Wind. It means the world to us.
TM
Company Reg. No.: 10403782
Company Announcement No. 12/2023
Interim Financial Report
Second Quarter 2023
Vestas Wind Systems A/S Page 2 of 30
Interim Financial Report – Second Quarter 2023
Contents
Summary ........................................................................................................................................................... 3
Financial and operational key figures ............................................................................................................ 4
Sustainability key figures ................................................................................................................................ 5
Group financial performance .......................................................................................................................... 6
Power Solutions ............................................................................................................................................... 9
Service ............................................................................................................................................................ 11
Sustainability .................................................................................................................................................. 12
Strategy and financial and capital structure targets ................................................................................... 13
Outlook 2023 ................................................................................................................................................... 14
Consolidated financial statements 1 January – 30 June ............................................................................ 15
Management’s statement .............................................................................................................................. 28
Information meeting (audiocast)
On Wednesday 9 August 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:
Daniel Patterson, Vice President
Investor Relations
Tel: +45 2669 2725
Media:
Anders Riis, Vice President
Communications
Tel: +45 4181 3922
Vestas Wind Systems A/S Page 3 of 30
Interim Financial Report – Second Quarter 2023
Summary
Quarterly revenue of EUR 3.4bn with an EBIT margin
before special items of (2.0) percent. Continued strong
wind turbine backlog of EUR 20.0bn. Full-year guidance
maintained.
In the second quarter of 2023, Vestas generated revenue
of EUR 3,429m – an increase of 3.8 percent compared to
the year-earlier period. EBIT before special items
amounted to EUR (70)m, resulting in an EBIT margin
before special items of (2.0) percent, compared to (5.5)
percent in the second quarter of 2022.
Free cash flow
1)
amounted to EUR (140)m compared to
EUR (362)m in the second quarter of 2022.
The quarterly intake of firm and unconditional wind turbine
orders amounted to 2,333 MW, an 8 percent increase
from second quarter 2022. The Onshore average price
per MW (ASP) was EUR 0.97m. The value of the wind
turbine order backlog was EUR 20.0bn as at 30 June
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 31.6bn.
Thus, the value of the combined backlog of wind turbine
orders and service agreements stood at EUR 51.6bn – an
increase of EUR 3.7bn compared to the year-earlier
period.
Vestas maintains the full-year guidance. We expect
revenue of EUR 14.0bn-15.5bn, however, Service is now
expected to grow around 10 percent (previously 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
continued to improve underlying performance in the
second quarter of 2023, and based on the first half of the
year, we remain on track to achieve our financial outlook
for 2023. In the second quarter, our revenue was EUR
3.4bn, a 4 percent increase year-on-year, which was
secured by higher value of turbine deliveries and strong
growth in our Service business. In line with expectations
and the continued execution of older projects with lower
margins in our backlog, we achieved an EBIT margin of
minus 2 percent. We received 2.3 GW of orders with an
average selling price on our onshore solutions that
returned to EUR 0.97m/MW. The first half of the year
unfortunately also highlighted that permitting and
regulatory uncertainty remain a key challenge to speed
up the energy transition, and although supply chain
disruptions are easing off, we expect disruptions to
continue throughout the second half of the year. Vestas
remains fully focused on becoming profitable and improve
industry maturity and discipline to ensure the operational
efficiency, quality, and scalability the energy transition
requires. The global business environment is expected to
remain challenging for the rest of 2023, and we want to
thank our customers, partners, and 29,000 colleagues for
their continued support and engagement in making
Vestas and the industry profitable.”
Key highlights
Order intake of 2.3 GW
Wind turbines orders in GW grew by 8 percent YoY with an Onshore ASP of EUR 0.97m/MW.
Revenue of EUR 3.4bn
Growth of 4 percent YoY driven by 29 percent Service growth, higher average pricing on deliveries, partly offset by lower
volume.
EBIT margin of negative 2 percent
Profitability improving due to a strong Service business and increased pricing as we execute the backlog.
Vestas continues to drive industry discipline and maturity
Stronger operational and commercial discipline across the industry imperative to ensure value capture and quality.
Outlook maintained
On track to deliver on the outlook for 2023 with higher Service growth.
1) Excl. acquisitions of subsidiaries, joint ventures, associates, and financial investments.
Vestas Wind Systems A/S Page 4 of 30
Interim Financial Report – Second Quarter 2023
Financial and operational key figures
mEUR
Q2
2023
Q2
)
2022
H1
2023
H1
2022
FY
)
2022
Financial key figures
Income statement
Revenue
3,429
3,305
6,258
5,790
14,486
Gross profit
221
97
409
119
118
Operating profit/(loss) before amortisation, depreciation and
impairment (EBITDA) before special items
132
41
368
(21)
(63)
Operating profit/(loss) (EBIT) before special items
(70)
(182)
(30)
(511)
(1,152)
Operating profit/(loss) before amortisation, depreciation and
