Company announcement No. 14/2022
Interim Financial Report
Second Quarter 2022
Company Reg. No.: 10403782
Wind. It means the world to us.
TM
Vestas Wind Systems A/S Page 2 of 34
Interim Financial Report – Second Quarter 2022
Classification: Public
Contents
Summary ........................................................................................................................................ 3
Financial and operational key figures ......................................................................................... 4
Sustainability key figures ............................................................................................................. 5
Group financial performance ....................................................................................................... 6
Power Solutions ............................................................................................................................ 8
Service ......................................................................................................................................... 10
Sustainability ............................................................................................................................... 11
Strategy and financial and capital structure targets ................................................................ 12
Outlook 2022 ................................................................................................................................ 15
Consolidated financial statements 1 January - 30 June .......................................................... 16
Management’s statement ........................................................................................................... 33
Information meeting (audiocast)
On Wednesday 10 August 2022 at 10 am CEST (9 am
BST), 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: 88041990#
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
Vestas Wind Systems A/S Page 3 of 34
Interim Financial Report – Second Quarter 2022
Classification: Public
Summary
Quarterly revenue of EUR 3,305m with an EBIT margin
before special items of (5.5) percent. Wind turbine order
intake of 2.2 GW with a continued strong backlog of EUR
18.9bn at higher pricing. Full-year guidance maintained.
In the second quarter of 2022, Vestas generated revenue
of EUR 3,305m – a decrease of 7 percent compared to
the year-earlier period. EBIT before special items
amounted to EUR (182)m, resulting in an EBIT margin
before special items of (5.5) percent, compared to 2.7
percent in the second quarter of 2021.
Free cash flow* amounted to EUR (362)m compared to
EUR 183m in the second quarter of 2021.
The quarterly intake of firm and unconditional wind
turbine orders amounted to 2,153 MW, and the value of
the wind turbine order backlog was EUR 18.9bn as at 30
June 2022. In addition to the wind turbine order backlog,
at the end of the quarter, Vestas had service agreements
with expected contractual future revenue of EUR 31.3bn.
Thus, the value of the combined backlog of wind turbine
orders and service agreements stood at EUR 50.2bn –
an increase of EUR 2.1bn compared to the year-earlier
period.
Group President & CEO Henrik Andersen said: “The first
half of 2022 was characterised by geo-political
uncertainty and supply chain disruptions that have
caused costs to increase and an energy crisis to unfold.
This development underlines the urgent need for a
sustainable energy transition and drives stronger policy
support for renewables across the globe but also creates
a highly challenging business environment that
negatively impacts Vestas’ financial results. In this
environment, we achieved a revenue of EUR 3.3bn in the
second quarter of 2022, and in accordance with our
guidance for the full year, profitability remained
challenged with an EBIT margin of (5.5) percent. In the
quarter, our Service revenue grew 12.5 percent year-on-
year, but was negatively impacted by one-offs related to
a few projects in specific geographical areas. We
reinforced our onshore leadership with an order intake of
2.2 GW and an average selling price on onshore wind
turbines of EUR 0.96m/MW, a 22 percent increase year-
on-year. The sustained price increases show we
maintain the discipline to protect value creation and pave
the way towards our profitability target. We continue to
execute on our strategy to ensure Vestas continues to
lead the energy transition and is ready to profitably grasp
future growth. Everyone at Vestas is doing a great job in
very tough circumstances, and we remain thankful for the
ongoing support from our customers and partners.”
Key highlights
Sustained price increases continue to pave the way towards profitability target
Maintaining the discipline to protect value creation.
Order intake of 2.2 GW
Wind turbine order backlog remains high at EUR 18.9bn.
Revenue of EUR 3.3bn
Revenue decreased by 7 percent year-on-year caused by delay of offshore project.
Profitability negative in accordance with outlook revised on 1 May
EBIT margin of (5.5) percent driven by supply chain disruptions and cost inflation.
Positive policy development in the USA and Europe
Despite evidence of an energy crisis, still a lack of permitting progress.
*) Excl. acquisitions of subsidiaries, joint ventures, associates, and financial investments.
Vestas Wind Systems A/S Page 4 of 34
Interim Financial Report – Second Quarter 2022
Classification: Public
Financial and operational key figures
mEUR
Q2
2022
Q2
4)
2021
4)
H1
2022
H1
4)
2021
4)
FY
4)
2021
4)
Financial highlights
Income statement
Revenue
3,305
3,536
5,790
5,498
15,587
Gross profit
97
375
119
564
1,556
Operating profit/(loss) before amortisation, depreciation and
impairment (EBITDA) before special items
41
313
(21)
441
1,341
Operating profit/(loss) (EBIT) before special items
(182)
94
(511)
16
429
Operating profit/(loss) before amortisation, depreciation and
impairment (EBITDA)
42
313
(420)
441
1,250
Operating profit/(loss) (EBIT)
(147)
94
(1,041)
16
290
Net financial items
(6)
(12)
0
(30)
(101)
Profit/(loss) before tax
(139)
115
(1,028)
31
225
Profit/(loss) for the period
(119)
83
(884)
19
144
Balance sheet
Balance sheet total
20,458
19,512
20,458
19,512
19,648
Equity
3,658
4,477
3,658
4,477
4,697
Net working capital
(488)
(616)
(488)
(616)
(1,049)
Capital employed
5,635
5,956
5,635
5,956
6,133
Interest-bearing position (net), end of the period
(415)
334
(415)
334
1,200
Cash flow statement
Cash flow from operating activities
(188)
352
(1,116)
(402)
956
Cash flow from investing activities before acquisitions of
subsidiaries, joint ventures, associates and financial investments
(174)
(169)
(367)
(313)
(773)
Free cash flow before acquisitions of subsidiaries, joint ventures,
associates and financial investments
(362)
183
(1,483)
(715)
183
Free cash flow
(381)
166
(1,504)
(924)
57
Financial ratios
1)
Financial ratios
Gross margin (%)
2.9
10.6
2.1
10.3
10.0
EBITDA margin (%) before special items
1.2
8.9
0.4
8.0
8.6
EBIT margin (%) before special items
(5.5)
2.7
(8.8)
0.3
2.8
EBITDA margin (%)
1.3
8.9
(7.3)
8.0
8.0
EBIT margin (%)
(4.4)
2.7
(18.0)
0.3
1.9
Return on capital employed (ROCE)
2)
(%) before special items
(2.9)
12.2
(2.9)
12.2
4.5
Net interest-bearing debt / EBITDA
2)
0.5
(0.2)
0.5
(0.2)
(0.9)
Solvency ratio (%)
17.9
22.9
17.9
22.9
23.9
Return on equity
2)
(%)
(17.8)
21.4
(17.8)
21.4
3.0
Share ratios
Earnings per share
3)
(EUR)
(0.8)
0.9
(0.8)
0.9
0.1
Dividend per share (EUR)
-
-
-
-
0.05
Pay-out ratio (%)
-
-
-
-
36.0
Share price at the end of the period (EUR)
20.2
32.9
20.2
32.9
26.9
Number of shares at the end of the period (million)
1,010
1,010
1,010
1,010
1,010
Operational key figures
Order intake (bnEUR)
2.1
4.5
5.1
6.1
11.6
Order intake (MW)
2,153
5,290
5,101
7,306
13,896
Order backlog – wind turbines (bnEUR)
18.9
21.2
18.9
21.2
18.1
Order backlog – wind turbines (MW)
20,945
26,334
20,945
26,334
21,984
Order backlog – service (bnEUR)
31.3
26.9
31.3
26.9
29.2
Produced and shipped wind turbines (MW)
3,758
5,775
7,727
10,305
17,845
Produced and shipped wind turbines (number)
947
1,445
1,898
2,572
4,456
Deliveries (MW)
3,140
3,767
5,376
5,692
16,594
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) Earnings per share has been calculated over a 12-month period and in accordance with IAS 33 on earnings per share.
4) Comparative figures for 2021 have been adjusted following the accounting policy change for configuration and customisation cost in cloud computing arrangements, refer to
note 5.3.
