Thank you, Maija, and hello to everybody. A few highlights to cover. First of all, order intake. I'm pretty happy with order intake and how it develops, both on Energy and Marine side. We have good traction. Data center orders announced earlier. I think you have seen also in the press releases, so not more to comment there. Pipeline is strong. Pipeline also continues to be on a good level, both actually for Energy and Marine. Looking good, at least the last couple of. It's actually one week to go in this quarter. I think also good to highlight and remember once again or remind once again, let's say, the divestment that we have done and completed, basically, first of all, what we have done last year. You can see it on this slide.
ANCS, Automation, Navigation and Control Systems, last year, July, a Marine Electrical Systems last year in October. It had a quite significant correction in the order book, EUR 900 million about. Annual revenue in 2025 was about EUR 225 million. Quite good to keep in mind also for your own analytics. Also now in 2026, we have two more. Actually, the last ones out of portfolio business Gas Solutions that was completed on 1st of June, as well as Water & Waste, also completed on 1st of June. Annual revenue for both of them, let's say, 2025 Gas Solutions EUR 390 million, and Water & Waste about EUR 50 million. Order book expected to be adjusted with about EUR 650 million now in Q2 reporting.
As said, with these final two Gas Solutions and Water & Waste going out, basically portfolio business have no remaining activities anymore after Q2. If we move to the next slide, which is actually the other highlight I want to make is, of course, the announcement that we did, not so long ago, 15th of June, to start a joint venture with RCT Solutions from Germany for our Energy Storage business. It will be a 50/50 joint ventures. Over time, we anticipate new investors to come in, and that would reduce ownership of the initial shareholders, both RCT as well as Wärtsilä. Peter Fath, which is the CEO of RCT Solutions, will become the CEO of the joint venture after closing. He's really committed to this. Financial impact. At closing, no material profit and loss impact at closing.
We transfer basically assets to the joint venture, which is less net assets actually, which is less than 5% of Wärtsilä total net assets. It's not significant in that scale. We expect the joint venture after all kind of transformation-related activities to be executed. We expect the joint venture to generate positive results towards the end of 2027. While in 2026, we anticipate the loss for Wärtsilä on Wärtsilä result and basically total to be in the range of EUR 40 million-EUR 50 million coming from this area. With respect to reporting and timing, we will not have any separate segment reporting anymore in Q2 financials. We will also stop the financial targets for this business and also not provide any demand guidance, as I would believe is also quite obvious that that will disappear.
We expect the closing to happen in Q3, depending on regulatory and other customary conditions and approvals, as well as arranging financing package. Until that, it will be reported as discontinued operations and as held for sale. From closing onwards, the joint venture will, as any other joint venture that we have, be reported under other business activities and as share of result in associated companies. Not all our joint ventures are other business activities. This one will be. All joint ventures are reported as share of result in associated companies. One single line consolidation. Which is part of operating result this year still. Next year, due to IFRS 18, joint venture results will move out of operating result and will move to result from investing activities. Just on the size, Energy Storage business has been the smaller segment in Wärtsilä for about 480 employees globally.
Net sales of about EUR 700 million in 2025, and an operating result of EUR 23 million in 2025, 2.8% of Wärtsilä total. Very small positive contributor. These were my short introduction words, and I would open up for questions.
Thank you very much, Arjen. Yeah, let's start with the Q&A. The first questions comes from John Kim. Please go ahead.
Hi. Good afternoon. I am wondering if we could start off with Marine. Can you give us a bit of compare and contrast on how disruptions both on equipment yards and perhaps service looks like in Q2 versus Q1? What I am trying to unpack is time and place impact from Middle East conflict removes versus perhaps ongoing constraints in various parts of the supply chain, if there are any. Thanks.
We have not had any, let's say, immediate impact or direct impact. We have been already for some time, let's say, stocking a little bit extra also because we saw that the factory utilization and capacity clearly goes up. I don't know of any immediate urgent case that some parts are stuck in the Strait of Hormuz, not at all. It's in a way also a bit of a dead-end street. It's more for, let's say, transport of oil and stuff than from our supply chain. Our supply chain is typically not in that region. Most of our supply chain, critical at least, comes from Europe, and some parts from Asia. They don't typically go through the Strait of Hormuz. From a service perspective, of course, there are ships in the Strait of Hormuz sailing that we can service.
