Q1 2026 Vestas Wind Systems AS Earnings Call

May 6, 2026

Henrik Andersen: Good morning, welcome to our Q1 for 2026 release. I think the key word for this Q1, of course, for the world is heading of energy crisis. Another one after the last one in H1 2022. It's also here very much appropriate to thank you. Thank you for a good start of the year. That thank goes especially to customers, to partners, colleagues, and other stakeholders. Thank you for many, very many valuable conversations and commitments in what has been an increasing volatile world throughout the first 4 months of the year. With that, let's go to the key highlights of Q1. Key highlights for Q1, revenue of EUR 4 billion.

Speaker #1: Another one after the last one in H1 2022. It's also here very much appropriate to thank you—thank you for a good start to the year.

Speaker #1: That thank goes especially to customers, to partners, colleagues, and other stakeholders. Thank you for many, very many valuable conversations and commitments in what has been an increasingly volatile world throughout the first four months of the year.

Speaker #1: So with that, let's go to the key highlights of Q1. So key highlights for Q1, revenue of $4 4 billion that's an increase of 14% year on year, driven by offshore where we also see the manufacturing ramp up is improving year on year.

Henrik Andersen: That's an increase of 14% year-on-year, driven by offshore, where we also see the manufacturing ramp up is improving, year-on-year. EBIT margin of 3.2%. It's better profitability in both onshore and offshore, leading to the best Q1 EBIT margin since 2018. Our service EBIT margin of 16.3%. Continued cost out in the service leads to lower revenue with profitability in line with outlook. We'll come back to more details on that. Of course, order intake of 4.5 GW, strong offshore order intake in the UK, mainly related to AR-7, and a good onshore momentum leads to record high backlog of now more than EUR 36 billion. We are also returning cash to shareholders for the Q3 in a row.

Speaker #1: EBIT margin of 3.2%. It's better profitability in both onshore and offshore, leading to the best first quarter EBIT margin since 2018. Our service EBIT margin of 16.3%. Continued cost out in the service leads to lower revenue, with profitability in line with outlook.

Speaker #1: We'll come back to more details on that. And then, of course, order intake of $4.5 gigawatts—strong offshore order intake in the UK, mainly related to AR7—and good onshore momentum leads to a record high backlog of now more than €36 billion.

Speaker #1: We also returning cash to shareholders for the third quarter in a row. We will initiate a new share buyback of 100 million euros. We'll be initiated and starting as of tomorrow morning.

Henrik Andersen: We will initiate a new share buyback of EUR 100 million, will be initiated and starting as of tomorrow morning. Last but not least, outlook for 2026. We maintain our guidance, and I'll give you more details of that when we get to the end of my presentation. With that, I will go to orders and markets in general. I think here, wind energy, key to affordability, security, and sustainability. We probably couldn't have chosen a better value proposition and probably a better narrative to talk to. The energy crisis only confirms both the need for energy security, not least energy affordability, and of course, as always, energy sustainability. When we look at the global environment for us, I think so far in Q1, we have seen inflation, raw materials, and transport costs being reasonably stable.

Speaker #1: And then last but not least, Outlook for 2026, we maintain our guidance and I'll give you more details of that when we get to the end of my presentation.

Speaker #1: With that, I will go to orders and markets in general. I think here, wind energy is key to affordability, security, and sustainability. We probably couldn't have chosen a better value proposition, and probably a better narrative to talk to.

Speaker #1: So the energy crisis only confirms both the need for energy security not least energy affordability and of course as always energy sustainability. When we look at the global environment for us, I think so far in Q1 we have seen inflation raw materials and transport cost being reasonable stable.

Speaker #1: But of course tariffs and blockages will over time increase cost and some of the energy will also lead to inflationary pressures when we get quarters ahead from where we are today.

Henrik Andersen: Of course, tariffs and blockages will over time increase cost, and some of the energy will also lead to inflationary pressures when we get quarters ahead from where we are today. On the ongoing geopolitical side, I think we can say it is, there is trade volatility. There's also some movement in the geopolitical scenario, if not for day to day, then at least week for week or month to month. Of course, the energy crisis only leading to further regionalization. I think we have seen this. We have also moved toward this. We also, therefore, have created a large part of our resilience being prepared for this. I will say we are in a good position also to deal with some of these variances.

Speaker #1: On the ongoing geopolitical side, I think we can say it is there is trade volatility, there's also some movements in the geopolitical scenario if not from day to day then at least week for week or month for month.

Speaker #1: And of course the energy crisis only leading to further regionalization. I think we have seen this, we have also moved toward this, we also therefore have created a large part of our resilience being prepared for this.

Speaker #1: So I will say we are in a good position also to deal with some of these variances. When we get to the market environment, I think of course in the longer term the energy crisis here again gives us an opportunity to talk to not only customers but also to governments around not least in Europe where the need for energy security and affordability is probably higher than it's ever been.

Henrik Andersen: When we get to the market environment, I think, of course, in the longer term, the energy crisis here, again, gives us an opportunity to talk to not only customers, but also to governments around, not least in Europe, where the need for energy security and affordability is probably higher than it's ever been. When we look at the grid investment, it is prioritized and getting prioritized in key markets, but the challenge is still here. Being a Danish national, citizen, I will say, we don't have the best example to share when we pause something of a grid for now, 3 to 4 months in the middle of an energy crisis. When we look at permitting, I think it's improving in certain selected markets, but overall, permitting still struggles with its red tape.

Speaker #1: When we look at the grid investment, it is prioritized and getting prioritized in key markets. But the challenge is still here. And being a Danish national citizen, I will say we don't have the best example to share when we pause something on a grid for now three to four months in the middle of an energy crisis.

Speaker #1: When we look at permitting, I think it's improving in certain selected markets but overall permitting still struggles with its red tape. Some of the auctions and market designs are still challenging but I can also see governments are sharing with each other and therefore improving so terms are getting better.

Henrik Andersen: Some of the auctions and market designs are still challenging, but I can also see governments are sharing with each other and therefore improving, so terms are getting better. I think here is the time and also the place to say a proper thank you and mentioning UK and Germany. UK, Germany shows examples of what I will call courage, political leadership, characterized by Katharina Reiss and Ed Miliband. You're doing it, maybe it's not always as popular, but in years from now, we will all appreciate what you have done to increase capacity and get these permitting processes running so we can actually get capacity installed. When it comes to project level in this Q1, we've had a very good start of the year. Thank you to the team, thank you to partners on it.

Speaker #1: I think here is the time and also the place to say a proper thank you and mentioning UK and Germany. UK, Germany shows examples of what I will call courage, political leadership, characterized by Katarina Rice and Ed Miller Band.

Speaker #1: You're doing it, you're doing it maybe it's not always as popular but in years from now we will all appreciate what you have done to increase capacity and get these permitting processes running so we can actually get capacity installed.

Speaker #1: When it comes to project level in this Q1, we've had a very good start of the year. Thank you to the team, thank you to partners on it.

Speaker #1: We have had very small disruptions in it and it's probably some of the best execution we have seen in the onshore and now also in the offshore where there is at the same time on execution also a very high focus on simplifying investors from sourcing the components out to installing it at site.

Henrik Andersen: We have had very small disruptions in it, and it's probably some of the best execution we have seen in the onshore and now also in the offshore, where there is, at the same time on execution, also very high focus on simplifying Vestas from sourcing the components out to installing it at site. Next one, time of the year where normally Woodmac and others releases their market data. We continuous leading the industry. I will just say here, highlights on installation in our addressable markets increased from to 47 GW in 2025, from 37 GW in 2024, so a growth there. Vestas remains the market leader.

Speaker #1: Next one, time of the year where normally wood mag and others releases their market data we continuous leading the industry I will just say here highlights on installation in our addressable markets increased from 47 gigawatt in '25 from 37 gigawatt in '24 so a growth there versus remains the market leader when we look at the market and the development again an increase in the market size but also installations often deviate of what wood mag counts as installation compared to for instance the OEMs and how well we install and finish the project with our customers.

Henrik Andersen: We look at the market and the development, again, an increase in the market size, but also installations often deviate of what Wood Mackenzie counts as installation compared to, for instance, the OEMs and how well we install and finish the project with our customers. The Vestas market share in key development markets was relatively stable in 2025, while the market share development in others was mainly driven by installation growth in emerging markets, predominantly such as India. We look ahead, we see growth in our core markets. We're really happy with that, and we will take advantage of it. At the same time, we will use time really well to increase our competitive in those markets that is really core to Vestas. With that, I will go to the Power Solutions. The Power Solutions is a really positive story in Q1.

Speaker #1: The business markets here in key development markets was relatively stable in 2025, while the market development in others was mainly driven by installation growth in emerging markets, predominantly such as India.

Speaker #1: When we look ahead we see growth in our core markets we really happy with that and we will take advantage of it and at the same time we will use time really well to increase our competitive in those markets that is really core to investors.

Speaker #1: With that I will go to the power solutions. And the power solution is a really positive story in Q1. First of all because we are operating in a market where the need for electricity is underpinning the demand and its demand that is needs to have a timely supply.

Henrik Andersen: First of all, because we are operating in a market where the need for electricity is underpinning the demand, and it's demand that it needs to have a timely supply. When we look at it, order intake in the quarter was 4.5 gigawatts in the quarter. It's driven by strong offshore order intake in the UK, mainly related to AR7 announcements, and then it's the onshore momentum across all regions. ASP on new orders was EUR 1.16 million per megawatt. It's above the prior quarters. Also, the ASP reflects a good mix of project scope, geography, and type. The overall pricing environment remains stable and therefore is also very supportive for the progress of the profitability of Vestas.

Speaker #1: So when we look at it order intake in the quarter was four and by strong offshore order intake in the UK mainly related to AR7 announcements and then it's the onshore momentum across all regions.

Speaker #1: The ASP on new orders was Euro 1.16 million per megawatt it's above the prior quarters but also the ASP of flex a good mix of project scope geography and type the overall pricing environment remains stable and therefore has also very supportive for the progress of the profitability of investors.

Speaker #1: In Q1 2025 versus development generated 230 megawatt of order intake from Brazil with the Esquina de Vento project fully developed by investors and therefore also exchanged with the partner Equinor.

Henrik Andersen: In Q1 2025, Vestas development generated 230 MW of order intake from Brazil with the Esquina do Vento project fully developed by Vestas, and therefore also exchanged with the partner Equinor. I will also say here for the ease of presentations in the quarters, we have decided to take the slide out on development simply because we think there's happening too little on the slide quarter-on-quarter. You will typically see it in a bullet format on the Power Solutions in the quarters to come. When we then look at the Power Solutions order backlog, it's increased to a record high of EUR 36.3 billion at the end of the quarter.

Speaker #1: I will also say here for the ease of presentations in the quarters we have decided to take the slide out on development simply because we think there's happening too little on the slide quarter on quarter and therefore you will typically see it in a bullet format on the power solutions in the quarters to come.

Speaker #1: When we then look at the power solutions order backlog it's increased to a record high of 37.3 billion at the end of the quarter.

Speaker #1: The progress that we have seen in the offshore ramp-up, including reduced tack time and improved efficiency, of course required us, unfortunately, to adjust the number of colleagues and employees at the linear factory.

Henrik Andersen: The progress that we have seen in the offshore ramp-up, including reduced takt time and improved efficiency, of course, required us, unfortunately, to adjust the number of colleagues and employees at the Linghe factory. It was something we have spoken to some of you about in the last couple of quarters because, of course, that is part of the evidence of that our offshore ramp is progressing as planned and probably in this quarter progressed positively compared to where we expect it to be. I will say in combination with further progress on our operating model reset by simplifying and becoming more competitive towards our customers, this is a really positive sign coming out of Q1. You can see the underlying breakdown of the order intake to the right, you can also see the last 5 quarters development in ASP.

Speaker #1: It was something we have spoken to some of you about in the last couple of quarters because of course that is part of the evidence of that our offshore ramp is progressing as planned and probably in this quarter progressed positively compared to where we expected to be.

Speaker #1: I will say in combination with further progress on our operating model reset by simplifying and becoming more competitive towards our customers this is a really positive sign coming out of Q1.

Speaker #1: You can see the underlying breakdown of the order intake to the right and you can also see the last five quarters development in ASP.

Speaker #1: With that, I would like to go to service. We've had a good start of the year. The recovery is—there's a lot of time on it, and I will say, here are a couple of testaments in the numbers, which I will also—and both me and Jakob will spend some time in taking you through.

