VWDRY (VWDRY) Q2 2026 Earnings Report, Transcript and Summary

Good morning, everyone, and welcome to our presentation of Q2 for 2026. Strong quarter, and let me also here immediately thank our customers, partners, the full supply chain and also colleagues for an exceptionally well-executed quarter. And with that, I would like to go to our key highlights for the quarter. So in quarter, revenue of EUR 4.7 billion. That's an increase of 26% year-on-year, driven by strong growth in Power Solutions of 37%. EBIT margin of 9.4%, strong profitability improvement, driven by both onshore and offshore. EPS of EUR 1.1 per share. Earnings per share grew 46% year-on-year to one of the highest levels in the history of Vestas. The order intake of 3.3 gigawatt. It's an increase of 67% year-on-year, driven by commercial traction in both EMEA and the Americas. Importantly here, returning cash to shareholders, we are also having a new share buyback of EUR 400 million that will begin 13th of August as of tomorrow and run until the end of the year. That's a little special note. It runs until the 16th of December intended, but Jakob will give you more details on that when we come to the capital structure for that. And then outlook for 2026, guidance raised, reflecting the performance in the second quarter and the improved visibility for the rest of the year. With that, I'd like to take you through the markets and environments we are operating and executing in. First of all, wind energy, key to affordability, security and sustainability. No new words in that, but especially the 2 keywords right now for societies worldwide is affordability and security. When we look at the global environment, inflation, raw materials and transport costs are stable, but tariffs and blockages increased costs over time or from time to time, as we say. It's a changeable environment. When we look at the ongoing geopolitical, the trade volatility and energy crisis that are leading to a regionalization, we've spoken about that, we're still seeing it, and that trend has not reversed to any better. When we look at the market environment, heightening focus on energy, security and affordability. I think most societies, we have that, unfortunately, also sometimes included with some nonfactual basis, and we are probably the one that will strive and keep striving for telling what are the real benefits and what are the costs and how fast can we get the energy. When we look at grid investment, it's prioritized in key markets and getting higher and higher prioritized in key markets, including also EU. When we look at the permitting, it's improving in some markets, but overall permitting auctions and market design are still ensuring challenging things. I would just say here, take Denmark as an example, in November 2024, a failed offshore auction then included better and improved conditions for the developer and customers to us. Then in August 2026, we see that a fully subscribed offshore auction, but unfortunately, it only leads to that Denmark actually missed the new energy supply with another 18 to 24 months. So we got to change our way of looking at it. On the project level, really strong project execution this quarter. We have had a really good quarter, and thanks to everyone. And also, of course, we will strive whatever we can to keep having that momentum into the second half of the year. So this time, before we go to the segments, let me also anchor Q2 '26 in the bigger picture and also you in the longer-term picture of our 10% bridge. This bridge and this slide and picture is important for the whole of team Vestas and not least for me personally. When we look at it, we're talking about how we get to the 10% EBIT and it says plus 10%, so that means at 10% or above. We have now a starting point with the grade guidance for today at a midpoint of 8%, and we also just want to take you through that the 4 levers to get to 10% are still the same, but we have rearranged it a little bit. But it also means that when you see this in a bigger picture, you've seen it before, now there's 200 basis points to go. And I will assure the investors that raised it at the AGM that we might now be at 8%, but that doesn't satisfy us. We still have the 10% target, and we will work towards that diligently in not least the coming quarters and the coming years. I will start here with the offshore, still the same. By far, the largest lever to get us to 10%. It's the ramp-up, it's the cost out and it's extending the competitiveness that we add volume to the platform of our 15 megawatt. We have then rearranged it, so we actually have service as the second highest delivery operational recovery, the commercial reset with the ambition to achieve 25% EBIT margin, and we are assured through our recovery process that is possible, and we will work diligently, but it doesn't come overnight. On the quality side, we have moved that. So it's sort of has a lever and has a very important lever to us because it's drive operational performance. It's talking about lower warranty costs, but we had 3% -- and Jakob will comment on it a bit later, but it's also reduced the cost of poor quality through close collaboration throughout our full value chain, especially also when we source and when we use the inbound in our factories. And last but not least, on the onshore. It is a quarter where we could sort of debate, is there really that big a lever in onshore still, and there is. There is the operational leverage. There's the cost out that we still can do more of and then there is retaining the commercial culture. So when we look across the world, it is also what are you talking about today, how do we get other countries to pursue the same alley as, for instance, U.S. and Germany are doing by scaling up. And of course, we'll benefit from that. Takeaway, doable, we believe in it. And of course, the closer you get, probably also, therefore, your level of confidence goes up. With that, I would like to go to the Power Solution and what has happened in Q2. So order intake of 3.3 gigawatt in the quarter, driven by strong onshore order intake, especially in the U.S. and Germany. There are no offshore orders in the Q2, but don't worry about that, they come quarter-on-quarter and they will be lumpy. So therefore, we will address that when things happen. On the ASP on new orders, it was EUR 1 million per megawatt for the quarter. The ASP reflects a good mix of project scope and geography and the overall pricing environment remains stable, which, of course, bodes well for also what we have of quality in our order backlog on Power Solutions. The Power Solutions order backlog was EUR 36 billion at the end of the quarter. And when we look at it, we continue to see progress in our offshore ramp-up, with reduced takt times, better efficiency in manufacturing and improved installation time. So again, here, keywords for us are the scale offers us the both required but also expected dilution, and we can see that the offshore team and across Vestas are really pulling forward in that journey, which is positive also when we look to the end of the year and also into '27. You can see the numbers described on the chart to the right. With that, I'll go to Service. So the recovery plan is progressing is the heading for Q2. The Service order backlog increased to EUR 40.9 billion. That's an increase of EUR 5 billion compared to a year ago. That's including a EUR 1.3 billion uplift from indexation and a EUR 0.2 billion headwind from foreign exchange rate movements in the quarter. When we see that, Service reached 166 gigawatts under active service contracts. That's an increase of 2 gigawatt compared to last quarter as strong contract renewals and also new additions more than offset expiries and customer deselection. I think here, we are confirmed after Q2 that we are doing the right things in commercial reset as part of this recovery, but we can also see that we have actually been positive surprised over -- first of all, the value we create together with our partners, but also therefore, the stickiness of our renewal process in Service. The Service recovery plan is progressing well, and we continue to see the operational movement drive down cost levels while the commercial reset is improving the backlog health, and we can see that quarter-on-quarter. Again, the drivers here are working and the new service operating discipline is getting adopted worldwide as we speak, and we're getting comfort to see it being adopted at the pace we are implementing it. With that, I will finish with the sustainability for Q2. Sustainability still in everything we do. And if we start on this, turbines produced and shipped in the last 12 months, are expected to avoid 535 million tonnes of greenhouse gas emissions over the course of their lifetime. This is, of course, one of the highest number we have had for a quarter and therefore, also a reflection of that we see the increase in levels of activity, total turnover of 26%; and in the Power Solution, 37%, which, of course, reflects in this. The carbon emission from our own operation increased by 7% compared to last year. That's mainly due to the vessel emission from increased activity in the offshore. So we know we have to spend some more carbon emission to do also the offset, what you just saw above of the 535 million tonnes. Therefore, it's also worth noticing that the carbon emission went from 110,000 to 118,000 tonnes. So therefore, it's a different ball game when you compare the 2. But of course, here, it demonstrates how low we got Scope 1 and 2 before we also embarked in the offshore journey with the -- with our customers. The number of recordable injuries per million working hours, TRIR, increased to 2.9 compared to 2.6 last year. Safety remains a top priority for us, and we are committed to addressing the identified hotspots. And what I mean by that is we still have parts of Vestas where we see that some of these safety incidents come from a behavioral and attitude point, and we are addressing that because it's not acceptable in the environment we work. Of course, we also have to appreciate we are now working close with almost 40,000 employees, and some of the sites are also new or have embarked new into Vestas. We will address that as we go and comment on it in the coming quarters. I think it's actually now time, Jakob, that you have been looking forward to take us through the financials. So with that, over to you, Jakob, on the financials.

