Anders Runevad - President and Chief Executive Officer Marika Fredriksson - Chief Financial Officer

Kristian Johansen - Danske Bank Lars Heindorff - ABG Daniel Patterson - SEB Patrik Setterberg - Nordea Mark Freshney - Credit Suisse David Vos - Barclays Klaus Kehl - Nykredit Markets Pinaki Das - Bank of America Alok Katre - Societe Generale Shai Hill - Macquarie Fasial Ahmad - Handelsbanken

So, good morning, everyone and welcome to this presentation on the second quarter 2014. So, I will start and talk about orders and a bit about the markets and I will hand over to our CFO, Marika Fredriksson, who will do the financials and then I will come back with a summary, outlook and then we are both available for Q&A.

So, to start with order then, we had a solid order intake in the quarter of close to 2 gigawatts, an 18% increase year-over-year. In the U.S., we had order intake of 800 megawatts in the Q2 that correspond to more than 40% of the total order intake, so a big contribution on the order side from the U.S.

market. Looking at the average selling price in euro per megawatt, we saw as in recent quarters that the price per megawatt was impacted by a larger amount of supply-only contracts, again, which is a very typical contract in the U.S.

market. And as we talked about before, the price per megawatt depends on a number of different factors, the wind turbine type geography, scope, and of course, the uniqueness of the offering.

So, I will say compared to last couple of quarters fairly stable development. Looking at the backlog, the combined backlog increased like-for-like with €900 million to €13.9 billion, excluding the offshore service backlog that was transferred to Mitsubishi-Vestas joint venture in the quarter.

So, that was €0.8 billion. So that means that onshore service backlog increased with €0.4 billion to €6.5 billion and the wind turbine backlog increased with €0.5 billion to €7.4 billion.

So, to talk a little bit about the market development and activities we see in the market, if we compare then the first half of this year compared to the first half of last year, we see an overall increased activity in the market. And for Vestas, we increased our delivery with 26% on the half year compared to the same period last year.

The activity level is very much driven on a global basis, on a market basis, from Americas and also Asia-Pacific, while we see Europe, Middle East, and Africa being stable. So, going a little bit into the different regions then both what we see overall market development and also then what we have done from Vestas.

As I said, we see growing market in the U.S. due to the PTC cycle that we are in, deliveries in the first half of ‘14 already doubling the total full year figures for 2013.

In the first half, Vestas delivered almost 500 megawatts more than the previous period last year and contributing through more than doubling of deliveries to Americas and we also saw increased activity in Latin America. As I said Europe, Middle East, Africa, a big region with many countries and lot of differences between the different countries.

In general, we see good growth in delivery in you can say Northern, Western Europe markets like Germany, France, UK, but we also see stagnation or very low activity in Southern Europe. We have also started from of course a lower level delivery in South Africa during this period.

So, that’s the overall market picture and very much corresponding to what we have done from Vestas, we more than tripled deliveries to Germany driving the total growth for us in this region to 26%. In Asia-Pacific, we also see a global market that is growing, improved activity very much driven by the economic growth in China and India.

From Vestas, our deliveries in this region more than halved compared to the same period last year, but that was primarily due to that we last year had a big project in Australia and nothing during this first half of this year. So, with that, Marika please on financials.

Thank you, Anders. That takes us into the income statement for Vestas.

One of the main highlights in the P&L is of course the much improved gross profit level and I would like to highlight here that the cost out on the products continues and of course is a contributor to the improved gross profit level for Vestas, but it also is a positive mix in the gross profit that has an impact in for Q2 and also volume driven as you can see revenue is higher compared to Q2 of last year. I would like to highlight also that we keep the fixed capacity cost at more or less the same level as of last year despite the higher activity level in the quarter.

That gives us an improved EBIT. So, we are actually delivering in Q2 €104 million.

Special items as is mainly from the joint venture that was concluded now in April. That gives us an EBIT after special items of €154 million, so again, a big improvement from the negative EBIT of last year.

