Good morning, ladies and gentlemen, and welcome to Siemens Energy's 2023 Third Quarter Conference Call. As a reminder, this call is being recorded. Before we begin, I would like to draw your attention to the Safe Harbor statement on page two of the Siemens Energy presentation. This conference call may include forward-looking statements. These statements are based on the company's current expectations and certain assumptions and are therefore subject to certain risks and uncertainties. After the presentation, there will be a question-and-answer session. [Operator Instructions] And at this time, I would like to turn the call over to your host today, Michael, Head of Investor Relations. Please go ahead.

Thank you very much, Natalie. Good morning, and a warm welcome to our Q3 conference call. As always, all documents were released at 7 a.m. on our website. Our President and CEO, Christian Bruch, our CFO, Maria Ferraro, as well as our CEO of Siemens Gamesa, Jochen Eickholt are here with me. Christian, Jochen and Maria will take you through the major developments of the last quarter. This should take approximately 45 minutes, and thereafter, we will, as Natalie said, have a Q&A session. We did allow 1.5 hour for the entire conference call in order to answer as many questions as possible. I see already a lot of questions, so please limit yourself later to one question, if possible. And with that, I hand over to Christian. Christian, over to you.

Yes. Good morning, everybody, also from my side, and thank you very much for joining Maria, Jochen and myself for our quarter three conference call. I hope that you and your families are well unsafe. This quarter has been an extremely demanding quarter for Siemens Energy, while the former Gas and Power business has delivered an outstanding performance, we suffered a severe setback at Siemens Gamesa. As we have highlighted during our Author communication on June 22, in particular, two elements contributed to the unexpected charges at Siemens Gamesa. First, we have identified increased failure rates after a certain run time for specific components of the onshore products for X and 5.X. And second, the productivity increases, which were targeted for quarter three we're not coming, particularly in relation to the ramp-up of the offshore business. We have initiated a series of remediation actions and had to take substantial charges in this quarter. Jochen will explain within this call more details of the problems and the challenges at Siemens Gamesa, as well as the actions we are taking. This said, I'm very impressed with the entire Siemens Energy team and how they are supporting the Siemens Gamesa colleagues finding solutions, addressing the challenges and really implementing now the measures. This is also for all the colleagues at Siemens Gamesa a very demanding situation, and I'm convinced that together, we will overcome the current challenges. The market environment for the former Gas and Power businesses continues to develop favorably, and we also see strong demand in the wind business with rising awareness of our customers that the economics need to work out across the value chain. Maria will, as usual, take you through the financials, so I go straight to the expected impact for the full fiscal year 2023. The aforementioned issues at Siemens Gamesa have a strong bearing on our guidance, particular on profit before special items and net income resulting from the charges we have taken in quarter three. We continue to expect strong growth for Siemens Energy Group, however, it touched lower than before. Because of the charges at Siemens Gamesa, we expect to see a negative profit margin before special items of minus 8% to minus 10%. And because we also have changes to valuation allowances related to deferred tax assets, we expect a net loss of around EUR4.5 billion for fiscal year 2023. Because of Siemens Gamesa, we now expect the cash outflow up to low-triple-digit million euro amount. Before I hand over to Jochen to provide more details on the development at Siemens Gamesa, I want to address the performance of the former Gas & Power businesses year-to-date. And as you know, it accounts for two-thirds of our revenue and the current performance is an excellent example of how to turn around troubled businesses. During the third quarter, we have seen the same pattern as in quarter one and quarter two. Strong order growth, reflecting the strong demand in the market, strong revenue growth as we execute through the backlog and the strong margin improvement also because of the set activity over the past two, three years with regard to project, the cost out measures and lower nonconformity costs and strong cash flow, because of the high level of orders. This means the former Gas & Power businesses had an excellent performance during the first 9 months of the year. Most impressive is that these businesses generated EUR1.4 billion in EBIT with a cash conversion of more than 1 so far this year. Capitalizing on the quality of our products, our global reach and the opportunities created by the energy transition, we booked orders of EUR27.3 billion, and this reflects a run rate of EUR9.1 billion per quarter, nearly doubling the quarterly run rate compared to 2020. During the first nine months, we have grown revenue in the former Gas & Power business by 22% on a comparable basis to EUR16.1 billion and the EUR1.4 billion in profit before special items, which I mentioned above, reflects a margin of 8.7%. This marks an improvement of more than 7 percentage points compared to where we started in 2020. Gas Services, grid technologies and transformation of industry are therefore all on track to reach all the assumptions that we have laid out at the beginning of the year, and they are well on track to reach the mid-term targets we have set at the Capital Markets Day in May last year. Our focus on selective bidding, cost out and operational excellence gives us confidence that these businesses will continue to develop even more favorably given the positive market development. Like always, let me give you some examples of our highlight projects in the last quarter. The first project is a great example of our ability to help customers to facilitate the energy transition by improving security of supply as the plant will act as a backup during periods of lower renewable generation. Castlelost, the project, let's say, a company in Ireland awarded us a contract for 275 open cycle gas turbines. We are providing five SGT-800 turbines and the control system for the plant. They choose us because our solution offers flexibility, reliability and redundancy. And furthermore, the technology is future-proof as the plant has the potential to be converted to run on hydrogen with zero carbon emissions. The second project is underlining our leadership position in offshore wind. RWE signed an agreement with Siemens Gamesa to build their 1 gigawatt to our offshore wind project in Denmark. The offshore wind park with 72 14-megawatt turbines, of which 40 are equipped with recyclable blades, will provide green energy to more than 1 million Danish households. The offshore installation is expected in 2026 and will be fully operational no later than 2027. The project with Conrad Energy is another example how we can stabilize the grid. Conrad Energy awarded us an order for three synchronous condensers for two projects in the U.K. These synchronous condensers will help to stabilize the grid in case of volatility in electricity generation. The last project demonstrates our ability to reduce carbon emissions in the process industry. The Ksi Lisims LNG project in Canada has awarded Siemens Energy a contract to assist with the design of the project electrification, compression and associated electrical systems. Designed to connect with British Columbia's renewable hydroelectric power supply, Ksi Lisims LNG emissions will be over 90% lower than a conventional LNG facility powered with gas turbines, resulting in one of the lowest carbon intensities of any LNG export terminal in the world. And that makes us obviously very proud. And with this, let me now hand over to Jochen, who will you provide more details on the current Siemens Gamesa situation.

