first quarter 2015 - vestas/media/vestas/investor/investor... · 2015. 5. 6. · 2 │ first...

First quarter 2015

Vestas Wind Systems A/S

Copenhagen, 6 May 2014

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 new potential accounting

standards and policies, and 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 document, 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 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 2014 (available at vestas.com/investor) and these factors should also 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 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 document.

Disclaimer and cautionary statement

│ First quarter 2015 2

Key highlights Q1 2015 characterised by improved financial and operational performance

Record-high Q1 order intake Order intake in the quarter reached 1,750 MW.

Highest combined order backlog ever Wind turbine and service order backlog of EUR 15bn.

Return on invested capital (ROIC) at highest level ever ROIC increased to 44 percent (TTM).

Earnings improved – highest Q1 ever EBIT margin before special items at 5.2 percent – up 2.1 percentage points

compared to Q1 2014.

Guidance increased Guidance for 2015 has been increased based on higher than expected order intake

YTD, greater visibility for the year and USD development.

3 │ First quarter 2015

Agenda

4

1. Orders and markets

2. Financials

3. Summary, outlook and questions & answers

Q1 Interim financial report,

first quarter 2015

│ First quarter 2015

Market shares 2014 Three out of four external analysts have Vestas as a clear No. 1 with a market share ranging

from 11.6 to 12.3 percent

Market shares 2014 (onshore and offshore)

Percent

5

“Installations” “Wind turbine shipments” “Installations”

Source: MAKE Consulting, IHS Energy, BTM Part of Navigant, FTI Consulting.


“Grid connected”

11.0%

10.0%

3.0%

4.0%

100% = 52 GW

4.0%

32.0%

8.0%

10.0%

4.0%

9.0%

5.0% United Power

Vestas

XEMC

Goldwind

Others

MAKE

Envision

MIngyang

Enercon

GE

Siemens

Gamesa

Other

Envision

Vestas

United POwer

Suzlon Group

BTM Navigant

3.8%

4.7%

Mingyang

100% = 51 GW

7.8%

4.4%

5.8%

Goldwind

5.1%

Gamesa

GE

28.1%

Siemens

Enercon

12.3%

9.0%

9.9%

9.1%

GE

Enercon

3.8%

7.6%

Other

Siemens

100% = 52 GW

30.0%

3.9%

Gamesa 4.6%

Nordex

IHS Energy

5.0%

Goldwind

Suzlon Group 5.6%

8.9%

United POwer

8.9%

9.7%

12.0%

Mingyang

Vestas

Other

Envision

Gamesa

United Power

Enerocn

Mingyang

GE

Goldwind

Vestas

FTI

100% = 54 GW

31.8%

3.7%

3.9%

4.5%

4.8%

Siemens

5.5% Suzlon Group

9.5%

8.7%

8.7%

11.6%

7.3%

Market development – regulatory trends

6

Germany…

• Still awaiting details for the

auction design. First auction

expected end 2016/start 2017.

Norway and Sweden…

• Governments put forward

legislative proposals to

increase support for

renewables.

EMEA

Americas

IRS updates guidance on PTC…

• “Start of construction date”

changed from 1 January

2014 to 1 January 2015.

• “Place in service date”

extended to 1 January 2017

for all qualifying projects.

• Continuous construction

/effort tests satisfied if above

dates are complied with.

Note: IRS = Internal Revenue Service; RET = Renewable Energy Target.

* Expected target under China’s National Energy Administration’s (NEA) 13th 5-year plan (2016-2020).

Asia Pacific

Australian RET…

• Ongoing political negotiations

regarding adjusted level of

RET.

Continued commitment to wind

in China…

• Potentially increase 2020-

target on total accumulated

wind installations from 200

to 250 GW*.


Poland…

• Market is getting ready for

new auction system, first

auction to be organised in

H1 2016.

Overall support for renewable energy. Recent regulatory trends characterised by clarification,

transition and negotiations.

Wind turbine order intake Highest Q1 order intake ever at 1,750 MW – an increase of 47 percent. Average selling price

remains fairly stable.

Order intake

MW

Average selling price of order intake

mEUR per MW

• Q1 2015 order intake was 562 MW higher than in

Q1 2014, corresponding to an increase of 47

percent.