We delivered 7.8% margin in the quarter, again a big improvement compared to Q2 of last year. And you can see here also the income from our joint venture investment has a negative 19 and I will get more into the details of that on the coming – in coming picture.

So here is more illustrative example. We recognized revenue with ToR at the time of selling the V112 to the joint venture and consequently we also have the P&L effect on the contribution margin.

That means that the joint venture will ToR when they actually deliver to the customer, so you have a timing difference, but of course that will have an effect will be transferred back to us in – when the joint venture actually recognized revenue. Service, we see if we do a like-for-like, i.e., excluding the offshore wind, we have an increase in the service business of 6% compared to Q2 of last year.

We also show volume impact over the quarters that the offshore service business has. So, you can clearly see that the majority of the service business is onshore because obviously of the install base we have on onshore.

The balance sheet, the equity is considerably higher compared to last year and we did an equity increase in February of this year as you recall. We also have a favorable net debt situation and obviously impacted by both our own capability of generating cash, but also the activities that took place in February.

Solvency ratio is now above 30% and our capital structure target is 30 as we have communicated earlier. Change in working capital, if you look at the working capital and the performance over the last 12 months, you see a significant improvement and that is of course that working capital is one of our focus areas.

And we have a lot of changes in the process that we have implemented. Over the last quarter you see that we are building up inventory, but that again is as anticipated the divestment of the joint venture also has an impact negatively on the working capital as there were prepayments and inventory in the joint venture or in the offshore business.

If we look at the warranty provisions, we keep them at 1.5%, but in absolute numbers of course it is increasing because revenue is increasing for us. Lost production factor remains stable below 2% also in this quarter.

The cash flow statement please note that the cash flow from our operating activities is significantly improved compared to last year driven of course by the improved earnings. You see the change in working capital again as anticipated as we knew we were going to build up inventory to meet the demand in the second half of this year.

That gives us a negative free cash flow but again as anticipated and please remember compared to last year we had a one-time effect from one of the divested projects in Romania that actually gave a very big positive contribution in Q2 of last year. If we look at the investments, we continued to invest as already communicated in our in molds for, in particular the V110 and V126.

So to meet demand again and we are trailing in the order of €250 million and also guided for earlier. The capital structure as we communicated also our target is to be below 1 net debt to EBITDA and we are clearly below that in the quarter and a solvency ratio of above 30% so we meet both targets in Q2.

That leads us to the ROIC which is also one of our more long-term indicator and we have said we will be double digits over the three to five year period covering the strategic framework and we are in the quarter 19%, so you will see a big improvement quarter-over-quarter compared to last year, but also Q1 versus Q2 that’s mainly driven by the improved earnings for Vestas. Over to you, Anders.

Thank you, Marika. So, moving on the summary a solid quarter where we see improved profitability executing on our mid-term plan that we have talked about before with our (indiscernible).

So solid order intake and increased order backlog as I said we see increased revenue and greatly improved quality of earnings both year-on-year and quarter-on-quarter. The service business another key pillar other key objective for us is on track.

We announced internally the new organization yesterday. We see a 6% growth in our onshore service business for the quarter and renewal rates are backed up compared to the lower than normal renewal rates that we saw in Q1.

So I will say on track. Net working capital, under control we are building up for more hectic second half, but we feel that overall we are control over the working capital and the mid-term financial targets continued positive trend.

We had ROIC in the quarter of 19%. So looking forward and we have raised our EBIT margin target from a minimum 6% – minimum 5% to minimum 6% based on the improved cost base that we see and also we had a greater visibility now when we have soon done eight months and of course look into the projects that we will deliver for the second half of the year.

Their other target remains, so revenue minimum €6 billion or remains unchanged. EBIT as I said margin before special item minimum 6%.

Total investment approximately €250 million and the free cash flow of minimum €300 million and our predictions on to service side is also unchanged. So with that welcome back Marika and we are ready for questions.

So I will first aks them if there are any questions here from the floor, it looks a bit empty, I have to say, so operator please any questions.

Yes. Good morning, a couple of questions from me.