Henrik Andersen: With that, I would like to go to service. We've had a good start of the year. We spent a lot of time on it, and I will say here a couple of testaments in the numbers, which I will also, both me and Jakob, will spend some time in taking you through. The service order backlog increased to EUR 39.8 billion. That includes EUR 1.1 billion uplift from indexations and also EUR 0.6 billion headwind from foreign exchange rate movements compared to a year ago. The service reached 164 GW under active service, an increase of 3 GW compared to last quarter, as healthy additions and renewals in the quarter outweighed expiries and de-selections.

Speaker #1: So the service order backlog increased to 39.8 billion that includes 1.1 billion uplift from indexations and also 0.6 billion headwind from foreign exchange rate movements compared to a year ago.

Speaker #1: The service reads 164 gigawatt under active service an increase of three gigawatt compared to last quarter as healthy additions and renewals in the quarter outweighed expiries and deselections.

Speaker #1: I will say especially on the renewals they are better than we expected a year ago and probably also better than we had exchange of our internal discussions so that just shows our value proposition of the service business is really appreciated by our customers.

Henrik Andersen: I will say especially on the renewals, they are better than we expected a year ago and probably also better than we had exchanged of our internal discussions. That just shows our value proposition of the service business is really appreciated by our customers. Service remain and is a high priority, strategic priority for us in 2026, as we aim to recover profitability through operational excellence, commercial reset, and cost-out initiatives. We're still not there, but I think this quarter was a real testament of that the progress we are making, the cost-out initiatives are really proving its effect, which therefore also lower the top line, but stabilizes and also build the profitability for the future. I'm happy with that, but I'm also happy to see that we are progressing in both parts, both the operational cost-out excellence and also the commercial reset.

Speaker #1: Service remain and is a high priority strategic priority for us in 2026 as we aim to recover profitability through operational excellence commercial reset and cost out initiatives.

Speaker #1: We're still not there but I think this quarter was a real testament of that the progress we are making the cost out initiatives are really proving its fact which therefore also lower the top line but stabilizes and also build the profitability for the future.

Speaker #1: I'm happy with that, but I'm also happy to see that we are progressing in both parts: both the operational cost-out excellence and also the commercial reset.

Speaker #1: You will see the breakdown of service here to the right. So we have $39.8 billion in the backlog, of which $33.9 billion is onshore. We have 164 gigawatts under service, of which 155 is onshore, and we have, as stated here, more than 11 years of average contract duration.

Henrik Andersen: You will see the breakdown of service here to the right. We have EUR 39.8 billion in the backlog, of which EUR 33.9 billion is onshore. We have 164 GW on the service, of which 155 GW is onshore, and we have, as stated here, more than 11 years of average contract duration. Again, here, tough times in service for many colleagues, but we are having the focus, and we keep the focus because it's actually now showing the real movement in the quarter and that you should take away as a positive. Let me by that go to sustainability.

Speaker #1: Again here tough times in service for many colleagues but we are having the focus and we keep the focus because it's actually now showing the real movement in the quarter and that you should take away as a positive.

Speaker #1: Let me by that go to sustainability Q1. Sustainability in everything we do and I think for those who follow us also us on social media you will see we also welcome really the progress we have seen where blade recycling are now moving from what I will call an early prototype to also scalable.

Henrik Andersen: Q1, sustainability in everything we do, and I think for those who follow also us on social media, you will see we also welcome really the progress we have seen, where blade recycling are now moving from what I will call an early prototype to also scalable. Thank you to Stena Recycling and our partner chosen there, and we look forward in both the quarters and the years to come to find and solve another part of our recyclability of the turbine. Another thing here is one of the 10 energy companies that makes a difference that reached now the TIME list. Thank you TIME for taking us into consideration of that, and we will prove you with some examples also in the future years to come.

Speaker #1: Thank you to Stena and our partner chosen there and we look forward in both the quarters and the years to come to find and solve another part of our recyclability of the turbine.

Speaker #1: Another thing here is one of the 10 energy companies that makes a difference that reads now the times list thank you times for taking us into consideration of that and we will prove you with some examples also in the future years to come.

Speaker #1: Highlights: Else, turbines produced and shipped in the last 12 months are expected to avoid 468 million tons of greenhouse gas emissions over the course of their lifetime.

Henrik Andersen: Highlights else, turbines produced and shipped in the last 12 months are expected to avoid 468 million tons of greenhouse gas emissions over the course of their lifetime. The carbon emission from our own operations increased by 4% compared to last year, mainly due to vessel emissions from increased activity in offshore. We've spoken about that. We've also spoken about this in the sense of that this is part of the negative development in carbon emission when you now install more projects offshore and therefore have more of that emission coming. I just want to highlight here, we are measuring our own scope one and two emissions in 112,000 tons, and then we are putting solutions in place that displaces 468 million tons over the time.

Speaker #1: The carbon emission from our own operations increased by 4% compared to last year. Mainly due to vessel emissions from increased activity in offshore. We've spoken about that we've also spoken about this in the sense of that this is part of the negative development in carbon emission when you now install more projects offshore and therefore have more of that emission coming.

Speaker #1: But I just want to highlight here we are measuring our own scope one and two emissions in 112,000 tons and then we are putting solutions in place that displaces 468 million tons over the time.

Speaker #1: Anyone with that in mind probably say that's a trade worth doing. On the number of total recordable injuries per million working hours TRIR remain stable at 2.8 compared to last year.

Henrik Andersen: Anyone with that in mind probably say that's a, that's a trade worth doing. On the number of total recordable injuries per million working hours, TRIR remains stable at 2.8 compared to last year. Safety remains absolutely one of our top priorities for us, and we tirelessly work to improve our safety performance across our value chain. This is an average across our more than 80 countries where we work in, and of course, there are places where we are above that average. Right now it is about getting everyone to work, at work, and home from work safely, and that is really an ethos of what we strive for. With that, I'm pretty sure Jacob is excited to present some of the quarterly numbers. Over to you, Jacob, for the Q1 2026.

Speaker #1: Safety remains absolutely one of our top priorities for us and we tirelessly work to improve our safety performance across our value chain. This is an average across our more than 80-year countries where we work in and of course there are places where we are above that average so right now it is about getting everyone to work at work and home from work safely and that is really a ethos of what we strive for.

Speaker #1: With that, I'm pretty sure Jakob is excited to present some of the quarterly numbers, so over to you, Jakob, for the Q1 2026.

Speaker #2: Thank you, Henrik, and let me take us through some of the details of the financials of what is the highest first-quarter profitability since 2018.

Jakob Wegge-Larsen: Thank you, Henrik. Let me take us through some of the details of the financials of what is the highest first quarter profitability since 2018. Revenue increased by 14% compared to Q1 last year. The increase was driven by higher revenue and Power Solutions, offset by lower revenue in service, which Henrik, you already spoke to. EBIT margin before special items was 3.2%, an increase of 2.8 percentage points year on year. The development was primarily driven by improved profitability in Power Solutions. In the quarter, we incurred EUR 35 million of special items, mostly related to the operating model reset, started in the fall of 2025, which included both additional severance provisions and non-cash write-down of inventory related to a few development projects.

Speaker #2: Revenue increased by 14% compared to Q1 last year. The increase was driven by higher revenue and power solutions offset by lower revenue in service which Henrik you already spoke to.

Speaker #2: EBIT margin before special items was 3.2% and increase of 2.8 percentage points year on year. The development was primarily driven by improved profitability in the power solutions.

Speaker #2: In the quarter we incurred 35 million of special items mostly related to the operating model reset started in the fall of 25 which included both additional severance provisions and non-cash write down of inventory related to a few development projects.

Speaker #2: And diving into the segments starting with power solutions where we see a solid start to the year. In power solutions first quarter revenue increased by 23% year on year driven mainly by higher megawatt delivered in offshore and to a lesser degree by higher average selling prices on the megawatt delivered.

Jakob Wegge-Larsen: Diving into the segments, starting with Power Solutions, where we see a solid start to the year. In Power Solutions, Q1 revenue increased by 23% year on year, driven mainly by higher megawatt delivered in offshore, and to a lesser degree, by higher average selling prices on the megawatt delivered. EBIT margin for Power Solutions reached 2.7%, +2.7% in Q1, up 5 percentage points year on year, driven by improved profitability in both offshore as well as onshore, as well as for obvious reasons, when we increase the top line benefits from operating leverage. Please note that the onshore revenue is expected to follow the usual back-end loaded profile during the year, while offshore revenue is more evenly spread across the quarters.

Speaker #2: EBIT margin for power solutions reached 2.7% plus 2.7% in Q1 up 5% points year on year driven by improved profitability in both offshore as well as onshore as well as for obvious reasons when we increased the top line benefits from operating leverage.

Speaker #2: Please note that the onshore revenue is expected to follow the usual backend-loaded profile during the year, while offshore revenue is more evenly spread across the quarters.

Speaker #2: And you see on the right both the onshore and the offshore revenue as well as the EBIT margin. Moving on to the service segment where we see the recovery plan improvements leading to cost out.

Jakob Wegge-Larsen: You see on the right both the onshore and the offshore revenue, as well as the EBIT margin. Moving on to the Service segment, where we see the recovery plan improvements leading to cost out. Service revenue decreased by 9% year-on-year, impacted by a 4% currency headwind and a decrease in contract revenue. A higher level of gigawatt under active service was more than offset by the continued cost out. Transactional sales were on par with last year. Service generated an EBIT of EUR 136 million in the quarter, equivalent to an EBIT margin of 16.3%, as expected. We continue to execute on the recovery plan to achieve our long-term ambitions. Moving on to a new slide, to the focus of the impact of our operating model reset and our operating scale benefits.

Speaker #2: Service revenue decreased by 9% year on year impacted by a 4% currency headwind. And a decrease in contract revenue. A higher level of gigawatt under active service was more than offset by the continued cost out.

Speaker #2: Transactional sales were on par with last year. Service generated an EBIT of 136 million in the quarter equivalent to an EBIT margin of 16.3% so as expected.

Speaker #2: We continue to execute on the recovery plan to achieve our long-term ambitions. And moving on to our new slide and moving on to the focus of the impact of our operating model reset and our operating scale benefits.

Speaker #2: The operating model reset is ongoing as you know and aims to improve our operational and commercial efficiency through removing bureaucracy and rightsizing the organization together with strengthening our culture.

Jakob Wegge-Larsen: The operating model reset is ongoing, as you know, and aims to improve our operational and commercial efficiency through removing bureaucracy and rightsizing the organization together with strengthening our culture. The SG&A cost amounted to 7.4% of revenue on a last 12 months basis, an improvement of 0.1 percentage points compared to a year ago, as higher revenue more than offset the increased cost level. As you can see, we have seen significant improvements since 2024. In terms of net working capital for the quarter, we see an increase in the quarter, which is reflecting normal seasonality. Net working capital increased in Q1 to EUR -2.4 billion, driven by an increase in inventory levels and other receivables and liabilities.

Speaker #2: The SG&A cost amounted to 7.4% of revenue on a last 12 months basis and improvement of 0.1% points compared to a year ago as higher revenue more than offset the increased cost level and as you can see we have seen significant improvements since 2024.

Speaker #2: In terms of networking capital for the quarter we see an increase in the quarter which is reflecting normal seasonality. Networking capital increased in Q1 to a negative 2.4 billion driven by an increase in inventory levels and other receivables and liabilities.

Speaker #2: Networking capital reflects the typical seasonality of our business as we build inventory for higher activity later in the year. As a percentage of the last 12 months revenue networking capital in the first quarter amounted to negative minus 12.3% which is a minor improvement compared to Q1 last year.

Jakob Wegge-Larsen: Net working capital reflects the typical seasonality of our business as we build inventory for higher activity later in the year. As a percentage of the last twelve months revenue, net working capital in the first quarter amounted to -12.3%, which is a minor improvement compared to Q1 last year. Moving on to the cash flow statement, our operating cash flow was -EUR 289 million in the quarter, a decline compared to Q1 in the prior year, mainly due to the changes I just mentioned in net working capital. Total investments amounted to EUR 198 million in Q1, a decrease compared to EUR 307 million last year.

Speaker #2: Then, moving on to the cash flow statement, our operating cash flow was minus €289 million in the quarter, a decline compared to Q1 in the prior year, mainly due to the changes I just mentioned in networking capital.

Speaker #2: Total investments amounted to 198 million in Q1 a decrease compared to 307 million last year the decline reflects quarterly facings of the investments. Our adjusted free cash flow in the quarter amounted to minus 533 million a decline compared to last year driven by the reasons mentioned in above.

