Company Announcement No. 21/2022
Interim Financial Report
Third Quarter 2022
No.: 10403782
Vestas Wind Systems A/S Page 2 of 36
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nancial Report – Third Quarter 2022
Classification: Public
Contents
Summary ........................................................................................................................................ 3
Financial and operational key figures ......................................................................................... 4
Sustainability key figures ............................................................................................................. 5
Group financial performance ....................................................................................................... 6
Power Solutions ............................................................................................................................ 9
Service ......................................................................................................................................... 11
Sustainability ............................................................................................................................... 12
Strategy and financial and capital structure targets ................................................................ 13
Outlook 2022 ................................................................................................................................ 16
Financial calendar 2023 .............................................................................................................. 16
Consolidated financial statements 1 January - 30 September ................................................ 17
Management’s statement ........................................................................................................... 34
Information meeting (audiocast)
On Wednesday 2 November 2022 at 10 am CET (9 am
GMT), Vestas will host an information meeting via an
audiocast. The audiocast will be accessible via
vestas.com.
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 3333 000 804
USA: +1 6319 131 422
Denmark: +45 3544 5577
Conference PIN code: 52523657#
Contact details
Investors/analysts:
Mathias Dalsten, Vice President
Investor Relations
Tel: +45 2829 5383
Media:
Anders Riis, Vice President
Communications
Tel: +45 4181 3922
Vestas Wind Systems A/S Page 3 of 36
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nancial Report – Third Quarter 2022
Classification: Public
Summary
Quarterly revenue of EUR 3.9bn with an EBIT margin
before special items of (3.2) percent. Continued strong
wind turbine backlog of EUR 18.1bn despite lower order
intake. Full-year guidance adjusted.
In the third quarter of 2022, Vestas generated revenue of
EUR 3,913m – a decrease of 29 percent compared to the
year-earlier period. EBIT before special items amounted
to EUR (127)m, resulting in an EBIT margin before special
items of (3.2) percent, compared to 5.7 percent in the third
quarter of 2021.
Free cash flow* amounted to EUR (752)m compared to
EUR 300m in the third quarter of 2021.
The quarterly intake of firm and unconditional wind turbine
orders amounted to 1,895 MW, and the value of the wind
turbine order backlog was EUR 18.1bn as at 30
September 2022.
In addition to the wind turbine order backlog, at the end of
the quarter, Vestas had service agreements with
expected contractual future revenue of EUR 32.8bn.
Thus, the value of the combined backlog of wind turbine
orders and service agreements stood at EUR 50.9bn – an
increase of EUR 3.6bn compared to the year-earlier
period.
Vestas adjusts the full-year guidance on revenue to EUR
14.5bn-15.5bn (previously EUR 14.5bn-16.0bn), and on
EBIT margin before special items to approx. (5) percent
(previously (5)-0 percent). Revenue in Service
specifically, on the other hand, is now expected to grow
min. 20 percent (previously min. 10 percent).
Total investments
*)
are now expected to amount to
approx. EUR 850m in 2022 (previously approx. EUR
1,000m).
Group President & CEO Henrik Andersen said: “In the
third quarter of 2022, Vestas continued to increase the
average selling price of our wind energy solutions and
build further momentum within offshore wind, although
geo-political uncertainty and high inflation impacted
execution cost and activity levels in the wind industry. In
this environment, we achieved revenue of EUR 3.9bn
despite project delays, while our Service business grew
more than 30 percent with a solid EBIT margin of 24.5
percent, providing stability during a very challenging
period. In the third quarter, our profitability improved along
the lines of our expectations but remained heavily
impacted by cost inflation and supply chain disruption,
which resulted in an EBIT margin of minus 3.2 percent
and an adjustment of our guidance. Our growing offshore
momentum was highlighted through preferred supplier
agreements totaling 3.8 GW across USA, United
Kingdom, and Poland, while onshore order intake landed
at 1.9 GW and an average selling price of EUR
1.06m/MW, ensuring a high order backlog of EUR 18.1bn.
The energy crisis incentivises a faster transition to an
energy system built on renewables and ambitious political
agreements such as the Inflation Reduction Act in USA
strengthen the underlying demand for wind energy
solutions, but project development and order intake
remain impeded by energy market uncertainties and red
tape. Everyone at Vestas remains focused on executing
on our strategy and safely delivering on our customer
commitments in a very busy fourth quarter, and Executive
Management thanks our 28,000 colleagues for their great
contribution in a highly uncertain environment.”
K
ey highlights
Average Selling Price continues upward trend
Increased prices secure continued high order backlog of EUR 18.1bn despite lower order intake of 1.9 GW.
Offshore momentum building
Preferred supplier agreements of 3.8 GW announced over the last quarter.
Revenue of EUR 3.9bn
Revenue decreased by 29 percent year-on-year driven by project delays.
Profitability negative but improving
EBIT margin of (3.2) percent driven by supply chain disruptions and cost inflation as well as project delays.
Strong performance in Service
Revenue increased 32 percent with a 24.5 percent EBIT margin.
Outlook for 2022 adjusted
Revenue and EBIT margin negatively impacted by project delays while Service momentum has accelerated.
*) Excl. acquisitions of subsidiaries, joint ventures, associates, and financial investments.
Vestas Wind Systems A/S Page 4 of 36
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Financial and operational key figures
mEUR
Q3
2022
Q3
4)
2021
4)
9M
2022
9M
4)
2021
4)
FY
4)
2021
4)
Financial highlights
Income statement
Revenue
3,913
5,538
9,703
11,036
15,587
Gross profit
161
599
280
1,163
1,556
Operating profit/(loss) before amortisation, depreciation and
impairment (EBITDA) before special items
101
557
122
998
1,341
Operating profit/(loss) (EBIT) before special items
(127)
318
(638)
334
429
Operating profit/(loss) before amortisation, depreciation and
impairment (EBITDA)
103
486
(317)
927
1,250
Operating profit/(loss) (EBIT)
(114)
199
(1,155)
215
290
Net financial items
(65)
(40)
(65)
(70)
(101)
Profit/(loss) before tax
(171)
163
(1,199)
194
225
Profit/(loss) for the period
(147)
116
(1,031)
135
144
Balance sheet
Balance sheet total
20,447
18,927
20,447
18,927
19,648
Equity
3,727
4,690
3,727
4,690
4,697
Net working capital
93
(526)
93
(526)
(1,049)
Capital employed
6,155
6,092
6,155
6,092
6,133
Interest-bearing position (net), end of the period
(1,195)
692
(1,195)
692
1,200
Cash flow statement
Cash flow from operating activities
(614)
513
(1,730)
111
956
Cash flow from investing activities before acquisitions of
subsidiaries, joint ventures, associates and financial investments
(138)
(213)
(505)
(526)
(773)
Free cash flow before acquisitions of subsidiaries, joint ventures,
associates and financial investments
(752)
300
(2,235)
(415)
183
Free cash flow
(644)
385
(2,148)
(539)
57
Financial ratios
1)
Financial ratios
Gross margin (%)
4.1
10.8
2.9
10.5
10.0
EBITDA margin (%) before special items
2.6
10.1
1.3
9.0
8.6
EBIT margin (%) before special items
(3.2)
5.7
(6.6)
3.0
2.8
EBITDA margin (%)
2.6
8.8
(3.3)
8.4
8.0
EBIT margin (%)
(2.9)
3.6
(11.9)
1.9
1.9
Return on capital employed (ROCE)
2)
(%) before special items
(8.2)
9.2
(8.2)
9.2
4.5
Net interest-bearing debt / EBITDA
2)
2.6
(0.5)
2.6
(0.5)
(0.9)
Solvency ratio (%)
18.2
24.8
18.2
24.8
23.9
Return on equity
2)
(%)
(24.8)
16.0
(24.8)
16.0
3.0
Share ratios
Earnings per share
3)
(EUR)
(1.0)
0.7
(1.0)
0.7
0.1
Dividend per share (EUR)
-
-
-
-
0.05
Pay-out ratio (%)
-
-
-
-
36.0
Share price at the end of the period (EUR)
19.0
34.6
19.0
34.6
26.9
Number of shares at the end of the period (million)
1,010
1,010
1,010
1,010
1,010
Operational key figures
Order intake (bnEUR)
2.0
3.0
7.1
9.1
11.6
Order intake (MW)
1,895
3,727
6,996
11,033
13,896
Order backlog – wind turbines (bnEUR)
18.1
19.3
18.1
19.3
18.1
Order backlog – wind turbines (MW)
19,287
24,069
19,287
24,069
21,984
Order backlog – service (bnEUR)
32.8
28.0
32.8
28.0
29.2
Produced and shipped wind turbines (MW)
2,441
3,945
10,168
14,250
17,845
Produced and shipped wind turbines (number)
591
991
2,489
3,563
4,456
Deliveries (MW)
3,569
6,020
8,945
11,712
16,594
1) The ratios have been calculated in accordance with the guidelines from The Danish Finance Society (Recommendations & Financial ratios).
2) Calculated over a 12-month period.
3) Earnings per share has been calculated over a 12-month period and in accordance with IAS 33 on earnings per share.
4) Comparative figures for 2021 have been adjusted following the accounting policy change for configuration and customisation cost in cloud computing arrangements, refer to
note 5.3.
Vestas Wind Systems A/S Page 5 of 36
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Sustainability key figures
Q3
2022
Q3
2021
9M
2022
9M
2021
FY
2021
ENVIRONMENTAL
Utilisation of resources
Consumption of energy (GWh)
156
158
487
564
738
- of which renewable energy (GWh)
57
66
178
216
283
- of which renewable electricity (GWh)
51
59
152
180
233
Renewable energy (%)
37
42
37
38
38
Renewable electricity for own activities
(%)
100
100
100
100
100
Withdrawal of fresh water (1,000 m³)
113
103
274
314
378
Waste
Volume of waste from own operations (1,000 t)
10
14
36
53
70
- of which collected for recycling (1,000 t)
7
9
20
28
35
Recyclability rate of hub and blade
1)
(%)
//
//
//
//
42
Material efficiency (tonnes of waste excl. recycled per MW produced
and shipped)
1.1
1.3
1.6
1.8
2.0
Carbon emissions adjusted for acquisitions and divestments
Direct emissions of CO
2
e
(scope 1) (1,000 t)
24
23
72
75
2)
99
2)
Indirect emissions of CO
2
e
(scope 2) (1,000 t)
0.1
0.1
1.1
1.9
2)
3
2)
Indirect emissions of CO
2
e from the supply chain (scope 3)
1)
(million t)
//
//
//
//
10.56
Indirect emissions of CO
2
e from the supply chain (scope 3)
1)
(kg per
MWh generated)
//
//
//
//
6.65
Products
Expected CO
2
e avoided over the lifetime of the MW produced and
shipped during the period (million t)
80
89
304
402
532
Annual CO
2
e
avoided by the total aggregated installed fleet
(million t)
225
206
225
206
210
SOCIAL
Safety
Total Recordable Injuries (number)
50
56
149
156
201
- of which Lost Time Injuries (number)
9
13
52
50
67
- of which fatal injuries(number)
0
0
0
0
0
Total Recordable Injuries per million working hours (TRIR)
3.5
3.4
3.3
3.2
3.1
Lost Time Injuries per million working hours (LTIR)
0.6
0.8
1.1
1.0
1.0
Employees
Average number of employees (FTEs)
Employees at the end of the period (FTEs)
28,286
29,665
28,286
29,665
29,427
Diversity and inclusion
Women in the Board
and Executive Management at the end of the
period (%)
27
27
27
27
27
Women in leadership positions at the end of the period (%)
22
21
22
21
21
Human rights
1)
Community grievances
(number)
//
//
//
//
17
Community beneficiaries (number)
//
//
//
//
8,236
Social Due Diligence on projects in scope
(%)
//
//
//
//
0
GOVERNANCE
Whistle-blower system
1)
EthicsLine compliance cases
(number)
//
//
//
//
465
- of which substantiated
//
//
//
//
96
- of which unsubstantiated
//
//
//
//
292
For general definitions and specifications on these sustainability key figures, see the Notes to sustainability key figures in the Annual Report 2021, page 142-143.
