Full year 2014 - Vestas/media/vestas/investor... · 2014 total MW order intake up by 10 per cent – totalling 6,544 MW Americas MW Europe and Africa MW ... Q4 2013. • USA, Kenya,

Full year 2014

Vestas Wind Systems A/S

Copenhagen, 11 February 2015

This presentation 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. There are a number of factors that could affect Vestas' future operations and could cause

Vestas' results to differ materially from those expressed in the forward-looking statements included in this

presentation, including (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; (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 from suppliers and vendors; and (m) customer readiness and

ability to accept delivery and installation of products and transfer of risk.

All forward-looking statements contained in this presentation 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 2014 (available at vestas.com/investor) and these factors also should be considered. Each

forward-looking statement speaks only as of the date of this presentation. Vestas does not undertake any

obligation to publicly update or revise any forward-looking statement as a result of new information or future

events others than 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 presentation.

Disclaimer and cautionary statement

│ Full year 2014 2

Key highlights Significant improvement in earnings. Board of Directors recommends dividend pay-out.

Earnings improved significantly EBIT margin before special items at 8.1 per cent – up 4.6 percentage points

compared to 2013.

Combined order backlog increased Wind turbine and service order backlog of EUR 13.7bn combined.

Return on Invested Capital (ROIC) increased to 35 per cent (TTM) ROIC increased by more than 27 percentage points in 2014.

Solid results on all key financial and operational parameters One year on, Profitable Growth for Vestas strategy well on track.

Recommendation of dividend pay-out for the first time since 2002 Board of Directors recommend dividend pay-out to Vestas shareholders based on

improved earnings and strong net cash position.


Agenda

1. Orders and markets

2. Financials

3. Profitable Growth for Vestas – status and update

4. Summary, outlook and questions & answers

Annual report,

2014.

FY


Market development – order intake 2014 total MW order intake up by 10 per cent – totalling 6,544 MW

Americas

MW

Europe and Africa

MW

Asia Pacific

MW

• FY 2014 primarily driven by

strong USA. Lower activity

mainly in Canada and Mexico.

• Q4 2014 lower primarily due to

USA more than offsetting

positives in Chile and

Dominican Republic.

• FY 2014 general improvement in

Europe partly offset by a few

single countries and offshore.

Africa was more or less flat.

• Q4 2014 mainly driven by Lake

Turkana and Poland. Lower

activity primarily in Romania.


no activity in Australia partly

offset by improvements in

South Korea and China.

• Q4 2014 overall slow quarter.

Impact from single project,

positive growth in China.

573888

376724

+16%

-49% -34%

1,043

104 202

+37%

Q4

1,426

3,070

FY Q4 FY

2,607

3,560

2,321 -18%

FY

+12%

Q4

2013 2014


Market development – deliveries 2014 total deliveries up by 29 per cent in terms of MW – totalling 6,252 MW

Americas

MW

Europe and Africa

MW

Asia Pacific

MW


strong rebound in USA – up

by more than 1.4 GW.

• Q4 2014 mainly driven by 655

MW increase in US

deliveries.

• FY 2014 overall good

development in Europe and

Africa, representing a wide

range of different countries.

• Q4 2014 down mainly due to

lower deliveries in Romania

and offshore.

• FY 2014 impacted by lower

deliveries in Australia and

China. Strong performance in

the Philippines.

• Q4 2014 driven by the new

markets Philippines and

South Korea.

925544682

362 294

+104%

+156%

+92%

144

+14%

3,385 -18%

Q4 Q4

-20%

1,218 1,484

FY

2,971

FY Q4 FY

1,209

2,323

2014 2013


Wind turbine order intake Order intake increased by 122 MW in Q4 2014. Average selling price remains fairly stable.

Order intake

MW

Average selling price of order intake

mEUR per MW

• Q4 2014 order intake was 122 MW higher than in

Q4 2013.

• USA, Kenya, Poland and Germany were the main

contributors to order intake in Q4 2014,

accounting for almost 60 per cent.

Key takes:

• Price per MW remains fairly stable.

• Price per MW depends on a variety of factors,

i.e. wind turbine type, geography, scope and

uniqueness of offering.

