Interim financial report, first quarter 2010
Company announcement from
Vestas Wind Systems A/S
Randers, 28 April 2010
Interim financial report, first quarter 2010
Company announcement No. 21/2010
Page 1 of 30
Interim financial report, first quarter 2010
Results and order intake in line with expectations. Significant increase in
investments and number of staff.
Summary: Vestas generated first-quarter revenue of EUR 755m, a drop of 32 per
cent, achieving an EBIT of EUR (96)m, against EUR 76m in the first quarter of
2009. The EBIT margin thus declined from 6.9 per cent to (12.7) per cent due to
the expected very low capacity utilisation. Net working capital stood at 21 per
cent of expected annual revenue, against 8 per cent the year before. The
first-quarter order intake was 1,258 MW, and the value of the backlog of firm
and unconditional orders amounted to EUR 2.9bn at 31 March 2010. From 31 March
to 27 April 2010, Vestas' announced order intake amounted to 2,014 MW inclusive
of the firm and unconditional order of 1,500 MW from EDP Renováveis. Safety at
Vestas' work places improved further, and renewable energy accounted for 43 per
cent of Vestas' total energy consumption in the quarter. The forecast for 2010
is retained; an intake of firm and unconditional orders for 8,000-9,000 MW, an
EBIT margin of 10-11 per cent, a net working capital of 15 per cent and revenue
of EUR 7bn. Based on the order intake and market momentum, Vestas will now be
launching full staffing in the USA, which contributes to Vestas expecting to
employ a total of 3,400 employees in 2010. Furthermore, Vestas will also invest
funds in a service and maintenance centre in Colorado, USA, and combined with
the sales release of the V112-3.0 MW turbine for both onshore and offshore at
the end of August, this represents a EUR 400m increase for the 2010 investment
programme to EUR 1.0bn.
Q1 2010 at a glance (against Q1 2009)
- 64% Vestas shipped a total of 178 wind turbines
- a decrease of 64 per cent
- 56% Vestas shipped wind power systems with an aggregate capacity of 387 MW
- a decrease of 56 per cent
- 32% Vestas generated revenue of EUR 755m
- a decrease of 32 per cent
- EUR 172m EBIT amounted to EUR (96)m
- a decrease of EUR 172m
- EUR 138m Profit after tax amounted to EUR (82)m
- a decrease of EUR 138m
- 3% The number of employees fell to 20,693
- a decrease of 3 per cent
- 66% Industrial injuries per one million working hours was reduced to 4.4
- a reduction of 66 per cent
+ 4 % points The share of renewable energy increased to 43 per cent
- an increase of 4 percentage points
The Group's financial performance in Q1 2010
--------------------------------------------------------------------------------
| | Q1 | Q1 | Full |
| | 20101) | 20091) | year |
| | | | 2009 |
--------------------------------------------------------------------------------
| Revenue (mEUR) | 755 | 1,105 | 6,636 |
--------------------------------------------------------------------------------
| EBIT (mEUR) | (96) | 76 | 856 |
--------------------------------------------------------------------------------
| EBIT margin (%) | (12.7) | 6.9 | 12.9 |
--------------------------------------------------------------------------------
| Profit after tax (mEUR) | (82) | 56 | 579 |
--------------------------------------------------------------------------------
| Net working capital (% of | 21 | 8 | 19 |
| revenue) | | | |
--------------------------------------------------------------------------------
| Cash flow from operating | (398) | (195) | (34) |
| activities (mEUR) | | | |
--------------------------------------------------------------------------------
1) Neither audited nor reviewed.
Revenue declined by 32 per cent in the first quarter of 2010 to EUR 755m in line
with expectations. The EBIT margin therefore fell to (12.7) per cent. The
decline in revenue and earnings reflects the much lower level of activity and
Vestas' decision not to adjust its capacity further because of short-term market
developments. Vestas' capacity at year-end 2010 will be 10,000 MW. Having
shipped only 387 MW in the first quarter, Vestas was as expected thus far from
utilising its capacity.
Outlook for 2010
Of the expected intake of firm and unconditional orders of 8,000-9,000 MW,
Europe is still expected to contribute nearly 50 per cent, the Americas about 30
per cent and Asia/Pacific approx 20 per cent.
Adjusted for input prices, in general Vestas expects that prices and conditions
remain unchanged in 2010 relative to 2009. In 2010, Vestas expects to achieve an
EBIT margin of 10-11 per cent and revenue of EUR 7bn. The lower EBIT margin
relative to 2009 is due to Vestas' excess capacity and the fact that the far
majority of revenue, and especially earnings, will be generated at the end of
the second half of the year, which will have a material impact on the margin.
Revenue in the service business is expected to remain unchanged at EUR 600m with
an EBIT margin of 15 per cent. Net working capital will continue to fluctuate
heavily in 2010 and is expected to amount to 15 per cent of annual revenue at
the end of the year.
Investments in property, plant and equipment and intangible assets are now
expected to amount to EUR 650m and EUR 350m, respectively. The revised
expectations for capital expenditure are due primarily to the V112-3.0 MW
turbine being launched sooner and in greater volumes than previously planned.
The additional investments will be allocated to, among other things, new blade
moulds. Furthermore, a service and maintenance centre will be established
adjacent to the blade and nacelle factory in Brighton, Colorado, USA.
Financial items are still expected to amount to EUR (25)m. The effective tax
rate is expected to be 28 per cent. Warranty provisions are expected to
represent 3 per cent in 2010.
Vestas now expects to recruit 3,400 employees, net, in 2010 against 1,300 as
previously expected. The number of staff at year-end 2010, will thus amount to
around 24,000. The accelerated build-up of human resources is primarily
attributable to the launch of production in the USA. Vestas Technology R&D is
still expected to increase its employee headcount by a total of 500 to approx
2,000 during 2010.
Assumptions and risks
As a result of the credit crisis, Vestas' order intake dropped considerably from
the autumn of 2008 to the end of 2009. The expected improvement in order intake
has materialised for Vestas, and a number of banks are venturing into project
funding, which will henceforth create a more robust financial infrastructure for
the industry and its customers. As the banks are now much more critical than
they were before the credit squeeze, processing times and documentation
requirements have gone up. This is clearly to the benefit of the financially
strong blue-chip providers. A setback in the credit market would adversely
affect the wind turbine market. Similarly, low prices of fossil fuels could
postpone demand, and lower energy consumption caused by economic trends could
also affect demand for wind power plants.
Prices of a number of components are again starting to rise. As a general rule,
Vestas' contracts take such price increases into account so that the final price
of the projects will reflect developments in input prices. This means that
Vestas' margin is relatively robust towards fluctuating input prices.
Large-scale investments throughout the supply chain have eliminated any
immediate risk of bottlenecks and, by extension, Vestas' need for buffer stocks,
which will be reduced in the course of 2010.
Other than the aforementioned, the most important risk factors include
additional warranty provisions due to quality issues, transport costs,
disruptions in production and in relation to wind turbine installation as well
as potential patent disputes. The number of providers and sub-suppliers is
growing, leading to intensified competition throughout the value chain.
Vestas operates with three types of contracts: “supply-only”,
“supply-and-installation” and “turnkey”. The underlying operating risk is lowest
when dealing with supply-only orders, but they do, however, increase
quarter-on-quarter fluctuations in revenue and EBIT as this type of order is not
recognised as revenue until the turbines have been delivered according to the
contractual terms.
Several banks now require that one supplier is responsible for the whole
project, which means that the trend towards more supply-only orders in recent
years has reversed. In 2009, supply-only orders accounted for 25 per cent of
revenue excluding service. Revenue from supply-and-installation and turnkey
orders, in which Vestas is responsible for installing and connecting the
turbines to the power grid and for the entire project including all engineering
works, respectively, is recognised as the work is performed, providing a more
balanced income flow. The trend towards a higher degree of complexity raises the
access barriers, but the underlying operating risk is higher than it is for
supply-only orders. There are no differences between the contract types in terms
of the payment profile.