• USA, Brazil, Poland and China were the main

contributors to order intake in Q1 2015,

accounting for more than 60 percent.

Key takes:

• Price per MW remains fairly stable.

• Price per MW depends on a variety of factors,

i.e. wind turbine type, geography, scope and

uniqueness of offering.

Key takes:

Q1

2015

Q2

2014

1,750

1,188

2,254

Q1

2014

Q4

2014

1,170

Q3

2014

1,932

+562

0.92

Q4

2014

Q3

2014

0.87

Q2

2014

0.91

Q1

2015

Q1

2014

0.88 0.87


Market development – order intake Q1 2015 order intake in 20 different countries. Improvements mainly seen in Brazil, Poland,

China and Sweden.

Americas

MW

EMEA

MW

Asia Pacific

MW

• Development primarily driven

by Brazil with an order intake

of 286 MW compared to 28

MW in Q1 2014.

• Good activity level in USA,

Jamaica, Chile and Costa

Rica.

• Overall improvement in

Europe, especially driven by

Poland and Sweden.

• General solid activity levels

across a wide range of

countries with varying year-

over-year developments.

• Asia Pacific solely driven by

improvement in China:

- 50 MW in Q1 2014.

- 220 MW in Q1 2015.

710820

220

693

445

Q1 Q1

+340%

+18%

Q1

50

+60%

2015 2014


Market development – deliveries

Americas

MW

EMEA

MW

Asia Pacific

MW

• Higher activity level primarily

driven by USA – up by 212

MW and totalling almost 600

MW in the quarter.

• Improvements in Chile,

Uruguay and Canada, while

Mexico and Brazil declined.

• Overall decline in the EMEA-

region primarily driven by

lower activity level in

Germany.

• Improvements seen in

markets like South Africa,

Finland, Poland and France.

• Significant improvement in

Asia Pacific, however,

coming from a low base.

• Improvements in all markets

compared to last year.

718

457499483

96

Q1

6

-8%

+49%

+1,500%

Q1 Q1

2014 2015


Q1 2015 total deliveries up by 29 percent in terms of MW – totalling 1,271 MW. Improvements

mainly seen in the USA and Asia Pacific-region.

Backlog: Wind turbines and service Combined backlog increased by EUR 1.3bn to record-high EUR 15bn. Wind turbines

increased by EUR 0.8bn, while service increased by EUR 0.5bn.

Wind turbines:

EUR

7.5bn

Service:

EUR

7.5bn

EUR +0.8bn* EUR +0.5bn*

* Compared to Q4 2014.


Offshore status Mitsubishi Vestas Offshore Wind progressing according to plan

Strong technical performance

• The V164-8.0 MW turbine has received its type certificate from leading classification group DNV GL:

- Verifying compliance with tough industry quality standards.

• High running time percentage at test centre:

- The V164-8.0 MW prototype is running according to plan with limited down time.

Operational performance according to plan

• Technical and commercial milestones are progressing as planned.


V164-8.0 MW an early morning at test centre

in Oesterild, Denmark.

Agenda

12


2. Financials



first quarter 2015


Income statement Highest ever Q1 revenue and earnings leading to record-high Q1 net profit

13

• Revenue increased by 18 percent

primarily due to higher volume and

impact from USD.

• Gross profit up by 23 percent driven

by higher volume, higher average

margins and impact from USD.

• EBIT before special items almost

doubled mainly driven by higher

gross profit.

Margin: 5.2 percent.

• Significant improvement in net profit

– up by EUR 54m compared to 2014.

Key takes:


*R&D, administration and distribution

mEUR Q1 2015 Q1 2014 %

change

Revenue 1,519 1,283 18%

Cost of sales (1,293) (1,099) 18%

Gross profit 226 184 23%

Fixed costs* (147) (144) 2%

EBIT before special items 79 40 98%

Special items - (13) -

EBIT after special items 79 27 193%

Income from investments account for

using the equity method 4 - -

Net profit/(loss) 56 2 -

Gross margin 14.9% 14.3% 0.6%-pts

EBITDA margin before special items 10.6% 10.0% 0.6%-pts

EBIT margin before special items 5.2% 3.1% 2.1%-pts

Service Onshore service revenue increased by 21 percent

Service revenue (onshore and offshore)

mEUR

260235244

210

255

+21%

Key takes:

Onshore

* Including offshore in Q1 2014 (prior to closing of the offshore JV), service revenue increased by 13 percent. ** Q1 2014: 18.7 percent.

