Well then I think we're sorted. Good morning everyone and very welcome to this presentation of the first quarter 2014. The normal disclaimer and then moving on to the agenda. So I will start with the introduction, talk about the orders and a bit about the markets. Marika then will talk about the financials and I come back for a short outlook and summary and then we have Q&A as usual. So let me start then. One main focus for us during the quarter have been to deliver on our key objectives that we have in our mid-term strategy plan. And if we look at the progress a bit, if we start with the markets and the customer we see a solid order intake in Q1 actually almost double year-on-year so compared with Q1 2013.
On the service side where the objective is to capture the full potential of the service business, I'm really pleased that we have appointed a new head of the service unit during the quarter. He will start the first of June. So that's an important milestone. Also the launch of PowerPlus which is a toolbox that extends the annual energy production of installed wind parks. You can actually if you use all the tools in the toolbox you can extend the energy production up to 5%. And this is an important example of what we have talked about of broadening the service portfolio going forward. On the product side and to reduce the levelized cost of energy we now have the pre-commercial installation of the V110-2.0 MW platform an important product for us and well received by the market.
This product actually increased the energy production with approximately 13% compared to the previous model. So again a good example on how we are working to reduce the cost of energy. And the V164-8.0 MW prototype is on track and of course will change the cost of energy in the offshore segment. Last but absolutely not least around operational excellence and that is of course on how we improve our earning capability. We see that we have significant improvement year-on-year. Gross profit more than tripled. And of course we should remember that we had a difficult Q1 a year ago. It's very encouraging on earning side generating an EBIT of EUR 40 million an improvement of close to EUR 150 million. Also that the net working capital maintained at a low level.
We saw improvement in cash flow of EUR 44 million year on year. Of course we have changed the financial situation considerably with about EUR 1 billion in free cash flow during the last 12 months. So a good progress in our key strategic focus areas in a fairly small quarter. Another event during the quarter has been that the MHI Vestas Offshore Wind is now operational as planned from 1st of April . 380 employees headquartered, yes, very close to us here in Aarhus and as previously expected the financial impact will be in Q2 2014. And as I said we are confident with the development of the V164. Our adventure with a clear objective to be a global wind leader in the offshore wind market.
Talking about markets, we also now have results from three of the different analysts that looks at the market share for last year. Of course encouraging for us investors that we are the clear number one in all three of these market surveys with a market share of around 13%. As we all know, that is actually despite that in 2013 there was a big drop in installation in the U.S. And of course the U.S. is an important market for Vestas. And despite that fact we were still able to claim the number one position. I think it's a good testament and also underlies what I talked about that it is important to have a global reach and we benefit from that. Actually last year we had deliveries in 31 countries and we had an order intake in 37 countries.
So moving on then to orders and markets, we look at order intake, and as I said, order intake almost doubled year-on-year. 25% or 292 MW of the orders in Q1 was from the U.S. We look at the average selling price on order intake. We had a small decline compared to last quarter, 0.88. Then of course we should remember that the price per megawatt is impacted on the type of contracts we have. We had a large part of supply-only contracts in the quarter as we had in Q4. A supply-only contract is the most common contract in, for example, the U.S. market. The price per megawatt depends on a number of different factors. As I said, the scope but of course also the turbine type.
We have one price per megawatt peaks on the 2 MW, another on the 3 MW. The scope and, of course, the uniqueness of the offering. Having said that, it is also a competitive market that we are in. Looking at the backlog, then, backlog increased with EUR 300 million and now stands at EUR 13.8 billion, equally split, then, between turbines and services. So a solid book to build. With that, please, Marika, help us to go through the financials.
Thank you, Anders. Thank you. So that leads us into the P&L, where we have compared to last year improved on the revenue but not the least on the gross profit. We have actually tripled the level compared to last year. Having said that though, as Anders mentioned earlier, Q1 of last year was a poor quarter from a margin perspective because we had a couple of projects with a very low margin. We have improved compared to last year the fixed capacity cost and obviously a consequence of the turnaround program that we have been through during the last couple of years. That leads us to a positive EBIT in the quarter and also improving the net profit. So we have basically improved on all the parameters in the P&L. And looking at the service, we have improved the service revenue year-over-year.