Vestas since 2006:
Improved quality, strengthened R&D efforts and greater profitability
--------------------------------------------------------------------------------
| | Q1 | Full | Full | Full | Full |
| | 20101) | year | year | year | year |
| | | 2009 | 200 | 2007 | 2006 |
| | | | 8 | | |
--------------------------------------------------------------------------------
| Order intake | 1.3 | 3.2 | 6.4 | 5.5 | 4.9 |
| (bnEUR) | | | | | |
--------------------------------------------------------------------------------
| Order intake (MW) | 1,258 | 3,072 | 6,019 | 5,613 | 5,559 |
--------------------------------------------------------------------------------
| Revenue (mEUR) | 755 | 6,636 | 6,035 | 4,861 | 3,854 |
--------------------------------------------------------------------------------
| Gross margin (%) | 5.8 | 21.7 | 19.5 | 17.0 | 12.0 |
--------------------------------------------------------------------------------
| Warranty provisions | 3.0 | 3.5 | 4.0 | 5.0 | 4.5 |
| (%) | | | | | |
--------------------------------------------------------------------------------
| EBIT margin (%) | (12.7) | 12.9 | 11.1 | 9.1 | 5.2 |
--------------------------------------------------------------------------------
| Net working capital | 21 | 19 | 5 | (1) | 3 |
| (%) | | | | | |
--------------------------------------------------------------------------------
| Return on invested | 4.12) | 23.9 | 34.1 | 30.9 | 11.9 |
| capital (%) | | | | | |
--------------------------------------------------------------------------------
| Investments in | 82 | 606 | 509 | 265 | 153 |
| property, plant and | | | | | |
| (mEUR) | | | | | |
--------------------------------------------------------------------------------
| Number of | 20,648 | 20,832 | 17,924 | 13,820 | 11,334 |
| employees, average | | | | | |
--------------------------------------------------------------------------------
| Number of R&D | 1,673 | 1,490 | 1,345 | 650 | 519 |
| employees, end of | | | | | |
| period | | | | | |
--------------------------------------------------------------------------------
1) Neither audited nor reviewed.
2) Calculated over a 12-month period.
Vestas is managed and developed with a long-term perspective. Accordingly,
Vestas should not be judged on the basis of its quarterly results as they will
reflect fluctuations in the level of activity and changes in contract types. In
2005-2006, Vestas initiated a sharp improvement in prices and conditions,
including not least the introduction of advance payments and a reduced warranty
period, the standard of which is now two years against previously up to five
years. These steps significantly reduced the risk on Vestas' balance sheet. A
key factor in Vestas' further progress is the improved ability to identify,
control and price risks at all project stages and during the operational period
of a wind power plant. This work is organised under a Contract Review Function,
which reports to the CFO. Together with the CEO, the Contract Review Function
reviews all projects in excess of EUR 15m. Smaller projects are handled in the
individual sales business units.
The higher prices coupled with far more effective production and improved
quality have helped to lift Vestas' profitability. Going forward, new products
such as the V112-3.0 MW, the V100-1.8 MW and the 6.0 MW turbine for offshore use
and services in connection with the entire wind power plant coupled with
ever-improving productivity and quality, regionalisation and more balanced
output will be the drivers behind improved competitive strength and the expected
increase of Vestas' earnings, as announced in Triple15 - no later than 2015,
Vestas' EBIT margin and revenue must be 15 per cent and EUR 15bn, respectively.
As part of the No. 1 in Modern Energy strategy, Vestas will continue to invest
large amounts in production facilities. Going forward, Vestas expects its
headcount to rise at a lower rate than its business volume because of enhanced
efficiency, improved turbine performance and economies of scale. A key measure
in this context is the ongoing standardisation of Vestas' organisation, which
will facilitate communications and collaboration across the 14 business units.
Vestas will therefore be able to maintain a high return on invested capital.
Financial calendar 2010
18 August 2010 Publication of Q2 2010
Press and analyst meeting in London, England
1-2 September 2010 Capital Markets Day, Colorado, USA
Further info on page 16.
26 October 2010 Publication of Q3 2010
Press and analyst meeting in New York, USA
- o -
Press and analyst meeting in New York
Wednesday, 28 April 2010 at 9 a.m. EST (New York time)/3 p.m. (CET)
In connection with the announcement of this interim financial report, an
information meeting will be held today, Wednesday, at 9 a.m. EST (New York
time)/3 p.m. (CET) for analysts, investors and the press at the Four Seasons
Hotel i New York, USA. Further details on page 16 or on vestas.com/investor.
Yours sincerely
Vestas Wind Systems A/S
--------------------------------------------------------------------------------
| Bent Erik Carlsen | Ditlev Engel |
| Chairman of the | President & CEO |
| Board of Directors | |
--------------------------------------------------------------------------------
This interim report is available in Danish and English. In case of doubt, the
Danish version shall apply.
--------------------------------------------------------------------------------
| Financial highlights for the | | | |
| Group | | | |
--------------------------------------------------------------------------------
| mEUR | Q1 20101) | Q1 20091) | Full year |
| | | | 2009 |
--------------------------------------------------------------------------------
| Highlights | | | |
--------------------------------------------------------------------------------
| Income statement | | | |
--------------------------------------------------------------------------------
| Revenue | 755 | 1,105 | 6,636 |
--------------------------------------------------------------------------------
| Gross profit | 44 | 216 | 1,441 |
--------------------------------------------------------------------------------
| Profit before financial income | (44) | 123 | 1,074 |
| and expenses, depreciation and | | | |
| amortisation (EBITDA) | | | |
--------------------------------------------------------------------------------
| Operating profit (EBIT) | (96) | 76 | 856 |
--------------------------------------------------------------------------------
| Profit of financial items | (18) | 2 | (48) |
--------------------------------------------------------------------------------
| Profit before tax | (114) | 78 | 809 |
--------------------------------------------------------------------------------
| Net profit for the period | (82) | 56 | 579 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Balance sheet | | | |
--------------------------------------------------------------------------------
| Balance sheet total | 6,540 | 5,435 | 6,435 |
--------------------------------------------------------------------------------
| Equity | 3,296 | 2,025 | 3,364 |
--------------------------------------------------------------------------------
| Provisions | 251 | 249 | 356 |
--------------------------------------------------------------------------------
| Average interest-bearing | (228) | (48) | (55) |
| position (net) | | | |
--------------------------------------------------------------------------------
| Net working capital (NWC) | 1,468 | 553 | 1,235 |
--------------------------------------------------------------------------------
| Investments in property, plant | 82 | 145 | 606 |
| and equipment | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Cash flow statement | | | |
--------------------------------------------------------------------------------
| Cash flow from operating | (398) | (195) | (34) |
| activities | | | |
--------------------------------------------------------------------------------
| Cash flow from investing | (149) | (185) | (808) |
| activities | | | |
--------------------------------------------------------------------------------
| Cash flow from financing | 520 | 308 | 1,075 |
| activities | | | |
--------------------------------------------------------------------------------
| Change in cash at bank and in | (27) | (72) | 233 |
| hand less current portion of | | | |
| bank debt | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Ratios | | | |
--------------------------------------------------------------------------------
| Financial ratios2) | | | |
--------------------------------------------------------------------------------
| Gross margin (%) | 5.8 | 19.5 | 21.7 |
--------------------------------------------------------------------------------
| EBITDA margin (%) | (5.8) | 11.1 | 16.2 |
--------------------------------------------------------------------------------
| EBIT margin (%) | (12.7) | 6.9 | 12.9 |
--------------------------------------------------------------------------------
| Return on invested capital3) | 4.1 | 7.8 | 23.9 |
| (ROIC) (%) | | | |
--------------------------------------------------------------------------------
| Solvency ratio (%) | 50.4 | 37.3 | 52.3 |
--------------------------------------------------------------------------------
| Return on equity3) (%) | 3.5 | 7.4 | 21.8 |
--------------------------------------------------------------------------------
| Gearing (%) | 26.1 | 18.3 | 10.4 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Share ratios2) | | | |
--------------------------------------------------------------------------------
| Earnings per share4) (EUR) | 0.5 | 0.7 | 2.9 |
--------------------------------------------------------------------------------
| Book value per share | 16.2 | 10.9 | 16.5 |
--------------------------------------------------------------------------------
| Price/book value | 2.5 | 3.0 | 2.6 |
--------------------------------------------------------------------------------
| Cash flow from operating | (2.0) | (1.1) | (0.2) |
| activities per share | | | |
--------------------------------------------------------------------------------
| Dividend per share | 0.0 | 0.0 | 0.0 |
--------------------------------------------------------------------------------
| Payout ratio (%) | 0.0 | 0.0 | 0.0 |
--------------------------------------------------------------------------------
| Share price at the end of the | 40.2 | 33.0 | 42.6 |
| period (EUR) | | | |
--------------------------------------------------------------------------------
| Average number of shares | 203,704,103 | 185,204,103 | 197,723,281 |
--------------------------------------------------------------------------------
| Number of shares at the end of | 203,704,103 | 185,204,103 | 203,704,103 |
| the period | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Neither audited nor reviewed.
