Vestas Wind Systems A/s · OMXCOP:VWS
Vestas Wind Systems A/s — FY2015 Earnings Presentation
42 slides from Vestas Wind Systems A/s's earnings presentation, Feb 9, 2016
Slide 1: Full year 2015
Full year 2015 Vestas Wind Systems A/S Copenhagen, 9 February 2016
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 Strategy execution produces strong financial/operational results on high activity level globally Financial and operational results • FY 2015 guidance met or exceeded on revenue (EUR 8.4bn), EBIT margin (10.2 percent), and free cash flow (EUR 1,047m). • Highest ever net profit (EUR 685
Slide 4: Agenda
Agenda FY Annual report, 2015. 1. Orders and markets 2. Financials 3. Profitable Growth for Vestas – status and update 4. Summary, outlook, and questions & answers 4 │ Full year 2015 Classification: Public
Slide 5: Strong order intake in Q4 2015
Strong order intake in Q4 2015 Order intake at 2,668 MW – an increase of 18 percent compared to Q4 2014. Average selling price remains stable. Order intake Average selling price of order intake MW mEUR per MW +18% 3,018 2,668 2,254 0.96 0.91 0.92 0.90 0.90 1,750 1,508 Q4 Q1 Q2 Q3 Q4 Q4 Q1 Q2 Q3 Q4 2
Slide 6: Solid improvement in order intake levels across all regions
Solid improvement in order intake levels across all regions FY order intake of 8.9 GW, up by 37 percent year-on-year. All regions delivering growth, leveraging on our global reach. Strategic markets on track. 2014 2015 Americas EMEA Asia Pacific MW MW MW +58% +9% 4,113 +50% 3,889 -17% 3,560 +150% 2,
Slide 7: 2015 total MW deliveries up by 20 percent – totalling 7,486 MW
2015 total MW deliveries up by 20 percent – totalling 7,486 MW Strong performance in the Americas and EMEA region; Asia Pacific lower due to lower order intake in 2014 2014 2015 Americas EMEA Asia Pacific MW MW MW +8% +45% +31% 3,357 3,385 3,672 0% 2,323 -16% -45% 1,591 925 926 1,218 544 457 294 163
Slide 8: Unique global reach once again manifested in 2015
Unique global reach once again manifested in 2015 Balanced order intake from 34 countries across five continents in 2015. Installations in Guatemala and Serbia expand global reach to 75 countries. Order intake by country, FY 2015 Northern Europe Scandinavia Finland 8,943 MW • 34 countries Canada Uni
Slide 9: Second highest combined backlog at EUR 16.8bn
Second highest combined backlog at EUR 16.8bn Combined backlog increased by EUR 0.4bn in the quarter. Service backlog increased by EUR 0.7bn, while the backlog of wind turbines decreased by EUR 0.3bn. Wind turbines: Service: EUR EUR 7.9bn 8.9bn EUR -0.3bn* EUR +0.7bn* * Compared to Q3 2015. 9 │ Full
Slide 10: Multi-year PTC extension secures long-term visibility in the US
Multi-year PTC extension secures long-term visibility in the US Following a +3 GW order intake-year for Vestas, the December 2015 multi-year PTC extension bodes well for continued high activity levels and a solid future for wind energy in the US market Activity levels expected to continue at a Multi
Slide 11: An eventful year for MHI Vestas Offshore Wind
An eventful year for MHI Vestas Offshore Wind JV on track. First commercial installation of the V164 expected during 2016. Sales and operational activity Manufacturing ramp-up First commercial installation of the V164-8.0 MW • Announcements since formation of JV: Announced Announced firm orders cond
Slide 12: Agenda
Agenda FY Annual report, 2015. 1. Orders and markets 2. Financials 3. Profitable Growth for Vestas – status and update 4. Summary, outlook, and questions & answers 12 │ Full year 2015 Classification: Public
Slide 13: Income statement – full year
Income statement – full year Earnings improved – EBIT margin before special items of 10.2 percent. Highest net profit ever. % mEUR FY 2015 FY 2014 Key takes: change Revenue 8,423 6,910 22% Cost of sales (6,918) (5,732) 21% • Revenue increased by 22 percent primarily due to higher volume and Gross pr
Slide 14: Income statement – Q4
Income statement – Q4 EBIT margin before special items increased by 3.1 percentage points to 13.3 percent % mEUR Q4 2015 Q4 2014 Key takes: change Revenue 3,035 2,473 23% Cost of sales (2,460) (2,057) 20% • Revenue increased by 23 percent due to higher volume further Gross profit 575 416 38% supplem
Slide 15: Leveraging on fixed costs
