Good morning, and welcome to this presentation of Vestas' full year 2023. Before I go into the details, let me start by saying a huge and heartfelt thank you to all of our stakeholders out there. Shareholders, for your support and patience, customers, for your partnerships throughout the last years, the supply chain for the continued working so committed with Vestas and the Vestas team around, and last but not least, our passionate colleagues across the world. Without you, it would not have been possible to return back in black in this scope of 2023. With that, let me go quickly to the highlights of our full year.
So we returned to profitability and achieves the upper end of our guidance after the Q3 and Q4. EBIT margin ended at 1.5%. That enables Vestas to pay our employee a bonus for the first time in the last four years, and are for sure deserved and long awaited. We had a record order intake of 18.4 GW for the year. The order intake are driven by strong growth in both offshore and onshore, and especially in the U.S. We ended revenue at EUR 15.4 billion. The increase in revenue was driven by higher pricing, as well as the continued growth in the service business and a performance across the businesses really well. We'll see later for the details. We also introduced the low-emission steel towers. We announced a partnership with ArcelorMittal.
We'll talk more about it. It's the new tower offering is a big step towards fully circular wind turbines and for customers and investors to achieve our emission targets, especially in the Scope 3. We also see that the strategic path is unchanged. We remain and we sustain the strong commercial discipline and value or volume attitude to reach our long-term ambitions. We also today initiate our outlook for 2024. Revenue is expected in the range of EUR 16 billion-EUR 18 billion, and EBIT margin is expected to be in the range of 4%-6%. So with that, I will just go in with also this, we will talk about the market, the orders, sustainability first.
We'll hence, we'll take the financials, and then, as normal practice on our full year, we will also give a strategy update of where we are, and of course, finishing with the, full, full outlook in the end. So with that, how does our current business environment look like? Clearly, we drive the industry maturity, and we also define the three core circles of what you look here below, which also drive a strong from all three circles, the energy transition, forward. If we'll start with the global environment first, I think we can say the global environment, had improved and improved, so Q4 was the best quarter for us to see across and also what we were asked to mitigate, across the three circles.
The global environment, the raw materials and the transport costs either stabilized or even pointed towards lower levels. But for us, the most important was it was a stable exit of the year, and it was a stable Q4. When we look at the geopolitical situation, yes, there are definitely a geopolitical volatility. Some will call it instability, but on the other hand, we also have to appreciate here that works also to some extent still as a driver for also the independent buildup of energy resources in some of the countries. We see inflation and interest rates still remaining high, at a higher level and elevated level, and of course, that challenge the industry in also build out to the price levels governments are aspiring to.
When we look at the market environment, absolutely still a priority to grid investment. We also see that happening. We see more and more doing it in parallel to accelerate the permitting, so that is actually a positive support for this. And when we look at the permitting, which of course I will be one of the ones that normally speaks highly for in these calls, we see the permitting is improving in markets like Germany and the UK. Can't praise the governments there enough for actually sitting themselves at the table and driving that accelerated part, and we will talk more about it. I'm sure somebody will have more questions to it, but it's really positive to see in a country like Germany that we are in excess of probably 5 GW in onshore permitting annually.
And therefore, also, it is just look at the good examples and then try to, see that, because overall, the permits and auctions and grid are still challenging and are still the probably the three factors we are normally having to, work with our partners to also have, governments moving faster. The best part is the project level. We've seen the supply chain disruption are improving. It's the least we have seen in now a number of years. And of course, we still appreciate there is a Red Sea. We still appreciate there are additional days, from the Red Sea in the transport and logistic part, but so far, I think mitigating the extra 15-20 days is so far handled well by the supply chain and also by the partners we are working with.
Otherwise, yes, we are absolutely sleeves up. We continue to run the commercial discipline. We continue to run the execution discipline we took away from 2023. That was a very hard and committed year, but of course, that also gives us the strength to execute on the backlog for 2024, which still consists on some of the lower-margin projects we have from the years of both 2021 and 2022. But we are getting there.... So with that, let me take you to the Power Solutions and Q4. It was a record quarter in terms of order intake and also the year. And of course, we saw the improved execution throughout the year.
