Earnings call transcript: Vestas Q2 2025 sees strong revenue growth, challenges in order intake

Vestas Wind Systems A/S reported its second-quarter 2025 earnings, showcasing a 14% increase in revenue year-over-year to €3.7 billion. Despite the growth, the company faced a significant decline in order intake, which fell by 44% compared to the previous year. The stock remained stable, with no change in price as of the latest data. With a market capitalization of approximately $18 billion, InvestingPro analysis suggests the stock is currently undervalued, presenting a potential opportunity for investors. The company maintained its leadership position in the wind energy sector, with a strong presence across key markets.

Key Takeaways

• Revenue increased by 14% year-over-year, reaching €3.7 billion.
• Order intake dropped by 44%, raising concerns about future growth.
• EBIT margin stood at 1.5%, indicating profitability challenges.
• Offshore manufacturing in Poland ramping up, expected to reduce costs.
• Positive outlook for the U.S. market with clear policy direction.

Company Performance

Vestas demonstrated robust revenue growth in Q2 2025, driven by strong demand in the wind energy sector. However, the company’s order intake decline poses a challenge as it seeks to maintain its market position. The company’s focus on innovation and operational efficiency, such as the deployment of 15 megawatt offshore turbines, highlights its commitment to leading in renewable energy technologies.

Financial Highlights

• Revenue: €3.7 billion (+14% YoY)
• EBIT Margin: 1.5%
• Order Intake: 2 gigawatts (down 44% YoY)
• Return on Capital Employed (ROCE): 11.5%

Outlook & Guidance

Vestas provided revenue guidance for 2025, projecting between €18 billion and €20 billion, with an EBIT margin of 4-7%. The company expects its services EBIT to reach approximately €700 million, and total investments are anticipated to be around €1.2 billion. Analyst consensus remains moderately bullish, with price targets ranging from $9.39 to $30.55. A strong second half of 2025 is anticipated, with ongoing efforts to reduce offshore manufacturing costs. Detailed analysis and comprehensive research reports are available on InvestingPro.

Executive Commentary

Henrik Andersen, CEO of Vestas, emphasized the affordability and sustainability of wind energy, stating, "Wind energy is affordable, provides security, and is sustainable." He also highlighted the ongoing service recovery plan, which is expected to run through 2026, and noted the clearer policy outlook in the U.S., which should drive substantial activity towards the end of the decade.

Risks and Challenges

• Declining order intake could affect future growth and market share.
• Profitability pressures with a low EBIT margin of 1.5%.
• Potential impacts from U.S. tariffs, although minimal, could affect costs.
• Offshore ramp-up costs expected to peak in Q4 2025.
• The competitive landscape in renewable energy continues to intensify.

Vestas’ performance in Q2 2025 highlights its resilience in revenue growth amidst challenges in order intake and profitability. With a beta of 1.28 indicating moderate market sensitivity and a strong Altman Z-Score of 4.26 suggesting financial stability, the company’s strategic focus on innovation and market leadership positions it well for future opportunities in the renewable energy sector. For comprehensive analysis and real-time updates on Vestas and other renewable energy stocks, explore InvestingPro’s extensive research tools and reports.

Full transcript - Vestas Wind Systems A/S S (VWS) Q2 2025:

Henrik Andersen, CEO, Vestas: Good morning, and welcome to Vestas’ Q2 Investor Presentation. And also here, let me start by extending a huge thank you to our customers, other stakeholders and not least colleagues around the globe. It has been a busy and also a quarter with a certain degree of uncertainty in policy, not least for our more than 5,000 dear colleagues in The U. S. It’s also a warm welcome to Jacob, and you will have to bear a bit of patience until the financials before you listen to him.

So welcome, Jacob. And with that, let’s go to the key highlights of the quarter. So the quarter ended with a revenue of €3,700,000,000 That’s an increase 14% year on year. The EBIT margin ended at 1.5%. Onshore improved onshore project performance, lower warranty costs offset by the offshore ramp up costs.

We’ll speak more about that. The order intake ended at two gigawatt. Lower order intake year on year as customers have been awaiting policy clarity, particularly in The U. S, and definitely, we’ll talk more about that. And then manufacturing ramp up driving costs and investments.

Onshore and offshore ramp up is progressing, and the first V236 nacelle assembled at the facility in Poland. And then we ended with a return on capital employed of 11.5% last twelve months. Improved profitability in the last twelve months results in the highest return on ROCE since 2020, which, of course, is very pleasing. And last but not least, our 2025 outlook guidance maintained, and we’ll take that in the end of this presentation. So with that, let’s touch shortly on what are the markets and what markets are we in.

The wind energy, and this is fact based, is wind and it’s affordable. There is a security element, and there’s definitely also a sustainability element. If we look at our current business environment, inflation, raw materials and transport costs are stable. However, tariff will, over time, increase costs, which we see as an imminent and also a link, but of course, for us, a long lead time with the backlog. The ongoing geopolitical and trade volatility leading to regularization, and we, of course, say that, and we also notice that throughout what we have done in the previous years.

When we get to the market environment, the heightened focus on energy security and affordability, you will also notice that in the most recent wording from The U. S. Where we are talking detailed around how FIAG and components will be discussed and also seen going forward. The grid investment is prioritized in many of our key markets, and it is becoming a also a very important part of getting the solution successfully in the market. When we look at permitting, it is improving in some markets, but overall, permitting, auctions and market design are still challenging.

And sometimes, we still see even very successful government having an unsubscribed auction simply because we don’t apply the same principles from neighboring countries. When we then look at the project level, I would say a really, really pleasing quarter. We’ve seen a really good execution in the onshore across the markets where you have seen our deliveries, and we are positive towards the end of the year if we can continue the same discipline and also the same execution level of what we have seen in Q2. That also means we now go to the Power Solution. And Power Solution in Q2, I will say lower, maybe a bit disappointing order in Q2 compared to where we like to be, both compared to last year but also where we would like to be from our own side.

We see that with good activity in EMEA. So order intake ended at two gigawatts. It was down 44% compared to last year. The decline was mainly driven by a lack of orders in Americas, especially in The U. S.

As customers have been awaiting policy clarity. There were no offshore orders in Q2, as noticed. The ASP declined to €1,110,000 per megawatt in Q2 compared to €1,240,000 per megawatt in the prior quarter. The decline was driven by a change in order mix and also while the underlying pricing remained stable and positive for Vestas. As you also noticed, we have had a very good start to Q3, and this is where disconnects the two quarters is wrong to do, see it in connection with the policy changes that happens over the quarter end.

So we’ve seen several orders announced, including in The U. S. The policy outlook is clearer. And that also means year to date in or quarter to date, in this quarter, we are already well past what we saw in Q2, including approximately 1.5 gigawatts so far in The U. S.

The Nacelle facility in Poland has now started serial manufacturing, and the first two thirty six Nacelle left the factory in June. Actually, Jacob, we were there in June when that happened. And it’s really nice to see that the ramp up our team has been working on for now, saying years, is now coming to fruition. And of course, it also means that our offshore ramp up cost in a Polish factory is around top of what we have seen because now we now have more than 500 employees working in the Nacelle factory in Poland. It is an intense period for the offshore because we have turbines going out to EMBW and Baltic Power in Hydraig as well.