Ratios have been calculated following the guidelines from “Den Danske
Finansanalytikerforening” (The Danish Society of Financial Analysts)
(Recommendations and Financial ratios 2005).
Calculated over a 12-month period.
Earnings per share have been calculated over a 12-month period and in accordance
with IAS 33 Earnings per share.
--------------------------------------------------------------------------------
| Non-financial highlights for the Group |
--------------------------------------------------------------------------------
| | Q1 20101) | Q1 20091) | Full year 2009 |
--------------------------------------------------------------------------------
| Key figures2) | | | |
--------------------------------------------------------------------------------
| Occupational health & safety | | | |
--------------------------------------------------------------------------------
| Industrial injuries (number) | 39 | 127 | 306 |
--------------------------------------------------------------------------------
| - of which fatal industrial | 0 | 0 | 0 |
| injuries (number) | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Products | | | |
--------------------------------------------------------------------------------
| MW produced and shipped | 387 | 885 | 6,131 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Utilisation of resources | | | |
--------------------------------------------------------------------------------
| Consumption of metals (tonnes) | 28,236 | 58,237 | 202,624 |
--------------------------------------------------------------------------------
| Consumption of other raw | 18,232 | 37,906 | 126,600 |
| materials, etc. (tonnes) | | | |
--------------------------------------------------------------------------------
| Consumption of energy (MWh) | 149,432 | 158,600 | 537,165 |
--------------------------------------------------------------------------------
| - of which renewable energy | 64,552 | 63,178 | 263,611 |
| (MWh) | | | |
--------------------------------------------------------------------------------
| - of which renewable | 50,647 | 52,115 | 238,462 |
| electricity (MWh) | | | |
--------------------------------------------------------------------------------
| Consumption of water (m3) | 121,215 | 103,915 | 521,005 |
--------------------------------------------------------------------------------
| - of which water of | 16,086 | 20,328 | 102,528 |
| non-drinking water quality | | | |
| (m3) | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Waste disposal | | | |
--------------------------------------------------------------------------------
| Volume of waste (tonnes) | 16,237 | 26,779 | 97,471 |
--------------------------------------------------------------------------------
| - of which collected for | 6,849 | 8,268 | 34,303 |
| recycling (tonnes) | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Emissions | | | |
--------------------------------------------------------------------------------
| Emission of CO2 (tonnes) | 15,896 | 15,089 | 50,532 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Local community | | | |
--------------------------------------------------------------------------------
| Environmental accidents | 0 | 4 | 10 |
| (number) | | | |
--------------------------------------------------------------------------------
| Breaches of internal | 3 | 1 | 3 |
| inspection conditions (number) | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Employees | | | |
--------------------------------------------------------------------------------
| Average number of employees | 20,648 | 21,051 | 20,832 |
--------------------------------------------------------------------------------
| Number of employees at the end | 20,693 | 21,259 | 20,730 |
| of the period | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Indicators2) | | | |
--------------------------------------------------------------------------------
| Occupational health and safety | | | |
--------------------------------------------------------------------------------
| Incidence of industrial | 4.4 | 12.8 | 8.1 |
| injuries per one million | | | |
| working hours | | | |
--------------------------------------------------------------------------------
| Absence due to illness among | 3.2 | 3.3 | 2.8 |
| hourly-paid employees (%) | | | |
--------------------------------------------------------------------------------
| Absence due to illness among | 1.4 | 1.4 | 1.3 |
| salaried employees (%) | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Products | | | |
--------------------------------------------------------------------------------
| CO2 savings over 20 years on | 10 | 21 | 163 |
| the MW produced and shipped | | | |
| (million tonnes of CO2) | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Utilisation of resources | | | |
--------------------------------------------------------------------------------
| Renewable energy (%) | 43 | 39 | 49 |
--------------------------------------------------------------------------------
| Renewable electricity for own | 93 | 69 | 85 |
| activities (%) | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Employees | | | |
--------------------------------------------------------------------------------
| Women at management level (%) | 19 | 17 | 19 |
--------------------------------------------------------------------------------
| Non-Danes at management level | 46 | 44 | 46 |
| (%) | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Management system3) | | | |
--------------------------------------------------------------------------------
| ISO 14001 (%) | 97 | 100 | 97 |
--------------------------------------------------------------------------------
| OHSAS 18001 (%) | 97 | 98 | 97 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
1) Neither audited nor reviewed.
2) Accounting policies for non-financial highlights for the Group, see page 60
of the annual report 2009.
3) The production facilities in Hohhot, Inner Mongolia, China, are expected
certified by the end of first half-year 2010.
Management report
No. 1 in Modern Energy
Vestas' strategy is to be the No. 1 in Modern Energy because wind power means
the world to us. To Vestas, being No. 1 means being the best, and being the best
means maintaining world class safety standards, having the most satisfied
customers, the best performing wind power plants and the most environmentally
friendly production. Being the market-leader in wind power, Vestas aims to
create the world's strongest energy brand. This is possible because wind power
is financially competitive, predictable, independent, fast and clean. Vestas'
financial priorities reflect its constant focus on profitability: 1) EBIT
margin, 2) Net working capital, 3) Revenue.
Vestas aims to provide its customers with the lowest cost per MWh produced,
“Cost of Energy”, and optimum security for the capital invested in a wind power
plant, “Business Case Certainty” - Vestas delivers as promised. Under the “Easy
to work with” principle, Vestas also endeavours to become a more flexible and
knowledgeable business partner because significantly improved customer loyalty
is a prerequisite for Vestas to retain its market-leading position. In 2012, the
target is for the customer loyalty index to have risen to 75 and for 2010 the
target is 70. In 2009, it was 64 - a significant increase from index 44 in 2006.
Being the industry's leading player and a pure-play spokesperson, Vestas aims to
ensure that wind power remains at the top of the global energy agenda. This is
achieved through dialogue with politicians, public servants, interest groups and
NGOs the world over and through advice and information to the public about the
potential of wind power, both in individual markets and worldwide.
Wind, Oil and Gas
Wind, Oil and Gas is Vestas' vision, which expresses the ambition of making wind
an energy source on a par with fossil fuels. At the end of 2009, wind power
accounted for less than 2 per cent of the world's combined electricity
production. Among renewable sources of energy, wind power is currently the best
means of ensuring that the many national climate targets are reached. Vestas
expects that, if the necessary political decisions on a national and
international level to expand the power grid and appoint sites are made now,
wind power can make up at least 10 per cent of total electricity production by
2020. That translates into installed wind power capacity of at least 1,000,000
MW, as compared with around 160,000 MW at the end of 2009. The wind power
industry including the many sub-suppliers will be able to create more than 2
million jobs along the way. The key to realising the potential is having
long-term, stable national schemes that provide the industry with the necessary
opportunities to plan and invest in employees, technology and production
facilities.
Long-term national and local climate targets have now been defined by China, the
EU and Australia, among others. In the USA, Congress is currently drafting a
climate and energy bill to underpin the green ambitions already defined by more
than 30 states. In spite of the credit crisis and the global economic slowdown,
politicians around the world have retained their climate targets, and in Vestas'
opinion this demonstrates that the green agenda is here to stay. The climate,
the environment and independence of scarce resources such as fresh water will
henceforth drive political and economic developments, as exemplified by China's
massive investments in green technology. The increasing demand for Business Case
Certainty in China implies that Vestas has reserved the capacity at its Chinese
factories for the Chinese market for the remainder of the year.
Vestas is confident that a fixed price for CO2 would promote the necessary
climate investments because it would provide industrial and financial investors
with a higher degree of predictability than the present quota system, which
leads to large fluctuations in the price of CO2.
Failure is not an option
Vestas' mission, Failure is not an option, expresses the organisation's
commitment to constantly seeking improvements and to consistently following up
on and rectifying errors in a structured manner. The mission also mirrors
Vestas' uncompromising stance on safety, which is given top priority no matter
what the context, because the customers demand it and the employees are entitled
to it.
