Good morning, and welcome to our release and presentation of our Vestas Q2 results for 2021. Warm welcome to everyone. Let's go to the key highlights of the quarter immediately. First of all, we had a strong order intake, and we also released a first preferred supplier agreement on our 15 MW offshore platform. That ended in a total order intake of 5.3 GW, with both onshore and offshore contributing to that number. Revenue was EUR 3.5 billion, impacted by lower offshore activity and also, to some extent, the continued supply chain constraints which we have seen in Q2. EBIT margin of 2.9%, profitability impacted by the higher fixed cost base from the offshore business and therefore also the integration, and also cost inflation into it. We had a solid performance, again from service, a revenue growth of 23% compared to Q2 2020, and an EBIT margin of 28.6%. On the ESG side, we had another important step towards the zero-waste turbine, where we also entered a CETEC project, which is all with the purpose of trying to find 100% recyclability of the blades of our turbines. Last, we will also discuss more, of course, the outlook for the year, which we have revised and adjusted in this quarter, to reflect what we will talk much more about in the supply chain constraint and also from the cost inflation. Starting and immediately moving to the global business environment. I think it goes without saying, as we also say here, the longevity of the pandemic is still causing ripple effects and entails some challenges. I will try to talk of some of the direct things here, but also have thoughts with a lot of either colleagues or citizens that are affected right now by the fourth wave, because it's a reality in a number of countries. I think for the first of all, it's very positive for us that energy and wind power remain a critical infrastructure in all the countries we are operating in. That is a continued support to the business continuity for Vestas, and it also is a strong commitment from the countries we operate in. We've also seen here that some of the logistical challenges and supply chain bottlenecks have probably been amplified by the COVID-19 restrictions in some of our strategic markets. I will say not a lot of news, but we are just still being impacted, but of course also here, able to mitigate because we learn our way around them. We have seen a cost inflation further accelerated, you can especially say in not only the quarter here, but also probably for the year. We have seen transportation, we have seen a number of raw materials, and also components being cost inflated in this part. We will talk more about that, but also here, how we mitigate. We also seen a reduced mobility, especially for the service technicians and the construction workers. I think here, we right now have still either the same or a higher number of colleagues being in quarantine or wait and hold positions to enter or exit some of the sites or even countries we work in. May I also just take this opportunity here to extend a big thank you and a gratitude, especially to our 29,081 employees globally. They are working incredibly hard and committed to mitigate a lot of those challenges and have found ways around, I will call them, they are in some extent, in some sites, nearly mission impossibles, which they are dealing with and mitigating. It's an incredible thank you and also incredible examples and evidence of that it does work in a global company like ours. Also here, thanks to the customers and partners for mitigating these issues and continuing putting their best effort in to find solution. Let's go to Power Solutions. If we look at Power Solutions in the quarter, we had a strong total order intake of 5.3 gigawatt. It's supported from both the onshore and offshore, of course, therefore, utilizing Vestas' global reach. We saw an onshore ASP that remains underlying stable and supportive for the industry, not least also for Vestas' continued value creation. Our first offshore order intake after the integration of the offshore business was seen, we also had the first preferred supplier agreement on the new 15-megawatt platform with EnBW in Germany. We saw that led to an all-time high order backlog at EUR 21.2 billion across the onshore and offshore backlog. Of course, here it goes without saying, a very strong focus on project execution and profitability. When we then look at the Q2, I will just highlight here, it is in onshore 4.5 GW versus 2 GW in Q1. This is to take a note of, because in Q1 we already at that point in time talked about that there was some that was on wait and hold in the discussions because there were a number of variables coming from the supply chain and the cost increases. You can see some of those have found their solutions and also the agreements, because we saw that that's the increase in the order intake to now 4.5 GW in Q2. Especially in EMEA, we have seen nearly 2.8 GW of order intake. I will again highlight within EMEA that Germany, for the first time now in many years, have just executed the second auction round this year. First auction round was on 1.5 GW, second auction round on 1.5 GW, but we now also see permitting flowing to it. The uptake was 46% in the first auction, and now 74% in the second auction, all leading to that one of the leading markets in EMEA is now restarting and catching up momentum. We just say the ASP, you will see down here ASP overall was EUR 0.84, and as I said, in onshore, EUR 0.79, compared also to previous quarters. We then go to the service business, as said, a stellar performance in the quarter. We progress well with the integration of both the offshore and onshore, and we now start having that operating model in place. Still more to come for 2021 is that year where we get that done. That gives us the leveraging in the global supply chain and also the scale, not only to our customers, but also back to our partners in the supply chain. We also continued to focus on long-term service contracts on the EnVentus platform. You've seen us taking several wins, both across Europe and also in Australia. We also had a full scope multi-brand contract with a 15-year duration signed in the U.S. Again, an evidence of that we still work both on own capture, but also on the multi-brand arena. When we look at the service backlog, it is now EUR 26.9 billion, and of course it's up EUR 8 billion compared to Q2 2020, but also be aware that out of the EUR 26.9 billion, EUR 23.2 billion stems from the onshore part. We have 119 GW under service, and we have an average years of contract duration in excess of 10 years. Below, you can see the split of the regions, and for us, again, here, the positive is that we are seeing increase in the regional coverage in all 3 regions, both in Americas, EMEA, and APAC. With that, go to also the highlight from our sustainability strategy and what we are embarking in as a journey. Mentioning the highlights, we entered the new CETEC project. It's launched. It's an important step. It's 1 now of several projects we have for actually looking into the technology that will cause the zero-waste turbine to be a reality in 2040 or before. We saw an increase in carbon emission. Not to be sort of talked anything else than