So therefore, we see our 15 megawatt is now getting up on both sides, and we are in close, of course, dialogue and communication with our customers and partners on that. Ramp up at its peak, and we’ll talk more about that, I’m sure, later in the call and also on the coming days. With that, I’d like to go to Service. So again, solid quarter as recovery plan continues. When we look at the service order backlog, increased to DKK 36,000,000,000 from DKK 35,000,000,000 a year ago but declined compared to Q1 due to the development in foreign currency translation.

And that actually goes across for most of the businesses, and Jacob will give you some more details on that later on. Service reached 159 gigawatt under service compared to 151 gigawatt a year ago. The commercial reset, which includes contract trimming and deselecting of contracts with unattractive term, is ongoing. Even so, gigawatt under service during the quarter evidenced that our solutions are valuable to both our customers’ partners and investors. If we look at the other part, the standardized cost control, bringing down direct costs and reducing unscheduled maintenance continue to be the top among the top priorities to improve our service operations.

And I really, really welcome the many, many, many of our colleagues that are involved in that and also improving on a daily basis. Thank you for that. When we look at Vestas, we are two quarters into the service recovery plan, as expected to run to the 2026. And I just want here, you can see the numbers, the breakdown of our 159 gigawatt to the right. And then also remind that we have an average years of contract duration of eleven years.

With that, I want also to remind you, it’s a slide we shared with you in the beginning of the year. But just to highlight, when we look at the service recovery plan, we have just boxed in the two main headings over here where most of the resources and also a lot of dedicated leadership time goes into. The commercial resetting, where we drive the commercial excellence with focus on price, scope, billing profiles and contract trimming, and we see a wage inflation that, at least in Europe, is settling fine around 2.5%. When we look at the standard cost control, that means it’s hard day to day work for the regions, and that is being driven by them and creating the right ownership, I think we have to admit, lagged when we look throughout 2024, but that’s a new reality from 2025. Quickly go to development.

I will pass that relatively quickly. Not a lot news to say. Development is focused, focused, focused on the projects we are seeing. So in Q2 twenty twenty five, our pipeline of development project was stable at 27 gigawatt with Australia, U. S, Spain and Brazil holding the largest opportunities.

Strategic focus is on maturing and growing a quality project pipeline as well as conversion of mature projects in project sales and also related turbine order intake. In the quarter, Vestas Development firmed one project for 102 megawatt of order intake in one of our markets globally. You can see the breakdown here, not a lot of change, business as usual. But as you will also appreciate in the environment, a lot of focus on getting the full solution rightly done in the development and therefore, and sold to our partners in good state. So with that, we go to sustainability.

Vestas remains the most sustainable energy company in the world. We are proud of it, and we also keep our relentless focus in putting more energy up available but also a focus on keeping the sustainability of it. The turbine produced and shipped in the last twelve months are expected to avoid four eighty million tonnes of greenhouse gas emission over the course of their lifetime. This positive development of 65,000,000 tonnes was driven by increased production over the last twelve months. Therefore, a probably connecting to that, the carbon emission from our own operations increased by 8,000 tonnes year on year due to the increased activity, especially also in the offshore construction and service.

The number of recordable injuries per million working hours TRIR was up from 2.8 to three point zero year on year. Safety remains a top priority for us as we tirelessly work to improve our safety performance and records across our value chain. However, it’s also clear that if you look at the number of full time employees we have today, we also have to constantly, constantly put our effort to this when we are welcoming so many new colleagues, especially in our own factories, but also on the new sites where we are putting our solutions in play. With that, pleasure. I’ll hand over to Jacob and welcome him to our investor presentation here.

Jacob, CFO, Vestas: Thank you, Henrik, and it’s great to be here. And we will start with the income statement. We see three key highlights for the quarter. Revenue increased 14% year on year driven by higher delivery volume on turbines and higher revenue in service. Here, it’s worth to note that the service revenue in the comparison quarter was negatively affected by more than €300,000,000 due to the planned cost adjustments last year.

Our gross profit increased to €417,000,000 in the quarter, primarily driven by the reasons mentioned above as well as the increased profitability in Onshore, which was offset by ramp up costs in Offshore. EBIT margin before special items was positive 1.5% in the second quarter. As previously communicated, 25% will be a back end loaded year with most of our activity and earnings expected in Q3 and Q4, so basically similar to the last many years. Moving into the segments. First, with Power Solutions.

Revenue increased by 7% year on year, primarily driven by higher onshore delivery volumes in The U. S. And you can actually best see these details in the interim report on Page 10, where you see that The U. S. Is up with 500 megawatt.

EBIT margin before special item was minus 0.4%, down 1.1 percentage point year on year. The lower profit reflects ramp up cost in Offshore and higher depreciations and amortizations. This was partly offset by better profitability in the Onshore segment, which continues to perform very well. For the Service segment. Excluding the planned cost adjustment made in Q2 last year, Service revenue declined four percentage year on year, mainly due to a 3% currency headwind.

Our transactional sales were on par with last year. Service generated EBIT of €163,000,000 corresponding to an EBIT margin of 17.2%, in line with recent quarters. The Service recovery plan continues, and Henrik has already spoken to this, and it will take some time before benefits are visible in the financials. Moving on to cash flow and first looking at the net working capital. Net working capital decreased in Q2 due to an increase in the level of customer down and milestone payments, partly offset by higher inventories as we prepare for higher activity in the remainder of the year.

Compared to Q2 last year, we have seen a considerable improvement in net working capital, and we continue to focus on improving this. Our cash flow statement comparing Q2 ’twenty four with Q ’twenty five showed a positive operating cash flow of 120,000,000 in the quarter, a decline compared to last year. The decrease year on year was primarily driven by a favorable development in net working capital in Q2 twenty twenty four, partly offset by better profitability this year. Adjusted free cash flow in the quarter amounted to minus €220,000,000 a decline compared to Q2 last year, again driven by the reasons mentioned in above. Finally, we ended the quarter with a net debt position of €7,000,000 after both paying out dividend and buying back shares.

Our investments are in line with our plans and in line with previous months. Total investments amounted to DKK288 million in Q2. The investments are primarily related to tangible investments such as transport equipment and tools for our offshore ramp up. The recent increase in LPF is caused by a few sites, including the previously mentioned offshore sites that have been undergoing repair. Disregarding these sites, the underlying LPF, lost production factor, continues to trend down.

Warranty costs amounted to €115,000,000 in the quarter, corresponding to a 3.1% of revenue, which is an improvement from 4.3 in Q2 last year. Warranty provisions consumed were €188,000,000 The higher consumption level in this quarter is related to the above mentioned repairs. And for me, ending on the capital structure slide, as seen from previously, we have a zero net debt. Our earnings per share measured on a twelve month rolling basis improved to €0.8 driven by the better profitability. And finally, as Henrik started out by saying, return on capital employed improved to 11.5% as the earnings recovery continues.

And this is, as you mentioned, Henrik, the first time since 2020 that we are above 10%. And on this note, I pass over the mic to Henrik.

