Good morning, ladies and gentlemen and welcome to Siemens Energy's 2023 First 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 2 of the Siemens Energy presentation. The 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. At this time, I would like to turn the call over to your host today, Mr. Michael Hagmann, Head of Investor Relations. Please go ahead, sir.

Thank you, Eugenia. A warm welcome from my side to everybody. Because of the AGM, we are a little bit earlier than usual. So the documents were out at 06:30 on the website. Here with me is Christian Bruch, our CEO; and Maria Ferraro, our CFO. We will have a short presentation, as always, it will take, hopefully, a little bit less than 30 minutes. And thereafter, we have about 30 minutes for Q&A. Because of the AGM, we have to finish on time. But of course, the IR team will be ready to answer your questions. And with that, I hand over to Christian.

Yes, good morning, everybody, also from my side. Thank you very much for joining Maria and myself for an early quarter 1, 2023 conference call. And we had at Siemens Energy, a very busy start into the fiscal year. We booked record orders of €12.7 billion, reflecting a rise of nearly 50% year-over-year and we delivered also 16% revenue growth. At the end of the quarter, our order backlog stood at nearly €99 billion which marks another record. And on an underlying basis, our profitability improved material at Gas Services and Grid Technologies. Transformation of industries manage the turnaround, as you can see from the more detailed numbers. However, because of the warranty-related charges at Siemens Gamesa, our profit before special items for Siemens Energy was materially worse than a year ago and that is without any question disappointing. Notwithstanding the charges at Siemens Gamesa, Jochen Eickholt and his team are making progress in improving the setup of the company and also really stabilizing the operations. And also in addition to Siemens Gamesa now the cash tender offer has been completed as intended. The EGM decided on the delisting of the company and Siemens Gamesa shares will cease trading on the Spanish Stock Exchange by the end of today. We published also our sustainability report in December and I'm glad to say that we continue to make progress towards our ESG targets. And let me provide you with further insights to that in a couple of minutes. The operating environment continues to improve. The need for energy security is driving investments. You see it, as I said, in the first quarter for us, in particular, in Grid Technologies and a gas services. In the U.S., the inflation reduction accelerates infrastructure investments. And obviously, since last week, we are heavily discussing the EU Green Deal industrial plan for the net zero age which was published on first of February. 2023 which aims to simplify, accelerate and align incentives in the EU and also really on the member state level. The operating environment in the wind industry is still challenging. So not only Siemens Gamesa is loss-making but the same is true for our major competitors. However, we are seeing a shift in boundry [ph] conditions which results on the one hand, in rising ASP and on the other hand, also in improved terms and conditions in the underlying contracts which we now conclude. Due to the charges at SGRE, we had to adjust our outlook for fiscal year 2023. We lowered our margin expectations and now expect the group profit margin for Siemens Energy of 1% to 3%. This compares to 2% to 4% before. I would like just to highlight, obviously, if you compare it at a midterm midpoint -- sorry, at the midpoint, this is a cut by roughly 100 basis points. and it's less than the mathematical impact of the change at Siemens Gamesa on our group margin which means, obviously, the rest of the business is doing better than expected and this is obviously a good space for the future. I would also like to highlight that we now expect positive cash flow for the group for the full year. And our change of view reflects the fact that yet again, we expect very solid cash conversion at gas services and core technologies in particular. Let me move to Siemens Gamesa and what I as Chairman of Siemens Gamesa see happening on the ground. Jochen and his team are making progress. The underlying performance at Siemens Gamesa was in line with our expectations. And I'm particularly pleased to see that we see a positive development when it comes to the 5x. During the quarter, manufacturing volumes were up. The same is true for installations and project delivery times improved miss the optimization program within SGRE is an implementation and the new organization is running as of first of January. However, the charge of SGRE is obviously disappointing. It originates in the installed fleet and reflects elevated failure rates due to failing components. As of today, €472 million is the best estimate of the cost to replace these components. And the process will take now several years. Keep in mind, this is a running fleet which then over the next years to come has to be maintained. And during that time, Jochen and the team have the chance, together with the supplier, to mitigate these costs. So that could be a potential positive contribution from that. Let me now share with you what will happen after the delisting. Immediately, with the delisting Seven Board members will leave the Board of SGRE. This means the Board will consist of 3 people, Jochen Eickholt as the CEO; Anton Staiger [ph] from the legal side; and myself as a Chairman. And Siemens Gamesa itself as an entity will have very limited external reporting requirements. We are talking about a dramatic simplification of the governance structure and this means that Jochen and his team can really focus 100% on solving the operational problems and to achieve the all-important turnaround and we will all obviously will support Jochen and his team in achieving this. In parallel, we are aligning the functions in order to realize the first synergies, for example, in procurement and logistics. We are deliberately not touching the operations itself in order not to jeopardize the progress Siemens Gamesa is making by implementing Mistral [ph]. Mistral [ph] remains the underlying key program to drive forward and to stabilize the company. once we attain 100% ownership of Siemens Gamesa, we will have a more integrated organization and realize the synergies. Keep in mind, we set 3 years after full integration is what we target in terms of implementation of the synergies. Let me, like always, move to 3 highlights out of the quarter. Underlining once again, obviously, our structure in terms of driving electrification or driving energy efficiency and Transformation of Industry. We have the competence to support really entire energy infrastructures. And in that regard, we, I have to say, extended the collaboration also with the Iran government. We have been active in Iraq over the past years already in terms of repairs and refurbishment of existing infrastructure. The second phase now very much focuses on new build infrastructure using flare gases or voice flare gases, building renewables in total between conventional and renewable production around adding 6 gigawatts to the system. Over the next 5 years and also extending grid infrastructure. And this is something which will also help the Iraq to prosper going forward. We had a world scale award from Amprion which underlines also our role in the build-out of the renewable infrastructure. The award was to a consortium between us and the Spanish company Dragados for a contract to connect several wind farms in the North Sea, then to the shore and supply the total capacity of around 4 gigawatts, so enough electricity to supply 4 million people. And the project will involve 2 gigawatt converter stations and combines also service business with it. Just before Christmas, production started at Haru Oni plant in Chile. This is a project we introduced before. This is a good example for combining different technologies, what we have to produce green molecules. In this regard, it's green in fuel which can power mobility, obviously, produced from wind power. And obviously, here, the intention is now to demonstrate the practicality and then extend in the second phase, the overall production capacity of the plant. As you know, at Siemens Energy, we have put ESG at the center of our strategy and we are developing Siemens Energy alongside our ESG framework. Our goal is to be a leader within the energy industry when it comes to sustainability, corporate governance and social topics. And in the report which we just issued, we documented our progress on our targets. You can see that we are on a good path to reach our goals, even so we really need to continue with our efforts. It will be a continued push also from my side. But let me start to flag up certain key points. First of all, with the emissions. Last year, we could reduce our greenhouse gas emissions by 21% compared to the previous year. which means 50% compared to the baseline year 2019. And with that, we have already exceeded our original target which was 46% reduction by 2025. Scope 3 emission account for more than 99% of Siemens Energy's total greenhouse gas emissions and represent the most significant challenge to climate neutrality. Here, we reduced our emissions by 12% versus the baseline and 300 basis points compared to 2021. At Siemens Energy, 90% of the electricity we consume stems from renewables. And as of the end of this year, we want to be at 100%. So this is another KPI where we are ahead of our original target of 84%. At the end of fiscal year '22, 22% of our leadership positions were held by women. And I'm pleased that with the new organization, we already in this year, exceed our original target of 25% by 5 in the leadership position. So we're making good progress also on our diversity end. And I'm also pleased it's not just gender, it's also really a very international representation and our leadership team. I firmly also believe in a safe working environment and our initiatives to reduce accidents such as our Zero Harm Day which was just completed recently, are extremely important to get this safety-focused culture into the company. We did make progress on our total recordable injury rates. They went down from 2.47% to 2.17%. Still some work to be done but the trend is absolutely positive and good. And with this, I will hand over to Maria for the financial numbers.