Jakob Wegge-Larsen: The decline reflects quarterly facings of the investments. Our adjusted free cash flow in the quarter amounted to -EUR 533 million, a decline compared to last year, driven by the reasons mentioned in above. Nonetheless, this is on plan, and we ended the quarter with a net cash position of +EUR 435 million. In terms of our provisions, LPF reduced as planned. The loss production factor improved in Q1 now that the repairs at the sites mentioned in the recent quarters have been completed. Please note that the LPF is measured over the last 12 months and, therefore it will take some quarters before this effect of the specific sites are fully out. Warranty costs amounted to EUR 119 million in the quarter, corresponding to 3% of revenue.

Speaker #2: Nonetheless this is unplanned and we ended the quarter with a net cash position of plus 435 million. In terms of our provisions LPF reduced as planned the lost production factor improved in Q1 now that the repairs at the size mentioned in the recent quarters have been completed.

Speaker #2: Please note that the LPF is measured over the last 12 months and therefore it will take some quarters before this effect of the specific sites are fully out.

Speaker #2: Warranty costs amounted to 119 million in the quarter corresponding to 3% of revenue. Warranty consumption in Q1 was 149 million so that's in line with expectation and also in line with what you see in the previous quarters on the right where you see consumption is higher than our provisions.

Jakob Wegge-Larsen: Warranty consumption in Q1 was EUR 149 million, that's in line with expectation and also in line with what you see in the previous quarters on the right where you see consumption is higher than our provisions. On capital structure, we are announcing, as Henrik has mentioned, a share buyback in Q3, for Q3 in a row. Net EBITDA, net debt to EBITDA ended the quarter at -0.2x, stable compared to last year and within our targeted range of -1 to +1. We maintained a solid investment grade rating from Moody's with a stable outlook.

Speaker #2: Then on capital structure, we are announcing, as Henrik was mentioning, a share buyback in the third quarter—for the third quarter in a row. Net debt to EBITDA ended the quarter at minus 0.2 times, stable compared to last year and within our targeted range of minus 1 to plus 1.

Speaker #2: We maintained a solid investment grade rating from Moody's with a stable outlook. Given our solid start to the year and a healthy capital structure the share buyback of 100 million is initiated as Henrik mentioned and it's in line with our intentions to return at least 40% of net profit to shareholders.

Jakob Wegge-Larsen: Given our solid start to the year and a healthy capital structure, the share buyback of EUR 100 million is initiated, as Henrik mentioned. It's in line with our intentions to return at least 40% of net profit to shareholders. You will see that we have shaded it in the Q2, Q3, and Q4. That is in line with our communication that we will communicate this on a quarterly basis. At the shareholders' annual general meeting in April, the proposal to cancel the 14.3 million shares was adopted. This is a friendly reminder to everybody on the call that you remember also to change that in your model. With that, ending on my new favorite slide, focusing on shareholder value through performance.

Speaker #2: You will see that we have shaded it in the Q2 Q3 and Q4 and that is in line with our communication that we will communicate this on a quarterly basis.

Speaker #2: At the shareholders annual general meeting in April the proposal to cancel the 14.3 million shares was adopted so this is a friendly reminder to everybody on the call that you remember also to change that in your model.

Speaker #2: And with that ending on my new favorite slide focusing on shareholder value through performance here you see our most important financial metrics in the longer perspective these metrics are central to how we measure our performance and align nicely to shareholder value creation and also to our equity story and I encourage you to read further on that in the annual report.

Jakob Wegge-Larsen: Here you see our most important financial metrics in the longer perspective. These metrics are central to how we measure our performance and align nicely to shareholder value creation and also to our equity story. I encourage you to read further on that in the annual report. With that, Henrik, over to you for the outlook.

Speaker #2: With that Henrik over to you for the outlook. Thank you so much Jacob and I think sure your internalized that to your favorite new slides and I think I can find a few other in that club because this also shows our long-term trajectory is actually paying off and I think this is a testament to many people working to generate the underlying progress in our financial matrixes here and of course also is a testament of why we feel comfortable of doing the third share buyback third quarter in a row.

Henrik Andersen: Thank you so much, Jakob. I think, sure, you've internalized that to your favorite new slide, and I think I can find a few other in that club because this also shows our long-term trajectory is actually paying off. I think this is a testament to many people working to generate the underlying progress in our financial matrices here. Of course, also is a testament of why we feel comfortable of doing the third share buyback, Q3 in a row. With that, I will go to the outlook. The outlook here for 2026 revenue, EUR 20 to 22 billion. The EBIT margin before special items is kept at 6% to 8%.

Speaker #2: So with that I will go to the outlook and the outlook here for 2026 revenue 20 to 22 billion euros the EBIT margin before special items is kept at 6 to 8 percent services expected to generate EBIT margin before special items of 15 and a half to 17 and a half percent and total investments sits around 1.2 billion overall for the year.

Henrik Andersen: Service is expected to generate EBIT margin before special items of 15.5% to 17.5%. Total investments sits around EUR 1.2 billion overall for the year. With that, I will also sort of again thank everyone for being here. Thank everyone for the conversations we have had, and we look forward to see many of you also in the coming day. I can see, as somebody that followed the presentation here, I can see my IR person has sort of lost almost as much hair as I have because there were 1 or 2 slides that were probably in early draft versions or something, but that what happens, Frederik.

Speaker #2: With that I will also sort of again thank everyone for being here thank everyone for the conversations we have had and we look forward to see many of you also in the coming day and I can see as somebody that followed the presentation here I can see my IR person has sort of lost almost as much hair as I have because there were one or two slides that were probably an early draft versions or something but that what happens Frederik so let's go to the let's go to the Q&A and pass back to the operator for opening the Q&A and I hope people are okay with not raising questions to things that were in draft in here.

Henrik Andersen: Let's go to the Q&A, and pass back to the operator for opening the Q&A. I hope people are okay with not raising questions to things that were in draft in here.

Speaker #2: We will now begin the question and answer session anyone who wishes to ask a question may press star and one on the telephone you will hear a tone to confirm that you have entered the queue.

Operator 2: The first question comes from the line of Akash Gupta from JPMorgan. Please go ahead.

Speaker #2: If you wish to remove yourself from the question clue please press star and two. Questioners on the phone are requested to disable the loudspeaker mode while asking a question.

Speaker #2: In the interest of time please limit yourself to two questions. Anyone who has a question may press star and one at this time. The first question comes from the line of Akash Gupta from JP Morgan please go ahead.

Operator: The first question comes from the line of Akash Gupta from JPMorgan. Please go ahead.

Speaker #2: Yes hi good morning my first one is on offshore ramp up you had very strong revenues which indicate ramp up is progressing well but can you comment on installation activity and where do we currently stand on commissioning of the first two projects also if you can elaborate on how much of increase in contract assets in the quarter was driven by offshore where you had strong revenues and I believe invoicing is generally slow in the start of the year.

Akash Gupta: Yes. Hi, good morning. My first one is on offshore ramp-up. You had very strong revenues which indicate ramp-up is progressing well. Can you comment on installation activity and where do we currently stand on commissioning of the first two projects? Also, if you can elaborate on how much of increase in net contract assets in the quarter was driven by offshore, where you had strong revenues and I believe invoicing is generally slow in the start of the year. That's the first one.

Speaker #2: That's the first one. Thank you Akash I will sort of say thank you for the offshore point here installation is clearly as we would expect when you get through Q1 and you have better weather improving throughout Q1 that's picking up and is definitely continued in also to Q2.

Henrik Andersen: Thank you, Akash. I will sort of say, thank you for the, for the offshore point here. Installation is clearly as we would expect when you get through Q1 and you have better weather improving throughout Q1. That's picking up and is definitely continued in also to Q2. We plan to have the started projects we started on last year finished here in, I will say, H1 of this year, give and take, and we see ships are going out.

Speaker #2: So we plan to have the started projects we started on last year finished here in I will say first half of this year give and take and we see ships are going out but the more positive thing of it as well Akash is that what you've also seen from the factories we are now ahead in some of those plans which is really positive for our ramp for also the future projects.

Henrik Andersen: The more positive thing of it, as well, Akash, is that what you've also seen from the factories, we are now ahead in some of those plans, which is really positive for our ramp for also the future, the future projects. We will find things when you establish offshore projects of that nature, lumpy parts, both when it comes to grid connection. We have turbines connected, and we are working to the commissioning of turbines as they go offshore and get commissioned. It is also clear that in Germany, we are working parallel. It works really well. There are a couple of delays in when we look at other parts of Europe when it comes to the offshore grid.

Speaker #2: Then we will always find we will find things when you establish offshore projects of that nature lumpy parts both when it comes to grid connection we have turbines connected and we are working to the commissioning of turbines as they go offshore and get commissioned but it is also clear that in Germany we are working parallel it works really well there are a couple of delays in when we look at other parts of Europe when it comes to the offshore grid so that will might push some of it to the right in terms of timing but at least I can now we can now see sit here and say it feels good in the sense of the progress we have made and therefore it was a testament when we also had to say goodbye to some colleagues in the factories because that was part of our over our in the factories for the ramp up.

Henrik Andersen: That will might push some of it to the right in terms of timing. At least we can now sit here and say it feels good in the sense of the progress we have made. Therefore it was a testament when we also had to say goodbye to some colleagues in the factories, because that was part of our in the factories for the ramp-up. In terms, Jacob, you take the next.

Speaker #2: In terms Jacob you take the next. Yeah I guess in terms of net contract asset I can confirm that the increase we see in Q1 is driven by power solutions.

Jakob Wegge-Larsen: Yeah, Akash. In terms of net contract asset, I can confirm that the increase we see in Q1 is driven by Power Solutions.

Speaker #2: Thank you my second one is on the US so this section 232 investigation that is currently ongoing it started on 13th of August and as per 270 days deadline we are not far from when the administration might come out with announcement.

Akash Gupta: Thank you. My second one is on the US. This Section 232 investigation that is currently ongoing, it started on 13 August, and as per 270 days deadline, we are not far from when the administration might come out with announcement. I'm wondering if you can tell anything you have heard on this regard from either administration or among the players, customers in the market. Also give us some indication of what could be pent-up demand when we get some sort of clarity on Section 232 tariffs, which might be sooner than later. Thank you.

Speaker #2: I'm wondering if you can tell anything you have heard on this regard from either administration or among the players customers in the market and also give us some indication of what could be pent up demand when we get some sort of clarity on section 232 tariffs which might be sooner than later.

Speaker #2: Thank you. Thanks Akash and again said here I don't think anyone is better than you to try to lump a few questions into two questions but as always here is the thing I think the section 232 is undergoing a review it can point a bit in different directions and I don't think necessarily there is that much and have been that much predictability around tariff and directional setting I think as we also seen many tariffs are being up for discussing and then you might have a complaint and then they either disappear or they get in a different direction I think the underlying here is more important the underlying is that most places around in the US need electrons and they need it fast and that normally in the US and you will appreciate that capital moves where there is both a need and a return and right now with the underlying energy and electricity and the price of electrons are going up in many places so it is a little contrary intuitive I think the conditions for establishing projects in the US of the nature of renewables solar and wind has probably never been better but there we have to go through a couple of bumps on the road but so far we are dealing with it our customers are keen to deal with it but you can also see many of our customers are not that particularly interested in pointing to locations or projects or customers for that matter because there is no need to be taken in that so progress on order intake progress on establishment of projects and so far it seems that we are having an okay balance with the current interpretation.

Henrik Andersen: Thanks, Akash. As said here, I don't think anyone is better than you to try to lump a few questions into two questions. As always, here is, here is the thing. I think the Section 232 is undergoing a review. It can point a bit in different directions, and I don't think necessarily there is that much and have been that much predictability around the tariff and directional setting. I think, as we've also seen, many tariffs are being up for discussing, and then you might have a complaint, and then they either disappear or they get in a different direction. I think the underlying here is more important. The underlying is that most places around in the US need electrons, and they need it fast.

Henrik Andersen: That normally in the US, and you will appreciate that, capital moves where there is both a need and a return. Right now, with the underlying energy and electricity and the price of electrons are going up in many places. It is a little counterintuitive. I think the conditions for establishing projects in the US of the nature of renewables, solar, and wind, has probably never been better. There we have to go through a couple of bumps on the road. So far, we are dealing with it. Our customers are keen to deal with it. You can also see many of our customers are not that particularly interested in pointing to locations or projects, or customers for that matter, because there is no need to be taken in that.

Henrik Andersen: Progress on order intake, progress on establishment of projects, and so far it seems that we are having an okay balance with the current interpretation.

Speaker #2: Thank you Henrik. Operator you can take the next question. The next question comes from the line of Christian Turner from SEB please go ahead.

Akash Gupta: Thank you, Henrik.

Henrik Andersen: Operator, you can take the next question.

