Anders Runevad - President and CEO Marika Fredriksson - EVP and CFO

Kristian Johansen - Danske Bank David Vos - Barclays Casper Blom - ABG Akash Gupta - JPMorgan Claus Almer - Nordea Dan Togo - Handelsbanken Capital Markets Marcus Bellander - Carnegie Alok Katre - Societe Generale Martin Wilkie - Citi Gurpreet Gujral - Macquarie Peter Testa - One Investments Pinaki Das - Bank of America Merrill Lynch Sean McLoughlin - HSBC

So, good morning, everyone and thank you for calling in. Welcome to this earnings call on the full year 2017. Let me start with a usual disclaimer slide and then go straight into the key highlights. So revenue were close to 10 billion, EBIT of 12.4%, free cash flow of 1.2 billion and investments of 407 million. So all parameters within the guidance was met. So a very strong performance in the service business, 16% growth year-over-year and an EBIT margin of 20% for the year. Highest ever order intake on 11.2 gigawatts across 33 markets. So again, really leveraging our global reach and that's a 6% increase compared to '16. Also then leading to an all-time high combined order backlog of close to EUR21 billion. Safety is the key issue for Vestas and it was very good to see that we again improved our safety performance on the target we have with 23%. Dividend payment of DKK9.23 per share, very close to the maximum payout ratio that we have. So overall, a strong balance sheet and a net cash position of 3.4 billion, allowing us to do another share buyback program of 200 million. This is also the time of the year where we do our yearly strategic updates and both looking at how we have executed on and how we look at it going forward. And again, we are firmly on track and strengthened our leadership position in this transitional market and I would come back to that a bit later on. As usual then, I will start talking about orders and markets and then Marika will come to the financials and then I will come back then on the strategy and outlook. So starting with the Q4 order intake at 3.8 gigawatts and an average selling price of EUR0.74 million per megawatt in the quarter. Orders declined 688 megawatts year-over-year but that of course was expected, since, we in '16 Q4, had a large intake of PTC orders. But encouraging to see that we, also in Q4 of '17, had 264 megawatts of PTC components order that then qualify for projects in 2021. Otherwise, US, Sweden, India and Canada were the main contributors on the order intake in Q4. Looking at the ASP and the sequential decline, I would say that there are two main factors and one minor factor. As we have talked about before, we continue to see a very competitive market, also in Q4, leading to a price pressure. Second, we had a mix effect both in relation to turbine models, the relation between 2 megawatts and 4 megawatts and on the amount of power modes that was sold in the quarter. And the minor factor then is an FX effect of 0.01. Going a bit more into the detail on order intake and as I said, highest ever for Vestas at 11.2 gigawatts for the full year. Looking a bit more into regions, Americas was up 16% year-over-year. Mexico, Argentina, main contributors and US also solid even if a slight decrease. In the quarter, down 21%, very much due to the PTC impact. In EMEA, we saw a decline of 13% for the year and 9% in the quarter. We continue to take orders from broad base. Sweden was one market that was contributing very positively, but we could not fully compensate for the 1 gigawatt order that we took in Norway in '16. In Q4, it's primarily Germany and France that contribute to the decline of 9%. Asia-Pacific, very solid improvement of 64% year-over-year and a decline of 14% in the quarter. For the full year, the increase was driven by China, India and Thailand and what was negative year-over-year in Q4 was Australia. Looking at the delivery then, overall, we see increased delivery in EMEA and Asia-Pacific, offset then as expected as well with the decline in US delivery. So starting with Americas, a 20% decline for the full-year, 26% in Q4, very much due to the US and then compensated by growth in Brazil and Canada. EMEA stable, so plus 2% for the full year and 7% up in the quarter. Germany, UK were the main contributors for the full year and we also saw a good increase in Denmark in Q4. Asia-Pacific full year up 3% and a quarterly increase, 36%. Again, China, Mongolia main contributors and for Q4 also India and Australia. We took orders in 33 countries during last year, again a good benefit of our unique global reach and we actually also added two new markets, taking the total up to 77 I think. Leading then to a record high order backlog of close to EUR21 billion. The combined order backlog increased 1.7 billion year-over-year despite negative FX impact of approximately 700 million. Looking at it sequentially then, we saw an increase of 0.1 billion in the turbine business to 8.8 billion and an increase sequentially of 1 billion for the service business to 12.1 billion. We continue to see positive development in the joint ventures that we have together with MHI for the offshore business. The company announced two large preferred supplier agreements in the UK, taking the total of conditional and preferred supplier agreements to 2.5 gigawatt on top of the firm announced orders of 2.7 gigawatts. Last year, the joint venture also completed the first V164, sold a big turbine project and the same turbine was then awarded Turbine of the Year. We have also in line with the agreements - the joint venture agreements, appointed a new management team that will be effective from April this year. With that, I'll leave over to Marika for the financials.

