Nordex Group

Nordex SE - Financial-year figures 2019

24th March 2020

2 |

Disclaimer

  • All financial figures within this presentation are final and audited.
  • This presentation was produced in March 2020 by Nordex SE solely for use as a source of general information regarding the economic circumstances and status of Nordex SE. It does not constitute an offer for the sale of securities or an invitation to buy or otherwise acquire securities in the Federal Republic of Germany or any other jurisdiction. In particular it is not intended to be an offer, an investment recommendation or a solicitation of an offer to anyone in the U.S., Canada, Japan and Australia or any other jurisdiction. This presentation is confidential. Any reproduction or distribution of this presentation, in whole or in part, without Nordex SE's prior written consent is expressly prohibited.
  • This presentation contains certain forward-looking statements relating to the business, financial performance and results of Nordex SE and/or the industry in which Nordex SE operates, these statements are generally identified by using phrases such "aim", "anticipate", "believe", "estimate", "expect", "forecast", "guidance", "intend", "objective", "plan", "predict", "project", and "will be" and similar expressions. Although we believe the expectations reflected in such forward-looking statements are based upon reliable assumptions, they are prepared as up-to-date and are subject to revision in the future. We undertake no responsibility to update any forward-looking statement. There is no assurance that our expectations will be attained or that any deviations may not be material. No representation or warranty can be given that the estimates, opinions or assumptions made in, or referenced by, this presentation will prove to be accurate.

FY figures 2019 | 24 March 2020

3 | Agenda

Agenda

Introduction

José Luis Blanco

Markets and orders

Patxi Landa

Financials

Christoph Burkhard

Operations and technology

José Luis Blanco

Sustainability

José Luis Blanco

Covid-19

José Luis Blanco

Guidance 2020

José Luis Blanco

Q&As

All

Key takeaways

José Luis Blanco

FY figures 2019 | 24 March 2020

4 | Introduction

The Nordex Group

Innovative global manufacturer

of onshore wind turbine

systems: Among the

Top 4*

industry leaders worldwide

Leading product in new 4MW+

turbine segment:

Leading-edge

product portfolio

Highly attractive and resilient

Service business with:

19.6 GW

under service

More than

30 years

of industry experience:

At the forefront of the

technological development

FY figures 2019 | 24 March 2020

*Source: Wood Mackenzie - Global Wind Turbine Order Analysis Q1 2020: based on onshore

order intake excl. Chinese manufacturers.

5 | Introduction

Executive summary

FY 2019 RESULTS FULLY IN LINE WITH GUIDANCE

Sales

EBITDA margin

Working capital ratio

EUR 3,285m

3.8%

-9.1%

  • Strongest ever order intake of 6.2 GW in FY 2019 - increase of 31% compared to previous year 2018.
  • 44% of the 6.2 GW order intake in FY 2019 accounts for latest turbine generation Delta4000.
  • Book-to-bill-ratioof 1.53 signalling further growth in the future.
  • Delta4000 product portfolio with five different product variants covering all customer requirements.
  • On October 8th cash capital increase of EUR 99m through private placement to anchor shareholder Acciona.

FY figures 2019 | 24 March 2020

6 | Introduction

Economics and decarbonisation support global mid-term demand

Capacity addition (GW)

Global

CAGR +4.71%

27.0

34.8

45.3

45.8

40.4

36.8

35.6

Europe

14.4

18.5

17.1

16.3

15.5

9.7

10.7

2018

2019e

2020e

2021e

2022e

2023e

2024e

International

30.9

US 60%-PTC extension

27.3

upside potential

24.1

23.3

15.5

20.4

20.1

17.3

13.5

7.1

11.9

4.6

3.8

8.3

9.0

12.2

15.4

13.7

16.3

15.8

16.3

2018

2019e

2020e

2021e

2022e

2023e

2024e

North America Rest of the World

Key highlights

Europe:

  • PPAs and merchant projects keep driving Northern Europe
  • Permitting difficulties continue to affect auctions in Germany
  • Auctions in Poland and FIT phase-out in Ukraine lead to increased activity
  • Newly announced auction rounds expected to increase volume in Italy

North America:

  • 100%-PTCdemand unstopped and continues to increase 2020 volume
  • 2021 supported by strong 80%-PTC demand and delayed 100%-PTC projects shifting from 2020 to 2021
  • Introduction of 60%-PTC extension expected to lift volume in 2023 and 2024

International:

  • Latin America outlook:
    • Brazil and Colombia continue to show good momentum
    • Increased activity in Chile and Mexico; but political uncertainties remain
  • Activity in India slowly recovering, as awarded auction projects are starting to come online; undersubscription concerns remain
  • Africa mainly driven by South Africa

FY figures 2019 | 24 March 2020

Source: Wood Mackenzie (2019), Q4 Market Outlook Update; numbers are rounded.