Thank you, Christian. Good morning, everyone and a very warm welcome also from my side. I'm very pleased to share with you our Q1 financial results for the group and for the very first time, our new reporting segmentation. Now with transparency on our business areas, Gas Services, Grid Technologies and Transformation of Industry therefore, as promised, much more transparency this quarter. So let me start by giving you a quick overview on where we stand regarding the voluntary cash tender offer and the related financing structure before I go through Q1. So as Christian mentioned, at the SGRE EGM on January 25, shareholders approved the delisting and we subsequently filed for the delisting of the shares from the stock exchange and with the Spanish National Securities Market Commission or the CNMV. As a result of this, a standing purchase orders for shares of SGRE commenced on December 23 and is scheduled to end today, the 7th of February at market close. This means the shares will cease trading today. Given this occurs, the official and definitive delisting is expected to happen around the tenth of February. Now just to recap, during the acceptance period from November 8 to December 13, approximately 175 million shares worth €3.2 billion were tendered. This equated to an ownership stake for us of 92.72%, of course, up from our 67.1%. Since then, as part of the standing purchase order, another 30.8 million shares were tendered until the end of January worth roughly €550 million. This increased our stake to 97.2% and therefore, the total cash consideration to approximately €3.7 billion. As we are still within the standing purchase order to tender time frame, I don't know how many shares exactly will be render -- or tender today rather to know the exact stake and therefore, the exact funding requirement. As of yesterday night, our stake stood at 97.6%. So going back to the end of Q1, the transaction value of €3.4 billion, of course, was financed as follows: We have the €1.15 billion cash that was pledged and deposited with the CNMV at the end of Q3. We have the €960 million proceeds from the mandatory convertible bond. This was also deposited with the CNMV in October of last year. And of course, the remainder has been financed approximately €1.3 billion via the bridge facility that's in place. This is all fully reflected in our net debt position at the end of Q1. This is described, of course, also on Slide 12. I'd like to reconfirm our clear intention to raise another max €1.5 billion of the transaction value via equity or equity-like instruments, to finance the bridge facility, of course, because Siemens Energy is and remains committed to a solid investment-grade rating. The financing of the transaction, how it's composed including our intention to raise up to €2.5 billion in total equity or equity-like instruments is designed to maintain and support this key objective. To maintain maximum flexibility, we seek authorization for a 10% conditional capital which will allow us to do a cattle increase without preemption rights later at today's AGM. Just to reiterate, regarding the equity component of this transaction. Number one, we continue to have a very good solid cash flow performance and we have a strong balance sheet. Number two, the transaction continues to be fully financed and secured. Number three, we have flexibility in sourcing the equity component for this transaction with various options which remain open and available to us. And we are looking to do this as quickly as possible, of course, as always, subject to market conditions. Now let's get on to Q1, please, on Page 10, starting with an overview of the SE Group. As Christian mentioned, SE level of orders was outstanding and better than expected. And I think this really truly reflects the favorable demand pattern and the confirmation of our customers that they believe that we have the right portfolio to support them in their energy transition journeys. Comparable growth was 49.2% despite a high basis of comparison. This resulted in orders for the quarter of €12.7 billion, the highest ever quarterly order intake of Siemens Energy. Order backlog of just shy of €99 billion marks a record despite negative currency translation effects of close to €4 billion. Of course, this is providing us with a solid foundation to deliver the growth and the margin improvements that we're striving for. I'll get into that a bit later. Revenue for the group came in at €7.1 billion. This is a 16% increase on a comparable basis, with all segments contributing to this growth. Nominal service growth was slightly higher, plus 19% than the new unit growth at 18% but -- and also contributing to a positive mix on the top line. As Chris mentioned, 16% revenue growth is a great achievement and again, across all businesses, even though we did have a weak basis of comparison. Book-to-bill Siemens Energy is strong at 1.8 for the quarter and 1.42 for the 12-month rolling period. Profit before special items amounted to negative €282 million or minus 4%. In Q1 of last year, it was negative 69%. This is, of course, due to the losses at SGRE and the charges of €472 million. I would like to highlight that we had a solid start. Gas Services and Grid Technology reported sharp improvements year-over-year in their profit before special items and Transformation of Industry delivered a turnaround. I'll get to that in a moment. Free cash flow pretax negative at €58 million, more or less at prior year level but this was better than we had expected. This is supported by advanced payments from our customers, reflecting the strong order development. Cash performance was particularly strong in Gas Services which generated free cash flow pretax of €359 million and Grid Technologies which generated free cash flow pretax of €361 million. Given this strong dynamic and strong start, we now have a more favorable view on our net working capital movement in fiscal year '23. Therefore, we've adjusted our free cash flow guidance upwards and expect free cash flow for the group to be positive in fiscal year '23. Now let's go to the next slide, please and take a look at the much promised order backlog transparency and where we stand at the end of Q1. As we've reiterated in the past, the order backlog is so important for us because it's growing strongly, even with our ongoing selectivity in place and we do really adhere to that. It provides us with visibility on revenue well beyond a 12-month time frame and of course, it reinforces and creates a strong business foundation. A strong book-to-bill feeds into our order book, the order book grew by another 13% over the last 12 months. This is increases across all businesses. During the quarter, we generated €7.1 billion and another €22 billion is already contracted or in-house for fiscal year '23. In other words, 90% plus of our fiscal year '23 revenue is already secured in our backlog. What you can see on this chart is the resilience and essentially stickiness, if you will, of our service backlog which is based on long-term service business. This is true for all our business areas but particularly for Gas Services. Today, €54 billion, as you can see here on the slide, of the group's total order backlog is service. This has multiyear duration. This is high margin and resilient. I'm also happy to confirm because it's not only about quantity but I always say it's also about the quality that the margin profile in our backlog continues to progress and support our margin targets accordingly. Next slide, please. I'd like to take you through the group's cash bridge. Here, clearly, it reflects the funding of the CTO of €3.4 billion, as mentioned earlier, at the end of our first quarter. Looking at our cash and cash equivalents, that stands at €5.4 billion. This is €510 million lower than at the end of fiscal year '22, mainly driven by the cash transfer of the €960 million proceeds of our mandatory convertible bond, as I mentioned earlier, to the CNMV in October, before, of course, it was sitting in our account and that was, of course, to be used as part of the December settlement. We have €5.5 billion of financial debt. This is up from €3.2 billion at the end of the fourth quarter, of which €2.4 billion is long term. The increase is driven by the fact that we drew on the bridge loan in the amount of €1.6 billion to fund the CTO and the increased short-term debt at SGRE. During the quarter, SE's provision for pensions and similar obligations decreased slightly from €570 million at the end of last fiscal year to €545 million at the end of Q1. This was largely driven by FX improvements. Taking into account pensions, we have an adjusted net debt position of €660 million. The fact that we are now in a net debt position is, of course, as a result of the funding of the cash tender offer. Looking at our liquidity position. As of the end of Q1, we have total availability -- sorry, total available liquidity, rather, of just shy of €11 billion and we have around €5.4 billion in cash and cash equivalents, as mentioned and €5.1 billion of undrawn credit lines. So now let's take a look, please, at the business areas, our new transparency, starting with Gas Services. So quick remark on the KPIs you see here, a very strong quarter for gas services across all KPIs, well done. The overall gas market remains solid. In the first quarter, we booked €3.8 billion. This exceeds the high level of prior year by 22.3% comparable. The substantial order growth which is important, it was driven by large orders but in various geographies, special note from the U.S. and Brazil and a continued strong development in our service business. Book-to-bill stood at 1.47% and the order backlog after Q1, €41 billion. In the first quarter, we booked 14 gas turbines greater than 10 megawatts. They are of 7 large gas turbines and 7 industrial gas turbines in the range of between 10 and 100 megawatts. Q1 is characterized by a strong gas market for GT greater than 10 megawatts and SE reached a market share of 25% accordingly. Revenue grew substantially by just shy of 22%, albeit versus a lower prior year base and came in at €2.6 billion, mainly driven by a very strong service business this quarter and obviously then a positive mix. Profit before special items came in substantially better at €318 million, reflecting a 12.4% margin. This is approximately 390 bps greater than prior year. This is a combination and as a result of a combination of higher revenue and that higher service contribution which gives you a positive mix this quarter. And of course, strong execution and I think that needs to be noted. It's operational excellence here as well as an improved cost structure. Moving on to our Grid Technologies business. Here, as mentioned by Christian and also by myself driving this outstanding order development in our Grid Technologies business. The overall market environment for Grid Technology remains very positive. Orders more than triple and rose to €6.3 billion. This development was driven by the large grid connection orders, as mentioned by Christian earlier and we're seeing strong demand in Europe for a while but this quarter, we're also seeing strong demand in other geographies, such as the United States. Book-to-bill was €3.96 million [ph] with backlog rising to €18.7 billion. Revenue grew significantly just shy of 19% year-over-year on a comparable basis, supported by the strong order backlog and order intake, of course, in the prior fiscal year. Growth was mainly driven by expected increases in the product ad solutions business. Profit before special items came in at a strong €110 million or a margin of 6.9%. This also implies quite an improvement, almost 310 bps versus last year. This increase mainly results from higher revenue and a strong focus on project executions. Also, you may recall last year, during the prior year quarter, we had mentioned that, particularly in this business, we had supply chain constraints and negative impacts related to higher material and logistic costs which impacted the short-cycle business of transmission. On the next slide, let's take a look at TI or Transformation of Industries. At the Capital Market Day, we clearly said that within or comprised within TI, you have the independently managed businesses or IMBs. You have sustainable energy systems and electrification, automation, digitalization. Those were areas to focus not only on profit but more on growth. Industrial steam turbines and generators and compression, of course, will focus on turnaround and profitability. And this is clearly reflected in our Q1 figures as TI did deliver a turnaround with margin improvements across all businesses. Looking at orders, 17% decrease. This is because of a high basis of comparison, particularly in the compression business, where we booked a handful of large projects in Q1 of last year, not repeated. On the other hand, though, we see substantial order growth in EAD and we booked €64 million worth of orders at SCS. So underlying orders continue to progress positively. Revenue grew significantly by 13% year-over-year on a comparable basis with all 4 IMBs or independently managed businesses showing double-digit growth. We have strong growth in services, plus 24% and in new units at 13%. This also, though, contributes this quarter to a positive mix in the top line and, of course, in profits. So looking at profit, it continued the positive trend that we saw in the prior fiscal year which, again, confirming that all the hard work and all those measures that were put in place are starting to bear fruit. We're starting to see the beginning of the turnaround. Profit before special items came in at €57 million. This reflects a margin of 5.7%. This compares to a loss of €23 million in Q1 of prior year, so thereby implying an improvement of 840 bps versus last year. Again, this increase was not by accident. This was based on progress, real hard work across all businesses, of course, higher revenue, improved business mix and a higher service share and those underlying operational improvements all contributed to this outcome. From a biggest business perspective, rather, the biggest improvement came from our turnaround cases within compression and industrial steam. So with that, maybe very quickly to sum up our achievements in our first quarter of this fiscal year '23. First of all, I hope the increased transparency in our new reporting structure is helpful. I really enjoyed. I think you give some views into our businesses where our opportunities where are some of our challenges. No doubt, we had strong orders and revenue growth, better-than-expected cash flow, strong underlying operational improvements at all 3 BAs, GS GT and TI. That gives us the confidence that we are on the right trajectory towards our full year assumptions for all BAs. Nevertheless, due to the aforementioned charges at SGRE, we did have to adjust our outlook for fiscal year '23, as Christian mentioned and let me just quickly highlight this on the next page. Just to focus on what has changed. So we now expect Siemens Energy's Group profit before special items to be between 1% and 3%, previously 2% to 4%. And accordingly, a net loss of Siemens Energy Group on prior year's reported level. We previously had foreseen a sharp reduction of the net loss this year. Due to better-than-expected cash flow development in the recent quarter, we now expect free cash flow pretax for fiscal year 2023 to be positive. This was previously a negative range of low to mid-triple-digit million. And of course, we reconfirm our revenue guidance and outlook for this year. So with that, I hand over to Christian. Thank you very much. He will explain our key priorities in the current financial year and some final remarks. Thank you.

