Dear ladies and gentlemen, welcome to the interim report Q3 2021 of Nordex SE. At our customer's request, this conference will be recorded. As a reminder, all participants will be in a listen-only mode. After the presentation, there will be an opportunity to ask questions. If any participant has difficulties hearing the conference, please press star key followed by the zero on the telephone for an operator assistant. May I now hand you over to Mr. Zander, who will lead you through this conference today. Please go ahead, sir.
Thank you very much for the introduction. 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 Q3 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. Now, I would like to hand over to José Luis. José Luis, please go ahead.
Thank you, Felix. Good afternoon, everyone. I'm sure most of you will have seen our press release on preliminary financials and revised guidance last Monday. Today we announce the final results for the first three quarters of the year, which are in line with what we announced last week. 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 book 23% more orders in this period compared to the previous year, of which, keeping the trend, around 80% of the orders were for Delta 4000 platform. Second, financial performance.
We deliver almost EUR 4 billion in sales with an EBITDA margin of 2.5% in the first three quarters of the year. Let me again reiterate that this was achieved in a highly volatile and inflationary environment 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 EBITDA levels so far. Additionally, during the quarter, we are strengthening our balance sheet with EUR 586 million rights issue.
As a result of that, we have an equity ratio of 28.5% and a net cash position of EUR 560 million. As you can see, we now have a strong financial structure in place to ride us over the period of volatility, rationally. During the Q1 , talking about technology, we added a new variant to the product portfolio, the 6.X. 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 strategic targets given the extremely volatile environment. This is not only just affecting wind, but many other sectors at large. With this, let me hand over to Patxi.
Thank you very much, José Luis. Looking at the orders, as was briefly mentioned, now we closed 4.6 GW 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 back-ended 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 remains stable at EUR 0.70 million per MW. Service sales amounted to 8.4% of group sales in the first nine months of the year with EUR 332 million and an EBIT margin of 16.7%. The fleet on the contract stands at 27 GW with an average availability of 97.3%. Turbine order backlog remains stable at EUR 5 billion, despite the significant growth in sales in the period. Service order backlog grew 7% to EUR 3 billion for a combined order backlog of EUR 8 billion at the end of the period. With this, I hand over to Ilya.
Yeah. Thank you, Patxi. And 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. Let's first look at the income statement. Our sales grew by 25% to almost EUR 4 billion on the back of the high level of execution and in, as José Luis mentioned, a very tough environment. Our gross margin stood at 17% compared to this chart of 11% last year, which is in a better margin of 2.5 percentage points in the first nine months of this year, so around EUR 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 costs of almost EUR 100 million, so it's a bit on the higher side for financial costs, and it's due to basically two reasons being one-offs for both the cancellation of the shareholder 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 canceled and have been booked into Q3. With that, let me jump to the balance sheet.
Through the capital increase, we've mentioned a few times, we have now significantly fortified our balance sheet and have put it on a stronger footing, which is helpful in the current environment, of course. As a result, we now have a strong cash position, EUR 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 EUR 600 million, mainly due to the, I mentioned it a few moments ago, repayment and cancellation of the Schuldscheindarlehen and the RCF facility. With that, our net debt position now converts into a net cash position of EUR 560 million. That brings me on the next slide to the working capital.
Working capital ratio also continues to be quite tight at -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. Overall, it remains clearly below our guided number for the current year, which is at -6%. That brings me to the cash flow statement on the next slide, where the cash flow from operating activities stood at EUR 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 just mentioned. In terms of cash flow from investing activities, it has been a regular quarter, largely in line with our investment program.
There's a positive free cash flow of around EUR 30 million in Q3, thanks to that successful working capital management. For the nine months, this is overall a EUR 23 million number, as you can see on the slide. Last but not least, cash flow from financing activities stood at EUR 73 million. That also reflects the cash proceeds from the capital increase, offset by the repayment and cancellation, again, of both the RCF and the Schuldscheindarlehen. With that, I would quickly go to the investment slide, the CapEx, very briefly. We invested around EUR 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 on the 112- 108, basically on the same level.
