Nordex SE

Thank you very much for the introduction. Good afternoon, ladies and gentlemen.

First, I would like to welcome you on behalf of Nordex to our analyst and investor call for the full-year 2020. Our CEO, Jose Luis Blanco; our new CFO, Ilya Hartmann; and our CSO, Patxi Landa will guide you through the presentation providing you with information about strategy market and social or financials.

This presentation will be followed by as you have heard by a Q&A session. Please be so kind and limit yourself up to three questions.

And now, I would like to hand over to Jose Luis. Please go ahead.

Thank you, Felix. Good afternoon ladies and gentlemen.

Thank you for your time and participation. First time the new management board, Ilya Hartmann, Patxi Landa, and myself.

I like to introduce first to the new CFO, Ilya Hartmann. Ilya has been in the industry the last 15 years and joined Nordex back in 2017.

He was instrumental at that time in the efficiency program and he has been part of the executive management team ever since. Agenda for today is, we will start with an introduction.

Patxi will guide us about the market and other development. Ilya will share with us the financial performance of the company and I will take as usual operation and technology.

We’ll share with you our guidance for the year. We’ll share with you as well the drivers in order to meet the strategic targets.

And we'll discuss, as well the strategic targets for Nordex in 2022. We'll open for Q&A.

And then I will conclude the meeting with our key takeaway. So, going to the summary of 2020, I think Nordex successfully completed the year in-line with reinstated guidance.

Sales of 4.651 billion, EBITDA margin 2%, working capital minus 6.3%. It is worth to remark that the order in-take amounted to around 6 gigawatts in full-year 2020 despite the COVID pandemic and this is quite remarkable, the momentum remains strong and the success order in-take starting for Nordex remains.

81% of the orders accounted from the last Delta4000 turbines series, remarkable as the 2.3 gigawatts order in-take in Q4 2020, the strongest quarter in the year. Talking about execution, full-year sales amounted to 4.6 billion, an increase of 42% versus the previous year, 3.3, despite as mentioned, the massive COVID disruptions.

And this was a result of record of installation and production. As mentioned COVID heavily impacted as we commented in Q3 call.

We installed close to 5.5 gigawatts in a COVID year with an increase of 77% year-on-year. And we had as well a record of turbine assembling close to 5.8 gigawatts, an increase of 24% year-on-year.

EBITDA margin in-line with the guidance, but as mentioned in Q3 affected by COVID of around 240 million and additional one-off course, due to [our mentioned] Nordic EPC project in 2020. As we discussed previously, extensive and very successful financing measures successfully implemented combined with the sale of European project development and portfolio to RWE for around 400 million before cost taxes successfully completed in Q4 2020.

Strategic targets for 2022 in place, sales of approximately 5 billion on EBITDA margin around 8%. Before handing over to Patxi, I would like to share with you a little bit of how Nordex is positioned in the markets where we operate, because it’s good to put things in context.

So, in terms of installations, as mentioned before, close to 5.5 gigawatts were installed. Majority in Europe where Nordex always according to the good McKenzie Global Wind Power project installation [that was] top three with a close to 15% market share.

Second geography for us was the Americas with 7% market share in the Americas Top four. Asia-Pacific no installation and global top four with 9.2% market share in installations.

Here we talk about order intake, and as mentioned before, more than 6 gigawatts order intake for second year and this could be taken as a proxy for revenues and installations in 2021. According to the same sources, we were top two in Europe with more than 31% market share, which is the region worldwide with more volume expected ahead.

And this is a very remarkable that Nordex enjoy that position in what is expected to be the biggest region for the years to come. Remarkable as well, the order intake in America, 12.7% top four players in that region.

And as for the reasons that we will later explain, we decided not to sell in India, so we decided to stop sale activities there because of risk reward equation is not convenient for us. And as a global order intake, top 4, 14% market share but very close to top three.

So the message here is that despite COVID, production and installation levels are in a record high numbers, and we managed to position Nordex as a top global player measured in the main KPIs. So, in the right track to accomplish what we want to accomplish.

And with this, I will hand over to Patxi to talk about markets and customers and services.

Thank you, Jose Luis and good afternoon. So, looking bit more specifically at the markets and starting with Europe.

So, we continue as Jose Luis was monitoring to benefit from favorable conditions across the main European markets. As is the case with Germany, where activity levels are slowly picking up with the effect of both our 2020 orders and 2021 installations in the country doubling, with respect to the 2019 orders and 2020 installation levels respectively.

Nordex markets continue to deliver good volumes, same as Turkey where we are market leaders and what is new regulation is maintaining the market momentum. Spain is also seeing very significant volumes being contracted, [big] and our local manufacturing footprint makes us compete very well there.

So, as we’ve said, good momentum across the main European markets where we are capitalizing on our good market position to deliver very good results. The U.S.

is expected to contract less volume than last year back to the normalized levels that we saw in the years before. The new administration is as well expected to improve the existing support regulation or by this effect would only be felt eventually starting next year.

In the rest of the world, we see very good momentum and significant volumes being contracted in Brazil, as well as in Chile, fueled by its decarburization targets. On the contrary, Mexico continues to be with investments on hold.

