Nordex Aktie

Ladies and gentlemen, welcome to the Q1 figures 2026 Conference Call. I'm Lorenzo, the Chorus Call operator. [Operator Instructions] The conference is being recorded. [Operator Instructions] The conference must not be recorded for publication or broadcast. At this time, it's my pleasure to hand over to Anja Siehler. Please go ahead.

Thanks, Lorenzo, and a very warm welcome from the Nordex team in Hamburg. Thank you for joining the Q1 2026 results management call. As always, we take -- we ask you to take notice of our safe harbor statements. With me are our CEO, José Luis Blanco; and our CFO, Dr. Ilya Hartmann, who will lead you through the presentation. Afterwards, we will open the floor for your questions. And now I would like to hand over to José Luis. Please go ahead.

Thank you very much for the introduction, Anja. As well, on behalf of the Management Board, I would like you to welcome to our first quarter result of 2026. Let's start with a recap of the first 3 months of the year. Overall, we are pleased to report that the first quarter of the year represents a positive start into the year for Nordex, generally in line with our expectations.

We continue to execute well operationally, deliver further margin improvements and entered the year with a strong financial position. We maintain a strong presence in our core European markets with Europe representing 97% of the total project order intake. Germany remained our most important market, followed by Turkey and Sweden. Project order intake amounted to 1.9 gigawatts, which is slightly down year-on-year. And this development needs to be seen in the context of a particularly strong comparison base in Q1 and Q4 of last year.

More importantly, the underlying demand environment and pricing remains stable. Secondly, we continue to deliver solid operational performance across the businesses. Total revenue reached EUR 1.6 billion, 11% growth year-on-year. Project revenue accounted for 87% of total revenue, also growing by 11%, driven by consistent progress in execution and deliveries. Parallel, service revenue represented 14% of the total and grew as well 11% year-on-year.

Thirdly, profitability improved further in the first quarter. We achieved an EBITDA margin of 8.2%, reaching levels above 8% already in first quarter. And fourthly, our cash position remains very solid. At the end of the first quarter, we reported a cash position of EUR 1.8 billion. Working capital continued to normalize, moving back to around minus 9%, which is consistent with the seasonality of our business.

On the strategic side, we continue to see supportive market fundamentals, particularly in Europe and in Germany. Overall, the first quarter confirms that we are on track to deliver on our guidance for 2026. We have started the year with improved margins, continued revenue growth, strong financial position, providing a solid foundation for the quarters ahead.

And with this, let's move a little bit more to next slide for details. First quarter of 2026 saw order intake in line with our expectations. In Q1 '26, turbine order intake totaled EUR 1.7 billion, corresponding to 1.9 gigawatts. Orders were received from 13 different countries. Average selling price increased to EUR 0.91 million per megawatt compared to EUR 0.87 million per megawatt in Q1 '25. This increase was driven by regional mix and project scope.

From a regional perspective, Europe accounted for 97% of the order intake. And as always, while we are not providing specific guidance for the year, we remain comfortable in our order intake momentum for this year. Let's move to the next slide, the order book. Let me briefly comment on the development of our order book. At the end of the first quarter, our combined order book amounted to close to EUR 17 billion, reflecting continuing momentum in both segments.

The turbine order book stood at EUR 10.5 billion, with most orders scheduled for installation in Europe, followed by North America, Rest of the World and Latin America. In the Service segment, the order book increased to EUR 6 billion. By the end of the quarter, almost 14,000 turbines were covered by service agreement corresponding to an installed base of 49.4 gigawatts. Overall, the order book development supports planning visibility and reflects the expansion of our installed base over the past years.

Let's talk about the Service business. Looking at the first 3 months of '26, I can confirm that our Service business continued to develop positively. Service revenue increased to EUR 218 million and service sales represented around 14% of total group revenues. At the same time, service EBIT margin improved further to 19.2%. As we have mentioned before, the margin recovery in service is not linear, but the underlying trend remains clear and steady.

This development is supported by an expanding service order book, contract tenor and continued discipline in execution. Operationally, fleet availability remained stable at around 97% and the average tenor of the service contract increased to over 13 years, supporting visibility and stability in the service business.

Overall, the first quarter development confirms the continued improvement in service margin, progressing towards our midterm EBITDA margin target of crossing 20%. Let's move to the next slide, our installation and production figures. Installations increased to 227 turbines across 14 countries, up 10% in megawatts year-on-year. Installations were mainly focused on Europe, followed by South Africa.

At the same time, turbine production increased to 249 units compared to 209 in Q1 last year, largely tracking project scheduling and delivery requirements. Blade production remained stable in the quarter despite temporary delays at one supplier facility in Turkey. Overall, operationally, the activity in the first quarter developed in line with our expectations, supporting execution of readiness for the higher activity in the quarters ahead.

And now I would like to hand over to Ilya for the financials.

Thank you, Jose Luis. Welcome also from my side. And as usual, I will guide us through the financials in -- starting with the income statement. So as mentioned by Jose Luis, in the first 3 months of this year, sales rose by around 11% to EUR 1.6 billion, up from EUR 1.4 billion in Q1 of 2025. This development was primarily driven by higher activity levels in both our project and service business.

We again further strengthened our gross margins, reaching 29.4% in this first quarter compared to 27.3% in the same period of last year. As a result, we generated an absolute EBITDA of EUR 89 million, which is higher substantially than the EUR 35 million in the first 3 months of 2025. This development translates to a further EBITDA margin improvement from 5.5% to 8.2% year-on-year. On the back of this operating performance, we reported a net profit of EUR 54 million for the quarter, representing a substantial improvement versus the EUR 8 million in Q1 of last year.

And with this, we already move on to the balance sheet. Looking at the balance sheet, the overall structure remains on a comparable level when looking at year-end 2025. We ended the first quarter of '26 with a cash position of EUR 1.8 billion, as already mentioned by Jose Luis as well. And then the working capital normalized from minus 12.4% end of the year to minus 9% end of this past quarter.

Equity ratio improved and reached 19.4% at the end of the first quarter. And then, of course, this development is largely driven by a further increase in net profit. Now together, let's have a look at the other balance sheet KPIs on the next slide. So the net cash as a result, reached EUR 1.5 billion at the end of the quarter and remaining at an arguably strong level in a quarter, which is usually softer. Working capital ratio one more time at minus 9% or in total numbers EUR 690 million at the end of the quarter, which is a reflection of the normalization in working capital usual for Q1.

And with that, let's go to the cash flow and CapEx slide. Cash flow from operating activities before net working capital stood at EUR 175 million at the end of the quarter and again, reflecting the strong operational performance of the company with the working capital normalizing, as I just said, cash flow from operating activities, after working capital amounted to minus EUR 69 million at the end of the quarter -- million of course. And as a result, we generated a negative free cash flow of minus EUR 98 million in the first quarter of this year. However, for the full year, we continue to expect a solid free cash flow generation.

CapEx spendings amounted to around EUR 27 million in that quarter, and this is pretty similar to the ones in the previous year. Our investment focus remained largely unchanged compared to last year with investments primarily in blade and nacelle production facilities and tooling for installations and transport.

And with that, I would like to hand it over back to Jose Luis for the guidance slide.

Thank you very much, Ilya. And based on a healthy first quarter, I would like to confirm our guidance we said at the end of February and that we expect profitable growth to accelerate in 2026. This is, of course, assuming no material disruption in the market due to recent geopolitics development and market normalizing at some point during the first half of the year.

Our guidance for 2026 is as follows: sales between EUR 8.2 billion and EUR 9 billion, meaning a top line growth between 9% to 18% year-on-year. EBITDA margin in the range of 8% to 11%. We believe that midpoint plus is the most likely outcome as of today, working capital ratio below minus 9%, CapEx approx EUR 200 million. Regarding free cash flow, as Ilya mentioned, we don't provide formal guidance. However, based on the building blocks we have shared, you can likely conclude that we are positioned to deliver another solid free cash flow year.

And with this, handing over to Anja to open for Q&A.

Yes. Thank you, gentlemen, for the presentation. Lorenzo, you can now please start with the Q&A.

[Operator Instructions] The first question comes from the line of Ajay Patel from Goldman Sachs.

I just one -- two questions, if I might. If we look at the quarterly performance, like the first quarter, despite being a relatively low revenue quarter, has delivered quite a sizable increase in margins. And if you kind of extrapolate that into the rest of the year, it would imply a bit more than the midpoint statement that we just said over the course of the presentation. So I was wondering to what degree you could maybe point to us how the profile of margin will evolve over this year? Not giving a forecast, but just understanding why that if you have a relatively low revenue quarter this way, you've got a good margin, but then the future quarters should have sizable operational leverage, which should lead to quite a substantial increase in those quarters, too. So if you could help us with the dynamics there, that would be really helpful.

And then the second question was more around -- just more policy than anything else. In March, there was a paper out, which was on the EU Industrial Accelerator Act, and it had some restrictive EU origin requirements. I just wondered if you could just talk to that and how that may affect your portfolio if at all?

Yes. Let's do this together, Ilya. I think regarding the first quarter and as we always mentioned, majority of the activity is always in the second half of the year, and this is a project business. So the composition of the margin changes with the scope, with quality and quantity of the projects you are executing in your planning phase. So yes, you might get some general early indications, and this is why with the information we have as of today and with the disclaimers that the geopolitics get settled in the first quarter -- in the first half of the year, we think we can do middle point plus. So we see slightly more chances than risk to exceed the midpoint. But to go more into details, I don't know, Ilya, if you can provide more light.

I'd say probably combining in one response, hopefully to -- a, to the profile, I think for calibrating and I think we did that on the full year call and yes, a step-up in total and percentage numbers in the profitability. Probably to a similar pattern, different absolute terms, obviously, than yes, last year. So that's how I would see the trajectory.

And second important point on what it looks today and the actuals Jose Luis has made, I would just make one addition. As you said, Ajay, it's a bit of a slow weaker revenue-wise quarter. So this is why service margin outweighs and outperforms a bit. So I don't think you can necessarily extrapolate that first quarter to the rest.

Yes. And regarding the industry -- EU Industrial Acceleration Act, I think it's a policy in the right direction. Our sector, as everybody now understand, is super critical for not only to fight climate change, but to deal with affordability, and we saw that in the auctions in Germany to deal with a resilient energy market to have energy sovereignty and to have technology sovereignty as the role that this sector plays to national security and critical -- to critical infrastructure.

So what EU Industry Acceleration Act is somehow trying to address is to make sure that roadblocks are removed to unleash demand growth. A good example was a very successful case in Germany. So hopefully, this Acceleration Act will provide some leeway as well for other countries to follow and somehow will put in value what our sector brings to governments and to society in terms of affordability, resilience and autonomy.

The next question comes from the line of Constantin Hesse from Jefferies.

First of all, congrats on another really strong print. I've got 3 questions, please. The first one related to the Middle Eastern conflict. So I think last week, you were in an article in Recharge. And this morning, I spoke to Ilya as well, and it doesn't really seem that you guys are seeing much headwinds currently either in terms of supply chain or inflation at the moment, at least in Q1, but Q2 doesn't really seem to be an issue there as well.

So I'm wondering, you're obviously assuming that you can do midpoint plus if the situation ends in the first half. So what exactly are you seeing in Q2, which would change that view, if this conflict continues into the second half? That would be the first question.

I mean, as in a project business, everything is about risk and chances. Of course, this situation has had some impact that we were able to deal with the chances in other areas of the business. And regarding Q2, I would say all things being equal. We should be able to deal with that as well. For us, the biggest concern is security of supply. If one thing is price of what you procure, this is quite volatile.

There are certain cost factors that, regardless what the price in the market, vessels were contracted. So the high prices in the market might not hit you in your P&L, although might have some impact. The biggest concern is if the situation prolongs for long, we might start to see disruptions in supply, which will affect our ability to deliver. And then there is a knock-on effect that might impact more '27 than '26, which is inflation that this will potentially bring to the markets where we operate, but not that much in '26, potentially in '27.

Understood. Okay. Question number two then on order intake for the remainder of the year. So you obviously made a statement in the presentation where you're confident about the sustainability of the trajectory of order intake. Assuming the U.S. does not happen this year, are there any markets in Europe which are, other obviously than Germany, having lower auctions compared to last year? Are there any other markets that are potentially underperforming and would lead to a view where you would tell yourself that order intake could potentially be below last year? Or are basically all markets performing pretty well, and therefore, we should expect probably flat orders assuming no change in the U.S.?

I would say with the typical disclaimer Constantin, that we don't guide out of this stake. We see -- I would say, all regions we are organized performing business as usual, let's put it that way. Maybe some challenges in Nordics due to temporary low electricity prices. But materially speaking, this could be compensated by slightly more volume in other regions. So I will -- U.S. apart, I will consider the situation as stable.

Great. And then last question. Now this one is a little bit harder to answer and I get it, but I'm just trying to -- I just want to get your view on this. So if Germany really transitions to the EEG '27 the way it currently is, meaning we would go into contracts for difference, redispatch, you wouldn't be awarded for that anymore if you have -- if you're curtailed. So clearly, the return environment is getting worse for the developer. I understand that Germany wants to auction 10 gigawatts per annum until 2032. But I'm assuming that if the developer isn't getting a good return, we won't see the 10 gigawatt.

So I'm trying to figure out how do you think the market will evolve from the current feed-in tariff to the contracts for difference. What are you hearing from developers about keeping these volumes running at these higher levels, i.e., 10 gigawatts? It would be great to get your view on this.

Yes. No, our view and our strong advice to policymakers is to think well through the changes, so the changes can be implemented in a way that volumes are not delayed. Because on the positive aspects, we saw the beauty of bringing permits to the market, auctions were reducing prices quarter-on-quarter contributing massively to one of the key concerns of all governments, which is affordability. So we are part of the affordability. We are part of the resilience of the strategic autonomy.

So if you delay that, that's not good for Germany. So I hope that this is taken into account, but you name it. I think every time that a system change from Model A to Model B, there are going to be adaptations needed that might or might not affect volumes. We saw the opposite in a few years ago with -- when Germany implemented the overarching and overriding public interest, which accelerate the market. So hopefully, this is taken into account by the policymakers and volumes are somehow stable.

I mean the redispatch discussion is a good one to have, but who carry that risk, the developer or the system. If you are aiming for net zero, the path is clear, the endgame is clear. So maybe it's not very smart to push that risk to the developers because it's going to be more expensive for the system because they need to price it. So I think hopefully, they will take this into account. And hopefully, this change doesn't compromise the speed of the energy transition, which, by the way, we are late in our overall targets across Europe and in Germany as well. Ilya?

But I think I see it the same way. I think from those 2 points you mentioned, Constantin in the legislative process, I'm not so concerned about that they would be touching volumes -- the total volumes of the market. Could there be some outliers of people being unreasonable or some irrational behavior when bidding into the auctions? Yes, that can happen, always happens. But by and large, it is what Jose Luis said, if you -- and that's not a German discussion, I mean, go back to any given U.S. project.

If you have a PPA where your offtaker takes it as produced, you offer price A. If the offtaker wants you to bear the curtailments and the risk of the uncertainty of the curtailments, you get a price of A plus X. So the market should resolve that. The underlying question for policymakers is whether it's cheaper to bear that on the system directly or through indirect effects on bidding. But I think on the total volume, that, again, provided largely rational behavior that shouldn't change.

And the same is true for the CFD mechanism. If until now you had an opener clause for -- to go to direct marketing and you, let's say, don't get that in the future, well, you will have to bid initially your auction bid with a different level. So pricing will basically adjust for whatever the legislator decides.

And we should not forget that this journey requires grid deployment and renewables deployment at a greater scale. So I encourage more policymakers to accelerate the grid deployment to deal with the curtailments than to decelerate the capacity deployment of wind onshore, which is going to delay on all main KPIs on net zero, on resilient, on affordability, on everything.

The next question comes from the line of Vivek Midha from Citi.

I have a couple of questions. I'll go one at a time, if I may. The first one is a follow-up around your comment around cost inflation potentially being more of a 2027 topic than '26. I was wondering if you could give some color or commentary around where you see your pricing power? I mean customer returns are maybe a bit more squeezed than where they were post-COVID. We've seen the auction price in Germany fading. But then on the other hand, the turbine prices have spiked. We have, of course, still a pretty strong German market in volume terms and so on. I mean, how do you see how easy it will be to push on higher prices given that cost inflation?

No, thank you for the question. I mean, I think it's Q1. What I can comment in Q1 that Q1, we are happy with the quality of order intake for the quarters ahead for 2027. It's too early to comment on that. But you name it, I think if oil is costing more, logistics might cost more, resins might cost more. And then the rest is what are the other levers? The other levers is what is the price -- allowable price for the market, and this is supply and demand and competition.

We will try to do our best to capture the best possible prices, as it should be. And then it's efficiency gains that -- and productivity gains that we need to squeeze further to deal with this margin pressure that we might have provided. We cannot pass those cost increases to -- directly to customers.

That's great. My other question was just a follow-up on the free cash flow. In general, completely agree that working capital to sales should generally improve from here seasonally given this is Q1. But the payables line does still stand out as quite a bit higher than where it was, say, 6 months or so ago. So is there anything we should bear in mind about how that particular line should develop? Or should it stay at this sort of level for the coming quarters?

I think this one, I'll take Jose Luis. No, that's a good observation, Vivek. However, this is just the size of the business and how the manufacturing production, everything is lump, so to speak, in general terms. And again, one more time without guiding anybody, I would repeat my statement from the full-year call that we clearly expect a conversion rate more normal than last year, not that high, but the conversion rate of EBITDA to cash of around 50%.

The next question comes from the line of Richard Dawson from Berenberg.

I've got two, please. Firstly, on services. There was another step-up in service order intake this quarter to what looks to be a new record level. Is this a reflection of a better renewal rate than before? Or is this more just a generally growing installed base within projects? And that's my first question.

And then second one, more of a broader question on the industry. ASPs looked elevated this quarter. I appreciate there's some geographical scope in there on why it's a bit higher. But I guess the main thing is it looks like pricing discipline has been pretty well maintained within Europe. What are your views on the industry competition? We've spoken about the reentry of Gamesa into Europe, but what about some of the Indian OEMs that are looking to reenter or to enter the European market?

Thank you, Richard, for the question. So I would say services, I mean, we are steadily growing that business and improving profitability but improvement doesn't happen overnight. It's a low pace of improvement, let's put it that way. We, this expect to continue, provided things keep working as they are working. We are super happy with the technology. So I mean the service business, of course, the main driver is reliability on the technology and the efficiency that the growth brings and dealing with potential inflationary pressures we might have on people and on certain materials.

So we expect the journey to continue, but a steady pace. I think there should not be expected big jumps. We always say high single-digit, low double-digit growth and whatever profitability that this growth might bring to the business, all things being equal.

Regarding the industry and ASP, we always mentioned, an indicator, which is an indicator that doesn't reflect, in fact, the quality of the business and is driven mainly by -- in this case, I cannot disclose the quality of the order intake, but we are happy with the quality of the intake, it has not deteriorated, but the key contribution for the ASP is geography and product mix. Regarding how this could affect in the future with newcomers. So hopefully, the market will grow in the areas where we operate to accommodate the newcomers, long term or medium term.

And I think short term, the market is in execution focus. The volumes that were auctioned need to be contracted and need to be executed. So I don't see, I mean, with all disclaimers, and I might burn my fingers, but I don't see customers willing to change the way they operate until we process this big volume that was auctioned at that contract that this might change long term. But so far, we don't see it.

The next question comes from the line of Sebastian Growe from BNP Paribas.

Three for me. The first one would be on mix, and we had the debate before around the gross profit margin of more than 29% in the first quarter. So I was wondering if there were any onetime effects or if you would consider the regional mix in any particular way favorable. So maybe you could just quickly comment on that and then I have two more.

I think it's probably a notch to the high end. So I wouldn't expect that to be always recurring on that level. Again, one more time, smaller quarter, more service helps the profitability. So I think the trajectory is clear, but it's probably for a single quarter, which I always would ask us not to look too much at quarters. So I wouldn't read too much into the number, but at least ballpark. No specific one-offs. No specific one-offs either way.

Okay. That's good to hear. And the next one on provisioning. So there was around EUR 45 million in the first quarter. I think it's not necessarily an outlier, but I just wanted to check in whether there's any change to what you had planned for. I think you had been guiding previously to 3% to 4% or so, but if you could just comment on that one area?

Yes. Good observation. Thank you, Sebastian. That gives me the chance to talk about that. Yes, for the quarter, a bit of a higher number, but very clearly, we are not -- so the gross additions were basically at 4% when you talk about warranty provisions, and we keep our basic message from the last quarter, especially the full year call, somewhere between 3% and 4%. And yes, you might expect that to -- for the full year go to up to 4%, but not beyond that.

All right. And maybe the last one, just on the volumes, I think over the last 12 months, you have assembled almost 9 gigawatts of turbines. If I'm not mistaken, when you did not provide a gigawatt number as part of your midterm target update. So can you talk about the ambition for the company when it comes to considering probably Europe being about 8 gigawatts or so alone in '26 and that is, however, before factoring in any contributions from Canada, from the U.S. or from Australia. So I was just wondering if you feel comfortable in talking about volumes and where you want to take this company over the next couple of years?

That's a good question. I would say in terms of instability, you need to invest a little bit in overcapacity to have room to maneuver as well as to accommodate to project schedules and so on. But yes, the 9 gigawatts, it might change from component to component because the timing and the project demand is slightly different and the overcapacity is slightly different component to deal with different risk profiles. But yes, yes, we are ready to deliver in that ballpark, 9 gigawatts, 10 gigawatts a year, yes.

But when you say overcapacity on the one side, you are doing already at a run rate about 9 gigawatts. So how much leeway would you then have? And then...

It depends a lot, Sebastian, in nacelles, substantial; in blades, less. It depends because you do a risk assessment of all different aspects that might impact your business, different import duties, taxes, so on and so forth, future view of what Net-Zero Industry Act might have for your business. So in nacelles, we have, of course, way more than 10 gigawatts a year; in blades, ballpark that number.

And last one, then quickly on the blades part because apparently, you were able to then also [ legalize ] or offset them what you've been missing in terms of the blades by external partners. So how do you see the scope for then also getting better supplies going forward, if need be?

Intention to phase out low-performing suppliers and to concentrate in internal factories and suppliers with better quality performance. And now the focus is to further grow in India, to ramp up Turkey and keep working with our Chinese suppliers in Morocco and in China.

The next question comes from the line of Colin Moody from Royal Bank of Canada.

I have two, please, if I could. One, on the central costs. So I understand that there's an investment need to support your strong order intake, but it has continued to ramp sequentially for quite a few quarters. Could you help us understand or better estimate what the normalized level should be? Presumably, it should begin to flatten at some point.

And then my second question, just kind of macro question. On the U.S., I'm just curious to see how your customer -- conversations are going with your customers right now, what the interest levels are and the holdups, especially as we approach that July 4 safe harbor deadline?