Well, thanks, Christian, and good morning to everyone who's dialed in. Allow me to dive into some of the details in respect to the product quality problems of the onshore business at Siemens Gamesa. Now during some monitoring activities, which we typically do, we detected some elements of lower availability for part of the 4.X and 5.X onshore fleet. This is due to higher-than-expected failure rates of specific components, which occurred after certain run time of these turbines. And the issues in most cases are associated with main bearings and blades and some other components. Since components are sourced from different suppliers, and therefore, are not the same for even the same 4.X or the same 5.X turbine, we estimate that the varying number of our wind turbines and questions are affected for the 4.X, we have some 2,100 turbines in the field. For the 5.X, we will now discuss a volume of some 800 turbines. It is important to understand that the majority of our onshore fleet in toll is operating in line with contractual obligations. However, we are seeing some certain variations in the availability by region, but this is not as such a regional effect. It's more related to the failure patterns. And as undesirable as it is, we are at the beginning of the product life cycle with a limited number of units in the field. Such experiences are not unusual after wind turbines are in operation for a certain period of time. Now whilst I'm very disappointed that we are experiencing these issues, I'm pleased with the fact that in most cases, we recognize them well before our customers became aware of the issues. And also, I would like to mention that the variance of the 4.X and 5.X wind turbines that we're currently selling to our customers are either modified or are intended to be modified. So in other words, the identified issues are addressed, and it's now a matter of rectifying these issues in respective wind turbines that are now in the field. And let me say, going forward, we will be very selective when it comes to determining, which projects we take on. This is a general policy anyway. So let me try now to explain some of the mitigation measures. As soon as we realize the potential quality problems at the 4.X and the 5.X platforms, we established an expert task force at Siemens Gamesa and brought forward the annual quality baseline validation, which otherwise would have only happened in Q1 of the fiscal year ‘24. We've identified and quantified remedial actions, and we continue to work on validating and optimizing these actions with an extended task force. This is now a task force, which for its majority consists of Siemens Gamesa specialists, but then also it includes senior experts from Siemens Energy, perhaps not always experience in wind turbines, but certainly in [Indiscernible] equipment. And we also have external consultants from AlixPartners in there. AlixPartners, as you perhaps know, is a very renowned worldwide operating consultancy firm dealing with such matters. The task force as such reports directly to the Board of Directors of Siemens Gamesa and will also explore how we can improve on the mitigation of the measures going forward or perhaps finding different alternatives for the repairs, which are intended. After in-depth analysis, we've taken a EUR1.6 billion charge in the context of the product quality problems of the 4.X and the 5.X. This chart covers the cost of the mitigation measures, as well as wind turbine repairs and knock-on effects. But of course, then also things like our cost to meet contractual obligations. In addition, due to the cost increases related to rectification measures as such, for example, minor modifications, we will also face a lower profit contribution from going forward from some of these projects. Let me now highlight concrete actions we have taken to address the problems. First, to ensure the component quality, we are applying different stricter processes for the supplier qualification and the manufacturing process at the supplier. And perhaps it's also fair to say that the supply from some of the suppliers was stopped. Some suppliers in that sense, were almost disqualified. And we are talking also to specific suppliers about compensation. Please remember that sometimes components can be the root cause of many of the difficulties. We continue to improve the processes in our factories to ensure that the products, which are leaving the factory show the desired quality. And the core of the stabilization process going forward is going to be a streamlining of our offering in the sense of less product variance. This means less product variation, if you wish, in our offering regionally and portfolio-wise, even if it means that we will grow slower. This has been already initiated as part of the Mistral strategy program. We've, therefore, also in the past, reduced the number of variants we're offering, and we will continue to sharpen this concept. Now offshore, a different part of our business, the availability across our fleet is in line with the expectations and our contractual obligations, and we are benefiting from extensive experience here across the fleet basically. However, a little bit the situation is difficult in offshore, because we, kind of, became a victim of our past successes over the last years. The interest in our products was very high, and this resulted in increased number of orders in ‘21 and ‘22 and requested now a ramp-up of manufacturing capacities of production in almost all of our production facility, but of course, specifically where we manufacture the 11 and the 14-megawatt platforms. And as a consequence, all offshore manufacturing sites are currently in a ramp-up mode. The target is to increase capacities, but one also could say the offshore sites are to a large extent, also construction sites. And that means that is a combination of difficulty we see there. We have to switch to blades and ourselves for larger platforms, but also simultaneously new people have to be onboarded. So in the U.K., for instance, we are roughly doubling our capacity for the blades. In Leuhan, in France, we are ramping up the new facilities to produce the nacelles and blades. We are ramping up the capacities in Alborg and Cuxhaven. And we expected all these ramp-ups to be challenging. However, for instance, the labor markets allowed us to have a slower-than-anticipated pace of all these things, specifically after COVID-19. The delays in completing the factory infrastructure and the slower headcount were affecting the productivity improvement. And it is now so that our teams are tackling these challenges, but it should be said that there is not really one factor, which is causing the overall set of delays, but it's rather a combination of these factors, as you can imagine. We are working diligently to address this, but it means that sometimes it will take longer to get the targeted production levels in place. In addition, we had to observe that cost inflation on our side remained unexpectedly high, which means that the additional productivity is needed to be compensated for on the cost side to allow us to reach target profitability’s. So this now means that the combination of higher costs and lower productivity is affecting not only current operation and expected gross margins in our backlog, we also may see an impact on future contracts in the case that we are bound by preferred supply agreements that were signed in the past. Due to these effects, Siemens Energy had to book a charge of EUR600 million in the quarter. The majority of that is really related to those preferred supply agreements in the past and it's an effect which is really difficult. You perhaps also from previous sessions, remember that we were always trying to improve supply agreements from the past. On the cost side, not in all cases, we were sufficiently successful. And to some extent, we have to realize now that going forward, there is going to be an effect in the mentioned size. As we explained in the calls before, for more recent contracts, we've been negotiating different terms and conditions, specifically when it comes to inflation compensation. But this does not help us with legacy contracts and legacy preferred supply agreements. Let me now explain the remedial actions for offshore. We've been raising prices. I spoke about that even beyond sometimes the level which is known to the public. We also improved on contracts which are existing, and we have negotiated much more favorable terms and conditions so that we have covered in the case of cost inflation and risks outside of our control. We have, for example, moved from a steel tower indexation to a much broader cost coverage mechanism on our material cost side, including tower and non-tower steel and so on. We are working on productivity improvements going forward by building in the lessons learned in the areas of planning and routing hours for the ramp-up in order to optimize the overall situation. We are working on cost-out measures together with our suppliers. This is also perhaps worth mentioning. And as a consequence, we are also reviewing our CapEx plans associated with the introduction of new platforms so that we can optimize in the end of the day, the return on the investment. Now with this, perhaps back to Christian.

Yes. Thank you, Jochen. Let me summarize on the key messages that I want you to take away regarding Siemens Gamesa. We have taken remedial action and put a highly competent task force in place to resolve the quality issues of the 4.X and 5.X onshore platforms. We have had and continue to have high availability in our offshore fleet. And some of the most renowned experts in the industry have validated and certified the 4.X and 5.X. platforms. The same is true for the processes. We have brought on the way to solve the quality issues, and we execute new projects based on the updated versions on of the 4.X and the 5.X and obviously continue with our successful offshore platform. The implementation of the Mistral organization has created clear accountabilities throughout Siemens Gamesa. And this will help now to overcome the challenges we are dealing with. We are reviewing and strengthening the processes, as Jochen had laid out in the organization. For administrative processes, Siemens Gamesa taps now already in selected areas into the systems and processes we use at Siemens Energy. This helps a lot and the challenges at Siemens Gamesa Mark, obviously, very clearly to say this a setback. And because of the higher cost, we will see slower growth and a longer path to target profitability as we focus on stability and profitability before growth. We have applied this guiding principle already successfully in the former Gas and Power businesses and will now apply the same principle for Siemens Gamesa. And now I will hand over to Maria for the financials.

