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• Highlights for the Group
• Financial performance
• Consolidated financial statements

Order intake and financial performance

During the first two quarters of the year, Vestas achieved another record-high order intake of 5,436 MW compared to 4,716 MW in the same period of 2017. This resulted in an order backlog of 13,521 MW. The order intake was broad-based across 21 countries, and led by the USA. Activity levels remained at a high level with more than 5.8 GW produced and shipped and 3.2 GW delivered to the customers.  

In the first half of 2018, Vestas’ total installed onshore capacity increased from 79 GW to 88 GW – an increase of 11 percent. 

Revenue from Power solutions amounted to EUR 3,175m, which was a decrease of 6 percent compared to the first two quarters of 2017. The EBIT margin for the segment was 9.1 percent in 2018, down 4.4 percentage points compared to 2017. 

Trends in the onshore wind power market

As wind power is becoming increasingly competitive, the trend towards market-based mechanisms continues, and in the first half of 2018 alone, close to 12 GW has been allocated to wind power through auctions. Markets with an already established presence of wind power such as India, Brazil, and Germany were the main contributors, but adding to this, other countries new to wind power conducted auctions, one example being Russia, that has now decided to include wind power in the future energy mix with more than 2 GW allocated during the last year.

In the first half of 2018, Vestas continued to expand its strategic initiatives to support customers across the entire wind power plant value chain, including co-developing projects together with strategic partners and key customers.

In the USA, Vestas was involved in the development of two projects of a total of 312 MW, and in Sweden, Vestas partnered with Swedish utility, Vattenfall, and Danish pension fund, PKA for a 353 MW wind energy project. Through development and ownership of wind energy projects, Vestas is leveraging its unparalleled experience and addresses a wind power plant’s full value chain to maximise return on investment and profitability. 

Technology for the future and optimisation of the manufacturing footprint

Following the announcement of the world’s first utility-scale hybrid project in Australia in 2017, Vestas continues to develop initiatives that will accelerate the transition to an energy mix led by renewable energy. In March, Vestas, together with EDPR, installed a wind and solar photovoltaic hybrid demonstrator that explores new ways to combine sustainable energy sources. 

The ability to continuously lower the cost of energy through new and more efficient wind turbines remains the single most important objective for Vestas. Earlier in the year, a prototype of the newly introduced V120-2.0 MW^TM generated its first kilowatt hour of electricity. The wind turbine is part of the extensive upgrade of both the 2 MW and 4 MW platform announced in 2017, offering a significant improvement in power production.

In the first half of 2018, Vestas continued to strengthen its manufacturing footprint to support regions and countries with a strong development. Vestas opened manufacturing facilities in Russia, and in Argentina, Vestas announced its plan to establish a nacelle assembly facility to support the success in a promising market for Vestas and for wind power in general.

Furthermore, Vestas strengthened the flexibility and cost-effectiveness by adding a supply agreement to its existing relationship with TPI Composites. With production scheduled to commence in the first half of 2019, the agreement includes producing blades for the newly introduced V150-4.2 MW^TM turbine in China to supply primarily Asian markets, but also markets globally when applicable.  

Order intake and financial performance

In the first half of 2018, Vestas’ service business continued to grow its activities with an increased profitability. Revenue for the service business amounted to EUR 779m, with an EBIT margin of 26 percent. This corresponds to an increase in revenue of 5 percent, and 6.6 percentage points in EBIT margin compared to first half of 2017.

Vestas’ fleet under service grew in the first half of 2018, and as a result of a strong order intake, Vestas had a total of 79 GW under service in 64 countries by the end of the period. This resulted in an order backlog with expected contractual future revenue of EUR 12.8bn as at 30 June 2018, an increase of EUR 1.7bn compared to the end of first half of 2017.

Innovation and digitalisation

As the global energy sector is transforming, and wind power projects are becoming increasingly sophisticated, Vestas’ service business continues to grow in importance. Vestas is looking to offer customers digital solutions to deliver greater predictability, increased renewable energy production, more efficient operations, and better integration and management of energy grids. To achieve this, during the first quarter of 2018, Vestas acquired Utopus Insights, Inc., a US based energy analytics provider with 15 years of experience in solutions development.

The acquisition enables Vestas to further leverage its unparalleled data repository, increase operational agility and revenue, and eventually lower the cost of energy.

Developments in Vestas’ service business

The customer landscape continues to change, and among others, global investment funds seeing wind energy as a stable investment, and corporations aiming to consume more renewable energy at a fixed price, curtail the predominance of the global utilities. This presents a great opportunity for the service business, as an advanced service offering on the wind turbines de-risks investments in wind power projects.

Vestas continues to build its capabilities within multibrand servicing. In the first half of 2018, Vestas’ success in the multibrand area was highlighted by being awarded a service contract from Spain’s leading wind power operator, Iberdrola, covering a total of more than 2 GW on non-Vestas turbines across Spain, Portugal, and Mexico.

By the end of first half of 2018, Vestas had service agreements for more than 8 GW of non-Vestas wind turbine platforms. By growing services on third-party wind turbines along with keeping renewal rates at a high level, Vestas aims to increase the share of installed onshore capacity that Vestas services.

Order intake and operational performance

During the first half of 2018, MHI Vestas Offshore Wind secured a strong order intake of more than 1.1 GW with the Norther project (370 MW) in Belgium and the Borssele III/IV projects (732 MW) in the Netherlands. Further to this, the joint venture received a conditional order for the 224 MW Northwester 2 project in Belgium.

MHI Vestas Offshore Wind continues to further strengthen its track record of successful commissioning of the V164-8.0 MW^TM turbine. In 2017, the first large-scale project to use the V164-8.0 MW^TM was finished, and in the first half of 2018, the Aberdeen Bay was commissioned using the same type of turbine.

MHI Vestas Offshore Wind also completed the 330 MW Walney Extension Wind Park in the UK, while its largest offshore wind park to date, namely the 400 MW Rampion project, also in the UK, was commissioned.

Positive outlook for the offshore wind industry intact

The first half of 2018 marked the introduction of new important markets for offshore wind power. Taiwan allocated 5.5 GW through auctions, which will be installed between 2020 and 2025. Alongside being appointed preferred supplier for 900 MW of the awarded volume, MHI Vestas Offshore Wind has signed local Memorandums of Understanding with five prestigious Taiwanese companies, and is thereby well positioned to play a vital role in the country’s development of offshore wind power.

The USA marked its entry to offshore wind power as Massachusetts and Rhode Island auctioned out 1.2 GW to developers, setting the stage for large-scale offshore wind power on the Eastern seaboard of the country.

Emergence of volume targets in new markets, combined with modest growth in the established Northern European markets, provides the offshore wind power industry with attractive growth expectation over the next decade. Industry analysts are projecting volumes to grow 15-20 percent annually towards 2026 from the low base of 3 GW in 2017.

New management team to lead expansion

The end of the first quarter of 2018 completed the first four-year management cycle in MHI Vestas Offshore Wind. In accordance with the joint venture agreement, both Mitsubishi Heavy Industries and Vestas agreed to a change in the executive management of the company with Philippe Kavafyan and Lars Bondo Krogsgaard being appointed as CEO and Co-CEO, respectively. At the same time, Vestas’ CEO Anders Runevad was appointed Chairman of the Board of Directors, all of the changes with effect as of 1 April 2018.

Read more at MHI Vestas Offshore Wind's website