impairment (EBITDA)
134
42
396
(420)
(437)
Operating profit/(loss) (EBIT)
(68)
(147)
(2)
(1,041)
(1,596)
Net operating profit after tax (NOPAT)
(60)
(125)
(2)
(894)
(1,071)
Net financial items
(58)
(6)
(92)
0
(110)
Profit/(loss) before tax
(130)
(139)
(99)
(1,028)
(1,696)
Profit/(loss) for the period
(115)
(119)
(99)
(884)
(1,572)
Balance sheet
Balance sheet total
20,333
20,458
20,333
20,458
20,090
Equity
2,849
3,658
2,849
3,658
3,060
Investments in property, plant, and equipment
95
75
171
182
371
Net working capital
(171)
(488)
(171)
(488)
(1,349)
Capital employed
5,768
5,635
5,768
5,635
5,487
Interest-bearing position (net), end of the period
(1,283)
(415)
(1,283)
(415)
46
Interest-bearing debt, at the end of the period
2,883
1,977
2,883
1,977
2,427
Cash flow statement
Cash flow from operating activities
48
(188)
(926)
(1,116)
(195)
Cash flow from investing activities before acquisitions of
subsidiaries, joint ventures, associates and financial investments
(188)
(174)
(295)
(367)
(758)
Free cash flow before acquisitions of subsidiaries, joint ventures,
associates and financial investments
(140)
(362)
(1,221)
(1,483)
(953)
Free cash flow
(110)
(381)
(1,195)
(1,504)
(874)
Financial ratios
1)
Financial ratios
Gross margin (%)
6.4
2.9
6.5
2.1
0.8
EBITDA margin (%) before special items
3.8
1.2
5.9
0.4
(0.4)
EBIT margin (%) before special items
(2.0)
(5.5)
(0.5)
(8.8)
(8.0)
EBITDA margin (%)
3.9
1.3
6.3
(7.3)
(1.2)
EBIT margin (%)
(2.0)
(4.4)
(0.0)
(18.0)
(11.0)
Return on capital employed (ROCE)
2)
(%) before special items
(10.8)
(2.9)
(10.8)
(2.9)
(18.5)
Net interest-bearing debt / EBITDA
2)
before special items
4.5
0.5
4.5
0.5
N/A
Solvency ratio (%)
14.0
17.9
14.0
17.9
15.2
Return on equity
2)
(%)
(24.3)
(17.8)
(24.3)
(17.8)
(43.9)
Share ratios
Earnings per share
3)
(EUR)
(0.8)
(0.8)
(0.8)
(0.8)
(1.6)
Dividend per share (EUR)
-
-
-
-
-
Pay-out ratio (%)
-
-
-
-
-
Share price at the end of the period (EUR)
24.4
20.2
24.4
20.2
27.2
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)
2.5
2.1
5.4
5.1
11.9
Order intake (MW)
2,333
2,153
5,636
5,101
11,189
Order backlog – wind turbines (bnEUR)
20.0
18.9
20.0
18.9
19.1
Order backlog – wind turbines (MW)
20,096
20,945
20,096
20,945
19,623
Order backlog – service (bnEUR)
31.6
29.0
4)
31.6
29.0
4)
30.4
Produced and shipped wind turbines (MW)
3,656
3,758
6,639
7,727
13,106
Produced and shipped wind turbines (number)
782
947
1,386
1,898
3,126
Deliveries (MW)
2,831
3,140
5,148
5,376
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.
4) The number disclosed in the Interim Financial Report, Q2 2022 for the Service order backlog has been corrected from EUR 31.3bn to EUR 29.0bn.
Vestas Wind Systems A/S Page 5 of 30
Interim Financial Report – Second Quarter 2023
Sustainability key figures
Q2
2023
Q2
2022
H1
2023
H1
2022
FY
2022
Environmental
Utilisation of resources
Consumption of energy (GWh)
182
162
345
331
641
- of which renewable energy (GWh)
43
62
99
121
231
- of which renewable electricity (GWh)
38
52
80
101
187
Renewable energy (%)
24
38
29
37
36
Renewable electricity for own activities
(%)
100
100
100
100
100
Withdrawal of fresh water (1,000 m³)
73
80
131
161
341
Waste
Volume of waste from own operations (1,000 t)
10
12
23
26
47
- of which collected for recycling (1,000 t)
7
6
16
1)
13
26
Recyclability rate of hub and blade
2)
(%)
//
//
//
//
42
Material efficiency (tonnes of waste excl. recycled per MW
produced and shipped)
0.8
1.7
1.1
1.7
1.6
Carbon emissions adjusted for acquisitions and divestments
Direct emissions of CO
2
e
(scope 1) (1,000 t)
35
24
58
48
98
Indirect emissions of CO
2
e
(scope 2) (1,000 t)
0.1
0.2
1
1
2
Indirect emissions of CO
2
e from the supply chain (scope 3)
2)
(million t)
//
//
//
//
8.18
Indirect emissions of CO
2
e from the supply chain (scope 3)
2)
(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)
114
105
207
223
408
Annual CO
2
e
avoided by the total aggregated installed fleet
(million t)
226
221
226
221
219
Social
Safety
Total Recordable Injuries (number)
73
50
117
3)
97
200
- of which Lost Time Injuries (number)
26
20
45
42
73
- of which fatal injuries(number)
0
0
1
0
0
Total Recordable Injuries per million working hours (TRIR)
4)
4.3
3.1
3.5
3.1
3.3
Lost Time Injuries per million working hours (LTIR)
4)
1.5
1.2
1.4
1.3
1.2
Employees
Average number of employees (FTEs)
Employees at the end of the period (FTEs)
29,197
28,729
29,197
28,729
28,438
Diversity and inclusion
Women in the Board and Executive Management at the end of the
period (%)
27
27
27
27
25
Women in leadership positions at the end of the period (%)
23
22
23
22
23
Human rights
2)
Community grievances
(number)
//
//
//
//
13
Community beneficiaries (number)
//
//
//
//
7,572
Social Due Diligence on projects in scope
(%)
//
//
//
//
65
Governance
Whistle-blower system
2)
EthicsLine compliance cases
(number)
//
//
//
//
539
- of which substantiated
//
//
//
//
137
5
)
- of which unsubstantiated
//
//
//
//
358
5
)
For general definitions and specifications on these sustainability key figures, see the Notes to sustainability key figures in the Annual Report 2022, pages 151-152.
1) The reported recycled waste in first quarter 2023 has been corrected from 7,000 tonnes to 9,000 tonnes.
2) Data only reported on an annual basis.
3) The reported number of Total Recordable Injuries in first quarter 2023 has been corrected from 42 to 44.
4) For the remainder of 2023, due to the new methodology for calculating working hours requiring time to mature, Vestas will report LTIR and TRIR according to the methodology
used before first quarter 2023. Comparable numbers for Q1 2023 would be: TRIR: 2.7 and LTIR: 1.2. See also page 12 for more information.
5) 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 30
Interim Financial Report – Second Quarter 2023
Group financial performance
Income statement
Revenue
Revenue in the second quarter of 2023 amounted to EUR
3,429m (Q2 2022: EUR 3,305m), an increase of 3.8
percent year-on-year, mainly driven by increasing service
activity and higher value of turbine deliveries, partly offset
by lower MW delivered. Revenue for the second quarter
of 2023 reflected a negative impact of EUR 142m from
foreign exchange rates compared to 2022.
