Vestas Wind Systems A/S (VWS) Earnings Call Transcript & Summary

So good morning, everyone. We cannot thank you for coming here in person. But it also means we will have a whole day together, where I'm pretty sure you have already seen the little bit of clutters around, and you will see the normal liquids on the tables; they're used for the hands. So let's make sure that for the ones who are in the room today, let's take good care of each other. I know everyone are tested. Some of them even traveled in and probably been tested, either in the airport or those who are returning to London, I know the drill, so you'll be tested when you arrive in London, and that's your exempt for not being in 2 days quarantine. But there would almost be no excuse for not having this day. We wanted to see people for obvious reasons that I think we are in an exciting time. But as you will also expect today is also an opportunity to have a real view into what's going on across the Vestas piece in more than 80 countries. And therefore, today, we have put an agenda together, which I think is a normal Capital Markets Day, but it's also a day where we can talk about some of the current challenges that are going on and also some of the long perspectives of the industry, customers and not least also the supply chain. So I think we have put that together in blocks, both during the day, so you will have breaks during the day. And then, of course, for those that has it and all the way through to after 4:00, a Q&A, and then at least for the ones here, kindly to be in an informal setting to also have a bit of time together afterwards. For obvious reasons, when we go in the lunch, we all seated because that's part of the measurement of staying safe and with a decent distance to each other. And then I will just say there are no drills planned for this building today. So if there is a fire alarm, then somebody from Dansk Erhverv will come here and guide us out, or you will, Brian. But this is the old Børsen location, which we are absolutely stunned and pleased with. Brian, you will allow us also to host for today. The exits, as you can see, are marked with green in both ends. I will normally say follow the ones that are opening the doors. But you know for those who came in that way, the drill, and that way, there is a stair, and then we are basically out to the main stair outside the building. So Børsen staff will take care of you and, therefore, follow them in the events. Besides that, before we go into the first topic, really pleased to have Brian Mikkelsen with us. Brian is the CEO of Dansk Erhverv or the Danish Chamber of Commerce. It's a place where we -- both from a Danish perspective as we are founded and located and registered here but also outside into the wider world. Really appreciate the relationship with Dansk Erhverv but not least also with you, Brian. So therefore, it was natural today to invite you to the stage to give an opening, an outsider perspective, both probably from a country but also an industry perspective. So with that further, Brian, welcome to stage. Thank you so much.

Thank you, Henrik, and welcome to all of you to this, as Henrik is saying, very historical building. Some of you have probably been here, and most of you have not been here. The building is 400 years old, built by Christian IV. And it was the old stock exchange, where we were not trading bonds and so on, but we were trading goods and -- from around the world. At that time, Denmark had colonies in the Indies, Africa, West Indies and so on. So there are 32 different ports there where you could trade spices, textiles and so on 400 years ago. And actually for 300 years on, it went on and on and on. And then we acquired the building in 1857. That was the short historical version of where you are right now. But I'm very happy to welcome you to Vestas' capital market. Here at the Danish Chamber of Commerce, we represent actually 18,000 Danish businesses who share exactly the same ambition, that Denmark should be the best country in the world to do business in. Our member companies turn genesis into business every day, and we believe that this is the way to build and make our society better in Denmark, in Europe and across the globe. We believe that many of the best new and creative ideas come from entrepreneurs and businesses, not from the political system. I'm saying that I have been in politics for 25 years, Minister for 13 years. Because ideas, creative ideas come from the private sector. In this way, [ they're ] also the key to drive our society forward. It's key to make tomorrow better than today. It can be better health and new medicine, make transport and communication easier, make family lives easier, make their free times and holidays more fun, make our planet and future greener. In short, find solutions for every day's life as well as the crisis we always meet. And let me address this in a few minutes because one of the greatest problems of our time is, of course, the climate changes. This is an absolute top priority for us in the Danish Chamber of Commerce and also for the Danish society and many of our members, Vestas, nonetheless. Green changes and green business are the very core of what we do. We share the ambition that Denmark should be the best country in the world being green, the best country in the world when it comes to green energy and green electricity. So for those of you who are not from our little kingdom, welcome to the country of wind power. And that's why I would like to show you just a couple of facts about Denmark as a leader in -- within wind energy. Denmark has 6 gigabyte -- gigawatt onshore and offshore wind installed. That's pretty impressive if you know how tiny a country we are. Denmark is 43,000 square kilometers. Almost half of all electricity came from wind just a year ago, half. And take a moment just to think about that, ladies and gentlemen. Despite that, there are still critics of this type of energy. The critics often point out to the risk of reduced security of supply from, for example, instant wind. However, Danish consumers enjoy one of the highest levels of security of supply in the world despite half of our electricity being provided by wind energy. We are too proud of it. That was just a couple of facts about Denmark as a green front runner. And that leads me to ask: Has it been good for business? And being the former Minister for Business for many years, the answer is quite simple: yes, very much indeed. Danish companies have a market share of 40% of the European offshore markets. More than 30,000 people work directly in the wind industry in Denmark, and the wind industry creates 60,000 jobs. And you have to remember, in Denmark, we are only 5.8 million people. Summing up, the Danish wind industry makes a huge contribution to Danish GDP and exports and, therefore, also to the Danish welfare system. In short, wind energy is very good for all things. One of the few political idols I have is John F. Kennedy, and he said [Foreign Language] in 1963 before the Berlin Wall was built and so on. And I am tempted to say, I'm a wind man. I'm a [indiscernible] because that's very good for Denmark and is very good for the whole society as a whole, as I have just shown you with the numbers here. We are a country of wind power because of front runners, such as the impressive company Vestas, who develop the newest technology and try out new solutions. That's one of the reasons why I'm so happy to see that Vestas is still moving forward because a very important company in Denmark. And this is why we do everything we can to make sure we get the best framework conditions for such front runners like Vestas. High political ambitions and good framework conditions for wind are an important part of our historical position in Denmark as one of the greenest nations in the world. However, as you know, international competition is rising. Energy markets and power markets change, the climate crisis becomes even more serious. So staying at the front of the global green race is super important for us, for our members, for our planet and for our future. At the Danish Chamber of Commerce, what do we see as the cornerstone condition for more green business? Well, firstly, here, we see and promote a good old tool, which has stood the test of time. And I believe in it as a capitalist. That's the market. Market-driven solutions have shown what they can do again and again through history. If we need more of something, it needs to cost less. If we need less of something, it needs to cost more. This is why we believe that the green transition needs to be driven by the market. This is why we see a high carbon tax for the entire economy as the right tool for a greener future. With a high carbon tax, it will cost more to emit CO2. It will cost less to use green energy. It will be cheaper to build wind power and more expensive to use coal, oil and gas. This way, we will see the most effective CO2 reductions, and this will benefit green businesses and make society greener. Secondly, we need good framework conditions on and offshore wind. Today, it's too difficult to get wind farms approved. There, and you know it all, not in my backyard, position is a major problem, both for onshore and near offshore. Rules protecting birds, nature and so on, they often collide with the need for new wind farms. We need to find ways where protection of nature and promotion of green power can coexist, and we need to support the upcoming market of Power-to-X. This market is very tightly connected to wind. Thirdly, we need to get a bigger power grid fast enough, and we have to expand electrification if a carbon tax [ would bring ] both forward, but we still need a strong push to electrify personal transport, heavy transport, industry and heating. And we need to do it very fast. Fourthly, Denmark needs better facilities for testing and demonstrating new wind technologies onshore and offshore. Otherwise, we simply won't be able to stay in the front in the global competition, and we want to be #1. Fifthly, Denmark is not an island. We are not isolated. Our economy, our markets, our energy system all is very closely connected to the rest of Europe and the world. Therefore, we work for the same political goals in the EU and globally, a market-driven green transition and good framework conditions. In Denmark and also in Europe, we have built a European Emissions Trade System (sic) [ Emissions Trading System ] and, in the long run, by supporting a global carbon tax. COP26 in Glasgow, and we were also participating there, underlined that temperatures cannot increase more than 1.5 degrees. And we need to stop the use of coal, oil and gas. This is clear to all, and it needs to happen now. If we in Denmark and Europe chose a market-driven green transition, we, and I'm looking at Denmark, can show the rest of the world that climate mitigation and green energy expansion go hand in hand with economic growth. Therefore, we can continue to inspire the rest of the world by being a window to the future, a window which China, India and other major economies can relate to. Green technologies such as wind energy quickly have to be expanded and deployed on a massive scale across the world. Vestas' solutions are one of the most important technologies to solve the climate changes. Green investments are crucial to tackle climate change and to meet the global climate targets. Much is already happening within green investments. In 2019, Danish pension funds, and I'm actually a Board member of two of them, announced that before 2030, they would invest at least USD 50 billion more in green transition. And this year, '21, pension funds from all the Nordic countries announced green investment of at least USD 130 billion. On a global scale, we have seen a massive influx of capital in green energy and climate technologies since the coronavirus. And your presence at this Capital Markets Day, physically and also online, shows that the appetite for investing in world-leading green companies is still strong. From my organization, we will do our utmost to create investment-friendly framework conditions for green energy and green companies in Denmark, and thereby make sure that Vestas and other green technology companies have the best conditions to continue to develop, grow, test, innovate, export and thereby change the world. Thank you for the attention. I can see from the program that you will have a very, very interesting day, and I hope that you will also have a pleasant day at this historical [indiscernible] here at the Børsen. So once again, welcome, and I hope you have a good capital day for Vestas. Thank you.