Henrik Andersen, CEO, Vestas: Thank you, Jacob. Thank you. First of all, it’s always exciting to do your first presentation, not least sort of concluding on the first couple of months. I think here, as we are talking about Q2, I’ll also take this opportunity to reach out a bit of a special thank you to Asmus because, of course, he has been holding very much that together with the rest of the organization. So therefore, to many of you, you will also find both Asmus and Jacob sort of being a bit of a pairing here over this quarter.

So we you get a proper way of saying cheerio to Asmus. Asmus continues as our CFO for the Global Service business, which we are hugely excited about. So we look forward to that. So with that, I’ll go to the outlook for the year. As we said, remain the same.

So revenue, 18,000,000,000 to €20,000,000,000 The EBIT margin before special items, 4% to 7%. Services expected to generate EBIT before special items of around €700,000,000 And then when we look at the total investments of approximately €1,200,000,000 This outlook is also based on the current foreign exchange rate. And as you will clearly have both noticed and appreciated that it is putting some pressure on a couple of the absolute numbers that are in here because, of course, with the dollar decline towards the euro, we see that effect from The U. S. And also a couple of our regions where currencies are tied to the dollar.

With that, really thank you for listening in to us. And with that, I will go to the Q and A and pass back to the operator.

Conference Operator: Session. The first question comes from the line of Sean McLaughlin Please go ahead.

Sean McLaughlin, Analyst: Good morning and thank you very much for taking my questions. Just firstly on U. S. On the situation, clearly customers are not waiting for final clarity on how to qualify for construction ready status. Maybe just a little bit more clarity on how significant the near term order rally could be in The U.

S? And whether you see this, let’s say, as a short lived rally or we could be looking at a one to two year period of very robust onshore U. S. Demand? That’s the first question.

And second question, I wanted to touch on the change of CTO. I think it’s quite significant. You’ve I guess, under the six years of Anders Nielsen, you’ve pushed for more standardization in onshore. You’ve developed the 15 megawatt offshore turbine. I mean, given the incoming CTO’s background at ZF, it looks like maybe a deepening of the focus on the gearbox.

I mean, can you talk about the incoming CTO’s priorities? Thank you.

Henrik Andersen, CEO, Vestas: Thanks, Jan. I think U. S. First. If we look at the demand side there, it goes without saying, and I think we spoke to that as well, you don’t like to put orders down in any market anywhere in the world if there’s not policy clearance.

Then you can sort of say if you have a project that is already well permitted, has an offtake and also have clearance on the other parts, then there’s no need to wait for potentially what comes on an IRS guidance under sort of the safe harbor ruling later. So that we’ll have to wait until next week. But that also now set us so if you look back at the wording, I think it’s fair saying it was vulnerable and maybe also a bit volatile wording that was in happening during May, June. And of course, where we ended in July, I have to say, was pleasing to see because that makes a structured program that also allows for build out of energy assets in The U. S.

When it comes to wind. It doesn’t surprise you, contrary to a few others, that I’m a strong believer in wind, and I see the positives of wind. So therefore, when you look at this, there will be significant activity coming towards that. And you can also see that if people are having an opportunity to do things, then they will not necessarily wait for the IRS update guidance. But I will say in here, work is going on.

People are generally quite pleased with it. And of course, for a number of customers, they have also secured some of the safe harbor probably already pre July 4. So in The U. S, I don’t see this as a couple of years. I see this as leading towards the end of this decade.

So therefore, there will be substantial activity, and we know that from talking to The U. S. Customers. And I know how little I have had successful in predicting some of this. But I try again, Claus Almer, you’ll be listening in, and I will go to The U.

S. And I will go to Australia. So we better see what happens in the next year then. When it comes to the CTOO change, anyone can see when you finish a press release with that probably Anders expected to retire from operating executive jobs six years ago. When I was out with him and Felix last night, it’s fair saying he thinks he’s had six years, maybe the best of his working life, lots of challenges but also a fantastic footprint to leave behind.

He will stay on here to get Felix rightly settled in. We have a number of things to get done here in the autumn and not least towards the year end. And Felix starts today, so therefore, his first working day. So there’s no gap. There’s no running around and looking for excuse to stop and go.

With Felix coming in, he’s a veteran in the industry. He’s a veteran also probably knowing Vestas in good and bad details, of course, on the gearbox side. So for us, it’s not like we are saying, Oh, now it’s gearbox time, because gearbox has been and drivetrain has been one of the things Felix was helping us with. So that’s not personal related. That is actually ZF partnership related from where Felix come from.

Then Felix has not turned 50 yet. He has mileage to go. So it’s also, for me, a real pleasure to see that we are able to attract global leadership executives into this leadership team. And I’m just looking here. At least I can see on my birthday that I have ten years ahead of Felix.

So it’s good to have some of these in. And you will if you look into Jacob, it’s similar. So it’s a normal good succession. And I hope most of the people that knows Anders will be part of giving him a good send off because he deserves that. So business as usual and not a second of pause.

We continue the same with what we have done under Anders’ leadership.

Christian Thorneau, Analyst, SEB: Thank you.

Conference Operator: The next question comes from the line of John Kim from Deutsche Bank. Please go ahead.

John Kim, Analyst, Deutsche Bank: Hi, good morning. Thanks for the opportunity. I’d like to focus on where we should be thinking about order intake for rest of year. One could argue that ’25 is a peak market for Germany. I’m wondering within the greater European remit, where else we should be looking for orders this year next in onshore?

And then the same question for offshore, please.

Henrik Andersen, CEO, Vestas: Yes. John, it’s super difficult to sit in August and give you these are the but I will say the building blocks are not surprisingly. If you look at Europe right now, a lot of onshore attention is getting into Germany. What did Germany do to get to a position of where they are today? So Germany continues.

We are one of the ones that works closely with partners in Germany to get it up. Very short lead time, very short permitting time, very short auction time. Listen, a lot of EU twenty seven have been now drawn right to what are the learnings from Germany. And I wouldn’t be surprised if we see policymakers in Europe aligning in and around some of the similar rules for EU. And so therefore, people are picking some of the positive learnings out of it.

And one of the real underlying that everyone can understand is if you go from six, seven years permitting to a twelve months permitting, you get access to the latest technology on any project. That in itself is an enormous upside. Then we see the repowering in Europe, I’m pretty sure, will have more legs. So Europe, yes. U.

K, you will see U. K. As well. Some of it will be how do we get the permitting done in The U. K.

Under the new regime. But there is tangible levers to what the government want in The U. K. And not least at Miliband, so praise to that. U.

S, yes, wait and see. I mean that’s the only better way of saying it. And there will, of course, be if there are some changes to the safe harbor in terms of percentages, we might close in on where some of the safe harbor orders almost become small orders in that sense if the percentage to clear goes up. Outside that, Asia Pacific, you will see in Q2 76 megawatts. They haven’t had the busiest quarter of their time in Q2.

So that’s a good indication of they’ve been working on quite a lot of things that didn’t come in Q2, which is back to my comment on please don’t disconnect quarters or times it with four because that won’t work. We are already now, by this date, way past Q2 order intake, and we will we are having quite some time to go in Q3. So no worries with that.

