Vestas Wind Systems A/s · OMXCOP:VWS
Vestas Wind Systems A/s — Q2 2018 Earnings Presentation
26 slides from Vestas Wind Systems A/s's earnings presentation, Aug 15, 2018
Slide 1: Second quarter 2018
Second quarter 2018 Vestas Wind Systems A/S Copenhagen, 15 August 2018
Slide 2: Disclaimer and cautionary statement
Disclaimer and cautionary statement This document 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 statement
Slide 3: Key highlights
Key highlights Quarterly performance Strong order intake Order intake of 3.8 GW; an increase of 43 percent YoY 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 fl
Slide 4: Agenda
Agenda Q2 Interim financial report, second quarter 2018 1. Orders and markets 2. Financials 3. Outlook and questions & answers 4 Second quarter 2018 (Public) 15 August, 2018
Slide 5: Q2 order intake
Q2 order intake Order intake at 3,807 MW, with an average selling price of EUR 0.71m per MW Order intake Average selling price of order intake MW +43% mEUR per MW 3,844 3,807 2,667 2,615 0.81 0.80 1,629 0.74 0.73 0.71 Q2 Q3 Q4 Q1 Q2 Q2 Q3 Q4 Q1 Q2 2017 2017 2017 2018 2018 2017 2017 2017 2018 2018 Ke
Slide 6: Further strengthening our two competitive platforms
Further strengthening our two competitive platforms Demand shifting towards 4 MW platform as more markets move to low wind sites 2 MW platform 4 MW platform Order intake by region, H1 2018 Order intake by region, H1 2018 MW MW 6% 9% Americas Total 2 MW Americas Total 4 MW 28% EMEA 1,313 MW EMEA 4,12
Slide 7: Americas
Americas Strong order intake in the US and Latin America Market highlights Deliveries MW • Decline in US deliveries as a result of PTC 1.710 component deliveries in H1 2017 1.010 -41% PTC and trade tariffs in the USA… • Low level of activity in Latin American • Continued strong US demand H1 2017 H1
Slide 8: Europe, Middle East, and Africa
Europe, Middle East, and Africa Continued high activity levels in EMEA as EU increases RE target Market highlights Deliveries MW • Decline in deliveries mainly driven by UK, but 1.503 partly offset by France and Italy 1.199 -20% European RE target increased to 32% from 27% for 2030… • Continued soli
Slide 9: Asia Pacific
Asia Pacific Strong deliveries across the region’s markets Market highlights Deliveries MW • Diversified deliveries secures high level of 954 activity China to introduce auctions… 174 448% • Strong development in India, Australia, and • Wind volume to be awarded in auctions Thailand H1 2017 H1 2018
Slide 10: All-time high order backlog of EUR 23bn
All-time high order backlog of EUR 23bn Combined backlog increased sequentially by EUR 1.4bn* Wind turbines: Service: EUR EUR 10.2bn 12.8bn EUR +0.9bn* EUR +0.5bn* * Compared to Q1 2018 10 Second quarter 2018 (Public) 15 August, 2018
Slide 11: First firm order for the V164-9.5 MW; Borssele III/IV
First firm order for the V164-9.5 MW; Borssele III/IV V164-9.5 MW adds to legacy as world’s most powerful available wind turbine Track record… Key highlights • Preferred supplier announcement for 900 MW in the first round of awarded projects in Taiwan ~3.3 > 1.000 turbines installed • Firm and uncon
Slide 12: Agenda
Agenda Q2 Interim financial report, second quarter 2018 1. Orders and markets 2. Financials 3. Outlook and questions & answers 12 Second quarter 2018 (Public) 15 August, 2018
Slide 13: Income statement
Income statement Revenue on par with last year but with lower profitability mEUR Q2 2018 Q2 2017* % change Key highlights Revenue 2,260 2,206 2% • Revenue on par with Q2 2017, primarily driven by Production costs (1,844) (1,722) (7)% higher activity in Service Gross profit 416 484 (14)% • Gross prof
Slide 14: Leveraging on SG&A
Leveraging on SG&A Continued control of SG&A costs SG&A costs (TTM)* Key highlights mEUR and percent of revenue • SG&A costs slightly down YoY 0.2 %-pts 733 • Relative to activity levels, SG&A costs amounted to 712 713 722 705 709 692 705 6.9 percent – an increase of 0.2 percentage points 674 compar
