Vestas Wind Systems A/S

Good morning everyone and welcome to our presentation of Q2 for 2026.

Strong quarter and let me also here immediately thank our customers, partners, the full supply chain and also colleagues for an exceptionally well executed quarter. And with that, I would like to go to our key highlights for the quarter. So, in quarter, revenue of 4.7 billion euros, that's an increase of 26% year-on-year, driven by strong growth in power solutions of 37%. Even margin of 9.4%, strong profitability improvement driven by both onshore and offshore. EPS of Euro 1.1, Euro per share. Earnings per share grew 46% year-on-year to one of the highest levels in the history of Vestas. The order intake of 3.3 gigawatt, that's an increase of 67% year-on-year, driven by commercial traction in both EMEA and the Americas. Thank you very much. and then outlook for 2026, guidance raised, reflecting the performance in the second quarter and the improved visibility for the rest of the year. With that, I'd like to take you through the markets and environments we are operating and executing in. First of all, wind energy, key to affordability, security and sustainability. No new words in that, but especially the two key words right now for societies worldwide is affordability and security. When we look at the global environment, inflation, raw materials and transport costs are stable, but tariffs and blockages increase costs over time or from time to time, as we say. It's a changeable environment. When we look at the ongoing geopolitical, the trade volatility and energy crisis that are leading to a regionalization, we've spoken about that, we're still seeing it and that trend has not reversed to any better. When we look at the market environment, heightened focus on energy security and affordability, I think most societies we have that. Unfortunately also sometimes included with some non-factual basis and we are probably the one that will strive and keep striving for telling what are the real benefits and what are the costs and how fast can we get the energy. When we look at grid investment, it's prioritized in key markets and getting higher and higher prioritized in key markets, including also EU. When we look at the permitting, it's improving in some markets, but overall permitting, auctions, and market design are still showing challenging things. I will just say here, take Denmark as an example. In November 2024, a failed offshore auction then included better and improved conditions for the developer and customers to us. Then in August 2026, we see that a full subscribed offshore auction But unfortunately, it only leads to that Denmark actually missed the new energy supply with another 18 to 24 months. So we got to change our way of looking at it. On the project level, a really strong project execution this quarter. We have had a really good quarter and thanks to everyone. And also, of course, we will strive whatever we can to keep having that momentum into the second half of the year. So, this time, before we go to the segments, let me also anchor Q226 in the bigger picture and also you in the longer-term picture of our 10% bridge. This bridge and this slide and picture is important for the whole of Team Vestas, and not least for me personally. When we look at it, we're talking about how we get to the 10% EBIT, and it says plus 10%, so that means at 10 or above. We have now a starting point with the grace guidance for today at a midpoint of 8%. We also just want to take you through that the four levers to get to 10% are still the same, but we have rearranged a little bit. But it also means that when you see this in a bigger picture, you've seen it before, now there's 200 basis points to go, and I will assure the investors that raised it at the AGM that we might now be at 8%, but that doesn't satisfy us. We still have the 10% target, and we will work towards that diligently in not least the coming quarters and the coming years. I will start here with the offshore, still the same, by far the largest lever to get us to 10%. It's the ramp up, it's the cost out, and it's extending the competitiveness that we add volume to the platform of our 15 megawatt. We have then rearranged it so we actually have service as the second highest, delivery operation recovery, the commercial reset with the ambition to achieve 25% EBIT margin, and we are assured through our recovery process that is possible and we will work diligently, but it doesn't come overnight. On the quality side, we've moved that so it sort of has a lever and it has a very important lever to us because it's driver operational performance. It's talking about lower warranty cost, but we are at 3% and Jakob will comment on it a bit later. But it's also reduced the cost of poor quality through close collaboration throughout our full value chain, especially also when we source and when we use the inbound in our factories. And last but not least, on the onshore. It is a quarter where we could sort of debate, is there really that big a lever in onshore still? And there is. There is the operational leverage. There is the cost out that we still can do more of. And then there is the retaining the commercial culture. So when we look across the world, it is also what we are talking about today. How do we get other countries to pursue the same alley as, for instance, U.S. and Germany are doing by scaling up? And of course, we will benefit from that. Takeaway, doable, we believe in it and of course the closer you get probably also therefore your level of confidence goes up. With that, I would like to go to the power solution and what has happened in Q2. So, order intake of 3.3 gigawatt in the quarter, driven by strong onshore order intake, especially in the U.S. and Germany. There are no offshore orders in the Q2, but don't worry about that. They come quarter and quarter, and they will be lumpy. So, therefore, we will address that when things happen. On the ASP on new orders, it was €1 million per megawatt for the quarter. The ASP reflects a good mix of project scope and geography and the overall pricing environment remains stable, which of course bodes well for also what we have of quality in our order backlog on Power Solution. The Power Solution order backlog was €36 billion at the end of the quarter. And when we look at it, we continuously see progress in our offshore ramp-up with reduced tack times, better efficiency in manufacturing and improved installation time. So again here, key words for us are the scale offers us the both required but also expected dilution. And we can see that the offshore team and across Vestas are really pulling forward in that journey, which is positive also when we look to the end of the year and also into 27. You can see the numbers described on the charts to the right. With that, I'll go to service. So the recovery plan is progressing, is the heading for Q2. The service order backlog increased to 40.9 billion euros. That's an increase of 5 billion euros compared to a year ago. That's including a 1.3 billion euro uplift from indexation and a 0.2 billion euro headwind from foreign exchange rate movements in the quarter. When we see that, service reached 166 gigawatt under active service contracts. That's an increase of 2 gigawatt compared to last quarter, strong contract renewals, and also new additions more than offset expiries and customer deselection. I think here we are confirmed after Q2 that we are doing the right things in commercial reset as part of this recovery, but we can also see that we have actually been positively surprised over, first of all, the value we create together with our partners, but also therefore the stickiness of our renewal process in service. The service recovery plan is progressing well and we continue to see the operational movement drive down cost levels while the commercial reset is improving the backlog health and we can see that quarter on quarter. Again, the drivers here are working and the new service operation discipline is getting adopted worldwide as we speak and we're getting comfort to see it's being adopted at the pace we are implementing it. With that, I will finish with the sustainability for Q2. Sustainability still in everything we do. And if we start on this, turbines produced and shipped in the last 12 months are expected to avoid 535 million tons of greenhouse gas emissions over the course of their lifetime. This is of course one of the highest number we have had for a quarter and therefore also a reflection of that we see the increase in levels of activity, total turnover up 26% and in the power solution 37%, which of course reflects in this. The carbon emission from our own operation increased by 7% compared to last year. That's mainly due to the vessel emission from increased activity in the offshore. So we know we have to spend some more carbon emission to do also the offset what you just saw above of the 535 million tons. Therefore, it's also worth noticing Thank you very much. Thank you very much. With almost 40,000 employees and some of the sites are also new or have embarked new investors. We will address that as we go and comment on it in the coming quarters. I think it's actually now time, Jakob, that you have been looking forward to take us through the financials. So with that, over to you, Jakob, on the financials.

