Nordex SE

Thank you very much for the introduction. As always, I would like to welcome you on behalf of Nordex to our analyst and investor call related to the release of the Q3 results today.

As you know last week, we have already published our preliminary results for the third quarter and our revised guidance. Today, our CEO, José Luis Blanco; our CFO, Dr.

Ilya Hartmann; and our CSO, Patxi Landa will guide you through the presentation and share additional information about the development of Nordex with you. Afterwards, as you have heard, there will be a Q&A session, and I would like to ask you to limit yourself up to three questions, please.

And now, I would like to hand over to José Luis. José Luis, please go ahead.

Thank you, Felix. Good afternoon, everyone.

I am sure most of you will have seen our press release on preliminary financials and revised guidance last Monday. Today, we announced the final results for the previous three quarters of the year, which are in line to what we announced last week.

So we are confirming the preliminary results. As usual, let me start with the key highlights of the first nine months.

Moving to the next slide. Thank you.

First, our order intake continues to be strong and strong compared to the industry. We booked 23% more orders in this period compared to the previous year, of which keeping the trend around 80% of the orders were for Delta4000 platform.

Second, financial performance, we delivered almost €4 billion in sales, with an EBITDA margin of 2.5% in the first three quarters of the year. And let me again reiterate that this was achieved in a highly volatile and inflationary environment, and with consistent increases of prices for raw materials, basic commodities, as well as a very volatile environment in shipping rates, along with shortages in vessels that have been impacting supply chain costs, supply chain availability, and ultimately, our overall financial performance.

With these environments of continuous supply chain disruptions, we believe our team has done and is doing very well to deliver 25% growth in sales and limiting the impact on the retail labor so far. Additionally, during the quarter, we have strengthened our balance sheet with €586 million rights issue.

As a result of that, we have an equity ratio of 28.5% and a net cash position of €560 million. As you can see, we now have a strong financial structure in place to ride us over the period of volatility reasonably.

During the first quarter, talking about technology, we added a new variant to the product portfolio, the 6.X. So we are as well playing a role in the 6.X market segment.

Finally, as we announced last week, we have revised our guidance and the strategic targets, given the extreme volatile environment. This is not only just affecting wind but many other sectors as alerts.

And with this, let me turn over to Patxi.

Thank you very much, José Luis. looking at the orders, and as José briefly mentioned now, we closed 4.6 gigawatts of new turbine contracts in the first nine months of the year, up 23% with respect to the same period last year.

62% of those orders came from Europe in 13 different markets, with the largest volumes coming from Germany, Finland, Spain, France, Turkey and the Netherlands. 18% of the orders came from Latin America, mainly from Brazil and then the large order in Australia with Acciona that was previously mentioned.

We have a backhanded order profile this year in North America as a result of the relative market slowdown and we expect the North American orders to come in Q4 this year. The good order momentum we saw in the middle of the year is confirmed and we expect to close the year with larger order volumes than in 2020, 80% of the orders came with Delta4000 turbines and ASP remained stable at €0.7 million per megawatt.

Service sales amounted to 8.4% of Group sales in the first nine months of the year, with €332 million and ending with a margin of 16.7%, fleet under contract stands at 27 gigawatts, with an average availability of 97.3%. Turbine order backlog remains stable at €5 billion, despite the significant growth in sales in the period and service order backlog grew 7% to €3 billion, for a combined order backlog of €8 billion at the end of the period.

And with this, I hand over to Ilya.

Yeah. Thank you, Patxi.

Good afternoon, also, from my side. I would now like to guide you through the Q3 financials of this year and some of them we already anticipated in last week’s call.

But let’s first look at the income statement. So our sales grew by 25% to almost €4 billion on the back of the high level of execution, and as José Luis mentioned, a very tough environment.

Our gross margin stood at 17%, compared to just shy of 11% last year. We achieved an EBITDA margin of 2.5 percentage points in the first nine months of this year, so around €100 million in total numbers.

However, as also mentioned by José Luis today and last week, this was significantly impacted by the ongoing inflationary pressures and the supply chain disruptions. On this slide, probably, let me also make one last point.