1) Data only reported on an annual basis.
2) In alignment with the GHG protocol standard, data for 2021 has retroactively been adjusted for acquisitions and divestments in 2020 and 2021 in accordance with Vestas’ policy on
baseline adjustments for CO
2
emissions and related indicators.
Vestas Wind Systems A/S Page 6 of 36
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Group financial performance
Income statement
Revenue
Revenue in the third quarter of 2022 amounted to EUR
3,913m (Q3 2021: EUR 5,538m), a decrease of 29
percent, primarily driven by lower deliveries in Northern
Europe and the USA as well as various delays due to
transportation and project execution challenges. Vestas’
decision to withdraw from the Russian market and
pausing activity in Ukraine has also resulted in lower than
expected deliveries in those two markets.
For the first nine months of the year, revenue amounted
to EUR 9,703m (9M 2021: EUR 11,036m), a decrease of
12 percent, primarily driven by a lower level of wind
turbine deliveries resulting from the same challenges as
observed in the third quarter of 2022, partly offset by
increasing service activity. Revenue for the first nine
months of 2022 reflected a positive impact of approx.
EUR 345m from foreign exchange rate translation
compared to 2021.
Revenue and EBIT margin before special items
mEUR and percentage
Gross profit
Gross profit amounted to EUR 161m in the third quarter
of 2022, corresponding to a gross margin of 4.1 percent
(Q3 2021: EUR 599m; 10.8 percent), which is a 6.7
percentage point decrease compared to the third quarter
of 2021. The decrease in the gross margin was mainly
attributable to continued external cost inflation and supply
chain disruptions in the Power Solutions segment.
Gross profit in the first nine months of 2022 amounted to
EUR 280m, equal to a margin of 2.9 percent (9M 2021:
EUR 1,163m; 10.5 percent). Besides the same factors
impacting the quarter, the decrease in gross margin was
attributable to an adjustment related to offshore activities
covering impairment losses related to the V164/V174
offshore technology and related assets and as well
increased warranty provisions for offshore turbines
already installed.
Warranty provisions
Costs for warranty provisions amounted to EUR 177m in
the third quarter of 2022 (Q3 2021: EUR 219m),
equivalent to a warranty ratio of 4.5 percent of revenue
(Q3 2021: 4.0 percent). Higher warranty provisions in the
quarter were caused by increasing repair and upgrade
costs due to external cost inflation.
For the first nine months of 2022, warranty costs
amounted to 5.1 percent of revenue compared to 3.5
percent in the first nine months of 2021. The higher level
of warranties in 2022 was primarily attributable to
additional warranty provisions totalling EUR 124m in the
first quarter of 2022, caused by increasing repair and
upgrade costs due to external cost inflation, of which EUR
93m was related to offshore wind turbines already
installed.
Research and development costs, Distribution
costs and Administration costs
Research and development costs recognised in the
income statement amounted to EUR 85m for the third
quarter of 2022 which is on par with third quarter 2021
(Q3 2021: EUR 86m).
Distribution costs amounted to EUR 117m in the third
quarter of 2022 (Q3 2021: EUR 102m). The increase was
mainly due to increasing depreciation of transportation
equipment.
Administration costs amounted to EUR 86m in the third
quarter of 2022 (Q3 2021: EUR 93m). The decrease
reflects costs related to offshore integration activities
impacting the third quarter of 2021.
Depreciation, amortisation, and impairment
In the third quarter of 2022, overall depreciation,
amortisation, and impairment before special items
amounted to EUR 228m (Q3 2021: EUR 239m). The
decrease was mainly driven by reduced depreciation on
offshore technology and other intangible assets.
Operating profit (EBIT) before special items
EBIT before special items amounted to negative EUR
127m in the third quarter of 2022, equivalent to an EBIT
margin of negative 3.2 percent (Q3 2021: EUR 318m; 5.7
percent) negatively impacted by lower revenue and gross
profit.
For the first nine months of 2022, EBIT before special
items amounted to negative EUR 638m, equal to an EBIT
margin of negative 6.6 percent (9M 2021: EUR 334m; 3.0
percent). The decrease in EBIT before special items was
impacted by the adjustments related to the offshore
technology, which impacted EBIT negatively by EUR
176m. Excluding this, the EBIT margin before special
items in the first nine months of 2022 was negative 4.8
percent, equal to a decline of 7.8 percentage points
compared to the first nine months of 2021, mainly driven
by lower revenue and gross profit.
Vestas Wind Systems A/S Page 7 of 36
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Operating profit (EBIT) after special items
In the third quarter of 2022, EBIT after special items
amounted to negative EUR 114m (Q3 2021: EUR 199m).
This reflects special items income of EUR 13m, mainly
related to an adjustment of the write-down of the Isle of
Wight production facility.
EBIT after special items in the first nine months of 2022
amounted to negative EUR 1,155m, equivalent to an
EBIT margin after special items of negative 11.9 percent
(9M 2021: EUR 215m; 1.9 percent). The negative EBIT
after special items reflects special items costs of EUR
358m recognised in the first nine months of 2022 following
Russia’s invasion of Ukraine and Vestas’ decision to
withdraw from the Russian market while pausing all
service and construction activities in Ukraine.
Furthermore, it reflects special items costs of EUR 225m
related to the manufacturing footprint in China and India,
partly offset by positive adjustments to the footprint
changes announced in 2021 of EUR 66m.
Income from investments in joint ventures and
associates
Income from investments in joint ventures and associates
amounted to a profit of EUR 21m in the first nine months
of 2022 (9M 2021: EUR 49m). The lower profit compared
to 2021 was related to a lower level of co-development
activities in the USA, partially offset by higher income from
the investment in Copenhagen Infrastructure Partners
P/S.
Net financial items
Financial items amounted to a net loss of EUR 65m in the
third quarter of 2022 (Q3 2021: loss of EUR 40m) and net
loss of EUR 65m in the first nine months of 2022 (9M
2021: loss of EUR 70m), primarily driven by foreign
exchange impacts of EUR 54m from various exposures.
I
ncome tax
Income tax amounted to an income of EUR 24m in the
third quarter and EUR 168m in the first nine months of the
year. For both the quarter and the first nine months of the
year, income tax represented an effective tax rate of 14
percent, compared to 30 percent in the first nine months
of 2021. The effective tax rate was primarily driven by the
losses in Russia with limited tax deductibility.
Net result for the period
The net result amounted to a loss of EUR 147m in the
third quarter of 2022 (Q3 2021: profit of EUR 116m),
resulting in a loss of EUR 1,031m in the first nine months
of 2022 (9M 2021: profit of EUR 135m). The decrease in
the net result in the first nine months of 2022 year over
year was mainly the result of lower margins and special
items.
Financial ratios
Earnings per share calculated over a 12-month period
amounted to negative EUR 1.0 in the third quarter of 2022
(Q3 2021: EUR 0.7). The decrease of EUR 1.7 was driven
by the lower result in the period.
Return on capital employed (ROCE) before special items
was negative 8.2 percent in the third quarter of 2022 (Q3
2021: 9.2 percent), a decline compared to 2021 driven by
the lower EBIT before special items. Return on equity was
negative 24.8 percent in the third quarter of 2022 (Q3
2021: 16.0 percent), a decrease of 40.8 percentage
points attributable to the lower net profit.
Working capital and free cash flow
Net working capital
Net working capital amounted to a net asset of EUR 93m
as at 30 September 2022 (30 September 2021: net
liability of EUR 526m). Compared to 2021 the
development reflects increasing inventories due to the
low level of deliveries in the first nine months of 2022
partially offset by increasing contract liabilities.
Cash flow from operating activities
Cash flow from operating activities was negative EUR
614m in the third quarter of 2022 (Q3 2021: positive
513m). The negative development was primarily driven by
the negative profit and the development in the net working
capital in the period.
C
ash flow from investing activities
Cash flow from investing activities before acquisition of
subsidiaries, joint ventures, associates, and financial
investments amounted to a net outflow of EUR 138m in
the third quarter of 2022 (Q3 2021: outflow EUR 213m),
primarily reflecting a decrease in purchase of
transportation equipment and construction tools as well
as cash inflow from the disposal of the Lauchhammer
production facility.
Free cash flow
Free cash flow before acquisition of subsidiaries, joint
ventures, associates, and financial investments
amounted to negative EUR 752m in the third quarter of
2022 (Q3 2021: positive EUR 300m) and negative EUR
2,235m in the first nine months of 2022 (9M 2021:
negative EUR 415m). The negative development year
over year was driven by a negative cash flow from
operating activities.
C
apital structure and financing items
Equity and solvency ratio
As at 30 September 2022, total equity amounted to EUR
3,727m (30 September 2021: EUR 4,690m). The
decrease compared to 2021 was mainly attributable to the
negative net profit in the first nine months of 2022 also
causing the solvency ratio to drop 6.6 percentage points
in the same period to 18.2 percent as at 30 September
2022.
Net interest-bearing position and cash position
As at 30 September 2022, the net interest-bearing
position amounted to negative EUR 1,195m (30
September 2021: EUR 692m). This development
compared to 2021 was a result of negative free cash flow
and increasing financial debt.
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Cash and cash equivalents amounted to EUR 1,139m as
at 30 September 2022, compared to EUR 1,878m at the
end of the third quarter of 2021.
