Wind. It means the world to us.
TM
Company Reg. No.: 10403782
Company Announcement No. 17/2023
Interim Financial Report
Third Quarter 2023
Vestas Wind Systems A/S Page 2 of 30
Interim Financial Report – Third 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
Financial calendar 2024 ................................................................................................................................. 14
Consolidated financial statements 1 January – 30 September .................................................................. 15
Management’s statement .............................................................................................................................. 28
Conference call (audiocast)
On Wednesday 8 November 2023 at 10 am CET (9 am
GMT), Vestas will host a conference call with a
presentation on the results. The presentation will be
audiocast and can be viewed live or replayed via
vestas.com.
The presentation will be held in English and will conclude
with a Q&A. Details on how to register for the Q&A are
to be found at vestas.com/en/investor.
Contact details
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 – Third Quarter 2023
Summary
Summary: Quarterly revenue of EUR 4.4bn with an EBIT
margin before special items of 1.6 percent. Order intake
of 4.5 GW and record-high combined order backlog of
EUR 54.0bn. Full-year guidance narrowed.
In the third quarter of 2023, Vestas generated revenue of
EUR 4,353m – an increase of 11.2 percent compared to
the year-earlier period. EBIT before special items
amounted to EUR 70m, resulting in an EBIT margin
before special items of 1.6 percent, compared to (3.2)
percent in the third quarter of 2022.
Free cash flow
1)
amounted to EUR (251)m compared to
EUR (752)m in the third quarter of 2022.
The quarterly intake of firm and unconditional wind turbine
orders amounted to 4,502 MW, a 138 percent increase
from third quarter 2022. The value of the wind turbine
order backlog was EUR 21.6bn as at 30 September 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 32.4bn.
Thus, the value of the combined backlog of wind turbine
orders and service agreements stood at EUR 54.0bn – an
increase of EUR 6.0bn compared to the year-earlier
period.
Based on the results for the first nine months, we are
narrowing our full-year guidance. We now expect revenue
to range between EUR 14.5bn-15.5bn (previously EUR
14.0bn-15.5bn), including Service, which is still expected
to grow around 10 percent.
The outlook for EBIT margin before special items is
narrowed to 0-2 percent (previously (2)-3 percent), with
the Service EBIT margin now expected to be approx. 21
percent (previously approx. 22 percent). Total
investments
1)
are expected to amount to approx. EUR
0.8bn (previously approx. EUR 1bn) in 2023.
Group President & CEO Henrik Andersen said: “Vestas’
positive momentum increased in the third quarter of 2023,
and we continued the gradual improvement in our
execution and profitability. In the quarter, we had an EBIT
margin of 1.6 percent, which was achieved through higher
gross margin and increased pricing on deliveries. Based
on our results for the first nine months, we remain on track
to become profitable in 2023 and are narrowing our
guidance for the full year. In the quarter, we achieved
revenue of EUR 4.4bn, an 11 percent growth year-on-
year, which was driven by higher value of delivered
projects, stable volumes and continued solid Service
performance. Despite continued market design and
permitting challenges, we saw strong commercial activity
with underlying stable pricing and received 4.5 GW of
orders, including 2.1 GW for our V236-15.0 MW offshore
turbine. With around 50 days left of 2023, Vestas remains
fully focused on becoming profitable again while
strengthening our commercial and operational discipline.
We would like to thank our customers, partners and
29,000 colleagues for their support and passion for
powering the energy transition and Vestas forward
.”
Key highlights
Order intake of 4.5 GW
Wind turbine orders more than doubled year-on-year driven by Offshore and higher activity in North America and Europe.
Positive earnings from operations
Return to profitability reflects good execution in the quarter and gradual improvements in project profitability.
Revenue of EUR 4.4bn
Growth of 11 percent year-on-year driven by higher value of turbine deliveries, stable volumes, and double-digit growth in
Service.
EBIT margin of 1.6 percent
Profitability improvement driven by higher gross margin, better pricing and solid performance and profitability in Service.
Outlook narrowed
On track to deliver positive EBIT in 2023.
1) Excl. acquisitions of subsidiaries, joint ventures, associates, and financial investments.
Vestas Wind Systems A/S Page 4 of 30
Interim Financial Report – Third Quarter 2023
Financial and operational key figures
mEUR
Q3
2023
Q3
)
2022
9M
2023
9M
2022
FY
)
2022
Financial key figures
Income statement
Revenue
4,353
3,913
10,611
9,703
14,486
Gross profit
351
161
760
280
118
Operating profit/(loss) before amortisation, depreciation and
impairment (EBITDA) before special items
264
101
632
122
(63)
Operating profit/(loss) (EBIT) before special items
70
(127)
40
(638)
(1,152)
Operating profit/(loss) before amortisation, depreciation and
impairment (EBITDA)
263
103
659
(317)
(437)
Operating profit/(loss) (EBIT)
69
(114)
67
(1,155)
(1,596)
Net operating profit after tax (NOPAT)
69
(98)
67
(992)
(1,071)
Net financial items
(32)
(65)
(124)
(65)
(110)
Profit/(loss) before tax
28
(171)
(71)
(1,199)
(1,696)
Profit/(loss) for the period
28
(147)
(71)
(1,031)
(1,572)
Balance sheet
Balance sheet total
20,857
20,447
20,857
20,447
20,090
Equity
2,981
3,727
2,981
3,727