The ambition to attain a 6 Sigma quality level throughout the value chain not
later than in 2015 underlines this commitment to constant improvement. At the
end of 2008, Vestas and the vast majority of its suppliers had reached 4 Sigma.
The target for the end of 2010 is 5 Sigma, which is a prerequisite for the
long-term improvement of the EBIT margin. It should be emphasised that Vestas'
customers, Vestas' earnings and its reputation continue to suffer from a few
suppliers' inadequate production and quality management. Therefore, Vestas
regularly establishes relations with new suppliers with a commitment to reach 6
Sigma in a joint effort with Vestas.
Vestas currently monitors more than 16,000 turbines, or 27,500 MW, round the
clock, and this opens up for effective maintenance planning and higher uptime
and performance for the turbines, benefiting customer earnings and Vestas'
expenditure, as Vestas' service technicians are now able to service more than
twice as many turbines as they were at the beginning of 2008. The monitoring of
70 per cent of Vestas' total installed capacity of about 39,000 MW is extended
each day. Failure is not an option also applies to Triple15.
The Willpower
Vestas is driven forward by its employees, whose willpower, imagination and
ability to constantly develop the technology and the organisation have made
Vestas the industry leader. This is expressed in the sculpture entitled the
Willpower, which has been placed at a number of the Group's locations. Reaching
for the sky, it symbolises the willpower and passion possessed by the employees.
Vestas seeks to promote a culture characterised by independent initiatives and
collaboration across professional and organisational boundaries and in which the
dynamics and sense of responsibility that usually characterise a small company
are retained. The solid foundation of the sculpture reflects the reliability,
common sense and trustworthiness that is the cornerstone of all Vestas'
activities. Vestas' Code of Conduct is to ensure that all employees and other
persons acting on behalf of Vestas know what is correct Vestas behaviour.
Management focus
Vestas' Management's overall focus is on customers, colleagues, Cost of Energy
and shareholders. Success in these areas is a prerequisite for retaining the
leadership position in competition with some of the world's largest
corporations.
Customers
Wind power is gaining support in more and more countries, with new customers as
well as large and well-established international players investing in wind power
plants. As wind power comes to represent an ever-growing proportion of the
energy supply, considerably larger customers will account for a growing share of
demand. In 2009, when energy companies and utilities accounted for 58 per cent
of revenue, Vestas' revenue was distributed among 201 customers. The figures for
2008 and 2007 were 228 and 272, respectively. This places heavy and increasing
technical demands on the Vestas organisation, which in early 2009 rolled out Key
Account Management so that customers with international operations have a
permanent contact in the Vestas Government. Vestas also endeavours to become a
more flexible and open business partner and is intensifying customer dialogue at
all levels. Through much improved turbine reliability and much closer customer
relations, Vestas, being a quality supplier, delivers Business Case Certainty to
its customers. Vestas retains its strategy of not relying on any single market
or customer.
Colleagues
In the first quarter of 2010, Vestas retained its employee headcount, whilst
many factories were idle in connection with the transition to make-to-order
manufacturing, the structural aim of which is to reduce Vestas' inventories and
production time. These measures have been facilitated by the improvement of
Vestas' in-house production and higher quality products and logistics from many
suppliers.
Based on the order intake and market momentum, Vestas will now begin to recruit
employees to reach its target level of staffing in the USA. During the next 12
months, Vestas expects to increase its headcount in the USA to a total of around
4,000. Vestas' US facilities will together with the new service and maintenance
centre in Brighton recruit around 2,000 employees over the next 12 months.
In order to reduce organisational complexity and facilitate communications
across the business units and corporate functions, the four production business
units have been streamlined and now share the same organisational structure. The
seven sales business units are embarking on a restructuring towards a uniform
structure, which will help reduce Vestas' response time. The retention of the
market leadership position calls for shorter lead and delivery times.
Concurrently with the organisational streamlining, which significantly increases
transparency, Vestas will become more decentralised with more decision-making
power and responsibility being assigned to the operating units.
All Vestas employees are covered by a bonus scheme. For employees in the 14
business units, 30 per cent of the bonus depends on targets specific to the
business unit, whilst 70 per cent depends on the Group's announced targets for
the year and developments in customer satisfaction. For employees in the parent
company, the bonus depends exclusively on the fulfilment of announced targets
and improvement in customer satisfaction. When calculating the bonus for 2010,
each component is weighted as follows: An EBIT margin of 10 per cent (40 per
cent weighting), a net working capital of 15 per cent (20 per cent weighting),
revenue of EUR 7bn (20 per cent weighting) and a customer loyalty index of 70
(20 per cent weighting). In the longer term, bonus payments will be more closely
linked to the day-to-day performance of each employee. For 2009, a bonus amount
of EUR 59m will be disbursed.
As part of Triple15, Vestas aims, in terms of cultural versatility, to become a
more international business with a much higher of non-Danish and women employees
in management positions. At the end of the first quarter of 2010, non-Danes held
46 per cent of the positions in the top 2,500, and 19 per cent were women.
Cost of Energy
Vestas' wind power plants must have the lowest Cost of Energy and will ensure
that the price of wind power continues to fall. Conversely, the price of fossil
fuels is expected to rise, thus steadily increasing the competitiveness and
resulting value of wind turbines. Through large-scale investments in development
and test facilities around the world, Vestas will seek to consolidate its
leadership position within wind power. At the end of the first quarter of 2010,
8 per cent of Vestas' staff were employed with Vestas Technology R&D, which is
now organised in specialised centres around the world, managed from Aarhus in
Denmark. In 2010, the development activities will be extended by an additional
500 employees to around 2,000 employees in Denmark and abroad. In addition to
improved design, which also facilitates the work of service technicians, lighter
materials and the possibility of recycling all turbine components, Vestas is
also investing large resources in optimising the location of each turbine in a
wind power plant with a view to harnessing the wind to the full.
In 2009, Vestas started to market its new turbine types, V112-3.0 MW, V100-1.8
MW and V60-850 kW. The first orders for the V100-1.8 MW and V60-850 kW turbines
were announced at the end of 2009, whilst the V112-3.0 MW turbine is currently
undergoing the final tests before it will be released for sale for both onshore
and offshore at the end of August 2010. In addition, Vestas is developing a 6.0
MW turbine for offshore operations. All of the new products are designed to
provide the customers with Business Case Certainty and the lowest Cost of
Energy. A number of new products and services will in the coming years
contribute to securing Vestas accomplishing Triple15.
The motivation behind Vestas' development initiatives is the goal of having
increasingly robust turbines and the necessity of increasing output per
kilogramme turbine for the benefit of the environment. As part of these
initiatives, under the “As green as it gets” principle, Vestas has stepped up
its efforts to minimise the consumption of resources. One result of the
intensified efforts is that, from the second quarter of 2009, Vestas has
reported on quarterly developments in its non-financial highlights in order to
give prominence to the performance in achieving its environmental and safety
targets.
Consumption of raw materials declined by 52 per cent, and waste generation
dropped by 39 per cent relative to the first quarter of 2009, reflecting the
quarter's lower level of activity. Conversely, energy consumption is largely
unchanged.
Vestas has implemented a green building policy, under which all buildings must
comply with the LEED platinum building standard, and this will significantly
contribute to reducing energy consumption from Vestas' buildings in the years to
come. The extension of the development centres on the Isle of Wight, UK, and at
Lem in Denmark will be the first buildings that meet the LEED platinum
construction standard. Vestas' new headquarters, which are under construction in
Aarhus, Denmark, will also be certified to this construction standard. At this
site, annual CO2 emissions will be reduced by 95 per cent compared with a
similar building, among other things owing to the installation of Denmark's
largest geothermal heating plant.
In the first quarter of 2010, the share of renewable energy was 43 per cent and
the share of renewable electricity was 93 per cent. The corresponding figures
for the year-earlier period were 39 per cent and 69 per cent. A number of
factories started to purchase renewable electricity at the beginning of 2010,
which had a positive effect on the share of renewable energy and electricity. On
the other hand, new capacity and colder-than-usual winter weather during the
quarter pushed up heat consumption, adversely affecting the proportion of
renewable energy because energy for heating to a greater extent is based on
non-renewable sources of energy.
