Classificati
Company Announcement No. 10/2023
Interim financial report
Company Reg. No.: 10403782
First quarter 2023
Vestas Wind Systems A/S Page 2 of 26
Interim Financial Report – First Quarter 2023
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 2023 ................................................................................................................................ 13
Consolidated financial statements 1 January - 31 March ........................................................ 14
Management’s statement ........................................................................................................... 25
Information meeting (audiocast)
On Wednesday 10 May 2023 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. Details on how to
register for the Q&A are to be found at
vestas.com/en/investor.
Contact details
Vestas Wind Systems A/S, Denmark
Investors/analysts:
Mathias Dalsten, Vice President
Investor Relations
Tel: +45 2829 5383
Daniel Patterson, Senior Specialist
Investor Relations
Tel: +45 2669 2725
Media:
Anders Riis, Vice President
Communications
Tel: +45 4181 3922
Vestas Wind Systems A/S Page 3 of 26
Interim Financial Report – First Quarter 2023
Summary
Quarterly revenue of EUR 2.8bn with an EBIT margin
before special items of 1.4 percent. Continued strong
wind turbine backlog of EUR 19.7bn driven by higher
order intake. Full-year guidance maintained.
In the first quarter of 2023, Vestas generated revenue of
EUR 2,829m – an increase of 14 percent compared to the
year-earlier period. EBIT before special items amounted
to EUR 40m, resulting in an EBIT margin before special
items of 1.4 percent, compared to negative 13.2 percent
in the first quarter of 2022.
Free cash flow
1)
amounted to negative EUR 1,081m
compared to negative EUR 1,121m in the first quarter of
2022.
The quarterly intake of firm and unconditional wind turbine
orders amounted to 3,303 MW with an average price per
MW (ASP) of EUR 0.89m. Comparing to the fourth quarter
2022, the order ASP is negatively impacted by mix effects
from project scope, different countries, as well as foreign
exchange rates, while underlying pricing and project
profitability are not diluted. The value of the wind turbine
order backlog was EUR 19.7bn as at 31 March 2023.
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 31.0bn.
Thus, the value of the combined backlog of wind turbine
orders and service agreements stood at EUR 50.7bn – an
increase of EUR 1.8bn compared to the year-earlier
period.
Vestas maintains the full-year guidance. We expect
revenue of EUR 14.0bn-15.5bn including Service
revenue, which is expected to grow min. 5 percent.
Vestas expects to achieve an EBIT margin before special
items of (2)-3 percent with a Service EBIT margin of
approx. 22 percent. Total investments
1)
are expected to
amount to approx. EUR 1bn in 2023.
Group President & CEO Henrik Andersen said: “Vestas
has had a good start to 2023 and achieved 14 percent
growth year-on-year in revenue and an EBIT margin of
1.4 percent. Our growth in the first quarter was driven by
higher value and increased volume of delivered projects,
as well as a 29 percent revenue increase in Service.
Compared to 2022, our profitability in the first quarter of
2023 was positively impacted by the sale of our converter
business, lower warranty provisions, and solid profitability
in Service. Order intake increased 12 percent year-on-
year to 3.3 GW with an Average Selling Price of EUR
0.89m/MW, which was alone caused by mix effects from
scope, country, and exchange rates. Underlying pricing
and profitability are not diluted by the lower Average
Selling Price in the quarter, and we continue to strengthen
industry discipline and maturity to return Vestas and the
industry to profitability and prepare for future growth. The
wind industry remains challenged by political uncertainty,
slow permitting processes, and high inflation, which we
expect to continue throughout 2023, but we are on track
for our 2023 financial outlook. There is still a long way to
go for the full year, and we must remain focused on
delivering on our promises to our customers and partners.
We want to thank our customers and partners for their
continued support, as well as our more than 28,000
colleagues for their hard work getting Vestas back to
profitability and powering the energy transition.”
Key highlights
Revenue of EUR 2.8bn
Growth of 14 percent YoY driven by higher average pricing on deliveries, higher volume, and 29 percent Service growth.
EBIT margin of 1 percent
Profitability improvement driven by the sale of the converter business, lower warranty provisions, and strong Service
business.
Order intake of 3.3 GW
Wind turbine orders in GW grew by 12 percent YoY with an ASP of EUR 0.89m/MW impacted by mix.
Solid capital structure with more than EUR 1bn of new financing in Q1
EUR 500m sustainability-linked bond issued and EUR 750m revolving credit facility signed.
Vestas leading the industry forward with discipline
Despite driving industry maturity, Vestas maintains leading position in the global market.
2)
1) Excl. acquisitions of subsidiaries, joint ventures, associates, and financial investments.
2) Source: Wood Mackenzie: Global wind turbine OEM 2022 market shares (May 2023).
Vestas Wind Systems A/S Page 4 of 26
Interim Financial Report – First Quarter 2023
Financial and operational key figures
mEUR
Q1
2023
Q1
)
2022
FY
)
2022
Financial highlights
Income statement
Revenue
2,829
2,485
14,486
Gross profit
188
22
118
Operating profit/(loss) before amortisation, depreciation and impairment (EBITDA) before
special items
236
(20)
(63)
Operating profit/(loss) (EBIT) before special items
40
(329)
(1,152)
Operating profit/(loss) before amortisation, depreciation and impairment (EBITDA)
262
(585)
(437)
Operating profit/(loss) (EBIT)
66
(894)
(1,596)
Net operating profit after tax (NOPAT)
34
(769)
(1,071)
Net financial items
(34)
6
(110)
Profit/(loss) before tax
31
(889)
(1,696)
Profit/(loss) for the period
16
(765)
(1,572)
Balance sheet
Balance sheet total
19,914
20,078
20,090
Equity
3,024
3,899
3,060
Investments in property, plant, and equipment
76
107
371
Net working capital
(167)
(609)
(1,349)
Capital employed
5,947
5,856
5,487
Interest-bearing position (net), end of the period
(1,121)
58
46
Interest-bearing debt, at the end of the period
2,923
1,957
2,427
Cash flow statement
Cash flow from operating activities
(974)
(928)
(195)
Cash flow from investing activities before acquisitions of subsidiaries, joint ventures,
associates and financial investments
(107)
(193)
(758)
Free cash flow before acquisitions of subsidiaries, joint ventures, associates and financial
investments
(1,081)
(1,121)
(953)
Free cash flow
(1,085)
(1,123)
(874)
Financial ratios
1)
Financial ratios
Gross margin (%)
6.6
0.9
0.8
EBITDA margin (%) before special items
8.3
(0.8)
(0.4)
EBIT margin (%) before special items
1.4
(13.2)
(8.0)
EBITDA margin (%)
9.3
(23.5)
(1.2)
EBIT margin (%)
2.3
(36.0)
(11.0)
Return on capital employed (ROCE)
2)
(%) before special items
(12.7)
0.7
(18.5)
Net interest-bearing debt / EBITDA
2)
before special items
5.8
0.0
N/A
Solvency ratio (%)
15.2
19.4
15.2
Return on equity
2)
(%)
(22.9)
(12.5)
(43.9)
Share ratios
Earnings per share
3)
(EUR)
(0.79)
(0.6)
(1.6)
Dividend per share (EUR)
-
-
-
Pay-out ratio (%)
-
-
-
Share price at the end of the period (EUR)
25.9
26.9
27.2
Number of shares at the end of the period (million)
1,010
1,010
1,010
Operational key figures
Order intake (bnEUR)
2.9
3.0
11.9
Order intake (MW)
3,303
2,948
11,189
Order backlog – wind turbines (bnEUR)
19.7
18.9
19.1
Order backlog – wind turbines (MW)
20,596
22,181
19,623
Order backlog – service (bnEUR)
31.0
30.0
30.4
Produced and shipped wind turbines (MW)
2,983
3,969
13,106
Produced and shipped wind turbines (number)
604
951
3,126
Deliveries (MW)
2,317
2,236
13,328
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.
