First quarter 2017 - Vestas | Home/media/vestas/investor/investor...Solid Q1 order intake Order...

First quarter 2017

Vestas Wind Systems A/S

Copenhagen, 5 May 2017

Classification: Public

Disclaimer and cautionary statement

5 May, 2017First quarter 2017 (Public)2

This document contains forward-looking statements concerning Vestas’ financial condition, results of operations 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 based on management’s current expectations and assumptions and involve known and unknown risks and uncertainties that

could cause actual results, performance, or events to differ materially from those expressed or implied in these statements.

Forward-looking statements include, among other things, statements concerning Vestas’ potential exposure to market risks and statements

expressing management’s expectations, beliefs, estimates, forecasts, projections and assumptions. A number of factors that affect Vestas’ future

operations and could cause Vestas’ results to differ materially from those expressed in the forward-looking statements included in this document,

include (without limitation): (a) changes in demand for Vestas’ products; (b) currency and interest rate fluctuations; (c) loss of market share and

industry competition; (d) environmental and physical risks, including adverse weather conditions; (e) legislative, fiscal, and regulatory developments,

including changes in tax or accounting policies; (f) economic and financial market conditions in various countries and regions; (g) political risks,

including the risks of expropriation and renegotiation of the terms of contracts with governmental entities, and delays or advancements in the

approval of projects; (h) ability to enforce patents; (i) product development risks; (j) cost of commodities; (k) customer credit risks; (l) supply of

components; and (m) customer created delays affecting product installation, grid connections and other revenue-recognition factors.

All forward-looking statements contained in this document are expressly qualified by the cautionary statements contained or referenced to in this

statement. Undue reliance should not be placed on forward-looking statements. Additional factors that may affect future results are contained in

Vestas’ annual report for the year ended 31 December 2016 (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 document. Vestas does not undertake any obligation to publicly update or revise

any forward-looking statement as a result of new information or future events other than as 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 document.

Key highlightsSolid first quarter performance.


Strong Q1 revenueRevenue at EUR 1,885m.

Improved earningsEBIT margin at 11.2 percent.

Solid Q1 order intakeOrder intake in the quarter reached 2,049 MW.

Backlog increasingWind turbine and service order backlog of EUR 20bn.

5 May, 20174

Agenda


1. Orders and markets

2. Financials

3. Outlook and questions & answers

Q1 Interim financial report,

first quarter 2017

Vestas gained market share in 2016Vestas remains market leader with more than 16 percent market share in 2016 – improvement of ~3-4 percentage points.


Siemens

Guodian

Enercon

Ming Yang

Goldwind

GE

Vestas

Gamesa

Others

Nordex

Envision

16.5%

7.0%

12.1%

12.3%

25.0%

3.7%

5.0%

6.6%

2016

100% = 53 GW

3.9%

4.2%

3.7%

13.5%

4.7%

100% = 57 GW

2015

5.2%

3.4%

4.7%

4.8%

30.3%

5.3%

Enercon

Mingyang

Guodian

CSIC

Goldwind

Vestas

Envision

GE

Siemens

Gamesa

Others

12.6%

10.2%

5.3%

Bloomberg New Energy Finance“Onshore installations”

Market shares development

Percent

Source: Bloomberg New Energy Finance and MAKE Consulting.

100% = 54 GW

2016

3.6%

Enercon

3.4%

8.1%

Vestas

6.1%

GE

16.1%

5.7%

25.0%

Siemens

Ming Yang

Envision

13.2%

Goldwind

Nordex

United Power3.5%

Others

Gamesa

3.5%

11.8%

5.1%

3.3%

12.0%

Siemens

Gamesa

4.9%

2015

30.1%

4.5%

Others

Guodian

6.2%

Senvion

Envision

Goldwind

Mingyang

Vestas

GE

Enercon

100% = 58 GW

4.3%

5.3%

11.0%

13.3%

MAKE Consulting“Onshore grid-connected”

Overall supportive environment for renewable energy remains


As wind has become competitive, the trend towards auction systems is present in most regions.

EU moving towards 2020 and 2030

targets…

• General movement towards auctions.

• First auction bids submitted in

Germany - results expected in mid-

May.

• Repowering beginning to add

meaningful volume.

Positive signals in MEA…

• Steady growth and continued

commitment but coming from a low

base.

• 400 MW wind auction expected in

Saudi Arabia.

EMEA

Asia Pacific

Continued commitment in China…

• 13th 5-year plan wind target of 210 GW

cumulative installations by 2020.

• Curtailment being addressed.

India remains interesting…

• Target of 60 GW by 2022 remains in

place, but transition to auctions

creating some short-term uncertainty.