Thank you Henrik and as you mentioned a strong quarter where we see earnings per share increase up by 46%. The other highlights of the quarter is that revenue increased by 26% compared to Q2 last year. The increase was driven by power solutions while service revenue was slightly lower. The EBIT margin before special items was 9.4% and increased of almost 8 percentage points year-on-year. The development was driven by improved profitability in power solutions from both onshore and offshore. Then also on the right you can see that we incurred 27 million of special items in the quarter. That's mostly related to our operating model reset including staff severance provisions. Moving in to the segment split and the financials for that, we start with the strong quarter in power solutions. In power solutions, Henrik, as you mentioned, revenue increased by 37% year-on-year, driven mainly by higher megawatt delivered in both onshore and offshore, and to a lesser degree by higher average selling prices on megawatt delivered. EBIT margin of 10.4% in Q2 was strong, up more than 10 percentage points year-on-year. Positive benefits in both onshore and offshore, from operating leverage, outstanding project executions and lower than expected project costs. All of this contributed to the strong profitability in the quarter. and here you can see the quarterly split on the right also the split between onshore and offshore and it is worth to note that 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 so this is and we mentioned it last time this is a change from what you have have seen previously when you look at the total numbers Moving on to our service segment, where, as you mentioned, Henrik, we are really pleased to see Costa coming out and that the commercial reset is working as planned. Service revenue decreased by 5% year-on-year, including a 1% currency headwind. The ongoing recovery plan is working and driving lower cost levels, leading to a decrease in contract revenue that we also spoke about last quarter, so the same trend this quarter. Transactional sales were slightly lower than last year. Our service generated an EBIT of €149 million, equivalent to an EBIT margin of 16.6%, which is in line with our expectations. Moving to the focus on SG&A cost and on our scalability in general. SG&A cost amounted to 7% of revenue on a last 12 months basis, an improvement of 0.4% point compared to a year ago and obviously driven by higher revenue. We continue to work and improve our SG&A costs through the operating model reset program. And we see right now also with an increase in top line, we see an opportunity to scale the organization while growing the business. And as you can see on the right side, we have for the last three quarters seen a marginal decrease in the cost while we have just spoken to the top line increases. So that obviously gives the scalability. Networking capital, we saw a slight increase in the quarter to negative 2.3 billion, mainly driven by an increase in inventories and contract cost. As a percentage of last 12 months revenue, networking capital in the second quarter amounted to negative 11.1%, so still a strong place to be. Operating cash flow was positive by 419 million in the quarter, a significant improvement compared to Q2 in prior year, and that is driven by higher profitability. Total investment amounted to 278 million in Q2, which is stable compared to last year. Adjusted free cash flow in the quarter amounted to 94 million euro, an improvement compared to last year, driven by the reasons mentioned in above. Cash flow from financing activities in the quarter was driven mainly by the repayment of the bond, which we also spoke about last quarter, as well as the dividend payments and share buybacks. We ended the quarter with a net cash position of 92 million euro. Then Henrik, you spoke about quality and here looking at our LPF, our loss production factor, we see a slight improvement in Q2, reflecting the better fleet performance and operational improvements across our serviced turbines. Warranty cost amounted to 141 million in the quarter, corresponding to a 3% of revenue. Warranty consumption was in Q2 218 million and that confirming previous quarter's positive trend where we consume, meaning repair, old identified quality cases more than we provision for new quality cases. The capital structure and shareholder distribution, Henrik, you mentioned the 400 million euro buyback program. The net debt to EBITDA ended the quarter at zero times stable compared to last year and within our targeted range of minus one to plus one. We maintain, as previous quarters, a solid investment grade rating from Moody's with a stable outlook. And given our performance and visibility at this point of time of the year, combined with a healthy capital structure, a new share buyback program of 400 million euro will be initiated, in line with our previously communicated intention to return at least 40% of net profit to shareholders. The buyback will begin tomorrow and run until the end of the calendar year. And as you can see also on the right, the 400 million is covering the two quarters, which is of course different from what we have previously done. And then ending, I've said it before, on my favorite slide, because this is where we look at our long-term shareholder value creation. Here you see the most important financial metrics in a longer perspective. These metrics are central to how we measure our performance and align nicely to our shareholder value creation and of course also our equity story. And I encourage, if you want to read more about that, to read further about that in the annual report. And with that, over to you, Henrik, for the outlook.

