Q2 2025 Vestas Wind Systems AS Earnings Call

Speaker #2: Good morning and welcome to VESTAS WIND SYSTEMS Q2 Investor Presentation. I'd like to start by extending a huge thank you to our customers, other stakeholders, and, not least, colleagues around the globe.

Jacob: Good morning and welcome to Vestas' Q2 investor presentation. 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 quarter with a certain degree of uncertainty in policy, not least for our more than 5,000 dear colleagues in the U.S. It is also a warm welcome to Jacob, and you will have to bear a bit of patience until the financials before you listen to him. Welcome, Jacob. With that, let's go to the key highlights of the quarter. The quarter ended with a revenue of €3.7 billion. That is an increase of 14% year-on-year. The EBIT margin ended at 1.5%. Improved onshore project performance, lower warranty costs offset by the offshore ramp-up costs. We will speak more about that.

Speaker #2: 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 in the US.

Speaker #2: 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.

Speaker #2: And with that, let's go to the key highlights of the quarter. So, the quarter ended with a revenue of $3.7 billion, that's an increase 14% year on year.

Speaker #2: The EBIT margin ended at 1.5%. Onshore improved project performance and lower warranty costs were offset by the offshore ramp-up costs. We'll speak more about that.

Speaker #2: The order intake ended at 2 gigawatts, 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.

Jacob: The order intake ended at 2 GW, lower order intake year-on-year as customers have been awaiting policy clarity, particularly in the U.S. We will definitely talk more about that. 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. We ended with a return on capital employed of 11.5% last 12 months. Improved profitability in the last 12 months results in the highest return on ROSE since 2020, which, of course, is very pleasing. Last but not least, our 2025 outlook guidance maintained, and we will take that at the end of this presentation. 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 is affordable. There is a security element, and there is definitely also a sustainability element.

Speaker #2: And then, manufacturing ramp-up, driving costs and investments. Onshore and offshore ramp-up is progressing, and the first V236 nacelle was assembled at the facility in Poland.

Speaker #2: And then we ended with a return on capital employed of 11.5% for the last 12 months. Improved profitability in the last 12 months results in the highest return on assets since 2020, which, of course, is very pleasing.

Speaker #2: And last but not least, our 2025 outlook guidance is maintained, and we'll take that at the end of this presentation. So with that, let's touch shortly on what the markets are and what markets we are in.

Speaker #2: 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.

Jacob: 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 regionalization, 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 FEERC 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 very important part of getting the solution successfully in the market.

Speaker #2: However, tariffs will, over time, increase costs, which we see as imminent and also a link. But of course, for us, there is a long lead time with the backlog.

Speaker #2: The ongoing geopolitical and trade volatility is leading to regionalization, and we, of course, say that. We have also noticed this throughout what we have done in the previous years.

Speaker #2: 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 in detail about how FAIR and components will be discussed and also seen going forward.

Speaker #2: The grid investment is prioritized in many of our key markets, and it is becoming a very important part of getting the solution successfully in the market.

Speaker #2: When we look at permitting, it is improving in some markets; however, overall permitting auctions and market design are still challenging. Occasionally, we still see even very successful governments having an unsubscribed auction simply because we don't apply the same principles from neighboring countries.

Jacob: When we look at permitting, it is improving in some markets, but overall, permitting, auctions, and market design are still challenging. Sometimes, we still see even very successful government having an unsubscribed auction simply because we do not apply the same principles from neighboring countries. When we then look at the project level, I would say a really, really pleasing quarter. We have 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.

Speaker #2: 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.

Speaker #2: 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.

Speaker #2: And power solution in Q2, I would 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.

Jacob: 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. Order intake ended at 2 GW. It was down 44% compared to last year. That decline was mainly driven by a lack of orders in Americas, especially in the US, as customers have been awaiting policy clarity. There were no offshore orders in Q2, as noticed. ASP declined to €1.11 million per megawatt in Q2 compared to €1.24 million per megawatt in the prior quarter. The decline was driven by a change in order mix and also while the underlying pricing remains stable and positive for Vestas.

Speaker #2: We see that with good activity in EMEA, so order intake ended at 2 gigawatts. It was down 44% compared to last year. The decline was mainly driven by a lack of orders in the Americas.

Speaker #2: Especially in the U.S., customers have been awaiting policy clarity. There were no offshore orders in Q2, as noted. The ASP declined to €1.11 million per megawatt in Q2 compared to €1.24 million per megawatt in the prior quarter.

Speaker #2: Decline was driven by a change in order mix, and also while the underlying pricing remained stable and positive for investors. As you also noticed, we have had a very good start to Q3, and this is where disconnecting the two quarters is wrong to do.

Jacob: As you also noticed, we have had a very good start to Q3, and this is where disconnect the two quarters is wrong to do. See it in connection with the policy changes that happen over the quarter end. We have seen several orders announced, including in the US, as the policy outlook is clearer. That also means year to date or quarter to date in this quarter, we are already well past what we saw in Q2, including approximately 1.5 GW so far in the US. The nacelle facility in Poland has now started serial manufacturing, and the first V236 nacelles left the factory in June. Actually, Jacob, we were there in June when that happened. It is really nice to see that the ramp-up our team has been working on for now, saying years, is now coming to fruition.

Speaker #2: See it in connection with the policy changes that happened over the quarter end. So we've seen several orders announced, including in the U.S., as the policy outlook is clearer.

Speaker #2: And that also means, year-to-date in the quarter-to-date in this quarter, we are already well past what we saw in Q2.

Speaker #2: Including approximately 1.5 gigawatts so far in the U.S. The self-facility in Poland has now started serial manufacturing, and the first 236 nacelles left the factory in June.

Speaker #2: 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.

Speaker #2: And of course, it also means that our offshore ramp-up cost in a Polish factory is around the top of what we have seen, because now we have more than 500 employees working in the nacelle factory in Poland.

Jacob: This also means that our offshore ramp-up cost in a Polish factory is around top of what we have seen because 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 Hidrajc as well. Therefore, we see our 15 megawatt is now getting up on both sides, and we are in close dialogue and communication with our customers and partners on that. Ramp-up at its peak, and we will talk more about that, I am sure, later in the call and also on the coming days. I would like to go to service. Again, solid quarter as recovery plan continues.

Speaker #2: It is an intense period for the offshore sector because we have turbines going out to EMBW and Baltic Power, and in HitRite as well. Therefore, we see our 15 megawatt capacity now ramping up on both sides, and we are in close dialogue and communication with our customers and partners on that.

Speaker #2: Ramp-up at its peak, and we'll talk more about that, I'm sure, later in the call and also in the coming days. With that, I'd like to go to service.

Speaker #2: So again, a solid quarter as the recovery plan continues. When we look at the service order backlog, it increased to $36 billion from $35 billion a year ago.

Jacob: When we look at the service order backlog, it increased to 36 billion from 35 billion a year ago, but declined compared to Q1 due to the development in foreign currency translation. That actually goes across for most of the businesses, and Jacob will give you some more details on that later on. Service reached 159 GW under service compared to 151 GW a year ago. The commercial reset, which includes contract trimming and deselecting of contracts with unattractive terms, is ongoing. Even so, GW under service during the quarter evidenced that our solutions are valuable to both our customers, partners, and Vestas Wind Systems A/S. If we look at the other part, the standardized cost control, bringing down direct costs and reducing unscheduled maintenance, continue to be among the top priorities to improve our service operations.

Speaker #2: But there is a decline compared to Q1 due to developments in foreign currency translation, which affects most of the businesses. Jacob will provide you with more details on that later on.

Speaker #2: Service reached 159 gigawatts, compared to 151 gigawatts a year ago. The commercial reset, which includes contract trimming and deselecting contracts with unattractive terms, is ongoing.

Speaker #2: Even so, gigawatt on the 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, continues to be among the top priorities to improve our service operations.

Speaker #2: And I really, really welcome the many, many, many of our colleagues who are involved in that and also improving on a daily basis. Thank you for that.

Jacob: 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 Wind Systems A/S, we are two quarters into the service recovery plan as expected to run to the end of 2026. I just want here, you can see the numbers, the breakdown of our 159 GW to the right. Then also remind that we have an average years of contract duration of 11 years. I want also to remind you it is 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.

Speaker #2: When we look at Vestas, we are two quarters into the service recovery plan, which is expected to run to the end of 2026. As you can see, we have a breakdown of our 159 gigawatts to the right.

Speaker #2: And then also remind you that we have an average contract duration of 11 years. With that, I also want to remind you—it's a slide we shared with you at the beginning of the year—but just to highlight, when we look at the service recovery plan, we have boxed in the two main headings over here, where most of the resources and a lot of dedicated leadership time go into.

Speaker #2: The commercial resetting, where we drive the commercial excellence with a focus on price, scope, billing profiles, and contract trimming. We see a weight inflation that, at least in Europe, is settling fine, around $2.5.

Jacob: The commercial resetting, where we drive the commercial excellence with focus on price scope, billing profiles, and contract trimming. 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 is 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 lacked when we look throughout 2024, but that is a new reality from 2025. Quickly go through development. I will pass that relatively quickly. Not a lot of news to say. Development is focus, focus, focus on the projects we are seeing. So in Q2 2025, our pipeline of development project was stable at 27 GW with Australia, U.S., Spain, and Brazil holding the largest opportunities.

Speaker #2: When we look at standard cost control, it means it's hard day-to-day work for the regions, and that is driven by them creating the right ownership. I think we have to admit it has lacked when we look throughout 2024, but that's a new reality from 2025.

