Wind. It means the world to us.
TM
Company announcement No. 16/2021
Vestas Wind Systems A/S
Hedeager 42,8200 Aarhus N, Denmark
Company Reg. No.: 10403782
Interim Financial Report
Second Quarter 2021
Vestas Wind Systems A/S
Interim Financial Report – Second Quarter 2021 Page 2 of 32
Classification: Public
Contents
Summary ........................................................................................................................................ 3
Financial and operational key figures ......................................................................................... 4
Sustainability key figures ............................................................................................................. 5
Group financial performance ....................................................................................................... 6
Power Solutions ............................................................................................................................ 9
Service ......................................................................................................................................... 12
Sustainability ............................................................................................................................... 13
Strategy and financial and capital structure targets ................................................................ 14
Outlook 2021 ................................................................................................................................ 17
Consolidated financial statements 1 January - 30 June .......................................................... 18
Management’s statement ........................................................................................................... 31
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:
Information meeting (audiocast)
On Wednesday 11 August 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: 99835184#
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, Vice President
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 – Second Quarter 2021 Page 3 of 32
Classification: Public
Summary
Revenue overall at the same level as in second quarter
2020, while EBIT increased. Record high combined
order backlog as a consequence of strong order intake
and the integration of offshore. Full-year guidance
revised.
In the second quarter of 2021, Vestas generated revenue
of EUR 3,536m – in line with the year-earlier period. EBIT
before special items increased by EUR 67m to EUR
101m. This resulted in an EBIT margin before special
items of 2.9 percent, compared to 1.0 percent in the
second quarter of 2020. Free cash flow* amounted to
EUR 183m compared to EUR (106)m in the second
quarter of 2020.
The quarterly intake of firm and unconditional wind
turbine orders amounted to 5,290 MW. The value of the
wind turbine order backlog was EUR 21.2bn as at 30
June 2021. In addition to the wind turbine order backlog,
at the end of June 2021, Vestas had service agreements
with expected contractual future revenue of EUR 26.9bn.
Thus, the value of the combined backlog of wind turbine
orders and service agreements stood at EUR 48.1bn –
an increase of EUR 13.0bn compared to the year-earlier
period.
To reflect the current environment characterised by
supply chain constraints, cost inflation, and restrictions in
key markets caused by COVID-19, and the impacts this
is likely to continue to have in the second half of the year,
Vestas is revising its full-year guidance. The
expectations are now a revenue of EUR 15.5-16.5bn
(previously EUR 16-17bn), including Service, with an
overall EBIT margin before special items of 5-7 percent
(previously 6-8 percent). Total investments
*)
are now
expected to be below EUR 1,000m in 2021 (previously
approx. EUR 1,000m).
Group President & CEO Henrik Andersen said: “In the
second quarter of 2021, Vestas underlined our market-
leading position although the first half of the year has
been slower than anticipated due to supply chain
constraints in key markets. We achieved revenue of EUR
3.5bn and an EBIT margin of 2.9 percent, which is an
improvement of 1.9 percentage points year-over-year.
This increase was primarily driven by underlying
improved operations and execution, but hampered by
the continued cost inflation impacting global industrials.
In this environment, our Service business and wind
turbine order intake grew 23 percent and 28 percent
respectively year-over-year, which resulted in an all-time
high order backlog of more than EUR 48bn. Combined
with an average selling price of 0.79 EUR/MW for
onshore, new offshore orders and our first preferred
supplier agreement for our V236-15.0 MW turbine, the
quarter was commercially very strong. To reflect the
challenges from cost inflation and the global environment
we operate in, we have revised our guidance for 2021
and we remain focused on executing our priorities for the
year, which enable us to deliver on our commitments,
drive the energy transition, and strengthen our market
leadership.”
K
ey highlights
Strong order intake and first preferred supplier agreement on the 15 MW platform
Wind turbine order intake of 5.3 GW with both onshore and offshore contributing.
Revenue of EUR 3.5bn
Revenue impacted by lower onshore activity level and continued supply chain constraints.
EBIT margin of 2.9 percent
Profit impacted by higher fixed costs base from offshore integration and cost inflation.
Solid performance in Service
Revenue growth of 23 percent compared to Q2 2020; EBIT margin of 28.6 percent.
An important step towards zero-waste turbines
CETEC project launched to provide circular economy for epoxy materials in blades.
Outlook for the year revised
Guidance updated to reflect supply chain constraints and cost inflation.
*) Excl. acquisitions of subsidiaries, joint ventures, associates, and financial investments.
