jaarverslag vestas 2012

7/29/2019 Jaarverslag Vestas 2012

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Annualreport 2012


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Vestas our most important stakeholders are its customers, share-holders, employees and the surrounding society. To be able to gener-ate value or all stakeholders in the long run, Vestas must maintainclose stakeholder relations and consistently become a more e cientsupplier o wind power solutions.

This annual report incorporates Vestas nancial reporting andthe measures it has taken to reduce consumption o Earths scarceresources and the companys environmental ootprint. Proper workingconditions and generally accepted business ethics are two among anumber o priority areas which in combination should demonstratecorrect Vestas behaviour. Generally, the annual report aims to providean insight into the values that Vestas generates or its stakeholders.

Combined with additional in ormation about Vestas sustainabilityinitiatives at vestas.com, this annual report constitutes Vestas Com-munication on Progress (COP) under the UN Global Compact. As aresult o its endorsement o the UN Global Compact, Vestas has optedto apply the option stipulated in section 99a o the Danish FinancialStatements Act concerning the duty o large enterprises to prepare acorporate social responsibility report by re erring to the COP report.Vestas reporting process meets the international guidelines rom theGlobal Reporting Initiative, GRI G3.0.

Prologue


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Annual report 2012004 Chairmans statement006 CEOs review008 Highlights or the Group010 Deliveries012 Overview015 Vestas business model019 Management report039 Corporate governance059 Consolidated accounts115 Annual accounts or Vestas Wind Systems A/S126 GRI overview

127 In ormation about the company

This annual report is available on vestas.com/investor in Danish and English.In case o doubt, the Danish version shall apply.


4/128004 Vestas annual report 2012 Chairmans statement

In the wake o the two pro t warnings announced at the end o 2011and in January 2012, Vestas share price was sent plummeting andcon dence in the Group hit rock bottom. This marked a historic low orVestas but it was also a turning point. Ever since, Vestas has beenplanning and implementing a wide range o initiatives aimed at improv-

ing pro tability and cash fows. Going into 2013, we have come a longway in our comprehensive e orts to trans orm our company and ouroperating business model. The aim is to prevent a similar situation romoccurring again and restore con dence in Vestas.

This is a long, steady haul, and Vestas is still some distance away romthe nishing line. However, were de nitely moving in the right direction.When I took over as chairman o the Board o Directors in the spring o2012, con dence was low and criticism harsh. Today, I hear more andmore customers and shareholders acknowledging that we are deliver-ing on our promises. I recognise the act that there is still a long way togo, but Im pleased to note that con dence is steadily edging upwards.

This is no coincidence. Vestas aced huge changes in 2012. We in-vested a lot o e ort in stabilising Vestas nancial position, preparingthe organisation or a new reality where the market will provide greaterchallenges than ever be ore. That was the situation in 2012, and thatshow it will be in 2013.

F cuse a age e t tea w th c ear resp s b t esSince change starts with management, we started 2012 by implement-ing a new ve-person management team in place o the ormer 16-mem-ber Vestas Government. The new management team combines skillssuch as management experience rom global corporations with in-depthknowledge o our customers needs and years o insight into Vestas corevalues o technology, development, production, sales and service.

Based on a more ocused management team with clearly de ned re-sponsibilities and close relations with the Board o Directors, Vestasstands better prepared than ever be ore to navigate swi tly and sa elyin an increasingly dynamic market. On the Board o Directors, we arecon dent that the new management has charted the right course orVestas and is capable o ully completing the changes, the e ects owhich have already begun to materialise.

Working to restore confdence in Vestas

On the Board o Directors, we are con dentthat the new management has charted theright course or Vestas and is capable o ullycompleting the changes, the e ects o whichhave already begun to materialise.

Bert NordbergChairman o the Board o Directors


5/128005Chairmans statement Vestas annual report 2012

Re se ba k g ac t esThe renegotiation o Vestas bank agreements was another essentialtask we success ully dealt with in 2012. With the new agreements inplace, Vestas has secured the necessary nancial room to manoeuvreat a time when the entire industry is struggling to overcome economic

and political uncertainty.

Paramount to Vestas nancial position are also the massive cost-outmeasures implemented during 2012. We have already sharply reducedour break-even level, ensuring a pro table Vestas. Coupled with a re-duced need or investment, this also enhances Vestas cash-generatingpotential. Ultimately, Vestas is judged by its pro tability and cash fows,and our ability to generate a pro t is crucial or market con dence. Con-sequently, we will continue our e orts to enhance Vestas pro tabilityand cash fows with undiminished dedication in 2013.

Wr te- w sAs a consequence o Vestas declining earnings and a more conserva-tive view o the uture market, write-downs o more than EUR 500mwere recognised. This is partly due to the act that we have decided toput some actories up or sale as part o our changed business model.

PTC e te s e s supp rt the USAThe extension o the Production Tax Credit scheme in the USA lendscrucial support to Vestas in what has been the companys largest mar-ket over the past three years. One o the actors behind the decision toextend the scheme was the act that Vestas has contributed to estab-lishing the wind power industry and creating jobs in the USA. Combinedwith extensive lobbying this helped ensure continuing political support

or the US wind turbine industry.

Gr wth ew arketsIn 2013, it will be imperative or Vestas to retain its strong momentum.Having made the entire organisation leaner, more manoeuvrable anddynamic, we need to capitalise and respond quickly to opportuni-ties that arise in the market. Focus is o ten on the USA since this hastraditionally been the largest market. However, demand or energy isgrowing in many other regions, and in 2012, Vestas landed large ordersin countries such as Mexico, South A rica, Peru and Chile. On the other

hand, we should not aim or higher revenue at any cost. Vestas will onlyembark on projects that are pro table to our customers and our busi-ness.

We are well prepared, having satis actorily managed a 2012, which

proved exactly as di cult as we had anticipated. 2012 brought mas-sive challenges to the entire wind turbine industry. While implementinga new organisation and comprehensive cost-out initiatives concur-rently with a record-high level o activity, Vestas nevertheless retainedits position as the industrys leading wind turbine manu acturer. Thispower ul achievement underlines how Vestas is per orming in competi-tion with some o the worlds largest industrial conglomerates.

We ha e uch t be pr u Although we sometimes orget it, our market-leading position is some-thing we can justi ably be proud o . In spite o the criticism and mistrustdirected at Vestas because we have undoubtedly made mistakes in avolatile market, Vestas retains, year a ter year, its unique position as theworlds largest wind turbine manu acturer.

Vestas has earned great respect worldwide and is considered anambassador or the entire industry. It is generally acknowledged thatVestas, more than anyone else, has pioneered the global proli erationo wind power, that our technology is o ten used as a benchmark andthat Vestas remains the undisputed market leader, having installed inexcess o 55 GW.

Vestas is only capable o retaining this position because o its dedi-cated e orts to improve and optimise every corner o its organisation.Thats what we did in 2012, and thats what we will continue to do in2013. Consequently, Vestas is truly in a position to consistently im-prove its earnings and cash fows and thereby restore con dence in itsbusiness.


6/128006 Vestas annual report 2012 CEOs statement

Towards the end o 2011, we were preparing Vestas or 2012 and2013. Assessing already then that we were acing two extremely di -

cult years, we resolved to handle the two years as one period. We havenow overcome the rst year, which as expected, proved to be challeng-ing. On the other hand, we succeeded in implementing so many o the

initiatives tabled in the autumn o 2011 that, going into 2013, we areacing a more avourable situation than we saw a year ago. We are not

there yet, but we truly believe that the glass is hal ull rather than halempty.

2012 a ear u c trast2012 was characterised by challenges as well as encouragements.On the one hand, we carried out necessary changes and implementeda new organisation in a busy year that saw production at an all-timehigh. On the other hand, our nancial per ormance was adverselya ected by excessive costs associated with the V112 turbine and theGridStreamer technology, an issue we carried over rom 2011. Thisresulted in losses in the rst part o the year, but Vestas recoveredstrongly in the ourth quarter where the EBIT be ore special items morethan tripled over the ourth quarter o 2011. This also goes or our cashfow as the ree cash fow we generated in the ourth quarter was thehighest we have recorded or ve years.

The ourth quarter is important because that was when the initiativeswe implemented in 2012 started to materialise. I have previouslycompared our situation to that o changing the course o a supertanker.When we turn the helm, it takes a long time or a large group such asVestas to change direction. But it has now started to happen, and theimprovement is discernible in our gures.

C ear g ut g asOver the past year, we have come a long way in creating a new Vestas.Together, we stuck with the planned restructuring o the Group, thepositive e ects o which are now starting to materialise. The Vestas otoday is a lighter and more fexible organisation which with the new op-erating business model is easily scalable to speci c needs.

Along the way, we unsentimentally cleared out old dogmas and strate-gies. Among other initiatives, we simpli ed our product range, which

Vestas generally succeeded in implementing anumber o initiatives in 2012 which makes uswell prepared or a challenging 2013.

Ditlev EngelGroup President & CEO

Vestas strengthened its position in a di fcult 2012


7/128007CEOs statement Vestas annual report 2012

we consolidated into our wind turbine plat orms in 2012. Instead ospending resources on research into new technology, our developmentdepartment will now increasingly ocus on continuously developingand improving existing plat orms and proven technology. The purposeo this dedicated e ort is to ensure maximum reliability and the lowest

cost o energy or Vestas customers.

E c e c ust be urther pr eVestas will also increase the use o outsourcing and standard compo-nents, and we have identi ed a number o ways to improve the utilisa-tion o the production capacity. One example was the divestment oVestas tower actory in Denmark. Another and quite the opposite was to increase the activities at the US tower actory, which now appliesup to 25 per cent o its capacity manu acturing towers or third parties.Both solutions divestment and capacity sharing will be applied inthe uture.

