Full year 2011
2011 was a very challenging year for the wind industry. The sameapplies to Vestas which had to issue two profit warnings and abandon
its Triple15 targets. Vestas recorded revenue of EUR 5.8bn and an
EBIT margin before special items of (0.7) per cent in 2011, slightly below
the preliminary financial figures for 2011 announced on 3 January
2012 due to later-than-expected deliveries.
The results and revenue for the year are, however, substantially lower
than the original expectations of an EBIT margin of 7 per cent and
revenue of EUR 7bn which are disappointing. It should be emphasised,
however, that the projects in question have not been cancelled but
postponed and that they are expected to be handed over and recognised
as income in 2012.
On the other hand, the intake of firm and unconditional orders of
7,397 MW with a value of EUR 7.3bn, was in line with expectations.
In terms of MW, Europe and Africa accounted for 50 per cent, the
Americas accounted for 34 per cent, and Asia Pacific accounted for
16 per cent of the order backlog. The backlog of orders at the end of
2011 was 9,552 MW corresponding to EUR 9.6bn, which is the highest
level ever recorded.
In 2011, Vestas produced and shipped 2,571 wind turbines with an
aggregate capacity of 5,054 MW, against 2,025 wind turbines and
4,057 MW in 2010.
Vestas generated revenue of EUR 5.8bn in 2011; EUR 1.2bn lower
than the original forecast and 16 per cent lower than in 2010. Commissioning
problems at the new generator factory in Travemünde, Germany,
and poor weather towards the end of the year; for instance, in
Germany, where wind speed in December was 30 to 45 per cent higher
than the average for the past ten years, caused a postponement of
delivery and, by extension, recognition of a number of projects.
Revenue in the service business rose by 13 per cent to EUR 705m.
The service business EBIT margin stood at 16 per cent.
The gross profit amounted to EUR 725m, corresponding to a gross
margin of 12.4 per cent. In 2010, the gross profit and gross margin
amounted to EUR 1,175m and 17.0 per cent, respectively. The lower
result was due to lower-than-expected deliveries and unforeseen high
costs, primarily in connection with industrialisation of the V112-3.0
MW turbine and the GridStreamerTM technology for the 2 MW platform.
The operating loss, EBIT, before special items was EUR (38)m, corresponding
to an EBIT margin of (0.7) per cent, as compared to the
original forecast of an EBIT margin of 7 per cent.
Net working capital amounted to EUR (71)m, an improvement of EUR
743m since 2010. The improvement was attributable especially to
the reduction of component inventories following a successful maketo-
order implementation, higher pre-payments and trade payables.
The free cash flow rose by EUR 812m to EUR 79m primarily as a
result of the net working capital improvement. Vestas thus met the
forecast to generate a positive free cash flow.
The Group achieved a return on invested capital before special items
of (1.3) per cent, against 10.8 per cent in 2010. Other than the disappointing
full-year financial performance, the decline was due to recent
years’ large-scale investments in new facilities and technology, not
fully utilised in 2011.
Non-financial issues
Personal safety is always given top priority at Vestas because its
employees are entitled to it and its customers request it. Through
increased focus, intensive training and the dedicated efforts of its
employees, Vestas has managed to reduce the number of accidents
year after year. Continuing its decline, the incidence of industrial injuries
was 3.2 per one million working hours in 2011, which was much
below the 5.0 target and a great improvement on 2007, when the
incidence rate was 20.8.
The target is 0.5 industrial injuries per one million working hours in
2015, the ultimate goal being to avoid accidents altogether.
Vestas has defined a goal that all electricity must come from renewable
energy sources, subject to availability. For 2011, the goal was
for 40 per cent of Vestas’ energy consumption to be green, while the
share of renewable electricity should be at least 95 per cent. The goal
was not reached because it was not possible to buy renewable electricity
in sufficient volumes in China and in parts of the USA and India
in 2011. Vestas therefore invested in wind power plants in Eastern
Europe, some of which, however, are not expected to be fully commissioned
until in 2012.
Vestas’ share of renewable energy dropped to 38 per cent in 2011
from 42 per cent in 2010, and renewable electricity dropped to 68
per cent in 2011 from 74 per cent in 2010.