Thank you, Anders. And if we have a look at the income statement for the full year, you can see that we are from an activity level, down on revenue by 3%. That is also reflected on the EBIT that is down by 13% and consequently the margin is down to 12.4%. But we, despite the lower activity level, have managed to deliver yet another solid year for Vestas and we are well within the guided figures on the P&L side. I should also point out here that the results from the joint venture is negative 40 million but still being negative it is, a 60% improvement from 2016. The income statement for Q4 is a reflection of the same parameters. So, you see a lower revenue as a consequence of lower activity in the quarter and the EBIT is down. You can see SG&A costs going up by 17% and I will come back to the factors here on the SG&A side that still is well under control. And in the quarter, we managed to deliver 12.3% in EBIT margin and here you see a positive impact from the joint venture of 10 million, because we have a timing difference of the TUR, but positive here in Q4 of '17. The SG&A cost is still well under control, despite an increase in percentage and also absolute numbers compared to last year same quarter. But again still under - well under control and obviously something we continued to mitigate. This is a reflection of also the lower revenue, which obviously have a consequence on the percentage per se. But all in all, a satisfactory development also on the SG&A. Service, we continue to deliver strong performance on the service side and I think even more importantly is that we continue to deliver on the strategy that we have put forward on the service business. And you see an increase here compared to last year with 16% and that is mainly driven by the higher activity level. You also have the two acquisitions in these numbers and then we have an EBIT number of 20.1%. So again, very solid performance in the service business. We had a very strong Q4 of '17 and that is also reflected in the revenue as well as the EBIT margin that reached 23.4% in the quarter. The balance sheet, we continue to deliver strong balance sheet and we have an increased net cash position which obviously creates a lot of flexibility and also room for investments. And I think you have seen the latest one that we have performed and that's well within the strategic frame that we have. We have a net cash position delivered here at 3.3 billion, so very high. And the ROIC looks extremely strange and it actually becomes negative due to invested capital being negative. And I will not go into more detail on the math and how we calculate the ROIC, but I think you will see that we have a very strong balance sheet and the solvency ratio is 28.6%, which I will also come back to on a later slide. If we have a look at the net working capital, that is still very satisfactory and we are performing the activities that we put in place in 2013 and that makes it possible to also have the net working capital well under control. If you look at the last 12 months, you'll see improvements is driven by trade payables and here the payables are clearly a reflection of the high activity level and that is offset by higher inventory. And there, we have also said earlier that we will utilize the balance sheet when we see fit, but still within the control that we have put in place. Net working capital change over the last three months is, you see a positive development and it's driven by a combination of receivables, inventory and prepayments. The warranty provision and lost production factor is also well under control and at satisfactory level. You'll see that Q4 would still consume less than what we provide for although slightly up from Q3 in terms of consumption. You'll see that lost production factor trailing below 2% here so again very good quality performance on the turbines. The cash flow statements, full year, we have said before that we continue obviously to fulfill what we have said to the market on the operating activities and here you see - clearly see that we have a solid cash flow from operating activities and that leaves us with a free cash flow of 1.2 billion or slightly above, which we have already indicated. There is a cash outflow from financing activities and that is mainly driven by the share buyback program and dividend that was based on the '16 result. Total investments is also in line with expectations and I will use the term, control also on this one. So we deliver a net value of 407 million and the negative 91 million is the cash we received for the facilities in-house, but net value is 407 million and underlying cash flow from investments is in line with 2016. Capital structure well within the thresholds on the net debt to EBITDA. So we are even further in negative territory, obviously driven by the high cash balance that we provide. And the solvency ratio is 28.6%, so slightly below the 30% to 35% that we have put forward. And we will revise the solvency target to a minimum 25% from the range that we have provided earlier to have the flexibility to perform share buybacks if we saw it fit. The capital allocation, we returned to the shareholders close to 1 billion and for '17, the board recommends to the AGM to pay out the dividend of DKK9.23 per share. So we are again at the higher territory of the 25% to 30% of net profit. And combined with the share buyback of 694 million, the total distribution to shareholders during '17 financial year will amount to close to 1 billion as you see on the headline here. By that, Anders will talk more about this.

Thank you, Marika. So then moving over to the strategy and looking at the overall growth prospect, which is forecasted to be very favorable for renewables. This is the slide from International Energy Agency that looks at forecasted electricity generation from '16 to 2040. And of course, what we can see here is that renewable will have the majority of the growth. Coal will decline and that is where we see the biggest part that is on the decline. Also, encouraging of course for us to see is that we will take a major share of the forecasted growth for renewable. We actually saw already last year that wind is starting to be a mature technology in the overall energy mix, accounting for approximately 20% of all new-build capacity. And still from a penetration point of view, then only represents 7%. The markets continues to be two fundamental different drivers in OECD countries. It's about the replacements or decommissioning conventional capacity. And what drives this decommission is either financial end of life or CO2 reduction targets or of course a combination of the two. In non-OECD, we see a market that is more new build to cater for the forecasted increase in electricity demand. What drives this development is of course the cost - the levelized cost of energy for wind and we see this is the numbers from Bloomberg New Energy Finance and we are seeing now that wind is very competitive against other technologies both on the renewable side and on the more conventional side, when it comes to levelized cost of energy. We expect this development to continue and giving some historical numbers. We've of course seen more than 80% decrease in levelized cost of energy in the last 20 years and close to 20% decrease in the last three years. Looking at then the markets going forward, and these are numbers from MAKE Consultants that we view as relevant numbers for all planning assumptions. We see an onshore market with a CAGR of around 3% to 5%. So a stable market with decent growth. Our strategic priorities in this market is as before to generate best-in-class margin and to grow faster than the market. And that we do with providing our customers with the lowest cost-of-energy solutions. Looking at the service market, we see a forecast of high growth again based on MAKE numbers, a CAGR of 8% to 9%, which drives the cost installed base and the continued penetration drives this market, but also new services. Our strategic priorities here remains to more than 50% growth in revenue towards 2020 compared to '16 and again to generate best-in-class margins. Looking at the offshore markets where of course we participate through the joint venture that we have, we see high growth CAGR of 15% to 20%, again MAKE's numbers. A little bit phased you can see, so a modest growth until 2020 and then when markets outside Northern Europe is forecasted to pick up, we see a substantial growth. The priorities for MHI Vestas then is to claim a leading position and again really compare to the offering on lowest cost-of-energy. Our strategy remains and we are committed to our strategy. We also - the definition of - of our definition to be a global leader in sustainable energy also remains in the financial definition of leaders in revenue and best-in-class margins. And we have also maintained our strategic objectives, but of course adjusted actions and programs underneath to reflect the current market conditions. Looking a bit back on the execution during '17 then, we continue to leverage our global reach technology and service leadership and scale and we are executing well overall on the strategy. On the power solutions side, we saw a 6% increase in order intake and of course in a market that - what is expected to have declined last year that will lead to market share gains. Best-in-class margins, very important for us. As you know, we delivered 12.4% EBIT margin in '17 and well above the industry average. On the service side, also a good execution with a 16% growth in revenue with solid earnings and then increase in backlog to 12 billion and we are well on track on achieving our goal of 50% revenue growth by 2020. On the lowest cost-of-energy solution which is of course to a large extent on the competitiveness of our product program, we have two very solid platforms for onshore in the three megawatts that is now upgraded to four megawatt platform offering double-digit AEP increases. And we have also done then during last year the fifth major upgrade on the 2 megawatt platform, increasing AEP up to 7%. Best-in-class operation, you heard Marika and me talk about the importance of a strong balance sheet many times. I think that today - in today's market, more true than ever and of course we executed well on a free cash flow of 1.2 billion and also our control over our fixed costs. Last year, we also talked about building abilities for the future market and we started that well during last year. The first utility-scale hybrid project was secured with the energy stores and PV. We are also looking into the storage development and we have signed a development agreement with Northvolt to look specifically more in depth on the battery technology. And we very recently did the acquisition of Utopus Insights that will accelerate our digital solution offering especially on the service side. And we continue to develop our core development capabilities. So to summarize our position and also taking account our stake in the joint venture, we summarized the year with revenue on 10.5 billion, clearly taking market share; an EBIT of 1.1 billion where we deliver best-in-class margin. That also of course enable us to invest more in R&D than anyone else in the industry and maintain a flexible, asset-light manufacturing footprint. Combined backlog then at 22.8 billion and we have now an installed base combined on 92 gigawatt and of that almost 80 gigawatt is under service. It will continue to be important to build on and leverage the key differentiators that we have within Vestas about global reach, about technology and service leadership and about scale. And if we look at the onshore scale then, we have now grown up to 90 gigawatts across 77 countries and with data insights from 38,000 wind turbines. So we have then also updated our long-term ambition and when designing our long-term ambition, we forecast markets where wind has achieved merchant level in the vast majority of markets and therefore naturally drives additional volume. The industry is undergoing a transition towards more mature market without subsidies. And this transition leads to a highly competitive market as we have seen that we believe will drive further consolidation. So the longer-term beyond the transition more mature markets will be created. That creates opportunity for Vestas to leverage on our strength and leadership position. With that in mind, we have also then updated our long-term ambition. Revenue to be the market leader and grow; EBIT margin of at least 10%; free cash flow positive each year; ROIC double digits over the cycle. As Marika said, on the capital structure, we kept the net debt to EBITDA ratio and we have adjusted then the solvency ratio to 25% and the distribution policy remains at 25% to 30%. So with that, I move into the more shorter-term outlook and outlook that we see for '18 where we see revenue between EUR10 billion and EUR11 billion and EBIT margin of 9% to 11%. Total investment, approximately EUR500 million, free cash flow of a minimum EUR 400 million. We expect the service business as before to continue to grow with stable margins and you should also note that this of course - this outlook is based on today's foreign exchange rate. So with that, we move over to Q&A.