Good to remind that it's mainly merchant fleet, where the main engine is a two-stroke engine, which is not so much, let's say, impacting us. Because, okay, also on the two-stroke engine, let's say the main market share is Everllence, basically two-stroke. We are servicing more the, let's say, call it the WinGD brand. Also there, let's say, I would not say the Strait of Hormuz has a significant impact either. Altogether, no major impact, I would say not a material change compared to Q1. Having said that, I think with unrest in the world, of course, and the longer it takes, people or businesses and ship owners and operators are also getting a little bit, let's say, nervous. How long will it take? What does it mean to fuel prices, et cetera? Yeah, there are probably new considerations coming.
Should we, let's say, go for a more fuel-efficient solution in the future? Do a retrofit or not? Stuff like that. Let's say no concrete big- scale impact. I would say it's more discussions than anything else at this point of time. Of course, this can change, but at this point of time, I don't see Q2 being very different than Q1.
Okay. Thank you.
Thank you, John. Next question comes from Sven Weier. Please go ahead.
Yes, hi. Good afternoon. Thanks for doing the call. My first question is on orders. I was just wondering, you didn't have any announced orders since the 800-MW data center order. Should we assume that you will stop reporting every data center order now that it has become a bit more normal part of the business? Or how should we think about unannounced orders in general? Should they be at a normal level, average level in Q2?
No. Our policy is to basically report as many orders as we possibly can. Of course, you need the permission of the customer to announce an order. Sometimes, and depends a bit on the scale, let's say for big orders, it's more relevant than for, let's say, smaller orders. We try then to report even anonymously. As you have also seen earlier from us that, let's say, we don't mention the customer name, sometimes even not the location, but still saying that, okay, there is a big order coming. Our policy, it's not really a policy. We try to report as much as possible the orders that we get. Preferably with a name, but if not allowed, then at least for the bigger ones, we want to go anonymous.
Is there any reason to assume that unannounced orders should be at a completely different level as in the quarters before?
Yeah. Okay, now I cannot remember by heart, let's say, how much the unannounced part was first for all the quarters before. I would say it's a normal business. Business as usual.
Sorry, can I have a follow-up, or are we limited to one, or Maija, just guide me?
Yes, please. Let's have the other question a bit later. Thank you.
Yeah. I'll follow up later. Thanks.
Next question comes from Sebastian Kuenne. Please go ahead.
Yeah. Hi. Thanks for doing this call. I have a question on deals related to AI or Energy security in Europe. Europe wants to become independent, ideally from U.S. AI systems, and one would expect also primary power issues here. We haven't seen much from Wärtsilä in the sense that you get allocated deals for data center power here in Europe. Could you give us maybe a little update here and also on the countrywide energy tenders that you are involved in? I think one was in Brazil a couple of weeks ago. Maybe another update there where there are big tenders that we should be aware of. Thank you.
Good question. Let's say data centers in Europe, I think Europe is late to the game. I think it will be challenge for them. At least I'm not aware of, let's say, huge data center orders in Europe of the scale of, let's say, size and scale, I would say, in number of orders, as we see in the U.S. For sure there is pipeline also. We have pipeline in Europe. Nothing big has been so far, let's say, materializing. I would expect still something to happen this year. Timing with these orders is always very difficult. What is a fact, and I think that that is more and more also aware in the world and among our customers is you need to be fast in decision-making, because if you're not, you're without power.
Because the capacity, not only our capacity, but also the capacity of our competitors, is being sold very fast. Decision-making is key. It's also very difficult. I think in Europe it's even more difficult than in U.S., for example, to get permits. If you buy an engine without permits, should you do that or not? It's more complicated, I think, to push orders forward in Europe than it is in the U.S. On your question on the Brazil, yes, the tender took place. Let's say the award was done, what is it now, 1.5 months or so months ago. I think the ones that offered with Wärtsilä equipment, there were quite a few. We also announced, let's say, at least two of them.
We are negotiating with a few more. I think time starts to run out. If they are not concluding within weeks, I would say the slots are gone. At least the slots are gone for the time that they require it. They need to find alternatives.
Other countries, are there big customers?
Not like Brazil, we have quite good activities ongoing in Malaysia, Indonesia, Australia, also in Europe, a few locations, and of course also in the U.S., also South America. Actually, it's quite active all over the place. I think also more and more customers realize that if we are not making decisions, we will need to wait a couple of years before there is any capacity available, not only from us, but also from others. I think the awareness starts to grow, which also means that pipeline and activity starts to go up or is up, actually.
Understood. I have another question, I go back end of line.
Yeah. Thank you.
Yeah. Thank you.