We are still at a very satisfactory level when it comes to the earnings of the service business. Our renewal rate is 50% in the quarter due to a couple of projects in China falling due in the quarter where the renewal is very low compared to other countries. We also had one project in the U.S. that didn't renew so that's the impact where the impact comes from in this specific quarter. The balance sheet equity. We did an equity raise in February. Obviously that also has a positive impact on the balance sheet. We have also managed to reduce our debt with a close to EUR 1.5 billion over the past twelve months. Net working capital is also continuing on a positive path and improvement compared to last year.
We also said that we discussed the solvency ratio when we presented the full-year numbers and we are now at 31% for the quarter. The focus on the net working capital and also stated in the strategy as part of the operational excellence continues. We have a program in place that was implemented in the midst of last year that continues. So you can see the positive change during the last over the last 12 months. A lot of focus is on the megawatts and the completion because that's where we tie up most of our money.
So you can also see in Q1 that the focus remains and also what we stated in Q4 is that even if we don't foresee any further positive development in the working capital we are very consistent in the focus and what we have implemented up to this point will remain. Warranty provision continues at a low level and in particular the lost production factor remains below 2%. So I would say a very consistent path that we have accomplished when it comes to our quality of the product. Cash flow we have had great impact from the reduction in net working capital during last year. Here you can clearly see the impact from the earnings as we have positive earnings in Q1 of this year. So I would say very very positive developments and also as anticipated and as planned.
The investments compared to last year are higher and again as expected and as planned, and the investments are in particular for mold that we also communicated and in the latter part of last year that we will invest in but also the V164. Capital structure: we are net debt negative, so a great improvement. As I alluded to in the earlier page, this is also driven by the equity raise that we did in February. Solvency ratio has also improved due to the equity raise to 31%, not only due to the equity raise but a main or a big contributor in the quarter. We communicated that ROIC is a parameter that we will focus on, and we also said that we see a double-digit ROIC.
Here you can clearly see the impact from the earnings quarter-over-quarter and not least the year-over-year. So we are now at 14.5% so a good development but also again as planned and as expected for us. So by that I leave the word to you Anders.
Yeah. So, outlook, we remain for 2014: revenue of minimum EUR 6 billion and an EBIT margin before special items of minimum 5%. Total investment approximately EUR 250 million and a free cash flow of minimum EUR 300 million. And the service business is expected to grow with stable margins. So, to summarize, we will continue to stay focused on executing on our key objectives. We see steady progress in the first quarter of this year. We will also invite everyone who has an interest. You are most invited to our Capital Markets Day that we will have June 12 here in Aarhus, where we will dig a bit deeper into the strategy and elaborate on the different areas of profitable growth for Vestas. So, all of you most welcome. And with that, we end the presentation and open for questions. First.
Thought of.
Two things. I have a couple of questions. First of all, could you comment a bit on the competitive situation in the industry? How is pricing? We can see that your average prices are dropping a bit. But how is pricing and how is competition in different markets? And also, I'd like to hear if the margin on the orders that you take into your books at the moment is that better than the margins that you already have in your order book? That's my second question. And then my third question relating to the gross margin: would you consider this a normal quarter? Are there any extraordinary things impacting gross margin?
If I start then a bit about the market questions, then as I said, I mean, the price per megawatt, there's a number of different factors that influence that. We see definitely competitive markets where there's a lot of suppliers and so that's and we expect that going forward. On the other hand, we don't see any change in behavior in Q1 of this year that we haven't seen before. So from that aspect, I would say it's fairly stable.
When it comes to the margins, I would also like to say that what Anders alluded to earlier in terms of the megawatts price per megawatt, it doesn't necessarily correlate with the margins. So what you see in the quarter is the impact of both us having a rigorous project process when we select a project and how we select a project, and also the cost-out programs that are in place obviously have a positive impact on the margins. Your second questions relating to this is if this is a normal quarter? It's hard to say because it's a small quarter although a good improvement that we see in the quarter on the margin side.
