First quarter 2015 - Vestas/media/vestas/investor/investor... · 2015. 5. 6. · 2 │ First...
Transcript of First quarter 2015 - Vestas/media/vestas/investor/investor... · 2015. 5. 6. · 2 │ First...
First quarter 2015
Vestas Wind Systems A/S
Copenhagen, 6 May 2014
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 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 new potential accounting
standards and policies, and 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 document, 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 document 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 2014 (available at vestas.com/investor) and these factors should also be considered. Each
forward-looking statement speaks only as of the date of this document. 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 document.
Disclaimer and cautionary statement
│ First quarter 2015 2
Key highlights Q1 2015 characterised by improved financial and operational performance
Record-high Q1 order intake Order intake in the quarter reached 1,750 MW.
Highest combined order backlog ever Wind turbine and service order backlog of EUR 15bn.
Return on invested capital (ROIC) at highest level ever ROIC increased to 44 percent (TTM).
Earnings improved – highest Q1 ever EBIT margin before special items at 5.2 percent – up 2.1 percentage points
compared to Q1 2014.
Guidance increased Guidance for 2015 has been increased based on higher than expected order intake
YTD, greater visibility for the year and USD development.
3 │ First quarter 2015
Agenda
4
1. Orders and markets
2. Financials
3. Summary, outlook and questions & answers
Q1 Interim financial report,
first quarter 2015
│ First quarter 2015
Market shares 2014 Three out of four external analysts have Vestas as a clear No. 1 with a market share ranging
from 11.6 to 12.3 percent
Market shares 2014 (onshore and offshore)
Percent
5
“Installations” “Wind turbine shipments” “Installations”
Source: MAKE Consulting, IHS Energy, BTM Part of Navigant, FTI Consulting.
│ First quarter 2015
“Grid connected”
11.0%
10.0%
3.0%
4.0%
100% = 52 GW
4.0%
32.0%
8.0%
10.0%
4.0%
9.0%
5.0% United Power
Vestas
XEMC
Goldwind
Others
MAKE
Envision
MIngyang
Enercon
GE
Siemens
Gamesa
Other
Envision
Vestas
United POwer
Suzlon Group
BTM Navigant
3.8%
4.7%
Mingyang
100% = 51 GW
7.8%
4.4%
5.8%
Goldwind
5.1%
Gamesa
GE
28.1%
Siemens
Enercon
12.3%
9.0%
9.9%
9.1%
GE
Enercon
3.8%
7.6%
Other
Siemens
100% = 52 GW
30.0%
3.9%
Gamesa 4.6%
Nordex
IHS Energy
5.0%
Goldwind
Suzlon Group 5.6%
8.9%
United POwer
8.9%
9.7%
12.0%
Mingyang
Vestas
Other
Envision
Gamesa
United Power
Enerocn
Mingyang
GE
Goldwind
Vestas
FTI
100% = 54 GW
31.8%
3.7%
3.9%
4.5%
4.8%
Siemens
5.5% Suzlon Group
9.5%
8.7%
8.7%
11.6%
7.3%
Market development – regulatory trends
6
Germany…
• Still awaiting details for the
auction design. First auction
expected end 2016/start 2017.
Norway and Sweden…
• Governments put forward
legislative proposals to
increase support for
renewables.
EMEA
Americas
IRS updates guidance on PTC…
• “Start of construction date”
changed from 1 January
2014 to 1 January 2015.
• “Place in service date”
extended to 1 January 2017
for all qualifying projects.
• Continuous construction
/effort tests satisfied if above
dates are complied with.
Note: IRS = Internal Revenue Service; RET = Renewable Energy Target.
* Expected target under China’s National Energy Administration’s (NEA) 13th 5-year plan (2016-2020).
Asia Pacific
Australian RET…
• Ongoing political negotiations
regarding adjusted level of
RET.
Continued commitment to wind
in China…
• Potentially increase 2020-
target on total accumulated
wind installations from 200
to 250 GW*.
│ First quarter 2015
Poland…
• Market is getting ready for
new auction system, first
auction to be organised in
H1 2016.
Overall support for renewable energy. Recent regulatory trends characterised by clarification,
transition and negotiations.
Wind turbine order intake Highest Q1 order intake ever at 1,750 MW – an increase of 47 percent. Average selling price
remains fairly stable.
Order intake
MW
Average selling price of order intake
mEUR per MW
• Q1 2015 order intake was 562 MW higher than in
Q1 2014, corresponding to an increase of 47
percent.
• USA, Brazil, Poland and China were the main
contributors to order intake in Q1 2015,
accounting for more than 60 percent.
