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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.
5 May, 2017First quarter 2017 (Public)3
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
5 May, 2017First quarter 2017 (Public)4
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.
5 May, 2017First quarter 2017 (Public)5
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
5 May, 2017First quarter 2017 (Public)6
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.
5 May, 2017First quarter 2017 (Public)7
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.
5 May, 2017First quarter 2017 (Public)8
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.
5 May, 2017First quarter 2017 (Public)9
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.
5 May, 2017First quarter 2017 (Public)10
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
5 May, 2017First quarter 2017 (Public)12
1. Orders and markets
2. Financials
3. Outlook and questions & answers
Q1 Interim financial report,
first quarter 2017
First quarter 2017 (Public)13
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.
First quarter 2017 (Public)14
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:
First quarter 2017 (Public)15
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:
First quarter 2017 (Public)16
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.
First quarter 2017 (Public)17
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
First quarter 2017 (Public)18
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:
First quarter 2017 (Public)19
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:
First quarter 2017 (Public)20
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.
First quarter 2017 (Public)21
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:
First quarter 2017 (Public)22
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
5 May, 2017First quarter 2017 (Public)23
1. Orders and markets
2. Financials
3. Outlook and questions & answers
Q1 Interim financial report,
first quarter 2017
Outlook 2017
5 May, 2017First quarter 2017 (Public)24
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
First quarter 2017 (Public)25
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.
5 May, 2017First quarter 2017 (Public)26
Q&AFinancial calendar 2017:
• Disclosure of Q2 2017 (17 August)
• Disclosure of Q3 2017 (9 November)
Thank you for your attention
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