Thank you very much, Maria. And very briefly from my side, let me conclude with the key priorities which have not changed from what I said at the end of the fiscal year 2022. Because of the charge at Siemens Gamesa, we now expect lower margin, as Maria pointed out in her presentation but we will make sure that we remain on track to reach the underlying targets we have set. And we will obviously work hard on the revised positive cash flow targets what we have given. We will leverage our new operating model which went live beginning of this fiscal year. It is 1 of our 5 key levers to create value. And from the beginning of the year, we strive really to leverage these key advantages which means the organization is leaner, more agile, more transparent, as also Maria has pointed out and we'll continue to drive the underlying performance improvement over the quarters to come. And in this regards, obviously, we will continue to use that. The turnaround at SGRE is key to our vision. That is not a question and we are fully committed to this in terms of really achieving the turnaround. This will be also a lot of my personal attention this year. And the fourth element, we will capitalize on the opportunities that come with the government initiatives. You have seen a glimpse of it already in the first quarter. We see now the European program coming there in addition with the other programs in other regions of the world. So there is plentiful of opportunities in the energy transition which we want to capture. And with this, I would hand over to Michael and look forward to your questions. Thank you very much.

Thank you, Christian and Maria. We now enter the Q&A. We have just shy of 30 minutes. We need to absolutely stick to the timeline because of the AGM. [Operator Instructions] The first 3 questions will come from or first 3 speakers will be Vivek, Supriya and Akash. So with that, operator, please open the line for Vivek. Thank you. Q - Unidentified Analyst: A question for Maria, please. After the strong order intake in Q1 -- your contract liabilities are now greater than the sum of contract assets and inventories. So what are your updated thoughts over the next few years for how you expect those items to develop going forward? And would it be fair to assume, given the long-dated nature of the grid contract that any normalization in prepayments might take quite a long time?

