Outlook for EBIT, cash flow and revenue retained. Disappointing first quarter revenue and earnings due to low level of deliveries, too high wind turbine costs and additional unexpected warranty provisions of EUR 40m.
Vestas generated revenue of EUR 1,105m in the first quarter of 2012 – an increase of 4 per cent to the year-earlier period. EBIT before special items declined by EUR 135m to EUR (204)m. The EBIT margin before special items was (18.5) per cent. After special items of EUR 41m, EBIT was EUR (245)m. The free cash flow improved to EUR (295)m from EUR (431)m in the first quarter of 2011. The net debt at 31 March 2012 amounted to EUR 850m; an increase of EUR 305m during the quarter. The intake of firm and unconditional orders was 1,269 MW in the first quarter of 2012 and the backlog of firm and unconditional orders amounted to EUR 10.0bn at 31 March 2012 – which is the highest level ever recorded. In addition to the order backlog, Vestas had service agreements with contractual future revenue of EUR 4.2bn at the end of March 2012. Safety at Vestas’ workplaces improved once again and the share of renewable energy increased to 44 per cent.
Monitoring data from Vestas’ Performance and Diagnostics centres have shown that 376 V90-3.0 MW gearboxes delivered to Vestas from June 2009 to September 2011 may potentially need additional maintenance, repair or replacement due to malfunctioning bearings. Thus, additional provisions of EUR 40m have been made in the quarter. Vestas will pursue all relevant actions with regards to potential compensation from the suppliers.
Vestas retains its full-year guidance of an EBIT margin of 0-4 per cent, revenue of EUR 6,500-8,000m, a positive free cash flow, shipments of approx 7 GW and investments of EUR 550m. Due to the additional provisions made for the V90-3.0 MW gearboxes, warranty provisions for the year are now expected to be around 3 per cent of the expected full-year revenue, against the previous guidance of less than 3 per cent of full-year revenue.
Vestas continues the adjustment of the organisation and still expects the number of employees at year-end to be around 20,400. This will contribute to a fixed cost reduction of more than EUR 150m with full effect as from the end of 2012. During the third quarter of 2012, Vestas will make a decision on its future footprint in the US market in case the PTC scheme is not extended.
The development of the potentially leading offshore platform, the V164-7.0 MW turbine, continues; however, to align the expected serial production date with Vestas’ current offshore market outlook, Vestas has reduced the pace of development. The prototype is now expected to be installed in Denmark during 2014. Vestas has received inquiries from potential partners on the further development of the V164-7.0 MW wind turbine.