Nordex SE Investor Presentation Hamburg September, 2015
AGENDA 1. Intro and corporate strategy 2. Markets and market success 3. Products and R&D 4. Financials 2014 & outlook 5. Appendix (shareholder structure) 2
1. COMPANY PROFILE NORDEX SE Nordex at a glance Installed capacity (12.1 GW) Global manufacturer of wind energy systems with a focus on turbines in the 2-3 MW class Most extensive and consistent use of platform technology in the industry; variants for different wind and climate conditions leveraging shared components Production sites in Germany (Rostock blades and nacelles) Asia 8% Other Europe 60% America 7% By region Africa 2% Germany 23% Headquartered in Germany (Hamburg) and USA (Chicago); subsidiaries in more than 20 other countries Listed company in the German TecDax Main shareholder Skion/momentum (22.8%), rest is freefloat Revenues 2014: EUR 1.74 bn ~3,000 employees as of H1/2015 Mainstream (1.3/1.5 MW) 20% Small (<1.0 MW) 6% By segment MMW Class (2.3-3.3 MW) 74% Track record as of H1/2015: >6,600 turbines and >12,000 MW in 41 countries worldwide 3
1. MANAGEMENT STRUCUTURE New structure to increase operational and strategic responsibility of top managers Supervisory Board Board Lars Bondo Krogsgaard Bernard Schäferbarthold Executive Committee Board + 7 top managers with ~70 years of experience in wind 4
1. INTRODUCTION TO STRATEGY Strategy implementation: Nearly all targets reached one year earlier Turnaround (Phase I) successfully managed delivered as promised Start of Phase II: Stronger focus on margin improvement Underlying measures for all main functions defined and partly initiated Main financial targets 2017: EBIT 7-8% Positive FCF 5
1. CHANGE OF PRIORITIES: FROM STRONG TOP-LINE GROWTH TO FOCUS ON PROFITABILITY Phase 1: Reaching critical top-line (Revenues in bn EUR) Phase 2: Margin improvement (EBIT margin in %) 1.4 1.7 1.7 0.9 0,9 1.1 7-8% 4-5% 2011 2012 2013 2014 2014 2015 2016 2017E 6
1. PHASE I (2012-2014): OVERVIEW Key strategy areas identified in 2012 Focused sales and service strategy Improved operational excellence Reductions in cost of materials Development of excellent products and launch of Generation Delta Finalize restructuring Financial stability Main Financial targets CMD 2013 CMD 2014 Current Guidance Timeframe 2015 2017 2015 Order Intake EUR 1.5bn n/a EUR 2.1 2.3bn Sales EUR 1.5bn EUR 2.0bn EUR 2.0 2.2bn Gross margin 25% 25% 22%-23% EBIT margin 5% 7-8% 5-6% CAPEX EUR 60-70m EUR 50-60m EUR 60-65m W/C ratio <10% <5% <5% FCF neutral FCF positive FCF positive 7
1. MAIN FOCUS AREAS OF THE NEW STRATEGY (PHASE 2) PROFITABLE GROWTH HIGH VALUE PRODUCTS PROJECT DRIVEN COMPANY BUSINESS MODEL EXPANSION 8
AGENDA 1. Corporate Strategy 2. Markets and market success 3. Products and R&D 4. Financials 2014 & outlook 5. Appendix (Shareholder structure) 9
2. DIFFERENTIATION PAYS OFF Doing Things Differently Competitor s developments Broad global market approach Strong focus on utilities/big IPPs Onshore and offshore Narrow scope Low complexity Different WTG platforms ~20 focus markets Strong focus on small/midsized customers Onshore only Broad scope Accept complexity One competitive product for each wind class 10
2. FOCUSED SALES APPROACH LEAD TO DOUBLE DIGIT MARKET SHARES IN MANY FOCUS MARKETS Currently focused on ~20 countries onshore market position 2014 UK Market share 2014: 10% Order intake: +58% Ireland Market share 2014: 47% Sweden Market share 2014: 10% Finland Market share 2014: 40% Order intake: +52% Germany Market share 2014: 9% Order intake:+ 28% Pakistan Market share 2014: 66% France Market share 2014: 10% Order intake: +200% Turkey Market share 2014: 20% Order intake: +67% Chile Subsidiary established Uruguay Market share 2014: 14% Major order of 142 MW received South Africa Market share 2014: 20% Qualified for 111 MW round 3 EUROPE Market share 2014: 10% 10% 10% GLOBAL Market share 2014: 3% Order intake: + 17% 11