Thank you, Vivek, for the question. Of course, the fact that our strong top line continues to develop. We're very happy about that. Hence, that continues to support our strong belief that free cash flow will continue. You're absolutely right. The dynamics on our balance sheet is, as you've mentioned, in this case, for this quarter is the first time our contract liabilities exceed our contract assets and our inventories and that is expected because, of course, we need to now deliver on this very large order backlog that we have. Do we expect that dynamic to change in the short term? No. We expect that to continue into the midterm, let's say and long term. This is underpinning our business plans and also underpins our business -- our target -- our midterm targets that we've already described. At that point -- at this point in time, I think one other thing that I'd like to mention regarding the balance sheet is, if you recall last year, we talked a lot about our operating net working capital and our asset management initiatives. Of course, as we execute, we start to see some of the impacts that we have in those areas on our balance sheet, 2 things. One is, we have an increase in inventories. This was in part due to things like safety stock as well in the past fiscal year. This is something that we're looking at and going to determine what the right flight level is coming forward into the next quarters. Also regarding accounts receivable, we do have some seasonality, if you'd like, in Q1 but this is something as well that we will maintain and keep a very keen eye on in the next quarters to come.

Thank you, Vivek, for the question. And the next question comes from Supriya Subramanian at UBS.

Yes. I had a question around Siemens Gamesa, given that you shared the potential synergies between -- once you get sort of control of the business. I wanted to understand how would that work when -- if you don't have 100% ownership yet, is there sort of technically certain things you can or cannot do? Or have you reached, let's say, the squeeze-out threshold, so you still would then get the 100% ownership? And also on the midterm outlook for Siemens Gamesa, do you think that if the issues are still contained within the quarter, the original business plan of breakeven in '24 and positive margins in '25 still hold true?