it's a reflection of that we are now integrating the offshore activities, and therefore, that we have to work with from a new level. You will see the level on the right side of the slide. We also fully support the European-wide landfill ban on decommissioned wind turbine blades by 2025, initiated by WindEurope, again here said it is also well connected to the project launched around the zero-waste turbine. Lastly, I think very importantly in the environment we are in, a continued focus on ensuring a workplace safety, not least when it comes to our factories, our sites, and also our service technicians. Really proud to see that we in a quarter where, or the first half of the year, where we have had that many external factors and challenges, we've been able to even reduce the safety measures from first half 2020. We can also see here on the right side that the displaced CO2 in million tons have gone up to 201 million. It is up 14% on an annualized basis in Q2, and that is quite a large number. In a comparison, we work with a country like, for instance, Denmark, that has a total emission less than 40 million tons a year, so it is quite an impressive number to deal with in displacement of CO2. With that, I will hand over to Marika and walk through further details of the financials. Thank you, Henrik. As you know, the income statement is a good reflection of what Henrik have been through here. We see stable activity levels compared to Q2 of last year, if not very stable. The stable revenue is primarily driven by the increased activity in service as well as offshore. Obviously some slippage here in the quarter from the onshore activities. Gross margin up by 4.2 percentage points year-over-year. That is driven both by Power Solutions as well as service. EBIT margin before special items had an increase by 1.9 percentage points. That is primarily driven by the improved and higher gross profit, which to a certain extent is offset by the higher SG&A cost as a result of the offshore integration. I will get back to that. Income from JVs and associates is a positive of EUR 33 million. It's primarily co-development projects in the U.S. as well as the contribution from CIP. Power Solutions. We had an increase in profitability, but we are still not where we want to be. Revenue decreased by 4% year-over-year, mainly driven by a decrease in the onshore activity level. Offshore revenue is driven by strong installation levels, primarily in the U.K., and EBIT margin before special items improved by 1.7 percentage point year-over-year. That is primarily driven by lower warranty provisions, and improved, which is very important, underlying project profitability despite the external cost inflation. Having a look at the service business, we see continued strong performance. You see a revenue increase here quarter-over-quarter, year-over-year, increase by 23%. That is primarily driven by higher onshore activity levels as well as the integration of the offshore business. You see the Q2 EBIT, before special items, amounting to EUR 178 million, and that corresponds to a 28.6% margin here in the quarter. Very good performance. SG&A cost continues to be under control, and also continues to be very focused from our side. Depreciation and amortization, excluding the impairments, increased by EUR 66 million year-over-year, and that is to the very large extent related to offshore, so nothing unplanned for, obviously. Relative to activity levels, SG&A cost amounted to 6.3%, which is an increase year-over-year of 0.6 percentage points, and that is obviously driven by lower absorption here in the quarter. Networking capital improved in the quarter. It is primarily positively impacted by down the milestone payments as well as payables. We have an increase in inventory, and that is primarily to cater for the anticipated high activity level here in the second quarter. Again, as planned for. Cash flow statement, very positive cash flow from the operating activities. I would say if I compare with last year, it's obviously the change in networking capital that makes a big difference here in the quarter. We see a positive cash flow of EUR 183 million. Net interest bearing position is EUR 334 million, and we obviously have a continuous focus on cash and cash discipline. Total investments year-over-year, very stable. You see EUR 177 here in Q2, which is EUR 20 million higher than last year. The methodology is the same, so we continue to invest in molds, as well as capitalized R&D, and in cases where needed, also localization. Provision and Lost Production Factor, you see here as we also anticipated, you see an increase in the consumption in Q2 of this year. The LPF also have an increase, and that is a consequence of the extraordinary repair that we have indicated, so the two cases that we have discussed. Warranty provision for this year is stable at around 3%, 3.1% to be very precise. Again, consumption is obviously driven by the two cases that we have indicated and that we provided for last year. Capital structure, net debt to EBITDA is still well below our threshold, so we are at a level of negative 0.2. Also to highlight that following the board of directors' proposal at the AGM, we have done here in the quarter a dividend of EUR 230 million. By that, I leave the word to you, Henrik. Thank you so much, Marika. Now to the last one, and that's of course the outlook. Coming from the status of the business and not least the financials, we have decided to revise our guidance with the effects of what we see from the raw materials and components and to some extent also the transport. Revenue right now will be guidance for the full year of EUR 15.5 billion-EUR 16.5 billion, where we previously had an outlook of EUR 16 billion-EUR 17 billion. Service still expected to grow approximately 15%. On the EBIT margin, we say now 5%-7%, where the previous outlook was 6%-8%. We'd like you to think of that as the moving of the mid-range from 7% to 6% is also what we reflect here, which is equal to a 1% adjustment. Service margin is expected to be approximately 24%. In total investment now below EUR 1 billion from previous outlook of approximately EUR 1 billion. I think here, again, with the same as we have discussed after Q1, the warranty provision in 2021 is expected to be around the 3% level, as you've seen in the revenue from include both the on and offshore. The special items which we haven't had anything of in H1 is still expected to be around EUR 100 million for the full year, relating to the integration of the offshore activities, and therefore also, putting especially the platform and the manufacturing together in the second half of the year, and those announcements to come. When we also look at this, it is without saying that we see still a number of countries being affected by COVID-19, so therefore the guidance will come in this year with the normal, that the base assumptions behind the guidance, and will probably for the rest of this year remain more uncertain than under normal circumstances. With that, thank you for listening in, and I will therefore open up to the operator for the Q&A. Thank you so much. Ladies and gentlemen, if you have a question for the speakers, please press zero one on your