At the same time, we will continue our e orts to meticulously reducecosts. In 2012, we lowered the need or investments, improved produc-tion e ciency and reduced our work orce by 4,943 employees. Thus,revenue was up by 24 per cent, while our work orce was reduced by22 per cent.

The outlook or a quiet 2013 le t us no choice, and urther cost reduc-tions and e ciency improvements are planned or this year. By theend o 2013, total cost savings will run to more than EUR 400m. Withthese cost savings, Vestas will be in a better position to earn moneyand generate positive cash fows. Not only in 2013, but also in the longterm.

Str g gr wth the ser ce bus essA turbulent year, 2012 was also ull o results documenting that Vestasis on the right track.

That applies especially to the proven quality o our products. The LostProduction Factor, the share o the wind not harvested by Vestas tur-bines, is now below 2 per cent. Meanwhile, in 2012, the consumption owarranty provisions in relation to revenue was the lowest ever.

Service was the astest growing and most pro table part o Vestasbusiness in 2012. By the end o the year, our service business hadgrown by 26 per cent, and in 2013 we project service revenue oapprox EUR 1bn. As a result, Vestas will truly become a two-leggedoperation, selling wind turbines and servicing o wind power plants. We

have a solid oundation or urther growth. In 2012, Vestas reacheda milestone o 55 GW o installed capacity. The act that our closestcompetitor has still to reach 40 GW underlines Vestas unique positionin the service market.

With the regrettable exception that we experienced two tragic deathsamong our subcontractors, we reached a record in terms o sa etyamong Vestas employees in 2012. The number o industrial injuries

ell to 2.8 per one million working hours in 2012. In comparison, thecorresponding gure was 15.6 in 2008. In other words, 2012 was notonly the busiest, but also the sa est year ever or Vestas. However, weare all deeply a ected by the atal accidents, which will only encourageus urther to attain the 2015 target o no more than 0.5 industrial inju-ries per one million working hours.

The u at s p aceVestas generally succeeded in implementing a number o initiatives in2012 which makes us well prepared or a challenging 2013. We havethe oundation in place or Vestas to retain its position as the worldsleading wind turbine manu acturer and achieve its long-term vision obringing wind power on a par with oil and gas.

It is becoming increasingly necessary that we accomplish our vision. In2012, the average global temperature rose or the 36th year running.

In other words, the world needs wind power more than ever be ore. Wehave come a long way in making Vestas better prepared than ever toprovide it.


8/128008 Vestas annual report 2012 Highlights or the Group

Highlights or the Group

EUR 2012 2011 2010 2009 1) 2008 1)

HiGHliGHTSinComE STATEmEnTRevenue 7,216 5,836 6,920 5,079 5,904Gross pro t 796 725 1,175 836 1,125Pro t be ore nancial income and expenses, depreciation andamortisation (EBITDA) be ore special items 473 305 747 469 749Operating pro t/(loss) (EBIT) be ore special items 4 (38) 468 251 614Pro t be ore nancial income and expenses, depreciation andamortisation (EBITDA) a ter special items 299 305 684 469 749Operating pro t/(loss) (EBIT) a ter special items (697) (60) 310 251 614Pro t/(loss) o nancial items (14) (93) (72) (48) 46Pro t/(loss) be ore tax (713) (153) 238 204 660Pro t/(loss) or the year (963) (166) 156 125 470

BAlAnCE SHEETBalance sheet total 6,972 7,689 7,066 7,959 6,327Equity 1,622 2,576 2,754 2,542 1,587Provisions 353 329 370 534 393Average interest-bearing position (net) (1,189) (990) (593) (55) 395Net working capital 233 (71) 672 317 (73)Investments in property, plant and equipment 167 406 458 606 509

CASH FloW STATEmEnTCash fow rom operating activities (73) 840 56 (34) 277Cash fow rom investing activities (286) (761) (789) (808) (680)Free cash fow (359) 79 (733) (842) (403)Cash fow rom nancing activities 832 (13) 568 1,075 (91)Change in cash at bank and in hand less currentportion o bank debt 473 66 (165) 233 (494)

RATioS 2)

FinAnCiAl RATioSGross margin (%) 11.0 12.4 17.0 16.5 19.1EBITDA margin (%) be ore special items 6.6 5.2 10.8 9.2 12.7EBIT margin (%) be ore special items 0.1 (0.7) 6.8 4.9 10.4EBITDA margin (%) a ter special items 4.1 5.2 9.9 9.2 12.7EBIT margin (%) a ter special items (9.7) (1.0) 4.5 4.9 10.4Return on invested capital (ROIC) (%) be ore special items 0.2 (1.3) 10.8 9.5 43.4Solvency ratio (%) 23.3 33.5 39.0 31.9 25.1Net interest-bearing debt/EBITDA be ore special items 1.9 1.8 0.8 (0.3) (0.1)Return on equity (%) (45.9) (6.2) 5.9 6.1 33.9

Gearing (%) 108.0 35.7 33.2 13.8 7.8

SHARE RATioSEarnings per share (EUR) (4.8) (0.8) 0.8 0.6 2.5Book value per share (EUR) 8.0 12.6 13.5 12.5 8.6Price / book value (EUR) 0.5 0.7 1.7 3.4 4.7P / E-value (EUR) (0.9) (10.3) 30.8 71.0 16.3Cash fow rom operating activities per share (EUR) (0.4) 4.1 0.3 (0.2) 1.5Dividend per share (EUR) 0.0 0.0 0.0 0.0 0.0Payout ratio (%) 0.0 0.0 0.0 0.0 0.0Share price 31 December (EUR) 4.3 8.3 23.6 42.6 40.7Average number o shares 203,704,103 203,704,103 203,704,103 197,723,281 185,204,103Number o shares at the end o the year 203,704,103 203,704,103 203,704,103 203,704,103 185,204,103

1) The comparative gures have been adjusted in accordance with the changed accounting policies implemented in 2010.2) The ratios have been calculated in accordance with the guidelines rom Den Danske Finansanalytiker orening (The Danish Society o Financial Analysts)

(Recommendations and Financial ratios 2010), re . note 1 to the consolidated accounts.


9/128009Highlights or the Group Vestas annual report 2012

2012 2011 2010 2009 2008

SoCiAl And EnviRonmEnTAl KEy FiGURES 1)

oCCUPATionAl HEAlTH & SAFETyIndustrial injuries (number) 110 132 201 306 534 o which atal industrial injuries (number) 0 1 0 0 0

PRodUCTSMW produced and shipped 6,171 5,054 4,057 6,131 6,160Number o turbines produced and shipped 2,765 2,571 2,025 3,320 3,250

UTiliSATion oF RESoURCESConsumption o metals (1,000 tonnes) 192 212 171 203 187Consumption o other raw materials, etc. (1,000 tonnes) 121 105 107 127 129Consumption o energy (GWh) 630 586 578 537 458 o which renewable energy (GWh) 327 223 242 264 173

o which renewable electricity (GWh) 310 208 209 238 167Consumption o resh water (1,000 m3) 581 562 598 521 475

WASTE diSPoSAlVolume o waste (1,000 tonnes) 87 89 89 97 97- o which collected or recycling (1,000 tonnes) 44 48 35 34 30

EmiSSionSDirect emission o CO2 (1,000 tonnes) 59 58 57 51 42

loCAl CommUniTyEnvironmental accidents (number) 0 0 0 10 16Breaches o internal inspection conditions (number) 1 3 3 3 5

EmPloyEESAverage number o employees 21,033 22,926 22,216 20,832 17,924Number o employees at the end o the year 17,778 22,721 23,252 20,730 20,829

SoCiAl And EnviRonmEnTAl indiCAToRS 1)

oCCUPATionAl HEAlTH & SAFETyIncidence o industrial injuries per one million working hours 2.8 3.2 5.0 8.1 15.6Absence due to illness among hourly-paid employees (%) 2.4 2.3 2.6 2.8 3.3Absence due to illness among salaried employees (%) 1.1 1.3 1.3 1.3 1.1

PRodUCTSCO2 savings over the li e time on the MW produced and shipped

(million tonnes o CO2) 163 133 108 163 164

UTiliSATion oF RESoURCESRenewable energy (%) 52 38 42 49 38Renewable electricity or own activities (%) 89 68 74 85 68

EmPloyEESWomen at management level (%) 17 18 19 19 17Non-Danes at management level (%) 56 53 49 46 42

mAnAGEmEnT SySTEmOHSAS 18001 occupational health & sa ety (%) 100 2) 97 98 97 98ISO 14001 environment (%) 100 2) 96 98 97 100ISO 9001 quality (%) 100 2) 94 98 98 98

1) Accounting policies or social and environmental highlights or the Group, see page 36.2) As Vestas is ully covered by an umbrella certi cate or its worldwide activities , the accounting policy or the certi ed management system has been changed. Vestas aims or all new

sites/locations o a certain size to be visited by the external certi cation body within six months.