2. ORDER INTAKE Order intake H1/15 vs. H1/14 (in EUR mn) Order intake by areas H1/15 909 +49% 1,354 RoW other 6% Americas GER 19% FIN Germany 30% TRK FR EMEA other 25% RSA 8% 12% Turkey H1 2014 H1 2015 France Generation Delta accounts for ~20% of new orders; bestselling WTG N117/2400 (~ 40%) One third of the OI stems from emerging markets like South Africa, Uruguay and Pakistan >90% contracted in EUR or USD, rest of projects hedged (natural, forwards/ derivatives) 12
2. GROWTH IN NORDEX MARKETS EXPECTED Order intake 2013 and 2014 by markets (in EUR) +28% 2013 2014 +67% +200% +61% +52% >100% Germany Turkey France UK/IRL Finland Lithuania Past Success Factors Highly competitive N117/2400 for low-wind sites turbine of the year Focus on small and medium-sized customers; comprehensive sales and service support Focus on increasing sales in Germany Future Success Factors N131/3000 (and N131/3300 for German market) next stage of evolution turbine of the year Expand business with existing (loyal) customer base Exploit opportunities with big IPPs / utilities Ability to serve new markets profitably 13
2. ORDER BOOK Development of the firm order book* 2013 H1 2015 (in EUR mn) +21% 1.259 +16% 1.462 1.769 1.13 1.17 1.34 Book-tobill ratio* FY 2013 FY 2014 H1 2015 EMEA currently accounts for 78% of the firm order book, Americas 15% and Asia 7% Book-to-bill ratio* improvement to 1.34 (H1 2014: 1.17) Conditional order back-log at EUR 664 mn (H1 2014: EUR 720 mn; -7.7%) * Turbine business, excluding service 14
4. A CLOSER LOOK AT FRANCE AND GERMANY Installations France H1: 524 MW onshore OEM 5 OEM 4 6% 6% Nordex 28% OEM 3 16% Installations Germany H1: ~1,200 MW onshore Nordex 12% OEM 2 18% 26% OEM 1 Others (not discolsed) 88% French market picking up on the way back to a solid GW market Market leadership with 28 % in H1 2015 (based on grid-connections; FY 2015: 9.1%) Strong development pipeline Sources: FEE, VDMA Gains in market share: 11.8 % (H1 2014: 8.1%; FY 2014: 8.4 %) German market intact for 2015-17; EEG amendment and details on tender regime expected for late summer Current focus on selling N131/3000 ongoing modification of WTG 15
2. UNWAVERING SUPPORT FOR WIND IN GERMANY Onshore is the backbone of the Energiewende S. Gabriel* in MW 5000 4000 3000 2000 1000 0 new onshore rep onshore offshore Source: VDMA/BWE, MAKE Consulting, Market Update Q3 2014 *Minister for Energy & Economic Affairs Germany More potential in Germany cap onshore Highlights of the expected development in Germany Government remains committed to the Energiewende Developer/investor visibility improved with new legislation Record installations in 2014 Changes to tender markets in 2017/19 Current state of debate: Tender volume of 2,500 MW/p.a. (repowering excluded); 4 tender rounds p.a. (quarterly); only small bid bonds required; period for realisation 24 months The important German home market will remain stable product portfolio increasingly competitive 16
4. DEMAND OUTLOOK IN GW PER REGION +4% 62 58 57 55 14 12 52 52 50 13 14 12 13 EMEA 13 11 14 9 10 8 13 Americas 11 26 28 27 28 27 24 25 APAC 11 Offshore 4 4 5 6 2 2 2014 2015e 2016e 2017e 2018e 2019e 2020e Source: MAKE Q3 outlook as of 9/2015 2015/2016: Global onshore growth of ~16 % expected in 2015. Clean energy spending still at a high level 2016 dip mainly caused by China and the US Through 2020: Germany: continues on a high level (~3 GW p.a.) Northern Europe: Nordex core markets provide stable foundation for our business - gains in market share targeted in various focus markets Southern Europe: High demand for volume in Turkey and France Eastern Europe: Some recovery in EMEA East due to new regulations in Poland Emerging Markets: Ongoing growth opportunities in Africa (RSA, Egypt), Latin America (URU, Chile) and smaller markets in Asia (PAK etc.) 17
AGENDA 1. Corporate Strategy 2. Markets and market success 3. Products and R&D 4. Financials 2014 & Outlook 5. Appendix (Shareholder structure) 18