Next question comes from Vivek Midha. Please go ahead.
Thank you very much, Maija. My question is actually also on Brazil. I saw from your release that you described it as an equipment supply contract. Historically, you've obviously indicated your strategy to move away from EPC towards EEQ. Brazil historically has been quite an EPC market. I'm just curious, long term, as you think about your more emerging market-focused customers, how are you approaching those kinds of negotiations? Should we expect that, for example, if you do book Brazil orders in Q3, for example, that they'll also be very equipment-focused as well? Thank you.
I would say it is a good question. Let's say our first focus when we sell new equipment in Energy is equipment delivery. That's what we start with typically. It's typically, let's say, we go to the customer with an equipment delivery and a life cycle offer, often in combination, because that's how we believe we can generate more value for customers. If the customer wants EPC, we are not ruling out EPC. We have always said that, okay, we are not ruling out EPC, but we take on extra risk with EPC, so that also means that we need to get premium price and get paid for the extra risk that we take on. If the customer is not willing to do that, then there will not be an EPC contract, then it's just equipment. That's the approach.
Let's say we are not ruling out EPC, but we need to get extra paid because we take extra risk.
Understood. Thank you.
Thank you, Vivek. Next question comes from Johan Eliason. Please go ahead.
Maija, thanks for taking the questions. On the equipment deliveries, can you sort of give us any guidance over the year how that looks like now when you only have the Energy and the Marine business to worry about?
How does it look like? Let's say the fact that we are increasing capacity, it says a lot of how it looks like. In particular, I would say energy. Energy is really, let's say, booming business, and majority of the capacity expansion will go to energy, by far. Having said that, we also see good opportunities in Marine. Let's say the ship age has been as old as it's ever been. Yards capacity is ramping up much faster than what we thought even one year ago. I think also something big is coming in Marine, and we see also, let's say, good outlook for that. It's of course always segment-based. Let's say not all ship segments move in the same pace. It depends on age as well.
Let's say, for example, I've mentioned many times, I think ferries are very old, so there needs to be a new build cycle at some point of time. It's amazing how long it takes actually before it kicks off, but we see more and more activity. Yes, I'm very positive about Energy. I'm also actually very positive about Marine. If you put it in perspective, more positive about Energy.
Yeah. I was sort of more thinking of your backlog delivery pace over this year. Will we have higher equipment deliveries every quarter now and then until you have the capacity?
That's difficult to say, Johan, because let's say timing, let's say now, let's say equipment deliveries is you take revenues at delivery. Let's say if it slips in, let's say, in the last week of a month to the next quarter, it's suddenly a totally different picture in the next quarter. I would say over the coming time, with a faster end pop of capacity, and I would say in particular, 2028 onwards, when the new capacity becomes available, I think then we will see more shift towards higher on the equipment side pro rata.
Mm-hmm. you mentioned-
We also believe in growth of services, can it keep the same pace? That's a bit questionable. Depends very much on, in particular, I would say retrofit projects. How is the retrofit cycle?
Yeah. you mentioned that you had 75% capacity utilization in the main Vaasa plant last year, I guess you must be filling that up now-
Yes.
This year already, I suppose.
Yeah. That has an impact already. I would say the more significant impact is later in 2027.
Okay.
Towards 2028.
Thank you.
Thank you, Johan. The next question comes from Vlad Sergievskii. Please go ahead.
Yes.
Yes, please go ahead, Vlad.
We cannot hear you. Perhaps if you turn off your camera, I think-
Yeah.
Visuals are locked.
[audio distortion].
I cannot hear.
The line is very bad. We can't hear you.
The line is okay. Is it any better or not really?
No. If you switch off the camera, Vlad, then it might work better.
Yeah. Let's try that. I think we will take a next question.
Then come back.
Let's try again, Vlad, a bit later if the connection would be better. Please, Antti, go ahead.
Thank you. Can you guys hear me?
Yes.
I think I'll try with video as well. I have a little bit of a bad connection. My question was on the capacity announcement that you made in May. My question is that why did you not announce of the full capacity expansion in February when you made the original 2028 expansion? Why the two-step approach? Why the two separate announcements? What are you actually doing in the second phase of the capacity expansion, your own factory versus your suppliers, please?