10/128010 Vestas annual report 2012 Delivered MW

2012 deliveries worldwide

USA1,313 MW

Argentina2 MW

Brazil88 MW

Mexico29 MW

China413 MW

India88 MW

Pakistan50 MW

Australia

420 MW

Canada439 MW

Nicaragua40 MW

NetherlandsAntilles30 MW

Northern EuropeUnited Kingdom

312 MWNetherlands

42 MWBelgium16 MWIreland

4 MW

ScandinaviaSweden525 MWDenmark

87 MWNorway54 MWFinland33 MW

SouthernEurope

Italy452 MW

Spain290 MW

France168 MW

Turkey48 MWCyprus11 MW

Portugal6 MW

Cape Verde3 MW

Central Europe

Germany591 MWPoland275 MWUkraine81 MWRomania56 MWCzech Republic16 MWAustria14 MWBulgaria6 MW

Puerto Rico23 MW

Chile7 MW

Uruguay7 MW


11/128011Delivered MW Vestas annual report 2012

de ere (ToR) 1) sh re a sh reMW

Eur pe a A r caGermany 8,386Spain 4,039Italy 3,116Denmark 2,781United Kingdom 2,093Sweden 1,951Netherlands 1,590France 1,560Greece 1,044Poland 770Portugal 670Turkey 604Ireland 590Romania 544Austria 447Belgium 311Bulgaria 309Hungary 105Cyprus 93Czech Republic 84Ukraine 84Egypt 79Norway 70Finland 60Morocco 50Croatia 48Others 94T ta 31,572A er casUSA 10,982Canada 2,315Brazil 292Mexico 132Chile 124Argentina 89Costa Rica 51Nicaragua 40Jamaica 39

Uruguay 39Others 117T ta 14,220As a Pac cChina 3,878India 2,799Australia 1,681Japan 510New Zealand 346South Korea 166Taiwan 86Pakistan 50Others 62

T ta 9,578

T ta w r 55,370

de ere (ToR) 1)

MW

Turb e t peOthers 22,907V80-1.8 MW 1,829V80-2.0 MW 6,538V90-1.8 MW 2,545V90-2.0 MW 9,716V90-3.0 MW 8,190V100-1.8 MW 1,911

V100-2.0 MW 32V100-2.6 MW 133V112-3.0 MW 1,569T ta 55,370

de ere (ToR) 1) sh reMW

United Kingdom 784Netherlands 247Denmark 197Belgium 165Sweden 13

Portugal 2Japan 1T ta 1,409

1) Delivered (trans er o risk TOR) Vestas wind turbines as at 31 December 2012.

Accumulated deliveries worldwide


12/128012 Vestas annual report 2012 Overview

Overview

2012 was a challenging year or the wind power industry and orVestas. During the year, Vestas started the implementation o a new

organisational structure and a new operating business model, whichincludes an evaluation o its manu acturing ootprint. In the autumn o2012, Vestas renegotiated its credit acilities as the hal -year test othe nancial covenants was de erred.

While executing a record high level o shipments, Vestas also had toprepare or a signi cantly lower activity level in 2013. Consequently,investments were reduced by 62 per cent or EUR 475m and the num-ber o employees was reduced by 22 per cent or 4,943 employeesduring 2012. This contributed to xed cost reductions o more thanEUR 250m with ull e ect as rom the end o 2012.

Revenue amounted to EUR 7.2bn, EBIT margin be ore special itemswas 0.1 per cent and ree cash fow amounted to EUR (359)m. A totalo EUR 701m was recognised as special items primarily driven bywrite-downs.

Fu ear 2012The intake o rm and unconditional orders o 3,738 MW with a valueo EUR 3.8bn, was 49 per cent lower than in 2011 primarily drivenby weaker order intake in the two largest markets, China and the USA.In terms o MW, Europe and A rica accounted or 61 per cent, theAmericas accounted or 26 per cent, and Asia Paci c accounted or 13per cent o the order intake.

At the end o 2012, the backlog o orders stood at 7,156 MW corre-sponding to EUR 7.1bn. In addition to the wind turbine backlog, Vestashad service agreements with contractual uture revenue o EUR 5.3bnby the end o 2012.

or er take a sh p e tsMW

Order intake

Shipments0

2,000

4,000

6,000

8,000

10,000

20122011201020092008

In 2012, Vestas produced and shipped 2,765 wind turbines withan aggregate capacity o 6,171 MW, against 2,571 wind turbinesand 5,054 MW in 2011. Final capacity delivered to the customersamounted to 6,039 MW; an increase o 16 per cent.

Vestas generated revenue o EUR 7.2bn in 2012 which is an increaseo 24 per cent compared to 2011. Revenue in the service businessrose by 26 per cent to EUR 886m. The service business EBIT marginstood at 17 per cent be ore allocation o Group costs.


13/128013Overview Vestas annual report 2012

Re e uemEUR

0

2,000

4,000

6,000

8,000

20122011201020092008

The gross pro t amounted to EUR 796m, corresponding to a grossmargin o 11.0 per cent. In 2011, the gross pro t and gross marginamounted to EUR 725m and 12.4 per cent, respectively. The lowergross margin is explained by higher depreciations and too highproduct and production costs or the V112-3.0 MW turbine and theGridStreamer technology, which however have been reduced during2012.

EBITDA be ore special items amounted to EUR 473m; an increase o55 per cent over 2011.

The operating pro t, EBIT, be ore special items was EUR 4m, corre-sponding to an EBIT margin be ore special items o 0.1 per cent. TheEBIT margin was negatively impacted by EUR 126m higher deprecia-tion and amortisation than in 2011.

EBiT be re spec a te smEUR

(200)

0

200

400

600

800

20122011201020092008

Special items amounted to EUR 701m o which write-downs consti-tuted EUR 551m. The write-downs were recognised as a consequenceo Vestas declining earnings and a more conservative view o the

uture market.

EBIT a ter special items amounted to EUR (697)m.

During 2012, the net working capital increased by EUR 304m to EUR233m which corresponds to 3.2 per cent o revenue. A EUR 555mreduction in trade payables was the primary driver behind the increaseand was not balanced by the EUR 302m decrease in inventories.

Cash fow rom operations amounted to EUR (73)m adversely im-pacted by the a orementioned increase in net working capital. Netinvestments decreased by 62 per cent to EUR 286m o which EUR167m were investments in property, plant and equipment.

Cash f w r perat s a est e tsmEUR

Cash owfrom operations

Investments(1,000)

(500)

0

500

1,000

20122011201020092008

The ree cash fow declined by EUR 438m to EUR (359)m primarily asa result o the increased net working capital.

Free cash f wmEUR

(1,000)

(750)

(500)

(250)

0

250

20122011201020092008

Net debt amounted to EUR 900m at the end o 2012. The net debt toEBITDA ratio increased to 1.9 compared to 1.8 at the end o 2011.

Return on invested capital be ore special items amounted to 0.2 percent, against (1.3) per cent in 2011. Going orward, return on investedcapital must improve through higher earnings and relatively lowerinvested capital.

F urth quarter 2012Vestas ourth-quarter order intake was 1,123 MW with a total valueo EUR 1.2bn. This was slightly below expectations.

Vestas produced and shipped 687 wind turbines with an aggregatecapacity o 1,464 MW in the quarter, against 721 wind turbines and1,478 MW in the ourth quarter o 2011. During the quarter, a total o2,160 MW was delivered to Vestas customers, against 1,956 MW inthe ourth quarter o 2011.

Fourth-quarter revenue amounted to EUR 2,512m in 2012 anincrease o 23 per cent rom the ourth quarter o 2011. Europe andA rica accounted or 58 per cent o revenue, the Americas or 18per cent and Asia Paci c or 24 per cent o revenue. Service revenueamounted to EUR 223m in the ourth quarter o 2012.

The gross pro t was EUR 333m, or 13.3 per cent, against EUR 267mand 13.1 per cent, respectively, in the ourth quarter o 2011. EBIT be ore special items more than tripled to EUR 155m rom EUR46m in the ourth quarter o 2011. The EBIT margin be ore special


14/128014 Vestas annual report 2012 Overview

items thus increased by 3.9 percentage points to 6.2 per cent in theourth quarter o 2012.

Special items in the ourth quarter amounted to EUR 485m, primar-ily driven by write-downs. EBIT a ter special items amounted to EUR(330)m.

Warranty provisions in the quarter amounted to EUR 14m, equal to0.6 per cent o revenue. In the ourth quarter o 2012, Vestas con-sumed warranty provisions totalling EUR 18m. The improved windturbine per ormance is also refected in the Lost Production Factor(LPF), which was reduced to less than 2 per cent in the autumn o2012. The LPF indicates the share o the wind not harvested by thewind turbines.

The ree cash fow amounted to EUR 416m an improvement o EUR119m compared to the ourth quarter o 2011. Investments in the

quarter amounted to EUR 79m, which was EUR 198m lower than theinvestments in ourth quarter o 2011.

S c a a e r e ta ssuesPersonal sa ety is always given top priority at Vestas because itsemployees are entitled to it and its customers request it. Throughincreased ocus, intensive training and the dedicated e orts o its em-ployees, Vestas has managed to reduce the number o accidents yeara ter year. Continuing its decline, the incidence o industrial injurieswas 2.8 per one million working hours in 2012.

Vestas has de ned a goal that all electricity must come rom renew-able energy sources, subject to availability. For 2012, the goal was notreached in ull.

Vestas share o renewable energy increased to 52 per cent in 2012rom 38 per cent in 2011, and renewable electricity increased to 89

per cent in 2012 rom 68 per cent in 2011.

i c e ce ustr a jur esPer one million working hours

0

5

10

15

20

20122011201020092008

out k 2013Shipments are expected to decline to 4-5 GW compared to the previ-ous guidance o around 5 GW. The change is due to a weaker orderintake than expected.

Revenue is expected to be at least EUR 5.5bn, including service rev-enue, which is expected to rise to approx EUR 1bn. Vestas expects toachieve an EBIT margin be ore special items o at least 1 per cent withthe EBIT margin or service amounting to approx 17 per cent be oreallocation o Group costs.

It should be emphasised that Vestas accounting policies only allowthe recognition o supply-only and supply-and-installation projects as

income when the risk has nally passed to the customer, irrespectiveo whether Vestas has already produced, shipped and installed theturbines. Disruptions in production and challenges in relation to windturbine installation, or example bad weather, lack o grid connectionsand similar matters may thus cause delays that could a ect Vestas

nancial results or 2013.

The ree cash fow is expected to be positive in 2013.

The development o the V164-8.0 MW turbine is continuing ac-cording to Vestas plans, with installation o the rst prototype stillexpected to take place in the second quarter o 2014. As previouslyannounced, Vestas has received inquiries rom potential partners onthe V164-8.0 MW turbine. Vestas will also continue to upgrade thenew 3 MW plat orm and the 2 MW plat orm.