John Kim, Analyst, Deutsche Bank: Okay. Very helpful. Any color for Offshore?

Henrik Andersen, CEO, Vestas: No. I will just say here, Offshore continues being it. But as you also would appreciate, a lot of the Offshore is having a different cadence to the order intake because you work with the PSA first and then you go to the order intake. So I can’t really say that because in a couple of the areas here on offshore, a lot of it depends on outcome, for instance, on AR7. Can that be can that some of that happen this year or next year?

So therefore, the offshore is generally and we don’t I know this week is, like everyone, are trying to find and put a finger in a hole somewhere in offshore, and that’s wrong. If there is some project specific, you’ve got to get used to that. But when you look across offshore, it’s actually working, and therefore, just follow that. And when we have an opportunity to convert some of the offshore PSAs because the customer and the partner is ready, we will do that.

Conference Operator: We now have a question from the line of Colin Moody from RBC. Please go ahead.

John Kim, Analyst, Deutsche Bank: Hi there. Thanks for taking my questions. Two, if I could. Maybe one first on capital allocation. This is a question that’s emerged for the first time in a little while.

Obviously, you’ve had good cash flow development and the net debt is where it is right now. How do you feel about potential future use of cash, I guess, particular, in regards to future buybacks, further CapEx or investments? Or is there anything out there to buy? And then just kind of a quick accounting question as well. It looks like your incremental D and A this quarter was up around €33,000,000 in this year this quarter.

It was up incrementally around €30,000,000 in Q1. If I recall, I think the full year guide was for a step up of around €200,000,000 year on year. I wanted to clarify as to whether expectations have changed around that 200,000,000 Or is this just the case that the D and A will be a little bit more back end weighted?

Jacob, CFO, Vestas: Yes. And Colin, let me take that. First, to your capital allocation question. Firstly and we have that also well described in our quarterly report. Firstly, we invest in the business.

And then secondly, we look at dividends. We were very happy that we could pay out dividend this spring. And you also saw we did some share buybacks there. And that’s our ambition to continue that as we generate the free cash flow. So we confirm what we have previously said, and you can also see that in the documents.

In terms of depreciations and amortizations, we have previously guided up to the €200,000,000 And we do see the increase. And as you rightfully say, it’s maybe less than what you would have anticipated at this point in time, but there were some minor delays. But in general, we are on track, and the number we previously guided is the number you should model in.

John Kim, Analyst, Deutsche Bank: Thank you very much.

Conference Operator: The next question comes from the line of Dan Togo Jensen from DNB Carnegie. Please go ahead.

Dan Togo Jensen, Analyst, DNB Carnegie: Yes, thank you. Maybe a question on the Onshore business. Where is it today, so to say, relatively to where it’s been historically? Just to understand what is still outstanding for your Onshore business to lift it towards the 10% EBIT margin? Is it just a matter of operational leverage?

Is there still some ramp up issues in The U. S, etcetera? And then maybe on your offshore business, the loss that clearly hits you here in Q2, how should we think of that in absolute terms in coming quarters? Will it expand? Just a reflection on when you say, Henrik, the peak is or the ramp up is peaking here in Q2.

So will offshore losses expand further in coming quarters as you deliver more at more loss, so to say? Or how should we think about the absolute level of offshore losses in coming quarters? Thanks.

Henrik Andersen, CEO, Vestas: Thanks, Dan. And I think on the onshore, you’re absolutely right. You put sort of the onshore U. S, which has, of course, caused us still some troublesome here. But you can see the deliveries are going up in also in Q2.

And I think, as Jacob mentioned, there was another 500 megawatt that went out of the door in The U. S. In second quarter compared. So no, we are making progress on the Onshore. And if I could give credit to the five regions that we are having executing on Onshore, there’s not much I will do differently in Onshore this quarter when I look at the both the profitability and also the execution.

And you know we control how we price it, and then we also know how we look at how when the project is delivered, what was the post calculation as well. So we’re really pleased with that. So that probably just sends you one signal off that it also illustrates quite a bit of how much we are right now using of the of that positive into the offshore ramp. And as I said, I know you would love to have a date or a quarter where this either tops or I can’t say that per se. But what, of course, it is the ramp up cost gets diluted by two things.

First of all, when we start having volume number of assets coming out of a factory like in Stettin in Poland, that is helpful because then you start having assets, not just more than 500 colleagues going around. And of course, it triggers costs out of this. And therefore, if we look towards the end of this year, we should have passed what is the offshore peak of the ramp up cost. And that also means at that point in time, we are looking pretty tight at each other internally of how that is then ramping down. And of course, ultimate ramp up cost should get towards zero.

I just can’t say per quarter yet when that is going to happen. So a lot of a bit of hi fis around the onshore in the quarter and a lot of attention to how the ramp up costs are not only spent but also contributing to the success of offshore. And let’s not forget, we have quite a number of turbines offshore standing now at sea, and we are really pleased with that.

Dan Togo Jensen, Analyst, DNB Carnegie: Understood. Thank you.

Conference Operator: The next question comes from the line of Max Yates from Morgan Stanley. Please go ahead.

Max Yates, Analyst, Morgan Stanley: Hi. Thank you and good morning. I just wanted to ask again on the offshore business. It’s a fairly sort of small profit quarter. So it’s I guess it’s hard to really understand.

Were the offshore losses and the developments of the offshore business kind of in line with your expectations? Or were they actually a bit worse? And maybe just sort of qualitatively, if you could just talk through kind of the ramp up, what’s going well? What sort of specific parts of it to maybe kind of going less well? And where maybe are the issues and where are the successes?

So just qualitatively in terms of actually how that is progressing, where are the challenges to kind of better help us understand sort of actually mechanically what’s sort of going on there? Thank you.

Henrik Andersen, CEO, Vestas: Thanks, Max. And I think here, on the Offshore ramp up plan or the ramp up is unplanned, so to say, because I think when we looked at it, could it be that we are one week adrift from the plan in a factory in Stettin in Poland? Probably. But when I look at Stettin in Poland and walk around to the employees there and how we are now seeing we are exchanging between linear and Stettin under Nacelle, that feels really, really good because that gives us, first of all, a flexibility of production and manufacturing going forward. It also gives us a little bit of a backup in reality that how is it if there is something happening in linear or in Stettin, then we have at least two sites where we are well under the way within the sales.

When we look at the two projects, we knew anyone who are ramping up in offshore. And let’s not forget, we have done that before. It’s more than ten years ago, but we have done that before. So therefore, it is costly because you have two projects, and the two projects as such are not here to cover what we are spending in getting the technology and the factories up and running. You saw some of that when we also had almost idling status in The U.

S. But then the turning point comes when we get to ’26 and ’27, first of all, because we have more volume and more projects to be delivered. But secondly is, of course, some of those ramp up costs, you won’t keep having. And what am I talking about here? You spent quite a lot of people extra in there to put it.

And some of it is also when you pass a technology from prototype to serial manufacturing, you have a number of nonconformities you put through a finish line. The finish line is a busy place when you have new technology working. I can’t praise the team enough for doing it. Of course, I’d rather not have any finishing to be done because that was a sign off that we didn’t have any nonconformities, but that’s not the reality of an industry we work in wherever you work in the world. So therefore, do the diligent finishing, and that is extremely important for the partners that are able to see that walking around in our factories as well.