The main reason is the supply chain. I think in the first capacity expansion, I would say the majority dependency was very much on our own facilities. Of course, also the supply chain, we need to make sure that the supply chain can follow what we have in mind to do locally in Vaasa. I would say we could not say more. At that point of time in February, we had not secured the next capacity expansion phase from a supply chain point of view. That's the main reason. What's different? I would say that in the second one, I think you have more investments related to supply chain, machining capacity, either in or at supplier sites or in our own facility, let's say extra machining efforts. Also having investments supporting the supply chain itself. With a certain volume commitment or what have you.
There is lots of work to be done. We are not in totally safe waters, but I would say we are comfortable that we can make this capacity come to life by the time that we have estimated it, Q1 2028 and Q1 2029.
That's amazing.
Main driver is something that we could in February not have the full commitment of the supply chain.
Okay. Clear enough. Maybe referring to the comment that you earlier said about Brazilian clients, that you are running out of production slots for them, what is timeframe that they are asking for your deliveries?
I think the majority is 2028, 2029.
Okay. You should have ample capacity for 2029, if I understand correctly, the expansion plans.
Depends a bit on the customers. Of course, what they have promised from a capacity point of view. There are big customers and there are smaller customers. 2028 is pretty much locked and committed, I would say, or either booked or locked through valid customer quotes. 2029 starts to be also more and more committed through customer quotes. There we have space. Again, it's not only Brazilian customers that are looking for capacity. I think there's a lot of other customers in different places, like I mentioned, Australia, Indonesia, Malaysia, et cetera, that also want to lock slots. First- come, first- served. That's more or less what it is today.
Thank you very much.
Thank you, Antti. For me, it seems that Vlad's picture is still frozen, so let's try to have another one. Next question comes from Daniela Costa. Please go ahead.
Hi. Thank you for taking my question. Sorry, my line has been on and off, so apologies if this has already been asked. I wanted to ask a two-part question regarding how should we think about modeling advances from here. From one side, as your orders get bigger and bigger in the megawatts, does the rule of thumb, like 20%-25% of advances still applies, or does it change with size? From another side, I guess you've added capacity. Several peers are adding capacity for those outer years that are being bid now. Is the customer acceptance of these type of levels of advanced, has that stayed put or do we see the customers negotiating maybe that more actively? Thank you.
No. Let's say our aim is always to be cash positive throughout the project. I must say, we are very successful in that overall. Of course, you have here and there you have exceptions, but overall, I would say we are very successful in that. Okay, is it 10% down or 20% down or sometimes even more percent down? Yeah, it varies by order. You might have, let's say, 10% down and 30% mid delivery. You might also have, let's say, 20% down and 10% mid delivery. At the end of the day, what is, for me, most important is that a down payment is at least more than 10%, and that we have a cash positive flow throughout the project, and preferably the majority of the cash in the house at delivery. On your question, is it changing? No, I would not say it's changing.
Very clear. Thank you.
Thank you, Daniela. Next question comes from Sven Weier. Please go ahead.
Thanks for taking my follow-up questions. The first one is on, you obviously have a few data center orders now in the backlog. We're hearing a lot about potential construction delays and da-di-da-di-da. Can you track the progress on these projects, whether they start in time, whether there are delays, whether there are permitting issues? Is that possible for you or also difficult for you?
No. Okay. It varies by case. Some are more transparent than others. In general, I think we are pretty much on top of, let's say, if there is a delay. Basically, often they come to us and say, "Okay, we cannot have the engines right now," because let's say if you ship, let's say 10 engines, 20 engines to a site, it takes a lot of space, and if they are delayed with their building construction, they cannot have it. Often we get pretty much early warnings if that happens. So far, I have not heard of any major delays on, for example, the data centers as you mentioned. No. So far not.
When you pitch for the projects, compared to the one you won in July last year, the first one, are you running into more engine competitors or fuel cell competitors now when you pitch for the projects, or is it unchanged?
At least I've not heard of any major changes, no. I would say it's the same.
Are you thinking about developing an even bigger engine because of the megawatts increase of the projects, or are you at a physical limit-
No.
Where you are?
Let's say developing a new engine takes a lot of time and effort, and by the time you have it probably mature, yeah, the market is probably totally different or not difficult to say. We used to have long time ago, I still remember it, and I think we have a few of them still operational, the Wärtsilä 64. That is 20 years ago, I think about. Yeah, I don't think it makes a lot of sense to pull those drawings out of the cupboard and start producing it, no.
That wouldn't help you, basically.
I don't see it realistic. It's too much work and testing and what have you to get it up and running quickly. You also need to make sure that the whole stocking supply chain, everything is geared up again, and I don't think that will happen on short notice.