Key takes:
• Price per MW remains fairly stable.
• Price per MW depends on a variety of factors,
i.e. wind turbine type, geography, scope and
uniqueness of offering.
Key takes:
Q1
2015
Q2
2014
1,750
1,188
2,254
Q1
2014
Q4
2014
1,170
Q3
2014
1,932
+562
0.92
Q4
2014
Q3
2014
0.87
Q2
2014
0.91
Q1
2015
Q1
2014
0.88 0.87
7 │ First quarter 2015
Market development – order intake Q1 2015 order intake in 20 different countries. Improvements mainly seen in Brazil, Poland,
China and Sweden.
Americas
MW
EMEA
MW
Asia Pacific
MW
• Development primarily driven
by Brazil with an order intake
of 286 MW compared to 28
MW in Q1 2014.
• Good activity level in USA,
Jamaica, Chile and Costa
Rica.
• Overall improvement in
Europe, especially driven by
Poland and Sweden.
• General solid activity levels
across a wide range of
countries with varying year-
over-year developments.
• Asia Pacific solely driven by
improvement in China:
- 50 MW in Q1 2014.
- 220 MW in Q1 2015.
710820
220
693
445
Q1 Q1
+340%
+18%
Q1
50
+60%
2015 2014
8 │ First quarter 2015
Market development – deliveries
Americas
MW
EMEA
MW
Asia Pacific
MW
• Higher activity level primarily
driven by USA – up by 212
MW and totalling almost 600
MW in the quarter.
• Improvements in Chile,
Uruguay and Canada, while
Mexico and Brazil declined.
• Overall decline in the EMEA-
region primarily driven by
lower activity level in
Germany.
• Improvements seen in
markets like South Africa,
Finland, Poland and France.
• Significant improvement in
Asia Pacific, however,
coming from a low base.
• Improvements in all markets
compared to last year.
718
457499483
96
Q1
6
-8%
+49%
+1,500%
Q1 Q1
2014 2015
9 │ First quarter 2015
Q1 2015 total deliveries up by 29 percent in terms of MW – totalling 1,271 MW. Improvements
mainly seen in the USA and Asia Pacific-region.
Backlog: Wind turbines and service Combined backlog increased by EUR 1.3bn to record-high EUR 15bn. Wind turbines
increased by EUR 0.8bn, while service increased by EUR 0.5bn.
Wind turbines:
EUR
7.5bn
Service:
EUR
7.5bn
EUR +0.8bn* EUR +0.5bn*
* Compared to Q4 2014.
10 │ First quarter 2015
Offshore status Mitsubishi Vestas Offshore Wind progressing according to plan
Strong technical performance
• The V164-8.0 MW turbine has received its type certificate from leading classification group DNV GL:
- Verifying compliance with tough industry quality standards.
• High running time percentage at test centre:
- The V164-8.0 MW prototype is running according to plan with limited down time.
Operational performance according to plan
• Technical and commercial milestones are progressing as planned.
11 │ First quarter 2015
V164-8.0 MW an early morning at test centre
in Oesterild, Denmark.
Agenda
12
1. Orders and markets
2. Financials
3. Summary, outlook and questions & answers
Q1 Interim financial report,
first quarter 2015
│ First quarter 2015
Income statement Highest ever Q1 revenue and earnings leading to record-high Q1 net profit
13
• Revenue increased by 18 percent
primarily due to higher volume and
impact from USD.
• Gross profit up by 23 percent driven
by higher volume, higher average
margins and impact from USD.
• EBIT before special items almost
doubled mainly driven by higher
gross profit.
Margin: 5.2 percent.
• Significant improvement in net profit
– up by EUR 54m compared to 2014.
Key takes:
│ First quarter 2015
*R&D, administration and distribution
mEUR Q1 2015 Q1 2014 %
change
Revenue 1,519 1,283 18%
Cost of sales (1,293) (1,099) 18%
Gross profit 226 184 23%
Fixed costs* (147) (144) 2%
EBIT before special items 79 40 98%
Special items - (13) -
EBIT after special items 79 27 193%
Income from investments account for
using the equity method 4 - -
Net profit/(loss) 56 2 -
Gross margin 14.9% 14.3% 0.6%-pts
EBITDA margin before special items 10.6% 10.0% 0.6%-pts
EBIT margin before special items 5.2% 3.1% 2.1%-pts
Service Onshore service revenue increased by 21 percent
Service revenue (onshore and offshore)
mEUR
260235244
210
255
+21%
Key takes:
Onshore
* Including offshore in Q1 2014 (prior to closing of the offshore JV), service revenue increased by 13 percent. ** Q1 2014: 18.7 percent.