Wood Mackenzie (2019), US wind gets boost with one year extension.

7 | Markets & orders

Order intake FY 2019

Order intake turbine* (in MW)

+31%

6,207

4,754

12M/201812M/2019

  • Strong order intake in FY 2019: EUR 4,415m (EUR 3,637m in the previous year)
  • Thereof in Q4/2019: EUR 1,102m (EUR 1,290m in prior-year quarter)
  • Stable ASP of EUR 0.71m/MW in FY 2019

Order intake turbine* by regions (in %)

Europe North America Latin America RoW

45%

51%

15%

25%

28%

15%

18%

3%

12M/2018

12M/2019

  • Large orders from USA, Turkey, Mexico, Sweden and Brazil in FY 2019
  • 44% of order intake for new Delta4000 generation in FY 2019
  • Share of Delta4000 generation was 49% in Q3 and increased to 57% in Q4/2019 indicating transition to 4/5 MW class products

FY figures 2019 | 24 March 2020

*Group segment "Projects"

8 | Markets & orders

Growing service business generates steady cash flows

Development of service revenues (EUR m) and EBIT margin

EBIT margin

15.1%

16.1%

17.7%

403

315 343

2017 2018 2019

Share of fleet under contract (as % of installed base)

Comments

  • Service sales share amounted to 12.3% of group sales in FY 2019
  • Service EBIT margin of 17.7% in FY 2019
  • 97.5% average availability of WTGs under service
  • Strong service order backlog of around EUR 2.5bn at the end of FY 2019
  • 19.6 GW of installed base are under service agreement
    - this represents a coverage of around 70%

Average service contract duration is over 10 years

under contract

30%

not under contract

Installed

base:

28.2 GW

Thereof:

70%

72% Nordex WTGs

28% AWP WTGs

8

FY figures 2019 | 24 March 2020

9 | Markets & orders

Strict policies for order recognition and healthy age profile of order backlog

Strict policies for order recognition

  • A legally binding contract has been signed
  • All necessary construction permits have been issued
  • A connection has been established with the grid or a grid-connection agreement has been signed
  • The customer has obtained the necessary financing and payment security was exchanged
  • The customer has remitted the agreed prepayment

Nordex does not recognize "conditional" orders

Age profile of turbine order backlog* as of year end 2019

2%

33%

65%

<12 months 12-24 months > 24 months

  • Order backlog provides good visibility for next two years

Majority of orders older than 24 months are mostly completed with only final invoicing outstanding

9

FY figures 2019 | 24 March 2020

* Turbine portion of order backlog considered only; no service contracts reflected.

10 | Markets & orders

Combined order backlog of around EUR 8.1bn at the end of FY 2019

Order backlog turbines (EUR m)

+43%

5,534

3,869

Order backlog service (EUR m)

+14%

2,537

2,218

12M/2018

12M/2019

12M/2018

12M/2019

Order backlog of EUR 5,534m at the end of FY

At the end of FY 2019: 7,760 wind turbines under

2019 reflects consistent high order intake over

service - corresponding to 19.6 GW

the last quarters

  • Distribution on Nordex focus markets: Europe (52%), North America (19%), Latin America (17%), Rest of World (12%)

FY figures 2019 | 24 March 2020

11 | Markets & orders

Order backlog well-balanced across platforms, markets and customers

Order backlog (EUR m) as of year end 2019

Platforms

Markets

Customer type

2%

12%

8%

23%

18%

35%

17%

47%

52%

40%

19%

27%

AW

Delta4000

Delta

Gamma

Europe

Latin America

Utility

Developer

North America

Rest of World

IPP

Other

  • Order backlog well-balanced between platforms, with Delta4000 already reaching 40% by the end of FY 2019.
  • Gamma platform soon to be phased out. Other legacy platforms to be phased out gradually in line with customer and market demands.
  • Nordex with strong base in European home markets.
  • No dependence on one single market or region.
  • Nordex successfully managed to achieve a shift in its customer base from regional project developers to global utility customers.
  • Utilities with strong ratings and defined requirements, many of which are global key players.