Vestas pursues an energy policy, which stipulates that all purchases of
electricity must be from renewable energy sources, subject to availability. The
target is for 55 per cent of Vestas' energy consumption to come from renewable
sources by 2010. The precondition is that the proportion of renewable
electricity is increased to more than 90 per cent by 2010.
Vestas has established a wind power plant in India in order to balance the
energy consumption from areas in which it is still not possible to buy green
electricity.
The incidence of industrial injuries per one million working hours was 4.4 in
the first quarter, a drop of 66 per cent relative to the first quarter of 2009.
Vestas took advantage of the low level of activity in the first quarter to
provide training for 1,666 employees in workplace safety, which is expected to
result in a noticeable improvement in safety levels.
Recent years' dedicated focus on the safety culture by building management and
employee skills, improving work procedures, documentation, production equipment
and wind turbine design has thus been intensified in 2010. Vestas employs the
safety philosophy that all injuries can be avoided. Vestas further increases its
focus on this area by following up on these developments in its quarterly
reports. The target for 2010 is to achieve an incidence of 7.0 industrial
injuries or less per one million working hours. For 2012, the target is three
injuries or less per one million working hours.
Shareholders
At the end of March 2010, Vestas had 127,362 registered shareholders, including
custody banks. The registered shareholders held 87 per cent of the company's
share capital. At the end of March, 122,961 Danish shareholders owned about 30
per cent of Vestas, which has a free float of 100 per cent. No shareholders have
reported shareholdings that exceed 5 per cent. Vestas seeks to have an
international group of shareholders and to inform this group openly about the
company's long-term targets, priorities and initiatives conducted with due
consideration to the short-term opportunities and limitations. The Group
presents its interim reports in London and New York as part of roadshows, which
will cover more than 25 capitals and financial centres in North America, Europe
and Asia in 2010. Vestas also arranges a large number of meetings with private
investors in Denmark and Sweden.
Development, first quarter 2010
Activities and order backlog
In the first quarter of 2010, Vestas shipped wind power systems with an
aggregate output of 387 MW (178 turbines) against 885 MW (490 turbines) in the
first quarter of 2009. Final capacity delivered to the customers amounted to 758
MW, a decrease of 4 per cent from the first quarter of 2009.
--------------------------------------------------------------------------------
| | Europe | Americas | Asia/ | Total |
| | | | Pacific | |
--------------------------------------------------------------------------------
| MW under completion, 1 | 2,883 | 315 | 571 | 3,769 |
| January 2010 | | | | |
--------------------------------------------------------------------------------
| MW delivered to customers in | (562) | (131) | (65) | (758) |
| the period | | | | |
--------------------------------------------------------------------------------
| MW produced and shipped in | 228 | 60 | 99 | 387 |
| the period | | | | |
--------------------------------------------------------------------------------
| MW under completion, 31 March | 2,549 | 244 | 605 | 3,398 |
| 2010 | | | | |
--------------------------------------------------------------------------------
At the end of the quarter, turbine projects with a total output of 3,398 MW were
under completion, slowing down the EBIT margin increase as part of the revenue
cannot be recognised until the turbines have been shipped or finally handed over
to the customers. The quarterly order intake was 1,258 MW, of which 62 per cent
has been announced publicly. The order backlog amounted to 2,618 MW at the end
of March 2010. Europe accounted for 65 per cent and the Americas and
Asia/Pacific accounted for 22 and 13 per cent, respectively. The value of the
order backlog was EUR 2.9bn at the end of March 2010. From 31 March to 27 April
2010, announced order intake amounted to 2,014 MW inclusive of the 1,500 MW firm
and unconditional order from EDP Renováveis.
Income statement
Europe accounted for 61 per cent of revenue in the first quarter of 2010. The
Americas and Asia/Pacific accounted for 18 per cent and 21 per cent of revenue,
respectively. First-quarter revenue amounted to 11 per cent of the expected
full-year revenue, against 17 per cent of actual revenue in 2009. Service
revenue amounted to EUR 146m. The service business comprises the sale and repair
of spare parts, guaranteed uptime for a fixed fee and general service and
maintenance work on an hourly basis.
Vestas recorded a gross profit of EUR 44m in the first quarter of 2010 against
EUR 216m the year before. The gross margin thus fell from 19.5 per cent to 5.8
per cent as a result of the planned very low capacity utilisation during the
quarter.
Financial items amounted to a net expense of EUR 18m against an income of EUR 2m
in the first quarter of 2009, primarily due to exchange rate adjustments.
Vestas' average interest-bearing net position in the first quarter of 2010
amounted to EUR (228)m, against EUR (48)m in the year-earlier period.
Balance sheet
Vestas had total assets of EUR 6,540m at 31 March 2010, against EUR 5,435m at 31
March 2009. At the end of March 2010, Vestas' interest-bearing net position had
decreased by EUR 195m to EUR (404)m. Financial debt obligations rose by EUR 494m
to EUR 864m since 31 March 2009. On 23 March 2010, Vestas issued a
EUR-denominated corporate bond with a principal amount of EUR 600m and a coupon
of 4.625 per cent. The bond runs for five years until 23 March 2015.
Net working capital
At 31 March 2010, Vestas' net working capital amounted to EUR 1,468m against EUR
553m at the end of March 2009. The three main reasons being: 1) A decline in
pre-payments during the period which reflects the decline in the order backlog.
2) A high, but decreasing, level of work in progress. 3) Vestas has reduced
trade payables after a busy year-end 2009. Conversely, inventories have been
reduced compared to the end of March 2009, which has dampened the increase in
the net working capital.
Trade receivables and construction contracts
Trade receivables amounted to EUR 575m at 31 March 2010, compared with EUR 567m
the year before. Construction contracts amounted to EUR 144m, net, against EUR
(755)m the year before. Construction contracts comprise projects currently being
installed, but for which the risk has not been transferred to the customers.
Warranty provisions
In 2010, Vestas expects to make warranty provisions of 3 per cent of annual
revenue, against 3.5 per cent in 2009. Provisions are made for all costs
associated with turbine repairs, and any reimbursement is not offset unless a
written agreement has been made with the supplier to that effect. The warranty
provisions of EUR 23m in the first quarter, equivalent to 3.0 per cent of
revenue, cover possible costs for remedy and other costs in accordance with
specific agreements. Provisions are based on estimates, and actual costs may
deviate substantially from such estimates. The typical warranty period is
currently two years as opposed to previously, up to five years, and that reduces
Vestas' risk exposure.
Changes in equity
Vestas' equity amounted to EUR 3,296m at 31 March 2010, an increase of EUR
1,271m on 31 March 2009. Vestas' Board of Directors believes that a solvency
ratio of at least 40 per cent is a prerequisite for paying dividend. To this
should be added the investment requirement and the goal of maintaining strong
liquidity resources.
Cash flow and investments
As a result of the slowing order intake from the autumn of 2008 to the end of
2009, Vestas draws on its credit facilities. Longer term, Vestas will to be able
to finance its organic growth through operations. Cash flows from operating
activities before changes in working capital fell to EUR (165)m in the first
quarter of 2010 from EUR 59m in the first quarter of 2009. Cash flows from
operating activities including costs for warranty commitments amounted to EUR
(398)m, against EUR (195)m in the first quarter of 2009. Cash flows from
investing activities amounted to EUR (149)m. The investments were made primarily
in equipment and development projects.
Capital Markets Day - 1-2 September 2010 in Colorado, USA
Vestas will host a Capital Markets Day for institutional investors, analysts and
the press on Wednesday, 1 September and Thursday, 2 September 2010 in Colorado,
USA. The programme includes a review of the principal markets and the V112
turbine. Furthermore, the new production facilities in Colorado, which also will
be producing the V112-3.0 MW turbine, will be presented. You may register for
the arrangement by contacting Vestas' Investor Relations department at
CapDay@vestas.com not later than 5 July 2010.
- o -
Press and analyst meeting in New York
Wednesday, 28 April 2010 at 9 a.m. EST (New York time)/3 p.m. (CET)
In connection with the announcement of this interim financial report, an
information meeting will be held today, Wednesday at 9 a.m. EST (New York
time)/3 p.m. (CET) for analysts, investors and the press at the Four Seasons
Hotel, "Cosmopolitan Suite", 57 East 57th Street, New York 10022, USA.
