Q2 2026 Vestas Wind Systems AS Earnings Call

Speaker #1: Easily thank our customers, partners, the full supply chain, and also colleagues for an exceptionally well-executed quarter. And with that, I would like to go to our key highlights for the quarter.

Speaker #1: So, in quarter revenue of 4.7 billion euros, that's an increase of 26% year on year, driven by strong growth in power solutions of 37%.

Speaker #1: EBIT margin of 9.4%, strong profitability improvement driven by both onshore and offshore. EPS of euro 1.1, euro per share, earnings per share grew 46% year on year to one of the highest levels in the history of Vestas.

Speaker #1: The order intake of 3.3 gigawatt, that's an increase of 67% year on year, driven by commercial traction in both EMEA and the Americas. Importantly here, returning cash to shareholders: we are also having a new share buyback of 400 million euros that will begin 13 August as of tomorrow and run until the end of the year.

Speaker #1: That's a little special note: it runs until the 16th of December, intended but Jakob will give you more details on that when we come to the capital structure for that.

Speaker #1: And then, outlook for 2026: guidance raised, reflecting the performance in the second quarter, and the improved predictability for the rest of the year. With that, I'd like to take you through the markets and environments we are operating and executing in.

Speaker #1: First of all, wind energy: key to affordability, security, and sustainability. No new words in that, but especially the two key words right now for society is worldwide, is affordability and security.

Speaker #1: When we look at the global environment, inflation, raw materials, and transport costs are stable, but tariffs and blockages increase costs over time, or from time to time as we say.

Speaker #1: It's a changeable environment. When we look at the ongoing geopolitical, the trade volatility, and energy crisis, that are leading to a regionalization, we've spoken about that, we still seeing it, and that trend has not reversed to any better.

Speaker #1: When we look at the market environment, heightening focus on energy security and affordability, I think most societies we have that, unfortunately also sometimes included with some non-factual basis, and we are probably the one that will strive and keep striving for telling what are the real benefits and what are the costs, and how fast can we get the energy.

Speaker #1: When we look at grid investment, it's prioritized in key markets and getting higher and higher prioritized in key markets, including also EU. When we look at the permitting, it's improving in some markets, but overall permitting auctions and market design are still showing challenging things.

Speaker #1: I will just say here, take Denmark as an example: in November 2024, a failed offshore auction then included better and improved conditions for the developer and customers to us.

Speaker #1: Then in August 2026, we see that a full subscribed offshore auction but unfortunately it only leads to that Denmark actually missed the new energy supply with another 18 to 24 months.

Speaker #1: So we got to change our way of looking at it. On the project level, really strong project execution this quarter. We have had a really good quarter, and thanks to everyone and also of course we will strive whatever we can to keep having that momentum into the second half of the year.

Speaker #1: So this time, before we go to the segments, let me also anchor Q2 26 in the bigger picture and also you in the longer-term picture of our 10% bridge.

Speaker #1: This bridge and this slide and picture is important for the whole of Team Vestas, and not least for me personally. When we look at it, we're talking about how we get to the 10% EBIT, and it says plus 10%, so that means at 10 or above.

Speaker #1: We have now a starting point with the grace guidance for today, at a midpoint of 8%, and we also just want to take you through that the four levers to get to 10% are still the same, but we have rearranged that a little bit.

Speaker #1: But it also means that when you see this in a bigger picture, you've seen it before, now there's 200 basis points to go, and I will assure the investors that raised it at the ADM, that we might now be at 8%, but that doesn't satisfy us.

We now have a starting point with the grace guidance for today at a midpoint of 8%. We also just want to take you through that D4. The levers to get to 10% are still the same, but we have rearranged them a little bit.

Speaker #1: We still have the 10% target, and we will work towards that diligently in not least the coming quarters and the coming years. I will start here with the offshore, still the same, by far the largest lever to get us to 10%.

Speaker #1: It's the ramp-up, it's the cost out, and it's extending the competitiveness that we add volume to the platform of our 15 megawatt. We have then rearranged it so we actually have service as the second highest delivery operation recovery.

But it also means that, when you see this in a bigger picture—as you've seen before—now, there's 200 basis points to go. I will assure the investors that raised it at the ATM that we might now be at 8%, but that doesn't satisfy us. We still have the 10% target, and we will work towards that diligently in, not least, the coming quarters and the coming years.

Speaker #1: The commercial reset with the ambition to achieve 25% EBIT margin and we are assured through our recovery process that is possible and we will work diligently but it doesn't come overnight.

I will start here with the offshore still the same by far, the largest lever to get us to 10%, it's the ramp up its the cost out and it's extending the competitiveness that we add volume uh, to the to the platform of our 15 megawatt.

Speaker #1: On the quality side, we removed that so it's sort of has a lever and has a very important lever to us because it's driver operational performance, it's talking about lower warranty cost, but we are at 3% and Jakob will comment on it a bit later, but it's also reduced the cost of poor quality through close collaboration throughout our full value chain.

We have then rearranged it, so we actually have Service as the second highest delivery, operation, and recovery. A commercial reset with the ambition to achieve a 25% EBIT margin, and we are assured through our recovery process that this is possible. We will work diligently, but it doesn't come overnight.

Speaker #1: Especially also when we source and when we use the inbound in our factories. And last but not least, on the onshore, it is a quarter where we could sort of debate is there really that big a lever in onshore still and there is.

Speaker #1: There is the operational leverage, there's the cost out that we still can do more of, and then there is the retaining the commercial culture.

Speaker #1: So when we look across the world, it is also what we're talking about today, how do we get other countries to pursue the same alley as for instance US and Germany are doing by scaling up.

Speaker #1: And of course we'll benefit from that. Takeaway: doable, we believe in it, and of course the closer you get, probably also therefore your level of confidence goes up.

Speaker #1: With that, I would like to go to the power solution and what has happened in Q2. So order intake of 3.3 gigawatt in the quarter, driven by strong onshore order intake, especially in the US and Germany.

On the quality side, we remove that. So it sort of has a lever and has a very important lever to us because it drives abrasion on performance. It's talking about low warranty cost, but we had 3%, and Jakob will comment on it a bit later. But it's also reduced the cost of poor quality through close collaboration throughout our full value chain, especially also when we source and when we use the inbound in our factories. And last but not least, on the onshore, it is a quarter where we could sort of debate, is there really that big a lever in onshore still? And there is. There is the operational leverage, that is the cost out, that we still can do more of. And then there is retaining the commercial culture. So, when we look at the world, it is also what we are talking about today: how do we get other countries to pursue the same alley as, for instance, the US and Germany are doing by scaling up? And of course, we'll...

Benefit from that.

Um, takeaway: doable. We believe in it. And of course, the closer you get, probably also, therefore, your level of confidence goes up.

Speaker #1: There are no offshore orders in the Q2, but don't worry about that, they come quarter on quarter and they will be lumpy, so therefore we will address that when things happen.

With that, I would like to move on to the Power Solutions segment and discuss what has happened in Q2.

Speaker #1: On the ASP on new orders, it was 1 million euro per megawatt for the quarter, the ASP reflects a good mix of project scope and geography and the overall pricing environment remains stable which of course bodes well for also what we have of quality in our order backlog on power solution.

So, order intake of 3.3 gigawatts in the quarter, driven by strong onshore order intake, especially in the US and Germany.

There are no offshore orders in the queue in Q2, but don't worry about that. They come quarter by quarter, and they will be lumpy. So therefore, we will address that when things happen.

On the ASP on new orders, it was €1 million per megawatt for the quarter.

Speaker #1: The power solution order backlog was 36 billion euro at the end of the quarter. And when we look at it, we continuously see progress in our offshore ramp-up with reduced tag times, better efficiency in manufacturing, and improved installation time so again here keywords for us are the scale offers us the both required but also expected dilution and we can see that the offshore team and across Vestas are really pulling forward in that journey which is positive also when we look to the end of the year and also into 27.

The ASP reflects a good mix of project scope and geography, and the overall pricing environment remains stable, which, of course, bodes well for what we have in terms of quality in our order backlog on Power Solutions.

The power solutions order backlog was €36 billion at the end of the quarter.

Speaker #1: You can see the numbers described on the charts to the right. With that, I'll go to service so the recovery plan is progressing, is the heading for Q2.

Speaker #1: The service order backlog increased to 40.9 billion euros. That's an increase of 5 billion euros compared to a year ago. That's including a 1.3 billion euro uplift from indexation and a 0.2 billion euro headwind from foreign exchange rate movements in the quarter.

And when we look at it, we continue to see progress in our offshore ramp up with reduced tax times, better efficiency in manufacturing and improved installation time. So again here keywords for us are the scale of us the uh both required. But also expected dilution and we can see that the offshore team and across West is really pulling forward in that Journey which is positive. Also, when we look uh to the end of the year and also into 27

You can see the numbers, uh, described on the charts to the right.

With that, I'll go to Service. So, 'The Recovery Plan is Progressing' is the heading for Q2.

Speaker #1: When we see that, service reached 166 gigawatt under active service contracts. That's an increase of 2 gigawatt compared to last quarter as strong contract renewals and also new additions more than offset expiries and customer deselection.

The service, uh, order backlog increased to 40.9 billion, uh, Euros. That's an increase of 5 billion euros compared to a year ago that including a 1.3 billion Euro uplift from indexation and a 0.2 billion Euro headwind from foreign exchange rate, movements in the quarter

Speaker #1: I think here we are confirmed after Q2 that we are doing the right things in commercial reset as part of this recovery but we can also see that we have actually been positive surprised over first of all the value we create together with our partners but also therefore the stickiness of our renewal process in service.

Reached 166 GW on the active service contracts—that's an increase of 2 gigawatts. Compared to last quarter, strong contract renewals and new additions more than offset expiries and customer de-selections.

Speaker #1: The service recovery plan is progressing well and we continue to see the operational movement dry down cost levels while the commercial reset is improving the backlog health and we can see that quarter on quarter.

I think here we are confirmed after Q2 that we are doing the right things in commercial reset as part of this recovery. But we can also see that we have actually been positively surprised over, first of all, the value we create together with our partners, but also therefore the stickiness of our renewal process in service.

Speaker #1: Again, the drivers here are working and the new service operating discipline is getting adopted worldwide as we speak and we're getting comfort to see it's being adopted at the pace we are implementing it.

The service recovery plan is progressing well, and we continue to see the operational movement drive down cost levels, while the commercial reset is improving the backlog health. We can see that quarter on quarter.

Speaker #1: With that, I will finish with the sustainability for Q2. Sustainability still in everything we do and if we start on this turbines produced and shipped in the last 12 months, I expect it to avoid 535 million tons of greenhouse gas emissions over the course of their lifetime.

Again, the drivers here are working and the new service, uh, operating. A discipline is getting adopted worldwide as we speak, and we're getting comfort to see it's being adopted at the pace we are implementing it.

Speaker #1: This is of course one of the highest number we have had for a quarter and therefore also a reflection of that we see the increase in levels of activity total turnover up 26% and in the power solution 37% which of course reflects in this.

Speaker #1: The carbon emission from our own operation increased by 7% compared to last year that's mainly due to the vessel emission from increased activity in the offshore so we know we have to spend some more carbon emission to do also the offset what you just saw above of the 535 million tons.

With that, I will finish with the sustainability for Q2 sustainability, still in everything we do. And if we start on this turbines produced and shipped in the last 12 months, I expected to avoid 535 million, tons of greenhouse, gas emissions over the course of their lifetime. This is of course, 1 of the highest number. We have had uh, for a for a quarter. Um, and therefore also a reflection of that, we see the increase in levels of activity.

total turnover of 26%, and in the Power Solutions, 37%, which of course reflects in this,

Speaker #1: Therefore it's also worth noticing that the carbon emission went from 110,000 to 118,000 tons. So therefore it's a different ball game when you compare the two.