Vestas Wind Systems A/S Page 5 of 34
Interim Financial Report – Second Quarter 2022
Classification: Public
Sustainability key figures
Q2
2022
Q2
2021
H1
2022
H1
2021
FY
2021
ENVIRONMENTAL
Utilisation of resources
Consumption of energy (GWh)
162
192
331
406
738
- of which renewable energy (GWh)
62
70
121
150
283
- of which renewable electricity (GWh)
52
59
101
121
233
Renewable energy (%)
38
36
37
37
38
Renewable electricity for own activities
(%)
100
100
100
100
100
Withdrawal of fresh water (1,000 m³)
80
111
161
211
378
Waste
Volume of waste from own operations (1,000 t)
12
20
26
39
70
- of which collected for recycling (1,000 t)
6
9
13
19
35
Recyclability rate of hub and blade
1)
(%)
//
//
//
//
42
Material efficiency (tonnes of waste excl. recycled per MW produced
and shipped)
1.7
1.9
1.7
1.9
2.0
Carbon emissions adjusted for acquisitions and investments
Direct emissions of CO
2
e
(scope 1) (1,000 t)
24
27
2)
48
51
2)
99
2)
Indirect emissions of CO
2
e
(scope 2) (1,000 t)
0.2
0.5
2)
1
2
2)
3
2)
Indirect emissions of CO
2
e from the supply chain (scope 3)
1)
(million t)
//
//
//
//
10.56
Indirect emissions of CO
2
e from the supply chain (scope 3)
1)
(kg per
MWh generated)
//
//
//
//
6.65
Products
Expected CO
2
e avoided over the lifetime of the MW produced and
shipped during the period (million t)
105
167
223
298
532
Annual CO
2
e
avoided by the total aggregated installed fleet (million t)
221
201
221
201
210
SOCIAL
Safety
Total Recordable Injuries (number)
50
51
97
100
201
- of which Lost Time Injuries (number)
20
21
42
37
67
- of which fatal injuries(number)
0
0
0
0
0
Total Recordable Injuries per million working hours (TRIR)
3.1
3.1
3.1
3.1
3.1
Lost Time Injuries per million working hours (LTIR)
1.2
1.3
1.3
1.1
1.0
Employees
Average number of employees (FTEs)
Employees at the end of the period (FTEs)
28,729
29,081
28,729
29,081
29,427
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 (%)
22
20
22
20
21
Human rights
1)
Community grievances
(number)
//
//
//
//
17
Community beneficiaries (number)
//
//
//
//
8,236
Social Due Diligence on projects in scope
(%)
//
//
//
//
0
GOVERNANCE
Whistle-blower system
1)
EthicsLine compliance cases
(number)
//
//
//
//
465
- of which substantiated
//
//
//
//
96
- of which unsubstantiated
//
//
//
//
292
For general definitions and specifications on these sustainability key figures, see the Notes to sustainability key figures in the Annual Report 2021, page 142-143.
1) Data only reported on an annual basis.
2) In alignment with the GHG protocol standard, data for 2021 has retroactively been adjusted for acquisitions and divestments in 2020 and 2021 in accordance with Vestas’ policy on
baseline adjustments for CO
2
emissions and related indicators.
Vestas Wind Systems A/S Page 6 of 34
Interim Financial Report – Second Quarter 2022
Classification: Public
Group financial performance
Income statement
Revenue
Revenue in the second quarter of 2022 amounted to EUR
3,305m (Q2 2021: EUR 3,536m), a decrease of 6.5
percent, primarily driven by lower offshore deliveries in
Northern Europe.
For the first half of the year, revenue amounted to EUR
5,790m (H1 2021: EUR 5,498m), an increase of 5
percent, primarily driven by wind turbine deliveries in the
USA and Northern Europe as well as increasing service
activity. Revenue for the first half of 2022 reflected a
positive impact of approx. EUR 120m from foreign
exchange rate translation compared to 2021.
Revenue and EBIT margin before special items
mEUR and percentage
Gross profit
Gross profit amounted to EUR 97m in the second quarter
of 2022, corresponding to a gross margin of 2.9 percent
(Q2 2021: EUR 375m; 10.6 percent), which is an 7.7
percentage point decrease compared to the second
quarter of 2021. The decrease in the gross margin was
mainly attributable to continued external cost inflation and
supply chain disruptions.
Gross profit in the first half of 2022 amounted to EUR
119m equal to a margin of 2.1 percent of revenue (H1
2021: EUR 564m; 10.3 percent). The decrease in the
gross margin was mainly attributable to an adjustment
related to offshore activities covering EUR 83m
impairment losses related to the V164/V174 offshore
technology and related assets and as well increased
warranty provisions for offshore turbines already installed
of EUR 93m. Excluding these effects, the gross profit in
the first half of 2022 amounted to EUR 295m highlighting
that the first half of 2022 was negatively impacted by
continued external cost inflation and supply chain
disruptions.
Warranty provisions
Costs for warranty provisions amounted to EUR 123m in
the second quarter of 2022 (Q2 2021: EUR 109m). This
was equivalent to a warranty ratio of 3.7 percent of
revenue in the second quarter of 2022 (Q2 2021: 3.1
percent).
For the first half of 2022, warranty costs amounted to 5.5
percent of revenue compared to 3.1 percent in the first
half of 2021. The higher warranty in 2022 was primarily
attributable to additional warranty provisions totalling
EUR 124m, caused by increasing repair and upgrade
costs due to external cost inflation and EUR 93m related
to offshore wind turbines already installed.
Research and development costs, Distribution
costs and Administration costs
Research and development costs recognised in the
income statement amounted to EUR 83m (Q2 2021: EUR
99m). The decrease was mainly driven by lower
depreciation, following the impairment of V164/V174
technology as well as lower research and development
activities in the second quarter of 2022 following the high
level of activity in the preceding quarter.
Distribution costs amounted to EUR 107m in the second
quarter of 2022 (Q2 2021: EUR 97m). The increase was
mainly due to higher sales activity and increasing
depreciation of transportation equipment.
Administration costs amounted to EUR 89m which is on
par with the amount in the second quarter of 2021.
Depreciation, amortisation, and impairment
In the second quarter of 2022, overall depreciation,
amortisation, and impairment before special items
amounted to EUR 223m, which is on par with the second
quarter of 2021.
Operating profit (EBIT) before special items
EBIT before special items amounted to negative EUR
182m in the second quarter of 2022, equivalent to an
EBIT margin of negative 5.5 percent (Q2 2021: EUR 94m;
2.7 percent). For the first half of 2022, EBIT before special
items amounted to negative EUR 511m, equal to an EBIT
margin of negative 8.8 percent (H1 2021: EUR 16m; 0.3
percent). The decrease in EBIT before special items was
mainly attributable to the adjustments related to offshore
which had an impact of EUR 176m. Excluding this, the
EBIT margin before special items in the first half of 2022
was negative 5.8 percent equal to a decline of 6.1
percentage points compared to first half of 2021, mainly
driven by the lower gross profit.
Operating profit (EBIT) after special items
In the second quarter of 2022, EBIT after special items
amounted to negative EUR 147m (Q2 2021: EUR 94m).
The EBIT after special items reflects special items income
of EUR 35m related to a reversal of previously recognised
impairment losses of EUR 33m on factories in
Lauchhammer and Esbjerg, and adjustments to the
Vestas Wind Systems A/S Page 7 of 34
Interim Financial Report – Second Quarter 2022
Classification: Public
provisions related to Russia’s invasion of Ukraine
amounting to net EUR 34m, partially offset by negative
adjustments to the manufacturing footprint change in
China amounting to EUR 32m.
EBIT after special items in the first half of 2022 amounted
to negative EUR 1,041m, equivalent to an EBIT margin
after special items of negative 18.0 percent (H1 2021:
EUR 16m; 0.3 percent). The negative EBIT after special
items reflects special items costs of EUR 367m
recognised in the first half of 2022 following Russia’s
invasion of Ukraine and Vestas’ decision to withdraw from
the Russian market while stopping all service and
construction activities in Ukraine. Furthermore, it reflects
special items costs of EUR 215m related to the
manufacturing footprint in China and India, as well as
adjustments to the footprint change announced in
September 2021 amounting to positive EUR 52m.
Income from investments in joint ventures and
associates
Income from investments in joint ventures and associates
amounted to a profit of EUR 14m in the second quarter of
2022 (Q2 2021: EUR 33m). The lower profit compared to
2021 was related to a lower level of co-development
activities in the USA, partially offset by higher income from
the investment in Copenhagen Infrastructure Partners
P/S.
Net financial items
Financial items amounted to a net loss EUR 6m in the
second quarter of 2022 (Q2 2021: loss of EUR 12m) and
net EUR 0m in the first half of 2022 (H1 2021: loss of EUR
30m), driven by interests, fees, and foreign exchange
impacts.
Income tax
Income tax amounted to an income of EUR 20m in the
second quarter and EUR 144m 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 14 percent, compared
to 39 percent in the first half of 2021. The low effective tax
rate was primarily driven by the losses in Russia with
limited tax deductibility.
Net result for the period
The net result amounted to a loss of EUR 119m in the
second quarter of 2022 (Q2 2021: profit of EUR 83m). The
decrease in net result was mainly due to the lower gross
profit in the second quarter of 2022. The net result for the
first half of 2022 amounted to a loss of EUR 884m (H1
2021: profit of EUR 19m). The decrease in net result was
mainly the result of the special items, warranty costs and
impairment losses recognised in the first half of 2022.
Financial ratios
Earnings per share calculated over a 12-month period
amounted to negative EUR 0.8 in the second quarter of
2022 (Q2 2021: EUR 0.9). The decrease of EUR 1.7 was
driven by the lower result in the period.
