Wind. It means the world to us.
TM
Company announcement No. 10 / 2021
Vestas Wind Systems A/S
Hedeager 42,8200 Aarhus N, Denmark
Company Reg. No.: 10403782
Interim Financial Report
First Quarter 2021
Vestas Wind Systems A/S
Interim Financial report – First Quarter 2021 Page 2 of 30
Classification: Public
Contents
Summary ........................................................................................................................................ 3
Financial and operational key figures ......................................................................................... 4
Sustainability key figures ............................................................................................................. 5
Group financial performance ....................................................................................................... 6
Power Solutions ............................................................................................................................ 9
Service ......................................................................................................................................... 11
Sustainability ............................................................................................................................... 12
Strategy and financial and capital structure targets ................................................................ 13
Outlook 2021 ................................................................................................................................ 16
Consolidated financial statements 1 January - 31 March ........................................................ 17
Management’s statement ........................................................................................................... 28
Note on business segments
With the acquisition at the end of 2020 of the offshore
business in the previous joint venture MHI Vestas
Offshore Wind A/S, the offshore business is now to be
regarded as and will be reported as an integrated part of
the two segments “Power Solutions” and “Service”.
The two business segments are:
Information meeting (audiocast)
On Wednesday 5 May 2021 at 10 a.m. CEST (9 a.m.
BST), Vestas will host an information meeting via an
audiocast. The audiocast will be accessible via
vestas.com/en/investor.
The meeting will be held in English and questions may
be asked through a conference call. The telephone
numbers for the conference call are:
Europe: +44 3333 000 804
USA: +1 6319 131 422
Denmark: +45 3544 5577
Conference PIN code: 29163702#
Presentation material for the information meeting will be
available at vestas.com/investor approximately one hour
before the meeting.
Contact details
Vestas Wind Systems A/S, Denmark
Investors/analysts:
Mathias Dalsten, Senior Director
Investor Relations
Tel: +45 2829 5383
Media:
Anders Riis, Vice President
Communications
Tel: +45 4181 3922
Power
Solutions
Service
Vestas Wind Systems A/S
Interim Financial report – First Quarter 2021 Page 3 of 30
Classification: Public
Summary
Revenue and EBIT decreased compared to same
quarter 2020. Record high combined order backlog as a
consequence of the integration of offshore. Full-year
guidance maintained.
In the first quarter of 2021, Vestas generated revenue of
EUR 1,962m – a decrease of 12 percent compared to
the year-earlier period. EBIT before special items
decreased by EUR 17m to EUR (71)m. This resulted in
an EBIT margin before special items of (3.6) percent,
compared to (2.4) percent in the first quarter of 2020.
Free cash flow* amounted to EUR (898)m compared to
EUR (920)m in the first quarter of 2020.
The quarterly intake of firm and unconditional wind
turbine orders amounted to 2,016 MW. The value of the
wind turbine order backlog was EUR 19.4bn as at 31
March 2021. In addition to the wind turbine order
backlog, at the end of March 2021, Vestas had service
agreements with expected contractual future revenue of
EUR 25.3bn. Thus, the value of the combined backlog of
wind turbine orders and service agreements stood at
EUR 44.7bn – an increase of EUR 10.6bn compared to
the year-earlier period.
Vestas maintains its full-year guidance for 2021, with
revenue expected to range between EUR 16bn and
17bn, including service revenue, which is expected to
grow by approx. 15 percent. Vestas expects to achieve
an EBIT margin before special items of 6-8 percent, with
a service EBIT margin of approx. 24 percent. Total
investments*) are expected to amount to approx. EUR
1,000m in 2021.
Group President & CEO Henrik Andersen said:
“Following a strong end to 2020, continued impact from
COVID-19 and lower activity levels affected Vestas’
results for the first quarter of 2021. Our order backlog
reached an all-time high of EUR 45bn, and as a reflection
of the continued positive price development, our
underlying profitability improved in the quarter. Logistical
challenges and supply chain bottlenecks were, however,
amplified by COVID-19 restrictions in strategic markets
and extraordinary events, and as a result our EBIT
margin decreased year-over-year. Our service backlog
and revenue increased significantly in the first quarter,
and we started welcoming around 3,000 new colleagues
in our offshore business as well as partnering with
customers on upcoming offshore projects. At the same
time, we continued the build-out of our global
development business to capture a larger share of the
value chain and accelerate the deployment of
renewables. Although we have started the year a bit
slower than expected, we remain positive we will catch
up throughout the rest of the year by maintaining a strong
focus on executing our 2021 goals and mid-term
strategic priorities.”
Key highlights
All-time high order backlog
Combined order backlog of EUR 45bn despite lower order intake in Q1 2021.
Integration of offshore ongoing
Approx. 3,000 new colleagues welcomed in Vestas to capture future values.
Revenue of EUR 2bn
Decreased compared to Q1 2020 due to lower activity levels and impact from supply chain constraints.
EBIT margin of (3.6) percent
Slightly down from Q1 2020, impacted by lower revenue and logistical challenges.
Annual displacement of CO
2
reaches 192m tonnes
Vestas’ installed fleet at the end of Q1 displaces 192m tonnes of CO
2
on an annual basis.
*) Excl. acquisitions of subsidiaries, joint ventures, associates, and financial investments.
.
Vestas Wind Systems A/S
Interim Financial report – First Quarter 2021 Page 4 of 30
Classification: Public
Financial and operational key figures
mEUR
Q1
2021
Q1
2020
FY
2020
FINANCIAL HIGHLIGHTS
Income statement
Revenue
1,962
2,235
14,819
Gross profit
189
159
1,538
Operating profit before amortisation, depreciation and impairment (EBITDA) before
special items
136
97
1,391
Operating profit (EBIT) before special items
(71)
(54)
750
Operating profit before amortisation, depreciation and impairment (EBITDA)
136
87
1,382
Operating profit (EBIT)
(71)
(112)
698
Net financial items
(18)
(2)
(95)
Profit before tax
(77)
(107)
934
Profit for the period
(57)
(80)
771
Balance sheet
Balance sheet total
19,098
14,885
18,160
Equity
4,696
3,449
4,703
Net working capital
(380)
(631)
(1,127)
Capital employed
6,049
4,317
6,057
Interest-bearing position (net), at the end of the period
445
1,482
1,920
Cash flow statement
Cash flow from operating activities
(746)
(760)
743
Cash flow from investing activities before acquisitions of subsidiaries, joint ventures,
associates and financial investments
(152)
(160)
(687)
Free cash flow before acquisitions of subsidiaries, joint ventures, associates and
financial investments
(898)
(920)
56
Free cash flow
(1,090)
(919)
476
FINANCIAL RATIOS
1)
Financial ratios
Gross margin (%)
9.7
7.1
10.4
EBITDA margin (%) before special items
6.9
4.3
9.4
EBIT margin (%) before special items
(3.6)
(2.4)
5.1
EBITDA margin (%)
6.9
3.9
9.3
EBIT margin (%)
(3.6)
(5.0)
4.7
Return on capital employed (ROCE)
2)
(%) before special items
12.2
17.4
13.5
Net interest-bearing debt / EBITDA
2)
(0.3)
(1.0)
(1.4)
Solvency ratio (%)
24.6
23.2
25.9
Return on equity
2)
(%)
20.3
18.4
21.4
Share ratios
3)
Earnings per share
4)
(EUR)
0.8
0.6
0.8
Dividend per share
(EUR)
-
-
0.23
Pay-out ratio (%)
-
-
30.0
Share price at the end of the period (EUR)
35.0
15.6
38.7
Number of shares at the end of the period (million)
1.010
995
1.010
OPERATIONAL KEY FIGURES
5)
Order intake (bnEUR)
1.6
2.4
12.7
Order intake (MW)
2,016
3,311
17,249
Order backlog – wind turbines (bnEUR)
19.4
15.9
19.0
Order backlog – wind turbines (MW)
24,814
22,049
24,630
Order backlog – service (bnEUR)
25.3
18.2
23.9
Produced and shipped wind turbines (MW)
4,530
4,917
17,055
Produced and shipped wind turbines (number)
1,127
1,476
5,239
Deliveries (MW)
1,925
2,228
17,212
1) The ratios have been calculated in accordance with the guidelines from The Danish Finance Society (Recommendations & Financial ratios).
