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First quarter 2014
Vestas Wind Systems A/S
Aarhus, 9 May 2014
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 2013 (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
│ First quarter 2014 2
Agenda
3 │ First quarter 2014
1. Introduction
2. Orders and markets
3. Financials
4. Outlook, summary and questions & answers
Q1 Interim financial report,
first quarter 2014
Focus on Profitable Growth for Vestas Profitable growth strategy to strengthen global leadership
4 │ First quarter 2014
Grow profitably in mature &
emerging markets
Markets & customers
OBJECTIVES STRATEGY PROGRESS
Governance, leadership & culture
Capture full potential of the
service business
Service
Reduce the levelised
cost of energy
Products
Operational excellence
Efficiency
Solid order intake in Q1.
New head of Service appointed.
Launch of Vestas PowerPlusTM.
Pre-commercial installation of V110-2.0 MW.
V164-8.0 MW prototype.
Earnings improved significantly in Q1.
NWC maintained at low level.
Profitable
Growth for
Vestas
MHI Vestas Offshore Wind becomes operational Strong joint venture to become a global leader in offshore wind power
5 │ First quarter 2014
Announcement of JV
between Vestas and MHI
Approval from competition
authorities
MHI Vestas Offshore Wind
- operational
27 September 2013 28 February 2014 1 April 2014
• 380 employees headquartered in Aarhus, Denmark.
• Financial impact in Q2 2014.
• V164-8.0 MW on track.
Market shares 2013 External analysts have Vestas as a clear No. 1 with a market share of more than 13 per cent
Market shares 2013 (onshore and offshore)
Percentage
6 │ First quarter 2014
• Three leading external analysts
place Vestas as No. 1 in wind.
• Despite drop in US installations in
2013, Vestas was still able to
claim No. 1 position.
• Vestas’ strong global position
balances the dependency on
single markets:
- Deliveries in 31 countries.
- Order intake in 37 countries.
Key takes:
3.7%
Vestas
3.4%
4.9%
13.2%
31.7%
8.0%
MAKE
6.3%
10.1%
10.2%
3.9%
4.6%
100% = 36 GW
Enercon
Suzlon Group
Siemens
Nordex
United Power
Gamesa
Goldwind
Others
Mingyang
GE Gamesa
GE
3.3%
3.5%
4.0% United Power
BTM
Goldwind
5.3%
Siemens
Mingyang
Enercon
Other
100% = 37 GW
Suzlon Group
Nordex
Vestas
30.5%
6.6%
7.4%
9.8%
11.0%
5.5%
13.1%
Other
Nordex
GE
Siemens
Enercon
100% = 37 GW
Goldwind
29.3%
3.5%
EER
4.1%
5.4%
Vestas
United Power
3.4%
Suzlon Group
Ming Yang
Gamesa
10.6%
13.3%
10.0%
8.1%
5.6%
6.7%
“Grid connected” “Installed capacity” “MW supplied”
Source: MAKE Consulting, EER, BTM Navigant
Agenda
7 │ First quarter 2014
1. Introduction
2. Orders and markets
3. Financials
4. Outlook, summary and questions & answers
Q1 Interim financial report,
first quarter 2014
Wind turbine order intake Order intake almost doubled in Q1 2014. Average price per MW of EUR 0.88m
Order intake
MW
Average selling price of order intake
mEUR per MW
8 │ First quarter 2014
• Q1 2014 order intake was almost twice as high
as in Q1 2013.
• USA announced orders of 292 MW in Q1 2014
corresponding to 25 per cent of total order intake.
Key takes:
• Price per MW impacted by a larger amount of
supply-only contracts.
• Price per MW depends on a variety of factors,
i.e. wind turbine type, geography, scope and
uniqueness of offering.
Key takes:
644
Q1
2013
Q1
2014
1,641
Q4
2013
Q3
2013
+544
1,188
1,547
2,132
Q2
2013
0.88
Q4
2013
Q1
2014
Q2
2013
Q3
2013
1.04
Q1
2013
1.04
0.89
0.97
Backlog: Wind turbines and service Combined backlog increased by EUR 300m* to EUR 13.8bn – equally split between wind turbines
and service
Wind turbines:
EUR
6.9bn
Service:
EUR
6.9bn
EUR +0.1bn* EUR +0.2bn*
9 │ First quarter 2014
* Compared to Q4 2013.
