Q3 2026 Siemens Energy AG Earnings Call

August 5, 2026

Speaker #1: Good morning and a warm welcome to the Siemens Energy Q3 results analyst call for fiscal year 2026. We publish our Q3 fiscal year 2026 results this morning at 7:00 a.m.

Speaker #1: on our website. Our president and CEO, Christian Bruch, and our CFO, Maria Ferrari, are here with me. Christian and Maria will take you through the major developments during Q3 fiscal year 2026.

Speaker #1: This will take approximately 30 minutes. Thereafter, Christian and Maria are available to answer your questions. For the entire conference call, we have allowed 1 hour.

Speaker #1: Christian, over to you.

Speaker #2: Thank you, Tobias, and good morning, everyone, and thank you for joining us today. Siemens Energy delivered another outstanding quarter with record orders, record revenue, and further margin expansion.

Speaker #2: I'm very, very proud of the Siemens Energy team, our team purple, which is converting the strong demand environment into profitable growth, cash generation, and sustainable value creation.

Speaker #1: As a reminder, this call is being recorded. Before we begin, I would like to draw your attention to the Safe Harbor statement on page 2 of the Siemens Energy presentation.

Speaker #2: Especially achievement this quarter, after 15 quarters, Siemens Gamesa has closed a profitable quarter. And there are the three messages I would like you to take away from today's presentation.

Speaker #1: This conference call may include forward-looking statements. These statements are based on the company's current expectations and certain assumptions, and are therefore subject to certain risks and uncertainties.

Speaker #2: First, the structural drivers behind our markets remain firmly intact. Our second, our pricing discipline and project selectivity support profitable growth. And third, our capacity expansion projects are executed as planned, allowing us to successfully convert our backlog into higher revenue and earnings.

Operator: These statements are based on the company's current expectations and certain assumptions and are therefore subject to certain risks and uncertainties. At this time, I would like to turn the call over to your host today, Mr. Tobias Hang. Please go ahead, sir.

Speaker #1: At this time, I would like to turn the call over to your host today, Mr. Tobias Hang. Please go ahead, sir.

Speaker #2: Thank you so much, Moritz. Good morning, and a warm welcome to the Siemens Energy Q3 Results Analyst Call for fiscal year 2026. We published our Q3 fiscal year 2026 results this morning at 7:00 a.m.

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

Speaker #2: Our investment case is increasingly benefiting from the next phase of value creation. Stronger earnings, cash generation, and shareholder returns supported by our growing backlog, capacity investments, and structural market growth.

Speaker #2: On our website, our President and CEO, Christian Bruch, and our CFO, Maria Ferraro, are here with me. Christian and Maria will take you through the major developments during Q3 fiscal year 2026.

Speaker #2: The question is not only how strongly these markets grow, but also how effectively we translate these opportunities into sustainable value for our shareholders. And I'm pleased with the progress we are making.

Speaker #2: This will take approximately 30 minutes. Thereafter, Christian and Maria are available to answer your questions. For the entire conference call, we have allowed one hour.

Speaker #2: And let me now turn to the key achievements of the quarter. Supported by continued strong market demand, Siemens Energy delivered another record quarter. Orders reached approximately 17.9 billion euros, driven particularly by gas services and grid technologies.

Speaker #2: Christian, over to you.

Speaker #3: Thank you, Tobias, and good morning, everyone. Thank you for joining us today. Siemens Energy delivered another outstanding quarter, with record orders, record revenue, and further margin expansion.

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

Speaker #3: I'm very, very proud of the Siemens Energy team—our Team Purple—which is converting the strong demand environment into profitable growth, cash generation, and sustainable value creation.

Speaker #2: And at the same time, revenue reached a record 11.4 billion euro, the highest quarterly revenue level we have delivered so far. And the investments in capacity expansions and operational improvements over the past years are really translating into tangible revenue growth and improved financial performance.

Speaker #3: Especially an achievement this quarter: after 15 quarters, Siemens Gamesa has closed a profitable quarter. And there are three messages I would like you to take away from today's presentation.

Speaker #2: Profitability strengthened considerably. Profit before special items more than tripled year over year, and the margin before special items reached 14.2%. And this reflects the improving earnings quality and operational leverage we are building across the portfolio.

Speaker #3: First, the structural drivers behind our markets remain firmly intact. Second, our pricing discipline and project selectivity support profitable growth. And third, our capacity expansion projects are executed as planned, allowing us to successfully convert our backlog into higher revenue and earnings.

Speaker #2: As a result, basic earnings per share rose to 1.28 euro from 0.71 euro in the prior year quarter, reflecting the significant improvement in profitability and the value we are creating for our shareholders.

Speaker #3: Our investment case is increasingly benefiting from the next phase of value creation: stronger earnings, cash generation, and shareholder returns, supported by our growing backlog, capacity investments, and structural market growth.

Christian Bruch: Stronger earnings, cash generation, and shareholder returns, supported by our growing backlog, capacity investments, and structural market growth. The question is not only how strongly these markets grow, but also how effectively we translate these opportunities into sustainable value for our shareholders. I'm pleased with the progress we are making. Let me now turn to the key achievements of the quarter. Supported by continued strong market demand, Siemens Energy delivered another record quarter. Orders reached approximately EUR 17.9 billion, driven particularly by Gas Services and Grid Technologies. At the same time, revenue reached a record EUR 11.4 billion, the highest quarterly revenue level we have delivered so far. The investments in capacity expansions and operational improvements over the past years are really translating into tangible revenue growth and improved financial performance. Profitability strengthened considerably.

Speaker #2: As mentioned, I'm very proud of the progress that Siemens Gamesa has achieved. For the first time since the fourth quarter of fiscal year 2022, Siemens Gamesa delivered a positive quarterly result.

Speaker #3: The question is not only how strongly these markets grow, but also how effectively we translate these opportunities into sustainable value for our shareholders. I'm pleased with the progress we are making.

Speaker #2: And this is an important milestone and is based on the tremendous efforts of the entire team. While we remain focused on the work ahead, this achievement clearly demonstrates that the turnaround measures are delivering tangible results, and break-even for the full fiscal year is firmly on track.

Speaker #3: And let me now turn to the key achievements of the quarter. Supported by continued strong market demand, Siemens Energy delivered another record quarter. Orders reached approximately €17.9 billion, driven particularly by Gas Services and Grid Technologies.

Speaker #2: And cash generation remains robust. Year to date, free cash flow pre-tax reached approximately 7.2 billion euros. Reflecting disciplined operational execution and working capital management.

Speaker #3: And at the same time, revenue reached a record €11.4 billion, the highest quarterly revenue level we have delivered so far. The investments in capacity expansions and operational improvements over the past years are really translating into tangible revenue growth and improved financial performance.

Speaker #2: This robust cash generation provides significant financial flexibility and enables us to translate operational success into tangible value for our shareholders. Execution of the second 1 billion euro share buyback tranche is progressing well, and is nearing completion.

Speaker #3: Profitability strengthened considerably. Profit before special items more than tripled year over year, and the margin before special items reached 14.2%. This reflects the improving earnings quality and operational leverage we are building across the portfolio.

Christian Bruch: Profit before special items more than tripled year over year, and the margin before special items reached 14.2%. This reflects the improving earnings quality and operational leverage we are building across the portfolio. As a result, basic earnings per share rose to EUR 1.28 from EUR 0.71 in the prior year quarter, reflecting the significant improvement in profitability and the value we are creating for our shareholders. As mentioned, I'm very proud of the progress that Siemens Gamesa has achieved. For the first time since the Q4 of fiscal year 2022, Siemens Gamesa delivered a positive quarterly result. This is an important milestone and is based on the tremendous efforts of the entire team. While we remain focused on the work ahead, this achievement clearly demonstrate that the turnaround measures are delivering tangible results, and break even for the full fiscal year is firmly on track.

Speaker #2: Together with the first 2 billion euro tranche and our dividend policy of distributing 40 to 60 percent of net income attributable to Siemens Energy shareholders, this underscores our commitment to attractive and sustainable shareholder distributions.

Speaker #3: As a result, basic earnings per share rose to €1.28 from €0.71 in the prior-year quarter, reflecting the significant improvement in profitability and the value we are creating for our shareholders.

Speaker #2: Including the dividend paid earlier this year for fiscal year 2025, we remain on track to return up to 3.6 billion euros to shareholders during fiscal year 2026.

Speaker #3: As mentioned, I'm very proud of the progress that Siemens Gamesa has achieved. For the first time since the fourth quarter of fiscal year 2022, Siemens Gamesa delivered a positive quarterly result.

Speaker #2: Based on our performance, the continued favorable market environment, we reaffirm our fiscal year 2026 outlook with profitability trending towards the upper end of our guided 10 to 12 percent profit margin before special items.

Speaker #3: This is an important milestone and is based on the tremendous efforts of the entire team. While we remain focused on the work ahead, this achievement clearly demonstrates that the turnaround measures are delivering tangible results and that break-even for the full fiscal year is firmly on track.

Speaker #2: Before turning to the market environment, let me briefly address one strategic milestone that also supports the next phase of our journey. Siemens Energy has started preparations for its transition to an independent brand, and going forward, Siemens Energy and Siemens Gamesa Renewable Energy will be united under a single name and brand identity, the name will be OMTERA, and the transition will begin later this calendar year, and we will be implemented in phases and currently the existing license agreement remains in place.

Speaker #3: And cash generation remains robust. Year to date, free cash flow pre-tax reached approximately €7.2 billion, reflecting disciplined operational execution and working capital management.

Christian Bruch: Cash generation remains robust. Year to date, free cash flow pre-tax reached approximately EUR 7.2 billion, reflecting disciplined operational execution and working capital management. This robust cash generation provides significant financial flexibility and enables us to translate operational success into tangible value for our shareholders. Execution of the second EUR 1 billion share buyback tranche is progressing well and is nearing completion. Together with the first EUR 2 billion tranche and our dividend policy of distributing 40% to 60% of net income attributable to Siemens Energy shareholders, this underscores our commitment to attractive and sustainable shareholder distributions. Including the dividend paid earlier this year for fiscal year 2025, we remain on track to return up to EUR 3.6 billion to shareholders during fiscal year 2026.

Speaker #3: This robust cash generation provides significant financial flexibility and enables us to translate operational success into tangible value for our shareholders. Execution of the second €1 billion share buyback tranche is progressing well and is nearing completion.

Speaker #2: Let me now turn to our capacity expansion program, which continues to progress according to plan and is increasingly translating into revenue momentum and financial performance.

Speaker #2: The investments we have made over the past several years are coming into operational execution with additional capacity brought online, and we are seeing a growing contribution to revenue especially in the second half of fiscal year 2026 and beyond.

Speaker #3: Together with the first €2 billion tranche and our dividend policy of distributing 40 to 60% of net income attributable to Siemens Energy shareholders, this underscores our commitment to attractive and sustainable shareholder distributions.

Speaker #2: Starting with gas services, we successfully brought additional medium-sized gas turbine capacity online during the quarter. And this is an important milestone increasing annual production capacity from around 50 units in fiscal year 2025 to approximately 80 units this year, and further expansion planned over the coming years as we had shown in our last year's capital market day.

Speaker #3: Including the dividend paid earlier this year for fiscal year 2025, we remain on track to return up to €3.6 billion to shareholders during fiscal year 2026.

Speaker #3: Based on our performance and the continued favorable market environment, we reaffirm our fiscal year 2026 outlook, with profitability trending towards the upper end of our guided 10% to 12% profit margin before special items.

Christian Bruch: Based on our performance, the continued favorable market environment, we reaffirm our fiscal year 2026 outlook, with profitability trending towards the upper end of our guided 10% to 12% profit margin before special items. Before turning to the market environment, let me briefly address one strategic milestone that also supports the next phase of our journey. Siemens Energy has started preparations for its transition to an independent brand. Going forward, Siemens Energy and Siemens Gamesa Renewable Energy will be united under a single name and brand identity. The name will be Omterra. The transition will begin later this calendar year, and will be implemented in phases. Currently, the existing license agreement remains in place. Let me now turn to our capacity expansion program, which continues to progress according to plan and is increasingly translating into revenue momentum and financial performance.

Speaker #2: So we stay on the communicated plan. And this additional capacity is highly valuable in the current market environment. Medium-sized gas turbines are often selected for distributed power generation and data center applications, where customers require reliable power solutions that can be deployed quickly.

Speaker #3: Before turning to the market environment, let me briefly address one strategic milestone that also supports the next phase of our journey. Siemens Energy has started preparations for its transition to an independent brand. Going forward, Siemens Energy and Siemens Gamesa Renewable Energy will be united under a single name and brand identity. The name will be OMTERA, and the transition will begin later this calendar year. It will be implemented in phases, and currently, the existing license agreement remains in place.

Speaker #2: The key advantage of products such as our SGT 800 is their ability to operate in a combined cycle setup, significantly improving efficiency and making them a highly attractive solution for a wide range of electricity generation needs.

Speaker #2: The additional capacity enables us to capture this growing demand while maintaining the same disciplined approach to project selection and execution. And at the same time, our large gas turbine expansion program continues to be fully on track and will begin contributing from fiscal year 2027 onwards.

Speaker #3: Let me now turn to our capacity expansion program, which continues to progress according to plan and is increasingly translating into revenue momentum and financial performance.

Speaker #3: The investments we have made over the past several years are coming into operational execution with additional capacity brought online, and we are seeing a growing contribution to revenue, especially in the second half of fiscal year 2026 and beyond.

Christian Bruch: The investments we have made over the past several years are coming into operational execution with additional capacity brought online, we are seeing a growing contribution to revenue, especially in the second half of fiscal year 2026 and beyond. Starting with Gas Services, we successfully brought additional medium-sized gas turbine capacity online during the quarter. This is an important milestone, increasing annual production capacity from around 50 units in fiscal year 2025 to approximately 80 units this year, and further expansion planned over the coming years, as we had shown in our last year's Capital Market Day. We stay on the communicated plan. This additional capacity is highly valuable in the current market environment. Medium-sized gas turbines are often selected for distributed power generation and data center applications, where customers require reliable power solutions that can be deployed quickly.