Thank you, Henrik. And as you mentioned, a strong quarter where we see earnings per share increased, up by 46%. The other highlights of the quarter is that revenue increased by 26% compared to Q2 last year. The increase was driven by Power Solutions, while Service revenue was slightly lower. EBIT margin before special items was 9.4%, an increase of almost 8 percentage points year-on-year. The development was driven by improved profitability in Power Solutions from both onshore and offshore. Then also on the right, you can see that we incurred EUR 27 million of special items in the quarter. That's mostly related to our operating model reset, including staff severance provisions. Moving into the segment split and the financials for that, we start with the strong quarter in Power Solutions. In Power Solutions, Henrik, as you mentioned, revenue increased by 37% year-on-year, driven mainly by higher megawatt delivered in both onshore and offshore, and to a lesser degree, by higher average selling prices on megawatt delivered. EBIT margin of 10.4% in Q2 was strong, up more than 10 percentage points year-on-year. Positive benefits in both onshore and offshore from operating leverage, outstanding project executions and lower-than-expected project costs. All of this contributed to the strong profitability in the quarter. And here, you can see the quarterly split on the right, also the split between onshore and offshore. And it is worth to note that onshore revenue is expected to follow the usual back-end loaded profile during the year, while offshore revenue is more evenly spread across the quarters. So this is, and we mentioned it last time, this is a change from what you have seen previously when you look at the total numbers. Moving on to our Service segment, where, as you mentioned, Henrik, we are really pleased to see costs are coming out and that the commercial reset is working as planned. Service revenue decreased by 5% year-on-year, including a 1% currency headwind. The ongoing recovery plan is working and driving lower cost levels, leading to a decrease in contract revenue that we also spoke about last quarter. So the same trend this quarter. Transactional sales was slightly lower than last year. Our Service generated an EBIT of EUR 149 million, equivalent to an EBIT margin of 16.6%, which is in line with our expectations. Moving to the focus on SG&A costs and on our scalability in general. SG&A costs amounted to 7% of revenue on a last 12-month basis, an improvement of 0.4 percentage points compared to a year ago and obviously driven by higher revenue. We continue to work and improve our SG&A costs through the operating model reset program. And we see right now, also with an increasing top line, we see an opportunity to scale the organization while growing the business. And as you can see on the right side, we have, for the last 3 quarters, seen a marginal decrease in the cost, while we have just spoken to the top line increases. So that obviously gives the scalability. Net working capital, we saw a slight increase in the quarter to negative EUR 2.3 billion, mainly driven by an increase in inventories and contract costs. As a percentage of last 12 months revenue, net working capital in the second quarter amounted to negative 11.1%, so still a strong place to be. Cash flow. Operating cash flow was positive by EUR 419 million in the quarter, a significant improvement compared to Q2 in prior year, and that is driven by higher profitability. Total investment amounted to EUR 278 million in quarter 2, which is stable compared to last year. Adjusted free cash flow in the quarter amounted to EUR 94 million, an improvement compared to last year, driven by the reasons mentioned and above. Cash flow from financing activities in the quarter was driven mainly by the repayment of the bond, which we also spoke about last quarter as well as the dividend payments and share buybacks. We ended the quarter with a net cash position of EUR 92 million. Then Henrik, you spoke about quality, and here looking at our LPF, our lost production factor. We see a slight improvement in Q2, reflecting the better fleet performance and operational improvements across our serviced turbines. Warranty costs amounted to EUR 141 million in the quarter, corresponding to 3% of revenue. Warranty consumption was, in Q2, EUR 218 million, and that confirming previous quarter's positive trend, where we consume, meaning repair, old identified quality cases, more than we provision for new quality cases. The capital structure and shareholder distribution. Henrik, you mentioned the EUR 400 million buyback program. The net debt to EBITDA ended the quarter at 0x, stable compared to last year, and within our targeted range of minus 1 to plus 1. We maintain, as previous quarters, a solid investment-grade rating from Moody's with a stable outlook. And given our performance and visibility at this point of time of the year, combined with a healthy capital structure, a new share buyback program, EUR 400 million, will be initiated in line with our previously communicated intention to return at least 40% of net profit to shareholders. The buyback will begin tomorrow and run until the end of the calendar year. And as you can see also on the right, the EUR 400 million is covering the 2 quarters, which is, of course, different from what we have previously done. And then ending, as I've said before, on my favorite slide because this is where we look at our long-term shareholder value creation. Here, you see the most important financial metrics in a longer perspective. These metrics are central to how we measure our performance and align nicely to our shareholder value creation and, of course, also our equity story. And I encourage, if you want to read more about that, to read further about that in the annual report. And with that, over to you, Henrik, for the outlook.