Speaker #1: But of course here it demonstrates how low we got scope one and two before we also embarked in the offshore journey with the with our customers.

Speaker #1: The number of recordable injuries per million working hours TRIR increased to 2.9 compared to 2.6 last year. Safety remains a top priority for us and we are committed to addressing the identified hotspots.

The carbon emission from our own operation increased by 7% compared to last year. That's mainly due to the vessel emission from increased activity in the offshore. So we know we have to spend, uh, some more carbon emission to do. Also, the offset what you just saw about of the 535,000 tons. Therefore, it's also worth noticing that the carbon emission went from 110,000, um, to 118,000 tons. So therefore, it's a different—it's a different ball game when you compare the two. But, of course, here it demonstrates how low we got to Scope 1 and 2 before we also embarked in the offshore journey, uh, with, uh, with our customers.

Speaker #1: And what I mean by that is we still have parts of Vestas where we see that some of these safety incidents come from a behavioral and attitude point and we are addressing that because it's not acceptable in the environment we work.

The number of recordable injuries per million working hours, TRIR, increased to 2.9 compared to 2.6 last year.

Speaker #1: Of course we also have to appreciate we are now working close with almost 40,000 employees and some of the sites are also new or have embarked new into Vestas.

Speaker #1: We will address that as we go and comment on it in the coming quarters. I think it's actually now time Jacob that you have been looking forward to take us through the financials.

Speaker #1: So with that, over to you Jacob on the financials.

Safety remains a top priority for us, and we are committed to addressing the identified hotspots. And what I mean by that is we still have parts of Vestas where we see that some of these safety incidents come from a behavioral and attitude point, and we are addressing that because it's not acceptable in the environment we work in. Of course, we also have to appreciate we are now working closely with almost 40,000 employees, and some of the sites are also new or have embarked new.

Speaker #2: Thank you Henrik. And as you mentioned, a strong quarter where we see earnings per share increase up by 46%. The other highlights of the quarter is that revenue increased by 26% compared to Q2 last year.

To investors, we will address that as we go and comment on it in the coming quarters.

I think it's actually now time, Jakob, that you have been looking forward to, to take us through the financials. So with that, over to you, Jakob, on the financials.

Thank you, Henrik.

Speaker #2: The increase was driven by power solutions while service revenue was slightly lower. EBIT margin before special items was 9.4% and increased of almost 8% points year on year.

And as you mentioned, a strong quarter, where we see earnings per share increase by 46%. The other highlight of the quarter is that revenue increased by 26% compared to Q2 last year.

Speaker #2: The development was driven by improved profitability in power solutions from both onshore and offshore. Then also on the right you can see that we incurred 27 million of special items in the quarter that's mostly related to our operating model reset including staff severance provisions.

The increase was driven by Power Solutions, while service revenue was slightly lower.

Even margin before special items, uh, was 9.4% and increased by almost 8 percentage points year-on-year.

The development was driven by improved profitability in Power Solutions, from both onshore and offshore.

Speaker #2: Moving in to the segment split and the financials for that, we start with the strong quarter in power solutions. In power solutions, Henrik, as you mentioned, revenue increased by 37% year on year, driven mainly by higher megawatt delivered in both onshore and offshore and to a lesser degree by higher average selling prices on megawatt delivered.

Then, also on the right, you can see that we incurred €27 million of special items in the quarter. That's mostly related to our operating model reset, including staff severance provisions.

Speaker #2: EBIT margin of 10.4% in Q2 was strong up more than 10% points year on year. Positive benefits in both onshore and offshore from operating leverage outstanding project executions and lower than expected project cost.

Moving into the segment split and the financials for that, we start with a strong quarter in Power Solutions. Henry, as you mentioned, revenue increased by 37% year-on-year, driven mainly by higher megawatts delivered in both onshore and offshore, and to a lesser degree by higher.

Average selling prices on megawatt delivered.

Speaker #2: All of this contributed to the strong profitability in the quarter. And here you can see the quarterly split on the right also the split between onshore and offshore.

EBIT margin of 10.4% in Q2 was strong, up more than 10 percentage points year over year.

There are positive benefits in both onshore and offshore from operating leverage.

Speaker #2: And it is worth to note that onshore revenue was expected to follow the usual backend loaded profile during the year while offshore revenue is more evenly spread across the quarters.

Outstanding project executions and lower-than-expected project costs.

Ability in the quarter.

Speaker #2: So this is and we mentioned it last time this is a change from what you have seen previously when you look at the total numbers.

Speaker #2: Moving on to our service segment where as you mentioned Henrik, we are really pleased to see costs are coming out and that the commercial reset is working as planned.

And here you can see the quarterly split on the right. Also, the split between onshore and offshore and it is worth to note that onshore revenue is expected to follow. The usual back-end loaded profile during the year. While offshore revenue is more evenly spread across the quarters. So this is, and we mentioned it last time. This is a change from what you have have seen previously. When you look at the total numbers,

Speaker #2: Service revenue decreased by 5% year on year, including a 1% currency headwind. The ongoing recovery plan is working and driving lower cost levels leading to a decrease in contract revenue.

Moving on to our service segment, where, as you mentioned, Henrik, we are really pleased to see Costa coming out and that the commercial reset is working as planned.

Speaker #2: That we also spoke about last quarter. So the same trend this quarter. Transactional sales were slightly lower than last year. Our service generated an EBIT of 149 million euro equivalent to an EBIT margin of 16.6% which is in line with our expectations.

Service revenue decreased by 5% year-over-year, including a 1% currency headwind.

The ongoing recovery plan is working and driving lower cost levels, leading to a decrease in contract revenue that we also spoke about last quarter. So, the same 20—this quarter, transactional sales were slightly lower than last year.

Speaker #2: Moving to the focus on STNA cost and on our scalability in general. STNA cost amounted to 7% of revenue on a last 12 months basis and improvement of 0.4% point compared to a year ago and obviously it driven by higher revenue.

Our service generated an EBIT of €149 million, equivalent to an EBIT margin of 16.6%, which is in line with our expectations.

Moving to.

The focus on SDNA cost and on our scalability in general.

Speaker #2: We continue to work and improve our STNA cost through the operating model reset program and we see right now also with an increasing top line we see an opportunity to scale the organization while growing the business.

SG&A costs amounted to 7% of revenue on our last 12 months basis, an improvement of 0.4 percentage points compared to a year ago, and obviously driven by higher revenue.

Speaker #2: And as you can see on the right side, we have for the last three quarters seen a marginal decrease in the cost while yeah we have just spoken to the top line increases.

Speaker #2: So that obviously gives the scalability. Networking capital we saw a slight increase in the quarter to negative 2.3 billion mainly driven by an increase in inventories and contracts cost.

Speaker #2: As a percentage of last 12 months revenue, networking capital in the second quarter amounted to negative 11.1%. So still a strong place to be.

We continue to work and improve our SG&A cost through the, uh, Operating Model Reset program. And we see, uh, right now also with an increase in topline, uh, we see an opportunity to scale the organization while growing the business. And as you can see on the right side, we have for the last three quarters seen a marginal decrease, uh, in the cost while—yeah, we have just spoken to the topline, uh, increases. So that obviously gives the scalability.

Net working capital: We saw a slight increase in the quarter to a negative $2.3 billion, mainly driven by an increase in inventories and contract costs.

Speaker #2: Cash flow operating cash flow was positive by 419 million in the quarter. A significant improvement compared to Q2 in prior year and that is driven by higher profitability.

As a percentage of last 12 months' revenue, networking capital in the second quarter amounted to negative 11.1%. So, still a strong place to be.

Speaker #2: Total investment amounted to 278 million in quarter two which is stable compared to last year. Adjusted free cash flow in the quarter amounted to 94 million euro and improvement compared to last year driven by the reasons mentioned in above.

Cash flow. Operating cash flow was positive by €419 million in the quarter, a significant improvement compared to Q2 in the prior year, and that is driven by higher profitability.

Speaker #2: Cash flow from financing activities in the quarter was driven mainly by the repayment of the bond which we also spoke about last quarter as well as a dividend payments and share buybacks.

Total investment amounted to €278 million in Q2, which is stable compared to last year.

Speaker #2: We ended the quarter with a net cash position of 92 million euro. Then Henrik, you spoke about quality and here looking at our LPF, our lost production factor, we see a slight improvement in Q2 reflecting the better fleet performance and operational improvements across our serviced turbines.

Adjusted free cash flow in the quarter amounted to €94 million, an improvement compared to last year, driven by the reasons mentioned above.

Cash flow from financing activities in the quarter was driven mainly by the repayment of the bond, which we also spoke about last quarter, as well as the dividend payments and share buybacks.

We ended the quarter with a net cash position of €92 million.

Speaker #2: Warranty cost amounted to 141 million in the quarter corresponding to a 3% of revenue. Warranty consumption was in Q2 218 million and that confirming previous quarter's positive trend where we consume meaning repair old identified quality cases more than we provision for new quality cases.

And Henrik you spoke about quality. And and here looking at uh, our LPF, our loss production Factor, we see a slight Improvement in Q2 reflecting the better Fleet performance and operational improvements across our service turbines.

Warranty cost amounted to $141 million in the quarter, corresponding to 3% of revenue.

Speaker #2: The capital structure and shareholder distribution Henrik, you mentioned the 400 million euro buyback program. The net debt to EBITDA ended the quarter at zero times stable compared to last year and within our targeted range of minus 1 to plus.

Warranty consumption was in Q2, €218 million, and that is confirming previous quarters. Positive trend where we consume—meaning repair old identified qualifications—more than we provision for new quality cases.

Speaker #2: We maintain as previous quarters a solid investment grade rating from Moody's with a stable outlook. And given our performance and visibility at this point of time of the year combined with a healthy capital structure and new share buyback program 400 million euro will be initiated in line with our previously communicated intention to return at least 40% of net profit to shareholders.

The capital structure and shareholder distribution. Henry, you mentioned the €400 million buyback program. The net debt to EBITDA ended the quarter at zero times, stable compared to last year and within our targeted range of minus one to plus one.

We maintain, as in previous quarters, a solid investment-grade rating from Moody's with a stable outlook.

Speaker #2: The buyback will begin tomorrow and run until the end of the calendar year. And as you can see also on the right the 400 million is covering the two quarters which is of course a different from what we have previously done.

And given our performance and visibility at this point of the year, combined with a healthy capital structure and a new share buyback program, €400 million will be initiated in line with our previously communicated intention to return at least 40% of net profit to shareholders.

Speaker #2: And then ending said before on my favorite slide because this is where we look at our long-term shareholder value creation. Here you see the most important financial metrics in a longer perspective.

...of the calendar year. And as you can see also on the right, the €400 million is covering the two quarters, which is of course different from what we have previously done.

Speaker #2: These metrics are central to how we measure our performance and align nicely to our shareholder value creation and of course also our equity story.

Speaker #2: And I encourage if you want to read more about that to read further about that in the annual report. And with that over to you Henrik for the outlook.

Speaker #1: Thank you so much Jacob and of course I absolutely understand you're liking for the for the slides but there are many slides that could compete on the on the favorite one this this quarter.

And then ending, and I've said it before, on my favorite slides—because this is where we look at our long-term shareholder value creation. Here you see the most important financial metrics. In a longer perspective, these metrics are central to how we measure our performance and align nicely to our shareholder value creation, and, of course, also our equity story. And I encourage, if you want to read more about that, to read further about it in the annual report.

