Ditlev Engel – President and CEO Marika Fredriksson – CFO

Jacob Pedersen – Sydbank Daniel Patterson – SEB Equities Lars Heindorff – ABG Patrik Setterberg – Nordea Claus Almer – Carnegie Arnaud Brossard – Exane Paribas David Vos – Barclays Mark Freshney – Credit Suisse Sean McLoughlin – HSBC Klaus Kehl – Nykredit Faisal Ahmad – Handelsbanken Shai Hill – Macquarie

Okay. Good morning and welcome to Vestas Wind Systems Quarterly Announcement for First Quarter 2013. And welcome to everybody in the room here today, press and analysts, and everybody who’s decided to tune in over the Web. The presentation, we have decided to call very easily outlook 2013 maintained and I hope they will be able, during the presentations today, to give you an illustration of what has happened during the first quarter and the evidence of the activities taken and why we therefore believe that the outlook for 2013 can be reached. The agenda that we will cover is the regular one. And before we get to the Q&A, I will introduce our new CFO, Marika Fredriksson, who is with me here today. And she will just give a small presentation of herself. But obviously, I will do all the presentations and Q&A today as she just started last week. And then when we get to the second quarter, she will be up here with me on stage presenting the results. If we start to look into Vestas’ aspirations and organization and operating business model, then we have three very important focus areas that we’re working on since 2012. Number one have been to reduce the overall costs through operational excellence; secondly, to reduce investments and simplify our product roadmap; and thirdly, how we can improve our capacity utilization across the organization but also the capital efficiency. However, it was also very important that these activities should not hamper Vestas’ aspirations within running the business, meaning that we have to advance our technology. We also have to ensure a more efficient setup of the way that we run Vestas overall, and we have to make sure that our focus on sales and service of the wind power plants was not hampered. All these had to tie in to the new organization that was launched last year and the operational model that we need to make that Vestas could be as flexible as possible and scalable as possible due to the big changes that we continue to see in the market. So, that has been the focus point and the three main areas that we have been working on. And again, during the presentation today, we’ll try to take you through where we think we have progress within these three main focus areas. If we start on the cost side, then by the end of 2012, Vestas was 17,700 employees. And here, by the end of the first quarter, we are now down to 17,196. And if you look at where the reduction has come from, then 95% of the reduction had come within the salaried area and the last 5% within the hourly paid. It is important to be aware of, coming back to the scalability, that, of course, we will also see fluctuations within this area as we are also scaling our production up and down in order to deliver what we have to do during the year 2013. However, all of it tied into that we have this aspiration of taking out the fixed cost of more than €400 million over this two-year period. If we look into the reduction of CapEx, then we have over a 12-month rolling period, reduced the CapEx with 66% compared to one year ago. We obviously have no plans this year for new factories. And we are also lowering R R&D investments, and that means that the net investments have been lowered by more than €230 million over the last 12 months, again, an important contribution to the aspiration that I mentioned in the beginning of how to be better in also utilizing our capital going forward. And as you will see, we have actually done so without hampering our aspirations within the competitiveness of Vestas. On this slide, and I’m not going to take you through all the numbers, but it’s just to say that Vestas’ approach have been to see how can we get a better leverage on our 2-megawatt and 3-megawatt platforms, the new one based on the V112, and do so in order – in a CapEx-like way but also, at the same time, increase the offerings to the clients. And the AEP that is mentioned here on this slide stands for annual energy production. And you will see that, for instance, the V126 is going to deliver nearly 20% more annual energy production compared to, for instance, the V112-3 megawatt. This is, of course, important not only for the effectiveness of the customers going forward but also important for Vestas to increase our earnings going forward as this is going to ensure that the competitiveness of Vestas within the turbine areas is keep being enhanced even though we are working with a lower CapEx program by capitalizing on the existing platforms that we already have developed. Another important message in the accounts today has been the acceleration of the V164-8 megawatt. We had originally planned that this was going to installed on the prototype level in the second quarter 2014, and we are now advancing this to Q1 next year and it’s going to be installed here in Denmark. And the reason why we are capable of doing that is because the prototype test studies ongoing here are progressing very well, and also due to the fact that many of the people at Vestas working on this is having a very nice progress. And this means that the drivetrain, gearbox and generators, hub, blade bearings, et cetera, are moving according to plan. And again, an important message to Vestas’ clients, that not only is the prototype going to be advanced but also the actual parts testing, part running well. And just to give a magnitude of what we talk about here, what you see on the slide is the gearbox and what you maybe noticing in the back is actually a pretty big truck, just to give a feeling for what kind of magnitude we are looking at on this turbine. If you look into the development of the net working capital then Vestas have, in the past, normally seen that the first quarter has been a challenging quarter when it comes to the net working capital. And actually this is the first quarter in five years where we see a positive development on the net working capital. The megawatt under completion are down by a little more than 200 megawatts. But in terms of the operational model that Vestas is working on across the value chain, whether we talk transportation, construction and manufacturing, and the turnaround time is an area that we have particular focus. Not just in the way that we are doing it in terms of our daily operations but, of course, also we are seeing now that the new design of the turbines and the way that they can be installed makes it easy and faster in the commissioning side which, again, is decreasing the need for capital churn up when we are doing these kind of things. We call it the order-to-cash implementation that we are working on, and it’s an important part of many of the features that we have at Vestas across the value chain in order to improve the net working capital. And I’ll come back later on and talk about the specific development of the cash flow. During 2012, we got many questions concerning the improved capacity utilization of our plants, and obviously we closed some plants last year. We also divested one. And we will continue to look at how can we increase the capacity utilization of our facilities, whether it is doing something for third parties at Vestas facilities or some divestments. However, what should not be forgotten when we, last year, said good-bye to more than 5,000 people, of course, also leaves us with