Hello, welcome and good morning to this Vestas Q2 Presentation. It's the voice of Henrik Andersen, and I think that was probably the best introduction I could do. From a personal point of view, I look very much forward to connect and talking and seeing many more of you over the coming quarters and at least when we do the, particularly, road show as well. I also think it's in good order here to thank my new colleagues here in Vestas for also presenting the Q2 result. As you would appreciate with a start date of 1st of August, I owe them quite a bit thank you for doing what they have just done in Q2. So with that in mind, let's go into the presentation here. The usual disclaimer, I think we all know of. And then if we come to the key highlights of Q2. Surely it's the highest-ever quarterly intake we've had, 5.7 gig in the Q2, and we'll come back more on that, but also includes the first order for our new EnVentus platform. We had a total revenue of €2.1 billion, it's slightly down compared to the Q2 of 2018, and it would a little bit of 128 million including to a margin of 6%, where we stay as well, its impacted by surely the competitive market, we have some tariffs and then of course, we are looking into a very busy second half the year. And we had the best quarter on service yet, strong service performance, we're up 15% in revenue, and we had an EBIT margin of 28.4%, so a very good quarter in service. We also increasing profits from MHI Vestas Offshore and, as such, we will talk more about it but it's all about the execution in there. So, net profit of €22 million and means an underlying improvement of €49 million year-on-year. In terms of our outlook, we have narrowed our guidance for 2019 in both terms of revenue in EBIT, surely down to that we also see an improved visibility for the full year at this point in time. If we on the second slide here, if we look at the quarterly order intake, as we've said here 5.7 gig in Q2 2019. And that was at 1.9 gig higher than it was in Q2 2018 and therefore representing almost an increase of 50% Q-on-Q, but also really nice to see that it's about the Q4 for 2018. Particularly here, it's U.S., Brazil, Finland that were the main contributors to the order intake in Q2 and really good strong quarter. In terms of the ASPs in the quarter, we ended at €0.75 and as we say here it's stable and is also down to that in Q1 versus Q2, we have a slightly lower part of the EPS in Q2 versus Q1. As always, there're differences in terms of geography, the turbines and also the scope. And that I'm sure we'll talk more about. In terms of the status of the order backlog, it is now all time high more than €31 billion in. We have a year-on-year increase of 37%. So on the turbines, we are close to €16 billion; and on the services, we are just about €15.5 billion with these very, very well supported when we look into the future of business. When we come into the regional market, slowly we start with the regional highlights from Americas, again, a continued strong demand in the U.S. with the current PTC. We know it's a very busy '19 and '20, before the PCC goes down in '21. And at the same time, we also appreciate in the U.S. right now. We will have the tariff and fuel mitigation, which we are working closely with through our supply chain, and also with our customers. In Latin America, we have seen the new government in Brazil, introducing the first options. And we expect more options to come also in the coming quarters, so really well. And we have seen Argentina announcing an option in second half of 2019, which of course will be discussed, considering Argentina's current state. And then you've seen an option in Colombia as well being a being announced. And so deliveries, half year '19 verses 18, up almost 60% mainly in the U.S and then we've also seen Argentina, Canada and Mexico contributing, as you will find in the announcement to that to that number. Order intake doubles compared to first half 2018. Again, U.S. and Brazil are having the main contribution to that. And again, U.S. continues to be at a very high level. In terms of the midterm volume outlook. As you can see, we use the external source with Mackenzie. And I think it's fair saying they of course, putting that there will be historic high installations with the PTC at 100 in '20. And then some sort of 12 of in '21, where we also know that part of that will be mitigated, for instance, from Brazil and other parts of the Americas. If we go to Europe, Middle East and Africa, and I think it is fair to say here Europe right now, positive from all both EU and the countries, we see a two and a half option being confirmed in Poland for the second half 2019. Being in Denmark, you also know we have had a new government that has introduced 70% greenhouse gas reduction by 2030, which means also means and targets and also tools to achieve that. And then in Germany, it seems that we still have the on the subscription of the option in Germany continues. But I think from a German government perspective and country, they definitely have still the commitments also to speed up the retirement of the coal fired power lines and therefore also committing strongly to renewables in going forward. I would say in the rest of the region, Middle East and Africa, you have also seen us that it's probably coming down to country by