Nordex growing and improving profitability in the course of 2009

Today more than 3,970 Nordex wind turbines with a total rated output of more than 5,400 megawatts are already rotating in 34 countries of the world. Nprdex are represented with offices and subsidiaries in 18 countries.

Nordex AG is a management holding company with its headquarters in Rostock. The domicile of the board and administration is Norderstedt, near Hamburg. Nordex AG’s task is to control and coordinate the activities of the two 100 per cent subsidiaries Nordex Energy GmbH and Nordex Energy B.V.

This growth was underpinned by US wind power business. US subsidiary Nordex USA, Inc. contributed 17 percent and, thus, almost one fifth to consolidated sales (previous year: 1 percent). However, Europe continued to account for the bulk of the Group’s business, contributing a total of 76 percent to consolidated sales (previous year: 89 percent).

German wind turbine maker Nordex sees sales growth and higher profitability next year after its US business helped it report underlying third-quarter earnings that beat market expectations.

As a result of reduced sourcing prices, gross profit climbed by 12 percent to EUR 179 million (previous year: EUR 160 million). At the same time, the cost-of-materials ratio contracted by 190 basis points over the same period one year earlier to 77.7 percent (previous year: 79.6 percent). Earnings before interest and taxes (EBIT) contracted to EUR 21.9 million in the period under review (previous year: EUR 37.3 million) on account of higher structure costs.

This particularly related to the establishment of new corporate structures in the United States as well as a number of key European markets. Thus, the staff cost ratio widened to 9.8 percent (previous year: 7.3 percent). In addition, Nordex continued to spend on extending and modernizing its production facilities as a crucial basis for ensuring future growth. This especially involved new and extended rotor blade production in Rostock and the establishment of manufacturing operations in the United States. All told, capital spending came to EUR 36.3 million (previous year: EUR 52.8 million), resulting in an increase in depreciation expense to EUR 13.8 million (previous year: EUR 12.3 million).

The third quarter of 2009 alone contributed more than half of earnings (EUR 12.4 million), resulting in a sequential improvement in the EBIT margin to 4.4 percent (Q2/2009: 3.3 percent).

The equity ratio remained at a stable high level of around 38 percent as of the balance sheet date. Cash and cash equivalents widened by EUR 26.6 million to EUR 138.3 million. Accordingly, Nordex considers its liquidity to be sufficient for financing its business and planned capital spending projects. Cash flow from operating activities rose substantially to EUR 5.5 million (previous year: net outflow of EUR 61 million) primarily as a result of destocking effects of EUR 15.1 million. At the same time, the working capital ratio was reduced to 17.4 percent in the course of the year in line with plans.

Order receipts remained modest in the course of 2009, rising by EUR 199 million in the third quarter to a total of EUR 638.3 million (previous year: EUR 796 million). This was primarily due to continued lending restraint on the part of banks, thus preventing wind farm operators from raising the necessary finance for their projects. The order backlog thus contracted to EUR 2.3 billion (December 31, 2008: EUR 3.0 billion) and comprised firmly financed contracts worth EUR 704 million and contingent contracts (master contracts including reservation fee) of EUR 1.6 billion. Against the backdrop of only minor growth in industry-wide sales volumes, Nordex continues to forecast an increase in its own full-year sales to around EUR 1.2 billion for 2009. The full-year EBIT margin is expected to contract to around 3 percent on account of reduced growth compared with the previous year.

Market wind energy leader Vestas in late October reported a bigger-than-expected rise in third-quarter operating profit, kept its 2009 outlook, adding it expected an EBIT margin of 10-12% and revenues of 7-8 billion euros in 2010. It chief executive then said he saw determination in the world’s biggest economy to "re-engage in a big way" in the wind energy market.

However, German peer REpower, majority owned by Indian company Suzlon, earlier this month said the expected recovery of the US market had so far failed to materialise, but stuck to its 2009-10 forecast. Nordex said third-quarter earnings before interest and tax (EBIT) came in at 12.4 million euros, above the 11.5 million forecast in a Reuters poll. But third-quarter sales of 301.5 million euros slightly missed the 308 million forecast.

“We expect our wind energy market to rebound more sharply in the course of 2010, which is why we have continued to spend judiciously despite the financial market crisis. In this way, we will be able to step up our international business immediately after the upswing starts gaining momentum,” says Thomas Richterich, CEO of Nordex AG. Between 2004 and 2008, Nordex was able to increase its sales by an annual rate of over 50 percent. Looking ahead over the coming year, management expects top-line growth in the single digits or low teens accompanied by a sustained improvement in profitability.

Nordex was launched in 1985, before the international demand for wind turbines increased in the first half of the nineties. One of the founding members is today’s Sales Director, Carsten Pedersen. From the outset, Nordex focused on large, powerful turbines. In just two years, the company installed the largest series wind turbine in the world at the time.

Following the principle of small steps, Nordex has succeeded in building reliable machines, which operate with ever-increasing efficiency. Moreover, we have set new standards with several of our innovative products: the entry into the megawatt class in 1995 and the development of the first wind turbine with a capacity of 2.5 megawatts in 2000 – today one of the largest serial produced wind turbines in the world – are just two examples of this.

2007 Opening of new rotor blade production in China / Launch N100
2006 Installation of Germany’s first offshore turbine / Chinese production of multi-megawatt turbine commenced
2005 Launch N90/2500 kW
2003 Installation of the 2,000 Nordex turbine / 1. Offshore turbine installed
2001 Commencement of industrial rotor blade production
2001 IPO
2000 Transfer of wind power activities to the new Nordex AG
Completion of the world’s first series 2.5 megawatt wind turbine
1999 Installation of the 1,000th Nordex turbine
1995 Construction of the world’s first series megawatt wind turbine
1992 Establishment of production operations in Germany
1987 Production of the world’s largest series wind turbine (250 kW)
1985 Incorporation of Nordex in Denmark