Vestas Wind Systems A/s · OMXCOP:VWS
Vestas Wind Systems A/s — Q2 2016 Earnings Presentation
28 slides from Vestas Wind Systems A/s's earnings presentation, Aug 18, 2016
Slide 1: Second quarter 2016
Second quarter 2016 Vestas Wind Systems A/S Copenhagen, 18 August 2016 Classification: Public
Slide 2: Disclaimer and cautionary statement
Disclaimer and cautionary statement 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 state
Slide 3: Key highlights
Key highlights An extremely solid performance in the second quarter of 2016 High activity levels across the board Deliveries up by 56 percent in Q2 2016 – driven by all regions. Strong earnings EBIT margin before special items of 15.6 percent – up by 7.3 percentage points compared to Q2 2015. Order
Slide 4: Agenda
Agenda Q2 Interim financial report, second quarter 2016 1. Orders and markets 2. Financials 3. Outlook and questions & answers 4 │ Second quarter 2016 Classification: Public
Slide 5: Overall supportive environment for renewable energy remains
Overall supportive environment for renewable energy remains Various regulatory developments in all regions, generally supportive EMEA Americas Asia Pacific EU moving towards 2020 and 2030 targets… PTC timing in USA… China remains committed… • Trend to move from FiT to • IRS guidance on PTC • Wind en
Slide 6: Satisfactory quarterly order intake given tough 2015 comps
Satisfactory quarterly order intake given tough 2015 comps Order intake at 1.8 GW – a decrease of 41 percent compared to a very strong Q2 2015. Average selling price fairly stable. Order intake Average selling price of order intake MW mEUR per MW -1,228 3,018 2,667 2,403 0.96 0.90 0.90 0.89 1,790 1,
Slide 7: Order intake: Unique global reach proven in H1 2016
Order intake: Unique global reach proven in H1 2016 Balanced order intake from 24 countries across four continents during the first six months of 2016 2015 2016 Americas EMEA Asia Pacific MW MW MW +33% -45% 2,463 2,703 2,029 1,355 -51% 276 135 H1 H1 H1 • H1 2016 impacted by a • H1 2016 underlying st
Slide 8: Turbine platforms continues to excel in global marketplace
Turbine platforms continues to excel in global marketplace Both platforms delivering strong market performance in H1 2016 driving our global reach 2 MW platform 3 MW platform Order intake by region, H1 2016 Order intake by region, H1 2016 MW MW Americas Americas 9% 1% EMEA 16% EMEA Asia Pacific Asia
Slide 9: Deliveries: Strong development across all regions
Deliveries: Strong development across all regions H1 2016 total MW deliveries up by 29 percent – totalling 3,705 MW. All regions positively contributing to the higher activity levels. 2015 2016 Americas EMEA Asia Pacific MW MW MW +42% +13% +63% +43% 1,767 1,574 +51% 1,387 1,244 +90% 1,090 1,126 669
Slide 10: Record-high combined order backlog at EUR 18.1bn
Record-high combined order backlog at EUR 18.1bn Combined backlog increased by EUR 0.1bn in the quarter. Backlog of wind turbines decreased by EUR 0.4bn, while the service backlog increased by EUR 0.5bn. Wind turbines: Service: EUR EUR 8.2bn 9.9bn EUR -0.4bn* EUR +0.5bn* * Compared to Q1 2016. 10 │
Slide 11: JV continues to be on track
JV continues to be on track Sales activity remains high and delivery of projects progresses according to plan Sales strength continues Delivery schedule according to plan • Order backlog grows to… ~1.6 GW • 258 MW Burbo Bank Extension project consisting of 32 V164-8.0 MW turbines progressing accordi
Slide 12: Agenda
Agenda Q2 Interim financial report, second quarter 2016 1. Orders and markets 2. Financials 3. Outlook and questions & answers 12 │ Second quarter 2016 Classification: Public
Slide 13: Income statement
Income statement EBIT margin before special items increased by 7.3 percentage points mainly driven by higher volume and improved average project margins % mEUR Q2 2016 Q2 2015 Key takes: change Revenue 2,557 1,749 46% Cost of sales (1,936) (1,434) 35% • Revenue increased by 46 percent primarily due
Slide 14: Leveraging on fixed costs