Any other questions? So then operators any questions on the call?
Okay, thank you. We will now begin the question and answer session. If you have a question please press star and then one on your touch-tone phone. If you wish to be removed from the queue please press the hash key or the pound sign. Once again I'll remind you if you have a question please press star and then one on your touch-tone phone. Our first question will come from Mr. Kristian Johansen from Danske Bank. You can now go ahead sir.
Yes, thank you. My first question is regarding project margin and your fixed capacity cost. You mentioned they are both improved versus Q1, but could you please also comment whether these have improved versus Q4?
Of course, the cost-out program that is in place and also the fixed capacity cost reductions that we have done during the last few years. You didn't see the full year impact on some of the activities that was implemented in the latter part of last year. So we will of course see the full year impact on those and that is also reflected now in Q1. But even if we have a turnaround program that is ended at the end of last year, the focus on further optimizing and getting increased efficiency in the company continues. And that is, you can also see on Anders, one of Anders' strategic pillars, which is the operational excellence.
Are the fixed capacity costs in Q1 lower than Q4 last year?
You see, we'll see and have we see a continuous impact on because you have the full year impact on the in the quarter and also continuous throughout this year.
Okay.
On the activities implemented in the latter part of last year.
Okay. Then my second question is in terms of your variable cost programs which you've mentioned last quarter as well. Can you just give us an update on this? And do you expect your variable cost programs to have any impacts to your 2014 earnings?
As we said, what we said is that we will continue to optimize. So we're looking into shared service solutions and we're also looking at site consolidation for the company. That we have not communicated or indicated whether that will have an impact on this year or not, but we are evaluating and looking into those options.
Okay, thank you. That's all from me.
Our next question will come from Lars Heindorff from ABG. You can now go ahead sir.
Thank you. A couple questions from me as well. Firstly, regarding the pricing on the order intake, there's been quite a bit of unannounced orders this quarter. Could you give us an indication about sort of the geographical split of those orders? You mentioned in your presentation that you have a larger share of supply-only orders in the quarter, which I understand is mainly related to the U.S. So it'd be nice to if you can get sort of a better feeling for the split in the unannounced orders. Thanks.
Yeah, I mean, as we said, 25% of the orders is, or the 1,000 orders is from the U.S. So that's of course fairly significant. And on the rest I would say it's a fairly normal split. That's what I can say. I mean we have a process on how we announce the orders and that is the process we will stick to. But apart from the U.S. of course that has a big impact. I would say that the spread of the other orders are fairly normal.
Okay. Then secondly you said that also in terms of your guidance that you expect a stable development in your service margin. I mean looking back on it has been fairly volatile. So when you say stable is that from the margins that we've seen from the full year last year or is it run rates that we have seen here in the first quarter? That's a bit unclear.
When we talk about stable margins, we compare to last year. And even if you see some fluctuations in between the quarters, and that is also what we have stated that you will see in the future, I would say on a comparable basis we see it is stable margins in the service business.
Okay, then last question for me regarding the net working capital and your aim to reduce your megawatt under completion. You'll spend a bit of time on that here on the presentation. And I mean how much further can you actually reduce your megawatt under completion and still uphold sort of a—I would say—a production capacity to meet the demand here particularly in the light of the PTC extension?
I start where we sort of started from. We implemented a project of last year. That project remains. But a lot of the activities or the majority of the activities that we implemented are truly process-oriented. So it is embedded now in the operations. And of course the challenge for us is in a growing market with a growing demand to maintain all the activities that was implemented as of last year. We see no changes in that. So we think if we see that we have the processes under control. Having said that, of course we will not do anything to force this at a level where we will jeopardize the business. So it will always be in line with the business needs.
But as you can see in the quarter, we have managed to maintain the levels that we saw last year.
Right, thank you.
And also yeah.