First you previously mentioned that you expect net working capital at the end of this year to be fairly unchanged to the end of last year, is that still your expectation?

Well, we haven’t obviously guided for the net working capital for the full year. We expect what I have said is that we expect that the activities that have taken place will continue.

And if weather permits and everything goes in our favor, we expect to flush out a lot of inventory in the later part of the year.

So, if nothing goes unexpected, could you still be able to keep it unchanged year-over-year?

I am not confirming that we will keep it unchanged year-over-year, but we see a flash out of inventory in the latter part and a buildup of inventory to meet the demand now for the second half of this year the buildup taken place in Q2.

Okay, fair enough. Then in terms of your project margins, you mentioned both the mix effect and your cost out program, can you sort of give us an indication of the split here, is it equally the cost out and the mix effect or is it primarily the cost out program we are seeing here in Q2?

Well, the quarter as such again is driven by volume and also the mix, so the project mix in the quarter. I will not go into the details of the splits, but it is a big contributing fact is the project margin, but also the cost out and also the total volume.

Those three are the main parameters for the improved margin in the quarter.

Okay. Then you mentioned your fixed capacity cost was unchanged year-over-year, is that also the case quarter-over-quarter and what should we expect going forward?

Well, we have a fairly flat fixed capacity cost compared to last year, so despite a busier quarter in this year compared to last year, so we have reduced it slightly by 1%. And we will not give any indication on the performance.

We strive and the focus is on fixed capacity cost, not only for this quarter, but obviously for the full year and going forward.

Okay. But should we expect fixed capacity cost to go up now that your activity is going to increase significantly in the second half?

We are striving to maintain the fixed capacity level the best we can.

Okay.

But of course you have some effect from the increased capacity or the increased capacity or the increased activity level has worked for us.

Okay. Then just my last question there on your previous guidance on margin, this 5%, I think you have said that the 5% will not result in any bonus payment, how does that look now that you have upgraded guidance, I mean, is it the 6% does that include any sort of expected provision for bonus?

It’s correct. As you said that, on the previous guidance, we have said at that level we have no bonus payment, but we will not disclose the levels we have in the bonus program this year as we have also previously said.

We will – if we get bonus territory, we will accrue for that cost, yes, normally running in the business.

But can you confirm whether the 6% will result in a bonus on us?

No, I will not comment on that.

Okay, fair enough. That’s all from me.

Thank you.

Thank you.

Thank you.

Yes, good morning. A question regarding the number of turbines from the completion, I am curious to find out whether the ramp up you are going to see here in the second half, you are still able to in absolute terms to keep that sort of fairly steady or how we should view that?

I mean, we have seen over the past couple of years that at least by the end of the year that the turbines under completion have declined slightly? Is that still going to be the case?

Well, it is a seasonality related to the inventory buildup, but of course, the first half is (less based on) the second half of this year and then you prepare yourself in Q2 and Q3 to meet the demand in the last part of the year. And as I said earlier, if everything permits and that the uncontrollable factor again is to whether we expect to have a lot of reduction in the latter part of the year in terms of inventory.

Okay, alright. Thank you.

Thank you.

Yes, good morning, Daniel Patterson from SEB. Couple of questions.

I think the most important point here in the results is obviously the very strong project margin and I know that you don’t disclose it, but is it correctly understood that it is also positively affected by delivery of offshore projects in the quarter?

Correct. We have invoiced the joint venture as I said and consequently have a positive effect from the project invoiced.

But again – and that’s obviously part of the favorable mix I was alluding to, but there is also cost out and it is volume impacting the improved margin equally.

Okay. And just to be crystal clear here, when I look on Page 9 of your report on all the deliveries, you are summing up all the different countries, are there any offshore included in these 1145 megawatts?

We have deliveries of one project. Yes, so it is included.

So, it has some impact on the favorable mix as I said earlier.

Okay. And then on the bonus scheme, I think Kristian’s question was quite important in the sense that are there any provisions made throughout the year for the bonus or will that happen in Q4 like last year I think that’s important to understand?

