Nordex SE Capital Markets Day 2012 Frankfurt, 13/09/2012
BOARD LED BY NEW CEO, JÜRGEN ZESCHKY Jürgen Zeschky Previously Executive Vice President of Voith Turbo in Heidenheim, Germany between 2003-2012 A highly profitable hidden champion which produces drive systems used in a broad range of industries 1991-2003: Director Operations Mannesmann Demag, incl. 6 years in US Clear management focus on strategy & products 1
AGENDA 1. Strategy Overview 2. Markets and Strategy in Sales, Service & Project Development 3. Wind Farms a Cash Flow supporting Asset for Investors 4. Products and Operational Excellence 5. Financial Impact of the Strategy 6. Strategy Implementation and Conclusion Jürgen Zeschky Lars Bondo Krogsgaard Robert A. Clover (MAKE) Jürgen Zeschky Bernard Schäferbarthold Jürgen Zeschky 2
SITUATION Markets are challenging: Strong order intake from Europe & RoW, but PRC not accessible Double digit decrease in ASP in recent years, mainly in the US and China Growing competition in WTG development Uncertain remuneration in the US and Southern Europe Profitability disappointing: Under-utilization, esp. in the US and China Some suppliers unreliable Project delays due to financing issues Concerns over working capital issues 3
AND ACTION ITEMS Mid-term targets EUR 1.5 bn; EBIT 5%, will define R&D spending of EUR 50 mn p.a. Project size 100-150 MW 1. Sales Strategy Focus Differentiation 2. Operational Excellence needed In project execution Huge impact on costs 3. Reduction in cost of materials essential Improve materials cost ratio from 78% to 75% Further slight decline in turbine prices expected 4. Nordex has some excellent products Focus on N117, next MMW-turbines Improvement in towers and blades required 5. Organization & Structure 4
1. SALES STRATEGY Focus on key markets and customers balancing volume / value-added Doing more turn-key projects Increasing service revenues More sales in Nordex project development Gaining market share in Germany Being selective in order to reduce risk profile in order backlog 5
2. OPERATIONAL EXCELLENCE 2013 2014 Tower Blades Logistics EBIT margin improvement +1% EBIT margin improvement +1% EBIT margin improvement of 1% in 2013 and 2014 each Profitability measures focused on towers, blades and logistics Implementation through a collaborative project by engineering and purchasing 6
3. REDUCTION IN COST OF MATERIALS in 2013 2012-2015 -EUR >0.1mn / WTG (= -4%) -15% / WTG (in total) Design to cost / Design to value efforts in engineering Supply from low cost countries 2 nd phase of cost-out project n-ergize 7
4. PRODUCT DEVELOPMENT 2012 2013 2014 Start of serial production N117 (IEC3) NXT 8.1 (IEC1) NXT 8.1 (IEC2) Towers NXT 8.2 (IEC3) Blades Nordex has developed a best in class WTG for light wind sites The N117/2400 was first installed in December 2011 on time & on budget Launch of 2 WTGs in 2013 to achieve leading-edge position in IEC1 / 2 as well Decrease development time to 18 24 months 8
CEO CFO CCO 5. ORGANIZATION AND MANAGEMENT STRUCTURE Global Production and Supply Chain Management Purchasing Engineering Product Line Management Quality Management Health, Safety and Environment Controlling Finance Tax Accounting Treasury IT Legal HR Corporate Communications Corporate Development Sales Service Project Management Project Development Regional subsidiaries 9
5. REGIONAL STRUCTURE 2012e 2013e Asia Turnover EBIT EUR 50 mn EUR -9 mn EUR 100 mn EUR 2-3 mn USA Turnover EBIT EUR 170 mn Break even EUR 170 mn Break even Stable situation in 2013 based on expected order intake 10
KEY PERFORMANCE DRIVERS WIND Broad market access Technology and R&D Cost position Financial resources Nordex is focusing on its key performance drivers with a strategy reset and organizational adjustments A partnership could be an additional game changer to leverage key performance drivers 11
NORDEX POSITION IN THE WIND INDUSTRY There is a place for Nordex in the Market Focus on small to mid-size customers and key markets Expertise in technically demanding projects, customized solutions, high degree of flexibility and short reaction times Nordex products and services focused on turn-key solutions, project development, broad service & maintenance offering Excellent turbine platform (N117/2400) builds a strong basis for further product development 12
