Good morning everyone, welcome to Wärtsilä half-year financial report 2018 presentation. I have here this morning with me the whole board of management and Natalia Valtasaari, the Head of Investor and Media Relations. Everyone is here ready to answer all the questions you might have. The good momentum in order intake continued during the second quarter. I'm extremely happy to see the development of the order intake in services. We have a strong support from our customers for the long-term agreements. Marine Solutions order intake was a highlight of this quarter. If you look at some of the most important figures, order intakes in a group wise was 14% higher. Net sales stable, a bit lower on the second quarter, but if you take the first 6 months, a bit higher. I will come back to the development of the net sales in different divisions.
Book-to-bill very high. Result at stable compared to last year. Earnings per share a bit higher. Cash flow now developing to the right direction, and it's great to see the order book at the end of the period is almost EUR 6 billion. Over EUR 800 million more than previously. If you look at the different divisions, really Services long-term agreement development is driving the growth in services. In addition to that one, there is a lot of retrofitting scrubbers in our business. Marine Solutions, the same. The scrubber business is developing well. Energy Solutions stable. Last year we had a good number, and now it's stable. When we go through Energy Solutions later on, you can see the quotation activity is very positive. Net sales stable. Services, here it's good to remember that the negative FX impact.
If you correct that one in the second quarter, we had a 3% increase in net sales, and during the first 6 months it's 5% increase, just according to our plans. Marine Solutions, second quarter a bit up. What is actually affecting the net sales of the group in the second quarter and the first 6 months is the timing of our Energy Solutions projects. Some of the projects have moved from the second quarter, hopefully to the third quarter. That development will be later on corrected. Services now 48% of the net sales, and Energy a bit higher than Marine. Book-to-bill, very nice development. If you look at the order book distribution, of course, the last 6 months of this year, delivery schedules are going to be higher than in the first 6 months.
Of course, typically for Wärtsilä again, the fourth quarter is going to be very important for us. Operating results stable. When moving to the different divisions, Services sales, as I said, FX impact with that one corrected there is a growth. When you look at the distribution in different businesses or product areas first, spare parts is still a bit less than 50%. We are driving, of course, that heavily. Agreements 22% now. That's very good because the agreements support the long-term growth also in our services business. Power plants a bit lower than previously. There might be some slower developments in our nuclear power plant business services. Not nuclear power plants, but supporting the nuclear power plants with our engines. You see, of course, cruise is growing at the moment, cruise and ferry a bit.
Installed base now a bit positive development on energy side. One of the highlights in the second quarter was actually a good deal with Transocean, one of the biggest offshore company, where We will optimize the maintenance of all Wärtsilä thrusters installed on Transocean's fleet. That's a very performance-based agreement, and really, again, is a good combination of the new digital development within the services organization. Energy quotation activity, again, up. A lot of gas, LNG-fueled power plants. The order intake is stable. There is a very clear trend when you look at the gas-driven power plants going forward. When you look at the different areas, Asia is very active, and one of the highlight here on second quarter was a power plant in Myanmar. It's a gas-fueled 145-megawatt power plant. Now we have sold power plants to 178 countries.
One country added to the previous number. This is a fast-track project, so should be operational already during the first quarter next year. This is a bit older number, we have reached the 21% market share. That's, of course, because the development of renewable story globally. Marine Solutions, June '22 vessels. If you look at the first six months, there is a growth in vessel contracting. There is a positive momentum going on now in the marine market in quite many segments. For us, of course, still good development on cruise and ferries and gas carriers. When you look at the different development on the segments, traditional merchant is now up. That's probably and mainly because of the scrubber orders we have seen there. Cruise and ferry is still playing also quite important role and the gas carriers.
One of the highlight is the scrubber business today, a EUR 170 million order for hybrid gas cleaning equipment for one of our customers. This is a retrofit, so this is actually a services transaction. It actually highlights that a lot of these scrubbers are going to the market at the moment. A couple of slides regarding the financial cash flow developing on the second quarter, now better and the first six months stable development. Here I have to mention that one of the reason for the development of the cash flow is the working capital development. We are building inventories at the moment for a heavy deliveries during the last six months of this year. Gearing a bit up because of the latest transaction acquisition we bought Transas, 0.29 now. The prospects, we have now changed and raised the prospect in marine solutions.