We booked net interest cost of almost €100 million, so it’s a bit on the higher side for financial cost and it’s due to, basically two reasons being one-offs for both of the cancellation of the share, the loan, as well as the state-backed RCF we had to account for one-off costs and arrangement costs for both these debt instruments that have now been cancelled and have been booked into Q3. With that, let me jump to the balance sheet.

So through the capital increase, we’ve mentioned a few times, we have now significantly fortified our balance sheet and put it on a stronger footing, which is helpful in the current environment, of course. So as a result, we now have a strong cash position, €870 million at the end of Q3 and improved also our equity ratio to 28.5%, which is 10 percentage points better than in Q3 of last year.

Current liabilities are down more than €600 million, mainly due to the, I mentioned at the few moments ago, repayment and cancellation of the short-term bank loan [ph] and the RCF facility. So, with that, our net debt position now converts into a net cash position of €516 million.

So that brings me on the next slide to the working capital. Our working capital ratio also continues to be quite tight, at a minus 7.7%, compared to the 6.3% in December of last year.

Improvement in the working capital was mainly driven by reducing our receivables by reaching more milestone payments and driving project execution. So, overall, it remains clearly below our guided number for the current year, which is at minus 6% and that brings me to the cash flow statement.

On the next slide, where the cash flow from operating activities stood at €128 million at the end of the Q, clearly higher than the previous year and mainly driven by further tightening of the working capital, as José mentioned. In terms of cash flow from investing activities, it has been a regular quarter, largely in line with our investment program.

So there’s a positive, sorry, positive free cash flow of around €30 million in Q3. Thanks to that successful working capital management, and for the nine months, this is overall a €23 million numbers you can see on the slide.

So last but not least, cash flow from financing activities stood at €73 million. That also reflects the cash proceeds from the capital increase offset by the repayment and cancellation again at both the RCF and the short-term bank loan [ph].

And with that, I would quickly go through the investment slide, the CapEx very briefly. We invested around €110 million in the first nine months and this is very much on the same level as last year’s period.

There’s a bit difference €112 million to €108 million, basically on the same level and the focus on our investments remain the same, so main investments were again in the blade production facilities in India, as well as tooling equipment covering our ongoing high installation activities. And with that, I go to my last slide, which is the capital structure.

And as expected and also mentioned before, our capital structure substantially improved post-rights issue and the shareholder loan conversion that was done in the same transaction. So our leverage ratio now stands at minus 4.2% and our equity ratio now stands at, as said before, 28.5% versus 16.5% in Q2.

So, with that, I would summarize my key takeaways before giving it back to you José about, again, first our balance sheet is now in a much stronger place to support the business and cash is also strong. Second though, the unprecedented volatility in the macro environment continues to impact operations, and hence our margins, as we’ve seen, and also our planning and forecasting ability is therefore constrained in this environment, because visibility is much less than usual times.

And then, third, in that environment, our focus remains on topics that we can control or influence, and that is, stricter cost controls, accelerating cost savings through our comprehensive company program, supporting the business and tackling the cost inflation, and dynamic and faster responses in our planning and costing to adapt to this fast changing environment. And with this, I would give it back to you, José.

Thank you. Thank you, Ilya.

Talking about the operational side of the business let me provide you a quick overview of the operational performance. As you can see in the left chart, we installed a remarkable 46% more megawatts compared to the same three quarters of the last year and we have done this in 22 different countries across the world.

This is a remarkable achievement. As you saw substantial growth and this installation profile that was achieved in one of the worst supply chain disrupted environments, which was not very much affected by the pandemic, but was affected by the consequences of the pandemic, so a lot of disruptions in availability of parts, vessels for one and so forth.

On the production side, same environment, we managed to keep our -- to keep increasing our order activity to support our projects and our customers, we produced 1,068 turbines Germany, Spain, India and Brazil, 400 blade sets, Germany, Spain, Mexico and starting in India, converting Mexico and this is around 40% of the total demand for blades. So let me make two points here, first, as you can see, we have a good global production footprint to deliver our customers the well-landed costs and as well give us the possibility to adapt the footprint to disruptions in the costing side of the company or in the, say, in the volatility in shipping.