Operator 2: The next question comes from line of Kristian Tornøe Johansen from SEB. Please go ahead.

Operator: The next question comes from line of Kristian Tornøe Johansen from SEB. Please go ahead.

Kristian Tornøe Johansen: I'm fairly pleased and confident with the development we are seeing, and I'm not completely sure the stock markets share your confidence here. As we look at the margin on slide 13, it seems that there's been this downward trend for the past year or so. Can you maybe help us understand why we shouldn't be concerned around this downward pressure on the service margin?

Speaker #2: You seem fairly pleased and confident with the development we are seeing, and I'm not completely sure the stock market shares your confidence here. As we look at the margin on slide 13, it seems that there's been this downward trend for the past year or so. So can you maybe help us understand why we shouldn't be concerned around this downward pressure on the service margin?

Speaker #2: I'm five quarters through now and the recovery and I think here we do all the right things for the business we share with you on the both the renewable and this time when you see a drop in the top line here as Jacob rightly took us through some of it relates to pure and simple effects on the business and where it comes from and the rest of it is a dedicated executed cost out which I'm really pleased with and as Jacob also said on the net contract assets it's in well control under the service side so I don't know Christian you know me well enough I don't necessarily speculate in a couple of hours on a share price development we're doing all the right thing for the business and that's what really matters on the renewable we are surprised positively over we are able to do the both the terms and also the renewable pricing on some of the service parts that's happening with good partnership with customers because it makes and creates value for them on their solution so I don't know and the honest is I don't know and I don't know if that's the reason or the link to a share price development since nine o'clock this morning and in reality Christian it doesn't matter to me because we're doing exactly the right thing for the business and it is well progressed since last quarter and it is enormously progressed since we started the journey five quarters ago so I'm not sharing the same frustration I just thanked most of the colleagues doing it and some of it is tough job fully appreciate that when you take cost out of that nature but there are plenty of spaces where we can take further cost out and that's what we have also spent the start of Q2 doing so I don't know Christian is the honest answer at least on the short term share price I've given up that I don't want to comment on.

Henrik Andersen: I'm 5 quarters through now in the recovery. I think here we do all the right things for the business. We share with you on the, both the renewable and this time, when you see a drop in the top line here as Jakob rightly took us through, some of it relates to pure and simple effects on the business and where it comes from. The rest of it is a dedicated, executed cost out, which I'm really pleased with. As Jakob also said on the net contract assets, it's in well control under the service side. I don't know, Kristian, you know me well enough. I don't necessarily speculate in a couple of hours on a share price development.

Henrik Andersen: We're doing all the right thing for the business, and that's what really matters on the renewable. We are surprised positively over we are able to do both the terms and also the renewable pricing on some of the service part that's happening with good partnership with customers because it makes and creates value for them on their solution. I don't know. The honest is, I don't know, and I don't know if that is the reason or the link to a share price development since 9:00 this morning. In reality, Kristian, it doesn't matter to me because we're doing exactly the right thing for the business. It is well progressed since last quarter, and it is enormously progressed since we started the journey five quarters ago.

Henrik Andersen: I'm not sharing the same frustration. I just thanked most of the colleagues doing it, and some of it is tough job. Fully appreciate that when you take cost out of that nature. There are plenty of spaces where we can take further cost out, and that what we have also spent the start of Q2 doing. I don't know, Kristian, is the honest answer. At least on the short-term share price, I given up. That I don't want to comment on.

Kristian Tornøe Johansen: That's fair enough. Thank you. My second question on Power Solutions, obviously quite a remarkable improvement in the margin year-on-year. Are there any drivers where we should be a bit careful not to just assume that you can continue to deliver sort of the same underlying performance when we look into the next couple of quarters?

Speaker #2: That's fair enough thank you and then my second question on power solutions obviously quite a remarkable improvement in the margin year on year are there any drivers where we should be a bit careful not to just assume that you can continue to deliver sort of the same underlying performance when we look into the next couple of quarters.

Speaker #2: Thanks Christian I love the question here I could hear there was sort of just around the neck with 500 basis point over the following three quarters as well I will sort of say here we've seen and don't forget when you compare four quarters back you compare about something where ramp up cost in offshore was very high to something where we in reality have improved ramp up cost of offshore continuously now for those four quarters but of course it is significant improvement and that's also why you can hear on both the voice and the tone and a bit of the confidence on it we are in a good place now on the offshore ramp and that of course is reflected also in a bit of what we are looking into and that you can read it back into sort of taking a share buyback program because that's how confident we are in where we are with the ramp and of course 500 basis points is not to be neglected in power solution it is a really really good underlying and a material part of that comes from the offshore ramp up coming out but significantly also in there is still an improvement in onshore both onshore execution but also onshore deliveries because we now see when you are establishing that many turbines for instance in a key market like Germany you get synergies in terms of people you get synergies in terms of installation time that of course also underlying supports our synergies and therefore profitability on establishing that capacity.

Henrik Andersen: Thanks, Christian. I love the question here. I could hear it was sort of just around the neck with 500 basis points over the following 3 quarters as well. I will sort of say here, don't forget, when you compare 4 quarters back, you compare about something where ramp-up cost in offshore was very high to something where we in reality have improved ramp-up cost of offshore continuously now for those 4 quarters. Of course, it is significant improvement. That's also why you can hear on both the voice and the tone and a bit of the confidence on it. We are in a good place now on the offshore ramp.

Henrik Andersen: That, of course, is reflected also in a bit of what we are looking into. That you can read it back into sort of taking a share buyback program, because that's how confident we are in where we are with the ramp. Of course, 500 basis points is not to be neglected in Power Solutions. It is a really, really good underlying, and a material part of that comes from the offshore ramp-up coming out. Significantly also in there is still an improvement in onshore, both onshore execution, but also onshore deliveries. We now see when you're establishing that many turbines, for instance, in a key market like Germany, you get synergies in terms of people, you get synergies in terms of installation time.

Henrik Andersen: That, of course, also underlying supports our synergies and therefore profitability on establishing that capacity.

Speaker #2: We now have a question from the line of Kaspar Blum from Danske Bank please go ahead. Thank you very much and congrats on the strong improvement here in Q1 I'm sorry but I'm going to dwell a little bit more into the service division I think that is getting a lot of attention from the stock market these days and I was hoping maybe you could comment a little bit as to what degree that the service margin is currently being burdened by fixed cost because as the as you're taking out costs and thereby driving down revenue I assume that there is a worsened absorption of the fixed cost base within service can you give any kind of commentary as to what the impact is here.

Operator 2: We now have a question from the line of Casper Blom from Danske Bank. Please go ahead.

Operator: We now have a question from the line of Casper Blom from Danske Bank. Please go ahead.

Casper Blom: Thank you very much. Congrats on the strong improvement here in Q1. I'm sorry, but I'm going to delve a little bit more into the service division. I think that is getting a lot of attention from the stock market these days. I was hoping maybe you could comment a little bit as to what degree that the service margin is currently being burdened by fixed cost. Because as you're taking out costs and thereby driving down revenue, I assume that there is a, you know, worsened absorption of the fixed cost base within service. Can you give any kind of commentary as to what the impact is here?

Speaker #2: And secondly in service if you could comment on to what degree the service margin is currently burdened by any kind of penalties from customers on the turbines and what improvement we could see from that side in the future thank you.

Casper Blom: secondly, in service, if you could comment on to what degree the service margin is currently burdened by any kind of penalties from customers on the turbines, and what improvement we could see from that side in the future. Thank you.

Speaker #2: Thanks Kaspar I think there's two it's first of all it's two good questions and it's a yes to both of them because of course you can always say when you have a successful cost out if you only do that in direct cost then of course it will hurt the business over time because the way the accounting of the service business is that when you see the top line going down that's actually a very strong signal of the cost is coming off quickly and that is happening but we have managed also here to take part of the FCC and therefore the white colors out as well so it's not only in at site and front line it's also throughout simplifying the service business which is why when you come in now with something that is still in the mid 16s it's actually pretty positive and pretty satisfying in a quarter like this right now we are not so much fixed on or focused on driving a top line growth on the service business we got to have every site in control of their cost allocation directly so that's a positive with it and as I said here outlook for the year is exactly in that range so I think here we're happy with the first quarter and if we can continue some of that then it's a positive also for the full year but not least also the years to come.

Henrik Andersen: Thanks, Casper. I think there's two, it's two good questions and it's a yes to both of them because, of course, you can always say, when you have a successful cost out, if you only do that in direct cost, then of course, it will hurt the business over time because the way the accounting of the service business is that when you see the top line going down, that's actually a very strong signal of the cost is coming off quickly. That is happening. We have managed also here to take part of the FCC and therefore the white collars out as well. It's not only in at site and frontline, it's also throughout simplifying the service business.

Henrik Andersen: Which is why when you come in now with something that is still in the mid-16, it's actually pretty positive and pretty satisfying in a quarter like this. Right now, we are not so much fixed on or focused on driving a top line growth on the service business. We got to have every site in control of their cost allocation directly. That's the, that's a positive with it. As I said here, outlook for the year is exactly in that range. I think here we are, we're happy with the first quarter, and if we can continue some of that, then it's, then it's a positive also for the, for the full year, but not least also the years to come.

Speaker #2: On the LD side as Jakob went through when we are hoovering around 3% in LPF that is still I wouldn't say it's a percent too high but let's just say at least it has to start with a 2 and it's not 2.9 it has to come towards 2.5 2% before we are pleased with and before we see some of those performing performance LDs actually coming out of the P&L and that's not insignificant to the service business as well so therefore that's another dimension where we see family play right now where we got to get the warranties and we got to get the repairs done and I think here you can see that commitment in another number we are sharing with you we are spending more than we are providing quarter on quarter meaning that we don't see new components failing of material degree but we are spending quite a lot on repairing some of the older ones and that's the drive we have right now and we spoken to that and of course that has one purpose only which is of course getting first of all the LPF towards 2.5 and therefore also getting LDs lower in the service business and that will also have a material contribution to get service back to 25%.

Henrik Andersen: On the LD side, as Jakob went through, when we are hovering around 3% in LPF, that is still, I wouldn't say it's 1% too high, but let's just say at least it has to start with a 2, and it's not 2.9. It has to come towards 2.5%, 2% before we are pleased with and before we see some of those performance LDs actually coming out of the P&L. That's not insignificant to the service business as well. Therefore, that's another dimension, where we see a family play right now, where we got to get the warranties, and we got to get the repairs done. I think here you can see that commitment in another number we are sharing with you.

Henrik Andersen: We are spending more than we are providing quarter on quarter, meaning that we don't see new components failing of material degree, but we are spending quite a lot on repairing some of the older ones. That's the drive we have right now. We've spoken to that, and of course, that has one purpose only, which is getting, first of all, the LPF towards 2.5, and therefore also getting LDs lower in the service business. That will also have a material contribution to get service back to 25%.

Speaker #2: Thank you. The next question comes from the line of Alex Jones from Bank of America please go ahead. Morning thanks for taking my questions if I can start back on the US there have been press reports recently that the Department of Defense is holding up permits on around 30 gigawatts of onshore projects could you comment on whether that's impacting any projects where you've already had orders and it could face delays and perhaps more importantly is it holding back any customers from placing orders on new projects despite clearly as you mentioned the underlying need for electrons only increasing and then secondly just on raw material inflation given the Middle East situation could you comment a little bit on what you're seeing so far and the supply chain situation and whether you expect any impact on profitability later in the year into 27 if the situation remains as it is today thank you.

Alexander Jones: Thank you.

Casper Blom: Thank you.

Operator 2: The next question comes from the line of Alexander Jones from Bank of America. Please go ahead.

Operator: The next question comes from the line of Alexander Jones from Bank of America. Please go ahead.

Alexander Jones: Morning. Thanks for taking my questions. If I can start back on the US, there's been press reports recently that the Department of Defense is holding up permits on around 30 gigawatts of onshore projects. Could you comment on whether that's impacting any projects where you've already had orders and it could face delays? Perhaps more importantly, is it holding back any customers from placing orders on new projects despite, you know, clearly, as you mentioned, the underlying need for electrons only increasing?

Alex Jones: Morning. Thanks for taking my questions. If I can start back on the US, there's been press reports recently that the Department of Defense is holding up permits on around 30 gigawatts of onshore projects. Could you comment on whether that's impacting any projects where you've already had orders and it could face delays? Perhaps more importantly, is it holding back any customers from placing orders on new projects despite, you know, clearly, as you mentioned, the underlying need for electrons only increasing?