The information meeting will be held in English and webcast live with
simultaneous interpretation into Danish, German, Italian, Spanish and Mandarin
via vestas.com/investor.
The meeting may be attended electronically, and questions may be asked through a
conference call. The telephone numbers for the conference call are +45 7026 5040
(DK), +44 208 817 9301 (UK), +1 718 354 1226 (USA).
A replay of the information meeting will subsequently be available on
vestas.com/investor.
The Vestas Group
Interim financial report for the period
1 January 2010-31 March 2010
--------------------------------------------------------------------------------
| Contents | Page |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Consolidated income statement | 18 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Consolidated statement of comprehensive income | 19 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Consolidated balance sheet - Assets | 20 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Consolidated balance sheet - Equity and liabilities | 21 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Consolidated statement of changes in equity | 22 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Summarised consolidated cash flow statement | 23 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Accounting policies | 24 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Management's statement | 25 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Company announcements from Vestas Wind Systems A/S | 26 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Sales | 27 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| MW overview per quarter 2010 | 28 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Warranty provisions | 29 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Segment information | 30 |
--------------------------------------------------------------------------------
The interim financial report has neither been audited nor reviewed.
Consolidated income statement
--------------------------------------------------------------------------------
| mEUR | Q1 2010 | Q1 2009 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Revenue | 755 | 1,105 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Cost of sales | (711) | (889) |
--------------------------------------------------------------------------------
| Gross profit | 44 | 216 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Research and development costs | (18) | (25) |
--------------------------------------------------------------------------------
| Selling and distribution expenses | (44) | (39)1) |
--------------------------------------------------------------------------------
| Administrative expenses | (78) | (76)1) |
--------------------------------------------------------------------------------
| Operating profit | (96) | 76 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Income from investments in | 0 | 0 |
| associates | | |
--------------------------------------------------------------------------------
| Net financials | (18) | 2 |
--------------------------------------------------------------------------------
| Profit before tax | (114) | 78 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Corporation tax | 32 | (22) |
--------------------------------------------------------------------------------
| Net profit for the period | (82) | 56 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Earnings per share (EPS) | | |
--------------------------------------------------------------------------------
| Earnings per share for the period | (0.40) | 0.30 |
| (EUR), basic | | |
--------------------------------------------------------------------------------
| Earnings per share for the period | (0.40) | 0.30 |
| (EUR), diluted | | |
--------------------------------------------------------------------------------
1) Costs amounting to EUR 17m has been re-classified from selling and
distribution expenses to administrative expenses. For full year 2009, the
re-classification means that selling and distributions costs are EUR 54m lower
than disclosed in the annual report for 2009 and administrative expenses EUR 54m
higher.
Consolidated statement of comprehensive income
--------------------------------------------------------------------------------
| mEUR | Q1 2010 | Q1 2009 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Profit for the period | (82) | 56 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Exchange rate adjustments relating to | 21 | 15 |
| foreign entities | | |
--------------------------------------------------------------------------------
| Fair value adjustments of derivative | (17) | (38) |
| financial instruments for the period | | |
--------------------------------------------------------------------------------
| Fair value adjustments of derivative | 8 | 38 |
| financial instruments transferred to the | | |
| income statement (cost of sales) | | |
--------------------------------------------------------------------------------
| Tax on derivative financial instruments | 1 | 0 |
--------------------------------------------------------------------------------
| Other comprehensive income after tax for | 13 | 15 |
| the period | | |
--------------------------------------------------------------------------------
| Total comprehensive income for the period | (69) | 71 |
--------------------------------------------------------------------------------
Consolidated balance sheet - Assets
--------------------------------------------------------------------------------
| mEUR | 31 | 31 March | 31 |
| | March | 2009 | December |
| | 2010 | | 200 |
| | | | 9 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Goodwill | 320 | 320 | 320 |
--------------------------------------------------------------------------------
| Completed development projects | 135 | 101 | 99 |
--------------------------------------------------------------------------------
| Software | 73 | 63 | 73 |
--------------------------------------------------------------------------------
| Development projects in progress | 336 | 192 | 320 |
--------------------------------------------------------------------------------
| Total intangible assets | 864 | 676 | 812 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Land and buildings | 681 | 513 | 661 |
--------------------------------------------------------------------------------
| Plant and machinery | 234 | 163 | 230 |
--------------------------------------------------------------------------------
| Other fixtures, fittings, tools | 219 | 196 | 216 |
| and equipment | | | |
--------------------------------------------------------------------------------
| Property, plant and equipment in | 416 | 283 | 354 |
| progress | | | |
--------------------------------------------------------------------------------
| Total property, plant and | 1,550 | 1,155 | 1,461 |
| equipment | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Investments in associates | 1 | 1 | 1 |
--------------------------------------------------------------------------------
| Other receivables | 17 | 23 | 16 |
--------------------------------------------------------------------------------
| Deferred tax | 104 | 84 | 110 |
--------------------------------------------------------------------------------
| Total other non-current assets | 122 | 108 | 127 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Total non-current assets | 2,536 | 1,939 | 2,400 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Inventories | 1,720 | 2,087 | 1,663 |
--------------------------------------------------------------------------------
| Trade receivables | 575 | 567 | 525 |
--------------------------------------------------------------------------------
| Construction contracts in | 878 | 450 | 1,032 |
| progress | | | |
--------------------------------------------------------------------------------
| Other receivables | 262 | 187 | 234 |
--------------------------------------------------------------------------------
| Corporation tax | 109 | 44 | 93 |
--------------------------------------------------------------------------------
| Cash at bank and in hand | 460 | 161 | 488 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Total current assets | 4,004 | 3,496 | 4,035 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| TOTAL ASSETS | 6,540 | 5,435 | 6,435 |
--------------------------------------------------------------------------------
Consolidated balance sheet - Equity and liabilities
--------------------------------------------------------------------------------
| mEUR | 31 March | 31 March | 31 December |
| | 2010 | 2009 | 2009 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Share capital | 27 | 25 | 27 |
--------------------------------------------------------------------------------
| Other reserves | (28) | (63) | (41) |
--------------------------------------------------------------------------------
| Retained earnings | 3,297 | 2,063 | 3,378 |
--------------------------------------------------------------------------------
| Total equity | 3,296 | 2,025 | 3,364 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Deferred tax | 57 | 11 | 121 |
--------------------------------------------------------------------------------
| Provisions | 69 | 83 | 82 |
--------------------------------------------------------------------------------
| Pension obligations | 2 | 2 | 2 |
--------------------------------------------------------------------------------
| Financial liabilities | 859 | 314 | 339 |
--------------------------------------------------------------------------------
| Total non-current liabilities | 987 | 410 | 544 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Prepayments from customers | 142 | 135 | 123 |
