First half and second quarter 2011 - Vestas/media/vestas/investor/investor... · 2013. 10. 28. ·...

First half and second quarter 2011Fierce competition in a very fragile world7 August 2011 │ The London Marriott West India Quay Hotel │ London

17 August 2011 │ The London Marriott West India Quay Hotel │ London

This presentation contains forward-looking statements concerning Vestas' financial condition, results ofoperations and business. All statements other than statements of historical fact are, or may be deemed to be,forward-looking statements. Forward-looking statements are statements of future expectations that are basedon management’s current expectations and assumptions and involve known and unknown risks and uncertaintiesthat could cause actual results, performance or events to differ materially from those expressed or implied inthese statements.

Forward-looking statements include, among other things, statements concerning Vestas' potential exposure tomarket risks and statements expressing management’s expectations, beliefs, estimates, forecasts, projectionsand assumptions. There are a number of factors that could affect Vestas' future operations and could causeVestas' results to differ materially from those expressed in the forward-looking statements included in thispresentation, including (without limitation): (a) changes in demand for Vestas' products; (b) currency and interestrate fluctuations; (c) loss of market share and industry competition; (d) environmental and physical risks; (e)legislative, fiscal and regulatory developments, including changes in tax or accounting policies; (f) economic andfinancial market conditions in various countries and regions; (g) political risks, including the risks of expropriationand renegotiation of the terms of contracts with governmental entities, and delays or advancements in theapproval of projects; (h) ability to enforce patents; (i) product development risks; (j) cost of commodities; (k)customer credit risks; and (l) supply of components.

All forward-looking statements contained in this presentation are expressly qualified by the cautionarystatements contained or referenced to in this statement. Undue reliance should not be placed on forward-lookingstatements. Additional factors that may affect future results are contained in Vestas' annual report for the yearended 31 December 2010 (available at www.vestas.com/investor) and these factors also should be considered.Each forward-looking statement speaks only as of the date of this presentation. Vestas does not undertake anyobligation to publicly update or revise any forward-looking statement as a result of new information or futureevents others than required by Danish law. In light of these risks, results could differ materially from those stated,implied or inferred from the forward-looking statements contained in this presentation.

Disclaimer and cautionary statement

First half and second quarter 20112

Key points


Activity level increased as planned.

Better margins due to activity level and mix.

Free cash flow improved.

Fierce competition in a very fragile world.

Guidance maintained.

3

Agenda


1. First half and second quarter 2011.

2. Order intake.

3. Guidance 2011.

4. Questions & Answers.

4

Activity at Vestas


Shipments

387

588

1,456

1,626

634

1,417

Q1 Q2 Q3 Q4 Q1 Q2

2010 2011

MWQ2 2011 vs. Q2 2010:Shipments up 141%.

H1 2011 vs. H1 2010:Shipments up 110%.

6

Deliveries to customers


DeliveriesMW

758 839

1,688

2,557

864

1,127

Q1 Q2 Q3 Q4 Q1 Q2

2010 2011

Q2 2011 vs. Q2 2010:Deliveries up 34%.

H1 2011 vs. H1 2010:Deliveries up 25%.

7

Profit and loss account


First half breaks even

EURm Q22011

Q22010

Change H12011

H12010

Change

Revenue 1,401 1,032 36% 2,461 1,881 31%

Cost of sales (1,153) (1,020) 13% (2,113) (1,768) 20%

Gross profit 248 12 1,967% 348 113 208%

Fixed costs*) (171) (192) (11%) (340) (332) 2%

Operating profit/(loss) 77 (180) - 8 (219) -

Profit/(loss) for the period 55 (143) - (30) (182)

Gross margin 17.7% 1.2% 14.1% 6.0%

EBITDA margin 10.7% (9.8%) 6.1% (4.7%)

EBIT margin 5.5% (17.4%) 0.3% (11.6%)

*) Sum of research and development costs, selling and distribution expenses and administrative expenses.

8

Fixed costs


Fixed costs as per cent of revenue

16.5%

18.6%

9.3%

6.3%

15.9%

12.2%

Q1 2010 Q2 2010 Q3 2010 Q4 2010 Q1 2011 Q2 2011

per centEffect of Q3 2010 initiatives.

Downward trend continues.

