VWDRY - Earnings call transcript Q2 2021

Due to licensing restrictions, you must log in to view earnings call transcripts.

Henrik Andersen

Good morning, and welcome to our Release and Presentation of our Vestas Q2 Results for 2021. Warm welcome to everyone and let's go to the key highlights of the quarter immediately.

So first of all, we had a strong order intake and we also released a first preferred supplier agreement on our 15-megawatt offshore platform. That ended in a total order intake of 5.3 gigawatts with both onshore and offshore contributing to that number. Revenue was €3.5 billion, impacted by lower offshore activity and also to some extent the continued supply chain constraints which we have seen in Q2. it. profitability offshore the the business also inflation X.X%, base fixed integration of cost the from and into margin impacted higher by cost and EBIT therefore also service We revenue QX had and margin EBIT XX.X%. an performance a again XXXX growth XX%, compared solid of to of from recyclability And to with also the step CTEC entered of the on project, we find the waste turbines. zero which important ESG another side, all purpose a trying of turbine, XXX% the is our of had towards where blades we And course, also then more much adjusted what year, the from have last, more but reflect we will and talk and the which about cost also inflation. discuss in revised in of to will the this the quarter outlook supply for we constraint we chain moving business and environment. to Starting global the immediately

also of wave the we And goes fourth either I affected the longevity entail direct by the of things pandemic think here a reality right now it effects will still number that have saying thoughts I some or try in of citizens of without and colleagues countries. a it's are a say the rebel of because talk causing some lot is challenges. with here also as but to

the also in are will in. first we the seen countries not still able we our news we continuity to operating them. amplified power because that probably for learn energy way chain supply strategic in. from a lot course around and and remain markets. a by mitigate the very is here just I challenges have of and say logistical the of our some are impacted the business of restrictions for strong COVID-XX think countries also positive is of that That but we I been continued of being We've but wind some all here Vestas in a it's all for operate to support the commitment us and critical it a also infrastructure bottlenecks

a We have inflation seen further accelerated. cost

here but especially You can say year the for in have transportation. probably we also the quarter only not seen

a also inflated seen number in have We raw being materials components this cost of part. and

talk will about here mitigate. how we more that also We but

reduced construction find And service for see a I working positions right enter the in think we mobility, to workers. same or opportunity I higher colleagues especially still or and now in the either to are of nearly and hard and they exit some guaranteeing you XX,XXX incredible incredible the of also this found issues here, the sites to solution. thank for in does India, ways examples with dealing and company to and partners thanks in evidence around, call some those have and will it the and mitigate which number wait-and-hold especially globally. a being gratitude, I some mitigating a here technicians They that lot employees are best extent May effort also or and ours. mitigating. impossible, Also big our a We work these countries sites putting or a to of mission just the extend we and here in. customers committed challenges take even to like a you work continuing thank also incredibly global in an have It's of

remains onshore and for in and ASP for both Solutions intake from course supported We the Vestas reach. and underlying, that And saw X.X creation. continued of gigawatt. an therefore total a global industry utilizing also offshore, not stable supportive Power to Solutions. of then if onshore Vestas' look least value strong the had quarter, go order we we Let's at Power the It's

we that platform billion and preferred course, would we highlight in project of onshore supplier with versus at order take business without at look in offshore of it because across This €XX.X EnBW already backlog. in backlog gigawatt X.X saying there that it seen. variables onshore from chain had new goes talked XX-megawatt were offshore and offshore the And so here, an was profitability. and then led number When is We at the the on and And the of gigawatt a I in the we time on some that order of note also there strong on Germany. was here coming intake the after were QX, first execution in two -- focus the first increases. and to QX. about in that point supply because to a Our wait high just hold the all-time is the a cost integration QX, discussions very, agreement very

we again some nearly the order have second and round saw within EMEA Especially can Germany see will intake have And time found of we that's their increase in order the year. years the intake. also You first now many this the EMEA, because of highlight those the in have solutions gigawatt executed that now X.X seen I gigawatt X.X QX. for auction agreements just in that in to

to auction was X.X now it. see we round First and also round gigawatt, permitting on X.X auction second gigawatt, but flowing

in said will business, -- onshore uptake performance the X.XX. you and in ASP, And leading go to ASP the one we I to was here in quarter. auction a When in as down leading the previous overall said, in see auction When stellar then compared the is was also now up restarting quarters. we one-off leading XX% the X.XX Service say as probably just to that the second the XX% and momentum. EMEA catching markets of now So all first the

well offshore we and that that place. year for progress having back to That chain. where come the also our also in but global the onshore XXXX of partners the the supply deleveraging model we scale, chain to in our that done. with to the get both only we start gives more customers, Still supply not integration us now and So in operating is and

to also the service focus long-term We continued contracts platform. EnVentus on on

Australia. us across Europe taking seen also You've wins several and both in

in multi-brand with XX-year a the scope duration signed contract We also a had US. full

So again, still from When at XXXX, stems now of we look capture, on billion, of And service it's also out also but €XX.X €X arena. billion onshore but it own €XX.X on the evidence billion. up we that to is be in course, part. an work the backlog, that the the €XX.X of multi-brand aware QX billion compared both

gigawatt what we are regional regions talked a of to integrating and of to the increase a looking under in embarking an we cause the also we three is emission, the in CTEC the and zero-waste be as the all a our positive for saw We in of that mentioned reflection in it's strategy that entered the XX in into level. seeing And Americas, XXX launched. reality we technology have an It's are to a from have split that regions. are in not And actually the one it of contract increase can the here before. average that go coverage to of work sustainability from we new And have several EMEA project, see both We Below again for APAC. you XXXX than It's will excess projects an and step. journey. years have now or therefore, duration is service carbon now important in the years. be the we With us anything highlights, sort with turbine of else new activities. highlight that offshore in we