3. HIGHLY COMPETITIVE PRODUCT PORTFOLIO FOR ALL WIND CLASSES Rotordiameter 131 m N131/3000* 117 m N117/2400 N117/3000 100 m N100/2500 N100/3300 90 m *Introduction of N131/3300 (for German market) on HUSUM Wind fair N90/2500 6,0 6,5 7,0 7,5 8,0 8,5 9,0 9,5 10,0 Wind speed [m/s] IEC 3a IEC 2a IEC 1a 19
3. STATUS N131/3000 Update Installation of the first turbine completed in Janneby, Germany 30 WTGs on order for 2015 projects in Germany and Finland Successful completion of IEC design evaluation conformity statements (DECS) and DIBt type approvals Awarded Windpower Monthly s Turbine of the Year Award in 3MW+ segment Myllykangas II Kooninkallio- Kankaanpää Janneby Wettringen I & II Hollich Sellen 20
AGENDA 1. Corporate Strategy 2. Markets and market success 3. Products and R&D 4. Financials 2014 & Outlook 5. Appendix (Shareholder structure) 21
4. HIGHLIGHTS ON FY 2014 2014 was a very good year Strong demand in focus markets Sales + 21%, EBIT + 1.4 ppt to 4.5%, free cash flow of EUR 89m Order intake + 17% Successful market launch of the new Generation Delta N131/3000 Implementation of medium-term strategy going according to plan 2015 has started well, positive order momentum continues 2017 sales target may be achieved earlier than previously expected 22
4.... AND ON H1 2015 Nordex in good shape Good H1 results Strong increase in revenues and order intake EBIT margin up to 5.6% Positive free cash flow Largest single order in Nordex history so far (Pampa, Uruguay) Strategic projects on track Guidance for FY 2015 raised for sales and order intake Update on strategy and medium-term targets during Capital Markets Day on 15 October 23
4. BUSINESS PERFORMANCE ALONG THE VALUE CHAIN Production Installations - Service Turbine assembly: 1.013 MW (+ 75% yoy) assembly of turbines for installations in H2 Blade production: 165 blades (- 29% yoy) extension of facility in Rostock, ramp-up of NR 65.5 Installations: 611.2 MW (-8% yoy) phasing of projects with a focus in H2 235 turbines installed in 12 countries main markets Germany, Turkey and France Service sales: EUR 92 mn (+24% yoy) Renewal rate: 87% (-10 ppt) 24
4. GROUP INCOME STATEMENT H1 2015 In EUR millions H1 2015 H1 2014 in % Sales 1,100.3 815.4 34.9 Total revenues 1,083.8 774.5 39.9 Cost of materials (847.9) (597.7) 41.9 Gross profit 235.9 176.8 33.4 Personnel costs (93.4) (81.0) 15.3 Other operating (expenses)/income (54.6) (40.0) 36.5 EBITDA 87.9 55.8 57.5 Depreciation (26.4) (18.7) 41.2 EBIT 61.5 37.1 65.8 Net financial result (10.3) (12.9) (20.2) EBT 51.3 24.2 >100 Tax (14.4) (7.7) 87.0 Net profit 36.9 16.5 >100 Sales increase reflects high order backlog and order intake as well as sales of large projects and increased production volume Net profit increase by 123 % due to higher volume and as a result of lower structural costs, relative to total revenues and optimized financial result H1 EBIT margin of 5.6 % well in the target range; EBIT margin in Q2 at 6.1 % 25
4. DEVELOPMENT OF GROSS MARGIN AND PRODUCTIVITY Development of gross margin Q1 2014 H1 2015 (in %) Gross profit per employee (in TEUR) 24.0 19.8 20.4 27.2 21.5 +5% 22.8 21.8 81 84 Q1 2014 Q2 2014 Q3 2014 Q4 2014 Q1 2015 Q2 2015 H1 2015 H1 2014 Based on sales H1 2015 Some volatility of gross margin during the year, with 22 23 % expected for the full year Value added measured as gross profit/employee above last year 26
