Good morning, and welcome to this investor presentation of Vestas's third quarter 2021. Warm welcome to everyone, and especially also a warm welcome to Marika here next to me, which we'll talk more about. First of all, to the key highlights for the quarter. As announced this morning, Marika will be stepping down first of March 2022. We have an internal successor, Hans Martin Smith, who is our current CFO of Vestas North & Central Europe, who will succeed Marika in March the coming year. There is at least a number of months to handle, and I hope you will all congratulate Marika and also Hans Martin Smith on this call. Secondly, we were awarded the largest preferred supply agreement to date. We were the PSA was awarded in the Empire Wind project in the U.S. from Equinor and bp. That comes on top of an onshore order intake of 3.7 GW in the quarter. Revenue ended at EUR 5.5 billion in the quarter. wqIt's the highest ever quarterly revenue, and we have to say it was secured despite the continued supply chain challenges, and we'll come back to that, but a very high activity quarter for us. The EBIT margin ended at 5.9%. EBIT here impacted by further cost inflation and higher level of warranty provisions in the quarter. On the CSR and the ESG, the circularity roadmap was launched, as we promised before. We're raising the bar in also how we can make the turbine full circular when we look towards 2030 and 2040, and especially on the rotor and the blades. We are trying to accelerate the recyclability as we speak. Last but not least, we'll talk more about the outlook, but the guidance on EBIT margin was updated and revised to reflect these accelerated cost inflations and also the supply chain challenges, which of course we will talk much more about in this call. First of all, if we go to the global business environment, the challenging global business environment and supply chain instability is expected to last throughout 2022. I think on the positive, we have seen wind power is increasingly critical, first of all, to address the short-term electricity demand. We have seen the electricity demand short-term, go up in many of the countries we operate in. It is therefore also important we both support the countries, the customers, and not least also the whole community around, the electricity pricing. In some cases, electricity pricing and energy prices haven't changed just a few%, but we are now talking into the several hundred%, and in some cases, also in Europe, up more than 10 times of what it was compared just a few quarters ago. When we look at the supply chain disruptions and instability, it is absolutely here to impact both our timelines and also the increased cost. Timelines now means that most of the deliveries, when we talk about deliveries to either factories or the site where we need the assets and parts, we often see that maybe two out of three deliveries are either delayed or changed during this disruption. Therefore, cost inflation continues to accelerate within transportation and raw materials. We are mitigating, but unaffected we can't be. When we look at the mobility both for our construction colleagues and also our service technicians around the world, they are not only remain challenging, but as we speak, COVID-19 in a number of countries are reemerging. I will just say here, a big thank you to our customers, the partners, suppliers, but also not least here, our 29,000 colleagues that, despite this environment, have contributed to one of the busiest quarter in the history of Vestas, when we both consider the offshore and the onshore. When I go into the Power Solutions, no doubt Power Solutions now operates as one business. We have spent most of this year in now getting to one business and one team Vestas, which includes both the offshore and the onshore. Our systems went live just a few days ago over the weekend, so now we also operate in one system for the activity. That means we are basically coming out of the first year of the ownership of the offshore business, where we would have completed the physical integration of the business. Now it's all down to also creating that spirit and one team Vestas in there. When we then go to the highlight of the Power Solutions, we can say that power prices continue to be record high. Of course, still there is a smaller increase seen and compared to the PPA levels that are currently seen. That is absolutely challenging to the industry. It's also challenging especially to our customers, because some of our customers would, around the world, have agreed PPA levels that are away from where the current levels are or even the electricity prices are. Of course, that creates an imbalance because the cost of the renewable solution from Vestas on the turbine side increases in price, and therefore either dilute the business case or potentially challenging the project in its entirety. On the positive side, I will also say it probably on the medium to long term have never been better and more committed from the markets and countries we operate in. As an example, we saw Germany fully subscribed auction in Germany in the last auction here with more than 1 GW, and of course that non-allocated 2021 volume that was there from non-permitted that will come on top of the 2022 auctions, which means that Germany, as an example, will basically have gone in the last 12 months from almost zero to now doing auctions in excess of 5 GW for 2022. When we look at the offshore, yes, we had a 2.1 GW preferred supply agreement of our new 15-MW platform in the U.S., and that adds on top of the 3.7 GW onshore but a firm order intake in onshore. On the onshore ASP, it increased in the quarter to partially mitigate the cost inflation, and we will talk more about that. Positively on the charts to the right, as you can see, slightly lower order intake, but year to date we are happy with the order intake, but we are also cautious. As you can see in all regions, business as we go, especially in Asia Pacific and to some extent in America, we have been pleased with seeing also now the reemerging of the order intake in this quarter. When we then go to the service business, service business again here operate now as one team in the service integration between offshore and onshore, and that comes towards the end. Service business has had a very busy quarter in terms of also both seeing the activity and also what we have done in both onshore and offshore. Above that, we also introduced the Covento, which is our digital platform where partners can connect and customers can connect to also see a leverage scale in the renewable aftermarket. In Australia, we had a 396 MW service contract that was for 30 years on the new EnVentus platform, so again, a testament of how the market has worked, and this is definitely part of the projects where it was built, even though the conditions were changing along the way. We continue to have a full scope multi-brand focus, and of course we continue to also do that as part of our presence and density, as you can see to the right. Currently backlog in the service business is EUR 28 billion, of which 24 comes from onshore. We look after 124 GW, of which 118 comes from the onshore, and we then have a contract average which is above 10 years on average. Below you will see the regional presence and therefore growth in all regions, and we are very pleased to see the progress and also the performance of the service business. In total, we have now a combined order backlog that is in excess of EUR 47 billion, and under normal circumstances we will be really, really pleased with that. As you can also hear and see in this quarter, that order backlog gives some challenges in the current environment to execute. Again, thank you to so many colleagues being involved. When we look at the sustainability, we will just say here we continue the journey we are on, and therefore we