We see good developments mid-term both in Colombia and Peru, same as in South Africa, where the accelerated round got recently awarded and [allowed around 5] as well was recently announced for the coming month of August. So, now we see a positive situation in the markets where we do operate, which is not to underestimate in the context of the effect of the pandemic to other industries demand.

If you go to next slide please. Now looking at the orders and despite COVID as Jose Luis mentioned, during 2020, we were able to sell almost as many megawatts as in 2019 with 6 gigawatts of new orders 2.3 of which in the last quarter of the year.

60% of these orders came from Europe and 40% from the Americas. Very importantly, we sold double as many Delta 4000 turbines as in 2019, representing 81% of the total new orders.

And with a consequential effect as we have discussed during numerous calls of improving the order backlog margin quality. ASP remains stable at EUR0.70 million per megawatt.

So, all-in-all, we are very pleased with this performance, both from a volume and a margin perspective in the middle of the pandemic. Next slide, please.

Service sales amounted to 9.4% of Group Sales in 2020 with EUR438 million and EBIT margin of 15.8% in the year. The fleet on the contract stands at 21 gigawatts with an average contract duration of around 11 years.

Next slide please. Now, with respect to order backlog, turbine order backlog stood at EUR5.3 billion at the end of the year, increasing 4% with respect to the previous year, and service order backlog grew 11% to EUR2.8 billion for a total combined order backlog of EUR8.1 billion at the end of 2020.

And with these, I hand over to Ilya, who will take you through the financials.

Thank you, Patxi, and good afternoon. Warm welcome also from my side.

This is Ilya Hartmann speaking. Thanks Jose Luis for the nice introduction at the beginning.

Now, on that slide and before going into our 2020 details, let me summarize again our efforts last year in strengthening our balance sheet and the depth profile. On the slide, we can see the milestones achieved last year still under the helm of my predecessor Christoph, you will know, and if we quickly walk through, first on the top left important, securing the extension of the multicurrency guarantee facility in April 2020, supported by a large number of financial institutions, insurance companies that obviously was a cornerstone to support the business and our growth path.

If we continue on the top right, the so-called RCF, another important milestone a 350 million revolving credit facility that was closed in August 2020, and comes on the back of guarantees by the Federal Republic of Germany and two federal states to know that it'll be original 350 million, a 100 have already been returned last year. And I think I would like to use the opportunity to thank both the banks and the German authorities for their support here in this context.

If we continue on the bottom left, we were in the wake of this also, able to secure the repayment of the Schuldscheindarlehen, which becomes due next month. With that our maturity profile has been reshaped and replacing loan has a tenure of five years.

And fourth and last, but not least to speak about the equity increase by way of an accelerated bookbuilding in December last year that was supported by the anchor shareholder and other key shareholders and the inflows from the capital increase sure further support our growth again. The strategic target id 2020 and further strengthened our balance sheet.

But now without going to the 2020 details on the next slide and starting with the income statement, we delivered sales of above EUR4.6 billion in 2020, which is a 42% increase over 2019, despite the COVID-19 impact. I think this underlines that Nordex was one of the resilient and top global players as Jose Luis explained in his intro in this industry.

Gross margin stood at 11.8% at year-end, and we generated a 94 million in EBITDA, representing a 2% level as we had anticipated in our reinstate of guidance as of November last year. The profitability was marked by the impact among others of the COVID-19 pandemic and one-off as mentioned by Jose Luis again before.

Well with that our EBIT declined by EUR42 million, compared to fiscal-year 2019. In addition to all the aforementioned factors, it was impacted by higher financing costs because of higher utilization of our guarantee facility, which in turn is a consequence of our increased business activities.

Finally, just to round this up, we include our usual PPA information, the depreciation amounted to EUR24 million in the full-year figures. For the sake of completeness, on the next slide, we see the income statement of Q4 2020.

It didn’t show any unexpected deviation from our reinstated guidance, and also reflect the back end of volume as we anticipated. Now, next slide, and looking at the balance sheet, the solid structure of our balance sheet remain in substance unchanged compared to year-end of 2019.

With roughly 780 million of liquidity, we've achieved a solid position, a solid cash position at the year-end versus a EUR510 million in 2019. Among other effects, here we can see the cash contribution from the project development sale that we did with RWE.

And it is also strong – that's also a result of a stronger order intake in Q4 of 2020. Then, as a result, our net debt in 2020 went down compared to 2019 as well.

It now stands at 41 million, which is plus 43 compared to our previous year, when it was at 84. The size of the balance sheet also increased versus 2019, driven by the increased activity level compared to the previous period.

And then in turn total equity increased as well, compared to 2019, basically due to the capital increase in December 2020. With that, I would go to the next slide, and like to briefly comment on our working capital.

Working capital ratio ended at [minus 6 to 3]. This is well below our guidance figure of minus 4.

The development there continued to be stable, very stable, especially if you see it against the backdrop of the COVID-19 pandemic. In the right side of the chart, we see that the positive development of EUR35 million in absolute terms between end of Q3 and Q4 is largely attributable to the high activity level of our execution in Q4, and this has also led to a corresponding decrease of our inventories, which contributed EUR295 million in the reduction of our working capital.