We will not comment on that.

But you have not changed your accounting policy versus last year on this topic?

I will not comment on that, Daniel.

Okay. Then on the market outlook, the U.S., obviously you have been getting lot of orders in the second quarter and particularly from the U.S., but where do you stand now there were some talks about perhaps the PTC guidelines were a little bit unclear still, what are your views here on the U.S.

market? Do you think you are going to get more orders or it’s just drawing off the frame agreements or some flavor on the U.S.

market would be very helpful?

Yes. No, we of course still have some room to go before we have filled the frame agreements.

So, of course, our U.S. sales team is busy trying to get the (overseeing) and of course as we have communicated, we have frame agreements up to a point.

We will continue to stick to our principle that we announce orders when they are firm and unconditional, but of course, there is a high activity level in the U.S. to work on getting as much as possible all the frame agreements we have to firm and unconditional orders.

The first reaction on the clarification on the PTC is positive as far as we can read it that you have two ways to qualify the Safe Harbor that we knew before, but also construction started mechanism. So, our reaction on reading that is positive.

So, I think that should be a positive thing for stabilizing the uncertainty that exceeds then around PTC.

Okay. And then just a final point there on the U.S., you have been ramping up employees, hiring, I guess re-hiring a lot of the employees in the U.S., how has that gone?

I mean, is it easy to get people or is it hard as the market has sort of recovered now and do you have the people that you need now in the U.S.?

Yes, I mean, as you say we have talked about the ramp up for quite sometime now and we have been ramping up for quite sometime, because of course we saw these frame agreements coming at the fairly of the states. So, we are according to our internal plan, we are on our plan.

It’s always of course difficult to hire so many people even if it’s over a period of time. So, of course, there are always challenges.

U.S. economy I would say it seems to be doing fairly well.

So, but there is no scarcity of – it’s not so that we are struggling to hire the amount that we need to take in, but of course, it’s hard work. It’s a big ramp up and something that we need to be carefully follow-up on.

Okay, thank you very much and congrats on another strong quarter.

Thank you.

Thank you.

Yes, hello. A couple of questions.

My first question, I have to follow-up the discussion regarding the mix, the positive mixes in the quarter, is there any other thing to point out beside this offshore contract you are delivering in the quarter? I noticed as well that your German installation has been developed very well during the first or during the second quarter of 2014, is this another aspect of the positive cost mix effect you are seeing in the quarter?

Well, as I said earlier, offshore is one of them and the country is part of the mix, but also scope of the project and specification of the project is another. We have delivered projects into the European territory and of course because of the scoping of the projects, that has a positive impact on the quarter.

But I would like to highlight again that we have also taken out cost on the products in the quarter that contributes to the positive effect on the gross profit level.

Okay. It’s more to understand if you want to highlight this has been extraordinarily strong, we could expect this positive mix, which continue for the next couple of quarters?

Well, this is a small quarter with a positive mix effect in the quarter. So, we are not saying that this quarter is fully representative for the full year.

Okay, thank you. My second question is relating to your service business, you have been having two quarters with very strong margin and you are still guiding with a stable margin for your service business for the full year 2014?

Why you are not more aggressive given the margins you have been delivering in the first half?

Well, the level – the profitability level in the service business as well as the V2G business fluctuates quarter-over-quarter. And yes, we have had two good quarters, but we still see stable margins as the right indicator going forward, because of the fluctuations that we have in between the quarters.

Okay. My last question is regarding as I touched upon earlier, your very strong development in the German market, could you give us some flavor what you are expecting from the German market going forward, is it both for the remainder of 2014 and as well going into 2015?

With Germany, this year we believe will be a stable market from a delivery point of view. There is a discussion on the support mechanism there going forward.

And we will see where that ends up. It’s very hard to predict, but as I said, when I talked about Europe, Germany is stable market with a good delivery activity during this year.

It could, depending on the final decision of the support mechanism, it could reduce a little bit going forward, but we still expect it to be a good stable market. So, from a stability point of view, it’s probably the most stable market in Europe.