Speaker #2: Quickly go to development, I will pass that relatively quickly, not a lot news to say, development is focus, focus, focus, on the projects. We are seeing so in Q2, 25, our pipeline of development project was stable at 27 gigawatts with Australia, US, Spain, and Brazil, holding the largest opportunities.

Speaker #2: 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.

Jacob: 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 megawatts 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 shared 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.

Speaker #2: In the quarter, VESTAS development firmed one project for $102 megawatts of order intake in one of our markets globally. You can see the breakdown here, not a lot of change.

Speaker #2: Business as usual. However, as you will also appreciate, there is a lot of focus on getting the full solution right during development, and therefore shared and sold to our partners in good condition.

Speaker #2: 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 on putting more energy available, but also a focus on keeping the sustainability of it.

Speaker #2: The turbines produced and shipped in the last 12 months are expected to avoid 480 million tons of greenhouse gas emissions over the course of their lifetime.

Jacob: The turbine produced and shipped in the last 12 months are expected to avoid 480 million tons of greenhouse gas emission over the course of their lifetime. This positive development of 65 million tons was driven by increased production over the last 12 months. Therefore, probably connecting to that, the CO₂ emissions from our own operations increased by 8,000 tons 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 3.0 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.

Speaker #2: This positive development of 65 million tons was driven by increased production over the last 12 months. Therefore, probably connected to that, the carbon emissions from our own operations increased by 8,000 tons year on year due to the increased activity, especially in offshore construction and services.

Speaker #2: The number of recordable injuries per million working hours, TRIR, was up from 2.8 to 3.0 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.

Speaker #2: 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.

Jacob: However, it is 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 will hand over to Jacob and welcome him to our investor presentation here. Thank you, Henrik. It is great to be here. 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 on service. It is worth to note that the service revenue in the comparison quarter was negatively affected by more than $300 million due to the planned cost adjustments last year.

Speaker #2: With that, it's my pleasure to hand over to Jacob and welcome him to our Investor Presentation here.

Speaker #3: Thank you, Henrik. It’s great to be here. We will start with the income statement, where we see three key highlights for the quarter.

Speaker #3: Revenue increased 14% year on year, driven by higher delivery volume of turbines and increased revenue from services. It is worth noting that service revenue in the comparison quarter was negatively affected by more than $300 million due to the planned cost adjustments last year.

Speaker #3: Our gross profit increased to $477 million 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.

Jacob: Our gross profit increased to $417 million 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, 2025 will be a backend loaded year with most of our activity and earnings expected in Q3 and Q4, 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. You can best see these details in the interim report on page 10, where you see that the U.S. is up with 500 megawatts. EBIT margin before special item was minus 0.4%, down 1.1 percentage points year on year.

Speaker #3: EBIT margin before special items was positive 1.5% in the second quarter. As previously communicated, 2025 will be a back-end loaded year, with most of our activity and earnings expected in Q3 and Q4.

Speaker #3: 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.

Speaker #3: 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 megawatts.

Speaker #3: EBIT margin before special items was minus 0.4%, down 1.1 percentage points year on year. The lower profit reflects ramp-up costs in offshore and higher depreciations and amortizations.

Jacob: The lower profit reflects ramp-up costs 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 4% year on year, mainly due to a 3% currency headwind. Our transactional sales were on par with last year. Service generated EBIT of $163 million, corresponding to an EBIT margin of 17.2% in line with recent quarters. Service recovery plan continues, and Henrik Andersen 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 networking capital.

Speaker #3: 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 4% year on year, mainly due to a 3% currency headwind.

Speaker #3: Our transactional sales were on par with last year. Service generated EBIT of $163 million, corresponding to an EBIT margin of 17.2%, in line with recent quarters.

Speaker #3: Service recovery plan continues, and Henrik has already spoken to this. It will take some time before the benefits are visible in the financials. Moving on to cash flow, we will first look at the net working capital.

Speaker #3: Networking capital decreased in Q2 due to an increase in the level of customer down payments and milestone payments, partly offset by higher inventories as we prepare for higher activity in the remainder of the year.

Jacob: Networking 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 networking capital, and we continue to focus on improving this. Our cash flow statement comparing Q2 2024 with Q2 2025 showed a positive operating cash flow of $120 million in the quarter, a decline compared to last year. The decrease year on year was primarily driven by a favorable development in networking capital in Q2 2024, partly offset by better profitability this year. Adjusted free cash flow in the quarter amounted to minus €220 million, a decline compared to Q2 last year, again driven by the reasons mentioned above.

Speaker #3: Compared to Q2 last year, we have seen a considerable improvement in networking capital, and we continue to focus on improving this. Our cash flow statement comparing Q2 2024 with Q2 2025 showed a positive operating cash flow of $120 million in the quarter, a decline compared to last year.

Speaker #3: The decrease year on year was primarily driven by a favorable development in networking capital in Q2 2024, partly offset by better profitability this year.

Speaker #3: Adjusted free cash flow in the quarter amounted to minus $220 million, a decline compared to Q2 last year, again driven by the reasons mentioned above.

Speaker #3: Finally, we ended the quarter with a net debt position of €7 million, after both paying out dividends and buying back shares. Our investments are in line with our plans and consistent with previous months.

Jacob: Finally, we ended the quarter with a net debt position of €7 million 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 €288 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 million in the quarter, corresponding to 3.1% of revenue, which is an improvement from 4.3% in Q2 last year. Warranty provisions consumed were €188 million. The higher consumption level in this quarter is related to the above-mentioned repairs.

Speaker #3: Total investments amounted to $288 million in Q2. The investments are primarily related to tangible investments, such as transport equipment and tools, for our offshore ramp-up.

Speaker #3: 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, or lost production factor, continues to trend down.

Speaker #3: Warranty costs amounted to $115 million in the quarter, corresponding to 3.1% of revenue. This represents an improvement from 4.3% in Q2 last year.

Speaker #3: Warranty provisions consumed were $188 million. 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 zero net debt. Our earnings per share, measured on a 12-month rolling basis, improved to €0.80, driven by better profitability. Finally, as Henrik started out by saying, return on capital employed improved to 11.5%, as the earnings recovery continues.

Jacob: 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 12-month rolling basis improved to €0.8, driven by the better profitability. Finally, as Henrik Andersen started out by saying, return on capital employed improved to 11.5% as the earnings recovery continues. This is, as you mentioned, Henrik Andersen, the first time since 2020 that we are above 10%. On this note, I pass over the mic to Henrik Andersen.

Speaker #3: 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.

Speaker #2: 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.

Rasmus Gram: Thank you, Jacob. Thank you, first of all. It is 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 will also take this opportunity to reach out a bit of a special thank you to Rasmus because, of course, he has been holding very much that together with the rest of the organization. Therefore, to many of you, you will also find both Rasmus and Jacob sort of being a bit of a pairing here over this quarter. So you get a proper way of saying cheerio to Rasmus. Rasmus continues as our CFO for the global service business, which we are hugely excited about. We look forward to that. With that, I will go to the outlook for the year. As we said, it remains the same.

Speaker #2: I think, as we are talking about Q2, I'll also take this opportunity to reach out with a special thank you to Rasmus, because, of course, he has been holding very much of that together with the rest of the organization.

Speaker #2: So therefore, to many of you, you will also find both Rasmus and Jacob sort of being a bit of a pairing here over this quarter.

Speaker #2: So, you get a proper way of saying cheerio to Rasmus. Rasmus continues as our CFO for the Global Service Business, which we are hugely excited about.

Speaker #2: So we look forward to that. With that, I'll go to the outlook for the year. As we said, it remains the same: revenue of €18 to €20 billion, the EBIT margin before special items of 4% to 7%, and services are expected to generate EBIT before special items of around $700 million.

Rasmus Gram: So revenue €18 billion to €20 billion. The EBIT margin before special items 4% to 7%. Services expected to generate EBIT before special items of around €700 million. When we look at the total investments of approximately €1.2 billion. This outlook is also based on the current foreign exchange rate. As you will clearly have both noticed and appreciated, 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 US and also a couple of our regions where currencies are tied to the dollar. With that, really thank you for listening in to us. With that, I will go to the Q&A and pass back to the operator.

Speaker #2: And then when we look at the total investments of approximately $1.2 billion, this outlook is also based on the current foreign exchange rate. As you will clearly have both noticed and appreciated, 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.

Speaker #2: With that, thank you for listening to us. Now, I will go to the Q&A and pass it back to the operator.

Speaker #1: We will now begin the question-and-answer session. Anyone who wishes to ask a question may press *N1 on their telephone. You will hear a tone to confirm that you have entered the queue.

Operator: We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on their telephone. You will hear a tone to confirm that you have entered the queue. If you wish to remove yourself from the question queue, you may press star and two. Questioners on the phone are requested to disable the loudspeaker mode while asking a question. In the interest of time, please limit yourself to two questions. Anyone who has a question may press star and one at this time. The first question comes from the line of Sean McLaughlin from HSBC. Please go ahead.

Speaker #1: If you wish to remove yourself from the question queue, you may press Star N2. Questioners on the phone are requested to disable the loudspeaker mode while asking a question.

Speaker #1: In the interest of time, please limit yourself to two questions. Anyone who has a question may press *N1 at this time. The first question comes from the line of Sean McLaughlin from HSBC.

Speaker #1: Please go ahead.

Speaker #4: Good morning, and thank you very much for taking my questions. Firstly, on the U.S. situation, clearly customers are not waiting for final clarity on how to qualify for construction-ready status.