I think that, again reflects the awareness of the importance of a strict working capital management with our entire organization. That would bring me to the cash flow statement on the next slide.

And to start here on the top, the negative cash flow from operating activities, as a consequence, or a net loss in 2020 is directly linked to a positive cash flow from investing activities, which in turn reflects the sales proceeds we received from RWE for the Nordics project development pipeline as mentioned before. Just as a reference in the past, we’ve always shown this an operational cash flow.

Overall, free cash flows on a on a prior year level. Cash flow from financing activities, I think we need to stay on the other slide, thank you very much, amounts to EUR406 million.

That's mainly a result of the cash inflow from the RCF and our latest capital increase in December 2020. And with that, I would go to our CapEx slide, as we just saw moments ago.

Total investment at the year-end 2020 stood at roughly EUR163 million, showing a slight decrease, compared to 2019, and on the slide you can see that the investments undertaken basically supported the production [ramped up] in Mexico, but also Brazil and India, also supported to the increased activity installation of new product, the Delta4000 platform and as always, the product development. And that brings made to the next – in that case for my block to the last slide.

Having a look at the capital structure, we had already indicated in our Q3 call that leverage ratio will further go down and that's what we can see here now on the left side of the slide. The leverage curve declined to 0.4, which is below, well below our long-term ambition level of 1.5.

And then the equity ratio came back during the year to 17.5% at year-end, and here we can see again, the effect of the capital increase as per December 2020 as mentioned, while year-on-year it slightly decreased due to the prolonged balance sheet. So much for the capital structure.

And before handing back to Jose Luis, also from my side, maybe three key takeaways, but I think that first Nordics delivered in this environment, you mentioned it in installation and production of a second showed resilience in the forward-looking picture and forward-looking business, but third, that none of this is over and we will continue with our COVID working groups and monitor the situation and react immediately as needed. And that will be from my side.

Thank you very much Ilya. Precisely, this is a good introduction for the next slide.

Thanks to the good work of every Nordex employee on the focus of the business continuity task force COVID-related, which is still in operation. We manage to grow installation of 77% in the middle of our worst ever pandemic in recent history.

We installed 1,492 turbines in 23 countries. That was 938 the previous year, the geographical split 46% Europe, 30% North America, close to 20% Latin America, 5% rest of the world.

For 2021, as we discussed before, name of the game is not growth versus profitability, but is de-risking the growth and we plan to concentrate the majority of the installations in Europe, 60%, as well as Americas and stop temporary at least installations in India and Argentina, as we mentioned before. If we talk about production, remarkable achievement as well, given the impacts that COVID had for our people, for our parks, for our factories, we managed to assemble 5.7, close to 5.8 gigabytes of turbines.

To give you an idea of the split, 1.6 gigawatts of that was legacy products AWP, which we are almost not planning to do this year. Our [in-house sales blade production] increased [13%] to 1,545 units.

So, regarding output of turbines, Germany 800 units, Spain 437, all of them legacy products, or both Spanish factories are now converted in 2021 to produce Delta4000, India 160 units as well AWP, as of today the plant is in the final stages of the conversion to Delta4000 where we are starting to assemble Delta4000 turbines, Brazil 79 units in the process as well, to transfer that factory to assemble the Statkraft deal, and the good perspective that we see in the Brazilian market. And Argentina as we mentioned, we decided to close this facility.

Regarding in-house blade production, 1,545 units, 724 Germany, Delta4000, Mexico 369, the plant is now running full in Delta4000. The existing [India plant] was producing legacy AWP produce, now this factory is already producing Delta4000 series and Spain last year produced a combination of both is now running full speed in producing Delta4000.

So, substantial ramp up in Delta4000 products all over the world. Germany, Spain, Turkey, India, Mexico, Brazil, a lot of challenges managing to do that in the middle of the pandemic, as of today the blade plants are not back to normal, but close to back to normal.

Outsource blade production 2,816 units, compared to the 2,556 units last year. We keep the relationship with key strategic partners in good mode, and we plan our strategies to make and buy blades in the future.

With this and with the visibility we have today and having already taken into account the spillover of loss making projects and still COVID impacting Q1, today I share with you the guidance for 2021, sales are going to be in the range we expect to be in the range 4.7 billion to 5.2 billion, EBITDA margin 4 to 5.5, working capital below 6%, and CapEx 180 million. As mentioned before, our strategy now is not any longer growth versus profitability, is little bit rational growth and improving profitability is step by step.

Going forward, and to give context to the strategic targets. We expect saying as market participants, that win will be a prominent source of our global energy production.

And we see that renewal are going to jump to 70% of the [catch] in 2015 versus 25% of the [catch] today, but the size of the [catch] is going to increase from 26 terawatt hours to 40.9 terawatt hours. So, we are in the right sector, and we talk about major contributors.

Win plays a big role in this substantial growth. So, growing the market share from 8% as of today to 20% as of 2015.

So, definitely the sector has a continuous growth on onshore in the medium-term. And if we go to the next slide, how is the positioning of the company in the sector?