Alexander Jones: Secondly, just on raw material inflation, given the Middle East situation, could you comment a little bit on what you are seeing so far in the supply chain situation and whether you expect any impact on profitability, you know, later in the year into 2027, if the situation remains as it is today? Thank you.

Alex Jones: Secondly, just on raw material inflation, given the Middle East situation, could you comment a little bit on what you are seeing so far in the supply chain situation and whether you expect any impact on profitability, you know, later in the year into 2027, if the situation remains as it is today? Thank you.

Speaker #2: Thanks Alex I would say on the US I think here it's a little bit of an interesting one because of course yes that is a thing that has come in and is being used as part of the defense or blocking that in a sense or at least not progressing the sort of the applications that are at a certain point in time I'm pretty sure the industry will be after that attitude and therefore we will see that probably people will be told nicely that that has to start working again there's nothing in the backlog that is hurt by it because it's not like I've never seen customers in the US doing closure or for that matter firm order intake or building projects or starting on them without having their full permits that has always been the environment in the US with the legal framework on projects of any energy nature that if you don't have the permits or you don't have it so therefore a lot of those that are in there and you're talking about potentially 30 gig being whole up by not having permits but then I could give you a similar impressive number that is already in there that can actually pursue already now project starts so it's not like it's holding up wind if somebody sat with that thing and you can see that in order intake in Q1 you will also see it in the coming quarters that there will be order intake because rightly so it is so attractive it's not only financially attractive but it is physically attractive to get the electrons out to either the factories or the data centers and that is key critical for any US states for any US company so I'm yeah I see that there's a whole up but I'm also fully aware of that sometimes some of these whole up are being used in a either in negotiation on what is permitting legislation or whatever in a wider scheme of the US I will allow somebody else to comment on that but there's clearly something in this that is going on in a wider space when it comes to the raw materials on the Middle East we are not immune but on the other hand we have built an enormous resilience and I think sometimes when you sit and see effect on businesses of course you see effect on businesses because yeah oil has gone up to 120 and other stuff but in the short term in our supply chain we are very little hit by that and when we look towards 2027 it is not like we saw in 2021 where first of all physically exchanges were very difficult and very complicated because societies was closed down but on the other hand our binding period with customers is down to something which is a month month and a half or two and that means our indexations and other stuff covers some of this I haven't seen it yet and we have many partners that have helped us mitigate throughout the first four months of the year so I'm not so worried so far but of course if we get longer into the year and it still has this open and close literally daily throughout the week of course that's upsetting to the logistics but let's not forget Alex that it's only a few quarters ago where we also saw a similar thing on Suez where we found ways of rerouting components and materials so the world has become better in rerouting but I fully understand the frustration or the worry if you are using jet fuel every day or something like that because of course that has to come for you through Hormuz at some point in time and that I fully see not so much a risk for us but that's probably more a macro benefit but thanks so we're in good shape and that's just what we come out of Q1 and confirming.

Henrik Andersen: Thanks, Alex. I would say on the US, I think here it's a little bit of an interesting one because, of course, yes, that is a, that is a thing that has come in and is being used as part of the defense or blocking that in a sense, or at least not progressing the sort of the applications that are at a certain point in time, I'm pretty sure the industry will be after that attitude. Therefore, we will see that probably people will be told nicely that that has to start working again.

Henrik Andersen: There's nothing in the backlog that is hurt by it because it's not like I've never seen customers in the US doing closure or for that matter, firm order intake or building projects or starting on them without having their full permits. That has always been the environment in the US with the legal framework on projects of any energy nature, that if you don't have the permits or you don't have it. Therefore, a lot of those that are in there, and you're talking about potentially 30 gig being hold up by not having permits, I could give you a similar impressive number that is already in there that I can actually pursue already now project start.

Henrik Andersen: It's not like it's holding up wind if somebody sat with that, with that thing. You can see that in order intake in Q1, you will also see it in the coming quarters that there will be a order intake because rightly so, it is so attractive. It's not only financially attractive, but it is physically attractive to get the electrons out to either the factories or the data centers. That is key critical for any US states, for any US company. Yeah, I see that there's a hold up, but I'm also fully aware of that sometimes some of these hold up are being used in a, either a negotiation on what is permitting legislation or whatever in a wider scheme of the US.

Henrik Andersen: I will allow somebody else to comment on that. There's clearly something in this that is going on in a wider space. When it comes to the raw materials on the Middle East, we are not immune. On the other hand, we have built an enormous resilience. I think sometimes when you sit and see effect on businesses, of course, you see effect on businesses because, yeah, oil has gone up to EUR 120 and other stuff. In the short term in our supply chain, we are very little hit by that. When we look towards 2027, it is not like we saw in 2020 and 2021, where first of all, physically, exchange was very difficult and very complicated because societies were closed down.

Henrik Andersen: On the other hand, our binding period with customers is down to something which is 1 month, 1 and a half or 2, and that means our indexations and other stuff covers some of this. I haven't seen it yet, and we have many partners that have helped us mitigate throughout the first 4 months of the year. I'm not so worried so far. Of course, if we get longer into the year and it still has this open and close literally daily throughout the week, of course, that's upsetting to the logistics. Let's not forget, Alexander Jones, that it's only a few quarters ago where we also saw a similar thing on Suez, where we found ways of re-routing components and materials. The world has become better in re-routing.

Henrik Andersen: I fully understand the frustration, or the worry if you are using jet fuel every day or something like that, because of course, that has to come through Hormuz at some point in time. That I fully see not so much a risk for us, but that's probably more a macro benefit. Thanks. We're in good shape, and that's just what we come out of Q1 and confirming.

Speaker #2: Thank you. We now have a question from the line of John Kim from Deutsche Bank please go ahead. Hi good morning I'm wondering if you could help us think through perhaps the pipeline for offshore for the rest of the year what other projects regions should we be focused on versus a very strong Q1 intake.

Alexander Jones: Thank you.

Alex Jones: Thank you.

Operator 2: We now have a question from the line of John Kim from Deutsche Bank. Please go ahead.

Operator: We now have a question from the line of John Kim from Deutsche Bank. Please go ahead.

John Kim: Hi, good morning. I'm wondering if you could help us think through perhaps the pipeline for offshore for the rest of the year. What other projects regions should we be focused on versus a very strong Q1 intake? I also wanted to follow up with any comment or color you can give us just on profitability in that near-term pipeline and the backlog. How should we think about price cost, given your earlier comments on logistics and direct energy costs for the year, specific to offshore, please?

Speaker #2: I also wanted to follow up with any comment or color you can give us just on profitability and that near-term pipeline and the backlog.

Speaker #2: How should we think about price cost given your earlier comments on logistics and direct energy costs for the year specific offshore please. Yeah you hear on the tone of voice I'm pretty sure a pretty good momentum we're coming out of something where we are 500 basis points better in power solutions so John I'm on the last part there pretty well suited and that sits in line with also what we comment on we have a really healthy backlog we are building to that healthy backlog not by compensating things in there that is not healthy so we are just in full execution mode on something where we can see profitability is really underpinning and underlying the foundation of building towards not only the guidance we have but also to the longer term aspiration we have of 10% EBIT when we look at pipeline rest of the year I always say guys we got to put a line in the sand every quarter end and then if it drops into that quarter we sit here and we say it's a really good quarter significant on offshore this quarter we will see what else we get near in offshore but they will always be lumpy where the onshore is more running but still some of the part and part of the world is lumpy in onshore as well so if you're in US if you're in Australia if you saw it also here in Latham then it suddenly becomes lumpy and if it drops into that quarter we still see good order intake remainder part of the year we see an opportunity to accelerate certain places and we will try to do that and yeah so now I've given you a couple of places if there's one place I would have expected more by overriding and taking the interest of society and energy supply into consideration it would be Europe but it seems like the only two places in Europe where they really get the acts together is Germany and UK the rest of it is still sitting and discussing throughout bureaucracy and probably hiding in their own bureaucracy instead of just getting capacity permitted so I'm positive on pipeline and I do somehow in here hold a belief that Europe will pick up throughout this year.

Henrik Andersen: Yeah. You hear on the tone of voice, I'm pretty sure a pretty good momentum. We're coming out of something where we are 500 basis points better in Power Solutions. John, I'm on your last part there pretty well suited, and that sits in line with also what we comment on. We have a really healthy backlog. We are building to that healthy backlog, not by compensating things in there that is not healthy. We are just in full execution mode on something where we can see profitability is really underpinning and underlying the foundation of building towards not only the guidance we have, but also to the longer term aspiration we have of 10% EBIT.

Henrik Andersen: When we look at pipeline rest of the year, I always say, Guys, we got to put a line in the sand every quarter end, and then if it drops into that quarter, we sit here and we say it's a really good quarter. Significant on offshore this quarter. We will see what else we get near offshore, but they will always be lumpy where the onshore is more running, but still some of the part and part of the world is lumpy in onshore as well. If you're in US, if you are in Australia, if you saw it also here in LATAM, then it suddenly becomes lumpy, and if it drops into that quarter. We still see good order intake remain the part of the year.

Henrik Andersen: We see an opportunity to accelerate certain places, and we will try to do that. And yeah. Now I've given you a couple of places. If there's one place I would have expected more, by overriding and taking the interest of society and energy supply into consideration, it would be Europe. It seems like the only two places in Europe where they really get their act together is Germany and UK. The rest of it is still sitting and discussing throughout bureaucracy and probably hiding in their own bureaucracy instead of just getting capacity permitted. I'm positive on pipeline, and I do somehow in here hold a belief that Europe will pick up throughout this year.

Speaker #2: Okay thanks so much. The next question comes from the line of Sean McLaughlin from HSBC. Please go ahead. Thank you good morning first question is about the loss production factor you've talked about the importance of this to fall given this is a 12 month trading indicator maybe can you share the direction of the latest readings just to gauge a level of confidence of how quickly that LPF might move down and understand that what still is the most critical element that needs to be addressed to get that LPF down thank you.

John Kim: Okay. Thanks so much.

Operator 2: The next question comes from the line of Sean McLoughlin from HSBC. Please go ahead.

Operator: The next question comes from the line of Sean McLoughlin from HSBC. Please go ahead.

Sean McLoughlin: Thank you. Good morning. First question is about the loss production factor. You've talked about the importance of this to fall. Given this is a 12-month trailing indicator, maybe can you share the direction of the latest readings just to gauge a level of confidence of how quickly that LPF might move down, and understand that what still is the most critical element that needs to be addressed to get that LPF down. Thank you.

Speaker #2: Is correct it's a 12 months rolling and we will continue to show it like that we do see the warranty so a picture of that or a financial picture of that is what we provision on a monthly or sorry on a quarterly basis and there you see that we have we peaked that some years back and Q1 here all bid of course being only one quarter is also down compared to last year so it's a good indication and there we what we see let's say in our maybe shorter rolling not 12 months rolling is good indications that we over the year should see further improvements as we have seen the last 12 months.

Henrik Andersen: It's correct. It's a 12 months rolling, and we will continue to show it like that. We do see, you know, the warranty. A picture of that or a financial picture of that is what we provision on a monthly, or sorry, on a quarterly basis. There you see that we have we peaked that some years back and Q1 here, albeit of course, being only one quarter, is also down compared to last year. It's a good indication. There what we see, let's say now maybe shorter, rolling 12 months rolling is good indications that we over the year should see further improvements as we have seen the last 12 months.

Speaker #2: I think that's the closest where I can get to that. Very clear can I touch also on the UK and offshore obviously you have the let's say the conditional factory announcement that you said clearly is predicated on more order intake can I understand maybe what your expectations are on maybe cadence of order intake and what you'd actually need in order to trigger that investment.

Henrik Andersen: I think that's the closest way I can get to that.

Sean McLoughlin: Very clear. Can I touch also on UK and offshore? Obviously you have the conditional factory announcement that you said clearly is predicated on more order intake. Can I understand maybe what your expectations are on maybe cadence of order intake and what you'd actually need in order to trigger that investment?

Speaker #2: No as I said what is out there is we have a partnership we will join build with UK and for that matter Scottish government so therefore it's between us to make that decision there is an outcome from AR7 there is a we walk into the next planning of AR8 I think UK is doing all the right things so again one of the credit I will say countries get credit but behind countries it's key politicians and in this case it's Ed Miller Band that drives that so when we feel we have the right demand in that as partners we also will build the factory in Leaf that will then be an SL factory so we're confident that will happen I don't want to set an opening year on it it typically takes us 18 months to scale and ramp some of that so therefore Sean we're getting closer and I will be in all honesty personally I'll be disappointed if it hasn't happened within this decade we have a three and a half years timeline so it has to happen now and then we will see when is the time where we have enough demand that really triggers that but we are not long from it.