Close collaboration with the partners really appreciate that. And then as I said, the finishing should start coming down in second half of this year. And of course, that in itself will also start reducing the ramp up cost we are having. But as you can almost hear on the voice here, this is a substantial drain on the EBIT in the Power Solution in the quarter. And with that, I’m not going to give you a percentage on it because that’s not what this is about in a small quarter.

Max Yates, Analyst, Morgan Stanley: Okay. And maybe just then, I guess, the second question. Just on the lower warranty costs because that is kind of quite a significant improvement year over year. I know you’ve talked about this kind of improving over time. Does this feel like kind of the new level that we can sustain?

Or was there anything particularly kind of one off in there that we might see kind of that increase again in the second half?

Henrik Andersen, CEO, Vestas: That is not expected. We run a process, as you very well know, Max, we almost sometimes run case handling in that quarterly number. And I think here, 3.1% illustrates where we are running and where we are seeing the business. We didn’t have any extraordinary things. As you can probably also see in the split between what we provided and what we used, We used slightly more than we provided for, which is also a bit of the instruction, get it done and get it fixed, what is in there in the lost production factor.

So there are no significant new cases. And therefore, 3.1 a good running currently as where we are and where we see things developing. It should still be in that direction from when we saw €4,300,000,000 for the full year of 2024.

Max Yates, Analyst, Morgan Stanley: Okay. Very clear. Thank you very much.

Conference Operator: We now have a question from the line of Kasper Blum from Danske Bank. Please go ahead.

Kasper Blum, Analyst, Danske Bank: Thank you. First of all, a question going towards The U. S. Onshore business. Obviously, it seems as if you’re looking into a busy rest of 2025 and also 2026 or ’26 look right now.

And I noticed that the TPI filed a Chapter 11 earlier this week. Could you give any sort of indications as to whether you see any risk to deliveries of blades from that side? And maybe also talk about if you can’t get late from that side for whatever reason, what the backup plan is? And then secondly, Henrik, you did mention that overall, you see the offshore industry continuing and that sort of hiccups are maybe sort of a bit more project specific. But very obvious, of course, with being in Denmark that there’s been some hiccups this week.

Can you give any kind of comments to the pricing discipline from an OEM point of view in that sector? Are you able to keep pricing on offshore with some of the developers struggling? Or do you need to sort of help them getting back on their feet? Thanks,

Henrik Andersen, CEO, Vestas: Casper. Quite two, I will call them, large questions in that sense. So if we look at The U. S. Onshore and the outlook, I see the world is fragmenting almost into two beliefs here, I’m probably trying to see if we can get the merged understanding of it.

If you look into it, this policy sets clear way at least towards the end of the decade. So for somebody to try to make it as short as possible, I can sort of hint that, that might is guided a little bit of the personal interest of either investors or the industry’s share position on the valuation, where I think this leans very much towards what is underlying happening in The U. S. The energy prices is on an upward trend, whatever being said, factual. Electricity is in higher demand than it has been before.

Electricity from especially the tech sector is going up, not down. So therefore, some of the fastest, some of the cheapest thing to get access to right now and most value, therefore, for any investors’ money in the offtake is actually renewables. And therefore, wind is a priority. And that’s what you have seen in just a few weeks here starting in Q3. So that one, can’t predict and won’t predict where it ends in terms of order intake for this year because it’s simply too lumpy.

As you can also see, some of the orders, this is not Europe, Germany, where it’s unannounced. It’s in excess of 200, three four hundred megawatt and upwards. So therefore, there’s more to come. And I can only here say, fantastic, we have such a commercial team and we have such an experienced leadership team in The U. S, both in terms of public affairs but also in terms of the commercial setting.

When it comes to TPI, I’m pretty sure they didn’t go into Chapter 11 for going out of business because then there was no reason to go into Chapter 11. So now it’s up to TPI to figure out what they want to do with their prime customers around in the world. And of course, we are one of them. So let’s see when they come. It’s I think if it’s right saying here, it’s forty eight hours, and I assume forty eight hours in, there’s quite a lot of other things going on in that debate.

I think from a person I think I feel for a leadership team in TPI, it’s difficult conditions. But I also know if you’re able to bring it out. TPI has been a long standing good partner for us. So I’m pretty sure that there is all reasons to believe that operations continue and also the good partnership continues somewhere in here. Then we see how that goes in Chapter if they come out of a Chapter 11 as a one unit and one partner and one TPI or they come out there with different sets of assets.

We will look to that. And if they need help, they know they can always talk to us. On the offshore, come on, no one is able to price a project and compensate if you need more capital to the tune of €8,000,000,000 So therefore, that is not a pricing issue, Casper, if I can be a bit direct and brutal in that sense. That is something else. It’s probably financing of a project rather than pricing.

So therefore, I think our part of the industry went through quite a difficult time, and some of it led to that auctions got pulled. I saw still some countries around the world still struggle to find the offtake price where they still feel or think that offshore will be more cheap than any other energy assets available. And that’s simply not the case. So I think what I saw most recently in the AR7, which we have seen, we have worked closely with the U. K.

Government. They’ve had their experiences both as failing AR’s auctions. But the recent AR7 is probably one of those more modern ones where I will say, here is the thing: consultation with industry across both from developers, OEMs and others. And that’s where you will then have almost a preset of who is going to come in here and how will value be created. So again, a little bit of a flag up and a positive to Ed Miliband.

He is running a good way of doing it. And we can see some of it is actually compared and shared into the EU setting as well. So offshore, it’s not a thing about pricing in the case you were discussing this week. But as a general thing, don’t take it for more than that’s a project problem and a financing issue.

Kasper Blum, Analyst, Danske Bank: Thank you, Henrik. Appreciate the detailed answers.

Conference Operator: We now have a question from the line of Claus Almer from Nordea. Please go ahead.

Claus Almer, Analyst, Nordea: Thank you. Yes, first of all, a warm welcome to you, Jacob. And then to my two questions, and I I would not ask about Australia this time, but more talk about the offshore and the ramp up. Maybe you can give some some color to what was actually included in the 2025 guidance back in February, not in the absolute number, obviously, but how does that compare to what has actually happened in the first half of this year? That would be the first one.

Henrik Andersen, CEO, Vestas: Thanks, Claus, and I appreciate your personal reservation here of not asking about Australia. So thank you for that. I’m sure we’ll speak more about that later in the week. I think on the if we look at the guidance when we initiated that in the beginning of the year, I will say within that guidance range, there are things that will always do a bit better. And if I look at that right now, I will say the onshore year to date execution and what we are looking into the second half of the year looks like that’s going to contribute positively into that guidance range.

And if we look at the offshore ramp, I think we are spending slightly more than what we had in the beginning of the year. That is, in some ways, a precaution of not ending the year of saying we could have done better or we could have done something else in the ramp up. But no mistake making here. I mean, internally, everyone knows that it’s not a freebie of spending money in ramp up. So therefore, spend the money wisely investing in it.