Return on capital employed (ROCE) before special items
was negative 2.9 percent in the second quarter of 2022
(Q2 2021: 12.2 percent), a decline compared to 2021
driven by the lower EBIT before special items. Return on
equity was negative 17.8 percent in the second quarter of
2022 (Q2 2021: 21.4 percent), a decrease of 39.2
percentage points attributable to the lower net profit.
Working capital and free cash flow
Net working capital
Net working capital amounted to a net liability of EUR
488m as at 30 June 2022 (30 June 2021: net liability of
EUR 616m). The development reflects increasing
receivables compared to 2021 while increasing inventory
and contract assets was offset by increasing
prepayments and trade payables.
Cash flow from operating activities
Cash flow from operating activities was negative EUR
188m in the second quarter of 2022 (Q2 2021: positive
352m). The negative development was primarily driven by
the negative profit and the development in the net working
capital in the period.
Cash flow from investing activities
Cash flow from investing activities before acquisition of
subsidiaries, joint ventures, associates, and financial
investments amounted to a net outflow of EUR 174m in
the second quarter of 2022 which is on par with the
investments in the same quarter of 2021.
Free cash flow
Free cash flow before acquisition of subsidiaries, joint
ventures, associates, and financial investments
amounted to negative EUR 362m in the second quarter of
2022 (Q2 2021: positive EUR 183m) and negative EUR
1,483m in the first half of 2022 (H1 2021: negative EUR
715m). The negative development year over year was
driven by a negative cash flow from operating activities.
Capital structure and financing items
Equity and solvency ratio
As at 30 June 2022, total equity amounted to EUR 3,658m
(30 June 2021: EUR 4,477). The decrease compared to
2021 was mainly attributable to the negative net profit in
the first half of 2022 also causing the solvency ratio to
drop 5 percentage points in the same period to 17.9
percent as at 30 June 2022.
Net interest-bearing position and cash position
As at 30 June 2022, the net interest-bearing position
amounted to negative EUR 415m (30 June 2021 EUR
334m). This development compared to 2021 was a result
of negative free cash flow and increasing financial debt.
Cash and cash equivalents amounted to EUR 1,350m as
at 30 June 2022, compared to EUR 1,596m at the end of
the second quarter of 2021.
The ratio net interest-bearing debt/EBITDA was 0.5 as at
30 June 2022 compared to negative 0.2 at the end of the
second quarter of 2021. The ratio was negatively
impacted by both a lower EBITDA and deteriorated net
interest-bearing position.
Vestas Wind Systems A/S Page 8 of 34
Interim Financial Report – Second Quarter 2022
Classification: Public
Power Solutions
Result for the period
In the second quarter of 2022, revenue from the Power
Solutions business amounted to EUR 2,605m (Q2 2021:
EUR 2,914m). The decrease was mainly attributable to
lower offshore deliveries in Northern Europe partially
offset by higher onshore deliveries. Offshore contributed
with EUR 78m of revenue in the second quarter of 2022
(Q2 2021: EUR 719m).
The first half of 2022 reflected revenue in the Power
Solutions segment of EUR 4,467m, an increase of 2.7
percent compared to the same period last year (H1 2021:
EUR 4,352m), mainly driven by the USA and Northern
Europe.
EBIT before special items amounted to negative EUR
225m in the second quarter of 2022, equal to an EBIT
margin of negative 8.6 percent (Q2 2021: EUR 1m; 0
percent). The negative development in the EBIT margin
was attributable to continued external cost inflation and
supply chain disruptions.
In the first half of 2022, EBIT before special items
amounted to negative EUR 605m, equal to an EBIT
margin before special items of negative 13.5 percent (H1
2021: EUR (109)m; (2.5) percent), a deterioration of 11.0
percentage points compared to same period last year.
The negative development in the EBIT margin was
attributable to the offshore adjustment covering
impairment losses related to the V164/V174 offshore
technology and additional warranty provisions.
Excluding this impact, the EBIT margin for the Power
Solutions business was negative 9.6 percent highlighting
an increased impact from external cost inflation and
supply chain disruptions.
Power Solutions revenue and EBIT margin before special
items
mEUR and percentage
Wind turbine order intake
In the second quarter of 2022, wind turbine order intake
amounted to 2,153 MW, corresponding to a value of
EUR 2.1bn (Q2 2021: 5,290 MW; EUR 4.5bn) This
represents a decrease of 59 percent in MW order intake
compared to the second quarter of 2021, mainly related
to strong order intake in Northern Europe and Asia
Pacific in 2021.
The average price per MW was EUR 0.97m (EUR 0.96m
for onshore only) in the second quarter of 2022,
compared to EUR 0.84m in the second quarter of 2021
and EUR 0.83m for full year 2021, highlighting continued
price increases towards customers.
Wind turbine order intake, second quarter 2022
MW
EMEA
Ameri-
cas
Asia
Pacific
Total
Onshore order
intake
896
1,199
28
2,123
Offshore order
intake
30
-
-
30
Total order
intake
926
1,199
28
2,153
Wind turbine deliveries
Deliveries to customers amounted to 3,140 MW in the
second quarter of 2022 (Q2 2021: 3,767 MW). The
decrease was mainly driven by lower offshore deliveries
in the UK due to a delayed offshore project.
Deliveries
MW
By the end of June 2022, Vestas had installed a total
capacity of 158 GW in 88 countries.
Vestas Wind Systems A/S Page 9 of 34
Interim Financial Report – Second Quarter 2022
Classification: Public
Deliveries (onshore and offshore)
MW
Q2
2022
Q2
2021
FY
2021
Finland
426
142
838
Poland
322
130
739
Germany
251
120
598
France
226
118
668
Sweden
108
130
679
Italy
104
43
321
United Kingdom
70
661
2,129
Belgium
54
45
90
Turkey
54
22
88
Spain
48
2
76
Latvia
42
-
-
Austria
24
4
91
Netherlands
23
38
388
Ireland
14
-
-
Greece
12
13
40
Egypt
12
-
24
Portugal
5
46
97
South Africa
4
13
330
Denmark
4
29
235
Russian Fed.
-
185
473
Saudi Arabia
-
110
245
Norway
-
2
413
Jordan
-
5
38
Faroe Islands
-
-
11
EMEA
1,803
1,858
8,611
Hereof Offshore
60
589
2,007
Brazil
437
396
1,892
USA
394
621
3,065
Colombia
45
4
41
Chile
41
97
314
Mexico
-
45
200
Panama
-
19
25
Bolivia
-
15
39
Canada
-
-
151
Puerto Rico
-
-
11
El Salvador
-
-
9
Americas
917
1,197
5,747
Hereof Offshore
-
-
-
Japan
117
143
170
India
93
15
157
Australia
86
47
389
Vietnam
53
336
1,132
Taiwan
51
28
35
China
7
128
319
South Korea
6
-
1
New Zealand
4
12
30
Sri Lanka
3
3
3
Asia Pacific
420
712
2,236
Hereof Offshore
27
-
-
Total
3,140
3,767
16,594
Hereof Offshore
87
589
2,007
Wind turbine order backlog
At the end of the second quarter of 2022, the wind
turbine order backlog amounted to 20,945 MW, which
corresponds to a value of EUR 18.9bn, of which EUR
3.5bn relates to offshore wind power projects.
Order backlog per region
MW
EMEA
Ameri-
cas
Asia
Pacific
Total
Onshore order
backlog
8,832
7,235
1,985
18,052
Offshore order
backlog
1,634
-
1,259
2,893
Total backlog as at
30 June 2022
10,466
7,235
3,244
20,945
Europe, Middle East, and Africa (EMEA)
The total order backlog for Europe, Middle East, and
Africa decreased 32 percent from the end of second
quarter of 2021 to 10,466 MW at the end of second
quarter 2022. The decrease was driven by the exclusion
of Russia and Ukraine and a decrease in the offshore
backlog from 3,050 MW in second quarter 2021 to 1,634
MW in second quarter 2022, following the deliveries of
offshore wind turbines in 2021.
Americas
The total order backlog for Americas decreased 5
percent from the end of second quarter 2021 to 7,235
MW at the end of second quarter 2022. The decrease
was largely driven by high onshore deliveries in the USA
and Brazil, partially offset by an increased order intake in
Canada and Argentina.
Asia Pacific
The total wind turbine order backlog for Asia Pacific at
the end of the second quarter 2022 of 3,244 MW
corresponds to a decrease of 5 percent compared to end
of second quarter 2021. The offshore backlog
contributed with an increase from 728 MW to 1,259 MW
by the end of second quarter of 2022, mainly driven by
orders in Taiwan, but offset by a decrease in the onshore
order backlog.
Vestas Wind Systems A/S Page 10 of 34
Interim Financial Report – Second Quarter 2022
Classification: Public
Service
Result for the period
The Service business generated revenue of EUR 700m
in the second quarter of 2022 (Q2 2021: EUR 622m),
which corresponds to a 12.5 percent increase compared
to the second quarter of 2021.