So, we say, we know sure is going to grow. And Nordex has a good product and marketing position in the segment that is growing more than the market.

So, our position – our demand for 4 megawatt turbine is expected to be very strong growing in a cumulative basis 50%, [20 to 24]. And as of today, the Delta4000 platform is one of the most competitive platform in the market with the second highest cumulative order intake in 2020.

So, it means top two in the [fast growing segment]. Furthermore, Nordex in 2020 consists of 81% generated with as we mentioned before with this platform.

So, this commercial success on forecasters is strong demand for those turbines will support the revenue and profit profile for the next four years. So, we said the market is going to grow.

The segment where we are a leader is going to grow faster than the market and this is great for the long-term, but for the mid-term, we have the company transformation out of which the – what we call, India for global and strategic capacity expansion in India to deliver global customers is the initiative to lift profitability in 2022 versus 2021. Profitability 2021 is a result of executing a better backlog.

Profitability in 2022 assumes market behavior, rational market behaviors are stable, prices and margins and with this initiative, we will manage to reduce our cost base to improve profitability. So, these production facilities are planned for export only and will support our ambition to grow further and to eventually market share, if the win onshore segment globally grows.

The components from these facilities are expected to create a significant cost advantage, compared to other currently – structures of products. The ramp up is going to benefit from already long track record in the country, producing quality products in a competitive basis is going to benefit from existing [team and] infrastructure.

The quality of the product is secure with the European suppliers delivering their components also locally from India in better and more competitive basis. And well experienced management team to run the initiative, the CEO and the head of the purchasing department are both from India, and the CEO is a long life in the industry.

And we have a very strong management, local management team to run this initiative. Additionally, of the existing comparison of the [blade] facility and the existing combustion of the blade facility, we are in the final stages of building one of the biggest blade facilities that we have worldwide and this is a real picture on the left and this facility plans to start operation in the second half of 2021.

As mentioned before, existing blade facility are already producing Delta4000 products with 2 [indiscernible]. Our strategic – one of our strategic partners, TPI, is already starting to produce place for us in India with an additional [two months] and worth to mention that all the necessary CapEx is already considered in the 2021 budget on guidance.

So, with all these and with the current disability and as mentioned before, assuming rational marketing and pricing behavior in the market, and that we complete the latest stages of the implementation of the India for Global ramp-up program and the company transformation program, we are confirming the strategic targets that we shared with you in the Q3 call. Sales about around 5 billion, EBITDA margin 8%, capacity 6 gigawatts.

As you can see here, we are not very ambitious in the growth. We've had a focus in profitability improvement with initiatives that the company is running.

And with this, we will open the floor for Q&A.

Thank you very much for the presentation. And operator, [indiscernible] opening the Q&A.

Please go ahead.

Hi all and thank you very much for taking my questions. My first one would be, I saw last week, a press release from Acciona relating to the MacIntyre Wind Farm in Australia.

And he noted in there that the – around about 1 gigawatts wind farm will have 180 Nordex Delta4000 turbines. I wondered if this is in your guidance?

Currently, I didn't see any mention of it. And if you could give [indiscernible] on that.

Thank you.

Thank you very much. Thank you for your question.

I think we have, I will say, quite a strict order in-take recognition process. And at this point, we are still in the final negotiation of that agreement.

So, we are not ready to communicate it. And what is in the planning is the firm and unconditional order backlog.

So, let me provide a little bit more flavor on that. This is Patxi speaking.

So, we have a very strict criteria, high criteria. We have to have our contract signed.

We have to have the down payment already received or permits in place. So, [indiscernible] financing in place, and payments security and until those criteria are fulfilled, we do not recognize orders.

It is true that Acciona is one of our best customers and they issued that press release on the MacIntyre contract. That is a usual way of behaving because we have customers that even before we recognize order intake sometimes they provide [indiscernible] to the public.

What I can say you is that we are not guiding order intake. So, there is no such a MacIntyre been included into the guidance whatsoever.

What I can say as well is that Acciona generally buys turbines from us and that we are doing everything we can to position ourselves to win that contract in due course.

Okay, thank you very much for that. Perhaps another one for you Patxi, on the service margins I saw that there have been a little bit of an increase in Q4, can you talk about what the moving pieces here are on the service margins?

And then also the level that you assume that you'll achieve for 2021 within your guidance range?

Yes, that is and we discussed it in November call. We have some one-off effects that affect the profitability in the previous two quarters.

And as a consequence of that, we'll have some recovery in Q4 to put the full-year at 15.8, slightly below the historical levels, which are set at [16, 17]. This is precisely the profitability level that we would expect in 2021 between 16 and 17.

And with the internal programs that we have explained as well that are in due course, we expect to even increase that further, but that will be only be seen in 2022. So for 2021, we expect 16 to 17.

Thank you very much. Then my final question would be, within Europe, do you think that the Delta4000 platform has allowed you to take market share?

And within that, can you give us some examples of certain regions and certain auctions where that might have been the case?