Speaker #2: It provides sufficient flexibility to support the demand outlook we have today. Equally important, every gas turbine installed today creates long-term service with substantial business opportunity in maintenance, upgrades, and operational support throughout their lifetime.

Speaker #3: Starting with Gas Services, we successfully brought additional medium-sized gas turbine capacity online during the quarter. This is an important milestone, increasing annual production capacity from around 50 units in fiscal year 2025 to approximately 80 units this year, with further expansion planned over the coming years, as we had shown in our last year's Capital Markets Day.

Speaker #2: And as a result, the capacity investments we are making today not only support equipment revenue growth, but also expand the installed base that will drive recurring service revenues for many years to come.

Speaker #2: Turning to grid technologies, we are executing our capacity expansion program across multiple product areas, and the first meaningful brownfield expansions are now coming online, adding capacity for products such as large power transformers and gas insulated switchgear.

Speaker #3: So we stay on the communicated plan. And this additional capacity is highly valuable in the current market environment. Medium-sized gas turbines are often selected for distributed power generation and data center applications, where customers require reliable power solutions that can be deployed quickly.

Speaker #2: We continue to execute successfully the brownfield and greenfield expansion projects, which we announced on the capital market day to further expand our manufacturing footprint through the end of the decade.

Speaker #3: The key advantage of products such as our SGT-800 is their ability to operate in a combined cycle setup, significantly improving efficiency and making them a highly attractive solution for a wide range of electricity generation needs.

Christian Bruch: The key advantage of products such as our SGT-800 is their ability to operate in a combined cycle setup, significantly improving efficiency and making them a highly attractive solution for a wide range of electricity generation needs. The additional capacity enables us to capture this growing demand while maintaining the same disciplined approach to project selection and execution. At the same time, our large gas turbine expansion program continues to be fully on track and will begin contributing from fiscal year 2027 onwards. It provides sufficient flexibility to support the demand outlook we have today. Equally important, every gas turbine installed today creates long-term service, with substantial business opportunity in maintenance, upgrades, and operational support throughout their lifetime.

Speaker #2: The increased capacity is needed to reflect the high level of demand visibility we experience across our markets. And based on the increased capacity, the revenue growth in the relevant business continues to accelerate and grid technologies delivered another significant step up in revenue during the third quarter.

Speaker #3: The additional capacity enables us to capture this growing demand while maintaining the same disciplined approach to project selection and execution. At the same time, our large gas turbine expansion program continues to be fully on track and will begin contributing from fiscal year 2027 onwards.

Speaker #2: In short, the capacity we are adding today enables us to capture the market opportunities ahead of us. And let me now turn to the market environment.

Speaker #3: It provides sufficient flexibility to support the demand outlook we have today. Equally important, every gas turbine installed today creates long-term service with substantial business opportunities in maintenance, upgrades, and operational support throughout their lifetime.

Speaker #2: The overall demand environment remains very robust across our key markets and regions. And while the Americas was again a major growth driver led by the United States, momentum was also solid in the other regions and I'm satisfied with the balance of our project portfolio.

Speaker #2: In Europe, demand remains supported by structural trends such as grid expansion, electrification, and energy security, and looking specifically at Europe, prior year order intake benefited from several large offshore wind awards.

Speaker #3: As a result, the capacity investments we are making today not only support equipment revenue growth but also expand the installed base that will drive recurring service revenues for many years to come.

Christian Bruch: As a result, the capacity investments we are making today not only support equipment revenue growth but also expand the installed base that will drive recurring service revenues for many years to come. Turning to Grid Technologies, we are executing our capacity expansion program across multiple product areas, the first meaningful brownfield expansions are now coming online, adding capacity for products such as large power transformers and gas-insulated switchgear. We continue to execute successfully the brownfield and greenfield expansion projects, which we announced on the Capital Market Day to further expand our manufacturing footprint through the end of the decade. The increased capacity is needed to reflect the high level of demand visibility we experience across our markets. Based on the increased capacity, the revenue growth in the relevant business continues to accelerate, and Grid Technologies delivered another significant step up in revenue during the Q3.

Speaker #3: Turning to grid technologies, we are executing our capacity expansion program across multiple product areas, and the first meaningful brownfield expansions are now coming online, adding capacity for products such as large power transformers and gas-insulated switchgear.

Speaker #2: In contrast, and as discussed previously, we still expect a number of major offshore projects to shift into fiscal year 2027, impacting the year-over-year comparison in the current fiscal year.

Speaker #2: In gas services, market demand is still exceptionally strong. We booked 15 gigawatts of orders during the quarter, including conversion of previously signed reservation agreements into firm customer orders.

Speaker #3: We continue to successfully execute the brownfield and greenfield expansion projects, which we announced on Capital Market Day, to further expand our manufacturing footprint through the end of the decade.

Speaker #2: Demand is being driven by the need for reliable and dispatchable power generation in the United States, as well as by large combined cycle and independent power producer projects in the Middle East and Asia.

Speaker #3: The increased capacity is needed to reflect the high level of demand visibility we experience across our markets. Based on the increased capacity, the revenue growth in the relevant business continues to accelerate, and Grid Technologies delivered another significant step up in revenue during the third quarter.

Speaker #2: In the Middle East, we see several countries investing further in additional generation capacity to strengthen security of supply. It is important to remember that the conventional power market is our primary growth driver.

Speaker #3: In short, the capacity we are adding today enables us to capture the market opportunities ahead of us. And let me now turn to the market environment.

Christian Bruch: In short, the capacity we are adding today enables us to capture the market opportunities ahead of us. Let me now turn to the market environment. The overall demand environment remains very robust across our key markets and regions. While the Americas was again, a major growth driver led by the United States, momentum was also solid in the other regions, and I'm satisfied with the balance of our project portfolio. In Europe, demand remains supported by structural trends such as grid expansion, electrification, and energy security. Looking specifically at Europe, prior year order intake benefited from several large offshore wind awards. In contrast, as discussed previously, we still expect a number of major offshore projects to shift into fiscal year 2027, impacting the year-over-year comparison in the current fiscal year. In Gas Services, market demand is still exceptionally strong.

Speaker #2: It represents the largest share of our backlog and benefits from strong structural demand driven by electrification, rising electricity consumption, and the need for reliable baseload and dispatchable capacity.

Speaker #3: The overall demand environment remains very robust across our key markets and regions. And while the Americas was again a major growth driver led by the United States, momentum was also solid in the other regions, and I'm satisfied with the balance of our project portfolio.

Speaker #2: At the same time, our visibility is improving. Our backlog slot reservation agreements and project pipeline provide a clear line of sight well beyond the current fiscal year.

Speaker #2: Following the shipment of 6 gigawatts during the quarter, our commitment our committed customer volume stands at historically high levels. And while order intake may fluctuate from quarter to quarter as we expected for quarter four, my view remains unchanged.

Speaker #3: In Europe, demand remains supported by structural trends such as grid expansion, electrification, and energy security. Looking specifically at Europe, prior year order intake benefited from several large offshore wind awards.

Speaker #3: In contrast, and as discussed previously, we still expect a number of major offshore projects to shift into fiscal year 2027, impacting the year-over-year comparison in the current fiscal year.

Speaker #2: The project pipeline for fiscal year 2027 looks very promising. At the same time, we prioritize value over volume. Maintaining strict project selectivity and pricing discipline.

Speaker #3: In Gas Services, market demand is still exceptionally strong. We booked 15 gigawatts of orders during the quarter, including the conversion of previously signed reservation agreements into firm customer orders.

Christian Bruch: We booked 15 GW of orders during the quarter, including conversion of previously signed reservation agreements into firm customer orders. Demand is being driven by the need for reliable and dispatchable power generation in the United States, as well as by large combined cycle and independent power producer projects in the Middle East and Asia. In the Middle East, we see several countries investing further in additional generation capacity to strengthen security of supply. It is important to remember that the conventional power market is our primary growth driver. It represents the largest share of our backlog and benefits from strong structural demand driven by electrification, rising electricity consumption, and the need for reliable base load and dispatchable capacity. At the same time, our visibility is improving. Our backlog, slot reservation agreements, and project pipeline provide a clear line of sight well beyond the current fiscal year.

Speaker #2: This supports the quality of our backlog and lays the foundation for further sustainable margin expansion. As our service business is expected to make a larger contribution to profitability over time.

Speaker #3: Demand is being driven by the need for reliable and dispatchable power generation in the United States, as well as by large combined cycle and independent power producer projects in the Middle East and Asia.

Speaker #2: Turning to grid technologies, the market environment remains equally compelling. Automomentum during the quarter was driven by the product business, primarily large power transformers, and demand related to data center infrastructure remained healthy and additional brownfield capacity investments supported further revenue growth.

Speaker #3: In the Middle East, we see several countries investing further in additional generation capacity to strengthen security of supply. It is important to remember that the conventional power market is our primary growth driver.

Speaker #2: Regionally, growth was primarily driven by Europe, and North America. Grid technologies really getting an execution machine. The business combines structural demand, improving margins, enhanced cash generation, and exceptionally backlog visibility.

Speaker #3: It represents the largest share of our backlog and benefits from strong structural demand driven by electrification, rising electricity consumption, and the need for reliable baseload and dispatchable capacity.

Speaker #3: At the same time, our visibility is improving. Our backlog slot reservation agreements and project pipeline provide a clear line of sight well beyond the current fiscal year.

Speaker #2: So the overall message is straightforward. Demand across our key end markets remains robust. And the underlying growth drivers are structural rather than cyclical. And our focus remains on converting this opportunity into profitable growth, stronger cash generation, and long-term shareholder value creation.

Speaker #3: Following the shipment of six gigawatts during the quarter, our committed customer volume stands at historically high levels. And while order intake may fluctuate from quarter to quarter, as we expected for Q4, my view remains unchanged.

Christian Bruch: Following the shipment of 6 GW during the quarter, our committed customer volume stands at historically high levels. While order intake might fluctuate from quarter to quarter, as we expected for Q4, my view remains unchanged. The project pipeline for fiscal year 2027 looks very promising. Pricing remains attractive, and at the same time, we prioritize value over volume, maintaining strict project selectivity and pricing discipline. This supports the quality of our backlog and lays the foundation for further sustainable margin expansion as our service business is expected to make a larger contribution to profitability over time. Turning to Grid Technologies, the market environment remains equally compelling. Order momentum during the quarter was driven by the product business, primarily large power transformers, and demand related to data center infrastructure remained healthy. Additional brownfield capacity investments supported further revenue growth.

Speaker #2: And with that, let me hand over to Maria for the financial review.

Speaker #1: Thank you very much, Christian. And good morning, everyone from my side. It's a pleasure to be here with you. As Christian mentioned, Q3 was another very strong quarter for Siemens Energy.

Speaker #3: The project pipeline for fiscal year 2027 looks very promising. Pricing remains attractive and at the same time, we prioritize value over volume. Maintaining strict project selectivity and pricing discipline.

Speaker #1: And I will now take you through the group financials, the order backlog, cash flow, and capital allocation, and then briefly comment on the individual business areas and the outlook.

Speaker #3: This supports the quality of our backlog and lays the foundation for further sustainable margin expansion, as our service business is expected to make a larger contribution to profitability over time.

Speaker #1: So starting with group performance, Q3 was a record quarter across all key financial metrics. Orders reached 17.9 billion, supported by strong demand in gas services and grid technologies.

Speaker #3: Turning to grid technologies, the market environment remains equally compelling. Order momentum during the quarter was driven by the product business, primarily large power transformers, and demand related to data center infrastructure remained healthy. Additional brownfield capacity investments supported further revenue growth.

Speaker #1: This translated into a book-to-bill ratio of 1.57 and lifted our order backlog to another all-time high of 1602 billion euros. Over the last 12 months, our order backlog has grown by growth was broad-based across all segments, led by grid technologies and gas services.

Speaker #3: Regionally, growth was primarily driven by Europe, and North America. Grid technologies is really getting an execution machine. The business combines structural demand, improving margins, enhanced cash generation, and exceptionally backlog visibility.

Christian Bruch: Regionally, growth was primarily driven by Europe and North America. Grid Technologies is really getting an execution machine. The business combines structural demand, improving margins, enhanced cash generation, and exceptionally backlog visibility. The overall message is straightforward. Demand across our key end markets remains robust, and the underlying growth drivers are structural rather than cyclical. Our focus remains on converting this opportunity into profitable growth, stronger cash generation, and long-term shareholder value creation. With that, let me hand over to Maria for the financial review.

Speaker #1: Q3 included only minor foreign exchange headwinds, primarily driven by a weaker US dollar, weighing on revenue by roughly 50 basis points year over year.

Speaker #3: So the overall message is straightforward. Demand across our key end markets remains robust, and the underlying growth drivers are structural rather than cyclical. And our focus remains on converting this opportunity into profitable growth, stronger cash generation, and long-term shareholder value creation.

Speaker #1: To clarify, currency movements continue to have no material impact on our profitability. At the end of this is due to our global footprint with strong local-for-local sourcing and effective hedging strategies.

Speaker #3: And with that, let me hand over to Maria for the financial review.

Speaker #1: Thank you very much, Christian, and good morning, everyone, from my side. It's a pleasure to be here with you. As Christian mentioned, Q3 was another very strong quarter for Siemens Energy.

Speaker #1: Profit before special items, more than tripled to 1.6 billion. Corresponding to a margin before special items of 14.2%. This is the highest quarterly group margin in our history.

Maria Ferraro: Thank you very much, Christian. Good morning, everyone, from my side. It is a pleasure to be here with you. As Christian mentioned, Q3 was another very strong quarter for Siemens Energy. I will now take you through the group financials, the order backlog, cash flow, and capital allocation, and then briefly comment on the individual business areas and the outlook. Starting with group performance, Q3 was a record quarter across all key financial metrics. Orders reached EUR 17.9 billion, supported by strong demand in Gas Services and Grid Technologies. This translated into a book-to-bill ratio of 1.57 and lifted our order backlog to another all-time high of EUR 162 billion. Over the last 12 months, our order backlog has grown by almost 20%. Revenue reached EUR 11.4 billion, up 19% year over year on a comparable basis. Growth was broad-based across all segments, led by Grid Technologies and Gas Services.