Thank you very much, Christian. Good morning, everybody. Let's get right into it and start with the overall group Siemens Energy numbers. For Siemens Energy orders, we booked EUR14.9 billion this quarter, reflecting just over 54% growth on a comparable basis. This was driven by large orders in Siemens Gamesa and Grid Technology. The book-to-bill ratio came in at a very strong 1.98 and the order book grew to a new record level of EUR109 billion. Also, the order intake for the quarter is also a record intake of just shy of EUR 15 billion. Looking at revenue, it increased by 8% on a comparable basis to EUR7.5 billion in the third quarter with double-digit growth in all the former Gas & Power businesses. Growth in service at 8% was higher than in new units, which resulted in a favorable business mix. As you may recall, this is usual for Q3. And of course, the mix is generally different in Q4, where it shifts proportionately to a more new unit than service share. Profit before special items was negative EUR2 billion, driven by the charges at Siemens Gamesa, all other business areas, GS, GTNTI, as you'll see in a moment, sharply exceeded their prior-year quarter's level, both in terms of profit and corresponding margin. Free cash flow pretax improved to a positive EUR27 million from a negative EUR25 million in the prior year quarter. Again, a strong cash flow in GST, CTI partly offset by the cash outflow at Siemens Gamesa and anticipated Ingrid technologies. Looking now at the order backlog development as per the other quarters, I find it's important to highlight the order backlog, which is very important for us given it gives us strong visibility going forward. In the third quarter, the order backlog grew across all businesses, notwithstanding a small decrease in GS. This is only timing-related, so therefore, shifts. That said, out of the EUR109 billion of the Siemens Energy order backlog, EUR40 billion refers to Siemens Gamesa approximately, and the quarter charges and ongoing issues led to a weaker order book quality at Siemens Gamesa consequently. However, the margin profile of the order backlog on GSGT and TI representing approximately EUR70 billion or two-thirds of our backlog continues to improve and supports our short- and midterm targets. Now moving to the next slide, please, regarding our strong liquidity position. I do want to mention, we have a strong balance sheet. And we have a track record and continue to maintain a strong balance sheet since the spin and also now post the buyout of the Siemens Gamesa minorities. And we continue to maintain an investment-grade rating in line with our absolute commitment to do so. So as you can see in this bridge, our liquidity position remained strong in Q3 with overall EUR4.4 billion in cash and cash equivalents, EUR4.7 billion in financial debt, of which EUR3.2 billion is long-term in nature. This results in a slight net debt position of EUR336 million. And taking into account pensions, we have an adjusted net debt position of just over EUR900 million. Looking at our liquidity position as of the end of Q3, Siemens Energy has a total available liquidity of EUR9.4 billion. As I just mentioned, where we have around EUR4.4 billion in cash and cash equivalents and EUR5 billion of undrawn credit lines with a maturity date in 2026. Now it's important perhaps to give you a bit of an orientation of where we'll end up with respect to year-end. So in Q1 or year-to-date Q1 to Q3, at the group level, we generated a negative free cash flow pretax of negative EUR324 million. The revised guidance calls for a negative free cash flow pretax up to a low triple-digit million amount. Therefore, for the fourth quarter, we expect a neutral to breakeven free cash flow pretax, which is in line with our revised guidance. When it comes to cash outflows in the fourth quarter that are not part of our free cash flow definition, we assume the following: cash tax payments of around EUR100 million, interest payments of around EUR100 million, cash for the buyout of Siemens Gamesa minorities of EUR270 million and non-carve-out topics of between EUR300 million to EUR400 million. So therefore, our net debt position that is expected or approximated for year-end will be slightly higher than at the end of Q3. So now let's take a look at our business areas, starting with Gas Services. So again, a very strong quarter for Gas Services on a revenue and profit level. In the third quarter for orders, we booked orders worth EUR2.2 billion. This is reflecting a decrease on a comparable basis and was driven by strong orders in the service business, but low new unit orders. But again, this is only timing-related and shifts in timing. In the third quarter, we booked nine gas turbines greater than 10 megawatts, all of them in the industrial gas turbines in the range of 10 to 100 megawatts. We didn't book any large gas turbines greater than 100 megawatts. This is again due to timing shifts in the booking of already secured projects. As mentioned, they're already signed and are in the final stages and will be booked accordingly in Q4. So we expect strong large gas turbine orders in Q4, just to be clear. From a revenue perspective, NGS, we grew strongly by over 21% to EUR2.7 billion. This is driven by both new unit and service business and both grew approximately by 15%. In particular, the excellent performance of our short-cycle service business contributed to a positive business mix this quarter. Looking at profit almost doubled year-over-year and came in at EUR296 million. This reflects a margin of 10.9% or an increase of 440 bps versus Q3 of last year. This strong increase reflects a combination of higher revenue and improved cost structure as well, as I mentioned, a favorable mix. In line with our knowing seasonality and prior year results, we do expect the business mix in Q4 to have a lower portion of services with, therefore, a correspondingly lower margin. Moving on to Good Technologies in orders, truly an outstanding order development on the back of strong demand across the business. In third quarter, we booked orders worth EUR4.3 billion. This is an incredible increase of just shy of 64% comparable. This growth was supported by large orders in the solutions business, including an order for offshore grid connections in the North Sea. All regions showed growth with the strongest increase in Europe, where book-to-bill overall was 2.35. Revenue grew significantly at 18.7% on a comparable basis, again, on the back of very strong order intake in the prior fiscal year. Profit strong at EUR159 million and a margin of 8.7%, this is an improvement of 710 basis points versus Q3 of last year. Just want to, maybe a friendly reminder, of course, the prior year quarter was burdened by strong headwinds from supply chain constraints. However, what we see now is strong development driven by margin-accretive volume and underlying operational improvements, well done to the GT team. On the next slide, let's take a closer look at our transformation of industry business area. Here, the main message is that the turnaround plan that was put in place a few years ago and the transformation is working. The focus on profitability is paying off across all businesses where we're well on track to achieve our targets. Orders, we booked orders worth EUR1.3 billion. This is reflecting a 13.9% increase on a comparable basis. The largest contributors to this development was our electrification, automation and digitalization and the industrial steam turbines and generation businesses. Revenue grew by 10.5% on a comparable basis, supported by all four IMDs or Independently Managed Businesses, mainly driven, of course, of the underlying service business. Profit before special items, where TI continued the positive trends seen during the prior fiscal year and the first six months of the current fiscal year, again confirming the turnaround. Profit came in at EUR70 million. This reflects a margin of 6.5% and compares to a profit of [EUR17] (ph) million in Q3 of prior fiscal year. This is an improvement of 490 basis points versus last year. And again, also important is that increase was based on progress across all of the independently managed businesses, and I think this is very noteworthy and well done to the team. Next slide is Siemens Gamesa. I think it's been explained already by the colleagues the situation at our wind subsidiary, Siemens Gamesa and the comprehensive plan to mitigate the issues. However, the third quarter financials do clearly reflect the severity of the impact. But looking at orders in the third quarter, orders more than doubled and rose to EUR7.4 billion, of which EUR5.3 billion therein refer to our offshore business. And this, of course, was driven by higher volume of large orders, including a single offshore order worth EUR2.3 billion. The order backlog for Siemens Gamesa at the end of the third quarter amounted to just shy of EUR40 billion at EUR39.9 million. Revenue declined by 12.2% year-over-year on a comparable basis and came in at EUR2 billion. This decline in onshore and service was driven by the quality issues and associated percentage of completion methodology for accounting, where we are incurring the cumulative catch-up effects for those charges. In offshore revenue increased by 19% despite the ramp-up challenges as we've already indicated. Profit, we came in negative at EUR2.55 billion. This number includes the mentioned charges before of EUR2.2 billion, which are detailed more on the next slide in just a moment. Free cash flow for Siemens Gamesa was negative at EUR393 million, mostly driven by the operating performance and the execution of owners projects. It's also important to note that the cash impact of the EUR2.2 billion charges in this quarter was quite limited. And also, as noted, this will be spread over the next several years with limited impact in fiscal year '23. On the next slide, here's the breakdown of the Q3 charge for Siemens Gamesa. As already mentioned, we took the EUR1.6 billion charge pertaining to quality relating to the 4.X and 5.X onshore platforms. The remaining EUR0.6 billion can be broken down into two categories, where the 0.4% is relating to onerous loss provisions for certain offshore contracts because of increased product costs. Then we have the EUR0.2 billion. This is, amongst others, reflecting offshore ramp-up challenges as was described by Jochen, causing project delays and underutilization, et cetera, in our factories. So detailing slightly further on the increased product costs, these relate to changes in cost assumptions for materials, labor and other production costs, but also to the fact that productivity improvements are not materializing as previously expected, and the root cause for this is connected to the ramp-up challenges as we're not reaching the load plan and therefore, productivity levels in our factories that was previously assumed. In addition, these issues at Siemens Gamesa and the charges also triggered negative tax effects in Q3 amounting to EUR0.7 billion. This is resulting from valuation allowances on deferred tax assets in Germany, U.S., Spain and Mexico, which, however, have no profit nor cash flow impact. And also, this does not affect the legal existence of these loss carryforwards, so therefore, are still available to offset future profits. So it's also important to note that the issues we've identified in the third quarter for Siemens Gamesa will have certain consequential operational effects for the quarters to come. For example, the margin potential of our legacy backlog has further deteriorated. And this is driven by the quality issues as mentioned on onshore and product cost increases in offshore. Particularly, increased product costs will have an impact on the profitability of the offshore business until that legacy backlog is executed. The continued delay also in the offshore ramp-up will lead to shifts and therefore, lower revenue than previously assumed, which leads to missing project profit and higher underutilization in our factories. Therefore, the above-mentioned challenges will lead to a flatter margin recovery curve across the Siemens Gamesa businesses, and it will take more time to reach target profitability. So what does this mean for the fourth quarter of this fiscal year '23? This means that the amended profit guidance for Siemens Gamesa after incurring a year-to-date loss of roughly EUR3.7 billion implies an expected loss of around or approximately EUR0.6 billion for Q4. And here, again, you should break this down into two parts, where we see approximately the EUR300 million to EUR400 million, reflecting the continued execution of our legacy backlog. And then in addition, due to the charges in Q3, we see about EUR200 million to EUR300 million additional consequential operational effects that burden Q4, in particular. These include continued delays in the offshore ramp-up as described. And of course, these delays are additionally limiting our intended improvement measures. So with that, I know that was quite detailed, but let's sum up for the first nine months of the fiscal year. I think Christian already mentioned it. We had excellent performance of all of the former GP businesses since the inception of Siemens Energy. In the first three quarters of 2023, with roughly just over EUR27 billion in orders, which is a 54% increase, 22% comparable revenue growth and a profit margin before special items of more than 8%, again, driven by the strong underlying operational improvements that we've undertaken in the last years in all three business areas. However, the financial performance of Siemens Gamesa does mark a setback. And since the capital reduction has been approved in June, we now own 100% of Siemens Gamesa. And this allows us to rigorously tackle the issues necessary to ensure the turnaround, as Christian explained and Jochen and his team. The strong performance on cash flow of the former GP reflects our ability to turn around the businesses and to continue to generate free cash flow, not only in the prior years, as Christian mentioned, but also going forward. We continue to have a strong balance sheet and a confirmed investment-grade rating with a stable outlook. So just one other point to mention that we have made a change in the CFO of Siemens Gamesa. I'm very pleased to announce that Stefan Huppertz, the former Head of Finance Grid Solution Technologies in our Grid Technologies business area within Siemens Energy was appointed as the new CFO of Siemens Gamesa. Stefan brings with him a proven track record looking at the progress we've made in the GT solutions space in Siemens Energy, and he knows how to master complex and finance project structures. I'm very pleased that he's taken over this important position, and he will begin at the beginning of September. So moving to our guidance, our amended guidance. Let me just say over-achingly all overall assumptions for the segment's gas services, grid technologies and transformation of industries for fiscal year '23 remains unchanged. So therefore, GS plans to achieve comparable revenue growth of 10% to 12% and a profit margin before special items of 9% to 11%. GT plans to achieve a comparable revenue growth of 12% to 14% and a profit margin before special items between 6% and 8%. GI plans to achieve a comparable revenue growth of 8% to 10% and a profit margin before special items of between 3% and 5%. And as you can see from the Q3 results, we are on a strong trajectory towards achieving these targets. Siemens Gamesa has adjusted revenue and profit assumptions for fiscal year '23 and now assumes comparable revenue growth of negative 3% to 0%, previously positive 6% to positive 10% and a negative profit before special items of around or approximately EUR4.3 billion. So therefore, as a result, consequently, we had to adjust our outlook for Siemens Energy Group for fiscal year '23 and now expect comparable revenue growth to be in the range of 9% to 11%, a slight notch down, previously 10% to 12% and a profit margin before special items between negative 10% and negative 8%. This was previously around the low end of our guidance range of positive 1% to positive 3%. The net loss of Siemens Energy Group is now expected to be around or approximately EUR4.5 billion. This was previously expected to exceed prior year's fiscal year's level of EUR712 million by up to a low triple-digit million amount. And not to forget, we now expect cash, free cash flow pretax for fiscal year 2023 up to a negative low triple-digit amount, which was previously positive up to a low triple-digit amount. With that, now I hand over back to you, Christian, and thank you for your attention.