For the first half of the year, revenue amounted to EUR
6,258m (H1 2022: EUR 5,790m), an increase of 8.1
percent mainly driven by increasing service activity and
higher value of turbine deliveries, partly offset by lower
MW delivered. Revenue for the first half of 2023 reflected
a negative impact of EUR 187m from foreign exchange
rates compared to 2022.
Revenue and EBIT margin before special items
mEUR and percentage
Gross profit
Gross profit amounted to EUR 221m in the second
quarter of 2023, corresponding to a gross margin of 6.4
percent (Q2 2022: EUR 97m; 2.9 percent), which is a 3.5
percentage point increase compared to the second
quarter of 2022. The increase was attributable to the
Power Solutions segment and increased pricing together
with easing of supply chain disruptions as well as
increased activity in the Service segment.
Gross profit in the first half of 2023 amounted to EUR
409m equal to a margin of 6.5 percent of revenue (H1
2022: EUR 119m; 2.1 percent). The increase was
attributable to increased revenue and margins in both
segments. In addition, gross profit in the first half of 2023
reflects lower warranty costs as well as lower
depreciations, amortisations and impairments of offshore
assets due to impairment of the V164/V174 offshore
technology and related assets recognised in 2022.
Warranty costs
Warranty costs amounted to EUR 171m in the second
quarter of 2023 (Q2 2022: EUR 123m). The warranty cost
is equivalent to a warranty ratio of 5.0 percent, 1.3
percentage point above last year (Q2 2022: 3.7 percent).
For the first half of 2023, warranty costs amounted to 4.5
percent of revenue compared to 5.5 percent in the first
half of 2022.
Research and development costs, Distribution
costs and Administration costs
Research and development costs recognised in the
income statement amounted to EUR 82m for the second
quarter of 2023, on the same level as last year (Q2 2022:
EUR 83m).
Distribution costs amounted to EUR 111m in the second
quarter of 2023, also on the same level as last year (Q2
2022: EUR 107m).
Administration costs amounted to EUR 114m in the
second quarter of 2023 (Q2 2022: EUR 89m). The
increase was driven by additional IT and employee-
related costs.
Depreciation, amortisation, and impairment
In the second quarter of 2023, overall depreciation,
amortisation, and impairment before special items
amounted to EUR 202m (Q2 2022: EUR 223m). The
decrease was mainly attributable to lower depreciation in
the offshore area due to the impairment losses
recognised on the V164/V174 offshore technology and
related assets in 2022.
Sale of technology
Sale of technology includes consideration received in the
first half of 2023 of EUR 147m relating to a perpetual
manufacturing license granted to KK Wind Solutions
under the agreement of the sale of the converters &
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 16m in the second quarter of 2023.
Operating profit (EBIT) before special items
EBIT before special items amounted to negative EUR
70m in the second quarter of 2023, equivalent to an EBIT
margin of negative 2.0 percent (Q2 2022: negative EUR
182m; negative 5.5 percent).
For the first half of 2023, EBIT before special items
amounted to negative EUR 30m, equal to an EBIT margin
of negative 0.5 percent (H1 2022: negative EUR 511m;
negative 8.8 percent). The improvement was driven by
the sale of the converter & controls business, increased
gross margin and higher fixed cost absorption from higher
activity levels. Furthermore, the first quarter of 2022 was
Vestas Wind Systems A/S Page 7 of 30
Interim Financial Report – Second Quarter 2023
impacted by additional warranty provision and impairment
of offshore technology and related assets.
Operating profit (EBIT) after special items
In the second quarter of 2023, EBIT after special items
amounted to negative EUR 68m (Q2 2022: negative EUR
147m).
EBIT after special items in the first half of 2023 amounted
to negative EUR 2m, equivalent to an EBIT margin after
special items of 0 percent (H1 2022: negative EUR
1,041m; negative 18.0 percent). This reflects special
items income of EUR 28m, mainly related to a reversal of
previously recognised write-downs of inventories related
manufacturing footprint adjustments in India and China.
Income from investments in joint ventures and
associates
Income from investments in joint ventures and associates
amounted to a loss of EUR 4m in the second quarter of
2023 (Q2 2022: income of EUR 14m). The second quarter
of 2022 was positively impacted by income from Vestas’
investment in Copenhagen Infrastructure Partners.
Net financial items
Financial items amounted to a net loss of EUR 58m in the
second quarter of 2023 (Q2 2022: loss of EUR 6m) and a
net loss of EUR 92m for the first half of 2023 (H1 2022:
EUR 0m). Financial items are primarily driven by
increasing exchange rate losses in countries with high
inflation in South America and the Middle East as well as
higher level of interest expenses from increasing financial
debt and interest levels.
Income tax
Income tax amounted to an income of EUR 15m in the
second quarter of 2023, and in the first half of the year the
income tax amounted to EUR 0m (effective tax rate of 0
percent), compared to 14 percent in the first half of 2022.
Net result for the period
Net result amounted to a loss of EUR 115m in the second
quarter of 2023 (Q2 2022: loss of EUR 119m). The net
result for the first half of 2023 amounted to a loss of EUR
99m (H1 2022: loss of EUR 884). The net result in the first
half of 2022 was significantly impacted by special items
recognised in the first half 2022 related to Russia’s
invasion of Ukraine as well as the manufacturing footprint
adjustment in India and China.
Financial ratios
Earnings per share calculated over a 12-month period
amounted to negative EUR 0.8 in the second quarter of
2023 and on the same level as last year (Q2 2022:
negative EUR 0.8).
Return on capital employed (ROCE) before special items
calculated over a 12-month period was negative 10.8
percent in the second quarter of 2023 (Q2 2022: negative
2.9 percent), a decline compared to 2022 driven by the
lower earnings.
Return on equity calculated over a 12-month period was
negative 24.3 percent in the second quarter of 2023 (Q2
2022: negative 17.8 percent), a decrease of 6.5
percentage points attributable to the lower net results
compared to last year.
Working capital and free cash flow
Net working capital
Net working capital amounted to a net liability of EUR
171m as at 30 June 2023 (30 June 2022: a net liability of
EUR 488m). Compared to 2022 the development reflects
decreasing supplier payables compared to the end of the
second quarter of 2022, while an increase in contract
assets was offset by an increase in contract liabilities.