Thank you so much, Jakob. And of course, I absolutely understand your liking for the slides, but there are many slides that could compete on the favorite one this quarter. But also on the slide here, I also want to just hear saying it's nice to see the trend, but it's also nice to see that how you have been able since your start, able to accelerate a couple of those graphs as well. So thank you for that. With that, I would just like to go to the outlook. So outlook here. As you -- most of you also seen, revenue kept EUR 20 billion to EUR 22 billion, previous outlook, same. When we look at the EBIT margin, we are raising the guidance to 7% to 9% from 6% to 8%. And that also means, in this, we keep Service as it was, previous from February. So Service is expected to generate EBIT margin before special items of 15.5% to 17.5%. And then we see total investment around the EUR 1.2 billion mark for the year. With that, I will say thank you for listening in. I'm sure there will be a fewer questions and answers to come. And therefore, so let me, by this, pass back to the operator, and let's start the Q&A.

[Operator Instructions] The first question comes from the line of Akash Gupta from JPMorgan.

My first one is on the U.S. market. Could you please talk about the dialogues that you are having with your U.S. customers and whether the intensity of those discussions has changed? As we can see, the demand for power equipment continued to grow, especially given we saw new record for gas turbine orders in second quarter. So I'm just wondering, has anything changed on your side on the U.S. pipeline and your view of the market in the course of the quarter? That's the first one.

Akash, thank you so much. And the easy answer is no. The bit more filling on this one is in the U.S., demand and fundamentals are making its way into also how it's being evaluated. And right now, speed to energy and speed to, not least, energy and electricity and electrons are also a part of the driver. So the environment is underlying strong from fundamentals, and the whole of the U.S. society in many states need more power and more energy faster than probably new sources or other competing technologies. But in reality, U.S. is also coming to a conclusion of we need more of everything.

And my follow-up question is on Power Solutions margins. You delivered a strong performance in Q2, and a lot of people that follow Vestas split margins between onshore and offshore given the large differences between the 2. Can you give an indication of what offshore margins are in the quarter and where you might get there by end of the year? And also, when we think about the guidance upgrade, which is coming from Power Solutions, entirely how much of that is onshore versus offshore?

Yes. Thanks, Akash, and you know already that, I won't give you the -- you know the answer to it. No, we won't give you the breakdown, but we will also say here, as we've said, we're aiming for a better full year number in '27 than we have had in '26 on offshore. But on the other hand, having a second quarter where we had 10.4% in Power Solutions, we see both onshore and offshore contributing positively compared to where we started the year and planning for it. So there is a good momentum in both parts. For obvious reasons, I don't have an interest in showing you the split between onshore and offshore. But you also know that we will most likely in this year in a red number and the scale and the ramp-up will take us to a black number in '27 for offshore. So of course, that's the positive development we also see in this quarter and also part of why we are raising the guidance overall for Vestas.

The next question comes from the line of John Kim from Deutsche Bank.

Congrats on the numbers. Two questions, if I may. If we think about the guide after a very strong evolution in H1, I want to say the upper end of your guide only implies about 200 points of margin expansion year-on-year. I'm wondering if there's certain things we need to consider? Think about that kind of curtail perhaps the optimism into H2?

No. I think life is what we just see here. Q2 has been an exceptional quarter. We have had some projects in Q2 that also contributed strongly to that. So we -- you know that, John, there's no linear programming between the quarters, We are still back-end loaded. That also means that we see some risk in -- just by the nature of what we're executing for in the second half of the year, which, of course, is reflected in our guidance. And I can assure you that if we have an opportunity to do better, we will do that, but that's what we see currently for the second half of the year. And the split into quarter, we are so dependent on some of those major completions on the projects. What that project is exactly with as a percentage in the backlog. But I will say, in this quarter, really well executed. And there are some lower costs on some of those exceptional projects in -- good executed in second quarter, of course, that contributed to it. But it's not too shabby to raise the guidance to 7% to 9%, so I thank you for your congrats. We definitely feel it's been -- there's been a lot of hard work going into it.

Great. And my second question, if I may, is about the contract assets. We saw a sequential increase from Q1 to Q2. Wondering if you could help us unpack that and what you're seeing around kind of price cost or -- price cost in the service base?