2) Calculated over a 12-month period.
3) As of 28 April 2021, a share split at a ratio of 1:5 of the Vestas share was carried out. Comparative figures have been restated to reflect the change in number of shares.
4) Earnings per share has been calculated over a 12-month period and in accordance with IAS 33 on earnings per share.
5) The order backlog for Vestas Offshore Wind A/S (former MHI Vestas Offshore Wind A/S) is included as of 31 December 2020. The remaining operational key figures include
Vestas Offshore Wind A/S from 14 December 2020.
Vestas Wind Systems A/S
Interim Financial report – First Quarter 2021 Page 5 of 30
Classification: Public
Sustainability key figures
Q1
2021
Q1
2020
FY
2020
ENVIRONMENTAL
1)
Utilisation of resources
Consumption of energy (GWh)
214
167
621
- of which renewable energy (GWh)
80
69
2)
295
- of which renewable electricity (GWh)
62
59
2)
261
Renewable energy (%)
37
41
2)
48
Renewable electricity for own activities
(%)
100
100
2)
100
Withdrawal of fresh water (1,000 m³)
100
90
421
Waste
Volume of waste from own operations (1,000 t)
19
22
89
- of which collected for recycling (1,000 t)
10
11
46
Recyclability rate of hub and blade
3)
(%)
//
//
41
Carbon emissions
Direct emissions of CO
2
e
(scope 1) (1,000 t)
28
20
71
Indirect emissions of CO
2
e
(scope 2) (1,000 t)
1
1
2)
2
Indirect emissions of CO
2
e from the supply chain (scope 3)
3)
(million t)
//
//
9.79
Indirect emissions of CO
2
e from the supply chain (scope 3)
3)
(kg per MWh generated)
//
//
6.49
Products
Expected CO
2
e avoided over the lifetime of the MW produced and shipped during the
period (million t)
126
125
493
Annual CO
2
e
avoided by the total aggregated installed fleet (million t)
192
169
186
SOCIAL
Safety
Total Recordable Injuries (number)
49
46
185
- of which Lost Time Injuries (number)
16
13
65
- of which fatal injuries(number)
0
0
0
Total Recordable Injuries per million working hours (TRIR)
3.1
3.4
3.3
Lost Time Injuries per million working hours (LTIR)
1.0
1.0
1.2
Employees
Average number of employees (FTEs)
29,279
25,757
26,121
Employees at the end of the period (FTEs)
29,229
25,948
29,378
Diversity and inclusion
Women in the Board
4)
and Executive Management at the end of the period (%)
27
23
27
Women in leadership positions
5)
at the end of the period (%)
20
20
19
Human rights
Community grievances
3)
(number)
//
//
20
Community beneficiaries
3)
(number)
//
//
14,770
Social Due Diligence on projects in scope
3)
(%)
//
//
78
GOVERNANCE
Whistleblower system
EthicsLine compliance cases
3)
(number)
//
//
287
- of which substantiated
//
//
54
- of which unsubstantiated
//
//
199
1
The increase seen compared to first quarter 2020 in consumption of energy, withdrawal of fresh water, and carbon emissions, is mainly due to the inclusion of the offshore
business.
2
Calculation for first quarter of 2020 changed to reflect that renewable energy certificates were subsequently bought for non-renewable electricity.
3
Data only available from 2019 onwards.
4
Only Board members elected by the general meeting are included.
5
Employees in leadership positions comprise managers, specialists, project managers, and above.
Vestas Wind Systems A/S
Interim Financial report – First Quarter 2021 Page 6 of 30
Classification: Public
Group financial performance
Income statement
Revenue
Revenue in the first quarter of 2021 amounted to EUR
1,962m, a decrease of 12 percent compared to EUR
2,235m in the first quarter of 2020. The decrease was
particularly driven by lower wind turbine deliveries and as
well impacted by supply chain constraints. Compared to
the foreign exchange rates in the first quarter of 2020,
revenue for the first quarter of 2021 reflects a negative
impact of approx. EUR 100m from foreign exchange rate
translations effects.
Revenue and EBIT margin before special items*
mEUR and percentage
*Up until 14 December 2020, when Vestas acquired MHI Vestas Offshore Wind A/S,
numbers reflect onshore revenue only.
Gross profit
Gross profit amounted to EUR 189m, corresponding to a
gross margin of 9.7 percent, which is a 2.6 percentage
point increase compared to the first quarter of 2020. The
gross margin increase was mainly attributable to
improved average project margins in the Power Solutions
segment, but the margin continued to be negatively
affected by logistical challenges and supply chain
bottlenecks, among other things attributable to COVID-
19.
Warranty provisions
Costs for warranty provisions amounted to EUR 63m in
the first quarter of 2021, compared to EUR 70m in the first
quarter of 2020. This is equivalent to a warranty ratio of
3.2 percent of revenue in the first quarter of 2021, which
was close to on par with the ratio in the first quarter of
2020 at 3.1 percent.
Research and development costs, Distribution
costs and Administration costs
Research and development costs recognised in the
income statement amounted to EUR 87m, which is above
the level in the first quarter of 2020 of EUR 72m, mainly
from the inclusion of the offshore business.
Distribution costs amounted to EUR 86m in the first
quarter of 2021 compared to EUR 90m in the first quarter
of 2020.
Administration costs amounted to EUR 87m, compared to
EUR 51m in the first quarter of 2020. The increase was
mainly attributable to the inclusion of the offshore
business and approx. 3,000 new employees.
Depreciation, amortisation, and impairment
In the first quarter of 2021, overall depreciation,
amortisation, and impairment amounted to EUR 207m.
This compares to EUR 199m in the same quarter of 2020,
of which EUR 48m impairment loss was reflected in
special items in the income statement. The underlying
depreciation, amortisation, and impairment thereby
increased by EUR 56m. The increase is primarily
attributable to the inclusion of the offshore business and
secondarily a result of recent years’ more frequent
introduction of new technologies and product variants.
Operating profit (EBIT) before special items
EBIT before special items amounted to negative EUR
71m in the first quarter of 2021, compared to negative
EUR 54m in the first quarter of 2020, and equivalent to an
EBIT margin of negative 3.6 percent. The EBIT margin
before special items decreased by 1.2 percentage points
compared to the first quarter of 2020, driven by the lower
revenue and consequently lower absorption of fixed
costs.
Special items
In the first quarter of 2021, no income or costs have been
classified as special items, compared to EUR 58m in the
same quarter last year, related to the optimisation and
simplification of the product portfolio.
Operating profit (EBIT) after special items
In the first quarter of 2021, EBIT after special items
amounted to negative EUR 71m, equivalent to an EBIT
margin after special items of negative 3.6 percent. In the
first quarter of 2020, EBIT after special items amounted
to negative EUR 112m, equivalent to an EBIT margin after
special items of negative 5 percent.
Income from investments in joint ventures and
associates
Income from investments in joint ventures and associates
amounted to a profit of EUR 12m in the first quarter of
2021, compared to a profit of EUR 7m in the first quarter
of 2020. The profit was mainly derived from the
investment in Copenhagen Infrastructure Partners P/S
and from gains related to co-development activities in the
USA.
Vestas Wind Systems A/S
Interim Financial report – First Quarter 2021 Page 7 of 30
Classification: Public
Net financial items
Financial items for the first quarter of 2021 amounted to
negative EUR 18m compared to negative EUR 2m in the
first quarter of 2020 driven by interests, fees, and
currency related items.
Income tax
Income tax amounted to an income of EUR 20m,
equivalent to an effective tax rate of 26 percent, largely in
line with 25 percent in the first quarter of 2020.
Net result for the period
Net result amounted to a loss of EUR 57m in the first
quarter of 2021 compared to a loss of EUR 80m in the
first quarter of 2020. The increase in net result was mainly
a result of higher gross profit in the first quarter of 2021,
and the negative impact in the first quarter of 2020 from
special items.