telephone keypad now. If you wish to withdraw your question, you may do so by pressing zero two to cancel. Once again, if you wish to ask a question, that's zero one on your telephone keypad now. We ask you kindly to limit your questions to two at a time. There will be a brief pause until the first question is registered. Our first question comes from the line of Kristian Johansen from Danske Bank. Please go ahead. Your line is now open. Yes. Thank you. Two questions from me. First, in regards to your comment that underlying project profitability is improved. Slightly puzzled about this, obviously, considering the cost inflation you're seeing. Maybe if you can clarify a bit, how do you define project profitability? Is that including all raw material and transportation cost off, or exactly what do you mean, in this definition? Yeah. I understand, Christian. When I say improved, project profitability is obviously Clearly, we don't see the full impact simply because of the cost inflation that you are alluding to, but it's obviously includes all the variances that we have. If I look at the underlying profitability on the project as such, before any changes or any rerouting as we have discussed numerous of times, I see that the productivity in what we're doing is improving. Especially when I refer to the contribution margin of the project, it's really the pre and post calc in terms of having as little deviations as possible. Obviously, as we did last year, we had the warranty provision, and didn't do anything similar this year, apart from more of the normal. Excluding that, I still see that a lot of the initiatives that we have are having an impact. Also, obviously, the stable pricing is one of the factors that I'm including. Okay. That makes sense. Same question is on cost inflation, and just to what extent we have seen the full impact yet, and secondly, what you are doing to mitigate this, looking ahead for the second half. Should we expect you better hedged, or are we still going to see the full effect to come? How should we view this into 2022 in terms of new actions you have taken on this? Kristian, thanks for that. I think for 2021, when we released the guidance today, we haven't changed the methodology we constantly work with. That means we look into the backlog, and we look what we are executing and plan for executing in second half of the year. There we basically assume that what we are experiencing now, you would appreciate we are now in beginning of August, a lot of those things are either on the way or already towards sites. Therefore, we have a fairly good visibility in that part. Of course, having said that, I think right now one thing is the cost inflation. The other thing, which Marika mentioned here a little bit, like rerouting. We also work in a market right now where it is extraordinary circumstances. Where you just see that it can be either put on wait and hold outside a harbor, or you can actually have the unfortunate situation where somebody leaves without taking your ex works finished good with on the ship because they have prioritized somebody else's. I think right now that is where we talk about its mitigation, down to the single asset and down to the single shipment. That matter, we are very, very strengthened and very, very strict in following. Understood. Can you provide any flavor on sort of the magnitude of impact on the supply chain versus the cost inflation? I would say that the biggest part, probably answered the same way as we have done, Kristian, is that the biggest cost increase that we see right now, that is to a large extent due to both rerouting. You have cost increases, but you also have scarcity. It is the changes that is the most costly part. We also see an impact from raw material. The biggest part is really the transportation. You would have also, because as Henrik said on the lockdowns that we now see in Asia, you have complete lockdown. You cannot install the projects. Therefore, you get a slippage. We get additional costs because we have to have cranes, what have you, longer period at the sites. Getting people in is very difficult. It is the sort of unprecedented situation due to the pandemic as well as the cost inflation. A little bit, unfortunately, of a double whammy from that perspective. Understood. Thank you very much. Thank you. Our next question comes from the line of Arsalan Obaidullah from Deutsche Bank. Please go ahead. Your line is now open. Good morning. Thank you for taking my question. Just one. I just wanted to understand whether, in terms of in the near term, you're seeing sort of any negative demand for onshore turbines just coming from the rise in raw material costs, and the quarterly turbine prices as well, and also from the regulatory uncertainty in the U.S. Are you sort of seeing anything here in the near term, on the demand side? Arsalan Obaidullah, thank you. I think there's a couple of questions in your question here. I think on the onshore, first of all, I think it's clear that what we also alluded to here in Q1, and we discussed that in some details after Q1, with an order intake of 2 gigawatt in Q1, it was also a signal that there were quite a number of adjustments and discussions. Whenever you have a price or a cost adjustment to the magnitude of what we are experiencing now, customers will go back. To some extent, they will go back and revisit their internal processes, either for internal approval of investment committees or external financing. Of course, that takes time. That pushed a lot of the discussions from Q1 to Q2. Some of these discussions are now reflected in order intake, and there we are adamant with the same process. We have the robust process of order intake, there one of the priorities is they don't drop below the threshold. I think the threshold here is the same, which we always work with, we are just disciplined around that. That has affected it, I will just say the numbers here in Q2 also confirmed that we shouldn't underestimate that the price of energy has also gone up. When we sat here a year ago, we struggled to find, at least in Europe, PPAs. There were electricity prices around EUR 20 per megawatt. Now, that is up 240% compared to a year ago. I also think on the electricity side, that has suddenly become more valuable in most of the markets. From a customer point of view, I think it's about connecting also the full value chain of this. Unfortunately, it seems like coal has gone up 100%, which means there is an increasing demand for coal, as well. The onshore, we don't see a change in the underlying. We actually see it the opposite, as mentioned, for instance, the example in Germany. When it comes to the U.S., a particular situation is still there is, in some ways, there's a clearance on the PTC. You can also see we have taken some orders, but not to the extent we would like to. We are in progressed discussions in the U.S., and therefore, I think we will hopefully see more clearance on what to come from that. You all appreciate PTC is an ongoing discussion point in the U.S., and also compared to the local manufacturing and employees in the U.K. In the U.S. That we have to wait probably a bit longer into H2 to await the administration and their decision on