Broader Asia Pacific region on the

move…

• Renewable targets in most markets.

Americas

PTC timing in USA…

• Continued strong US demand driven

by current PTC structure.

Latin America tenders…

• New auctions in several markets

such as Argentina, Chile, and

Mexico.

• Short-term challenging market

conditions in Brazil.

Solid Q1 order intakeOrder intake at 2,049 MW. Average selling price remains fairly stable.


Order intake

MW

2,049

Q4

2016

1,790

Q3

2016

4,532

Q1

2016

1,769

Q2

2016

-354

Q1

2017

2,403

Average selling price of order intake

mEUR per MW

Q1

2017

Q4

2016

0.95

Q2

2016

0.89

Q1

2016

Q3

2016

0.88

0.82

0.88

• Q1 2017 order intake was 354 MW lower than in Q1 2016,

corresponding to a decrease of 15 percent. 1 GW order in

Norway in Q1 2016 impacting quarter-on-quarter comparison.

• USA, Germany, and China were the main contributors to

order intake in Q1 2017, accounting for more than 70 percent.

Key takes:

• Price per MW remains at overall stable levels

observed in recent quarters.

• Price per MW depends on a variety of factors, i.e. wind

turbine type, geography, scope, and uniqueness of

offering.

Key takes:

Solid order intake across all regionsQ1 2017 order intake mainly seen in the US, China, Germany, and Argentina. First order received in India after opening of blade factory.


921 802460 326

1,885

+100%

+462%

Q1

-57%

Q1Q1

58

2017

2016

Americas

MW

EMEA

MW

Asia Pacific

MW

• Increase primarily driven by

strong US order intake.

• Good development in

Argentina.

• Good activity level across

Europe primarily driven by

Germany and France.

• Decline mainly driven by the 1

GW Statkraft order in Q1 2016.

• Solid development in China.

• First order in India after

opening of blade factory.

Increased deliveries highlight benefits from unique global reachMain improvements seen in USA, UK, and Germany.


89

641484

706790

57

+63%

-36%

Q1

+10%

Q1 Q1

2016

2017

Americas

MW

EMEA

MW

Asia Pacific

MW

• Overall increase primarily

driven by strong US market

incl. delivery of PTC

components.

• Good activity in Uruguay

and Mexico.

• Strong development in UK

deliveries.

• Good activity in Germany,

France, and Turkey.

• Positive development in

China and India, but overall

limited activity in Asia

Pacific.

* Compared to Q4 2016.

Combined order backlog at EUR 20bnCombined backlog increased by EUR 0.8bn in the quarter. Backlog of wind turbines increased by EUR 0.5bn, while the service backlog increased by EUR 0.3bn.


Wind turbines:

EUR 9bn

Service:

EUR 11bn

EUR +0.5bn* EUR +0.3bn*

Good start to the year for the JVLargest order ever and launch of 9 MW turbine.

5 May, 2017

First quarter 2017 (Public)11

Manufacturing ramp-up and project execution

Preparing for near-term project execution

• 414 jobs created to support production facilities in Nakskov

and Lindoe, DK.

• Uprating of the V164-8.0 MW platform to reach 9 MW at

specific site conditions.

Nobelwind

(BE)

165 MW

V112-3.3 MW

Blyth (UK)

42 MW

V164-8.0 MW

Burbo Bank

Extension (UK)

258 MW

V164-8.0 MW

Walney

Extension (UK)

330 MW

V164-8.0 MW

Rampion (UK)

400 MW

V112-3.45 MW

Projects currently in progress

~2.5

GWAnnounced FOI since JV formation

• Q1: 450 MW Borkum Riffgrund 2, Germany

~1.0

GW

Announced conditional &

preferred supplier agreements

• 680 MW Borssele III & IV, Netherlands

• 252 MW Deutsche Bucht, Germany

5 May, 201712

Agenda



2. Financials



first quarter 2017


Income statementEBIT margin increased by 5.4 percentage points.

mEUR Q1 2017 Q1 2016 % change

Revenue 1,885 1,464 29%

Production costs (1,508) (1,217) 24%

Gross profit 377 247 53%

SG&A costs* (166) (162) 3%

EBIT 211 85 148%

Income from investments in

associates and joint ventures(11) (19) 42%

Net profit 160 35 357%

Gross margins 20.0% 16.9% 3.1%-pts

EBITDA margin 16.0% 12.0% 4.0%-pts

EBIT margin 11.2% 5.8% 5.4%-pts

5 May, 2017

• Revenue increased 29 percent primarily driven by

increased MW-deliveries and service.

