were large gas turbines and 51 industrial gas turbines. Our Q2 market share for gas turbines greater than 10 megawatts stands at 27%. This is the #1 position.

Revenue increased 15% year-over-year, the highest ever quarterly revenue in GS. This was supported by strong execution in new units with significant growth of 47% comparable. Service revenue was slightly below prior year. The service share as a percentage of revenue in Q2 decreased to 57% versus 67% in the previous year.

This, again, was expected given the very strong new unit bookings in the previous quarters, and the new unit success today, as you know, structurally expands the high-margin service base of tomorrow.

Profit for gas services before special items increased to EUR 552 million and the margin of last year's level, again slightly reflecting that business mix effect with a more pronounced share of new units, as I already mentioned. Free cash flow pretax was EUR 1.8 billion, significantly higher than last year. particularly benefiting from advanced payments on large orders.

And overall, for gas services, a very strong quarter, and congratulations to the entire team. So now let's move on to our Grid Technology business. For here, Grid Technologies had a very strong performance in the second quarter. Orders increased to EUR 7 billion, up 42% year-over-year. This increase in order to take -- in order intake was in part driven by solutions business due to a large HVDC project order in the Baltic Sea with a volume of more than EUR 1 billion.

In addition, the products business with Transformers recorded substantial growth, mainly by demand from the U.S. Book-to-bill ratio was 2.28 and order backlog also here a record increased to EUR 49 billion for -- good Technologies. Revenue up EUR 3.1 billion represented year-over-year growth of 12%. This was supported by solid execution across both solutions and products.

As a result, we've upgraded revenue growth guidance for fiscal year '26 to 25% to 27%. This is from 19% to 21%, and we expect a significant acceleration in revenues for GT in the second half of this year, primarily driven by the increased capacities from our brownfield expansions and, of course, project phasing in the solution business.

Looking at profit before special items for GT, this amounted to EUR 524 million, margin of 17.1%. The year-over-year margin decrease was primarily attributable to a one-off timing effects in prior year quarter of approximately EUR 100 million, of course, which positively influenced the prior year results.

Therefore, on a comparable basis, the Q2 margin of prior year was actually 16.4% and therefore, an increase year-over-year. So in addition, we have increased our full year guidance for profit before special items for GT from 16% to 18% to 18% to 20%. For the second half of this year, just to repeat, we do expect a notable increase in margin. This is driven by the higher revenues and an enhanced contribution for higher -- from higher-margin products as well as improved project execution.

Lastly, free cash flow pretax was EUR 735 million. This was supported by profit and milestone payments and continued [Technical Difficulty] to transformation of industry. Again, this business delivered another solid and consistent quarter. Orders were EUR 1.3 billion, slightly lower year-over-year, mainly driven by timing shifts in the Middle East particularly at compression and our EAD or electrification, automation and digitalization businesses.

Book-to-bill ratio was 0.88 and the order backlog at the end of the quarter was EUR 8 billion, unchanged and stable from previous quarter. Revenue increased moderately by 5% to EUR 1.4 billion. Profit before special items improved to EUR 171 million. This resulted in a margin for TI of 12% for the quarter.

Of course, this was mainly due to productivity improvements and a higher margin of the processed order backlog. Free cash flow amounted to EUR 46 million. This was lower than last year, mainly due to timing effects. Again, overall, Transformation of Industry continues to deliver reliable profitability quarter-over-quarter.

Now moving on and turning to Siemens Gamesa, where we continue to see clear and tangible progress. Orders of EUR 846 million were slightly above the level of prior year quarter, mainly driven by onshore new units business, which also included some SG 7.0 platform orders. That's the successor to the 5x turbine.

As anticipated, no material offshore order was booked in the quarter in the recent quarter. Therefore, book-to-bill ratio stood at 0.33 and the order backlog was EUR 33 billion. Year-over-year comparable revenue increased slightly due to the growth in the offshore business.

Profit before special items improved significantly year-over-year to negative EUR 44 million. And the margin improved to minus 1.7% in Q2. This is compared to minus 9.2% a year ago or negative EUR 249 million.

In Q2, Siemens Gamesa delivered continued financial and operational improvements. The positive development was mainly due to better productivity and increased cost efficiency in offshore as well as progress in the service business across the fleet. Free cash flow pretax was minus EUR 654 million, partly due to planned quality-related cash outs in the quarter. The Siemens Gamesa team continues to work diligently through the matters step by step, and the direction of travel is very clear, and we remain confident in achieving breakeven supported by the operational measures in progress and already implemented.

So now let me move on to our revised outlook for fiscal year '26. So based on the positive business development in the first half and the strong market demand, we have raised our outlook for fiscal year 2026 across all key financial metrics.

The change in the outlook is due mainly to a stronger-than-expected performance at Grid Technologies. For Siemens Energy, we now expect comparable revenue growth of 14% to 16%, up from 11% to 13%. Our profit margins before special items is now 10% to 12%, up from 9% to 11%. Net income is expected of around EUR 4 billion, up from EUR 3 billion to EUR 4 billion, and free cash flow pretax is now at around EUR 8 billion. This is up from EUR 4 billion to EUR 5 billion.

And let me briefly highlight the changes within the business areas. So in Grid Technologies, we now plan a comparable revenue growth of 25% to 27% and previously 19% to 21% and a profit margin before special items between 18% to 20% before this was between 16% to 18%.

And in Siemens Gamesa, we now assume a comparable revenue growth of 3% to 5%, which was before 1% to 3%. And of course, we confirm the profit margin before special items at breakeven.

Furthermore, one last piece of information that I'd like to share with you is that we intend to provide you with new midterm targets for fiscal year '30 with our full year results in November.

So with this, thank you very much for your attention. And I now hand back to Christian for some closing key remarks.

Thank you, Maria. And let me brief you wrap it up. Looking back at the targets we set for ourselves at last November Capital Markets Day. I am pleased to say that we are well on track to create sustainable shareholder value. In the first half of fiscal year 2026 has been an excellent start as you saw with our upgraded guidance.

And I want to sincerely thank our team purple here at Siemens Energy for their outstanding commitment and performance and our people stand side by side with our customers, doing everything possible to keep critical infrastructure running.

The importance of reliable energy in our daily lives has never been higher. I'm proud of what our team has achieved, even more excited about what lies ahead of us. And with that, I would like to hand it back to Tobias for the question and answers.

[Operator Instructions] So Max Yates from Morgan Stanley.

Christian. So my question was really just on the order intake over the next few quarters in Gas Services. If I sort of back out of your comments on the year-end commitments, it looks like you're pointing towards sort of 8 gigawatts a quarter over the next couple of quarters. At the midpoint, maybe 10.5 gigawatts at the upper end.

And I guess there's a lot of data that we can see around slot reservations. What I'm really trying to get to is, is there a reason that we're sort of seeing orders level off at those -- at that kind of range?

Is this kind of the new normal? And I guess I would interpret your slot reservations in the high 20s or that dictating the next 4 quarters of orders at about 7 gigawatts a quarter. I'm just trying to think about what do we see as a sort of steady state of orders over the next 12 months, over the next 2 years? And should we think about it, that 12% to 13% just truly being exceptional. So any color there on how customer conversations are feeding into that.

Thanks, Max. Great to hear you. Let me give you a free remark. We have to keep in mind, this business is still, let's say, not a quarter-by-quarter business.

There is certain obviously lumpiness in that and not get too fixated [ on the quarter, ] we said it before, and I would repeat it, we feel comfortable with this elevated level of the gas turbine market and we see this continuing.

And you will see also going forward quarters on a good level, then on a lower level a little bit, but you have to look really on a year-by-year basis. And in this, we would continue to repeat that we see sufficient opportunities to believe that this elevated level is going to continue.

What we have seen also now in the last quarter, we always try also to balance out really the segment. how much data centers. And I think with the 25% to 30%, that is something which we enjoy. But at the same time, we balance out. So we also now you've seen some quarters coming in and you will see it coming in also classical operations, Asia and really balancing out.

And we are trying to steer smartly through it to build a great portfolio on projects. But as I said, elevated level, we believe this is going to prevail and don't get too fixated on the quarter. And for us, it's really about diversity of the backlog in segments and in regions. Thanks.

So the next question goes to Gael de-Bray from Deutsche Bank.

Yes. Could you tell us what was the book to bill of the Service segment for the Gas division in the second quarter, please? And I'm actually wondering why the service revenues of the Gas division have been kind of muted over the past couple of quarters, even slightly down this quarter. I mean -- does it mean that eventually the Gas division will rather be trending towards the low end of its targeted revenue range for the year?

I'm not sure whether I heard everything correctly. I mean -- sorry, again, the quality was really bad revenue development or what...

Do you need me to repeat the questions?

just a second. I would honestly say, I mean, you always have, let's say, mixed elements in terms of how you look on the different quarters. But I would not overly interpret it. I would have to say, I don't know, Maria, how you look on this?

Gael and maybe just to reiterate, what I meant by we have, let's say, a different mix is that, of course, the new units is more pronounced in the quarter.

But if we look at it from a slice, it's really, we said level, slightly down, but level from last year. And again, looking at this from a quarterly basis, there are puts and takes that come in that affect that quarter-over-quarter. But we're not at all worried about it or concerned about it.

And when it comes to the book-to-bill, just overall, again, for Gas services is 2.55. So you can interpret that with new units and service, both of those book-to-bills were very strong, well above one.

And this is not -- we don't disclose it by units and service, but I can assure you that this was very positive on both counts for the quarter.

The next question goes to Sebastian Growe BNP Paribas.

One on free cash flow. I was wondering if you could help us how we should think about the cash generation beyond '26 in the wake of both positive commentary on the market outlook, particularly at GT, for which the order momentum appears to further build up here. And also SGT, in particular, has reached the '28 target margin level of 18%, 20% 2 years ahead of plan. So if you could comment on that, please?

Sure. Thank you, Sebastian, for the question. Maybe let me start with the free cash flow first. And I think this is like we mentioned, we have excellent cash generation. Clearly, cash conversion rate is above 1. And as I mentioned, looking at our -- for this year alone, we have roughly -- if you look at the EUR 8 billion that we're anticipating, roughly EUR 5 billion of that cash flow comes from operational profitability alone in that regard.

And like we said at the Capital Market Day, and I showed that I do not expect that cash flow would reduce in years to come, not at all with a book-to-bill greater than 1 across all businesses anticipated. And overall for Siemens Energy, we still see that positive free cash flow generation continuing but beyond 2026, not only for Grid but also for the other businesses.

So the next 3 questions go to Ajay Patel, Phil Buller and Alex Jones. So Ajay Patel from Goldman Sachs. Please go ahead.

Mine's on Grid Technologies as well. Just thinking about the margin expansion for this financial year in terms of the guidance. How much of this is operational leverage into higher volumes?

And how much is actually driven by mix effect? Are there components here in the business that are better margin that are growing faster that could be relevant for when we're forecasting the margin evolution of this business.

Thank you for the question on the profit for GT. Look, it's a great development, right? I mean, we're really reflecting strong execution momentum. And as Christian mentioned, this is also on the back of some of those brownfield expansions and just normal project phasing. We have high visibility there in terms of security materials.

They're already in-house. Manufacturing is on track. A lot of the projects are in final assembly stages and we look also at commercial terms.

But in terms of what you mentioned about mix, look, there is project phasing driven by our large HVDC projects, Normally, those reach milestones under the POC method and sometimes that is lumpy. But don't forget, underlying in our GT business is a very well-running what we call product business, which is really our large power transformer business, which is -- we showed you that on our backlog margin, right?

The backlog margin in GT increased, and some of that is attributable to the large power transformers and that's kind of that underlying growth, if you'd like, that steady portion of the profit that we see in GT. And what the team has done really exceptionally is not only have they brought new capacity online they've done that with very little additional what we call nonconformance cost.

So that's why you're seeing a lot of that profit dropping. So to answer your question, yes, some of that is related to pricing, but a lot of it is related to operational execution and operational excellence in the factories.

So the next question goes to Phil Buller from JP Morgan.

I have just a couple of follow-ups on cash, if I can. It's great to see the Gamesa P&L loss is now at about EUR 100 million, but you still have the EUR 1.2 billion cash outflow. Has your breakeven time line changed at all on the Gamesa topic and then in terms of CapEx outlays, again, that's also been quite low in the first half of the year at around EUR 700 million. What is holding that back? Because it doesn't seem to be impacting your growth at all and are you considering any additional capacity expansion plans from here?

Let me start it with maybe Gamesa. And so like we mentioned, we remain committed to breakeven for this fiscal year. Absolutely. We remain very confident in that regard. The team is working diligently to ensure that we achieve that.

With respect to free cash flow, I've already indicated that the Gamesa free cash flow will remain negative in fiscal year '26. We see that also in Q2. Likely in the 4-digit arena is how we've messaged this.

However, better than fiscal year or on level with fiscal year '25. And there's 4 reasons why really you see this free cash flow, if you'd like, trailing the profit development. One is the quality cash-outs.

And we provide transparency on that quality cash out and again, as we've said before, the largest cash out is in the years of fiscal year '25, so prior year and this year, where we've indicated around the triple mid-digit around EUR 400 million, let's say. Then secondly, of course, we're working on many project improvement, risk mitigation and cost out measures and those will also have perhaps a delayed cash effect due to the phasing of percentage of completion or POC. Then don't forget, we do continue to have CapEx related to the offshore ramp-up that continues to go through and has cash impacts, of course, this year.

And last but not least, this is something that's near and dear is the reduction in contract liabilities. If you recall, we even mentioned this at the Capital Market Day. What we're trying to do is look at phasing of orders, of course, and deleveraging, shifting and prefinancing towards, let's say, other parts of our business, and we continue to optimize the prefinancing on a group level, considering opportunities, risks, et cetera.

So Phil, and looking at those 4 items, of course, we do expect a negative free cash flow here. And as we mentioned at the Capital Market Day, we expect free cash flow to be positive in fiscal year '28 for Siemens Gamesa.

Yes. Maybe let me comment briefly on the CapEx piece. I mean this will be, let's say, higher in the second half. And obviously, this is more booking things. The factory expansion, as I said, are running well and are ramping up.

And so that is not any major thing. It's really more or less on how it is booked. With regard to additional capacity there, I would say stay tuned and call in, in quarter 4 when we want to give more new midterm outlook. We are reviewing these things. We see fantastic growth momentum that's very positive, and we will share more insights in the quarter 4 call.

So the next question goes to Alex Jones from Bank of America.

Great. I guess, over the past 2 quarters, you've signed 19 gigawatts of new slots, whereas your U.S. peers signed 40 gigawatts does that reflect your efforts to balance out customer mix and therefore, you're happy to see some market share on U.S. data center deliveries towards the end of the decade.

Or is there anything else we should consider to explain that divergence like a greater focus on firm orders from you rather than new slot reservations?

Yes. I mean I wouldn't compare myself against somebody else, we just can say on how we look on it? Absolutely. What we're trying to do with the reservation agreements is to keep, I would say, a decent time line in terms of also how fast we convert them.

And that is obviously an important element in terms of this ratio between reservation agreements and firm orders. And also keep in mind that -- I mean, majority of the business still is obviously classical utility business. Not each and every order comes with a reservation agreement. So we have to avoid that we draw this conclusion immediately. Some of it is classical business, also particularly in other regions.

And as I said, we had the quarter-by-quarter trying to balance it out a bit, see Asia coming up again. So that is nothing, let's say, particular to interpret into this in this logic, but it's obviously for us an element to have a short-term conversion on the reservation agreement.

So the next 3 questions go to Vivek Midha, Chris Leonard and Ben Uglow. Vivek Midha from Citi.

Thank you very much, everyone, and good morning. I hope you can hear me well. I'd actually like to follow up just on that specific comments. You mentioned about having a short-term conversion.

Are you referring to short-term conversion of the slot reservation into firm orders? Or is it more about the lead times on the projects? I'm curious as to how you're treating the question of reservations and orders for delivery slots post 2030.

When do you expect to start having more conversations with your customers about those kinds of slots how are you thinking about that longer-term project pipeline?

No. The statement was meant really to reservation agreements into firm orders. That is -- I mean, in terms of the timing -- we are having discussions now for obviously, projects in the early 30s. That is developing and will continue also going out.

But as I said, for me, it's obviously something where we still try to convert it then in a decent time frame from orders. That's it, right? And I mean question was a bit also, can you read anything into it? And I'm struggling to say sometimes I have to say it's a great market. It's a broad interest.

We see also now customers, which are not all of the data centers coming back and obviously realizing activities. Interestingly enough, I think despite high oil and gas prices, we see across the board, also the interest into LNG-based facilities continuing. So that means also the market believes that midterm, it will play out. And that's it, right, in that regard.

So next question goes to Chris Leonard from UBS.

So can you just speak to the evolution that you've seen in order dynamics for gas turbines through Q3 to date? And whether or not you're also seeing continuing momentum in that backlog margin for the turbine business, and you've also been clear that you expect a slowing order intake into the second half of the year.

Would you still expect to have the 70% split on firm orders to be sustained into full year '26 for that total commitment of sort of 90 gigawatts to 100 gigawatts that you've guided to.

Yes. Thank you. I have to see on how to best frame it. I mean if I look on quarter 3, I mean, it looks still very good, right, in terms of all what I see coming.

I cannot tell you how much is no reservation agreements then and all this because -- this is then, I mean, tight planning. But quarter 3, it looks good. I would believe quarter 4 will be a little lower. But keep in mind, we are now ready at what is it, EUR 17.5 billion from -- EUR 17.6 billion in GS. And we were last year at EUR 23.5 billion in the total year. So obviously, seeing the ramp-up of capacity, it will not every quarter be EUR 10 billion or EUR 8 billion or EUR 9 billion, and this is why this will balance out.

And this is why I would always warn on this quarter-by-quarter. And if you look beyond '26 also '27, all what we see looks like a good pipeline. And in that regard, on the order side, works all out. And we will every year until 2030, increase our capacity in the factories on the gas turbine side in terms of coming with additional capacity in, and that helps us, obviously, to generate the revenue. Pricing is good and still continues to contribute positively to the backlog margin, and I see that also for the quarter 3.

Yes. Ben, unfortunately, just skipped over the line. So the next 3 questions will be going to Sean McLoughlin, Richard Dawson and Vlad Sergievskii. So Sean, please go ahead.

A question on Grid Technologies. You've highlighted the digital aspect. I'm just wondering, but it does sound like the core transformer business is really the part of the business that's driving most demand.

Just where are we in terms of digital percentage of overall sales or orders and where do you see that progressing over time? And is digital more about getting a customer in the door rather than improving the margin? Or is digital also a margin accretive component.

Thank you for this question. First of all, absolutely, right. If you look on our revenues and orders to [indiscernible] driven by, as Maria said, the products, the transformers, the solutions business and digital is just coming up.

What I wanted to flag up that is really coming up and that will, over the next, let's say, 5, 10 years, become a substantial business, and we are working on it on all ends. And it will be decisive to use this infrastructure, which we now physically build as most effective as possible.

And we believe this can be an enormous value contributor. It will take some time to ramp it up also in terms of margin. So a lot of these things are developments money and investments, which we are currently doing. Also, we have done some smaller bolt-on acquisitions on little things here and there.

And we believe very much in really the -- how should I say, autonomy of the asset to a certain extent. Yes, because we installed so many transformers, you would want your transformers to operate in a certain way, even so -- to not, let's say, controlled by a human or whatever.

And this is what we're working on. But it is more to give you the outlook in terms of what next is to come until 2030 and beyond. And going forward, I do believe the average, it will be accretive to the margins. But it's a ramp-up curve, and it's a new business to be built up.

But when I see what has happened in the last 12 months on the AI side and what were you able to do on really new applications, which are not part of an overarching software suite and so forth. That's super interesting.

So the next question goes to Richard Dawson from Berenberg.

Just one on the orders for Gas Services. So clearly, very strong demand from the U.S. data center vertical, but have you seen any of the data center customers starting to cancel projects due to objections at the local level, So, really issues around energy availability or water supply, for example. And if this had any effect on reservation agreements.

I wouldn't call it cancellations in particular. No, not like this, but what we do see is that customers trying -- particularly bigger customers trying to shift between sites where they see, let's say, different time lines on regulations or approvals in terms of permits.

And that is an element in terms of saying where can they get whatever air permits quicker and how do they shift it around. But so far, these customers have a portfolio of different sites and projects where they then want to deploy the assets too. But this is more or less it. Fundamentally, that you would say you see bigger amounts of cancellations, no.

So the next question also Vlad Sergievskii from Barclays.

Will ask also about Gas Services orders, I'm afraid, trying to look at the big picture here. In the last 2 quarters, you booked 25 gigawatts of firm orders. This is 50 gigawatts annualized just for Siemens Energy versus your Capital Markets Day estimate of the entire market being around 100 gigawatts per year going forward.

Is it underlying market demand so much higher than you thought back in November or is it particular phasing of orders than this 100 gigawatt number for the markets you hold?

I hope that I heard everything correctly. I'm not 100% sure, but I mean, on average, as we indicated -- I mean the picture has substantiated from the Capital Markets Day. It has not fundamentally changed.

And already at the Capital Markets Day, we indicated this around 100 right, 100 gigawatt type of market, which we also see going forward with obviously a certain portion in this coming from data centers, which we will see continuing, which we believe.

But that is pretty much in line, obviously, with what we said on the Capital Markets Day with a slight note on a bit more positive and substantiated now really coming through.

Thanks a lot. So Ben Uglow is back in the line and then afterwards comes Alex Virgo and then Lucas Ferhani, so Ben, second try, please.

I just wanted to get a kind of qualitative sense of feeling for what you're seeing in terms of the data center market, the 5 gigawatt order number is obviously pretty noticeable. But in particular, I'm interested in your portfolio. And in terms of where you are seeing the greatest strength in demand.

Has there been any change at all in the last 3 to 6 months. And the reason I ask is that we've got a lot of new companies or new capacity, I should say, in all kinds of different areas from gas, diesel, even fuel cells, et cetera.

And what I wanted to know was, have you seen any kind of shift in the type of units that are being requested from Siemens Energy.

Yes, it's not a shift. Hi Ben, first of all. It has not been a shift in the request as such. It has been a shift in what we sometimes put together or offered for customers with a certain need in terms of the different frame sizes.

And looking really on what we can do and obviously also we also try sometimes to find really workaround solutions like redeploying units from elsewhere and trying to build bridges for customers, which are obviously an urgent need. So it's more around this.

And obviously, yes, we also see the different applications, including fuel cells, which is more driven by elements. How fast can you get an air permit and how fast can you deploy certain things. But it's more really from a perspective, what can you do and not so much in terms of I want.

We fundamentally, and I shared that before, have obviously took an extra effort to expand our midsized gas turbine capacity, which is increasing faster than the large gas turbine capacity and this has obviously helped also on the data center markets then to come with, whatever, 5x SGT-800s or so type of solutions. But that was more driven by what is -- what can be made fast available.

So next question goes to Alex Virgo from Evercore.

Christian and Maria, I wonder if you could just talk a little bit to GT for us. I guess what I'm just trying to reconcile here is the visibility that you have in that business versus the significance of the upgrade and the phasing through the year.

That would be super helpful. And Maria, I could squeeze a [ chief ] on tariff framework changes. Any comments on that would be really helpful.

Okay. No. Sorry, Alex, it's the audio quality is medium. No. I mean, what we are seeing, obviously, and I hope you said GT business, right? I heard you correctly. What we're seeing in GT going forward is obviously, a strong transformer business continuing. We see this demand obviously on the [Technical Difficulty] centers activity.

Keep in mind, if I have it right from the top of my head, I think 2,000 gigawatts of capacity globally are waiting for grid connection, something like this, right?

So it's an enormous amount of strengthening grid infrastructure. And we'll continue to prevail. So the visibility going forward is good in terms of the demand needs. And we always have said, obviously, certain of the solutions business and project business will be more bumpy in terms of getting into rest of big HVDC.

But also there, I would say, let's take an example in Europe. We see this continued planning being executed. So in that regard, visibility going forward is good. This is why we're expanding so much capacity.

I mentioned the 50% capacity expansion between '26 and 2030. And we believe the market will still be, let's say, tight at that time. So I would say so far, so good.

And yes, let me make a brief word, Alex, on your question regarding tariffs. So I mean, of course, you know we booked around the EUR 200 million or so tariffs of last year. We've included -- fully included tariff impacts that are expected for this year. And as you know, this situation remains slightly volatile. And of course, we don't expect significant impacts on new orders and/or our margin expansion.

Maybe let me put that out there to start. Secondly, when it comes to the new, let's say, the tariff and the refunding, if you recall, one of the reasons why we're so resilient with respect to [Technical Difficulty] really on to our customers. We haven't had to loose anything with respect to refunds or anything like that. And of course, should that be the case if and when, then of course, we would [indiscernible] back to the customers accordingly.

But nothing really to report on that side at this point in time, Alex.

As we have 3 more questions on the line or 2 more questions online, please really quick Q&A now. It's Lucas Ferhani now from Jefferies, please.

Just one on wind. You see there were some one-offs in Q1. The margin was slightly better. And then you pointed that Q2 could be kind of similar to slightly worse Q-on-Q, eventually, it's better again. So just the path there, how do you see the second half and the improvement do you have extra confidence in getting to that breakeven.

Maybe just to clarify to make sure that, of course, you saw for this quarter, we have a negative EUR 44 million for Siemens Gamesa. And what we always said is we want to be breakeven by the end of the fiscal year which means we said that we would progress profitability through Q3 and Q4.

So we expect the profit -- slight profit to come in both of those quarters to ensure that we have that breakeven, which we remain committed to for the fiscal year.

So now the last question goes to Alex Hauenstein from DZ Bank, please?

Looking into SGRE, I'm wondering if there is a good chance to see a speed up of the ramp-up for the formerly 4x and 5x turbines, which have been overhauled here. So I'm wondering, at the end of the day, what could be a level in terms of gigawatts that you might reach, let's say, looking into 2030 plus/minus, what do you think here? And at the end of the day, how big in comparison to how big you have been, you might end up in terms of what you see currently and what you're planning.

Thanks for the question. I mean, first of all, we will have to see now how this ramps up. It will be in a couple of gigawatts type of range, and this will also depend in terms of would be on onshore reenter U.S. or not. And there's another thing which is coming, which is all the repowering, right, which is obviously contributing in onshore also in Europe at one point in time to that.

The onshore business for us will be always smaller than the offshore business going forward. I mean this is in terms of size on how I would look on it. And keep in mind, the thing what we're trying to do is to have, let's say, a decent enough flight level that we can entertain in a profitable service business and really make sure our infrastructure, which we entertain is loaded. It is not my major growth engine in the company.

That's not the desire. But I would say at the end, a couple of gigawatts coming, but let's see on how the next particular 12 and 18 months develop it, we see a good interest in the units. That's positive. It just takes time because of the process, particularly in Europe, to get this then afterwards into the projects committed.

I'm more obviously now look in particular with regard to '27 on the large orders on the offshore side.

Thanks all for the extra time. If there's any additional questions, you can always reach out to the Investor Relations team. But with that, Christian, do you want to conclude the call with some extra comments.

I mean, first of all, thanks very much for your time and all the questions and your interest in the company. I have to say -- I can only repeat it. It's a great time to be in the energy industry. There's more to build and more to come.

And I'm really pleased also to see that the people are able to execute. I mean, this is what Maria mentioned with the capacity expansions. I had big concerns at the beginning of the year in terms of, okay, is it really all coming in terms of getting the factories up and running. That's positive. And we take it from here and take it forward.

Thanks, Christian. So everybody, have a great day, and talk to you soon.

Thank you. Bye-bye.

[Interpreted] Good morning, everybody. I'm Tim Proll-Gerwe. This is our earnings call for Q2 2026 of Siemens Energy. Like most of you know, we have slightly adjusted the format of our earnings calls. There's not going to be a dedicated presentation by the members of the Executive Board. We get started with our Q&A. CEO, Christian Bruch, will be answering your questions. And since these are also half year numbers, Maria Ferraro, our CFO, is here as well, and she's happy to take your questions as well.

On the 23rd of April, we've published our preliminary figures this morning at 7:00 AM. There were no surprises in other words. So here are the numbers. Siemens Energy has followed up with a good second quarter despite the geopolitical tensions. So we had a record order of EUR 17.7 billion orders and achieved improvements with all main indicators. The order intake was driven by data centers. We are talking about EUR 154 billion of orders (sic) [ order backlog ], which is, in another way, EUR 8 billion more than in the past year. EUR 1.164 billion profit before -- profit margin before special items. And net income was at EUR 835 million, [ and next is ] free cash flow, and this is what Maria, our CFO, is really happy about, is almost EUR 2 billion. So what I'm saying is this has been a strong second half year for Siemens Energy.

On the 23rd of April, we've increased our outlook. We now expect 14% to 16% of comparable revenue growth, a profit margin before special items of 10% to 12% and a free cash flow of about EUR 8 billion.

Now this is what we want to talk with you about. If you have questions for our CEO, Christian Bruch, or our CFO, Maria Ferraro, on the numbers or any other questions really, please make use of your telephone line. [Operator Instructions] As always, this call is shared on 2 -- transmitted on two webcast, one in original line and one with an English version translated by our interpreters, but you can also ask written questions in the chat window.

Now let me also point out once again, only journalists will ask questions. Now analysts can do that later in the analyst call and employees can do that also in their town hall meeting. Shareholders cannot ask questions because we often see questions in the chat window on the share price development, et cetera, we cannot answer those.

Now obviously, we want to ensure that there's no feedback and ask you to mute your line and there's also a safe harbor statement on future looking -- forward-looking statements that you also see now on the webcast.

Now with that, let's get started with our Q&A.

[Interpreted] Now Mr. Bruch, before we take the first question from the journalists, I would ask you one -- a very brief one. The Middle East conflict is increasing now in terms of tensions and Siemens Energy has a footprint in the region, about 4,000 employees that I'm sure have had a difficult time. Now you did something that your colleagues on site have really appreciated. You travel to the region to have a look at the situation with [ Iran, right ]? So first question, why did you do that? And what can you report from your trip? What was your impression that you had?

[Interpreted] Well, thank you very much, and good morning, everybody. It's great you've all found the time today. Now on this general situation, I always wanted to see what's happening, what the security situation is on the ground and also what the general conditions are for our colleagues in the area because we work there. We have a power plant footprint, but also industrial installations. So with that in mind, it is important to understand what's happening.

Our field service people who work in the region are the people that we wanted to talk to. And I must say I take great pride in how our team has resolved the situation there or is dealing with it. Now at the same time, we need to keep people safe quite literally. So therefore, we need to take precautions in the situation that has been unusual for all of us. It's things like protecting them from flying debris. So if anything happens, they have to be safe on the construction side. All the way to the fact that the power installations, power plants need to keep operating. And this is what everyone has appreciated. Our customers have appreciated as well. But be it as it may, let me say once again, this is a challenging situation, not only for our employees, for all people living in the area.

As -- I myself was in the hotel, I get a mobile phone notification to proceed to a safe location. Well, that was an unusual situation. But I found that the way that people deal with the situation, managed situation is laudable. But again, it's not something we would wish for. No one would wish for.

What is fantastic, I must say, is our team has kept operations going, and that was really remarkable.

[Interpreted] Well, thank you very much. Let's start with our QA. Christof Ruhrmair from DPA ask the first question. Please, you have the floor.

[Interpreted] Can I follow up to what you just said, your trip to the Middle East? Can you say a word about the impact on Siemens Energy's business? So in the sense that high commodity risks will have a negative impact on your business? And is there any equipment or established fleet in the region affected by attacks in the region, so military attacks?

And second question about Gamesa. So not yet broken even yet. Is it going to happen the breakeven in the third or the fourth quarter? What do you think?

[Interpreted] Okay. Thank you very much. Let me talk about the Middle East once again. If you look at the financial indicators, the impact is almost negligible. So what we do see is higher transportation costs. We have higher transaction costs partly. But again, this is nothing that's significant at all. So in financial terms, no. And when it comes to orders in the past quarter, we had an order intake in several countries, from that region, Oman and the Emirates, Saudi Arabia as well. So with that in mind, the business continues.

There are some projects that you have seen that with transformation of industry in the oil and gas sector that have just shifted sideways just because of the situation. But again, I see discussions are ongoing. In other words, I do not believe that the order intake will change in the medium term. However, we have seen that in those countries, there has been a short-term focus on keeping things going, keeping operations going that is.

And as far as we are concerned, our equipment, our installations have not been affected. We had one installation where we had falling debris. Anti-drone defense has worked really well, but still the debris will need to fall down somewhere. It was nearby our installations, but nothing has been damaged.

So what we do see, however, is that in some places, we have increased demand now because other infrastructure elements are now needed in Saudi Arabia. There's a new pipeline that they operated to the Red Sea -- towards the Red Sea to export oil from there. And we are involved in that as well. So with that in mind, so far, so good.

In terms of Gamesa, we have always said that in the second half of the year or towards the end of the second part of the year, that will be visible. So I don't think then we're across the finish line in Q3. So we need Q4 as well for that.

[Interpreted] Next question from Christoph Steitz, Reuters.

[Interpreted] A couple of questions. First one on the U.S. tariffs and paying back or claiming back U.S. tariffs. Mr. Bruch, do you claim those tariffs back because in the past fiscal year you paid about EUR 200 million in tariffs or tariff damage, if you will. Do you claim them back from the U.S. government? And if so, have you done it already? And to what tune? And when would you expect a payback of those prepaid tariffs? So that would be the first question.

One on the share buyback, which you are now accelerating. How about increasing the overall volume of the share buyback? Is that something that you're considering at the moment due to the financial performance of the company? And then an add-on question on -- I mean, you're saying that the Middle East crisis doesn't really have an impact on you. Could we still get what oil price you're assuming in your models for the entire year? If you could give us an idea about that, that would be very helpful.

[Interpreted] Thank you very much, Mr. Steitz. I'll start with tariffs and then Maria will take over.

Of course, we are looking at the situation because you need to see what's happening, and that's a normal process because that's one thing we need to bear in mind, one of those tariffs were paid for by our customers. So what that means is we're obliged to handle the situation properly. We need to see how this develops. And the amount that we've named or mentioned was a short-term bottom line effect. However, in our customer agreements, there are provisions on who's paying what. But with that in mind, yes, we are involved in this process right now, but we do not expect any major net effect on our bottom line because many of those tariffs have either been passed on or were being clarified. So what that means, it's rather an administrative handling of the situation rather than any special effect.

Thank you for your questions. Maybe starting with the first one on the share buyback. Yes, we are accelerating. And maybe just to put that into context, we had a very strong first half for free cash flow with the first quarter being just shy of EUR 3 billion and now EUR 2 billion in our Q2. That, as you know, has contributed to the upgrade and increasing of our guidance to EUR 8 billion. So as of last week, the end of last week or currently, we're about at EUR 1.8 billion in shares already purchased back. And hence, why we said we would continue to purchase up to EUR 1 billion of additional volume in this fiscal year. So essentially preponing, if you'd like, EUR 1 billion from next year because if you recall, we indicated approximately a EUR 2 billion per annum buyback volume estimated. So at this point in time, we're going to continue to purchase as indicated and stay tuned for if there's going to be a change in the capital allocation that's not contemplated at this point. We're still sticking with the $6 billion up until 2028 and step by step, let's do this additional $1 billion this year.

So with respect to the oil price, yes, of course, we're watching this. And even at around USD 105 per barrel, this is not -- especially in our business, we're not looking at this from a short-term perspective. Our business is very long term in nature, as you know, -- and in the models, they account for some of that fluctuation or that, let's say, volatility. So at this point in time, we don't see this as a major effect. Of course, we're watching it closely. Should it go above 120, 130, 150, et cetera, then that would be something different.

Actually, just to maybe put this into perspective, in certain parts of the world where, let's say, increasing oil and gas prices are even more acutely felt, we're seeing that customers are continuing to want to buy and to proceed with business as usual per se. So just to put that into perspective. Thank you for the questions.

[Interpreted] [Operator Instructions] There's one question from the chat for you, Mr. Bruch, from Sergio Venegas from El Economista, in Spain.

Question about Gamesa. What has been Siemens Energy's reaction to the proposal by Jose Entrecanales, the CEO of ACCIONA, and the main shareholder of Nordex, regarding the idea of creating a European leader in wind turbines?

German, English or Spanish? English. Okay.

Thank you for the question. No, I'm not commenting on speculations in the market. This discussion around consolidation in the wind industry is on for a long time, and that is not just a European question. I think it's a Western question, which will continue to stay around, but this is just speculation, nothing to comment about it.

[Interpreted] Next question from Axel Hubner from Handelsblatt.

[Interpreted] Two questions. Data center order intake, how high is the share here? And the second question is, what is the current state of play with regards to the turbines, which have been reserved in Germany and what's going to happen in the future?

[Interpreted] Data centers, when you talk about the gas turbines, it's approximately a share of 25% with regards to the order intake in general. Within the 20%, 25% level, we try to keep the situation as it is on a long-term basis. This also means that the large amount of the capacity utilization of the plants depends on the entire electricity development, conventional electrification.

With regards to the grid plants, transformers, it's below 10% the overall year, EUR 2 billion in general were used for data centers within the entire grid book. We try to find the right balance because we want to have a portfolio which is as diverse as possible with regards to the order intake.

Gas power plants, we still have long-term plans. Everything has been reserved so far, and we try to get into the discussions with the operators. We want to have a [ variable ] share of these capacities for which we want to have a public tender, and we are discussing this in close cooperation with our customers. I do hope that in the second half of the year, at least with regards to the governments, we will be able to cross the finish line. But with regards to the order intake '27, this will be of utmost significance, but our plans are still very solid.

[Interpreted] Thank you very much. There is one question that you already answered. We have another question from Jose Ruiz.

What is the percentage of new orders coming from data centers? You answered the question. Second question is, can you quantify the evolution of pricing in the Gas Services division? And are you seeing cross-selling opportunities between Gas Services and Grid Technologies?