FY figures 2019 | 24 March 2020

12 | Financials

Income statement FY 2019

in EUR m

FY 2019

FY 2018 abs. change

Comments

Sales

3,284.6

2,459.1

Total revenues

3,871.4

2,364.2

Cost of materials

-3,096.0

-1,710.2

Gross profit

775.4

654.1

Personnel costs

-360.7

-325.9

Other operating (expenses)/income

-290.9

-226.5

EBITDA

123.8

101.7

Depreciation/amortization

-143.4

-155.8

EBIT

-19.6

-54.2

Net profit

-72.6

-83.9

825.5

Sales figures of EUR 3,285m

1,507.2

and EBITDA margin of 3.8% in

-1,385.8

line with expectations and

guidance

121.3

High total revenues signal

-34.8

further sales growth in FY

-64.4

2020

PPA depreciation amounted to

22.1

EUR 24m in FY 2019 (EUR

12.4

62.6m in the previous year)

34.6

11.3

Gross margin*

23.6%

26.6%

EBITDA margin

3.8%

4.1%

EBIT margin w/o PPA

0.1%

0.3%

FY figures 2019 | 24 March 2020

*Gross profit in relation to sales.

13 | Financials

Income statement Q4/2019

in EUR m

Q4/2019

Q4/2018

abs. change

Sales

1,341.6

686.3

655.3

Total revenues

1,351.7

611.0

722.3

Cost of materials

-1,091.6

-428.7

-662.9

Gross profit

260.1

182.3

77.8

Personnel costs

-95.8

-87.7

-8.1

Other operating (expenses)/income

-100.7

-64.3

-36.4

EBITDA

63.6

30.3

33.3

Depreciation/amortization

-41.0

-45.4

4.4

EBIT

22.6

-15.2

37.8

Net profit

4.0

-32.0

36.0

Gross margin*

19.4%

26.6%

EBITDA margin

4.7%

4.4%

EBIT margin w/o PPA

2.1%

0.3%

Comments

  • Sales figures of EUR 1,342m in Q4/2019 show high order execution as expected
  • PPA depreciation in Q4/2019 totaled EUR 5.7m

FY figures 2019 | 24 March 2020

*Gross profit in relation to sales.

14 | Financials

Balance sheet FY 2019

in EUR m

31.12.19

31.12.18

abs. change

in %

Non-current assets

1,488.9

1,277.6

211.3

16.5

Current assets

2,513.8

1,781.0

732.8

41.1

Total assets

4,002.7

3,058.5

944.2

30.9

Equity

745.4

697.3

48.1

6.9

Non-current liabilities

914.2

822.9

91.3

11.1

Current liabilities

2,343.2

1,538.3

804.9

52.3

Equity and total liabilities

4,002.7

3,058.5

944.2

30.9

Net debt*

-84.0

-32.5

Working capital ratio**

-9.1%

-3.8%

Equity ratio

18.6%

22.8%

Comments

  • Cash position of EUR 510m at year-end 2019 (EUR 610m year-end 2018)
  • Increase in current assets and current liabilities reflects preparation for high installation activity in 2020
  • Balance sheet prolongation compared to 2018 is also a result of significantly increased project pipeline

FY figures 2019 | 24 March 2020

*Cash and cash equivalents less bank borrowings and bond.

**Based on actual sales figures.

15 | Financials

Working capital development FY 2019

Working capital ratio (in % of sales)*

Working capital development (in EUR m)*

FY guidance 2019 < 2%

-1.5

-3.8

-4.7

-5.2

-9.1

Q4/

Q1/

Q2/

Q3/

Q4/

2018

2019

2019

2019

2019

-136

47

162

47

92

-300

Q3/

Receiva-

Inven-

Prepay-

Pay-

Q4/

2019

bles

tories

ments

ables

2019

  • Low working capital ratio also supported by continuous stringent working capital management throughout FY 2019
  • Decrease in inventories driven by high installation level in Q4/2019
  • Receivables management mirrors strong cash focus

FY figures 2019 | 24 March 2020

*Based on last twelve months sales.