15

Q1

2014

0 0 0 0

Q1

2015

Q4

2014

Q2

2014

Q3

2014

Offshore

• Onshore service revenue increased

by approx 21 percent* compared to

Q1 2014.

• EBIT before special items: EUR 54m.

Margin: 21.2 percent**.

• Service order backlog growth of EUR

0.5bn compared to Q4 2014.

• Average duration in the service order

backlog of approx 8 years.


Balance sheet Net cash position of EUR 1.7bn

15

• Improvement in net debt due to

improved earnings and net working

capital.

• Positive net working capital

development of EUR 740m.

• Solvency ratio at 31.4 percent.

Key takes: Assets (mEUR) Q1 2015 Q1 2014 Abs.

change

%

change

Non-current assets 2,278 2,071 207 10%

Current assets 5,216 3,763 1,453 39%

Assets held for sale 103 358 255 (71)%

Total assets 7,597 6,192 1,405 23%

Key figures (mEUR) Q1 2015 Q1 2014 Abs.

change

%

change

Net debt (1,686) (483) 1,203 -

Net working capital (1,148) (408) 740 -

Solvency ratio (%) 31.4% 31.0 - 0.4%-pts

Liabilities (mEUR) Q1 2015 Q1 2014 Abs.

change

%

change

Equity 2,388 1,921 467 24%

Non-current liabilities 762 230 532 -

Current liabilities 4,447 3,836 611 16%

Liabilities ass. with assets held for sale - 205 205 (100)%

Total equity and liabilities 7,597 6,192 1,405 23%


Note: Q1 2014 Financial debts have been adjusted due to time to maturity. Q1 2014 Net working capital has been adjusted for Asset and liabilities held for sale.

Change in net working capital Net working capital development characterised by higher activity levels and higher order intake

NWC change over the last 12 months

mEUR

NWC change over the last 3 months

mEUR

Payables

(236)

Inventories

(1,148)

(3) 40

CCP*

(15)

Receiv-

ables

NWC

end

Q1 2015

Other

liabilities

NWC

end

Q1 2014

(853) (408)

Pre-

payments

327

Receiv-

ables

Payables Other

liabilities

Pre-

payments

Inventories NWC

end

Q1 2015

CCP*

360

(1,148) 45

(6) (350)

(251)

11 (957)

NWC

end

Q4 2014

16

• Positive development primarily driven by higher

prepayments and payables slightly offset by

higher inventories.

Key takes:

• Prepayments increased primarily due to higher

order intake in Q1 2015.

• Inventories and payables more or less offset

each other – both driven by higher activity levels.

Key takes:

* Construction contracts in progress.

Note: Other liabilities has been adjusted by EUR 116m due to the dividend for FY 2014 approved at the annual general meeting 30 March 2015. 12-months figures

have been adjusted for Asset and liabilities held for sale.


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

17

33

36

28

2527

18

28

34

28

22

Q1

2014

Q4

2014

Q3

2014

Q2

2014

Q1

2015

Provisions made Provisions consumed

• Warranty consumption constitutes approx 1.4

percent of revenue over the last 12 months.

• Warranty provisions made correlates with

revenue in the quarter, corresponding to approx

1.8 percent in Q1 2015.

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

Dec

2009

Dec

2013

Dec

2012

Dec

2011

Dec

2010

Dec

2014

Cash flow statement Free cash flow of EUR 146m

18

Key takes: mEUR Q1 2015 Q1 2014 Abs.

change

Cash flow from operating activities before

change in net working capital 160 68 92

Change in net working capital 49 (26) 75

Cash flow from operating activities 209 42 167

Cash flow from investing activities (63) (66) 3

Free cash flow 146 (24) 170

Cash flow from financing activities (97) 421 518

Change in cash at bank and in hand less

current portion of bank debt 49 397 348

• Free cash flow improvement of

EUR 170m driven primarily by

higher earnings and change in net

working capital.

• Cash flow from financing activities

mainly impacted by repayment and

issuance of Eurobonds.


Note: Change in net working capital in Q1 2015 impacted by non-cash adjustments and exchange rate adjustments with a total amount of EUR 258m.