right the on level the slide. side see will You of the

initiated We wind support turbine. launched on here by European-wide XXXX decommissioned said Europe. band by to And again, also it also fully connected is the turbine project the lanes well the zero-waste landfill around wind

in is a technicians. quarter or of workplace the safety We factories it's half proud able XX% an see have the and continued side gone our annualized see focus first and have external from here in basis very also measures environment displaced the least that, we that sites can where million half up a safety tonnes Really up Lastly, importantly we tonnes on it we've not the even where challenges a million and comes on quite also work many first I large that with our a service country had to In XXXX. million, the been Denmark number. XXX we reduce factors to COX than in comparison, – for in are right less year a we that on to like a And XX the instance emission year. think a in to when our that ensuring has QX. a total

impressive the through quite with So to With over further an to COX. number I of hand it that, of displacement in financials. deal Marika, walk and will details is

Marika Fredriksson

you, Henrik. Thank

Henrik what the has through know, statement income you good as a here. is of reflection been So

stable. to driven So service very we as if is stable The as of in offshore. by primarily activity revenue activity last year, stable see QX the well compared levels increased not

some obviously the profit, improved points by million. is by cost here of back as and which well higher as US from to is well gross an slippage margin co-development from EBIT onshore and the driven before X.X a from as It's the contribution X.X to offset That in the extent percentage points. projects as special Income offshore items is the result that. percentage activities. Solutions driven a associates higher Solutions. SG&A get year-over-year. as CIP. quarter by by Gross in I had certain both by primarily service. and up Power positive primarily will the So, is of integration, That the margin increase €XX JVs Power a

strong UK external still before in improved, and to Revenue driven special profitability, increase and X% items are is is provisions percentage the despite but decrease year-over-year that decreased level. onshore very activity the driven by We is by in by not revenue by improved levels, project profitability have want lower year-over-year, cost driven in Offshore by an where primarily X.X we mainly inflation. points important EBIT which we be. installation underlying the warranty and primarily a margin

continued at look having performance. we So business, strong the service a see

primarily the XX%. quarter-over-quarter, higher You of integration onshore increase the well see revenue driven activity a offshore here That increased by as year-over-year as business. levels by is

and to €XX see the from quarter, amounting amortization continues very before focused also is to increased large extent good the year-over-year be items SG&A XX.X% continues to very under in Depreciation to side. by and margin the million control QX corresponds excluding so here and very to EBIT special our million, a and impairments you offshore. a So that €XXX cost be to performance. related that

payments milestone by which nothing Net in payables. percentage primarily is So to well obviously here down capital points the that activity an is as is year-over-year and quarter. unplanned absorption improved Relative X.X%, driven positively amounted working increase for it levels by quarter, SG&A in the to impacted costs lower as of obviously. X.X the and

We to have anticipated and cater an for here activity primarily is in in the high quarter. the inventory second that increase level

positive from very So again as change makes flow And we Cash if of say, Net quarter. a and planned focus €XXX with a Total last capital statement would in positive And for. interest-bearing the see the here year difference activities. working continuous I million. obviously investments big a stable. is the operating obviously have position I on is cash net flow discipline. cash year-over-year that compare million, very in flow we cash €XXX cash and

which and is see here QX, than you same. €XX So last is year, million the higher million in methodology the €XXX

Provision and and as localization. to continue needed in lost we R&D, where as well capitalized So in invest factor. also malls production cases

cases anticipated, also have and Warranty we have consumption we cases as that provision discussed. also consumption of an And QX and at in be have extraordinary X%, in And the repair is here LPS for is that structure. for we is this an below see that debt-to-EBITDA Net obviously year. provided see that by year consequence for threshold. the is year. increase precise. that the Capital last still of well indicated indicated have the X.X% we you again, our this to increase driven two we around You stable very two the a

to that highlight done So here we of quarter million. Directors' we €XXX to have By a level €X.X Henrik. in leave I negative of are word the that, million. AGM, And proposal Board following the at dividend the of the at you the also

Henrik Andersen

the so the one, you now course much Marika. and of And Thank to that's outlook. last

raw the revise not see with decided materials to from the what business least the financials, also status transport. to of we extent the the components and of and the So our some guidance we effects have and from coming

grow to So revenue XX%. an we Service still full will right approximately XX% guidance to the to now XX.X% year expected is be XX%. XX.X% for previously of of outlook had where

the to million what the is range X%. margin outlook was then we the also the come. this, you the year where of announcements to now the that platform and X%, to the I X% therefore Service X% and to moving without of to of from it provision which those think in XXXX On EBIT haven't in affected include margin, here is total the revenue for second we And is expected as to reflect of countries The -- together special be the expected is a half of to and especially seen we like be integration that the any year at now we the warranty to €XXX offshore. also both approximately again off outlook say and also previous see offshore X% being a X% X% HX billion previous activities, be is by approximately to the still is the adjustment. investment in level equal in from be which thing expected after manufacturing items, number the billion. below to as relating X% is and -- around here full And think COVID-XX. you've still on XX% around from of saying the €X the discussed with we mid to and QX €X we had putting look in same When we

year the come therefore will will the of normal the more for you normal for listening up circumstances. -- remained with so rest the of will will guidance guidance Thank sort the that much. and behind the I thank therefore uncertain open assumptions for this base year this that, to Q&A. probably than So, in operator under the in you and With

Operator

line Danske [Operator comes the Please of from go from Bank. Instructions] Our Johansen first Kristian ahead. question

now open. is line Your

Kristian Johansen

you. Yes, thank

two me. for questions So,

cost your this about seeing. obviously, First, underlying considering in regards inflation to comment project profitability slightly the that puzzled is improved you're

and you if including you how maybe you that definition? in bit is can cost exactly this do or transportation clarify material profitability? raw a So, So, do define what mean all