Cash flow from operating activities
Cash flow from operating activities was EUR 48m in the
second quarter of 2023 (Q2 2022: negative EUR 188m)
and negative EUR 926m in the first half of 2023 (H1 2022:
negative 1,116m). The improved cash flow compared to
2022 was driven by better performance in the period and
lower outflows related to warranty consumption and net
working capital.
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 188m in
the second quarter of 2023 (Q2 2022: net outflow of EUR
174m) and a net outflow of EUR 295m in the first half of
2023 (H1 2022: net outflow of EUR 367m). The increase
on a quarterly basis primarily reflects an increase in
investments in offshore activities. The lower net
investment in the first half of 2023 includes positive cash
flows from disposal of property, plant and equipment
related to the converters and controls business.
Free cash flow
Free cash flow before acquisition of subsidiaries, joint
ventures, associates, and financial investments
amounted to negative EUR 140m in the second quarter of
2023 (Q2 2022: negative EUR 362m) and negative EUR
1,221m in the first half of 2023 (H1 2022: negative EUR
1,483m). The positive development year over year was
mainly driven by an improved cash flow from operating
activities.
Capital structure and financing items
Equity and solvency ratio
As at 30 June 2023, total equity amounted to EUR 2,849m
(30 June 2022: EUR 3,658m). The decrease compared to
second quarter of 2022 was mainly attributable to the
negative net profit in the last half year of 2022 also
causing the solvency ratio to drop 3.9 percentage points
to 14.0 percent as at 30 June 2023.
Net interest-bearing debt and cash position
As at 30 June 2023, net interest-bearing debt amounted
to EUR 1,283m (30 June 2022: EUR 415m). This
development compared to 2022 was a result of negative
free cash flow in the last 12 months.
Cash and cash equivalents amounted to EUR 1,504m as
at 30 June 2023, compared to EUR 1,350m at the end of
the second quarter of 2022.
Vestas Wind Systems A/S Page 8 of 30
Interim Financial Report – Second Quarter 2023
The ratio net interest-bearing debt/EBITDA was 4.5 as at
30 June 2023, compared to 0.5 at the end of the second
quarter of 2022. The ratio was impacted by increased
financial debt and lower EBITDA in the 12-month period.
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. In
April 2023, the one-year extension option related to the
EUR 2bn revolving credit facility was exercised and
approved by all lenders. Maturity on this facility is now
2028. As at 30 June 2023, Vestas had EUR 2.5bn of
undrawn credit facilities.
Vestas Wind Systems A/S Page 9 of 30
Interim Financial Report – Second Quarter 2023
Power Solutions
Result for the period
In the second quarter of 2023, revenue from the Power
Solutions segment amounted to EUR 2,525m (Q2 2022:
EUR 2,605m), which corresponds to a 3.1 percent
decrease compared to the second quarter of 2022. The
decline reflects lower MW delivered, partly offset by
higher value of turbine deliveries. Revenue for the
second quarter of 2023 reflects a negative impact of
EUR 101m from foreign exchange rates compared to
2022.
In the first half of 2023, revenue in the Power Solutions
segment amounted to EUR 4,548m, an increase of 1.8
percent compared to the same period last year (H1 2022:
EUR 4,467m). The first half of the year reflected a
negative impact of EUR 135m from foreign exchange
rates compared to 2022.
EBIT before special items amounted to negative EUR
175m in the second quarter of 2023, equal to an EBIT
margin of negative 6.9 percent (Q2 2022: negative EUR
225m; negative 8.6 percent). The positive development
in the EBIT margin was primarily attributable improved
project pricing and easing of supply chain disruptions.
In the first half of 2023, EBIT before special items
amounted to negative EUR 229m, equal to an EBIT
margin before special items of negative 5.0 percent, an
improvement of 8.5 percentage point compared to same
period last year (H1 2022: negative EUR 605m, negative
13.5 percent). The positive development in the EBIT
margin was primarily attributable to the sale of the
converters and controls business, increased revenue,
improved margins from pricing as well as 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 second quarter of 2023, wind turbine order intake
amounted to 2,333 MW, corresponding to a value of
EUR 2.5bn (Q2 2022: 2,153 MW; EUR 2.1bn). This
represents an increase of 8 percent in MW order intake
compared to the second quarter of 2022.
The Onshore average price per MW was EUR 0.97m in
the second quarter of 2023 compared to EUR 0.96m in
the second quarter of 2022. The average price per MW
including Offshore was EUR 1.04m in the second quarter
of 2023 compared to EUR 0.97m in the second quarter
of 2022.
Wind turbine order intake, second quarter 2023
MW
EMEA
Ameri-
cas
Asia
Pacific
Total
Onshore order
intake
1,285
756
54
2,095
Offshore order
intake
-
-
238
238
Total order
intake
1,285
756
292
2,333
Wind turbine deliveries
Deliveries to customers amounted to 2,831 MW in the
second quarter of 2023 (Q2 2022: 3,140 MW). Offshore
deliveries increased from 87 MW in the second quarter
of 2022 to 395 MW in the second quarter of 2023.
Deliveries
MW
By the end of June 2023, Vestas had installed a total
capacity of 170 GW in 88 countries.
Vestas Wind Systems A/S Page 10 of 30
Interim Financial Report – Second Quarter 2023
Deliveries (onshore and offshore)
MW
Q2
2023
Q2
2022
FY
2022
United Kingdom
564
70
790
Germany
386
251
818
France
136
226
1,002
Poland
84
322
957
Finland
73
426
1,185
Netherlands
73
23
578
Greece
67
12
215
Italy
66
104
256
Austria
44
24
213
Egypt
34
12
82
Portugal
34
5
46
Sweden
17
108
480
Belgium
12
54
123
Spain
7
48
156
Denmark
3
4
95
Czech Republic
2
-
-
Faroe Islands
-
-
14
Ireland
-
14
178
Latvia
-
42
59
Russian Fed.
-
-
13
Turkey
-
54
89
South Africa
-
4
4
Ukraine
-
-
114
EMEA
1,602
1,803
7,467
o/w Offshore
318
60
700
Brazil
407
437
1,528
USA
307
394
2,275
Argentina
112
-
80
Canada
110
-
325
Chile
18
41
128
Dominican Rep.
