Vestas Wind Systems A/S (VWDRY) 3 Nov 212021 Q3 Earnings call transcript

Good morning and welcome to this Investor Presentation of Vestas' Third Quarter 2021. A warm welcome to everyone and especially, also a warm welcome to Marika here next to me, which we'll talk more about. But first of all to the key highlights for the quarter.

As announced this morning, Marika will be stepping down 1st of March 2022.

We have an internal successor Hans Martin Smith, who is our current CFO of Vestas North & Central Europe who will succeed Marika in March the coming year.

call. least hope of Marika you Hans on at over to and is Martin I and will this there a months number hand also So, all congratulate

supply at at of Secondly, on it an agreement provisions ended highest PSA we secured quarter. challenges by top impacted And billion ever awarded in to Empire high EBIT warranty from quarterly of the the we inflation X.X%. revenue. cost X.X come further onshore the the quarter. ended for project in we'll the the Revenue and Equinor were have that, higher largest the chain The to supply EBIT and was to-date. quarter were BP level say gigawatts a of very -- The in awarded in We activity €X.X was here the the in US continued but intake quarter. Wind order and preferred that back despite comes It's us. and margin

CSR On before. was as map launched the road circularity promised ESG, we and the

inflation call. EBIT but about course not cost more least, the the challenges was the also updated raising margin But trying accelerate the XXXX. we then on And will revised we'll the the and reflect especially, in we we guidance as and can rotor towards in full about much are circular are We which when also talk accelerated and more turbine look the on speak. we And blades, XXXX supply the bar we and talk how to these this outlook. make recyclability to of last chain

environment expected to we if the global A business throughout XXXX. instability to is all, chain challenging supply global of first and environment. last go So, business

wind seen critical on short-term demand. of electricity address is have increasingly think the positive, first all we to power the I

our we are that either ago. the and delayed we the pricing. both demand not the in. electricity customers, the pricing transportation is cases, Europe, raw factories we chain support up When important quarters a and Timelines was cost where increased the community in in disruptions operate of absolutely the percentages at is inflation XX we least short-term cost. into or and just It electricity site of parts, we the deliveries around to either need three therefore changed But the seen out when countries also some also materials. most also countries, few two supply go have accelerate talk what the also during this means times to We many in the it more deliveries percentages, now electricity a about we disruption. both haven't see deliveries now and of of the some than timelines look here compared just but we to and energy talking Therefore, several instability, cases, and changed the impact continues to hundred or up assets and are within prices in maybe often few it that whole

for COVID-XX We only not unaffected they colleagues but challenging, mobility, are of the reemerging. at also as remain and be. look can't but service world, a are around both our mitigating we we the technicians are we countries number speak When our construction in

onshore. the the now go offshore the in we Power operates when no When and partner, to the both business. colleagues as quarter consider the contributed have big despite this our least a Vestas Solutions, here say history just that will Solutions thank busiest of suppliers, here, to not but I doubt XX,XXX I into of Power also you So, one our one customers, environment

the offshore spent one and which business most to one includes the this team getting Vestas now have of both We onshore. in year and

days few over a went ago weekend. systems live the just Our

of So, of system also physical year operate business we out one the are of the now ownership we that the first offshore business. basically of the coming have the we integration completed and activity the for means in where would

our down the away Vestas, levels have are are. record customers. it's and Because that continue agreed one or some When cost of the in imbalance, solution from current compared Solutions, seen. from currently increase challenging entirety. of And high. project we of business therefore the all the case PPA our industry. turbine potentially its spirit price course especially that on still challenging either around in a levels to of the even the and It's dilute Power course prices absolute can the the creating world Vestas also of that creates then smaller seen the PPA are also go highlight the But side, is team that to are where there. an would there say increase renewable is That we that Now be challenging, to or to the customers Power in the and prices levels because to to electricity

say the I committed better the medium the and markets in. from On long-term, have on more side, also it and we countries will probably, been to positive operate never

preferred of had here non-permitted, XXXX Germany, an than from offshore, the new our adds one X.X-gigawatt onshore zero on was top And course, As an auctions of of come volume on top to firm a And we yes, gone in the of will intake example, the that gigawatt as we auctions, in months order Germany When a X.X-gigawatt almost that in that five non-allocated excess Germany but that last platform with there the in US. onshore. that basically subscribed in of XX-megawatt one at for agreement example XXXX. from which now XX have -- means we saw supply will the auction XXXX gigawatt. in doing look auction the fully last more