Speaker #1: I will now take you through the group financials, the order backlog, cash flow, and capital allocation, and then briefly comment on the individual business areas and the outlook.

Speaker #1: And the 910 basis points improvement year over year. This very strong development was driven by excellent project execution and supported by improvements across all segments.

Speaker #1: So, starting with group performance: Q3 was a record quarter across all key financial metrics. Orders reached €17.9 billion, supported by strong demand in Gas Services and Grid Technologies.

Speaker #1: And again, noteworthy with Siemens Gamesa making the largest year-over-year contribution to the improvement. Net income also rose by more than 70% year over year to 1.188 billion, free cash flow pre-tax stood at 2.3 billion, again very strong, more than five times last year's level.

Speaker #1: This translated into a book-to-bill ratio of 1.57 and lifted our order backlog to another all-time high of €162 billion. Over the last 12 months, our order backlog has grown by almost 20%.

Speaker #1: This was supported by improved cash effective profit and a high cash a higher cash conversion rate as well as customer advanced payments including reservation fees associated with the strong order intake.

Speaker #1: Revenue reached €11.4 billion, up 19% year over year on a comparable basis. Growth was broad-based across all segments, led by Grid Technologies and Gas Services.

Maria Ferraro: Revenue reached EUR 11.4 billion, up 19% year over year on a comparable basis. Growth was broad-based across all segments, led by Grid Technologies and Gas Services. Q3 included only minor foreign exchange headwinds, primarily driven by a weaker US dollar, weighing on revenue by roughly 50 basis points year-over-year. To clarify, currency movements continue to have no material impact on our profitability. This is due to our global footprint with strong local-for-local sourcing and effective hedging strategies. Profit before special items more than tripled to EUR 1.6 billion, corresponding to a margin before special items of 14.2%. This is the highest quarterly group margin in our history and a 910 basis points improvement year-over-year. This very strong development was driven by excellent project execution and supported by improvements across all segments. Noteworthy with Siemens Gamesa making the largest year-over-year contribution to the improvement.

Speaker #1: Now let us take a closer look at our order backlog and move to the next slide. So from Q2 to Q3, we added 26 billion to our order backlog.

Speaker #1: Q3 included only minor foreign exchange headwinds, primarily driven by a weaker US dollar, weighing on revenue by roughly 50 basis points year over year.

Maria Ferraro: Q3 included only minor foreign exchange headwinds, primarily driven by a weaker US dollar, weighing on revenue by roughly 50 basis points year-over-year. To clarify, currency movements continue to have no material impact on our profitability. This is due to our global footprint with strong local-for-local sourcing and effective hedging strategies. Profit before special items more than tripled to EUR 1.6 billion, corresponding to a margin before special items of 14.2%. This is the highest quarterly group margin in our history and a 910 basis points improvement year-over-year. This very strong development was driven by excellent project execution and supported by improvements across all segments. Noteworthy with Siemens Gamesa making the largest year-over-year contribution to the improvement. Net income also rose by more than 70% year-over-year to EUR 1.188 billion.

Speaker #1: And at the end of Q3, our order backlog, as mentioned, reached 162 billion. This provides an exceptional foundation for future growth. It also provides very high visibility for fiscal year 26 and fiscal year 27 with a significant portion of expected revenues already covered by existing orders.

Speaker #1: To clarify, currency movements continue to have no material impact on our profitability. Again, this is due to our global footprint with strong local-for-local sourcing and effective hedging strategies.

Speaker #1: Profit before special items more than tripled to €1.6 billion, corresponding to a margin before special items of 14.2%. This is the highest quarterly group margin in our history.

Speaker #1: And visibility extends even further. Across parts of our portfolio, lead times are now 3 to 4 years and beyond, providing a clear line of sight well into the end of the decade and the beginning of the next.

Speaker #1: And the 910 basis points improvement year over year—this very strong development was driven by excellent project execution and supported by improvements across all segments.

Speaker #1: This highlights the strategic importance of the capacity expansions announced last November at our capital market day. These investments are already contributing to revenue growth today, and they also ensure that we are well positioned to capture the substantial service opportunities that will emerge from our expanding installed base and record backlog in the years ahead.

Speaker #1: And again, noteworthy, with Siemens Gamesa making the largest year-over-year contribution to the improvement. Net income also rose by more than 70% year over year to €1.188 billion. Free cash flow pre-tax stood at €2.3 billion, again very strong—more than five times last year's level.

Maria Ferraro: Net income also rose by more than 70% year-over-year to EUR 1.188 billion. Free cash flow pre-tax stood at EUR 2.3 billion, very strong, more than five times last year's level. This was supported by improved cash effective profit and a higher cash conversion rate, as well as customer advanced payments, including reservation fees associated with the strong order intake. Let us take a closer look at our order backlog and move to the next slide. From Q2 to Q3, we added EUR 26 billion to our order backlog. At the end of Q3, our order backlog, as mentioned, reached EUR 162 billion. This provides an exceptional foundation for future growth. It also provides very high visibility for fiscal year 2026 and fiscal year 2027, with a significant portion of expected revenues already covered by existing orders. Visibility extends even further.

Speaker #1: In gas services, our long-term service agreements now have an average duration of 17 years, underpinning highly recurring and predictable revenue streams. However, it's not as you know, only about backlog size.

Maria Ferraro: Free cash flow pre-tax stood at EUR 2.3 billion, very strong, more than five times last year's level. This was supported by improved cash effective profit and a higher cash conversion rate, as well as customer advanced payments, including reservation fees associated with the strong order intake. Let us take a closer look at our order backlog and move to the next slide. From Q2 to Q3, we added EUR 26 billion to our order backlog. At the end of Q3, our order backlog, as mentioned, reached EUR 162 billion. This provides an exceptional foundation for future growth. It also provides very high visibility for fiscal year 2026 and fiscal year 2027, with a significant portion of expected revenues already covered by existing orders. Visibility extends even further.

Speaker #1: This was supported by improved cash-effective profit and a higher cash conversion rate, as well as customer advance payments, including reservation fees associated with the strong order intake.

Speaker #1: It is the combination of size, duration, and improving market quality that counts. New orders in almost all businesses continue to enter the backlog up margins above the historical portfolio average supporting future earnings expansions as these executors the orders are executed into the future.

Speaker #1: Now let us take a closer look at our order backlog and move to the next slide. So from Q2 to Q3, we added €2.6 billion to our order backlog.

Speaker #1: And at the end of Q3, our order backlog, as mentioned, reached €162 billion. This provides an exceptional foundation for future growth. It also provides very high visibility for fiscal year '26 and fiscal year '27, with a significant portion of expected revenues already covered by existing orders.

Speaker #1: Together, these factors strengthen our confidence in the durability of Siemens Energy's energy profile well beyond fiscal year 2026. Again, we look forward to providing further details on our order backlog quality with our mid-term ambitions in our end-of-year call in November.

Speaker #1: And visibility extends even further. Across parts of our portfolio, lead times are now three to four years and beyond, providing a clear line of sight well into the end of the decade and the beginning of the next.

Speaker #1: So now let us turn to our cash generation capital allocation and improved credit profile. So over the past years, Siemens Energy has significantly improved its free cash flow generation.

Maria Ferraro: Across parts of our portfolio, lead times are now three to four years and beyond, providing a clear line of sight well into the end of the decade and the beginning of the next. This highlights the strategic importance of the capacity expansions announced last November at our Capital Market Day. These investments are already contributing to revenue growth today. They also ensure that we are well-positioned to capture the substantial service opportunities that will emerge from our expanding installed base and record backlog in the years ahead. In Gas Services, our long-term service agreements now have an average duration of 17 years, underpinning highly recurring and predictable revenue streams. However, it is not, as you know, only about backlog size. It is the combination of size, duration, and improving market quality that count.

Speaker #1: For fiscal year 2026, we continue to expect around 8 billion free cash flow. Cash generation is a key pillar of our strategy. It provides us with the flexibility to invest in profitable growth, strengthen our balance sheet, and deliver attractive shareholder returns.

Speaker #1: This highlights the strategic importance of the capacity expansions announced last November at our Capital Market Day. These investments are already contributing to revenue growth.

Speaker #1: Today, they also ensure that we are well positioned to capture the substantial service opportunities that will emerge from our expanding installed base and record backlog in the years ahead.

Speaker #1: The substantial progress we have made continues to be recognized by our rating agencies. In June, we reaffirmed Siemens Energy's EAA1 rating and changed its outlook from stable to positive.

Speaker #1: In Gas Services, our long-term service agreements now have an average duration of 17 years, underpinning highly recurring and predictable revenue streams. However, it's not, as you know, only about backlog size.

Speaker #1: In July, S&P upgraded Siemens Energy to BBB+ with a stable outlook. These ratings reflect the improved quality of our earnings, our substantial cash generation, and our significantly strengthened balance sheet.

Speaker #1: It is the combination of size, duration, and improving market quality that count. New orders in almost all businesses continue to enter the backlog at margins above the historical portfolio average, supporting future earnings expansions as these executed orders are executed into the future.

Speaker #1: They further enhance our financial flexibility and support efficient access to capital markets. Again, at the same time, returning capital to our shareholders remains a clear priority.

Maria Ferraro: New orders in almost all businesses continue to enter the backlog up margins above the historical portfolio average, supporting future earnings expansions as the orders are executed into the future. Together, these factors strengthen our confidence in the durability of Siemens Energy's energy profile well beyond fiscal year 2026. We look forward to providing further details on our order backlog quality with our midterm ambitions in our end-of-year call in November. Now let us turn to our cash generation, capital allocation, and improved credit profile. Over the past years, Siemens Energy has significantly improved its free cash flow generation. For fiscal year 2026, we continue to expect around EUR 8 billion free cash flow. Cash generation is a key pillar of our strategy. It provides us with the flexibility to invest in profitable growth, strengthen our balance sheet, and deliver attractive shareholder returns.

Speaker #1: During fiscal year 26, we expect total shareholder returns of approximately 3.6 billion. This consists of our share buyback program in 2026 and the dividend paid in March of this year for fiscal year 2025.

Speaker #1: Together, these factors strengthen our confidence in the durability of Siemens Energy's energy profile well beyond fiscal year 2026. Again, we look forward to providing further details on our order backlog quality, along with our mid-term ambitions, during our end-of-year call in November.

Speaker #1: Our dividend policy remains unchanged. Targeting a payout ratio of 40 to 60 percent of the net income attributable to Siemens Energy shareholders. As Christian mentioned earlier, execution of the share buyback remains firmly on track.

Speaker #1: So now let us turn to our cash generation, capital allocation, and improved credit profile. Over the past years, Siemens Energy has significantly improved its free cash flow generation.

Speaker #1: We successfully completed the first $2 billion tranche in May and expect the second $1 billion tranche for this fiscal year to be completed within the coming weeks.

Speaker #1: For fiscal year 2026, we continue to expect around €8 billion in free cash flow. Cash generation is a key pillar of our strategy. It provides us with the flexibility to invest in profitable growth, strengthen our balance sheet, and deliver attractive shareholder returns.

Speaker #1: Our capital allocation framework is balanced, disciplined, and focused on long-term value creation. We invest where we see attractive returns to strengthen our financial position, to create sustainable value, and return capital to our shareholders.

Speaker #1: The substantial progress we have made continues to be recognized by our rating agencies. In June, Moody's reaffirmed Siemens Energy's Baa1 rating and changed its outlook from stable to positive.

Maria Ferraro: The substantial progress we have made continues to be recognized by our rating agencies. In June, Moody's reaffirmed Siemens Energy's Baa1 rating and changed its outlook from stable to positive. In July, S&P upgraded Siemens Energy to BBB+ with a stable outlook. These ratings reflect the improved quality of our earnings, our substantial cash generation, and our significantly strengthened balance sheet. They further enhance our financial flexibility and support efficient access to capital markets. Again, at the same time, returning capital to our shareholders remains a clear priority. During fiscal year 2026, we expect total shareholder returns of approximately EUR 3.6 billion. This consists of our share buyback program in 2026 and the dividend paid in March of this year for fiscal year 2025. Our dividend policy remains unchanged, targeting a payout ratio of 40% to 60% of the net income attributable to Siemens Energy shareholders.

Speaker #1: An update regarding Siemens Energy India. On June 8th, 2026, we completed the second and final Siemens India Limited and Siemens Energy India Limited share swap, increasing our stake in Siemens Energy India Limited by 1.02%.

Speaker #1: In addition, on June 23rd, 2026, we acquired a further $3.98% stake from Siemens AG for $428 million. The transaction was structured to adhere to India's 5% annual acquisition threshold.

Speaker #1: They further enhance our financial flexibility and support efficient access to capital markets. At the same time, returning capital to our shareholders remains a clear priority.

Speaker #1: During fiscal year 2026, we expect total shareholder returns of approximately $3.6 billion. This consists of our share buyback program in 2026 and the dividend paid in March of this year for fiscal year 2025.

Speaker #1: As a result, Siemens Energy ownership stake in Siemens Energy India Limited now stands at 16%, again further strengthening our position in one of the most attractive growth markets for energy infrastructure globally.

Speaker #1: Our dividend policy remains unchanged, targeting a payout ratio of 40 to 60 percent of the net income attributable to Siemens Energy shareholders. As Christian mentioned earlier, execution of the share buyback remains firmly on track.

Speaker #1: Our strength strong cash generation, investment-grade credit profile, and disciplined investment and growth opportunities and attractive shareholder returns underscore the financial strength of Siemens Energy and remain a core pillar of our equity story going forward.