There are no plans to invest in new production acilities, and thus in-vestments in property, plant and equipment are expected to be aroundEUR 150m. Vestas expects to urther reduce the number o employees during2013 and the year-end number o employees is expected to be nomore than 16,000.

out k 2013bnEUR

Shipments (GW) 4-5Revenue 5.5- o which service revenue approx 1EBIT margin (%) be ore special items 1EBIT margin, service (%) be ore allocation o Group costs approx 17Free cash fow > 0

A ua Ge era meet g 2013Vestas Wind Systems A/S Annual General Meeting will be held on21 March 2013 at 1:00 p.m. CET at the Concert Hall (Musikhuset) inAarhus, Denmark.

The convening or the Annual General Meeting will be disclosed on 25February 2013. In order to save costs, Vestas has, however, decidednot to distribute the convening notice by ordinary mail.

Distribution o dividends will always be decided with due considera-tion o the Groups growth plans and liquidity requirements. The Boardo Directors recommends to the companys Annual General Meetingthat no dividend be paid or 2012.


15/128015Vestas business model Vestas annual report 2012

Vestas business model

Born out o the oil crisis in the 1970s, it has always been Vestas goalthrough development, production and service o wind turbines to en-

sure energy independence in a sustainable manner.

Since the production o small wind turbines aimed at local armersbegan in a modest barn in 1979, Vestas has experienced signi cantgrowth. In 2005, Vestas implemented its in the region or the regioninitiative, building up a global production capacity in order to keep upwith demand while lowering costs o ever larger wind turbines.

However in recent years, the economic downturn has curbed energydemand and overshadowed the green agenda on a number o largemarkets. As a result, growth is no longer a given or the wind powerindustry, nor or Vestas.

Consequently, Vestas is changing. Towards the end o 2011, thecompany embarked on a new journey when a new operating businessmodel and a new organisation were conceived.

new perat g bus ess eThe objective is to optimise cash fow and earnings in the short term,while not sacri cing long-term opportunities such as capitalising onthe growing service business or developing the game changing V164-8.0 MW turbine or o shore. The new operating business model isbased on three pillars and utilises our principles.

The three pillars represent the companys core competencies:

A a ce w turb e tech g :With more than 30 yearsexperience within development o high technology wind turbinesand large investments in test and development, Vestas constantlydevelops and optimises a comprehensive and competitive modelline-up o wind turbines.

E c e t a u actur g w turb es:Vestas continuouslyimprove its high quality levels while adjusting production capacity

to the activity level and implementing cost reductions. Sa ety isa priority with a target o no more than 2.0 incidents o industrialinjuries per one million working hours or 2013.

Sa e a ser ce w p wer p a ts:Utilising real-time datarom almost 25,000 installed wind turbines, Vestas o ers service

o its wind turbines on days with no or low wind, thereby optimisingthe customers power production. The Lost Production Factor theamount o available wind not harvested has been reduced to below2 per cent. Vestas growing service business secures two revenuestreams: Sale o wind turbines and service o wind turbines.

The our principles must strengthen Vestas ability to manage busi-ness risk in an increasingly dynamic industry with little possibility opredicting uture market conditions:

Sca ab ecapacity must ensure that Vestas can adjust itsmanu acturing capacity when needed. Vestas can quickly adapt tofuctuations in demand, while maintaining a high actory utilisation.

F e b egeographical presence to ensure that Vestas can allocateregional resources when needed. Vestas aims to utilise a higherdegree o outsourcing.

Ag eresponse to shi ting market demand. Vestas constantlyprepares or market fuctuations in order to quickly adapt to suddenslow-down or pick-up o speci c markets.

lea through cost reductions and relatively lower capitalrequirements. Vestas continuously apply cost-out initiatives andadjustments o its work orce when and where it is necessary.


16/128016 Vestas annual report 2012 Vestas business model

Vestas three core competencies and the our principles create anoperating business model designed to manage risk by minimising un-

certainty, preserve Vestas competitive wind turbine technology, globalootprint and customer proximity while reducing costs and the relativecapital requirement.

F cus areasApplying the principles and building on the pillars has resulted in aclear direction. All areas o the business must ocus on improving thecurrently disappointing return on invested capital. In particular, thismeans executing on three objectives o importance: cost reductions,reduced investments and improved capacity utilisation.

C st re uct sCost savings have high priority or Vestas. During 2012, a cost reduc-tion plan or both xed and variable costs was intensi ed in order toimprove earnings.

Fixed costs such as salaries and operating expenses were signi -cantly reduced mainly through headcount reductions o 4,943.

Overall, the xed cost reductions during 2012 amounted to more thanEUR 250m. By the end o 2013, Vestas expects the combined xedcost savings e orts during 2012 and 2013 to exceed EUR 400m.

Likewise, variable costs were reduced during the course o 2012.When Vestas entered 2012, the product and production costs or theV112-turbine and the GridStreamer-technology were higher thanexpected. In order to reduce these and other variable costs, more than100 product cost-out initiatives were implemented. Product cost-outinitiatives ranged rom reducing the selection o bolts and screws toradically streamlining the production o large components or Vestas

wind turbines.

Re uce est e tsAnother ocus area or Vestas is lowering the need or investments. Anexample is the new product roadmap launched in 2012. The productroadmap prioritises continuous development o existing, well provenproducts over the costly development o entirely new plat orms.

Instead, R&D e orts will concentrate on the constant improvement othe quality and reliability o Vestas products in order to urther reducethe cost o energy or the customers. As a result, Vestas will also accel-erate pro tability and reduce the time it takes to bring new productsto market.

Likewise, Vestas plans to take urther advantage o an industry sup-ply chain that has improved signi cantly in recent years. By utilisingstandard components to a higher degree, Vestas will urther reduce itsneed or investments.

i pr e capac t ut satIn general, Vestas will make its business more scalable. Instead ocontinuing to produce almost all components itsel , Vestas intends tobecome a much lighter company, assembling parts made rom trustedbusiness partners and validated suppliers to a much higher degreethan is the case today.

An example rom 2012 was the divestment o the tower actory inDenmark to a Chinese business partner. Collaboration continues whileVestas reduces xed costs, rees resources and obtains greater manu-

acturing fexibility.

Divestments are expected to continue in 2013 as some manu actur-ing plants are put up or sale.

Yet the shi t rom growth to consolidation as well as a higher utilisa-tion o outsourcing, must never compromise Vestas leading position

in the areas o quality, technology and sa ety.

F a c a pr r t esThe ocus on cost reductions, reduced investments and increased out-sourcing, has not changed Vestas three main nancial priorities:

1. EBiT arg :Vestas has de ned a goal o achieving a high single-digit EBIT margin inthe medium term subject to a normalised US market. For 2013, the goalis to achieve an EBIT margin be ore special items o at least 1 per cent.

2. Free cash f w:Vestas expects to be able to nance its own growth. In 2013, the tar-get is a positive ree cash.

3. Re e ue:Vestas has two revenue streams: Wind turbines and service. Service,which is more pro table, is expected to continue being the astestgrowing segment. For 2013, the target is total revenue o at least EUR5.5bn o which service constitutes approx EUR 1bn.

A ew rga satConcurrently with implementing its new operating business model in2012, Vestas changed its organisational set-up. Hence, the manage-ment areas Technology & Service Solutions, Manu acturing & GlobalSourcing and Sales represent the companys core competencies, cru-cial or achieving Vestas short-term objectives.

Tech g & Ser ce S ut sVestas predominant competence is the development o the industrys

most advanced wind turbines or the most versatile conditions.

Based on our product plat orms, Vestas o ers a wide array o turbineso varying rotor sizes, tower heights, and power output that can betargeted speci c site, wind and grid conditions both onshore and o -shore all over the world.

Simultaneously with developing wind turbines, Vestas has ostereda number o sophisticated service solutions or di erent customerneeds. Consolidated in the Technology & Service Solutions unit,Vestas o erings include products and services such as SiteHunt,SiteDesign, Electrical PreDesign, PowerPlant Controller and Vestas-Online Business (SCADA). Technology & Service Solutions also de-velop solutions supporting urther integration o wind power into thegrid.

ma u actur g & G ba S urc gIn close collaboration with Technology & Service Solutions, Vestas cur-rently manu actures blades, nacelles, towers, generators, and controlsystems in-house. As a result o years o cooperation, many suppliershave grown with the business, enabling them to deliver the requiredquality on time. Consequently, Vestas works on assigning a greatershare o wind turbine manu acturing to trusted local and internationalpartners. This will reduce the need or investments and make Vestas aleaner and more agile company.

The end goal or Vestas is to rely on strong business partnerships withrelatively ewer suppliers which are in charge o a larger part o themanu acturing. As a result, Vestas will have relatively ewer employeeswho increasingly control and coordinate supplier relationships.

The quality improvement in the supply chain has also allowed Vestasto apply the make-to-order principle, thereby reducing componentinventories.


17/128017Vestas business model Vestas annual report 2012

Sa esThe consolidation o the global sales organisation allows Vestas sales

business units to share best practises and reduce costs. Meanwhile,the six sales business units Vestas Americas, Vestas Asia Paci c &China, Vestas Central Europe, Vestas Mediterranean, Vestas NorthernEurope and Vestas O shore maintain proximity with its customersand the ability to quickly react to wishes and requirements rom spe-ci c customers and markets.

In the reorganised sales unction, continuously more resources havebeen allocated to the service business. As a result and a sign o thestill closer relationship between Vestas and its customers, 95 per cento all MW sold and announced in connection with orders received in2012 was accompanied by a service contract. By the end o the year,service revenue had climbed to EUR 886m, turning Vestas into a trulytwo-legged operation, standing rmly on two revenue streams.