Most importantly here is we saw that leading to an improved EBIT in the Power Solutions business from start of -10% in Q1 to +3% in Q4. 13% in four quarters doesn't come without a huge commitment from all the stakeholders involved here, and I can't thank the stakeholders enough for doing that, because that is really the impressive part that is behind the positive EBIT here. When we then look at the order intake, we had 8.2 GW in a single quarter. It's a record for Vestas. It's driven by strong onshore activity, especially in the U.S., but also a very positive momentum in EMEA. That also indicates that we have had just around 1.3 GW of unannounced orders, which comes from the normal markets, where we see unannounced orders.
That is mainland Europe and particularly also in, in, Germany, France, and to some extent, Poland. We also secured the largest onshore project order to date with our partner, Pattern Energy. The SunZia project will use our new V163-4.5 MW turbine, which has very good commercial traction in the U.S., not only in this project. The total ASP decreased slightly to EUR 1 million per MW in Q4, down from EUR 1.09 million per MW in the prior quarter.
The decrease was due to the scope, mix with higher share of supply-only orders in the quarter, and please don't read more into it, that we are now seeing that playing, of course, a role when you are in the U.S. and we are ramping up the factories, and some of the orders are close to the factories for that matter. So for business reasons then, Vestas now only discloses total ASP to avoid sort of exposing individual offshore project values. And this quarter is a good example of that, because we had an order in Q4 of 780 MW, and of course that goes into the average. But the assurance to you is ASP is positively supported in this quarter as well for Vestas in comparison on the onshore.
You can see the breakdown to the right where we see quarter-on-quarter comparison and also the ASP. So with that, I'll go to the service. So service Q4 and for the full year, again, profitable backlog continues to grow, stellar performance of it. We saw service reaching 152 GW on the service, compared to 144 GW a year ago, and that's solidifying our position as the largest service business in the industry. The service order backlog continues to grow, now more than EUR 34 billion, up from EUR 30 billion in 2022. Of course, the inflation indexation has been and continues to be an important tool in protecting the profitability of the backlog.
You'll be able to see the breakdown, to the right of the EUR 34 billion in the backlog, of which a bit more than EUR 29 billion stems from onshore, and then as very supportive is the average years of contract, contract duration is still above 11 years. You'll see below the breakdown of regions. You'll also see that APAC is slowing down and actually went a bit backwards, which is part of this expiring portfolio that sometimes happen from time to time. Then I will go to development. Development, again, the whole ethos for development throughout 2023 with the macroeconomic environment, has been quality over volume as well. So I think a big thank you to the development team across Vestas.
The highlights here was 135 MW of order intake that was generated in Q4, and then we also had other successful transactions where early development projects or portfolio were completed, exit in U.S. and in Italy. Our strategic focus on quality projects in core markets led to several project exits and closures in Q4, which were offset by another 5 GW of new secured pipeline, mainly from Australia and in the U.S., which is really positive to see and of course, have a huge interest from our close partners. At the end of 2023, Vestas' pipeline of development projects amounted to 30 GW, with Australia, the U.S., Spain, and Italy being the largest markets, and we really enjoy those conversations with our close partners in how to develop that for the coming years.
You will see the breakdown to the right, the order intake generated. You will see the new secured pipeline, and you will see the total project pipeline of 30 GW. You will also see the breakdown in the regions below, and again, here, really encouraged to see how well that is now integrated as part of our regional operating model. So regions work closely together to develop this positively. Then we come to sustainability for the full year, and I won't say it's not a surprise to see that we speak highly about our reduced carbon footprint of the wind turbine towers. When we last month announced a partnership with ArcelorMittal, a long partner of Vestas, where we now will launch the low-emission steel offering for towers.
The low-emission steel has 66% less CO2 emissions per kilo of steel than conventional steel. This equates to 10%-30% reduction in emissions per turbine, depending on project, type and also scope, where lower percentages relates, mostly to the, offshore part. The low emission steel is produced using 100% scrap steel, melted in an electric arc furnace, powered entirely by wind energy of ArcelorMittal's steel mill, in Europe. For customers, this offering can help achieve their own emission reduction targets, and sustain the sustainability-linked financing, and again, be a competitive advantage in auctions where they are introduced more and more, non-price criteria, which of course we support strongly.
The Baltic Power project in Poland is the first offshore wind farm in the world to partly utilize this low-emission steel, and you will see, we absolutely enjoy that expansion of our, part in Poland. Then to the, to the right again, the CO2 avoided coming from our, ships and produced, turbines in the year, was more or less unchanged, to the year before. That relates strongly to the capacity, we have gotten through, which of course, with an increasing, order intake, should also come higher in the years to come. The CO2 emissions of our own, Scope 1 and 2, is 109,000 versus 100,000 tons, a year ago. That's an increase of 9%. Reflection a bit here is still the service, business and also the offshore.