Second, India remains a key component in our strategy, although, slow -- slightly slow ramp up due to the ongoing issues in the logistic environment for inbound logistics as well for project cost based. Moving to the next slide and approaching to the end.

As we discussed last week, we announced revised guidance for 2021. We tightened our revenue guidance to the top end at €5 billion to €5.2 billion on the back of a very good on the ground execution despite the challenges.

Unfortunately, our EBITDA guidance for the year now stands at around 1% to account as we mentioned for the supply chain disruption and external costs. Moving to the last slide, our strategic targets.

No further changes to what we discussed last week. Just to summarize our message from last week, we need stability in the environment to have a stable cost structure that eventually is realized in the pricing policy to the customers and whilst those standard conditions are achieved, we believe we can reach our normalized EBITDA margin of 8%.

And with this, as always, I would like to open the floor for Q&A. Yeah.

Thank you very much, and Operator, please open the call for questions. Thank you.

Hi. Good afternoon, everyone.

And I will take my questions one at a time. And firstly, just trying to get a sense of the underlying margins of the business and I know there’s been some cost inflation on the supply chain, et cetera.

But I wondered if you could specifically let us know what the absolute liquidated damages charges for 2021?

I think we mentioned in the call last week and shown how we can’t comment here that. Of course, there are some LDs into the forecast expected.

We cannot go more into detail, because first, we don’t know the exact number; second, is not that prudent, because those discussions are ongoing with customers. It’s even premature to give you a precise number.

So in normal life circumstances, this should not be part of a business planning, but due to the, I would say, substantial disruption in availability of vessels and so on, this is -- are included in part of our forecast. Unfortunately, I cannot be more specific at this point in time.

And maybe -- this Ilya. To complement or to put an addition to what José just said, let’s remind us that the LDs is just part of what now we have shown last week in the…

Yeah.

…considering the guidance, I mean, by and large, it is that information pressure from the logistics, from the commodities. So that is to, let’s say, the bulk of the impact we’ve been seeing…

Yes.

… where we are seeing our guidance affect.

And talking about the underlying margins, I mean, without all those effects, that’s very much what to substantiates our view that the mid-term strategy target should be able to achieve once stability comes back to the market, so which means that the underlying margins without those effects are unchanged So it remain very much as they were before.

Thank you very much for the color. I’d -- I mean just as a follow up to this question, in general, and I think what people try to understand is, there’s clearly ongoing logistics and raw material price inflation and costs pressure associated with that, which might be transitory and might also continue into next year.

But clearly, liquid -- liquidated damages is much more one-off and specific in nature. And so just wondered within the guidance range or guidance now you target to 1% EBITDA margin, can you let us know a rough range in double-digit million or a triple-digit million that could be associated with these liquidated damages?

Thanks.

Not triple-digit. But again, as Ilya mentioned, there are reasons for the deterioration in profitability.

This is one of the vast majority is the extra costs that we have in the logistic operations. And as well, to less extent as well, the extra costs that we have in the bill of material to produce our products and the resin is more expensive, in some cases, steel more expensive and so on and so forth.

Okay. Thank you very much.

And so my second question would be on the services margins, which increased significantly year-on-year in the third quarter. I just wondered what drove this margin expansion and here 1% EBITDA margin for the Group, what are you assuming the services will be to the full year?

These are quarterly affect, the increase versus the previous period. What we are seeing is a not dissimilar to the turbine business service improving the margin, but however, we also hit by the inflationary pressures that we were mentioning at the less the scale, but we are seeing that, if you remember, we have the objective to reach 17%, 18% EBIT for the segment, we are at 16.7% improving profitability towards that target.

But, however, the inflationary pressures are also preventing us to get to our target towards the end of the year.

Just to confirm that when you don’t expect to be between 17% and 19% -- and 18% for the full year?

It will be complicated in this volatile environment that is affecting services the same way that is affecting the turbine business.

Okay. Thank you very much.

And then, my final question would be on orders ASP. And this did improve a little bit year-on-year in Q3, despite around half of the order intake coming from the Acciona order in Australia.

