Wind. It means the world to us.
TM
Company Reg. No.: 10403782
Company announcement No. 18/2021
Interim financial report
Third quarter 2021
Vestas Wind Systems A/S
Interim Financial Report – Third Quarter 2021 Page 2 of 34
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
Capital Markets Day 2021 ........................................................................................................... 17
Financial calendar 2022 .............................................................................................................. 17
Consolidated financial statements 1 January - 30 September ................................................ 18
Management’s statement ........................................................................................................... 32
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 3 November 2021 at 10 a.m. CET (9
a.m. GMT), Vestas will host an information meeting via
an audiocast. The audiocast will be accessible via
vestas.com.
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: 46050492#
Presentation material for the information meeting will be
available at vestas.com 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 – Third Quarter 2021 Page 3 of 34
Classification: Public
Summary
Revenue increased compared to third quarter 2020,
while EBIT decreased as a consequence of supply chain
challenges. Combined order backlog of more than EUR
47bn. Full-year guidance updated.
In the third quarter of 2021, Vestas generated revenue of
EUR 5,538m – an increase of 16 percent compared to
the year-earlier period. EBIT before special items
decreased by EUR 87m to EUR 325m. This resulted in
an EBIT margin before special items of 5.9 percent,
compared to 8.6 percent in the third quarter of 2020. Free
cash flow* amounted to EUR 300m compared to EUR
547m in the third quarter of 2020.
The quarterly intake of firm and unconditional wind
turbine orders amounted to 3,727 MW. The value of the
wind turbine order backlog was EUR 19.3bn as at 30
September 2021. In addition to the wind turbine order
backlog, at the end of September 2021, Vestas had
service agreements with expected contractual future
revenue of EUR 28.0bn. Thus, the value of the combined
backlog of wind turbine orders and service agreements
stood at EUR 47.3bn – an increase of EUR 13.4bn
compared to the year-earlier period.
The supply chain instability and cost inflation caused by
the pandemic is continuing to impact the wind power
industry. Based on these circumstances, and the impact
these are expected to have for the remainder of the year,
Vestas is updating its full-year guidance on EBIT margin
before special items, which is now expected to be around
4 percent (previously 5-7 percent). Vestas still expects
revenue of EUR 15.5-16.5bn, including Service, and total
investments*) below EUR 1,000m in 2021.
Group President & CEO Henrik Andersen said: “During
the third quarter of 2021, everyone at Vestas did an
outstanding job to ensure record-high revenue and
activity levels in spite of an increasingly challenging
global business environment for renewables. The
quarter was thus characterised by supply chain instability
and rising energy prices as well as accelerated cost
inflation from raw materials, transport, and turbine
components, which severely impacted profitability and
limits visibility. In this environment, and with additional
warranty provisions of EUR 50m to cover the execution
of previously announced blade repairs and upgrades, we
achieved revenue of EUR 5.5bn, order intake of 3.7 GW,
23 percent growth in Service, an EBIT margin of 5.9
percent, and the largest preferred supplier agreement in
our history for a 2.1 GW offshore project in the USA.
Based on how 2021 has evolved and how we expect to
finish the year, we are adjusting our EBIT margin
guidance to around 4 percent with revenue expectations
unchanged. With supply chain instability and high
component, material and transport costs expected to last
throughout 2022 as well as the growing climate and
energy crises making our solutions ever more important,
our full focus is to mitigate impact from external factors
to protect profitability and execute on our strategy without
compromising on safety or quality.”
Key highlights
Organisational update
Marika Fredriksson to step down as CFO effective 1 March 2022; Hans Martin Smith, CFO of Vestas Northern & Central
Europe, to succeed.
Vestas’ largest preferred supplier agreement to date secured
Vestas as preferred supplier for the 2.1 GW Empire Wind project in the USA; onshore order intake of 3.7 GW.
Revenue of EUR 5.5bn
Highest ever quarterly revenue secured despite continued supply chain challenges.
EBIT margin of 5.9 percent
EBIT impacted by further cost inflation and higher level of warranty provisions.
Circularity roadmap launched, raising the bar
New targets introduced to achieve full circularity by 2040, and targets to increase rotor recyclability accelerated.
Outlook for full year updated
Guidance on EBIT margin updated to reflect accelerated cost inflation and supply chain challenges.
* Excl. acquisitions of subsidiaries, joint ventures, associates, and financial investments.
Vestas Wind Systems A/S
Interim Financial Report – Third Quarter 2021 Page 4 of 34
Classification: Public
Financial and operational key figures
mEUR
Q3
2021
Q3
2020
9M
2021
9M
2020
FY
2020
FINANCIAL HIGHLIGHTS
Income statement
Revenue
5,538
4,770
11,036
10,546
14,819
Gross profit
600
612
1,165
999
1,538
Operating profit before amortisation, depreciation, and impairment
(EBITDA) before special items
567
575
1024
860
1,391
Operating profit (EBIT) before special items
325
412
355
392
750
Operating profit before amortisation, depreciation, and impairment
(EBITDA)
496
581
953
851
1,382
Operating profit (EBIT)
206
418
236
340
698
Net financial items
(40)
(28)
(70)
(65)
(95)
Profit before tax
170
391
215
277
934
Profit for the period
123
290
156
205
771
Balance sheet
Balance sheet total
18,979
14,636
18,979
14,636
18,160
Equity
4,742
3,394
4,742
3,394
4,703
Net working capital
(526)
