30.11.2021, Author: Nico Popp

Nordex - good business, weak margin — Does the megatopic of sustainability now also ensure sustainable profits?

  • Sustainability
  • Energy
  • Windpower

For years, the climate and energy turnaround has determined events in the economy. Since the coalition agreement of the upcoming German government was presented, it has become clear that sustainability and renewable energy sources will become even more important in the future. Reason enough to take a closer look at the shares of wind turbine manufacturer Nordex. Can shareholders now hope for a significant boost in demand? What role do sluggish approval procedures play in operational progress on the German market? Which global markets are gaining in importance? How can we succeed in boosting the still relatively weak margins in times of raw material shortages? Answers to these and other questions are in the following article.

Time to read: 9 minutes

wind energy
With this topic, you have to be free of giddiness, even as an investor. Nordex SE, based in Hamburg, Germany, was founded in 1985 and is one of the pioneers of the wind energy industry. Source/Picture: Nordex SE

New coalition agreement - full speed ahead

Despite the secrecy of the protagonists, the coalition negotiations between the Social Democrats, the Greens and the Liberals were also marked by conflict: While the Greens called for more sustainability, the FDP worried about state budget and freedom. The SPD also found it difficult in some cases to allow the change pushed by the smaller parties. The bottom line, however, according to many observers, is a paper that combines the goals of the three parties well and with which the economy can also live.

To 70 GW

the share of wind farms in the German energy mix is to double between 2030 and 2045 - after an increase of 50% from today to 2030

In the area of climate protection, the coalition partners are aiming to phase out coal ideally as early as 2030. Wind and solar energy are to compensate for the dwindling supply. According to the coalition agreement, around 80% of energy is to come from renewable sources by 2030. **With regard to wind energy, 2% of the federal territory is to be reserved for wind power projects. Wind farms at sea are to supply 50% more energy by 2030 than previously planned, namely 30 instead of 20 gigawatts. By 2045, this figure is to double again to 70 gigawatts.1 What does this expected surge in demand now mean for Nordex?

Market share in Germany

In 2020, Nordex had a market share of around 30% of newly approved MW in Germany, according to the company's figures. 2 The company's market share in Germany has steadily increased over the past few years. With the market position it has now achieved, Nordex is likely to be one of the biggest beneficiaries of the new German government's plans. But how realistic is it that these plans will be implemented? According to the German Wind Energy Association, a wind energy project currently takes between four and five years to be planned and approved. 3 However, the new federal government also wants to take action here and halve the duration of corresponding approval procedures. Digital processes and interdisciplinary working groups are to help. However, it remains to be seen to what extent these plans can be implemented in the time envisaged. The digitization of the German administration is unlikely to be a project that can be completed within one legislative period.

Nordex margin position: right
José Luis Blanco, CEO Nordex SE: "There continues to be strong demand for our product portfolio, and the prospects for our industry also remain very promising due to the ambitious political climate targets in many countries. Renewable energies - including onshore wind energy - enjoy a high level of acceptance and are an important part of the energy transition. The main issue for us now is to efficiently drive our production and installation activities, as well as manage the extremely high costs of raw materials and logistics, as this volatile environment could be with us for a while." Source/Picture: Nordex SE

Nordex: political plans "very ambitious"

Nordex itself takes a positive view of the climate targets set by politicians, describing them as "very ambitious". When asked: "Our company is prepared for this development and provides our customers with a selection of highly efficient turbines that can optimally serve the market in Germany (among other markets). It is now up to policymakers to create a framework to leverage the growth potential in the long term. In addition to new land, simplified and faster approval processes, harmonization of environmental regulations and further promotion of acceptance among the population plays an important role here," a company spokesman told

Given the ambitious plans of the next German government and Nordex's high market share in Germany, the company should benefit from the new framework. However, as approval procedures in Germany have been relatively slow so far, Nordex will remain dependent on new business in other international countries. With Europe accounting for 54% of sales, North America 22% and Latin America 17%, Nordex's business appears sufficiently diversified.4 With other governments also promoting or making their own investments in renewable energy, Nordex has a good outlook.

Nordex, wind power, costs
Not only raw materials but also the costs for logistics have increased recently. Source/Picture: Nordex SE

International business and new markets

Nordex Group has plants in Germany, Spain, Brazil, the United States, India and Mexico. Given the regulatory environment in Germany, international markets play an important role. The company is currently expanding its production capacity for rotor blades and turbines in India. Due to delays in the wake of the pandemic, the measures are currently around three months behind schedule. The company does not expect sales in India anyway due to the current weak market environment. Things are currently going better in Peru.