Vestas Wind Systems A/S Page 5 of 26
Interim Financial Report – First Quarter 2023
Sustainability key figures
Q1
2023
Q1
2022
FY
2022
Environmental
Utilisation of resources
Consumption of energy (GWh)
163
169
641
- of which renewable energy (GWh)
56
59
231
- of which renewable electricity (GWh)
42
49
187
Renewable energy (%)
34
35
36
Renewable electricity for own activities
(%)
100
100
100
Withdrawal of fresh water (1,000 m³)
58
81
341
Waste
Volume of waste from own operations (1,000 t)
13
14
47
- of which collected for recycling (1,000 t)
7
7
26
Recyclability rate of hub and blade
1)
(%)
//
//
42
Material efficiency (tonnes of waste excl. recycled per MW produced and shipped)
1.3
1.7
1.6
Carbon emissions adjusted for acquisitions and divestments
Direct emissions of CO
2
e
(scope 1) (1,000 t)
23
24
98
Indirect emissions of CO
2
e
(scope 2) (1,000 t)
1
1
2
Indirect emissions of CO
2
e from the supply chain (scope 3)
1)
(million t)
//
//
8.18
Indirect emissions of CO
2
e from the supply chain (scope 3)
1)
(kg per MWh generated)
//
//
6.46
Products
Expected CO
2
e avoided over the lifetime of the MW produced and shipped during the period
(million t)
93
118
408
Annual CO
2
e
avoided by the total aggregated installed fleet
(million t)
222
216
219
Social
Safety
2)
Total Recordable Injuries (number)
42
47
200
- of which Lost Time Injuries (number)
17
20
73
- of which fatal injuries(number)
1
0
0
Total Recordable Injuries per million working hours (TRIR)
2.1
3.1
3.3
Lost Time Injuries per million working hours (LTIR)
0.8
1.3
1.2
Employees
Average number of employees (FTEs)
Employees at the end of the period (FTEs)
28,567
29,274
28,438
Diversity and inclusion
Women in the Board and Executive Management at the end of the period (%)
27
27
25
Women in leadership positions at the end of the period (%)
23
22
23
Human rights
1)
Community grievances
(number)
//
//
13
Community beneficiaries (number)
//
//
7,572
Social Due Diligence on projects in scope
(%)
//
//
65
Governance
Whistle-blower system
1)
EthicsLine compliance cases
(number)
//
//
539
- of which substantiated
//
//
137
3
)
- of which unsubstantiated
//
//
358
3
)
For general definitions and specifications on these sustainability key figures, see the Notes to sustainability key figures in the Annual Report 2022, page 151-152.
1) Data only reported on an annual basis.
2) As of 1 January 2023, the safety data methodology has been revised to improve the accuracy of contractor working hours, making year-on-year figures uncomparable.
3) The number reflects a status quo, with the final substantiation rate only to be seen in connection with the full-year reporting 2023.
Vestas Wind Systems A/S Page 6 of 26
Interim Financial Report – First Quarter 2023
Group financial performance
Income statement
Revenue
Revenue in the first quarter of 2023 amounted to EUR
2,829m (Q1 2022: EUR 2,485m), an increase of 13.8
percent, primarily driven by higher value and increased
volume of wind turbine deliveries and increasing service
activity. Revenue for the first quarter of 2023 reflected a
negative impact of approx. EUR 45m from foreign
exchange rate translation effects compared to 2022.
Revenue and EBIT margin before special items
mEUR and percentage
Gross profit
Gross profit amounted to EUR 188m in the first quarter of
2023, corresponding to a gross margin of 6.6 percent (Q1
2022: EUR 22m; 0.9 percent), which is a 5.7 percentage
point increase compared to the first quarter of 2022. The
increase was mainly attributable to increased revenue in
both segments, an improved margin in the Power
Solutions segment as well as lower depreciations,
amortisations and impairments on offshore assets due to
the impairment of the V164/V174 offshore technology and
related assets recognised in 2022.
Warranty costs
Warranty costs amounted to EUR 113m in the first quarter
of 2023 (Q1 2022: EUR 195m). The net warranty
provision is equivalent to a warranty ratio of 4.0 percent
of revenue (Q1 2022: 7.8 percent). The lower warranty
provisions in the quarter, compared to 2022, were driven
by the additional warranty provisions recognised in the
first quarter of 2022 caused by external cost inflation as
well as 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 92m for the first
quarter of 2023 (Q1 2022: EUR 149m). The decrease
reflects the impairment losses recognised on V164/V174
offshore technology impacting the first quarter of 2022.
Distribution costs amounted to EUR 107m in the first
quarter of 2023 (Q1 2022: EUR 115m). The decrease was
mainly attributable to the impairment losses recognised
on V164/V174 offshore technology and related assets
impacting the first quarter of 2022.
Administration costs amounted to EUR 105m in the first
quarter of 2023 (Q1 2022: EUR 87m). The increase was
driven by additional IT- and employee-related costs.
Depreciation, amortisation, and impairment
In the first quarter of 2023, overall depreciation,
amortisation, and impairment before special items
amounted to EUR 196m (Q1 2022: EUR 309m). The
decrease was mainly attributable to the impairment
losses recognised on the V164/V174 offshore technology
in the first quarter of 2022 as well as lower depreciation
related to sales and construction activities in 2023.
Sale of technology
Sale of technology includes consideration received of
EUR 147m relating to a perpetual manufacturing license
granted to KK Wind Solutions under the agreement of the
sale of the converters and controls business.
Income from investments in joint ventures and
associates from core activity
Income from investments in joint ventures and associates
related to Development activities amounted to a gain of
EUR 9m in the first quarter of 2023.