(711)
(526)
(711)
(1,127)
Capital employed
6,144
4,342
6,144
4,342
6,057
Interest-bearing position (net), at the end of the period
692
1,615
692
1,615
1,920
Cash flow statement
Cash flow from operating activities
523
688
137
(21)
743
Cash flow from investing activities before acquisitions of
subsidiaries, joint ventures, associates, and financial investments
(223)
(141)
(552)
(458)
(687)
Free cash flow before acquisitions of subsidiaries, joint ventures,
associates, and financial investments
300
547
(415)
(479)
56
Free cash flow
385
546
(539)
(277)
476
FINANCIAL RATIOS
1)
Financial ratios
Gross margin (%)
10.8
12.8
10.6
9.5
10.4
EBITDA margin (%) before special items
10.2
12.1
9.3
8.2
9.4
EBIT margin (%) before special items
5.9
8.6
3.2
3.7
5.1
EBITDA margin (%)
9.0
12.2
8.6
8.1
9.3
EBIT margin (%)
3.7
8.8
2.1
3.2
4.7
Return on capital employed (ROCE)
2)
(%) before special items
9.6
14.3
9.6
14.3
13.5
Net interest-bearing debt / EBITDA before special items
2)
(0.4)
(1.1)
(0.4)
(1.1)
(1.4)
Solvency ratio (%)
25.0
23.2
25.0
23.2
25.9
Return on equity
2)
(%)
16.3
14.6
16.3
14.6
21.4
Share ratios
3)
Earnings per share
4)
(EUR)
0.7
0.5
0.7
0.5
0.8
Dividend per share
(EUR)
-
-
-
-
0.23
Pay-out ratio (%)
-
-
-
-
30.0
Share price at the end of the period (EUR)
34.6
27.7
34.6
27.7
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)
3.0
3.1
9.1
8.7
12.7
Order intake (MW)
3,727
4,232
11,033
11,691
17,249
Order backlog – wind turbines (bnEUR)
19.3
14.6
19.3
14.6
19.0
Order backlog – wind turbines (MW)
24,069
20,399
24,069
20,399
24,630
Order backlog – service (bnEUR)
28.0
19.3
28.0
19.3
23.9
Produced and shipped wind turbines (MW)
3,945
4,329
14,250
13,913
17,055
Produced and shipped wind turbines (number)
991
1,386
3,563
4,285
5,239
Deliveries (MW)
6,020
5,991
11,712
12,239
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 – Third Quarter 2021 Page 5 of 34
Classification: Public
Sustainability key figures
1)
Q3
2021
Q3
2020
9M
2021
9M
2020
FY
2020
ENVIRONMENTAL
2)
Utilisation of resources
Consumption of energy (GWh)
158
150
564
461
621
- of which renewable energy (GWh)
66
79
3)
216
224
3)
295
- of which renewable electricity (GWh)
59
75
3)
180
202
3)
261
Renewable energy (%)
42
53
3)
38
49
3)
48
Renewable electricity for own activities
(%)
100
100
3)
100
100
3)
100
Withdrawal of fresh water (1,000 m³)
103
123
314
329
421
Waste
Volume of waste from own operations (1,000 t)
14
22
53
68
89
- of which collected for recycling (1,000 t)
9
12
28
32
46
Recyclability rate of hub and blade
4)
(%)
//
//
//
//
41
Carbon emissions
Direct emissions of CO
2
e
(scope 1) (1,000 t)
23
16
80
52
71
Indirect emissions of CO
2
e
(scope 2) (1,000 t)
0.1
0.1
3)
1.9
1.1
3)
2
Indirect emissions of CO
2
e from the supply chain (scope 3)
4)
(million t)
//
//
//
//
9.79
Indirect emissions of CO
2
e from the supply chain (scope 3)
4)
(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)
89
110
402
355
493
Annual CO
2
e
avoided by the total aggregated installed fleet
(million t)
206
182
206
182
186
SOCIAL
Safety
Total Recordable Injuries (number)
56
57
156
147
185
- of which Lost Time Injuries (number)
13
18
50
48
65
- of which fatal injuries(number)
0
0
0
0
0
Total Recordable Injuries per million working hours (TRIR)
3.4
4.0
3.2
3.5
3.3
Lost Time Injuries per million working hours (LTIR)
0.8
1.3
1.0
1.1
1.2
Employees
Average number of employees (FTEs)
29,409
25,822
29,262
25,812
26,121
Employees at the end of the period (FTEs)
29,665
25,828
29,665
25,828
29,378
Diversity and inclusion
Women in the Board
and Executive Management at the end of
the period (%)
27
27
27
27
27
Women in leadership positions at the end of the period (%)
21
20
21
20
19
Human rights
Community grievances
4)
(number)
//
//
//
//
20
Community beneficiaries
4)
(number)
//
//
//
//
14,770
Social Due Diligence on projects in scope
4)
(%)
//
//
//
//
78
GOVERNANCE
Whistleblower system
EthicsLine compliance cases
4)
(number)
//
//
//
//
287
- of which substantiated
//
//
//
//
54
- of which unsubstantiated
//
//
//
//
199
1)
For general definitions and specifications on these sustainability key figures, please see the Notes to sustainability key figures in the Annual Report 2020, page 134-135
2)
The increase seen compared to third quarter and nine months 2020 in consumption of energy and carbon emissions is mainly due to the inclusion of the offshore business.
3)
The calculation for third quarter and nine months 2020 is changed to reflect that renewable energy certificates were subsequently bought for non-renewable electricity.
4)
Only reported on an annual basis.
Vestas Wind Systems A/S
Interim Financial Report – Third Quarter 2021 Page 6 of 34
Classification: Public
Group financial performance
Income statement
Revenue
Revenue in the third quarter of 2021 amounted to EUR
5,538m, an increase of 16 percent compared to the same
quarter last year (Q3 2020: EUR 4,770m). The increase
was particularly driven by the inclusion of the offshore
business and higher service revenue.
For the first nine months of the year, revenue amounted
to EUR 11,036m (9M 2020: EUR 10,546m), an increase
of 5 percent which was primarily driven by offshore
deliveries in the United Kingdom offsetting a lower level
of onshore deliveries impacted by continued supply chain
challenges. The improvement of the overall revenue was
additionally supported by a 19 percent increase in Service
revenue. Total revenue for the first nine months of 2021
reflected a negative impact of approx. EUR 200m from
foreign exchange rate translation effects, when applying
the foreign exchange rates of the first nine months of 2020
to the revenue of the current period.
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 600m in the third quarter
of 2021 corresponding to a gross margin of 10.8. percent
(Q3 2020: EUR 612m; 12.8 percent) negatively impacted
by the continued external cost inflation and higher level of
warranty provisions.
Gross profit in the first nine months of 2021 amounted to
EUR 1,165m equal to a margin of 10.6 percent of revenue
(9M 2020: EUR 999m; 9.5 percent).