Maria Ferraro: As Christian mentioned earlier, execution of the share buyback remains firmly on track. We successfully completed the first EUR 2 billion tranche in May and expect the second EUR 1 billion tranche for this fiscal year to be completed within the coming weeks. Our capital allocation framework is balanced, disciplined, and focused on long-term value creation. We invest where we see attractive returns to strengthen our financial position, to create sustainable value, and return capital to our shareholders. An update regarding Siemens Energy India. On 08 June 2026, we completed the second and final Siemens Limited and Siemens Energy India Limited share swap, increasing our stake in Siemens Energy India Limited by 1.02%. In addition, on 23 June 2026, we acquired a further 3.98% stake from Siemens AG for EUR 428 million. The transaction was structured to adhere to India's 5% annual acquisition threshold.

Speaker #1: We successfully completed the first $2 billion tranche in May and expect the second $1 billion tranche for this fiscal year to be completed within the coming weeks.

Speaker #1: More to come in November. So now moving on to our BAs, let me start, please, with our gas services business, which delivered another outstanding quarter.

Speaker #1: Our capital allocation framework is balanced, disciplined, and focused on long-term value creation. We invest where we see attractive returns to strengthen our financial position, create sustainable value, and return capital to our shareholders.

Speaker #1: And continued its exceptional momentum across all key performance indicators. Orders were up by 62% year-over-year to $10 billion, making another record for this business.

Speaker #1: This resulted in a book-to-bill ratio of 2.7 and drove the order backlog to an all-time new high of $73 billion, again providing excellent revenue visibility for the years ahead.

Speaker #1: An update regarding Siemens Energy India. On June 8, 2026, we completed the second and final Siemens India Limited and Siemens Energy India Limited share swap, increasing our stake in Siemens Energy India Limited by 1.02%.

Speaker #1: The market for gas turbines greater than $10 megawatt again exhibited remarkable strength during the third quarter. This quarter in total gas services totaled $73 gas turbines for power generation and oil and gas, including 25 large gas turbines, and 48 industrial gas turbines.

Speaker #1: In addition, on June 23, 2026, we acquired a further 3.98% stake from Siemens AG for $428 million. The transaction was structured to adhere to India's 5% annual acquisition threshold.

Speaker #1: Driven by the strong momentum in large gas turbine orders, our market share in gas turbines above 100 megawatts reached 42% in Q3. Revenue for gas services grew by 21% year-over-year to $3.8 billion, representing the highest ever quarterly revenue for them.

Speaker #1: As a result, Siemens Energy's ownership stake in Siemens Energy India Limited now stands at 16%, further strengthening our position in one of the most attractive growth markets for energy infrastructure globally.

Maria Ferraro: As a result, Siemens Energy ownership stake in Siemens Energy India Limited now stands at 16%, again, further strengthening our position in one of the most attractive growth markets for energy infrastructure globally. Our strong cash generation, investment-grade credit profile, and disciplined investment in growth opportunities and attractive shareholder returns underscore the financial strength of Siemens Energy and remain a core pillar of our equity story going forward. More to come in November. Moving on to our BAs, let me start please, with our Gas Services business, which delivered another outstanding quarter and continued its exceptional momentum across all key performance indicators. Orders were up by 62% year over year to EUR 10 billion, making another record for this business.

Speaker #1: Our strength—strong cash generation, investment-grade credit profile, disciplined investment and growth opportunities, and attractive shareholder returns—underscore the financial strength of Siemens Energy and remain a core pillar of our equity story going forward.

Speaker #1: Growth growth was supported by strong execution in new units, while our service business continued to deliver healthy double-digit growth with both a key contributor to profitability.

Speaker #1: The service share revenue stood at 60%. This was slightly below last year's level, but again reflecting the higher volume of new unit deliveries. As we indicated before, this is expected given the very strong new unit bookings in previous quarters.

Speaker #1: More to come in November. So now, moving on to our BAs, let me start, please, with our Gas Services business, which delivered another outstanding quarter.

Speaker #1: And continued its exceptional momentum across all key performance indicators. Orders were up by 62% year over year, to €10 billion, marking another record for this business.

Speaker #1: Profit before special items improved significantly by 60% to $648 million, resulting in a margin of 17.3%. This is up 420 basis points versus the prior year.

Speaker #1: This resulted in a book-to-bill ratio of 2.7 and drove the order backlog to an all-time high of €73 billion, again providing excellent revenue visibility for the years ahead.

Maria Ferraro: This resulted in a book-to-bill ratio of 2.7 and drove the order backlog to an all-time new high of EUR 73 billion, again, providing excellent revenue visibility for the years ahead. The market for gas turbines greater than 10 megawatt again, exhibited remarkable strength during the Q3. This quarter, in total, Gas Services booked 73 gas turbines for power generation and oil and gas, including 25 large gas turbines and 48 industrial gas turbines. Driven by the strong momentum in large gas turbine orders, our market share in gas turbines above 100 megawatts reached 42% in Q3. Revenue for Gas Services grew by 21% year over year to EUR 3.8 billion, representing the highest ever quarterly revenue for them. Growth was supported by strong execution in new units. While our service business continued to deliver healthy double-digit growth, with both a key contributor to profitability.

Speaker #1: This demonstrates gas services' ability to sustain strong profitability throughout the year, underpinned by solid execution and a favorable business mix. Free cash flow reached 1.7 billion, significantly above last year, benefiting from strong operational performance and preservation agreements and advanced payments on large customer orders.

Speaker #1: The market for gas turbines greater than 10 megawatts again exhibited remarkable strength during the third quarter. This quarter, in total, Gas Services booked 73 gas turbines for power generation and oil and gas, including 25 large gas turbines and 48 industrial gas turbines.

Speaker #1: The combination of sustained market demand, expanding capacity, growing the installed base, and long-term service revenues makes gas services one of our most attractive businesses and a key driver of sustainable value creation.

Speaker #1: Driven by the strong momentum in large gas turbine orders, our market share in gas turbines above 100 megawatts reached 42% in Q3. Revenue for Gas Services grew by 21% year over year to $3.8 billion, representing the highest-ever quarterly revenue for them.

Speaker #1: Moving on now to grid technologies. Now, grid technologies once again delivered an outstanding quarter. Orders increased by 28% year-over-year to $5.4 billion, growth was broad-based across all the businesses with the strongest contribution coming from the transformer business.

Speaker #1: Growth was supported by strong execution in new units, while our service business continued to deliver healthy double-digit growth, with both being key contributors to profitability.

Speaker #1: The book-to-bill ratio reached 1.48 and order backlog grew further to a record $51 billion. This backlog again provides exceptional visibility and reflects the structurally attractive demand environment we continue to see across electrification, grid expansion, renewable integration, and data center infrastructure.

Speaker #1: The service share revenue stood at 60%. This was slightly below last year's level, but again reflects the higher volume of new unit deliveries. As we indicated before, this is expected, given the very strong new unit bookings in previous quarters.

Maria Ferraro: The service share of revenue stood at 60%. This was slightly below last year's level, but again reflecting the higher volume of new unit deliveries. As we indicated before, this is expected given the very strong new unit bookings in previous quarters. Profit before special items improved significantly by 60% to EUR 648 million, resulting in a margin of 17.3%. This is up 420 basis points versus the prior year. This demonstrates Gas Services' ability to sustain strong profitability throughout the year, underpinned by solid execution and a favorable business mix. Free cash flow reached EUR 1.7 billion, significantly above last year, benefiting from strong operational performance, slot reservation agreements and advanced payments on large customer orders. The combination of sustained market demand, expanding capacity, growing the installed base, and long-term service revenues makes Gas Services one of our most attractive businesses and a key driver of sustainable value creation.

Speaker #1: Profit before special items improved significantly by 60% to €648 million, resulting in a margin of 17.3%. This is up 420 basis points versus the prior year.

Speaker #1: Revenue reached a record $3.6 billion up 29% year-over-year. This is driven primarily by the product business and profit before special items reached $722 million.

Speaker #1: This is a corresponding margin of 19.9%. An improvement of 400 basis points year-over-year. This is driven by higher volumes and improved margin profile with the executed order backlog and the positive effects of disciplined execution.

Speaker #1: This demonstrates Gas Services' ability to sustain strong profitability throughout the year, underpinned by solid execution and a favorable business mix. Free cash flow reached €1.7 billion, significantly above last year, benefiting from strong operational performance, reservation agreements, and advance payments on large customer orders.

Speaker #1: This strong performance is the basis as you know for raising our full-year margin guidance to 18 to 20 percent at the half-year for this business.

Speaker #1: The combination of sustained market demand, expanding capacity, growth of the installed base, and long-term service revenues makes Gas Services one of our most attractive businesses and a key driver of sustainable value creation.

Speaker #1: Free cash flow pre-tax amounted to $896 million, again supported by strong profit and milestone payments. So now moving to transformation of industry. This business delivered a strong quarter characterized by solid order intake, continued revenue growth, and an improvement in profitability.

Speaker #1: Moving on now to Grid Technologies. Grid Technologies once again delivered an outstanding quarter. Orders increased by 28% year over year to $5.4 billion. Growth was broad-based across all the businesses, with the strongest contribution coming from the transformer business.

Maria Ferraro: Moving on now to Grid Technologies. Grid Technologies once again delivered an outstanding quarter. Orders increased by 28% year over year to EUR 5.4 billion. Growth was broad-based across all the businesses with the strongest contribution coming from the transformer business. The book-to-bill ratio reached 1.48 and order backlog grew further to a record EUR 51 billion. This backlog again provides exceptional visibility and reflects the structurally attractive demand environment we continue to see across electrification, grid expansion, renewable integration,, and data center infrastructure. Revenue reached a record EUR 3.6 billion, up 29% year over year. This is driven primarily by the product business, and profit before special items reached EUR 722 million. This is a corresponding margin of 19.9%, an improvement of 400 basis points year over year. This was driven by higher volumes and improved margin profile with the executed order backlog and the positive effects of disciplined execution.

Speaker #1: Order intake reached 1.8 billion up 32% over year-over-year. The main contributor here was new units in compression, which benefited from large orders in the Americas and in the Middle East.

Speaker #1: As a result, the book-to-bill ratio reached 1.19, while the order backlog remained stable at around 8 billion. Revenue increased by 12% to $1.5 billion with all businesses contributing.

Speaker #1: The book-to-bill ratio reached 1.48, and order backlog grew further to a record €51 billion. This backlog again provides exceptional visibility and reflects the structurally attractive demand environment we continue to see across electrification, grid expansion, renewable integration, and data center infrastructure.

Speaker #1: Growth was supported by both the new units and service businesses, again highlighting the balanced nature of the portfolio in transformation of industries. Profitability strengthened in the third quarter to $218 million this resulted in a margin of 14.3%.

Speaker #1: Revenue reached a record €3.6 billion, up 29% year over year. This was driven primarily by the product business, and profit before special items reached €722 million.

Speaker #1: Free cash flow pre-tax amounted to $180 million, broadly in line with the prior level, reflecting continued cash conversion and disciplined execution. And overall, transformation of industry does continue to demonstrate its ability to generate reliable earnings and cash flow while capturing opportunities and attractive end markets.

Speaker #1: This is a corresponding margin of 19.9%, an improvement of 400 basis points year over year. This is driven by higher volumes and an improved margin profile, with the executed order backlog and the positive effects of disciplined execution.

Maria Ferraro: This was driven by higher volumes and improved margin profile with the executed order backlog and the positive effects of disciplined execution. This strong performance is the basis, as you know, for raising our full-year margin guidance to 18% to 20% at H1 for this business. Free cash flow pre-tax amounted to EUR 896 million, again supported by strong profit and milestone payments. Moving to Transformation of Industry. This business delivered a strong quarter characterized by solid order intake, continued revenue growth, and an improvement in profitability. Order intake reached EUR 1.8 billion, up 32% year over year. The main contributor here was new units and compression, which benefited from large orders in the Americas and in the Middle East. As a result, the book-to-bill ratio reached 1.19, while the order backlog remained stable at around EUR 8 billion.

Speaker #1: So now turning to Siemens Gamesa. Here the third quarter marks an important milestone in the turnaround journey. For the first time since Q4 fiscal year '22 as Christian mentioned, Siemens Gamesa delivered a positive quarterly result.

Speaker #1: This strong performance is the basis, as you know, for raising our full-year margin guidance to 18 to 20 percent at the half-year for this business.

Maria Ferraro: This strong performance is the basis, as you know, for raising our full-year margin guidance to 18% to 20% at H1 for this business. Free cash flow pre-tax amounted to EUR 896 million, again supported by strong profit and milestone payments. Moving to Transformation of Industry. This business delivered a strong quarter characterized by solid order intake, continued revenue growth, and an improvement in profitability. Order intake reached EUR 1.8 billion, up 32% year over year. The main contributor here was new units and compression, which benefited from large orders in the Americas and in the Middle East. As a result, the book-to-bill ratio reached 1.19, while the order backlog remained stable at around EUR 8 billion. Revenue increased by 12% to EUR 1.5 billion, with all businesses contributing.

Speaker #1: Free cash flow pre-tax amounted to €896 million, again supported by strong profit and milestone payments. So, now moving to Transformation of Industry. This business delivered a strong quarter characterized by solid order intake, continued revenue growth, and an improvement in profitability.

Speaker #1: Reaching this point has required significant operational improvements, disciplined execution, and tremendous commitments from the entire organization. While the turnaround is not yet complete, the improvements delivered over the past quarters are clearly visible in the financial performance.

Speaker #1: Order intake reached $1.8 billion, up 32% year over year. The main contributor here was new units in Compression, which benefited from large orders in the Americas and in the Middle East.

Speaker #1: Orders for the quarter amounted to $1.1 billion. And we're below the exceptionally high prior year level. It's important to note that Q3 last year then exited from two large offshore orders with a combined value of more than $3 billion.

Speaker #1: As a result, the book-to-bill ratio reached 1.19, while the order backlog remained stable at around €8 billion. Revenue increased by 12% to €1.5 billion, with all businesses contributing.

Speaker #1: While the current quarter did not include any comparable awards. This has resulted in a book-to-bill ratio below one. Order backlog, however, stood at 31 billion at the quarter end.