AGENDA 1. Strategy Overview 2. Markets and Strategy in Sales, Service & Project Development Lars Bondo Krogsgaard 3. Wind Farms a Cash Flow supporting Asset for Investors 4. Products and Operational Excellence 5. Financial Impact of the Strategy 6. Strategy Implementation and Conclusion 13
MARKET DEVELOPMENT H1 2012 Regional development Market highlights 38 7 41 9 Forecast ~6% 51 48 46 12 14 10 53 11 53 10 Americas Five year forecast downgraded but global WTG installations to grow with a CAGR of ~6% Global growth in H1 2012 up by 20%; Germany (+26% YoY) and USA (+37% YoY) above average Demand in Northern Europe and Eastern Europe above average (CAGR 2011-16e +10%) 21 10 2010 21 10 2011 21 12 2012e 23 12 25 12 27 13 28 14 2016e Asia-Pac. Europe RoW Southern Europe held back by the credit crisis, but still growing slightly mainly thanks to Turkey and France USA will be the most volatile market due to the uncertain PTC situation but there are proposals to extend it Asian volume still driven by China but currently affected by grid constraints RoW South Africa as an emerging market for wind Sources: 2010/ 2011 - GWEC; 2012-2016 - MAKE Consulting, July 2012; BWE; AWEA 14
NORTHERN EUROPE IS THE BACKBONE OF NORDEX SALES STRATEGY EMEA North and Germany EMEA North Germany 4.570 2.770 2.730 1.800 1.800 1.800 1.800 2012 4.530 2013 4.130 2.330 2014 3.930 2.130 2015 new onshore installations in Nordex focus markets in MW Germany: Stable, mature market due to legal framework and wind initiatives at federal level; attractive low wind sites Larger projects in Eastern Germany U.K.: ROC reduction (-10%) in 2013; demand for turnkey contracts. Sweden/Norway: stable remuneration system, with currently extremely low electricity prices (Sweden) and certificate prices (both countries) Finland: sprinter bonus leads to relatively strong outlook for 2013/14; good Nordex-visibility due to large framework contract (up to 111 WTGs) Ireland: REFIT I not extended with REFIT II approved, grid capacity/ connection being a major hurdle. Grid code requirements constantly changing; demand for turn-key contracts. Region with robust market volume in Nordex focus markets Germany, U.K., Ireland, Sweden, Norway and new Finland Strong demand for Cold-Climate-solutions and AIS in combination with all WTG types. Competitive high towers needed in Sweden, Finland and Southern Germany for majority of projects. Based on MAKE Consulting; Market Outlook Q2 2012 15
POTENTIAL IN EMEA SOUTH BACKED BY FRANCE, TURKEY AND SOUTH AFRICA EMEA South 4.248 3.465 4.015 4.715 France: temporary interruption of market dynamics in 2012 (H1 2012: -58% yoy in installations) due to legal complaint ( Grenelle 2 ) stable GW market until 2016; clean sale expected to raise through N117 offering Italy: Uncertainty due to change in incentive system (reverse auction system introduced); stable but lower volumes than in the past; more price driven Belgium/Netherlands: stable but low volumes Turkey: significant growth driver; need for additional generation capacity South Africa: Potential volume market but tender system still implies risks and uncertainties 2012 2013 2014 2015 new onshore installations in Nordex focus markets in MW Area: strongly suffering from sovereign debt crisis (GR, PT, ES; also IT). France and Turkey likely to account for significant part of market volume with some promising outlook for South Africa Based on MAKE Consulting; Market Outlook Q2 2012 16
FOCUSED APPROACH IN EMEA EAST ON POLAND AND ROMANIA EMEA East 1.100 2012 1.200 2013 1.000 2014 900 2015 new onshore installations in Nordex focus markets in MW Poland: uncertainty in 2012-13 driven by change in Energy Law from certificates to a feed-in-tariff. Recovering market growth expected after 2013. Attractive market for foreign investors; utilities expected to invest massively. Romania: Attractive incentive system up to 2017 (two certificates per MWh, only one certificate per MWh after 2017). Current uncertainty due to political instability and meltdown of the banking sector meltdown in Southern Europe; smaller size projects expected, stable market. Foreign utilities and IPP s investing Most sites are IEC III very good fit with Nordex WTGs; main competition now with Siemens and Vestas. NXD brings USPs and market knowledge Based on MAKE Consulting; Market Outlook Q2 2012 17
