28.11.03

28.11.2003: Meldung: Vestas Wind Systems A/S: Quarterly information - 3rd Quarter 2003

Quarterly information - 3rd Quarter 2003

Market situation
Vestas continues to have positive expectations for the global market for wind power for 2003. The German market is also in 2003 the single largest market in the world. However, the German market has decreased in size compared to the same period last year. The main reasons for the decreasing market are uncertainty in connection with the revision of the amendment of the EEG (Germany"s Renewable Energies Act) and a more strict policy for financing of wind power projects applied by the German banks.

The proposed amendment agreed by the German government does not change the basic principles of the existing price system. However, the yearly reduction rate of the basic price is now proposed at 2 per cent instead of previously 1.5 per cent and sites with very low wind speed will no longer qualify under the EEG. The price system is suggested to improve the offshore market and will apply for projects built up to 2012 compared to 2006 in the present EEG.

The present system will continue until the new amendment has been finally approved by the German parliament, which is expected to take place in the first half of 2004. Vestas expects that the revised amendment of the EEG will stabilise and strengthen the German onshore market and improve the long-term offshore opportunities. Vestas thus expects Germany to continue as a strong market also in the future.

Despite the decreasing German market in 2003, Vestas has managed to continue the positive development in deliveries to Germany and Austria and has strengthened its position on these markets.

The Benelux markets have also been characterised by a positive development in the deliveries, however, order intake in the third quarter has been lower than expected.

The offshore market develops very positively in Great Britain. 18 offshore projects are planned of which Vestas has contracted the first two. Vestas is erecting 30 units of V80-2.0 MW offshore turbines in the North Hoyle wind power plant. Furthermore, Vestas has started works on the second project, the Scroby Sands offshore wind power plant, also consisting of 30 units of V80-2.0 MW offshore turbines.

The onshore markets in Great Britain and Ireland are still characterised by a positive order
intake, but also of postponements of projects. The growth prospects for 2004 and further
ahead, however, continue to be very positive.

The activities in Denmark have been very limited as expected due to the existing politically imposed ceiling on the price for wind energy. In Sweden, Vestas has experienced a positive development both in order intake and deliveries based on the new Swedish renewable energy legislation.

The definition of long term goals for green energy in Italy has yet to be finalised. Recent events such as the nationwide black-out on 28 September, as well as several regional power cuts during the summer, have led to new discussions and new openings, however, a final solution is still not in place. Despite the uncertainties during the third quarter, the market has seen the reactivation of some of the previously postponed projects. The deliveries for 2003 will be limited, however, the activity is expected to pick up further in 2004.

In Spain, Vestas has established a local sales and service company with the purpose of obtaining a good share of the market. Vestas expects to secure the first contracts by the end of 2003 and the establishment of a local production facility remains an objective for 2004.

The Portuguese market has developed positively in the third quarter and Vestas has received orders for V80 turbines, cf. Stock Exchange announcement no. 16/2003 of 4 September 2003. Based on the increased activity level, Vestas has established a service company in Portugal. Growth prospects for 2004 are good and the positive market development is expected to continue.

On the North American market, one of the challenges is a high level of installation activities before 31 December 2003, which is the expiry date for the Production Tax Credit (PTC) scheme. Vestas" deliveries in the third quarter 2003 include the 162 MW Highwinds project to California (cf. Stock Exchange announcement no. 19/2002 of 9 December 2002) and the 75 MW McBride Lake project to Alberta in Canada (cf. Stock Exchange announcement no. 17/2002 of 30 October 2002). The 147 MW Evanston project for Wyoming (cf. Stock Exchange announcement no. 12/2003 of 23 July 2003) and several other projects are on schedule for fourth quarter deliveries.

