[Call Starts Abruptly] Head of Investor Relations. Please go ahead, sir.

Thank you, Aurelia. Good morning, everybody and a warm welcome to the Siemens Energy Q3 Analyst Call. For the record, all Q3 documents were released at 7 on our website. Here with me are Christian Bruch, our President and CEO, as well as Maria Ferraro our Chief Financial Officer and they will take you through the Q3 results. The call will be approximately 60 minutes and after Christian and Maria present, we will have time for Q&A. Over to you Christian.

Thank you, very much, Michael, and also good morning, everybody from my side. Thank you for joining Maria and myself for our quarter three 2021 call. I hope you and your families are safe and healthy in these difficult times. Our thoughts are with all our colleagues who got to be affected either by the pandemic or by the recent severe weather events all over the globe where we have it and I would like really to thank the whole team at Siemens Energy for their support and compassion working through all the items in these difficult times and also helping in a lot of areas to rebuild infrastructure which had been affected by the weather conditions. While Maria will take you through the financials, let me highlight some key developments of the company in the quarter. There was a solid revenue growth, given the last year we had a big COVID impact, but also stable market and market share gains in certain areas. EBITA before special items for Siemens Energy of €54 million is to be straight, disappointing and while GP was absolutely in line, SGRE fell short of our expectations. Cash flow was yet again very strong in this quarter. And let me address right from the start, the performance of SGRE, I have to say I am disappointed with the performance at SGRE for two reasons. First of all, the turnaround in onshore business has not yet reached the speed and impact I expect. And second, the processes to identify deviations and provide the transparency to the Board level where we sit on as a shareholder have proven to be too slow. And let me be clear, project management is not an easy business addressing fast the rising challenges as raw material changes, cost increases or the local supply chain is a key and the processes and governance culture needs to address this and this is what I expect the management at Siemens Gamesa to tackle to really fix the issues now rigorously and do the homework in the onshore business. And this goes along with a lot of passion for detail, rigorous follow-ups and open communication. Andreas and his whole team absolutely share our view that really everybody at SGRE needs to be aware of the obligations and they address it step-after-step and working through this to really get to higher unpredictable earnings and cash flows. Let me also be clear that there is a lot of positive elements also with SGRE. I mean, you have seen it from SGRE’s call. There is a positive development in offshore and service where our mid-term outlook on the business is very positive. The wind market is growing and effective. 2021 was a peak year. 2021 to 2024 will be relatively stable, but from 2025 onwards, the market will excel, which is mainly reflected in offshore where we have a market-leading position. And it will continue to play a key role in the strategy of Siemens Energy to be successful and wins. It is paramount to our success also to achieve the stated CO2 targets and if you really mean it’s really serious as serious as a society, the speed of building new wind power generation will only accelerate going forward. And I believe SGRE is well-positioned to capitalize on this growth. However, fixing current performance issue is absolutely the base for it. And in this regard, we are working together through our Board role with the management of Siemens Gamesa. Let me come to gas and power. I am pleased to see the teams working successfully through the plans. It's absolutely on track for fiscal year 2021 and we confirm our guidance for this segment. And we see obviously also stable or recovering markets in which we keep in a lot of areas our leading market positions. Currently, one major topic in the industry overall, are the increasing raw material prices, SGRE already has commented on this. Looking at GP, we are to the extent possible covered by price escalation formula on our contracts and hedging activities. So it’s for GP, there is no meaningful impact on profitability in fiscal year 2021. Looking beyond 2021 to the dynamic environment for new contracts with price increases versus this cost inflation. However, it’s also clear that if these material cost increases remain end-market prices for our goods must also increase accordingly and this is what we are working on also with our customers. And in reference to COVID, we are slowly getting back to a more normalized working mode, but remain elevated I would call it. All factories are open and running. This also the first time in this call that we skip our special COVID slide. I have to say it has unfortunately a little bit become part of the daily life. So I think it is something which we simply need to take on board on how we manage the business. But we're seeing that we are able to perform services. We are seeing that we are able to act and we also are confident going forward with the order pipeline, what we see in the different areas. On the guidance, we maintain our revenue guidance for SE, the 3% to 8% and the margin guidance for GP on a 3.5% to 5.5%. However, the decreased financial performance of Siemens Gamesa Renewable Energy had also an impact on our margin guidance for Siemens Energy since we are fully consolidating these results. We now expect a margin for the Group in the range of 2% to just under 3%. Let me go to the next slide on executing our strategy. This is a slide which you always have seen in the different calls and we continue to execute on really delivering on the fundamentals and to execute our cost out programs. You'll recall the new program we announced on the reduction of the 7,800 headcount in the segment GP, back in February. This is solidly executed and clearly on track in a lot of countries outside Germany, this is really already either implemented or under implementation. The negotiations with the employee representatives in Germany, which covers roughly around 3,000 headcounts were done over the past months. There were agreements on a lot of points, but not on all, which meant they have not been finally concluded and now escalated to an arbitration body which is – let’s say, not necessary but also not unusual process under German Labor Law. In comparison to September 30, 2020, more than 1,500 employees have left the company and we manage this also to a voluntary leaver program which we already implemented over the past couple of months, also in Germany to really help us to work through the energy transformation and to improve our cost base. For me, it’s also important once we talk about really improving the base that we not only talk about the cost side, but also the innovation