The focus on our investments remained the same. Main investments were again in the blade production facilities in India, as well as tooling equipment covering our ongoing high installation activities. With that, I go to my last slide, which is the capital structure. As expected, and also mentioned before, our capital structure substantially improved post the rights issue and the shareholder loan conversion that was done in the same transaction. Our leverage ratio now stands at -4.2, and our equity ratio now stands at, I said it before, 28.5% versus 16.5% in Q2. With that, I would summarize my key takeaways before giving it back to you, José Luis.
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. Also our planning and forecasting ability is therefore constrained in this environment because visibility is much less than usual times. 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 in tackling the cost inflation, and dynamic and faster responses in our planning and costing to adapt to this fast-changing environment. With this, I will give it back to you, José Luis.
Thank you. Thank you, Ilya. Talking about the operation side of the business, let me provide you a quick overview of the operational performance. As you can see, the left chart, we installed a remarkable 46% more MW compared to the same three quarters of the last year. We have done this in 22 different countries across the world. This is a remarkable achievement, as is a substantial growth, and is an installation profile that was achieved in one of the worst supply chain disrupted environments. I think this was not very much affected by the pandemic, but was affected by the consequences of the pandemic. A lot of disruptions in availability of parts, vessels, so on and so forth. On the production side, same environment.
We managed to keep increasing our 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. This is around 40% of the total demand for blades. 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 cost, and as well give us the possibility to adapt the footprint to disruptions in the costing side of the company or in the volatility in shipping.
Second, India remains a key component in our strategy, although in a slightly slow ramp up due to the ongoing issues in the logistics environment for inbound logistics as well as for project logistics. 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 EUR 5 billion-EUR 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 extra 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 readjusted in the pricing policy to the customers. Once those boundary conditions are achieved, we believe we can reach our normalized EBITDA margin of 8%. With this, as always, I would like to open the floor for Q&A.
Yeah. Thank you very much. Operator, please, open the channel for questions. Thank you.
Thank you. We will now begin our question and answer session. If you have a question for our speakers, please dial zero and one on your telephone keypad now to enter the queue. Once your name has been announced, you can ask a question. If you find your question is answered before it's your turn to speak, you can dial zero and two to cancel your question. If you're using speaker equipment today, please lift the handset before making your selection. As a courtesy of our special participants, may I finally request that you limit the number of questions you ask to three at a time. We have a first question. It's from George Featherstone, Bank of America. The line is now open for you.
Hi. Good afternoon, everyone. I'll take my questions one at a time. Firstly, just trying to get a sense of the underlying margins for the business. 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 charge is for 2021.
I think we mentioned in the call last week, and somehow we can comment here that, of course, there are some at least expected in the forecast. We cannot go into more detail because, first, we don't know the exact number. Second, it's not that prudent because those discussions are ongoing with customers, so it's even premature to give you a precise number. In normal circumstances, this should not be part of business planning. Due to the, I would say, substantial disruption in availability of vessels and so on, these are included as part of our forecast. Unfortunately, I cannot be more specific at this point in time.
Maybe this is to complement what or to add to what José just said. Let's remind us that the LDs is just part of what now we have shown last week in those-
Yeah.
During the guidance, I mean, by and large, it is that inflation pressure from the logistics, from the commodities. That is, let's say, the bulk of the impact we've been seeing.
That's it.
When seeing our guidance affected.
Talking about the underlying margins, I mean, without all those effects, that's very much what substantiates our view that the mid-term strategic target should be able to be achieved once stability comes back to the market. Which means that the underlying margins, without those effects, are unchanged, so remain very much as they were before.