In North America many new projects are under negotiation, however, the Energy Bill in the USA with an extension of the PTC has not been passed as expected. Vestas now expects the PTC to be passed in the beginning of 2004. The delay influences the order intake in 2003 and thus turnover for the USA in 2004. Even though the effect is partly balanced by higher expectations for Canada, the order backlog to North America at the end of 2003 will be lower than previously expected.

The markets in Oceania and in Asia show positive growth prospects with deliveries in Japan, China and Korea. Japan continues as a stable market and several new projects are under negotiation in Australia.

In general, the long-term development of the markets is positive. Several new markets are developing and in the third quarter of 2003, Vestas has delivered wind turbines to France, Iran and Egypt.

In summary, the order intake has resulted in a satisfactory order backlog at the end of the third quarter of 2003. The total backlog of firm and unconditional orders corresponds to approximately five months" average production at Vestas, which is at the level of third quarter 2002.

Products and production
The launch of the next generation in the Vestas product range, the V90-3.0 MW turbine programme, has been continued in the third quarter 2003. A series of new V90 low wind speed turbines primarily for the Central and the South European countries were presented and very well received at the September conference and exhibition in Husum. Serial production will be initiated in 2004.

The adjustments of Vestas" manufacturing capacity from kW- to MW-turbines have continued in third quarter and at the end of 2003, more than 80 per cent of Vestas" manufacturing capacity will be available for MW-turbines.

Expectations for the Vestas Group for the full year 2003
Based on deliveries until the end of the third quarter of 2003, a good backlog of firm and unconditional orders and a number of conditional orders, which are expected to become firm and unconditional before year-end, the expected turnover for the full year is now bnEUR 1.7 - the lower level of the previously informed range of bnEUR 1.7-1.8. The net working capital at the end of the year is still expected to amount to approximately 35 per cent of the net turnover for the full year. The pressure on the installation capacity in Germany during the fourth quarter carries, however, an increased risk for some of the projects to be postponed into 2004. Such postponements can influence the net working capital.

On the basis of the lower turnover and a possible early termination of the technology transfer agreement with Gamesa Eólica S.A., the profit before financial income and expenses (EBIT) is now expected to be approximately 5 per cent against approximately 7 per cent, cf. Stock Exchange announcement no. 15/2003 of 19 August 2003. The potential costs of early termination with Gamesa Eólica S.A. are approximately 1 percentage point.


Market expectations for 2004
The Vestas Group"s long-term expectations continue to be positive. In general, the markets outside the USA are developing positively and Vestas expects Germany to continue as a strong market also in 2004. Based on the expectation for an extension of the PTC scheme in the beginning of 2004 and not as previously expected late in 2003, projects will be postponed into 2005. In 2004 the American market is expected to decrease, whereas the market is expected to grow again in 2005 and 2006. Consequently, the forecast turnover for 2004 is reduced to bnEUR 1.8-1.9 against previously forecast bnEUR 1.9-2.0, cf. Stock Exchange announcement no. 15/2003 of 19 August 2003. The EBIT-margin is expected to increase to 9 per cent in 2004. Vestas" goal for EBIT-margin is unchanged at a level of minimum 10 per cent.

The Vestas Group will publish its Annual Report 2003 on 17 March 2004.
In connection with the publication of the 3rd Quarterly information, Vestas will host a telephone conference today, Friday, 28 November 2003 at 3 p.m. (CET). The telephone conference will be held in English. It will be possible to attend the conference via Vestas" website www.vestas.com and Copenhagen Stock Exchange A/S" website www.cse.dk.

Interested parties from Denmark, who wish to ask questions during the telephone conference, may call ph. +45 7026 5040, interested parties from the rest of Europe may call ph. +44 20 7769 6432, and interested parties from the US may call ph. +1 877 204 0753. After the meeting, a replay will be available on Vestas" web site www.vestas.com.

Any questions may be addressed to the Board of Management at Vestas Wind Systems A/S, phone +45 9675 2575.

Yours faithfully,
Vestas Wind Systems A/S
Svend Sigaard
President and CEO
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