Nordex Aktie

Ladies and gentlemen, welcome to the Q2 figures 2026 Conference Call. I'm Lorenzo, the Chorus Call operator. [Operator Instructions] The conference must not be recorded for publication.

At this time, it's my pleasure to hand over to Anja

Siehler. Please go ahead.

Thanks, [ Mona ]. A warm welcome from the Nordics team in Hamburg. Thank you for joining the Q2 2026 Results Management Call. Always, we ask you to take notice of our safe harbor statements. With me are our CEO, Jose Luis Blanco; and our CFO, Ilya Hartmann, who will lead you through the presentation. Afterwards, we will open the floor for your questions.

Now I would like to hand over to you, Jose Luis.

Thank you very much for the introduction, Anja. And on behalf of the management board, I would like to you to our second quarter results of 2026. We start with a overview of the key highlights of the quarter. Overall, I'm pleased to report that the second reflects continued positive momentum for Nordex. The revenue growth achieved a double-digit EBITDA margin generated healthy free cash flow and maintain a strong financial position.

First, order intake reached 3.1 gigawatts, representing growth 32% year-on-year. Europe continued to be our largest region for 74% of the product order intake while Germany and the United States were the most during the quarter. Second, we continue to deliver strong revenue growth. Total revenues increased by 16% year to EUR 2.2 billion. Project revenue accounted to 90% of total revenue and grew by 18%, reflecting continued progress with execution. At the same time, our service business continued its positive development, while revenues increased by 8% year-on-year EBIT margin going to 19.7%.

Third, profitability improved further. We achieved an EBITDA margin of 10.3%, exceeding the 10% threshold and driven by compared to last year. Finally, cash generation remained strong. We generated free cash flow of EUR 165 million, while capital remained stable at minus 8.3%. In addition, we strengthened our financial flexibility by EUR 2.5 billion of bank guarantee facilities on improved commercial character. At the end of the quarter, our net cash position stood at EUR 1.7 billion, underlying the strength of our balance sheet.

Overall, the second quarter the most fits the continued progress we are making across the business. We remain focused on disciplined in growth and delivering our guidance for the full year 2026. Moving on. Turning to our activities in North America, particularly in U.S. on Page 5. I'm happy to report that we have successfully retired our presence in the market. Year-to-date, we have secured around 800-megawatt of orders until the end of the -- on June supported by a diversified customer mix, and we keep on working on increasing the pipeline. At the same time, the ramp-up of Iowa is progressing well, production is underway. The facility is ready to scale with and no further CapEx will be required. Combined with established service footprint and growing regional organization, we believe we are well positioned to capture future opportunity in the U.S. and Canada.

And let me turn now to our operational performance, starting with of our order intake. As published in our order intake press release on the July 9th we saw a strong [indiscernible] driven by figures. During the second quarter, we were [indiscernible] as of order intake, an increase of 32% year-on-year. The growth was by major U.S. orders entering the book consequently, order intake for the first 6 months of the year reached to 5 gigawatts. In euros, turbine order intake almost EUR 3 billion. Orders were received from 10 different countries and the average EUR 0.97 million per megawatt was stable when compared to quarter of previous year. Although average selling prices are influenced by the specific project and regional mix any given quarter, we continue to see stable pricing across our markets.

Effective -- Europe remain the main region and accounted for 74% of the order intake. While -- and as usual, we are not providing specific guidance for order intake 2026. We expect a good order more for the year. And with this, let's move to Slide 8, where I will discuss the development of the order book. The combined order book strengthening parts and expects EUR 18 billion at the second quarter of 2026, reflecting continued positive momentum of both our Turbine and Service business. Turbine order book reached EUR 11 trillion of the orders came from Europe, followed by North America, rest of the in Latin America.

In the service sector, the order book increased to EUR 6.8 billion. By the end of the quarter, the service portfolio crossed an important milestone. For the first time, we have over 50 gigawatts under service, representing more than 14,000 wind turbines. The order book developed to [indiscernible] and the expansion of our installed base over the past years. And let us move to Slide #9 and have a closer look into the Service.

