Annual Report 2016 1 January 2016 – 31 December 2016
Total Page：16
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Annual report 2016 1 January 2016 – 31 December 2016 Vestas Wind Systems A/S, Hedeager 42, 8200 Aarhus N, Denmark, Company Reg. No.: 10 40 37 82 The Vestas Group Countries in which Vestas has: Sales and service offices Manufacturing facilities Research and development facilities Dedicated to wind energy Vestas is a global energy company dedicated to wind energy – improv- 82 GW ing business case certainty and reducing the cost of energy for its customers. Vestas has installed almost Vestas works in close partnership with customers to offer the most 82 GW (59,909 wind effective solutions. The core business is development, manufacturing, turbines) in 76 countries sale, and service of wind turbines – with competencies that cover every around the world and has aspect of the value chain from site studies to service. manufacturing facilities in The strategic direction for Vestas remains the same – as does the North and Latin America, ambition to maintain and expand Vestas’ global leadership and create an even more flexible and robust company. Europe, and Asia. The Vestas track record speaks for itself With installed wind turbines in 76 countries around the world, Vestas has considerable experience in all key disciplines – engineering, logis- tics, construction, operations, and service. Vestas’ projects have covered every kind of site, from high altitude to extreme weather conditions. EUR 10.2bn Every day, Vestas leverages its global experience to continuously In 2016, Vestas’ revenue improve the performance of its customers’ wind power plants. This amounted to EUR 10.2bn is done through the monitoring and performance diagnostics of the world’s largest fleet of wind turbines. The continuous stream of data and EBIT before special items from more than 32,000 wind turbines enables Vestas to meticulously amounted to EUR 1.4bn – an plan and carry out service inspections, thereby reducing wind turbine increase of EUR 1.8bn and downtime to an absolute minimum. EUR 0.6bn, respectively, Vestas has installed 59,909 wind turbines on six continents, which compared to 2015. generate more than 205 million MWh of electricity per year – enough electricity to e.g. supply almost 120 million Europeans households electricity consumption and globally reduce carbon emissions by more than 110 million tonnes of CO2. 002 Vestas annual report 2016 · The Vestas Group Preparing for the future “ The Board and I are pleased to see that the operational results Vestas has achieved in 2016 have also manifested themselves into strong financial performance. We are convinced that the future of energy belongs to wind and other clean energy sources.” Bert Nordberg Chairman of the Board of Directors The future belongs to clean energy stepping up our game. In our 2017-2020 strategy update, three key We are convinced that the long-term future of energy belongs to wind themes will shape our approach: raising the bar, refining initiatives, and and other clean energy sources. Renewables are becoming increasingly accelerating execution. competitive on purely economic grounds, with wind energy for utility scale applications leading the way – now and in the future. While the strategic direction for Vestas remains the same, we are updating our vision and mission statements as well as refining our core In addition to being confident that wind will come out on top in the strategic objectives and accelerating various initiatives to effectively clean energy future, we are also convinced that Vestas will come out on respond to evolving market conditions that include the onshore sec- top in the competition against other original equipment manufacturers tor shifting from high growth rates to high but steady volumes and an (OEM). Our global reach, technology and service leadership, and scale intensifying competition for market share. give us a unique position to compete and win in the marketplace. Increasing cash distribution to shareholders At the same time, there is a relentless demand for lowering the cost of The Board and I are pleased to see that the operational results Vestas energy. With market-based policies like auctions being “the new norm”, has achieved during the year have also manifested themselves into it is more important than ever that we sharpen our focus and continu- strong financial performance. The Board recommends that a dividend ally evolve to meet the competitive environment – both from other will be paid again in 2017 on the back of the results for 2016. Strong OEMs that are increasingly consolidating as well as from other power growth in earnings allows us to increase our dividend payments com- generation sources. We see this as a healthy development as our indus- pared to last year. On top of that, we also initiated and completed the try matures, though strategically and organisationally, we need to act company’s second share buy-back programme and hence, cash returns on multiple fronts to maintain our market-leading position. continue to increase, displaying our strong intent to continue to pro- vide shareholder value. Our