Vestas Wind Systems A/S
Interim Financial Report – Second Quarter 2021 Page 4 of 32
Classification: Public
Financial and operational key figures
mEUR
Q2
2021
Q2
2020
H1
2021
H1
2020
FY
2020
FINANCIAL HIGHLIGHTS
Income statement
Revenue
3,536
3,541
5,498
5,776
14,819
Gross profit
376
228
565
387
1,538
Operating profit before amortisation, depreciation, and impairment
(EBITDA) before special items
321
188
457
285
1,391
Operating profit (EBIT) before special items
101
34
30
(20)
750
Operating profit before amortisation, depreciation, and impairment
(EBITDA)
321
183
457
270
1,382
Operating profit (EBIT)
101
34
30
(78)
698
Net financial items
(12)
(35)
(30)
(37)
(95)
Profit before tax
122
(7)
45
(114)
934
Profit for the period
90
(5)
33
(85)
771
Balance sheet
Balance sheet total
19,557
14,934
19,557
14,934
18,160
Equity
4,522
3,162
4,522
3,162
4,703
Net working capital
(616)
(411)
(616)
(411)
(1,127)
Capital employed
6,001
4,095
6,001
4,095
6,057
Interest-bearing position (net), at the end of the period
334
1,145
334
1,145
1,920
Cash flow statement
Cash flow from operating activities
360
51
(386)
(709)
743
Cash flow from investing activities before acquisitions of
subsidiaries, joint ventures, associates, and financial investments
(177)
(157)
(329)
(317)
(687)
Free cash flow before acquisitions of subsidiaries, joint ventures,
associates, and financial investments
183
(106)
(715)
(1,026)
56
Free cash flow
166
96
(924)
(823)
476
FINANCIAL RATIOS
1)
Financial ratios
Gross margin (%)
10.6
6.4
10.3
6.7
10.4
EBITDA margin (%) before special items
9.1
5.3
8.3
4.9
9.4
EBIT margin (%) before special items
2.9
1.0
0.5
(0.3)
5.1
EBITDA margin (%)
9.1
5.2
8.3
4.7
9.3
EBIT margin (%)
2.9
1.0
0.5
(1.4)
4.7
Return on capital employed (ROCE)
2)
(%) before special items
12.3
15.4
12.3
15.4
13.5
Net interest-bearing debt / EBITDA
2)
(0.2)
(0.8)
(0.2)
(0.8)
(1.4)
Solvency ratio (%)
23.1
21.2
23.1
21.2
25.9
Return on equity
2)
(%)
21.6
15.4
21.6
15.4
21.4
Share ratios
3)
Earnings per share
4)
(EUR)
0.9
0.5
0.9
0.5
0.8
Dividend per share
(EUR)
-
-
-
-
0.23
Pay-out ratio (%)
-
-
-
-
30.0
Share price at the end of the period (EUR)
32.9
18.1
32.9
18.1
38.7
Number of shares at the end of the period (million)
1,010
985
1,010
985
1,010
OPERATIONAL KEY FIGURES
5)
Order intake (bnEUR)
4.5
3.2
6.1
5.6
12.7
Order intake (MW)
5,290
4,148
7,306
7,459
17,249
Order backlog – wind turbines (bnEUR)
21.2
16.2
21.2
16.2
19.0
Order backlog – wind turbines (MW)
26,334
22,183
26,334
22,183
24,630
Order backlog – service (bnEUR)
26.9
18.9
26.9
18.9
23.9
Produced and shipped wind turbines (MW)
5,775
4,667
10,305
9,584
17,055
Produced and shipped wind turbines (number)
1,445
1,423
2,572
2,899
5,239
Deliveries (MW)
3,767
4,020
5,692
6,248
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 – Second Quarter 2021 Page 5 of 32
Classification: Public
Sustainability key figures
Q2
2021
Q2
2020
H1
2021
H1
2020
FY
2020
ENVIRONMENTAL
1)
Utilisation of resources
Consumption of energy (GWh)
192
144
406
311
621
- of which renewable energy (GWh)
70
76
2)
150
145
2)
295
- of which renewable electricity (GWh)
59
68
2)
121
127
2)
261
Renewable energy (%)
36
53
2)
37
47
2)
48
Renewable electricity for own activities
(%)
100
100
2)
100
100
2)
100
Withdrawal of fresh water (1,000 m³)
111
115
211
206
421
Waste
Volume of waste from own operations (1,000 t)
20
24
39
46
89
- of which collected for recycling (1,000 t)
9
12
19
24
46
Recyclability rate of hub and blade
2)
(%)
//
//
//
//
41
Carbon emissions
Direct emissions of CO
2
e
(scope 1) (1,000 t)
29
15
57
35
71
Indirect emissions of CO
2
e
(scope 2) (1,000 t)
1
2
2)
2
2
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)
167
119
298
244
493
Annual CO
2
e
avoided by the total aggregated installed fleet
(million t)
201
176
201
176
186
SOCIAL
Safety
Total Recordable Injuries (number)
51
44
100
90
185
- of which Lost Time Injuries (number)
21
17
37
30
65
- of which fatal injuries(number)
0
0
0
0
0
Total Recordable Injuries per million working hours (TRIR)
3.1
3.1
3.1
3.2
3.3
Lost Time Injuries per million working hours (LTIR)
1.3
1.2
1.1
1.1
1.2
Employees
Average number of employees (FTEs)
29,097
25,856
29,188
25,806
26,121
Employees at the end of the period (FTEs)
29,081
25,865
29,081
25,865
29,378
Diversity and inclusion
Women in the Board
3)
and Executive Management at the end of
the period (%)
27
27
27
27
27
Women in leadership positions
4)
at the end of the period (%)
20
20
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 second 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 half of 2020 changed to reflect that renewable energy certificates were subsequently bought for non-renewable electricity.
3
Only Board members elected by the general meeting are included.
4
Employees in leadership positions comprise managers, specialists, project managers, and above.
Vestas Wind Systems A/S
Interim Financial Report – Second Quarter 2021 Page 6 of 32
Classification: Public
Group financial performance
Income statement
Revenue
Revenue in the second quarter of 2021 amounted to EUR
3,536m largely on par with same quarter last year (Q2
2020: EUR 3,541m).
For the first half of the year, revenue amounted to EUR
5,498m (H1 2020: EUR 5,776m), out of which EUR 892m
relates to offshore, a decrease of 5 percent which was
primarily driven by lower onshore wind turbine deliveries
mainly in the USA and as well impacted by supply chain
constraints. The decline in Power Solution deliveries was
partly offset by an increase in Service revenue. Revenue
for the first half of 2021 reflected a negative impact of
approx. EUR 200m from foreign exchange rate translation
effects compared to the first half of 2020.
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 376m in the second
quarter of 2021 corresponding to a gross margin of 10.6
percent (Q2 2020: EUR 228m; 6.4 percent). The second
quarter of 2020 was negatively impacted by extraordinary
warranty provisions of EUR 175m.
Gross profit in the first half of 2021 amounted to EUR
565m equal to a margin of 10.3 percent of revenue (H1
2020: EUR 387m; 6.7 percent). The gross margin
increase was mainly attributable to the extraordinary
warranty provisions in the second quarter of 2020.
Excluding the effect of warranty provisions, the gross
margin for the first half of 2021 increased by 0.6
percentage points from the same period in 2020. This
increase was positively impacted by growth in Service
revenue and improved underlying profitability in the
Power Solutions segment, while the gross margin was still
negatively impacted by cost inflation.
Warranty provisions
Costs for warranty provisions amounted to EUR 109m in
the second quarter of 2021 (Q2 2020: EUR 283m). This
was equivalent to a warranty ratio of 3.1 percent of
revenue in the second quarter of 2021 (Q2 2020: 8.0
percent). The costs for warranty provisions in the second
quarter of 2020 reflected extraordinary warranty
provisions of EUR 175m to cover a specific repair and
upgrade of a confined, albeit considerable number of
blades that were already installed. Warranty provisions in
relation to revenue was in the second quarter of 2021, on
par with same period last year, apart from the
extraordinary warranty provision in the second quarter of
2020.