Marika Fredriksson

Kristian. understand I Yes,

discussed But pricing simply more from that say the mean impact it factors initiatives So, that stable see the includes to one alluding changes I as the is the all is And of is that as productivity rerouting of variances had I'm we such at project project of the But Then the obviously before we and full -- I an if normal. is when because profitability impact year we're I terms don't numerous that, the as see profitability the to, calc the little times. inflation of underlying possible. on the sort we did clearly didn't are the obviously including. in and I of obviously anything what that look I as lot you any but apart especially, refer as doing do any a project or really of we improved cost excluding contribution have that have. that we obviously, this improving. warranty the when in have pre-imposed margin deviations year, still having last a the similar are we provision also of see of having I

Kristian Johansen

to should into hedged, taken you expect going And we to should new full the XXXX question view what see sort Okay, And under full this the for we or to the that of half extent come? in mitigate are cost makes Then are inflation. you we is ahead impact just of what to have we you still secondly, this? have And this same second actions seen on sense. the looking yet. effect doing terms better how

Henrik Andersen

when think we for work the released methodology Kristian And with. guidance constantly we changed today, XXXX that. Hey thanks I for haven't we the

we on we way So, And that beginning now or basically we executing look in that would now. are are of what appreciate second means those for and in we there we look the August, assume into of year. and the are executing either experiencing things already lot a we of the backlog are sites. half the so what plan towards you And

So, is now in therefore, one fairly part. that, I of visibility But having course, the thing good a right we cost inflation. that said have think

The is we like little a a here other it thing work now extraordinary bit circumstances. market rerouting Marika in which mentioned where also right

So, leaves else's. your X where without have you on goods either just where prioritized with situation put on you somebody see a finished that work's outside can hold harbor it be unfortunate they or on actually have wait somebody the the ship because taking can

the where down its to that and So, asset down is I shipment. now think to single we single talk right mitigation about the

So, very in strict very very, and that stringent matter following. we are very,

Kristian Johansen

understand. provide on supply versus any of of the inflation? I flavor impact sort Can magnitude cost on you the the chain

Marika Fredriksson

way will that say increase answer done extent have is right that and I that part will to the both cost the scarcity. now as the to cost due have rerouting you increases, also is I a biggest large that probably and we same Kristian you so we but see biggest have

So, that part. costly it changes the is most the is

have people at the a the complete to raw now see an cranes Therefore, Henrik install transportation. get have really you on the but you also have that in biggest have from lockdowns difficult. cost also said get material so projects. very it's see longer We Asia, Then additional slippage the sites part you you because a impact have you is cannot because would we in what lockdown we getting we the as period

it the as is cost due as unprecedented So, the pandemic inflation. well situation the sort to of

So, unfortunately that a perspective. whammy bit of from double a little

Kristian Johansen

you Thank Understood. very much.

Operator

Deutsche from Bank. line comes Our of go from Please Obaidullah next ahead. Arsalan question the

open. line is now Your

Arsalan Obaidullah

my for morning thank you Good question. and taking

of uncertainty coming just turbines material near terms in in wanted to onshore negative demand the turbine just for costs in the sort term the you're seeing side? whether from the of from near -- term, anything are the I rise And quarterly prices sort the one. demand as the in here well? and you raw any Just of seeing in also regulatory US, understand on

Henrik Andersen

Arsalan, thank you.

of your I question in questions think a there's couple here.

a So I we here details of gigawatt think all, QX QX. alluded discussed in order the of it's because It was now also there QX a in that number also on intake adjustment what and go that experiencing a we are what onshore, to discussions adjustments magnitude cost customers clear after an have to two signal with will the think some that quite of or in of were and you first a whenever of price back. we I

extent, external will discussions or internal go time. the they That of that QX. internal to Some revisit back from for financing. course, processes, a approval and their And lot of QX committees of investment either takes pushed

of there in we discussions now same intake. with Some are order are adamant And these the process. reflected

the We below is order priorities which always And of have the process are we is there, don't the robust I and disciplined threshold. of think just the around threshold we with they one And intake. here same that. drop work the

but confirmed Europe ago, also gone When here numbers struggled affected that megawatt. we we up. prices a at the to electricity here of we in has QX were that energy that So €XX per there I say price year around find also will just in it, shouldn't PPAs, least the has sat underestimate

a that ago. is compared Now XXX% year up to

side most markets. valuable think of has in I more become that on the the electricity So suddenly also

the value as point this. for unfortunately, has of full customer up is means it a coal from like connecting with an about well. chain coal which there view, I And seems it's of also demand gone increasing So XXX%, think

Germany. We PTC. the mentioned, some So, don't see is is as in situation is to example clearance When particular -- opposite change ways, the the see a the it the for a US, instance, it still, a comes in the onshore, we there underlying. in there a actually on

we You can to. would taken extent have also see some but orders we to not the like

the to clearance we PTC is US, And will also local the I what UK. the appreciate discussion progressed compared are point discussions hopefully in employees in you to all see and We and in manufacturing an on more in US. come that think from ongoing therefore the

So -- that US. in to the

we the to wait decision longer to a So probably HX their have into that bit administration and on await PTC.

Arsalan Obaidullah

Thank much. you very

Operator

Thank you.