Warranty provisions
Costs for warranty provisions amounted to EUR 219m in
the third quarter of 2021 (Q3 2020: EUR 146m) equivalent
to a warranty ratio of 4.0 percent of revenue in the third
quarter of 2021 (Q3 2020: 3.1 percent). The increase was
a result of additional warranty provisions of EUR 50m
driven by increased repair and upgrade costs caused by
external cost inflation.
For the first nine months of 2021, warranty costs
amounted to 3.5 percent of revenue compared to 4.7
percent in the first nine months of 2020. The decrease
was a consequence of the extraordinary warranty
provisions of EUR 175m in the second quarter of 2020
and the aforementioned additional warranty provisions to
reflect external cost inflation.
Research and development costs, Distribution
costs and Administration costs
Research and development costs recognised in the
income statement amounted to EUR 81m in the third
quarter of 2021 and 262m in the first nine months of 2021
(Q3 2020: EUR 67m, 9M 2020: 203m). 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 101m in the third
quarter of 2021 and 283m in the first nine months of 2021
(Q3 2020: EUR 74m, 9M 2020: 230m). The increase was
mainly a consequence of the inclusion of the offshore
business combined with costs for depreciation in the
supply chain area for transport equipment.
Administration costs amounted to EUR 93m in the third
quarter of 2021 and 265m in the first nine months of 2021
(Q3 2020: EUR 59m, 9M 2020: 174m). The increase was
mainly attributable to the inclusion of the offshore
business.
Amortisation, depreciation and impairment
In the third quarter of 2021, overall depreciation,
amortisation, and impairment before special items
amounted to EUR 242m (Q3 2020: EUR 163m). 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 325m in the
third quarter of 2021, equivalent to an EBIT margin of 5.9
percent (Q3 2020: EUR 412m; 8.6 percent), a
development driven by the same factors impacting gross
profit as well as the higher SG&A costs.
EBIT before special items in the first nine months of 2021
amounted to EUR 355m, equal to an EBIT margin of 3.2
percent (9M 2020: EUR 392m; 3.7 percent), driven by the
same factors impacting the quarter.
EBIT after special items amounted to EUR 206m in the
third quarter of 2021 and EUR 236m in the first nine
months of 2021 (Q3 2020: EUR 418m, 9M 2020: EUR
340m). This reflects special item costs of EUR 119m in
the third quarter of 2021 (9M 2020: 52m) as a
consequence of ceasing production at Vestas’ factories in
Lauchhammer, Germany; Viveiro, Spain; and Esbjerg,
Denmark reflecting the adjustment of Vestas’
Vestas Wind Systems A/S
Interim Financial Report – Third Quarter 2021 Page 7 of 34
Classification: Public
manufacturing footprint relating to the integration of MHI
Vestas Offshore Wind.
Income from investments in joint ventures and
associates
Income from investments in joint ventures and associates
amounted to a profit of EUR 49m in the first nine months
of 2021 (2020 9M: EUR 2m), derived from gains related
to co-development activities in the USA and secondarily
from the investment in Copenhagen Infrastructure
Partners P/S.
Income from investments in joint ventures and associates
amounted to a profit of EUR 4m in the third quarter of
2021 compared to EUR 1m in the third quarter of 2020.
Net financial items
Financial items amounted to a net loss of EUR 40m in the
third quarter of 2021 (Q3 2020: loss of EUR 28m) and a
loss of EUR 70m in the first nine months of 2021 (9M
2020: loss of EUR 65m), driven by interests, fees, and
currency related items.
Income tax
Income tax amounted to an expense of EUR 47m in the
third quarter and EUR 59m in the first nine months of the
year. For both the quarter and the first nine months of the
year, income tax represented an effective tax rate of 28
percent, up 2 percentage points from the same periods in
2020.
Net result for the period
The net result amounted to a profit of EUR 123m in the
third quarter of 2021 (Q3 2020: EUR 290m). The
decrease in net result was mainly a result of lower
operating profit (EBIT) in the third quarter of 2021,
combined with the impact of special items in the same
period. The net result for the first nine months of 2021 was
a profit of EUR 156m (9M 2020: EUR 205m); a decrease
driven by a negative development in operating profit
(EBIT) and the impact of special items in the first nine
months of 2021.
Financial ratios
Earnings per share amounted to EUR 0.12 in the third
quarter of 2021 (Q3 2020: EUR 0.29) driven by the lower
net results in the periods.
Return on capital employed (ROCE) before special items
was 9.6 percent in the third quarter of 2021 (Q3 2020:
14.3 percent), a decline attributed to a combination of an
increase in equity and financial debt, and lower EBIT
before special items in the third quarter of 2021 compared
to the third quarter of 2020.
Return on equity was 16.3 percent in the third quarter of
2021 (Q3 2020: 14.6 percent), an increase which can be
attributed to a higher net result in the past four quarters,
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
526m as at 30 September 2021 (30 September 2020: net
liability of EUR 711m). This is a deterioration of EUR
185m compared to the same point in time last year, an
effect of higher inventory levels.
Cash flow from operating activities
Cash flow from operating activities was positive EUR
523m in the third quarter of 2021 and EUR 137m in the
first nine months of 2021 (Q3 2020: positive EUR 688m,
9M 2020: negative EUR 21m). The first nine months
development were mainly resulting from the change in net
working capital.
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 223m in
the third quarter of 2021 and EUR 552m in the first nine
months of 2021 (Q3 2020: outflow of EUR 141m, 9M
2020: outflow of EUR 458m). The increased net
investment levels were driven by the introduction of new
technologies and product variants, now both covering
onshore and offshore.
Free cash flow
Free cash flow before acquisition of subsidiaries, joint
ventures, associates, and financial investments
amounted to positive EUR 300m in the third quarter of
2021 (Q3 2020: EUR 547m). The negative development
was mainly driven by lower cash flow from operating
activities combined with higher investment level.
Free cash flow before acquisition of subsidiaries, joint
ventures, associates, and financial investments
amounted to negative EUR 415m in the first nine months
of 2021 (9M 2020: negative EUR 479m). The positive
development compared to same period last year was
driven by improved cash flow from operating activities due
to a favourable change in net working capital during the
first nine months of the year.
Capital structure and financing items
Equity and solvency ratio
As at 30 September 2021, total equity amounted to EUR
4,742m (30 September 2020: EUR 3,394m), 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 September 2021 at
25.0 percent (30 September 2020: 23.2 percent).