That wouldn't change the project decision if you had a bigger engine even. That's-
No. Let's say it's even now today that for some projects, probably the large bore engine was a better fit, but simply because it was not available, they went for medium bore. Yeah. That's how desperate the market is at the moment. I need power, and I need it quick.
Thank you.
Thank you, Sven. Next question comes from Tom Skogman. Please go ahead.
Yes, hello.
Hello.
Thanks for organizing the call. You talk about expansion in percentages, I think it would make a lot of sense for you then to tell what is the share of engine in Marine equipment, because otherwise we might end up putting too large growth estimates for you.
I think we stick with what we have said earlier. The majority of the capacity expansion goes to energy, I think that's what you need to use in your simulations.
When you say you will have basically 30% and 35% more capacity that it's on engines. Then in Marine equipment, you have a lot of other products. You cannot just add that capacity basically to that. That's why I'm thinking this would be quite crucial, it's not business sensitive in any way, just to avoid that estimates are wrong in the market, basically.
True, perhaps we will do that in the future, so far, we have not decided to do so.
Yeah. Future reporting. Is it so that you will have two divisions, or are you considering to just report in some different way when you no longer have the portfolio and the storage businesses?
No, it will be, let's say, two segments. We have a dual segment reporting, Marine and Energy, and the rest is other business activities.
Yeah. This storage loss, is that booked on the discontinued line?
Yes.
Is it day one on the associated line? It's on the discontinued line. You should have the loss in the third quarter.
Until, let's say, closing, it's on the discontinued line, and then after it will be share of result in associated companies.
This big one-off loss relating to the write-down.
That will be likely on share of result in associated companies when the joint venture is established.
Finally, I get so much different information about Energy efficiency and so on. Is your view that mid-speed engines are always more fuel efficient than high-speed engines, independent of size? Why is that then?
Now you asked me a very technical question, Tom.
You have highlighted that the fuel efficiency is like 10 percentage points better in these engines.
I think the answer is yes. Let's say, what's the main driver? I think it's probably power per megawatts deal, I would assume. I don't know the exact technical reason why a high-speed engine is less efficient than a medium-speed engine. It has to do with power per fuel density, basically fuel consumption versus power output. That's probably.
It's your view then that this order boom for high-speed engines to data centers, that's because they have a supply chain that is just more easy to ramp up as they might use, let's say, components from the truck industry or so?
I think it's the desperation for power. Let's say if you need a 500 MW power plant and you put it with high-speed engines, you're desperate because you need power. First of all, let's say high-speed engines, they last much less long than a medium-speed engine. Medium-speed engine can take 30 years. We have engines running in the field for 40 years, even higher than that. Typically, high-speed engines, I think it's 15 years, 20 years max, then they are worn out. You need to replace them. Also from a space point of view, it's by far not the most optimal solution. For 500 MW, I definitely would never go with high-speed engine unless you're really desperate because there are so much disadvantages with it.
Okay. Thank you.
Thank you. Next question comes from Sebastian Kuenne. Please go ahead.
Yeah. Thank you for taking my follow-ups. My first is relating your investments and developments in carbon capture, hydrogen engines, ammonia engines. Now we have this delay with the IMO, with U.S. blocking further enforcement of certain rules. The question is then, should we prepare for some capitalized R&D having to be written down? Is there any smaller business where you have put 30 people, 50 people, 100 people that develop certain engines and that you cannot now commercialize? Is there any shift or any risk that certain units are underutilized because we have delays in our transition?
No, I don't think so. I don't see any reason. If you take carbon capture as an example, it's not a dead market. There are activities happening. We are still selling also scrubbers that are carbon capture enabled. I'm pretty sure it will come. It will take a little bit longer time than we originally had anticipated. No, I don't see any accelerated write-downs on that area. Not at all.
Very good. My last question is the Everllence sale by Volkswagen. The latest news I have is that there are three interested parties. None of them is Wärtsilä.
No.
I was wondering if you are in talks with Volkswagen or with any of the buyers, or if you heard that Everllence is being broken up into pieces where you could get some of it? What can you share with us on that topic?
Actually, let's say there is not so much known to us. I think the case starts to be less and less appealing. First of all, let's say Volkswagen wants to maintain a quite big ownership, at least to our understanding.
What is it, 45% or something? Just minority, basically. I would say at least the price that they have in mind, at least what we have heard is quite high. There is lots of complication with, let's say, splitting four-stroke and two-stroke. To be honest, I don't think it will end in our favor.
Is there other options you see in the market to complement your current portfolio? Not who it is, just if there would be someone?
