Pattern of recovery undisturbed -- Nordex and Repower

On the strength of their third quarter results, Germany's listed turbine manufacturers, Nordex and Repower, are powering ahead with getting their businesses back into the black, each posting positive results for the first nine months of 2006. Nordex, however, has the edge over its domestic rival. With a sharp growth in exports, it has more than doubled sales for the first nine months of the current business year.

At EUR 373 million, Nordex sales are up 113% on the EUR 175 million generated in the same period in 2005. Around 75% of this year's sales have been generated in Asia and European countries other than Germany, compared to 52% last year. Earnings before interest and tax (EBIT) are up 200% to EUR 12.1 million, compared to a deficit of EUR 12.3 million in the January to September period last year. The improvement is "primarily due to full capacity utilisation," Nordex says. For 2006 as a whole, it is targeting sales of EUR 500 million. "The group is on track to meet its forecasts," it says.

Turbine output at Nordex totalled 426 MW, compared to 167 MW in the first nine months of 2005 and its holding of firm orders stands at EUR 411 million, up 57% on the previous year's EUR 262 million. "New business widened by 84% to EUR 515 million compared with the equivalent figure in the previous year of EUR 280 million," says Nordex. With firm and conditional orders combined, its order book is valued at EUR 763 million, which is "sufficient to ensure full capacity until the end of 2007." Looking to the medium term, the company expects to grow its business at an annual average of 50% to reach EUR 1 billion in 2008.

Repower reports EBIT of EUR 3.4 million for the first nine months of 2006 on sales of EUR 292.6 million, a significant improvement on the EBIT deficit of EUR 12.5 million on sales of EUR 195.1 million for the same period in the previous year. Some 188 Repower turbines totalling 355 MW had been delivered up to September 30, a 50% increase on the 96 turbines (170 MW) in the same period last year. Net earnings are up from a deficit of EUR 8.3 million in the first nine months of 2005 to EUR 1 million in 2006.

For 2006 as a whole, Repower expects EBIT to be around EUR 11-13.5 million on sales of EUR 450 million, although it acknowledges a risk that up to ten turbines may not be delivered because of component supply bottlenecks, which could slice up to EUR 1. 5 million off projected earnings.

The company is confident of significant growth. Next year, it plans to deliver around 325 turbines, increasing sales to EUR 650 million and further improving its EBIT margin. Revenues in 2008 are predicted to grow by another EUR 200 million to EUR 850 million, with around 420 turbines delivered. That does not include sales from its joint venture in China, Repower North (China), nor from a planned joint venture with India's Essar Group (Windpower Monthly, October 2006).

As of the end of September 2006, Repower's order book, for both firm and provisional sales, contains purchase agreements for 453 wind turbines totalling 867.5 MW, it says. "This is the highest number of orders since Repower Systems AG was founded and corresponds to a potential order volume of EUR 776.9 million," it says. One of the orders, for 50 turbines, dates back to 2002.

Meanwhile, the company is ploughing ahead with installation of its 5 MW machine, although commissioning of the first pair at the Beatrice oil field off Scotland has not gone as planned: commissioning of the first machine is delayed by bad weather while all thoughts of installing the second turbine have been abandoned this winter. Another pair, however, are going up at Cuxhaven in Germany, which should also see five installed in Brunsbüttel and one in Bremerhaven in 2007. In 2008, when series production begins, six are scheduled go to the Borkum West offshore demonstration site, three to the Bürgerwindpark Westre onshore in northern Schleswig-Holstein, and negotiations are underway for around 20 more 5 MW machines, the company reports.