Operating profit (EBIT) before special items
EBIT before special items amounted to EUR 40m in the
first quarter of 2023, equivalent to an EBIT margin of 1.4
percent (Q1 2022: negative EUR 329m; negative 13.2
percent). The improvement was driven by the sale of the
converter & controls business, increased gross margin
and higher fixed cost absorption as well as the offshore
adjustments made in the first quarter of 2022.
Operating profit (EBIT) after special items
In the first quarter of 2023, EBIT after special items
amounted to EUR 66m (Q1 2022: negative EUR 894m).
This reflects special items income of EUR 26m, mainly
related to an adjustment of the manufacturing footprint in
India, including a reversal of previously recognised write-
downs of inventories.
Income from investments in joint ventures and
associates from other activities
Income from investments in joint ventures and associates
amounted to a loss of EUR 1m in the first quarter of 2023
mainly impacted by Vestas’ share in Copenhagen
Infrastructure Partners which is on par with first quarter
2022 (Q1 2022: loss of EUR 1m). The result is primarily
related to timing.
Vestas Wind Systems A/S Page 7 of 26
Interim Financial Report – First Quarter 2023
Net financial items
Financial items amounted to a net loss of EUR 34m in the
first quarter of 2023 (Q1 2022: profit of EUR 6m), primarily
driven by foreign exchange impacts of EUR 15m from
various exposures as well as EUR 11m interest expenses
related to lease financing, corporate bonds, and a green
loan facility with the European Investment Bank.
Income tax
Income tax amounted to an expense of EUR 15m
equivalent to an effective tax rate of 48.4 percent in the
first quarter of 2023, compared to 13.9 percent in the first
quarter of 2022. The high effective tax rate is mainly
driven by permanent differences and income in high tax
rates countries together with low profitability.
Net result for the period
The net result amounted to a profit of EUR 16m in the first
quarter of 2023 (Q1 2022: loss of EUR 765m).
Financial ratios
Earnings per share calculated over a 12-month period
amounted to negative EUR 0.8 in the first quarter of 2023
(Q1 2022: negative EUR 0.6). The decrease of EUR 0.2
was driven by the lower result in the period.
Return on capital employed (ROCE) before special items
was negative 12.7 percent in the first quarter of 2023 (Q1
2022: 0.7 percent), a decline compared to 2022 driven by
the lower EBIT before special items in the 12-month
period. Return on equity was negative 22.9 percent in the
first quarter of 2023 (Q1 2022: negative 12.5 percent), a
decrease of 10.4 percentage points attributable to the
lower net profit in the 12-month period.
Working capital and free cash flow
Net working capital
Net working capital amounted to a net liability of EUR
167m as at 31 March 2023 (31 March 2022: a net liability
of EUR 609m). Compared to 2022 the development
reflects decreasing supplier payables compared to the
end of the first quarter of 2022.
Cash flow from operating activities
Cash flow from operating activities was negative EUR
974m in the first quarter of 2023 (Q1 2022: negative
928m). The negative cash flow is on par with last year and
driven by development in net working capital and
increasing inventory outpacing prepayments and a high
level of supplier payments in the quarter.
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 107m in
the first quarter of 2023 (Q1 2022: outflow EUR 193m),
primarily reflecting a decrease in purchase of
transportation equipment and construction tools as well
as cash inflow from sales of Property, plant and
equipment related to the converters and controls
business and sale of development projects.
Free cash flow
Free cash flow before acquisition of subsidiaries, joint
ventures, associates, and financial investments
amounted to negative EUR 1,081m in the first quarter of
2023 which is on par with last year (Q1 2022: negative
EUR 1,121m).
Capital structure and financing items
Equity and solvency ratio
As at 31 March 2023, total equity amounted to EUR
3,024m (31 March 2022: EUR 3,899m). The decrease
compared to 2022 was mainly attributable to the negative
net profit in the last nine months of 2022 also causing the
solvency ratio to drop 4.2 percentage points to 15.2
percent as at 31 March 2023.
Net interest-bearing position and cash position
As at 31 March 2023, the net interest-bearing debt
amounted to EUR 1,121m (31 March 2022: net interest-
bearing position of EUR 58m). This development
compared to 2022 was a result of negative free cash flow
and increasing financial debt, while EBITDA remained at
a low level.
Cash and cash equivalents amounted to EUR 1,707m as
at 31 March 2023, compared to EUR 1,801m at the end
of the first quarter of 2022.
The ratio net interest-bearing debt/EBITDA was positive
5.8 as at 31 March 2023 compared to 0.0 at the end of
the first quarter of 2022. The ratio was impacted by
increased financial debt.
In March 2023, Vestas obtained EUR 1.25bn in new debt
financing encompassing the issuance of a EUR 500m
sustainability-linked bond maturing in 2026, and the
signing of a EUR 750m revolving credit facility maturing
in 2024 which includes a six-month extension option. As
at 31 March 2023, Vestas had EUR 2.4bn of undrawn
credit facilities.
Vestas Wind Systems A/S Page 8 of 26
Interim Financial Report – First Quarter 2023
Power Solutions
Result for the period
In the first quarter of 2023, revenue from the Power
Solutions segment amounted to EUR 2,023m (Q1 2022:
EUR 1,862m), which corresponds to a 8.6 percent
increase compared to the first quarter of 2022. The
increase was mainly attributable to higher value and
increased volume of wind turbine deliveries. Revenue for
the first quarter of 2023 reflected a negative impact of
approx. EUR 34m from foreign exchange rate translation
compared to 2022.
EBIT before special items amounted to negative EUR
54m in the first quarter of 2023, equal to an EBIT margin
of negative 2.7 percent (Q1 2022: negative EUR 380m;
negative 20.4 percent). The positive development in the
EBIT margin was primarily attributable to the sale of the
converters and controls business, higher revenue as well
as the impairment losses and warranty provisions
recognised in the first quarter of 2022 related to
V164/V174 offshore technology.
Power Solutions revenue and EBIT margin before special
items
mEUR and percentage
Wind turbine order intake
In the first quarter of 2023, wind turbine order intake
amounted to 3,303 MW, corresponding to a value of
EUR 2.9bn (Q1 2022: 2,948 MW; EUR 3.0bn). This
represents an increase of 12 percent in MW order intake
compared to the first quarter of 2022. The increase was
mainly related to strong onshore order intake in Brazil
and South Africa.
The average price per MW was EUR 0.89m in the first
quarter of 2023 compared to EUR 1.01m in the first
quarter of 2022 and EUR 1.15m in the fourth quarter of
2022. The development in the average price per MW
compared to the fourth quarter 2022 is negatively
impacted by mix effects from project scope, different
countries as well foreign exchange rates while
underlying pricing and project profitability are not diluted.