Thank you so much, Jakob. And of course, I absolutely understand your liking for the slides, but there are many slides that could compete on the favorite one this quarter. But also on the slide here, I also want to just hear saying it's nice to see the trend, but it's also nice to see how you have been able, since your start, Outlook As most of you have also seen, revenue kept 20 to 22 billion. Previous outlook, same. When we look at the EBIT margin, we are raising the guidance to 7 to 9 from 6 to 8. And that also means in this we keep service as it was previous from February. So service is expected to generate EBIT margin before special items of 15.5 to 17.5%. and then we see total investment around the 1.2 billion mark for the year. With that, I will say thank you for listening in. I'm sure there will be a few questions and answers to come and therefore also let me by this pass back to the operator and let's start the Q&A.

We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on their telephone. You will hear a tone to confirm that you have entered in the queue. If you wish to remove yourself from the question queue, you may press star and two. Questioner on the phone, I request to disable the loudspeaker mode while asking a question. Anyone who has a question may press star and one at this time. The first question comes from the line of Akash Gupta from JP Morgan. Please go ahead.

Yes, hi, good morning and thanks for your time. My first one is on the U.S. market. Could you please talk about the dialogues that you are having with your U.S. customers and whether the intensity of those discussions has changed? As we can see, the demand for power equipment continued to grow, especially given we saw new record for gas turbine orders in second quarter. So I'm just wondering, has anything changed on your side on the U.S. pipeline and your view of the market in the course of the quarter? That's the first one.

Thank you so much. And the easy answer is no. The bit more filling on this one is in the U.S., demand and fundamentals are making its way into also how it's being evaluated. and right now speed to energy and speed to not least energy and electricity and electrons are also part of the driver. So the environment is underlying strong from fundamentals and the whole of the US society in many states need more power and more energy faster than probably new sources or other competing technologies. But in reality US is also coming to a conclusion of We need more of everything.

Thank you. And my follow-up question is on power solution margins. You delivered a strong performance in Q2, and a lot of people that follow Westa split margins between onshore and offshore, given the large differences between the two. Can you give any indication of what offshore margins are in the quarter and where you might get there by end of the year? And also, when we think about the guidance upgrade, which is coming from Power Solutions Entirely. How much of that is onshore versus offshore? Thank you.