For the first half of 2021, warranty costs amounted to 3.1
percent of revenue compared to 6.1 percent in the first
half of 2020 driven by the same factor as for the quarter.
Research and development costs, Distribution
costs and Administration costs
Research and development costs recognised in the
income statement amounted to EUR 94m (Q2 2020: EUR
64m). The increase was mainly attributable to the
inclusion of the offshore business and to research and
development activities as part of bringing new onshore
and offshore technology to the market.
Distribution costs amounted to EUR 96m in the second
quarter of 2021 (Q2 2020: EUR 66m). The increase was
mainly a consequence of the inclusion of the offshore
business and overall depreciation of investments.
Administration costs amounted to EUR 85m (Q2 2020:
EUR 64m). The increase was mainly attributable to the
inclusion of the offshore business.
D
epreciation, amortisation, and impairment
In the second quarter of 2021, overall depreciation,
amortisation, and impairment amounted to EUR 220m
(Q2 2020: EUR 149m). The increase was primarily
attributable to the inclusion of the offshore business and
secondarily a result of investments related to recent
years’ more frequent introduction of new technologies
and product variants.
Operating profit (EBIT)
EBIT before special items amounted to EUR 101m in the
second quarter of 2021, equivalent to an EBIT margin of
2.9 percent (Q2 2020: EUR 34m; 1.0 percent). EBIT
before special items in the first half of 2021 amounted to
EUR 30m, equal to an EBIT margin of 0.5 percent (H1
2020: EUR (20)m; (0.3) percent). The increase in EBIT
margin in both periods was mainly driven by the same
factors impacting gross profit and as well the lower
absorption of fixed costs from the offshore integration.
In the first half of 2021, no income or costs have been
classified as special items, compared to EUR 58m in the
first half of 2020 related to the optimisation and
simplification of the product portfolio.
Vestas Wind Systems A/S
Interim Financial Report – Second Quarter 2021 Page 7 of 32
Classification: Public
Income from investments in joint ventures and
associates
Income from investments in joint ventures and associates
amounted to a profit of EUR 33m in the second quarter of
2021 compared to a EUR (6)m in the second quarter of
2020. The profit was primarily derived from gains related
to co-development activities in the USA and secondarily
from the investment in Copenhagen Infrastructure
Partners P/S.
Net financial items
Financial items amounted to a net loss EUR 12m in the
second quarter of 2021 (Q2 2020: EUR (35)m) and EUR
(30)m in the first half of 2021 (H1 2020: EUR (37)m),
driven by interests, fees, and currency related items.
Income tax
Income tax amounted to an expense of EUR 32m in the
second quarter and EUR 12m in the first half of the year.
For both the quarter and first half of the year, income tax
represented an effective tax rate of 26 percent, up 1
percentage point from the same periods in 2020.
Net result for the period
Net result amounted to a profit of EUR 90m in the second
quarter of 2021 (Q2 2020: EUR (5)m). The increase in net
result was mainly a result of higher gross profit in the
second quarter of 2021. The net result for the first half of
2021 was a profit of EUR 33m (H1 2020: EUR (85)m). An
increase also driven by positive development in gross
profit, but further amplified by the lack of costs related to
special items in first half of 2021 and higher income from
investments in joint ventures and associates.
Financial ratios
Earnings per share amounted to EUR 0.9 in second
quarter of 2021 (Q2 2020: EUR (0.01)) and EUR 0.03 in
the first half of 2021 (H1 2020: EUR (0.08)), driven by the
improved results in the periods.
Return on capital employed (ROCE) before special items
was 12.3 percent in the second quarter of 2021 (Q2 2020:
15.4 percent), a decline attributed to an increase in equity
and financial debt, despite the higher EBIT before special
items in the second quarter of 2021 compared to second
quarter of 2020.
Return on equity was 21.6 percent in the second quarter
of 2021 (Q2 2020: 15.4 percent), an increase which can
be attributed to higher net result, 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
616m as of 30 June 2021 (30 June 2020: net liability of
EUR 411m). This was an improvement of EUR 205m to
the same time last year, an effect of higher down- and
milestone payments from customers and higher trade
payables to suppliers more than offsetting an increase in
inventory levels.
Cash flow from operating activities
Cash flow from operating activities was positive EUR
360m in the second quarter of 2021 (Q2 2020: EUR 51m).
The development was mainly a result of a positive
development in net working capital and in particular
driven by collections from customers.
Cash flow from investing activities
Cash flow from investing activities before acquisitions of
subsidiaries, joint ventures, associates and financial
investments amounted to a net outflow of EUR 177m in
the second quarter of 2021 (Q2 2020: EUR 157m). The
increased net investment level was driven by the
integration of offshore.
Free cash flow
Free cash flow before acquisition of subsidiaries, joint
ventures, associates, and financial investments
amounted to positive EUR 183m in the second quarter of
2021 (Q2 2020: EUR (106)m) and EUR (715)m in the first
half of 2021 (H1 2020: EUR (1,026)m). The positive
development was driven by the improved cash flow from
operating activities due to a favourable change in net
working capital.
Capital structure and financing items
Equity and solvency ratio
As at 30 June 2021, total equity amounted to EUR 4,522m
(30 June 2020: EUR 3,162m), an increase mainly
attributable to net profit development in the past four
quarters and capital increase in December 2020 in
relation to the acquisition of MHI Vestas Offshore Wind
A/S. These were also the main drivers of the increase in
Vestas’ solvency ratio, closing 30 June 2021 at 23.1
percent (30 June 2020: 21.1 percent).
Net interest-bearing position and cash position
As at 30 June 2021, the net interest-bearing position was
EUR 334m (30 June 2020: EUR 1,145m), a decline of
EUR 811m. Despite positive free cash flow in the past four
quarters, this was more than offset by the impact of
investments in Copenhagen Infrastructure Partners P/S
and MHI Vestas Offshore Wind A/S combined with
dividend payment in April 2021.
Cash and cash equivalents were driven by the same
factors as above and amounted to EUR 1,596m as at 30
June 2021 (30 June 2020: EUR 1,867m).