country. So there are countries that announce themselves entering into the renewable arena. And some picks up some of the former programs they had, and we'll deal with them country by country or by order. In terms of delivering, in first half of 2019 up 20% mainly in Spain, Italy and Ukraine, where we also sort of mitigate the decline you've seen in Germany and in the first half of the year. Surely in the region right now. We see that there has been a relatively low level of deliveries in the first half. But therefore, there's also an expected back-end loading of delivery for second half of the year. In terms of order intake slightly lower than first half last year, Finland, France are the main contributors, offering some of the shorts on Italy and Sweden. And then we sort of had Poland, which two orders, where we see that that is of the restart of that renewable market again. In terms of the external midterm volume outlook for the region, we see that is actually here, looking to increased both in '20 and '21, signaling that EU generally takes up a positive and that will mitigate showing some of the effects from potentially America's decline. We see Germany in this number, going from somewhere around 1.5 in '19, towards 4, 4.5 in '21, which, of course is very positive. When we come to Asia Pacific, we see an increased commitment in China. We've seen the options and the tenders started and of course, that's well supported by the feed-in-tariffs, which sort of have also 2020 year timeline to it. So there is a positive market ongoing, both in the short, but also in the longer run. In India, we have seen that the ambitions are still to receive 140 gig in 2013. But I think it has and we have all seen that some short-term uncertainties around how that is being executed and how that is being supported by also the commissions locally. In the broader Asia Pacific region, it's positive to see the country is generally committing more and more renewable energy. And here, we recently, most recently saw South Korea doing exactly that. In terms of deliveries, we have 35% lower than first half of 2018, primarily driven by Thailand, China and India. And as a comparison and then we see Australia remains pretty stable in here. Good, increase in order intake, 100% up from H1 2018. And therefore, we see an increased growth from Australia strong order intake in Australia and we see China and India also contributing to the increase here. As I mentioned, we'll supported by the Chinese feed-in-tariff. And from an excellent point of view in the mid-term volume outlook, surely, they put some reduction in China posted 2020 and the current policy there and there will be to some extent, sort of mitigated by some of the other areas, and still with an uncertainty to India as well. So overall, the region is forecasted in '21 to come somewhere around 15% lower. If we didn't go to our own business starting with the service business first, and clearly, we have had as I mentioned, a very strong quarter. You know as well, so we have 36-gigawatt under service with some, equals to somewhere around 42,000 turbines, which is gives us an enormous coverage in that. 67 countries where we have active operations and those still goes off depending on when and where we get the service contracts and also some of the new countries. We have an average backlog around 9 years. But as you will also appreciate and you'll probably seen in our order intake service contracts generally both as new and renewables becomes with a longer and longer tenure in Germany. Key highlights here. We had the first EnVentus order in Finland with the supported by a 30 year service agreement. We have had a couple of multi brand deals, we had a 300 megawatt multi brand deal in the U.S., and then we had a 14-year full-scope service contract with an extended multi-brand project in Europe. And in lower right hand corner you can see the split where we, service business, which is very, very well represented in Americas and EMEA and building will in APAC as the country's come along. If we then go to the offshore, I think the heading says very much of it is the operational excellence that also secures how we execute on the existing projects. And this is really where we can see and Marika will come back to the numbers on that one where we can see turnover goes up because we start having a real execution and installation of the turbines. We have so far 1100 turbines installed across 30 projects 4.6 gig. We have a pipeline which is under installation on conditional of 3 gigawatts. And then we have condition orders and preferred suppliers of 2.2 gigawatts currently. I think the key highlights here in the quarter and first half is, we've had a massive improvement in the installation time for the Norther project, where we are literally cutting the installation time in half compared to where we were four years ago, and then we've had the integration of the Borkum Riffgrund 5, which is 56 turbines of V164. And today that's the most powerful turbines installed in the German offshore wind market. I think in the lower right hand corner you will also appreciate, as we will say a lot of activities is ongoing and project in progress from Q2 listed here. And really nice to see the progress in how they execute on that pipeline. With that, I will hand over to Marika on financials.