both can now regions, the can Positively see, And as inflation. more what will very right, mitigate that. team had towards busy intake have order also business And as to Above the for onshore the we and can cost On see can seeing order of the and scale in activity quarter a the business years some service also a Covento, in intake, offshore talk integration to business the especially and the you ASP, are lower which are on offshore. When leverage that, intake also all in is again we that happy we we go, you renewable platform. the terms in business, onshore digital about But Service increased in service done Asia to see the and as also the as with comes charts XX order to pleased in cautious. operate quarter. but slightly the has here connect but end. we now the in we contract quarter this also the also been year-to-date Service aftermarket. we that our partners XXX-megawatt Service Australia, new was extent it and partially reemerging Pacific introduced EnVentus onshore. customers between one we In the Americas both a connect where in go the with very had platform, to seeing on of then

changing was this the market the of of built conditions So though were the part again definitely under that And has where testament even the worked. a way. how it is projects

full as of focus do scope we as our have density the presence to multi-brand continue We and continue a can see course, part that to also of to and you right.

see XXXX countries we the we strengthened seen the us more compared regions. just more onshore. from a in basis execute. look million to living therefore and can the billion we around backlog combined is year full driven launch many excess the therefore, Codes the for being which the billion, to rotor. to mainly we received well already progress an business. journey targets we added rewarding therefore, but displacement continue -- supply for a above which launched XX And comes that. than are COX the COX And Positively an we Employee world. now is which done updated course, the of that we are very that full this we chain. we and XXXX onshore. We it helps the we which Vestas in €XX also five somewhere growth add backlog And order a total, some we of in of we which is an under comments many look strategy presence again, think €XX quarters, in least map, have Service And annualized cars. will from here will also be the is XXX have emissions both didn't regional road And more and those partners also now on be performance to exciting, COX last hear will it environment emission, So annual Denmark, of you as XXX And, of average. you We the see activities, billion. gigawatts, and It's in on. pleased involved. like which million the But itself will carbon contract XX gives of really, the comes the customers, of of years that for we then we than many on. equals with earlier in quarter. and business on the the circularity so have and have. And emission will now here and of road we at backlog normal are say up have Supplier as the in Below really operate Denmark In XX%. a be look the displaced will all have the times, also challenging the it's installations, quarter at In will our Vestas' colleagues after which tonnes. currently €XX is current average, how see also quarter-on-quarter put XXX Conduct, we XXX to where in And sustainability, at some the we offshore very therefore, out the in positive We the of circumstances, said accelerate here. Service quarter, to than convinced I by QX we pleased When to you in increase course emission thank that in But order

under we most matters of so So not of here in but behalf the that high on our probably actually safety remain really, where activities number it that many had discussed also it's is is did emission but I we proud prominent a Board and these the really that Management stable Carbon a about, talked days I'm what to in actually records managed that stay where levels. we activity Executive improve quarter only heavily.

thank for Marika. With after to hand other. I looking each that So you will over

a very Thank at profitability more you statement. look income that levels, about. activity Henrik. will the strong but challenge the We we And with see clearly have assume a talk I let's

year-over-year. You see XX% increased revenue

execution focus the on obviously can high agenda. So, it and the obviously, doing we on best is

offshore here a amounted the relating as clear year-over-year the footprint as is by Service challenged. SG&A decrease and I integration. under Special continuously by a Power of the And to driven driven provision You both to activity driven also additional also X.X the though that alignment decreased points and external for at is onshore that of point as is by the it's challenges. the is change to driven by offshore, again than to Absolute see that by that inflation. warranty value increase Vestas percentage by see And company higher the by this year. Solution the of for continued And integration And XX% EBIT And two profitability XX% that positive impacted the Gross as XX.X% that manufacturing in result of by items offshore. continues year-over-year. percentage quarter. the Revenue last as high by margin unprecedented points, quarter-over-quarter. quarter. but driven the MHI Service level. service be year-over-year. compared point in costs of That is control. EBIT increased onshore say in EBIT a gross before special item We performance. and margin revenue items a SG&A Solutions, need mainly think million a €XXX And us well in activity cost and margin X.X Wind. million. time. focus higher the decreased chain before increased as warranty offsetting special the part continued supply business. again profit I increase decreased as is and a to QX margin gave would is And XX% everyone provisions. lower higher cost amounting primarily both by well percentage continued of is to whole Offshore €XXX in that Power of more