Agenda
10 │ First quarter 2014
1. Introduction
2. Orders and markets
3. Financials
4. Outlook, summary and questions & answers
Q1 Interim financial report,
first quarter 2014
Income statement Significant improvement in Q1 2014 earnings
*R&D, administration and distribution
mEUR Q1 2014 Q1 2013 %
change
Revenue 1,283 1,096 17%
Cost of sales (1,099) (1,038) 6%
Gross profit 184 58 217%
Fixed costs* (144) (166) (13)%
EBIT before special items 40 (108) -
Special items (13) (14) (7)%
EBIT after special items 27 (122) -
Net profit/(loss) 2 (151) -
Gross margin 14.3% 5.3% 9.0%-pts
EBITDA margin before special items 10.0% (1.1)% 11.1%-pts
EBIT margin before special items 3.1% (9.9)% 13.0%-pts
11 │ First quarter 2014
• Gross profit more than tripled
compared to Q1 2013 due to
improved project margins, increased
revenue, lower fixed capacity costs
and lower depreciation.
Note: Q1 2013 was impacted by a
couple of low-margin projects.
• EBIT before special items in posi-
tive territory at EUR 40m.
• Net profit of EUR 2m.
• EBIT margin before special items
increased by 13 percentage points
to 3.1 per cent.
Key takes:
Service Satisfactory development continues
Service revenue
mEUR
260
227
250
217 225
Q4
2013
Q3
2013
Q2
2013
Q1
2013
Q1
2014
+4%
12 │ First quarter 2014
• Service revenue increased by 4 per
cent compared to Q1 2013.
• Q1 2014 EBIT before allocation of
Group costs: EUR 58m.
Margin: 26 per cent.
• Renewal rate of expiring service
contracts at 50 per cent year-to-
date.
Key takes:
Balance sheet Capital increase and lower financial debts further improve balance sheet strength
13 │ First quarter 2014
• Net debt translated into net cash:
From EUR (1)bn to EUR 0.5bn.
• Net working capital improvement of
EUR 767m due to improved cash
conversion and cash collection.
• Solvency ratio improved by 7.6
percentage points to 31 per cent
mainly due to the equity increase
conducted early February 2014.
Key takes: Assets (mEUR) Q1 2014 Q1 2013 Abs.
change
%
change
Non-current assets 2,071 2,436 (365) (15)%
Current assets 3,763 3,783 (20) (1)%
Assets held for sale 358 136 222 -
Total assets 6,192 6,355 (163) (3)%
Key figures (mEUR) Q1 2014 Q1 2013 Abs.
change
%
change
Net debt (476) 972 (1,448) -
Net working capital (570) 197 (767) -
Solvency ratio (%) 31.0 23.4 - 7.6%-pts
Liabilities (mEUR) Q1 2014 Q1 2013 Abs.
change
%
change
Equity 1,921 1,489 432 29%
Non-current liabilities 830 1,344 (514) (38)%
Current liabilities 3,236 3,522 (286) (8)%
Liabilities ass. with assets held for sale 205 0 205 -
Total equity and liabilities 6,192 6,355 (163) (3)%
Change in net working capital Negative net working capital maintained
NWC change over the last 12 months
mEUR
NWC change over the last 3 months
mEUR
46
197
Pre-
payments
142
Inventories
(569)
(119)
Payables
(194)
Other
liabilities
NWC
end
Q1 2014
(570)
Receiv-
ables
CCP* NWC
end
Q1 2013
(73)
31 54
Receiv-
ables
NWC
end
Q4 2013
(596) (570)
NWC
end
Q1 2014
Other
liabilities
Pre-
payments
14
(228)
Payables
68
Inventories
87
CCP*
14 │ First quarter 2014
• Improved cash conversion and cash collection.
• Release of more than EUR 750m.
• Inventories reduced due to lower MW under
completion and good cash conversion.
Key takes:
• Good NWC management in Q1 2014.
• Higher payables almost offsetting increased
inventories, lower prepayments and higher
receivables.
Key takes:
* Construction contracts in progress.