Thank you, Henrik. Then we start with the income statement and here you can see compared to Q2 in '18 that revenue is down 6%. And power solution have, as we said before, a very back-end loaded activity profile. But you can also see here that service revenue increase year-over-year. So a continued good performance and also highlighted by Henrik earlier. As a consequence of the lower activity, gross margin is down 4.2 percentage points and you have, as we also said before, we have a negative impact from the orders that we took late '17, also beginning, I would say, in '18, are starting to phase them out quite significantly. So Q2 but, is still impacted by those projects. We also have external factors such as the tariffs and raw materials price increases, and that's also impacting the quarter here. Again EBIT margin down as a consequence of the above, by 5.5 percentage points and that is primarily driven by the lower gross profit and an increase in the SG&A cost. If we have a look at the SG&A that continues to be well under control. And it's one of the controllable thoughts from our side. You see that they are going up to 7.2% compared to Q2 of last year. That is a reflection of the activity level that we anticipate here in the second half of the year. So I wouldn't say any surprises, it's time for. Depreciation amortization increased by €23 million euro year over year. And that is primarily due to the introduction of new products. If we ever looked at the service business, we see a very strong service performance. And here you can see that revenue is increasing quarter-over-quarter and also the EBIT or the profitability is quarter 28.4. As we have said previously, you will always see some fluctuations in between the quarters, but here their performance continue to be very strong in the service sector and primarily due to really high quality but also a very fruitful cost of program. MHI Vestas Offshore, you heard about the highlights in the joint venture from Henrik. And here we talked a little bit more about the P&L revenue is clearly interesting compared to Q2 of last year. We are starting to install the new 164, obviously having a positive impact on the P&L. And profit as a consequence on the installations increasing to 22 million here into to all '19. The change in networking capital is I will say fairly flattish. We are continued to build inventory. And again as planned for because of the high activity level, we see in the second half of the year. That is offset by high higher down payments and milestone payments, but also increase your payables as activity level is very high. Cash flow, here you can see that cash flow from operating activities is lower compared to last year. And doing positive is obviously the net working capital also having a positive swing compared to last year. And we are delivering free cash flow before financial items or investments of negative but a positive swing compared to last year. So as I said before, this is driven by the working capital primarily. Total investments continue to be fairly flattish I would say compared to Q1 this year and an uptick compared to last year by €54 million. Again very much as planned for this is it took it both the of the new product or the capitalized R&D, as well as capacity and the planning for the second half and to also plan for the high order intake that we have at this time. Warranty provision and loss production factor continues to be high focus, so high focus on quality. You see as we continue to consume less than what we provide for, but also remember that we increase the provision as we have a lot of new product introductions. But while performing loss production factor continues below 2%, so quality, again very high on the agenda for Vestas. The capital structure net debt to EBITDA well below threshold, I will say fairly flattish compared to Q1 of this year. So, a very good performance on the net debt to EBITDA, if you look at the solvency ratio, it's 22.1% and that's clearly below the end of the year target and that is driven by the increase in total assets. I will also talk about the outlook for 2019 and we see here on the revenue, we have changed the guidance to or uplift to the lower end 11 billion and the higher end remains at 12.25. So, again, the lower level increased EBIT margin as we have more visibility of the remainder of the year and also the cost for family retirees and the transportation. We have decided to narrow the guidance to 8% to 9%, compared to the previous outlook of 8 to 10. Total investments also catering for the higher activity level as well as the capitalized R&D, but primarily the higher activity level as a consequence of the order intake, we are now guiding for an approx 800. And the service, not the least on the revenue side is expected to grow to approximately 10%. And we are anticipating a minimum of 24% on the EBIT line for the service business. So that's an update compared to approximately. By that, I open up for Q&A for the quarter.