Sorry, Colin, we couldn't get the first question in full, I don't know.

I'm not sure, Colin, did you ask about kind of a calibration of a run rate for the investment, the CapEx part?

No. Sorry, apologies if the line is unclear. I was asking about the central cost line. it continues to ramp as it has done for several quarters. Can you help us understand the unallocated central costs, [ EUR 120 million ] of EBIT, what that should levelize and normalize that? And then the second question was just what you're seeing in...

Yes. second, we got. So you take the first, Ilya.

The first one is basically still ramp-up activity driven increasing of the business. That goes back a bit to the conversation that Sebastian and Jose Luis just had in a different shape, which is about the capacity. So I think if the business develops as good, but within the ballpark of what we're calibrating you, we should be getting close to at least by Q3, the latest Q4 by a run rate, and I don't think that the increase will be so steep going forward when you compare them, let's say, in the last 12 to 18 months. So not so much more, I would expect.

And regarding the U.S., I would say, you need to understand that we don't have the market position we have in Europe and U.S. is [indiscernible] on yield. Nonetheless, we see substantial commercial activity. Most of this commercial activity is subject to certain federal permits that need to happen to release those final investment decisions. But from now to July, we see very much what the volume of the market would be for the foreseeable future. But I must say that for us, we see a momentum, which is not minor.

The next question comes from the line of Deepa Venkateswaran from Bernstein.

I wanted to follow up on some of the topics we've already discussed. So the first one on inflation. You mentioned that this might be more of a topic for 2027. Given that you've locked in most of the ASPs for your '27 production maybe last year or even in '24, I was wondering whether there is any specific indexation to bunker fuel or raise in costs? And I suppose, given you are producing a lot of your turbines in China and India, the cost of moving that to Europe, should your customers be willing to bear that? So that was my first question.

And the second question was a bit more on the German auction. So I think the recent auction price was also below, I think, at EUR 55 per megawatt hour roughly. And it is now -- I think the last time it was in these levels was probably in 2018 or so. So wanted to just check how you're thinking of pricing because so far you and the rest of the industry have maintained that discipline. But it seems like developers are maybe losing it a bit. So what is your comments here. I think one of your smaller peers said that he was not willing to lower prices in Germany. So I wanted to kind of take -- get your take on this topic.

So let's go to the first one. Very much our indexation policy, Ilya can elaborate more, but very much we try to lock what is firm orders. So at the moment we lock an order, we try to lock the logistics and the towers to have certainty on the delivery. But we don't do forward -- so we are not long in fetching fuel for expected order intake. So the future margins of the volumes that are unsold are going to depend on what is the cost base at the moment we lock the order and the price we can get from the order, which is going to be a typical competition with your -- against your competitors to win the order.

And this is '26, we are comfortable because 3/4 of the activity all part is very much locked with contracts. 1/3 to 1/4 of the activities still needs to be [ some ]. And consequently, we will figure out what the margin of this expected order intake is for '26 small portion and for '27 big portion.

When we talk about German auctions and the pricing and adjusting or not adjusting, again, supply and demand. We will try to harvest the best market conditions possible, but we need to have the requisite -- the projects need to be viable with the CapEx, with the land lease, with the finance, with expected returns for the customer and with healthy margins for us. We learned painfully in previous years, how devastating can be for a sector doing irrational things. And I hope that we can make a living all in the sector at the current auction prices. I don't know Ilya if you can elaborate a little bit.

I think you nailed it. I think maybe the 2018 comparison with all due respect is a bit skewed because it was a different system on the subscribed auctions, but still the general trajectory of the direction of the question is totally understandable. Nonetheless, let's not forget that the auctions as they stand today, still have an open upside to the electricity market. So it is not an absolute data point where the auction ends, the developer, the ultimate owner is still entitled with those tariffs to step in and out of a power marketing system in Germany.

So that might change with the CFD, but I think we have this conversation early on. Nonetheless, Luis, I think you summarized what we called in the full year call. Also, Germany will become a more normal market. It will have oversubscribed supply and demand auctions. Hence, the whole value chain in Germany that arguably was a bit healthier than in other markets with those set feed-in tariffs will normalize. And then basically, we will have a market with a very good volume, but on margins in comparable markets in Europe.

It's a great market to be in, 200 projects, the capillarity you need to be to execute that is you don't build it overnight, you don't lose it overnight. And the German and Central Europe is the highest price for electricity in Europe for several reasons. So you are in a market where electricity is paid more than in Baltics or Nordics or Iberian Peninsula, where there is a huge demand and where the companies have amazing capabilities to deliver. So yes, you always want better auction prices, but I think we can do a reasonable business with the current volumes and auction prices.

The next question comes from the line of Sean McLoughlin from HSBC.

A question on service. You talked about crossing 20% in your comments. I'm just curious as to really what are the drivers and I guess, blue sky, how far above 20% should we start thinking about? That's the first question.

Yes. I mean, all things being equal, volumes and for volumes, you need to be patient. If we keep growing 10%, every 7 years, we duplicate the business. But the margin will not grow in that proportion. I mean, it's hitting [indiscernible] because, I mean, we cannot deliver better margins than the ones we sell. And the ones we sell are -- I think we cannot disclose in that detail, but margins in services will -- the growth rate, and you see it in the previous quarters is slowing down as it should be.

And another question, just on the service fleet. Because I'm just wondering if today, if you break down your fleet, how much of your fleet still are the older AWP turbines and how much already is Delta? Just on the assumption that I suppose you're getting better margins on turbines you're selling today?

I would say big majority is now Delta and Delta4000 AWP, we are losing renewals and the weight of the AWP fleet is decreasing by 2 factors because the overall is increasing and we don't -- and we lose renewals. So over time, the AWP might be phasing out and in very small portion. Still we have a big fleet under service in Latin America, in Spain, in several countries, but the trend is lower AWP contribution over time.

The next question comes from the line of Alex Jones from Bank of America.

Two if I can, please. First, just a follow-up on the EU Industrial Accelerator Act. As you currently understand the draft legislation, would that require any changes in your supply chain to move more into Europe? Or do you see the footprint currently as well positioned?

And then secondly, just in your customer discussions in Europe since the start of the Middle East conflict, has that changed at all the tone of those conversations with customers? Are they accelerating things due to movements in fossil fuel prices or any hesitation given sort of the inflation and interest rate environment that we're in?

That second is the typical dynamic. So first Industrial Acceleration Act, no changes for our supply chain. We were preparing for that and planning for that to have different options. We might bring some more towers from A to B, and we might produce a little bit more modules in country A or country B. But generally speaking, it's not a surprise to us because we were expecting that and planning for that because we always mentioned in the past that we didn't want to have all eggs into the same basket. Just planning for having optionalities for the future. So that's regarding supply chain configurations.

Regarding customer compensations, twofold here. I think one is great. I mean, everywhere is a [ drama ]. But for our sector, what has happened or what is happening in the Hormuz Strait is reinforcing the contribution and the importance to renewals and especially wind onshore to the resilience of the countries and to the affordability for consumers and hopefully accelerate electrification.

It is true that in the past, many countries were questioning a little bit that might need to consider back gas or is that -- is gas the solution for Europe or all those things, I must say, are very much out of the table, which is only good for our business because then policymakers focus in accelerating renewals because it gives you a better country, a more resilient country, less exposed to volatility and so on. When you translate this to customer discussions, I would say, the helicopter view is great because your sector is needed and needs to be accelerated. But in the short term, you need to deal with volatility, with costing, with pricing, with margins and so what with financing, getting the projects bankable and financed, and this might have some short-term impact. I think we should be able to manage that. I don't think this will affect dramatically our sector.

What I hear from customers is that a reasonable project in Europe, wind onshore with permits gets filled in almost every country, of course, in Germany, being the auctions oversubscribed, that's not totally true. But over time, the sector is not lacking capital and PPAs in certain markets are not adjusting, in others are adjusting to the new reality. So it depends a lot market to market. But generally speaking, wind onshore is a good market to be.

The next question comes from the line of John Kim from Deutsche Bank.

I wanted to focus in on the second half just a little bit. Quite a growth in nacelle production in Q1, blades flat. Given what you described around kind of pricing, bunker fuel, resin and outsourcing, what is -- can you give us any sense of kind of safety net backlog that you have in blade supply? And how we could think about kind of Q2 into Q3 given what happens or what we're seeing right now? I mean nobody can really predict the end of a conflict, but if the Strait of Hormuz is not open, when will we start to see later deliveries or supply chain constraints in the second half numbers? And will it be blades?

Thank you, John. I think the -- I would say the activity in Q1 is mainly driven by high activity last year. So we accelerate the buildup of the stock because the company is a growing company. And at least our view is expected to be a growing company in the foreseeable future. So strategically, we were anticipating inventory to be in a better position to deliver higher quantities over the quarters, mainly in Germany. And this was advisable to slow down a little bit in Q1 that was on purpose, but everything normal.

Regarding slightly cost increases that we might have in place -- but even considering that, we are still committed to the midterm plus in the guidance. We will figure out how to manage in other commodities. In parallel, we are ramping up blade production in Turkey at the same quarter of last year that factory was producing blades and then went into Chapter 11 and then we rescue the assets and are starting up as we speak to produce blades.

So I'll say business as usual with the typical changes in the models to -- that are allocated to different factories, but we are well equipped to deliver our projects without impacts and that affects blade production, blade production costs and fuel cost. Of course, if the situation deteriorates in the second half and you don't have availability of components, I wouldn't say that projects even might survive without LDs and so on, that percentage of completion will be under pressure because if you don't produce, you don't recognize revenue and margin, but too early to say. The assumption is that the factories will work in second half.

Understood. Follow-up question, if I may. If we isolate just your project margins in Q1, very strong year-on-year delivery and expansion 360 basis points. How would you characterize that? Is that better profitability on the project deliveries overall? Is there a strong mix effect from the nacelle production? And how should we think about that through maybe Q2, given your current outlook?

I would say Q1, I will categorize that in every project business, you have risk and chances, and risk didn't materialize and chances materialize. This might or might not be the case in the future quarters, maybe some more balanced approach or maybe the trend continues. But too early to say.

The next question comes from the line of William Mackie from Kepler Cheuvreux.

A couple, please. Firstly, going back to the discussion on gross margins or project margins. Is there any way you can throw some more -- or can you please throw some more color on the differential between the project margins, gross margins you're achieving and the service gross margins, just so we get a sense of mix effects into the year. And on that topic, would you describe your project margins sort of flying at target attitude? Or is there scope for expansion around mix? That's my first question.

Let's put these together. I think Q1, as Ilya mentioned before, is listed at -- on an EBIT level as the contribution of services that the service business will expect to grow steadily in the quarters ahead of us. But the contribution of service will decrease once the project business ramps in Q3 and Q4. So we will have less service contribution to the overall profitability. And the rest is portfolio. Ilya?

I think the first part, we understand William's question, but I think that is as specific as I would go on a public call on the split between the two. I think to the underlying -- or the other question that William is asking us about how you feel about the project margins, is that the target run rate you have? I think here, what we're saying is -- and Jose Luis, correct me if I'm wrong, when we now sell the projects and go into execution, they absolutely are, but then it is a function of how we perform against the risk and chance and the contingencies we've baked into those.

So last year, for example, we came out in November, as some of you might remember with that, that our [ top ] notification that we were just doing substantially better. But this is what we also said at the full year call when we gave the guidance. For this year, we are budgeting this in a very similar fashion. So whether this ultimately will be the target rate or the rate we're targeting, I think everything goes well or better than planned totally, if it goes much better, well, that's why we guide for a range towards the upside. If some risks, which we haven't seen in so far materialized, it goes the other way. So I think that is what would say depends on the bandwidth of contingencies we're baking into our calculations.

The second question would be around technology or product mix going historically and going forward. I think you're in the phase of ramping up the N175, a significant opportunity in the 6-megawatt category. When we look back on the success of the Delta4000 around the 4 and 5-megawatt platforms, how should we think about the risk as you evolve onto the 6-megawatt platform? And specifically, is this something which has similar levels of profitability or better or how should we think about mix effect with regard to product development in the project business?

That's a very good question, William. I think, first, the 175 is one for the extension based on the same platform. So we started 149/4.X, 5. X, 6.X, 163/5.X, 6.X, now 175/6.X and even 7.X. So on product, I consider this product one evolution. And my expectation is that the reliability of the product doesn't deteriorate contrary to what you could think in the previous upgrades of products every new variant of Delta4000 was performing slightly better than the previous one, which I have no reason to believe that 175 should be the other way around. So that's from a reliability point of view.

From a margin point of view, I will say this product makes projects viable and bankable at price levels that otherwise those projects were not bankable. So are we capturing the extra value and increasing profitability? The honest answer is maybe not. Maybe this is the product that you need to make sure that we keep profitability slightly improving in an auction price market that is declining. So this is part of the solution while we think we can make money even with the auction prices in Germany dropping so substantially.

The last perhaps relates to one of your flagged risk issues around supply chain. If I recall, your turbine volume production stepped up 50% in China last year. I think it's about 40% of the volumes you booked. How would you frame the risk around supply chain from China? And going back to some of the earlier questions, about addressing the European localization content, do you have the capacity to ramp up if you need within Germany and Spain to flex or to balance between the two in value-added around nacelle.

We clearly have the possibility to substantially to double if needed our capacity in Europe. So far, we are keeping that possibility, and we're using that possibility balancing cost and obligation for the Net-Zero Industry Act auction and eventually doing a little bit more in Europe than strictly required. But we have possibility to do more, yes.

[Operator Instructions] Ladies and gentlemen, that was the last question. I would now like to turn the conference back over to Jose Luis Blanco for any closing remarks.

Thank you very much, and let us close, as always, with a few takeaways from the first quarter. First, we have a positive start into the year with healthy order intake and continued confidence in the order intake trajectory across our core markets. Second, our focus remains on generating positive and sustainable free cash flow, supported by good visibility on margins and the continued recovery we see across the business throughout the year. Third, we confirm our guidance for 2026. And last, overall, the first quarter supports our view that we are setting a consistent path towards our upgraded midterm EBITDA margin target of 10% to 12%.

Thank you very much, and wish you a great afternoon ahead.

Ladies and gentlemen, the conference is now over. Thank you for choosing Chorus Call, and thank you for participating in the conference. You may now disconnect your line. Goodbye.

Ladies and gentlemen, welcome to the Q4 2025 Results Conference Call. I'm Moritz, your Chorus Call operator. [Operator Instructions] The conference is being recorded. [Operator Instructions] The conference must not be recorded for publication or broadcast. At this time, it's my pleasure to hand over to Anja Siehler. Please go ahead.

Thanks, Moritz, and also a very warm welcome from the Nordex team in Hamburg. Thank you for joining the Q4 2025 and full year results management call. As always, we take -- we ask you to take notice of our safe harbor statements. With me are our CEO, Jose Luis Blanco; and our CFO, Dr. Ilya Hartmann, who will lead you through the presentation. Afterwards, we will open the floor for your questions. And now I would like to hand over to our CEO, Jose Luis.

Thank you very much for the introduction, Anja. As said, on behalf of the Management Board, a very warm welcome to all of you joining us today for the Q4 and full year 2025 results. Results that conclude a transformational period and a transformational year for Nordex. 2025 has been a landmark year. We delivered and exceeded our medium-term margin target ahead of schedule, generated positive free cash flow, achieved record order intake and strengthened our balance sheet. This very much sets the tone for the years ahead of us. Let's now walk you through what drove this performance and how it prepared Nordex for the next phase of profitable growth.

Let's start with a short recap of how we were able to deliver as promised or on the upper end of the promise. Over the past 3 years, we have made consistent progress in strengthening the business and our profitability. 2025 is the year in which Nordex demonstrated that the operational and financial improvements we have been working on over the past 3 years are now full translating into our numbers. We delivered robust growth across all major KPIs, increased profitability substantially, generated strong free cash flow and strengthened our financial foundation. Combined, these achievements set a strong tone for our longer-term strategic ambitions. Moving on, 2025 was a milestone year for Nordex. We delivered record order intake of 10.2 gigawatts, reached an 8.4% EBITDA margin and generated EUR 863 million of free cash flow, all well above last year and ahead of our original plan.

These results show that our strategy is working and that our business is now consistently delivering strong margins and is cash generative. Based on this track record, we now aim to set the tone for what is ahead of us. First, 2026 guidance, continued sustainable improvement, capital allocation, the introduction of our first shareholders' return policy; and third, our new strategic midterm target and upgraded EBITDA margin of 10% to 12%. Before we go into more details on the mentioned aspects, let's look at how we performed in terms of market position in 2025 first. 2025 was also a year in which our market position strengthened further. We were again able to keep our #2 position globally, improving, not in the relative position, but in the market share of the global position.

In Europe, we continue our strong momentum and achieved leadership position for the fourth year in a row. And this clearly reflects our competitive product range and our strong customer relationship and ability to deliver in our core region. The Americas, we continue to rebuild our market position, mainly driven that year by Canadian orders reaching an 11% market share in 2025, a solid step forward after the reset in previous years. Let's now start the usual chapters regarding the operational and financial highlights. Let me start with an overview of the fourth quarter and the full year. Q4 was another strong quarter operational. Our combined order book grew to EUR 16 billion with the turbine order book up 30% year-on-year to over EUR 10.1 billion and the service order book rising 20% to nearly EUR 6 billion.

Financially, we closed the year with EUR 307 million EBITDA in Q4, an increase of 188% compared to the same period of 2024. Our EBITDA margin in Q4 reached 12.1%, up more than 7 percentage points year-on-year. Service EBIT margin increased further to 19%, marking another quarter of consistent increase. Free cash flow in Q4 reached EUR 565 million, more than doubling last year's level. And finally, our net cash position exceeded EUR 1.6 billion at year-end. We also successfully reached our medium-term EBITDA margin target of 8% already in 2025 and we believe we can deliver further margin improvements based on the levers we see. And with this, let me walk you through the operational performance in more detail.

In Q4, we record EUR 3.2 billion of turbine order intake, an increase of around 10% compared to Q4 last year. This corresponds to 3.6 gigawatts, representing 9% growth versus Q4 2024. A few important aspects to highlight. First orders came from 12 different countries, demonstrating continued strong diversification. ASP remained stable at EUR 0.89 million per megawatt comparable to last year level. The largest markets in Q4 were Germany, Canada and France, supported by steady demand in our focus regions and countries. On a full year basis, turbine order intake reached 10.2 gigawatts, representing a record EUR 9.3 billion in order value, an increase of 25% year-on-year.

Let's move to the next slide, the order book. Our turbine order book ended the year at EUR 10.1 billion, up 30% versus the same period of 2024. On the service side, our order book increased to almost EUR 6 billion, up 20% year-on-year. We now have almost 14,000 turbines covered by long-term service contracts, representing 48.3 gigawatts under term service contracts. And the combination of structurally larger projects order book and a steadily growing service base provides a strong visibility for revenue and margin delivery in 2026 and beyond. Let's talk about the service business. Our service business continued its predictable trajectory in 2025. In Q4, service revenue reached EUR 240 million. Service EBIT reached EUR 46 million, corresponding to 19% EBIT margin.

This marks the eighth consecutive quarter of margin expansion in the service business, driven by improved efficiency, strong availability levels in our installed base and disciplined execution. Let me also highlight a few key operational KPIs. The average availability of our wind turbines under service remain high at around 97% and the average tenure of our service contracts continues to be around 13 years. Let's move to the next slide, our installation and production figures. Installations were up by 25% year-on-year, reaching around 2.1 gigawatts in the fourth quarter of 2025. In Q4, we installed 376 turbines, up from 283 in the same period of 2024. Full year installations reached 7.663 megawatts -- or gigawatts, compared to 6,641 megawatts in 2024. Turbine production increased to 519 turbines in Q4 compared to 445 last year. Paid production remained stable despite temporary delays at one of our suppliers in Turkey. And now I would like to hand over to Ilya for the financials.

Thank you, Luis, and a warm welcome also from my side. So before I start with my usual slides, let's take a brief look at the past fiscal year and the achievements of our goals or targets. So the slides on the screen illustrates the highlights of the past year. Following the initial publication of our guidance for 2025, we made strong progress in our operational performance throughout the year. Jose Luis has talked about that. And as a result, we were able to further strengthen our profitability, which led us to upgrade our full year EBITDA margin guidance in last October.

By year-end, we achieved and in some areas, even exceeded all of the targets we had. So let me use this opportunity to thank Team Nordex for their tireless efforts worldwide. We're very proud of you. And with that, let's move on to the next page, where I would like to share a few insights on the development of our income statement. After sales were temporarily affected by project mix and scheduling effects earlier in the year, we saw a significant rebound in the fourth quarter. Sales increased by 16% to around EUR 2.5 billion compared with EUR 2.2 billion in Q4 of the year before. Main contributors were Germany, Turkey, North America and Spain. For the full year, sales reached approximately EUR 7.6 billion, and so fully in line with our internal planning and almost right in the middle of our guided range despite some impacts from Turkey that we discussed with you last year.

We continue to strengthen our gross margins, reaching 27.8% in the fourth quarter, up from 23% in the same period last year. For the full year, gross margin improved to 27% compared with 21% in the previous year. This corresponds to an EBITDA margin of 12.11% in Q4 2025, up from 4.9% in Q4 of 2024 and of 8.4% for the full year '25 compared to the 4.1% in the year before. Building on this operating performance, we ended the quarter with a net profit of EUR 184 million, compared to EUR 18 million in the fourth quarter of 2024. For the full year 2025, the net profit amounted to EUR 274 million, a significant improvement over the EUR 9 million recorded in 2024. With this, let's move on to the balance sheet. As we can see, our overall financial position at year-end remained solid and has further strengthened compared to the end of 2024, a reflection of the operational and financial performance throughout the year. Cash position at the end of the fourth quarter was around EUR 1.9 billion.

Working capital came in at minus 12.4%, significantly better than our guided number of below minus 9%. Equity ratio improved steadily through the year and reached 19% at the end of the fourth quarter compared with 17.7% at the year-end 2024. This positive development is largely driven by the strong increase in our net profit. And now let's have a closer look how the other balance sheet KPIs have developed in the last quarter. Overall, all balance sheet figures continue to develop positively in the fourth quarter, continuing the trend we had already seen throughout the entire year. The operating performance in the fourth quarter led to a further increase in our net liquidity, which reached a record year-end level of EUR 1.625 billion. Again, the working capital ratio at the end of the fourth quarter was minus 12.4% or minus EUR 935 million in absolute terms.

This improvement is largely attributable to the very strong order momentum we experienced in the final month of 2025. And now let's go to the cash flow and CapEx slide. Cash flow from operating activities amounted to EUR 631 million at the end of the fourth quarter, previous year was EUR 318 million and to over EUR 1 billion for the full year, previous year, EUR 430 million. And one more time, this development reflects our consistently robust operational performance throughout the year and especially the very strong fourth quarter. So in the fourth quarter of 2025, positive free cash flow totaled EUR 565 million compared to Q4 of the prior year of EUR 271 million.