The second quarter of 26 continued to show solid progress in the Service. Service sales increased by 8% reached EUR 223 million, representing 10% of total Europe revenues. EBIT margin further improved to 19.7% in terms of midterm EBIT margin target of crossing [indiscernible]. Operationally, fleet availability remained stable at around 97%, average tenure of services increased to over 14 years.

Let me move to the next slide. Given insights in installation and productions in Page #10, installations debt according to plan and total 1.2 gigawatts. The reduction year-on-year was primarily driven by project scheduling with large [indiscernible] towards second half of the year. There were also some regional mix effects on customer delays as previously communicated grade-related performance in Turkey. While installations in Germany increased year-on-year, this was not fit to offset this regional mix effects. The key takeaway is that these are primarily timing-related factors. We continue to expect full year to grow compared to 2025. On the production side, turbine increased to 337 units, reflecting credit scheduling and delivery requirements. The production were stable at around 1,343 blades.

And now I will hand over to Ilya to talk about the financials.

Thank you, Jose, and welcome from my side. As always, I will start with our income statement. Some of that has been highlighted by Jose already. In the second quarter of '26, sales increased 16% to almost EUR 2.2 billion, reflecting higher activity levels in both Project and Service business. Gross margin continued its year-on-year development, proving to 26.9% from 24.8% in the second quarter of 2025. As a result, EBITDA more than doubled and reached EUR 224 million with an EBITDA margin of 10.3% for the quarter.

On the back of this operating performance, we reported a net profit of EUR 111 million for the quarter, representing a substantial improvement of EUR 80 million when compared to last year quarter. And with that, we're moving on to the balance sheet. Well, in analyzing the balance sheet, the overall structure remains on a very comparative level when looking at year-end '25, the second quarter ended with a strong cash level again of approximately EUR 2 billion and the equity ratio continues to improve and reached [indiscernible] at the end of the second quarter backed by further increase in net profit and equity and the increase in the total assets. And that was the next [indiscernible] KPIs open. Net cash increased and total EUR 1.7 billion at the end of the quarter, and that is exported by the operational performance that Jose Luis explained earlier.

Working capital [indiscernible] EUR 663 million and remained at a stable ratio of minus 8.3% quarter. Let me now go to the next page and spend a moment on financing highlight, which is not our regular kind of slide, but we believe in order to comment on is the closing of a so-called multi guarantee facility that we signed in July, only a few days ago, about [indiscernible] billion, and it has not only been a significant development for the company, but particularly in 2, 3 that we discussed. It is a much larger facility than previous one almost in the volume of the previous MGF, which is the acronym of EUR 1.3 billion.

In longer term, almost twice as long than the previous one, that was 3 years, now the new is 5 years the interest rates or the cost of response are materially lower than in the previous facility and without details, but the others in those -- in that MGF is far better than in the last one then an [indiscernible] investment-grade facility. The company is backed by 15 banks, so less than last time with larger tickets. Obviously, the volume is higher and the banks are a [indiscernible] number. So that is a substantial progress, which has made in the recent years especially in strengthening the balance sheet and the financial profile of the company, or in other words, it is a token of back to the usual flow, and that is now the cash flow on the next page.

Again, on the back of the additional performance, the cash flow from operating activities before net working capital increased to EUR 267 million with working capital normalizing the cash flow from operating activities was EUR 240 million. And as a result, we generated positive free cash flow of EUR 165 million in the second quarter of 2026. For the full year, we continue to impact a solid free cash flow generation. CapEx spending amounted to EUR 46 million in [indiscernible] that is 19% above the last year, mainly due to the ramp-up of the new blade [indiscernible], which we spoke about a few times in the past calls.

Then investment remains largely unchanged compared to last year and the years before, with investments primarily in blade in the cell production facilities and tooling for installations and transport reflecting the higher volume.

And with that, I would like to hand it back to Jose for the next slides.