Maria Ferraro: Revenue increased by 12% to EUR 1.5 billion, with all businesses contributing. Growth was supported by both the new units and service businesses, again highlighting the balanced nature of the portfolio and Transformation of Industry. Profitability strengthened in Q3 to EUR 218 million. This resulted in a margin of 14.3%. Free cash flow pre-tax amounted to EUR 180 million, broadly in line with the prior level, reflecting continued cash conversion and disciplined execution. Overall, Transformation of Industry does continue to demonstrate its ability to generate reliable earnings and cash flow while capturing opportunities in attractive end markets. Turning to Siemens Gamesa. Here, Q3 marks an important milestone in the turnaround journey. For the first time since Q4 fiscal year 2022, as Christian mentioned, Siemens Gamesa delivered a positive quarterly result. Reaching this point has required significant operational improvements, disciplined execution, and tremendous commitments from the entire organization.

Speaker #1: Growth was supported by both the new units and service businesses, again highlighting the balanced nature of the portfolio in the transformation of industries. Profitability strengthened in the third quarter to €218 million.

Maria Ferraro: Growth was supported by both the new units and service businesses, again highlighting the balanced nature of the portfolio and Transformation of Industry. Profitability strengthened in Q3 to EUR 218 million. This resulted in a margin of 14.3%. Free cash flow pre-tax amounted to EUR 180 million, broadly in line with the prior level, reflecting continued cash conversion and disciplined execution. Overall, Transformation of Industry does continue to demonstrate its ability to generate reliable earnings and cash flow while capturing opportunities in attractive end markets. Turning to Siemens Gamesa. Here, Q3 marks an important milestone in the turnaround journey. For the first time since Q4 fiscal year 2022, as Christian mentioned, Siemens Gamesa delivered a positive quarterly result. Reaching this point has required significant operational improvements, disciplined execution, and tremendous commitments from the entire organization.

Speaker #1: And now looking at revenue, this increased by 14% year-over-year to $2.7 billion. Driven primarily by the offshore business. Growth was led by higher service revenues while the new unit business also delivered a clear increase.

Speaker #1: This resulted in a margin of 14.3%. Free cash flow pre-tax amounted to €180 million, broadly in line with the prior level, reflecting continued cash conversion and disciplined execution.

Speaker #1: Profitability, as mentioned, improved substantially. Profit before special items reached $75 million. Compared to a loss of $430 million in the prior quarter. The margin reached positive 2.7%.

Speaker #1: And overall, Transformation of Industry does continue to demonstrate its ability to generate reliable earnings and cash flow, while capturing opportunities in attractive end markets.

Speaker #1: This is representing a year-over-year improvement of more than 20 percentage points. So free cash flow pre-tax was negative $518 million compared to negative $758 million in the prior year.

Speaker #1: So now turning to Siemens Gamesa. Here, the third quarter marks an important milestone in the turnaround journey. For the first time since Q4 fiscal year '22, as Christian mentioned, Siemens Gamesa delivered a positive quarterly result.

Speaker #1: As discussed previously, cash flow developments remain influenced by project and milestone timing effects. While we are encouraged by the progress and we're very proud of that, we see focus and keep our feet on the ground.

Speaker #1: We are reaching significant operational improvements through disciplined execution and tremendous commitments from the entire organization. While the turnaround is not yet complete, the improvements delivered over the past quarters are clearly visible in the financial performance.

Speaker #1: Execution discipline in Siemens Gamesa, quality management, and cost efficiency remain key priorities as we continue to improve the business. That said, the direction of travel is clear.

Maria Ferraro: While the turnaround is not yet complete, the improvements delivered over the past quarters are clearly visible in the financial performance. Orders for the quarter amounted to EUR 1.1 billion and were below the exceptionally high prior year level. It is important to note that Q3 last year benefited from two large offshore orders with a combined value of more than EUR 3 billion. While the current quarter did not include any comparable awards, this has resulted in a book-to-bill ratio below one. Order backlog, however, stood at EUR 31 billion at the quarter end. Now looking at revenue, this increased by 14% year over year to EUR 2.7 billion, driven primarily by the offshore business. Growth was led by higher service revenues, while the new unit business also delivered a clear increase. Profitability, as mentioned, improved substantially.

Speaker #1: Orders for the quarter amounted to $1.1 billion, and we're below the exceptionally high prior year level. It's important to note that Q3 last year benefited from two large offshore orders with a combined value of more than $3 billion.

Speaker #1: While the current quarter did not include any comparable awards, this has resulted in a book-to-bill ratio below one. Order backlog, however, stood at €31 billion at the quarter end.

Speaker #1: As profitability improves and execution risks continue to decline, Siemens Gamesa will now contribute to the predictable resilient and high-quality earnings profile of the group.

Speaker #1: And now, looking at revenue, this increased by 14% year over year to €2.7 billion, driven primarily by the offshore business. Growth was led by higher service revenues, while the new unit business also delivered a clear increase.

Speaker #1: So now with that, please let me take a look at the outlook. So following the strong performance in the first nine months of the fiscal year, we are reaffirming the outlook we just raised after the first half of the fiscal year.

Speaker #1: Profitability, as mentioned, improved substantially. Profit before special items reached €75 million, compared to a loss of €430 million in the prior quarter. The margin reached a positive 2.7%.

Speaker #1: For Siemens Energy, we continue to expect comparable revenue growth of 14 to 16 percent and a profit margin before special items of 10 to 12 percent.

Maria Ferraro: Profit before special items reached EUR 75 million, compared to a loss of EUR 430 million in the prior quarter. The margin reached positive 2.7%. This is representing a year-over-year improvement of more than 20 percentage points. Free cash flow pre-tax was EUR -518 million compared to EUR -758 million in the prior year. As discussed previously, cash flow developments remains influenced by project and milestone timing effects. While we are encouraged by the progress and we are very proud of that, we stay focused and keep our feet on the ground. Execution discipline in Siemens Gamesa, quality management, and cost efficiency remain key priorities as we continue to improve the business. That said, the direction of travel is clear. The return to positive profitability in Q3 is a proof point that the turnaround measures are delivering results.

Speaker #1: Based on our performance year to date, we now expect to land towards the upper end of the margin raise. Range. We also continue to expect net income of around $4 billion and free cash flow pre-tax of around $8 billion for fiscal year 2026.

Speaker #1: This represents a year-over-year improvement of more than 20 percentage points. So, free cash flow pre-tax was negative €518 million compared to negative €758 million in the prior year.

Speaker #1: As discussed previously, these results are influenced by project and milestone timing effects. While we are encouraged by the progress—and we're very proud of that—we remain focused and keep our feet on the ground.

Speaker #1: The progress we have demonstrated throughout fiscal year 2026 is increasingly validating the assumptions that underpin our mid-term and medium-term ambitions. The operational proof points are becoming visible and again we will discuss the full financial framework in November.

Speaker #1: So with that, thank you very much for your attention and let me hand now back to Christian for the closing remarks. Thank you.

Speaker #2: Thank you, Maria. And let me close with a broader message of today's result. Quarter three was another excellent quarter for Siemens Energy with record orders, record revenue, record profitability, and excellent cash generation.

Speaker #1: The return to positive profitability in the third quarter is a proof point that the turnaround measures are delivering results. Siemens Gamesa's continued improvement is becoming an increasingly important element of the Siemens Energy investment case. As profitability improves and execution risks continue to decline, Siemens Gamesa will now contribute to the predictable, resilient, and high-quality earnings profile of the group.

Maria Ferraro: Siemens Gamesa's continued improvement is becoming an increasingly important element of the Siemens Energy investment case. As profitability improves and execution risks continue to decline, Siemens Gamesa will now contribute to the predictable, resilient, and high-quality earnings profile of the group. Now with that, please let me take a look at the outlook. Following the strong performance in the first 9 months of the fiscal year, we are reaffirming the outlook that we just raised after H1 of the fiscal year. For Siemens Energy, we continue to expect comparable revenue growth of 14% to 16% and a profit margin before special items of 10% to 12%. Based on our performance year to date, we now expect to land towards the upper end of the margin range.

Speaker #2: But for me, the most important point is not only the level of these numbers, but what they demonstrate about the development of the company.

Speaker #2: We are seeing more consistent performance across the portfolio gas services continues to benefit from a highly attractive market environment and disciplined execution grid technology is translating structural demand into higher volumes, stronger margins, and robust cash flow.

Speaker #1: So now, with that, please let me take a look at the outlook. Following the strong performance in the first nine months of the fiscal year, we are reaffirming the outlook that we just raised after the first half of the fiscal year.

Speaker #2: Siemens Gamesa has reached an important milestone in its turnaround reducing volatility and execution risk for the group and transformation of industry continues to show strong and consistent performance.

Speaker #1: For Siemens Energy, we continue to expect comparable revenue growth of 14 to 16 percent and a profit margin before special items of 10 to 12 percent.

Speaker #2: And taken together, these developments show the transition we want investors to recognize. Siemens Energy is driven by structural growth, stronger execution, improving earnings quality, significant cash generation, and disciplined capital allocation.

Speaker #1: Based on our performance year to date, we now expect to land towards the upper end of the margin range. We also continue to expect net income of around €4 billion and free cash flow pre-tax of around €8 billion for fiscal year 2026.

Maria Ferraro: We also continue to expect net income of around EUR 4 billion and free cash flow pre-tax of around EUR 8 billion for fiscal year 2026. The progress we have demonstrated throughout fiscal year 2026 is increasingly validating the assumptions that underpin our midterm and medium-term ambitions. The operational proof points are becoming visible, and again, we will discuss the full financial framework in November. With that, thank you very much for your attention, and let me hand now back to Christian for the closing remarks. Thank you.

Speaker #2: And our focus is clear. Converting backlog into revenue, revenue into earnings, and earnings into cash flow. And this is translating into higher earnings per share and tangible value creation for our shareholders.

Speaker #1: The progress we have demonstrated throughout fiscal year 2026 is increasingly validating the assumptions that underpin our mid-term and medium-term ambitions. The operational proof points are becoming visible, and again, we will discuss the full financial framework in November.

Speaker #2: And our backlog gives us visibility. Our capacity investments support future growth and our service base creates long-duration earnings potential. And our cash flow generation gives us a flexibility to invest in the business while returning capital to shareholders.

Speaker #1: So with that, thank you very much for your attention. Let me now hand back to Christian for the closing remarks. Thank you.

Speaker #2: And this gives us confidence for the remainder of fiscal year 2026 and provides a solid foundation for medium-term framework we will discuss with you in November.

Speaker #2: Thank you, Maria. And let me close with a broader message of today's result. Q3 was another excellent quarter for Siemens Energy, with record orders, record revenue, record profitability, and excellent cash generation.

Christian Bruch: Thank you, Maria. Let me close with a broader message of today's result. Q3 was another excellent quarter for Siemens Energy, with record orders, record revenue, record profitability, and excellent cash generation. For me, the most important point is not only the level of these numbers, but what they demonstrate about the development of the company. We are seeing more consistent performance across the portfolio. Gas Services continues to benefit from a highly attractive market environment and disciplined execution. Grid Technologies is translating structural demand into higher volumes, stronger margins, and robust cash flow. Siemens Gamesa has reached an important milestone in its turnaround, reducing volatility and execution risk for the group. Transformation of Industry continues to show strong and consistent performance. Taken together, these developments show the transition we want investors to recognize.

Speaker #2: As Maria has underlined, that we will be provide more detail on the next phase of Siemens Energy's value creation journey. I would like like every quarter, but this quarter particular, to thank all our teams across Siemens Energy.

Speaker #2: But for me, the most important point is not only the level of these numbers, but what they demonstrate about the development of the company.

Speaker #2: We are seeing more consistent performance across the portfolio. Gas Services continues to benefit from a highly attractive market environment and disciplined execution. Grid Technology is translating structural demand into higher volumes, stronger margins, and robust cash flow.

Speaker #2: Great job, Team Purple. And the progress we are discussing today is the result of their commitment, their operational focus, and their execution discipline. We are entering the next phase of Siemens Energy's development from a position of strengths and we look forward to discussing that next chapter with you in November to be as over to you for a question and answers.

Speaker #2: Siemens Gamesa has reached an important milestone in its turnaround, reducing volatility and execution risks for the group, and the transformation of the industry continues to show strong and consistent performance.

Speaker #2: And, taken together, these developments show the transition we want investors to recognize. Siemens Energy is driven by structural growth, stronger execution, improving earnings quality, significant cash generation, and disciplined capital allocation.

Speaker #3: Thank you so much, Christian, Maria. So now we will start our today's Q&A session. If you wish to ask a question, please press star one on your telephone keypad.

Christian Bruch: Siemens Energy is driven by structural growth, stronger execution, improving earnings quality, significant cash generation, and disciplined capital allocation. Our focus is clear: converting backlog into revenue into earnings, and earnings into cash flow. This is translating into higher earnings per share and tangible value creation for our shareholders. Our backlog gives us visibility. Our capacity investments support future growth, and our service base creates long-duration earnings potential. Our cash flow generation gives us the flexibility to invest in the business while returning capital to shareholders. This gives us confidence for the remainder of fiscal year 2026 and provides a solid foundation for the medium-term framework we will discuss with you in November. As Maria has underlined, there we will provide more detail on the next phase of Siemens Energy's value creation journey.

Speaker #3: Again, please press star one on your telephone keypad. If you no longer want to ask a question, please press star two. Even though we have really hot weather outside, there are so many people sticking to our call right now.

Speaker #2: And our focus is clear: converting backlog into revenue, revenue into earnings, and earnings into cash flow. This is translating into higher earnings per share and tangible value creation for our shareholders.

Speaker #3: So I already see the queue in the line very long. So please stick to only one questions and I would call up the next three people asking question and then calling up the individual ones.

Speaker #2: And our backlog gives us visibility. Our capacity investments support future growth, and our service base creates long-duration earnings potential. Our cash flow generation gives us the flexibility to invest in the business while returning capital to shareholders.

Speaker #3: So first three questions go to Max Yates from Morgan Stanley, Phil Buller from JP Morgan, and Gail DeBrea from Deutsche Bank. So Max, please go ahead.