Rep s t e r re ewe gr wthDespite the current challenges, time works or wind power. SinceVestas delivered its rst wind turbine, the worlds energy challengehas only grown bigger. The UN projects that the global population willhave increased by another two billion in 2050, resulting in a massiveneed or more energy. Because it is nancially competitive, predict-able, independent, ast and clean, wind power is the leading alterna-tive to oil and gas.

In order to meet the energy challenges o the uture in a sustainablemanner, it is Vestas vision to bring wind power on a par with oil andgas. Because wind power in some markets is already competitiveand the e ciency and reliability is constantly improved, Vestas hasalready come a long way on its journey towards ul lling the vision.According to Bloomberg New Energy Finance1), when all types o

energy are cleared o all subsidies, the average price o electricity romwind power plants will already in 2016 be on a par with ossil uels.

To make the vision come true, it is Vestas mission together with thecustomers, shareholders, employees and the surrounding society toalways provide superior cost-e ective wind technologies, productsand services.

In 2013, Vestas will continue the work initiated in 2011 o becominga leaner and more agile company by reducing costs and investmentswhile increasing the utilisation o outsourcing. This will increaseVestas earnings and cash fow generating capabilities. Simultane-ously with securing a sustainable order intake, the ongoing cost-oute orts will reposition Vestas or a market expected to substantially in-crease once energy consumption resumes its inevitable growth. Whenthat happens, Vestas will be even better positioned to deliver sustain-able energy independence to its customers.

1) Bloomberg New Energy Finance: Onshore wind energy to reach parity with ossil- uel electricity by 2016. Press release, November 2011.


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19/128

Management report020 Financial per ormance023 Market development025 Business development028 Customer per ormance028 Social and environmental per ormance031 Risk management034 Events a ter the balance sheet date034 Outlook 2013036 Accounting policies or social and environmental highlights037 The independent auditors statement concerning

social and environmental highlights


20/128020 Vestas annual report 2012 Management report

Management report

2012 was a challenging year or the wind power industry and orVestas. During the year, Vestas started the implementation o a new

operating business model and a new organisational structure.

While executing a record high level o shipments, Vestas also had toprepare or a signi cantly lower activity level in 2013. Consequently,the number o employees was reduced by 22 per cent or 4,943employees, and investments were reduced by 62 per cent or EUR475m during 2012.

Revenue amounted to EUR 7.2bn, EBIT margin be ore special itemswas 0.1 per cent and ree cash fow amounted to EUR (359)m. A totalo EUR 701m was recognised as special items primarily driven bywrite-downs.

F a c a per r a ceor er back g a act t es w turb esCompared to 2011, the order intake or the year decreased by 49 percent to 3,738 MW corresponding to EUR 3.8bn. A weaker market de-velopment in several key markets was the primary driver or the lowerthan anticipated order intake in 2012. In terms o geography, Europeand A rica accounted or 61 per cent, the Americas or 26 per centand Asia Paci c or 13 per cent o the 3,738 MW. 61 per cent o theorders were announced publicly.

At the end o 2012, the wind turbine order backlog amounted to7,156 MW and EUR 7.1bn against 9,552 MW and EUR 9.6bn at theend o 2011. In terms o MW, Europe and A rica account or 67 percent o the backlog o orders, the Americas or 20 per cent and AsiaPaci c or 13 per cent.

le e act tIn 2012, Vestas produced and shipped 2,765 wind turbines withan aggregate capacity o 6,171 MW, which was slightly lower thanthe expected level o around 6.3 GW. In 2011, Vestas produced andshipped 2,571 wind turbines totalling 5,054 MW . Final capacity

delivered to the customers in 2012 amounted to 6,039 MW; an in-crease o 16 per cent. At the end o 2012, Vestas had delivered a total

o 48,950 wind turbines with a total capacity o 55,370 MW.

o er ew per regMW

Europeand

A rica AmericasAsia

Pacifc T ta

Under completion,1 January 2012 1,132 360 329 1,821Delivered to customersduring 2012 (3,090) (1,978) (971) (6,039)Produced and shippedduring 2012 2,913 2,327 931 6,171U er c p et ,

31 dece ber 2012 955 709 289 1,953

At the end o the year, wind turbine projects with a total output o1,953 MW were under completion. This is refected in the level o pre-payments and inventories, as a large share o these MW cannot yet berecognised as revenue. The revenue recognition o these MW will takeplace when the projects are nally delivered to the customers.

or er back g a act t es ser ceAt the end o 2012, Vestas had service agreements with contractual

uture revenue o EUR 5.3bn an increase o 8 per cent during theourth quarter o 2012. Service revenue increased by 26 per cent to

EUR 886m compared to 2011 which was as expected. Even thoughthe activity level in the service business is ar more stable than o thewind turbine business, revenue and earnings rom the di erent servicecontracts may vary rom quarter to quarter. In the ourth quarter o2012, service earnings were adversely impacted by higher costs onsome German service contracts. The EBIT margin be ore allocation o


21/128021Management report Vestas annual report 2012

Group costs amounted to 17 per cent an increase o 1 percentagepoint compared to 2011. The EBIT margin a ter allocation o Group

costs amounted to 9 per cent in 2012.

By the end o 2012, Vestas has installed more than 55 GW in morethan 70 countries. A high level o installed capacity and care ullyplanned service visits are key prerequisites or generating pro t

rom the service business. Consequently, close monitoring o almost25,000 wind turbines, equivalent to nearly 43 GW, is one o the oun-dations o Vestas service business growth strategy.

During 2012, Vestas renewed 77 per cent o its expiring serviceagreements. As Vestas expects urther growth in the service business,the number o service technicians increased by around 450 during2012. Vestas now employs 4,958 employees in the service business.

i c e state e t

Re e ueRevenue increased by 24 per cent to EUR 7,216m in 2012 whichwas in the middle o the guided revenue range o EUR 6,500-8,000m.Europe and A rica accounted or 52 per cent o annual revenue. TheAmericas and Asia Paci c accounted or 35 per cent and 13 per cento annual revenue, respectively.

d str but re e uemEUR

2012 2011

Europe and A rica 3,754 3,053Americas 2,512 2,068Asia Paci c 950 715

T ta 7,216 5,836

- o which service revenue 886 70 5

Gr ss pr t a EBiTdAVestas gross pro t amounted to EUR 796m in 2012, equal to agross margin o 11.0 per cent, a 1.4 percentage point decrease rela-tive to 2011. Higher depreciation and higher product and productioncosts on the V112-3.0 MW turbine and GridStreamer technologyadversely impacted the gross margin in 2012. EBITDA be ore specialitems increased by 55 per cent to EUR 473m, which translates into anEBITDA margin be ore special items o 6.6 per cent.

Depreciation and amortisation increased by EUR 126m to EUR 469mwhich was as expected. The increase in depreciation and amortisationwas primarily due to the start o serial production in the second halo 2011 o both the V112-3.0 MW turbine and the GridStreamertechnology, which means that capitalised development costs wereamortised in the entire year o 2012.

Research a e e p e t c stsResearch and development costs increased to EUR 255m rom EUR203m in 2011 driven by amortisations being EUR 75m higher. Totalresearch and development expenditure decreased to EUR 221m in2012, against EUR 402m in 2011. O this amount, EUR 161m wascapitalised in 2012, against EUR 302m in 2011.

d str but e pe sesDistribution expenses amounted to EUR 204m, which was slightlylower than the EUR 208m in 2011.

A strat e e pe sesIn 2012, administrative expenses amounted to EUR 333m, which was

slightly lower than the EUR 352m in 2011. The employee reductionso 4,943 during 2012 did not have a ull-year e ect in 2012, but willcontribute to lower expenses in 2013.

operat g pr tThe Group reported an operating pro t (EBIT) be ore special items oEUR 4m in 2012, an improvement o EUR 42m relative to 2011. TheEBIT margin be ore special items was 0.1 per cent in 2012 against(0.7) per cent in 2011. This was at the low end o the guided range oan EBIT margin be ore special items o 0-4 per cent, which is partlyexplained by the composition o the projects nally delivered in 2012.A ter special items o EUR 701m, the EBIT stood at EUR (697)m.

Spec a te s a pa r e tsAs a consequence o Vestas declining earnings and a more conserva-

tive view o the uture market, a total review o all non-current assetshas been per ormed. The ollowing write-downs, amounting to EUR527m, were recognised in 2012:

Goodwill: EUR 104m Development projects and so tware: EUR 64m Non-current assets held or sale: EUR 182m Other non-current assets related to actories or acilities closed downor with low capacity utilisation: EUR 177m

In addition to the above-mentioned write-downs, Vestas has specialitems o EUR 119m relating to lay-o o employees. Finally, cancelledobligations, write down o inventories and other restructuring costsamounted to EUR 55m.

The total special items or 2012 thus amounted to EUR 701m com-pared to the guidance o EUR 225-250m. The write-downs recog-nised in the ourth quarter o 2012 were the primary reason or thedeviation.

The write-downs o EUR 527m will lower the 2013 depreciation andamortisation by approx EUR 50m.

F a c a te s a taIn 2012, nancial items represented a net expense o EUR 14m; animprovement o EUR 79m relative to 2011. A positive currency devel-opment among other things, driven by the depreciation o the euro balanced the higher interest expenses.

In 2012, the tax rate was 35 per cent against 8 per cent in 2011. Cor-poration tax amounted to EUR 250m in 2012.

As a consequence o the declining earnings and a more conservativeview o the uture market, the expected uture taxable pro t has beenreduced signi cantly. This has resulted in write-down o tax assets oEUR 377m.

Ba a ce sheetVestas total assets decreased by EUR 717m to EUR 6,972m in 2012

rom EUR 7,689m in 2011, which was primarily driven by write-downso property, plant and equipment and a decrease in the inventory level.

n -curre t assetsNon-current assets amounted to EUR 2,481m at the end o 2012, adecrease o EUR 1,041m since the end o 2011. This was primarilydriven by write-downs, and to a smaller degree, by lower investmentsthan depreciation and amortisation in 2012.