Key takes:

Q1

2014

Q4

2014

1,170

2,254

Q2

2014

1,188

1,932

2,132

+122 MW

Q3

2014

Q4

2013

0.87

Q4

2014

0.91

Q3

2014

0.87

Q2

2014

0.88

Q4

2013

0.89

Q1

2014


US market order intake Visibility of potential deliveries to the US market for 2016 improved with the late 2014 PTC

renewal

2014 2015 2016 2017

~2.2 GW

order intake

~1.6 GW

under MSAs

~0.6 GW

outside MSAs

+

=

Up to approx. 3 GW potential under MSAs

based on 2013 and 2014 MSAs combined.

Potential of orders outside MSAs

e.g. 298 MW Kingfisher in Q1 2015.


Backlog: Wind turbines and service Combined backlog increased to EUR 13.7bn. Wind turbines remained unchanged from Q3 2014,

whereas service increased to EUR 7.0bn.

Wind turbines:

EUR

6.7bn

Service:

EUR

7.0bn

Unchanged* EUR +0.3bn*

* Compared to Q3 2014.


Offshore status Mitsubishi Vestas Offshore Wind off to a strong start in 2014

JV off to a strong start

• Successful organisational and operational merge

of MHI and Vestas teams following closing in April.

• JV well received by the customers:

- Continued interest in the 3 MW platform.

- Signing of first commercial V164 order with

DONG for 258 MW Burbo Bank Extension.

• Setting up supply chain and facilities:

- Nacelles assembly at Lindoe, Denmark.

- Blade manufacturing at leased Vestas facility at

Isle of Wight, UK.

Operational performance as expected

• Milestone payments from MHI into the JV

progressing as planned.

• V164 prototype turbine performing well:

- Strong technical performance.

- Positive reception in market.

• Operating results for the year as expected and in

line with business plan.

Source: BNEF: Offshore Wind O&M Strategies, Dec. 2014.

Annual European offshore wind power installations, 2007-2025

GW

Move towards larger-scale wind turbines in

growing offshore market.

0

5

2

4

3

1

6

2023

2021

2019

2022

2014

2013

2024

2018

2017

2012

2011

2010

2009

2025

2020

2008

2007

2015

2016

2-5 MW WTG 7-10 MW WTG 5-8 MW WTG


Agenda


2. Financials



Annual report,

2014.

FY


Income statement – full year Earnings more than doubled in 2014. Highest profit since 2008.

*R&D, administration and distribution

mEUR FY 2014 FY 2013 %

change

Revenue 6,910 6,084 14%

Cost of sales (5,732) (5,188) 10%

Gross profit 1,178 896 31%

Fixed costs* (619) (685) (10)%

EBIT before special items 559 211 165%

Special items 48 (109) -

EBIT after special items 607 102 -

Income from investments account for

using the equity method (31) - -

Net profit/(loss) 392 (82) -

Gross margin 17.0% 14.7% 2.3%-pts

EBITDA margin before special items 13.4% 10.0% 3.4%-pts

EBIT margin before special items 8.1% 3.5 % 4.6%-pts

Key takes:

• Gross profit up by 31 per cent

driven by higher volumes as well as

better average margins.

• EBIT before special items more than

doubled primarily due to improved

gross profit and lower fixed capacity

costs and lower D&A.

• EBIT margin before special items at

8.1 per cent – up from 3.5 per cent

in 2013.

• From net loss to net profit – up by

EUR 474m compared to 2013.

• Bonus provision of EUR 82m.


Income statement – Q4 Q4 2014 revenues and EBIT both increased by 5 per cent

*R&D, administration and distribution

mEUR Q4 2014 Q4 2013 %

change

Revenue 2,473 2,361 5%

Cost of sales (2,057) (1,905) 8%

Gross profit 416 456 (9)%

Fixed costs* (164) (216) (24)%

EBIT before special items 252 240 5%

Special items 19 (10) -

EBIT after special items 271 230 18%

Income from investments account for

using the equity method (5) - -

Net profit/(loss) 194 218 (11)%

Gross margin 16.8% 19.3% (2.5)%-pts

EBITDA margin before special items 13.9% 14.3% (0.4)%-pts

EBIT margin before special items 10.2% 10.2% -

Key takes:

• EBIT before special items increased

by 5 per cent driven by markedly

lower fixed capacity costs in Q4

2014 compared to the fourth quarter

of 2013.