So those are the two barriers. Then I will say, since February, if we just look at some of the external markets, some of the external things that has happened, whether that has been in, as I mentioned here, on the some of the nominal things on FX, but you’ve also seen tariffs. I mean, come on, it’s not easy to get a fixed point in any of the weeks where we have been. So some of the tariffs we are doing we’re doing really well in both being firm and seeing the tariff and also finding mitigations. And at the same time, in all of this, pricing levels for the world will be higher because tariffs will go to the final end customer, whatever value chain you sit with.

Claus Almer, Analyst, Nordea: Fair enough. Then the second question is about the commercial reset of the Service division. How far has you come to this termination or repricing of the unprofitable contracts? And did you this repricing or termination, did it have an impact on Q2 EBIT? That was my second question.

Henrik Andersen, CEO, Vestas: Yes. No, I understand your question. If you’ve got a couple of things going here. You’ve got two buckets that are doing. You’re of course, you’re going through your whole setup of contracts in there, which is only natural.

And then, of course, you’ve got a natural flow of renewables that comes to you. And therefore, you treat those two equally. But at the same time, it goes without saying, from a contractual point of view, the renewables are pretty much easier to get to because there, you will have some of them. There, you just have a natural. Is it an extension or not?

And as I said earlier, probably this, we would have expected to see a slightly more negative effect on gigawatt on the service. It hasn’t happened. And that probably is a good illustration of no one is generally unclear about our own costing internally at all. So therefore, when you see this, that also means customers are having deep insight in how we are pricing, how we are costing this and has led to that we are both renewing probably a higher percentage than we initially thought service business thought, service leadership team thought and I definitely thought two quarters ago. And then I will say on the more resetting on some of it, that’s more a partnership portfolio discussion we have but that we have across the world.

And with some of that, that gives some adjustments that is included in the run rate. We don’t want to do this opening a Pandora’s box of where you can start doing one offs and other things in service because then it gets a bit out of hand because then it’s one off cost of termination and other stuff. So it’s in the run rate. It’s in the operations. That’s how the instruction is to the global service team around the world.

Claus Almer, Analyst, Nordea: Okay. I will say thanks for that answer. Not it will not be easy to put that into an Excel spreadsheet, but that’s how it is, I guess.

Henrik Andersen, CEO, Vestas: No. But you can definitely hear on me that there’s no positive upside in a run rate from that exercise. So that you can know. Then you just need to find out what negative number you want to put to it.

Claus Almer, Analyst, Nordea: Thanks, Henri.

Conference Operator: The next question comes from the line of Thore Fankmann from Bank of America. Please go ahead.

Jacob, CFO, Vestas0: Good morning. Thank you for taking my two questions. The first one would be, during Q2, one of the European operators spoke about price pressure of the European countries from Chinese competitors. What do you see here in the region? And how would you describe how protective are the governments in the European countries regarding the Chinese competition in wind?

I’ll take the second one afterwards. Thank you.

Henrik Andersen, CEO, Vestas: I think a lot of things it’s a different world today than it was twenty four months or forty eight months ago. So I think people are generally a bit more mature in the way we look at things. And I think seeing the geopolitical landscape right now, I think everyone are fully on board with what also goes towards cybersecurity and protective measures of your critical infrastructure, we participate heavily in that. So I’d rather say I mean that there are so many other factors right now than a price discussion only. So therefore, if you have a price pressure point discussion, then I think you’re probably up against something else where you haven’t really talked about what the solution is.

And if somebody falls for that, then I think it’s the wrong part of it. I think EU is fairly mature, I think speaking also on behalf of Wind Europe. Wind Europe is making very good progress in exchanging also what are the things and what are the components we can work closely with and what are the components and probably electronics that you should be very, very careful about. So that comes the normal three buckets we say and we also have. Listen, it’s affordable, it’s independent and secure and it’s sustainable, and that’s what we have as a solution.

And I see a lot of more there will always be the opportunistic that will try to see something. But if it doesn’t get connected into the grid or it’s a build and sell, then it might not work down the line.

Jacob, CFO, Vestas0: Okay. Thank you. And my second question is a follow-up on the service contract renegotiations. Could you maybe speak about how restrictive are your customers and partners of these renegotiations? And if I understood you correctly, in previous quarters, you were mentioning that you will try to renegotiate all the contracts by the 2026, so basically over the coming one point five years, how easy is this to do in case you want to cancel a contract?

Are they not just simply legally binding? Or can you just cancel out of a contract if you’re not willing to agree to the new terms?

Henrik Andersen, CEO, Vestas: No. I think here, there’s many questions in your one question here. I think I don’t think we can have a commercial reset done by a specific date. I think this is also a way of living when you then look at it and when we look into this going forward because if you have an average eleven years of contract duration, you will see somewhere a little less than 10% of your contract portfolio coming towards you with the usual sort of construction bumps that are written and led to the service contract. So therefore, you see this as an ongoing basis.

Then when it comes to your question sort of more specifically, how easy is it? I don’t think anyone says it’s easy when you call get a call from somebody that says, we need to have something here in discussion that doesn’t work terribly well for us but probably works pretty well for you. And then if that was the only thing you were to discuss, then it will be maybe a short conversation. But as this is all related to both partners we have had for maybe decades, we have partners where you need new orders, new capacity, different solutions or even repowering because there are also some of these service contracts that are now up for discussion, where it might, for the customer and for us, be a lot better and smarter to repower some of these older turbine makes. So a lot of things are up.

And therefore, I’m saying here, of course, we can’t single handedly, if that’s sort of what you are we can’t say that we just go single handed out and cancel. We’re not stupid to pay a cancellation LD or something that opens that one up. But on the other hand, no one wants to force penalties on each other if you can find a good partnership and a good commercial settlement.

John Kim, Analyst, Deutsche Bank: Okay. Thank you.

Conference Operator: We now have a question from the line of Christian Thorneau from SEB. Please go ahead.

Christian Thorneau, Analyst, SEB: Yes. Thank you. Two questions from me as well. The first one again on the Offshore ramp up. So with the cereal manufacturing in Poland, have you reached cereal production in all the Offshore sites?

And are you fully staffed at this point in Offshore?

Henrik Andersen, CEO, Vestas: I think we are fully staffed to where we plan to be in terms of, for instance, a Polish factory to what we are doing right now. But of course, Polish factory also has additional capacity, which we are going to take advantage of, Christian. So we run ahead with shifts or anything else until we know that we have that capacity restriction as well. So I think we are where we would like to be. There’s no doubt that if I walk into one of the factories today, I think we are making great progress in terms of takt time and other things coming down in the manufacturing, the serial manufacturing of the sort of the standard.

I think where we see that we have still some more work to do is in the finishing of the assets before they leave for harbor and finally ship out.

Christian Thorneau, Analyst, SEB: Understood. That makes sense. And my other question goes to your comments when you presented around the LPF. Just curious, the sites you mentioned where you are doing major repairs, are they identical to the sites that you also talked about in Q1? Or have there been sort of new sites in each with these major repairs?

Henrik Andersen, CEO, Vestas: Same sites.

Christian Thorneau, Analyst, SEB: Okay. Excellent. Thank you.

