Vestas Wind System A/S (VWS) Extended Graph Analysis

November 19th, 2019 Posted by Extended Analysis No Comment yet

About the Company

vestas

Vestas Wind System manufactures wind turbines around the world. Vestas is an energy industry that install and service wind turbines. The company has more than 108 GW wind turbines in 80 countries.

Vestas is a Danish company founded in 1945, headquartered in Hedeager 42 Aarhus N, 8200 Denmark with more than 25,000 employees  Vestas is under Energy Sector and under Renewable Energy Industry.

 

Vestas Wind System A/S (VWS) Extended Graph Analysis

 

1. VWS CASH FLOWS

VWS CASH FLOWS

2014 2015 2016 2017 2018 2019
Net cash provided by operating activities 1,126,000,000 1,472,000,000 2,181,000,000 1,625,000,000 1,021,000,000 1,357,000,000
Net cash used for investing activities -285,000,000 -425,000,000 -817,000,000 -407,000,000 -603,000,000 21,000,000
Net cash provided by (used for) financing activities 389,000,000 -360,000,000 -611,000,000 -974,000,000 -639,000,000 -249,000,000
Capital expenditure -278,000,000 -368,000,000 -489,000,000 -491,000,000 -607,000,000 -733,000,000
Free cash flow 848,000,000 1,104,000,000 1,692,000,000 1,134,000,000 414,000,000 624,000,000

Facts

  • Cash provided by operating activities was $1.357 billion in 2019.
  • Net cash used for investing activities was $21 million in 2019.
  • Net cash provided by (used for) financing activities was -$249 million in 2019.
  • Capital expenditure was -$733 million in 2019.
  • Free cash flow was $624 million in 2019.

Explanation

  • Cash from operation had a growth of 21 percent in five years.
  • Cash from investing activities, purchases of investments and other investing activities have a significant amount.
  • Cash from financing activities were common stock repurchases and dividend payment.
  • Capital expenditures are purchases of property, plant and equipment and purchase of intangibles.
  • Free cash flow although erratic in movement in the last five years, it has a positive results year-over-year.

Interpretation

The company managed to generate cash for the operation of the business. Its net income is sufficient to generate positive operating cash flow.

 

2. VWS BALANCE SHEET

VWS BALANCE SHEET

2014 2015 2016 2017 2018 2019
Total cash 1,819,000,000 2,569,000,000 3,226,000,000 3,204,000,000 3,308,000,000 3,308,000,000
Total current assets 4,696,000,000 5,976,000,000 6,950,000,000 8,006,000,000 8,555,000,000 8,555,000,000
Net property, plant and equipment 1,132,000,000 1,279,000,000 1,329,000,000 1,247,000,000 1,318,000,000 1,318,000,000
Total non-current assets 2,301,000,000 2,611,000,000 2,981,000,000 2,865,000,000 3,344,000,000 3,344,000,000
Total assets 6,997,000,000 8,587,000,000 9,931,000,000 10,871,000,000 11,899,000,000 11,899,000,000
Short-term debt 604,000,000 0 0 0 0 0
Total current liabilities 4,357,000,000 4,805,000,000 5,627,000,000 6,533,000,000 7,405,000,000 7,405,000,000
Long-term debt 3,000,000 495,000,000 496,000,000 497,000,000 498,000,000 498,000,000
Total liabilities 4,618,000,000 5,688,000,000 6,741,000,000 7,759,000,000 8,807,000,000 8,807,000,000
Total stockholders’ equity 2,379,000,000 2,899,000,000 3,190,000,000 3,112,000,000 3,092,000,000 3,092,000,000

Facts:

  • Total cash was $3.3 billion in 2018.
  • Current assets was $8.555 billion in 2018.
  • Net property, plant and equipment was $1.3 billion in 2018.
  • Non-current assets were $3.3 billion in 2018.
  • Total assets were $11.899 billion in 2018.
  • Short-term debt was zero from 2015 to 2018.
  • Current liabilities were $7.405 billion in 2018.
  • Long-term debt was $498 million in 2018.
  • Total liabilities were $8.807 billion in 2018.
  • Stockholders equity was $3.092 billion in 2018.

Explanation

  • Total cash increases year-over-year and has grown 82 percent in five years. Moreover, it represents 39 percent of total current assets.
  • Current assets increases year-over-year and has a growth of 82 percent in five years. Further, it represents 72 percent of total assets.
  • Net property, plant and equipment increased by 16 percent in five years. Further, it represents 39 percent of the total non-current assets.
  • Non-current assets grows 45 percent in five years and it represents 28 percent of the total assets in 2018.
  • Total assets increases year-over-year and has grown 70 percent in the last five years.
  • There was zero short-term debt in the last four years.
  • Current liabilities represents 84 percent of the total liabilities in 2018.
  • Long-term debt represents 6 percent of the total liabilities in 2018.
  • Total liabilities represents 74 percent of the total liabilities and stockholders equity in 2018.
  • Equity represents 26 percent of the total liabilities and total equity in 2018.  