Our next question is coming from Mr. Patrik Setterberg from Nordea. You can now go ahead sir.
Yes, hello Patrik Setterberg from Nordea Markets. A couple questions from my side as well. My first question is regarding your renewal rate on the service business, where you're in Q1 had 50% service renewals. It strikes me or it strikes me to be quite a low number compared to what we have historically seen historically. Are we seeing is this a one-time effect or or or are we seeing a structural decline in the service renewal rate?
I agree it's a low renewal rate. And we don't think that this is a new trend. We've seen considerably higher renewal rates before. And we don't think that the low renewal rate that we see in Q1 is significant going forward. We expect improvements there.
Okay, another question relating to your service business. In connection with your AGM, your chairman said that you will start to do or aim to win service contracts on turbines which is not provided by yourself. Could you please elaborate on what this strategy means for you?
We all actually already today do service on non-Vestas turbines on a case-by-case basis and when the customer asks us to do so. So that's something that we are doing today. And or we will address that going forward. We'll be part of the service strategy that we are currently developing.
But will it have any impact on the service renewal rate going forward? I assume this will not be captured in your service renewal rate.
that's correct.
Okay, then my last question is from.
There is nothing of that in the renewal rate for the Q1 so to speak.
Okay, thank you. My last question is to you, Marika. Usually, you provide an EBIT bridge for us. Could you please elaborate or could you please tell me what the volume and project margins impact is on the EBIT in the first quarter?
Well, we have chosen not to give you an EBIT bridge. But obviously as the revenue is increasing you see the margins are increasing. You see that the fixed capacity costs are lower. I mean that is the main reason for the improved EBIT and also the reason for the improved net profits that we see in the company. So higher volume will have an impact and project margins will have a big impact on the company. And we are improving both on those lines with the P&L.
But you cannot say the split between on in percentage-wise approximately?
no.
Okay. Yep, that was all from me.
Our next question coming from Mr. Claus Almer from Carnegie Bank. You can now go ahead, sir.
Thanks. I have also a couple of questions. The first it goes to your full year guidance. The EBIT improvement in Q1 is more than you implicitly is guiding for a full year. So how should we, you know, read your minimum EBIT guidance which was reiterated? Yeah, that's my first question.
Well, as you say yourself, the guidance is a minimum guidance. This is a first quarter and it is a small quarter. We have consequently decided that the minimum guidance is adequate for us.
We should not fear that EBIT could be declining year-over-year in the coming quarters?
We have also communicated earlier that you will see fluctuations, quarter dependent on which quarter we are. But we are sticking to our minimum. I highlight again a minimum guidance of five.
Okay. Then my second question goes to the R&D cost. We assume you know that your JV with Mitsubishi will likely change what we will see in the P&L and also the R&D costs. Can you provide some guidance to the levels to be expected in the coming quarters?
Well, we are not specifically commenting on the R&D spend that we will see from the R&D from the joint venture. But obviously as we are not affected by those going forward, it will have a positive impact from that perspective that we will not have the V164 cost in our books. But having said that, there are also potentially other opportunities in terms of development questions that we will see going forward.
So, just to be sure, we cannot be sure that the R&D cost in P&L would be declining in the coming quarters or?
That, yes, you cannot anticipate a reduction, is what I'm saying.
Okay. Thank you so much.
Our next question is coming from Mr. Daniel Patterson from SEB. Please go ahead sir.
Yes, Daniel Patterson here. A couple of questions. First of all, do you think you're taking market share?
I think when it comes to Q1 I think it's very hard to say. As I said before it's a small quarter. The external reports I've seen is between that the market is growing between 5%-20% for the full year. How that has played out in the quarter it's very very hard to say. So what I can say is that I'm happy with our orders intake in the quarter. As I said almost double year-on-year. And I'm happy with the position on the order situation in the important market.
Okay. Then another question regarding, I guess it's project margins and gross margin. Obviously very very strong numbers here in the first quarter. And I noticed that you're actually delivering almost 500 MW in the U.S., Brazil, and China collectively. And these are markets that I think a lot of people think of being sort of low price markets. So my question is really how are you able to get these, let's say, rather good project margins and good gross margins in some of these tough markets? Do you think you are the cost leader in the U.S. for example?