Thank you, Supriya, for the question. In terms of the synergies without 100% ownership, yes, we can do a couple of things and we are in preparation of doing so. So the delisting is a key milestone for doing that. One of the first synergies is actually reducing the Board members significantly. We go from [indiscernible] make the governance much more straightforward and simpler. This is what we immediately can do. We also align corporate functions already and we can do it. We have to use a little bit of different mechanism because legally, the entity of Siemens Gamesa going to be an independent legal entity but there's a lot where we can obviously harmonize approaches and really make use of these type of elements that will be in the area of IT or let it be in the area of cybersecurity or HR and this is what we're going to do. This will not deliver the 100% of the synergies but it can deliver a fair amount. We are working through this but this is definitely our intention to immediately implement more or less with the course of today already certain measures in terms of simplifying things. That said, with regard to the squeeze-out question. For the squeeze-out level, the level in December was relevant. And we have not achieved a formal squeeze-out level. We now have to do, obviously, a stocktaking on the remaining shareholders, obviously, between December and as of today, we continued to buy shares. So our share in Siemens Gamesa today is higher what we communicated in December. But we'll now have to see on what are the next steps to a potential 100% ownership and this will be clarified over the next weeks to come. In terms of the midterm level outlook, let me put it a little bit into perspective. First of all, the charges which we have seen in quarter 1, let's say, by and large, with the majority resulting from the service business. And this is the installed fleet with the increased failure rates. Where I do see really stabilization and good progress is really on all the operations in terms of factories on how they operate and quality cost and so forth. So I do see stabilization there by Jochen and his team. And in this regard, I'm confident with the midterm outlook into the business. That said, we have included in quarter 1 all elements and charges that we see as of today with the information as of today. What you never know, is there anything coming around the corner going forward? We have seen surprises in the past and this is why I would be careful to say, could there be anything in additional future? Yes, or no. It's something we have to see. But what I'm seeing is 2 things. I see a better, much better handle on the operations and the other thing is much better terms and conditions in the contracts we take on board. And this gives me obviously the confidence that we are on a good track. At the same time, we have -- and Jochen has underlined in his call, we have not yet given an outlook on '24 or so. We're saying we're investigating this. Keep in mind that some of the charges we have taken also would imply that we have to consider what is our suppliers contributing potentially and can there be a positive contribution? And this is all what we have to work through over the next weeks and months to come. So in this regard, there is no dedicated guidance for '24 on that business but there's a midterm positivity, I would call it, in terms of the outlook on this. But we will obviously keep you updated throughout the year on how our views on the business continues.

And the next question goes to Akash Gupta at JPMorgan.

My question is on Transformation of Industry. And here, margin improvement that you have reported in both industrial turbine business and the compression subsegment. Can you please elaborate on both of the subsegments, what are the underlying drivers for the significant margin improvement? And can we also talk about sustainability of this margin rebound in the coming quarters?

Thank you, Akash, for this question. First of all, the 2 big contributors, as Maria pointed out, our compression and steam. And that is really largely driven by what we call the accelerated impact program and all the measures which have been done in the past years to optimize the footprint, to get the cost structures in place. And I have to say the team has done a fantastic job and they are ahead of their plan. But it obviously shows operational improvements which are there to last. That is my expectation. And if I look on the backlog and the book-to-bill above 1, this all gives me the comfort that the business is absolutely on the right track and these are the big contributors in the margin improvement. Keep in mind that what we call sustainable energy systems is still a business where we invest money into. So as a business, it is losing money. It is obviously an investment into the future if it is around hydrogen. And this obviously does -- you have to see in the overall balance. And the EAD business is, let's say, a little bit smaller also doing good but also, I think, with some potential in terms of improvement. But the big 2 contributors, compression and steam and I'm pleased with what I'm seeing there.

The next 3 people in the queue are Gael de-Bray, Andre Kukhnin and Will Mackie. And Gael, if you would please go ahead with your question. Gael de-Bray: And congratulations, really on the outstanding commercial performance this quarter. On this, could you talk a bit more about the remaining pipeline for the former gas and power segment for the rest of the year? Do you still expect to bag large ticket items in the next few quarters? Or would you rather anticipate some kind of normalization in the order pattern towards maybe the previous quarterly run rate we've been used to between €5 billion and €6 billion?

Yes. First of all, when we discussed at end of last year in terms of our expectation in 2023, keep in mind, Gas Services was a super order intake in 2022. And we said 2023 is going to be lower. I still believe it will be lower than 2022. We are -- will probably be above what we have set ourselves as a target because the order pipeline looks still good. If you look across the industry, quarter 1, it was a particularly strong quarter which is actually unusual in the gas services. But it shows the market demand and there is potential also for further good order intake in the next quarters to come. However, we -- as Maria said, we're going to be selective in what we take on. We obviously have to balance also delivery times, load in our factories. We are excellent loaded. And obviously, we will be selective and not chase each and every order to make sure there is a good margin profile in the backlog. So in one line, better than budgeted but I would still expect it below 2023 in terms of order intake -- sorry, 2022, then in order intake. Gael de-Bray: Understood. Do you have time for a second question?