Thank you very much, Ilya. So before turning to our guidance, let me make a few brief comments on the market outlook. Overall, the medium and long-term fundamentals for onshore wind remain attractive across our markets. So we continue to see supportive policy frameworks, strong [indiscernible] and growing demand for secure and cost competitive renewal energy. One notable development since our full year results is the publication of the draft [Audio Gap] that's in Germany while both proposals are still subject to the legislative process and might change.

Our initial assessment is cautiously positive. The proposal points to higher auction volumes and provide greater clarity around grid-related pigs, which could help reduce uncertainty for [indiscernible] brand investors. Beyond Germany, we continue to see encouraging elopement in the U.S., Turkey, France, Canada and other markets, supporting a healthy long-term outlook of the industry. [Audio Gap] is and based on our performance year-to-date [Audio Gap] can remain on track to reach the guidance we set out in February. We continue to expect 2026 to be a profitable year, assuming no material disruption thing from ethical developments.

To reiterate, we expect a top line growth between 9% to 11%, with an EBITDA margin in the range of 8% to 11% with midpoint as the most likely outcome as of today and expect another good year for free cash flow generation. And now I go into the Page #20, where we talk about the midterm targets. As you can see on the slide, the first half of '26 provides further evidence that we are moving in the right direction. Our EBITDA margin improved 9.4%, reflecting continued progress across the business. The main [indiscernible] remain unchanged, growing volumes stronger contribution from service business and the [indiscernible] measures that we are implemented throughout the company.

While there is [indiscernible] the results achieved so far give us confidence that we are on track towards EBITDA margin target of 10% to 12% and that we are building a more profitable than Chilean Nordics. And with this, hand over to Ana to open the Q&A.

[Operator Instructions] Thanks, gentlemen, for leading us through the presentation. I would now like to open the Q&A.

[Operator Instructions] This question comes from Richard Dawson from Berenberg.

Two from me. First one on the U.S. orders. So now that we've seen a restart in those U.S. orders, are you able to provide any color on any margin difference between those U.S. orders and the German orders? I'm thinking more broadly about any potential inefficiencies you have in the outwear facility just as you're starting to ramp up, but also cost differences on the U.S. compared to the European ones.

And then secondly, Ilya, maybe one for you in a bit more detail on the balance sheet. If I look at production levels versus installation first half, you're running about a gigawatt ahead on production versus installations, but your inventory figure is broadly flat for the period. So just why there hasn't corresponding increase in your inventory on the balance sheet given that outrunning production? Or is look at it?

Thank for the question, Richard. So the first is quite simple. I think we have to go into details ballpark similar profitability as Germany.

And then I go to the question on the revenue recognition and on the inventory part. So yes, fair question. So maybe use the opportunity to say revenue recognition. That question is done, again, mostly cost to cost when we reduce our components, so not so much on the installations. That is why we see that revenue number to that what it might do.

Why not the inventory? Because that production that outpaces also the installations is done mostly [indiscernible] large under existing contracts that we're getting paid by our customers. This is why you don't see an increase in the inventory.

And the next question comes from Vivek Midha from Citi.

Thank you very much, everyone, and good afternoon. So my follow-on Germany, you've talked about the stable turbine prices. I see weaker auction prices we've seen for the powering those auctions. Is there any reason to think that the future normalization term pricing in Germany could exceed any of the assumptions you made underpinning the mid-term normalized margin target you gave out? And do you expect auction pricing to stabilize given the further improvement involves in 2027 to '28.

Well, German pricing so far -- we see [indiscernible] the pricing. Future pricing to have to predict. What we can comment is -- what we see today and what we see today is stability. Regarding future auctions, it's going to be a new [indiscernible] is a little bit crystal ball reading, but all seems equal, if there is no market upside, prices should recover in the auctions. But again, this is crystal ball, crystal ball was reading.