Thank you, Maria. Before I conclude with my key priorities, let me say the following. The situation of Siemens Gamesa is a major setback for us at Siemens Energy. However, our former Gas and Power businesses deliver outstanding results, and this is an encouraging testimony to the fact that we know how to successfully restructure travel businesses, just recall what we all discussed three years ago when we looked on the prior Gas & Power businesses. This expertise and our focus on selective bidding cost out and operational excellence gives us confidence that the organization has the capability to help previous-Siemens Gamesa to successfully turn around and operationally challenged but otherwise strategically attractive growth business. At this point in time, also really saying all employees at Siemens Energy and Siemens Gamesa, particular for the last couple of weeks, which has been for everybody, a very work-intensive period and really all the commitment and the knowledge of our people is a great thing to see even in such a situation. I'm convinced that wind is an indispensable part of a successful energy transition. But this obviously needs to be possible in a predictable and reliable way going forward. In the next weeks, we will review our original plans in Siemens Gamesa to ensure that the challenges of growth are managed diligently and with a profitable outcome. We will provide you a detailed update on the different businesses at our Capital Markets Day in Hamburg on November 21 and 22, and I hope you can join us there. Now to my priorities. Together with Jochen and the whole Siemens Gamesa team, I intend to turn around Siemens Gamesa by fixing product quality problems and reducing costs in onshore, managing the ramp-up in offshore and improving the cost structure, strengthening the processes and increasing the focus, as Jochen said before, on core regions and products. We continue to leverage our new operating model at Siemens Energy to capitalize on market opportunities and to drive performance at gas services, grid technologies and transformation of industry. With this, I hand back to Michael to moderate the Q&A session while Maria, Jochen and I are looking forward to your questions. A - Michael Hagmann: Thank you, Christian. Thank you, Maria, and thank you, Jochen. We now have approximately 45 minutes for the Q&A session. [Operator Instructions] If I look at the list, the first three questions go to Vivek Midha, Citi, Ajay Patel at Goldman Sachs, Gael de-Bray at Deutsche Bank and Vivek, please do go ahead.