side, which we continued to build on in close collaboration with our customers and partners and like always I want to give a couple of selected examples of what we are doing, really driving the energy transformation and partnering up with other companies. The focus area for us is to develop always more sustainable solutions. The Transmission business belongs to this and one key area, which has been in the past years always in field of activity for us, it's the SF6-free high-voltage transmission technology, which means replacing gas SF6, which is – which has a very high greenhouse gas potential, 23,000 times compared to CO2. And we have launched already a new technologies, new products in this area. And we are currently conducting a feasibility study together with Mitsubishi on the joint development of high-voltage switching solutions with zero global warming potential and also then to jointly, obviously further push this into the market. The second example from the recent quarter is from our digital solutions and cyber security area. This is an area which is nicely growing. Obviously, the resilience of our customer plans which are normally always system-critical against cyber crime is critical and we are collaborating with ServiceNow, which is a German startup to create reach between cyber security experts analyzing anomalies and malicious behaviors in plant operators, capable of acting on attacks and really improving the security across the operating environment. And this combined software solution helps to secure the energy transition really to enable also the adoption of digital distributed and low-emission solutions and in this regard cyber security is for us a focus area with new products. In line with our three pillars, which are always referred to we are now also collaborating with Malta in the area of energy storage. The partnership will focus on the development of an innovative heat pump and heat engine components to support a utility-scale of 100-MW system for mid-term storage of 10 to 200 hours and this is all in line really of these activities where we say, how can we, on the one hand produce power CO2 effective or without CO2, how can we distribute the power and how can we shrink the problem of energy consumption. And this is really the logic of the innovations we continuously drive. I also just want to highlight one other event we had in the quarter, which is the opening of a green hydrogen project in Dubai in the Sheikh Maktoum solar park, which is the first green hydrogen project under operation in Dubai in the Emirates. And this is a perfect example also for future energy system, where solar power goes together with immediately the hydrogen production. Let me highlight a couple of awards. Also once again, to explain a little bit the logic what we are driving forward as a company in these different areas. I want to start on the right-hand upper side with the Project Leipheim, which is a great example for the need to deal with rising complexity in our power grid. The renewables play important role but gas power plants will be key for the stability and reliability of electricity supply and will remain an important contributor to electricity generation over the coming years. I will continuously repeat this always, we will need gas in the future energy system and this project is a super example, because, obviously, it has the ability to quickly kick in, in times of low green energy supply and obviously, the modern service center and the modern design of the plant allows the full integration into the entire digital operation design of the plant and the system. The best place is to generate renewable energy resources are usually far from where the power is needed. This is why we need to transmission and this is why need to transport electricity. The SudOstLink project is contributing to solve this problem in Germany. We have now won the second power highway, I would call it after Ultranet this year, which is obviously a very successful track record. And with this, obviously, we want to continue to build all the transmission sites. I will also continuously repeat to all politics, these processes have to get faster because we will need more transmission. This is where I am very positive on in terms of the business, but it also means that authorities and regulations have to get faster there. Siemens Energy contributes also with the supply of electrification, automation and digitalization packages to the first of its kind by a refinery that produces green biochemicals without the use of fossil-based raw materials in line in Leuna, Germany together with our Finnish customer UPM-Kymmene to increase also their sustainable portfolio. This is part of our Industrial Applications business and when we had – when we started the discussion as, where do we want to take oil and gas and further development in the process industry, this is exactly what we do, right? The driving electrification in the process industry, this is where we are good at and helping really to reduce CO2 at our customer site. I wouldn’t want to skip SGRE project also as a win which is a preferred supplier agreement in Taiwan. Also, on the offshore side not only there is new state of the last offshore wind turbine, but it obviously also shows our strategy to grow in Asia, and in this regard. Obviously, there were also positive notes around Siemens s Gamesa in the current quarter. Let me briefly go through the ESG update. I also told you over the last quarters that this is always something which I will every quarter bring up. What we are doing there? We have been working really through the past months through our programs together with a lot of rating agencies. We had an ESG roadshow in the U.S., Europe and Australia in June and we are extremely pleased to see the high interest and the very valuable feedback from all of you and what we received from the market. We want to be recognized in the market as a right partner and driver for the energy transformation and in this regard, I am very pleased also that we signed only as a second company, the partnership with renewable energy. There is only two companies worldwide which have this close collaboration set up. And we are, together with IRENA, so the International Renewable Energy Agency organization developing business cases for new technologies like green hydrogen, what can we do to drive decarbonization and heat generation and how can we really help this change process in the different societies. Furthermore, I would like to point out that we see the prime rating from ISS ESG and received an MSCI ESG rating upgrade to triple B from double B after we now have a higher transparency at the point of the initial rating when our sustainability report was not yet available. I also would like to already flag up to all of you that we are going to have more extensive sustainability report coming out early next year, because obviously we will continue to drive further this transparency that you understand what we are doing. And with this, I would hand over to Maria for the numbers.