Wind turbine order intake, first quarter 2023
MW
EMEA
Ameri-
cas
Asia
Pacific
Total
Onshore order
intake
1,026
2,147
130
3,303
Offshore order
intake
-
-
-
-
Total order
intake
1,026
2,147
130
3,303
Wind turbine deliveries
Deliveries to customers amounted to 2,317 MW in the
first quarter of 2023 (Q1 2022: 2,236 MW) similar to the
same quarter last year. Offshore deliveries increased
from 113 MW in the first quarter of 2022 to 214 MW in
the first quarter of 2023.
Deliveries
MW
By the end of March 2023, Vestas had installed a total
capacity of 167 GW
in 89 countries.
Vestas Wind Systems A/S Page 9 of 26
Interim Financial Report – First Quarter 2023
Deliveries (onshore and offshore)
MW
Q1
2023
Q1
2022
FY
2022
Germany
367
124
818
France
186
128
1.002
United Kingdom
175
126
790
Poland
106
165
957
Netherlands
102
121
578
Egypt
82
6
82
Greece
76
17
215
Portugal
50
2
46
Austria
16
29
213
Belgium
13
57
123
Spain
13
35
156
Italy
13
13
256
Denmark
10
-
95
Czech Republic
7
-
-
Finland
4
233
1.185
Faroe Islands
-
14
14
Ireland
-
11
178
Latvia
-
-
59
Russian Fed.
-
13
13
Sweden
-
70
480
Turkey
-
7
89
South Africa
-
-
4
Ukraine
-
24
114
EMEA
1,220
1,195
7,467
o/w Offshore
191
97
700
Brazil
420
368
1,528
USA
299
349
2,275
Argentina
57
-
80
Dominican Rep.
11
-
29
Puerto Rico
11
(2)
6
Chile
6
33
128
Canada
-
-
325
Mexico
-
7
7
Colombia
(9)
1)
37
142
Americas
795
792
4,520
o/w Offshore
-
-
-
Australia
127
73
376
India
68
30
162
Japan
48
104
399
New Zealand
24
5
22
Taiwan
17
11
126
South Korea
13
1
23
Vietnam
3
21
179
Sri Lanka
2
(3)
0
China
-
7
54
Asia Pacific
302
249
1,341
o/w Offshore
23
16
188
Total
2,317
2,236
13,328
o/w Offshore
214
113
888
1) Part of Vestas’ deliveries are based on a percentage-of-completion method
requiring estimates in relation to stage of completion.
Wind turbine order backlog
At the end of the first quarter of 2023, the wind turbine
order backlog amounted to 20,596 MW, which
corresponds to a value of EUR 19.7bn, of which EUR
2.5bn relates to offshore wind power projects.
Order backlog per region
MW
EMEA
Ameri-
cas
Asia
Pacific
Total
Onshore order
backlog
7,874
8,284
2,447
18,605
Offshore order
backlog
901
-
1,090
1,991
Total backlog as at
31 March 2023
8,775
8,284
3,537
20,596
Europe, Middle East, and Africa (EMEA)
The total order backlog for Europe, Middle East, and
Africa decreased 22.8 percent from the end of first
quarter of 2022 to 8,775 MW at the end of the first quarter
2023. The decrease was driven by lower order intake
and high offshore deliveries in Northern Europe during
2022 and the first quarter of 2023.
Americas
The total order backlog for Americas at the end of the
first quarter 2023 of 8,284 MW corresponds to an
increase of 15 percent compared to the end of first
quarter 2022. The increase was largely driven by higher
order intake in Brazil and Argentina.
Asia Pacific
The total order backlog for Asia Pacific amounted to
3,537 MW at the end of the first quarter 2023, which is
on par with the order backlog at the end of first quarter
2022.
Development business
In the first quarter of 2023, Vestas’ pipeline of
development projects amounted to 32 GW with Australia,
the USA, and Brazil being the countries with the largest
project pipeline. During the quarter, Vestas secured 1.1
GW of new pipeline projects.
The order intake generated in the first quarter of 2023
from projects developed by Vestas amounted to 50 MW,
comprising a project in Finland.
Vestas Wind Systems A/S Page 10 of 26
Interim Financial Report – First Quarter 2023
Service
Result for the period
The Service segment generated revenue of EUR 806m
in the first quarter of 2023 (Q1 2022: EUR 623m), which
corresponds to a 29.4 percent increase compared to the
first quarter of 2022, driven by higher contract activity
and increased transactional sales as well as indexation
mechanisms in contracts.
Service revenue and EBIT margin before special items
mEUR and percentage
EBIT before special items amounted to EUR 183m in
the first quarter of 2023, corresponding to an EBIT
margin of 22.7 percent (Q1 2022: EUR 127m; 20.4
percent), which is a 2.3 percentage point increase
compared to the same period last year. The increase
was primarily driven by the higher activity in the first
quarter of 2023.
Wind turbines under service
At the end of March 2023, Vestas had around 56,400
wind turbines under service, equivalent to 147 GW.
At the end of March 2023, the overall average Lost
Production Factor continued to be impacted by the level
of extraordinary repairs and upgrades.
Lost Production Factor
*)
Percent
*) Data calculated across more than 35,000 Vestas wind turbines under full-scope
service. The lost production factor includes both onshore and offshore turbines.
Service order backlog
At the end of March 2023, Vestas had service contracts
in the order backlog with expected contractual future
revenue of EUR 31.0bn, an increase of EUR 1.0bn
compared to 31 March 2022 driven by increased order
intake as well as indexation mechanisms in contracts
partially offset by EUR 0.5bn related to foreign
exchange rates.
Service order backlog
bnEUR
At the end of the quarter, the average duration of the
service order backlog was 11 years. (31 March 2022:
10 years average duration).
Vestas Wind Systems A/S Page 11 of 26
Interim Financial Report – First Quarter 2023
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 first quarter
of 2023 are expected to avoid 93 million tonnes of CO
2
e
over the course of their lifetime, a decrease of 21 percent
from the first quarter of 2022 due to a lower amount of
MW produced and shipped.
In the first quarter of 2023, our total scope 1 and 2
emissions decreased by 4 percent compared to the first
quarter of 2022. This can be attributed to a lower activity
level in manufacturing and in offshore Service due to
weather conditions. Scope 3 emissions are reported
annually in the Vestas Sustainability Report.
Emissions-reduced steel
As part of our commitment to reduce Scope 3 carbon
emissions intensity by 45 percent by 2030, we have
launched a new offering for low-emissions steel in
towers. The new offering is based on scrap-based steel
plates produced with an electric arc furnace. The electric
arc furnace is itself powered by on-site renewable
energy. The combination of scrap-based material and
renewable energy in the construction process allows us
to reduce the carbon intensity of an average wind turbine
by ~20 percent, compared to conventional steel.
Low-emissions scrap-based steel is an important part of
our long-term outlook to reduce emissions in our value
chain. However, we also remain focused on fostering
break-through technologies that will enable near-zero
emissions steel, where virgin iron ore is reduced using
green hydrogren. Through our commitment to the First
Movers Coalition at the World Economic Forum, we are
collaborating with steel suppliers and other industrial
users of steel to accelerate investments to produce large
volumes of near-zero emissions steel by 2030.