opportunities to looking into the administration optimization and therefore optimizing the office space that we have across Vestas. And we actually announced, for instance, the closure of our former headquarters in Randers and our facilities in Copenhagen, and for instance, in Shanghai and Leatherhead as a further optimization of the overall cost structure, which is an important feature of getting to the target of the €400 million cost savings over this two-year period. Now, let’s turn into the actual financials and start to look at the overall activity level on shipments and deliveries. As expected, we saw a significant reduction in the activity level. Actually, what we produced and shipped was down 34% compared to the same time last year. And what we handed over to the client was down 26%. This is basically as we anticipated the activity level we would see. And you’re also noticing that what we, for instance, are delivering here in the first quarter is in UK, Sweden, Australian, Chile and Brazil. But, for instance, there is nothing being delivered in United States here in 2013, and that is of course something we have known all along that it would be the big challenge in 2013 is how to mitigate the huge reduction that has taken place in United States for this year. And I’ll come back later on and talk about where we see the order of development. The income statement. The revenues were basically unchanged at €1.1 billion in Q1 2013, exactly at the same level as we saw in 2012. However, the gross profit was improved by €46 million to €58 million. This improvement, in one hand, looks like it is a positive development which, of course, it is. However, seen from our point of view, the margin that we are carrying here in the first quarter is not satisfactory on the turbine. And actually, a big part of the progress we are seeing in the first quarter comes also from the fact that our warranty provisions are significantly down due to the strong performance of the Vestas’ suite of turbine. And, therefore, when we look at our full-year expectations, it’s important to be aware of that this earnings level is not representative of the earnings level that we are seeing and the backlog that we are carrying. There will always be a mixture of projects and turbines that we are delivering in a given quarter. And what we are handing over in this quarter does not that have a satisfactory earnings level, even though it looks somewhat better compared to Q1 2012. However, what is more of a sustainable nature is the development of a fixed cost that is down from €216 million to €166 million. And these two together actually means that the EBIT has been improved to €96 million from minus €204 million to minus €108 million. So, again, an EBIT margin improvement but, from our point of view, we still need to see a much further improvement on the turbine side, and we know that what we have in the backlog, it should be possible. The overall development of the gross margin is moving in the right direction. And of course, here, we are seeing more and more positive evidence of the improvement on the earnings of the new platform. But again, it will take time before this filters 100% through in the earnings side, and there will always, as I said, be fluctuations how this develops quarter by quarter, but I think the trend is clearly moving in the right direction. I mentioned the number of employees down from end of last year through this quarter. But if you compare it by the end of 2011, it is a reduction of 24% down to the 17,196. It is still our aspirations that we will get down to 16,000 compared to the level where we are now and that is, obviously, going to be a continuation of the optimization of the existing organization but also due to divestment that should bring us down at this level by the end of 2013 in order to get to the target of €400 million reduction of the overall cost structure. Again, coming back to the development of the fixed cost, I think this slide is fairly self-explanatory of the reduction that we are seeing quarter by quarter and that is in line with the plans that we mapped out for getting to the full-year target and we are trending according to the plan that we laid out. And actually, compared again to the end of 2011, we are down with €55 million down to a level of €101 million compared to more than €150 million back at that time. I mentioned briefly how we saw the development of the EBIT. Let me therefore just reiterate what has been in the wrong – in the right direction compared to Q1 2012. As you can see here on the slide, the €80 million contribution from the fixed capacity cost is the biggest driver of the overall improvement of the EBIT, and this comes close to what is related to the manufacturing, but also in the middle of the P&L in terms of the overall fixed cost. And if you’re looking to the positive contribution from the warranties, then that stands at close to €40 million compared to the same time last year. However, again, the project margins were not at the level that we would like them to be. But again, as I said, they are not representatives for the margins on the projects that we do carry in the backlog and expect to execute here in the coming quarters. The service side continues to develop quite positively. The service revenues increased by 7% compared to Q1 2012. But maybe more importantly, the margin before allocation of group cost was 24%, which was 15% in Q1 2012. And if you compare it after the allocation of group cost, then the margin was 15% versus 3% in the first quarter of 2012. Again, the activity level that is taking place out in the field can mean that we are seeing some deviation on the numbers. But it is an important parameter for us that with 5,000 employees, that we today carry in our service business, that we also here keep on working on how to optimize the overall performance not only the turbine but also the time that we are running in the field. And there, again, the installation time, as I mentioned earlier, is an important factor of how fast we can turn around the people when they are attending the various task at the turbines. Turning to the balance sheet. There is, of course, compared to Q1 2012 with Q1 2013, there are a lot of deviations because of the write-downs that were made by the end of last year. So, I will not dwell into that, but more looking at how has the development been on the net debt and the net working capital. And I should maybe use the phrase that the net debt only increased by €72 million during the first quarter 2013, whereas the net working capital, as I mentioned previously, improved by €36 million here in Q1. And as I mentioned in previous years, we actually have seen that the net working capital was moving in the wrong direction in Q1. This overall change in the net working capital and the improvement that we saw, of the €36 million, you have here on the right-hand side of the slide how this is being composed. We had a positive contribution coming from prepayments, inventories and receivables, whereas payables and other liabilities was moving in the other direction. But overall, it did contribute to a positive development of €36 million. As I said in the opening, the development of the turbines and the warranty provisions is a very positive development. We are providing €23 million here in Q1. But the actual consumption is down to €17 million. And if you look across the blue bars here, over the last many quarters, you will see that this is, by far, the lowest consumption of warranties, whereas the number of turbines on the services are obviously much, much larger quarter-by-quarter. And