Thanks, Cassian. You know already that I will give you the answer to it. No, we won't give you the breakdown, but we will also say here, as we've said, we're aiming for a better full year number in 27 than we have had in 26 on offshore. But on the other hand, having a second quarter where we are 10.4% in power solution, we see both onshore and offshore contributing positively compared to where we started the year and planning for it. So there is a good momentum in both parts. For obvious reasons, I don't have an interest in showing you the split between onshore and offshore. But you also know that we will most likely end this year in a red number and the scale and the ramp up will take us to a black number in 27. Thank you, Henrik. The next question comes from the line of John Kim from Deutsche Bank. Please go ahead.

Good morning. Thanks for the opportunity. Congrats on the numbers. Two questions, if I may. If we think about the guide, after a very strong evolution in H1, I want to say the upper end of your guide only implies about 200 points of margin expansion year on year. I'm wondering if there's certain things we need to consider, think about, that kind of curtail perhaps the optimism into H2?

Thank you very much. We are still back and loaded. That also means that we see some risk just by the nature of what we are executing for in the second half of the year, which of course is reflected in our guidance. And I can assure you that if we have an opportunity to do better, we will do that. But that's what we see currently for the second half of the year. And the split intra quarter, we are so dependent on some of those major completions on the projects. What that project is exactly with as a percentage in the backlog. But I will say in this quarter, really well executed. And there are some lower costs on some of those exceptional projects in good executed in second quarter, of course, that contributed to it. But hey, it's not too shabby to raise the guidance to seven to nine. So I thank you for your congrats. We definitely feel there's been a lot of hard work going into it.

Great, thanks. And my second question, if I may, is about the contract assets. We saw a sequential increase from Q1 to Q2. Wondering if you could help us unpack that and what you're seeing around kind of price cost or price cost in the service base. Thanks.

Yeah, let me take that. Similar to last quarter, the development is driven by our power solutions. So that's the first to answer your first part of the second question. The second part on the service cost, we are, as I also mentioned, we are pleased with the development this quarter. The team is delivering as we have expected and as we have planned. We take out costs as we have planned and we also have the success we expect in the commercial reset, which is really one of the initiatives we see that also now is having a positive impact on the overall service business. So service is progressing as we have planned and as expected.

Great. Thank you.

The next question comes from the line of Claus Aylmer from Nordia. Please go ahead.

Thank you. Yeah, also from my side, you know, impressive quarter. Well done by the Vestas organization. I will also do two questions. So the first is about the power division. As Jakob mentioned in his prepared remarks is the strong performance was driven both by onshore and offshore. And I think Henrik, you mentioned this 27 could be in black numbers. This question is not to get any guidance for next year, but could we get a bit more color to the strength of the momentum? Could it be a 5% potential next year, or where is the range of outcome? That would be the first one.

I love the camouflage of various reasons to ask for 27. If a black number, that also includes a 5%, I don't know, but it's a positive number for next year. And then we will say not more about it, because in reality, we'll say more about where we expect Vestas to perform next year. And from giving a service percentage, you can then calculate the power solution. I think here we're giving ourselves time to enjoy a little bit the execution of this. It is hard work and has been hard work and has had also mixed feelings when you ramp up and scale up of this nature in offshore. So what we are first and foremost really happy with is that there is a large contribution from both offshore and of course from a different contribution in onshore because onshore is just execution of all what is so well known to us where the offshore is reducing the marginal cost from offshore and the scaling of it. So it is different. And therefore, same thing is, we'll fight hard to see if we get it to a full year, plus minus zero or whatever for 26. And then there is a black number coming in 27. How big that black number is, we won't tell you. And we won't tell you that in February either.

So maybe it's asking a different way. So the improvement you're seeing within offshore, Is this an improved speed of output of the factories? Is it better projects that are starting to be delivered? Or what is the main driver for the better profitability or this loss?

I think here when we open a new set, we open new capacity, you're always a bit questionable to that. When does it work? When do we have the right practices in and around those shifts? We can see that. The negative side of that, for instance, on linear was we had to say goodbye to some very good colleagues on linear. But when you get to that point where tack time is improving and others, so that's the main part we have seen. So it is working. Daniel Patterson, Javier Rodriguez Diez, Anne Pearce, Javier Rodriguez Diez, Thank you very much.

Okay, then my second question is the onshore backlog. These price initiatives you have taken for the last year, year and a half, have you seen the full effect in the P&L in this first half, or do you still see some additional effects the rest of the year?