• EBIT margin before special items at

10.2 per cent – on a par with 2013.

• Gross profit impacted mainly by a

less favourable project mix in Q4

2014 and to a lesser extent a

relative effect of the unusually

favourable execution in Q4 2013.

• Net profit down by EUR 24m.


Service Onshore service revenue increased by 7 per cent in 2014

Service revenue (onshore and offshore)

mEUR

889825

659596

949+12%

Key takes:

Onshore

* Including offshore in 2013 and 2014-Q1 (prior to closing of the offshore JV), service revenue increased by 1 per cent.

276146 65

15

FY

2013

FY

2014

FY

2012

FY

2010

FY

2011

Offshore

• Onshore service revenue increased

by approx 7 per cent* in 2014.

• 2014 EBIT before allocation of

Group costs: EUR 238m.

Margin: 24.7 per cent.

• Renewal rate of expiring service

contracts: 72 per cent in 2014.

Note: the renewal rate in a single

quarter or year is not necessarily

representative for the entire portfolio

of service contracts.

• Service order backlog growth of

EUR 300m compared to Q3 2014.


Balance sheet Cash position improved and continued to be strong in 2014

Key takes: Assets (mEUR) FY 2014 FY 2013 Abs.

change

%

change

Non-current assets 2,198 2,152 46 2%

Current assets 4,696 3,156 1,540 49%

Current and non-current assets

held for sale 103 332 229 (69)%

Total assets 6,997 5,640 1,357 24%

Key figures (mEUR) FY 2014 FY 2013 Abs.

change

%

change

Net debt (1,411) (86) 1,325 -

Net working capital (957) (596) 361 -

Solvency ratio (%) 34.0 27.0 - 7.0%-pts

Liabilities (mEUR) FY 2014 FY 2013 Abs.

change

%

change

Equity 2,379 1,524 855 56%

Non-current liabilities 261 827 566 (68)%

Current liabilities 4,357 3,046 1,311 43%

Total equity and liabilities 6,997 5,640 1,357 24%

• Net cash position improved by EUR

1,325m.

• Positive net working capital

development of EUR 361m.

• Solvency ratio increased to 34 per

cent – up by 7 percentage points

compared to 2013. Mainly driven by

improved earnings and the capital

increase in February 2014.


Change in net working capital 2014 positive development in working capital primarily due to prepayments

NWC change over the last 12 months

mEUR

NWC change over the last 3 months

mEUR

Pre-

payments

NWC

end

2013

(596) (380)

14 57

Receiv-

ables

57

Inventories CCP*

(957)

Payables NWC

end

2014

(96)

(13)

Other

liabilities

Pre-

payments

NWC

end

Q4 2014

(586)

(170)

Inventories NWC

end

Q3 2014

Other

liabilities

(344)

(957) (40)

(218)

(57)

CCP* Payables

458

Receiv-

ables

• Positive development primarily driven by higher

prepayments and payables mainly offset by

higher receivables and CCP.

Key takes:

• Quarterly improvement of EUR 613m primarily

driven by lower inventories, higher

prepayments and lower receivables slightly

offset by lower payables.

Key takes:

* Construction contracts in progress.


Warranty provisions and Lost Production Factor Warranty consumption and LPF continue at a low level

Warranty provisions made and consumed

mEUR

Lost Production Factor (LPF)

Per cent

117

148148

194

122

84

119

179

253

108

FY

2014

FY

2011

FY

2013

FY

2012

FY

2010

-19%

Provisions consumed Provisions made

0

1

2

3

4

5

6

Dec

2009

Dec

2010

Dec

2013

Dec

2011

Dec

2012

Dec

2014

• Warranty consumption constitutes approx 1.6 per

cent of revenue over the last 12 months.

• Warranty provisions made correlates with

revenue in the quarter.

Key takes:

• LPF continues at a low level below 2.0.