PTC. Thank you very much. Thank you. Our next question comes from the line of Dan Tørgo from Carnegie. Please go ahead. Your line is now open. Thank you. Maybe a bit more flavor on the, sort of, say, incremental margin that we could be looking out for here. When I calculate through and try to do some reverse engineering, you're guiding for EUR 1.5 billion more in revenue in second half 2021 compared to second half 2020. What sort of incremental margin should we put into that? That would be the first question. Second question would be on deliveries. You delivered in second half last year, some 10, close to 11 GW. Is that feasible here in second half 2021, given the circumstances and the environment we're in right now? Yeah. Obviously, I think you say it yourself, Dan. It is a lot of uncertainty with COVID and the restrictions. Obviously, I think we have shown for a few years now that the extreme push in second half, which is sort of a normal profile, but the extreme has probably been higher, both last year and expected this year. Expectation is obviously that we can, and as I said, there is a slippage here from Q1, so Q1 and Q2, so first half. We still expect and intend to be able to manage that situation. On the margin side, we continuously work with further improvements, as I said, on the productivity side. We also have a very handsome average sales price also in the backlog. If we can avoid too much changes and too much rerouting, too much extra cost, then obviously we are in a better position, and that is also reflected in the 5% to 7% EBIT guidance. Just to understand, what are the risks here, and which markets? Is it 1 GW we are talking about here, ±? Which markets should we be looking out for where this additional service could appear? Is it Brazil, Vietnam, etc.? I mean, in these emerging regions. Yeah. I would say that Latin America has its definite challenge, but I would say the bigger challenges are in Asia right now. I think you mentioned one of the markets that is a good market for us, that is Vietnam, and there we have a complete lockdown. We obviously are installing at the best of our capacity right now, but there are severe limitations, and that obviously have an impact. We are doing what we can and also trying to mitigate the cost increases that we see due to this. I mean, so far there's no indication that we cannot do what we intend to do. Again, as I said, the EBIT is reflecting a positive and a negative and something in between. That is obviously why we're putting a 5-7, so a pretty big range still here in August. Understood. Thanks a lot. Thank you. Our next question comes from the line of Supriya Subramanian from UBS. Please go ahead. Your line is now open. Hi. Good morning. Thank you for taking my question. I have two questions. One is, into 2022, I know it's still early days, just wanted to get your thoughts on what proportion of the backlog, let's say, is potentially at risk, in terms of unhedged positions, if there are any, what are the mitigating measures that you're taking to offset that? Also, on pricing, one of your peers, of course, has stated that they've started putting through pass-through clauses in the onshore business as well since March of this year. Is that something that Vestas is also exploring or looking at absolute price increases? Supriya, thank you so much for your question. First of all, to the 2022 and the backlog as such, we haven't changed our way of working, and I think that probably served us well through some of these times where there are many variables, and that's the reflection of what you also see in what we adjust in 2021. We generally, therefore, work with the backlog, and there, of course, what we now see is that they are also in both the backlog and also for this year, they are in effect from price inflation when it comes to some either of the raw materials or the components. Can I also here, now I praised and giving a lot of praise to a lot of people understanding how to mitigate in this situation. We also have to deal with some of the, what I call, cases of probably bad behavior, where people forget the long partnership and probably forget the long contract or try to get out of it because they could earn more to deliver it to somebody else. That we are dealing with at the same time. When we look into the backlog, we are, as we will normally be, hedged when it goes firm, and then we work with some of the residuals. There are some markets where you have a less possibility of being fully hedged, and therefore, there are always a residual which we work with. Then as Marika rightly said, when you have a backlog where you have a transport, some of those transport measures will either have to be rescheduled. Rescheduling from a timing perspective now is just prohibitively expensive right now, and that we have to deal with, and, I wouldn't say become better at, because it is an extraordinary market. That we are doing. When it comes to the 2022, we work diligently through what we are doing right now, and as you've seen today, I think we can be counted on that we keep working on the project level and at the same time with the global supply chain as such. When it comes to pricing, I don't want to go into contract clauses and that sort of name of the game. We work, and we have been here for now decades of business. I don't think we will start saying that we have invented something new. There are for some customers, when you're regulated, absolutely when you come into some of these things, you need to have a price. It needs to be firm so you can get the approval. At that point in time, we have certain ways of helping each other by hedging the price risk. From other customers, it's clear that until it goes firm, there is a variable in here, which of course, as we spoke about, caused some delays in the order intake also in Q1. I think we are well here. With the extent what we are seeing, I mean, prices of a renewable wind solution goes up right now. There's no other way of saying it. I think our customers appreciate that. They also see, by the way, that their offtake in pricing goes up as well. I think it matches well together, and dare I say, there is probably a customer or two that has also smiled and said even the electricity has gone more up than the turbine. It's probably a market that will find its natural in due time. Sure. Thank you. Just 1 more question around profitability across geographies. Given that potentially the weight of U.S. and the total sales share is likely to come off. In the next couple of years. Could you shed some light, as in is profitability broadly even across regions, or is U.S. higher profitability, so would there be an adverse mix effect going into 2022? We see a robust process here. We don't favor or disfavor any locations in our markets, so we have the same thresholds. We work with the same thresholds in that sense. Therefore, we more see that the volume that comes out of our global supply chain will also be allocated to the customers that basically stays within our limit of threshold of taking the orders. We don't disfavor that, and therefore, as we always discuss, ASP will variate, but that's due to either scope or complexity or, to some extent, the geography where