Thank you, Brian. I also know that when you announced yourself as a wind man, not a wingman, but a wind man, it's close to what you believe in. It was close what you fought for all the years you were in politics. And therefore, I think anyone who wants to insult him a little bit in the break goes up and call him green because that probably is not what it is. But Brian, I think all of the effort over all those decades, they are actually paying back, and that's what today is also about where we come from and when we then look ahead, where we then look to what we can actually do. And I think one thing to pick up on, which, of course, we will talk much more about is it has to happen now, but it also has to happen in a controlled way because otherwise, somebody will get hurt big time from the energy transition that potentially can't match the demand and supply for both the electrification but also the move of the energy transition. So Brian, again, thank you so much, and thank you for having us here today. So with that, we better get right into it. So the first of all, this first stage of it will very much be talk about the strategic starting point. Where are we right now? And what's the outer world? What's the inner world of Vestas? And how do we see that potentially being addressed when we both look within the year but also towards the next decade? A starting point for us is the vision, and the vision being a global leader in sustainable energy solutions. It has probably never been more in demand or more being asked for. I will just say walking around and also in Glasgow is everyone wants right now to hear how fast, how can we do this, and what is the meaning of a sustainable energy solution. And I think we all know it. The world has to do dramatic changes to just stay in the region of 1.5% (sic) [ 1.5 degrees ] temperature. We can also testify to that because we can see climate changes because we have had the Service business, where there are sensors on our turbines. So we know things are changing. That's the bigger picture. The inside picture of Vestas is that we also here have a very close tie between what is the vision, the purpose. And I know from being in a factory of Vestas that even a factory colleague in Vestas will say, there is a higher purpose of me being here. And if you're in doubt, you should come with us to visit at Lem or in Nakskov or, for that matter, a U.S. factory or some of the other places we are establishing because that's part of scaling not only today but also in the next decade. We will double-click on some of these today, and you bear with us. Some of those looks into the future. We have only touched part of the beginning of this energy transition, and that's probably in the important takeaway from today. We're only in the beginning of it, and I will come back to a couple of hard reminders that are currently happening out there to remind us potentially what a bumpy road it can be in that energy transition if we don't get it right as a total world. But -- so therefore, we'll look at what's the market outlook. What's the current market outlook? What's the near term? I know some will look at me and saying, so what's happening in the next quarter? But also what happens when we look in the frames of either the countries or even the continents where we're operating at? We'll look at Vestas' position, and you will have to allow us a little bit of wiggle room that when we look at the industry, we'll say with a tone of voice. And when we look at Vestas, we will say with a tone of voice, and we wouldn't be on this stage if we wouldn't be a bit positive attracted to the Vestas tone of voice. So therefore, you will have to bear with us over that. We're not arrogant of it, but we also want to show a certain confidence of how we're addressing it. We'll talk about our people because we cannot do this without an enormous connection with the people that are doing the scalability with us. We cannot operate in more than 80 countries in the current environment if we don't have an enormous connection with the employee that is right now commissioning something. But that also goes for when it looks 3 or 5 or 10 years ahead because with the growth that are happening, a lot of countries are right now asking: How can we transform? How can we transfer some of our employees that has worked in coal, oil and gas into the renewable industry, into the wind, into the solar but also into the hydrogen and all of the other parts of the energy transition? And then, of course, in the end, we will look at what do we have as a foundation. Having started that look up here. And you probably know, and you appreciate it. Since '90, we have had a very, very good growth in GDP, but we have also had a growth in CO2 emissions. Out of the 1.7, the 1.5 of the CO2 emissions comes from the pure fact of that we acquired a number more in the population in the world. The 1.2 of the 1.7 basically comes from that we also do pollute more in the CO2. But I always say, when you look at something and you see there is a thing to address, do you then have also part of the solution. Part of the solution, which I think most of you are familiar with, is when you look at the levelized cost of energy. Listen, guys, we have been there because we have been around for 4 decades. Most of you remember the days of '11 and '12, which came on the back end of '10 and '09, where the world closed down. There was a financial crisis. Financing disappeared; capital disappeared. But at that point in time, you will also appreciate the levelized cost of energy wherein 95% of the world's markets depending on that we could get a subsidy as part of either building or for somebody to own it. Otherwise, it wouldn't be the first choice. If we look today, the last decade has changed it. Anders will talk a lot more about the technology and how we also look into the future. But if we haven't made those changes to the technology in the last decade, we wouldn't be at the point where that and that graph pointing towards the lower of all. So today, with Brian's mentioning, it's actually good here that you don't need to incentivize the good things being best also on a levelized cost of energy. And therefore, you can make that if the right thing is to make that choice, then now you also have a financial incentive to do that choice. But that doesn't mean that the whole world can then do an energy transition in 5 years. And I just want to show you a few of those because how far have we actually come out of the 100% energy consumption and demand today, approximately 20% comes from electricity. 80%, give and take, is coming from the traditional fossil fuel part. So 20% from the electrification. So we will now see the enormous pickup on electrifying the transport, the car fleet and others that only pushes the demand side for electricity. And you can see in the electricity part, which is the 20%, that we have only scratched the surface of getting to 1%. And I know this sounds a little bit, yes, but Henrik, that's probably bad in your town hall. But when we sit at a town hall, we say, yes, there's still 99% to go. But when you then start playing with the 99% to go, then you can either say, oh, that's going to be a very, very challenging journey, and it will be for the world, it will be a challenging journey, but it is also an enormous upside. And what we have just said here is if you look at the graph to the right, up until 2020, you can see that the world has come, to at least some extent, into where we are contributing electricity. But if we look at the graph there, it has increased slowly. And if we look now to the next 2 or 3 decades, we're just trying to paint it in what is actually needed in terms of that energy transition if he wants to play with the stated policies, if he wants to come out of Glasgow and saying, actually, this time, it wasn't just the COP26 that talked about a few things. But this time, people are actually going back and doing it. And I wanted to pick up on the point from Brian. Brian always talks about then this country committed this number of billions of euros. The capital is not in shortage guys. And you will see that. You will hear that. Thomas Alsbjerg today will talk about why did we enter into development. Because it's the development of projects that can make any of the gray area happening. If there isn't any permitting, if there isn't any projects being accelerated, none of the things that are in the gray area. So as we just said here, there are some announced pledges. And if the announced pledge is happening, we're looking into a market that suddenly goes from the current plus 60 gigawatt, plus some offshore to suddenly 175 gigawatt, potentially 200 gigawatt. Today, we won't give you the marking in the gray area. I can see you looking at me Claus and smiling. You won't get our marking off where we believe it is, but we just know that the scalability we have done and played in since '13, where we were a EUR 6 billion company to '18, where we were a EUR 10 billion company, and today, where we are plus/minus EUR 16 billion company, was actually a very good fairly training session because what's coming in there from a scalability point of view is in any marking of the gray is a step-up for us. So therefore, it's good to be in practice and have learned both some of the positive experience you will hear today, but you will also hear some of the tough learnings today. And that, I think we are better and better equipped to talk about. You decide where you want to believe the world should be in the gray area, and then you come back and tell us how much we need to scale on that one. And then we can have a real interesting conversation. I hope we'll have that already at lunch break. We also hear we cannot have this, and that was probably another reason. We have to be here today also talking about some of the near-term issues. And they are here. If we look, start from the left side, then some of the near-term issues is that countries right now are actually working hard to figuring out where they're going to be when it comes to the whole framework for renewable energy. Some countries run ahead of their own ability to execute on it. It's great to have a target, and we see that, unfortunately, in many countries where you put up a target that is huge and then you forget that the actionable permitting has to happen to fulfill it. We also see the political world sometimes that instead of then picking up with what's actually happening, then you double your target, but that only means that your distance to achieve the target has now become impossible. Right now, a couple of examples up there, U.S. U.S., Biden's plan hasn't been approved. But we could be days; we could be weeks away. But if it's weeks or even a couple of months away, that probably could set what will then be the next 10 years' energy transition in the U.S. If that happens, it opens up something that has never been seen in the last decade. But of course, right now, it feels like there is a stop and go. I can tell you why. There is a tremendous financial difference if you have a 60% or 100% PTC. So our advice to the customers also have some patience because it might not last more than a couple of months. Germany is below. Germany has changed, but it has also been quiet for a few years. It has been so quiet that Germany actually ran ahead of themselves in their decision on the energy transition in Germany. So they have had to rely on other sources to replace nuclear and coal. If we don't get these measurement right, and we -- and I know Brian has now left, so I can talk about Denmark. Denmark talks about the energy transition. But if we want to reach the renewable energy in 2030, we need to build between 6 to 8 gigawatt. We need to double from where we are today. And that's just doing the green renewable energy in Denmark. With the current pace, we might reach it, but it will then be in 2070, '80 or even in 21, and that's a little late to do that. So there is happening a change in the decision-making at that level. Otherwise, it won't happen, and we will disappoint the generation to come. The other thing, which is Germany a good example of, if you look down here to the midpoint of the competition and the ability to pass through, right now, the power prices are going up. I don't know, you saw it yesterday, but a prediction of yesterday for today was that the average power price in Europe would touch EUR 300 per megawatt hour. These were the power prices 18 months ago that there were fuel prices, oil that was for negative, and there were no PPAs to get because it was April. COVID has just broken out. Today, they are 10x higher. Yes, some of the freight costs, some of the steel costs have gone up. They have gone up incredibly as well. Tommy is not here to tell you today that, that ceased by the Capital Markets Day. Now it will continue until we find the balance. What that balance means, we'll come back. We have plenty of quarters ahead of us. But the balance here is that those two graphs are deliberately put next to each other because the output for any steel and freight cost that comes out of a turbine today is up to 10x more valuable for the owner of it. Right now, we can see that brings another calculation. It also brings another review of what projects were made in [ borderline ] a year or 18 months ago, but it takes time because the variables are there. How are we addressing it? We've shown the blue. We are passing it on. We're passing it on, but we also have to say we can only pass that on we know of. And we cannot pass on what we don't know and what we can't hedge in our backlog. Therefore, we are also living part of the negative of those graphs. You will hear Tommy talking about it, and it's easy for me to say Tommy will talk about it. But it's something that we address on a daily basis because it needs addressing because if we don't mitigate it, it would have looked worse. Then in the end, you will also hear today that from a Vestas point of view, we won't forget the big picture. The assurance to you today, we won't forget what happens short term, but we won't forget the long term either because if we forget the long term, then we miss your marking on the gray area. Then we also miss to keep that global leadership we have built and we have superior today and we will keep also for the next decade. So therefore, today, you will hear Kerstin in a second talking about what do we do with people, what do we do with the leadership built. It's in shortage. All the newcomers that are coming into it, we'll talk about some of them later, they lack talent of it. You will hear Anders talking about the technology. We are not finished. We just entered. We reentered the offshore. And therefore, you will see some of that technology we can now do from onshore to offshore. Sustainability, you will hear throughout the day sustainability. Yes, we probably have the world's most sustainable product. It goes carbon neutral after 4 months. Great. But what do we do with our own CO2 footprint? What do we do in transport? Come back to that. We don't see sustainability as something that we will look at when we are finished with the other things. No. 2030, we believe for many global companies, sustainability and addressing it is your license to operate. So if you don't have that sorted, you won't be allowed to talk about the other short-term or long-term things. We talk about service. We'll talk about how Christian brings his more than 10,000 service colleagues into this world, the digital world, the technology and how we will build on that in a foundation of service. And then not least, Tommy and Anders will have an opportunity also to talk us through what do we do in quality. And therefore, that's a topic which also sits with most of us on a daily basis. Where are we positioned? This is what has happened. If we look back in 2010, we were having a category that sits with others doing in the OEM somewhere around 35% to 40% of the market. We were at that point in time in '10, around 20%. Don't forget the market has also grown. But we have, throughout this period, continued growing organically, putting effort into global customers and new markets, which means we are today at 35%. The other thing that has happened is that the consolidation have led to that the four top OEMs in this sits today somewhere around 90%. We can give you an insight. It's not a great market to be midsized and only in part of the market. And we know that because we acquired our offshore business back as a full member of the family. And that's difficult if you're out there trying to do globalization and, at the same time, invest in technology and, at the same time, addressing your local manufacturing. That's almost impossible to get to work even in the best [indiscernible]. So therefore, the consolidation is happening. Some will probably go together. And as you can see, it's not always an easy one. And others will probably disappear and be picked up. for customers, I think they have experienced both. They clearly prefer people comes together because then they are not left with half-finished projects. But I think it's the world that is ahead of us that people, if they cannot do it, they have to, in the industry, leave something behind. And today is probably the risk bigger than ever because some of the costings are now so large that some projects will have that effect for somebody out there. When we look at us, we're taking firm orders on an LTM basis of a little bit more than 16 gigawatt. We have revenues in excess of EUR 15 billion, and we have an adjusted EBIT margin of 4.7% on an LTM basis. We would like to have more. We would like to have more of the EBIT, and today, we will talk more about that. But we will also use today and saying, this cannot go on as an industry. This cannot go on as an industry that has to solve, make your part of the energy transition and work with technology development, localization of the product and then work with negative EBIT. It won't last. That one, we have to come on an industry point of view, but we have to also take our role in it, and we are not intending to go anywhere near any of that. And therefore, our part is then leave some of the things and leave it to somebody else, if it's not profitable. You know that, and we stick to that because we believe that works. I think on the platform and technology, for the first time now, we have a platform where we can say that we are advanced on the onshore with the modularization. We now have an inventor that we can start elaborating on the experience is at. I know, Anders, you and your team are working incredibly hard also now to build the next offshore prototype. We are advanced in it, but also in it, in a learning point of view, what do we mean when we talk about modernization? Today, he's here. Today, he will give you some of the insights. He will give you some of the details of how far have we come in that modularization. But importantly, here is also -- the best product also leads to how do we make those products serviceable for the next 30 years. How do we make those products so Christian's colleagues walk into them and saying, that's actually what it's about? So the chain here is important. Today, we design, first of all, to obtain and being able to obtain and localize and scale on the technology. But we also do it so we know we can grasp and we can do service better than anyone else in the industry. So the service -- the Vestas turbine should be unique, not only in technology but also in the ability for Christian to pick it up and service it. And today, we passed 124 gigawatt. It's not long ago since we celebrated the 100 gigawatt, Christian. So on the go. It all comes down to partnerships. Up here, we have just shown it comes to customers, comes to some of the global customers, comes to some of the local customers. It also comes to up here now certainly something we didn't talk about 5 years ago, the entrance of what is considered the oil majors. The Total, the Shell, the BP and the Equinor of the world. There is a reason why those four companies are up here because they are the ones that are walking right into this market and putting up gigawatt after gigawatt of targets when we look towards 2030. For them, it's not a question about doing renewable because somebody have set that in strategy. For them, it's part of if they don't, they might not be investable in 2030 and '40 and beyond. I listened into Equinor's conference a couple of weeks ago, and it was remarkable. Then on a company like that, there was almost as much passion for the renewable transition than there will be on a Capital Markets Day of Vestas. And that's interesting because we come from 100%. They probably almost comes from 100% towards something else, but exciting just to observe. We won't forget because the customer here is partnership. It's not transactional friendship. It's partnership because we will rely on each other for decades into new markets and also localization. That also means we'll talk about business enablers. Business enablers are the DSV, the Maersk, the CIP of the world, the Vestas Ventures. You will hear more about it today. It's also Mitsubishi Heavy Industries. These are the ones where we will extend into other parts both of the supply chain, of the value chain, and they become insiders in many ways to how we would develop going on. We then put up here component suppliers. They are more than suppliers. If you look ZF, CS WIND, at Schaeffler, Winergy, they are having the insight. They are having the insight also how does it look when we look to the next version of modularization when we look to the next version of it. So everyone up here, and there could be a few forgotten, which we just don't want to show here, but that all ties together. If you're up here, you're a partner. You have access. We will develop together for the future. Nothing can be done without a management team. And I think today, you will see everyone here from the blue boxes represented on stage because they actually gather what is Vestas' operating standards across the world. At the same time, there is no chance to operate in 80 countries plus without an enormous strength added to the regions. So today, we are doing -- with the arrival of offshore, we are doing a decentralized execution muscle through the regions. So when you look at Jose Luis that sits in Med, he sits in Madrid, Spanish. He's been with Vestas for many years. He is there to expand the Mediterranean, which means its southern part of Europe, it's Africa, and it's the Middle East. Full on, and he also has a team that represents the functions that sits there. We look at Latin America. It will become an independent region from 1st of January because Latin America is in addition to 2 gigawatt every year. So we have to because these guys want to have a different way of looking at it when they look towards '25 and '30. Eduardo, Brazilian guy based out of São Paulo. North America, Laura Beane, American. She's female. She's based out of Portland. She runs North America. She's a well-known character in the industry, and she is there to address the U.S. market with the support from all of us and also from our other regional residents. Nils de Baar starts out of Hamburg, runs North and Central Europe. So he also runs Denmark from a commercial one. And then we have Purvin. He's Indian. He's based in Singapore, in India, and he runs Asia Pacific and China. These are the guys. They were not here today because they are out there talking with customers and sorting out the rest of it. But for the rest of us, we work closely with those because without that team, we cannot run and scale Vestas to the tune of what we have an ambition to. Today is also another changeover. And I know because I told you whom last night. It's your last Capital Markets Day. You've been looking forward to it. But for you to stand up here today and not for us to have Hans Martin here as well would be strange. So therefore, Hans Martin is here today. And I know these have coordinated. So whatever Marika says today is not to set Hans Martin up to fail. So there's no baton handed out in an improper way here. So for us, I hope you really appreciate. You can see also Morten Dyrholm and Nicolai are here. So today is the day where you can have access to anyone you want on that map, and that's really the important thing of it. So with that, Kerstin, welcome on stage to talk more about People, please.

So first of all, a wonderful good morning from my side. Short introduction. My name is Kerstin Knapp. I'm heading People and Culture for Vestas, and I joined in January 2020. So building on what Henrik said, we have built this regional execution model. And here are the benefits of that, just to give you a short overview. First of all, scalability and commonality. With the alignment we have created, we can create also scalability but also autonomy, as Henrik said. It's important we strengthen the execution muscles of the region, and that will allow us to do that. The full integration of offshore enables higher customer centricity. And as you will hear later from Javier, I'm sure you will talk about customers, we have mainly the same customers when you look at offshore and onshore. So that also creates some efficiencies. We have simplified the interfaces with our global functions. Just to give you an example. In the past, we had someone representing procurement, manufacturing, supply chain on our management teams. Today, if we look into our regional models, you have one regional CEO combining all of that in one position. And then last but not least, it's talent mobility. And as you can imagine, if we have similar operating models in every region that allows for cross-cultural and cross-regional talent exchanges but also a career path. And that's actually a good leeway into my next slide. It's building leadership for the future, which is high on our agenda to substantiate our ambitious growth path. What have we done so far? And how are we emphasizing the strong need for strong talent? In short, we have amplified our focus on talent and leadership. Talent and leadership is also one of our seven strategic must-win battles. Here are some quick facts for you. Currently, we are reviewing 3,300 positions, corporate leadership positions on our succession planning. We have started doing that last year in order to have a line of sight of our depth of talent with investors. Secondly, we have currently around 60% of an internal fill rate when we staff open positions. That is not good enough in our view. World-class organizations have around 80%, and that's also what we are aiming at. But that also calls for a higher pace in talent development and talent intake. We have around 500 colleagues today on our regional and global development programs around the world. And that has been a huge increase if you look into 2020 and 2021 how we have embarked new talents onto this journey. And then the last number I will share with you on that part is we have, today, around 21.3% women in corporate leadership positions. We have an ambition to reach 25% by 2025 and 30% by 2030. And that sounds actually quite -- yes, we are quite good on track, and we are, but it hasn't been easy because we have kind of had a trend of 19% over the last many years, I would say. And with 3,000 new colleagues coming in from offshore, we had even a little bit of a down dip, but we have put tremendous effort in the last, I would say, 15, 18 months in order to reverse that trend. And I feel confident today to say that I'm really sure that we can achieve that target together. But having said that, the need to further strengthen our employer brand becomes pretty obvious. And that leads me to my next slide. I wanted to share with you that we have, for that reason, developed and launched the Vestas employee value proposition in early -- or in late 2020. When you ask external applicants today, what comes into their mind when they think of Vestas as an employer, the first two things they will tell you is quality and safety. And while we are all very proud that those are the two attributes they referred to Vestas, we also know that, that is more related to Vestas as a corporate brand and less so as an employer brand. So that, therefore, is also -- there is a need in order to strengthen and be more communicative around what makes us special about being an employer. So what we need to establish stronger is what makes us unique in being an employer and working for us, and that's what the EVP does. It tells a story about Vestas in the past and Vestas in the future. It aims to get Vestas known in every single country we operate in. It targets to attract diverse talent from all over the world to create a truly global best-in-class one Vestas team. And I have, as the last point for today, prepared a small teaser for you so you can hear and see the look and feel of our EVP yourself. [Presentation]

Thank you, Kerstin. And I think seeing all of those wonderful colleagues, it is a question, can you ignite that fire of doing that transition wherever you are? And you can see operating in more than 80 countries, it's more needed than ever. This slide has a little bit more to it because I'm pretty sure if we have had that in September 2020, most of today have gone with questions around what are we going to do with offshore and what are we actually intended to in offshore because this market is becoming so much more. Today, up there, you can see now offshore is here. The systems and everything else went together by 1st of November. And that also means offshore is now part of it. Offshore has changed in the last year. From a market outlook of 15 to 20 gigawatts in 2030, no one now talks anymore about anything less than 30 gigawatt a year, and that's the market we are now embarking into, both in terms of technology, localization and also customers and the organization. We also almost at the same time saw ourselves embarking into development. Our development entry is not about competing with anyone. Our development entry is to actually walk in and use our 80 countries to explore and make that capital be unleased into good projects, designated designs and approved by Vestas with the Vestas turbine and, therefore, the best sustainable energy solution on it for the next 30 years. That's what we do in development, and Thomas will tell us much more about it. But those thing has come up and probably dropped down from that box up there, which talk about future innovation. The Board and I know that, and the executive management team is as one in this company. Therefore, things are happening in that box up there; that's called future innovation. And then suddenly, it drops down, and then it becomes part of the business and the day-to-day running. Today, we will talk more about the two that is, for some, something that happened a year ago. But for us, we are just now completing some of both the integrations but also scaling of those businesses. And I think you will walk away from here being pretty excited about those two boxes because now they are here to talk about because they are that advanced. We don't get anywhere today if we don't also talk to this audience about the long-term financial targets. They haven't changed, but we also put a year to it. 2025, we are 10% plus, and that's what we are aiming at. And I think most -- so we don't get the whole of today's Q&A in around what basis points come somewhat. We won't give you an argument, and we won't give you, by the way, on that waterfall. But here are some of the areas you will hear from people, some of the best people presenting it, which is we will talk about what happens in the volume, talk about what happens in both onshore and offshore volumes when we look towards both '25 and beyond. We'll talk about what we plan to do in cost efficiency and how we will work with our customers to create that. We talk about the raw materials and transport. You can guess who, Tommy. And we'll talk about the technology and pricing, which sits between Javier and Anders in here. And not least, how do we scale the service and therefore, what are the levers to get us to those 10%? We wouldn't say that if we were not confident of getting there. But today, you listen to the ones that are going to do part of that journey together as that team. And therefore, I hope you will enjoy that part of the day tremendously. We don't get there without the sustainability. I won't comment much about it. You can see it. You can see it from quarter-to-quarter. We make a change, and it starts with ourselves. So we have now converted more than 50% of just the benefit in the company cars of Vestas. That's actually quite an amazing achievement in only what is 24 months in just a few weeks. And we have converted now a larger proportion of the service fleet as well. So it does matter because that will soon have addressed one of the big parts of our own transport in there. We're addressing our own energy consumption. We won't change that because somebody took a decision 1st of January, so we change every company car in January, because that's stupid. That's costly, and it's actually not making the energy and the transition right. So therefore, when we transition something, we do it when the car runs out, and therefore, it takes estimated around 4 to 5 years. But there aren't any type diesel cars ordered from a Vestas manager anymore because that's part of Kerstin's employer value proposition that when you have a company car in Vestas, you don't drive a diesel, or at least when you order a new one, you don't drive a diesel anymore. So that's probably my little thing here. So I hope you will enjoy the day because this will be part of our license to operate Vestas when we look towards it. With that, Mathias, I'm sure you will have a few questions, and we can also have some questions in here.

Thank you, Henrik. And as you probably saw from the agenda, there will be a Q&A block on the back of each module, as we call them today, so every other presentation. We'll start with a couple of questions here from the audience, and then we will open up for the ones on the line. [Operator Instructions] But let's start with a couple of questions here from the audience. I can see Claus has a question first.

It's Claus Almer from Nordea. One question regarding the ASP. Henrik, you showed on the slide that your trend is somewhat different than the competitors. And looking at the order intake so far in Q4, it could indicate that you are pricing yourself out of the market as it is today. So how do you really see this big gap between your pricing, at least from an ASP point of view, versus your peers?