• LPF measures potential energy production not

captured by the wind turbines.

Key takes:


Cash flow statement – full year Earnings cascade into free cash flow of EUR 841m – in line with revised guidance

Key takes: mEUR FY 2014 FY 2013 Abs.

change

Cash flow from operating activities before

change in working capital 866 419 447

Change in net working capital 260 829 569

Cash flow from operating activities 1,126 1,248 122

Cash flow from investing activities (285) (239) 46

Free cash flow 841 1,009 168

Cash flow from financing activities 389 (1,150) 1,539

Change in cash at bank and in hand less

current portion of bank debt 1,230 (141) 1,371

• Free cash flow of EUR 841m

primarily driven by earnings and

change in net working capital.

• Compared to 2013, improvement in

earnings more than offset by less

favourable change in net working

capital and higher cash outflow from

investing activities.

• Cash flow from financing activities

improved by approx EUR 1.5bn due

to no repayment of financial debts in

2014 and the capital increase

conducted in February 2014.


Note: Change in net working capital in 2014 impacted by non-cash adjustments and exchange rates adjustments with a total amount of EUR 101m.

Cash flow statement – Q4 Free cash flow of EUR 781m

Key takes: mEUR Q4 2014 Q4 2013 Abs.

change

Cash flow from operating activities before

change in working capital 501 428 73

Change in net working capital 378 478 100

Cash flow from operating activities 879 906 27

Cash flow from investing activities (98) (90) 8

Free cash flow 781 816 35

Cash flow from financing activities (7) (493) 486

Change in cash at bank and in hand less

current portion of bank debt 774 323 451

• Free cash flow of EUR 781m

primarily driven by earnings and net

working capital improvements.

• Cash flow from financing activities

improved by almost EUR 500m due

to no repayment of financial debts in

Q4 2014 as a result of strong cash

position.

Note: Change in net working capital in Q4 2014 impacted by 1) Reclassification of reversal of EUR 134m from change in net working capital to adjustments for other

non-cash transactions related to the establishment of the offshore JV; 2) Non-cash adjustments and exchange rates adjustments with a total amount of EUR 101m.


Net debt Significant development of net debt in 2014 – improvement of EUR 1.3bn

Net debt

mEUR

(602) (442) (476)

(86)

900

545579

(1,325)

FY

2013

Q4

2014

Q2

2014

Q3

2014

Q1

2014

FY

2011

FY

2010

(1,411)

FY

2012

Key takes:

• Net cash improvement of approx

EUR 1.3bn over the last 12 months

resulting in a net cash position of

approx EUR 1.4bn.

• Improvement mainly driven by:

- Capital increase conducted in

February 2014.

- Efficient net working capital

management.

- Better earnings.

• Net cash position a strong basis for

considering options when Eurobond

expires in March 2015.


0

0

Pre-turnaround period

Total investments 2014 investments in line with guidance, confirms focus on reduced capex requirements

Net investments

mEUR and per cent of revenue Key takes:

• Investments increased by EUR 46m

compared to 2013.

• 2014 investments mainly driven by

tangible investments for V110 and

V126 blades as well as capitalised

R&D.

• Focus on reduced capex

requirements compared to the pre-

turnaround period continued in

2014.

285239

286

761789

13% 11%

+46

4% 5% 4%

FY

2010

FY

2014

FY

2012

FY

2013

FY

2011

Per cent of revenue


Capital structure Net debt to EBITDA and solvency ratio within targets

Net debt to EBITDA

×EBITDA

Solvency ratio

Per cent

Q4

2014

<1.0

(1.5)

(0.7)

Q4

2013

(0.1)

(0.6) (0.5)

Q1

2014

Q3

2014

Q2

2014

Net debt to EBITDA, mid-term financial target (2014)

Net debt to EBITDA before special items, last 12 months

36

32

28

34

30

38

0

min. 30.0

Q4

2014

Q1

2014

31.6 31.0

Q2

2014

Q3

2014

30.8

34.0

Q4

2013

27.0

Solvency ratio

Solvency ratio, mid-term financial target (2014)

• Net debt to EBITDA at (1.5)x in Q4 2014.