it's delivered in. All right, great. Thank you very much. Our next question comes from the line of Akash Gupta from J.P. Morgan. Please go ahead. Hi, good morning, Henrik and Marika, and thanks for your time. My first one is on the U.S. I think you've been saying that we might get some clarity on an extension of PTC by end of this year. We saw your U.S. competitor was saying that this extension will likely result in near-term uncertainty and pushes out some investment because of the longer duration of subsidies. Any thoughts from your side in terms of how, if we get 10-year extension, it might impact your orders, and could there be any risk of some delays because the customers don't need to act quickly, and they may want to maximize their returns by waiting for some of this inflationary pressure to come down? The second one I have is on extent of price increases. We heard from one of your competitors that this raw material headwind needs to be absorbed by the entire supply chain as well as customer, and it is unlikely that we would be able to pass it on to customers completely. Do you have any thoughts on that? Thank you. Akash, thank you for your question. First of all, on the PTC, I think you're asking me to comment on the unknown, and I will try to avoid that. I think we are in a current regime when there is, as we have seen in the extension that was earlier, we have, in the last 24 months, seen the PTC either have extensions, positive commitments, and in this case, it might be that there comes a slightly new flavor to it, either in the number of years it covers, percentages, or localization. I think anything there will just be adding to the speculation. I think customers being said, everyone actually prioritize, whether that's onshore or offshore in the U.S., an acceleration of how we can get more projects. Therefore, I would rather say, when there is clearance of the frame and therefore the legislative frame around the PTC and therefore the projects, then I think positively we will also see quite a strong flow. That might be that it then has a 12 months lead time to the delivery. Let's see when that comes, Akash, rather than speculating to it. Right now, as we commented on Q1, customer generally will be on a wait and hold until they can calculate the complete effect on the projects and the business. When it comes to price increases, if you ask for a% of fairness in the world about cost coming up in raw materials and components and transport, that doesn't exist. What is important for us to say is we have the firm discussion based on the order intake, and when it comes to us, and we do that costing update regularly currently, because it is that variable. The price and the percentage change of some of these things require us to do it regularly and frequent. Therefore, that will come into the customer conversations. Having seen that somebody thinks that it's to be forgotten, and there is no price increases to the turbine, that's probably not something we will encourage, and I don't think that serves the industry at all, actually. We want to be a professional partner, and a professional partner also know how the pricing of the product and solution works. Thank you. Our next question comes from the line of Casper Blom from ABG Sundal Collier. Please go ahead. Your line is now open. Yes. Thanks a lot. First of all, a question we haven't really talked about yet. Marika, as you mentioned, you had a bit of a tailwind from co-development projects in the U.S. affecting the income statement this quarter. Could you give any kind of guidance on whether that is a sort of sustainable level to shoot for coming quarters also, or is that too lumpy a kind of business to put anything in there? That's the first one. Thank you. Yeah. I think, Casper Blom, that you're somewhat answering the question yourself. It is lumpy, but obviously, this is more and more becoming a part of sort of the overall business. When you're starting to divest, it's more late stage. If I look at the portfolio, you have a good mix of it. It is very lumpy and very hard to be precise. Obviously, as we're having co-development as part of the business, we're expecting this to be on a more frequent basis than to give you an exact number what that frequent basis is. I cannot do that at this point. Is it fair to assume that it's a number that will grow year after year as you do more and more of this? Obviously, that is the expectation, and that's why we have focused on the business. It is lumpy, and it takes time. That's just my experience. Okay. My second question regarding the EBIT margin in the Power Solutions business. I know you don't give a breakdown between onshore and offshore. I do note that you had much more revenue from offshore in this quarter. Can you give any indication on whether you are sort of approaching a break-even level on the EBIT margin in offshore with this kind of revenue that you saw in the quarter? As I said, when you do that, Casper, you can't. We gave the guidance of basically the journey we are on, because we got the insight and that bit, the backlog we took over. Therefore, this year and the following years until we are into basically end of 2024, it will be a margin dilutive effect of the offshore business. In a quarter where we have some turnover, of course, that helps sort of dilute the fixed capacity cost, as Marika also argued, but we are integrating a business. We have also done the integration, so synergies will come over 2021. That's just how it is. We don't expect on a full-year basis to change any of the guidance we did in Q4 2020 when we acquired the business. There's no indications of anything else. You don't want to say whether this revenue seen in the quarter is sort of enough to cover the fixed cost in offshore? No, I don't think I will comment on that one, because then we start commenting on part of what is being delivered under certain projects, and that one is not in anyone's interest in a market where there is few projects and very few competitors. Fair enough. Thanks a lot, Henrik. Thank you. Our next question comes from the line of Martin Wilkie from Citi. Please go ahead. Your line is now open. Yeah, thank you. Good morning. It's Martin from Citi. Two questions. The first one, just coming back on pricing. From the outside, when we look at raw materials and so forth, a layman sort of assessment might be that pricing has to go up by maybe 10% or so. I understand that's obviously too simplistic because there's many, many things that come through the supply chain. All these raw materials are not necessarily bought by Vestas. When you look at your comment that pricing is stable, or on a reported basis, the ASPs are up 1% year-on-year, what are we sort of externally doing wrong in that calculation to see that pricing that is stable is still supportive for margins when it does look like raw mats would suggest that pricing has to be far higher? That was the first question. The second one was just on service, because obviously very good level of profitability in the second quarter, it does imply a deceleration of service margins in the second half. Just to understand if there's any specifics around why that might be, or if it's prudence in the guidance, just