The ratio of net interest-bearing debt/EBITDA was (0.2)
as at 30 June 2021 (30 June 2020: (0.8)), negatively
impacted by the deterioration of the net interest-bearing
position.
Assets held for sale
On 3 June 2021, Vestas signed an agreement with CS
Wind Corporation for the acquisition of Vestas’ tower
manufacturing facility in Pueblo, Colorado. As the
transaction was pending regulatory approval, assets and
liabilities directly part of the divestment have been
classified as held for sale as at 30 June 2021 with assets
corresponding to EUR 111m and liabilities of EUR 3m.
Vestas Wind Systems A/S
Interim Financial Report – Second Quarter 2021 Page 8 of 32
Classification: Public
Assets held for sale are primarily related to production
facility, machinery, and tools. The transaction was closed
on 30 July 2021 following regulatory approval.
Vestas Wind Systems A/S
Interim Financial Report – Second Quarter 2021 Page 9 of 32
Classification: Public
Power Solutions
Result for the period
In the second quarter of 2021, revenue from the Power
Solutions segment amounted to EUR 2,914m (Q2 2020:
EUR 3,036m). The decrease was mainly attributable to
less onshore wind turbine deliveries mainly in the USA
with high level of deliveries in the first half of 2020 where
customers were incentivised to complete projects early
in the year through the mechanisms of the Production
Tax Credit (PTC). The offshore business contributed with
EUR 719m of revenue in the second quarter of 2021
driven by strong installation levels in the UK.
The first half of 2021 reflected revenue in the Power
Solutions segment of EUR 4,352m, a decrease of 9
percent compared to the same period last year (H1 2020:
EUR 4,797m), with the US market as the main decline.
EBIT before special items amounted to EUR 2m in the
second quarter of 2021, equal to an EBIT margin of 0.1
percent (Q2 2020: EUR (50)m; (1.6) percent), an
improvement of 1.7 percentage points. The second
quarter of 2020 was negatively impacted by
extraordinary warranty provisions of EUR 175m.
Excluding this impact, the second quarter of 2021 was
impacted by improved average project margins, but more
than offset by cost inflation and a higher level of fixed
costs from the integration of offshore.
In the first half of 2021, EBIT before special items
amounted to EUR (108)m, equal to an EBIT margin
before special items of (2.5) percent (H1 2020: EUR
(167)m; (3.5) percent), an improvement of 1 percentage
point compared to same period last year. This
development was primarily driven by same factors as for
the quarter.
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.
W
ind turbine order intake
In the second quarter of 2021, wind turbine order intake
amounted to 5,290 MW, corresponding to a value of EUR
4.5bn (Q2 2020: 4,148 MW; EUR 3.2bn), an increase of
28 percent mainly contributed by the EMEA (Europe, the
Middle East, and Africa) region. In the same region,
Vestas also secured 733 MW for two larger offshore
projects located in Germany, marking the first firm
offshore order intake since Vestas acquired full
ownership of its offshore activities.
The average price per MW was EUR 0.84m in the
second quarter of 2021 (Q2 2020: EUR 0.78m), a
positive development impacted by the two offshore
orders which represented an average price of EUR
1.18m. For onshore alone, the average price per MW
was EUR 0.79m in the second quarter of 2021,
highlighting the continued underlying stability in pricing.
Wind turbine order intake, second quarter 2021
MW
EMEA
Ameri-
cas
Asia
Pacific
Total
Onshore order
intake
2,758
1,302
497
4,557
Offshore order
intake
733
-
-
733
Total order
intake
3,491
1,302
497
5,290
Vestas Wind Systems A/S
Interim Financial Report – Second Quarter 2021 Page 10 of 32
Classification: Public
Wind turbine deliveries
Deliveries to customers amounted to 3,767 MW in the
second quarter of 2021 (Q2 2020: 4,020 MW), a
decrease driven mainly by the US market with a high
level of deliveries in the second quarter of 2020. The
offshore business contributed with 589 MW in the second
quarter of 2021 from deliveries in the United Kingdom.
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 June 2021, Vestas had installed a total
capacity of 140 GW across 85 countries.
Deliveries (onshore and offshore)
MW
Q2
Q2
FY*
2021
2020
2020
United Kingdom
661
-
78
Russian Fed.
185
108
390
Finland
142
54
222
Poland
130
-
413
Sweden
130
114
424
Germany
120
58
499
France
118
124
679
Saudi Arabia
110
80
159
Portugal
46
-
34
Belgium
45
-
140
Italy
43
-
87
Netherlands
38
38
270
Denmark
29
-
92
Turkey
22
50
324
South Africa
13
1
132
Greece
13
31
297
Jordan
5
8
40
Austria
4
-
3
Spain
2
43
135
Norway
2
148
792
Senegal
-
-
23
Kazakhstan
-
-
48
Ukraine
-
-
8
EMEA
1,858
859
5,289
Hereof offshore
589
-
86
USA
621
1,934
6,779
Brazil
396
260
1,236
Chile
97
121
249
Mexico
45
39
194
Panama
19
-
40
Bolivia
15
-
35
Colombia
4
-
-
El Salvador
-
1
46
Argentina
-
99
240
Canada
-
109
130
Americas
1,197
2,563
8,949
Hereof offshore
-
-
-
Vietnam
336
30
199
Japan
143
-
-
China
128
165
1,465
Australia
47
327
898
Taiwan
28
1
62
India
15
17
68
New Zealand
12
22
95
Sri Lanka
2
36
80
South Korea
-
-
107
Asia Pacific
712
598
2,974
Hereof offshore
-
-
-
Total
3,767
4,020
17,212
Hereof offshore
589
-
86
*Up until 14 December 2020, when Vestas acquired MHI Vestas Offshore Wind A/S,
numbers reflect onshore deliveries only
Vestas Wind Systems A/S
Interim Financial Report – Second Quarter 2021 Page 11 of 32
Classification: Public
Wind turbine order backlog
At the end of the second quarter of 2021, the wind turbine
order backlog amounted to 26,334 MW, which
corresponds to a value of EUR 21.2bn (30 June 2020:
22,183 MW; EUR 16.2bn), an increase of 31 percent in
value. Of the backlog end of June 2021, EUR 4.2bn
relates to offshore wind power projects mainly in Europe,
but also in Asia Pacific.