• Development primarily driven by an improved

net debt position.

Key takes:

• Solvency ratio increased to 34 per cent in Q4 2014.

• Q4 development mainly driven by improved net

profit and net working capital elements.

Key takes:

Note: Fulfilment of the capital structure targets is a prerequisite for potential dividends according to Vestas’ dividend policy.


Return on invested capital ROIC at 35 per cent – more than a 4x increase compared to a year ago

Return on invested capital (ROIC)

Per cent

-10

-5

0

5

10

15

20

25

30

35

40

19.0

Q1

2014

Q4

2014

Q2

2014

Q4

2013

Q3

2014

14.5

7.7

25.7

35.3

EBIT margin before special items, last 12 months ROIC, last 12 months

Key takes:

• ROIC increased to 35.3 per cent in

Q4 2014 – an improvement of 27.6

percentage points compared to Q4

2013.

• Development primarily driven by

improved net cash position and

higher earnings.


Agenda


2. Financials



Annual report,

2014.

FY


Overall market environment remains unchanged Growth in energy demand is still expected to be met by new additions and replacement of power

capacity retirements

Source: IEA World Energy Outlook 2014 – Presentation to the Press.

• As China slows, India, Southeast Asia, the

Middle East and part of Africa & Latin

America take over as the engines of global

energy demand growth.

• Despite limited demand growth, OECD

countries account for one-third of capacity

additions – to compensate for retirements &

to decarbonise.


Long-term climate and energy policy outlook

Recent political developments are positive

USA – China

Climate Accord

• USA: CO2 emission down by 26-28 per cent in 2025 vs. 2005 levels.

• China: Stop emissions from growing and 20 per cent renewable energy sources by 2030.

COP21

in Paris • Positive developments, however, there is still a long way to a global agreement with

significant impact.

Green trade

negotiations

• Positive developments in negotiations for free trade agreement on climate friendly tech-

nologies between the EU and 13 other WTO countries (collectively, accounting for approx

90 per cent of world trade in green goods).

Positives

in India

• Positive signals from new government to increase the use of wind energy.

• Agreement with the USA to work together on fighting global climate change.

EU Climate

Agreement

• Binding target of 27 per cent renewable energy sources by 2030. Currently at 14 per cent.

• Greenhouse gas emissions down by at least 40 per cent by 2030 vs. 1990 levels.


Wind increasingly often cheapest new power source On a global level, new wind is cost-competitive with coal and gas already today

Levelised cost of energy (LCOE)

USD/MWh

Source: BNEF, Fossil and Wind LCOE ranges by region, H2 2014.

0 50 100 150 200 250 300

GLOBAL - Coal

GLOBAL - Natural gas CCGT

GLOBAL - Onshore wind

APAC - Coal

APAC - Natural gas CCGT

APAC - Onshore wind

EMEA - Coal

EMEA - Natural gas CCGT

EMEA - Onshore wind

AMER - Coal

AMER - Natural gas CCGT

AMER - Onshore wind 45 129

140 29

172

65

172 46

81

78 132

62 110

49

51 133

29 130

45

46

280

84

131

280


Focus on Profitable Growth for Vestas continues Market environment and Vestas key differentiators still support Vestas’ profitable growth strategy

Accountability, Collaboration and Simplicity

To be the undisputed global wind leader

Strongest brand in industry | Best-in-class margins

Market leader in revenue | Bringing wind on a par with coal and gas

Mid-term

(3-5 years)

Improve operational excellence

Reduce Levelised Cost of Energy

Grow profitably in

mature & emerging

markets

Capture full potential of

the service business

We deliver best in class wind energy solutions and set the pace in our

industry to the benefit of our customers and our planet.

Vision

Mission

Values


Key achievements in first year of profitable growth strategy On track: 2014 was a successful milestone for Vestas in achieving its mid-term ambitions

OBJECTIVES STRATEGY MAIN RESULTS DELIVERED

Profitable Growth

for Vestas

Grow profitably in

mature &

emerging markets 1

Capture full potential of

the service business 2

Reduce the levelised

cost of energy 3

Improve operational

excellence 4

Revenue growth of 14 per cent.