Yes. Let me take that. Similar to last quarter, the development is driven by our Power Solutions. So that's the first -- to answer your first part of the second question. The second part on the Service cost, we are, as I also mentioned, we are pleased with the development this quarter. The team is delivering as we have expected and as we have planned. We take out costs as we have planned. And we also have the success we expect in the commercial reset, which is really one of the initiatives we see that also now is having a positive impact on the overall Service business. So Service is progressing as we have planned and as expected.

The next question comes from the line of Claus Almer from Nordea.

Yes, also from my side, impressive quarter, and well done by the Vestas organization. I will also do 2 questions. So the first is about the Power division. As Jakob mentioned in his prepared remarks is the strong performance was driven both by onshore and offshore. And I think Henrik, you mentioned, this '27 could be in black numbers. This question is not to get any guidance for next year, but could you get a bit more color to the strength of the momentum? Could it be a 5% potential next year? Or where is the range of outcome? That will be the first one.

I love the camouflage of various reasons to ask for '27. If a black number, that also includes a 5%, I don't know, but it's a positive number for next year. And then we will say not more about it because in reality, we'll say more about where we expect Vestas to perform next year. And from giving a Service percentage, you can then calculate the Power Solution. I think here, we're giving ourselves time to enjoy a little bit the execution of this. It is hard work and has been hard work and has had also mixed feelings when you ramp up and scale up of this nature in offshore cloud. So what we are, first and foremost, really happy with is that there is a large contribution from both offshore and of course, from a different contribution in onshore because onshore is just execution of all what is so well known to us, where the offshore is reducing the marginal cost from offshore and the scaling of it. So it is different. And therefore, same thing is we'll fight hard to see if we get it to a full year plus/minus 0 or whatever for '26, and then there is a black number coming in '27. How big that black number is, we won't tell you, and we won't tell you that in February either.

That's a -- so maybe it's -- ask in a different way. So the improvement you're seeing within offshore, is this an improved speed of output of the factories? Is it your better projects that are starting to be delivered? Or what is the main driver for the better profitability or [ less ] loss?

I think here, when we open a new set, we open a new capacity. You're always a bit questionable to that. When does it work. When do we have the right practices in and around those shifts. We can see that the negative side of that, for instance, on [indiscernible] was we had to say goodbye to some very good colleagues on [indiscernible]. But when you get to that point where takt time is improving and others, so that's the main part we have seen. So it is working towards the takt time. And of course, then it's getting now the fully -- the full value chain also to link to it. So we see the installation time offshore. We see the transport. And of course, the benefit now is people are seeing it much more frequent than they did a year ago. And that really is, for us, the key driver, where it looks very much comparable, but it's very different assets. We are both manufacturing and transporting and installing. So we are fully aware of that. So it's the ramp-up and it's the efficiency across the team, which is why I extend a huge thank you to especially the teams that have been working diligently with that ramp. We are just around the plan and maybe in some quarters, a little bit better, but we see the momentum in there, and that's what we are also adding to by raising the guidance today.

Okay. And then my second question is the onshore backlog. These price initiatives you have taken for the last year, 1.5 years, have we seen the full effect in the P&L in this first half? Or do you still see some additional effects rest of the year?

I don't think there's anything to say about the rest of the year. We've just said something about the rest of the year in raising our guidance. And I said, I got to correct you. If you think we have done something with pricing in the last 18 months, I've been here long enough. We have discussed it for the last more than 4 years. And everyone probably question a little bit in our quarterly also. Is it enough? Will we ever get to 10%? Is this enough priced for 10%? And the [ 2 ] of it is we live in a very changeable world. But the backlog is supportive and our pricing and commercial culture is very supportive of that journey to 10%, which is probably also it means a lot more with the day-to-day trusted customer conversation that also supports this pricing. So I see it as a much longer thing than 18 months. And if you look at that, there's nothing what we have said in the last couple of years that hinder that. But you also know that there has been either further realization. There has been disruption and there's even been some tariffs that have been coming and going. So therefore, it's never a locked in as more as we share the risk in a transparent way. So for us, strong pricing, EUR 36 billion in the backlog, very supportive for also the coming not quarters but years.

The next question comes from the line of Ajay Patel from Goldman Sachs.

Congratulations on the results. I've got a couple of questions, please. Firstly, can I just -- can I get a little bit more of an understanding on the improvement in margin? Like it's very rare that Vestas beat consensus Q2 results by a factor of 2. And if you look at what you delivered in margin for Q2 at the 9% of the number and look at what's implied at the midpoint for the second half that's -- that also a 9% number, that would seem odd given like you have a sizable amount of operational leverage in the second half of the year from onshore. So I'm just trying to understand, to what degree is Q2 fantastic performance on contingencies that may be provided for? And if you could maybe give us an idea of how good that execution is? And what kind of contingencies you have made in the second half of the year in the new guidance to get us to understand at least what the sort of risks or potential upside or downside to numbers could be for the second half? And then I'll come back on the second question, if you don't mind.