Go ahead. Gael de-Bray: I mean Q1 was also exceptionally strong in terms of both growth and margins for your 3 divisions, excluding Gamesa. They are now clearly above the targeted ranges for the full year. So first, did it come as a big surprise to you too and why? And second, if we assume that you reach the upper end of your objectives, for gas and power in 2023, it would still imply a clear deceleration in growth and lower margins in the next 9 months compared to Q1. So can you help us understand a bit better why that should be the case?

Yes. I would start and Maria, if you would like to add, please jump in. First of all, I mean, quarter 1 was particularly strong, right? And in some areas in the margin as well as in the order intake. I would not multiply it by 4 and get to the year and in all areas. That's very clear. But it's a deliberate choice. I think the market itself underlying particularly in certain areas like where technology is extremely strong. Keep in mind also the way on how revenue is generated at that business is different than in other parts because some of them are very long running projects. But I expect it to even out. We obviously gave our guidance in terms of revenue, still as expected. And also in this regard, I do expect that we are in an order -- book-to-bill on the level of 1 or above in the different areas. So that is what is driving me at the moment. And Maria, anything to add from your side in terms of margin?

Yes. No. Thank you. I fully agree Q1, as I mentioned earlier, had a positive service mix across the board which allowed for, let's say, a stronger or very good and solid start which we will take, by the way for, this fiscal year. But you know we do have volatility and Q2 tends to be a little slower. And then, of course, then we have a bit of a ramp-up as we get to the fiscal year, Gael, just to provide a little bit of color. So I completely compare with what Christian said, don't take Q1 and multiply it by 4, for sure not. Do we see some positive momentum? Yes. And hence, why we said and we're able to confirm now in Q1 that our business areas will remain within their guidance ranges of profit.

Next question comes from Andre Kukhnin at Crédit Suisse.

I just wanted to run through the multiple streams of kind of cost savings and self-help programs that are being undertaken. Just to understand what we've got in store for 2023 and then also for 2024. I understand there is the remainder of the kind of old gas and power program that I think is supposed to deliver €300 million for this year. So if you could talk about that and whether there's anything less than '24 and the cadence of synergies from SGRE integration. Should we expect anything for this year? And is it going to be more kind of '24, '25 weighted. And then I think there was also a program for hierarchy reduction, reduction of managerial positions, I think, of about 1,500 head count which I think we estimate around €300 million is that yielding any savings this year? How should we think about it for 2024 as well? If we could just have that kind of summed up, that would be great. And if I may, just a quick follow-up on the up to €1.5 billion equity raise as it is kind of raising some questions to give it on a parent in the market. Can I just check on the size of that up to 1.5%, the final size of it, will that be determined purely by the function of how much SGRE you own at that period? Or would you take into account other factors such as your own cash generation which has obviously been better than expected given the guidance change? And therefore, can we think about up to €1.5 billion as maybe conceivably €1 billion rather than €1.5 billion in that kind of ballpark?

I'll take both questions. So first of all, thank you for the question on where we stand with our cost-out programs. If you recall last year, we actually had a very strong let's say, momentum in our cost-out programs. Again, you see this now coming to fruition with the underlying operational improvements Also, as you can see in Q1 and this is what we expect, as Christian said, to be sustainable. This year, we foresee the additional, if you'd like, last piece on the AIP program of approximately €300 million in 2023 to come. And this is something that, at this point in time, we also confirm. And of course, there's more to come in 2024 and '25, as we continue to -- this is an ongoing process for us. It's nothing that we say, okay, we have our €800 million and we're done. That's not at all the case. And of course, there will be continuing that real cost focus and cost consciousness as we get into '24 and '25. Regarding the equity raise. So as mentioned, as of last night, we now stand at 97.6%. So only 2.4% of the shares outstanding. And so as a result, your assumption of is this equated to how much we will at the end of the day have in terms of ownership of the shares percentage? Yes. I think it's really important to remember that we had said that this is a €4 billion transaction in its entirety. Of course, the funding secured for that, of which €2 billion, €2.5 billion in total would be equity and equity like. And hence, we did the mandatory convertible bond already for the €960 million. So therefore, we still have €1.5 million -- €1 billion rather of equity to come. And that's why I reiterate Andre, it's very important. So thank you for asking that question. We are committed to that because, of course, this then underpins our balance sheet which is then commensurate with a company that has an investment-grade rating. So that's our underlying objective.

Great. And on synergies, timing, if possible?