[Operator Instructions] And we have our first question from the line of Kristian Johansen from Danske Bank.

Thank you. So first question is about your updated long-term financial targets. What is the time horizon for these? And then specifically your new margin target, should we read that as your aim for at least 10% EBIT margin in 2019?

Yes. So, I mean, of course, it's a long term to start with, a long-term ambition and we haven't set the time on it. I mean we've described a market scenario that we forecast long term. So of course, it can depend - it could be different timing when we see that kind of market scenario. But it's of course within our strategic time horizon, which we have - we always work with a 3 to 5-year time horizon. But I mean I think it's clear to say that it's a market transition that we forecast and in that scenario.

Just to understand, so you say within the next 3 to 5 years, you should have an EBIT margin of at least 10%?

What I'm saying is that within the scenario planning process, which is 3 to 5 years, we envision this market scenario that I described and in that market scenario our ambition is to have an EBIT margin of at least 10%.

Okay. And then my second question, one of your competitors recently stated they have seen a stabilization of prices in Q4 versus Q3. Can you just confirm whether you've seen a similar development?

Yes. I can't of course comment on our competitors' statement. If we look at Q4, 0.74 and as I said, I mean we definitely say that it was a competitive market also in Q4 with price erosion. But of course, we also have the mix effect as I said. So I mean for Q4, it's very much in line with what I said, still a competitive market, 0.74 have two major factors and one minor as I said sequentially compared to Q3. And when it comes to longer-term and of course the assumptions that we have - the back - the ASP we have in the backlog and the assumptions we do for the year is reflective on our guidance and margins for '18.

Okay. So you do see further price erosion in Q4 versus Q3?

Yes. I mean, ASP is going down of course as I said in Q4 compared to Q3. So - and that has a price erosion effect, it has a mix effect on the turbine side and has a small FX impact. And then we don't guide on what kind of prices we see going forward from Q4 but of course our assumption on prices and our ASP is reflected in our guidance for '18. What to look for, I think I would say it came back to what we talked about in the last quarter. I mean we see electricity prices coming down in the auction systems and I think we see definitely in some market they continue to go down; we see in other markets that they start to come down a little bit slower. And of course looking at the longer-term, the longer-term price evolution of the industry, I think that is a very important leading indicator to look at the prices in the auction. And when we get back to a more normal development in ASP is of course when we see - we will continue to see a declining ASP based on technologies which is what we have been used to in the process well in this industry but that is one - it's one key indicator of course and then we have a competitive environment as usual.

Your next question comes from the line of David Vos from Barclays.

The first one would be on your comments around consolidation. You have in the past stated, if I'm not mistaken, that you would pretty much rule out buying any of the western OEMs. Do these new statements around consolidation imply that you might be changing your view there? That will be question one.

No, we haven't changed our view there. I mean we are - our strategy is built on organic growth and of course as we said before, you would see - you could see more bolt-on type of acquisitions as we've done in the service space and now in the digital space but otherwise our strategy remains on organic growth. We feel we have a very solid position and that we have a very complete, both market presence and product presence.

That's clear. Second question on your targets. Clearly, I think everybody will be happy to see you commit to a 10% long-term EBIT margin target, but I'm slightly puzzled myself with the FCF and the return on capital employed targets. Clearly, you have a negative capital employee base at this moment in time. Therefore, and not committing to a very strong FCF target at least implicitly you could put one and one together and conclude that your working capital or indeed your fixed capital investments are to pick up quite dramatically, thereby bringing ROIC back to the sort of double-digit range, whatever that might be between 10% and 99%. But still it would imply sort of that your capital base goes up by quite a lot. Is that the right interpretation here or how do we square that circle?

No. I understand where you're coming from and obviously as the net invested capital is negative and we are coming from a very high level of ROIC I can understand from a mathematical point of view where you're coming from David. Our intention is obviously with the double-digit ROIC is to say that's where, I mean, looking at the margin levels that Anders provided, so still very solid on that point of view. Positive cash flow and if we are not precise enough it is obviously very hard to be precise on the free cash flow. But I think that we are also stating clearly on the net working capital although not guiding for it that we have no intention to lose the control that we have and that all the main elements in the working capital activities remain and that's also why we also in 2017 are delivering a very solid net working capital. But what I've said previously is obviously that from time to time, it's more efficient to use the balance sheet in terms of building up inventory and that is also something with a very strong balance sheet that we have that we have actually the possibility and capability of doing and that will definitely continue also going forward.

I understand that. I just don't - I guess if I want to put it bluntly don't see the point of - for presenting two sort of metrics in the long-term ambition framework that are so difficult to interpret given where the starting point is. I guess we will discuss it some other day. If I can ask one final question please. Regarding 2019 and the potential margin level in 2019, what sort of price erosion can you handle on the order intake in '18 such that margins in 2019 do indeed exceed the midpoint of your guidance for '18, so EBIT at 10% which would also be in line with the long-term ambitions? Thank you.