Financial ratios
Earnings per share amounted to negative EUR 0.06 in the
first quarter of 2021, an improvement of EUR 0.02
compared to negative EUR 0.08 in the first quarter of
2020, driven predominantly by the improved result of the
period.
Return on capital employed (ROCE) before special items
was 12.2 percent in the first quarter of 2021, a decline
compared to 17.4 percent for the first quarter of 2020.
This negative development can be attributed to an
increase in equity and financial debt in combination with
lower EBIT before special items in the first quarter of
2021.
Return on equity was 20.3 percent in the first quarter of
2021, compared to 18.4 percent in the first quarter of
2020, an increase of 1.9 percentage points which can be
attributed to a higher net profit, despite an increase in total
equity.
Working capital and free cash flow
Net working capital
Net working capital amounted to a net liability of EUR
380m as at 31 March 2021, compared to a net liability of
EUR 631m as at 31 March 2020. The increase was mainly
driven by build-up of inventory for onshore and offshore
deliveries during the remainder of 2021. Despite the
deterioration compared to 2020, the overall net working
capital level remains negative.
Cash flow from operating activities
Cash flow from operating activities was negative EUR
746m in the first quarter of 2021, slightly up from negative
760m in the first quarter of 2020.
Cash flow from investing activities
Cash flow from investing activities before acquisition of
subsidiaries, joint ventures, associates, and financial
investments amounted to a net outflow of EUR 152m,
compared to EUR 160m in the first quarter of 2020. The
EUR 8m decrease in the net investment level was driven
by net proceeds from investments in joint ventures.
Free cash flow
Free cash flow before acquisition of subsidiaries, joint
ventures, associates, and financial investments
amounted to negative EUR 898m, a level close to
negative EUR 920m in the first quarter of 2020, excluding
acquisitions of financial investments and investment in
Copenhagen Infrastructure Partners. The negative
development was driven by negative cash flow from
operating activities reflecting net working capital build-up
in the first quarter of the year.
Acquisition of 25 percent stake in Copenhagen
Infrastructure Partners
On 18 December 2020, Vestas announced that it would
acquire a 25 percent stake in the parent companies of
Copenhagen Infrastructure Partners P/S (CIP). The
transaction was completed on 5 February 2021 and has
from that point been recognised as an investment in
associates. A EUR 180m cash payment has been
recognised during the first quarter of 2021, while the
remaining maximum EUR 320m earn-out is to be paid in
the period from 2023 to 2029.
Capital structure and financing items
Equity and solvency ratio
As at 31 March 2021, total equity amounted to EUR
4,696m, an increase from the level at the end of March
2020 of EUR 3,449m, mainly attributable to the net profit
development in the last nine months of 2020.
As at 31 March 2021, the solvency ratio was 24.6 percent,
which is an increase of 1.4 percentage points from the first
quarter of 2020. The solvency ratio was positively
impacted by a higher total equity, despite the higher
overall asset balance mainly from acquisition and
consolidation of offshore business and inventory build-up.
Net interest-bearing position and cash position
As at 31 March 2021, the net interest-bearing position
was positive EUR 445m, a decline of EUR 1,037m,
compared to a positive position of EUR 1,482m at the end
of the first quarter of 2020. This development was
primarily a result of the lower cash position the investment
in Copenhagen Infrastructure Partners P/S and MHI
Vestas Offshore Wind A/S.
As announced on 29 April 2021, Vestas has refinanced
its existing credit facilities by obtaining a EUR 2,000m
revolving multi-currency credit facility with an interest
margin linked to Vestas’ sustainability KPIs. The new
sustainability-linked revolving credit facility will mature in
2026 and will include a two-year extension option to 2028.
Subsequently to the establishment, Vestas has credit
facilities of EUR 2,000m available for cash drawing and
total available financial resources of EUR 3,893m.
Vestas Wind Systems A/S
Interim Financial report – First Quarter 2021 Page 8 of 30
Classification: Public
Cash and cash equivalents amounted to EUR 1,677m as
at 31 March 2021 compared to EUR 1,965 at the end of
the first quarter of 2020.
The ratio net interest-bearing debt/EBITDA of negative
0.3 as at 31 March 2021 deteriorated compared to
negative 1.0 at the end of the first quarter of 2020. The
ratio was negatively impacted by the deterioration of the
net interest-bearing position.
Vestas Wind Systems A/S
Interim Financial report – First Quarter 2021 Page 9 of 30
Classification: Public
Power Solutions
Result for the period
In the first quarter of 2021, revenue from the Power
Solutions business amounted to EUR 1,438m, which is
below the first quarter 2020 revenue of EUR 1,761m.
The decrease is mainly attributable to the US and
Australian markets. Offshore contributed with EUR 92m,
a contribution which is expected to increase significantly
for the remainder of the year.
EBIT before special items amounted to negative EUR
110m in the first quarter of 2021, equal to an EBIT margin
of negative 7.6 percent. Compared to the first quarter of
2020, this is a deterioration of 1 percentage point. This
development was positively impacted by a higher gross
margin from improved average project margins, but more
than offset by logistical challenges and a higher level of
fixed costs from the integration of offshore.
Power Solutions revenue and EBIT margin before special
items*
mEUR and percentage
*Up until 14 December 2020, when Vestas acquired MHI Vestas Offshore Wind A/S,
numbers reflect onshore revenue only.
Wind turbine order intake
In the first quarter of 2021, onshore wind turbine order
intake amounted to 2,016 MW, corresponding to a value
of EUR 1.6bn. This represents a decrease of 39 percent
compared to an order intake of 3,311 MW in the first
quarter of 2020, the decrease mainly relating to China
and Brazil. Offshore did not account for any order intake
in the quarter. In the quarter however, the new offshore
product, the V236-15.0 MW
TM
turbine was launched in
the market to support customers in ongoing and
upcoming tender activities.
The average price per MW was EUR 0.80m in the first
quarter of 2021, compared to EUR 0.72m in the first
quarter of 2020 and EUR 0.74m for full-year 2020,
highlighting the continued underlying stability in pricing.
Wind turbine order intake, first quarter 2021
MW
EMEA
Ameri-
cas
Asia
Pacific
Total
Onshore order
intake
1,497
226
293
2,016
Offshore order
intake
-
-
-
-
Total order
intake
1,497
226
293
2,016
Wind turbine deliveries
Deliveries to customers amounted to 1,925 MW in the
first quarter of 2021, compared to 2,228 MW in the first
quarter of 2020. The decrease was driven by deliveries
in the Americas and Asia Pacific regions, with the most
significant declines in the US and Australian markets.
Deliveries*
MW
*Up until 14 December 2020, when Vestas acquired MHI Vestas Offshore Wind A/S,
numbers reflect onshore deliveries only.
By the end of March 2021, Vestas had installed a total
capacity of 136 GW in 84 countries.
Vestas Wind Systems A/S
Interim Financial report – First Quarter 2021 Page 10 of 30
Classification: Public
Deliveries (onshore and offshore)
MW
Q1
2021
Q1
2020
FY*
2020
Germany
147
110
499
France
129
94
679
United Kingdom
109
4
78
Saudi Arabia
96
-
159
Turkey
66
41
324
Russian Fed.
65
131
390
Netherlands
63
17
270
Poland
50
42
413
South Africa
49
2
132
Sweden
49
68
424
Jordan
33
8
40
Denmark
31
-
92
Finland
20
4
222
Belgium
18
-
140
Austria
11
-
3
Italy
11
4
87
Greece
6
105
297
Spain
4
-
135
Egypt
4
-
-
Norway
1
4
792
Senegal
-
22
23
Kazakhstan
-
-
48
Portugal
-
-
34
Ukraine
-
8
8
EMEA
962
664
5,289
Hereof Offshore
86
-
86
Brazil
398
263
1,236
Mexico
127
115
194
USA
89
523
6,779
Chile
70
46
249
Bolivia
20
1
35
El Salvador
9
23
46
Panama
1
40
40
Argentina
-
60
240
Canada
-
21
130
Americas
714
1,092
8,949
Hereof Offshore
-
-
-
China
136
61
1,465
Australia
41
312
898
Vietnam
30
4
199
India
18
23
68
New Zealand
18
17
95
Japan
6
-
-
South Korea
-
-
107
Sri Lanka
-
19
80
Taiwan
-
36
62
Asia Pacific
249
472
2,974
Hereof Offshore
-
-
-
Total
1,925
2,228
17,212
Hereof Offshore
86
-
86
*Up until 14 December 2020, when Vestas acquired MHI Vestas Offshore Wind A/S,
numbers reflect onshore deliveries only
Wind turbine order backlog
At the end of the first quarter of 2021, the wind turbine
order backlog amounted to 24,814 MW, which
corresponds to a value of EUR 19.4bn, of which EUR
3.9bn relates to offshore wind power projects. The value
of the total order backlog constitutes an increase of 22
percent compared to EUR 15.9bn at the end of the first
quarter of 2020, mainly driven by the inclusion of the
offshore business.