4. GROUP BALANCE SHEET H1 2015 In EUR millions Liquid funds & fixed-term deposits Trade receivables and future receivables H1 2015 FY 2014 H1 2015 FY 2014 433.2 388.4 Trade payables 314.5 177.5 268.6 185.5 Bond 1 151.6 0 Net inventories 263.2 273.9 Other current liabilities 436.4 451.8 Other current assets 111,0 73.4 Current Assets 1,076.0 921.2 Current liabilities 902.5 629.3 Property, plant, equipment 142.4 136.2 Bond 1 0 156.2 Capitalized R&D expenses 106.1 106.1 Deferred tax liabilities 43.7 30.8 Deferred tax assets 51.2 44.8 Other non-current liabilities 26.9 27.6 Other non-current assets 31.1 31.6 Non-current assets 330.8 318.7 Non-current liabilities 70.6 214.6 Shareholders equity 433.8 396.0 Total assets 1,406.8 1,239.9 Total liabilities 1,406.8 1,239.9 Balance sheet strengthened: Net liquidity increased to EUR 282 mn (31.12.2014: 232.2 mn) Bank borrowings remain at zero bond reclassified as current liability (maturity in 4/2016) Total assets up 13% to EUR 1.4bn; equity ratio 30.8 % (31.12.2014: 31.9 %) 1 Bond incl. interest 27
4. WORKING CAPITAL Development of working capital 2013 H1 2015 40 20 2,2 1,0 3 2 W/C ratio 0-20 -40-60 -80-100 -1,4-3,4-2,3-4,8-2,1 1 0-1 -2-3 -4-5 W/C (EUR mn) FY 2013 Q1 2014 H1 2014 Q3 2014 FY 2014 Q1 2015 H1 2015 Working capital ratio well below the target (<5%) Volatility reflects production and installation activity Continuing stringent working capital management with: Optimised turnaround and order times High customer prepayments 28
4. OPERATING CASH FLOW AND FREE CASH FLOW Key figures cash flow statement H1 2015 Key figures cash flow statement H1 2014 Cash flow from operating activities Cash flow from investing activities in EUR mn 73.4 (31.5) Free cash flow 41.9 Cash flow from operating activities Cash flow from investing activities in EUR mn 91.2 (21.2) Free cash flow 70.0 Cash flow from financing activities (-35.0) Cash flow from financing activities (-152.2) Decreased operating cash flow because of higher operational performance and corresponding increase in trade payables/receivables Investing activities in H1 2015 mainly for capitalized product development and expansion of the blade center in Rostock project almost completed Cash flow from financing activities results from investment in fixed-term deposits 29
4. GUIDANCE 2015 2014A 2015 old 2015 update Order intake EUR 1.75 bn EUR 1.8 2.0 bn EUR 2.1 2.3 bn Sales EUR 1.73 bn EUR 1.9 2.1 bn EUR 2.0 2.2 bn EBIT margin 4.5 % 5 6 % 5 6 % Working capital ratio - 2.3% < 5% <5 % Investment EUR 76.3 m ~ EUR 50-60 m ~EUR 60 65 m Guidance update triggered by strong order momentum and increase in activity level Large installation volume in H2 30
4. MEDIUM-TERM DIRECTION 2017 Strong demand Positive momentum Solid order book for Nordex Measures to improve operating efficiency High growth brings its own challenges Implementation of operational improvement according to plan, impact not yet fully reflected in financial results Strong product pipeline and focused sales strategy to secure future development 31
AGENDA 1. Corporate Strategy 2. Markets and market success 3. Products and R&D 4. Financials 2014 & outlook 5. Appendix (Shareholder structure) 32
5. APPENDIX: SHAREHOLDER STRUCTURE NORDEX SE SKion/momentum capital 22.79 % DWS 5,04 % JPMorgan 5.02 % Free float 64.13% Old Mutual 3.02 % Based on 80.882.447 shares, as of September 2015 33
5. APPENDIX: FINANCIAL CALENDAR 2015 AS OF SEPTEMBER 2015 Date Event 10 September Commerzbank Sector Conference (Frankfurt) 21-22 September Goldman Sachs & Berenberg German Corporate Conference (Munich) 15 October Capital Markets Day (Frankfurt) 31 October Börsentag (retail investors; Hamburg) 12 November Q3 2015 results and analyst call 17-20 November EWEA fair (Paris) 23 November Goldman Sachs Renewables Conference (London) 3 December HSBC Luxembourg Conference 34
5. DISCLAIMER This presentation was produced in August 2015 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 forwardlooking 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. 35
THANK YOU FOR YOUR ATTENTION. Nordex SE Ralf Peters Oliver Kayser Head of Corporate Communications Senior Manager Investor Relations Langenhorner Chaussee 600, 22419 Hamburg, Germany Phone: +49 (0)40 30030 1000 Fax: +49 (0)40 30030 1333 email: investor-relations@nordex-online.com NDX1 ISIN: WKN: DE000A0D6554 A0D655 www.nordex-online.com 36