--------------------------------------------------------------------------------
| Construction contracts in | 734 | 1,205 | 598 |
| progress | | | |
--------------------------------------------------------------------------------
| Trade payables | 700 | 1,017 | 1,062 |
--------------------------------------------------------------------------------
| Provisions | 123 | 153 | 151 |
--------------------------------------------------------------------------------
| Financial liabilities | 5 | 56 | 12 |
--------------------------------------------------------------------------------
| Other liabilities | 391 | 381 | 436 |
--------------------------------------------------------------------------------
| Corporation tax | 162 | 53 | 145 |
--------------------------------------------------------------------------------
| Total current liabilities | 2,257 | 3,000 | 2,527 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Total liabilities | 3,244 | 3,410 | 3,071 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| TOTAL EQUITY AND LIABILITIES | 6,540 | 5,435 | 6,435 |
--------------------------------------------------------------------------------
Consolidated statement of changes in equity - three months 2010
--------------------------------------------------------------------------------
| mEUR | Share | Translat | Cash | Retained | Total |
| | capital | ion | flow | earnings | |
| | | reserve | hedging | | |
| | | | reserve | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Equity at 1 January | 27 | (35) | (6) | 3,378 | 3,364 |
| 2010 | | | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Acquisition of | 0 | - | - | 0 | 0 |
| treasury shares | | | | | |
--------------------------------------------------------------------------------
| Share based payments | 0 | - | - | 1 | 1 |
--------------------------------------------------------------------------------
| Total comprehensive | 0 | 21 | (8) | (82) | (69) |
| income for the | | | | | |
| period | | | | | |
--------------------------------------------------------------------------------
| Equity at 31 March | 27 | (14) | (14) | 3,297 | 3,296 |
| 2010 | | | | | |
--------------------------------------------------------------------------------
Consolidated statement of changes in equity - three months 2009
--------------------------------------------------------------------------------
| mEUR | Share | Translat | Cash | Retained | Total |
| | capital | ion | flow | earnings | |
| | | reserve | hedging | | |
| | | | reserve | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Equity at 1 January | 25 | (50) | (28) | 2,008 | 1,955 |
| 2009 | | | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Acquisition of | 0 | - | - | (1) | (1) |
| treasury shares | | | | | |
--------------------------------------------------------------------------------
| Share based payments | 0 | - | - | 0 | 0 |
--------------------------------------------------------------------------------
| Total comprehensive | 0 | 15 | 0 | 56 | 71 |
| income for the | | | | | |
| period | | | | | |
--------------------------------------------------------------------------------
| Equity at 31 March | 25 | (35) | (28) | 2,063 | 2,025 |
| 2009 | | | | | |
--------------------------------------------------------------------------------
Summarised consolidated cash flow statement
--------------------------------------------------------------------------------
| mEUR | Q1 2010 | Q1 2009 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Profit for the period | (82) | 56 |
--------------------------------------------------------------------------------
| Adjustments for non-cash transactions | 6 | 23 |
--------------------------------------------------------------------------------
| Corporation tax paid | (89) | (26) |
--------------------------------------------------------------------------------
| Net interest | 0 | 6 |
--------------------------------------------------------------------------------
| Cash flow from operating activities | (165) | 59 |
| before change in working capital | | |
--------------------------------------------------------------------------------
| Change in working capital | (233) | (254) |
--------------------------------------------------------------------------------
| Cash flow from operating activities | (398) | (195) |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Net investment in intangible and other | (66) | (42) |
| non-current assets | | |
--------------------------------------------------------------------------------
| Net investment in property, plant and | (82) | (145) |
| equipment | | |
--------------------------------------------------------------------------------
| Other | (1) | 2 |
--------------------------------------------------------------------------------
| Cash flow from investing activities | (149) | (185) |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Acquisition of treasury shares | 0 | (1) |
--------------------------------------------------------------------------------
| Raising of non-current liabilities | 520 | 309 |
--------------------------------------------------------------------------------
| Cash flow from financing activities | 520 | 308 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Change in cash at bank and in hand less | (27) | (72) |
| current portion of bank debt | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Cash at bank and in hand less current | 479 | 219 |
| portion of bank debt at 1 January | | |
--------------------------------------------------------------------------------
| Exchange rate adjustments of cash at | 7 | 12 |
| bank and in hand | | |
--------------------------------------------------------------------------------
| Cash at bank and in hand less current | 459 | 159 |
| portion of bank debt at 31 March | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| The amount can be specified as follows: | | |
--------------------------------------------------------------------------------
| Cash at bank and in hand | 447 | 145 |
--------------------------------------------------------------------------------
| Cash at bank and in hand with disposal | 13 | 16 |
| restrictions | | |
--------------------------------------------------------------------------------
| | 460 | 161 |
--------------------------------------------------------------------------------
| Current portion of bank debt | (1) | (2) |
--------------------------------------------------------------------------------
| | 459 | 159 |
--------------------------------------------------------------------------------
Accounting policies
Basis of preparation
The interim report comprises a summary of the Consolidated Financial Statements
of Vestas Wind Systems A/S.
Accounting policies
The interim financial report has been prepared in accordance with IAS 34
”Interim Financial Reporting” as adopted by the EU and additional Danish
disclosure requirements for interim financial reports of listed companies.
Apart from the effect of new IFRS/IAS implemented in the period, the accounting
policies are unchanged from those applied to the Annual Report for 2009 prepared
under the International Financial Reporting Standards (IFRS) approved by the EU.
Reference is made to pages 71-77 of the annual report for 2009 for a complete
description of the Group's accounting policies.
There has been a slight change in classification between selling and
distribution expenses and administrative expenses.
New IASs/IFRSs implemented in the period
With effect from 1 January 2010, Vestas implemented amendments to IAS 27
consolidated and separate financial statements, amendments to IAS 39 financial
instruments, recognition and measurement, IFRS 2 share-based payment, IFRS 3
business combinations, IFRIC 12 service concession arrangements, IFRIC 15
arrangements for the construction of real estate and similar constructions
contracts, IFRIC 17 distributions of non-cash assets to owners and IFRIC 18
transfer of assets from customers as part of the sales transaction.
Vestas evaluates the changes and interpretations not to be relevant to Vestas at
present.
New accounting regulations
The International Accounting Standards Board (IASB) has adopted the following
standards and new interpretations, not yet approved by the EU, which will take
effect at 1 January 2010 or later: Amendment to IFRS 1 first-time adoption of
international financial reporting standards.
The changes are not relevant to Vestas at present.
Reference is made to page 112 of the annual report for 2009 for more details of
the aforementioned standards and interpretations.
Management's statement
The Executive Management and the Board of Directors have today discussed and
approved the interim financial report of Vestas Wind Systems A/S for the period
1 January to 31 March 2010.
The interim financial report has been prepared in accordance with IAS 34
”Interim Financial Reporting” as adopted by the EU and additional Danish
disclosure requirements for interim financial reports of listed companies. The
interim financial report has neither been audited nor reviewed.
In our opinion the interim financial report gives a true and fair view of the
Group's assets, liabilities and financial position at 31 March 2010 and of the
results of the Group's operations and cash flow for the period 1 January to 31
March 2010.
Further, in our opinion the Management's review gives a true and fair review of
the development in the Group's operations and financial matters, the results of
the Group's operations for the period and the Group's financial position as a
whole and describes the significant risks and uncertainties pertaining to the
Group.