So of course, that is something we are looking closely into, and we are introducing more and more, what I will call renewable car, which means electric cars in the service fleet, which will also, mitigate, part of that. When we look at the safety records, for 2023, we are improved, we are lower, we are three, but actually, that's still, too high, so we are working closely with it, and as always, here, safety first, for having our colleagues to arrive and return safely, with their families after the Vestas job. With that, really over to you, Hans, to present, the numbers.
Thank you very much, Henrik. And here on the first page, as we normally do, well, actually, as we only do by the full year, we look at the full year numbers, where we can see that for the year, revenue was up 6% year-on-year, driven by turbines delivered at the higher prices that we've been talking to now for some years, that have been pushed through, by stable volumes, but also by growth in the Service segment. Gross margin stood at 8.3%, which is an increase from the 0.8% we had last year. The improvement also driven by increased revenue in both segments, but also by the higher pricing in the Power Solutions, and generally by the easing that we have seen of supply chain disruptions.
That took us to an EBIT margin before special items at 1.5%, a significant improvement, from the -8% we had last year, and also in the upper end of our outlook range. The increase, was driven pretty much by the things I mentioned before, but of course, also by the sale of our Controls and Converter business, and by transactions in our Development business that contributed, as well. Finally, I'm also pleased to see that our return on capital employed turned positive, to a level of 2.9%. Turning to the Q4 income statement, of course, a lot of the same movements, that I mentioned before. We had a revenue that was largely unchanged, around EUR 4.8 billion, compared to last year.
Deliveries were actually lower, and we also saw a decline in service revenue. We come back to that also later on. But that was offset by higher prices from the turbines that we actually delivered. We had a gross margin of 11%, up from the -3% we had last year. And of course, the Power Solutions segment was the main driver in this, as we see that our commercial discipline is coming through. We had an EBIT margin before special items of 4% in the quarter, which of course is a substantial improvement compared to last year. Turning to the Power Solutions segment, we had revenue increasing by 2% year-on-year.
We saw a decline in offshore revenue, but this was more than offset by higher onshore revenues, in particular from South America, and from Australia. I should also mention there actually was a 5% currency headwind in the quarter. Importantly, EBIT margin returned to positive territory, with 3.3% in the quarter. The increase was primarily driven by the better project pricing and execution that we have been working very, very hard on, in the last couple of years. As I said before, we also had contribution from our development business, and we also do have lower warranty provisions compared to last year.
I think it's important to, of course, note on the chart here that we are continuing to see gradual improvements in the profitability, but at the same time, I think you pointed to it as well, Henrik, we are also seeing in 2024 that we have projects in the backlog where execution and say, some of the cost issues that we've had, where they remain. But that is something that, of course, we'll work our way through. Service revenue decreased 9% year-on-year in Q4, driven by lower transactional sales. We also had a tough comparison in Q4 2022. We also here had a currency headwind in this case of 6%. But at the same time, allow me to say that the underlying service activity continued to grow.
That meant also that service generated an EBIT of EUR 172 million, equivalent to a margin of 18.7%. If you compare to Q4 last year, the main impact there is the employee bonus cost. That was triggered, of course, by the better profitability that we're seeing for Vestas as a whole. SG&A, relatively stable, I would say, at around 8%, 8.1, to be precise, on a trailing basis. We had a slight improvement compared to last year, mainly driven by lower R&D costs that are then partly offset by the higher admin cost that we had throughout the year. In net working capital, we saw a decrease during the fourth quarter.
The decrease we had in inventory, driven, of course, by the project execution, that we have been seeing, as part of our typical seasonality that we observe, I would say, as a fairly regular type of event investors. And we then also saw high amounts of down and milestone payments, and, of course, part of that was caused by the order intake in the fourth quarter. Says here, record levels, and I guess it's not a big secret that we had a fairly strong order intake in the quarter. That takes us to the cash flow statement, where we can see that the operating cash flow stood at EUR 2 billion in the quarter, an increase compared to last year.
