Vestas Wind Systems A/S

Good morning and welcome to our presentation of our Q1 for 2025. And let me by here also extend a huge gratitude and thank you to our customers across the world and especially in the US for the very active discussions and also our colleagues for a very strong start of the year. With that, I would like to go to the key highlights. So the key highlights, we ended Q1 with a revenue of 3.5 billion euros. That's an increase of 29% year-on-year driven by our higher activity compared to Q1 last year and also the higher average pricing in power solutions. The EBIT margin ended at positive 0.4%, positive operating profit in Q1, despite normally the seasonal low activity in Q1, driven again by revenue growth and also higher project profitability. The order intake was 3.1 gigawatts. The order intake increased by 36% year on year, driven by strong momentum in offshore particularly and also in EMEA onshore. The manufacturing ramp-up and the service recovery plan remain key, and it is absolutely key of our operating priorities also for the coming quarters. So the onshore and offshore ramp-up is progressing, and the service completes its first quarter of its recovery plan as we speak. Then we have a new CFO starting 1st of June. We are onboarding Jakob Vege Larsen. He is in the planning and he is ready to join and meet all of you when we get to the roadshow in August post our Q2 release in beginning of August. So soon a very warm welcome to Jakob who has his official contract not the 1st of June, because I actually think it's a Sunday, but the 2nd of June. So, Jakob, we look forward to welcome you to Estes. With that, we'll look a bit more on the orders and the markets we are operating in. It goes without saying that wind still holds the same key to both affordability, security and sustainability, as we have highlighted in here. And I think we are acutely reminded of that throughout the first four months of this year. If we look at the global environment, inflation, raw materials and transport costs are generally stable, but they, of course, added an extra added dimension of potentially also some significant tariff that could increase costs in some of these. We see the ongoing geopolitical and trade volatility leading to some sort of more form of regionalization and also adds to the uncertainty, especially when we look at our colleagues in the U.S. The market environment, when we look at that, there is a very high focus on energy security and affordability. I think we have seen also in Europe examples of that and how important it is to have societies running with stable energy supply. The grid investment is prioritized in key markets, and we see that more and more. And then also the permitting improving in some markets, but overall permitting auctions and market design are still challenging and are being discussed actively. I think a positive example of some of this is also seeing a home country to us, which is in Denmark, where they have resubmitted the auctions for offshore after failing in Q4 last year. We are actually now seeing new terms coming out, which, of course, I'm guessing will attract good attention from the main European developers. On the project level, we have had a quarter here. Proud to say that the team has executed well on our deliveries across the markets, but it is also clear that there is some regional disruptions to supply chain, at least at risk, and particularly in this around in North America with U.S. as a core tension for us. When we then look at the market share, this is the time of the year where we look with the numbers that has come in. And of course, here we continue to lead the industry when we look at global onshore, offshore installations, excluding China. The global installation decreased from 37 gigawatt in 24 years. or two 37 gigawatt in 24 from 40 gigawatt in 23. We maintain a leading position and we continue to emphasize our value over volume. Secondly, also industry maturity is improving. Developers and turbine suppliers are being more selective and focusing on building high quality value creating projects and also healthy backlogs. You'll see now our market share has gone from 28% to 30%. And of course, we will continue to follow it. But as I said, still we prioritize value over volume. We then go to power solution in the quarter. So higher order intake year on year. When we look at that, the order intake of 3.1 gigawatt was up 36% compared to last year. The main reason for the increase is higher order intake in offshore and onshore and mere while the US is awaiting policy clarity. It is the largest offshore order in the quarter was one gigawatt. It's the Norflik One project in Germany, which will employ Vestas' 236 15 megawatt turbine. The largest onshore order in the quarter was the 384 megawatt Tilligul project in Ukraine. Once commissioned, the wind farm will generate enough clean energy to power more than 200,000 homes a year, making it the largest wind energy project in Ukraine. Personally, it makes me incredibly proud to both have the established relationship with DTEK, between DTEK investors through many years, not also with the personal relationship to the CEO, Maxim, who I spent an awful lot of time in making some of these things possible. And it goes without saying, our two teams made this possible to sign and also start manufacturing and transporting into Ukraine. The ASP increased to Euro 1.4 million per megawatt in Q1 compared to Euro 1.18 million per megawatt in the prior quarter. The increase was driven by a larger share of offshore orders and orders with a larger scope. So this is, don't forget, an average of many things in a quarter. We're happy with it, and it also supports the strategy we are laying out and following rigorously now for the last years. We also see in the breakdown to the right that U.S. only account for 189 megawatt in order intake, illustrating the natural await position for condition to be clearer on policy and also on tariffs in the U.S. We are not disappointed over it. We expected it. But we can also see that we are working diligently with our customers to make that clear, and that will become clearer in the coming quarters. We then go to service in Q1. We are now one quarter into the service recovery plan. So quarter here, we ended the quarter with a backlog increase to almost 37 billion, up from 34 billion a year ago. The service reached 157 gigawatt under service compared to 149 gigawatt a year ago, solidifying our position as the largest service business in the industry. Westers is now one quarter into the service recovery plan, which is expected to run until the end of 2026. We'll keep you updated as we progress in the coming quarters. But rest assured, the team is fully engaged and also committed and fully aware of the plan across the world. So we are driving and operating that with a discipline across our operations. When you look to the right, especially in the middle one where we have a gigawatt on our active service contracts stating 157 gigawatts, it could deviate in the coming quarters when commercial reset takes place. And we are also expanding on our customer conversations on the external. So be aware of that. And then on the average contract duration, still a bit more than 11 years. And that also gives our strong contract portfolio we're executing on. With that, I'll go to development. And it's the Q1 2025 coming out of a quite busy year end in 2024. So I don't have a lot of saying to the development. They haven't had many order intake, as you can see it says. zero megawatt for the quarter. So I would just say in Q125, Vestas' pipeline of development projects amounted to 27 gigawatt with Australia, US, Spain, and Brazil holding the largest opportunities in general. The strategic focus is on maturing and growing a quality project pipeline as well as conversion of mature projects into project sales and related turbine orders. During Q1, focus was on continued development of existing projects. The quarter did not release and realize any project sales nor any related order intake. So we, of course, have better expectations on the coming three quarters to our colleagues in development. When we then look at sustainability status after Q1 2025, The turbines produced and shipped in the last 12 months are expected to avoid approximately 490 million tons of greenhouse gas emission over the course of their lifetime. This is an increase of 97 million tons. The improvement is primarily driven by the increased production we realized throughout Q1. You can see that on the graph to the right. The carbon emission from our own operation decreased by 1% compared to last year. That also demonstrates our relative performance still improving across our Scope 1 and 2, but it also highlights that if we have a lower activity on construction on offshore, then, of course, some part of this will be influenced by it. So I'm just saying here we could foresee that that will increase in some of the coming quarters while our construction activities increases at sea. Then lastly, number of recordable injuries per million working hours was up from 2.9 to 3.2 year on year. Safety remains a top priority for us as we tirelessly work to improve our safety performance across our value chain. Currently, we are onboarding many new colleagues across our operations in both the factories and in the service, so ever more important to have every member of the Vestas family arriving safely, working safely and returning safely to their families after carrying out the work at Vestas. So this is something that we will keep focusing, practicing and training with our colleagues in the field. Now, with that, I'll give it over to Rasmus, please.