Revenue from the Service business amounted to EUR
1,
323m in the first half of 2022 (H1 2021: EUR 1,146m),
a 15.4 percent increase compared to the first half of 2021
driven by higher contract activity and transactional sales.
Service revenue and EBIT margin before special items
mEUR and percentage
EBIT before special items amounted to EUR 124m in the
second quarter of 2022, corresponding to an EBIT
margin of 17.7 percent (Q2 2021: EUR 173m; 27.8
percent), which is a 9.9 percentage point decrease
compared to the same period last year. The decrease
was driven by lower profitability on certain projects in the
USA and Africa.
In the first half of 2022, EBIT before special items
amounted to EUR 251m with an EBIT margin of 19
percent (H1 2021: 283m; 24.6 percent), a 5.7 percent
point decrease compared to the first half of 2021. The
development was mainly attributable to impairment
losses in first quarter 2022 and the same factors
impacting the second quarter.
Wind turbines under service
At the end of June 2022, Vestas had around 55,200 wind
turbines under service, equivalent to 138 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 2022, 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 2022, Vestas had service contracts
in the order backlog with expected contractual future
revenue of EUR 31.3bn, an increase of EUR 4.4bn
compared to 30 June 2021 from all regions despite
negative impact from a write-down of wind turbine order
backlog in Russia and Ukraine of EUR 0.6bn.
Service order backlog
bnEUR
At the end of the quarter, the average duration in the
s
ervice order backlog was approx. ten years,
unchanged from at the end of 2021.
Vestas Wind Systems A/S Page 11 of 34
Interim Financial Report – Second Quarter 2022
Classification: Public
Sustainability
The Vestas Sustainability Strategy
Vestas has been leading the transition to a world
powered by sustainable energy for over four decades.
But in 2020, we launched our sustainability strategy to
embed sustainability in everything we do with clear
ambitions: achieving carbon-neutrality of our own
operations by 2030, without using carbon offsets;
creating zero-waste wind turbines by 2040; becoming
the safest, most inclusive and socially responsible
workplace in the energy industry; and leading the
transition to a world powered by sustainable energy.
Carbon footprint
Wind turbines produced and shipped in the second
quarter of 2022 are expected to avoid 105 million tonnes
of CO
2
e over the course of their lifetime, a decrease of
37 percent from the second quarter of 2021 due to a
lower amount of MW produced and shipped in the period
compared to last year.
In the second quarter of 2022, our total scope 1 and 2
emissions decreased by 12 percent compared to the
second quarter of 2021. This can be attributed to lower
activity levels overall and the installation of a new
biomass boiler in our Daimiel factory. Scope 3 emissions
are reported annually in the Vestas Sustainability Report.
Circularity
Following the launch of our Circularity Roadmap in third
quarter of 2021, we now report the material efficiency of
our own operations on a quarterly basis. In the second
quarter of 2022, our material efficiency improved 11
percent compared to second quarter of 2021 to 1.7
tonnes of waste per MW produced and shipped. This
improvement is primarily due to lower overall waste since
last year from factories sold or closed and lower
production levels.
Safety
Working towards becoming the safest workplace in the
energy industry, we aim 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 2022, 50 Recordable Injuries
were registered, resulting in a TRIR of 3.1 both for the
quarter and year-to-date, which is unchanged from 2021.
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 Page 12 of 34
Interim Financial Report – Second Quarter 2022
Classification: Public
Strategy and financial and
capital structure targets
(For an extended introduction to the Vestas strategy,
please refer to the Annual Report 2021.)
Accelerating the journey to net zero
We are currently in a climate change crisis, which is the
greatest challenge humanity has ever faced. This can
only be changed through a new major industrial
revolution: the global energy transition and the need to
act has never been clearer. Global temperature levels
have already increased by 1.2°C and continue to rise,
highlighting the urgency with which we must act to stay
within the 1.5°C scenario.
An important step towards action was taken at COP26 in
Glasgow in November 2021, where climate targets were
increased, additional countries announced net zero
targets and the phase-out of coal was included for the
first time. However, these targets fall short of deploying
renewable energy fast enough, according to the
International Energy Agency (IEA). Further on the
COVID-19 pandemic led to a further deepening of the
world’s dependence on gas and coal and creating price
and supply volatility.
The value of wind turbines and other renewable
technologies is already well established. The energy
transition though is more than a technology revolution. It
also requires a fundamental shift in mindset – thinking
and acting across our entire value chain, employing
circularity and collaborating across the industry,
strengthening of supply chains to ensure flexibility and
alleviate challenges. Further on, the industry must
become more profitable, with appropriate return
measurements on equity and capital. As a leader in
sustainable energy solutions, Vestas is deeply
committed to ensuring the renewables industry achieves
full maturity.
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 within
the electricity system alone is tremendous. For more
than 40 years, Vestas has driven the global energy
transition. 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. We will
continue to invest in solutions that enable both the
continued deployment of renewables and allow us to
integrate sustainability in everything we do.
Industry leadership and challenging new fields
For more than 40 years, Vestas has delivered solutions
to one of the world’s biggest challenges. This
commitment has taken us to global wind leadership with
a presence in more than 80 countries. During this period,
we have made wind energy the cheapest new sources of
electricity along solar PV. We have further paved the way
for a sustainable energy system but there is still a long
way to go.
Solving the climate crisis entails decarbonising the entire
energy system. Vestas has the scale, reach, track
record, and technological expertise to continue leading
the buildout of renewable energy and expand renewable
energy through the following core pillars:
· Increasing the renewable energy penetration of
electricity
· Driving direct electrification
· Developing and implementing solutions for
indirect electrification
As part of our strategy, and as part of our efforts to play
a leading role in the energy transition, in 2021 we made
significant strides towards achieving our vision of
becoming the global leader in sustainable energy
solutions. The main ones:
· Finalised the integration of Offshore, establishing
one globally aligned organisational footprint for
Vestas
· Introduced the offshore V236-15 MW™ offshore
turbine
· Launched roadmap to secure full circularity by
2040 and accelerated targets for full rotor
recyclability by 2030
· Matured our business across the value chain
· Increased our focus in project development
activities, Power-to-X, and Vestas Ventures
In the mid-term, our priorities remain to lead the market
in both wind power plant solutions and in service while
integrating sustainability in everything we do. 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 2021.
Driving industry maturity
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
Directors and the Executive Management team,
providing the organisation with a strong focus and
ensuring clear direction for all of our colleagues around
the world.
Vestas Wind Systems A/S Page 13 of 34
Interim Financial Report – Second Quarter 2022
Classification: Public
In 2021, our key strategic priorities included among
others the following:
· Sustainability: To address the climate crisis while
meeting the growing expectations of our
stakeholders, we have mobilised internal functions to
accelerate our sustainability journey. Despite the
inclusion of offshore activities, we remain committed
to carbon neutrality in our own operations by 2030.
We have launched our Circularity Roadmap and
accelerated progress towards zero-waste turbines
and continue to invest in sustainable mobility.
· Quality: A key part of the continued evolution of our
industry is to provide quality to ensure resilient
energy systems. This includes dealing with issues in
an efficient and customer-focused manner.
Continued growth through new product introductions,
accelerated cost-out and high activity levels have put
pressure on the entire Vestas value chain, including
our quality. To address these challenges, we have
reinforced our quality culture and focus through
several initiatives and strengthened and simplified
our processes and governance and developed a
strong quality community across 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 attract, recruit, develop, and retain
business-critical talents. In order to achieve these
talent objectives, we have launched several
initiatives to consolidate our position as an attractive
employer, improve succession planning and create a
more diverse talent pipeline.
Long-term financial ambitions
Wind power has outcompeted fossil fuel alternatives in
most parts of the world, volumes in the global wind
turbine market are good, and the prospects for the
coming years promising, with wind power’s expected
central role in the electrification of societies, industries
and mobility systems and forecasts of accelerated
annual growth of wind power capacity towards 2030
*)
. 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 remain a focus
area for wind turbine manufacturers in the coming years.
Severe supply chain instability and cost inflation has only
made this more important.
Onshore
The demand for onshore wind power globally is expected
to remain relatively stable at the current high level the
next couple of 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, as well as
growing capabilities within the fast-developing market for
Power-to-X and hybrid solutions. 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’ acquired
offshore business. Based on the order backlog, Vestas
will see a good activity level in the coming year.
Following that, the company expects to see a decline in
activity towards 2025, while necessitating to invest
heavily both in the organisation, supply chain, and
technology. By 2025, upon the steep increase in annual
offshore installations and Vestas' new platform 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 business area of EUR
+3bn by 2025, with an EBIT margin before special items
on par with the Group's overall margin.
Service
The wind power service market is expected to grow at
high single digit 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, taking
into account the integration of the offshore business,
which currently generates lower margins than onshore.
General ambitions
Despite supply chain instability and a high degree of cost
inflation, causing volatility in the demand for wind power,
Vestas maintains its ambition on an overall level to grow
faster than the market and be market leader in revenue.