I don't think there's anything to say about the rest of the year. We've just said something about the rest of the year in raising our guidance. And as I said, I got to correct you. If you think we have done something with pricing in the last 18 months, I've been here long enough. We have discussed it for the last more than four years. And everyone probably questioned a little bit in our quarterly also, is it enough? Will we ever get to 10%? Is this enough priced for 10%? and the truth of it is we live in a very changeable world but the backlog is supportive and our pricing and commercial culture is very supportive of that journey to 10% which is probably also it means a lot more with the day-to-day trusted Thank you very much. The next question comes from the line of AJ Patel from Goldman Sachs. Please go ahead.

Good morning and congratulations on the results. I've got a couple of questions, please. Firstly, can I get a little bit more of an understanding on the improvement in margin? It's very rare that Vestas beats consensus Q2 results by a factor of two. And if you look at what you delivered in margin for Q2, the 9% or so number, and look at what's implied at the midpoint for the second half. That's also a 9% number. That would seem odd given like you have a sizable amount of operational leverage in the second half of the year from onshore. So I'm just trying to understand to what degree is Q2 fantastic performance on contingencies that maybe you provided for and if you could maybe give us an idea of how good that execution is and what kind of contingencies maybe you have made in the second half of the year in the new guidance to get us to understand at least what the sort of risks or potential upside or downside to numbers could be for the second half. And then I'll come back on the second question if you don't mind.

There was what I call a long first question with a few dimensions in, so let me give you the credit for that, Reis. First of all, Adjei, it's nice to see. I won't comment on why we beat the consensus, because in reality here, you and I know that we know the backlog. None of you are on our payroll, so you don't have access to see what projects we are executing in a quarter. and the mix for us in this quarter on the deliveries and other stuff have formed that basis and then there will always be in there projects that have either in this quarter over delivered on some parts towards an average we're looking in for for the second quarter or the third quarter or the fourth quarter so you can't sort of again here it is not a constant percentage Thank you very much. We have a good momentum, but there's also something in the projects we already look for in second half that doesn't imply that it is as back-loaded as you probably have seen in previous years of Vestas. And please then don't forget Daniel Patterson, Javier Rodriguez On the H2 risk, you already know what we have of H2 risk investors. So we have a seasonality. We are getting into a fourth quarter where weather and can we get from the inbound to the outbound doing, yeah, latter part of Q3 into Q4. So we are sure we have all the assets there. Thank you very much. We feel we are where we would like to be right now, and that's a pretty positive place.

Thank you. And then on the second question side, I think on the tapes we're seeing from the press call that it was cited that management saw an opportunity to reach the 10% EBIT margin next year. And I know that you don't want to give guidance for next year, but just to make sure that we're all treated exactly the same way, is it possible Daniel Patterson, Javier Rodriguez

Daniel Patterson, Javier Rodriguez I feel a bit over the last probably couple of years, some has called it an impossible wire we keep talking about and others have said, hey, come on, there's probably a chance you can do it. For us right now, it means a lot that we can see that we have the levers, we have the handles. And then in reality, for all of us, we have been here very long investors. Thank you.

The next question comes from the line of Christian Thurn from SEB. Please go ahead.

Thank you. I have two questions as well, and the first one goes to your guidance. So I've noticed you highlight the strong execution of your organization on several occasions here, and I guess that already started in Q1 as well. as the explanation for the strong margin in power solutions but it has also been pointed to your guidance for the second half of the year doesn't really imply any substantial margin uplift so at least my take seems here to be that you're assuming your organizational performance should go back to a more average level in the second half of the year which I understand why you would Why shouldn't we expect that your organization could keep pace to some extent in the coming quarters?

Thanks, Christian. You know me well enough. I probably work slightly more outside than in the spreadsheet, but I understand fully your question. We don't try to necessarily do worse, but as I also said here, Daniel Patterson, Javier Rodriguez Diez, Thank you very much. And then at the same time, we also can see that there is a pricing in some of the projects that comes in Q3 and Q4 that probably not bought as high as you would normally see in some times in what we have had in Q4. But as I said, let's see how that goes. But the guidance right now, 7 to 9, is the best estimate for the full year. And that implies we're actually doing pretty okay in second half. So I... I understand maybe there are people that are sitting and now trying to do even better, but do you know what? If we hit the seven to nine in that part, we are doing a really, really good year.

Fair enough. Then my second question is regarding the blade incident at the head ride of the wind project. And just if you could sort of update us on that. Has there been any noticeable financial implication and have you identified the root cause and so on?

