Slide 1: Full Year 2022
FULL YEAR 2022 Vestas Wind Systems A/S Copenhagen, February 2023
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 in 2022
KEY HIGHLIGHTS IN 2022 Revenue of EUR 14.5bn Revenue decline compared with 2021 driven by Russia/Ukraine exit as well as project delays. EBIT margin of (8) percent EBIT hampered by supply chain disruptions, inflation, higher warranty provisions, and offshore impairments. Total order intake of 11.2 G
Slide 4: Agenda
AGENDA Orders and markets Financials Strategy and market outlook Outlook & Q&A 4 Full year 2022 Classification: Public
Slide 5: Global Business Environment
GLOBAL BUSINESS ENVIRONMENT Employee health and safety top priority Global business environment expected to remain challenging throughout 2023 Renewables Maintain critical business • High inflation impacts production and execution infrastructure continuity costs • Geo-political uncertainty and trade
Slide 6: Power Solutions
POWER SOLUTIONS Firm and unconditional order intake, MW Increased pricing is a key factor for value creation Onshore Offshore 13,896 649 60 (24)% Highlights AME 4,571 10,540 4,547 • All regions contributing with a strong end to the year, 589 capturing 11.2 GW of order intake and 34 percent EMEA 7,63
Slide 7: Service Business
SERVICE BUSINESS GW under active Well positioned for further growth Service order backlog service contracts Average years contract duration Highlights EUR 144 11 30.4bn GW Years (26.6 onshore) (136 onshore) • Service continues to prove its importance to customers in periods with very high power pric
Slide 8: Vestas Development
VESTAS DEVELOPMENT Order intake New secured Total project High level of commercial activities generated pipeline pipeline Highlights 1.6 13 32 GW GW GW • Commercially busy year with 13 GW in new secured pipeline and 1.6 GW order intake generated including side deals • High activity levels in major e
Slide 9: Sustainability Strategy
SUSTAINABILITY STRATEGY Strong sustainability achievements CO2e avoided 532 408 (23)% CO2e avoided over the Highlights lifetime of the capacity produced and shipped during the period (million t) 2021 2022 • Break-through on recycling and circular economy for blades Carbon emissions 0.102 0.100 (2)%
Slide 10: Agenda
AGENDA Orders and markets Financials Strategy and market outlook Outlook & Q&A 10 Full year 2022 Classification: Public
Slide 11: Income Statement – Full Year
INCOME STATEMENT – FULL YEAR mEUR 2022 2021** % change Challenged revenue and profit in 2022 Revenue 14,486 15,587 (7.1)% Production costs (14,368) (14,031) 2.4% Gross profit 118 1,556 (92.4)% Highlights SG&A costs* (1,270) (1,128) 12.6% EBIT before special items (1,152) 428 (369.2)% • Revenue decre
Slide 12: Income Statement – Q4 2022
INCOME STATEMENT – Q4 2022 mEUR Q4 2022 Q4 2021** % change Higher activity but challenged profitability Revenue 4,783 4,551 5.1% Production costs (4,945) (4,158) 18.9% Gross profit (162) 393 (141.2)% Highlights SG&A costs* (352) (299) 17.7% EBIT before special items (514) 94 (646.8)% • Revenue incre
Slide 13: Power Solutions – Full Year
POWER SOLUTIONS – FULL YEAR Challenges in Power Solutions Power Solutions revenue and EBIT margin, mEUR and percent Highlights (13.5)% 12,764 13,103 2,337 11,331 • Revenue decreased by 14 percent YoY, driven by 10,276 933 offshore delays in execution 8,465 • EBIT margin before special items decrease
Slide 14: Service Business – Full Year
SERVICE BUSINESS – FULL YEAR Strong Service growth Service revenue and EBIT margin, mEUR and percent Highlights +27.0% 3,155 • Service revenue increased 27 percent compared to 2,484 2021 driven by higher onshore activity including 2,055 transactional sales and indexation uplifts 1,871 1,669 • 2022 E
Slide 15: SG&A Costs
SG&A COSTS SG&A costs increased in 2022 SG&A costs (TTM)*, mEUR and percent 1.6 %-pts Highlights 1,270 1,128 • Higher SG&A costs primarily driven by impairments 788 on the V174 platform in Q1 and Q4 2022 (total of 757 672 EUR 109m in SG&A). 8.8 7.2 6.6 6.2 • Relative to activity levels, SG&A costs a
Slide 16: Cash Flow Statement
CASH FLOW STATEMENT Negative FY free cash flow albeit strong Q4 mEUR 2022 2021 Abs. Change Highlights Cash flow from operating activities before change in net working capital (3) 947 (950) Change in net working capital* (192) 9 (201) • FY 2022 free cash flow of EUR (953)m driven by Cash flow from op