Carnegie. ahead. Dan question next from line of comes go the from Togo Please Our

line Your is open. now

Dan Togo

margin Thank say more Yes. to when Maybe engineering, be some What in do bit should -- half through that. we billion flavor out revenue -- to push incremental because guiding into on so margin the second €X.X could sort calculate XXXX. for you're to try XXXX in you. I for incremental half and reverse a looking second compared more that here, put we of

the question. be would first that So

would be deliveries. on question Second

of here You in feasible delivered year, XX, to XXXX and right circumstances in some environment in the half gigawatts. last second the that given XX half close now? second Is we're

Marika Fredriksson

well, Dan. I I and extreme in lot It's sort -- push a expected few Yes. we but the shown this Obviously, say both now think year of year normal you uncertainty the profile year. Obviously, for the have with of it COVID second extreme think years is last restrictions. higher and yourself a a has which probably last been that half,

So And a as that we QX. obviously is here expectation there can. from slippage said, I is

to So, we QX half. still able first that so expect intend and situation. be and manage to QX, But

improvements. side, On work I the continuously with we margin further mean,

price in have very on a we sales As also productivity also I the handsome average the side, said, backlog.

extra too So and much much changes if position a costs, then in X% EBIT too the too that guidance. X% we also obviously, avoid is better are and we to much can changes, rerouting, in reflected

Dan Togo

Vietnam, are where looking plus/minus? emerging understand, these I -- in mean, are should be what to regions. in here? out markets And just cetera, risks so which is service talking Brazil, markets where which for, here did we -- -- X-gigawatt And are it et So could an the appear this additional we is about --

Marika Fredriksson

I definite would Asia, America right is Yes. would Latin say, challenge. challenges that, say are bigger the I now. has in -- But

is the Vietnam. think markets, I of And for a is one us, lockdown. there have you a mentioned So that that complete good we market

there's a capacity right severe why and an are no now, to see are we reflecting can again, have doing of we But EBIT what up and our obviously, something negative this. we obviously, that, that mitigate is I is, we, that limitations but also putting far the that the best But, X%, X% so mean, to big installing, so we cost impact. to August. to I and are do. the trying we're So obviously, cannot increases there at indication positive a here, a in range as And what in intend we do But, said, and pretty still between. due

Dan Togo

much. so a lot. you Thanks Thank

Marika Fredriksson

Thank you.

Operator

Our next question comes from the line of Supriya Subramanian from UBS. Please go ahead.

is now open. line Your

Supriya Subramanian

Hi. that onshore Feb, that? I still just that business peers, Good risk, to well, on in And and they two your pushing are pass-through as year. Vestas if but potentially any? the what for are to at of of have you into is, increases? positions, looking of that is morning backlog, unhedged through know on clauses there And also thank since measures at have mitigating the or days, proportion you're the let's has started exploring I pricing, price of offset stated One taking Is terms March my in say, questions. your absolute one something of taking course, also that questions. this XXXX. early thoughts what it's wanted get

Henrik Andersen

thank your you for question. much Supriya, so

And of some think people some either and and I First in the of that's the And of in some what And now is working. comes of XXXX. for raw hear, inflation, of dealing it forget they with we way else, the backlog to now cases our also are the more situation. to these with backlog. therefore, bad what with XXXX many partnership where to they with can generally, materials a they to that praised from people of and somebody what when giving also as are, the, year, call, variables. and probably the served get how earn to see deal both haven't understanding I there, to I the course, through praise of us And long or are work reflection well it also it, all, this and mitigate effect, I probably or times, a what we behavior, to see this you at in have backlog lot where there in price we of deliver also also We probably of the changed of are could long that the the But adjust we such, to out components. because try contract of the that same lot time. forget we

be prohibitive better timing expensive rescheduled some is say, with. is become that of look will it we measures to So a from markets then, wouldn't backlog, some with there deal hedged we a the perspective are either are, when and doing. and which just and you at, now. it I And be, are you that have a residuals. we a when There as the Marika right so we we it market, rescheduling of we those a said, work backlog, where firm fully And where into always with. have goes to work have residual transport, therefore transport being have extraordinary because less some an of then hedged you will And we normally as possibility are have rightly when now

business. that that of decades to name time of work want of contract such. go don't supply and have XXXX So counted when at be keep think and it we with today, work the we comes to and sort we level same now. as it clauses the can we I into for pricing, right on When to the diligently We you've chain comes seen working the now through, on game. project we are the as And global been what I doing here

start need it and absolutely goes you So new. come risk. it's that needs some customers when then price QX. that variable firm They get we I until at have in helping the firm hedging some regulated. so a each something which spoke to price things, saying, into have of Then to invented of some And a are in delays these when you order don't think, we you're it we certain be about ways you approval. by for will other we customers also the can then as have of course clear, From time, here, other cause in is point intake in there the that

that here. the by well. what up goes prices So seeing, that way are they up customers our with think well as their I think And the saying I of are see other appreciate goes extent mean now. There's and way it. pricing renewable right wind also of we solution we offtake I no And in

matches I think, I electricity has smiled even and also say probably the customer and than up the there together turbine. to said gone more it is well has So there that a

So a find market that its probably time. natural due it's will in

Supriya Subramanian

Thank . you Sure.

one more around across geographies. profitability question Just

potentially profitability could and share likely XXXX that well? come as in is XXXX next an the to across would is regions, US and sales US into couple mix maybe off broadly profitability so going weight as effect of even the you some of years, the be total Given higher or is shed light adverse there

Henrik Andersen

markets. process a or here. favor don't our locations We disfavor any see robust We in

sense. thresholds So the work We thresholds. same in we have with same that the

that be the comes customers that limit within of chain, taking will of therefore, see of allocated the our out volume the basically we our also stays So more supply threshold global that orders. to

always in. but it's So where that's complexity display to extent or we that. due some variate with the scope or we don't as to delivered either therefore, will And geography ASP discuss