Circularity
In the first quarter of 2023, our material efficiency
improved 25 percent compared to first quarter of 2022 to
1.3 tonnes of waste per MW produced and shipped. This
improvement was due to the rate of waste recycling
increasing from 50 percent in the first quarter of 2022 to
69 percent in the first quarter of 2023. The high quarterly
recycling rate is inflated by the recycling of a large
stockpile of steel at one of our factories in the Americas
Region, and is expected to return to a more typical level
in subsequent quarters.
Announced in the first quarter of 2023, our new blade
circularity solution offers a scalable, circular pathway for
blade recycling based on innovations in the solvolysis of
end-of-life blades. Applicable to both existing and new
epoxy-infused blades, the new solution allows for the
separation of blade materials at end-of-life, both cost-
effectively and without degrading the quality of the blade
materials. Along with partners Stena Recycling and Olin,
we are now working to pilot and commercialise this
process, decades ahead of schedule.
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.
As of 1 January 2023, Vestas has revised the
methodology for calculating contractor working hours in
relation to the Safety KPI, making the data uncomparable
year-on-year. The revision includes a new risk-based
management system, increased focus on incident
investigations, improved safety performance governance
in regions, and the transition from standard estimations
of contractor working hours to complete certain tasks to
actual working hour data from contractors. The change
will apply to all LTIR and TRIR statistics, with a detailed
explanation forthcoming in the Vestas Sustainability
Report 2023. Based on this new methodology, the first
quarter TRIR was 2.1.
Also in the quarter, a vehicle accident occurred on
depature from a service site, which tragically meant the
death of one of our US service technicians. The incident
has been thoroughly investigated, and lessons-learned
implemented to reduce the likelihood of future injury.
Vestas Wind Systems A/S Page 12 of 26
Interim Financial Report – First Quarter 2023
Strategy and financial and
capital structure targets
(For an extended introduction to the Vestas strategy,
please refer to the Annual Report 2022.)
From energy crisis to sustainable and resilient
societies
Renewables are the obvious way to reach climate targets
and ease pressure on fossil-based energy demands.
Removing bottlenecks to wind energy expansion can
help countries achieve energy independence – in a cost-
efficient, sustainable, and resilient manner.
The global and regional events of the early 2020s have
demonstrated that the true value of renewables is not
only their ability to reduce costs and emissions. It is their
potential to build resilient, sustainable, and prosperous
societies. Yet trade barriers, localisation, lack of
investments, and slow permitting processes continue to
present physical and administrative bottlenecks to the
energy transition. If we can overcome these barriers, we
have the energy solutions to change our trajectory and
create a sustainable planet for future generations.
Maturing the industry to improve value capture
and scalability
If we are to address the climate crisis and reach net zero
by 2050, we need to expand wind energy from around
830 GW of installed capacity in 2021, to 7,800 GW by
2050, according to the International Energy Agency
(IEA). Global electricity consumption is anticipated to
more than double towards 2050 in the net zero Scenario.
As a global leader in sustainable energy, Vestas is fully
focused on creating sustainable and resilient energy
systems that can help build prosperous societies. We do
this by building sustainability into everything we do and
leading the industry in three key areas:
1. Accelerating the penetration of renewables to
increase share of the electricity system
2. Direct electrification
3. Indirect Electrification
Strengthen our core to become the global
leader in sustainable energy solutions
We are accelerating the deployment of wind energy by
strengthening the core of our business model –
Development, Onshore Wind, Offshore Wind and
Service. Through these key areas, we aim to help drive
the energy transition and achieve a sustainable future.
Onshore wind
The onshore market is expected to grow new
installations (GW) by 8-10 percent CAGR in the period
2022-25 with declining activity expected in 2023 followed
by increases in 2024 and 2025 driven by the USA,
Europe, and Africa.
Offshore wind
The offshore market is expected to grow new
installations (GW) by 35-40 percent CAGR in the period
2022-25. Strong expansion in Europe and new markets
such as the USA and South Korea and broader Asia
Pacific. Growth to accelerate from 2025.
Service
The market for Service is expected to grow by 8-10
percent CAGR in the period 2022-25 from a high base.
Higher power prices and electricity shortages to drive
need for output optimisation.
Development
We expect our Development business to grow order
intake generated for Vestas of more than 10 percent
CAGR in the period 2022-2025 from a base of 1.6 GW in
2022. Ambition to outgrow the onshore market in firm
order intake generated.
Capital structure
Our objective is to create a stable and flexible capital
structure with the most effective cost of capital. Vestas
has a credit rating from Moody’s, currently with the rating
Baa2 with a stable outlook.
We apply the following priorities to capital allocation:
• Reinvest in our manufacturing footprint and R&D to
realise our corporate strategy.
• Make bolt-on acquisitions to accelerate profitable
growth and explore divestments of non-core assets.
• Pay 25-30 percent of net result after tax in dividend.
• Initiate share buy-backs from time to time.
Long-term financial ambitions
Our industry needs structural change to increase
profitability, especially within the wind turbine segment.
The structural changes primarily entail strengthening the
commercial discipline in customer dialogues, lowering
the frequency of new technology introductions as well as
maturing the assessment of risk.
In 2022, the gap between our financial results and our
long-term financial ambitions increased, but the year
underlined that Vestas is on the right strategic path to
improve the industry structurally and build the
commercial and operational maturity to achieve our
financial ambitions. In that context, a 10 percent EBIT
margin in 2025 remains realistic, although external
headwinds from a challenging business environment
continues to cloud near-term visibility and create
uncertainty.
Vestas has the following long-term financial ambitions:
• Grow revenue faster than the market and be the
market leader in revenue.
• Positive free cash flow
• Reach at least 10 percent EBIT margin before
special items.
• Achieve 20 percent ROCE over the cycle.
NOTE: The above market expectations are excluding China
and based on Wood Mackenzie Global Wind Power Market
Outlook, Q4 2022.
Vestas Wind Systems A/S Page 13 of 26
Interim Financial Report – First Quarter 2023
Outlook 2023
Revenue for full year 2023 is expected to range between
EUR 14.0bn and 15.5bn including Service revenue,
which is expected to grow min. 5 percent. Vestas expects
to achieve an EBIT margin before special items of (2)-3
percent with a Service EBIT margin of approx. 22
percent. Total investments
1)
are expected to amount to
approx. EUR 1bn in 2023. It should be emphasised that,
similar to the preceding years, there is greater
uncertainty than usual around forecasts related to
execution in 2023, and the outlook seeks to include the
current situation and challenges.
The outlook for 2023 includes the impact of the sale of
Vestas’ converter factories announced on 10 August
2022 with an expected impact on EBIT before special
items of approx. EUR 150m.