3,060
Investments in property, plant, and equipment
124
85
295
267
371
Net working capital
291
93
291
93
(1,349)
Capital employed
6,399
6,155
6,399
6,155
5,487
Interest-bearing position (net), end of the period
(1,622)
(1,195)
(1,622)
(1,195)
46
Interest-bearing debt, at the end of the period
3,418
2,428
3,418
2,428
2,427
Cash flow statement
Cash flow from operating activities
(31)
(614)
(957)
(1,730)
(195)
Cash flow from investing activities before acquisitions of
subsidiaries, joint ventures, associates and financial investments
(220)
(138)
(515)
(505)
(758)
Free cash flow before acquisitions of subsidiaries, joint ventures,
associates and financial investments
(251)
(752)
(1,472)
(2,235)
(953)
Free cash flow
(239)
(644)
(1,434)
(2,148)
(874)
Financial ratios
1)
Financial ratios
Gross margin (%)
8.1
4.1
7.2
2.9
0.8
EBITDA margin (%) before special items
6.1
2.6
6.0
1.3
(0.4)
EBIT margin (%) before special items
1.6
(3.2)
0.4
(6.6)
(8.0)
EBITDA margin (%)
6.0
2.6
6.2
(3.3)
(1.2)
EBIT margin (%)
1.6
(2.9)
0.6
(11.9)
(11.0)
Return on capital employed (ROCE)
2)
(%) before special items
(7.3)
(8.2)
(7.3)
(8.2)
(18.5)
Net interest-bearing debt / EBITDA
2)
before special items
3.6
2.6
3.6
2.6
N/A
Solvency ratio (%)
14.3
18.2
14.3
18.2
15.2
Return on equity
2)
(%)
(19.7)
(24.8)
(19.7)
(24.8)
(43.9)
Share ratios
Earnings per share
3)
(EUR)
(0.6)
(1.0)
(0.6)
(1.0)
(1.6)
Dividend per share (EUR)
-
-
-
-
-
Pay-out ratio (%)
-
-
-
-
-
Share price at the end of the period (EUR)
20.3
19.0
20.3
19.0
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)
4.9
2.0
10.3
7.1
11.9
Order intake (MW)
4,502
1,895
10,138
6,996
11,189
Order backlog – wind turbines (bnEUR)
21.6
18.1
21.6
18.1
19.1
Order backlog – wind turbines (MW)
20,966
19,287
20,966
19,287
19,623
Order backlog – service (bnEUR)
32.4
29.9
32.4
29.9
30.4
Produced and shipped wind turbines (MW)
2,719
2,441
9,358
10,168
13,106
Produced and shipped wind turbines (number)
649
591
2,073
2,489
3,126
Deliveries (MW)
3,641
3,569
8,789
8,945
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 30
Interim Financial Report – Third Quarter 2023
Sustainability key figures
Q3
2023
Q3
2022
9M
2023
9M
2022
FY
2022
Environmental
Utilisation of resources
Consumption of energy (GWh)
125
156
470
487
641
- of which renewable energy (GWh)
50
57
149
178
231
- of which renewable electricity (GWh)
36
51
116
152
187
Renewable energy (%)
40
37
32
37
36
Renewable electricity for own activities
(%)
100
100
100
100
100
Withdrawal of fresh water (1,000 m³)
86
113
217
274
341
Waste
Volume of waste from own operations (1,000 t)
9
10
32
36
47
- of which collected for recycling (1,000 t)
5
7
21
20
26
Recyclability rate of hub and blade
1)
(%)
//
//
//
//
42
Material efficiency (tonnes of waste excl. recycled per MW
produced and shipped)
1.4
1.1
1.1
1.6
1.6
Carbon emissions adjusted for acquisitions and divestments
Direct emissions of CO
2
e
(scope 1) (1,000 t)
20
24
78
72
98
Indirect emissions of CO
2
e
(scope 2) (1,000 t)
0.1
0.1
0.7
1.1
1.8
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)
85
80
291
304
408
Annual CO
2
e
avoided by the total aggregated installed fleet
(million t)
231
225
231
225
219
Social
Safety
Total Recordable Injuries (number)
56
50
165
2)
149
200
- of which Lost Time Injuries (number)
27
9
70
52
73
- of which fatal injuries (number)
0
0
1
0
0
Total Recordable Injuries per million working hours (TRIR)
3.5
3.5
3.2
3.3
3.3
Lost Time Injuries per million working hours (LTIR)
1.6
0.6
1.4
1.1
1.2
Employees
Average number of employees (FTEs)
Employees at the end of the period (FTEs)
29,986
28,286
29,986
28,286
28,438
Diversity and inclusion
Women in the Board and Executive Management at the end of the
period (%)
21
27
21
27
25
Women in leadership positions at the end of the period (%)
24
22
24
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, pages 151-152.
1) Data only reported on an annual basis.
2) Note that the reported number of Total Recordable Injuries for second quarter 2023 has been adjusted from 73 to 65 due to retroactive recategorisation.
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 30
Interim Financial Report – Third Quarter 2023
Group financial performance
Income statement
Revenue
Revenue in the third quarter of 2023 amounted to EUR
4,353m (Q3 2022: EUR 3,913m), an increase of 11.2
percent year-on-year, mainly driven by MW delivered at
higher prices in Power Solutions and increasing Service
activity. Revenue for the third quarter of 2023 reflected a
negative impact of EUR 282m from foreign exchange
rates compared to 2022.
For the first nine months of the year, revenue amounted
to EUR 10,611m (9M 2022: EUR 9,703m), an increase of
9.4 percent year-on-year, mainly driven by the same
factors impacting the quarter. Revenue for the first nine
months of 2023 reflected a negative impact of EUR 469m
from foreign exchange rates compared to 2022.
Revenue and EBIT margin before special items
mEUR and percentage
Gross profit
Gross profit amounted to EUR 351m in the third quarter
of 2023, corresponding to a gross margin of 8.1 percent
(Q3 2022: EUR 161m; 4.1 percent), which is a 4.0
percentage point increase compared to the third quarter
of 2022. The increase was mainly 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 nine months of 2023 amounted to
EUR 760m, equal to a margin of 7.2 percent of revenue
(9M 2022: EUR 280m; 2.9 percent). The increase was
attributable to increased revenue in both segments as
well as improved margins in Power Solutions. In addition,
gross profit in the first nine months of 2023 reflects lower
depreciations and amortisations of offshore assets due to
impairment of the V164/V174 offshore technology and
related assets recognised in 2022.