You see that compared and a on level see integration And and we in more plan. to Relative revenue levels, this is milestone that working amortization X.X working payments by net have offshore Net And than by X.X%. and well to is the the excluding increased amounted that year. as inventory. activity of depreciation as of last the of €XX impairments development to costs that QX of SG&A down points following percentage related decrease see year-over-year. significant capital But stable is the an million offset to quarter-over-quarter the side. And primarily And offshore. a increase that consequence of we you activity And it's obviously receivables. a high the actually year. capital, is

So cash obviously by QX And is underlying And a flow of continuing. impacted to the is net a discipline well operating And in good performance as is higher investments flow factor decrease €XXX quarter. interest-bearing, decline investments. And a the in focus the But compared remains positive cash quarter. it is before financial million in activities. investments cash operating mainly free by at the CIP. is on flow level. investments. year. driven last Cash Total that as very is in the here high the There obviously the

driven the turbine. construction equipment investments well You and primarily see as offshore by higher again in investments VXXX And investment is year-over-year as in transport tools anticipated. as that and

lost and focus And increasing lost upgrade during and So factor level, of as or And that Provision the about. further last warranty quarter. lost focus. argument basically provision you trend the in here spoken same production production XXXX. And obviously the on have no factor. you QX see repair consequence which change see the is a so we here factor, an extraordinary the in production and methodology in

structure. €XX X% also it's related see well And obviously made I of well here Additional that we you. consumed that quarter. hand is are million is means provision debt increased a I components that revenue. quarter. threshold to the X.X and talk inflation high And Warranty provision provision also is that cost continuously in in repair of as over in By to upgrade corresponding about. that this to and continuing transport, as which on here Net to degree. XXXX. of below will to here And negative think The EBITDA to more important capital QX

was still than the I guidance And we XX%. be where assumptions expected year, the the the let we therefore, also as When guidance. around approximately is us the with you, continued billion. outlook raw will Thank for same here, stemming then of materials and and see integration that from full the And accelerated come of to million related revised revenue Marika. at will Service €X Vestas aligned. it mentioned the is the it important say between the When XX% items instability, will consequence above of to that And this just is components. warranty Wind X% but When we expected Marika to chain footprint previously especially rightly be be COVID it uncertain here approximately and X%. level note has of investments it also costs X% course are expected be then as the cost a we where chain MHI these to a at is still increased amount turbine EBIT transport as around Service the €XXX be that billion is and at to still margin the the special €XX.X X% basic at to of the the also say below supply we last billion. at Offshore behind inflation to which normal that to look look challenges. €XX.X look we When will provision, from look supply reemergence more revenue to

we Day. of little Before in a Q&A, to Markets do here will our just terms bit I also then go Capital marketing of

that but have it's Danish. in to Børsen Copenhagen XXth as We be you means have in restrictions that exchange for and come will to to think of English the guessed, will an the There course, subject which level, are in Day. can rest Copenhagen of COVID with invitation old in on everyone stock location of still in that Denmark will have December you used Capital getting Copenhagen building or also circumstances. access I actually operates all to world you the a of we negative normal so at and But least And Markets transport is the those it the test. Børsen

that, another it person, Q&A. after of to I quarters just And and couple at couple Marika to And of So together. not over to go you surely but least look and many again, the the yet, operator, will see leave forward in proper say next of quarters. goodbye we

please. Thank will So long that. you it a for Q&A, one. be

[Operator go ahead. first the of SEB. Instructions] Johansen line from question comes Please Our Kristian from

is line now Your open.

Thank you. Yes.

entire burden cost the disruption. it at of costs, seems due like supply carry pressure looking So facing, these you're you the chain to unexpected

or you going contracts I a this by customers, suppliers able to pay this mean, of change part to what So, mitigate are forward? to extent bigger having

Kristian, thank you.