Leveraging on fixed costs Continued downward sloping trend in fixed costs relative to activity levels manifesting strong operational excellence and control Fixed costs (TTM)* Key takes: mEUR and percent of revenue • Fixed costs* relative to a activity levels continue downward trend. 671 622 636 638
Slide 16: Service
Service Strong service business performance primarily driven by organic growth with stable margins Service revenue (onshore and offshore) Key takes: mEUR • Onshore service revenue increased +20% by 20 percent* in 2015 mainly due to organic growth and impact from 1,138 currency. 949 889 825 • EBIT be
Slide 17: Balance sheet
Balance sheet Improved earnings and well managed operations strengthen balance sheet Abs. % Assets (mEUR) FY 2015 FY 2014 Key takes: change change Non-current assets 2,508 2,198 310 14% Current assets 5,976 4,696 1,280 27% • Improvement in net debt due to improved earnings and net working Total asse
Slide 18: Change in net working capital
Change in net working capital Net working capital well managed despite higher activity levels NWC change over the last 12 months NWC change over the last 3 months mEUR mEUR 390 (107) (89) 237 (783) (815) (55) (59) (957) (441) (162) 258 (141) (42) (1,383) (1,383) NWC Receiv- CCP* Inventories Pre- Pay
Slide 19: Warranty provisions and Lost Production Factor
Warranty provisions and Lost Production Factor Warranty consumption and LPF continue at very satisfactory low levels Warranty provisions made and consumed Lost Production Factor (LPF) mEUR Percent 179 6 160 148 148 5 119 122 117 4 108 95 84 3 2 1 0 FY FY FY FY FY Dec Dec Dec Dec Dec Dec Dec 2011 201
Slide 20: Cash flow statement – full year
Cash flow statement – full year Free cash flow of EUR 1bn driven by strong underlying operating profit Abs. mEUR FY 2015 FY 2014 Key takes: change Cash flow from operating activities before 1,075 866 209 change in net working capital • Free cash flow improvement of Change in net working capital 397
Slide 21: Cash flow statement – Q4
Cash flow statement – Q4 Q4 free cash flow driven by strong underlying net profit. 2014-comps impacted by lower non- cash adjustments and higher investment level. Abs. mEUR Q4 2015 Q4 2014 Key takes: change Cash flow from operating activities before 310 501 191 change in net working capital • Free c
Slide 22: Total investments
Total investments Investments in line with revised expectations following the acquisition of UpWind Solutions. Moulds and capitalised R&D main drivers of investments. Net investments Key takes: mEUR and percent of revenue • Investments increased by EUR 761 140m compared to 2014. • 2015 investments m
Slide 23: Capital structure
Capital structure Both Net debt to EBITDA and solvency ratio stable. Solvency target revised to range of 30 to 35 percent. Net debt to EBITDA Solvency ratio ×EBITDA Percent < 1.0 36 34.0 33.8 33.8 35.0 34 32.2 Solvency ratio 32 31.4 target revised 30 30.0 28 (1.9) (1.5) (1.8) (1.7) (1.7) 26 Q4 Q1 Q2
Slide 24: Capital structure development in details
Capital structure development in details Cash position continues to improve whereas solvency ratio is adversely impacted by movements in working capital Net cash position change over the last 12 months Solvency ratio mEUR Percent 35.0 35.0 0.3 397 34.0 -1.1 425 33.8 78 116 -1.1 150 2,270 5.7 1,075 -
Slide 25: Capital allocation
Capital allocation Increased dividend proposed and share buy-back conducted mEUR FY 2015 FY 2014 Key takes: Dividend per share (DKK) 6.82 3.90 Dividend per share (EUR) 0.91 0.52 • For 2015, the Board recommends to the AGM to pay out a dividend of Dividend payout ratio (%) 29.9 29.9 DKK 6.82 per shar
Slide 26: Return on invested capital
Return on invested capital Strong financial and operational performance resulting in impressive ROIC improvement Return on invested capital (ROIC) Key takes: Percent 117.2 120 • ROIC increased to 117.2 110 percent in Q4 2015 – an improvement of 81.9 100 percentage points compared 90 to Q4 2014. 80 7
Slide 27: Agenda
Agenda FY Annual report, 2015. 1. Orders and markets 2. Financials 3. Profitable Growth for Vestas – status and update 4. Summary, outlook, and questions & answers 27 │ Full year 2015 Classification: Public
Slide 28: Positive market and policy environment for wind
Positive market and policy environment for wind Clean energy investments reach all-time high in 2015 primarily driven by policy developments, wind energy’s continuously improving competitiveness, and direct investments Positive policy develop- Cost of wind energy Increasing direct invest- ment and m