I don't think we are pricing ourselves out of the market. I think if somebody says that prices haven't gone up, then they are potentially pricing themselves out of the market in a very bad way. Things have happened and changed so rapidly that if ASP is not going up and people are claiming they're not going up, they are looking at something they don't know of in their backlog. So let me try to address it differently. When we have gone back through customers throughout this year and also here in Q4, there are that many variables right now for customers that they have to revisit their own planning. Some of them have to go back and actually consult some of their own legislation to actually get a permitting again. Some of them are regulated utilities. And if you're a regulated utility, you have to go back if there is that significant changes in your capital and CapEx spend on the solution. So Claus, we're not, and I should -- I wouldn't say high from the two customers I spoke with. But once said, you're going to the capital markets, tell somebody that you're actually speaking to customers directly. We get a lot of escalations right now for good reasons because costs are going up, and they're going up with double-digit percentages. That's how life is. I haven't met anyone that can buy steel. We have -- Tommy and I, we are here all day. If anyone knows where we can get steel for oil pricing, we are happy to connect, but it's not possible. And for those who has and have run out of the old steel pricing, they will soon know that it's a tough day working ahead of them.

Just to be sure, Henrik, so the lack of orders being announced at least, so far, Q4 is more about timing and things just takes time. It's complicated and all of that, that things will hopefully normalize when we are looking at 31st of December.

I think if we took orders now and ASP went down or were stable, as we will say in Q4, Claus, then you should get worried. So we are not pricing. We're not leaving customers, but it's a tough discussion right now with customers, so there will be some delay. We talked about it in Q1, but we are comfortable with it. I think it's more that these solutions right now, it's not that we are in disconnect. Customers understand it. I would have been super nervous, and we would have been super nervous with it. Javier, you're coming up here soon. We would have been super nervous if the electricity prices have moved. So if the energy prices have moved and seeing all of the raw materials changes or transport changes, that would have been a very, very difficult one. But of course, for somebody sitting and have done, 18 months ago, a PPA at EUR 30 and not having bought the turbines or the solution to it, that's not great either, Claus. I can tell you that, and that's sympathy I have for customers. It's not our job then to make the turbines as cheap as that but is then trying to find a solution for our partners, our customer and for the turbines and the solution. That's the challenge right now. So there are people out there that are not having -- we don't have an easy time, but there are also people that have signed up to projects that are not having an easy time.

Yes. Let's have a question from Mark here.

It's Mark Freshney from Crédit Suisse. Two questions, Henrik. Firstly, I mean you spoke about the German and U.S. markets, which historically have been the most important ones for Vestas. But they may provide a bump up, but they don't provide the structural growth when -- and it's places like Vietnam, Brazil, Russia, which basically came from 0, 5 or 6 years ago, which have driven the growth, right? So can you talk about maybe which of the other markets you see driving the growth? And just secondly, regarding this whole chestnut, the cost pressures and logistics. In terms of current trading, when we last saw you 6, 5 weeks ago, how have those pressures on balance evolved? Did they got tougher, easier or remain the same?

First of all, I know we have a whole team here today. And just your point around markets, I know the guy that absolutely will give you the burning story about what other markets we are pursuing because they are there. Javier will come and tell you about what are we doing with customers. And as you can see, we have actually managed to live pretty well with our German market. So when that becomes a 4- or 5-gigawatt market, again, Mark, you will see the smile coming a little bit more visible on the face. In terms of things, I don't think Tommy will comment, say to you it's sorted. It hasn't gone better. It hasn't gone worse. But what has definitely gone worse, Mark, is to the testament of we are in the room today, 5, 6 weeks ago, we didn't have the lockdown and the quarantines, and we didn't have something what was called omicron. And that's actually not helping any of what we are talking about right now. So it hasn't gone any easier. But I think we are appreciated when we said Q3, we also said we think it will last most of '22 because we do believe it will last most of '22, and today, we are probably even more convinced that it will last '22.

Yes. Thanks. I think we will try to have one on the line. So we have Deepa from Bernstein.

The question I wanted to ask was, Henrik, you talked about the U.S. market and whether Biden's Build Back Better program will get passed in weeks or days or months. So I just wanted to understand what are the dynamics, and you talked about this would be -- this will open up tremendous opportunities. So as things stand right now, what do you think is the probability of the Senate passing that? And then how do you then see that play out in terms of annual market volumes or cadence of order intake? And what are customers waiting for? If you can just maybe elaborate that?

I think probability is high. It has had several reiterations now, and it hasn't changed. So it's high. I think it's -- the scope and the magnitude of the bill is so big that it will probably have another couple of iterations. And that's why I think the likelihood of it goes from December. Now it is the 15th. I think there is a likelihood that it will pass the next couple of weeks and drop into January. As of at least last night, the say was that everyone believes that Biden will be able to talk about it when he address his speech in the second half of January. At that point in time, there is a likelihood it will be done. So we are still leaning towards high and positive side of it. And of course, it will mean an enormous change if you have projects that are suddenly attracted to 100% PTC for the next 10 years. It goes without saying.

Yes. Then we just have one short question that can hopefully also get a short answer from the chat. Is there any update on the cybersecurity incident?

I won't give us your answer. I will say the following. We have said something on the 20th. We have said something in end of November. We've said something on the 6th of December. It is not funny to have lost something that is yours. But as we ask kindly in the last statement, this is a criminal offense. People have taken something that is not theirs. It's primarily related to internal matters of Vestas. We are up running again. Otherwise, I'm pretty sure we would have had to cancel this day. So we are up running again, and people are here on the stage will confirm that. But this time, we will also ask for one understanding. These guys are not gone away. And for those who follows it, they leak data from time to time. Therefore, the only thing I will do is to ask for understanding because we are still dealing with it, right? And when you start leaking things around employees, customers and others on those kinds of places, we just ask for your understanding, not to distribute, not to do anything else on the digital because actually, the equal thing here is that you leave today in a stolen car, and I encourage you not to do that and, therefore, needed to treat digital or data from Vestas as anything else that it belongs to Vestas. Outside that, we have nothing else to contribute with. But when it's ransomware, there is typically two things to be said. And that means we are up against somebody that is a criminal offense, and it is felt treated that way. And therefore, I hope that's the last time we need to talk about cybersecurity today. As we're up running, we don't have a material cost to it as anyone can expect because we're up and running again. So we have not been held ransom for running Vestas, but we have been held ransom on some of the data, and we're not happy with that. But I ask for your understanding because if you start doing anything else, then you're actually not helping us. You're helping somebody else. And those guys, I don't think you have any reason to help. Thank you for cybersecurity, by the way.

You're welcome, Henrik. That will be the final question of this round, and we will start presentations again in 10 minutes. [Break]

Are we ready to continue? Okay. So good morning, everyone. It's [indiscernible]. Good morning, everyone. My name is Javier, and I have been almost 21 years in Vestas. I'm the Chief Sales Officer, and I'm really happy to be in this amazing place today with all of you. So today, I will start to talk about how do we see the market, how do we see the market in today's scenario but also how do we see that it will evolve towards 2030. Also, I will talk about how in Vestas will create value together with our customers. Of course, I will talk about price. And then how we pretend to continue leading the onshore market and expanding our leadership in the onshore market and then reach our ambitions in the offshore market. So we are growing faster than the market. And here, you have some figures that prove that. We are gaining market share in the last 5 years. We have passed from 24% market share to 35%. This is excluding China and without compromising prices. In revenue, we have doubled the revenue of the company in the last 5 years. And in order intake, last year, we achieved a record order intake of 17 gigawatts. Today, our presence is in 146 gigawatts of track record, and we have projects in 85 countries. And that's really a competitive advantage because we are not so exposed to fluctuations of certain markets as some of our competitors are. I can say that we are probably the only true global player in the wind industry. Our wind turbine backlog is EUR 19 billion. That represents 24 gigawatts of firm and unconditional orders. So how do we see the market? You have heard Henrik before that we still will suffer short-term uncertainties. So we are operating with COVID restrictions in many of the markets where we operate. Transport disruptions will continue during the coming months, and Tommy will talk about that later in the presentation. And also, we will see volatility in raw material prices. But on the other side, everyone is committed to a really ambitious target, and we share that view. We need to solve some bottlenecks together in the industry. And there are two main bottlenecks right now. The first of all -- the first one is we need well-developed projects. And in order to have that well-developed project, we need simple and predictable permitting processes. And that's -- Thomas will talk about that a little bit later. Also, we need that the grid is developed at the same speed as the project in order to avoid this tremendous bottleneck that we have in some of the markets. But if we look at the long term, our baseline says that we will install 150 gigawatts by 2030, and that's the baseline. Out of that one, offshore will represent a significant portion of that, and offshore will move from a market from 4 to 6 gigawatts that we are seeing today to a market of 25, 30 gigawatts by 2030. But there are upsides there, and we talk a little bit about that. We talk about the electrification journey that everyone has embarked, and we are talking about the net-zero scenario, which is a target that we all should share. If that target, if we all share that target, that will mean that we will need to add additional 100 gigawatts in 2030, meaning that it could be 250 gigawatts of installations by that year. Talking a little bit about the markets. There are 20 markets worldwide that have announced plans of more than 10 gigawatts in this period. As you can see there, we have a strong and mature position in many of them -- in most of them, I would say. We can mention markets as the States, Germany, Australia or Brazil, where we have a historical presence but also a very healthy market share that goes from 35% to more than 50% of market share in some of the cases. In the offshore market, the mature markets will continue installing, and the mature markets, I would say, that is U.K., Germany or Denmark. But there are more and more markets that are putting ambitious plans to be materialized before 2030. We can mention U.S., where we have received very recently preferred supplier agreements for 2.1 gigawatts with -- in the Empire project, or we can talk about the development of the ASEAN offshore markets in markets like Taiwan, Korea or Japan. Also, Poland in Europe have put impressive targets in the -- for this period. But there are other markets where we are not so present, and we have the ambition of being present in the main markets worldwide. But one message that I want to do here, we will never do that buying market share. We will never do that by sacrificing profitability or quality of our products. So what is our ambition? Our ambition is to have a profitable leadership across all the segments. That will mean that we will need to expand our leadership in onshore, and we will reach our ambitious goals in offshore by 2030. And how we will do that? There are two main pillars. First pillar is obviously our customers, how to be the partner of choice, how to continue being the partner of choice of our customers. And the second one is, how do we internally optimize the value that we'll create for Vestas and for our customers? What does it mean, being the partner of choice? We continuously deliver sustainable returns together with our customers. And that's based in 3 pillars. The first one, proven performance. Our customers are continuously telling us that we deliver the most competitive and the most reliable business case. And we will continue investing time and resources on that. Secondly, being a trusted partner. We are going to move, and we are moving the market from a transactional opportunistic approach to a much more global partnership approach. And we are already engaged with many of the main players in multi projects and frame agreements in order to accelerate the way of contracting with our customers and enhance the relationship that we have with them. And third one, we will continue investing in innovation. And Anders will talk about that a little bit later. But we will continue being a pioneer, both in products and in markets. In that way, we will continue leading the market. Pricing, that's an important topic here. During the last years, we have continuously sell our products at a higher price than our competitors. Does it mean simply that we are more expensive? Not at all. At the end of the day, our customers pay for the value that they perceive in the products. And that means that we are capable, together with them, to extract more value of our products. And that has several pillars, but let me mention some of them. First of all, value engineering, by engaging early enough with our customers in the projects and understanding perfectly the business case, it allow us to optimize many, much more levers than just the price. We adopt the product to the specifics of the project, but also to the specifics of the PPA, which normally has been something that has been out of our play field. Is, if we have a PPA that evolves during the period, we have to create a solution that is adapted to that PPA. Intelligence. We have the broader understanding of what is happening in the market. So we have -- we understand how the supply and demand evolves, how the commodities and how the competition is evolving. And in that way, we can optimize the pricing and the value. Second one, global pricing strategy. We are not reacting to a specific -- situations in specific markets. We have a global pricing policy that understanding what is happening in the countries, in the customers and in the competitors, we apply a different pricing policy in different markets. Agility, this has proven to be a competitive advantage in the last months. We need to adapt faster to the changing environment. And we need to react very fast at the cost fluctuations, up and down, and also to the different transport disruptions that we are suffering. And that's very, very important. And finally, early permitting. By engaging early enough with our customers on our technology road map, we will secure that they permit the project with the most efficient turbine. And at the end of the day, we are extracting higher price, higher value for them and for us. So how are we moving from cost of energy to value of energy? Well, I started my career in the sector 22 years ago, and the market has changed significantly. So the market was growing, but nowhere to the levels that we see both in volume or in the stock value today. The prospects were really, really good, but it was 100% clear that we have to decrease the cost of energy to be mainstream. And we have a good track record of materializing our vision. In 2005, we had the vision in Vestas that it was wind, oil and gas. Simple. But at that time, we were dreaming that wind could compete on equal terms with other sources of energies powered by oil or gas. And we made it. We made it together. We have won that race. So the LCOE race has already been won. And I think that that's very, very important. But we need to evolve, and we need to be moved further away from the pure LCOE reduction. We are delivering a significantly higher value to the society on top of all our green credentials, of course. And we need to be scalable, and we need to move from this LCOE discussion to value of energy discussion. As I said before, we will change our way of interacting with our customers, because it will not be a pure transactional or deal-to-deal opportunistic relationship. We will build together a new way of interacting with customers, and Tommy will explain also with suppliers, in order to be scalable, predictable and under speed that these targets demand. Finally, how does it look expanding the leadership on offshore? I will mention here 3 pillars. First of all, innovation. We will continue innovating. Just -- one data, one single V236 will produce the sufficient electricity to power 20,000 houses compared to 40 houses that it was the first turbines that we were installing in the late '80s. That's amazing. So we will continue investing in innovation. That's one of our major pillars of why we are leading the market. Second one, we have the global scale and we have the volume, and we need to take advantage to efficiently operate our global supply chain. And third one, we will continue being the only true global player in the sector to avoid being exposed to certain markets or to some fluctuations. In offshore, we have our homework, of course. But I think that the 3 pillars here and the first one I will use exactly the same as in onshore innovation, we do have a competitive product. It proves when we took the decision last year of investing heavily in offshore, it proves that it was the right decision. Right now, you see there that we have seen in just some months, materialization of 2 huge projects, one in U.S., 2.1 gigas, and one in Germany of 1 giga. So we do have the product. Secondly, we will continue strengthening that external partnerships, and we are talking exactly with the same customers that are helping us to increase significantly our market share in offshore. And finally, we will invest in setting up the right footprint and the right supply chain in order to optimize the value of the products. So let's conclude here. We see a very attractive market outlook coming in the coming years. We still see some uncertainty in the coming quarters. And we do think that we have the right strategy and the right commercial strategy to create value together with our customers in this market. In that way, as I said before, we will expand our leadership in onshore, and we will achieve our ambitious targets of also leading offshore. We are in front of the biggest revolution that the energy transition represents. And I think that we have an incredible opportunity in Vestas of leaving that incredible revolution. So with that, I will leave the word to Thomas that will talk about development, and thank you very much.

