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Higher costs and interrupted supply chains make wind turbine manufacturer Nordex even more pessimistic for the current year. The higher sales prices of new customer contracts will probably only have a positive effect with a delay, the company announced in Hamburg on Monday evening. Accordingly, the operating loss is expected to be four percent of sales this year. Until now, management also considered a zero-line operating result possible. However, the order situation gives hope. After initial losses, the Nordex share price turned positive on Tuesday.
Shortly after the start of trading, the paper had lost five percent in value, but by noon it was five percent higher at 10.92 euros. This made the Nordex stock one of the strongest stocks in the SDAX small-cap index. Anyone who had bought at the low point of the day and sold again in the afternoon could achieve a price gain of almost eleven percent within a few hours.
Analysts were disappointed with the latest quarterly figures and the lowered forecast. However, industry expert Guido Hoymann of Bankhaus Metzler confirmed that the company had good chances for a positive turn. According to him, the risks of old contracts with customers that were still agreed at low prices should decrease quickly. In this regard, Nordex faces a “transitional period” in the coming quarters.
“The entire industry had maneuvered itself into a desolate situation in recent years by focusing too much on market share and volume,” Hoymann wrote. Meanwhile, however, suppliers like Nordex have recognized the need to enforce break-even prices and relax contract standards. Therefore, there is now hope that the second half of 2022 will be a turning point.
The company justified the fact that the operating loss in the current year will be greater than less with the “inflationary price environment” and the resulting costs due to the delay of projects. As with companies from other industries, supply chain disruptions make the wind turbine manufacturer’s job difficult.
However, Nordex’s business picked up again in the third quarter after a weaker first half. According to the information, the company achieved a turnover of about 1.7 billion euros in the months of July to September – considerably more than the nearly 1.3 billion a year earlier. As a result, turnover for the first nine months of 3.9 billion euros was only more than two percent below the level of last year.
At the same time, increased costs and supply chain disruptions are already having a noticeable impact on revenues. An operating loss of EUR 200 million was recorded over the first three quarters. Nordex had achieved an operating profit of 101 million euros in the same period last year. The operating margin (Ebitda) was minus 5.2 percent, even worse than expected for the full year.
The bottom line is that the company has gone deeper into the red. After nine months, it finally amounted to a loss of almost 372 million euros – after a deficit of almost 104 million in the same period last year.
With a view to new orders on better terms for Nordex, company boss José Luis Blanco sees reason for optimism. “In a challenging market environment, we managed to achieve higher selling prices for the new orders, which will offset the huge cost increases caused externally in the medium term and increase our profitability.”
The group did not shake its turnover target for the current year, which it had already adjusted downwards in May: turnover would amount to 5.2 to 5.7 billion euros. At that point, Nordex had already abandoned its goal of a full-year operating profit. The operating margin should continue to rise to eight percent “in the medium term”.
Plant manager Blanco is also building on the success of the new turbine type N175/6.X, which has a larger rotor and could generate more power at lower wind speeds. “We remain convinced of the promising medium-term prospects for our industry worldwide.”
In the first three quarters, Nordex received orders for new projects totaling 4.4 gigawatt hours. Although that was less than the 4.6 gigawatt-hours in the same period last year, the value of orders grew year-on-year from 3.2 to 3.6 billion euros.
In the third quarter, the average selling price per megawatt of output increased by almost a third to EUR 0.91 million. 69 percent of new orders came from Europe, 26 percent from Latin America and 5 percent from North America. At the end of September, Nordex had an order book of almost 9.7 billion euros, including services. A year earlier there were only about 8 billion in the books here.
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Image Sources: Nordex, Lukassek / Shutterstock.com