Full year, we closed with a positive free cash flow of EUR 863 million versus the EUR 271 million in 2024, supported, of course, by our order intake and further improvements in working capital. CapEx increased to EUR 72 million in the fourth quarter compared with EUR 42 million in the prior year quarter. And for the full year, CapEx totaled EUR 169 million, higher than last year's EUR 153 million, though still below our full year guidance of around EUR 200 million. And with that, I would now like to hand back to Jose Luis for the final chapter, our guidance and strategic outlook.

Thank you very much, Ilya, for walking us through the financials. Based on the strong foundations we established in 2025, we expect profitable growth to accelerate in 2026. Our guidance for '26 is as follows: sales will be between EUR 8.2 billion and EUR 9 billion, meaning a top line growth between 9% to 19% year-on-year. EBITDA margin is in the range of 8% to 11%. Again, as in previous years, we believe the midpoint is the most likely outcome as of today. Working capital ratio below minus 9% and CapEx approx EUR 200 million. This reflects continued margin expansion, steady volume growth and disciplined capital allocation.

Regarding free cash flow, we don't provide formal guidance. However, based on the building blocks we have shared, you can likely conclude that we are positioned to deliver another solid free cash flow year. As mentioned at the beginning, today is not only about presenting our 2025 results and guidance, it's also about setting the tone for the years ahead of us. With that in mind, let me now walk you through the capital allocation policy we are introducing. Over the past years, many of you have asked for greater clarity on how we think about capital deployment once Nordex returns to a more normalized financial position. Let me summarize our approach.

First, we remain fully committed to maintaining financial flexibility and a strong balance sheet and ample liquidity are essential to navigate market cycles in our industry. And this discipline will not change. Second, we continue to prioritize operational and strategic growth opportunities. That includes funding core organic investments across our supply chain, product enhancements and key research and development initiatives. We also want to retain the ability to pursue selective strategic opportunities, enhance our supply chain resilience and leverage opportunities to look in turbines via supporting our customers in advancing their project development pipeline. Third, with these foundations in place, we will consider returning cash to shareholders in a sustainable way.

Today, we are introducing Nordex's first shareholder return policy. Under this framework, Nordex will target a minimum annual shareholder return of EUR 50 million to be delivered either through dividends or share buybacks and always subject to regulatory approvals, our capital structure priorities and stable market conditions. As many of you know, under German HEV rules, distributable profits sit within the stand-alone Nordex SE entity, and this will catch up in 2026 due to difference in local GAAP and IFRS. Therefore, we plan the first payout in 2027. This policy reflects our commitment to a disciplined, predictable and sustainable approach to capital allocation, balancing the needs of the business with attractive returns for our shareholders. And importantly, this is a first step. We remain open to refining the framework over time, always guided by the principle of maximizing shareholders' return.

And moving on, let me now talk about our core markets and why we remain confident about the overall environment and our position within it. According to third-party researchers, onshore wind installation are expected to grow steadily throughout the decade. This growth is driven by 3 main factors: one, strong fundamentals in Europe and North America, which remain the core regions for Nordex; second, increasing electrification and industrial demand, which supports long-term renewables build-out. And third, selective upsides in markets such as Australia. And with this, given the structural improvements in our business and the visibility provided by our order book and the service portfolio, we are upgrading our midterm EBITDA margin ambition to 10% to 12%.

The key levers here include: first, continued volume growth in Europe and the Americas and operating leverage from revenue growth. Second, higher service profitability with EBIT margin crossing the 20% mark. And third, further margin improvement via efficiency measures across production, logistics and fixed costs due to the bigger volume. As we had mentioned before, we have been working tirelessly to make this company much stronger over the last 3 years and 2025 shows the results of these efforts.

And like Ilya, I really like to take this opportunity to thank our people for their tremendous efforts. Of course, our customers for their trust, support, banks and analysts and shareholders for the continued trust in Nordex, especially in difficult times. We believe we now have a good platform to deliver more profitable growth with the support of all of our stakeholders and remain committed to further strengthening the business in the years to come. And with this, let me hand over to Anja for Q&A.

Thank you, Jose Luis, and thank you, Ilya, for leading us through the presentation. I would now like to hand over to the operator to open the Q&A session.

[Operator Instructions] And the first question comes from John Kim from Deutsche Bank.

One question and a follow-up, if I may. First, congrats on the numbers. I wanted to understand when you think about capacity expansion and investment, I'd like you to speak a little bit about how we should think about factory loads. Any pinch points on supply chain? And I have a quick follow-up, if I may.

Yes. No, thank you very much for the question, John. I think we have provided you a view of EUR 200 million CapEx that should be sufficient to deal with the volume growth, even with the upper end of the volume growth considering in the guidance, and keeping our supply chain diversification strategy. We plan to keep Europe, eventually small growth. We plan to keep and grow India, and we plan to keep and grow China. At the same time, we are ramping up and growing U.S. So we don't plan major disruptions in supply chain, keeping the flexibility to shift volumes from region to region if needed. And we are confident and well equipped and provided for in the guidance.

Okay. And as a quick follow-up, can you just update us on the situation in Turkey, please, with blade supply?

Yes. I think we made substantial progress in derisking our situation in Turkiye. And we are, as we speak, ramping up blade production in Turkiye. We are committed with long-term investments in the market. We have been very successful in [GECA 4]. We hope to be equally successful or almost equally successful in [GECA 5] and we are ramping up the capacity to deliver our commitment to our customers and the government is, of course, happy with our commitment to the country.

And the next question comes from Alex Jones from Bank of America.

Two, if I can. The first one on the new capital return policy. Could you outline for us why you chose the EUR 50 million number rather than something smaller or bigger? I guess when I think about the midterm profits and therefore, cash flow of the group, I imagine they'll be substantially larger. So is there something constraining that number in the short term, be that German GAAP profits or whatever else?

No, thank you for the question. I think we try to share with you what our view is about the priorities, which is having a balance sheet fortress, if you will, to deal with cycles, but as well to deal with opportunities. And we think we will find opportunities to deploy capital at reasonable return, supporting our customers to make their projects through and consequently helping the company to grow further in the top line and in the profitability and achieve our midterm EBITDA target. And this is what we are -- where we are focusing now. Ilya?

I think you said -- I would add maybe 2 thoughts. One is, first, this is an idea of a minimum EUR 50 million. So we'll always then decide in the given year if a different number if appropriate. And other than the point you mentioned of deployment is not only a fortress of the balance sheet, which I think is one of the key priorities, but also the flexibility of Jose Luis to help execution, derisking supply chain changes whenever needed to react that we have also the resources to do that. I think that's our set of priorities.

That's very clear. Understood. And then if I can, on the installations in 2026. Can you give us any idea? The order intake has been very strong, above 10 gigawatts in '25. Some of that will take a while to come through, but could we see a year with installations above 9, for example, growing from the 7.6 you did last year?

I think we prefer to guide you in revenue and margin without going too much specific into the underlying operational figures. But definitely, we see growth in production and installation in '26. But remain that the year is very young, so we still need to sell a lot to contribute to PoC revenue and margin for 2026, and we need to grow the company in production and installation. Hopefully, the customers will not delay. Hopefully, we will not see major disruptions. We are prepared for that within a reasonable range. And I will say this is as far as I can go today. But growth is definitely expected in production and installation.

And the next question comes from Sebastian Growe from BNP Paribas.

My 2 questions would be around Germany and then also the margin trajectory that you have updated. So let's start on Germany then. Apparently, we are seeing the German Economy Ministry planning to make changes to the support scheme for renewables, both from a grid access point of view, but also then from a pricing perspective with the move to CFDs. Can you comment on how that might impact turbine pricing? And what is your most important single market at this point? How has your customer base reacted to the current draft that has been linked to the public. If we could start there and then continue on the margin part later.

Let's do this together with you. So I know that there is a lot of -- or a slight unrest about the situation in Germany. I tend to see it quite positive. I mean the German market is going to deliver 10 years -- 10 gigawatts a year for the years to come. And this is amazing. This is record high historical volumes for the next couple of years ahead of us. Yes, 10 is not 13 or 14, fine, but it's 10. It's going to be maybe the biggest worldwide market second to China. And we have a fantastic market positioning in this market, just to set our view. Then like in any changes in system, this is -- could bring uncertainty and could slow down the market. We had a very bad experience in 2017 in Germany. So hopefully, all stakeholders learn from the mistakes, and we do the transition in a smart way that the volumes are not affected.

Third, regarding the new system, I think wind onshore is by far the cheapest energy solution for Central Europe. And so we are part of the solution. We can help countries and societies to deal with affordability with energy independence, if they procure Western with technology independence and to foster electrification. Of course, the enabler for all those things is grid deployment. So I tend to think that we are in a great momentum, in a great momentum for our sector and for our company within the sector in a very important market despite some challenges that policymakers need to address in order to make this transition in the best possible way. And regarding the leak, I don't think we should comment on leaks. But my take is that wind onshore and our customers, we are part of the solution to lower electricity prices and to deliver society needs. And electrification is a must to deal with the competitiveness of Europe and Germany. And grid is the bottleneck that governments across Europe needs to address to make electrification a really powerful tool to address competitiveness.

Yes. I mean, had anything to add, and that's really not much, I would say, agreeing with you, Jose Luis, not to comment on leakages of draft. However, I would probably remind all of us that this is a government of 2 parties. And 1 of the 2 parties was part of the previous government and has heavily supported the Wind industry. And that also led to what you were saying, Jose Luis, to the reconfirmation by this current government of the 10 gigawatt annual target in Germany.

So let's see what comes out of the process. To the broader question, Sebastian, I'd say, for me, Germany with that is becoming a more normal market because now auctions from a system perspective start to work. And Germany will find a new normal across the value chain, the auction tariffs, the land leases, the developer fees, the equipment of BOP turbines. So after all, we're going to deal with a market that is very, very similar to many other markets in the world with similar economics. And then I think if anything to add, Jose Luis, that is something we have been considering when giving you this new midterm target. That is already considered.

That's a good segue indeed to my next question. In that chart on the margin walk to the 10% to 12% in the midterm, you haven't touched on the impact from price. So the question that I then would have around this is, am I right to assume that this very 10% to 12% range is a through cycle ambition? And as such, the strong volume visibility at attractive gross margin that you are enjoying right now might even result in a higher margin than this 10% to 12% range in a given moment. And it would rather than cater for if we did see this structural transition towards what is then a market price and not so much, say, determined price by a system, that this would then sort of be a normalized margin, but you would exclude at this point that you might even come out at a higher level. Is that the right way to think about it?

The way to think -- of course, we have made our view of what midterm prices could be and what the midterm market shares could be and what midterm volumes could be for our sector. And we are sharing with you our view and you are spot on. So we think that across the cycle, across the cycle margin. And let's not forget that the volume in Germany is going to be massive and the Central European price forward-looking 10 years for electricity are in the 70s. So -- and the best tool for lowering electricity is more wind onshore. So we are operating in a region that has certain price level in the -- for the final electricity pool. So I don't expect or we don't expect that the Central European electricity prices will drop like Finland or like any other countries like Spain in the medium term. And based on that, what we have from our view and guided you to that midterm target across the cycle.

And maybe to the second question of Sebastian, I think your answer is perfectly in my view that this is exactly what we want to calibrate you for. Could it be better in a given year? I would not exclude it.

Then the next question comes from Richard Dawson from Berenberg.

Two from me. Firstly, on the U.S. market, I'm just wondering if your view in that market has changed at all. You secured the contract at the end of '25 for over 1 gigawatt. So it suggests that order momentum is picking up. But how do you see the opportunity in 2026? And where could your market share go in the U.S.? And then second question is on the EBITDA margin bridge up to that 10% to 12%. You mentioned in the presentation an opportunity to streamline costs further. You've obviously done a lot of this in the past, but could you provide some more details just on specific initiatives you have in mind for streamlining those costs? And I ask this against the backdrop of a business which is clearly growing both on the project side and the service side.

Thank you very much, Richard, for the questions. The U.S., let me share with you. I was 2 weeks ago there meeting customers. And I'm very pleased with the turnaround of the brand in the U.S. market after facing certain difficulties that you were aware with the former legacy platforms and quality issues. This is all behind us. So we managed to turn around this quality situation. We managed to turn around the stakeholders' relationships of the brand. Nordex brand is amazingly well perceived now by U.S. stakeholders. Current Delta for housing platform in U.S. is delivering market availability.

And the team did a terrific job as well in restarting the West Branch facility and start to produce certain turbines for reservation orders we have. So we see momentum in the U.S. market. So customers are willing to keep investing in developments. Unfortunately, projects are pending, permits from the federal government. And this is something that honestly, nobody has a view of when those permits are going to flow. It's not that the permits or the determinations will not get to our customers to make their projects, it's a question of when. So there is no structural issue to reject those permits. It's a question of when those permits will be cleared, which reinforces our strategic decision to invest in that market long term. That market is facing a super cycle energy electricity increase demand cycle. And yes, maybe most of it is going to be delivered by gas, but wind plays a fantastic role to fit more with the demand profile of data centers, which is what is mainly driven electricity demand increase in U.S.

So I'm without having firm orders, without having a clear view of when the firm orders are going to land to Nordex, I'm convinced that this was a very good strategic decision for Nordex. And I'm very pleased with the positioning of the plan in the marketplace. Second, talking about the EBITDA bridge margin regarding cost further improvements. I mean the key thing here is stay lean and let's make sure that we keep our overhead as lean as possible and definitely grow substantially less the overhead than the revenue to untap profitability improvement, number one. And number two, the volume brings always efficiencies, a little bit on the cost side, but as well in the underutilization. So we still run the company with certain level of underutilization. We want to have optionality to have 3 or 4 supply chain options. And the more volume we grow, the more we reduce the underutilization, the more we support the profitability improvement.

The next question comes from Constantin Hesse from Jefferies. I'm sorry, it looks like the question was just withdrawn, then we go on with Ajay Patel from Goldman Sachs.

Congratulations on the results. I have 2 questions, please. Firstly, I just want to focus on capital allocation again. I'm not sure I'm fully appreciating everything here. So it looks like over the course of '26, you're going to be towards EUR 2 billion in net cash. And you're not going to be really distributing too much on the dividend side until '27 and then that will ramp. It therefore, still implies there's going to be a lot of cash on the balance sheet. And I just wonder how should we be thinking about that? Like when you talk about the potential for opportunities to invest, are we talking manufacturing sites? Are we talking maybe adjacent types of business activities? I'm just trying to understand how that capital allocation thought works.

And then if the cash is not being utilized maybe for distributions in at least the shorter term, could it be paying down debt or reducing use of facilities that we see a meaningful impact to interest costs? And if that's the case, what kind of improvement could we see? And then the second sort of set of questions is around the midterm target, the one on Page 23. The chart set up in a way that it looks at these 3 variables that gets us to the new midterm target, and it has it evenly distributed. And I'm wondering in my head, well, how much is actually in your own hands already and that you have enough visibility of auctions that have gone through Germany that eventually will convert to orders. You have enough of a pipeline in the U.S. You have a viewpoint on the efficiencies you're taking out of the business that are good amount of the targets under control? Or how much is it just dependent on market activity going forward? So I was just trying to understand how robust this is.

So let's start with the second question, Ajay. And so the year '26 is still very young. And we haven't sold what we need to sell to make the '26 guidance. So we still need to sell a lot of volume in Q1 and Q2. So definitely, this midterm target is subject to volume. Our assumption in this midterm target is that we will grow with the market. Some markets will grow, some markets will decrease. Germany long term will be an amazing market, but will be an amazing market of 10 gigawatts, not an amazing market of 14 gigawatts. Eventually, this will be compensated by U.S. picking up or other geographies. So this is a long-term view across the cycle, taking into account that we will grow with the market. So we are not taking the assumptions that we will grow market share. But of course, before talking midterm, we need to still deliver the '26 guidance for which we still need to sell.

So we are exposed to the market dynamics for the midterm. With that being said, I think things don't change radically year-on-year. I mean the old product, if it's super competitive today, should remain at least competitive in the next year. So the market shares don't change dramatically over time year-on-year and markets given the capillarity we have and the number of countries where we operate, we should be able to compensate some markets with us. Regarding capital allocation, let's put this together, Ilya, I think the first priority, I mean, we need to have sufficient headroom to deal with situations like the one in Turkey last year or eventually more to come. We don't want to lose any opportunity to derisk the company, to further grow the company, to further improve the profitability of the company and some of those potential opportunities might require investments above the guidance that we have given to you, and we want to be prepared for that.

Not saying that we have a concrete plan for that. Otherwise, we should share it with you, but we want to retain the option. And the first and foremost important thing is support our customers to make the projects reality. I think Germany, we heard that there are difficulties, and we want to use the liquidity of our shareholders because this company is the company of our shareholders to further invest this liquidity, supporting our customers, helping the company to further grow and to further improve profitability.

Yes. And this is -- I think the recount of the priorities, maybe just -- I mean, very good question, Ajay. The point here is there is not much debt to pay for the company because there's only really a convert out there. And our interest is largely determined by the bond line, which is not debt that you repay with cash. And we've been working a lot on bringing the interest on the bond line down. So we will have positives there, but that's not done with the cash. And maybe to kind of support Jose Luis, thinking there is, I mean, for Nordex, that's the first time ever that in the history when it's as a listed company of more than 3 decades that it moves into the territory of those shareholder returns.

And I think we should not forget that and where the company comes from. And on the other side, I'll repeat what I said maybe 10, 15 minutes ago, we're setting here a minimum. So when seeing the actual cash levels, the other opportunities that Jose Luis was describing, I think we will then come back with a more specific number. But that was to set the tone and introduce that shareholder return policy for the first time. So that would be my comment.

May I just follow up on something? Just talking about the cash profile. Is it fair to say, look, these are very broad numbers, and I'm not asking you to sort of say these are right. But I think previously, we talked about 9 gigawatts of installations in the future, which effectively would move about EUR 10 billion of revenue on these types of margins, it would broadly imply EUR 1 billion to EUR 1.2 billion of EBITDA. And actually massive increase in EBITDA relative to what you've just delivered in '25. I just wonder if CapEx follows or actually the pace of which CapEx increases in this type of picture in broad terms isn't going to be as fast. And therefore, there's a much stronger picture of free cash flow developing.

Yes. I think the CapEx is going to depend a lot if we need to do one-off things, which we are not planning to do, and the rest building blocks, you can do the math of cash to EBITDA conversion more normalized levels than this exceptional year. But it's fair to say that '26, we expect to generate a good cash flow. Ilya?

I will only add -- and I think, Ajay, your rough math is fully right when you say that in our core business, provide the unforeseen CapEx growth rate might be slower than the other building blocks you gave us. So yes. But then, of course, again, Jose Luis, listed a few priorities on where money might be deployed, always strengthening the core business, strengthening the balance sheet and helping our customers where needed to get projects over the hurdle in a bit of a difficult environment in some markets like the U.S. and others. And then second, yes, on the cash flow -- on the free cash flow, I probably to calibrate you, yes. If you plug an EBITDA to cash conversion rate of 50% to 60% into your models without guiding and the caveat and all that, I think then you get a -- you get a good picture of what we expect.

Then the next question comes from Constantin Hesse from Jefferies.

Sorry, guys before I had some technical issues. I've got 3 questions on my side. One is, look, I think there's obviously one question mark that is basically being created around this potential risk of Germany updating their renewable energy target. But thinking about the order intake outlook into 2026, if you could maybe just provide some commentary on what you're seeing in Q1. And then I'm trying to think about the building blocks for '26. And unless -- I haven't seen any markets that have announced any kind of slowdown. I mean, Italy confirmed their numbers. Germany is doing 11%. U.K. is accelerating. Baltics continue to be good. Australia, Canada relatively fine. So is there -- are there any markets currently that you see as potential risks that could slow down orders? That's my first question.

Thank you, Constantin. Great to get your questions. Regarding order intake in '26, I think you know we don't guide for order intake and the year is starting. So it's very young. The quarter is not that so young. So we see a weaker quarter compared to the same period of last year. Let's see. But so far, we are presenting to you a guidance and a midterm target with our view. And on a quarterly basis, it could be changes depending timing, but we don't see substantial disruptions altogether. And markets that might be [indiscernible] which for us is important, is U.S. that this might or might not come. And we have certain contribution from U.S. in our order intake planning, not from a guidance perspective and P&L, but from an order intake planning for midterm target. Other than that, I tend to agree with you. I don't see any major crisis in markets for order intake.

Understood. And second question, just around the medium-term margin. I mean, most of my questions have been answered there, but one that remains is, I just saw an article that came out about 30 minutes ago, so Luis, where you comment on potentially having to negotiate prices down in Germany if auctions continue to come down. So when we look at the medium-term margin outlook, the 10% to 12% that you gave, are any potential cuts to pricing in Germany already included in that?

I think how can I phrase it? We don't plan or I think it's advisable to enter here into a price war. That's not the point. I think -- and we need to see this from a different angle. I think it's a huge volume in Germany and prices for Central Europe are at high levels, which might be reduced the more renewables you introduce. And this is what we consider into our midterm target. Of course, we need to support our customers to make the projects through. And this might somehow have a slight effect where, as Ilya mentioned, everybody needs to contribute their part to develop the land leases, the construction work and the turbine. I think we have sufficient action plan in-house to be able to contribute our part without deteriorating the margin.

Understood. But any price decreases are still -- I mean, some decreases are still included in the medium-term target is what I understood. Lastly, on capacity. I mean, you just booked 10.2 gigawatts of orders. Looking at installations over the next couple of years, it's pretty obvious that things continue to move up quite significantly. What is the current nameplate capacity of Nordex? Where do you get to the point where you would have to start building more space, more capacity?

That depends a lot product to product. And of course, on the 175, which is the product that over time will take over 163, we are building up capacity, and we might need to do more or less depending the timing of the installations on 163, I think we have sufficient capacity. It depends a lot about what type of capacity, assembly capacity. I think we are well -- we are running with flexibility and overcapacity structurally because of 2 reasons. First reason is derisking single geography dependency. Second is having optionality.

Third is managing working capital. If you run too short in capacity, then you need to preproduce a lot and then you need a lot of working capital investment there, which we don't want to do. So we run with overcapacity. It means higher underutilization cost, which I think is the right investment to do versus flexibility and risk. In blade this is slightly different. But long history short, for this volume and for this additional volume that we put in the building block for the midterm target, I think we can do that within the range of CapEx that we gave to you in the guidance.

And the next question comes from William Mackie from Kepler Cheuvreux.

