Vestas Interim financial report third quarter 2018

Summary: Revenue on par with last year's third quarter while earnings and free cash flow decreased. Solid order intake and combined order backlog at high level. Guidance for 2018 is unchanged for revenue and EBIT margin before special items while it has been updated for total investments* and free cash flow*.

In the third quarter of 2018, Vestas generated revenue of EUR 2,811m - an increase of 2 percent compared to the year-earlier period. EBIT before special items decreased by EUR 79m to EUR 276m. The EBIT margin before special items was 9.8 percent compared to 12.9 percent in the third quarter of 2017 and free cash flow* amounted to EUR (223)m compared to EUR 193m in the third quarter of 2017.

The intake of firm and unconditional wind turbine orders amounted to 3,261 MW in the third quarter of 2018. The value of the wind turbine order backlog amounted to EUR 10.5bn as at 30 September 2018. In addition to the wind turbine order backlog, Vestas had service agreements with expected contractual future revenue of EUR 13.2bn at the end of September 2018. Thus, the value of the combined backlog of wind turbine orders and service agreements stood at EUR 23.7bn - an increase of EUR 3.5bn compared to the year-earlier period.

Vestas maintains its 2018 guidance on revenue in the range between EUR 10.0bn and EUR 10.5bn, and on EBIT margin before special items of 9.5-10.5 percent. Guidance on total investment* and free cash flow* is adjusted. Total investments* are expected to amount to approx. EUR 600m (compared to previously approx. EUR 500m), and free cash flow* is expected to be minimum EUR 100m in 2018 (compared to previously minimum EUR 400m).

Group President & CEO Anders Runevad said: "With continued strong global demand for wind energy, Vestas delivered industry-leading results and profitability in the third quarter of 2018, including another all-time high order backlog and all regions contributing to a 25 percent increase in order intake year-on-year. Although the industry remains highly competitive, average selling price in the third quarter saw continued underlying stabilisation, which highlights Vestas' ability to create value for customers. Our service business performed well with 14 percent organic growth in the quarter, while our offshore joint venture contributed to our net profit with EUR 23m, underlining the strength of our three-legged business model. To ensure Vestas sustains its leading position and ability to achieve long-term growth in the renewable energy industry, we remain focused on managing our fixed costs, effectively mitigating external factors such as tariffs, and delivering the profitability needed to innovate and deliver our industry-leading renewable energy solutions." 

Key highlights

Strong order intake
Order intake of 3.3 GW; an increase of 25 percent year-over-year, leading to all-time high order backlog.

Good service performance
Organic revenue growth of 14 percent, and EBIT margin of 24 percent.

EBIT before special items of EUR 276m
EBIT margin before special items at 9.8 percent.

Progress in MHI Vestas Offshore Wind
Contribution to net profit of EUR 23m.

Free cash flow year-to-date negative
Negative free cash flow due to lower profit and build-up of net working capital to cope with higher activity.

Outlook 2018
Unchanged guidance for revenue and EBIT margin before special items while total investments and free cash flow have been adjusted. 

*) Excl. the acquisition of Utopus Insights, Inc., any investments in marketable securities, and short-term financial investments.

Information meeting (audiocast)

Today, Wednesday 7 November 2018 at 10 a.m. CET (9 a.m. GMT), Vestas will host an information meeting via an audiocast. The audiocast will be accessible via vestas.com/investor.

The meeting will be held in English and questions may be asked through a conference call.

The telephone numbers for the conference call are:

Europe:               +44 203 008 9806
USA:                    +1 855 83159 44
Denmark:           +45 3544 5579

Presentation material for the information meeting will be available at vestas.com/investor approximately one hour before the meeting.

Contact details

Vestas Wind Systems A/S, Denmark
Patrik Setterberg, Vice President,
Investor Relations
Tel: +45 6122 1913

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