Vestas’ Development business continues to grow and to
reflect the business area’s increasing financial and
strategic importance, income related to sale of
Development projects from joint ventures and associates
is included as part of normal operations from 1 January
2023. The impact on EBIT before special items from this
change is expected to reach a lower double-digit million
EUR amount in 2023.
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 2023.
Further, the full-year results may also be impacted by
movements in exchange rates from current levels.
Outlook 2023
Revenue (bnEUR)
14.0-15.5
EBIT margin (%) before special items
(2)-3
Total investments
1)
(bnEUR)
approx. 1
1) Excl. acquisitions of subsidiaries, joint ventures, associates, as well as financial
investments.
Vestas Wind Systems A/S Page 14 of 26
Interim Financial Report – First Quarter 2023
Consolidated financial statements 1 January - 31 March
Condensed income statement 1 January - 31 March
mEUR
Note
Q1
2023
Q1
2022
Revenue
1.1, 1.2
Production costs
(2,641 )
(2,463 )
Gross profit
Research and development costs
(92 )
(149 )
Distribution costs
(107 )
(115 )
Administration costs
(105 )
(87 )
Sale of technology
1.3
Income from investments in joint ventures and associates
Operating profit/(loss) (EBIT) before special items 1.1 40 (329 )
Special items
1.4
(565 )
Operating profit/(loss) (EBIT) 66 (894 )
Income from investments in joint ventures and associates
(1 )
(1 )
Net financial items
(34 )
Profit/(loss) before tax
(889 )
Income tax
(15 )
Profit/(loss) for the period
(765 )
Profit/(loss) is attributable to:
Owners of Vestas Wind Systems A/S
(765 )
Non-controlling interests
(0 )
Earnings per share (EPS)
Earnings per share for the period (EUR), basic
(0.76 )
Earnings per share for the period (EUR), diluted
(0.76 )
Condensed statement of comprehensive income 1 January - 31 March
mEUR
Q1
2023
Q1
)
2022
Profit/(loss) for the period
(765 )
Items that may be reclassified to the income statement subsequently:
Exchange rate adjustments relating to foreign entities
(22 )
Fair value adjustments of derivative financial instruments for the period
(69 )
Gain/(loss) on derivative financial instruments transferred to the income statement
(51 )
(2 )
Share of fair value adjustments of derivative financial instruments of joint ventures and associates
(1 )
Tax on items that may be reclassified to the income statement subsequently
(4 )
Other comprehensive income after tax for the period
(5 )
Total comprehensive income for the period
(757 )
The above condensed statement of comprehensive income should be read in conjunction with the accompanying notes.
Vestas Wind Systems A/S Page 15 of 26
Interim Financial Report – First Quarter 2023
Condensed balance sheet – Assets
mEUR
Note
31 March
2023
31 March
2022
31 December
2022
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
Assets held for sale
2.2
Total current assets
Total assets
The above condensed balance sheet should be read in conjunction with the accompanying notes.
Vestas Wind Systems A/S Page 16 of 26
Interim Financial Report – First Quarter 2023
Condensed balance sheet – Equity and liabilities
mEUR
Note
31 March
2023
31 March
2022
31 December
)
2022
Share capital
3.1
Other reserves
(39 )
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
Liabilities held for sale
2.2
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 Page 17 of 26
Interim Financial Report – First Quarter 2023
Condensed statement of changes in equity – three months 2023
Reserves
mEUR
Share
capital
Transla-
tion
reserve
Cash flow
hedging
reserve
Other
reserves
Total
reserves
Retained
earnings
Non-
control-
ling
interests
Total
Equity as at 1 January 2023
(1 )
Profit/(loss) for the period
Other comprehensive income for the period
(21 )
(1 )
(4 )
(1 )
(5 )
Total comprehensive income for the period
(21 )
(1 )
(4 )
(0 )
Transfer of cash flow hedge reserve to the initial
carrying amount of hedged items
(50 )
(50 )
(50 )
Transaction with owners:
Share-based payments
-
Tax on equity transactions
Total transactions with owners
Equity as at 31 March 2023
(11 )
(33 )
(39 )
Condensed statement of changes in equity – three months 2022
Reserves
mEUR
Share
capital
Transla-
tion
reserve
Cash
flow
hedging
reserve
Other
reserves
Total
reserves
Retained
earnings
Non-
control-
ling
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
(765 )
(0 )
(765 )
Other comprehensive income for the period
(51 )
Total comprehensive income for the period
(51 )
(765 )
(757 )
Transfer of cash flow hedge reserve to the
initial carrying amount of hedged items
(26 )
(26 )
(26 )
Transaction with owners:
Share-based payments
Tax on equity transactions
(0 )
(0 )
Total transactions with owners
Equity as at 31 March 2022
(61 )
(3 )
The above condensed statement of changes in equity should be read in conjunction with the accompanying notes.
Vestas Wind Systems A/S Page 18 of 26
Interim Financial Report – First Quarter 2023
Condensed cash flow statement 1 January - 31 March
mEUR
Note
Q1
2023
Q1
2022
Profit/(loss) for the period
(765 )
Adjustment for non-cash transactions
Interest paid / received, net
(1 )
(0 )
Income tax paid
(15 )
(68 )
Cash flow from operating activities before change in net working capital
(319 )
Change in net working capital
(1,222 )
(609 )
Cash flow from operating activities
(974 )
(928 )
Purchase of intangible assets
(94 )
(88 )
Purchase of property, plant and equipment
(76 )
(107 )
Sale of intangible assets
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
(107 )
(193 )
Free cash flow before acquisitions of subsidiaries, joint ventures, associates and financial
investments
(1,081 )
(1,121 )
Purchase of shares in joint ventures and associates
(2 )
Purchase of other non-current financial assets
(3 )
Disposal of investments in joint ventures and associates
Net cash flow from deconsolidation of subsidiary
(8 )
Cash flow from investing activities
(111 )
(195 )
Free cash flow
(1,085 )
(1,123 )
Payment of lease liabilities
(35 )
(36 )
Proceeds from borrowings
Payment of financial debt
(50 )
(512 )
Cash flow from financing activities
Net change in cash and cash equivalents
(649 )
(629 )
Cash and cash equivalents at the beginning of period
Exchange rate adjustments of cash and cash equivalents
(22 )
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 Page 19 of 26
Interim Financial Report – First Quarter 2023
Notes
1 Result for the period
1.1 Segment information
In the first quarter of 2023, an income of EUR 26m was recognised in special items impacting the Power Solutions segment.
The income relates to a reversal of a previously recognised write-down of inventories of EUR 34m, partly offset by other
costs of EUR 5m, both relating to the adjustment of the manufacturing footprint in India, as well as a net expense of EUR
3m relating to the Russian invasion of Ukraine. For further information, refer to note 1.3.