Henrik Andersen: As I said, what is out there is, we have a, we have a partnership. We will joint builds with UK and, for that matter, Scottish government. Therefore it is between us to make that decision. There is an outcome from AR7. We walk into the next planning of AR8. I think UK is doing all the right things. Again, one of the credit, I will say, countries get credit, but behind countries it is key politicians, and in this case it is Ed Miliband that drives that.

Henrik Andersen: When we feel we have the right demand, in that, as partners, we also will build the factory in Leith, that will then be an SL factory. We're confident that will happen. I don't want to set an opening year on it. It typically takes us 18 months to scale and ramp some of that. Therefore, Sean, we're getting closer. And I will be in all honesty, personally, I'll be disappointed if it hasn't happened within this decade. We have a 3.5 years timeline, it has to happen now, and then we will see when is the time where we have enough demand that really triggers that.

Henrik Andersen: We are not long from it.

Speaker #2: Thank you. The next question comes from the line of William Mackie from Kepler Chevreux please go ahead. Good morning thank you for taking the questions two please firstly on power solutions profitability when we look at the operational leverage on a top line basis it's close to 25% in terms of incremental revenue versus the change in profit but there's a shift in the mix between onshore and offshore so can you throw any more color around how the delta in profitability was driven I'm guessing most of it is or nearly all of it is offshore but perhaps you could throw some color on that the direction of change and then specifically to what extent offshore still has further upside relative to your longer term ambitions in terms of profitability of the offshore segment.

Sean McLoughlin: Thank you.

Operator 2: The next question comes from the line of William Mackie from Kepler Cheuvreux. Please go ahead.

Operator: The next question comes from the line of William Mackie from Kepler Cheuvreux. Please go ahead.

William Mackie: Good morning. Thank you for taking the questions. Two please. Firstly, on Power Solutions profitability. You know, when we look at the operational leverage, on a top line basis, it's close to 25% in terms of incremental revenue versus the change in profit. You know, there's a shift in the mix between onshore and offshore. Can you throw any more color around, how the delta in profitability was driven? I am guessing most of it is, or nearly all of it is, offshore, but perhaps you could throw some color on that, the direction of change. Then specifically to what extent, you know, offshore still has further upside relative to your longer term ambitions in terms of profitability of the offshore segment.

Speaker #2: Yeah thanks William I will just sort of say positively here it just shows probably what we have been speaking about for now six to eight quarters of we have invested high numbers of getting it mobilized we have invested high numbers and also getting the ramp right looking back absolutely the right thing to do we are now seeing the benefit of it but we still have also substantial still to take out but it also shows that when you now have a business that is also running potentially close to a billion euro a quarter then suddenly you have one you have a leverage in the business but at the same time when you then get your attack time and your efficiencies out on the manufacturing then suddenly there is a rather large leverage faster approaching what we also said getting back to a black number and also a margin that can actually be positive to be seen it has taken away there is still quite a lot more to be done and hint here is still that even after first quarter offshore still sits with a red number when we get towards the year end the full year number will be red but we will do whatever we can to fast approach a black number so when we look into 27 with part of what we can do now in ramp and what we can see ahead of us we strongly believe that 27 will be with that black number on offshore and of course that gives us the leverage what we have been talking to I think we lack to be able to demonstrate it but you are right here if you assume there was only offshore that will be a little that will be one dimensional from your side so I will say onshore is proving too with the mixed the countries we are delivering in it is actually proving also contributing to that 500 basis points but materially of the 500 basis points comes from your offshore that you are right in.

Henrik Andersen: Thanks William. I will just sort of say positively here, it just shows probably what we have been speaking about for now 6 to 8 quarters of we have invested high numbers of getting it mobilized. We have invested high numbers and also getting the ramp right. Looking back, absolutely the right thing to do. We are now seeing the benefit of it, we still have also substantial still to take out. It also shows that when you now have a business that is also running potentially close to EUR 1 billion a quarter, then suddenly you have a leverage in the business.

Henrik Andersen: At the same time, when you then get your takt time and your efficiencies out on the manufacturing, then suddenly there is a rather large leverage fast approaching what we also said, getting back to a black number and also a margin that can actually be as positive to be seen. There is still quite a lot more to be done. Hint here is still that even after Q1, offshore still sits with a red number. When we get towards the year-end, the full-year number will be red, but we will do whatever we can to fast approach a black number.

Henrik Andersen: When we look into 2027, with part of what we can do now in ramp and what we can see ahead of us, we strongly believe that 2027 will be with that black number on offshore. Of course, that gives us the leverage what we have been talking to. I think we lack to be able to demonstrate it, but you are right here. If you assume there was only offshore, that would be one dimensional from your side. I will say onshore is proving to with the mix, the countries we are delivering in, it is actually proving also contributing to that 500 basis points. Materially of the 500 basis points comes from your offshore that you are right in.

Speaker #2: Thank you very much the second is to delve back into service after your five consecutive quarters of developing your turnaround plan can you throw perhaps some more light on the evolution of the KPIs in terms of the backlog of outstanding work to perform or the scale of the fleet that still requires rectification work and perhaps specifically on the numbers a sense of what the drop in costs was that you called out quarter on quarter within service.

William Mackie: Thank you very much. The second is to delve back into service after your 5 consecutive quarters of developing your turnaround plan. Can you throw perhaps some more light on the evolution of the KPIs in terms of the backlog of outstanding work to perform or the scale of the fleet that still requires rectification work? Perhaps specifically on the numbers, a sense of what the drop in costs was that you called out quarter-on-quarter within service. Thank you.

Speaker #2: Thank you. William that was almost in a cash category of getting a number of questions into one but let me just put it like this when you are able across things like this on a comparison to take something like 10% cost out out in a quarter that means also now we are getting to the meat of what the recovery is about it's getting to the optimization not only by sight but also what is the variable and potentially mobile work parts of technicians so we are getting much better in that part of that is better to organize getting into the sites get a better in a lot of way and also sourcing the parts and others and then I will say we got some stickiness we now know exactly what parts of the world are we still what I will call at high alert we operate with something called hypercare sites now where we have a little less than 100 sites globally but they sit in a less than I will say less than a handful of real countries where we then operate hypercare because hypercare comes from the name which is here is a an imbalanced costs allocation or there is an imbalanced of liquidated damages of availability and other stuff and that William has now also narrowed our way of running some of this but what so in reality some of it is really as you can almost hear homing in on certain sites in the portfolio but I will say here the other thing that really thrills me is that we now have enterprise processes for costs and how you equip yourself across the operations and then on the commercial reset many similar likes of what we did in power solutions back in yeah 21 22 and therefore that I hold a lot of regards but it is yeah yeah I got to be surprised maybe we should have addressed the commercial reset earlier but now we are doing it and it's catching momentum because we got enough competences and experience from the power solution of how to get it done.

Henrik Andersen: William, that was almost in a cash category of getting a number of questions.

William Mackie: Oh, sorry.

Henrik Andersen: into one. Let me just put it like this. When you are able across things like this on a, on a comparison to take something like 10% cost out in a quarter, that means also now we are getting to the meat of what the recovery is about. It's getting to the optimization not only by site, but also what is the variable and potentially m-mobile work parts of technicians. We are getting much better in that. Part of that is better to organize, getting into the sites, get better in a lot of way in also sourcing the parts and others. Then I will say we got some stickiness.

Henrik Andersen: We now know exactly what parts of the world are we still, what I will call at high alert. We operate with something called hypercare sites now where we have a little less than 100 sites globally, but they sit in a less than, I will say, less than a handful of real countries where we then operate hypercare. Because hypercare comes from the name, which is here is an imbalanced cost allocation or there is an imbalance of liquidated damages of availability and other stuff, and that William has now also narrowed our way of running some of this. In reality, some of it is really, as you can almost hear, homing in on certain sites in the portfolio.

Henrik Andersen: I will say here, the other thing that really thrills me is that we now have enterprise processes for costs and how you equip yourself across the operations. On the commercial reset, many similar likes of what we did in Power Solutions back in 2021, 2022, and therefore that I hold a lot of regards. I got to be surprised. Maybe we should have addressed the commercial reset earlier, but now we are doing it and it is catching momentum because we got enough competencies and experience from the Power Solutions of how to get it done.

Speaker #2: Thank you very much. We now have a question from the line of AJ Patel from Goldman Sachs please go ahead. Morning and thank you for the presentation I have two just only working capital movements over this quarter is any of that to maybe de-risk and buy a head of hand for any critical components that may become constrained as a function of the conflict is there a de-risking element in this cash flow number and does that how far would that be out just to give us a sense if possible and then secondly on ramp up costs offshore how much of a drag was it on offshore margins and over the first half I'm just thinking relative to the second half how much of an uptick that might present this is clearly going to be a lot of moving parts this year.

William Mackie: Thank you very much.

Operator 2: We now have a question from the line of Ajay Patel from Goldman Sachs. Please go ahead.

Operator: We now have a question from the line of Ajay Patel from Goldman Sachs. Please go ahead.

Ajay Patel: Morning, thank you for the presentation. I have 2. Just on the working capital movements over this quarter, is any of that to maybe de-risk and buy ahead of hand for any critical components that may become constrained as a function of the conflict? Is there a de-risking element in this cash flow number? How far would that be out? Just to give us a sense, if possible. Secondly, on ramp-up costs offshore, how much of a drag was it on offshore margins over the H1? I'm just thinking relative to the H2, how much of an uptick that might present. 'Cause there's clearly gonna be a lot of moving parts this year. Thank you.

Speaker #2: Thank you. Yeah thank you let me take that the first one on working capital as Henrik is talking to our supply chain team has learned a lot from last time and our working with the various tools and mechanisms that you can do to deal with that overall explaining the networking capital that is nothing to do about bringing things forward on inventory that's the networking capital you see is the normal seasonality of a year so yes we have done that in a small here and there where possible but you will not see it in that number it's driven by the seasonality that we built and install a lot end of the end of the year or the next part of the year your second question around ramp up remember the first I think we were celebrating it when we had the first turbine standing midyear and last year so of course that tells you that throughout last year we had a lot of ramp up in the first half and basically nothing installed or very limited we had of course manufacturing going on but that was ramping up throughout the year so there was definitely a year on year development that you will see there and you see that if you look at quarter four and quarter one the last two quarters you see the level of what we can do in our manufacturing sites and that's a good reflection of what you should expect so you're correct in your analysis.

Jakob Wegge-Larsen: Thank you. Let me take that. The first one on working capital, as Henrik is talking to our supply chain team, has learned a lot from last time, and are working with the various tools and mechanisms that you can do to deal with that. Overall, explaining the net working capital, that is nothing to do about bringing things forward on inventory. That's the net working capital you see is the normal seasonality of a year. Yes, we have done that in a small here and there where possible, but you would not see it in that number. It's driven by the seasonality that we built and install a lot end of the year or the next part of the year.

Henrik Andersen: Your second question around ramp-up. Remember the first, I think we were celebrating it, when we had the first turbine standing mid-year and last year. Of course, that tells you that throughout last year, we had a lot of ramp-up in H1 and basically nothing installed or very limited. We had, of course, manufacturing going on, but that was ramping up throughout the year. There is definitely a year and year development that you will see there.

Jakob Wegge-Larsen: Your second question around ramp-up. Remember the first, I think we were celebrating it, when we had the first turbine standing mid-year and last year. Of course, that tells you that throughout last year, we had a lot of ramp-up in H1 and basically nothing installed or very limited. We had, of course, manufacturing going on, but that was ramping up throughout the year. There is definitely a year and year development that you will see there. You see that if you look at Q4 and Q1, the last two quarters, you see the level of what we can do in our manufacturing sites, and that's a good reflection of what you should expect. You're correct in your analysis.

Henrik Andersen: You see that if you look at Q4 and Q1, the last two quarters, you see the level of what we can do in our manufacturing sites, and that's a good reflection of what you should expect. You're correct in your analysis.

Speaker #2: Thank you. We now have a question from the line of Deepa Venkateswaran from Bernstein please go ahead. Thank you I had a follow up question on the US and then one on offshore wind so starting with offshore wind obviously the UK is a great market AR8 should also put you in a strong position but I was just wondering are you able to comment on any other markets other than the UK where in the next couple of years you may see more orders Denmark Netherlands Belgium Taiwan South Korea any of these markets that was my first question second one just to clarification on the US follow up to the previous questions so you're saying that the main hang up for you is not permitting and I think previously you have mentioned section 232 so is it fair to say that once you have clarity on section 232 the taps should flow a bit more openly on US orders or is there something else.

Ajay Patel: Thank you.