It used to be solid, now it looks good because we see positive momentum in the marine market. With this, I end this presentation, now we are, of course, ready for the questions and answers. As we started already last time that please ask one question only, and then one follow-up question. If you need something more, then please come back to the line later on. So we can have the possibility for everybody to ask questions. Anybody here in the audience here in Helsinki? No. Why don't we go directly to the lines, please.
Thank you. As a reminder, if you wish to ask a question, you will need to press star and one on your telephone keypad. We have questions that come from the line of Sven Weier. Please ask your question.
Yeah. Thank you for taking the questions. The first question would be on the spare parts business, which overall didn't show any major improvement in the quarter. I was just wondering if you could comment a little bit about the momentum in the quarter, if you saw any improvement towards the end of the quarter or anything you could tell us about that. That would be question number one. Thank you.
Thank you, Sven. Pierpaolo, you see it daily how that develops. Let us know more about the momentum.
What we can say is that first of all, excluding the negative impact of the EUR 68 million, we have seen, as Jaakko has mentioned, we have a growth of 5% that we have forecasted or we have planned for this year. The orders that we have received in the previous year were related mainly to long-term agreement. In order to recognize the long-term agreement, according to the IFRS 15, the standard revenue recognition is based on cost accumulation, that, let's say, may delay some revenue recognition compared to previous approach. On the merchant, we have still slower activities compared to what we expected. What is good is that during the second quarter, especially on merchant and specifically on the two-stroke, the order intake and the sales on parts were higher compared to quarter one. That is a positive indication, especially in June.
This is the reason why we expect to recover, this segment would recover during the second half of the year.
Thank you, Pierpaolo. The momentum is getting now better. Also on partly you see it in offshore.
In offshore, the bleeding has stopped.
The bleeding has stopped.
Yes.
Thank you for that. That's actually leading to my follow-up question, because if I look at the order intake in marine, I can see it's a bit of a pickup in the offshore order intake, on the other hand, a bit of a slowdown in cruise. I'm conscious of the lumpiness here and conscious of the fact what you said that I guess there are still 100 cruise ships where they haven't placed the engine order. Should we see a stronger second half than in the cruise orders again? That would be the follow-up. Thanks.
Thanks, Sven. Roger, I let you to answer there. You know what's going on in cruise specifically.
Thank you. If we look at the cruise, if I start from vessel contracting, it's continuing as expected, I would say. We had 13 new vessel contracts for cruise vessels during the first half of the year. We don't see a slowdown on cruise at the moment. As we have said before, it's fairly long delivery time and all yard capacity is in full use, so you have to wait a long time for the vessels. From an activity point of view, it's more the normal quarterly differences.
Some of the cruise ships are now getting also a little bit smaller and you build expedition cruises.
Expedition cruises. That has actually been a fairly active vessel contracting, ordering for the first half of the year as well, going more to special segments and that we also expect to continue.
Good.
In a way, that backlog of this 100 cruise ships is getting bigger at the moment.
You can say so. There is no indication that we would see that that would go down at the moment.
Thank you for that. I go back in line.
Thank you, Sven.
Thank you. Next question comes from the line of Max Yates. Please ask your question.
Thank you. Just my first question is around trying to understand the sort of profitability development in the quarter. We obviously talked last year a lot about management provisions for incentive programs. That looks like it was EUR 18 million tailwind in the quarter. I am just trying to understand sort of where that went, what the major offsets were in the business, and whether it is just purely the spare parts development. Because if you look at spare parts in Q2, they were actually flat year-on-year. There is not an obvious discrepancy there. Is there anything else going on in the business which can help explain what has eroded the reversal of what looks like quite a significant tailwind from management provisions?
Thank you for the question. Yes, there are a couple of items. We are still spending money in our digital development. That is going on and we will continually
That's EUR 3 million, right?
In the first.