16 | Financials

Cash flow statement FY 2019

in EUR m

FY 2019

FY 2018

Comments

Cash flow from operating activities before net working capital

Cash flow from changes in working capital

-156.9-31.4

194.9156.3

Cash flow from operating

activities impacted by working

capital changes and at the

same time by net loss and

outflows related to VAT

phasing effects

Cash flow from operating activities

38.0

124.9

Cash flow from investing activities

-163.9

-80.9

Free cash flow

-126.0

44.0

Cash flow from financing activities

30.6

-46.4

Change in cash and cash equivalents*

-95.3

-2.4

Cash flow from investing

activities reflects global SCM

expansion

Cash flow from financing

activities mainly impacted by

capital increase in October

and repayment of SSD

tranche in April last year

FY figures 2019 | 24 March 2020

*Including FX effects

17 | Financials

Total investments FY 2019

CAPEX (in EUR m)

Property, plant, equipment

Intangible assets

52.8%

172.5

112.9

134.2

71.6

41.3

38.3

12M/201812M/2019

Comments

  • Investments in FY 2019 mainly consists of:
    • Investments in blade production facilities in Mexico and Spain
    • Investments in nacelle production facility in India
    • Investments in tooling and equipment for international projects
    • Investments in product development
  • Slight decrease in intangible assets due to lower level of development costs compared to previous year

FY figures 2019 | 24 March 2020

18 | Financials

Capital structure FY 2019

Net debt*/EBITDA**

Equity ratio (in %)

3.0

2.5

2.5

2.2

2.0

Ambition

1.5

1.3

level

1.0

0.7

0.5

0.3

0.0

-0.5Q4/

Q1/

Q2/

Q3/

Q4/

2018

2019

2019

2019

2019

30

25

22.8

20

19.7

18.6

17.4

15.5

15

10Q4/

Q1/

Q2/

Q3/

Q4/

2018

2019

2019

2019

2019

Leverage ratio significantly declined towards the end

Equity ratio improved towards year end 2019 as a

of FY 2019 as communicated

result of the capital increase in October 2019

In Q4/2019 leverage ratio well below own ambition

level of 1.5 as expected

FY figures 2019 | 24 March 2020

*Cash and cash equivalents less bank borrowings and bond.

** Based on last twelve months.

19 | Operations & technology

FY 2019 a year of significant ramp-up in operations

Installations (MW)

+23%

3,090

Production

Turbine assembly (MW) Inhouse blade production (#)

2,522

12M/201812M/2019

+105%

4,677

2,278

12M/2018

12M/2019

+69%

1,366

807

12M/2018

12M/2019

  • Total installations of 938 WTGs in 21 countries in FY 2019
  • Geographical split: 44% Europe, 29% Latin America, 23% North America and 4% Rest of World
  • Output turbines totaled 1,388 units in FY 2019: 536 GER, 526 ESP, 234 IND, 49 BRA and 43 ARG
  • Inhouse blade production of 1,366 units in FY 2019: 600 ESP, 465 GER, 234 IND and 67 MEX
  • Outscourced blade production of 2,556 units in FY 2019

FY figures 2019 | 24 March 2020

22 | Operations & technology

Nordex supply chain - global, flexible and scalable

Overview of production and workflows (selected simplified examples)

GER

BN

ESP

TUR

CHN

B

T

B

B B S

N

N

MEX

B T

B Blades

BRA

IND

B

N

T

N

B

N

Nacelles

T

T

T

Towers

CHL

ZAF

T

ARG

T

S

Smart Logistics

N

T

T

T

Blades

  • approx. 35% in-house capacity, 65% outsourced (as per Q4/2019)
  • Own production sites in Germany, Spain, Mexico and India
  • Third party sites in Turkey, Brazil and China
  • Global network of blade production necessary to ensure best landed cost in all regions

Nacelles

  • Own nacelle production in Rostock, two sites in Spain, one in India and one in Brazil. India producing for global markets, Brazil only for local market
  • Own production site in US mothballed and available if needed due to tariff conflicts
  • Nacelle production in Argentina (subcontracted assembly)

Towers

  • All steel towers sourced externally
  • Concrete towers are fully in-house (~700 concrete towers next year), track record of >1,000 concrete towers produced in-house