Net interest-bearing position and cash position
As at 30 September 2021, the net interest-bearing
position was EUR 692m (30 September 2020: EUR
1,615m). The decline of EUR 923m was driven by
investments in Copenhagen Infrastructure Partners P/S
and MHI Vestas Offshore Wind A/S, combined with
dividend payment in April 2021.
Vestas Wind Systems A/S
Interim Financial Report – Third Quarter 2021 Page 8 of 34
Classification: Public
Cash and cash equivalents were driven by the same
factors as above and amounted to EUR 1,878m as at 30
September 2021 (30 September 2020: EUR 2,352m).
The ratio of net interest-bearing debt/EBITDA was
negative 0.4 as at 30 September 2021 (30 September
2020: negative 1.1), negatively impacted by the
deterioration of the net interest-bearing position.
Vestas Wind Systems A/S
Interim Financial Report – Third Quarter 2021 Page 9 of 34
Classification: Public
Power Solutions
Result for the period
In the third quarter of 2021, revenue from the Power
Solutions segment amounted to EUR 4,921m (Q3 2020:
EUR 4,267m). The offshore business significantly
contributed with EUR 1,191m, offsetting a lower onshore
revenue.
The first nine months of 2021 generated revenue in the
Power Solutions segment of EUR 9,273m, an increase
of 2 percent compared to the same period last year (9M
2020: EUR 9,064m), mainly attributable to the strong
offshore turbine deliveries in the United Kingdom and
high onshore deliveries despite continued supply chain
challenges.
EBIT before special items amounted to EUR 265m in the
third quarter of 2021, equal to an EBIT margin of 5.4
percent (Q3 2020: EUR 318m; 7.5 percent), a decrease
of 2.1 percentage points. The third quarter of 2021 was
negatively impacted by the continued external cost
inflation and higher level of warranty provisions.
In the first nine months of 2021, EBIT before special
items amounted to EUR 157m, equal to a margin of 1.7
percent (9M 2020: EUR 151m; 1.7 percent), in line with
the same period last year.
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 third quarter of 2021, wind turbine order intake
amounted to 3,727 MW, corresponding to a value of EUR
3.0bn (Q3 2020: 4,232 MW; EUR 3.1bn), a decrease of
12 percent in terms of MW, mainly attributable to less
orders in EMEA.
The average price per MW increased to EUR 0.81m in
the third quarter of 2021, compared to EUR 0.73m in the
third quarter of 2020 in order to partially mitigate the
impact of significant cost inflation on future deliveries.
The average price per MW is as always subject to
variations in geography, turbine type, currency
developments, scope and uniqueness of the offering.
Wind turbine order intake, third quarter 2021
MW
EMEA
Ameri-
cas
Asia
Pacific
Total
Onshore
1,177
1,699
851
3,727
Offshore
0
0
0
0
Total order
intake
1,177
1,699
851
3,727
Wind turbine deliveries
Deliveries to customers amounted to 6,020 MW in the
third quarter of 2021 (Q3 2020: 5,991 MW), an increase
driven mainly by offshore deliveries of 972 MW 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 September 2021, Vestas had installed a
total capacity of 146 GW across 85 countries.
Vestas Wind Systems A/S
Interim Financial Report – Third Quarter 2021 Page 10 of 34
Classification: Public
Deliveries (onshore and offshore)
MW
Q3
Q3
FY*
2021
2020
2020
United Kingdom
1,092
10
78
Finland
355
54
222
Norway
279
489
792
Sweden
263
151
424
Poland
227
152
413
Russian Fed.
194
123
390
Netherlands
152
28
270
Germany
138
110
499
South Africa
100
8
132
France
78
263
679
Denmark
65
22
92
Portugal
51
20
34
Italy
40
-
87
Spain
32
-
135
Austria
22
1
3
Greece
20
72
297
Saudi Arabia
19
59
159
Belgium
8
32
140
Egypt
1
-
-
Turkey
-
143
324
Kazakhstan
-
31
48
Jordan
-
4
40
Senegal
-
1
23
Ukraine
-
-
8
EMEA
3,136
1,773
5,289
Hereof offshore
972
-
86
USA
1,337
2,745
6,779
Brazil
609
403
1,236
Canada
143
-
130
Chile
140
58
249
Colombia
19
-
-
Mexico
13
6
194
Puerto Rico
8
-
194
Panama
4
-
40
Bolivia
1
1
35
Argentina
-
64
240
El Salvador
-
10
46
Americas
2,274
3,287
8,949
Hereof offshore
-
-
-
Vietnam
530
41
199
China
33
565
1,465
India
30
22
68
Japan
13
-
-
Australia
4
182
898
South Korea
-
67
107
New Zealand
-
29
95
Sri Lanka
-
25
80
Taiwan
-
-
62
Asia Pacific
610
931
2,974
Hereof offshore
-
-
-
Total
6,020
5,991
17,212
Hereof offshore
972
-
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 third quarter of 2021, the wind turbine
order backlog amounted to 24,069 MW, which
corresponds to a value of EUR 19.3bn (30 September
2020: 20,399 MW; EUR 14.6bn), an increase of 32
percent in value. Of the backlog end of September 2021,
2.8 GW related 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
11,234
7,131
2,898
21,263
Offshore
2,078
0
728
2,806
Total backlog as
at 30 Sep 2021
13,312
7,131
3,626
24,069
Europe, Middle East, and Africa (EMEA)
The total wind turbine order backlog for Europe, Middle
East, and Africa amounted to 13,312 MW as at 30
September 2021, an increase of 28 percent from the end
of the third quarter of 2020. The offshore backlog
accounts for 2,078 MW in the United Kingdom and
Germany. The increase in the onshore MW backlog
isolated was 8 percent, with Poland, Sweden, Finland,
Germany, and France as the main contributors as at 30
September 2021.
Americas
As at 30 September 2021, the total wind turbine order
backlog for Americas amounted to 7,131 MW, an
increase of 4 percent from the end of the third quarter of
2020, driven by strong developments in Brazil, Canada,
and Colombia, partly offset by a decrease in the USA of
24 percent.
