Nordex SE — Call Transcript 2012

Nov 13, 2012

Nordex SE Conference Call 9M 2012

• 1. Highlights 9M 2012 Dr. J. Zeschky
• 2. Financials 9M 2012 B. Schäferbarthold
• 3. Guidance 2012 and market outlook B. Schäferbarthold
• 4. Strategy implementation – Update Dr. J. Zeschky
• 5. Concluding remarks Dr. J. Zeschky

APPENDIX: Financial calendar 2013 Shareholder structure

HIGHLIGHTS

• 7 % increase in sales up to EUR 715.5 Mio YoY
• Net profit Q3 EUR 7.7 mn
• Order intake at previous year´s level
• Confirmation of guidance for sales and operating cash flow
• Order intake expectation for 2012 at the upper end of the EUR 1 1.1 bn range
• EBIT expectation for 2012 at the lower end of the 1-3% EBIT margin range
• Reset of strategy completed in September implementation underway

Development of firm order backlog 2010 – 9M 2012 in EUR mn

• Order backlog decreased compared to H1 (EUR 837 m) but still 43 % above 9M 2011
• Promising order intake in Q4 order intake level of 2011 slightly topped per October (+1.7%; EUR 721 m per Oct 2012 vs. EUR 709 m per Oct 2011)
• European business accounts for 90 % of the order book minor exposure to weak Eurocountries (<10%)
• Conditional order backlog increased by EUR 153 m and now stands at EUR 1.6 bn

In EUR mn

	9M 2012	Q3 2012	9M 2011	Q3 2011
Sales	715.5	294.4	668.2	264.9
Total revenues	750.4	315.0	695.0	252.3
Cost of materials	(576.0)	(236.7)	(505.9)	(187.2)
Gross profit	174.4	78.3	189.1	65.1
Personnel costs	(103.6)	(36.4)	(102.6)	(36.0)
Net other oper. expenses	(45.7)	(18.2)	(55.8)	(12.6)
EBITDA	25.1	23.7	30.7	16.5
Depreciation	(22.8)	(8.3)	(19.7)	(7.1)
EBIT	2.3	15.4	11.0	9.4
Net financial result	(17.9)	(6.8)	(10.5)	(3.1)
EBT	(15.6)	8.6	0.5	6.3
Tax	(0.1)	(0.9)	(1.1)	(2.9)
Net Profit	(15.7)	7.7	(0.6)	3.4

• 7 % increase in sales YoY up to EUR 715.5 m
• Reduction in structural costs
• Significant EBIT (EUR 15.4 m) and net profit (EUR 7.7 m) in Q3
• Back to black positive 9M EBIT of EUR 2.3 m

In EUR mn

	9M 2012	Q3 2012	9M 2011	Q3 2011
Net result	(15.6)	7.7	(0.6)	3.4
Depreciation	22.9	8.3	19.7	7.1
Change in provisions	(8.0)	(10.0)	(18.0)	(1.3)
Change in working capital	(2.9)	(22.0)	(73.7)	58.4
Other cash outflow from operating activities	(29.1)	(12.8)	9.8	(8.0)
Cash flow from operating activities	(32.7)	(28.8)	(62.8)	59.6
Cash flow from investing activities	(40.0)	(19.0)	(34.4)	(10.7)
Cash flow from financing activities	(20.2)	(7.0)	167.8	(24.3)
Change in liquidity from cash flows	(92.9)	(54.8)	70.6	24.6
Liquidity beginning of period	212.0	175.1	141.1	184.2
Other	1.2	0	(0.7)	2.2
Liquidity end of period	120.3	120.3	211.0	211.0

Liquidity outflow due to planned production and installation peak in H2

Improved operating cash flow YoY

Development of inventories and working capital ratio 2010 – Q3 2012

• Strict working capital management resulted in a working capital ratio of 24 % (FY 2011: 27.7 %)
• Increase in working capital in Q3 due to procurement for the production and installation peak in H2 2012 but still below the level of Q3 2011

In EUR mn

	30.09.12	31.12.11		30.09.12	31.12.11
Liquid funds	120.3	212.0	Current bank borrowings	29.0	76.2
Trade receivables and future receivables	320.3	260.1	Trade payables	175.0	109.7
Net inventories	266.8	227.4	Other current liabilities	275.4	407.5
Other current assets	74.8	60.7	Current liabilities	479.4	593.41
Current assets	782.2	760.2	Non-current bank borrowings	27.4	0
Capitalized dev. expense	74.1	62.1	Deferred tax liabilities	14.0	16.8
Deferred tax assets	41.8	40.7	Bond2	152.6	1 -
Other non-current assets	166.4	166.0	Other non-current liabilities	33.9	42.2
			Non-current liabilities	227.9	59.0
			Shareholders" equity	357.2	376.6
Total assets	1.064.5	1,029.0	Total liabilities	1,064.5	1,029.0

¹Bond disclosed under current liabilities/ short-term debt in FY 2011 in the amount of EUR 154.6 mn ² incl. accrued interest

• Equity ratio at 33.6 % (9M 2011: 38.9 %)
• Re-financing/ syndicated loan negotiations under way

GUIDANCE 2012

Sales	EUR 1 – 1.1 bn Confirmed due to high visibility of project execution
Firm order intake	EUR 1 – 1.1 bn Narrowed to the upper end of the range due to recent and expected orders (e.g. South Africa, Germany, France)
EBIT	1 – 3% margin Narrowed to the lower end of the range due to supplier issues and temporary market freeze in France
Cash flow	Positive operating cash flow  Confirmed