That was a, what I call a long first questions with a few dimensions in. So let me give you the credit for that race. First of all, Ajay, it's nice to see -- I won't comment on why we beat the consensus because in reality here, you and I know that we know the backlog, none of you are on our payroll. So you don't have access to see what projects we are executing in the quarter. And the mix for us in this quarter on the deliveries and other stuff have formed that basis. And then there will always be, in there, projects that have either in this quarter over delivered on some parts towards an average we're looking in for the second quarter or the third quarter or the fourth quarter. So you can't sort of, again here, it is not a constant percentage in the backlog we're executing. It is actually a diverse spread project portfolio. So therefore, that came out positively. And of course, have we had to give you guidance, we probably indicated that Q2 will be a bit higher, but I will just say, fortunately, we don't. So therefore, in this, we look into a second half. We have a good momentum, but there is also something in the projects we already look for in second half that doesn't imply that it is as backloaded as you probably have seen in previous years of Vestas. And please then don't forget that we also now have an offshore that is a much bigger proportion of the business. It has a stable factor to it, but it doesn't necessarily have the same seasonality and back-end loaded when we look into that. So that's for you is, one, you have to balance a little, and we give that guidance through the revised guidance today. On the H2 risk, you very well know what we have of H2 risk in Vestas. So we have a seasonality. We are getting into a fourth quarter where weather and -- can we get from the inbound to the outbound doing, yes, latter part of Q3 into Q4. So we are sure we have all the assets there. Team is executing extremely well right now. So I know exactly what I'm going to tell the organization in a town hall later today because this is about keeping that attention and keeping that spirit. Don't try to do anything else. So we won't try to change our good execution. But as I said here, it's not too shabby to now raise the guidance to 7% to 9%. And as I probably also referred to Claus Almer previous, we feel we are where we would like to be right now, and that's a pretty positive place.

And then on the second question side, I think on the tapes we're seeing from the press call, that it was cited that management saw an opportunity to reach the 10% EBIT margin next year. And I know you don't want to give guidance for next year, but just to make sure we're all treated exactly the same way. Is there -- is it potential -- is it possible to achieve your medium-term guidance next year as [indiscernible] on the press call?

We don't give that sort of guidance, and we don't give a time guidance on it that I've been here too long for. So as I said here, we just took you through the slide and we took you through the bridge. We have changed a little bit in the order of the bridge. Trust me, if we can get it out, we will get it out as quickly as we can. We just said to you, it's definitely not going to happen this year, but we are building that bridge. So it actually has a lasting bridge. So therefore, please don't run ahead of yourself. And I think a little bit here. It's -- I feel a bit over the last probably couple of years, some has called it an impossible while we keep talking about it, and others have said, hey, come on, there's probably a chance you can do it. For us right now, it means a lot that we can see that we have the levers, we have the handles. And then in reality, for all of us, we have been here very long in Vestas. Whether that comes in 1 year, the other, doesn't matter, but we will do whatever we can to get there. But don't read into something people will quote for us because when we now start talking about 10%, people can see it's the lowest distance we have had for more than 6 years. And that probably makes everyone now imply, oh, we think you'd do it next year. That's not where -- we work diligently on improving quarter-on-quarter, day-on-day.

The next question comes from the line of Kristian Tornøe from SEB. Kristian Tornøe Johansen : I have 2 questions as well. And the first one goes to your guidance. So I noticed you highlight the strong execution of your organization on certain locations here. And I guess that already started in Q1 as well as the explanation for the strong margin in Power Solutions, but it has also been pointed to your guidance for the second half of the year doesn't really imply any substantial margin uplift. So at least my take seems here to be that you're assuming your organizational performance should go back to a more average level in the second half of the year, which I understand why you would sort of assume that in a spreadsheet, but why shouldn't we expect that your organization could keep pace to some extent in the coming quarters?

Thanks, Kristian. You know me well enough, I probably work slightly more outside than in the spreadsheet, but I understand fully your question. We don't try to necessarily do worse. But as I also said here, I think it's actually a bit of a nice reminder on a day like this that we are sitting here and discussing if we're going to do at a mix of what we are executing on. And you will say, come on, the Power Solution is up 37% compared to a year ago on quite a large sized company. So I think here, when we then have a mix of projects, do you know what, we will do whatever we can, but it's also fair saying there is always a risk attached, and we only need 1 or 2 of the medium to large-sized projects to have a negative bump on the road or whatever. And then at the same time, we also can see that there is a pricing in some of the projects that comes in Q3 and Q4, that probably not bode as high as you will normally see in -- sometimes in what we have had in Q4. But as I said, let's see how that goes. But the guidance right now, 7% to 9%, is the best estimate for the full year. And that implies we're actually doing pretty okay in second half. So I understand maybe there are people that are sitting and now trying to do even better. But you know what, if we hit the 7% to 9% in that part, we are doing a really, really good year. Kristian Tornøe Johansen : Fair enough. Then my second question is regarding the blade incident at the [indiscernible] offshore wind project and just if you could sort of update us on that? Has there been any notable financial implication? And have you identified the root cause and so on?

Yes. First of all, I said, there is an incident in [ He Dreiht ], it happened on the 22nd of July. We are -- due process, shouldn't happen, but when you produce blades and you produce turbines of the size we are doing, then it will happen from time to time. I'm particularly proud again to the wider organization here and not least also the collaboration with EnBW and especially our -- or at least for me, for my part, my contact, [ Peter Heider ] in there. We are going through normal process. I think the first thing to observe is no one got hurt by it, which is positive. Second is that we have managed to also keep and contain something as the debris that comes off. We even -- I can see on some of the pictures, we even got help from the German coast guard. So that's an important one. And we have had here both vessels and we have people on beaches collecting things. So it doesn't sort of mess up summer holiday for people that are coasting on the North Sea. So that is really well done. Then at some point in time, we are doing that and we are going through the normal root cause analysis on that. And then, of course, right now, as you probably also have seen, we managed on Sunday -- Saturday to complete the last turbine, #64, on the -- on He Dreiht. And that means, right now, we have a full turbine park we can work with. But of course, there is a blade -- one blade shorter. And we need to get the remaining part of that blade down, and then we will finish our root cause analysis. So that's where we are. It's something you can probably hear on my voice I would rather not have, but now we have it, and we deal with it in a really professional way, and I can't thank, at least our partner in [indiscernible] also having the same professionalism and availability to deal with an anomaly like this. So if it has done anything, it has probably strengthened the partnership. And for more details, I will reserve my partnership right with He Dreiht.

