Vestas Wind Systems A/S · OMXCOP:VWS
Vestas Wind Systems A/S — Q3 2013 Earnings Presentation
32 slides from Vestas Wind Systems A/S's earnings presentation, Nov 6, 2013
Slide 1: Third quarter of 2013
Third quarter of 2013 Outlook 2013 upgraded Aarhus, 6 November 2013
Slide 2: Agenda
Agenda 1. Introduction Anders Runevad 2. Financials Marika Fredriksson 3. Order intake and outlook Anders Runevad 4. Questions and answers Anders Runevad and Marika Fredriksson 2 Third quarter of 2013
Slide 3: 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 4: Introduction
1 Introduction
Slide 5: Turnaround objectives remain core in 2013
Turnaround objectives remains core in 2013 Unfolding the new operating business model’s potential Core focus areas Q3 2013 results 2013 objectives I Reduce costs • Further fixed capacity costs • Fixed cost savings of more than savings. EUR 400m*. • Max. 16,000 employees. II Lower investment • Invest
Slide 6: Fixed cost savings of more than EUR 400m
I Fixed cost savings of more than EUR 400m* Number of employees close to target of maximum 16,000 employees Employees, end of period Number of employees 22,721 (3,876) Divestment of machining and casting units has lowered the number of employees by 1,025 employees as at (1,608) November 2013. 17,237
Slide 7: Lower capex
II Lower capex Last 12 months’ net investments lowered to EUR 228m Net investments, last 12 months mEUR 761 688 • Capex maintained at a low level. • Last 12 months’ net investment have 575 been lowered by 53 per cent -53% compared to one year ago. 484 • Low R&D investments despite V164- 8.0 MW devel
Slide 8: Offshore joint venture with Mitsubishi Heavy Industries (MHI)
Offshore joint venture with Mitsubishi Heavy Industries (MHI) II Vestas and MHI each contribute significantly to the joint venture Key contributions to the JV Vestas Offshore A/S’ existing business. Development of the V164-8.0 MW Ensures and related technologies. • Proven track record and strong mom
Slide 9: Capital efficiency and capacity utilisation
III Capital efficiency and capacity utilisation Improved net working capital during Q3 2013 Strategic leavers Operational drivers Net working capital • Improved cash conversion. 481 330 233 197 • Room for improvement in MW under completion. 20 2,445 MW under completion end Q3 2013. (56) (117) Q1 Q2
Slide 10: Improve capacity utilisation and become asset light
III Improve capacity utilisation and become asset light From 31 factories in 2011 to 19 The divestment of the machining and casting units adds to a more asset light and scalable manufacturing that can adapt quickly to fluctuations in demand while at the same time secure a high factory utilisation. C
Slide 11: Financials
2 Financials
Slide 12: Shipments and deliveries
Shipments and deliveries High shipment activity – still low deliveries Shipments by region Deliveries (TOR*) by region • Shipments amounted to 1,607 MW in Q3 2013 which • Delivery (TOR*) amounted to 1,176 MW in Q3 2013 – is on a par with Q3 2012. a decrease of 20 per cent. • Canada, Brazil, Germany
Slide 13: Income statement
Income statement Q3 2013 mEUR Q3 2013 Q3 2012 Change FY 2012 Revenue 1,442 1,988 (546) 7,216 • Gross profit increased despite 27 per cent lower Cost of sales (1,229) (1,785) 556 (6,420) revenue due to improved project margins and lower Gross profit 213 203 10 796 capacity costs. Fixed costs* (146) (
Slide 14: EBIT development Q3 2013 vs Q3 2012
EBIT development Q3 2013 vs Q3 2012 Improved earnings despite 27 per cent lower revenue EBIT Q3 2013 vs Q3 2012 mEUR 67 19 EBIT before special items increased by EUR 54m in Q3 2013 compared to Q3 2012 despite lower volume: 13 • Better project margins on the 72 delivered projects compared to a weak Q
Slide 15: Fixed costs
Fixed costs* Fixed costs excluding depreciation and amortisation continue to trend down Fixed costs* excluding D&A mEUR -74 156 • Headcount reductions is the major 145 141 contributor to fixed costs savings. • Note: Part of the more than EUR 121 400m of cost savings impacts cost 114 of sales. 101 93
Slide 16: Special items