The company also remains optimistic about reaching a
10 percent EBIT margin before special items. Based on
the current market conditions and projections, we now
envision this to be achieved by 2025. The introduction of
our new offshore turbine platform will impact free cash
flow, but Vestas nevertheless expects to generate
positive cash flow and to achieve a long-term ROCE of
minimum 20 percent over the cycle.
*)
Source: Wood Mackenzie: Market Outlook Update Q4 2021. November 2021.
Vestas Wind Systems A/S Page 14 of 34
Interim Financial Report – Second Quarter 2022
Classification: Public
Financial and capital structure targets and
priorities
The Board and Executive Management regularly assess
whether Vestas’ capital structure, i.e. how the company
funds its overall operations and growth, is in the
shareholders’ best interest. The ongoing assessments
also include the ways in which it supports our corporate
strategy.
Financial management
In relation to financial management, the objective is to
create the necessary flexibility and stability to implement
strategic development work, while in the long-term
achieving Vestas’ financial ambitions. At the same time,
we aim to reduce the cost of capital.
Capital structure targets
As a key player in a market where projects, customers,
and wind energy investors are increasing in size and
number, we aim to be a strong financial counterpart. We
will maintain capital resources to ensure compliance with
our capital structure target of net interest-bearing debt to
EBITDA below 1x.
Capital allocation priorities
Vestas applies the following principles to capital
allocation:
Provide the investments and R&D required to
realise our corporate strategy and our long-term
vision of being the global leader in sustainable
energy solutions.
Make bolt-on acquisitions to accelerate or
increase profitable growth prospects. All
investments in organic growth and acquisitions
must support our long-term financial ambition of
achieving return on capital employed.
Pay shareholder dividends based on the Board’s
intention to recommend 25-30 percent of the
company’s annual net result after tax, which will be
paid out following shareholder approval at the
annual general meeting.
From time to time, initiate share buy-back
programmes to adjust the capital structure. Any
decision to distribute cash to shareholders will be
based on the capital structure target and
availability of excess cash. The level of excess
cash will be determined in line with our growth
plans and liquidity requirements. Share buy-back
programmes, if any, will likely be initiated in the
second half of the year based on performance.
The Board and Executive Management consider that
Vestas’ current capital and share structure serves the
interests of shareholders and the company well. It also
provides strategic flexibility to pursue our vision of
becoming the global leader in sustainable energy
solutions.
Vestas Wind Systems A/S Page 15 of 34
Interim Financial Report – Second Quarter 2022
Classification: Public
Outlook 2022
As expected when announcing the updated financial
guidance for full year on 1 May 2022, the business
environment with supply chain instability and cost
inflation has subequently continued to impact the wind
power industry, and hence Vestas maintains this outlook.
Revenue for full year 2022 is expected to range between
EUR 14.5bn and 16.0bn, including Service revenue
which is expected to grow min. 10 percent. Furthermore,
Vestas expects to achieve an EBIT margin before special
items of (5)-0 percent with a Service EBIT margin before
special items of approx. 23 percent.
Total investments
*)
are expected to amount to approx.
EUR 1,000m in 2022.
It should be emphasised that there is greater uncertainty
than usual around forecasts related to execution in 2022,
and the outlook seeks to take into account the current
situation and challenges.
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 2022.
Further, the full-year results may also be impacted by
movements in exchange rates from current levels.
Outlook 2022
**
)
Revenue (bnEUR)
14.5-16.0
EBIT margin (%) before
special items
(5)-0
Total investments
*)
(mEUR)
approx. 1,000
*) Excl. acquisitions of subsidiaries, joint ventures, associates, and financial
investments.
**) Updated on 1 May 2022.
Vestas Wind Systems A/S Page 16 of 34
Interim Financial Report – Second Quarter 2022
Classification: Public
Consolidated financial statements 1 January - 30 June
Condensed income statement 1 January – 30 June
mEUR
Note
Q2
2022
Q2
1)
2021
1)
H1
2022
H1
1)
2021
1)
Revenue
1.1, 1.2
Production costs
(3,208 )
(3,161 )
(5,671 )
(4,934 )
Gross profit
Research and development costs
(83 )
(99 )
(232 )
(192 )
Distribution costs
(107 )
(97 )
(222 )
(184 )
Administration costs
(89 )
(85 )
(176 )
(172 )
Operating profit/(loss) (EBIT) before special items 1.1 (182 ) 94 (511 ) 16
Special items
1.3
(530 )
Operating profit/(loss) (EBIT) (147 ) 94 (1,041 ) 16
Income from investments in joint ventures and associates
Net financial items
(6 )
(12 )
(30 )
Profit/(loss) before tax
(139 )
(1,028 )
Income tax
(32 )
(12 )
Profit/(loss) for the period
(119 )
(884 )
Profit/(loss) is attributable to:
Owners of Vestas
(119 )
(884 )
Non-controlling interests
Earnings per share (EPS)
Earnings per share for the period (EUR), basic
(0.12 )
(0.88 )
Earnings per share for the period (EUR), diluted
(0.12 )
(0.88 )
Condensed statement of comprehensive income 1 January - 30 June
mEUR
Q2
2022
Q2
1)
2021
1)
H1
2022
H1
1)
2021
1)
Profit/(loss) for the period
(119 )
(884 )
Items that may be reclassified to the income statement subsequently:
Exchange rate adjustments relating to foreign entities
(41 )
(9 )
Fair value adjustments of derivative financial instruments for the period
(11 )
(80 )
Gain/(loss) on derivative financial instruments transferred to the income statement
(8 )
(8 )
(10 )
(14 )
Exchange rate adjustments relating to joint ventures
Share of fair value adjustments of derivatives financial instruments of joint ventures
and associates
Tax on items that may be reclassified to the income statement subsequently
Other comprehensive income after tax for the period
(48 )
(40 ) 76
Total comprehensive income for the period
(167 )
(924 )
The above condensed statement of comprehensive income should be read in conjunction with the accompanying notes.
1)
Comparative figures for 2021 are adjusted in relation to accounting policy change for configuration and customisation cost in cloud computing arrangements, refer to note 5.3.
Vestas Wind Systems A/S Page 17 of 34
Interim Financial Report – Second Quarter 2022
Classification: Public
Condensed balance sheet – Assets
mEUR
Note
30 June
2022
30 June
1)
2021
1)
31 December
1)
2021
1)
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
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
The above condensed balance sheet should be read in conjunction with the accompanying notes.
1)
Comparative figures for 2021 are adjusted in relation to accounting policy change for configuration and customisation cost in cloud computing arrangements, refer to note 5.3.
Vestas Wind Systems A/S Page 18 of 34
Interim Financial Report – Second Quarter 2022
Classification: Public
Condensed balance sheet – Equity and liabilities
mEUR
Note
30 June
2022
30 June
1)
2021
1)
31 December
1)
2021
1)
Share capital
3.1
Other reserves
(67 )
(100 )
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
Financial debts
3.4
Contract liabilities
Trade payables
Provisions
2.3
Tax payables
Other liabilities
3.4
Total current liabilities
Liabilities associated with assets held for sale
2.2
Total liabilities
Total equity and liabilities
The above condensed balance sheet should be read in conjunction with the accompanying notes.
1)
Comparative figures for 2021 are adjusted in relation to accounting policy change for configuration and customisation cost in cloud computing arrangements, refer to note 5.3.
Vestas Wind Systems A/S Page 19 of 34
Interim Financial Report – Second Quarter 2022
Classification: Public
Condensed statement of changes in equity – six months 2022
Reserves
mEUR
Share
capital
Transla-
tion
reserve
Cash flow
hedging
reserve
Other
reserves
Total
reserves
Retained
earnings
Non-
controlling
interests
Total
Equity as at 1 January 2022
(8 )
Impact from change in accounting
estimates (IAS 37 amendment)
(17 )
(17 )
Adjusted equity as at 1 January 2022
(8 )
Profit/(loss) for the period
(884 )
(0 )
(884 )
Other comprehensive income for the period
-
(63 )
(40 )
(40 )
Total comprehensive income for the period
(63 )
(40 )
(884 )
(924 )
Transfer of cash flow hedge reserve to the
initial carrying amount of hedged items
(49 )
(49 )
(49 )
Transaction with owners:
Dividends distributed
(50 )
(50 )
Dividends distributed related to treasury
shares
Share-based payments
Tax on equity transactions
(3 )
(3 )
Total transactions with owners
(49 )
(49 )
Equity as at 30 June 2022
(96 )
(67 )
Condensed statement of changes in equity – six months 2021
Reserves
mEUR
Share
capital
Transla-
tion
reserve
Cash flow
hedging
reserve
Other
reserves
Total
reserves
Retained
earnings
1)
Non-
controlling
interests
Total
1)
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 )
The above condensed statement of changes in equity should be read in conjunction with the accompanying notes.
1)
Comparative figures for 2021 are adjusted in relation to accounting policy change for configuration and customisation cost in cloud computing arrangements, refer to note 5.3.