The next question comes from the line of Alex Jones from Bank of America.

My first question, just on the Power Solutions margin again, this quarter, one of the reasons you cited for the strength was lower-than-expected project costs. Could you just expand a little bit on that? Are there any specific items that are common across projects that have driven the lower-than-expected cost or just really a good execution and a lot of project-specific factors?

Just normal project factors, project factors that hit. Sometimes you have an execution where you have no delays, you have access to a full -- to full access to site and you get the assets there and you get the cranes and everything else. So it has just come together really well. And of course, we are probably benefiting in a quarter like this on some projects that were having commercial, really good traction. And at the same time, also, we are executing, as you can see on our delivery table, on markets where we have very, very experienced operators on site. So that's the main reason underlying. Then there will always be some one-offs hitting some of the projects. And of course, that also leads to what we have as a comment in saying here that there are some of the projects that simply just have a lower operating cost in the quarter.

Okay. Understood. And then the second one on the buyback. Obviously, you decided to announce sort of a larger program for the next 2 quarters today rather than the sort of one quarter at a time approach that you were taking previously. Could you just talk through the decision to do that? Is it implying that you now have better visibility on sort of future results, orders, cash flow than you've had in the past year when you've been taking a quarterly approach or any other interpretation we should take from that?

Yes. Thanks for the question, Alex. No, there's nothing else you should take from that. That is, as we also communicated that is the -- on the back of the strong first half and on the visibility we now have into second half. And that -- yes, this EUR 400 million, together with what we have done so far this year, we will go up to EUR 650 million in total with what we have announced.

The next question comes from the line of Martin Wilkie from Citi.

It's Martin from Citi. And yes, congratulations again on such a great set of results. I did want to come back to Power Solutions. And if I understand correctly, the offshore business is still loss making. So you expect that to go to profit by Q4. But that doesn't mean that your onshore margin has to be sort of low to mid-teens, which we've not seen for about a decade. And it sounds like there were some lower cost in the quarter. But you used to frame the way that you saw the margins with the precalc and the postcalc, what you expected when you signed the contract, what it ultimately ended up being? I mean in aggregate, was that post calc way better this quarter? Or was it much more just the particular mix this quarter was better you kind of knew that already given the backlog and the comment that you made earlier, just to understand what really drove that magnitude of improved margin?

We've just been through this and seen, of course, a quarter where -- I don't think I've had to raise my voice one single time on a project execution this quarter if it -- if I had to raise my voice this quarter, it was to give people an extra praise for something. So I think margin in this quarter, it is just very -- I mean, I don't think I can go back in the quarter and say there were some projects where we should have done differently or something. So it's really been really well executed. And that also means that, of course, in a quarter like that, where you have some really positive projects in the backlog to execute on, you just didn't have much deviation. So that is really the one. On your split between offshore and onshore, of course, you can make -- you make some of those calculations. But there, I won't comment on it because in reality here, we know what we're aiming at. And therefore, of course, I can't say anything else. Of course, onshore is performing above the average, and the average was 10.4. So there is no shying away from that. So we are doing well in onshore, we are also improving and getting there in offshore.

Great. And if I could just -- a follow-up question. I mean the question came up earlier about the U.S. market, but obviously, still a lot of moving parts in the U.S. There were some court rulings on permitting recently. Obviously, the tariff backdrop has changed quite a bit since the start of the year. Are you seeing any signs of pent-up demand in the U.S. getting released? Or do you still think that the -- some of these uncertainties are sort of weighing on the market still and we have to wait for a bit more progress before we kind of unleash a new wave of order intake in the U.S.?

Yes. I don't know what you -- I don't know what people are sort of [ unleashing ]. I don't know. We got to fulfill the demand that comes. And I think last quarter, I think the talking point was, at that point in time, there was a department in the U.S. that probably didn't work exactly accordingly to the expected legislation on issuing the permitting or the -- at least negative interference permitting with, for instance, the Department of War. And I think that, of course, ended with a judge ruling as late as a week ago. So I think, Martin, in the U.S., as I said earlier on this call, that underlying demand and fundamentals are really strong. So whenever people can get a project through, there is an offtaker in the other end immediately. And of course, that bodes well for both getting permitting and the volume through whenever you have a fully approved project in the U.S. So I see the lifting of it potentially, again, accelerating something, but we will see more of that when we get further into the year and in '27. I think the same as did when we were sitting here last quarter and discussing, I think, there's still a Section 232 that is outstanding. But then on the other hand, then some tariffs have been going and some tariff has been returned, and then might new tariffs be coming. Do you know what? It starts feeling a little bit on a day-to-day what we have seen before. So to have an incredibly good organization not only in the U.S. but also globally to deal with it. So we are positive we can overcome some of those challenges. So far, it doesn't look too shabby.

The next question comes from the line of Casper Blom from Danske Bank.

Also congrats from my side. So happy to see that your hard work is paying off here. Two questions also here. First one goes to the Service recovery plan. You've now for a couple of quarters, talked about how you can see that your efforts are paying off and that you are able to take out costs. Can you talk a bit to where you are in this recovery plan? Are you sort of part all identification of challenges and is now more execution? Or should we more think about this recovery plan or something that will also continue after 2026 for '27, '28 and onwards as you continue to sort of optimize this business. And as a bit of a follow-up to this, I know many investors are eager to see when will this cost takeout lead to higher margins in the Service business. Is there anything you can say about how you will evaluate the business when you get to the end of 2026?