Operator 2: We now have a question from the line of Deepa Venkateswaran from Bernstein. Please go ahead.

Operator: We now have a question from the line of Deepa Venkateswaran from Bernstein. Please go ahead.

Deepa Venkateswaran: Thank you. I had a follow-up question on the US and then one on offshore wind. Starting with offshore wind, obviously the UK is a great market. AR8 should also put you in a strong position. I was just wondering, are you able to comment on any other markets other than the UK where in the next couple of years you may see more orders, Denmark, Netherlands, Belgium, Taiwan, South Korea, any of these markets? That was my first question. Second one, just a clarification on the US, a follow-up to the previous question. You're saying that the main hang up for you is not the 30 gigawatts stuck in DoD permitting. I think previously you have mentioned Section 232.

Deepa Venkateswaran: Is it fair to say that once you have clarity on Section 232, the taps should flow a bit more openly on US orders, or is there something else? That was it. Thank you.

Speaker #2: That was it thank you. I don't know what you mean by retiring the worst order here I was thinking sort of US orders are coming orders are coming in they're not coming in as usually informative as they normally would with location and who and others because people have become sensible of announcing that deeper but so I will say here main uncertainties in the US for us I will say the ones where you will see we are progressing is the ones where it's either conditional upon final offtake or something like that the offtake market as you can see in Q1 it's gone up again despite what maybe a few people are claiming on energy prices they're actually increasing across both molecules and electrons in the US so for us the thing you're focusing on is the argument of what potentially will in 29 30 or 31 will slow down and I think there we have plenty of time to deal with that because that I don't think will in the current environment on the price of energy will survive that sort of we won't do that or we won't give you the permits there are plenty of gigawatts already now ready to be executed fully permitted inside it inside states inside the federal permits as well so that one I'm not so nervous of so this is more about getting the finance getting yourself organized just like you would normally assume so we don't see that stop in the US and as I said I'm that much in the US right now and that's not what I hear from customers either but you don't want to end in a one to one fight with one person that potentially doesn't like wind in the US on the offshore appreciate your comment and I will keep it from a market point rather than because you probably also appreciate we're confident we see the offshore upside we can also probably see that in a number of the main markets we are one and two and therefore when we talk about markets here I think what I really welcome it seems like European Energy Ministers have stopped competing with each other to have a free auction because everyone have now experienced a failed auction so most recently in the Eurowind conference in Madrid I think everyone are now fully onboarded in that offshore works with some kind of a CFD across all of Europe Holland has done it Denmark is doing it but that means they are reissuing their auction design in Europe so offshore Europe very positive on whether it's Ireland or it's Holland or it's Belgium or one day France will also adjust to it but we'll see maybe there will be the last in the row and then when we look outside Europe yes you're in Asia you're in back in Korea Japan has something to prove for themselves if they want to recover from the failed round one and of course that we will try to help those countries if they want our input because we know the markets there really well so if I look at it we are fulfilling the offshore project we have in the US but then I will say US goes silent which is not surprisingly but Europe will be plenty of things to do in the coming decade.

Henrik Andersen: I don't know what you mean by retiring the worst order here. US orders are coming, orders are coming in. They're not coming in as usually informative as they normally would with location and who and others, because people have become sensible of announcing that, Deepa. I will say here, main uncertainties in the US for us, I will say the ones where you will see we are progressing is the ones where it's either conditional upon final offtake or something like that. The offtake market, as you can see in Q1, it's gone up again. Despite what maybe a few people are claiming on energy prices, they're actually increasing across both molecules and electrons in the US.

For us, the thing you are focusing on is the argument of what potentially will in 2029, 2030 or 2031. I think there we have plenty of time to deal with that, because that I don't think will, in the current environment on the price of energy, will survive that sort of, we won't do that, or we won't give you the permits. There are plenty of gigawatts already now ready to be executed, fully permitted inside it, inside states, inside the federal permits as well. That one I'm not so nervous of. This is more about getting the finance, getting yourself organized, just like you would normally assume.

Henrik Andersen: For us, the thing you are focusing on is the argument of what potentially will in 2029, 2030 or 2031. I think there we have plenty of time to deal with that, because that I don't think will, in the current environment on the price of energy, will survive that sort of, we won't do that, or we won't give you the permits. There are plenty of gigawatts already now ready to be executed, fully permitted inside it, inside states, inside the federal permits as well. That one I'm not so nervous of. This is more about getting the finance, getting yourself organized, just like you would normally assume.

Henrik Andersen: We don't see that stop in the US and as I said, I'm that much in the US right now, and that's not what I hear from customers here. You don't want to end in a one-to-one fight with one person that potentially doesn't like wind in the US. On the offshore, appreciate your comment, and I will keep it from a market point rather than, because you probably also appreciate. We are confident. We see the offshore upside. We can also probably see that in number of the main markets we are one and two.

Henrik Andersen: Therefore, when we talk about markets here, I think what I really welcome, it seems like European energy ministers have stopped competing with each other to have a free auction because everyone have now experienced a failed auction. Most recently in the WindEurope conference in Madrid, I think everyone are now fully onboarded in that offshore works with some kind of a CFD across all of Europe. Holland has done it, Denmark is doing it, they're reissuing their auction design in Europe. Offshore Europe, very positive on whether it's Ireland or it's Holland or it's Belgium or one day France will also adjust to it, but we'll see. Maybe they will be the last in the row.

Henrik Andersen: When we look outside Europe, yes, you are in Asia, you are back in Korea. Japan has something to prove for themselves if they want to recover from the failed round one. We will try to help those countries if they want our input, because we know the markets there really well. If I look at it, we are fulfilling the offshore project we have in the US, but then I will say US goes silent, which not surprisingly, but Europe will be plenty of things to do in the coming decade.

Speaker #2: Thank ank you. The next question comes from the line of Klaus Almer from Nordia please go ahead. Thank you yeah also a few questions from my side so the first question goes to the service division and congratulations with the efforts you have made so far given those initiatives implemented shouldn't we expect a better profitability rest of the year that would be the first one.

Deepa Venkateswaran: Thank you.

Operator 2: The next question comes from the line of Claus Almar from Nordea. Please go ahead.

Operator: The next question comes from the line of Claus Almar from Nordea. Please go ahead.

Claus Almar: Thank you. Also a few questions from my side. The first question goes to the service division. Congratulations with the, you know, efforts you have made so far. Given those initiatives implemented, shouldn't we expect a better profitability rest of the year? That would be the first one.

Claus Almar Nielsen: Thank you. Also a few questions from my side. The first question goes to the service division. Congratulations with the, you know, efforts you have made so far. Given those initiatives implemented, shouldn't we expect a better profitability rest of the year? That would be the first one.

Henrik Andersen: We keep the guidance, Claus, this is a much matter of done some turnarounds in service business. We have a strong hold of the business right now. We are not letting any of that go, therefore cost out is still name of the game and getting in control. When I now share with you that we have hypercare of a certain number of sites until we are in full control over that, Claus, I don't think you should start modeling anything else of that nature. Not quarterly, that's why we are repeating the year-end and full year guidance for the service business. Of course, it progresses well, and we are happy with that.

Speaker #2: We keep the guidance Klaus and this is a much matter of done some turnarounds in service business we have a strong whole of the business right now we are not letting any of that go and therefore cost out is still name of the game and getting in control and when I now share with you that we have hypercare of a certain number of sites until we are in full control over that Klaus I don't think you should start modeling anything else of that nature not quarterly so that's why we are repeating the year end and full year guidance for the service business but of course it progresses well and we are happy with that that is also why we are internally giving us some momentum but also some further commitments of getting this done within the coming three quarters and there I'm not so focused right now on one quarter's EBIT or top line I want the business to we want the business to run as a proper business where there are in control of their KPIs and the operational measurements so that's the focus area right now yeah you know me by now that's what really is on the agenda.

Henrik Andersen: That is also why we are internally giving us some momentum, but also some further commitments of getting this done within the coming 3 quarters. There, I am not so focused right now on 1 quarter's EBIT or top line. We want the business to run as a proper business where they are in control of their KPIs and the operational measurements. That is the focus area right now. You know me by now. That is what really is on the agenda.

Speaker #2: Sure and I was not trying to get a guidance upgrade during this conference call Henrik it was more like all the things you're doing everything equal underlying things should be improving in the coming quarter so that was more what I was trying to hint at.

Claus Almar: Sure. I mean, I was not trying to get a guidance upgrade during this conference call, Henrik. It was more like, you know, with all the things you're doing, everything equal underlying, things should be improving in the coming quarter. That was more what I was trying to hint at.

Claus Almar Nielsen: Sure. I mean, I was not trying to get a guidance upgrade during this conference call, Henrik. It was more like, you know, with all the things you're doing, everything equal underlying, things should be improving in the coming quarter. That was more what I was trying to hint at.

Henrik Andersen: I've-

Claus Almar: But-

Claus Almar Nielsen: But-

Henrik Andersen: I've had that, and then, and as I said, here, the commercial reset, as you will appreciate, of course, that is going to increase the profitability at a certain point in time.

Speaker #2: I've had that, and as I said here, the commercial reset, as you will appreciate, of course, that is going to increase the profitability at a certain point in time—which sure, it is. And we have a higher renewal rate than we ever expected four or five quarters ago, because the internal feedback was we would hardly have any renewables when we start having a conversation around renewables on different terms. And let us take the multi-brand—something we can honestly say we should probably not have engaged in, but now we're having it, and most of the multi-brands are transferring into something that's called cost-plus, or even just a spare part arrangement together with our partners.

Henrik Andersen: I've had that, and then, and as I said, here, the commercial reset, as you will appreciate, of course, that is going to increase the profitability at a certain point in time.

Claus Almar: Sure.

Claus Almar Nielsen: Sure.

Henrik Andersen: Sure it is. We have a higher renewal rate than we ever expected, four or five quarters ago, because the internal feedback was we would hardly have any renewables when we start having a conversation around renewables on different terms. Let us take the multi-brand. Something we can honestly say we should not, probably not have engaged in, but now we're having it, and most of the multi-brands are transferring into something else called cost-plus or even just a spare part arrangement together with our partners.

Claus Almar: Well, my second question, I just want to repeat, I'm not, you know, hinting for a guidance upgrade of this call. Looking at the group level, you know, you showed in a slide that the 12-month rolling EBIT margin is 6.1%. With the improvement in offshore, onshore is doing pretty well, and the service, you know, doesn't it look, you know, what should drive full-year margin in the low end of range?

Claus Almar Nielsen: Well, my second question, I just want to repeat, I'm not, you know, hinting for a guidance upgrade of this call. Looking at the group level, you know, you showed in a slide that the 12-month rolling EBIT margin is 6.1%. With the improvement in offshore, onshore is doing pretty well, and the service, you know, doesn't it look, you know, what should drive full-year margin in the low end of range?

Speaker #2: So my second question and I just want to repeat and I'm not hinting for a guidance upgrade of this call but looking at the group level you showed in a slide that the 12-month rolling EBIT margin is 6.1% and with the improvement in offshore onshore is doing pretty well and the service doesn't it look what should drive full year margin in the low end of range.

Henrik Andersen: Oh, I think if we were only sitting here in a little bubble and talking investors alone, then I'm pretty sure we could quickly fix something that would looks likely better. We also have a world around us, and I think the world around us are probably giving us something that still could hit various parts of that guiding range, which is why we keep the guidance, Claus. Six to eight feels comfortable in the current surroundings. Of course, you can sort of say if we were sitting in Q1, take away the following. We're not buying back shares, if we were not feeling pretty confident of how we executing right now.

Speaker #2: I think if we were only sitting here in a little bubble and talking investors alone then I'm pretty sure we could quickly fix something that would look slightly better but we also have a world around us and I think the world around us are probably giving us something that still could hit various parts of that guiding range which is why we keep the guidance Klaus so six to eight feels comfortable in the current surroundings but of course you can sort of say if we were sitting in Q1 take away the following we're not buying back shares if we were not feeling pretty confident of how we executing right now and as some of you also asked here is the offshore and the feeling around offshore is therefore a much bigger relief and that I think we can send the signal back to you and saying that's partly why we also now buying shares back for the third quarter if you do that calculation I will go from the bottom line instead if we have to distribute 40% of net profits to shareholders over this year then we still have some shares to buy back outside also the 100 we announced today and that's probably a focus area for us I know you will then see if it's seven or is it midpoint is it seven or is it 7.2 or 6.8 I can get to all of those numbers right now but let's have that conversation a little later in the year but I will much rather sit here after Q1 and feel we have had a good start than feeling that I needed to catch up on something.