Order backlog per region
MW
EMEA
Ameri-
cas
Asia
Pacific
Total
Onshore order
backlog
12,256
7,626
2,674
22,556
Offshore order
backlog
3,050
-
728
3,778
Total backlog as at
30 June 2021
15,306
7,626
3,402
26,334
Europe, Middle East, and Africa (EMEA)
The total order backlog for Europe, Middle East, and
Africa amounted to 15,306 MW as at 30 June 2021, an
increase of 54 percent from end of second quarter of
2020. Inclusion of the offshore backlog contributed with
3,050 MW in the United Kingdom and Germany. The
increase in the onshore MW backlog isolated was 23
percent with Finland as the main contributor.
Americas
The total order backlog for Americas amounted to 7,626
MW as at 30 June 2021, a decrease of 14 percent from
the end of second quarter of 2020 as a result of a high
level of deliveries in USA in the period from second to
fourth quarter of 2020, partly mitigated by a strong
development in Brazil and Colombia.
Asia Pacific
The total order backlog for Asia Pacific amounted to
3,402 MW, an increase of 2 percent from the end of
second quarter of 2020. Inclusion of the offshore backlog
contributed with 728 MW in Japan and Taiwan. The
onshore backlog decreased by 20 percent in the same
period, led by China.
Vestas Wind Systems A/S
Interim Financial Report – Second Quarter 2021 Page 12 of 32
Classification: Public
Service
R
esult for the period
The Service business generated revenue of EUR 622m
in the second quarter of 2021 (Q2 2020: EUR 505m), a
23 percent increase year on year.
Revenue from the Service business amounted to EUR
1,146m in the first half of 2021 (H1 2020: EUR 979m), a
17 percent increase compared to the first half of 2020.
The service revenue growth in the first half of 2021 was
mainly driven by higher onshore activity levels and
integration of the offshore business.
S
ervice 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 178m in the
second quarter of 2021, corresponding to an EBIT
margin of 28.6 percent, which was in line with the same
period last year (Q2 2020: EUR 144m; 28.5 percent).
The stable EBIT margin was a result of reliable
performance of the wind turbines under service
contracts.
In the first half of 2021, EBIT before special items
amounted to EUR 294m with an EBIT margin of 25.7
percent, a 1.7 percent decrease compared to the first
half of 2020 (H1 2020: EUR 268m; 27.4 percent). The
development was mainly attributable to external factors
in the first quarter of 2021 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 June 2021, Vestas had approx. 50,300 wind
turbines under service, equivalent to approx. 119 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 June 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 June 2021, Vestas had service contracts in
the order backlog with expected contractual future
revenue of EUR 26.9bn, an increase of EUR 8bn
compared to 30 June 2020, driven by the inclusion of the
offshore business and strong order intake levels in the
onshore service market.
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 the first quarter of 2021.
Vestas Wind Systems A/S
Interim Financial Report – Second Quarter 2021 Page 13 of 32
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. Because of the offshore
integration, in the second quarter of 2021 Vestas’ total
scope 1 and 2 emissions increased by 76 percent
compared to the second quarter of 2020. Vestas’ scope
1 and 2 carbon emissions from its onshore activities
increased by 8 percent year-on-year in the second
quarter of 2021 due to increased service activity. Scope
3 emissions are reported annually in the Vestas
Sustainability Report.
During the second quarter of 2021, Vestas continued its
transition to e-mobility in its benefit and service vehicle
fleet. For benefit cars, 37 percent of the fleet is now plug-
in hybrids or battery electric vehicles, up with 6
percentage points from last quarter. For the service fleet,
17 additional sustainably fueled vehicles were
introduced, bringing the total to 167.
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.
In May 2021, Vestas, as part of the Circular Economy for
Thermosets Epoxy Composites (CETEC) Initiative,
announced the development of a new technology to
enable circularity for composites used in wind turbine
blades. Partly funded by Innovation Fund Denmark
(IFD), CETEC is spearheaded by Vestas and involves
both industrial and academic leaders including Olin, the
world leading producer of Epoxy, the Danish
Technological Institute (DTI), and Aarhus University.
Developed by DreamWind, an innovation initiative driven
by the same partners, the new technology consists of a
two-step process. Firstly, thermoset composites are
disassembled into fibre and epoxy. Secondly, through a
novel chemcycling process, the epoxy is further broken
up into base components similar to virgin materials.
These materials can then be reintroduced into the
manufacturing of new turbine blades, constituting a new
circularity pathway for epoxy resin.
Wind turbines are 85-90 percent recyclable, with turbine
blade material constituting the remaining percentage that
cannot be recycled, due to the nature of thermoset
composites. CETEC is aiming to close this recycling
gap and enable a significant step forward in the
elimination of waste across the wind energy industry.
In June 2021, WindEurope, with full support from Vestas,
called for a Europe-wide landfill ban on decommissioned
wind turbine blades by 2025. The ban should enter into
force by 2025 and will also apply to other large composite
components in the nacelles of modern wind turbines,
as the first turbines are soon reaching the end of their
operational life in Europe’s most mature markets for wind
energy. WindEurope expects around 25,000 tonnes of
blades to reach the end of their operational life annually
by 2025, where Germany and Spain will see the highest
number of decommissioned blades, followed by
Denmark.
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 second quarter of 2021, 51 Recordable
Injuries were registered, resulting in a TRIR of 3.1
(including offshore). The rate year to date was also 3.1,
a slight improvement from 3.2 for the first half year of
2020.
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.
Vestas Wind Systems A/S
Interim Financial Report – Second Quarter 2021 Page 14 of 32
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
electricity in countries making up around 73 percent of
world GDP,
1
and Vestas’ total installed capacity
1
Source: Bloomberg New Energy Finance: Bloomberg New Energy Outlook.
September 2020.
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
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
Vestas Wind Systems A/S
Interim Financial Report – Second Quarter 2021 Page 15 of 32
Classification: Public
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.
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
1
Source: Wood Mackenzie: Market Outlook Update Q4/2020. December 2020.
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.
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.
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.