Conference Operator: The next question comes from the line of Akash Gupta from JPMorgan. Please go ahead.

Jacob, CFO, Vestas1: Yes, hi. Good morning and thanks for taking my questions. I’ll ask one at a time. My first one is on The U. S.

So Henrik, I think you mentioned early on about the attractiveness of The U. S. Market given the electricity demand growth and boosted by data centers. The question I have is on wind competitiveness in The U. S.

Without subsidies because when we look at some of the data out there, studies done by third parties, we see that wind even without PTC is more competitive than new CCGT or nuclear. They can be built quite fast. But then of course the problem is intermittency, which can be fixed through some backup generators. So the question I have is that given what we see in The U. S.

Market on the demand side with so high demand for electricity and more so for clean electrons, what sort of discussions you are having, not just in the near term, but maybe like looking on the longer time horizon on projects where basically customers may be not caring about which subsidies you get, but more about when can you how soon these some of these projects can be built? So I want to start first with The U. S.

Henrik Andersen, CEO, Vestas: Thank you, Akash. No, I think you’re very right in your sort of outlook. And I think, of course, no one would build additional assets if it wasn’t needed and the offtake was not needed there. I think also that the demand side doesn’t change significantly from this when we look towards the end of this decade. So I share that.

On the other hand, it’s also when you are finding yourself in an environment where you have a known quite well structured incentive to build out further capacity in The U. S, which we both know has been existing since 1992. That has driven an enormous capacity. But also, when you run the capacity up, you, of course, you bring the levelized cost of energy down because you have a full supply chain. You have construction, you have supply chain, you have harbors, you have railways and other stuff that is very much and by the way, we have factories there.

So that also means that you have a levelized cost of energy that will also, by the end of the PDC cycle, prove to be competitive. But of course, it will be open there to competitiveness and comparison to some of the other assets. But you are mentioning nuclear. Then we also have to talk just ordinary facts. It doesn’t allow anyone to build a new nuclear facility in thirty six or forty eight months.

We are, as you know, in The U. K, we are probably talking at best fifteen, twenty years. And then in fifteen, twenty years, it’s very, very difficult to foresee what the levelized cost of energy will be twenty years out in the future. That’s a lot easier with something you know for a fact that is tangible in thirty six to forty eight months. So I think we got some strength here that we are definitely putting.

And the good thing is customers our customers, our long lasting partners, are seeing the same. And of course, they are backed by that because these are the customers’ partners that are also selling the electricity to their customers or end users in that. So we see the same. I can’t say fixed point what is the offtake looks like and what is the liberalized cost of energy in The U. S.

In three or four years’ time from now because we got a couple of variables, which, of course, we have had to deal with in the previous couple of quarters. So if tariffs are hitting some of these things and if the industry is having these, which seems to be more shorter term stop and go again, that’s not helpful. That was what I talked positively about in the IRA. It was a ten year. Now it seems like we are down to what we also have lived with for many decades, three or four years execution.

But in the outcome of it, clearly, positive that we have a proper structure and we have a proper both ramp up and ramp down of U. S. In its current policy.

Jacob, CFO, Vestas2: Thank you. And my second question is on

Jacob, CFO, Vestas1: the guidance. So this year you started with 300 basis points wide, which was 100 basis points wider than last year. And we already had seven months, but still you are reiterating 300 basis points wide guidance, which means a wide range of scenarios for the remaining five months. Maybe can you talk about the uncertainty that’s still out there and the opportunities that are ahead of you? And can you indicate is the midpoint of guidance is still a realistic outcome for the year?

Thank you.

Henrik Andersen, CEO, Vestas: As I said, when you have a guidance, the whole guidance is a potential outcome for the year, Akash. So I will sort of say here, maybe it’s a little unusual that we keep our 300 basis points throughout this quarter as well. But I think also, all fairness, if we just take the last six, eight weeks, it is still with a bit of variable to what we see for the year in terms especially as you can see the ramp up in The U. S. Is happening as we speak.

But you still see then there is a pause in something which is helpful, and then there is something new being introduced. So I think here, we just have to work through it. And now U. S. Is definitely a very, very busy place in construction in second half of the year.

Then let me also we talk about that all the time, and I think we said it in February very, very specifically, and Jacob talked to it here as well. The first half of the year is yes, it’s lower than potentially also compared to the second half of the year. So I sort of sit in here and saying we performed really well in the Onshore in the first half of the year, keep that momentum because that is part of also what allows to have to still have the guidance range in that sense because that is, of course, what can bring the guidance towards the higher end of it. Otherwise, you are fine in having a guidance where you take the midpoint, and that’s what you work with. And as I said here, there is also, as you will appreciate, there are a couple of FX things that have influenced some of the nominal things in the guidance, but we haven’t changed.

So that’s pulling a bit in the other direction. So, so far, we’re really pleased with it. We are where we are, and we can see that. And of course, if we get to that, anyone can see that it’s going to be a high EBIT half year, second half of the year, and it’s going to be a high cash second half of the year, which bodes well from when we get into November release of Q3. And probably in November Q3, not hinting anything, but we should be able to maybe narrowing it a bit from the 300 basis points when we talk again in November.

Conference Operator: We now have a question from the line of Ajay Patel from Goldman Sachs. Please go ahead.

Jacob, CFO, Vestas2: Good morning. Thanks for the presentation and welcome, Jacob. I first wanted to start on Service, please. So you presented this plan, all the initiatives that you’re working on, highlighting it’s a strategic priority for 2025 and 2026. And I look at consensus, and I think it’s like 17 to 19% EBIT margins for the next three years include out for 2027.

And I just wondered when you say that these benefits will take time to materialize, are you saying that ultimately as we get into the back end of 2026, we should start to see some financial improvements, maybe not all the way up to the 25%, but progress versus that sort of 18% to 19% range. I just wanted a little bit more granularity on what you meant by these statements. And then the second question was just on U. S. Tariffs.

Is there any sort of indication of size? Because clearly, when you set your guidance back in February, tariffs went there. And now we’ve have those as an additional cost. And clearly, look, the offshore ramp up will be quite wide ranging depending on where you end up on that consensus, but that number would help even in if it’s quite a broad order of magnitude.

Henrik Andersen, CEO, Vestas: Yes. I think, first of all, on the if I start in the reverse order this time, I think on The U. S. Tariff, I would love to say I had a fixed point, but I don’t because The U. S.

Tariffs have simply been a bit of a moving target throughout this half year. So I would rather say we do whatever we can together with customers to mitigate it. When we find ways of doing it, we lock it down and then we take it. And as you will appreciate, we have, in this case, most of those tariff impacts for 2025 covered in and around with the customers. So that we are working through in that sense.

But there are also with that when you have special components or special countries taken with us where we have the factories, but we still have things that comes into the factories that will be influenced by it. So I think it’s manageable. Maybe it gets a bit tense, but that’s always the case because if you open the television, there is tariff is a good thing, but I can’t find any good consequences of tariffs generally even though somebody else is saying it. So it will go negatively for trade, and it will go negatively for the end consumer period. I think when we talk about the service recovery plan, I think what Jacob is rightly saying here, we often asked already upfront this quarter, this was where it was.