Yes. And obviously I understand where you are coming from also on this one David. But I think it's not - as Anders have described, it's obviously not only a price that defines our EBIT target or the revenue target and we have a good order backlog both on the V2G side as well as the service side. So obviously service business plays a very important role in our forecasting of what we can deliver. And then obviously we have a big element of the cost-outs, we have a big element of the still controlled SG&A. And - I mean the power rating as Anders first alluded to earlier, it's obviously you mitigate a part of the very competitive markets. We've continued to develop very good technology that offset part of that. So I mean all those elements continues and our best estimate is that we have a solid ground to say that we, over the cycle, will develop a minimum 10%. And obviously we have not indicated '19, we just guided for '18.

The next question comes from the line of Casper Blom from ABG.

Yet another question regarding ASP. Looking at your order intake ASP of 0.74, it's down 22% from the year, 0.95 a year ago. Can you give any sort of flavor to the different elements in this? How much is due to larger turbines? What's due to scope of projects pricing? And I think you mentioned FX of 0.01. Can you sort of put a little bit of magnitude on those different elements?

Yes. I mean what I referred to was the sequential then between 0.8 and 0.74. I think that if I don't - remembering correctly, I think that 0.95 was not really representative of that. Yes. We had a bit of a spike there as well. So I think, you have to look at this much more from a trend point of view as we've talked about before as well. And my comments that I made was comparing sequentially then Q3 to Q4.

Okay. Fair enough. And then a question regarding your cash flow. Marika, you mentioned that payables are held into cash flow here in quarter four. And given the changing enterprising environment in the industry, has there also been changes to the pricing conditions so that for example you're receiving a higher portion of the total price as a prepayment?

No. I would say it's - we have been very consistent on that cash burn and it's also fair to say that we are very glad that we've been very consistent on the payment terms. So they remain as they have been previously. So that is obviously one enabler for us also from a certainty point of view. And as I said earlier, the payables is just a reflection of the very high activity level overall in the company and pretty much the same behavior as previously. And we also have negotiated good payment terms but that has been done previously and part of the program as I mentioned.

Okay. And then just one final question also regarding the 10% long-term EBIT ambition. You say it's sort of in the 3-year to 5-year perspective. So should we read it sort of as an average that over those 3 years to 5 years combined, you will have an EBIT margin of 10% at least or should we view it as a floor for each individual year in the period?

No. But you should view it as - actually as I said, it's our long-term financial ambition that we have adjusted and that is what it is. And the reason why we have it there is I mean generally speaking come back to what I said before that we talked about the transitional phase of the market that we are currently in. I think we are all well aware of that and that's very evident for the industry. And that put some pressure on us and our players but the good side of that coin is of course as I said that we see that the competitiveness of wind is then increasing. And as I said, the electricity prices are on merchant levels in some markets or many markets already today. And if we look at that longer term without setting a date on the longer term more describing the market, I think that of course will provide a floor for electricity prices generated by wind. When we are at merchant levels in the majority of the market and in some markets even at the running costs of fossil fuel then of course that should provide a natural floor for electricity prices for wind. On top of that, you'll see good - we have a good technical - sort of technical visibility, we have solid plans on what we want to continue the technical development that we have seen during the last couple of years. And of course we have a good visibility of our service business where we have a fairly I would claim at least ambitious growth targets in the - up to 2020 time period. But as usual of course we work with all the levers that we control and that's our focus on and then we have to do assumptions based on - of what we see in the market.

Thanks. That's all good, but you still though you - don't want to sort of commit to whether or not the 10% is a floor for each year or whether it's an average for the period?

I mean it's a long-term financial target. So it's not the floor per year or divided into specific years.

The next question comes from the line of Akash Gupta from JPMorgan.

My first question on this year's 2018 guidance if I look at the range which is based on the current FX rate and looking at what I see you have already secured in your backlog, could you help us provide what is the coverage as of today in terms of where you stand with existing orders and how much you will be relying on infra-out orders at mid-point of the guidance because that has been a disappointment in 2017? And my second question is on the US and what sort of activity you are seeing there because we haven't seen any orders or I would say, large orders since the tax reforms that has taken place last quarter? And also should we expect a strong Q1 for revenues because inventory is very high and you earlier indicated that this inventory will be delivered in late this - the late 2017 or early 2018?

If we start with the guidance of 9% to 11%, obviously, with the strong order backlog that we have both on the service business as well as the V2G business, we have a good visibility over the revenue for '18 and that's also why we have provided the guidance of 9% to 11% . Obviously, you will have some infra-out orders also in '18 but certainly we have a good visibility with the strong order backlog that we have in place. And then you will have - you always do simulations as we said previously on headwinds or tailwinds that we could have during any given year.

Based on the US, I think there were several questions on that but if I start overall on the order side, as I said, I mean, we have announced 264 megawatts, I think it was for PTC orders for then qualification rollout 2021. I must say I'm very confident with our precision overall in the US, also considering the PTC order that we announced last year and actually also if I look at current performance in the market looking at both the, what I call the Energy Association AWEA in the US on delivery during last year and according to Bloomberg, we maintain our leading position also when it comes to actual delivery. So I mean orders will by nature always be a bit lumpy but if I look at the order intake we did last year if I look at the additional PTC components and if I look at our position in the market, I must say overall I'm very pleased with our position and our performance in the US. But to your question then on seasonality of the US, I think it's definitely a fair point. I mean in the last - so '17 Q1, we of course had a very high activity level of delivering those PTC components, which we will not see a repeat on this Q1. So from that point of view, we see that this year will pan out more like a normal distribution over the quarters compared to last year where we had a very high Q1 due to the PTC components.

And just to follow up on this MHI Vestas offshore joint venture, if I remember correctly, you were guiding for operational breakeven in 2018, is that still the case? I mean, can you update us what should we expect as a joint venture contribution from this year, because all I try to understand is that, can you grow your earnings together with lower share count because you are launching a buyback now and maybe further buyback down the year? So I mean I am trying to figure out whether you can grow earnings this year if you have a good contribution from the joint venture?

Yeah, and our - what we have said earlier on the EBITDA breakeven in '18 and net profit break-even in '19 remains.

The next question comes from the line of Claus Almer from Nordea. Please go ahead. Your line is now open.

Thank you. Also a few questions from my side. The first question goes to the auction system. In the annual report, it is mentioned that prices tend to stabilize after the first auctions or couple of auctions. Have you seen this in some of the markets who recently implemented an auction system? That will be the first one.