Vestas Wind Systems A/S Page 20 of 34
Interim Financial Report – Second Quarter 2022
Classification: Public
Condensed cash flow statement 1 January – 30 June
mEUR
Note
Q2
2022
Q2
1)
2021
1)
H1
2022
H1
1)
2021
1)
Profit/(loss) for the period
(119 )
(884 )
Adjustment for non-cash transactions
Interest paid / received, net
(5 )
(6 )
(5 )
(23 )
Income tax paid
(22 )
(18 )
(90 )
(81 )
Cash flow from operating activities before change in net working capital
(90 )
(409 )
Change in net working capital
(98 )
(707 )
(508 )
Cash flow from operating activities
(188 )
(1,116 )
(402 )
Purchase of intangible assets
(104 )
(88 )
(192 )
(167 )
Purchase of property, plant and equipment
(75 )
(115 )
(182 )
(194 )
Disposal of property, plant and equipment
Dividends from investments in joint ventures and associates
Cash flow from investing activities before acquisitions of
subsidiaries, joint ventures, associates and financial investments
(174 )
(169 )
(367 )
(313 )
Free cash flow before acquisitions of subsidiaries, joint ventures,
associates and financial investments
(362 )
(1,483 )
(715 )
Purchase of shares in joint ventures and associates
(20 )
(11 )
(22 )
(197 )
Purchase of other non-current financial assets
-
(6 )
-
(7 )
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
(193 )
(186 )
(388 )
(522 )
Free cash flow
(381 )
(1,504 )
(924 )
Dividend paid
(50 )
(228 )
(50 )
(228 )
Payment of lease liabilities
(40 )
(34 )
(76 )
(68 )
Proceeds from borrowings
Payment of financial debt
(102 )
(614 )
(291 )
Acquisition of treasury shares
(12 )
(12 )
Cash flow from financing activities
(90 )
(255 )
(564 )
Net change in cash and cash equivalents
(471 )
(89 )
(1,100 )
(1,488 )
Cash and cash equivalents at the beginning of period
Exchange rate adjustments of cash and cash equivalents
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.
1) Comparative figures for 2021 are adjusted in relation to accounting policy change for configuration and customisation cost in cloud computing arrangements, refer to note 5.3.
Vestas Wind Systems A/S Page 21 of 34
Interim Financial Report – Second Quarter 2022
Classification: Public
Notes
1 Result for the period
1.1 Segment information
In the second quarter of 2022, an income of EUR 35m was recognised in special items impacting the Power Solutions
segment. The income relates to a reversal of previously recognised impairment losses relating to the factory in
Lauchhammer of EUR 26m and the factory in Esbjerg of EUR 7m and adjustments to the provision relating to the Russian
invasion of Ukraine of EUR 42m, offset by adjustments to the manufacturing footprint in China of EUR 32m as well as staff
costs and other costs totalling EUR 8m relating to the Russian invasion of Ukraine. For additional information, refer to note
1.3.
1) Comparative figures for 2021 are adjusted in relation to accounting policy change for configuration and customisation cost in cloud computing arrangements, refer to note 5.3.
mEUR
Power
Solutions
Service
Not allocated
Total
Group
Q2 2022
Total revenue
2,605
700
-
3,305
Total costs
(2,830)
(576)
(81)
(3,487)
Operating profit/(loss) (EBIT) before special items
(225)
124
(81)
(182)
Special items
35
35
Operating profit/(loss) (EBIT)
(190)
124
(81)
(147)
Income from investments in joint ventures and associates
14
Net financial items
6
Profit/(loss) before tax
(139)
Amortisation and depreciation included in total costs
(183)
(29)
(11)
(223)
mEUR
Power
Solutions
Service
Not allocated
Total
1)
Group
1)
Q2 2021
Total revenue
2,914
622
-
3,536
Total costs
(2,913)
(449)
(80)
(3,442)
Operating profit/(loss) (EBIT)
1
173
(80)
94
Income from investments in joint ventures and associates
33
Net financial items
(12)
Profit/(loss) before tax
115
Amortisation and depreciation included in total costs
(177)
(26)
(16)
(219)
Vestas Wind Systems A/S Page 22 of 34
Interim Financial Report – Second Quarter 2022
Classification: Public
1.1 Segment information (continued)
In the first half of 2022, Vestas recognised an impairment loss relating to the V164/V174 offshore activity, including
technology. Intangible assets of EUR 55m and tangible assets of EUR 28m have been impaired, impacting the Power
Solutions segment by EUR 71m and the Service segment by EUR 12m. Additional warranty provisions of EUR 93m was
recognised related to the offshore activity.
In the first half of 2022, impairment losses, write-downs and other costs of EUR 530m relating to the Russian invasion of
Ukraine as well as adjustments to the manufacturing footprint have been recognised in special items, impacting the Power
Solutions segment. For additional information, refer to note 1.3.
mEUR
Power
Solutions
Service
Not allocated
Total
Group
H1 2022
Total revenue
4,467
1,323
-
5,790
Total costs
(5,072)
(1,072)
(157)
(6,301)
Operating profit/(loss) (EBIT) before special items
(605)
251
(157)
(511)
Special items
(530)
-
-
(530)
Operating profit/(loss) (EBIT)
(1,135)
251
(157)
(1,041)
Income from investments in joint ventures and associates
13
Net financial items
0
Profit/(loss) before tax
(1,028)
Amortisation and depreciation included in total costs
(439)
(69)
(24)
(532)
mEUR
Power
Solutions
Service
Not allocated
Total
1)
Group
1)
H1 2021
Total revenue
4,352
1,146
-
5,498
Total costs
(4,461)
(863)
(158)
(5,482)
Operating profit/(loss) (EBIT)
(109)
283
(158)
16
Income from investments in joint ventures and associates
45
Net financial items
(30)
Profit/(loss) before tax
31
Amortisation and depreciation included in total costs
(341)
(51)
(33)
(425)
Vestas Wind Systems A/S Page 23 of 34
Interim Financial Report – Second Quarter 2022
Classification: Public
1.2 Revenue
The illustration below shows the process from order intake to revenue recognition in Vestas.
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
2022
Q2
2021
Q2
2022
Q2
2021
Q2
2022
Q2
2021
Timing of revenue recognition
Products and services transferred at a point in time
1,636
2,002
110
93
1,746
2,095
Products and services transferred over time
969
912
590
529
1,559
1,441
2,605
2,914
700
622
3,305
3,536
Revenue from contract types
Supply-only
495
621
-
-
495
621
Supply-and-installation (at a point in time)
1,141
1,381
-
-
1,141
1,381
Supply-and-installation (over time)
609
675
-
-
609
675
Turnkey (EPC)
360
237
-
-
360
237
Service
-
-
700
622
700
622
2,605
2,914
700
622
3,305
3,536
Primary geographical markets
EMEA
1,523
1,662
356
406
1,879
2,068
Americas
741
791
275
170
1,016
961
Asia Pacific
341
461
69
46
410
507
2,605
2,914
700
622
3,305
3,536
Vestas Wind Systems A/S Page 24 of 34
Interim Financial Report – Second Quarter 2022
Classification: Public
mEUR Power Solutions Service Total
H1
2022
H1
2021
H1
2022
H1
2021
H1
2022
H1
2021
Timing of revenue recognition
Products and services transferred at a point in time
2,718
2,701
190
165
2,908
2,866
Products and services transferred over time
1,749
1,651
1,133
981
2,882
2,632
4,467
4,352
1,323
1,146
5,790
5,498
Revenue from contract types
Supply-only
822
814
-
-
822
814
Supply-and-installation (at a point in time)
1,896
1,887
-
-
1,896
1,887
Supply-and-installation (over time)
1,168
1,213
-
-
1,168
1,213
Turnkey (EPC)
581
438
-
-
581
438
Service
-
-
1,323
1,146
1,323
1,146
4,467
4,352
1,323
1,146
5,790
5,498
Primary geographical markets
EMEA
2,553
2,430
669
707
3,222
3,137
Americas
1,344
1,250
522
344
1,866
1,594
Asia Pacific
570
672
132
95
702
767
4,467
4,352
1,323
1,146
5,790
5,498
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.
Russian invasion of Ukraine
Following Russia’s invasion of Ukraine in February 2022, Vestas announced on 5 April 2022 that Vestas would withdraw
from the Russian market. In order to facilitate the withdrawal from Russia, Vestas continues certain activities during a
limited transition period where Vestas will dispose of its Russian assets, wind down operations and end existing contractual
relationships. Furthermore, Vestas’ activities in Ukraine have been put on hold.
The costs related to the Russian invasion of Ukraine qualify as special items in accordance with Vestas’ accounting policy.
In the first half of 2022, special items of EUR 367m have been recognised including provisions of EUR 118m, write-down
of inventories located in Russia and Ukraine of EUR 228m, impairment of tangible assets of EUR 8m, write-down of VAT
receivables of EUR 4m, staff costs of EUR 6m and other expenses of EUR 3m, as directly related to the Russian invasion
of Ukraine.