Interpretation

The company has a strong balance sheet hence current assets is greater than its current liabilities which means that VWS is capable of paying its current obligations when due time comes.

3. VWS FINANCIAL RATIOS

VWS FINANCIAL RATIOS

2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
Asset Turnover (avg) 1.13 1.03 0.79 0.98 0.96 1.09 1.08 1.11 0.96 0.89 0.85
Return on Asset  % 9.86 2.31 -2.25 -13.14 -1.30 6.20 8.79 10.42 8.60 6.01 5.02
Return on Equity % 21.77 5.10 -6.23 -45.88 -5.21 20.09 25.96 31.70 28.37 22.05 20.74
Financial Leverage (avg) 1.91 2.57 2.98 4.30 3.70 2.94 2.96 3.11 3.49 3.85 4.37
Return on Invested Capital % 21.23 5.69 -2.23 -27.28 -0.77 16.17 21.59 27.28 24.53 19.15 17.08
Interest Coverage 14.05 3.53 -0.28 -11.08 0.58 15.94 49.68 50.50 80.47 42.36 0.00

Facts:

  • Asset turnover ratio was 0.85 in 2019.
  • Return on assets were 5.02 percent in 2019.
  • Return on equity was 20.74 percent in 2019.
  • Financial leverage was averaging 4.37 in 2019.
  • Return on invested capital was 17.08 percent in 2019.
  • Interest coverage were 42.36 and 0.00 in 2018 and 2019 respectively.

Explanation

  • Asset turnover means that a ratio of 0.85 indicate a dollar of asset generated 85 cents of net sales.
  • Return on assets indicates that every dollar invested in asset it generated 5.02 cents of net income.
  • Return on equity indicates that every dollar of shareholders equity VWS generates 20.74 cents of net income. 
  • Financial leverage means that for every dollar invested in equity the company generated $4.37 in total assets.Further, $3.37 was borrowed. Furthermore, it indicates that VWS starts to get risky.
  • Return on invested capital means that the company is making 17.08 percent over its invested capital. In other terms, for every dollar invested in capital the company generates 0.1708 cents.
  • Interest coverage means that the company has the ability to make interest payments on its debt when due date comes. In other words, the company is making sufficient money from current operations to pay for current interest rates.

Interpretation

Financial ratios shows that the company is operating well its business except in the area of asset turnover which needs a little improvement.

 

4. VWS INCOME AND MARKET

VWS INCOME AND MARKET

2014 2015 2016 2017 2018 2019
Sales 6,910,000,000 8,423,000,000 10,237,000,000 9,953,000,000 10,134,000,000 10,866,000,000
EBIT 558,000,000 859,000,000 1,421,000,000 1,230,000,000 959,000,000 898,000,000
Net Income 392,000,000 685,000,000 965,000,000 894,000,000 684,000,000 640,000,000
Market Capitalization 8,164,000,000 15,513,000,000 14,491,000,000 14,000,000,000 14,872,000,000 14,472,000,000
Intrinsic Value 7,635,146,286 26,442,872,224 15,639,413,893 24,227,525,567 50,141,478,405 15,344,024,990
EBITDA 935,000,000 1,249,000,000 1,718,000,000 1,628,000,000 1,390,000,000 871,000,000

Facts

  • Sales was $10.866 billion in 2019.
  • EBIT was $898 million in 2019.
  • Net income was $640 million in 2019.
  • Market capitalization was $14.472 billion in 2019.
  • Intrinsic value was $15.3 billion in 2019.
  • EBITDA was $871 million in 2019.

Explanation

  • Sales has a growth of 57 percent in five years.
  • EBIT increased by 61 percent in five years and it represents 8 percent of sales.
  • Net income grew 63 percent in five years and it represents 6 percent of sales.
  • Market capitalization increased by 77 percent in the last five years.
  • Intrinsic value was greater by 6 percent against market capitalization.
  • EBITDA decreased 7 percent in five years. It represents 8 percent of sales.

Interpretation

The company had not seen any negative bottomline in the last five years, although it decreases year-over-year from 2017 to 2019 at an average rate of 12 percent. 

 

5. VWS BOARD OF DIRECTORS COMPENSATION

VWS TOTAL BOARD OF DIRECTORS COMPENSATION

TOTAL COMPENSATION (in DKK)

2016 2017 2018
Bert Nordberg 2,100,000 2,200,000 2,143,353
Lard Josefsson 1,800,000 1,800,000 1,832,918
Carsten Bjerg 900,000 900,000 909,427
Eija Pitkanen 700,000 700,000 650,000
Henrik Andersen 500,000 1,100,000 1,100,000
Henry Stenson 700,000 700,000 483,888
Jens Hesselberg Lund 0 0 650,000
Kim Hvid Thomsen 700,000 700,000 650,000
Michael Abildgaard Lisbjerg 400,000 400,000 400,000
Peter Lindhoist 400,000 400,000 400,000
Sussie Dvinge Agerba 400,000 400,000 400,000
Torben Ballegaard 400,000 700,000 650,000

Facts:

  • Bert Nordberg total compensation was DKK 2.1 million in 2018.
  • Lard Josefsson total compensation was DKK 1.8 million in 2018.
  • Carsten Bjerg total compensation was DKK 909 thousand in 2018.
  • Eija Pitkänen total compensation was DKK 650 thousand in 2018.
  • Henrik Andersen total compensation was DKK 1.1 million in 2018.
  • Henry Stenson total compensation was DKK 483,888 in 2018.
  • Jens Hesselberg Lund total compensation was DKK 650,000 in 2018.
  • Kim Hvid Thomsen total compensation was DKK 650,000 in 2018.
  • Michael Abildgaard Lisbjerg total compensation was DKK 400 thousand in 2018.
  • Peter Lindhoist total compensation was DKK 400 thousand in 2018.
  • Sussie Dvinge Agerbo total compensation was DKK 400 thousand in 2018.
  • Torben Ballegaard total compensation was DKK 400 thousand in 2018.

Explanation

  • Bert Nordberg compensation represents 21 percent of the total compensation in 2018.
  • Lard Josefsson compensation represents 18 percent of the total compensation in 2018.
  • Carsten Bjerg compensation represents 9 percent of the total compensation in 2018.
  • Eija Pitkanen compensation represents 6 percent of the total compensation in 2018.
  • Henrik Andersen compensation represents 11 percent of the total compensation in 2018.
  • Jens Hesselberg Lund compensation represents 6 percent of the total compensation in 2018.
  • Kim Hvid Thomsen compensation represents 6 percent of the total compensation in 2018.
  • Michael Abildgaard Lisbjerg compensation represents 4 percent of the total compensation.
  • Peter Lindhoist compensation represents 4 percent of the total compensation in 2018.
  • Sussie Dvinge Agerbo compensation represents 4 percent of the total compensation in 2018.
  • Torben Ballegaard compensation represents 6 percent of the total compensation in 2018.

Interpretation

The total board of directors compensation represents 1.6 percent of the net income in 2018.

 

6. LOBBYING AND CONTRIBUTIONS

VWS LOBBYING AND CONTRIBUTIONS

 

TOTAL LOBBYING EXPENDITURES
Period USD
2008 210,000
2009 150,000
2010 325,000
2011 310,000
2012 480,000
2013 220,000
2014 270,000
2015 270,000
2016 180,000
2017 540,000
2018 390,000
2019 250,000

Facts:

  • Total lobbying expenditures in 2008 was $210 thousand.
  • Total lobbying expenditures in 2009 was $150 thousand.
  • Total lobbying expenditures in 2010 was $325 thousand.
  • Total lobbying expenditures in 2011 was $310 thousand.
  • Total lobbying expenditures in 2012 was $480 thousand.
  • Total lobbying expenditures in 2013 was $220 thousand.
  • Total lobbying expenditures in 2014 was $270 thousand.
  • Total lobbying expenditures in 2015 was $270 thousand.
  • Total lobbying expenditures in 2016 was $180 thousand.
  • Total lobbying expenditures in 2017 was $540 thousand.
  • Total lobbying expenditures in 2018 was $390 thousand.
  • Total lobbying expenditures in 2019 was $250 thousand.

Explanation

The company is spending a yearly lobbying from 2008 to 2019.  A statement from OpenSecret stated that, all lobbying expenses report came from the Senate Office of Public Records. The data for the most recent years was downloaded on September 19, 2019.

 

7. VWS FINANCIAL STRENGTH

VWS FINANCIAL STRENGTH

DATA:

EUR
Working capital 1,150,000,000
Total assets 11,899,000,000
Sales 10,866,000,000
EBIT 959,000,000
Market value of equity 14,472,000,000
Book value of total liabilities 8,807,000,000
Retained earnings 3,042,000,000

CALCULATION

Ratio Score Result
A – Working Capital / Total Assets 0.10 1.20 0.12
B – Retained Earnings / Total Assets 0.26 1.40 0.36
C – EBIT / Total Assets 0.08 3.30 0.27
D – Market Value of Equity / Book Value of Total Liabilities 1.64 0.60 0.99
E – Sales / Total Assets 0.91 1.0 0.91
Z-Score 2.64

Formula: Z-Score = 1.2A + 1.4B + 3.3C + 0.6D + 1.0E

Explanation

Z-Score is a statistical measurement that compare data points from different sets of data to find correlations. This measurement by Dr. Edward Altman is a significant measure in determining the financial strength of the company because it relies on different weighted financial liquidity and profitability metrics to come up with the overall score. This measure indicates the probability of bankruptcy.

Interpretation

The result of the calculated Z-Score of VWS was 2.64. Dr. Edward Altman indicate that a grading scale of 1.8 to 3 tells us that the company will likely declare bankruptcy in the near future.

There are four main categories in the calculation of Z-Score namely, the profitability or the return on investment, liquidity, leverage and the operating or efficiency.

Hence this calculation relies on different metrics this is a significant measure in determining the financial strength of the company.

CITATION

https://www.vestas.com/

https://www.opensecrets.org/federal-lobbying/clients/summary?cycle=2019&id=F318846

Researched and written by Criselda

 

 

 

 

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