Yeah, we've seen of course that a typical trend has been that the initial auction has taken a very large decline in prices. I mean, we've seen everything from 20% to 40% in the first auction, I would say depending quite a lot on the volume offered in the auction, the type of price decline. And after that we have typically seen a continued decline, but at a much lower rate than the initial auctions. So that's as far as we have seen in the market. I think the only market so far that actually have seen an increase on auction prices is probably to my recollection, it's probably Brazil. And there is a lot of other specialties in the Brazilian market. So I think we shouldn't read that into a global trend, so to speak, but definitely we see that the steepness of decline is less, so to speak, when you see more auctions coming online. And then looking forward, of course, I think, it's for us as well definitely a key indicator of judging the market, and a leading indicator of judging the market in combination with additional volumes. And there I think we see some positive signs still to be confirmed. But I mean, one such an example is of course, the EU that is discussing now to increase the 27% renewable energy targets by 2030. The parliament has voted to increase it to 35%, we still don't know what it will be, but the basis of that discussion is very much that we did the new level of pricing for renewable. It's actually for the same amount of money, so to speak, possible to increase the target. And I think that is a healthy sign that a more competitive price actually drives higher volumes in the longer run. Then, of course, we need to see that coming in, we need to see it being confirmed, and we need to see those volumes translate into auctions. But that will of course increase the market for renewable in that time frame in Europe with about 80 gigawatts or something approximately.

Okay, thanks. Then my second question goes to your 2018 guidance, this 9% to 11% EBIT margin which as we have discussed before is below the long-term target. What scenario will take it to the lower end of the range and same thing goes to other end of the range?

Well, I would say what we have said earlier. I mean, obviously we have a good visibility as we have the big order backlog that we have both for the service and V2G business. And then you will have operational headwinds or if the infra-out that doesn't materialize as we expect them to materialize. So I would say it's nothing that - it could be some uncertainty on the operations in terms of not fulfilling or not being supplied as we expect and then the infra-out, those two are the major elements for the either-or.

How is the currency trend impacting 2018?

I mean, what we have now provided for is with the current exchange rates and obviously that is weaker dollar and from a translation point of view, a weaker dollar is not very favorable all-in-all for our business. But we have given the guidance based on the current exchange rate.

Sure. I'm just trying to figure out the year-over-year impact, how much has the currencies diluted the EBIT margin or expected to dilute the EBIT margin this year?

Yeah. I mean, that's also considered in the guidance that we are providing, but obviously the translation impact is bigger on the revenue side as we have a big portion in the US as well, and then a smaller - could be a slight positive on the cost side and a smaller impact on the EBIT, just to give you a flavor.

Okay. Then just a final question. This order intake megawatt ratio of 0.74, is that the level we should expect for 2018 too?

I mean, again, we don't forecast on the ASP. So, I mean, as Marika said, I mean, the margin guidance for 2018, of course, reflects the ASP and backlog and reflects the ASP that we forecast for the infra-out in the year.

The next question comes from the line of Dan Togo from Handelsbanken Capital Markets. Please go ahead. Your line is now open.

Thank you for taking my questions as well. I'd like just to get back to the ASP here and understand the sequential explanation you are giving Anders that 0.01 is the FX and price and mix more or less shares the rest. But could you give some flavor on the mix? Is it related to any particular regions or - and is it a one-off in this Q4 or will we see this mix effect continue into 2018? That's first question.

Yeah. I think if I try to divide it into sort of a trend and then maybe something that can vary a bit between the quarter depending on product. So if you look at Q3, on the order side a bit more than 60%, or around 60% was on the 4 megawatt platform. And if you then look at it in Q4, about 70% of the order were on the 4 megawatt platform. So when you then have a shift on that you take more orders of the total order share, so to speak, on the 4 megawatt and the 2 megawatt. Then of course, you get more megawatts, but not necessarily in the same extent the higher price. And that trend that of course we're seeing for some time that we see a shift from the 2 megawatt platform to the 3 megawatt platform indirectly speaking, but of course, that's also geography. So if you have a quarter, where order intake is extremely strong in the geography where we primarily sell the 2 megawatts in the quarter, you can have - that long-term trend can reverse in a quarter, so to speak. So it does, but generally speaking, of course, for some time we've seen a trend that the 3 megawatt takes over volume from that is now 4 megawatt, that takes over volume from the 2 megawatt platform. So that's more of a long-term trend, that again of course depending on geography can vary between the quarter. The other part is a bit more technical, but power modes. So I mean, for most of our turbines, we have power modes that fits in certain markets, you can use them and in certain markets you can't really use them depending on the wind projects. And the power mode is typically, for example, that we have a 2 megawatt that you can run at 2.2 as a power mode and we have the same on the 3 megawatts and we have the same on the 4 megawatts. And of course if you then in a quarter compare to the sequential quarter have a higher order intake on power modes compared to non-power modes, you'll also have an impact. That I will say is a bit more lumpy. It's with - it depends on when we release those power mode updates on the products when we can take in orders on those power modes.

Very helpful. Thanks a lot. Now on the service business, an EBIT margin in Q4 of 23% seems extremely strong. What explains this? I mean I would have maybe expected that due to the price pressure will be seeing on ASP and on the whole value chain here, also could expect some pressure on service, but are there any sort of say price pressure on service that you provide for clients at the moment or can you basically sell your service at the same price that you could, let's say, a year ago and even a quarter ago?

I would say that the service business is also very competitive. We are in a good position and with the different offerings, we have obviously created a very stable ground for us in terms of EBIT. And then volume, is obviously also important when it comes to the EBIT. And I would say that yes, it is competitive, but we still have a very high - because the more population you have obviously that creates opportunities for cost-out in the service business. So the levels we are at now, we think is still very stable. And obviously we continue to optimize the service business not the least from a portion or a percentage of the total revenue to continue to being a stable company.

Are there also any mix effects here, I mean clients stepping up in the service products?

I would say you see a mix of that, but I think it's with the different offerings we can provide. Obviously, with any financial investors, it creates a lot of stability as we give certain guarantees for output as well, and we have very high quality on the product. So it seems like the tenure of the new contracts are increasing.

And then a question on cost-out and in the long-term targets, what kind of assumptions do you make here because of course when you look at the way the ASP has developed and the 20% price reduction over the past one year and half year, should lead - has that led you to be more aggressive on the cost-outs? And what are your assumptions here for the long-term targets? Are you just assuming cost-outs to more or less be on par with what we've seen historically in megawatt?