Slide 15: Service
Service Good service performance Service revenue Key highlights mEUR • Service revenue increased 11 percent compared to Q2 2017; negative FX impact of approx. EUR 20m +11% resulting in 17 percent organic growth 414 413 • EBIT of EUR 104m (25.2 percent margin) as a result 371 368 366 of reliable turb
Slide 16: Balance sheet
Balance sheet Balance sheet remains strong and provides flexibility Assets (mEUR) Q2 2018 Q2 2017* Abs. change % change Key highlights Non-current assets 3,069 2,799 270 10% • Net interest bearing position of EUR 2,070m, Current assets 8,201 7,399 801 11% negatively impacted by net working capital d
Slide 17: Change in net working capital
Change in net working capital Continued ramp-up for deliveries expected in coming quarters NWC change over the last 12 months* NWC change over the last 3 months* mEUR mEUR 1.126 (1.197) (319) 625 (299) 154 (1,143) 5 201 8 155 (61) (1,143) (1,225) (1,526) 67 NWC end Receiv- Contract Inventories Pre-
Slide 18: Warranty provisions and Lost Production Factor
Warranty provisions and Lost Production Factor Warranty consumption and LPF continue at a low levels Warranty provisions made and consumed Lost Production Factor (LPF) mEUR Percent 54 55 6 41 41 43 41 5 36 37 36 4 27 3 2 1 0 Q2 Q3 Q4 Q1 Q2 Dec Dec Dec Dec Dec Dec Dec Dec Jun 2017 2017 2017 2018 2018
Slide 19: Cash flow statement
Cash flow statement Negative free cash flow in the second quarter mEUR Q2 2018 Q2 2017* Abs. change Key highlights Cash flow from operating activities 377 411 (34) • Free cash flow before financial investments in line with before change in net working capital Q2 2017 Change in net working capital**
Slide 20: Total investments
Total investments Underlying investments in line with Q2 2017 Total investments* Key highlights mEUR • Underlying investments increased by EUR 5m 184 176 compared to Q2 2017, primarily driven by capitalised R&D as well as tangible blade investments 65 127 116 121 +5 119 Q2 Q3 Q4 Q1 Q2 2017 2017 2017
Slide 21: Capital structure
Capital structure Net debt to EBITDA well below threshold; solvency ratio declined due to share buy-back Net debt to EBITDA* Solvency ratio* xEBITDA Percent 1 <1.0 40 0 35 30.8 29.9 28.6 27.6 30 -1 25.9 (1.3) 25 (1.4) (1.5) -2 (1.7) (2.0) 20 Q2 Q3 Q4 Q1 Q2 Q2 Q3 Q4 Q1 Q2 2017 2017 2017 2018 2018 201
Slide 22: Share buy-back programme of up to EUR 200m launched
Share buy-back programme of up to EUR 200m launched Adjusting capital structure to address strong cash position, total EUR ~400m buy-backs in 2018 Size and timing Share buy-back programme of up to DKK 1,500m (EUR 200m) in accordance with the safe harbour rules. Programme launched on 15 August 2018 a
Slide 23: Agenda
Agenda Q2 Interim financial report, second quarter 2018 1. Orders and markets 2. Financials 3. Outlook and questions & answers 23 Second quarter 2018 (Public) 15 August, 2018
Slide 24: Outlook 2018
Outlook 2018 New outlook Previous outlook Revenue (bnEUR) 10.0 - 10.5 10 - 11 - Service business is expected to grow EBIT margin (%) 9.5 - 10.5 9 – 11 - Service margin expected to increase compared to 2017 Total investments (mEUR) (Excl. the acquisition of Utopus Insights, Inc., any investments in m
Slide 25: Financial calendar 2018: Q&A
Financial calendar 2018: Q&A • • Disclosure of Q3 2018 (7 November) Capital Markets Day (29 November) 25 Second quarter 2018 (Public) 15 August, 2018
Slide 26: Thank you for your attention
Thank you for your attention Copyright Notice The documents are created by Vestas Wind Systems A/S and contain copyrighted material, trademarks, and other proprietary information. All rights reserved. No part of the documents may be reproduced or copied in any form or by any means - such as graphic,