Henrik Andersen: As some of you also asked here is the offshore, and the feeling around offshore is therefore a much bigger relief. That I think we can send a signal back to you and saying that's partly why we also now buying shares back for Q3. If you do that calculation, I will go from the bottom line instead. If we have to distribute 40% of net profits to shareholders over this year, we still have some shares to buy back outside also the 100 we announced today, and that's probably a focus area for us. I know you will then see if it's 7 or is it midpoint, is it 7 or is it 7.2 or 6.8?

Henrik Andersen: I can get to all of those numbers right now, but let's have that conversation a little later in the year. I would much rather sit here after Q1 and feel we have had a good start than feeling that I needed to catch up on something.

Speaker #2: That is all fair thank you so much Henrik. We now have a question from the line of Henrik Tar from Berenberg please go ahead.

Claus Almar: That is all fair. Thank you so much, Henrik.

Claus Almar Nielsen: That is all fair. Thank you so much, Henrik.

Operator 2: We now have a question from the line of Henry Tarr from Berenberg. Please go ahead.

Operator: We now have a question from the line of Henry Tarr from Berenberg. Please go ahead.

Henry Tarr: Hi there, and thanks for taking my questions. I have two if I may. The first just on the Power Solutions business. Were the offshore margins Do the offshore business effectively explain all of the improvement year-on-year? Onshore margins relatively similar year-on-year, or is there some potential improvement in onshore as well? Then the second question just on the buyback. I guess so EUR 100 million buyback, even despite the sort of weaker free cash flow, I guess we should expect that to continue as long as you sit with a net cash position. Is that what I'm sort of taking away from the slides? Thank you.

Speaker #2: Hi there and thanks for taking my questions I have two if I may the first just on the past solutions business were the offshore margins do the offshore business effectively explain all of the improvement year on year so onshore margins relatively similar year on year or was there some potential improvement in onshore as well and then the second question just on the buyback I guess so 100 million buyback even despite the sort of weaker free cash flow I guess we should expect that to continue as long as you sit with a net cash position is that what I'm sort of taking away from the slides.

Speaker #2: Thank you. Let me take those two first power solutions question I do believe it's a slight repeat of what we have said before also on this call in general this is the main driver is offshore that's that explains the main impact of it in terms of share buyback I think also we indirectly are hinting this right yes and as I said and I showed the slide right we have greyed out the quarter two to quarter four that we do it already in Q1 is a sign of strength and where we are confident as Henrik is saying with how the business has started and the business can carry this despite of as you say despite of the cash flow in the first quarter the business can carry this and this is a good sign of also where we see the strength of the good start and also how we look at the rest of the year.

Jakob Wegge-Larsen: Let me take those two. First, the Power Solutions question. I do believe it's a slight repeat of what we have said before, so on this call. In general, this is the main driver is offshore. That explains the main impact of it. In terms of share buyback, I think also we indirectly are hinting this, right? As I said, and I showed the slide, right, we have grayed out the Q2 to Q4, that we do it already in Q1 is a sign of strength and where we are confident, as Henrik is saying, with how the business have started.

Henrik Andersen: The business can carry this, as you say, despite of the cash flow in Q1. The business can carry this. This is a good sign of also where we see the strength of the good start and also how we look at the rest of the year. With that, I think we take the last two questions.

Jakob Wegge-Larsen: The business can carry this, as you say, despite of the cash flow in Q1. The business can carry this. This is a good sign of also where we see the strength of the good start and also how we look at the rest of the year. With that, I think we take the last two questions.

Speaker #2: With that, I think we take the last two questions, so we have the question from Lukas Serhani from Jefferies. Please go ahead. Thank you, and good morning everyone. My question was just on the market share—you show at the start the data from Woodmark. Obviously, we're seeing most of the Western players lose a bit of share, and then others kind of go from 11 to 25. So can you talk a little bit around what is happening there? You do talk about India and emerging markets, but I'm thinking about a country like Brazil, for example, where you're seeing maybe other players come in. When you look at your overall footprint, what countries, maybe outside Europe and the US, that are relatively still strongholds for the Western Union, do you see maybe that pressure coming from these smaller players? Thank you.

Operator 2: We have the question from Lucas O'Donnell from Jefferies. Please go ahead.

Operator: We have the question from Lucas Ferhani from Jefferies. Please go ahead.

Lucas O'Donnell: Thank you, good morning, everyone. My question was just on the market share you show at the start of the data from WoodMac. Obviously, we're seeing most of the Western players lose a bit of share, then others kind of go from 11 to 25. Can you talk a little bit around what is happening there? You do talk about India and emerging markets, but I'm thinking about a country like Brazil, for example, where you're seeing maybe other players come in. When you look at your overall footprint, you know, what countries maybe outside Europe and the US that are relatively still strong strongholds for the Western union, do you see, you know, maybe that pressure coming from these smaller players? Thank you.

Lucas Ferhani: Thank you, good morning, everyone. My question was just on the market share you show at the start of the data from WoodMac. Obviously, we're seeing most of the Western players lose a bit of share, then others kind of go from 11 to 25. Can you talk a little bit around what is happening there? You do talk about India and emerging markets, but I'm thinking about a country like Brazil, for example, where you're seeing maybe other players come in. When you look at your overall footprint, you know, what countries maybe outside Europe and the US that are relatively still strong strongholds for the Western union, do you see, you know, maybe that pressure coming from these smaller players? Thank you.

Henrik Andersen: As I said here, that's always the thing when you have averages of that nature and you have individual countries of that nature. We generally work well with customers where we are in our main markets. Where there are markets coming in, like if, part of Egypt or Middle East and others, we generally sort of say if somebody wants to pass that with the pricing that not even covering a direct cost, Lucas, then that's not the game we are in. If you want to do that, then we are fine. Governments generally understand the criticality of the infrastructure, the grids and others, which of course we have been guiding angels of for decades.

Speaker #2: As I said here that's the old ways the thing when you have averages of that nature and you have individual countries of that nature we generally work well with customers where we are in our main markets where there are markets coming in like India like yeah part of Egypt or Middle East and others we generally sort of say if somebody wants to pass that with pricing that not even covering direct cost Lucas then that's not the game we are in and if you want to do that then we are fine but governments generally understand the criticality of the infrastructure the grids and others which of course we have been guiding angels of for decades so we are fine with that and then as I said we had orders in Brazil we had development parts in Brazil related also to Brazil developing their data center legislation so game on I mean I'm fine with that and therefore here you should more as I said you can drill on that slide and you could probably find one or two negative arguments with some of you with share price outlook probably needs to find and others doesn't need to find but you know what if I look at our backlog right now it's yeah it's 36 billion euros and we are happy with that and it's for me and I join in August 19 as a chief exec it's the best backlog I've had so therefore I'm literally a bit relaxed on that market share because there's still some markets in there which doesn't make sense to sit and have a bad day over.

Henrik Andersen: We are fine with that. Then as I said, we had orders in Brazil. We had development parts in Brazil related also to Brazil developing their data center legislation. Game on. I mean, I'm fine with that. Therefore, here, you should more, as I said, you can drill on that slide, and you could probably find one or two negative arguments with some of you which share price outlook probably needs to find and others doesn't need to find. You know what? If I look at our backlog right now, it's EUR 36 billion, and we are happy with that. It's for me, and I joined in August 2019 as the chief executive, it's the best backlog I've had.

Henrik Andersen: Therefore, I'm literally a bit relaxed on that market share because there's just still some markets in there which doesn't make sense to sit and have a bad day over.

Speaker #2: Perfect thank you. So that's last question then operator thank you. Or last questions if. So the last question comes from Martin Wilke from Citibank please go ahead.

Lucas O'Donnell: Perfect. Thank you.

Lucas Ferhani: Perfect. Thank you.

Henrik Andersen: That's last question then, operator. Thank you.

Operator 2: The last question comes from Martin Wilkie from Citibank. Please go ahead.

Operator: The last question comes from Martin Wilkie from Citibank. Please go ahead.

Speaker #2: Thank you good morning it's Martin thanks for squeezing me in the question was just coming back to the US market obviously the big visual bill has its one year anniversary in a couple months from now and I think we've talked in the past that the construction start deadline is not necessarily a sort of firm cliff if you like because customers can achieve it in different ways and ordering the turbine but any sort of updated commentary as to how we should think about how customers are thinking about achieving construction start just so we can understand how that may or may not act as a catalyst and then related to that there has been noise and actually a bill proposed by some Republicans just in the last few days to try and reverse some of this the expiration of these tax credits so effectively removing this cliff in 29 2030 now I know there's obviously lots of politics to happen later this year but is that entering customer conversations that it's possible that these tax credits may not actually expire in 29 and 2030.

Martin Wilkie: Thank you. Good morning. It's Martin. Thanks for squeezing me in. The question was just coming back to the US market. Obviously, the big visual bill has its 1-year anniversary in 2 months from now. I think we've talked in the past that the construction start deadline is not necessarily a sort of firm cliff, if you like, 'cause customers can achieve it in different ways and order the turbine. Any sort of updated commentary as to how we should think about how customers are thinking about achieving construction start, just so we can understand how that may or may not act as a catalyst.

Martin Wilkie: Related to that, there has been noise and actually a bill proposed by some Republicans just in the last few days to try and reverse some of this, the expiration of these tax credits, so effectively removing this cliff in 2029, 2030. I know there's obviously lots of politics that happen later this year, but is that entering customer conversations that it's possible that these tax credits may not actually expire in 2029 and 2030?

Speaker #2: I think here there will be I mean if you take the constant stream of also things that are potentially not right I think I always say Martin the best way of addressing a market like the US that has so strong fundamentals this is about demand and supply of electrons and the price and the time of within you can deliver it then you have in the US right now a political arena and probably also an environment that includes emotions and as I'm also typically using a bit by repeating something that is not right doesn't make it right and therefore we got to just blow through some of that I think on the anniversary and other things we know that if you're in construction if you still have safe harbor then of course you also able to construct some of the things and I will say who the hell would stop something that is that attractive to supply your society with electrons that is in desperate need for new electrons I don't know but maybe that's why I'm business and not political person so I think there is a lot to be done there is a midway election coming up in November I think both sides are start seeing the realities of slowing things down or creating or pushing to an energy crisis so that's why we keep doing what we do best stay close with your customers and with your partners and then I'm pretty sure we'll solve some of those obstacles that are thrown at us and so at the current pricing of PPAs and offtake both 10 15 20 years there stop worrying about the tax credits and other stuff because it is so attractive anyway so that's actually fundamentals of US right now.

Henrik Andersen: I think here there will be, there I mean, if you take the constant stream of, also things that are potentially not right, I think I always say, Martin, the best way of addressing a market like the US that has so strong fundamentals, this is about demand and supply of electrons and the price and the time within you can deliver it. You have in the US right now a political arena and probably also an environment that includes emotions. As I'm also typically using a bit, by repeating something that is not right doesn't make it right. Therefore, we got to just plow through some of that.

Henrik Andersen: I think on the anniversary and other things, we know that if you're in construction, if you still have safe harbor, then of course, you're also able to construct some of the things. I will say, who the hell would stop something that is that attractive to supply your society with electrons that is in desperate need for new electrons? I don't know. Maybe that's why I'm business and not political person. I think there is a lot to be done. There is a midway election coming up in November. I think both sides are start seeing the realities of slowing things down or creating or pushing to an energy crisis.

Henrik Andersen: That's why we keep doing what we do best, stay close with your customers and with your partners, I'm pretty sure we'll solve some of those obstacles that are thrown at us. At the current pricing of PPAs and offtake, both 10, 15, 20 years, they stop worrying about the tax credits and other stuff because it is so attractive anyway. That's actually fundamentals of US right now.

Speaker #2: Great thank you very much. Okay thanks for joining this call and again here thanks for all your attention and support as well I'm sure we'll see many of you over the coming days so good start to the year looking forward to the next three quarters together with you and thanks for our Q1 thanks.

Martin Wilkie: Great. Thank you very much.

Henrik Andersen: Okay. Thanks for joining this call. Again, here, thanks for all your attention and support as well. I am sure we will see many of you over the coming days. Good start to the year. Looking forward to the next 3 quarters together with you. Thanks for our Q1. Thanks.

Speaker #2: Ladies and gentlemen the conference is now over thank you for choosing Chorus Call and thank you for participating in the conference you may now disconnect your lines goodbye.

Operator 2: Ladies and gentlemen, the conference is now over. Thank you for choosing Chorus Call, and thank you for participating in the conference. You may now disconnect your lines. Goodbye.

Operator: Ladies and gentlemen, the conference is now over. Thank you for choosing Chorus Call, and thank you for participating in the conference. You may now disconnect your lines. Goodbye.