You have seen in the introductory figures, the Wood Mackenzie number, and that is a proxy that the Delta4000 is truly receiving and we have two selling turbines within the segment. And the main markets have been in Europe or [indiscernible] don't forget that this is a global product and we are selling this as well in North Americas and South Americas as well.

As I said in my introduction as well, we are seeing tailwinds in most of the main European markets and that is a turbine that is selling in all of them were permit allows, potentially some parts of France or some parts of markets that have a more strict, from a timing perspective, permitting requirements is difficult yet to see projects being developed within the 4000. But despite that, which is a minor part of the market, and the rest of the addressable market, Delta4000 is competing head-to-head and we are having really good results across the continent.

Right. So, thank you very much.

Yes. HSBC.

Thank you. So, my first question, just around this overall falling market environments, you're assuming rational behavior from all your peers?

I mean, history tells us that that isn't the case when we do see falling order volumes that actually that does create effectively more price competitiveness. So, I'm just wondering how we should square the circle on, you know, what is the macro data on one side versus your behavioral expectation on the other?

I will say – this is Jose Luis speaking. I think there are several factors that are different now than in previous cycles.

First, is that majority of the top four global players are launching up, launching 4 to 5 megawatt platform. So, we are in different stages, but more or less on the same phase of product development.

Second, very important, the market has rationalized a lot only for top global players. And not like before, too crowded.

Players fighting for market share. As you saw in our numbers, and as you heard as well, for some of our competitors, looks like it's more important now for the market profitability recoveries than growth.

And last, very important, in the previous cycles, I will say win, in some cases, was not market competitive, compared to now. I mean, today, win is one of the most or the most competitive source of energy producing kilowatt hours, renewable kilowatt hours that society needs and wants to increase other substantial lower costs than the spot price.

So, I think the industry is competitive, and we just need to transform the industry into long lasting sustainable and that means being reasonably profitable and cash flow generation. And I don't see anything against that behavior among the top four market participants so far, and this is our assumption.

Very clear. Thank you.

I suppose then a couple of questions for Ilya maybe. Free cash flow, in 2021, working capital is going to stay comfortably, I suppose where it is now 6% negative of sales.

I mean, should we be expecting a decent positive cash flow in 2021? What are the moving parts should we be aware of?

And secondly, also with the equity ratio of 17.5%, is there anything in the debt covenants that we should be aware of as maybe tied to equity ratio? How comfortable are you with that, with that ratio?

Yeah, thank you, Sean. I'll take the two.

First on the free cash flow. I mean, I'd say, we don't guide to the free cash flow.

But I believe that with the guidance we've been providing today, we should have the building blocks to do it. I mean, depending on where you put yourself on the range of both on the sales and the margin side, then your equation comes to one [another result].

So, there's really two bookends now granted. I think [indiscernible] was saying that the year ahead of us, it will always be our utmost ambition to get as a free cash flow positive as possible already in 2021.

But I think again, it depends on the parameters you’ve picked. On the other question, to the equity ratio, I mean, right now – in the past, I mean, we have that leverage ratio, we're not disclosing the specifics, but to your question, no we don’t feel uncomfortable, to the contrary we feel comfortable those ratios are also under the covenants.

Super. Thank you.

Yeah, hi. Good afternoon, everybody, Jose Luis, Patxi, Ilya.

First one, I would like to talk around the fiscal 2021 guidance and for the margin in particular. You indicated that obviously, the backdrop margins are much better than in the past.

I think that the [indiscernible] element that you've been talking about. How should we think about [really this mix tables] from the data for 1000s and then eventually, all these improvement program that you've been, especially in the annual report stressing quite a bit?

Are there any related costs to getting this improvement program into reality that we should be aware of? And how should we particularly think of eventually the, kind of counter aspects like supply chain, logistics costs that rather are increasing as we hear from your competitors?

Raw material price is up? How does that reflect really in the [guidance]?

That would be the first question?

Thank you very much, Sebastian. Very appropriate question, given the times.

I think as we mentioned before in Q1, we are still facing [Audio Gap] as well, the range of the guidance is broad, in order to deal with eventual volatility in the market. It is true that, you know, after COVID.

So, as I mentioned before, our blade plans that were, still our that were bottleneck and delivering substantially [behind plan] last year. We are almost close to nominal spend, but that was not the case in Q1, but there are new factors as you mentioned is commodity prices, the raw material increase, logistics shortages in containers.

So, substantial volatility in the marketplace post-COVID. I think we have guided that they are to the best of our knowledge and considering the impacts that we know and the same for the strategic target.

So, in order to deliver the strategic targets as mentioned, the CapEx was already forecasted in this year’s P&L and is about executing. We feel quite comfortable that we will execute on time, but if the execution is delay, is not do or die, because is one of the delay in profitability improvement materialization.

So, long history short, this 2021 guidance, the building block is executing our backlog with higher share of Delta4000, we say around was [8%] order in-take, but is going to be around 60% in project execution, what we said before Delta4000 3% to 5% better margin is still valid. So, we have a high coverage of the revenue of the year around 80%.

The quality of the backlog is better. After ending Q1 things are more stable.

We are executing the majority of the volume in Europe with stable things in very mature countries. So, I'm not going to say that is going to be easy, given the new risk that are threatening our sector.

