The wind power industry continues to be challenged by the current environment characterised by supply chain instability, which is causing significant cost inflation and delay in execution of projects. Furthermore, the current business environment severely impacts both visibility and profitability and Vestas is therefore today announcing preliminary figures for 2021 and financial outlook for 2022. Under very challenging circumstances, Vestas achieved record-high revenue and delivered 16.6 GW in 2021, which is a true testament to our more than 30,000 employees’ hard work and dedication. Our shared determination and resilience ensured we delivered on our commitments to our customers and pushed the energy transition forward while handling challenges from cost inflation, COVID-19, and a cynical cyberattack.
The global business environment for wind energy remains volatile in the short term and prosperous in the long term. As communicated at the release of our results for the third quarter of 2021, we expect the near future and at least 2022 to be heavily impacted by cost inflation, while the emergence of an energy crisis caused by geopolitics and fossil fuel volatility has also resulted in dramatic increases in energy prices.
Preliminary results for full year 2021
As a result of these underlying conditions, preliminary numbers for 2021 show a revenue of EUR 15,587m, which is in line with the outlook of EUR 15.5-16.5bn, while EBIT before special items is expected to amount to EUR 461m, equalling a margin of 3.0 percent, compared to an outlook of around 4 percent. This reflects delays in the installation of some onshore projects, as well as increased cost inflation. These factors also continued to impact warranty provisions in the fourth quarter of 2021, causing increased repair and upgrade costs for existing cases. Consequently, the warranty provision level for the full year 2021 ended at 4.4 percent of revenue.
Preliminary 2021 results
| Preliminary results | Guidance updated 03.11.21 | Initial guidance | |
| Revenue (bnEUR) | 15.6 | 15.5-16.5 | 16-17 |
| EBIT margin (%) before special items | 3.0 | around 4 | 6-8 |
| Total investments** (mEUR) | 813 | below 1,000 | approx. 1,000 |
Free cash flow*) continued to be positive and amounted to EUR 183m, highlighting the continued focus on building Vestas’ financial strength while also underlining the operational resilience.
* Excl. acquisitions of subsidiaries, joint ventures, associates, and financial investments.
Increasing prices on wind turbines are a necessity to address the external cost inflation and ensure the industry’s long-term value creation. Our focus on protecting the value of our products and solutions requires strong discipline to address the increased cost of raw materials and components in customer dialogues, which have prolonged negotiations. In the longer term, however, increasing levels on power purchase agreements and power prices in general also presents an opportunity for our customers to accelerate investments in renewable energy. As a result, order intake amounted to 13.9 GW across both onshore and offshore in 2021. The average selling price increased to EUR 0.83m per MW for 2021 (onshore only: EUR 0.81m per MW) and EUR 0.86m per MW (onshore only: EUR 0.86m per MW) in the fourth quarter.
Wind turbine order intake, 2021
MW
| EMEA | Americas | Asia Pacific | Total | |
| Total order intake | 7,637 | 4,571 | 1,688 | 13,896 |
Update on the cyber security incident
Further, Vestas would also like to use the opportunity to provide an update on the cyberattack that Vestas became aware of on 19 November 2021. This has not caused significant direct impact on Vestas’ operations or added significant additional costs as wind turbines remained unaffected, but did keep certain internal IT systems down for some time and required significant internal resources to be re-allocated to handle the attack and mitigate the impact. As a consequence, the attack temporarily impacted our efficiency and the organisation’s ability to be fully focused on end of year execution. Although the immediate incident can be considered as over and the company’s cyber security setup helped contain the incident, Vestas’ work to further strengthen both our own and the energy system’s cyber security and resilience continues.