I mean the cost-out is and has been a very important element for us. But I think that what Anders said before is that we have prepared ourselves for the last few years for the market we're in, being subsidy free, being very competitive. So it's all about the cost, but it's also about having a very efficient product portfolio and that is the other enabler, is to basically provide more output with fewer turbines. So we have a very high focus and remember that we invest a lot on the technology side. That is obviously also a mitigating factor and I think it was actually huge. If you look at the ASP over the last few years, it has been trending down. So it's clear that's part of the levelized cost of energy and that's part of the market conditions that has been there. And now we're in a transition with a new market with the auction and totally subsidy free, but we have been working in the same pattern for the last few years and cost is obviously a very important element.

So you are not - just to understand, you are not more ambitious now on cost-out than you've been in the past, you just continue along the path basically?

I think we have been ambitious and we have been aggressive on cost-out, I mean it's all about profitability. So obviously that is a very important element.

Okay, and then just final question here on the JV turning profitable here in Q4, but is that just a one-off due to some timing of some orders and should we expect, because, I mean, this catches up a bit earlier than what I believe you have previously communicated and we should see the JV profit-wise?

Yes, absolutely. So it is a timing. So when we sell the 3 megawatt platform, so this is the ramping of project and now in Q4 the joint venture have delivered what we provided them with before, then we have a negative impact in the joint venture. So it is only a timing element. What we have said earlier in terms of EBITDA breakeven of '18 remains.

The next question comes from the line of Marcus Bellander from Carnegie. Please go ahead. Your line is now open.

Thank you. Just one question for me. In previous conference calls when we've discussed guidance, you've sometimes suggested that you aim for the higher end of the guidance range. Does that go for the 2018 guidance as well, or have you been a little more aggressive in your guidance this time?

I mean, we have given you the best assumptions that we could have and that's the 9 to 11 and obviously we're striving for the higher end of the guidance. So nothing has changed from that perspective.

The next question comes the line of Alok Katre from Societe Generale. Please go ahead. Your line is now open.

Hi, Alok Katre. Thanks for taking my questions. Well, my first one and I have a few as well is, I think if I heard it right, I think Anders wasn't committing towards - through cycle versus point in time sort of margin target, whereas Marika, I think you mentioned over the cycle we will develop a minimum of 10%. So I'm just wondering whom should we be looking at between the both of you from this perspective? And if you say, it's a three to five-year target is a minimum of 10%, you've done 12% in the last three years, so if I take the rolling three to five-year period, does it mean you should end up somewhere close to 8% over the next three to give you an average of 10% over the cycles? I'm just trying to understand a bit more in terms of how we should think about the margin target. So that's question number one. I'll follow up with the others.

Okay. I'm not sure I 100% understand where you're coming from, but I'll try my best. So what I said is, obviously what Anders have or Vestas have provided as a medium-term guidance is the 10%, minimum 10%. That also means that in certain periods you can potentially be below 10%. But we are striving for and we have not been exact in timing of the minimum 10%, but I don't think you should look at the average 12 months rolling EBIT either because the conditions in the market is very hard to extrapolate. But I would also like to say we have provided a minimum 10% medium-term and obviously, we make assessments and we make simulations on how to get there. And I think now it's probably that I say a three to five year target, and Anders is talking about the long-term that we could potentially - you could potentially see a discrepancy. I don't know if you want to elaborate more on this.

No, I think - can I just go back to what I said. I think hopefully it was fairly clear that on the minimum 10% target we that is a market scenario that we look at within our strategy period, our strategy period is unchanged, that's before three to five years. But of course it depends on that market scenario that we see that as the long-term target of the transitional phase. And I mean I can't really put a date on that and in between then, I think we have of course as we talked about, we guide for '18, we will come back at the time for '19. And if the question then is, can we at any time in between there go below or minimum 10%, yes, we can, because of course in '18 we have a lower scenario of 9, so that is of course, then possible.

Sure. Thanks. So does this include in the context of slide 26, does the five-year period will include upcycle in the US and decline post-2020. So your 10% target that you so said, if it's on the three to five year business cycle basis, would it be fair to say it includes a period of decline in 2021 onwards as well?

I mean, I think what I said on the MAKE numbers here is that, I think that this provides a good basis for all our forecast and how our strategy work. I can't really say that if between the different years, that this is accurate. I mean, that I can't do, but if I look at the planning cycle, if I look at all strategy scenarios and we have many of them like, of course, you have to have when you look at three to five years, then I think this is a good estimate of the overall market in this period and growth rate that we see, without going into what I believe if it's right between individual years, so to speak. I mean remember that the forecast I think for '16, all the numbers for '16 was 53 gigawatt and then '17, 46. So I think it was in that kind of decline that was forecasted there. Actually we can do a fairly good performance.

Okay, great. And then my last question on this one is in terms of your longer-term strategy, you mentioned in the annual report that you target a leadership position in both onshore and even in offshore segment. Now clearly, we are seeing a bit more consolidation. I guess, you remain let's say committed to not, let's say, doing a larger deal, meaning the consolidation will happen around you rather than with you being involved. In that sense, do we then expect - given this consolidation, do we then expect Vestas to become a bit more aggressive if competitors force your hand in terms of the pricing and bidding? And then how does that square with the 10% margin, meaning I'm just trying to understand what sort of competitive dynamics have you included in this target, I mean worsening, but improving?

I mean you're absolutely right. I think from Vestas' point of view, if I take that first which of course is then 100% onshore business and 100% under onshore service business, we have been very clear that our long-term objective and our vision is to be the market leader in revenue and that absolutely remains. I think for the offshore joint venture to be clear, and I think that is also on the slide, they talk about a leader and not necessarily the leader in offshore, but - so I think that is the distinction there, which from an owner point of view, from Vestas' point of view I think is an absolute fine ambition for the joint venture to have. And that, of course, just to be really clear on that spot and when it comes to then balancing volumes, we had margins in this - over this time. I mean our strategy has always been about profitable growth. And I mean, that remains. I think that's actually also evident in our numbers if you compare our numbers through industry average numbers. I think it is clear that that has been our focus and will continue to be our focus going forward. And that is, of course, a constant thing that you have to monitor where you see that the market is growing and as I said I think already in the last call, I mean a stable volume that we have I think also gives a lot of benefit on the cost side and the cost outside. So there's definitely a continued interest for us to have the right balance. I mean we want to drive a profitable business, and that is also - and from the cost point of view, it is also important to keep a fairly stable volume. And then you have to balance it with how the market develops.

The next question comes from the line of Martin Wilkie from Citi. Please go ahead. Your line is now open.