DEVELOPMENT IN AMERICAS DRIVEN BY HIGH US VOLATILITY Americas CA, UY US 12.446 1.746 10.700 6.070 2.270 3.800 7.510 2.940 4.570 6.955 3.115 3.840 USA: large wind resources, heavy electricity consumption, but political uncertainty and highly competitive sources of energy (esp. shale gas); PTC extension will push 2012 projects to 2013 with tight construction deadlines. Long term demand driven by traditional economic market drivers, new transmission lines and other fuel source. Large projects likely to dominate. Market will be led by developers with access to capital. Canada: Hedge against weakness in the US. Strong development expected, as Quebec and Ontario drive 60% of build through 2016. Utilitiesdriven PPA prices expected to remain high; local content requirements in Ontario and Quebec are challenging 2012 2013 2014 new onshore installations in Nordex focus markets in MW 2015 LATAM: Demand driven by emerging renewable energy policies, combined with growing economies and development banks support. Very high conventional electricity price levels are stimulating the development of the wind project pipeline. Based on MAKE Consulting; Market Outlook Q2 2012 18
CHINA DOMINATING VOLUME BUT A COUPLE OF EMERGING MARKETS OFFER POTENTIAL APAC PK, PH, JP China 17.903 523 17.380 2012 18.875 675 18.200 2013 20.225 625 19.600 2014 21.000 800 20.200 2015 new onshore installations in Nordex focus markets in MW China: high volume market with fierce competition; market driven by initial purchase price considerations rather than life-time-cycle cost though increasing quality awareness; very limited access for non-chinese OEMs; predominant wind class IEC III (75%), attractive IEC I segment (5-10%); supply-only market Pakistan: Growth due to need for power and attractive feed-in-tariff; financing main and major hurdle for realizing growth; wind class high IEC III / low IEC II; turn-key market Asean: growth markets with recently introduced attractive feed-in-tariffs; still small volumes; Philippines wind class IEC I; Thailand wind class IEC III, Vietnam wind class IEC I and II; turnkey market Japan: growth market with recently introduced attractive feed-in-tariff; volume still small; all wind classes; supply-only as well as turn-key market; challenging for non-japanese OEMs Based on MAKE Consulting; Market Outlook Q2 2012 19
STRATEGY TO TARGET NORDEX FOCUS MARKETS Conclusion Nordex focus markets Business cornerstones Nordex focus markets in Europe, Asia and Americas have significant sales and service potential BIG UTILITIES/ IPPs CHALLENGING NORDEX GOOD FIT SMALL TO MID-SIZED CUSTOMERS IT MAKES SENSE FOR NORDEX TO DO MORE IN GERMANY Most of Nordex focus markets are stable or growing Nordex has an established market position including sales and service structures Low margins Base-load for production Project refs. High margins Value Nordex Drive service Stable volume High margins Quality seal Nordex product portfolio is geared towards customer requirements in its focus markets Double digit market shares and/or TOP3 positions in European onshore markets are realistic Regular monitoring of emerging markets including analysis and definition of watch list markets to take advantage of opportunities TURN-KEY MAKES SENSE FOR NORDEX High margins Nordex experience Niche potential Complements Nordex project development MORE NXD MAKES SENSE Good customer fit Growing segment Drives service NORDEX SERVICE BUSINESS SHOULD BE DEVELOPED FURTHER Stable business High margins By-itself-growth, good visibility 20