this, of course, also contributed to the fact that the lost production factor continues to move in the right direction, largely creating more energy for Vestas customers. If you compare over a 12 month’s period, it actually means that the warranty consumption is less than 1.5% of revenue over the last 12 months. And therefore, the constant focus on quality is again turning out to be important for us but, of course, also in order to maintain the earnings on the service business that we are seeing this development of the turbines. Turning now to the cash flow. The cash flow was improved by €235 million compared to Q1 2012. And as you can see on the slide here behind me, it came from various factors. The improvement of the working capital was an important contributing factor, but also the overall investment level being reduced from €91 million to €37 million has contributed positively to the development of the free cash flow. And again, the Vestas organization diligently working on how to further improve within this area is an important factor in order to get to the overall expectations for the full year. It has long been our aspiration that we should have Vestas that was running at a net debt to EBITDA level below 2. And if you compare here in Q1 2013, we are at 1.8. And obviously when we look at the very challenging year in 2012, we were actually – in the middle of last year, we were about 5, and again I think this is a good illustration of – that the profit that Vestas has made is starting to pay off and we are now ending at the level of 1.8. The return on invested capital, and I should say here that when we look on the left-hand side of the slide, are still very small numbers. So, maybe the slide of the curves looks a little more impressive than they really are, if you compare to the percentages on the left-hand side. However, I think the important message here is that since the second quarter 2012, the ROIC has been moving in the right direction. But it’s, of course, still not at an acceptable level. But at least, the trend is moving where it should move. Turning now to the order situation and the overall order intake, it’s clear that Q1 2012 with an order intake of 644 megawatts was a very low Q1 and down 50% compared to Q1 2012. Fortunately, we show in the month of April a rebound of 570 megawatts, just in the month of April alone, of announced orders. And of course, again, we are seeing here that there is no impact yet from the development in the United States as the new rules for the B2C was announced in the middle of April. On the pricing side, we are seeing a fairly steady environment. The average price per megawatt stands at €1.04 million per megawatt, and that is up 2% compared to the same time last year. But again, it will depend on the types and the geographies that we talk about for these variants. But I think the key message here is that the bottoming out of the overall price erosion we have seen seems to be now stabilizing. And again, of course, for Vestas, an important message to look at. Despite the low order intake in Q1, then the backlog is actually unchanged, the combined backlog still stand at €12.4 billion with a slight change through the turbines being down €100 million whereas the service is up €100 million to €5.4 billion but, overall, we still have €12.4 billion of orders that Vestas has to execute going forward, and we believe that that is important that we keep on building our backlog going forward. It is, of course, an important priority for us looking into the rest of the year. Turning to the outlook, just to dwell a little bit upon the market share, we have not have the opportunity to comment on that since these numbers were released after our Q4 result. They were, of course, for major industrial analysts coming up with how they saw the overall market development as some – one having investors as the largest, some having investors in the second spot. But for us, the key takeaway actually is that Vestas, GE and Siemens have gained global market share on the back of Asian players, irrespective which of the four industrial analysts that you look at. And we think this is important to be aware of also for the market going forward, in particular, with the global requirements that they are in order to be able to work globally, install turbines globally, in particular, in many of the emerging markets. And we feel, therefore, that Vestas is well-positioned irrespective of where the business is going to go in 2013 and beyond in order to capture our share of the market, whatever it is on the planet. This leads me to talk a little bit about the regulatory side which, of course, is very important for us and again, a bit of a mixed bag not to go through all of them. We have got the PTC now rules, guidance released in the middle of April. In the EU, there has been some discussion over the EEG from Germany. That hopefully now has or has now subsided, which is important. But, of course, the very low price on carbon in the EU is a challenge. We have had Romania with some uncertainties. So, there are still various markets in the EU where things are moving in various directions. Same thing actually takes place in Asia, where there are discussions in Australia about the future of the carbon tax, where as we have seen both in India and Japan some positive development on the regulatory side for the expansion of our activities in that part of the world. As I’ve said in the opening, we are maintaining the outlook. We expect to ship 4 to 5 gigawatts for this year. Have revenues of minimum €5.5 billion, of which the service is expected to be around €1 billion; EBIT margin before special items at minimum plus 1% and the EBIT margin before allocation of group costs of around 17% on the service side, and a free positive cash flow for the full year. Again, there are no plans to invest in new manufacturing facilities, and therefore, we also still expect to see that the investments in property, plant, et cetera, are expected to run around €150 million. And as previously mentioned, we are working towards giving an organization of a level of no more than 16,000 people by year-end. And just to remind everybody, I know people who are following Vestas know this, but we will, of course, as ever see fluctuations between the quarters on the activity level and the way that we recognize revenues and earnings in Vestas. Just to sum it up before I hand over to Marika is to say – as I’ve said in the opening, there are three main focus areas for us. It is to reduce costs, the low investment level and the improved capacity utilization and capital efficiency. And what has happened on that front here in Q1? We have managed to reduce the number of employees, 95% in the salaried areas, and we are therefore trending positively towards the €400 million on a – over this two-year period with €80 million going down compared to Q1 last year. The investments are down by 59%. But despite that, we are advancing the V164, and we have introduced a number of new variants on the 2-megawatt and 3-megawatt platform. And on the – improved capacity and capital efficiency, we have seen both closures of offices and an improvement, for the first time in five years, on the net working capital. All this leads us to believe that we can maintain our objectives for 2013 on the number of employees, investments and also further improvement of the capital and capacity. As I said in the opening, I’m joined by our new CFO, Marika Fredriksson, and I will do the rest of the Q&A. But Marika would just like to come up here and briefly introduce herself. And then I will be back on. Marika?