Thanks very much, Michael. Good morning everyone. My question is on the offshore business. Would it be possible to quantify the proportion of the offshore backlog and pipeline, which is now onerous? And do you have any updated view on when you expect the offshore business to turn profitable again? Or is that a topic for the CMD? Thank you.

Yes. Thank you, Vivek. Good morning. Thank you for your question. As we've mentioned before, the onerous backlog was mainly relating to the onshore business in the past. And of course, given the Q3 additional charges, we do see an increase of the onerous backlog in onshore. We've indicated in prior sessions management indicated around the EUR2.5 billion. We also said that would be going down to EUR2 billion now as a result of the charges. It's just slightly above EUR3 billion. With respect to offshore, we also have a handful of contracts that have turned onerous. Of course, the execution of those contracts are a little further in the future. You know the duration of our contracts with onshore being slightly, let's say, two to three years and offshore being four to five years. And this is relating mainly to the product cost issues that we indicated in Q3.

Thank you, Maria. And then the next question goes to Akash Gupta at JPMorgan.

Thank you for your time. First of all, thank you for the level of details that you have provided in presentation. It's quite useful to figure out the moving parts. The question I had was more on the orders prospect. I mean, if I look at your Q3 orders, you had EUR15 billion, almost 2 times book-to-bill year-to-date. We have 1.8 times book-to-bill. How does your pipeline look here in the next three to six months? Any comment on that would be helpful. Thank you.

Thank you very much, Akash. Very good morning. I mean, since you obviously relate this to the EUR15 billion, so the overall business, I mean, all in all, we still see a strong pipeline in projects. We will also keep in mind, as we mentioned before, we will be very selective on orders. And in that regard, obviously, we do expect a continuous positive outlook, but we will not take it unreasonably on board very clearly. On wind, I think it's very clearly dominated this quarter by offshore Jochen explained it in his numbers. And we will, in particular, in onshore, be very careful and very selective in terms of taking on new projects. And as was indicated in the call, we will review, obviously, the way going forward and it would always put stability and profitability first before growth. And I think that is a balance which we would keep to ensure that we can execute through the backlog. The book-to-bill in quarter four, roughly, if you look on current businesses in quarter four would be around 1% roughly.

Right. I realize that I think I got the list slightly wrong. But the next questions go to Gael de-Bray at Deutsche, Nicholas Green at Bernstein and then Alexander Virgo at Bank of America. Gael, if you go ahead, please? Gael de-Bray: Yes, thanks very much, good morning everyone, I have two questions, please. So the first one is, of course, on Gamesa and the new guidance for Gamesa implies an operating loss of EUR600 million in Q4. You've just said that this would include EUR200 million to EUR300 million knock-on effects related to the issues you've just detailed. I guess my question is, could you perhaps help us understand the band, which you dealt this knock-on effect going into next year? Is this EUR200 million to EUR300 million, a quarterly run rate we should use? And then the second question is on the balance sheet. So it seems that your net debt could increase by around EUR800 million in fiscal Q4. So first, could you confirm the math? And second, are you comfortable with your BBB minus credit rating?

Thank you, Gael. So I'll take each of the questions one by one, maybe. And looking at the Q4 profitability. So you're right, maybe just again to do the math. We have the year-to-date EUR3.7 billion. We have then, of course, approximately EUR600 million in the fourth quarter, of which we then partition up into those two parts, right? And one is this onerous backlog that we continue to work through. And as you know, with onerous backlog, I mean, even when you make charges with respect to like we did in Q1 -- in Q3, excuse me this relates only to the direct costs for those projects, right? So there's other costs that, of course, continue to come in. And therefore, that's why you see this underlying development of negative in the quarters, and this is true in Q4. And that's the circa EUR300 million to EUR400 million we're talking about. Then the second one and the second category is this EUR200 million to EUR300 million, these are, as you term the knock-on effect or the consequential operational issues. And some of those are only for this Q4 due to some of the issues that Jochen has described earlier. For example, some of the productivity measures are just we're not able to achieve those in this time frame. So those are really Q4 specific. Things like under absorption within the factories, as you know, if the ramp-up then tends to, let's say, improve as we go forward, then of course, this is a Q4 topic as well. And I think those are the way to look at it. Is that something that you can take forward into next year as a rule of thumb, I would say, Gael, as always, give us a bit of time. We're working through that exactly to see exactly what the go-forward impacts will be. But Q4, in particular, does have a heightened level of these consequential operational effects due to the Q3 charge.

Thank you, Maria. And the next question goes to Nick Green at Bernstein. Nick, please go ahead.

Good morning everybody, thank you for taking my question. It's a technical question here. So on Jochen's comments at the press call earlier, you've indicated that firstly, it's not yet possible to determine the root cause that you can have a turbine that has multiple issues, and then you can have another turbine in the same model without any issues, but you are unwilling to confirm the number of turbines at fault, you've identified wrinkles on blades, but this may be irrespective of the root cause or the problem that you found particles in the grace way of the main bearings. But at present, you're not able to confirm where those particles came from. And if indeed, the blade issue is in any way connected to the discovery of these particles. So I have three specific questions, please. Firstly, is it, therefore, fair to say that you cannot confirm with any confidence that you can book and what is actually going wrong here? Secondly, is it fair to say that you cannot, at this stage, give comfort that remaining turbines within the same models will not subsequently develop abnormal vibrations? And then thirdly, accordingly, with what confidence can investors take that this EUR1.6 billion charge won't be higher in the future? Thank you.

Yes, perhaps a couple of questions. Thank you very much. Thank you very much also for listening to the previous session. I think perhaps the conclusions I would grow are not exactly the ones which perhaps I referred to. So first of all, the thing is that still in the end of the day, we are regarding 4.X, but also regarding 5.X specifically at the very beginning of the operating duration. And therefore, we have rather few physical findings and we have to base our assumptions very much on probabilistic calculations. These probabilistic calculations are, what we typically do apply, but we also got our methods as such, confirmed by an external third-party assessment. In this case, it's a [Indiscernible] note and they established that the way to handle these issues is to put it in their words, kind of, best-in-class. So the probabilistic model as such is okay. However, continuing to suffer from two few data points. Now data points as such, cannot come from anywhere, and we will constantly look at those and try to optimize those over the time. Now -- so that will provide over time, more stability to the numbers. Secondly, now we address those issues, which we are aware of in a very systematic manner and try to make sure that perhaps even the full understanding of the root causes, still symptoms of that or failure modes of the components going forward do not happen again. And that is what the task force, the quality task force which sometimes is referred to is working on and working on right now. And going forward, we have the impression that certainly a significant part of the root causes can be mitigated in a way that the offering we have to our customers does not show this phenomena. And please remember, that our obligation towards the customer oftentimes is around availability of the turbine as such. It's not about failure rates of a single component. So that's a different effect. Going forward, I would assume that the modifications we do put in place will take us to turbines, which fully qualify according to our commitment with the customer. And now, of course, the overall situation is such that you could say, well, there's a couple of big hits here, and I have to say I fully concur with that. The problem is that we've now seen this kind of volume of hits in this constellation also. And we haven't seen that before. So it's a unique situation we are finding ourselves in. We're trying to work ourselves through this situation as diligent as possible. But the combination of the onshore activities and mentioned the aforementioned offshore situations that, as such, also for us is an elevation is a unique situation. Now in total then, this means that our accounting principles are in place, and they are sound and stable. And following that, we've tried to put everything we know of in the best possible way into our numbers. And following then our accounting standards, I think it's also fair to say that the accruals as such are based from this perspective on the right level. And we continue to work our way forward around those issues which are known. And as I said, the situation we had in Q3 for me is unique in a way that we did not see that before. It's a combination of things, which hit us, which also came to us, I mean, we didn't expect that to happen. Otherwise, the sequence of events would have been clearly different anyway. I hope this answers a little bit those questions.