7
-
29
Colombia
4
45
142
Puerto Rico
-
-
6
Mexico
-
-
7
Americas
965
917
4,520
o/w Offshore
-
-
-
Australia
123
86
376
Taiwan
72
51
126
Japan
43
117
399
New Zealand
15
4
22
South Korea
5
6
23
China
3
7
54
Vietnam
3
53
179
India
1
93
162
Sri Lanka
(1)
3
-
Asia Pacific
264
420
1,341
o/w Offshore
77
27
188
Total
2,831
3,140
13,328
o/w Offshore
395
87
888
Wind turbine order backlog
At the end of the second quarter of 2023, the wind
turbine order backlog amounted to 20,096 MW, which
corresponds to a value of EUR 20.0bn, of which EUR
2.4bn relates to Offshore wind power projects.
Order backlog per region
MW
EMEA
Ameri-
cas
Asia
Pacific
Total
Onshore order
backlog
7,878
8,067
2,314
18,259
Offshore order
backlog
584
-
1,253
1,837
Total backlog as at
30 June 2023
8,462
8,067
3,567
20,096
Europe, Middle East, and Africa (EMEA)
The total order backlog for Europe, Middle East, and
Africa decreased 19.1 percent from the end of the
second quarter of 2022 to 8,462 MW at the end of the
second quarter 2023. The decrease was driven by higher
deliveries than order intake in Northern Europe and in
Offshore during the last half of 2022 and beginning of
2023.
Americas
The total order backlog for Americas at the end of the
second quarter 2023 of 8,067 MW corresponds to an
increase of 11.5 percent compared to the end of second
quarter 2022. The increase was largely driven by high
order intake in Brazil and Argentina during 2023.
Asia Pacific
The total order backlog for Asia Pacific amounted to
3,567 MW at the end of the second quarter 2023, an
increase of 10 percent from the end of second quarter
2022.
Development business
At the end of second quarter of 2023, Vestas' pipeline of
development projects amounted to 30.5 GW with
Australia, the USA, and Brazil being the countries with
the largest pipeline.
During the first half of the year, Vestas secured 1.3 GW
of new pipeline projects.
The order intake generated in the second quarter of 2023
from projects developed by Vestas amounted to 168
MW, comprising projects in the USA and Brazil.
Vestas Wind Systems A/S Page 11 of 30
Interim Financial Report – Second Quarter 2023
Service
Result for the period
The Service segment generated revenue of EUR 904m
in the second quarter of 2023 (Q2 2022: EUR 700m),
which corresponds to a 29.1 percent increase compared
to the second quarter of 2022. The quarter was positively
impacted by higher contract activity and indexation
adjustments of the contracts. Albeit still at a high level,
transactional sales were slightly down compared to the
second quarter 2022 for the first time in several quarters.
Foreign exchange rates had EUR 40m negative effect on
revenue growth.
In the first half of 2023, revenue from the Service
segment amounted to EUR 1,710m (H1 2022: EUR
1,323m), a 29.3 percent increase compared to first half
of 2022.
Service revenue and EBIT margin before special items
mEUR and percentage
EBIT before special items amounted to EUR 198m in
the second quarter of 2023, corresponding to an EBIT
margin of 21.9 percent which is a 4.2 percentage point
increase compared to the same period last year (Q2
2022: EUR 124m; 17.7 percent). The second quarter of
2022 was negatively impacted by lower profitability on
certain projects in the USA and Africa. In addition, the
quarter was positively impacted by higher activity.
In the first half of 2023, EBIT before special items
amounted to EUR 381m with an EBIT margin of 22.3
percent, a 3.3 percent point increase compared to the
first half of 2022 (H1 2022: EUR 251m; 19.0 percent).
The positive development compared to the first half of
2022 was mainly attributable to higher activity, and
impairments recognised in the first quarter of 2022, in
addition to the lower profitability impacting the second
quarter of 2022.
Wind turbines under service
At the end of June 2023, Vestas had around 56,900 wind
turbines under service, equivalent to 150 GW.
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.
At the end of June 2023, the overall average Lost
Production Factor showed signs of improvement, but
remains at a high level mainly from extraordinary repairs
and upgrades.
Service order backlog
At the end of June 2023, Vestas had service contracts
in the order backlog with expected contractual future
revenue of EUR 31.6bn, a EUR 2.6bn increase from
same quarter last year.
Service order backlog
bnEUR
At the end of the quarter, the average duration of the
s
ervice order backlog was eleven years (30 June 2022:
ten years average duration).
Vestas Wind Systems A/S Page 12 of 30
Interim Financial Report – Second 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 four 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
Turbines produced and shipped in the second quarter of
2023 are expected to avoid 114 million tonnes of CO
2
e
over the course of their lifetime, an increase of 9 percent
from the second quarter of 2022 due to a higher volume
of MW produced and shipped in the period.
In the second quarter of 2023, our total scope 1 and 2
emissions increased by 45 percent compared to the
second quarter of 2022. This can be attributed to higher
activity levels in offshore construction and service. Scope
3 emissions are reported annually in the Vestas
Sustainability Report.
Partnership with Ørsted
In the second quarter of 2023, Ørsted and Vestas,
announced a commercial sustainability partnership.
Ørsted will procure a minimum of 25 percent low-
emission steel wind turbine towers and blades made
from recycled materials from Vestas in all joint offshore
wind projects.
By committing to integrate sustainable procurement not
just as a one-off but in all future offshore projects
between the two companies, Ørsted is creating ongoing
demand for Vestas’ innovative low-carbon and circular
solutions. This collaborative approach is a critical step on
the journey towards net-zero wind farms.
Electric vehicle service fleet
In cooperation with industry leaders in Europe and the
USA, we are transitioning our service fleet to electric
vehicles. More than 300 EVs have been ordered for our
service fleet in Vestas Americas in the first half of this
year. And in Europe, we have ordered more than 100
EVs to be delivered in 2023. During the first half of 2023
we added another 78 renewably fuelled vehicles to the
fleet. In total 386 full renewable service vehicles have
been introduced into Vestas Service since the
programme started in 2020.