Curre t assetsAt the end o 2012, current assets amounted to EUR 4,360m primar-

ily driven by an increase in trade receivables and cash at bank and inhand which more than o set the decrease in inventories.

net w rk g cap taAt 31 December 2012, Vestas net working capital amounted to EUR233m, which corresponds to 3.2 per cent o annual revenue. The networking capital increase during 2012 was primarily due to a decreasein trade payables which was not ully balanced by lower inventories.

i e t r esInventories amounted to EUR 2,244m at the end o 2012, a declineo EUR 302m relative to the end o 2011. A large part o Vestasinventories consists o wind turbines that have been shipped but notyet handed over to the customers. Vestas is dedicated to reducing thepart o its inventories that is included in the production process and

thereby release capital.

n -curre t assets he r sa eIn alignment with the new operating business model, Vestas aims tobecome more asset-light through divestments. Some manu actur-ing plants have thus been reclassi ed as assets held or sale and areexpected to be sold within the next year. The assets have been writtendown by EUR 182m to EUR 131m, corresponding to the expectedsales price less costs to sell.

net ebt a cash at ba k a haThe average interest-bearing position was EUR (1,189)m in 2012,against EUR (990)m in 2011. At the end o 2012, the net interest-bearing debt was EUR 900m, which was EUR 355m higher than thenet debt at the end o 2011. Cash at hand and in bank stood at EUR

851m at the end o 2012 which was EUR 476m higher than at theend o 2011. The higher level was due to the transition to the revisedbanking acilities at the end o the year and is expected to be loweredin 2013.

The net debt/EBITDA ratio rose to 1.9 in 2012 rom 1.8 in 2011.

Re se ba k g ac t esVestas revised its banking acilities in the second hal o 2012 a ter

de erring the covenant test on the ormer acilities in connection withthe interim nancial report or the rst hal year o 2012. The revised

acilities agreed upon in November 2012 consist o :

A EUR 900m syndicated loan acility with the existing lender groupo nine international banks structured as a EUR 250m amortisingterm loan and a EUR 650m revolving credit acility.

Term loans on an amortising basis with the European InvestmentBank or EUR 200m and with the Nordic Investment Bank orEUR 55m.

In addition to the above acilities, Vestas has a corporate Eurobond oEUR 600m and has access to project-related guarantee acilities oEUR 519m.

It is managements assessment that the bank agreement will ensure

that the required nancial resources are available to the Group in2013. The bank agreement is based on the condition that the Groupmeets certain quarterly nancial ratios (covenants) i the banks areto continue to make the credit acility available. Based on the Groupsoutlook, it is managements assessment that the credit acilities willbe available throughout 2013. Deviations rom the outlook may inher-ently change this picture.

Warra t pr s sIn 2012, Vestas made total warranty provisions o EUR 148m. Thisequals 2.1 per cent o revenue, which is lower than the expected levelo around 3 per cent. In 2011, warranty provisions represented 2.5per cent o revenue.

Vestas constantly improves the reliability o its turbines owing toincreased investments in development, testing, monitoring and servic-ing o wind power plants. In 2012, Vestas consumed warranty provi-sions totalling EUR 119m. This corresponds to 1.6 per cent o revenueand is an improvement o 1.5 percentage points on 2011.

Vestas makes provisions or all costs associated with turbine repairswithin the warranty period, and any reimbursement is not o set unlessa written agreement has been made with the supplier to that e ect.

H gher act t e e , pr e qua t a crease reg a sat

2012 2011 2010 2009 2008

Order intake (bnEUR) 3.8 7.3 8.6 3.2 6.4Order intake (MW) 3,738 7,397 8,673 3,072 6,019Produced and shipped (MW) 6,171 5,054 4,057 6,131 6,160Deliveries (MW) 6,039 5,217 5,842 4,764 5,580Revenue (mEUR) 7,216 5,836 6,920 5,079 5,904Gross margin (%) 11.0 12.4 17.0 16.5 19.1Warranty provisions (%) 2.1 2.5 2.8 5.8 4.5Warranty consumption (%) 1.6 3.1 3.7 5.1 4.4EBIT margin be ore special items (%) 0.1 (0.7) 6.8 4.9 10.4Net working capital (%) 3.2 (1.2) 9.7 6.2 (1.2)Return on invested capital be ore special items (%) 0.2 (1.3) 10.8 9.5 43.4Investments (mEUR) (386) (761) (789) (808) (680)

Free cash fow (mEUR) (359) 79 (733) (842) (403)Employees, year-end (number) 17,778 22,721 23,252 20,730 20,829- o which, outside Europe and A rica (number) 6,704 8,603 8,127 6,569 5,320



Vestas also makes provisions to cover anticipated expenses or majorrepairs and replacements in connection with the conclusion o long-

term service contacts.

Cha ges equ tVestas equity amounted to EUR 1,622m at the end o 2012 com-pared with EUR 2,576m at 31 December 2011. The decrease wasdue to the reported loss, primarily arising rom special items andwrite-down o tax assets. The write-downs also had an adverse impacton the solvency ratio. At 31 December 2012, the solvency ratio was23 per cent, against 34 per cent at the end o 2011.

Cash f w a est e tsIn 2012, cash fows rom operating activities amounted to EUR (73)m,a decrease o EUR 913m relative to 2011. The decrease was primarilydue to a negative development in the net working capital during 2012relative to a positive net working capital development in 2011.

Cash fows rom investing activities amounted to EUR 286m, o whichEUR 169m was intangible assets. Total investments were lower thanthe expected level o EUR 350m and EUR 475m lower than in 2011.This was primarily driven by lower investments in new actories andequipment and a more ocused R&D investment programme.

The ree cash fow decreased by EUR 438m to EUR (359)m. whichwas within the latest guided range o EUR (500)-0m, but lower thanthe original guidance o a positive ree cash fow.

market e e p e tWidespread global concerns about the economy, tight scal policiesand low gas prices in certain markets continue to represent a chal-lenge to the wind power industry.

According to the independent research company Emerging EnergyResearch this will result in an overall decline o new wind power instal-lations in the coming years. The market will see a steep decline rom48 GW in 2012 to 39 GW in 2013, a ter which the market will slowlyrecover to a projected 46 GW in 2015. 1) The short-term slow-downin more mature markets cannot be compensated by otherwise stronggrowth rates in emerging markets.

While the intake o orders or wind turbines generally slowed down in2012, Vestas succeeded in building an even stronger service busi-ness by entering into new or renewing service contracts. By the end o2012, Vestas was servicing 41,760 MW an increase o 29 per centcompared to the end o 2011. The strong growth resulted in total ser-vice revenue o EUR 886m in 2012.

2012 e er es a back g per regMW

Europeand

A rica AmericasAsia

Pacifc T ta

Deliveries 3,090 1,978 971 6,039Wind turbine order backlogas per 31 December 2012 4,750 1,456 950 7,156

Eur pe a A r caIn 2012, the European wind market remained fat and the trend is ex-

pected to continue in 2013. Consequently, the European wind powerindustry is downscaling its manu acturing capacity. This also appliesto Vestas which has reduced its headcount at a number o actories.

With an overall target o generating 20 per cent o its energy romrenewable sources by 2020, Europe is still expected to remain Vestaslargest market. Yet there are notable di erences between regions.Northern European countries continue to grow moderately. On the otherhand, Southern European countries such as Spain, Portugal and Greecesee continued decline and are likely to all behind in their renewable en-ergy action plans. Eastern Europe remains promising but with regionalvariations. In Ukraine, a 90 MW order or 30 V112-3.0 MW turbinesunderlined not only the popularity o the V112 turbine, but also Vestassuccess ul e orts to enter promising markets in Eastern Europe.

Especially the development o the V112-3.0 MW and the V126-3.0MW wind turbines, which are highly suitable or the many low andmedium wind sites in Europe, has given Vestas a avourable marketposition.

Although rising rom a low level, A rican wind energy markets alsocontinued to show potential in 2012. Not least in South A rica whereVestas consolidated its strong oothold. Since December 2011,Vestas has won pre erred supplier status or seven projects totalling435 MW, corresponding to approx 36 per cent o the approved windpower projects in South A rica. Two o these projects, amounting to141 MW in total, have already materialised in rm and unconditionalorders or Vestas.

In 2012, Vestas delivered 3,090 MW to Europe and A rica and the

order backlog amounted to 4,750 MW as o 31 December 2012.

A er casRacing to install wind power projects be ore the potential expiry o theproduction tax credit (PTC), the US wind market had a record-breaking2012. More than 13 GW were installed and in January 2013, theAmerican Wind Energy Association announced that a total capacitymilestone o 60 GW had been reached 2).

In 2012, Vestas installed 1,313 MW in the USA while simultaneouslypreparing or a much more subdued 2013. By the end o 2012, Vestashad delivered a total capacity o almost 11 GW in the USA, serving asa solid oundation or its growing US service business. This achieve-ment would not have been possible i Vestas had not built its presencein the US market on local and competitive manu acturing acilities.

The one-year extension o the PTC passed on 1 January 2013 wasgood news or the American wind power industry and Vestas. Whilethe extension will not lead to new record levels o activity, it is ex-pected to have a positive impact on the US market beyond 2013; theextension allows quali ed projects that start construction in 2013 toclaim the credit once they are placed in service.

Although wind power has provided approx 35 per cent o all new USpower capacity over the last ve years, growth o wind power gener-ally slowed in the USA due to declining natural gas prices as well as adecline in the overall energy consumption. 3) Consequently, the price oelectricity has allen as well.

1) Emerging Energy Research (EER): Global wind energy orecast: 2012-2025 all update. December 20122) American Wind Energy Association: US wind industry ourth quarter 2012 market report. January 2013.3) U.S. Energy In ormation Administration: December 2012 monthly energy review. December 2012.