A couple of larger picture and some specific. First of all, focusing on supply chain and gross margin, but supply chain broadly, I think that ahead of the Chinese 15th 5-year plan, they have announced or declared a grand intention for wind installation domestically, which sort of looks in the region of a 40% increase in installation volumes. The impact of that, of course, is on their -- or the local manufacturing and supply chain. You have always been flexible and seeking partnership and qualifying suppliers from around the world to optimize your cost base and gross margin. So within the longer-term thinking and perhaps in the context of your chancellor in Germany, what is your thinking about the future relationship with China and how you can leverage that supply base to your benefit?

Thank you very much, William. I think that's a super, super good question. And we thought a lot about that many years ago. I think we -- as an industry, we need to leverage and as a company, we need to leverage on hardware economies of scale of Chinese supply chain. Software, we want to keep in Europe. Software and control, we want to keep in Europe. And within the hardware despite Europe is -- cannot be competitive in the current setup, we decided to keep a foot in Europe and support the policy about made in Europe and Net-Zero Industry Act. So depending how geopolitics works, we might need to ramp up Europe or not, but we want to have the possibility to do so.

And we want as well to grow India as a balancing act for our supply chain strategy. So -- but fully committed with China, with our team in China, with our suppliers and partners in China, and they are part of our trajectory. And if geopolitics play a different role, we will adapt accordingly.

You put together in your assumptions, input costs, tariffs, changing supply base, how do you see gross margins developing? Your gross margins, I think, exclude your direct labor costs. So it's effectively a direct input cost impact. So they seem to be plateauing. Is this a normalized level for your business? Do you envisage the scope for growth or expansion?

It's going to depend a lot of make or buy strategy, how much you do internal, how much you procure. But all things being equal, in the make or buy strategy or in the make or buy share on the make or buy strategy, that's a fair assumption. plateauing is a fair assumption.

My second, I know we've been trying to understand your capacities from your internal capability. My question is more thinking about installation capability. I think historically, you've delivered maybe above 1,600 turbines or installed over 1,600 turbines in a year in the recent past, but with a different geographic mix. As we look forward, the mix is biased towards Western Europe and Germany and your installation partners, do you see sufficient capacity, whether it's crane lift, install, EPC completion, which enables you to run at higher rates as Germany and these other markets begin to increase their installation rates?

I think that's a super good question. And the answer is we have a plan for that but is not without risk, let's put it that way, because the record levels is going to put challenges everywhere from police escorts, to transportation permits, to building permits to all the supply chain needs to stay tuned and in focus and all government, federal and states and municipalities needs to support the journey, which so far, I think it's the case because it's a country mission, what we are discussing here, but it's not without challenges. I mean the volumes that we are going to install in Germany are massive and the number of special permits and the disruption in the highways at night, and this is going to be a challenge for the whole industry indeed.

Super. The final question maybe for Ilya is financial. Just rounding back on an earlier question for clarification. I mean you're running an increasing level of bonding lines or project bonding lines. I think historically, you've used a number of sources for that capital, but your historic weak capital structure has resulted in higher costs. I think you were in negotiations to syndicate with new banks. Looking forward, as your capital structure increases, how could we expect your bonding line costs to change?

Yes. Thank you. That's indeed a very good question. I alluded to it earlier a bit also when I was answering to Ajay's third question. I mean, without going to these other structure. Right now, we have been in the past year '25 ramping up a lot of bonding lines already on a bilateral basis with banks, whether that goes into syndication or continues to be bilateral. I think that is a matter of choice and terms and conditions. But for both concepts, fortunately, true is that now the costs for those bonds have come down significantly from those high levels you were talking about in the times of a weaker financial standing of Nordex. So in a like-for-like volume, at the end of this ride, they could almost half from the peak. So we could talking about half the cost, maybe even better than that.

Of course, we're doing now more volumes. So we're using more bonds. Germany requires more bonds than other countries. So in absolute terms, the decrease might not be that much. But in relative terms, it would be almost 50% of the peak values. And if you want to do this for '26, and we've traditionally given you values of something like EUR 90 million to EUR 100 million of those interest costs. I think if you plug in for this year, again, we're still on the journey to recycle all those bonds. If you're talking more 70-ish number, I think this year, it's a good calibration. And then we hope to improve this further, as I said, during this year and then for the years to come.

And the next question comes from Sean McLoughlin from HSBC.

Congratulations from me also. Just coming back to German auctions, it sounds from your comments like we have seen pressure on turbine pricing as a result of the price compression in the latest onshore bids. So it sounds like this is not all getting competed out at the developer level. Just to understand what kind of change are you seeing in conversations with your developer customers in thinking of bidding at the next auctions? And how you're planning on remaining margin neutral? That's my first question.

I think our take there is -- and let's do this together, Ilya, is that Wind is an amazing part to solve the problem of competitiveness of Europe and Germany and lower electricity prices. The floor price of the auction is substantially lower than the 10-year forward prices of Central Europe. So we somehow wish that our customers take that into consideration. And we can support equally the German ambition without doing unnecessary or unsustainable changes in that.

I subscribe to that. I think the one and probably many people here on the call as well have been following this industry for quite some time, and you and I have been in this industry for 20 or in some cases, 20-plus years. And we've seen a few cases where systems start to get into auctions. And Germany has officially started that in 2017, but since it was undersubscribed, it never really was an auction system. Now with the oversubscription really taking only place since '24 and really since last year, I probably see that '26 is one of those transition years. And in those markets we've been working with [indiscernible] in the past, be it in the U.S., be it in Latin America or South Africa, people need to find a new normal. And sometimes they take somewhat irrational decisions. But after a not so long time, markets normalize. And I would say, Jose to your point about the electricity pricing in Europe, sooner or later, we will see that new normal. So I wouldn't take the '26 auctions for too much. Let's see 3, 4 auctions down the road where the final pricing of electricity in these auctions has leveled out.

And especially after the new policy next year, let's figure out. I think I tend to see it positively in a way that is big volume, 10 gigawatts for the foreseeable future is big volume and the ultimate price in Central Europe is a decent price for everybody to be profitable.

Just another question, just to understand a little bit the bottom end of the guidance range. You're implying a margin fall despite roughly 8% higher revenue. So just to understand what are your bearish assumptions to get to that bottom end of the range?

The biggest -- I mean, there are 2 or 3. I mean, one is substantial delay on the order intake. We still need to sell order intake this year for percentage of completion of products that we plan to manufacture this year. If the order intake doesn't come, we don't produce to stock. We produce to orders. Even if we produce to stock, if we don't have the orders, we cannot recognize revenue and margin. So this is the biggest risk. Second bigger risk is delays, either due to us or to our customers or to permits, installation delays, construction delays. And the third is disruptions in supply chain that we have factored certain minor disruptions if there is -- this will depend how much this disruption will affect your supply chain.

And I think it's a very good question. We haven't mentioned it before because if we give you a range for both revenues and for EBITDA margin, of course, we shouldn't fail to calibrate you and also to mention it here, we would like to calibrate you for both those ranges from what we see today in the midpoint on the revenues. And in the EBITDA margin, it's a midpoint view and Jose Luis -- looking at you...

Midpoint plus.

Midpoint plus. If you ask something, it's midpoint, but if you ask us is it's another midpoint minus or midpoint plus. I think our answer is this is a midpoint plus view on the EBITDA margin guidance.

And the rest is the scenarios, scenarios that we need to plan for. Hopefully, those downside scenarios will not materialize. But in case those materialize, we don't want to surprise you.

And the next question comes from Vivek Midha from Citi.

Congratulations again for myself as well. I have a few follow-ups, if I may. The first on the market. You mentioned that the U.S. is contributing to your order intake assumptions underpinning the midterm guidance. Could you help us understand what you have to share your assumption around that U.S. market volume within that guidance?

I mean you know that we don't discuss order intake guidance nor distribution of the markets within that, even in the year. So I feel we cannot be very specific there. But our ambition for U.S. was returning to our previous market share. And our view, and we might be completely right or wrong is that we don't see reasons why U.S. medium term is not a sizable market as Germany. Do we see that short term? We don't. But that's our assumption medium term that U.S. should be a sizable market as Germany and that we should be able to deliver there in our traditional 20% market share.

Helpful. My other follow-up was on the cash flow side, following up on your comment, Ilya, around the sort of cash conversion, how we can think about that going into free cash flow. If I look at the key building blocks of EBITDA, working capital and the CapEx, that would appear to imply around EUR 450 million, in line with that view of 50%, 60%. That doesn't include any changes around the warranty provision topic. Should we expect any cash outflows from that? Is that material at all?

Thanks. Very good question. I'm afraid I do my caveat one more time that I don't want to guide you for the free cash flow. But if I was accepting your number for a second, and you're always doing very well, the building blocks for us, then I would say that includes all potential outflows from anything on our provisions.

And we do have a follow-up question from John Kim from Deutsche Bank.

More of a conceptual question. I'm wondering if you had a view as to longevity of the Delta4000 platform. As the market evolves, you tend to need to refresh. How should we think about a new platform in the next 3 to 5 years?

Let me see how I think our current platform with minor evolutions are very good to deliver what the market needs in the markets where we operate in Europe, where you have no restriction, logistical challenges, same applies to Canada, to U.S. So we are not going to be the ones first to launch a new platform to the marketplace. So in the horizon of what we see in the medium term, we don't see the need. Nonetheless, we need to be prepared in case our competitors do so. But I don't see the need because we can deliver the cheapest electricity source of energy in Central Europe with the current products, and there is no need for that.

So let's see what the market does. And in our view, the best way for all stakeholders in the marketplace is reliable products. And reliability comes from testing, from field experience for operational platform and from taking the time to ramp up and staying at nominal capacity as many years as reasonably possible. That's the key for profitability and sustainability. So hope that the market remains that way as this has happened with Delta4000.

Okay. Helpful. If I can ask an unrelated question. Can you just comment on price cost dynamics in your service business? You had very strong sales. You have a very strong backlog here. But I'm wondering how we should think about cost to serve given the growth in the fleet and what levers you're throwing to kind of optimize that?

I mean, on our midterm target, we are considering that the service business should contribute with the growth and with slightly profitability improvement and the profitability improvement comes especially from more reliable turbines with less problems in the field to replace and repair. And then if the growth is coming as is expected in areas where you have a strong service business fleet, you don't need to grow up overheads and new capacity, but you take certain efficiency from the growth in existing geographies. And those are the levers.

Our target, I mentioned in the speech, we should hit someday the 20%. Is this going to be a profitable business as the market leader? No, because we don't have the size of that business for the time being. Long term, maybe. But medium term, no, but definitely crossing the 20% is something that we are ambitioning.

And we do have one more follow-up question from Constantin Hesse from Jefferies.

Just one quick follow-up on tax. Ilya, can you just remind us, I mean, after so many years of pretty substantial losses, you must have built quite a good portfolio of some tax loss carryforwards. How do you think about tax over the next few years?

Yes, good question. As a company now that makes profit, so we need to think about taxes even in a more intense way than before. So of course, ultimately, the applicable tax rate, and that's what we're giving you on the P&L side is that German 30% rate. But when you think about cash taxes, you should more think about a 15% to 20% cash tax rate. I mean we're working on this. So take it as a very early nonguided number, but to give you an order of magnitude, that's where we're going using the losses from the past, and let's see how optimal we can get that.

And can I just ask you in terms of how long can this last for in terms of that range that you just discussed?

I mean it will depend. I mean, according to our midterm target and now we're really entering a territory where we're typically on a public call. But of course, if we go at that rhythm and we're talking midterm, maybe of a common understanding here in 3 to 4 years, we might have absorbed and consumed all of those past losses.

So it looks like there are no further questions at this time. So I would like to turn the conference back over to Jose Luis Blanco for any closing remarks.

Thank you. Thank you very much for the very good and intense Q&A session. Let us conclude with our key messages for today. First, '25 was a record year with a strong operational performance and major financial and operational improvements. Second, strong free cash flow and net cash position above EUR 1.6 billion, strengthening our strategic flexibility. Third, we are well positioned for 2026 and beyond. Fourth, our shareholder return policy is an important milestone in Nordex development in its first time ever.

And finally, we reached our midterm EBITDA target ahead of plan, and now we are setting up to improve it further towards 10% to 12% across the cycle. Thank you very much for your time and wish you a wonderful day ahead.

Ladies and gentlemen, the conference is now over. Thank you for joining, and have a pleasant day. Goodbye.

Ladies and gentlemen, welcome to the Nordex SE Q3 2025 Results Conference Call. I'm Moritz, the Chorus Call operator. [Operator Instructions] The conference is being recorded. The presentation will be followed by a question-and-answer session. [Operator Instructions]. The conference must not be recorded for publication or broadcast.

At this time, it's my pleasure to hand over to Anja Siehler. Please go ahead.

Thank you, Moritz, and a very warm welcome from the Nordex team in Hamburg. Thank you for joining us for the Q3 2025 management call. As always, we ask you to take notice of our safe harbor statements.

With me are our CEO, José Luis Blanco; and our CFO, Ilya Hartmann, who will lead you through the presentation. Afterwards, we will open the floor for your questions. And now I would like to hand over to José Luis.

Thank you very much for the introduction, Anja. On behalf of Nordex Management Board, very warm welcome to the presentation of our third quarter results for 2025, a quarter that marks a significant milestone in Nordex's journey.

Let's start with a short recap of our guidance upgrade, which we communicated last week. Over the past 3 years, we have made consistent progress in strengthening the business, and our profitability. Growing order intake is slowly starting to translate into sales, and we have step-by-step improved our margins and free cash flow generation. With an EBITDA margin of 8% in Q3 and 6.5% year-to-date, we have continued that positive trend. This performance, along with our updated outlook for the remaining of the year, has led us to raise our profitability guidance for 2025.

If we move to the next slide, let's now start highlighting the key achievements of the third quarter in detail. First, our order book continues to show strong momentum. Turbine orders in Europe grew by 36% year-on-year, while service orders rose by 20%, bringing our total order book to an impressive EUR 15 billion.

Second, we have made significant progress in profitability. EBITDA reached EUR 136 million, a 90% increase compared to last year with an EBITDA margin of 8%. Our Service segment also continued to strengthen and achieving an EBIT margin of 18.6%. Third, on cash generation, we are happy to report another quarter of robust performance. Free cash flow rose to EUR 149 million and net income increased to EUR 52 million, up from just EUR 4 million in Q3 last year. Our net cash position now exceeds EUR 1 billion, underscoring our financial resilience.

Finally, this strong execution across both projects and service enables us to raise our full year margin guidance to 7.5% to 8.5%, bringing our mid-term target of 8% EBITDA margin well within reach. These results clearly demonstrate that Nordex is delivering on its commitments, enhancing profitability, generating strong cash flows and building a solid foundation for sustainable growth.

Let's now turn to next slide where I walk you through the current market conditions in more detail. The third quarter of 2025, we saw another strong order intake momentum. Nordex delivered 2.2 gigawatts in Q3, marking a 26% increase in megawatt terms and 27% growth in order intake value year-over-year. This translates to EUR 2 billion in value from Nordex across 16 countries with most projects coming from Europe, primarily Germany, North America as well, particularly Canada. Pricing remained stable and has been stable now for quite some quarters.

Let's move to the next slide, the order book. Driven by strong performance across all segments, our total order book reached EUR 15 billion by the end of the third quarter of 2025. Turbine order book grew by 36% year-on-year and stands at EUR 9.3 billion end of September. Most of these orders will be installed in Europe, followed by North America, here mainly Canada, Latin America and other international markets. On the Service side, our order book increased by 20% year-on-year. This growth is a direct result of the expansion of our turbine 2 years ago, which now translates into a recurring service revenues.

Let us move to the Service business. Looking at the third quarter of 2025. I am pleased to report that our Service business has continued to improve faster than expected and surpassed the 18% EBIT margin line already in Q3. Service revenue continued to grow at a high-level year-over-year reaching EUR 219 million in Q3 '25. The share of service sales now accounts for approximately 13% of the total group sales. As we have outlined previously, EBIT margins are on a clear upward path. In Q3, our Service EBIT margin reached 18.6%, continuing the steady improvement we've seen over the past quarters.

Let me also highlight a few key operational KPIs. Average availability of our wind turbines and the service remained high at around 97% and the average tenure of our service contract continued to be around 13 years.

Let's move to the next slide, our installations and production figures. Installations were up by 28% year-over-year, reaching around 2.6 gigawatts in the third quarter of '25. In the current quarter, we installed a total of 422 turbines with the majority of installation occurring in Europe, followed by Latin America and North America.

On the Production side, we assembled around 2.5 gigawatts of nacelles, corresponding to 428 turbines. Blade production in units was down around 25%, mainly driven by temporary delays at our supplier factory in Türkiye.

And now I will, as always, hand over to Ilya to go over the financials.

Thank you, José Luis, and also welcome from my side. And again, as always, I will start with our income statement.

In the third quarter of '25, sales amounted to around EUR 1.7 billion, broadly in line with the same period last year. Sales, as we've mentioned it, were held back by project scheduling mix and temporary supplier-related delays in Türkiye. We again further improved our gross margins, reaching 28% in Q3 after 24.8% in last quarter and 21.6% in the same period of last year. As a result, we delivered an absolute EBITDA of EUR 136 million in the third quarter, nearly doubling the EUR 72 million achieved in the same period 1 year ago. This corresponds to a further improvement in our EBITDA margin, as we've mentioned several times, reaching 8% in Q3 2025, up from 5.8% in the previous quarter this year and 4.3% in Q3 of last year.

On the back of that performance, we closed the quarter with a positive net income of EUR 52 million compared as José Luis mentioned it also EUR 4 million in Q3 2024. With net income already totaling EUR 91 million for the first 9 months of 2025, we're confident that we will deliver a robust full year result and hence, exceeding last year's net profit substantially.

And with this, let's move to the balance sheet. Looking at the balance sheet, the overall structure remains largely unchanged compared to the end of 2024, reflecting a similar and, I'd say, robust financial position. We closed the third quarter with a strong cash position of around EUR 1.4 billion, and the working capital improved to minus 8.2%, and that is in line with our internal planning and targets. And for the full year. Of course, we stand behind our guidance of below minus 9% and think we can go even beyond.

The equity ratio reached 18.3% at the end of Q3, showing steady improvement over Q2 of '25, 18% and year end of '24, which was 17.7%, underpinned by the strong net income development.

And finally, let's have a closer look at other balance sheet KPIs, how they have developed. Overall balance sheet figures continue to perform well in the third quarter of this year, extending the positive trend we have seen throughout the year. Operating performance in the third quarter led to a further increase in net cash, which totaled EUR 1.073 million at the end of the quarter compared to EUR 583 million, in the same quarter of 2024. Again, the working capital ratio at the end of Q3 stood at minus 8.2% or in absolute terms, minus EUR 594 million.

And that brings me to the cash flow and CapEx slide, which is the last one for me. Here you can see that the cash flow from operating activities stood at EUR 180 million at the end of Q3, reflecting the ongoing and explained robust operational performance of the company. We generated positive free cash flow of EUR 149 million in the third quarter compared to last year's quarter, which stood at EUR 159 million.

Looking ahead, we expect to maintain positive free cash flow generation in the fourth quarter, depending, of course, on a few factors, order intake and working capital movements. We anticipate, again, without guiding their specific, figure that the company could add another EUR 200 million to EUR 300 million in free cash flow in Q4. CapEx spending was at EUR 34 million for the quarter, slightly less than the previous year quarter.

Since the beginning of the year, so for the 9 months, CapEx totaled EUR 97 million. However, we would expect CapEx to further increase towards the end of the year and to continue moving in the direction of the around EUR 200 million we have and continue to guide for the full year. Our main investment priorities remain largely unchanged with investments primarily in blade and nacelle production facilities, tooling for installations and transport.

And with that, I would like to hand back to José Luis for the guidance slide.

Thank you, Ilya, for walking us through the financials. Again, based on a solid 9-month performance and the review of our forecast for the remaining of the year, we now expect 2025 to register a significant step-up in profitability compared to 2024 levels, bringing us very close to the medium-term EBITDA margin target of 8%. Reflecting a strong service EBIT margins and solid project execution, we have raised our EBITDA margin guidance to a range of 7.5% to 8.5%. While we are not issuing formal guidance on free cash flow, we remain confident in our ability to deliver another year of robust free cash flow generation.

All other elements of the guidance remain unchanged. Before I'm handing over to Anja to open the Q&A. I would also like to take a moment to thank the Nordex team for their consistent effort and commitment, your work is truly appreciated, and we are now able to see this hard work also in our financials. Also want to thank our analysts and investors for your continued trust and support. It means a great deal to us. We will try to continue to deliver on our promises.

And with this, I'm handing over to Anja to open for Q&A.

Thank you, gentlemen, for leading us through the presentation. I would now like to hand over to the operator, to Moritz to open the Q&A session.

[Operator Instructions] And the first question comes from Vivek Midha from Citi.

I hope you can hear me well. I have one question and one follow-up, please. My question is, is just a broader, maybe more strategic question than just around '26. But your midterm margin target has been around 8% and you hit that for the quarter, guiding that for the full year. My question is really around where we go from here. Beyond just further volume developments and movements around the cycle about perhaps a new level, are there any further company level drivers that you see that can maybe support your margins further in the future? I mean, it would be very interesting if you're thinking about what might be the right timing for maybe considering a new midterm target to supersede the existing one.

Thank you, Vivek, for the question. As somehow, we mentioned as well in the ad hoc call, give us some time. I think -- we are confident that we can repeat another year in a good year in order intake to support 2026, but we still have a huge amount of orders to be sold in the remaining of the year. Of course, the biggest drivers for midterm are volume and gross margin per unit and gross margin is a function of the price in the marketplace and the stability in the cost. And that's as far as we can go, if all things being equal, yes, directionally, '26 could eventually be better. But there are many ifs, all things being equal, and we need to keep this good execution, the supply chain stability, this order momentum and the rest, we need to wait until February to talk about '26 and to talk about the future.

Understood. Just following up on that, and then I'll ask my other question. I guess my question was more broad around the transformation. You've done a huge amount of work to transform the group. You obviously, rebalance the cost base and so on. Are there any other initiatives that you're working on at the moment? Or are you generally happy with how the cost base looks, how the structure of the group looks and so on.

We are super focused in our main value stream in technology, quality, supply chain stability, delivering products on time and with quality with our customers. So we enhance our customer base that will repeat business with us. That's our daily job, and I expect this will continue to be a daily job in the future. There is no any other strategic initiative ongoing other than keep enhancing our mainstream business.

Understood. My final follow-up is just around the CapEx guidance. I think you said that we should move in the direction of that EUR 200 million CapEx guidance, clearly, with just below EUR 100 million. Could there may be a bit of a push out of some of that CapEx spend to 2026? I'm just trying to reconcile that step-up in CapEx implied in the fourth quarter, which is quite meaningful relative to the commentary suggesting EUR 200 million to EUR 300 million of free cash flow in Q4.