THERE IS A PLACE IN THE MARKET FOR NORDEX Why customers should buy Nordex? See projects through customer eyes Ideal partner for investors seeking one-stop solutions DEEP CUSTOMER UNDERSTANDING the only OEM doing project development >25 years of experience Wind engineering heritage Track-record for performance and quality Availability and Credibility A SAFE CHOICE well-proven German/Danish engineering from one of the most experienced OEMs in the industry MARKET POSITION TURN-KEY CAPABILITY a highly competent provider of turn-key solutions Extensive turn-key experience Comfortable with civil works and balance of plant (E-BoP) scopes Turn-key projects in all sizes Partner for customers seeking to wrap risks SPEED AND ACCESS the most easy-to-dealwith OEM Some differentiation potential Significant differentation potential The most easy-to-deal-with OEM We interact as equals with customers, will not get stuck in process Short transaction times, low transaction costs Easy-to-understand organization Access to management and specialists as required 21
BUSINESS CORNERSTONES LEAD TO FIVE VALUE STREAMS for which specific strategies have been developed Business area New unit sales Own development Service sales Value stream Volume sales Value-added sales Turn-key sales Business rationales Accept lower project margins in return for volume busines, cap sales to required baseload Improve project margins through sales to small and medium-sized value-added customers Leverage turn-key experience to drive project margins. Enter small/mid-size project niche Leverage unique NXD position and pipeline to drive project margins Leverage Nordex WTG business to generate stable revenue stream, drive efficiency to improve margins Cornerstones BIG UTILITIES/ IPPs ARE DEMANDING, BUT PROVIDE USEFUL VOLUME NORDEX FITS WELL WITH SMALL TO MID-SIZED COMPANIES IT MAKES SENSE FOR NORDEX TO DO MORE IN GERMANY TURN-KEY MAKES SENSE FOR NORDEX MORE NXD MAKES SENSE NORDEX SERVICE BUSINESS SHOULD BE DEVELOPED FURTHER = Nordex strategy change 22
TARGETS AND STRATEGIES FOR EACH VALUE STREAM HAVE BEEN DEFINED EXAMPLE NXD Own development (Nordex Development = NXD) Business rationale Customers Markets Products Initiatives/ Projects Leverage unique NXD position and pipeline to drive project margins No risk investors buying at substantial completion stage Minimum risk investors buying at ready to build with turn-key scope or with WTG supply only scope France Poland Sweden USA Developed project + WTG supply Additional balance of plant and civil works Full product range Broad and long service Build up separate NXD organization incl. new P&L structure Expand project pipeline Establish finance vehicle to take assets of Nordex balance sheet 23
N117 IEC3-BENCHMARK OF THE INDUSTRY Prototype of N117/2400 installed in time (December 2011 in Stadum/ Flensburg, Germany) 24
SUMMARY SALES & SERVICE STRATEGY Drive volume & margins through focus on value-added customers, NXD, service, N117/2400 There is a place for Nordex in the market (re-positioning and differentiation started) Focus on financial investors Extend current order momentum 1 Leverage product fit (N117/2400) to increase German sales Must-have revenue line of around 1.5 bn has been validated against sales planning Strategies around 5 value streams: New unit sales: Volume New unit sales: Value-added New unit sales: turn-key Own project development Service Value streams are based on business cornerstones (Nordex strengths/business potential) Balanced value stream mix in order to optimize volume and profit requirements 1 H1 2012: firm order intake well above industry average (Nordex yoy: stable; industry yoy according to MAKE Consulting -30%) 25
Q&A SESSION I 26
AGENDA 1. Strategy Overview 2. Markets and Strategy in Sales, Service & Project Development 3. Wind Farms a Cash Flow supporting Asset for Investors Robert A. Clover (MAKE) 4. Products and Operational Excellence 5. Financial Impact of the Strategy 6. Strategy Implementation and Conclusion 27
PRESENTATION BY ROBERT A. CLOVER (MAKE CONSULTING) 28
AGENDA 1. Strategy Overview 2. Markets and Strategy in Sales, Service & Project Development 3. Wind Farms a Cash Flow supporting Asset for Investors 4. Products and Operational Excellence Jürgen Zeschky 5. Financial Impact of the Strategy 6. Strategy Implementation and Conclusion 29
