Third quarter 2016
Vestas Wind Systems A/S
Copenhagen, 8 November 2016
Classification: Public
This presentation 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. There are a number of factors that could affect Vestas' future operations and could cause
Vestas' results to differ materially from those expressed in the forward-looking statements included in this
presentation, including (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; (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 from suppliers and vendors; and (m) customer readiness and
ability to accept delivery and installation of products and transfer of risk.
All forward-looking statements contained in this presentation 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 2015 (available at 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 any
obligation to publicly update or revise any forward-looking statement as a result of new information or future
events 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
│ Third quarter 2016 2 Classification: Public
Key highlights Solid quarterly performance
High activity levels Deliveries up by 44 percent in third quarter of 2016 – driven by all regions.
Strong earnings EBIT margin before special items of 14.9 percent – up by 4.0 percentage points
compared to third quarter of 2015.
Solid free cash flow Free cash flow amounted to EUR 155m in third quarter of 2016 – on a par with third
quarter of 2015.
Combined order backlog remains high Combined order backlog at EUR 17.1bn. Wind turbine order backlog impacted by
high activity levels in third quarter of 2016.
Outlook 2016 2016 has proven to be an extraordinary year and based mainly on better visibility for
the remainder of the year, guidance for 2016 is increased on all parameters.
3 │ Third quarter 2016 Classification: Public
Agenda
4
1. Orders and markets
2. Financials
3. Outlook, and questions & answers
Q3 Interim financial report,
third quarter 2016.
│ Third quarter 2016 Classification: Public
Quarterly order intake increased by 17 percent Order intake of 1.8 GW – an increase of 17 percent compared to Q3 2015. Average selling price
fairly stable.
Order intake
MW
Average selling price of order intake
mEUR per MW
• Q3 2016 order intake was 261 MW higher than in
Q3 2015, corresponding to an increase of 17
percent.
• USA, China, Germany, and Morocco were the
main contributors to order intake in Q3 2016,
accounting for approx 75 percent.
Key takes:
• Price per MW in Q3 2016 fairly stable.
• Price per MW depends on a variety of factors,
i.e. wind turbine type, geography, scope, and
uniqueness of offering.
Key takes:
1,769
Q3
2016
Q2
2016
1,790
Q1
2016
Q4
2015
Q3
2015
2,667
2,403
1,508
+261
Q3
2015
0.96
Q3
2016
0.88 0.89
Q4
2015
0.82
Q2
2016
Q1
2016
0.90
│ Third quarter 2016 5 Classification: Public
Order intake: 9M 2016 keeping up the pace from last year
Americas
MW
EMEA
MW
Asia Pacific
MW
• 9M 2016 primarily driven by
lower realised FOI activity in
the US due to the PTC
situation, while Canada and
Argentina were the biggest
positive contributors.
• 9M 2016 driven by a range of
countries with especially
Germany, Norway*, and
Morocco contributing positively.
Offshore* having a negative
impact.
• 9M 2016 mainly impacted by
126 MW order in Thailand in
2015. First ever order
secured in Mongolia in Q3
2016.
538 340
2,711
-23%
-37%
9M 9M
+22%
9M
2,320
3,302 3,026
2016 2015
Global reach from 29 countries across five continents secures order intake level on a par with 9M
2015. Overall regulatory environment remains favourable with no significant Q3 2016 events.
│ Third quarter 2016 6 Classification: Public
* Vestas received a 1 GW order in Norway 23.02.2016. Vestas received, via MHI Vestas Offshore Wind, a 400 MW offshore order in the UK 18.05.2015.
Deliveries: Continued strong growth across all regions
Americas
MW
EMEA
MW
Asia Pacific
MW
• 9M and Q3 2016 primarily
driven by USA and a general
improvement across Latin
America, especially in Chile
and Brazil.
• 9M and Q3 2016 with higher
activity levels mainly in
Germany, Sweden, and
Belgium (mainly due to
offshore).
• 9M and Q3 2016 mainly
driven by higher activity
levels in China, Thailand, and
India.