First of all, there is an incident in Hennedreit that happened on the 22nd of July. We are due process. It shouldn't happen, but when you produce blades and you produce turbines of the size we are doing, then it will happen from time to time. I'm particularly proud again to the wider organization here, and not least also the collaboration with EMBW and especially our, or at least for my part, my contact Peter Heidegger in there. We are going through normal process. I think the first thing to observe is no one got hurt by it, which is positive. Second is that we have managed to also keep and contain something as the debris that comes off. I can see on some of the pictures we even got help from the German Coast Guard. So that's another important one and we have had here both vessels and we have had people on beaches collecting things so it doesn't sort of mess up summer holiday for Daniel Patterson, Javier Rodriguez Diez, And that means right now we have a full turbine park we can work with, but of course there is one blade short, and we need to get the remaining part of that blade down, and then we will finish our root cause analysis. So that's where we are. It's something you can probably hear on my voice I would rather not have, but now we have it. and we deal with it and we deal with it in a really professional way and I can't thank at least our partner enough for also having the same professionalism and availability to deal with an anomaly like this. So if it has done anything it has probably strengthened the partnership and for more details I will reserve my partnership right with Hedreit.

All right, thank you, that's all from me.

The next question comes from the line of Alex Jones from Bank of America. Please go ahead.

Good morning. Thanks. My first question, just on the power solutions margin, again, this quarter, one of the reasons you cited for the strength is lower than expected project costs. Could you just expand a little bit on that? Are there any specific items that are common across projects that have driven the lower than expected costs or just generally good execution and a lot of project-specific factors?

Just normal project factors that hit. Sometimes you have an execution where you have no delays, you have access to full access to site and you get the assets there and you get the cranes and everything else. So it has just come together really well and of course we are probably benefiting in a quarter like this on Some projects that were having commercial really good traction. And at the same time, also, we are executing, as you can see on our delivery table, on markets where we have very, very experienced operators on site. So that's the main reason underlying. Then there will always be some one-offs hitting some of the projects. And of course, that also leads to What we have as a comment in saying here that there are some of the projects that simply just have a lower operating cost in the quarter.

Okay, understood. And then the second one on the buyback, obviously you've decided to announce sort of a larger program for the next two quarters today rather than the sort of one quarter at a time approach that you were taking previously. Can you just talk through the decision to do that? Is it implying that you now have better visibility on sort of future results, orders, cash flow than you've had in the past year when you've been taking a quarterly approach or any other interpretation we should take from that? Thank you.

Thanks for the question, Alex. No, there's nothing else you should take from that. That is, as we also communicate, that is on the back of the strong first half and on the visibility we now have into second half. These 400 million, together with what we have done so far this year, we will go up to 650 in total with what we have announced.

Thank you. The next question comes from the line of Martin Wilkie from Citi. Please go ahead.

Yeah, thank you. Good morning. It's Martin from Citi. And yeah, congratulations again on such a great set of results. I did want to come back to Power Solutions. And if I understand correctly, the offshore business is still loss making, so you expect that to go to profit Thank you very much. I mean, in aggregate, was that post-calc just way better this quarter, or was it much more just the particular mix this quarter was better, and you kind of knew that already given the backlog and the comment that you made earlier? Just to understand what really drove that magnitude of improved margin. Thanks.

We've just been through this and seen, of course, a quarter where I don't think I've had to raise my voice one single time on a project execution this quarter. If I had to raise my voice this quarter, it was to give people an extra praise for something. So I think, Martin, in this quarter, it is just... Thank you very much. Thanks for watching! I can't say anything else. Of course, onshore is performing above the average and the average was 10.4. So there's no shying away from that. So we are doing well in onshore. We are also improving and getting there in offshore.

Thank you very much. And if I could just have a follow-up question. I mean, the question did come up earlier about the U.S. market, but obviously still a lot of moving parts in the U.S. There were some court rulings on permitting recently. Obviously, the tariff backdrop has changed quite a bit since the start of the year. Are you seeing any signs Thank you very much.

I don't know what people are sort of unreasoning. I don't know. We got to fulfill the demand that comes. And I think last quarter, I think the talking point was at that point in time, there was a department in the US that probably didn't work exactly accordingly to the expected legislation on issuing the permitting or at least the negative interference permitting. Daniel Patterson, Javier Rodriguez Thank you very much. and in 20 and in 27 I think the same as did when we were sitting here last quarter and discussing I think there's still a section 232 that is outstanding but then on the other hand then some tariffs have been going and some tariffs have been returned and then might new tariffs be coming Thanks very much.

The next question comes from the line of Kasper Blom from Danske Bank. Please go ahead.

