Operational excellence contributes to lowering LCOE

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1 Operational excellence contributes to lowering LCOE Jean-Marc Lechêne, Executive Vice President & COO London, 21 June 2016

2 Disclaimer and cautionary statement This presentation contains forward-looking statements concerning Vestas' financial condition, results of operations and business. All statements other than statements of historical fact are, or may be deemed to be, forward-looking statements. Forward-looking statements are statements of future expectations that are based on management s current expectations and assumptions and involve known and unknown risks and uncertainties that could cause actual results, performance or events to differ materially from those expressed or implied in these statements. Forward-looking statements include, among other things, statements concerning Vestas' potential exposure to market risks and statements expressing management s expectations, beliefs, estimates, forecasts, projections and assumptions. There are a number of factors that could affect Vestas' future operations and could cause Vestas' results to differ materially from those expressed in the forward-looking statements included in this presentation, including (without limitation): (a) changes in demand for Vestas' products; (b) currency and interest rate fluctuations; (c) loss of market share and industry competition; (d) environmental and physical risks; (e) legislative, fiscal and regulatory developments, including changes in tax or accounting policies; (f) economic and financial market conditions in various countries and regions; (g) political risks, including the risks of expropriation and renegotiation of the terms of contracts with governmental entities, and delays or advancements in the approval of projects; (h) ability to enforce patents; (i) product development risks; (j) cost of commodities; (k) customer credit risks; (l) supply of components from suppliers and vendors; and (m) customer readiness and ability to accept delivery and installation of products and transfer of risk. All forward-looking statements contained in this presentation are expressly qualified by the cautionary statements contained or referenced to in this statement. Undue reliance should not be placed on forward-looking statements. Additional factors that may affect future results are contained in Vestas' annual report for the year ended 31 December 2015 (available at vestas.com/investor) and these factors also should be considered. Each forward-looking statement speaks only as of the date of this presentation. Vestas does not undertake any obligation to publicly update or revise any forward-looking statement as a result of new information or future events others than required by Danish law. In light of these risks, results could differ materially from those stated, implied or inferred from the forward-looking statements contained in this presentation. 2 CMD 2016 Manufacturing & Global Sourcing Classification: Public

Prior to joining Vestas, Jean-Marc Lechêne served as Executive Vice President at Michelin in France.

3 Introducing your speaker Jean-Marc Lechêne Executive Vice President & COO. Joined Vestas in 2012 as COO based in Aarhus, Denmark. Master degree in Engineering from École des Mines de Paris and has completed a MBA at INSEAD, Fontainebleau. Prior to joining Vestas, Jean-Marc Lechêne served as Executive Vice President at Michelin in France. For a period of almost 15 years Jean-Marc Lechêne held various top positions in the Lafarge Group and he has lived in China, Canada and the US. 3 CMD 2016 Manufacturing & Global Sourcing Classification: Public

4 Agenda CMD Capital Markets Day, 21 June Introduction and status 2. Enabling reduction of LCOE 3. Summary and questions & answers 4 CMD 2016 Manufacturing & Global Sourcing Classification: Public

5 Sticking to strategy pays off Unchanged Vestas and COO strategy pays off with well executed plans To be the undisputed global wind leader Market leader in revenue Strongest brand in industry Best-in-class margins Bringing wind on a par with coal and gas Deliver best-in-class wind energy solutions and set the pace in the industry to the benefit of Vestas customers and the planet Grow profitably in mature Capture the full potential of and emerging markets the service business Consistently executing in accordance with the strategy Reduce levelised cost of energy (LCOE) Improve operational excellence Accountability, Collaboration, and Simplicity 5 CMD 2016 Manufacturing & Global Sourcing Classification: Public

6 Safety is always number one Improving operational excellence while building strong safety culture Industrial injuries Number per 1 million working hours Total Recordable Injuries: lost time injuries + restricted work injuries + medical treatment injuries 2015 target: 10.1 achieved: target: 8.0 YTD: Total Recordable Injuries Lost Time Injuries Vestas life saving rules. 6 CMD 2016 Manufacturing & Global Sourcing Classification: Public

7 .. and ensuring high quality Vestas quality ensures strong reliability and supports our technology and service leadership Lost Production Factor (LPF) Percent LPF: Steady reductions year-on-year. Warranty consumption: Continues at low level - approx 1.1 percent of revenue over the last 12 months. 0 Dec 2009 Dec 2010 Dec 2011 Dec 2012 Dec 2013 Dec 2014 Dec CMD 2016 Manufacturing & Global Sourcing Classification: Public

8 Agenda CMD Capital Markets Day, 21 June Introduction and status 2. Enabling reduction of LCOE 3. Summary and questions & answers 8 CMD 2016 Manufacturing & Global Sourcing Classification: Public