Thank you very much for the color. I mean, just as a follow-up to this question in general, I think what people are trying to understand is there's clearly ongoing logistics and raw material price inflation and cost pressure associated with that, which might be transitory, and it might also continue into next year. Clearly, liquidated damages is much more one-off and specific in nature. Just wondered within the guidance range or guidance now that you've tightened to 1% EBITDA margin, can you let us know a rough range? Is it double-digit million or triple-digit million that could be associated with these liquidated damages? Thanks.
Not triple digit. Again, as Ilya mentioned, there are reasons for the deterioration in the profitability. This is one, but the vast majority is the extra cost that we have in the logistic operations. As well, to lesser extent, the extra cost that we have in the bill of material to produce our products. Resin is more expensive, in some cases, steel more expensive, and so on and so forth.
Okay. Thank you very much. My second question would be on the services margins, which increased significantly year-over-year in the Q3 . Just wondered what drove this margin expansion. To your 1% EBITDA margin for the group, what are you assuming the services will be for the full year?
It is a quarterly effect, the increase versus the previous period. What we are seeing is not dissimilar to the turbine business, service improving the margin, but however, we also hit by the inflationary pressures that we were mentioning. At a less 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. The inflationary pressures are also preventing us to get to that target towards the end of the year.
Just to confirm with that one, 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. Then my final question would be on orders ASP. 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. If I've understood it correctly, this order is about as close to a clean turbine price as possible, given there's no logistics and installation in it. This order would represent a headwind in effect to the overall ASP level year-on-year. I just wondered if you could help us with the bridge to compare it basically with last year. With the underlying turbine pricing increases that you've done in Q3 on a year-on-year basis.
Your logic is right. It is precisely the McIntyre contract that is very large. The weight that it has 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 specific deals or specific customers. Again, reiterating that without this effect on the McIntyre contract, the ASP would be higher than 0.70.
Okay. 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.
The next question is by Vivek Midha, Citi. The line is now open for you.
Thanks very much, everyone. Good afternoon. I'll go one at a time if that's possible. Firstly on the working capital and cash flow. You've delivered your second successive quarter of inventories at this quite good, quite low level. What have you done in order to get there, and how should we think about the development of inventories going forward? Do you see this current level as sustainable, or could this be a ramp-up going into 2022? Thank you.
Yeah. 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 pans out for 2022. That's how I understood the question.
That's correct. Thank you.
Okay. Yeah, I guess for the first part of that question, as I've been saying earlier, the key driver for 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. 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, I said it last week, apart from not guiding cash flow, I would like to ask for your understanding as we're saying that we'll come back for a better look on 2022 when we come out with the guidance at the beginning of March.
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 as a fact because that would not be prudent to do at this stage.
Okay.
For the sake of completeness, I will say that of course we will always have that utmost ambition of keeping the working capital levels tight.
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 run with a higher ratio of inventories to sales. I was just wondering if you, I mean, how you assess this current level and how sustainable that would be. Thanks.
Sure thing. I will say, I mean, at the end, we operate in a pull system project by project. We don't build inventory. We book orders and then, at the very same moment, we try to de-risk production, so closing orders with suppliers. 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 the specific contract. Are the same goods produced in a nearby site or not or far away? Is the title transferred at origin, at the port, at destination? It's quite. There are many factors that could affect this.
Generally speaking, I don't see reasons why things should change substantially. I would say that more or less in a year-on-year should be a stable thing. I think I don't expect a build up of inventories because, I mean, the project locations are the same, 50% 55%, 60% Europe, rest, Latin, U.S., Australia. Given the factory locations where they are and the payment conditions that we are demanding to the customers and the title transfer conditions, I don't think this is gonna change substantially.
Okay. Understood. Thank you. That's very helpful. My second question was just a follow-up on George's pricing. 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 or see pricing go to over the next few quarters in order to be able to fully offset that cost inflation? Thank you. Also given that, you know, 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 the guidance last week, was around 3%-5%, 3.5% percentage points. On average, that would be the average price that you would have to increase in order to maintain margins as they are. That is, costs remaining equal, the price increases that you would need in order to maintain prices. However, again, I return to the volatility that we see, that is very complicated for us to have.