1
During the third quarter of 2023, costs of EUR 27m were reclassified from
Administration costs to Research and Development costs (EUR 17m), Distribution
Warranty costs
Warranty costs amounted to EUR 262m in the third
quarter of 2023 (Q3 2022: EUR 177m). The warranty cost
is equivalent to a warranty ratio of 6.0 percent of revenue
and on a higher level than last year (Q3 2022: 4.5
percent).
For the first nine months of 2023, warranty costs
amounted to 5.1 percent of revenue, on par with the first
nine months of 2022.
Research and development costs, Distribution
costs and Administration costs
1
Research and development costs recognised in the
income statement amounted to EUR 97m in the third
quarter of 2023, on a higher level compared to last year
(Q3 2022: EUR 85m). The increase was driven by higher
IT and employee costs. For the first nine months of the
year, research and development costs amounted to EUR
271m (9M 2022: EUR 317m). The decrease was mainly
attributable to lower depreciations.
Distribution costs amounted to EUR 117m in the third
quarter of 2023 (Q3 2022: EUR 117m). For the first nine
months of the year, distribution costs amounted to EUR
335m (9M 2022: EUR 339m).
Administration costs amounted to EUR 81m in the third
quarter of 2023. on the same level as last year (Q3 2022:
EUR 86m). For the first nine months of the year
administration costs amounted to EUR 300m (9M 2022:
EUR 262m). The increased costs were mainly driven by
higher employee costs.
Depreciations, amortisations, and impairments
In the third quarter of 2023, overall depreciations,
amortisations, and impairments before special items
amounted to EUR 194m (Q3 2022: EUR 228m). The
decrease was mainly attributable to lower depreciations
in the Offshore business due to the impairment losses
recognised on the V164/V174 offshore technology and
related assets in 2022.
For the first nine months of the year, overall depreciations,
amortisations, and impairments before special items
amounted to EUR 592m (9M 2022: EUR 760m). The
decrease was mainly attributable to impairment losses
recognised on the V164/V174 offshore technology in the
first quarter of 2022 and lower depreciations following the
impairment losses.
Sale of technology
Sale of technology includes consideration received in the
first nine months 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 and controls business.
costs (EUR 4m) and Production cost (EUR 6m). The reclassification was recognised
based on the nature of the costs and consistent with prior years’ classification.
Vestas Wind Systems A/S Page 7 of 30
Interim Financial Report – Third Quarter 2023
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 14m in the third quarter and EUR 39m in the first
nine months of 2023. The income is mainly related to sale
of development projects in the USA.
Operating profit (EBIT) before special items
EBIT before special items amounted to EUR 70m in the
third quarter of 2023, equivalent to an EBIT margin of 1.6
percent (Q3 2022: negative EUR 127m; negative 3.2
percent). The increased margin was mainly driven by
improved profitability in Power Solutions and higher
activity in Service.
For the first nine months of 2023, EBIT before special
items amounted to EUR 40m, equal to an EBIT margin of
0.4 percent (9M 2022: negative EUR 638m; negative 6.6
percent). The improvement was primarily driven by
improved profitability in the Power Solutions segment, the
sale of the converters and controls business and higher
activity in the Service segment. Furthermore, the first
quarter of 2022 was impacted by additional warranty
provision and impairment of offshore technology and
related assets.
Operating profit (EBIT) after special items
In the third quarter of 2023, EBIT after special items
amounted to EUR 69m (Q3 2022: negative EUR 114m).
EBIT after special items in the first nine months of 2023
amounted to EUR 67m, equivalent to an EBIT margin
after special items of 0.6 percent (9M 2022: negative EUR
1,155m; negative 11.9 percent). This reflects special
items income of EUR 27m, mainly related to reversal of
previously recognised write-downs of inventories related
to 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 9m in the third quarter (Q3
2022: income of EUR 8m) and a total loss of EUR 14m in
the first nine months of 2023 (9M 2022: income of EUR
21m). The loss was mainly related to Vestas’ investment
in Copenhagen Infrastructure Partners.
Net financial items
Financial items amounted to a net loss of EUR 32m in the
third quarter of 2023 (Q3 2022: loss of EUR 65m) and a
net loss of EUR 124m for the first nine months of 2023
(9M 2022: loss of EUR 65m). Financial items are primarily
driven by increasing exchange rate losses in high inflated
countries, most significant in South America, as well as a
higher level of interest expenses from increasing financial
debt and interest levels.
Income tax
Income tax amounted to EUR 0 in the third quarter and in
the first nine months of the year (effective tax rate of 0
percent). The effective tax rate in the first nine months of
2022 amounted to 14 percent.
Net result for the period
Net result amounted to EUR 28m in the third quarter of
2023 (Q3 2022: loss of EUR 147m). The net result for the
first nine months of 2023 amounted to a loss of EUR 71m
(9M 2022: loss of EUR 1,031m). The net result in the first
nine months of 2022 was significantly impacted by special
items recognised in the first half 2022 related to Russia’s
invasion of Ukraine as well as adjustments to the
manufacturing footprint in India and China.
Financial ratios
Earnings per share calculated over a 12-month period
amounted to negative EUR 0.6 in the third quarter of 2023
(Q3 2022: negative EUR 1.0). The increase of EUR 0.4
was driven by improved earnings in 2023.
Return on capital employed (ROCE) before special items
calculated over a 12-month period was negative 7.3
percent in the third quarter of 2023 (Q3 2022: negative
8.2 percent), an improvement compared to 2022 driven
by improved earnings.
Return on equity (RoE) calculated over a 12-month period
was negative 19.7 percent in the third quarter of 2023 (Q3
2022: negative 24.8 percent), an increase of 5.1
percentage points, attributable to improved earnings in
2023 compared to last year.
Working capital and free cash flow
Net working capital
Net working capital amounted to a net asset of EUR 291m
as at 30 September 2023. In the third quarter of 2023, net
working capital reflects decreasing contract liabilities
following a high level of execution on projects (30 June
2023: net liability of EUR 171m). The first nine months of
2023 were negatively impacted by build-up of inventories
and decreasing supplier payables (31 December 2022:
net liability of EUR 1,349m).