Analyst: Good morning, and thank you very much for taking my questions. 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 us 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 is the first question. The second question, I wanted to touch on the change of Chief Technology Officer. I think it is quite significant. I guess under the six years of Anders Nielsen, you have pushed for more standardization in onshore. You have developed the 15-megawatt offshore turbine. Given the incoming Chief Technology Officer's background at ZF, it looks like maybe a deepening of the focus on the gearbox.

Speaker #4: 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 if we could be looking at a one- to two-year period of very robust onshore U.S. demand.

Speaker #4: That's the first question. And the 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 Nilsson, pushed for more standardization in onshore, and you've developed the 15 megawatt offshore turbine.

Speaker #4: 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?

Analyst: Can you talk about the incoming Chief Technology Officer's priorities? Thank you.

Speaker #4: Thank you.

Speaker #2: Thanks, Sean. I think US first, if we look at the 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 the policy clearance.

Rasmus Gram: Thanks, Sean. 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 do not like to put orders down in any market anywhere in the world if there is not the 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 is no need to wait for potentially what comes on an IRS guidance under sort of the Safe Harbor ruling later. That we will have to wait until next week. That also now set us. If you look back at the wording, I think it is fair saying it was vulnerable and maybe also a bit volatile wording that was happening during May, June.

Speaker #2: Then you can sort of say if you have a project that is already well-permitted, has an offtake, and also has clearance on the other parts, then there's no need to wait for potentially what comes on.

Speaker #2: And IRS guidance under sort of the safe harbor ruling later. So, we'll have to wait until next week. But that also now sets us, so if you look back at the wording, I think it's fair to say it was vulnerable.

Speaker #2: And maybe also a bit of volatile wording that was happening during May and June. And of course, where we ended in the beginning of July, I have to say, was pleasing to see because that makes for a structured program that also allows for the build-out of energy assets in the U.S. when it comes to wind.

Rasmus Gram: Of course, where we ended in the beginning of 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 does not surprise you, contrary to a few others, that I am a strong believer in wind, and I see the positives of wind. Therefore, when you look at this, there will be significant activity coming towards that. 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. I will say in here, work is going on. People are generally quite pleased with it. Of course, for a number of customers, they have also secured some of the Safe Harbor probably already pre-4th of July.

Speaker #2: 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. Therefore, when you look at this, there will be significant activity coming towards that.

Speaker #2: 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.

Speaker #2: 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-4th of July.

Speaker #2: So, in the US, I don't see this as a couple of years. I see this as leading towards the end of this decade. Therefore, there will be substantial activity.

Rasmus Gram: In the U.S., I do not see this as a couple of years. I see this as leading towards the end of this decade. Therefore, there will be substantial activity. We know that from talking to the U.S. customers. I know how little I have had successful in predicting some of this, but I try again. Klaus Elmer, you will be listening in, and I will go to the U.S., and I will go to Australia. We better see what happens in the next year then. When it comes to the CTO change, anyone can see when you finish a press release with that probably Anders Nielsen expected to retire from operating executive jobs six years ago.

Speaker #2: And we know that from talking to the U.S. customers, and I know how little I have had success in predicting some of this. But I try again. Klaus Elmer, you'll be listening in, and I will go to the U.S. and I will go to Australia.

Speaker #2: So we better see what happens in the next year then. When it comes to the CTO change, anyone can see when you finish a press release with that probably Henrik expected to retire from operating executive jobs six years ago.

Speaker #2: When I was out with him and Felix last night, it's fair to say he thinks he's had six years—maybe the best of his working life.

Rasmus Gram: When I was out with him and Felix last night, it is fair saying he thinks he has 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. Felix starts today. His first working day. There is no gap. There is no running around and looking for excuse to stop and go. With Felix coming in, he is a veteran in the industry. He is a veteran also probably knowing Vestas Wind Systems A/S in good and bad details, of course, on the gearbox side.

Speaker #2: There are lots of challenges, but also a fantastic footprint to leave behind. He will stay on here to help Felix get settled in properly. We have a number of tasks to complete this autumn, not least towards the year-end.

Speaker #2: And Felix starts today, so therefore it's his first working day. So there's no gap, there's no running around looking for excuses to stop and go.

Speaker #2: 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.

Speaker #2: So for us, it's not like we are saying, oh, now it's gearbox time, because gearbox has been and drive trim has been one of the things Felix was helping us with.

Rasmus Gram: For us, it is not like we are saying, "Oh, now it is gearbox time," because gearbox has been and drive trim has been one of the things Felix was helping us with. That is not personal related. That is actually ZF partnership related from where Felix comes from. Felix has not turned 50 yet. He has mileage to go. It is also, for me, a real pleasure to see that we are able to attract global leadership executives into this leadership team. I am just looking here. At least I can see on my birthday that I have 10 years ahead of Felix. It is good to have some of these in. You will, if you look into Jacob, it is similar. It is a normal, good succession.

Speaker #2: So, that's not personal related; that is actually ZF partnership related, from where Felix comes from. Then, Felix has not turned 50 yet; he has mileage to go.

Speaker #2: So it's also a real pleasure for me 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 10 years ahead of Felix.

Speaker #2: So it's good to have some of these in, and if you look into Jacob, it's similar. So it's a normal, good succession. I hope most of the people that know Anders will be part of giving him a good send-off, because he deserves that.

Rasmus Gram: I hope most of the people that know Anders Nielsen will be part of giving him a good send-off because he deserves that. Business as usual and not a second of pause. We continue the same of what we have done under Anders Nielsen's leadership.

Speaker #2: So, business as usual and not a second of pause; we continue the same of what we have done under Anders' leadership.

Speaker #4: Thank you.

Analyst: Thank you.

Speaker #1: The next question comes from the line of John Kim from Deutsche Bank. Please go ahead.

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

Speaker #5: Hi, good morning. Thanks for the opportunity. I'd like to focus on where we should be thinking about order intake for the rest of the year. One could argue that 2025 is a peak market for Germany.

Analyst: Hi. Good morning. Thanks for the opportunity. I would like to focus on where we should be thinking about order intake for the rest of the year. One could argue that 2025 is a peak market for Germany. I am wondering, within the greater European remit, where else we should be looking for orders this year, next, and onshore? Then the same question for offshore, please.

Speaker #5: I'm wondering, within the greater European remit, where else we should be looking for orders this year and next in onshore. And then the same question for offshore, please.

Speaker #2: Yeah, you know, John, it's super difficult to sit in August and give you these numbers, but I will say the building blocks are not surprisingly.

Rasmus Gram: You know, John, it is 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? 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. A lot of EU 27 have been now drawn right to what are the learnings from Germany. I would not be surprised if we see policymakers in Europe aligning in and around some of the similar rules for EU. Therefore, people are picking some of the positive learnings out of it.

Speaker #2: 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?

Speaker #2: So, Germany continues. We are one of the ones that works closely with partners in Germany to get it up in a very short time, with very short permitting times and very short auction times.

Speaker #2: Listen, a lot of EU 27 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.

Speaker #2: And so therefore, people are picking some of the positive learnings out of it. One of the real underlying points that everyone can understand is that if you go from six or seven years of permitting to a 12-month permitting process, you get access to the latest technology on any project.

Rasmus Gram: One of the real underlying that everyone can understand is if you go from six, seven years permitting to a 12-month permitting, you get access to the latest technology on any project. That in itself is an enormous upside. We see the repowering in Europe. I am pretty sure we will have more legs. Europe, yes. UK, you will see UK as well. Some of it will be, how do we get the permitting done in the UK under the new regime? There are tangible levers to what the government wants in the UK and not least at Millerben. Praise to that. U.S., yeah, wait and see. That is the only better way of saying it.

Speaker #2: That in itself is an enormous upside. Then we see the repowering in Europe; I'm pretty sure it will have more legs. So Europe, yes, the UK—you will see the UK as well. Some of it will be how do we get the permitting done in the UK under the new regime.

Speaker #2: But there are tangible levers to what the government wants in the UK, and not least at Miliband. So, praise to that. The US, yeah, wait and see.

Speaker #2: 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.

Rasmus Gram: 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 have not had the busiest quarter of their time in Q2. That is a good indication of they have been working on quite a lot of things that did not come in Q2, which is back to my comment on please do not disconnect quarters or times it with four because that will not work. We are already now by this date way past Q2 order intake, and we are having quite some time to go in Q3. No worries with that.

Speaker #2: 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.

Speaker #2: 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, by this date, way past Q2 order intake, and we have quite some time to go in Q3.

Speaker #2: So no worries with that.

Speaker #5: Okay, very helpful. Any color for offshore?

Analyst: Okay. Very helpful. Any color for offshore?

Speaker #2: No. 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.

Rasmus Gram: 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. I cannot 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 some of that happen this year or next year? Therefore, the offshore is generally, and we do not, I know this week is like everyone are trying to find and put a finger in a hole somewhere in offshore, and that is wrong. If there is some project specific, you have got to get used to that. But when you look across offshore, it is actually working, and therefore, just follow that.

Speaker #2: So, I can't really say that because, in a couple of the areas here offshore, a lot of it depends on the outcome. For instance, on AR7, can some of that happen this year or next year?

Speaker #2: So therefore, the offshore is generally... and I know this week is like everyone is trying to find and put a finger in a hole somewhere in offshore, and that's wrong.

Speaker #2: If there is something project-specific, you have to get used to that. But when you look across offshore, it's actually working. Therefore, just follow that.

Speaker #2: And when we have an opportunity to convert some of the offshore PSAs, because the customer and the partner are ready, we will do that.