15
Q1
2014
0 0 0 0
Q1
2015
Q4
2014
Q2
2014
Q3
2014
Offshore
• Onshore service revenue increased
by approx 21 percent* compared to
Q1 2014.
• EBIT before special items: EUR 54m.
Margin: 21.2 percent**.
• Service order backlog growth of EUR
0.5bn compared to Q4 2014.
• Average duration in the service order
backlog of approx 8 years.
14 │ First quarter 2015
Balance sheet Net cash position of EUR 1.7bn
15
• Improvement in net debt due to
improved earnings and net working
capital.
• Positive net working capital
development of EUR 740m.
• Solvency ratio at 31.4 percent.
Key takes: Assets (mEUR) Q1 2015 Q1 2014 Abs.
change
%
change
Non-current assets 2,278 2,071 207 10%
Current assets 5,216 3,763 1,453 39%
Assets held for sale 103 358 255 (71)%
Total assets 7,597 6,192 1,405 23%
Key figures (mEUR) Q1 2015 Q1 2014 Abs.
change
%
change
Net debt (1,686) (483) 1,203 -
Net working capital (1,148) (408) 740 -
Solvency ratio (%) 31.4% 31.0 - 0.4%-pts
Liabilities (mEUR) Q1 2015 Q1 2014 Abs.
change
%
change
Equity 2,388 1,921 467 24%
Non-current liabilities 762 230 532 -
Current liabilities 4,447 3,836 611 16%
Liabilities ass. with assets held for sale - 205 205 (100)%
Total equity and liabilities 7,597 6,192 1,405 23%
│ First quarter 2015
Note: Q1 2014 Financial debts have been adjusted due to time to maturity. Q1 2014 Net working capital has been adjusted for Asset and liabilities held for sale.
Change in net working capital Net working capital development characterised by higher activity levels and higher order intake
NWC change over the last 12 months
mEUR
NWC change over the last 3 months
mEUR
Payables
(236)
Inventories
(1,148)
(3) 40
CCP*
(15)
Receiv-
ables
NWC
end
Q1 2015
Other
liabilities
NWC
end
Q1 2014
(853) (408)
Pre-
payments
327
Receiv-
ables
Payables Other
liabilities
Pre-
payments
Inventories NWC
end
Q1 2015
CCP*
360
(1,148) 45
(6) (350)
(251)
11 (957)
NWC
end
Q4 2014
16
• Positive development primarily driven by higher
prepayments and payables slightly offset by
higher inventories.
Key takes:
• Prepayments increased primarily due to higher
order intake in Q1 2015.
• Inventories and payables more or less offset
each other – both driven by higher activity levels.
Key takes:
* Construction contracts in progress.
Note: Other liabilities has been adjusted by EUR 116m due to the dividend for FY 2014 approved at the annual general meeting 30 March 2015. 12-months figures
have been adjusted for Asset and liabilities held for sale.
│ First quarter 2015
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)
Percent
17
33
36
28
2527
18
28
34
28
22
Q1
2014
Q4
2014
Q3
2014
Q2
2014
Q1
2015
Provisions made Provisions consumed
• Warranty consumption constitutes approx 1.4
percent of revenue over the last 12 months.
• Warranty provisions made correlates with
revenue in the quarter, corresponding to approx
1.8 percent in Q1 2015.
Key takes:
• LPF continues at a low level below 2.0.
• LPF measures potential energy production not
captured by the wind turbines.
Key takes:
│ First quarter 2015
0
1
2
3
4
5
6
Dec
2009
Dec
2013
Dec
2012
Dec
2011
Dec
2010
Dec
2014
Cash flow statement Free cash flow of EUR 146m
18
Key takes: mEUR Q1 2015 Q1 2014 Abs.
change
Cash flow from operating activities before
change in net working capital 160 68 92
Change in net working capital 49 (26) 75
Cash flow from operating activities 209 42 167
Cash flow from investing activities (63) (66) 3
Free cash flow 146 (24) 170
Cash flow from financing activities (97) 421 518
Change in cash at bank and in hand less
current portion of bank debt 49 397 348
• Free cash flow improvement of
EUR 170m driven primarily by
higher earnings and change in net
working capital.
• Cash flow from financing activities
mainly impacted by repayment and
issuance of Eurobonds.
│ First quarter 2015
Note: Change in net working capital in Q1 2015 impacted by non-cash adjustments and exchange rate adjustments with a total amount of EUR 258m.