The ratio net interest-bearing debt/EBITDA was positive
2.6 as at 30 September 2022 compared to negative 0.5
at the end of the third quarter of 2021. The ratio was
negatively impacted by both a lower EBITDA and
deteriorated net interest-bearing position.
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Power Solutions
Result for the period
In the third quarter of 2022, revenue from the Power
Solutions segment amounted to EUR 3,096m (Q3 2021:
EUR 4,921m). The decrease was mainly attributable to
lower offshore deliveries in Northern Europe and
onshore deliveries in the USA and a lack of deliveries in
Russia and Ukraine. Furthermore, challenges related to
transportation and project execution have caused
delays in deliveries more broadly.
The first nine months of 2022 reflected revenue in the
Power Solutions segment of EUR 7,563m, a decrease of
18.4 percent compared to the same period last year (9M
2021: EUR 9,273m), driven by the same challenges as
observed in the quarter, partly offset by a positive impact
from foreign exchange rate translation compared to 2021
of EUR 272m.
EBIT before special items amounted to negative EUR
252m in the third quarter of 2022, equal to an EBIT
margin of negative 8.1 percent (Q3 2021: EUR 263m; 5.3
percent). The negative development in the EBIT margin
was attributable to lower revenue, continued external
cost inflation and supply chain disruptions.
In the first nine months of 2022, EBIT before special
items amounted to negative EUR 857m, equal to an
EBIT margin before special items of negative 11.3
percent (9M 2021: EUR 154m; 1.7 percent), a
deterioration of 13.0 percentage points compared to
same period last year. Besides the same factors
impacting the quarter, the negative development in the
EBIT margin was driven by an offshore adjustment
covering impairment losses related to the V164/V174
offshore technology and additional warranty provisions
recognised in the first quarter of 2022. Excluding this
impact, the EBIT margin for the Power Solutions
segment was negative 9.0 percent.
Power Solutions revenue and EBIT margin before special
items
mEUR and percentage
Wind turbine order intake
In the third quarter of 2022, wind turbine order intake
amounted to 1,895 MW, corresponding to a value of
EUR 2.0bn (Q3 2021: 3,727 MW; EUR 3.0bn). This
represents a decrease of 49 percent in MW order intake
compared to the third quarter of 2021, following the
general market decline and with main impacts in the USA
and Australia.
The average price per MW was EUR 1.07m (EUR 1.06m
for onshore only) in the third quarter of 2022, compared
to EUR 0.81m in the third quarter of 2021 and EUR
0.83m for full year 2021, highlighting continued price
increases towards customers.
Wind turbine order intake, third quarter 2022
MW
EMEA
Ameri-
cas
Asia
Pacific
Total
Onshore order
intake
774
1,027
94
1,895
Offshore order
intake
0
0
0
0
Total order
intake
774
1,027
94
1,895
Wind turbine deliveries
Deliveries to customers amounted to 3,569 MW in the
third quarter of 2022 (Q3 2021: 6,020 MW). The
decrease was mainly driven by lower onshore deliveries
in the USA and Vietnam and lower offshore deliveries in
the UK.
Deliveries
MW
By the end of September 2022, Vestas had installed a
total capacity of 161 GW in 88 countries.
Vestas Wind Systems A/S Page 10 of 36
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Deliveries (onshore and offshore)
MW
Q3
2022
Q3
2021
FY
2021
United Kingdom
283
1,092
2,129
Finland
257
355
838
Netherlands
224
152
388
France
219
78
668
Sweden
214
263
679
Poland
146
227
739
Germany
145
138
598
Ireland
87
-
-
Greece
73
20
40
Denmark
59
65
235
Austria
56
22
91
Italy
49
40
321
Turkey
24
-
88
Egypt
22
1
24
Latvia
17
-
-
Portugal
14
51
97
Belgium
4
8
90
Spain
1
32
76
South Africa
-
100
330
Russian Fed.
-
194
473
Saudi Arabia
-
19
245
Norway
-
279
413
Jordan
-
-
38
Faroe Islands
-
-
11
EMEA
1,894
3,136
8,611
Hereof Offshore
279
972
2,007
USA
619
1,337
3,065
Brazil
331
609
1,892
Canada
242
143
151
Colombia
28
19
41
Chile
23
140
314
Mexico
-
13
200
Panama
-
4
25
Bolivia
-
1
39
Puerto Rico
-
8
11
El Salvador
-
-
9
Americas
1,243
2,274
5,747
Hereof Offshore
-
-
-
Japan
134
13
170
Australia
104
4
389
Vietnam
80
530
1,132
Taiwan
60
-
35
China
35
33
319
South Korea
9
-
1
India
7
30
157
New Zealand
3
-
30
Sri Lanka
-
-
3
Asia Pacific
432
610
2,236
Hereof Offshore
103
-
-
Total
3,569
6,020
16,594
Hereof Offshore
382
972
2,007
Wind turbine order backlog
At the end of the third quarter of 2022, the wind turbine
order backlog amounted to 19,287 MW, which
corresponds to a value of EUR 18.1bn, of which EUR
3.0bn relates to offshore wind power projects.
Order backlog per region
MW
EMEA
Ameri-
cas
Asia
Pacific
Total
Onshore order
backlog
7,993
7,028
1,755
16,776
Offshore order
backlog
1,355
-
1,156
2,511
Total backlog as at
30 Sep 2022
9,348
7,028
2,911
19,287
Europe, Middle East, and Africa (EMEA)
The total order backlog for Europe, Middle East, and
Africa decreased 30 percent from the end of third quarter
of 2021 to 9,348 MW at the end of third quarter 2022.
The decrease was driven by the exclusion of Russia and
Ukraine, lower order intake following the general market
decline and a decrease in the offshore backlog from
2,078 MW at the end of third quarter 2021 to 1,355 MW
at the end of third quarter 2022, due to deliveries of
offshore wind turbines and low order intake.
Americas
The total order backlog for Americas amounted to 7,028
MW at the end of third quarter 2022, which is on par with
the order backlog at the end of third quarter 2021. This
represents a decrease in order intake in the USA, offset
by an increased order intake in Brazil and Argentina.
Asia Pacific
The total wind turbine order backlog for Asia Pacific at
the end of the third quarter 2022 of 2,911 MW
corresponds to a decrease of 20 percent compared to
the end of third quarter 2021. The offshore backlog
contributed with an increase from 728 MW to 1,156 MW
by the end of third quarter of 2022, mainly driven by
orders in Taiwan, but more than offset by deliveries in
Australia, Japan, and India and low onshore order intake.
Vestas Wind Systems A/S Page 11 of 36
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nancial Report – Third Quarter 2022
Classification: Public
Service
R
esult for the period
The Service segment generated revenue of EUR 817m
in the third quarter of 2022 (Q3 2021: EUR 617m), which
corresponds to a 32.4 percent increase compared to the
third quarter of 2021, driven by higher contract activity
and increased transactional sales as well as indexation
mechanisms in contracts.
Revenue from the Service segment amounted to EUR
2,140m in the first nine months of 2022 (9M 2021: EUR
1,763m), a 21.4 percent increase compared to the first
nine months of 2021 driven by higher contract activity
and transactional sales as well as inflation levers in
contracts. Revenue for the first nine months of 2022
reflected a positive impact of approx. EUR 74m from
foreign exchange rate translation compared to 2021.
Service revenue and EBIT margin before special items
mEUR and percentage
EBIT before special items amounted to EUR 200m in the
third quarter of 2022, corresponding to an EBIT margin
of 24.5 percent (Q3 2021: EUR 139m; 22.5 percent),
which is a 2.0 percentage point increase compared to
the same period last year. The increase was driven by
higher activity in the third quarter of 2022.
In the first nine months of 2022, EBIT before special
items amounted to EUR 451m with an EBIT margin of
21.1 percent (9M 2021: EUR 422m; 23.9 percent), a 2.8
percent point decrease compared to the first nine months
of 2021. The development was mainly attributable to
impairment losses in first quarter 2022 and lower
profitability in certain projects in the USA and Africa in
the second quarter.
Wind turbines under service
At the end of September 2022, Vestas had around
55,700 wind turbines under service, equivalent to 141
GW.
Lost Production Factor
*)
Percent
*) Data calculated across more than. 35,000 Vestas wind turbines under full-scope
service. The lost production factor includes both onshore and offshore turbines.
At the end of September 2022, the overall average Lost
Production Factor continued to be impacted by the level
of extraordinary repairs and upgrades.
Service order backlog
At the end of September 2022, Vestas had service
contracts in the order backlog with expected
contractual future revenue of EUR 32.8bn, an increase
of EUR 4.8bn compared to 30 September 2021 from all
regions despite negative impact from a write-down of
the order backlog in Russia and Ukraine of EUR 0.6bn
during the first quarter of 2022.
Service order backlog
bnEUR
At the end of the quarter, the average duration in the
service order backlog was approx. ten years,
unchanged from at the end of 2021.
Vestas Wind Systems A/S Page 12 of 36
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nancial Report – Third Quarter 2022
Classification: Public
Sustainability
T
he Vestas Sustainability Strategy
Vestas has been leading the transition to a world
powered by sustainable energy for over four decades.
But in 2020, we launched our sustainability strategy to
embed sustainability in everything we do with clear
ambitions: achieving carbon-neutrality of our own
operations by 2030, without using carbon offsets;
creating zero-waste wind turbines by 2040; becoming
the safest, most inclusive and socially responsible
workplace in the energy industry; and leading the
transition to a world powered by sustainable energy.
Carbon footprint
Wind turbines produced and shipped in the third quarter
of 2022 are expected to avoid 80 million tonnes of CO
2
e
over the course of their lifetime, a decrease of 10 percent
from the third quarter of 2021 due to a lower amount of
MW produced and shipped.
In the third quarter of 2022, our total scope 1 and 2
emissions increased by 4 percent compared to the third
quarter of 2021. This can be attributed to a higher activity
level in Service. Scope 3 emissions are reported
annually in the Vestas Sustainability Report.
Hydrogen-powered vessel
To help find solutions to decarbonise marine transport,
we launched a pilot program of the word’s first hydrogen-
powered crew transfer vessel (CTV) in July.
The CTV is powered by a dual-fuel solution, capable of
being powered by hydrogen in a combination with marine
gas oil. Hydrogen fuel contains no carbon, signalling the
potential to significantly reduce carbon emissions while
maintaining the same power output. The solution will be
tested at the Norther Wind Farm until the end of 2022,
allowing us to explore a potentially scalable approach to
incorporating hydrogen into our operational setup. The
goal of the trial will be to collect insights into the
opportunities and limitations of hydrogen-powered
vessels in daily operations.