Outside the USA, Vestas experienced growth in markets such asMexico, Chile and Peru. In Mexico, Vestas secured a record-breaking

396 MW order or the Marea Renovables project consisting o132 V90-3.0 MW turbines and a 10-year service agreement. Wheninstalled, the project will be the largest wind power plant in LatinAmerica.

In 2012, Vestas delivered 1,978 MW to the markets in its Americasregion and the order backlog amounted to 1,456 MW as o31 December 2012.

As a Pac cThe Chinese market continues to be the worlds largest wind powermarket. However, stagnation has urther intensi ed competition.Vestas ocuses on serving its Chinese customers with the most reli-able and grid compliant wind turbines.

In 2012, Vestas initiated the manu acture in China o the V100-1.8MW turbine, targeted at the growing market or low wind sites in thecountry. Soon a ter, Vestas received its rst Chinese order or this typeo wind turbine 48.6 MW rom Datang Hubei Renewable Energy.

In Australia, support or renewable energy continues to be robust,driven by the 20 per cent Renewable Energy Target. Completion othe 420 MW Macarthur wind power plant consolidated Vestas strongposition in Australia.

On a contrary note, incentives in India were withdrawn in 2012,primarily curbing project developments by private investors. Vestashas subsequently scaled down its Indian activities. In the short term,Vestas will ocus on supporting existing customers in operating andmaximising the output o their wind power plants.

Japan and South Korea are wind power markets o ering attractivepotential or Vestas, which has a well-established presence in bothcountries. In Japan, high electricity prices and a newly introduced eed-in tari or renewable energy could kick-start the market, and in SouthKorea, Vestas has commenced talks with government o cials about

urther development o wind power in the country.

In order to reduce cost, Vestas united its two separate sales businessunits Vestas China and Vestas Asia Paci c into one entity in 2012.The new setup will align Vestas e orts in a region where the Asianmarkets are already closely interlinked.

In 2012, Vestas delivered 971 MW to Asia Paci c and the order back-log amounted to 950 MW as o 31 December 2012.

o sh reIn the UK, the dra t bill to introduce a new contract-based supportscheme was published in November 2012. Once the bill has beenpassed, the investment certainty or o shore projects is expected toimprove signi cantly.

In other European countries, o shore development is progressingwell. In Germany, however, grid and transmission issues are delayingprogress.

In general, the o shore market undoubtedly represents a stronggrowth potential. That includes Asia where China aims to install 20GW by 2020 while South Korea has set expectations or o shore in-stallations o 2.5 GW towards 2019.

de er es (ToR)4)

MW

2012 20 11

Eur pe a A r caGermany 591 390Sweden 525 309Italy 452 178United Kingdom 312 106Spain 290 161Poland 275 72France 168 287Denmark 87 130Ukraine 81 3Romania 56 216Norway 54 -Turkey 48 180Netherlands 42 41Finland 33 9Czech Republic 16 4Belgium 16 20Austria 14 46Cyprus 11 -Portugal 6 35Bulgaria 6 11Ireland 4 30Cape Verde 3 23Greece - 100

T ta Eur pe a A r ca 3,090 2,351

A er casUSA 1,313 1,552Canada 439 192Brazil 88 -Nicaragua 40 -Netherlands Antilles 30 -Mexico 29 -Puerto Rico 23 -Chile 7 -Uruguay 7 2Argentina 2 76Dominican Republic - 25

T ta A er cas 1,978 1,847

As a Pac cAustralia 420 200China 413 501India 88 276Pakistan 50 -New Zealand - 36Vietnam - 6

T ta As a Pac c 971 1,019

T ta w r 6,039 5,217

4) Delivered (trans er o risk - TOR) Vestas turbines as at 31 December 2012.



In 2012, Vestas received its second V112-3.0 MW o shore orderor 216 MW inclusive o a 15-year service agreement rom Belgian

Northwind NV.

In order to urther lower the cost o energy or Vestas customers,power output or the V164 prototype was increased rom 7 to 8 MW.The power increase will urther enhance the V164-8.0 MW wind tur-bines position as a game changer or o shore wind power.

Out o the total order backlog o 7,156 MW, the order backlog or O -shore amounted to 483 MW as o 31 December 2012.

Bus ess e e p e tIn 2012, Vestas introduced a undamentally new product roadmap.By ocusing on urther developing existing technology, outsourcing alarger part o the production and increasing the use o standard com-ponents, Vestas will reduce manu acturing cost as well as the cost o

energy or its customers.

Likewise, Vestas revised its product plat orms. Going orward, ourMW plat orms will orm the oundation o uture product development.Consequently, Vestas global R&D acilities were consolidated, mainlyin Denmark.

Finally, the service business continued its strong growth, indeed mak-ing Vestas a two-legged company based on two revenue streams.

Research a e e p e tHistorically, Vestas has developed and manu actured almost every-thing, rom blades to bolts, in-house. However, a market characterisedby slower growth and increased competition calls or a new mindset.Cost o energy and capital expenditure as well as the time-to-market

or new products must be substantially reduced in order to adapt tonear-term challenges.

According to the new product roadmap, Vestas will ocus on continu-ous development o existing, proven products in stead o researchin advanced, new technologies. Incremental innovation will result inproducts o low cost and high reliability or the bene t o customersand Vestas alike.

Other cost-saving measures initiated in 2012 were increased out-sourcing and increased use o standard components. This was madepossible a ter years o maturing, standardising and validating col-laboration with Vestas suppliers. Further outsourcing will also makeVestas able to enhance the local content o its products as this willincreasingly become a prerequisite or selling wind turbines in manymarkets.

Vestas will also share more standard components with the industryin order to achieve economies o scale. This cost-out initiative is well-known in e.g. the automotive industry and will be ruit ul or Vestas,customers and the wind power industry in general because it makeswind power even more competitive compared with ossil uels.

While suppliers to a greater extent will be responsible or manu ac-turing standard components, Vestas will ocus on the know-how andexpertise or urther development o special components and crucialtechnologies such as grid integration and ground-breaking new prod-ucts like the V164-8.0 MW turbine.

As part o the changed set-up or R&D, Vestas decided to close downits R&D acilities in Beijing, China, Ris, Denmark and Boston, Louis-ville and Houston, USA. The main task or the restructured R&D organ-isation is to lower the cost o energy or Vestas customers while main-taining the companys leading position within quality and reliability.

iP/iPRThe high number o patents led in the last ew years is now resulting

in granted patents worldwide. For instance 65 patents were grantedin the USA in 2012. The high number o new patent lings continuedthroughout 2012. For in ormation on IP/IPR risks, see Risk Manage-ment.

Pr uct p at r sIn 2012, Vestas revised all o its product plat orms as part o the prod-uct roadmap. One o the consequences was the discontinuation o thekW turbines V52-850 kW and V60-850 kW.

Vestas revised product port olio consists o a 2 MW, a 3 MW, a new3 MW and an 8 MW plat orm. Based on analyses o customer needs,the market outlook o slower growth and increased competition,Vestas will base its uture development on incremental innovation othese our plat orms.

Pr uct p at r s

iEC iiil w

w

iEC iime u

w

iEC iH ghw

2 mW p at rV80-2.0 MW XV90-1.8 / 2.0 MW X XV100-1.8 / 2.0 MW X XV80-2.0 MW GridStreamer TM XV90-2.0 MW GridStreamer TM X X

3 mW p at r

V90-3.0 MW X XV100-2.6 MW X X

new 3 mW p at rV112-3.0 MW X X XV112-3.0 MW o shore X XV126-3.0 MW X

8 mW p at rV164-8.0 MW o shore X X

An example o incremental innovation is the current 2 MW plat orm.Dating back to 1995, the plat orm has been constantly revised andtechnically updated, e.g. with larger blades and optimised drivetraintechnology. This incremental approach to product development hasincreased quality and reliability while lowering the cost o energyand the Lost Production Factor or Vestas customers. Expanding thisapproach to all product plat orms will enable Vestas to cut costs andimprove quality at the same time. Likewise, incremental innovation willreduce the time it takes to bring a new product to market while alsolowering capital expenditure.

In 2012, the V112-3.0 MW turbine consolidated its position as oneo the most popular wind turbines in the line-up. Launched or salein August 2010, the V112-3.0 MW already reached the 3 GW orderintake mark in the middle o 2012 due to strong demand rom morethan 30 customers around the globe. The size o orders spans rom asingle turbine to the largest order so ar or 140 wind turbines or therecently completed Australian Macarthur project.



new pr ucts a ser cesAnother example o incremental innovation, the V126-3.0 MW tur-

bine, was launched in September 2012. Based on the new 3 MW plat-orm, the V126-3.0 MW turbine has a rotor diameter o 126 metresto target low wind conditions especially in Europe, where land o ten isconstrained. Because medium- and low-wind sites account or morethan 75 per cent o the worlds onshore wind resources, demand is onthe rise or wind turbines with larger rotors such as the V126-3.0 MWand the V112-3.0 MW.

By increasing the swept area by 27 per cent, the V126-3.0 MWturbine enhances annual energy production by 7 to 13 per cent com-pared with the V112-3.0 MW turbine. The V126-3.0 MW turbine alsointroduces structural shell blade design. Utilising improved carbon

bre technology, the combination o the aero oil and structural bladedesign has reduced the weight by 20 per cent compared to enlargingthe existing V112 blade. The new blade can be built-to-print i Vestas

chooses to outsource production in speci c markets. The structuralblade design also halves the capital investment in new productionlines and improves fexibility in manu acturing while maintaining thequality and reliability expected o a Vestas wind turbine.

In November 2012, just six weeks a ter the V126-3.0 MW turbinewas released, Finnish customer TuulliWatti Oy placed the very rstorder or the turbine. The rst prototype o the V126-3.0 MW turbinewill be installed at the sterild test centre in Denmark during the sec-ond quarter o 2013.