I would say first of all we have focused on the costs absolutely. But also having said that I again want to underline that the scope of the project doesn't necessarily correlate with the margin. So even if we have a supply only in the U.S. it doesn't mean that we have a low margin. And again we have a very very rigorous process on how we select the projects for Vestas. And that goes for all the countries we are present in. And the cost -out program is ticking. So it continues also going forward.
Okay. Then my final question relates to 2014 sort of at large. What is the main operational risk that you are facing for the rest of the year?
I mean, I think normal, like almost any business I would say. It's the normal operational risk. New products, new deliveries. I mean, nothing extraordinary, but the normal operational risk that you have in any companies I would say.
So there's no specific sort of project hiccups that you know are sort of running over cost or something later in the year that should hit you?
I mean, as I said, we, you always have a risk in running the business. And you always have an operational risk. And it's usually related to delivery ramp up and to new product introduction. But we have not one specific identified project or product or what you ask for. No.
Of course. Yeah, 'cause it's important to understanding the guidance, of course, given that you're already above your 5% on trading term once. But thank you very much.
Thank you.
Thank you.
Next question will come from Mr. Mark Freshney from Credit Suisse. You can now go ahead.
Hello, just two questions. Firstly, on the MHI joint venture that you have, will there be a requirement to put more capital in there or to invest within that business as you bring forward the new offshore turbine? And just secondly, on the outlook for the offshore market given your discussions with governments and regulators, what are your expectations for the size of this market in Europe?
Yeah, I mean, first off with the first yeah and of course when we as we I think have talked about before the main scenario is of course that we have funding in place with this transaction for bringing the V164 to market. And the first commercial project. So that is the base assumption and that's the assumption we are working with and that the joint venture is working on. Then of course it will all depends on the how the market develops. and of course that's a bit hard to predict. So the main assumption is that we don't need any additional funding to bring the V164 to market. But as I said that is based on a certain market scenario.
If I talk a little bit about the market overall as I see it and try to do that in relative terms, I would say that what I see now is a smaller market in offshore than we probably saw a year ago. But, on the other hand, a much more realistic scenario. So I think that there were very high expectations a year and a half ago, talking about the market of 30 GW and so on. And we see that expectation coming down, but still a considerable, very interesting market. And probably also a much more realistic market from a capability point of view both for projects to happen and for supply to happen into that market.
On the regulatory framework we see for the offshore side, then we see, I would say, more clarity from Germany and U.K., for example, on their offshore plans and on their support mechanisms. So I think that is positive and ties well into what I said of a market that we now start to see on a realistic level and more certainty around the policy schemes around it.
Thank you.
Our next question is coming from Alok Katre from Societe Generale. You can now go ahead.
Hello, hi. Alok Katre from Societe Generale. Two quick questions if I may. Firstly, if you could just elaborate a bit more on your emerging market strategy in the context of the few statements that have been coming from the management on China. So that's the first part of the question. And then obviously we don't seem to hear a lot on Brazil or India which are growing markets as well. So what has changed or what will change at Vestas to make it more successful in those regions? That was question number one. And then if you could talk a little bit more on the V164 in terms of what's happening on the program, customer response. And then finally, did you bid for the French offshore tenders that GDF Suez and Areva have just won? Thank you.
Okay. So if I start a bit going back to the overall strategy. So what we said is that profitable growth in emerging and mature markets. And of course mature markets definition is a very important category for Vestas. And will remain an important category for Vestas. And will also remain an area where we can can grow. So we shouldn't forget that in when we talk about a lot of emerging markets. So the mature markets very important for the company. We actually see potential improvement to grow to grow all the also there even if we have a good market there. When it comes to emerging markets and you specifically mentioned China I think of course then there are big differences. China, India, Brazil.