Thank you very much and of course also congrats from my side. So happy to see that your hard work is paying off here. Two questions also here. First one goes to the service recovery plan. You've now for a couple of quarters talked about how you can see that your efforts are paying off and that you are able to take out costs. Can you talk a bit to where you are in this recovery plan? Are you sort of past all identification of challenges and is now more execution? Or should we more think about this recovery plan as something that will also continue after 2026 for 2027, 2028 and onwards as you continue to sort of optimize this business? And as a bit of a follow-up to this, I know many investors are eager to see When will this cost take out lead to higher margins in the service business? Is there anything you can say about how you will evaluate the business when you get to the end of 2026? Thank you.

Thanks Kasper. I will only repeat what we have said. Service recovery plan is on track, deliver as expected. It's both on the cost side but also on the commercial side. The team is delivering exactly as we have planned and as we expect. I appreciate you all would like to see when and how much and so forth and what we have said and we will repeat this quarter. Thank you very much. and let's talk about guidance there. But again, we have more to do for the rest of the year. The last six quarters of the recovery period is giving us good confidence in the team in terms of their ability to deliver on the plan because they have done so far. Okay, thanks for that.

Then my second question is a little bit of a follow-up to all the previous ones on power solutions and Your statement about having outstanding execution here in the quarter, which I suppose we can also see in your gross margin. Henrik, you point to the fact that you are delivering a lot in markets where you have a lot of experience and looking at the table, it's Germany and the US are two places that stand out. I suppose these are also markets where we can expect to see a high degree of onshore deliveries, both for the remainder of this year and for the next year. Should we then also expect that these markets can continue this outstanding execution? And is it possible to take the best practice from these places to other markets? Thank you.

I mean, it's a special day because you sit here and now you almost have to explain why we are doing so well. And we have probably trained very well quarter on quarter for five years in explaining why we were doing so badly. I think here today we are doing so well, so it's an interesting one. Listen, we learned all the hard practices three, four years ago, and we tried to bottle that and take it into the countries. But you also will appreciate where you have several projects on an execution on a go, then it's a lot easier to compensate where you have... Thank you very much. It's not a Q2 we can sort of bottle because it just came well together and the pricing and the commercial terms of the Q2 orders were significant beneficial project by project. So there is a combination in this quarter. Thank you. Thanks.

The next question comes from the line of Sean McLaglin from HSBC. Please go ahead.

Thank you and well done from my side too. I have a question on offshore. Deliveries now stable over the last three quarters at about 0.8 gigawatts. Is this a new run rate? Is there any reason to expect H2 offshore deliveries to fade versus H1? That's the first question.

I think the quarters here will be more equal because it's about getting it out, getting it prepared. There's more installation, there's more pre-installation work when you talk about offshore, so that will probably be more flatline. It doesn't have the same seasonality and shouldn't have the same seasonality. But of course, in offshore, you would also appreciate that where you are more, I can call it, Javier Rodriguez Diez, Anne Pearce, Javier Rodriguez Diez, Anne Pearce Thank you. And then staying on offshore, it remains the largest clog you like in the bridge to the 10% margin target. We've seen that

So obviously you've already reached a degree of production efficiency in the last quarter, which I imagine is also part of that margin strength. Just where we go from here, is it really about higher volume or are we already at a level where This three to four gigawatt run rate is, I guess, the delivery norm. And it's really, there's still a lot more to do on the actual efficiency of production. Just wondering where, if any detail around, you know, where we see those incremental improvements that drive you from red to black and drive the company to 10%.

Thank you. I think you're right in saying we can start seeing and you can start seeing the same as we can in terms of scalability and volume. We are getting there. I think we spoke about it a lot through last year. I think there was an initial when people started not liking offshore as much a couple of years ago. Daniel Patterson, Javier Rodriguez There is a lot, Sean, until you get comfortable with that. Are we fully comfortable with that? Has the journey ended? No, not at all. But we are at a point now where we can say that from a scale point of view, from last year we had a couple of projects, this year we are right now fully focused on And of course, the by far biggest thing here sitting with the variants, I call it Daniel Patterson, Javier Rodriguez and I think now you can also start seeing the lever of it in a context. Thank you.

The next question comes from the line of William Mackey from Kepler Chevro. Please go ahead.

Yeah, good morning. Thank you for the time. A couple of follow-ups really. Starting with service, you've explained you're making good progress with the cost out and that's evident in the revenue progression being slightly down in the year. Can you share how you see the scope of revenue development in the second half of the year or rather how you see the scope of cost development and also maybe touching on the viability of the 25% margin in service that you've called out in previous quarters. That's my first question.

