Vestas - Interim financial report, second quarter 2018
Summary: Revenue on par with last year’s second quarter while earnings and free cash flow decreased. Solid order intake and combined order backlog at high level. Guidance for 2018 narrowed.
In the second quarter of 2018, Vestas generated revenue of EUR 2,260m – an increase of 2 percent compared to the year-earlier period. EBIT decreased by EUR 20m to EUR 259m. The EBIT margin was 11.5 percent compared to 12.6 percent in the second quarter of 2017 and free cash flow* amounted to EUR (173)m compared to EUR (158)m in the second quarter of 2017.
The intake of firm and unconditional wind turbine orders amounted to 3,807 MW in the second quarter of 2018. The value of the wind turbine order backlog amounted to EUR 10.2bn as at 30 June 2018. In addition to the wind turbine order backlog, Vestas had service agreements with expected contractual future revenue of EUR 12.8bn at the end of June 2018. Thus, the value of the combined backlog of wind turbine orders and service agreements stood at EUR 23.0bn – an increase of EUR 2.8bn compared to the year-earlier period.
Vestas narrows the 2018 guidance on revenue to range between EUR 10.0bn and EUR 10.5bn (compared to previously EUR 10.0bn-11.0bn), and on EBIT margin to 9.5-10.5 percent (compared to previously 9-11 percent). Total investments* are still expected to amount to approx. EUR 500m, and free cash flow* is expected to be minimum EUR 400m in 2018. The adjustments are based on improved visibility for the remainder of the year.
Group President & CEO Anders Runevad said: “In the first half of 2018, the wind industry strengthened its position as the cheapest form of energy generation in many markets, which drove strong global demand. This development saw Vestas’ second quarter order intake increase 43 percent year over year, contributing to the continued growth of our order backlog to an all-time high. In the second quarter, price per MW stabilised around the levels in recent quarters, but continues to impact short-term results. External factors such as existing and potential tariffs, however, are creating some uncertainty in the industry. In this environment, I am very pleased that Vestas continues to deliver best-in-class margins and achieved a 17 percent organic growth in service, while free cash flow is negative because activity levels in 2018 will be back-end loaded. With long-term perspectives for renewable energy getting stronger, Vestas continues to effectively manage its costs and invest in the solutions that together will help us lead the global energy transition.”
Key highlights
Strong order intake
Order intake of 3.8 GW; an increase of 43 percent year over year, leading to all-time high order backlog.
EBIT of EUR 259m
EBIT margin at 11.5 percent.
Good service performance
Organic revenue growth of 17 percent, and EBIT margin of 25 percent.
Free cash flow
Free cash flow negative as a result of a back-end loaded activity level in the year.
Share buy-back programme
New EUR 200m share buy-back programme launched.
Outlook 2018
Guidance for 2018 narrowed for revenue and EBIT margin based on improved visibility.
*) Excl. the acquisition of Utopus Insights, Inc., any investments in marketable securities, and short-term financial investments.
Information meeting (audiocast)
Today, Wednesday 15 August 2018 at 10 a.m. CEST (9 a.m. BST), Vestas will host an information meeting via an audiocast. The audiocast will be accessible via vestas.com/investor.
The meeting will be held in English and questions may be asked through a conference call.
The telephone numbers for the conference call are:
Europe: +44 203 008 9806
USA: +1 855 83159 44
Denmark: +45 3544 5579
Presentation material for the information meeting will be available at vestas.com/investor approximately one hour before the meeting.
Contact details
Vestas Wind Systems A/S, Denmark
Patrik Setterberg, Vice President,
Investor Relations
Tel: +45 6122 1913