Thank you, Christian. Good morning, everyone. A very warm welcome also from my side. I am pleased to share with you all today our Q2 results and also always happy to answer any questions you may have. So, let’s take a look at the Group please. First, as you can see orders declined by 37% or close to €3.5 billion to €5.9 billion in the quarter. This, again in many aspects our quarterly results are a bit of a mix picture. So, this is driven by Siemens Gamesa, on the other hand GP had a strong growth in the quarter. I’ll get to that in a moment. We did finish the quarter with a very strong order backlog of €83 billion. This is just shy of about €1 billion of last quarter reflecting again the low order intake in the quarter. However, this still represents approximately 2.5 years of our revenue providing a solid foundation for our business. Revenue rose by 9% on a reported basis. We still experience translation effects. So excluding the headwinds from currency and portfolio effects, total revenue rose by 11%. Book-to-bill for Siemens Energy was 0.2, reflecting a very weak book-to-bill of just 0.56 at SGRE for the quarter. GP had a book-to-bill of close to 1. Adjusted EBITA before special items improved from an EBITA loss of €213 million to an EBITA profit in the quarter of €54 million. This reflects a margin of 0.7%. I’ll further elaborate on this in a moment. Free cash flow, pre-tax came in at €328 million, a decline of approximately €100 million. Although, again a bit of a mix picture we had strong improvement at GP which cannot offset a decline at SGRE. This said the cash performance at both SGRE and GP was better than expected. On the next page, Page 11, let’s take a look at the quarterly development of SE. Again, orders declined, that’s depicted here. So, looking at the orders at GP, they rose 11% year-on-year on a comparable basis. At €4.5 billion the runrate was a bit lower compared to the first half. We enjoyed very healthy order levels that’s predominantly due to - during the first of the year. Orders at SGRE declined by €3.8 billion to just €1.5 billion. They had a record quarter last year where they booked predominantly in the offshore space. Two or three large orders that weren’t repeated this year. Revenue rose 11%. At GP, we rose by 9%. Of course, it needs to be said that Q3 of last year was a weak quarter due to COVID. In SGRE, revenue increased by 14% on a comparable basis. Now looking again at EBITA before special items of €54 million. This is a significant improvement from prior year and reflects an EBITA before special items loss of €154 million at SGRE due to the significant onerous losses relating to raw material cost increases, and of course, due to the mentioned issues with the 5X and projects in Brazil. On the other side, we are very happy with the profitability at our GP segment, which continues to be on track to achieve the full year guidance. GP reported net EBITA profit before special items of €231 million or margin of 5.1%. This is an improvement of 640 basis points, of course against our Q3 which was a weaker quarter last year. For the nine months or year-to-date EBITA before special items at Siemens Energy improved from a loss of €87 million to over €700 million. This reflects a 390 basis point margin improvement driven by improvements of course at both segments GP and SGRE. Now taking a look at special items on the next slide please. For Siemens Energy in total, we ended up at about €178 million as special items for the quarter. For the nine months ended, we are at €392 million, which is down substantially from prior year, which of course was impacted by the strategic portfolio decisions relating to our LGT portfolio with an impact in last quarter of just over €700 million. Looking at GP for the current quarter. We have €95 million of restructuring and integration costs. This takes into account the further progress we are making on our restructuring measures inside and outside of Germany. We also assume a timely decision of the arbitration committee which was highlighted by Christian and we expect higher charges with relation to these programs in Q4. Standalone costs, of course, these are costs associated with the setup of the standalone company stood at €25 million as expected in Q3 and takes the full number for the nine months to just shy €100 million at €96 million. Strategic portfolio decisions are at €27 million. This pertains again to the ongoing analysis we continually review the streamlining of our aero derivative and small gas turbine portfolio. For example, as we review on a quarterly basis, we will continue to have small write-downs or adjustments in inventory, hence the impact for this quarter. Now, looking at our net income transition next. On the next slide please. As in previous quarters, and as expected, the PPA is slightly lower, driven by the impairments that were associated with our decisions last year in the gas and power segment duty to the LGT portfolio. The financial results in this quarter came in at negative €9 million. This is much lower than in the prior quarter and due to the lower interest expenses versus prior year and higher interest income as a result of interest on tax credits and receivables in the current quarter. Net income was negative, but sharply improved, compared to the prior quarter. It’s also important to note the net income of the quarter includes €77 million of income tax expenses due to non-recognition of deferred tax asset at SGRE. SGRE for example incurs losses in some countries where it’s unlikely that these losses will be offset by taxable profits in the near future. Accordingly, for these losses, no deferred tax asset and deferred tax benefit can be recognized. It's also important to note that if we look at the full year expectations for those same reasons as we've experienced here in Q3, we also assume negative income tax despite a negative net income before tax. So now going our cash flow statement and net cash position. On the next slide, we should discuss CapEx. It rose slightly by 26 million in the current quarter. GP, I mean, this is evenly shared. GP and SGRE were both up around €12 million. Free cash flow pretax came in at €328 million, as mentioned before, a decline of approximately €100 million, but a very strong improvement at our GP segment versus last year. This was due to higher project-related cash inflows. Some of those actually were preponements and improvements in payables. The positive contribution in others, this mainly refers to the cash flow line item change in other assets and liabilities, which shows a positive contribution of €473 million in Q3. This improvement is mainly driven by the increase in loss provisions and SGRE. For the nine first nine months, the Group’s free cash flow pretax improved by €272 million in the prior year to €373 million. A very good effort. Next, the net cash position on the next slide. No change to the similar format that we have each every quarter. We see our cash and cash equivalents on the left-hand side of €4.6 billion. We take, of course, into account the receivables from the Group, looking at also our total liquidity, just in terms of our long-term and short-term debt this decreased about €100 million. Of course, looking then to our net cash, this increased from prior quarter at plus €250 million. We have our normal pension provisions and there is a new amount here of credit guarantees of €62 million. I do want to highlight this. This refers to bank financing of an associated company, for which we, Siemens Energy Group has now issued credit guarantees. Before the spin-off and up until Q2 of this fiscal year Siemens AG had guaranteed these amounts and now we have properly taken over this current credit guarantee and has been replaced in Q3 of this fiscal year. It is also important to note that this will only run until July of 2022. So now, if we can please go to the next slide and look at our Gas and Power segment specifically. As mentioned before, positive development across all KPIs in our Gas and Power segment, truly a solid result. Order showed an improvement rising 11% on a comparable basis year-over-year. For the first nine months, we have €14.7 billion in orders, up 2.5% comparable with a strong book-to-bill of 1.12. For the full year, we expect a book-to-bill greater than one, despite a seasonally weak book-to-bill, which is normal in our Q4. Revenue also increased by just shy of 7%, nominally year-over-year and 9% comparable. Service revenues therein rose moderately by 4%. This is due to our solid outage season seasonality that we have in the U.S. within generation and very important to recovery of the transactional services in our IA division. I think it's also important to note that service revenue was negatively impacted by currency effects of more than four percentage points. So therefore, the quarter-over-quarter growth is greater than 8%. New units revenue rose by 9%. For the first nine months, revenue declined just by 2%, but rose by 2% comparable. So, as you can see the CTE or the currency translation effect was quite sizable. We do and we will have a strong finish to the year in the end to be in the guided range of 2% to 6% on a nominal annual growth. The book-to-bill stands at 0.97. We have an order backlog of €50 billion and this is roughly on par with prior quarter end. Again our EBITA came in strong for GP at €231 million or 5.1%. This is significantly up versus prior year for 640 basis points. For the nine months, we now sit at a margin of 5.3%, which is comfortably within the guided range of 3% to 5% to 5.5%. As indicated before, our margin will be weaker in Q4, but of course, we reconfirm and expect to end up comfortably within the range. In our GP segment, we’re doing very well in cash. Free cash flow pretax ended at 384. It’s also important to note that GP generated close to €1 billion of cash during the first nine months. And also to note that we do continue to expect an adverse shift in our contract assets and liabilities in Q4 and we also expect higher restructuring. Very quickly looking at the quarterly development. I think a lot of the messages hold true. Looking at orders, it's important to note that the growth we see here is predominantly in the EMEA region. Orders in Germany for example more than doubled, supported by two large orders at our transmission group and this was greater than €450 million. Transmission and industrial applications contribute to the growth, generation orders rather were slightly lower in Q3 versus the runrate for the first half. This being said, generation has been trending at a book-to-bill of above one over the last three years. Revenue, very clearly up, compared to prior year - quarter. All businesses posting increases here and contributing to the growth. The strong increase revenue in EBITA, this reflects our return to growth and operational improvements across all businesses. This is also in line and we are on track with the €200 million commitment we made for savings in this fiscal year. So, just taking a little bit of a deeper dive and some general observations on the trends in our businesses. As Christian mentioned, we maintain our leading market position in stable or recovering markets. The total market for gas turbine is greater than 10 MW without oil and gas it’s stable based on stable large gas turbine demand and a continuous strong small and medium gas turbine market. In generation, we managed to gain back market share in the large gas turbine market heading towards our aspired market share above 20%. This quarter we booked three LGT'S and we continue to see a stable market for generation overall and we are seeing a market at the upper end of our expected range of 60 to 80 large gas turbine units. In the industrial gas turbine rates which is between 10 MW and 100 MW without AGT, we booked six units in the quarter to book a total of 34 units already this year. Also as anticipated, industrial applications see some recovery in the transactional service business in total plus 70% in service orders and a return to growth on the top-line in Q3, although still slightly below pre-COVID levels. New equipment in the IA market continues to lag since a market upswing, for example, due to increasing oil prices triggers an order growth early as 6 to 9 months later. In transmission, I mentioned this earlier. We really observe first signs of increased market demand. This is based on the numerous stimulus programs across the globe in Europe and in U.S. And grid stability projects and grid upgrades are driving this demand. So now with that, now I turn it back to you Christian. Thank you.