Slide 29: Renewable energy to lead the way in global electricity generation
Renewable energy to lead the way in global electricity generation Growth in energy demand expected to be met primarily by renewable energy sources with wind forecasted to lead Renewables expected to account for half of additional global electricity generation, overtaking coal around 2030 to become t
Slide 30: Wind increasingly often cheapest new power source
Wind increasingly often cheapest new power source On a global level, new wind is cost-competitive with coal and gas already today Source: BNEF, H2 2015 Global Levelised Cost of Electricity Update, October 2015. 30 │ Full year 2015 Classification: Public
Slide 31: Focus on Profitable Growth for Vestas continues
Focus on Profitable Growth for Vestas continues Market environment continues to support Vestas’ profitable growth strategy To be the undisputed global wind leader • Market leader in revenue • Strongest brand in industry Our vision • Best-in-class margins • Bringing wind on a par with coal and gas De
Slide 32: Grow profitably in mature and emerging markets
Grow profitably in mature and emerging markets With the strong global performance in 2015, our ambition to grow faster than the market remains unchanged Key achievements 2015: “Grow faster than the Manifestation of unique global reach: market” • Order intake and deliveries in 34 countries. • Global
Slide 33: Capture the full potential of the service business
Capture the full potential of the service business Higher than anticipated growth in the service business leading to an increase of the mid-term growth ambition from 30 to 40 percent Key achievements 2015: “Grow service business by Growing service business: 40% mid-term” • Onshore service revenue up
Slide 34: Reduce levelised cost of energy
Reduce levelised cost of energy 2015 once again proves our ability to develop very competitive offerings based on our existing product portfolio, while maintaining a strong focus on time-to-market Key achievements 2015: “Reduce LCOE faster Introduction of the V136-3.45 MW: than the market” • Improve
Slide 35: Operational excellence
Operational excellence Operations improved during 2015. Operational excellence programmes will continue in 2016 to continue to strengthen cost leadership. Key achievements 2015: “Improve earnings Improved operations: capability” • EBIT margin before special items improved by 2.1 percentage points. •
Slide 36: Vestas key differentiators remain intact
Vestas key differentiators remain intact Global reach, technology and service leadership, and scale give Vestas a unique position to compete in the marketplace Technology and service Global reach Scale leadership • Pioneer and most experienced • More people dedicated to wind • Wind turbines covering
Slide 37: Financial targets and ambitions
High ambitions remain Vestas wants to be the undisputed global wind leader Financial targets Ambitions ROIC: • Double-digit each year over the cycle. FCF: • Positive each year. • Be the market leader in revenue. Capital • Net debt to EBITDA ratio below 1 at any Structure point in the cycle. targets:
Slide 38: Agenda
Agenda FY Annual report, 2015. 1. Orders and markets 2. Financials 3. Profitable Growth for Vestas – status and update 4. Summary, outlook, and questions & answers 38 │ Full year 2015 Classification: Public
Slide 39: Summary: Another strong year executing on our strategy
Summary: Another strong year executing on our strategy Strong financial and operational performance showcasing the merits of Vestas’ profitable growth strategy Execution of Profitable Growth for Vestas well … with continued financial and on track… operational performance: ~9 GW d FOI +20% d Deliveri
Slide 40: Outlook 2016
Outlook 2016 2016 expected to be another year with solid financial performance Outlook Revenue (bnEUR) min. 9 EBIT margin before special items (%) min. 11 Total investments (mEUR) approx 500 (incl. the acquisition of Availon GmbH) Free cash flow (mEUR) min. 600 (incl. the acquisition of Availon GmbH
Slide 41: Q&A and Financial calendar 2016
Financial calendar 2016: Q&A • • • • Annual General Meeting (30 March 2016). Disclosure of Q1 2016 (29 April 2016). Disclosure of Q2 2016 (18 August 2016). Disclosure of Q3 2016 (8 November 2016). 41 │ Full year 2015 Classification: Public
Slide 42: 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,