293838
504909
Q3
+29%
Q3
140
1,733
9M
1,044
+8%
+66%
3,307
2,432 +72%
9M
+36%
+169%
Q3
52
9M
2,676 2,081
2016 2015
│ Third quarter 2016 7 Classification: Public
9M 2016 total MW deliveries up by 35 percent – totalling 6,487 MW – driven by stronger perfor-
mance in all regions. US market expected to build up towards 2020 from lower level in 2017.
Combined order backlog remains strong at EUR 17.1bn Combined backlog decreased by EUR 1.0bn in the quarter. Backlog of wind turbines decreased
by EUR 1.0bn due to higher MW deliveries in Q3, while the service backlog increased slightly.
Wind turbines:
EUR
7.2bn
Service:
EUR
9.9bn
EUR -1.0bn* EUR +0.0bn*
* Compared to Q2 2016.
│ Third quarter 2016 8 Classification: Public
High installation activity
• Burbo Bank Extension: Under installation, progressing
as planned. More than half of the turbines installed.
• Nobelwind: Under installation, progressing well. The 1st
turbine was installed 28 October.
• Rampion: Vestas has started delivery of the V112-3.45
MW turbines to the JV.
JV in installation mode Delivery of projects progresses according to plan, while sales activity remains high
Sales strength continues
• Order backlog grows to…
… with the signing of the Aberdeen Bay project in the
UK for a total capacity of 92 MW consisting of 11 V164-
8.0 MW turbines.
• Conditional orders of 450 MW.
• Announced preferred supplier agreements increased to
622 MW with the 252 MW Deutsche Bucht project in
Germany.
│ Third quarter 2016 9 Classification: Public
~1.7
GW
Burbo Bank
Extension (UK)
258 MW, 2017*
Nobelwind (BE)
165 MW, 2017*
Rampion (UK)
400 MW, 2018*
* Expected full-project installation year by MHI Vestas Offshore Wind.
Agenda
10
1. Orders and markets
2. Financials
3. Outlook, and questions & answers
Q3 Interim financial report,
third quarter 2016.
│ Third quarter 2016 Classification: Public
Income statement Strong quarterly revenue and earnings primarily driven by higher activity levels
– EBIT margin before special items increased by four percentage points to 14.9 percent
11
• Revenue increased by 37 percent
primarily due to higher MW deliveries.
• Gross profit up by 52 percent mainly
driven by the higher revenue and to a
lesser extent better average margins.
Note: Write-down of EUR 54m in Q3
2016 related to development and
construction activities in prior years.
• Income from JV decreased by EUR
33m due to increased ToR from Vestas
to the JV and V164 D&A.
• EBIT before special items up by 87
percent mainly driven by higher gross
profit.
• Net profit up by 50 percent - EUR
103m compared to Q3 2015.
Key takes:
*R&D, administration and distribution
mEUR Q3 2016 Q3 2015 %
change
Revenue 2,903 2,120 37%
Cost of sales (2,312) (1,731) 34%
Gross profit 591 389 52%
SG&A* (158) (157) 1%
EBIT before special items 433 232 87%
Special items - - -
EBIT after special items 433 232 87%
Income from investments account for
using the equity method (20) 13 -
Net profit/(loss) 309 206 50%
Gross margin 20.4% 18.3% 2.1%-pts
EBITDA margin before special items 18.2% 15.1% 3.1%-pts
EBIT margin before special items 14.9% 10.9% 4.0%-pts
│ Third quarter 2016 Classification: Public
Leveraging on SG&A SG&A costs continue to be under control
SG&A costs (TTM)*
mEUR and percent of revenue Key takes:
• SG&A costs* relative to activity levels
continue downward in stable trend.
• Relative to activity levels, SG&A
costs* amounted to 7.2 percent in Q3
2016 – a decrease of 0.9 percentage
points compared to Q3 2015.
* R&D, administration and distribution on trailing 12 months basis.
712
660645638636622619
713
8.4%
Q2
2015
8.7%
Q4
2014
Q3
2016
7.2%
Q2
2016
7.8% 7.9%
Q4
2015
Q1
2015
Q1
2016
Q3
2015
7.7%
(0.9)%-pts
8.1% 9.0%
│ Third quarter 2016 12 Classification: Public
Service Continued progress in the underlying service business and the integration of Availon and UpWind
proceeds as planned
Service revenue
mEUR
326
299311
280
312
Q4
2015
Q2
2016
Q3
2015
Q1
2016
Q3
2016
+11%
Key takes:
• Service revenue increased by 11
percent compared to Q3 2015 driven
by both organic as well as growth
from service acquisitions.