Increase in digital.
The first, probably, yes. That's around the right number. Because of the higher activities in the businesses, specifically also in, as you see in energy sector, we have been investing in new resources. We have new people in the organization and that's, of course, the department costs are also higher.
Okay. Maybe my follow-up question would just be around FSRUs. Obviously that was quite a healthy sort of order segment for you last year in 2017. I think that there've been fewer of those orders, just trying to understand the pipeline of orders there for FSRUs, because obviously that can have quite a significant bearing on the gas carrier segment that you report and potentially overall marine. Just if you give a bit of color around what you're seeing there, that would be helpful.
Yep. Thank you. Roger, would you-
If I start from the gas carriers, we have 42 gas carrier orders year to date now from a contracting point of view. We're already higher than last year in total. FSRUs, we have had clearly less activities the beginning of this year because there are still FSRUs in the pipeline that don't have a final contract. At least we expect that those needs to come in place before we will start to see more activities on FSRU. Good activities on gas carriers in general. FSRUs so far, beginning of this year, slower than last year.
Okay. Thank you.
Thank you.
Okay, your next question comes from the line of Johan Eliason. Please ask your question.
Yes. I was just wondering about how the scrubber orders will turn into revenue. You announced this big order in the service side. Is that all for next year? On the new build side, can you sort of quantify how much scrubbers were of the new build orders? Were they of the same magnitude as services or we're talking a smaller number there, and are they later on? Thanks.
Thank you. First of all, if a marine customer orders a scrubber for the new buildings, that of course, deliveries are later on and depending on the ship building schedule. The retrofitting is a business which is mainly going to affect our numbers next year and 2020, so the next couple of years. Not so much yet this year. I don't think the timing is too quickly coming, the year-end. The numbers, marine side, we sold 41 scrubbers and services, 68.
Okay. Thank you very much.
Thank you very much. Your next question comes from the line of Manuel Riempp. Please ask your question.
Thank you. I would like to follow up on the margin developments. As previously stated, the impact from the increased investment in the digitalization was maybe some EUR 3 million, that still leaves a pretty big gap. You explained the gap compared to last year's result with increased investment in Energy Solutions. Are we talking about more than EUR 10 million of increased investment into people and back office and different functions in the Energy Solutions, which sounds like a fairly sizable number? Or is there still something else which is kind of burdening the margin compared to the previous year, like the mix impact in services as well?
Thank you, Manu. Marco Wirén, our CFO, wanted to add some highlight to the question.
Yeah. Thank you for the question, Manu. If you just look Q2, we can see that volume actually had a negative impact on our EBIT as well, and that was quite a big number if you take that from gross margins or drop through the EBIT is actually double-digit. Then, of course, just like Jaakko mentioned, the department costs, and of course, we will have heavy deliveries on an increase in deliveries in Energy Solutions. We've seen an increase in engineering costs and that's coming in our Q2 as well. And then actually R&D, as I mentioned in Q1 already, we have a little bit tilted distribution of the full year R&D costs towards the H1. We will have a lower number in H2 compared to H1. In Q2, R&D costs were EUR 6 million higher compared to a year ago.
I hope this gives a little bit more flavor. On the other hand, I would say also that the positive thing is that gross margins were a little bit higher in Q2 this year compared to last year. We see the improvement in margins going up. Thank you.
Okay. Thank you. Then let's follow up on that. Can you help us to think around then the seasonality, as we know that you are very much Q4 heavy in terms of the profits and the first half of the year accounts, some 35% of the full year profitability. Will we then see even higher than normal skew towards the second half of the year, given that the first half of the year, you are lagging still behind what you delivered or slightly up compared to what you delivered in 2017? If you include all the long-term incentive provisions, you're actually behind. Help us understand how to think about the seasonality.
Thank you, Manu. I'm not going to start guiding quarters. As I said, the last six months are going to be important for us and definitely the fourth quarter. It's also how the development in services is going on. We strongly believe when looking at the markets there will be the mix of services is important and the growth of services during the next month. All that will definitely help the numbers for the year.
Thank you.