Thank you, Ditlev. Well, my name is Marika Fredriksson, and I joined Vestas just a few days ago. My background is CFO in global industrial companies such as Volvo Construction Equipment, Autoliv and Gambro. I work with both turnarounds and growth. And as Ditlev said in the introduction, I will now take an active part in the presentation of the Q1 and the Q&A. But I will be on road show for the coming week-and-a-half. So, hopefully, I’ll meet some people then. And I will, of course, take an active and full role in the presentation and the Q&A in the Q2. Thank you.

Okay. Thank you, Marika. And let’s now turn to the Q&A. And let’s start here in the room before we turn to the phone. And I think we have a mic over there. Jacob Pedersen – Sydbank: Yes. Jacob Pedersen from Sydbank with a couple of questions. First of all, you commented that project margin on the first quarter was below your expectations, on what’s on the order book. Could you comment a bit on the project margins on your order intake – current order intake compared to target level? That’s my first question.

Well, the margin that we – as I said, the margin that we carry in the backlog is not representative of what we’ve seen here in the first quarter. We also have to remember that we have some projects also affected by the cost overrun from previously. So, we knew that these projects, on a lower earnings level, had to be handed over during this year. And they are coming in here in Q1. I think I mentioned that if you look at the margins going forward, then the pricing level has panned out as you can also see on the order intake. And with the further improvement on the cost-out, that of course is going to be build to the margins that we’re seeing in the first quarter is not going to be represented also on the new order cycle. Jacob Pedersen – Sydbank: Okay. Next question. Could you talk a bit more about your expectation for what’s going to happen with the order intake from the U.S.? We have seen GE commented that they’ve already won 12,000 megawatts, in the first quarter from US. So, what is your expectation going forward in the U.S. market? You previously had a market share of 10% to 15%, should we expect that, too, going forward?

I think the – I think it’s clear that with the PTC rules in place, which means that you have to be 5% complete of a project in order to get the grant also after 2013, will mean that the normal PTC rush to get everything done in 2013 is not that great as long as you get started. So, that, of course, means that the overall activity level on installation will obviously be significantly down this year compared to last year. When it comes to placing orders, we haven’t given a number and I’m not going to give you that either. But it’s clear that we have actually seen no movement in the U.S. marker over the last 12 months because people have been waiting for this. But based upon the projects that we know from people’s pipeline, we are definitely hopeful we will see in the coming quarters that the order intake in U.S. is going to pick up again. Jacob Pedersen – Sydbank: Great. Last question from my side, do you have a plan if the low order intake that we’ve seen in the quarters, the recent quarters, that persists in the coming quarters, do you have a plan for what’s going to happen in 2014?

Well, first, we still have €12.5 billion of business we have to execute and we have no changes to our shipment expectations for this year. So, that is the plan we’re working along. But, of course, when we look beyond and into the future, we’re, of course, paying close attention to how does the order intake develop compared with the activity level we need to see. So, we have no other plans that we should be around this 16,000 people by year-end, and let me just say April alone was 570 megawatts on the turbine side on the announced order. Daniel Patterson – SEB Equities: Daniel Patterson from SEB Equities. I want to come back to the gross margin again not to sort of burst the bubble on an otherwise strong quarter, but obviously 5% is not particularly strong. You say that’s not satisfactory. You also showed us a slide where the rolling 12 months was almost 12%. So, you think that’s on a good trend, so I must assume that’s not satisfactory either. So, what is a satisfactory gross margin?

A higher one, but we haven’t given a number for this, but what we’re just saying is that the margins we are seeing in the backlog are different than the ones we’re reporting in this quarter. And therefore, I think if you do the math in order to get to the guidance, I think you can start to simulate based upon Q1 what it needs to be in the next three quarters in order to get to the guidance that we maintain. Daniel Patterson – SEB Equities: Okay. And then to follow up perhaps specifically in Q1, just to be crystal clear, is this some specific project that has had cost overrun or specific components that have more broad products?

This is projects that we knew. We’re not carrying a satisfactory margin. A combination of that would be the projects themselves, due also to some of the changes that we have had on technology became more costly than they should be originally when we took them on because we had this overall cost overrun but now we’re handing them over and then we take the impact on that. So, there’s not a surprise to it, but it was a function of that. And it is some specific projects that are affected by that. And therefore, when we look into our backlog now and knowing where we are in the cost of the turbines, et cetera, we can see that it is not representative of the projects we need to execute in the coming quarters. Daniel Patterson – SEB Equities: Okay. Very clear. Just a final question on working capital. Obviously, very strong development in the quarter, quite impressive. When we look at the megawatts under completion, you’re on roughly 1,700 now. Is there scope for you to reduce that even further and therefore structurally lower your working capital even further, or is this basically what we’ll see now in Q2 on that end?

Well, we need to – in order to get to our overall cash flow guidance, we need to do even better on the net working capital. And as I’ve said, we actually only lowered it by 200 megawatts on the projects under completion and it was coming also from other areas. So, from our point of view, we should be even better in the turnaround time of projects under installation and that is, as I said before that is the clear priority that we will be even faster in the turnaround. And the design of the new turbines are – have been built very much that they should be plug-and-play. I can tell you that the other day, I was out crawling in our new V112 turbines. And it’s clear that when I listen to the service technician, they are telling me that compared to where we were 12 months ago, installing because it was a new technology and the time that they spent today, installing the new technology, of course, it has become much more of a plug-and-play. And that is, of course, important in terms of also improving the turnaround time and that is somewhat the design features that was actually also going to be part of it. Okay. Let’s turn to the Q&A on the phone.