First 100 percent methanol crew transfer vessel
In collaboration with vessel supplier Northern Offshore
Services (N-O-S), we extended an existing five-year
charter to ten years to test how the world’s first methanol-
powered crew transfer vessel (CTV) can help reduce
carbon emissions from its offshore service operations.
The original CTV concept was powered by a dual-fuel
propulsion layout, capable of being powered by
methanol, but also able to fall back on marine gas oil if
methanol is not available. The new vessel is 100 percent
powered by bio-methanol.
As of today, this vessel is the first and only CTV used for
the service of offshore wind turbines to run on 100
percent methanol.
Circularity
In the second quarter of 2023, our material efficiency
improved 52 percent compared to second quarter 2022
to 0.8 tonnes of waste per MW produced and shipped.
This improvement is primarily due to a significant
increase in recycling rate of waste across several of our
factories. This represents significant progress towards
our 2030 commitment to landfill less than one percent of
manufacturing waste.
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.
At the beginning of the year, Vestas revised the
methodology for calculating contractor working hours in
relation TRIR and LTIR. We have since then concluded
that the implementation of this change will require a
longer transition period to ensure quality of data. For this
reason, we have decided to return to the previously used
methodology for the remainder of 2023. An overview with
restated numbers for first quarter 2023 can be seen
below.
Q1
2023
Q2
2023
H1
2023
Total Recordable Injuries
(number)
44
*)
73
117
- of which Lost Time
Injuries (number)
19
26
45
Total Recordable Injury Rate
2.7
4.3
3.5
Lost Time Injury Rate
1.2
1.5
1.4
*) Note the Q1 2023 TRI has been corrected from 42 to 44.
I
n the second quarter of 2023, 73 Total Recordable
Injuries were registered, an increase from 44 Total
Recordable Injuries in first quarter 2023. This increase
comes primarily from an increase in safety incidents
during construction activities, primarily involving
contractors working under our operational control. We
have commenced a contractor governance programme
to set more specific requirements throughout the
operational stages (proposal, contract, and operational
stage), and will retain our focus on building a strong
safety culture at our working sites.
Vestas Wind Systems A/S Page 13 of 30
Interim Financial Report – Second 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 value creating 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 14 of 30
Interim Financial Report – Second Quarter 2023
Outlook 2023
Revenue for full year 2023 is expected to range between
EUR 14.0bn and 15.5bn, however the expected growth
in Service revenue has been adjusted to around 10
percent (previously 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 15 of 30
Interim Financial Report – Second Quarter 2023
Consolidated financial statements 1 January – 30 June
Condensed income statement 1 January – 30 June
mEUR
Note
Q2
2023
Q2
1)
2022
H1
2023
H1
1)
2022
Revenue
1.1, 1.2
Production costs
(3,208 )
(3,208 )
(5,849 )
(5,671 )
Gross profit
Research and development costs
(82 )
(83 )
(174 )
(232 )
Distribution costs
(111 )
(107 )
(218 )
(222 )
Administration costs
(114 )
(89 )
(219 )
(176 )
Sale of technology
1.3
Income from investments in joint ventures and associates
Operating profit/(loss) (EBIT) before special items 1.1 (70 ) (182 ) (30 )
(511 )
Special items
1.4
(530 )
Operating profit/(loss) (EBIT) (68 ) (147 )
(2 ) (1,041 )
Income from investments in joint ventures and associates
(4 )
(5 )
Net financial items
(58 )
(6 )
(92 )
Profit/(loss) before tax
(130 )
(139 )
(99 )
(1,028 )
Income tax
Profit/(loss) for the period
(115 )
(119 )
(99 )
(884 )
Profit/(loss) is attributable to:
Owners of Vestas
(115 )
(119 )
(100 )
(884 )
Non-controlling interests
Earnings per share (EPS)
Earnings per share for the period (EUR), basic
(0.12 )
(0.12 )
(0.10 )
(0.88 )
Earnings per share for the period (EUR), diluted
(0.12 )
(0.12 )
(0.10 )
(0.88 )
Condensed statement of comprehensive income 1 January – 30 June
mEUR
Q2
2023
Q2
)
2022
H1
2023
H1
2022
Profit/(loss) for the period
(115 )
(119 )
(99 )
(884 )
Items that may be reclassified to the income statement subsequently:
Exchange rate adjustments relating to foreign entities
(39 )
(41 )
(61 )
Fair value adjustments of derivative financial instruments for the period
(19 )
(11 )
(80 )
Gain/(loss) on derivative financial instruments transferred to the income statement
(35 )
(8 )
(86 )
(10 )
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
Other comprehensive income after tax for the period
(85 )
(48 )
(91 )
(40 )
Total comprehensive income for the period
(200 )
(167 )
(190 )
(924 )
The above condensed statement of comprehensive income should be read in conjunction with the accompanying notes.
Vestas Wind Systems A/S Page 16 of 30
Interim Financial Report – Second Quarter 2023
Condensed balance sheet – Assets
mEUR
Note
30 June
2023
30 June
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 17 of 30
Interim Financial Report – Second Quarter 2023
Condensed balance sheet – Equity and liabilities
mEUR
Note
30 June
2023
30 June
2022
31 December
)
2022
Share capital
3.1
Other reserves
(96 )
(67 )
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 18 of 30
Interim Financial Report – Second Quarter 2023
Condensed statement of changes in equity – six 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
(100 )
(99 )
Other comprehensive income for the period
(60 )
(29 )
(1 )
(90 )
(1 )
(91 )
Total comprehensive income for the period
(60 )
(29 )
(1 )
(90 )
(100 )
(0 )
(190 )
Transfer of cash flow hedge reserve to the initial
carrying amount of hedged items
(21 )
(21 )
(21 )
Transactions with owners:
Acquisition of treasury shares
(11 )
-
(11 )
Share-based payments
-
Tax on equity transactions
(0 )
(0 )
Total transactions with owners
Equity as at 30 June 2023
(50 )
(51 )
(96 )
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 )
Transactions 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 )
The above condensed statement of changes in equity should be read in conjunction with the accompanying notes.