Vestas Wind Systems A/S
Interim Financial Report – Second Quarter 2021 Page 16 of 32
Classification: Public
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 – Second Quarter 2021 Page 17 of 32
Classification: Public
Outlook 2021
The wind power market continues to be challenged by
supply chain constraints as well as cost inflation and
restrictions in key markets caused by COVID-19. As a
consequence, Vestas experienced lower activity than
expected with regards to deliveries during the first half of
the year. To reflect the current environment and the
impacts this is likely to continue to have in the second
half of the year, Vestas is revising its full-year guidance.
The expectations are now a revenue of EUR 15.5-16.5bn
(previously EUR 16-17bn), including Service, with an
overall EBIT margin before special items of 5-7 percent
(previously 6-8 percent). Total investments
*)
are now
expected to be below EUR 1,000m in 2021 (previously
approx. EUR 1,000m).
The expectations to revenue and EBIT margin in Service
isolated are unchanged: Vestas expects Service
revenue to grow approx. 15 percent in 2021, with an
EBIT margin for full year of approx. 24 percent.
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 there is greater uncertainty
than usual around forecasts related to execution in the
second half of 2021, and the adjusted outlook seeks to
take into account the current situation and constraints.
Vestas continues to focus on its priorities for the year,
which will enable delivering on the company’s
commitments.
In relation to forecasts on financials from Vestas in
general, it should be noted 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
New
guidance
Initial
guidance
Revenue (bnEUR) 15.5-16.5 16-17
EBIT margin (%) before special items 5-7 6-8
Total investments
*)
(mEUR) below 1,000 approx. 1,000
*Excl. acquisitions of subsidiaries, joint ventures, associates, and financial
investments.
Vestas Wind Systems A/S
Interim Financial Report – Second Quarter 2021 Page 18 of 32
Classification: Public
Consolidated financial statements 1 January - 30 June
Condensed income statement 1 January – 30 June
mEUR
Note
Q2
2021
Q2
2020
H1
2021
H1
2020
Revenue
1.1, 1.2
Production costs
(3,160 )
(3,313 )
(4,933 )
(5,389 )
Gross profit
Research and development costs
(94 )
(64 )
(181 )
(136 )
Distribution costs
(96 )
(66 )
(182 )
(156 )
Administration costs
(85 )
(64 )
(172 )
(115 )
Operating profit (EBIT) before special items 1.1 101 34 30 (20 )
Special items
1.3
(0 )
(58 )
Operating profit (EBIT) 101 34 30 (78 )
Income from investments in joint ventures and associates
(6 )
Net financial items
(12 )
(35 )
(30 )
(37 )
Profit before tax
(7 )
(114 )
Income tax
(32 )
(12 )
Profit for the period
(5 )
(85 )
Profit is attributable to:
Owners of Vestas
(7 )
(82 )
Non-controlling interests
(3 )
Earnings per share (EPS)
Earnings per share for the period (EUR), basic
(0.01 )
(0.08 )
Earnings per share for the period (EUR), diluted
(0.01 )
(0.08 )
Condensed statement of comprehensive income 1 January - 30 June
mEUR
Q2
2021
Q2
2020
H1
2021
H1
2020
Profit for the period
(5 )
(85 )
Items that may be reclassified to the income statement subsequently:
Exchange rate adjustments relating to foreign entities
(9 )
(14 )
(46 )
Fair value adjustments of derivative financial instruments for the period
(96 )
Gain/(loss) on derivative financial instruments transferred to the income statement
(8 )
(26 )
(14 )
(49 )
Exchange rate adjustments relating to joint ventures
(1 )
(2 )
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
(44 )
Other comprehensive income after tax for the period
(102 )
Total comprehensive income for the period
(107 )
The above condensed statement of comprehensive income should be read in conjunction with the accompanying notes.
Vestas Wind Systems A/S
Interim Financial Report – Second Quarter 2021 Page 19 of 32
Classification: Public
Condensed balance sheet – Assets
mEUR
Note
30 June
2021
30 June
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
2.3
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
Assets held for sale
2.2
Total assets
T
he above condensed balance sheet should be read in conjunction with the accompanying notes.
Vestas Wind Systems A/S
Interim Financial Report – Second Quarter 2021 Page 20 of 32
Classification: Public
Condensed balance sheet – Equity and liabilities
mEUR
Note
30 June
2021
30 June
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
2.4
Deferred tax
Financial debts
3.4
Tax payables
Other liabilities
3.4
Total non-current liabilities
Contract liabilities
Trade payables
Provisions
2.4
Financial debts
3.4
Tax payables
Other liabilities
3.4
Total current liabilities
Liabilities associated with assets held for sale
2.2
Total liabilities
Total equity and liabilities
T
he above condensed balance sheet should be read in conjunction with the accompanying notes.