And with that, over to you, Henrik, for the outlook.

Speaker #1: But also on on the slide here I also want to just hear saying it's nice to see the trend but it's also nice to see that how you've been able since your start able to accelerate a couple of those graphs as well.

Speaker #1: So thank you for that. With that I'll just like to go to the outlook so outlook here as you most of you also seen revenue kept 22 22 billion previous outlook same when we look at the EBIT margin we are raising the guidance to 7 to 9 from 6 to 8 and that also means in this we keep service as it was previous from from February so service is expected to generate EBIT margin before special items of 15 and a half to 17 and a half percent and then we we see total investment around the 1.2 billion mark for the year.

Thank you so much, take care. And, of course, I absolutely understand. You're liking for the, for the slides, but there are many slides that could compete on the, on the favorite 1, this this quarter, uh, but also, on on the slide here. Uh, I also want to just hear saying it's nice to see the trend, but it's also nice to see that, uh, how you have been able since your start able to accelerate a couple of those, uh, graphs as well. So thank you for that uh, with that. I'll just like to go to the Outlook. Uh, so outlook here as you, most of you also seen Revenue kept 222 billion, previous Outlook same. When we look at the EV Martian, uh, we are raising the guidance to 729 from 6 to 8, uh, and that also

Speaker #1: With that I will say thank you for listening in. I'm sure there will be a few questions and answers to to come and therefore also let me by this pass back to the operator and let's start the Q&A.

Speaker #3: 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 in the queue.

Means in this, we keep Service. Uh, as it was, uh, previous from from February, so service is expected to generate a little bit more before, special items of 15 and a half to 17 and a half percent. And then we, uh, we see total investment, uh, around the 1.2 billion, Mark for the year with that, um, I will say thank you for listening in. I'm sure there will be a few questions, uh, and answers to to come. And therefore, also let me buy this pass back to the operator and uh, let's start the Q&A.

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Speaker #3: Anyone who has a question may press star and one at this time. The first question comes from the line of Akash Gupta from JP Morgan.

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Speaker #3: Please go ahead.

Speaker #4: Yes hi good morning and thanks for your time. My first one is on the US market. Could you please talk about the dialogues that you are having with your US customers and whether the intensity of those discussions has changed as as we can see the demand for power equipment continue to grow especially given we saw new record for gas turbine orders in second quarter.

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

Speaker #4: So I'm just wondering has anything changed on your side on the US pipeline and your view of the market in the course of the quarter.

Speaker #4: That's the first one.

Speaker #1: Okay thank you so much. And the and the easy answer is no. The the bit more filling on this one is in the US demand and fundamentals are making its way into also how it's being evaluated.

Yes, hi, good morning, and thanks for your time. My first one is on the US market. Could you please talk about the dialogues that you are having with your US customers, and whether the intensity of those discussions has changed, as we can see the demand for power equipment continue to grow, especially given we saw a new record for gas turbines by Notorious in the second quarter?

So I'm just wondering, has anything changed on your side—on the US pipeline and your view of the market—in the course of the quarter? That's the first one.

Speaker #1: And right now speed to energy and speed to not least energy and electricity and electrons are also part of the of the driver. So the environment is underlying strong from fundamentals and the whole of the US society in many states need more power and more energy faster than probably new sources or or other competing technologies.

Speaker #1: But in reality US is also coming to a conclusion of we need more of everything.

Speaker #3: Thank you. And my follow-up question is on power solution margins. You delivered a strong performance in Q2 and a lot of people that follow Vestas split margins between onshore and offshore given the large differences between the two.

Okay, thank you so much. And the and easy answer is no. Uh, the, uh, the bit more filling on this 1 is in the US demand. And fundamentals are making its way into also how it's being evaluated and right now speeds to energy and speed to not least energy and electricity and electrons are also a part of the, of the driver. So the environment is, uh, underlying strong from fundamentals. And the whole of the US Society in many states, need more power and more energy, uh, faster than probably knew, uh, sources, or or other competing Technologies. But in reality, us is also coming to a conclusion of. We need more of everything.

Speaker #3: Can you give any indication of what offshore margins are in the quarter and where you might get their by end of the year and also when we think about the guidance upgrade which is coming from power solutions entirely how much of that is onshore versus offshore.

Thank you. And my follow-up question is on the Power Solutions margins. You delivered a strong performance in Q2, and a lot of people that follow Vestas split margins between onshore and offshore, given the large differences between the two.

Speaker #3: Thank you.

Speaker #1: Yeah thanks Akash and you know already that I will give you the the you know the answer to it no we won't give you the breakdown but we will also say here as we've said we're aiming for a a a better full year number in 27 than we have had in in 26 on offshore.

Can you give an indication of what offshore margins are in the quarter, and where you might get to by the end of the year? And also, when we think about the guidance upgrade, which is coming from...

Speaker #1: But on the other hand having a second quarter where we are 10.4% in power solution we see both onshore and offshore contributing positively. Compared to where we started the year and planning for it.

Speaker #1: So there is a good momentum in in both parts. For obvious reasons I don't have an interest in in showing you the split between onshore and offshore but you also know that we will most likely end this year in a red number and the scale and the the ramp up will take us to a black number in in in 27 for offshore.

Speaker #1: So of course that's the positive development we also see in in this quarter. And also part of of why we are raising the guidance overall for Vestas.

Speaker #3: Thank you Henrik. The next question comes from the line of John Kim from Deutsche Bank. Please go ahead.

Contributing positively compared to where we started the year and planning for it. So there is a good momentum in in both parts. Uh, for obvious reasons. I don't have an interest in, in showing you the split between onshore and offshore, uh, but, uh, you also know that we will most likely end this year in a red number and the scale. And the, uh, the ramp up will take us to a black number in, in, in 27, uh, for offshore. So, of course, that's the positive development. We also see in in this quarter and also part of of why we are racing the guidance overall for investors,

Speaker #5: Hi good morning. Thanks for the opportunity. Congrats on the numbers. Two questions if I may. If we think about the guide after a very strong evolution in in in H1 I want to say the upper end of your guide only implies about 200 points of margin expansion year on year.

Thank you, enri.

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

Speaker #5: I'm wondering if there's certain things we need to consider think about that kind of curtail perhaps the optimism into H2.

Speaker #1: No. I think life is what we just see here Q Q2 has been an exceptional quarter. We have had some projects in Q2 that also contributed strongly to that.

Hi, good morning. Uh, thanks for the opportunity to congrats on the numbers, 2 questions. If I may um if we think about the guide after a very strong Evolution and and and H1, I want to say the upper end of your guide, only implies about 2 points of margin expansion year. On year, I'm wondering if there's certain things we need to consider uh think about

Uh, that kind of curtails, perhaps, the optimism into H2.

Speaker #1: So we we you know that John there's no there's no linear programming between the quarters. We are still back and loaded that also means that we see some risk in in just by the nature of what we executing 400 second half of the year which of course is reflected in our in our guidance.

Speaker #1: And and I can assure you that if we have an opportunity to do to do better we will do that. But that's what we see currently for the for the second half of of the year.

Speaker #1: And the split intra quarter we are so dependent on some of those major completions on the projects. What that project is exactly with as a percentage in the in the backlog.

Speaker #1: But I will say in this quarter really well executed and there are some some lower costs on some of those exceptional projects in in good executed in in second quarter that of course that that contributed to it.

Speaker #1: But hey it's not too shabby to to raise the guidance to 7 to 9. So I thank you for your congrats. We we we definitely feel it's been that's been got a lot of hard work going into it.

No, I think life is what we just see here Q Q2 has been an exceptional quarter. We have had some projects in Q2 that also contributed strongly to that. So we we you know that there's no there's no linear programming between the quarters. We are still back and loaded. That also means that we see some risk in in just by the nature of what we executing 400 second half of the year, which of course is reflected in our in our guidance. Um, and and I can assure you that if we have an opportunity to do a to do better, we will do that. But that's what we see currently for the for the second half of of the year and the split intra quarter, we are so dependent on some of those major completions on the projects. What that project is exactly with as a percentage in the year in the backlog. But I will say in this quarter really well executed and there are some some lower costs and some of those uh exceptional projects in in

Speaker #5: Great. Thanks. And my second question if I may is about the contract assets. We saw a sequential increase from Q1 to Q2. Wondering if you could help us unpack that and what you're seeing around kind of price cost or or price cost in the service base.

In good executed, in in second quarter and of course that the, the contributed to it. But hey it's not too shabby to uh to raise the guidance to 729. So I thank you for your congrats. We we we definitely feel, it's been that's been got a lot of hard work going into it.

Speaker #5: Thanks.

Speaker #1: Yeah let me let me take that. Similar to last quarter the development is is is driven by our power solutions. So so that's the first to answer your first part of the the second question.

Great. Thanks. And my second question. If I may, uh, is about the contract assets. We saw as the quentel increase from q1 to Q2. Uh, wondering if you could help us unpack that and what you're seeing around kind of price cost or or Price cost in the service space. Thanks

Yeah, let me take that. Um,

Speaker #1: The the second part on on the service cost we are as I also mentioned we are pleased with the development this quarter. The team is delivering as we have expected and as we have planned.

Similar to last quarter, the development is driven by our Power Solutions.

Speaker #1: We take out cost as we have planned and we are also have have the success we expect in the commercial reset which is really one of the initiatives we see that also now is having a positive impact on on the overall service business.

Speaker #1: So services progressing as we have planned and as expected.

Speaker #5: Great. Thank you.

Speaker #3: The next question comes from the line of Klaus Elmer from Nordea. Please go ahead.

So so that's the first to answer your first part of the the second question. Uh the the second part on, on the service cost we are. As I also mentioned, we are pleased with the development, uh, this quarter. The team is delivering as we have expected. And as we have planned, we take out cost as we have planned and we are also, um, have have the success we expect in the commercial reset which is really 1 of the initiatives. We see that also now is having a positive impact on on the overall service business. So service is progressing. Uh, as we have planned and I expected

Speaker #4: Thank you. Yeah also from my side you know impressive quarter. Well done by the Vestas organization. I will also do two questions. So the first is about the power division.

Great. Thank you.

Speaker #4: As Jacob mentioned in his prepared remarks is the strong performance was driven both by onshore and offshore. And I think Henrik you mentioned this 27 could be a black numbers.

The next question comes from the line of Klaus Elmer from Nordea. Please go ahead.

Thank you. Yeah, also from my side, you know, impressive quarter. Well done by the business organization. I will also do two questions.

Speaker #4: This question is not to get any guidance for next year but you know could we get a bit more color to you know the strength of the momentum.

Speaker #4: Could it be a 5% potential next year or where is you know the the the range of outcome. That would be the first one.

Speaker #1: I love I love the I love the camouflage of various reasons to ask for 27. If a black number that also includes a 5% I don't know but it's a it's a positive number for next year.

Speaker #1: And then we will we will say not more about it because in reality we'll say more about where we expect Vestas to perform next year.

Speaker #1: And from from giving giving a service percentage you can then calculate the power solution. I think here we're giving ourselves time to enjoy a little bit the the execution of this.

Speaker #1: It it is hard work and has been hard work and and has had also mixed feelings when you ramp up and scale up of this nature in in offshore cloud.

Speaker #1: So so what we are first and foremost really happy with is that there is a a large contribution from both offshore and of course from a from a different contribution in onshore.

Speaker #1: Because onshore is just execution of all what is so well known to us where the offshore is reducing the marginal cost from from offshore and the scaling of it.

Speaker #1: So so it is different. And therefore same same thing is we'll fight hard to see if we get it to a full year plus minus zero or or whatever for 26.

