Vestas Wind Systems A/S

Good morning and welcome to our Q1 for 2026 release. I think the key word for this first quarter, of course, for the world is heading of energy crisis. Another one after the last one in H1 2022. It's also here very much appropriate to thank you. Thank you for a good start of the year. That thank goes especially to customers, to partners, colleagues, and other stakeholders. Thank you for many, very many valuable conversations and commitments in what has been an increasing volatile world throughout the first four months of the year. So with that, let's go to the key highlights of Q1. So key highlights for Q1, revenue of €4 billion. That's an increase of 14% year-on-year, driven by offshore, where we also see the manufacturing ramp-up is improving year-on-year. EBIT margin of 3.2%. It's better profitability in both onshore and offshore, leading to the best first quarter EBIT margin since 2018. Our service EBIT margin of 16.3%, continued cost out in the service leads to lower revenue with profitability in line with outlook. We'll come back to more details on that. And then, of course, order intake of 4.5 gigawatt, strong offshore order intake in the UK, mainly related to AR7, and a good onshore momentum leads to record high backlog of now more than €36 billion. We're also returning cash to shareholders for the third quarter in a row. We will initiate a new share buyback of 100 million euros. We'll be initiated and starting as of tomorrow morning. And then last but not least, outlook for 2026. We maintain our guidance, and I'll give you more details of that when we get to the end of my presentation. With that, I will go to orders and markets in general. I think here wind energy is key to affordability, security, and sustainability. We probably couldn't have chosen a better value proposition and probably a better narrative to talk to. So the energy crisis only confirms both the need for energy security, not least energy affordability, and of course, as always, energy sustainability. When we look at the global environment for us, I think so far in Q1 we have seen inflation, raw materials and transport costs being reasonably stable. But of course tariffs and blockages will over time increase costs and some of the energy will also lead to inflationary pressures when we get quarters ahead from where we are today. On the ongoing geopolitical side, I think we can say there is trade volatility. There's also some movements in the geopolitical scenario, if not from day to day, then at least week to week or month to month. And, of course, the energy crisis only leading to further regionalization. I think we have seen this. We have also moved toward this. We also, therefore, have created a large part of our resilience being prepared for this. So I will say we are in a good position also to deal with some of these variances. When we get to the market environment, I think, of course, in the longer term, the energy crisis here again gives us an opportunity to talk to not only customers but also to governments around, not least in Europe, where the need for energy security and affordability is probably higher than it's ever been. When we look at the grid investment, it is prioritized and getting prioritized in key markets, but the challenge is still here. And being a Danish national citizen, I will say we don't have the best example to share when we pause something of a grid for now three to four months in the middle of an energy crisis. When we look at permitting, I think it's improving in certain selective markets, but overall permitting still struggles with its red tape. Some of the auctions and market designs are still challenging, but I can also see governments are sharing with each other and therefore improving, so terms are getting better. I think here is the time and also the place to say a proper thank you in mentioning UK and Germany. UK and Germany shows examples of what I will call courage, political leadership, characterized by Katharina Reiss and Ed Miliband. You're doing it. You're doing it. Maybe it's not always as popular. But in years from now, we will all appreciate what you have done to increase capacity and get these permitting processes running so we can actually get capacity installed. When it comes to project level in this Q1, we've had a very good start of the year. Thank you to the team. Thank you to partners on it. We have had very small disruptions in it, and it's probably some of the best execution we have seen in the onshore and now also in the offshore, where there is at the same time on execution also a very high focus on simplifying Vestas from sourcing the components out to installing it at site. Next one, time of the year where normally Woodmac and others releases their market data. We continue leading the industry. I will just say here highlights on installation in our addressable markets increased to 47 gigawatt in 25 from 37 gigawatt in 24. So a growth there. Vestas remains the market leader. When we look at the market and the development, again an increase in the market size, but also installations often deviate of what would count as installation compared to, for instance, the OEMs and how well we install and finish the project with our customers. The Vestas market share in key development markets was relatively stable in 2025, while the market share development in others was mainly driven by installation growth in emerging markets, predominantly such as India. When we look ahead, we see growth in our core markets. We're really happy with that, and we will take advantage of it. And at the same time, we will use time really well to increase our competitiveness in those markets that is really core to investors. With that, I will go to the power solutions. And the power solution is a really positive story in Q1. First of all, because we're operating in a market where the need for electricity is underpinning the demand, and it's demand that needs to have a timely supply. So when we look at it, order intake in the quarter was 4.5 gigawatts in the quarter. It's driven by strong