Total investments Investments primarily driven by blade moulds and capitalised R&D

Net investments

mEUR

98

66

55

6663

Q1

2015

Q2

2014

-3

Q3

2014

Q4

2014

Q1

2014

19

Key takes:

• Investments more or less unchanged

compared to Q1 2014.

• Investments in the quarter was mainly

for V110 and V126 blade moulds and

capitalised R&D.

• Trailing twelve months net investments

of EUR 282m.


Capital structure Net debt to EBITDA within target, while solvency ratio is impacted primarily by change in working

capital elements and approved dividend

Net debt to EBITDA

×EBITDA

Solvency ratio

percent

20

Q1

2015

< 1,0

(1.8)

(0.5)

Q3

2014

(0.6)

Q4

2014

Q2

2014

Q1

2014

(0.7)

(1.5)

Net debt to EBITDA before special items, last 12 months

Net debt to EBITDA, mid-term financial target

35.0

34.0

33.0

32.0

0.0

34.5

33.5

31.5

32.5

31.0

34.0

min.35.0

Q2

2014

31.6

Q1

2015

31.4

Q1

2014

Q3

2014

31.0

Q4

2014

30.8

Solvency ratio, mid-term financial target

Solvency ratio

• Net debt to EBITDA fell to (1.8) in Q1 2015.

• Development driven by both improved net cash

position and improved EBITDA.

Key takes:

• Solvency ratio decreased to 31.4 percent in Q1

2015.

• Q1 development mainly driven by working

capital elements, approved dividend and an

improved cash position.

Key takes:


Green Eurobond strengthens capital structure Issuance of seven-year green Eurobond secures continued long-term financial strength and

flexibility


• Issuance of new green Eurobond in

March 2015:

- Secure long-term financing at

attractive terms.

- Strengthen balance sheet and

support solid capital structures.

- Maintain presence in the debt

capital markets.

• Issued as green Eurobond* to

support strategy – exclusive

dedication to wind energy.

• Proceeds to be used for general

corporate purposes.

Maturity profile of debt instruments

mEUR

Strong financial position and flexibility for the future.

500600

0

200

400

600

2020

2019

2017

2021

2016

2015

2018

2022

Matured Eurobond

500

800

400

600

200

1,000

0

2018

2019

2015

2020

2017

1,000

2016

2022

2021

Green Eurobond

* The Notes are in line with the stated definition of green bonds within the green bond principles (DNV GL, 19 February 2015).

Return on invested capital Record-high ROIC of 44 percent

22

Return on invested capital (ROIC)

Percent

-10

-5

0

5

10

15

20

25

30

35

40

4543.8

Q1

2015

Q1

2014

Q3

2014

Q2

2014

21.4

15.2

29.1

Q4

2014

35.3

ROIC, last 12 months EBIT margin before special items, last 12 months

Key takes:

• ROIC increased to 43.8

percent in Q1 2015 – an

improvement of 28.6

percentage points compared

to Q1 2014.

• Development primarily driven

by improved net cash position

and higher earnings.


Note: ROIC is excluding Asset and liabilities held for sale. Reported ROIC in Q1-Q3 2014 has been adjusted accordingly.

Agenda

23


2. Financials



first quarter 2015


Summary Q1 2015 results reaffirm good progress towards achieving profitable growth objectives


“Profitable Growth for Vestas” strategy

continues to be on track…

… supported by strong Q1 results

on key financial and operational

parameters:

• Order intake of 1.8 GW.

• Order backlog of EUR 15bn.

• EBIT margin of 5.2 percent.

• ROIC of 44 percent (TTM).

Outlook 2015 2015 outlook raised on revenue, EBIT margin before special items and free cash flow based on

higher than expected order intake YTD, greater visibility for the year and USD development

• Service business is expected to continue to grow with stable margins.

New outlook Previous outlook

Revenue (bnEUR) min. 7.5 min. 6.5

EBIT margin before special items (%) min. 8.5 min. 7

Total investments (mEUR) approx 350 approx 300

Free cash flow (mEUR) min. 600 min. 400


Financial calendar 2015:

• Disclosure of Q2 2015 (19 August 2015).

• Disclosure of Q3 2015 (5 November 2015). Q&A


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Thank you for your attention

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