The increase was driven by, of course, better profitability, but also by improvements in the net working capital that we saw before. We had EUR 1.7 billion free cash flow in the quarter, also an improvement compared to last year, despite actually having higher investment levels, but as mentioned, still seeing an improvement nonetheless. All in all, for the full year, the free cash flow amounted to a positive EUR 245 million. And yeah, here you can see the aforementioned investments. They stood at EUR 308 million in Q4, an increase compared to last year, driven by high investments we are seeing in the 236 offshore manufacturing footprint, but also by new tools and equipment for the 4 MW platform .
I'd also like to mention that the new offshore facility, the nacelle manufacturing facility in Poland, is planned to start operating in early 2025, while the recently announced blade facility is scheduled for 2026 operations. On the provisions and the LPF, we see that the LPF remains at an unsatisfactory level, but it has improved throughout 2023. I think, of course, that's an important thing to note. Warranty costs amounted to EUR 268 million in the quarter, corresponding to 5.6% of revenue, and for the whole of 2023, warranty cost ended up at 5.3% of revenue. It's still too high, it is still elevated, but it is an improvement compared to the 6.4% that we had last year, actually.
Here we see the capital structure, and where I would like to highlight that, the financial leverage has decreased as a natural function of the earnings recovery that we have been through. Net debt to EBITDA decreased to a multiplier of, yeah, well, 0 at the end of 2023, due to the strong cash flow in the quarter. We have also, of course, been getting a higher EBITDA on a trailing 12-month basis. But of course, when you are at these types of debt levels, then the multiplier naturally ends around the levels we are at. And again, I'm thinking this is, like, a good, strong performance we have seen on both sides of the equation. Our investment grade rating of Baa2 from Moody's remained with a stable outlook.
And I would also like to mention here as a last thing, that in November, we issued a EUR 500 million sustainability-linked bond maturing in 2031. And then I'd like to hand it back to you, Henrik, for an update on the strategy.
Thank you so much, Hans. As I said, good to be here jointly present the positive numbers, and also therefore completing that testament of back in black. If we then look at the market outlook, which is natural, you've seen a couple of these graphs before. We of course still see that the two things here, that the wind electricity and its degree of the global energy consumption goes up. We are now at 1.5%, and some will positively then say there is 98.5% to go.
I think, positively also here is that, we see that we take a fair bit of the electrification, and of course, the electrification we see demonstrated, every day when we look around us, either on the roads or in the, in the homes we are living in, or potentially also in the industries we are running, that, of course, will also increase the, the electricity consumption from the existing approximately 20%, where the others come from, typically the fuels and fossils and, and other sources. To the, to the right, I think it, it's one of those, graphs, that's always nice to revert to.
It's the cumulative graph of saying: How do we actually reach, first of all, if we want to go net zero, wind takes its proportionate part of it, and also if we then look at the announced pledges, or in this, also the stated policies. I think the big challenge in this one, as the cumulative effect is, if we don't do the stated targets we have in a year, then actually the graph only becomes steeper, which pushes a little bit of a mountain that becomes steeper and steeper to climb. I think that's the conversation we have with governments. That's also the conversations I know our partners and customers have with governments, and jointly in that triangle, we need to do a better way of dealing with this chart.
The say and do gap, unfortunately, still has never been larger than this, and it doesn't solve it by increasing the targets. It solves it by increasing the actual permitting and the projects getting connected. So permitting needs to catch up, and also, therefore, the build-out of projects needs to catch up. Otherwise, both stated policies, announced pledges, and net zero is just something we are putting further and further out. I think here, good mention of Germany, France, U.K., and U.S. right now in the onshore. Then we're also seeing offshore having a reset in certain markets, which positively, and we are actually quite encouraged to see that some of these resets have been managed within a quarter or six months, like it's been done in the U.K. most recently.
With that, I'll just look to the market growth, you know, the four core areas of ours. So when we look at the onshore, when we look at the market expectations toward 2030, we now see a compounded average growth rate of 7%-9%, towards 2030. Of course, positively, with activity expected, driven by U.S. and Europe, but also further increases in other related geographies. But here we see U.S. and the main drivers in EU-27, especially Germany, pulling their strength in showing this. When we look at the offshore market expectations toward 2030, remains 20%-25% compounded average growth rate. We see expansion in Europe especially. We see new markets such as the U.S., South Korea, and Japan.
But there is, and has been a stop and think, in couple of the countries where the reset is ongoing. But I think we are all encouraged to see that actually some of the markets are pushing ahead, which we recently confirmed both in Europe, South Korea, and Japan, and some of the states in the U.S. So therefore, more to, more to come. When you look at the service, the market expectations towards 2030 is a compounded average growth rate of 8%-10%. It's a really solid part of, of our business. It's also a solid part of, the generating nature of the assets. You have to maintain it, you have to service it, and therefore, you get a better, annual, energy production out of it.