• Gross profit up by 53 percent mainly driven by the

increased revenue and better average margins.

• EBIT up by 148 percent mainly driven by the higher

gross profit.

• Net profit up by EUR 125m.

Key takes:

* R&D, administration, and distribution.

* R&D, administration, and distribution on trailing 12 months basis.


Leveraging on SG&ASG&A costs continue to be under control.

5 May, 2017

709705713712

660645638

(1.3) %-pts

Q4

2016

Q3

2016

7.2%7.7% 7.8%

Q2

2016

8.1%

Q3

2015

7.9%

Q1

2016

Q4

2015

Q1

2017

6.6%6.9%

SG&A costs (TTM)*

mEUR and percent of revenue

• SG&A costs relative to activity levels continues stable

downward trend.

• Relative to activity levels, SG&A costs amounted to

6.6 percent – a decrease of 1.3 percentage points

compared to Q1 2016.

Key takes:


ServiceStrong service performance driven by high activity levels.

5 May, 2017

372

312326

299

369

Q4

2016

Q1

2016

Q3

2016

Q2

2016

+23%

Q1

2017

• Service revenue increased by 23 percent compared to

Q1 2016 mainly due to higher activity levels.

• EBIT: EUR 71m.

Margin: 19.2 percent.

• Service order backlog growth of EUR 0.3bn compared

to Q4 2016.

Service revenue

mEUR

Key takes:


Balance sheetBalance sheet remains strong.

5 May, 2017

Assets (mEUR) Q1 2017 Q1 2016 Abs. change % change

Non-current assets 2,879 2,568 311 12%

Current assets 7,388 6,223 1,165 19%

Assets held for sale - 103 103 (100)%

Total assets 10,267 8,894 1,373 15%

Liabilities (mEUR)

Equity 3,308 2,728 580 21%

Non-currents liabilities 1,129 909 220 24%

Current liabilities 5,830 5,257 573 11%

Total equity and

liabilities10,267 8,894 1,373 15%

Key figures (mEUR)

Interest bearing

position (net)3,192 1,957 1,235 63%

Net working capital (1,710) (1,068) 642 60%

Solvency ratio (%) 32.2% 30.7% - 1.5%-pts

• Improvement in interest bearing position (net).

• Positive net working capital development of EUR

642m.

• Solvency ratio at 32.1 percent.

Key takes:

* Construction contracts in progress.


Change in net working capitalSatisfactory net working capital management despite negative impact from high activity levels.

5 May, 2017

(379)

Pre-

payments

NWC end

Q1 2017

Inventories

(159)

Payables

(262)231

(1,710)

Other

liabilities

(13)

CCP*

(60)

NWC end

Q1 2016

(1,068)

Receiv-

ables

(1,710)

254(580)

Receiv-

ables

Pre-

payments

Inventories Payables

708

Other

liabilities

NWC end

Q1 2017

64

CCP*

(8)(207)

NWC end

Q4 2016

(1,941)

NWC change over the last 3 months

mEUR

NWC change over the last 12 months

mEUR

• Positive development mainly driven by higher

prepayments from customers and trade payables

slightly offset by higher inventories – all largely driven

by higher activity levels.

Key takes:

• Net working capital increased by EUR 231m in Q1

2017 due to higher activity levels.

• The negative development was mainly driven by

higher inventories and lower prepayments more than

offsetting higher trade payables.

Key takes:

0

1

2

3

4

5

6

Dec

2015

Dec

2016

Dec

2014

Dec

2012

Dec

2010

Dec

2009

Dec

2011

Dec

2013


Warranty provisions and Lost Production FactorWarranty consumption and LPF continue at a low level.

5 May, 2017

100

5248

2835

2326271819

Q4

2016

Q1

2017

Q3

2016

Q1

2016

Q2

2016

Provisions consumedProvisions made

Lost Production Factor (LPF)

Percent

Warranty provisions made and consumed

mEUR

• Warranty consumption constitutes approx. 0.9 percent

of revenue over the last 12 months.

• Warranty provisions made correlates with revenue in

the quarter, corresponding to approx. 1.9 percent in

Q1 2017.

Key takes:

• LPF continues at a low level below 2.0.

• LPF measures potential energy production not

captured by the wind turbines.

Key takes:


Cash flow statementPositive free cash flow driven by improved earnings and sale of office buildings.

mEUR Q1 2017 Q1 2016 Abs. change

Cash flow from operating activities

before change in net working

capital258 164 94

Change in net working capital (262) (278) 16

Cash flow from operating activities (4) (114) 110

Cash flow from investing activities* 12 (182) 194

Free cash flow* 8 (296) 304

Cash flow from financing activities (55) 5 60

Net decrease in cash and cash

equivalents(47) (291) 244

5 May, 2017

• Free cash flow of EUR 8m driven primarily by

increased earnings and proceeds from the sale of

office buildings.