Special items Divestment of machining and casting units led to writedown of EUR 50m Q3 2013 special items mEUR 64 • Special items of EUR 64m in the 50 quarter – EUR 57m writedowns without cash effect. 7 7 Employees layoffs Writedown related to Closing provision Q3 2013 special land and buildings and
Slide 17: Service
Service Still the most profitable part of Vestas • Service revenue decreased by 3 per Service revenue cent compared to Q3 2012. mEUR -3% • Q3 2013 EBIT before allocation of 250 Group costs: EUR 44m. Margin: 19 233 227 223 217 227 per cent vs 21 per cent in Q3 2012. 203 203 • Q3 2013 EBIT after alloc
Slide 18: Balance sheet
Balance sheet Q3 2013 Assets (mEUR) Q3 2013 Q3 2012 Change FY 2012 • Vestas’ non-current Intangible assets 764 1,137 (373) 1,016 assets, including assets held for sale, and equity Property, plant and equipment 1,241 1,799 (558) 1,286 decreased compared to Q3 2012 primarily driven Other non-current a
Slide 19: Net assets held for sale
Net assets held for sale Change in the value of assets held for sale Assets held for sale mEUR 462 (296) • Machining and casting units divested. • Offshore assets and liabilities transferred 234 to assets held for sale. (287) 1 (9) 166 227 21 (21) Q2 2013 Divestment of Assets mainly Liabilities Q3 2
Slide 20: Change in net working capital
Change in net working capital Release of working capital continues NWC decreased over the last 12 months NWC improvement during Q3 • More than EUR 500m of cash released. • Improved cash conversion. • Decrease in inventories partly offset by • Higher payables more than offset the slight increase lowe
Slide 21: 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 Q3 2013 amounted to • End Q3 2013: LPF remains below 2 per cent. EUR 28m – corresponding to 1.9 per cent
Slide 22: Cash flow statement
Cash flow statement Q3 2013 mEUR Q3 2013 Q3 2012 Change FY 2012 Cash flow from operating activities before 43 49 (6) 231 change in working capital Change in working capital 61 (151) 212 (304) Cash flow from operating activities 104 (102) 206 (73) Cash flow from investing activities (48) (40) (8) (28
Slide 23: Net debt to EBITDA
Net debt to EBITDA Net debt reduced and net debt to EBITDA at 1.4 Net debt Net debt to EBITDA mEUR ×EBITDA 1.9 -559 1.8 1.8 1,287 1.5 1,147 1.4 972 900 0.8 850 779 728 -0.1 -0.3 Q1 Q2 Q3 Q4 Q1 Q2 Q3 FY FY FY FY FY Q1 Q2 Q3 2012 2012 2012 2012 2013 2013 2013 2008 2009 2010 2011 2012 2013 2013 2013 Ne
Slide 24: 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 25: Order intake and outlook
3 Order intake and outlook
Slide 26: Wind turbine order intake
Wind turbine order intake Vestas’ global footprint and strong offering secure orders Improved wind turbine order intake Price per MW • Q3 2013 order intake almost four times as high as in Q3 • Price per MW decreased by 3 per cent compared to Q3 2012. 2012. • US announced order intake of 540 MW in Q3
Slide 27: Backlog: Wind turbines
Backlog: Wind turbines Q3 2013: Wind turbine backlog increased by EUR 0.2bn to EUR 7.3bn 540 MW Firm order intake in the USA during Q3 2013 Wind turbines: 1.2 GW EUR Potential order intake in the USA through master supply agreement and 7.3bn turbine supply agreements announced in Q3 2013 27 Third qu
Slide 28: Backlog: Service
Backlog: Service Q3 2013: Service backlog increased by EUR 0.2bn to EUR 6.1bn EUR 1.2bn Growth in service order backlog Service: last 12 months >7 years EUR Average length of service contracts in the backlog 6.1bn 79% Renewal rate YTD 2013 28 Third quarter of 2013
Slide 29: Outlook 2013
Outlook 2013 EBIT margin upgraded to min. 2 per cent and free cash flow upgraded to EUR 500-700m Outlook Outlook Outlook Feb. 2013 Aug. 2013 Nov. 2013 • Maximum 16,000 Shipments (GW) 4-5 4-5 ~4.5 employees end 2013 is maintained. Revenue (bnEUR) Min. 5.5 Min. 5.5 Min. 5.5 - of which service revenue
Slide 30: Q4 2013 marks the end of Vestas' two-year turnaround
Q4 2013 marks the end of Vestas’ two-year turnaround 21 Aug. 2013 6 Nov. 2013 4 Feb. 2014 Announcement of new Announcement of Announcement of Group President & Q3 2013 results. strategic objectives and CEO. priorities in connection with disclosure of the annual report for 2013. A flawless execution
Slide 31: Questions & answers
4 Questions & answers
Slide 32: 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