Rasmus Gram: When we have an opportunity to convert some of the offshore PSAs because the customer and the partner is ready, we will do that.

Speaker #5: Okay, thanks very much.

Analyst: Okay. Thanks very much.

Speaker #1: We now have a question from the line of Colin Moody from RBC. Please go ahead.

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

Speaker #5: Hi, hi there. Thanks for taking my questions. Two, if I could. Maybe one first on capital allocation. You know, this is a question that's emerged for the first time in a little while.

Analyst: Hi there. Thanks for taking my questions too, if I could. Maybe one first on capital allocation. This is a question that has emerged for the first time in a little while. Obviously, you have had good cash flow development, and the net debt is where it is right now. How do you feel about the potential of future use of cash, I guess, in particular in regards to future buybacks, further CapEx or investments, or is there anything out there to buy? Then just kind of a quick accounting question as well. It looks like your incremental DNA this quarter was up around $33 million in this year, this quarter. It was up incrementally around $30 million in Q1. If I recall, I think the full-year guide was for a step up of around $200 million year on year.

Speaker #5: 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 in particular in regards to future buybacks, further CapEx or investments, or is there anything out there to buy?

Speaker #5: And then just kind of a quick accounting question as well. It looks like your incremental DNA this quarter was up around $33 million in this year, this quarter.

Speaker #5: It was up incrementally around $30 million in Q1. If I recall, I think the full year guide was for a step up of around $200 million year-on-year.

Speaker #5: I wanted to clarify as to whether expectations have changed around that $200 million, or is this the case that the DNA will be a little bit more backend weighted?

Analyst: I wanted to clarify as to whether expectations have changed around that $200 million, or is this the case that the DNA will be a little bit more backend weighted? Thank you.

Speaker #5: Thank you.

Speaker #2: And, Colin, let me take that.

Jacob: Thank you, Colin. Let me take that first to your capital allocation question. Firstly, we have that also well described in our quarterly report. Firstly, we invest in the business. Secondly, we look at dividends. We were very happy that we could pay out dividend this spring. You also saw we did some share buybacks there. That is 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 document. In terms of depreciations and amortizations, we have previously guided up to the 200 million. We do see the increase, and as you rightfully say, it is maybe less than what you would have anticipated at this point in time, but there were some minor delays.

Speaker #3: First, to your capital allocation question. We have that also well described in our quarterly report. Firstly, we invest in the business, and then secondly, we look at the dividends. We were very happy that we could pay out a dividend this spring.

Speaker #3: And you also saw we did some share buyback there. 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.

Speaker #3: In terms of depreciations and amortizations, we have previously guided up to $200 million. 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.

Speaker #3: But in general, we are on track, and the number we previously guided is the number you should model in.

Jacob: In general, we are on track, and the number we previously guided is the number you should model in.

Speaker #2: Thank you very much.

Analyst: Thank you very much.

Speaker #1: The next question comes from the line of Dan Togojensson from DNB Carnegie. Please go ahead.

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

Speaker #4: Yeah, thank you. Maybe a question on the onshore business. Where is it today, sort of say, relatively to where it's been historically, just to understand what is still outstanding for the onshore business to lift it towards the 10% EBIT margin.

Analyst: Thank you. Maybe a question on the onshore business. Where is it today, so to say, relatively to where it has been historically, just to understand what is still outstanding for the 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., etc.? Then maybe on the 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 reflection on when you say, Henrik Andersen, 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.

Speaker #4: Is it just a matter of operational leverage? Are there still some ramp-up issues in the U.S., et cetera? And then maybe on the offshore business, the loss that clearly hits you here in Q2, how should we think of that in absolute terms in the coming quarters?

Speaker #4: Will it expand? Just a reflection on when you say, Henrik, the peak is, or the ramp-up is peaking here in Q2. Will offshore losses expand further in the coming quarters as you deliver more at more loss, so to say?

Speaker #4: Or how should we think about the absolute level of offshore losses in coming quarters? Thanks.

Speaker #2: Thanks, Dan. I think on the onshore side, you're absolutely right. You put the onshore U.S. alongside us; of course, it still costs us some trouble here.

Jacob: Thanks, Dan. On the onshore, you are absolutely right. You put the onshore U.S., which has, of course, cost us still some troublesome here. You can see the deliveries are going up in Q2. As Jacob mentioned, there was another 500 megawatt that went out of the door in the U.S. in the second quarter. We are making progress on the onshore. If I could give credit to the five regions that we are having executing on onshore, there is not much I will do differently in onshore this quarter when I look at both the profitability and the execution. You know we control how we priced it, and we also know how we look at when the project is delivered, what was the post-calculation as well. We are really pleased with that.

Speaker #2: But you can see the deliveries are going up in Q2 as well. And I think, as Jacob mentioned, there's another 500 megawatts that went out the door in the U.S. in the second quarter compared to last year.

Speaker #2: So, no, we are making progress on the onshore. 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 both the profitability and also the execution.

Speaker #2: And you know, we control how we price it, and we also know how we look at how, when the project is delivered, what the post-calculation was as well.

Speaker #2: So, we are 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 that positive into the offshore ramp.

Jacob: That probably just sends you one signal that it also illustrates quite a bit of how much we are right now using of that positive into the offshore ramp. As I said, I know you would love to have a date or a quarter where this either tops or ramps. I cannot say that per se. What it is, the ramp-up cost gets diluted by two things. First of all, when we start having a volume number of assets coming out of a factory like in Stettin in Poland, that is helpful because then you start having assets and not just more than 500 colleagues going around. It triggers costs out of this. Therefore, if we look towards the end of this year, we should have passed what is the offshore peak of the ramp-up cost.

Speaker #2: 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.

Speaker #2: But of course it is. The ramp-up cost gets diluted by two things. First of all, when we start having a volume number of assets coming out of a factory like in Stettin, Poland, that is helpful, because then you start having assets and not just more than 500 colleagues going around.

Speaker #2: And of course, it triggers costs out of this. Therefore, if we look towards the end of this year, we should have passed what is the offshore peak of the ramp-up cost.

Speaker #2: And that also means, at that point in time, we are looking pretty tightly at each other internally regarding how that is then ramping down.

Jacob: That also means at that point in time, we are looking pretty tight at each other internally of how that is then ramping down. Of course, ultimate ramp-up cost should get towards zero. I just cannot say per quarter yet when that is going to happen. A lot of high fives 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. Let us not forget, we have quite a number of turbines offshore standing now at sea, and we are really pleased with that.

Speaker #2: And of course, ultimate ramp-up costs should get towards zero. I just can't say per quarter yet when that is going to happen. So, a lot of bit of high fives 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.

Speaker #2: And let's not forget, we have quite a number of turbines offshore standing now at sea. We are really pleased with that.

Speaker #4: So thank you.

Analyst: Understood. Thank you.

Speaker #1: The next question comes from the line of Max Yates from Morgan Stanley. Please go ahead.

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

Speaker #5: 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.

Analyst: Hi. Thank you. Good morning. I just wanted to ask again on the offshore business. It is a fairly small profit quarter, so I guess it is hard to really understand. Were the offshore losses and the development of the offshore business in line with your expectations, or were they actually a bit worse? Maybe qualitatively, if you could just talk through the ramp-up, what is going well, what specific parts of it are going less well, where are the issues, and where are the successes? Just qualitatively in terms of how that is progressing, where are the challenges to better help us understand mechanically what is going on there. Thank you.

Speaker #5: Will the offshore losses and the development of the offshore business kind of be in line with your expectations, or will they actually be a bit worse?

Speaker #5: 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 are maybe kind of going less well, and where maybe are the issues? And where are the successes?

Speaker #5: 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 going on there.

Speaker #5: Thank you.

Speaker #2: Thanks, Max. And I think here on the offshore ramp-up plan, or the ramp-up is on plan, 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?

Rasmus Gram: Thanks, Max. I think here on the offshore, the ramp-up plan or the ramp-up is on plan, so to say, because I think when we looked at it, could it be that we are one week at risk from the plan in a factory in Stettin in Poland? Probably. When I look at Stettin in Poland and walk around to the employees there and how we are now seeing we are exchanging between Linner and Stettin on the 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, how is it if there is something happening in Linner or in Stettin? Then we have at least two sites where we are well under the way with the nacelles.

Speaker #2: 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 on the nacelle, that feels really, really good, because that gives us, first of all, a flexibility of production and manufacturing going forward.

Speaker #2: It also gives us a little bit of a backup in reality that how is it if there is something happening in linear in Stettin, then we have at least two sites where we are well under the way with the nacelles.

Speaker #2: When we look at the two projects, we know anyone who is ramping up in offshore, and let's not forget, we have done that before. It's more than 10 years ago, but we have done that before.

Rasmus Gram: When we look at the two projects, we knew anyone who are ramping up in offshore, and let us not forget, we have done that before. It is more than 10 years ago, but we have done that before. Therefore, it is costly because you have two projects. 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 2026 and 2027, first of all, because we have more volume and more projects to be delivered. Secondly, of course, some of those ramp-up costs you will not keep having. What am I talking about here? You spend quite a lot of people extra in there, to put it.

Speaker #2: 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.

Speaker #2: 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.

Speaker #2: First of all, because we have more volume and more projects to be delivered. But the second is, of of course, some of those ramp-up costs, you won't keep having.

Speaker #2: And what am I talking about here? You spent quite a lot of extra resources in there to put it. Some of it is also when you pass a technology from prototype to serial manufacturing; you have a number of non-conformities that you put through a finish line.