With regard to the pricing, we publish once a year every quarter 4, our pricing development in the different segments and then new units, in particular, which is relevant for Gas Services. And this used to be, for example, in the, let's say, fiscal year '25, which was last year, around 500 basis points on the back of prior price increases. What we are saying for 2026, it has been substantial price increases since then, but you will only see a quantification then with the quarter 4. We do it obviously not quarter-by-quarter because it could be confusing because it is volatile. And at the end, it's important to see it overarchingly on the full year. And in the quarter 4, you will see the details on it.

On the cross-selling opportunities, absolutely. I mean that is an opportunity. That is, by the way, not only related to data centers, that is really across the board, and that is not just between Gas and Grid Technologies. We, in the last quarter, had one project where we combined wind and grid. Also, that is an opportunity, particularly when it comes to offshore wind. And these are things which we obviously try to leverage.

[Interpreted] Next question from [indiscernible].

[Interpreted] I have 2 questions. First of all, concerning transformation of industry. There are wonderful figures that we've presented, but there is one particular area where the orders have declined significantly or slightly due to the hesitation of the customers due to the situation in the Middle East. Is this a behavior which is limited in time? Or is it more a structural problem because there are sometimes difficulties with this section and transformation of industry.

Second question, during the AGM, you announced that with regards to the Mozambique LNG, you would provide with additional information or that you would rather try to get additional information. Have you done so? And if so, what's your conclusion?

Order intake TI. This is of limited in nature. We think that things will change rather quickly. And we also think that this will be the case with a view to the future. New developments will set in. But basically saying transformation of industry rather has conventional process industry customers, chemical, gas and other process-based industrial operations. Here, the momentum is different compared to the conventional electrification business. So here, the situation is a bit more balanced, but we are confident that we will have a healthy book-to-bill order intake with regards to the revenue situation also with the view to the future and the postponed order intake will be realized in the near future.

With regards to Mozambique, we are still in close contact with [ TotalEnergies ]. No deliveries have taken place so far. If I remember correctly, now I have to look over [ to my colleague ]. But we are still in the middle of discussions, and we are trying to review the framework conditions. So I cannot provide you with any news compared to the situation back at the AGM.

[Interpreted] Two more questions. This is your last chance. [Operator Instructions] One question in the chat comes from [ Michael Jude from EnergyWatch, in Denmark ].

[Interpreted] The first question was already answered by you, Mr. Bruch. Expect to reach breakeven for Siemens Gamesa, you answered that. But the second question is what will be the main drivers to reach breakeven?

[Interpreted] We showed a couple of elements during our Capital Market Day. And obviously, it is between improving the service profitability, making sure that the quality costs get under control in the onshore, increasing productivity on the offshore factory side and the fourth element was a general cost reduction in the corporate structures.

And also, I mean, if you recall, we indicated when we did the takeover of the minorities in Siemens Gamesa. We also indicated that we believe in synergies of around EUR 300 million, which are well on track, I have to say, in terms of being realized. We are working on all ends. The situation throughout the year, and I said it before, is a bit more challenging because the order intake is slightly lower than we expected in wind. And this is why we obviously have to continue to work on the cost mitigation. And this is what we are doing and what the team is doing in light of this. But these are more or less the 4 levers what we pull to make -- to achieve the breakeven and the team is doing an excellent job, I have to say.

[Interpreted] The next question via telephone, Marilen Martin from Bloomberg.

[Interpreted] I have a question concerning the situation that you do not want to focus on data centers only. What's your customer base with regards to data centers? Are these individual key accounts? And what is the regional dissemination? You also mentioned Poland in the press release. What's the demand there? Is it limited in time? Or is it a long-term demand?

[Interpreted] With regards to the data centers, you can see that quite obviously, and that's very interesting because we have different customer groups. On the one hand, we've got the conventional project developers that establish the data centers and make them available. Then you've got the tech companies, which are involved directly in the business operations. And then, of course, you also have customers who are gas suppliers and try to turn it into electricity in order to reach an arbitrage. So it's a rather broad base of customers, different customers who all pursue their own interest, of course.

What was the second question again? Poland. Oh, yes. Poland developed in a very positive way. We were quite successful there as well. And that is something that we consider to be a region which is of strategic significance for us in Europe, not only with the view to gas, and that's what you referred to, but also with regards to wind. In the offshore wind sector, we received a lot of important orders. And of course, we're catching with grid as well. So Poland continues to be in our focus.

[Interpreted] The next question comes from the chat from [indiscernible]. Transformation of industry does not grow that strongly than gas turbines and grid and the number of orders have declined. What are the 4 different sectors, transformation of industries, could you explain to us what the market developments will be and how the 4 sectors are doing in the market?

[Interpreted] Hello [ Ms. Maya ], I wouldn't say that orders have declined, but it's an industrial business operation you see. It is not so much volatile as it used to be in the field of electricity in the past, but this book-to-bill of 2.5 or so can never be reached. And of course, it also has become very obvious that industries such as chemicals are characterized by a great deal of reluctance. But I do hope, and I'm confident that we have a stable outlook of a healthy book-to-bill, which means 1 and above.

Now let us zoom in on the 4 different sectors or areas. Compression and steam, good developments can be projected also with regard to compression. And oil and gas will also help us make additional investments into the infrastructure. Here the help -- the high oil price is of help to us today honestly.

With regards to steam, we have reached a high level of profitability. I'm also confident with a number of incoming orders because new applications will be used. First data centers will also use turbines. But it's a very good market with a view to the future. So we think there are new growth opportunities.

LNG is a very broad area from Navy electrification of different plants. It's an area which in the medium run will continue to grow in double-digit numbers. That's what we said on the occasion of the capital market. But you know it changes from quarter-to-quarter because it's a rather small segment. But in general terms, I'm very positive.

What is weak is SES. These are the electrolyzers. The factory is working hard on that. And there are still some projects which are about to be executed, but we are a far cry from the speculations or expectations that existed with regards to hydrogen. And this will not change in the near future. There will be projects here and there, and we will stick to the technology, but it's not really yet a commercial market.

Let me just add to that. But I remember that 5 years ago you said that up until the end of the decade, it will not be a commercial market. So therefore, your intention was right. Yes, it doesn't help. It's a pity. Being on the right side doesn't really help you. Okay. Point taken.

[Interpreted] Next question from the chat comes from [ Philippe Joubert from Energies ]. Delivery times for gas turbines, how have they developed? How long do customers have to wait on average once they place an order? In '25, you spoke about 4 years for gas turbines.

[Interpreted] Well, we'd like to set the stage for you. I would like to repeat this once again. Yes, this is the delivery time that still applies, but we try to become more flexible whether we shift things back and forth where there is a demand for smaller turbines that we try to cover in greater numbers because they can be delivered much quicker, but the utilization rate is still the same.

But let me explain to you that every year, with regards to gas turbines and also grid technology, which means transformers and switch units, we try to increase our capacity. So therefore, it is to be expected that with -- in the course of the next few years, the situation will get better.

With a view to the big transformers, we have reached delivery times of 3 to 4 years. But last week -- I think it was last week, we have a groundbreaking ceremony for -- 3 new groundbreaking ceremonies for 3 more plants. So we are running at full speed, and we are trying to increase our capacities year-by-year. It will take some time before we get into the right situation. But I think in the next few years to come, we will be able to generate healthy growth and get back to normal with regards to the delivery times before the end of the decade.

[Interpreted] Yes, absolutely. I go back to the chat window. Something that we heard before from Energy. What -- he has a question on Siemens Gamesa. Orders are lower than expected in offshore wind. And what are your expectations in the offshore business for the rest of the year? And he also asked, are you concerned that your growth in orders are so much lower than Vestas? And why is it so? I mean this is probably to the quality issues, but over to you.

This is only related to offshore. No. I mean, first of all, what you have seen, I mean, offshore is always a bumpy business because an order is in the billion or billions, and then obviously, it is volatile, and you always have seen that. In '27, we always expect it as a low. There were some orders which we expected to low -- sorry, '26 we have always expected as a low, and then we said that more will come in '27. We have, on top of that, seen some of the orders shifting from '26 to '27. This is also what we see, for example, in Asia happening.

If you relate to comparison, I'm not commenting on competitors, but obviously, this is heavily impacted by the auction round 7, where some specialties were in terms of the prior agreements. No, I don't see that as a concern. I see it, obviously that if you take, let's say, the current European suppliers and offshore, we can serve the total market. I think that is an important message to the customers. But I'm obviously confident that we are able to secure enough orders going forward.

But where I'm concerned is that, obviously, projects which are planned are not getting to FID fast enough. And that is mainly also related -- keep in mind, the interest rates have gone up substantially. And all the projects face now challenges, which has been auctioned like years ago at a lower interest rate to face now higher interest rate and with this less profitability. And this is where I think the policymakers need to think through of what can they do as boundary conditions to ease investment decisions in companies who are investing into offshore wind parks. So we are trying to explain to governments that's really needed because we do need offshore wind, particularly in Europe.

I have to correct myself a little bit. Those were 2 different questions. So I put them all together, but the question regarding Vestas and are we concerned growth in order intake was not related to offshore. So it's a general question.

No. I mean, obviously, Vestas is larger than us in wind. And obviously, we pursue a different strategy, particularly on onshore. Onshore is for me about derisking, profitability of service business, and then let's see where we take it from there. And obviously, this was on the back of fixing the quality matters, and this is what we're working through. No, I'm not concerned, and we see substantial interest also now with bringing the onshore products back into the market from the customer side. So in that regard, I'm not concerned.

There's another question from a journalist Toby Thomas. He asked whether there is any chance that Siemens Gamesa will demerge as the business is pulling down the improvement of GT and GS?

There's no plans at the moment.

[Interpreted] Next question is again from Christoph Steitz from Reuters.

[Interpreted] I'd like to know once again because you said before that tariffs is not going to have a major net effect. But can you still contextualize what are we talking about? Is it double-digit millions that you want to claim back? I mean, could you just say a few more things on that?

[Interpreted] Well, we said before that we paid a lower triple figure amount [ technology ] so EUR 200 million was what we talked about before. And now everything is under review and under discussion. And we -- what we don't know at this point is which of the funds are allocated to what segment, what could be refunded, what could not be refunded because the process is not [ a spin-off ] as it sounds. So there have been different tariff regimes, tariff numbers or codes. So I would be cautious to say that, look, this is the amount that we expect. So therefore, we are saying everything and everything we're saying, in fact, of our annual guidance, et cetera, is not based on our belief that we will get something back. If something comes back, well, fair enough, and that's good, but it's no specific plan. And it could actually go forward until quite a while until this is all processed. But we had some outflows, and therefore, we've referred to the lower triple-digit million range.

And then we have to see whether all of this is eligible, if you can say it like that or not. So we're right in that process. What we did do is you need to register first. So if you have an interest in clarifying that, and that's what we did.

[Interpreted] Excellent. Now currently, there are no further questions. So with that, let's end our Q&A for the day. Thank you so much for attending, for your kind interest and the many questions. If you do have more questions, the press team and myself personally will be available. The analyst call will start at 10:30 AM with CEO, Christian Bruch, and CFO, Maria Ferraro. You can dial-in as well. However, you cannot ask questions anymore. You'll find that link on our website. The next regular journalist Q&A will be on the 5th of August, which will be the third quarter press call also with Christian Bruch, again. So with that, have a great day. Talk to you soon. Bye-bye.

[Portions of this transcript that are marked [Interpreted] were spoken by an interpreter present on the live call.]

Good afternoon, and welcome to the Siemens Energy's Pre-Close Group Call for the Second Quarter of Fiscal Year 2026. Before we begin, please note that today's call is being recorded. The recording will be available on Siemens Energy's website until the quarterly results are published on May 12, 2026. Before we begin, I would like to draw your attention to the information and forward-looking statements notice, which you have agreed to by signing up to this call, which applies to comments made during the call today.

At this time, I would like to turn the call over to your host today, Mr. Tobias Hang. Please go ahead, sir.

Thank you so much, Moritz. Good afternoon, good evening, and a warm welcome to the Siemens Energy Q2 Fiscal Year 2026 Pre-Close Call. The purpose of today's call is to reinforce our previously communicated guidance and to recap key information already shared at quarterly results calls, conferences and road shows. We plan to publish our Q2 fiscal year '26 results at 07:00 a.m. CEST on Tuesday, May 12, with the webcast scheduled for 10:30 a.m. CEST, the same day. Our silent period will begin immediately after this call on March 31. As always, we will share the company compiled consensus one week ahead of the earnings release on Tuesday, May 5, after market close.

Let me briefly guide you through today's agenda. I will begin with our assessment of the current situation in the Middle East. I will then share our perspective on market development, demand and pricing trends before touching on seasonality and concluding with a few additional updates for the second quarter. As our disclosure is restricted to the information already covered during the call, we will conclude today's session without a Q&A. Thank you for your understanding.

Starting now with the current situation in the Middle East. For us, one priority stands above all else at this time, the safety of approximately 3,000 employees in the region. At the same time, we are doing everything we can to ensure continuity for our customers and partners to support the reliable operation of energy systems. In fiscal year 2025, the Middle East accounted for a high single-digit percentage of group backlog and revenue. Saudi Arabia, the UAE and Qatar are the core countries with Saudi Arabia by far the largest. It's also important to keep in mind that we do not meaningfully export from this region into other regions.

And while we do not have major supply chain dependencies on the Middle East, we're continuously monitoring the situation for potential consequential effects. From a business perspective, while we see impacts on local projects, we do not see a material direct impact on our guidance at the current point in time.

The primary impact from the conflict is on logistics and shipping, not the underlying demand, which can lead to project level delays and shifts in revenue recognition and cash timing. Potential indirect effects, such as severe logistical constraints in the event of a prolonged or high-intensity conflicts or deterioration in investment sentiments are currently not assumed but are being closely monitored.

With regard to longer-term impacts, it is too early to draw conclusion at this stage. Let us continue how we see the market more broadly. The market context remains the same as we laid out at the Capital Markets Day and reiterated in the Q1 calls. We operate in a structurally growing electricity markets rather than a short-term cyclical environment, expect an elevated gas turbine market at least until 2035.

On the grid side, we see a once-in-a-generation investment cycle over the next 15 years, driving -- driven by the need to connect renewables and replace aging assets. By 2040, around half of installed transformers will have reached retirement age.

These themes underpin the demand strength we are seeing across our portfolio. Demand is real and accelerating. And the key challenge is capacity and speed rather than appetite.

Turning now to demand and pricing in Gas Services. The Q1 order intake of 13 gigawatts was exceptionally strong, with demand broad-based across regions, customers and applications. That said, quarterly order intake will remain volatile, reflecting the large multi-train project nature of the business. We expect another strong second quarter, followed by a weaker second half of fiscal year 2026, reflecting the timing embedded in slot reservation agreements rather than any indication of a weakening market environment.

With respect to gas turbine capacity, we are sold out until fiscal year 2028, with fiscal year 2029 slots filling up very quickly and in high demand. We have also started seeing some slots for fiscal year 2030 being booked. As we approach the end of the year, we do expect fiscal year 2029 to be largely sold out with limited capacity available in fiscal year 2030.

When it comes to signing orders beyond that time frame, we will need to ensure that the broader supply chain and our EPC partners have demonstrated sufficient execution capacity. In supply chain, blades and vanes remain the industry's principal bottleneck and our #1 limiting factor. In Q1, we confirmed that pricing momentum remains favorable with further new units year-over-year margin uplift, and that we expect this trend to continue in the foreseeable future. We have also confirmed that current slot reservation agreements are signed with higher pricing versus current orders.

When it comes to service, the starting point in terms of service profitability is already very strong, a better pricing for new service contracts and our order backlog continues. Nevertheless, we need to be mindful that it takes time on the better price service contracts starts to convert through the P&L. To elaborate, new turbines first need to be shipped and installed. Minor inspections typically begin 2 to 3 years thereafter, and major outages usually start roughly 5 years later. As a result, the real margin uplift from services will become much more visible towards the end of this decade or the beginning of the next, clearly beyond fiscal year 2028.

Overall, demand for gas turbines and services remain structurally strong. The market is tight, pricing momentum remains favorable and while order intake will remain volatile, the full benefit of attractive service margins will materialize gradually over time.

Let me continue with demand and pricing in Grid Technologies. The market has doubled over the last 3 years, and we continue to see further growth across all regions. Our book-to-bill in Grid Technologies have been at or above 2 for 3 consecutive years. Globally, customers are accelerating investments in transmission capacity to integrate renewables, meet rising demand and strengthen stability. The challenge is delivery time rather than demand.

Even with factory expansions underway, transmission demand continues to outpace industry capacity. In Q1, we confirmed that pricing has plateaued at high levels in Europe, a message we have been consistent on for 5 quarters now. In the U.S. pricing is still moving up for certain products, particularly where customers value shorter lead times. Looking ahead, further margin improvement in grids will be driven primarily by productivity and operational excellence.

Across both new and existing facilities, we are investing heavily in automation, including robotics and AI as well as further digitalization and simplification of production processes.

Let me now turn to Siemens Gamesa. The offshore wind market has recently seen attractive auction outcomes, such as the U.K.'s Round 7. In addition, the targets agreed at the North Sea Summit reinforce our confidence that offshore winds will remain an attractive market in selected regions globally. We were also pleased to secure the first orders in our SG 7.0 platform, the successor of the 5.X in Q1. This provides tangible evidence that our turnaround strategy is translating into market traction.

For Siemens Gamesa, the trajectory outlined in the first quarter remains unchanged. We expect the first half to be negative and the second half to be positive with full year breakeven remaining the clear commitments. Our capital allocation framework remains unchanged. We have committed to up to EUR 6 billion of share buyback through fiscal year 2028. The first tranche, with a maximum volume of EUR 2 billion, started on March 4. Progress on the share buyback is published weekly on our Investor Relations website. Just as today, we just published the latest results.

Now let's briefly discuss seasonality across our business areas. In Gas Services, order intake for fiscal year 2026 is expected to be above fiscal year 2025 with a stronger first half. As mentioned earlier, we caution against annualizing the exceptionally strong Q1 order intake. It is also important to remember that strong order intake is typically paired with down payments, which support free cash flow as we saw in fiscal year 2025. In terms of profitability in Gas Services, the historical pattern remains unchanged. Profitability is typically stronger in the first half of the year, reflecting the service season and the new units to service mix.

This will still be the case in fiscal year 2026, although the effect will be less pronounced as better margin new unit business begins to convert through the P&L. For Grid Technologies, order intake in fiscal year 2026 should be at or slightly above fiscal year 2025, reflecting the strong market environment shown at the Capital Market Day. However, due to the lumpiness of large HVDC orders and projects, individual quarters may deviate from the average.

Underlying profit margin in groups are expected to be relatively stable across the quarters with limited seasonality in line with previous years. Please remember that the last year's second quarter profitability was elevated by a positive one-off item of around EUR 100 million. For transformation of industry, quarterly profit margins are expected to be relatively stable across the year, again, in line with historical patterns.

For Siemens Gamesa, as mentioned earlier, we expect a negative first half, a positive second half and full year breakeven. Finally, due to the timing shift of some offshore auctions, offshore order intake in fiscal year 2026 is expected to be relatively muted with some projects shifting into the next fiscal year. CapEx for fiscal year '26 remains around EUR 2.5 billion. Given that we spent only EUR 347 million in Q1, CapEx will increase significantly over the remaining 3 quarters.

Additional Q2 updates, which finally we will provide a brief comment on the foreign exchange. As we guide on comparable revenue growth, excluding currency translation and portfolio effects, we continue to see materially higher comparable growth and nominal growth. This is mainly driven by U.S. dollar to euro volatility, specifically the devaluation of the U.S. dollar. As a result, for the second quarter, we expect comparable revenue growth to be around 600 basis points higher than nominal growth at group level compared with 460 basis points in Q1.

With that, we will conclude today's call. Thank you very much for your participation and for continued engagement. As a final reminder, our results will be published at 07:00 a.m. CEST on Tuesday, May 12, with the webcast at 10:30 a.m. CEST, and our silent period begins tomorrow on March 31. With Easter approaching, we wish you a relaxing Easter break. Thank you, and bye-bye.

Ladies and gentlemen, the conference has now concluded, and you may disconnect. Thank you for joining, and have a pleasant day. Goodbye.

Good morning, ladies and gentlemen, and welcome to the Siemens Energy's Q1 Fiscal Year 2026 Analyst Call. As a reminder this call is being recorded.

Before we begin, I would like to draw your attention to the safe harbor statement on Page 2 of the Siemens Energy presentation. The conference call may include forward-looking statements. These statements are based on the company's current expectations and certain assumptions and are therefore subject to certain risks and uncertainties.

At this time, I would like to turn the call over to your host today, Mr. Tobias Hang. Please go ahead, sir.

Thank you so much, Moritz. Good morning, and a warm welcome to the Siemens Energy Q1 Fiscal Year 2026 Results and Analyst Call. As always, all documents were released at 7:00 a.m. on our website.

Our President and CEO, Christian Bruch; and our CFO, Maria Ferraro, are here with me. Christian and Maria will take you through the major developments during Q1 fiscal year 2026. This will take approximately 30 minutes. Thereafter, Christian and Maria are available to answer your questions. For the entire conference call, we have allowed 1 hour. Christian, over to you.

Thank you very much, Tobias, and good morning, everyone, and welcome to our quarter 1 analyst call also from my side. Thank you for joining us today.

I'm pleased to report that Siemens Energy had a very strong start into fiscal year 2026, capitalizing on the favorable market momentum and successful execution of the backlog. The global energy system continues to transform with increased pace shaped by electrification and the increasing need for security of supply and our portfolio is excellent, aligned with these long-term needs.

In the first quarter, we booked orders of nearly EUR 18 billion, the strongest quarter in our company's history. And this demand was broad-based across regions and business areas. The market momentum remains positive for our core portfolio. As a result, our order backlog has grown to a record of EUR 146 billion, giving us strong visibility for this fiscal year and beyond.

Our very strong free cash flow performance in this quarter was supported by significant order momentum and customer prepayments, including reservation agreements, especially in Gas Services, and Grid Technologies. These businesses continue to demonstrate strength, high market demand, disciplined execution and particularly in Gas Services, high service intensity, all of which contribute to high-quality cash generation.

At Siemens Gamesa, we remain on the path towards breakeven. The underlying operational measures show impact in particular, the improved productivity in offshore increased service profitability and reduction of structural cost in onshore. Please note that profitability in quarter 1 also benefited from some timing effects and was therefore less negative than expected, meaning the trajectory might not be strictly linear across the different quarters of the year.

I'm also pleased to announce that we have received the first order for our SG 7.0 wind turbine that is a successor to the 5.X platform. We will supply 6 turbines for 42-megawatt wind park in Germany. Given the strength of our underlying markets, clear visibility from our order backlog and the strong start into the year, we are fully on track to achieve our fiscal year 2026 guidance. While the first half of the year is historically stronger than the second half, this performance clearly demonstrates deeper operational momentum across the company, momentum built on backlog quality, disciplined execution and exposure to markets with long-term trends.

Demand remains strong and broad-based across all business areas and across all regions in the first quarter. Gas Services delivered its strongest quarter ever in terms of order intake, booking 102 gas turbines. That means we matched more than 50% of last year's unit volume within just 1 quarter. The momentum was brought across all turbine frames. In total, we booked around 13 gigawatts of new gas turbine orders in quarter 1. 12 gigawatts were converted from existing reservation agreements and at the same time, we added 12 gigawatts of new reservations. This increased total commitments to a total of 80 gigawatts even after delivering 3 gigawatts during the quarter.

In the data center segment, we have commitments of 22 gigawatts, of which 15 gigawatts are reservation agreements. But I want to emphasize, our growth trajectory does not depend on data centers. Demand is driven by broader structural trends, electrification, industrial expansion and the increasing need for resilient energy systems. And these fundamentals remain firmly intact. While demand for gas turbines is especially strong in the U.S., data centers still represent only 1/4 of our total global commitments. Roughly 60% continues to come from traditional applications while the rest is related to peaking, marine or FPSO applications.

Grid Technologies delivered another strong quarter, driven by robust demand across both products and solutions. The U.S. contributed with several data center-related orders amounting to a high triple-digit million euro volume. And just to remind you, last year, we booked in that space around EUR 2 billion. We also saw continued demand for grid stabilization in the U.S. reflected in large [indiscernible] orders with a total amount of a low triple-digit million euro value.

Globally, customers are accelerating investments in transmission capacity to integrate renewables, meet rising demand and strengthen stability. Recent events underline the importance of energy security and resilience. The sabotage of a cable bridge in Berlin, leaving more than 45,000 households and over 2,000 businesses without power for days and the winter storms in the U.S. where around 1 million people lost electricity both highlight how mission-critical modern grid infrastructure is. Such events raise awareness and increased demand for grid stabilization technologies like our synchronous condensers.

Regionally, the Americas, but particularly the United States showed excellent performance. Orders grew nearly 60% on a comparable basis and revenue increased by around 25%. This means the Americas are now nearly at parity with EMEA in order intake, a remarkable milestone that reflects the rising importance for the global energy transition. That said, EMEA also remained very strong with almost 20% growth in both orders and revenue. Significant wins in Poland and Turkey further demonstrate customers' trust in our technology and long-term reliability.

In Asia and Australia, we also recorded more than 20% order growth. Revenue moderated due to a very strong prior year comparison from large offshore wind project in Taiwan but the underlying demand picture remains solid. Regional diversification continues to be a priority. A good example is the well-balanced gas services order backlog. The U.S., Middle East and Europe account for roughly 80%, almost evenly split among the 3.

Quarter 1 orders in Gas Services were 40% from the U.S., 35% from Europe and 15% from Middle East and China. Across Gas Services and Grid Technologies, the pricing environment remained favorable and supported high-quality profitable growth as it is accretive to our backlog margins. In Gas Services, favorable pricing momentum continues with current reservation agreements being signed with higher pricing versus current orders.

Let me now give you a progress update on our Elevate program, which we introduced in detail at our Capital Markets Day in November. We are fully on track with our capacity additions. And last week, we communicated more details around our U.S. investment program, which we already indicated at our Capital Market Day. I will provide more details on this on the next slide. In Europe, our grid technologies expansion is also progressing strongly. We have tripled production for wind transformers in Austria and together with our partner, KONCAR, opened a new transformer tank manufacturing facility in Croatia in January.

We continue to strengthen our supply chain resilience through long-term partnerships. Our investment in ASTA Energy, a company which listed publicly on January 30, ensure secure access to critical copper components for our grid infrastructure portfolio. And both S&P and Moody's upgraded our credit ratings, reflecting the improved balance sheet, improved cash performance and stronger resilience of the company.

We also drive forward the implementation of our new operating model, simplifying structures, reducing overhead and increasing accountability across the organization. As part of that transformation, we also increased AI capabilities and our workforce to work more efficiently and unlock new productivity improvements across the company. Across all 3 pillars, Elevate is continuously making a meaningful contribution to our performance. Progress can be seen in our margin development, cash conversion and operational stability.

Let me provide you more details on our U.S. investment program. We currently execute investment projects for around $1 billion to expand manufacturing in the United States and expand our workforce as part of this effort. This includes also strengthening of the supply chain and establishing 2 training centers for qualification of workforce. Across 6 states, we are particularly strengthening the Grid Technologies and Gas Service business.

In Mississippi, we are building a new high-voltage switchgear plant and expand the transformer capacity. In North Carolina, we are resuming gas turbine manufacturing as already indicated at the CMD and increasing large transformer capabilities while expanding also research and development. In Florida, we are boosting our blade and vane production and upgrading our innovation center, including an AI grid lab together with NVIDIA.

In Alabama, we are scaling production of key generator components, and in New York and Texas, we are also upgrading compression equipment facilities. This expansion will add 1,500 new jobs on top of our 12,000 excellent employees in the U.S. And last year, the U.S. accounted for 29% of our global order volume, underlining its strategic importance. We are fully committed to supporting the growth of electricity in the U.S. market by driving local capacity exactly where the market needs it.

Let me briefly focus on Grid Technologies, where we are scaling at an impressive speed. I am proud of the progress we made with our new production sites in Austria and Croatia. In Austria, Siemens Energy has opened a new wind transformer plant in Wollsdorf, following an investment of more than EUR 100 million creating around 100 new jobs and at the same time, tripling our wind transformer production. The facility was completed in just 13 months and has more than 25,000 square meter of production space enabling an annual output of up to 2,000 offshore wind transformers for customers in 70 countries. Combined with our long-established right side, Siemens Energy now supplies transformers for 80% of the world's offshore wind parks, solidifying our leadership in this critical segment of the energy transition.

Moving to Croatia. The opening of our new Transformer tank factory near Zagreb, our joint venture with KONCAR adds more than 400 manufacturing jobs and provides capacity for approximately 160 custom large power transformer tanks per year, strengthening our global supply chain. And this is part of a broader EUR 260 million expansion program aimed at doubling regional transformer capacity to 45,000 MVA by 2031. The new factory also bolsters Europe's manufacturing resilience by supplying heavy-duty tanks for HBDC, generator step-up transformer and auto transformers up to 550 kV supporting the accelerated grid build-out required to integrate renewables at scale.

And with this, I would like to hand over to Maria.

Thank you, Christian, and good morning, everyone, from my side. Very pleased to be here with all of you, and let's start to go through the details of Q1 fiscal year '26.

Moving on to Slide 10, looking at the group results. Orders reached a record high of EUR 17.6 billion, up 34% year-on-year on a comparable basis. Our book-to-bill ratio was 1.82 and as Christian mentioned, order backlog hit a new record of EUR 146 billion. This is up from EUR 138 billion in Q4 of fiscal year '25. That's more than EUR 8 million in addition. Again, giving us excellent visibility for fiscal year '26 and beyond. Revenue was EUR 9.7 billion, up 12.8% year-over-year on a comparable basis, with all segments contributing to revenue growth. Just as a note, foreign exchange headwinds, primarily driven by a weaker U.S. dollar weighed on the top line by roughly 400 basis points year-over-year.

Looking at profit before special items. This was EUR 1.159 million with a margin of 12%. This is more than double last year's 5.4% or up by 660 basis points. And regarding FX impact in profit, just for clarification, looking at our currency movements, it does not have a material impact on our profitability. And again, this goes to what Christian was mentioning earlier. It's due to our global footprint with strong local for local sourcing and affecting hedging strategies.

Looking at net income, this rose to EUR 746 million, up EUR 494 million year-over-year. Special items was negative EUR 152 million, mainly due to the sale of the Indian wind business. However, strong operational performance led to notable earnings improvement overall. Free cash flow reached a record EUR 2.9 billion, nearly doubling last year's result. This was driven by strong orders, reservation fee and some timing effects. Cash flow continued to show strong seasonal patterns at the start of our fiscal year.

Now let's take a quick or a closer look into our order backlog. Order backlog, as mentioned, reached a new high of EUR 146 billion. 45% of our backlog relates to service business. Again, this is recurring profitable revenues for many years ahead. For the current year, revenue coverage stands at approximately 90% for the remainder of the year. Already for next year, fiscal year '27, we have approximately just over 70% coverage.

The growing backlog demonstrates increasing resilience due to broad-based demand geographically as well as across all businesses. Additionally, our order backlog margin further improved as a result of the positive pricing development and environment. Therefore, overall, our growing backlog and healthy margin, again, provides a strong foundation for our financial performance.

Now let's talk about the drivers of free cash flow in the next slide. As mentioned, cash flow was very strong this quarter. Free cash flow pretax was EUR 2.9 billion, driven by strong profit development and customer advanced payments, including reservation fees. This is linked to our increase in orders. Regarding CapEx, we had a slow start for cash out relating to CapEx with EUR 347 million year-to-date. However, we are expecting roughly 5% of revenues or approximately EUR 2.5 billion of CapEx for this fiscal year.

Quick update on Siemens Gamesa quality anticipated cash out. This amounted to EUR 101 million for the quarter. And as a reminder, for the full year, we indicated and still expect a mid-triple million amount similar to fiscal year 2025. Therefore, we closed the quarter with EUR 11.8 billion in cash and cash equivalents and EUR 3.8 billion of debt, therein EUR 2.4 billion long-term debt. This results to an adjusted net cash position of EUR 7.6 billion at the end of Q1. This is compared to an adjusted net cash position of EUR 4.8 billion at the end of September or last fiscal year.

At our Annual General Meeting, which is upcoming on February 26, we will propose a dividend of EUR 0.70 per share for fiscal year '25. This will result in cash out of approximately EUR 600 million anticipated in the second quarter. In addition, the announced share buyback, which was announced at the Capital Market Day up to EUR 6 billion until fiscal year '28, is intended to commence in March. And just again, an update regarding our investment credit grade ratings, which were upgraded in December 2025. Our rating by S&P was upgraded to BBB with a positive outlook. And Moody's rating was Baa1 with a stable outlook.

So now let's look at the quarterly financial performance, starting with our Gas Services business on the next slide. Here, we see Gas Services delivered an outstanding performance and another strong quarter in Q1 of fiscal year '26. Orders amounted to EUR 8.8 billion. This is up 81% year-over-year, the highest order intake ever and again, driven by large unit -- new unit projects in the U.S., Poland, Turkey and Taiwan. Book-to-bill for Q1 was an impressive 2.83, leading to a record order backlog for GS of EUR 60 billion, again another all-time high.

Q1 was characterized by a very strong gas market for gas turbines greater than 10 megawatts with the largest markets in the U.S. and Europe. Gas Services booked a total of 102 gas turbines for power generation and oil and gas in Q1 of fiscal year '26. Therein, 19 were large gas turbines and 83 were industrial gas turbines. Our Q1 market share for gas turbines greater than 10 megawatts stands at 43%, securing the #1 position.

Revenue for Gas Services rose by just shy of 14% at 13.9% and compared to last year, again driven by strong performance in new units, which saw nearly 51% comparable growth. Profit before special items was EUR 515 million with a margin of 16.6% and up from 14.6% last year, again reflecting improved margin quality of the processed order backlog and better underlying productivity.

A gentle reminder on seasonality, our H1 or half -- first half year profitability in GS is always stronger than the second half just because of the service mix. Free cash flow pretax was EUR 1.9 billion, more than doubled, benefiting from advanced payments as mentioned on large orders. Overall, a very strong quarter for GS.

And now let's take a look at our Grid Technologies business. Grid Technologies continues its strong performance. Orders were EUR 6 billion, up 22% year-over-year with strong demand specifically in our product business and partly driven by data centers in the U.S. as well as large HVDC order in the U.K. Book-to-bill ratio stood at 1.95, resulting again in a record order backlog of EUR 45 billion. Revenue reached EUR 3.1 billion. This is up 26.9% year-over-year, a substantial increase mainly driven by the solutions business, but also supported by the transformer and switchgear business.

Profit before special items was EUR 538 million with a margin of 17.6%. This is up 520 basis points year-over-year, again driven by continued strong operational performance. Free cash flow pretax was EUR 1.8 billion. This, again, significantly increased by around EUR 600 million year-over-year, reflecting strong operational performance and milestone payments. Another strong quarter for our Grid Technologies team, well done.

So now let's move on to Transformation of Industry, which again delivered a solid quarter. Orders were EUR 1.6 billion, up 11% year-over-year, and this was supported by compression and electrification, automation and digitalization projects, including a major order in the Middle East. Book-to-bill for Q1 stood at 1.21, resulting in an order backlog -- a stable order backlog of EUR 8 billion. Revenue came in at EUR 1.3 billion, again, stable on a comparable basis to Q1 of last year. Profit before special items was EUR 154 million or 11.8% unchanged, and free cash flow pretax was EUR 94 million. This was just down due to some timing effects looking at the previous year. So thank you to TI.

And now let's move on to Siemens Gamesa. As Christian already mentioned, we are seeing progress in the turnaround at Siemens Gamesa. Here, orders were EUR 1.6 billion for the quarter. This is down from last year due to timing and a large offshore order that was booked in the prior year quarter. Revenue came in at EUR 2.4 billion, this is 3.9% up on a comparable basis, supported by offshore and service business growth. Profit before special items narrowed to negative EUR 46 million.

This is a significant improvement from negative EUR 374 million just a year ago. The positive development was mainly due to productivity increases in offshore and progress in the service business. Additionally, we benefited from preponements or timing effects in the quarter. Free cash flow pretax was minus EUR 545 million, and this, again, as a reminder, included the EUR 101 million quality-related cash out.

So with that, I want to sum up our achievements in Q1. We had a very strong start to the fiscal year in all of our businesses across all main KPIs, order intake, revenue growth, profitability and cash flow.

So now moving to the next slide, our outlook slide. Here is our outlook for fiscal year '26 and targets for fiscal year '28, which remain unchanged. However, we do acknowledge that the year started with a very strong performance. At the same time, we remain mindful of the seasonality with a stronger first half than second, that typically influences our results each year, particularly within our Gas Services business. Bookings and associated cash flow did exceed in some areas expectations. However, it's too early to draw firm conclusions from this first quarter momentum. We will continue to monitor developments closely and will provide an assessment at the half year mark.

So with that, I'd like to thank you for your attention and would like to hand back to Christian. Thank you.

Thank you very much, Maria. So Siemens Energy is positioned really excellently to deliver sustainable shareholder value in a strong market. We see really good structural demand, a record high and high quality order book and disciplined execution across all segments.

Our long-term value creation rests on 5 levers, profitable growth, margin expansion, strong cash generation, resilient balance sheet and consistent operational excellence. And across each of these, we are making tangible progress. I am very grateful for the commitment of our people, making this company every day a bit better and supporting our customers. Well, we know that we need to deliver, and we are fully focused on doing just that, reliable execution and consistent performance.

And with this, let me hand back to Tobias for question and answers. I look forward to your questions.

Thank you so much, Christian and Maria. [Operator Instructions] And the first 3 people going for the questions will be first, Alex Jones from Bank of America, Max Yates from Morgan Stanley and Ajay Patel from Goldman Sachs.