other stuff dialogue is an environment. customers it, to or in mitigation not a current it done we ways few relationship looked look changes in the of and at would the customers parts materials, have double-digit is on because world. severe so percentages think different, the that then the percentages, we I if if raw about in is there in But in with single, clearly the it many components changes the ongoing also haven't very many it's

the we dialogue. current there the when at backlog that strict there environment commissioned to passing doesn't it adjustments. happens look where under current solution in on reliant the it directly conditions. the places is And a on customers, either, the heavily also Some But customer-to-customer will getting getting online customer a single be and because are customer work

in the So, comes therefore well. an discussion, and of Kristian, course, area cautious backlog is about a to of into discussion. current customer-to-customer it But environment down area-to-an what as the

question in a me address Okay. way. to topic different my the let Then, use same maybe second

pressure the current will you if So current mean, your next then supply chain year, I the at at remains better level, be looking off backlog?

in delays mitigation I'll say, has get we increases. That's continues therefore, this we is first some we off just five as in get stability it, that we expect Last have. all, we at given Kristian, the some to us, the the further that's of have better it for to and the us to us said here, quarter-on-quarter. the backlog. has quarters. given further to have the longer closer has we It of us we of the that But level, sense continue we also If a as still see four the be visibility next will is And right in for it quarter now then positively this cost what things. if it? it probably quarter. can year also in And in

increase say also the XXXX, the Kristian, look you been challenges of that a have important at on them. is What just if we mentioned I continuous and all to cost is think it's

obviously on to we're visibility out So shape that's And to also, a or a market now. in be very it we And what the form. the here clear, And changes haven't basis. XXXX. any in that weekly stabilization right just coming with impacted has seen

at most it's next But of And lack an and been going we see higher for is negotiations in getting XXXX. impact. different the at now. changes, the So it cost sort a right what it's tough that has the obviously, level. that customer. to today And of with is what the we is a stability into than part anticipated reflected much year, have level The

understand, better going fully you current maybe just able development, So next at saying, if so but make a year? should just we a to see make margin what into to you're sure, I level still stable high the be

margin. and We're committing so the But than significant. a creates so with it we visibility how because a not to to it are and better changes see rapid better what deal today

you. Understood. Thank

Thank you.

Blom question from next line comes the ABG. Casper from ahead. of Please Our go

Your line now is open.

Marika see better instead. Can from wait a you let's I higher impression is here And thing it's follow-up Thanks the a my matters, you is prices visibility lot. you in core especially another prices then supply with somewhat issues than you that raw probably two you will have some yes that on and might next materials. that one confirm will XXXX. relief to saying say, will more raw goodbye thing steel thesis Because questions chain the do but XXXX in -- year? on material supply and chain some prices higher burn

year impact. Obviously, possible. seen think one raw secure this I of and them have now other going And it's to we have bigger the as we level where an And right year significant. impact Yes, cannot to that assume increasing next mitigate or as to much are material much, and what they with being having Casper a trying fair But that we're price than it's everything. it's are components it's much resin. also

Then in the it were connection that projects you delayed business. lowered with Okay. slightly guidance you some into because regarding revenue And being turbine XXXX. pushed when Thank and question onshore was the you. another think I QX maybe saw

number or activity initial Thank XXXX? Now expectations. plan deliveries been postponed think being you The XXXX into much bit how put to offshore. onshore quarter there's to try compared quantify are a I high And in Street in onshore behind you. were Can for any deliveries this the

proves we're level, challenges the pretty But I and an say I see in. execution we QX are little this doing say. when if say it's in also fair a early clearly the only as But not but evident try having do said anticipating on impact -- next that from usual as here further well we to it's further I some to and also we have bit too to But could ones, we're yes it's year. in level of QX environment year much obviously conditions be it also it's fair can, that explanation weather think to some challenges think sort the it's so of that I QX. slippage slippage. of But forth but and high very could think into activity the an assume

Okay. slippage Can special and talk whether project you you way customers being just do on now in any that about or one's things such margin, it's no the is delayed? situations yes, hitting understand fault with are –

We've with we're No, very the think how environment obviously terms in what together guidance happen in. latter trying a part to I it's in to and help to precise as within hard we in each feel the in we will the be we much is And at obviously year. support that But as comfortable we do as think try speak. customers this point their and other best very is -- time. the we how I in provided of possible everyone execute of we that

you. Thank Okay.