to understand a little bit about the implied service profitability in the second half. Thank you. On the pricing side, thanks, Martin, for the question. As I said, when you see pricing, you can't just put the sort of equal between an ASP and a pricing. I said in Q1, we have seen it a number of times now. We have also seen projects by projects being escalated. When we say stable pricing, it means stable pricing also considering the value creation of the individual projects for Vestas. Therefore, we are satisfied with the development in the ASP. As I said, we booked an overall 0.84 and 0.79 in the quarter, and that actually fulfills and respects some of those conversations. You shouldn't forget there are more than 20 countries where we have done order intake in a quarter like this. You can't scope and other things, you can't really say that that's then unchanged or whatever. We say it's stable, it fulfills what we also set up it should do, that's what we're working diligently towards. Be careful of it. It's here. We can see it. Some of the projects, we know that there is a percentage increase, and I won't comment on your 10% calculation, or it's five, or it's more than 10, because there are areas where it is quite a lot that changes in the current profile. If we go to the service margin, and I obviously understand your point here, Martin, but the only thing I will repeat myself, you will see also here lumpiness. The 24% that we have indicated is something we feel comfortable providing to the market. You will see a little bit ups and downs, depending on which quarter you're in. Obviously, it is overall, on a 12-month rolling, a very stable business, good performance, and that is what we are indicating at this point in time. Okay. Thank you very much. Our next question comes from the line of Deepa Venkateswaran from Bernstein. Please go ahead. Your line is now open. Thank you so much. I had one follow-up question and a new question. On the commodity inflation, Henrik, you mentioned that there's some residual exposure. Would you mind elaborating a bit more on what commodities you're talking about here? Is it also fair to assume that the guidance changed today, the 100 bips on margin and EUR 500 million? Can we say that that's mainly because of the logistics cost and constraints on the physical side as opposed to any of these raw mat inflation? My second question is for Marika on the SG&A. I know overall the ratios have increased because of offshore, but if I compare with last quarter, seems like SG&A has trickled up a bit more to EUR 275 million versus EUR 260 million. Should we read anything more into it? How do you see the evolution for the rest of the year on SG&A? If I answer a little bit on Henrik's behalf here on the commodity side, it's a rigorous process. If there's any residual, it depends on whether it's indirect or direct, obviously having an impact, and that is what Henrik is alluding to. I would say, I think it's fair to say that the biggest exposure from a commodity point of view is the steel when it comes to our business. Obviously there you have a very direct impact from the tower and indirect on other components. That is what obviously changed the picture. I would also say that at the speed of increasing right now, you will see a timing gap from offering to when you firm up any order. We haven't seen anything like this overall. When it comes to cost inflation, the biggest part this year, to be very clear, is transport, and the second 1 is raw material. There's 2, and both of them are just further amplified by the COVID situation we're in, because that's causing a limitation on the flexibility you have as a global company. Then on the SG&A side, now we see we have situations normalizing a little bit in parts of the world, going back and forth again. You also have, remember, that you have depreciations increasing, and that is together with offshore depreciation is the other part that is going up due to previous investments. Okay, thank you. Thank you. Our next question comes from the line of Ajay Patel from Goldman Sachs. Please go ahead. Your line is now open. Good morning. Thank you for the presentation and allowing me to ask questions. I just wanted to maybe add the first one just to make sure if I could get a clarification. Is the vast bulk of the downgrade on the margin the logistics and the potential cost increases you may from project delays? I'm just trying to understand if the raw material bit is 1/3 to 25%, 50/50. Just any sort of rough guide would be really helpful just to make sure I understand everything. I guess just if you could, give us some form of guidance on at least what you can see, which is the order intake you've had year-to-date. Is that order intake consistent with margins of 6%-8%, which was your previous outlook before these additional costs came through? Is it too early to tell because of the residual exposure you have on the commodity there? I'm just trying to get a sense of what sort of risk do we see for next year on raw mats, effectively. Okay, if we start with the cost inflation, transportation is the absolute major part, but the second one is also the raw material. I would say to a certain extent, it's direct, but also indirect. The logistics is a big impact. You have other costs relating to slippage due to, in particular, what we see this year, it's lockdowns, but it could also be weather conditions. What we see right now is more from COVID situation and limitations in different countries. In terms of your, I think very charming question around how the pricing relates to a previous guidance for 2021. I think it's clear also what Marika said, the initiatives and the tools we are having internally is diligently working towards the goal of an EBIT margin of 10%. Therefore, when we work with price and adjustment here, we also diligently work towards what we also said as a longer term. You can't read anything out, either related to a previous 6%-8% or a current 5%-7%. We constantly try to do better, Ajay. Okay. Thank you very much. That's very clear. Thank you. Our next question comes from the line of Rajesh Singla of Societe Generale. Please go ahead. Your line is now open. Yeah. Hi, good morning. Thanks for taking my question. This is regarding the LCOE of your 5.X MW turbines. Is it possible to comment on how that LCOE number has changed over the last 1 year and where it stands currently? Second question would be on the pricing front. Last time when we had a discussion, you mentioned that we hedge everything whenever we receive a firm order, and I just want to make sure that we are on the same track for the future as well. The order book currently we have reflects that factor. Well, yes. Thank you so much. I think here, I do appreciate that we have quite a large audience, and as you are not necessarily a customer buying the turbine of a specific nature, then I will avoid commenting on the development in LCOE, because that is simply too much information to a broad audience. We generally work diligently with all our platforms to increase, either by power mode or upgrades or new models to reduce the levelized cost of energy, and you would appreciate that. That is also one of the reason why, of course, we