In general, quarter-on-quarter fluctuations are due to changes in the activity level and variations in the contract types. Net working capital stood at 11% of expected annual revenue, against (1)% the year before.

The order backlog of firm and unconditional orders amounted to EUR4 billion at June 30, 2009. In spite of the weak order intake since the onset of the credit crisis, Vestas retains its forecast for 2009.

Since the end of the reporting period, Vestas has recorded an order intake of EUR0.7 billion with unchanged payment patterns. Additionally, Vestas’ corporate Contract Review Board will be evaluating several contracts with a total value of more than EUR4.4 billion in the upcoming period. On April 28, 2009 Vestas announced the necessity of lay-offs in Northern Europe due to lack of demand. In Denmark, 1,142 employees were laid off, whilst 425 employees were made redundant in the UK last week. At the same time, Vestas continues to expand its new factories in the US and China.

The EBIT margin declined to 6.4% due to the reduced gross margin and, to a minor extent, higher administrative expenses. It should be emphasised that the gross margin will always be marked by quarter-on-quarter fluctuations, among other things due to changes in the contract types. The declining gross margin in the second quarter was also attributable to severance payments in Northern Europe and the intensified increase in production staff at the new facilities in China and the US. Half-year revenue increased by 29% and EBIT rose by 22% relative to 2008. The increase in employee headcount over the past 12 months, from 17,370 to 21,153, leads to a natural increase in costs. Under the “People before megawatt” principle, Vestas hired 5,524 new employees, net, in 2008 as part of the build-up to “10 in 10” – Vestas has the factory capacity to manufacture, ship and install 10,000 MW in 2010. Furthermore, the Group built up its production capacity and increased its staff in order to be capable of handling revenue growth in 2009 of more than 40% relative to 2008. Following the capacity reductions in Denmark and the UK, Vestas continues to have some excess capacity in Northern Europe relative to local market prospects.

Outlook for 2009

Vestas retains its revenue and EBIT guidance for 2009 as initially announced on November 6, 2008 and most recently reiterated on April 28, 2009. In 2009, revenue is expected to rise by 20% to EUR7.2 billion, whilst the EBIT margin is expected to be 11-13%. Net working capital, projected to account for a maximum of 10% of revenue at the end of 2009, will fluctuate noticeably in the course of the year. Of the total revenue of EUR7.2 billion, service revenue is still expected to amount to EUR550 million at an EBIT margin of 15%.

For 2009, supply-only orders, in which Vestas only supplies the wind turbines, are expected to represent slightly more than 30% of revenue as in 2008. In 2005, these orders accounted for 10%. The rising proportion reduces the underlying operating risk, but increases quarter-on-quarter fluctuations in revenue and EBIT as revenue from this type of order is not recognised until all the turbines have been delivered. In supply-and-installation and turnkey projects, revenue from the orders is recognised as the work is performed, and for accounting purposes this provides a more balanced income flow. There are no differences between the contract types in terms of the payment profile. Vestas does not expect any change in payment patterns for its orders.