first quarter 2014 - vestas/media/vestas/investor/investor... · 2014-05-09 · order intake almost...

First quarter 2014

Vestas Wind Systems A/S

Aarhus, 9 May 2014

This presentation contains forward-looking statements concerning Vestas' financial condition, results of

operations and business. All statements other than statements of historical fact are, or may be deemed to be,

forward-looking statements. Forward-looking statements are statements of future expectations that are based on

management’s current expectations and assumptions and involve known and unknown risks and uncertainties

that could cause actual results, performance or events to differ materially from those expressed or implied in

these statements.

Forward-looking statements include, among other things, statements concerning Vestas' potential exposure to

market risks and statements expressing management’s expectations, beliefs, estimates, forecasts, projections

and assumptions. There are a number of factors that could affect Vestas' future operations and could cause

Vestas' results to differ materially from those expressed in the forward-looking statements included in this

presentation, including (without limitation): (a) changes in demand for Vestas' products; (b) currency and interest

rate fluctuations; (c) loss of market share and industry competition; (d) environmental and physical risks; (e)

legislative, fiscal and regulatory developments, including changes in tax or accounting policies; (f) economic and

financial market conditions in various countries and regions; (g) political risks, including the risks of expropriation

and renegotiation of the terms of contracts with governmental entities, and delays or advancements in the

approval of projects; (h) ability to enforce patents; (i) product development risks; (j) cost of commodities; (k)

customer credit risks; (l) supply of components from suppliers and vendors; and (m) customer readiness and

ability to accept delivery and installation of products and transfer of risk.

All forward-looking statements contained in this presentation are expressly qualified by the cautionary

statements contained or referenced to in this statement. Undue reliance should not be placed on forward-looking

statements. Additional factors that may affect future results are contained in Vestas' annual report for the year

ended 31 December 2013 (available at vestas.com/investor) and these factors also should be considered. Each

forward-looking statement speaks only as of the date of this presentation. Vestas does not undertake any

obligation to publicly update or revise any forward-looking statement as a result of new information or future

events others than required by Danish law. In light of these risks, results could differ materially from those stated,

implied or inferred from the forward-looking statements contained in this presentation.

Disclaimer and cautionary statement

│ First quarter 2014 2

Agenda

3 │ First quarter 2014

1. Introduction

2. Orders and markets

3. Financials

4. Outlook, summary and questions & answers

Q1 Interim financial report,

first quarter 2014

Focus on Profitable Growth for Vestas Profitable growth strategy to strengthen global leadership


Grow profitably in mature &

emerging markets

Markets & customers

OBJECTIVES STRATEGY PROGRESS

Governance, leadership & culture

Capture full potential of the

service business

Service

Reduce the levelised

cost of energy

Products

Operational excellence

Efficiency

Solid order intake in Q1.

New head of Service appointed.

Launch of Vestas PowerPlusTM.

Pre-commercial installation of V110-2.0 MW.

V164-8.0 MW prototype.

Earnings improved significantly in Q1.

NWC maintained at low level.

Profitable

Growth for

Vestas

MHI Vestas Offshore Wind becomes operational Strong joint venture to become a global leader in offshore wind power


Announcement of JV

between Vestas and MHI

Approval from competition

authorities

MHI Vestas Offshore Wind

- operational

27 September 2013 28 February 2014 1 April 2014

• 380 employees headquartered in Aarhus, Denmark.

• Financial impact in Q2 2014.

• V164-8.0 MW on track.

Market shares 2013 External analysts have Vestas as a clear No. 1 with a market share of more than 13 per cent

Market shares 2013 (onshore and offshore)

Percentage


• Three leading external analysts

place Vestas as No. 1 in wind.

• Despite drop in US installations in

2013, Vestas was still able to

claim No. 1 position.

• Vestas’ strong global position

balances the dependency on

single markets:

- Deliveries in 31 countries.

- Order intake in 37 countries.

Key takes:

3.7%

Vestas

3.4%

4.9%

13.2%

31.7%

8.0%

MAKE

6.3%

10.1%

10.2%

3.9%

4.6%

100% = 36 GW

Enercon

Suzlon Group

Siemens

Nordex

United Power

Gamesa

Goldwind

Others

Mingyang

GE Gamesa

GE

3.3%

3.5%

4.0% United Power

BTM

Goldwind

5.3%

Siemens

Mingyang

Enercon

Other

100% = 37 GW

Suzlon Group

Nordex

Vestas

30.5%

6.6%

7.4%

9.8%

11.0%

5.5%

13.1%

Other

Nordex

GE

Siemens

Enercon

100% = 37 GW

Goldwind

29.3%

3.5%

EER

4.1%

5.4%

Vestas

United Power

3.4%

Suzlon Group

Ming Yang

Gamesa

10.6%

13.3%

10.0%

8.1%

5.6%

6.7%

“Grid connected” “Installed capacity” “MW supplied”

Source: MAKE Consulting, EER, BTM Navigant

Agenda


1. Introduction


3. Financials



first quarter 2014

Wind turbine order intake Order intake almost doubled in Q1 2014. Average price per MW of EUR 0.88m

Order intake

MW

Average selling price of order intake

mEUR per MW


• Q1 2014 order intake was almost twice as high

as in Q1 2013.