embark on the journey in offshore and also become a leading player there. When it again comes down to fully hedged, yeah, that's right. Generally, when it goes firm, we of course hedge as we can to the tune of it comes into the global supply chain. When we come and get into the global supply chain, you will have certain raw materials and components that are, to some extent, not hedgeable from just buying a future price security of that. Of course, there, we work with the partners, the supply chain. That works really well, and probably in this case, guys, except also it demonstrate the strength of the supply chain in what we are working with, considering the environment we are in. I think here, it's also finding that it is a 100 basis points midpoint adjustment, which actually gives quite a lot of credit to how the supply chain works, both with the hedging, but also mitigating exactly those bottlenecks that we have in major harbors of the whole world. I think here, little bit of credit back to that internal team and internal teams that are working so diligently with that and the partners that support us externally. Thank you. Maybe just one follow-up on the hedging part. For how long we can hedge all these raw material costs? I think last time we heard that you can hedge quite longer into the future. Maybe a bit more clarification on how long you can hedge these raw material costs. The hedge timing is not necessarily the importance here. It's the how that connects to the project order intake. We generally can hedge in the same timeframe as we have the order intake, or you have other clauses that will then have the discussion. That hedge, you can't say that runs out on a project. To phrase it slightly different is that we have different methodologies. You can hedge as such, but you can also pre-buy, you can store, and you can index. We're obviously using the means that we have. I would say also, the longer period you have, if you would do more of financial hedge, it's very costly. Yeah. That is something you try to avoid. We have different means, and we have, over time, used all of them where we see it's most appropriate. Thank you. Thank you very much. Our next question comes from the line of Claus Almer of Nordea. Please go ahead. Thank you. Thank you so much for taking my questions. I will take them one by one. The first question goes to the in-for-out orders, which in 2021 is at a very low level. Why is that? Is this one of the reasons for the lower revenue guidance? That would be the first one. Yeah. No. Yes, you're obviously right that we have a lower in-front this year. The change in revenue guidance is primarily how the slippage will pan out. Obviously, slippage means that we haven't lost anything, but it's a timing question, so it's not relating to in-front orders at all, is pretty firm comment from my side. Slippage definitely, because we have such a high activity level in the second half. Things will have to be, if not flawless, at least pretty good. That's also why we're providing a slightly big range on the EBIT side. Should we expect some in and out orders being announced in Q3, for instance? Has the year gone and it's too late? We shouldn't exclude, but as you are rightly saying, you're in August, so with a supply chain of ours, you will have a less and less impact of that. There's no, as Marika said, it was a backlog for this year that was different, and to a much lesser extent, depending on in-front orders. You have seen very little, for instance, which normally is one of the market in China, which is also just an acknowledgement of how the Chinese market is currently. Even excluding China, it is a low level. Is this by choice of Vestas, or is this the nature of the wind market, or why is it so low? As I said here, I think it probably goes that it's maybe reflecting some of the things both from China and the U.S. They come out of a year where there are certain things that changed in their way of dealing with it. That might be that it was more predominantly in a year where you want to take advantage of a tariff or a different regime coming to an end, and therefore you push for some of these in-for-out orders with very short notice. I would also say from a manufacturing point of view, it's much better and much easier to mitigate some of it, because if you came and asked for an in-for-out order right now, come on, we all have to appreciate. We know exactly what the cost of that will be, and that's going to be quite a lot higher. Okay. Makes sense. The second question goes to the Lost Production Factor. That continues to increase and is now at a 3% high level. When should we expect it to have peaked? Does this high level actually have a negative P&L impact, excluding the provisions, obviously? If I answer the latter part of your question first, the Lost Production Factor increase doesn't have a P&L impact. It's obviously the warranty provision that has the P&L impact. The consumption is increasing, and obviously, even if it's not good to make the provision, but it's as anticipated, and it means that things are going according to plan. We have said, if I remember correctly, and also expected that to increase here in the quarter. The Lost Production Factor is a consequence of that we are now addressing the two issues that we had. I would say, expect a higher level this year, and then obviously, going forward, we haven't been that precise. We should see an improvement, although not down to the one and a half in the early timeframe. We should definitely start seeing the improvement in the latter part of next year. Okay. Thank you so much. That was all for me. Thank you. Our next question comes from the line of Sean McLoughlin from HSBC. Please go ahead. Your line is now open. Thank you. Good morning. 2 questions. Firstly, on cash generation, which looked pretty strong, seasonally strong in Q2. Just wondering how you're thinking about potential for a buyback in 2021. Secondly, on offshore, we note the first signal of interest for the 15 MW turbine. When would you expect to be booking the first firm orders for this machine? Thank you. I think on the cash flow side, Shaun, as Marie already said, we have a tremendous focus on cash because it links well with the profitability and therefore the value creation. When it comes to timing of it's fair saying we are in a year where there are variables coming from the especially on the external environment we are working in. There we will always be more prudent, more sort of wait and see. We haven't decided anything on that after Q2, and we will evaluate that on an ongoing basis. If cash continues, then we will look when we are later in the year, how we will deal with that, but exclude or include nothing in that sense. When it comes to the offshore, you will appreciate the offshore market works with slightly longer lead times, therefore the FOI is sort of the order intake is not necessarily the holy grail for us. We work diligently in a number of cases around the world. As you probably picked up, there is enormous good momentum into the offshore approval process on governments in major markets of the world, we are quite keen exactly in participating in those discussions. That comes both from customers, it