Let's say two-stroke would be an excellent add-on, especially when you can acquire basically a market leader in that space, which is Everllence clearly on the two-stroke side.
Yeah.
Let's say there is no second two-stroke player except for WinGD and Mitsubishi. Those are, let's say, market share-wise, so small it wouldn't make sense in my view.
Yeah. Okay. All right. Thank you so much.
Thank you. Next question comes from Mikael Doepel. Please go ahead.
Yeah. Thank you. Hope you can hear me.
Yes.
Yes.
Good. Just one question on the data center related pipeline, maybe you could talk a bit about that. You previously said that you have a sweet spot there, 50 MW-400 MW. Just wondering if you could talk a bit about that, what you see out there in the market, and how you're positioned on that front.
No, it has not really changed. Let's say the pipeline is still strong and good, size-wise. I think our sweet spot is the 450 MW-400 MW. I think then if you compare all the parameters let's say water consumption, fuel efficiency, what have you, I think we typically come out best, I think in most of the cases. If you go beyond, yeah, we can still come out best. Let's say if you need a 1 GW or 800 MW, whatever, let's say power plant, but you're in an area where water consumption is a big issue or water is scarce, probably it's not so good to go with a turbine because that needs a lot more water than, let's say, what the engine is. There are different parameters that make or break a decision upon equipment for a customer, in different locations.
Yes, I would still say the sweet spot is what it is, 50 MW-400 MW, but certainly, let's say we have also clear options or, let's say good opportunities, I would say on a bigger scale.
Okay. No, that's clear. Just as a follow-up there, how would you describe where in the negotiations are you currently? Are you close to finalizing some deals? Just thinking about managing the expectations here in the market. Everybody can see the boom out there. Just wondering, if you could say anything about that.
We have, let's say, in the whole pipeline you have orders that are in final stages of negotiation. You have orders that just, or opportunities that just come in. That's a bit of a constant flow. Sometimes let's say one that is very close to conclusion just disappears, for whatever reason, they didn't get a permit or some other reason. Let's say immediately some other customer jumps into the slot and basically sometimes we have even cases that within, let's say four weeks- six weeks, you conclude something, which is also possible. It's a very volatile pipeline, as we have also said before. It can change very quickly, but different projects in different stages. We have always projects in, I would say, any stage of the opportunity pipeline.
Okay. No, that's very clear. Thank you very much.
Thank you. The next question comes from Johan Eliason. Please go ahead.
Yeah. Hi again. Thanks for taking follow-up. I was just wondering, you have announced the details of the CapEx for this expansion. How should we think about the total CapEx over this period until 2028? Is it sort of your normal 2%- 3% of sales and then this comes on top or how should we model it?
I would say it's a good question. I would say this is largely on top you could say, because you have always, let's say the normal, let's say CapEx law of replacement of workshop equipment and what have you. I would say the majority of this I would calculate on top.
Good. Just thinking about your balance sheet when, while we were at the topic you decided to go for this extra dividend, versus your gearing target, you're still very far away. Is it obviously you have to have a strong balance sheet now when you are doing these investments, still, priority going forward, M&A or continuous shareholder returns. Have you communicated anything about that going?
No, we have not, let's say communicated, let's say the shareholder returns, that's typically, let's say board decision at the end of the year when we talk about that. So far, no conclusion. Let's say last year we did an extraordinary dividend eventually paying 100% of EPS out, in dividends, partly regular, partly extraordinary. Will that happen again? No, there are no guarantees for that. It's a case-by-case decision. Depends on, let's say, the situation at that point of time From other priorities, clearly, let's say we need to spend more money on the CapEx. R&D spend will stay on a higher level, let's say not the 3% historically, but let's say 4%+ clearly. Then of course, with growing sales, 4%+ of sales is also an increasing absolute amount.
M&A, yes, we are looking out. I don't think, like I just said, Everllence is going to happen. Will there be something else? At least no big tickets that I can see. It will be more, let's say, small bolt-ons. Otherwise, I think it's also not a bad situation to have in a time when there is lots of things happening also geopolitically, to have a solid balance sheet. Better be safe than sorry.
Yeah, absolutely. Then finally, just the detail about this JV with the storage business. You talk about this EUR 40 million-EUR 50 million charge, but you mentioned it will be taken when it's part of the JV. It's EUR 40 million-EUR 50 million, half of this charge, as you own half of the JV.