Maybe I can focus on gas orders. At the CMD in November, you talked about 36 gigawatts of orders over the next 12 months, but you've clearly started ahead of that run rate with 13 gigawatts this quarter. And I think Christian, on the press call earlier, you said you wouldn't call Q1 exceptional or one-off given how strong market demand is. So therefore, is there upside to that 36 gigawatt number, given the demand you see? And could momentum continue at a similar rate as Q1 in the coming quarters?

Thanks for the question. And what I said in the press call is that I continue to see strong momentum in the market. It obviously will also play out how many slots we have available and how quickly 29 fills up. So don't -- I would always say don't multiply it by 4. But at the same time, obviously, we're trying really our best to continue on this. I would still be on a 36 gigawatt planning base for the time being. We might be higher than that.

It could be, but it's really something where it depends on certain larger commitments. The specialty at the moment in the market is also what you see is obviously, multi-train bigger orders. And this is what moves the needle also in terms of the gigawatts. So as Maria said, for the other comments, it's a bit too early to tell to see how the things are moving, but I'm definitely positive on the market on GS.

So the next question goes to Max Yates.

So I guess my question was just around pricing. Could you give us a feel of how much of the order growth that you're getting year-over-year is driven by pricing? And then maybe as an extension of that, we know there's pricing in kind of new equipment. Could you talk about pricing on some of the longer-term service agreements as well that you're receiving with these new orders? Are you also seeing a sizable step-up in the service contracts and specifically the longer-term service agreements that you're signing with the new equipment at the moment?

Yes. Thanks, Max. I mean, obviously, we see an improvement year-on-year on the margins. And we also -- the other statement, obviously, what we make, we see the incoming orders higher than the older orders. So we see continuous appreciation of the pricing on the gas turbine side. It is -- on the service side, I'm just thinking through it at the moment. As we always said, this is slightly going up, not as distinct as for the new units. Even so, obviously, I'm very positive whenever the proportion to the service business increases because it's a good service business and keep one thing in mind, you're only going to see that after '28. So, so much to put this into perspective.

So the next question goes to Ajay Patel.

I just wanted to ask around cash flow. Is there any reason that the shape isn't similar on cash flow this year to last year? And then in the event that we do run ahead on cash flow, is it fair to assume the capital allocation works as in 1/3 of cash flows would be allocated towards cash returns? Just want to make sure that link is the case if we do end up better than we expected?

Thank you. And of course, yes, as I mentioned earlier, we did have a really excellent start to the year, and we started in a very strong position. And I think what -- maybe to your point of how to look at the shape of free cash flow and how that develops, it is clear that, of course, the main drivers are a few, but certainly the strong order intake. And again, to what Christian said earlier, the market continues to be very positive. However, it was quite a strong quarter for orders and not to take that and divide or multiply rather by 4 and say, here's what we can expect.

And in addition, one other thing. I think one of the dynamics that perhaps is not fully, let's say, understood is we do have reservation fee agreements. And in light of how that momentum is going, this is actually quite a sizable number. And also, in addition, I think one of, let's say, the efforts that we started from a while ago, is looking at our operating working capital and how do we unlock cash.

So that's something that doesn't look like linear in fashion in some of our, let's say, difficult countries where we've seen that we've been quite successful in receiving some of the overdue payments there. But again, I would just state again, we had a strong year start. This is connected to volume in some areas, but we need a bit more better visibility as the year continues, and we'll come back to you.

So the next 3 questions will be going to Sebastian Growe from BNP Paribas, Richard Dawson from Berenberg and Gael de-Bray from Deutsche Bank. Sebastian, please go ahead.

My question is regards to the GT segment. apparently very strong momentum, both in regards to orders and also execution and not least free cash flow. So how should we think about the order pipeline in that business? Are you in a similarly favorable position as for GS, i.e., to sell also slots to customers?

And what I'm trying to better understand here is what explains the massive free cash flow strength in the quarter in GT in particular and how it might trend from here? And if I may just quickly follow up on one of your earlier remarks, Maria, that there's a sizable impact from those reservation fee agreements. Could you quantify those?

Maybe you take the cash, I just briefly on -- I hope we have heard you correctly, Sebastian, because quality was very bad. So if it was about the order pipeline momentum in GT, if I have heard you correctly. And that is obviously something which continues also to be strong. And you can bet then always every quarter who is ahead, Gas or Grid, but I think in that regard, both look very strong on. Also their data centers have an impact, maybe not as distinct. It's more around the general grid replacement and stabilization. But I obviously see this strong outlook also for the year. And I think we also indicated on the Capital Market Day that we will be -- expect the orders to be higher than last year.

Correct. And maybe just to add to what Christian mentioned there with respect to GT. I mean profit also has a part to play with that and also driven by strong orders, which we anticipate and continue to anticipate in Grid Technologies. We also indicated in the GT slide that some of that was related to milestone payments, some of those slipped into Q1 as well. And of course, we expect a very strong operational performance and underlying performance within GT and that is all reflected actually in the very, let's say, strong free cash flow.

There's also an element of reservation fees for GT. I think that's also important. That plays, let's say, a factor when, of course, delivery perhaps can be even further expedited. So with respect to reservation fees, no, we do not disclose the amount of reservation fees that does change, of course, in line with, as Christian outlined earlier, how much, let's say, in GS, how many gigawatts are reserved, et cetera. And the reason why is that it just it varies. It's quite variable depending upon the contract and the size and the customer.

Next question goes to Richard Dawson from Berenberg.

Just a follow-up on these reservation agreements. Have you started to see any customers maybe thinking twice about signing a reservation agreement given thinking gas turbines, the lead time of delivery is so long? And can you make any comments on how Q2 is shaping up for those reservation agreements?

What is shaping up, sorry?

Q2.

Q2 is shaping up. Sorry. Well, obviously, the key thing is when can you deliver. That's the first question every customer ask and it's obviously all about '28, '29. And you get, obviously, the further you reach out 2030, 2031, and in the meantime, that goes all up to 2032. Obviously, there is a bigger hesitation than to immediately agree because everybody wants something in '28 or '29.

In that sense, however, I think the fundamental interest in the reservation agreement has not changed. It's more like can you deliver certain things? And obviously, we're trying each and everything to build bridges for the customers. And I also see this, in quarter 2, continuing on the same level. However, we have to recognize that, obviously, our delivery times continue to increase, and this is simply the fact of the matter. But I hear -- let's say, I've been, last week, seeing a lot of customers myself. Interest is as high as before.

So the next question comes from Gael de-Bray from Deutsche Bank.

I guess I'm wondering if the flattish service revenue you had in the Gas division this quarter was in line with your own expectations? And how we should think about that for the remainder of the year? And since that's probably a very short question. I have a second one on the pricing side.

I mean, you've talked a bit about that. But when I look at the backlog increasing by 10 gigawatt on a sequential basis and by EUR 6 billion in value terms. So I guess the back of the envelope calculation is that the price per gigawatt is around EUR 600 million this quarter, which is a major step-up compared to what we saw last year, I think. So maybe some comment about that? Because I think you said prices were only going up slightly.

Maybe I'll take the last one and you -- and my feedback would be no, I would not break it down in this because I think it starts to get confusing by looking on the backlog and trying to apply the percentages. So I would refrain from breaking it down in more detail.

Of course. And let me take the comment on our service revenue. As mentioned, overall, revenue had quite a substantial FX headwind of 400 bps. And this can be directly attributed by the way, to our service revenue, as you know, we have a large installed fleet in the U.S. in which that could -- that does play a part. If you take out the FX impact, I actually don't see it sluggish at all. It's actually -- for the quarter is, let's say, slightly flat. There was some onetime topics of prior year. And for the fiscal year, going in line with the pricing, we do see growth, and that's exactly what we've indicated at the Capital Markets Day. So it is FX-related, Gael.

So the next 3 questions go to Phil Buller from JPMorgan, William Mackie from Kepler Cheuvreux and Lucas Ferhani from Jefferies. Phil, please go ahead.

Obviously, the demand environment is very strong. I was hoping to ask about the supply situation, please. The CapEx, as you say, started a bit slowly. I think it's 3.6% of sales versus a guide for 5% for the year. Should we be reading anything into that? Are there any supply issues in ramping up the output perhaps in GS or perhaps in GT? Anything changed relative to what you're expecting on the supply side?

Thanks. First of all, on the build-out of the capacity, no, you should not read anything into that. I mean that's more, let's say, the classical phasing, when does the planning come? When do the contractors get their contracts. So that's more like, let's say, normal course of business. No concerns really at the moment in terms of the execution of our own capacity expansions.

On the supply chain, yes, that is something which we need to watch very carefully. We had some negative impact in quarter 1 on the supply chain, in particular, obviously, on the gas turbine side. Not surprisingly, it is also on the supply chain market for the respective supplier, which is good. And we see them, obviously, also there increasing prices.

We continuously work with our suppliers in terms of what can we do to expand supply chain, co-investing and the likes. But this will be by seeing this impressive demand on the gas services side, to be continuously with us over the next 2 years, I would say. And you will also see it on the customer side. That's not so much us. That's really the EPC contractors, the civil and whatever that this brings up the total installed cost, but we will need to watch this very carefully. But we are on it. And this was also the reason why we decided to invest further money -- why we invest further money in Florida in our blade and vane manufacturing.

So the next question will be going to Will Mackie.

My question will build on Phil's really. Could you -- can we check in could you remind us where you stand with regard to your ability to serve the demand in '26, '27 in GS and GT. What I mean is, what should we be planning or thinking with regard to gigawatt install or deliveries across large and industrial turbines and across the main elements of the product business in GT?

Will, I have to admit you overstretch my memory a bit. I'm trying as good as I can in terms of -- I mean, the big thing in '26, which comes online is on the midsized gas turbine. That's the increase in Finspong, which is the SGT which will towards the end of the year come in. The large gas turbine pieces, obviously all come in '27. And keep also in mind that the numbers we have showed on the Capital Market Day included also a steam portion for the larger gas turbines. So in terms of delivery for '25, before I state no wrong number, I think we have to come back to you in terms of the exact planning, Tobias will get back to you on that one.

So the next question will be going to Lucas Ferhani.

It would be on the SGRE business, just on the timing effects you talked about on the margin. Can you give us a bit more information about what they are and maybe the number behind them, what would be the underlying margin be? And also just on the order side in onshore. Obviously, it's a good start, but I'm wondering what do you have in budget for full year '26 in onshore order intake? What would you think is kind of successful for the relaunch?

Yes. Let me try. I do apologize because it was difficult to hear you. So if I -- I hope I understood it correctly, but let me -- I think the first part of that question was relating to the onetime or timing effects in the quarter 1 profit. And the second one was relating to the order intake for onshore. So let me start with the Q1 profit. So of course, the Q1 profit was negative EUR 46 million, again, supported by timing effects. Particularly, I have to say, coming probably the majority more from Q2 and again, to put that into context, it was -- in total, the range was likely around a mid-double-digit amount. So some examples are the -- some of the hedging effects, so positive hedging effects and of course, those are reversed or also evened out, of course, as we continue to execute in the quarters to come.

There was, as you would expect for a large project business like Siemens Gamesa, some project benefits and shifts. It happens, right, where customers take over projects or even earlier than expected. And that's what has happened also in Q1 and again, kind of to counter that and something that to think about when you think of quarter by quarter, there is, of course, ongoing uncertainty regarding tariffs. And we said that last year that in the wind power business, actually, the tariff impact was the most substantial of all of ours. So of course, we're watching that very carefully.

Again, our assumptions relating to tariffs for the year fully embedded our guidance. There's nothing to indicate at this point. But nothing was additionally booked in Q1 with wind power, but perhaps could be coming to fruition in further quarters. With respect to orders for Q1, again, with respect to onshore orders, Q1 was in line with previous year. And don't forget, I think Christian just mentioned that there's some orders forthcoming. We're now having some let's say, success with the new frames, but it was in line with last year, I think, of EUR 0.8 billion, just shy of EUR 1 billion, and that was as expected.

Yes. To put it briefly into perspective. So we have, let's say, on the trajectory on where we want to get it. I mean we want to achieve the, let's say, last year's order intake. Keep one thing in mind, we limited ourselves to say, look, that is the amount of turbines we want to sell for the first phase and ensure that, obviously, every -- let's say, we test really everything out, and we are very careful. And in that regard, that's the main thing. So -- but we are, I would say, bang on plan.

Thanks a lot. So the next 3 questions will be going to Chris Leonard from UBS, Sean McLoughlin from HSBC and Alex Virgo from Evercore. Chris, please go ahead.

Yes, maybe as an extension on the wind side and focusing on the offshore -- European offshore wind development. Is there any comment from your side as to what we should expect in terms of potential U.K. offshore wind allocation of orders for you in '26 or '27? And equally, any comment would be helpful as well on recent European plans for the North Sea.

Yes. Thanks very much for the question. Maybe a couple of comments to offshore wind. If you look on the quarter 1 order intake, also just to flag it up, there's also one offshore order in Poland, which contributed to the order intake in quarter 1. U.K., auction around 7, still ongoing discussions, not yet fully clarified, so it's too early to say. But yes, we are also looking obviously in certain projects there and discussions are ongoing.

On the 15 gigawatt, which came out of the North Sea summit of 15 gigawatt per year -- out of the North Sea Summit, yes, I believe, obviously, this will be actually great for the offshore industry or good momentum. We have to see now on how this is converted into auction schemes. You may know that Germany pushed its scheme out and is rediscussing the framework, which is fundamentally a good thing because at the end, it's not about the auction, it's about the FID. So I would expect that out of this North Sea Summit, we see obviously momentum also creating in the offshore industry going forward, potentially not in '26. It's more than coming in '27 '28.

Next question goes to Sean McLoughlin.

Just a question on the gas turbine mix. What's your current lead time on a new midsized turbine? And how does that compare with lead times for heavy-duty equivalent?

Yes, it depends really what type of midsize, what type of turbine and keeping, let's say, flexibility there. As I said before, they see and there are some slots also '27, '28, which we try to balance, and these are the midsized gas turbines than with multiple trains. There's also a decent amount of reservation agreements on the midsized gas turbines. But I would say today, you're talking about, let's say, minimum a year shorter than the large gas turbine simply because of the supply chain situation.

And just a follow-up, if I may. Just thinking about the huge increase in CapEx commitment that we've had from the main hyperscalers. I mean, I guess that puts emphasis on urgency. I mean, are you seeing more interest in midsized turbines that they can effectively obtain more quickly? Or is the mix still across all your turbine types?

No, absolutely. They are -- let's say, the timing effect is a predominant decision criteria at the moment. So if you can deliver faster, smaller turbines, they go from more smaller turbines. And you see also some solutions, which I deem not ideal from an efficiency perspective, if I look on lots of small gas engines or so, which we do not do ourselves, but I see some solutions discussed just to bring power to the sites.

What we are seeing is -- and what is really, really good for us, we're seeing a very strong demand across all different frames of gas turbines even below the midsized gas turbines, so in that regard, we can play the full breadth of our portfolio, and that's superb.

So the next question goes to Alex Virgo.

I wondered if you could just expand a little bit on that last one there. The 83 units that you've had on the industrial turbines and the color around the order backlog exposure to hyperscalers. I wondered if you could just talk a little bit about whether that number in the industrial turbines is really what's driving and underpinning the hyperscaler exposure?

And the sort of extension of that, your U.S. peer has just signed a big framework agreement, multiunit framework agreement. And I think you alluded, Christian, to that in your -- maybe it was an earlier answer on your prepared remarks, you talked about the trend to multiunits in the context of the customer discussions you're having. I wondered if you could give us a sense of whether it's likely that you're able to sign something similar? Or you're seeing that in the discussions you're having?

I hope also there. I heard you correctly because our -- the worst qualities from time to time on the call is not good. I mean, looking across the, let's say, how should I say, diversity of the order book. And this is what I believe I heard from you, Alex, in terms of the different areas. Obviously, it's relatively evenly distributed around the frames. I mean, yes, the biggest chunk in terms of numbers more than obviously 50% is the midsized gas turbines. You have it evenly distributed really across the different regions.

Roughly 40% is U.S., as I said, 35% EU, 15% release in China. If you see the order book, for what we're currently having is roughly 2/3 is a new unit, 1/3 is service. So that is roughly the distribution around it. If you take the data centers on the 29 -- on the orders, and if you talk about the 29 gigawatts of reservation agreements which we have outstanding, it's only half of this is data centers and half of this is conventional business is what we are seeing which also means only half of this is U.S. So this is obviously the diversity, which we have in the order book.

There was a second part of the question? The multiunit -- thank you, the multiunit contracts. Yes, absolutely, we see it. We not only see it in data centers. There are some applications. We don't so prominently communicate it because not every customer wants that. But there is also bigger multiunit contracts outside the data center framework, which we have been taking and will continue to take. But we also see in the data center field framework agreements for several years and obviously, lots of units under discussion and also under conclusion in our order book.

So now the last 3 questions go to Vivek Midha from Citi, Vlad Sergievskii from Barclays and last a follow-up from Phil Buller. Vivek, please go ahead.

Hope you can hear me well. My question is on Grid. The margin of 17.6% is very healthy and in the upper half of the full year guidance range. Historically, Grid is not a business with that obvious seasonality. So should we see the upper half of that range is a better guide for the full year margin? And can you maybe talk about the continued fixed cost degression effects you talked about last year versus pricing impact and so on?

Yes. Thank you, Vivek, for that, and thank you for asking a question on our very nice profit development at Grid Technologies. So just maybe to preface this a little bit. So they did have a strong margin in the first quarter. There are also some underlying topics like sometimes FX, hedging, et cetera, onetime positive effects but I don't want to focus on that too much for grid technologies.

What they have done and what they continue to do is execute through their backlog very efficiently, looking at things like productivity. So underlying, we see a very steady positive development. And actually, you can see that not only quarter-over-quarter, but also year-over-year. So I wouldn't expect -- I mean it was high. I would really look at their guidance of 16% to 18%, right, and see how that, let's say, is quite stably developing in the next quarters.

So next question goes to Vlad.

So gas turbine orders, obviously exceptionally strong in the first quarter. Could you give us an idea of how much did it extend your backlog duration in Gas Services? And also more conceptual question. Is there a natural limit to how long backlog duration could get to? Is there a point when it becomes hard for customers to plan that far upfront?

Yes. Maria, do you want to take it or [indiscernible]?

How about I take the first one. Vlad, and again, please correct us. Again, it was a bit difficult to hear. But in terms of our backlog, which I showed earlier, the EUR 146 billion, of which 45% is service. This plays very nicely into the backlog of gas services. And I think we showed that quite nicely also at the Capital Market Day, where we saw a step-up in the margin not only on new units, but also on service. And what's nice about the backlog and Gas Services, which is at EUR 60 billion, by the way, overall, a new record for them is that if you look at the new units, you tend to have, depending on frame size, I think Christian just nicely described that earlier.

It depends on the frame size on how long that remains in our backlog before ultimate execution. Large frames are 3 years, maybe 3 to 4 years, perhaps the smaller frames are between 12 and 24. But what's really nice about the backlog of Gas Services is the service backlog there in. And that has an average duration in terms of our long-term service program contracts of around 13 to 14 years. So that's what -- when I talk about visibility in the EUR 146 billion backlog, I don't just talk about the next year or the year after. I really talk about the visibility that we have beyond -- towards the end of the decade and beyond.

And again, I think EUR 10 billion of the backlog that we see right now around will continue to be executed until the end of fiscal year, if you think about it from that perspective and then an additional, let's say, more than that between EUR 10 billion and EUR 20 billion executed into the next fiscal year '27. As a rule of thumb, again, it all depends on how much we refill the backlog and, of course, what we execute there in. Thanks for the question.

So the last question now goes to Phil, once again.

I think a lot of the questions are trying to disaggregate the more traditional customer environment in GS versus the data center customers. So I was hoping just to clarify a little bit. I think you said a quarter of the backlog is data center now for new units, but is the book-to-bill in Q1 for those traditional customers comfortably above 1?

Reservation agreements, I know you don't disclose what the cash component is, but are there any reservation payments at all from traditional customer sets? And is there -- are you seeing signs of price elasticity, specifically for that traditional customer set? I know in aggregate, pricing is very good, but I'm just trying to drill down on the situation for that more traditional customer set, please?

Yes. I mean what you have to see in quarter 1 revenue on Gas is roughly EUR 3 billion, right? And you see the order intake on EUR 8.8 billion. So -- and the answer is yes. I mean you have a book-to-bill above 1 on the very conventional base. And this is why I was giving this 25% indication also. And we feel comfortable also with the existing other market. That's why I continuously say, we are not dependent on the data centers. But they are the cream on the cake.

And obviously, if you have a, let's say, early slot, you can really make nice profit around this. But obviously, going forward, if we now -- and then also in terms of reservation agreements, right? These things are also in discussions with classical customers. But the timing pressure is a little bit more flexible, I would say, for utility-driven customers. But keep in mind, we have the upcoming 10 gigawatts discussion in Germany, right? I mean -- and absolutely, we are already long-term planning this in, and we want to serve this market, and we will be in and but this is all considered at the moment. So I think across the board, it's a good market for gas.

So with that, we would conclude the Q&A. And Christian, I don't know if you want to have some closing remarks just at the end?

No, just an invitation also to the AGM to join us there in terms of giving a look back and a look forward. No, thank you really for participating in the call. It has been an interesting quarter. I'm very, very proud of our organization on how they execute through a demanding time, I have to say, seeing the geopolitics and everything and the high workload. Big thanks to everybody who was on the call, big thanks to the team purple here at Siemens Energy.

Thank you so much, Christian. So with that, we conclude the call. And if you have any questions, you can always reach out to us at the Investor Relations team. Thank you. Bye-bye.

That will conclude today's conference call. Thank you for your participation, ladies and gentlemen. A recording of this conference call will be available on the Investor Relations section of the Siemens Energy website. The website address is www.siemens-energy.com/investor-relations. Have a nice day. Bye-bye.

Good afternoon, and thank you for joining Siemens Energy's Pre-close Group Call for the First Quarter of Fiscal Year 2026. Before we begin, please note that today's call is being recorded. The recording will be available on our website until our quarterly results are published on February 11, 2026. [Operator Instructions]

As a reminder, we are in the markets pre-close period and will not provide guidance on quarterly KPIs. Please refer to the information and forward-looking statements notice on screen, which applies to all comments made today. The purpose of this call is to remind investors of prior statements and guidance, recap information previously disclosed at quarterly results calls, conferences, roadshows and our recent Capital Market Day and to answer contextual questions.

We plan to publish our Q1 fiscal year '26 results at 7 CET on Wednesday, February 11, and the webcast will be scheduled for 10:30 CET same day. Our silent period will begin on December 19. As always, we will share company compiled consensus 1 week ahead of the earnings release on Wednesday, February 4, after market close.

I will begin today's call with a recap of the key messages from our main investor event in Q1, our Capital Market Day. This overview will cover our perspective on the market, demand and pricing trends, backlog margin expansion as well as our updated short- and midterm guidance and capital allocation framework. After these topics, I will address seasonality, capacity expansion, tariffs and additional updates for Q1 before opening the floor for your questions.

Let's begin with the market context. We operate in the right market at the right time. Electricity demand is a structural upswing, not a short-term spike. As discussed at CMD, global electricity demand is expected to rise by roughly 50% over the next decade and to double by 2050, driven by electrification in transport and industry, population growth and increasingly AI and data center compute loads. Electrification is growing faster than GDP and faster than overall energy consumption, supporting a long durable growth momentum. Gas will remain indispensable, quick to deploy, dispatchable and reliable with an elevated gas turbine market expected to stay robust at least until 2035, supported by coal-to-gas conversions, grid stability, industrialization and a high-driven baseload.

For grid technologies, we see a once-in-a-generation build-out of around $10 trillion over the next 15 years to connect renewables and replace aging assets. About 50% of transformers will reach retirement age by 2040. Siemens Energy is positioned at the center of this transition with leading positions in gas services and grid technologies and a large service footprint that turns our installed base into recurring cash-generative value.

Customer feedback at CMD from utilities, pipeline operators and hyperscalers confirm the same message. Demand is real, lumpy loads are rising and the challenges, capacity and speed without compromising reliability. Shifting to demand and pricing. In Gas Services, we see an average of 90 to more than 100 gigawatts per annum of market activity in the upcoming 10 years, supported by coal to gas shifts behind-the-meter needs and grid stability. Please remember that this is based on a combined cycle demand.

We sold 194 turbines in fiscal year 2025 compared to 100 in the prior year and secured 78 gigawatts of new units backlog across all frames, of which 8 gigawatts were booked within the first 6 weeks of fiscal year 2026. 36 gigawatts, which are currently customer reservation should turn into orders within the next 12 months, meaning fiscal year 2026 and the beginning of fiscal year 2027. Pricing momentum for Gas Services seen in recent quarters is expected to continue to be favorable. We are seeing more attractive pricing and reservation agreements than in current bookings.

Moving to grid. In Grid Technologies, capacity constraints are tangible. Lead times for large power transformers have stretched to around 5 years compared to 2 years a few years before. Our GT backlog doubled in 2 years to EUR 42 billion, with broad-based demand across our products and solutions. For Grid Technologies, pricing has plateaued at an attractive level due to the regulated market in Europe. Short-term deliveries in the U.S. might lead to some premium. The pricing trend for Siemens Gamesa remained favorable. After 2 years of price increases in onshore, prices are stabilizing, particularly in Europe and the United States. For offshore, we see stable pricing trends for 2029 and 2030.

Now let's discuss backlog margin expansion, which is a pillar of our guidance. Our backlog quality underpins our fiscal year '28 guidance and provides us with visibility, resilience and improved margins. The group backlog stood at EUR 138 billion as per September 30, up 42% over recent years, providing excellent coverage approximately 85% of fiscal year 2026. The service backlog stands at EUR 65 billion. Backlog margin uplift is embedded in our guidance and is driven by better pricing and improved operational excellence across all businesses.

In Gas Services, new units improved by 5 percentage points and service by 1 percentage point in fiscal year '25 alone. In Grid Technologies, backlog margin improved by 3 percentage points in fiscal year '25 and by 9 percentage points over the last 3 years. The ongoing mix shift toward a higher share of Gas Services and Grid Technologies, both on strong margin trajectories, enhances visibility on group level margin expansion. Our decision to raise fiscal year '28 guidance is underpinned by contracted backlog and execution programs already underway.

Turning to our fiscal year '26 targets. For Siemens Energy, we expect revenue growth between 11% and 13% with a profit margin before special items of 9% to 11%. Net income is targeted between EUR 3 billion and EUR 4 billion with free cash flow of EUR 4 billion to EUR 5 billion. By business area, Gas Services targets 16% to 18% revenue growth and profit margin before special items of 14% to 16%. Grid Technology expects 19% to 21% revenue growth and profit margins before special items of 16% to 18%. Transformation of Industry aims for revenue growth of 5% to 7% and profit margins before special items of 11% to 13%. Siemens Gamesa targets revenue growth of 1% to 3% and is on track for breakeven.

For additional financial consideration for fiscal year '26, such as the reconciliation line, financial results and cash flow positions below free cash flow pretax, please refer to appendix Slide 23 of our Q4 analyst presentation. Let me quickly remind you also of our upgraded midterm guidance for fiscal year 2028. As we announced at our Q4 results, we upgraded our fiscal year 2028 targets significantly. For the group, we now expect revenue growth in the low teens CAGR through 2028 and profit margin before special items of 14% to 16%, representing a step-up of 400 basis points versus previous targets.

Looking into the business areas, Gas Services now targets a mid-teens revenue growth CAGR and profit margins before special items of 18% to 20%, which reflects a 600 basis point uplift. Grid Technologies expects a high teens revenue growth CAGR and profit margin before special items of 18% to 20%, a 500 basis point step-up.

Transformation of Industry aims for mid-single to high single-digit revenue growth CAGR and profit margins before special items of 12% to 14%. Siemens Gamesa is on track for breakeven in fiscal year 2026 and will continue its journey to 2028 with a mid-single-digit revenue growth CAGR and a profit margin before special items of 3% to 5% by fiscal year 2028 with a cash positive contribution at group level by that time.

Looking beyond fiscal year 2028, the driver for -- of continued EPS growth are clear. Service monetization from today's new unit backlog will accelerate. Most of long-term service agreements are signed near commissioning and 80% plus of this service volume and quality of earnings, you will see it beyond 2028. Productivity remains the primary margin lever. Shop floor automation, AI-driven testing, repeatable designs and a leaner operating model. In addition, the trademark license fee agreement embedded in SG&A of the individual business areas, except Siemens Gamesa, which account for approximately 1% of the group ends in fiscal year 2030, creating additional margin headroom beyond the planning horizon. Our base case beyond fiscal year '28 assumes productivity first and pricing opportunistic, supported by sustained electricity growth.

Let's move to our capital allocation framework. We are committed to balanced capital allocation approach. Approximately EUR 6 billion will be invested in the midterm planning horizon, which means fiscal year '26 to fiscal year '28 in capacity expansions for Gas Services, Grid Technologies and Siemens Gamesa, following clear principles, short payback periods, expansion within existing footprint and high service relevance. Shareholder returns will amount to up to EUR 10 billion over the next 3 years, including up to EUR 6 billion in share buybacks and around EUR 4 billion in dividends aligned with our 40% to 60% payout policy.

We will maintain a strategic reserve to fund the India stake increased to 51% by 2028, selective bolt-on acquisitions and to support our investment-grade rating. Free cash flow for fiscal years 2026 to 2028 is expected at EUR 20 billion cumulatively, with cash conversion at or above 1 over the period. Net cash stood at approximately EUR 5 billion at the end of fiscal year 2025, and we intend to maintain a net cash position through fiscal year 2028 to protect resilience during growth.

Now let's briefly discuss seasonality across our business areas. The flight level of orders in Gas Services for fiscal year 2026 should be above fiscal year 2025, in line with Green statement at the CMD. Please remember that strong order intake is paired with down payments that adds to free cash flow as we experienced in fiscal year 2025. When it comes to profitability in Gas Services, the historical pattern is that profitability is stronger in the first half versus the second half of fiscal year based on the new unit service mix as the first half is a stronger service season. This will not change in fiscal year '26. The flight level of orders for Grid Technologies for fiscal year 2026 should be at or slightly above fiscal year 2025 level, reflecting the strong market environment as shown at the CMD. However, due to lumpiness from large HVDC orders, quarters may deviate from the average.

In Grid Technologies, the underlying profit margin is expected to be relatively stable across the quarters in fiscal year 2026, in line with previous years. For Transformation of Industry, the quarterly profit margin should be relatively stable across quarters, also in line with historical pattern. With reference to Siemens Gamesa, as mentioned in the Q4 call, we expect a rather linear improvement path in fiscal year 2026 to achieve breakeven, driven by the project mix and execution along the year and the timing of expected improvement measures. Q1 will, therefore, show negative profitability, and we expect Q4 to show positive profitability with Q2 and Q3 between Q1 and Q4.

Capacity expansion in Gas Services. Let me outline some details on the capacity expansion. Prior to the CMD, we announced expansion plans where constraints pertain to units, not gigawatts. Hence, mix may always change a bit. For large gas turbines, that means large gas turbines above 100 megawatts capacity was set to increase from around 35 units in fiscal year '24, '25 to around 50 units per annum in fiscal year '27. For medium gas turbines, capacity was to increase from around 50 units in fiscal year '24 to 80 units already in fiscal year '26. Based on these announced plans, capacity would have been around 25 gigawatts in fiscal year 2027, including combined cycle application, which means that steam turbine output is included in this view.

At the CMD, we stated that the next phase of capacity expansion will be implemented more dynamically, going up to and beyond 30 gigawatts until 2030. Karim mentioned 4 golden rules for capacity expansions, scale up within existing footprint, high service relevance, premium pricing and short payback period. This is the basis for our recent investment decisions. For large gas turbines, we will restart manufacturing of F-class gas turbines in Charlotte. Karim mentioned at the CMD, maybe we do 6 to 8 units on top of the around 50 units announced in Berlin. For medium-sized gas turbines, we are adding 20 units to the original plan, which means that the new capacity will be around 100 units.

We are also reintroducing the A65 frame, which is a large aero-derivative gas turbine with around 65 megawatts dedicated for data centers in the U.S. market. Based on that, we add up to 5 gigawatts in the fiscal year '28 to 2030 time-frame versus our original plan, consistent with our target to keep around 25% to 30% market share in what we estimate to be a 90 to 100 gigawatt gas market, including combined cycle. As noted at the CMD, we are now sold out with respect to capacity, even taking into account the announced expansions until 2028, and we are now booking slots for 2029 and beyond.

Before we move to major Q1 events, let me briefly touch on tariffs. As stated during our Q4 fiscal year '25 call, tariffs are embedded in our guidance for fiscal year '26. As of today, no major changes have occurred, the assumption made. The statement still holds.

Turning to additional updates for Q1. One important event was on December 11, when the rating agency, S&P Global confirmed the recovery and stronger earnings power with an upgrade of the credit rating. The rating of Siemens Energy was raised from BBB- to BBB. In addition, the rating agency left the outlook positive, meaning that a further future upgrade is possible in the wake of higher profitability. Likewise, on December 17, the rating agency, Moody's has lifted our rating from Baa2 to Baa1 with the outlook stable.

Last but not least, a comment on FX. As we are guiding on a comparable revenue growth, which means excluding currency translation and portfolio effects. As in the previous quarter, we continue to see higher comparable growth and nominal growth, which is mainly driven by U.S. dollar-euro volatility, the devaluation of the U.S. dollar. Consequently, we expect for Q1 comparable revenue growth, which will be around 300 to 400 basis points higher than nominal growth on SE level.

With this, I would like to open the floor for Q&A. [Operator Instructions]

So I see one question from Kulwinder Rajpal.

I just wanted to get some clarity on free cash flow protection from a mid- to long-term perspective, given that we are seeing a lot of news around crippling financing around the data center market, how are you potentially protecting the cash delivery in the future years? If there is any insight that you can give me on that front, it would be helpful.

Well, so just maybe a question from my side. So I mean that in case there would be any downturn of the -- or the...

Yes, exactly.

I mean, in general, of course, we are seeing on the data center -- the data center part of the business is currently or was in fiscal year '25, only between 20% to 25% of the overall order intake for the Gas Service business. At the same time, we also mentioned that we had roughly EUR 2 billion of order intake at Grid Technologies last year related to data center. So that means in that reference, we, of course, get whenever we have reservation agreements, the down payments or the reservation fees. In case there is really an order intake, you still have the down payment for the projects, which normally relates to 10% to 15% of the project value.

As I just mentioned, I mean, the relation of the order intake within Gas Services related to 20% to 25% is only one part of the overall business, while all the underlying trends are certainly also intact and where we also still expect strong demand in the upcoming years. So even, let's say, if there would be a certain downturn of the demand for data centers, we still see the demand in all the other areas continuing to be strong. So therefore, that would only have a, let's say, part of -- or partly an impact on the overall cash inflow from the down payments and also from the future, let's say, project execution. So therefore, we don't really see a very high risk. And in general, all the projects are managed in that way that we are actually cash positive through all the projects we are executing.

Jonathan [Berkman] please.

I think you mentioned grid margins being relatively stable through the year. But if I look at previous years, it's not always the case that margins were stable. They sort of walked upwards over the course of the year, which also makes sense because grid is growing and as time goes by, you get better price [indiscernible] to backlog. So is there any specific dynamic this year, which is supporting first half margins such that may be like a little bit seasonally stronger than, I guess, what you would have thought if you just looked at it relative to prior years?

Well, generally, what you shouldn't forget is that we had one, let's say, special effect in last year's Q2, where, let's say, there was -- this one special effect certainly had a peak in the margins in the last year. So far, right now, as mentioned before, we don't really see that there should be any, let's say, significant ups and downs between the margin profile throughout the year. So therefore, of course, we are continuously working -- still working on the productivity level. And as you know, that the projects we are having in the order backlog are still continuing to be executed in a very long time frame. At that point in time, the only thing we can be saying that we are expecting that margin profile levels throughout the quarter should not be really varying that much.

Next question comes from Gael de-Bray.

Look, just could you provide a bit of color maybe on the difference between the fees you receive for reservation agreements and the level of down payments you then receive on the firm orders? Is there a big difference between the two?

Well, I mean, we only once really provided further details on the amount we received for reservation agreements that was in Q1 fiscal year '25, where we mentioned that for roughly 20 gigawatts, we received EUR 200 million of reservation agreement fees. That might, let's say, vary a bit. We do not really provide an additional color on that in detail. But generally, you can expect that the down payments when the order comes in is significantly higher than the reservation fee. And the general technical way is that the reservation fee whenever it turns into an order is certainly then calculated into the down payment fee. But the reservation fee is never at the same amount as we -- as I mentioned before, that the down payment is normally 10% to 15% of the project volume.

And then the second one is on the order dynamics, maybe just looking at the Q1 outlook, you said you already received 8 gigawatts in the first 6 weeks of the quarter, right? So I guess we are very much on track to have a record high level in terms of new units awarded in the first quarter?

Yes, let's say like that. I mean, as Karim mentioned, and I think that was also the purpose of his mentioning the 8 gigawatts we already received between the Q4 results or, let's say, the end of the last fiscal year and the time of the Capital Market Day on the 20th of November, there are certain market dynamics continuing. So therefore, these 8 additional gigawatts certainly showed a certain impact. I cannot really provide any additional color on that in detail. But I think the dynamics we saw in the previous quarters kind of continued.

So if I combine these strong commercial dynamics for Q1 and the fact that there are still lots of down payments to be received, what does that mean for free cash flow in Q1? I mean we've seen a number of quarters where Q1 was seasonally weak, but will it be seasonally weak this time around given what's going on, on the commercial side?

