The market environment continues to be very supportive for the wind power industry with regulatory policies generally providing a favourable backdrop for industry stability. Combined with the continuously improving economics of wind energy, the future looks bright for increasing wind energy’s share of the energy mix. Today, renewable energy only accounts for a small portion of total world energy consumption but the International Energy Agency forecasted in late 2015 that growth in energy demand towards 2040 is expected to be met primarily by renewable energy sources with wind taking the largest part of the expected renewables installations in that period.
With that in mind, I’m pleased to observe that Vestas’ strategy continues to be on track. We are delivering growth in both the wind turbine and service business, and we continue to lower the cost of energy to the benefit of both our customers and Vestas, while still keeping a strong focus on controlling and improving operational excellence, for instance by managing working capital and keeping costs under control.
Activity levels were yet again high during the two first quarters of the year. Order intake has been at a very satisfying level, shipped/produced MWs is up by 42 percent and deliveries up by 29 percent. Further, we installed the multirotor prototype. All in all, it has indeed been a busy period for the 21,781 employees in the Vestas group. I wish to extend my sincere thanks and gratitude for being part of such a dedicated group of people.
As a result of the high activity levels, financial performance year-to-date also improved compared to 2015. Revenue and earnings were up significantly and our cash flow was also strong in the second quarter and we are delighted to be able to upgrade our expectations for the year on revenue, EBIT margin, and free cash flow. The strong performance and the improved expectations for the year have also allowed Vestas to launch the second share buyback programme in the history of the company.
The share buyback comes on top of a dividend payment of EUR 201m earlier this year and hence, cash returns continue to increase, displaying our strong intent to continue to provide shareholder value.
Performance in the offshore joint venture (JV) with Mitsubishi Heavy Industries is also on track. MHI Vestas Offshore Wind A/S continues to enjoy success in the marketplace and activity levels are expected to continue to increase with factories ramping up for installation of the first V164 projects. In the short-term, this will adversely impact earnings in the company as seen in the financials for the JV in the first half of the year, but in the mid to longer term, the JV is expected to become a strong and meaningful contributor to the earnings of Vestas. The first half of 2016 has played out well, and we now look forward to once again deliver on our promises as we enter into a busy second half of the year.