So solid growth driven by installed base and higher share of offshore for us. We see power price increases and electricity shortage generally to drive higher need for the output optimization. So, really, in this part of the business, as you know, stellar, stellar work done and, and well, well around 14,000 colleagues at Vestas. When we look at the development parts up until 25, we still see order intake generated increasing. We see the compounded average growth here more than 10%. The foundation is in place.
You know, it's a relatively new business area for us, but we see that it's the ambition to outgrow the total onshore market in further order intake generated, and also strategically converting that quality project pipeline in very, very close collaboration with our partners out there, which know us very well, and we know very well what it takes to have a quality project for 30 years. When we then look at our strategic priorities, and this is probably one of the most important bridges we have, when we talk about Vestas.
We are coming out of a 2023 that has taken an enormous discipline and enormous commitment to get from where we started the year with -10% in the Power Solutions to +3% in Q4, as Hans also illustrated in the previous slides. So that discipline, that commitment, that energy, and not least also that team effort together with our customers, is the most important thing to get further into 2024 and 2025. Therefore, we call it from Back in Black into the Back on Track. We know that the Back on Track gives us another eight quarters to exit 2025, where of course, yes, we are targeting to move towards the 10%, and therefore double-digit EBIT.
That is also something that you will see again and again in our annual report. The six priorities besides the discipline and besides our values and all other things are focus on onshore, keep growing the onshore and restoring the profitability. Absolutely incredibly important. Also, continuing that commercial discipline you have seen. The quality, as Hans was mentioning, we have a quality, we have a track on it, we see the LPF improving, but we are definitely not where we want to be yet. On the offshore, it's the ramp-up offshore. We are the first year in 25, where we will install our first products with our new turbine, but the ramp-up works to plan. But there is a lot of work still to be done, as you also saw from our announcement in Poland last week.
When we see cash, cash is what pays for everything, so we work closely with cash. You can see it. We ended in a positive situation by 2023, and that, of course, the good momentum from that take it into 2024 and 2025. Efficiencies, when we talk about that, that is initiatives that are across the Vestas more than 80 countries, but it also means that we still look to the efficiency from operations, from digital, not least, but also from how we run, for instance, back offices and other stuff. So efficiencies across Vestas are hugely important, and that, by the way, also goes for how we develop the technology that are with our customers. And then last, talent. Retain and attract the right talent and the capabilities.
I think here, a big thank you to the, to the workforce and the team Vestas across. This is what it has taken, and we shouldn't forget, almost to the tune of today, was the day where, at least from our part, the world closed around, for COVID, lockdown. That's four years ago. Hard to believe, feels like yesterday, and I think the—at least our talent and our workforce has been, fighting through that, so really appreciate. But that's also what we will build on, and that strength absolutely should become an employer of choice across the industry.
That gives us the opportunity in the coming two years to build that foundation, that then talks about sustainable growth, which also then builds on a company that has targets for that second part of this decade, which I'll come to in a second. So if we look at our long-term ambitions, they remain unchanged, and they also in 2023 gave us so many positive evidence points to talk about in what we have set out to do, and also how we are improving not only quarter-on-quarter, but also year-on-year. The revenue is that we grow faster than the market and be a market leader in revenue.
On the EBIT side, we want to be the best-in-class earnings, and that also means at least a 10% EBIT margin, double-digit, leading the, the industry. And we are absolutely progressing towards that when we see it. And then the return on capital employed, 20%, return over investment, on investment over the cycle. I think two gives three. So I think here there is a partnership between the EBIT and the return on capital employed, and we will see that, the closer we get to the 10%. Free cash flow positive, hence, again, here, the team Vestas across, fully, fully dedicated to continue working with that.
I think here, a very good understanding also from both our customers and not least our supply chain, to understand the importance of that, for the whole value chain. And then not least, on the ESG, on the ESG side, carbon neutrality across our own operations, and then a 45% Scope 3 reduction by 2030. And of course, here was a very major step when we now start talking about the carbon-reduced steel, which is by far the biggest contributor to the Scope 3 for Vestas and also for our customers and partners. With that, I will go towards the outlook for the year. So when we look at outlook for 2024, revenue is set for EUR 16 billion-EUR 18 billion.