9 Operational Excellence to reduce the Levelised Cost of Energy Flexible, asset-light and low cost manufacturing footprint Reducing the Levelised Cost of Energy 9 CMD 2016 Manufacturing & Global Sourcing Classification: Public

10 Flexible, asset-light, and low-cost manufacturing footprint Lowest delivered cost. Outsourcing. Supply chain managed at worldwide scope. 10 CMD 2016 Manufacturing & Global Sourcing Classification: Public

11 Evolution of manufacturing footprint Driven according to a set of guiding principles Optimisation logic Strategy Assembly Transport & Lead Time >> Labor Factory close to market Implementing 2-3 MW flexibility as market requires (USA, China). Blades Labor >> Transport Factory in the region Growth and Outsourcing are enablers to optimize delivered cost in the region. Local content as "business case booster. Leveraging Denmark as development / industrialisation center. Controls & generators Labor >> Transport Global factories Optimise setup by moving to low cost countries (China, Spain) and adapt to local content requirements (Brazil, India). Dual sourcing internal / external for continuous benchmark and reliability of supply. Leveraging Denmark / Germany as development / industrialisation centers. 11 CMD 2016 Manufacturing & Global Sourcing Classification: Public

12 Assembly footprint Assembly consists of six factories, three of them being flexible to produce both the 2 and 3 MW platform Ringkobing Denmark Brighton USA Leon Spain Tianjin China Chennai India Fortaleza Brazil 2 MW 2+3 MW 3 MW 12 CMD 2016 Manufacturing & Global Sourcing Classification: Public

13 Blades footprint Blades comprises 11 factories, three of them subcontracted. Footprint based on regional and global presence supported by cross-regional supply e.g. China/India to USA. Lem Denmark Lauchhammer Germany Brighton USA Windsor USA Daimiel Spain Taranto Italy Turkey Tianjin China Dafeng China India Fortaleza Brazil Vestas Blades Subcontracted blades 13 CMD 2016 Manufacturing & Global Sourcing Classification: Public

14 Generators and Controls footprint Generators and controls consists of both an in-house and subcontracted setup Hammel Denmark Travemunde / Lubeck Germany Viveiro Germany Spain Tianjin China Brazil Vestas Generators Vestas Controls Subcontracted generators 14 CMD 2016 Manufacturing & Global Sourcing Classification: Public

Reducing product cost across the whole value chain Product & Value Chain cost-out: Commercial negotiation. Design optimization. Best cost countries. Scale.

15 Reducing product cost across the whole value chain Product & Value Chain cost-out: Commercial negotiation. Design optimization. Best cost countries. Scale. Reducing complexity: Buy more systems and less parts Standard parts and reuse. Design for Manufacturing, Transport, Construction and Service. 15 CMD 2016 Manufacturing & Global Sourcing Classification: Public

16 AE to AEPRO - from cost to built-in value Unchanged targets but more value chain focused levers to execute on plan Maturity Accelerated earnings PRO Focus: - Value Chain cost-out. - From price to value. Accelerated earnings Focus: - Category cost-out. time CMD 2016 Manufacturing & Global Sourcing Classification: Public

17 Minimising working capital Make to order. Lean manufacturing. Standard lead times. Industry Vestas. 17 CMD 2016 Manufacturing & Global Sourcing Classification: Public

18 Agenda CMD Capital Markets Day, 21 June Introduction and status 2. Enabling reduction of LCOE 3. Summary and questions & answers 18 CMD 2016 Manufacturing & Global Sourcing Classification: Public

19 Summary 1 Consistently executing in accordance with the strategy delivering operational excellence. 2 3 A flexible, asset-light and low cost global manufacturing footprint contributes to securing competitive products and lowering LCOE. Continued focus on cost-out. Accelerated Earnings PRO programme on track with additional actions focused on value chain to further support execution of plan. 19 CMD 2016 Manufacturing & Global Sourcing Classification: Public

Thank you for your attention Copyright Notice The documents are created by Vestas Wind Systems A/S and contain copyrighted material, trademarks, and other proprietary information. All rights reserved.

20 Thank you for your attention Copyright Notice The documents are created by Vestas Wind Systems A/S and contain copyrighted material, trademarks, and other proprietary information. All rights reserved. No part of the documents may be reproduced or copied in any form or by any means - such as graphic, electronic, or mechanical, including photocopying, taping, or information storage and retrieval systems without the prior written permission of Vestas Wind Systems A/S. The use of these documents by you, or anyone else authorized by you, is prohibited unless specifically permitted by Vestas Wind Systems A/S. You may not alter or remove any trademark, copyright or other notice from the documents. The documents are provided as is and Vestas Wind Systems A/S shall not have any responsibility or liability whatsoever for the results of use of the documents by you.

ORDER MOVEMENT MANAGER (OMM)-TANK INVENTORY SYSTEM (TIS) DEPLOYMENT

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