Carbon emissions associated with offshore operations
currently account for one third of our scope 1 & 2
emissions. Therefore, deploying hydrogen-fuelled
vessels will be crucial for our sustainability journey. The
new CTV holds the potential to generate a CO
2
saving of
158 tonnes, an estimated saving of 37 percent carbon
emissions in comparison to a traditional vessel, and this
could drop to near-zero emissions once a source of
green hydrogen is readily available.
Battery charging station
As renewable capacity increases, measures to drive
wider electrification must expand alongside it to ensure
that we meet energy demand while driving
decarbonisation. Building out charging infrastructure is a
key step along this journey.
In September, we installed an innovative battery-
charging station at our headquarters in Aarhus,
empowering employees to charge their electric or hybrid
vehicles with green electricity. This charging solution will
also be available for local residents after office hours,
supporting the Aarhus Municipality’s journey to
becoming a carbon neutral city by 2030.
The system, developed in-house by our Storage and
Energy Solutions team, is managed by a software
platform that enables the battery system to synchronise
electric vehicle charging needs with real-time renewable
electricity generation from our test turbines in Østerild,
ensuring CO
2
free charging.
Circularity
In the third quarter of 2022, our material efficiency
improved 15 percent compared to third quarter of 2021
to 1.1 tonnes of waste per MW produced and shipped.
This improvement was due to factories closed or sold,
lower activity levels, and one of our blade manufacturing
facilities having increased recycling significantly with
fiber glass and pultrusion dust now being recycled by a
company producing concrete.
Safety
Working towards becoming the safest workplace in the
energy industry, we aim to reduce the Total Recordable
Injury Rate (TRIR) to 1.5 by 2025 and 0.6 by 2030,
equivalent to a 15 percent year-on-year reduction from
2019.
In the third quarter of 2022, 50 Recordable Injuries were
registered, resulting in a TRIR of 3.5 for the quarter and
3.3 year-to-date, which is an increase from 2021.
Incidence of total recordable injuries*
Per million working hours
*) Up until 14 December 2020, when Vestas acquired MHI Vestas Offshore Wind A/S,
numbers reflect onshore only.
Vestas Wind Systems A/S Page 13 of 36
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nancial Report – Third Quarter 2022
Classification: Public
Strategy and financial and
capital structure targets
(For an extended introduction to the Vestas strategy,
please refer to the Annual Report 2021.)
Accelerating the journey to net zero
We are currently in a climate change crisis, which is the
greatest challenge humanity has ever faced. This can
only be changed through a new major industrial
revolution: the global energy transition and the need to
act has never been clearer. Global temperature levels
have already increased by 1.2°C and continue to rise,
highlighting the urgency with which we must act to stay
within the 1.5°C scenario.
An important step towards action was taken at COP26 in
Glasgow in November 2021, where climate targets were
increased, additional countries announced net zero
targets and the phase-out of coal was included for the
first time. However, these targets fall short of deploying
renewable energy fast enough, according to the
International Energy Agency (IEA). Further on the
COVID-19 pandemic led to a further deepening of the
world’s dependence on gas and coal and creating price
and supply volatility.
The value of wind turbines and other renewable
technologies is already well established. The energy
transition though is more than a technology revolution. It
also requires a fundamental shift in mindset – thinking
and acting across our entire value chain, employing
circularity and collaborating across the industry,
strengthening of supply chains to ensure flexibility and
alleviate challenges. Further on, the industry must
become more profitable, with appropriate return
measurements on equity and capital. As a leader in
sustainable energy solutions, Vestas is deeply
committed to ensuring the renewables industry achieves
full maturity.
Today, electricity constitutes just 20 percent of the global
energy system, and of this wind energy provides around
6 percent. With less than 2 percent of all energy coming
from wind turbines, it is clear the growth potential within
the electricity system alone is tremendous. For more
than 40 years, Vestas has driven the global energy
transition. This will remain our key focus. To create a
sustainable planet for future generations and continue to
provide an economic return to our shareholders, we
must, however, also look beyond wind energy. We will
continue to invest in solutions that enable both the
continued deployment of renewables and allow us to
integrate sustainability in everything we do.
Industry leadership and challenging new fields
For more than 40 years, Vestas has delivered solutions
to one of the world’s biggest challenges. This
commitment has taken us to global wind leadership with
a presence in more than 80 countries. During this period,
we have made wind energy the cheapest new sources of
electricity along solar PV. We have further paved the way
for a sustainable energy system but there is still a long
way to go.
Solving the climate crisis entails decarbonising the entire
energy system. Vestas has the scale, reach, track
record, and technological expertise to continue leading
the buildout of renewable energy and expand renewable
energy through the following core pillars:
· Increasing the renewable energy penetration of
electricity
· Driving direct electrification
· Developing and implementing solutions for
indirect electrification
As part of our strategy, and as part of our efforts to play
a leading role in the energy transition, in 2021 we made
significant strides towards achieving our vision of
becoming the global leader in sustainable energy
solutions. The main ones:
· Finalised the integration of Offshore, establishing
one globally aligned organisational footprint for
Vestas
· Introduced the offshore V236-15 MW™ offshore
turbine
· Launched roadmap to secure full circularity by
2040 and accelerated targets for full rotor
recyclability by 2030
· Matured our business across the value chain
· Increased our focus in project development
activities, Power-to-X, and Vestas Ventures
In the mid-term, our priorities remain to lead the market
in both wind power plant solutions and in service while
integrating sustainability in everything we do. We also
aim to ensure industry-leading profitability, sustaining
our preferred partner status with customers, and
attracting the best talent in the energy industry.
To achieve our goals and lead the energy transition, we
focus on three strategic business areas: onshore,
offshore, and service. For an elaborated version of
priorities and ambitions for those three business areas,
please refer to the Annual Report 2021.
Driving industry maturity
To drive our strategic priorities and ensure we focus on
the key challenges we face, Vestas runs a yearly
strategy cycle and review where we discuss, adjust and
optimise our strategy based on market changes and
future scenarios. The yearly cycle ensures close
alignment on strategic priorities between the Board of
Directors and the Executive Management team,
providing the organisation with a strong focus and
ensuring clear direction for all of our colleagues around
the world.
Vestas Wind Systems A/S Page 14 of 36
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nancial Report – Third Quarter 2022
Classification: Public
In 2021, our key strategic priorities included among
others the following:
· Sustainability: To address the climate crisis while
meeting the growing expectations of our
stakeholders, we have mobilised internal functions to
accelerate our sustainability journey. Despite the
inclusion of offshore activities, we remain committed
to carbon neutrality in our own operations by 2030.
We have launched our Circularity Roadmap and
accelerated progress towards zero-waste turbines
and continue to invest in sustainable mobility.
· Quality: A key part of the continued evolution of our
industry is to provide quality to ensure resilient
energy systems. This includes dealing with issues in
an efficient and customer-focused manner.
Continued growth through new product introductions,
accelerated cost-out and high activity levels have put
pressure on the entire Vestas value chain, including
our quality. To address these challenges, we have
reinforced our quality culture and focus through
several initiatives and strengthened and simplified
our processes and governance and developed a
strong quality community across Vestas. Our aim is
to ensure issues are contained and solved close to
their origin, while providing best-in-class quality for
future customer solutions.
· Talent & Leadership: Vestas’ growth ambitions
require us to attract, recruit, develop, and retain
business-critical talents. In order to achieve these
talent objectives, we have launched several
initiatives to consolidate our position as an attractive
employer, improve succession planning and create a
more diverse talent pipeline.
Long-term financial ambitions
Wind power has outcompeted fossil fuel alternatives in
most parts of the world, volumes in the global wind
turbine market are good, and the prospects for the
coming years promising, with wind power’s expected
central role in the electrification of societies, industries
and mobility systems and forecasts of accelerated
annual growth of wind power capacity towards 2030
*)
. At
the same time, the wind power industry has seen
consolidation, giving way for a more stable competitive
environment. The profitability, however, is still not at a
satisfactory level, and hence this needs to remain a focus
area for wind turbine manufacturers in the coming years.
Severe supply chain instability and cost inflation has only
made this more important.
Onshore
The demand for onshore wind power globally is expected
to remain relatively stable at the current high level the
next couple of years. After that, a new phase of growth
is expected, driven by new policies, increased
electrification, and corporate ambitions and activities.
Adding to that, Vestas expects to see increasing
contributions from its development activities, as well as
growing capabilities within the fast-developing market for
Power-to-X and hybrid solutions. On this background,
Vestas maintains its long-term ambition for the onshore
wind power segment to grow faster than the market and
be market leader in revenue.
Offshore
The projections for the offshore market suggest a
development in three phases for Vestas’ acquired
offshore business. Based on the order backlog, Vestas
will see a good activity level in the coming year.
Following that, the company expects to see a decline in
activity towards 2025, while necessitating to invest
heavily both in the organisation, supply chain, and
technology. By 2025, upon the steep increase in annual
offshore installations and Vestas' new platform gaining
traction in the market, Vestas aims to be a leading player
in offshore wind power.
Based on these assumptions, Vestas has an ambition to
achieve revenue in the offshore business area of EUR
+3bn by 2025, with an EBIT margin before special items
on par with the Group's overall margin.
Service
The wind power service market is expected to grow at
high single digit rate, and Vestas maintains its ambitions
for the long-term for the Service revenue to grow faster
than the market. The Service EBIT margin is expected at
a level of around 25 percent in the coming years, taking
into account the integration of the offshore business,
which currently generates lower margins than onshore.
G
eneral ambitions
Despite supply chain instability and a high degree of cost
inflation, causing volatility in the demand for wind power,
Vestas maintains its ambition on an overall level to grow
faster than the market and be market leader in revenue.
The company also remains optimistic about reaching a
10 percent EBIT margin before special items. Based on
the current market conditions and projections, we now
envision this to be achieved by 2025. The introduction of
our new offshore turbine platform will impact free cash
flow, but Vestas nevertheless expects to generate
positive cash flow and to achieve a long-term ROCE of
minimum 20 percent over the cycle.
*)
Source: Wood Mackenzie: Market Outlook Update Q4 2021. November 2021.
Vestas Wind Systems A/S Page 15 of 36
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nancial Report – Third Quarter 2022
Classification: Public
Financial and capital structure targets and
priorities
The Board and Executive Management regularly assess
whether Vestas’ capital structure, i.e. how the company
funds its overall operations and growth, is in the
shareholders’ best interest. The ongoing assessments
also include the ways in which it supports our corporate
strategy.
Financial management
In relation to financial management, the objective is to
create the necessary flexibility and stability to implement
strategic development work, while in the long-term
achieving Vestas’ financial ambitions. At the same time,
we aim to reduce the cost of capital.
Capital structure targets
As a key player in a market where projects, customers,
and wind energy investors are increasing in size and
number, we aim to be a strong financial counterpart. We
will maintain capital resources to ensure compliance with
our capital structure target of net interest-bearing debt to
EBITDA below 1x.