Please maybe just remember Q1 in the last year, where we also saw that, I mean, as we have, let's say, fiscal year starting in October, our Q1 is different than, let's say, the Q4 of most of our customers. So there might be also partly or what we experienced 1 year before was that we received quite a lot of also down payments and so on as there were still cash budgets left on the customer side. So that was an effect we were seeing in the last year. If that will be happening this year, I cannot comment at that point in time, but it might be a pattern which could be repeated.

Are there any additional questions? I've seen that Alex [indiscernible] sent an e-mail -- via e-mail as the function seemed not to work to raise the hand. The question is, could you update the slot reservation number following the 8 gigawatt signatures of the first 6 weeks? Clarify the 26 gigawatt at the year-end has dropped to 18 or has the 8 gigawatt converted in the first 6 weeks has been replaced by subsequent slot reservations?

I think I commented it in the -- during the last 15 minutes that the 36 gigawatts, which already included the 8 gigawatts, which we commented at the Capital Market Day, which we had in reservations available, this is something which will turn within the next 12 months into orders. So that means, of course, you have a certain part of that, which will turn into orders. The specifics on that will be provided then at our Q1 results call. But generally, the 8 gigawatts were additional reservations. And at that point in time, as we commented at the Capital Market Day at this specific status, it is something which did not or we didn't see any additional turnover or let's say, like that, the overall 78 gigawatts in the backlog and thereof referring 36 gigawatts to reservations didn't really change in that way.

So the next question goes to Sebastian Growe.

Just one quick question on Gas Services and the mix, especially within the service business. So I was just interested in some commentary around how we should think about the transactional services [fees] against recurring service bit. So if you just -- it should be better than how we should think about the margin dynamics in the first quarter in Gas Services?

Yes. I think we have seen the pattern in previous years as well that especially the first half of the year is certainly seeing a lot more transactional service as this is really the outage season where a lot of outages are taking place. And in that reference, customers also take the opportunity to do modification or upgrades, which normally always comes along with higher margins. So that -- and we also saw that pattern in the previous years, you normally can expect that the first half of the year shows, let's say, a higher margin level, while the Q4 is normally the weakest quarter of the year. So therefore, as this pattern of the outage season does not really change, you can expect that to be the same case in this year.

And if I may just ask one quick question around Grid Technologies. So apparently, the growth profile of the quarters has been quite different. If I look at the year '25, ranging from 16% nominal at the bottom end to up to 30%. And I think the quarter 1 comparison is also relatively lower one at 19% growth. So should we think about that in the way that the quarter 1 growth in Grid Tech should be meaningfully above than the full year target?

At that point in time, I would -- I couldn't really comment on that. Please, yes, that is something where I could not really provide you additional information, and therefore, I would ask you to really wait for the quarter results there.

So we have another question, Gael, you have one additional question. I think Gael is still muted.

Can you hear me now?

Oh, now, I can hear you.

There seems to be a problem with your system. I need to switch from the computer to the phone and vice versa to be able to ask a question just for many times. Anyway, I was just checking if I did not miss any announcements from you in terms of large ticket items for the quarter, either on the HVDC side or on the offshore wind side.

No, so far, you didn't really miss any large announcements. There haven't been any press releases. Otherwise, we would have referred to that. But yes, there's always, let's say, the difference between, let's say, customers giving us the opportunity to communicate that. There might be some shifts also whenever we do press releases. So we are looking into that in order to provide more guidance maybe in the future to think about how we communicate larger orders. But at that point in time, you also didn't miss anything.

Okay, which means that potentially for both Grid and Gamesa, it's going to be a somewhat softer quarter than for the rest of the year?

I wouldn't say that -- I mean, for the wind business, that might be true. If we do not have, let's say, any large offshore orders, the baseline for onshore wind, as you saw the pattern in the last quarters as well is a lot lower, while in grid, we could also see in the -- I think it was the third quarter that even with the baseline, there's also still strong order intake, even though that if, let's say, no large HVDC orders would be included.

I heard that Sean McLoughlin would also like to ask a question, but I cannot see his hand raised.

Can you hear me?

Yes, I can hear.

I'm also having problems with the hand raise. I just wanted to build a little bit on Alex's question in terms of the -- I suppose, any change, I mean, quarter-on-quarter in overall customer willingness to join that RSAQ? I mean I'm assuming that every quarter, that backlog, I'm joining the RSAQ at a further and further date outwards. So just keen to understand how that dynamics evolved over the last quarter?

As you could see, I mean, that there were, let's say, or we had a lot of discussions during the quarter in different calls on, let's say, new players in the field, for example, like Wartsila or Caterpillar. And even there, one has heard that their lead times might be also extending as there was such a high demand. You can expect that even slots going further out in 2028 are still very attractive for potential customers. So therefore, at that point in time, we don't really see any, let's say, declining demand in order to really reserve or fix spots on slots, which are available as 2029 slots are also filling up quite quickly. So therefore, at that point in time, we don't really see any different dynamics there.

Well, so far, I don't see any additional questions at that point in time. So therefore, I would really thank you for the questions you raised.

And now as a final reminder, our results will be published at 7:00 on Wednesday, February 11, with a webcast at 10:30 Central European Time, and our silent period will begin now tomorrow on December 19.

Today's call has been recorded and will remain available until our Q1 fiscal year '26 publication on February 11, 2026. And now I really want to thank you for joining us and for your continued engagement.

As we approach the end of the year, we wish you and your families a restful holiday season and a successful start to the new year. And I certainly hope that we will all engage also in 2026 as frequently as we did in this year. So thank you so much, and goodbye, and have a wonderful Christmas season.

So good morning, everybody and also good afternoon to everybody on the webcast who might be joining us from somewhere else around the world because just last week on Friday, we had our Q4 conference call from Berlin. And now today, we are standing here in Charlotte, North Carolina, and I'm really happy to have so many people here in the room and hopefully, a lot of you following us online.

So before we actually start getting into our Capital Market Day, let me just give you a quick note that on Page 2 on all the presentations, which we uploaded just about 2 hours before, you have the information on our forward-looking statements. So please take care to reading through that as we're going to have some information we might be forward-looking.

Now let me just quickly go with you through the agenda of today. I think it's going to be a very exciting day. So we're going to start first with Christian and Maria presenting the CEO and CFO presentation and following there with the Q&A. Afterwards, we are really excited to have a panel discussion, where we're going to have Chad Zamarin from Williams, Alan Duong from Meta and Matthew Gardner from Dominion joining Christian on stage.

Going to have a short break afterwards before we're going to go into the business area presentation, which will start with Karim Amin on Gas Services and Tim Holt on Grid Technologies, followed by a quick Q&A.

Afterwards, we're going to continue with the BAs with Vinod Philip talking about Siemens Gamesa, and then Anne-Laure Chammard talking about transformation of industry followed by Q&A before we're actually going to then close the CMD, where Christian is going to be coming up on stage again.

So for now, I want to welcome Christian, our President and CEO of Siemens Energy here on stage for the first presentation.

[Presentation]

Good morning, and a very warm welcome from my side to our Capital Market Day 2025. It's great to see so many people of you here in the room, and thanks to everybody who follows us online. As Tobias just has said, we have presented last week already our results from last year and also give or gave our upgraded targets for the short and midterm.

Today, it's very much also providing you the background of the different businesses behind it and the details on how we want to get there and to achieve this. And I'm obviously very happy also to hear the voices of our customers.

You have just heard some voices and really the trust what we received from them over the last years is fantastic, and I'm very, very grateful for that. For us, this trust also converts in an obligation on how can we get better every day. How can we make sure that we help our customers to build this sustainable or more reliable or more resilient energy infrastructure. And I want to talk today also with you about what are the measures behind it. And before we do that and go into the details, I want to talk about safety.

And safety is for us, obviously -- Safety is one of the most -- Okay, my slides here don't operate correctly, but you may want to check that, please. And safety is for us -- I just have to check, is there no slides or 1 slide on? Okay. And safety is for us, obviously, a key element really to run the company.

And I have to say, if I look back over the last years, I'm very proud of what the Siemens Energy team has been doing. We have achieved a 30% reduction in our total injury rate over the last 3 years. but also very clear to be leading in the industry more needs to be done. And it's obviously to elevate our safety performance.

We push very much in Siemens Energy, our zero-harm framework. And this gives indications, principles, behaviors, rules to our people to make sure that safety performance gets better every day. And as we are executing through this, we will see, obviously, the safety behavior improving. I just have to ask, are the questions -- Tim, are the slides online or not?

Working on it.

Okay. So I will talk -- continue to talk while the guys fix the presentation. Sorry for that. And the one thing I want to underline, we are always working in our business in a hazardous environment. So safety hazard is always going to be around us. And in that regard, it is important that in a growing organization like ours, we build a culture where everybody looks after each other and acts immediately if a hazard is identified.

And if the colleagues make it work, I would like to share with you a bit the impressions of Monique. Monique is a field service engineer from our organization here in the U.S. and she joined us from outside 2.5 years ago, and she is sharing her experiences when she joined the company. And now I have to ask the guys.

He's working on it.

Okay. Just maybe you Okay. That looks good. Very good. Here we go. Okay. Excellent. So let me share this from Monique and her impressions really when she joined the company. And we have no tone. I think that's a classic, right? I mean if you start...

[Presentation]

Thank you. So that is what I want to see. That is what we want to see, right? I mean people look after each other, and I'm very grateful for all employees who display that behavior. And we will obviously continue to work on it to make sure that everywhere in our organization, this behavior is displayed and with this drive up the safety performance continuously.

So let me come to the 2025 achievements. And last Friday, as Tobias said, we have presented our results from 2025, gave also our upgraded short and midterm targets. And I want to be relatively short on the look back, but I want to highlight a couple of points before we start to look forward on how we are doing all the things. I have to say I'm very proud of the team at Siemens Energy.

We delivered on all targets which we gave ourselves for 2025. And we delivered that in an environment of geopolitical challenges and constrained supply chain. And we received 150 -- sorry, 15% revenue growth in last fiscal year, a 500 basis points margin improvement. And these achievements were based on really disciplined execution and operational excellence.

We grew our backlog to EUR 138 billion with improved backlog margins, and that is a strong foundation for the continuous expansion of margins and profitability on the way forward. I have started my presentation with some statements from our customers. And their trust is the basis for our improvements. And it is important that everybody at Siemens Energy really embraces this customer focus.

Over the last years, we have been continuously improving our Net Promoter Score. And in fiscal year 2025, we improved it by another 8 points, and that is an excellent level. But nevertheless, it will continue to be our priority to drive this customer focus in our organization. It was also a sign of confidence that Standard & Poor's lifted their credit rating outlook by 2 notches from negative to positive.

And the 200% share price increase is probably the strongest sign of the regained trust in Siemens Energy. And I would like to thank all our shareholders for that trust into our company. We are well aware that this comes with expectations, expectations to continue to elevate our performance and continuing with profitable growth, driving operational excellence and expanding our margins.

And starting from a successful 2025, I would like to share with you how we are directing our organization on this journey. We at Siemens Energy are all driven by our purpose. We energize society and by our vision to become the most valued energy technology company. And on this journey, we are guided by our North Star, which I want to outline for you. This North Star provides 5 key principles alongside which we structure our strategic measures.

And it gives us a direction when we take decisions and it's an indication for you on where do we want to develop the company in the mid and long term. It also gives you an indication what are the indicators to look after, whether we are on track on this journey or not. And we are a company with an electricity DNA since the days of Werner von Siemens.

We are convinced that the electricity and electrification markets provide us with plenty of opportunities to grow the company profitably. And we aspire to benefit from this market from a leading market position. And that is an important base to, at the end, drive the financial performance day after day after day in our organization.

And this period of growth, which we have at the moment is also a fantastic opportunity to push operational excellence and continuously work on the margin expansion, also by rigorously challenging our cost structures. And we do all of this to best serve our customers. And this is why I showed also the NPS, and we will continue to work on it and push it further to help them to build a resilient energy infrastructure.

And this North Star gives us a framework of what to focus on, where to allocate our capital and what is really the business structure we should give ourselves. Today, not all our business are there. We are very well aware of that, but the ambition level is defined. And at the end, we want to be excellent in managing business and working on us to become better every day.

To achieve our North Star, one essential precondition is the market we operate in. And to be crystal clear, we are in the right market. We see substantial growth in electricity demand, which is happening now. Electricity grows faster than GDP. It grows roughly double the speed of the energy growth. And this is not a short-term situation. That is a structural shift what we're seeing.

Demand will continue to grow at a sustained rate, increasing by 50 -- roughly 50% over the next decade and doubling until 2050. This growth is driven by resilient long-term trends. Population growth. Until 2050, we expect 2.3 billion more gaining access to electricity. Electrification, around 1.5 billion electric vehicles are expected to be on the streets in 2050 compared to 50 million today.

And on top of this, AI and data centers at a powerful upside. Power demand for data centers is expected to triple or to more than triple in the next 10 years. And while the power demand for data centers is only a fraction of the electricity market, it offers a fantastic opportunity for us as a company. And these trends come also along with challenges.

But for us, it's really now an opportunity together with our customers to shape new solutions for it and to grow into this market. Siemens Energy is really positioned at the heart of this transformation, ready to capture the benefits of this electricity growth and electrification market. The scale of the investment, which we have already seen in power generation and grid infrastructure in the -- also energy efficiency measures is unprecedented, and our portfolio is well aligned up with that.

And as you will see in the presentation of the different business areas, this is not just about the portfolio. It's about the ability to deliver, building a capacity which helps our customers to build and ramp up new factories, to have the people available who can execute. And we are confident that gas is here to stay, that will be needed to ensure reliable and affordable electricity supply.

And a few years ago, we had to defend why we stay in gas. Today, all the forecasts show that the elevated capacity of the annual growth in the gas turbine market is going to stay until 2035. What it means for us is we are building a bigger fleet such that the associated services will create value well into the 2040s. We also have seen over the last years that the expansion and stabilization of grids is fueling the demand for our grid technologies businesses.

Transmission networks are expected to double by 2035. And it's not just about adding capacity. It's also about replacing aging infrastructure. 80% of today's installed transformers will reach retirement age in the next decade. And we believe that investment cycle into the grid infrastructure will continue with the electricity needs we have.

Additionally, the ramp-up in renewables will go on. And it is creating strong growth opportunities for wind, but obviously also for transformation of industry or for grid technologies. And even though gas dominates at the moment, the discussion, growing -- we always have to be aware that the additions, the capacity additions in renewables is faster than conventional.

And Siemens Energy is positioned in the center of this transformation, delivering technologies that power progress and resilience and provide more reliable energy solutions. And as we have shown with our quarter 4 results, we are raising the bar now, both for short-term and midterm targets because we are confident in our ability to deliver an even stronger performance in this positive market environment.

We expect revenue growth to continue in the low teens through 2028. We expect a profit margin before special items from 14% to 16% in 2028. We are aware this ambitious target, but we also do it in the confidence of disciplined execution, the strength of our portfolio and the passion of our people for continuous improvement. Our commitment is clear, profitable growth, operational excellence and value creation for all stakeholders.

I want to introduce you now on the way, how do we get from here today where we are, a successful 2025 to 2028. And I want to introduce you our strategy program, which is called Elevate. And Elevate helps us really to structure our strategic actions on the way forward and how do we also guide the organization around it. While I've shown you before the North Star, that is the more detailed structure over the next years, and we already have started last year on activities.

You will reconcile it in the different examples I will give to you to execute this strategy program. And our strategy program, Elevate is structured around 3 different pillars. First of all, building the transforming energy world. And that is about the capacity and the portfolio needed to deliver to our customers.

The second point is about strengthening the resilience in this transforming environment in which we operate. Let it be supply chain, let it be financial strength, let it be other things to manage. And the third pillar is on how we are doing things, how do we transform the way we operate and getting better every day.

And let me guide you through some examples of this program in the next couple of slides. To deliver on our growth ambitions, we are expanding our capacities in our core business. In 2025, we have invested around EUR 2 billion in our core business areas to expand capacities. And you will see the details of that in the different business area presentations.

We will continue to invest in our capacity in the coming years, particularly in the areas of gas services and grid technologies. Our output for power transformers and mid- and large-scale gas turbines will increase until 2028 by 30% to 50%, depending on the size of the frame or the size of the transformer. Two principles guide us in this significant expansion program we are running. The first one, it must be backed by the market.

We definitely want to avoid overcapacity in our market. And the second one is use our capital efficient. And this means that we have a high priority to expand on existing sites to limit CapEx and make the execution of expansion projects plannable and as fast as we can. And the U.S. transformer factory, which we are currently executing is a good example for that.

This will be here at the site in Charlotte. The ones who are here in Charlotte today are going to see the site with a lot of different products, and it's also where then we build the transformer factory. We have relatively early on started up to build up the human resources, which are required to execute our backlog. And in the last 2 years, we have added around 7,000 employees net to the organization.

Obviously, we do this with a strong focus on leveraging locations which have the talent pools and competitive labor cost. And with the growth we are foreseeing at the moment, we intend, obviously, to continue to expand our workforce also in the years to come. However, we do this in parallel to standardization of our products and processes to ensure that our revenue grows faster than our headcount.

And we also will continue to evolve our portfolio. We have been consistently investing into research and development over the last years. And if you would take the sum of the CapEx, what we spend and the research and development expenses and look back over the last 3 years, we intend over the next 3 years to spend 20% more. This transfers into a relatively stable spending in research and development because the CapEx increases, and Maria will show it you in detail.

But the euro amount in R&D will continue to be on a good flight level with some shift in the next years to grid technologies and gas services. The majority of our R&D activities is with a focus on maintaining the competitiveness of our core revenue carriers, like the next version of the F frame in the gas turbines, which will come online in 2026 or the 420 kV Blue portfolio, which is the first F gas-free switch gear in the high-voltage class, where orders are expected for 2027.

And there are a lot more examples that will be from compression, steam turbines, other technologies. And you also have seen that we have been launching products into the market over the last years, which are just now starting to build up this revenue piece and become a core revenue carrier like our electrolyzers and transformation of industries, like the Mark VI offshore wind platform in wind power.

And we will continue obviously to build this optimize existing revenue carriers, bring new ones in. And I also would like to highlight our activities where we drive innovations with joint partnerships. I gave you the examples to the last quarterly calls of our collaboration with Rolls-Royce on developing small modular reactors.

You have heard about our collaboration with Eaton to develop solutions on data centers. We have our Omnivise platform, which is our AI-led fleet management system, which we closely develop together with our customers. These actions, capacity expansion, talent investment and portfolio evolutions are how Siemens Energy is preparing to lead in a rapidly transforming energy world.

And at the same time, we expect that the boundary conditions will remain volatile. Supply chains will be under stress, and we will have to maneuver through geopolitical challenges. And resilience is an important criterion for us to develop our company. Over the last years, you have maybe noticed the examples on how we are working on strengthening our resilience.

The one example was diversifying the supply chain. You heard about the example of the rare earths and the magnets where together with Japanese and Australian companies, we are trying to build up to 30% supply outside China for these. This diversification is happening across the supply base and different regions to be better prepared for disruptions. And while dependencies will remain, the continuous strengthening of the supply chain is crucial for us.

And this is also happening by securing access to critical components. A recent example, what we gave was the acquisition of a key supplier for ceramic cores for gas turbines. This is eliminating for us a bottleneck on the gas turbine side and giving us access to 25% more capacity. And this step gives us greater control over essential parts and strengthen the reliability of our supply to customers.

In addition, we are enhancing local for local sourcing to reduce lead times and adapt local market needs with greater flexibility. In Grid Technologies, more than 95% of purchase volumes are already coming from local suppliers. And at the same time, we are investing into strategic partnerships. And we have 15 strategic partnerships, and they are meant really to jointly align the execution plans to build joint capacities.

A good example for this is our joint venture with KONCAR in Croatia, which is focusing on delivering more volumes for transformer tanks into the industry and help us really to deliver this demand. The 3 actions, diversification, access to critical components and local sourcing, that's the way on how we drive resilience also at Siemens Energy.

While our technology and products are essential to compete in the market, it is the way we operate, which makes us different. Our target is to build an organization which better than others operates in a transforming world, respond quickly to market changes and continuously reduce the cost base. On October 1, with the start of the new fiscal year, we have launched our new revised operating model for our organization.

And the clear focus is to drive operational excellence by establishing a more decentralized organization. It is based on sharp definitions on our processes of what to really drive in the business and what to keep really core in the central.

And it will allow the businesses to steer more effectively through this growth period. It also comes with an amendment of our performance management system, creating smaller P&L structures, very clear frameworks in terms of performance management, and also making sure that everybody works on taking out bureaucracy, making sure cost efficiency and further developing the company step after step.

And I'm confident that this will contribute positively to the margin expansion of the company. The other element I would like to flag up are our activities around data-driven processes and digitalization. And there are many examples in the company at the moment happening where we are using AI or data to improve the processes, let it be procurement, pricing, spare part management.

And I would like to give you an example on -- from our factory shop floor in terms of what we're doing. And what you're seeing in the background is an example from our switchgear factory in Shanghai. And we optimized over the last years a lot in terms of robotics and in terms of optimizing these assembly processes, what you see here by continuously improving algorithms.

And it is amazing to see also on this station the improvement what you're able to generate with that. We doubled the output from the factory and reduced at the same time, the headcount required by 60%. And that is really way on how to drive things better. You may also have seen that 2 weeks ago, we opened a new factory, a switchgear factory in Saudi Arabia. And this is based really on the same technology.

So we transferred the technologies from China to Saudi Arabia, opened up the factories, which gives us the opportunity to really immediately have these productivity gains already in the new factory. And that is something what we will continue to work on in terms of really driving AI in our processes, getting every day better and differentiating afterwards through these more innovative approaches. In the period of spending so much capital really for expanding the company, the priority on capital allocation is important.

And Maria will go in more detail on this, but I want to flag up the 3 priorities. First of all, we're going to spend around EUR 6 billion of CapEx in the next 3 years to come on expanding our capacities, particularly on the gas service side and grid technology side. The second point is, at the same time, we intend to return around EUR 10 billion to our shareholders.

And this is based on the dividend policy of 40% to 60% of the net income attributable to our shareholders and a share buyback program of up to EUR 6 billion, what we are now launching. And last but not least, obviously, we will continue also to spend money on developing further the portfolio.

We will maintain an R&D spending above EUR 1 billion per year, gradually shifting more money towards Grid Technologies and Gas Services with a strong focus on asset performance and product competitiveness. Our approach is ensuring that we deliver profitable growth, innovation leadership and value creation for all stakeholders. I briefly also want to address our position on the ESG side.

And as the electricity demand grows rapidly, our responsibility is to provide to society new -- sufficient power and sufficient electricity while make it affordable and sustainable. And we are trying to balance this out in our ESG agenda. And let me first address the environmental progress. Since 2019, we have achieved industry-leading 55% reduction in Scope 1 and Scope 2 emissions in our company.

And we are on a very good way to achieve our climate neutrality target for Scope 1 and Scope 2 by 2030. At the same time, we aim to reduce Scope 3 downstream emissions by more than 50% until 2030. We very clearly focused on an intensity target also to make sure that we capture the growth within the market. It's not an absolute target. It's an intensity target to drive that forward.

And our ESG agenda is also about developing people. We need the best and most motivated workforce to make sure that we can deliver what we promise. And I'm very glad to see engagement factors in our employee surveys of around 80%. More than 90% of the people in our organization are proud to work with Siemens Energy and for Siemens Energy, and we will continue to build the workforce by more than 2,000 apprentices by more than 1.4 million learning hours to make sure that at the end, we have, obviously, the workforce on that to deliver.

That was a quick rundown for the years ahead of us in terms of what we are doing, and we're now getting into the details. In summary, obviously, it is the right business model and to provide, obviously sustained margins by really driving through execution of high-margin orders, continuously working on operational excellence and cost optimization.

And there is a passion in the team of really driving this forward. And with that momentum, I'm also -- if I look beyond '28, seeing that momentum continuing, also delivering continuous EPS increase after 2028 and obviously, basing this on the sustained long-term electricity growth momentum in the market. In that framework, obviously, the North Star gives us the direction.

The Elevate program gives us a structure on how to execute. Maria will walk you now through the numbers of the financials, and then the businesses will show you the details behind it. Thank you very much.

And I would like to hand it over to Maria. Thank you.

Thank you, Christian. Good morning, everybody. Hello. How are you? Very warm welcome from my side. It's great to see so many familiar faces in the room, and hello to everyone who's joining us online. As Christian mentioned, you know that last week on Friday, we had our Q4 and our fiscal year '25 results.

Today, I want to talk to you about value creation and how we deliver value to our shareholders. So here, you see in front of me 3 priorities that I have. One is profitable growth. It's leveraging the strengths that Christian just mentioned. It's looking at our market position and ensuring that we have sustainable profitable growth. Secondly, it's about resilience, in particular, financial resilience.

So enhancing our financial resilience. And this is through a very strong and robust business model and also our rock-solid financial foundation. And thirdly, it's about capital allocation, but it's ensuring a disciplined approach to capital allocation. It's ensuring that we have, as Christian showed attractive shareholder returns. But before we go there, let's quickly recap how we delivered in fiscal year '25.

So here you see in front of us, we have delivered on all of our KPIs and goals in fiscal year '25. Consistently across all businesses. Actually, fiscal year '25 was a pivotal year for us. Revenue grew 10% over the last 3 years. However, it's about the execution of that revenue, flawlessly, stringently step-by-step execute on our backlog and on our customer commitments and focusing on operational excellence, all at the same time as expanding our operations for more growth to come.

Looking at profit, clear 6% profitability at the group level This, again, is also a turning point. And you'll see in a moment, this is not just in one area. This is all businesses improved. All businesses are looking at a double-digit trajectory continuing. And of course, our Siemens Gamesa is on its turnaround path as well. And free cash flow, EUR 9 billion in free cash flow generated over the last years.

And this is fueled by growth for sure, and our capital-efficient business model, where we are effectively prefinanced, including effective allocation of capital where we're prioritizing properly and again, building upon that rock-solid financial foundation. We have EUR 5 billion of net cash. We have 2 investment-grade ratings with positive outlooks. I'll talk a little bit about that later. But now looking at that pivotal '25, let's look a little forward on how we will accelerate sustainable value creation. So a lot of information on this slide.

And I show this slide every time. It's very important. Why? Because here you see across our business areas where our business areas will go into more detail, but you see the broad-based potential across our portfolio. It's all of them have a positive trajectory. That resiliency that's formed as a result of those 4 businesses all going all of the opportunities across each of the businesses forms a resilient base for us.

It also shows what can only be described as the stellar progress that we've made already with GS and GT both approaching the 20% mark. This, as you know, substantially lifting the fiscal year '28 outlook. TI and Laura will bring you through the impressive turnaround that we've made so far and Siemens Gamesa confirming their commitment to breakeven with clear profitability by fiscal year '28. And underneath at the bottom of that slide, you see the profit before special items.

All businesses are looking at returns of factors of greater than 2 or up to or more than 2. So overall, what you see here is all businesses are growing, all businesses are improving their margins. And this outlook for our businesses that you see in front of you here is based on a very strong foundation. Our excellent order book. I talk a lot about our order book because it's super important to us, 138 billion, 42% increase in the last years because it provides resiliency and visibility.

And looking at visibility, here, I have 85% of my revenue already for fiscal year '26 in-house. I have 60% of my revenue for fiscal year '27 already in the backlog in-house. And by the way, the backlog goes well beyond our midterm plan. If you look at some of our solutions, Tim will talk about that in GT or our long-term service program. And again, looking at enhanced resiliency. I just mentioned our long-term service program.

We have EUR 65 billion of service backlog, recurring, resilient, profitable, cash generating revenue for years. And in addition, I think this is something that you can see throughout the last 4 years, it's the structure has improved. So you now have a higher proportionate share of Gas Services and Grid Technologies with those strong margins that I just showed you.

And with respect to Siemens Gamesa, as Vinod will show you later, onshore has been diligently executed with the new unit onshore backlog less than EUR 2 billion. Last, improved margin. So yes, that's as a result of a very strong pricing environment. But more importantly, it's about operational excellence across all of the businesses. Looking at the Gas Services new unit and service split, this is new in terms of the presentation.

And here, I wanted to highlight to all of you the strong trajectory that we see in both of those areas, particularly in new units. You see GT at 9% and of course, transformation of industries, also a different business there with higher transactional business, but all businesses showing improvement in the years prior to '25, but certainly also in '25. So all in all, a strong resilient foundation for us, which supports the outlook.

There's also more to just the resiliency than what we've showed you the backlog in other areas. It's really important that the financial resilience is further enhanced and supported by the strength of our global footprint and the diversity of our portfolio. So here you see the revenue by region. This encapsulates the global nature of our business, the demand and opportunities for growth across all of the regions.

And also, when it comes to local for local, this is real financial resiliency with our strong local for local content and footprint and cost base. In addition, this also provides a natural hedge and resilience, for example, against trade restrictions or tariffs. Now looking on the right-hand side at the revenue by type, you see that around 30% of our revenue is recurring service.

And now you also see the other, let's say, 1/3, 1/3 is attractive margins that we now have in both our solutions and our products. So as Christian mentioned in the North Star, we are active in all of these areas, whether it's by region or by revenue type. We are active where we hold leading positions because this is also resiliency in terms of scale, in terms of barrier to entry restrictions.

So talking a little bit about resiliency, let me shift to something that is also extremely important. And this is something that's near and dear. The focus on efficiency and productivity. Christian mentioned that electricity is in our DNA. Productivity is also in our DNA. And we have worked hard in the last years to produce this basis, a very strong basis. in terms of the various efficiency programs that we've had, whether it was the Accelerate Impact program, whether it was the legacy programs from GP and also looking at integration synergies. This, of course, all the while each and every year, we also have rigorous base productivity, and this is offsetting the impacts from cost inflations. And we have enormous potential ahead of us.

Christian talked about our new operating model. Here, it's about catalyzing that operational excellence day by day, step by step. It's also looking at sustainable economies of scale when we see our growth. And very importantly at the bottom is technology and AI adoption. I think we saw a really cool example from Christian. But let me assure you that it's not just in our operations.

It's in all of our processes. It's in our businesses. It's also in our functions where we're looking at how we can use technology and AI to drive better efficiencies. And all, as you see over the years to come, all contributing to a lower overhead intensity, including SG&A. One area that I do want to highlight is the dark purple, which is our trademark license fee.

This is reported fully in SG&A. It's approximately about 1% of revenue and have a mid-triple-digit impact each year or per annum. We mentioned this in the Q4 call last week, where this ends in 2030, but I think please bear this in mind when you're assessing potential beyond 2030.

Okay. So let's now transition to the third priority or the third item on my agenda, looking at cash generation and capital allocation. So here in front of you, you see book-to-bill net contract liabilities and CapEx. And our cash flow strength, as I mentioned, is grounded in a very capital-efficient business model. So low asset intensity and a prudent prefinancing strategy.

So starting with the first area, you see book-to-bill and how it's fared in the last years. And it's based on a continued growth, so greater than 1 beyond the midterm. And here, you see this in line with our prefinancing and our contract liabilities, developing with our backlog.

So moving to the second item, which is the net contract liabilities, here's where we're deploying our prudent prefinancing strategy. And this is linked by -- to our margins and to the risk profiles in our contracts. And again, we talk a lot about our prefinancing in new units. We also have prefinancing in our service business. And what you see here is, yes, it's peaking with our tremendous backlog and then it will go slightly down to 12% of our backlog and should then grow, it's essentially correlated to our backlog progression.

And lastly, on the right-hand side, you see our CapEx. And as Christian mentioned, we have CapEx, of course, with very disciplined investment criteria where we look at CapEx, we're EUR 6 billion of that in the next years between now and 2028, all related to capacity expansions and the execution of our current and future order book.

And here we practice very clear prior principles. For example, Karim will discuss further the principles applying for a capacity expansion, for example. And looking at CapEx intensity in the midterm, you see it peaks in '26 and then in the midterm will be around 3% below depreciation. So all of this together creates the basis for a strong cash outlook, which you see in front of you.

So on the right-hand side, you see for the years '26 to '28, we are expecting EUR 20 billion of free cash flow. This is reflecting a cash conversion rate at or above 1 over the period. And it's also further supported by a lower, let's say, just slightly shy of 20% cash tax rate. Here's where we're utilizing our loss carryforwards. And with that in mind, then we go from a EUR 20 billion pretax to a EUR 17 billion post tax.

And cash and cash flow is the cornerstone of our balance sheet resilience. That rock solid financial foundation I was talking about. And this is underpinned by our EUR 5 billion in net cash position that we had at the end of fiscal year '25. And it's also underpinned by our ratings that you see here. Again, we are committed to a rock-solid financial fedation, and we are also ensuring that we are resilient in this period. And this together forms the basis for our updated capital allocation.

So here you see we have a total of EUR 28 billion to be allocated. This includes a net cash basis of EUR 25 billion and the operating cash flow pre-CapEx. And what you also see here is we are committed to a balanced capital allocation, approximately 1/3 for each area. So let me briefly explain. In the first 1/3, you see our EUR 6 billion in other operations that are needed for the business in the years -- in the next 3 years to come. Anything that's related to inorganic growth is here.

In the middle, I'm very happy and pleased to share the shareholder returns where we provide EUR 10 billion of total capital returns to shareholders until fiscal year '28. So this comprises of our new share buyback program of up to EUR 6 billion plus total dividends assumed of approximately EUR 4 billion. This is based on our progressive net income and, of course, also based on our 40% to 60% dividend policy of net income attributable to shareholders.

Now you also know that we announced the proposal for a dividend for fiscal year '25 of EUR 0.70, that was proposed based on our dividend policy and also please, if you're looking at the years ensure that you understand there's a dividend, there's a lag. So of course, the dividend that is proposed is for fiscal year '25 and paid out in '26.

So last but certainly not least, in a very important component in terms of our capital allocation is the last third of the last tranche of strategic reserve. So here, you'll have -- or I have things like our India commitment that you know to get up to the 51% of our Siemens Energy India Limited in 2028. That's here.

We also have, for example, if there is the necessity for bolt-on M&A and other inorganic measures, we'll be here. And of course, this is where the net cash reserve will sit. This is where we will ensure that we -- our commitment to a strong investment-grade credit profile is maintained. So that together really shows the overall balanced capital allocation and how we foresee the sources and uses of cash in the next 3 years to come.

So with that, we have really to summarize that we have a very strong outlook, a framework really for sustainable value creation. And our outlook reflects the continued broad-based across the portfolio growth, not just in one area across all of the businesses for double-digit growth.

And of course, this is supported clearly by the visibility that we saw in the backlog. And this also enables us to have that continuous margin expansion towards the 14% to 16% by fiscal year '28, and again supported by all businesses. And what's also important that, yes, we have our pricing momentum.

But we also have that operational excellence, that North Star that Christian is talking about, embedded in all of our businesses and underlying when we are talking about our margin expansion. This leads to our profit more than tripling by fiscal year '28. And I think, as Christian mentioned, there's more potential beyond '28.

And also to complement our guidance, you see here our net income of EUR 3 billion to EUR 4 billion free cash flow of EUR 4 billion to EUR 5 billion and again, our commitment to a strong investment-grade profile. So a lot of information. but maybe let me recap and summarize.

So it's about creating sustainable shareholder value. And we're going to do it because we have our resilient revenue growth. This well-diversified portfolio has shown leading market positions embedded in all of our businesses. We have a broad-based margin expansion where we have this excellent order book, where we have transparency and resiliency and our growing service share. We have strong cash flow generation, as I showed you, EUR 20 billion in the next years, which supports the capital allocation of EUR 28 billion.

The balanced capital allocation, again, reinforced by our commitment to a strong investment credit grade profile. And last but certainly not -- last, but not least, excuse me, we have excellent shareholder returns, up to EUR 10 billion for the next 3 years in dividends and share buybacks until fiscal year 28. And although not on this page, it goes without saying that all of this would not be possible if not for our excellent team and team [ performance ].

So with that, I think that concludes my portion of the presentation. So I think over back to you, Tobias, and for Christian to join me.

Thank you so much, Maria.

Thank you.

Christian, please also come back on stage. And now we have around 20 minutes for the Q&A. So Christian and Maria. So if you have any questions, it would be great. We have 2 people in the room who are bringing around the mics and whenever you get the mic, maybe state your name and company so that we know who question.

So first question comes from Phil Buller, first row.

Yes. Great. So Phil Buller from JPMorgan. I've got one for Christian and one for Maria, if I may. The growth drivers, I think, Christian, to 2028 are quite clear. There's a lot of confidence that things improve still beyond 2028 in terms of profitable growth. I would assume that a key driver behind that is the outlook for service margins. At the moment, I assume you renegotiate your service contracts every year.

So how are those service margin discussions evolving as they roll off their current term? Are they changing in terms of price? Are they changing in terms of structure? Are people looking for longer duration contracts? And are there any competitive entrants that could disrupt that topic?

And for Maria, on the balance sheet, we obviously had a near death experience a few years ago. I know that there's a desire to remain net cash, but you're now going to be a much more profitable business than you've ever been in the past. So how should we think about the level of net cash? Is that EUR 100 million? Is that EUR 5 billion? I guess, given how things are looking, do we need to be quite so net cash going forward?

Thanks for the questions. And with regard to the service piece, just to make sure that we all consider it's different on the different businesses, right? I mean on the Gas Services, absolutely, yes, it's really creating the base for a successful service business. And on Grid Technologies, it's much more on projects and products and less on service. There is service and there's more service probably also coming, but not to the same extent as in Gas Services.

So I would see it slightly different. What I do see in the electricity market happening, the one thing is general growth on this base electricity market. But also, I mean, take this example of data centers, it's more a structural shift because it's -- the market works differently than a classical electricity market. And that offers also opportunities for new type of solutions or framing it differently.

And I think with a company like ours, which is on the one hand, on the generation side and on the other side, on the Grid Technology side and understands grid stability, that's a very interesting combination. So it's not just the service piece, which drives us up to 2028, just to put that into perspective. But yes, I think the -- let's say, the services and the leverage, particularly in gas service business then to continue also the margin expansion.