Is next quarter the one that goes better? And that’s where we’re just saying right now, we have a plan for until 2026, Services working diligently fluid. There is under the 17.2% in this quarter, it’s quite a number of net movements from individual contracts and other stuff, but it ended at 17.2%. Rest assured that immediately, we see the momentum, then there is no holding back of our part here of getting this above the 20% and starting with a 2% again. But we just can’t have and we don’t have visibility from when that is the right thing to say to you on this one, Jay.

Otherwise have

Jacob, CFO, Vestas2: to bear with us, but it’s coming Yes. Kind Okay. That’s fine. And then just because of the tariff question, do you mind if I just replace something? Offshore, right, it’s a combination of ramp up costs that we need to under the absorption of fixed costs partly with volume, I guess, issue and then maybe the margins on the contracts.

You have quite a sizable backlog in Offshore now. You’re saying that off ramping ramp up costs should maybe peak towards the end of the year. Does that sort of indicate quite a material increase in profitability or much lower losses going into 2026?

Henrik Andersen, CEO, Vestas: I don’t like to comment on 2026 when we are in 2025. But I think here, it’s there’s no need to keep the ramp up cost if you don’t need them, right? So therefore, if we look at this, there will be some ramp up cost. There will be some finishing line we will still have in 2026, but it will be significantly lower.

Conference Operator: The next question comes from the line of Deepa Venkateswaran from Bernstein. Please go ahead.

Jacob, CFO, Vestas3: Thank you. My two questions. The first one is on The U. S. As you mentioned next week there should be a guidance from treasury on what would constitute start of construction.

I just wanted to know how much of an uncertainty business for your customers from placing orders or is there already enough safe harbor projects? And when you mentioned that you expect orders to not continue just for the next two years by the end of the decade, I’m assuming you meant deliveries till the end of the decade, if you could just clarify that. And the second question on offshore, obviously, you’re taking time. Can you give us any idea if there are any delays for the wind farms or whether there’s any financial consequences associated with these delays? And are you behind schedule by six months?

Or just any kind of idea if there’s any consequence of this fee?

Henrik Andersen, CEO, Vestas: Thank you, Deepa. I think on The U. S. RS guidance, probably I learned here that it’s better to wait for the August 18 or whatever date around that where it comes out. I’m pretty sure that they do their diligent work around it.

We know what the existing rules are. And normally, I’m saying normally, under normal administrations in many decades, we have seen when they change guidance, it is from that date and onwards. So therefore, we have also seen some of that where orders either is already permitted, is already off taken, is already grit done. And therefore, you see those orders not awaiting an IRS guidance on this specifically in construction because, of course, you would appreciate if you want to qualify in construction after a certain date, I’m pretty sure that is where the IRS guidance will come. So guessing might be that under the new IRS guidance, there could be a slightly shorter window to build out before it’s in service.

Or it could be that the usual rule of thumb of a certain percentage is smaller percentages of safe harbor, that percentage might go up, which was my hint of saying it could be that some of the safe harbor orders start looking as small normal orders in the sense when we get on the back end of August 18. And of course, if you’re already out there and you have done that, then you’re probably under the old rules. And after whatever date comes here in August, you will be after the new rules. So that will be my that will be sort of my interpretation of where we are. Then in a week’s time, we’ll know if that was a good directional answer.

On the Offshore, I think the delays is always going to be a discussion point because the delays goes for the full project. It goes also for access, and it goes for grids. It goes for all of these things. And generally, what we see in offshore is that it is not as mature. And I think that goes for all of us in doing it.

And therefore, there will be also just a simple thing that sometimes the weather is that you can’t do what you normally would do. So therefore, there will be financial consequences if we are the cause for a delay. But on the other hand, right now, we are working diligently through it in terms of the two projects we are working with. And therefore, for us, we have two eyes on the two projects. We have absolutely and full attention to it, but we also have a very strong attention and also how we are having the capacity available to the further ramp up of capacity that happens from 2026 and onwards.

So for us, this is the important thing. This is important to get the two projects right, but it is probably, from a investors’ point of view and also from an industry point of view and partners’ point of view, as important that we get the right capacity mustered from when we look in 2026 and beyond.

Conference Operator: If

Henrik Andersen, CEO, Vestas: I could hear by just having the last question in this round as we are eleven thirty

Conference Operator: We have our last question from the line of Martin Wilkie from Citi. Please go ahead.

Jacob, CFO, Vestas4: Yes, good morning. It’s Martin from Citi. Thanks for squeezing me in. Just one final question and it comes back to tariffs and how it links into the service business. One of your competitors did take an adjustment to their long term service margin expectations in The U.

S. Because of higher tariff costs. Obviously, you look at your U. S. Business, there is a large service backlog.

It doesn’t look like that’s impacted your profitability or maybe it was offset elsewhere. Have U. S. Tariffs been an effect on gross margins in the service backlog? Or have they been offset?

Or how should we think about any risk or anything like that inside the service profitability because of tariffs?

Henrik Andersen, CEO, Vestas: Yes. First of all, I as always, please address competitors’ comments on some of this with what they are seeing. We have a lot set up in The U. S. In wind.

We have a supply chain there in the wind industry where it’s highly also localized. And therefore, we don’t see the same principles as somebody else has mentioned. So therefore, I would leave that with them to sort of argue. And for us, it is a combination of both backlog portfolio and also the localization of supply chain we have in The U. S.

Otherwise, there, I would just sort of say U. S. Business, great business, long contracts and good business. So therefore, I don’t see an imminent push from some of the tariffs into that part of the business in The U. S.

Jacob, CFO, Vestas4: Good. That’s great to hear. And if I could just clarify one other question as well. Obviously, the ASP this quarter at $1.11 that’s a pure Onshore number. You mentioned in your opening remarks both the word stable and positive.

But just to to understand, if we if we do sort of normalize for mix between EPC and all the rest of it, is pricing still effectively flat, or is there still some slight positivity in pricing because of some lingering effects of raw materials, labor and these kind of things?

Henrik Andersen, CEO, Vestas: I think it’s fair saying here. As we are in some of the markets where we have different mix, We didn’t have any U. S. Orders in Q2, in fact. And therefore, what we have seen in here is a good market across predominantly EMEA, where there are a good mix of that margin.

So I think here, we just say we’re really pleased with it. And you’re rightly saying it’s one of those quarters where it’s a pure onshore ASP that is comparable with other quarters. But as we now have U. S. Up and running and we have some of the other markets also, for instance, in Asia Pacific, then there will be a different pricing.

We are very pleased with this, and the discipline that goes into the commercial setting and pricing here is still more than intact. So we’re really pleased and positive with that.

Jacob, CFO, Vestas4: Great. That’s good to hear. Thank you very much.

Henrik Andersen, CEO, Vestas: Good. With that, operator, I just want to round off and thank everyone for the interest also for many of them. For those who didn’t get access here on the Q and A, we hope to see you in the coming days where you will also have a lot more time one on one or in the groups with Jacob and Erasmus. So we look forward from a total investors team to spend more time on the coming days. So thank you so much, and keep well.

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