But to the stand, we know we have considered all the factors and the same for 2022. On all the cash flow associated was, is already in the planning.

Just to recap on what you just said. So, firstly the 60% share of Delta4000 fiscal 2021 to what level would that compare in 2020?

That's the first follow-on, and the second is related to the logistics causes that are covered really by contracts, etcetera or is there, sort of still a certain portion of the business that you've laid out at [indiscernible] billion that is open where you have based in some sort of price escalation eventually, just to get that understanding right.

Okay. Now, let me be more specific, last year Delta4000 was less than 14, and this year is more than 16.

So, is transitioning with one-year behind the order intake evolution. Regarding contracts and pricings and majority, we are locked with contracts, but we are still, we still need to shell 20% of the revenue of the year, a little bit less, but let's say around 20%.

And we still have a very minor portion that is not locked with contracts. But you need to keep in mind Sebastian that one thing is having contracts, another thing is that, you know, in some cases, regardless having contracts, you need to deal with business continuity in your supply chain, because they might be out of business and in some cases you need to support.

So, from a contractual perspective, we are reasonably okay, but this is not risk free. I think if things, you know, don't stabilize shortly or in the mid-term, of course, we will suffer like the sector.

And sometimes it is pricing and cost, but it's as important as pricing on course and commodities and so on is capacity. I think the current COVID restrictions are decreasing substantially the shipment capacity because the protocols in the past take longer.

So, as a consequence, containers how to stock imports do not return to China to ship again. So, we are still, even from a health and safety perspective looks like we see the light of the end of the tunnel, from the operations will take a little longer to further destabilize.

And as I mentioned, we have guided to the best of our knowledge. And already considered certain impacts that we know that are either were real, or are going to be real.

If there are additional, of course we need to deal with those in due course.

Okay, that's really helpful. Thanks for the openness and the color.

The next question that I would have is along the demand and then pipeline and [indiscernible] and Patxi said, that you don’t guide on orders. But obviously, you're striving obviously for command in the top three position compared to the number four position that you have right now, that would normally I think go along with a higher and 6 gigawatts order run rate over the last two years.

So, where can it really go and to what extent with the U.S. is very important cornerstone that was 30% of your shipments in 2020?

And obviously, we have the expectation that it might be flat in 2021 and then eventually coming down in 2022. So, anything that gives us a bit more, kind of confidence in where the U.S., particularly might have worked would be much appreciated?

Patxi, can you take this question, please.

And Sebastian this, as you know, we don't generally guide orders. What I can tell you is two things in that respect.

First is, is that to have good visibility in the order pipeline for the full-year. And I will leave it there.

But it's true that the activity that we see across the market is not to be underestimated. Having said that, and I will say another one which is especially in Europe, where we see really good momentum, as well as some Latin American markets that I mentioned in my introductory speech.

U.S. will see decline in volumes and is going to see the dynamics – are going to be different in the sense that PTC value is diminishing that solar PV will compete very well with respect to wind, particularly this year and as a consequence, the dynamics in the market will be tougher than what we saw last year.

Last year already, we saw decline internally, and although I don't give particular numbers, you can do the math in the building blocks in the presentation to see that. With respect to the previous year, we saw less in the U.S., we had a very successful U.S.

year, but the previous won't have been even more successful. We can allow ourselves given our European position and LatinAmerican position and not so good U.S.

year, if that eventually happens. I'm not saying that this will happen, because we bet yet again for a good U.S.

year. But if eventually did not happen, it will not materially affect.

I don't expect to materially affect the full-year or varying [indiscernible].

Okay. That’s helpful.

Thanks. And then the last one is around the competitive planning in India.

And so, I was a bit surprised to see that you only produced about 500 megawatts in terms of turbines in the Indian market, particularly in the fourth quarter which was rather low in terms of production output. The hardware [indiscernible] target as a capacity and is India really, only then went up when you would receive the flood of big, especially export orders or where is the tipping point when you really step up the gas for expanding capacity?

That’s the question on the turbines side.

That's a good question. I think in India, we were last year in a ramping down scenario.

So, India now sells – we have capacity for currently, for way more than a gigawatt. And the most critical components, which is [a place] we used to have two production lines of Acciona Windpower product that we converted to Delta4000.

We contracted two lines with TPI, and the factory you saw in the presentation is going to operate with four lines. And that gives you 650 rotors to 700 rotors per year that depending if the turbine is 5 or 5.5 that will give you close to the nominal capacity.

So, indeed is a ramp up that is a ramp up leverage on existing things and on existing experience. And we feel quite comfortable and with the help of TPI.

So, we are quite comfortable that we will achieve that. And that materializes substantial cost advantage landed in the consumption point.

Regardless, the consumption point is strong European markets or U.S. or Latin America.

They make sense. And if I may, very quick last question on working capital for Ilya.

I was wondering really about very high order intake level on the one side, however only very minor improvement in terms of cash relief from working capital on the other side of things, especially prepayment that will improve. So, what am I getting wrong?

Is that, sort of the deferral in the prepayment and when I will introduce the structural change, the payment terms [indiscernible] that?