We are obviously, as a company, and Karim is much better qualified afterwards to put this in detail, we are relying a lot on very long-term service agreements. So the renegotiation is not as fast turning around. But our strength was always to work in this existing long-term framework and then optimize our cost base. That is the trick we are trying to do. That's our strategy.

Yes, we get a lot of new service agreements coming in now with a new, much bigger new unit installed base. And what we do see at the moment, depending on the market, there are some changes commercially on how these contracts come together. Not everything is about profit margin. A lot of things is also about resilience and making sure that whatever going to happen in the world, you have some safeguards in there.

And it's also a little bit of understanding how can we ensure that we have models together with our customer that there is a, let's say, pain gain or, let's say, winning scheme jointly. And this will change certain service business models what we're working on. But fundamentally, I always have said the gas service business is a great business to have. I think it's our stronghold, and I'm not disclosing separate margins, but it's really something where we continue to build on.

But yes, also with the current momentum because a lot of units may be operated differently and may have different challenges, it offers an opportunity for revised that business model also after -- with an effect of 2028. Keep in mind, if you sell a gas turbine today, you're probably not seeing all these things in terms of service business in all the numbers what you have seen on the screen. They come after 2028.

That's right.

So the question, I guess there's 2 parts of that isn't there? So there's the new contracts that you're locking in for new customers, but the natural attrition of the installed base. So I guess if you have 10-year contracts every year, there'll be a renewal. So on those renewals of existing ones, are you seeing a material change to the structure of those contracts? Or is it...

No, it's not so much, but Karim can much better. He will show the installed fleet and also the additions in his presentation. And then you can also give you a little bit more background on that one.

Then over to me for -- thank you, Phil, for reminding us of -- but that's true. A couple of years ago, we experienced things a little differently, and that's why it's so important for us to maintain that rock solid financial foundation. As you know, we ended the year with just shy of EUR 5 billion of net cash. And I think it's really important in light of some of the activities in terms of growth that we have for our businesses.

You saw on the 1/3, 1/3, 1/3, where it's looking at potential bolt-on M&A in other areas, but it's really important for us at this point in time for the time being to have a net cash balance. And we see that and I foresee that in the 3 years to come until fiscal year '28.

So thank you very much. Maybe the next question goes to Ben Uglow. And 1 question, please. Please only ask one question, thanks.

Okay. I'll try to just ask one. But my question is for Christian. And it's about -- I don't know how to put it, but market discipline. And we are in the midst of an industry-wide capacity expansion, which we haven't seen, really, frankly, for 20-plus years. And in the past, the problem has been that people behave normally and then go completely bananas.

If I listen to what you and your competitors are saying, there's this kind of common agreement that we're all expanding capacity by 30%. Behind the scenes, there's kind of different things going on with different companies. impression is your Japanese competitor could be significantly bigger than that in the U.S. and because it's -- how do you see the market?

How do you see the price behavior and the capacity behavior between the different players. And if things were to change, i.e., that we need more capacity, how adaptable are your plans? So if we decide to go the full hog, how quickly can Siemens Energy adapt.

Yes. Thanks, Ben, for the question. And as I've shown in the slides, I believe we do a very conscious capacity expansion, making sure that we leverage really our productivity and our existing sites. And I see my competition also thinking carefully through this. You can never avoid that somebody goes crazy or whatever. But so far, I'm not seeing that. And I would repeat that for the Gas Services business as well as for the Technology business.

And the other thing is also what if additional capacity is not available. I mean nobody going to curtail electricity just because it's not available. So it's a relatively thin line to walk. But for me, it's important that the money we put down for capacity expansion has relatively short payback times. That whenever this occurs, right, that I can say, okay, yes, but we captured what we wanted to capture and the market might be smaller, whatever, in 2035, but that is not -- that was not the logic, right?

I would, from my side, be very hesitant to say, I invest into something where I only know after 15 years whether it ever has paid off, right? I think in terms of where's the limitation, at the moment, everybody talks about gas turbine and transformers and you have to tune out the noise, right, and really focus on the signal. I think we're overestimating that limitation because there's next limitations to come. I think we have to watch carefully the supply chain, and we are investing into this.

There is obviously things we can do, and I believe also our competitor can do to further drive up productivity. I've shown you the examples for a reason from the shop floor. Nobody would have ever believed 3 years ago that you can increase the productivity so much in an existing factory by relatively straightforward measures. And I think there's more, right? But we are learning this.

And in 2028, could there be another leverage on driving up productivity? Potentially, yes. And this is what I would always follow, make these things more productive and sweat the assets. I do believe we will see then the limitations tripling through, supply chain, EPCs, really bringing these things down, and we work our way through it. So far, I see a consistent behavior -- and as I said, for me, it's important that we don't expose ourselves in case the tide turns, right?

But it's a balance between also being too slow because that is something which we should not underestimate. We want to be able to deliver to our customers what they need. So far, I think we have embarked on a decent journey. And I believe there are still always levers you can pull on productivity to get more out of it. And Karim and Tim are going to show it a bit.

Alex Jones, you also raised your hand.

Alex Jones, Bank of America. On a slightly similar topic, you showed this continued margin progression after 2028. I'm interested in how you see pricing as a driver of that? Or is it more driven by productivity?

And I suppose I'm asking because the gas slides that you released earlier show a continued capacity expansion even after 2027, I think of another 35%. Do you expect that to lead in the market to some sort of declining or moderating OE pricing as we get beyond the next 3 years? Or do you remain confident?

My base assumption would always be leverage productivity and really make sure that also from a corporate cost structure side, we do the utmost. If there is an additional pricing element, that's great. But at the moment, it's really in terms of this continuous improvement on EPS. It's really productivity and really bringing home what we have in the books. That's my main assumption.

So Delphine, just behind you.

You showed a lot of ambition in terms of capacity -- sorry, I'm Delphine Brault, ODDO BHF. You showed a lot of ambition in terms of capacity expansion, workforce increase R&D expansion. Any limits that you have to deal with I'm thinking notably a shortage of workers in some countries or segments but also supply chain tensions that you touch upon, how do you deal with this? What measures or processes do you put in place to counter the obstacles?

No, at the end, I mean, all of these are limitations, as you rightly said. I mean -- and this is why I said we're relatively early on roughly more than 2 or 3 years ago, we started, for example, the workforce ramp-up. At the same time, we're trying to understand what means AI for certain processes and how to do more with less people. And that is why it's also important to drive standardization of our products and our processes to make sure we can handle this even so obviously, workforce availability might not be easy.

And that is true for every country of the world. It's not different elsewhere. We have been leveraging this quite well, I think, in the last years. It will continue to be with us. At the end, it's a question on what we focus on. And this is why I also tried to show the structure. It is working through this. Supply chain will be a constraint. Always, it will not go away.

But the question is, can we manage it better than others by really having the focus on it. This is what we're trying to do in there. And it will also continuously be challenges, which we don't see today on that. What I cannot tell you today is really what do we foresee fully then as the impact, for example, of AI and how to redo the processes. At the moment, I clearly have to say we are ready to execute our order backlog.

I mean that is what I can really convey. And then we work on it day after day after day. But this is also why, for example, education and apprentices is so important for us. We have to also build up the workforce in our industry ourselves to a certain extent to make sure that they are available. And supply chain will be a continuous exercise to diversify, localize and not even talking about requests from countries to further localize will be with us. focus of management is that, that is the main answer to that for me.

If you just hand it over to Gael, maybe, Gael de-Bray.

Gael de-Bray from Deutsche Bank. Can you talk a bit more about the portfolio review, the ongoing portfolio review. Specifically, you mentioned that one of the guiding principles for the group was to achieve #1 or #2 positions in all areas.

So I guess, specifically, do you think this is something you can achieve for the onshore wind business? And could you also talk about the place and the rollout of the corporation business within the overall strategy and the synergies with the rest.

Yes. I can talk about it. I might not have an answer specifically for each and everything at the moment. But what is important for me to understand with the North Star is that at the end, we're trying to manage a set of businesses, which is super well positioned in the market and serves electricity and electrification. And we always have been talking about like business, what is wind and what is transformation of industry.

Keep in mind that 5 years ago, we talked the same way about Grid Technologies. They were the laggard in terms of the performance. We were not sure how it's coming. So I would also take some breathing time there and saying, let's see how it's developing. For me, it's important at the moment that both of these businesses improve day after day after day. And this is why also this turnaround story in wind is extremely important for us.

It's the biggest lever on the profitability in '26 for us. Do I believe onshore wind can go? That's a very long run in terms of really getting there, particularly from where we're coming from. That's something to be looked at, but it's not in that point in time at the moment. For me, the key thing in onshore is our team to set them up for success to reintroduce products in the market to get them better every day.

And I always have said, and this applies to each and every business that we will continuously look on what is the outlook. There's currently no active things planned. But you know, for example, in onshore wind, we have taken measures like India, where we say we don't do this or we focus only there. And you will see it also from Vinod's presentation that there is a very focused approach on this.

And then at the end, when we have done this, then it's the time to look on it and saying, okay, can we get it to the flight level where we want to be. But that is not the point in time today, also not for the transformation of industry business, which has also elements which they are continuously working through. And keep in mind, the portfolio elements might be also portfolio elements to add to dispose. We've done it in the past.

We will work through it and keep you updated on this. Let me put it like this. What I want you to hear and clear is that we very carefully look on the portfolio composition at the end, profitability and market leadership is linked together. And this is why we obviously will use it as an element to further develop the company.

Thanks a lot. Any additional questions right now? Will, just in front of you. Will, please.

Will Mackie, Kepler Cheuvreux. My question comes to working capital and specifically, the working capital development we've seen over the last 3 years. You put up on your chart, the allocation of your EUR 28 billion and you've provided some insight into the development of contract liabilities.

But I mean, perhaps you could frame how we should think about how working capital at the group level will develop as a proportion of sales through the cycle and perhaps some of the other elements of contract assets and the other more stable elements of working capital. And then perhaps to go deeper into that question to ask how you see the working capital across each of the divisions evolving specifically the...

That's very specific getting into some of the details of working capital. And that's why I wanted to share the peaking of the 13% with the net contract liabilities, specifically because, of course, when you look at our operating working capital, everyone talks about the contract assets and the contract liabilities. And currently, you see that peaking again with our backlog progression.

When you're looking at things like inventory and our working capital, you see that also is in line with increasing levels as we execute our backlog. But as a percentage of sales, you would see that currently, like you saw with the SG and other things, it's a degression effect or a limiting effect. Even though we continue to increase our working capital peaks for the contract liabilities, but other things go in line with our sales progression but proportionately lower.

Yes, please. You've got a question at the back.

Richard Dawson from Berenberg. So I just noted you completed several bolt-on M&A acquisitions this year. but also note that you sort of keeping capital reserve for future opportunities as well. So just interested if you could provide some color on what you may be missing from your portfolio and maybe sort of a guide on what sort of size that could be.

First of all, to be clear also, I mean, at the moment, we are not up to major acquisitions, where there's bolt-on acquisitions, particular, as I said, one piece is strengthening the supply chain. And this is why I gave the example of the ceramic cores. This could be also an investment into joint ventures like with KONCAR to make sure that there is a resilience on the supply chain.

The second point and always have flagged it up, we heavily look into how do we continue to develop the business on the digital grid side, on the grid stabilization. Some of this might be R&D work. Some of it might be collaborations. Some of it might be smaller bolt-on acquisitions, but it's also really for us at the moment to deliver our backlog and work through it.

And this is why I also -- when I showed the 3 priorities for capital allocation, big M&A was not part of that, right? I mean there's a reason for that. It's not the core focus at the moment. But if there are smaller bolt-ons, we're going to look into this. And I think there's definitely room on the grid technologies side and on the supply chain side where we could do certain things.

So -- and as the room is so big, sorry, I didn't see you before Max. Please go ahead with your question.

Max from Morgan Stanley. I just -- I wanted to ask -- I'll wait for capacity on gas. But I wanted to ask about the grid business. And maybe just sort of 2 pieces. If I look at the backlog margins that you've showed, they're up by 300 basis points last year, and I look at kind of what's coming out and it's kind of 15 or 16 depending on whether you exclude one-offs.

I guess my question is, it looks to me when you try and back it out that the margins of what's going in is kind of well into the 20s. Is that right? When you look at kind of margins on new orders, it looks like they're already above the top end of your targets. So am I missing anything?

Do you want to take that?

I would say, Max, that it's not that you're missing anything. And of course, you saw the progression of the backlog margin and the project margin increasing in the years, but you also know, as you rightly mentioned, there's a lag between, of course, the booking of the order and when that comes to fruition to sales. So that the trajectory is higher in that regard in order to ensure that uplift for the 2028 accordingly.

And could I ask a very quick follow-up. You talked about obviously new equipment versus aftermarket a lot in terms of your gas services equipment. But in the grid business, when you look at your products versus solutions business and you look at the pricing that you're getting on new orders, how should we think about this kind of evolution, maybe qualitatively of those 2 businesses when we think about margins going forward?

I think while there is markets where you would say that's products that solutions don't completely unlink them because obviously, certain products business, you only generate because of the solutions business. That's the logic, right? And then it's a little bit an internal allocation piece in terms of how do you do that.

Fundamentally, I would say the way on how we run it, the product looks, let's say, higher in terms of margin than the solutions piece. But as I said, it's not completely unrelated on that. And I expect, obviously, that relation also in terms of margin level to continue also for the future.

Yes, we don't have -- so after we have not 20 minutes of Q&A., we had -- so we need a quick break in order to set up the stage because I'm really happy to welcome now for the panel discussion. Chad Zamarin from Williams, Alan Duong from Meta and Matt Gardner from Dominion. But just give us 2 minutes, and we're going to be prepared so that we're going to have the panel discussion here starting in a second.

Is that working? Okay. And now comes a part of the Capital Market Day where I have to say, I really look forward to be part of the Capital Markets Day because that is really a pleasure to have a discussion here with some of our most important customers, and I would like to welcome to our stage, Chad Zamarin, Matt Gardner and Alan Duong. Please have a seat.

Very good. Thank you very much. Thanks for joining us today and having a discussion. I have to say I was very pleased to see the composition of the panel. And if I talk about the U.S. and what is we have ahead of us, I think we could not have a better panel to talk about the development of the energy infrastructure.

We have Chad Zamarin, the CEO from Williams since this year. Congratulations still, and he joined Williams in 2017. He has been before also with companies like Cheniere. So I think you have seen a big transformation in the energy markets. So very glad to have you here.

Matt Gardner Vice President of Planning and Operations in Dominion Energy, I would say the brain behind the grid, right, in terms of really helping us to understand how we actually get all these electrons across the country.

And Alan Duong, they had -- you have probably the coolest title at the moment, right? Head of data center design, engineering and construction. He is probably one of the guys where everybody goes to and says, "How the heck we're going to do that." So it's very great to have you here. And I'm looking forward really to the joint discussion.

And maybe, Alan, we start with you in terms of your view on data centers and AI, how is the load curves coming? What is the demand outlook? What are you seeing from your perspective at Meta?

Yes. No, that's a great question. What you're seeing in the market today clearly is this shift and change in compute, right? So we're moving towards very heavy compute. Very low storage which is driven by AI technology, as you [ would know ]. And so within our company, what we're seeing -- I won't speak for the rest of the industry, but if you follow the news, you see where the industry is going.

We are seeing from where we're going to land at the end of the year of our just AI infrastructure data center footprint by the end of this year, over the next 24 months, we're going to see a 4x to 5x growth in our capacity demands alone. And so we plan around sort of, I would say, 18 months sort of rolling capacity outlook and from that perspective, 24 months from now, 4x or 5x is what we're seeing.

So that's what's happening within just Meta alone. And if you scale this out over the next 48 months looking all the way up to 2030, you can see that ballooning significantly more. And so we're going to time it again, every 18 months, we refresh our capacity outlook, but that's where we're at today.

Chad, I mean, looking on gas, right? I mean we're talking so much about gas at the moment. At the end, it also means the pipelines have to be there, the capacities have to be there. How do you look on the current situation? Or where do you see the bottlenecks on that side?

Yes. I mean it is one of the challenges in the United States. I mean we haven't -- we've grown natural gas demand by about 50% over the last 10 years. We've only grown pipeline capacity by 25%, and we haven't grown storage capacity at all. Here in the United States, we've got a gas market of about 100 Bcf a day.

We can store 4 trillion cubic feet of natural gas each and every day here in the United States. It's the world's largest battery. And it's why the natural gas value chain is so important to our energy ecosystem, but we haven't been expanding it at the pace that demand has been growing. And then you think about electricity, we haven't grown electricity production in the United States in 25 years.

We've done a lot of work. We've moved a lot of things around, but we actually haven't grown electricity production in 25 years in the U.S. And so we've got to build in order to support this race that we need to win, and we've got to support our customers in achieving their full potential, but we've got to build at a pace and at a scale that we frankly haven't for the last 25 years. So supply chain matters.

I mean, obviously, the partnership with Siemens for us is incredibly important. But just more broadly, I mean, we, as a country, have to get back to building. I mean, I'll give you -- Williams is a company that in World War II built the war emergency pipelines from Texas to New York in under a year. We've been -- we built our Atlantic Sunrise pipeline started in 2012, went in service in 2017, and we just finished the last litigation on the project this year, 13 years to kind of close out a big scale project.

So we do have to -- and we're seeing hopeful signs that the market is realizing this once-in-a-generation opportunity, but we've definitely got to get back to building at a scale we haven't in a long time.

Thank you. Thanks, Chad. Matt, now the infamous question, obviously, what about the grid? I mean where are the constraints there? Is it available? What is the near-term pressure points what you see? And how to unlock capacity?

Yes. Absolutely, great question. And by the way, thank you very much for the honor of being a part of this panel. So what we're seeing right now on the grid is an environment of both accelerating demand and accelerating growth. And so let me provide some statistics associated with that. We are a part of the PJM market, and our load forecast is at a CAGR of 6.3%.

And we've been in that 5% to 6% growth rate since essentially the easing and the ending of the pandemic. So what does that type of growth rate mean for us? That type of growth rate means that in the next 15 years, the demand on our system is going to double. Now we've been in business for 116 years. And in the next 15 years, we're going to essentially double the demand on our system.

When have we seen peak demands on our system? Well, each year, year after year, over the last half a decade, we've seen one -- we've set one new high watermark after another in terms of peak loading on our system. Our all-time peak load occurred this year. As a matter of fact, all top 10 of the peak loads on our system have occurred in the first 7 months of 2025. So we've hit all top 10 peaks. And we anticipate that next year, we'll hit new peaks as well.

So what is this doing to the grid? This type of demand growth, this type of load growth is meaning that we're certainly extending the transmission system to handle this load growth, but it's more than just the local extension, adding substations to the grid. It's now starting to have an impact on the very backbone of the grid, the extra high-voltage network. I'm talking 500 kV, 765 kV. We're starting to see the need for significant regional enhancements to that portion of the grid. So that's driving investment in our system. So accelerating demand, accelerating growth affecting the backbone of the grid. But what I would like to say is that accelerating growth, the amount of capacity that we're adding to our system over the next 5 years is actually going to be the same as the amount of capacity that we've added over the last 10 years. So essentially, what I'm going to do in the next 5 years is going to be greater than or equal to the amount of capacity I've added in the last 10.

So there's accelerating growth there as well. What about reliability? With all of this demand, with all of this growth, what about reliability? Actually, on our system, reliability is improving along the way. And what that means is that these investments are having a positive impact on all of our customers.

As a matter of fact, last year, in the calendar year 2024, we registered the highest levels of reliability ever on our transmission and substation system. The lowest number of minutes out was registered last year. So accelerating growth, accelerating demand and then improving reliability as well.

Thanks, Matt. So I'd say, summarizing it, demand is there, right? And there is, let's say, a big push for that. And now the question is how do we execute all of that? And how can we make this growth happening?

And Matt, maybe from your side also as Matt, I think you have a strong U.S. view, but you also have a view outside -- sorry, Alan, you have a strong sight on also outside the U.S. and what's happening else. What do you see as the limiting factors or the bottlenecks or the really blocking points? Is it permitting? Is it execution capacity? Is it OEMs? What is it?

Well, it's supply chain is #1 when it comes to data center construction, just raw construction. We don't have access to enough equipment for us to go build these data centers. And then when you move up the chain and you move backwards probably 24 months from that, a limiting factor is energy. You can't find land and you can't find energy anywhere today.

And if you're talking about the accelerated demands that we're all operating against today where we believe in the next 24 months, we're going to learn a lot about who's going to win this race. AI is powered by infrastructure and it's powered by energy. And so that's our limiting factor today. And so that's why you're seeing a lot of deployments where we're deploying behind-the-meter generation directly connected to our workloads, and that's what's driving it. So that's our biggest risk today, our biggest bottleneck.

If I may jump into this immediately and look to you, Matt, right? Because we were talking so much about behind the meter, grid infrastructure, not get connected, grid connected. How do you see it from your perspective, really understanding also the grid infrastructure in the U.S.

Well, I mean, it's -- when you look at when you look at the type of growth that we're having right now, I think we're going to need to see an all-of-the-above approach in terms of continuing to serve the load. And that means getting creative. That means getting creative in how we generate energy and how we partner with our customers in load flexibility. The flexibility of demand, the flexibility of loads is becoming more and more of a conversation.

As a matter of fact, we've developed what we call the CAP Flex program at Dominion Energy, which allows for us to add curtailable capacity to our grid. So I think, Christian, from the perspective of behind the meter, in front of the meter, partnered with the utility, I think we're looking at an all of the above scenario where we'll find joint progress and success together with our customers.

Christian, I might just add, I think it positions Siemens in a really important place. I mean I do think Matt said it well, this is not a black and white grid versus behind the meter. It's not going to be a large frame unit versus a small frame unit. What we're seeing is to meet the customers' needs, we've got to expand the grid. We've got to build the big infrastructure.

I mean we move 1/3 of the nation's natural gas, but building the big systems to expand the grid takes time. Again, we haven't been doing it at scale for 25 years. So in the meantime, and I think for long term, there are a lot of industries where large power use facilities want to control some form of their energy. You want to tailor that energy system to the unique operations of a facility. You think about the industrial complex that we serve.

So this idea of kind of grid versus behind the meter, big unit versus small unit, it's going to be a combination of solutions. And I think it's one of the reasons why we spend so much time with your team. You've got a lot of different tools that we can bring to bear so that we can solve these unique challenges.

Are you seeing differences if you look from a, let's say, gas pipeline perspective or an electricity grid perspective? Are there different elements in terms of what is limiting the speed of the transformation?

Yes. I mean it's really hard to build linear infrastructure. I mean that is one of the challenges in our country. You're crossing people's land, you're crossing different jurisdictions. You've got environmental features. So I mean, one of the hardest things to build -- I mean, we talk about very large complex sites and even data centers are very large complex sites.

But once you've got that site secured and you're building on a single location, it's not easy. Don't get me wrong. But building long, large linear transmission power and pipeline infrastructure is very difficult. So a lot of what we're going to have to do is work with our customers work with Meta to make sure we can site facilities where we've got enough existing infrastructure and then we can build.

But the challenges are the same. I mean it is increasingly difficult and the country has gotten more populated, and we're wanting to site locations as close as we can to end-use opportunities. But it is certainly a challenge to build through people's backyards.

You have outlined a pretty impressive now growth and you're reviewing it continuously. But what is really -- what is the must-have to make it happen really that you, at the end, also bring all this demand. And so what is really the points where you would say that's driving you day after day to look on -- to recalibrate also on how you're moving?

Yes. I mean it's relevant to what we're talking about here and everything that everyone shared already. It's speed, right? At the end of the day, our -- my job is to ensure that we can deliver data center capacity to our software teams and our hardware team so that they can build frontier AI systems on our infrastructure. And right now, the next 24 months is very critical for us.

Our leadership team is betting the company in the next 24 months as far as excelling our AI infrastructure and AI systems. In order for us to get there, we need energy. That is the current bottleneck at the moment. If you ask me what my preferred deployment is, it is to connect our data centers to the grid. That's what we've done over the last 12 years, right?

Grid connected energy from there is stable, reliable. It's dependable for us. That's what we want. We're only moving towards behind the meter because that's the only way that we can build fast. So we don't have to do what Chad just said, going through all these policies, building pipelines across people's land, that takes a lot of time. And so for us, we're moving in this direction in the near term because we need to deliver capacity quickly. That's our biggest priority.

Is there any other things which drive you? And obviously, also saying, hey, what is with regard to what the clean energy procurement versus fossil fuels, right? And how do we cope with that? Is there anything what comes in addition to that?

I mean we have goals to be net zero in 2030 across our entire supply chain. We're still committed to that. And so we want to partner with partners in the industry that will allow us to scale our capacity now.

But at the same time on the back end, help us get to our commitments because we won't hit that if we're just burning natural gas generators to create power to power up our data centers. We need the renewables. We need the commitments there as well as well as long-term sort of commitments because it doesn't stop in 2027.

If this technology proves already from what it's doing today in the industry and how it's changing the way we work, and engage with each other. This thing is going to continue to scale all the way through the next 10 years. And so we have to intentionally long-term plan that today. We have to scale out our grid. We got to scale our power generation, and we have to continue to invest in renewable supply, like we have to do that.

Seeing that -- I mean what I find fascinating about data centers is the amount of electricity we're talking about. I mean, we so easily talk about 1 gigawatt consumption per site. I mean we always have to recognize there's a very limited number of sites in the U.S. at the moment. just having a couple of hundred megawatts. So we're doing something completely different to the infrastructure.

Matt, if you look on it, these lumpy loads, which now kick in, what does it mean?

Yes. Large lumpy loads say that 5 times. But I'll tell you what, on the grid, we've actually been dealing with large lumpy loads for decades. We've been serving things like arc furnaces. It requires flexibility. It requires really understanding the nature of the large load. We have in our industry, our reliability regulator, so to speak, in North America is the North American Electric Reliability Corporation.

And they've recognized this large load issue as well. As a matter of fact, there's a task force right now that's focused on understanding these large loads, how they operate and what the grid needs to do in order to be flexible and provide stability.

So they've actually developed a questionnaire, a questionnaire that we've taken, worked with our customers and actually placed within our facility interconnection requirements so that as these data center loads are growing on our system, not just data center loads, but all sorts of loads, as they're growing on our system, we know the characteristics of them.

We keep that conversation going with our customers to understand the dynamic nature of the loads. But it does require additional flexibility from the grid. How do we get that flexibility? Well, we get that flexibility from things like flexible AC transmission systems. The discussion of HVDC is becoming more and more prevalent in the industry. Long story short, what we're trying to do is not only serve this load through investments in grid but also serve this load with investments in grid capability.

And that capability comes from engineering solutions that are innovative, that provide flexibility that give you the proverbial dimmer switch to adjust voltage and ride through various transients that might come from these lumpy loads, so to speak.

Thanks, Matt. And then obviously, on the other side, we also have an ability to flex generation a bit. And Chad, how you look from your point of view on generation infrastructure like [ Pekas ]? And how would it going to look like going forward?

Yes. I mean one of the challenges, I mean it is going to be really important that we continue to evolve our technology in order to address a more dynamic energy system. I mean it sounds interesting and fun. One of the challenges is it drives up the complexity and cost of the system. I mean, we've seen as we -- it is the right thing to move coal out of our generation composition. But as we've done that, we've added intermittency and we've created a more complex grid even before you add more dynamic loads at large scale from an industry like data centers.

We've added LNG exports on the gas side, which are more volatile, they could be lifted or not lifted. We've added a lot more power generation in natural gas, which is primarily the only tool we have at scale that can balance intermittency. And so as the grid becomes more dynamic, it requires more complexity.

And the thing we have to be careful of is that can oftentimes lead to additional cost. And what we've seen in the United States is markets that haven't gotten that right. We will see some of the largest utility price increases in the United States this year in the history of modern energy in our country in certain markets. And that's in markets where we have added complexity to the system, but we haven't solved that with technologies that complement it well.

Markets that get that right, we still have very affordable, reliable energy, but that is a challenge. And it's -- again, to be a company like Siemens thinking about solving these technology challenges, we have to understand that the grid is becoming more complex. So yes, today, we rely heavily on natural gas in markets that function well as the backstop and support for renewables, intermittency and volatility. But we're going to have to continue to evolve that over time as we introduce additional loans as we grow the system.

The slack is gone. We've kind of taken all the slack out of our system. So we have a thesis that grid constraints will continue for a very long time, which is why we're going to have to have a combination of existing but also new technologies to meet those needs.

I mean you addressed already a couple of points, but my question would have been what you need from companies like us?

I think it's why we need a variety of different solutions. I mean if you look at already what we're doing with Siemens, we have some very large -- I mean, we are one of the largest operators of turbomachinery in the United States. Most of our business historically was to use that from a compression perspective. We do power generation as well. But if you look at the combination of solutions that we're going to need, every market is going to be unique. Every customer need is going to be unique. And so -- and even every site is going to be unique.

So how do we make sure we're bringing those combinations of solutions and you're going to continue to see that we're not just focused on 1 unit design. We're focused on kind of the variety of units, and there may even be units that haven't been thought of or designed yet that we're going to need to think about into the future as the grid evolves.

So I think at the end of the day, we're going to need a lot. And you heard from Alan, like we need a lot. We need a lot of energy. We also need to continue to be on a sustainability path of decarbonization best way we can do that is decarbonize the existing energy ecosystem. It's the biggest system on the planet, and we've got to do that here at home.

Internationally. I mean it's great we're going to do it in the U.S., but at the end of the day, emissions is a global problem. How do we go out into develop -- still 3 billion people in energy poverty around the world. India now just become the most populous country on the planet. They're starting their journey out of poverty using oil and coal primarily, a little bit of renewables and natural gas. But those are the things that we're going to need a bit of everything, but it's really going to be new technology and evolution of the existing technology to meet the need.

Yes. Alan and Matt, from your side, anything where you would say that's what you need from companies like us?

Yes. Well, we need from Siemens Energy exactly what we need from the grid, as I mentioned, capacity and capability. So let me unpack that just a little bit. Certainly, we're going to need capacity. We're going to need large power transformers. We're going to need switch gear. We're going to need fax devices, those flexible devices that give the grid capability.

The way we achieve that with key suppliers is through forecasting in communications. We're very intentional about taking the growth that we're seeing in our in our service territory and in our company and being open about that and having discussions with you and your team on what that means in terms of the demand for equipment, what that means in terms of slots and how we and how we manage those orders.

So certainly, we need capacity. Over the next 5 years, I'm going to build 200 or more substations, 200 or more substations. How do you stick build 200 or more substations? That's where, again, we need the capability from our key suppliers like Siemens Energy. What does that mean?

That means innovation. How can I take a substation and make it look more like something that's prefabricated, pre-engineered modular repeatable. So how can we leverage that for the grid? And also, again, flexibility.

Flexibility comes from innovation. Certainly, there will be additional technologies that will need to be developed for the grid we are starting to push into not only a time where there's more demand on the grid. But as we've already talked about, these large loads there, they could be very dynamic. So the grid is becoming a more and more dynamic place.

There's more and more that's happening on the grid. So measuring that, understand how we operate that, understanding how we can control that. Really, the grid is starting to evolve into a digital energy routing system. And that will require a lot of innovation on our part, certainly on your part to manage.

Thank you. Alan, anything to add from your side?

Chad and Matt covered a lot there. They did cover a lot of that. I mean we're saying thing capacity just more equipment, more of your product, more of your innovation, creativity. We have to -- we need to take on the challenge of -- the labor market is -- it's diminishing from that perspective. So we got to move stuff into manufacturing. You touched on that.

But if I want to touch on something that just maybe a little bit different here. For me, it's trust, partnership, predictability that's key for any partner we want to work with, right? We want to make sure that what you say you're going to do, we want predictability and an openness and transparency. And I think we have that currently, and it's been a great journey so far, but that's -- on top of everything as you said, those are the 3 key things that we...

Yes. I think on that note, too, this bringing together those relationships. The conversion of energy and technology, I mean, it's always been there, but it's at a scale and importance today that we haven't seen at least in my lifetime. And so understanding those unique aspects and how we bring them together, we were talking earlier, I mean, I'm just -- I'm a metallurgical engineer, so kind of dumb steel guy, right? So like I get that. But like the electrical stuff fascinates me. I look at what we're doing. We're kind of taking existing technologies to solve the problem today, but I'm pretty sure looking at it like there's going to need to be pretty significant changes.

Is batteries the right solution for managing dynamic loads are super capacitors something that we can scale up and make more effective? Like what are the technologies? We are truly kind of using what we've got today to solve a problem of the future. And so I think us all understand each other's needs, limitations, capabilities better, like it takes bringing together the kinds of companies we have here today. So I think Alan is exactly right.

Integrated partnerships, that's key. We have to codesign this because Again, we're recreating like how we should think about scaling out grade technologies and energy in the world.

And also understanding that as you grow, there will be growing pains. Nobody is perfect. And so when we -- the relationship, just to both your points, the relationship matters so much to us. Everybody is going to have issues. There's everything -- we're all going to experience those times where something goes bump in the middle of the night. It really comes down to how we handle and partner and solve for whatever that challenge is together.

I mean seeing also here at the audience, I mean, I get a lot of questions in terms of how so are you that this is a really demand which is there for the long term, can this bubble burst.

What would be your answer to that in terms of what are the growth factors you look on and what gives you the, let's say, the comfort in terms of what's this continuing journey also put this really tremendous situation, which we have at the moment a bit into perspective.

Yes, I can start. I mean, first, I've never bet against our innovation and technology companies. Our energy industry has created some of the most incredible advances around the world. And there are 2 fundamentals that our business is aligned run. At the end of the day, we're an energy infrastructure company.

We're very focused on natural gas. We have a renewables and new energy Ventures business as well. but we see the need for natural gas today at scale because of 2 important fundamentals. First, what we're trying to solve for is clean, reliable affordable. Like those are the 3 we think, most important elements of an energy system. Now we've introduced this need for speed.

Like that's the fourth element that has really shown up fast. But there are 2 primary fundamentals and I mentioned them. The first is the increase in demand and infrastructure not keeping up with it. and the grid and power production in the U.S. not having grown. So when you think about this incredible -- I mean I saw a report that said robotics may surpass within the next 10 years, the need for power, may surpass data center needs.

I think they're both going to grow incredibly. One of your team members was showing me a video. I keep thinking these are like AI-generated videos of robots doing things like -- he actually -- it's really like -- but the number of motors that it takes to power a robot and the amount of power that that's going to require, like I think we're at just such an amazing time. And I still think that the constraints are likely going to keep us throttled from reaching the full ultimate potential.

So I'm certainly confident that this is not a 5-year opportunity that this is the next generation, and it's going to be up to us to deliver to get us to full potential for, frankly, the next decade -- multi-decades.

Yes, very good. Before you go there, I mean, also if there is, let's say, specific questions out of the audience, just raise the hand. I will try to sneak it in. We might have time for 1 or 2 questions there. But maybe from your side.

Yes. No, we sit on top of the world's largest data center market in Dominion Energy. It's referred to as data center alley, larger than the next 5 domestic markets combined, larger than the next 4 international markets combined. So it's a big market, and we've also been doing it for a long time. We've been serving data centers since the nascence of the Internet.

So that's given us a lot of intelligence in terms of how these customers grow, how they ramp into their capacity, that is how their demand, what spins a meter actually ramps up to the capacity that has been requested by the sites by each site. So that certainly gives us quite a background that substantiates our forecast. But in addition to that, I'll just talk from a transmission perspective, the types of demand we have coming into our system.

For the past 3 years or so, and this actually goes back a little bit longer. But for the past 3 years, we've had 70 or more requests for large loads to connect to our system per year. 2 years ago, it's about 74 last year, about the same. This year, we have more than 90 requests for large loads to connect to our system. At the same time, those requests are becoming larger and larger.

I expect this year, those 90-plus requests to amount to over 20 gigawatts of capacity, whereas last year, it was 15 and the year before that, it was 10. So we're seeing -- and you mentioned it, we're seeing kind of this saturation of demand as it's impacting our system. So I think it will be with us for quite a long while.

Okay. Alan from your side.

Yes. We get this bubble question quite a bit. I think you have to think of -- I'll go at it from a technology perspective, right? So 30 years ago, I started using the Internet. I didn't imagine what the Internet would do for me 20 years later, how we have these little devices in our hand and our entire lives are wrapped around these devices, right?

Where do we -- who do we talk to how we get our information, how do we buy food, how do we book flights and hotels, like nobody would have guessed that. I would imagine maybe some geniuses did right? But 30 years ago when the Internet came up and I dialed up into AOL, I did not imagine today that we would have this thing with us.

It's the same thing with AI, right? AI has been around for a while. We've had some forms of AI through our software throughout our tech as well as if you look in the industry. But it wasn't until 3 years ago where people really felt that this was going to become something.

And so if you believe in the technology and the difference between what we had at the Internet of Things and cloud as well as where we're headed with AI particular systems and technology, it is a shift between heavy storage, low compute to high compute, low storage.

And the biggest difference between that is about 200x more power consumption in heavy compute versus storage training a machine to be able to think like a human being requires significantly more compute power than it ever did just have standard storage and cloud services.

And so if you believe in the technology, what you've seen in the last 2 years, and if you can predict what this technology can do in robotics, what it can do in the way we work and the way that we engage with each other. I don't think it's a bubble.

Yes. I mean there's -- obviously, if we put it together, lots of opportunities. By the way, I'm looking right raise your hand in case you have a question, Phil, maybe we can get a microphone there in terms of opening up.

Yes. Thank you. This all sounds incredibly exciting. It also sounds very inflationary for power prices, I guess. We've got a lot of average consumers who are already struggling. So I'm wondering if thinking into the sort of near term, 2026, if politics could be one of those potential bumps in the road that you referred to.

Yes. I'll start on that. We spend a lot of time on that, and we serve virtually every market in the United States, including just got approval for the first pipeline to be built in New York City and over in over 15 years. Not an easy one. We tried once before. The project was stopped because of political opposition not because it wasn't necessary.

