Vestas generated an EBIT improvement of 124% to EUR76 million and lifting the EBIT margin from 4.9% to 6.9%. Net working capital stood at 8% of expected annual revenue, against 2% in First Quarter Of 2008. The increase was significantly attributable to larger inventories. The order backlog of firm and unconditional orders amounted to EUR4.9 billion at March 31, 2009. Full-year expectations for 2009 are still for an EBIT margin of 11 to 13% on revenue of EUR7.2 billion. At the end of the first quarter of 2009, Vestas’ total undrawn financial facilities amounted to EUR850 million. Vestas continues to expand its operations in the USA and China owing to the positive market prospects. Capacity will be reduced in Northern Europe, as demand in this area at the moment does not meet expectations. Consequently, Vestas expects to lay off around 1,900 employees in the production units in Northern Europe, primarily in Denmark and England. As a result of these measures, expected investments in property, plant and equipment and intangible assets are reduced by EUR200 million to EUR1.0 billion. The British Government’s commitment of April 21, 2009 regarding massive investments in wind power and higher tariffs, will have a positive influence on Vestas’ possibilities of producing blades in Great Britain.

First Quarter Of 2009 at a glance (against First Quarter Of 2008)

Vestas shipped a total of 490 turbines – an increase of 21%

Vestas shipped wind power systems with an aggregate capacity of 885 megawatt (MW) – an increase of 29%

EBIT amounted to EUR76 million – an increase of 124%

First-quarter profit after tax amounted to EUR56 million – an increase of 70%

The number of employees rose to 21,259 – an increase of 31%

The incidence of industrial injuries per one million working hours was reduced to 12.8 – a reduction of 32%

Revenue in the first quarter of 2009 was positively influenced by a high percentage of completion for work in progress. In addition, some of the turbine projects that were shipped in the fourth quarter of 2008 were finally completed in the first quarter of 2009. The EBIT margin rose to 6.9% although costs for research, sales and administration rose by more than 50% relative to the year-earlier period. The higher costs were primarily due to the increase in employee headcount over the past 12 months, from 16,178 to 21,259. 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”.

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. Coupled with the ongoing productivity enhancements and the continuing regional expansion in the USA and China, relative to the existing local market expectations for the coming years, these measures have given Vestas a substantial structural excess capacity in Northern Europe, which has so far also manufactured for the US market.

As Vestas no longer believes that the North European markets in the years ahead will be able to absorb the capacity released, as a result of the US expansion, Vestas is unfortunately compelled to reduce production capacity in Northern Europe. Consequently, Vestas expects to lay off around 1,900 employees in Northern Europe, primarily in Denmark and England. Following the expected lay-offs, Vestas will, together with its suppliers, still have factory capacity to manufacture, ship and install 10,000 MW in 2010. The British Government’s commitment of 21 April 2009 regarding massive investments in wind power and higher tariffs will have a positive influence on Vestas’ possibilities of producing blades in Great Britain.

Outlook for 2009

During the past six months, the wind power industry has suffered from a funding crisis – not a demand crisis. The projects that will help Vestas meet its forecast for 2009 are currently only awaiting funding; everything else is in place. Consequently Vestas expects that significant contracts will be signed during the coming months. Vestas therefore retains its revenue and EBIT guidance for 2009 as initially announced on 6 November 2008 and reiterated on 11 February 2009. In 2009, revenue is expected to rise by 20% to EUR7.2 billion, whilst the EBIT margin is expected to be 11-13% including costs associated with the expected lay-offs.

Net working capital, projected to account for a maximum of 10% of revenue at the end of 2009, will fluctuate heavily in the course of the year. Of the total revenue of EUR7.2 billion, service revenue is expected to amount to EUR550m at an EBIT margin of 15%. Total investments in property, plant and equipment and intangible assets are expected to rise to EUR800 million and EUR200 million respectively, or a total of EUR1.0 billion, as compared with the previous forecast of EUR1.2 billion. The decrease is due to lower investments in Denmark and England. Financial items are expected to amount to EUR(20) million, because Vestas plans to draw on some of its credit facilities in 2009. The effective tax rate is expected to remain unchanged at 28%. Warranty provisions are expected to fall to 3-4% of revenue owing to strongly improved turbine reliability and enhanced uptime.