Asia Pacific
The total wind turbine order backlog for Asia Pacific
amounted to 3,626 MW, an increase of 14 percent from
the end of the third quarter of 2020. The offshore backlog
contributed with 728 MW in Japan and Taiwan supported
by strong onshore order intake in Australia. The onshore
backlog decreased by 9 percent in the same period, led
by China and Vietnam.
Vestas Wind Systems A/S
Interim Financial Report – Third Quarter 2021 Page 11 of 34
Classification: Public
Service
Result for the period
The Service business generated revenue of EUR 617m
in the third quarter of 2021 (Q3 2020: EUR 503m), a 23
percent increase year on year.
Revenue from the Service business amounted to EUR
1,763m in the first nine months of 2021 (9M 2020: EUR
1,482m), a 19 percent increase compared to the first nine
months of 2020. The service revenue growth in the first
nine months of 2021 was driven by higher onshore
service contract activity levels and inclusion of the
offshore business.
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 143m in the
third quarter of 2021, corresponding to an EBIT margin
of 23.2 percent (Q3 2020: EUR 144m; 28.6 percent).
In the first nine months of 2021, EBIT before special
items amounted to EUR 437m with an EBIT margin of
24.8 percent, a 3.0 percentage point decrease compared
to the first nine months of 2020 (9M 2020: EUR 412m;
27.8 percent). The development was mainly attributable
to less cost out in service contracts and the inclusion of
the offshore business to capture future synergies
between the onshore and the offshore service business.
Wind turbines under service
At the end of September 2021, Vestas had approx.
51,255 wind turbines under service, equivalent to
approx. 124 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 September 2021, the overall average Lost
Production Factor continued to be impacted by the level
of repairs and upgrades.
Service order backlog
At the end of September 2021, Vestas had service
contracts in the order backlog with expected contractual
future revenue of EUR 28bn, an increase of EUR 9bn
compared to 30 September 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 the end of the second quarter of 2021.
Vestas Wind Systems A/S
Interim Financial Report – Third Quarter 2021 Page 12 of 34
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 third quarter of 2021 Vestas’ total
scope 1 and 2 emissions increased by 44 percent
compared to the third quarter of 2020. Vestas’ scope 1
and 2 carbon emissions from its onshore activities
increased by 10 percent year-on-year in the third quarter
of 2021 due to increased service activity. Scope 3
emissions are reported annually in the Vestas
Sustainability Report.
During the third quarter of 2021, Vestas continued its
transition to e-mobility in its benefit and service vehicle
fleet. For benefit cars, 45 percent of the fleet is now plug-
in hybrids or battery electric vehicles, up by 8 percentage
points from last quarter. For the service fleet, 12
additional sustainably fueled vehicles were introduced,
bringing the total to 199.
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 third quarter 2021, Vestas launched a new circularity
roadmap, detailing a comprehensive set of commitments
to be implemented across its value chain to accelerate
its journey to reach zero-waste turbines by 2040.
Through the roadmap, Vestas is setting a new
benchmark for the wind industry within circularity
commitments and waste reduction as the first wind
industry leader to implement a broad circularity
approach. By maturing its circularity plan, Vestas aims to
develop the first fully circular wind turbine, capable of
keeping turbine materials in circulation across the value
chain for longer than ever before.
The roadmap marks an evolution of the previously
announced zero-waste ambition, by adding more
detailed and more ambitious commitments, as well as
organisational governance to execute on these
commitments. It outlines circularity pathways for Vestas’
entire value chain by setting new targets across three
key areas: design, operations and material recovery.
In design, the roadmap increases the ambition level from
last year’s announcement by adding commitments to
increase material efficiency by 90 percent, achieve 100
percent rotor recyclability and reduce in supply chain
waste by 50 percent, all by 2030. Across operations,
Vestas is committing to expand efforts to refurbish and
reuse turbine components, whilst regionalising its repair
and refurbishment infrastructure where possible. While
the major components of a turbine are largely
refurbished already, the roadmap commits Vestas to
achieve a 55 percent total refurbished component
utilization by 2030 and 75 percent by 2040, in large part
by creating new repair loops for minor components. This
will lead to further waste reduction, while cutting carbon
emissions and driving local job creation. Within material
recovery, Vestas is committing to reduce the amount of
manufacturing waste ending up in landfill to less than 1
percent, along with ensuring more than 94 percent of
manufacturing materials are recycled by 2030. This
marks a significant increase from 52 percent of materials
being recycled today.
Social Responsibility
In the third quarter of 2021, Vestas launched updated
Codes of Conduct for employees and partners.
The world has changed and so has Vestas since the last
update of our Codes in 2016. We have refreshed the
Codes, added new topics and strengthened existing
ones to reflect current and upcoming legal and industry
standards and expectations.
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 third quarter of 2021, 56 Recordable Injuries
were registered, resulting in a TRIR of 3.4 (including
offshore). The rate year to date was 3.2, an improvement
from 3.5 for the first nine months 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 – Third Quarter 2021 Page 13 of 34
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 – Third Quarter 2021 Page 14 of 34
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 – Third Quarter 2021 Page 15 of 34
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 – Third Quarter 2021 Page 16 of 34
Classification: Public
Outlook 2021
The supply chain instability and cost inflation caused by
the pandemic is continuing to impact the wind power
industry. In particular over the last couple of months,
Vestas has been further impacted by the acceleration in
cost inflation within transportation and raw materials as
well as shortage of components. Based on these
circumstances, and the impact these are expected to
have for the remainder of the year, Vestas is updating its
expectations to the full-year results.
For the full year, Vestas still expects revenue of EUR
15.5-16.5bn, including Service, but now with an overall
EBIT margin before special items of around 4 percent
(previously 5-7 percent). Total investments*
)
are still
expected to be below EUR 1,000m in 2021.
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.
Further, Vestas now expects warranty provisions at a
level above 3 percent of revenue as a consequence of
increased costs stemming from the supply chain
instability and accelerated cost inflation from raw
materials, transport, and turbine components. 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 for the
remainder of 2021, and the adjusted outlook seeks to
take into account the current situation and challenges.
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
Previous
guidance
**)
Initial
guidance
Revenue (bnEUR)
15.5-16.5
15.5-16.5
16-17
EBIT margin (%) before
special items
around 4
5-7
6-8
Total investments
*
(mEUR)
below 1,000
below 1,000
approx. 1,000
* Excl. acquisitions of subsidiaries, joint ventures, associates, and financial
investments.