PRODUCTS, OPERATIONAL EXCELLENCE AND COST OF MATERIALS AS PROFITABILITY LEVERS 1. Nordex has a best in class product and a promising pipeline 2. Operational excellence focus on further cost reductions esp. for the main components tower and blades 3. Project WTG minus >100k (2 nd phase n-ergize ) Further cost out per turbine Alignment engineering and purchasing 30
1. PRODUCT STRATEGY 2012-2016: INCREASING COMPETITIVENESS IN ALL WIND CLASSES Gradually moving product portfolio towards full grid parity by 2015/16 2012 2013 2014 2015 2016 Focus Launch NXT-6.2 Ramp up N117/2400 NXT-6 Time-to-market NXT-8 Cost of energy reduction with minimal time to market Launch NXT-8 CoE (EUR/kWh): Proven technology NXT-GEN Technological innovation to reach full grid parity by 2015/16 Launch NXT-GEN CoE (EUR/kWh): Innovation 31
+22% AEP +22% AEP 1. CURRENT AND NEAR TERM PRODUCT PORTFOLIO NXT-6 Current Product Portfolio 2012 IEC 1a IEC 2a IEC 3a NXT-6 WTG Types 2500 2500 2400 NXT-8 Product Portfolio 2013/14 IEC 1a IEC 2a Best in Class WTG for Light Wind NXT-8 WTG Types Planned SOP (series) End 2013 End 2013 32
1. R&D BLUEPRINT N117/2400 ECONOMICALLY ATTRACTIVE, HIGHLY EFFICIENT & LOW NOISE EMISSIONS Scenario: IEC3a/ low wind 6.5 m/s at 140m hub height, inland location, (Southern) Germany Nordex N117/2400 Net AEP [MWh p.a.] Competitor WTG 1 Competitor WTG 2 Competitor WTG 3 Full load hours [MWh p.a./mw] Most efficient Light Wind Turbine in the market WTG price [keur] Invest factor [EUR/MWh p.a.] Sound power level [db (A) max Lwa] Best Economics Light Wind Turbine in the market 105,0 Lowest Sound Power Light Wind Turbine in the market New for 2014 deliveries: Market leading Anti-Icing System also for N117/2400 33
1. INCREASING IN GROSS MARGIN POSSIBLE DUE TO GAINING PRODUCT EFFICIENCY Current product portfolio K08 GAMMA/NXT-6 Future product portfolio NXT-8 Current product portfolio K08 GAMMA/NXT-6 Future product portfolio K08 DELTA/NXT-8 / MWh 100 90 Required cost down for N100/2500 to reach LCOE level of NXT-8 ~30% / MWh 100 90 80 N117/2400 80 IEC3 NXT-8 70 N100/2500 70 IEC2 NXT-8 60 N90/2500 60 IEC1 NXT-8 50 50 40 40 30 LCOE IEC3a 6.5m/s - N117/2400 20 LCOE IEC2a Peak load price 8.0m/s - N100/2500 10 Levelized Cost of Energy (LCOE) Base load price IEC1a 9.0m/s -N90/2500 0 2011 2012 2013 2014 2015 30 LCOE IEC1a 9.0m/s IEC1 nest gen 20 LCOE IEC2a 8.0m/s IEC2 next gen 10 LCOE IEC1a 6,50m/s Peak load price IEC1 next gen Base load price 0 2011 2012 2013 2014 2015 Low cost of energy at a grid parity level will minimize the reliance on incentives and offer margin potential 34
Wind class 1. PRODUCT DEVELOPMENT APPROACH Product development focused on wind classes and performance within the wind classes Competitive Products Portfolio Management Innovation 1 Performance 2 + 3 Time 35
2. COSTLY ISSUES WITH BLADES AND TOWERS DURING ORDER EXECUTION WILL BE ELIMINATED SYSTEMATICALLY KEY ISSUE Cost over-run due to inefficiencies in project execution TOWERS BLADES LOGISTICS/OTHER ANALYSIS Quality problems, short term postponements Late & expensive supplies Core: mismatch of supply footprint & demand Inefficient erection & commisioning; problems with incomplete deliveries COST IMPACT ~ -10 mn ~ -10 mn ~ -5 mn ACTION/ MEASURES Cross-functional project Tower Excellence Project Blade Excellence To be dealt with in n-ergize Execution Improve supplier performance Implement first sample production for towers Rework tower specs & instructions Increase expediting capacity & capabilities in SQA Match supply footprint to needs: Negotiations to increase volume in EU Stabilize 24h cycle for existing NR 58.5 supplier Start up US supply for N117 Adjust international footprint & increase volume flexibility Reduce man-hours & equipment effort for erection & commissioning Optimize outbound logistics Improve quality of supplied modules GOAL EBIT IMPACT Proven supply chain with zero defects and timely delivery Set up for regional production/ supplier bases + 1% CM in 2013 +1% CM in 2014 Fault free delivery & optimized erection & commissioning 36
2. DTV-PROJECTS SUCH AS FOR STEEL TOWERS CARRY SIGNIFICANT POTENTIAL FOR LOWER COSTS Advanced 120m tower 2nd source/concept 141m hybrid towers -15-20% -10-20% 2012 2014 2012 2014 2012-2014: -15 to -20% cost reduction targeted depending on WTG type Advanced design of steel towers Dimensioning of towers based on eigenfrequency 2012-2013: -10 to -20% cost reduction targeted depending on destination/ region Supplier diversification Significantly lower costs and dependency 37