• EBIT before special items: EUR 44m.
Margin: 14.1 percent.
• Service order backlog grew slightly
compared to Q2 2016 and 21 percent
compared to Q3 2015.
│ Third quarter 2016 13 Classification: Public
Balance sheet Continued strong balance sheet supporting the business model
14
• Improvement in net debt due to
improved earnings.
• Stable net working capital
development of EUR 4m.
• Solvency ratio at 32.9 percent.
Key takes: Assets (mEUR) Q3 2016 Q3 2015 Abs.
change
%
change
Non-current assets 2,557 2,158 399 18%
Current assets 6,780 6,061 719 12%
Total assets 9,337 8,322 1,015 12%
Key figures (mEUR) Q3 2016 Q3 2015 Abs.
change
%
change
Net debt (2,116) (1,809) 307 17%
Net working capital (787) (783) 4 1%
Solvency ratio (%) 32.9% 33.8% - (0.9)%-pts
Liabilities (mEUR) Q3 2016 Q3 2015 Abs.
change
%
change
Equity 3,073 2,813 260 9%
Non-current liabilities 986 802 184 23%
Current liabilities 5,278 4,707 571 12%
Total equity and liabilities 9,337 8,322 1,015 12%
│ Third quarter 2016 Classification: Public
Change in net working capital Satisfactory and controlled development in net working capital despite negative impact caused by
higher activity levels
NWC change over the last 12 months
mEUR
NWC change over the last 3 months
mEUR
(47)
(783)
NWC
end
Q3 2015
CCP* Trade
receiv-
ables
34
573
Payables
(337)
55
(787)
(282)
Inventories NWC
end
Q3 2016
Pre-
payments
Net
Other
liabilities
and
receivables
(787)
(71)
Payables
199
Inventories Net
Other
liabilities
and
receivables
65
Pre-
payments
NWC
end
Q3 2016
CCP*
(1,016)
299
11
Trade
receiv-
ables
(274)
NWC
end
Q2 2016
15
• Stable development primarily driven by higher
payables and net other liabilities and
receivables more than offsetting primarily
higher trade receivables due to increased
activity levels.
Key takes:
• Net working capital increased by EUR 229m in
Q3 2016 due to higher activity levels.
• The negative Q3 2016 development was mainly
driven by higher trade receivables and lower
prepayments more than offsetting lower
inventories.
Key takes:
* Construction contracts in progress.
│ Third quarter 2016 Classification: Public
Warranty provisions and Lost Production Factor Warranty consumption and LPF continue at a low level
Warranty provisions made and consumed
mEUR
Lost Production Factor (LPF)
Percent
48
28
56
44
52
1819
2826 27
Q4
2015
Q2
2016
Q3
2016
Q1
2016
Q3
2015
Provisions consumed Provisions made
• 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
1.8 percent in Q3 2016.
Key takes:
• LPF continues at a low level below 2.0.
• LPF measures potential energy production not
captured by the wind turbines.
Key takes:
0
1
2
3
4
5
6
Sep
2016
Dec
2015
Dec
2009
Dec
2014
Dec
2013
Dec
2012
Dec
2011
Dec
2010
│ Third quarter 2016 16 Classification: Public
Cash flow statement Free cash flow of EUR 155m driven by strong underlying earnings capabilities
17
Key takes: mEUR Q3 2016 Q3 2015 Abs.
change
Cash flow from operating activities before
change in net working capital 563 398 165
Change in net working capital (295) (161) 134
Cash flow from operating activities 268 237 31
Cash flow from investing activities (113) (79) 34
Free cash flow 155 158 3
Cash flow from financing activities (122) (19) 103
Change in cash at bank and in hand less
current portion of bank debt 2,612 2,304 308
• Free cash flow in line with Q3 2015
driven primarily by higher earnings
offset by change in net working
capital and cash flow from investing
activities.
• Higher cash outflow from financing
activities due to acquisition of
treasury shares as per the
announced 2016 share buy-back
programme.