And if I’ve understood it correctly, this order is about as close to a clean turbine price as possible, given there’s no logistics installation in it. So this order would represent a headwind in effect to the overall ASP level year-on-year.

I just wonder if you could help us with the bridge to compare it basically with last year and also with the underlying turbine pricing increases that you’ve done in Q3 on a year-on-year basis.

Your logic is right. It’s precisely the MacIntyre contract is a very large and the weight that you have in the -- in relative terms is making a significant impact in ASP, bringing it down, because as you rightly mentioned, the scope is reduced with respect to the normal scopes that we have generally when doing business.

I will not quantify that, because we do not provide such details for the specific deals, for the specific customers, but again reiterating that without this effect on the MacIntyre contract, the ASP would be higher than €0.70.

Okay. And on the underlying turbine price increases in Q3?

That these price increases, again, are very much contract specific, product specific, market specific, customer specific. What I can say is that we are entertaining pricing discussions.

We have been entertaining pricing discussions with customers in a very constructive environment. The customers understand, as well as we do the very volatile environment in which we are doing business and we are entertaining those discussions with the customers on price increases.

Okay. Thank you very much.

Thanks very much, everyone, and good afternoon. And I will go one at a time, if that’s possible.

And so, firstly on the working capital and cash flow, so you delivered your second consecutive quarter of inventories that is quite good, quite low level. So what have you done in order to get there and how should we think about this fragmented inventories going forward?

Do you see this current level is sustainable or could this be a ramp up going into 2022? Thank you.

Vivek, there was a bit of background noise in the question. But I think you were asking on the working capital development and how and why the inventories were reduced in the way they were and how that ramp up for 2022.

That’s how I understood the question.

That’s correct. Thank you.

Okay. So, yeah, I guess, for the first time and for the first part of that question, as I’ve been saying earlier, so the key driver of that apart from the order intake is the good execution and higher pace of installations that we are seeing this year versus the last year.

So this is why we’re seeing the levels better than our guided number and that’s what helped the cash flow as you say. For the next year and I said last week, we are -- apart from not guiding cash flow, I would like to ask your understanding as we’re saying that, we will come back for a better look on 2022 when we come out with the guidance at the beginning of March.

So in that case, the visibility or the lack thereof we were mentioning last week and this week, and being still in the process of the bottom-up budget is that we can give you or shall not give you numbers of the fact, because that would not be prudent to do at this stage.

Okay. And…

Again -- and for the sake of completeness, I would say that, of course, we always have that upmost ambition of keeping the working level -- the working capital levels.

Right.

Sure. I understand.

I guess the question was specifically on the inventories. I mean if I look at for example some of your peers, they’ve run with a higher ratio of inventories to sales.

So I was just wondering if you, I mean, how you assess this current level and how sustainable that would be? Thanks.

Okay. I will say, I mean, at the end, we operate in a persistent project-by-project.

So, we don’t build inventory. So we book orders.

And then there are the very same moment we try to derisk production, closing orders with suppliers. So the level of intermediate inventory is very much a factor of the payment conditions of the contract, the title transfer of the contract, the supply chain configuration for this specific contract, are the same goods produced in a nearby site or not or far away, and is the title transfer at origin, at the port, at destination.

These are quite. There are many factors that could affect this.

But generally speaking, I don’t see reasons why these should change substantially. I will say that more or less in a year-on-year should be on a stable thing.

I think I don’t expect inventory -- buildup of inventories, because I mean project locations are the same, 60%, 55%, 60% Europe, rest LatAm, U.S., Australia, given to the factory locations where they are and the payment conditions that we are demanding to the customers under tighter transport conditions. I don’t think this is going to change substantially.

Okay. Understood.

Thank you. That’s very helpful.

And my second question was just a follow up George’s on the pricing. So, I guess, asking it in a different way, given the cost inflation you highlighted the need for pricing to offset the higher costs.

I mean, where should we need to expect we will see pricing go to over the next few quarters in order to be able to fully offset that cost inflation? Thank you.