I mean, for me, the positive aspect is that it's going to be substantial ball and which is in line what the government needs more electricity to produce the price for citizens and industries. And this is a good opportunity to having a healthy margin for the market participants. That's our assumption.

Understood. My second question, just as a follow-up on the notes. It looks like you've had some impact of trade receivables over the year-end, including in the first half gone up from EUR 55 million to EUR 92 million. So could you just comment as to why that maybe in the case and if there's been any P&L impact on that?

[indiscernible] very follow-up question. But -- but there is basically nothing out of the ordinary. That's not because of any customer or if there is just some sanitizing of books, but nothing where our customers are able to meet its obligations, his or her obligations.

The next question from John from Deutsche Bank.

Two from my side, if you think about the Q2 Brent, you had quite a bit of production contribution to the revenue, not so much on deliveries. Are you expecting this to normalize in the second half of or is the cadence here off versus "normal" given the Turkey situation and perhaps German permitting connection delays?

I think will catch up in the second half, at least that is what our planning says. And going forward with some [indiscernible] and recovering the relay in Turkey, will normalize levels in the future. But definitely, in the second will catch up.

And if we think about the things that need to be true to deliver very strong delivery reason where are you on your factory loads? And how should we think about that in terms of cost to fulfill or OpEx?

I would say in from that aspect, the year is not that different than the previous year, very much in the second half to 60% to 65% of the activity of the year and we are well prepared. So I will say it's not new ramp-ups that we need to do, this is very much repeating the year that we did last year from the production side.

And the next question come in Constantin Hesse from Jefferies.

The first one, I'd like to focus a little bit on Germany because clearly, this [indiscernible] massive assuming that the grid package is balanced enough between government and developers. So I just want to understand what have your conversations with developers been with regards to the script package. I've heard a bank with regards to the latest draft, I heard the government just achieved an agreement a couple of hours ago. I had any new draft yet, but I'm curious to see what the announcement was because if this grid package is balanced and the developers are happy with it.

I mean, I'm looking at this forecast that you have on Page 18, it's very conservative what Germany could actually go to, right? I think this forecast decline installations [indiscernible] 2030. And if this goes through, we could see growth into the early 2030s with [indiscernible] intake i.e., Nordex could even be installing low teens gigawatt numbers in a couple of years to [indiscernible]. So I'm wondering what have your discussions been? And what's your opinion on this current grid package, please?

Thank you very much, Constantin, for the I think our view and CPI to the association and to the government you need to build a ton of renewals. You need to bid a lot of grid in order to reduce the dependency and reduce the price for consumer and the industry. That's the equation. So then you can take different approaches, but delaying the [indiscernible] of wind on short because the grid is slightly delayed, is not very advisable.

And second, if you are outpacing the timing of [indiscernible] versus deployment of grid, this is a temporary thing because at the end, both investment needs to be done both material impassable to synchronize the pace of those investments. So assuming that's going forward, then you put question, if there is a certain content, who should pay for that. And in our humble opinion, from a country point of view, the more you decrease the investment decisions for investors, the better for cans.

If you ask every investor to put a risk premium into what the curtailment is going to cost at the end, it's going to be a higher price in the auction as [Audio Gap] price consumers. So we cannot comment much on the dropping because from the open, but at least there is a cap and it's better to have a cap and having uncapped figures to price that risk because the [Audio Gap] 20%, it's a different thing, pricing, 100% of the risk or 20% of the risk. So wish to see a low number there so as our customers as well. But at least, there is numbers really, I don't know.

But, I don't think, I mean, I would be on the danger of repeating what you said. So I think Constantin mentioned in this question, the government has announced informally in the past months that it wants to have additional 12 gigawatts on top of already, we probably agree very high gel volume enacted to be in 30 or before, and it has now put that into the draft. So knowing what finally the government decided on that one, but I guess they would have proved this, meaning that we have actions in '27 or 15 gigawatts and '28 of 15 gigawatts and in '29 of [Audio Gap] gigawatts. So that is the acceleration that [indiscernible] was moving.