Special features of the Peru order

Nordex recently announced another order from the South American country. It involves a 177 MW wind farm for an unnamed customer. The project is unique in that it is the first order for N155/5.X turbines of the Delta4000 series with a rotor diameter of 155 meters and variable rated power. In addition to the delivery, Nordex secured a service contract with a long term of ten years. Nordex plans to start construction as early as autumn 2022 - Given Germany's long planning times, the key data for the latest order from Peru underscores the great importance of international business.

Good prospects in Turkey

However, it is not only in Peru that things have been going well for Nordex recently: in November alone, the company reported further orders, such as a 44 MW order in France brokered by RWE and 68.4 MW from Turkey. In the middle of the year, Nordex's market share within Turkey stood at 28.6%. The company says its operations in Turkey are expected to reach 3.5 GW of capacity by early 2022, comprising more than 1,100 turbines. 5

Nordex Margin
Nordex aims to lift its margin with the Delta 4000 platform. Source/Picture: Nordex SE

Problem children: raw material shortages and margins


Nordex has recently cashed in on the EBITDA margin and expects only 1.0% for 2021.

Although Nordex's business stands on several regional pillars, analysts also see risks. These lie primarily in rising commodity prices and the resulting dwindling margin according to market observers. The company had originally targeted consolidated sales of between EUR 4.7 billion and EUR 5.2 billion in 2021, with an EBITDA margin of 4.0% to 5.5%. A significant contribution to the rising margin was expected to come from the new Delta4000 platform, which is considered more efficient and of increasing importance to Nordex. However, ongoing cost pressure has put a spanner in the plans for 2021: Now, Nordex expects sales at the upper end of the guidance, but only an EBITDA margin of around 1.0%.

Delta4000 will soon no longer be attractive

The company also continues to rely on its Delta4000 platform. When asked, a company spokesperson commented to "Of course, the sustainable improvement of profitability is one of the essential goals of our management, in which the high and increasing share of the Delta4000 platform will play its part. It is expected that the share of Delta4000 platforms in 2022 will be higher than the previous year due to higher expected production and installation numbers."

Company EBITDA-Margin 2021e
Nordex 1,0%
Vestas Wind 11,36%
Siemens Gamesa Renewable Energy 3,98%
Legrand SA 23,73%
Nexans SA 12,18%
Dongfang Electric Corp. 21,9%
EBITDA margins of the peer group in comparison. Source: S&P CapitalIQ Pro, as of Nov. 29, 2021

As a result, the EBITDA margin could increase slightly again in 2022, but in the long term, the new platform is likely to have less and less potential to have a positive impact on the figures, as Delta4000 is already the dominant platform at Nordex - already in 2020, 81% of new orders were for Delta4000.6

Look at the numbers


Increased Nordex sales in the first nine months of 2021.

The first nine months of the year were pleasing for Nordex in terms of sales - business grew by around 25% to EUR 3.9 billion. As a result, earnings before interest and taxes also increased significantly to a loss of only EUR 9.6 million in the period under review. In the first nine months of the previous year, this figure was still EUR 43.9 million. However, since Nordex was last in the black in 2017, a relatively high debt ratio is now also causing an interest burden: In the first nine months of 2020, EUR 98 million was incurred for debt servicing alone. The bottom line is a loss of EUR 104 million.

On the positive side, however, Nordex already recognized the high debt ratio as a problem in the summer and parts of a capital increase of EUR 568 million were used for debt service. Thus, the interest burden should tend to decrease in the coming quarters.

Recently, Nordex stock lagged behind the benchmark, here Dow Jones Renewable Index. Source: S&P CapitalIQ Pro, as of 11/29/2021 old: Nordex margin
  1. Draft coalition agreement between SPD, Greens, FDP 2021. "Dare more progress. Alliance for freedom, justice and sustainability" PDF, ARD/, retrieved 11/26/2021
  2. Company data website Nordex SE, retrieved on 11/26/2021
  3. Association Bundesverband WindEnergie e.V. (BWE) Website, retrieved on 11/26/2021
  4. Data from the company Nordex Annual Report 2020, retrieved on 11/26/2021
  5. Data from the company Nordex website, retrieved 11/26/2021
  6. Data from the company Nordex Annual Report 2020 p. 28, retrieved 11/26/2021

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Source: Nordex SE

ISIN: DE000A0D6554
Symbol NDX1
Last price, as of 29.11.2021 16.20 EUR
Number of shares 160,021,035
Market capitalization 2.59 billion EUR
Market segment Prime Standard, Regulated Market
Sales (2022e) EUR 5.098 billion
EBITDA (2022e) EUR 195.561 thousand
CEO José Luis Blanco
Source: S&P CapitalIQ Pro, as of Nov. 29, 2021
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Nico Popp

At home in Southern Germany, the passionate stock exchange expert has been accompanying the capital markets for about twenty years. With a soft spot for smaller companies, he is constantly on the lookout for exciting investment stories.

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