corporate strategy is working – but more is needed to stay ahead The Board wishes to thank all Vestas employees for contributing to our Vestas delivered extremely solid performance across all parameters in performance in 2016. We have many more projects lined up for 2017, 2016. Industry-wide, Vestas is at the top of the market share tables; we and I am sure that we will succeed if we continue working together for are active in substantially more countries than any of our competitors; the good of Vestas, our customers, shareholders, and employees. and has more GW under service than anyone else. Vestas is the market leader by revenue and volume, and 2016 was our best year ever. Bert Nordberg Chairman of the Board of Directors Nevertheless, the Board of Directors and Executive Management know that our current success is no guarantee for future prosperity. Vestas needs to continually improve if it is to stay on top against other OEMs and other power generation sources. When the company launched the “Profitable Growth for Vestas” strat- egy in 2014, we gave ourselves three to five years to accomplish the objectives we spelled out, while simultaneously committing to annual strategy reviews to update where needed. Our “Profitable Growth” stra- tegic ambitions remain just as valid today as when we launched them. However, if we are to remain the global wind leader, we need to continue 003 Vestas annual report 2016 · Chairman’s statement Executing on our targets “ Vestas is a financially strong and operationally effective organisation, delivering solid 2016 performance with strong revenue and earnings growth.” Anders Runevad Group President & CEO High activity levels across the board in 2016 The joint venture MHI Vestas Offshore Wind showed major progress The market environment continues to be very supportive for the wind during 2016 by announcing four firm and unconditional orders. Based power industry with regulatory policies generally providing a favour- on these levels of order activity, the joint venture finds itself well posi- able backdrop for industry stability. Combined with the continuously tioned as one of the strongest players in the offshore market. improving economics of wind energy, the future looks bright for increasing wind energy’s share of the energy mix. In 2016, Vestas continued to optimise its overall manufacturing and supply chain competitiveness in response to evolving market condi- Vestas is a financially strong and operationally effective organisation, tions. Unfortunately, we had to reduce the staffing levels at the blade delivering solid 2016 performance with strong revenue and earnings factory in Lem, Denmark. However, the factory remains a very important growth. Once again, we realised strong cash flows, which are increas- part of Vestas’ global manufacturing footprint. ingly created by the earnings we generate. Raising the bar With total net investments of EUR 617m, we are also preparing for the Vestas is now stronger than ever across the business. Our current suc- future. We need to continuously introduce new and effectively integrate cess, however, is no guarantee for future prosperity. To beat the compe- proven technologies into our products and services. In 2016, we invested tition on all parameters, we will build further on our capabilities to inte- more in R&D than any of our peers and continued launching product grate new technologies and ensure the lowest possible cost of energy. upgrades and other innovations that can lower the cost of energy. To continue leading the industry, Vestas needs to do more in all parts of We also achieved important safety milestones in 2016, with three the business. Towards 2020, three key themes shape Vestas’ approach: factories reporting no lost time injuries and an overall reduction in total recordable injuries across Vestas’ factories of 30 percent. Any injury is · Raising the bar – Vestas will set even higher, more ambitious targets unacceptable as it not only affects our daily business but more impor- to push ourselves to stay ahead of competition. tantly our families. Safety must always come first and it is an essential · Refining initiatives – Re-scoping or expanding Vestas strategic prerequisite for world-class operations. initiatives to reflect new market realities. · Accelerating execution – Accelerating execution of new and existing Vestas achieved record-breaking order intake for the year, and amongst initiatives to deliver on higher targets. others, announced 31 orders in 31 days, across 12 countries, and five continents in the month of December, demonstrating once again the Global reach, technology and service leadership, and scale remain the power of Vestas’ global reach. foundation for Vestas’ unique position in the market place and will be our key differentiators to secure a leadership position. When listing some of the highlights, one always risks omitting others. The 1 GW Fosen/Hitra order in Norway and the Wind XI project in the On that note, let me conclude by thanking all employees in Vestas for US, which has a potential of up to 2 GW, stand out as high points on their hard work and dedicated efforts throughout the year.