Vivek, that's a very fair question. Yes, we have been discussing with all folks, especially in operations about the final stretch of the year. And of course, most is happening now. But I think, if anything, we will fall a bit short on that CapEx rather than overshoot it. So the assumption embedded in your question is there could be a push out? Yes, there really could be. I wouldn't say order of magnitude, but it's not unlikely.

And the next question comes from Ajay Patel from Goldman Sachs.

I guess I have really 2. I'm trying to think -- you're largely a European dominant order backlog. And I'm just kind of thinking forward, outside of the pickup of Germany, where do you see additional pockets of growth? The other thing is the business has changed quite a lot over the last 5 years. To what degree is the manufacturing footprint rightsized with the existing delivery footprint? And then just thinking maybe a bit longer term, right? We had a medium-term target, but we still do have a medium-term cost target of 8%. But what is the right margin for the business given all the experiences we've had over the last 5 years, Is it a bigger number? What are your aspirations? And if it's not driven by volume growth, given that picture has been painted, is it more from the cost side?

Thank you, Ajay, for the questions. I would say, yes, our backlog relies majority in Europe, and we are tapping as well the German increase in demand that is so desperately needed to improve the energy cost for the country and to improve the resilience of the energy supply. Other than Europe we are -- we have been, and we are very successful in Canada. And we are committed to go back to the market in U.S. with our traditional market share in that market.

Today, we don't have sufficient visibility to tell you how much volume is expected from the U.S. But for sure, sooner or later, we will harvest our share in that market. Our small share, not -- we have not the ambition like in Europe. We have a modest ambition in the U.S., but we will -- the U.S. will play a role for us.

We are as well active in Australia, and we still competing -- struggling, but competing in Latin America and South Africa against Chinese competitors. Regarding supply chain, I think we have the right supply chain for the current market conditions, is -- it is flexible enough to adapt to a different macro scenario, name it duties, name it Net-Zero Industry Act, name it trade war and so on. So it's not the time in my view or in our view, to put all the eggs into the most competitive supply chain we see with the view of today.

I think we need to take a long view to understand how the dynamics in the world are playing and how to hedge the best possible way to a changing world. Are we fully prepared for any major disruption? We are not. Are we taking that into consideration that disruption might come? Yes, we are taking that into consideration. And that's why we have several configurations to deal with different scenarios.

And your third question in the long term, of course, we always won better margins for our business and for our company and for our industry. I think our industry is very competitive, has proven the ability to deliver the lowest cost of energy in most of the geographies where we operate. And we deserve recognition for that and for the impact we have in energy independence and the resilience of the energy system. But you know very well that this is a market dynamic. And the key factors are volumes of the market, market share, prices that drive prices and costing.

So where this market is going to go, I think the market will tell. I don't think I can give you more visibility than the one I have 9 months ahead, which is why we issued the guidance in February for the year, we will do the same in -- for next year. So the current view we have is we are confident that we see moments of stability and all things being equal, we should be slowly improving year-on-year, but this is as far as we feel comfortable to go.

The next question comes from Tore Fangmann from Bank of America.

Just one from my side. Your rotor blade output came down year-on-year, which was connected to the issue in Turkey. How confident are you that this does not impact markets outside of Turkey? And how do you think about this going into 2026 when you think about timings in your supply chain, but also cost impacts into '26?

No, thank you very much for the question. I think for 2025, beginning of the year, we were spotting that this might be a risk, and we provided for. Finally, we managed to deal with the impact in '25. As we mentioned in the call, we are, as we speak, negotiating with customers, with government operationally as well how to bring blade production in Türkiye back on track. I would say, global deliveries, I can confirm that will not be affected. So this is Türkiye for Türkiye. Nonetheless, Türkiye for Türkiye, it might affect. It might affect the revenue. It might affect somehow the profitability of next year, but it's a Türkiye topic.

We are working around the clock to restart blade production in Turkey and negotiating with customers and with government and with different stakeholders, the best way forward. One key important aspect to mention is that we are fully committed with Türkiye. We are fully committed, not just to deliver these blades as soon as possible for the projects that we sold. We are fully committed to invest in Türkiye for the long term because it's a country with sustainable volumes where we are market leader, where we have a huge brand reputation, a very good team with the ability to deliver, and we plan to stay doing business there in the long term. Short term, we will figure out how to deal with the situation in the best possible way for all stakeholders.

Very well understood. Is there any way to quantify a potential risk going into '26? Or is this too early to say?

It's too early to say because -- it's too early to say, and I wish it could be more transparent. But as this is a moving target and when the negotiation is ongoing, I prefer to be prudent. We will give you more light in the '26 guidance.

And the next question comes from Richard Dawson from Berenberg.

Two from my side. Last week, you mentioned that you could see financial costs start to reduce as the financial health the company starts to improve. So it looks like that started in Q3 or really actually started across this whole year with expenses now about EUR 20 million a quarter. And do you see this going lower next year? Or is this an appropriate run rate for sort of quarterly assumptions going forward?

And then second, what's the current status of the factory in Iowa in the U.S.? I believe the last update was that it was ramping up to qualified turbines for the U.S. market. Is that still the case?

The second question I take it is, yes. We are assembling components and nacelles if -- to qualify for the U.S. market and the ramp-up is as per the plan. So we haven't changed our plans for the Iowa factory. And regarding the first question, you take it, Ilya.

Yes, I'll take the one on the financial interest one. So -- it has started this year and that's the short version. It started this year and will continue to improve next year because the costs largely here are driven by what we have to pay for our performance warranty bonds, down payments bond and the like, which is the large bond line we have. And the interest we pay for that is, as I said last week, and you mentioned it, is against the risk profile of the company that has substantially improved. So now we're rolling over basically bonds from existing facilities into new arrangements. Those bond costs are typically -- not typically, all of them are cheaper than the ones we're getting out the door. But I'd say the larger effect we will see next year.

So what we've seen this year or until so far is a start, but that should continue well into '26 when we believe that the full things will be rolled over, always like-for-like. So it means if volume increases further, we will need more bonds than of course, financial interest will move with that proportionately. But on a like-for-like comparison, I repeat what I said last week, we're getting substantial relief on the cost side there.

And the next question comes from Constantin Hesse from Jefferies.

Sorry, I was muted on my own line. Just a quick -- so staying with Turkey for a moment. Just trying to figure out what is the worst-case scenario here? So I mean, if TPI indeed, I mean, probably goes bankrupt, who takes over that factory, right? I'm just trying to figure out what's the worst-case scenario? How could this potentially look like for you? Does like a third party take over that factory, would you have to take over that factory? How do scenarios look like?

Let me figure out how I can be transparent without not being fully transparent because that could be contraproductive. We are working out, as we speak, to set up in-house blade plant to start producing blades somewhere mid next year. And we are in conversations to find, if possible, a way to produce blades as well in the existing facilities.

And depending on the success of -- and the speed of both projects that will determine the quantities of blades available for the projects and that will determine the revenue, the profitability and the liquidated damages, if any, of those projects next year. But as we speak, we are building in-house plant, and we are negotiating with some stakeholders, safe process to restart blade production there.

Okay. Understood. This is great. Next question would be just on the margin very quickly. José Luis or Ilya, if -- so your comment was, look, next year, right, you're probably going to have a little bit more volume. So far, supply chains are looking pretty good. So potentially next year, it could look better in terms of the profitability. Just to manage expectations, right? The original guidance this year, including the contingencies, it was 5% to 7%, 6% midpoint.

The commentary that you're giving now because I'm assuming you're not going to suddenly get rid of the contingency, a procedure next year, you probably won't include all these contingencies again next year. So based on your commentary, does that mean that we obviously could look -- so thinking of a potential guidance next year, right, obviously, without giving one, but just trying to figure out the point that we're leaving. We're not going to be leaving from this new guidance.

So when we look at your commentary, should we use the previous guidance as a result, so maybe assume a 7% midpoint guidance next year, including these contingencies? Or is your commentary already based on this new guidance?

I would say -- there is, as we mentioned, there is many ifs. So when if is the order intake in Q4. Are we confident? We are. But so far, year-to-date is less volume than last year. So we still need to sell a lot to match and eventually improve. Second is stability. But without trying to confuse, but to bring clarity last year, what you name contingency, we build contingencies for Türkiye.

And next year, in the guidance, we need to build contingencies for Türkiye. And the impact of those contingencies might be different in '25 than in '26. And this might affect the profitability in a different way, '25 or '26. Other than this and other than -- and all things being equally, definitely, we should be able to see directionally a better performance.

I don't know, Ilya, if you can...

I mean, I think [indiscernible] question, I think you answered it. [ Possible ] if you allow me, should the all things being equal, is the midpoint moving to 6% to 7%. I think that's the question that Constantin was asking us. And we have to ask for patience until we come back to you with that new guidance. But I think the statement Constantin that we're making is as far as we can see, which subject to order intake seems stable or as far as we can see. We continue with our statement, which we have given at the beginning of the year and throughout the year, next year should be all things being equal, better than this one because this now a steady-state company in that sense. And you have always the unforeseen like the Turkey topic, but this is how we see the company.

Understood. No, that's clear. And then maybe just lastly and let's just quickly just to understand this a little bit. I would have expected maybe a little bit more in terms of your order book in Service. I think Service order intake was something around EUR 300 million in Q3, which sounded a little bit low. I mean maybe this is just timing. I don't know. I haven't really necessarily looked at the order intake overall very often. But just wondering, is there a particular way to look at it? Are there any concerns? Or has orders -- have orders slowed for some reason? Or how should we think about this?

No. I think no concerns. I think the renewal rate is the one we want. And in quarter might be higher, might be lower and the order intake that we landed in Q3 is good. It's associated with good Service orders, and that trend is expected to continue. So no changes in our view. I think Service business should be growing very high single digit year-on-year, and our view hasn't changed.

And the next question comes from John Kim from Deutsche Bank.

I'm wondering if you could just comment on how you're feeling about the order book pricing relative to your input costs. If I understand correctly, time lines are extending in core Europe, particularly Germany. I'm just wondering about your cover there.

I would say, generally, so we see a slight inflation pressure in Europe, driven by high demand, not as high pressure as we saw maybe 1 year ago, slightly easing a little bit. And we see stability in Asia where we procure. We see stability in the shipping. We see spikes in certain commodities. But all in all, I will categorize that as stability, cost improvements in certain areas, slight inflation in other areas, all in all, stability.

Okay. And just a point of clarification. I understand the issue in Turkey. But when I look at your in-house production on blades, it looks to be a bigger drop than that of third party, if I'm reading the graphic correctly. Is that where Turkey would have booked?

No, no, that we need to clarify because the in-house production is not -- is doing okay. It's Spain and India, Türkiye should be qualified as a third party. And the biggest drop we have is related to Türkiye because that was -- that factory was in its strike since May and didn't produce any blades since.

Okay. Fair enough. And just also to clarify, in the Q3 print, given what you know now of the Turkish situation, was there any extra provisioning we should be aware of? Or is it too far away in terms of the [indiscernible] delivery in the country?

No. Everything we know is considering the guidance for this year. And everything we can forecast for next year will be included in the guidance of next year.

Okay. And stepping back from kind of near-term situations to kind of the bigger scope, which markets are you excited about next year in terms of order intake? Any color you can provide here would be helpful.

Of course, Europe, Germany, I mean this is the new market where we want to protect our market share. We need to and want to succeed in the next jack-up tender in Turkey. We are fully committed with the market long term, doing investments there. We want to keep the good momentum we have in Canada, and I wish to see some orders from U.S. and from Australia.

Okay. Okay. Helpful. And I think you had mentioned you're committed to Turkey, but the nature of competition in South Africa and Brazil feels a bit more intense with the Chinese. Is that a fair comment?

Chinese are very active in Türkiye, and it's a serious competitor. So far, we managed to keep our leading position in the marketplace. And that's our view that our proven track record in the market, the service performance, the local content requirements and so on, should allow us to keep as a key player. For nonlocal content turbines, of course, Chinese will do some market share there. But for local content, as we don't know what their plans is -- what their plans are, if they plan to set up local manufacturing facilities in Turkey or not.

Understood. And last question, if I may. Any sense of auction sizes in Germany next year? Or is it too early?

No, I think it's clear. I think with the current legislation that cannot change. It already sets the volume for next year of auctions, which, if I'm not wrong, is 11.3 gigawatts or...

That would be the steady state. I think maybe the full answer would be we don't have more specific data points. So absent any changes, what José Luis is saying, would be we remain patient for the auctions. Maybe in addition to that, when we had this conversation back in June, the sector, including ourselves, was a bit more cautious after the new government took office. But once the summer was over, that monitoring report came out, I'd say many -- a bit inconclusive. We had conversations with the government and in the industry, where José Luis is probably a bit more optimistic than we were a few months ago because signals are that onshore wind is not really in the focus of any changes. But we have to wait and see for the final legislation.

And I believe we're going to see some kind of a draft legislation end of this year, early next year, and that will tell. But to date, back expectation is the one that José Luis just mentioned, no changes means continued volume for '26.

And the next question comes from Sebastian Growe from BNP Paribas Exane.

It would be on execution either. José Luis, you said in your introduction that the order intake is slowly translating into sales. And in fact, the backlog is about EUR 3 billion higher than this year's sales in the project business. And that compares a thing to about EUR 1 billion plus or so in the last 2, 3 years. So if I square that also with your statement from the call last week where you said that the lead time has increased to 18 to 24 months, then this suggests to me that the growth should meaningfully accelerate in '26, apparently provided no hick-ups in the supply chain. So if you could just provide your views here and simply provide your opinion, that would be much appreciated.

Yes. Yes. And I fully concur with you. You are right. And other than Türkiye, this is the case. We start to see more orders in execution in Germany, which is usually a long lead time market. And year-on-year, definitely, we see more volumes. So directionally, we should see higher revenue and higher growth normalizing the lead times of the company to a higher number than previous years. And the only caveat is Turkey and that we will quantify and gives you our view in February.

Okay. Understood. And if we look at the overall production capacity, if I look at the current turbine assembly output and unit numbers, then at the peak apparently, you were able to do around 1,500 per year. This is now down to around 1,300 and was in '24 and presumably going into a similar direction for the year '25. So the question that I simply have, what's really the capacity leeway that you have? I think you spoke in the past also about maybe up to 2,000 turbines that you could do at some point in time. So if you could just update us on that front.

Yes. No, and that's slightly more complex because it depends a lot of the turbine type. From a pure assembly capacity, yes, we have the possibility to do that because structurally, we are running with overcapacity. We want to keep our options in Europe or assessing Net-Zero Industry Act and the resilient criteria to play in the European markets. We are fully committed with supply chain from China, but we want as well as supply chain from India because in times of political uncertainty, you always want to have backup in place. So long history short, we have excess of assembly capacity nacelles, which we plan to keep. So that is not our intention to rationalize any plant in seeking better efficiency. I think, it's better to sacrifice a little bit efficiency versus certainty and ability to grow if the market comes.

Then the question is blade molds. And there the situation is different because there are different demand profile for different type of products and different available capacity for those type of products. And the Türkiye example is a good example where having certain flexibility is advisable. So we managed this year to improve profitability in the company while having a hit in the top line. And this was because we had spare capacity.

Unfortunately, not in Türkiye, for Türkiye, but the rest of the projects worldwide were mostly unaffected for that situation. And this is one example of not going always to the limit to optimize the last penny and taking a management view on things that could go wrong and how do you plan for those things that could go wrong. So do we have ability to do more? We do; we do.

Okay. That's helpful. And then the last one, just quickly on service. I think in the past; you said that you would be striving for double-digit top line growth in the business. I think most of our discussions in the past have always been focusing on especially pricing around the project business. [ Oliver ], I would be greatly appreciating if you could also provide us with your views on the pricing quality in the service business and also the phasing in the wake of what I said before, might be double-digit top line growth and how to think about that going forward?

I would say top line, we always say low 10s or high single digit, but in that range in the foreseeable future, depending a little bit the timing of the new build, which is what mainly affects the top line. Regarding quality, of course, quality is a factor of pricing and failure rate and cost stability versus your cost forecasting. So we are confident about the quality of the order intake in services.

Yes. And I guess Sebastian asked on one step, how do you feel about pricing in service.

So far, stable, like the turbine business is following the same pattern in the marketplace. So we see stability. Then the market dynamic, and of course, it might change. The market dynamic today is wind is super valuable for the energy systems in the markets where we operate. of course, prices are important. It's a factor of competition, but prices are lower than most of other alternative sources in most of the markets where we operate and as there is growth expected, it looks like the focus now is reliable partners that can execute the projects as the market demand especially Germany.

And if I may just come back now to the some -- to the cadence within the Service business and specifically in regards to executing the backlog. So my understanding has been that apparently, the overall now favorable development that we have seen in the margin improvement in services is a function of better pricing, better volume, then also the regional mix more towards Europe and then also clearly the exit of probably old contracts from the AWP side.

So how far advanced are we in this journey? So this just really the very beginning of a longer duration sort of improvement cycle? And yes, if you could just sort of help us better understand where we are in scale from, I don't know, 0 to 10 or so.

That's a good one. I would say the low hanging fruits are behind us. So now every small improvement is going to take more efforts because the legacy topics are on the way. Some of them are already behind us, another on the way to be addressed, and overall, diluting into new fresh water coming into the tank. So all in all, I would say, yes, there is possibilities to keep improving, but maybe not at the same pace. But I don't want to anticipate a guidance discussions, Sebastian.

I will get back to that in February, I guess.

And the next question comes from Xin Wang from Barclays.

I'll start with a very ignorant one. Installations in Q3 is record high. Turbine production is close to recent high, only weakness is the blade production. Why is revenue so low in the quarter?

But it is -- I mean, all the observations are true, but basically, it is coming from that shortfall in the blade production. I mean, it's not a minor one. So we've been saying full year effect without being very specific, between EUR 200 million to EUR 300 million there. But bulk of that is falling earlier because now we -- for all the blades that don't go to Turkey, we found alternatives. But in the beginning, of course, that took some time. So that's the major reason, which one of the blades -- yes. Go ahead.

And then looking on the cash flow. I think if I look at the bridge you provided for movements in net working capital, I think what struck me was orders was at record high this year, current year high, record high and revenue, obviously very low. So book-to-bill formally above 1, but prepayment is a drag to cash flow. So that's the one thing I struggle to understand in the bridge. Secondly, trade payables is a EUR 200 million tailwind to free cash flow generation in the quarter. Is this a specific issue related to a specific supplier or just a timing issue that we expect to reverse in Q4?

I take that one. Now in both cases, I don't think they have an influence on the cash flow picture we're trying to give you last week and today again. I mean, if you look at that from, let's say, a bit of a commercial standpoint, profitability at the midpoint of the new guidance we've been giving adds that substantial portion of this EUR 200 million to EUR 300 million without guiding bandwidth we're giving you for additional cash flow.

And then you put, let's say, an improvement from this minus 8.2% to -- for sure, better than minus 9% than our track record saying probably a good deal better than that. This is where that free cash flow is coming from or will be coming from.

So ladies and gentlemen, this was the last question. I would now like to turn the conference back over to José Luis Blanco for any closing remarks.

Thank you very much for participating in the call and for your questions. Let me outline our key takeaways for this quarter. So first, we delivered another strong quarter in order intake, and we expect our full year orders to match or slightly exceed last year's level. We have increased our full year EBITDA margin guidance to 7.5% to 8.5% and remain focused on improving profitability and generating positive sustainable free cash flow. We are on track to meet our guidance, deliver margin improvements and can confirm that the medium-term margin target, 8% is in reach. Thank you very much. Wish you a good rest of the day.

Ladies and gentlemen, the conference has now concluded, and you may disconnect. Thank you for joining and have a pleasant day. Goodbye.

Thank you, Maria, and also a very warm welcome from the Nordex team in Hamburg. Good morning. Thank you for joining the management call on the upgraded full year 2025 EBITDA margin. As always, we ask you to take notice of our safe harbor statements.

With me are our CEO, José Luis Blanco; and our CFO, Ilya Hartmann, who will lead you through the presentation. Afterwards, we will open the floor for your questions.

And now I would like to hand over to Jose Luis.

Thank you very much for the introduction, Anja. Good morning, everyone. Thank you for joining us on such short notice. As you saw in ad hoc released last night, we managed to deliver a strong performance in the third quarter and, hence, we are now raising our full year 2025 EBITDA margin outlook after careful review of the full year forecast. Today, I'm pleased to walk you through our preliminary Q3 results and the rationale behind our upgraded guidance.

So let's start with our preliminary third quarter results. We delivered revenues of EUR 1.7 billion in the third quarter, broadly in line with the same period last year. This was partially driven by project scheduling mix and temporary supplier-related delays in Turkiye. On the profitability side, we exceeded expectations. Q3 EBITDA margin reached 8%, up from 4.3% in Q3 last year, driven by stronger execution and ongoing improvements in service margins. This brings our year-to-date EBITDA to EUR 324 million with 6.5% EBITDA margin for the first 9 months.

As highlighted in our Q2 results, we continue to generate solid free cash flow in Q3, bringing the year-to-date total to EUR 298 million. Looking ahead, we expect to maintain positive free cash flow generation in Q4, supported by increased activity levels, continued momentum in order intake and disciplined working capital management.

Let's move to the next slide, where I will walk you through the key drivers behind our margin upgrade. Over the past 3 years, we have made consistent progress in strengthening our profitability. With an EBITDA margin of 8% in Q3 and 6.5% year-to-date, we have continued that positive trend. The performance, along with our updated outlook for the remaining of the year, has led us to raise our profitability guidance for 2025. The margin improvement reflects operational progress across the businesses.

Project execution exceeded expectations with some of the contingencies we had built in earlier this year not materializing. Service segment continued its recovery faster than anticipated, contributing positively to the overall margins. And not least, stable supply chain conditions and disciplined pricing also supported the upgrade. We are encouraged by the progress so far, but our focus remains firmly on the execution and disciplined delivery in the fourth quarter with record high activities. Our aim is to close the year with consistency and operational strength while continuing to manage risk carefully.

Moving to the last slide to the guidance. Based on a solid 9 months performance and the review of our forecast for the remaining of the year, we now expect 2025 to register a significant step-up in profitability compared to 2024 levels, bringing us very close to the medium-term EBITDA margin target of 8%. Reflecting strong service EBIT margins and solid project execution, we have raised our EBITDA margin guidance to a range of 7.5% to 8.5%. While we are not issuing formal guidance on free cash flow, we remain confident in our ability to deliver another year of robust free cash flow generation.

The strength of this performance will depend on, first, continued momentum in order intake, of course, sustained profitability improvements and disciplined working capital management. All other elements of our guidance remain unchanged.

With this, I'm handing over to Anja to open for Q&A.

Thank you, José Luis, for guiding us to the presentation. I would now like to hand over to Moira to open the Q&A session.

[Operator Instructions] The first question comes from Constantin Hesse from Jefferies.