Going orward, Vestas will continuously expand both the 2 MW and the3 MW turbine plat orms by adding rotors and generators o varyingsizes to existing plat orms. This incremental innovation makes it pos-sible or Vestas to optimise turbine per ormance or speci c marketsand wind conditions while utilising proven technology with lengthytrack records. With the capacity to per orm up to 900 hours o testinga day distributed on 50 test rigs, Vestas has some o the wind turbineindustrys most comprehensive testing acilities at its disposal. Thusthe V112-3.0 MW and the V126-3.0 MW are the most thoroughlytested wind turbines Vestas has ever brought to market.

The 8 mW sh re w turb eFully utilising the technological design o the V164 turbine, urtherdevelopment made it possible or Vestas to increase the power output

rom 7 to 8 MW. The increase emphasises the game-changing abilitieso the V164-8.0 MW within o shore wind power. For the customers,it will signi cantly lower the cost o energy because the larger turbinereduces the balance o plant costs. For instance, or a 336 MW windturbine project, the power increase rom 7 to 8 MW corresponds to a12.5 per cent decrease in investments in the orm o ewer wind tur-bines, oundations and interconnections.

The development o the V164-8.0 MW turbine is progressing asplanned. At Vestas testing acilities on the Isle o Wight, UK, the rstblade has been manu actured and is currently undergoing testing. Thesame goes or the prototype hub, while testing o the generator and gearbox is about to commence at Vestas test centre in Aarhus, Denmark.

Vestas expects to install the rst prototype o the V164-8.0 MWturbine at the sterild test centre in Denmark in the second quarter o2014. The testing will be conducted in collaboration with the Danishutility DONG, operator o the worlds largest feet o o shore wind tur-bines. The combined experiences o DONG and Vestas will mature thetesting o the prototype and ultimately bring a highly validated V164-8.0 MW wind turbine to the market.

Depending on customer demand and the number o rm and uncondi-tional orders, serial production could begin as early as 2015.

Ser ceThe ability to plan, build, operate and service complete wind power

plants or its customers is becoming increasingly important or Vestas.Customers are demanding individual solutions that provide maximumoutput and involve minimum risk: Vestas must deliver value be ore,during and a ter the customer has invested in a wind power plant.

Focusing on maximum return rom the wind power plants, Vestas ser-vice organisation helps to ensure more satis ed customers. Throughits state-o -the-art Per ormance & Diagnostics Centre, Vestas moni-tors and analyses data rom almost 25,000 wind turbines all over theglobe. These comprehensive data, ranging rom weather orecaststo technical alerts, enables Vestas to meticulously plan and carry outservice inspections, thereby reducing wind turbine down-time to anabsolute minimum.

An example o how Vestas capitalises on its monitoring and servicing

capabilities was the signing o its largest ever service renewal agree-ment with long-standing Portuguese key account EDP Renovveis(EDPR). The global service agreement represents a total capacity o1,897 MW, distributed over more than 1,100 turbines in the USAand Europe. Other service renewals in 2012 included two renewalsamounting to 460 MW in Italy, 368 MW in Australia and 533 MW inCanada.

Going orward, as part o its service growth strategy, Vestas can o erservicing o non-Vestas turbines or key account customers request-ing it. Partnering is pivotal to Vestas operations, and with the ActiveOutput Management (AOM) service concept Vestas has ormalisedcustomers demand or a trustworthy partnership. The trend towardsincreased partnering is underlined by the act that 95 per cent o allMW sold and announced in connection with orders received in 2012was accompanied by a service contract. On top o that, Vestas had a77 per cent renewal rate o service contracts.

Compared with total service revenue o EUR 396m in 2008, servicerevenue has climbed to EUR 886m in 2012 ,deriving rom almost 42GW under service. By the end o 2012, Vestas had accumulated a ser-vice backlog worth EUR 5.3bn. The expanding service business makesVestas relatively less exposed to the fuctuations normally related towind turbine manu acturing.

Active Output ManagementAOM is Vestas service concept, tailored to suit desired customer riskpro les. It consists o the ollowing ve concepts:

Aom 1000 : Without charging a basic ee, Vestas o ers the customera range o services on a pay-as-you-go basis.

Aom 2000 : The wind turbine is regularly serviced, and the customerhas an option to buy additional services.

Aom 3000 : A ull service solution which includes spare parts andlabour. Turbine reliability is maximised through both scheduled andunscheduled service.

Aom 4000 : A ull service solution aimed at maximising outputand uptime, including all required components and a guarantee otraditional time-based availability o up to 97 per cent. The servicecontract runs or up to ten years and may be extended by up to veyears at a time.

Aom 5000 : A ull service solution designed to minimise productionloss. The service contract runs or up to ten years and may beextended by up to ve years at a time.



Under the AOM 5000 service concept, Vestas guarantees a minimumexploitation o the available wind. Using detailed weather orecasts,

Vestas plans and per orms service on days with no or little wind, thusoptimising the customers power production and ensuring the lowestpossible Lost Production Factor. Vestas is pioneering this service con-cept, which relocates service and maintenance o the customers windpower plant rom time-based uptime to capturing the wind; rom hourto power.

Power Plant SolutionsPower Plant Solutions is a collective term or Vestas services in thearea o planning, projecting, operations, servicing and the constant op-timisation o complete wind power plants. In its Power Plant Solutionsinitiative, Vestas trans orms many years o experience in monitoringwind turbines into services that directly increase the pro tability ocustomers investments. The range o Power Plant Solutions productsinclude:

S teHu t: Based on input rom 35,000 meteorological stations anda comprehensive wind data library, wind resources around the globeare mapped out and the best sites are selected.

S tedes g : Once the site has been selected, Vestas helps itscustomers identi y the most suitable turbines and the best on-siteposition.

E ectr ca Pre-des g : Vestas ensures that electricity generatedby the wind power plant constantly delivers the maximum output,meeting the requirements and grid codes o the local power grid.

P wer P a t C tr er: Real-time wind power plant controlenhances production and increases the level o reliability. This allows

the customer to control production and to meet the requirements othe local power grid.

vestas Per r a ce ma ager : Online or via a smartphoneapplication, the customer gains an overview o how the turbines areper orming and when they are scheduled or service.

P werF recast : Comprehensive historical data or weatherconditions and power production are used to calculate the uturepower production, allowing customers to ul l grid requirements allacross the globe and enhance revenues on the energy markets. Inorder to make power generation orecasts even more precise, Vestasbegan using the Firestorm super computer in the summer o 2011,at that time the worlds third astest commercially-owned computer.

ma u actur g tpr tVestas implemented a new manu acturing setup in 2012, mergingthe our production business units under one management area. Atthe same time, an evaluation o the manu acturing ootprint was initi-ated. Vestas seeks to increase its manu acturing fexibility and utiliseoutsourcing to a higher degree, creating a leaner and more asset-lightmanu acturing organisation.

An example o this approach was the divestment o the tower actoryin Varde, Denmark, in June 2012 to long-standing Chinese supplierand business partner, Titan Wind Energy. Vestas continues the collab-oration with Titan but saves xed costs, rees resources and obtainsgreater manu acturing fexibility with the sale o the tower actory. InNovember 2012, Titan Wind Energy in Varde shipped its rst tower toVestas.

In 2012, Vestas closed the Hohhot actory in China and reduced themanu acturing work orces at the nacelle assembly acility in Brighton,Colorado, at the tower actory in Pueblo and at the blade actories in

Brighton and Windsor, all in the USA. In Spain, the production capacityat the blade actory in Damiel was also reduced and in October, Vestas

closed the controls actory in lvega.

Supp ersVestas works closely with its suppliers to improve the pro essionallevel o the supply chain, enabling the timely supply o componentso the right quality at competitive prices. Against this background,Vestas has implemented Six Sigma as the Groups key quality improve-ment tool or Vestas own actories and its suppliers in all regions.

Using the Lean and Six Sigma productivity systems, Vestas ensures auni orm approach to production, including joint processes or improve-ment initiatives which acilitate the identi cation o synergies andexchange o best practice experience between actories. At the endo 2012, more than 500 employees had participated in improvementinitiatives concerning Lean and Six Sigma.

As a proo o this development, warranty consumption has decreasedby more than 50 per cent rom 4.4 per cent o revenue in 2008 to 1.6per cent o revenue in 2012. For Vestas, this corresponds to aroundEUR 200m o savings. For the customer, this means increased poweroutput o the wind power plant.

This positive development is not least the result o Vestas industry-leading testing acilities comprising 50 test rigs and employing morethan 150 engineers committed to constantly improving quality.

The ambition is to complement in-house production with deliver-ies rom collaboration partners. On the other hand, partnerships willdeepen with increased supplier involvement in development, creatingmore strategic partnerships based on a high level o trust and mutualbene t. For Vestas, this approach means more fexibility, lower invest-ments, ewer suppliers and reduction o xed costs. It also makesVestas more agile and capable o quickly adjusting production to de-mand or instance to the lower level o activity expected or 2013.

In order or Vestas to rely more on suppliers and outsourcing, a numbero initiatives were carried out in 2012. A standardised supplier as-sessment tool was rolled out globally, ensuring that Vestas require-ments to sa ety, quality and delivery are met. Meanwhile, qualityimprovement plans were implemented in order to drive every singlemanu acturing unit to continuously improve quality. Combined withan intensive ollow up on conducting problem-solving techniques, thishas signi cantly reduced the ailure rate translating into high prod-uct reliability or Vestas customers.

Pr uct c st utAt the end o 2011, Vestas experienced cost overruns due to too highdevelopment and production costs or the V112-3.0 MW turbine andthe GridStreamer technology as well as commissioning problems atthe generator actory in Travemnde, Germany.

Subsequently, a thorough plan w

jaarverslag vestas 2012

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