Capital allocation priorities
Vestas applies the following principles to capital
allocation:
Provide the investments and R&D required to
realise our corporate strategy and our long-term
vision of being the global leader in sustainable
energy solutions.
Make bolt-on acquisitions to accelerate or
increase profitable growth prospects. All
investments in organic growth and acquisitions
must support our long-term financial ambition of
achieving return on capital employed.
Pay shareholder dividends based on the Board’s
intention to recommend 25-30 percent of the
company’s annual net result after tax, which will be
paid out following shareholder approval at the
annual general meeting.
From time to time, initiate share buy-back
programmes to adjust the capital structure. Any
decision to distribute cash to shareholders will be
based on the capital structure target and
availability of excess cash. The level of excess
cash will be determined in line with our growth
plans and liquidity requirements. Share buy-back
programmes, if any, will likely be initiated in the
second half of the year based on performance.
The Board and Executive Management consider that
Vestas’ current capital and share structure serves the
interests of shareholders and the company well. It also
provides strategic flexibility to pursue our vision of
becoming the global leader in sustainable energy
solutions.
Vestas Wind Systems A/S Page 16 of 36
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nancial Report – Third Quarter 2022
Classification: Public
Outlook 2022
During the third quarter of 2022, the business
environment with supply chain instability and cost
inflation did not wane. Additionally, delays on project
deliveries lead to higher costs related to executing on
customer commitments.
Consequently, Vestas is adjusting the full-year guidance.
Revenue for full year 2022 is now expected to range
between EUR 14.5bn and 15.5bn (previously EUR
14.5bn-16.0bn), and the outlook for the EBIT margin
before special items is adjusted to approx. (5) percent
(previously (5)-0 percent).
Service revenue is now expected to grow min. 20 percent
(previously min. 10 percent) due to strong performance
and additional repowering activities. The Service EBIT
margin before special items is now expected to be
approx. 22 percent (previously approx. 23 percent).
Total investments
*)
are now expected to amount to
approx. EUR 850m in 2022 (previously approx. EUR
1,000m).
It should be emphasised that there is greater uncertainty
than usual around forecasts related to execution in 2022,
and the outlook seeks to take into account the current
situation and challenges.
In relation to forecasts on financials from Vestas in
general, it should be noted that Vestas’ accounting
policies only allow the recognition of revenue when the
control has passed to the customer, either at a point in
time or over time. Disruptions in production and
challenges in relation to shipment of wind turbines and
installation hereof, for example bad weather, lack of grid
connections, and similar matters, may thus cause delays
that could affect Vestas’ financial results for 2022.
Further, the full-year results may also be impacted by
movements in exchange rates from current levels.
Outlook 2022
Updated
guidance
Previous
gui
dance**)
Initial
guidance
Revenue (bnEUR) 14.5-15.5 14.5-16.0 15-16.5
EBIT margin (%)
before special
items
approx. (5) (5)-0 0-4
Total investments
*)
(mEUR)
approx. 850
approx.
1,000
approx.
1,000
*)
Excl. acquisitions of subsidiaries, joint ventures, associates, and financial
investments.
**)
Updated on 1 May 2022.
Financial calendar 2023
08.02.2023
Disclosure of the Annual Report 2022
28.02.2023
Deadline for the company’s shareholders to submit
a written request to the Board of Directors that a
specific matter be included in the agenda for the
Annual General Meeting
10.03.2023
Convening for Annual General Meeting
12.04.2023
Annual General Meeting in Aarhus, Denmark
10.05.2023
Disclosure of the Interim financial report, Q1 2023
09.08.2023
Disclosure of the Interim financial report, Q2 2023
08.11.2023
Disclosure of the Interim financial report, Q3 2023
The financial calendar lists the expected dates of
disclosure of financial results and the Annual General
Meeting in the financial year 2023 for Vestas Wind
Systems A/S.
Vestas Wind Systems A/S Page 17 of 36
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nancial Report – Third Quarter 2022
Classification: Public
Consolidated financial statements 1 January - 30 September
Condensed income statement 1 January – 30 September
mEUR
Note
Q3
2022
Q3
1)
2021
1)
9M
2022
9M
)
2021
1)
Revenue
1.1, 1.2
Production costs
(3,752 )
(4,939 )
(9,423 )
(9,873 )
Gross profit
Research and development costs
(85 )
(86 )
(317 )
(278 )
Distribution costs
(117 )
(102 )
(339 )
(286 )
Administration costs
(86 )
(93 )
(262 )
(265 )
Operating profit/(loss) (EBIT) before special items 1.1 (127 ) 318 (638 ) 334
Special items
1.3
(119 )
(517 )
(119 )
Operating profit/(loss) (EBIT) (114 ) 199 (1,155 ) 215
Income from investments in joint ventures and associates
Net financial items
(65 )
(40 )
(65 )
(70 )
Profit/(loss) before tax
(171 )
(1,199 )
Income tax
(47 )
(59 )
Profit/(loss) for the period
(147 )
(1,031 )
Profit/(loss) is attributable to:
Owners of Vestas
(147 )
(1,031 )
Non-controlling interests
Earnings per share (EPS)
Earnings per share for the period (EUR), basic
(0.15 )
(1.03 )
Earnings per share for the period (EUR), diluted
(0.15 )
(1.02 )
Condensed statement of comprehensive income 1 January - 30 September
mEUR
Q3
2022
Q3
1)
2021
1)
9M
2022
9M
1)
2021
1)
Profit/(loss) for the period
(147 )
(1,031 )
Items that may be reclassified to the income statement subsequently:
Exchange rate adjustments relating to foreign entities
Fair value adjustments of derivative financial instruments for the period
Gain/(loss) on derivative financial instruments transferred to the income statement
(29 )
(27 )
(39 )
(41 )
Share of fair value adjustments of derivatives financial instruments of joint ventures
and associates
Tax on items that may be reclassified to the income statement subsequently
(27 )
(27 )
(0 )
(26 )
Other comprehensive income after tax for the period
Total comprehensive income for the period
(857 )
T
he above condensed statement of comprehensive income should be read in conjunction with the accompanying notes.
1)
Comparative figures for 2021 are adjusted in relation to accounting policy change for configuration and customisation cost in cloud computing arrangements, refer to note 5.3.
Vestas Wind Systems A/S Page 18 of 36
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nancial Report – Third Quarter 2022
Classification: Public
Condensed balance sheet – Assets
mEUR
Note
30 September
2022
30 September
)
2021
1)
31 December
1)
2021
1)
Goodwill
Completed development projects
Software
Other intangible assets
Development projects in progress
Total intangible assets
Land and buildings
Plant and machinery
Other fixtures, fittings, tools and equipment
Right-of-use assets
Property, plant and equipment in progress
Total property, plant and equipment
2.1
Investments in joint ventures and associates
Other investments
Tax receivables
Deferred tax
Other receivables
3.4
Financial investments
3.4
Total other non-current assets
Total non-current assets
Inventories
Trade receivables
Contract assets
Contract costs
Tax receivables
Other receivables
3.4
Financial investments
3.4
Cash and cash equivalents
3.2
Total current assets
Assets held for sale
2.2
Total assets
T
he above condensed balance sheet should be read in conjunction with the accompanying notes.
1)
Comparative figures for 2021 are adjusted in relation to accounting policy change for configuration and customisation cost in cloud computing arrangements, refer to note 5.3.
Vestas Wind Systems A/S Page 19 of 36
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nancial Report – Third Quarter 2022
Classification: Public
Condensed balance sheet – Equity and liabilities
mEUR
Note
30 September
2022
30 September
1)
2021
1)
31 December
1)
2021
1)
Share capital
3.1
Other reserves
Retained earnings
Attributable to owners of Vestas
Non-controlling interests
Total equity
Provisions
2.3
Deferred tax
Financial debts
3.4
Tax payables
Other liabilities
3.4
Total non-current liabilities
Financial debts
3.4
Contract liabilities
Trade payables
Provisions
2.3
Tax payables
Other liabilities
3.4
Total current liabilities
Total liabilities
Total equity and liabilities
T
he above condensed balance sheet should be read in conjunction with the accompanying notes.
1)
Comparative figures for 2021 are adjusted in relation to accounting policy change for configuration and customisation cost in cloud computing arrangements, refer to note 5.3.
Vestas Wind Systems A/S Page 20 of 36
Interim Fi
nancial Report – Third Quarter 2022
Classification: Public
Condensed statement of changes in equity – nine months 2022
Reserves
mEUR
Share
capital
Transla-
tion
reserve
Cash flow
hedging
reserve
Other
reserves
Total
reserves
Retained
earnings
Non-
controlling
interests
Total
Equity as at 1 January 2022
(8 )
Impact from change in accounting
estimates (IAS 37 amendment)
(17 )
(17 )
Adjusted equity as at 1 January 2022
(8 )
Profit/(loss) for the period
(1,031 )
(1,031 )
Other comprehensive income for the period
Total comprehensive income for the period
(1,031 )
(857 )
Transfer of cash flow hedge reserve to the
initial carrying amount of hedged items
(45 )
(45 )
(45 )
Transaction with owners:
Dividends distributed
(50 )
(50 )
Dividends distributed related to treasury
shares
(0 )
(0 )
Share-based payments
Tax on equity transactions
(4 )
(4 )
Total transactions with owners
(51 )
(51 )
Equity as at 30 September 2022
Condensed statement of changes in equity – nine months 2021
Reserves
mEUR
Share
capital
Transla-
tion
reserve
Cash flow
hedging
reserve
Other
reserves
Total
reserves
Retained
earnings
1)
Non-
controlling
interests
Total
1)
Equity as at 1 January 2021
(114 )
(21 )
(11 )
(146 )
Profit for the period
Other comprehensive income for the period
Total comprehensive income for the period
Transfer of cash flow hedge reserve to the
initial carrying amount of hedged items
(12 )
(12 )
(12 )
Transaction with owners:
Transactions with non-controlling interests
(6 )
(48 )
(54 )
Dividends distributed
(230 )
(230 )
Dividends distributed related to treasury
shares
Acquisition of treasury shares
(12 )
(12 )
Share-based payments
Tax on equity transactions
(5 )
(5 )
Total transactions with owners
(242 )
(48 )
(290 )
Equity as at 30 September 2021
(28 )
(8 )
The above condensed statement of changes in equity should be read in conjunction with the accompanying notes.
1)
Comparative figures for 2021 are adjusted in relation to accounting policy change for configuration and customisation cost in cloud computing arrangements, refer to note 5.3.