Vestas Wind Systems A/S
Interim Financial Report – Second Quarter 2021 Page 21 of 32
Classification: Public
Condensed statement of changes in equity – six 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
Other comprehensive income for the period
Total comprehensive income for the period
Transfer of cash flow hedge reserve to the
initial carrying amount of hedged items
(26 )
(26 )
(26 )
Transaction with owners:
Transactions with non-controlling interests
(5 )
(17 )
(22 )
Dividends distributed
(230 )
(230 )
Dividends distributed related to treasury
shares
Acquisition of treasury shares
(12 )
(12 )
Share-based payments
Tax on equity transactions
(6 )
(6 )
Total transactions with owners
(247 )
(17 )
(264 )
Equity as at 30 June 2021
(55 )
(37 )
(8 )
(100 )
Condensed statement of changes in equity – six 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
(82 )
(3 )
(85 )
Other comprehensive income for the period
(45 )
(1 )
Total comprehensive income for the period
(45 )
(82 )
(4 )
Transfer of cash flow hedge reserve to the
initial carrying amount of hedged items
Transaction with owners:
Reduction of share capital
(1 )
Dividends distributed
(211 )
(211 )
Dividends distributed related to treasury
shares
Share-based payments
Tax on equity transactions
(3 )
(3 )
Total transactions with owners
(1 )
(203 )
(204 )
Equity as at 30 June 2020
(49 )
(29 )
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 – Second Quarter 2021 Page 22 of 32
Classification: Public
Condensed cash flow statement 1 January – 30 June
mEUR
Note
Q2
2021
Q2
2020
H1
2021
H1
2020
Profit for the period
(5 )
(85 )
Adjustment for non-cash transactions
Income tax paid
(18 )
(37 )
(81 )
(144 )
Interest paid / received, net
(6 )
(1 )
(23 )
(13 )
Cash flow from operating activities before change in net working capital
Change in net working capital
(245 )
(508 )
(920 )
Cash flow from operating activities
(386 )
(709 )
Purchase of intangible assets
(96 )
(76 )
(183 )
(146 )
Purchase of property, plant and equipment
(115 )
(81 )
(194 )
(171 )
Proceeds from investments in joint ventures and associates
Cash flow from investing activities before acquisitions of
subsidiaries, joint ventures, associates and financial investments
(177 )
(157 )
(329 )
(317 )
Free cash flow before acquisitions of subsidiaries, joint ventures,
associates and financial investments
(106 )
(715 )
(1,026 )
Investment in joint ventures and associates
(11 )
(1 )
(197 )
(1 )
Purchase of other non-current financial assets
(6 )
(1 )
(7 )
(2 )
Disposal of other non-current financial assets
Disposal of investment in joint ventures and associates
Purchase of financial investments
(116 )
Disposal of financial investments
Cash flow from investing activities
(194 )
(538 )
(114 )
Free cash flow
(924 )
(823 )
Dividend paid
(228 )
(208 )
(228 )
(208 )
Payment of lease liabilities
(34 )
(24 )
(68 )
(35 )
Payment of financial debt
(6 )
(291 )
(6 )
Proceeds from borrowings
Acquisition of treasury shares
(12 )
(12 )
Cash flow from financing activities
(255 )
(190 )
(564 )
(148 )
Net decrease in cash and cash equivalents
(89 )
(94 )
(1,488 )
(971 )
Cash and cash equivalents at the beginning of period
Exchange rate adjustments of cash and cash equivalents
(4 )
(50 )
Cash and cash equivalents at the end of the period
3.2
T
he above condensed cash flow statement should be read in conjunction with the accompanying notes.
Vestas Wind Systems A/S
Interim Financial Report – Second Quarter 2021 Page 23 of 32
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 have
been integrated in the existing reportable Service segment.
The measure of revenue is disclosed in accordance with how the segments are reported to CODM. The reported revenue
is in alignment with how the segments are internally committed for variable consideration under sales contracts. This is
different to the external commitment of the segments.
mEUR
Power
Solutions
Service
Not allocated
Total
Group
Q2 2021
Total revenue
2,914
622
-
3,536
Total costs
(2,912)
(444)
(79)
(3,435)
Operating profit (EBIT)
2
178
(79)
101
Income from investments in joint ventures and associates
33
Net financial items
(12)
Profit before tax
122
Amortisation and depreciation included in total costs
(177)
(26)
(17)
(220)
mEUR
Power
Solutions
Service
Not allocated
Total
Group
Q2 2020
Total revenue
3,036
505
-
3,541
Total costs
(3,086)
(361)
(60)
(3,507)
Operating profit (EBIT) before special items
(50)
144
(60)
34
Special items
(0)
-
-
(0)
Operating profit (EBIT)
(50) 144 (60) 34
Income from investments in joint ventures and associates
(6)
Net financial items
(35)
Profit before tax
(7)
Amortisation and depreciation included in total costs
(123)
(16)
(15)
(154)
Vestas Wind Systems A/S
Interim Financial Report – Second Quarter 2021 Page 24 of 32
Classification: Public
1.1 Segment information (continued)
In the first half of 2020, impairment losses of EUR 43m, provision for purchase commitments of EUR 12m, and staff costs
of EUR 3m 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
H1 2021
Total revenue
4,352
1,146
-
5,498
Total costs
(4,460)
(852)
(156)
(5,468)
Operating profit (EBIT)
(108) 294 (156) 30
Income from investments in joint ventures and associates
45
Net financial items
(30)
Profit before tax
45
Amortisation and depreciation included in total costs
(341)
(51)
(35)
(427)
mEUR
Power
Solutions
Service
Not allocated
Total
Group
H1 2020
Total revenue
4,797
979
-
5,776
Total costs
(4,964)
(711)
(121)
(5,796)
Operating profit (EBIT) before special items
(167)
268
(121)
(20)
Special items
(58)
-
-
(58)
Operating profit (EBIT)
(225) 268 (121) (78)
Income from investments in joint ventures and associates
1
Net financial items
(37)
Profit before tax
(114)
Amortisation and depreciation included in total costs
(242)
(33)
(30)
(305)
Vestas Wind Systems A/S
Interim Financial Report – Second Quarter 2021 Page 25 of 32
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 – Second Quarter 2021 Page 26 of 32
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
Q2
2021
Q2
2020
Q2
2021
Q2
2020
Q2
2021
Q2
2020
Timing of revenue recognition
Products and services transferred at a point in time
2,002
2,142
93
84
2,095
2,226
Products and services transferred over time
912
894
529
421
1,441
1,315
2,914
3,036
622
505
3,536
3,541
Revenue from contract types
Supply-only
621
1,757
-
-
621
1,757
Supply-and-installation (at a point in time)
1,381
385
-
-
1,381
385
Supply-and-installation (over time)
675
512
-
-
675
512
Turnkey (EPC)
237
382
-
-
237
382
Service
-
-
622
505
622
505
2,914
3,036
622
505
3,536
3,541
Primary geographical markets
EMEA
1,662
680
406
284
2,068
964
Americas
791
1,884
170
165
961
2,049
Asia Pacific
461
472
46
56
507
528
2,914
3,036
622
505
3,536
3,541
mEUR
Power Solutions
Service
Total
H1
2021
H1
2020
H1
2021
H1
2020
H1
2021
H1
2020
Timing of revenue recognition
Products and services transferred at a point in time
2,701
3,255
165
155
2,866
3,410
Products and services transferred over time
1,651
1,542
981
824
2,632
2,366
4,352
4,797
1,146
979
5,498
5,776
Revenue from contract types
Supply-only
814
2,308
-
-
814
2,308
Supply-and-installation (at a point in time)
1,887
947
-
-
1,887
947
Supply-and-installation (over time)
1,213
788
-
-
1,213
788
Turnkey (EPC)
438
754
-
-
438
754
Service
-
-
1,146
979
1,146
979
4,352
4,797
1,146
979
5,498
5,776
Primary geographical markets
EMEA
2,430
1,244
707
543
3,137
1,787
Americas
1,250
2,699
344
340
1,594
3,039
Asia Pacific
672
854
95
96
767
950
4,352
4,797
1,146
979
5,498
5,776
Vestas Wind Systems A/S
Interim Financial Report – Second Quarter 2021 Page 27 of 32
Classification: Public
2.1 Property, plant and equipment
In the first half of 2021, Vestas acquired assets with a cost of EUR 194m mainly related to manufacturing blade moulds,
transport equipment and construction tools, compared to EUR 171m in the first half of 2020.