Cash flow from operating activities
Cash flow from operating activities was negative EUR
31m in the third quarter of 2023 (Q3 2022: negative EUR
614m) and negative EUR 957m in the first nine months of
2023 (9M 2022: negative EUR 1,730m). The improve-
ment compared to third quarter and the first nine months
of 2023 last year was most significantly driven by lower
outflows related to suppliers and subcontractors.
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 220m in
the third quarter of 2023 (Q3 2022: net outflow of EUR
138m) and a net outflow of EUR 515m in the first nine
months of 2023 (9M 2022: net outflow of EUR 505m). The
quarter reflects increased investments in property, plant,
and equipment related to offshore activity. Note that third
quarter 2022 benefitted from proceeds from the disposal
of our Lauchhammer facilities in Germany.
Free cash flow
Free cash flow before acquisition of subsidiaries, joint
ventures, associates, and financial investments
amounted to negative EUR 251m in the third quarter of
Vestas Wind Systems A/S Page 8 of 30
Interim Financial Report – Third Quarter 2023
2023 (Q3 2022: negative EUR 752m) and negative EUR
1,472m in the first nine months of 2023 (9M 2022:
negative EUR 2,235m). 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 September 2023, total equity amounted to EUR
2,981m (30 September 2022: EUR 3,727m). The
decrease compared to third quarter of 2022 was mainly
attributable to the negative net profit in the last quarter of
2022 also causing the solvency ratio to drop 3.9
percentage points to 14.3 percent as at 30 September
2023.
Net interest-bearing debt and cash position
As at 30 September 2023, the net interest-bearing debt
amounted to EUR 1,622m (30 September 2022: EUR
1,195m). This development compared to 2022 was a
result of negative free cash flow.
Cash and cash equivalents amounted to EUR 1,696m as
at 30 September 2023, compared to EUR 1,139m at the
end of the third quarter of 2022.
The ratio net interest-bearing debt/EBITDA calculated
over a 12-month period was 3.6 as at 30 September 2023,
compared to 2.6 at the end of the third quarter of 2022.
The ratio was impacted by an increasing net interest-
bearing 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 lender extension
option. As at 30 September 2023, Vestas had EUR 1.9bn
of undrawn credit facilities.
Vestas Wind Systems A/S Page 9 of 30
Interim Financial Report – Third Quarter 2023
Power Solutions
Result for the period
In the third quarter of 2023, revenue from the Power
Solutions segment amounted to EUR 3,415m (Q3 2022:
EUR 3,096m), which corresponds to a 10.3 percent
increase compared to the third quarter of 2022. The
increase reflects higher average prices and a slight
increase in volume delivered. Revenue for the third
quarter of 2023 included a negative impact of EUR 218m
from foreign exchange rates compared to 2022.
The first nine months of 2023 reflected revenue in the
Power Solutions segment of EUR 7,963m, an increase
of 5.3 percent compared to the same period last year (9M
2022: EUR 7,563m). Deliveries in the period were
slightly lower than the same period last year but at a
higher average price per MW. The first nine months of
the year reflected a negative impact of EUR 353m from
foreign exchange rates compared to 2022.
EBIT before special items amounted to negative EUR
38m in the third quarter of 2023, equal to an EBIT margin
of negative 1.1 percent (Q3 2022: negative EUR 252m;
negative 8.1 percent). The positive development in the
EBIT margin was primarily attributable to improved
project pricing and execution as well as easing of supply
chain disruptions.
Power Solutions revenue and EBIT margin before special
items
mEUR and percentage
In the first nine months of 2023, EBIT before special
items amounted to negative EUR 267m, equal to an
EBIT margin before special items of negative 3.4 percent
(9M 2022: negative EUR 857m, negative 11.3 percent),
an improvement of 7.9 percentage points compared to
same period last year. The positive development in the
EBIT margin was primarily attributable to increased
revenue, improved margins from pricing as well as the
sale of the converters and controls business in the first
quarter of 2023. The same period last year was
furthermore impacted by impairment losses and
warranty provisions recognised in the first quarter of
2022 related to V164/V174 offshore technology.
Wind turbine order intake
In the third quarter of 2023, wind turbine order intake
amounted to 4,502 MW, corresponding to a value of
EUR 4.9bn (Q3 2022: 1,895 MW; EUR 2.0bn). This
represents an increase of 138 percent in MW order
intake compared to the third quarter of 2022. The
increase was mainly driven by two major offshore deals
in Poland and Germany.
The Onshore average price per MW was EUR 1.05m in
the third quarter of 2023, compared to EUR 1.06m in the
third quarter of 2022. The average price per MW
including Offshore was EUR 1.09m in the third quarter of
2023.
Wind turbine order intake, third quarter 2023
MW
EMEA
Ameri-
cas
Asia
Pacific
Total
Onshore order
intake
994
1,370
38
2,402
Offshore order
intake
2,100
-
-
2,100
Total order
intake
3,094
1,370
38
4,502
Wind turbine deliveries
Deliveries to customers amounted to 3,641 MW in the
third quarter of 2023 (Q3 2022: 3,569 MW). Offshore
deliveries decreased from 382 MW in the third quarter of
2022 to 254 MW in the third quarter of 2023.
Deliveries
MW
By the end of September 2023, Vestas had installed a
total capacity of 173 GW in 88 countries.
Vestas Wind Systems A/S Page 10 of 30
Interim Financial Report – Third Quarter 2023
Deliveries (onshore and offshore)
MW
Q3
2023
Q3
2022
FY
2022
Germany
420
145
818
Finland
362
257
1,185
United Kingdom
188
283
790
France
126
219
1,002
Sweden
109
214
480
Italy
104
49
256
Austria
72
56
213
Netherlands
62
224
578
Denmark
40
59
95
Estonia
38
-
-
Ireland
34
87
178
Poland
32
146
957
Lithuania
24
-
-
Spain
22
1
156
South Africa
19
-
4
Portugal
18
14
46
United Arab Emirates
12
-
-
Egypt
11
22
82
Greece
10
73
215
Turkey
9
24
89
Belgium
-
4
123
Faroe Islands
-
17
14
Latvia
-
-
59
Russian Fed.