Thank you. Your next question comes from the line of Francis Celine. Please ask your question.
Thank you. I would like to talk about the scrubbers. Can you just state the number of retrofit scrubbers in Q1 and Q2 combined?
108.
108 totally.
40
The quarter, 68 the second quarter for retrofits.
Okay. How should we think of this? Alfa Laval has spoken about 5,000 ships to be retrofitted overall. Over what time period do you think this should happen? 10 years or less, or more?
Of course, now it's important to understand that this regulation comes into force 2020. Everybody is aiming for that one. That's the starting point. That's why next year is going to be very important. For order intake is, of course, this year and then next year to retrofit them. Of course, if you don't get the slot or you don't get the scrubber, you can switch to diesel and do it later. Scrap your ship and build a LNG-driven ship. The main momentum is this year and next year.
Okay. What do you think, what is your feel of Wärtsilä market share in this space, the scrubber business space?
The biggest players are Wärtsilä and Alfa Laval. There are a couple of smaller players also in the market. There are some companies who have even their own scrubber manufacturing. I don't really know if we know today. This has developed also very quickly during the last couple of months. I would like to say that we are the market leader at the moment. Yes, everybody is agreeing with me here in Helsinki.
Should we say 40% market share for that?
40% margin? No, not yet.
For market share. 30%? Where are we in terms of market share?
Yeah.
Let's see the whole year.
Let's get back to that one in January, then we know exactly where we are until 2018, or we were.
Okay. Thank you.
Thank you.
Your next question comes from the line of Sean Fernback. Please ask your question.
Good morning. Thank you. Just a follow-up from the previous question. If I can understand how you think about your capacity to deliver scrubbers. Are you now already sold out for next year? How are you thinking about maybe prioritizing resource internally to ultimately allow you to deliver this very high number of customers that seem to be coming your way, for very quick delivery? Thank you.
Thank you. It's a very good question, and of course, we are paying a lot of attention how to solve and service our customers. Of course, we rely a lot to our sub-suppliers, and we have been working with them heavily to be able to sell first of all, and then deliver. Our own service organization is of course there to help when we are doing the final retrofitting on board of the vessel. Every possible ways have been utilized, and we are studying new ways also to service them better. It's not yet sold out for next year. There is a possibility. Of course, the customers who come first, they will be served first. As the gentleman here also said, it's developing quite well at the moment. It's a challenge. You had a good question.
It was ramped up quite quickly. We were waiting for that one. We already knew that the customers will be there.
Thank you. A follow-up, if I may, just to understand, what % of this order intake is just for the equipment, and what % is the equipment plus the installation?
Of course, the Marine 41 is only equipment. That will be installed at the shipyard. The 68 in the second quarter or over 100 for the first six months in services, that's a.
Those are including some engineering-.
There is engineering
erection, commissioning, it's not homogeneous, let's say.
It's not possible to start breaking it up.
Okay. Thank you.
Thank you.
Thank you very much. Your next question comes from the line of Edward Maravanika. Please ask your question.
Good morning, Jaakko. Most of my scrubber-related questions have been asked, just the 170 million EUR, is all of that tied into the EUR 68? Did the 170 million EUR not cover the entire EUR 68?
194.
EUR 194.
Second quarter in services.
I missed the first part, sorry. The line went blank.
Sorry.
Was it the second quarter or the first half year you were asking about?
For Q2. If I look at the EUR 170 million order that you announced, does that relate? Is that all the 68 Q2?
No.
-record
No. That's a one deal. That's a one deal, retrofitted deal with one customer.
Okay. How many scrubbers were in that EUR 170 million order?
Do you remember how many?
Yes, I know.
You can say it.
56.
Oh.
56 is the number.
66.
56.
56.
Oh, okay. 56. If we wanted to do sort of an average cost per scrubber.
No. That's a retrofitting. That's a value of the transaction. That includes engineering, installation, and all kinds of projects.
First of all, the size of the scrubbers are different. First of all. The second, the scope-
Three different size of scrubbers and all here, four.