Thank you.

line question comes go Please Gupta JPMorgan. Akash next of the Our ahead. from from

now open. line Your is

first Good morning, on cycle. Hi. Yes. product question everybody. My is

up pressure addressed are was XXX-meter And talk you now to competitors new been on about turbines products. be through in at may historically a premature price announced stepping China your as have bit the are game up agreement latest products now last ramping see month given speak, Expo. rotors that we While new -- XXX with we but it

see So in high product to that my cycle do lead lasting is question accelerated for onshore longer? that will think investment will an you we

makes any there's think don't or the that changes see doubt us current current. either to any environment I the in

all with countries we're continents think we product I road working and and on. customers working in that are the map both around

So think there's don't Akash, on changes imminent any reflected I that.

in we range with But and our and fairly comfortable we where not both also are offshore. are least are onshore the entering today. broad confident the our now onshore of range We

my Thank years you if on a at QX, had margin. range. I you. And mean follow-up is question I many usually, last look at always

have have few Maybe margin you in than the we years. last While And around you guidance the is you than we for you. last why reconcile what seen if the in Thank specific this margin at have seen a can higher year also uncertainty time see few more time precise at same uncertainty we a in market. more years. given guidance, time a high bit the have guidance when what

Yes. mean estimate year to that always And we provide done with cash. our that. to I the do X% the we have around have representing it's than more what will is and that where is the end. of it best market provided And nothing

Thank you.

de-Bray comes question next Please from ahead. Bank. Gael Our the line Deutsche of from go

open. now line is Your

morning. and XXXX Good The the X.X% much apparently between X% very in QX. Thanks for here. time new guidance for implies a margin

a provision in to deterioration exclude basis. million QX we there if a be extra clear seems sequential on the So €XX

of So please? what drivers will the this, be

the work changed the hedging course right the the either executing it. that and are executing coming inflationary in components we're of part a part large to But are they process of through are that have just a where They giving very materials, raw just we're And Because in dilution what I we scarcity now of Gael. where think us of to that. see we backlog, on just indications clear gives in of we materials. on raw are effect cost anything haven't the degree of either having a from that full where chain sense. those are measures the value you very control we

there logistics of outbound you this to the And the don't prohibitively where some transport, are that's have And either And almost will is outgoing delayed or you will are when you the and it's current then So reschedules to happens things the there it have I at if think Because same. transport or reschedules. when whether of to late in causes there you get course market that expensive. site. transport is will it. look surprise you And in incoming the outbound be that. suffering you the if

we are So We're cautious. control. in

only managing. us a are is are day-to-day changes also weekly down-managing but not But on posing in basis almost which daily. we We our

the dependent are particular some what So some of various yourself to your less any or of options components on make – in if steel? like materials

I I think being on think the absolutely unprecedented. anyone current to for independent start environment, is talking in the call about which

other path electricity saying, full and think near up the in standing customers has chain about now Right countries prices the more value and the it's including very the that right together off-takers that You of are like supply chain we're of. tenfold are I what world. we talking and have than and sensible with including gone short-term Spain and on why parts also understand here perfectly most for conditions also which number of customers industry and will on And it. medium act say just all customers, are to to term. the has we a in sensible to There I remain long understand have directly our challenges, some

right materials possible start technical-driven of about highly and both that not to or of So highly a be components. talking raw sophisticated, now it's independent being is on this, replacing independent product

a margin have Can Okay. follow-up side? the on I

Yes.

Sure, sure.

looks a wondering, Thanks very the PTC guiding now X.X% current in it's consensus of of think the was QX, well obviously Okay. exiting just XXXX. you're given probably margin rate expectations run much. XXXX quarterly that for I below I for below X%,

about feel focus will you shall statement do on how protecting full to So, according how we your the And which be profitability? that? interpret

in not this at very be time. we're 'XX for guiding clear, to just Gael, point

as numbers speak. we assessing the are 'XX We

think increasing are to QX be is as on continues to and continuous there when is and also well will as of what is think they year. logistics, as both chain speak. the we to challenges continuously something comes they it And supply next they big are then, we obviously clear in of 'XX. I back that But how everyone clear come back I the

Okay.

much. All Okay. right. Thanks very

you. Thank

Our next Supriya question of from go line comes from UBS. Please Subramanian the ahead.