Okay. Thank you very much.

Thank you.

Thank you.

Hi. Could I ask a longer term question please?

If next year is similar to this year in terms of the profitability and the cash flows in the FCF, then by the end of 2015, you potentially have over €1 billion of net cash? Clearly, Marika you spoke about the need for bonding etcetera at your Capital Markets Day, but is there any (indiscernible) or anything you would rule out on potential for deploying their capital?

Well, bonding is what we still foresee to be a necessity from our point of view. And I will not elaborate more on the capital structure that we have.

You know the two targets we have also in terms of net debt to EBITDA and the solvency ratio. So, that’s what we are working against for the full year, but also long-term.

Thank you. And secondly can I please ask on the mix of products within the services business, I understand a lot of the services business is availability guarantees, the AOM 4000 and 5000 products.

Have those – have renewal rates for those been a big chunk of the 77% renewal rate in the quarter?

We are not elaborating on the mix in the service business. It is considerably improvement compared to last quarter in terms of renewable rates.

That’s all I can comment on.

Okay, thank you.

Thank you.

Yes, good morning. I have two questions please from me.

I want to come back on the German market outlook, because you pointed that marketing you say that’s probably one of the most stable markets out there. And I just want to challenge that slightly, because if I look at 2013 when 3.2 gigawatts were installed in the German market overall, as I am sure and I compare that to the 2.4 gigawatts to 2.6 gigawatts of kind of band that the German government is aiming for.

Going forward, I see quite a big gap there. And that question I suppose may have an answer in terms of repowering turbines, because there is an additional gigawatt of repowering allowance in that band on top of the 2.4 gigawatts to 2.6 gigawatts.

So, I guess my question is do you count on repowering to drive that market going forward and if you could provide a bit of color around how much repowering you already do in Germany and I guess for the group as a whole? That’s question one.

Yes. I mean, first of all, if I should clarify what I meant with the stable, I think that as you said of course we see fluctuation in Germany as well.

And what I meant was we see fairly stable delivery during this year. And I also said that there is of course a discussion on the support mechanism going forward.

And I think what you have alluded to was that there are some analysts believing that, that couldn’t mean 2.5 gigawatt markets going forward if those rules now then, gets decided. So, that is what I say as well and that is still what I would consider fairly stable in the different volatilities that we see in these wind markets.

Okay, and if you could give any color on the repowering point?

Yes. No, I mean, I think it’s in the interest being part of the business that of course over time will open up more and more.

We are in early discussions with our customers of course and of course it will start in the more material markets, where the big wind site was built sometime ago. But from a P&L point of view, I would say today it’s very insignificant and that’s really a question for how strong that will develop going forward.

And I don’t have anymore data or comments on that.

Okay, thank you very much. And then I don’t want to belabor the point on the gross margin expansion, but I think the one thing that hasn’t been mentioned yet so far is the delivery pricing that you have achieved in this quarter.

So, I have that down to €0.96 million a megawatt from €1.07 million last quarter and also in Q2 ‘13. That’s about a 10% drop and we have seen a 5% gross margin expansion, 5 percentage points that is of course, I struggle to reconcile the two.

I hear what you say that there is maybe a bit of offshore mix involved there and there are some projects that are better than others, but still I feel that there is a gap that’s just too wide there to be explained by those two factors alone. And I also just on a more conceptual level wonder if there is anyway you could devise to guide as a bit better as to the quality of your backlog, because you mentioned earlier that the earnings quality has improved, but I would say earnings have improved for sure, but the quality of those earnings I am not sure if I agree with you that they have improved also if we are looking at these kind of fluctuations that are very, very difficult for the market to get their head round?

Any comment on those two things, I would very much appreciate it? Thank you.

Yes. And what we have said earlier, yes, you are on the megawatts, the price per megawatt it has decreased in – but having said that, that is also a matter of the scoping of the project.