The type of, let's say, scope of supply is different. We cannot homogenize. We cannot take all the scrubbers and divide the money by the scrubbers. It would give a very wrong assumption.
Okay. All right. Okay, fine. As a follow-up, can you put a capacity utilization number, in terms of your scrubber work at the moment?
No, it's not possible.
No.
No.
Sub-suppliers.
All right. Okay. If the current order rate continued for the next three, four quarters, you would be able to keep your delivery time the same?
Yes.
Okay. All right. Thank you.
Thank you.
Thank you very much. Your next question comes from the line of Tomi Railo. Ask your question.
Good morning. This is Tomi from SEB. Little bit on the M&A theme. Couple of larger possible deals have been gone elsewhere. What's your current thoughts on that side?
Yeah, I don't know. Thanks, Tomi, for the question. I don't know what you mean elsewhere, but we have analyzed. Of course, we look at all the possible candidates in the market, and we have analyzed those companies also and look at the possibility, what it would mean to Wärtsilä and concluded that it's not for us.
Just a follow-up. Is it on the price or quality? Are you happy with your current portfolio-
There is-
without these targets or?
There is all kinds of reason. You have to add all them together.
Thank you.
Thank you.
All right. Thank you very much. Your next question comes from the line of Robert Davis. Please ask your question.
Hello?
Hello. Can you hear me?
Yes. Now we can hear you. Please.
Yes. Thank you. Thanks for taking my question. My question was just on the Energy Solutions business, whether you could give us a little bit more color in terms of the regional developments. What customers are saying in sort of various regions and what your expectations are for the back half of the year, if you could. Thanks.
Thank you. Javier now, please tell us more-
Thank you
about the regions and-
Excellent. Thank you for the good question. The growth that we are experiencing the last years continues, and that's very diverse globally. That is one of the key strengths of Wärtsilä. Jaakko was mentioning that this quarter we were contracting a new country, an order in Myanmar, a new country for Wärtsilä, and a new country that is opening up for more flexible solutions, thinking in a future with more renewables. I like to highlight that there is no single country in the planet that is not aware that renewables are coming. Renewables are coming. They need flexibility. That means flexible engines, energy storage, the full integration package. A very quick answer would be everywhere, and we really see growth everywhere. The last two years plus, we have seen Asia being the one growing most. That will continue.
Asia will continue growing the most due to the development of economies there, and also due to the leapfrog that countries are making, jumping from old-fashioned technologies, inflexible and stiff technologies that don't enable solar and wind to more flexibility. That's why we see Indonesia, we see Bangladesh, we see many countries now, Myanmar. We have seen, not in Asia, but in Australia, going to Down Under compared to here, Helsinki. We had our first big order ever with 211 megawatts announced in the first quarter of this year. We see that development everywhere. If I give the top three, it would be Asia, United States, and probably between Middle East and Africa, the three places. I said four, but
Senegal was one highlight also.
Yes, exactly
Africa is developing well.
Exactly. Senegal is investing in renewable future, we know that the big sunny or solar irradiation belt is impacting heavily in Africa. There is an enormous potential for solar electricity, for solar energy being extremely affordable. We as Wärtsilä, not only because we are very present in Africa through our services and long-term agreements, but because we have the technologies that enable solar to be dispatchable and to be reliable. That's why, as you said, Jaakko, Senegal was one of the highlights of this quarter in which they go full-fledged for renewables. They adopt the Wärtsilä Smart Energy vision, and they come with us with engines, storage, software, and all our EPC and services possibilities. As said, Asia, U.S., and the third one, Middle East and Africa.
Okay, great. My follow-up was just, I wonder if you can make a comment about how you see the potential risks from trade tariffs, as obviously various companies are starting to sort of mention. I just wondered, what are your thoughts in terms of implications for Alfa Laval over the next year or so?
First of all, globally, if you look at Wärtsilä, the uncertainty in the market is, of course, a concern. It hasn't developed, not in energy market yet. Customers are investing.
Customers are buying vessels, as you see from the vessel contracting. Some of our customers in marine markets specifically are probably only exercising the most necessary service jobs. There you probably see a bit hesitation. Of course, if you would see a global trade war, that would definitely affect to everybody's business.