Thank you, Javier, and good morning, everyone. Nice to meet you. My name is Thomas. I'm Head of our Development Business Unit. I joined the company back in 2019. And I really look forward to build on what Javier just teed up here, so how do we address and how do we accelerate the transition and what additional roles can investors play in this? We believe that doing development is a very, very important part of this. And the presentation today intends to give you an in-flight into how we have set it up and how our ambitions are carved out. So if I refer back to Henrik's initial slides speaking about the energy transition and the different scenarios that we potentially could look into, one of the intrinsics here is that we need to scale up the industry, obviously. And as we scale up the industry, we also need to scale up the volume, the amount of projects that we have out there. And we believe, actually in Vestas, that we are quite uniquely positioned to help out, and I'll come back to some of the arguments for why we want to do this. This slide is just to give you a feeling for the ambitions that we are looking into and that are expressed by our customers oftentimes, right? So you have some of the big oil majors pitching in here with the ambitions in terms of how much they want to build out by 2030. And I can assure you that one of the first questions that we are met with when we speak to customers is, can we look at your project portfolio. So there is a big demand for more projects. So why do we think that we are well positioned to do this? Well, first of all, the conditions that Javier also alluded to, the underlying markets, obviously invites for doing more project business. And we think we are also quite uniquely positioned to do this. I'll come back to the details, but we do have some capabilities that are well fit for this. And obviously, we do have a network during the past years of experience that we can leverage in the industry of project development. We can add -- second point, we can add a lot of value to our customers and our partners. And one of the points that are very important when we are adding value, and that's coming back to the argument about value of energy, is that we, in due time, start to do the value engineering as we call it, where we optimize the projects quite in the detail. And that's something that we're able to do now that we are engaged very early in the projects, and we know that it's going to hold, a Vestas turbine and a service contract on to it. Well, that enables us to actually dig into the project and really optimize, in the smallest detail, which obviously comes to the benefit of the customer eventually. It's a new solution. So it's -- you could almost call it a package deal to some extent, right? So when customers approach us, they buy the full package, so the project, the turbine and the service contract. And then obviously, it also adds value to Vestas as this is a growing market, and we believe that we can grow it in a profitable way. So a little bit into the details of project development here. So this slide intends to give you some insights into where we play. I suppose you can do project development and play in different ways. So the way this slide is built up is by saying, well, first of all, there's different stages of development, right? And typically, we see it takes between 4 and 5 years to develop an onshore wind project. And it holds different nuances to it. So obviously, the valuation of the project builds up over the years. The risk profile is initially very high, but lowers as we become more certain on permits and so on and so forth. The capital intensity increases as we approach or go through construction. We need to place bonds and stuff like that and actually the actual construction work, the equipment. So there are different sort of angles in terms of placing yourself optimally. And we believe that we should place ourselves all the way from the beginning. So we are initiating greenfield projects and take it through to where construction starts. And that's the point in time where we want to sell the project to the long-term owner of the asset here. So that's the mechanics, if you will. That's the base case of what we do. So what is it that we can do? Well, first of all, the technical capabilities investors are well fitted to project development. Some of the key elements that you need to have is obviously a good understanding of the wind resources. And through the operating assets that we are managing through Vesta's business, we have a lot of insights from the wind data. We also have a lot of insights from grids. We have a lot of grid experts that are often sold out by external parties almost on a consulting basis, to help out balance the grids. It can be quite tricky at times. And that's something that we can bring into the formula of crafting up a high-quality project. And then obviously, the micro-siting. We know what equipment is going to take eventually. So the technical group that is actually sitting in Andersen's organization is very close to project development and we work closely together with these guys on a daily basis. And then obviously, the financial strength of Vestas is also very important. As you move through, you saw in the previous slide, as you move through the phases of project development, it takes more capital placing bonds, grid bonds and so on and so forth, and warranties and so on. It's not an easy thing to contemplate if you're a small developer. So that fits very well to the size of Vestas. And then the global reach, as Henrik also alluded to, 80 countries, we can cover the globe in terms of where the wind is and where the opportunities are from a project point of view. Okay. So where are we? If you look at the left-hand side of the project -- sorry, the slide here, that tells the story about what have we done so far. Over the past years, Vestas has actually already developed quite some projects, about 4 gigawatts, and most of it from the U.S., obviously facilitated by the PTC scheme that we have had over there. Right now, we have a pipeline of some 130 projects globally that we are developing, adding up to about 20 gigawatts of projects. So it's pretty sizable already now. And we do have an ambition to increase this probably up to between 30 and 40 gigawatts at a -- in a steady-state scenario. We're also covering different segments. You see this on the right upper side, you see the small sort of symbols there. So we're actually doing development in wind. Obviously, that's our home turf. But also from time to time selectively moving into solar if we need to do so, and there can be some technical, let's say, explanations for why we would do so. Hybrids, obviously, to get the capacity factor up on the parts. And then Power-to-X, the last one, is something that is accelerating as we speak and something that we will speak to more in the future. So a solid pipeline accelerating up and obviously illustrating the growth potential that we see in the business. So what is the context of the CIP, Copenhagen Infrastructure Partner acquisition that we contemplated about a year ago? Well, it actually fits very well to the whole setup around development. First of all, if you remember the slide where we talked about the, sort of, buildup of the value of the projects, well when we originate these projects, we do have an interest in participating in some of that value upside that comes through the different phases. And by taking a direct investment into CIP, we get a part of that value upside. So that's one reason. Secondly, we do also engage with CIP in co-development. It could be, for example, in, let's say, new markets where CIP might have previous experience and where we are new from a development point of view. Then we partner up with them and do co-development as we call it, together with these guys. And then finally, which I think is almost the most important thing is that exploring new technology, new innovation across the value chain is something that we enjoy doing with CIP as well. One example, as I alluded to before, is the Power-to-X. I'm sure you're all aware that, that is a very, very high-growth area and high area for good reasons. And it's something that we enjoy to work with CIP in as with other partners, obviously, as well. But just to name CIP in the context of the acquisition here, certainly a reason why we would also join these guys. It's also important for me to say that there's no exclusivity or anything like that. We are not obliged to work with CIP and vice versa, the other way around. So no sort of obligations on that side. Finally, I'd like just to give you a little bit of a teaser from a project that we recently sold in the U.S. called 25 Mile Creek, a 250-megawatt project that we have been working on for some years now and sold it to one of our key accounts together with Javier and the sales team and are actually now progressing through to commissioning the project in '22. So an example of a project in the U.S., and as Henrik also alluded to before, we do expect that there's going to be quite some project in the U.S. also over the next decade from a development point of view. So in conclusion, we believe that as a developer and as part of Vestas, we are well equipped to contribute to the energy transition. We think we have the capabilities and a track record already, and we can see it already year-to-date and also with the pipeline that we are building. And we are absolutely certain that we can add quite some value to the overall company and the journey that Vestas is on. So with that, thank you so much.

Thank you, both. Once again, we'll start with some questions here from the room if we see any. We can start with Mark.

Two questions. Firstly, with regards to the co-development model and offering turnkey solutions to clients, meaning historically, that's absorbed a lot of balance sheet if you don't use project finance. And as we've seen in the past, with those projects you've done such as ones in Romania had nice capital gains on them, they tied up balance sheet for a prolonged period of time. So how can you kind of address those problems? And further to that, I mean, the return on capital often tends to be lower than actually just producing the turbines. And also, one of the reasons I think Vestas didn't get into this industry more in 2008, 2009 was because the fear that customers who are also competing for land bank may decide not to take your machines. How do you feel that's addressed by moving back into co-development?

Thanks, Mark. So let me start by the last question that you have. So I think we need to look at it as a non-finite number of projects that we're trying to, let's say, address here. So essentially, if it was a finite number of projects in the industry, I would agree with you on the argument that then we would be competing. But that's not the case here. We're basically making the pie bigger. We are originating more projects for the industry to construct and operate. So for that reason, I don't think -- and that's also confirmed by the dialogues that we have with our customers, it's not competition. It's basically just adding to it and using the skills and capabilities that we have at the best. So I think that's the first one. With regards to -- or the last one. With regards to your first question on the balance sheet exposure, what we've chosen to do in the operating model for our development business is exactly to exit at the point before construction to avoid the situation that you're alluding to here. So it's actually fairly light on the balance sheet relative to the scenarios that you referred to. So it's -- I suppose you can say it's a derisked business model from that approach.

If you allow me to add to the first answer, we are meeting probably 2, 3 customers per day. And there are none of them that have told us that they don't need fully well-developed projects. So we think as a development as a complementary part of our scope and never as competition with our customers. And the best proof is that all these projects at the end of the day are going to our customers. So I think that is a complementary scope that we are offering to our customers and not a competition.

We have a question from Dan here in front.

Dan Togo from Carnegie. For Javier, I was intrigued a bit by your saying that we should get away from the LCOE discussion. I guess the industry will continue to drive out and drive down costs. How should we think about that going forward? Is it because you, as an OEM, expect to keep more of that gain? Or -- how will it be going forward? How will -- will it be visible to us in the financials at the end?

Thank you, and it's a very good question. I think that, as I said before, there was a period where it was needed to demonstrate that we can be competitive. And now we have demonstrated that we have -- that we are competitive. So the LCOE will always be a parameter of evaluating projects. We need to continue being competitive in cost of energy against other sources of energy. But also that crazy rates in some cases, has led to some inefficiencies in the complete supply chain. And we have seen that the profitability of some of the actors in the sector is not as healthy as it should be. So that's my point there is that remaining competitive. There's no need to go further in some cases, deteriorating the profitability of the full supply chain. So that was much more the argument. It's not that we will not continue being competitive is that we need to redistribute the value through the entire supply chain. I think that, that was much more of the point.

I think we have a couple of questions from the line, and we'll start with Martin Wilkie from Citi.

Yes. It's Martin from Citi. A couple of questions. The first one is just on the -- how we think about the financials for, from your projects. Do you effectively book a gain on sale once you've completed the sort of that early development or -- or should we see more of a -- almost like a loss leader for the project where Vestas ultimately sells turbines to customers? How do we think about the profitability of your part of the business in the context of Vesta overall? And then a second unrelated question just around -- we had earlier about permitting still being a bottleneck. Just if you are sort of more at the cutting edge of early development projects. I mean how do you get around that if some of the challenges are very much that these sites are just very, very difficult to come by?

Yes. So I think on the -- if I understood you correctly, Martin, the profitability side of it or how we book the profit, obviously, the projects themselves has a profit to them. So there's a return on the investment that we do contemplate during the project phase. And then obviously, with the Vestas turbines, it also holds a profit to it. So I hope that that's kind of the bucket, if you will, the buildup of the total profit of this and how it's booked. What was the last question? Sorry, I didn't get that.

On permitting, whether or not sort of the challenge the permitting -- or how do you see that given that you're at the very early stage of project development, is the permitting side a constraint on your business?

No, it's not a -- it can be an issue depending on where we do development in the world, of course, right? So you have -- you have some parts of the world where permitting, I would call it, is less mature. The permitting processes are less mature. And then other markets where we completely know how the process will fall out and what is required to achieve the permitting. So it differs a lot from country to country, I would say. And then also, obviously, we see that in the, let's say, the time that it takes to mature projects through the different phases.

Thanks, Thomas. The next question we have on the line is from Kristian [indiscernible] from SEB. There is a question from Deepa as well, I can see on the line. Let's see if we can get her through.

So I had 2 questions for Javier. One is of the different markets we've talked about and the various different competitors. I think one question that is often asked is the Chinese competitors coming to eat your lunch in some of your key markets. So could you comment about the threat of the Chinese competitors for onshore wind and maybe even offshore? And secondly, just wanted to verify if you've shared your short-term forecast. Can you just confirm that, that's global, including China? And how would that picture look if you excluded China because I presume that's your main market? And maybe a last one, what is FOI, what's the pro forma FOI that's true on the sites?

Yes, sorry. FOI is firm order intake. It's whenever we record a project as a firm and unconditional order from our customers. So that's -- sorry about -- that's an internal terminology. Sorry about that. Second one, it was about -- the first one was about the Chinese competitors. And as I said before, we will never buy market share deteriorating our profitability or the quality of our products. We, of course, respect a lot -- all of our competitors. But today, we think that we are offering a totally different product than the one that they are offering. So I think that what we -- the best way of competing against Chinese competitors is by doing what we have been doing until now, investing in innovation, quality and then, of course, having a very robust service department that delivers the expected business case to our customers. So I think that, that is important. The second one, I have to say that you have to help me what...

Chinese?

That was the one that I have just answered. Sorry, can you give me the...

Sorry, the short-term market outlook. I think those numbers include China, the 93 gigawatts now going to 150.

Yes. We will see a drop. If we exclude China, we will see exactly the same effect during the coming 2 years. During the coming 2 years, there's going to be a drop and there is -- the explanations are in line with what I have said during the conversation. There's one very clear, which is the U.S. market that is very promising in the medium and the long term. But during this couple of years, well, 1.5 years will be lower than what we have expected. But also we are seeing that the effects of COVID restrictions, transport congestions and raw material fluctuations is delaying the discussions with the customers. And it's not canceling any discussion or is not any project that has been canceled, but there's a delay, because we are together with our customers, building the business case of those projects. So I think that, that's it.

Thanks, Javier. It seems that we have a question with us again on the line. Let's see.

Great. So just to Javier on competition. So it's -- I mean you point out your superior ASP and sort of what you do to achieve that. But can you elaborate a bit on the competitive dynamic you are seeing, especially also in the light of Henrik's comment that the industry as a whole is simply earning too little money. And also specifically on the Q4 order intake, in terms of -- I understand that Henrik said that you're seeing customer delaying decisions, but it doesn't seem that your competitors are having the same problems. So also sort of on the current decisive factors on orders?

Yes. Well, on the second one, I will go back to the answer of Henrik. First of all, we don't comment on the quarterly order intake until the quarter is finished. So that will come in for sure in beginning of February. And of course, there's a fact that the business cases have been very studied in most cases, and we are discussing it. So we are seeing that delay. But of course, I cannot comment on the specific results mainly because we have not finished the quarter. In relation to the competitors, I have to say that ASP is a reference. But I think that what is important is to deliver a constant profitability in the market, in the results of the company. So what we are doing, of course, is reevaluating the cost of all the projects. And based on that, we are creating value through many other levers in order to minimize the impact, first, of course, for Vestas, and secondly, for our customers. And that's the best way of protecting the projects and the volume. I think that we have seen different strategies from our competitors. I will not comment here my opinion about if it's the right or the wrong strategy. But the only thing that I can say is that we have a firm and we have a solid strategy on that in terms of pricing and in terms of commercial strategy. So I think that this is what I can comment here. I cannot talk specifically about what our competitors are doing.

Thanks, Javier. You, too, were fast through the presentation so we have a little bit more time for Q&A. So Gustaf has a question, and then Claus afterwards.

Gustaf Sherwin, Handelsbanken. A follow-up on the competition, if you look at the mid long-term growth outlook it looks very promising. Let's see where it ends up. But in a scenario where we see sort of 200, 300 gigawatts installations annually, do you find it realistic that we will have this very high market consolidation ex China. You talked about 90%, or do you think we'll see a situation where the Chinese players will start serving the market ex China as well? And if not, what kind of time do you need to scale the business in order to keep your market share?

I think that what is important in the short term is that the market demonstrates that we are maturing as a market and materially means that we redistribute the profits that all the companies throughout the entire supply chain are profitable, which is not the case today. And I think that while it sees companies that are not making money, I think that the consolidation will continue. And I think that that's one thing. Regarding Chinese, well, it depends a lot on how the specific Chinese market evolves and how the rest of the world financing customers, et cetera, accepts to have a totally different product. I always like to say that we are selling something different. It's not the same thing when we are comparing our products with those products. So I think that the consolidation will continue -- if we do not, are capable of redistributing the profits through the entire value chain. And then regarding Chinese, I think that, well, they need to step up significantly, mainly in technology and in service in order to be truly global players.

Let's have a question from Claus if you still have one.

This is Claus Almer from Nordea. Coming back to the market outlook that you're saying you're going to slipping next couple of years. I believe in the past, you have said all depending on the market, but you did not see a negative revenue development in the coming years. Has that changed given the market forecast?

Well, in terms of revenue and financial results, I think that this is something that you can ask Marika later in the finance part. In terms of what I'm showing here is total volume. And I think that -- well, it is still premature to say how much of that volume are we targeting. Of course, we want to continue, maintain and expand our market share, meaning that we do not expect a significant drop. But I think that is better in terms of revenue that you ask Marika at the end of the day.

Just to be sure, so you say you do not expect a major drop. I think that's how we quoted it. Do you have a backlog that is supporting a growth? Or do we see a dropping...

We have a backlog that supports the growth, but will present our expectations for 2022 again in February. So yes, we have a 17-gig -- 24 giga, EUR 17 billion of backlog in turbines. So you can calculate more or less what is our order coverage. But our results will -- our expectation for the next year will be presented in February.

There's a question from Frank over here.

For Thomas. On the face of it, you're adding quite a bit of complexity to a business that already has a certain level of complexity by adding development. Is there a future scenario where this could reduce the level of complexity of the business overall by providing more visibility? Or is that too distant to be realistic?

I think that it is probably too distant by now. But I would probably -- I wouldn't say that we're adding a lot of complexity because the way that we've set it up organizationally, it's a separate business unit. So in that regard, it runs by itself. So we're not sort of -- we're sort of building on top of the big Vestas if you will. So obviously, working together with Anders on the technology side and Javier on the turbine sales side and so on. But the unit itself sits as a separate organizational unit. So I don't think that we at least internally see it as an added complexity.

It's a question from Peter over here.

Can you comment a bit about how you see the competition from solar? I understand, of course, in some markets, they can complement each other. But if the cost curve of solar continues to decline and you try to raise your prices, I guess the gap between solar and wind will increase and people would allocate capital to solar. So how do you view that situation?

Well, I think that the first thing is that, well, you have seen -- we have talked about disruptions during our presentation. We have had disruptions, the solar sector have had huge disruption during the last quarters, during the last month. I think that the first thing is that, well, it needs to be profitable and sustainable sector, which I hope that it will be. They have to demonstrate that they continue -- that they start -- that they continue to make sustainable profitability in the sector. And that means that this LCOE decrease will not continue at the same pace. They need to start generating money. But we don't see as a competitor, solar. We are seeing some complementary source of energy in many, many markets. We are seeing more and more hybrid projects. And I think that the future, I think that the -- how I see it is that there has to be complementary in this path of growth that we were -- that I was mentioning. There will be some markets where the solar will be higher than wind, and the opposite, depending on the natural resources, the grid connection and the customer needs. But I always see as a complementary. And this one -- this curve is just wind. So the growth curve is it was -- it's just for wind.

Maybe a short follow-up? But I don't think I fully understand that because customers, they have a CapEx budget. They look at project RRs. And if they can get a better return from solar instead of the wind, why would they not allocate to solar instead of wind?

Yes. And it depends on the -- what I'm saying is it depends on the market. There are customers that have a higher share of solar and a lower share of wind and the opposite. And I think that what is important is that they have the best solution for each and every project. And I think that it's not just a question of price. I think that when we are talking about value of energy, well, solar has a totally different shape of the supply than wind. And that's why I'm saying that it's very complementary in those markets. And the value of energy of wind is higher than the value of energy of solar. Solar is much more concentrated in certain periods.

We have a question on the chat for you as well, Javier, on the offshore side. Both in terms of how do you see the price development there, but also how do you see customers perceiving the new turbine.

Okay. Well, in terms of pricing, well, we don't comment about future pricing. We have a strategy there when we -- as I said, I'm extremely happy of the welcome that all our customers have had of our new product. We are in discussions with several -- with many customers in, as I said, U.S., Europe and Asia, and it has brought a lot of attention of everyone. And the point that -- sorry for repeating myself. It's really competitive because it has proved that in just some months, we have signed the first 2 PFS, preferred supplier agreements. And so it's competitive. And in terms of pricing, whenever we announce the orders, you will see how it's -- our levels whenever we have a firm and unconditional order.

And there was actually a follow-up question for you, Thomas, on the offshore as well, that, of course, development is not actively engaging in offshore right now. But what is the time line and the thinking about entering into that as well?

Yes. So that's a very good question, and it's absolutely right that sort of our home turf from development is onshore wind. But we do see opportunities selectively to move into offshore development, preferably in what we call new markets. So kind of the future or the next wave offshore markets, that's probably where we would consider to move in. But the base is, for sure, onshore development.