Thank you guys. A couple of questions please. The first one is just going back to the US markets, obviously, we saw other players taking a good chunk of marked orders in Q4 and I appreciate you point to sort of lumpiness in order as opposed to anything really changing there. But in terms of the pricing, do you feel that theUS market was more competitive than other parts of the world? Just to understand if some of those orders were perhaps one using more aggressive tactics on pricing. So that was the first question. The second one was around, you obviously commented that auction pricing can be a leading indicator for how turbine pricing might develop later. Obviously, we have the next round of the German auctions kicking off around about now. There doesn't look to have been a change in some of the rules as to how the German auctions will take place in terms of not having these community or system wind farms. Do you have any expectations that German auction pricing can get better over the next quarter or so? It would be interesting what your thoughts are on that? Thank you.

Yeah. No, but if I start with US and I think - I mean the overall answer is that - I mean, we talked about auctions and I think as I said before, I meanUS we had very large tenders and a fairly long-term horizon in the current PTC cycle. It has exactly the same characteristic as an auction market. So even if it's not by definition an auction, I think the characteristic is very much the same as an auction market. And of course the other thing with auctions and less and less feed-in tariff is that we see more and more of a global price picture with very few regional differences with exception of China. But that's very much of a scope difference as well. But apart from China, I would say that we see a more and more of a global picture when it comes to pricing. Then I mean, of course, as I said, from Vestas' point of view and again, I can't talk for the competition, we are very happy with competition in US, I think both from a market share point of view, happy to keep what we have, so to speak and also if I look at the potential orders that we have, because they're all potential that we have secured with PTC I'm happy with our position. And I can't really comment on what competition could do or not do short term. I think your German question is of course, extremely interesting as you say. I mean everything else equal of course the system wind park has been negative for the industry in the sense that from the pure sense that they didn't need permitting, and if you didn't - and that also then allowed four years to build instead of, if you need permitting to bid, I would say that you probably have around two years to build. So the negative part with system wind park has been volume push-outs in time, so to speak and therefore, of course also, theoretically speaking more opportunities to use further technology in those types of bid. I think the answer to your question on what will happen now, because the latest round was about to say normal, but with permitting that I think we will now actually within a week or so - I think the auction was last week, and of course we participated together with customers, and I think the result of that I suspect will come out within a week or so, and then we will see if this new round of auctions have actually had any impact on the price.

Next question comes from the line of Gurpreet Gujral from Macquarie. Please go ahead. Your line is now open.

Hi guys. Just some clarity on the order intake ASP sequential decline, if that's okay. You mentioned FX resulted in 0.01 decline out of that total 0.06. So are you seeing competitive pressure and mix impacts make up the difference on an equal fashion, i.e. 2.5 each or is it more sort of favored to competitive pressure say on a 3 and 2 basis?

No, I would say roughly speaking, half and half. I mean, you get into very complicated definitions, because of course they go into each other to some extent. I mean, take what I talked about the power mode, as an example. If we upgrade, if we sell more of the power modes, let's say from 2 to 2.2, power mode of course has an advantage that has limited cost increase compared to - I mean, a 4 megawatt turbine is more expensive than a 2 megawatt turbine, but if we then can't keep, so to speak, in our pockets that power mode upgrade, it's that then a price pressure or is it something else. When you get into - you have a certain overlap, of course, between these depending on the definition as an example. So I think, roughly speaking, they are about of equal importance, but you get into very difficult definitions.

Yeah. Okay, understood. Okay, and the second question is on the cost-out statements that you guys made. Can you perhaps give us some examples of where you may get some easy wins or early wins here? Is this a case of establishing new suppliers from new regions, perhaps from Asia, or are you seeing new innovations coming from your supply chain, and how much of the commodity price pressure that we might be seeing here in the supply chain be a headwind in those negotiations with your supplier?

Well, if we start with the last one, which is the commodity pricing, obviously, we have a fair share of - still in our products. So, that is probably the commodity that we are most exposed to. Here we are mitigating with indexation so we are pre-buyers, we have said previously, obviously we're not immune. But when it comes to cost-out activity, it's a good mix of what you mentioned. So part of it is technology development that gives us an opportunity, but it's also going from global local to local. That gives us an opportunity to do further cost-out. So basically we are - I mean the program that has been running over the years, we're further looking at activities. So it's very well defined, it's nothing random. We're tracking on a monthly basis, how we are performing on the cost-out targets. So I would say it's a rigorous process and we are as aggressive as we have been in the past to identify further opportunities. But it is a well-identified program, so it's not a guess, it's really solid activities behind all the cost-out element.

And is there any part of the value chain that is giving you the best kind of cost-out? Is it the plate, is it part of the value chain that you can really focus on going forward?

I would say the cost-out is obviously the low-hanging fruit that we had from the beginning. That also was volume dependent, but I think also one element on the cost-out is really that we are global, that we are big. That obviously creates big opportunities for us. But also going forward, you will see a lot of the cost-out coming from design.

And the final question on the acquisition over the weekend, perhaps from comments around the rationale. I know it's a relatively small acquisition, but can you give us some color as to what that business can provide to you guys in terms of new innovation?

Yes, we are happy to. So of course we see it as a really good fit, and of course as you say from the size point of view, it's fairly small. I mean, it's a very R&D focused company that has really a good product offering already today in the digital and the management space, very much focused on renewable, but of course, lack the sales channel for those product packages that exist today, which of course, we can provide from Vestas. And that's on the revenue side. It's also very interesting from a cost point of view to further optimizing the cost on the service business with the tools that they have to look at efficiency gains in the forecasting part that we can do on the service side. So I think it's a very good complement to the skills we already have. I think I talked about before on the service side that we have, of course, data average 150, 200 census per turbine, 38,000 turbines under service, sending data 24/7. And we've done an excellent job on the digitization on that data when it comes to designing new turbines. We've done a really good job on that data analyst when it comes to the performance of the existing fleet, the preventive maintenance in the service packages, the guarantees that we can give, but we also say that we can do a lot more on the increased performance side. And then we need more data analytic type of products and software and that this exactly where this company fits in.

And the next question comes from the line of Peter Testa from One Investments. Please go ahead. Your line is now open.

Hi, thanks very much. Just three questions please. The first one is if you could give us some understanding looking at 2017, what the turbine mix was on deliveries please, between 2, 3 and 4 megawatts?

We will give that task to Patrik as I have to come back to you with it, so we don't say anything incorrect. I don't have it on top of my head.

And then looking at inventory, there was a notable increase in finished goods inventories with sales subsidiaries and also work in progress, so I was wondering if you could give any comment on that. And then also on the opportunity to spread production across 2018, as you did in 2017, whether you can give a greater or similar opportunity in that regard?