Thank you. (Operator Instructions). Lars Heindorff from ABG is on line with a question. Lars Heindorff – ABG: Good morning, gentlemen. A question regarding the order composition in the first quarter. We can see now that for a couple of quarters that the unannounced shipped larger than the announced orders, I’m just curious if you can give us sort of an indication about – are there any specific areas where you see this huge number of the small orders coming from?

I think that it’s maybe more in reverse. It is more the fact that the large orders, for instance, from the U.S. are not happening because the large orders are normally coming from offshore U.S. Australia, Mexico are some of the main areas where we announced large orders. And therefore, it’s probably more functional that they have not taken place, whereas a number of small orders have been placed in various parts of the globe. So, I wouldn’t say it’s something specific, but more due to the things that we did not announce for obvious reasons. Lars Heindorff – ABG: Okay. And then, still – a little bit – another question regarding the project margin. Is these bad projects and cost overrun in the first quarter, is that related to a certain turbine?

It’s related to the overall cost overrun we had on technology. And then, as I said, the fact that we knew that they, for various reasons, would not be the best projects from an earnings perspective, so it was in line with the expectations. So, it is not a turbine that is showing some problems. We just basically – that we knew that some of this new technology would be more costly when we were handing it over and that is what we’re seeing now. Lars Heindorff – ABG: Okay. Then lastly, just maybe a clarifying question. Could you say at some point that you didn’t expect any deliveries in the U.S. for Vestas this year?

No. I said that we would probably not see that many deliveries this year to the clients because that the PTC now gives the fact that you need to be 5% complete. And also there’s not a change pressure to have everything done this year when normally, compared to previous years, where you have to be completed by year-end. Lars Heindorff – ABG: Okay. Thank you very much.

You’re welcome.

Patrik Setterberg from Nordea is on line with a question. Patrik Setterberg – Nordea: Yes. Hello, gentlemen. Coming back to the theme of today, the project margins here in Q1, I want to know how big a part of the revenue was this projects contributing of.

I don’t have the exact number but it’s related to a few projects. Patrik Setterberg – Nordea: So, it’s less than 5% of the total revenue in the first quarter?

It was probably more than that. Patrik Setterberg – Nordea: Okay. And regarding this project, were they loss-making on the gross margin? And if they were so, could you quantify the absolute amount how much they were loss-making on the gross margin?

I don’t want to say to that but only to say that they were not – they were in the loss-making territory. But again, I have to say it is not a surprise when we looked into 2013, we knew that when these projects were going to be handed over, they were not going to be the most interesting projects from an earnings perspective. Patrik Setterberg – Nordea: Okay. Then two final questions just some housekeeping. Moving forward, the prototype of the V164. Is that going to impact your CapEx in 2013? And secondly, regarding the special items for 2013, could you give us a full-year estimation of how big this will be?

I cannot give you an estimation on the special items. But I can tell you that the advancement of the V164 does not change our expectations to the CapEx of the €150 million. Patrik Setterberg – Nordea: Okay. Thank you.

You’re welcome.

Claus Almer from Carnegie is on line with a question. Claus Almer – Carnegie: Yes. Hi. I have several questions. The first one goes to the free cash flow. Well, I guess, the divestment of the 90 megawatt in Chile has benefited in Q1. Could you quantify the impact in Q1? That’s my first question.

We have to remember that, obviously, when we handed over the project, it had impact no cash in Q1. But there have also been milestone payments on these projects prior to Q1. So, it was not all the cash that came from this project in Q1. Claus Almer – Carnegie: But, I mean, is it €10 million, it’s €50 million? Just a ballpark number.

I cannot recall the number that we got here in the last installment when we handed over the project. But as you know, we have milestone payments, and I can’t recall the exact number that we got here. Claus Almer – Carnegie: And then about the CapEx in the quarter, which was also pretty low, or how should we think about the €150 million guidance for the full year? Would that be evenly split in the next three quarters?

Well, as you know, we don’t guide on that. But of course it’s clear that also with the V164. We will source more and work further on this advancement. So, we will see how it’s going to pan out. So, we’re not giving it on a quarterly basis, but we still plan to – even that we are advancing the V164 on €150 million. Claus Almer – Carnegie: Okay. My second question goes to the service division where the Q1 report states that you have a renewal rate of 71%. I believe that the normal rate is closer to 90%. So, was there anything special happening in the quarter, and how much were renewed in the quarter?

It varies of how much is being renewed. And also depending on which contracts are running out. I would say we still see quite a satisfactory progress on the renewable rate. And therefore, we don’t, let’s say, see that there’s anything disturbing in any way that we won’t have 71% here in Q1. Claus Almer – Carnegie: So, it sounds like competition is picking up and some of the more key players are winning some of your contracts?

I mean there are also some customers on older turbines that are just not wanting to renew them. Claus Almer – Carnegie: Okay. Then my third and last question and that also goes to these projects. It’s always difficult to look at a quarter’s profitability. But if you did Q1 and multiply that with 4 trying to get a feeling for the full year, then you will get a €4.5 billion more or less revenue but also a loss on EBIT line of minus €440 million. Then you could argue that these two projects should be added back but still there is some room for improvement before you hit a breakeven on EBIT, how should we think about the profitability for the next couple of quarters?