That sounds good. And there is another question for you, Thomas, on the chat in terms of your ambitions for development. So do you have an internal order intake target?

Yes, we do.

I would assume the question would be what it is.

We have an internal order intake year-by-year, and we are basically building that up, contributing to -- together with Javier and the sales team, to the overall target of Vestas. So absolutely, yes, we have an internal target. I don't think we disclose exactly what they are and how they stack up, but we are quite ambitious, I can tell you that.

But I think that we cannot isolate that target from the overall order intake of Vestas because I think that in some cases, it's a multiproject agreement and a specific project agreement. So optimizing just one target will not optimize the overall order intake of Vestas. So I think that is much more important, the overall order intake as a company, than the specific targets of each of the different contributors.

And it's also -- when we have a project that is ready to be sold, Javier and myself work closely together to, let's say, optimize the way that we leverage the project, right, in the context of our key accounts globally. So it's -- yes.

Any final question from the room here? Claus has one.

Claus Almer from Nordea. In the old days, we saw these big gigawatt frame agreements being announced both by Vestas and some of your competitors. And now you're talking about partnerships with clients, and I'm talking onshore. But we don't see these frame agreements really being announced anymore. Is that just because you don't want to announce them? Or you don't get a frame agreement when you do a partnership?

I think that we have a very strict -- and I think that we -- I think we will continue to having that strict way of communicating a frame agreement. So we only communicate order when they are firm and unconditional, so meaning well, down payment -- well, contract signature, down payment and payment security received for that specific order. We are signing collaboration agreements and we are discussing collaboration agreements with our customers, but the announcement moment will be the moment where we have firm and unconditional order. So that's -- so frame agreements can be of different nature, can be collaboration, can be a preferred supplier, can be market share, can be from orders. So it's a global way of defining our way of interacting with our customers. But in firm order announcements, we will follow certainly the definition.

Thanks for that. And with that, we end this Q&A session, and we will have some lunch for us here in the room. I hope the ones sitting at home can do the same. And we'll be back 5 minutes after 2:00. [Break]

I think we are at 14:05. Let's see if we can give a couple of minutes more to get people into the room. I will look at you, Mathias, to tell me when to start. So then, good afternoon, ladies and gentlemen. My name is Anders Nielsen, and I'm the CTO of Vestas. And I've joined the company in 2020 in April. I have a background in the automotive industry. So I'll try to keep you awake after lunch. Hopefully, I will manage with that, talking about Vesta's current technology portfolio. We'll look into the modular foundation of how we work, onshore and offshore synergies and a bit into the future solutions. I think we've -- you've over the years, probably seen this. So we have the widest offering to the market -- or all OEMs in the business. So we have the 2-megawatt platform, still active. Launched in 2000, where we sold more than 55 gigawatts on that platform. We have the 4-megawatt platform. Came into 2010, where we sold also more than 50 gigawatts on that. And we have a 9-megawatt platform, which was the first offshore platform -- or the bigger offshore platform, where we sold 5 gigawatts of that. And then we have the new platforms coming in, which is the EnVentus, platform with more than 5 gigawatts of firm order intake, and where we actually started the modular architecture, which then can carry across both onshore and offshore. And we have the next generation of offshore designs, the 236 at 15 megawatts, where we have then come up to 3 gigawatt of PSA, preferred supplier agreements. And we really see that has a good potential as a platform moving forward. So we have a wide offering. We have a wide coverage of the market, not only from a technical point of view but also from a geographical point of view, as Javier showed you before. So we talked about -- there's a number of things changing in the business, and this is challenging us from a business set up, but also from a technology point of view. We see a very rapid growth in the business, as said before. And that means that, of course, the complexity in the value chain growth. And we also need to get the whole buildup of the capacity done and also limit us a bit in how fast can we actually have a product cycle turnover. Because if you're going to build a 300 a year gigawatt capacity, then you need to make sure that also the whole supply chain can use that for a certain point of time. So building on platform where we can launch performance are built on the same platforms will improve the opportunity to actually get your money back in the products you invest in. We have the availability of attractive sites, as mentioned by Thomas and also by Henrik before. That means that we need to go to places, to sites where the climate is not optimal. It could be harsh climate. It could be lighter winds than before, which means that we actually have to have a product that can also adapt to that type of circumstances. The third part that also been mentioned before is that we have the limitations of the grid. And the limitations of the grid means that if you do go a full electrification journey of all the type of all the industries that need to be electrified, the grid will not be able to carry that amount of energy. That means that we need to look into behind-the-grid solutions, island solutions where you can actually produce renewable fuels without connecting to the grid stand-alone, where you also have the renewable resources in a different way, also the different technology where we need to look into. So from -- to have this value creation, that means that we need to be really good at making the site customization. We need to be able to have the right product for that specific site, those specific conditions. At the same time, we need to be able to work with an internal standardization. Meaning that we do have more -- we use the same building blocks across different solutions. We need to have the scalability, as mentioned before. We need to make sure that we get optimization of the CapEx deployed. And we need to be able to leverage both partnership on the customer side and on the supplier side. And the answer to this is what we are addressing as modularization, which is customization using internal standardized building blocks. And this is how we're trying to create the value. We see a big opportunity to create the value in the industry this way. I mean, if you make a very simplistic picture, you would paint it like this. So you have the towers, you have the nacelles, you have the blades. And you are able to combine different nacelles and different towers, different blades -- the different blades and different nacelles to be able to create optionality to the market. Of course, in reality, it's all -- it goes deeper into the technical systems, how we're able to deploy the subsystems across the different turbines and making sure I don't have to develop a pitching system for all the turbines uniquely. I can actually use the same technology and I can scale it up and down to the capacity, the performance needed. And that is really the essence behind the whole thing about modernization, is going down to subsystem levels, making sure I can carry that technology onwards across the whole portfolio. So I get volume, scale and I can work with my suppliers for that. I can also offer to the service side that actually servicing a Vestas turbine has a lot of similarities, no matter if it's onshore or offshore. No matter if it's 4 megawatts or an EnVentus. That type of solutions will simplify and reduce the complexity in our business across the value chain. Now we've been on this journey for a while. So we started out in 2014 with the conceptual work. Got it. The first modular concept, done in 2018. We had the EnVentus launch in 2019. And now in '21, it's been quite a busy year. We have had the launch of the 236, which is built from the same modularity. We had the modularized nacelle that we actually launched in the Electric City just a couple of weeks back. And we have the next generation of EnVentus for the next performance steps of the EnVentus. We will expand this modularity across all the different turbines we have across the complete turbine system and also into the plant level. I mean, sometimes when we talk simplistically about turbines, we are selling power plants. We are selling the whole controlling of the plant, including softwares, to make sure that we get a deployment of our energy into a grid. And that functionality lies in what we call the plant level. So with that, I'd like to actually show you a little bit of film. [Presentation]

So this video we used to launch the modularized nacelle here on the Electric City, and it shows a little bit of how we [ compartalize ] the different systems in the turbine. What we'd want to address with the modular approach is really -- have created efficient design, meaning that we have the time to market by using a carryover system between different products, we can actually shorten our time to market. We want to make sure that we can maximize the AEP in the different sites we are, so unlocking customer value. Improve the site ability. And that means in normal language that we need to have some performance step in cooling, performance step in anti-icing systems. Meaning that you can't have a standardized product. You have to carry the cost of all those systems because you don't need them in different sites. You need to make sure you have it correct for the site and you have the abilities of the product for a specific site, but not carry costs across all sites. So that optionality, we also need to create. We need to improve production, making sure that we can reutilize the CapEx in the production to -- so we minimize the total CapEx need. We need to break the transport curve. I mean, when you come into very, very heavy transports and very, very large objects of course, the transport cost goes exponentially upwards. And by breaking that in packages, which is easier to transport, we can also break that curve. And the third -- sorry, fifth, but not smallest part by any means, is that we also need to make sure we have the right quality. And quality is making sure you use proven systems across different environments and different product types. If you are just every time starting with a white piece of paper, you might be solving some of your legacy problems but you always create some new ones. So having that stability and carryover technology is also key to the future good quality. So this is a little bit what you saw from the video as well. So we divide a nacelle basically in one main nacelle housing and a side compartment. And in a side compartment, we have the power unit, which is basically the converter and the transformer. That side compartment, we can then use across the same -- across different products. And the main nacelle housing, we can optimize that for assembly and -- for the assembly optimized nacelle structure. So that -- to have those interfaces done, right, so we're creating simple interfaces where you can lock -- hang on the side compartment to the main nacelle, where you have a click-on interface. You have a single-access locking solution. Meaning that when you yaw it to the wind, you're not creating that -- any sideward movements, but that's not a load-carrying item at all. And we have a heavy-duty interface. So everything of the heavy loads comes very close to the tower, meaning that we create good weight distribution in the whole system. I mentioned before as well that we have -- there's possibilities of synergies across onshore and offshore. And if you go back to that side compartment, that side compartment is actually the same between the EnVentus next generation and the 236 offshore 15 megawatts. Meaning that we can carry those systems, we can try it onshore, we can get the full footprint benefits of having the same across offshore and onshore. It gives the same standardized connection interface. We have this, as I said, the common power unit. The onshore transportation can be split up. Even for the onshore/offshore products, we have a part that is onshore transportation, getting it to the assembly harbors. And as I said as well that we can also position the heavy components as close to the tower as possible to minimize the loads of the product. So the modularity, this advanced modularity, it enables scalability for us. So we have the module nacelle, which gives us benefits for the transport solutions. We have also, as you saw rapidly in the video, the possibility of a service crane. A service crane is basically -- is a hoist-up crane. It hoists up itself. And then that can be used to exchange heavy components, meaning that you don't need to bring an expensive crane to site. So it's a way of also bringing down the OpEx, meaning that we have a more easy and more beneficial service costs. It also creates opportunities for the future, future innovations. We have a flexible possibility to put on other functionalities on the turbine. You can have grid-forming capabilities, meaning that to start a turbine today -- I mean we have always been able before to actually lean the renewable energy into a stable grid. Now with a more and more penetration of renewables, you get more and more intermittency into the grid. And that means the grid-forming capability of other turbines will be very important, meaning that we actually can stabilize the grid or dispatch energy in the right side -- the right way to the grid. You can deploy battery storage to it as well. I mean, dispatchability, meaning that I can actually deploy energy when I need it. So Javier talked about the value of energy versus LCOE, and sometimes, I think there is a little bit of a misconception here. The LCE is the average cost of energy when we calculate it. And of course, if you add a battery to a product, you will increase the LCOE. You add cost. You don't -- you can't produce more, but you create the opportunity to actually dispatch that electricity when the price is right. So it actually addresses the revenue side of the customers rather than the cost side for customers. And that is why we say when we want to work with the value of energy, it means that we also, together with the customer, can work on functionalities that actually create a better top line for the customers. And that's where the common value creation lies. Power-to-X. I think hydrogen, green hydrogen has been on everybody's lips in the whole discussion, COP26 getting into energy transition. Here, we can also -- you could also deploy an electrolyzer up-tower, which actually makes a lot of sense because pipelines are cheaper than high-voltage cables. So there's a number of optionalities that we can play out in the -- when we create this more flexible platforms so we can reuse as much as possible over time. So the value creation through the plant solution, as I mentioned before, is really we have a number of software capabilities. You mentioned them before, Thomas. It's already in the development phase. We have the customer risk and value prediction. We have the value optimization and business case certainty, meaning that we can predict the output of a certain location. We have the efficient grid connection and lifetime compliance. We have the full life cycle operations and value optimization that goes both into the construction phase, but also into the operating phase, where we have the service over lifetime. And we have the cyber secure operations and plant communications. Of course, we need to secure that -- these assets. They are connected. We have the possibility to get the data from them, but they also -- that they are safe from a cybersecurity point of view. And this modularized hardware and software solutions, that will give a full life cycle customer value. And that is also what we're tapping into in the recurring businesses -- business opportunities. Just as a little bit of a taste here as well. So we are actually in the first wind -- dynamic wind to ammonia plant around. It's a pilot project, but it will be commercial, where we have the responsibility of integrating wind and solar to the electrolyzer, making sure that we have that knowledge of how you dispatch the electricity to the whole electrolyzer and maximize the output of the hydrogen, together with the tops, that's doing then the ammonia plant in that side of it. So this is very important for us to step into these different projects because that creates a learning for us as well. And we develop the technology as we go. So we're pretty well on our way in this one. Another interesting way of looking at it. So again, we talk often to -- only to the turbine side. So we worked with Microsoft and minds.ai, looking into how do you actually create -- how do you take wake losses in the farm. So when you build a big wind farm, the bigger the turbines get, the more they will actually create wake to each other. And you can actually -- by letting them -- turbines talk to each other, you can open them up and yaw them a little bit differently to avoid that loss. And by applying AI to it, you can actually have that farm teaching itself how should I, in different wind direction, correct the yawing of the different turbines to actually maximize the output of the farm. And that can give up to 1.5% extra AEP out of the farm just by having that internal communication optimization. So we've done a great job with minds.ai, and we see quite a big opportunity moving forward here as well. So key takeaways. We are leading in turbine solutions. And of course, we have the ambition to continue to be so. And with the EnVentus and the 236, we have created modular platforms where you can leverage the technologies between the different platforms. Scalability. With this modular approach, we can also create a good base for scalability of the industry, where we can, together with customers and suppliers, make sure that it's actually possible to scale it from a CapEx perspective, from a reuse perspective. And we are creating the renewable integration. We have new energy solutions from Power-To-X in how to create stable grids. We are also having very good capabilities in that area, and we see that as a very big part of our future business as well. Thank you very much.