Slide 17: Net Working Capital
NET WORKING CAPITAL NWC improved in 2022 NWC change over the year, mEUR Highlights • Net working capital generally stable, negatively impacted by an increase in the level of inventory offset by down- and milestone payments and higher receivables (586) 763 197 (1,049) (424) (251) (1,349) NWC end 2021
Slide 18: Total Investments – Full Year
TOTAL INVESTMENTS – FULL YEAR Stable investments year-over-year Total net investments*, mEUR Highlights 773 758 729 687 • Investments of EUR 758m in 2022, mainly driven 603 by investments in the V236 offshore turbine and the modular onshore platform, EnVentus, partly offset by divestment of the Lauc
Slide 19: Provisions & LPF
PROVISIONS & LPF Lost Production Factor (LPF), Percent Focus on warranty provisions and LPF 5 4 3 Highlights 2 1 • LPF* continues at high level as a consequence of 0 the extraordinary repair and upgrade level Dec Dec Dec Dec 2009 2013 2017 2022 • Warranty provisions made corresponding to 9 percent o
Slide 20: Capital Structure
CAPITAL STRUCTURE Net debt to EBITDA well below threshold Net debt to EBITDA before special items Highlights 2.6 1.0 • Net debt to EBITDA at 0.7 in Q4 2022 0.7 0.5 • Net debt negative 46m; EBITDA also negative for 0.0 2022 (EUR 63m) resulting in ratio to remain (0.9) positive • Ratio highly volatile
Slide 21: Agenda
AGENDA Orders and markets Financials Strategy and market outlook Outlook & Q&A 21 Full year 2022 Classification: Public
Slide 22: Our sustainable energy solutions are centered around wind
Our sustainable energy solutions are centered around wind CORE Onshore Offshore Service Development ENABLERS 219 Mt Service adjacencies PtX / Hydrogen Vestas Ventures CO2e avoided annually CUSTOMER & SUPPLIER PARTNERSHIPS 22 Full year 2022 Classification: Public
Slide 23: Significant decarbonisation potential ahead
Significant decarbonisation potential ahead World energy consumption by source 2021 Global wind generation capacity scenarios In exajoule (EJ) and percent (%) In terawatts (TW) 8 Wind electricity 1% Other electricity 19% 7 Net Zero >240 GW annual installations 6 5 Announced Pledges >215 GW annual in
Slide 24: Policy and market developments
Policy and market developments US Inflation Reduction Act and EU Net Zero Industrial Act • The IRA represents the most expansive clean energy measure in history, driving significant growth • Immediate impact is reduced due to high costs, supply chain disruptions, and long interconnection timelines K
Slide 25: Our portfolio consists of four attractive RE growth drivers
OUR PORTFOLIO CONSISTS OF FOUR ATTRACTIVE RE GROWTH DRIVERS Vestas uniquely positioned in the industry ONSHORE OFFSHORE SERVICE DEVELOPMENT Restarting growth Global expansion Solid growth Foundation in place Market expectation Market expectation Market expectation Vestas’ expectation 2022-2025 2022-
Slide 26: Long-term Financial Targets
LONG-TERM FINANCIAL TARGETS REVENUE EBIT MARGIN FCF ROCE Outgrow market >10% Positive 20% over the cycle Our industry needs structural change to increase profitability, especially within the wind turbine segment. Vestas is on the right strategic path and our efforts focus on strengthening the commer
Slide 27: Ambitious targets for our sustainability journey
AMBITIOUS TARGETS FOR OUR SUSTAINABILITY JOURNEY CARBON FOOTPRINT CIRCULARITY Carbon neutral Producing zero-waste company by 2030 – wind turbines by 2040 without using carbon offsets PEOPLE ENERGY TRANSITION Safest, most inclusive Leading the transition & socially-responsible towards a world company
Slide 28: Agenda
AGENDA Orders and markets Financials Strategy and market outlook Outlook & Q&A 28 Full year 2022 Classification: Public
Slide 29: Outlook 2023
OUTLOOK 2023 Outlook Revenue (bnEUR) 14 – 15.5 - Service is expected to grow min. 5 percent EBIT margin before special items (%) (2) – 3 - Service margin is expected to be approx. 22 percent Total investments (bnEUR) approx. 1 Excl. acquisitions of subsidiaries, joint ventures, associates and financ
Slide 30: Financial calendar 2023: Q&A
Financial calendar 2023: • Annual General Meeting (12th April) Q&A • • • Disclosure of Q1 2023 (10th May) Disclosure of Q2 2023 (9th August) Disclosure of Q3 2023 (8th November) 30 Full year 2022 Classification: Public
Slide 31: 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,