Speaker #1: And then there is a black number coming in in 27. How big that black number is we we won't we won't tell you. And we won't tell you that in February either.

Speaker #4: That that is fair Henrik. So maybe it's asking different way. So the improvement you're seeing within offshore is this an improved speed of output of the factories.

Speaker #4: Is it your better projects that are starting to be delivered or what is the the main driver for the better profitability or less loss?

Ourselves, uh, time to enjoy a little bit. The, the execution of this. It it is hard work and has been hard work, and and has had also mixed feelings when you ramp up and scale up, uh, of this nature in in offshore, uh, Cloud. So, so what we are first and foremost, really happy with, is that there is a, a large contribution from both, uh, offshore, and, of course, from a, from a different contribution in onshore because onshore is just execution of all. What is so well, known to us, whether the offshore is reducing the marginal costs from from offshore and the scaling of it. So, so it is different and therefore, same. Same thing is, we'll fight hard to see if we get it to a full year, uh, plus minus 0 or or whatever for 26. And then there is a black number coming in in 27. Um, how big that black number is we we won't we won't tell you uh and we won't tell you that in February either.

Speaker #1: I think here when we open a new a new set we open new capacity you always a bit questionable to to that when when does it work when do we have the right practices in and around those shift.

That that same right? So maybe it's asking a different way. So the improving you're seeing within offshore is this an improved uh, or a speed of output of the factories? Is it your better projects that are starting to be delivered, or what is the the main driver for the better, uh, profitability or this loss?

Speaker #1: We can see that the negative side of that for instance on linear was we had to say goodbye to some some very good colleagues on on linear.

Speaker #1: But but when you get to that point where tack time is is improving and others so that's the main that's the main part we have seen.

Speaker #1: So it is working towards the tack time and of course then it's getting now the fully the full value chain also to link to it.

Speaker #1: So we see the installation time offshore. We see the the transport. And of course the benefit now is people are seeing it much more frequent than they did a year ago.

Speaker #1: And that really is for us the key driver where it looks very much comparable but it's very different assets. We are both manufacturing and transporting and installing.

Speaker #1: So we're fully aware of that. So so it's the ramp up and it's the efficiency across the team which is why I I extend a huge thank you to to especially the teams that have been working diligently with that ramp.

Speaker #1: We are just around the plan and and maybe in in some quarters a little bit better but we see the momentum in there and that's what we are also adding to by by raising the guidance today.

I think here, when we opened a new, uh, a new set, we opened a new capacity, uh, you always a bit uh, questionable to, to that when when does it work? When do we have the right, uh, practices in, and around those shifts? We can see that the negative side of that, for instance, on linear was we had to say goodbye to some some very good colleagues on on linear, but but when you get to that point where T time is, is improving and others. So that's the main, that's the main part we have seen. So it is working towards the takt time and of course, then it's getting now the full the full value chain also to link to it. So we see the installation time offshore, we see the, the transport and, and, of course, the benefit now is people are seeing it much more frequent than they did a year ago. And that really is for us, uh, the key driver where it looks very much comparable, but it's very different assets. Uh, we are both manufacturing and transporting and installing. So we're fully aware of that. So, so it's the ramp up, and it's the efficiency of

Speaker #4: Okay. Then my my second question is the onshore backlog. You know these price initiatives you have taken for the last year year and a half have we seen the full effect in the P&L in this first half or do you still see some you know additional effects rest of the year?

Across the team, which is why I I extend a huge thank you to, to, especially the teams that have been working diligently with that, the ram. We are just around the plan and, and maybe in, in some quarters a little bit better, but we see the momentum in there. And that's what we are also adding to, uh, by by raising the guidance today,

Okay, then my second question is about the onshore backlog.

Speaker #1: I don't think there's anything to say about the rest of the year. We've just said something about the rest of the year in in in raising our guidance and and and as I said I I got to correct you if if you think we have done something with pricing in the last 18 months.

Now, these price initiatives you have taken over the last year, year and a half—have you seen the full effect in the P&L in this first half, or do you still expect some additional effects in the rest of the year?

Speaker #1: I I've been here long enough. We have discussed it for the last more than four years and and everyone probably questioned a little bit in in our quarterly also is it enough.

Speaker #1: Will we ever get to 10%. Is this enough priced for for 10%. And the truth of it is we live in a very changeable world.

Speaker #1: But the backlog is supportive and our pricing and commercial culture is very supportive of that journey to 10% which is probably also it means a lot more with the day-to-day trusted customer conversation that also supports this pricing.

Speaker #1: So I I see it as a as a much longer thing than 18 months. And if you look at that there's nothing what we have said in the last couple of years that hinder that.

Speaker #1: But you also know that there has been either further realization that has been disruption and there's even been some tariffs that have been coming and going.

Speaker #1: So therefore it's never a locked in as more as we share the risk in a transparent way. So so for us strong pricing 36 billion euros in the backlog very supportive for also.

I don't think there's anything to say about the rest of the year. We've just said something about the rest of the year in in in raising our guidance and and and as I said I I got to correct you if if you think we are done something with price in the last 18 months I I've been here long enough, we have discussed it for the last more than 4 years and and everyone probably questioned a little bit in in our quarterly also. Is it enough? Will we ever get to 10%? Is this enough priced, for, for 10%? And the 2 of it is, we live in a very changeable world but the backlog is supportive. And our pricing and Commercial culture is very supportive of that journey to 10%, which is probably also, it means a lot more with the day-to-day trusted customer conversation that also supports this pricing. So, I, I see it as a, as a much longer thing than 18 months. And if you look at that, there's nothing what we have said in the last couple of years, that hinder that. But you also know that there has been either

Speaker #1: The coming not quarters but years.

Speaker #4: That sounds great. Thank you so much. Jakob and Henrik.

Speaker #2: The next question comes from the line of AJ Patel from Goldman Sachs. Please go ahead.

Further realization is that there has been disruption, and there have even been some tariffs that have been coming and going. So therefore, it's never locked in as much as we share the risk in a transparent way. So for us, strong pricing—€36 billion in the backlog—is very supportive for the coming, not quarters, but yes...

Speaker #3: Good morning and congratulations on the results. I've got a couple of questions please. Firstly can I just can I get a little bit more of an understanding on the improvement in margin.

That sounds great. Thank you so much.

Speaker #3: Like it's very rare that Vestas beats consensus Q2 results by a factor of two. And and if you look at what you've delivered in margin for Q2 the 9% so number and look at what's implied at the midpoint for the second half that's also a 9% number that would seem odd given like you have a sizable amount of operational leverage in the second half of the year from onshore.

The next question comes from the line of Ajay Patel from Goldman Sachs. Please go ahead.

Good morning, and congratulations on the results. I have a couple of questions, please. Firstly, can I just...

Speaker #3: So I'm just trying to understand to what degree is Q2 fantastic performance on contingencies that maybe you provided for. And if you could maybe give us an idea of how how good that execution is and what kind of contingencies maybe you have made in the second half of the year in the new guidance to get us to understand at least what the sort of risks or potential upside or downside to numbers could be for the second half.

Speaker #3: And then I'll come back on the second question if you don't mind.

Speaker #1: It was a there was a there was a there was a what I call a long first questions with a few dimensions in. So let me give you the let me give you the credit for that raise.

Applied at the midpoint for the second half—that's also a 9% number. That would seem odd, given you have a sizeable amount of operational leverage in the second half of the year from onshore. So I'm just trying to understand: to what degree is Q2's fantastic performance on contingencies that maybe you provided for, and if you could, maybe give us an idea of how good that execution is, and what kind of contingencies you may have made in the second half of the year in the new guidance, to help us understand at least what the sort of risks or potential upside or downside to numbers could be for the second half.

Speaker #1: First of all Ajay it's it's nice to see I won't comment on why we beat the consensus because in reality here you you and I know that we know the backlog.

Speaker #1: None of you are on our payroll. So you don't have access to see what projects we executing in a quarter. And the mix for us in this quarter on the deliveries and other stuff have formed that basis.

And then I'll come back on the second question. If you don't mind, was that there was a, there was a, there was a what I call a long first questions with a few dimensions in. So let me give you the, let me give you the credit for that uh, race. Um, first of all, uh, idea is it's it's nice to see.

Speaker #1: And then there will always be in there projects that have either in this quarter over delivered on on some parts towards an average we're looking in for for the second quarter or or the third quarter or the fourth quarter.

Speaker #1: So you can't sort of again here it is not a constant percentage. In the backlog we executing it is actually a diverse spread project portfolio.

I won't comment on why we beat the consensus, because in reality here, you and I know that we know the backlog. None of you are on our payroll, so you don't have access to see what projects we are executing in a quarter, and the mix for us in this quarter on the deliveries and other stuff have formed that basis. And then there will always be projects that have either—

Speaker #1: So therefore that came out positively. And of course have we had to give you guidance we probably indicated that Q2 will be a bit higher but but but I will just say fortunately we don't.

Speaker #1: So therefore in this we look into a second half we have a good momentum but there's also something in the projects we already look for in in second half that doesn't imply that it is as backloaded as you probably have seen in previous years of Vestas.

Speaker #1: And please then don't forget that we also now have an offshore that is a much bigger proportion of the business. It has a stable factor to it but it doesn't necessarily have the same seasonality and back end loaded when we when we look into that.

Speaker #1: So so that's for you is is one you have to balance a little. And we give that guidance through the revised guidance today. On the H2 risk you very well know what we have of of H2 risk in in Vestas.

In this quarter, uh, over delivered on, on some parts towards an average. We're looking in for for the second quarter or or the third quarter or the fourth quarter. So, you can't sort of again, here, it is not a constant percentage in the backlog, we executing. It is actually a diverse spread project portfolio, so therefore, that came out positively, and, of course, have we had to give you guidance. We probably indicated that Q2 will be a bit higher, but, but but I will just say fortunately, we don't. So, therefore in this, uh, we look into a second half. Uh, we have a good momentum, but there's also something in the projects we already look for in in second half, that doesn't imply that it is as back, loaded as you probably have seen uh, in previous years of investors and please then don't forget that. We also now have an offshore that is a much bigger proportion of the business. It has a stable factor to it but it doesn't necessarily have the same seasonality and back end loaded when we

Speaker #1: So we have a seasonality. We are getting into a fourth quarter where weather and can we get from the inbound to the outbound doing yeah latter part of Q3 into Q4.

Speaker #1: So we are sure we have all the the assets there. Team is executing. Extremely well. Right now. So I know exactly what I'm going to tell the organization in a town hall later today.

Speaker #1: Because this is about keeping keeping that attention and keeping that spirit. Don't don't try to do anything else. So we won't try to to change our good execution.

When we look into that. So so that's for you is, is 1. You have to balance a little, and we give that guidance through the revised guidance today on the H2 risk, you very well know what, we have of of H2 risk in investors. So, we have a seasonality, we are getting into a fourth quarter where weather and can we get from the inbound to the outbound, uh, doing? Yeah. Later part of Q3 into Q4. So we assure, we have all the the assets there, uh, team is, executing extremely well.

Speaker #1: But as I said here it's not too shabby to now raise the guidance to seven to nine and as I said probably also refer to Claus Alma previous.

Speaker #1: We we feel we are where we would like to be right now. And that's a pretty positive place.

Speaker #3: Thank you. And then on the second question side I think on the tapes we're seeing from the the press call that it was cited that management saw an opportunity to reach the 10% EBIT margin next year.