You think about New England, New England has Boston, has the second highest energy prices behind only Tokyo around the globe. And Boston and Massachusetts sits less than 200 miles away from Northeast Pennsylvania where we can produce gas at the energy equivalent of $0.50 per gallon of gasoline. And yet -- and many times of the year, it's $1 per MMBtu for gas in Northeast Pennsylvania. It's $12 per MMBtu in Massachusetts.

So in the natural gas side, at least for now, that is our affordability super power in markets that have introduced volatility that have introduced complex loads that have introduced intermittency. The ones that have managed price well have done that by balancing with natural gas. So we can actually do this here in the United States.

We are the low-cost energy producer on the planet. It is a challenge of getting the infrastructure to where we need it from a market perspective. And so I actually think we can solve that. We need to keep scaling up nuclear and other technologies and bringing down the cost curve. We've got to bring down the cost curve of fuel cells. And we just have to recognize that it is going to take innovation and technology to do it.

The good news is demand also helps. One of the problems we've had in the U.S. is we've been investing in the energy system, but we haven't been growing demand for 25 years. And when you aren't growing the denominator, but you are growing the CapEx numerator, costs are going to go up for the consumer.

And so I am hopeful that we can grow demand alongside our technology opportunities and also do that in a way that won't increase cost to consumers. If we do it right, this should actually improve our energy systems and actually reduce cost, increase reliability. I mean we see an equation that absolutely can be solved on that front.

Any views from your side in terms of your politics getting in the way or...

In Virginia last year, about a year ago, a study was issued by the Joint Legislative audit review committee, essentially an independent committee that creates reports for our legislature that actually looked at this question, are data centers paying -- are large loads paying their fair share.

And they actually found that in our case, they were, but to further insulate residential and other customer classes from the costs associated with upgrading the grid to handle these new large loads. We're actually proposing right now, it's before our State Corporation Commission in Virginia, a specialized large load customer class, we call it our GSV customer class.

And that starts to incorporate upfront deposits for large loads that want to interconnect into our system, deposits that cover the upfront capital costs for major substation equipment and then essentially take-or-pay contracts that extend out for 14 years or so. So there's a lot of focus on affordability.

We see that, and we're trying to bring forward solutions to make sure that, that numerator, denominator equation works out as we invest in the grid and these large load customers, these data centers, they have that demand that goes into the denominator that it ends up penciling out so that it holds our residential customer classes harmless, so to speak.

Anything further to add?

I mean they covered it. I think Chad could probably validate my statement here, but we don't pass any of our infrastructure costs down to any residential customers.

And on that note, I would say I think we're even working together to figure out how we can better support the residential customers. So I think we've got to educate policymakers and the public at large. We can do this in a way that's good for everyone.

I think it's definitely because I think the narrative is also driven by concerns. However, at the same time, you also have to see once electricity demand is growing, it gives you a straight lever actually to get the specific cost where it needs to be. Problem is if electricity is not growing.

And then you build an infrastructure, which is not fully used. And the other thing is definitely the question is how interconnected are really these markets. And I think this is what we're all trying to learn at the moment still. There was another there.

Marc Bianchi with TD Cowen. I guess there's a lot of discussion about how much of this type of power supply will come behind the meter. And I'm curious, particularly, Alan, for your perspective because you guys have elected to go with Entergy and be part of the grid.

How is that decision process? Like how are you considering additional projects that could be behind the meter or not behind the meter, what are some of the considerations that you make?

Yes. We will always prioritize grid-connected energy. But at the pace of those projects and those deployments and the schedules associated with it, we have to leverage different solutions, right, specifically within the near term. So in Louisiana, we had an entire 18 months to plan for that cluster. And when I say planning, we went down selected sites.

We were very selective in the partners we wanted to partner with in the locations. And that was the plan we put together because we saw this coming a couple of years ago. What we didn't see coming was we needed significantly more capacity in the near term. We're halfway too short when we thought about that being our mega cluster that's going to solve some of these issues for us.

We're far behind from that perspective. And so in the near term, in order to get that type of capacity, we're leaning very heavily on behind-the-meter type solution. So you're going to see significantly more of that from us, and I would say the industry as well over the next 24 months until we can be within our lead time to supply energy to our data centers from the grid.

Last question maybe to Ben.

This is a really big picture question. I mean, all of you gentlemen seem to have done this for some time. If we look back in history at these big cycles, if you look at what was happening in that, say, that dash for gas period back in 9802, you had deregulation, you had huge power demand. You had private financing. This gentleman mentioned take-or-pay contracts, which I remember well. How do you see the fundamental underpinning of this particular cycle versus what was happening 25 years ago?

Yes, I'll start. I mean, Williams built 1/3 of the nation's telecommunications backbone and fiber in the late '90s, and it almost bankrupted the company. And so we know those challenges well. I mean we're an infrastructure company, and you always have to.

And Christian talked about it, and we're talking to seems about how do we make sure we plan capacity so that we're not overbuilding and so that we're building and matching kind of the needs. But I will say, we've spent a lot of time looking at the fundamentals. We're behind on infrastructure. We're behind on energy production capabilities. The use case is real. I'll just give you an example for us.

I mean we are one of the largest energy marketing in the United States. And we -- it's a very complex operation to move energy. We had a competition in the company where in just 1 market, on just one asset in the Dallas-Fort Worth area, we had kids volunteer across the company to program AI to compete with a physical trader that's been moving energy in the Dallas-Fort Worth area for 10 years.

We did it for a month. At the end of the month, we did a look back 100 -- a score of 100 would have been perfect, execution, you predicted the weather, you predict the demand, price here in there. And the physical trader score of 93, a kid who had never heard of energy marketing before score of 96 with 6 AI models that he was -- and it was a light ball moment for me because we always think of, hey, we're going to adopt version 1 of the technology.

And then in a few years, we're going to adopt version 2 like no, this is like someone going back and -- it's like an F1 pit crew. Every time the car comes around the track, he was changing different input variables and the model was learning and getting smarter like we're just scratching the surface on what we can even do for our own company, not to mention what incredible new products are going to be created for our society.

And so -- but I will tell you that as a whole, I think we're having very smart conversations about sizing the capacity, whether it's manufacturing capacity or ultimately infrastructure capacity sizing that to be right for the moment.

I would say, at a very high level, it's -- we're requiring more and more pillars to support this large load. Let me unpack that. There are really 4 things that we need to support and serve the types of demand that we see coming on to the electric grid. The first 2 have been around for a while.

Everybody knows you need the substation, right, to connect the load too. That's pretty clear. No bottleneck there, no -- very little time, lead time needed to make that happen. Also, what we've needed forever are the, what I'll call, local transmission upgrades to serve that load, right? You might need to reconductor a line. You might need to add another circuit those types of things, relatively local transmission.

And for, I would say, probably the first decade or so of the -- of what we've seen on our system of data center growth, those 2 pillars held up the large load. What we're starting to see now are the additional pillars of backbone infrastructure, those large EHV projects.

I wouldn't be surprised if HVDC comes on to the scene in a larger way. and then also generation. It's really important to realize that you're not going to wire your way out of this type of load growth. There also needs to be intentional, thoughtful investments in planning and constructing the generation.

So those are really the 4 pillars that are needed to serve the types of load growth that we have today. And those all sit on a foundation of a strong supply chain supply chain that leverages partnerships and forecasts. You need the outages. That's the big thing right now is when you -- to expand the grid, you need the outages to get the new infrastructure cut in.

That's the proverbial the proverbial orange cones on the grid that you would see just like a highway lane addition. But then also you need the permits as well. So those are the foundations that hold up those 4 pillars and it's all becoming more and more complex as the demand increases.

Anything to add, Alan?

No, I think it's a great question. I mean, again, it's continual learning, right? It's -- do you see an end to this? I think that's the real question is this, do you see an end? I mean do we see then and learning constantly learning as human beings. Imagine now we're constantly reinforcing that learning in a machine so that it increases our engagement and products. It increases our own intelligence, it increases productivity. That's very compute-intensive to have constant reinforcement learning, right?

So pretraining is one thing. Pretraining will come will build these large sort of language models that are going to be -- require these large clusters. We're going to we can update them over and over and over again. And we're going to create data over and over and again. And so that requires a significant amount of compute. I don't see it slowing down. I see if you believe in the technology, and you think this is going to happen, and we're going to leverage this in our everyday lives and how we work and how we engage with each other, like I said already, I don't see this slowing down. And we're going to need the infrastructure to support that.

Excellent. Maybe to wrap it up and very quickly only as a rapid fire, the magic wand question, right? I mean, if you have a magic wand, I mean, would you like to change.

I'd like us to get back to building at a pace. I mean, I think Governor Perry said it last night, this is -- I wasn't around for the Manhattan project. He's a bit older than I am. So my reference would be maybe like even the moon, Apollo 11, I mean, I went to Purdue and think about the space program like this is an incredible opportunity for our generation. we got to get back to building at a scale we just haven't in a long time.

Very good.

Capacity and capability.

Likewise, same thing.

Very good. Thanks very much. I mean, it was really a fantastic panel, and I have to say, for me, it's a summary. I mean, obviously, if we do it right, we collaborate, right, and build jointly that industry. Thank you very much for being part of it. Thanks for the trust and the collaboration. It was great to have you. Thanks for the discussion. Thank you.

Thanks, Chad. All the [ panel, ] thank you very much. Matt, great. Thank you very much. Thank you. Alan, thank you very much.

So thank you, everybody. I think wow, that was really an exciting first part of the Capital Market Day. Unbelievable that the first 2 hours went already by. So now for the participants here, good news. We have roughly until 11 for a break. So we're going to be back. That's especially important for the webcast. We're going to be back online at 11:00 U.S. time. And so far, all the participants here in the room, I mean, you can stay outside. We're going to have some teams there who are going to present at the information booth, if you have any additional questions in regards to the different BAs.

Please meet the teams outside. They are really happy to welcome you. And everybody online, I see you back at 11. And even though the first half was very exciting, you can be ensured that the second part will be as exciting as the first part. So see you later then. Thank you very much.

[Break]

Well, I hope you all had some time to recap what we just saw before. I thought it was really good for start. But yes, it's going to continue to be exciting. So now in the second part, we're going to start out with Karim Amin, who is heading our gas service business. So Karim, please come on stage.

So good morning, everybody, and welcome from my side. I am Karim Amin, I'm heading the Gas Services business within Siemens Energy. I've been in the company for almost 25 years, always in the energy and rotating equipment business, did a lot in service, many years in service, but also was running our global sales for quite some time. The oil and gas business segment and also was responsible for the product business before I took over the role in the Board.

I want to start in the next 20 minutes to take you through the Gas Services story in Siemens Energy. And I want to really start by saying we see gas like this video has -- did the introduction. We see gas as the backbone of the energy markets today. It gives the world what it needs most, which is the quick to deploy. Gas is one of the fastest technologies that can be deployed in scale. It's reliable, 24/7. And it's also giving all the dispatchability features that are very critical as we see more and more countries building renewables and crossing 50% of their generation capacity from renewables.

For these qualities we believe that gas is indispensable, not only today but also in the future. The market is not just strong. The market is accelerating. And I think we have seen a number of insights of this through the panel discussion today. Since fiscal year '22, the market grew by 40% to 85 gigawatt per annum of gas installation by the end of fiscal year '25. And we believe that this momentum is going to continue further picking the market anywhere from 90 to 100 or even plus depending on really the scenario of the adoption of AI and to which extent this is going to kick off. And it will stay elevated for years to come.

I think the most important message that I really want to give here is that there is more than one driver for this elevated market. Definitely, AI and the fast adoption and the exponential growth of data centers is a very important driver. But it's not the only driver. We also see a lot of countries pushing for electrification in general. Many countries are going still through massive coal-to-gas chips. The grid stability and reliability requirements is really sitting as well in the center of all that, and pure urbanization and economic development.

Opportunities are massive and they are also global, not concentrated in one geography or in one country. I just put a few insights of the latest opportunities we see. We are in the United States and the U.S., of course, is going through a massive push towards adding more capacity, electrical capacity and gas is in the center of it. In the next 5 years, we've seen different reports. We talk to different people, but it is really safe to say that there is 250 gigawatt at least that is needed in the U.S. in the next 5 years. And this is not only data centers. The U.S. is also going through grid stability requirements as well as shifting from coal in many parts of the country.

Saudi Arabia and United Arab Emirates are having their own country strategic programs like Vision 2030 in Saudi Arabia or the ambition of the UAE to be the center of AI outside of the U.S. And there, there is around 50 gigawatt that is being either in discussion and being awarded right now or plan to be awarded in the next 2 to 3 years. We have a line of sight of that. We see it. We are bidding there, and we are even winning there.

You also see what is happening in Germany and in Eastern Europe. There, there's a lot of push towards sustainability and getting out of coal. Germany just announced last weekend, finally, the program to put as a start 10 gigawatts of gas-fired power plants that would help to phase out coal. And it doesn't stop only at the 10 gigawatts. This is the first phase. We see similar trends in Eastern Europe, in Poland, in Czech Republic and the likes.

Taiwan is also a country where there's a lot happening. And here, you see another trend of phasing out of nuclear and replacing this with gas-fired power plants plus, of course, all the semiconductor business that is happening.

If you put this all in one basket and then think also about what needs to happen post war, in some of the economies and geographies that needs to be reconstructed again, think about Iraq, think about Ukraine. When the time comes, think about Syria and the likes. So there is also like 60 gigawatts we see in the next 5 years in between these countries.

So let's see how fiscal year '25 looked like for us. For Siemens Energy Gas Services, we were not just watching or following this trend of market growth, we were leading it. We have doubled our numbers of gas turbines sold in fiscal year '25. A year earlier, we sold 100 gas turbines. In '25, we sold 194 gas turbines. This is, without doubt, #1 in the market share. And all in all, we put 78 gigawatts.

If you count fiscal year '24, fiscal year '25 and what we have secured in fiscal year '25 that will turn into concrete orders in fiscal year '26. And this is only a portion of fiscal year '26. We are still in the first quarter of the fiscal year. So 78 gigawatts has been secured, and this is really a big number.

And you see in the slide in front of you, across multiple frames, right? So we are active in large gas, medium gas, aero derivatives as well as small gas. And if I really want to leave you with one point, why do we have this strong market position, why did we perform in fiscal year '25, the way we did. It's definitely our strategic diversification. We are really well diversified across market applications. We're not selling into one application only.

You see the pie chart going from conventional to data centers to power ships and picking applications as well as FPSOs for oil and gas, which is very, very in high demand here in the U.S., in the Gulf of Mexico and others, but also across regions. So we are very active in the North America, in Europe, in the Middle East as well as in the Asia Pacific region.

Let me illustrate with 2 examples. I think Williams gave a very good overview in the last panel's discussion. Take the William opportunity and relationship where they are building 5 gigawatts for powering AI. And this we did across multiple frames. We're having F classes. We're having SGT-800s, we're having aero derivatives that is all being delivered in a fast manner, and it also helps to find the best configuration of redundancy, of flexibility and managing different load regimes.

The same goes into another example in Taiwan, where with our customer Mai Liao and Kuo Kuang were putting 6 of our HL gas turbines. This is the largest gas turbine we have in our fleet to really power a 3-gigawatt effort to revamp the semiconductor industry, but also to support this coal-to-gas shift momentum that I talked to you about.

So let us go to this slide, I call it the growth engine, and I want to really put the 78 gigawatts that we have secured in our backlog a little bit in prospects and show you how the 78 gigawatts is really going to create value now, but also for decades to come. The 78 gigawatt is our new units backlog. So this is the backlog that would turn into revenue in the next 2 to 3 years. But this is not just volume, this is a backlog that comes with above-average margins, driven by 3 very important drivers that you see in front of you.

First, it is coming with favorable pricing. So the pricing points of the new unit is higher than what we have in our existing backlog. It also gives us because of its sheer volume, a lot of benefits in terms of degression -- cost degression. And then it is accretive. So we are seeing projects with higher gross margins coming into our backlog as we are also seeing projects which are already in our existing backlog with lower gross margins phasing out.

So when you look at this thing altogether, this backlog will be the primary driver in the next 2 to 3 years that will help us to achieve our targets of margin expansion. But this is only the new unit story, and it does not stop here. Beyond fiscal year '28, where we are, of course, right now focusing as it's our planning period, and this is where we give our guidance. Beyond that, only the 78 gigawatts opens the door for us for up to EUR 30 billion of potential service revenue because these units will go into a 20-year cycle of service. And the more gigawatts we add, the more this growth engine will work harder.

Just to give you an example of the momentum, the 78 gigawatts 6 weeks ago was 70. So in the first 6 weeks of this fiscal year, we added 8 gigawatts to our backlog. So this is how fast this is growing. This is how big the impact is going to be. And let us just see how is this projecting itself already in fiscal year '25.

In fiscal year '25, we booked almost EUR 23 billion of order entry. 40% of this was in new units, 60% was in service. And you see that the margins in the backlog is really climbing. So on the new unit side, we have improved our backlog margin by 5 percentage points. And on the service side, we have improved it by 1 percentage point. But of course, you also -- you always have to remember the service backlog is a very big backlog because it has all the LTPs for many, many years to come. So moving the backlog of service by 1 percentage point is actually a big deal.

With this, we have reached an all time [indiscernible] of our backlog of EUR 54 billion, which gives us 9 billion more than what we had a year earlier and gives us a very strong foundation for what is yet to come.

This growth engine, I just showed you is really the backbone of our upgraded financial outlook that we have announced last week. We start from fiscal year '25 with a very strong position. As you see in fiscal year '25, we have a revenue growth of 14%, and we have already reached a profit margin of 13%. And we are raising the bar, as Christian said, in fiscal year '26, we expect revenue growth between 16% and 18% and profit margin between 14% and 16%. This is well above our previous guidance in fiscal year '26, which was 10% to 12%.

Just to put this all in perspective, in fiscal year '24, our profit was 9.5%. So in a period of 4 years, we are well on track to double our profit margins from 9.5% to almost 18% to 20%. This is not really just growth. This is for us a step change in our profitability that is starting as we speak, and will stay with us for years and years to come because the backlog has the potential to deliver this result.

And now let's see how we can turn this ambition into reality. And we will take this view now on 4 key pillars that I will explain in more details in the remaining slides. We have defined 4 key pillars in front of you, which is investing in our portfolio to make sure that we always stay ahead in terms of innovation and technology and have the best portfolio there is in the market.

Second, we are expanding our capacity in a very intelligent and disciplined way that fires the entire portfolio to the best of our ability. And we have defined very clear principles of how to do this, on one hand side to match the market demand. And you heard a lot about the market demand in the previous panel. On the other hand side, to remain within the boundaries of a healthy business that is sustainable and does not get prone to any shocks in the market.

Third, we are strengthening our execution excellence to make sure that we are able to deliver on what we promise, and we are investing to eliminate any bottlenecks in manufacturing or in supply chain or in people. And last, but certainly not least, we are creating the long-term value for our business. And Maria talked about this in very, very clear words. It's all about creating the long-term value of our business, elevating our service business potential to new heights and working to really secure long-term, profitable, predictable service revenues that will stay with us for decades to come.

Now let's take a closer look at each and every one of these 4 pillars. And I would start with the portfolio. We invest EUR 500 million per annum in our portfolio to make sure that we have the best portfolio there in the industry. And this investment is certainly paying off. I'm really proud to say that we are the only player that has a very comprehensive portfolio in the industry that ranges from 10 megawatts to 1,000 megawatts. That goes from small gas turbines all the way to nuclear steam turbines that serves conventional nuclear, 1,000 megawatts steam turbine up and the latest addition is our SMR.

This portfolio is leading in the market, and our customers are choosing us for that. Let me give you a few highlights on 4 of these portfolio elements, and I will start with our SGT-800. That's the 60 megawatt turbine that is really now the industry standard in many industrial applications. In fiscal year '25, we had 90% market share for this gas turbine in its segment. And we tripled our numbers of units sold from 29 units in fiscal year '24 to 88 units in fiscal year '25, and that trend continues. So already fiscal year '26 is starting on very high notes.

Our F-class is the best in its class when it comes to flexibility, very, very highly regarded, especially in data center applications, very much needed when it comes to simple cycle applications and peaking. Again, here, we increased fiscal year '25 by 50%, going to 30-plus units sold versus 20, and we are commanding a market share north of 37%.

Our H Class is the largest gas turbine in our portfolio. And this goes between 50 cycle and 60 from 400-plus megawatt to above almost 600 megawatts. This turbine holds the Guinness World record in power output and efficiency. And if you walk a little bit in the facility here, you would see the certification of the Guinness World book of record around us.

We have already sold 65 units of HL, 15 of them are in operation. And being in Charlotte is very significant because the first HL gas turbine has been manufactured in this facility here in Charlotte. And it has been sold to our Duke customer, not far from here and thoroughly tested in a very strategic and close collaboration with Duke in the Lincoln County power plant nearby from here.

And when I look at the nuclear, and you heard a lot about nuclear and how nuclear is in its renaissance, we have 2 important portfolio elements. We have the large steam turbine, the 1,000 megawatts which is really used for conventional nuclear power plants. And today, we have 80 gigawatts of fleet already running with this turbine that offers us a lot of potential for upgrades and lifetime extension.

But we also have our newest addition, which is our 500-megawatt SMR steam turbine. This is the one that will go into the exclusive strategic partnership with Rolls-Royce. And just also by coincidence last weekend, the U.K. government has announced that Rolls-Royce with our steam turbine will be awarded the first 3 nuclear SMR installation in North of Wales.

So that's a very broad portfolio that is really hunting in the market, but having the best portfolio without being able to scale up and meet our customers' demand and the market requirements is not really serving us well. Hence, capacity expansion was a very important topic. And let me tell you how we are doing capacity expansion to meet market demand.

First of all, this breadth of portfolio that I showed you gives us really a lot of flexibility to increase our capacity across different frames and not really focused on one frame only. It's not about adding more units or about volume. It's really about a very disciplined and well thought through process to understand and to target where to expand which portfolio element for which market and customer base by what? And this is what we call the dynamic capacity expansion. And we have defined very clear rules of doing it.

We call it The 4 golden rules. First, we are scaling up within existing footprints. So we really look at what we have, whether it's in Charlotte or it's in Berlin or Finspong or different parts of the world, and we are focusing on getting the maximum out of this footprint.

Second, every investment we do must have a very high relevance of service, meaning if we are investing right now in expanding blade production, the blade production is not only needed for the new units, it's also needed for the 20 years service requirements that I showed you in the growth engine.

Then we are really looking at expanding specific portfolio elements where we can demand premium pricing, where this unit is in high demand and the price is high enough that it pays for this -- pays for its business case.

And last but certainly not least, and Christian stressed on that, we really look at the short payback period. How many years do we need to get back our investment on fixed cost? So this has been already in our focus and the first phase of capacity expansion has been already implemented. And this is the phase where we moved from the 17 gigawatts, which was our capacity a year ago to this 22 average capacity between fiscal year '25 and fiscal year '27. This has been already announced, I believe you all know about it, and this has been already implemented.

Today, we are in Phase #2. And Phase #2 is to take this further that by fiscal year '28 to fiscal year '30, we are going to anywhere between 210 units to 230 units across the various frames I showed you, and that's why you see the different color shades which is something in the range of 30 gigawatts give or take. And this is going to be implemented in a very flexible and dynamic way.

And let me just give you a few examples to show you how we are doing this. I want to start with our LGT, the large gas turbines. And you will have the facility tour in the afternoon. We will start. We are right now in the process of doing it. We will start manufacturing and assembling our F-class frame here in Charlotte, again. And as you go into your factory tour, I really encourage you to pay attention to the assembly pits of these F Classes.

We have 3 assembly pits in this site here. And we always have them. But when we were rightsizing, we kept the provision, but we were not using them. Now we are able to use them and get more units out of Charlotte. Our MGT is the second example, this SGT-800. You saw that we have tripled the orders between '24 and '25, and it's a 90% market share. We will double it because we have concrete fixed offtake demand from customers that are signing binding contracts right now for deliveries well in '29 and beyond.

And last but not least, you might all remember our Rolls-Royce acquisition. We have our A65 aero derivative gas turbine. This is -- was used more and more for LNG as a mechanical drive. Today, it's one of the most sought through machines for data centers, but also for peaking applications. Part of the Williams agreement that we did was putting these A65 units back, we are also pushing the envelope to bring this A65 back into the market.

Third one is driving execution excellence. We have a very, very holistic approach when it comes to execution excellence. We look from sales all the way to delivery. It is really all about selecting the right order with the right risk profile. If you look at our order mix, we have a very healthy order entry mix, more than our -- more than 85% of our units right now in order is product scope. So this minimizes risks and maximizing standardization. We prioritize multiunit deals, which gives us really the chance to optimize our execution and focus our execution capabilities in a few areas.

And we have a very strong regional and frame diversification, as I showed you in our order mix of fiscal year '25. Resilient manufacturing and supply chain is really a topic that we take very, very serious. Again, how to get more out of what we have. We have managed in Charlotte, and you will see it again today when you go into the factory tour, 45% manufacturing hours per square meter is coming out of Charlotte, with very, very little fixed cost behind it.

Christian talked about the Capital Injection Ceramics acquisition, that will open the blades and veins supply chain for us to new horizons. And of course, we constantly upgrade our machines and make sure that they are fit for purpose.

And last but not least, we invest in people. We have already a very strong expert team, more than 7,400 experts are NGS. We added last fiscal year 4,700 people, and we are opening new talent hubs in different parts of the world, in Mexico, and Romania and India. And of course, our Net Promoter Score at 70 points is really placing us at the top tier of our industry, and it's a strong sign of confidence from our customers that they like what we do, and they continue to work with us. All this strong focus on execution excellence is really driving results and delivering EUR 400 million of productivity in fiscal year '25, and we expect this to continue with us in the next years.

And then comes my favorite slide, and this is service. The whole business accelerates when we look at service. Today, we are supporting and operating 700 gigawatts of service fleet, 50% of it is on baseload. This service fleet is already seeing 2 percentage point better utilization versus last year. And there was a question to Christian about renewal rates? More than 90% of our LTPs are being renewed. This is already a huge growth opportunity. However, in the next 5 years, we are adding even more units, 180 gigawatt is expected to be added in the next 5 years. 50% of this has been already secured. And these new units are advanced high-value assets that runs for critical applications like data centers and offshore. So we expect them to come with 80% baseload.

This will see our service backlog growing rapidly and we'll see synergies as we are managing a larger installed base, and we also expect that the power of AI tools that has been more and more available to us today will help us to extract more value out of this fleet.

And then I want to end it here with our Elevate program, and I want to leave you with 3 key messages. Gas Services is the market leader in fiscal year '25 with the gigawatts and the number of units it secured across the frames and geographies and applications. We are expanding our capacity with discipline, and we will add 180 gigawatts of additions by fiscal year 2030, and it's all about accelerating our long-term value creation with this turbocharge service engine that I showed you earlier.

And to reinforce our commitment, we are raising our fiscal year '28 targets with revenue growth of mid-teens and profit margin of 18% to 20%. I hope that this gave you an overview of Gas Services. Thank you so much, and I will be available for questions after the presentation of Tim. And now allow me to hand over to Tim Holt for the Grid Technologies. Thank you.

So good morning, and I think you saw it was a blackout in Spain, why we really need reliable modern grids and why are they the backbone of our energy system. And that's what we do in Grid Technologies. We connect the renewables, we make sure the grids are resilient and reliable. And that's part of the portfolio. That's what 20,000 employees in Grid Technology today after day, quarter after quarter, and that's how we tackle the growth.

My name is Tim Holt. I'm the Head of Grid Technologies, 30 years with the company. I think I've seen all the BAs, but I have to say, this is my sixth Capital Market Day. It's one of the most exciting ones because I think we have a great story on Grid Technologies, and let me take you through it over the next 20 minutes.

So I can clearly see Grid Technologies and Siemens Energy, we are the leader on the transmission side. And let me give you 3 numbers. We're serving over 2,000 customers. And you saw the panel. I think if you looked at a panel 10 years ago, you would have seen 3 [indiscernible], maybe different sizes, but it's all utility TSO. But here, you have also seen Alan from Meta on the hyperscaler. You have seen Chad from the developer side, and that's really the breadth of the customer base we have developed over the last years.

Also a large part of the installations, every fifth power transformer is from Siemens Energy. 30% of the HVDCs are from us, and that has really resulted in a record order backlog over the last years. If you look at the last 2 years, '23 to '25, 2x in order backlog, up to EUR 42 billion. If you go back 2 prior years, if you go '21 to '25, it's 4x. And what's really important to also look at the mix because the question came earlier, part of it is a solution, but also great part is products and it's also digital services. And I think the great part is, it gives us a multiyear revenue and cash generation visibility. And with that mix, I think we have a really good healthy outlook what the future is going to bring.

Now let's talk a bit about the big picture, and I think you heard at the age of electricity is there. And it's once in a generation grid buildout. If I look at the left side, you see the grid investments. Over the next 15 years, it's over $10 trillion that are being spent over that time on the grid. And we try to break it down a bit into the different categories because I think it's not just the demand growth that's really driving this or the renewable, the energy transition, but also replacements.

And let's start at the top. When I see customers, I always ask a question, what is the age of your transformer fleet. And mostly, it's kind of in the mid-30s. And then I say, okay, tell me how many -- what's the percentage above 40 years? And I would say 90-plus percent of the customers will tell you, 50% of the transformer fleet is over 40 years old. So there's a huge replacement potential, and I think we're uniquely positioned to benefit from it over the next 15 years.

Then of course, you have the energy transition, right? I mean, still, we're adding the largest source of generation growth comes from the renewables. All these electrons need to flow from where they are generated, be it solar, be it wind, to where the load centers are. And those could be substations. You heard that earlier on the panel. This is HVDC line, and it requires a lot of grid stabilization effects of STATCOMs.

And then the biggest portion is really demand growth. And it's not just data centers. It comes from all parts of the industry, and that's about 60% what's needed. All in all, if you look at it, about 80 million kilometers of additional grids need to be built over that time or replaced. So I think the market gives really a tremendous opportunity over the 15 years, and it goes back to how long is this cycle I think if you look at these investments and what's needed to really keep the grid going and keep the energy transition going and the build-out grid will be a key part to make that happen.

So if you kind of break it down, what's the addressable market that we look at as Siemens Energy and Grid Technologies? How do I look at the market? How do I look at the different regions? Upper left side, you see that the addressable market more than doubled from '22 to '24. So that's also a reflection of how you've seen our entry growth going from EUR 10 million to over EUR 20 billion. But I think the remarkable thing is going forward, and I'm not going to 2040, that's too far away, but just to 2030, we see a very, very healthy 7% annual growth rate in our addressable market.

And then kind of -- it's also very regional and there's different drivers in the different regions. And if you look at the right-hand side, you see the U.S. really ready to take off. I hope you also heard it in the panel and in the various discussions. It's driven by data center, it's driven by good stabilization, more and more renewables coming online, aging infrastructure. All these 3 factors are driving the U.S. market over the next years going forward.

Europe, a bit slower. But remember, that market has seen in the last years that tremendous growth, a lot of that market doubling came from Europe. We see more and more of the data center build-out also coming, aging infrastructure but also all these requests, can I connect more renewables? Can I connect batteries? Can I connect data centers? The queues are also building up in Europe.

And then the third region, Middle East, we talked a lot about Saudi, it's also the data centers are picking up there, but it's also the renewables build-out, aging infrastructure. And then, of course, China, India, massive opportunity through the renewable build-outs, various projects currently ongoing in India, HVDC lines, I think the numbers up to 9,000 kilometers of HVDC in India. So you can see this is not just one market we are looking at. It gives us the flexibility to shift capacity where needed.

And also you look at geopolitics, you look at exchange risk, you look at tariffs, I think it also gives you a good picture that around the globe, our products and solutions are needed.

So demand, what does it mean? Solutions are kicking in high gear. And we also heard it before. On the left side, this is how we look at our solution market. We have the HVDC, these long offshore connection of offshore wind farms, but also bringing power across large parts of the land from where the load is generated with renewables to where it's needed. Compared to what we have seen in '22 to '24, and I fast forward to '28 to '30 to kind of give you a bit of a longer outlook. That market is going to double.

And why do we like HVDC? Because it usually takes 5 to 7 years to implement a project, very good in terms of revenue visibility, cash generation. So also there are quite some tremendous opportunity, 3 big players in that market. We've got a very healthy market share that's above 30%. It's also very good. Then the substations, also 2x growth. It's a larger market. It's going to be over EUR 100 billion, more players in it, a bit more local, a little bit shorter visibility on the revenue recognition, but a large portion of our products go into that business. About 60% to 70% of the order entry on a substation is actually based on our product business where it got we put switchgear, where we put transformers in it.

And then I was really happy to hear Chad talk about super capacitors also on the data centers, grid stabilization, that's semcons, that's STATCOM, that's eSTATCOMs with super capacitors. That is really the market that has been the fastest growing in the last 3 years. That will be needed more and more as the generation that comes on the grid is more intermittent. And that's also a big area where we just had a few players in the market and where we have a market-leading position.

But it's not just about growth. It's about healthy growth. Growing the backlog is good, but we also have to be really focused. We have to be selective. Who do we work with? What terms and conditions do we accept, how do we standardize and we have to be laser focused on execution, on the supply chain, how do we make sure we put pass-throughs into the contract, how do we do the hedging on copper, steel, aluminum, what's in the contracts? How do we actively manage the headcount ramp-up and then also driving efficiencies.

And I think the good thing is the more order backlog you have, the better you can actually drive productivity and pull that productivity through into margin expansion. So it's not just about riding the wave of demand, but really leading it and making sure we secure the projects with the customers and really drive that healthy order backlog on the solutions side.

So let's shift a bit from the solution to the products. And I think on our table last night, lots of discussion about capacity expansion, how is the market going to look like? How is the market going to look like after '28, '30 plus? And what I tried to do on the left-hand side is really how we look at the market at the demand of large power transformers. Those are the ones who go into data centers, those go -- that connect data centers, those are the ones who actually also go into these large substations.

And if you look at that market over the years, you could have -- you see that in '25, between what the market needs and what the -- what we have in the market in terms of capacity, there's a 40% gap. And I think where does it show up? Of course, a bit in pricing, but also in lead times. 3 years ago, a large power transformer standard lead time 2 years. Today, it's about 5 years. So we're taking the capacity, but it takes longer and longer to get there. And even if we fast forward and we did quite intensive market studies, even if we project it out to fiscal year '30 and we look at all the announcements from all our competitors, by the way, nobody has really announced a new factory, all expanding existing facilities. If you go through the announcements, we still believe there's going to be 10% gap in terms of demand to the capacity that's in the market.

What have we done? So if I look back the last 3 years, EUR 600 million investments in new factories, transformers, switchgear that Christian talked about the new factory that we just opened last month in Saudi on the switching. We opened a new factory in Austria. We have expanded multiple factories to really increase capacity so already under the way.

The other one is really all about how do we enhance the supply chain. We had quite a number of single source suppliers. We even had one that had a fire in this factory, Luckily, nothing happened, but that shows you also it's not just about capacity, but making sure your suppliers grow with the capacity expansion because otherwise, you might have the manufacturing capacity but not the procurement side that goes with it.

The second one is really the outlook, and we heard it. We're going to invest over EUR 2 billion until '28 in capacity expansions across the globe, be it Nuremberg on the large transformer side to serve the HVDC market. We have -- we're expanding even in China to serve the market that provides Chinese. We're looking at Charlotte here, expanding, but also the switching here in the U.S. So massive investment in order to really get up to the curve that you see here, but still making sure we don't overinvest and create overcapacity in the market.

The other important piece to that is it's not just about adding physical manufacturing, but also how do we optimize manufacturing. Christian showed the video on the switchgear, how we use automation in order to get more through. We're actually using also AI and data analytics to optimize testing procedures, that's normally bottleneck in a factory. So how do we get more transformers through the test field that we can actually produce more, same with the dying ovens that you need for transformers. Our goal is to basically create one additional factory just purely through automation and AI and have just more throughput through the existing ones.

So also here, very careful, flexible expansion, improved operations to make sure we follow the market demand, but also don't overinvest in it that we create overcapacity. So this is not just about capacity investment. This is also about portfolio resilience. And you see the left side, I just talked about very strong profitable core, #1 in solutions, #1 in products, and we want to grow and expand that. But we're also looking what comes beyond it.

And you also heard it on the panel, what's on everybody's mind, one is digital. It's about how do I use the grid better to get more electrons through it? There's quite a bit of inefficiencies in the grid. So it's how do you do analytics? How do you do more sensors, how do you get more load through the existing substations? How do I do software that helps the grid operator to operate it more efficiently, less curtailment.

And a clear ambition in 2030, over EUR 1 billion in highly profitable and scalable and recurring revenues on the digital side. That's by growing our own business but also looking at M&A, how we can support it.

The second piece that maybe is less prominent than in Karim's business is the service business. It's all about how do I upgrade aging infrastructure. Not all transformers will be replaced by new transformers depending where they sit, but it's also about refurbishment. How do I do these complex projects, HVDC facts, how do I do LTSAs that go with these type of solutions. So also there on the service side, we have done -- we have gotten a really good run on the service side over the last 3 years. But now it's all about doubling the current orders and setting the target to increase also the service share in the overall mix.

So it's all about the future, higher quality earning mix, steadier cash flows, more recurring revenues and really, how do I get the cyclical out of the mix. This also comes with innovation. And I think that's also an important part to talk about and to really address what is keeping our customers awake at night.

Affordability, sustainability and flexibility. And really looking at what can we do in terms of innovation to also help our customers and further drive the portfolio. We talked about the eSTATCOMs. You heard it on the panel. I think that's a good example. I talked a bit about digital. You see the little white box on the line. On the lower left, this is about what we call dynamic asset rating, basically taking measurements on the overhead lines to see how can I actually get more through these overhead lines and have the technology and the sensors and the data to help our customers together with software to predict what we can do.

