Out of the red and striding into profit -- China deal buoys confidence

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With third quarter results for Nordex showing revenues up 21% on 2004, losses cut by half, and an order book worth 88% more than in the same period the previous year, spring is coming early for the German wind turbine maker. It says it will climb out of the red and achieve net profit for 2006 on turnover of EUR 400 million, compared with the targeted EUR 280 million it expects to achieve for 2005.

News of a joint venture agreement for turbine assembly in China also went down well in the financial markets, with Nordex's share price ending 26% up on three months earlier. Orders for projects with construction permits and grid connection secured are EUR 260 million, compared to EUR 129 million in 2004. "If all projects are included, that is, where only contracts have been signed, the volume stands at over EUR 660 million," says the company's Ralf Peters. Nordex sold 219 turbines in 2005, with a combined capacity of 416 MW, well up on the 241 MW sold in 2004. Exports made up 62%, mainly to France.

While some of its larger rivals, such as Vestas and Repower, are lamenting the scarcity of available components, Nordex says it has "made early supply reservations with its suppliers and deliveries of core components have largely been secured for 2006." Similarly, while Vestas has warned it could lose market share in China because of the requirement for 70% of wind plant equipment to be manufactured locally, Nordex is confident of expanding its Chinese order book. It recently announced that its joint venture company in China, Nordex Wind Power Equipment Manufacturing (NWPEM), is set to build 1.5 MW machines and already has orders for 200 MW to be installed by 2009.

Chinese partner

Nordex's Chinese partners -- regional utility Ningxia Electric Power Group with a 40% stake in NWPEM and power station operator and construction company Ningxia Tianjing Electric Energy Development Group with 10% -- already own the 110 MW Helanshan wind farm. This project "is to undergo massive extension over the next few years," says Nordex. The two Chinese firms have plans for a further 600 MW in the medium term. Assuming these progress, the joint venture expects to expand production to reach 200 turbines a year, says Nordex. It anticipates demand from other project developers as well.

Although Nordex expects to meet the 70% requirement "swiftly," says the firm's Thomas Richterich, of the 26 machines to be made this year for China, some will be built in Germany to train Chinese workers. Nordex established its first Chinese joint venture back in 1998 with Xi'an Aero Engine for the assembly of 600 kW turbines. A year ago it opened a blade production facility in Baoding, where it produces components for its 1.3 MW series.

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