offshore order intake in the UK, mainly related to AR7 announcements. And then it's the onshore momentum across all regions. The ASP on new orders was Euro 1.16 million per megawatt. It's above the prior quarters, but also the ASP reflects a good mix of project scope, geography and type. The overall pricing environment remains stable and therefore is also very supportive for the progress of the profitability of Vestas. In Q1 2025, Vestas Development generated 230 megawatts of water intake from Brazil with the Esquina de Vento project fully developed by Vestas and therefore also exchanged with the partner Ekinor. I will also say here for the ease of presentations in the quarters, we have decided to take the slide out on development simply because we think there's happening too little on the slide quarter on quarter, and therefore you will typically see it in a bullet format on the power solutions in the quarters to come. When we then look at the power solutions order backlog, it's increased to a record high of $36.3 billion at the end of the quarter. The progress that we have seen in the offshore ramp-up, including reduced tack time and improved efficiency, of course, required us, unfortunately, to adjust the number of colleagues and employees at the linear factory. It was something we have spoken to some of you about in the last couple of quarters because, of course, that is part of the evidence of that our offshore ramp is progressing as planned and probably in this quarter progressed positively compared to where we expect it to be. I will say in combination with further progress on our operating model reset by simplifying and becoming more competitive towards our customers, this is a really positive sign coming out of Q1. You can see the underlying breakdown of the order intake to the right, and you can also see the last five quarters development in ASP. With that, I would like to go to service. We've had a good start of the year. The recovery is absolutely in full execution. We spent a lot of time on it, and I will say here a couple of testaments in the numbers, which I will also, and both me and Jacob will spend some time in taking you through. So the service order backlog increased to 39.8 billion. That includes 1.1 billion uplift from indexations and also 0.6 billion headwind from foreign exchange rate movements compared to a year ago. The service reached 164 gigawatts under active service, an increase of 3 gigawatts compared to last quarter, as healthy additions and renewals in the quarter outweighed expiries and deselections. I will say, especially on the renewals, they are better than we expected a year ago and probably also better than we had in exchange of our internal discussions. So that just shows our value proposition of the service business is really appreciated by our customers. Service remain and is a high priority, strategic priority for us in 2026 as we aim to recover profitability through operational excellence, commercial reset and cost-out initiatives. We're still not there, but I think this quarter was a real testament of that the progress we are making, the cost-out initiatives are really proving its fact, which therefore also lower the top line, but stabilizes and also builds the profitability for the future. I'm happy with that, but I'm also happy to see that we are progressing in both parts, both the operational cost-out excellence and also the commercial reset. You will see the breakdown of service here to the right. So we have 39.8 billion in the backlog, of which 33.9 is onshore. We have 164 gigawatt on the service, of which 155 is onshore. And we have, as stated here... more than 11 years of average contract duration. Again here, tough times in service for many colleagues, but we are having the focus and we keep the focus because it's actually now showing the real movement in the quarter and that you should take away as a positive. Let me by that go to sustainability, Q1. Sustainability in everything we do. And I think for those who follow also us on social media, you will see we also welcome really the progress we have seen where blade recycling are now moving from what I will call an early prototype to also scalable. Thank you to Stena and our partner chosen there, and we look forward in both the quarters and the years to come to find and solve another part of our recyclability project of the turbine. Another thing here is one of the 10 energy companies that makes a difference that reached now the times list. Thank you, Times, for taking us into consideration of that. And we will prove you with some examples also in the future years to come. Highlights else, turbines produced and shipped in the last 12 months are expected to avoid 468 million tonnes of greenhouse gas emissions over the course of their lifetime. The carbon emission from our own operations increased by 4% compared to last year, mainly due to vessel emissions from increased activity in offshore. We've spoken about that. We've also spoken about this in the sense of that this is part of the negative development in carbon emission when you now install more projects offshore and therefore have more of that emission coming. But I just want to highlight here, we are measuring our own scope one and two emissions in 112,000 tons, and then we are putting solutions in place that displaces 468 million tons over the time. Anyone with that in mind probably say that's a trade worth doing. On the number of total recordable injuries per million working hours, TRIR, remain stable at 2.8 compared to last year. Safety remains absolutely one of our top priorities for us, and we tirelessly work to improve our safety performance across our value chain. This is an average across our more than 80 countries where we work in. And of course, there are places where we are above that average. So right now, it is about getting everyone to work at work and home from work safely, and that is really an ethos of what we strive for. With that, I'm pretty sure Jacob is excited to present some of the quarterly numbers. So over to you, Jacob, for the Q1 26.