Thank you. [Operator Instructions] And our first question comes from the line of Kristian Johansen from Danske Bank. Please go ahead. Your line is open.

So my first question is regarding the factors, which you are here for the change in EBITDA and also EBIT margin guidance. So you mentioned tariffs, transportation and scarcity in the market. If you can just elaborate a little bit more on those. So first of all tariffs, you previously said that you expect tariffs to increase cost of goods sold by 400%, but is that still the case? And then also in terms of transportation, you mentioned rerouting. Can you get a bit more details and hat is going on here? And the scarcity in the market, you also highlight, what should we sort of think about that? Is that simply just suppliers raising prices?

Yes. And I understand your question, Kristian. And what we said last year, we said that the tariffs that we knew at that time would have an impact on 1.5% before any mitigation. I would say that we have been good at mitigating the additional costs that we anticipated for this year. Unfortunately, there has been changes in the tariffs meanwhile, and when we say that we see an increase not only in the tariffs, but also the fact that the positive is that we can definitely removed, because of the tariffs because the overall global platform that we have. And the negative is obviously that the rerouting is costing us. So the more we could plan for 2019, the better. And now we have surprises, I would say, from external factors. So there is definitely a scarcity also remember that the type of products that we are shipping or, is very bulky, so there is definitely a scarcity from that perspective. And if we have other conditions where we have to do more land transport that we plan for that definitely also costing more. So it could double effect on both the new tariffs as well as the rerouting that we see at this point in time.

So just to understand the rerouting partly reflects tariffs and sort of changed supply patterns, but it also changed reflect higher volumes or…?

I mean, obviously, we have a high activity level and that's the positive as we see it. And we are sort of changing or narrowing the guidance, as we see we have a very strong order intake, the intake and as a consequence, very well covered for '19. But there are surprise factors that we need to change the planning. And changing of the planning because of tariffs and we rerouting is a cost factor as the prices have increased.

Okay, I understand. Then my second question is sort of around the same topic, but it's, I mean obviously you highlighted these surprise factors. How will you mitigate and compensate for this going forward? Is it possible to raise prices?

I mean, I would say that you see that in any given year, the more visibility you have over your ToR or installations that you will do in a year, you plan for it will advance that's the cheaper option for us. And anything that that causes changes to that, and tariffs obviously being one of them, is costly. And as, if you have a signed contract, I think you know, as well as I do that it's very hard to come back and ask for something. But obviously the price picture that we see right now is very stable. And I will say a lot of discussions both not only with customers, but also with suppliers is ongoing at this point in time.

But in Q2 you signed a lot of contracts. So do these contracts then reflect these surprise factors that you mentioned?

I mean, the contracts that we have signed already we cannot change. But ongoing, we have these types of negotiations and discussions with customers and supplier.

All right, fair enough. That's all for me. Thank you.

Thank you. Our next question comes from the line of Claus Almer form Nordea. Please go ahead.

Thank you, also a few questions from my side. The first is also about this change of EBIT margin guidance. Because one thing is 2019, but redo, which is 2020, is probably more interesting. And I know you are not guiding yet on next year. But maybe you could put some color to the headwind we should reflect in our estimates. Broadly calculated, your change of guidance is 100 million more or less of possibility, impacting only a few months of 2019. So it's just do the math, the impact on next year could be even more severe.

Yes. And as you say, Claus, we're obviously not guiding for next year, but if you look at the order intake that we have had and continue to have, we have a very positive view on the market and obviously a fairly good visibility of 2020. We're also launching a number of new products that are very positively received. So I cannot say anything, but we're having a positive view on the 2020. I think when you look at the numbers and all the changes that we've seen and happening in the market, I mean, we are pretty successful in mitigating those. Then, of course, we cannot meet again hundred percent of all the factors that are out of our control at this point in time.

Would it be fair to assume that you will have a large negative impact initiative and this year, so it says €100 million if and when this year, it will be even larger this year?

I mean, we are in the planning of next year. So I mean, you cannot draw those type of conclusions.

Okay. And then a question regarding share buyback. In the past if you have announced share buyback further in the Q2 results. So firstly, you haven't done that today. What should we think about your distribution to shareholders?

We wouldn't -- we wouldn't exclude to do that after Q3. And we've always done that in the second half of the year, but considering also where the activity level in the second half of the year, tells me we will we will come back to it. And we think it's better time after Q3 this year.

Fair enough. And then service margin, you had a virtual first half is also mentioned. First half EBIT margin 27.4% and you're now guiding for minimum 24% for the full year. Is there anything we should be aware of in the second half when it comes to EBIT margin?