Order backlog per region
MW
EMEA
Ameri-
cas
Asia
Pacific
Total
Onshore order
backlog
10,780
7,526
2,873
21,179
Offshore order
backlog
2,907
-
728
3,635
Total backlog as at
31 March 2021
13,687
7,526
3,601
24,814
Europe, Middle East, and Africa (EMEA)
The total order backlog for Europe, Middle East, and
Africa increased 50 percent from end of first quarter of
2020 to 13,687 MW at the end of first quarter 2021.
Inclusion of the offshore backlog contributed with 2,907
MW in the United Kingdom. The increase in the onshore
backlog isolated was 18 percent mainly driven by the
United Kingdom, the Netherlands, and Poland.
Americas
The total order backlog for Americas decreased 25
percent from the end of first quarter 2020 to 7,526 MW
at the end of first quarter 2021. This was largely driven
by the onshore order backlog in the USA, declining after
high deliveries in the period from second to fourth quarter
of 2020. The onshore order backlog in Americas in turn
was positively impacted by a strong development in
Brazil and Colombia.
Asia Pacific
The total order backlog for Asia Pacific increased 28
percent from the end of first quarter 2020 to 3,601 MW
at the end of first quarter 2021. Inclusion of the offshore
backlog contributed with 728 MW in Japan and Taiwan.
The onshore backlog isolated increased by 2 percent in
the same period, led by order intake in Vietnam.
Vestas Wind Systems A/S
Interim Financial report – First Quarter 2021 Page 11 of 30
Classification: Public
Service
Result for the period
The Service business generated revenue of EUR 524m
in the first quarter of 2021, which corresponds to a 10
percent increase compared to the first quarter of 2020.
The increase was driven by the inclusion of the offshore
business but as well supported by growth in onshore
service revenue.
Service revenue and EBIT margin before special items*
mEUR and percentage
*Up until 14 December 2020, when Vestas acquired MHI Vestas Offshore Wind A/S,
numbers reflect onshore only.
EBIT before special items amounted to EUR 116m in the
first quarter of 2021, corresponding to an EBIT margin of
22.2 percent, which is a 4 percentage points decrease
compared to the same period last year, at 26.2 percent.
This development was mainly driven external factors as
well as the integration of the offshore business to capture
future synergies between the onshore and the offshore
service business.
Wind turbines under service
At the end of March 2021, Vestas had approx. 49,400
wind turbines under service, equivalent to approx. 118
GW.
Lost Production Factor*
Percent
*) Data calculated across approx. 35,000 Vestas wind turbines under full-scope
service. The lost production factor includes both onshore and offshore turbines.
At the end of March 2021, the overall average Lost
Production Factor continued to be impacted by the level
of extraordinary repairs and upgrades.
Service order backlog
At the end of March 2021, Vestas had service contracts
in the order backlog with expected contractual future
revenue of EUR 25.3bn, an increase of EUR 7.1bn
compared to 31 March 2020 partly driven by the
inclusion of the offshore business.
Service order backlog*
bnEUR
*The service order backlog for the offshore business is included as of 31 December
2020.
At the end of the quarter, the average duration in the
service order backlog was approx. ten years,
unchanged from end of 2020.
Vestas Wind Systems A/S
Interim Financial report – First Quarter 2021 Page 12 of 30
Classification: Public
Sustainability
The Vestas Sustainability Strategy
A passion for sustainability has always been driving
Vestas, and the company is working to embed
sustainability into everything it does – including its value
chain and own operations. In the beginning of 2020,
Vestas launched its Sustainability Strategy with four key
ambitions: to become carbon-neutral by 2030, without
using carbon offsets; to produce zero-waste wind
turbines by 2040; to become the safest, most inclusive
and socially responsible workplace in the energy
industry; and to lead the transition to a world powered by
sustainable energy. The company is currently integrating
offshore into its sustainability activities and remains
committed to its ambitious sustainability goals regardless
of its increased scope.
Carbon footprint
Vestas is committed to become carbon-neutral in its own
operations without using offsets and to reduce emissions
from its supply chain by 45 percent per MWh delivered
to the market by 2030. As a consequence of the
integration of the offshore business, in the first quarter of
2021 Vestas’ total scope 1 and 2 emissions increased by
32 percent compared to the fourth quarter of 2020.
Vestas’ scope 1 and 2 carbon emissions from its onshore
activities increased by 12 percent year-on-year in the first
quarter of 2021 due to increased service activity. Scope
3 emissions are reported annually in the Vestas
Sustainability Report.
During the quarter, Vestas continued its transition to e-
mobility in its benefit and service vehicle fleet. For benefit
cars, 31 percent of the fleet is now plug-in hybrids or
battery electric vehicles, down 4 percentage points from
last quarter due to the integration of offshore. For the
service fleet, 23 additional sustainably fueled vehicles
were introduced, bringing the total to 150.
Circularity
Vestas aims to produce zero-waste turbines by 2040,
meaning that the company will work to create a value
chain that generates no waste materials. To support this
goal, in January 2021 Vestas launched the
DecomBlades project, a large cross-sector collaboration
focusing on value chains for recycling end-of-life (EOL)
wind turbine blades. Through collaboration with other
major wind OEMs, recycling companies and knowledge
partners, DecomBlades aims to identify one or more
sustainable, globally available and economically feasible
recycling routes for EOL blades. Specifically, Vestas will
support the development of material and value streams
for three recycling routes, with all recycling technologies
undergoing a complete lifecycle analysis including global
warming potential. The project will run for three years
and is partly funded by Innovation Fund Denmark (IFD).
Diversity & Inclusion
Vestas is committed to achieve a 25 percent share of
women in leadership positions by 2025 and 30 percent
by 2030. The company is therefore progressing on a
number of initiatives to help achieve this ambition. In the
first quarter of 2021, a new project was launched to
generate deep insights about why women leave Vestas,
with the aim of creating targeted solutions to retaining
women. In January, Vestas was included in the 2021
Bloomberg Gender Equality (GEI) index for the first time,
which demonstrates its commitment to measuring and
disclosing data related to gender equality, and to
benchmarking against other companies for
improvement. To further advance Vestas’ commitment to
this area, a new team, "Diversity, Inclusion, and Well-
being" was formed in February and will continue to drive
the D&I agenda at Vestas.
Safety
Committing to be the safest workplace in the energy
industry, Vestas wants to reduce the Total Recordable
Injury Rate (TRIR) to 1.5 by 2025 and 0.6 by 2030,
equivalent to a 15 percent year-on-year reduction from
2019. In the first quarter of 2021, 49 Recordable Injuries
were registered, resulting in a TRIR of 3.1 (including
offshore). This is an improvement from the TRIR of 3.4
in the first quarter of 2020 (not including offshore). During
the quarter, integrating the offshore activities under the
existing safety initiatives was a key priority.
Incidence of total recordable injuries*
Per million working hours
*Up until 14 December 2020, when Vestas acquired MHI Vestas Offshore Wind A/S,
numbers reflect onshore only.
Energy transition
In February 2021, Vestas’ newly established corporate
venture capital arm, entitled Vestas Ventures, invested
in the Swedish wood technology company Modvion A/B.
With the investment in Modvion, Vestas becomes a
minority investor in the bio-composite specialist, which
focuses on the development and manufacturing of
modular, sustainable wind turbine towers. When
compared directly with the value chain of a conventional
steel tower, Modvion towers are proven to reduce carbon
emissions by 80 percent from tower manufacturing
operations, again proving Vestas’ dedication to scaling
technologies that enable the world to be powered by
sustainable energy.