Okay. That's great. Thanks very much.
Thank you.
Thank you very much. Your next question comes from the line of Peter Whaley. Please ask the question.
Oh, good morning. Sorry to come back to the scrubber business, can you talk about how the market for retrofit is going to look in 2020, 2021, and afterwards? Do you expect a rush next year, and then the market essentially dies because people will either have retrofitted or they won't? Do you think it all depends on where the relative price of high sulfur and low
Hello? We lost Now he has to go back to the line or how does it work?
Yes, good start up. Your next question comes from the line of Glenn Riedy. Please ask the question.
Good morning. For the energy division, can you give us an idea of what's happening to pricing? What is the split between sort of power plants that are going to facilities where it's connected to renewables, and how that's developed?
Okay. Glenn, thank you. I can answer the first question. The pricing is going up, and that has been a very positive trend in our energy business. Do you want to, Javier, continue with-
Definitely
connecting to the renewables?
Definitely, because both questions are very connected. As Jaakko mentioned, we see every quarter and every month, the profitability or the pricing environment is getting better. This is coming because the complexity of the grids and the complexity of the solutions is getting bigger. This is something that in the energy market is already known during the last more than 3 years, that the complexity is getting higher and higher when the solar and wind and more intermittent sources are coming into the grid. That is answering part of your question. The more renewables you have into the grid or into the whole ecosystem of assets, then the more complexity you need to solve. That is really the strength of Wärtsilä, and that is the know-how we have with our smart solutions. We can put them all together with a software platform.
We can construct them, we can service them. When we talk about grids where there is no renewable yet, and I link to the previous question we got from another colleague that renewables are coming, even if they are not here today. Countries need to invest today in assets that will last 30, 40 years. They need to have plans for renewables to come. For that reason, the solutions need to be ready to adopt and to integrate intermittent sources of power. Even those places in which there are no renewables, solutions need to be ready for them to be welcome, because this is a transition that is accelerating everywhere.
Okay, thank you. A question on the service business. You have seen an improvement in the proportion of your install base covered by long-term contracts. I know it will be lumpy, but are there larger potential contracts in the pipeline? Because clearly, as the percentage of your install base that grows, getting a small contract isn't going to make much of a difference. Are there still large customers that you're engaged with that could enter into long-term contracts?
Thank you, Glenn. Excellent questions. Answer is yes. I will let Pierpaolo to open it up a bit.
The answer is yes, definitely. Let's say, we hope to announce very soon something interesting. Second, the second comment is related to number of installation that is leading to what you exactly were mentioning. The number of installations have increased visibly also from the previous quarter, from 829 to 864, not including the 200 installation locomotives, on which we have, let's say, a good maintenance agreement that we have published during this quarter. Having the same, comparing apple with apples is 829 against 864. Number of installation is higher. Power density is lower, it is also in accordance with the trend of our industry. The installation are becoming, let's say, smaller. You are right.
Okay. Thank you very much.
Thank you very much. Your next question comes from the line of Erkki Vesola. Please ask the question.
Hi, it's Erkki from Inderes. You talking about Energy Solutions projects having been moved from Q2 to Q3, maybe Q4. Could you give us any kind of ballpark figure how big the impact was? Was there anything exceptional in this performance?
Erkki, thank you for the question. I'm not going to start talking about the exact numbers there. It's a timing issue all the time in our energy business, how the delivery finally will be recorded in our figures. No exception. There is no drama. How the month ends, unfortunately, if it's not yet there, it moves to the next month and so on.
We talk about this as usual. Very much.
It's as usual. This is business as usual. This is lumpy business.
Yes, I know. Okay, thanks.
Thank you.
Thank you very much. Your next question comes from the line of Max Yates. Please ask the question.