Thanks, Casper. I will only repeat what we have said, Service recovery plan is on track, deliver as expected. It's both on the cost side but also on the commercial side, the team is delivering exactly as we have planned and as we expect. I appreciate, you all would like to see when and how much and so forth and what we have said, and we will repeat this quarter. We have 2 more quarters of the recovery plan ahead of us. We'll speak to those in the next 2 quarterly investor calls. And then after that, we'll have a conversation about how do we naturally, as part of the last quarter, we will talk about how do we see into 2027. And let's talk about guidance there. But again, we have more to do for the rest of the year. The last 6 quarters of the recovery period is giving us giving us a good confidence in the team in terms of their ability to deliver on the plan because they have done so far.

Okay. Then my second question is a little bit of a follow-up to all the previous ones on Power Solutions and your statement about having outstanding execution here in the quarter, which I suppose we could also see in your gross margin. Henrik, you point to the fact that you are delivering a lot in markets where you have a lot of experience. And looking at the table, it's -- Germany and the U.S. are 2 places that stand out. I suppose these are also markets where we expect to see a high degree of onshore deliveries, both for the remainder of this year and for the next year. Should we then also expect that these markets can continue this outstanding execution? And is it possible to take the best practice from these places to other markets?

Yes. I mean we -- I mean it's a special day because you sit here now, you almost have to explain why we are doing so well, and we have probably trained very well quarter-on-quarter for 5 years in explaining why we were doing so badly. I think here, today, we are doing so well. So it's an interesting one. Listen, we learned all the hard practices 3, 4 years ago, and we tried to bottle that and take it into the countries. But you also will appreciate where you have several projects on an execution on a go, then it's a lot easier to compensate where you have a single country, single project. If something goes wrong, you have no compensating factor. So of course, we are right now blessed with part of that, and that's probably why some of the execution just came so well together. As I said, it's not a Q2 we can sort of bottle and -- because it just came well together, and the pricing of and the commercial terms of the Q2 orders were significant beneficial project by project. So there is a combination in this quarter, which is really well. Trust me, if we can continue doing that, and we can bottle it to the rest of the world, life will do -- look different for the future, but it will also have -- look very different in the past if we have had more quarters of this nature. So I don't know what more to -- I'm not sitting here and apologizing for doing good in the quarter. That's for sure, Casper.

The next question comes from the line of Sean McLoughlin from HSBC.

Well done from my side too. I have a question on offshore. Delivery is now stable over the last 3 quarters at about 0.8 gigawatts. Is this a new run rate? Is there any reason to expect H2 offshore deliveries to fade versus H1? That's the first question.

I think the quarters here will be more equal because it's about getting out, getting it prepared. There is more installation, there's more pre-installation work when you talk about offshore. So that will probably be more flat line. It doesn't have the same seasonality and shouldn't have the same seasonality. But of course, in offshore, you would also appreciate that where you are more, I can call it, sort of easier or safe in terms of working days. Offshore is always going to be Q2 and Q3, where you will use Q1 and Q4 to ramp and get some capacity out. So it's slightly different. It becomes more difficult to rely on the weather installation in Q4 for offshore because both the wind and the waves there will impact that. So counted a little bit more, I wouldn't say linear, but a little bit more better balanced on the 4 quarters and also between H1 and H2.

Yes. And then staying on offshore, I mean, it remains the largest hog, if you like, in the bridge to the 10% margin target. We've seen that takt times have been falling. So obviously, you've already reached a degree of production efficiency in the last quarter, which I imagine is also part of that margin strength. Just where we go from here? Is it -- how -- is it really about higher volume? Or is -- or are we already at a level where this 3 to 4 gigawatt run rate is, I guess, the delivery norm, and it's really -- there's still a lot more to do on the actual efficiency of production? Just wondering where, if any detail around where we see those incremental improvements that drive you from red to black and drive the company to 10%?

Yes, I think you're right in saying we can start seeing and you can start seeing the same as we can in terms of scalability and volume, we are getting there. I think we spoke about it a lot through last year. I think there was, in initial, when people start not liking offshore as much a couple of years ago. I think last year, when you ramp something up, I actually appreciate today that the ramp we have done takes a lot more effort and a lot more resources also from something simple that just getting the full value chain tools into installation and being sure you have the right tools and the tools available. There is a lot, Sean, until you get comfortable with that. We feel comfortable with that. The -- has the journey ended, no, not at all. But we are at a point now where we can say that from a scale point of view, from last year, we had a couple of projects this year, we are right now fully focused on running 5 projects, various parts. So therefore, also, it just takes different scalability, also from right, from people to the tools. And of course, the by far biggest thing here sitting with the [ variations ] or the -- I call it today, I have to say '24 and '25, it was the investments in getting off the ground. But as you can also start seeing, this is now a business that are, from next, year starts contributing positively. And then we will start seeing something that are also meaningful drives and lifting what is the midpoint of the guidance from 8% towards the 10%. And there was a little plus ahead of the 10s. So let's see where we stop with it. But you can see the lever of it. And I think now you can also start seeing the lever of it in a context.

The next question comes from the line of William Mackie from Kepler Cheuvreux.

A couple of follow-ups really. Starting with Service, you've explained you're making good progress with the cost out, and that's evident in the revenue progression being slightly down in the year. Can you share how you see the scope of revenue development in the second half of the year or rather how you see the scope of cost development? And also maybe touching on the viability of the 25% margin in Service that you've called out in previous quarters. That's my first question.