-
-
13
Ukraine
-
-
114
EMEA
1,712
1,894
7,467
o/w Offshore
27
279
700
USA
750
619
2,275
Brazil
381
331
1,528
Canada
164
242
325
Argentina
132
-
80
Mexico
1
-
7
Dominican Rep.
-
-
29
Puerto Rico
-
-
6
Chile
(1)
*)
23
128
Colombia
(2)
*)
28
142
Americas
1,425
1,243
4,520
o/w Offshore
-
-
-
Taiwan
245
60
126
Australia
183
104
376
New Zealand
41
3
22
China
13
35
54
Philippines
13
-
-
Japan
3
134
399
India
3
7
162
Vietnam
3
80
179
South Korea
-
9
23
Asia Pacific
504
432
1,341
o/w Offshore
227
103
188
Total
3,641
3,569
13,328
o/w Offshore
254
382
888
*) The negative figures reflect adjustments related to projects for which deliveries
are counted according to the percentage-of-completion method.
Wind turbine order backlog
At the end of the third quarter of 2023, the wind turbine
order backlog amounted to 20,966 MW, which
corresponds to a value of EUR 21.6bn, of which EUR
4.6bn relates to offshore wind power projects.
Order backlog per region
MW
EMEA
Ameri-
cas
Asia
Pacific
Total
Onshore order
backlog
7,202
8,012
2,072
17,286
Offshore order
backlog
2,656
-
1,024
3,680
Total backlog as at
30 September
2023
9,858
8,012
3,096
20,966
Europe, Middle East, and Africa (EMEA)
The total order backlog for Europe, Middle East, and
Africa increased 5.5 percent from the end of the third
quarter of 2022 to 9,858 MW at the end of the third
quarter 2023. The order backlog was positively impacted
by significant offshore order intake in third quarter 2023.
Americas
The total order backlog for Americas at the end of the
third quarter 2023 of 8,012 MW corresponds to an
increase of 14.0 percent compared to the end of third
quarter 2022. The increase was largely driven by high
order intake in the USA and Brazil during 2023.
Asia Pacific
The total order backlog for Asia Pacific amounted to
3,096 MW at the end of the third quarter 2023, an
increase of 6.4 percent from the end of third quarter
2022.
Development business
In the third quarter of 2023, Vestas’ pipeline of
development projects amounted to 29.9 GW with
Australia, the USA, and Brazil being the countries with
the largest project pipeline. During the quarter, Vestas
secured 1.2 GW of new pipeline projects, mainly coming
from South Korea.
Vestas Wind Systems A/S Page 11 of 30
Interim Financial Report – Third Quarter 2023
Service
Result for the period
The Service segment generated revenue of EUR 938m
in the third quarter of 2023 (Q3 2022: EUR 817m), which
corresponds to a 14.8 percent increase compared to the
third quarter of 2022. The quarter was positively
impacted by higher contract activity in primarily Northern
Europe and Americas as well as indexation adjustment
of the contracts. Transactional sales were slightly down
compared to the third quarter of 2022. Foreign exchange
rates had a EUR 64m negative effect on revenue growth.
In the first nine months of 2023, revenue from the
Service business amounted to EUR 2,648m (9M 2022:
EUR 2,140m), a 23.7 percent increase compared to the
first nine months of 2022, primarily driven by the same
factors impacting the quarter. Foreign exchange rates
had a EUR 116m negative effect on revenue growth.
Service revenue and EBIT margin before special items
mEUR and percentage
EBIT before special items amounted to EUR 197m in
the third quarter of 2023, corresponding to an EBIT
margin of 21.0 percent (Q3 2022: EUR 200m; 24.5
percent), which is a 3.5 percentage point decrease
compared to the high margin in the same period last
year.
In the first nine months of 2023, EBIT before special
items amounted to EUR 578m with an EBIT margin of
21.8 percent (9M 2022: EUR 451m; 21.1 percent), a 0.7
percentage point increase compared to the first nine
months of 2022. The positive development compared
to the first half of 2022 was mainly attributable to higher
contract activity and impairment loss recognised in the
first quarter of 2022, in addition to lower profitability on
certain contracts impacting the second quarter of 2022.
Wind turbines under service
At the end of September 2023, Vestas had
approximately 57,100 wind turbines under service,
equivalent to 151 GW, a 7.1 percent increase compared
to 141 GW end of September 2022.
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 September 2023, the overall average Lost
Production Factor continued to be impacted by the level
of extraordinary repairs and upgrades.
Service order backlog
At the end of September 2023, Vestas had service
contracts in the order backlog with expected
contractual future revenue of EUR 32.4bn, which is an
increase of 8.4 percent compared to end of the period
last year (30 September 2022: EUR 29.9bn).
Service order backlog
bnEUR
At the end of the quarter, the average duration of the
service order backlog was eleven years (30 September
2022: ten years average duration).
Vestas Wind Systems A/S Page 12 of 30
Interim Financial Report – Third 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, and
with a 45 percent reduction in our supply chain CO
2
e
intensity; 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 third quarter of
2023 are expected to avoid 85 million tonnes of CO
2
e
over the course of their lifetime, an increase of 6 percent
from the third quarter of 2022 due to a higher volume of
MW produced and shipped in the period.
In the third quarter of 2023, our total scope 1 and 2
emissions were stable compared to the third quarter of
2022. Within the first nine months of 2023, there has
been an 8 percent increase compared to the first nine
months of 2022, primarily driven by higher activity levels
in construction and service fuel usage.
Scope 3 emissions are reported annually in the
Sustainability Report.
Circularity
In the third quarter of 2023, our material efficiency rate
decreased to 1.4 tonnes of waste per MW produced and
shipped, compared to 1.1 in third quarter 2022. However,
year-to-date, our material efficiency has overall seen a
45 percent improvement to 1.1, compared to 1.6 in the
same period in 2022.