Well, um, right now. So, um, yeah, I know exactly what I'm going to tell the organization in a town hall later today, because this is about keeping keeping that attention and keeping that Spirit don't don't try to do anything else. So uh, we won't try to to change our good execution. Uh, but as I said here, it's not too shabby to now raise the guidance to 7 to 9 and as I said probably also refer to Klaus Elma previous uh, we we feel, we are where we would like to be right now and that's a pretty positive place.

Speaker #3: And I know that you don't want to give guidance for next year but just to make sure that we're all treated exactly the same way.

Speaker #3: Is there is it potentially is it possible to achieve your medium term guidance next year as as with us on the on the press call?

Speaker #1: We don't give that sort of guidance and we don't give a time guidance on it that I that I've been here too long for.

Speaker #1: So as I said here we just took you through the slide and we took you through the the bridge. We have changed a little bit in the order of the bridge.

It's missing from the uh, the Press call that it was cited that management saw an opportunity to reach the 10% ebit. Margin next year and I know that you don't want to give going into the next year but just to make sure that we're all treated exactly the same way. Um, is there, is it potentially, is it possible to achieve your medium-term guidance next year as a as a result on the on the Press call?

Speaker #1: Trust me if we can get it out we will get it out as as quickly as we can. We just said to you it's definitely not going to happen this year.

Speaker #1: But we are building that bridge so it actually has a lasting bridge. So therefore please don't don't run ahead of yourself. And I think a little bit here it's it's I feel a bit over the last probably couple of years some has called it an impossible why we keep talking about and others have said hey come on there's probably a chance you can do it.

We don't give that sort of, uh, guidance. And we don't give a Time guidance on it that I that I've been here too long for. So, uh, as I said here, we just took you through the slide and we took you through the, the bridge, we have changed a little bit in the order of the bridge, uh, trust me if we can get it out, so we will get it out as, as quickly as we can. We just said to you, it's definitely not going to happen this year, but we are building that bridge. Uh, so it actually has

Speaker #1: For us right now it means a lot that we can see that we have the levers we have the handles and then in reality for all of us we have been here very long in in Vestas.

Speaker #1: Whether that comes in one year the other doesn't matter but we will do whatever we can to to get there. But but don't don't read into something people will quote for us because when we now start talking about 10% people can see it's the lowest distance we have had for more than six years.

Speaker #1: And that probably makes everyone now imply oh we didn't could do it next year. That that's not that's not where we we work diligently on improving quarter on quarter day on day.

Speaker #3: Thank you. The next question comes from the line of Kristian Torne from SEB. Please go ahead.

This is the lowest distance we have had for more than six years, and that probably makes everyone now imply, oh, we need to do it next year. That's not the way we work. Dylan and I focus on improving quarter on quarter, day on day.

Speaker #4: Thank you. I have two questions as well. And the first one goes to your guidance. So I've I've noticed you highlight the strong execution of your organization on on several occasions here.

Thank you.

The next question comes from the line of Christian Tours from SEB. Please go ahead.

Speaker #4: And I guess that that already started in in Q1 as well. As the explanation for the strong margin in in in power solutions. But at at has also been pointed to your guidance for the second half of the year.

Speaker #4: Doesn't really imply any substantial margin uplift. So at least my take seems here to be that that you're assuming your organizational performance should go back to a more average level in in the second half of the year.

Speaker #4: Which I understand why you would sort of assume that in a in a spreadsheet. But but why shouldn't we expect that your organization could could keep pace to some extent in the coming quarters?

Speaker #1: Thanks Kristian. You know me well enough. I probably work slightly more outside than in the spreadsheet. But I I understand fully your question. We don't try to necessarily do do worse.

Thank you. I have uh 2 questions as well. Uh and the first 1 uh goes to your guidance. Um so I've I've noticed you highlight the strong execution of your organization on on several occasions here. And I guess that that already started in in q1 as well um as the explanation for the strong Market in in in Power Solutions but it it has also been pointed to your uh guidance for the second half of the Year doesn't really imply any uh, substantial Martin uplift. So, at least my take seems here to be that that you're assuming your organizational performance. Should go back to a more average level in in the second half of the year.

Which I understand why you would sort of assume that in a, in a spreadsheet. But but why shouldn't we expect that your organization could could keep Pace to some extent uh, in the coming quarters.

Speaker #1: But but as I also said here I think it's actually a bit of a nice reminder on a day like this that we are sitting here and discussing.

Speaker #1: If we're going to do at a mix of what we are executing on and you will say come on the power solution is up 37% compared to a year ago.

Speaker #1: On a quite a large sized company. So I think here when we then have mix of projects do you know what we will do whatever we can but it's also fair saying there is always a risk attached and we only need one or two of the medium to large sized projects to have a a a negative bump on the road or whatever.

Speaker #1: And then at the same time we also can see that there is a pricing in some of the projects that comes in Q3 and Q4 that probably not bold as as high as you will normally see in in sometimes in in in what we have had in in Q4.

Speaker #1: But as I said let's see how that that goes. But but the guidance right now seven to nine is the best estimate for for the full year.

Uh, thanks Christian. Uh, you know, me well enough, I probably work slightly more, uh, outside than in the spreadsheet. But I, I understand fully your question. We don't try to necessarily do do worse, uh, but but as I also said here, I think it's actually a bit of a nice, reminder, on a day like this, that we are sitting here in discussing if we're going to do at a mix of what we are executing on. And you will say, come on, the power solution is up 37% compared to a year ago, on a quite a large, uh, sized company. So I think here when we then have a mix of projects, do you know what? We'll do whatever we can. But it's also Fair saying, there is always a risk attached and we only need 1 or 2 of the medium to last size projects to have a a, a negative bump on the road or whatever. And then at the same time, we also can see that there is a pricing in some of the projects that comes in Q3 and Q4 that. Probably

Speaker #1: And that implies we're actually doing pretty okay in second half. So so I I I I understand maybe there are people that are sitting and now trying to do even better.

Speaker #1: But do you know what if we hit the seven to nine in in in that part we're we're doing a really really good year.

Speaker #4: Fair enough. Then my second question is regarding the blade incident at the head right of your wind project. And and just if you could sort of update us on that.

Not bold as, as high as you will normally see in in sometimes, in, in in what we have had in in Q4, but as I said, let's see how that that goes. But but the guidance right now 7 to 9 is the best estimate for for the full year and that implies we actually doing pretty okay in second half. So so I I I, I understand maybe there are people that are sitting and now trying to do even better. But you know what? If we hit the 7 to 9 in, in, in that part we we are doing a really, really good year.

Speaker #4: Has there been any noticeable financial implication and have you identified the root cause and so on?

Speaker #1: Yeah. First of all there is a there is an incident in in head right happened on the 22nd of of July we are we are due process shouldn't happen but when you produce blades and you produce turbines of the size we are doing then then it will happen from time to time.

Fair enough. Um, then my second question is regarding the plate incident at the head, right? Um, of your wind project, and just if you could sort of update us on that—has there been any noticeable financial implication, and have you identified the root cause, and so on?

Speaker #1: I'm particularly proud again to to the to the wider organization here and not least also the collaboration with EMBW and and especially our or at least for me for my part my contact Peter Heidegger in there.

Speaker #1: We are we are going through normal process. I think the the first thing to observe is no one got hurt by it. Which is positive.

Speaker #1: Secondly is that we have managed to also keep and contain something as as the debris that comes off. We even I can see on on some of the pictures we even got help from the German Coast Guard so that's another important one and we have had here both vessels and we have had people on on beaches collecting things.

Yeah, first of all, there's a there is an incident in in head, right? It happened on the 22nd of of July. We are. We are due process shouldn't happen. But when you produce blades and you produce turbines of the size, we are doing then, uh, then it will happen from time to time. Uh, I'm particularly proud again, to, to the, to the wider organization here, and not least, also the collaboration with EMW and, and especially our or at least for me for my part. My contact Peter in there. Um, we we are going through normal processes. I think the the first thing to observe is No 1 uh got hurt by it. Um, which is positive. Uh, so

Speaker #1: So it doesn't sort of mess up summer holiday for for people that are are are coasting on the on the North Sea. So so that is really well done.

Speaker #1: Then at some point in time we we are doing that and we are going through the normal root cause analysis on that. And then of course right now as you probably also have seen we managed on Sunday Saturday to complete the last turbine number 64 on the on head right.

Speaker #1: And that means right now we have a a full a full turbine park we can we can work with. But of course there is a a blade one one blade short and we need to get the remaining part of that blade down and then we will finish our root cause analysis.

Speaker #1: So so that's where we are. It's it's something you can probably hear on we have it and we deal with it and we deal with it in a really professional way and and I can't thank at least our partner enough for also having the same professionalism and availability to deal with an anomaly like this.

Second years that we have managed to also keep and contain uh something as as the debris that comes off, uh we even I can see on on some of the pictures, we even got help from the German Coast Guard. Um, so that's another important 1 and we have had here, both vessels and we have a people on on beaches collecting things, so it doesn't, uh, sort of mess up, uh, summer holiday for for people that are, are, are coasting on the, on the North Sea. So, so that is really well done. Then at some point in time, we, we are doing that and we are going through the normal, uh, root cause, uh, analysis on that. And then, of course, right now, as you probably also have seen we managed on Sunday, Saturday, to complete the last turbine number 64, on the on head, right? And that means right now we have a, a full, a full turbine Park. We can we can work with. Uh, but of course there is a plate, 1, 1 blade short and we need to get the remaining part of that blade down. And then we will finish our root cause

Speaker #1: So if it has done anything it has probably strengthened the partnership and and for more details our reserve my partnership right with with head right.

Speaker #4: All right. Thank you. That's all from me.

Speaker #3: The next question comes from the line of Alex Jones from Bank of America. Please go ahead.

Something you can probably hear on my voice. I would rather not have. But now we have it and we deal with it and we deal with it in a really uh professional way. And and I can't thank uh, at least our partner enough for also having the same professionalism and availability to deal with an anomaly uh like this. So if it has done anything and it's probably strengthen the partnership and and for more details I will Reserve uh my partnership right with with hit right.

Speaker #4: Morning. Thanks. My first question just on the power solutions margin again this quarter one of the reasons you cited for the strength is lower than expected project costs.

All right, thank you. That's all from me.

Speaker #4: Could you just expand a little bit on that? Are there any specific items that are common across projects that have driven the lower than expected costs or is it just generally good execution and you know a lot of project specific factors?

The next question comes from the line of Alex Jones from Bank of America. Please go ahead.

Speaker #1: Just normal project factors. Project factors that hit sometimes you have you have a an execution where you have no delays you have access to full to full access to site and you get the you get the assets there and you get the cranes and everything else.

Morning, thanks. Um my first question, just on the Power Solutions margin again. This quarter 1 of the reasons you cited for the strength is lower than expected project costs. Could you just expand a little bit on that? Are there any specific items that are common across projects that have driven? There's a lot of other than expected costs or just generally a good execution and, you know, a lot of projects specific factors.

Speaker #1: So it has just come together really well. And of course we are probably benefiting in a quarter like this on some projects that were that were that were having commercial really good traction.

Speaker #1: And at the same time also we are executing as you can see on our delivery table on markets where we have very very experienced operators on site.

Just normally project factors project factors that hit. Sometimes, you have you have a, an execution where you have no delays. You have access to full to full access to site. And you get the, uh, you get the assets there and you get the grains and everything else. So it has just come together really well. And of course, we are probably benefiting uh, in a quarter like this on uh, some projects that were

Speaker #1: So so that's that's the main reason underlying. Then there will always be some some one offs hitting some of the projects and of course that also leads to what we have as a common in saying here that there are some of the projects that simply just have a lower operating cost in the in the in the quarter.

Speaker #4: Okay. Understood. And then the second one on the buyback. Obviously you've decided to announce sort of a larger program for the next two quarters today rather than the sort of one quarter at a time approach that you were taking previously.