• Cash flow from investing activities impacted by EUR

99m due to the sale of office buildings.

• Cash flow from financing activities driven by the share

buy-back programme launched at FY 2016 results.

Note: Change in net working capital in Q1 2017 impacted by non-cash adjustments and exchange rate adjustments with a total amount of EUR 31m.

* Before investments in marketable securities and short-term financial investments, and incl. proceeds of EUR 99m from sale of office building facilities.

Key takes:


Total investmentsUnderlying investments in line with Q1 2016 - net investments impacted by sale of office buildings.

5 May, 2017

99 91

226

96

87

22

83

Q3

2016

Q1

2016

182

Q2

2016

113

(12)

-194

Q1

2017

(99)

Q4

2016

Service acquisitions Other acquisitions and divestments

Net investments*

mEUR

Key takes:

Transfer of

headquarters in

Aarhus, Denmark

from owned to

leased, EUR 99m.

• Investments decreased by EUR 194m compared to

Q1 2016, primarily driven by the sale of office

buildings in Aarhus, Denmark.

• Underlying investments of EUR 87m driven by

capitalised R&D as well as tangible blade investments.

* Before investments in marketable securities and short-term financial investments, and incl. proceeds of EUR 99m from sale of office building facilities.


Capital structureCapital structure targets within set boundaries.

5 May, 2017

(1.2)

< 1.0

(1.8)

Q1

2017

Q3

2016

Q4

2016

(1.4)

Q2

2016

Q1

2016

(1.6) (1.5)

Net debt to EBITDA, last 12 months

Net debt to EBITDA, financial target

28

30

32

34

36

Q4

2016

32.232.1

35.0

Q3

2016

30.0

Q1

2017

Q2

2016

30.5

32.9

Q1

2016

30.7

Solvency ratio

Solvency ratio, financial target range

Solvency ratio

Percent

Net debt to EBITDA

xEBITDA

• Net debt to EBITDA increased to (1.5) in Q1 2017.

• Development driven primarily by lower net cash

position and improved EBITDA.

Key takes:

• Solvency ratio of 32.2 percent in Q1 2017.

• Q1 2017 development mainly driven by improved

earnings and positive net working capital effects.

Key takes:


Return on invested capitalROIC at very high level of 353 percent.

5 May, 2017

0

50

100

150

200

250

300

350

400353.3

Q1

2016

265.2

119.1

Q4

2016

Q1

2017

Q3

2016

162.5

Q2

2016

148.2

ROIC, last 12 months EBIT margin, last 12 months

• ROIC increased to 353.3 percent in Q1 2017 – an

improvement of 234.2 percentage points compared to

Q1 2016.

• Development primarily driven by higher earnings and

improved net cash position.

Return on invested capital (ROIC)

Percent

Key takes:

5 May, 201723

Agenda



2. Financials



first quarter 2017

Outlook 2017


Outlook

Revenue (bnEUR) 9.25-10.25

EBIT margin before special items (%) 12-14

Total investments (mEUR)(Before investments in marketable securities and short-term financial investments, and incl.

proceeds of EUR 99m from sale of office building facilities.)

approx. 350

Free cash flow (mEUR)(Before investments in marketable securities and short-term financial investments, and incl.

proceeds of EUR 99m from sale of office building facilities.)min. 700


Market leadershipSummarising our market-leading position.

5 May, 2017

Note: Consolidation of Vestas and Vestas’ proportionate share of MHI Vestas financial and operational figures per 31 March 2017. Order intake, revenue, and EBIT based on 12-month rolling performance.

Combined market share for Vestas and MHI Vestas is based on Bloomberg New Energy Finance 2016 market share statistics.

Backlog:

EUR

22bn

• Annual order intake of 11 GW.

• Largest installed base of more

than 83 GW.

• 74 GW under service.

EBIT:

EUR

1.4bn

• Best in class margins.

• Largest R&D investments in

the industry.

• Flexible, asset-light, and low-

cost manufacturing footprint.

Revenue:

EUR

11bn

• Grow faster than the market.

• Leading market share of 16.5

percent.


Q&AFinancial calendar 2017:

• Disclosure of Q2 2017 (17 August)

• Disclosure of Q3 2017 (9 November)

Thank you for your attention

Copyright Notice

The 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 any

means - 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, or

anyone 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” and

Vestas Wind Systems A/S shall not have any responsibility or liability whatsoever for the results of use of the documents by you.

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