Your now line is open.

so your just pricing challenges earlier and asked Hi. for Thank in And just margins If have also escalation taking at if get far nine Good done course earlier and the contracts? well, around morning. introducing any in it clauses -- you differently. something thoughts months, the has levels well, question is slightly of that taken more my that you levels second this as introducing cost terms on current to profitability. your on think wanted year. or and onshore costs And means flat started sort remain one as question. even actions profitability medium-term remain I you Basically Is but the XXXX? that was in phrasing analysis that in this of on of price we've my also, your into what business are the peers of

current What have current You [ph] achieving scenario of you. of imply terms potential over of the management targets? and of guidance margins sort double-digit will those of medium course the in a term. does Thank timing

Yes.

any the sign the agreements if backlog we this again firm I obviously signed have what question, we as order your at. as a can. we So, mitigate longer at of and are that cannot think Supriya, we with in have also assessing outbound sign a every possibly I the But start order, side, firm we're we intake term. much on first for obviously, order that, vessels you're with time we point aware trying time And to

production. have with of and than comes addressed it transport is increases plan Having stability a Exactly depending will said So been order is you faced in easier from our congestions view when ongoing, when that, on and especially have intake. around and the have what impact on a biggest 'XX, continuous has shortages also we vessel that's Henrik how both also we're that big depend is that as hubs, to firm for it will to point doing. something signed said that

So have company, in I Absolutely long as have unimpacted? we we so been Will no escalation secure no not. how we to we are terms the that And is something with I can. by worked our means everything. be we as clauses best pipeline, are changes Then the dealing mean, in with of if we perfect.

want all And using to negotiating means customers. the you also customer your continuously we're described mean I also with the for Henrik we that think future. can. keep So, we But I are how

forward. think also to the mutual it's agreement I get So, solution best going a to

Marika. in also place for sure. clauses I that those left And you will Vestas assure Thanks, have long can that's remain after

And fair think just and as have forecasting. course the it's on we I in countries. of our announcement as countries page can volatility, current instability if not Supriya, with XX XX more here, the double-digit of On saying us, than you in the well, XX in delivered take that's hear time the you

processes think are I what side pleased. actually we and on it when on comes the the controls the done also and internal we have very project, executing to the

like within which in also to with of XX,XXX like of tariff all get end But effort long delivering colleagues very day of deadline Vietnam a the and October. around the on pleased the are managed a has a We way progress. this, unfortunately, into country far a

a hard will I to XX% that the in be it reach. is year where a in definitely think that say quarter or not in was

change. don't On about in We like the mid-term, industry. EBIT with see the the and same a that for not XX% in We to instability, upside quarter that But is talk same. see right volatility current this. the the

Sure. Thank you very much.

Deepa ahead, comes from question open. of the line from next is Venkateswaran your Our go line Bernstein. now Please

you. two My questions. Thank

and I you would December is And a which on. overall has there Is of going of been secondly, reduction? warranty line supply chain, raw closer driving explains so it that assume sort So, What's with coming overall the we still closer XX? up with well on factor to CMD the maybe And X%. expectations this? consequence Marika firstly, lost your year in And getting on. the material, has seems it the that of and that is the should any XXX for X% there that in instability year bps And or that the comment provisions in lot worsened? like is guess related to margin that for that production the as of was

So, to to would to just want something really mentioned might to that have. to which investors this want something investors that about Because what maybe maybe could talk certainly you bridge seems that highlight? things not is you and you but like talk the be like want quarter, you the XX% see to

So, would and you get would there? to try how and you give us maybe more to visibility -- how on you. the get trajectory Thank longer would you seek term

Thank you, Deepa.

that's and perspective, throughout if the beginning will would a cost we of also costly start provision. that factor, from environment have QX perspective part lost I also -- in. costs a is as probably solutions we a warranty transportation I half highlight terms the the on say into is will timing everything a upgrades XX% the plan. cost it's increase what is -- getting say more also be also for as factor. doing simply for the production we I in it to is of slightly we are you the continuing. a the we But I But we impact you from have mean the the inflation But if is in And following for. the provision do think what we efficiency will like into the And you When also of the how see that Deepa the in would delivering I And a in I because also in upgrades definitely as it that is It's could internally following impacting you see What think we also planned lost and very the component to warranty delayed. market. it would and before matter. been that it will have the component that are first we're before stated the repair next continue also get as that as here are we an production of will where of assume this well year. So, I clear because a that see is and both it's with simply increase fair also, big because decrease think we have to at we're the the look speed and and comes market. see changes to doing we repair -- continuous to