Speaker #2: Thank you Tobias and good morning everyone. I guess my question is just around the gas margins. So it's a really good step change this quarter in terms of the profitability.

Speaker #2: This gives us confidence for the remainder of fiscal year 2026 and provides a solid foundation for the medium-term framework we will discuss with you in November.

Speaker #2: I just wanted to ask kind of bigger picture if we look at kind of the margin progression that you've been seeing 300 base or more than 300 basis points in 2025, it looks like you're going to do another 300 basis points margin improvement this year.

Speaker #2: As Maria has underlined, we will provide more detail on the next phase of Siemens Energy's value creation journey. I would like, like every quarter—but this quarter in particular—to thank all our teams across Siemens Energy. Great job, Team Purple.

Christian Bruch: I would like, every quarter, but this quarter particular, to thank all our teams across Siemens Energy. Great job, Team Purple. The progress we are discussing today is the result of their commitment, their operational focus, and their execution discipline. We are entering the next phase of Siemens Energy's development from a position of strength, and we look forward to discussing that next chapter with you in November. Tobias, over to you for question and answers.

Speaker #2: Just when you think about kind of the composition of the backlog, how pricing has evolved in the last sort of two to three years and what you're going to be delivering in the next two to three years, I guess my question is, is there any reason when we think of operational leverage in the service business, the margins in the backlog, that that kind of progression can't continue at these levels?

Speaker #2: And the progress we are discussing today is the result of their commitment, their operational focus, and their execution discipline. We are entering the next phase of Siemens Energy's development from a position of strength, and we look forward to discussing that next chapter with you in November. Tobias, over to you for questions and answers.

Speaker #2: Is there anything as to why the margin progression should have been particularly front-loaded in 25 and 26 and basically why we shouldn't continue at these kind of margin expansion levels?

Speaker #3: Thank you so much, Christian, Maria. So now we will start our Q&A session for today. If you wish to ask a question, please press star one on your telephone keypad.

Tobias Hang: Thank you so much, Christian, Maria. Now we will start our today's Q&A session. If you wish to ask a question, please press star 1 on your telephone keypad. Again, please press star 1 on your telephone keypad. If you no longer want to ask a question, please press star 2. Even though we have really hot weather outside, there are so many people sticking to our call right now, I already see the queue in the line very long. Please stick to only one question, and I will call up the next three people asking question and then calling up the individual ones. The first three questions go to Max Yates from Morgan Stanley, Phil Buller from J.P. Morgan, and Gael de-Bray from Deutsche Bank. Max, please go ahead.

Speaker #4: The simple words I would say no. We see it obviously embedded in the backlog and you have seen the margin backlog continuously growing over quarter by quarter by quarter.

Speaker #4: And this is why we hammer so much also on execution and operational excellence because it's important that we unleash this potential which sits in the backlog.

Speaker #3: So I already see the queue in the line is very long, so please stick to only one question. I will call up the next three people asking questions, and then call up the individual ones.

Speaker #4: And that is obviously something which is, let's say, in the plan and we share this obviously on the November capital quarterly call. The execution of the project and of the backlog, you always have to keep in mind takes two to three years.

Speaker #3: So, the first three questions go to Max Yates from Morgan Stanley, Phil Buller from J.P. Morgan, and Gael de Bray from Deutsche Bank. So Max, please go ahead.

Speaker #4: Thank you, Tobias, and good morning, everyone. I guess my question is just around the gas margins. There was a really good step change this quarter in terms of the profitability.

Max Yates: Thank you, Tobias, and good morning, everyone. I guess my question is just around the gas margins.

Max Yates: Thank you, Tobias, and good morning, everyone. I guess my question is just around the gas margins. It's a really good step change this quarter in terms of the profitability. I just wanted to ask kind of bigger picture, if we look at the margin progression that you have been seeing, more than 300 basis points in 2025. It looks like you are going to do another 300 basis points margin improvement this year. Just when you think about the composition of the backlog, how pricing has evolved in the last two to three years, and what you are going to be delivering in the next two to three years. I guess my question is there any reason when we think of operational leverage in the service business, the margins in the backlog, that that kind of progression cannot continue at these levels?

Speaker #4: And in certain areas with the bigger turbines, no, even longer. So it will obviously gives us a good base really to continue to expand margin.

Max Yates: It's a really good step change this quarter in terms of the profitability. I just wanted to ask kind of bigger picture, if we look at the margin progression that you have been seeing, more than 300 basis points in 2025. It looks like you are going to do another 300 basis points margin improvement this year. Just when you think about the composition of the backlog, how pricing has evolved in the last two to three years, and what you are going to be delivering in the next two to three years. I guess my question is there any reason when we think of operational leverage in the service business, the margins in the backlog, that that kind of progression cannot continue at these levels?

Speaker #4: I just wanted to ask kind of a bigger-picture question. If we look at the margin progression that you've been seeing—300 basis points, or more than 300 basis points, in 2025—it looks like you're going to do another 300 basis points of margin improvement this year.

Speaker #1: Yeah. And maybe just to add to that, Max, because looking absolutely in terms of midterm, but again, just to underline, we still do see seasonality in Q4.

Speaker #4: Just when you think about the composition of the backlog, how pricing has evolved in the last two to three years, and what you're going to be delivering in the next two to three years, I guess my question is: Is there any reason, when we think of operational leverage in the service business and the margins in the backlog, that that kind of progression can't continue at these levels?

Speaker #1: As mentioned at the half year, we see that less pronounced, of course, as new units, you know, even proportionally, are higher as a percentage of revenue, but don't forget, I think absolutely as we continue we see absolutely margin expansion, we see that orders were booking today have higher margins than yesterday.

Speaker #4: Is there any reason why the margin progression should have been particularly front-loaded in '25 and '26, and basically why we shouldn't continue at these kinds of margin expansion levels?

Speaker #1: But just again, just to underline that we still do see some seasonality in Q4. Thank you.

Max Yates: Is there anything as to why the margin progression should have been particularly front-loaded in 2025 and 2026, and basically why we should not continue at these kind of margin expansion levels?

Speaker #2: Very clear. Thank you.

Speaker #3: Thanks so much. Next question goes to Phil Buller from JP Morgan.

Speaker #2: In simple words, I would say no. I think this is our expectation—that we really continue on this margin progression. We see it, obviously, embedded in the backlog, and you have seen the margin in the backlog continuously growing quarter by quarter by quarter.

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

Speaker #5: Hi, good morning everybody. I'd like to explore this demand topic a little bit further, please, beyond what's already in the backlog. You mentioned, Christian, the 2027 pipeline that's very promising and I hear you on the operational execution side.

Speaker #2: And this is why we hammer so much also on execution and operational excellence, because it's important that we unleash this potential which sits in the backlog.

Speaker #5: But can you share any subtleties on the nature of the discussions you're having on that 2027 pipeline? Is pricing still trending positively? Are the payment terms for slot reservation agreements still favorable?

Speaker #2: And that is obviously something which is, let's say, in the plan and we share this obviously on the November capital quarterly call. The execution of the project and of the backlog, you always have to keep in mind takes two to three years.

Speaker #5: Maria, I think you mentioned that the service contract duration is now 17 years. I think it was 15 years. A year ago. So is there anything at all that's trending backwards contractual level?

Speaker #2: And in certain areas with the bigger turbines, no, even longer. So it will obviously give us a good base, really, to continue to expand margin.

Speaker #5: Thanks.

Speaker #1: Yeah, and maybe just to add to that, Max, because looking absolutely in terms of midterm—but again, just to underline, we still do see seasonality in Q4.

Speaker #2: No, at the moment it's really not, right? And this is where we see positively into 2027. What are the things we're talking the German Kraftwerke strategy, right?

Maria Ferraro: Yeah. Maybe just to add to that, Max, because looking absolutely in terms of midterm, but again, just to underline, we still do see seasonality in Q4.

Speaker #1: As mentioned at the half year, we see that less pronounced, of course, as new units, you know, even proportionally, are higher as a percentage of revenue. But don't forget, I think absolutely as we continue, we see absolute margin expansion. We see that orders we're booking today have higher margins than yesterday.

Christian Bruch: Yeah.

Maria Ferraro: As mentioned at the half year, we see that less pronounced, of course, as new units even proportionally are higher as a percentage of revenue. Don't forget, I think absolutely as we continue, we see absolutely margin expansion. We see that orders we're booking today have higher margins than yesterday. Again, just to underline that we still do see some seasonality in Q4. Thank you.

Speaker #2: The power plants to be built in Germany. Obviously this is in alignment agreement phase or reservation agreement phase now. It's not converted into orders yet.

Speaker #2: This will come into 2027. But these are these examples, right? And as I always said, I mean, absolutely we had seen over the last quarters a lot of capacity going into data centers and the US.

Speaker #1: But again, just to underline, we still do see some seasonality in Q4. Thank you.

Speaker #2: But also keep in mind that this led to the situation that a lot of other replications are have pushed out decision makings and this is why we see Asia coming up.

Speaker #4: Very clear. Thank you.

Max Yates: Very clear. Thank you.

Speaker #3: Thanks so much. Next question goes to Phil Buller from JP Morgan.

Tobias Hang: Thanks so much. Next question goes to Phil Buller from J.P. Morgan.

Speaker #2: We see the Middle East things coming up. And absolutely this supports our positive view on 2027.

Speaker #5: Hi, good morning, everybody. I'd like to explore this demand topic a little bit further, please, beyond what's already in the backlog. You mentioned, Christian, the 2027 pipeline that's very promising, and I hear you on the operational execution side.

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

Speaker #5: Thank you.

Speaker #3: Thanks a lot. So next question goes to Gail DeBrea from Deutsche Bank.

Speaker #6: Oh, thank you. Good morning everybody. It's obviously great to see Gamesa back in the green this quarter. But I'd like to get your thoughts on the recent new merger guidelines from the European Commission.

Speaker #6: Which entice emphasizes benefits from corporate scale. So do you think further consolidation is required in the win industry?

Speaker #5: Maria, I think you mentioned that the service contract duration is now 17 years. I think it was 15 years a year ago. So, is there anything at all that's trending backwards as you look at 2027 at a contractual level?

Speaker #2: Gail, do you still hear us? Because you. Oh, sorry. Could you repeat the last sentence because you were in the middle?

Speaker #5: Thanks.

Speaker #2: No, at the moment it's really not, right? And this is where we see positivity into 2027. What are the things we're talking about? One thing, for example, is the German Kraftwerke strategy, right?

Christian Bruch: No, at the moment it's really not, right? This is where we see positively into 2027. What are the things we're talking about? One thing, for example, is the German Kraftwerksstrategie, right? The power plants to be built in Germany. Obviously, this is in alignment agreement phase or reservation agreement phase now. It's not converted into orders yet. This will come into 2027. These are the examples, right? As I always said, absolutely we had seen over the last quarters a lot of capacity going into data centers and the US. Also keep in mind that this led to the situation that a lot of other replications have pushed out decision-makings. This is why we see Asia coming up, we see the Middle East things coming up. Absolutely, this supports our positive view on 2027.

Speaker #6: Oh, sorry about this. I was just asking about the merger guidelines from the European Commission, the new one on the win side and whether you think that some further consolidation would be needed eventually in the win industry to better compete against the Chinese.

Speaker #2: The power plants to be built in Germany—obviously, this is in the alignment agreement phase or reservation agreement phase now. It's not converted into orders yet.

Speaker #2: This will come into 2027. But these are examples, right? And as I always said, I mean, absolutely, we have seen over the last quarters a lot of capacity going into data centers in the US.

Speaker #2: Look, Gail, I think this discussion is on at least since I'm with Siemens Energy and rightly so because obviously competition is particular in the onshore side super aggressive.

Speaker #2: But also keep in mind that this led to the situation that a lot of other replications have pushed out decision-makings, and this is why we see Asia coming up.

Speaker #2: Depends on the region in the world. And I do not see the bounding conditions at the moment in Europe on this discussion like the wind Airbus which you sometimes hear, right?

Speaker #2: We see the Middle East things coming up, and absolutely, this supports our positive view on 2027.

Speaker #2: I mean, consolidating the whole industry is that something was going to come. No, that is more a political discussion than a business discussion. That we need to think about how to position ourselves in a very aggressive market onshore and offshore.

Speaker #5: Thank you.

Phil Buller: Thank you.

Speaker #3: Thanks a lot. So, next question goes to Gail the Breyer from Deutsche Bank.

Tobias Hang: Thanks a lot. Next question goes to Gael de-Bray from Deutsche Bank.

Speaker #6: Oh, thank you. Good morning, everybody. It's obviously great to see Gamesa back in the green this quarter. But I'd like to get your thoughts on the recent new merger guidelines from the European Commission, which emphasize benefits from corporate scale.

Gael de-Bray: Thank you. Good morning, everybody. It's obviously great to see Gamesa back in the green this quarter. I'd like to get your thoughts on the recent new merger guidelines from the European Commission, which emphasizes benefits from corporate scale. Do you think further consolidation is required in the wind industry?

Gael De Bray: Thank you. Good morning, everybody. It's obviously great to see Gamesa back in the green this quarter. I'd like to get your thoughts on the recent new merger guidelines from the European Commission, which emphasizes benefits from corporate scale. Do you think further consolidation is required in the wind industry-

Speaker #2: Absolutely clear. But I do not see anything at the moment changed from a regulation environment in that regard. So this is not where we are at the moment.

Speaker #2: And I also would see it a bit different in offshore and onshore. And offshore very clearly and I think you indicated it, we are really trying also to convey to regulators and governments you need to get these offshore projects off the ground.

Speaker #6: So, do you think further consolidation is required in the wind industry?

Speaker #2: Gail, do you still hear us? Because you—

Christian Bruch: Gaël, do you still hear us because you

Speaker #6: From the Chinese OEM.

Speaker #2: Oh, sorry. Could you repeat the last sentence? You were cut off in the middle and we had a glitch here.

