Vestas Wind Systems A/S · OMXCOP:VWS
Vestas Wind Systems A/S — FY2018 Earnings Presentation
34 slides from Vestas Wind Systems A/S's earnings presentation, Feb 7, 2019
Slide 1: Full Year 2018
FULL YEAR 2018 Vestas Wind Systems A/S Copenhagen, 7 February 2019
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 Financial and operational results • Highest ever order intake of 14.2 GW across 43 countries; up 27 percent compared to 2017 • All-time high combined order backlog of more than EUR 26bn • FY 2018 guidance met on all parameters; revenue of EUR 10.1bn, EBIT margin before special items o
Slide 4: Agenda
AGENDA Orders and markets Financials Strategy Outlook and Q&A 4 Full year 2018 (Public) Classification: Public
Slide 5: Increased Q4 Order Intake
INCREASED Q4 ORDER INTAKE Order intake at 5,517 MW, with an average selling price of EUR 0.76m per MW in the quarter Order intake Average selling price of order intake MW mEUR per MW +44% 5,517 3,844 3,807 0.78 0.76 0.74 0.73 0.71 3,261 1,629 Q4 Q1 Q2 Q3 Q4 Q4 Q1 Q2 Q3 Q4 2017 2018 2018 2018 2018 20
Slide 6: Global Reach
GLOBAL REACH Order intake from 43 countries highlights unique global reach and strong global demand First orders ever in: Scandinavia • Senegal Finland • Panama Northern Europe Sweden • Bolivia USA Denmark Canada United Kingdom Norway Russian Fed. • Kazakhstan Netherlands Belgium Ireland Kazakhstan
Slide 7: Order Intake
ORDER INTAKE Highest-ever order intake in all regions totalling 14.2 GW; up 27 percent compared to 2017 Americas EMEA Asia Pacific MW MW MW 2017 +25% 2018 +25% 6,271 +38% 5,006 5,599 4,476 1,694 2,344 FY FY FY • Increasing order intake in the • Strong development in South • Australia driving the US
Slide 8: Deliveries
DELIVERIES Increasing deliveries in all regions Americas EMEA Asia Pacific MW MW MW 2017 +30% 2018 +2% +100% 4,996 3,856 4,063 4,128 1,723 860 FY FY FY • FY 2018 increase driven by • Increased deliveries in • Strong development in Mexico and Argentina Scandinavia offsetting decline Australia, India,
Slide 9: All-Time High Order Backlog of More Than EUR 26bn
ALL-TIME HIGH ORDER BACKLOG OF MORE THAN EUR 26BN Combined backlog increased by EUR 5.3bn YoY, an increase of 25 percent Wind turbines: Service: EUR EUR 11.9bn 14.3bn EUR +3.1bn* EUR +2.2bn* * Compared to FY 2017. 9 Full year 2018 (Public) Classification: Public
Slide 10: MHI Vestas Offshore Wind
MHI VESTAS OFFSHORE WIND Ramping up in core and new markets as order book increases Track record… Key highlights • Firm order intake of 3,180 MW; all based on the industry-leading V164 turbine, which during the year was upgraded to a nominal rating of 10 MW ~3.8 > 1.000 turbines installed • Preferre
Slide 11: Agenda
AGENDA Orders and markets Financials Strategy Outlook and Q&A 11 Full year 2018 (Public) Classification: Public
Slide 12: Income Statement – Full Year
INCOME STATEMENT – FULL YEAR Increased competition impacting profitability Key highlights mEUR FY 2018 FY 2017* % change Revenue 10,134 9,953 2% • Revenue up 2 percent compared to 2017; mainly driven by Production costs (8,503) (7,990) (6)% increased revenue in Service, partly offset by lower prices
Slide 13: Income Statement – Q4
INCOME STATEMENT – Q4 Lower profitability driven by Power solutions Key highlights mEUR Q4 2018 Q4 2017 % change Revenue 3,369 3,119 8% • Revenue increased 8 percent, primarily driven by higher activity Production costs (2,870) (2,543) (13)% in Power solutions and increased Service revenue Gross pro
Slide 14: SG&A Costs
SG&A COSTS SG&A costs under control Key highlights SG&A costs (TTM)* EURm 0.8 %-pts 733 722 • SG&A down YoY 705 709 692 705 674 662 672 • Relative to activity levels, SG&A costs amounted to 6.6 percent – a decrease of 0.8 percentage points compared to Q4 2017, primarily driven by distribution and ad
Slide 15: Service
SERVICE Strong service performance Key highlights Service revenue and EBIT margin, onshore EURm and percent 10% 1.669 • Service revenue increased by 10 percent compared to 2017, 1.522 mainly driven by higher activity levels; FX headwind of EUR 54m, resulting in 13 percent organic growth 1.309 • 2018
Slide 16: Balance Sheet
BALANCE SHEET Balance sheet remains strong Key highlights Assets (mEUR) FY 2018 FY 2017* Abs. change % change Non-current assets 3,344 2,865 479 17% • Continued strong cash position of EUR 3,046m Current assets 8,555 8,006 549 7% Total assets 11,899 10,871 1,028 9% • ROCE of 20.4 percent driven by l
Slide 17: Change in Net Working Capital
CHANGE IN NET WORKING CAPITAL Satisfactory net working capital management Key highlights NWC change over the last 12 months* mEUR • Improvement driven by higher down- and milestone payments partly driven by strong order intake, especially in Q4 • Higher level of inventory to cater for increased acti
Slide 18: Cash Flow Statement – Full Year