And also given that, there’s some scope potentially on the supply chain like, what does pricing need to do to offset that? Thank you

Well, we mentioned that the impact, as you saw, when we revised guidelines last week was around 3% to 5% -- 3.5% -- percentage points, so on average that would be -- the average price that you would have to increase in order to maintain margins as they are and that is cost remaining equal, the price increases that you would need in order to maintain prices. However, again, return to the volatility that we see, that is very complicated for us to have the visibility on the costing as we speak and as a consequence also from a pricing perspective, we are being prudent when trying to pass-through the cost to the customers, which is just to clarify this 3.5% is to recover the profitability loss of the backlog.

On top of that, we have increased prices, because costs increase. So this is -- so the inflation is coming in different ways.

The 3.5% that I was mentioning is to recover the backlog profitability. The further impacts that we are seeing in the costs are as well pass-through and we are trying to reset the pricing levels of the turbines in the different markets to absorb as well the further weights of inflation.

Understood. Thank you.

Just to follow up on that latter point, so I understand this, what you need on the backlog and then for those newer projects, which you’re tendering for now, I mean, do we need to get double-digit pricing increases relative to current pricing levels in order to offset that cost inflation?

It’s very, very specific again and I will return to the point of markets, products, customers. And what I can say is that we are, when we have leeway, when there is time also for our customers to absorb the CapEx increases and reset off-take expectations, we are trying to reset price levels to the necessary level to absorb fully.

That is in the long-term. Shorter term, there is less leeway in some of the situations for the customers to pass-through as well for us to pass-through.

But it is very specific to customers, markets and products.

But a little bit color on that, I mean, unfortunately, we don’t have a magic formula to completely hedge our costs and link that to the price with certain conditions in the contract. I mean, there are factors that are very difficult for us to hedge the cost of inbound logistic, I mean, very difficult to agree with our customers hedging that risk, among many others.

So the best thing or what we are trying to do is to strike back-to-back contracts of the notice to proceed when possible and not if -- that is not always possible with steel towers, with shipping companies and some others. But Patxi was mentioning, so if cost remains with the view that we have today, we don’t have a long-term issue of profitability.

Our best enemy is that the duration in cost in the future weeks or months compared to the cost assumptions that we took today for the deal that we just landed today. So this is that we are landing today with the visibility that we have today and with the maximum derisk strategy we can apply in a deal-to-deal basis.

That over time should be able to deliver the underlying profitability. If things keeps -- keep deteriorating in the cost side of the business either because there is huge volatility or disruptions that affects your ability to deliver on as a consequence, more cost to deliver, then that assumption might not be true over time.

But if the current conditions remain at -- even at the very high cost level that we see today, the pricing that we are signing today covers for that.

Understood. Thank you very much.

Good afternoon and thanks for taking my questions. I have three.

I will just go through them and then if you could answer that will be great. So I am still a little bit unclear about the MacIntyre project.

So we know that logistics was not in the contracts. What I am trying to understand really here is, what lower margin -- do you see the lower margin on these projects because you transfer that risk Acciona or did you manage to actually get the same margin as you were expecting for the wider portfolio, just trying to think about how to think about that?

And if you were to strip this project out, what percentage has your ASP increased Q3-on-Q3? And then the second question is that, earlier in this year, you identified that we do in equity raise to improve the credit metrics to ensure that you can get a better share of an improving U.S.

market. So I am just wondering what size buffer does that need to be to ensure that those metrics are still in the right position to take advantage of that opportunity.

And I am just thinking two years, three years down the line when we’re through this and maybe we’ve had the impacts, do you need any more capital or do you -- as you see it today, you feel like your credit metrics will be in the right place to take advantage? And then the last one is just on impacts, now rightly, we have a lot of headwinds into 2022.

But as you see right now, would you also expect an impact into 2023 as well? Thank you.

Let’s elaborate in teams here the three questions. Regarding MacIntyre, the price is adjusted to the risk and to the scope.

I don’t know if…

Yes. No.

Ajay, no specific comment on -- obviously on margins from a specific customer deals and going back to the percentage of ASP increase that we will not disclose, but it’s not insignificant given the size of MacIntyre -- relative size of MacIntyre with respect to the total order intake. So…

But I can give you one public information that we mentioned in -- we have spent, let’s say, in around close to €700 million in logistic for a $60 plus installation. I mean, it’s not a scientific KPI, because it varies a lot, but you can’t do your math, what the logistic impact could be in average terms.

