Priorities and targets
Longer term, Vestas aims to become the most profitable provider of wind power solutions, and secondarily to retain its position as the largest player in the industry. This is reflected in the prioritisation: 1. EBIT margin, 2. Free cash flow, 3. Revenue. This is to be achieved through profitable and reliable solutions for the customers and Vestas alike, developed in cooperation with the customers and Vestas' suppliers. Due to the expected low growth in the OECD area, the Triple15 ambition is abandoned and substituted by the following:
- In the medium term, Vestas aims to realise a high single-digit EBIT margin with a normalised US market A more even activity flow over the course of the year, the future change and adjustment of the organisation in 2012, lower production and sourcing costs together with the launch of new products and services will be the means to achieve this.
- Vestas must, as a minimum, be able to finance its own growth and aims to generate a positive free cash flow every year, which is also the expectation for 2012. Launching brand new platforms such as the V164-7.0 MW turbine, which will be put into production in 2015 when the required orders have been received, is an investment-intensive process and will most likely lead to a negative free cash flow in individual years. In the coming years, many new products and services will be upgrades and improvements of existing tested solutions, whose lifetimes are thus extended. In addition, suppliers must account for a greater part of production. In 2012, investments in property, plant and equipment are expected to amount to nearly EUR 200m, which corresponds to the current maintenance investments at Vestas’ present capacity.
- In 2012, investments in intangible assets are expected to amount to approx EUR 450m. Total development expenses are expected to amount to EUR 550m inclusive of development related investments in non-current assets. The high level is to a greater extent related to the development of the V164-7.0 MW turbine. Vestas' R&D investments are intended to ensure a consistently lower Cost of Energy and optimum sustainability for turbines and turbine production. Vestas’ current onshore wind power plants generate electricity at 4-7 eurocents per kWh. Vestas will continue to bring down the Cost of Energy in order to become able to offer increasingly competitive solutions compared with fossil fuels, the price of which is expected to rise in the coming years.
- In the coming years, the wind power industry is expected to consolidate – the large providers account for a growing proportion of the order intake. Based on its share of nearly one-fourth of the global installed capacity, more than 30 years of experience with different wind regimes and power grids, the most sophisticated computer models for calculating optimum installation conditions and its global organisation, which has a strong track record of positioning itself in new markets, Vestas expects to increase its market share from the current level of 15 per cent in the years to come.
- Safety must consistently be enhanced. In 2015, the incidence of industrial injuries per one million working hours must be reduced to a maximum of 0.5. The share of renewable energy must be raised, and at the latest by the end of 2015, Vestas and its subcontractors must have reached Sigma 6.