also, as we said, earlier quarters, we will launch a full circularity strategy, which we have done here. We put out a roadmap where we will look at how we accelerate some of those targets for 2030 already now for the rotor, and we are very convinced that the road to 2040 will be both exciting, but it will also be rewarding for Vestas' customers, Vestas itself, and also our partners in the supply chain. We launched an updated and strengthened employee and supplier code of conduct, which we have received many positive comments on, and I think that helps us operate in the many countries, more than 80 around the world. In the quarter, we have seen an increase in the carbon emission, which is mainly driven by the offshore activities which we compare to last year in Q3 didn't have, and therefore of course the added installations of course therefore add to the CO2 emission in the quarter. Positively here, the displaced CO2 emissions, annualized, quarter-on-quarter is now up 13%. It's more than 200 million tons, and, at least living in Denmark, it's somewhere like 5 times, the full displacement of the CO2 emission of Denmark on an annual basis, and it more than equals 130 million cars. It is actually a number that matters in these days where it's discussed so heavily. Carbon emission I talked about, but probably most prominent here and what I'm really, really proud of on behalf of the executive management board, is also that we in a quarter where we had that many activities, our safety records did not only remain stable, but we actually managed to improve that under the high activity levels. Thank you for looking after each other. With that, I will hand over to Marika. Thank you, Henrik. Let's have a look at the income statement. We see very strong activity levels, but clearly a challenge with the profitability that I assume we will talk more about. You see revenue increased 16% year-over-year, so obviously focus on execution and doing it the best we can is obviously high on the agenda. You see a 16% change year-over-year and quarter-over-quarter. Gross margin decreased by 2 percentage points, driven by both Power Solutions and Service, as well as additional need for warranty provision. EBIT margin before special items decreased by 2.7 percentage points year-over-year, and that is mainly driven again by the lower gross profit and also higher SG&A costs as a result of the offshore integration. Special items is amounting to EUR 119 million here in the quarter, and that is relating to the alignment of the manufacturing footprint as part of the integration of MHI Vestas Offshore Wind. Power Solutions, I think it's clear to everyone that profitability is continuously challenged. Revenue, though, increased by 15% year-over-year, and that is driven by offshore offsetting a decrease in the onshore activity level that is primarily impacted by the continued supply chain challenges. EBIT margin before special items decreased by 2.1 percentage points, and again, as for the whole company, driven by higher warranty provision as well as continued increase in the external cost inflation. I would say that the increase is more than unprecedented at this point in time. Service business, we see a continued positive service performance, and the revenue increased 23% compared to Q3 of last year. That is driven by higher activity, both onshore and offshore. Absolute value of EBIT amounted to EUR 143 million, and that gave us a margin of 23.2% in the quarter. SG&A cost continues to be a high focus, but also under control. You see depreciation and amortization, excluding the impairments, increased by EUR 79 million year-over-year, and that is primarily related to offshore and the integration of offshore. Relative to activity levels, SG&A cost amounted to 6.5%, and that is an increase of 1.1 percentage points compared to Q3 of last year. Net working capital, we see a stable development of net working capital quarter-over-quarter this year. It's actually following the plan, and that is obviously a consequence of the high activity level on the revenue side. You see that we have a significant decrease in the inventory, and that is more than offset by down payments and milestone payments as well as receivables. Very good performance here in the quarter. Cash flow is obviously impacted by the operating activities, and positive free cash flow before financial investments is EUR 300 million in the quarter, and that is a decrease compared to Q3 of last year. The underlying factor is obviously the operating cash flow as well as higher investments. There's a decline in the net interest bearing, mainly driven by investments in CIP, but it remains at a high level, and the focus on cash discipline is continuing. Total investments, you see higher investment year over year, and again as anticipated. That is primarily driven by investments in construction equipment as well as transport tools, and investment in the V236 offshore turbine. No change in methodology or focus. Provision and loss production factor, obviously focus on warranty provision and the loss production factor, and here you see the trend in the loss production factor which we have spoken about. You see an increase further during Q3 2021, and that is a consequence of the extraordinary repair and upgrade level. Basically the same argument as last quarter. Additional provision of EUR 50 million here in the quarter, and that is related to cost inflation on components as well as transport, which we will talk more about. Warranty provision made is corresponding to 4% of revenue. I think it's also important to see here that provisions consumed increased also in this quarter. Obviously, that means that upgrades and repairs are continuing to a high degree. The capital structure, net debt to EBITDA, is continuously well below threshold, and negative 0.4 here in Q3 2021. By that, I hand over to you. Yes. Thank you, Marika, and then let us come to the outlook, which is the revised guidance. When we look at revenue, same as last, EUR 15.5 billion-EUR 16.5 billion, service still expected around 15%. When we look at the EBIT margin for the full year, it will be around 4%, where previously it was between 5%-7%, and the service is still to be expected approximately 24%, and investments will be below EUR 1 billion. When we then look at the warranty provision, it is expected to be at a level above 3% of revenue as a consequence of these increased cost stemming from the supply chain instability, but also the accelerated cost inflation from especially raw materials, transport, and turbine components. When we look at the special items, as Marika rightly mentioned here, we still say that it will amount to approximately EUR 100 million related to the integration of the MHI Vestas Offshore Wind and also where we see that the footprint has to be aligned. Therefore, I will just say here important is to note that the basic assumptions behind this guidance are of course more uncertain than normal, also with the reemergence of COVID and the continued supply chain challenges. Before we then go to Q&A, I will just do a little bit of marketing here also in terms of our Capital Markets Day. We have that, and it's an invitation to everyone for the fifteenth of December in Copenhagen, in the old location of Børsen in Copenhagen, or stock exchange in English, but Børsen Building in Danish. There will be restrictions, as you will have guessed, which means that you will have to come with a negative COVID test. I think we are all getting used to those circumstances. Of course, it is also still subject to that, at least Copenhagen, Denmark, and the rest of the world operates on normal transport levels, so you can actually access the Capital Markets Day. After that, I will just leave it to the operator and go to Q&A. Again, Marika, not yet, but another at least a couple of quarters together, and we look forward to see