Mm-hmm.
We have a 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 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. This is this.
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, they pass through, and we are trying to reset the pricing levels of the turbines in the different markets to absorb as well the further waves of inflation.
Understood. Thank you. Just to follow up on that latter point. I understand there's what you need on the backlog. 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?
Is very, very specific again, and I would return to the point of markets, products, customers. 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 offtake 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. It's very specific to customers, markets, and products.
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 contracts. I mean, there are factors that are very difficult for us to hedge, the cost of inbound logistics. I mean, very difficult to agree with a customer hedging that risk, among many others. The best thing, or what we are trying to do is to strike back-to-back contracts at the notice to proceed, when possible, and not if. That is not always possible with steel towers, with shipping companies and some others.
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 biggest enemy is that deterioration 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. The deals that we are landing today with the visibility that we have today and with the maximum de-risk strategy we can apply in a deal-to-deal basis, that over time should be able to deliver the underlying profitability.
If things keep deteriorating in the cost side of the business, either because there is huge volatility or disruptions that affect your ability to deliver, and as a consequence, more cost to deliver, then that assumption might not be true over time. 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.
The next question is by Ajay Patel, Goldman Sachs. The line is now also open for you.
Good afternoon, and thanks for taking my questions. I have three. I'll just go through them, and then if you could answer, that'd be great. I'm still a little bit unclear about the McIntyre project. We know that logistics was not in the contract. Do you receive a lower margin on these projects because you transferred that risk to 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. If you were to strip this project out, what percentage has your ASP increased, Q3 on Q3?
The second question is that earlier in this year, you identified that we do an equity raise to improve the credit metrics to ensure that you can get a better share of an improving U.S. market. I'm just wondering what size buffer does that need to be to ensure that your metrics are still in the right position to take advantage of that opportunity.
I'm just thinking two, 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. The last one is just on impact. Now, rightly, we have a lot of headwinds into 2022. As you see right now, would you also expect an impact into 2023 as well? Thank you.
Let's elaborate on these things here, the three questions. Regarding McIntyre, the price is adjusted to the risk and to the scope. I don't know. Yes, no, probably not specific comment on, obviously, on margins from specific customer deals. Going back to the percentage of ASP increase, that we will not disclose, but it's not insignificant given the size, the market-relative size of McIntyre with respect to the total order intake. I can give you one public information that we mentioned. We spent, let's say, around close to EUR 700 million in logistics for a 6 GW-plus installation. I mean, it's not a scientific KPI because it varies a lot, but you can do your math, what the logistic impact could be in average terms.
Maybe on the second point of the capital increase, I start.
Yeah.
The rationale remains the same as we've been giving it earlier, which is that resetting of the balance sheet in one go. Let's not forget that we also managed to extend and expand the bond line, the MGF, in the wake of that. More specific to your question, from where I'm sitting on the CFO perspective and what customers relay back to us, several of those ratios and metrics are important. I would single out here probably the equity ratio, which we've seen improve from 60.5%- 28.5%, which is now in line with market peers and what customers perceive. That was one of the key drivers, if you will, for doing that. When it comes to the U.S. customers-
Yeah.
We've been saying this.
No, I think on an ongoing basis, 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 managed to sell. I'm wondering if we could do that with a different balance sheet structure. You never know, but I think this has played a role there. 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 structure, even in the U.S., which is I will call it the most demanding in that characteristic.
Regarding 2023, as I mentioned before, if the cost remains at the level that we have today, if we don't see 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 signal that? No. Because you know, 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, you know, signal you something that might change tomorrow and that we don't control.
Stability, keep selling, trying to pass to consumers through customers the cost increases, trying to de-risk the cost side of the company as much as we can with back-to-back when possible. Once 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. Just on the question on the Australian project. I'm 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 you are coming back to revealing specific margins for specific customers, which we will not do. It is true that on a risk reward the scopes that we differently sell generally come at different margins as well. By this does not mean that this particular deal has a particular margin. Generally, the concept that you mentioned is the right one.