Supriya Subramanian

Thank Great. very much you right. All

Operator

JPMorgan. of go question Gupta the next from line ahead. Please Our from comes Akash

is open. line now Your

Akash Gupta

absorbed year. saw because be might and this result And duration one in some returns these Henrik is on on terms of extension maximize you've to thanks to that your able headwind And of raw on act that I of near-term end Marika and of pass inflationary heard on the And subsidies. your need unlikely, delays and we uncertainty be risk your PTC for an supply of extent one, entire thoughts side we will -- clarity price because morning, by investment customers out needs some that My from this it's was of come get you. second longer on Thank for been Hi. pressure pushes the well first extension could customers the Any this is by by be thoughts any and it your we I saying Good as on if to completely. US Do likely that would And customers. don't and of, there and down? you the some of to that? may have from US chain of how impact they quickly XX-year waiting get increases. saying We competitor it one want might the orders? competitors to their material we as in any to your extension is think some time. have

Henrik Andersen

for thank your question. Akash, you

comment you're to I will unknown. PTC, First on to the of that. avoid try me asking think all on I And the

this positive it case localization. we have number when think commitments. in And XX that we there slightly there current are last PTC in might either to seen we earlier new covers, the either the years I regime of percentages in a was is it it comes have extensions flavor in in or extension have the seen as be there the months

think I will there, anything just be So speculation. the to adding

an of everyone customers the in is offshore said, think onshore or whether I acceleration get that more can projects. being how US we actually prioritized

do the as let's the legislative on flow But therefore be projects then I QX, rather XX see the us than the of say and and to frame based frequent. it that currently and in business. for The on percentage clearance you the increases and us complete the discussion when of change regularly on intake. if exist. and that for is we the cost can see effect lead doesn't and order positively it might the the coming right up and would quite that PTC materials rather a I be world the a do When of us to costing will months' projects So And to commented in around that update there important we say these fairness it because some also when require price the think to therefore, has comes about it things when to on generally calculate therefore we regularly is components have of comes to and frame a will comes percentage strong is then they firm a wait and now Akash speculating that What time hold ask customer transport price until it But delivery. we it. that variable. the is the raw

come to forgotten. not turbine serves no of and there having don't professional product I be pricing that seen the that And be probably also we price actually that's solution works. how that all will know the increases But into at something want is partner partner think because to conversations. the the that and a we professional industry a and to will encourage therefore, somebody customer So, it's thinks the

Akash Gupta

Thank you.

Operator

Our of Collier. Blom the comes Casper go line question Please ahead. from ABG next Sundal from

open. Your line is now

Casper Blom

Yes. lot. Thanks a

about a income of First guidance Marika quarter. that in the co-development coming is Could whether assume tailwind this you. of a level in give quarters That's mentioned, first had anything to Thank also, all statement affecting put for as you any talked really the from questions sustainable projects yet. business bit lumpier too the there? you of we is haven't one. to on US that sort you or

Marika Fredriksson

mix answering this late somewhat yourself. think that more I overall to stage. becoming Casper starting at more is I if mean And you the the Yeah. a And portfolio good it. obviously, you're more But, it's of question of It have look when mean divest part is lumpy. is This you're and the I a business. I

on that of having So it that to and frequent do give at basis -- be as is be obviously, But, cannot you to I co-development very to expecting business, we're very the we're this frequent to point. an be what number as a basis part lumpy than is exact precise. hard more this

Casper Blom

Is it that fair you more of and a will grow year-after-year it's as this? more do assume to that number

Marika Fredriksson

have and But and That's time. it Yeah. it we that lumpy that's I my the the obviously takes expectation is business. just mean focused on is why experience.

Casper Blom

Okay. Then onshore I on offshore you with my in you a note kind more EBIT revenue give whether know second between question this this regarding indication level and and the give quarter. on a in EBIT margin I you approaching margin in of breakdown much offshore. you revenue the from do saw business. that had the power But offshore breakeven are any don't the you that quarter? Can solution's

Henrik Andersen

you, As journey are year until you following I the into be of guidance -- will inside gave end a And the the on we the and the said with of we when took offshore do are that can't. this it we effect Casper backlog over. you basically XXXX and years And, got that dilutive because the basically the we therefore, of margin business. we

argued where as quarter So the also of dilute in that turnover, we some sort helps cost business. we fixed the integrating are course, a Marika of capacity have but

the We also have done integration.

that's don't basis So the synergies is. the full just will when it anything indications any come We over business. no we XXXX, how on expect but in of else. XXXX year did to There's guidance we change acquired of QX a

Casper Blom

a in is at fixed to want quarter offshore? enough don't cost you come seen to the And say this revenue in you've whether

Henrik Andersen

is delivered a competitors. are I projects certain on anyone's will and part that start being in few there comment on very a not of what market No. under because I we projects in don't interest then few that one where one think, commenting and is

Casper Blom

Henrik. Fair lot, a enough. Thanks

Operator

of Our Citi. the Martin next question comes from from Please go Wilkie line ahead.

Your line is now open.

Martin Wilkie

good Two questions. morning. Citi. Yes, thank from Martin It's you,

in is What it we on pricing from is raw be far would of at coming outside, materials so just and that The ASPs pricing back assessment we and first And supply reported might by these so. sort one many, comments to your sort when -- that I -- pricing has at all see materials stable, has XX% that externally look that are obviously are many things to that's basis because you to X% year-on-year. doing raw a that a still mats the for pricing. forth look When on layman wrong like when raw chain the through not are stable suggest that is bought go look pricing up supportive necessarily maybe higher. of Vestas. or be the too margins, understand calculation up does that simplistic, there's come by

very first might So that quarter. the half if second good prudent level second question. any in just in the deceleration to the around specifics one just be was profitability the a margins of service service, And and does there's the that in guidance. imply understand because second on It obviously, why

second in profitability bit you. Thank to Just understand the little a half? about implied the service