many of you in person, and surely say proper goodbye over the next couple of quarters. It will be a long one. Thank you for that. Q&A, please. Ladies and gentlemen, if you have a question for the speakers, please press zero one on your telephone keypad now. We ask you to kindly limit your questions to two at a time. Once again, if you have a question for the speakers, please press zero one on your telephone keypad now. Our first question comes from the line of Kristian Johansen from SEB. Please go ahead. Your line is now open. Yes, thank you. Looking at the cost pressure you're facing, it seems like you carry the entire burden of these unexpected costs due to supply chain disruption. I mean, to what extent are you able to change contracts to mitigate this by having customers or suppliers pay a bigger part of this going forward? Kristian, thank you. I think on the relationship to customers, clearly there is an ongoing dialogue with customers in the current environment. If we then look at it, if we haven't done the mitigation and other stuff, it would have looked very different because the changes in raw materials, the changes in also components is so severe in many ways that it's not about a single or a few percentages. It is double-digit percentages in many parts of the world. Some customers, when we look at the current backlog, there will be adjustments, and that happens on a single and customer-to-customer dialogue. Passing it directly to the customer in the current environment doesn't work either because there are places where the customer is heavily reliant on getting the solution commissioned, getting it online also under strict conditions. Therefore, Kristian, it is down to a customer-to-customer discussion and an area-to-an-area discussion. Of course, we're cautious about what comes into the backlog in the current environment as well. Okay. Let me use my second question to maybe address the same topic in a slightly different way. If the current supply chain pressure remains at the current level, will you then be better off next year? I mean, looking at your backlog. I'll say, first of all, as we also said here, the longer and the closer we get to a year, the better we will be off in the backlog. It is in the sense of can we just get some stability in it, and that's probably what has caused us also in this quarter. Last quarter has given us further increases. It has given us further delays in some of the things. Therefore, as we right now see it, Kristian, we expect that to continue for the next four to five quarters. That's the visibility we have. If it is positively for us, if it continues at this level, then we still have to have that mitigation quarter-over-quarter. What I think is important to say also, Kristian, is if you look at 2021, it's just been a continuous increase on all the challenges that we have mentioned and the cost of them. We haven't seen a stabilization in any shape or form, and that has obviously impacted the visibility here in 2021, and that's also what we're coming out with to the market right now. Just to be very clear, it's changes on a weekly basis. For next year, it's gonna have an impact, and what we see today, it's at a much higher level than what we anticipated getting into 2021. The cost is at a different level, and obviously that has been reflected in the negotiations with the customer. It is the sort of changes and lack of stability that is the most tough part right now. Maybe just to make sure I fully understand what you're saying. If we just see a stable development but at the current high level, you should still be able to make a better margin going into next year? No. We're not committing to better margin, but it creates a better visibility in how to deal with it than what we see today because the changes are so rapid and so significant. Understood. Thank you. Thank you. Our next question comes from the line of Casper Blom from ABG. Please go ahead. Your line is now open. Thanks a lot. I will wait with saying goodbye to you, Marika, and do a follow-up to Kristian's question here instead. Because one thing is supply chain, another thing is raw materials, and it's my impression that especially the highest steel prices will probably burden you somewhat more in 2022 than in 2021. Can you confirm that thesis that you know you might see some how to say some relief from higher prices and better visibility on the supply chain matters, but then you will have issues on yeah core raw material prices next year? I think it's fair to assume, Casper, that it's gonna have an impact. Obviously we're trying to mitigate as much as possible. But we cannot secure everything. With the price level where they are right now, it's significant. It's also other components or raw material that are increasing and having a much bigger impact next year than what we have seen this year, and one of them being resin. Okay. Thank you. Another question regarding the onshore turbine business. I think when you slightly lowered the revenue guidance in connection with Q2, it was because you saw that some projects were maybe delayed and being pushed into 2022. Now in this quarter there's been high activity in offshore, and I think onshore deliveries were a bit behind the street expectations. Can you put any number or try to quantify how much onshore deliveries are being postponed into 2022 compared to the initial plan for 2021? Thank you. I think it's a little bit too early to say, but it's also fair to say that yes, it could be some slippage. I think Q3 of this year clearly proves that from an execution level, we are doing pretty well in the environment we're in. If we see further challenges here in Q4, and when I say further challenges, it's not only sort of the very evident ones, but it's also the usual explanation on weather conditions and so forth could also have an impact on Q4. Having said that, we're obviously anticipating high activity level and try to do as much as we can. I think it's fair to assume some slippage into next year. Okay. Can you in any way talk about whether such slippage is hitting you on the project margin, or do customers understand that now with special situations and it's, yeah, no one's fault, things are just being delayed? No, I think that is obviously we together with the customers, we try to help each other as much as possible, in the environment we're in. I think everyone's trying to do their best, in terms of how we execute and how we support at this point in time. It's very hard to be very precise in what will happen in the latter part of the year. We've provided a guidance and that we obviously feel comfortable within, as we speak. Okay. Thank you. Thank you. Our next question comes from the line of Akash Gupta from J.P. Morgan. Please go ahead. Your line is now open. Yes. Hi, good morning, everybody. My first question is on product cycle. While it may be a bit premature to talk about new products now given you are ramping up on latest turbines as we speak, but historically, price pressure was addressed through new products, and we now see in China your competitors are stepping up the game with 190, 200 meter rotors that have been announced last month at Expo. So my question is that, do you think we will see an accelerated product cycle that may lead to high investment in onshore lasting for longer? I don't think there's anything in the current environment that makes us either doubt or see any changes to the current. I think we're all working in both countries and continents around the product roadmap, and that we are working with customers on. I guess I don't think there's any imminent changes reflected on that. We are comfortable with our range and not least our broad range of both onshore and now also entering the offshore. The onshore we are fairly confident in where we are today. Thank you. My follow-up question is on margin. I mean, usually if