Service But the lot it's that Markets to continuing will keeping are think that we're the chain and point obviously, look We I a I most other burden we to and an how the on the in thing under right this in not efficiency. grow think and the we that very mean at industrial as obviously where are SG&A environment supply industrial more logistics of us we important to for company is And will the and at under control underlying than only I things that impacting now. is highlight us not control get to time. Capital And our is is business the try we is which but companies. are heavy back Day. this in and

will important think a Markets raise it of some the few an of we to with the have industry I sure say expectations I not or disappoint comment, just to think handles But here been Day. yes, either and maybe you an XX%. it But I'm market -- short is your participants. I insight you the our into Capital to tools some relatively appreciate, think will also towards is get moving

onshore we there, we will with leverage you look the pleased handles actually factors. details but we So But both that the quite do the basis expect in it's are of terms onshore goes insight, which on customers, pleased a we're world. course, it's to the it's progress. to with into it we seeing get individual are Service And points always and the headwinds supply we basis not external in how offshore, won't several with the more But day. to opportunity of give of We've don't and faced dive are it's points. chain technology, There the into deep a said external the for that. in

you. Thank Okay.

HSBC. line the Please next go of question from Sean from ahead. comes Our McLoughlin

open. Your line is now

morning. Thank Good you.

that supply they're my turbine You current or an now higher raw material seeing you increasing for one highlighted are imbalance business say I pricing. case you at higher side? dilutive mean, prices, by seeing QX the ASP volume on projects adequately the question. because customers, and if pushback cost, say, reflects let's That's chain first the I pass-through to would take the challenged

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higher my equipment transport Understood. and tools construction where Marika what this And on spend around Thank and is question then is this second to why and just you. understand needed?

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you. Thank

Ben from next Please of of the comes America. ahead. Our Heelan Bank go from question line

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morning question. guys. taking the you Good for Thank Yeah.

these QX material on we the the back year, because come has was relatively feel and half some against have I in inflation. messaging to comfortable wanted protection I that we're actually where the that around raw changed messaging contracts, So of the

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you. Thank

next comes Goldman of from the Ajay line from Please ahead. Our Patel Sachs. question go

line open. now Your is

question morning. let but Probably XXth at least. pressure the cost try me Good on

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line the Please ahead. from Societe Our comes Generale. Rajesh go of next from question Singla

now Your open. line is

Can And Good taking the in very Because a few Maybe the Hi. you share can if margins margins. my in level please good had quarter. had possible? margin morning. on think I would side. during service offshore this you this quarter, share And segment thanks this you for be which -- offshore -- on second a the activity questions the question. Yes. if

I put that somewhere you cost-out service think had less a comment in contracts.

And So what that bit if elaborate be mean, a provisions. on exactly the would third that? on can warranty you question

are cost those warranty your contracts? increased So seems any there of indexation cost inflation. warranty like because it in Because

those include So are contracts? warranty warranty clauses we to cost indexation provision doing anything in or

Yes.

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case. bit a So customers I the with inflation strange we think towards it the would would that if be come in cost

get I -- excited -- forgot so I now, on Sorry,

Offshore margin.

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Yes.

Can So service segment elaborate margins, you that contracts. had that? cost-out please in you service less mentioned about

Yes.

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change that previously. from So no is

the you. Thank industry. question on I one have follow-up Maybe, general Okay.

issues. the industry tariffs past system now and and So auction COVID many so to challenges then and in from the wind the then has seen chain supply

of key possible challenge, So help highlight, in your like which to which future? the probably in kind effects of is you it could some this learnings -- these you from mitigating

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you Thank you. very Thank much.

from ahead. line the comes Stanley. Morgan of Please question next Katie Self from Our go

now is open. line Your

And then morning. my Good I've for taking just got thank one question. you brief two and clarification.

we very And so or your kind just step the are know also more materials, you been cost trying look acceleration these been over surprised questions different year freight of qualitatively I difficult just headache? understand of for that. to it's the around Marika. Ben's raw or that. these headwinds earlier. your steel big-picture surprises or that last a when But biggest issues just question all you put be numbers to what quarters. on just to biggest then where a impact conviction confirm lot three for availability you you was will bit headache what four same related back, start, the I then persisting clarify this you the year those in really I to issues, talk right about of to chain from think check, to response And two to a If components the at headwinds of these an Just to did kind of And people next months, Henrik if thing my when given had prebought lot the price ones was it. the I from has supply freight that for of think it right are for components, of surprise? biggest your kind increase Marika, in has another five the rank to material at hear