Can you hear me okay?

Yes, we can.

Well, first of all, congratulations, guys. Quite incredible, what Nordex has been doing in the last 3 years. So well deserved guidance upgrade.

A few questions on the margin very quickly. So looking at the margin and the volume profile, it looks like these margins are now coming through at volume levels that were much below those 8 to 9 gigawatts that we were talking about before. So is that kind of the new volume level that we could expect this level of profitability?

Then looking into 2026, I'm assuming that there are no major one-offs. So we're talking about this level of profitability now going forward into 2026. I'll start with those two.

Thank you, Constantin. I mean, this is a project business and there are always risk and chances and some materialize or not. This year I think we see better supply chain stability. So as a consequence, some risk, some contingencies didn't materialize and can be released to the profitability. But you cannot extrapolate this for the future.

Today, we would like to explain you why this uptick, but 2026 is too early. I think we still have a huge quarter ahead of us in terms of activity, in terms of expected order intake and how 2026 -- we are in the middle of the budget preparation for 2026, how '26 is going to look like. We will know better beginning of next year and we will report in the schedule of the financial calendar. But I wouldn't extrapolate a quarter performance in a long-term view. Nonetheless, if all things being equal, we are confident that we can do a better year than '25.

Okay. That's understood. Can I just on -- so when you say contingencies, it's basically just risks that haven't materialized. It's not like there has relief...

Very much so, very much so.

Okay. Understood. And just on the volume levels, so it's fair to say that volume levels wise, it looks like profitability is coming through better than anticipated as levels of volumes that are lower compared to what you had anticipated previously.

Let's be cautious there. I think we were always signaling that this extra volume will boost extra profitability to achieve the 8% midterm target. And looks like we are going to achieve this midterm profitability target with a lower volume. But as said, project business risk and chances. So...

Okay. Fair enough. Understood. Last two questions. Order intake, you're still very confident that you're going to beat next year -- sorry, last year. And just on this Turkey situation, could we potentially expect any small liquidity damages in 2026 from any potential delays? Or how should we think about that?

Order intake, you know, Constantin, we don't guide order intake. So to exceed the last year performance, we need to do a good Q4. That, we expect to do. But so far, the bucket is empty. So with still 2 months to go -- no, I'm just joking a little bit. So it's still 2 months to go, and we still need to bag a big number of orders. So yes, without guiding you, we remain optimistic that we can achieve and slightly improve last year without guiding for order intake.

Regarding Turkiye, the situation, as you can imagine, is quite complex. So in mind, your assumption might be correct. But I will prefer not to go into more details because complex negotiations with several stakeholders that, as we speak, we are having. So we hope that we can solve the situation. We don't know yet what the impact is going to be for '26. For '25, we know, and it's included in the guidance that we provided today.

The next question comes from the line of Vivek Midha from Citi.

I'll stick to one. Regarding the performance in third quarter and fourth quarter, the contingency that you're referring to, could you -- is it possible to be more specific on what the contingencies were? So how much was related to, say, project execution? How much was related to perhaps the warranty provisions you've been booking earlier this year? Any color would be helpful.

No, thank you for the question. I think you remember the very unfortunate situation a couple of years ago where we were missing our targets and disappointing everybody. So the situation there was quite unstable. So step by step, we tried to improve our pricing. We tried to improve our transfer conditions and we improved as well the provisions that we booked for project execution. After several quarters, you have more visibility for the year and you realize that those contingencies that were increased compared to previous years are not any longer needed, even that we could execute even below the contingencies of former time. So this released profitability to the P&L. So it's general contingencies for project execution.

And maybe to give some color to Vivek. So this is everything that has to do with the projects, if you go to logistics, sprains, installations, crane time. So all of things that can go wrong in a project and have gone wrong in the past are baked into the project contingencies. And if they don't materialize over the year, people realize that the execution goes better than they had thought. And that is the basic principle here in the project business.

Understood, understood. And just to be -- just one quick follow-up as well. On the free cash flow commentary, I fully understand it, of course, depends on the working capital developments and so on. But just in terms of what we see at the end of the year, sounds like you may do, for example, EUR 550 million to EUR 600 million or so of EBITDA. We've got the CapEx guidance, working capital. Is there anything else to be aware of when we think about what you could do for the free cash flow for this year?

Today, the way we see it, I mean, the building blocks is expected order intake, keep stable execution, which we are confident. And this is why we are guiding you. The risks are on a high activity level in project installation as well as high activity level in manufacturing in the last quarter of the year. But if everything is stable, Ilya, the math is correct.

I think so. And again, as José Luis said, we're not guiding neither for cash or free cash flow, but the two of you have done the building blocks and of those assumptions, the chips fall the right way to calibrate you, but really just calibration, could we do again the same free cash flow in the last quarter on the back of the items discussed than we've done in the 9 months, so twice as much as current. Probably, we could. If some of the things don't go away, maybe a little less, but I think that is where the math is correct.

The next question comes from the line of Sebastian Growe from BNP Paribas.

Can you hear me? Just to clarify.

Yes. There is a little bit of noise on the line, but we can hear you, Sebastian.

Okay. I'll try my very best not to have any technical issues. So the first question would be around the gross profit margin. And I would like to make some reference or get some reference to the order backlog in this case. So you mentioned currently a good execution in '25. At the same time, however, you will know what you do have contracted both from a regional and also from a gross margin perspective, I think.

So against the backdrop, my question is simply, if you do see any relevant changes from either a mix or a gross profit margin quality perspective based on the existing backlog when looking into sort of the future. So it will be the first one. And the other one is -- well, maybe start there. Then we take them one by one, that would be great.

The answer is not really, not really. I would say that the -- yes, there are certain regions with a slightly better margin, but it's not -- I would say, generally speaking, 80% of the project execution, 80% of the backlog is very much with normalized margins. So we don't see a big difference in regions so far.

That sounds good. And then the other question is on free cash flow and also more higher level discussion, if I may. I would just be curious to hear your thoughts around if there's anything visible at this stage for relevant free cash flow that might change, be it the level of cash interest, cash taxes, the working capital, terms and conditions that you find in the market, also the CapEx because I think all of those items have been fairly stable now, and just curious to hear your thoughts if there might be any changes.

I'll start and then José Luis might think of any other levers. No, I think all the large building blocks, especially you touched upon CapEx, more or less, give or take, we believe, are on the run rate that we have been giving in the past years. Yes, the truth is that now with an improved standing of the company, our financial costs will go down. I mean, the cost for our bonds, which is our bread and butter. Business, of course, depends on the risk profile of the company, and that is improving as we're talking about it. So if anything, financial costs or interest for the bonds might go down. And that's probably the most relevant lever I can think of. But José Luis, have anything else?

No, no. I think the biggest building blocks, of course, expected order intake and EBITDA. And the EBITDA is mainly from keeping the stability in the supply chain. And that's it, I think understanding that there is a big activity quarter as always, winter for installation and factories fully loaded in the quarter. So the risk profile of the quarter is slightly higher. Last year, we delivered. We expect to deliver this year.

Yes. And that's actually a good segue to my last question, if I may say that. The first one is a very technical one. I'm sorry if you had answered that before. But could you quantify the impact on the revenue delays that you attributed to Turkey to the extent that is possible or give at least a rough magnitude? And would you expect the full catch-up in the fourth quarter? And on a more structural note, I'm just a bit irritated by apparently, we have seen order intake going far higher now for a couple of years really in comparison with the revenue execution volume. So when should these two lines convert? So you're running on orders of 8, 9 gigs. At the same time, the deliveries and execution are probably 6.5, 7, somewhere in that neighborhood. So how should we think about that from a timing and as I said, convergence perspective, that would be great.

No. Thank you, Sebastian, for these two questions. Regarding Turkiye, you need to allow me not to be -- I cannot be very specific there in the best interest of all stakeholders of Nordex because everything I say might impact the ongoing negotiations that we have with several stakeholders. The impact for this year is within the guidance and that has dragged revenue. And let's put it that way, the revenue we see we are guiding midpoint, but we see more risk on the revenue than on the EBITDA for this year. And Turkiye is one of the big contributor factors for that. But I really cannot be more specific there. We are dealing with that the best way we can. This might impact slightly 2026. But here, we are talking about Q3 and full year guidance for '25.

Regarding the second question, it's a very good one. And what you see there is a shift in the order intake profile of the company and in execution coming from close to 50% of the volume in previous years. In the Americas, where the lead time is very, very short, so you contract Q4 this year and hit P&L execution Q4 the year after, to majority of the volume being contracted now in Europe and in Germany where the lead times is more in the range of 18 to 24 months. So as a consequence, you will see that delay. We expect next year to be a higher volume than this year because of that delay in the order intake going through the P&L, especially in Germany. And that's the main reason why the order or the book-to-bill has been increasing, so because the lead time in orders in Europe, mainly in Germany, takes twice the lead time of an order in North America, in U.S., for instance.

The next question comes from the line of Ajay Patel from Goldman Sachs.

Congratulations on the release. I have two questions. I wanted to take it a little bit high level for a second. This year, if we look at what you put out today, points to at the midpoint, an 8% margin number in terms of EBITDA. And you start to think, well, -- you haven't had the real ramp-up of Germany and typically, they're better margin projects. There is project execution or at least order intake coming on the U.S. side for the likes of Vestas and potentially that's an opportunity for you also.

I find it very difficult to understand that volumes don't grow over the next 2 to 3 years. And if you're already having a base year margin of around 8% this year, that we don't see a more improved margin environment than the 7% or so margin that is in consensus for next year.

Could you talk to some of the building blocks that maybe I need to think about because it feels pretty clear the direction of travel as I see it. So maybe I'm missing something. And then on the cash flow, I think Ilya pointed to the call pointed to around EUR 550 million of free cash flow -- free cash flow. That points to just over EUR 1.5 billion net cash for the full year. That's like 25% of the market cap.

When are we going to get some details on what does capital allocation look like? How much do you need for the balance sheet? How much do you need to invest going forward? What can be returned to investors? And to what degree that's a consideration?

Thank you very much for the two questions. Let's do this together. I think starting with the second question, the first priority -- the answer is we will talk about that in the annual results presentation in February next year. But keep in mind that the first and foremost important thing for us is to strengthen the balance sheet. And we have -- we expect to have -- we have today and we expect to have a very solid cash position, but the equity ratio is still what it is.

So we need to reinforce the balance sheet to make sure that we prepare the company for higher volumes in the future. And this goes in line now with the first question. Do we expect higher volumes in the future? I mean, we are not here guiding '26 or midterm. But if the high level, your assumption, we agree. I mean, if the book-to-bill is increasing and increasing, sometimes you need to process those orders because you cannot increase the book-to-bill forever.

So all things being equal, we should be able to see growth, and we should see some profitability improvement associated with the growth. But as said before, project business, contingencies for the projects this year we didn't need or we don't need. This might not be the case next year. So I'm not saying that what we released today are one-off, but I want you to understand that this is a project business. And sometimes you consume certain level of contingencies in execution and in other moments, you consume a different level. And Eli, I don't know if you want to.

No, I think on that point of what you and Ajay are discussing on the 8% and the trajectory, that is obviously everything you said I subscribe. And to the capital allocation, a little to add. But to underline, it is a very fair question. And we've been saying in the past when shareholders have been supportive of the company that we will not forget about that once the company is doing well. And right now, it is on a healthy track, as José Luis has explained. So please bear with us until the full year results. As we said, we will come back with something on that, but it is a question that is front and center on our minds and will be discussed and explained when we do the full year call.

The next question comes from the line of William Mackie from Kepler Cheuvreux.

Can I just maybe ask some questions about the contingency process in your projects business, Jose Luis, with your vast experience. I mean, since the last 3 or 4 years, clearly, you've been nursing the business back to the health we see today. And with that adopted or allowed your project teams to adopt more caution perhaps than normally you might expect.

So can you talk a little bit to how you would think the contingencies were being accrued or assessed at the beginning of the year? And then when this became visible to you? So as the year progressed and the execution and the costs, were the execution better and the costs lower, when was it clear that the contingencies were overly prudent? And when we think about how you run the business into '26, '27, to what extent do you think you'll change the way you challenge the project leaders and teams in the way that they're allowed to accrue contingencies going forward?

Yes, that's a very good question. The way we operate, we assess the risk in the supply chain. We take into consideration previous and current experience in project execution. We assess the world and the risk and the configuration of the supply chain. And based on that, during the order intake phase of the project, we build certain contingencies for executing the project.

So the order intake then moves from an offer to a contract, and then we put that into the machinery of the company. And from there, it goes into a planning for the year. And from the planning goes a budget, and then you start execution.

Usually, the first quarter of the year is very low activity. So very low activity. You cannot fully assess if you are conservative or optimistic in the view of the year with a quarter of low activity.

So second quarter, slightly more activity than first quarter. So you start to have a better visibility how the year might look like. And then around the third quarter, you have a way better visibility to narrow what you think the company can deliver, is this process going to change for the future? I don't think so. I think we keep the same process.

What we will do is after hopefully 2 or 3 years of very stable execution, if we see that our contingencies are over conservative, we might revisit that. But for the time being, we haven't done that because the macroeconomic is quite still uncertain.

I mean there is trade discussions, duties, yes, no, this influences currencies. So I don't think we are in a position where we can say, well, the macro environment is fully stable. You need to be more aggressive in the way you build your contingencies for the projects.

Maybe the second is a follow-up to questions that have been asked a number of times. But I mean, the basic arithmetic suggests that your Q4 EBITDA margin is 11% and maybe the second half is close to 10%. Unless the world becomes topsy-turvy again or changes to the risk side, I guess the questions that are coming are more why shouldn't -- or why should we not assume that you can maintain a similar level of performance in '26 towards that we've seen in the H2 '25 when you're expecting higher volumes, your pricing has been stable.

The supply chain is stable with the exception of Turkey. And therefore, already, you're going to be hitting above your midterm targets for adjusted EBITDA. And I guess I hear you need to go through the planning process before disclosing that more widely, but is there anything that we should be missing that should hold our thinking back for '26 on '25?

No, I think the building blocks you name them. I think the biggest -- and let's not talk '26 before time because we are in the middle of the planning. But the biggest lever is the expected order intake. So we still need to sell a lot of projects to make real the assumption that we will see a growing company next year. We expect to do so, but everything is still needs to be executed.

Regarding supply chain activity, I mean, we've had years of bad surprises and years of good surprises. So if we are in a neutral supply chain and we don't deteriorate profitability in execution, is this going to be an uptick like this year or it's going to be neutral versus how we build the contingencies for the project to be seen, and the Turkey effect, we need to assess what the Turkey effect is going to be for 2026. For 2025, we know. We plan for that. For 2026 is still in discussion.

And as I mentioned before, I will rather stay silent there because there are several negotiations ongoing with key stakeholders that it's important that we keep information limited. And I'm sorry for that, but I think it's in the best interest of the company.

The next question comes from the line of Alex Jones from Bank of America.

Two, if I can. First, just back on the supply chain. You talked about that being sort of more stable perhaps than you expected at the start of the year. Are there any signs apart from Turkey that, that changes going forward? I'm thinking things like the tighter EU steel quotas? Are you pretty happy at the moment with how things look going forward?

And then the second question, just on service margins, which you called out specifically. Is there anything else that sort of improved the service margins other than the sort of strong execution you're talking about? Or to phrase it differently, is this a pull forward of the improvement you're expecting in service margins or just an indication that actually they can be more robust than you had previously expected?

Okay. So first question, I would say, all things being equal, there is the elephant in the room of CBAM and what the impact of that could be and who needs to pay for that impact. So this will translate into cost increases. And eventually, we would like to translate to the price. The quotas for steel is a little bit the same. Can this be a pass-through to the customers and to the tariffs and to the consumers or not in CBAM, we at Nordex, we have a clear position.

I think CBAM is an environmental tool that put a lot of burden on the supply chain, and that might delay the biggest contribution to fight climate change. So every turbine we sell has a CO2 payback of 2 months. So if you put a CBAM increased prices, this might delay the installation of turbines and as a consequence, delay the net zero.

So it's a tool that goes against the intent of the tool that puts a lot of pressure on supply chain and on customers and consumers. So let's see because negotiations are ongoing. If this could be extent for our sector, yes or no.

The second impact, which is related with that is steel and the quotas and the prices, and we'll try to manage this portfolio in the best possible way and translate the cost increases to customers. And Turkey, we already mentioned.

Regarding services margin, we are very happy with the service performance. And it's very much that you pay less liquidated damages because the company and the technology is doing well and the failure rate is moving into the right direction. And I don't think this is a one-off. I think this is sustainable.

But to what extent the service business growth and what the profitability of the service business growth is a slow moving -- is a slow but steady moving business, both in the top line and in the profitability improvement and that we expect that for the future.

The next question comes from the line of Anis Zgaya from ODDO BHF.

I have only one left question on prices, they are holding quite well for quarters now. But don't you see that it could be additional pressure going forward coming from Siemens Gamesa's return to the market and increasing Chinese competition?

That's a very good question. I think we try to keep the price that we need based on our cost base to deliver a decent profitability for our company and for our shareholders. So far, we managed to achieve that. But of course, there are geographies that we suffer more. In Latin America, we suffer. In South Africa, we suffer where we compete against Chinese competitors.

But the geographies where we operate in, it's not straightforward for Chinese competitors to land because it's very complex, the permitting, the characteristics of the turbines that you need and so on and so forth.

So far, we have been managing to keep market share, eventually improve while not compromising in prices and margins. To what extent this could continue in the future, we just don't know. We think -- I wish that the sector behaves reasonable, but you never know what other competitors can do if they want to improve their market share. We just don't know.

The next question comes from the line of Xin Wang from Barclays.

I just want to clarify one thing. Is it possible to break out how much of the margin upgrade is underlying and how much is contingency release? Is it aiding Q3 already or will release in Q4? And also, when you say '26 margin will be better than '25, does this mean '26 underlying without a similar level of contingency release against '25 underlying? Or is it against '25 with contingency release, please?

Maybe, Ilya, I don't think we can give too much clarity there.

No, I think we can. I think we can. Maybe we do that again because I think you did a very good explanation of the contingency, how that works. So I think it's worthwhile to say that this is the underlying margin so that we're talking of an operational performance of the company.

I think Jose explained quite well how we do the planning, the budgeting and then the execution. And I think William asked you about how do you think about the profile going forward. And I think for now, we're not going to change much. So this is how the company operates. It's not something special.

Yes, that's it.

So the further you progress in the year and if you have a good year of good execution and you don't see the risks materialize, the people and their projects start to release those contingencies. And if you -- 9 to 10 months into it, you do a review of the forecast again and look what do you think for the rest of the year is going to happen. So it's a project discussion. It's an operational discussion, nothing else.

Okay. Understood. Yes. So I think how contingency release works is explained very well. But I'm looking at the midpoint of your new guidance suggests potentially EUR 2.6 billion revenue in Q4. And at the same time, it's a massive margin uplift. So essentially, do we expect a similar level of tailwind going forward in Q4 next year? Is that needed for the margin in '25?

You cannot do that correlation because the portfolio of projects next year is a different portfolio of projects. So this year, in Q4, we have high activity levels and very good execution profile. So provided that we deliver these high activity levels in the factories and in the projects and provided that our view one quarter ahead of the expected cost to go goes in the direction, that releases that level of contingency and that gives you a profitability for the quarter.

Q1 next year is going to be lower activity than Q4 this year. So the profitability -- I mean, I haven't seen because we are in the middle of the planning process for next year. But I bet that the profitability of Q1 next year will be substantially lower than the profitability of Q4 this year.

And in Q1 next year, we will look at the year. We will assess risk and chances of the projects. And very much, we will see if we were over conservative in the contingencies bill or not or if the contingencies are needed because the execution of next year is a different profile than the execution of this year.

Okay. And maybe -- I mean, we will get the full release next week. But can we get some indication of how much of the free cash flow generation is the net working capital tailwind from order intake?

Yes. Let's discuss that in detail for -- on the quarterly call next week. But for this year and the full 9 months, the working capital is not the key driver. It is more from the operational free cash flow that comes from the profitability. But the details we'll give you and a bit of an outlook for the full year on the call next Tuesday.

Next question comes from the line of Kulwinder Rajpal from Alpha Value.

So firstly, just wanted to come back on service margins. So would it be fair to assume that we reach the 18% to 19% range this year itself and then continue from there on, all things being equal from what we see so far this year? And secondly, just wanted to understand how the discussions with customers in U.S. have evolved during Q3 and maybe what you have seen so far in the month of October? And how is that market looking for you?

Sorry, we couldn't get in full the first question. Will you be so kind to repeat, please?

Yes, absolutely. So I just wanted to confirm something regarding service margins. So is it fair to assume that we will already be somewhere between 18% to 19% for this year and then continue progressing from there on, all things else being equal?

I think, yes, service margins, I mean, you can have quarterly variations, slightly up, slightly down. But if you take the last 12 months as an indicator, this should be slowly growing going forward.

So we don't see any reason why this should not be the case. So we see service business as a high single-digit revenue growth going forward and the associated profitability improvement, and you should not look at it from a quarterly because there are adjustments on the warranties on certain things, but you should look at it from the last 12 months profitability. And this, we expect to have a small improvement going forward.

Regarding U.S., it's very much a moving target. I think we are in discussions with customers. And that's so far as far as we can go. We think that we will have a role in that market. And we think that, that market will have a role in the energy supply that the country needs, but discussing as we speak.

The next question comes from the line of Richard Dawson from Berenberg.

Just one clarification from me and going back to what you said about Q4 order intake and sort of needing that to give you the confidence that FY '26 margins could be a similar run rate to H2. But just given that it takes new orders sort of 18 to 24 months to really hit the P&L, why do we wait to see where Q4 order intake lands?

The line wasn't super clear. Could you help us one more time with the last part of that question? Sorry for that.

Yes, no problem. Is this better?

Way better, way better, yes.

Perfect. It was just a question on -- you had comments there about sort of waiting to see where Q4 order intake lands to really give you some confidence into where margins could be for FY '26. So just comments on why do you need to wait for Q4, given you have such a long sort of 18- to 24-month period before any of those orders actually would hit the P&L, so sort of post FY '26?

No, because it's the way -- of course, we issued the guidance in February, around February. In February, we still have expected demand in our planning process that have impact in the P&L of the year. If we advance 2 quarters, then the visibility is way lower.

So we don't feel comfortable to guide the company 5 quarters ahead. We feel comfortable to guide the company 3 quarters ahead with certain level of expected demand to be closed. In other words, the expected demand to be closed today is higher than the expected demand to be closed in February '25. So the risk profile, if we guide you today for next year, we will be assuming a higher risk profile that we don't want to do.

Okay. That makes sense. And maybe just one other question, just going back to Turkey. And I appreciate you can't go into too much detail on this. But do you expect those temporary supplier-related delays to actually result in additional revenue being recognized next year as that situation reverses? Is that sort of how we should be thinking about Turkey?