2. FURTHER COST REDUCTION ON BLADES TO SECURE MARGIN IMPROVEMENT In-house blade production to grow 3 rd party blade supply -24% -28% -20% 2010 2011 2012e 2013e 2014e 2010-2012: 24% cost reduction already achieved Further -28% targeted Increasingly competitive to 3 rd party supply Due to more efficient production process, lower costs of material 2008 2009 2010 2011 2008-2011: 20% cost reduction already achieved Further reductions targeted Due to low cost country supply / negotiation 38
3. COST REDUCTIONS CAN BE ACHIEVED IN ALL LARGE WTG PARTS Past Future -16% -9% -2.5% Nacelle -3 to -5% p.a. Blades Tower FY 2009 FY 2010 FY 2011 FC 2012 Target 2013 Target 2014 Target 2015 Example N100/2500, R100; total cost reduction of ~30% between 2009-2015e 39
FURTHER COST REDUCTION OF MORE THAN EUR 100K PER WTG DRIVEN BY ENGINEERING AND PURCHASING Engineering Purchasing Design to Cost (DtC) Design to Value (DtV) Value Engineering Benchmark functions Benchmark components Standards, processes, tools Improved methods Supply strategy Low cost countries 80 / 20 volume allocation towards lead supplier Standards, processes, tools Close collaboration Engineering Purchasing - Production 40
Q&A SESSION II 41
AGENDA 1. Strategy Overview 2. Markets and Strategy in Sales, Service & Project Development 3. Wind Farms a Cash Flow supporting Asset for Investors 4. Products and Operational Excellence 5. Financial Impact of the Strategy Bernard Schäferbartold 6. Strategy Implementation and Conclusion 42
NORDEX PATH TO EUR 1.5 BN REVENUE BACKED BY FIVE VALUE STREAMS Additional Revenue drivers in EUR mn 1,500 Value added Volume 1,100 Turn-key 2012e New unit sales NXD Service 2015-17 Revenue growth driven by: Volume sales in line with overall market development of 6% p.a. Value-added sales esp. in Germany and thanks to N117/2400 projects Turn-key excellence center NXD: Leverage growing maturity of own development pipeline and financial vehicle Service: Raising installation base, additional service products (e.g. for blades) 43
NORDEX PATH TO A 25% GROSS PROFIT MARGIN AND A 5% EBIT MARGIN Additional EBIT Revenue levers drivers in EUR mn 5% 1-3% Tower Blade Logist. 2012e price decr. Op. Material costs New products 2015-17 excellence Gross margin and EBIT margin improvement despite pricing pressure mainly driven by: Operational excellence Cost-down initiatives (>100 k/wtg) Price premium achievable with superior products due to lower CoE 44
OPERATIONAL EXCELLENCE / COST REDUCTION Operational Excellence Cost of Materials 2013 2014 in 2013 2012-2015 Tower Blades Logistics EBIT margin improvement +1% EBIT margin improvement +1% -EUR >0.1mn / WTG (= -4%) -15% / WTG (in total) EBIT margin improvement of 1% in 2013 and 2014 each Profitability measures focused on towers, blades and logistics Implementing by a collaborative project by engineering and purchasing Design to cost / Design to value efforts in engineering Supply from low cost countries 2 nd phase of cost-out project n-ergize 45
COST REDUCTION IN TOWERS & BLADES Advanced 120m tower 2nd source/concept 141m hybrid towers -15-20% -10-20% 2012 2014 2012 2014 In-house blade production to grow 3 rd party blade supply -24% -28% -20% 2010 2011 2012e 2013e 2014e 2008 2009 2010 2011 46
NEW PRODUCTS WILL MINIMIZE RELIANCE ON INCENTIVES AND OFFER MARGIN POTENTIAL Current product portfolio K08 GAMMA/NXT-6 Future product portfolio NXT-8 Current product portfolio K08 GAMMA/NXT-6 Future product portfolio K08 DELTA/NXT-8 / MWh / MWh 100 100 90 90 80 N117/2400 80 IEC3 NXT-8 70 N100/2500 70 IEC2 NXT-8 60 N90/2500 60 IEC1 NXT-8 50 50 40 40 30 30 20 Peak load price Base load price 10 0 2011 2012 2013 2014 2015 20 10 Peak load price Base load price 0 2011 2012 2013 2014 2015 47
STRICT CASH FLOW MANAGEMENT AND INNOVATIVE CORPORATE FINANCE STRUCTURES Working Capital target of 10 15% of total revenues Neutral free cash flow Investment focus purely on R&D No need for additional finance Introduction of a Global Planning Office (GPO) Introduction of new and innovative corporate finance instruments and structures: Finance vehicle for NXD Professional sales support with tools and processes 48