Thank you very much, Maria, and let me conclude the presentation with the most important messages of this quarter. First GP is delivering as planned and we are on track to reach our fiscal year 2021 and also the fiscal year 2023 targets. At SGRE offshore and service, business is performing well. But we are disappointed with the onshore business. Therefore we will now closely align with the SGRE Board on the remediation plans. And the fact that onshore is currently underperforming does not change our view that wind has an important role to play in the energy transition and with this also at Siemens Energy. Our researching program is showing a solid progress outside of Germany. The negotiations with the German Workers Council have ended. It may take the arbitration time - the arbitration board some time to reach a decision. However, we still expect to reach our fiscal year 2023 cost out targets as we communicated in the Capital Market Day last year. And we also confirm our fiscal year 2021 guidance for GP as well as a fiscal year 2021 revenue growth guidance for Siemens Energy, because of the shortfall at SGRE, we need to adjust the full year guidance for Siemens Energy and now expect an adjusted EBITA pay margin before special items up to below 3%. Overall, the opportunities at the mid-term outlook in the electricity and energy market is intact. And this definitely supports our long-term strategy. And with this, I am happy and Maria also to take your questions.

Thank you, Christian. Thank you, Maria. As we go into the Q&A, we’ve got about just under 30 minutes. [Operator Instructions] So the first question goes Ben Uglow. Ben, if you please go ahead.