And when it comes to curtailment, who pays what? Let's wait what the final outcome is, but I have two points, one is which is the certainty that the government appears to acknowledge that there needs to be a certain number, and that goes especially on gas to the financing sector to make projects banking. And the other comment I would have, not knowing what happens in the future, but the [indiscernible] have worked from a system perspective. They have done price discovery. Maybe it's not even file.

So there's a price discovery and that is what the system wanted. And it's based on a certain set of rules. So now if you change those rules, your price discovery will continue but it might lead to a different pricing point or while we were indicating auction bids might go up again. If the system wants to pay the cost way, that's a critical choice. What we're saying is you will ultimately at least to have bear in mind that auctions can go both ways. And from that perspective, I would say, from an OEM perspective, we're fine with it and from a system perspective, politicians need to make their decisions.

Understood. Second question, if I may, just quickly, obviously, second half is going to be pretty significant in terms of activity. So just understanding your exposure here, the markets that you're in, fair to say that you set up in terms of the local infrastructure cranes, everything? Is there any exposure to this execution risk? Or from today's perspective, you're really well placed from local infrastructure requirement to get everything built in?

I would say we have properly started if I can point that risk is maybe transportation permits in money due to the [Audio Gap] in the market. Other than that, we are less -- and in Germany, I think we are discussing with the different government agencies and want to overcome as an industry this potential bottleneck.

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

First one with DRAM services. The momentum has been stronger than what I would have expected with ratio compared to the project segment orders running at a very high level compared to some. So what is the root cause for the strong service order intake? And can you talk us through the terms of the contract renewals, in particular, and how these might fit down also to your target to cross the 20% margin level, not too distant future?

And secondly, on the U.S., you pointed to the 800-megawatt plus orders in the backlog. Can you give us an indication with regard to the size of your remaining pipeline? And are you pointing to a market share mostly on prior calls in the U.S., what absolute volume are you targeting in that market? And if I may, very briefly chip in one more as a clarification on earlier that was asked. It was more around pricing. I think we know that normally there's a delta on pricing, which might be better typically in the U.S., but you probably then and they have to pay for it at the expense of, let's favorable working capital terms. So if you could just -- working capital on the side of the U.S. business.

Thank you, Sebastian. So services, I would say the main rationality behind that is the higher value from Germany where most of trucks have long-term duration and the way we count the backlog is the spec revenue for those service contracts. So it's the service contract that we landed in the last quarter, the average tenor is bigger than the cumulative one and that's why that is increasing. That's the reason. Regarding U.S. be cautious here because we have a healthy pipeline to achieve and, if not even treat one what it could be volumes that we did in the past.

So I don't feel confident to guide you on order intake in general and less even to do specifically into a market. But we are investing because we are optimistic about the market and optimistic that we have products and teams and solutions to harvest a decent market share in that market. Our ambition before that was previously communicated why not 20% and we stick to that. So why not 20% or more maybe. Regarding sizing [Audio Gap] conditions of the U.S. deals. You know without going into much detail, but those are not that different than the ones in Germany. So the good quality deals.

Sorry, for the 20% that you just now also asked around the 20% margin for services there's kind of a new flight level in a word. So is there anything that ...

I mean the Service business is profitability. I mean is a slow moving [Audio Gap] slightly marginal improvements and due to 10% growth year-on-year. And this is what profitability improvement. So we have reasonably [indiscernible] that we will that 20% after a slow moving journey.

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

Just following up on that U.S. order pipeline comment. Could you talk about the extent to which the fourth of July tax credit deadline was an important driver for the orders to come through in pricy sort of per your discussion with customers and whether there are any other catalysts or tariff discussions or otherwise that would capitalize more orders coming through -- from that health pipeline that you highlighted?

