Vestas – Interim financial report, second quarter 2020

Vestas Wind Systems A/S, Aarhus, 11 August 2020
Company announcement No. 25/2020

Vestas – Interim financial report, second quarter 2020

Summary: Strong performance in spite of challenging environment; revenue increased compared to same quarter last year. Combined order backlog at all-time high level. Full-year guidance reintroduced with unchanged outlook for revenue of EUR 14-15bn, and an updated EBIT margin before special items of 5-7 pct.

In the second quarter of 2020, Vestas generated revenue of EUR 3,541m – an increase of 67 percent compared to the year-earlier period. EBIT before special items decreased by EUR 94m to EUR 34m. This resulted in an EBIT margin before special items of 1.0 percent, compared to 6.0 percent in the second quarter of 2019. The decrease was primarily a result of extraordinary warranty provisions made in the quarter of EUR 175m, covering a specific repair and upgrade of a confined number of blades already installed; excluding these provisions, the underlying margin was 5.9 percent. Free cash flow* amounted to EUR (78)m compared to EUR (75)m in the second quarter of 2019.

The quarterly intake of firm and unconditional wind turbine orders amounted to 4,148 MW. The value of the wind turbine order backlog was EUR 16.2bn as at 30 June 2020. In addition to the wind turbine order backlog, at the end of June 2020, Vestas had service agreements with expected contractual future revenue of EUR 18.9bn. Thus, the value of the combined backlog of wind turbine orders and service agreements stood at EUR 35.1bn – an increase of EUR 3.6bn compared to the year-earlier period.

Based on the results for first half of 2020, Vestas now provides the market with new guidance. The outlook for full-year revenue is unchanged at EUR 14-15bn. The EBIT margin before special items is updated to range between 5 and 7 percent (initially 7-9 percent), including extraordinary warranty provisions of EUR 175m. Vestas’ total investments^*) are expected to be below EUR 700m in 2020 (initially approx. EUR 700m). This guidance, it should be emphasised, is based on assumptions that are subject to greater uncertainty than under normal circumstances, due to COVID-19.

Group President & CEO Henrik Andersen said: “The COVID-19 pandemic continued to impact the renewable energy industry and the global economy in the second quarter of 2020. In these challenging circumstances and without state aid, Vestas’ almost 26,000 employees have performed strongly, growing our revenue by 67 percent compared to the same quarter last year and achieving an order intake of 4.1 GW as well as a record high total order backlog of more than EUR 35bn. Service continued to grow with high margins in the quarter and played a key role in ensuring stable and renewable energy supply during lockdowns across the globe. Extraordinary warranty provisions impacted our EBIT margin negatively in the quarter, but our underlying EBIT margin of 5.9 percent showcases good execution that gives us confidence to deliver improving results throughout the remainder of the year. The global pandemic and economic downturn will continue to create uncertainty in 2020, but we remain confident in our ability to ensure business continuity across our value chain and are therefore reintroducing guidance for 2020 with unchanged outlook for revenue of EUR 14-15bn, while the EBIT margin is updated to range between 5 and 7 percent.”

Key highlights

Strong performance in a challenging environment without state aid
Revenue of EUR 3.5bn; up 67 percent compared to Q2 2019.

Order intake continues at high level with stable prices
Firm order intake of 4.1 GW; all-time high combined order backlog of more than EUR 35bn.

Underlying EBIT margin of 5.9 percent
Impacted by extraordinary warranty provisions of EUR 175m; reported EBIT margin of 1.0 percent.

Solid performance in Service
Organic growth of 6 percent in Service compared to Q2 2019; EBIT margin of 28.5 percent.

CO₂ targets scientifically approved and verified as Paris Agreement compliant
Carbon emission reduction targets approved by the Science Based Targets initiative.

*) Excl. any investments in marketable securities, and short-term financial investments.

Information meeting (audiocast)
Today, Tuesday 11 August 2020 at 10 am 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 3333 000 804

USA:              +1 1 6319 131 422

Denmark:        +45 3544 5577

Conference PIN code: 75495841#

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