I look at last many years, at Q3 you always had a range, while this time around you have a more precise margin guidance than what we have seen in last few years. At the same time, we also see heightened uncertainty in the market. Maybe if you can reconcile why you have given more specific guidance, margin guidance for the year at a time when uncertainty is a bit higher than what we have seen in the last few years. Thank you. Yeah. I mean, what we do and always have done is to provide the market with our best estimate of where the year will end. That is representing the around 4% that we have provided, Akash, and it's nothing more to it than that. Thank you. Our next question comes from the line of Gaël de Bray from Deutsche Bank. Please go ahead. Your line is now open. Good morning. Thanks very much for the time here. The new guidance for 2021 implies a margin apparently between 5.5%-6% in Q4. If we exclude the EUR 50 million extra provision in Q3, there seems to be a clear deterioration on the sequential basis. What will be the drivers of this, please? I think we're just giving you very clear indications of where we are in that sense, because we're executing on a backlog. We see the full value chain having those cost inflationary measures coming from not either the raw materials, where a very large degree haven't changed anything in control of the process and the hedging of it, but they are just part of the raw materials, they're part of the components right now that are either in scarcity, where we just have to work through that. That, of course, gives us a dilution effect to what we are executing, what we're executing on, Gaël. I don't think there is surprise in that. When you look at the logistics and transport, whether that's the incoming or the outbound or outgoing transport, there will be suffering to it. Because if you are delayed, then you will have reschedules. Reschedules in this current transport market is almost prohibitively expensive. When you get to the outbound, there you will have some of the things where you are either late to site, and if that happens, of course, it costs the same. We are cautious, we're in control, we are managing, but we are now managing on not only a day-to-day, but also on a weekly basis, which is posing us challenges almost daily. What are the various options, if any, to make yourself less dependent on, in particular, some of your components or some materials like steel? I think to start talking about being independent in the current environment, which I think for anyone on the call is absolutely unprecedented. You have electricity prices that has gone up more than tenfold in very near countries like Spain and other parts of the world. Right now, I think it's about that the supply chain and the full value chain, including customers and also including off-takers, are standing together and saying, "We're on the right path for medium and long term." There are some short-term challenges which we all have to remain sensible of. I will just say here, talking directly to a number of our customers, most customers understand perfectly what conditions we are in and also understand why the industry has to act sensible on it. Right now, start talking about replacing or being independent on this. It's not possible to be independent of a product that is highly sophisticated, highly technical driven of both raw materials and components. Okay. Can I have a follow-up on the margin side? Yes. Sure. Okay, thanks very much. I was just wondering, you know, given the margin of probably below 6%, you're guiding now implicitly for Q4. It's obviously a quarterly run rate exiting 2021 that looks well below the current contentious expectations of, I think, 6.9% for 2022. How do you feel about, you know, that? How shall we interpret your statement according to which the full focus will be on protecting profitability? I think, Gaël, just to be very clear, we're not guiding for 2022 at this point in time. We are assessing the 2022 numbers as we speak. I think what is clear, and I think it's clear to everyone that the continuous challenges when it comes to both logistics as well as supply chain continues also in 2022. Then how big they will be is something we obviously come back to on the back of Q4 of next year. They are there and they are continuously increasing as we speak. Okay. Okay, all right. Thanks very much. Thank you. Our next question comes from the line of Supriya Subramanian from UBS. Please go ahead. Your line is now open. Yes. Hi, good morning. Thank you for taking my question. I basically, around profitability as well, just wanted to get your thoughts on if, and I think this was sort of asked earlier as well, but phrasing it slightly differently, if cost levels remain and challenges remain at current levels flat, and the pricing action that we've taken so far, in the nine months, have you all done any analysis on what that means, in terms of margins or costs, into 2022? Also, you know, one of your peers, of course, has started introducing price escalation clauses even in the onshore business, since earlier this year. Is that something that you all are also introducing in your contracts? My second question is more on the medium-term profitability. You of course have a guidance of double-digit margins over the medium term. What does sort of the current scenario and current margin level imply in terms of potential timing of achieving those targets? Thank you. If I start with your first question, Supriya, obviously we are again assessing the order backlog that we have at this point in time and what we have signed the firm order intake at. Every time we sign a firm order, we're obviously trying to mitigate as much as we possibly can. I think you're also aware that we cannot, on the outbound side, sign any agreements with vessels for a longer term. That is something that is addressed ongoing, depending on when you have signed a firm order intake. Having said that, stability is easier to plan for than continuous increases, and that's also what we're doing. Exactly how big impact it will have will also depend on shortages that we have been faced with in 2021, both from a transport and vessel point of view, congestions, as Henrik have said, and especially around our biggest hubs when it comes to the production. I mean, we are dealing with everything. Will we be unimpacted? Absolutely not. Escalation clauses is something we have worked with as long as I have been in the company, so no changes to that in terms of how we secure our pipeline the best we can, and we are by no means perfect. I mean, we're using all the means that we can, and I think Henrik also described how we are continuously negotiating with customers. But you also wanna keep your customer for the future. I think it's a mutual agreement to get to the best solution also going forward. Thanks, Marika. I can assure that those clauses will also remain in place long after you have left Vestas, that's for sure. Listen, on the double-digit here, as you can hear from us, if you just take the page 10 in our announcement as well, we have delivered in more than 30 countries. Of course, in 30 countries with the current instability and volatility, I think it's fair saying, Supriya, that's not the time of forecasting. I think on the internal side, on the processes and the controls and what we have done also when it comes to executing the project, we are actually very pleased. We are very pleased with the progress, but unfortunately on a day like this, all the effort of 29,000 colleagues around, which has also managed in a country like Vietnam to get a far and a long way into delivering within the tariff deadline of end of October. I think it is hard to say, but that was definitely not in a quarter or in a year where 10% will be in the reach. On the midterm, don't change. We see the same upside for 10% even in the industry. With