Yes. Morning everyone, Christian, Maria and Michael, hope all are doing well. I had one question and maybe if I can switch in a follow-up. The first question is around pricing conditions. You mentioned that you were implementing actions to compensate the raw materials. That’s in other way straightforward in your business. Can you talk about the customer conversations, how are customers receiving price increases? And is this something that you are seeing across the board? Are all competitors at the moment doing exactly the same thing? So, that was question number one. Very quick follow-up if I may. It’s really been a tale of two companies between gas and power in Siemens Gamesa. There has been a huge amount of press speculation on I stretch it’s unconfirmed. But, that you are conducting some form of strategic review et cetera. Can you just clarify what the state of play is in terms of the Siemens Energy thinking about Siemens Gamesa plays? Thank you.

Good morning, Ben. And good to hear you, First of all on the pricing and I think we have to – I think it pins more to the wind business actually in terms of the comment and obviously Andrea has already made some comments about the discussion on the wind side. And don't forget there is always two things. The one thing is around the price level. The other thing is about the commercial conditions and the contracts in terms of indexation and both need to be tackled. Over the past month these has been addressed and implemented. So we see progress there. And I think this is, if I look on wind, something which the industry itself really has to onboard and tackle and we see their willingness to discuss it, absolutely not every customer is happy to talk about price increases. But you also see it in the wind side, obviously, in the – I think across the market with the earnings conditions. At the end, you need to be able to add on proper money with this business, otherwise nobody would invest into innovations. So, I think it’s something where I see the understanding in the market. But it's not an easy process. If you allow this to tackle over to the rest of the business, because you said it across the board, let me say a couple of words to the pricing environment from our view. Gen relativity stable in terms of pricing. It will remain, let’s say a tight market. That’s not the question. But, I see a stable environment. I see some, let’s say pricing compression on the IA side, by the way, let’s say well ahead in terms of really our cost out measures and compensating this in transmission. I see a good pricing environment. It’s a strong market and also the ability to address broad price increases in this market. With regard to the speculation, or you said yourself speculation around SGRE. We are at the moment working as a shareholder through all of all our board rolls to tackle the things which dissatisfy us. And the one thing is obviously the non-yet effective turnaround and onshore and the other pieces also the transparency of deviations which I don't like, right? I mean, it was the not visible enough in terms of the challenges and this has to get better. All the rest around it is speculation and I would also refrain from commenting on it.

Thank you very much. You interpret talking all part of them for now. Thanks.

Thanks, Ben.

Thank you, Ben. And the next question comes from Andreas Willi at JPMorgan. Andreas, please go ahead.

Yes. Good morning everybody. Thanks for the time. My first question is on margin development of your – for gas and power you are well on track for this year and you have 2023 target out there, as well. What do we need to take into account when we look at the improvements during 2022? Should we think more about the linear improvement or as you mentioned price – earlier or price cost, but also the service side as we fully recovered in terms of mix as the mix normalize to where you would expect it to see. Or is there a little bit more to come as some of the service elements come back to normal which will help your profitability? And the one just on transmission. We have seen in the US, Infrastructure Bill proposal from Senate. It’s quite a bit of support for transmission, maybe you could just highlight a bit what your exposure is to the U.S. within that business. I think ABB – it has been kind of the market need for that or how do you expect to benefit in the U.S. from these potential support measures?

Hi, Andreas. Good morning. It's Maria. So, I'll take the first part of that question regarding margin development. You are correct, we’re on track. Of course, remember, we do and we have launched our cost improvement initiatives, the AIP program for example and working to execute on that into next year. So, as a result you can kind of take as you said a linear approach if you'd like, but please bearing in mind that of course some of the restructuring activities will continue into next year. With that, I think the mix goes to service with respect to service Christian?

Yes. I mean, obviously, I mean, on the margin, in terms of cost we are well on track. The mix was – let’s say on the service look more challenging a little bit, because we also pull forward certain services in 2021. But I'm confident obviously that also with the improvement on the operational performance, we are – as I said well on track. But this obviously, as rightly said, always a question of the mix and we have to see that was particular and in Gen also now strong contribution there which then was obviously look different in 2022. But I look on the overarching picture. On the U.S. Infrastructure Bill we’d say transmission, yes, I do we do use this as a good opportunity for us. Also as you do see now really the offshore wind plus HV DC discussions also now slipping over to the US, which is for us a stronghold and which we want to continue to build. You know we have let’s say also factories on transmission side in the U.S. But we will continue to look in with the development of the bill what it has to there, because that is definitely a key market where we want to really exploit our strong position. We have to see a little bit obviously how faster things are coming. But we are looking into this how can we make sure that we get a decent amount of growth in transmission of what can we do more.

Thank you very much.

Thank you.

Thank you.

Thank you, Andreas. And the next question goes to Vivek Midha at Citi. Vivek, please go ahead.

Thank you very much. Good morning. Thanks much for taking my questions. I just have one question really, on the Siemens Energy grid margin target for 2023. I noticed that you’ve maintained that at where it was before. So, given the continued drag from Siemens Gamesa going forward, how comfortable are you with that that 2023 target? Thank

Yes. Maybe Maria, you want to take it because it's so important understand the process.

Correct. No, thank you for the question, Vivek, and I think, exactly there is the process behind. And of course the guidance for 2023 comprises the GP and SGRE segments. And at this point in time, we do confirm of the outlook for 2023, of course, as you rightly said, we’re looking at the developments and of course the sense of urgency is felt within SGRE to fully address those topics and to assure that we get back online. But right now there has been no change. I think it's important at this point in time, there is no change to the guidance. But of course, we’re reviewing some of the remedial actions ensuring that those from as swifter as a response as possible is necessary, okay?