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 1 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.
In the third quarter of 2023, 56 Total Recordable Injuries
were registered, an increase from 50 Total Recordable
Injuries in third quarter 2022. This increase comes
primarily from an increase in safety incidents during
construction activities, primarily involving contractors
working under our operational control.
Incidence of total recordable injuries*
Per million working hours
*) Up until 14 December 2020, when Vestas acquired MHI Vestas Offshore Wind A/S,
numbers reflect Onshore only.
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 – Third 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 – Third Quarter 2023
Outlook 2023
Based on our results for the first nine months, we remain
on track to become profitable in 2023 and are narrowing
our guidance for the full year.
Revenue is now expected to range between EUR 14.5bn
and 15.5bn, (previously EUR 14.0-15.5bn) with Service
revenue still expected to grow around 10 percent.
The outlook for EBIT margin before special items is
narrowed to 0-2 percent (previously (2)-3 percent), with
the Service EBIT margin now expected to be approx. 21
percent (previously approx. 22 percent).
At the same time, the outlook for total investments
1)
is
adjusted to approx. EUR 0.8bn (previously approx. EUR
1bn).
The outlook for 2023 includes the impact of the sale of
Vestas’ converters and controls business finalised in the
first quarter of 2023 with an expected impact on EBIT
before special items of EUR 147m.
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
Outlook
Previous
outlook
Revenue (bnEUR)
14.5-15.5
14.0-15.5
EBIT margin (%) b. s. i.
0-2
(2)-3
Total investments
1)
(bnEUR)
approx. 0.8
approx. 1
1) Excl. acquisitions of subsidiaries, joint ventures, associates, as well as financial
investments.
Financial calendar 2024
07.02.2024
Disclosure of the Annual Report 2023
26.02.2024
Deadline for the company’s shareholders to submit
a written request to the Board of Directors that a
specific matter be included in the agenda for the
Annual General Meeting
08.03.2024
Convening for Annual General Meeting
09.04.2024
Annual General Meeting in Aarhus, Denmark
02.05.2024
Disclosure of the Interim financial report, Q1 2024
14.08.2024
Disclosure of the Interim financial report, Q2 2024
05.11.2024
Disclosure of the Interim financial report, Q3 2024
The financial calendar lists the expected dates of
disclosure of financial results and the Annual General
Meeting in the financial year 2024 for Vestas Wind
Systems A/S.
Vestas Wind Systems A/S Page 15 of 30
Interim Financial Report – Third Quarter 2023
Consolidated financial statements 1 January – 30 September
Condensed income statement 1 January – 30 September
mEUR
Note
Q3
2023
Q3
1)
2022
9M
2023
9M
2022
Revenue
1.1, 1.2
Production costs
(4,002 )
(3,752 )
(9,851 )
(9,423 )
Gross profit
Research and development costs
(97 )
(85 )
(271 )
(317 )
Distribution costs
(117 )
(117 )
(335 )
(339 )
Administration costs
(81 )
(86 )
(300 )
(262 )
Sale of technology
1.3
Income from investments in joint ventures and associates
Operating profit/(loss) (EBIT) before special items
1.1
(127 )
(638 )
Special items
1.4
(1 )
(517 )
Operating profit/(loss) (EBIT)
(114 )
(1,155 )
Income from investments in joint ventures and associates
(9 )
(14 )
Net financial items
(32 )
(65 )
(124 )
(65 )
Profit/(loss) before tax
(171 )
(71 )
(1,199 )
Income tax
Profit/(loss) for the period
(147 )
(71 )
(1,031 )
Profit/(loss) is attributable to:
Owners of Vestas
(147 )
(71 )
(1,031 )
Non-controlling interests
(1 )
Earnings per share (EPS)
Earnings per share for the period (EUR), basic
(0.15 )
(0.07 )
(1.03 )
Earnings per share for the period (EUR), diluted
(0.15 )
(0.07 )
(1.02 )
Condensed statement of comprehensive income 1 January – 30 September
mEUR
Q3
2023
Q3
)
2022
9M
2023
9M
2022
Profit/(loss) for the period
(147 )
(71 )
(1,031 )
Items that may be reclassified to the income statement subsequently:
Exchange rate adjustments relating to foreign entities
(36 )
Fair value adjustments of derivative financial instruments for the period
Gain/(loss) on derivative financial instruments transferred to the income statement
(19 )
(29 )
(105 )
(39 )
Share of fair value adjustments of derivative financial instruments of joint ventures
and associates
Tax on items that may be reclassified to the income statement subsequently
(14 )
(27 )
(10 )
(0 )
Other comprehensive income after tax for the period
(7 )
Total comprehensive income for the period
(78 )
(857 )
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 – Third Quarter 2023
Condensed balance sheet – Assets
mEUR
Note
30 September
2023
30 September
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 – Third Quarter 2023
Condensed balance sheet – Equity and liabilities
mEUR
Note
30 September
2023
30 September
2022
31 December
)
2022
Share capital
3.1
Other reserves
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 – Third Quarter 2023
Condensed statement of changes in equity – nine 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
(72 )
(71 )
Other comprehensive income for the period
(34 )
(5 )
(2 )
(7 )
Total comprehensive income for the period
(34 )
(5 )
(72 )
(1 )
(78 )
Transfer of cash flow hedge reserve to the initial
carrying amount of hedged items
(4 )
(4 )
(4 )
Transactions with owners:
Acquisition of treasury shares
(11 )
-
(11 )
Share-based payments
-
Tax on equity transactions
(3 )
(3 )
Total transactions with owners
Equity as at 30 September 2023
(24 )
Condensed statement of changes in equity – nine 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
(1,031 )
(1,031 )
Other comprehensive income for the period
Total comprehensive income for the period
(1,031 )
(857 )
Transfer of cash flow hedge reserve to the
initial carrying amount of hedged items
(45 )
(45 )
(45 )
Transactions with owners:
