Nordex bullish on Q1 earnings drop

GERMANY: Turbine maker Nordex has reported a 13.4% fall in EBITDA in its Q1 results, but maintains the results are in line with expectations.

Nordex said the results were in line with expectations for the quarter
Nordex said the results were in line with expectations for the quarter

EBITDA totalled €51.2 million in the quarter, down from €59.1 million in the same period of 2016.

Revenue, however, increased 3.7% from €639.7 million to €663.6 million thanks to a 1.8% increase in sales, mostly in its servicing business.

"Our medium-term goal is to improve market share and profitability. For this reason, we are stepping up spending on our technology as well as lowering production costs," said the manufacturer's new CEO Jose Luis Blanco.

Blanco was appointed CEO of Nordex in March, following the departure of Lars Bondo Krogsgaard who quit following a poor performance forecast. 

Nordex's capital expenditure more than doubled compared to 2016, to €35.7 million. This was "due to the acquisition of plant and equipment for the production of new core components", the firm said.

Unlike competitor Senvion, which is shedding jobs and closing works in Germany, Blanco said the company's factories in Spain — brought in through the merger with Acciona Wind Power in April 2016 — and Germany are not in danger.

"In Spain, there is record activity in production. There has been a slight decrease in activity in Germany, but there is a sustainable amount of production and the works are competitive," he said in a conference call.

There is an ongoing "supply chain reshape" aimed at "creating a more balanced supply chain in terms of customers and geography", Blanco said.

This includes opening a nacelle production facility in India, and the new blade production facility in China with a third party partner, he explained. But he does not see a radical change in the supply chain, he stressed.

Blanco also pressed the importance of Nordex's service activities. "It is a substantial part of revenue and a very substantial part of our order backlog," he said.

Service contracts are important "to keep structures alive and prepare for future options", Blanco said.

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