If you think about two things that there will be always be fluctuations in the quarters. And that when we say that the margin of the backlog is different from what we see here in the first quarter, I think that the best way we can say to you is that we should not do what you just described, i.e., take Q1 and multiply by four. Claus Almer – Carnegie: Okay. And maybe just a follow-up, the issues you have with these two projects were cost overruns. I mean, you’re comparing with Q1 last year where you also had all the cost overrun issues. What is different this quarter compared to 12 months ago? That’s my final question.

The difference is that we knew that these projects would have this kind of earning profile and thusly, of course, can sometimes be difficult to know whether it would be handed over in Q1 or Q2, but we knew that when we go in there. 12 months ago, because we have the cost overrun of the V112, we were not aware that we’re going to see this major cost overrun, so I think that’s a huge difference. Claus Almer – Carnegie: Okay. Thank you so much.

You’re welcome.

Arnaud Brossard from Exane Paribas is on line with a question. Arnaud Brossard – Exane Paribas: Hi, everyone. So, first question on Europe and Africa which are increasing as a share of your total backlog. Could you please tell us which countries are the biggest in your Europe and Africa backlog and tell us whether this is related to offshore orders?

As far as I recall, there’s no offshore in there. There is – yes, we have – sorry, we have – for offshore, we have some projects still in there that are all for Europe. And then most of it I think are still in the more traditional countries divested and executed, going forward, which means particular in the Northern part of Europe and elsewhere in that part of Europe. Arnaud Brossard – Exane Paribas: Okay. Thank you. Second question, now that we’re in May and you have more visibility for the year, could you please give us an indication of a sort of guidance range rather than just the minimum? And that means give us an indication of how much above €5.5 billion sales and 1% EBIT margin you think your results could go in 2013?

I have nothing more to add than the outlook that we have already given. I’m sorry. Arnaud Brossard – Exane Paribas: Okay, I understand. I understand. Final question on your service business, the service EBIT margin has had a very strong start to the year. Can you please tell us whether this was what you had factored in, in your full-year guidance or if this provides some upside potential to your estimate?

Well, if you look at our expectations for the full year, it is still 17% before the allocation of group cost. And again, the service business is also going to be a bit like what we have on the turbine side depending on which projects we’re executing in the quarters. And, of course, there are also various earnings on which kind of service contracts we are executing in the quarter. So, my recommendation is still to say, well, we have given the guidance of how we see this developing, and again, there will be fluctuations between the quarters. Arnaud Brossard – Exane Paribas: Okay. I see. And sorry, I just want to add that last one. Just an explanation on why you choose to give us a guidance for minimum outcomes rather than a range or an estimate of what you would expect as the actual outcome?

Because I think also as you could see on the regulatory side that there are still a number of unknown factors in the market. We have actually on the shipment giving you a range of four to five. And obviously, depending on how this pans out, because some of the regulatory uncertainty will have a huge impact, and that’s why we said we need to try to taking into account when we give our expectations going forward. Arnaud Brossard – Exane Paribas: Okay. Very clear. Thank you.

Thank you.

David Vos from Barclays is on line with a question. David Vos – Barclays: Good morning, everyone. I have two questions, please. First on – just going back to the orders in the U.S. When you develop a farm there and you need to be done – you need to have 5% constructed by the end of the year, when do you kind of need to place your orders for those wind turbines? If you can give us a feel for that, please. That’s the first question.

I cannot remember all the exact – to be honest, all the exact language that is in the language released by the U.S. authorities. But as far as I know, you have to, for instance, get started, that means, you have to start to build the foundation. And you have to place an order which, I guess, realistically means that you can wait very long and still demonstrate that we actually have a project and that you have started. So, I would still say that you have a fairly good time. It’s simply because you don’t have to have the project complete by year-end. David Vos – Barclays: Okay. Thank you. And then just on the working capital improvement which was obviously very good in the quarter, I just wondered if you could give us a sense for how much of that was a true operational improvement stemming from all the efforts that you’re putting through versus a kind of more mechanical effect of the strong volume decline that we’ve seen going through your deliveries?

I think you should also just remember that Q4 2012 actually also had a pretty positive development on the cash flow. And therefore, I would say it’s probably due to various factors, but there’s no doubt that all the work that is taking place in order to improve the net working capital across the organization is definitely having a very important impact on this improvement. David Vos – Barclays: Okay. But you can’t quantify how much that is proportionally?

Well, I think you can. You can see where most of it coming from. We also have to remember that there are other factors than this, but as I said the fact that you have the regional footprint that Vestas does have, and the turnaround time and the improvement of the turbine. So, there are many factors that are playing into the fact that you can improve this development on the net working capital. David Vos – Barclays: Okay. Thank you very much.

You’re welcome.

Mark Freshney from Credit Suisse is on line with a question. Mark Freshney – Credit Suisse: Hello. It’s Mark Freshney from Credit Suisse. Just two questions, firstly on refinancing the various bank facilities in the Eurobond, those mature in around about 20 months. So, clearly you have to start thinking about them in a year. I’m just wondering what your thoughts are regarding the credit financing in the business. And secondly, you’ve already pretty much achieved almost €400 million fixed cost cutting, is there a scope for any more? Are you generally happy with the cost structure within the business? Thank you.

Well, first, before we talk about refinancing, I think we should just remember that we entered a new bank deal in the beginning of this year and that is the one we are working with, and I have no more comments than that. So, that’s a pretty fresh deal. It’s actually only a few months old. Concerning what to achieve, it’s clear that one of the main objectives in this new organization has been to make Vestas a more scalable organization and thusly, being able to absorb the big swings that we see in the market like, for instance, the dramatic drop in the U.S. And that scalability is something that we will keep on having going forward. And we are still at 17,200 people in the organization. So, obviously, we hope to see that by bringing it down to 16,000 by year end that we can do even better on the overall run rate on fixed cost going forward. That’s clear. But it’s definitely challenging but that’s what we are working towards. Mark Freshney – Credit Suisse: Okay. Thank you.