• USA announced orders of 292 MW in Q1 2014

corresponding to 25 per cent of total order intake.

Key takes:

• Price per MW impacted by a larger amount of

supply-only contracts.

• Price per MW depends on a variety of factors,

i.e. wind turbine type, geography, scope and

uniqueness of offering.

Key takes:

644

Q1

2013

Q1

2014

1,641

Q4

2013

Q3

2013

+544

1,188

1,547

2,132

Q2

2013

0.88

Q4

2013

Q1

2014

Q2

2013

Q3

2013

1.04

Q1

2013

1.04

0.89

0.97

Backlog: Wind turbines and service Combined backlog increased by EUR 300m* to EUR 13.8bn – equally split between wind turbines

and service

Wind turbines:

EUR

6.9bn

Service:

EUR

6.9bn

EUR +0.1bn* EUR +0.2bn*


* Compared to Q4 2013.

Agenda


1. Introduction


3. Financials



first quarter 2014

Income statement Significant improvement in Q1 2014 earnings

*R&D, administration and distribution

mEUR Q1 2014 Q1 2013 %

change

Revenue 1,283 1,096 17%

Cost of sales (1,099) (1,038) 6%

Gross profit 184 58 217%

Fixed costs* (144) (166) (13)%

EBIT before special items 40 (108) -

Special items (13) (14) (7)%

EBIT after special items 27 (122) -

Net profit/(loss) 2 (151) -

Gross margin 14.3% 5.3% 9.0%-pts

EBITDA margin before special items 10.0% (1.1)% 11.1%-pts

EBIT margin before special items 3.1% (9.9)% 13.0%-pts


• Gross profit more than tripled

compared to Q1 2013 due to

improved project margins, increased

revenue, lower fixed capacity costs

and lower depreciation.

Note: Q1 2013 was impacted by a

couple of low-margin projects.

• EBIT before special items in posi-

tive territory at EUR 40m.

• Net profit of EUR 2m.

• EBIT margin before special items

increased by 13 percentage points

to 3.1 per cent.

Key takes:

Service Satisfactory development continues

Service revenue

mEUR

260

227

250

217 225

Q4

2013

Q3

2013

Q2

2013

Q1

2013

Q1

2014

+4%


• Service revenue increased by 4 per

cent compared to Q1 2013.

• Q1 2014 EBIT before allocation of

Group costs: EUR 58m.

Margin: 26 per cent.

• Renewal rate of expiring service

contracts at 50 per cent year-to-

date.

Key takes:

Balance sheet Capital increase and lower financial debts further improve balance sheet strength


• Net debt translated into net cash:

From EUR (1)bn to EUR 0.5bn.

• Net working capital improvement of

EUR 767m due to improved cash

conversion and cash collection.

• Solvency ratio improved by 7.6

percentage points to 31 per cent

mainly due to the equity increase

conducted early February 2014.

Key takes: Assets (mEUR) Q1 2014 Q1 2013 Abs.

change

%

change

Non-current assets 2,071 2,436 (365) (15)%

Current assets 3,763 3,783 (20) (1)%

Assets held for sale 358 136 222 -

Total assets 6,192 6,355 (163) (3)%

Key figures (mEUR) Q1 2014 Q1 2013 Abs.

change

%

change

Net debt (476) 972 (1,448) -

Net working capital (570) 197 (767) -

Solvency ratio (%) 31.0 23.4 - 7.6%-pts

Liabilities (mEUR) Q1 2014 Q1 2013 Abs.

change

%

change

Equity 1,921 1,489 432 29%

Non-current liabilities 830 1,344 (514) (38)%

Current liabilities 3,236 3,522 (286) (8)%

Liabilities ass. with assets held for sale 205 0 205 -

Total equity and liabilities 6,192 6,355 (163) (3)%

Change in net working capital Negative net working capital maintained

NWC change over the last 12 months

mEUR

NWC change over the last 3 months

mEUR

46

197

Pre-

payments

142

Inventories

(569)

(119)

Payables

(194)

Other

liabilities

NWC

end

Q1 2014

(570)

Receiv-

ables

CCP* NWC

end

Q1 2013

(73)

31 54

Receiv-

ables

NWC

end

Q4 2013

(596) (570)

NWC

end

Q1 2014

Other

liabilities

Pre-

payments

14

(228)

Payables

68

Inventories

87

CCP*


• Improved cash conversion and cash collection.