The EBIT margin before special items is set for 4%-6%. Service, as part of that, is expected to generate EBITs of between EUR 800 million-EUR 880 million. Then last, the total investment is approximately EUR 1.2 billion. Of course, that includes acquisitions of subsidiaries, joint ventures, and associates, and other financial investments as normal standard. All of this is based on the normal outlook of current foreign exchange rates, and besides that, of what you're also listening to in this, and you can read in the annual report. With that, I will hand over to the operator for the Q&A session.
We will now begin the question-and-answer session. Anyone who wishes to ask a question may press star and one on their touch tone telephone. You will hear a tone to confirm that you have entered the queue. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use only handsets when asking your question. Anyone who has a question may press star and one at this time. The first question comes from the line of Kristian Tornoe with SEB. Please go ahead.
Yes, thank you. Two questions from me. First question, in the Q3 report, you wrote that the 10% EBIT margin was realistic by 2025. In today's report, it says that it's realistic in the medium term. I fully appreciate that it's not desirable to have a specific guidance for 2025. So if you could rather talk about the outlook for 2025 today compared to how you saw it in November, would it actually be fair to say that the outlook for 2025 has improved, considering your strong order intake, especially in the U.S.?
Thank you, Kristian . And I think you, in your question here, implies exactly part of the answer to it. No, we don't want to end up here in guiding you specifically for 25, because that we do in February 2025. We are coming out of a Q4, and especially also a 2023, which actually gives us a lot of evidence that the journey is on track. But for that to unfold and for us to be back in the double-digit EBIT, there is still a lot of work to be done between February 2024 and end of December 2025. The target is the same. We think the building blocks are the same.
We have seen a lot of commercial discipline, and we also seen a lot of support from the customer side. So the, so the backlog is there. We need to have the execution of some of that in 2024, and then we still hold very firm attention to 2025. But you will also appreciate, when you look through it, that we are still not at the level of LPF. We are still not at the level of the warranty provision that will serve us at 10%, because then we would have been further ahead. But that doesn't change with that for Team Vestas across this, and especially for us, the target and the aim is absolutely to get the Vestas back into that double-digit EBIT part.
Quite clear, thank you. Then the second question goes to the warranty provisions. So we are seeing the ELPF trending down, but as you point out, it's still too high. So, I mean, what should we think about the absolute level of warranty provisions? When would you expect that to trend down, and what have you included in your guidance?
... I think on that one, Kristian , we have been talking to that for a while and saying that we would like to hit something that's in the area around 3%. That's kind of the target that we're setting for ourselves. So in terms of what it is that we would like to achieve, that goal, of course, remains. It's also fair to say, of course, that this is not something you do overnight. It's important for us to see, first of all, that the ELPF is trending in the right direction. You can see that also, of course, in the slides that we looked at only a few minutes ago. So that's an important development.
Secondly, then, we are also seeing a decrease in the warranty provisions that we have done for this year compared to last year. So I think you're seeing some progress, but I guess it's also fair to say that over the course of the last couple of years, we have also been honestly admitting that this is not something that you just fix within a quarter. It takes time and of course, it's one of the very important building blocks in our strategy, that we need to see these warranty provisions come down from the elevated levels that we have seen in the last couple of years.
In that context, I think the level we hit this year, that being an improvement compared to last year, at least it is giving us some comfort that things are moving in the right direction.
So if I may interpret what you're saying, we should expect a low warranty ratio in 2024 and 2023, but not necessarily the 3%?
I think it's—I mean, you can make your own guesses, but of course, if you look at the development we have seen over the course of the last few years, it's not that this just get fixed overnight. This is something that will take some time, and I don't think at our end, that the 3% we ever said that that is something we would achieve overnight in a year like this one.
Understood. Thank you so much.
The next question comes from the line of Martin Wilkie with Citi. Please go ahead.
Yeah, thank you. Good morning, it's Martin from Citi. Just, just a couple of questions, really sort of digging back into the midterm guidance. The first one is on offshore. You know, saying that by 2025, you should have EUR 2 + billion of revenues, which obviously makes sense given the order intake we've seen. Even if offshore is not yet at the same level of profitability as onshore at that level, is offshore still profitable at EUR 2 billion or so of revenue? Just in terms of how we think about that, as you move towards 2025. Thank you.