And then maybe on the second quarter, the capital increases, I start so...

Yeah.

…the rational remains the same, Ajay, we’ve been giving it earlier, which is that, resetting of the balance sheet in one go and let’s not forget that we also managed to extend and expand the bound line the MGF in the wake of that. But more specific to your question, so from where I am sitting on the CFO perspective and would customers play back to us several of those rational metrics are important, but I would single out here probably the equity ratio, which we’ve seen improved from a 6.5% to 28.5%, which is now in line with market peers and what customers perceive and that was one of the key drivers, if you will, for doing that.

When it comes to the U.S. customers, José, would been saying this…

Yes.

I think and very soon we will be able to share with you good news of orders in the U.S., where the balance sheet plays a big role in a substantial downturn in the market we manage to sell. And I wondering if we could do that with a different balance sheet structure, you never know, but I think this has played a role that.

I think we have now, even when we compare our balance sheet structure compared to our competitors. I think we are now well-equipped to confront customers with the right balance sheet restructuring even in the U.S., which is I will call it the most demanding in that characteristic.

Regarding the 2023, as I mentioned before, if the cost remains at the level that we have today, if we don’t see the disruptions in the supply chain, if we keep selling the way we are selling. Yes, 2023, there is no reason to think that could not deliver the underlying profitability.

Do we try to sign all that? No, because in the last weeks, we saw massive volatility and I think it’s prudent to wait for stability and to form a view about how to forecast and predict the future before trying to sign or do something that might change tomorrow and that we don’t control.

So stability keep selling, trying to pass to consumers through customers the cost increases, trying to derisk the cost side of the company as much as we can with back-to-back when possible and when we see several months of stability, then we can give a more reliable forecast for the future.

Thank you for that. I think there was just one bit that didn’t quite make sense to me.

the -- just on the question on the Australian project, I am just trying to understand here, you’ve clearly transferred some risk, so that must come at a lower margin, right, than the aggregate rest of the order book. Is that a fair assumption to make?

If -- again, you are coming back to revealing specific margins for a specific customers which we will not do, but it is true that on a risk reward, the scopes that we differently sell generally come at different margins as well, whereby this does not mean that this particular deal has a particular margin, but generally the concept that you mentioned is the right one.

Okay. Thank you very much.

Hi there and good afternoon. Thank you very much for taking my questions as well.

So the first one is, you just said that, if costs remain at this level today, you could reach the 8% EBITDA profitability level in 2023. So basically if we see logistics costs potentially coming down from the second half of next year, there is upside to this 8%?

This is the first question. The second question is related to your CapEx cycle.

So clearly, you’re going to be a bit under pressure this year and next year with regards to margins and profitability, which might have an impact on your balance sheet. So thinking about future CapEx cycles and innovation, how far longer can you drive the Delta4000 platform?

And then, lastly, if you could share any updates or anything you might be doing on the project development side of things, which I know is non-core for you, but it’s just interesting to hear what’s happening there? Thanks.

Thank you, Constantin. Let me take or let’s do it together.

So the first, one, you are right. In that event, the math should work, but we don’t have that visibility, unfortunately.

Sorry for that. But at this stage, we will be more than happy that things do not deteriorate than seems -- that seems substantially improved because logistic goes down.

We are working in ways to try to bring more stability to the cost side. There is as much as we can report.

Regarding CapEx, we see stability in the CapEx of the company and we don’t see yet the need for new platforms in the marketplace, at least in the horizon that we forecast business. Regarding project development, we are doing very selective activities, but nothing material to report.

That’s great. Thank you.

Thank you. Good afternoon.

Firstly, a question on the strategic sales targets, I mean, we’ve talked a lot about profitability, but your order intake is up. So you’ve clearly been gaining market share.

ASP is on a flat. So let’s say uptrend.

You’re already above €5 billion topline in 2021. What is holding you back from providing a higher sales target, because if I look now optically, your current target of €5 billion implies flat a best of visibility going forward.