WORKING CAPITAL REDUCTION REMAINS A MAJOR TARGET Nordex working capital development with a top line at EUR 1.5 bn WC in m EUR 300 250 25.2 30.0 WC in % WC WC in % total revenues 30 25 Target: Top line EUR 1.5 bn Balanced free cash flow 200 18.6 18.4 20 require a working capital range of 10-15% 150 100 15.1 15 10 Measures: Organizational responsibilities for major components of working capital 50 0 2008 2009 2010 2011 B2012 T2013 T2014 T2015 5 0 Global Planning Office Working Capital Management Project started in 2012 will be continued 49
INTRODUCTION OF A GPO GLOBAL PLANNING OFFICE New function GPO acts as central interface between customer facing functions and line organization Project Organisation Region Region Region Region... Sales P&L PM Service NXD Strategic Planning Global Planning Office (GPO) Financial Targets Engineering PLM Purchasing Manufacturing/ SCM Line Organization 50
OPTIMIZED OPERATING PROCESSES REQUIRES A RELIABLE NORDEX VALUE CHAIN Production Fulfill to order (from PM) Purchasing Focus on timely delivery and quality Service Flawless commissioning and operations PM Correct pick-up dates for production & purchasing Sales OI volume and erection dates 51
FINANCIAL VEHICLE FOR NXD PROJECTS Target: (Off balance) bridge finance for wind farm projects developed in-house (Non-recourse) financing on project basis Sale of projects at the point of substantial completion to match with need of financial investors Main Market: France Volume: EUR 50-60 mn Nordex JV-Partners: State owned bank Private equity fund 52
SUMMARY FROM THE FINANCIAL PERSPECTIVE Targets 2015/2017 Revenue target of EUR 1.5 bn Gross profit margin target of 25% EBIT margin target of 5% Neutral free cash flow No need for additional finance 53
AGENDA 1. Strategy Overview 2. Markets and Strategy in Sales, Service & Project Development 3. Wind Farms a Cash Flow supporting Asset for Investors 4. Products and Operational Excellence 5. Financial Impact of the Strategy 6. Strategy Implementation and Conclusion Jürgen Zeschky 54
CEO CFO CCO IMPLEMENTATION OF THE NEW STRATEGY Implementation projects with clear board responsibilities started NXT 8.1 and NXT 8.2 Optimization of Engineering and Purchasing Blade & Tower excellence project WTG EUR 100k cost down Global Planning Office (GPO) Working Capital Management Relationship proj. finance / ECA Interface to sales: Cash flow training Windmoney education Bridge finance NXD Support complex tenders Ramp up Sales Germany Ramp up NXD organisation Turn-key excellence center Fixed sales team Joint P&L responsibility for Sales and Project Management Processes (Windmoney, Gate process, SMEEP) Strategy Implementation Office 55
STRATEGIC MEASURES IMPLEMENTATION LANDSCAPE EXCERPT OF THE SALES STRATEGY Areas for Action Strategic Lever Programme/ Measure Project/ Action Area Strategies Finalize Detailed Area Strategies Redesign Regional Responsibility (P&L) Establish Key Account Mgmt. Establish Turn-key Excellence Center(s) Boost N117 Germany Implement WindMoney Training New Units Focus & Differentiation Implement Fixed Sales Teams Enhance Must Win Program Redesign GATE Process SMEEP & Market Master Process 1. Sales Strategy Strengthen Sales Team in Value Markets Service Increase Service Revenue Drive Service Margin Improvement Build Service Sales Team Implement Service Account + Reg. Mgmt. New Organisation for Extra Business Implement Service Improvement Prg. NXD P&L Responsibilty Ramp up NXD P&L / Mgmt. Accounting/ Controlling for CFF Provide Finance Vehicle Expand project pipeline NXD Organisation & Team 56
STRATEGIC CONCLUSION THERE IS A PLACE IN THE MARKET FOR NORDEX Status Quo Above average order momentum Superior product launched (N117/2400) Operational strategy in place Sales strategy Operational excellence Cost of materials reduction Product strategy Structure Aligned and fully committed management team Ensure sustainable profitability in the US and China Strategic options 57
Q&A SESSION III 58
Thank you very much for your attendance! Have a safe trip home! 59