Sean McLoughlin from HSBC is on line with a question. Sean McLoughlin – HSBC: Yes. Good morning. I have three questions. Firstly on pricing, several competitors are talking about pricing pressure in turbines. You’re making some quite bullish comments about pricing having trough, and certainly we’re seeing good pricing in the order backlog. What’s the difference here? Are you turning down some projects because of the pricing? I mean, what is your strategy regarding pricing? Secondly, if you knew 12 months ago that certain projects would have a lower earnings profile, could you specify how many more projects of lower margins do you expect through the remainder of 2013? And thirdly on the new turbines, if you could comment on how this is opening up for new markets, new customers, effectively, any feedback you can give on the impacts on customer discussions from the new models and what your actual margin expectations are compared with current existing models? Thank you.

Okay. Maybe – let me take first the pricing and the new turbines together. It’s clear that, for instance, the fact when we introduced the V126 that has an annual production which is 20% better is of course something that hopefully should help both the client in getting more out of the investment. But for those that we would like to ensure that Vestas gets more out of it as we are coming – seeing from our point of view of product offering. So, the pricing is supposed – it varies from regions to regions, but it has been, as I said in the introduction, there has been – so, it’s really important for us that even though we were going through all these changes that we were not hampering bringing a more competitive turbines to the market. And I think that customers are seeing that the turbine and the reliability of the turbine not least and that we also do service part of it and the security around it and therefore the parameters. So, the combination of higher energy production, even lower loss production factor with a good service side, and of course giving the presentation that the clients are looking for. And we know that this is so important for them in their decision making. So, it’s a combination of things. And as you said, if you look at our pricing slide, you’re seeing that it’s 2% up, but again there’s some – depending on we are replacing the orders in the plants. But overall, these are, of course, very important factors for them and for us. Then you asked me something about the earnings were lower. What was that? Sean McLoughlin – HSBC: It was just going back to these projects in Q1. It had a lower earnings profile. And you suggested that you already knew about these projects 12 months ago.

Sorry. Yes. Sorry, that’s right. Sean McLoughlin – HSBC: How many more projects in 2013?

When we went into 2013, we obviously have a fairly good view of the projects that we’re going execute. And thereby, we also know what kind of margins that they carry. And therefore, those projects that were handed over here in the quarter, we knew, as I said earlier, we’re not having the most exciting earnings profile. And therefore, we also know, at least in what we call the pre-count, that means what we expect to get out of them based upon all the parameters that is – what is the earnings there should be. Then, of course, it’s also obviously our operational organization to make sure that the estimated cost for installation and everything else goes according to plan; those with the PreCalc and the PostCalc will end up at the same level, and that’s of course important. So, what I’m telling you here is that we – that the projects that we are in the process of executing are not going to executed if they have a much more interesting earnings profile than the ones we are handing over. Some of those we are handing over to others. Sean McLoughlin – HSBC: Very good. Thank you.

Klaus Kehl from Nykredit is on line with a question. Klaus Kehl – Nykredit: Yes. Hello. Klaus Kehl from Nykredit with two questions. First of all, could you update us on the run rate of the cost-out program here in Q1? I believe that you said after Q4 that you have managed to take out €30 million in Q4. And secondly, you have said that you expect to make investments of approximately €150 million in fixed assets during 2013, but what about the R&D cost, could you update us on that? Thank you.

If we start with the cost-out, then we are still seeing this work progressing nicely. And also, we mentioned in Q4, we have not quantified here but the trend that we saw in the end of last year is still continuing. But obviously, as we also said, it will also depend on which projects we hand over in a given quarter. But of course, that is, again, a positive contribution to the fact when we say that the margin profile on the backlog is improved. It’s, of course, also a function of the fact that these machines are expected to be produced at lower cost due to cost-down exercise. Concerning the R&D then the €150 million of the overall tangible expenditure as we mentioned, we have not quantified how much is going into R&D. But it’s clear that R&D expense, also been affected by the overall reduction that took place here in 2012. And the V164 project is, of course, carrying a lot of the costs there in 2013 for the R&D department. But we have not specified exactly how much that is. But the majority of the changes that we expect to see on the organization is not coming that much from the R&D side. Klaus Kehl – Nykredit: Okay. Then just a follow-up question, would it then be reasonable to look at the R&D level for 2012 and then perhaps use that as a benchmark for 2013?

As I said, there are no major changes expected within the R&D area. And I’m sure that they are going to be extremely busy delivering, in particular, on the V164. Klaus Kehl – Nykredit: Okay. Thank you very much.

You’re welcome.

Faisal Ahmad from Handelsbanken is on line with a question. Faisal Ahmad – Handelsbanken: Yes. Faisal Ahmad here with a few questions. Firstly on cost reductions, if you look at Q1 and most of the employees which you laid off were salaried employees. How should we be thinking about the composition of layoffs for the remainder of the year? Can you comment on that, the split between salaried employees and the fixed cost employees?

Yes. It’s based upon the plans that we have, which is everything equal about 1,100 FTEs, and some of this is divestment that obviously means that we are there looking more into the hourly pays, that we are looking into the salary pay. Faisal Ahmad – Handelsbanken: Okay. And so, would it be fair to assume that the OpEx level, which you assumed, achieved in Q1, I mean, that’s the run rate now going forward? Can we basically multiply the OpEx level in Q1 by four or is there more to come in that respect?