• Release of more than EUR 750m.

• Inventories reduced due to lower MW under

completion and good cash conversion.

Key takes:

• Good NWC management in Q1 2014.

• Higher payables almost offsetting increased

inventories, lower prepayments and higher

receivables.

Key takes:

* Construction contracts in progress.

Warranty provisions and Lost Production Factor Warranty consumption and LPF continue at a low level

Warranty provisions made and consumed

mEUR

Lost Production Factor (LPF)

Percentage


43

28

232325

11

2828

17

28

Q3

2013

Q1

2014

Q4

2013

Q1

2013

Q2

2013

Provisions consumed Provisions made

0

1

2

3

4

5

Dec

2013

Dec

2011

Dec

2012

Dec

2010

Dec

2009

• Warranty consumption constitutes approx 1.5 per

cent of revenue over the last 12 months.

Key takes:

• LPF continues at a low level below 2.0.

• LPF measures potential energy production not

captured by the wind turbines.

Key takes:

Cash flow statement Improved earnings cascade into free cash flow


Key takes: mEUR Q1 2014 Q1 2013 Abs.

change

Cash flow from operating activities before

change in working capital 68 (59) 127

Change in working capital (26) 36 (62)

Cash flow from operating activities 42 (23) 65

Cash flow from investing activities (66) (37) (29)

Free cash flow (24) (60) 36

Cash flow from financing activities 421 (309) 730

Change in cash at bank and in hand less

current portion of bank debt 397 (369) 766

• Free cash flow improvement of

EUR 36m driven by higher

earnings.

• Cash flow from financing activities

increased by EUR 421m primarily

due to the capital increase

conducted in early February 2014.

Total investments Q1 investments in V110 blade moulds for the US market and V164 technology

Net investments

mEUR

90

48

64

37

66

Q1

2014

Q2

2013

+29

Q3

2013

Q4

2013

Q1

2013


Key takes:

• Investments increased by EUR 29m

mainly due to V110 blade moulds for the

US market and V164 technology.

• Trailing twelve months net investments

of EUR 268m.

Capital structure Net debt to EBITDA and solvency ratio within targets

Net debt to EBITDA

×EBITDA

Solvency ratio

Percentage


<1.0

(0.1) (0.6)

Q1

2014

Q4

2013

1.4 1.5

Q3

2013

Q2

2013

Q1

2013

1.8

Net debt to EBITDA before special items, last 12 months

Net debt to EBITDA, mid-term financial target

20.5

23.4

Q1

2014

22.8

32 31.0

min.30.0

Q2

2013

Q4

2013

Q3

2013

22

28

0

Q1

2013

26

30

24

27.0

Solvency ratio, mid-term financial target

Solvency ratio

• Net debt to EBITDA fell to (0.6) in Q1 2014.

• Development driven by both net debt reduction

and improved EBITDA.

Key takes:

• Solvency ratio increased to 31 per cent in Q1

2014.

• Q1 development mainly driven by capital

increase.

Key takes:

Return on invested capital Double-digit ROIC for the first time since Q4 2010

19

Return on invested capital (ROIC)

Percentage

14

12

10

8

6

4

2

0

(2)

(4)

(6)

Q1

2014

min.10.0

14.5

Q4

2013

Q2

2013

3.2

7.7

Q3

2013

Q1

2013

1.6 2.1

16

ROIC, last 12 months EBIT margin before special items, last 12 months

ROIC, mid-term financial target

│ First quarter 2014

Key takes:

• ROIC increased to 14.5 per

cent in Q1 2014 – an

improvement of 12.4

percentage points compared

to Q1 2013.

• Development primarily driven

by improved earnings.

Agenda


1. Introduction


3. Financials



first quarter 2014

Outlook Outlook for 2014 maintained


• Service business is expected to continue to grow with stable margins.

Revenue (bnEUR) min. 6

EBIT margin before special items (%) min. 5

Total investments (mEUR) approx 250

Free cash flow (mEUR) min. 300

Focus remains on Profitable Growth for Vestas Executing on the strategy to strengthen global leadership


Capital Markets Day, 12 June 2014

at Vestas’ headquarters in Aarhus,

Denmark:

• Elaboration of ”Profitable

Growth for Vestas”

Please register no later than on

28 May 2014 through email to

[email protected].

Further details at

vestas.com/investor.

Steady progress… Q1 2014

… in executing on mid-term strategy.

mailto:[email protected]

http://www.vestas.com/en/investor/capital_markets_day

Financial calendar 2014:

• Capital Markets Day (12 June 2014).

• Disclosure of Q2 2014 (20 August 2014).

• Disclosure of Q3 2014 (7 November 2014). Q&A


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Thank you for your attention

first quarter 2014 - vestas/media/vestas/investor/investor... · 2014-05-09 · order intake almost...

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