In the first quarter of 2023, a gain of EUR 154m was recognised relating to the sale of the converters and controls business
to KK Wind Solutions impacting the Power Solutions segment. For further information, refer to note 1.4 and 2.2.
mEUR
Power
Solutions
Service
Not allocated
Total
Group
Q1 2023
Revenue
2,023
806
-
2,829
Sales of technology
147
-
-
147
Income from investments in joint ventures and associates
9
-
-
9
Total income
2,179
806
-
2,985
Total costs
(2,233)
(623)
(89)
(2,945)
Operating profit/(loss) (EBIT) before special items
(54)
183
(89)
40
Special items
26
26
Operating profit/(loss) (EBIT)
(28)
183
(89)
66
Income from investments in joint ventures and associates
(1)
(1)
Net financial items
(34)
(34)
Profit/(loss) before tax
31
Amortisation and depreciation included in total costs
(149)
(33)
(14)
(196)
mEUR
Power
Solutions
Service
Not allocated
Total
Group
Q1 2022
Revenue
1,862
623
-
2,485
Sale of technology
-
-
-
-
Income from investments in joint ventures and associates
-
-
-
-
Total income
1,862
623
-
2,485
Total costs
(2,242)
(496)
(76)
(2,814)
Operating profit/(loss) (EBIT) before special items
(380)
127
(76)
(329)
Special items
(565)
(565)
Operating profit/(loss) (EBIT)
(945)
127
(76)
(894)
Income from investments in joint ventures and associates
(1)
Net financial items
6
Profit/(loss) before tax
(889)
Amortisation and depreciation included in total costs
(256)
(40)
(13)
(309)
Vestas Wind Systems A/S Page 20 of 26
Interim Financial Report – First Quarter 2023
In the first quarter 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.
The change in accounting policy for configuration and customisation cost in cloud computing arrangements had an impact
of EUR 7m in the first quarter of 2022; EUR 3m in Power Solutions and EUR 4m in Service.
In the first quarter of 2022, impairment losses, write-downs and other costs of EUR 565m 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 1.4.
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
Q1
2023
Q1
2022
Q1
2023
Q1
2022
Q1
2023
Q1
2022
Timing of revenue recognition
Products and services transferred at a point in time
1,216
1,082
102
80
1,318
1,162
Products and services transferred over time
807
780
704
543
1,511
1,323
2,023
1,862
806
623
2,829
2,485
Revenue from contract types
Supply-only
277
327
-
-
277
327
Supply-and-installation (at a point in time)
938
755
-
-
938
755
Supply-and-installation (over time)
634
559
-
-
634
559
Turnkey (EPC)
174
221
-
-
174
221
Service
-
-
806
623
806
623
2,023
1,862
806
623
2,829
2,485
Primary geographical markets
EMEA
1,116
1,030
403
313
1,519
1,343
Americas
643
603
334
247
977
850
Asia Pacific
264
229
69
63
333
292
2,023
1,862
806
623
2,829
2,485
Vestas Wind Systems A/S Page 21 of 26
Interim Financial Report – First Quarter 2023
1.3 Sale of technology
Sale of technology includes consideration received of EUR 147m relating to a perpetual manufacturing license granted to
KK Wind Solutions under the agreement for the sale of the converters and controls business. For further details on the
transaction, refer to note 2.2.
Basis for recognition
Income relating to the perpetual manufacturing license granted to KK Wind Solutions is measured based on an allocation
of the total consideration specified in the contract. The total consideration is allocated to the individual performance
obligations in the contract based on stand-alone selling prices and is presented in the income statement according to the
nature of the performance obligations. The consideration is recognised at closing as Vestas has no future performance
obligations in respect of the manufacturing license.
1.4 Special items
Russian invasion of Ukraine
In April 2022, Vestas announced that Vestas would withdraw from the Russian market. Since the announcement, Vestas
has continued certain activities to wind down operations and end contractual relationships. Furthermore, Vestas’ activities
in Ukraine was put on hold. On 31 January 2023, Vestas exited Russia by putting a full stop to all remaining corporate
activities in Russia, including terminating remaining employees and leaving stranded assets idle. From this date, Vestas
deconsolidated its Russian entities.
In the first quarter of 2023, a net expense of EUR 3m was recognised in special items, including a gain of EUR 2m from
the deconsolidation.
Basis for recognition
The entities in Russia are deconsolidated as Vestas, following the exit from Russia, no longer controls the entities. As a
result, the assets, liabilities and the share of the accumulated exchange rate adjustments recognised in other
comprehensive income, are recognised in special items.
Adjusting manufacturing footprint
In the first quarter of 2023, an income of EUR 29m was recognised in special items relating to the adjustment of the
manufacturing footprint in India, including a reversal of a previously recognised write-down of inventories of EUR 34m,
partly offset by other costs of EUR 5m.
Basis for recognition
The reversal of write-down of inventories relates to blades sold that were previously expected to be scrapped. Other costs
primarily related to purchase commitments towards suppliers and costs of closing the factory.
mEUR
31 March
2023
31 March
2022
31 December
2022
Write-down of inventory
33
(271)
(260)
Provisions
(1)
(160)
(87)
Impairment loss on intangible and tangible assets
-
(123)
(69)
Other costs
(7)
(20)
(23)
Staff costs
(1)
9
(5)
Derecognition of net assets in Russia
2
-
-
Special items
26
(565)
(444)
2 Other operating assets and liabilities
2.1 Property, plant and equipment
In the first quarter of 2023, Vestas acquired assets with a cost of EUR 76m mainly related to manufacturing blade moulds,
acquisition of land, transport equipment and construction tools, compared to EUR 107m in the first quarter of 2022.
Lease contracts recognised as right-of-use assets during the first quarter of 2023 amounted to EUR 72m, compared to
EUR 28m in the first quarter of 2022.
2.2 Assets held for sale
On 9 August 2022, Vestas signed an agreement for the sale of the converters and controls business to KK Wind Solutions
and consequently, the converters and controls business was classified as held for sale as at 31 December 2022. On 28
Vestas Wind Systems A/S Page 22 of 26
Interim Financial Report – First Quarter 2023
February 2023, the transaction closed and a total gain of EUR 154m was recognised, hereof EUR 147m recognised in
sale of technology and EUR 7m recognised in production costs.
2.3 Warranty provisions (included in provisions)
mEUR
31 March
2023
31 March
2022
31 December
2022
Warranty provisions, 1 January
1,490
1,197
1,197
Provisions for the period
119
212
926
Warranty provisions consumed during the period
(129)
(154)
(633)
Warranty provisions
1,480
1,255
1,490
The provisions are expected to be payable as follows:
< 1 year
597
580
725
> 1 year
883
675
765
1,480
1,255
1,490
During the first quarter of 2023, net warranty provisions charged to the income statement amounted to EUR 113m (EUR
195m in the first quarter of 2022), equivalent to 4.0 percent of revenue. The net amount consists of a gross warranty
provision of EUR 119m less supplier claims of EUR 6m. Warranty consumption amounted to EUR 129m compared to
EUR 154m in the first quarter of 2022.