Rasmus Gram: 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 cannot praise the team enough for doing it. Of course, I would rather not have any finishing to be done because that was a sign-off that we did not have any nonconformities. But that is not the reality of an industry we work in, wherever you work in the world. 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. As I said, the finishing should start coming down in the second half of this year.

Speaker #2: 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 would rather not have any finishing to be done, because that would be a sign-off that we didn't have any non-conformities.

Speaker #2: 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.

Speaker #2: 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.

Speaker #2: And of course, that in itself will also start reducing the ramp-up cost we are having. But as you can almost hear in the voice here, this is a substantial drain on the EBIT in the power solution in the quarter.

Rasmus Gram: Of course, that in itself will also start reducing the ramp-up cost we are having. As you can almost hear on the voice here, this is a substantial drain on the EBIT in the power solution in the quarter. I am not going to give you a percentage on it because that is not what this is about in a small quarter.

Speaker #2: 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.

Speaker #5: 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.

Analyst: Okay. Maybe just then, the second question, just on the lower warranty costs because that is quite a significant improvement year over year. I know you have talked about this improving over time. Does this feel like the new level that we can sustain, or was there anything particularly one-off in there that we might see that increase again in the second half?

Speaker #5: 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?

Speaker #2: That is not expected. We run a process, as you very well know. Actually, we almost sometimes run case handling in that quarterly number.

Rasmus Gram: That is not expected. We run a process, as you very well know, Max. We almost sometimes run case handling in that quarterly number. I think here, 3.1% illustrates where we are running and where we are seeing the business. We did not 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, get it, get it done, and get it fixed, what is in there in the lost production factor. There are no significant new cases. Therefore, 3.1% is 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 4.3% for the full year of 2024.

Speaker #2: 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, get it, get it done and get it fixed, what is in there in the lost production, factor.

Speaker #2: So, there are no significant new cases. Therefore, 3.1 is a good running currently, as we are and where we see things developing.

Speaker #2: It should still be in that direction from when we saw 4.3 for the full year of '24.

Speaker #5: Okay, very clear. Thank you very much.

Analyst: Okay. Very clear. Thank you very much.

Speaker #1: We now have a question from the line of Kasper Blom from Danske Bank. Please go ahead.

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

Speaker #4: Thank you. First of all, a question regarding the U.S. onshore business. Obviously, it seems as if you're looking into a busy rest of 2025 and also 2026, as things look right now.

Analyst: Thank you. First of all, a question going towards the U.S. onshore business. Obviously, it seems as if you are looking into a busy rest of 2025 and also 2026, I think, right now. 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? Maybe also talk about if you cannot get blades from that side for whatever reason, what the backup plan is. Secondly, Henrik, you did mention that overall you see the offshore industry continuing and that hiccups are maybe a bit more project-specific. It is very obvious, of course, being in Denmark, that there have 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?

Speaker #4: I noticed that TPI filed for Chapter 11 earlier this week. Could you provide any indications as to whether you see any risk to deliveries of blades from that side?

Speaker #4: And maybe also talk about if you can't get blades for that 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.

Speaker #4: But very obvious, of course, with the 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?

Speaker #4: 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?

Analyst: Are you able to keep pricing on offshore with some of the developers struggling, or do you need to help them getting back on their feet? Thank you.

Speaker #4: Thank you.

Speaker #2: Thanks, Kasper. Quite two I will call him large questions in that sense. So if we look at the US onshore, and the and the outlook, I see the world is fragmenting almost into two beliefs here.

Rasmus Gram: Thanks, Kasper. Quite two, I will call them, large questions in that sense. If we look at the U.S. onshore and the outlook, I see the world is fragmenting almost into two beliefs here. I am probably trying to see if we can get the merged understanding of it. If you look into it, this policy sits clear away at least towards the end of the decade. 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 Vestas Wind Systems A/S or the industry's share position or undervaluation, where I think this leans very much towards what is underlying happening in the U.S. The energy prices are on an upward trend, whatever being said, factual. Electricity is in higher demand than it has been before.

Speaker #2: And I’m probably trying to see if we can get the merch understanding of it. If you look into it, this policy sets a clear way, at least towards the end of the decade.

Speaker #2: 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 VESTAS or the industries share position or undervaluation.

Speaker #2: Where I think this leans very much towards what is underlying happening in the US. The entity prices is on an upward trend, whatever being said, factual.

Speaker #2: Electricity is in higher demand, 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 investor's money in the offtake is actually renewables.

Rasmus Gram: Electricity from especially the tech sector is going up, not down. Therefore, some of the fastest, some of the cheapest thing to get access to right now and most value therefore for any investor's money in the offtake is actually renewables. Therefore, wind is a priority. That is what you have seen in just a few weeks here starting in Q3. That one cannot predict and will not predict where it ends in terms of order intake for this year because it is simply too lumpy. As you can also see, some of the orders, this is not Europe, Germany, where it is unannounced. It is in excess of 2, 3, 400 MW and upwards. Therefore, there is more to come. I can only hear say, "Fantastic.

Speaker #2: 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.

Speaker #2: Some of the orders, this is not Europe-Germany, where it's unannounced, it's in excess of two, three, 400 megawatt and upwards. So therefore, there's more to come.

Speaker #2: 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.

Rasmus Gram: 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 am pretty sure they did not go into chapter 11 for going out of business because then there was no reason to go into chapter 11. Now it is up to TPI to figure out what they want to do with their prime customers around in the world. Of course, we are one of them. Let us see when they come. I think if it is right saying here it is 48 hours, and I assume 48 hours in, there is quite a lot of other things going on in that debate.

Speaker #2: 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.

Speaker #2: So now it's up to TPI to figure out what they want to do with their prime customers around the world. And of course, we are one of them, so let's see when they come. I think it's right in saying here, it's 48 hours, and I assume that within those 48 hours, there's quite a lot of other things going on in that debate.

Speaker #2: I think, from a personal perspective, I feel for the leadership team in TPI. It's difficult conditions, but I also know that if you're able to bring it out, TPI has been a longstanding good partner for us.

Rasmus Gram: I think from a personal, I think I feel for a leadership team in TPI, it is difficult conditions, but I also know if you are able to bring it out, TPI has been a longstanding good partner for us. I am pretty sure that there are 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 one unit, one partner, and one TPI, or they come out there with different sets of assets. We will look to that. If they need help, they know they can always talk to us. On the offshore, no one is able to price a project and compensate if you need more capital to the tune of €8 billion.

Speaker #2: So I'm pretty sure that there are all reasons to believe that operations continue, and also the good partnership continues in some way here. Then we see how that goes in the chapter, whether they come out of Chapter 11 as one unit, one partner, and one TPI, or whether they come out with different sets of assets.

Speaker #2: 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 billion.

Speaker #2: So therefore, that is not a pricing issue, Kasper, if I can be a bit direct and brutal in that sense. That is something else.

Rasmus Gram: Therefore, that is not a pricing issue, Kasper, if I can be a bit direct and brutal in that sense. That is something else. It is probably financing of a project rather than pricing. Therefore, I think our part of the industry went through quite a difficult time, and some of it led to auctions getting 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. That is simply not the case. I think what I saw most recently in the AR7, which we have seen, we work closely with the U.K. government. They have had their experiences both as failing ARs auctions.

Speaker #2: It's probably financing of a project rather than pricing. Therefore, I think our part of the industry went through quite a difficult time, and some of it led to that auctions getting pulled.

Speaker #2: I saw that some countries around the world still struggle to find the offtake price where they feel or think that offshore will be cheaper than any other available energy assets.

Speaker #2: 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 UK government. They've had their experiences, both as failing ARs auctions.

Speaker #2: But the reason 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 value will be created.

Rasmus Gram: But the reason 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." That is where you will then have almost a preset of who is going to come in here and how value will be created. Again, a little bit of a flag up and a positive to Ed Milerben. He is running a good way of doing it. We can see some of it is actually compared and shared into the EU setting as well. Offshore is not a thing about pricing in the case you are discussing this week. As a general thing, do not take it for more than that is a project problem and a financing issue.

Speaker #2: So again, a little bit of a flag up and a positive to add about 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.

Speaker #2: So offshore, it's not a matter of 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.

Speaker #4: Thank you, Henrik. I appreciate the detailed answers.

Analyst: Thank you, Henrik. I appreciate the detailed answers.

Speaker #1: We now have a question from the line of Klaus Elmer from Nordea. Please go ahead.

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

Speaker #6: Thank you. Yeah, first of all, a warm welcome to you, Jacob. And then to my two questions. And Henrik, I will not ask about Australia this time.

Analyst: Thank you. First of all, warm welcome to you, Jacob. Then to my two questions. Henrik, I will not ask about Australia this time, but more talk about the offshore and the ramp-up. Maybe you can give 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.

Speaker #6: But more talk about the offshore and the ramp-up. Maybe you can give some color to what was actually included in the 2025 guidance back in February?

Speaker #6: Not in the absolute number, obviously, but how does that compare to what actually happened in the first half of this year? That would be the first one.

Speaker #2: Thanks, Klaus, 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.

Rasmus Gram: Thanks, Klaus. I appreciate your personal reservation here of not asking about Australia, so thank you for that. I am sure we will speak more about that later in the week. I think if we look at the guidance when we initiated that in the beginning of the,

Speaker #2: 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.

Henrik Andersen: I will say within that guiding range, there are things that will always do a bit better. 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. 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. Internally, everyone knows that it's not a freebie of spending money in ramp-up. Therefore, spend the money wisely, investing in it. Those are the two areas.

Speaker #2: 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.

Speaker #2: 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.