We talked about SF6-free, the blue portfolio, we have the new EU regulation coming in, kicking in 2030, basically saying no more SF6 on the switching side, also really a good uplift in terms of portfolio shift to a more technology-driven portfolio on the switchgear side. And then everybody talks about HVDC. Currently, those are point-to-point connections, but the future will really be about creating a DC grid where you can shift the power over long distances between different parts. There's a couple of pilots going on in Europe.

But if you look longer term, probably beyond 2030, more towards 2035, we'll see these first multiterminal multi-vendor connections appearing in Europe that will really help to build out the HVDC.

We're not doing this alone. I think the task in the industry is really tremendous. So this is our partnerships. I'm really proud that we have been working with NVIDIA over the last 3 years. And really, we're driving various initiatives with them, a, for future customer offerings, but also digital transformation. We're going to open our AI lab later this year in Orlando. We're going to have a cluster of GPUs, where we will help work with our customers to develop digital twins of the substations of their transformers and see how we can further improve their operations, which is one of the applications.

I think the other one is also internally, how do we accelerate our R&D efforts, how do we use also the Omniverse suite to upgrade our factories in terms of automation and robotics. Same with Mitsubishi Electric. They're pretty leading on the DC grid with a DC breaker. We're having a partnership where we look what can we do jointly in order to really enhance that technology and drive it. So going forward, it's not just about us at Siemens Energy driving these innovations, it's also about the partnerships.

So to sum it up, I think really important, we'll keep on growing and continue on the growth trajectory that you have seen in the past. More importantly, we will keep on executing. We have that strong order backlog. We said revenue growth. It's all about execution, execution, execution, the ramp-up in the factory, the headcount ramp-up that we need in order to execute and really investing more in the factories, the EUR 2 billion I talked about to make sure we also follow the market demand.

And of course, we'll be enhancing our margins. We have the question. I think also driving the productivity, looking at the backlog, standardization, how can we really enhance the margins? And you've seen that in the fiscal year '28 targets. I think the revenue growth, what I've shown you with the markets, the order, you just have that natural progression then into revenue conversion and the target on the high teens, but also on the guidance for the midterm '28, 18% to 20%. Given what we have delivered in the past, given the current track record, we're very comfortable with that margin range and that will deliver. So disciplined execution, quality order growth and really keeping those strong margins from this healthy business.

And with that, I'm looking forward to the questions. Thank you.

Thank you so much, Tim. Karim, if you would also come on stage. I mean, thanks so much, to you both. I mean, a very comprehensive presentation. So I guess there aren't actually any questions anymore in the room because we heard it all, but I've already heard there is some interest here. So therefore, let's kick it off and see if there are any questions. Vivek?

I have 2 questions for Karim, if I may. One question, one kind of clarification follow-up. The first question is around the service outlook. You highlighted earlier that the service story is not just to 2028. At the same time, we have the revenue guidance, mid-teens CAGR for the overall division. I was wondering if you could give us more color on the relative growth rates between service and new units within that? And if you can give us any more color on the building blocks of fleet growth, pricing, transactional upgrades within that, that would be very appreciated.

And just as a quick follow-up on that market outlook you've given, that includes the steam combined cycle. If I remember correctly, in the last outlook you gave, that was around 10 gigawatts or so, it would be quite helpful to understand comparing like-for-like, how much is the combined cycle steam within that?

Okay. Maybe I'll answer quickly. I think the first topic with regards to the building blocks of the service. We typically have a time lag between getting the new units contract and getting the service contract booked. We could agree on it, we index it, but it does not get booked always -- most of the time actually on the same time of the new units. It takes a bit of time until you get financial closure and some customers are also not in a hurry to sign a service contract and they still have like 3 years of construction period of the power plant.

So the majority of the 78 gigawatts of the backlog I showed you, will be transacted and turn into revenue in the planning period fiscal year '26 to '28. 80% plus of this service volume and quality of earning, you don't see it yet. You will see it beyond '28. Most of it is, as I said, very high availability and reliability, critical assets, and they go with LTPs. So we expect that you would see 90% plus of this on LTPs. It also comes with index. So there is an escalation formula. And the prices, as we are discussing right now are healthy. So I hope this gives you some color on what to expect after that.

With regards to the market, I think you referred to the first slide. Yes, it includes the combined cycle part. I'm not so sure [indiscernible] is it 10 giga? 10 to 15.

I think if you just pass it on to Sean right next to you.

Sean McLoughlin at HSBC. A question for Tim. The -- you're positioning this 10% gap on the supply side by 2030. Just in terms of maybe Asian competition, other competitors also expanding in this space. What is the risk effectively that gap does close?

Could be. But remember, I mean, if you look at the large power transformers, you don't build this overnight, right? I mean we know the existing facilities also that our competitors have. We know the expansion plans. There's always a limit in an existing facility. The test bed can only take so many transformers a year to get push it through in terms of intelligence. If you look at the ovens, there's only so many ovens you can push to the parts for drying.

Yes, there could always be people expanding, but also what we have seen that curve on the market every year, we actually have upgraded that upwards. So we're kind of always behind the curve in terms of looking at additional capacity. And it's a stage process. So not everything we're going to pull the trigger now. So we can also dial back if we see that gap is kind of closing, and we feel there's too much overcapacity that's coming. So it's very -- it's dynamic, but we're also looking at it on a very regular basis, multiple times a year to make sure we really understand what's needed going forward.

And a follow-up, if I may, just on productivity. I mean big gains in '25, targeting, again, '26. I was intrigued on the automation side. I mean, where are we in that implementation of automation? And is there any way you can quantify that productivity?

No -- I mean we have a target. I mean, it's easy to target productivity in terms of -- on the procurement side and so on. But you also have to realize, we have 43 factories. I think all of them are in some sort of expansion. So if you're expanding the factory, then also looking in terms of productivity on the manufacturing side, when you fully load it, you see it -- if you go to our transformer factory in Nuremberg, there's stuff everywhere, right? I mean it's even the material flow in there is not as it should be because we're just trying to get so much stuff through and we need every corner to store material.

I think that's going to come a bit later once we start really seeing that expansion and having that flow. We see, of course, also the productivity is on the white color side. And then if I talk AI, how we do engineering, how do we do repeat designs, how do we utilize in terms of a contract approach? That's where it's a bit easier because it's more standardized.

I think on the factories, we're going to see it a bit with a delay just because of the expansion and trying to clamp in productivity, at the same time, creating capacity. It's a bit of conflicting targets at the same time. So also our message to the factory heads is make sure that you get the load out because that's what we have committed. And then while you do that, you look at what are the measures you implement to drive the productivity.

All right. Next question goes to Alex.

Alex Jones, Bank of America. Just on gas capacity additions, could I get a more color on the cadence? You've already announced large gas goes to 50 units, medium goes to 80 by the end of '27, I think. But the slides would suggest you're not going beyond that. Is that sort of gradual debottlenecking after '27? Or there are other major step changes within capacity that you're hoping to make going forward?

Yes. There are step changes that we already are doing. But as I said, within the existing footprint, and one of them is that you will see it in a while, is bringing the capacity that is already existing in the footprint of Charlotte to be able to do units. Maybe we do 6, 7, 8 units from Charlotte, and this will add to our capacity. Second is our arrows. But really, the biggest driver is our MGT this is really where we are going north of 100. So the 50 becomes 80 becomes 100, and this is where we have the majority of the capacity.

Next one goes to Will, please.

Two questions, Tim and Karim. Tim, just come back to the comments about growth. You highlighted the 3 business areas that are growing very fast that contribute to a lot of your growth. And then I think you suggested that you want to double service as a proportion of the total revenue for your business.

Orders.

Of your orders. So -- but effectively, you're almost doubling over 5 years, your total business. But if you double the proportion of service, you're 4x. So what do you see in the market that's going to provide you such significant growth in the service-related business? And should we think that's accretive to the overall mix as we go forward?

I think there's a couple of things in there. One is aging infrastructure. And you always have the option, and that's why we are on the capacity expansion, it's not just new unit. We're also investing in 2 refurbishment centers, one here in Charlotte, the other one over in Europe. So instead of buying a new transformer, you can also have a refurbish that's about 2/3 of the cost of a new transformer. I think there's a trade-off that a lot of customers will do looking at how much remaining lifetime of the substation of the assets that's going to go. We see more and more kind of LTSA type contracts coming on the solution side. On the solution side, HVDC. So I mean, traditionally, it's not just a call of transactional service, but customers actually sign up for long-term service agreements, both parts and technical support. So that's a driver that's coming also out of the more complex solution business that's coming.

Plus also, we're seeing much more of a refurbishment business on the substations that will go into service where basically you rip out old equipment, you put in new equipment that's being done by the service group. And I think the last one, we talked about these labor shortages. We see more and more customers having less own service people and actually outsourcing to us and say, can you take over the service of our assets or partially. So those are kind of the 4 drivers I see on the service side.

And the second one to Karim. If I recall correctly, you said a couple of times that you hope to install 180 gigawatts over 5 years, so about 36 gigawatts a year average simple math. But you put up a chart to talk about capacity being 22 gigawatts going to over 30 gigawatts in the second half of the period. So how do I square your capacity being below the total install that you're targeting?

It's the time difference between when you get an order and when you need to deliver it, right? So within this 5 years, we expect to get orders of 180 gigawatts that is not necessarily all going to be delivered in fiscal year 2030, right? So if you get an order in fiscal year '29 or 2030, then you are looking at a delivery in '31 or maybe '32.

So next question goes next Max, please.

Maybe just for Karim. Could you just give us a feel for -- to announce these capacity additions, you must have a good idea of kind of where industry capacity sits. So if we're saying kind of the single cycle, if we sit the single cycle and we say the market is kind of 85, 90 gigawatts going forward, you're going to -- if you knock 10%, 15% of your combined cycle number, it's '26, '27 GT are probably going to end up doing similar to what you do. So where do you think we are when all said and done with what most likely happens in the next year versus that 85 gigawatt number?

Yes. I think it's not very easy for us to really do that from the market demand because you saw on the panel discussion, the discussions always give me more, right? So I really always have the discussions of I want to get all what you can offer. And you really need to balance this of. If the market is very much relying on us to deliver what it needs to unlock the productivity and so on. We can't sit back all the time and say, hey, I'm not going to do the capacity expansion because I'm very scared of what's going to happen and vice versa, right? You cannot just go and run. We believe from our own analysis that it's a market would be in the range of the 100 giga as I told you. And the total capacity that we see today is around 85. However, from our side, we are able very quickly to ramp down again. And as I said, until fiscal year '28 is all sold out, '29 is in 6 weeks, we got 8. So '29 is filling very fast. And so these are capacities that are contracted or will be contracted very soon. And we will adjust if we need to adjust downwards.

And maybe just a very quick follow-up. You showed that chart where you were quite optimistic about the service business because more of what was going into the installed base was baseload. Maybe just give us a feel of the economics of if you have a turbine in your fleet that is baseload, what does that mean versus a peak in terms of revenue per gigawatt and maybe profitability on a baseload engine?

Yes, the profitability as a percentage is the same. I think there is 2 important drivers I want to leave with you. And it's, again, not the application of data center only. Think about the nuclear steam turbines, whether it's conventional or SMRs or offshore installations, FPSOs, et cetera. The first and the most important thing is availability and reliability. And this means an LTP contract that has all the bells and whistles in it, including strategic spare parts inventory, call-off team that can be there within 24 hours. All this is features that adds volume.

We -- on average, as I said, we expect around EUR 400 million per gigawatt in this period of 20 years on average. But of course, if I look at base load, it's the volume that goes higher. And it's also the customer behavior that they are not really shopping around for I want to get the service from a third party that might offer me 10% or 15% cheaper, but it's more of can you guarantee for me the highest levels of availability and reliability. And as I think Dominion and William said, "When I need you, I want you to be there, and I want you to deliver what you promise." And for this, of course, we get paid.

Thank you so much. So with that, we would conclude this Q&A. And as the next person, I would like to welcome Vinod on stage. So please come here. The stage is yours.

Good afternoon. It's a pleasure to be here with all of you, and my name is Vinod Philip. I've been with the Siemens Energy business for 28 years now. And over the course of those 28 years, I've worked in the gas turbine business, the generator business, I've been Head of Strategy for Siemens Energy, been the Chief Technology Officer for the company as well as for the gas turbine business. I've worked in the regions, and now I've also run service in the past, and here I am running the wind business. It's a real pleasure to be here. And what I want to do in the course of the next few minutes is to talk to you about where we stand with regards to our turnaround and the progress we have made along the way. But let me start by saying that for us, the people are the foundation of everything we do. And this is really important because over the last 24 months, the teams across Siemens Gamesa as well as at Siemens Energy have been working tirelessly day in and day out to make the turnaround happen. n

And I do want to take this opportunity to really thank them for their hard work. And also related to people is also something that Christian highlighted in his talk, which is safety. And I'm really happy to say that today, we have a safety record that is below industry benchmark and the lowest we have ever had. And this has been an over 35% reduction in our total recordables year-over-year. And for me, this is important because safety is a -- for me, a leading indicator of operational performance. And once you see a strong safety culture, a lot of things follow in terms of quality, in terms of operational performance and ultimately, profitability. So with this, I would like to walk you through a few proof points that highlight our progress towards breakeven and beyond.

So to start with, we have to recognize that there are some key strengths we have in Siemens Gamesa that we have to leverage in order to make our turnaround happen. And these are around project execution, where you saw in the video, we have installed over 5,000 offshore turbines at a rate of almost 1 turbine per day. Our first offshore wind farm was built in 1991, and there is a tremendous track record here that plays a big role in our market position in offshore. Our service fleet is something that we are absolutely able and should leverage even more. With the installed base of 150 gigawatts between onshore and offshore, we are clearly #2 in the market. And this is something that we can build on. And we also have some key differentiating technologies, be it the IntegralBlade or the direct drive or the recyclable blade that really make our products unique and also differentiated for our customers. We are the only OEM, for example, that actually supplies commercially recyclable blades that at the end of life can be recovered completely with the glass fiber or the carbon beams or the balsa wood being reused for other applications.

It's these trends that we will use as a way to get to breakeven in fiscal '26 and on the road to profitability beyond that. And so in the course of my presentation, you will see me emphasizing 3 things: operational excellence within a portfolio and footprint that has been streamlined quite a bit, turning onshore into a focused service-centric business, and in offshore, leveraging our strong position and market share to drive profitability.

So as Maria also presented, our commitments are clear. In the forecast period, our goal is to be in the mid-single digit for revenue and in 3% to 5% for profit margin. But to make it super clear, these do not reflect our long-term ambition. Our long-term ambition is to be at higher profitability levels than what you see in '28.

Now let's take a pause and just think about where we have come from. In fiscal '23, my predecessor, Jochen Eickholt, had introduced in the Capital Market Day the 5 priorities that were going to be key for turning around the business. And I'm really pleased to say that today, because of the tireless work of the teams within Siemens Gamesa, but also I have to take a moment to give a shout out to my colleagues in the other business areas, key experts, key leaders from gas services, grid technologies, transformation of industry and also the corporate functions stepped in to work side-by-side with the Siemens Gamesa teams to make this turnaround progress happen.

So to highlight a few proof points, let's start with the onshore product quality topic. And here, I want to make just a reference because in the course of my presentation, you will not see me using the word 4x and 5x because we are changing the way we name these platforms. The 4x is now the SG 5.0, which is our 5-megawatt platform and the 5x is our SG 7.0, which is the 7-megawatt platform, up to 7 megawatts. And the good thing I can say is that our quality task force that was established in 2023 to start getting the quality issues in onshore sorted out has successfully finished its mission. We have stabilized this topic. And now the quality task force has closed and the continued implementation of the correctives and the measures have been handed over to the line organization to continue the driving them forward over the course of the next years.

The second thing is to talk about also our back to market. And as you all might remember, in Q3 of '25, we announced the first sale of the SG 5.0 in Spain. And I'm happy to say that, as of today, in the course of the last few days, we were able to get 2 deals in Germany with the SG 7.0. And we will also have a few more in the pipeline that we will be able to share more details in the months to come. So the key message here is that from an onshore product quality and the onshore business, we have stabilized things, the back to market is going according to plan and the implementation of the measures right now are taking place also on track.

The second thing I want to highlight here is the topic of ramp-up in the offshore business. And I would look at this from 2 sides. One is installations. So as I showed you in the overview, we have a very high installation rate in offshore. In fiscal '25, we installed about 300 offshore turbines. And in fiscal '26 and '27, we aim to install about 500 offshore turbines. In the factories also, the teams led by [ Karim Amin ] have done a great job in ramping up productivity and output. As an example, in Cuxhaven, in fiscal '23, we produced about 100 nacelles. And in fiscal '25, that number is now 300. And in fiscal '26, we aim to go beyond that. So the offshore ramp-up, both from a factory perspective as well as from an installation perspective is on track. And last but not least, it's about making sure that we also have a strong performance on service, and over here with the interventions we are now doing, we have been able to, for example, reduce the mean time between -- or increase the mean time between unplanned correctives year-over-year for the SG 7.0 by 40%.

So these are all good indications that we delivered what we promised. Fiscal '25 was stabilizing the business as we look at fiscal '26 and beyond.

Now talking about fiscal '26, we are on track to break even in fiscal '26. And what you see here are the 4 key levers that we are using to drive this path upwards. One is around onshore -- sorry, offshore profitability, where we really focus on execution of the projects and commercial discipline. This is going to be key to this profit uplift. In terms of operational excellence, it's all about making sure that our factory productivity, as I mentioned, which is on the right path continues, and we also reduced nonconformances. We have reduced, for example, year-over-year 60% -- by 60% nonconformances in the new unit business.

Similarly, when we talk about the continued turnaround in onshore, it's all about cost optimization, both in terms of structural costs as well as investments in R&D and CapEx by having a much more streamlined portfolio, which I will talk about in my next slide in more detail. And last but not least, service. As I said, with a fleet of 150 gigawatts, of which about 65 are under service programs and the rest in open market, there is a lot more we can do. And in this case, field productivity and aftermarket are 2 key areas that we are looking at. When we talk about field productivity as an example, year-over-year between fiscal '24 and fiscal '25, we were able to reduce in North America, the time for a main bearing exchange by almost 50% by using lean processes for planning out the outage, innovations in cranes and improving the ways the field service teams work together. And these are the sorts of things we will continue to do step by step every day to make sure that this profit bridge you see here will be realized.

I want to spend the next few slides doing 2 deep dives, one on the onshore business and the other from the offshore business, so we can also zoom out a bit and see what's the overall environment that we are in. Now with regards to onshore, it is still, from an electrification perspective, one of the cornerstones, and Christian briefly touched about this in his introduction because onshore is still, from an LCOE point of view, the second most competitive technology after a PV. And it also allows for fast build-outs, which is why you see, in the global markets, excluding China, the onshore market is expected to grow from about 40 to 45 gigawatts today to 65. But what I want to highlight here is to zoom in a bit because we, as Siemens Gamesa and Onshore, are not going to chase after every one of these countries and markets. We will take a very focused approach, and we have defined 12 countries, which we define as our focus countries where we see a strong positioning for Siemens Gamesa. And this positioning comes either because we have a very strong regulatory environment there or we have a good product fit, and I'll come to that in a minute, or we have a very strong existing service fleet and track record.

So if you look at these 12 countries, that makes up about 50% of the global market outside of China, and that's what we're really going to focus on. And what you also might see on the slide that focus country, or that set of focus countries has an installed fleet of over 67 gigawatts of Siemens Gamesa turbines. And this is what we're going to zoom in on to really drive our onshore new unit business in a much more focused manner to make sure that we are maximizing our value.

So that means that we have to change how we have managed our portfolio and our footprint, and that's what we have done. So over the course of the last 2 years, we have reduced the number of platforms in onshore that were in active sales from 11 to 4. And these are the 4 you see on the slide. The SG 5 and 7 the SG 4.3 and the SG 3.2, and I'll talk a bit about all of them now. So the SG 7 and 5, these are our larger onshore turbines that are ideal for complex wind conditions. They have integrated noise mitigations, extensive tower catalogs to allow for different tip heights, the ability to deal with high sheer wind conditions and so forth. And this makes them a good fit for the European market and other selected markets. Similarly, we have a direct drive-based onshore machine called the SG 4.3, which is our typhoon class resistant turbine. And this is very strongly fitting the market conditions in Japan. And that's also where we will drive this highly robust product for the Japanese markets, and we also see this product picking up, for example, in New Zealand.

And then last but not least, repowering. When you have a fleet of about 150 gigawatts and you look at some of the older units, many of them are coming up to 20, 15 years of life, and now it is a good opportunity for repowering. And we see this as a very strong market in the U.S. where our SG 3.2 is an ideal candidate for repowering. Now just to also highlight that, the SG 3.2 is at a 3.2-megawatt turbine today that started as a 2.7. So we upgraded that from a 2.7 to 2.9 and now to a 3.2. And this allows us to do the repowering that depends on the scope of the customer, but you just keep the tower, change the rotor or you do the full rebuild depending on what the customer wants. And to give you a sense of how this market is evolving, in 2023 and 2024, we were on average about 250 megawatts of repowering. That went up to almost 500 megawatts in '25. And we see in the course of '26, that will be closer to 1 gigawatt of repowering. And we see the same kind of trend emerging in Spain potentially and also in some parts of U.K. where we have the older fleet. So repowering is something where we will use our proven products and address those wind farms that have been installed many years ago, and many of them are actually in very good wind conditions because that's where they started and find a way to make sure that we maximize the value of that portfolio.

In order to do that, we also then reshaped the footprint. And in onshore, we have now reduced the number of manufacturing sites for blades and nacelles from 10 to 4. And this is something that also allows us to really make sure that we are driving up the effects in terms of utilization, quality and cost benefits.

So looking at the service side, again, on onshore, I want to have a bit of a deep dive here because I do believe this is where we can do a lot more at Siemens Gamesa. You see the numbers in terms of order backlogs, average contract durations and so forth. But what I really want to highlight over here is in addition to being a recurring value stream that we can see from the 65 gigawatts there, which are under our service programs, we also have an opportunity to go after the non-service fleet with the aftermarket business. So what we are going to do when we talk about becoming a service-centric onshore business is to find a better balance between what we do in terms of supporting the fleet under service programs where it is all about making sure that we improve availability of the fleet. And over there, to give you a proof point, between fiscal '24 and fiscal '25, we were able to improve average availability of the SG 5.0 and SG 7.0 fleet by 3% points, which is remarkable.

Similarly, on the aftermarket side, we'll be looking to see how can we bring our spare parts, high-value spare parts to customers on time so that we can get a lot of this aftermarket business. And over there, the availability and delivery of spare parts is key. And in line with this strategy of aftermarket, year-over-year, we were able to improve our spare parts on-time delivery by 50% points. And this is something we will continue to drive because this will then allow us to really tackle that aftermarket business, which is relatively healthy margins. And we have seen year-over-year order entry for the aftermarket business grow by 30% and revenues by 50% -- 15%. And we will continue to make this a focus so that we really drive this onshore into a focused service-centric business going forward.

Now switching tack to offshore. Offshore from a market perspective is still very promising to us because as a technology, offshore offers a unique combination that you see mentioned on the slide. It's a high factor in terms of energy independence of many countries. It allows gigawatt scale deployment of these offshore farms. And of course, depending on the conditions, for example, in the North Sea, you have very high capacity factors, almost 50% compared to PV at 10%. And that's what you see. So all of us know about the U.K. and the EU as strongholds for offshore with the numbers there in terms of installations and also the commitments made. A few days ago, I was at the North Sea Energy Cooperation Ministerial, where the countries around the North Sea once again reinforced that they're going to follow a much stronger approach on ramping up offshore by also, for example, using the 2-sided CfD model in Denmark and also in the Netherlands to learn from the U.K. and keep driving this going forward.

The other thing I want to highlight here is that we do have opportunities in the Asian markets, namely around Japan, Korea and Taiwan, where we have a very good starting position. And in these countries combined, they have committed to build-outs of 100 gigawatts of offshore between now and 2040. And this is something else we will also be looking at.

Now the reason why we have a very strong position in offshore is because of 2 things. One is a very systematic decade of product improvements built on proven design features, be it the direct drive machine -- direct drive technology or the integral blade that allows the turbine to be fundamentally much lower maintenance and higher performance. That then leads us to our core product today, which is the SG 15, our 15-megawatt offshore turbine. In addition to that, as I mentioned a few minutes ago, our execution track record is unmatched when it comes to offshore. And that's why you see in terms of our market position in installed capacity, we are almost 70% market share. And this is based on 35 years of experience and deep customer relationships that we can continue to build on.

And what we also want to do to make sure that we are really maximizing the value of this position is we have also streamlined our portfolio. What you see on the left side of the chart is how we had, in the production mix, the various platforms. So what you see in fiscal '23 is we had in production 3 different platforms, the SG 6/7, the SG 8 and the SG 11. And the reason why this is relevant is because in manufacturing, when you keep switching product, it creates a lot of complexity for the shop. So what you see here is step by step, we have gone away from having this multi-platform approach. We have this workhorse as the SG 15 that is a very well-received product in the market, and we are going to focus on this as our key and only active sales platform for the rest of this decade. And by doing this, we are able to drive up productivity in manufacturing, able to reduce nonconformance costs coming from switch outs. We are able to get the learned out cost effects and so forth. And this is going to be key to our offshore profitability improvement. And also, the market has received it very well. What you see here is in terms of secured pipeline. The SG 14/15 has over 22 gigawatts of orders secured compared to the rest 3 platforms, which is about the rest 3 platforms, which is about 20, and we have up to 40 gigawatts in discussions where we will continue to see this coming into our order books in the years to come.

So to bring it all together, we are on a journey of transformation. We are step-by-step making progress. Fiscal '25 was the year of stabilization. Fiscal '26 is where we want to aim to break even in and then step-by-step move towards the '28 targets you see here in terms of revenue growth and margins. And we will do this by really focusing day in and day out on 3 things: operational excellence with lean structures and a streamlined footprint/portfolio, driving offshore through industrialization and making sure that onshore is transforming more and more into a service-centric business. And this is only possible because of the fantastic team we have at Siemens Gamesa.

So with this, thank you very much. I hope you all got a sense of our journey of transformation and looking forward to the Q&A. And now I invite my colleague, Anne-Laure, to join me on stage to give her presentation. Thank you.

So hello, everybody. I'm Anne-Laure. I joined Siemens Energy a bit more than 3 years ago when we created Transformation of Industry. And before that, I was working for ENGIE, one of the world's largest independent power producer, where I was the CEO of their distributed energy generation and energy infrastructure internationally. So I'm very pleased to be presenting today Transformation of Industry and a little bit the journey of where we've come from. So as you saw in the video, we have a very broad portfolio of technologies that are supporting energy-intensive industries. It includes compressors, steam turbines, generators, electrolyzers, but also electrification, automation and digital solutions. And all these businesses are #1 or #2 in their market. And you will see that since the creation of TI, we've come a very long way. All these businesses have been laser-focused on building resilience, growing service and on execution excellence. So I'll share with you our journey until today, our ambitions and how we plan to keep this momentum to further improve our performance year-over-year.

Let me first explain where we come from. We've delivered a huge turnaround. We've improved profitability by over 1,300 basis points since 2021, and our profit margin has now reached over 11%. This transformation was done in 2 stages. First, we worked on footprint optimization, portfolio streamlining and operational excellence. This delivered EUR 600 million of savings, and it strengthened our resilience by increasing our focus and by rightsizing our operations. Since then, we've improved further. We've been pushing service revenue. We've been increasing productivity above the industry standard. And doing that, we've also been keeping CapEx extremely light. So we've come a long way, and our teams have proven that they can deliver with extreme focus and with extreme execution discipline.

Now let's look ahead. We're committed to keep this momentum and to further deliver on performance. We're targeting a revenue growth of 5% to 7% in '26 and mid- to high single-digit growth through 2028. And regarding our profit margin, we are set to reach 11% to 13% next year and 12% to 14% by 2028. And this is just the beginning. We will also continue to improve even further going forward.

How are we going to do that? So we have 3 levers that we are working on to be able to achieve that. The first one is diversifying markets, which increase our resilience going forward, and I will explain you how. Second is service growth, which is a huge profit engine for us. And third, execution excellence to be able to further increase our productivity. First lever, our diversified market. This is really giving us the resilience we need going forward. The market environment is changing rapidly, and they're driven by a few major trends that you all know, which are, first, energy cost and affordability. These are key drivers for industrials, and this is why we see strong investments in energy efficiency. Second is a strong focus on energy security and diversification of supply. This is due to the current geopolitical situation, and this is why we see that LNG will continue to grow in the coming years. And third, the proportion of electricity in the industrial energy mix is expected to rise because more and more industries are switching their processes from fuels to electricity. And finally, we see the surge in power demand, particularly driven by AI, as my colleagues were talking about, and this is putting even more pressure on industries for cost-effective energy solutions.

So let's now see how this will impact our market growth. So if you look at the middle chart in the middle, you see that some of our core markets, so maritime, process industries, industrial power generation, they will grow double digit. When you look at oil and gas and chemicals, however, they will continue to grow, but at a slower pace. Today, you see that they represent 2/3 of our overall market and their share will actually gradually reduce over time. And you also see that hydrogen will provide an upside towards the end of the decade. Our resilience is based on this diversification of our markets and the fact that we are exposed to a broad range of markets, which helps us in navigating the different market cycles. But our resilience also comes from the diverse applications that we have and the global reach and balanced regional exposure that we have in over 70 countries.

I also want to take a bit of time to explain to you how our portfolio is well positioned for further growth in key growing markets. So first, maritime. We see that this sector is shifting to lower emission fuels and to electrification, and we are building on the fleet that we already have today of 900 ships to continue to provide solutions from electrical propulsion to battery storage, both for commercial and naval vessels. Second, data centers. There, we provide different solutions like load stabilization, for example, so that data centers can operate 24/7. And we aim to quadruple our orders in the next 3 years, riding the AI demand boom. Third, digital services. So there, our solutions include things like asset performance, remote operations, energy management. And here, we plan to more than triple our orders in the next 3 years. And finally, hydrogen. We have already 1 gigawatt of electrolyzer projects that are either under execution or already in operation. Last year, we were #1 in the market, Chinese included, and many of these projects have 10-year service contracts attached. So it is long term. We all know that the long-term market growth for green hydrogen will depend on its cost competitiveness. And this is why we're also working on reducing the total installed cost of hydrogen production by 40% by 2030.

Second driver, service growth. So this driver is honestly our biggest bottom line driver. And I would like you to consider 2 examples to see how important it is for our customers. As you see on the screen, up to 40% of the total operating expenses in metals production are related to energy use. We also see that in oil and gas, unplanned downtimes that you have in a plant cost on average, $400,000 per hour. So this shows how efficiency is key for competitiveness, but also why asset life cycle support is critical for our industrial customers. At Transformation of Industry, we have 85,000 assets in the field and many are operating for more than 50 years. Over that life cycle, service revenue is at least twice the asset revenue. That's why capturing the service potential of our fleet is a very, very powerful growth engine. And since 2023, we've delivered double-digit service growth every year. We've significantly increased our service margin. We've grown our service backlog, and we kept the service share above 50% in our mature businesses. This growth in service is a key win-win for our customers, but also for our profitability, one of the key drivers.

So now how will we further harness the full value of this enormous installed base that we have? So we start from a very strong position. We have the largest installed fleet and service organization in the industry. We have decades of customer relationships, and this closeness that we have with our customers gives us speed and scale. Also, we constantly innovate on our products and on our service offerings. And for example, we work on making service interventions more cost effective by leveraging AI to minimize downtime for our customers by 30%.

So how do we accelerate this growth engine? First, we plan to further increase our service reach to penetrate untapped fleet. This is about maximizing the asset performance, maximizing or extending the asset life, and this is a huge opportunity for us that we haven't tapped yet enough. Second, we want to win more on our fleet through targeted modernization and upgrades. You need to know that modernization have less than 2 years of payback time and that our upgrades generate usually efficiency increases of 5%. So this is a very strong service growth lever that we also need to push. And third, we aim to increase our electrification and digital services by over 60% to make our service more predictable and to further reduce the downtime for our customers. So these are the very strong market drivers that we see and the very strong actions that we will do on service to further grow using our very powerful and sustainable installed base.

Third lever, execution excellence. This has been our obsession these past years, and we will continue to drive resilience and productivity by being laser-focused on it. So let's start by resilience. We continue to strengthen our supply chain. We're focusing on more diverse and more local supply, and this makes us far less vulnerable to any external shocks. But resilience is also about the many customers, projects, transactions that we serve every year. And it's also about delivering on time and on quality with strong execution discipline. And this is reflected in the very high customer satisfaction increase that we've seen in the past years.

So how will we continue to deliver productivity? First, we remain disciplined in how we grow, keeping CapEx light. This allows us to be selective where we actually prioritize profit over volume and also the fact that we increase our output within our existing footprint delivers both productivity and resilience. We are also extremely disciplined in how we manage fixed costs and overhead. And by applying digitalization throughout our value chain, we're also streamlining our operations, becoming more effective and gaining speed. This execution excellence will further drive our performance and our financial results.

So let me recap what you can expect from us. First, our balanced exposure to different markets, different industries, applications and regions will continue to provide resilience to our business. Second, service is our big key profit engine, and we will remain laser-focused on its growth. And third, our track record proves that we are committed to execution excellence, and we will remain extremely disciplined in building resiliency and productivity. This will translate directly into financial performance, and we're looking ahead to 2028, we plan to deliver mid- to high single-digit revenue growth and an increased profit margin of 12% to 14%. Thank you. Questions.

Thank you so much, Anne-Laure and Vinod, if you please come back on stage. So now we're going to finish up with our last Q&A before Christian is going to wrap up our Capital Market Day, but I guess there will be another lot of questions. So starting here with Phil, in the first row. Microphone is coming.

It's a question for Vinod to start with. Obviously, the breakeven is now in sight, confidence levels there seem to be quite high. With the transformation mission now complete, as you've described it, the growth rates that you've offered for onshore and offshore and with the increased focus on service, there I ask it, but it kind of feels like mid-single-digit growth and 3% to 5% margins is not necessarily the end of the road. How should we think about the trajectory from that point into 2030, please?

Sure. Thank you. Thanks for the question. I think, first of all, let me just reemphasize the transformation is not complete. It's underway. So stabilization is what we aimed for in '25. And now step by step, we have to get through to the midterm target of 3% to 5%. I must say, honestly, I think looking at 2030 for me right now is too far out. It's really important that the team stay focused on delivering in '26 as we have committed and then get to the 3% to 5%. And over the course of the time, I'm sure as we get more traction under the belt, I think we can discuss what happens towards the end of the decade.

But the important thing to highlight was to line up to what Christian said as part of the elevate program, at the end of this decade or by the end of this decade, I think every part of Siemens Energy needs to be in a band that makes sense for the company. And that's what we're aiming for. But let's get to breakeven and then also let's get to 3% to 5%, and then we can see what comes after.

Ben, please.

I've got a slightly nasty one for Vinod. I was going to ask it to Maria, but I didn't have a chance. It's about the cash within Siemens Gamesa. We are still, to be frank, hemorrhaging cash. It's nearly EUR 2 billion of cash out the door in the last year. And I guess it's all very well us talking about breakeven margin. When are we talking about breakeven cash? And on the cash side, I mean, we've still got these quality cash-out things to deal with this year. So is our line of sight to this becoming a cash positive business? Is this a '27 thing? Is it a '28 thing? When can we get to run rate cash generation back in this business?

It's a very fair question, Ben. And I think maybe let me just elaborate a bit on the cash drain, right? So I think the QTF cash outs are one lever. So that's fiscal '25 and fiscal '26 are the big chunk of it, yes. Then I think we still have investments that we have to do in the offshore. So CapEx is another one that we have to keep doing. The third is many of the improvement measures that we have kicked off as they start to pay out with the POC accounting also with project-based completion, they will also come later. So there is a bit of a lag on that. And then I think Maria would be much better suited to answer this if you need her to, but also from an overall prefinancing and everything and deleveraging wind power, there is also some of that effects coming in. So the goal is to become cash positive and probably towards the end of the decade.

Next question goes to Vivek, please.

Vivek Midha from Citi. A question on the onshore growth. So you've highlighted that you've started to get some of that order intake. But within those 12 focus countries, what do you see as a realistic market share to recover to within those countries?

Yes. I think I want to be careful because I think very often chasing after market share makes us lose project selectivity. So for me, the first focus, and this is a clear message I've given to all the teams between '26 and '27, make sure that we get the right projects. by working with the right customers. So I would be -- it will be too premature for me to talk about market share in the midterm. But my expectation is that if you want to be a relevant player in this, you have to be, if not #1, at least #2 or #3. And based on that, I think the market share will play out and its all. But I don't want to make market share the main driver. I really want to make project selectivity, profitability, driving up value first. And then I think once we get the ball rolling and we have a well-proven set of early launch projects out there, we can talk about market share. But I'm not going to comment on market share too early right now.

Maybe handing it over to Max, please.

Max from Morgan Stanley. I just -- I wanted to talk through a few of the moving pieces to get to breakeven. I think quite a few of them seem in your control. So collapsing the kind of offshore models into one, slimming down the cost base. I guess the one that's a little bit harder to understand is the improving or service going back to normal. Could you maybe just talk a little bit through what's actually happening there? How much is in your control versus how much is it kind of market forces? And how does that actually work in practice?

Right. I think on the service, there are maybe 3 different kinds of things we have got to do. So one is when you talk about bringing the SG 5.0 and the SG 7.0 fleet up to the availability levels by doing the proper implementation of all the correctives, that happens in service. So that, I think, is to make sure that the implementation of the correctives are done seamlessly. The second is for the mature platforms that are the pre-SG 5.0 and SG 7.0 platforms, over there, it's all about field efficiencies. We have, in most cases, good availabilities, but the higher up we can improve those, we can also squeeze out more value from the mature platforms. That's the second bucket. And the third bucket is aftermarket. This is where we really have to look for these high-value spares. And we have, as you see, a 50-some gigawatt market where we don't have service programs and to really penetrate the aftermarket business in there. So these 3 buckets, we focus on them. And then over the course of time, we start to see the overall service performance constant -- continuously improving.