And then the second question, just on the installation sort of back-end loaded nature of this year. You highlighted customer delays being as debris as one effect that. Could you talk about the confidence in the sort of temporary nature of those and whether you start those delays ease in July already? So regarding U.S. I don't think there is any specific milestone that trigger those orders. The pipeline one way or the other, some of them is relying on certain federal permits or they don't. I think what we see now is a substantial volume was safe harbor under current legislation, and we plan to take a share of that if cadet volume, some with the preservation agreements, others don't but we are optimistic given the momentum on the market, that we will get our share into that market.

And the volume that book -- I mean, nobody knows precisely, but there are different reports on pointing into sustainable volume. And that has [indiscernible] I think regarding installations, if you look at it year-on-year, certain geographies didn't contribute like Nordics or Spain. A little less installations in North America, although this was expected to dramatically change 1 year and the delay in Turkey due to availability of plates. That was partly conversated by more installations in Germany year-on-year, but not sufficiently. And it's true that even with those increased installations, we were to do more, but customers were not ready with the sites. And we are not booking liquidated damages for late delivery. It means that we are ready to deliver, but either sites are not ready or projects are not ready. We are in a situation to change in the second half. And our assumption is that we are going to be ready when the projects are ready.

Okay. And just a follow-up on the U.S. Do you have an expectation for when Section 232 tariffs might become clearer. I know some people expect that in the next week. Is that in line with your views?

Yes.

I think we have no specific date on that. So no, the larger question that you have, I can only say it is -- when you see those orders currently or obviously not hindering too many customers from moving ahead. So it's a very important [indiscernible] M&A but customers have just decided to go ahead.

And the next question comes from Vladimir Sergievskii from Barclays.

My first one is on very strong double-digit market this quarter. Interesting that it seemed to have some mechanical headwinds such as elevated provision in this quarter or a receivable on as well. Would it be fair semen those headwinds masked your true margin potential this quarter, which otherwise if you mean normalization of provision, for example, your EBITDA margin could have been in kind -- that's the first ..

It's a good one. Maybe 2 lines of response. One of the sales and then to the assumption, which I think we need to release for as well. when it comes to the total margin. So the provisions have been a bit above and slightly, I would argue about what we kind of is up to 4%. That is nothing out of the ordinary, its more mechanical because we've been selling a lot of stuff in the past quarters as we know. And then the revenues for this H1 are just not 50% reflect the full year. So the percentage of, I think, [indiscernible] is a bit above that, that we clearly think will normalize around that 4% for the full year.

So there's nothing out of the ordinary in those provisions. When it comes to what you're pointing to, to what margins could be, I think, a larger role and then already anticipating too much is that it will depend on how the execution to go. So more back to our contingency conversation of last year. There is a risk profile of of execution in the second half of the year, which has given its volume, a lot of potential, but also certain risks. So I don't think that from the provision, we can read too much into any or this underlying margin.

Very good. If I can quickly follow up on this provisioning point. You also suggested that there was some revisions to cost estimates, which turn drove those provisions up. What those revisions relate Nordic specific matters, certain specific projects or regions all those cost revisions are driven by more general inflation across the board that you are seeing?

It is very -- meaning the order of magnitude there is not that and -- and there are some adjustments, updates. Yes, we do see some inflation in certain components, but nothing -- no, it would give the order of magnitude. I would say every quarter to have more visibility in the year. So we started the year with a run more and a lot of sites in certain commodities. And it's true that we have suffered coin the commodities.

But every year, there are risks and chances and the way we look forward and the way we think that the chances can compensate the risk. And this is the reason why we are guiding to midpoint plus. So because we -- despite the -- I think we managed to deal with those with other productivity and efficiency measures.

Great. Final call there will be IFRS 18 accounting change from 2027, which improvement requires some project-related financing costs to be reclassified into operating client. Have you already done any preliminary assessment of potential impact of this accounting change in Nordex. If we've done that, what would be the preliminary conclusions?

Thank you as a very good question. It's going to be with us next year. So it's going to be -- we're going to have an interesting and detailed conversation we're going into next year Yes, but still early to assess. Of course, most of it will influence than the EBIT line. Look, let's have that conversation once we get there. But I dare to say that the effect is not -- I mean, what is the trust me, it's that substantial.