Vestas Wind Systems A/S
Interim Financial report – First Quarter 2021 Page 13 of 30
Classification: Public
Strategy and financial and
capital structure targets
(For an extended introduction to the Vestas strategy,
please refer to the Annual Report 2020.)
The beginning of a sustainable era
Energy is one of the fundamental building blocks of
society. It powers life and prosperity, defines entire eras
in human history, and dictates how we live our lives.
When energy sources change, societies change with
them, and we are currently on the brink of a new era
defined by renewables. Renewables are now the
cheapest source of electricity in most parts of the world,
1
and global efforts to combat the climate crisis and create
sustainable societies are gaining momentum. The need
for change is urgent, and the sustainable energy
solutions to deliver it are available today.
The sustainable era will be characterised by
unprecedented change to energy systems as well as
societies at large. Entire industries and mobility systems
will need to be electrified in order to take advantage of
renewable energy sources, and as a result renewable
energy sources will redefine how we produce, distribute,
and use energy. As such, the entire planet is embarking
on an industrial and societal transition never seen before,
opening up new opportunities for value creation for
sustainable companies.
Today, electricity constitutes just 20 percent of the global
energy system, and of this wind energy provides around
6 percent. With less than 2 percent of all energy coming
from wind turbines, it is clear the growth potential for
renewables is enormous. Global electricity demand is
expected to have grown almost 60 percent by 2050 as
electrification accelerates and energy demand in
developing economies increases. Wind and solar PV are
expected to play a key role in this expansion and supply
56 percent of global electricity, up from just 9 percent in
2019.
1
For the last 40 years, Vestas has pioneered wind energy,
and this will remain our key focus. To create a
sustainable planet for future generations and continue to
provide an economic return to our shareholders, we
must, however, also look beyond wind energy. Today,
we are therefore increasingly investing in solutions that
enable both the continued deployment of renewables
and allow us to integrate sustainability in everything we
do.
A strategy to lead from the front
In 2020, Vestas celebrated its 75th anniversary, and its
40-plus years of pioneering the development and
deployment of wind energy. Since 1979, when we
installed our very first wind turbine, we have been leading
the wind energy industry from the front. Today, wind
and/or solar PV are the cheapest new sources of
1
Source: Bloomberg New Energy Finance: Bloomberg New Energy Outlook.
September 2020.
electricity in countries making up around 73 percent of
world GDP,
1
and Vestas’ total installed capacity
displaces more CO
2
emissions than any other company
in the sustainable energy sector.
Vestas has the scale, reach, track record, and
technological expertise to continue leading the buildout
of renewable energy and the electrification of societies.
Leveraging these qualities, our strategy revolves around
three pillars:
· Enabling electrification through low-cost
renewable energy
· Driving increased deployment of renewable
energy
· Pioneering new solutions to indirect electrification
As part of our strategy, and as part of our efforts to play
a leading role in the energy transition, in 2020 we took
major steps towards the realisation of our vision. These
steps will affect Vestas in the short term and shape the
future Vestas of 2030. They include:
· Making an emphatic move in offshore by
acquiring MHI Vestas Offshore Wind
· Launching the industry’s most ambitious
sustainability strategy
· Making Vestas the first OEM in renewable energy
with verified climate targets in line with the 1.5°C
scenario
· Expanding our development activities and
investing in Copenhagen Infrastructure Partners
· Forming a partnership with Mitsubishi Heavy
Industries focused on green hydrogen
In the mid-term, our priorities remain to integrate
sustainability in everything we do and lead the market in
both wind power plant solutions and in service. We also
aim to ensure industry-leading profitability, sustaining
our preferred partner status with customers, and
attracting the best talent in the energy industry.
To achieve our goals and lead the energy transition, we
focus on three strategic business areas: onshore,
offshore, and service. For an elaborated version of
priorities and ambitions for those three business areas,
please refer to the Annual Report 2020.
Strategy execution
To drive our strategic priorities and ensure we focus on
the key challenges we face, Vestas runs a yearly
Vestas Wind Systems A/S
Interim Financial report – First Quarter 2021 Page 14 of 30
Classification: Public
strategy cycle and review where we discuss, adjust and
optimise our strategy based on market changes and
future scenarios. The yearly cycle ensures close
alignment on strategic priorities between the Board of
Directors and Executive Management, providing the
organisation with a strong focus and ensuring clear
direction for all of our colleagues around the world.
In 2020, our key strategic priorities included among
others the following ‘Must Win Battles’:
· Modularisation: Modularisation is both a tool and a
mindset. It will guide Vestas’ continued
transformation to meet the future demand for wind
energy and customer requirements – onshore as well
as offshore. In this way, modularisation combines
customisation and standardisation, making it
possible for us to serve broad market requirements
at competitive costs. Our platforms have served us
well until now, but the increasing number of variants
has increased the competitive pressure; our
response is continued standardization and cost-out,
without compromising on providing the solutions our
customers need. To succeed, we must remain
disciplined by investing in the right initiatives, while
discontinuing projects that look unlikely to provide the
returns we originally expected. As an example, in
April 2020 we discontinued the development of a
specific aspect of our technology programme.
· Quality: New product introductions, accelerated cost-
out and high activity levels have challenged
production ramp-ups and delivery plans, which in turn
has put pressure on the entire Vestas value chain,
including our quality. As a result, we are now seeing
higher warranty provisions and consumption due to
increased rework and delays in the launch and
execution of new products, which reduces our
profitability. Addressing these challenges and
enforcing a strong quality culture across the value
chain is a strategic priority for Vestas. Our aim is to
ensure issues are contained and solved close to their
origin, while providing best-in-class quality for future
customer solutions.
· Talent & Leadership: Vestas’ growth ambitions
require us to have the right employees with the right
capabilities. We need to attract, recruit, develop, and
retain business-critical talents, not only in established
markets but in new markets where the Vestas brand
may not be so well known. To fulfil our strategy, we
therefore must build a strong talent pipeline, improve
leadership capabilities, and increase diversity to
foster sustainable success and growth. We already
have around 30,000 skilled and dedicated
employees, but we are on a journey and we must do
even more to be successful in the future – especially
in terms of diversity and succession.
1
Source: Wood Mackenzie: Market Outlook Update Q4/2020. December 2020.
Long-term financial ambitions
Wind power has outcompeted fossil fuel alternatives in
most parts of the world, volumes in the global wind
turbine market are good, and the prospects for the
coming years promising, with wind power’s expected
central role in the electrification of societies, industries
and mobility systems and forecasts of average annual
growth of wind power capacity of 8 percent towards
2030.
1
At the same time, the wind power industry has
seen consolidation, giving way for a more stable
competitive environment. The profitability, however, is
still not at a satisfactory level, and hence this needs to be
a focus area for wind turbine manufacturers in the
coming years.
Ambitions for the three business areas
Onshore
The demand for onshore wind power globally is expected
to remain stable or grow slightly from the current high
level the next two-to-three years. After that, a new phase
of growth is expected, driven by new policies, increased
electrification, and corporate ambitions and activities.
Adding to that, Vestas expects to see increasing
contributions from its development activities.
On this background, Vestas maintains its long-term
ambition for the onshore wind power segment to grow
faster than the market and be market leader in revenue.
Offshore
The projections for the offshore market suggest a
development in three phases for Vestas’ newly acquired
offshore segment. Based on the order backlog, Vestas
will see a couple of years with high activity levels and
solid financial performance. Then, from 2023, the
company expects to see a decline in activity towards
2025. These first two phases will be under the influence
of heavy investments both in the organisation, supply
chain, and technology. By 2025, when a steep increase
in annual offshore installations is expected, and Vestas’
new platform will be gaining traction in the market,
Vestas aims to be a leading player in offshore wind
power.
Based on these assumptions, Vestas has an ambition to
achieve revenue in the offshore segment of EUR +3bn
by 2025, with an EBIT margin on par with the Group's
overall margin.