** Updated 11 August 2021.
Vestas Wind Systems A/S
Interim Financial Report – Third Quarter 2021 Page 17 of 34
Classification: Public
Capital Markets Day 2021
On 15 December 2021, Vestas will be hosting a Capital
Markets Day for analysts, institutional investors, and the
media. The event will, given that circumstances allow,
be held in Copenhagen, Denmark, in the historical
building of Børsen, the Old Stock Exchange.
To cater for participants that are prevented from
travelling, we will also offer live streaming of the
presentations on the day.
Find more information and register for the event at
vestas.com/en/investor/Calendar-Events. The deadline
for registration is 30 November 2021.
Financial calendar 2022
10.02.2022
Disclosure of the Annual Report 2021 and outlook
for 2022
21.02.2022
Deadline for the company’s shareholders to submit
a written request to the Board of Directors that a
specific matter be included in the agenda for the
Annual General Meeting
04.03.2022
Convening for Annual General Meeting
05.04.2022
Annual General Meeting in Aarhus, Denmark
04.05.2022
Disclosure of the Interim financial report, Q1 2022
10.08.2022
Disclosure of the Interim financial report, Q2 2022
02.11.2022
Disclosure of the Interim financial report, Q3 2022
The financial calendar lists the expected dates of
disclosure of financial results and the Annual General
Meeting in the financial year 2022 for Vestas Wind
Systems A/S.
Vestas Wind Systems A/S
Interim Financial Report – Third Quarter 2021 Page 18 of 34
Classification: Public
Consolidated financial statements 1 January - 30 September
Condensed income statement 1 January – 30 September
mEUR
Note
Q3
2021
Q3
2020
9M
2021
9M
2020
Revenue
1.1, 1.2
Production costs
(4,938 )
(4,158 )
(9,871 )
(9,547 )
Gross profit
Research and development costs
(81 )
(67 )
(262 )
(203 )
Distribution costs
(101 )
(74 )
(283 )
(230 )
Administration costs
(93 )
(59 )
(265 )
(174 )
Operating profit (EBIT) before special items 1.1 325 412 355 392
Special items
1.3
(119 )
(119 )
(52 )
Operating profit (EBIT) 206 418 236 340
Income from investments in joint ventures and associates
Net financial items
(40 )
(28 )
(70 )
(65 )
Profit before tax
Income tax
(47 )
(101 )
(59 )
(72 )
Profit for the period
Profit is attributable to:
Owners of Vestas
Non-controlling interests
Earnings per share (EPS)
Earnings per share for the period (EUR), basic
Earnings per share for the period (EUR), diluted
Condensed statement of comprehensive income 1 January - 30 September
mEUR
Q3
2021
Q3
2020
9M
2021
9M
2020
Profit for the period
Items that may be reclassified to the income statement subsequently:
Exchange rate adjustments relating to foreign entities
(49 )
(95 )
Exchange rate adjustments relating to foreign entities reclassified to the income
statement
Fair value adjustments of derivative financial instruments for the period
Gain/(loss) on derivative financial instruments transferred to the income statement
(27 )
(36 )
(41 )
(85 )
Exchange rate adjustments relating to joint ventures
(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
(0 )
Tax on items that may be reclassified to the income statement subsequently
(27 )
(26 )
(44 )
Other comprehensive income after tax for the period
(40 )
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 – Third Quarter 2021 Page 19 of 34
Classification: Public
Condensed balance sheet – Assets
mEUR
Note
30 September
2021
30 September
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 – Third Quarter 2021 Page 20 of 34
Classification: Public
Condensed balance sheet – Equity and liabilities
mEUR
Note
30 September
2021
30 September
2020
31 December
2020
Share capital
3.1
Other reserves
(19 )
(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 – Third Quarter 2021 Page 21 of 34
Classification: Public
Condensed statement of changes in equity – nine 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
(12 )
(12 )
(12 )
Transaction with owners:
Transactions with non-controlling interests
(6 )
(48 )
(54 )
Dividends distributed
(230 )
(230 )
Dividends distributed related to treasury
shares
Acquisition of treasury shares
(12 )
(12 )
Share-based payments
Tax on equity transactions
(5 )
(5 )
Total transactions with owners
(242 )
(48 )
(290 )
Equity as at 30 September 2021
(28 )
(8 )
Condensed statement of changes in equity – nine months 2020
Reserves
mEUR
Share
capital
Transla-
tion
reserve
Cash flow
hedging
reserve
Other
reserves
Total other
reserves
Retai
ned
earnings
Non-
controlling
interests
Total
Equity as at 1 January 2020
(4 )
(4 )
(59 )
(67 )
Profit for the period
Other comprehensive income for the period
(78 )
(3 )
Total comprehensive income for the period
(78 )
Transfer of cash flow hedge reserve to the
initial carrying amount of hedged items
(14 )
(14 )
(14 )
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
Total transactions with owners
(1 )
(200 )
(201 )
Equity as at 30 September 2020
(82 )
(26 )
(19 )
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 – Third Quarter 2021 Page 22 of 34
Classification: Public
Condensed cash flow statement 1 January – 30 September
mEUR
Note
Q3
2021
Q3
2020
9M
2021
9M
2020
Profit for the period
Adjustment for non-cash transactions
Income tax paid
(36 )
(33 )
(117 )
(177 )
Interest paid / received, net
(9 )
(2 )
(32 )
(15 )
Cash flow from operating activities before change in net working capital
Change in net working capital
(8 )
(516 )
(843 )
Cash flow from operating activities
(21 )
Purchase of intangible assets
(95 )
(57 )
(278 )
(203 )
Purchase of property, plant and equipment
(130 )
(84 )
(324 )
(255 )
Disposal of property, plant and equipment
Proceeds from investments in joint ventures and associates
Cash flow from investing activities before acquisitions of
subsidiaries, joint ventures, associates and financial investments
(223 )
(141 )
(552 )
(458 )
Free cash flow before acquisitions of subsidiaries, joint ventures,
associates and financial investments
(415 )
(479 )
Investment in joint ventures and associates
(10 )
(1 )
(207 )
(2 )
Purchase of other non-current financial assets
(7 )
(2 )
Disposal of subsidiary
Net cash flow from deconsolidation of subsidiary
(4 )
(4 )
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
(138 )
(142 )
(676 )
(256 )
Free cash flow
(539 )
(277 )
Dividend paid
(228 )
(208 )
Payment of lease liabilities
(31 )
(18 )
(99 )
(53 )
Payment of financial debt
(97 )
(26 )
(388 )
(32 )
Proceeds from borrowings
Acquisition of treasury shares
(12 )
Transaction with non-controlling interest
(22 )
(22 )
Cash flow from financing activities
(103 )
(38 )
(667 )
(186 )
Net decrease in cash and cash equivalents
(1,206 )
(463 )
Cash and cash equivalents at the beginning of period
Exchange rate adjustments of cash and cash equivalents
(23 )
(73 )
Cash and cash equivalents at the end of the period
3.2
The above condensed cash flow statement should be read in conjunction with the accompanying notes.