CASH FLOW STATEMENT – FULL YEAR Underlying free cash flow of EUR 418m Key highlights mEUR FY 2018 FY 2017* Abs. change Cash flow from operating activities before change in net working capital 1,190 1,461 (271) • Free cash flow was in line with the updated outlook of approx. EUR 400m disclosed on 9 J
Slide 19: Total Investments
TOTAL INVESTMENTS Total investments in line with expectations Key highlights Total investments* EURm +97 668 • Underlying investments increased approx. EUR 100m in order 617 to meet strong demand for 2019 and new product launches 65 83 • Total investments increased by EUR 261m further driven by 22 4
Slide 20: Warranty Provisions and Lost Production Factor
WARRANTY PROVISIONS AND LOST PRODUCTION FACTOR Warranty consumption and LPF continue at a low level Warranty provisions made and consumed Lost Production Factor (LPF) mEUR Percent Provisions made 6 Provisions consumed 5 55 53 50 43 44 4 41 41 37 36 3 27 2 1 0 Q4 Q1 Q2 Q3 Q4 Dec Dec Dec Dec Dec Dec D
Slide 21: Capital Structure
CAPITAL STRUCTURE Net debt to EBITDA well below threshold Net debt to EBITDA before special items* Solvency ratio* mEUR Percent <1.0 40 35 (1.3) (1.2) 30 28.6 27.6 (1.7) 26.1 (2.0) 25.9 25.9 (2.2) Q4 Q1 Q2 Q3 Q4 25 25.0 2017 2018 2018 2018 2018 20 Q4 Q1 Q2 Q3 Q4 Net debt to EBITDA, last 12 months 20
Slide 22: Capital Allocation
CAPITAL ALLOCATION Total distribution to shareholders reaches EUR 607m Key highlights EURm FY 2018 FY 2017 FY 2016 Dividend per share (DKK)* 7.44 9.23 9.71 • For 2018, the Board recommends to the AGM to pay out a Dividend per share (EUR)* 1.00 1.24 1.31 dividend of DKK 7.44 per share – corresponding
Slide 23: Agenda
AGENDA Orders and markets Financials Strategy Outlook and Q&A 23 Full year 2018 (Public) Classification: Public
Slide 24: Outstanding Growth Outlook for the Sector
OUTSTANDING GROWTH OUTLOOK FOR THE SECTOR Renewable energy to become the dominant generation source Over the next +10 years… Global Electricity Consumption ~36 PWh • Renewable energy capacity to 3.0 Nuclear grow significantly Hydro 5.4 Other fossil • >USD 3tr to be invested by ~25 6.3 RE 2030 2.6 Co
Slide 25: Our Portfolio Consists of Three Attractive RE Segments
OUR PORTFOLIO CONSISTS OF THREE ATTRACTIVE RE SEGMENTS Vestas’ market position ONSHORE WIND WIND SERVICE OFFSHORE WIND Large market, healthy#1 #1 #1 #2 growth Mid-sized market, high growth Small market, high growth New installations Installed fleet New installations GW GW GW CAGR 5-7% CAGR 8-10% CAG
Slide 26: We Have Four Key Differentiators in This Market
WE HAVE FOUR KEY DIFFERENTIATORS IN THIS MARKET Technology Proven Global reach and service Scale execution leadership 26 Full year 2018 (Public) Classification: Public
Slide 27: Next Step: Advanced Modular Design
NEXT STEP: ADVANCED MODULAR DESIGN Modularity enhances the flexibility of our solutions, while maintaining benefits of scale Enabling more Expanding More Increased customised number of standardised opportunities to solutions to variants, lowering components build supplier match customer number of en
Slide 28: Introducing Two New Variants
INTRODUCING TWO NEW VARIANTS Starting with V150-5.6 MW and V162-5.6 MW offering significant output increase Annual Energy Production* V136-4.2 MW™ V150-4.2 MW™ V150-5.6 MW™ V162-5.6 MW™ +29% +30% +30% +26% +27% +24% 6,5 m/s 7,5 m/s 8,5 m/s 6,5 m/s 7,5 m/s 8,5 m/s * Average wind speed at same HH, sta
Slide 29: Our Strategic Framework
OUR STRATEGIC FRAMEWORK Market leader in Revenue We have a clear strategy and priorities Grow faster than the market Our long-term Global leader in vision Sustainable Energy Solutions Best-in-class EBIT margin Minimum 10 percent Our mid-term Global leader in Global leader in objectives Wind Power Pl
Slide 30: Market Leadership
MARKET LEADERSHIP Summarising our market-leading position Revenue: EBIT: Backlog: EUR EUR EUR 11bn 1bn 30bn • Grow faster than the market • Best-in-class margins • Annual order intake of almost 16 GW • Leading market share of 16 • Largest R&D investments in percent the industry • Largest installed b
Slide 31: Agenda
AGENDA Orders and markets Financials Strategy Outlook and Q&A 31 Full year 2018 (Public) Classification: Public
Slide 32: Outlook 2019
OUTLOOK 2019 Outlook Revenue (bnEUR) 10.75 - 12.25 - Service is expected to grow approx. 10 percent EBIT margin before special items (%) 8 - 10 - Service margin is expected to be approx. 24 percent Total investments (mEUR) approx. 700 (Excl. any investments in marketable securities and short-term fi
Slide 33: Q&A and Financial Calendar 2019
Financial calendar 2019: • Annual General Meeting in Aarhus (3 April) Q&A • • • Disclosure of Q1 2019 (8 May) Disclosure of Q2 2019 (15 August) Disclosure of Q3 2019 (7 November) 33 Full year 2018 (Public) Classification: Public 07.02.2019
Slide 34: 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,