Dividends distributed
(50 )
(50 )
Dividends distributed related to treasury
shares
(0 )
(0 )
Share-based payments
Tax on equity transactions
(4 )
(4 )
Total transactions with owners
(51 )
(51 )
Equity as at 30 September 2022
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 – Third Quarter 2023
Condensed cash flow statement 1 January – 30 September
mEUR
Note
Q3
2023
Q3
2022
9M
2023
9M
2022
Profit/(loss) for the period
(147 )
(71 )
(1,031 )
Adjustment for non-cash transactions
Interest paid / received, net
(7 )
(8 )
(1 )
Income tax paid
(34 )
(30 )
(87 )
(120 )
Cash flow from operating activities before change in net working
capital
(328 )
Change in net working capital
(368 )
(695 )
(1,679 )
(1,402 )
Cash flow from operating activities
(31 )
(614 )
(957 )
(1,730 )
Purchase of intangible assets
(103 )
(105 )
(291 )
(297 )
Purchase of property, plant and equipment
(124 )
(85 )
(295 )
(267 )
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
(220 )
(138 )
(515 )
(505 )
Free cash flow before acquisitions of subsidiaries, joint ventures,
associates and financial investments
(251 )
(752 )
(1,472 )
(2,235 )
Purchase of shares in joint ventures and associates
(4 )
(9 )
(10 )
(31 )
Purchase of other non-current financial assets
(5 )
Disposal of other non-current financial assets
Disposal of investments in joint ventures and associates
Purchase of financial investments
(4 )
(4 )
Disposal of financial investments
Net cash flow from deconsolidation of subsidiary
(8 )
Cash flow from investing activities
(208 )
(30 )
(477 )
(418 )
Free cash flow
(239 )
(644 )
(1,434 )
(2,148 )
Dividend paid
(50 )
Payment of lease liabilities
(50 )
(35 )
(126 )
(111 )
Proceeds from borrowings
Payment of financial debt
(27 )
(58 )
(177 )
(672 )
Acquisition of treasury shares
(11 )
Cash flow from financing activities
Net change in cash and cash equivalents
(209 )
(650 )
(1,309 )
Cash and cash equivalents at the beginning of period
Exchange rate adjustments of cash and cash equivalents
(3 )
(2 )
(32 )
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 – Third Quarter 2023
Notes
1 Result for the period
1.1 Segment information
In the third quarter of 2022, an income of EUR 13m was recognised in special items impacting the Power Solutions
segment. The income relates to a reversal of previously recognised impairment losses of EUR 14m relating to the
production facility on Isle of Wight and adjustments to the write-downs and provisions relating to the Russian invasion of
Ukraine of EUR 9m, offset by adjustments to the impairment related to the manufacturing footprint in China of EUR 10m.
mEUR
Power
Solutions
Service
Not
allocated
Total Group
Q3 2023
Revenue
3,415
938
-
4,353
Income from investments in joint ventures and associates
14
-
-
14
Total income
3,429
938
-
4,367
Total costs
(3,467)
(741)
(89)
(4,297)
Operating profit/(loss) (EBIT) before special items
(38)
197
(89)
70
Special items
(1)
-
-
(1)
Operating profit/(loss) (EBIT)
(39)
197
(89)
69
Income from investments in joint ventures and associates
(9)
Net financial items
(32)
Profit/(loss) before tax
28
Amortisation and depreciation included in total costs
(147)
(37)
(10)
(194)
mEUR
Power
Solutions
Service
Not allocated
Total
Group
Q3 2022
Revenue
3,096
817
-
3,913
Income from investments in joint ventures and associates
-
-
-
-
Total income
3,096
817
-
3,913
Total costs
(3,348)
(617)
(75)
(4,040)
Operating profit/(loss) (EBIT) before special items
(252)
200
(75)
(127)
Special items
13
-
-
13
Operating profit/(loss) (EBIT)
(239)
200
(75)
(114)
Income from investments in joint ventures and associates
8
Net financial items
(65)
Profit/(loss) before tax
(171)
Amortisation and depreciation included in total costs
(185)
(31)
(12)
(228)
Vestas Wind Systems A/S Page 21 of 30
Interim Financial Report – Third Quarter 2023
1.1 Segment information (continued)
In the first nine months of 2023, a net income of EUR 27m 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 nine months 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 nine months of 2022, impairment losses, write-downs and other costs of EUR 517m 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
9M 2023
Revenue
7,963
2,648
-
10,611
Sales of technology
147
-
-
147
Income from investments in joint ventures and associates
39
-
-
39
Total income
8,149
2,648
-
10,797
Total costs
(8,416)
(2,070)
(271)
(10,757)
Operating profit/(loss) (EBIT) before special items
(267)
578
(271)
40
Special items
27
-
-
27
Operating profit/(loss) (EBIT)
(240)
578
(271)
67
Income from investments in joint ventures and associates
(14)
Net financial items
(124)
Profit/(loss) before tax
(71)
Amortisation and depreciation included in total costs
(450)
(110)
(32)
(592)
mEUR
Power
Solutions
Service
Not allocated
Total
Group
9M 2022
Revenue
7,563
2,140
-
9,703
Sales of technology
-
-
-
-
Income from investments in joint ventures and associates
-
-
-
-
Total income
7,563
2,140
-
9,703
Total costs
(8,420)
(1,689)
(232)
(10,341)
Operating profit/(loss) (EBIT) before special items
(857)
451
(232)
(638)
Special items
(517)
-
-
(517)
Operating profit/(loss) (EBIT)
(1,374)
451
(232)
(1,155)
Income from investments in joint ventures and associates
21
Net financial items
(65)
Profit/(loss) before tax
(1,199)
Amortisation and depreciation included in total costs
(624)
(100)
(36)
(760)
Vestas Wind Systems A/S Page 22 of 30
Interim Financial Report – Third 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
Q3
2023
Q23
2022
Q3
2023
Q3
2022
Q3
2023
Q3
2022
Timing of revenue recognition
Products and services transferred at a point in time
2,515
1,996
121
132
2,636
2,128
Products and services transferred over time
900
1,100
817
685
1,717
1,785
3,415
3,096
938
817
4,353
3,913
Revenue from contract types
Supply-only
780
910
-
-
780
910
Supply-and-installation (at a point in time)
1,735
1,086
-
-
1,735
1,086
Supply-and-installation (over time)
694
916
-