Vestas Wind Systems A/S
Interim Financial Report – Third Quarter 2021 Page 23 of 34
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.
In the third quarter of 2021, impairment losses of EUR 48m, staff costs of EUR 61m, and other costs of EUR 10m related
to adjustment of the manufacturing footprint have been recognised in special items, impacting the Power Solutions
segment.
mEUR
Power
Solutions
Service
Not allocated
Total
Group
Q3 2021
Total revenue
4,921
617
-
5,538
Total costs
(4,656)
(474)
(83)
(5,213)
Operating profit (EBIT) before special items
265
143
(83)
325
Special items
(119)
-
-
(119)
Operating profit (EBIT)
146
143
(83)
206
Income from investments in joint ventures and associates
4
Net financial items
(40)
Profit before tax
170
Amortisation and depreciation included in total costs
(194)
(27)
(21)
(242)
mEUR
Power
solutions
Service
Not allocated
Total
Group
Q3 2020
Total revenue
4,267
503
-
4,770
Total costs
(3,949)
(359)
(50)
(4,358)
Operating profit (EBIT) before special items
318
144
(50)
412
Special items
6
-
-
6
Operating profit (EBIT)
324 144 (50) 418
Income from investments in joint ventures and associates
1
Net financial items
(28)
Profit before tax
391
Amortisation and depreciation included in total costs
(129)
(18)
(16)
(163)
Vestas Wind Systems A/S
Interim Financial Report – Third Quarter 2021 Page 24 of 34
Classification: Public
1.1 Segment information (continued)
In the first nine months of 2021, impairment losses of EUR 48m, staff costs of EUR 61m, and other costs of EUR 10m
related to adjustments of the manufacturing footprint have been recognised in special items, impacting the Power Solutions
segment.
In the first nine months of 2020, impairment losses of EUR 43m, provision for purchase commitments of EUR 6m, 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
9M 2021
Total revenue
9,273
1,763
-
11,036
Total costs
(9,116)
(1,326)
(239)
(10,681)
Operating profit (EBIT) before special items
157
437
(239)
355
Special items
(119)
-
-
(119)
Operating profit (EBIT)
38 437 (239) 236
Income from investments in joint ventures and associates
49
Net financial items
(70)
Profit before tax
215
Amortisation and depreciation included in total costs
(535)
(78)
(56)
(669)
mEUR
Power
solutions
Service
Not allocated
Total
Group
9M 2020
Total revenue
9,064
1,482
-
10,546
Total costs
(8,913)
(1,070)
(171)
(10,154)
Operating profit (EBIT) before special items
151
412
(171)
392
Special items
(52)
-
-
(52)
Operating profit (EBIT)
99 412 (171) 340
Income from investments in joint ventures and associates
2
Net financial items
(65)
Profit before tax
277
Amortisation and depreciation included in total costs
(371)
(51)
(46)
(468)
Vestas Wind Systems A/S
Interim Financial Report – Third Quarter 2021 Page 25 of 34
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 – Third Quarter 2021 Page 26 of 34
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
Q3
2021
Q3
2020
Q3
2021
Q3
2020
Q3
2021
Q3
2020
Timing of revenue recognition
Products and services transferred at a point in time
3,851
3,446
94
82
3,945
3,528
Products and services transferred over time
1,070
821
523
421
1,593
1,242
4,921
4,267
617
503
5,538
4,770
Revenue from contract types
Supply-only
1,234
2,463
-
-
1,234
2,463
Supply-and-installation (at a point in time)
2,618
983
-
-
2,618
983
Supply-and-installation (over time)
869
586
-
-
869
586
Turnkey (EPC)
200
235
-
-
200
235
Service
-
-
617
503
617
503
4,921
4,267
617
503
5,538
4,770
Primary geographical markets
EMEA
2,843
1,323
280
272
3,123
1,595
Americas
1,606
2,375
249
179
1,855
2,554
Asia Pacific
472
569
88
52
560
621
4,921
4,267
617
503
5,538
4,770
mEUR
Power Solutions
Service
Total
9M
2021
9M
2020
9M
2021
9M
2020
9M
2021
9M
2020
Timing of revenue recognition
Products and services transferred at a point in time
6,552
6,701
259
237
6,811
6,938
Products and services transferred over time
2,721
2,363
1,503
1,245
4,224
3,608
9,273
9,064
1,762
1,482
11,035
10,546
Revenue from contract types
Supply-only
2,048
4,771
-
-
2,048
4,771
Supply-and-installation (at a point in time)
4,505
1,930
-
-
4,505
1,930
Supply-and-installation (over time)
2,082
1,374
-
-
2,082
1,374
Turnkey (EPC)
638
989
-
-
638
989
Service
-
-
1,762
1,482
1,762
1,482
9,273
9,064
1,762
1,482
11,035
10,546
Primary geographical markets
EMEA
5,273
2,567
986
815
6,259
3,382
Americas
2,856
5,074
593
519
3,449
5,593
Asia Pacific
1,144
1,423
183
148
1,327
1,571
9,273
9,064
1,762
1,482
11,035
10,546
Vestas Wind Systems A/S
Interim Financial Report – Third Quarter 2021 Page 27 of 34
Classification: Public
1.3 Special items
Group accounting policies
Special items comprise significant unusual and/or infrequently occurring items that are not attributable to Vestas’ normal
operations. Special items comprise income and costs related to significant organisational restructuring and significant
adjustments to production capacity and the product programme. The costs include the write-down of intangible and tangible
assets as well as provisions for re-organisations and any reversal/adjustments thereof.