Henrik Andersen

the pricing So question. the Martin thanks on side for

you see just when said, pricing. put As ASP can't sort you the between of an I equal and pricing,

a We've QX, also seen in projects times said it now. I by projects So of have seen we escalated. number been

pricing, say for also So creation value stable considering means projects pricing stable when of we individual the it Vestas. the

the fulfills said, satisfied the booked So as therefore, respects the we development conversations. and are quarter. actually an X.XX And And overall those with I that in ASP. of and in we've X.XX some

countries, So a like intake forget, done this. have we more are order in where you quarter shouldn't XX than there

We So towards, it. working and other it. say We what or what unchanged up it and of diligently do been It's should that's can be it's that's you things can't we're careful scope so also really stable. that whatever. here. can't set say see we you It fulfills,

increase. calculation it a XX% is there I your in quite the of that comment we some is percentage are than there it's or XX% And projects a it X% know And the profile. more on because, is lot changes that areas current will or where

Marika Fredriksson

in. at on will you rolling, in point here, margin But go XX% we we overall providing stable indicated to see only something comfortable, good feel bit repeat your on performance that are the is so you and and But depending is quarter understand we if is this will months obviously, are But business, thing, the you ups the and indicating And a XX have a here I will myself, to market. lumpiness, obviously service the see we I very which point what Martin. it downs, also little that time.

Martin Wilkie

Thank Okay. much. very you,

Operator

line Our comes of Deepa the Please next ahead. from go Bernstein. from Venkateswaran question

Your now line is open.

Deepa Venkateswaran

much. I follow-up had so question question. Thank you, one one and new

the raw and margin to fair Can million? these commodity bps today, cost side we we physical for million. Should up also do on the or have overall on offshore, into the Marika a seems bit the So, opposed a if here? how rest about because guidance to I is has but like year? trickled you quarter, more I versus on that's the Henrik the as residual that mentioned there's evolution because any €XXX read €XXX million more Would increased constraints second talking of mat mind bit know it? it XXX And on is anything the SG&A. exposure. to assume inflation? that see the SG&A And mainly €XXX and some year what last you're elaborating for that And more changed question of the of commodities with on say next my the of you inflation, you ratios logistics compare

Marika Fredriksson

Okay.

a if if bit rigorous the a I – here on answer So process. commodity it's little Henrik's behalf side, we on

would And we haven't at second one this is timing gap components. picture. be right up firm obviously part what other Henrik So it's the very if say direct And the is you to anything biggest will direct, the any business. overall. that having inflation, when and obviously the depends it there And we obviously, And have there's see impact also think very mean that say you transport to is cost this that is a I like tower our say fair or residual what on alluding point it seen from clear an And this And And – year I view order. any that of to the indirect you is I exposure from now, offering on that from changed it's whether the is indirect impact. to comes and it increasing when a deal comes material. when would raw commodity of to a to. speed I biggest

have we're COVID limitation on And parts just we bit depreciations and situation, So up due see again. in the increasing investments. on with I But And of causing previous we a that – you two. both and together of there's side, the have now to flexibility as have you back the offshore going that's company. mean also a situations them remember is forth amplified that going then because normalizing is SG&A part the a you depreciation they global – world little – other in that are by the further have is

Deepa Venkateswaran

you Okay. Thank

Operator

Sachs. line the Goldman next Ajay from go question ahead. Patel from of comes Please Our

Your line now is open.

Ajay Patel

just Good to can sure the ask and the morning. just if first presentation one, the make Thank allowing me you increases cost is question. I margin to material add downgrade Is the a the wanted raw bulk and made I for one-third understand bit potential just maybe the trying vast to get you on of if the I'm the from delays, to to logistics project XX%, or XX-XX. clarification.

we had I any of intake of really helpful just least would the on make at Is which previous just came do next to costs form of understand year additional mats consistent for could, through, I'm is get Just with year-to-date. sort rough guide the you've can us tell side. be sort order is everything. order then you which margins what your a the guidance of exposure see that sure what to X% give commodity effectively? before to and of it And some sense intake guess, because early you was too these the raw trying outlook to I residual if see of or risk X%, on just

Marika Fredriksson

Okay.

relating second it part direct it's costs major what also But year one the conditions. say, particular to to absolute inflation, and is also you in more with from in what COVID I extent So if the transportation would now situation but lockdown this have countries. we see is weather right limitations be different also due see to could And other slippage, then we but indirect. cost a the we certain start big But is And but is it's impact. logistics is material. raw the the

Henrik Andersen

internally tools previous initiatives Marika In terms question the having working around think it's for think is how also of we relates towards goal margin of the an said, your EBIT a the very pricing of I the clear what and diligently to charming are XXXX – guidance I XX%.

also a longer and worked So therefore, when also we here, we as towards work said we with adjustment what price diligently term.

previous constantly do a out try current read to seven, either six to related eight to you a better to Ajay. So can't we anything or five

Ajay Patel

much, Marika. Thank you very

Marika Fredriksson

you. Thank

Operator

Our next the from question Societe Please comes Singla go ahead. Generale. Rajesh line of of

is line now open. Your

Rajesh Singla

is Good my second it Thanks turbine. Yes. possible your comment morning. of regarding it Hi. one front. number question. has on pricing the on LCOE stands question the year taking like currently? Is LCOE and megawatt the X.X changed This last to where And over for that how

we book track that a So the want that the discussion whenever you last order. we firm time are future we sure that just everything as make factor. a on the when have hedge receive reflects mentioned And we for to well. currently order I same had And we

Henrik Andersen

thank yes, much. Well, you so

then large you audience. a that I work it components increase course as supply why the in comes from the global generally yes, have I there. become just development We buying power buying turbine LCOE as leading generally think reduce platforms necessarily comes not are firm nature energy models appreciate And materials down also of in we the supply then fully-hedged, audience. hedgeable one But is diligently our the you either tune a extent get to raw the or and a of right. upgrades new to would we it And of we that. to levelized some price all that of are again and also you appreciate And chain. information we security when I journey do course because will into can to and certain When offshore a broad the of global reasons here the embarked on have goes we and customer hedge too avoid will future or by of commenting that chain specific of not a that much the when mode quite into a it to simply come player on a with is cost that's a to that.