Thank you very much.

Thank you.

Thank you. And the next question goes to Gael de-Bray at Deutsche Bank. Gael, please go ahead. Gael de-Bray: Thanks very much. Good morning, everybody. The first question I have is on the GP margin side. The near margin guidance for the Group of just under 3% implies apparently a margin of just around 4% for GP in fiscal Q4. So that would be significantly down compared to Q3 obviously. So, could you once again elaborate on the reasons behind the expected sequential decrease in margins? And I also wondered if the Q4 margin would actually be the new kind of runrate which would at mind looking into next year. So that – so…

Yes. Sorry, Gael. In my looking into I have yet the think of the illegal going to have mysterious so I'll take the first Gael de-Bray: No, you go ahead. I’ll add it further.

Okay. Hello, Gael. Nice to hear you. Yes, so, I’ll take the first and the second question there and Christian, if there is anything to add. So with respect to what you indicated with respect to margin, yes, maybe it's important to recall that the GP EBITA is 3.5% to 5.5%, yes. So, we do feel comfortable in that range, yes. And perhaps even let’s say at the midpoint of that range, Gael. So, I am not sure where you're seeing that. So, perhaps that’s something to think about. In terms of Q4, we've indicated this, we are going to experience a mix issue. So we have a lot of the large projects revenue coming in, in Q4. The legacy projects, but also in other areas are where we have large solutions revenue coming into Q4 So it is a mix issue. Also that we will experience in Q4 as we indicated already and we do see that coming to fruition. Gael de-Bray: Okay. And, okay, understood. And then, on the free cash flow guide GP, I mean, it seems pretty clear that Q4 should be negative, but overall for the full year, given the much better than expected performance so far, in the first nine months, do you still see GP free cash flow down compared to last year? And then the final question I have is on the indication you provided about the – the fact there would be a clover alignment with SGRE Board on the remediation measures. Sorry to push again a little bit on these, but whether that mean terms and what kind of role of different role can you play if the current capital structure is here to stay?

Sorry. I guess, you can hear me better now, Gael. Yes, looking at that the free cash flow and I think I mentioned it when I went through the presentation. We had a very strong free cash flow performance from GP side of €1 billion year-to-date and this is what we foresee. We also, again underpinned that we did indicate the Q4 would be slightly, let’s say detrimental to the cash development. It's also interesting, Gael, that in Q3, we also saw a few preponements of payments, which is interesting perhaps post-COVID. This went into Q3 and also may have impact from fiscal year 2022. So, overall I would say, again, that overall for the Group, we do see a decline in cash. And in GP, we see a strong first three quarters, however impacted by Q4. But a strong finish overall, okay? Gael de-Bray: Okay.

Let me comment on the measures with SGRE in terms of what we can do. I think it’s always important to underline also that is a diverse picture across the company SGRE can only repeat offshore services ahead of plan delivering better results. Onshore, there is also good projects in onshore and then, you have selected projects, which are really deteriorating. And this is absolutely unsatisfactory. But there is also identifiable reasons for that. And I think Andreas alluded to this in his call. One thing is the fact managing the project in Brazil. The other one is the rollout of also 5X platform as a first elements is around the raw material prices. And this is where we can, so let’s say help also the SGRE management, also from the SE side to better tackle these issues. So, there are possibilities, obviously going one let’s say level further and deeper and this is what we are working through at the moment to make sure that we get as fast as possible really get an impact to clean up these problems. Gael de-Bray: Okay. Thanks very much.

Thank you, Christian.

May I please ask everybody just to ask one question. We got so many questions that we won't get through easily. So, please stick to one question. The next question comes from Iris Zheng at Credit Suisse. Iris please go ahead.

Thank you. Good morning everyone and thank you for taking my questions. My one question is if I can follow-up on Gamesa stake. And I do appreciate that you can't confirm or not confirm your intentions o to acquire or not acquire the fourth stake of Gamesa. But, would love to get some understanding of your thought process around this. So, what are the potential, maybe upsides or synergies or benefits that could be there if the two companies are round as one. And on the other side, I mean, what are there maybe the pros and benefits if the two companies just remain at the status quo. I mean, both from kind of a shareholder base speculative and also financing and also any maybe potential synergies that can be achieved? Thank you.

Yes. Thank you very much and obviously, also with, I said it before I think in one of the prior calls, there was a 67% ownership. We are trying to leverage already synergies. I mean, this is why we have three people from our organization sitting on the Board of Siemens Gamesa. For example, also in the area of customer access, where try to combine offerings. But obviously, also in term of innovation you referred about the projects where we do hydrogen and wind together. So there are elements which we today can do in terms of bringing things together. I think, afterwards - well, if I look on where the energy market is going, it will go to more renewable and it will go to more integrated solutions. So the solution is going to look more let’s say complex wind and storage wind and transmission wind and solar plus gas turbines. So there will be a lot of mix at our solutions and this is what we obviously have to bring together as synergies whether we do it better in a 67% ownership structure or a 100% ownership structure is a completely different question where I can only repeat I wouldn't comment on this at the moment. But the key issue at the moment is to fix simple project problems. How do you execute a project? It's a passion for detail is it - and it’s honestly – it’s project management is getting things really built in a profitable way that is our key task at the moment with SGRE. Going forward, I always stress that wind that is an indispensable part of our core strategy at Siemens Energy. We want to be the driver of the energy transformation. We will continue to do so. Wind plays a role. The question whether this is better done in 67% or 100% as I said, it’s not one, I would comment on at the moment.