CURRENT WIND MARKET SITUATION

• Temporary demand high in Germany; likely due to EEG 2.0 discussion
• Northern and Eastern markets stable Southern Europe still weak
• Change of legal framework initiated or expected for major markets
• First major order from South Africa after initial delays in the tender

Nordex: Encouraging customer interest in N117/2400, good production capacity utilization on single-shift basis; strong order book in Northern Europe and Germany

• US expecting a record year in wind installations 4.7 GW installed during Q1-3, a further 8.4 GW under construction
• BUT: Pending ITC / PTC-extension will lead to a sharp decline in 2013
• Nordex: Lack of orders in the US, production capacity underutilized; project development activities intensified in other parts of Americas (300 MW pipeline in Honduras; Chile)

Americas

• China will remain the largest wind market in the world but dynamics are slowing down – only 5.6 GW newly installed in H1 2012 (H1 2011: 8 GW)
• Tier II markets such as Pakistan, Philippines or Thailand developing
• Nordex: Difficult access to Chinese customers, capacities underutilized; first project in Pakistan (49.5 MW) fully commissioned

MARKET OUTLOOK UNTIL 2016

Regional development Assumptions

• MAKE forecast for 2012-16 slightly downgraded but global WTG installations to grow with a CAGR of ~5-6%
• Demand in Northern (CAGR +9%) and Eastern Europe (CAGR +11%) above average
• Southern Europe held back by the credit crisis, but still stable thanks to Turkey (CAGR +19 %) and France (CAGR +8 %)
• USA: Main reason for global market decline in 2013 due to policy uncertainty even after the elections
• Asian volume still driven by China but currently affected by grid constraints
• RoW: South Africa and selected countries in North Africa are new emerging markets

Sources: 2010/ 2011 - GWEC; 2012-2016 - MAKE Consulting, November 2012; AWEA

STRATEGIC TARGETS AND ACTION ITEMS 1

NXT 8.1 and NXT 8.2

• Optimization of Engineering and Purchasing
• Blade & Tower excellence project
• WTG EUR 100k cost down

Projects First Milestones

Development projects NXT 8.1 and 8.2 on time and budget for launch in 2013

WTG EUR 100k cost down in 2013:

• Project is running with 150 tasks (e.g. workshops with suppliers, finding suppliers in low cost countries in China and Eastern Europe, reduction in number of suppliers)

• 50% achievable by mid 2013, 100% by end 2013

• Global Planning Office (GPO)

• Working Capital Management
• Relationship project finance / ECA
• Interface to sales:
• Cash flow training
• Windmoney education
• Bridge finance NXD
• Support complex tenders

Projects First Milestones

• Global Planning Office staffed and established
• Project Management Office (PMO) set up including core team, work guidelines and web-based database tool "TrAction" to follow up on the strategic initiatives and its >50 measures
• Bridge finance vehicle for Nordex project development set up; signing for a French project pipeline

STRATEGY IMPLEMENTATION – UPDATE ON THE ACTION ITEMS CCO ¹

• Ramp up Sales Germany
• Expand Service sales
• Ramp up Nordex project development (NXD) organisation
• Turn-key excellence centre
• Fixed sales team
• Joint P&L responsibility for Sales and Project Management
• Processes (Windmoney, Gate process, SMEEP)

Projects First Milestones

• Germany initiative started reallocation of internal sales staff and new recruitment to take advantage of the current market momentum
• Project pipelines for NxD widened (e.g. Honduras, Chile)
• Turn-key excellence: South African project "Dorper" confirmed – set up of subsidiary Nordex Energy South Africa Pty. Ltd.

		2012e	Trend 2013	Trend 2014
Asia	Turnover EBIT	EUR 50 mn EUR -9 mn		No visibility
Americas Turnover	EBIT	EUR 170 mn Break even		No visibility

Stable situation for Asia and Americas in 2013 based on expected order intake

• BUT: strategy for sustainable profitability in both regions required
• Strategic review of Nordex´operations in China and in the US underway

Technology and R&D

Cost position

Financial resources

Nordex is focusing on its key performance drivers with a strategy reset and organizational adjustments

• Strategy being implemented as our top priority
• Strategic review of Nordex´operations in China and in the US underway
• Guidance 2012 confirmed (sales, operating cash flow) and narrowed (Order Intake, EBIT) before one off items
• Order intake promising so far in Q4

ANY QUESTIONS?

Q&A?!

Impressions of Beebe Wind Farm (USA) – largest N117/2400 project to date

11 March 2013	Publication of preliminary figures for the 2012 financial year*
25 March 2013	Publication of the Annual Report for the 2012 financial year; Press and analyst conference in Frankfurt/Main*
15 May 2013	Interim report for the first quarter 2013; Telephone conference
04 June 2013	Annual General Meeting in Rostock
15 August 2013	Interim report for the first half 2013; Telephone conference
14 November 2013	Interim report for the third quarter 2013; Telephone conference

*March dates prior to final statement from the external auditor

On the basis of 73.529 mn shares, as of November 2012

Disclaimer

The targeted goals in this document reflect forward looking statements which are based solely on estimates and not on predictable risks.

Should the estimates with regard to the successful integration of acquisitions and the future internal growth of the company not to be realized or if other unpredictable risks should arise, it cannot be ruled out that the actual financial results of the company will differ substantially from the targeted goals as laid out in this document.

In this respect Nordex SE is unable to give a guarantee that the actual financial results of the company will not differ from any forecasts or guidance given.

Contact

Ralf Peters

Head of Corporate Communications Phone: +49 (0)40 30030 1522 Fax: +49 (0)40 30030 1333 eMail: rpeters@nordex-online.com

Nordex SE

Langenhorner Chaussee 600, 22419 Hamburg, Germany www.nordex-online.com