Yeah. The inventory increase that we have during 2017 has been delivered. So we have used the balance sheet when we saw an opportunity to increase the finished goods instead of investing in additional capacity when we see fit, and that is also how we intend to use the inventory or the working capital, the possibility going forward. What we anticipate and what Anders alluded to because we had a very high activity level in Q1 of '17 because of the US orders coming in very late in '16 and delivered Q1 '17. You'll obviously not see the same kind of activity level, but remember also end of '17 we actually flushed out a bit of inventory because of the activity level, but I would say this year being '18, you will see a fairly normal distribution of the quarters. That being said, that is - the normal distribution is the lower activity at the beginning of the year and a higher activity level at the end of the year, and we will use the inventory possibility if need be.

Okay, and then just on realized ASP, if you look through the quarters in 2017, it's sort of moderately come down and there's been kind of an opening gap between the order ASP and the delivery ASP. And I was wondering if you could give us some sort of thoughts as to how long the time frame should be? We should think about in terms of those two numbers starting to converge again or the extent to which the backlog ASP becomes the delivery ASP.

Okay. So I mean, that is obviously you have a timing element between the order intake and the deliveries. I mean, that depends on how well or if we continue to being as good as we have been on the cost-out elements and also the part of the technology development that you have seen. So over time we anticipate that it will balance out.

Okay. But to be more specific, I think ASP in Q4 is around 93 on delivery and it's about 74 on intake. I was just trying to understand how long you felt it would be before the delivery ASP is roughly similar to what you're getting on the intake?

I'm not sure that we would give that. I mean, the only thing I can say is that it will balance out over time. Obviously it will move dependent on the backlog level that we have.

Do you think that it will stretch into 2019 before that happens?

That depends, it's hard to say the exact timing of it.

Okay. And the last question just on the offshore business. Given you are building up your capability there, I was wondering if you could give any thoughts as to your ability to bring sort of very different turbine cost into that market versus peers to help you lift that business off?

Yeah. I think that overall, I mean we actually have a very competitive offshore turbine that of course is the basis for the joint venture with the V164, sorted out as 8 megawatt and now been upgraded to 9.5 megawatt. So I mean that's taking all of the development in offshore, very similar to onshore. So I would expect also in that segment we will continue to see increases in ratings over time.

The next question comes the line of Pinaki Das from Bank of America Merrill Lynch. Please go ahead. Your line is now open.

Good morning, and a fairly long call, so I'm going to keep it short. Thank you so much for taking my questions. The first one is a very simple one, I think I missed it. Did you mention how much PTC component orders you had at the end of '17 for the 80% bracket? So that's first question. And my second question is just around consolidation aspect. You did mention consolidation and then denied that you will not do anything and that you've taken some of these dynamics, but how would you react if any of these players were to come and try and buy out one of the smaller turbine manufacturers in Europe, what would be your sort of reaction to that?

The first question was simple, 264 megawatts in 80% PTC component orders. The second question, I would say that as I said, Das, before, from Vestas' point of view, our strategy is based on organic growth and the reason for that is we have a very strong 2 megawatt platform with a large scale and good volumes and we have a very strong 4 megawatt platform also with a large scale and a good manufacturing footprint. So from a consolidation point, from a Vestas' point of view, we see limited gains on the product side. Also on the market side, I mean we have a geographical coverage that is really solid and best in the industry. Of course, there's always some markets you can do a little bit better, and I'm not saying that, but - I mean, that's always the case. But it's very hard to see an acquisition that would complement the capabilities we have to the extent that it justified the price. I mean that's what we see in today's market. Then of course - and that's why we have an organic strategy and being pretty clear on that. If that would change for the future, I mean who knows, but that this is what we see the situation today. But having said that I think it's fairly natural that we see this consolidation happening in the market, and of course, we've seen it for some time now. And I think that it's a fairly natural evolution of the market that that will continue, but that is forecast not something based on known facts, but more looking at the other industries in similar type of situation. I would say it will be a natural thing for the market to further consolidate.

Maybe I'll ask a follow-up question sort of something unrelated to this, but just on ASPs. If you look at the market you've got a 30 gigawatt China market, you guys are one-third of it at 10 gigawatts to 11 gigawatts. If you take the other two bigger suppliers, you guys almost control 75%, 80% of the market. So I was just wondering what - you are already at levels where wind is close to merchant power prices, if not cheaper. What's - why aren't the three big suppliers being more disciplined on ASP, because you are kind of the market and it seems like there's no need to go dramatically lower immediately on the cost of energy, if it can happen over time, but why not sort of push back a little bit on the ASP decline?

Yeah, of course I can only speak for Vestas and I can't really speak for the competition, but - so you have to ask them. I can only speak on behalf of Vestas that as I said before, we are disciplined. We want to run a profitable business and then we have to toss the others.

And the final question we have time for today is from the line of Sean McLoughlin from HSBC. Please go ahead. Your line is now open.

Good morning. Thank you for including me. I just wanted to explore on the cost side. How much will you need to increase your fixed costs baseline in order to meet your 2018 guidance midpoint?

No, Sean, as I said that previously, I mean we are trying to control or we are in good control over the fixed capacity cost and obviously the intention is to be stable, but we also have to adjust the fixed capacity cost dependent on what we can deliver in terms of revenue, because that could obviously be a measurement of the activity level of the company. So we've given you the range of EUR 10 billion to EUR 11 billion and the fixed capacity cost will also be mitigated based on where in that range we can end up, because that will be a consequence for us delivering the EBIT guidance as well.

I see. And do you see any need for restructuring within your current scenario planning?

I mean we haven't planned for any restructuring, but obviously, we are cautious when it comes to spend and we have been so. So I mean the fixed capacity cost is something we will continue to mitigate and we have also had a certain portion of outsourcing previously and we also have the shared service where we put more activity in that low cost base.

And then finally, just a quick question on the US, I mean what are your customers saying post tax reform? Can we expect theUS market to return to the kind of market levels we were expecting pre-tax reforms?

Yes, I think overall, of course, after the bit of scary situation we had towards the end of last year with the different proposal and the different possible impact of wind, I must say I'm really pleased to say that within the tax reform that the PTC remains. I think, as I also said before, I'm positive, continue to be positive about the US. It will continue to be the second biggest market in the world. And I mean the latest discussion has more been around, will the lower tax rate then impact the tax equity player and what could that do. And I mean, the feedback I get from the US market is that we expect the current tax equity players to continue to be active in theUS market.

Okay. That was the last call. And sorry it was a long one, but it of course is this time of the year where we also do the strategy update. So thank you for your interest. Thank you for calling in and I'm sure I will see at least the majority of you during the next couple of days. Thank you.

Thank you.