Speaker #2: That is, in some ways, a precaution of not ending the year saying we could have done better, we could have done something else.

Speaker #2: In the ramp-up, but no mistakes being made 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.

Henrik Andersen: I will say, since February, if we just look at some of the external markets, some of the external things that have happened, whether that has been, as I mentioned here, some of the nominal things on FX, you've also seen tariffs. It's not easy to get a fixed point in any of the weeks where we have been. Some of the tariffs we are doing, we're doing really well in both being firm and seeing the tariff and also finding mitigations. 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.

Jacob: Fair enough. Then the second question is about the commercial reset of the service division. How far has it come to this termination or repricing of the unprofitable contracts? Did this repricing or termination have an impact on Q2?

Henrik Andersen: Yeah.

Jacob: That would be my second question.

Henrik Andersen: Yeah. No, I understand your question. You got a couple of things going here. You got two buckets that are doing you, of course, you are going through your whole setup of contracts in there, which is only natural. Then, of course, you got a natural flow of renewables that comes to you. 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 that you just have a natural. Is it an extension or not? As I said earlier, probably we would have expected to see a slightly more negative effect on gigawatt on the service. It hasn't happened. That probably is a good illustration of no one is generally unclear about our own costing internally at all.

Henrik Andersen: 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, the service leadership team thought, and I definitely thought, two quarters ago. Then I will say on the more resetting on some of it, that is more a partnership portfolio discussion we have, but that we have across the world. With some of that, that gives some adjustments that are included in the run rate. We do not 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 is one-off cost of termination and other stuff.

Probably this, we would have expected to see a slightly more negative, uh, effect on on gigawatt on the service. It hasn't happened. Uh, and that probably is good. Illustration of No 1 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 initiate. Fourth service business for the service leadership team for uh, and I definitely fought 2 quarters ago. Um, and then, I will say, on the, on the more resetting on some of it, that's more a partnership portfolio discussion. We have but that we have across the world, uh, and with some of that that gives some adjustments. That is included in the runway, we, we don't, we don't want to do this uh, opening a a Pandora's box of

Henrik Andersen: So it is in the run rate, it is in the operations. That is how the instruction is to the global service team around the world.

Where you can start doing 1 off and, and and other things in in service because then it, it it it gets a bit out of hand because then it's 1 of cost of termination and other stuff. So it's in the runway, it's in the operations. That's how the instruction is to the to the, to the global Service team around the world.

Jacob: Okay. Yeah, I will say thank you for that answer. It will not be easy to put that into an Excel spreadsheet, but that is how it is, I guess. Thanks for opening.

Henrik Andersen: You can definitely hear on me that there is no positive upside in the run rate from that exercise.

Jacob: Okay.

Henrik Andersen: You just need to find out what negative number you want to put to it.

Jacob: Thanks, Henri.

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. So thanks. You can definitely hear me there. There’s no positive upside in a run rate from that exercise. So then you just need to find out what negative number you want to put to it.

Thanks. All right.

Rasmus Gram: The next question comes from the line of Ture Funkmann from Bank of America. Please go ahead.

Next question.

From Bank of America, please go ahead.

Operator: 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 will take the second one afterwards. Thank you.

Towards thank you.

Henrik Andersen: I think a lot of things is a different world today than it was 24 months or 48 months ago. I think people are generally a bit more mature in the way we look at things. I think seeing the geopolitical landscape right now, I think everyone is fully on board with what also goes towards cybersecurity and protective measures of your critical infrastructure. We participate heavily in that. I would rather say there are so many other factors right now than a price discussion only. Therefore, if you have a price pressure point discussion, then I think you are probably up against something else where you have not really talked about what the solution is. If somebody falls for that, then I think it is the wrong part of it. I think EU is fairly mature.

Henrik Andersen: 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. That comes into the normal three buckets we say and we also have. It is affordable, it is independent and secure, and it is sustainable. That is what we have as a solution. I see a lot more of that. That will always be the opportunistic that will try to see something. But if it does not get connected into the grid or it is a build and sell, then it might not work down the line.

I think, uh, a lot of things is a different world today than it was 24 months or 48 months ago. So, I think, uh, uh, people are, people are generally a bit more mature in, in the way we look at at things and I think, uh, uh, seeing the, the geopolitical landscape right now, I think everyone are fully on board with what also goes towards cyber security and protective measures of your critical infrastructure. We participate heavily in that. So, I'll rather say, I mean that there is so many other factors right now than a price discussion only. So, therefore, if you, if you have a price pressure point discussion, then I think you are probably you're probably up in something else, where you haven't really talked about what the solution is. And if, if somebody Falls for that, then I think it's the, it's the wrong, uh, part of it. Uh, I think EU is, is fairly mature. I think, uh, speaking also behalf of, of a, of a w

In Europe, when Europe is making a very good progress in exchanging. Also, what, uh, what are the things and what are the components? Uh, we can work closely with. And what are the, uh, what are the components? And probably electronics that you should be very, very careful about. So that comes into the, to the normal free buckets, we say and we also have listened, it's affordable. It's independent and secure and it's sustainable. And that's what we

We have as a, as a solution and I see a lot of more that that will always be the opportunistic that will try to see something. But uh but if it doesn't get connected into the Grid or it's a it's a it's a build and sell then it might not work, uh, down the line.

Operator: Okay. Thank you. My second question is a follow-up on the service contract renegotiations. Could you maybe speak about how receptive your customers and partners are to these renegotiations? If I understood you correctly, in previous quarters, you were mentioning that you will try to renegotiate all the contracts by the end of 2026, so basically over the coming one and a half 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 are not willing to agree to the new terms? Thank you.

Okay, thank you. And my second question is a follow-up on the service contract renegotiations. Um, could you maybe speak about how receptive your customers and partners are to these renegotiations? And if I understood you correctly in previous quarters, you mentioned that you will try to renegotiate all the contracts by the end of 2026. So basically, over the coming one and a half years.

Henrik Andersen: No, I think here there's many, many questions in your one question here. 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 11 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 writtenly led to the service contract. Therefore, you see this as an ongoing basis. When it comes to your question, sort of more specifically, how easy is it?

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, to the new terms? Thank you.

No, I think here. There's there's, there's many, many questions in your 1 question here. Uh, 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 look at it. And, and when we look into this going forward, because, uh, if you have an average 11 years of contract duration, you will see somewhere a little less than 10% of your contract portfolio coming towards you with the usual, uh, sort of construction bumps that are written, he led to the service contract. So, therefore, you see this, uh, as

Henrik Andersen: I don't think anyone says it's easy when you 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." If that was the only thing you were to discuss, then it will be maybe a short conversation. 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. A lot of things are up.

An ongoing basis. Then, when it comes to your question, sort of more specifically, how easy is it? Uh, I don't think anyone says it's easy when you 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, uh, if that was the only thing you were to discuss, then it would maybe be 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 some of these service contracts.

Henrik Andersen: Therefore, I'm saying here, of course, we can't single-handedly, if that's sort of what you're, 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. 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.

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 uh, uh turbine makes so so a lot of things are up. And therefore I'm saying here, of course, we can't, uh, single-handedly. If if that sort of what you we can't say that we just go single hand out and, and cancel. You're not, we're not stupid to pay a a cancellation LD or something. Uh, that opens that 1 up. But on the other hand, No 1 want to force penalties on each other. If you can find a good partnership and a good uh commercial settlement

Operator: Okay. Thank you.

Okay, thank you.

Rasmus Gram: We now have a question from the line of Christian Tornøe from SVB. Please go ahead.

We now have a question from the line of Christian Tour from SB. Please go ahead.

Analyst: Thank you. Two questions from me as well. First one, again, on the offshore ramp-up. With the serial manufacturing in Poland, have you reached serial production in all the offshore sites? Are you fully staffed at this point in offshore?

Yes, thank you. Two questions for me as well. The first one, again, on the offer ramp-up. So, with the serial manufacturing in Poland, have you reached serial production in all the OSO sites, and are you fully started at this point? No, sir.

Henrik Andersen: 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. We do not run ahead with shifts or anything else until we know that we have that capacity restriction as well. I think we are where we would like to be. There is 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 clear manufacturing, in the serial manufacturing of the sort of the standard.

Henrik Andersen: 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.

The Polish Factory to what we are doing right now. But of course, uh, polish Factory also has additional capacity which we are going to take advantage of, uh, question. So we don't, we don't run a hit with shifts or anything else until we know that we we have that capacity restriction as well. So I think we are, we are where we would like to be, uh, there's no doubt that, uh, if I walk into to 1 of the factories today, I think we are we are making great progress in terms of tax time and and other things coming down in the in the Claremont, the in the clear manufacturer in the serial manufacturing of of the sort of the standard. I think where we where we see that we have still some more work to do is in the finishing of the assets before they, they leave for for Harbor and finally ship out.

Analyst: Okay. That makes sense. My other question goes to your comment when you presented around the LPS. I am 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 new sites with these major repairs?

Henrik Andersen: Same sites.

Understood that makes sense. Um, and my other question goes to your comments when you, um, pretended around the, uh, the LPF just curious. So, the the the site 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 it? Would you need to make a repair same sites.

Analyst: Same sites. Excellent. Thank you.

Thank you.

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

The next question comes from the line of Akash Gupta from JP Morgan. Please go ahead.

Analyst: Yes. Hi. Good morning, and thanks for taking my questions. I will ask one at a time. My first one is on the U.S. 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. 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. The problem is intermittency, which can be fixed through some backup generators. Given what we see in the U.S.