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 12 April 2023, 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)
31 March
2023
31 March
2022
31 December
2022
Treasury shares as at 1 January
737,940
944,632
944,632
Vested treasury shares for the period
-
-
(206,692)
Treasury shares
737,940
944,632
737,940
Each share has a nominal value of DKK 0.20.
3.2 Cash and cash equivalents
mEUR
31 March
2023
31 March
2022
31 December
2022
Cash and cash equivalents without disposal restrictions
1,678
1,775
2,352
Cash and cash equivalents with disposal restrictions
29
26
26
Cash and cash equivalents
1,707
1,801
2,378
Vestas Wind Systems A/S Page 23 of 26
Interim Financial Report – First Quarter 2023
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 2022, note 4.1 (Financial risk management), pages 105-108.
The risks in 2023 remain similar in nature.
On 8 March 2023, Vestas issued a EUR 500m sustainability-linked bond to secure mid-term funding. The bond will mature
in 2026 and its interest rate is linked tocertain sustainability KPIs.
On 16 March, Vestas signed a EUR 750m revolving credit facility with six banks. The facility will mature in 2024.
Subsequently to the establishment, Vestas has committed credit facilities of EUR 2,750m and uncommitted credit facilities
of EUR 400m. As at 31 March 2023, EUR 771m of the committed credit facilities was converted into ancillary bank
guarantee issuance facilities leaving EUR 2,379m available for cash drawing and/or issuance of guarantees.
3.4 Financial instruments
Financial investments consist of interest-bearing investments which do not meet the definition for cash and cash
equivalents. As at 31 March 2023, the fair value of financial investments comprising marketable securities amounted to
EUR 95m, equal to book value.
Derivative financial instruments were negative with a market value of net EUR 30m, equal to book value, and were
recognised in other receivables and other liabilities with EUR 349m and EUR 379m, respectively.
As at 31 March 2023, the carrying amount of the sustainability-linked bonds issued by Vestas amounted to EUR 1,488m
and the fair value amounted to EUR 1,343m.
Financial instruments measured at fair value have been categorised into level 1, 2, and 3 as addressed in the Annual
Report 2022, note 4.3, page 112. Other than the EUR 500m sustainability-linked bond and the EUR 750m revolving credit
facility described above, no significant new financial instruments have been recognised compared to 2022 and there have
been no transfers between fair value levels.
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 2022 and with no significant
changes in fair values.
4 Other disclosures
4.1 Related party transactions
Vestas has had the following material transactions with joint ventures and associates:
mEUR
Q1
2023
Q1
2022
Joint ventures
Revenue for the period
125
81
Proceeds from investments in joint ventures
5
-
Capital increase
1
-
Other assets as at 31 March
4
-
Trade receivable as at 31 March
11
91
Prepayments balance as at 31 March (asset)
-
26
Associates
Revenue for the period
2
16
Proceeds from investments in associates
0
0
Capital increase
4
3
Other assets as at 31 March
8
-
Contract liabilities as at 31 March
4
-
Payable capital contribution as at 31 March
8
48
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Interim Financial Report – First Quarter 2023
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 2022, note 6.3, page 119.
4.2 Subsequent events
Other than the events recognised or disclosed in the Interim Financial Report, no events have occurred subsequent to 31
March 2023, which could have a significant impact on the 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 2022 of Vestas and additional Danish disclosure requirements for
interim financial reporting of listed companies.
The accounting policies remain unchanged compared to the annual report for 2022, to which reference is made.
This interim financial report includes selected notes. Accordingly, this report should be read in conjunction with the annual
report for 2022 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 Implementation of new and amended standards
The following new and amended accounting standards have been implemented as of 1 January 2023:
• Insurance contracts – amended IFRS 17
• Definition of accounting estimates – amendments to IAS 8
• Disclosure of accounting policies – amendments to IAS 1
• Deferred tax related to assets and liabilities arising from a single transaction – amendments to IAS 12
Vestas did not have to change its accounting policies or make retrospective adjustments as a result of adopting these new
and amended standards.
5.3 Presentation of investments in joint ventures and associates presented in and after EBIT
From 1 January 2023, Vestas presents income/(loss) from investments in joint ventures and associates which are deemed
to pertain to Vestas’ core business activities in EBIT before special items. The profit/(loss) from investments in joint
ventures and associates is not included in EBIT before special items when deemed outside Vestas’ core business activities
(cf. table 1.1). The changed presentation is due to an expected significant increase in income from investments in joint
ventures and associates related to Development activities, as set out in note 3.5 in the Annual Report 2022.
Vestas Wind Systems A/S Page 25 of 26
Interim Financial Report – First Quarter 2023
Executive Management
Board of Directors
*) Employee representative
Vestas Wind Systems A/S Page 26 of 26
Interim Financial Report – First Quarter 2023
Vestas Wind Systems A/S
Hedeager 42, 8200 Aarhus N, Denmark
Tel: +45 9730 0000
vestas@vestas.com, vestas.com
Disclaimer and cautionary statement
This document contains forward-looking statements
concerning Vestas’ financial condition, results of
operations and business. All statements other than
statements of historical fact are, or may be deemed to
be, forward-looking statements. Forward-looking
statements are statements of future expectations that are
based on management’s current expectations and
assumptions and involve known and unknown risks and
uncertainties that could cause actual results,
performance or events to differ materially from those
expressed or implied in these statements.
Forward-looking statements include, among other
things, statements concerning Vestas’ potential
exposure to market risks and statements expressing
management’s expectations, beliefs, estimates,
forecasts, projections, and assumptions. A number of
factors that affect Vestas’ future operations and could
cause Vestas’ results to differ materially from those
expressed in the forward-looking statements included in
this document, include (without limitation): (a) changes in
demand for Vestas' products; (b) currency and interest
rate fluctuations; (c) loss of market share and industry
competition; (d) environmental and physical risks,
including adverse weather conditions; (e) legislative,
fiscal, and regulatory developments, including changes
in tax or accounting policies; (f) economic and financial
market conditions in various countries and regions; (g)
political risks, including the risks of expropriation and
renegotiation of the terms of contracts with governmental
entities, and delays or advancements in the approval of
projects; (h) ability to enforce patents; (i) product
development risks; (j) cost of commodities; (k) customer
credit risks; (l) supply of components; and (m) customer
created delays affecting product installation, grid
connections and other revenue-recognition factors.
All forward-looking statements contained in this
document are expressly qualified by the cautionary
statements contained or referenced to in this statement.
Undue reliance should not be placed on forward-looking
statements. Additional factors that may affect future
results are contained in Vestas’ Annual Report for the
year ended 31 December 2022 (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.