Vestas Wind Systems A/S · OMXCOP:VWS
Vestas Wind Systems A/S — Q2 2013 Earnings Presentation
34 slides from Vestas Wind Systems A/S's earnings presentation, Aug 21, 2013
Slide 1: New Group President & CEO
New Group President & CEO Aarhus, 21 August 2013
Slide 2: Agenda
Agenda New Group President & CEO as per 1 September 2013 Introduction Bert Nordberg Questions and answers Bert Nordberg Second quarter of 2013 1. Introduction Marika Fredriksson 2. Financials Marika Fredriksson 3. Order intake and outlook Marika Fredriksson 4. Questions and answers Marika Fredriksso
Slide 3: New Group President & CEO as per 1 September 2013
New Group President & CEO as per 1 September 2013 Anders Runevad Nationality: Swedish Education: 1980-1984 Master of Science in Electrical Engineering, University of Lund (Sweden) 1985-1989 MBA studies, University of Lund (Sweden) Former management positions: 2010-2013 President, Region West & Centr
Slide 4: Questions & answers
«Se Pa ? 5 onal gov? Questions & Seige
Slide 5: Second quarter of 2013
Second quarter of 2013 The two-year turnaround continues – free cash flow outlook upgraded to at least EUR 200m Aarhus, 21 August 2013
Slide 6: Agenda
Agenda Second quarter of 2013 1. Introduction Marika Fredriksson 2. Financials Marika Fredriksson 3. Order intake and outlook Marika Fredriksson 4. Questions and answers Marika Fredriksson and Lars Villadsen 6 Second quarter of 2013
Slide 7: 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 8: Introduction
«Se Pa ? 5 onal gov? 1 Introduction ake’ me
Slide 9: New organisation and operating business model
New organisation and operating business model Focus on turnaround through the new operating business model continues Vestas’ operating business model Three core focus areas I Reduce costs through operational Reduce Reduce I II excellence. costs investments Efficient Advanced manufac- wind turing of
Slide 10: Fixed cost savings
I Fixed cost savings First half 2013 reduction of 525 employees Employees, end of period Number of employees 17,778 The reduction of salaried employees of 768 in the first half year of 2013 contributes to fixed cost savings. The increase of 243 hourly paid (768) employees in the first half year of 2
Slide 11: Lower capex
II Lower capex Last 12 months’ net investments lowered to EUR 220m Net investments, last 12 months mEUR 791 761 740 • Last 12 months’ net investment have 688 been lowered by 62 per cent -62% compared to one year ago. 575 • No new factories. 484 • Low R&D investments despite V164- 8.0 MW development
Slide 12: Capital efficiency and capacity utilisation
III Capital efficiency and capacity utilisation Improved net working capital during Q2 2013 Strategic leavers Operational drivers Net working capital Improved cash collection has driven down receivables. 481 330 233 Sale of own wind power plant. 197 20 Still room for improvement in MW under co
Slide 13: Financials
2 Financials
Slide 14: Shipments and deliveries
Shipments and deliveries Shipments and deliveries decreased by 47 and 33 per cent, respectively Shipments by region Deliveries (TOR*) by region • Shipments amounted to 1,144 MW in Q2 2013 – a • Delivery (TOR*) amounted to 877 MW in Q2 2013 – a decrease of 47 per cent compared to the very busy decrea
Slide 15: Income statement
Income statement Q2 2013 mEUR Q2 2013 Q2 2012 Change FY 2012 Revenue 1,185 1,611 (426) 7,216 • Gross profit decreased due to lower activity level and Cost of sales (1,016) (1,363) 347 (6,420) lower project margins, partly offset by lower Gross profit 169 248 (79) 796 capacity costs and lower depreci
Slide 16: EBIT development Q2 2013 vs Q2 2012
EBIT development Q2 2013 vs Q2 2012 EBIT still positive despite significant decrease in activity EBIT Q2 2013 vs Q2 2012 mEUR 40 EBIT decreased by EUR 28m in Q2 2013 compared to Q2 2012 driven by: 12 19 • Lower project volume and lower (95) project margins compared to the quite strong Q2 2012. • How
Slide 17: EBIT development Q2 2013 vs Q1 2013
EBIT development Q2 2013 vs Q1 2013 Project margins improved significantly compared to Q1 2013 EBIT Q2 2013 vs Q1 2013 mEUR 10 (6) 12 • EBIT improvement of EUR 120m in 9 Q2 2013 compared to Q1 2013 primarily driven by improved project 10 margins of EUR 94m. 94 3 (108) Q1 2013 Project Project Service
Slide 18: Reduction of employee costs
Reduction of employee costs Employee reductions in 2013 of approx 1,800 Employees, end of period Number of employees • Maximum 16,000 employees by year-end -24% 22,721 2013 despite keeping and ramping-up the US tower factory. • Employee reductions in H2 2013 of at least 1,253 through divestments of