Yeah, I think [I'm getting a question], if I get that is, the reduction in that case or the prepayment on the Q4 is a result of execution of projects. So, basically gets netted out there.

This is sort of any [spillover] of pretense made to the orders taken that should then come through in the quarter 1 or quarter 2 even or is this really as it is?

I would have to come back on details to you Sebastian in that case, but what I'm speaking top of memory, I think that is, what is, that is as is and has no doubt in that last quarter.

Okay. Thank you.

Hi, everyone. Thanks very much for taking my question.

So, just following up on a couple of the previous questions. Firstly, in terms of the – both the raw material price pressure and the rationality of the industry, and how confident are you that the industry will be able to pass on higher raw material prices in order intake in the quarters to come?

Secondly, just confirming on the India ramp up, so do you still aim to get the full run rate for production in India by around Q4 of this year? And then finally, just a bit of housekeeping question for Ilya please.

You mentioned higher financing costs due to high utilization facilities and higher activity, any indications on that front for 2021? Thanks very much.

Thank you. I think taking the first question about the raw materials as mentioned there are different contrasts with your customer’s different contracts with your suppliers and to make long history short, we are not fully hedged.

So, we hope that we – that to the extent we know we have considered the effects and those effects are in the guidance. If there are unexpected additional shakes, we might be affected.

Regarding the, if we plan India to have the two plus, two plus, four production lines that give nominal capacity of place by the end of this year, we are quite confident. Two lines are already in production.

Two lines with TPI are in ramp up. Four lines in the facilities as you saw in the presentation.

That facility is in the final stage of construction. We are ramping up things training, management is in place.

So, we have three quarters to go for a ramp up. So, we feel confident that Q4 or all that activity is going to be operative.

And I will say, maybe not 100% capacity, but close to that. I can be more specific if I look into the details, but close to nominal capacity.

Yes.

Can I just quickly follow up on the raw material question? I guess, so you'd highlighted before the assumption of stable prices, but if raw material prices stay, steel prices stay elevated then the industry might need to put through higher ASP in coming quarters.

So, my question was more around that not so much the hedging, but do you think the industry might see higher ASPs in coming quarters, given that is not resolved [indiscernible]?

I mean, in our view, we will see a timing effect, but those extra costs will be translated to the customers and that will be translated to the energy prices that they beat to the system. We are starting to see that with the solar panels.

And as I mentioned before, renewable energy doesn't have a problem of competitiveness. I think that in our humble opinion, if we do pass through, demand will stay stable regardless cost prices of the wind turbine across the [broad increase].

So, of course there are always timing effects to adapt to the new situation, but the industry is competitive enough to be able to run with a slightly higher cost base and translate that to the energy price that we generate with wind turbines, the same way it is happening as we speak with solar PV and maybe was slightly too much. The auction prices we saw in several markets, you know compared to the spot price at the market and the forward price of the market is paying for the electricity.

Thank you very much. And just quickly in the other question about financing costs.

Thank you.

Yes, yes, that's what I was hearing. So, no worries.

Let me take the last one. And though I am and thanks for not having the detailed number at hand, although we are not giving basically specific guidance on that one.

I think it's fair to assume that we will on similar levels in 2021 as we've been on the 2020. So, I'm always of course, it's the duty of the CFO and its team to work on improving this.

But to your question and from an expectation level that is, should be relatively similar.

Thank you. That's very helpful.

Thank you everyone.

Hi there. Thank you very much for taking my question.

I only have one last one less. Basically in the service business, right, the share of fleet under contract continues to go down now at about 66% of the total installed base.

I was just wondering if you can elaborate a bit on what is happening there, is there, do you see more intense competition potentially or and is there an internal target that you see as the ideal level? Thank you very much.

Yes, I can take that. Probably when you compare to an abnormally high [2019], I believe that we have in 2019 a number of renewal contracts in the U.S.

large renewal contracts in the U.S. have made a growth in 2019 abnormally high.

I believe that we are back to normal growth levels. We expect the market to grow at around 10% and we expect as well to grow ourselves the service business at around a [indiscernible] bigger.

So, all in all, probably the abnormality comes from earlier year rather than a situation that today is normal. And a consequence of that is, as you were asking on the percentage of turbines on the feet.

So, we have – we are very happy, very satisfied with the rural contrast. We see, as we have seen as well in the turbine business, rationale competition, more rational competition and more rational behavior from players and we expect to continue that way.

And if I can Patxi, we are – generally speaking, we are not losing out of this. I mean the percentage of fleet under service is more related to the strategy of certain customers that decide to do in house.

So, if you sell more to those customers, of course, your share of service fleet decreases if you sell more to other customer profile. Those usually prefer to do long O&M business with you.

But not done a structural threat, I will say, because we are not losing volume against ISPs. We are losing volume because customers decide to do in-house, some customers decide to do in-house activity.

Alright. That's great.

Thank you very much.

Yeah, hi. Thanks for taking my question.

Maybe a couple of them. So, first would be, like what percentage of share will Delta4000 would have in 2022 and 2023, if you can share that number?