So given what those costs are, I mean they're coming down as we have talked in the presentation. So the order of magnitude of of that is not that bad and that is a detailed technical conversation beginning of next year.

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

I guess my is looking at the margin for this quarter at 10% and then thinking about the second half of the year where you have a higher revenue I'm trying to 1 to what -- how did you perform versus the contingencies you put in Q2 and what contingencies do you have for the second half of the year?

Because assuming some operational leverage, it would seem that you would -- why aren't we thinking about a situation where we're talking midpoint. So just trying to understand the underlying assumptions? Or is it just a case of there's a lot and you'd want to get through it before you were more visible?

I think you name it. Last part of your question is our view. Let's take a little bit more comfort to how high level of execution going. Still, the world has a lot of geopolitical issues, not fully settled. We just not comfort.

Okay. And then if I could take a second question, just more on capital allocation, right? Sizable amount of cash sitting on set. I know that committed to returning or increased returns to shareholders maybe going into next year. What do you think about that cash position is building quite nicely as we go through the year? What are the allocations are you thinking any update that you can give us on this side?

Thanks for the question. always a very better question, especially when a company has a cycle like ours. I think the short answer is like there is no uptake. We'll come with that when we get in front of you with our full year results in the final tally when we've seen all the things that Jose mentioned that still need to evolve. So to deal with that hypothetically is too early, and I would say, undue.

So we will update this once the full year results are in, and we're doing the call and until then, our position of the order of magnitude that we gave for the full year call and whether that's going to be buyback or dividend is just the same.

The next question comes from Sean McLoughlin from HSBC.

Good afternoon, thank I mean just looking at the order intake, another strong quarter in ahead in H1 of what was a historically high last year. Maybe just to gauge your degree of confidence on that demand strength through the second half and any markets you'd want to highlight where you see incrementally positive or negative demand potential in the second half?

No. Thank you very much for the question, Sean.

No, I think . We are very much going with the market other than U.S., but we are so pleased to announce our entry into the market. For the second half, this business as in with the market. So with the markets we operate that should be a good proxy.

And would you be comfortable with the total volume of or at least at last year's level?

We don't -- we don't guide order intake, but we expect to be another good year.

The next question comes from William Mackie from Kepler Cheuvreux.

My first question would be about the U.S. again. great success in in your presence in the U.S. market, clear -- and I hear your hold on the under backlog. But I wanted to ask about cost. Your plants in Iowa stock but there's presumably no throughput there yet. So can you share what level of throughput is needed in the U.S. to get to a sort of at least a breakeven level rather than a cost for the group hole. And then perhaps some thoughts about what your initial plans are on the ramp-up volumes and throughput in the U.S. over the next 12 to 18 months?

The plants are -- have been operating for 1 year, our activity level to meet project demand. when we mentioned before, similar margins than in Germany, is include the cost associated to have the low is for U.S. So if you sell I don't know, 200 to 100 units a year to recover your -- that's not -- that's not the killer of the business. I think the cost is quite reasonable to do the local activities in the U.S. And we are planning to double the output in the month ahead and to go to nominal capacity beginning of next year.

Okay. With regard -- my second question then would reflect back on questions on capacity, your group's capacity when you want to think or frame it, there's opportunity or optionality to the upside in terms of volume and that you could have in share and in absolute market volume. But supply side in your own organization, I think you've talked up to about 11 gigawatts of throughput or installation volume. Theoretically, how do you see the setup today in terms of the capacity without significant CapEx? And where would the constraints be? Would it be primarily blades? Or do you see other elements of the supply chain that could constrain your ability to grow over our full year period?

I think we run the company with substantial overcapacity in cell assembly because geopolitics and act and you need to assess the situation before in OLX into the same basket as well geopolitical situation China, U.S. So you need to have optionality on cost but decrease your delivery. So from a sell perspective, we have substantial overcapacity in place as well although I will say slightly [indiscernible] capacity, although we have our capacity as well in place.