And as you say correctly, we see a very strong performance and that's also why we have up listed to a minimum rather than approximately. We don't at this point in time expect any negative surprises. But obviously, depending on how the contracts will be performed. And if we have the opportunity of the further cost out remains to be seen as we are delivering now the second half. But all together it's a positive in the service. And we're not expecting any very negative surprises.

We'll move on to the next question. So, the next question comes from the line of Dan Togo from Carnigie. Please go ahead. Your line is now open.

Yes, well, thank you. Marika, you've previously announced or communicated that in the previous EBIT margin when it compared to 10, the 10% was a flawless execution for 2019. Do you now see the 9% associated as a flawless level or does that includes some sort of disruptions you can see in the second half there will be the first question?

Yes, fair question, Dan. The 8% to 9% that we're guiding for because of the higher visibility obviously includes the different scenarios that we have in the 8 to 10. So it will be the same methodology is just as we have better visibility as we had external factors impacting the overall cost for us executing. But it's fair to assume, it's a similar methodology as we have for the 8 to 10 definitely.

And also on the distribution between the half years, do you now see this year, actually been a bit more back-end loaded than you've previously thought and what has caused that, if that's the case?

I wouldn't say, it's more back-end loaded than what we anticipated is very much in line because so far, we have been very good at executing. So it is an exciting year and that's what we have said all along in terms of the back-end loaded profile and that is materializing clearly.

Just one question on CapEx, you increased by 100 million where in which geography is that taking place? And is it promotes? Or can you be a bit more specific?

Yes, so, it's primarily for foremost, simply because of the strong order intake that's been have had and continue to have? So I would say, our global footprint, so obviously, it's a reflection of the fact that we have a global footprint. I would say that altogether, we are fairly even in where we have the overall demand so we are. But don't forget that they also investing in capacity locally and have done so. So but in general, it's most and fairly evenly spread.

And our next question comes from the line of Akash Gupta from JP Morgan. Please go ahead. Your line is now open.

I have two questions, please. My first question is on outlook. I mean, I see you are taking down a dope end of the rain by 100 basis points. And issues that were well-known to the market and you have been flagging since the start of the year. So my question is that, I mean, if you look at the first of the year execution issues, particularly on installations. Even you would be ramping up production of V150 and other large turbines. What sort of headroom do you have in your guidance and how realistic it is 8%? That's my question number one.

So we are guiding for 8 to 9, as I said earlier. And that is a reflection of different scenarios as we have for the 8 to 10. So nothing has changed from that perspective. And as I said earlier, the execution part internally is very satisfactory. So it's more external factors that we see now coming in and impacting us. And it is primarily the cost for transportation and as a consequence of the routine that we have had to do.

And my follow-up is for photo is for Henrik. If I look at the outlook, industry outlook that you presented, we have declining in Americas in 2021. And same we have for Asia Pacific, while the growth in EMEA is depending on Germany, where basically, current auction under subscription is not painting a bright picture for 2021 installations. So my question for you is that we have a good growth in 2020 and maybe double-digit decline in '21. So how you are going to focus on cost base and what are your key priorities for the next six months?

The next six months, I think it's fair saying and continue to the road we own, because we are investing a lot in the technology that will also being addressing some of these things in '21. And I think you just coming out of a quarter where we've had a record order intake. So, I think there's a lot of positive in this industry that we have quite some time to address when we get into '21. And then I think we need there to see that there is a big drop forecasted both from U.S. and China. And I think, let see when we get a little further three to six months on how that actually is coming off both from a PTC point of view and our feed-in tariff in, for instance, like a country like China, which you also know we are probably not as dependent on.

Thank you. And our next question comes from the line of Mark Freshney from Credit Suisse. Please go ahead.

Hi, Mark Freshney. Two questions, please. Firstly, on consolidation within the sector, I think it's fair to say that the upheavals in the industry over the last couple of years have increased your market share of Vestas and of course the ongoing internal work. How do you see consolidation in M&A playing out over the coming months? And just secondly, trying to understand the €800 million per year, this year capital investments? Should we expect that going forward? Because I mean you've lent very heavily on working capital for the last couple of years. Now you're having to invest the new facilities at the same point, you've got the EnVentus products R&D coming through. So should we envisage that €800 million per year extrapolating forward?