of we in. demonstrates working what there also case works are the chain the strength well. And partners course, the Of in considering this environment we supply we the the it are except with work that really probably guys with supply in chain

also it's exactly here also adjustment whole is world. that basis the XXX a I think So how of to major finding credit both the of in have that point we supply harbors but with chain a hedging, it bottlenecks actually those quite mitigating lot works which midpoint the gives

So externally. are I and team internal back credit support working diligently think here and a teams of that so bit us with to little the that partners internal that that

Rajesh Singla

follow-up Thank you. just one on the Maybe hedging part.

quite So longer long costs? into can for we think raw how we the these heard can hedge last future. material all that time you I the hedge

So like material raw can you bit how these maybe costs? clarification more hedge a on long

Henrik Andersen

timing But connects how to the not important intake. the the is hedge or the -- that project the It's necessarily here.

clauses have same intake will So other the we you as the generally time have can hedge order frame have we discussion. in the or that then

out project. you that So sort that on can't, hedge that of, a say runs

Marika Fredriksson

And the different have we that is different phrase slightly is methodologies.

and can would you financial you you you pre-buy, costly. more we're hedge but longer I And you to also the if is a period store can so index. means that So the mean we very do as obviously can such I say hedge have. using have would

where we we of over appropriate. you have means something try is avoid. that then different So used it's But have see to time and them all most we

Rajesh Singla

you Thank you. very much. Thank

Operator

question of comes Claus the Almer Please from ahead. of next Our go line Nordea.

now line Your open. is

Claus Almer

taking them for will much my by one I one. so you Thank take questions. you. Thank

for Why The be level. And and is low guidance? out at orders first of very the to first question the is revenue one. a this in which XXXX is the goes would lower that? one the reasons in That

Marika Fredriksson

is we that -- revenue we Yes. this how slippage a right change And I timing no. obviously that you're lost lower The haven't have anything, mean, a obviously it's in pan-out. the the slippage guidance will yes, but year. But infra-out means primarily question.

But comment side. So infra-out such it's firm orders the activity have at because a in is It to half. we my not second an slippage all. relating pretty definitely level from

range And not things So on side. the providing EBIT we're slightly if will good. at be to that's pretty a why big also least flawless have

Claus Almer

QX and the year too instance, being in has some announced for late? expect out and gone we or in Should orders is

Henrik Andersen

think exclude, August. are I shouldn't you – you but rightly are you as in will we saying,

supply are less with you will you a So the of of that. hours, less and chain impact have

infra-out instance, market depending backlog orders. the Marika said, So which to a it that an there very of one year as – was of just also is the currently. have much is you this was seen and market is Chinese which And on no is China, extent, a for little different for normally how lesser in acknowledgment

Claus Almer

– excluding China, yeah, level. why even of it it or the is this But choice is wind of is And business, by so low? or market, low is a this the nature

Henrik Andersen

I you to end. what in of advantage it, As also things to might both I they now, much think mitigate year, the a probably of all infra-out some asked out that and or it maybe appreciate know quite of orders manufacturing that will for of year changed be China the right will where be an lot and I therefore, going to because notice. tariff be have for a a order a different from cost it's we these said want there good some some it's reflecting exactly US, was very are infra-out and in that came things dealing here, that, where view, to that's if it's higher. an way we come certain regime of of of easier that more say their with push and come on, with short And to from a better much of you it predominantly a point a coming you take

Claus Almer

Okay. Makes sense.

impact lost at is the production a it excluding peaked? X% high actually have expect When does now negative the provisions we this to and to goes question a obviously? factor second have increase level. high should that and The to level P&L continues And

Marika Fredriksson

as If has the doesn't P&L increasing. obviously and that of I it's production it's factor but make impact. first, if P&L And even is plan. anticipated are It's provision, increase consumption question, to going part good have provision answer The according warranty lost the the the a not obviously, means your things that impact. latter the it to

issues expected quarter. this that if expect said, two that here would I that, factor – increase addressing I lost had. we of a correctly, we production higher consequence then to of part issues latter the the And in but precise, have start frame. improvement definitely in The we see we that level half the haven't not a we we the in obviously the So are should improvements forward, early also the and year. is remember say, the seeing should And an now going and But year. down been although next time one to

Claus Almer

much. you Thank so Okay.

Operator

Our next McLoughlin the from Sean ahead. question go of from Please line comes HSBC.

Your line is open. now

Sean McLoughlin

Two Thank you. Good morning. questions.

which looked strong pretty cash on strong Firstly generation, seasonally QX. in

you're note to of signal the a the first interest be we booking turbine, how for about firm this when machine? wondering, expect secondly for And just buyback thinking Thank XX-megawatt for So on in the potential XXXX? would you. offshore, first you orders

Henrik Andersen

we have there external of comes it, year profitability think environment creation. and especially the from in because on variables I value well on on the cash a it the in. Sean with links coming we're are tremendous the saying, – timing cash, fair we flow said, to side, it a working therefore are the where When Marika focus it's as

prudent be we of always So and more will wait there more sort see.