First of all, we'll take it as a positive here. The cost-out journey is progressing, so that means the cost-out as a meaningful lever here is continuing, and that is also continuing, but it is also continuing as a day-to-day working discipline. But there are still a couple of areas around the world where more attention is needed. So that will be. Then on the guidance of second half of the year, there's also transactional sales, which makes that a little bit sort of, hey, that we don't do that and we don't have a top line. We have an EBIT margin guidance right now and that we are following because I'm a bit nervous for in the recovery of... In all fairness, it's not a chasing of top line or it's not a top line here. So top line will be what it is and then we will show that quarter on quarter. But the business is in better health than it was six quarters ago and our colleagues in there running it are responding positively to it. And of course, at some point in time, Jakob's point on LPF will also start helping. Daniel Patterson, Javier Rodriguez Before we are able to probably say a bit more of what jumps will that come in. But there is no doubt for all of us. First, the immediate target of the service business is to complete what we are doing, get the backlog right. And then the target is for having a margin that starts with a two. And that we will get to in a timeframe. Thank you.

Thanks. The second question goes to the onshore business development again. I think your installation volumes are declared 3% up year to date. I mean, if you could share, you know, all being well and obviously subject to weather and execution risk, the sort of level of increase in output you might achieve in 26, or to think of it another way, how do you see your factory utilization trending Thank you very much. Thanks. First of all, what I will say here on the utilization, I think we are

We are still seeing that. You can also see in this quarter, and Jakob has had that in his part as well, we have included now the factories from also TPI in Mexico and India, and we expect to use those factories as well in our capacity planning. So therefore, we are not sitting here and trying to say that our utilization will go down opposite. But that also speaks to still part of the handle to the 10% bridge, which is onshore can still do things, we can still have a better utilization. And you know right now that in the U.S. we're having a good utilization, but it's also finding that balance in the U.S. because of course there is a U.S. manufactured advantage, and of course we are using that. Daniel Patterson, Javier Rodriguez I really encourage people not to walk away from a call here and think that second half is a kind of a disappointment. I'm saying if we are now discussing a rounding, whether it's nine or it's nine and a half or something, I have variances in a quarter on executing power solutions that are far bigger than half a percent, as you were saying. So it's priced well, it's in there, but we have had some execution and we have had some part of the Jens Stoltenberg And if we can, we will try to see if we can get to nine. But that's the guidance we are seeing for the business. And if that, I could take the last question, operator.

The last question from today's call comes from the line of Lucas Ferhani from Jefferies. Please go ahead.

Hello and thanks for fitting me in. I have two. The first one is just on inflation. Obviously, we're seeing Still prices, copper prices go up, logistics also accelerating a bit as of late. I mean, how do you think about what that means for ASPs, for underlying pricing? And then the second one is just on Germany. Obviously, the new EEG has been released, EEG, sorry, the new grid package as well. There's some changes for developers there. I guess the feedback is mixed, but it's still, you know, up in the air and it could change again. But how do you see Henrik Andersen, Henrik Andersen, Javier Rodriguez

There we either have agreed with the customer that they will come a part of the risk contractually and the rest we are securing through whether that is indexes or whether that is through our various tools in our treasury team, then we cover that, treasury and procurement, then we cover that. So I would say inflation and other changes to raw materials and pricing, we are dealing with that. Thank you very much.

We have actually seen a number of European countries doing that, I think to the benefit. I saw it latest in France just a couple of months ago where also they invited for feedback on, for instance, the offshore expansion. So I think this is positive. When it comes in this way that you invite the market participants, you also will appreciate that what has come with the German expansion and the German policy and let's not forget it's only sort of three years ago Germany was doing on average what rest of Europe was doing well below an average of expanding the energy accessibility for Germany. and now Germany in today's future expansion on auctions are of course suddenly doing almost in auction volume the same as EU did totally in installation just three years ago. So we are trending towards auction volumes of somewhere around 13, 15, even maybe 15 gigawatt while the EU just a few years ago totally Thanks for watching and see you next time! That they deserve a lot of credit for, that the new government, Reis and Merz, deserves a lot of credit for. And therefore, as an industry, we can then only add how we think that will work in the next three to five years, depending on how we structure it. But I think there has to be something for both and that German government is looking for. So maybe we can comment on it in after Q3 when we know a bit more of how the Thank you very much. Thank you so much, Lucas. And to everyone else. Thank you for listening in. Thank you also for your active questioning. And we look forward to see many of you over the coming days or even the coming weeks. So therefore, thank you for that. And thank you for your support, not least through the many last years. And I hope you appreciate the support and also our saying proper thank you with the share buyback after Q2. Thank you so much.