Okay. Do you want to start or…

No, you go.

Okay, I start with the CapEx. So Mark, the €800 million is really a reflection of first, the capitalization of the EnVentus projects that we have. That will continue throughout this year and also investments in most to, or to cater for the high demand that we have in the market right now. Should you expect the €800 million going forward? I would say, you should expect anything from 400 to 700. We are definitely at a higher level at this point, because we have the two factors that I mentioned. But under normal circumstances, we're talking about anything between 400 to 700 and obviously the 700 there is part of a new product introductions.

Okay. Thanks Mark. And I will just also comment on, I should say, I won't comment on how competitors are generally doing in our industry, but it's clearly that would you just comment on, is our investment level. If you want to have a lead into technology and therefore also being able to mitigate some of these things, you have to keep investing and of course that requires that you also will have the earnings and cash on it. How would that affect the industry structure? I think we have seen some of the effects already. And as we always say, we are following the clear path of the strategy of organic growth. And then from time to time, we do value for us value attributes of acquisitions, which we will consider also going forward. So, that's the reality how we see that.

Thank you. And our next question comes from the line of Alok Katre from Societe Generale. Please go ahead.

Hi, thanks for taking my question. Alok Katre from SocGen. Two questions that I had please. Henrik, first one to you Now, that you obviously had a bit more closer ringside view for the past three months, where do you think the biggest areas of improvement or even areas that you would like to pull back from if that's the case? And if you could also lay your thoughts on resource allocation, just following up from the previous question, and also in the context of some of the speculation that we've seen in the local media here in India, about your strategic involvement with one of the local OEM? And that one's for Henrik. Second, Marika, just in terms of the factors that you talked about, is it fair to say that some of these factors are temporary in terms of the supply chain tightness, or as we look at the next year, when you got to deliver a lot more in terms of volumes, and I guess, not just in the U.S.? Do you think we should think about these factors as a lot more entrenched? And, therefore, as a risky went into 2020. So that would be great. I mean, if you could also shed some light on whether there's any specific geographies where you're seeing let's say tightness. Thanks. Those are the two.

Okay, I think I will, I will start there. First of all, I really appreciate your tariff question and especially also that done normally known for having a long patience, but riding into a job in already now three months is probably a little bit over. Also, I started August 1. I came out of a pretty active other CEO, job. So I stepped out of the board, first of all was then in literally, since then, use all my awake hours to be around and seeing as much as I could. But I think we don't have the opportunity to be able to cover the world and the regions within just working day number 15. Having said that, coming from the board and having what we called, hopefully a non-event to session with analysts is that strategy is not changing. I've been part of the board since 2013. And I think that one is, is clear. We are continuing on the same path. And that's part of also I think, the non-eventful situation here. So, I will let you know if I find something really extraordinary to pick up on. But so far, I'm just super, super keen to continue what is going to be the busiest year, both for 2019 and 2020 for the history of Vistas. And in terms of local rumors on companies in the industry or whatever, we don't comment on those. And if we do have something to comment on, we will simply just say now our sort of under the rules and regulations. We will send out appropriate company announcements, so we don't comment on rumors in that.

Okay, Alex, so to…

Is that the sort of thing that fit…

Go ahead.

Sorry.

So is that the sort of thing that figures -- sorry just one quickly, is that the sort of thing that fits into your definition of organic growth and small bolt-ons?

I won't comment on speculations because now you're asking me to comment on exactly rumors of that nature. So, we will always look at it and look at a number of occasions from time to time. And if it comes to something, we will announce it. And if it doesn't, we won't comment on it.

Okay. Fair enough.

To comment on your question around the supply chain tightness and our view on I think what you said is 2020. Obviously, we are in the midst of planning we have a very strong order backlog, continuous from order intake. So, that creates visibility and a very positive one for 2020. I mean, I cannot give you any concerns or any possibilities for on that note, on the supply chain, this is really what we are in the midst of planning right now. So, we will get back to that when we provide the guidance basically for next year.