If I think there’s growth in services that then implies low confidence in turbine delivery growth, just understanding that, please?

No. I think that’s a very good question and this is something that we were internally debating.

I think very much what is preventing us to do so is the volatility, the volatility we have in the ability to deliver. If things go to a reasonable stability, you are right.

We should be able to outperform that. But we are at the same time, every day facing shortages in factories, because lack of parts.

We see every day delays in shipments. We see every day vessels that do not show up for taking the load.

I mean, the environment is quite volatile and we prefer to be slightly more prudent and conservative and eventually, there are good news later share those with you, than to be more aggressive and disappoint you. But we fully believe and trust in our ability to keep the market share.

I think we are not fighting here to increase market share. We don’t want to do so.

We don’t want to destroy prices in the market. We are comfortable with our market share and we are confident in our ability to sell as with third-party.

We are going to do better here this year than compared to last year and the company is executing, and I will say, unprecedented global disruptions in the supply chain and in this environment, we try to give you the best visibility we can.

Okay. Then maybe if I can just follow up on that, so 8% in the midterm, would I still be assuming a €5 billion sales figure on that EBITDA margin?

Pretty much 6 plus gigawatts plus 10% internal growth rate in services as those -- the current cost structure stable, the current G&A of the company and the current order intake momentum at the current prices that we are landing. Yes.

Okay. That’s clear.

Thank you. Second question just on that cost, I mean, what is now your average cost of debt?

Well, I take that one, obviously. So, again, we’re typically not going into the specific run rate or on the financial cost, but what is fair to say, nothing important to repeat now.

But we got the question is that with that capital increase, the reduction will and should be substantial? So I think we’ve said it, well, I think, I know, we’ve said it earlier when we’re doing the calls and the conversations around the capital increase that just because, so to speak, of the conversation of the shareholder loan into equity and also improving our ratios hands getting better conditions under our bond line, the NGF, plus some savings from the EIB and other smaller portions.

I’d repeat that our ambition must be, and obviously -- and actually is to have an improvement on our financial costs year-over-year and 2022 will be the first full year we’ve seen those effects of around €40 million plus a year. So that’s still the ambition level we have.

So when you compare that to our last years and probably that year other than the one-offs, I mentioned earlier, are very similar. So that’s where our ambition goes.

So, having a substantial saving in that respect.

Understood. And do you have any visibility on being able to further improve that costs through refinancing over the next 12 months?

Yeah. Thanks for the question, Sean.

I always ask that last week and we have, as I’ve said, I was asked about that we do have the maturity of our high yield bond in the near -- in the year after next. So we’re now looking into all options how to refinance that and at the right timing.

So there might be a further potential from that end.

Thank you.

Okay. Thank you, gentlemen.

Thanks for participating in our call and I would like to say good bye from my side and I would like to hand over to José Luis for your final remarks. Thank you.

Thank you very much for your question. Thank you, Felix.

So let me summarize our key takeaways from this quarter. So first, and was mentioned in the Q&A with Patxi, we continue to generate and maintain a good order intake momentum, which gave us good revenue visibility for the future.

At the same time, our margins are likely to remain under pressure, because of the continuing cost inflation and supply chain challenges and disruptions due to mainly the extremely difficult shipping markets and shipping rates. Thankfully, we are in an industry that needs to grow quite rapidly, if we are to believe the government targets on top of the new green hydrogen aspirations or gas, in general, the ambition to decarbonize the world by 2050.

In addition, wind been one of the cheapest, if not the cheapest source of energy in most of the geographies could very much easily accommodate those ongoing cost increases and still stay very competitive. Good news is that our customers also understand and acknowledge this dynamic, governments as well, cost is not any longer a topic to be discussed when we talk about renewables.

So that’s a good start to change the paradigm here. In parallel, we mentioned we have fortified our balance sheet sufficiently, so we can successfully breach over this period of transition without substantial problems.

Last, once those boundary conditions are met, we believe we and the whole industry can return to normalized level of margins. And with this, yes, thank you for your participation in our call, for your questions, for your time.

All the best and see you in the next occasion. Good bye and have a good rest of the year.