Service
The wind power service market is expected to continue
growth at the current rate, and Vestas maintains its
ambitions for the long-term for the Service revenue to
grow faster than the market. The Service EBIT margin is
expected at a level of around 25 percent in the coming
years, accounting for the integration of the offshore
business, which currently generates lower margins than
onshore.
Vestas Wind Systems A/S
Interim Financial report – First Quarter 2021 Page 15 of 30
Classification: Public
Ambitions on Group level
Vestas maintains its ambition on an overall level to grow
faster than the market and be market leader in revenue.
Even with the integration of the offshore business, the
company is targeting to reach a 10 percent EBIT margin
based on the current market conditions and projections.
The introduction of a new offshore wind power platform
will impact free cash flow, but Vestas nevertheless
expects to generate a positive cash flow each year. The
ambition is still to achieve a long-term ROCE of minimum
20 percent over the cycle.
Financial and capital structure targets and
priorities
Vestas’ financial and capital structure targets, as well as
related dividend policy, link to the strategic aspirations of
the company. Financial stability and structural strength
of the balance sheet remain key priorities for the
company.
Capital structure targets
As a player in a market where projects, customers, and
wind energy investors are becoming larger, Vestas aims
to be a strong financial counterpart. Capital resources
will be maintained to secure compliance with Vestas’
capital structure target:
Net interest-bearing debt/EBITDA ratio below 1x at any
point in the cycle – as well as related dividend policy,
linked to the strategic aspirations of the company.
Dividend policy and priorities for excess cash
allocation
Any decision to distribute cash to shareholders will be
taken in appropriate consideration of capital structure
targets and availability of excess cash. Determining
excess cash will be based on the company’s growth
plans and liquidity requirements, thus securing adequate
flexibility to invest in Vestas’ strategy.
The general intention of the Board of Directors is to
recommend a dividend of 25-30 percent of the net result
of the year after tax.
In addition, Vestas may from time to time supplement
with share buyback programmes in order to adjust the
capital structure. Such share buy-backs, if any, will likely
be initiated in the second half of the year based on
realised performance.
In years without major investments or extraordinary
events, the total distribution to shareholders through
dividends and share buy-backs may constitute the
majority of the free cash flow.
Vestas’ financial and capital structure targets, as well as
related dividend policy, link to the strategic aspirations of
the company. Financial stability and structural strength
of the balance sheet remain key priorities for the
company.
Vestas Wind Systems A/S
Interim Financial report – First Quarter 2021 Page 16 of 30
Classification: Public
Outlook 2021
Revenue for full-year 2021 is expected to range between
EUR 16bn and 17bn, including service revenue, which is
expected to grow approx. 15 percent. Vestas expects to
achieve an EBIT margin before special items of 6-8
percent with a service EBIT margin of approx. 24
percent. Total investments
*)
are expected to amount to
approx. EUR 1,000m in 2021.
Vestas expects warranty provisions at a level of around
3 percent of revenue. Special items are expected to
amount to approx. EUR 100m relating to the integration
of MHI Vestas Offshore Wind A/S.
It should be emphasised that Vestas’ accounting policies
only allow the recognition of revenue when the control
has passed to the customer, either at a point in time or
over time. Disruptions in production and challenges in
relation to shipment of wind turbines and installation
hereof, for example bad weather, lack of grid
connections, and similar matters, may thus cause delays
that could affect Vestas’ financial results for 2021.
Further, movements in exchange rates from current
levels may also impact Vestas’ financial results for 2021.
Outlook 2021
Revenue (bnEUR) 16-17
EBIT margin (%) before special items 6-8
Total investments
*)
(mEUR) approx. 1,000
* Excl. acquisitions of subsidiaries, joint ventures, associates, and financial
investments.
Vestas Wind Systems A/S
Interim Financial report – First Quarter 2021 Page 17 of 30
Classification: Public
Consolidated financial statements 1 January - 31 March
Condensed income statement 1 January - 31 March
mEUR
Note
Q1
2021
Q1
2020
Revenue
1.1, 1.2
Production costs
(1,773 )
(2,076 )
Gross profit
Research and development costs
(87 )
(72 )
Distribution costs
(86 )
(90 )
Administration costs
(87 )
(51 )
Operating profit (EBIT) before special items 1.1 (71 ) (54 )
Special items
(58 )
Operating profit (EBIT) (71 ) (112 )
Income from investments in joint ventures and associates
Net financial items
(18 )
(2 )
Profit before tax
(77 )
(107 )
Income tax
Profit for the period
(57 )
(80 )
Profit is attributable to:
Owners of Vestas
(61 )
(75 )
Non-controlling interests
(5 )
Earnings per share (EPS)
Earnings per share for the period (EUR), basic
(0.06 )
(0.08 )
Earnings per share for the period (EUR), diluted
(0.06 )
(0.08 )
Condensed statement of comprehensive income 1 January - 31 March
mEUR
Q1
2021
Q1
2020
Profit for the period
(57 )
(80 )
Items that may be reclassified to the income statement subsequently:
Exchange rate adjustments relating to foreign entities
(32 )
Fair value adjustments of derivative financial instruments for the period
(7 )
Gain/(loss) on derivative financial instruments transferred to the income statement
(6 )
(23 )
Exchange rate adjustments relating to joint ventures
(1 )
Share of fair value adjustments of derivatives financial instruments of joint ventures and associates
Share of fair value adjustments of derivatives financial instruments transferred to the income statement
of joint ventures and associates
Tax on items that may be reclassified to the income statement subsequently
(2 )
(72 )
Other comprehensive income after tax for the period
Total comprehensive income for the period
The above condensed statement of comprehensive income should be read in conjunction with the accompanying notes.
Vestas Wind Systems A/S
Interim Financial report – First Quarter 2021 Page 18 of 30
Classification: Public
Condensed balance sheet – Assets
mEUR
Note
31 March
2021
31 March
2020
31 December
2020
Goodwill
Completed development projects
Software
Other intangible assets
Development projects in progress
Total intangible assets
Land and buildings
Plant and machinery
Other fixtures, fittings, tools and equipment
Right-of-use assets
Property, plant and equipment in progress
Total property, plant and equipment
2.1
Investments in joint ventures and associates
2.2
Other investments
Tax receivables
Deferred tax
Other receivables
3.4
Financial investments
3.4
Total other non-current assets
Total non-current assets
Inventories
Trade receivables
Contract assets
Contract costs
Tax receivables
Other receivables
3.4
Financial investments
3.4
Cash and cash equivalents
3.2
Total current assets
Total assets
The above condensed balance sheet should be read in conjunction with the accompanying notes.
Vestas Wind Systems A/S
Interim Financial report – First Quarter 2021 Page 19 of 30
Classification: Public
Condensed balance sheet – Equity and liabilities
mEUR
Note
31 March
2021
31 March
2020
31 December
2020
Share capital
3.1
Other reserves
(100 )
(146 )
Retained earnings
Attributable to owners of Vestas
Non-controlling interests
Total equity
Provisions
2.3
Deferred tax
Financial debts
3.4
Tax payables
Other liabilities
3.4
Total non-current liabilities
Contract liabilities
Trade payables
Provisions
2.3
Financial debts
3.4
Tax payables
Other liabilities
3.4
Total current liabilities
Total liabilities
Total equity and liabilities
The above condensed balance sheet should be read in conjunction with the accompanying notes.