I think we need to -- and we are working in a plan to produce local content blades there. To what extent that plan will succeed or not and how many blades can be produced is still to be seen and what the impact for the projects might be that might impact our revenue, and we will try to avoid liquidated damages if we can. But first, we need to have a plan of how many blades and when will be available in Turkey.

We have a follow-up question from Sebastian Growe from BNP Paribas.

One quickly around service. It's just about the attachment rates apparently in the first half of '25, that had nicely improved if I look at what is under service from the installed base perspective.

I would just be curious to hear your latest thoughts about if this is continuing at the sort of mid or even higher 70 percentage sort of rates?

And then the second question is in regards to the supply chain more related to specific components, rare earth apparently topic of last few days, I think. So what's the visibility here? And how many years would you potentially have secured from a rare earth perspective in particular?

Sebastian, and we couldn't really understand you. Could you maybe repeat and be closer to the microphone?

So probably just as before with a one-to-one sort of taking the questions. So the first one is on service. And the question was that the attachment rates had nicely increased. So if one just looks at what you have under service contracts as opposed to what the installed base overall is.

My question is simply if these high attachment rates would have continued and if you would dare to say that probably with the higher exposure towards Germany, this is sort of also structurally improving from here? That's question number one. And maybe start there.

Sebastian, it's not about you being near to the microphone. The line is quite -- there's a lot of distortion. But let me try. I think what we gathered from the service question is whether you believe that -- or whether we believe, sorry, that by the kind of orders we have that we have a high grade of order intake that come with long-term service contracts, that at least how we understood the question.

If that is the question, the answer is yes because we continue to have a geographical mix, which is very largely driven by European contracts and European contracts very, very standard come with those long-term service contracts. So then the answer would be yes. But we're afraid we're not 100% sure we got your question there. But if that was the question, that is the response.

Very close and for sure good enough. So move on to the other question that I had and that was around the supply chain and the question then for around rare earth. So I was just curious if you could share how many years eventually of the required rare earth materials you would have contractually agreed at this point?

I don't think -- we are using very limited quantities of rare earths. And so our exposure is quite limited. We are working in contingency plans to put in place to have alternative designs. But our generator doesn't use rare earths. So we only use small, very small quantities in some very minor motors that we are working on to have diversity of supply, but we rely on China.

Even for those small quantities, we rely on China suppliers. But our technology can be adapted to induction motors. It will take us some time, but we are working in a plan in case needed not to use rare earths.

There are no more questions at this time. Ladies and gentlemen, the conference is now over. Thank you for choosing Chorus Call, and thank you for participating in the conference. You may now disconnect your lines. Goodbye.

Ladies and gentlemen, welcome to the Nordex SE Q2 2025 Results Conference Call. I am Mathilda, the Chorus Call operator. [Operator Instructions] The conference is being recorded. [Operator Instructions] The conference must not be recorded for publication or broadcast.

At this time, it's my pleasure to hand over to Anja Siehler, Head of Investor Relations. Please go ahead.

Thanks, Mathilda. And also a very warm welcome from the Nordex team in Hamburg. Thank you for joining the Q2 2025 Nordex conference call. As always, we ask you to take notice of our safe harbor statements. With me are our CEO, José Luis Blanco; and our CFO, Ilya Hartmann, who will lead you through the presentation. Afterwards, we will open the floor for your questions.

And now I would like to hand over to our CEO, José Luis. Please go ahead.

Thank you very much for the introduction, Anja. On behalf of the entire board, I would like to welcome you to our second quarter results of 2025.

Starting with the recap of the 3 months from April to June '25. As the title of this slide suggests, we are staying the course, and that course is one of a steady but consistent progress. Overall, the second quarter progressed as planned, delivering improved margins and another positive free cash flow.

In detail, the second quarter, we have seen a strong momentum in our market, resulting in a combined order book of more than EUR 14 billion. We recorded a turbine order intake of 2.3 gigawatts in the second quarter up 82%, which translate to an 83% year-on-year increase in euro value. Profitability continued to improve. Our EBITDA rose by 64% year-over-year, and our EBITDA margin increased by around 220 basis points. This translates into a 5.8% EBITDA margin and a positive net income of EUR 31 million.

Looking at the Service business with an EBIT margin of 17.7% in the second quarter, we are on a steady path towards our previous normalized levels. Important to highlight, we continue to generate positive free cash flow since several quarters now. In the last quarter, we achieved a free cash flow of EUR 145 million driven by the operating business. For the remainder of the year, we remain confident to repeat our performance of the first half of the year despite any provision-related outflows.

And finally, we are seeing good momentum across our core markets and remain on track to deliver guidance for this year and also our EBITDA margin target of 8% in the medium term.

Let's now turn to the next slide, where I'll walk you through the current market conditions in more detail.

We continue to see solid demand across our growth regions, particularly in Europe, where Nordex remains the market leader. The onshore installation forecast in our target market continues to show a steady growth trend of around 12% through 2028, with Europe consistently contributing a significant share. Our past order intake reflects this momentum in the first half of '25, we secured 4.5 gigawatts of new orders with 95% of that coming from Europe. This underscores the strength of our position in key markets like Germany, Turkiye, the Nordics and Baltic states, among others.

In North America, we maintain a strong presence in Canada, while our view on the U.S. remains unchanged. We believe that it continues to be a key market for wind energy in the long run. However, the outlook is uncertain in the short term. We are closely monitoring the impact of the executive orders on the safe harbor provision and order pipeline. On top of Europe and the U.S. market, we continue to be actively engaged in Canada, Australia and Latin America with varying degrees of success.

On the supply side, we continue to see a stable environment in both supply chain and costing aside from a few exceptions. Overall, we anticipate a slightly stronger performance in the second half of the year. All in all, the fundamentals of our market remain solid and Nordex is well positioned to capture the opportunities ahead.

Moving to the next slide. The second quarter of 2024, we saw another strong order intake momentum. Nordex delivered 2.3 gigawatts in Q2, making 8% -- 82% growth, an 83% increase in order intake compared to the same period of the previous year. This translates to EUR 2.2 billion in value from orders across 9 countries, strongest individual markets were Germany, Turkiye and Latvia. Pricing remained stable and has been stable now for quite some quarters. As always, important to mention here, the changes in ASP are scope and regional mix effects.

Moving to the next slide, order book. Driven by strong order intake in both segments, our total order book grew to EUR 14.3 billion. The turbine order book increased by 28% to EUR 8.9 billion in the second quarter of 2025, up from EUR 6.9 billion in the second quarter of '24. Most of these orders will be installed in Europe, followed by North America, Rest of the World and Latin America.

On the service side, our order book increased by 32% year-on-year, reaching EUR 5.5 billion by the end of the second quarter 2025. This growth in service order book reflects the expansion of our turbine business over the past years across multiple regions, now contributing to the service order book.

Moving ahead, Service margin in Q4 2025. I'm pleased to report that our Service business continues its upward trajectory and is steadily progressing towards our target profitability level. Service revenues grew by 17% year-over-year, reaching EUR 207 million in the second quarter of 2025, and the share of Services sales now accounts for approximately 11% of total group sales. As we have outlined previously, EBIT margins are on a clear upward path. In Q2, our Service EBIT margin reached 17.7%, continuing the steady improvement we've seen over the past quarters.

And let me highlight a few key operational KPIs for the services activity. Average availability of the fleet under service remained high at around 97%. And the average tenor of our service contract continued to be around 13 years, providing long-term visibility and recurring revenue. As mentioned, in Q1, the margin recovery is not linear, but the trend is clearly visible, and we remain confident in our ability to return to our historical margin levels of 18% to 19% within the next 12 months.

Let's move to the next slide, installation and production figures. Installations were up 5% year-on-year, reaching just around 2 gigawatts in the second quarter of 2025. In the current quarter, we installed a total of 337 turbines with the majority of installations occurring in Europe followed by Latin America and North America.

On the production side, we assemble around 1.6 gigawatt of nacelles, corresponding to 281 turbines. The decrease in production is only due to project scheduling and generally in line with our internal plan. Blade production in units increased by 8% with 1/3 in-house production.

And with this, I would like to hand over to Ilya to go through the financials.

Yes. Thank you, José Luis, and good afternoon, everyone. And as always, I will start with our income statement.

In the second quarter of 2025, sales totaled around EUR 1.9 billion, in line with our previous year's figure. We again were able to improve gross margins reaching 24.8% compared to the 19.3% in the same period of last year. As a result, we achieved an absolute EBITDA of EUR 108 million in Q2 compared to EUR 66 million in the second quarter of '24. This translates into a further improvement in EBITDA margin both year-on-year, so 3.5% in Q2 '24 and also sequentially, 5.5% in the past quarter, reaching 5.8% in the second quarter.

Going forward and with the visibility we have as of today, we continue to expect solid improvement in both margin and in absolute EBITDA levels in the second half. And given the overall solid performance in the second quarter, we closed Q2 with a positive net income of EUR 31 million after EUR 8 million in the first quarter. At the current run rate, we should be able to generate quite a healthy net profit for the full year, which may also be the right point in time to decide on other capital allocation topics, hence, with the full year results.

With this, let's move to the balance sheet. Looking at the balance sheet, the overall structure has not changed much. So very similar to year-end 2024. We completed the second quarter of this year with a cash position of around EUR 1.2 billion. There, the working capital stood at minus 7.5% on track and in line with our internal planning. Equity ratio was 18% at the end of the quarter with a slight increase compared to the previous year quarter, 17.6% and the year-end '24, where it was at 17.7%.

And now let's have a closer look how other balance sheet KPIs have developed. Overall, all balance sheet KPIs reflect the solid performance achieved in the second quarter. Strong operating business in the second quarter contributed to a further increase in net cash, which totaled EUR 942 million at the end of the quarter compared to EUR 446 million in the same quarter of the previous year. The working capital ratio, as just mentioned at the end of the quarter stood at minus 7.5% or in absolute numbers, EUR 539 million. The increase is mainly driven by preparing for higher expected activity levels in the second half of this year.

And with that, let's go to the cash flow and CapEx slide. Cash flow from operating activities before net working capital stood at EUR 232 million at the end of the second quarter, and reflect again the solid operational performance. Working capital only saw some minor changes, just mentioned, minus EUR 54 million in the delta, so that we reached a cash flow from operating activities after working capital of EUR 179 million at the end of Q2. And this is a solid performance and even beyond the same period of last year.

As a result, we generated a solid positive free cash flow of EUR 145 million in the second quarter of '25, despite working capital outflows in Q2. Although we don't guide for free cash flow, I am and we are confident that we will achieve a solid positive free cash flow for the full year 2025.

CapEx spending amounted to around EUR 39 million in the second quarter, slightly higher compared to the same quarter of last year. However, overall, we expect to catch up further in the second half of this year, and we're sticking to our guidance of around EUR 200 million of CapEx for the full year.

Our investment focus remained largely unchanged with investments primarily in blade and nacelle production facilities and tooling for installations and transport.

And with that, I would like to hand back to José Luis for our guidance slide.

Thank you, Ilya, for walking us through the financials. As mentioned earlier, the first half of 2025 has developed fully in line with our expectations, both operationally and financially. This gives us continued confidence in our outlook for the remaining of the year. We expect 2025 to be another year of steady and meaningful improvement in profitability with a solid order book and clear project time lines, we remain comfortable reaching the midpoint of our sales guidance range of EUR 7.4 billion to EUR 7.9 billion. At the same time, we continue to anticipate a consistent step-up in our EBITDA levels over the next 2 quarters, moving us closer to our medium-term target of an 8% marking.

While we are not providing formal guidance, we are confident in our ability to deliver another year of solid free cash flow or in other words, repeating our first half performance despite expected provision-related outflows.

And with this, handing over to Anja to open the Q&A?

Yes. Thank you, both for leading us through this presentation. I would now like to hand over to the operator to open the Q&A session.

[Operator Instructions] The first question comes from the line of Constantin Hesse from Jefferies.

So I've got 3 questions. If we could start with José Luis, maybe over to you. After the full year results, we had that breakfast, where I think you hinted towards momentum overall. You expected some growth in '26 and then potentially an acceleration in '27 and '28.

Now I'd just like to talk a little bit about this because looking at the share price performance. I mean, this year, it's been extremely good from a valuation perspective, we're trading at relatively higher multiples at this point. And I feel like some investors, and there are some question marks around how much longer can this momentum really continue. I think when we talk about '25, looking at German auctions, it looks like that's pretty much in the bag. So we're looking at probably order intake is probably going to be above last year.

But going into '26, maybe you could comment a little bit about where do you really see the market trending? What are the markets where you're seeing this momentum continuing? Because surely, Germany from an auction perspective is probably peaking this year. So just wondering if you could comment a little bit on when you look at '26, '27, what are these growth catalysts?

Okay. Thank you, Constantin. We remain optimistic about growing trajectory of the business and profitability improvement of the business. We don't guide for order intake, but we are optimistic that this year we could repeat or improve last year's performance. Despite the uncertainties in U.S., which for us is -- we mentioned as well in that meeting and in several calls is a safety net, but we are not -- we don't need that to deliver our plan. You name it, Germany is high level volume of permitting or auctions. Our market share in the order intake and in the execution in Germany is -- we are happy. We are 1 of the 3. So name it, 30%, 33%, and we expect this to continue. We don't see any indicator that this might change.

But other than Germany, rest of Europe is strong. Canada is strong, and we see opportunities in Australia. So you saw that the backlog has increased a lot. It means that the processing of those orders is increasing lead times. And as a consequence with the current backlog and expected order intake this year and next year, we think we can support a growing trajectory for '26, '27, '28 is a little bit earlier, but definitely for sure for '26 and '27.

That's great. And then maybe over to CapEx, if we could just comment a little bit on maintenance CapEx versus growth CapEx here going forward. I think a level of EUR 150 million to EUR 200 million, is that kind of a level that we should continue to anticipate over the next 2, 3 years? Or is there potentially -- sorry?

Yes, yes. No. I would say, ballpark, yes, could be slightly higher because we are with a slightly higher activity than previously expected. But CapEx to revenue, we think should be below 3%...

And I guess what -- in total, I'm sorry, José for chiming in. I guess if you take this EUR 200 million as a proxy for a bit of a run rate going forward, I think you're well calibrated.

Fair enough. So basically, no plan for now to potentially develop a new platform, anything at least until later in the decade?

Yes.

Fair enough. Last question, just on free cash flow. So I was quite surprised. I think you mentioned that you expect a similar performance in free cash flow in the second half relative to the first half, which basically takes you to about EUR 300 million in free cash flow compared to, I think expectations are currently at EUR 180 million, so significantly ahead here.

Can you just give us a bit of an indication? I know you don't guide us or give us a specific number for Engie, but looking at these potential outflows, how should we think about it? How long are they going to last? Are they pretty substantial already from the beginning? Or just to give us a little bit of an indication if there is a way.

Yes. So very valid question. And I think maybe the change to our previous calls in the full year and Q1 is that while we're already optimistic on a solid free cash flow for the year, if possible, we are even more optimistic than we were before. And you're right, we're not guiding for that, but I will not contradict the numbers you play to us here. So in that realm, if it's for calibration, not for guidance, I think that is a good orientation. So for the full year, that's clearly our expectation.

As it comes to the legacy issues, the late legacy issues were not going to be specific on individual customers. However, in terms of outflows, this will, as we said, for the full legacy issue to be a thing of 2, 2.5 years. And maybe in some individual cases, it goes a bit faster. So outflows of course, are happening already in H2, we'll see some more. But all this is already contemplated in the calibration we're giving you.

The next question comes from the line of John Kim from Deutsche Bank.

I wonder if we could focus back on the growth potential into '26 and '27. Specifically where in Greater EMEA, you see pockets of opportunity to grow the order intake. Also, any color you can give us on the cadence of orders to revenue recognition would be helpful here. And one follow-up, if I may.

John, so the growth in '26 expected is mainly driven by the growth in the order backlog. There is an effect here that the orders in Germany have a longer lead time for processing those. So those -- the order intake today doesn't mean revenue growth next year, but maybe the year after. And this is why we are cautiously optimistic about revenue growth trajectory for '26 and as well 2027. Majority of revenue growth next year compared to this year is expected to be in Region Central in Germany as we are ramping up to install a substantial more number of turbines compared to this year.

And other than Germany, where we see first auctions -- first permits, then auctions, then order intake than 2 years later installation. Other than Germany, the cycles in other geographies are slightly shorter, and it's very much order intake driven. So we expect the good order intake momentum to continue in the second half, especially in Germany, but not only Germany, rest of Europe, Canada, among others.

Okay. Great. And one follow-up, if I may. Any color on what you're seeing in Brazil right now?

That's a challenging market. We are executing projects. We are in negotiations with customers, but it's a challenging market. Electricity prices are quite low. There are grid issues to bring projects to the market. It looks like those grid issues are on the way to be resolved in 1 or 2 years. Electricity prices are improving, but at least for us, not sufficiently short term. But we remain committed with the market midterm and long term.

We now have a question from the line of Vivek Midha from Citi.

The connection with the questioner has been lost. We will proceed by taking the next question, which comes from the line of Tore Fangmann from Bank of America.

So I've got 2 follow-ups here. Maybe I can follow up on the capital allocation priorities and how do you think about balancing CapEx, balance sheet and rewarding shareholders? And then how do you think about starting dividend payments versus potential share buybacks? I'll take the second question afterwards.

Yes. I'll take that first one. Tore, thanks for asking it. And we have been discussing it at least on the last call, if not for the last 2 calls. As I tried to indicate in my remarks on the presentation, we will come back on this comprehensively with the full year results. I said it could be as early as Q3. What we want to see not only the result of this year, but basically, already having solid budget for next year and the business plan for the year thereafter, questions you're also asking us. But we will come back to that then with a firm answer and basically also a proposal, if any, to shareholders.

The guiding principle will be this company needs to be prepared, and we are preparing it for a cyclical industry. And when this cycle goes into the next one, it needs to be one of the strongest in the sector. So whatever we do, we'll always put the strength of the company first. Obviously, acknowledging the very valid needs or demands from our shareholders who have been very good with us in the difficult times. So I think you get a balanced picture once we reach the full year results.

And if I may complement to Ilya, keep in mind the evolution of the order backlog, which is an early indicator of revenue growth, and this is for us paramount, derisking the revenue growth of the company.

Okay. My second question, also a follow-up on your comments on the platforms. How do you think about the right time to, let's call it, pull the trigger on developing the next technology platform? And could you maybe comment on how is the current pace of new technologies with -- in the general market for you and also your competitors?

In the markets where we operate with the current products, we can deliver electricity below the grid parity in majority of the regions where we operate. So we don't see the need to launch new platforms. Of course, this is a competitive dynamic. I mean we are in a market if some of the competitors decide to do so, we don't want to be caught by surprise and we need to be prepared to react.

But I don't think we are going to be the ones starting to launch new platforms in the markets where we operate because current platforms deliver value to society and to different countries. So I don't think there is the need to be in a rush there. It is better to focus in reliability, in product performance, in managing existing supply chain with good quality, with good utilization instead of ramping up another new platform. But market dynamic will tell.

The next question comes from the line of Sebastian Growe from BNP Paribas Exane.

Two questions left for me. The first one would be surprise, surprise also around the order backlog and the related timing. So from what I can tell, I think it's around 10 gigawatts now. And I was just curious if you would be willing to share how we should think about the timing around those very 10 gigawatts. So that will be the first one.

And then the other question is more on services. So in the meantime, you have 46 gigawatts under services. It appears that the capture rate has meaningfully improved year-to-date. So on my calculations, it's close to a high 70% level. So I guess my question here is whether you can share what the capture rate in Germany is compared to the rest of Europe? And equally, how terms and conditions might differ between Germany and the rest of Europe?

Yes. That's precise. I don't know the second one, but I will try to give you some color regarding the timing of the 10 gigawatts. It changes country to country, and of course, project to project, but from 18 to 24 months. So the German portion more towards 24 months and the rest more to 18 months. What portion is Germany and what portion is others on the backlog, around 40% could be Germany or a little bit more. With that, you can do your early indication of expected revenue growth.

Regarding services, Germany is definitely a longer tenure than the average, substantially longer tenure and the capture rate for long-term service O&M in Germany is almost, I would say, close to 100%. So -- and the profitability in the German service business activity is good. I mean, of course, it's a quite developed region with a lot of service centers. So you are more close to the turbines and to the customers, so you can deliver a better service because of the geographical distribution of your presence in the marketplace and the size of the marketplace as well.

Sounds truly good. And may I just quickly throw in one other question around the provision debate that we had before. Ilya, if you would be in a position to share a number of how much one might expect in the second half of the year in terms of provision-related outflows?

You're talking again about the outflows, Sebastian?

That's right. Yes.

Yes. As mentioned before the spread of those provisions, which were specifically geared towards those legacy issues, which is a campaign of repair and replace is ongoing already. So there is outflows happening already because we're doing that campaign, and we'll continue. And I would repeat best guess, 2.5 years, something like that when we would put the start at the beginning of this year. And the earlier it is the more of those outflows. So it's going to be a declining outflow because the campaigns are going to be finished. I wouldn't like to be more specific than that.

But again, it is already happening as we have done agreements with customers, and it is all contemplated in the free cash flow orientation we're giving you for this year.

We now have a question from the line of Kulwinder Rajpal from AlphaValue.

So just wanted to get your comments on the U.S. market. Have you had any discussions with the customers following the earlier phaseout of the credits? And what has your feedback been on that so far? And then in the context of that, how do you now think about ramping up the capacity or the mothballed facility in the U.S. now?

Thank you for the question. Yes, we are in close discussions with customers. How can I summarize it? Too early to say. I think we are -- customers are evaluating what is the scenario of -- on tariffs and what is the practical scenario of the Big Beautiful Bill and the executive order to qualify for continuous construction. More clarity will be given around mid-August. I think it is August 18. And until there, there is not much we can say, but we think U.S. long term is a good market to be, and we are committed with the market long term regardless and despite the final assessment of the bill on August 18.

And regarding a ramp-up in Iowa, as we speak, we are doing so to qualify turbines for continuous construction, if legislation allows that. And until new information is frozen in stone to reassess the situation, we keep committed with our plans.

Right. And so just to clarify, is it more of an uncertainty kind of question that is facing the customers? Or is it more like without the credit, the demand won't be the same?

It's -- I mean, very much all. I think there is a timing effect always. I mean with or without tariffs, there is a CapEx impact that needs to be translated to PPAs, and this has a timing for that. And the same applies for the tax credits. So the size of the market might slightly change depending that, and continuous construction will determine if we are going to be in a peak of demand of 1 year or in a peak of demand of 2 or 3 years. That's as far as we can say today.

Okay. And secondly, just to quickly follow up on the service. Obviously, good to see the margins expanding. So I mean, should we expect similar developments for the margin in the second half?