Thank you very much, Henrik. And let's start with the income statement, where, as you already mentioned, Henrik, revenue increased by almost 30% year on year, driven by the higher delivery volumes, as well as higher prices on turbine deliveries, and then a slight growth in the service segments. Gross profit increased by 47% to 359 million euros, which corresponds to a gross margin increase of 1.3 percentage points year on year. And the EBIT margin before special items then came in at 0.4% in what is, of course, traditionally a little bit of a slow first quarter, but that is still an improvement of almost 3 percentage points year on year. On the table to the right here, it's also worth noting the improvement on return on capital employed, which continues to develop nicely, and we'll come back to that a little bit later. Looking at the power solution segment, revenue increased 43% year-on-year, again, driven primarily by higher delivery volumes in Americas and APAC, as well as by higher average pricing. And although EBIT margin was negative, it's still up by more than seven percentage points year-on-year. a good development. And all in all, I mean, we continue to see profitability improve in this segment, despite the cost related to the manufacturing ramp in both offshore and onshore in the US that continues to weigh on the segment margins. On the service segments, we generated an EBIT of €166 million in the quarter, which is corresponding to an EBIT margin of 18%, and on 2% higher revenue year-on-year, so fairly flattish from that perspective. We are, as Henrik also mentioned, continuing to execute on the service recovery plan that we laid out in connection with the full-year results, but it will take some time before benefits are visible in our financials. On the net working capital, we see an increase in Q1, driven by an increase in inventory levels, which was then partially offset by increasing payables and decreasing receivables. Working capital also, I would say, reflects the typical seasonality of our business as we build inventory for higher activity in the second half of the year, although we do note that it remains at a pretty healthy level from our perspective. And then going into the cash flow statement, operating cash flow was positive 28 million euros in the quarter, which is a major improvement compared to last year. And the improvement was driven by the higher profitability, as well as the better networking capital development that we just saw on the previous slide. And that then takes us to an adjusted free cash flow in the quarter of negative 325 million. And again, this is a significant improvement of almost 700 million compared to Q1 last year. And this despite a higher investment level of around 100 million euro more. And we'll get back to the investments in just a minute. Overall, that means we're ending the quarter with a net cash position of 366 million, which is very good to see.

Really well done.