Vestas Wind Systems A/S Page 19 of 30
Interim Financial Report – Second Quarter 2023
Condensed cash flow statement 1 January – 30 June
mEUR
Note
Q2
2023
Q2
2022
H1
2023
H1
2022
Profit/(loss) for the period
(115 )
(119 )
(99 )
(884 )
Adjustment for non-cash transactions
Interest paid / received, net
(5 )
(1 )
(5 )
Income tax paid
(38 )
(22 )
(53 )
(90 )
Cash flow from operating activities before change in net working
capital
(90 )
(409 )
Change in net working capital
(89 )
(98 )
(1,311 )
(707 )
Cash flow from operating activities
(188 )
(926 )
(1,116 )
Purchase of intangible assets
(94 )
(104 )
(188 )
(192 )
Purchase of property, plant and equipment
(95 )
(75 )
(171 )
(182 )
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
(188 )
(174 )
(295 )
(367 )
Free cash flow before acquisitions of subsidiaries, joint ventures,
associates and financial investments
(140 )
(362 )
(1,221 )
(1,483 )
Purchase of shares in joint ventures and associates
(6 )
(20 )
(6 )
(22 )
Purchase of other non-current financial assets
(2 )
(5 )
Disposal of other non-current financial assets
Disposal of investments in joint ventures and associates
Net cash flow from deconsolidation of subsidiary
(8 )
Cash flow from investing activities
(158 )
(193 )
(269 )
(388 )
Free cash flow
(110 )
(381 )
(1,195 )
(1,504 )
Dividend paid
(50 )
(50 )
Payment of lease liabilities
(41 )
(40 )
(76 )
(76 )
Proceeds from borrowings
Payment of financial debt
(100 )
(102 )
(150 )
(614 )
Acquisition of treasury shares
(11 )
(11 )
Cash flow from financing activities
(86 )
(90 )
Net change in cash and cash equivalents
(196 )
(471 )
(845 )
(1,100 )
Cash and cash equivalents at the beginning of period
Exchange rate adjustments of cash and cash equivalents
(7 )
(29 )
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 20 of 30
Interim Financial Report – Second Quarter 2023
Notes
1 Result for the period
1.1 Segment information
In the second quarter of 2023, a net income of EUR 2m was recognised in special items, impacting the Power Solutions
segment. The income relates to the adjustment of the manufacturing footprint in India and include a reversal of a previously
recognised write-down of inventories of EUR 1m and of a previously recognised impairment loss on tangible assets of EUR
2m, partly offset by other costs of EUR 1m relating to the Russian invasion of Ukraine. For further information, refer to note
1.4.
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, Germany of EUR 26m and the factory in Esbjerg, Denmark of EUR 7m and adjustments to the provision
relating to the Russian invasion of Ukraine of EUR 42m. This is 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.
mEUR
Power
Solutions
Service
Not
allocated
Total Group
Q2 2023
Revenue
2,525
904
-
3,429
Income from investments in joint ventures and associates
16
-
-
16
Total income
2,541
904
-
3,445
Total costs
(2,716)
(706)
(93)
(3,515)
Operating profit/(loss) (EBIT) before special items
(175)
198
(93)
(70)
Special items
2
-
-
2
Operating profit/(loss) (EBIT)
(173)
198
(93)
(68)
Income from investments in joint ventures and associates
(4)
Net financial items
(58)
Profit/(loss) before tax
(130)
Amortisation and depreciation included in total costs
(153)
(40)
(9)
(202)
mEUR
Power
Solutions
Service
Not allocated
Total
Group
Q2 2022
Revenue
2,605
700
-
3,305
Income from investments in joint ventures and associates
-
-
-
-
Total income
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)
Vestas Wind Systems A/S Page 21 of 30
Interim Financial Report – Second Quarter 2023
1.1 Segment information (continued)
In the first half of 2023, a net income of EUR 28m was recognised in special items relating to the adjustment of the
manufacturing footprint in India as well as the Russian invasion of Ukraine, impacting the Power Solutions segment. For
additional information, refer to note 1.4.
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 were
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.
mEUR
Power
Solutions
Service
Not allocated
Total
Group
H1 2023
Revenue
4,548
1,710
-
6,258
Sales of technology
147
-
-
147
Income from investments in joint ventures and associates
25
-
-
25
Total income
4,720
1,710
-
6,430
Total costs
(4,949)
(1,329)
(182)
(6,460)
Operating profit/(loss) (EBIT) before special items
(229)
381
(182)
(30)
Special items
28
-
-
28
Operating profit/(loss) (EBIT)
(201)
381
(182)
(2)
Income from investments in joint ventures and associates
(5)
Net financial items
(92)
Profit/(loss) before tax
(99)
Amortisation and depreciation included in total costs
(302)
(73)
(23)
(398)
mEUR
Power
Solutions
Service
Not allocated
Total
Group
H1 2022
Revenue
4,467
1,323
-
5,790
Sales of technology
-
-
-
-
Income from investments in joint ventures and associates
-
-
-
-
Total income
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)
Vestas Wind Systems A/S Page 22 of 30
Interim Financial Report – Second Quarter 2023
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
2023
Q2
2022
Q2
2023
Q2
2022
Q2
2023
Q2
2022
Timing of revenue recognition
Products and services transferred at a point in time
1,573
1,636
109
110
1,682
1,746
Products and services transferred over time
952
969
795
590
1,747
1,559
2,525
2,605
904
700
3,429
3,305
Revenue from contract types
Supply-only
373
495
-
-
373
495
Supply-and-installation (at a point in time)
1,201
1,141
-
-
1,201
1,141
Supply-and-installation (over time)
814
609
-
-
814
609
Turnkey (EPC)
137
360
-
-
137
360
Service
-
-
904
700
904
700
2,525
2,605
904
700
3,429
3,305
Primary geographical markets
EMEA
1,428
1,523
484
356
1,912
1,879
Americas
795
741
344
275
1,139
1,016
Asia Pacific
302
341
76
69
378
410
2,525
2,605
904
700
3,429
3,305
Vestas Wind Systems A/S Page 23 of 30
Interim Financial Report – Second Quarter 2023
1.2 Revenue (continued)
mEUR Power Solutions Service Total
H1
2023
H1
2022
H1
2023
H1
2022
H1
2023
H1
2022
Timing of revenue recognition
Products and services transferred at a point in time
2,789
2,718
211
190
3,000
2,908
Products and services transferred over time
1,759
1,749
1,499
1,133
3,258
2,882
4,548
4,467
1,710
1,323
6,258
5,790
Revenue from contract types
Supply-only
650
822
-
-
650
822
Supply-and-installation (at a point in time)
2,139
1,896
-
-
2,139
1,896
Supply-and-installation (over time)
1,448
1,168
-
-
1,448
1,168
Turnkey (EPC)
311
581
-
-
311
581
Service
-
-
1,710
1,323
1,710
1,323
4,548
4,467
1,710
1,323
6,258
5,790
Primary geographical markets
EMEA
2,544
2,553
887
669
3,431
3,222
Americas
1,438
1,344
678
522
2,116
1,866
Asia Pacific
566
570
145
132
711
702
4,548
4,467
1,710
1,323
6,258
5,790
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 were 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 half of 2023, a net expense of EUR 4m 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 half of 2023, a net income of EUR 32m 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 35m and
of previously recognised impairment loss on tangible assets of EUR 2m, partly offset by other costs of EUR 5m.