Speaker #2: Projects are slipping. That's not good. It's more about really what is the most competitive setup, not only from an onshore unit perspective, new unit perspective, but really also from a service perspective.

Gael de-Bray: From the Chinese OEMs.

Gael De Bray: -from the Chinese OEMs?

Christian Bruch: Sorry. Could you repeat the last sentence because you were cut off in the middle and we had a glitch here?

Speaker #6: Oh, sorry about this. I was just asking about the merger guidelines from the European Commission, the new one on the wind side, and whether you think that some further consolidation would be needed eventually in the wind industry to better compete against the Chinese.

Gael de-Bray: Sorry about this. I was just asking about the merger guidelines from the European Commission.

Gael De Bray: Sorry about this. I was just asking about the merger guidelines from the European Commission.

Speaker #2: This discussion will be with us for the next years to come, I would say. But at the moment, I don't see the environment yet in the regulatory market.

Christian Bruch: Yes

Christian Bruch: Yes.

Gael de-Bray: The new one on the wind side, and whether you think that some further consolidation would be needed eventually in the wind industry to better compete against the Chinese.

Gael De Bray: The new one on the wind side, and whether you think that some further consolidation would be needed eventually in the wind industry to better compete against the Chinese.

Speaker #6: Understood. Thanks very much.

Speaker #3: Thanks so much. So the next three questions go to Alex Jones from Bank of America, Sebastian Grobe from BNP Paribas and AJ Patel from Goldman Sachs.

Speaker #2: Look, I think this discussion has been ongoing at least since I was at Siemens Energy, and rightly so, because obviously competition, particularly on the onshore side, is super aggressive.

Christian Bruch: Look, I think this discussion is on at least since I'm with Siemens Energy, and rightly so, because obviously competition is, particularly on the onshore side, super aggressive. Depends on the region in the world. I do not see the boundary conditions at the moment in Europe on this discussion like the wind Airbus, which you sometimes hear, right? Consolidating the whole industry. If that's something was going to come, I don't know. That is a more political discussion than a business discussion. That we need to think about how to position ourselves in a very aggressive market, onshore and offshore, absolutely clear. I do not see anything at the moment changed from a regulation environment in that regard. This is not where we are at the moment. I also would see it a bit different in offshore and onshore.

Speaker #3: Alex, please go ahead.

Speaker #7: Thank you. We talk a little bit about a little bit about capacity, please. You seem quite emphatic this morning that you're not adding more gas capacity, but your messaging today and in prior months has been that demand's higher than you expected at the CMD.

Speaker #2: Depends on the region in the world. And I do not see the bounding conditions at the moment in Europe on this discussion, like the wind, Airbus, which you sometimes hear, right?

Speaker #2: I mean, consolidating the whole industry—is that something we're going to see? I don't know. That is more a political discussion than a business discussion.

Speaker #7: Last November and clearly your two largest peers have reacted to that by announcing more capacity. Is there a reason why you wouldn't follow them in announcing a little bit more de-bottlenecking or brownfield expansion into 2030?

Speaker #2: We need to think about how to position ourselves in a very aggressive market, both onshore and offshore. That's absolutely clear. However, at the moment, I do not see anything that has changed from a regulatory environment in that regard.

Speaker #7: And can you comment on how much of the capacity you're already adding to 2030 will be required for aftermarket needs as you move into the middle of the next decade?

Speaker #7: Thank you.

Speaker #2: Thanks, Alex. We always conveyed a clear message. We expending existing sites. And the other thing is on gas. And we are strengthening the supply chain in the sense of a vertical element looking on this.

Speaker #2: So, this is not where we are at the moment. I would also see it a bit differently in offshore and onshore. In offshore, very clearly—and I think you indicated it—we are really trying also to convey to regulators and governments: you need to get these offshore projects off the ground.

Christian Bruch: In offshore very clearly, and I think you indicated it, we are really trying also to convey to regulators and governments, you need to get these offshore projects off the ground. Projects are slipping. That's not good. This need to come. In onshore, it's more about really what is the most competitive setup, not only from a new unit perspective, but really also from a service perspective. This discussion will be with us for the next years to come, I would say. At the moment, I don't see the environment yet in the regulatory market.

Speaker #2: And this journey we continue. As we communicated in the capital market day and I see no reason to change that, absolutely we're trying to squeeze out everything out of existing sites in terms of driving productivity measures.

Speaker #2: Projects are slipping. That's not good. This needs to come. And in onshore, it's more about really what is the most competitive setup—not only from an onshore unit perspective, a new unit perspective, but really also from a service perspective.

Speaker #2: We do a lot about robotics at the moment. And thinking about application of AI on the shop floor. And these will obviously be things which hopefully drive more productivity and with this we get one or two more turbines out.

Speaker #2: This discussion will be with us for the next years to come, I would say. But at the moment, I don't see the environment yet in the regulatory market.

Speaker #2: But this is all about productivity, productivity, productivity and leveraging the existing footprint what we have. We do investments obviously in the gas service. As we announced in the capital market day, but this is all about making existing sites more productive.

Speaker #6: Understood. Thanks very much.

Speaker #3: Thank you so much. The next three questions go to Alex Jones from Bank of America, Sebastian Grobe from BNP Paribas, and AJ Patel from Goldman Sachs.

Gael de-Bray: Understood. Thank you very much.

Gael De Bray: Understood. Thank you very much.

Tobias Hang: Thanks so much. The next three questions go to Alex Jones from Bank of America, Sebastian Growe from BNP Paribas, and Ajay Patel from Goldman Sachs. Alex, please go ahead.

Speaker #3: Alex, please go ahead.

Speaker #4: Thank you. Can we talk a little bit about capacity, please? You seemed quite emphatic this morning that you're not adding more gas capacity, but your messaging today and in prior months has been that demand is higher than you expected at the CMD last November. Clearly, your two largest peers have reacted to that by announcing more capacity.

Speaker #2: And I see at the moment no reason to change that.

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

Speaker #3: Thanks a lot. So the next question goes to Sebastian Grove.

Speaker #5: Yeah, hi Maria, Christian and Tobias. Thanks for taking my question. I would be on the segment as opposed to the group margin guidance for the year so the 10, 12% range has been confirmed.

Speaker #4: Is there a reason why you wouldn't follow them in announcing a little bit more de-bottlenecking or brownfield expansion into 2030? And can you comment on how much of the capacity you're already adding through to 2030 will be required for aftermarket needs as you move into the middle of the next decade?

Speaker #5: I was wondering if you could provide more color with regard to the views on the assumptions for the four segments which are seemingly a bit more heterogeneous here to date, whereas what you have then guided for the full year and particularly if you could comment on grid technologies and what you see for the fourth quarter.

Speaker #4: Thank you.

Speaker #2: Thanks, Alex. We always conveyed a clear message. We are expanding existing sites. And the other thing is on gas. We are strengthening the supply chain in the sense of a vertical element, looking on this.

Christian Bruch: Thanks, Alex. We always convey the clear message. We expanding existing sites. The other thing is on gas. We are strengthening the supply chain in the sense of a vertical element look on this. This journey we continue, as we communicated in the Capital Market Day, I see no reason to change that. Absolutely, we're trying to squeeze out everything out of existing sites in terms of driving productivity measures. We do a lot about robotics at the moment, and thinking about application of AI on the shop floor. These will obviously be things which hopefully drive more productivity, and with this, we get one or two more turbines out. This is all about productivity, productivity, and leveraging the existing footprint what we have.

Speaker #5: Thank you.

Speaker #7: Hi, hello Sebastian. I have to admit the quality wasn't good. I hope you hear. Do you hear me?

Speaker #5: Loud and clear, yes.

Speaker #7: Hello? Okay. So I think your question was regarding the overall margin development looking at Q4 and based on what we've seen so far this year and essentially what to expect.

Speaker #2: And this journey we continue. As we communicated on Capital Markets Day, and I see no reason to change that. Absolutely, we're trying to squeeze everything out of our existing sites in terms of driving productivity measures.

Speaker #7: I think again, correct. And what I said earlier is that we do expect Q4 again to have a bit of a moderation effect, rather than if you think about it, Q3 was quite strong.

Speaker #2: We do a lot with robotics at the moment, and are thinking about the application of AI on the shop floor. These will obviously be things which, hopefully, drive more productivity, and with this we get one or two more turbines out.

Speaker #7: Exceptionally strong, let's say. Based on a number of factors. And if you look at Q4, we're looking at it rather around the level if you have from the first half.

Speaker #2: But this is all about productivity, productivity, productivity, and leveraging the existing footprint we have. We do investments, obviously, in the gas service, as we announced at the Capital Market Day, but this is all about making existing sites more productive.

Christian Bruch: We do investments, obviously, in the Gas Services, as we announced in the Capital Market Day, but this is all about making existing sites more productive. That is an important pillar to keep, and I see at the moment no reason to change that.

Speaker #7: And I think this reflects more of this phasing and mix effects that we've discussed year over year. But as I mentioned. It's a little more moderate this year.

Speaker #2: And that is an important pillar to keep. And I see at the moment no reason to change that.

Speaker #7: And Q3 did benefit from a few favorable project timing. And this is typical in our business as you know. For example, in TI and or in other areas.

Speaker #3: Thanks a lot. So, the next question goes to Sebastian Grove.

Tobias Hang: Thanks a lot. Next question goes to Sebastian Growe.

Speaker #7: And of course don't forget we do have the seasonality in the service environment and gas services predominantly where we see typically a weaker Q4.

Speaker #5: Yeah, hi Maria. Christian, Tobias, thanks for taking my question. I would be on the segment as opposed to the group margin guidance for the years of the 10-12% range that has been confirmed.

Sebastian Growe: Hi, Maria, Christian, Tobias. Thanks for taking my question. Would be on the segment, as opposed to the group margin guidance for the year. The 10% to 12% range has been confirmed. I was wondering if you could provide more color with regard to the views on the assumptions for the four segments, which are seemingly a bit more heterogeneous year-to-date with what you have then guided for the full year, and particularly if you could comment on Grid Technologies and what you see for Q4.

Speaker #7: And also there's also other seasonality not to get into more detail, but things like corporate costs also with respect to cash, right? I mean, capex is a lot of its backend loaded.

Speaker #5: I was wondering if you could provide more color with regard to the views on the assumptions for the four segments, which are seemingly a bit more heterogeneous here to date, whereas what you have then guided for the full year. Particularly, if you could comment on grid technologies and what you see for the fourth quarter.

Speaker #7: So all of these factors if you'd like kind of come into play in the current quarter and Q4. Again, but I do want one last point, please.

Speaker #5: Thank you.

Speaker #7: Q3 is by no means a peak. That's not what I'm saying. And there's more info of course to come in November. Again, we see margins further expanding.

Speaker #7: Hi, hello Sebastian. I have to admit, the quality wasn't good. I hope you can hear me. Do you hear me?

Christian Bruch: Thank you.

Maria Ferraro: Hi. Hello, Sebastian.

Sebastian Growe: Hi

Sebastian Growe: Hi.

Maria Ferraro: The quality wasn't good. I hope you hear. Do you hear me?

Speaker #5: No, I'm clear. Yes.

Speaker #7: We absolutely see the orders that are being booked today with margin expansion. And of course that will come into play in the next quarters and years.

Speaker #7: Hello? Okay. So, I think your question was regarding the overall margin development, looking at Q4 and based on what we've seen so far this year, and essentially what to expect.

Sebastian Growe: Loud and clear. Yes.

Maria Ferraro: Hello? Okay. I think your question was regarding the overall margin development, looking at Q4, and based on what we've seen so far this year and essentially what to expect. I think, again, correct. What I said earlier is that we do expect Q4

Speaker #7: But again, as mentioned, more to come in November.

Speaker #3: Thanks so much. So the next question goes Patel.

Speaker #5: Good morning and thank you very much for the presentation. Mine's just on the cash flow. I was looking at the cash flow statement at the back of the presentation and there's another line of about a 1.1 billion of positive cash flow.

Speaker #5: Just under half of the cash flow you delivered for the quarter. I just wanted to know what that was as in you delivered 90% of your free cash flow for the full year.

Speaker #5: So I'm just trying to understand what reverses maybe could happen in Q4 that keeps you to that 8 billion target because on the performance you're delivering, I would have maybe expected to even overshoot.

Speaker #7: No, again, I hope I got everything. But again, when you look we're in a very good position on cash, no doubt, right? At 7.2 year to date.

Speaker #7: But don't forget there are other things in there. From Q4 perspective that are still to come. I mean, on capex, I do have to underline we have a very heavy Q4.

Speaker #7: And of course and don't forget there's also in the other line in the cash flow statement, we have things like reservation fees included, etc.

Speaker #7: And things like other related accruals which perhaps are profit negative but not cash effective like personnel related accruals. And so on. So it is a bit of a mixed bag.

Speaker #7: But again, when you look at cash for us, I've said around 8. Yes, we're in a good position. All things remaining equal around 8 also means above 8.

Speaker #7: So maybe that kind of puts it into perspective. But we do have some like I said puts and takes to consider.

Speaker #5: And that 1.1 billion Q3, and the Q3 numbers on the other line, could you break that out?

Speaker #7: Yeah, and that's what I'm saying. The 1.1, again, in the other line, you do have reservation fees included. And also other personnel related accruals like I mentioned.

Speaker #7: Again, having a profit impact but not cash effectiveness. Not cash effective.

Speaker #5: Thank you.

Speaker #7: Okay?

Speaker #5: Thanks.

Speaker #3: Thanks so much. So the next three questions go to Chris Leonard from UBS. Vivek Mia from City and Will Meckey from Capital For Chevreux.

Speaker #3: Chris, please go ahead.

Speaker #6: Yeah, hi there. Could I focus maybe on the slot momentum you showed incremental new slots Q3 going up to 11 gigawatts? And could you maybe update as you start to grow into 2027 how you anticipate those slots will perform through Q4 and how it's going to date in Q4 and equally any further commentary on sort of pricing and how that's progressing on those slots between the quarters so far this year.

Speaker #6: Thank you.