That's fair enough. I mean, some of those -- because hearing that you've had to sort of made deposits against booking trucking capacity in the U.S., even 8, 10, 12 months, just because of how, tied to the situation over there is on the specialized trucks that you need, for instance. Just wonder, I mean, some of those factors, would you say the short-term specific link to the fact that you have these second half loaded this time around? Or is it, something that, you need to work on a lot more from a timing perspective?

I would say, I would put it like this Alok. The more time we have to plan with and that's where we are right now and the more visibility we have in terms of activity level, obviously, the better. So, it's the short term change that is difficult and costly for us. But now, we're talking about 2020, obviously, we are in the planning process for that.

And is this to U.S. that you're talking about in terms of the factors, which reasonably at least, if you could…

I would say, if look at this order intake, we're having -- it's very global. So, I would say, it's a global question rather than a specific country question.

And our next question comes from the line of Ji Cheong from Citi. Please go ahead. Your line is now open.

Thanks for taking my questions the couple please. First on the U.S. market, it seems like the market forecast in terms of like the expected installations for '20 and '21 have kind of come up for North America. And this is probably the U.S. So just wondering if you're actually see signs of elevated growth in the U.S. for '20 and '21, given the expectations have heightened over probably, say 3, 4 gigawatts per annum. And then the second question is that given that we're in August, mid-August. Can you give a sense of where you stand in terms of product execution for Q3? And what kind of revenue and EBIT margin evolution we can expect for Q3 and Q4, please?

I mean, obviously the U.S. and I think thanks for the question. I should say, you can also see from the order intake in Q2. Yes, it is very much focused still on the U.S. market. We're very pleased with that, it's a market we know and work very closely with also from a customer side. I think, it's probably a bit premature to sort of start talking about '21 there's clearly a lot of conversations, but I think that also comes down to how 2020 sort of pan out as a year. Because if you have the consideration, I'm pretty sure you as a customer will appreciate to get it into installed and put in place there before year-end '20. But it seems like there is a positive and that was probably why I said that. There's still quite some time to start forecasting for '21 and '22. But generally, we're in a good position and we have a competitive product portfolio for also addressing '21 and time beyond.

And to your question regarding our forecast of Q3, I mean, that's obviously nothing we can provide. What I can say is, what I've said before, we have good visibility of the second half is going to be extremely busy, as you can see from the revenue guidance provided. And obviously with the higher leverage that comes from volume that will have a positive impact on the EBIT line. And that's what I can say about the second half of the year.

Thank you. And our next question comes from the line of Lars Heindorff from SEB. Please go ahead.

Thank you. The first one is regarding EnVentus. I know you cannot give us any insight into negotiations with customers, but maybe you could help us a little bit about telling us the progression of EnVentus and how it has been received by the customers. I mean you've got one order for EnVentus here in the second quarter, but maybe a little bit more flavor on that, how that is progressing and how that's been received by the customers.

I think it has been truly generally well received. I think they understand also what we are trying to achieve with the modular building on inventors. So I would say from that point, it makes it easier also to address some of the local requirements from customers. So I think in that sense, it's an easy and it's a good discussion to have. So that's probably how it's perceived in generally Lars.

And then as a follow-up on that, which is regarding the local content requirement that you also mentioned earlier, you said that, that maybe will lead to higher CapEx. But on the cost side, I mean how is that going to affect your cost, operating costs going forward, and hence, also, well, in the wider perspective, maybe also the margins?

On a very sort of broad discussion, I mean, the more external sourcing we do to keep this volume, obviously, there's a price tag related to that. But then you also have the discussion with suppliers because they are, in general, very global even if they are localized. And then on top of it, you have obviously this discussion with the customers. So ultimately how it turns out, it depends on the different negotiations. But I think in a broader prospective, the more localized you get, and could be have a certain price tag related to expect again, that's the negotiations with both customers and suppliers. I think the most important thing in reality is that you have volume and are as a company interesting enough to actually find those that can support you in localization.

Thank you. And our next question comes from the line of Casper Blom from ABG Sundal Collier. Please go ahead.