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)
Percentage
15 │ First quarter 2014
43
28
232325
11
2828
17
28
Q3
2013
Q1
2014
Q4
2013
Q1
2013
Q2
2013
Provisions consumed Provisions made
0
1
2
3
4
5
Dec
2013
Dec
2011
Dec
2012
Dec
2010
Dec
2009
• Warranty consumption constitutes approx 1.5 per
cent of revenue over the last 12 months.
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 statement Improved earnings cascade into free cash flow
16 │ First quarter 2014
Key takes: mEUR Q1 2014 Q1 2013 Abs.
change
Cash flow from operating activities before
change in working capital 68 (59) 127
Change in working capital (26) 36 (62)
Cash flow from operating activities 42 (23) 65
Cash flow from investing activities (66) (37) (29)
Free cash flow (24) (60) 36
Cash flow from financing activities 421 (309) 730
Change in cash at bank and in hand less
current portion of bank debt 397 (369) 766
• Free cash flow improvement of
EUR 36m driven by higher
earnings.
• Cash flow from financing activities
increased by EUR 421m primarily
due to the capital increase
conducted in early February 2014.
Total investments Q1 investments in V110 blade moulds for the US market and V164 technology
Net investments
mEUR
90
48
64
37
66
Q1
2014
Q2
2013
+29
Q3
2013
Q4
2013
Q1
2013
17 │ First quarter 2014
Key takes:
• Investments increased by EUR 29m
mainly due to V110 blade moulds for the
US market and V164 technology.
• Trailing twelve months net investments
of EUR 268m.
Capital structure Net debt to EBITDA and solvency ratio within targets
Net debt to EBITDA
×EBITDA
Solvency ratio
Percentage
18 │ First quarter 2014
<1.0
(0.1) (0.6)
Q1
2014
Q4
2013
1.4 1.5
Q3
2013
Q2
2013
Q1
2013
1.8
Net debt to EBITDA before special items, last 12 months
Net debt to EBITDA, mid-term financial target
20.5
23.4
Q1
2014
22.8
32 31.0
min.30.0
Q2
2013
Q4
2013
Q3
2013
22
28
0
Q1
2013
26
30
24
27.0
Solvency ratio, mid-term financial target
Solvency ratio
• Net debt to EBITDA fell to (0.6) in Q1 2014.
• Development driven by both net debt reduction
and improved EBITDA.
Key takes:
• Solvency ratio increased to 31 per cent in Q1
2014.
• Q1 development mainly driven by capital
increase.
Key takes:
Return on invested capital Double-digit ROIC for the first time since Q4 2010
19
Return on invested capital (ROIC)
Percentage
14
12
10
8
6
4
2
0
(2)
(4)
(6)
Q1
2014
min.10.0
14.5
Q4
2013
Q2
2013
3.2
7.7
Q3
2013
Q1
2013
1.6 2.1
16
ROIC, last 12 months EBIT margin before special items, last 12 months
ROIC, mid-term financial target
│ First quarter 2014
Key takes:
• ROIC increased to 14.5 per
cent in Q1 2014 – an
improvement of 12.4
percentage points compared
to Q1 2013.
• Development primarily driven
by improved earnings.
Agenda
20 │ First quarter 2014
1. Introduction
2. Orders and markets
3. Financials
4. Outlook, summary and questions & answers
Q1 Interim financial report,
first quarter 2014
Outlook Outlook for 2014 maintained
21 │ First quarter 2014
• Service business is expected to continue to grow with stable margins.
Revenue (bnEUR) min. 6
EBIT margin before special items (%) min. 5
Total investments (mEUR) approx 250
Free cash flow (mEUR) min. 300
Focus remains on Profitable Growth for Vestas Executing on the strategy to strengthen global leadership
22 │ First quarter 2014
Capital Markets Day, 12 June 2014
at Vestas’ headquarters in Aarhus,
Denmark:
• Elaboration of ”Profitable
Growth for Vestas”
Please register no later than on
28 May 2014 through email to
Further details at
vestas.com/investor.
Steady progress… Q1 2014
… in executing on mid-term strategy.
Financial calendar 2014:
• Capital Markets Day (12 June 2014).
• Disclosure of Q2 2014 (20 August 2014).
• Disclosure of Q3 2014 (7 November 2014). Q&A
23 │ First quarter 2014
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
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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.
Thank you for your attention