Let's say our share is 50%. Of course not all that result is from that time. Let's say we have said that if we are not booking orders, let's say in last quarter, we said if we are not booking orders, we will be loss-making. Okay, we start to be at the tipping point, you could say. That as the orders have not yet really come in, we start to generate losses probably between now and closing. Then on top you have, let's say, the result of the joint venture later on when it is a joint venture. That's 50%, correct.
Yeah. Okay. Thank you.
Thank you. The next question comes from Sven Weier. Please go ahead.
Yeah, a few follow-ups left, please. First one is come back on M&A and fuel cells. I know we discussed this last time a few years ago, maybe that I think you guys ruled out to get involved, when we're seeing these guys making good progress on the data center side, for example, could be also on shipping. You still rule that out to organically and inorganically get involved in fuel cells?
Let's say in the past, we used to have, let's say, also a fuel cell business. I remember some, what is it, 10 years, 15 years ago? It was too small to survive. I think it was also pretty early in the time of fuel cells. I think the fuel cell technology has evolved quite well. I would not rule it out completely. I think it's definitely an area we should keep an eye on. Yeah, let's see.
Good. The other question I had was just, as you know, in the last couple of quarters, there was a great focus on this Euro per megawatt number in Energy, I think you've explained it a few times that there's a big influence from scope, right? When you look at the orders that you had in Q2, is there any reason to assume a much different scope in Q2 from Q1 so that we are prepared for another fluctuation here?
No. Okay, difficult to say because I am not 100% having in my mind clear, let's say what's the scope of every order that we take. I would say in general, the mix is pretty equal, but it makes a big difference, let's say how much auxiliary equipment, is freight included or not included. If you need a 300-MW power plant, whether we sell it with, let's say, large bore engines or medium bore engines, that's already, let's say, what is it, 10%-15% price difference. There is lots of, let's say, different elements that play a role in Euro per kilowatt. I would say, is it radically changing because of one factor? No, I don't think so.
It can still be volatile, I assume, right?
Yeah. I think it will remain volatile, that I'm pretty sure.
You're not going to change the definition of it just to look at maybe the core Euro per megawatt so that we have a really a like for like number in the future?
No, that's not what we-
Would be too detailed, I guess? [inaudible].
Yes. Also very difficult to do.
Okay. That's it for me. Thank you.
Thank you.
Thank you. The next question comes from Panu Laitinmäki. Please go ahead.
Yes, thanks. I just wanted to clarify on the reporting of the Energy Storage business. Will it be in discontinued operations in the Q2 report already?
Most likely, yes.
Most likely. Okay. Thank you.
Thank you, Panu. Next question comes from Tom Skogman. Please go ahead.
Yes. I just noticed that Håkan has said you get repeat orders in data center. His view is that customers are happy, of course, but I just wonder about customer concentration. Could you open up a bit about this as you have very large single orders and if some of them go to the same customers, it would be relevant to know about that kind of a risk, I guess.
No, I will not open that up. Sorry.
It's not in any way. You have several, is it two or three orders from the same customer?
I will not tell.
Okay. The deliveries in the second quarter, do you want to say anything? You have a great order backlog, but we know that sales is booked at deliveries, you still had a very big jump in Energy equipment sales in the first quarter, of course. Is there anything we should take into account modeling the second quarter sales estimates?
No, I think, looking at the sales volumes in particular, I think the majority of our sales volumes are actually in the second half of the year. I think Q2 is a good quarter. I wouldn't say it's a bad quarter, but I think the majority of sales will happen in the second half of the year when you think about, let's say, Energy equipment.
Okay. Thank you.
Thank you. Next question comes from Johan Eliason. Please go ahead.
Just coming back to your comment about R&D. I can't remember how it is in your case. Do you capitalize R&D, or do you just expense it directly?
No, partly capitalized. Yes.
Okay.
If we do a new engine platform development and also expanding it to the different cylinder configurations, that is typically capitalized R&D.
Okay. Thanks.
Thank you. The next question comes from Antti Kansanen. Please go ahead.
Thanks. I wanted to come back to the potential Brazilian orders and what you mentioned that they should be placing them very shortly if they want to keep kind of their delivery time. How does this work? I would assume that when they are quoting for the auction, they already have some type of a pricing agreement with you in order to kind of calculate how much the cost is and some type of a financing agreement as well to be included in the auction. What is then driving this kind of a potential delay in the orders?