Thank you. With that, the next question comes from Sean McLoughlin. Sean, you please go ahead.

Thank you. Good morning. I just wanted to follow-up on Gael’s question before, I understand you feel comfortable at the midpoint of the guidance range. But I just wanted to understand should we interpret you are leaving the guidance range and change my guessing power as more stylistic choice rather than an implied volatility in Q4. Thank you.

Sean, I appreciate your terminology of stylistic choice. And I think, again, we feel very comfortable with that range. We don't want to leave the impression that there is something. So perhaps maybe it goes back to your stylistic choice as such, because, again, we reconfirm the range. I think it's a simple as that. And we feel very comfortable as I mentioned to Gael on where we will land within that range. So, to – I maybe use that in the future to say it’s a stylistic choice then, Sean.

Thank you. And if I could, just understand what would the implication be around t he higher of that range? What would be needed in order to get that?

Yes. Sean, maybe to reconfirm and to make it to the point. I think, we've had a few - especially in GP, specifically talking about GP, we’ve had solid three quarters on what we do and we have indicated consistently that Q4, we do see a mix issue. So I think it's important to note that that mix issue will hit us in Q4's. So hence why I mean we did not changed the range, but we feel very comfortable in the midpoint of that range, yes. Sorry, go ahead. Thank you

Thank you, Sean. So the next question goes to Sebastian Growe at Commerzbank. Sebastian over to you.

Yes. Hi. Good morning. And two questions if I may? Sorry for the two. But the one on onshore. You said today that synergy potential between onshore and offshore needs to better exploited. So, can you tell us what the key areas should be for that? And what are you undertaking at the shareholders to do better in this aspect? And the other one just a clarification around Andreas question on the mid-term guidance. My understanding from what you said and keeping that guidance to life would be that for GP you are simply running ahead of your earlier plan and so that you take a more comfortable sense eventually on this guidance how you see these with onshore? Would that be proper reading or a fair reading at that point?

Thanks, Sebastian. I hope, I heard the last part of the question right, because the voice quality was not good. On the synergy between onshore and offshore, I made this in the – let’s say, in the conjunction with - there was a question whether it makes sense to disregard onshore? I don't think some because at the end, size matters and really combined obviously procurement efforts, the hedging assets in all these likes. And we see it obviously that Siemens Gamesa it has not been done good enough otherwise we would not have certain headwinds there. And I think there is potential and we can obviously also help Siemens Gamesa with even more deploying, let’s say have gone a level deeper in the deploying processes, tools and let’s say detailed support to Siemens Gamesa to achieve this. On the on the mid-term guidance, I hope heard your question correctly. But is the question was, am I satisfied in this GP little bit running ahead of the plan in terms of delivering? I would say, we are fully on track with what we wanted to deliver. That’s my message. The mid-term, I feel absolutely comfortable with. And I also always said, it's a multiyear exercise step-after-step improving and CS and GP on this track.

Okay. Thank you.

Thank you. And the next question comes from Simon Toennessen at Jefferies, Simon, go ahead please.

Yes. Good morning everybody and thanks for taking the question. Christian, can I just ask big picture again? And apologies for going back to SGRE. But it’s I guess, the number one question for investors right now. I mean, you are not too far away from one year listed as a separate company. And within GP, you are generating close to €1 billion of free cash now in the first nine months. But your shares are basically moving and underperforming the sector in line with SGRE certainly year-to-date. And I guess, with the issues at SGRE, recently the market will argue that it’s going to be even more difficult for GP can realize what is a fair value, I guess. So, do you think you can create value for GP in the current company structure? And as a follow-up maybe, do you think that the fact that you are stock is moving in line with SGRE – is it just SGRE related? Or do you think it’s the lack of, I guess, ESG story maybe at GP. We’ve talked about obviously the team for a while, we have talked about the oil and gas business in the past. So just trying to get your views on that and what management do you think can do to get better – I guess, reflection of the fair value of GP?

It’s an interesting way to ask a similar question but I will to answer this. Obviously, the overarching picture, let me first start with the stock price development, we are not satisfied with, because it's not fully understood in the market how important Siemens Energy as well as energy transformation. This is why I also continue to bring up the examples from the different areas. And I think it’s two-fold. The one thing is, I think also the market is too simplistic to understand the energy transformation, to be honest, right? We will need this diversity in the portfolio what Siemens Energy offers to master the energy transformation. You will need transmission. You will need storage. You will need gas turbines. You will need wind turbines. You need entry into - also a electrification of the businesses. And I think that's not that well understood and this is where we will continue to try to explain it that this diversity is a strength, because very little few companies can do it and this is why I continue to elaborate on these three pillars of the company, because these you are going to see also going forward continuously. We need this, because the market and the energy transformation going to need it. And this is something where we are at the starting point in terms of explaining it also to the market. At the same time, I have to say, look, one year back on how the market has looked on GP. I mean, then, everybody was talking about the old business as it’s not so interesting. And I think the market starts to understand that there is a lot of value in GP which is not yet appreciated in the stock price. And this is something where we continue to work on with all measures we can identify. And that is my ambition level. But I - it doesn't change my long-term picture on how I want to shape the companies along these three pillars. But obviously, I cannot be satisfied with the stock price development at this point in time, because there is more value in GP which is not appreciated. But step-after-step.

