In the second quarter of 2018, Vestas generated revenue of EUR 2,260m

Revenue on par with last year’s second quarter while earnings and free cash flow decreased. Solid order intake and combined order backlog at high level. Guidance for 2018 narrowed.

In the second quarter of 2018, Vestas generated revenue of EUR 2,260m – an increase of 2 percent compared to the year-earlier period. EBIT decreased by EUR 20m to EUR 259m. The EBIT margin was 11.5 percent compared to 12.6 percent in the second quarter of 2017 and free cash flow* amounted to EUR (173)m compared to EUR (158)m in the second quarter of 2017.

The intake of firm and unconditional wind turbine orders amounted to 3,807 MW in the second quarter of 2018. The value of the wind turbine order backlog amounted to EUR 10.2bn as at 30 June 2018. In addition to the wind turbine order backlog, Vestas had service agreements with expected contractual future revenue of EUR 12.8bn at the end of June 2018. Thus, the value of the combined backlog of wind turbine orders and service agreements stood at EUR 23.0bn – an increase of EUR 2.8bn compared to the year-earlier period.

Vestas narrows the 2018 guidance on revenue to range between EUR 10.0bn and EUR 10.5bn (compared to previously EUR 10.0bn-11.0bn), and on EBIT margin to 9.5-10.5 percent (compared to previously 9-11 percent). Total investments* are still expected to amount to approx. EUR 500m, and free cash flow* is expected to be minimum EUR 400m in 2018. The adjustments are based on improved visibility for the remainder of the year.

Group President & CEO Anders Runevad said: “In the first half of 2018, the wind industry strengthened its position as the cheapest form of energy generation in many markets, which drove strong global demand. This development saw Vestas’ second quarter order intake increase 43 percent year over year, contributing to the continued growth of our order backlog to an all-time high. In the second quarter, price per MW stabilised around the levels in recent quarters, but continues to impact short-term results. External factors such as existing and potential tariffs, however, are creating some uncertainty in the industry. In this environment, I am very pleased that Vestas continues to deliver best-in-class margins and achieved a 17 percent organic growth in service, while free cash flow is negative because activity levels in 2018 will be back-end loaded. With long-term perspectives for renewable energy getting stronger, Vestas continues to effectively manage its costs and invest in the solutions that together will help us lead the global energy transition.”

Key highlights

Strong order intake
Order intake of 3.8 GW; an increase of 43 percent year over year, leading to all-time high order backlog.

EBIT of EUR 259m
EBIT margin at 11.5 percent.

Good service performance
Organic revenue growth of 17 percent, and EBIT margin of 25 percent.

Free cash flow
Free cash flow negative as a result of a back-end loaded activity level in the year.

Share buy-back programme
New EUR 200m share buy-back programme launched.

Outlook 2018
Guidance for 2018 narrowed for revenue and EBIT margin based on improved visibility.

*) Excl. the acquisition of Utopus Insights, Inc., any investments in marketable securities, and short-term financial investments.
The Board of Directors of Vestas Wind Systems A/S has decided to initiate a share buy-back programme of up to DKK 1,500m (approx. EUR 200m) to be executed during the period 15 August 2018 to 28 December 2018.

The share buy-back programme is initiated pursuant to the authorisation granted to the Board of Directors by the annual general meeting on 3 April 2018, which authorises Vestas to acquire treasury shares at a nominal value not exceeding 10 percent of the share capital at the time of the authorisation.

The buy-back will be structured in accordance with Regulation No. 596/2014 of the European Parliament and of the Council of 16 April 2014 on market abuse (MAR) and the Commission’s delegated regulation (EU) 2016/1052 of 8 March 2016 (the “Safe Harbour” rules).

The purpose of the share buy-back programme is to adjust Vestas’ capital structure and to meet obligations arising from share-based incentive programmes to employees of Vestas.

At Vestas’ annual general meeting in 2019, a resolution will be proposed by the Board of Directors that shares acquired, which are not used for hedging purposes of share-based incentive programmes, will be cancelled.

Time frame
The share buy-back programme will run from 15 August 2018 to 28 December 2018.

Vestas has appointed Nordea as lead manager for the share buy-back programme. Nordea will make its own trading decisions independently of and without influence or involvement from Vestas.

Under the share buy-back programme, Vestas may repurchase shares up to a maximum amount of DKK 1,500m, and no more than 15,614,595 shares, corresponding to 7.6 percent of the share capital of Vestas Wind Systems A/S.

No shares may be bought back at a price exceeding the higher of i) the price of the last independent trade and ii) the highest current independent bid at the trading venue, on which the purchase is carried out, at the time of trading.

The maximum number of shares that may be purchased on each trading day may not exceed 25 percent of the average daily trading volume of shares on the trading venue, on which the purchase is carried out, over the last 20 trading days prior to the date of purchase.

Prior to the share buy-back, Vestas holds 4,955,005 treasury shares, equal to 2.4 percent of the share capital.

Vestas is entitled to suspend or stop the programme at any time subject to a disclosure of a company announcement.

On a weekly basis, Vestas will issue an announcement in respect of transactions made under the programme.