Germany: Nordex Announces 2011 Full Year Results

On basis of its provisional consolidated financial statements, the Nordex Group closed 2011 in line with its current forecast. In November 2011, the Management Board announced that Nordex would be reporting lower sales and an operating loss of around EUR 10 million for the year as a whole.

Highlights:

• Sales down 5% to EUR 921 million
• Loss of EUR 10.3 million at the EBIT level before one-offs
• Gross margin stable thanks to cost-cutting
• 50% increase in liquidity to EUR 212 million
• 70% increase in order backlog to EUR 698 million
• Growth and profit at the EBIT level expected in 2012

The 5% decline in sales to EUR 921 million is chiefly due to project postponements in Southern Europe and the relatively weak starting point early on in 2011. At the beginning of 2011, the order book amounted to EUR 411 million. In addition, order intake in China dropped by 80% in the course of the year, leading to a 57% drop in sales in Asia. On the other hand, US sales doubled, although this was not sufficient to fully make up for the declines recorded in other regions.

Nordex was able to partially cushion the effect of the general pressure on prices in the wind power industry by establishing a comprehensive cost-cutting programme, with which it wants to trim its product costs by up to 15% by the end of 2012. As a result, the gross margin remained above 25%. At the same time, structural costs rose by 16.9% to EUR 264.2 million (previous year: EUR 219.6 million). Together with the lower sales, this trend exerted pressure on operating earnings, resulting in a loss of EUR 10.3 million before interest, taxes and one-offs (previous year: EBIT of EUR 40.1 million).  Nordex responded to this at the end of 2011 by implementing a further cost-cutting program to reduce structural costs by EUR 50 million. In this connection, 253 full-time jobs were cut, resulting in one-off expense of EUR 13.1 million. Moreover, R&D expense of EUR 6.3 million for an offshore turbine was not capitalised. Nordex is currently engaged in talks with potential partners with a view to integrating its offshore business in a joint venture. However, the negotiations have not yet reached a stage indicating the imminent execution of these plans. Total loss at the EBIT level after one-offs thus stands at EUR 29.7 million.

The Group’s liquidity widened by 50% in 2011 to EUR 212 million (previous year: EUR 141 million). Net debt stood at EUR 18.8 million (previous year: net liquidity EUR 24.3 million). A net cash outflow of EUR 43.3 million arose from operating activities (previous year: net cash inflow of EUR 20.3 million) and was chiefly due to high inventories for short-term deliveries in the United States.  In the second half of 2011, Nordex recorded net cash inflow from operating activities of EUR 79.1 million (30 June 2011: net cash outflow of EUR 122.4 million).

With the 32% increase in order intake to EUR 1.1 billion, the value of firm orders in hand also rose by 70% to EUR 698 million (previous year: EUR 411 million). On this basis, the Management Board assumes that sales will grow to EUR 1.0 – 1.1 billion this year. Depending on sales volumes and future trends in turbine prices, an EBIT margin of 1 – 3% is expected. A net cash inflow from operating activities should be generated as of the end of 2012 thanks to improved working capital management. Nordex expects stronger sales in the second half of the year and assumes that the volume of committed capital will rise until summer 2012.

[mappress] Offshore WIND staff, February 28, 2012; Image: Nordex