They were, they were having commercial, uh, really good traction. And at the same time also, we are executing. As you can see, on our delivery table on markets, where we have very, very experienced operators, uh, on site. So so that's that's the main reason on the line, then there will always be some uh, some 1-off hitting some of the projects. And of course that also leads to what we have as a common in saying here that there are some of the projects that simply just have a lower operating cost in the uh in the in the quarter.

Speaker #4: Could you just talk through the decision to do that? Is it implying that you now have better visibility on sort of future results orders cash flow than you've had in the past year when you've been taking a quarterly approach or any other interpretation we should take from that?

Speaker #4: Thank you.

Speaker #1: Yeah. Thanks for the question. Alex. No there's there's nothing else you should take from that. That is as we also communicate that is the on the back of the strong first half and on the visibility we now have into second half.

Understood and then the second 1 on the buyback, obviously, you've decided to announce sort of a larger program for the next 2 quarters today rather than the sort of 1 quarter at a time approach that you were taking previously. Could you just talk through the decision to do that? Is it implying that you now have better visibility on sort of future results orders cash flow, uh, than you've had in the past year when you've been taking a quarterly approach, or any other interpretation, we should take from that, thank you.

Speaker #1: And that yeah these 400 million together with what we have done so far this year we we will will go up to six 650 in total with what we have announced.

Speaker #4: Thank you.

Speaker #3: The next question comes from the line of Martin Wilkie from CT. Please go ahead.

Yeah, thanks for the question. Eric know. There's there's nothing else you should take from that. That is as we also communicate, that is the on the back of the strong first half and on the visibility, we now have in 2 second half. And that, yeah, these 400 million together with what we have done so far this year, we we will uh, we'll go up to 6 650 in total with what we have announced.

Speaker #4: Yeah. Thank you. Good morning. It's Martin from CT. And yeah congratulations again on such a great set of results. I I did want to come back to power solutions and and if I understand correctly the offshore business is is still loss making.

Thank you.

The next question comes from the line of Martin Wilkie from Citi. Please go ahead.

Speaker #4: So you expect that to go to profit by by Q4. But that does mean that your onshore margin has to be sort of low to mid teens which we've not seen for about a decade.

Speaker #4: And it sounds like there were some lower costs in the quarter but you used to frame the the way that you saw the margins with the pre calc and the post calc.

Speaker #4: You know what what you expected when you signed the contract. What it ultimately ended up being. I mean in aggregate was was that post calc just way better this quarter or or was it much more just the particular mix this quarter was was better and you kind of knew that already given the backlog and the comment that you made earlier.

Speaker #4: Just to understand you know what really drove that that magnitude of improved margin. Thanks.

Speaker #1: We've just been through through this and and seen of course a quarter where I don't think I've had to raise my voice one single time on a project execution this quarter.

Yeah, thank you, good morning. It's March from suse and yeah, congratulations again, on such a great set of results. I I did want to come back to Power Solutions and and if I understand correctly, the offshore business is is still loss making. So you expect that to go to profit by by Q4. But that does mean that you're onshore margin has to be sort of low to mid teens, which we've not seen for about a decade. And it sounds like there were some lower cost in the quarter but you used to frame the, the way that you saw the margins with the pre-calc and the postal. You know what, what you expected when you signed the contract, What It ultimately ended up being. I mean in Aggregates was, was that postcard just way better this quarter or or was it much more just the particular mix. This quarter was was better and you kind of knew that already given the backlog and the comment that you made earlier just to understand, you know what really drove that um that magnitude of improved margin. Thanks.

Speaker #1: If it if I had to raise my voice this quarter it was to give people an extra praise for something. So I think margin in this quarter it it is just very I mean I I I don't think I can go back in the quarter and and say there was some projects where we should have done differently or something.

Speaker #1: So it's really been really well executed. And that also means that of course in a quarter like that where you have some really positive projects in the backlog to execute on it just you just didn't have much deviation.

We just been through uh, through this and and seeing, of course, a quarter where uh I don't think I've had to uh, to raise my voice uh, 1 single time on a project execution. This quarter, if it if I had to raise my voice this quarter it was to give people an extra price for something. Um so I think um imagine in this quarter it is just uh very I mean

Speaker #1: So that that is really really the one on your split between offshore and onshore. Of course you can make you can make some of those calculations but there I I won't comment on it because in reality here we we know what we are aiming at and therefore of course I can't I can't say anything else.

Speaker #1: Of course onshore is performing above the above the average and the average was 10.4. So there's no there's no there's no shying away from that.

Speaker #1: So we are doing well in onshore. We also we also improving and getting there in offshore.

Speaker #4: Great. Thank thank you very much. And if I could just a follow up question. I mean the question did come up earlier about the the US market but obviously still a lot of moving parts in the US.

Speaker #4: There was some court rulings on permitting recently. Obviously the tariff backdrop has changed quite a bit since the start of the year. Are are you are you seeing any signs of pent up demand in the US getting released or do you still think that the some of these uncertainties are are sort of you know weighing on the market still and we have to wait for a bit more progress before we kind of unleash a new wave of order intake in in the US.

In reality here. We we know what we are aiming at and therefore of course I can't I can't say anything else. Of course, I'm sure it's performing above the above, the average and the average was 10.4. So uh there's no, there's no, there's no shying away from that. So we are doing well in on. So we also we also improving and getting there in offshore.

Speaker #4: Thanks.

Speaker #1: Yeah. I don't know what you I don't know what people are sort of unleasing. I don't know. We we we got we got to fulfill the demand that comes.

Speaker #1: And I I think last quarter I think the talking point was at that point in time there was a department in in the US that probably didn't didn't work exactly accordingly to the expected legislation on on issuing the the permitting or the at least the negative interference permitting with for instance the Department of of of War.

Great, thank. Thank you very much and if I could just have a follow-up question, I mean, the question did come up earlier about the, the US market but obviously, still a lot of moving Parts in the US. There was some court rulings on permitting recently. Obviously, the Tariff backdrop has changed quite a bit since the start of the year um are are you are you seeing any signs of pent up demand in the US getting released? Or do you still think that the sum of these uncertainties are are sort of, you know, Weighing on the markets still? And we have to wait for a bit more progress before we kind of unleash a new wave of order intake in in the US. Thanks.

Speaker #1: And I think that of course ended with a with a judge ruling as late as a week ago. So I think Martin in the US as as I said earlier on this call that the underlying demand and fundamentals are really strong.

Speaker #1: So whenever people can get a project through there is an off taker in the other end immediately. And of course that bodes well for both getting permitting and the volume through whenever you have a full approved project in the US.

Yeah, and I don't know what you, I don't know what people are sort of an unreasoning. I don't know. We, we we got to, we got to fulfill the demand that comes. And I, I think last quarter, I think, the talking point was at that point in time, there was a department in, in the US that probably didn't didn't work. Exactly accordingly to the expected legislation on, on, issuing, the, the permitting or the at least, the negative interference permitting with, for instance, the department of of, of, of war. And I think that, of course, in it with a judge ruling, uh, as late as a week ago. So, I think, Martin in the US,

Speaker #1: So I see I see the lifting of it potentially again accelerating something but we will see more of that when we get further into the year and in 20 and in 27.

Speaker #1: I think the same as did when we were sitting here last quarter and discussing I think there's still a a section 232 that is outstanding but then on the other hand then some tariffs have been going and some tariffs have been returned and then might new tariffs be coming.

Speaker #1: Do you know what it starts feeling a little bit on a day to day what we have seen before. So so good good have a incredibly good organization or not only in the US but also globally to to deal with it.

Speaker #1: So we are positive we can overcome some of those challenges. So far it doesn't look too shabby.

Speaker #4: That's good to hear. Thanks very much.

As as I said earlier, on this call that in my underlying demand and fundamentals are really strong. So whenever people can get a project through there is an off tagger in the other end immediately, and, of course, that bolds well for both getting permitting, and the volume through, uh, whenever you have a full approved, uh, project in the US. So I see, uh, I see the lifting of it, uh, potentially, again accelerating something, but we will see more of that when we get further into the year and in 20 and in 27, I think the same as did when we were sitting here last quarter and discussing. I think there's still a a section 232 that is outstanding. But then on the other hand, then some tariffs have been going and some tariffs have been returned and then my new tariffs becoming do, you know what, it starts feeling a little bit on a day-to-day, what we have seen before. So, so go to have a incredibly good organization, uh, or not only in the US but also,

Speaker #3: The next question comes from the line of Casper Blom from Danske Bank. Please go ahead.

Globally, to deal with it. So we are positive. We can overcome some of those challenges so far. It doesn't look too shabby.

Speaker #4: Thank you very much. And of course also congrats from my side. So happy to see that that your hard work is paying off here.

That's good to hear. Thank you very much.

Speaker #4: Two questions also here. First one goes to the service recovery plan. You've now for a couple of quarters talked about how you can see that your efforts are paying off and that you are able to to take out costs.

The next question comes from the line of Casper Blum from Danske Bank. Please go ahead.

Speaker #4: Can you can you talk a bit to where you are in this recovery plan? Are you sort of past all identification of challenges and is now more execution or you know should we more think about this recovery plan as something that will also continue after 2026 for 27 28 and onwards as you continue to sort of optimize this business?

Thank you very much. And, um, of course, also congrats from my side—so happy to see that your hard work is paying off here. Um, two questions also here. Uh, first one goes to the service recovery plan. Um, you've now for a couple of quarters talked about how you can see that your efforts are paying off in that you are able to take out costs.

Speaker #4: And as a bit of a follow up to this I know many investors are are eager to see when will this cost take out lead to higher margins in the service business.

Speaker #4: Is there anything you can say about how you will evaluate the business when you get to the end of 2026? Thank you.

Speaker #1: Thanks Casper. I will only repeat what what we have said. Service recovery plan is on track. Deliver as expected. It's both on the cost side but also on the commercial side.

Can you can you talk a bit to where you are in this recovery plan? Uh, I use sort of pass all identification of challenges and is now more execution or, you know should be more think about this recovery plan as something, that will also continue after 2026, for 27/28 and onwards, as you continue to sort of optimize this business, and as a bit of a follow-up to this, um, I know many investors are are eager to see when will this cost take out lead to higher margins in the service. Uh, business. Is there anything you can say about how you will evaluate the business? Uh, when you get to the end of 2026, thank you.

Speaker #1: The team is is delivering exactly as we have planned and and and as we expect. I appreciate you all would like to see when and how much and so forth and what we have said and we will repeat this quarter.

Speaker #1: We have two more quarters of the recovery plan ahead of us. We'll speak to those in the next two quarterly investor calls and then after that we'll have a conversation about how do we naturally as part of the the last quarter we will talk about how do we see into 2027 and and let's talk about guidance there.

Speaker #1: But again we have more to do for the rest of the year. The last six quarters of the recovery period is giving us giving us good confidence in the team in terms of their ability to deliver on the plan because they have done so far.

Speaker #4: Okay. Thanks for that. Then then my second question is is a little bit of a follow up to all the previous ones on on power solutions and your statement about having outstanding execution here in the quarter which I suppose we can also see in your gross margin.

I have good confidence in the team in terms of their ability to deliver on the plan, because they have done so, so far.

Speaker #4: Henrik you point to the fact that you are delivering a lot in markets where you have a lot of experience and looking at the table.

Speaker #4: It's Germany and and the US are two places that stand out. I suppose these are also markets where we can expect to see a high degree of onshore deliveries both for the remainder of this year and for the next year.