It is dependent on the country and it’s also dependent on the specification, but I would also like to highlight again as I said that the cost out is also a strong driver of the profitability, but apart from the mix, we again see fairly stable margins for the company as such. So, we are mitigating through mix, through specification and also cost out.

But I will not give you the bridge on how we are mitigating any factors in that bridge.

Okay. Thank you very much.

Thank you.

Yes, hello, two questions from my side. First of all about these new cost out initiatives, you have obviously come a long way on your cost out projects that was initiated a couple of years ago, but at the Capital Market Day, you also showed us that you were looking into some new areas and would you try to comment on what size of new cost out initiatives we could see from here and yes, could you give us any comment on that?

Well, we will not comment on any value of future activities. I think what is important is that the cost out on the product continues.

So, it is a strong focus area for us. We also continue to focus on the fixed capacity cost with different activities.

We will not be communicate the programs how they look like, what they constitute of, it is what is important is that we continue on that path and also that consequently has a big impact in the quarter and also is part of the upgraded guidance that you see.

Okay. And then just a follow-up question, will it be fair to say the cost base that you are looking at on these new initiatives that would be a cost base of around €5 billion?

I will not comment on that.

Okay. Then my second question would be how much do you expect to deliver in the U.S.

in the second half of ‘14 roughly?

We don’t break it up on regions. We keep our target of minimum €6 billion for Vestas for the full year.

Okay. But will it be fair to say that ‘15 will be much stronger in the U.S.

than ‘14 will be?

We will come back to guidance of what we see in ‘15 when we are done this year.

Okay. Thank you very much.

Thank you.

Thank you.

Good morning, everybody. Thank you for taking the questions.

I have got a few. The first one actually is on U.S.

PTC, I think I missed some of your comments there, so just to be clear, could you confirm what is your expectation on your U.S. PTC do you expect it to be revised by the year end?

That’s question number one. And secondly if relating to that if the PTC extension doesn’t happen what’s the scenario you are looking at in terms of that the ongoing rate of installations in the U.S.

post-2015 as a whole market with and without PTC what’s your understanding right now? Secondly, you at the – my second question is relating to emerging markets, you obviously highlighted that as a big growth area at the Investor Day.

So, I just wanted to get an update on how things are going there and when do you expect to see orders on that front or you already have emerging market presence, but the major step up in emerging market growth that you would like to see? Third question is relating to offshore obviously, could you give us you have had the 8 megawatt now, could you give us an update on where you are on that and when do you expect to see orders on the 8 megawatt?

And last question is around the supply and then the ASP that you had I think lot of people were asking about that, but I just wanted to understand one thing is, is installation which you are not doing anymore in the U.S., is it a lower margin business than the supply itself and therefore it can help margins if you are doing only supply and how does it work in other countries, can you see a similar trend in other countries in future people may take on installation on their own rather than ask the turbine manufacturers? Thank you.

Yes. First of all, the question I will answer on the U.S.

and PTC was the recent clarification around qualification in the current PTC cycle that came out, I think about a week ago or so. So, that was my answer that, that was a positive clarification that was our initial read on it.

When it comes to the next PTC cycle if it will be extended or not after ‘15, beginning of ‘16, I think I will not really speculate on that of course very hard to have any call on that. So, of course, we are following that development very closely.

Of course, we have a lot of interest as well as many other companies that we will see an extension, but I will not speculate whether or not that will come. The impact is also of course very hard to say, for sure, of course the PTC is supporting the U.S.

markets and of course without the PTC, we will see any impact on the volume. And if we have the PTC, we will see positive.

So, we are working with different scenarios there of course. When it comes to emerging markets, as I said it is a mid-term plan.

We have no news to report in this quarter when it comes to the emerging markets. We saw growth in Latin America in the quarter on delivery, but we are continuing to execute on our plan, which is to make sure that we have a relevant product offering that we have the cost out in place on the product to get the relevant product offering with an acceptable return.

And that of course also implies that we look at local sourcing to get to the right cost out. We are continuing to building our capabilities in organization with new leadership in place.

We are reviewing our go-to-market model. So all that internal activities as we also talked about continues.