Thank you. Michael, if you just permit me just help us the other way around there. How did you come up with the EUR1.6 billion? The comfort we're trying to seek is that there won't be additional turbines in the future that could come up with a problem. And it sounds from your description that because you don't fully know the problem, we also can't fully say that a turbine that passes muster today won't struggle in a year's time. So help us with the EUR1.6 billion. Is it a probabilistic estimate? Is it -- do you have a discrete number of turbines that you feel comfortable standing behind, but the cost per turbine average, that's a moving part. Help us understand how we can book and the problems? Thank you.

Well, how can I look at that? I could say we've seen a couple of failures. We know from our history that if we are at the beginning of a lifetime of a turbine, these couple of failures indicate we are on a kind of failure rate curve. This figure curve is modeled statistically and with probabilistic measures takes us into an overall view. This overall view, as I was trying to say, was confirmed not only by Siemens Gamesa experts, but also then by a task force of Siemens Energy and Siemens Gamesa and then confirmed by an external assessment. That then is mirrored, if you wish, with the knowledge we have on certain corrective measures. Please remember, in those cases, most corrective measures are not seen as isolated different activities, but rather are planned to be executed in conjunction with standard or planned maintenance work, if you wish. That, in total, takes us to the EUR1.6 billion. Right now, there is no better know-how we have. Of course, going forward, we try to optimize those numbers as far as we can. But today, unfortunately, this number is the number.

Okay, thank you. I’ll turn it over. Thanks, Michael.

Thank you. Thanks, Jochen. The next question then goes to Alex Virgo at Bank of America. Alex, please go ahead.

Thanks, Michael. Good morning everybody. I wondered if I can pick up a little bit of Maria's answer to Gael's question, which I don't think you fully finished it off, Maria. So I wondered if I can incorporate that into a broader question over the cash flow and thinking just can you give us some guidance around the cadence of the cash out, so I guess, the EUR1.6 billion primarily, but obviously, the entirety of that. And I think Gael's question was about the BBB minus rating. And just if you could clarify the numbers you gave us for Q4 to so that we've got those down at, that would be helpful?

Thank you, Alex. And yes, you're so right. Apologies, Gael. The other two parts of your question, I was going to come back to, if not already asked by Alex. So I appreciate that. So maybe let me start with cash. I think that would be perhaps the first area. So the cash impact, as we indicated already, for the charges will be spread over several years. And we're trying to figure this out. We do not have this completely, let's say, with numbers, et cetera. This is something that's been worked on as we speak. But what we do know is we expect that the majority will be between fiscal year '24 and '26 and perhaps even peaking in fiscal year '25 based on, again, high-level estimations. What we do know is that there's only limited impact in this fiscal year. And also what we do know, so beyond, let's say, the five-year horizon that I just spoke about, a lot this is -- there’s some of this rather is relating to long-term service contracts. So therefore, it will be spread over even a much longer time frame as our long-term service program, in some cases, go beyond 10-years. So -- but at the same time, and this is why this is something that we'll further give some insight to in our Q4 and for sure at the Capital Market Day, we're also implementing the contingency measures as indicated by Jochen and Christian and of course, reviewing strategic and business plan assumptions. So therefore, we'll give some better clarity on the financial expectations, like I mentioned at the Capital Markets Day and Q4. With respect to the net debt cash position for the year-end, I think this was also a question that Gael had. The net debt position you see at the end of Q3 stood at approximately negative EUR336 million. So we've guided for negative free cash flow pretax up to a low-triple-digit million amount in Q1 to Q3. So year-to-date, we generated negative free cash flow pretax of negative EUR324 million. And there, as a result, then we expect to generate neutral to breakeven free cash flow, again estimated for the fourth quarter. And also, therefore, to get to the next stage when it comes to cash outflows, which are not part of the free cash flow definition as such, we assume a cash tax payment of around EUR100 million, interest payments of approximately EUR100 million. We have cash for the buyout of the SGRE minorities of EUR270 million and non-carve-out topics of between EUR300 million to EUR400 million. So therefore, we expect the net debt position at year-end to be slightly higher than in Q3 based on those estimated. So again, these are approximate amounts just to give you a bit of a steer. With respect to the BBB minus with a stable outlook, am I comfortable? We've said over and over, and I state here again, we have a solid balance sheet, right? So with our confirmed investment-grade rating, and we're working on this comprehensive plan to turn around Siemens Gamesa with all of the various measures. It's important also to note, like I mentioned earlier, that the cash curve for the Siemens Gamesa charges will be spread over the next years. And it's very imperative that we don't forget that we have the strong performance and the cash flow of our former Gas and Power businesses. I think in the last 2.5-plus years, there's over EUR4 billion in cash generated from those businesses. So I think that's really important to, kind of, round the circle, if you wish, with respect to why I feel we have a solid balance sheet that supports the investment-grade rating of the BBB minus, now with a stable outlook. So I am very comfortable with our balance sheet is. It stands but let me also assure you we don't stay still. We're going to continue to work on managing the balance sheet and ensuring that inventories, accounts receivables. These are things that we look at monthly and also even more frequently as necessary.

Great, thank you.

Thank you, Maria. And now the next question goes to Ajay Patel at Goldman Sachs. And thereafter, it's going to be [Govinda Rajpal] (ph) at AlphaValue, and Sean McLoughlin at HSBC, but first Ajay.

Good morning and thank you for the presentation and maybe just to build on the last question that was asked. A common discussion point that I have with clients is to what extent will Siemens Gamesa's turnaround story have an impact on balance sheet and how that evolves and some of the components you've given today clearly helped with that, especially the last point where I think you were talking about the EUR1.6 billion of provisions being and how that would crystallize in terms of cash over the coming five years. But what I wanted to build on or ask on is the second point in that presentation slide, where it talks about lower profit contribution from future execution of Siemens Gamesa's order backlog. So is there any details you can give? And I know that maybe getting it to the end degree will take some time. But just in terms of orders of magnitude, are we looking at Siemens Gamesa being negative cash flow for the next three, four, five years? And is that a sizable negative cash flow? Or is it minimal? And then just to try to understand here that you've still got the cash to come out from these charges that you put through and profits are going to be impacted, but just to try to get the understanding of what the balance of that looks like against Gas & Power business, which clearly is doing well, and it's throwing off a lot of cash? And if those pieces all fit together, can you categorically rule out a lot on the assumptions of the EUR1.6 billion that you've announced today that you don't need any equity issuances you're more than covered with the business as it stands and as you see it now? Hello?