I think it's a little bit too early to say because we are just about in terms of balancing synergies and dis-synergies. Obviously, we will keep you updated. As I said, some of it I expect to be relatively straightforward as a reduction in the Board members. But in terms of also putting a feeling for a corridor to that, I would ask for some time. Definitely, as I said, we can do certain things relatively fast and which then could have potentially an impact in '24, particularly if it comes to elements like procurement but we will keep you updated on that.

And next question comes from Will Mackie. As we are running up against the time line, if you could stick please to 1 question, Will, thank you.

My question relates to the European Green Deal industrial plan only really put forward yesterday but with some prior fact sheets. Could you share with us your initial interpretation of how the plan can reach across your businesses to provide either support or proactive financial benefits to either growth drivers or cost benefits across the business in Europe for you?

Yes. Thanks, Will for this question. We still have to a little bit see on how much this details out but it addresses a couple of things where I do believe we can benefit from one. It underlines necessity to manufacture also in Europe and to support the manufacturing industry place in Europe which is obviously us, in particular, obviously, we have been hammering in the past months on the struggles in the wind business and that different bonding conditions are required. I do believe this act can contribute to that but we will have to see it. The other thing is really also all the innovations which we drive, where a lot of activities are in Europe. And it's relatively broad yet. I mean, it cuts across heat pumps, electrification, general things, storage and a lot of the activities we are doing. So I would expect also support on that end in terms of building up and developing and financing new type of technologies and that could be another element. First and foremost, I think what I would hope through the act is a better -- long-term predictability of the growth in this market and obviously shorter approval time. So it's not just money. It's really in terms of getting projects on the ground. And I hope that this drives these initiatives. There's one element which I'm a little bit missing still in the act and we will continue to advocate for this which is the electrical grid which I think is still underestimated how much has to be done which is a super opportunity also on our side. And in that regard, I do believe it will help us this act. But we also -- I have to say, the proof of the pudding is at the end how it is implemented and in what time on it can be executed. This is where, in the past, the European regulations were not always the most simple and easy ones which is hopefully different this time.

The next question comes to -- comes from Sean McLoughlin at HSBC.

Could you just -- thinking about the very useful breakdown of your orders, can you talk maybe about the potential for short cycle? What is the scope maybe in fiscal '23 for shorter cycle in-for-out orders? Are you effectively closed for order intake for fiscal '23? And just to understand, maybe historically, I mean how much of your business is short cycle?

Yes. Thank you very much for the question. I mean it's particular obviously, where do we see short cycle business? One thing is obviously on GT, there is, what we call product business which is very, very strong at the moment also in addition to the HVDC business. And the other part is the transactional type of service business which also has been a very good quarter. And we also, with the funds which are available in the industry, we remain, obviously, they are positive also on the short cycle business. Anything to add, Maria?

Yes. Maybe, Sean, just to add to that, I think it goes back to what I mentioned about our order backlog and what's already secured in terms of revenue for the year. So I said it's just over 90% of our revenue is already in hand for this fiscal year. So not closed per se, or not but it looks -- obviously, we have very good visibility with our order backlog on that short cycle. And I think it is important to reiterate that the business of service has a long-term service element to it. But as Christian just mentioned, also has a short term, what we call transactional book and bill business. And that's exactly what we do see also continuing to be quite strong quarter-over-quarter. Thank you for the question.

I may, very cheekily just ask a follow-on around the service. I mean, how many years forward are you booking service, just thinking of visibility post-'25?

Yes. So the -- like the average duration in our service backlog is around 12 to 13 years. So hence, why you see such a large portion of our backlog in the greater than 25 years onward allocated to service.

There's one follow-on. And if you could keep it really, really, please Supriya, last question over to you.

On -- just wanted to get your thoughts on good technologies in terms of the -- we can clearly see the profitability improvement. Is that an indication that sort of operations are back to normal in terms of the supply chain challenges and raw material inflation impact that we've seen last year?

I mean last year, it was mainly impacted by closed on our factories, Cedar [ph] factories which we had, in particular, in China. This is back to normal. This is stabilized. And in this regard, this is something where now the margin is where we expected it in terms of the trajectory. Last year was the outlier but this is on track. And so far, we are positive on the margin trend in -- on the GT side.

Thank you and thanks, everybody, for the questions. We will not today be available for many questions afterwards. But you can, of course, try to reach us via e-mail. We'll try to answer the questions. Otherwise, we are available tomorrow to answer questions. Maybe 1 or 2 closing remarks from Christian.

So first of all, thank you very much for joining our call. And as we laid out, right, it has been a quarter of high lights and low lights, However, what I really like -- what I really enjoy to see is this good alignment with the energy transition. You mentioned the programs which are coming now to fruition which is all going in the right direction. So in this regard, stay us -- let's say, stay close to us. We will keep you updated and help us to build the energy transition successfully. So stay healthy. See you soon. Thank you very much for your time.

Thank you.

That will conclude today's conference call. Thank you for your participation, ladies and gentlemen. 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/investor Relations.