It's definitely our strategy over the mid-term, so to on a three to five year horizon to improve our position in those emerging markets. In order to do that, we have two important enablers in the strategic plan. And that is about operational excellence. So that is about getting the cost right to to address those markets and get the offering right to address those markets. And that ties very well into the program that we already have running when it comes to lowering the cost of energy for our product and when it comes to continue to work with operational excellence. We also have a global footprint when it comes to manufacturing. So we have a footprint in manufacturing capabilities in, for example, China. We have a small share today, but we have a big share of for from a non-Chinese point of view in that market.
So we have the capability to grow but that is a long-term plan. And we need to get those different capability in place. We've done a number of things you of course already to start. We have for example done a new setup for Asia Pacific, appointed a new manager, and of course we have the programs on the product that is running as I said. When it comes to Brazil it's our intention to participate in the upcoming auction. So we are focused on that. I think the last question was around the 164. And as I said the development is on track. We have produced 8 MW. I talked to a lot of customers. There's a high interest for the Mitsubishi Vestas joint venture to get into the offshore market in a big way of course with the new turbine.
And so I'm confident of the long-term plan for the joint venture. I will not comment on specific deals.
Okay, very clear. Thank you.
I'll remind you, if you have a question, please press star and then one on your touch-tone phone. Our next question is coming from Klaus Kehl from Nykredit Markets. Please go ahead, sir.
Yes, hello, Klaus Kehl from Nykredit Markets. Two questions, please. The first one relates to pricing again. We're seeing yeah low prices on the order intake here in the quarter, and that's as you mentioned most likely driven by the U.S. But you also have a much lower production cost in the U.S. So could you confirm that it's still the case that your contribution margin will be unaffected by the low prices we are seeing in the U.S.? That's my first question.
Well, what we just said is that despite it being supply only, it doesn't mean that it has a negative impact on the contribution margin. So that is correct.
Okay. And then my second question that's more or less kind of the same but the gross margin we're seeing here in Q1 does that give a reasonable picture of the gross margin you have in the backlog?
Well, first of all, we said this is again a small quarter. Even if it is a good improvement compared to last year, last year was not very representative as there was a couple of low margin projects in that particular quarter. So I will not comment on whether it's representative or not, but this is at a good level, and also you will see the cost out program continues for this year.
But that implies that it should increase further the coming quarters?
I'm not stating that. I'm just stating that the cost out program continues.
Okay, thank you very much.
Thank you.
Next question is coming from Mr. Sean McLoughlin from HSBC. Please go ahead, sir.
Good morning. I have three hopefully brief questions. Firstly, the unannounced orders. If I look at the last two quarters, we're averaging about 600 MW. That's consistently higher than the 400 MW average over the previous six quarters before that. Is this—can we read a trend into this? Are you targeting more smaller orders or can we read this in general terms of an overall order pickup or you maybe gaining share in small orders? That's the first question.
Well, I'm not sure that I follow your question, but if I understand you correctly, it's not a trend and it's not a focus. Again, if you look at this particular quarter, it is a small quarter for Vestas. We are focusing on, as we have done in the past, the mature markets but also the emerging markets. So where we are competitive, whether the project is small or big, we will of course be there. But it's no strategy into the random results in the quarter.
Thanks. Secondly, on the JV with MHI, have discussions widened? I wonder to talk about maybe wider market access in Asia, particularly with a view on onshore markets?
No, I mean the offshore joint venture is really focused on the offshore business. So that's the focus in those discussions and in our discussions with Mitsubishi. So that's full focus on getting to market with the V164. Service the market with the offshore contract we have with the V112. And yeah, that's it.
Thanks. And then thirdly just looking at your strong net cash position how has your view on acquisitive growth options changed?
No, it hasn't changed. So, I mean, of course we monitor the markets, see what is happening, but we have no plans in that respect.
Thank you.
Thank you.
Thank you.
Next question will come from Mr. Robert Clover from Recharge Insight. Please go ahead sir.