So next question will be going to Gael, please.

Just in terms of the quality topics were obviously a big issue. Now the main issue for onshore will probably be more about covering the fixed cost. So what is the size you need to have in that business to be profitable again? So that's question number one. Question number two is about the -- maybe a follow-up on the earlier question on the service side. I remember this service business used to deliver 20% plus type of margins. I think you said earlier that you've delivered on the promise to -- what did you say exactly to return service to target profitability. So what is the target profitability for service?

Yes. I think maybe let's start with the first one. In terms of the overall size, I really don't want to put a number out there because I think the more important thing is we have already a lean structures program that we have kicked off. So we are really right now focusing on taking out structural costs in onshore. There's also building on the program that was announced 2 years ago. That's on track, making sure that we optimize CapEx and R&D along the way. And then at the end of the day, I think it will be a business where we are making sure that we don't have to chase after every project because we have overcapacity to fill. So it really is going to be a balancing between making sure that we have the right cost structures, the right capacity, but not overdoing either of those. So you end up chasing projects that you actually don't have a very strong position on. So we will actually try to manage this along the way for onshore.

What is also important is that I think looking into the mid- to long term, offshore is going to be a big driver of the growth. It's not going to be looking at having onshore driving the growth as much. With regards to the profitability in service, to make very clear, we have measures in place that we are starting to put to get the service back on track. So as of fiscal '25, service is not in the target profitability levels we need to because of all the quality issues and everything. So the expectation is that in the midterm, if you have a healthy running service organization, similar to what we see in the market with what Nordex has and Vestas has, we should be looking at the mid-teens in that range.

And to get to breakeven '26 for the entire division, so you need to what...

No. So again, for breaking even for the whole wind business, we have these 4 buckets, all 4 play out. And the contribution of service into the breakeven is part, but the bigger contribution is going to come from the offshore uptake and also from the operational performance in the factories.

All right. So if we don't have any other questions now, well, thank you so much. We know and long. And then we would get to the end of the Capital Market Day today. So thank you all for participating for the last hours. And then I would ask Christian to come back on stage. Thank you so much.

Thank you very much. Just before I wrap up, conclude because I think Ben asked the question just to make sure that I heard it correctly because the tiny little things like cash are sometimes important. We will be strong cash positive in '28 in the wind business. That's the assumption, right? This is the current planning. I think I heard we're not saying it like this. I just want to make sure that it's correctly understood. Until then, it's really working up the way towards that, right? Good. I would like to conclude with a couple of thank you. And I hope you enjoyed really the presentations of the teams of presenting of what we're doing, how we energize society, how we're bringing the things together. It's a lot about how we do things, as I said in the morning. It's really about operational excellence. I'm very proud of what the teams have achieved. And I think it was giving you insightful background information on how we are continuing to develop the company.

I would, first of all, like to thank you all here in the room and obviously also online following us for 4.5 hours. And thank you very much also for the active engagement with the question-and-answer session. I obviously would like to thank our customers who joined us also today and also the ones who provided statements to the Capital Markets Day. We're very proud of the trust we get from our customers. So thank you very much for that. I would like to thank fantastic team purple, the people who are working at Siemens Energy. And that's really great to see what they get together. And in particular, I would like to thank the team who put this Capital Market Day together and have also made sure that in preparation of it, all the presentations, all the organizations around it. The people who will show you afterwards the site and everything, thanks very much for this extra effort. It was not easy in this row of all the events which we have currently. So thank you very much for that.

And I, last but not least, I would like to thank all our shareholders really for the trust in the company. It has been a very interesting journey over the last 5 years as a company. And I hope you have seen what we are planning ahead of us. And obviously, I think, as I said in the morning, it's a fantastic market to be in. We believe we have a lot of good things to offer to the market, and we will continue to work on it. We're looking forward for a continuous engagement with all of you. Thank you very much for the questions. Thank you very much for your attention today. It was great to have you here in the room. It was great to have you online. Thank you very much. Thanks of spending your time with Siemens Energy and the trust in the company. Thanks. Have a great day. Enjoy the tour for you.

Thank you.

Thanks a lot also once again from my side, and I know there are still so many open questions. The IR team is, as usual, always available for you.

Ladies and gentlemen, welcome to the Analyst Call Q4 Fiscal Year 2025. I'm Moritz, the Chorus Call operator. [Operator Instructions] The conference is being recorded. [Operator Instructions] The conference must not be recorded for publication or broadcast. At this time, it's my pleasure to hand over to Tobias Hang. Please go ahead, sir.

Good morning, and a warm welcome to the Siemens Energy Q4 Fiscal Year '25 Analyst Webcast. Today, we are here in the factory in Berlin. First of all, I really have to say that we are sorry that you had to wait for 5 minutes. Of course, we're going to add that -- the 5 minutes up on the end of the call, so that should happen, please excuse for that. As you probably noticed already, we pre-released our results yesterday night and published all the documents around 9:00 p.m. on our website. Now I'm pleased to have with me here President and CEO of Siemens Energy, Christian Bruch; and Maria Ferraro, our CFO. And in the next 30 minutes, Maria and Christian will take you through the developments of the last quarter and the fiscal year 2025. Thereafter, we will continue with our Q&A. For the entire webcast, we estimated roughly 1 hour. So with that, I would hand over to Christian.

Yes. Thank you very much, and also good morning, everybody, also from my side, and thank you for joining our quarter 4 call. We do it here from the factory in Berlin, and that is something I wish you could see it really continuously because we have our products around us, and this gives a good atmosphere. As we wrap up fiscal year 2025, I would like to take a moment to reflect on Siemens Energy's journey over the past 5 years. And when we listed Siemens Energy on September 28 in 2020, we had a clear ambition, focus and deliver on fundamentals, co-create innovations with customers and partners and start the energy transformation, all this based on our purpose, reenergize society. And since then, we have come a long way.

We are offering the right products, solutions and services to serve our customers in a changing energy world, driven by higher electricity demand and the need for energy security. The trust of our customers placed in us and the strength of our portfolio is reflected in our continuous revenue growth since our listing in total by 40% to almost EUR 40 billion in fiscal year 2025. At the same time, our order backlog has increased by around 75%, bringing us to another record high level of EUR 138 billion at the end of fiscal year '25. This is underlining the confidence of our customers and our ability to deliver complex critical infrastructure energy projects and the strong order backlog provides us good visibility for fiscal year 2026 and beyond.

Our journey has not been without challenges. We started in a world which was determined by COVID. And in fiscal year 2023, we were confronted with severe challenges at our wind business. Our focus on operational discipline and stringent execution brought us back on the successful path. And since then, the resilience of the company has been strengthened. The result of this journey, a 350 basis point profit margin improvement since our listing and a 1,500 basis point improvement since fiscal year 2023. Looking at this development, I want to thank everyone working at Siemens Energy, our team purple to make this happen. I'm proud of what the team at Siemens Energy has achieved together so far and the journey has just started. If the past 5 years have been about building the foundation and fiscal year 2025 was the start of a growth journey with continuous margin expansion.

Earlier this year, we upgraded our guidance at our half year results to reflect our confidence in the development of our business. And I'm pleased to report that we have achieved the top end and partly overachieved our upgraded targets. Fiscal year 2025 has been a year with strong performance. We saw 15% revenue growth, driven by robust demand across our core segments. We achieved significant margin improvement of 500 basis points year-over-year, thanks to operational excellence and the execution of more profitable orders, which we signed in the last couple of years. And finally, we generated an excellent level of free cash flow.

While Siemens Gamesa continues its turnaround journey, the rest of our portfolio has demonstrated remarkable performance. For the fiscal year 2026, we have set ourselves ambitious targets. We also upgraded our midterm targets for fiscal year 2028 substantially. For fiscal year 2026, we target a profit margin before special items of 9% to 11% and revenue growth between 11% and 13%. Midterm, for the fiscal year 2028, we are aiming for a low teens percentage range revenue growth and a profit margin before special items of 14% to 16%, more than doubling current margin levels within 3 years. And these targets are based on a robust order book, a culture of accountability and operational excellence.

Looking into the development of orders and revenue in the different regions in fiscal year 2025, we have seen strong market momentum and are confident that this will continue in the next years and be a strong base to achieve our midterm targets. During the last year, all our regions, Europe, the Americas, Asia Pacific and the Middle East delivered consistent expansion in demand. The underlying favorable trends are intact and continuing for the foreseeable future as the demand for electricity and the need for modernization and expansion of the electrical infrastructure should proceed to increase. Our portfolio covers to a large extent, today's and future technologies to meet this demand.

And next to the coal to gas shift, peaker demand and the generally higher electricity demand from developing societies as well as increase of electrification, 2025 order intake has been substantially supported by the electricity needs for data centers. Especially in the U.S., this has driven unprecedented demand for gas turbines and grid infrastructure and translated into record high order volumes for Siemens Energy in fiscal year 2025. We almost doubled the number of gas turbines sold globally from 100 units in 2024 to 194 units in 2025. Grid technology more than doubled the sales to hyperscalers to over EUR 2 billion in fiscal year 2025 driven by North America, but also across all other regions.

It is for us a deliberate target to diversify the origin of our orders, ensuring that our growth is balanced and resilient. Based on the current growth momentum, we are adapting our footprint and aligning our operations to regional demand and customer needs. The increasing regional setup helps us to mitigate the continuous geopolitical challenges like tariffs, which we, for example, experienced in the second half of fiscal year 2025. Let me give you some additional highlights on new projects from the last quarter. In our gas service business, we sold in the quarter 5 gigawatts of gas turbines and signed 11 gigawatts in reservation agreements. And this was mainly driven by Saudi Arabia and the U.S.

With that, the total commitments increased to 54 gigawatts in fiscal year 2025, thereof 26 gigawatts orders and 28 gigawatts reservations, 12 gigawatts are related to data center. Pricing momentum for gas services continued to be favorable and is expected to continue that way in the foreseeable future. Grid Technologies achieved the strongest quarterly order intake in fiscal year 2025, driven by substantial demand growth across all regions and the highest quarterly revenue in history driven by both product and solution business. We are confident that the profitable growth we aspire for fiscal year 2026 and beyond is supported by a strong electricity market.

Fiscal year 2025 was marked by several milestones that provide a foundation for future success and shareholder returns. And due to our solid financial performance throughout the year, we were able to exit the bond guarantees, improve our credit ratings and lift the dividend ban for fiscal year 2025. Our net cash position and robust liquidity profile allows us to pursue strategic growth and shareholder returns without compromising financial discipline. We have put the right measures in place to continuously drive profitability. This includes optimizing our cost structures, reducing nonconformance costs and being selective with the projects we take on, ensuring they align with our target margins and long-term strategy.

Our portfolio optimization efforts are well underway, but we will continue to review our portfolio elements. The divestment of our Indian wind business, which we have agreed in 2025 with a group of investors led by TPG is an important step to focus our onshore wind power on selected regions. Throughout the whole year, we were investing in the growth of our core business and the further strengthening of the supply chain. Examples were the acquisition of RWG and CIC this year, which will help our gas service businesses to deliver on their commitments. We have been and are investing in the expansion of our factories. Strong focus is here by the expansion of existing sites to achieve effective use of the capital spend and short payback times.

I'm pleased that also the development of partnerships to enhance our offerings into the market made good progress in fiscal year 2025. Here to mention Rolls-Royce in the area of small modular reactors and Eaton in the field of data centers. You will see a lot more details on our future journey during the Capital Market Day in Charlotte, and we are excited to discuss these measures together with you. We are positioning Siemens Energy to lead in the field of resilient energy, pursue profitable growth and deliver sustainable shareholder returns. With that, let me hand over to Maria for the numbers. Maria?

Thank you very much, Christian. Hello, everyone, from my side. A very good morning and also a very warm welcome. I'm pleased to share with you our Q4 and full year financial results. As always, I'm happy to answer any questions you may have afterwards. Before I go into the performance of the specific business areas, I would like to start with an overview for Q4 and full year 2025 at the Siemens Energy Group level. So overall, we had a very strong finish to the financial year. Quarterly revenue exceeded the EUR 10 billion mark for the first time with strong quarterly figures recorded for orders, profit and cash flow. Fiscal year '25 is a record year, and we reached the top end of our guidance for all KPIs.

Now looking at Q4, orders reached EUR 14.2 billion, and we saw a continuing strong demand, specifically in GS and GT. For the full fiscal year, we ended up just shy of EUR 60 billion in orders. This marks a record high since the listing. On a geographic basis, growth was broad-based, all regions reporting recorded increases. For fiscal year '25, orders were driven by a significant increase of 21% in our new unit business. Here, we saw exceptional growth in Gas Services with a remarkable 94%. Our service business grew by 16% compared to fiscal year '24. The book-to-bill ratio in fiscal year '25 was at 1.51 for the group, and the order book climbed once again to a new record high of EUR 138 billion. Revenue in Q4 reached an all-time high since the listing, like I mentioned, of EUR 10.4 billion. This is a 9.7% increase on a comparable basis.

The improvement of this quarter was primarily driven by GT and TI with both growing by more than 19% on a comparable basis. For the full year, we ended up just shy of EUR 40 billion in revenue, which also marks a record high since the listing. Full year revenue grew significantly in both new unit at 18% and in service with 13%, both on a comparable basis. In Q4, profit before special items was EUR 471 million. This is significantly above the negative EUR 83 million in prior year's quarter, ending the fiscal year almost at EUR 2.4 billion. Again, this is another record for Siemens Energy since the listing. Here, our profit increase was mainly due to increased volume and related productivity effects, but was also driven by improved margin quality of the processed order backlog.

Profit was negatively impacted by tariffs in the quarter with a high double-digit million euro amount. As already indicated in Q3, this was mainly due to the changes in the custom regulations between Europe and U.S. Additionally, in Q4, the amendment of Section 232 came into effect, which impacted mainly Siemens Gamesa. In special items, we see adjustments mainly in Siemens Gamesa related to the sale of the Indian wind business, as expected as well as the continued restructuring efforts. Net income for Q4 was EUR 236 million. Free cash flow pretax was more than $1.3 billion for the quarter and therefore, significantly above last year's quarter level, mainly driven by the sharp increase at Gas Services. I will talk a little more in detail about the drivers of our free cash flow on Slide 11. So now let me turn to our order backlog on the next slide.

So looking at our backlog, as we mentioned, we ended the year at $138 billion. And for fiscal year '26, so this coming year, the revenue coverage is already more than 85%. And in fiscal year '27, we see this as approximately 60%. We also see an improved order backlog margin development in fiscal year '25. I will stop there because I will provide further details on the backlog margin development by BA at our Capital Market Day next week. So please stay tuned. So now let me talk in more detail about the drivers of free cash flow. Free cash flow pretax, as I mentioned, was EUR 1.3 billion for the quarter, roughly EUR 400 million more than Q4 of prior year, again, mainly due to improved profitability impacting our net income.

Positive cash contributions from our net working capital is mainly driven by an increase in contract liabilities and a decrease in inventories. Additionally, we continue to have incoming reservation fees. This is also adding to our cash flow generation. So very quickly, an update on Siemens Gamesa's quality cash outs. For Q4, this amounted to EUR 157 million. And for the entire year, it was approximately EUR 450 million. This is in line with our mid-triple-digit million euro amount that we indicated for this fiscal year. And also, we expect a similar amount for fiscal year '26. Looking at CapEx, we spent $685 million in Q4 or roughly $1.7 billion for fiscal year '25. This is to fuel our future growth mainly for expansion and capacity extensions. For example, the ramp-up in Siemens Gamesa offshore as well as investments for capacity expansions in Gas Services and Grid Technology.

The amount spent in this fiscal year was lower than anticipated at the beginning of the year just due to timing and reallocations. So therefore, please stay tuned also in terms of how we see target of CapEx for fiscal year '26. We'll look at that a little more in depth, of course, at our Capital Market Day next week. So now looking at net cash on the right-hand side of the slide. Overall, we have $9.2 billion in cash and cash equivalents. Our financial debt stood at EUR 4 billion, of which $2.4 billion is long term. This is an increase of approximately EUR 0.3 billion versus Q3, mainly due to increased leasing obligations. And taking into account pension provisions of EUR 406 million, this brings us to an adjusted net cash position of EUR 4.8 billion at the end of September compared to just EUR 2 billion a year ago.

So overall, we continue to have to build a strong balance sheet commensurate with an investment-grade credit rating profile. So now this is a perfect segue to a question we receive very often from investors over the last few months regarding capital allocation. For this as well, we will provide more details at our Capital Market Day next week. However, one message which we can already reveal today is the dividend proposal for fiscal year 2025, demonstrating our commitment to shareholder return. We will propose a dividend of EUR 0.70 per share for fiscal year '25, subject to approval at our Annual General Meeting in February 2026.

So now let's have a quick look at the financial performance of our 4 business areas, starting with our Gas Services business. In GS, we had a very strong finish to an exceptional fiscal year '25. Congratulations to the entire Gas Services team. The Q4 orders of $4.8 billion were up by roughly 38% from prior year quarter, again, driven by strong demand in the U.S. and Saudi Arabia as well as significant growth in service business, which was up roughly 48%, ending fiscal year '25 with a record order intake of EUR 23 billion. Book-to-bill was an impressive 1.89 for the fiscal year. This led to a record order backlog of $54 billion, another all-time high for our GS business. In Q4, Gas Services booked a total of 19 gas turbines for power generation in oil and gas, 11 of those were large gas turbines.

Our gas turbine greater than 10-megawatt market share for power generation stood at 14% and for large gas turbines greater than 100 megawatts at 19%. Q4 was always expected to be a bit lower compared to the previous quarters solely due to timing. For fiscal year '25, overall, Siemens Energy achieved #1 position in gas turbines greater than 10 megawatt for power generation with 31% market share. In large gas turbines greater than 100 megawatts, we have secured #2 position with a 26% market share. Again, a fantastic performance, and we are really grateful for the confidence our customers have placed in us and for our team's ability to secure those orders.

Q4 revenue was $3.1 billion, a 15.5% increase on a comparable basis. This ends fiscal year '25 with a record revenue of more than EUR 12 billion and a comparable growth of 14.2%. This is above the fiscal year '25 guidance range of 11% to 13%. In Q4, new unit business showed significant growth of almost 34% comparable and service business of roughly 15% comparable. Q4 profit before special items was EUR 251 million. This was a margin of 8.1%. This is 300 basis points versus prior year Q4, again, showing some of the normal seasonality pattern, but also reflecting the improved margin quality for the processed order backlog and new units business. This ends fiscal year '25 with a record profitability of almost EUR 1.6 billion and 13% at the top end of the 11% to 13% fiscal year guidance range.

Lastly, but certainly not least, free cash flow for the fiscal year came in at a very strong EUR 3.2 billion for Gas Services. This is a cash conversion rate of just over 2. Again, a fantastic job GS. So now let's take a look at our Grid Technologies business. This was also a record year for Grid Technologies, well done. Q4 orders of EUR 6.9 billion, up 31% year-over-year. This was driven by strong growth across all regions, but specifically in the U.S. and an exceptionally high demand for product business. This ends fiscal year '25 with a record order intake of more than EUR 21 billion. Book-to-bill ratio for fiscal year '25 was at 1.9, again, resulting in another record order backlog of $42 billion.

Quarter 4 revenue reached a new quarterly high and grew by 19% on a comparable basis to $3.1 billion. This is ending fiscal year '25 with a record revenue of more than $11 billion for GT and a comparable growth of 25.4% for fiscal year '25, which is within the upper end of the guidance range of 24% to 26%. Revenue increase was supported by the steady processing of the order backlog with the short-cycle business exceeding the solutions business.

Q4 profit before special items was EUR 463 million. This was a margin of 14.7%. This is also plus 450 basis points versus prior year quarter 4, ending fiscal year '25 with a record profitability of almost EUR 1.8 billion and 15.8%, again, well at the upper end of the 14% to 16% guidance range for fiscal year '25. Free cash flow for the fiscal year for GT came in at EUR 2.8 billion and a cash conversion rate of just over 1.55. Excellent job. Thank you so much. And again, well done to our GT team.

On the next slide, we take a closer look at our Transformation of Industry business area. Fiscal year '25 was a record year for TI with regards to revenue and profitability. Q4 orders were EUR 1.6 billion. This was the highest quarterly order intake for the fiscal year. However, a decrease of approximately 20% versus prior year on a comparable basis. This was due to an exceptionally large order in prior year orders in compression and in sustainable energy systems. The full year came in with EUR 6 billion. The book-to-bill ratio for '25 was just over 1 at 1.01, and the order backlog at the end of the quarter amounted to EUR 8 billion.

For TI, Q4 revenue grew by just shy of 20% to EUR 1.6 billion, mainly due to substantial growth in the compression business. This is ending fiscal year '25 with a record revenue of $5.7 billion and a comparable growth of 13.5% Q4 profit before special items was EUR 177 million, almost double compared to Q4 of last year, resulting in a margin of 11%. This is a plus 420 basis points versus prior year Q4, ending fiscal year '25, again, with a record profitability of almost EUR 646 million and 11.3%, above the 9% to 11% fiscal year '25 guidance range.

Here, the biggest contribution to the improvement in Q4 came from industrial steam turbines and generators with plus 420 basis points and compression with plus 300 basis points compared to previous year's Q4. Again, huge congratulations to the TI team. They have really been on a successful turnaround path for the last couple of years. On that, when the TI business area was established, we emphasized the turnaround nature of most of its businesses and as a result, provided additional voluntary disclosure for the independently managed businesses or IMBs.

Given the successful turnaround of key businesses such as compression and steam turbine generators, this additional disclosure no longer will be provided. Accordingly, beginning with fiscal year '26, reporting for TI will be standardized in line with the group's approach and the other business areas and the separate IMB disclosure will be discontinued. So therefore, as of now, so for Q1 of fiscal year '26, TI will be reported in the exact same manner as all the other business areas.

So moving on to the next slide, where we take a closer look at Siemens Gamesa. Here, Siemens Gamesa finished fiscal year '25 in line with expectations despite the strongest headwinds from tariffs. Q4 orders came in at EUR 1.1 billion. This is a similar level as last year's Q4 number if adjusted for roughly EUR 3 billion large offshore order in the North Sea in the prior year quarter. Orders overall for fiscal year '25 are EUR 9.3 billion. The book-to-bill ratio for '25 came in at 0.9 and the order backlog is EUR 36 billion. Q4 revenue of EUR 2.7 billion, representing a decline of roughly 9% on a comparable level to prior year's quarter. In Q4, a significant increase in the offshore business could not offset the expected decline in the onshore business. However, overall revenue for fiscal year '25 was 10.4 billion, well above the fiscal year '25 guidance range of -- with 4.7%.

Q4 profit before special items came in at negative EUR 303 million, significantly better than prior year's quarter level, but remained negative, ending fiscal year '25 at around negative EUR 1.3 billion, which is exactly in line with our guidance. This quarter, we did have more underlying operational improvement, which was held back by certain negative effects, for example, tariffs imposed by the U.S., which we already indicated in our Q3 closing. In the Q4, the direct negative impact for tariffs forcing in Gamesa was a low to mid-double-digit euro million amount and again, mainly driven by onetime effects related to long-term service agreements in the U.S.

So now let me move on to our outlook for fiscal year '28 and raised fiscal year '28 targets. First, our financial outlook for fiscal year '26. For SE overall, we expect 11% to 13% comparable revenue growth and a profit margin before special items of 9% to 11%, this is at the midpoint, a step-up or increase of 400 basis points compared to fiscal year '25. We also expect a net income of $3 billion to $4 billion and a free cash flow pretax of $4 billion to $5 billion. Looking at the business areas when it comes to revenue growth, all business areas will grow in fiscal year '26 with Grid Technologies leading at 19% to 21%, then followed by Gas Services with a growth of 16% to 18%, both of them in the high teens.

All business areas are demonstrating continuous year-over-year improvement and delivering double-digit profit margins or high. The most significant step change will be the anticipated breakeven of Siemens Gamesa. In addition, all other business areas are targeting a margin uplift of approximately 200 basis points compared to the fiscal year '25 target ranges. So now just quickly, the updated financial targets for fiscal year '28. As indicated in Q2 of last fiscal year, when we upgraded the guidance for fiscal year '25, we did use the time to update the midterm targets accordingly. For Siemens Energy Group, we are aiming to achieve a compound annual growth on a comparable basis in the low teens percentage range through fiscal year 2028.

In addition, we target a profit margin before special items in the range of 14% to 16% by fiscal year '28. This represents a step-up of approximately 400 basis points compared to previous targets. The business area targets for revenue growth and profitability have been outlined accordingly. So in summary, all business areas foresee continued revenue growth. For profitability, the most significant step change by '28 will include an uplift of approximately 600 basis points for Gas Services and 500 basis points for Grid Technologies compared to prior targets. And with this, thank you very much for your attention. And I now hand back to Christian for some closing messages. Thank you very much.

Thank you very much, Maria. Thank you. And I will keep it very, very short because, obviously, I look forward to see you next week on the Capital Markets Day when we have more time to discuss, and we will provide you with more details on our different businesses and the way forward of the company. Summarizing 2025, it was a successful combination of an attractive market environment, products from our side, which are really needed by the market and resilient business models, which now provide a very solid foundation for the future.

We at Siemens Energy are excited to improve our company further and have kicked off with the new fiscal year, our program, Elevate Performance, which we will talk more about during our Capital Market Day. Our increased midterm guidance for 2028 underlines the performance commitment of the whole organization, driving disciplined execution, innovation and a relentless focus on customer and shareholder value. And for now, let me hand it over to Tobias again for the question-answer session. Thank you.

Thank you so much, Christian. Thank you so much, Maria. So now we will start our Q&A session. [Operator Instructions] I already see that we have quite a lot of people in the line. So I would always call up the next 3 names so that you already prep for your question. And the first question will go to Sebastian Growe afterwards, it's Ajay Patel and then Max Yates. So Sebastian, please go ahead.

First question would be around free cash flow and the pretax target here is EUR 4 billion to EUR 5 billion, which is implying apparently around 100% conversion from the adjusted EBITDA. So could you please help us with the key parameters going into this, such as CapEx, especially in the wake of that you spent EUR 4.3 billion less than earlier guided last year, also the budgeted cash out at Siemens Gamesa. And could you also comment on what the cash impact from slot reservations has been in '25 and how you view the conversion of the now 28 gigawatts in reservation agreements in the year '26.

Hello, Sebastian and thank you very much for your questions regarding cash flow. And of course, looking at the guidance to EUR 4 billion to EUR 5 billion. So as you rightly mentioned, we do expect a CCR of 1 in fiscal year '26. And of course, we do continue to see a positive impact from payments with respect to our order growth for the year and our continued backlog growth. Again, looking at CapEx, we'll provide more details on that next week at the Capital Market Day, but consider that the CapEx continues to exceed depreciation. And of course, we also have some shifts back and forth between the 2 fiscal years.

And as mentioned earlier, with respect to Siemens Gamesa cash outs, there was around EUR 450 million of cash outs relating to the provisions booked before for the quality topics, and we expect a similar amount for next year. So those are the other aspects that went into the EUR 4 billion to EUR 5 billion cash flow guidance.

So the next person would be Ajay Patel. Could you please limit your questions to one because we have so many people on the line.

Congratulations. My focus is just on your guidance. I'm looking at the '28 target. And I just want to compare it with '24 to understand the margin progression and the 2 main drivers. I was thinking, is there any way you could roughly give us the improvement in margin from '24 to '28? How much is driven by productivity? How much is driven by pricing for service and technologies, please?

Maybe I take this, and I would do this, with, once again, clear invite to next week. I mean we break down for every business more next week, and we want to really to understand the details behind it. So until then, I would keep it relatively generic. I would say the majority is productivity, the minority is pricing on this uplift on the margin. And this obviously helps us a lot that we have a very good planning base, volumes are high. So it allows us a good leverage in productivity that also going forward. Obviously, yes, I mean, backlog margin has continuously improved, and this is what Maria is going to walk through next week. But I would suggest let's take it really up next week when we in detail explain it step after step.

And that was for both divisions, right? Gas Service and Grid Technologies, that comment?

Was is what?

Was for both divisions, right?

Yes, correct. Yes.

It covers. Actually, Ajay, you'll see that -- those details for all of the business areas next week, which show the backlog improvements.

I will be there.

The next question goes to Max Yates, please.

I wanted to ask about the Gas Services margin guide for 2028, 18% to 20%. I think that's probably the one that has surprised maybe me and the market the most this morning. So I guess I just wanted to understand what is it that has given you the confidence to really put that up sort of as aggressively as you have? Is this mostly around the gross margin expansion on new equipment? Are you also now sort of becoming more optimistic on some of the pricing in services? And maybe just sort of finally within that, I know you won't give us the kind of target by equipment and aftermarket, but is it right to think sort of qualitatively that the margins of those 2 businesses are broadly converging within that target? So that's my question.

Thanks very much, Max. And also there, I mean, you will see a great presentation on Gas Services next week with a lot of the details. But let me put a couple of comments in there. First of all, what we absolutely do see, and this is different to 2 years ago, we see the gas order intake, gas business level substantially higher than before. And this gives us a long-term planning base, and that has been a substantial uplift, which also helps us to drive the margin because that is also about absorption, the factory, more productivity measures, better supply chain management. So there's a lot of elements into that.

On your comment with regard to service and new unit, be a bit careful because actually, the proportion of the new unit business is going to be, let's say, growing faster and bigger than the service business. Some of the service business, which is going to be related to the new units business is only going to kick up in '28 and thereafter. So that is something what you have to see. There is still a decent difference in the margins on the different businesses. But what we are really benefiting from now also going forward is keep in mind, when we started a couple of years ago, we were just introducing the large units, HL.

So we have a lot of learnings also through that. And that is where we get better and better really every year. We see that. We know what we need to do. And this is things which are now obviously behind us. But Karim will be there next week also and walk you in detail through the different matters, but that has been mainly it. And yes, the pricing in gas is still very favorable, but I would not underestimate really the productivity elements, which we see really in the business area.

So the next 3 questions go to Gael de-Bray, Vivek Midha and Alex Jones.

So if I have to stick to one question. Let me ask about the 2026 outlook. When I look at the margin guidance for the divisions and put them together, the weighted average implies a margin that is clearly higher than the 9% to 11% range you're guiding for at the group level. So is this because the breakeven for Gamesa is not a real breakeven, but rather start with a minus or is there anything else to consider?

I'll take that. Hello, Gael and thank you for the question. And let me just be clear, it does not indicate -- and you're right in your calculations, but that does not indicate any lack of confidence in the BA ranges, not at all. It is correct that if you do the math, of course, there's some, let's say, conservatism in relation to the BA ranges. We want to deliver what we promise, and we try to ensure that we have certain estimates for that because no doubt, the environment in which we operate continues to be dynamic. And headwinds are present in various areas.

So for example, last year, of course, in fiscal year '25, we experienced the tariffs. Of course, that's very much under control, we have that embedded in our guidance for next year. But of course, we always are ensuring that there is some -- if headwinds are present that we are able to handle that. And I know it maybe sounds silly, but there's also an element of rounding, of course, within all of it, trying to be as precise as possible as we can be with the BA ranges. But still, I do want to ensure you that there is no lack of confidence on the BA ranges in this regard, not at all Gael.

Thanks so much, Maria.

For Gamesa, what is the sequential path to breakeven that we have to consider for 2026?

You want to take that -- the sequential path for -- well, I'm happy to take it, and please jump in, Christian, if you'd like. I mean, look, you see in fiscal year '25, we've done a number of things right in the Siemens Gamesa business. They've been able to ensure that they're starting to look at how does the productivity look in all of their facilities that they're ramping up. We have an example here in Germany, where one of the facilities, the productivity has increased year-over-year by 30%. And as a result, you see that also in their ability to exceed their revenue forecast for this year.

They continue to very clearly look at optimizing footprint, ensuring that in terms of cost efficiency, supply chain, et cetera, all of those levers they're bringing into this fiscal year. Please don't expect a linear progression to breakeven. We do expect that the first half or the first quarter for sure, continues to be negative. Q2 and Q3 really then brings us to a positive Q4 for Siemens Gamesa in fiscal year '26.

So the next question goes to Vivek Midha from Citi.

I just have a follow-up around the reservation activity. It looks like you had a really good quarter, 11 gigawatts of new reservations in the quarter. You called out Saudi Arabia and the U.S., but it will be great if you might be able to expand on the makeup of the incremental new regions, on frame types and so on.

I would once again hit a lot next week where we try to give you the breakdowns. But let me say a couple of comments to what you said. Obviously, yes, U.S. has been generally a strong market for us in '25. What I would like to highlight is really our success across all different frames at Siemens Energy. The good thing is, obviously, we have small gas turbines, midsized gas turbines and large gas turbines. And what you have seen that all of the frames are in good demand and really also have helped us sometimes to accommodate timing needs of customers. In terms of markets, also, as I said in the last quarters, we try to keep the balance.

Yes, obviously, U.S. with 31% market share in the market -- in the order intake was a good one. But Middle East, it's not only Saudi, you see UAE obviously also now getting very active. You see orders we get in other parts of either North Africa or places like Iraq, where we were successful. So this is really across the board, but I would really ask for your patience, join us next week, much better. Karim is the right person to dive deep into that, and you will see a lot of great information.

Next question goes to Alex Jones from Bank of America.

Christian, I think earlier today, you made a comment that there are fewer synergies between onshore and offshore within Gamesa than perhaps is expected from the outside. Could you expand a little bit on that -- those comments and whether that signals an openness to exit onshore once you reduce cost and fix the current issues? And if that's not something you've already decided, what are the key criteria you're looking at for making that decision over the coming years?

No, thanks for the question. And I -- let's say, don't overrate it. But what I want to flag up is that from my perspective, each of the business has to prove their existence. This might be in a different time frame because they're developing time-wise differently. But I look similar to other parts of the business, I look on it really business unit by business unit. So 1 level deeper or 2 level deeper is to say, and this has to be a good one. And yes, there are some synergies on the administration costs. There are less synergies on the market side because offshore, by and large, is 2 handful of countries. Onshore is a little bit more diverse in the countries.

And obviously, on the factories, most of our factories are either producing offshore or either producing onshore, and we have not seen that as a main lever. In both areas, obviously, we tap into wind, turbine technology knowledge. So that is something. But what I wouldn't do is to say, let's say, you definitely can only run it together, but our target is to make both businesses successful look on it like this in that regard, that was the logic behind the statement because we don't have the one factory where we do all products from and just that this is understood.

Thanks so much. So the next 3 questions go to Akash Gupta from JPMorgan then Uglow from Oxcap and Sean McLoughlin from HSBC.

I have one on Siemens Gamesa. And maybe if you can provide a bit more color on this almost EUR 1.36 billion loss in last fiscal year between onshore, offshore and service. And when we look at the breakeven, can you also help us what are you assuming for each of the 3 businesses?

You want to take this...

You can start...

I start maybe one thing to always look at, I think I said it in one of the calls before. Keep in mind, if you talk about the EUR 1.3 billion, there are some one-offs in '25, which I don't expect to reoccur in '26. So the jump-off point is slightly different. In terms of the breakdown of the businesses, maybe, Maria, you take this.

And this is what we've always said, Akash, is on our way to the breakeven that we have to have, of course, the onshore has changed in terms of the dynamic, of course, because with the sales stop, et cetera. The offshore revenues, as I mentioned earlier, are now starting to come into the revenue stream. We continue to have a strong service business. The one-offs that Christian is mentioning is actually related to the service business in fiscal year '25, and that's really the components, if you'd like, that will make sure on top of other levers, of course, to get us to our breakeven for fiscal year '26.

Is it possible to quantify roughly these one-offs so we know idea what underlying profit?

No. Those one-offs, of course, are generally project-related in nature. But in terms of the split, I can say that 2/3 is onshore and service and 1/3 is offshore.

So the next question goes to Ben Uglow from Oxcap.

I was interested in the kind of market share commentary. And in particular, if we look at the 194 units, there is this mix shift going on in your business from the large gas turbines to the industrial, the SGT-750 and 800s, et cetera. And when we look across the whole market, if I think about Caterpillar, et cetera, we can see that. I guess my question is, the assumption is that this is all to do with timing and availability of the engines. My question is, is this shift just a temporary thing? Or do you actually think it could be a bit more structural? And the reason why I ask this is there are some aspects of the, let's call it, smaller machines that are more relevant or more appropriate to data centers. So I just want to know your general sense on that.

Yes. No, happy to take this, Ben. First of all, the big increase also on the MGT side, so the midsized gas turbine side is not only data centers. There is a good amount in data centers also because of shorter delivery times and sometimes of the flexibility to have multiple trains and providing actually also with the build-out of the data centers a better ramp-up curve. But there has been, for example, a very decent amount going to floating power, so gas turbines on a ship, right? There has been quite a decent amount going also on the industrial side afterwards on the compression side.

So it's -- I don't want to create the picture that is just because of AI. That's not the case for the midsized gas turbine. This is also -- and we show it also next week, why we decided to increase the capacity on our Swedish facility, and Karim will share this next week in more detail. The good thing is, honestly, today, I cannot tell you, if you would say, long-term picture after 2030 or whatever, I don't know. But what we are doing at the moment is we are doing investments into capacity expansion with a very short payback time. This is what drives us. And so where I'm very sure is that the investments we are doing at the moment in the sites to expand capacity will pay off. That's I'm confident about.

But structurally after 2030, to be seen, there is a lot of logic to have a multi-train solution with a robust turbine, what the midsized gas turbine is, but they will not be able to replace whatever an HL unit afterwards. I think this is what we're not going to see.