Yes, without going into quarter-to-quarter because we saw certain peaks in certain quarters, but the trend is expected to continue, yes. And eventually, in 1 year from now, we should be in the 18% to 19% EBIT marking. The growth should not be expected as steep as 17%. It is more low 10s and profitability improvement, yes.

The next question comes from the line of William Mackie from Kepler Cheuvreux.

I have 3, possibly 4 questions, if I may. The first one, it comes back to the way in which you or the Board are thinking or planning your capacity development in terms of -- if I look at on a rolling last 12-month basis, your order intake is running at about 9.5 gigawatts and your installation rates are running at about 6.5. You've mentioned earlier that the time to complete or the book-to-bill period is extending out towards 24 months in some cases. But how are you balancing that natural pressure between your customers wanting to complete and commission projects and, therefore, pushing you for deliveries. And you holding back or developing your capacity expansion and your willingness to deliver faster.

So I'm thinking really the question is, how should we expect you to develop your capacity and installation rates? And what bottlenecks are there, whether it's logistics or blades or nacelle completion, which might hold back that installation rate?

Yes. I think this is a very good observation. Installation this year, we plan to do slightly higher than that, but less than -- definitely less than the order intake. The biggest bottleneck is, at this point, is not blade capacity, nacelle capacity, logistics is customer permits and civil work ready. So it's very much we are preparing to fulfill our contractual schedules. And factually is that we don't pay almost liquidated damage much for being late to the projects. It poses different problematics because we need to store the components somewhere because the projects are not ready. And there are certain cost increased discussions with the customers because of those delays. That is very much driven by civil works and availability of permits to get into the site.

This is what is driven the different pace of order intake, the different pace of production and the different pace of installation. But without underestimating the challenge ahead of us, we see substantial growth especially in Central and in Germany, but we are prepared, and we do not see any major issues from our side to deliver the expected increase in activity next year.

The second question really draws on your privileged position and insight on the end markets and how they might behave. I guess would you be willing to share a view on perhaps how -- if the treasury adopt a very strict interpretation of the OBBA in the U.S., and we see perhaps the safe harbor statements go away or at least the safe harbor system go away, what sort of impact could that have on market dynamics?

And then in a similar vein, in Germany, do you have any initial thoughts or indications about how the German government may interpret or stand with regard to their willingness to commit to renewables in the medium term?

Let's go. U.S., we -- if you allow us, prefer not to speculate. Let's see what the legislation says. For us that position is easier because for us, U.S. is a safety net. We are prepared for a rush, if a rush is needed, but we are not counting with that in our internal planning. So for us, it's more an upside than anything else. But let's wait to see what the interpretation of the law is and react accordingly.

Regarding Germany, we see -- we saw massive improvement in permits, in auctions this year, another 2 auctions are expected to land with good volumes expected. We don't have any indication about the future. We are optimistic that Germany is committed to reduce the dependency from foreign resources and wind is delivering value to society.

How big the volume is going to be, the sustainable volume in Germany to be seen, but Germany is the biggest economy by far in Europe. And contrary to other European markets, the subject of energy is not that straightforward because there is no natural resources and the electricity price is high due to limited interconnections across Europe, especially with Nordics and with other geographies.

And the best way for the German government to reduce the energy bill is to install as much as you can. I mean it's a supply and demand. The more you install variable sources of electricity, the more you reduce the pool price of Central Europe. But difficult to assess or at least, we don't have any indication what the thoughts are in the German government.

I don't know, Ilya, if you want to complement here?

Not much. I think the rationale that you gave for what to consider in those conclusions were all given by you. I think there is a bit of a formal view on this that the government announced. And I think we mentioned it in the Q1 call. Shortly after taking office that it will launch a so-called monitoring period. So that means that they want to reassess some electricity demand for the years to come versus the grid capabilities, the mix of generation. So that is underway. And if my timing is not wrong, those 6 months would probably put us somewhere in the end of October, beginning November, let's say, in the fall, late fall. And I think that we will get a more formal position from the German government as well.

That's insightful. The last area I just wanted to touch back on, it's been asked a bit. But when we think about provisions and particularly warranty use, the warranty use in Q2 has jumped to the highest level we've seen in years, almost, in fact, if not the highest level ever, EUR 85 million, if my numbers are correct. How should we expect that to develop? When you talk about 2.5 years of provision use, is that sort of rate of provision use on a quarterly level we should anticipate now well into 2027?

No, actually it was -- sorry, go ahead.

Sorry, I mean if it -- and what does the warranty use relate to? Is it more of the legacy ACCIONA turbines or something else?

Very valid question, William. But certainly short answer is no that is not representative of the quarterly usage ratio of the provisions. In that specific case, without going to specific customers, this is something that where we have now reached all the final agreements, final agreements with everyone. And in that case, basically, we have moved already part of those provisions for specific cluster deal into the liabilities as a firm liability of the company. So that usage is basically a booking change, but nothing in nature. So there is no additions or anything else. It is basically that we now will recognize or have recognized these obligations as firm ones already in the books. So in the substance, there is no difference.

And second, no, that is not going to repeat itself. It's a more steady outflow, again, more at the beginning, then decreasing, but nothing near what we are just talking about.

We now have a question from the line of Ajay Patel from Goldman Sachs.

I really want to tackle 2 areas. I'm going to start with the first one, which is cash flow. But bigger picture here, right? I looked at the VOICE's consensus for next year, and we have EUR 990 million in net cash compared to the EUR 942 million that you delivered in the first half. And if I look to basically no cash generation relative to that number. And you start thinking, well, second half of the year, you're going to probably have 60% of your revenues. Margins will probably be better because of operational leverage. Admittedly, investments will be higher in the second half of the year than the first to make up the EUR 200 million that you guided for the full year.

But it points to a sizable amount of cash flow generation. And I just want to know, is there anything else that we should be adjusting off that? And why has the picture changed so much? Because when we were talking about the full year results, that EUR 180 million number, which is where consensus is for this year seems about right. And obviously, you have outperformed on this side. Can you really maybe scratch that a little bit more and give us a little bit more detail just because I feel like this has implications to pretty much every year in the forecast. So maybe some color there first. And then I have one further question to follow up on.

Yes. I guess, I'll take the first one, and maybe you get some business background from the CEO as well. But basically, a, we stick to the message that we want to calibrate you around the midpoint of the guidance in terms of EBITDA margin. We will say that if we were confident already in the full year call and in the Q1 call, if at all possible, we're more confident about that than we have been before. What I'm trying to say is probably -- if there's any down upside to that, we clearly see only upside to that position. So that basically is where we want to steer you towards.

But given that the 60%, 55% as you indicated, activity is still lying ahead of us, and we have seen certain hiccups, at least on paper between tariffs, permanent magnets and the likes, we would continue to be cautious to go beyond anything what we've mentioned on the call today in terms of the guidance for the cash flow and for -- which is not a guidance to repeat that and for the profitability. And I think that matches for at least how we see business, don't we?

Yes. I think you name it. I think 60% of the volume we need to execute, 55%, 50% in terms of production, installation, so on and so forth. I mean there is very little to non-order intake risk for delivering this year number. But one thing is order intake risk, the other is the execution itself that there are risks and chances. Today, we see slightly more chances than risks, that is half a year ahead of us to execute.

Really, the big variable here is you execute like you have over H1 and H2, then I think earlier in the call, someone was inferring EUR 300 million of cash flow. It isn't -- that is an impossible number. It's just a case of you need to get through it. You need to get through the court. That's the law, sorry. That makes sense. And it almost leads to the second part of this question. On Slide 21, you're very fine in giving us a bridge, the 4.1% to the 8% margin target. And you look at those variables and you got better execution, growing service, additional volumes.

Well, the service margins have seen sizable improvement. You're highlighting that Germany has a good intake path ahead of it. And I think that we'll have to see with the U.S., that there's a possibility on that side. And you're executing very well over this half. The hope is that, that becomes continued momentum going forward. What's effectively holding you back from that 8% margin target next year? What is -- is it purely just the reason that you -- when we asked this question, is it possible to hit the 8% margin next year? Is it that you just want to be conservative on the execution until you get everything perfectly humming correctly?

And I think your order intake in the first half was about 4.5 gigs. Is 9 gigawatts unrealistic this year? Or is there some timing in the order intake that we need to take into account? Because obviously, you have more visibility to your pipeline than we do.

Yes. That's -- how can I say it without guiding you. I think all things being equal, if we improve the order intake of last year, which we think can be done, then the additional volume that is needed in this bridge might come next year. So if the other 3 building blocks remains true, which is no hiccups or massive disruptions. your assumption or your math might be doable, but we are in July. The budget, we are -- after summer break, we will start planning for next year. Budget will be approved in December, and guidance for next year will be issued in February. So I mean, we still have -- we have a journey to go, but everything looks good.

The next question comes from the line of Sean McLoughlin from HSBC.

My first question is on the gross margin. Just thinking about the 500-basis-point year-on-year gap, can you talk about kind of effectively what is driving that? Is that execution mix, all of the above? And maybe thinking about the second half, any reason why this gross margin strength should not continue, maybe any puts and takes you expect on the gross margin in the second half? That's my first question.

Yes. I mean, let's do this together, Ilya. I think gross margin is, of course, a very relevant KPI, but doesn't reflect the profitability of the project because it changes a lot depending on your make-or-buy strategy, your project portfolio, locations and so on. But basically, they make-or-buy might affect your peaks or valleys in gross margin. But the trend is an indicator. If you take last 12 months trend, and you combine a little bit with the last 12 months make-or-buy strategy, especially in place, then you can forecast as well the profitability -- reconcile that with the profitability improvement, taking the Service business aside. And that's -- those are the building blocks.

Yes, I think you're describing also the imperfections of that KPI, which is why we keep going back to the EBITDA as a profitability measure. And here, we would repeat our message, slowly but steadily increase in both Q-on-Q in absolute numbers of EBITDA and gross margin percentage on the EBITDA level. So I think that is the more accurate one. And of course, the net profit goes in line with it. But if it's a wider commercial question, I would subscribe to José Luis, it's a trend that we will see to continue, especially when we look at the EBITDA level.

That's very clear. I just wanted to dig in also to a point you made about Lat Am. You were talking about varying degrees of success across markets. I mean, how much of this is due to competition from China? And how much is potentially company or country specific?

I would say we respect a lot of our Chinese competitors, of course, great companies. I think there are -- and the rest of our competitors, of course. So I think the company in Germany and in Europe in general has a very good positioning in the marketplace. Reliable products, reliable execution, quality under control and competitive. So we are very, very competitive, same is Canada, U.S. Unfortunately, we are not in that situation, because it took some time to solve our legacy issues there. We might be slightly late compared to the market leader. And the other market -- our peer -- market leader in the market, and market participant.

Latin America is very difficult because of the low electricity prices. So of course, we suffer more in Latin America because it's more easy to change permits. It's easy to execute. You don't have the restriction of roads, permits, noise, high sophisticated machines that are needed to play a role in Europe. You have more big utilities that do balance sheet that do not require project finance. Project finance, of course, we need to have a service solution for 20, 25 years, proven track record in the marketplace. So I would say Europe is more difficult to lose that market position compared to other geographies.

We now have a question from the line of Vivek Midha from Citi.

Can you hear me now?

Yes.

Many, sorry -- many apologies for the technical issues earlier. So my first question is just a follow-up or clarification on some of the questions, again, around the legacy warranty issues. You mentioned there was a movement from provisions into liabilities. But just to check, were there any additional warranty provisions taken in the quarter? I saw in the notes, I think there's EUR 54 million of compensation taken in the quarter. So just to check, were there any additional legacy warranty provisions taken?

Yes. I'll take the first one. The answer to that one is yes, because the final deal with one of the large customers required us to, in that specific project make one last step towards the customer. So just like what we have seen before that was it and all provisioned for, we had to make this last step because that customer, again, being a large global player, has, as is not unusual in the business, basically in return, giving us some additional business in multiple other geographies. So it's a package deal, where in a specific project, it increases, but overall, enhances the business. So yes, that would be reflected in that figure.

Understood. Because I guess that leads into my next question, which is that, that presumably would have had a P&L impact as well. There may be some other one-off onetime issues in the quarter. And I understand that within the project business the line between what is a one-off cost and what isn't is very blurry. But it does imply that the underlying margin momentum within your performance is very good right now.

So really, just from that, could you maybe clarify your comments regarding getting towards the midterm target as we improve through the year on the margin? Could we potentially be at the 8% by Q4?

It's too early. I would say regarding your assessment of provisions, totally right. This is a Project business. And -- but I don't expect or we don't expect, Ilya correct me, if I don't have the right understanding that those provisions or moving provisions to obligations do not -- I don't expect more P&L impact coming from that in the future. This is done and dusted and is provided for in the numbers and in the guidance for the year.

And regarding the guidance for the year, this is as far as we can go. I think we have 60% of the activity to go. With risks and opportunities, we see more opportunities than risk, but 60% needs to be executed. So let's wait a little bit and see how things go in this quarter because it's a high activity quarter. And in last quarter as well as this quarter is high activity in installation mainly. Last quarter is as well, high installation, not as big as this quarter, but high activity in production. So we need to see how the execution goes. But with the information we have today, we see more opportunities than risks to execute the remaining of the year.

Very clear. My final question is on working capital, a follow-up there. You have the busiest second half of the year. But just when I look at the balance sheet, inventories look relatively flat relative to the end of last year. If I look at contract assets from Projects that looks slightly down relative to the end of last year. So just in terms of the ramp-up of activity going into the second half of the year, perhaps those look a little bit surprising. So maybe could you just talk towards -- about the path towards going back to the minus 9% of sales as we go through the second half?

Yes. I think there's 2 things to say that. So one, when we talk about that ramp-up of activity, of course, we're not only talking about the manufacturing and the production or any inventory we're building up, but all the toolings, all the preparations that we need to do. But I think the more relevant, I guess, response to that is that when we look at our forecast, we clearly see that as -- that we will be returning to those minus 9% or lower in the working capital ratio. So we're not changing anything there.

In the past, we have done consistently better than what we were saying to you in that guidance this year probably, again, maybe again, but for sure, we are sure that we're going to hit that number by the end of the year.

The next question comes from the line of Christian Bruns from Montega AG.

I have only one left. This is on your capital allocation. You have a stronger finance profile and you said that you prefer to strengthen your business, if I understood that correctly. But I would like to know which part of the value chain of your business would you prioritize or prefer to strengthen. So the product production or R&D or the customer service?

Well, the first -- and Ilya, you complement. The first thing is we expect growth in the business. And growth means more bonds, eventually more liquidity needs in case you are achieving bond limits or so on. And we don't want to be in a position to lose orders because of that. As we see an important order intake momentum ahead of us, let's harvest that. That's foremost our first priority.

Second, we don't want to be short on cash, which given the amount of cash we have, doesn't look that is the case in terms of CapEx needed to execute the growth expected. And those are the 2 main priorities that need to be dusted before -- and with sufficient buffers before talking about any other thing. Ilya?

I think that -- so my answer would have been all of the above with exactly -- coming back to the question, but then those 2 key items are highlighted by you, of course, acknowledging that I repeat myself that shareholders have trusted and helped us in the past. So when it comes to make those decisions, we will, of course, take that into consideration. But the core items are the 2 ones that José Luis just mentioned, derisking as much as we can, the full supply chain from manufacturing to execution and the order intake. That's the key.

We now have a question from the line of Xin Wang from Barclays.

So my first one is on order ASP. This has been stable despite the regional mix. Is it fair to say underlying pricing has actually worsened?

No, it's not. I think, the ASP is, as we talk always is an indicator that the market demands from us and doesn't reflect the profitability of the business. The profitability of the order intake is slightly improving.

Okay. But do you still think the European orders, for example, are better priced than rest of the market?

It's mainly driven by tower heights. In this quarter, we had a lot of order intake from Turkiye, where the tower is a very short tower. So the ASP is lower, but profitability is super good. So you do super high towers, then the ASP goes up, but this doesn't tell you what is the profitability of the project. It tells you what's your TSA divided by the number of megawatts of the machine and this can go from 0.7 to 1.2.

Okay. And then my next question is on interest expenses. So both P&L charge and cash payments continue to increase year-on-year. And look, very outsized against the size of borrowing you have on balance sheet. I think you renewed your guarantee facility in April. Should we -- or when can we expect lower interest expenses and payments?

Yes. Xin, very fair question. Maybe I take 90 seconds on that one because it goes in 3 steps. So yes, we renewed that existing facility, but -- and I think we've mentioned it before, it is the syndicated bond facility with a club of banks. The renewal is part of a phaseout. So basically, now over the last 15 to 18 months, we've already started and far advanced with the wind down of that facility. There was a remainder opened under that facility. So we extended it for another year. But hopefully, by April, May next year, we'll be done with that.

In parallel, also mentioned on past calls, ACCIONA has, in the same period, come up with support for Nordex with its own bond line. It's very similar. Of course, it's not a syndicated one, but it's very similar in terms and conditions and pricing. So that is being utilized because the business continues to grow. And in parallel, we're now basically partially refinancing that bond line in the market stand-alone Nordex and a bit of a different structure.

But the good thing about that is that now the interest costs for those bonds are substantially lower than the ones we have to pay under the previous 2 bonds. That might not show until next year because, of course, these bonds then need to get into the field, and it will take a bit of time. But given the profile of the company and the risk profile, those costs are coming down substantially.

Now in total numbers, it is going to be a bit more difficult to tell because the business is growing. So while per bond, we're going to pay significantly less than we have in the past years. Depending on the additional volume we need in total numbers, that might still be a higher number. But of course, it would sustain a much larger volume as José Luis and others have been discussing on the call. So that's the picture on the interest.

My next question, I'm not sure if you can comment on this, but on Australia, is your comments on the market or your own pipeline, do you expect orders from other than ACCIONA from the Australian markets?

We do. Maybe not this year, but definitely midterm, we are fully committed in that market and optimistic about that market.

We have a follow-up question from the line of William Mackie from Kepler Cheuvreux.

I think perhaps this is a little unfair because it relates to external advisers numbers. But I just wanted to touch on Slide 5 and your market projections. At the end of last year, in Q4, you presented a series of market projections which were aggregated from third-party suppliers. And now you presented another set of projections over the next 4 years. If I strip out the obvious changes in the North American projections, there's still a 10% decline in '25 and a 17% decline in '26 in the installation forecast for '25 and '26 in the 6-month period, which is a little counterintuitive, given some of the optimistic stance we have on installations in Europe. So I guess the question is do you recognize that, that's changed in the data? And what do you think has changed from third-party expectations?

And then maybe the add-on to that is when we look at the projections on that slide, the expected growth in Europe in '28 over '27 is like 24%, which is a big change in trend. I'm just wondering how you see that evolving and what would drive that big step-up? Is it all relying on Germany?

Very good. I think we took external information to give you the view that the company is a market leader in Europe, and Europe has a growing trajectory, without going much into the detail of the granularity of Europe. Of course, we saw auction volume in Germany high in '24, in '25, which supports installation growth in '26 and '27. Eventually, the trend continues. So Germany will not go fast, will be -- I hope, will be the key European market. So this will support installations as well in '28.

On top of Germany, U.K. is expected to have a substantial growth. Turkiye, where the company is market leader, is committing to long-term [indiscernible]. Mediterranean is delivering substantial volume. Eastern Europe and Baltics is delivering more than for us very big volume, I mean, close to -- in the gigawatt range. Nordics, depending a lot, ups and downs. But long term it is a very good wind. There is land a little bit of interconnection issues, that is a market without entering into any specific granularity of the analysis, what we wanted to show you here is this is what external parties -- how external parties see the volumes coming.

We have similar view, maybe not year-on-year because we see more activity in '26 than '25 and as well '27, but that details. I mean from quarter-to-quarter, the view of these external consultants, change and adapt. Spain is a good example that they were more bullish than they are now due to several court cases and grid issues. Other than that, U.S. has reduced. I mean, reasons being what was commented in this call. And Italy as well and a slight reduction.

But other than that, important from our view is the trend, and we see the similar trend as they see that. I mean, '28 is a little bit uncertain. We don't have such a long-term view. But '26 and '27, we see Nordex growing and it's difficult to grow increasing market share when you have the market share that we have in those markets. So it means that if we see growth is because the market is growing.

We now have a follow-up question from the line of Anis Zgaya from ODDO BHF.

I have only one left question. So could you help me understand, please, why operating cash flow before working capital are significantly above EBITDA? What are the main noncash elements impacting EBITDA and not the operating cash flow?

I think the question indicates that, José Luis, it's the improved operating performance of the company. That's the largest driver for that. And then, of course, some of the other elements are noncash relevant. But the key driver for that, besides working capital, again, I stand at my statement that we will go back to the minus 9% or lower levels. That's the key driver.

We have a follow-up question from the line of Constantin Hesse from Jefferies.

Very quick one. Call has been obviously very long, but very quick one. Just a homework question. On the competition front, anything from Siemens Gamesa or anything from any of the Chinese OEMs in Europe that you've seen that you're currently keeping an eye on? I think Siemens Gamesa, they celebrated their first order in a long time a few months ago, but anything else that you've seen there?

No, I think respect, of course, for our competitors. But without -- with that taking into account, we think we can improve the order intake of the previous year. I don't think we are going to -- I mean, knock on wood, I don't think we are going to lose substantial market share in Europe this year compared to the previous year.

Okay. That's perfect. And then just lastly on Service. I mean if you continue to install, say, 8 to 9 -- let's call it 8 first gigawatts a year, let's say, over the next 3 years, maybe you stays stable, maybe you accelerate. But I mean is there anything that is currently holding back the Service business of being a EUR 1.5 billion top line business by the end of the decade given the current installation rate that you're running on?

End of the decade, maybe slightly optimistic. But if we keep that level of installation and the renewal rate, maybe slightly aggressive, but not far away. End of the decade, 2030. Yes.

Ladies and gentlemen, that was the last question. I would now like to turn the conference back over to Anja Siehler, Head of Investor Relations, for any closing remarks.

Thank you, Mathilda. Thank you, everyone. As usual, I would like to hand over to José Luis for his final remarks.

Well, again, thank you very much for your time, your participation and the questions. Let me outline our key takeaway for this quarter. First and foremost, we delivered another strong quarter in terms of order intake, and we are confident of achieving another good year, with total order intake expected to be above last year's level without guiding on specific numbers.

Second, our focus is on continuing to improve our profitability levels and delivering a positive and sustainable free cash flow. That's the key, focusing in free cash flow. And last but not least, we are on track to achieve our guidance and to deliver margin improvements, reiterating our medium-term margin target of 8% now looks like more close.

And with this, thank you very much. Wish you a wonderful rest of the day.

Ladies and gentlemen, the conference is now over. Thank you for choosing Chorus Call, and thank you for participating in the conference. You may now disconnect your lines. Goodbye.