Thank you very much. Two questions from me also, please. The first is on the order pipeline. You mentioned at the time of the capital increase or at least there was an inference that you had perhaps not won all the orders you hoped for because of a slightly weaker balance sheet than you clearly have now, which we clearly see as a very strong balance sheet position. Can you make any comments, perhaps, on how order negotiations are progressing now that your balance sheet position has improved considerably? Has that made the difference you hoped it would?
Well, I think it's definitely fair to say that in the discussions we have with the customer, they recognize that we have a completely different financial strength than we had before. So that is definitely recognized in the many discussions we have with our customers. Then, of course, it's very hard to put an exact number on that, but I would say a positive change for sure.
The inference of that would be that you would continue to gain market share then perhaps going forward?
Of course our objective long-term in our plan is to gain market share and grow faster than the market. But so long-term that's definitely our objective. Short-term we remain on the guidance we've done for 2014.
Thank you. And the second question I have was coming back to what Sean just mentioned in terms of sort of M&A, particularly in the light of your comments on the attractiveness of the service business and looking for opportunities to service non-Vestas turbines. Are there any sort of smaller bolt-on acquisitions that you could envisage in that area in particular?
No, we don't have any of those plans. But as I said, of course there is a lot of rumors in the markets of different types of consolidation. And of course we monitor the market, but we have no acquisition plans.
Many thanks for your answers.
Thank you.
Next question will come from Fasial Ahmad from Handelsbanken. Please go ahead, sir.
Yes, gentlemen. Faisal Ahmad from Handelsbanken Capital Markets. A few questions from my side. First, two on the service business. Could you tell us how many megawatts on the service you have in China? And secondly also maybe tell us how many megawatts were under renewal in Q1 and how that normally compares to the full year. That's the first questions on the service side.
That I don't know. So that we have to come back to you if we give out megawatts in specific geography. So unfortunately I don't know that fact. So that we have to come back to you.
How much was the order renewal in Q1? Can you inform us that? How much is order renewal normally in a full year?
No, we don't comment on that, so I can't inform you about that. What was in Q1, as I can say, is that there was a bigger part of what was up for renewal was in China. And in China the renewal rate is very low. So normally contracts are to a much less degree renewed after two years after the sort of normal two years. And that percentage was bigger in Q1.
Okay. I'll just move on to my next issue here. That's concerning ramping up. Can you tell us how much headcount you have taken on in the U.S. during Q1? And secondly you're also ramping up on a number of new blade technologies. And could you just inform us how that is progressing?
Well, when it comes to headcount, we communicated, I would say, early in or in the latter part of last year, that we will increase the number of headcounts. But that will in particular be blue-collar, and in particular in the U.S. We have an increase in the U.S. according to plan to meet the demand. And we have also increased in other geographies such as Europe. So where demand is increasing, we will continue to increase. And it is a positive for Vestas. But it will also fluctuate a little bit up and down. But it's in particular blue-collar. So no margin impact headcounts that you see us recruiting going forward.
The ramp up on the blade technologies, the V110 and V126, how is that progressing?
Well, that is progressing according to our plan.
All righty. When do you expect that to be finalized?
No, we will expect that we will keep our plan and keep the customer commitments that we have on the V110 and fulfill the orders that we have on those two products.
Okay. Then just one final question from my side and that's on the variable cost program. I mean how should we be thinking about this program? Will it be impacting mostly in 2014 or is it more of a 2015-2016 issue? Maybe if you can comment on that.
Well, I would—we haven't stated any program. We have stated that we will continue to further optimize the company, which means looking at the cost structure if that is adequate for the company. We have no programs in place. We are, as I said earlier or alluded to earlier, evaluating shared service solutions, outsourcing, and site simplification. And that is what we have communicated. You will see an impact from the previous turnaround program. That the cost out that took place in the latter part of last year will, of course, you will see the full year impact on this year. But the further optimizing the cost structure continues. But we will not present any programs or any big bangs around that.
Okay thank you.
All right. Thank you all for all your questions. We end here and I hope to see you at the Capital Markets Day then, if not earlier, in the 12th of June. Thank you very much for your interest.
Thank you.