First half and second quarter 2011 Fierce competition in a very fragile world 7 August 2011 │ The London Marriott West India Quay Hotel │ London 17 August 2011 │ The London Marriott West India Quay Hotel │ London
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
First half and second quarter 2011
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
First half and second quarter 2011
1. First half and second quarter 2011.
2. Order intake.
3. Guidance 2011.
4. Questions & Answers.
4
First half and second quarter 2011
Activity at Vestas
First half and second quarter 2011
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
First half and second quarter 2011
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 and second quarter 2011
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
First half and second quarter 2011
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
First half and second quarter 2011
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
First half and second quarter 2011
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
First half and second quarter 2011
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
First half and second quarter 2011
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
First half and second quarter 2011
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
First half and second quarter 2011
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
First half and second quarter 201117
The world is very fragile.
Expected 2011 order intake
First half and second quarter 2011
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
First half and second quarter 2011
46%
37%
17%
Europe Americas Asia Pacific
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
First half and second quarter 2011
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
First half and second quarter 2011
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
First half and second quarter 201122
It takes a variety of turbines to meet customers’ needs
High wind. Medium wind.Low wind.
Onshore. Offshore.
Recent product launches
First half and second quarter 2011
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
First half and second quarter 2011
Blades:Lauchhammer, GermanyBrighton, Colorado, USA
Nacelles:Ringkøbing, Denmark
24
Generators:Travemünde, Germany
Service and performance still more important to order intake
First half and second quarter 2011
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
First half and second quarter 2011
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%
Europe Americas Asia Pacific
Firm and unconditional orders
First half and second quarter 2011
MW split on geographyOrder backlog
28
ORDER BACKLOG:
8.3 GWEUR 8.0bn
Order backlog constituted by firm and unconditional orders only.
Guidance 2011
First half and second quarter 201130
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
First half and second quarter 2011
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
First half and second quarter 2011
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
First half and second quarter 201133
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.
First half and second quarter 2011
Uncertainty for 2011 still prevails.
Full year 2010 presentation,9 February 2011
34
Financial Calendar
First half and second quarter 2011
3rd Quarter 2011
9 November 2011
AarhusDenmark
4th Quarter 2011
8 February 2012
LondonUnited Kingdom
35
Key points
First half and second quarter 201136
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.
Q&A
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First half and second quarter 201138