the current volatility and instability, that is not right to talk about that in a quarter like this. Sure. Sweet. Thank you very much. Thank you. Thank you. Our next question comes from the line of Deepa Venkateswaran from Bernstein. Please go ahead. Your line is now open. Thank you. My two questions. So firstly, Marika, would you comment on the warranty provisions, which was 4%? What's driving this? Should we assume that for the overall year, is it sort of closer to 4% for the overall year as well? Maybe that explains 100 basis points of the margin reduction. Related, the loss production factor that has been going on. Is that in line with your expectations or is that worse? Is there any consequence of that, you know, getting closer to that 97? Secondly, I guess, with the CMD coming up in December, it seems like there is still a lot of instability in the supply chain, raw material and so on. Maybe could you just talk about what you might like to highlight? Because certainly investors would want to see things like the bridge to the 10%, which and like you mentioned, is not maybe something you wanna talk this quarter, but that seems to be something that investors really want to have. Would you try and give us maybe more visibility on the longer term trajectory and how you would get to how you would seek to get there? Thank you. Thank you, Deepa. So if we start with the warranty provision, and as we have stated, it is a cost inflation also for. I mean, it's impacting everything we do, also on the repair and the upgrades in terms of both, component cost as well as, transportation also for that matter. I think it's fair to assume that it could be an increase also here in Q4, simply because of the speed of the changes that we see in the market. When it comes to the loss production factor, I think we have been very clear that it will continue to increase simply because we are doing the upgrades and the repair. I would say also as we planned for. That will have a continuous impact also throughout the beginning of next year. I would say probably the first half before you will see a decrease in the loss production factor. This is following the plan. It's from a timing perspective slightly delayed but that's also because of the environment we're in. From a cost perspective, definitely more costly, and that you also see in the warranty provision. We are following, we have the solutions, and that is what we delivering into the market. What I would like to highlight before getting into how we will get to a 10%, Deepa, is also if you look at what we are doing internally, I think the efficiency part is a big component that is continuing. We are continuing to grow the service business. We are keeping the SG&A more than under control in this environment we're in right now. I think the most important thing is to look at the underlying efficiency. I mean, it's a lot of things that is not under our control, and that is the supply chain and the logistics, which is very heavy burden, and obviously not only for us as an industrial company, but other industrial companies. We will obviously try to highlight where we are and how that is impacting us at this point in time. I think we will get back to that on the Capital Markets Day. I think here, maybe just a short comment, Deepa. I think not to either raise or disappoint your expectations to our Capital Markets Day, but I think it is important here to say you will get an insight into some of the tools and some of the handles we have in moving towards the 10%. But I'm also sure you will appreciate it is an industry with relatively few market participants. So we won't do a deep dive into the individual details of basis points. We've always said it's the onshore, it's the offshore, it's the service, and it's the external factors. In the onshore, it goes for both customers, technology, supply chain, and how we leverage that. There are several handles in there, which we are actually quite pleased with in terms of progress. Of course, we are not pleased with seeing the headwinds we are faced with on the external world. We will give you more insight, but don't expect to get a basis points opportunity to look into that day. Okay. 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. You highlighted the imbalance for customers, because they're seeing the diluted business case and projects challenged by higher pricing. I mean, are you seeing increasing pushback on volume at current turbine prices? Or would you say that the pass-through, if I take the Q3 ASP, now adequately reflects higher raw material costs, let's say supply chain to one side? That's my first question. If I should take that, Sean, I don't think you can create, within 90 days, a full balance of what's going on in terms of volatility and discussion with customers. In some of the markets, you simply have that big variances, not only in the renewable solution between us and the customer, but also in the customer's circumstances in making the construction, the grid connection, and potentially also on the offtake. I think where we are long way in, I think where the markets are moving and adjusting quickly, there is a better understanding because of course there the customer's offtake moves up with the energy price increase we are seeing. It is probably where there are more rigid conditions in some of the markets where PPAs are not moving. That's of course where we have a slightly higher detailed review and probably also tense discussions because that is where it's more difficult for the customer to get into a business case that looks as attractive as it did just 90 days ago. We're also shown in this quarter a number of cases around the world where customers have continued with the order intake and where project was still very attractive. Therefore, I think it comes down to right now, project by project and customer to customer. It is difficult to pass these level of changes around with basically a day-to-day basis. That's not what actually the industry lives of in the long term. Understood. I mean, could you indicate, you know, where any markets specifically where PPAs haven't moved and customers are therefore having to be more aggressive on pricing? I will say it's in some of the main markets. There are still PPAs that have start increasing but are increased to the level what you have seen in the short term spot market for electricity. There is a very steep curve. It is a little bit here, what gives in first? Does the short term because there is a squeeze on the whole world and supply chain, which then settles the energy pricing down? Or is it the PPA that has to move towards what is going on in the short term pricing? It can be both. I think right now, unfortunately, that's not the visibility neither our customers or we are afforded in the current environment. I think it will adjust. It is some of also our main markets, but it's also in some of the main markets where the offtake from, especially, private industries are absolutely keen to have more renewable electricity coming towards them in the PPAs, and there is a different way of doing it. Understood. Thank you. Then my second question around higher spend on construction equipment and transport tools. Just very keen to understand what is this and where and why is it needed? No, it is obvious we have a number of new launches of products. We obviously have to change the tooling both for construction but also on the vessel side, so we can transport more and more efficient. I mean, basically the more products we develop, the more cost will be related to that fact. In the cost inflation we're in, obviously also have an impact on those items at this point. It's nothing strange or nothing new, but it's more costly again. Thank you. Our next question comes from the line of Ben Keelan from Bank of America. Please go ahead. Your line is now open. Yeah, morning, guys. Thank