Relatively high fixed costs in Q2 2010.

9

Net reduction in number of employees


EmployeesNumbers at year-end / Q-end

15,305

20,829 20,730

23,252 22,216 21,700

2007 2008 2009 2010 Q1 2011 Q2 2011

10

Net working capital


mEUR H12011

Q1 2011

Change H12010

Inventories 2,545 2,619 (3%) 4,135

Trade receivables 629 568 11% 470

Construction contracts in progress 113 49 131% 136

Other receivables 379 353 7% 238

Prepayment from customers (1,452) (1,457) (0.3%) (3,137)

Trade payables (1,090) (936) 16% (873)

Other current liabilities (252) (286) (12%) (314)

Net working capital 872 910 (4%) 655

As per cent of revenue 12% 13% 1 %-point 9%

Net working capital to be further improved by reducing inventories and by higher order intake.

11

Balance sheet


Assets (mEUR) H12011

Q12011

Change H12010

Change

Intangible assets 1,145 1,095 5% 900 27%

Property, plant and equipment 1,755 1,701 3% 1,705 3%

Other non-current assets 290 289 0.3% 414 (30%)

Current assets 3,954 3,924 1% 5,313 (26%)

Total assets 7,144 7,009 2% 8,332 (14%)

Equity and liabilities (mEUR) H12011

Q12011

Change H12010

Change

Equity 2,707 2,677 1% 2,372 14%

Non-current liabilities 1,396 1,332 5% 1,228 14%

Current liabilities 3,041 3,000 1% 4,732 (36%)

Total equity and liabilities 7,144 7,009 2% 8,332 (14%)

12

Cash flow statement


Main lines

mEUR Q22011Q2

2010H1

2011H1

2010Profit for the period 55 (143) (30) (182)

Adjustment for non-cash transactions 69 (128) 146 (122)

Corporation tax paid (25) 33 (32) (56)

Interest received and paid (net) (11) (9) (25) (9)Cash flow from operating activities before change in working capital 88 (247) (59) (369)

Change in working capital 38 (62) (200) (338)

Cash flow from operating activities 126 (309) (141) (707)

Cash flow from investing activities (189) (202) (353) (351)

Free cash flow (63) (511) (494) (1,058)

Cash flow from financing activities 63 248 346 768

‘Adjustments for non-cash trans-actions’ are constituted by depreciation, exchange rate, interest, warranty provision and tax.

13

Warranty provisions and quality


6.6%

4.5%

5.8%

2.8%2.3%

2007 2008 2009 2010 H1 - 2011

Warranty provisionper cent of revenue

Lost Production Factorper cent

0

1

2

3

4

5

6

7

14

< 2.5%

Sustainability


Safety firstIndustrial injuries per one million working hours

As green as it gets

25.3

20.8

15.6

8.1

5.03.2

2006 2007 2008 2009 2010 2011 - H1

15

Order intake


The world is very fragile.

Expected 2011 order intake


Order intake 2011Order intakeMW MW split on geography

6,019

3,072

8,673

2008 2009 2010 2011E

7,000-8,00050%

25% 25%

Europe Americas Asia Pacific

18

630

2,265

Q1 Q2

Order intake Q1 and Q2


46%

37%

17%


Order intake Q1 and Q2MW split on geography

~40 per cent of expected full-year order intake

Order intake Q1 and Q2MW

China: Grid and liquidity constraints.

19

Order intake in Q3 and Q4


Order intake 2011MW

Order intake in Q3 and Q4 to be intensely backed by new products (V100 and V112).Mid-range

4,605

20

630 2,265 635

3,970

Q1 Q2 Q3 + Q4


Valuable order intake to be created by competitive Cost of

Energy offerings through our

Products, Services,Global Presence

and Quality.

21

7 MWPlatform

V164

kWPlatform

V52V60

3 MWPlatform

V90V100V112

2 MWPlatform

V80V90

V100

Our product platform


It takes a variety of turbines to meet customers’ needs

High wind. Medium wind.Low wind.

Onshore. Offshore.

Recent product launches


More than 25 per cent of H1 2011 order intake constituted by V100 and V112.

Port of Sheerness, Kent (UK): Option secured, 70 hectares.Blade test facilities in operation on the Isle of Wight (UK).