Thank you, Anders. My name is Tommy Rahbek Nielsen. I'm the COO of Vestas, and I joined Vestas in 1997. My name has been mentioned a couple of times today about something to do with cost, something with transportation, and I would love to stand here and say, it's all gone. Unfortunately, it's not. But I'll tell you, too, a little bit about business starts with safety and quality; volatility on cost headwinds, what we're doing about it; and also shaping for the future. So what is actually a COO? We have 4 areas: Procurement, that's securing area across the whole value chain from the beginning, also substations, et cetera, throughout the value chain to service. Supply chain and transport, a key area for us, even more key than where we were before. Not just due to the cost, but also some of the things that Anders talked about, the modularization, how can we optimize across the value chain logistically. And of course, manufacturing. And manufacturing for me, it's our own sites, but also the partners we're having. And last, maybe we should start out with safety, of course. But quality, health and safety and environment. Our turbine deliveries has gone up from 8 gigawatts in '15 to 17 gigawatt in 2020, 116%. But if you see the number of turbines, it has not grown the same way, but complexity. Complexity has grown significantly between the years. We're having sites across plus 15 countries. Of course, we are bringing in 80-plus counties that Javier talked about early on. We have to have a service set up there and supporting service with procurement, et cetera. And then we have 21 internal sites and 92 external sites across the world. More than 400,000 shipments from 41 different countries, 600-plus vessels. Think about that number at the end. Safety always comes first. No doubt. That goes for us, goes for our colleagues, it also goes for our partners. There's been a steady decline in the number of incidents we had. In 2017, we had more than 250 people got injured. This year, it's 150. And at the same time, we've grown from being 23,000 to 30,000 people. It's still 156 too many. We always strive for 0. That's also how you get steadiness, get quality up. They're linked together. A little bit how we have been actually dealing with this pandemic. Now it's just become part of our daily life. I've been sitting in COVID-19 meetings in week 4, 2020. I still remember the first case. It's not as exciting, but it's still as critical that we stay alert and mitigate. So we have that anchored with me in XM but in a cross-functional team, in a global setting, but also in a local setting, in a regional setup. We comply to all legislations out there, and then we put something on top to ensure that our operations can keep running. We have a close cooperation with our suppliers. A little bit what Henrik talked about at the beginning, the magnitude of our business now and also the impact in society, if we fall out, is significant. So therefore, we are part of the critical infrastructure. And that's also what we work with our suppliers about, stakeholders, to ensure that we have no disruptions in our operations. We had no long-term shutdown in any of our factories. We have factories at suppliers. We help them to get started again. And that's what I think is true partnership because we depend on them, they depend on us. Quality. In the years from '16 to '20, we built 8 new factories, launched 16 products, added 8,000 people to the workforce, not necessarily in Vestas, but with partners. That gave a challenge. A little bit what Anders was talking about, how we can come to modularization, how can we launch better products in a steady way. So we have to go from a quality where we -- it's only about the product. It's not just the product. It's a product which will end up if we do mistakes early on. We were very internally focused, not customer focused. The QC department was responsible for quality. It's not the case. It starts with me, all of us. Limited ownership and -- we have to live quality. And we put also some rules up for ourselves and also have some value to this. Stop and speak up if you're in doubt. That goes throughout the chain. If there's something you see is not -- you don't know what it is, you stop and speak up. Same as for safety. Adhere to processes. We're a growing industry, probably a little bit opportunistic still. Entrepreneurial, I think, also, that word's been used. But we need to adhere to processes throughout this. Not just Vestas, but as an industry, we need to grow up. And do it right first time. We will make mistakes. How we fast learn from our failures, our mistakes and how we get them back in the chain, get the change design and getting it out to the suppliers and get back out to the customers. That's absolutely key for us. So increase customer value. Quality starts with me throughout the value chain. And we had our first quality today official here in November throughout the company and had engaged 30,000 people into that. And that's quite a momentum now. And there's no doubt that the modularization that Anders just talked about will lead us to a standardization and a more steady way of working. And also how we introduce product, but also how we run operations together with our partners. So preparing for the future. Scaling and leveraging. Cost inflation. I would have loved to stand here and say, it's gone. It's not. '22 will be difficult. And yes, I know that's predicted. Yes, all the costs inflation have gone back end of '22 and into '23. We have to prepare ourselves for a little bit longer time. I'll come back a little to we work on mitigations and how we work with that. Onshore and Offshore synergies is in the midst right now, how we're going to look into the future, how we combine the 2. But Anders talked about also -- because Anders is going to give me a nice life with lower CapEx and easier to implement products as well. So I'm looking forward to that, Anders. I say that with a smile because it's a collaboration across the value chain, not just Vestas, but also upstream and downstream in our value chain. And then last but not least, leverage on the supply chain synergies and scalability. Scalability is a key thing in our industry that we need to grow up. We're not super good -- haven't been super good at scaling. Now is the time, especially looking into the growth. Also what was presented earlier by Henrik, that, that growth, we have to scale towards. And we have now a chance also a couple of years where we really have to be ready for after that. So we can't talk about the future before a little bit related to where we are today. We all can talk about transportation. We also saw at the beginning about steel has gone up. But also disruptions, and we have to learn the disruptions out there. Coming from 2- to 3-days congestion to, on average, 20 days congestion is an issue. And how can we get back on track, that we can do with partnerships. And a partner like Maersk, who sits on the assets, who can control the assets -- because they can't control the weather yet, but for sure, that makes us more comfortable in that situation. But also given longer-term visibility to our partners, not just our own operations, but to partners as well, how they should invest, where you should go, which market to go for. As we've also been looking into new markets, as Javier talked about, local content is not necessarily super good, but we all have to work with that and find our way through and still stay profitable. We also work with the indexation, especially on the vessel side. There are shortage on vessels. 600-plus vessels, as I said earlier on. 15% of the overall vessel have actually been turned in from oversized cargo into going with containers, meaning capacity is going away or gone to something else. Locking on raw materials. We work with our partners. We're locking in the firm orders, to the extent possible, but it's not possible in all commodities. But we're making long-term agreements with our suppliers and try to secure us that way. And last but not least, supplying the tool of financial hedging. I think we're fairly immature in our industry yet, so we still have something to learn. And we keep learning day by day, and we are going to play the full toolbox to secure ourselves also going forward. Just one thing, the average schedule reliability has dropped with 50%, meaning disruptions in the value chain, cranes availability gone, et cetera. That's a challenge for us. And that's why we need to work closer with partners and also tie them in. A little bit how do we work on driving efficiency. In the triangle, it says risk, cost and scalability. We have all been driving hard towards going to China, be very dependent on China. We need to diversify ourselves on the value chain as it is now in the supply chain. Also what Javier talked about, we need to get sustainable supply chains, so therefore, we'll have to work also how we've done that across the continents we're working on. The curve is breaking mainly due to transportation here because this is our manufacturing cost and the transportation cost here, which is actually giving the spike. We keep working with standard work, meaning we want to be like a clock work. We normally say to our factory, be reliable and boring. So boring, meaning no hiccups. You just deliver as it is. Therefore, we need to get those disruptions away. And we work with steady tools, how we introduce new products. Because one thing is getting the design, they also need to get out in the value chain. There's probably between 5,000 and 10,000 components in the turbine. They all need to come through a value chain and come into a factory, be assembled and go out again. This is no excuse I'm trying to make. That's what we need to be good at. And I think we are good at it. And again, more on the partnership side, that's what we have to work on, and give them visibility as well as for ourselves, what does the future look like? How can we standardize more? And then last but not least, also outsourcing of main components. We'll focus what we're good at, what is the core? Where is the value creation? And then we'll leave some of those components who are better to do that than us. I said it was last one. There's actually one more. We always had a talk in the past about low-cost countries. We talk about best-cost countries. Because with the disruptions, transportation costs going through the roof, how do we mitigate that? That will be that we look into the best-cost countries, how are we supplying suppliers to us, but also from us to the sites where they are in the world. So realize now synergies across offshore and onshore. On the procurement side, we get some scale. We actually had quite an overlap. And also there was something when we took onshore -- offshore back in, that there are also supplier base we're consolidating on. But also on the materials across both an offshore machine, an onshore machine, and the new design is the same. And then in our industry, CapEx intensity. It is a challenge for us. It's something we need to work on across the value chain to ensure we actually get that intensity in the right level. And we need to optimize our footprint, our network. So I'd say, well, I'm coming back to that. Logistics, as I said before at the beginning, that becomes absolutely key, how we're going to drive the supply chain, how are we going to drive logistics, how we're going to drive the transportation, trucking, crane installation, how we're going to tie that whole chain together. That's absolutely key by advanced planning methods, but also how do we get utilization of solar plants. As one caveat to that, when you are then exposed to local content, there might be a big build come out in the U.S., but there's also a requirement to produce a lot of stuff in the U.S. They are not available in U.S., so that supply needs to be built. Quality, as I said before, it has to be there. And that's where we have to grow up as an industry, us, our suppliers and partners. And it has to come through with the design. It also has to come with the integration with suppliers and partners, so we make sure it's actually executed at the beginning. We've been talking before about functional cost out, functional setup, cross-functional, end-to-end. Now we talk ecosystems and what is ecosystems? When we're setting up a factory, that's probably the easy part when we set up a factory. But the difficult part is how do you tie your ecosystem around it, meaning your supply base, making sure you have the best country sourcing, best set up logistically, thereby also avoiding disruptions and risks. So that's what we're working on now and tying suppliers closer to us and partners closer to us. So in the future, that is what is going to unlock the full potential. We build that ecosystem, and we're going to do that here by integrating offshore into our footprint. And when I say footprint, it's the whole ecosystem together with my supply base. So what do we then mean when we say partnerships? Few, bigger, better, more capabilities at the suppliers is needed, at some of them. We definitely have good partners today like Maersk, ZF, [ Windyty ], [ Beta]. They have the capabilities. They still have to grow. But they also had to grow towards the growth we have in the coming years to be ready for that. Because if you look back in time, they were holding back, and that's also why we call it partnerships now and give them the visibility where we go, where we expect to go. And then also enabling the modularization. That's why we need the suppliers to lean into us and ensure that they are part of the journey. And that's what we mean about shared vision and objectives. If you don't have shared vision and objectives, you probably know that from your private lives as well, if you don't get aligned about what you want to do, it becomes a little bit messy and it's complicated. And we're willing to open up and share. But we'll also ask them for leaning in. And strategic alliances, which probably between 8 and 10 of our supply base, which we will determine as being strategic alliances. And then the joint growth. That means we leaning in, the supply base need to lean in as well. So we're coming from safety, quality, delivery and cost, has brought us far, very far. And I will say here, during the pandemic time, it has been absolutely excellent. We probably already moved to the side, safety, quality, delivery and cost stays, adding scalability, sustainability and supply network. We launched products globally and started factories during the pandemic, where we in the past need to have a lot of people traveling out, people in to be trained. We've done it virtually. Starting a blade factory in India, in Chennai with 4 molds that need to be installed from people who have never done it before, needs quite a support. That can only happen if you have a resilient and a foundation to build on, and you use the whole muscle of the company to ensure it happens. Launching a new product, the EnVentus platform was launched into our Chinese assembly line without having anybody coming to Ringkobing to be trained, without having anybody from Ringkobing coming to China. And somebody is probably sitting and say, "are you sure about that quality, Tommy?" 100%. The turbines are already up spinning. But it also requires that we think differently. It requires we challenge ourselves. I do not hope I need another COVID-19, I don't think any of us are hoping for that. But sometime, you learn very fast. But when you have a foundation to build on and you stand on, you're also secure, and also have an organization that works with that. Scalability in supply network is absolutely key for us. It's key for our industry, it's key for Vestas, key for our customers and to actually reach that growth we expect, and that requires the partnerships. So the key takeaways from my presentation here, managing complexity, I think that was a question, how are you going to manage that complexity? We can manage that. We have a foundation to stand on, to build on, but it requires also we actually integrate more with our partners. And also the modularization will lead to a huge standardization in our value chain and thereby also reaching the benefits we need. The supply chain involvement, it doesn't come overnight. But it has to evolve within the 5 to 10 years. Otherwise, we're not going to manage that growth that is coming to us. And we dare to work also differently than what we do today. It's not just about us and suppliers, it's us as an industry that also need to tap in to and do things differently. And last but not least, the partnerships. You're probably saying, "He keeps talking partnerships." We have great partnerships today. We took a new partnership with Maersk. We had a ZF key cornerstone in our whole setup of the turbine. They are true partners, and those, we need to build more on. Thank you very much.

Thank you, Tommy. Thank you, Anders. Let's again start with some questions here from the audience. Dan, first.

Dan Jensen, Carnegie. Maybe first for Anders. On the EnVentus platform, where do you stand out compared to your competitors? Because when we approach competitors of you, they claim, well, we are doing modularization, we are doing exactly the same. Can you make a few points or maybe enlighten us bit where do you believe you stand out? And can you raise any claims, any IP you can take out, and say, this is ours?

I think we can. First of all, yes, we do have quite a lot of IP. That's protecting the way we are doing things compared to others. Is there a lot of similarities in the business? Yes, it is. But I think what we have been able to show already is that we actually can do -- we can scale up the business and we can do that with the profitability. And that comes, of course, that we have a reusable. As I said, this journey has been going on since 2014, so that kind of a proven record as well. If you look into our -- it's hard to describe it without going into the details because the detail is really in, for instance, our converter. That's built in multiple steps. So we use the same across the 4- and the 6-megawatt platform into the 50-megawatt. So it's how we reuse that technology and how we get leverage on scale on that. So everyone can say it, right? And I kind of understand the question, but the hard thing is to -- I think we can prove it by the profitability, the way we are doing things. And we see that we can actually scale this quite much faster. The modularized nacelle is a way of actually opening up the system. Everyone have a problem that when you change something in a nacelle, you get a ripple effect, you have to move everything around and it affects everything. Now by separating them in compartments, you can actually scale them independently without creating the same complexity when you change the product. Meaning, you can create performance steps different levels for specific markets. I think that's where we -- I guess we have to -- I have prove myself. We have to prove ourselves as a company that this will actually give us a leverage going forward. But I know that everyone tries to say the same thing. I do have some experience from other companies as well. I think Scania has proven itself as well in modularization quite well compared to the rest, even though everyone says they are doing it. So somehow, it's easy to say, hard to do.

Just a small follow-up, yes?

Yes. That is rather to Tommy. With such a fragile global supply chain we have at the moment, I'm a bit concerned with whole scale up we are seeing for this industry going forward. What are your concerns with this scale up you're going to see globally? And where will the first bottlenecks be? And won't we just stand in the same situation, let's say, in 2, 3 years with a disrupted supply chain? And what can you do to mitigate it?

I think it's a good question because will there be disruption going forward? 100%. But that's why we are global, and we are working on all continents to make sure we -- how do you derisk that global setup, but also how do you actually make that visibility for our suppliers. Because what I'm most concerned about is actually our supply base are holding back too long. And that's more on us, on me, it's making sure that is the view you have to take. But also, we are not afraid of making long-term agreements. I think we have a little bit of a reputation in the market, we only won a 1-year agreement out there, and then we're just handing on. That's not the case anymore. We are very much going into the 5, 6 years agreement, if that's what it takes on the key core areas. And that's what I believe because it's on us that we tell where do we see it's going to be. But there will still be disruptions, right? And that is also depending on how you diversify it. The world is a little bit in -- all the work we did towards China back in time with the low cost, we just hammer in China, China, China, we came extremely vulnerable. And especially now, and also with the U.S. and also we're really depending on the U.S., but we got way too dependent on China, that's why we diversify now and building a supply chain in India as well to ensure we have a complementary. And there will need to be something in Europe as well.

Perhaps just adding to that. So to have really the whole industry scaling up, of course, there is a dependency from -- everywhere from -- all the way from policies to permitting to actually orders to supply chain capacity buildup. And to get that going, and there is events like COP26 is important because it actually creates some clarity of the intent where the industry is going and also the politicians getting behind it. Because that's, by the end of the day, if you don't get visibility to the market, how it actually will grow, then there, of course, there will be a lack of investment will.

A question from Claus.

Claus Almer from Nordea. A 2-parted question regarding quality. So the first part of the question is, when you look at provisions, you're looking at a lost production factor that has gone up for the last couple of years. Is that mainly the EnVentus platform? Or is also the 4-megawatt platform? That will be the first part. And the second part is, as you didn't really address all these quality issues we have seen for the last couple of years. Is that due to it's solved and fixed, so no more? Or where are you in the whole repair of quality and efficiency in the production?

So I start. So first of all, I don't want to go into the details of our provisions. I think I would happily leave that to Marika to the extent we want to comment on it. But I would put it like this. So of course, if you look into what I presented as a first slide, when it comes to how the volume is distributed in the market, you can see where we have the big volumes. And of course, that also corresponds to where we have had quality issues. So I mean, you don't get a big quality issue of something that's not in the market yet. It is what in the market that we've been fixing. So I think by that being said, as well, we're very confident in that we are actually doing work in a more prudent way today that -- I mean, it has been a big growth for the company, and we are working a lot in our methodology, our simulations, our way of predicting quality. I can say I'm very confident in the way of working, and we see improvement in that. I don't know if you want to comment, Tommy?

I can just add to what you were saying, Anders. I've been in the company for quite some time and also see how we evolved and also the growth, but also the handovers between the various functions between Anders and my function, which we have changed. We're not allowing that you just throw something across the fence. No, it's a collaboration. We're forcing people together. So we changed the product -- the way we're actually launching products out in the factories. So you will never launch in the factory if we don't pass an assessment, each individual a time. So -- and that's why I actually talk about how you get into everybody, so it starts with me. So it's not just, hey, the product is what matters. It's also the processes around how we deploy and how we deploy out at the end of the value chain. So I would say we are in a very different stage today than we were 2, 3 years back, no doubt.

Let's take another one from Mark, yes?

It's Mark Freshney from Credit Suisse. Anders, I was intrigued by the -- on your slide, when you spoke about modularization at the plant level. Does that mean that -- because as I understand it, different parts of the world, different factories specialize in different machines. Does that mean that you'll be able to produce components for any type of turbine at one factory? And just secondly, on scaling up. I mean, we've seen in the past, for example, the offshore platform started as a 7-megawatt, got to a 10-megawatt. The 3-megawatt platform started as a 3-megawatt, I think, got to a 4.5-megawatt. So the rule is it can go up 50%. Should we think about EnVentus in the same way? Or is EnVentus able to scale up a lot more?

So if I start by the last question first. So I won't give you a prediction where our next product will be. That would probably be a spoiler. But as you said, the history shows that you have -- when you enter into a new platform, that is a starting point for something that you're able to stretch. And I think the key issue here, having a flexible platform is that we can take those steps going forward as well and without having the same amount of change. That will be my key message when it comes to EnVentus. So the first question was?

In terms of manufacturing, at the moment, I believe that different plants in different areas of the world specialize in different machines. Is it -- will it be the case that with the modularization that you'll be able to produce many different versions of turbines in different plants, you won't have the same specialization in production?

I would say that would be the target. But of course, it takes a while before we have the full modularization across the platforms.

But I think to add to that, we're actually producing more or less all turbine types. We have both the 4-megawatt and EnVentus in more or less all assembly lines already today. So we are multilines out there. But there's no doubt with the modularization really keying in on the next version, that would help even better. And also link that with the offshore side, that will -- there's just some dimension in the offshore, there's a different on the 400-tonne versus the 100-tonne thing you need to work on. But each factory has to be able to do that going forward. And we need to be able to launch all products in all areas as well.

Thanks, Tommy. We'll have a question from the line. And first off, we have Sean McLoughlin from HSBC.

Yes, a question for Tommy, I guess. Just thinking about your comment on long-term agreements. I mean, it sounds -- it appears to me that's a sign you're somewhat nervous about maybe locking in supplier capacity. I mean we've come to structurally higher volumes in the onshore wind market, certainly. And if you had offshore wind on top of that, I mean, where are the key bottlenecks in the supply chain that you see over the next, let's say, 3 to 5 years? And how are you protecting yourselves from price fluctuations that you are signing in your long-term contracts?

I think, first of all, we are going to see also some specific parts. And also that goes together the design, how we design the turbine, what products are we using in turbine to ensure. We have been making long-term agreements before, but this is actually related to timing because they need to be a part of the development phase as well and therefore, being ready. What I'm concerned about is also what we've seen in the past, the supply lines comes in too late because we have not given the visibility to them. And they have been probably a little bit reluctant. And also what I said, we're going to work with a few bigger companies because we need to have a muscle as well to go into this and be ready for that growth. A specific component I don't think I can point out, but we're getting to some sizes where investments are heavy that need to be made. I can say going to ZF and seeing for the next 15-megawatt gear box, that's a massive thing and investment for those guys and tolerance that they have to work within. So how do we match that between the technology development, the physics and how actually we're going to make the investments. That's probably some of the areas where I'm -- if I should be concerned. But when you have good partnerships and also strong capabilities, then I'm not so concerned.

And then Tommy, probably on the latter part of the question from Sean. In terms of how we secure ourselves on the cost inflation?

Yes. Sorry. Yes, what we're doing, what I said earlier on, when we're locking in a project on a firm order, then we are trying to lock in on the commodities, especially steel and so on because towers are specific, so we are locking in the steel in that point of time, so we don't have the fluctuations. But there are part of our value chain where also, there are no indexes below because they're doing them by something resin and so on are driven by something simple as chlorine. The next is disruption probably is there's not enough chlorine. And how do you come that and make that indexation? So what we're doing, we work in upstream and supply chain, get to the chlorine guy and actually, how can we make an agreement with them, try to see. It's difficult because they're in a very different market situation right now.