you for taking the question. So I wanted to come back on these contracts because I feel that the messaging has changed, where in Q1 and around the half year, the messaging was actually we're relatively comfortable that we have protection against some of the raw material inflation. You highlighted that you had protection through indexation from raw materials. You highlighted that you hedged firm orders when they came in. It feels like that has changed. I wanna understand in a bit more detail exactly, you know, where you are protected against raw materials and why are you seeing raw materials be such a big headwind when, you know, previously we were feeling fairly comfortable about the situation because of those protections that you had. Thank you. Thanks, Ben. I don't think neither our tone of voice or anything else has changed from Q to Q in a sense of we are working with very diligent process and on how we hedge things and also how we go about it. It's also fair to say in the current environment, it is not possible and has never been possible to hedge completely raw materials and components going into a full turbine. Therefore, some of the shortages and some of the disruptions and scarcity of the supply chain, which basically comes from some of the raw materials like the resins and others, will have an effect on us. I don't think any of that has changed, and you can hear that in my and Marika's tone of voice has not changed. We do the same. The model we work works. It is also, and I think I like to hear that from you, Ben, then this is not something that is normal business running. We got something that has changed with not only several hundred percent, but in some cases 600, 700, 800% when it comes to either the scarcity of logistics and transport possibilities or even getting the raw materials to some of our factories. I don't think we will call any of this normal business running right now. Is there a way to understand what proportion of the raw material headwinds or the raw materials going into the turbine are hedged? 'Cause I think I do feel that a lot of people, you know, clients as well, have felt that there was a degree of protection and that protection, you know, isn't there, and obviously you're seeing the impact today. Is there a way to understand how much of the, you know, as a percentage of COGS that is actually open and you physically can't hedge? I think if we start from the beginning, Ben, when it comes to raw material, the one factor or the one part that has impacted us the most previously is steel. We said from the beginning of the year that we didn't expect a material or we expected an impact from steel this year, but that was not the major headwind. Again, we have done everything that we have said previously, and that is, we have secured steel to the largest extent possible. If you have an unforeseen order in a given year, obviously you have to deal with it at that point in time. It is the firm order intake. You try to secure as much as you can, but you can never secure 100%. What we are referring to here, when we talk about the big challenge, it is logistical challenges, and I think we have been very clear with that has a much bigger impact today simply because of prices as well as shortage at this point in time. What we have discussed, if we go to resin, for example, it is both the price level simply because we've had fires, we had different things happening from a production point of view, or suppliers have, that is impacting us. I want to be clear, on the raw material, It's not the most significant part of the headwind this year. That will be bigger this year with what we see right now and the prices, how they are developing. I hope I make myself clear on that. Okay. No, that is helpful. 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. Probably the 18th question on cost pressure, but let me try at least. So I've just first, I guess my first question is just in a really simplistic way, if you have a 4.2 MW turbine, you know, today versus the beginning of the year, how much has the cost of that type of turbine increased? And then I guess the other bit that I wanted to sort of understand is which is the bigger force? Is it ultimately trying to pass these costs to the end user and then a proportion of them just can't be done in such a short space of time because obviously you wanna preserve a partnership to some degree. is it that over the course of the year, some of the base assumptions that you have for your deliveries have changed so much, the actually underlying profitability of those projects have changed. I'm trying to understand the sort of broad which is the bigger issue and then just the broad sense of just a generic turbine where we are. Ajay, thank you so much for your question, and I will also probably relate a little bit to Ben's point before. We won't give you, of course, a direct price comparison of a 4 MW platform. Too easy and not the forum for that, so that's an internal one. What we can just see here, we know what the effect would have been because we do that basically on a daily basis. What would have been the cost increases, while we just said if we have done nothing from the beginning of the year to where we are today, it would have been up in many markets into the double-digit% because that's what you are faced with right now. Of course, each project will be different because is it shorter, is it longer, is it more complex, delivery from a transport point of view? That's where the transport is a part of it, and then the single turbine cost of the turbine is of course part of it. I will say here, when you look at that, then it is down to the individual turbine, and that we adjust on an ongoing basis. Some of the projects we have seen have had not only once, but several price increases while the project has been discussed and planned between planning, conditional to it go, it confirm in our order backlog. It is also fair saying 99% of the customers we see around the world is ongoing customers. It's customers we have had for decades long, and it's customers that will play a role in this energy transition for the next decades to come. Therefore, it's about finding solutions to overcome and mitigate some of those cost increases right now. We cannot say we can avoid it, but I can also say we can document to customers how that price and cost increases are arriving. Okay. I guess the second question, if you don't mind, is there any sort of in regards to U.S. activity, has that completely slowed down over relative to your expectations at the beginning of the year? Would you expect that to shift into next year just with what's happening with potential PTCs and extensions around this? I think you're right in that, and I think we have been quite clear about that. We believe the U.S. market is an attractive market. It'll be a medium to long term. I think in the short and medium term here, everyone are waiting exactly the same as you just mentioned, what will be the final outcome of the PTC structure. I think it has a material and a deciding factor for individual projects to be planned. We have seen a number of projects going into the order backlog, also in the last quarter. We're actually quite pleased to see in a time with a lot of uncertainties that there are still orders being both executed and planned. There's no doubt that a higher volume and a higher market demand is right now fully relying on a final conclusion on the PTC structure for the coming years, which is also, I think, most of you probably have seen the proposals that are currently being discussed in the U.S. To add to that point, just in the negotiations or the conversations that you're having, even in the event that a PTC was put into place, as in would there be a decent sized lag before any ramp-up in orders or could it actually quite have a material impact if it was to be