Thank you. If you can keep the questions now really brief and the answers just as much. Next question goes to our Alex Kirshensteyn at Deutsche Bank. Alex, just go ahead.

Hi guys. Hello. Thanks for taking my question. My question is on transmission. In order to expand your product portfolio and eventually in transmission, what do you think about going into the low-voltage segment or to put it differently our smart city applications of interest for you in the mid run in order to provide full-scale production solutions for your clients and if not why not? Thank you. a much on every coming from the high will decide so I would not at the moment look under the low-voltage side but obviously there is an extension to the portfolio is cited which could be interesting coming from where we are able to see also in the in the DSO area in terms of how is good minutes want to

Yes. Thank you very much. I mean, we are coming from the voltage side. So, I would not at the moment, looking to the low-voltage side. But obviously, there is an extension to the portfolio and we said it was going to be interesting coming from where we are, obviously, also in the TSO/DSO area in terms of how is grid managed? What do we need for grid stability and what is the right voltage level to be. That is something which we will continue to look on to. This would not apply to like low-voltage distribution, but obviously, there is more things in transmission around this where we could still extend our portfolio and we will continue to look into this if you want to exploit the full beauty of the infrastructure spending, I think we – it makes a lot of sense to look into extension of the portfolio but this is partly done on own developments. Partly, obviously, we are looking into what else we can do outside this more organically. But this is too early at this point in time.

Great. Thank you

Thanks, Christian. We got the time for three more short questions. So, next one comes from Rajesh Singla at Soc Gen. Rajesh, please go ahead.

Yes. Hi. Good morning. Thanks for taking my question. I just have one question in terms of your view on SGRE, do you really think SGRE could do a better job in dealing with whatever crisis they had in the last quarter? And also, like, what kind of control do you enjoy on this strategic initiatives?

Yes. Thanks. And I think it is also important to you give some credits also to the new management team which is just also addressing it. Don't forget the management team which we have known over the past 12 months starting off with the CEO, but also going down in each and every business is where there is new people in place. Some of the last one joined back in March. So, they are working through this. And yes, I think they can tackle it and they can do it. And this is something which we also have to see as I am satisfied, I am with the results. We also have to see that they are working through it some of the issues which - some of times results from some time back. It takes some time. We do have obviously the abilities which a Board member has in terms of through repos, through transparencies, through questions. To look into this, we are also as Board members, part of the strategic positioning and strategic revision. Under Spanish law, this is a role of the Board, the strategy. And this we can influence from a strategic point of view on where to go and what’s the best to and this is in the process we are also in.

Thank you.

Thank you. And the next question comes from Supriya Subramanian at UBS. Supriya, please go ahead.

Yes. Hi. Good morning. Thank you for squeezing me in. I have a question on the transmission business maybe a follow-up of the previous question. It’s related to – if you look at transmission spend right now, the main growth area seems to be around the digital grid or digital product segment. I wanted to get your thoughts on, one is, what is Siemens Energy's exposure to digital side of the grid investments? And, yes, your outlook on that as well as traditional network spends, as well? Thank you.

Yes. Thank you. Yes. We are building this up and obviously I am not sure whether you have seen earlier this year we announced also our approach with X solutions and digital grids and we had the sensformer products and trying to build really an IoT-based, let’s say, platform around our installed assets. Overall, what we call digital solutions comprises everything in GP side, not only transmission but all the others in little bit ahead of €1 billion, business which we will continue to build. We obviously want to benefit from the situation that this - the grid has to get smarter, no question. So, it’s more about IoT. It’s more edge, it’s more about digital solutions. We will continue to build on this. I see us well positioned in this, but it also means that we will continue to explore opportunities to either partner, co-develop, self-develop, or even find unorganic solutions to continue to extend this.

Okay. Great. Thank you.

Excellent. And the last question comes from Jonathan Mounsey at Exane BNP Paribas. Jonathan, please go ahead.

Yes. Thanks for fitting me in guys. I am just wondering, related to the China JV, if I remember rightly I think from your annual report, you don't actually own it. I think Siemens had to retain it because, I think they got first refusal on an ownership transfer. I think it was first to maybe €220 million you have to pay to buy that at some point in the current fiscal year. Has that now happened? If not, is it still going to happen next year? And also, is it still €220 million?

Yes. Thank you for the question. Yes, this is the set up in there. This has not yet happened. Obviously, also a little about the current situation in China, particularly also around, let’s say, the joint venture partner. I do not expect this to be concluded in 2021. I expect this to slip until 2022. And the mechanism is then the same, right? Because there was a certain amount reserved in the carve out to pay for this buy out. If not, it needs to be retransferred. So I think the numbers remain the same. What you have to consider, but it will be rather 2022, what I would look for.

Understood. Thank you.

Now, thank you everybody for all your questions and for dialing in. I’ll hand over to Christian for some closing remarks.

Yes. Thank you very much, Michael, and thank you very much really for anticipating the call. I can only, let’s say, reconfirm our view, GP on track, SGRE, work to be done. We will continue to do so and the overall energy market looks for me promising and I see obviously there all the initiatives globally to tackle it and tackle the infrastructure, which leads the overarching picture for us intact as a company. But definitely in this regard, we are looking a mixed quarter. And as you, we are the dissatisfied with the SGRE results. But at the same time happy with the rest of the business is delivering what we promised and we will continue to work on this. Thank you.

Thank you.

Thank you.

Thank you. Thanks everyone. Happy holidays. Bye everyone.

Thanks. Bye-bye.