Nordex confirms 2022 loss forecast as war and supply chain disruptions take toll

German turbine manufacturer hit by multiple factors this year but remains confident of recovery in 2023

Nordex has published its latest quarterly figures, confirming a downgrade in its financial outlook for 2022 and expectations of an overall loss for the year.

Sales for the first quarter of 2022 were €933 million, down 25% from €1.25 billion for the same period a year earlier. The German turbine manufacturer attributed the fall in sales to a planned change in production to different blades and weather-related lower installation rates.

Earnings before interest, taxes, depreciation, and amortisation (Ebitda) for the quarter, including one-off costs of €33.9 million for the reconfiguration of production, was minus €88.9 million, a significant drop from its 2021 first quarter Ebitda of €10.4 million.

Adjusted for the one-off costs, Ebitda was minus €52 million and the adjusted Ebitda margin was minus 5.6%, compared to 0.8% in the same period in 2021. The firm said profitability had been impacted by higher raw material and logistics costs compared with the same period in 2021.

"The start into 2022 has been difficult and has certainly unfolded differently than anyone expected. There are significant disruptions to the supply chain, and the cost situation remains volatile," noted Nordex CEO José Luis Blanco.

With that in mind, Nordex confirmed its earlier guidance for full-year consolidated sales of €5.2-5.7 billion — down from €5.4-6.0 billion — and an operating Ebitda margin of between minus 4% and 0% – having previously expected a positive margin of 1.0-3.5%.

The forecast factors in all the one-off and non-operating costs resulting from external factors. "Some of these one-off expenses, namely, direct impacts from the Ukraine war, the costs of reconfiguring its production footprint and costs related to cyber incident, should not recur in 2023, thus supporting the expected margin recovery," Nordex said.

Other indirect effects from the Ukraine war, supply chain disruptions and lockdowns in China are also included in the current guidance. The expectations regarding capital expenditure of around €180 million and a working capital ratio of less than minus 7% at the end of 2022 remain unchanged.

Staying upbeat

Despite the downturn in its financial forecast, Nordex remained upbeat. Having already achieved its sales target of around €5 billion and production capacity of more than 6GW, the firm said it remains committed to its strategic goal of achieving a group Ebitda margin of 8% in the medium term.

"Our underlying operations continue to manage the risks well with good momentum in our order intake," Blanco said. "Improving prices should help our margin recovery towards our midterm strategic target of an 8% Ebidta margin. It also underlines the competitiveness of our product portfolio, which now includes the N163/6.X in the 6MW class."

Overall in the first quarter of 2022, Nordex installed 197 turbines (with a combined capacity of 867MW) in 12 countries — this compares with 381 turbines (1,453MW) in 19 countries in Q1 of 2021.

In terms of installed megawatts for the first quarter of 2022, 82% was in Europe, 10% in North America and 8% in Latin America. As a result of lower installation figures, sales in the projects segment fell by 28.4% to €819.8 million, from €1,145.7 million a year ago.

In contrast, the company's service segment continued its positive trend with a 7.1% increase in sales to €115.7 million.

At 304 turbines, production output in turbine assembly was at the same level year on year, with the nominal output increasing by 15% to 1,495MW from 1,300MW. The company said it produced 270 rotor blades, down from 383, while external suppliers manufactured an additional 702 blades according to Nordex’s designs and specifications, up from 570 units a year ago.

As reported in April, order intake, excluding its service business, for the first three months of 2022 was slightly down at €903 million, totalling 1,165MW — compared with €911 million and 1,247MW for the same period a year earlier. Europe accounted for 89% (across ten countries) and 11% was for Latin America.

Overall, the company's total order book stod at €9.3 billion by the end of the first quarter 2022, up from € 7.9 billion year on year. Its projects division accounts for the bulk of that, with its order pipeline reaching €6.3 billion, representing a year-on-year increase of around 24% (Q1/2021: €5.1 billion). The order book for Nordex's service business increased by 7.2% from €2.8 billion to €3 billion.

The results announcement was originally planned for May but was delayed due to a cyber attack incident.

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