Speaker #4: Should we then also expect that these markets can continue this outstanding execution and is it possible to take the best practice from these places to other markets?

Speaker #4: Thank you.

Speaker #1: Yeah. I mean we we we I mean it's it's it's a special day because you sit here and now you almost have to explain why we are doing so well and we we are we are we are probably trained very well quarter on quarter for five years in explaining why we were doing so badly.

Okay, thanks for that then. Then my second question is, is a little bit of a follow-up, to all the previous ones on on uh Power Solutions and your statement about having outstanding execution here in the quarter which I suppose we can also see in your gross margin a Henrik. You point to the fact that you are delivering a lot in uh markets where you have a lot of experience and looking at the table, it's Germany. And and the US are 2 places that stand out. Um, I suppose these are also markets where we can expect to see a high degree of onshore deliveries, both for the remainder of this year. And for the next year, um,

Should we then also expect that these markets can continue this outstanding execution? And is it possible to take the best practice from these places to other markets? Thank you.

Speaker #1: I think here today we are doing so well so it's it's an interesting one listen we we learned all the hard practices three four years ago and we try to bottle that and and take it into the countries but but you also will appreciate where you have several projects on an execution on a go then it's a lot easier to compensate countries single project if something goes wrong you have no you have no compensating factor.

Speaker #1: So of course we are right now blessed with with part of that and that's probably why some of the execution just came came so well together.

Yeah, I mean, we we, we I mean, it's it's it's it's a special day because you sit here and now you almost have to explain why we are doing so well and we have, we have, we have, we have probably trained very well quote, unquote of 5 years in explaining, why we were doing so badly. I think here today we are doing so well so it's it's an interesting 1. Listen we we learned that all the hard practices uh 3 4 years ago and we tried to bottle that and and take it into the countries. But but you also will appreciate where you have several projects on an execution on

Speaker #1: As I said it's it's not a Q2 we can sort of bottle and because it just came well together and the pricing of and the commercial terms of the of the Q2 orders were were significant beneficial.

Speaker #1: Project by project. So there is a combination in this quarter which is really well. Trust me if we can continue doing that and we can bottle it to the rest of the world life will do life will do look different for the future but it will also have look very different in the past if we have had more quarters of this of this nature.

Speaker #1: So so I I don't know what more to to I'm not I'm not sitting here and apologizing for doing good in a quarter that that's for sure Casper.

Speaker #4: You shouldn't. Thank you.

Speaker #1: Thanks.

Speaker #3: The next question comes from the line of Sean McLoughlin from HSBC. Please go ahead.

On a goal. Then it's a lot easier to compensate where you have a single countries single project. If something goes wrong, you have no, you have no compensating Factor. So of course we are right now blessed with with part of that. And that's probably why some of the execution just came came so well together. As I said it, it's it's not a q2i we can sort of bottle and because it just came well together and the pricing of and the commercial terms of the of the Q2 orders were, were significant beneficial, uh, project by project. So, there is a combination in this quarter, which is really well. Trust me if we can continue doing that, and we can bottle it to the rest of the world and life will do, uh, life will do look different for the future. But it will also have looked very different in the past if we have had more callers of this, uh, of this nature so. So I I don't know what more to to. I'm not, I'm not sitting here, I'm apologizing for doing good in the quarter, that that's for sure Casper.

You shouldn't. Thank you.

Speaker #4: Thank you. And well done from my side too. I have a question on offshore. Deliveries now stable over the last three quarters at about 0.8 gigawatts.

Thanks.

The next question comes from the line of Sean McLaglen from HSBC. Please go ahead.

Speaker #4: Is is is this a new run rate? Is there any reason to expect H2 offshore deliveries to fade versus H1? That's that's the first question.

Thank you, and well done from my side too.

Speaker #1: I think the quarters here will be more more equal because it's about getting it out getting it prepared. There's there's more installation. There's more pre-installation work when you talk about offshore.

Deliveries: now, stable over the last three quarters at about 0.8 gigawatt. Is this the new run rate? Is there any reason to expect H2 offshore deliveries to fade versus H1? That's the first question.

Speaker #1: So that will probably be more more flat line. It it doesn't have the same seasonality and shouldn't have the same seasonality. But of course in offshore you will also appreciate that that where you are more I can call it sort of easier or or or safe in terms of working days offshore is always going to be Q2 and Q3 where you will use Q Q1 and Q4 to to ramp and get some capacity out.

Speaker #1: So it's it's slightly different. It becomes more difficult to rely on the on the weather installation in in in Q4 for offshore because both the wind and the and the and the waves there will will impact that.

Speaker #1: So counted a little bit more I wouldn't say linear but a little bit more better balanced on the four quarters and also between H1 and H2.

Speaker #4: Yeah. Thank you. And and then staying on offshore I mean remains the the the largest hog if you like in the bridge to the the 10% margin target.

I think the quarters here will be more more equal because, uh, it's about getting it out, getting it prepared. As there is more installation, there's more pre-installation work when you talk about offshore so that will probably be, uh, more more Flatline. It it doesn't have the same, uh, seasonality and shouldn't have the same seasonality, but of course in offshore, you would also appreciate that that where you are more. I can call it sort of easier or or, or, or safe in terms of working days offshore is always going to be Q2 and Q3 where you will use q, q1 and Q4 to uh, to ramp and get some capacity out, so it's it's slightly different. It becomes more difficult to rely on the, on the weather installation in in, in Q4 for offshore because both the wind and the, and the, and the waves there will will impact that. So, uh, count it a little bit more. Uh, I wouldn't say linear but a little bit more better.

Balanced in the fourth quarter and also between H1 and H2.

Speaker #4: We we've seen that tax times have been falling so obviously you've already reached a degree of production efficiency in in the last quarter which I I I imagine is is is also part of that margin strength.

Yeah, thank you. And then...

Staying on offshore, I mean, remains the largest hog.

You liken it to the bridge to the 10% margin target. We've seen that.

Speaker #4: Just where we go from here is it how is it really about higher volume or is you know or are we already at a level where this three to four gigawatt run rate is I guess the the delivery norm and it's really there's still a lot more to do on the actual efficiency of production?

Tax times have been falling. So obviously, you've already reached a degree of production efficiency in the last quarter, which I imagine is... is...

Also part of that margin strength—just, where do we go from here? Is it?

How?

Speaker #4: Just wondering where if any detail around you know where we see those incremental improvements that drive you from red to black and drive the company to 10%.

Speaker #4: Thank you.

Speaker #1: Yeah. I think you're right in in saying we can we can start seeing and you can start seeing the same as we can in terms of scalability and volume.

Speaker #1: We are getting there. I think we spoke about it a lot through through last year I think there was in initial when when people start not liking offshore as much a couple of years ago I think last year when you ramp something up I actually appreciate today that the ramp we have done takes a lot more effort and a lot more resources also from something simple that just getting the full value chain tools into installation and being sure you have the right tools and the tools available.

Rate is I I guess the the delivery norm and it's really there's still a lot more to do on the actual efficiency of production, just wondering where, if any detail around, you know, where we see those incremental improvements that drive, you from red to Black and drive the company to 10%. Thank you.

Speaker #1: There is a lot Sean I'll tell you get comfortable with that. Are we full comfortable with that? The as the journey ended no not at all but but we are at a point now where we can say that from a scale point of view from last year we had a couple of projects this year we right now fully focused on on running five projects various parts.

Speaker #1: So therefore also it just takes different scalability also from right from people to to the tools and of course the by far biggest thing here sitting with with the variance or the I call it today I I have to say 24 and 25 it was the investments in getting off the ground but as you can also start seeing this is now a business that are from next year starts contributing positively and then we will start seeing something that also meaningful drives and lifting what is the midpoint of the guidance from eight towards the towards the 10.

I think, uh, you're right in in saying we can, we can start seeing and you can start seeing the same as we can, in terms of scalability and volume. We are getting there. I think we spoke about it, uh, a lot through through last year. Uh, I think there was an initial when when people start not liking offshore as much a couple of years ago, I think last year when you ramp something up I actually appreciate today that the ramp we have done, it takes a lot more effort and a lot more resources. Um also from something simple that just getting the full value chain tools into installation and being sure you have the right tools and the tools available and there is a lot. Sean. I'll tell you get the comfortable with that. Are we full comfortable with that the as the journey in and no, not at all. But but we are at a point now where we can say that from a scale point of view. Uh, from last year, we had a couple of projects this year. We right now uh fully focused on on running 5 projects, uh, various parts. So therefore also

Speaker #1: And there's a little plus in ahead of the 10. So let's see where we stop with it. But you can see the lever of it and and I think now you can also start seeing the lever of it in in a context.

Speaker #4: Thank you.

Speaker #3: The next question comes from the line of William Mackie from Kepler Chevron. Please go ahead.

It just takes, uh, different scalability also from right from people to, to the tools. Um, and, of course, the by far biggest thing here, sitting with, with the variance, or the I call it today. I, I have to say, 24 and 25, it was the investments in getting off the ground, but as you can also start seeing this, is now a business that are from next. Year starts contributing positively, and then we will start seeing something that also meaningful drives, uh, and lifting. What is the midpoint of the guidance from 8, towards the, towards the 10 and there's a little Plus in the head of the 10. So, let's see where we stopped with it but you can see the lever off it. Um, and, and I think, now you can also start seeing the lever off it in in a context.

Speaker #4: Yeah. Good morning. Thank you for the time. A couple of follow ups really. Starting with service you've explained you're making good progress with the cost out and that's evident in the revenue progression being slightly down in the year.

Thank you.

The next question comes from the line of William Mackay from Kepler Cheuvreux. Please go ahead.

Speaker #4: Can you share how you see the scope of revenue development in the second half of the year or rather how you see the scope of cost development and also maybe touching on the viability of the 25% margin in service that you've called out in previous quarters.

Yeah, good morning. Uh, thank you for the time, a couple of follow-ups really, um, starting with service, you've explained you're making good progress with the, uh, cost out. And that's evident in the revenue progression being slightly down in the year.

Speaker #4: That's my first question.

Speaker #1: Yeah. First of all we'll take take it as a as a positive here. Cost out journey progressing so that means the cost out as a as a meaningful lever here is is continuing.

Can you share how you see the scope of revenue development in the second half of the year, or rather, how you see the scope of cost development? And also, maybe touch on the viability of the 25% margin in Service that you've called out in previous quarters? That's my first question.

Speaker #1: And that is also continuing but it is also continuing as a as a day-to-day working discipline. But there are still a couple of areas around the world where more more attention is is needed.

Speaker #1: So that will be then on the on the on the guidance of of second half of the year there's also transactional sales with which makes that a little bit sort of hey that that we don't do that and and we don't have a a top line.

Speaker #1: We have an an EBIT margin guidance I'm a bit nervous for in the recovery of of in all fairness it's not a chasing of top line or it's not a a top line here.

Speaker #1: So top line will be what it is and then we will show that quarter on quarter. But the business is in better health than it was six quarters ago and and and our colleagues in there running it are responding positively to it.

Speaker #1: And of course at some point in time Jacob's point on LPF will also start helping when the LPF is is coming down and therefore also support a more stable running of the of the service business.

First of all, uh, um, will take take it as a, as a positive here, cast out journey progressing. Uh, so that means the cost out as a as a meaningful lever here is, is continuing and that is also continuing, but it is also continuing as a, as a day-to-day working discipline. But there are still a couple of areas around the world where more more attention is is needed. So, that will be then on the, on the, on the guidance of, uh, of the second half of the year. There's also transactional sales with which makes that a little bit sort of, uh, Hey, that, that we don't do that. And, and we don't have a a Top Line. We have an, an EV margin, uh, guidance right now and that we are following because I'm a bit nervous for in the recovery of of, in all fairness. It's not a chasing of top line or it's not a a top line here. So Top Line will be what it is and then we will show that quarter on quarter but the business is in Better Health than it was

Speaker #1: On the 25% ambition it will it will take some it will take some quarters and it will take us a little bit more comfort in finishing the recovery before we are we are able to probably say a bit more of what jumps will that come in.