We still expect to see the overall cost level being reduced during the year. So, hopefully, we should see even further improvement on the cost side going forward. But obviously, the, let’s say, the very big jumps that we took in particular in the second half 2012 is not going to be replicated, but we still expect to see further improvement during 2013. Faisal Ahmad – Handelsbanken: And Ditlev, can you just help us explain where these reductions will be coming from because, as you mentioned previously, most of the layoffs, going forward, will be salaried employees or hourly paid employees?

Well, if you look in Q1, I mean, 95% came within the salaried area and only 5% within the hourly paid. It’s clear that when you have made such a large change to the organization as we have then, obviously, there are still things that we do believe we can further improve on in order to increase the efficiency in the organization. But again, I’m just saying it’s not going to be to the same magnitude that we saw last year and, therefore, it’s a constant work that has to happen during the remainder of the year and then coupled with some divestment which is obviously going to be more lumpy than the overall optimization. Faisal Ahmad – Handelsbanken: And just one final question on this theme before I have a cash flow question. I mean, given that most of the layoffs you’re expecting for the remainder of the year to be only paid employees, should we expect that special items peak in Q1 for this year?

As I said, we’re not giving any guidance on the special items. So, I’m sorry, I can’t help you with that. You better turn to your cash flow question then. Faisal Ahmad – Handelsbanken: Okay. So, just two questions remaining. I’ll take the cash flow question as the last one. I mean, given the regulatory clarification which you received in the U.S. and ongoing regulatory uncertainties which you have in some of your other European markets, I mean, what are your thoughts about your shipment guidance? I mean, should we expect you to land in the lower end or the higher end? Are you more confident in any of – in the range?

Again, we have given a range because we feel this is the most prudent thing to do. And one also has to remember that some of this is not always in our end. Sometimes some prices are getting delayed by the clients. And that means we have to postpone them. So, I don’t want to speculate about whether it’s one or the other. 4 to 5 is the best assessment we have. And then we’ll see how it pans out during the year. Faisal Ahmad – Handelsbanken: Okay. And my final question then from a cash flow, you make a fairly big investment for non-cash transactions in the quarter of €143 million and the size of depreciation, what does this amount cover?

On the – sorry, what is in the 43? Faisal Ahmad – Handelsbanken: €143 million in non-cash transactions.

I cannot recall that off of my head, but I’ll have to get back to you on that one. Faisal Ahmad – Handelsbanken: Okay. Thank you.

You’re welcome.

Shai Hill from Macquarie is on line with a question. Shai Hill – Macquarie: Yes. Good morning. It’s Shai Hill from Macquarie here. Three quick questions, please, Ditlev. On warranty provisions, slide 22, are you signaling that warranty provisions is going to be falling going forward as a percentage of revenues? Second question was just on U.S. orders. One of the other analyst asked that cited the GE comment yesterday that they’ve already signed 1 Gig of U.S. orders this year. Did I understand your answer correctly, please, Ditlev, which was that whilst you are optimistic on the recovery in U.S. orders into a later on into 2013 as yet, year-to-date, you haven’t signed any orders for 2014 delivery in the U.S.? And the third and final question was just on Dag Andresen and the surprise resignation of the CFO. I do understand that, so far, there’s been very clear investor relations’ stance on this which is a – it’s a personal matter. I just wanted to know if you wanted to make any comment on that because, obviously, it continues to be a source of questioning for many analysts, for many investors, I just wondered if you wanted to comment on that also when you were aware of Dag’s decision to leave?

Let’s take the last one first. I have nothing further to add to what has already been said. So, I concur 100% with our Investor Relation. Let me just say that we are very pleased to have Marika on board, and that she already is up and running. And as I’ve said – or she mentioned, she will be out meeting investors during the next two weeks. And there are no changes to the plan whatsoever the investors laid out already last year of how to execute in year 2012 and 2013. Concerning the warranties and the U.S. orders, then we would, of course, hope that we will see an even lower level going forward. But of course, we also know that also based upon history, when you work with this kind of machines, things can happen. So, we are just saying that we are seeing a very positive development. And in particular, I think one has to be aware of that 12 months ago when we introduced the V112, we were sitting with not only a cost overrun, we were, of course, also sitting with the fact that when we introduce new technology – and as you remember, a number of analysts asked me at that time whether we were confident, whether or not this would mean a huge impact on the warranties, which we actually did not see in 2012. Then we – of course, it’s good to see that having introduced the new technology, now, 12 months later, that it does perform very well and does not have a negative impact on the warranty consumption, which again is a very important KPI for us. So, where it’s going to end in the year, we will have to wait and see. But at least, we are happy that we – the level is at the level that it is, and I think it’s the lowest for – I don’t know whether – I haven’t checked it whether it’s forever but at least in a very, very long time. Then on the U.S. orders, you know that the Vestas policy is, and to make that clear, we only comment on firm and unconditional orders. And that is the policy we maintain also on the U.S. So, until something is announced, we don’t give any comments on it. What others have comment on, I will let them do. The only thing I will say is that, obviously, we do hope and expect to see more U.S. orders starting to pick up as we go through 2013 overall. Shai Hill – Macquarie: Thank you.

You’re welcome.

(Operator Instructions). We have no further questions at this time.

Okay. Well, thank you very much, operator. Then thank you to everyone for tuning in today, and thank you to everybody who come and saw us here in Aarhus, and we look forward to see you again at the Q2 announcement in August. Thank you so much.