First of all, Martin, you're absolutely right. When we originally talked about the EUR 3 billion, that was end of 2020 when we embarked on the journey, and as orders has panned out and the market has panned out, we are sitting with something that is order intake, at least, indicating around the EUR 2 + billion for 2025. And we live fine with that. I think right now, as you can see in the offshore and we've spoken to, there is a bit of reset. And of course, the buildup and the ramp -up of offshore depends on that that we also get to a higher level of revenue than just the EUR 2 billion.
The EUR 2 billion itself will be okay, but it's not Martin accretive to the onshore at that point. And that requires first of all ramp -up, and it also requires that we get a normal running of offshore, which doesn't come with the 2 single projects.
Great. Thank you. That's helpful. And just another question on how we think about the profit buildup. So you've disclosed that you got some of the first advanced manufacturing credits in the U.S. during the year. Obviously, you're building the facilities in Colorado, specifically. When we look at the credits that you got in 2023, it works out at about $25,000 per megawatt, if I've done my math correctly. But also we can't tell, you know, how much of that was done by third parties, how much of that was perhaps built in other countries, and therefore not getting the credit.
When we think about what you're doing to build capacity in the U.S., should we be thinking that all these orders that you've won, obviously a huge amount in the fourth quarter in particular, that much more of that will be done in-house at your facilities in the U.S., and therefore, we can see the contribution from those credits relative to the number of megawatts you're building, really accelerate over the next couple of years?
I think, Martin, I will answer in this way. I think the U.S. market onshore seems to be a good market for quite a few of us, and I will say a few of us, and therefore, some of your detailed question around how AMPC it goes to the OEM in the ratio we do, how we build up the capacities. Obviously, we've said we're building our own capacity, and we are putting the full utilization of our own factories first. So that's at least the first assumption. And then, what happens as parallel to that, I think I will keep off conversations like this because the U.S. market is important to us, like it's important to one or two others. So I think there, the AMPC works.
We are really pleased to see the guidance is out, and of course, we will take the maximum benefit of it, in relation and in partnership with our customers.
Great. Thank you very much.
The next question comes from the line of Ajay Patel with Goldman Sachs. Please go ahead.
Good morning. Thank you very much for the presentation. A couple of questions, please. The first one is that clearly, volumes are coming in very strongly in the order intake. I just wanted to understand how much operational leverage there is in the business. As in, as we utilize our facilities more aggressively, could that lead to better margins? And is any sense of how operational leverage works in this context? And then the second one is, clearly there's been some announcements about trading, changing behavior, for example, Siemens Energy, with their pullback on onshore. I just wanted to see, have you seen any exits from any countries or regions in terms of the competitive landscape? Any insights there would be really helpful. Thanks.
Thank you so much, Ajay. On the operational leverage, I think it goes without saying, it's a no-brainer when you have one shift and four days a week in the U.S., and you basically have almost empty factories. Then from there on, there's only operational leverage to come when you start adding shifts and also adding capacity. So we are very positive with that. I don't think we ever gave. There was basically no dilutions of our fixed capacity cost by having the factories at an earlier stage a year and a half ago. And now, of course, that operational leverage will start coming back to us. So that's part of it. I don't think I'll give more because this is very much a capacity now.
We brought the capacity down, and now we are bringing the capacity back on, which we do, of course, with our partners and the supply chain we work with. On the competitive landscape, we have taken orders. We are happy to take the orders we have taken, and we are definitely very happy with the ASP we've also seen in Q4. And we have taken them in countries and in markets where we feel we are strong and where customers want to have our solutions. Then I will avoid commenting on competitive decisions or where they are strong or weaker. I think that goes entirely to their conference and analyst calls.
Okay, thank you very much.
The next question is from the line of Deepa Venkateswaran with Bernstein. Please go ahead.
Thank you. I had two questions. I think the first one is on your offshore ramp -up. Again, one of your competitors seems to be struggling. Could you just give us on what's the latest? We know the prototype is up and running, but could you tell us a bit more near term, what's the plan in 2024 and 2025 on the current ramp -up of the factory in Poland and wherever else, so that we understand things are on track for offshore? Second one, obviously, on the U.S., it's great news to see all these orders coming in, but I'm sure there's also this other looming question about the U.S. elections and, you know, the threat from the Trump campaign to repeal the IRA.
So how are you thinking about that, particularly when you're taking decisions to expand, et cetera? How are your customers thinking about it? And might you even see some acceleration of orders in 2024, 2025 if these risks actually materialize? Thank you.
