Annual report 2010
Summary: The year’s order intake of 8,673 MW had a value of EUR 8.6bn, corresponding to EUR 1m per MW, which is on level with 2009, with an order intake of 3,072 MW at a value of EUR 3.2bn. Measured in MW, the order intake rose by 182 per cent.
In 2010, Vestas reached its expected revenue, earnings and net working capital as per announcement of 22 November 2010.
After record-high deliveries of 2,557 MW in the fourth quarter, the year’s total deliveries to the customers in 2010 rose by 1,078 MW to 5,842 MW from 4,764 MW in 2009. The 36 per cent increase in revenue to EUR 6.9bn is due to the 23 per cent increase in deliveries. However, according to the wind organisation, GWEC, the total wind power market fell from 38.6 GW in 2009 to an installed capacity of 35.8 GW in 2010.The service business, which as per 31 December 2010 comprised 31,000 MW, generated revenue of EUR 623m – an increase of 24 per cent. The EBIT margin was 6.8 per cent before and 4.5 per cent after one-off costs of EUR 158m for closure of factories and lay-offs as announced on 26 October 2010.
Free cash flow was EUR (733)m after investments of a total of EUR 789m in regionalisation and quality, research and technology development. During the second half of 2010, Vestas generated a free cash flow of EUR 325m, of which EUR 145m was generated in the fourth quarter. The free cash flow was EUR (842)m in 2009. The interest-bearing net debt, which rose to EUR 896m as at 30 June 2010, stood at EUR 579m at the end of 2010, which is equivalent to the corporate bond of EUR 600m, issued by Vestas on 23 March 2010. At the end of the year, Vestas did not draw on its credit lines. At 31 December 2010, Vestas’ backlog of firm and unconditional orders amounted to 7,622 MW at a value of EUR 7.7bn against 5,015 MW and EUR 5.4bn the year before.
The incidence of industrial injuries was reduced by 38 per cent to 5.0 injuries per one million working hours, the customer loyalty remained unchanged, whereas the green energy share only reached 42 per cent, which is due to lack of access to renewable electricity at several new locations. Vestas’ wind power plants once again improved their performance in 2010; Lost Production Factor (share of possible wind, which is not harvested) is now below 3 per cent at the wind power plants where Vestas guarantees the performance. At the end of 2010, Vestas had installed a total of 44,114 MW.
The outlook for 2011 is revenue of around EUR 7bn with an EBIT margin of 7 per cent after an expected increase of approx EUR 100m in depreciations and amortisations. The EBIT margin is also affected by the fact that earnings on new products will only be generated in 2012. Revenue and earnings are expected to be fairly evenly distributed between the first and the second half of the year. For the first quarter, Vestas forecasts a minor loss. The free cash flow is still expected to be positive, even though investments are now expected to amount to EUR 850m against the previous forecast of EUR 650m.
There will be no bonus payout for 2010. The Group bonus targets for 2011 include an EBIT margin of 8.4 per cent (35 per cent weighting), a free cash flow of EUR 200m (30 per cent), a customer loyalty index of 72 (20 per cent) and revenue of EUR 7bn (15 per cent). Bonus targets in the business units also include incidence of industrial injuries, inventory days, production of the wind power plants, etc. In order to increase focus on profitability, the requirements for EBIT margin and free cash flow included in the Group bonus targets are higher than the guidance for the year.
Vestas will disclose its expectations for 2012 in February 2012.
2009, 2010 and 2011 in short
| mEUR | Guidance for 2011 | Full year 2010 | Full year 2009 | Q4 2010 | Q4 2009 |
| Order intake, firm and unconditional orders (MW) | 7,000-8,000 | 8,673 | 3,072 | 2,106 | 1,022 |
| Production and shipments (MW) | 6,000 | 4,057 | 6,131 | 1,626 | 2,439 |
| Delivered to customers (MW) | -- | 5,842 | 4,764 | 2,557 | 1,419 |
| Revenue | 7,000 | 6,920 | 5,079 | 3,123 | 1,474 |
| - of which service revenue | 700 | 623 | 504 | 169 | 140 |
| EBIT margin (%) | 7 | 6.8*) | 4.9 | 8.3 | (3.8) |
| EBIT margin, service (%) | 15 | 14 | 15 | -- | -- |
| Financial items, net | (60) | (72) | (48) | (27) | (16) |
| Tax rate (%) | 28 | 34 | 39 | -- | -- |
| Net working capital (%) | -- | 9.7 | 6.2 | -- | -- |
| Investments - property, plant and equipment - intangible assets | 550 300 | 458 328 | 606 227 | 150 98 | 113 71 |
| Free cash flow | > 0 | (733) | (842) | 147 | 181 |
| Warranty provisions (%) | < 3.0 | 2.8 | 5.8 | 1.9 | 8.5 |
| Incidence of industrial injuries | ≤ 5.0 | 5.0 | 8.1 | 5.5 | 4.0 |
| Customer loyalty (index) | 72 | 64 | 64 | -- | -- |
| Share of green energy (%) | 40 | 42 | 49 | 33 | 44 |
| Share of green electricity (%) | 95 | 74 | 85 | 62 | 81 |
| Quality level, year-end (Sigma) | ≥ 5 | ~ 5 | > 4 | -- | -- |
*) before one-off costs of EUR 158m.
Press and analyst meeting in London
Wednesday, 9 February 2011 at 2 p.m. GMT (London time)/3 p.m. CET
In connection with the announcement of this annual report, an information meeting will be held today, Wednesday, at 2 p.m. GMT (London time)/3 p.m. CET for analysts, investors and the press at:
The London Marriott West India Quay Hotel
22 Hertsmere Rd
Canary Wharf
London, E14 4ED
England.
Further details on www.vestas.com/investor.
Any questions may be addressed to Ditlev Engel, President and CEO or Peter Wenzel Kruse, Senior Vice President of Group Communications, both on telephone +45 9730 0000.
Yours sincerely
Vestas Wind Systems A/S
| Bent Erik Carlsen Chairman of the Board of Directors | Ditlev Engel President & CEO |