Vestas Wind Systems A/S
Interim Financial report – First Quarter 2021 Page 20 of 30
Classification: Public
Condensed statement of changes in equity – 3 months 2021
Reserves
mEUR
Share
capital
Transla-
tion
reserve
Cash flow
hedging
reserve
Other
reserves
Total other
reserves
Retained
earnings
Non-
controlling
interests
Total
Equity as at 1 January 2021
(114 )
(21 )
(11 )
(146 )
Profit for the period
(61 )
(57 )
Other comprehensive income for the period
(15 )
Total comprehensive income for the period
(15 )
(61 )
Transfer of cash flow hedge reserve to the
initial carrying amount of hedged items
(9 )
(9 )
(9 )
Transaction with owners:
Transactions with non-controlling interests
(6 )
Share-based payments
Tax on equity transactions
(4 )
(4 )
Total transactions with owners
(6 )
Equity as at 31 March 2021
(47 )
(45 )
(8 )
(100 )
Condensed statement of changes in equity – 3 months 2020
Reserves
mEUR
Share
capital
Transla-
tion
reserve
Cash flow
hedging
reserve
Other
reserves
Total other
reserves
Retained
earnings
Non-
controlling
interests
Total
Equity as at 1 January 2020
(4 )
(4 )
(59 )
(67 )
Profit for the period
(75 )
(5 )
(80 )
Other comprehensive income for the period
-
(30 )
(2 )
Total comprehensive income for the period
(30 )
(75 )
(7 )
Transfer of cash flow hedge reserve to the
initial carrying amount of hedged items
(18 )
(18 )
(18 )
Transaction with owners:
Share-based payments
Tax on equity transactions
(5 )
(5 )
Total transactions with owners
Equity as at 31 March 2020
(34 )
(35 )
The above condensed statement of changes in equity should be read in conjunction with the accompanying notes.
Vestas Wind Systems A/S
Interim Financial report – First Quarter 2021 Page 21 of 30
Classification: Public
Condensed cash flow statement 1 January - 31 March
mEUR
Note
Q1
2021
Q1
2020
Profit for the period
(57 )
(80 )
Change in net working capital
(753 )
(675 )
Adjustment for non-cash transactions
Income tax paid
(63 )
(107 )
Interest paid / received, net
(17 )
(12 )
Cash flow from operating activities
(746 )
(760 )
Purchase of intangible assets
(87 )
(70 )
Purchase of property, plant and equipment
(79 )
(90 )
Proceeds from investments in joint ventures and associates
Cash flow from investing activities before acquisition of subsidiaries, joint ventures,
associates and financial investments
(152 )
(160 )
Free cash flow before acquisitions of subsidiaries, joint ventures, associates and
financial investments
(898 )
(920 )
Investments in joint ventures and associates
(186 )
Purchase of other non-current financial assets
(1 )
(1 )
Disposal of other non-current financial assets
Purchase of financial investments
(116 )
Disposal of financial investments
Cash flow from investing activities
(344 )
(159 )
Free cash flow
(1,090 )
(919 )
Payment of lease liabilities
(34 )
(11 )
Proceeds from borrowings
Payment of financial debt
(291 )
Cash flow from financing activities
(309 )
Net decrease in cash and cash equivalents
(1,399 )
(877 )
Cash and cash equivalents at the beginning of period
Exchange rate adjustments of cash and cash equivalents
(46 )
Cash and cash equivalents at the end of the period
The above condensed cash flow statement should be read in conjunction with the accompanying notes.
Vestas Wind Systems A/S
Interim Financial report – First Quarter 2021 Page 22 of 30
Classification: Public
Notes
1 Result for the period
1.1 Segment information
As disclosed in the Annual Report 2020, following the acquisition of MHI Vestas Offshore Wind A/S, Vestas established a
new offshore operating segment. The new operating segment for offshore forms part of the reportable segment Power
Solutions and is presented with the onshore activities in the table below. The offshore service operations acquired has
been integrated in the existing Service operating segment.
In the first quarter of 2020, impairment losses of EUR 48m and provision for purchase commitments of EUR 10m related
to the discontinuation of development projects have been recognised in special items, impacting the Power Solutions
segment.
mEUR
Power
Solutions
Service
Not allocated
Total
Group
Q1 2021
Total revenue
1,438
524
-
1,962
Total costs
(1,548)
(408)
(77)
(2,033)
Operating profit (EBIT)
(110)
116
(77)
(71)
Income from investments in joint ventures and associates
12
Net financial items
(18)
Profit before tax
(77)
Amortisation and depreciation included in total costs
(164)
(25)
(18)
(207)
mEUR
Power
Solutions
Service
Not allocated
Total
Group
Q1 2020
Total revenue
1,761
474
-
2,235
Total costs
(1,878)
(350)
(61)
(2,289)
Operating profit (EBIT) before special items
(117)
124
(61)
(54)
Special items
(58)
-
-
(58)
Operating profit (EBIT)
(175)
124
(61)
(112)
Income from investments in joint ventures and associates
7
Net financial items
(2)
Profit before tax
(107)
Amortisation and depreciation included in total costs
(119)
(17)
(15)
(151)
Vestas Wind Systems A/S
Interim Financial report – First Quarter 2021 Page 23 of 30
Classification: Public
1.2 Revenue
The following illustration shows Vestas’ revenue recognition and the link to the operational highlights.
Vestas Wind Systems A/S
Interim Financial report – First Quarter 2021 Page 24 of 30
Classification: Public
Disaggregation of revenue
In the following section, revenue is disaggregated for the two reportable segments, by primary geographical market, major
contract types, and timing of revenue recognition.
mEUR Power Solutions Service Total
Q1
2021
Q1
2020
Q1
2021
Q1
2020
Q1
2021
Q1
2020
Timing of revenue recognition
Products and services transferred at a point in time
699
1,113
72
71
771
1,184
Products and services transferred over time
739
648
452
403
1,191
1,051
1,438
1,761
524
474
1,962
2,235
Revenue from contract types
Supply-only
193
551
-
-
193
551
Supply-and-installation (at a point in time)
506
562
-
-
506
562
Supply-and-installation (over time)
538
276
-
-
538
276
Turnkey (EPC)
201
372
-
-
201
372
Service
-
-
524
474
524
474
1,438
1,761
524
474
1,962
2,235
Primary geographical markets
EMEA
768
564
301
259
1,069
823
Americas
459
815
174
175
633
990
Asia Pacific
211
382
49
40
260
422
1,438
1,761
524
474
1,962
2,235
2.1 Property, plant and equipment
In the first quarter of 2021, Vestas acquired assets with a cost of EUR 79m mainly related to investments in the transport
equipment and construction tools, compared to EUR 90m in the first quarter of 2020.
Lease contracts recognised as right-of-use assets during the first quarter of 2021 amounted to EUR 85m, compared to
EUR 18m in the first quarter of 2020.
2.2 Investments in joint ventures and associates
As disclosed in the Annual Report 2020, Vestas entered into an agreement to acquire a 25 percent stake in Copenhagen
Infrastructure Partners P/S’ parent companies on 18 December 2020. The consideration was agreed at a price of EUR
500m in the form of a EUR 180m upfront payment and a maximum of EUR 320m paid as a performance contingent
consideration in the period 2023 to 2029, refer to note 3.4.
Following the completion of the transaction in February 2021, an investment of EUR 500m in associated companies has
been recognised.
Vestas Wind Systems A/S
Interim Financial report – First Quarter 2021 Page 25 of 30
Classification: Public
2.3 Warranty provisions (included in provisions)
mEUR
31 March
2021
31 March
2020
31 December
2020
Warranty provisions, 1 January
1,189
619
619
Provisions for the period
63
70
693
Warranty provisions consumed during the period
(117)
(73)
(326)
Additions from business combinations
-
-
203
Reclassification
57
-
-
Warranty provisions
1,192
616
1,189
The provisions are expected to be payable as follows:
< 1 year
596
215
524
> 1 year
596
401
665
1,192
616
1,189
In the first quarter of 2021, warranty provisions charged to the income statement amounted to EUR 63m, equivalent to
3.2 percent of revenue. Warranty consumption amounted to EUR 117m compared to EUR 73m in the first quarter of
2020. Over the last 12 months, warranty consumption as a percentage of revenue amounted to 1.1 percent.
Reclassification of EUR 57m consists of warranty claims against Vestas for which it is virtually certain that Vestas will
receive compensation from sub-suppliers. These have been recognised as other receivables, and therefore the
reclassification does not have impact on the result nor cash flow for the period.
In general, provisions are made for all expected costs associated with wind turbine repairs or replacements, and any
reimbursement from other involved parties is not offset unless a written agreement has been made to that effect.
Provisions are made to cover possible costs of remedy and other costs in accordance with specific agreements.
Provisions are based on estimates, and actual costs may deviate substantially from such estimates.
3 Capital structure and financing items
3.1 Share capital
Pursuant to authorisation granted to the Board of Directors at the Annual General Meeting 8 April 2021, the Board of
Directors was authorised to acquire treasury shares on behalf of Vestas at a nominal value not exceeding 10 percent of
the share capital at the time of authorisation.