Thanks, Tommy. We have the next question from Martin Wilkie from Citi.

It's Martin again from Citi. Just a question in terms of the structure of how the contracts are working between your customers and then down to your suppliers. I mean, is this problem solvable in terms of the visibility that you have from developers, given that they often -- there could be a time difference between signing a PPA from the developer to when you get that, when you then sign it with your supplier. I mean, is there a bigger issue here that the industry overall is not quite aligned as to when they all sort of lock in their risk?

Yes. I think that's a good question because when you're selling in specific markets, you're selling at 2 or 3 years out and you have then the fluctuation in indexes running, and they are in some kind of a financing truck, that is a challenge, I can say that. And can it be solved? I'm sure, but this is where we need to play the full toolbox. Is it solved fully now? No, it's not a totally efficient market, either.

We have a question again from Kristian from SEB.

So Tommy, on one of your slides, you show 6 bullets with mitigations on the cost inflation. I mean some of it like hedges on steel you have done for a long time while the Maersk agreement is new. So can you maybe be a bit more specific and highlight some of the new initiatives, which should have the potentially biggest financial impact that you're taking as a consequence of the recent inflation?

I think when you come from 6, 7 years where you had, had steady raw material price and maybe fluctuating 2% or 3%, but now we look on a much broader scale than just steel, we look into copper, aluminum, et cetera, where we have a substantial use. And that's what I tried to say that we're using all the toolbox -- all the tools we have in the box. And we probably had to combine even more than what we've ever seen before. So we're talking to resin, as I talked to you before, and that's why I say we have to go upstream to see what we can do and also to handle that.

And then we have a question on the chat for you, Anders. Whether you, in some shape or form, can quantify some of the benefits we can realize from modularity?

This is a question you often get, but I will not go into cost predictions, right? That's the first thing. But the benefits that we will get, we will get faster to market. I mean the development time goes down because you don't have to do full development of the full product. We can develop subsystems and we can employ -- deploy them faster. So time to market, we see a significant opportunity. I will also say that on the CapEx reuse, meaning that we don't need to do everything new again, of course, the CapEx efficiency will be better. When we look into blades, we have the opportunity to make them more scalable, that will also give us faster time to market and also better capitalization of CapEx usage. But I won't -- I'm sorry, I won't go into the quantification of it.

Thanks. There is also a question here on the chat for you, Tommy, in relation to the extraordinary cost impacts for this year. How do you see that evolving into next year?

'22 will be difficult. Just to put it blunt. There are still disruptions as an omicron came 3 weeks ago, and we still see disruption, 400 vessels still in front of L.A. Port. So that's going to continue to '22, and we have to manage that and try to mitigate whatever we can mitigate. So I foresee, still, there will be a challenge going also into '22, for sure, and throughout '22 because we have to remember when we produce, there's a time lag until the turbine get installed. So that will -- it will haunt us at least far away into '22.

With that, if Julia, you're ready, then I could see Frank had a question.

I have a question for probably both of you. How do you coordinate your decisions on operational risk management to make sure -- and how do you do that with sales to make sure you don't commit to something that gets you outside your risk limits? And how often do you review that when the world changes, and when standard deviation event changes by definition every few weeks?

We basically do it every week because we have a portfolio that we work on of around 400, 500 projects. And of course, you can't flip all projects, but you need to be able to mitigate and that's what we work with. So we have a logistic function that sits in the middle between Javier and me, actually have a dual report line, both Javier and me. So it's very, very important that we also reflect because it's not just on our supply end, it's also in the customer end that get delayed, they can't get his substation and he can't get grid. So we want to supply in the most efficient way. And we basically don't want to utilize a vessel going to Brazil if we can't get it up there anyhow. Then we'd rather use lines to go into U.S. or whatever it might be. So that's a constant coordination and probably a bit wild west for some times, but I would say that we've been good at it. But it's not efficient fully due to the disruption from outside.

And that moves also into the collaboration as we see more structuring problems. We also look into opportunity to sign our way out of those problems using other materials, other solutions to actually get us out of it. And I think we've been pretty successful in actually avoiding that. We've been able to keep the volumes in a good way. So I mean in spite of semiconductor lacks and so on, we've actually been able to keep ourselves running.

And that can only come by if you're really working close together and having the teams together and constantly be alert. So we have constantly been monitoring, especially on the semiconductor market we've not had any disruption this year. But when looking into something next year that we need to find a solution about, and which we do together.

Thank you, Anders. Thank you, Tommy. That concludes the Q&A session here. We will continue presentations 20 minutes past 3. [Break]

Allow me to bid a warm welcome back to the next session. It's around 3:20 in Copehagen. Thank you very much. So as we start this next session, we will start with Service, and then we'll talk about the financial position and then have a Q&A. My name is Christian Venderby. I head up the Service business unit for Vestas. I started with the company in 2006 and spent the majority of that time in the U.S. business unit. But since '14, I've been in my current position here running Service. So we will go through a bit of a background fact sheet, talk about a bit about the market from a Service perspective. And then I would like to move on to talk about how we capture growth and continue our profitability journey. So a bit of facts. As we heard in the morning as well, we have 124 gigawatt approximately under service agreements. And these are all long-term service agreements part of our backlog. We have around 10,000 sort of customer-facing service technicians worldwide in around 77 countries. And on top of that, we have engineering functions, supply chain functions and sales functions. So altogether, we have more than 11,000 people working for the Service business. We have also built a healthy backlog of EUR 28 billion. That's, obviously, the future contractually secured revenue, and that covers around 51,000 turbines. And as some of you might know, the average length of our backlog, the duration is just over 10 years in terms of contracts. Talking about the volume and the size and our footprint. The 124-gigawatt, obviously, has 6 in the offshore business. But a fact that I wanted to highlight here is that when we look at other OEMs, we probably add 2x or 3x at most on the Service on an annual basis as the next player and 8x to 10x what we see from the largest asset owners in the wind business. And this is obviously important because it talks to the volume growth, and it talks to the scale potential we have as we move ahead with our Service business. Looking at the market very briefly. I think this is probably known facts, but let me just go through it one more time. We expect here, over the next 10 years, roughly, towards 2030, that the Service market can grow to approximately USD 40 billion. That means an annual growth rate of around 7%, much higher growth rate in the offshore, obviously, with around 50%, and then leaves the onshore with 4% to 5%. What is also worthwhile highlighting here, I believe, is that when you look at the absolute value-add per year, the offshore Service segment actually as much as the onshore Service segment. So this is, of course, something we are keenly following. I'll get back to this a little later how we position ourselves to work with the offshore Service business. Another element in the market dynamics is obviously that turbines get older, no surprise there. Over the next 4 to 5 years, we actually see almost a doubling of the share of turbines more than 13 years old in the distribution, in the installed base. So close to every 1 in 4 turbines will actually be more than 13 years. It matters because these turbines needs good care, maintenance service agreements. They are also probably more relevant for repowering, which is another activity that we see growth in our Service business. And then finally, obviously, as we have heard from Anders here today, our turbines do get bigger. And it also means that measured on a megawatt basis, the O&M prices come down, but we continue to see growing in the installed base. And obviously, that market dynamic does not, let's say, dampen the growth potential as such, which is still in the numbers here. So when we look forward for the Vestas Service business, I would just like to emphasize that it is a very robust foundation for continuous stable sort of profit for the company. We continue to deliver operational excellence to our customers, and we are focusing on digitalization to really capture our scale advantages. I'll go through a couple of examples here in a second. We have talked about LEAP, Henrik mentioned that. This is really our operational model for the global Service business. And it's not so much, let's say, a software deployment, even though we're very happy to partner up with, in this case, Salesforce.com. But what it does is that we are now streamlining and leaning a global footprint, a global operating model for the entire Service business. This has been ongoing for a couple of years. And we have seen really good, let's say, efficiency gains out of it. In some cases, more than 2-digit percentages in our cost base. And what we're going to do in 2022, that's going to be a very, very, let's say, a busy year for the Service business as well. It's when we're going to roll out the downstream activities, which means that our Service operations, the planning, the scheduling, the supply chain and how we actually deploy our service technicians will be managed in a new system. So we're optimizing these processes. And with that, we're systematizing it as well going forward. And this is obviously a critical component for our future cost out and scale advantages across the world. We also continue to harvest the advantages that comes from having energy analytics and, let's say, machine learning. And here, we are deploying now at a much, much, let's say, a bigger pace or faster pace rather, we are deploying these algorithms that help us move from unplanned task handling to planned task handling in the field. And this is obviously a major advantage as you run more than 51,000 turbines worldwide. So here we have on our digital software platforms, we basically have 3 value drivers. The first one, as I just mentioned, is it helps our operational excellence. It helps us understand how to predict potential failures and address it before it becomes even more expensive. It also supports how we continue to enhance our value proposition and add our -- to our Service solutions. So of course, we talk about AOM 1000 to 5000 offerings. But the full scope offerings and the long duration makes up about 80% of our future -- our existing business, our future business with our customers. And of course, as we continue to be more advanced in this, we can then adjust the risk share with our customers, and this is another key value driver we see from the digital platform. And then finally, and in terms of numbers, not big yet, it is also Software as a Service, and we do provide digital solutions to around 30-gigawatt of installed turbines worldwide that comes from our Utopus platform, and that continues to grow obviously with time. We have also looked into new more, let's say, yes, just new software solutions. And we launched Covento earlier this year. And we are looking at how can we actually simplify the aftermarket for the renewable energy sector. It's complex. And if we look at how we actually source procure ourselves and we look at how our customers go through the same, it is here where we can actually start adding some new solutions to the market. Again, it is not yet a big revenue stream, but the business model that we will roll out here connects this B2B so we don't have to fulfill the orders ourselves. We don't have to put all these different components and parts on the shelves. Of course, we have many already that we sell through our shop, Vestas. But this is the opportunity to remove complexity and ensure that the sellers and the buyers can actually connect on our platform, and then the value we provide is transparency and easy access to search for these different components. We obviously will start in a few markets. We will obviously start within wind. But if the potential continues to rise and right now, we see a market that is around EUR 2 billion worldwide. If that continues to be there, and we believe so, we will expand this potentially. So right now, we're very excited about launching this platform to the market. We also sort of in the more, let's say, in the physical world, we also see the advantages of robotics. We see advantages of new drones and other tools in that sense. Of course, this is something the industry has been working on, but it is still a very good illustration of how fairly small investments with partners can help drive cost out and efficiencies in the aftermarket in the service business. What we bring here is drone inspections. We are doing more than 25,000 turbines and a lot of these is on the blades, obviously. But the real value comes from the insight we gain from the intelligence of analyzing the data we capture. And this is obviously used both to understand the turbine performance, but also when and how we would want to upgrade or repair parts, or blades in this case. Something which we haven't really talked much about yet, but we call it BladeRobots here. It's actually right now almost ready for commercialization. It's a tool. It's a robot that we can attach to the blade. And then we can do minor repairs or cosmetic upgrades that would help ensure that the life and the performance of the blades is actually supported through a fairly inexpensive repair methodology and especially compared to the time we spend if we don't have a robot like this. So this is just examples of how we continue to drive also in the field new tools into place so we can support our customers differently, while we also reduce the cost base for them. I mentioned offshore before. And in the service business, we actually have more than 20, close to 25 years of experience. We have installed about 5-gigawatt. And of course, we have been part of the operations and managed activities in that space. We have the ambition to be the leader in also for the service offshore by 2025, so about 5 years' time. And what we bring to the market here is obviously a very large onshore business, by far, the largest. We will leverage that infrastructure. We will leverage our engineering, our supply chain and our training for technicians and of course, our digital tools and bring this to the market. The offshore service has been fairly and is fairly fragmented with a few asset owners, but it's pretty clear that over time, with the growth, and close to around 30-gigawatt is the expectation over time, that it does make sense, in our minds, to actually work with partners and also here, Vestas will play a very, very important role to drive, let's say, a different value proposition for our customers and the asset owners in the offshore service business? So with that, I mentioned we stand on a very strong foundation. And we actually, of course, it's very difficult to look into the next 10 years also in the Service business with a large backlog of EUR 28 billion. But we do see a path to doubling the current EBIT for the Service business towards 2030. So in other words, it will become, in rough numbers, EUR 1.1 billion of EBIT in 2030. And this is linked to the activities I just mentioned. So we expect to see better than market growth in the core business. We also expect, of course, to continue to see efficiency gains and cost-out opportunities and optimization in our core business. We will go after the offshore opportunities that has a higher growth rate. Obviously, from a service perspective, this kicks in towards the end of the period here for good reasons, because the installations happen in '25 and beyond, and we will then capture a good chunk of our Service growth in offshore from then. And then lastly, smaller numbers, obviously, and a low starting point, but with a high growth rate, we will see our new revenue streams kick off. And that will also start to, let's say, present itself as further EBIT support as we move in towards the end of the period here. So I think in summary, the Service business continues to be a very robust foundation for stable and predictable, both growth and earnings for the company. We are focused on delivering operational excellence to the market, and we do that more and more through our digital capabilities and our -- and therefore, supporting, say, the scale advantages that we can bring to the market here. And with the growth of new installations and with, let's say, the renewal rate that we see with our customers, this is sort of what makes us communicate here that we can double the EBIT level over the next 9 to 10 years. So with that, over to you, Marika, and we will take questions here in a second.

Thank you, Christian. I'll do my regular clean up. So good afternoon, everyone. I have the pleasure of being the last one on the agenda. But I also think and hope my colleagues, what they have described to you throughout the day, gives you a good feeling of that we have a consistency in the way we work, the focus that we have. Because I think what you can see, despite the circumstances in the market right now, we're continuing our focus and continuing delivering. Having said that, I will talk a little bit about the financial situation, which I don't think anyone is unaware of at this point in time or at least I hope that you're not; also talk about the ambitions and what is the path to actually reach the ambitions, which we've had for quite a long time at this point in time; also talk about the sustainability and our ability to actually invest in sustainability, thanks to the strong balance sheet that we have. So what is financial stability? We talk a lot about the EBIT of the company. And I think we have not reached our own expectations, neither your expectations, but we have a very strong balance sheet that we don't talk that much about. I heard, a few years ago, a lot of comments around we were too conservative. We were too prudent. I think the prudence have served us quite well. You heard Henrik talk about the longer term or, at this point, probably medium, long-term ambitions, which we have, for the first time, put a year [ or 2 ]. They are still, I would say, pretty ambitious, still very valid and what is it that will bring us to these targets at this point in time. You heard Anders talk about the technology, where we are and the strong market presence in the onshore space. We also acquired the offshore, as you're fully aware of, which gives us a big potential. I don't think anyone is unaware of that. Also, the leverage that we have overall for the company in terms of how we run, how we operate, which we will also talk more about. So all of the foundations is obviously what brings us to the targets that we have on the medium, longer term. We have, as you heard Tommy talk about also the [ boss ]. We have extraordinary cost impact. I don't think anyone have been ignorant to that. And I always said that every year, there is something new in Vestas. And unfortunately, I have been right. It seems like from here to eternity, but it's been ongoing for quite some time. We had the auction, which we went in all the whole market obviously went into. We had the tariffs. We had the growth pains, as I would like to call them for at least a couple of years, then we had the nice COVID situation. And now we have all-time high cost throughout. And I think everyone here is also aware of where will there be shortages. I think that could be very well be expected going forward. I remember, Claus, you said, are you on a good path to actually reach 10%? And I think if I extract everything that is extraordinary, then we can debate what is extraordinary. But I think you see on my pie chart here, it's a lot of extraordinary, and the logistic part is -- transport is a killer right now. And I think that's probably the part of any business that is doing terrifically well at this point. You also know that we had provisions that were higher than what we normally are. And then you have the extras, which is obviously the COVID situation and not to forget the raw material. And if I look at it, we've been debating steel from here to eternity as well. If I look at the resin part now, carbon, yes, definitely, but resin is a significant impact for Vestas and I would say our industry. Fixed cost is the part that we control very well. And due to the situation, although record-high volumes in '20, we managed to keep the fixed cost at a very low level for obvious reasons as well as no one could travel or pretty much do anything at that point in time. We will continue to be very cautious on the fixed capacity costs, as we have been and should be. It's very easy now to get a little bit excited about the offshore, everything new that's happening for us and also continued to leverage on the operating model we have. We are actually swapping costs where we see that business is happening. This is one thing that we have done very well, continue to do very well and is a good stability for us apart from the Service business, Christian. We definitely invest to capital synergies coming back again to the strong balance sheet that we have. We have cash. That's a great enabler. That is also the future for the company despite the situation right now. We will continue to invest in the offshore space. So the 50-megawatt is an obvious one. Is it free of charge? By no means, and I think you see that on the level of CapEx that we have. And obviously, after we have developed the product, you will also have -- or we will have to invest in capacity. But it's also a super interesting space to be in. The growth is fantastic and it continues to balance the company. Net working capital is one thing that we also have been discussing. In '19 and '20, we have, to a very large extent, utilized the balance sheet, simply because it's strong. So we have had a lot of inventory. I don't think that's any surprise to this group of people. You've seen it. You heard us talk about it. But we also see the inventory management as a great enabler to do something similar to what we did in '13, i.e. get the working capital even more efficient than what we have today. This will depend on the demand in markets for obvious reasons. It will also depend on what Tommy talked about the industrial footprint. And I think with everything that's happening in the world today, with the transport and everything, I think what we have done on a continuous basis, that is revisit where we are situated, where our suppliers are situated, will continue and probably be swifter than what you have seen. You will also see more and more localization, I think, not the least within the offshore space, but I think it will come across the board. So what are the drivers to long-term EBIT? Again, you heard Henrik say at the beginning, we will not give you the numbers, but we will give you the path. And what you see here is that we don't think a 10% EBIT is unlikely. We have put a time frame to it. Our ambition now is '25. And you also see the size of the bubbles is obviously representing the importance of them. And there are a few obvious ones. At the end, you see the technology driver getting actually paid for it. The cost side will be reduced. Will it be reduced within the near future? I don't think so because we see inflation is in the economies as we speak. You will also see a big contribution from the stability factor that Christian talked about, i.e., the service part. You also see the contribution from offshore as well as onshore from a volume perspective. Quality will also be a very important factor, as you asked about earlier, Claus. And I hope also my 2 colleagues give you an answer, and it very much correlates to what we have said before. So Vestas venture is another part that is extremely important for us. We've said that should we buy another big OEM or win asset at least. What we have been focusing on, buying technologies, serves us very well within this field. I think a lot of you have heard me say also that a lot of the cost reduction will actually come from installation, not the least within the offshore space, but also onshore. But offshore is probably the given one because you have 2/3 of the cost relates to installations. So you have to develop Anders for installation as well. So here, you see some of the things that we have been doing, and it's wooden towers. I've actually asked Mathias. I was sure they will not be part of any fire. Obviously, that is secured, just to say that. We will have the first one up in -- or at the end of next year. It's going to be super exciting. And it's also the modular part coming back to transportation and cost for transportation. You also see the Salamander, which is the lift you can get up to 200 meters. Me and Anders have been part of looking at this. This is a Swedish invention. So it's going to be very, very interesting. And speed is of essence. I think everyone knows that here, and this is a great enabler for us. So again, coming back to the strong balance sheet, does it serve us? Definitely. Key takeaways is what everyone have told you. It is a super challenging environment as we speak. And it's almost changing on a daily basis. Do we do quite well in managing the situation? We do. And you see the focus. You see, we're not forgetting about the future, but we're definitely trying to preserve the now. The financial strength is obviously a great enabler that I've spoken to you about. And Christian knows we have done some acquisition also in that field. And you now hear us say that the 10% EBIT, with what we see right now, should be likely in '25. So it's less blurry. We don't give you the full bridge, Claus, but it gives you a good flavor of what we're aiming for. So by that, I guess, we're into Q&A.