Vestas Wind Systems A/S Page 21 of 36
Interim Fi
nancial Report – Third Quarter 2022
Classification: Public
Condensed cash flow statement 1 January – 30 September
mEUR
Note
Q3
2022
Q3
1)
2021
1)
9M
2022
9M
1)
2021
1)
Profit/(loss) for the period
(147 )
(1,031 )
Adjustment for non-cash transactions
Interest paid / received, net
(9 ) (1 ) (32 )
Income tax paid
(30 ) (36 ) (120 ) (117 )
Cash flow from operating activities before change in net working capital
(328 )
Change in net working capital
(695 )
(8 )
(1,402 )
(516 )
Cash flow from operating activities
(614 )
(1,730 )
Purchase of intangible assets
(105 )
(85 )
(297 )
(252 )
Purchase of property, plant and equipment
(85 )
(130 )
(267 )
(324 )
Disposal of property, plant and equipment
Dividends from investments in joint ventures and associates
Cash flow from investing activities before acquisitions of
subsidiaries, joint ventures, associates and financial investments
(138 )
(213 )
(505 )
(526 )
Free cash flow before acquisitions of subsidiaries, joint ventures,
associates and financial investments
(752 )
(2,235 )
(415 )
Purchase of shares in joint ventures and associates
(9 )
(10 )
(31 )
(207 )
Purchase of other non-current financial assets
(7 )
Disposal of other non-current financial assets
Disposal of subsidiary
Net cash flow from deconsolidation of subsidiary
(4 )
(4 )
Purchase of financial investments
(116 )
Disposal of financial investments
Cash flow from investing activities
(30 )
(128 )
(418 )
(650 )
Free cash flow
(644 )
(2,148 )
(539 )
Dividend paid
(50 )
(228 )
Payment of lease liabilities
(35 )
(31 )
(111 )
(99 )
Proceeds from borrowings
Payment of financial debt
(58 )
(97 )
(672 )
(388 )
Acquisition of treasury shares
(12 )
Transaction with non-controllling interest
(22 )
(22 )
Cash flow from financing activities
(103 )
(667 )
Net change in cash and cash equivalents
(209 )
(1,309 )
(1,206 )
Cash and cash equivalents at the beginning of period
Exchange rate adjustments of cash and cash equivalents
(2 )
Cash and cash equivalents at the end of the period
3.2
T
he above condensed cash flow statement should be read in conjunction with the accompanying notes.
1) Comparative figures for 2021 are adjusted in relation to accounting policy change for configuration and customisation cost in cloud computing arrangements, refer to note 5.3.
Vestas Wind Systems A/S Page 22 of 36
Interim Fi
nancial Report – Third Quarter 2022
Classification: Public
Notes
1
Result for the period
1.1 Segment information
In the third quarter of 2022, an income of EUR 13m was recognised in special items impacting the Power Solutions
segment. The income relates to a reversal of previously recognised impairment losses of EUR 14m relating to the
production facility on Isle of Wight and adjustments to the the write-downs and provisions relating to the Russian invasion
of Ukraine of EUR 9m, offset by adjustments to the impairment related to Vestas’ manufacturing footprint in China of EUR
10m. For additional information, refer to note 1.3.
1) Comparative figures for 2021 are adjusted in relation to accounting policy change for configuration and customisation cost in cloud computing arrangements, refer to note 5.3.
mEUR
Power
Solutions
Service
Not allocated
Total
Group
Q3 2022
Total revenue
3,096
817
-
3,913
Total costs
(3,348)
(617)
(75)
(4,040)
Operating profit/(loss) (EBIT) before special items
(252)
200
(75)
(127)
Special items
13
-
-
13
Operating profit/(loss) (EBIT)
(239)
200
(75)
(114)
Income from investments in joint ventures and associates
8
Net financial items
(65)
Profit/(loss) before tax
(171)
Amortisation and depreciation included in total costs
(185)
(31)
(12)
(228)
mEUR
Power
Solutions
Service
Not allocated
Total
1)
Group
1)
Q3 2021
Total revenue
4,921
617
-
5,538
Total costs
(4,658)
(478)
(84)
(5,220)
Operating profit/(loss) (EBIT) before special items
263
139
(84)
318
Special items
(119)
-
-
(119)
Operating profit/(loss) (EBIT)
144
139
(84)
199
Income from investments in joint ventures and associates
4
Net financial items
(40)
Profit/(loss) before tax
163
Amortisation and depreciation included in total costs
(193)
(27)
(19)
(239)
Vestas Wind Systems A/S Page 23 of 36
Interim Financial Report – Third Quarter 2022
Classification: Public
1.1 Segment information (continued)
In the first nine months of 2022, Vestas recognised an impairment loss relating to V164/V174 offshore activity, including
technology. Intangible assets of EUR 55m and tangible assets of EUR 28m have been impaired, impacting the Power
Solutions segment by EUR 71m and the Service segment by EUR 12m. Additional warranty provisions of EUR 93m was
recognised in the first quarter of 2022 related to the mentioned offshore activity.
In the first nine months of 2022, impairment losses, write-downs and other costs of EUR 517m relating to the Russian
invasion of Ukraine as well as adjustments to the manufacturing footprint have been recognised in special items, impacting
the Power Solutions segment. For additional information, refer to note 1.3.
mEUR
Power
Solutions
Service
Not allocated
Total
Group
9M 2022
Total revenue
7,563
2,140
-
9,703
Total costs
(8,420)
(1,689)
(232)
(10,341)
Operating profit/(loss) (EBIT) before special items
(857)
451
(232)
(638)
Special items
(517)
-
-
(517)
Operating profit/(loss) (EBIT)
(1,374)
451
(232)
(1,155)
Income from investments in joint ventures and associates
21
Net financial items
(65)
Profit/(loss) before tax
(1,199)
Amortisation and depreciation included in total costs
(624)
(100)
(36)
(760)
mEUR
Power
Solutions
Service
Not allocated
Total
1)
Group
1)
9M 2021
Total revenue
9,273
1,763
-
11,036
Total costs
(9,119)
(1,341)
(242)
(10,702)
Operating profit/(loss) (EBIT) before special items
154 422 (242) 334
Special items
(119) - - (119)
Operating profit/(loss) (EBIT)
35 422 (242) 215
Income from investments in joint ventures and associates
49
Net financial items
(70)
Profit/(loss) before tax
194
Amortisation and depreciation included in total costs
(534)
(78)
(52)
(664)
Vestas Wind Systems A/S Page 24 of 36
Interim Financial Report – Third Quarter 2022
Classification: Public
1.2 Revenue
The illustration below shows the process from order intake to revenue recognition in Vestas.
Disaggregation of revenue
In the following section, revenue is disaggregated for the two reportable segments, by primary geographical market, major
contract types, and timing of revenue recognition.
mEUR Power Solutions Service Total
Q3
2022
Q3
2021
Q3
2022
Q3
2021
Q3
2022
Q3
2021
Timing of revenue recognition
Products and services transferred at a point in time
1,996
3,851
132
94
2,128
3,945
Products and services transferred over time
1,100
1,070
685
523
1,785
1,593
3,096
4,921
817
617
3,913
5,538
Revenue from contract types
Supply-only
910
1,234
-
-
910
1,234
Supply-and-installation (at a point in time)
1,086
2,618
-
-
1,086
2,618
Supply-and-installation (over time)
916
869
-
-
916
869
Turnkey (EPC)
184
200
-
-
184
200
Service
-
-
817
617
817
617
3,096
4,921
817
617
3,913
5,538
Primary geographical markets
EMEA
1,562
2,843
435
280
1,997
3,123
Americas
1,079
1,606
306
249
1,385
1,855
Asia Pacific
455
472
76
88
531
560
3,096
4,921
817
617
3,913
5,538
Vestas Wind Systems A/S Page 25 of 36
Interim Financial Report – Third Quarter 2022
Classification: Public
mEUR Power Solutions Service Total
9M
2022
9M
2021
9M
2022
9M
2021
9M
2022
9M
2021
Timing of revenue recognition
Products and services transferred at a point in time
4,714
6,552
322
259
5,036
6,811
Products and services transferred over time
2,849
2,721
1,818
1,503
4,667
4,224
7,563
9,273
2,140
1,762
9,703
11,035
Revenue from contract types
Supply-only
1,732
2,048
-
-
1,732
2,048
Supply-and-installation (at a point in time)
2,982
4,505
-
-
2,982
4,505
Supply-and-installation (over time)
2,084
2,082
-
-
2,084
2,082
Turnkey (EPC)
765
638
-
-
765
638
Service
-
-
2,140
1,762
2,140
1,762
7,563
9,273
2,140
1,762
9,703
11,035
Primary geographical markets
EMEA
4,115
5,273
1,104
986
5,219
6,259
Americas
2,423
2,856
828
593
3,251
3,449
Asia Pacific
1,025
1,144
208
183
1,233
1,327
7,563
9,273
2,140
1,762
9,703
11,035
1.3 Special items
Group accounting policies
Special items comprise significant unusual and/or infrequently occurring items that are not attributable to Vestas’ normal
operations. Special items comprise income and costs related to significant organisational restructuring and significant
adjustments to production capacity and the product programme.
Russian invasion of Ukraine
Following Russia’s invasion of Ukraine in February 2022, Vestas announced on 5 April 2022 that Vestas would withdraw
from the Russian market. In order to facilitate the withdrawal from Russia, Vestas continues certain activities during a
limited transition period where Vestas will dispose of its Russian assets, wind down operations and end existing contractual
relationships. Furthermore, Vestas’ activities in Ukraine have been put on hold.
The costs related to the Russian invasion of Ukraine qualify as special items in accordance with Vestas’ accounting policy.
In the first nine months of 2022, special items of EUR 358m have been recognised including provisions of EUR 117m,
write-down of inventories located in Russia and Ukraine of EUR 220m, impairment of tangible assets of EUR 8m, write-
down of VAT receivables of EUR 4m, staff costs of EUR 6m and other expenses of EUR 3m, as directly related to the
Russian invasion of Ukraine.
In the third quarter of 2022, an income of EUR 9m was recognised in special items including adjustments to the write-down
of inventories of EUR 8m and to the provision of EUR 1m.
Basis for recognition
The provisions primarily relate to potential risks related to the ceasing of activities in Russia and Ukraine existing at 30
September 2022. The write-down of inventory relates to inventory located in Russia and Ukraine that is not expected to be
sold. The impairment loss on tangible assets is primarily related to buildings and equipment located in Russia, which are
written down to zero as the assets are not expected to be utilised or sold. The write-down of VAT receivables is related to
VAT receivables that are deemed not recoverable. The staff costs are primarily related to severance payments. Other
expenses primarily relate to the closing of the factory in Russia.
Adjusting manufacturing footprint
Vestas continues to review the product portfolio and adapt the production capacity. As part of this development, Vestas
intends to adjust its manufacturing footprint by ceasing production at certain factories in China and India.