Total investments Investments primarily driven by blade moulds and capitalised R&D
Net investments
mEUR
98
66
55
6663
Q1
2015
Q2
2014
-3
Q3
2014
Q4
2014
Q1
2014
19
Key takes:
• Investments more or less unchanged
compared to Q1 2014.
• Investments in the quarter was mainly
for V110 and V126 blade moulds and
capitalised R&D.
• Trailing twelve months net investments
of EUR 282m.
│ First quarter 2015
Capital structure Net debt to EBITDA within target, while solvency ratio is impacted primarily by change in working
capital elements and approved dividend
Net debt to EBITDA
×EBITDA
Solvency ratio
percent
20
Q1
2015
< 1,0
(1.8)
(0.5)
Q3
2014
(0.6)
Q4
2014
Q2
2014
Q1
2014
(0.7)
(1.5)
Net debt to EBITDA before special items, last 12 months
Net debt to EBITDA, mid-term financial target
35.0
34.0
33.0
32.0
0.0
34.5
33.5
31.5
32.5
31.0
34.0
min.35.0
Q2
2014
31.6
Q1
2015
31.4
Q1
2014
Q3
2014
31.0
Q4
2014
30.8
Solvency ratio, mid-term financial target
Solvency ratio
• Net debt to EBITDA fell to (1.8) in Q1 2015.
• Development driven by both improved net cash
position and improved EBITDA.
Key takes:
• Solvency ratio decreased to 31.4 percent in Q1
2015.
• Q1 development mainly driven by working
capital elements, approved dividend and an
improved cash position.
Key takes:
│ First quarter 2015
Green Eurobond strengthens capital structure Issuance of seven-year green Eurobond secures continued long-term financial strength and
flexibility
21 │ First quarter 2015
• Issuance of new green Eurobond in
March 2015:
- Secure long-term financing at
attractive terms.
- Strengthen balance sheet and
support solid capital structures.
- Maintain presence in the debt
capital markets.
• Issued as green Eurobond* to
support strategy – exclusive
dedication to wind energy.
• Proceeds to be used for general
corporate purposes.
Maturity profile of debt instruments
mEUR
Strong financial position and flexibility for the future.
500600
0
200
400
600
2020
2019
2017
2021
2016
2015
2018
2022
Matured Eurobond
500
800
400
600
200
1,000
0
2018
2019
2015
2020
2017
1,000
2016
2022
2021
Green Eurobond
* The Notes are in line with the stated definition of green bonds within the green bond principles (DNV GL, 19 February 2015).
Return on invested capital Record-high ROIC of 44 percent
22
Return on invested capital (ROIC)
Percent
-10
-5
0
5
10
15
20
25
30
35
40
4543.8
Q1
2015
Q1
2014
Q3
2014
Q2
2014
21.4
15.2
29.1
Q4
2014
35.3
ROIC, last 12 months EBIT margin before special items, last 12 months
Key takes:
• ROIC increased to 43.8
percent in Q1 2015 – an
improvement of 28.6
percentage points compared
to Q1 2014.
• Development primarily driven
by improved net cash position
and higher earnings.
│ First quarter 2015
Note: ROIC is excluding Asset and liabilities held for sale. Reported ROIC in Q1-Q3 2014 has been adjusted accordingly.
Agenda
23
1. Orders and markets
2. Financials
3. Summary, outlook and questions & answers
Q1 Interim financial report,
first quarter 2015
│ First quarter 2015
Summary Q1 2015 results reaffirm good progress towards achieving profitable growth objectives
24 │ First quarter 2015
“Profitable Growth for Vestas” strategy
continues to be on track…
… supported by strong Q1 results
on key financial and operational
parameters:
• Order intake of 1.8 GW.
• Order backlog of EUR 15bn.
• EBIT margin of 5.2 percent.
• ROIC of 44 percent (TTM).
Outlook 2015 2015 outlook raised on revenue, EBIT margin before special items and free cash flow based on
higher than expected order intake YTD, greater visibility for the year and USD development
• Service business is expected to continue to grow with stable margins.
New outlook Previous outlook
Revenue (bnEUR) min. 7.5 min. 6.5
EBIT margin before special items (%) min. 8.5 min. 7
Total investments (mEUR) approx 350 approx 300
Free cash flow (mEUR) min. 600 min. 400
25 │ First quarter 2015
Financial calendar 2015:
• Disclosure of Q2 2015 (19 August 2015).
• Disclosure of Q3 2015 (5 November 2015). Q&A
26 │ First quarter 2015
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