Yes. Thanks, Marika. If I can ask you to go over here.

Yes.

So once again, let's take a couple of questions here from the audience. We'll start with Mark.

Mark Freshney from Credit Suisse. A question for Christian. Just regarding your Services. Services has a massive scope of stuff that you do, right? The most valuable products are the ones that the availability guarantees is my understanding. But some of the growing bid is working with clients putting retroactive upgrades onto the machines, where clients have been quite reluctant to take those. And there's other parts where multi-brand servicing, which can be quite competitive. So can you give us an idea of the margin breakdown or spread within those activities? And where you think the biggest opportunities are for growth within the growth, if you like, which are the slower growing parts?

Yes. There's no secret that when it comes to the service, you're right, it's fairly complex. It's not for anyone to do. There are the basic services, the more preventative. I think many can do that, and that's also probably where the margins are less attractive. When we then move up in terms of the advanced solutions and we provide the availability guarantees, this is the product that actually sort of is what we sell more than 80% of, and this is also where the margin is much more attractive. And if you then break that further down, obviously, if we go to the older turbines and we start the new powering activities, that's a very attractive segment as well for us to be in. So I think that's probably how to put it. We continue to see good demand for our long-duration contracts and the full-scope contracts. So that's also where we will see the growth when we talk about some of the solutions, at least from a -- let's say, from a near-term EBIT perspective. And then as I said before, on the longer term, we will see new revenue streams come into play that is probably more in the space of digital solutions with higher margins, obviously.

Any further questions here from the room? We have Claus.

This is Claus Almer from Nordea. To you, Marika, one of the questions asked earlier on about the revenue trend for the coming years. And I know we don't give guidance for '22 and beyond. But in the past, at least, you have given some indications about the direction of the revenue. And then coming back to the overall market trend going down maybe for the next couple of years, do you see also revenue from investors onshore going down? Or will you repeat past message that is not going to decline?

I would say that if you look at the overall, I would say, demand and picture of the renewable industry, it's hard to see that it will go down onshore. Also, if you look at the U.S., which we have spoken about quite a bit, and you see the likely 10-year extension, you also see the targets from different countries when it comes to wind. You also see the demand now or installations probably is the right word in Germany starting to pick up. And is it at the same level that we have seen before? Absolutely not. So from my perspective, we also had a very interesting discussion at the beginning of this week and actually a Swedish company, a big one. And they say we're totally independent. We have wind supporting us. So really merchants. And obviously, with the on and off and the cost side, as we speak right now, anyone that can be independent is in a very advantageous position. And obviously, Javier has a great job ahead of him capturing that opportunity as well.

Okay. Then just another follow-up. But the 10% EBIT margin, 2 things to that. First of all, is that depending on your venture business and the CIP investment? And secondly, why didn't you choose to break out some of these external headwinds that you have been facing this year and last year?

I mean from a number perspective, I think we've been as specific as we would like to be from a cost perspective. I think when you talk about CIP specifically, I think you saw the buckets that will be the biggest contribution to a 10%. And obviously, there, you saw offshore, onshore. You saw the quality. You saw the cost side. You saw the technology. So that should give you -- and not the least, the service side, sorry, Christian. And that is really sort of the base foundation. And that's also why I said, started sort of this presentation by saying you see what the colleagues are doing. And obviously, they are not doing this on their own. They have a lot of team members with them. But it also shows that what we do now, we are investing in exactly getting to the point where we want to be. Do we control everything external? Absolutely not. But we're trying to be less vulnerable as we speak.

Is there any further questions from the room for now at least? No? Then let's go over to the virtual option. I think we have Deepa from Bernstein with us.

I hope you can hear me? Yes.

Yes.

I have 2 questions for this session and then 1 follow-up from the previous. So I hope I can ask that. So firstly, just on services. I wanted to ask Christian, what is the risk that you see from many of your customers moving to self-service, particularly in offshore wind where the customers are fairly sophisticated? And how do you see that play out? And maybe it's not relevant by even 2030? But in onshore, how do you see the situation, particularly as many of these customers have these big targets and so on. And Marika, a question for you on the 10%. Obviously, I would have normally asked you to break down the bridge, but if we were to sit here in 4 years' time, and they're not quite at the 10%, where do you think the assumptions may have gone wrong? And I think the third question I wanted was for honors on the technology side is just the bet on, obviously, the gear box technology for offshore, which helps you with cost and synergies. But I'm just wondering what is the feedback from customers who you've been using your competitors, direct drive turbines? And whether that -- do you see that as being a disadvantage technologically? And then maybe you can explain to the [indiscernible] engineers on where are the disadvantages and advantages of that?

Okay. So you...

Yes, I think we'll take that. This is for Anders when he get here also. So on the in-sourcing or the offshore and onshore, I would say we haven't seen major shifts in the trends we have discussed over the years. We have many customers that actually have built capabilities to perform some of these service activities themselves, who continue to work with Vestas investors as a long-term partner. And they do that for 15, 20 and 25 years. And this is the balance we have found. So frankly, it is also supporting, of course, our value proposition. And we continue to both be competitive, and we continue to provide the service quality that the customers are looking for over the life of the assets. Now when it comes to the offshore, I mean, I believe I mentioned that we have a different starting point. And obviously, the large asset owners, they have had to build their own capabilities. They have a presence. They run operations and maintenance. I believe that this will change over time. And it's probably not going to change in the next 2 or 3 years dramatically. But as we get, of course, a major presence offshore, it would make sense to look at how to set up service hubs that can provide activities across technologies and in different regions. And this is probably where we'll see it play. So for me, it becomes that logical combination of, let's say, forces from the asset owners and from service providers and the OEMs, where we can sort of leverage the synergies together and bring it forward. And obviously, when it comes to the turbine technology, we will be in a very, very strong position to continue to support, let's say, the life optimization of those assets. So I think this is the shift we expect to see in the offshore service market over the next 3 to 4 years.

So if I -- Deepa, if I start with the 10% margin question, obviously, the less control from our side is the cost side. So I would say if we're not at the 10% in '25, it's more a cost -- on the cost side where we have anticipated wrongly. But obviously, the journey is on, and we're planning to be, as I said, less vulnerable. And I think that is a very important part of getting to a 10% margin. And then I could probably give the technical question to you, Anders.

So thank you. So the question that there's been a very long position about direct drive or actually geared drive. So we stand very strongly behind the choice of going with the gearbox. And there's a couple of reasons for it. One of the biggest reasons is that we actually take -- as the turbines become bigger and bigger, you end up also having the tip speed increasing and increasing if you want to keep a certain rev -- certain RPMs in the generator. So if you can't gear that in any way, you keep increasing the speed way much. And that reach into erosion problems and other stuff. With a gearbox, you can gear it down, and that gives you a benefit from that perspective. So there's an offset on the service side, which is a gearbox take service. But on the other hand, you have less rare earth metals as well into a geared solution compared to a direct drive. So with those main arguments, I would say we stay by absolutely sticking with our gearbox solution. So we have no plans for a direct drive.

Thanks, Anders. Any questions here from the room, [ Mark ]? Sorry, [ Mark ].

Marika, it's perhaps a little bit unfair because I ask you or I ask Henrik this question every single time, but I'll ask it to you now. And it's clear that your machines bring a lot of benefits to clients, right? The power price that the clients get has gone up over the last year. That should more than offset the increased logistics costs and the other bits and pieces. So presumably at some stage, once the indigestion work through the market, there's a conversation to be had with clients to say, "Look, we're going to put up the price by more than the input costs." They need to go up so that we can recover our past investments and the benefits of our innovation, right? And with the industry as, I think the slide earlier pointed to the big 3 or big 4 players having 89% market share. Presumably, as the industry leader, at some point, you need to have a conversation with the clients saying, look, prices are going up steeply. Do you think that's possible? And is that kind of conversation, something that's completely not within that bubble bridge that you put up?

Yes, of course, when we talk about technology, we talk about the pricing and the pricing power. The pricing power within this industry is different. If you look at our average sales price compared to anyone else, we're obviously increasing. You don't see the levelized cost of energy reduction at all at this point in time. Having said that, I don't think it's only the customers. We're having the discussion with customers, trust me. I would say Henrik is probably, on a daily basis, having those [ 5 years ] more than once a day. I mean, that is part of how we operate. But it's skewed because you have a super high demand. It's not only up to the customers. Maybe the customers have been offering too low of price to any government, but it's the whole chain that needs to obviously have a reset. Will that come? That's part of the discussion. But it's a very odd industry in the terms of pricing power and demand is not correlated because you have the time gap in between.

We have a question on the chat for you, Christian. In terms of the cost inflation that we're seeing, how is that impacting the Service business?

The cost efficiency?

Cost inflation.

The cost inflation, thank you. Of course, we're not immune to price increases on transport and the supply chain, that's for sure. It is a different cycle. And we are -- of course, we have more predictability into what we need in the Service business. So it also means that we can typically source with a sort of a longer time frame. But for sure, as cost prices go up, we will see that impact into, let's say, the service cost. Then the way we are structured commercially helps because our long-term service contracts are typically attached with an adjustment to inflation. So this is where we have a way to share that risk with our customers over the life of the contract. So from a -- let's say, from a bottom line perspective, the impact is very limited.

Thanks. Marika, a question for you on the chat as well. We have been hearing about the cost inflation also continuing into '22. I know you've been getting this question a lot. But is there anything you can say in terms of margin developments going into next year?

I mean it's clear. And I think it's clear from -- for everyone. The cost pressure is continuing. We don't see the signs of ease. We actually saw a couple of months ago, a new soft in the raw material that is bouncing back pretty quickly. Transport, for sure. I think also land transport. If you look at it, the semiconductors is obviously impacting the truck industry, which means that it's an inflation also in what you get paid for an old truck at this point in time. So don't expect cost pressure to ease off in '22. I think that is a bit too premature.

Thanks, Marika. There is no more questions on the line. If I can just confirm that with, I think, none on my side at least. Is there any more questions here from the room? To a question on Marika? Great. Then I'll actually invite the presenters up to the stage. We have a couple of closing remarks from Henrik, and then we'll do a short joint Q&A on the back of that. Okay.

Thanks. Thank you. I will say also to the room here. I know today, it's been particularly the circumstances around getting here in person. Also the latest number that was online is close to 600 people that are following this on an online basis. We also shows, first of all, the interest but also a recognition of, of course, first of all, for where is the world and what's the world happening on the energy transition. I think for us, as you can hear throughout the day, there is an upside in this. There is an upside in the -- both the short, medium and long term. I think in the short term, for us, it's very much about being out there, influencing some of the early leads and also some of the things that goes on with the individual countries. You've seen that today. You heard it from Tommy and Anders also that our machines and solutions have to be much more integrated and much easier to make flow around. And I think that scalability, we're working down hard in getting the scalability. Are we some of the ones that have probably done most training and most practice, both in a good sense of learned and in a hard sense of learned. You can hear that today. Then from here, I think there was a couple of things that were said a number of times, think differently, work differently, but that also goes, stick with the 80% that really works. But I think here, it's an invitation for a number of partners to actually be part of that scalability. This is we can't do it alone. And that is something we have learned in the last couple of years in that sense. The other thing I hope I really want you to take away today is also just the following. I think I really have to thank a few of you. There is always some usual suspects. I'm not looking at any one special mark. But there is always, in a room like this, it's a day where everyone gets their fair chance of getting questions and everything else. And it's actually cool because some of us see you regular on a quarterly basis. Others up here, it's either the first time or potentially the first time I get exposed to you. Really, thank you for that because it's nice from a team perspective to have this. So I'm pretty sure we are leaning towards having that on the next Capital Markets Day as well. Tommy, you mentioned you were the COVID [ head from XEM ], which also means, as you can see from the team here, we rely on one for all and all for one. So Tommy did his COVID, and thanks for that. Tommy, it wasn't always easy, but it actually means that there is somebody that takes the decision on behalf of [ XEM ]. When it came to the 19th of November, Christian, you didn't get much sleep. No question was the one that headed up our cybersecurity, but it also just means on a team point of view on this [ XEM ] team, it is actually something where we think today we can operate both as individuals on behalf of the whole company, but also across. And I think that's important for us to also give you that certainty that what we see up here is a whole bunch of experience we can work as a team today, but we can also work and operate the company as individuals, which is an enormous strength when we also wanted to address the scalability, but also the quality, which has also been discussed. So with that, on behalf of the team, I just want to say really warm thank you for coming. For those of you who traveled in and spent that and going through all of that testing, [ Mark ] and others, I know how cumbersome that is. It's really much appreciated because that gives a day like this a completely different life to stand here and present to a proper audience. So thank you for that, guys.

Yes. Thanks. Let's open up for one last Q&A. So if there's any questions that has been piling up during the day, now is the chance. If there is any from the room, we'll start there. It doesn't seem to be the case. So good job to the entire team here. I don't think we have anyone on the line either. So just a warm thanks for coming. Thanks for dialing in online as well. And before we end...

Just one little thing.

We just have one little thing.

One little thing because, for somebody, this is the last Capital Markets Day. It could very well be the last Capital Markets Day ever, until you sit in a Board somewhere. But it's only fair from us as a team, and I hope you will join me in that. There will be plenty of opportunities to say also in beginning of March, a proper goodbye to you, Marika, from a Vestas point, welcome to Hans Martin. But right now, we need to live without Marika. And we believe there is a life after Marika. But as a team -- and Marika, I've known you now since you joined Vestas in '13. It wasn't that fun, but it was tough. We know that because we spent a long time together in weekends. And I cannot on behalf of [ this XEM ], I cannot on behalf of Vestas, I cannot, hopefully, on behalf of shareholders, thank you enough for the time you dedicated to Vestas. When you came in, in the current pricing, it would have equaled DKK 5. And so I think here is a recognition. This is the last time on a Capital Markets Day we can say thank you in front of everyone. We will then invite you to do a reception. You can come and say [indiscernible] to Marika. But today, Marika, thank you. We will miss you. But there will also be the following and saying, "You held on in Denmark after your tax and all the others stuff after 7 years, and it is really a true pleasure." And it's just fantastic to be here. And I know there is a friendship with many of us that will last long after. And now you deserve to have time back in Stockholm with your dear husband, because I think he also wants to see a bit more of you. So thank you for that.

Hopefully.

So hang on. Here we go, and we had probably 2 common test at most. So hang on. Thank you.

Thank you. Thank you very much. I just want to say thank you. It's a lot of supporters here, not only Vestas' people, but also banks that supported us when we were actually on the virtue of [indiscernible]. We have one sitting over there. So really grateful for that. All the people that have taken an interest in the company, it's been a pleasure. We'll see you, also on the back of the full year. And I will not lose all the connection with Denmark, which I'm super happy. Some have actually said to me that I'm becoming semi-Danish, which I take as a compliment, although we have some Swedish as well, yes. But it's been a pleasure. So thank you, everyone. See you in February, I assume, and hope that this crazy COVID situation has improved at least a little bit. So I wish you all a Merry Christmas, Happy New Year and all the best for '22. Thank you.

That concludes the program for today. Thanks for dialing in, and there is a bit of a reception now.

Thank you, guys.

Thanks.

See you outside.