Leveraging on fixed costs Fixed costs continue to be under control Fixed costs (TTM)* Key takes: mEUR and percent of revenue • Fixed costs* relative to activity levels continue downward in stable trend. (0.6)%-pts 712 671 660 619 622 636 638 645 • Relative to activity levels, fixed costs* amounted t
Slide 15: Service
Service Satisfactory service performance driven by organic growth and impact from service acquisitions Service revenue Key takes: mEUR • Service revenue increased by 12 +12% percent compared to Q2 2015. 326 311 292 299 • Organic growth and impact as 280 expected from service acquisitions. • EBIT bef
Slide 16: Balance sheet
Balance sheet Balance sheet remains strong Abs. % Assets (mEUR) Q2 2016 Q2 2015 Key takes: change change Non-current assets 2,556 2,223 333 15% Current assets 7,023 5,675 1,348 24% • Stronger net cash position. Assets held for sale 0 103 103 -% • Stable net working capital despite Total assets 9,579
Slide 17: Change in net working capital
Change in net working capital Net working capital stable despite higher activity levels NWC change over the last 12 months NWC change over the last 3 months mEUR mEUR (29) 414 (536) (66) 186 (118) (8) (133) 616 496 (371) (390) (1,016) (1,025) (1,016) (1,068) NWC Receiv- CCP* Inventories Pre- Payable
Slide 18: 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 56 6 48 44 5 33 4 26 28 28 3 19 19 18 2 1 0 Q2 Q3 Q4 Q1 Q2 Dec Dec Dec Dec Dec Dec Dec Jun 2015 2015 2015 2016 2016 2009
Slide 19: Cash flow statement
Cash flow statement Strong operating activities driving free cash flow improvement of approx EUR 150m Abs. mEUR Q2 2016 Q2 2015 Key takes: change Cash flow from operating activities before 557 207 350 change in net working capital • Free cash flow of EUR 330m driven Change in net working capital (13
Slide 20: Total investments
Total investments Higher capitalised R&D and IT activity driving increase in investments Net investments Key takes: mEUR • Investments increased by EUR 17m +17 compared to Q2 2015 primarily driven by higher R&D activity and IT. 204 178 55 • Trailing twelve months net investments of EUR 557m – adjust
Slide 21: Capital structure
Capital structure Capital structure targets within set boundaries Net debt to EBITDA Solvency ratio ×EBITDA Percent < 1.0 36 35.0 33.8 33.8 34 32.2 32 30.7 30.5 30 30.0 (1.4) (1.7) (1.7) (1.6) 28 (1.9) Q2 Q3 Q4 Q1 Q2 Q2 Q3 Q4 Q1 Q2 2015 2015 2015 2016 2016 2015 2015 2015 2016 2016 Net debt to EBITDA
Slide 22: Priorities for capital allocation
Priorities for capital allocation In years without major extraordinary investments the total return to shareholders through dividends and share buy-backs may constitute the majority of the FCF Mid-term ambitions: Capital structure targets: • Double-digit ROIC • FCF ≥ 0 • Net debt to EBITDA < 1.0x •
Slide 23: 2016 share buy-back programme of up to EUR 400m launched
2016 share buy-back programme of up to EUR 400m launched Adjusting the capital structure and addressing strong cash position Size and timing Share buy-back programme of up to DKK 2,984m (EUR 400m) in accordance with the safe harbour rules. Programme launched on 18 August 2016 and running until 30 De
Slide 24: Return on invested capital
Return on invested capital ROIC at very high level of 148 percent Return on invested capital (ROIC) Key takes: Percent 160 148.2 • ROIC increased to 148.2 percent in Q2 2016 – an 140 improvement of 93.6 117.2 119.1 percentage points compared 120 to Q2 2015. 100 71.3 • Development primarily driven 80
Slide 25: Agenda
Agenda Q2 Interim financial report, second quarter 2016 1. Orders and markets 2. Financials 3. Outlook and questions & answers 25 │ Second quarter 2016 Classification: Public
Slide 26: Outlook 2016
Outlook 2016 2016 outlook raised on revenue, EBIT margin before special items, and free cash flow based on better than expected H1 2016 performance and visibility for the remainder of the year New outlook Previous outlook Revenue (bnEUR) min. 9.5 min. 9 - service business is expected to continue to
Slide 27: Financial calendar 2016: Q&A
Financial calendar 2016: Q&A • Disclosure of Q3 2016 (8 November 2016). 27 │ Second quarter 2016 Classification: Public
Slide 28: 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,