Okay. Thank you very much.
The next question is by Constantin Hesse, Jefferies. The line is now open for you.
Hi there. Good afternoon. Thank you very much for taking my question as well. The first one is, you know, you just said that if costs remain at this level today, you know, you could, you could reach the 8% EBITDA profitability level in 2023. 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.
Clearly, you're gonna 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. Thinking about future CapEx cycles and innovation, how far longer can you drive the Delta4000 platform? Lastly, if you could share any updates or anything you might be doing on the project development side of things, which I know is not core for you, but just interesting to hear what's happening there. Thanks.
Thank you, Constantin. Let me take or let's do it together. The first one, you are right. In that event, the math should work, but we don't have that visibility, unfortunately. Sorry for that. At this stage, I will be more than happy that things do not deteriorate than things substantially improve because logistics goes down. We are working in ways to try to bring more stability to the cost side, and that is as much as we can report. Regarding CapEx, we see stability in the CapEx of the company.
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.
The next question is by Sean McLoughlin, HSBC. The line is now open for you.
Thank you. Good afternoon. Firstly, question on the strategic sales targets. I mean, we've talked a lot about profitability, but you know, 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 EUR 5 billion top line in 2021. What is holding you back from providing a higher sales target? Because if I look now optically, your current target of EUR 5 billion implies flat at best on visibility going forward. If I think there's growth in services, that then implies you know, 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 we have in the ability to deliver. If things go to a reasonable stability, you are right. We should be able to outperform there. 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.
Eventually, if there are good news later, share those with you rather than to be more aggressive and disappoint you. 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. We are comfortable in our ability to sell. As we heard Patxi, we are gonna do a better year this year than compared to last year. The company is executing under, I will say, unprecedented global disruptions in supply chain. In this environment, you know, we try to give you the best visibility we can.
Okay. Maybe if I can just follow up on that. Eight percent in the midterm, would I still be assuming a EUR 5 billion sales figure on that EBITDA margin?
Very much 6+ GW plus a 10% internal growth rate in services. The current cost structure stable, the current ACNA 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 debt costs. I mean, what is now your average cost of debt?
I take that one, obviously. Again, we're typically not going into the specific run rates we have for the financing cost. What is fair to say, and I think important to repeat now that we got the question is that with our capital increase, the reduction will and should be substantial. I think we've said it, or 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 conversion of the shareholder loan into equity and also improving our ratios, hence getting better conditions under our bond line, the MGF, plus some savings from the EIB and other smaller portions.
I'd repeat that our ambition must be 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 EUR 40 million. That's still the ambition level we have. When you compare that to our last years and probably that year other than the one-offs I mentioned earlier, are very similar. That's where our ambition goes, so having substantial saving in that respect.
Understood. Do you have any visibility on being able to further improve that cost through refinancing over the next 12 months?
Yeah. Thanks for the question, Sean. I was asked that last week, and, as I said, we do have the maturity of our high yield bond in the year after next. We're now looking into all options, how to refinance that and at the right timing. There might be a further potential from that end.
Thank you.
Okay. Thank you, gentlemen, for participating in our call. I would like to say goodbye from my side and would like to hand over to José Luis for your final remarks. Thank you.
Thank you very much for your question. Thank you, Felix. Let me summarize our key takeaways from this quarter. First, as was mentioned in the Q&A, with Patxi, we continue to generate and maintain a good order intake momentum, which give 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 market and shipping rates. Thankfully, we are in a industry that needs to grow quite rapidly if we are to believe the government targets. On top of the new green hydrogen aspirations, or just in general, the ambition to decarbonize the world by 2050.
In addition, wind being 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 renewals.
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 bridge 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. With this, just thank you for your participation in our call, for your questions, for your time. All the best, and see you in the next occasion. Goodbye, and have a good rest of the year.
Ladies and gentlemen, thank you for your attendance. This call has been concluded. You may disconnect.