Overall increased activity levels in terms of

both order intake and deliveries.

Growth in service revenue of 7 per cent and

growth in order backlog.

New service organisation established.

Increased competitiveness via successful

commercialisation of new product variants

and cost-out achievements on 2 MW and 3 MW

platforms.

EBIT of 8.1 per cent and ROIC of 35.3 per cent.

Significant improvement in earnings

capabilities and net working capital.

Efficiency

Products

Service

Markets & Customers

AMBITIONS

Grow faster than the

market.

Grow the service

business by more than

30 per cent.

Reduce levelised cost of

energy faster than

market average.

Improve earnings

capability.


Grow profitably in mature & emerging markets Ambition: Grow faster than the market

• Global reach with order intake in 31 countries in 2014:

- Order intake up by 10 per cent in 2014.

- Deliveries up by almost 30 per cent in 2014.

• Continue to strengthen position in USA and Europe:

- US increase in order intake and deliveries.

- Improvements in e.g. Turkey, Poland, France and

Finland.

- Strong foundation for growing business further.

• Strong position in rest of the world:

- Latin America: Solid performance in many markets,

e.g. Uruguay, Guatemala, Chile and Dom. Republic.

- New and emerging markets such as Kenya, South

Africa, South Korea and Philippines also characterised

by good activity levels.

- Special attention to China, India and Brazil starting to

pay off, recent orders in both China (72 MW + 48 MW)

and Brazil (106 MW).

KEY ACHIEVEMENTS FOCUS AREAS IN 2015 AND BEYOND

Further strengthen

account management

across key markets.

Improve competitiveness

via cost-out / localisation

in key growth markets.

Explore markets

new to wind.


Capture full potential of the service business Ambition: Grow the service business by more than 30 per cent

• New service organisation:

- Head of Global Service appointed reporting directly

to CEO.

- Global Service established as a separate division.

• Growing service business:

- Onshore service revenue up by 7 per cent in 2014.

- Onshore service backlog up by EUR 300m

compared to Q3 2014.

• Important strategic initiatives and improved offerings:

- Successful multi-branding approach defined.

- Focus on tailor-made service offerings.

- Successful launch of Vestas PowerPlusTM.


Leverage scale and

operational performance.

Broaden portfolio. New

service offerings.

Renewals.

Revenue growth.


Reduce the levelised cost of energy Ambition: Reduce levelised cost of energy faster than market average

• Accelerated annual energy production:

- Improved performance on new 2 MW and 3

MW platforms.

• Successful launch of product offerings:

- Vestas PowerPlusTM.

- Large Diameter Steel Tower.

• Successful commissioning of V164-8.0 MW:

- Record holder in most energy production

within a 24-hour period.

• Significant cost reductions on 2 MW and 3 MW:

- Achieved cost-out to reduce LCoE and

improve competitiveness.

Continued strong focus on

driving down LCOE faster

than the market.

More efficient

wind turbines.

Continue cost reductions,

scale, localisation and

standardisation.



Improve operational excellence Ambition: Improve earnings capability

• Improved earnings:

- EBIT margin before special items improved by 4.6

percentage points in 2014.

• Strong cash flow generation:

- Net cash position improved by EUR 1.3bn in 2014.

• Site simplification.

• Successful transition of support functions to Shared

Service centres initiated.

Fully leverage potential of

Shared Service centres

and outsourcing.

Working capital

management.

Site simplification on new

markets.

Continue cost-out with

Accelerated Earnings Pro.



Vestas key differentiators remain intact Global reach, technology and service leadership, and scale give Vestas a unique position to

compete in the marketplace

Global reach Technology and service

leadership Scale

• Pioneer and most experienced

wind energy company in the

world.

• Unique global reach in terms of

sales, manufacturing, installation

and service.

• In 2014, Vestas had order intake

from 31 countries and deliveries

in 33 countries.

• Wind turbines covering all wind

classes across the world.

• A broad range of service offerings

securing optimal performance.

• Best-in-class quality.

• World-class siting and

forecasting.

• More people dedicated to wind

than anyone else, largest volume.