Yes, first of all, well, take it as a positive here, cost-out journey progressing. So that means the cost out as a meaningful lever here is continuing. And that is also continuing, but it is also continuing as a day-to-day working discipline. But there are still a couple of areas around the world where more attention is needed. So that will be. Then on the guidance of second half of the year, there's also transactional sales, which makes that a little bit sort of a -- that we don't do that, and we don't have a top line. We have an EBIT margin guidance right now and that we are following because I'm a bit nervous for in the recovery of -- in all fairness, it's not a chasing of top line or it's not a top line here. So top line will be what it is, and then we will show that quarter-on-quarter. But the business is in better health than it was 6 quarters ago. And our colleagues in there running it are responding positively to it. And of course, at some point in time, Jakob's point on LPF will also start helping when the LPF is coming down and therefore also support a more stable running of the service business. On the 25% ambition, it will take some quarters, and it will take us a little bit more comfort in finishing the recovery before we are able to probably say a bit more of what jumps will that come in, but there is no doubt for all of us. First immediate target of the Service business is to complete what we are doing, get the backlog right and then the target is for having a margin that starts with a [ 2 ], and that we will get to in a time frame.

The second question goes to the onshore business development again. I think your installation volumes have declared 3% up year-to-date. I mean, if you could share all being well and obviously subject to weather and execution risk, the sort of level of increase in output you might achieve in '26? Or to think of it another way, how do you see your factory utilization trending into '26, '27? And then an add-on to that really is to come back to a question that you sort of prompted earlier, which is about your back-end of the year, including weaker price projects, some in Q3 and Q4? And maybe any more color on how that would occur, given that we've seen a steady progression of price development over the last 2 years and the steady development of the supply chain and costs so it seems a little counterintuitive.

Thanks. First of all, well, I will say here on the utilization. I think we are still seeing that. You can also see in this quarter, and Jakob has had that in his part as well. We have included now the factories from also TPI in Mexico and India, and we expect to use those factories as well in our capacity planning. So therefore, we are not sitting here and trying to say that our utilization will go down opposite. But that also speaks to still part of the handle to the 10% bridge, which is onshore can still do things. We can still have a better utilization. And you know right now that in the U.S., we're having a good utilization, but it's also finding that balance in the U.S. because, of course, there is a U.S. manufactured advantage. And of course, we are using that. So the utilization right now goes hand in hand, and there's more also on the scale and the advantages and the mix in the onshore, we can take advantage of. And then as said, I will really encourage people not to walk away from a call here and think that second half is a kind of a disappointment. I'm saying, if we are now discussing a rounding, whether it's 9 or it's 9.5 or something, I have variances in a quarter on executing Power Solutions that are far bigger than 0.5%, as you were saying. So it's priced well. It's in there, but we have had some execution and we have had some part of the Q2 that was just exceptionally well. And I think we have had it because it also looked like it surprised you in some of the consensus for Q2. So therefore, let's go through the quarters. And I think here, we know each other that well, we shouldn't talk a negative out of raising a guidance and now having a 7% to 9% because we are not aiming at hitting 7%, and if we can, we will try to see if we can get to 9%, but that's the guidance we are seeing for the business. And if that, I could take the last question, operator.

The last question from today's call comes from the line of Lucas Ferhani from Jefferies.

Perhaps 2. The first one is just on inflation. Obviously, you're seeing steel prices, copper prices go up, logistics also accelerating EBITDAs of late. I mean how do you think about what that means for ASPs for our underlying pricing? And then the second one is just on Germany. Obviously, the EGG has been released -- EEG, sorry, the new grid package as well. There are some changes for developers there. I guess the feedback is mixed, but it's still up in the air in terms it could change again. But how do you see, let's say, the regulatory changes in Germany and what that means for kind of '27, '28, if they stay like this?

Yes. Thanks for your question, Lucas. And let me start with the first, and then Henrik will end on Germany. So in terms of inflation, we have learned our lesson also from history in terms of locking this in when we have a project that is firm. There, we either have agreed with the customer that they will come a part of the risk contractually. And the rest, we are securing through whether that is indexes or whether that is through our various tools in our treasury team, then we cover that treasury and procurement, and we cover that. So I would say inflation and other changes to raw materials and pricing, we are dealing with it better than what we have done in the past.

And Lucas, on your German EEG policy and other stuff. This is -- this is, again, I think, wisely for a country that has revised so much and changed so much in the last 24 months, you're inviting to a consultation period where people are invited to also come with feedback. We've actually seen a number of European countries doing that. I think, to the benefit, I saw it latest in France just a couple of months ago where also, they invited for feedback on, for instance, their offshore expansion. So I think this is positive when it comes in this way that you invite the market participants. You also will appreciate that what has come with the German expansion and the German policy, and let's not forget it's only sort of 3 years ago, Germany was doing, on average, what rest of Europe was doing well below an average of expanding the energy accessibility for Germany. And now Germany in today's future expansion on auctions, of course, suddenly doing almost in auction volume, the same as EU did totally in installation just 3 years ago. So we're trending towards auction volumes of somewhere around 13, 15, even maybe 15 gigawatt, while the EU, just a few years ago, totally did 16 gigawatts. So I think there is a good example of developing and the cost of it has also come down because now you suddenly see the upside of having the capacity, having the infrastructure, having the cranes, having the experienced construction people. So this is really, really good. That they deserve a lot of credit for that the new government. [indiscernible] deserves a lot of credit for. And therefore, as an industry, we can then only add how we think that will work in the next 3 to 5 years depending on how we structure it. But I think there has to be something for both and that German government is looking for. So maybe we can comment on it in -- after Q3 when we know a bit more of how the actual rules then came out. But so far, active participants from Vestas aside and active participants also, together with our partnerships on customers. So we're really looking forward to that. Thank you so much, Lucas. And to everyone else, thank you for listening in. Thank you also for your active questioning, and we look forward to see many of you over the coming days or even the coming weeks. So therefore, thank you for that, and thank you for your support, not least through the many last years, and I hope you appreciate the support and also our -- saying proper thank you with the share buyback after Q2. Thank you so much.