Speaker #2: I'm not sure whether I understood everything because honestly it was very difficult to understand. If it's about I hope I interpret correctly, right? I mean, obviously looking on the fourth quarter, we believe the fourth quarter will be lower, not unexpected.

Speaker #2: And then we look positively into the first half of '27 in terms of orders, but definitely with all the trajectories what we've seen quarter four, a little lower than we are let's say somewhere around the what is it?

Speaker #2: 100 giga, right, towards the end of the year. This is what we're trending towards. And as you also look into our bookings, what you potentially notice is that obviously we try to keep the, let's say, reservation agreements in terms of gigament relatively limited is the wrong word, but we obviously more look on orders than on the piling up the reservation agreements.

Speaker #2: And this is how the structure looks like. I hope I got everything because as I said, quality was not good.

Speaker #6: Reservations and how you expect those to trend into Q4. And I guess you sort of answered it there. And equally

Speaker #2: Yeah, it's a little bit honestly looking out of the window, right? I mean, I don't see any different trend in terms of the reservation agreements as we have seen in the last quarter.

Speaker #2: It depends more in terms of, okay, then finally decisions comes. So I would not really quarterly plan this, so.

Speaker #6: Thank you.

Speaker #3: Thanks a lot, Chris. Now going over to Vivek, please.

Speaker #5: Thank you very much, everyone. Good morning. My question is again on gas. I was just wondering if you could elaborate on the rough split between new units and service orders in the quarter.

Speaker #5: You said in the report that in both new units and service orders grew substantially in the quarter, but I hope you could give us a rough indication as well as around the pricing within the new units you've booked and any mix effects that may have been within that.

Speaker #5: Thank you.

Speaker #2: Thank you. I'm trying now this to do it from the top of my head. Maria is looking for the exact numbers, but I would say overproportionately new units.

Speaker #7: Yes, correct.

Speaker #2: And this is also has a consequence because obviously the service okay, thank you. Two thirds is new units. And obviously this has a consequence because obviously going forward, it means service agreement is going to be booked later.

Speaker #2: Right? And this is then still to come.

Speaker #7: Correct. But the good news is, as mentioned, that the margins on new units continue to expand as mentioned. So even with a higher proportionate share of a two thirds and one third in this particular quarter, we still see that as, let's say, accretive today and for the future in our backlog.

Speaker #3: Thanks so much. So the next question goes to Will Meckey, please.

Speaker #5: Yeah, good morning, Maria. Good morning, Christian, and everybody. Thank you for the time. My question comes to capacity expansion and the execution of your plans.

Speaker #5: Thank you for the details on slide five of the presentation and the update from the CMD. Very useful. You said you delivered six gigawatts in Q3.

Speaker #5: So could you at least put a rough estimate of what you expect to deliver in terms of gigawatts for the full year? And against the backdrop of the big step up in LGTs and the expansion in MGTs, what we should expect roughly as a delivery achievement into '27 given your current planning?

Speaker #5: And then any additional color you could give on how you're finding progress with your suppliers in the supply chain on long lead time items like forgings or castings.

Speaker #5: Thank you.

Speaker #2: Thanks, Will. Obviously, let me start with the second point on the forgings and castings. And this is really had made good progress. I mean, it was a big area of my concern, six to nine months ago, a lot of things have been done since then.

Speaker #2: It's still obviously we could see this growth in this supply chain still for several quarters. It will take time. But the things are on the way.

Speaker #2: And I'm pleased now to see what's coming in place. We will also continue to look into the areas of our own control, like the ceramic cores, our own casting house, and so forth.

Speaker #2: Which we have in temper. And this is something but where I would say that's good. It's still obviously has to grow further seeing this enormous amount of new units.

Speaker #2: And keep in mind at the end when all of this is in place, the vast majority of these parts will go into service business, not into the new units.

Speaker #2: And this is why it makes so much sense in terms of investing into that. And on the capacity delivery this year, I would scratch my head a bit around '15, around yeah, say around '15, maybe '16, something like this, gigawatt type of range I would believe you're going to see.

Speaker #5: Okay, thanks.

Speaker #3: Thank you so much. So the next three questions go to Alex Virgo from Evercore. Richard Dawson from Bernberg and Alistair Leslie from Bernstein. Alex, please go ahead.

Speaker #4: Thanks, Tobias. Morning, Christian. Morning, Maria. I wonder if I could just push you a little bit more on selling prices. I guess optically, it's a bit difficult to gauge given we don't have the details specifically, but optically it looks as if pricing has come down a little bit.

Speaker #4: Q on Q. So I just wondered if you could help us understand some of the moving parts that might affect that number, even if you're reluctant to actually guide on the price increases as you're seeing.

Speaker #4: I accept that margins are higher in the order intake, but I'd be curious to hear your comments on pricing. Thank you.

Speaker #2: And you have particular addressing gas. I would assume or?

Speaker #4: Yes, sorry, Christian. Yes, gas.

Speaker #2: Yeah. Yeah, thanks, Alex. And I'm not sure whether you are doing this. If you look on order intake and try to divide it by gigawatt numbers and seeing a trend in it, that is such a convoluted number because so many different things go into this.

Speaker #2: Don't interpret too much into that. This is what I always have to clearly say because it combines frame size, frequency, scope, balance between new units and service, and all the likes.

Speaker #2: So no pricing trend is intact in gas, absolutely. We see this so no change compared to last quarters.

Speaker #3: Very helpful. Thank you.

Speaker #5: Thanks a lot. So next question goes to Richard Dawson, please.

Speaker #6: Hi, good morning. Thank you for taking my question. I wanted to ask about the name change too on Terra. Does starting the transition to the new name now mean you can end that trademark license agreement with Siemens AG earlier than 2030, which I believe was when that agreement's due to end anyway?

Speaker #6: Thank you.

Speaker #2: Look, there is so early in the process and we just started it. We're not even launched the brand. So we said we start the preparation.

Speaker #2: The reason we announced it was that we don't want to put everybody on their NDA who's working on it and openly say it. It's too early in the process.

Speaker #2: We're working on it.

Speaker #6: Okay, thank you.

Speaker #5: Thanks a lot. So the next question goes to Alistair and Leslie.

Speaker #4: Yeah, thanks. Good morning. Question on gas services and the service opportunity. You touched upon it earlier in your prepared remarks. But last year, I think you quantified the lifetime service opportunity of around 400 million euros per gigawatt of backlog, I think.

Speaker #4: Just given how that backlog has kind of evolving, potentially in terms of mixed duration, possibly pricing, is that still the right number now or should we be thinking about maybe a meaningfully higher service opportunity per gigawatt going forward?

Speaker #4: Thank you.

Speaker #7: No, thanks for the question and also for kind of reminding us about our statement on that because it's very relevant. We don't see it's still around that mark.

Speaker #7: Of course, I think you're absolutely right. The average duration going up by two years is a positive thing. This is something that we see with the momentum that customers are opting for a longer long-term service program.

Speaker #7: But around the 400, more or less mark still remains intact.

Speaker #6: Okay, thank you.

Speaker #3: Thanks so much. So we get another five people in the queue. The next three will be Ben Uglo from Oxcap, Lucas Ferrani from Jefferies, and then Sean McLovlin from HSBC.

Speaker #3: Ben, please go ahead.

Speaker #4: Thank you. Morning, Christian, Maria, and Toby. Thanks for taking the question. It's a big picture question around the how you guys are seeing the kind of capacity situation in the market.

Speaker #4: If we look at large gas turbines first, in the olden days, we used to think about every company having a natural market share. But at the moment, we're seeing big increases kind of across the board.

Speaker #4: Do you see the capacity plans of the bigger companies and indeed some of the smaller ones too in gas turbines as kind of orderly?

Speaker #4: And then secondly, on the, let's call it on the engine fuel side, on the non-large gas turbine market, we are seeing some dramatic expansion, 60 gigawatts plus.

Speaker #4: How do you think about that two years from now? Does this all simply evaporate when your capacity comes on stream because of efficiency, or is this going to be a sort of persistent issue as we move forward?

Speaker #4: Thank you.

Speaker #2: Thanks, Ben, for your question and congratulations to be the first one with a video out in the morning. On the results, I'm always impressed by that.

Speaker #2: Well, is it an orderly increase? I believe yes, right? If I see a particular about the big players, I think we literally all do the same in terms of really driving productivity.

Speaker #2: This is I see from the colleagues. And that makes sense for me. And so in that regard so far, so good. And it's also investments with short payback times.

Speaker #2: Will there be a point in time when potentially the market is not 120 or 130 giga? Yes, at one point in time, might be.

Speaker #2: But I think I see it all orderly in that regard. Now you see obviously particular this quarter, you have seen, let's say, two smaller size turbine frames coming and pushing big orders with obviously to new players or not to players who do not always have listed there.

Speaker #2: And that is something which I see influence simply by the high demand. And I would absolutely believe that is impacted afterwards once the total capacity is on stream and maybe the demand is a bit more balanced in there.

Speaker #2: Absolutely agreed. How much this smaller companies now expend capacities, I can only see it, let's say, or cannot fully judge on, but I would say it's in using the opportunity type of thing.

Speaker #2: Which I fully understand, but it's not a structural completely change. While we will see, and this is I think important also, absolutely we will see more players trying to position themselves in the midsize gas turbine and push and maybe push the size a bit up and this is why it's for us important also to stay in forefront of our offerings from a technology perspective.

Speaker #2: We will continue to work on this. With having our strong turbines even betters and. But that is normal with more business as usual, I would say.

Speaker #4: Understood. Thank you.

Speaker #5: Thanks so much. I mean, as we are almost out of time, let's do a really quick round of questions and answers. The next one will be Lucas.

Speaker #5: Ferrani, please.

Speaker #7: Hello everyone and thanks for the time. Just had one on grids. I'm just wondering on your EPC capabilities, versus the full year 26 base.

Speaker #7: Are you also increasing capacity there to do more kind of HVDC project or is it only on the product side? And then when we think about the margin progress as those new volumes come, I think you talked before about pricing kind of normalizing a bit more in that segment.

Speaker #7: Are you still able to price kind of ahead or well ahead of inflation and still push margins or is only a productivity story in grids?

Speaker #7: Thank you.

Speaker #2: Yeah, thanks for the question very quickly. Increases also in the solutions part or EPC part. Yes, we started this three years ago because obviously the wave was visible.

Speaker #2: Obviously this also means execution capabilities. For example, in the US, which is a strong growing market, we will continue to build. While we continue also to be interested to be a strong products company.

Speaker #2: But yes, we have increased also on that side. Margin development or pricing development, not margin development, pricing development on that side. The pricing is intact, it's plateauing on a high level as we have said.

Speaker #2: And there's always opportunities particularly on the data center side, if you can deliver things fast. I mean, that is then an opportunistic element. But it's obviously also same message as in the quarters before, plateauing on a high level.

Speaker #3: Thanks a lot. Very quick question to Sean McLovlin, please.

Speaker #4: Thank you. Good morning. You had flagged previously a weaker Q4 in gas services with a pickup in Q1 or certainly early in 2027. How should we think about this quarter on quarter fade from such a strong number?

Speaker #4: And particularly given your comments around pipeline, should this be just a one quarter blip with several quarters of similar strength ahead? Thank you in gas services.

Speaker #6: Hello, Sean. Thank you for the question. And yes, I think I said that before. It's great to have billion slice, but we don't expect that each and every quarter.

Speaker #6: So there will be let's say a moderate or like a bit of a soft landing in Q4. As mentioned, so you should think of it that way.

Speaker #6: However, the pipeline remains super strong for fiscal year 27, especially in the first half. And so therefore it is kind of indeed in line with the rest of the seasonality for Q1 and then fiscal year 27 strong pipeline indeed.

Speaker #4: Super, thank you.

Speaker #5: Thanks so much, Sean. So last two questions go to Corvina, Rajpal from Barter and Vlad Segirski from Barclays. Thank you so much for your quick question, Corvina.

Speaker #7: Yeah, good morning everyone. I just wanted to dig a little bit around the backlog margin development particularly on transformation of industry. So wanted to understand what the moving parts there were and then wanted to reconcile this with Maria's statement about that we have not seen peak margins yet.

Speaker #7: So does that also apply for the TI business? Thank you.

Speaker #6: I think the question was around the confirmation of the expansion of the backlog margin. It was really difficult to hear you. But perhaps I'll just reiterate to say that yes, when we look at especially in both gas and grid, the orders that are being booked today are at higher margins than yesterday.

Speaker #6: We will give and please come dial in for November. We will give as we always do annually the insight into the backlog margin expansion by business area.

Speaker #5: Thanks so much, Maria. Thanks a lot, Corvina. So last question goes to Vlad, please.

Speaker #1: Thank you very much. Appreciate you squeezing me in. You increased your forecast for addressable market for gas turbines to about 110 to 120 gigawatts per year going forward.

Speaker #1: Based on pretty close call. Would you be able to give us some rough color on the geographical split of this addressable market? And in particular, what proportion of this 110 to 120 could be coming from the US?

Speaker #2: Yeah, let's say simple question at the moment. If I look on it, the 120 giga would probably see around half is US, right? I mean, so it will be a substantial market.

Speaker #2: Going forward, I would say it's a, you know, there is a kind of additional 20 giga even upside potential seeing what data centers gonna do, right?

Speaker #2: I mean, so there is a corridor on this. And but US continues to be a strong market in that regard.

Speaker #1: Thanks very much.

Speaker #2: Pleasure.

Speaker #5: Thanks so much for your patience and staying with us so long. So are there any final remarks from you, Christian?

Speaker #2: I hope a lot of you still have the vacation ahead of you. If so, then I wish you a great summer vacation for those of you who had it.

Speaker #2: I hope you enjoyed it. And thanks for being with us and looking forward to see you all in the quarter four call for a longer discussion then.

Speaker #5: Thanks so much, Christian. Also from my side, everybody have a great summer. The IR team is available in case you have any questions within August from September onwards.

Speaker #5: We are on several road shows and conferences. So looking forward to seeing you then. And with that, we conclude today's call. Thank you so much.