23

The V112-3.0 MW now in production


Blades:Lauchhammer, GermanyBrighton, Colorado, USA

Nacelles:Ringkøbing, Denmark

24

Generators:Travemünde, Germany

Service and performance still more important to order intake


Average length of service contracts on announced orders: 6.25 years (2008: 4 years)

Service revenuemEUR per year

214

298

396

504

623

700

2006 2007 2008 2009 2010 2011E

97 per cent of all MW include service contracts.

25

In the region for the region


South American set-up, Brazil

Sales office established in 2008.

Assembly facility in 2011.Start of operations in Q4.

Annual capacity of up to 800 MW.

Operations cluster responsible for:Service CentreTraining CentreSupply Chain and Spare Parts Centre

New facility is part of existing investment program.

26

Key account customersUtilities with the power to invest is key to the 2011-order intake

1,500 MW firm+ 600 optional

400 MW firm+ 1,000 optional

Share of Wallet:>50% Europe>30% USA

26.04.2010 09.09.2010 30.06.2011

27 First half and second quarter 2011

55%

31%

14%


Firm and unconditional orders


MW split on geographyOrder backlog

28

ORDER BACKLOG:

8.3 GWEUR 8.0bn

Order backlog constituted by firm and unconditional orders only.

Guidance 2011


Although nearly all orders for H2 are already firm and unconditional, the back-end loaded 2011 means that recognition of revenue and EBIT relies on smooth project execution in H2.

Please remember!

Guidance 2011: Maintained, despite a very fragile world


Order intake, firm and unconditional (MW) 7,000-8,000

Production and shipments (MW) 6,000

Revenue (mEUR) 7,000

- of which service revenue (mEUR) 700

EBIT margin (per cent) 7

EBIT margin service (per cent) 15

Financials, net (mEUR) (60)

Tax rate (per cent) 28

Investments (mEUR) 850

Free cash flow (mEUR) > 0

Warranty provisions (per cent) < 3

Industrial injuries (per one million working hours) ≤ 5

Customer loyalty (index) 72

Share of renewable energy (per cent) 40

Share of renewable electricity (per cent) 95

Quality level (Sigma) ≥ 5

Revenue in Q4 2011 on a par with revenue in Q4 2010.

31

(1,000)

(800)

(600)

(400)

(200)

0

200

400

600

800

1,000

2007 2008 2009 2010 2011

Cash generation


Cash flow from operations of EUR 763m in H2 2010

Cash flow from operationsEURm

InvestmentsEURm

Free cash flow

The back-end loaded 2011 means heavy cash generation in Q4 2011.

32

Revolving credit facility of EUR 1.3bn as of 1 July 2011


Nine participating banks in the new 5 (+1 +1) year facility:Commerzbank AG, DnB NOR Bank ASA, Nordea, HSBC, Rabobank, Royal Bank of Scotland, SEB, Unicredit and Société Générale.

Expected positive free cash flow in H2 2011 gives comfortable headroom entering 2012.

Considerable bilateral facilities on top of new revolving facility.


Uncertainty for 2011 still prevails.

Full year 2010 presentation,9 February 2011

34

Financial Calendar


3rd Quarter 2011

9 November 2011

AarhusDenmark

4th Quarter 2011

8 February 2012

LondonUnited Kingdom

35

Key points


Activity level increased as planned.

Better margins due to activity level and mix.

Free cash flow improved.

Fierce competition in a very fragile world.

Guidance maintained.

Copyright NoticeThe documents are created by Vestas Wind Systems A/S and contain copyrighted material, trademarks, and other proprietary information. All rights reserved. No part of the documents may be reproduced or copied in any form or by anymeans - such as graphic, electronic, or mechanical, including photocopying, taping, or information storage and retrieval systems without the prior written permission of Vestas Wind Systems A/S. The use of these documents by you, oranyone else authorized by you, is prohibited unless specifically permitted by Vestas Wind Systems A/S. You may not alter or remove any trademark, copyright or other notice from the documents. The documents are provided “as is” andVestas Wind Systems A/S shall not have any responsibility or liability whatsoever for the results of use of the documents by you.

In case we have unintentionally violated copyrighted material, we want to be informed immediately in order to straighten things out and thus to honour any obligatory fees.


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