FY figures 2019 | 24 March 2020

23 | Operations & technology

Product portfolio with highly efficient products for all different sites

Development of product portfolio & pipeline

Light

Medium

Strong

wind

wind

wind

N149/5.x

5MW

N163/5.x

N133/4.8

4MW+

N155/4.5

One platform with market specific derivatives

Delta4000

Future focus of product development

3MW+

N149/4.0-4.5 incl. 4.8 mode

AW116/3000

AW125/3000-3150

AW132/3000-3465

AW140/3000

AW148/3000

N100/3300

N117/3000-3600

N131/3000-3900

N90/2500

Continuous CoE

AWimprovements for low wind sites

Delta

Phase-out of 3MW Delta

platform in preparation

2MW+

N100/2500

N117/2400

Gamma

Phase-out of Gamma platform

in preparation

Site dependent

today

2022+

21

FY figures 2019 | 24 March 2020

24 | Operations & technology

Delta4000 products: range for the right fit for all sites

Product launches within Delta4000 platform

AEP* on typical low wind site in land constrained markets

Sept-

N149/4.0-4.5

Transformer and converter in nacelle

ember

Adaptable to various site conditions

2017

Maximum yield for light and medium wind

sites

115%

100%

136%

121%

N133/4.8

April

Tip height limitation

Very restricted transportation

2018

Maximum yield for high wind sites

N149/5.X

April

6-17 % higher AEP than the N149/4.0-4.5

Increased suitability in low and medium

2019

wind sites

N155/4.5

May

Improves park AEP in MW-constrained

applications without sound constraints

2019

Similar hub components to AW3000 to

capture supply chain and O&M synergies

N163/5.X

August

Maximizing turbine AEP - up to 20% higher

than the N149/4.0-4.5

2019

Optimized for low wind sites via 20%

increase in swept area

N133/4.8

N149/4.5

N149/5.5

N163/5.5

AEP* on typical site in grid-constrained markets

105%

100%

N149/4.5

N155/4.5

22

FY figures 2019 | 24 March 2020

*Annual Energy Production

23 | Sustainability

Sustainability strategy 2019 to 2021

FY figures 2019 | 24 March 2020

24 | Sustainability

Sustainability key facts

Product

Lifecycle assessment of wind farm with Delta4000

turbines shows:

only 6.4 g CO2e

are emitted per kilowatt-hour electricity generated

  1. single Nordex large-scale turbine1 covers the average annual electricity demand of about

3,000

four-person households2.

474 g of CO2

are saved per kWh generated by wind turbines (compared to the German electricity mix 20183).

Projection for one Delta4000 at medium wind speed:

savings of approx.

6,300 t CO2 per year.

Employees

Lost time injury frequency (LTIF) lowered to

4.6 in FY 2019 (FY 2018: 5.6)

73

nationalities were working at Nordex in FY 2019

Environment

73.5%

of the overall amount of purchased electricity

in 2019 was generated by the use of

renewables

1 Reference: N149/4.0-4.5, medium wind speed of 6.5m/s, excl. losses.

2 https://www.musterhaushalt.de/durchschnitt/stromverbrauch/ average electricity demand of 4,432 kWh per year.

FY figures 2019 | 24 March 2020 3 https://www.umweltbundesamt.de/sites/default/files/medien/1410/publikationen/2019-04-10_cc_10-2019_strommix_2019.pdf.

25 | Covid-19

Overall business impact assessment of Covid-19 is too early to judge

Management focus

Challenges

  • Health & safety of all Nordex employees is top priority
  • Global cross-functionalCovid-19 taskforce established to assess the situation closely
  • Special health related measures implemented
  • Ensure business continuity at all possible options
  • Strong focus on working capital and cash flow management
  • New and complex situation due to continuous measures by authorities, e.g. travel restrictions
  • Evaluation of impact on the business development in 2020 ongoing
  • Possible delays in project execution and installations
  • Impact on sourcing activities (components) along the entire supply chain
  • Delays in ramping up and enlarging the supply chain

FY figures 2019 | 24 March 2020

26 | Guidance 2020

Guidance 2020 - subject to the unforeseeable extent and duration of the measures taken globally to contain COVID-19

Sales:

EUR 4.2 - 4.8bn

EBITDA:

EUR 160 - 240m

Working capital ratio:

<0%

CAPEX:

min. EUR 140m*

FY figures 2019 | 24 March 2020

*Depending on the market situation and the pace of the further development of the supply chain.

27 | Q&As

Time for your questions

Questions

Answers

FY figures 2019 | 24 March 2020

28 | Key takeaways

Key takeaways

Expected sales growth in FY 2020 will show an increase of 75% to nearly 100% compared to FY 2018.

Order momentum expected to remain strong with increasing share of Delta4000.

Business performance and ramp-up in FY 2020 are subject to significant uncertainties due to COVID-19.

FY figures 2019 | 24 March 2020

29 |

Thank you for your attention

FY figures 2019 | 24 March 2020

30 |

Contact details

IF YOU HAVE ANY QUESTIONS PLEASE

CONTACT THE INVESTOR RELATIONS TEAM:

Felix Zander

Tobias Vossberg

Rolf Becker

Nordex SE

Langenhorner Chaussee 600

22419 Hamburg

Germany

Phone: +49-40-30030-1000

Email: investor-relations@nordex-online.com

Web: www.nordex-online.com

FY figures 2019 | 24 March 2020

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Nordex SE published this content on 24 March 2020 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 24 March 2020 07:02:07 UTC