This adjustment of the manufacturing footprint qualifies as special items in accordance with Vestas’ accounting policy. In
the first nine months of 2022, special items of EUR 225m have been recognised including impairment of intangible assets
of EUR 27m, impairment of tangible assets of EUR 97m, write-down of inventory of EUR 78m, staff costs of EUR 6m and
other costs of EUR 17m.
Vestas Wind Systems A/S Page 26 of 36
Interim Financial Report – Third Quarter 2022
Classification: Public
In the third quarter of 2022, special items of EUR 10m was recognised relating to staff costs of EUR 6m and adjustments
to impairment of tangible assets of EUR 3m and write-down of inventory of EUR 1m.
Furthermore, in the first nine months of 2022 a reversal of previously recognised impairment losses on tangible assets of
EUR 54m, staff costs of EUR 9m and other costs of EUR 3m was recognised in special items, primarily relating to the
factory in Lauchhammer, Germany and the production facility on Isle of Wight, UK.
In the third quarter of 2022, a reversal of previously recognised impairment losses on tangible assets of EUR 14m relating
to the facility on Isle of Wight was recognised.
Basis for recognition
The impairment loss is primarily related to intangible assets, buildings and production equipment which are written down
to fair value less expected cost to sell or value in use, and to inventory which is written down to net realisable value. The
intangible assets, buildings and production equipment at the factories have been written down from EUR 164m to EUR
40m reflecting the value that is expected from the disposal of the assets considering costs to sell. Inventory has been
written down from EUR 78m to zero as the inventory is expected to be scrapped. Other costs are primarily related to a
write-down of VAT and tax receivables that are deemed not recoverable.
mEUR
30 September
2022
30 September
2021
31 December
2021
Write-down of inventory
(298)
-
-
Provisions
(117)
-
-
Impairment loss on intangible and tangible assets
(78)
(48)
(68)
Other costs
(21)
(10)
(10)
Staff costs
(3)
(61)
(61)
Special items
(517)
(119)
(139)
2 Other operating assets and liabilities
2.1 Property, plant and equipment
In the first nine months of 2022, Vestas acquired assets with a cost of EUR 267m mainly related to manufacturing blade
moulds, transport equipment and construction tools, compared to EUR 324m in the first nine months of 2021.
Lease contracts recognised as right-of-use assets during the first nine months of 2022 amounted to EUR 101m, compared
to EUR 147m in the first nine months of 2021.
2.2 Assets held for sale
Assets (or disposal groups) are classified as held for sale if the carrying amount will be recovered principally through a
sales transaction rather than through continuing use and when the assets are expected to be disposed of within 12 months.
Liabilities of a disposal group that are directly related to assets held for sale are presented correspondingly. Assets and
liabilities held for sale are presented separately on the balance sheet. Immediately before the initial classification as held
for sale, the carrying amounts of the assets and liabilities are measured in accordance with their applicable accounting
policy. Assets and liabilities held for sale are subsequently measured at the lower of their carrying amount and fair value
less cost to sell. Non-current assets held for sale are not depreciated.
On 9 August 2022, Vestas signed an agreement for the sale of the converters & controls business to KK Wind Solutions.
The transaction is expected to close in the first quarter of 2023, subject to receipt of approvals from the relevant regulatory
authorities and separation of the converters & controls business. Therefore, it has been classified as held for sale as at 30
September 2022.
Assets held for sale includes property, plant and equipment of EUR 62m and inventory of EUR 95m.
Vestas Wind Systems A/S Page 27 of 36
Interim Financial Report – Third Quarter 2022
Classification: Public
2.3 Warranty provisions (included in provisions)
mEUR
30 September
2022
30 September
2021
31 December
2021
Warranty provisions, 1 January
1,197
1,189
1,189
Provisions for the period
509
421
748
Warranty provisions consumed during the period
(471)
(599)
(852)
Additions from business combinations
-
55
55
Reclassification
-
57
57
Warranty provisions
1,235
1,123
1,197
The provisions are expected to be payable as follows:
< 1 year
720
554
655
> 1 year
515
569
542
1,235
1,123
1,197
During the first nine months of 2022, net warranty provisions charged to the income statement amounted to EUR 495m
(EUR 177m in the third quarter of 2022), equivalent to 5.1 percent of revenue. The net amount consists of a gross warranty
provision of EUR 509m less supplier claims of EUR 14m. The warranty provisions in the first nine months of 2022 included
additional warranty provisions made in the first quarter of 2022 of EUR 124m due to increased repair costs caused by
external cost inflation, hereof EUR 93m related to offshore projects. Warranty consumption amounted to EUR 471m
compared to EUR 599m in the first nine months of 2021.
In general, provisions are made for all expected costs associated with wind turbine repairs or replacements, and any
reimbursement from other involved parties is not offset unless a written agreement has been made to that effect.
Provisions are made to cover possible costs of remedy and other costs in accordance with specific agreements. The
provisions are based on estimates, and actual costs may deviate substantially from such estimates.
3 Capital structure and financing items
3.1 Share capital
Pursuant to authorisation granted to the Board of Directors at the Annual General Meeting 5 April 2022, the Board of
Directors was authorised to acquire treasury shares on behalf of Vestas at a nominal value not exceeding 10 percent of
the share capital at the time of authorisation.
Treasury shares
Nominal value (DKK)
30 September
2022
30 September
2021
31 December
2021
Treasury shares as at 1 January
944,632
1,098,495
1,098,495
Purchases for the period
-
78,225
78,225
Vested treasury shares for the period
(206,692)
(232,088)
(232,088)
Treasury shares
737,940
944,632
944,632
Each share has a nominal value of DKK 0.20.
3.2 Cash and cash equivalents
mEUR
30 September
2022
30 September
2021
31 December
2021
Cash and cash equivalents without disposal restrictions
1,113
1,852
2,394
Cash and cash equivalents with disposal restrictions
26
26
26
Cash and cash equivalents
1,139
1,878
2,420
3.3 Financial risks
Financial risks, and how Vestas manages its risks, including liquidity, credit and market risks, are addressed in the notes
to the consolidated financial statements in the Annual Report 2021, note 4.1 (Financial risk management), pages 99-102.
The risks in 2022 remain similar in nature.
Vestas Wind Systems A/S Page 28 of 36
Interim Financial Report – Third Quarter 2022
Classification: Public
On 15 March 2022, Vestas issued two EUR 500m sustainability-linked bonds to both refinance the EUR 500m Green bond
(early redeemed in December 2021) and secure long-term funding. The two bonds will mature in 2029 and 2034
respectively, and their interest rates are linked to Vestas’ sustainability KPIs.
On 13 May 2022, Vestas has amended and restated the EUR 2bn multicurrency sustainability-linked revolving and bonding
facility agreement originally dated 28 April 2021. The sustainability KPIs have been updated and annual targets have been
set until final maturity. The facility will mature in 2027 after exercise of the first one-year extension option and can be
extended to 2028 with the exercise of the second one-year extension option.
On 17 July 2022, Vestas drew EUR 475m under the green loan facility with the European Investment Bank (EIB) signed
on 28 June 2022, cf. Vestas’ Investor News of 5 July 2022. The facility will mature in 2032.
3.4 Financial instruments
Financial instruments measured at fair value have been categorised into level 1, 2, and 3 as addressed in the Annual
Report 2021, note 4.1, page 106. Other than the two EUR 500m sustainability-linked bonds and the green loan with EIB
described above, no significant new financial instruments have been recognised compared to 2021 and there have been
no transfers between fair value levels.
Financial investments consist of interest-bearing investments which do not meet the definition for cash and cash
equivalents. As at 30 September 2022, the fair value of financial investments comprising marketable securities amounted
to EUR 94m, equal to book value.
Derivative financial instruments were negative with a market value of net EUR 18m, equal to book value, and were
recognised in other receivables and other liabilities with EUR 480m and EUR 498m, respectively.
Financial instrument assets categorised within level 3 comprise other equity investments and renewable energy
certificates. Valuation methods remain unchanged from the description in the Annual Report 2021 and with no significant
changes in fair values.
As at 30 September 2022, the carrying amount of the sustainability-linked bonds issued by Vestas amounted to EUR 990m
and the fair value amounted to EUR 832m.
4 Other disclosures
4.1 Related party transactions
Vestas has had the following material transactions with joint ventures and associates:
mEUR
Q3
2022
Q3
2021
9M
2022
9M
2021
Joint ventures
Revenue for the period
8
48
91
61
Proceeds from sale of projects
-
-
-
10
Capital increase
1
1
21
22
Proceeds from investments in Joint ventures
2
-
2
-
Trade receivable as at 30 September
29
-
29
-
Other assets as at 30 September
51
-
51
-
Other receivables as at 30 September
-
6
-
6
Other liabilities as at 30 September
2
-
2
-
Prepayments balance as at 30 September (asset)
-
148
-
148
Associates
Revenue
(2)
-
(7)
-
Proceeds from investments in associates
6
1
10
11
Capital increase
3
-
4
3
Contract assets as at 30 September
59
-
59
-
Payable capital contribution as at 30 September
40
46
40
46
Vestas Wind Systems A/S Page 29 of 36
Interim Financial Report – Third Quarter 2022
Classification: Public
No other significant changes have occurred with related parties or types and scale of transactions with these parties other
than what is disclosed in the consolidated financial statements in the Annual Report 2021, note 6.3, page 113.
4.2 Subsequent events
Other than the events recognised or disclosed in the interim financial report, no events have occurred subsequent to 30
September 2022 which could have a significant impact on the interim financial report.
5 Basis for preparation
5.1 General accounting policies
The interim financial report of Vestas comprises a summary of the consolidated financial statements of Vestas Wind
Systems A/S and its subsidiaries.
The interim financial report has been prepared in accordance with IAS 34, Interim Financial Reporting as adopted by the
EU, accounting policies set out in the Annual Report 2021 of Vestas (except for the changes described below in note 5.3)
and additional Danish disclosure requirements for interim financial reporting of listed companies.
This interim financial report does not include all the notes included in an annual financial report. Accordingly, this report
should be read in conjunction with the Annual Report for the year ended 31 December 2021 and any public announcements
made during the interim reporting period.
Taxes on income in the interim periods are accrued using the tax rate that would be applicable to the expected annual
profit or loss.
5.2 Key accounting estimates and judgements
When preparing the interim financial reporting of Vestas, management makes a number of accounting estimates and
assumptions which form the basis of the recognition and measurement of Vestas’ assets and liabilities. The estimates and
assumptions made are based on experience and other factors that management considers reasonable in the
circumstances.
Reference is made to the consolidated financial statements in the Annual Report 2021, note 7.3, page 120 for further
description of Vestas’ key accounting estimates and judgements.