Group President & CEO Henrik Andersen said: “Everyone at Vestas did an outstanding job in 2021 to ensure record-high revenue despite a global business environment that became more challenging as the year progressed. Supply chain instability and rising energy prices as well as accelerated cost inflation from raw materials, transport, and turbine components, however, continued to amplify costs throughout the year, which severely impacted visibility and profitability. In this environment and without compromising on safety or quality, we achieved revenue of EUR 15.6bn, an EBIT margin before special items of 3 percent, and free cash flow of EUR 183m. We achieved an order intake of 13.9 GW, 3.1 GW of preferred supplier agreements on our V236-15.0 MW offshore turbine as well as strong performance in Service. In 2021 we also made strong strategic progress to strengthen Vestas’ foundation and customer focus. This progress included the integration of Offshore activities, the ramp-up of Development, and the establishment of one global organisational blueprint. We remain focused on executing our strategy and driving the energy transition forward with our customers but expect the current challenging business environment to continue throughout 2022, which hampers our outlook for 2022. To mitigate these short-term challenges, the industry must show the discipline needed to protect profitability and improve value creation in the long term, and Vestas will continue to pave the way towards higher discipline. Partnerships remain fundamental for Vestas, and I want to extend a huge thank you to our colleagues, customers, and other partners across the full value chain.
Outlook 2022
The supply chain instability caused by the pandemic and leading to increasing transportation and logistics costs, is expected to continue to impact the wind power industry throughout 2022. In addition, Vestas will experience increased impact from cost inflation within raw materials, wind turbine components and energy prices. Based on these circumstances, Vestas is presenting its outlook.
Revenue for full year 2022 is expected to range between EUR 15.0bn and 16.5bn. Vestas expects to achieve an EBIT margin before special items of 0-4 percent. Total investments*) are expected to amount to approx. EUR 1,000m in 2022.
It should be emphasised that there is greater uncertainty than usual around forecasts related to execution in 2022, and the outlook seeks to take into account the current situation and challenges.
In relation to forecasts on financials from Vestas in general, it should be noted that Vestas’ accounting policies only allow the recognition of revenue when the control has passed to the customer, either at a point in time or over time. Disruptions in production and challenges in relation to shipment of wind turbines and installation hereof, for example bad weather, lack of grid connections, and similar matters, may thus cause delays that could affect Vestas’ financial results for 2022. Further, the full-year results may also be impacted by movements in exchange rates from current levels.
Outlook 2022
| Revenue (bnEUR) | 15.0-16.5 |
| EBIT margin (%) before special items | 0-4 |
| Total investments* (mEUR) | approx. 1,000 |
* Excl. acquisitions of subsidiaries, joint ventures, associates, and financial investments.
Vestas will disclose its Annual Report 2021 on 10 February 2022.
Financial and operational key figures, fourth quarter and full year
| mEUR | Q42021 | Q42020 | FY2021 | FY 2020 |
| FINANCIAL HIGHLIGHTS | ||||
| Income statement | ||||
| Revenue | 4,551 | 4,273 | 15,587 | 14,819 |
| Operating profit (EBIT) before special items | 106 | 358 | 461 | 750 |
| Warranty provisions | 287 | 194 | 679 | 693 |
| Cash flow statement | ||||
| Cash flow from investing activities before acquisitions of subsidiaries, joint ventures, associates, and financial investments | (261) | (229) | (813) | (687) |
| Free cash flow before acquisitions of subsidiaries, joint ventures, associates, and financial investments | 598 | 535 | 183 | 56 |
| OPERATIONAL KEY FIGURES | ||||
| Order intake (bnEUR) | 2.5 | 4.0 | 11.6 | 12.7 |
| Order intake (MW) | 2,863 | 5,558 | 13,896 | 17,249 |
| Order backlog – wind turbines (bnEUR) | 18.1 | 19.0 | 18.1 | 19.0 |
| Order backlog – wind turbines (MW) | 21,984 | 24,630 | 21,984 | 24,630 |
| Order backlog – service (bnEUR) | 29.2 | 23.9 | 29.2 | 23.9 |
| Deliveries (MW) | 4,882 | 4,973 | 16,594 | 17,212 |