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

Yes. Hi. Good morning, and thanks for taking my questions. I'll ask 1 at a time. Uh, my first 1, uh, is on the US. So, um, Henrik. I think you mentioned earlier, on about the, um, attractiveness of the US market, given the electricity demand growth and, um, boosted by data centers. The question I have is, is on wind competitiveness in the US without subsidies. Um, because when we look at some of the data, uh, out their studies done by Third parties, we see that wind in even without PTC. Um, is more competitive than a new ccgt or or nuclear, they can be built quite fast and 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 US market on the demand side with, so high demand for electricity and more. So for green, electrons and what sort of discussions you are having um not just in the near term but maybe like looking under longer time or time Horizon.

Um, on um, on on projects where basically customers maybe, um, not caring about uh, which subsidies you get, but more about when can you how soon these these some of these projects can be built. So I want to start, uh, first with the with the US.

Henrik Andersen: Thank you, Akash. I think you are very right in your outlook. I think, of course, no one would build additional assets if it was not needed and the offtake was not needed there. I think also the demand side does not change significantly from this when we look towards the end of this decade. I share that. On the other hand, it is 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. When you run the capacity up, you, of course, bring the levelized cost of energy down because you have a full supply chain.

Thank you Akash. Um, no, I think you are, you are, you're very right in your, in your sort of Outlook. And I think, of course, no, 1 would would build additional assets if, if it wasn't needed and, and the offtake was not needed there.

Henrik Andersen: 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. That also means that you have a levelized cost of energy that will also, by the end of the PTC cycle, prove to be competitive. Of course, it will be open there to competitiveness and comparison to some of the other assets. You are mentioning nuclear. Then we also have to talk just ordinary facts. It does not allow anyone to build a new nuclear facility in 36 or 48 months. We are, as you know, in the UK, we are probably talking at best 15, 20 years.

Uh, I think also that the demand side uh, doesn't change significantly from from this, when we look towards the, the end of this decade. So I, I share that on the other hand, it's also when you are finding yourself in an environment where you have a known, uh, quite well structured, uh, incentive to build out further capacity in the US, which we both know has been existing since 1992 that has driven an enormous capacity. But also, when you run the capacity of 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 compare competitiveness and contrast it with some of the other assets. Uh, but you are mentioning nuclear, then we also have to talk about just ordinary facts.

Henrik Andersen: In 15, 20 years, it is very, very difficult to foresee what the levelized cost of energy will be 20 years out in the future. That is a lot easier with something you know for a fact that is tangible in 36 to 48 months. I think we got some strengths here that we are definitely putting. The good thing is, customers, our customers, our long-lasting partners are seeing the same. 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. We see the same. I cannot say fixed point what the offtake looks like and what the levelized cost of energy in the U.S.

Henrik Andersen: 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. 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 is not helpful. That was what I talked positively about in the IRA. It was a 10-year. Now it seems like we are down to what we also have lived with for many decades, three or four years' execution. 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.

By that. Because these are the these are the customers partners that are also selling the electricity uh, to to their customers or end users in that. So, uh, we see the same, I can't say, fixed Point. What is the offtake looks like and what is the levelized cost of energy in in in the US, in 3 or 4 years? Time from now? Because we got a couple of variables, which of course, we have had to deal with in the pre previous couple of quarters. So if terrorists 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 10 year. Now, it seems like we are down to what we also have lived with for many decades, 3 or 4 years execution. But um in in the outcome of it, uh clearly positive that we have a proper uh, structure and we have a proper both Rambo and ramp down of of of us in its current

Uh, policy.

Jacob: Thank you. My second question is on the guidance. This year, you started with 300 basis points wide, which was 100 basis points wider than last year. 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 is still out there and the opportunities that are ahead of you? Can you indicate if the midpoint of guidance is still a realistic outcome for the year? Thank you.

Thank you. And my second question is on 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 7 months, but still, you are reiterating 300 basis points wide guidance, which means a wide range of scenarios for the remaining 5 months. Maybe can you talk about the uncertainty that’s still out there and the opportunity?

Um, that I had of you. And can you indicate is the midpoint of guidance is still a a realistic outcome, um, for the year. Thank you.

Henrik Andersen: As I said, when you have a guidance, the whole guidance is a potential outcome for the year, Akash. I will sort of say here, maybe it is a little unusual that we keep our 300 basis points throughout this quarter as well. I think also, in 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. You still see then there is a pause in something which is helpful, and then there is something new being introduced. I think here we just have to work through it. Now, U.S. is definitely a very, very busy place in construction in the second half of the year.

Henrik Andersen: 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, yeah, it is lower than potentially also compared to the second half of the year. 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 us to have a, 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 is what you work with.

I, as I said, when you have a Guidance, the whole guidance is is potentially outcome for the year. Uh, a cash. So so I will sort of see here, maybe it's a little unusual. That we, we keep our 300 basis points throughout this quarter as well. But I think also in, in all fairness if we just take the, the last 6 8 weeks, um, it is still, it is still with a bit of variable to, to what we see for the year in terms, especially as you can see, the Rambo in the US is, is happening as we speak. But you still see then there is a pause in something with this helpful and then there is something new being introduced. So I think here, we just, we just have to work through it. And now us is definitely a very, very busy place in construction and second half of the year, then. Let me also we we talk about that all the time. And I think we set it in February very, very specifically, and Jacob talked to it here as well. Um, the first half of the year is uh, is yeah. It

Henrik Andersen: 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 have not changed. That is pulling a bit in the other direction. So far, we are really pleased with it. We are where we are, and we can see that. Of course, if we get to that, anyone can see that it is going to be a high EBIT, half year, second half of the year, and it is going to be a high cash, second half of the year, which bodes well from when we get into November, release of Q3. 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.

It's it's lower than potentially also compared to the second half of the year. So I 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 go can bring the guidance towards the the higher end, end of it. Otherwise you're fine in in having a 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 effects things that have that have influenced, some of the nominal things in the, in the guidance. But we haven't changed. So that's that's that's pulling a bit in the, in the other direction. So, so far we really, we really pleased with it. We are where we are and we can see, we can see that. And of course if we get to to that, anyone can see that it's going to be a high ebit. Uh half year, second half of the year and it's going to be a high cash. Second half of

The year with sports. Well, from when we get into November, release of Q3 and probably in November Q3, uh, not hinting at anything, but we should be able to maybe narrow it a bit from the 300 basis points. When we talk again in November,

Jacob: Thank you.

Thank you.

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

Operator: Good morning. Thanks for the presentation and welcome, Jacob. I first wanted to start on service, please. You presented this plan, all the initiatives that you are working on, highlighting it is a strategic priority for 2025 and 2026. I look at consensus, and I think it is like 17% to 19% EBIT margins for the next three years, including out to 2027. 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. My second question was just on U.S. tariffs. Is there any sort of indication of size?

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

Operator: Clearly, when you set your guidance back in February, tariffs were not there. Now we have those as an additional cost. Clearly, the offshore ramp-up will be quite wide-ranging depending on where you end up on that consensus. That number would help even if it is quite a broad order of magnitude.

And then the second question was just on us terrorists. Is there any sort of indication of size? Because clearly, when you set your guidance,

Back in February Terrace went there uh and and now we've have those as an additional cost and 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 a magnitude,

Henrik Andersen: I think, first of all, on the, if I start in the reverse order this time, 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. 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.

Yeah, I think, first of all, if I start in the reverse order this time, I think on the U.S. tariff, a

Henrik Andersen: 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 come 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, 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.

I I would love to, to say, I had a fixed point, but I don't because the, the US terrorist has simply been a bit of a moving Target, uh, throughout this this half year. So I would rather say, uh, we do whatever we can together with customers to mitigate it, uh, when we find ways of doing it, uh, we log it down, and then we take it. Uh, and as you will appreciate, uh, we, we have, we have, uh, in this case, uh, most of the, of those tariff impact, uh, for for 25 covered, uh, in in and around with the customers so, that, that we are working through, uh, in that sense, um,

Henrik Andersen: Is next quarter the one that goes better?" That's where we're just saying right now, we have a plan for until the end of 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. There is no, there's no, there's 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, to you on this one, Ajay.

But there are also with that when you have special components or special countries taking, uh, with us where we, we have the factories, but we still have things that comes into the factories. That will be, that will be influenced by it. So, uh, I think it's manageable, uh, maybe it gets a bit tense but that's always the case. Because if you open the television there, there is terrifying is a good thing but I I can't find any good consequences of terrorists, generally even though somebody else is saying it. So so it it will it will go negatively for trade and it will go negatively for the end consumer period. Uh, I think when we talk about the service recovery plan, uh, I think what what Jacob is rightly saying here? Uh, we often ask already up front this quarter. This was where it was its next quarter, the 1 that goes better and that's where we're just saying right now. Uh, we have a plan for until the end of 26, uh, Services is working till it in the fluid. There is under the 70

19.2% in this quarter. It's quite a number of of, of net movements from Individual contracts and other stuff, but it ended in that 17.2%. Uh, rest assured that immediately, we we see the, we see the momentum. Then there is no, there's no, there's no holding back of of our part here of getting this uh, above 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.

Jacob: There is a fire with this, but it is coming.

To you on, on this 1.

Henrik Andersen: Yeah.

Jacob: Okay.

Henrik Andersen: Yeah.

Whether it's... but it's coming, kind of comment. Okay, yeah.

Jacob: That's fine. Just because of the tariff question, do you mind if I just replay something? Offshore is a combination of ramp-up costs that we need to undersub the absorption of fixed costs, partly because of volume, I guess, issue, and then maybe the margins on the contracts. You have quite a sizable backlog in offshore now. You are 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?