Hi. Thank you. Just a quick follow-up. In the power business, if we go back sort of three or four years ago, there was a lot of commentary around emerging market currencies, the uncertainty that that causes a lot of your emerging market customers. It was at a time where quotations were still very good, but you were still unable to actually book the orders. I just wanted to check whether some of the emerging market currency volatility that we're seeing at the moment is having any impact on customer conversations and sentiment. I know the quotations still look good in the presentation, but that was also the case three, four years ago when we also heard about this. Any color you can give around any effect that that's having on customers or perhaps not would be helpful. Thank you.
Thank you, Max. No, we don't see it yet. Of course, depending on the development, let's come back to that one. Today, no changes.
We are present in so many countries, if you have one or two cases of countries that are overheated, you don't see any effect on the business.
In developing world, quite often the more question is on financing, how to get the financing in place. Some of the processes are so long anyway. You know that we are negotiating one process sometimes for many years.
Of course, depending on the global situation, it will be closed or not.
Okay. Maybe just one follow-up on El Salvador. Are you able to give us sort of any updates as time goes on when that may fall? Are we thinking sort of back end of this year, or does it look more like 2019 now?
Javier?
I mean, definitely. Wonderful question. All the signals show that should be a contract that should happen still end of this year. As said, we have a big pipeline of projects. We have a very strong business going on. We are pretty confident with all the targets for this year. If it happens, will be great. Still, the figures of this year are going to be as good as expected.
El Salvador is not in our minds.
Yes.
It will happen and it will be a great addition too.
Exactly. If it happens this year, it's an upside in that sense.
Okay. Thank you very much.
Thank you.
Thank you very much. The next question comes from the line of Sven Weier. Please ask your question.
Just two quick follow-ups, if I may. The first one is following up with Javier, because you sound as excited as ever, I have to say. Obviously, the obvious question is, why do you leave now?
Thank you, Sven, for the question. Javier, that's your answer.
Definitely, I'm super excited, Sven. I'm super excited about the Wärtsilä business, Wärtsilä growth, our vision, how things are moving, the team we have, the business that is happening. Growth is going to continue. Indeed, as you have seen in the last 3 years, we have entered into solar business. We have entered into energy storage business. We have acquired the biggest software integration platform to integrate any assets. We have created our Smart Energy division going to 100% renewables. One of the key in all this integration is that we are pretty technology agnostic in all these new technologies like solar, wind or storage. Indeed, as you have seen, I'm moving to be the CEO of a new energy storage company that I'm sure that will be still very close to Wärtsilä, and we will still work.
The good thing is that I'm not leaving. I'm still several months here. The transition is going to be very smooth. Indeed, all the Wärtsilä vision, all the Wärtsilä DNAs is coming to that new company. Beware of that.
Okay. Thank you for that. The other follow-up was just a quick housekeeping again, sorry, on the scrubbers, because I appreciate the number of scrubbers, but I was more curious about the number of vessels, right? Because I guess the Alfa figure 5,000 is a vessel figure, not a scrubber figure. The 108 retrofits, how many vessels are those?
Wow.
Approximately.
No, we don't have the answer at the moment. Let's get back to that one, Sven. We need to dig deeper in.
Fair to say that at least the bigger vessels have several scrubbers, right?
Yeah, depending on the vessel, yes. Yeah.
Okay.
If it needs more power, then of course you have to have more than one.
Okay. Thank you.
Thank you.
Thank you very much. Your next question comes from the line of Johan Eliason. Please ask your question.
Yeah, hi. Just a follow-up here on the services. You said 5% organic growth now in the first half, you targeted 5% for the full year. With all these scrubbers coming, just this EUR 170 million order is sort of 7% of last year's turnover in the service business. Do you think you will exceed this 5% organic growth target next year when all these installations are supposed to be done? What will that, in that case, do to the average margin of the service business? Thanks.
Questions I'm not going to answer exactly. Let's get back to next year development in January, how the year looks like. As said earlier, most of the retrofitting new orders, service orders, will actually affect next year's numbers, not yet this year's numbers. The margin levels, I think it's a good business today. Whatever that means.
Yeah. Okay. Thank you.
Thank you.
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All right. No more questions. Thank you all. Very good questions. Have a nice summer. Let's see us then again in October. Thank you. Bye-bye.