Lease contracts recognised as right-of-use assets during the first half of 2021 amounted to EUR 126m, compared to EUR
68m in the first half of 2020.
2.2 Divestment of tower manufacturing facility
Assets (or disposal groups) are classified as held for sale if the carrying amount will be recovered principally through a
sales transaction rather than through continuing use and when the assets are expected to be disposed of within 12 months.
Liabilities of a disposal group that are directly related to assets held for sale are presented correspondingly. Assets and
liabilities held for sale are presented separately on the balance sheet. Immediately before the initial classification as held
for sale, the carrying amounts of the assets and liabilities are measured in accordance with their applicable accounting
policy. Assets and liabilities held for sale are subsequently measured at the lower of their carrying amount and fair value
less cost to sell. Non-current assets held for sale are not depreciated.
On 3 June 2021, Vestas signed an agreement with CS Wind Corporation for the acquisition of Vestas’ tower manufacturing
facility in Pueblo, Colorado. As the transaction was pending regulatory approval, assets and liabilities directly part of the
divestment have been classified as held for sale as at 30 June, 2021. Assets held for sale are primarily related to production
facility, machinery, and tools. The transaction was closed on 30 July 2021 following regulatory approval.
2.3 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.
2.4 Warranty provisions (included in provisions)
mEUR
30 June
2021
30 June
2020
31 December
2020
Warranty provisions, 1 January
1,189
619
619
Provisions for the period
187
353
693
Warranty provisions consumed during the period
(353)
(163)
(326)
Additions from business combinations
55
-
203
Reclassification
57
-
-
Warranty provisions
1,135
809
1,189
The provisions are expected to be payable as follows:
< 1 year
522
402
524
> 1 year
613
407
665
1,135
809
1,189
In the first half of 2021, net warranty provisions charged to the income statement amounted to EUR 172m, equivalent to
3.1 percent of revenue. The net amount consists of a gross warranty provision of EUR 187m and a claim towards sub-
suppliers of EUR 15m. Warranty consumption amounted to EUR 353m compared to EUR 163m in the first half of 2020.
Over the last 12 months, warranty consumption as a percentage of revenue amounted to 3.5 percent.
In second quarter of 2021, the provisional purchase price allocation regarding MHI Vestas Offshore Wind A/S was
adjusted with an increase in warranty provision and a reduction in service contract liability of EUR 55m respectively. The
adjustment is related to alignment on the classification of commitments to replace and repair main components.
Vestas Wind Systems A/S
Interim Financial Report – Second Quarter 2021 Page 28 of 32
Classification: Public
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 reclassified from provisions to 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)
30 June
2021
30 June
2020
31 December
2020
Treasury shares as at 1 January
1,098,495
3,559,449
3,559,449
Purchases for the period
78,225
-
-
Cancellation for the period
-
(1,977,848)
(1,977,848)
Vested treasury shares for the period
(232,088)
(483,106)
(483,106)
Treasury shares
944,632
1,098,495
1,098,495
3.2 Cash and cash equivalents
mEUR
30 June
2021
30 June
2020
31 December
2020
Cash and cash equivalents without disposal restrictions
1,572
1,842
3,039
Cash and cash equivalents with disposal restrictions
24
25
24
Cash and cash equivalents
1,596
1,867
3,063
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 categorized 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 30 June 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 normalized
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 recognized compared to 2020 and there have
been no transfers between fair value levels.
Vestas Wind Systems A/S
Interim Financial Report – Second Quarter 2021 Page 29 of 32
Classification: Public
Financial investments consist of interest-bearing investments which do not meet the definition for cash and cash
equivalents. As at 30 June 2021, the fair value of financial investments amounted to EUR 217m, equal to book value.
Marketable securities amounted to EUR 100m and deposits amounted to EUR 117m.
Derivative financial instruments were negative with a market value of net EUR 108m, equal to book value, and were
included in other receivables and other liabilities with EUR 275m and EUR 383m, respectively.
Financial instrument assets categorized 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 499m with a corresponding fair value of EUR
507m as at 30 June 2021. The book value of the SoWiTec corporate bond was EUR 15m with a corresponding fair value
of EUR 16m as at 30 June 2021.
4 Other disclosures
4.1 Subsequent events
On 3 June 2021, Vestas signed an agreement with CS Wind Corporation for the acquisition of 100 percent of the shares
in Vestas Towers America, Inc. owning Vestas’ tower manufacturing facility in Pueblo, Colorado, refer to section 2.2.
The regulatory approval has been received whereafter the transaction was closed on 30 July 2021.
4.2 Related party transactions
Vestas has had the following material transactions with joint ventures and associates:
mEUR
Q2
2021
Q2
2020
H1
2021
H1
2020
Joint ventures
Revenue for the period
-
209
13
265
Proceeds from sale of projects
-
-
10
-
Capital increase
-
-
21
-
Receivable as at 30 June
6
82
6
82
Received prepayments balance as at 30 June
55
191
55
191
Associates
Proceeds from investments in associates
6
-
10
-
Capital increase
3
-
3
-
Payable capital contribution as at 30 June
45
42
45
42
The volume and scale of transactions with related parties have 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.
Vestas Wind Systems A/S
Interim Financial Report – Second Quarter 2021 Page 30 of 32
Classification: Public
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 – Second Quarter 2021 Page 31 of 32
Classification: Public
Management’s statement
Aarhus, Denmark, 11 August 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
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.