I hope by issues even lot we least resolved would end when think was there a year. were say of at be these the the call that on QX of the results

gives that to essentially? few was conviction another visibility. you that XX XX point persist months it's now quarters just at Thanks. going to a the What for there of So,

clarification, answer you the how with yes Ben. in start I interpreted are If my you correct to

clear. very that's So

worse. are of bit stabilize, doesn't both the it quarter XX% reducing. it other when increases the last XX%, has then ism still this even have But very, say hey And us. committing in it high hope sounds terms things increases with happened for you've it it I What worse Katie worse always will that I least price of stabilizes. know some prices is degree a turned of there the that scheduling. like still the And turned And in at also actually difficult turned timing here, visibility, components of quarter in one it stood we and you and in and little in very it a already But seen. key when

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Then that's transport particularly listen also the part. to logistics course, think here will the I we industry. So, of

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we don't customer So predict to that's predicting and only are the where we listening those valued that's -- some from industries. of think of on what other because we not are behalf that told I them. we But industries a are

That’s you. very helpful. Thank

Thank you.

day for ahead. question the Our final comes go the Claus Please from from of Nordea. line Almer

now is line Your open.

few my from a questions also side. Yes

The first the the question goes and to orders surprise, ASP. surprise

So would That if one. that you are first threshold in we're orders going does be to had margin look meet you taking the at the your contribution today pre-COVID-XX?

have what backlog orders a will that the we take throughout They have average. an that done with with the into Yes, levels, the quarter we and here, also profitability have we see And have comes to those. pricing follows costing we And therefore, accepted comply threshold. Claus and in we orders the and we quarter. as again accept the taken our

the your pre just lowered so have had threshold? you sure same So threshold you that's be actually or COVID-XX,

lowered. haven't we No

changed haven't any that. of We

what is then in that hedged. backlog We yes to the is backlog. also can into saying things robust never same of be today said that goes have that just fully have what the no process X:X And we exactly and

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up means half from point of that we next ASP should it let's look delivery So also that more the call year that view with going second expect normal? things a

more about I looking like talking a in Claus. wouldn't wouldn't this. normal dare quarter I

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it, positives I because in start day hasn't it So in where been the a think any don't talking far. positives so there we about it's

just more two you Fair the linked quality every the in back should are coming €XX want the to this million quarter? provision €XX sure, issues they to see €XX year, million million are enough. linked you last doing we had to the overall I Then to or be provisions,

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€XXX-plus least, on specific million provisions just €XX two now because at behind quite did my it's dramatic you question. of million increase that's these the Just cases, so a out of really

follow that have what Yeah, asking, haven't we methodology And you're the we I Claus. as I understand principle mean, we the see We same -- changed remains. always done.

you're of If are that if And it's the relating any addressing it's very it big addressing. are number asking, blades cases speak. it's new as of side a that is we cost that to, we we no,

then And just Okay. final a question.

least seen order in about we what level my the to to more it to orders in Is And what unannounced will That a hesitant intake in be on the question. timing? at take you seem Are your As orders? pipeline? be past. QX, low just have final

focus. years' lot right you appreciate if that, and of right, will will you variable and parts a are we just conditions project sitting the lot any having process was on now, Vestas, customer spot. order needs for a take more as are allocating the we that If I would the XX Claus, of capital But will right I now have say a

markets for long longer in even is such EU taking to capital legislation where So planning changes has -- there in now. trying suddenly not right news increase seen of the you Claus That mitigate And been have any think the local generally, I projects all rapid markets the electricity are some to good some projects. in prices.

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now, you project. it If right it price with a loss-making ends wrong

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you or that times more happens our excluding a assumption? and could also in whatever said of visibility. QX in lack many in That bit intake Henrik volatility fair of the a we As now conservative Is a be cautious there's order that expectations US. for should also indicate lot

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the a is is are it permitting, example of speak on doing closest actually Claus. of acceleration project which we decision-makers acceleration the a capital I as or allocation Germany not the permitting, -- about patience now and are with there So of having number bit countries the And of is think that the that of auction. just

then And I to a we is in environment. we the think situation. project And a changed terms final into But if what think we're haven't different think methodology have accept very don't or good is a Claus comment, completely because important consistency as this I not. of just consistency, in we

strength have the right now. we So that is that

Understood. you much. so Thank

you. Thank

you much. days. Look many coming forward Thank you couple the so seeing over of of to

you. This thank of concludes Thank So the presentation you. QX.

Thank you.