In the second quarter of 2022, an income of EUR 34m was recognised relating to adjustments of EUR 42m to the provision
initially recognised in the first quarter of 2022, offset by staff costs of EUR 4m and other costs of EUR 3m.
Basis for recognition
The provisions primarily relate to potential risks related to the ceasing of activities in Russia and Ukraine existing at 30
June 2022. The write-down of inventory relates to inventory located in Russia and Ukraine that is not expected to be sold.
The impairment loss on tangible assets is primarily related to buildings and equipment located in Russia, which are written
down to zero as the assets are not expected to be utilised or sold. The write-down of VAT receivables is related to VAT
receivables that are deemed not recoverable. The staff costs are primarily related to severance payments. Other expenses
primarily relate to the closing of the factory in Russia.
Adjusting manufacturing footprint
Vestas continues to review the product portfolio and adapt the production capacity. As part of this development, Vestas
intends to adjust its manufacturing footprint by ceasing production at certain factories in China and India.
This adjustment of the manufacturing footprint qualifies as special items in accordance with Vestas’ accounting policy. In
the first half of 2022, special items of EUR 215m have been recognised including impairment of intangible assets of EUR
27m, impairment of tangible assets of EUR 94m, write-down of inventory of EUR 77m and other costs of EUR 17m.
Vestas Wind Systems A/S Page 25 of 34
Interim Financial Report – Second Quarter 2022
Classification: Public
In the second quarter of 2022, special items of EUR 32m was recognised including impairment of tangible assets of EUR
1m, write-down of inventory of EUR 33m and other adjustments (income) of EUR 2m.
Furthermore, a reversal of previously recognised impairment losses on tangible assets of EUR 40m, staff costs of EUR
9m and other costs of EUR 3m primarily relating to the factory in Lauchhammer, Germany, was recognised in special items
in the first half of 2022, of which a reversal of impairment losses on tangible assets of EUR 33m was recognised in the
second quarter of 2022.
Basis for recognition
The impairment loss is primarily related to intangible assets, buildings and production equipment which are written down
to fair value less expected cost to sell and inventory which is written down to net realisable value. The intangible assets,
buildings and production equipment at the factories have been written down from EUR 158m to EUR 37m reflecting the
value that is expected from the disposal of the assets considering costs to sell. Inventory has been written down from EUR
77m to zero as the inventory is expected to be scrapped. Other costs are primarily related to a write-down of VAT and tax
receivables that are deemed not recoverable.
mEUR
30 June
2022
30 June
2021
31 December
2021
Write-down of inventory
(305)
-
-
Provisions
(118)
-
-
Impairment loss on intangible and tangible assets
(89)
-
(68)
Other costs
(21)
-
(10)
Staff costs
3
-
(61)
Special items
(530)
-
(139)
2 Other operating assets and liabilities
2.1 Property, plant and equipment
In the first half of 2022, Vestas acquired assets with a cost of EUR 182m mainly related to manufacturing blade moulds,
transport equipment and construction tools, compared to EUR 194m in the first half of 2021.
Lease contracts recognised as right-of-use assets during the first half of 2022 amounted to EUR 87m, compared to EUR
126m in the first half of 2021.
2.2 Assets held for sale
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.
Assets held for sale are related to land and buildings. On 30 June 2022, Vestas signed an agreement for the disposal of
Vestas’ blades factory in Lauchhammer, Germany. Transfer of title to the factory to the buyer will be completed in third
quarter of 2022 and therefore it has been classified as held for sale as at 30 June 2022.
Vestas Wind Systems A/S Page 26 of 34
Interim Financial Report – Second Quarter 2022
Classification: Public
2.3 Warranty provisions (included in provisions)
mEUR
30 June
2022
30 June
2021
31 December
2021
Warranty provisions, 1 January
1,197
1,189
1,189
Provisions for the period
334
187
748
Warranty provisions consumed during the period
(313)
(353)
(852)
Additions from business combinations
-
55
55
Reclassification
-
57
57
Warranty provisions
1,218
1,135
1,197
The provisions are expected to be payable as follows:
< 1 year
728
522
655
> 1 year
490
613
542
1,218
1,135
1,197
During the first half of 2022, net warranty provisions charged to the income statement amounted to EUR 318m (EUR
123m in the second quarter of 2022), equivalent to 5.5 percent of revenue. The net amount consists of a gross warranty
provision of EUR 334m less supplier claims of EUR 16m. The warranty provisions in the first half of 2022 included
additional warranty provisions of EUR 124m due to increased repair costs caused by external cost inflation, hereof EUR
93m related to offshore projects. Warranty consumption amounted to EUR 313m compared to EUR 353m in the first half
of 2021.
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. The
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 5 April 2022, 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.
Treasury shares
Nominal value (DKK)
30 June
2022
30 June
2021
31 December
2021
Treasury shares as at 1 January
944,632
1,098,495
1,098,495
Purchases for the period
0
78,225
78,225
Vested treasury shares for the period
(206,692)
(232,088)
(232,088)
Treasury shares
737,940
944,632
944,632
Each share has a nominal value of DKK 0.20.
3.2 Cash and cash equivalents
mEUR
30 June
2022
30 June
2021
31 December
2021
Cash and cash equivalents without disposal restrictions
1,324
1,572
2,394
Cash and cash equivalents with disposal restrictions
26
24
26
Cash and cash equivalents
1,350
1,596
2,420
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 2021, note 4.1 (Financial risk management), pages 99-102.
The risks in 2022 remain similar in nature.
Vestas Wind Systems A/S Page 27 of 34
Interim Financial Report – Second Quarter 2022
Classification: Public
On 15 March 2022, Vestas issued two EUR 500m sustainability-linked bonds to both refinance the EUR 500m Green bond
(early redeemed in December 2021) and secure long-term funding. The two bonds will mature in 2029 and 2034
respectively, and their interest rates are linked to Vestas’ sustainability KPIs.
On 13 May 2022, Vestas has amended and restated the EUR 2bn multicurrency sustainability-linked revolving and bonding
facility agreement originally dated 28 April 2021. The sustainability KPIs have been updated and annual targets have been
set until final maturity. The facility will mature in 2027 after exercise of the first one-year extension option and can be
extended to 2028 with the exercise of the second one-year extension option.
On 27 June 2022, Vestas has signed a EUR 475m green loan facility with the European Investment Bank (EIB) to fund its
research, development, and innovation (RDI) activities until the end of 2025. As at 30 June 2022, the facility was unused.
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 2021, note 4.1, page 106. Other than the two EUR 500m sustainability-linked bonds described above, no significant
new financial instruments have been recognised compared to 2021 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 June 2022, the fair value of financial investments amounted to EUR 212m, equal to book value.
Marketable securities amounted to EUR 96m and deposits amounted to EUR 116m.
Derivative financial instruments were negative with a market value of net EUR 139m, equal to book value, and were
recognised in other receivables and other liabilities with EUR 420m and EUR 558m, respectively.
Financial instrument assets categorised within level 3 comprise other equity investments and renewable energy
certificates. Valuation methods remain unchanged from the description in the Annual Report 2021 and with no significant
changes in fair values.
As at 30 June 2022, the carrying amount of the sustainability-linked bonds issued by Vestas amounted to EUR 990m and
the fair value amounted to EUR 873m.
4 Other disclosures
4.1 Related party transactions
Vestas has had the following material transactions with joint ventures and associates:
mEUR
Q2
2022
Q2
2021
H1
2022
H1
2021
Joint ventures
Revenue for the period
2
-
83
13
Proceeds from sale of projects
-
-
-
10
Capital increase
20
-
20
21
Trade receivable as at 30 June
50
6
50
6
Other receivables as at 30 June
5
-
5
-
Prepayments balance as at 30 June (asset)
43
55
43
55
Associates
Revenue
(21)
-
(5)
-
Proceeds from investments in associates
-
6
-
10
Capital increase
(2)
3
1
3
Contract assets as at June 30
-
-
59
-
Payable capital contribution as at 30 June
48
45
48
45
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 2021, note 6.3, page 113.
Vestas Wind Systems A/S Page 28 of 34
Interim Financial Report – Second Quarter 2022
Classification: Public
4.2 Subsequent events
On 17 July 2022, Vestas drew EUR 475m under a new green loan facility with the European Investment Bank (EIB), cf.
Vestas’ Investor News of 5 July 2022.
As announced on 10 August 2022, Vestas has signed an agreement for the sale of the converters & controls business to
KK Wind Solutions. The transaction is expected to close in the first quarter of 2023, subject to receipt of approvals from
the relevant regulatory authorities and separation of the converters & controls business, at which point the transaction will
be reflected in Vestas’ financial accounts.
Other than the events recognised or disclosed in the interim financial report, no events have occurred subsequent to 30
June 2022 which could have a significant impact on the interim financial report.