I think on your first part, the offshore ramp -up, nothing has changed in our part. We have seen, we have achieved the site certificate on our prototype. We can also see if you follow us on social media, it's generally a regular visited site for partners and people to see how it will work. There is clearly a part that now goes from a prototype to a wind park standing in with Baltics and with He Dreiht that are supposed to be there in 2025. So 2024 is ramp up, so that also means our COO and CTO are in full motions of doing that ramp up, and that so far works to what we have seen.
And of course, we are then just planning to see how capacity gets on the back end of that. So Poland is part of adding capacity. That capacity won't be full for this until we are looking into the second part of this decade. Well, it wasn't intended to be because we don't see our entry to the offshore market with the project cycle needed to be until it's back end of 2026 and 2027. So that's all okay. In terms of the U.S. orders and the presidential campaign, it's February, there's a long time to go. So if I today already should have a big input on how we see it, there is a presidential campaign.
I think that's the best way of describing it. There'll be a winner at some point in time in November, and then we see what comes out of that. I think the positive in the U.S., and that's facts, the underlying fundamentals of the IRA is the PTC that was introduced in 1992. That has been extended, it has been changed in various degrees throughout many, many administrations since. But I think the U.S. right now is actually having a very positive effect from the build-out of renewable, I will call it the whole energy suite, because the hydrogen is having a price point and a cost point in the U.S. that is significant different to what we find it in Europe, simply because the electricity prices as a constant are much lower than, for instance, in mainland Europe.
So, I think there are some positives in the U.S., and then I will leave it to two presidential candidates to find the name of what IRA potentially is before, on, or after a presidential campaign.
All right. Thank you.
Another question from the line of Akash Gupta with JPMorgan. Please go ahead.
Yes. Hi, good morning, and thanks for taking my question. My first one is on R&D investment. And Henrik, I mean, if I look at your investments, EUR 500 million is kind of flat-ish versus 2022 and, maybe driven by offshore turbine development. Having said that, the development work is largely behind you, and, you and the industry has reduced the rate of new turbine introduction, and therefore, when it comes to cash R&D, spend, shall we expect it to go back to, the previous range of around EUR 400 million in 2024? Or are there any other areas of investments, that you can talk about, which may lead into kind of flattish R&D investments? So that's the number one to start with.
I think a major part of our R&D, of course, you're rightly so, goes into offshore. And of course, when a prototype is up, it doesn't finishes there with the R&D. So that continues because it also comes from prototype into the finished product, which is why prototype and testing is so important, Akash. So therefore, quite a lot of work is still ongoing with that and will still be ongoing both in 2024 and parallel into 2025. You would also have appreciated to seen that part of our success around in the onshore market is also because we are continuing investing into both existing turbines and optimizing existing turbines, but definitely also introducing more suitable turbines to the regime that are being put in place.
And if you take the V163-4.5 MW in the, especially in the U.S., seems to had absolutely a very good traction compared to what customers are putting it in place for. So from an R&D point of view, we don't see and foresee a significant change to the current spend in 2024 and 2025. But you are right, at some point in time, over the coming years, we will start seeing slightly lower, at least from the offshore.
Thank you. My follow-up question is for Hans. So when I look at your large onshore orders, there are very few for 2024 deliveries, and most of them are beyond 2024 deliveries. Can you comment on how does the phasing of your 1.3 GW unannounced orders split into 2024 and beyond? Thank you.
I think you're. Of course, when you look at the longer or the bigger orders, typically, they have a longer duration simply due to the fact that it takes more time, oftentimes, to say, deliver on those types of projects, right? And they typically also have longer delivery durations. So I would say that for, let's say, the sh, the sh- what do you call it? The unannounced orders, the ones that you refer to, of course, when you look at the countries in Europe and other places that they oftentimes would be going to, they would tend to have potentially shorter delivery times than what you might see for the very big ones that go all the way out to, I don't know, 26 or 27, in some cases.
I can't speak to the exact duration of that particular portion, but it would probably be fair to assume the logic that you're kind of implying there. That's, I'd say, a fairly natural thing to think.
Thank you.
The next question is from the line of Claus Almer with Nordea. Please go ahead.
Thank you. Yeah, also a few questions from my side. But first of all, congratulations with a very strong performance in Q4. So the first question, it goes to the order intake in 2024, and I know you don't guide on this, but given the outlook for the U.S.-