The next question comes from Klaus Ringel from ODDO BHF.

It would be on the MGS facility that you highlighted in the presentation. you could quantify an impact on your financial results looking ahead from that.

Yes. Thanks, Klauys. Very fair question. That's one we didn't direct in the presentation. So maybe 2 marks -- the second one is, I guess, geared to your question directly. First remark, as I said in the presentation. Now in any like-for-like scenario, that new MGF now reduces the financial cost interest costs per bond, so to speak, substantially. As much as in the final stage, 60%, 65% from its peak range under the old MGF, so a substantial reduction.

But of course, that depends also on the volume you utilize. So in order to maybe calibrate what you want to model. So basically, what we would 7 will be a moving target because let's see what the volume does. Then of course, we also revenue, the more cash we have. But for this year, and plug in a total number of 60 plus -- EUR 60 million to EUR 70 million of interest costs then you're understood rather probably 60 minus, maybe that's the best calibration I have for you today.

[Operator Instructions] We do have a follow-up question from John Kim from Deutsche Bank.

Sorry for the pause. I'm wondering if we think about service revenue growth, you've had very strong order intake. You've had a very strong base effect -- when will we see kind of sustain the revenue line and for the division? And then I have a follow-up, please.

We need to differentiate 2 things. One is the -- which is X number of megawatts multiplied by a but the contribution per year is related with the number of megawatts with a number of years. The number of years do the backlog, not the growth on the order intake. So from that point of view, I think you will see in the 10 revenue growth year-on-year. Despite the order backlog grows very fast because you increase your tenor of the contracts.

And I don't know if I explain you have -- yes and the service and then 8 gigawatts, and then we are going to have 58 after another 8 giga, 64, and that's the range of growth that you should expect from this business. Despite this 8 gigawatt might have 20 years of life. But this revenue over 20 years, not growth year #1.

Got that. One follow-up question unrelated. I think you had spoken to the platform development earlier. You think on kind of this year or the existing backlog, when should we think about a new platform? And I think you've spoken before that you would look at competition but not necessarily lead the charge here. I'm just wondering if you could comment on that dynamic as well, other OEMs .

We stick with the same with the strategy, prepare the ingredients in order to come but we are not going to start cooking the mill is not needed. It means that, that we will, in this case, will be followers.

And we do have one more follow-up question from Vlad Sergievskii from Barclays.

Last question from me is on -- you reported cost of raw materials and other supplies down about 1% in the first half of 26%. That's at least what you disclose suggest. At the same time, your revenue was up 14% which suggests the physical volume of work recognized in the P&L is probably up double digits, which means average rooms like turbine should have been down to 10% or potentially more than that. impressive cost cutting and cost efficiencies, given that we are seeing more inflation in drop. Can you give us some idea how this cost cuts have been achieved?

I don't think it can draw conclusions from that point of view because the way we do accounting and the way we report is not based on cost of goods sold. So as a consequence, depends a lot of your in-house activities. If you produce or you procure, you have more or less partial costs, more or less more less supplies.

And the cost base is going down in certain part numbers part numbers in services is going up. But I -- unfortunately, I cannot give you a precise answer to that with you.

Ladies and gentlemen, this 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 all. And let me close with a few key takeaways from the second quarter. First, we continue to deliver on profitability with further margin improvement and solid order intake, including important accesses in the use. This gives us confidence in our trajectory for the remaining of the year and provides good visibility for the coming quarters.

Second, we strengthening our position, we remain focused on generating positive free cash flow while signing of the new EUR 2.5 billion warranty facility increases our financial election provides additional capacity to support further growth. Based on our performance in the first half of the year and the visibility we have to -- we are confirming our guidance for 2026. Overall, our results demonstrate continued progress. profitability and financial strength are improving. Together, these achievements support our part towards our midterm EBITDA margin again of 10% to 12%. Thank you very much. We wish you a wonderful rest of the day and holiday season, if you manage to enjoy it.

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.