[Technical Difficulty] try to address these costs or these fixes within the regular maintenance intervals. And so that will take over, like I said, five years for the most part and even beyond, depending upon the contract duration. So I think that's really important to understand. And then the second component is what you're talking about with respect to the onerous backlog. And that's what I mentioned earlier. We do -- we had onerous backlogs, but predominantly in our onshore business that has been impacted by the quality issues that as you rightly said, the EUR1.6 billion that was charged this quarter. And as a result, we do have an uplift in the owner's backlog within onshore that we now need to take the time to execute upon. But that duration and exactly how that will unfold in the next quarters is something that we'll only be able to provide at the Capital Market Day and in some insight in Q4. Thank you for your patience on that one. I think that's really important. And last but not least, again, to reiterate my view and our view on our balance sheet. We continue to have a solid balance sheet. It's absolutely in line and commensurate with our investment-grade rating. I think this is important. And again, looking forward, we're going to continue to have strong cash generation from our Gas & Power business businesses, our previous gas and power businesses. And so therefore, from today's perspective, what we know today, we do not see the need for a capital raise.

Thank you very much.

Thank you, Maria. Next question goes to Govinda Rajpal at AlphaValue. If you please go ahead.

Yes. Good morning, everyone. I wanted to dig a little bit deeper into the supply chain remediation actions that you're taking in the onshore business. So this claims process that you have initiated. Can you give us a little more insight into how this would proceed? And if there is going to be any financial let's say, positive financial impact that comes back to you maybe in some time? Or is it too obscure to make an estimate of now? And then secondly, cash flows are likely to be impacted in the coming years. So then how should we think about the restoration of the dividend from a medium to long-term perspective?

Can you start Maria?

So let me try to start with the supply chain. So the findings are that sometimes the components we use in our turbines were not adequately or sufficiently qualified. Sometimes they were qualified, but at the end of the day, the cereal deliveries, if you wish were not meeting those expected quality standards. There's a couple of things behind that. In the end of the day, we tried to eliminate the failures coming from the components plus if there is then a legal basis for that in the sense of a liability given by a supplier to us, to stand up or to stand in for the quality issues, then we will try to follow-up on that. So we've got a couple of suppliers now where we are in serious negotiations, if you wish, on their contribution on their part. We've also had a couple of components, which were stopped, and there's also a number of specific suppliers where the business relationship, at least for the components ended. When it comes to the liabilities suppliers have, that liability typically goes up to 100% of their delivery volume. So that means there is a limited effect in relation to the damage we see on our side coming from those components. But nonetheless, the contribution there can be significant, and this is why we follow up on those. Then perhaps next.

Thank you. Regarding the dividend question. So as I just mentioned, the highest priority for us is maintaining our strong balance sheet that's commensurate with an investment-grade rating, which again has just been confirmed. And then potential dividends will then depend on our expectations for a positive net income. And just also as a friendly reminder, we do have a dividend policy in place of the 40% to 60% of net income attributable to Siemens Energy shareholders. But this, of course, will be discussed in conjunction and more at the Capital Market Day in November.

Thank you both. And the next question goes to Sean McLoughlin at HSBC. Sean, please?

Good morning and thank you for my questions, I have two. Firstly, just to understand the lower-than-expected profitability of your now onerous contracts. Why have not these been booked as part of the charges in Q3? And how should we think about the scale of the cost of executing on these contracts? And do they now represent 100% of what you have in your backlog? The second question was around onshore. And just looking at the ASP and the volumes, can we infer any loss of price discipline in these numbers? Can you just talk through the current situation with your customers in the onshore space? Thank you.

Hi, Sean, I'll take the first question regarding the backlog. I think, again, what we could identify within the charges for Q3 and for those projects that turned onerous, again, where the project margin becomes negative, that has all been fully provisioned for. But what it does not take into account is the lost gross profit of profitable projects. So therefore, it's actually a reduction in the profit going forward. And that's something that I tried to explain with respect to the consequential operational effects. So going forward, the backlog is slightly more onerous, like I mentioned for onshore. And so therefore, even for those projects that were profitable, we have a reduced profitability for those that were impacted by the Q3 charges. But I could not and should not provision for those as a charge in Q3 because, again, they're still rendering profit just at a lesser amount.

Could you maybe specify what proportion of that then. So I get it so contracts that have gone into negative or provisioned contracts that are, yes, showing a lower amount of positive profit are effectively still on operating question, right? Any clarity on the relative size of these two?

Sure. No, happy to do so. Maybe just to again because to maybe ring-fence it a little bit. So again, relating to onshore, the majority of the future cost is captured in onshore as the majority was onerous already. So I think that's why I said earlier, in earlier times, management indicated a EUR2.5 billion onerous backlog for onshore now that has crept up over the EUR3 billion mark. So that differential will take us a bit more time and actually is reflected in the owner's charge for Q3. What remains are those projects, which there are a lot of our projects, which still make profit going forward for those impacted by higher charges. We expect a lower profitability. And that's why we need to understand exactly how that will develop in the next quarters. And that's the type of insight we will give in Q4 and at the Capital Market Day to be precise in a progressive like post '23 mode.

On the onshore question?

Yes, onshore question. It was indicated, we continue to be selective in the field of onshore. That has a couple of elements to it. One is the pure price. And sometimes people have a discussion around the so-called ASP. This ASP, as we tried to indicate also earlier is somewhat indicative from an overall price level, but not necessarily for the profitability of a single project because of scope items and other stuff and regional aspects and variant aspects and what have you. So the ASP in our view, is developing as expected. But there's a second element to our selectivity, and that is around what we call the terms and conditions, and they are mostly around the overall volume of liabilities, but then also, for instance, on the scope, which is offered on the service side. That very much refers to projects which require project financing. So sometimes there, we find the requirements as being rather extensive and therefore, find it difficult to comply with those. We continue to be selective, as I said, on things we can stand up for. But if you compare the habits in our industry space here with the habits in other industry spaces, then the liabilities which are to be taken over by the supplier are substantially different, substantially more risky for us. And that going forward is something we jointly need to work on with our customers.

Thank you, everyone. And then the next three questions go to Sebastian Growe at BNP. Alex Hauenstein at DZ Bank and Will Mackie at Kepler Cheuvreux. Sebastian, if you please go ahead.

Good morning everybody, thanks for taking my questions, and Jochen thanks for the improved transparency. The first one would be on the growth trajectory at Siemens Gamesa going forward. Christian and Jochen, you both pointed to slower growth that is required. In the wake of the EUR21 billion backlog in the turbine part, what growth rate would you consider healthy going forward really? And the second question I have is small for Maria. As you pointed to the duration of the onerous contracts in the backlog. To me, it sounds that reaching breakeven will be several years out. Wake of the fact that you have played changes to our portfolio before if and when an asset did not meet the 8% group target margin, how should we think really of any potential strategic review of the wind business and wake-up for multiyear restructuring and cash burn line head?

Jochen, you start with proven it on the strategic review.

Good growth, if I may start with that. Well, obviously, you see some ambitious growth figures on our side. That, in my view, means two things. First of all, the growth in itself, which may be a challenge as such. And secondly, we oftentimes have to refer to the change in the portfolio in the sense of growing also towards turbine types towards products, which may be seen as more modern, certainly is bigger and certainly as how shall I say, is less proven technology. So these two combinations in our view, found the challenge or these two elements in combination from the challenge. And going forward, our hope would be that we can certainly prolong their life cycles of the products. And if we then would have to focus on, if you say just the extension of capacity that would certainly be easier. In terms of quantification of that, that's not so easy, but it would probably be less than what we see today.