Thanks a lot. First of all, hi, Henrik. Looking forward to meet you; then secondly, yet another question regarding your slightly lower-margin guidance. Marika, could you give any kind of flavor to how much of this lower margin is due to cost actually coming up and other things, and due to other things such as contingencies? I suppose normally you do a plan A and a plan B, now you have to do a plan C and a plan D also if tariffs increase somewhere in the world. And I mean how much is this also a preparation for something that could change tomorrow and become even worse? And how much is actually sort of the real cost that you know will be higher, if you can give any kind of split on that? And then secondly, a very broad question as opposed, but and with growth in the world sort of starting to seem to slow down? Are you see any kind of delays on projects or acceleration for that matter, and to what degree does a lower interest rate also play into that very broad question? Thank you.

Okay. So, if we start with the overall cost and I would say what we are now telling you is what we know, for at this point, on the tariffs and the changes, and, and obviously H&I and it's a reflection of I mean pure higher cost for rerouting and transportation costs. So that is more a fact. And when we talk about the Plan C or D, that is the planning process that we're in the midst of for next year. And as I said, the more we can actually plan for the better. And obviously, that's part of the negotiations, both with customers as well as, as suppliers. So, there's a different opportunity to cover for those then when you are in the midst of execution, if that understandable, Casper?

Yes, I guess, it is.

I'll take the sort of more broad on sort of the environment right now. I think this is two observations, I think generally, you don't see projects being told or anything. I think we are benefiting here from that, that the industry has become much more mature. And that also means that the allocation of capital is not what I would call, the short or the optimistic capital anymore. So I think there is a lot of infrastructure 20 to 30 years' money that goes into the industry. And those are not sort of going out of it even within a slightly more maybe gray or the big outlook for the world economy. So I think there's a lot to be had built from the trains in any of the sourcing, and generally, from being the more fossils towards our part of our community is better in renewables, I think that is the positive. In terms of low interest rate, come on that just means that every turn on some of our projects, still seems to be very attractive. So I can't see that right now doing anything else than just continuing to drive for our solutions around in areas. So in reality on the short term, no we don't see anything. Clearly, if it becomes really more bleak and darker, then let's discuss that when we when you see that as you thought as a head. But I think the other one is probably that if it does if you with anything from low raw materials if it came to that. But we haven't seen any of that yet. Thank you.

That sounds good. We'll hope for lower material costs.

And then still super positive on the order intake that's probably too much hopeful, okay.

Yes, yes on high prices as well.

Okay.

Thank you. And our next question comes from run of Sean McLoughlin from HSBC. Please go ahead. Your line is now open.

Good morning. Thank you. On turbine margins it seems to be remaining suddenly though across the industry. Could you help us understand a little bit better that the improvements in the contribution margin that particularly new products at this more stable pricing can give you to help really see how turbine margin can recover from these low levels? That's my first question.

And, Sean, that's what we have discussed a little bit before. It's, obviously, we don't develop any new products or concepts without seeing a clear path to both lower levelized cost of energy as well as something in the pocket for us. So obviously, I will say, the pipeline of new products that they have to generate something also for that stuff. Otherwise we wouldn't spend the money and more stable price environments we have the more positive and that's what we're seeing right now.

And that can be material already in 2020? Or is this 2 to 3-year effect?

We're now being that specific, Sean. But I mean, the order backlog, what type of product, we're taken in those orders. So, I mean, we have a positive view of the 2020, year 2020. That's the last -- next question will be the last question.

And our last question comes from the line of Klaus Kehl of New Credit. Please go ahead. Your line is now open.

And my question related to this strategic target that you were communicated in connection with the 2018 report. I can't remember the exact wording, but I guess the point was that, you were expecting a minimum 10% margin after the introduction or after the normalization of the market, after the implementation of all the auctions. Could you just elaborate a bit on this, yes, strategic targeting in, yes, as of today?

Yes. I mean the strategic targets of double digits EBIT is obviously still there. And as I have said before on a higher level as we're guiding for next year, we have a very positive view on '20. We have new products and we have a very strong order intake. So, obviously, visibility also over 2020 and then there will always be some unknown factors apart from those as we know right now, that could impact, but altogether we have a positive view of 2020.

With that, that was the last question. We thank you again for both the attention and also your questions on this conference call, and again, look forward to speak and see you out there. Thank you.

Thank you.