Note: Change in net working capital in Q3 2016 impacted by non-cash adjustments and exchange rate adjustments with a total amount of EUR 66m.
│ Third quarter 2016 Classification: Public
Total investments Investments driven by capitalised R&D, blade moulds, and IT. Q3 2016 investments also
impacted by acquisition of Vestas leased blades facility in Lauchhammer, Germany.
Net investments
mEUR
149
95 91
96
79
83
55
22
Q4
2015
204
Q3
2015
Q2
2016
Q1
2016
113
+12
Q3
2016
178
Key takes:
• Investments excluding other acquisitions
increased by EUR 12m compared to Q3
2015 primarily driven by higher R&D
activity.
• In the quarter, EUR 22m was spent on
the transfer of the blades facility in
Lauchhammer, Germany from leased to
owned.
• Trailing 12 months net investments of
EUR 591m – adjusting for the
acquisitions underlying net investments
amount to EUR 431m.
Service acquisitions Other acquisitions
│ Third quarter 2016 18 Classification: Public
Transfer of blades
facility in Lauch-
hammer, Germany
from leased to
owned, EUR 22m.
Capital structure Capital structure targets within set boundaries
Net debt to EBITDA
×EBITDA
Solvency ratio
Percent
Q1
2016
(1.4)
Q2
2016
Q4
2015
Q3
2015
(1.7) (1.9)
<1.0
Q3
2016
(1.8)
(1.6)
Net debt to EBITDA before special items, last 12 months
Net debt to EBITDA, financial target
28
30
32
34
36
33.8
Q3
2015
30.7
Q3
2016
Q2
2016
Q4
2015
32.9
Q1
2016
30.0
30.5
33.8 35.0
Solvency ratio, financial target range
Solvency ratio
• Net debt to EBITDA decreased to (1.8) in Q3
2016.
• Development driven primarily by improved
EBITDA more than offsetting the improved net
cash position.
Key takes:
• Solvency ratio of 32.9 percent in Q3 2016.
• Q3 2016 development mainly driven by lower
inventories and improved earnings.
Key takes:
│ Third quarter 2016 19 Classification: Public
Return on invested capital Strong ROIC of 163 percent
Return on invested capital (ROIC)
Percent
-20
0
20
40
60
80
100
120
140
160
180
Q3
2016
119.1
Q2
2016
117.2
Q3
2015
Q4
2015
162.5
148.2
71.3
Q1
2016
ROIC, last 12 months EBIT margin before special items, last 12 months
Key takes:
• ROIC increased to 162.5
percent in Q3 2016 – an
improvement of 91.2
percentage points compared
to Q3 2015.
• Development primarily driven
by higher earnings and
improved net cash position.
│ Third quarter 2016 20 Classification: Public
Agenda
21
1. Orders and markets
2. Financials
3. Outlook, and questions & answers
Q3 Interim financial report,
third quarter 2016.
│ Third quarter 2016 Classification: Public
Outlook 2016 2016 outlook raised on all parameters based mainly on better visibility for the remainder of the
year
Note: Outlook for 2016 is subject to exchange rate movements.
│ Third quarter 2016 22 Classification: Public
New outlook Previous outlook
Revenue (bnEUR)
- service business is expected to continue to grow 10 – 10.5 min. 9.5
EBIT margin before special items (%)
- service business is expected to have stable margins 13 – 14 min. 12.5
Total investments (mEUR) (incl. the acquisition of Availon Holding GmbH and excl.
investments in marketable securities)
approx 600 approx 500
Free cash flow (mEUR) (incl. the acquisition of Availon Holding GmbH and excl.
investments in marketable securities)
min. 1,000 min. 800
• Dividend policy: The Board’s general intention is to recommend a dividend of 25-30 percent of
the net result of the year.
Financial calendar 2017:
• Disclosure of FY 2016 (8 February 2017).
• Annual General Meeting (6 April 2017).
• Disclosure of Q1 2017 (5 May 2017).
• Disclosure of Q2 2017 (17 August 2017).
• Disclosure of Q3 2017 (9 November 2017).
Q&A
23 │ Third quarter 2016 Classification: Public
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