With effect as of 28 April 2021, a share split of Vestas’ shares with a ratio 1:5 was carried out. Consequently, each share
of nominally DKK 1.00 was split into five new shares of nominally DKK 0.20.
Treasury shares
Nominal value (DKK)
31 March
2021
31 March
2020
31 December
2020
Treasury shares as at 1 January
1,098,495
3,559,449
3,559,449
Purchases for the period
-
-
-
Cancellation for the period
-
-
(1,977,848)
Vested treasury shares for the period
(128,013)
(359,893)
(483,106)
Treasury shares
970,482
3,199,556
1,098,495
3.2 Cash and cash equivalents
mEUR
31 March
2021
31 March
2020
31 December
2020
Cash and cash equivalents without disposal restrictions
1,653
1,940
3,039
Cash and cash equivalents with disposal restrictions
24
25
24
Cash and cash equivalents
1,677
1,965
3,063
Vestas Wind Systems A/S
Interim Financial report – First Quarter 2021 Page 26 of 30
Classification: Public
3.3 Financial risks
Financial risks, and how Vestas manages its risks, including liquidity, credit, and market risks, are addressed in the notes
to the Consolidated financial statements in the Annual Report 2020, note 4.2, pages 091-095. The risks in 2021 remain
similar in nature.
As announced on 29 April 2021, Vestas has signed a EUR 2,000m revolving multi-currency credit facility with an interest
margin linked to Vestas’ sustainability KPIs to refinance the existing EUR 1,150m RCF maturing in 2024 and EUR 1,000m
loan facilities established in 2020. The new sustainability-linked revolving credit facility will mature in 2026 and will include
a two-year extension option to 2028. Subsequently to the establishment, Vestas has credit facilities of EUR 2,000m
available for cash drawing and/or issuance of guarantees.
3.4 Financial instruments
Financial instruments measured at fair value have been categorised into level 1, 2, and 3 as addressed in the Annual
Report 2020, note 4.4, page 102. In February 2021, Vestas acquired a 25 percent stake in Copenhagen Infrastructure
Partners P/S’ parent companies. The consideration includes a performance-contingent consideration amounting to a
maximum of EUR 320m to be paid in the period 2023 to 2029. The contingent consideration is classified as financial debt
and amounts to a discounted amount of EUR 308m as at 31 March 2021. The debt instrument is measured based on
expected maximum payments of EUR 320m in the period 2023 to 2026 and discounted using a 1 percent normalised
financing interest rate. The contingent consideration is categorised as a level 3 financial instrument. Other than the
contingent consideration, no significant new financial instruments have been recognised compared to 2020 and there have
been no transfers between fair value levels.
Financial investments consist of interest-bearing investments which do not meet the definition for cash and cash
equivalents. As at 31 March 2021, the fair value of financial investments amounted to EUR 216m, equal to book value.
Marketable securities amounted to EUR 100m and deposits amounted to EUR 116m.
Derivative financial instruments were negative with a market value of net EUR 17m, equal to book value, and were included
in other receivables and other liabilities with EUR 59m and EUR 76m, respectively.
Financial instrument assets categorised within level 3 comprise other equity investments and renewable energy
certificates. Valuation methods remain unchanged from the description in the Annual Report 2020 and with no significant
changes in fair values.
The book value of the green corporate eurobond issued by Vestas was EUR 498m with a corresponding fair value of EUR
510m as at 31 March 2021. The book value of the SoWiTec corporate bond was EUR 15m with a corresponding fair value
of EUR 16m as at 31 March 2021.
4 Other disclosures
4.1 Related party transactions
Vestas has had the following material transactions with joint ventures and associates:
mEUR
Q1 2021
Q1 2020
Joint ventures
Revenue for the period
13
56
Proceeds from investments in joint ventures
10
-
Capital increase
21
-
Receivable as at 31 March
34
67
Received prepayments balance as at 31 March
56
179
Associates
Payable capital contribution as at 31 March
44
41
Proceeds from investments in associates
4
-
Vestas Wind Systems A/S
Interim Financial report – First Quarter 2021 Page 27 of 30
Classification: Public
The volume and scale of transactions with related parties has decreased as a result of the acquisition of MHI’s 50 percent
shares in MHI Vestas Offshore Wind A/S on 14 December 2020, and consequently all transactions with MHI Vestas
Offshore Wind A/S and subsidiaries are included in the consolidated figures.
No other significant changes have occurred with related parties or types and scale of transactions with these parties other
than what is disclosed in the consolidated financial statements in the Annual Report 2020, note 6.3, page 110.
5 Basis for preparation
5.1 General accounting policies
The interim financial report of Vestas comprises a summary of the consolidated financial statements of Vestas Wind
Systems A/S and its subsidiaries.
The interim financial report has been prepared in accordance with IAS 34, Interim Financial Reporting as adopted by the
EU, accounting policies set out in the Annual Report 2020 of Vestas and additional Danish disclosure requirements for
interim financial reporting of listed companies.
This interim financial report does not include all the notes included in an annual financial report. Accordingly, this report
should be read in conjunction with the Annual Report for the year ended 31 December 2020 and any public announcements
made during the interim reporting period.
Taxes on income in the interim periods are accrued using the tax rate that would be applicable to the expected annual
profit or loss.
5.2 Key accounting estimates and judgements
When preparing the interim financial reporting of Vestas, management makes a number of accounting estimates and
assumptions which form the basis of the recognition and measurement of Vestas’ assets and liabilities. The estimates and
assumptions made are based on experience and other factors that management considers reasonable in the
circumstances.
Reference is made to the consolidated financial statements in the Annual Report 2020, note 7.2, page 118 for further
description of Vestas’ key accounting estimates and judgements.
Estimate regarding recognition of contract elements
Management performs significant accounting estimates in connection with determining the appropriate income recognition
of contract elements. In certain situations, Supply-only projects contain elements that in nature are associated with a high
degree of estimations regarding allocation of consideration under a contract to elements already delivered and elements
to be delivered in the future. Management has assessed that the project specific margin is a fair estimate of a reasonable
margin used to allocate consideration under a contract to the contract elements.
Estimate regarding measurement of warranty provisions
Measurement of warranty provisions is associated with significant estimation uncertainty and arises from component
defects and functional errors. Warranty provisions made also include wind turbines sold in prior years, but where serial
defects are identified later and comprise management’s best estimate of the costs required to settle the obligation from
such defects and functional errors.
Vestas Wind Systems A/S
Interim Financial report – First Quarter 2021 Page 28 of 30
Classification: Public
Management’s statement
Aarhus, Denmark, 5 May 2021
Executive Management
Henrik Andersen
Group President & CEO
Marika Fredriksson
Executive Vice President & CFO
Board of Directors
Bert Nordberg
Chairman
Anders Runevad
Deputy Chairman
Lars Josefsson
Eva Merete Søfelde Berneke
Bruce Grant
Helle Thorning-Schmidt
Kentaro Hosomi
Karl-Henrik Sundström
Michael Abildgaard Lisbjerg*
Sussie Dvinge Agerbo*
Pia Kirk Jensen*
Kim Hvid Thomsen*
*) Employee representative
Vestas Wind Systems A/S
Interim Financial report – First Quarter 2021 Page 29 of 30
Classification: Public
Vestas Wind Systems A/S
Interim Financial report – First Quarter 2021 Page 30 of 30
Classification: Public
Vestas Wind Systems A/S
Hedeager 42, 8200 Aarhus N, Denmark
Tel: +45 9730 0000
vestas@vestas.com, vestas.com
Disclaimer and cautionary statement
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 Vestas’ potential
exposure to market risks and statements expressing
management’s expectations, beliefs, estimates,
forecasts, projections, and assumptions. A number of
factors that affect Vestas’ future operations and could
cause Vestas’ results to differ materially from those
expressed in the forward-looking statements included in
this document, include (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,
including adverse weather conditions; (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; and (m) customer
created delays affecting product installation, grid
connections and other revenue-recognition factors.
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 2020 (available at
vestas.com/investor) and these factors also should 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 other than as 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.