announced? What's the sense when you talk to your partners in that? I think it's always a little bit. You can have projects where you have almost now on permitting on approval already. You're just waiting to get the PTC confirmed to some extent, Ajay. That's probably a minor part of it. The bigger volume of it will be something that is ongoing, and that probably has a lead time that more leads towards the six, 12, and 18 months from now. I'm pretty sure it will unfold pretty quickly in such a development market. It's probably the most developed market from a transparency point of view in the U.S. Capital is there, projects are there, and if there is a political will and intent, then we will see projects coming pretty quickly to life. Thank you very much. Our next question comes from the line of Rajesh Singla from Société Générale. Please go ahead. Your line is now open. Yea h. Hi, good morning, and thanks for taking my questions. Maybe if you can share a few questions on the margin side. Can you please share the offshore margins which you had during this quarter, if possible? Because I think offshore had a very good activity in this level in this quarter. The second would be on the service segment margins. I think somewhere you had put a comment that less cost out in service contract. What exactly that mean, if you can elaborate a bit on that? The third question would be on warranty provisions. Are there any indexation in those warranty contracts? Because it seems like your warranty cost increased because of cost inflation. Are we doing anything to include cost indexation clauses in those warranty provision or warranty contracts? Yeah. If we can start with your last question. On the warranty provisions, if there are any indexation overall in the service agreements as they are very long-term, there are definitely indexation in the contracts. Otherwise, it's very hard to enter into a 20-year or a 25-year contract with any customers. The warranty provisions, I think, is slightly different, as they are normally the warranty is shorter term. I think in this case, it's very clear what it's referring to, it's repair and upgrade that we have to provide to the customer. I think it would be a bit strange if we would come with the cost inflation towards the customers in that case. Sorry. Now I forgot. I get so excited on the Offshore margins. Yes. Offshore margin. Sorry for that. Offshore margins is what we have said earlier. It is in general lower margins compared to the onshore. As you see here in the quarter, it has a higher activity level, so I think you can draw your own conclusions on that. Then it was. Sorry. Service. Yeah, it was service segment margins. You had mentioned about less cost out in service contracts. Right. Can you please elaborate that? The cost out on the service side, I mean, the focus continues, but I think it's also fair to say in this environment, probably have some cost out that is mitigated by some cost in because of the cost inflation that we are faced with. From an efficiency point of view, in terms of how we act and what we do, that is continuing, and you will see fluctuations on that. It's not that the program is not in place and that we are not having the focus in any shape or form. That continues, but you will see changes in any given calendar year and quarters on the cost out. That is no change from previously. Okay. Thank you. Maybe one follow-up question on the general industry. The wind industry has seen so many challenges in the past, from auction system and then to tariffs and then, COVID and now the supply chain issues. Is it possible to highlight, like, some of your key learnings from this challenge which could probably help you in mitigating these kind of effects in the future? First of all, one thing, I guess, is you don't have to feel pity for yourself when you sit and doing the job like this because you just have to get used to that it seems to be a lot of headwinds. On the other hand, it also shows in such a large energy transition that we are finding ourselves in, we are of course, learning from it. I think one thing you can never underestimate is also how well the industry and also together with customers stand on this one. Because all of us appreciate we are building a renewable energy system for the next 30, 40 years, and that, of course, has to take some bumps and some hiccups along the way. This is one of them. If I look at it, this is not a particularly Vestas, this is not a particularly wind industry, and it's definitely not a renewable energy particularly issue. This is a worldwide global supply chain issue that hits the world right now. Therefore, I'm sort of saying here, we are learning. If there are some inefficiencies internally, we are taking that on the chin, and we are learning that from day to day and months and months. We can always improve, and we are doing that. On the other hand, if we have not been able to mitigate what we just shown and shared in this quarter, we would never have gotten to a point where we were able to deliver projects in more than 50 countries and a revenue of more than EUR 5 billion. Guys, that shows the resilience and also the commitment from that many colleagues of Vestas. We take that, and we work hard with it on a day-to-day basis ideas. As I said, right now, for probably the most important thing is people and investors at least to feel that they have done a good job, but not always being treated fair in what we are faced with as headwind. Okay. Thank you. Maybe one last question from my side. Would be earlier you mentioned that you have to take care of the customer relationship, and you have been in discussion with them for mitigating the impacts. Are they getting good offers from other people? Like, it seems like everyone is suffering in this kind of environment. When we go to the customer saying that this is, like the cost I am incurring on this kind of project, I need to escalate the prices. What kind of pushback you are seeing from the customer, which- Makes you say that we want to maintain our relationship with the customers. I don't think that they would have any other avenue to go for or buy turbine from any other vendor, right? If somebody can get a turbine without any of the price increases we have just experienced, I guess my general invitation to such a customer discussion is then he should buy the wind turbines and the solution from somebody that hasn't experienced any price changes. They don't exist around. Therefore, I will just sort of say customers are super sophisticated. They generally look at all what comes in to be priced under their renewable solutions. We don't have that level of lack of sophistication in our customer base. This is for many customers, it's a part of a global partnership and relationship, and they do their own allocation of capital based on also the discussions we have. It's a long foregone when customers only had one partner to deal with. Therefore, competitive industry, and we are still doing well in it, and trying to do and improve also under the circumstances. Thank you. Thank you very much. Thank you. Our next question comes from the line of Katie Self from Morgan Stanley. Please go ahead. Your line is now open. Good morning, and thank you for taking my question. I've got two, and then just one brief clarification, just to check. I think it was in response to Ben's question earlier. Marika, you did confirm, right, that the impact from the steel price increase will be more material next year, given that you pre-bought a lot of the components for this year right at the start. Just to clarify that. My two questions are just kind of big picture ones for Henrik or for Marika. If we step back, I think a lot of people are trying to understand the same thing, where just qualitatively, when you look at all of these different issues, you know, freight cost, availability of