And also, the order inflow so far this year, seems to be a bit slow after a blockbuster December 2020. So, any insight into that, like why that has been the case?

And maybe the third question would be on like, how much of the capacity is still there with Nordex in your project development portfolio? And what are your plans to grow that business?

Patxi, can you take the three questions? Hello.

I was muted sorry. I was talking.

From a P&L perspective, as Ilya was explaining before south of 40% 2020, north of 60% 2021. We don't guide 2022 and 2023.

We will do that in due course. But then the indication that are very intact this year was 81% Delta4000 should provide you an indication towards what the mix will be both in 2022 and 2023.

With respect to order intake is to the industry, I believe that we have had a slow beginning of the year, January February, and I believe that this is industry wide, if I measure this by announcements that have been abnormally low, although this is an indication – evidence of that. What I can tell you is that March has picked up significantly and we will end up Q1 with a normal – around 1 gigawatts orders, which is pretty normal for us.

And then as I said before, to Sebastian's question, without guiding the year, but we do see very good visibility in the pipeline. And with respect to product development, if this is an activity that we do continue this through that we divested significantly in the [indiscernible] transaction, but in selected markets we will continue to provide both projects and turbines to customers.

Maybe a follow-up on that project development. So, how much of the capacity we still have with us, like you sold, I think, more than 2 gigawatt to our RWE, and so how much of that capacity is still there with us?

And what kind of growth plans we have, like any – do you have any target to grow that capacity, maybe from say, 400 megawatt to say, 1 gigawatt or 2 gigawatt in next few years time?

We sold all of our European capacity to RWE. We still have some capacity in markets outside of Europe, but we are not guiding pre-development activity whatsoever now, but than what I tell you is that we will continue with those activities to offer both projects and turbines to customers.

Okay. Thank you very much.

Hi. Sorry, I was in mute.

So, good afternoon to everyone and thank you for taking my question. I just wanted to ask you regarding decommissioning.

So, in your order intake and order pipeline, do we also see some orders, which are coming from decommissioning area of the onshore wind power projects?

Patxi, can you take it?

If I understand your question, are you referring to repowering? I didn’t fully understand your question.

Sorry.

Yes, repowering.

Yes, repowering.

Yeah. It's a very minor share, I would say as we speak.

This is true that some markets is becoming more prominent in the U.S. and Germany in some specific markets that we see that this is coming up, but as I will take today, very minor.

Okay. And the second question is that you are guiding that the onshore markets will probably decline going forward from end of 2021 – onshore markets will probably decline going forward from end of 2021 to 2024.

So, do we expect Nordex to grow in FY 2023 and 2024 in-line with the market or do you expect you will be able to over perform it in a qualitative manner, purely not quantitatively?

I would say you have heard before from consumers that growth per se, is not going to be the strategic target, but profitability recovery. Having said that, if you go by building blocks, you will see that the decline is happening naturally in North America, but not in the rest of the geographies.

In fact, in Europe, we are plateauing at a very high activity level coming from 12 gigawatts to 17, 18. Over the last couple of years and plateauing at that level will generate significant business opportunities, same as seen in Latin America.

So, with the exception of the U.S., which has a very particular dynamic, the rest will see a healthy market situation as I was explaining in the beginning. And how market share will evolve is too early to say of course, but we are not desperate for market share growth, but we are – what we are doing is focusing very much in behaving very rationally in the markets in order to sustain a profitable growth.

Okay, thank you very much. Have a nice day.

Okay. I think this [more or so] the last question for today.

Thank you very much for … Okay, I’m just listening [indiscernible] there is one question in addition, so we take that one as the very last question. So, operator, please, connect.

Yeah, hi. Good afternoon.

And thank you for taking my question. I have only one question.

Regarding PPA depreciation, it was 24 million in 2020, what should we expect for 2021? Thank you.

Thanks. That was for me.

Ilya speaking here. I wanted to get back on a bigger number of that, but I think the trend here is a slight decline of that also in 2021.

Okay, thank you very much.

Okay, thank you. I understand.

So, now this was the last question for today. Thank you very much for all the questions and participating in our conference call and I would like to say goodbye.

But before that, I will hand over to Jose Luis, for your final remarks, please.

Thank you very much for your participation and for your questions. The key takeaways for today is; first, that business performance in Q1 2021 still impacted by the ongoing COVID pandemic and the volatility that we know in the market.

And we expect recovery in Q2 2021 onwards. Demand as mentioned by Patxi for the new Delta4000 platform remains on a promising level with a strong focus on Europe and the Americas, eventually Australia.

Comprehensive company program on track, you saw the picture and we share extensively the status of the India for global project that is going to be operating during the course of the – during the course of the year and this is the profitability lever that is going to bring us where we want it to be in 2022. And as a conclusion, we confirm the strategic targets of around 6 gigawatts, approximately 5 billion with 5% EBITDA margin by the end of 2022.

Again, assumptions are order intake, stable margin, rational pricing margin behavior in the market, plus the execution of the company program plus India for global. We are more confident about the last two because they depend on us, rational operating behavior.

We are quite confident, but it's somehow out of our control. So, with this, thank you very much and wish you a wonderful day.

Thank you very much.