Vestas Wind Systems A/S Page 24 of 30
Interim Financial Report – Second Quarter 2023
Basis for recognition
The reversal of write-downs of inventories relates to blades sold that were previously expected to be scrapped. The reversal
of impairment loss on tangible assets relates to assets sold that were previously expected to be scrapped. Other costs
primarily related to purchase commitments towards suppliers and costs of closing the factory.
1.4 Special items (continued)
mEUR
30 June
2023
30 June
2022
31 December
2022
Write-down of inventory
33
(305)
(260)
Provisions
(1)
(118)
(87)
Impairment loss on intangible and tangible assets
2
(89)
(69)
Other costs
(7)
(21)
(23)
Staff costs
(1)
3
(5)
Derecognition of net assets in Russia
2
-
-
Special items
28
(530)
(444)
2 Other operating assets and liabilities
2.1 Property, plant and equipment
In the first half of 2023, Vestas acquired assets with a cost of EUR 171m mainly related to manufacturing blade moulds,
acquisition of land, transport equipment, and construction tools, compared to EUR 182m in the first half of 2022.
Lease contracts recognised as right-of-use assets during the first half of 2023 amounted to EUR 117m, compared to EUR
87m in the first half 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
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
30 June
2023
30 June
2022
31 December
2022
Warranty provisions, 1 January
1,490
1,197
1,197
Provisions for the period
292
334
926
Warranty provisions consumed during the period
(254)
(313)
(633)
Warranty provisions
1,528
1,218
1,490
The provisions are expected to be payable as follows:
< 1 year
617
490
725
> 1 year
911
728
765
1,528
1,218
1,490
During the first half of 2023, net warranty provisions charged to the income statement amounted to EUR 284m (EUR
171m in the second quarter of 2023), equivalent to 4.5 percent of revenue. The net amount consists of a gross warranty
provision of EUR 292m less supplier claims of EUR 8m. Warranty consumption amounted to EUR 254m compared to
EUR 313m in the first half 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.
Vestas Wind Systems A/S Page 25 of 30
Interim Financial Report – Second Quarter 2023
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)
30 June
2023
30 June
2022
31 December
2022
Treasury shares as at 1 January
737,940
944,632
944,632
Purchases for the period
79,785
-
-
Vested treasury shares for the period
(139,004)
(206,692)
(206,692)
Treasury shares
678,721
737,940
737,940
Each share has a nominal value of DKK 0.20.
3.2 Cash and cash equivalents
mEUR
30 June
2023
30 June
2022
31 December
2022
Cash and cash equivalents without disposal restrictions
1,475
1,324
2,352
Cash and cash equivalents with disposal restrictions
29
26
26
Cash and cash equivalents
1,504
1,350
2,378
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 to certain sustainability KPIs.
On 16 March, Vestas signed a EUR 750m revolving credit facility with six banks. The facility will mature in 2024 and
includes a six-month extension option.
In April 2023, the one-year extension option related to the EUR 2bn revolving credit facility was exercised and approved
by all lenders. Maturity on this facility is now 2028.
Vestas has committed credit facilities of EUR 2,750m and uncommitted credit facilities of EUR 475m. As at 30 June 2023,
EUR 771m of the committed credit facilities was converted into ancillary bank guarantee issuance facilities leaving EUR
2,454m 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 30 June 2023, the fair value of financial investments comprising marketable securities amounted to EUR
96m, equal to book value.
Derivative financial instruments were negative with a market value of net EUR 47m, equal to book value, and were
recognised in other receivables and other liabilities with EUR 522m and EUR 569m, respectively.
As at 30 June 2023, the carrying amount of the sustainability-linked bonds issued by Vestas amounted to EUR 1,488m
and the fair value amounted to EUR 1,345m.
3.4 Financial instruments (continued)
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
Vestas Wind Systems A/S Page 26 of 30
Interim Financial Report – Second Quarter 2023
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
Q2
2023
Q2
2022
H1
2023
H1
2022
Joint ventures
Revenue for the period
2
2
127
83
Proceeds from investments in joint ventures
-
-
5
-
Capital increase
-
20
4
20
Trade receivable as at 30 June
18
50
18
50
Other receivables as at 30 June
11
5
11
5
Other liabilities as at 30 June
1
-
1
-
Prepayments balance as at 30 June (asset)
-
43
-
43
Associates
Revenue for the period
0
(21)
2
(5)
Proceeds from investments in associates
0
-
0
-
Capital increase
1
(2)
2
1
Contract assets as at June 30
-
-
-
59
Other assets as at 30 June
16
-
16
-
Contract liabilities as at 30 June
5
-
5
-
Payable capital contribution as at 30 June
8
48
8
48
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 30
June 2023, which could have a significant impact on the report.
Vestas Wind Systems A/S Page 27 of 30
Interim Financial Report – Second Quarter 2023
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 28 of 30
Interim Fi
nancial Report – Second Quarter 2023
Executive Management
Board of Directors
)
)
)
)
*) Employee representative
Vestas Wind Systems A/S Page 29 of 30
Interim Financial Report – Second 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.