freight, components, raw materials, what has been your biggest headache or your biggest surprise? I know it's you know very difficult to put numbers on them, but you know if you just had to kind of rank those over the last 3 months, when you talk about an acceleration in these headwinds or surprises from these headwinds, what has really been your biggest headache? Then kind of related to that, I was also a bit surprised to hear the conviction around these supply chain issues persisting for another 4-5 quarters. I think even when we were on say the Q1 results call, there was hope at least that a lot of these issues would be resolved by the end of the year. At that point, there was just a few quarters of visibility. What gives you the conviction now that it's gonna persist for another you know 12-18 months, essentially? Thanks. If I start with the clarification, yes, you are correct in how you interpreted my answer to Ben. That's very clear. In terms of the visibility, I will say here, Katie, when we stood there, you always have a little bit of hope that it stabilizes. What has happened in the last quarter is it doesn't stabilize. It actually turned worse. It turned worse in both committing and timing and scheduling, but it also turned worse in even some of the very high prices you've already seen. I know it sounds like that at least the degree of price increases are reducing, but when still key components and other things still increases with 20, 30% in this quarter, then it is a difficult one for us. I think right now, probably the worst part of it, Katie, is the instability. It's not having the visibility for anything in a quarter of either the deliveries or also the pricing of it. I think that's the part. Of course, we will here also listen to particularly the transport logistic industry. We will listen to the raw material and component supplier. If you look at that, whether it's technical or key components, then of course, we will hear them say that it probably takes another few quarters to work through some of the waiting backlog that has now been created in the world. That's why we are saying it will last, if not all 2022, then at least many quarters into 2022 before we see an ease of the current instability. I think we are not predicting that because we don't predict on behalf of other industries. Listening to some of those industries where we are a valued customer, that's what we are told from them. That's really helpful. Thank you. Thank you. Our final question for the day comes from the line of Claus Almer from Nordea. Please go ahead. Your line is now open. Thank you. Yeah, also a few questions from my side. The first question goes to, surprise, the orders and the ASP. If you're going to look at the orders you're taking in today, does that meet your contribution margin threshold you had pre-COVID-19? Claus, That'll be the first one. Yeah. Klaus, we take the orders, and that comes to an average. Therefore, orders we have taken in the quarter follows the pricing and the costing we have done throughout that quarter. And again, here, we have accepted those. They also comply with what we will accept into to our backlog with the profitability levels we see and have as a thresholds. Just to be sure, that's the same threshold you had pre-COVID-19, or have you actually lowered your threshold? No, we haven't lowered, we haven't changed any of that. We have exactly the same robust process of saying yes and no to things that goes into the backlog. What we have also said today is just that what is then in that backlog can never be fully one-to-one hedged. Right. Okay. That means with also ASP going up, should we expect the second half next year that from a delivery point of view, that things looks more, let's call it normal? I wouldn't, Claus, I wouldn't dare talking about looking more normal in a quarter like this. We are trying to do what we can, and therefore in that sense executing on it's priced in as good as we can. Right now, I will say we need a little bit of stability before we can conclude on that one positively. We see some of those headwinds right now continuing, Claus. I don't think it's a day where we start talking about the positives in it, because there hasn't been any positives in it so far. Fair enough. Coming back to the EUR 50 million in provisions, I just want to be sure, these EUR 50 million, are they linked to the two quality issues you had last year, or should we more see the EUR 50 million linked to the overall provision you are doing every quarter? Oh, I think it's clear, Claus, that the two cases that we are addressing as we speak, and clearly you see that on the consumption, they are relating to those two cases. It is the cost inflation again, even if it sounds a bit boring by now. It is just a mere fact. Just because EUR 50 million out of EUR 250+ million of provisions you did on these two specific cases, you know, that's a quite dramatic increase at least. Yeah. Yeah. Just, you know, reason behind my question. Yeah. I understand what you're asking, Claus. I mean, we haven't changed the methodology. That remains. We follow the same principle as we have always done. If you're asking if it's any new cases that it's relating to, no. It is the cost side of that we are addressing, and it's a very big number of blades that we are addressing as we speak. Okay. Just a final question, as to order intake in Q3, your you know unannounced orders seem to be on a low level, at least what we have seen in the past. Are you more hesitant to take in orders? Is it just the timing, and what about the pipeline? That was my final question. If the conditions are right, Claus, we will take the order on the spot. I will just say right now, any process we are having, and you will appreciate that, if I was sitting and allocating capital for 30-year project, right now, as a customer of Vestas, you would have a lot of variable parts that needs a lot more focus. Generally, all the processes are taking longer right now, and I think in some local markets. Claus, you have even seen in some EU markets where there has been sudden changes to the legislation trying to mitigate the rapid increase in electricity prices. That is not good news for any planning of such long capital projects. Right now it just takes a little bit longer, and of course, come on a day like this, we are cautious about the projects and also the order intake when it comes to pricing of it. If you price it wrong right now, it ends with a loss-making project. Fair enough. That's, as you also said many times now, Henrik, that there's a lot of volatility and lack of visibility. That could also indicate we should be a bit more cautious or conservative in our expectations for order intake in Q4, excluding whatever happens in the U.S. Is that a fair assumption? That's a fair assumption. On the other hand, as I said here, and you will appreciate that, it is also really from both a medium and a long-term perspective. I don't think the outlook and also the capital commitment into this industry has ever been bigger. It is about now having a bit of patience with decision makers on the capital allocation and the project permitting, which I think there are a number of countries that are actually doing acceleration of the permitting, acceleration of the auction, and Germany is not, or is just the closest example of that as we speak, Claus. I think as a final comment, Claus, consistency is very important in this environment, and we haven't changed methodology in terms of what we think is a good project to accept or not. Because if we don't have the consistency, then we're into a completely different situation. That is the strength that we have right now. Understood. Thank you so much. Thank you. Thank you so much. I look forward to seeing many of you over the coming couple of days. Thank you, and this concludes the presentation of Q3. Thank you. Thank you.