also comes from the localization of manufacturing and supply chain into those countries. There we are, I think, a fair partner for many countries right now. Have a bit more patience when it comes to firm order intake because it is a different cycle compared to the onshore. Thank you. Our next question comes from the line of Sebastian Groh from Commerzbank. Please go ahead. Your line is now open. Yes, good morning. Thanks for taking my questions. I am with Henrik. The first one is also around offshore and the preferred supplier agreement with EnBW. I have read from their press release that the FID is only due in 2023. My question would nevertheless be how we should think about terms and conditions for the margin thresholds, working capital terms, et cetera, because this is obviously so far the first project based on the V236. Sorry for bringing it really down to a specific project in this case, but it is of utmost importance and hence the question. The second question that would be more on services, but let's eventually better start with the offshore first. I think I will again hear Sebastian, first of all, again, a charming question. I will just say here, with respect of the audience and the wide respect of the audience in a single project like that, we won't give any details of that. That will be wholly unfair against the customer discussion we appreciate so much on the partnership. I will also say here, I know this 1 is too open an order. We work diligently with that. We also said that when we come beyond 2025, we have the same profit targets for the two businesses, and therefore you can assume that we work diligently on the same value creation metrics as we would do for what you know us well for in the onshore. That's how we work, and that's how we work well with the partners also in offshore. I think that will be my very further details to also a fair and open press release from our customers and partner in EnBW. Yeah. That's fair. Okay, thanks. The second one is on service, and a quick follow-up on the mixed question for the second quarter. Can you just shed some more light if offshore has eventually contributed much more meaningfully in a sequential comparison? That will be the first quick question. The other one I had is more on a structural nature of the business, because you mentioned in the quarterly report that you are obviously seeing some greater synergy potential between onshore and offshore. My question would rather be if you could be a bit more specific which areas or eventually also financial impact you might be seeing here. Yeah. Okay. Gitte to service part. On the service, the increase obviously, I think I said, both from onshore as well as offshore. It's clearly contributing to the increase quarter-over-quarter. We also, again, saying that we have an increase in the onshore space as well. When it comes to the lumpiness of the quarters and the profitability is that we see that it depends on how long the components are lasting. That depends on which given quarter you actually have the cost for it, and that will have an impact on the profitability. We have also been very successful on the cost out. That will also have an impact. If it's in this environment we're in right now with COVID, if we didn't have too much hinder when it comes to the flexibility in terms of sending people into different sites, that will also have less of a cost. All of those are impacting to a great extent to the positives that we see here in the quarter. Yeah. Overall on the service side, we are rightly building a global operating model where we actually align both the on and offshore colleagues in our regional setup. We can talk more about that in the one-to-one. With that, I would just like to maybe also to the operator pass to the last question, if we can do that. Last question, operator, please. Thank you. Our final question comes from the line of Mark Freshney of Credit Suisse. Please go ahead. Your line is now open. Thank you for allowing me to ask my questions. Firstly, on your margin, over the last 5 years, your share, your economic profit, your share of the benefit that these turbines bring to customers has been eroded. Now that the raw materials cost is going up or has gone up, is there scope for you to actually add a% margin onto that? I.e., surely the discussion should not only be about passing through raw materials but passing through a fair economic margin for yourself. Secondly, all of the discussion so far has been on logistics and raw materials. What about your own labor costs? Surely, the higher input costs are going to manifest itself into wage rises, probably more in some regions than the others. Surely within your cost base, there should be rises there. Are those something that you would have to absorb yourself? I would expect in the backlog, those are extremely hard. Okay. Mark, thank you for the two questions. If I just take the EBIT question first, is this the time of recovering a percentage of margin? I said, you know us well enough. We work diligently towards our midterm EBIT margin target, and therefore we will never shy away from that. Therefore, on a day where we revise our guidance 100 basis points down, I don't want to sit here and then saying this is the day where we then start talking about how we then recover. We constantly every day work towards a 10% EBIT target, and we will continue to do so. We are not going to sit here and say we will not be impacted when the world turns as it has done here. Which also then relates back to your second question, which is, what do we do in terms of, first of all, the competitiveness of our solution? Because that's the cost inflation we get, either from the raw materials, the components, or for that matter, transport, which is a material part, not least our own employee cost. We work with a global supply chain that over the last years have also proven it can be scaled, and don't forget, part of the capacity we have scaled to over the last three years is now serving a much higher capacity in terms of gigawatt annually. Which also puts us in a position that we, in a quarter like this, can take orders in more than 20 countries. That in itself will have to come, and therefore we also prove there that the levelized cost of energy is competitive in the country, and therefore we will have to also there look at what is then the output from a customer's point of view. As I just mentioned, probably the most important part is the price of electricity. I think that will find itself in a respect of the whole value chain from our customers as well. It is implied here. We work with efficiencies in the supply chain from an efficiency cost reduction point, we also work with an opportunity to scale up so that we will constantly work with, and we won't shy away from that. The recovery of EBIT from here absolutely is one of our key priorities besides delivering on our promised solutions. Mark, I hope we didn't upset you or you lost your connection there. I hope to speak with you over the coming couple of days. With that, could I just thank everyone for the attention and also for the interest. I'm sure we look forward to speak to many of you over the coming days. Again, thank you from here. Thank you.