-
694
916
Turnkey (EPC)
206
184
-
-
206
184
Service
-
-
938
817
938
817
3,415
3,096
938
817
4,353
3,913
Primary geographical markets
EMEA
1,554
1,562
516
435
2,070
1,997
Americas
1,313
1,079
345
306
1,658
1,385
Asia Pacific
548
455
77
76
625
531
3,415
3,096
938
817
4,353
3,913
Vestas Wind Systems A/S Page 23 of 30
Interim Financial Report – Third Quarter 2023
1.2 Revenue (continued)
mEUR Power Solutions Service Total
9M
2023
9M
2022
9M
2023
9M
2022
9M
2023
9M
2022
Timing of revenue recognition
Products and services transferred at a point in time
5,304
4,714
332
322
5,636
5,036
Products and services transferred over time
2,659
2,849
2,316
1,818
4,975
4,667
7,963
7,563
2,648
2,140
10,611
9,703
Revenue from contract types
Supply-only
1,430
1,732
-
-
1,430
1,732
Supply-and-installation (at a point in time)
3,874
2,982
-
-
3,874
2,982
Supply-and-installation (over time)
2,142
2,084
-
-
2,142
2,084
Turnkey (EPC)
517
765
-
-
517
765
Service
-
-
2,648
2,140
2,648
2,140
7,963
7,563
2,648
2,140
10,611
9,703
Primary geographical markets
EMEA
4,098
4,115
1,403
1,104
5,501
5,219
Americas
2,751
2,423
1,023
828
3,774
3,251
Asia Pacific
1,114
1,025
222
208
1,336
1,233
7,963
7,563
2,648
2,140
10,611
9,703
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 nine months of 2023, a net expense of EUR 5m 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 nine months 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 34m
and of a previously recognised impairment loss on tangible assets of EUR 4m, partly offset by other costs of EUR 6m.
Vestas Wind Systems A/S Page 24 of 30
Interim Financial Report – Third Quarter 2023
1.4 Special items (continued)
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.
mEUR
30 September
2023
30 September
2022
31 December
2022
Write-down of inventory
30
(298)
(260)
Provisions
(1)
(117)
(87)
Impairment loss on intangible and tangible assets
4
(78)
(69)
Other costs
(7)
(21)
(23)
Staff costs
(1)
(3)
(5)
Derecognition of net assets in Russia
2
-
-
Special items
27
(517)
(444)
2 Other operating assets and liabilities
2.1 Property, plant and equipment
In the first nine months of 2023, Vestas acquired assets with a cost of EUR 295m mainly related to manufacturing blade
moulds, acquisition of land, transport equipment, and construction tools, compared to EUR 267m in the first nine months
of 2022.
Lease contracts recognised as right-of-use assets during the first nine months of 2023 amounted to EUR 212m, compared
to EUR 101m in the first nine months 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 September
2023
30 September
2022
31 December
2022
Warranty provisions, 1 January
1,490
1,197
1,197
Provisions for the period
564
509
926
Warranty provisions consumed during the period
(366)
(471)
(633)
Warranty provisions
1,688
1,235
1,490
The provisions are expected to be payable as follows:
< 1 year
692
515
725
> 1 year
996
720
765
1,688
1,235
1,490
During the first nine months of 2023, net warranty provisions charged to the income statement amounted to EUR 546m
(EUR 262m in the third quarter of 2023), equivalent to 5.1 percent of revenue. The net amount consists of a gross warranty
provision of EUR 564m less supplier claims of EUR 18m. Warranty consumption amounted to EUR 366m compared to
EUR 471m in the first nine months 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 – Third 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 September
2023
30 September
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 September
2023
30 September
2022
31 December
2022
Cash and cash equivalents without disposal restrictions
1,666
1,113
2,352
Cash and cash equivalents with disposal restrictions
30
26
26
Cash and cash equivalents
1,696
1,139
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 2023, 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 September
2023, EUR 771m of the committed credit facilities was converted into ancillary bank guarantee issuance facilities and EUR
500m was drawn under the committed credit facilities, leaving EUR 1,954m available for cash drawing.
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 September 2023, the fair value of financial investments comprising marketable securities amounted
to EUR 96m, equal to book value.
Derivative financial instruments were positive with a market value of net EUR 97m, equal to book value, and were
recognised in other receivables and other liabilities with EUR 527m and EUR 430m, respectively.
As at 30 September 2023, the carrying amount of the sustainability-linked bonds issued by Vestas amounted to EUR
1,489m and the fair value amounted to EUR 1,329m.
Vestas Wind Systems A/S Page 26 of 30
Interim Financial Report – Third Quarter 2023
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
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
Q3
2023
Q3
2022
9M
2023
9M
2022
Joint ventures
Revenue for the period
30
8
157
91
Proceeds from investments in joint ventures
7
2
12
2
Capital increase
1
1
5
21
Trade receivables as at 30 September
20
29
20
29
Other assets as at 30 September
11
51
11
51
Other liabilities as at 30 September
-
2
-
2
Associates
Revenue for the period
-
(2)
2
(7)
Proceeds from investments in associates
0
6
1
10
Capital increase
-
3
2
4
Contract assets as at 30 September
-
59
-
59
Other assets as at 30 September
26
-
26
-
Contract liabilities as at 30 September
5
-
5
-
Payable capital contribution as at 30 September
8
40
8
40
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
September 2023, which could have a significant impact on the report.
Vestas Wind Systems A/S Page 27 of 30
Interim Financial Report – Third 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 Financial Report – Third Quarter 2023
Executive Management
Board of Directors
)
)
)
)
*) Employee representative
Vestas Wind Systems A/S Page 29 of 30
Interim Financial Report – Third 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.