It's a bit different than that. Let's say we have even, let's say, parties that have offered with Wärtsilä equipment that we were not even aware that they offered with Wärtsilä equipment. Yeah, it varies a lot by customer. Yes, we have typically made quotes. With some, we have even made commitments if you make a decision up to, let's say, this moment. There are also clearly customers quoting with Wärtsilä equipment that they have not had even contact with us, or very little contact with us. It's a mixed bag of things.
How would you say that?
Again, let's say, as I said earlier, if you have a commitment from Wärtsilä that, okay, you can have these slots, but you need to decide by this time, we will honor that. If you don't decide by that time, the slot is gone. For many, the slot has gone.
Kind of the remaining opportunities, are these largely parties that you have interacted with or largely parties that-
Yes.
[audio distortion].
It's of course always better to, let's say, sit down with Wärtsilä and discuss and be open about, let's say, what you need, when you need it, and what you want. That, of course, gives you the best possibility to get engines. Again, let's say it's with a fixed time, so if you don't decide, we will not keep your slots available for you forever.
Okay. Fair enough. I had a kind of a detailed follow-up on the R&D write-down related to the storage JV. I would assume that that's quite a sizable portion of the EUR 40 million-EUR 50 million that you're guiding for the full year. Wouldn't 100% of that be for Wärtsilä? Isn't it Wärtsilä who is doing that R&D capitalization write-down rather than the JV? Could you maybe walk us through how would that kind of play in your reporting?
No, we will likely do that in the joint venture. Why would we do it in Wärtsilä?
Okay. You will move kind of the balance sheet into the joint venture?
Yes.
Then the joint venture will do it. Okay.
We transfer the net asset value to the joint venture, and then they will take the necessary actions. These actions, okay, they are largely worked out, but, let's say, all the details need to be tuned still. That's also why we give a range.
In no cases, this will be visible on your adjusted EBIT that you report. It will be either discontinued or-
Yes.
Associated. Okay.
Discontinued or a share of result in associated companies. Correct.
Okay. Is there anything you want to kind of give more clarity on the cash impacts of the JV? You will move net assets into it, which will have some advanced payments. Is there-
Yes.
Any money moving to the other direction?
Which is absolutely correct. Let's say that's the cash outflow that we will have. I think in considering, let's say, the size of advances that we have received in this business, it's more cash going out than coming in. Let's say when we say, okay, the P&L impact at closing is more or less zero, so you get compensated for the net asset value that you transfer, but the net asset value includes, let's say, the cash from advances.
Mm.
That's quite a sizable amount, actually.
The impact on group net cash position will be minor negative?
Altogether, it will be negative, yes.
Okay. Thank you.
Thank you. The next question comes from John Kim. Please go ahead.
Hi, Arjen. I was wondering if you could help us think through factory loads as you expand capacity. I'm trying to square the circle here. You have a number of customers who are quite eager to get delivery as soon as possible. There's probably an optimal level of load in the factory itself, but there's also, I think, conceptually the option of paying overtime to deliver potentially at a rate above that optimal level. Just trying to think how you and the management team are thinking through this, and how that might sequence over the next two years- three years. Is there a period where you're going to have extraordinarily high load because of what appears to be a fairly supernormal demand, or are you looking to load balance that and provide more of a consistent cadence on load and profit?
I think at the moment, and I think that will still stay for quite some time, we are running the factory at maximum capacity. Utilization is, you could basically say 100%. Of course, there is a little bit fluctuation. It's never flat, let's say 100%, but in general, I would say it's 100%. I would say that given the fact that, okay, we have extra capacity coming available in 2028, most of 2028 slots have already been either sold or committed. We are pretty confident that, let's say at least until the end of 2028, and if not longer, I think it will even be longer, we will run the factory at 100% capacity. It will not go down.
Understood. How could we think about need to hire in the back of this? We talked about nameplate capacity, but can you help us think through headcount additions?
Hiring new people for this extra capacity, I don't think we need a lot, actually, to be honest. We have a factory that is capable of running 100%, so we don't need a lot of, let's say, new resources. Where we do need the resources in the future is, of course, when all these installations get installed and you need to do operation and maintenance, you run the power plant on behalf of customers. Many places where we have sold, let's say, power plants, we are hiring people to make sure that we can run the power plant once it's commissioned.
Understood. Thank you.
Thank you. It seems that we don't have any more questions, and I haven't received any questions to email, so I think it's time to wrap up. Our half-year financial report will be published on July 21st, so hopefully we will meet in connection with that. Many thanks, Arjen, and thanks for all the participants for a very lively discussion. Bye now.
Thank you.
Thank you.
Thank you, team.
Bye