Slide 19: Fixed costs
Fixed costs* Fixed costs excluding depreciation and amortisation continue to trend down Fixed costs* excluding D&A mEUR -63 160 156 155 154 • Headcount reductions is the major 150 145 contributor to fixed costs savings. 145 141 140 135 135 130 • Note: Part of the more than EUR 125 121 400m of cost s
Slide 20: Service
Service Satisfactory development continues Service revenue mEUR • Service revenue increased by +10% 10 per cent compared to Q2 250 2012. 233 227 223 217 • Q2 2013 EBIT before 203 203 allocation of Group costs: 169 173 169 EUR 73m. Margin: 29 per cent 159 160 vs 26 per cent in Q2 2012. 149 • Q2 2013
Slide 21: Balance sheet
Balance sheet Q2 2013 Assets (mEUR) Q2 2013 Q2 2012 Change FY 2012 Intangible assets 989 1,233 (244) 1,016 Property, plant and equipment 1,306 1,869 (563) 1,286 Other non-current assets 187 445 (258) 179 Non-current assets 2,482 3,547 (1,065) 2,481 Current assets 3,537 5,229 (1,692) 4,360 Non-curren
Slide 22: Assets held for sale
Assets held for sale Change in the value of assets held for sale Assets held for sale mEUR Sale of tower factory, Pueblo, USA, has been 25 reversed: Due to expected full capacity 136 utilisation in 2014, the writing down of the factory in 2012 was partially reversed by EUR (98) 25m and reclassified
Slide 23: Change in net working capital
Change in net working capital Improved net working capital NWC decrease over the last 12 months NWC improvement during Q2 • Decrease in inventories partly offset by • Lower receivables due to improved cash collection. lower prepayments and payables. • Higher payables only partly offset by higher • P
Slide 24: Warranty provisions and Lost Production Factor
Warranty provisions and Lost Production Factor Warranty consumption and LPF continue at a low level Warranty provisions and consumption Lost Production Factor (LPF) • Warranty provisions made in Q2 2013 amounted to • End Q2 2013: LPF remains below 2 per cent. EUR 23m. • LPF measures potential energy
Slide 25: Cash flow statement
Cash flow statement Q2 2013 mEUR Q2 2013 Q2 2012 Change FY 2012 Cash flow from operating activities before 7 48 (41) 231 change in working capital Change in working capital 254 (310) 564 (304) Cash flow from operating activities 261 (262) 523 (73) Cash flow from investing activities (64) (76) 12 (28
Slide 26: Net debt to EBITDA
Net debt to EBITDA Net debt to EBITDA at 1.5 and net debt reduced Net debt Net debt to EBITDA mEUR ×EBITDA 1.9 -32% 1.8 1.8 1,287 1.5 1,147 972 900 850 0.8 779 -0.1 -0.3 Q1 Q2 Q3 Q4 Q1 Q2 FY FY FY FY FY Q1 Q2 2012 2012 2012 2012 2013 2013 2008 2009 2010 2011 2012 2013 2013 Net debt to EBITDA before
Slide 27: Return on invested capital
Return on invested capital ROIC still at an unacceptable level Return on invested capital* (ROIC) Percentage 6% ROIC will increase by: 4% • Improved earnings through cost reductions, growth in service business and higher 2% capacity utilisation. • Better capital efficiency 0% through capex-light sol
Slide 28: Order intake and outlook
«Se Pa ? 5 onal gov? 3 Order intake Sik
Slide 29: Wind turbine order intake
Wind turbine order intake Vestas’ global footprint and strong offering secure orders Improved wind turbine order intake Price per MW • Q2 2013 order intake was 74 per cent higher than in Q2 • Price per MW increased by 9 per cent compared to Q2 2012. 2012. • Global footprint and strong offering secur
Slide 30: Backlog: Wind turbines
Backlog: Wind turbines Q2 2013: Wind turbine backlog grew by EUR 0.1bn to EUR 7.1bn • Due to uncertainty about a few customers’ ability to comply with the contractual obligations, Vestas has resolved to lower the backlog Wind turbines: value by EUR 0.4bn. • Approx half of the amount relates EUR to a
Slide 31: Backlog: Service
Backlog: Service Q2 2013: Service backlog grew by EUR 0.5bn to EUR 5.9bn EUR 0.5bn Growth in service order backlog Service: compared to Q1 2013 >7 years EUR Average length of service contracts in the backlog 5.9bn 76 % Renewal rate in Q2 2013 31 Second quarter of 2013
Slide 32: Outlook 2013
Outlook 2013 Free cash flow upgraded to at least EUR 200m Outlook • Vestas expects to see deliveries, revenue Shipments (GW) 4-5 and earnings peak in the fourth quarter. • Based on the current delivery plan, margins Revenue (bnEUR) Min. 5.5 on the delivered projects are expected to be higher in the
Slide 33: Questions & answers
«Se Pa ? 5 onal gov? 4 Questions Caoigectee
Slide 34: Copyright Notice
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, electronic, or mechanical, i