On the joint venture, also joint venture will follow the same principle that we have when it comes to order announcements, so nothing to report there. A lot of interest from customers as I have talked about before on the 8 megawatt, V164, confident that this is a product that will be and is very well received in the market.

So, we feel that joint venture have the potential to be a global leader in the offshore segment. We are on track with the development.

We follow the time schedule that we jointly agreed on when we setup joint venture and we are progressing with both the development of the turbine and the customer discussions that we have according to our plan. Then I think I missed something on supply, that was more, yes, I mean again there are a number of different projects.

We have a number of different projects in all in all in 73 countries, some supply – of course some countries bigger than others, but that have different profiles. Supply only varies if it’s above average or below average.

So, it’s very, very hard to say a generic rule on margin generation or full turnkey compared to supply-only. So, to give you general guidance on that is I can’t.

Great, thank you so much.

Thank you.

Hi, this is Alok Katre here from Societe Generale. Thank you for taking my question and congratulations on a good set of numbers.

Thank you.

I had two questions really, one is on the free cash flow development and in particular working capital per se, but I thought working capital, the buildup was perhaps greater than what we had in our numbers. So, just wanted to get a sense of what are we looking at going forward.

And I think I alluded to one of the previous questions where I think the suggestion was that you can maintain working capital at previous year’s levels. So, just wanted to get some sense of that on the working capital side really?

That was question number one.

Okay. So, if we take the buildup that you see now in Q2, €100 million is related to Vestas only and you have €134 million, if I recall correctly, is related to the joint venture divestment or not the joint, but the offshore divestment.

So, €100 million is Vestas only buildup. And again as I said, this was entirely anticipated from our side as we knew we are building up to meet the demand in the second half of the year that will be much busier than what you have seen in Q1 and Q2.

So, again, no surprises, you will see working capital fluctuates amongst the quarter as it has traditionally. And you will also see a bigger improvement on the inventory level in Q3 as a lot of the inventory is flashed out at that time.

Okay, okay fair enough. Thank you.

Then my second question really was in terms of if I look at your guidance for EBIT and for EBIT margins and for revenues and the CapEx numbers. So, if you do €6 billion of revenues, 6% margins and €250 million of CapEx, I am looking at really run rate of depreciation etcetera.

I am just trying to understand if you combine all of that with your greater than €300 million of free cash flow expectations, which have been maintained in this quarter. I was trying to sort of tie all of that together to what – to the comments on the working capital side of things?

So, essentially, yes, I mean if I look at all of these put together, the €300 million unchanged free cash flow guidance still looks quite conservative. So, just wanted to understand are there any other moving parts within the free cash flow guidance to them, so not properly looked at – properly looking at?

Well, overall, if you look at the guidance, it is the best estimate where we have obviously upgraded the EBIT, because we have a clear visibility on the cost out activities that are taking place and what impact they will have, but also the second half that we are now basing our guidance on is this year you have uncertainties. So, what you see is our best estimate for the full year of 2014.

I will not go into more details of that, but that is with the visibility we have right now, this is our best estimate.

Okay, thank you. And then really the last question on my side is on the price per megawatt, clearly, I know it’s not an absolute one-to-one correlation between price per megawatt and the margins.

I think we have sort of discussed this in the past. I just wanted to get a sense, in Q2, there was a higher mix of European deliveries versus the U.S.

deliveries, particularly in Q2, yet we saw price per megawatt go down quite substantially YOY. As we see the U.S.

supply-only contracts being delivered, should we sort of expect headline price per megawatt to be – to gravitate what’s in the backlog and how soon should we sort of expect that to happen?

Well, we are not guiding on price per megawatts for the coming quarter or what we have in our order backlog. And again, yes, mix had a favorable impact in Q2, but of course as we have delivered the cost out in the first half of the year, we will continue on that path for the second half of the year and that’s also the reason for the upgrade on the EBIT line, but I will not be more specific than that.

And we have delivered during the first half of this year we delivered 500 megawatts about to the U.S. market, so it’s not that we have not started those deliveries.