• Largest global installed base of

more than 66 GW across more

than 70 countries.

• Largest service organisation.

• Data insights from monitoring of

more than 27,000 wind turbines.


Capital structure revisited Solvency ratio increased to minimum 35 per cent. Leverage ratio unchanged.

Net debt to EBITDA

×EBITDA

Solvency ratio

Per cent

2011

1.9 1.8

(1.5)

2014

0.8 < 1.0

(0.3)

2009 2012 2010 2008

(0.1)

2013

(0.1)

Net debt to EBITDA before special items, last 12 months

Net debt to EBITDA, mid-term financial target

2008 2009 2010 2011 2012 2013 2014 2015

40

35

0

30

25

27.0

23.3

33.5

25.1

39.0

31.9

min. 35.0 (new)

min. 30.0 (2014)

34.0

Solvency ratio, mid-term financial target

Solvency ratio

• The net debt to EBITDA ratio is at the lowest year-

end level observed since 2008.

• Recent strong performance reflecting strong

operational improvements.

• Short term fluctuations does not change mid-term

view that lower than 1 is a meaningful target.

Current leverage level at lowest since 2008:

• Solvency is a key metric signalling financial

strength of the company.

• Vestas has previously had greater solvency

levels than what is observed today.

• Capital goods peers would typically be at levels

of +35 per cent, hence Vestas increases target.

Solvency still lower than in 2010:


Recommendation to pay out dividend for 2014 Recommendation to pay out DKK 3.90 per share – corresponding to 29.5 per cent of the net

result

Priorities for excess cash

• Repayment of debt if net

debt to EBITDA ratio is

above target:

Condition fulfilled for

xx x xx 2014.

• Allocation to shareholders

if solvency ratio is above

target:

Condition fulfilled for

xx x x2014.

Dividend policy

• The Board’s intention is to

recommend a dividend of

25-30 per cent of the net

result of the year.

• However, the paying out of

dividends will always take

into consideration the

Group’s plans for growth

and liquidity

requirements.

• For 2014, the Board

recommends to the AGM

to pay out a dividend of

DKK 3.90 per share –

corresponding to 29.5 per

cent of the net result for

the year.


Agenda


2. Financials



Annual report,

2014.

FY


Summary: Profitable Growth for Vestas on track Strong financial improvement showcasing the merits of Vestas’ profitable growth strategy

A successful year of implementation of

“Profitable Growth for Vestas” strategy…

… translated into improved

performance:

• ROIC at 35.3 per cent - up by more

than 27 percentage points.

• Earnings improved significantly.

• Activity levels increasing in terms

of both deliveries and order intake.

• Cash position of EUR 1.4bn.


Outlook 2015 2015 expected to be yet another year with solid financial performance

• Service business is expected to continue to grow with stable margins.

Outlook

Revenue (bnEUR) min. 6.5

EBIT margin before special items (%) min. 7

Total investments (mEUR) approx 300

Free cash flow (mEUR) min. 400


Mid-term financial

targets

ROIC: • Double-digit each year over the cycle.

FCF: • Positive FCF each year.

Capital

structure:

• Net debt to EBITDA ratio must be lower

than 1 at the end of each financial year.

• Solvency ratio must be above 35 per

cent at the end of each financial year.

Priorities for

excess cash:

1. Repayment of debt if net debt to

EBITDA ratio is above target.

2. Allocation to shareholders if solvency

ratio is above target.

Dividend policy: • The Board’s intention is to recommend

a dividend of 25-30 per cent of the net

result of the year. However, the paying

out of dividends will always take into

consideration the Group’s plans for

growth and liquidity requirements.

Mid-term ambitions Vestas wants to be the undisputed global wind leader

Mid-term

ambitions

• Be the market leader in revenue.

• Bring wind on a par with coal

and gas.

• Deliver best-in-class margins.

• Have the strongest brand in the

wind power industry.


Financial calendar 2015:

• Annual General Meeting (30 March 2015).

• Disclosure of Q1 2015 (6 May 2015).

• Disclosure of Q2 2015 (19 August 2015).

• Disclosure of Q3 2015 (5 November 2015).

Q&A


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