Uh, that's fine. And then just because of the tire question, do you mind if I just replace something offshore, right? It's a combination of ramp up costs, uh, that we need to absorption of fixed costs. Uh, partly with the volume, I guess, issue. And then maybe the margins on the contracts.

You have quite a sizable backlog in offshore now, um, you're saying that after Trump ramping up costs, should maybe peek towards the end of the year. Does that sort of indicate quite a material increase in profitability or much lower losses going into 26?

Henrik Andersen: I do not like to comment on 2026 when we are in 2025. I think here there is no need to keep the ramp-up costs if you do not need them, right? Therefore, if we look at this, there will be some ramp-up costs. There will be some finishing line we will still have in 2026, but it will be significantly lower.

Jacob: Thank you.

Oh, I don't like to comment on 26 when we are in 25. Um, but uh, but I think here it's there's no, there's no need to keep the ramp up cost if you if you don't need them, right? So, therefore, uh, if if, if we look at this, there will be some Rambo because there will be some Finishing Line. We'll still have in 26, uh, but it will be significant lower.

Thank you.

Rasmus Gram: The next question comes from the line of Dita Vankatisvaran from Bernstein. Please go ahead.

The next question comes from the line of Deepa Vannett.

From Bernstein. Please go ahead.

Analyst: Thank you. I have 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 this is for your customers from placing orders, or is there already enough safe harbor projects? When you mentioned that you expect orders to not continue just for the next two years, but the end of the decade, I am assuming you meant delivery till the end of the decade. If you could just clarify that. The second question on offshore, obviously, you are taking time. Can you give us any idea if there are any delays for the wind farms or whether there is any financial consequences associated with these delays?

Analyst: Are you behind schedule by six months or just any kind of idea on if there is any consequence of this for you?

Uh, thank you. Um, I my 2 questions. The first 1 is on the US. Uh, as you mentioned next week, there should be a guidance from treasury on. What would constitute? Um, start of construction? Uh, I just wanted to know how much of an uncertainty this is for your customers from placing orders or, or is there already enough? Safe Harbor projects. Uh, and you know, when you mentioned that, um, you expect orders to not continue, just for the next 2 years. For 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 of there? Are any delays for the wind farms or whether there's any Financial consequences associated with these delays. And and you know, are you behind schedule by 6 months or just just any kind of idea and if there's any consequence of this fee,

Henrik Andersen: Thank you, Dita. I think on the U.S. IRS guidance, probably I learned here that it is better to wait for the 18th of August or whatever date around that, where it comes out. I am pretty sure that they do their diligent work around it. We know what the existing rules are. Normally, I am saying normally, on the normal administrations, in many decades, we have seen when they change guidance, it is from that date and onwards. Therefore, we have also seen some of that where orders either are already permitted, are already off-taken, are already grids done. 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 am pretty sure that is where the IRS guidance will come.

RS guidance. Um, probably I learned here that it's better to wait for the 18th of, of August, 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, uh, administrations, in, 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 a waiting, an IRS guidance on this specifically in construction because of course you would appreciate if if you want to qualify.

Henrik Andersen: Guessing might be that under the new IRS guidance, there could be a slightly shorter window to build out before it is in service, or it could be that the usual rule of thumb of a certain percentage, 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 18th of August. Of course, if you are already out there and you have done that, then you are probably on the old rules. After whatever date comes here in August, you will be after the new rules. That will be my, that will be sort of my interpretation of where we are. Then in a week's time, we will know if that was a good directional answer.

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. That could be a slightly shorter window to 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, uh, normal orders in, in the sense when we get the on the back end of of 18, of August, and of course, if you are

Henrik Andersen: 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. Generally, what we see in offshore is that it is not as mature. I think that goes for all of us in doing it. Therefore, there will be also just a simple thing that sometimes the weather is that you cannot do what you normally would do. Therefore, there will be financial consequences if we are the cause for a delay. On the other hand, right now, we are working diligently fluid in terms of the two projects we are working with. Therefore, for us, we have two eyes on the two projects. We have absolute and full attention to it.

If you're already out there and you have done that, then you're probably on the, the old rules. And after whatever date comes here in in August, you'll be after the, the new new rules. So, so that will be my, uh, that will be sort of my, interpretation of where we are. Then in a week's time, we'll know if, if that was a good directional, uh, answer on the on the offshore, um, I think the, the delays, uh, is always going to be a discussion point. Because the delays goes, uh, for the full project, it goes also for Access and it goes for grits. It goes for, uh, all of these things. And generally, uh, what we, you know, offshore is that it is, it is not as mature and and, and, and I think that goes for all of us in in doing it. Um, and therefore there will be uh,

Henrik Andersen: 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. For us, this is the important thing. This is important to get the two projects right. It is probably from a Vestas 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.

Also, just a simple thing that sometimes the weather is that you can't do what you normally would do. So therefore there, there will be Financial consequences if we, if we are the cause for a delay. But on the other hand right now, we are working diligently in the fluid. In terms of the 2 products we are working with. And therefore, for us, uh, we have 2 eyes on the 2 projects. We have absolutely and full attention to it. But we also have a very strong attention and and and, and also uh, how we are having the capacity available to the further ramp up of capacity that happens from 26 and onwards.

So for us, this is the important thing. This is this is important to get the 2 projects, right? But it is probably from a vesta's point of view and also from an industry point of view and partners point of view as important that we get the right capacity, uh mastered from when we look in in 26 and Beyond.

Jacob: Okay. Thank you.

Henrik Andersen: If I could, by just having the last question in this round, as we are quarter past 11:00.

Okay, thank you.

if I could hear by just having the last question in this round, as we are quarter 11,

Rasmus Gram: We have a last question from the line of Martin Awakir from City. Please go ahead.

We have a last question from the line of Martin W. from City. Please go ahead.

Analyst: Good morning. It is Martin from City. Thanks for squeezing me in. Just one final question. 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. When we look at your U.S. business, there is a large service backlog. It does not look like that has 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? How should we think about any risk or anything like that inside the service profitability because of tariffs? Thank you.

Yeah, good morning. It's Martin from City, thanks for squeezing me. I have just one final question. 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, when we 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 in effect on gross margins and the service backlog, or have they been offset? How should we think about any risk or anything like that inside the service profitability because of tariffs? Thank you.

Henrik Andersen: Yeah. First of all, I, as always, please, please address competitors, comments on, on, on some of this with what they're seeing. We have a, we have a, a large setup in the U.S. in wind. We have a supply chain there in the wind industry where it's highly also localized. Therefore, we do not see the same principles as somebody else has mentioned. Therefore, I would leave that with them to argue. For us, it is a combination of both backlog portfolio and also the localization of supply chain we have in the U.S. Otherwise, they are all just U.S. business, great business, long contracts, and good business. Therefore, I do not see an imminent push from some of the tariffs into that part of the business in the U.S.

Analyst: Good. Okay. That's great to hear. If I could just clarify one other question as well. Obviously, the ESP this quarter at 111, that's a pure onshore number. You mentioned in your opening remarks both the word stable and positive. Just to understand, if we do normalize for a 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 kinds of things?

Good. Look at that, that's great to hear. And if I could just clarify 1 other question as well, obviously, the ESP this quarter at 111 and that that's a pure onshore number you. You 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 a mix between EPC and all the rest of it is pricing still effective flat or is there still some slight positivity in pricing because of some lingering effects of uh raw materials labor and and these kind of things.

Henrik Andersen: 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. Therefore, what we have seen in here is a good market across, predominantly, EMEA where there is a good mix of that margin. So I think here we just say we're really pleased with it. You're rightly saying it's one of those quarters where it's a pure onshore ESP 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. The discipline that goes into the commercial setting and pricing here is still more than intact. So we are really pleased and positive with that.

I think it's a it's very saying here. Uh, as we are in some of the, some of the uh, some of the markets where we have different mix. Uh, we didn't have any us orders in, in Q2, in fact, uh, and therefore what we have S seen in here is a, is a good Market, uh, across predominantly, uh, in here where, where they are a good mix of of that margin. So I think here we we just say we really pleased with it and you're rightly saying it's it's 1 of those quarters where it's a it's a pure onshore ASP that is that is comparable with with other quarters. Um but but as we now have us up and running and we have some of the other markets also for instance in in Asia Pacific and then there will be a, a different pricing. We are very pleased with this and the discipline that goes into the commercial. Uh setting and pricing here is is still modern intact. So we really, really pleased and positive with that.

Analyst: great. That is good to hear. Thank you very much.

Great, that's good to hear. Thank you very much.

Henrik Andersen: Good. With that, the operator just wants to round off and thank everyone for the interest. Also for many of those who didn't get access here on the Q&A, 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 Rasmus. We look forward from the total Vestas team to spend more time in the coming days. Thank you so much, and keep well.

Good with that. Uh, Operator just wants to round off and and thank everyone for the interest. Also, for many of them, for those who didn't get access, uh, here on the Q&A, hope to see you in the in the coming days where you will also have a lot more time, 1-on-1 or, or in the groups with uh, with Jacob and and Osmos. Uh, so we look forward from an uh, total investors team to spend more time on the coming days. So, thank you so much and uh, and keep well.

Rasmus Gram: Ladies and gentlemen, the conference is now over. Thank you for choosing CarsCo, and thank you for participating in the conference. You may now disconnect your lines.

Ladies and gentlemen, their conference is now over. Thank you for choosing Cars Call, and thank you for participating in the conference. You may now disconnect your lines. Goodbye.