Right, okay. Thank you and congrats for a great quarter again.

Thank you.

Thank you.

Yes, good morning. It’s Shai Hill from Macquarie here.

Three questions please. Firstly, just coming back to this issue of price per megawatt, which fell despite the gross margin being up as was highlighted in earlier question, would I be right to assume that you could be setting a lower spec product at a lower price, but you could still deliver a higher margin on that, because it’s a lower material cost in the product.

I just wanted to check if I my understanding is correct, Marika? Second question on the price per megawatt in the backlog, which is now down to about an €0.9 million, I understand that a lot of your big U.S.

orders are supply-only, so they will naturally have a lower price per megawatt, but are there any other issues that is creating a very low price per megawatt in the backlog? I do have final question.

Sorry.

Should I just ask the third one, last question?

Yes, please.

It’s just on the – I don’t want to be specific about years, but I just want to talk sort of generally about the sustainable EBIT margin in the medium-term. You are probably going to say no comment, but basically consensus is suggesting you can beat an 8% margin EBIT margin and sustain that through the medium-term, do you think that is a fair assumption?

We think obviously as we are guiding for a minimum 6% that is a fair assumption for 2014 and beyond that we are not guiding for as you alluded to. And if you look at the price per megawatt and the favorable mix that we have right now.

As I said earlier, yes, we are having an impact from the cost out. We are having an impact on the specification of the project.

What we are with all the parameters and all the levers we can, which is product mix, country mix specification, cost out, we are managing the gross profit level of the company and that obviously is what we have done in a very good way in Q2 and leads us to a good margin. And sorry, the third question I think I forgot.

Do you remember?

Sorry.

Now, to complement a bit I think your question was on specification of products, of course, you are right that the U.S. market is primarily 2 megawatt platform market with 2 megawatt specification.

And the Europe is to a large extent 3 megawatt market with a different specification and a different cost.

Okay, thank you. The final question really was just spread on from that was just on the order backlog, I assume the lower pricing in the backlog is mainly due to the higher weight of U.S.

supply-only orders, but I just wondered if there was anything else, because it’s the lowest price per megawatt in the order book for several years?

Well, again as you are alluding to, it is a mix question and there is a lot of supply-only in the order backlog. So, that’s a correct assumption.

Thank you very much.

Thank you.

So, operator, can we have the last question, if any?

Yes, Fasial Ahmad, two questions here. Question on the U.S.

market and the recent qualification by the tax authorities here and you obviously said that, that’s been a positive impact and the positive impact you are alluding to is that on your framework agreement or do you also expect a profit impact for orders outside the framework agreements? That’s the first question.

Yes. I said it was our initial rate of the ruling was positive.

And with that to be clear, with that I meant that it was the clarification of the rules, so that our customers and the market knows what qualifies or not, I didn’t make, I didn’t say it was a positive impact on Vestas. When it comes to our situation in the U.S., the majority of the orders that we have announced of course the customer had, the PTC qualification as we have said before, we have framework agreements that gives the potential to get more orders in the U.S.

frame agreements that we have announced. I think it’s positive that the customers that then have those frame – that we just have those frame agreements, we have no security on the rules for the PTC and we will make sure that our sales force in the U.S.

works hard of realizing the maximum potential of that opportunity.

Okay, very clear. And my second question that’s to Marika, I was slightly distracted when you were commenting here on the working capital, I believe you mentioned a bigger improvement in Q3, was that in inventories or was that total working capital?

Well, I never commented on the Q3. I said that we as anticipated again buildup inventory here in Q2 to meet the demand in the second half.

And the highest positive activity level is Q4 and that follows normal seasonality for Vestas when it comes to working capital. So, you normally build up in the beginning of the year and flash out at the latter part of the year.

Okay. So, you didn’t comment on Q3 at all?

No.

Okay, thank you.

Thank you.

Okay. So then I would like to thank you for your interest and also who are here and also thank you for those of you who have called in.

Thank you very much.

Thank you.