So an decided that QX, will we ongoing haven't anything after evaluate and basis. on we

a the with of offshore of is holy therefore, world. FOI sense. the look, the worked So or When will market in times. order later slightly grail number necessarily if appreciate around lead you longer cases to we offshore, but deal with include are it will will diligently is nothing in how cash We not that the we year, when continues the intake for the comes us. that, then exclude sort works in we And

many a comes both fair we into I the – up As from comes local into partner are in those world, of are approval major and countries, good participating there in and the on is chain in from the offshore momentum discussions. good probably keen there markets there also right quite countries That for picked process enormous governments now. you customers, and think manufacturing supply we but the exactly those are

to a cycle it comes the it patience different order intake, more compared So, have firm a when bit because onshore. is to

Sean McLoughlin

you. Thank

Operator

comes ahead. Our from Please Growe Sebastian from next question go Commerzbank. the line of

Your line open. now is

Sebastian Growe

question. Hi, my taking Marika, for thanks And morning. Henrik. Good Yes.

also that is only I've is due from FID would one around EnBW. first XXXX. their in offshore The and the Then release the supplier VXXX. agreement preferred press terms read question my think with cetera, margin obviously look on be because based far the in project how first thresholds so terms, we should about capital this and conditions, the about is et the nevertheless

be bringing of case, the first. sorry down better really more And And to question but it and let's importance on is would eventually the second in the a offshore with that hence project specific for this services, utmost but question. start

Henrik Andersen

any I say again with partnership. of details charming know here, of question, the and I again, And one that. That that. We with won't will of and project that so like wide work say audience We open the I customer will single discussion. a of Sebastian, we appreciate first to respect give all, this will all. audience just I diligently will on here, be think also in is the respect a I wholly much the unfair the against hear

for what have -- the businesses. value we onshore. also in assume would know on beyond work the we you profit we creation therefore, well do for We we come you diligently the same two as can that -- that was same And when the for targets the XXXX, said metrics

work the work well press customers think offshore. our in we And partners we in also and details with from that further how fair release that's and open So I partner to EnBW. that's my how a very be very, also will and

Sebastian Growe

That's Yes. fair.

contributed more offshore second mix the shed and much if for light quick you the follow-up on second more a comparison. And the and quarter. eventually has a meaningfully more on one Okay. question is just some Can sequential service

And seeing onshore other be is So are the first potential between synergy report the quick structural the more you some offshore. greater that of because in quarterly obviously the that business, will nature question. had one the mentioned on I you and

eventual my more seeing question So be areas be specific, a or you rather bit here? be could you would impact financial which might if

Henrik Andersen

take you part? the Do service

Marika Fredriksson

Yes.

profitability increase offshore, to onshore I have an well. are contributing well are and increase we that said, the as that of see space as we the comes from lasting. It increase so in is how as quarter-over-quarter. the lumpiness I that. components long on service, onshore it the it's on the again -- as we to depends But saying the When think quarters the obviously, the So clearly both also

on depends an quarter So it will impact and for the have cost which the that given profitability. have actually you that on

we're have been on now with cost. have that it's We cost in this successful we right will didn't into much of less if comes in have have will very too flexibility impact. people an to terms also sites COVID the different that of environment when the if hinder And sending a in also also it out

are those see of impacting All that we here in the the quarter. a great positives to to extent

Henrik Andersen

colleagues talk on one-to-one. our we can question, do And overall on would like are the maybe just to to global the rightly more also service in and last model operating we aligned we setup, can to side, where that. in With regional we that, the building offshore actually a pass that both operator if but the about I the

question last please. So operator,

Operator

you. Thank

of line go Mark Freshney ahead. question from Suisse. the final of comes Please Our Credit

open. is Your line now

Mark Freshney

my you Thank me ask letting to for questions.

margin, share that last five economic EBIT the have these profit been on years, bring I the eroded. to share EBIT over So firstly, EBIT turbines your customers mean benefit of

of Now, the a materials. discussion add has that, secondly, gone up, the raw far are higher those How not raw is Because backlog through on are logistics rises, that yourself? labor probably into absorb the should and in surely for rises But percentage cost hard. been fair base materials have manifest materials, about the there. expect to all should passing through or margin extremely so passing your economic in are yourself. up, only those be something than Surely more you has scope discussion actually costs? onto own going your margin within some -- others i.e. but that be about, cost the would to are there there And wage is what surely regions input costs raw you for, the to would I going itself a

Henrik Andersen

recovering I EBIT towards And we the question from the this for us percentage will said enough therefore, you we the two margin take our a midterm never questions, know thank that. you Mark, I shy Okay. just is EBIT of time margin? away target. first, of if well work diligently

transport where our so. is a be also and our scaled. day have do or over we is the to how output also point levelized has will sit orders the cost we then not in here. I is then we have XXX towards than work three back for can all, the a to position competitiveness there done guidance years which here what We not that, in also now But puts therefore, continue will to then -- a us when second So That we And going impacted, that either much this raw saying, don't it supply over work countries. capacity because the cost. the it of more last XX terms global in to look EBIT customer's question the annually, call take of a down forget, which we of to constantly materials, about, view. competitive we therefore, with employee are not And like be we the start And do we will here, of where we and chain world what higher part matter a can come least basis this which a our talking own capacity don't in that's on in have components, every saying there day to quarter which the And from at also we then a target. as XX% of will revised proven, therefore, prove country. in your we gigawatts in of from points or itself part a material is XX energy have cost is get want we the sit also of the serving years that relates last we to terms the do turns solution the inflation scaled is, first day

customers part the in price our probably whole is important from And I find will that value As of itself think as I of mentioned, well. most respect electricity. the the just chain

we that constantly from And with the cost from away delivering on supply with. that opportunity So of with we of work scale the absolutely work will EBIT won't besides in here. it an is recovery promised from solutions. efficiency our chain reduction an is up, so work priorities, implied We efficiencies point our key we here, one also to shy

Henrik Andersen

or hope, connection you upset didn't you we Mark your Okay. I lost there.

So coming of with over days. the I couple speak to hope you

interest? forward from I'm many of So could the thank the and that, I to again also thank for with coming the you we look days. over everyone you attention sure to speak And just for here.

Marika Fredriksson

Thank you.

Vestas Wind Systems A/S (VWSYF) 11 Aug 212021 Q2 Earnings call transcript