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 2021 of Vestas (except for the changes described below in note 5.3)
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 2021 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 2021, note 7.3, page 120 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.
Judgement regarding classification in the income statement
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.
Vestas Wind Systems A/S Page 29 of 34
Interim Financial Report – Second Quarter 2022
Classification: Public
Estimate regarding the valuation of assets and liabilities in Russia and Ukraine
Measurement of the provision for the potential risks related to the ceasing of activities in Russia and Ukraine as well as
write-down of inventory located in Russia and Ukraine is associated with significant estimation uncertainty due to the
current situation in Russia and Ukraine. The recognised cost reflect management’s best estimate based on the current
expectations.
5.3 Changes in accounting policy and disclosures
Except for the changes below, the accounting policies remain unchanged compared to the annual report for the year ended
31 December 2021, to which reference is made.
IAS 38, Configuration or customisation costs in a cloud computing arrangement
As announced in Vestas’ Annual Report 2021, as of 1 January 2022, Vestas has changed its accounting policy on
configuration and customisation costs related to cloud computing arrangements, also referred to as Software as a Service
(SaaS).
Previously, Vestas had capitalised costs related to the implementation of cloud computing arrangements as intangible
assets. Under the new policy, implementation costs including costs to configure and customise the cloud provider’s
application software are recognised as operating expenses when the services are received.
Historical financial information has been restated to account for the impact of the change in accounting policy in relation to
SaaS arrangements as follows:
Condensed income statement extract 1 April - 30 June
mEUR
Q2 2021
Reported
Effect of new
policy
Q2 2021
Restated
Production costs
(3,160)
(1)
(3,161)
Operating profit (EBIT) before special items
376
(1)
375
Research and development costs
(94)
(5)
(99)
Distribution costs
(96)
(1)
(97)
Administration cost
(85)
(85)
Operating profit (EBIT) before special items
101
(7)
94
Operating profit (EBIT)
101
(7)
94
Profit before tax
122
(7)
115
Profit for the period
90
(7)
83
Profit is attributable to:
Owners of Vestas
89
(7)
82
Non-controlling interests
1
-
1
Earnings per share (EPS)
Earnings per share for the period (EUR), basic
0.09
0.08
Earnings per share for the period (EUR), diluted
0.09
0.08
Condensed statement of comprehensive income extract 1 April - 30 June
mEUR
Q2 2021
Reported
Effect of new
policy
Q2 2021
Restated
Profit for the period
90
(7)
83
Other comprehensive income after tax for the period
17
-
17
Total comprehensive income for the period
107
(7)
100
Vestas Wind Systems A/S Page 30 of 34
Interim Financial Report – Second Quarter 2022
Classification: Public
Condensed income statement extract 1 January - 30 June
mEUR
H1 2021
Reported
Effect of new
policy
H1 2021
Restated
Production costs
(4,933)
(1)
(4,934)
Operating profit (EBIT) before special items
565
(1)
564
Research and development costs
(181)
(11)
(192)
Distribution costs
(182)
(2)
(184)
Administration cost
(172)
-
(172)
Operating profit (EBIT) before special items
30
(14)
16
Operating profit (EBIT)
30
(14)
16
Profit before tax
45
(14)
31
Profit for the period
33
(14)
19
Profit is attributable to:
Owners of Vestas
28
(14)
14
Non-controlling interests
5
-
5
Earnings per share (EPS)
Earnings per share for the period (EUR), basic
0.03
0.01
Earnings per share for the period (EUR), diluted
0.03
0.01
Condensed statement of comprehensive income extract 1 January - 30 June
mEUR
H1 2021
Reported
Effect of new
policy
H1 2021
Restated
Profit for the period
33
(14)
19
Other comprehensive income after tax for the period
76
-
76
Total comprehensive income for the period
109
(14)
95
Condensed balance sheet extract – Assets, 30 June
mEUR
30 June
2021
Reported
Effect of new
policy
30 June
2021
Restated
Completed development projects
571
(1)
570
Software
134
(17)
117
Development projects in progress
427
(31)
396
Total intangible assets
2,888
(49)
2,839
Deferred tax
321
4
325
Total other non-current assets
1,668
4
1,672
Total non-current assets
6,598
(45)
6,553
Total assets
19,557
(45)
19,512
Vestas Wind Systems A/S Page 31 of 34
Interim Financial Report – Second Quarter 2022
Classification: Public
Condensed balance sheet extract – Equity and liabilities, 30 June
mEUR
30 June
2021
Reported
Effect of new
policy
30 June
2021
Restated
Retained earnings
4,554
(45)
4,509
Attributable to owners of Vestas
4,481
(45)
4,436
Total equity
4,522
(45)
4,477
Total equity and liabilities
19,557
(45)
19,512
Condensed cash flow statement extract 1 April - 30 June
mEUR
Q2 2021
Reported
Effect of new
policy
Q2 2021
Restated
Profit for the period
90
(7)
83
Adjustment for non-cash transactions
49
(1)
48
Cash flow from operating activities
360
(8)
352
Purchase of intangible assets
(96)
8
(88)
Cash flow from investing activities before acquisition of subsidiaries, joint ventures,
associates and financial investments
(177)
8
(169)
Cash flow from investing activities
(194)
8
(186)
Condensed cash flow statement extract 1 January - 30 June
mEUR
H1 2021
Reported
Effect of new
policy
H1 2021
Restated
Profit for the period
33
(14)
19
Adjustment for non-cash transactions
193
(2)
191
Cash flow from operating activities
(386)
(16)
(402)
Purchase of intangible assets
(183)
16
(167)
Cash flow from investing activities before acquisition of subsidiaries, joint ventures,
associates and financial investments
(329)
16
(313)
Cash flow from investing activities
(538)
16
(522)
Condensed balance sheet extract – Assets, 31 December
mEUR
31 December
2020
Reported
Effect of new
policy
31 December
2020
Restated
Completed development projects
621
(1)
620
Software
164
(17)
147
Development projects in progress
317
(17)
300
Total intangible assets
2,888
(35)
2,853
Deferred tax
335
4
339
Total other non-current assets
1,003
4
1,007
Total non-current assets
5,913
(31)
5,882
Total assets
18,160
(31)
18,129
Vestas Wind Systems A/S Page 32 of 34
Interim Financial Report – Second Quarter 2022
Classification: Public
Condensed balance sheet extract – Equity and liabilities, 31 December
mEUR
31 December
2020
Reported
Effect of new
policy
31 December
2020
Restated
Retained earnings
4,773
(31)
4,742
Attributable to owners of Vestas
4,654
(31)
4,623
Total equity
4,703
(31)
4,672
Total equity and liabilities
18,160
(31)
18,129
IAS 37, Cost of fulfilling a contract
As of 1 January 2022, Vestas adopted the amendment to IAS 37 relating to onerous contracts. The amendment specifies
that an allocation of directly related production costs, such as depreciations of production plants, machinery and equipment,
should be included in the cost of fulfilling a contract when applying IAS 37. Historically, Vestas’ accounting policy has not
included an allocation of such costs in the cost of fulfilling a contract.
The application of the amendment resulted in the recognition of an increased provision for onerous contracts related to
prior years of EUR 22m with a net impact of EUR 17m on retained earnings as at 1 January 2022. Vestas has applied the
amendment using the cumulative effect method. Under this method, the comparative information is not restated.
Vestas Wind Systems A/S Page 33 of 34
Interim Financial Report – Second Quarter 2022
Classification: Public
Management’s statement
The Executive Management and the Board of Directors
have today discussed and approved the interim financial
report of Vestas Wind Systems A/S for the period 1
January to 30 June
2022.
The interim financial report has been prepared in
accordance with IAS 34 on interim financial reporting as
adopted by the EU, accounting policies set out in the
Vestas’ Annual Report 2021 (except for the changes
described in note 5.3) and additional Danish disclosure
requirements for interim financial reports of listed
companies. The interim financial report has neither been
audited nor reviewed.
In our opinion the accounting policies used are
appropriate and the interim financial report gives a true
and fair view of Vestas' assets, liabilities, and financial
position as at 30 June
2022 and of the results of Vestas'
operations and cash flows for the period 1 January to 30
June
2022.
Further, in our opinion the management report gives a
true and fair review of the development in Vestas'
operations and financial matters, the results of Vestas'
operations for the period and Vestas' financial position
as a whole and describes the significant risks and
uncertainties pertaining to Vestas.
Besides what has been disclosed in the interim financial
report, no changes in Vestas’ most significant risks and
uncertainties have occurred relative to what was
disclosed in the Annual Report 2021.
Executive Management
Board of Directors
Anders Runevad
)
)
)
)
*) Employee representative
Vestas Wind Systems A/S Page 34 of 34
Interim Financial Report – Second Quarter 2022
Classification: Public
Vestas Wind Systems A/S
Hedeager 42, 8200 Aarh us N, Denmark
Tel: +45 9 730 0000
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 2021 (available at
vestas.com/en/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.