Speaker #1: But but there is no doubt for for all of us first immediate target of the service business is to complete what we are doing get the backlog right and then and then the target is for having a a margin that starts with a two.

Speaker #1: And and that that we will that we will get to in in in in a time frame.

Speaker #4: Thank you. Thanks. The the second question goes to the onshore business development again. I think your installation volumes are declared 3% up year to date.

That we will that we will get to uh in in a in a in a time frame.

Speaker #4: I mean if you could share you know all being well and obviously subject to weather and execution risk the sort of level of increase in output you might achieve in 26 or to think of it another way how do you see your factory utilization trending into 26 27 and then an add on to that really is to come back to a question that you sort of prompted earlier which is about your back end of the year including weaker price of projects some in Q3 and Q4 and maybe any more color on on how that would occur given that we've seen a steady progression of price development over the last two years and a steady development of the supply chain and costs.

Speaker #4: So it seems a little counterintuitive.

Speaker #1: Thanks. First of all well I will say here on the utilization I think we are we are we are still seeing that you can also see in this in this quarter and and Jacob has had that in in his part as well we have included now the the factories from from also GPI in Mexico and India and we expect to use those factories as well in our in our capacity planning and so therefore we we are not we're not sitting here and and trying to say that our utilization will go down opposite.

Thank you. Thanks. The the second question, goes to the onshore business development again. Um, I think your installation volumes are declared 3% up year to date. I mean, if you could share, you know, all being well and obviously subject to weather and execution risk, uh, the sort of, uh, level of, uh, increase in output you might achieve in 26 or to think of it another way. How do you see your factory utilization trending, uh, into 2627? And then an add-on to that really is to come back to a question, uh, that you sort of prompted, uh, earlier which is about your back-end, uh, of the year including weaker price of projects, some in Q3, and Q4, and maybe any more color on on how that would occur given that we've seen a steady progression of, uh, price development over the last 2 years and a steady development of the supply chain and costs,

So, it seems a little counterintuitive.

Thanks. First of all, I will say here on the utilization, I think we are...

Speaker #1: But that's also speaks to still part of the handle to the 10% bridge which is onshore can still do things we can still have a better utilization and you know right now that that in the US we having a a a good utilization but it's also finding that balance in the US because of course there is a a US manufactured advantage and of course we are we are using that.

Speaker #1: So so the utilization right now goes hand in hand and there's more also on the on the on the scale and the advances and the mix in the onshore we can take advantage of.

Speaker #1: And then as I said I I I really encourage people not to walk away from a call here and think that second half is a is a kind of a disappointment.

We are, we are still seeing that you can also see in this in this quarter and and Jacob has had that in in his part as well. We have included now the uh, the factories from uh, from also TPI in Mexico, and India and we expect to use uh those factories as well in our in our capacity planning. Um, so therefore we we are not we are not sitting here and and trying to say that our utilization will go down uh opposite. But that's also speaks to still uh part of the handle to the 10% Bridge, which is onshore can still do things, we can still have a better utilization and, you know, right now that that in the US we having a a, a good utilization but it's also finding that balance in the US because, of course, there is a, a US manufactured, uh, advantage. And of course we are, we are using that. So, so the utilization right now, uh, goes hand in hand, and there's more, uh, also on the, on the, on the scale, and the advantages, and the mix in the

Speaker #1: I'm I'm saying if if if we are now discussing a rounding whether it's nine or it's nine and a half or something you know I have I have variances in a broader in a quarter on executing power solutions that are far bigger than half a percent as you are saying.

Honore, we can take advantage of that. And then, as that, I—

Speaker #1: So it's priced well it's in there but we have had some execution and we have had some part of the of the Q2 that was just exceptionally well and and I think we have had it because it also looked like it it surprised you in some of the consensus for Q2.

I I really encourage people not to walk away from a call here, and think that second half is a is a kind of a disappointment. I'm, I'm saying, if if, if we are now discussing a rounding, whether it's 9, or it's 9 and a half or something, you know, I have I have variances in a product in a quarter on executing Power Solutions that are far bigger than half a percent as you are saying. So it's priced. Well, it's in there.

Speaker #1: So therefore let's let's let's go through the quarters and I think here we'll we we know each other that well we we shouldn't talk a a negative out of raising a guidance and now having a seven to nine percent because we are not aiming at at at at hitting seven and if we can we will try to see if we can get to nine.

Speaker #1: But but but that's the guidance we are seeing for the business. And if that I could take the last question operator.

Speaker #4: The last question from today's call comes from the line of Lucas Ferhani from Jefferies. Please go ahead.

But we have had some uh, execution and we have had some part of the of the Q2 that was just exceptionally well and and I think we have had it because it also looked like it, it surprised you in some of the consensus for Q2. So, therefore, uh, let's let's, let's go through the quarters and I think here, uh, will we we know each other that? Well, we we shouldn't talk a, a negative out of raising a guidance. And now having 7 to 9% because we are not aiming at the, at at, at hitting 7. And if we can, we will try to see if we can get to 9. But but, but that's the guidance we are seeing, uh, for the business.

Speaker #2: Hello and thanks for fitting me in. Perhaps two the first one is just on inflation. Obviously we're seeing stock prices copper prices go up logistics also accelerating a bit as of late.

And if I could take the last question, operator.

The last question from today's call comes from the line of Lucas Farhani from Jefferies. Please go ahead.

Speaker #2: I mean how do you think about what that means for for ASBs for or underlying pricing and then the second one is just on Germany.

Speaker #2: Obviously the the new EGG has been released EEG sorry the new grid package as well. There's some changes for for developers there. I guess the the feedback is is mixed but it's still you know up in the air in terms it could change again.

Speaker #2: But how do you see let's say the regulatory changes in Germany and what that means for kind of 27 28 if if they stay like this.

Speaker #2: Thank you.

Speaker #1: Yeah thanks for your question Lucas and let me let me start with the first and then Henrik will will end on on Germany. So in terms of inflation we have learned our lesson also from from history in terms of logging this in when we when we have a project that is firm.

Hello, and thanks for fitting me in, so I have 2. The first 1 is just on inflation. Obviously you were seeing stop prices, copper prices, go up Logistics also accelerating. If it, as of late. I mean, how do you think about what that means for for asps for or underlying pricing? Um, and then the second 1 is just on Germany. Obviously the, the new EG has been released EEG. Sorry. The new grid package as well. There's some changes for for developers there. I guess the feedback is is mixed, but it's still, you know, up in the air and time they could change again. But how

Do you see, let's say, the regulatory changes in Germany and what that means for kind of 2027-28 if they stay like this? Thank you.

Speaker #1: There we we either have agreed with the customer that they will come a part of the risk contractually and the rest we are we are securing through whether that is indexes or whether that is through through our various tools in in our treasury team then then we cover that treasury and procurement then we cover that.

Speaker #1: So I would say inflation and and other changes to raw materials and and pricing we we are dealing with with better than what we have done in the past.

Speaker #4: And Lucas on your on your German EEG policy and and other stuff this is a this is again I think wisely for a country that is that is revised so much and changed so much in the last 24 months you're inviting to a consultation period where people are invited to also come with feedback.

Whether that is, uh, indexes or whether that is through through, uh, our various Tools in in our treasury team, then then we cover that uh, Treasury and procurement, then we cover that. So I would say uh, inflation and and other changes to raw materials. And and pricing, we we are dealing with uh with uh, better than what we have done in the past.

Speaker #4: We have actually seen a number of European countries doing that. I think to the benefit I saw it the latest in France just a couple of months ago where also they invited for feedback on for instance their offshore expansion.

Speaker #4: So I think this is positive when it comes in this way that you invite the market participants you also will appreciate that what has come with the German expansion and the German policy and and and let's not forget it's it's only sort of three years ago Germany was doing on average what rest of Europe was doing well below an average of of expanding the energy accessibility for for for Germany.

And look, it's on your, on your German. Uh, EG policy and and other stuff. This is a, this is again I think wisely for a country that is that is revised so much and changed so much in the last 24 months, you're inviting to a consultation period where people are invited to also come with feedback. Uh, we've actually seen a number of European countries doing that. Uh, I think to the benefit. Uh, I saw it the latest in France uh just a couple of months ago, where also they invited for feedback on for instance uh their offshore

Uh, expansion. So, I think this is positive.

When it comes in this way that you invite the market participants,

you also will appreciate that.

Speaker #4: And now Germany in today's future expansion on auctions are of course suddenly doing almost in auction volume the same as EU did totally in installation just three years ago.

Speaker #4: So we are we're trending towards auction volumes of somewhere around 13 15 even maybe 15 gigawatt while the EU just a few years ago totally did 16 gigawatt.

What has come with the German expansion? And the German policy—and, and, and let's not forget, it's only sort of three years ago, Germany was doing on average what the rest of Europe was doing well below, an average of, of expanding the energy accessibility for Germany. And now Germany, in today's—

Speaker #4: So I think there is a good example developing and the cost of it has also come down because now you suddenly see the upside of having the capacity having the infrastructure having the cranes having the experienced construction people.

Speaker #4: So this is really really good. That they deserve a lot of credit for that the the new government Reich and Merz deserves a lot of credit for and therefore as an industry we can then only add how we we think that will work in the next three to five years depending on how we we structure it.

Speaker #4: But I think there has to be something for both and and that German government is looking for. So so maybe we can comment on it in in after Q3 when we know a bit more of of how the actual rules then came out.

Speaker #4: But so far active participants from Western society and active participants also together with our partnerships on customers. So we really looking forward to that.

Future expansion on auctions. Of course suddenly uh, doing almost an auction volume. The same as EU did. Totally in installation just 3 years ago so we are. We're trending towards auction volumes of somewhere around 1315, even maybe 15 gigawatt. While the EU just a few years ago, totally did 16 gigawatt. So I think there is a good example developing and the cost of it has also come down because now you suddenly see the upside of having the capacity, having the infrastructure, having the cranes, having the experience, the construction people. So this is really, really good. Um, that they deserve a lot of credit for that the the new government uh uh, rice and match the serves a lot of credit for and therefore as an industry, we can then only add, uh, how we we think that will work in the next 3, to 5 years, depending on how we we structure it. Uh, but I think there has to be something.

Speaker #4: I think.

Speaker #2: Thank you very much.

Speaker #4: Thank you so much Lucas and to everyone else thank you for listening in. Thank you also for your active questioning and we look forward to see many of you or the coming days or even the coming weeks.

Uh, for both and and that German government is looking for. So, so maybe we can comment on it, in in, after Q3 when we know a bit more of of how the actual rules then came out. Uh, but so far, uh, active participants from investor society and active participants also together with our Partnerships on customers. So we really looking forward to that.

Speaker #4: So so therefore thank you for that and thank you for your support not least through the many last years and I hope you appreciate the the support and and also our saying proper thank you with the with the share buyback after Q2.

iPhone, thank you very much. Thank you so much, Lucas, and to everyone else.

Uh, thank you for listening in. Thank you also for your active uh uh questioning. Um, and we look forward to seeing many of you or the coming days or even the coming weeks. So uh so therefore thank you for that and thank you for your support not least through the many last years. And I hope you appreciate the the support and and also our saying proper. Thank you with the uh, with the share buyback after Q2. Thank you so much.

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