Thank you, Henrik. And let me take us through some of the details of the financials of what is the highest first quarter profitability since 2018. Revenue increased by 14% compared to Q1 last year. The increase was driven by higher revenue in power solutions, offset by lower revenue in service, which Henrik, you already spoke to. EBIT margin before special items was 3.2%, an increase of 2.8 percentage points year-on-year. The development was primarily driven by improved profitability in power solutions. In the quarter, we incurred 35 million of special items, mostly related to the operating model reset started in the fall of 2025, which included both additional severance provisions and non-cash write-down of inventory related to a few development projects. And diving into the segments, starting with power solutions, where we see a solid start to the year. In Power Solutions, first quarter revenue increased by 23% year-on-year, driven mainly by higher megawatt delivered in offshore, and to a lesser degree by higher average selling prices on the megawatt delivered. EBIT margin for power solutions reached 2.7%, plus 2.7% in Q1, up 5 percentage points year-on-year, driven by improved profitability in both offshore as well as onshore, as well as, for obvious reasons, when we increased the top-line benefits from operating leverage. Please note that the onshore revenue is expected to follow the usual back-end loaded profile during the year, while offshore revenue is more evenly spread across the quarters. And you see on the right both the onshore and the offshore revenue, as well as the EBIT margin. Moving on to the service segment, where we see the recovery plan improvements leading to cost out. Service revenue decreased by 9% year-on-year, impacted by a 4% currency headwind, and a decrease in contract revenue. A higher level of gigawatt under active service was more than offset by the continued cost out. Transactional sales were on par with last year. Service generated an EBIT of 136 million in the quarter, equivalent to an EBIT margin of 16.3%, so as expected. we continue to execute on the recovery plan to achieve our long-term ambitions. And then moving on to a new slide and moving on to the focus of the impact of our operating model, RESET and our operating scale benefits. The operating model reset is ongoing, as you know, and aims to improve our operational and commercial efficiency through removing bureaucracy and right-sizing the organization together with strengthening our culture. The SG&A cost amounted to 7.4% of revenue on a last 12-month basis, an improvement of 0.1 percentage points compared to a year ago, as higher revenue more than offset the increased cost level. And as you can see, we have seen significant improvements since 2024. In terms of net working capital for the quarter, we see an increase in the quarter, which is reflecting normal seasonality. Net working capital increased in Q1 to a negative 2.4 billion, driven by an increase in inventory levels and other receivables and liabilities. Net working capital reflects the typical seasonality of our business as we build inventory for higher activity later in the year. As a percentage of the last 12 months' revenue, net working capital in the first quarter amounted to negative minus 12.3%, which is a minor improvement compared to Q1 last year. Then moving on to the cash flow statement, our operating cash flow was minus 289 million in the quarter, a decline compared to Q1 in the prior year, mainly due to the changes I just mentioned in networking capital. Total investments amounted to 198 million in Q1, a decrease compared to 307 million last year. The decline reflects quarterly facings of the investments. Our adjusted free cash flow in the quarter amounted to minus 533 million, a decline compared to last year driven by the reasons mentioned above. Nonetheless, this is unplanned and we ended the quarter with a net cash position of plus 435 million. In terms of our provisions, LPF reduced as planned. The lost production factor improved in Q1 now that the repairs at the size mentioned in the recent quarters have been completed. Please note that the LPF is measured over the last 12 months, and therefore it will take some quarters before this effect of the specific sites are fully out. Warranty costs amounted to $119 million in the quarter, corresponding to 3% of revenue. Warranty consumption in Q1 was 149 million. So that's in line with the expectation and also in line with what you see in the previous quarters on the right where you see consumption is higher than our provisions. Then on capital structure, we are announcing, as Henrik was mentioned, a share buyback for the third quarter in a row. Net debt to EBITDA ended the quarter at minus 0.2 times, stable compared to last year, and within our targeted range of minus 1 to plus 1. We maintained a solid investment grade rating from Moody's with a stable outlook. Given our solid start to the year and a healthy capital structure, the share buyback of 100 million is initiated, as Henrik mentioned, and it's in line with our intentions to return at least 40% of net profit to shareholders. You will see that we have shaded it in the Q2, Q3, and Q4, and that is in line with our communication that we will communicate this on a quarterly basis. At the shareholders' annual general meeting in April, the proposal to cancel the 14.3 million shares was adopted. So this is a friendly reminder to everybody on the call that you remember also to change that in your model. And with that, ending on my new favorite slide, focusing on shareholder value through performance. Here you see our most important financial metrics in the longer perspective. These metrics are central to how we measure our performance and align nicely to shareholder value creation and also to our equity story. And I encourage you to read further on that in the annual report. With that, Henrik, over to you for the outlook.

Thank you so much, Jacob. And I think, sure, you've internalized that to your favorite news light. And I think I can find a few other in that club because this also shows how long-term trajectory is actually paying off. And I think this is a testament to many people. working to generate the underlying progress in our financial matrixes here. And, of course, also is a testament of why we feel comfortable of doing the third share buyback, third quarter in a row. So with that, I will go to the outlook. And the outlook here for 2026, revenue 20 to 22 billion euros. The EBIT margin before special items is kept at 6% to 8%. Service is expected to generate EBIT margin before special items of 15.5% to 17.5%, and total investments sits around 1.2 billion overall for the year. With that, I will also sort of again thank everyone for being here, thank everyone for the conversations we have had, and we look forward to see many of you also in the in the coming day and i can see as somebody that followed the the presentation here i can see my ir person has sort of lost almost as much hair as i have because there were one or two slides there were probably in early draft versions or something but that what happens frederick so so let's go to the let's go to the q a and pass back to the operator for opening the q a and And I hope people are okay with not raising questions to things that were in draft in here.