Estimate regarding recognition of contract elements
Management performs significant accounting estimates in connection with determining the appropriate income recognition
of contract elements. In certain situations, Supply-only projects contain elements that in nature are associated with a high
degree of estimations regarding allocation of consideration under a contract to elements already delivered and elements
to be delivered in the future. Management has assessed that the project-specific margin is a fair estimate of a reasonable
margin used to allocate consideration under a contract to the contract elements.
Estimate regarding measurement of warranty provisions
Measurement of warranty provisions is associated with significant estimation uncertainty and arises from component
defects and functional errors. Warranty provisions made also include wind turbines sold in prior years, but where serial
defects are identified later and comprise management’s best estimate of the costs required to settle the obligation from
such defects and functional errors.
Judgement regarding classification in the income statement
The use of special items entails management judgement in the separation from other items in the income statement. In
connection with the use of special items, it is crucial that these are of a significant unusual and/or infrequently occurring
nature that are not attributable to Vestas’ normal operations, as such classification highlights to users of financial
statements the items to which the least attention should be given when understanding current and future performance.
Vestas Wind Systems A/S Page 30 of 36
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Classification: Public
Estimate regarding the valuation of assets and liabilities in Russia and Ukraine
Measurement of the provision for the potential risks related to the ceasing of activities in Russia and Ukraine as well as
write-down of inventory located in Russia and Ukraine is associated with significant estimation uncertainty due to the
current situation in Russia and Ukraine. The recognised cost reflect management’s best estimate based on the current
expectations.
5.3 Changes in accounting policy and disclosures
Except for the changes below, the accounting policies remain unchanged compared to the annual report for the year ended
31 December 2021, to which reference is made.
IAS 38, Configuration or customisation costs in a cloud computing arrangement
As announced in Vestas’ Annual Report 2021, as of 1 January 2022, Vestas has changed its accounting policy on
configuration and customisation costs related to cloud computing arrangements, also referred to as Software as a Service
(SaaS).
Previously, Vestas had capitalised costs related to the implementation of cloud computing arrangements as intangible
assets. Under the new policy, implementation costs including costs to configure and customise the cloud provider’s
application software are recognised as operating expenses when the services are received.
Historical financial information has been restated to account for the impact of the change in accounting policy in relation to
SaaS arrangements as follows:
Condensed income statement extract 1 July - 30 September
mEUR
Q3 2021
Reported
Effect of new
policy
Q3 2021
Restated
Production costs
(4,938)
(1)
(4,939)
Operating profit (EBIT) before special items
600
(1)
599
Research and development costs
(81)
(5)
(86)
Distribution costs
(101)
(1)
(102)
Administration cost
(93)
-
(93)
Operating profit (EBIT) before special items
325
(7)
318
Operating profit (EBIT)
206
(7)
199
Profit before tax
170
(7)
163
Profit for the period
123
(7)
116
Profit is attributable to:
Owners of Vestas
122
(7)
115
Non-controlling interests
1
-
1
Earnings per share (EPS)
Earnings per share for the period (EUR), basic
0.12
0.11
Earnings per share for the period (EUR), diluted
0.12
0.11
Condensed statement of comprehensive income extract 1 July - 30 September
mEUR
Q3 2021
Reported
Effect of new
policy
Q3 2021
Restated
Profit for the period
123
(7)
116
Other comprehensive income after tax for the period
113
-
113
Total comprehensive income for the period
236
(7)
229
Vestas Wind Systems A/S Page 31 of 36
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Condensed income statement extract 1 January - 30 September
mEUR
9M 2021
Reported
Effect of new
policy
9M 2021
Restated
Production costs
(9,871)
(2)
(9,873)
Gross profit
1,165
(2)
1,163
Research and development costs
(262)
(16)
(278)
Distribution costs
(283)
(3)
(286)
Administration cost
(265)
-
(265)
Operating profit (EBIT) before special items
355
(21)
334
Operating profit (EBIT)
236
(21)
215
Profit before tax
215
(21)
194
Profit for the period
156
(21)
135
Profit is attributable to:
Owners of Vestas
150
(21)
129
Non-controlling interests
6
-
6
Earnings per share (EPS)
Earnings per share for the period (EUR), basic
0.15
0.13
Earnings per share for the period (EUR), diluted
0.15
0.13
Condensed statement of comprehensive income extract 1 January - 30 September
mEUR
9M 2021
Reported
Effect of new
policy
9M 2021
Restated
Profit for the period
156
(21)
135
Other comprehensive income after tax for the period
185
-
185
Total comprehensive income for the period
341
(21)
320
Condensed balance sheet extract – Assets, 30 September
mEUR
30 September
2021
Reported
Effect of new
policy
30 September
2021
Restated
Completed development projects
532
(1)
531
Software
118
(17)
101
Development projects in progress
495
(38)
457
Total intangible assets
2,869
(56)
2,813
Deferred tax
318
4
322
Total other non-current assets
1,564
4
1,568
Total non-current assets
6,456
(52)
6,404
Total assets
18,979
(52)
18,927
Vestas Wind Systems A/S Page 32 of 36
Interim Financial Report – Third Quarter 2022
Classification: Public
Condensed balance sheet extract – Equity and liabilities, 30 September
mEUR
30
September
2021
Reported
Effect of new
policy
30
September
2021
Restated
Retained earnings
4,681
(52)
4,629
Attributable to owners of Vestas
4,731
(52)
4,679
Total equity
4,742
(52)
4,690
Total equity and liabilities
18,979
(52)
18,927
Condensed cash flow statement extract 1 July - 30 September
mEUR
Q3 2021
Reported
Effect of new
policy
Q3 2021
Restated
Profit for the period
123
(7)
116
Adjustment for non-cash transactions
453
(3)
450
Cash flow from operating activities
523
(10)
513
Purchase of intangible assets
(95)
10
(85)
Cash flow from investing activities before acquisition of subsidiaries, joint ventures,
associates and financial investments
(223)
10
(213)
Cash flow from investing activities
(138)
10
(128)
Condensed cash flow statement extract 1 January - 30 September
mEUR
9M 2021
Reported
Effect of new
policy
9M 2021
Restated
Profit for the period
156
(21)
135
Adjustment for non-cash transactions
646
(5)
641
Cash flow from operating activities
137
(26)
111
Purchase of intangible assets
(278)
26
(252)
Cash flow from investing activities before acquisition of subsidiaries, joint ventures,
associates and financial investments
(552)
26
(526)
Cash flow from investing activities
(676)
26
(650)
Condensed balance sheet extract – Assets, 31 December
mEUR
31 December
2020
Reported
Effect of new
policy
31 December
2020
Restated
Completed development projects
621
(1)
620
Software
164
(17)
147
Development projects in progress
317
(17)
300
Total intangible assets
2,888
(35)
2,853
Deferred tax
335
4
339
Total other non-current assets
1,003
4
1,007
Total non-current assets
5,913
(31)
5,882
Total assets
18,160
(31)
18,129
Vestas Wind Systems A/S Page 33 of 36
Interim Financial Report – Third Quarter 2022
Classification: Public
Condensed balance sheet extract – Equity and liabilities, 31 December
mEUR
31 December
2020
Reported
Effect of new
policy
31 December
2020
Restated
Retained earnings
4,773
(31)
4,742
Attributable to owners of Vestas
4,654
(31)
4,623
Total equity
4,703
(31)
4,672
Total equity and liabilities
18,160
(31)
18,129
Had the change in accounting policy not been made, operating costs for third quarter 2022 would have been EUR 5m
lower, cash flow from operating activities would be EUR 5m higher and cash flow from investing activities would be EUR
5m lower.
Similarly, without the change in accounting policy, for the first nine months of 2022, operating costs would be EUR 20m
lower, and intangible assets EUR 20m higher at the end of the period. Cash flow from operating activities would increase
by EUR 20m and cash flow from investing activities would have been EUR 20m lower.
IAS 37, Cost of fulfilling a contract
As of 1 January 2022, Vestas adopted the amendment to IAS 37 relating to onerous contracts. The amendment specifies
that an allocation of directly related production costs, such as depreciations of production plants, machinery and equipment,
should be included in the cost of fulfilling a contract when applying IAS 37. Historically, Vestas’ accounting policy has not
included an allocation of such costs in the cost of fulfilling a contract.
The application of the amendment resulted in the recognition of an increased provision for onerous contracts related to
prior years of EUR 22m with a net impact of EUR 17m on retained earnings as at 1 January 2022. Vestas has applied the
amendment using the cumulative effect method. Under this method, the comparative information is not restated.
Vestas Wind Systems A/S Page 34 of 36
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Classification: Public
Executive Management
Board of Directors
)
)
)
)
*) Employee representative
Vestas Wind Systems A/S Page 35 of 36
Interim Fi
nancial Report – Third Quarter 2022
Classification: Public
Vestas Wind Systems A/S Page 36 of 36
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nancial Report – Third Quarter 2022
Classification: Public
Tel: +45 9730 000 0
D
isclaimer and cautionary statement
This document contains forward-looking statements
concerning Vestas’ financial condition, results of
operations and business. All statements other than
statements of historical fact are, or may be deemed to
be, forward-looking statements. Forward-looking
statements are statements of future expectations that are
based on management’s current expectations and
assumptions and involve known and unknown risks and
uncertainties that could cause actual results,
performance or events to differ materially from those
expressed or implied in these statements.
Forward-looking statements include, among other
things, statements concerning Vestas’ potential
exposure to market risks and statements expressing
management’s expectations, beliefs, estimates,
forecasts, projections, and assumptions. A number of
factors that affect Vestas’ future operations and could
cause Vestas’ results to differ materially from those
expressed in the forward-looking statements included in
this document, include (without limitation): (a) changes in
demand for Vestas' products; (b) currency and interest
rate fluctuations; (c) loss of market share and industry
competition; (d) environmental and physical risks,
including adverse weather conditions; (e) legislative,
fiscal, and regulatory developments, including changes
in tax or accounting policies; (f) economic and financial
market conditions in various countries and regions; (g)
political risks, including the risks of expropriation and
renegotiation of the terms of contracts with governmental
entities, and delays or advancements in the approval of
projects; (h) ability to enforce patents; (i) product
development risks; (j) cost of commodities; (k) customer
credit risks; (l) supply of components; and (m) customer
created delays affecting product installation, grid
connections and other revenue-recognition factors.
All forward-looking statements contained in this
document are expressly qualified by the cautionary
statements contained or referenced to in this statement.
Undue reliance should not be placed on forward-looking
statements. Additional factors that may affect future
results are contained in Vestas’ Annual Report for the
year ended 31 December 2021 (available at
vestas.com/en/investor) and these factors also should
be considered. Each forward-looking statement speaks
only as of the date of this document. Vestas does not
undertake any obligation to publicly update or revise any
forward-looking statement as a result of new information
or future events other than as required by Danish law. In
light of these risks, results could differ materially from
those stated, implied or inferred from the forward-looking
statements contained in this document.