It maybe to the portfolio in general. And as I said, a lot let's say, we will explain on the Capital Markets Day, including also this growth trajectory on the wind power, right, because it's really now finding the right flight level to make sure that we can grow profitably. Yes, we continue always to, let's say, look on the different businesses, the criteria you have said, we also continue to follow. There is certain elements ongoing. You may be also even read about some disposals on the wind side even, but we also obviously continue look also on the other side to make sure that we going forward can shape the portfolio accordingly. One thing is profitability, the other thing is also making sure that it fits to the future layout of the company and that it's manageable in terms of simplicity of the organization. So we will continue to do that. Also that, please understand we're going to discuss most of that on the Capital Market Day.

Maybe I can reiterate on with respect to the duration of the owner's backlog. And as we mentioned, yes, this will go out later. For example, in the past or previously our assumption for the onerous onshore backlog would be that the majority would be into next year with the tail end, if you appreciate, for ‘25. And of course, with, let's say, some of the setbacks, then that will then go to the beginning of '25 is our anticipation. So from a timing, it's a slight shift. So you're fully right. But again, this is exactly what we're trying to work through and to understand, and we'll give further transparency and timing again at the Capital Markets Day.

Thank you all and the next question goes to Alex Hauenstein at DZ Bank. Alex, go ahead, please.

Yes thank you, [Indiscernible]. I've got three questions. First of all, I would like to come back to the breakeven potential breakeven level on an adjusted profit basis for SGRE overall. I'm not sure if I got completely right or maybe you can help me out a bit and explain what are your views here at the current time and at the current, yes let's say, a setup of the portfolio as we speak right now. So I'm not sure, are we talking about another two-year delay overall, putting all things together, are we talking about more? Is it still uncertain? Maybe a bit of a clarification here? And then to other questions a bit more on the qualitative side. I'm wondering what is the reputational damage here out of this whole story that you might see? And what could be any impact? Or how do you intend to avoid this reputation damage, if any? And last, last time we spoke, you mentioned some culture of putting things negative news too long below the case as you say. So how do you intend to change the corporate culture overall in that matter?

Yes, thank you very much for the question. Obviously, with all the forward-looking pieces, please understand that it's really for the Capital Market Day. The thing what I just want to underline, obviously, that with the other businesses, we expect to be on or better really on the trajectory. And this obviously, if you talk about the overall company, this comes into the equation and the rest will also depend on how do we decide at the end to shape the wind business and how does this then balance out. On the reputation damages in terms of at the moment in the market. The organization around Jochen is doing an extensive work at the moment with the customers. Actually, I would say it's a bit the contrary, right? Because we are very early addressing these things, and we are proactively reaching out to customers and say, hey, look, there could be something if we don't do anything. And that is, I think, also a bit when I was a customer from my company before, but I always appreciate it, earlier address the issues, there are issues, but we do it while the turbines are operating. So that is also seen not entirely negative by the customers. And this is where I think we can definitely manage the current situation in close collaboration with our customers. In terms of the comment you're referring to, thanks for the question, and let me also put this a bit into perspective. I think you're referring to the ad hoc call when I was given a statement. But also to be clear, I mean, I have not seen anybody proactively holding back information in all these type of discussions. But if such a hit comes to the company, I think it's also important to think how can we proactively faster identify challenges and really make sure that everybody has all sensors up and running to detect this and mitigate these as fast as possible to avoid these type of hits, because it will always be a risk-based business, which we need to manage. And the better we can manage it, the better we can return to profitability. And this is where I think this is my take. I think this muscle we have to strengthen in the organization. But very clearly, I think that is not something where people, let's say, would hide something, but it's really to make sure that we faster act on these elements to ensure that we can successfully execute projects as has been demonstrated in other parts of the business.

Okay, thank you. Good luck for that.

Thank you. And the next question goes to Will Mackie. Will, if you please go ahead.

Yes, hi good morning, thanks for the time. So my first question goes to the design of the 4.X and 5.X, to what extent would you say that the design is now fixed and firm and does not need further modifications and the problems you face are really related to a rectification and stabilization of the supply chain and the manufacturing processes. The second would be related to your slide eight. You've described the EUR1.6 billion of charge and helpfully provided a bit more broad brush color you're calling out there just over EUR1 billion of provisions for wind turbine repairs and then the rest split between about EUR400 million service and the rest on knock-on impacts. Is there any more detail you would be willing to give on how you calculated those numbers? And more specifically, the duration of the utilization of that backlog and the knock-on effects for the commissioning timetables across your onshore portfolio? And the last question relates to how we should conceptually think about service within Siemens Gamesa. You've had about EUR2.2 billion of annualized revenue, growing mid-single digit, give or take, and historically targeted 20% or so margins. Is that something which is sustainable? Or should we now throw that assumption out of the window? Thank you.

So let me start with design issue. Now I think design-wise, we have to assume that there's always the intention to have optimizations to some extent for various reasons. So design, in my view, is not a stable thing as such. It's more a road map, which is following various criteria. So oftentimes, for instance, also cost-out exercise as such, does require a design change. So in that sense, I believe it's not so much a design question, what we're discussing here, but more the overall system with its contributions around our own processes and about the supply components. But in some cases, there are also design modifications as part of the game. Then on the EUR1.6 billion, perhaps you allow me to try to illustrate once more how this number is calculated. So we have a number of components, which then have different, as we call failure modes, yes, so one component can have different root causes for something to happen. Here, we have the likelihood of something to be considered then, and that is a consideration over lifetime. And for the lifetime, we typically calculate some 25 years. So that leads us to a couple of numbers, which, as such, are independent of each other. So if a turbine has a blade problem, it may also have a bearing problem at some other place or not. And this is why it is not so easy to calculate the number of effective turbines, if you wish, because for most of these things, we now have probabilistic numbers. With these probabilistic numbers, we move into our cost modeling. And then with the cost modeling, we say, this is now what we anticipate to be using over that period of time, depending a little bit on when it comes and when it occurs and when not. And that is then a translation into those numbers in the specified breakdown? And in the end of the day, that's the best knowledge we have right now. The third thing on the service, would you like to comment on shall I?

Yes. I can also jump into the service space. I mean, obviously, this is also where we will give an outlook, let's say, going forward on the Capital Market Day at this point in time, obviously. And this is what you have seen, well, on the allocation part of the accruals is allocated to the service business. This will reduce the profitability of the service business in the midterm, but we will give an outlook then really going forward on the Capital Market Day. Okay. One follow-up. Yes, you already had the…

The calculation EUR6 billion provision, can you provide an indication of your expected consumption rate of provision over the next one to two years?

No, to have that calculated. This is still premature. I'm afraid, please remember that we, in some cases, don't really have a full establishment of the root causes. We did establish now the task force and the task force has one prime target, and that is around firming up numbers. So we tried to become as clear and as firm up as possible over the next months. But for today, this is not really possible.

Thank you.

Right. Unfortunately, we really have a time out given that some people took more than one question. So I would hand back to Christian for some closing remarks.

Yes. Thank you very much to spend a little bit more time with us. I think it's absolutely worth it seeing the current situation, and thanks very much for the discussion. I obviously expect to see a lot of you also during, let's say, follow-up calls over the next couple of weeks. And then please block the Capital Market Day in your calendar 21, 22. It is an opportunity also to see wind factory, which is obviously also very helpful. And until then, stay tuned and looking forward to see you. Thanks for your time.

Thanks, everyone.

Thank you.

All the best. Bye.

Ladies and gentlemen, that will conclude today's conference call. Thank you very much for your participation. A recording of this conference call will be available on the Investor Relations section of the Siemens Energy website. The website address is www.siemens-energy.com/investorrelations.