--------------------------------------------------------------------------------
| Randers, 28 April 2010 |
| Executive Management |
--------------------------------------------------------------------------------
| Ditlev Engel | Henrik Nørremark |
| President and CEO | Executive Vice |
| | President and CFO |
--------------------------------------------------------------------------------
| Board of Directors |
--------------------------------------------------------------------------------
| Bent Erik Carlsen | Torsten Erik Rasmussen |
| Chairman | Deputy Chairman |
--------------------------------------------------------------------------------
| Elly Smedegaard Rex | Freddy Frandsen | Håkan Eriksson |
--------------------------------------------------------------------------------
| Jørgen Huno Rasmussen | Jørn Ankær Thomsen | Kim Hvid Thomsen |
--------------------------------------------------------------------------------
| Kurt Anker Nielsen | Michael Abildgaard | Ola Rollén |
| | Lisbjerg | |
--------------------------------------------------------------------------------
| | Sussie Dvinge Agerbo | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Company announcements published by Vestas Wind Systems A/S |
| from 1 January |
| 2010 to 27 April 2010 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| First quarter 2010 |
--------------------------------------------------------------------------------
| 06.01.201 | 01 | Vestas receives 80 MW ordre for Germany |
| 0 | | |
--------------------------------------------------------------------------------
| 14.01.201 | 02 | Vestas Wind Systems A/S' Extraordinary General Meeting |
| 0 | | |
--------------------------------------------------------------------------------
| 10.02.201 | 03 | Annual report 2009: Strong foundation for Triple15 |
| 0 | | |
--------------------------------------------------------------------------------
| 10.02.201 | 04 | Vestas receives 99 MW order for the USA |
| 0 | | |
--------------------------------------------------------------------------------
| 17.02.201 | 05 | Major shareholder announcement - BlackRock, Inc. |
| 0 | | |
--------------------------------------------------------------------------------
| 15.03.201 | 06 | Vestas Wind Systems A/S to issue Eurobonds |
| 0 | | |
--------------------------------------------------------------------------------
| 15.03.201 | 07 | Vestas successfully places a EUR 600m Eurobond |
| 0 | | |
--------------------------------------------------------------------------------
| 17.03.201 | 08 | Vestas Wind Systems A/S' annual general meeting |
| 0 | | |
--------------------------------------------------------------------------------
| 23.03.201 | 09 | Major shareholder announcement - BlackRock, Inc. |
| 0 | | |
--------------------------------------------------------------------------------
| 24.03.201 | 10 | Major shareholder announcement - BlackRock, Inc. |
| 0 | | |
--------------------------------------------------------------------------------
| 25.03.201 | 11 | Vestas receives 145 MW order for the USA |
| 0 | | |
--------------------------------------------------------------------------------
| 26.03.201 | 12 | Major shareholder announcement - BlackRock, Inc. |
| 0 | | |
--------------------------------------------------------------------------------
| 31.03.201 | 13 | Vestas receives its largest single order in Australia |
| 0 | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Company announcements published after the interim reporting period |
--------------------------------------------------------------------------------
| 01.04.2010 | 14 | Major shareholder announcement - BlackRock, Inc. |
--------------------------------------------------------------------------------
| 07.04.2010 | 15 | Vestas signs 93 MW contract in Turkey |
--------------------------------------------------------------------------------
| 09.04.2010 | 16 | Major shareholder announcement - BlackRock, Inc. |
--------------------------------------------------------------------------------
| 12.04.2010 | 17 | Major shareholder announcement - BlackRock, Inc. |
--------------------------------------------------------------------------------
| 15.04.2010 | 18 | Major shareholder announcement - BlackRock, Inc. |
--------------------------------------------------------------------------------
| 26.04.2010 | 19 | Vestas signs order for 1,500 MW with an option for |
| | | an additional 600 MW |
--------------------------------------------------------------------------------
| 27.04.2010 | 20 | Vestas received four orders totalling 198 MW in |
| | | China |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Sales (deliveries)
--------------------------------------------------------------------------------
| Sales in MW | Q1 2010 | Q1 2009 | Full year 2009 |
--------------------------------------------------------------------------------
| Belgium | 0 | 31 | 49 |
--------------------------------------------------------------------------------
| Bulgaria | 177 | 8 | 64 |
--------------------------------------------------------------------------------
| Denmark | 0 | 1 | 57 |
--------------------------------------------------------------------------------
| France | 42 | 34 | 157 |
--------------------------------------------------------------------------------
| Greece | 20 | 32 | 177 |
--------------------------------------------------------------------------------
| The Netherlands | 0 | 4 | 26 |
--------------------------------------------------------------------------------
| Ireland | 0 | 0 | 45 |
--------------------------------------------------------------------------------
| Italy | 46 | 69 | 419 |
--------------------------------------------------------------------------------
| Poland | 2 | 2 | 145 |
--------------------------------------------------------------------------------
| Portugal | 0 | 3 | 84 |
--------------------------------------------------------------------------------
| Romania | 0 | 0 | 43 |
--------------------------------------------------------------------------------
| Spain | 82 | 30 | 762 |
--------------------------------------------------------------------------------
| Great Britain | 14 | 65 | 122 |
--------------------------------------------------------------------------------
| Sweden | 76 | 41 | 144 |
--------------------------------------------------------------------------------
| Czech Republic | 2 | 0 | 22 |
--------------------------------------------------------------------------------
| Turkey | 27 | 0 | 111 |
--------------------------------------------------------------------------------
| Germany | 74 | 139 | 320 |
--------------------------------------------------------------------------------
| Hungary | 0 | 1 | 25 |
--------------------------------------------------------------------------------
| Total Europe | 562 | 460 | 2,772 |
--------------------------------------------------------------------------------
| Aruba | 0 | 0 | 30 |
--------------------------------------------------------------------------------
| Brazil | 74 | 38 | 51 |
--------------------------------------------------------------------------------
| Canada | 0 | 0 | 380 |
--------------------------------------------------------------------------------
| Chile | 0 | 0 | 94 |
--------------------------------------------------------------------------------
| USA | 57 | 187 | 749 |
--------------------------------------------------------------------------------
| Total Americas | 131 | 225 | 1,304 |
--------------------------------------------------------------------------------
| India | 65 | 41 | 97 |
--------------------------------------------------------------------------------
| Azerbaijan | 0 | 2 | 2 |
--------------------------------------------------------------------------------
| China | 0 | 62 | 584 |
--------------------------------------------------------------------------------
| Total Asia/Pacific | 65 | 105 | 683 |
--------------------------------------------------------------------------------
| Kenya | 0 | 0 | 5 |
--------------------------------------------------------------------------------
| Total Africa | 0 | 0 | 5 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Total world | 758 | 790 | 4,764 |
--------------------------------------------------------------------------------
MW overview per quarter 2010
--------------------------------------------------------------------------------
| (MW) | Europe | Americas | Asia/ | Total |
| | | | Pa | |
| | | | cific | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Q1 | | | | |
--------------------------------------------------------------------------------
| MW under completion, | 2,883 | 315 | 571 | 3,769 |
| 1 January | | | | |
| 2010 | | | | |
--------------------------------------------------------------------------------
| Delivered to customers during | (562) | (131) | (65) | (758) |
| the period | | | | |
--------------------------------------------------------------------------------
| Produced and shipped during the | 228 | 60 | 99 | 387 |
| period | | | | |
--------------------------------------------------------------------------------
| MW under completion, | 2,549 | 244 | 605 | 3,398 |
| 31 March | | | | |
| 2010 | | | | |
--------------------------------------------------------------------------------
Warranty Provisions
--------------------------------------------------------------------------------
| mEUR | 31 March 2010 | 31 March 2009 | 31 Dec. 2009 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Warranty provisions, 1 | 161 | 183 | 183 |
| January | | | |
--------------------------------------------------------------------------------
| Exchange rate adjustments | 0 | 0 | 0 |
--------------------------------------------------------------------------------
| Provisions for the period | 23 | 39 | 233 |
--------------------------------------------------------------------------------
| Warranty provisions used | (63) | (64) | (257) |
| during the period | | | |
--------------------------------------------------------------------------------
| Adjustments relating to | 0 | 0 | 2 |
| the change in discounting | | | |
| of warranty provisions | | | |
--------------------------------------------------------------------------------
| Warranty provisions, | 121 | 158 | 161 |
| 31 | | | |
| March/31 December | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| The provisions are | | | |
| expected to be payable as | | | |
| follows: | | | |
--------------------------------------------------------------------------------
| < 1 year | 84 | 111 | 111 |
--------------------------------------------------------------------------------
| > 1 year | 37 | 47 | 50 |
--------------------------------------------------------------------------------
Segment information
--------------------------------------------------------------------------------
| mEUR | Europe | Americas | Asia/Pacific | Production | Total |
| | sa | sales | sales units | units | reportabl |
| | les units | units | | | e |
| | | | | | segments |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Q1 2010 | | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| External | 455 | 138 | 162 | 0 | 755 |
| revenue | | | | | |
--------------------------------------------------------------------------------
| Internal | 153 | 29 | 12 | 320 | 514 |
| revenue | | | | | |
--------------------------------------------------------------------------------
| Total | 608 | 167 | 174 | 320 | 1,269 |
| segment | | | | | |
| revenue | | | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Reportable | 8 | (3) | (6) | (97) | (98) |
| segments' | | | | | |
| operating | | | | | |
| results | | | | | |
| (EBIT) | | | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Total | 1,862 | 461 | 625 | 2,154 | 5,102 |
| assets | | | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Q1 2009 | | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| External | 471 | 554 | 76 | 4 | 1,105 |
| revenue | | | | | |
--------------------------------------------------------------------------------
| Internal | 122 | 46 | 9 | 691 | 868 |
| revenue | | | | | |
--------------------------------------------------------------------------------
| Total | 593 | 600 | 85 | 695 | 1,973 |
| segment | | | | | |
| revenue | | | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Reportable | 34 | 26 | (14) | 7 | 53 |
| segments' | | | | | |
| operating | | | | | |
| results | | | | | |
| (EBIT) | | | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Total | 1,312 | 576 | 478 | 2,281 | 4,647 |
| assets | | | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Reconciliation | Q1 2010 | Q1 2009 |
--------------------------------------------------------------------------------
| Reportable segments' EBIT | (98) | 53 |
--------------------------------------------------------------------------------
| All other operating segments' EBIT*) | 2 | 23 |
--------------------------------------------------------------------------------
| Consolidated operating profit (EBIT) | (96) | 76 |
--------------------------------------------------------------------------------
*) Includes parent company income (management fee, service, royalty and other
rental income from group companies) reduced by costs related to Vestas
Technology R&D and Group staff functions.