Key Accounting judgement
Classification
The use of special items entails management judgement in the separation from other items in the income statement. In
connection with the use of special items, it is crucial that these are of a significant unusual and/or infrequently occurring
nature that are not attributable to Vestas’ normal operations, as such classification highlights to users of financial
statements the items to which the least attention should be given when understanding current and future performance.
Adjusting manufacturing footprint
Vestas continues to develop the products and solutions offered to customers as well as expand partnerships with
specialised partners in the supply chain. As part of this development, in September 2021, Vestas announced that it will
adjust its manufacturing footprint and intends to cease production at factories in Lauchhammer, Germany; Viveiro, Spain
and Esbjerg, Denmark.
This adjustment of the manufacturing footprint event qualifies as special items in accordance with Vestas’ Accounting
policy. In total, special items of EUR 119m have been recognised. EUR 48m as impairment of tangible assets, EUR 61m
as staff costs, and EUR 10m as other costs.
Basis for recognition
The impairment loss is primarily related to land and buildings which are written down to fair value less expected cost to
sell. The facility in Lauchhammer has been written down with EUR 34m to EUR 10m. The facility in Viveiro has been written
down with EUR 6m to zero as no significant value is expected from the disposal of the facility considering costs to sell.
Furthermore, a right of use asset related to the building in Esbjerg has been written down with EUR 8m to zero as the
building is not expected to be utilised after production has ended.
Vestas has initiated negotiations with worker’s representatives and local work councils for all affected employees. The total
staff cost recognised include severance packages and salaries during leave. The expected costs are dependent on the
outcome of the negotiations including the length of the negotiation period. The provision for staff costs amounts to EUR
61m related to employees in Lauchhammer, Viveiro and Esbjerg.
Other costs are primarily related to a write-down of inventory and other receivables as well as costs to maintain facilities
during idle period.
mEUR
30 September
2021
30 September
2020
31 December
2020
Impairment loss on intangible and tangible assets
(48)
(43)
(43)
Staff costs
(61)
(3)
(3)
Other
(10)
(6)
(6)
Special items
(119)
(52)
(52)
2 Other operating assets and liabilities
2.1 Property, plant and equipment
In the first nine months of 2021, Vestas acquired assets with a cost of EUR 324m mainly related to manufacturing blade
moulds, transport equipment and construction tools, compared to EUR 255m in the first nine months of 2020.
Lease contracts recognised as right-of-use assets during the first nine months of 2021 amounted to EUR 147m, compared
to EUR 133m in the first nine months 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
Vestas Wind Systems A/S
Interim Financial Report – Third Quarter 2021 Page 28 of 34
Classification: Public
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.
2.3 Warranty provisions (included in provisions)
mEUR
30 September
2021
30 September
2020
31 December
2020
Warranty provisions, 1 January
1,189
619
619
Provisions for the period
421
499
693
Warranty provisions consumed during the period
(599)
(225)
(326)
Additions from business combinations
55
-
203
Reclassification
57
-
-
Warranty provisions
1,123
893
1,189
The provisions are expected to be payable as follows:
< 1 year
554
444
524
> 1 year
569
449
665
1,123
893
1,189
In the first nine months of 2021, net warranty provisions charged to the income statement amounted to EUR 391m,
equivalent to 3.5 percent of revenue. The warranty provisions in the third quarter of 2021 included additional warranty
provisions of EUR 50m driven by increased repair and upgrade costs, caused by the external cost inflation. The net amount
consists of a gross warranty provision of EUR 421m and a claim towards sub-suppliers of EUR 30m. Warranty consumption
amounted to EUR 599m compared to EUR 225m in the first nine months of 2020. The higher consumption is primarily
related to the extraordinary warranty provisions of EUR 175m made in the second quarter of 2020 to cover a specific repair
and upgrade of a confined, albeit considerable number of blades already installed.
In the 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.
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.
Vestas Wind Systems A/S
Interim Financial Report – Third Quarter 2021 Page 29 of 34
Classification: Public
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 September
2021
30 September
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 September
2021
30 September
2020
31 December
2020
Cash and cash equivalents without disposal restrictions
1,852
2,327
3,039
Cash and cash equivalents with disposal restrictions
26
25
24
Cash and cash equivalents
1,878
2,352
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 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 30 September 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 30 September 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 positive with a market value of net EUR 35m, equal to book value, and were included
in other receivables and other liabilities with EUR 288m and EUR 253m, respectively.
Vestas Wind Systems A/S
Interim Financial Report – Third Quarter 2021 Page 30 of 34
Classification: Public
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 499m with a corresponding fair value of EUR
507m as at 30 September 2021.
4 Other disclosures
4.1 Related party transactions
Vestas has had the following material transactions with joint ventures and associates:
mEUR
Q3
2021
Q3
2020
9M
2021
9M
2020
Joint ventures
Revenue for the period
48
294
61
504
Proceeds from sale of projects
-
-
10
-
Capital increase
1
-
22
-
Receivable as at 30 September
6
87
6
87
Received prepayments balance as at 30 September
148
61
148
61
Associates
Proceeds from investments in associates
1
-
11
-
Capital increase
-
-
3
-
Payable capital contribution as at 30 September
46
43
46
43
Received prepayments balance as at 30 September
-
30
-
30
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.
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.
In April 2021, IFRIC finalised its agenda decision Configuration or Customization Costs in a Cloud Computing Arrangement.
In this agenda decision, IFRIC considered whether intangible assets should be recognised in relation to configuration or
customisation of application software, and if an intangible asset is not recognised, how the customer accounts for the
configuration or customisation costs. As Vestas has cloud computing arrangements in place, Vestas has commenced an
Vestas Wind Systems A/S
Interim Financial Report – Third Quarter 2021 Page 31 of 34
Classification: Public
analysis of the impact of this agenda decision on the accounting policies applied to implementation costs in cloud
computing arrangements.
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 – Third Quarter 2021 Page 32 of 34
Classification: Public
Management’s statement
Executive Management
Board of Directors
*) Employee representative
Classification: Public
Classification: Public
Tel: +45 9730 000 0
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.