Ladies and gentlemen, welcome to the Nordex SE Q3 2025 Results Conference call. I'm Moritz, the COROS call operator. I would like to remind you that all participants will be in a listen-only mode and the conference is being recorded. The presentation will be followed by a question-and-answer session. You can register for questions at any time by pressing star and one on your telephone. For operator assistance, please press star and zero. The conference must not be recorded for publication or broadcast. At this time, it's my pleasure to hand over to Anja Siehler. Please go ahead.
Thank you, Moritz, and a very warm welcome from the Nordex team in Hamburg. Thank you for joining us for the Q3 2025 management call. As always, we ask you to take notice of our safe harbor statements. With me are our CEO, José Luis Blanco, and our CFO, Ilya Hartmann, who will lead you through the presentation. Afterwards, we will open the floor for your questions. Now I would like to hand over to José Luis.
Thank you very much for the introduction, Anja. On behalf of Nordex Management Board. Very warm welcome to the presentation of our third-quarter results for 2025. A quarter that marks a significant milestone in Nordex's journey. Let's start with a short recap of our guidance upgrade, which we communicated last week. Over the past three years, we have made consistent progress in strengthening the business. And our profitability. Growing order intake is slowly starting to translate into sales, and we have step-by-step improved our margins and free cash flow generation. With an EBITDA margin of 8% in Q3 and 6.5% year to date, we have continued that positive trend. This performance, along with our updated outlook for the remaining of the year, has led us to raise our profitability guidance for 2025.
If we move to the next slide, let's now start highlighting the key achievements of the third quarter in detail. First, our order book continues to show strong momentum. Turbine orders in EUR grew by 36% year-on-year, while service orders rose by 20%, bringing our total order book to an impressive EUR 15 billion. Second, we have made significant progress in profitability. EBITDA reached EUR 136 million, a 90% increase compared to last year, with an EBITDA margin of 8%. Our service segment also continued to strengthen, achieving an EBIT margin of 18.6%. Third, on cash generation, we are happy to report another quarter of robust performance. Free cash flow rose to EUR 149 million, and net income increased to EUR 52 million, up from just EUR 4 million in Q3 last year. Our net cash position now exceeds EUR 1 billion, underscoring our financial resilience.
Finally, this strong execution across both projects and service enables us to raise our full-year margin guidance to 7.5%-8.5%, bringing our mid-term target of an 8% EBITDA margin well within reach. These results clearly demonstrate that Nordex is delivering on its commitments, enhancing profitability, generating strong cash flows, and building a solid foundation for sustainable growth. Let's now turn to the next slide, where I will go through the current market conditions in more detail. The third quarter of 2025, we saw another strong order intake moment. Nordex delivered 2.2 gigawatts in Q3, marking a 26% increase in megawatt terms and 27% growth in order intake value year-over-year. This translates to EUR 2 billion in value from orders across 16 countries, with most projects coming from Europe, primarily Germany. North America as well, particularly Canada. Pricing remained stable and has been stable now for quite some quarters.
Let's move to the next slide, the order book. Driven by strong performance across four segments, our total order book reached EUR 15 billion by the end of the third quarter of 2025. Turbine order book grew by 36% year-on-year and stands at EUR 9.3 billion end of September. Most of these orders will be installed in Europe, followed by North America, here mainly Canada, Latin America, and other international markets. On the service side, our order book increased by 20% year-on-year. This growth is a direct result of the expansion of our turbine two years ago, which now translates into recurring service revenues. Let us move to the service business. Looking at the third quarter of 2025, I'm pleased to report that our service business has continued to improve faster than expected and surpassed the 18% EBIT margin line already in Q3.
Service revenue continued to grow at a high level year-over-year, reaching EUR 219 million in Q3 2025. The share of service sales now accounts for approximately 13% of the total group sales. As we have outlined previously, EBIT margins are on a clear upward path. In Q3, our service EBIT margin reached 18.6%, continuing the steady improvement we've seen over the past quarters. Let me also highlight a few key operational KPIs. Average availability of our wind turbines under service remained high at around 97%. The average tenor of our service contract continued to be around 13 years. Let's move to the next slide, our installations and production figures. Installations were up by 28% year-over-year, reaching around 2.6 gigawatts in the third quarter of 2025.
In the current quarter, we installed a total of 420 turbines, with the majority of installation occurring in Europe, followed by Latin America and North America. On the production side, we assembled around 2.5 gigawatts of nacelles, corresponding to 428 turbines. Blade production in units was down around 25%, mainly driven by temporary delays at a supplier factory in Türkiye. Now I will, as always, hand over to Ilya to go over the financials.
Thank you, José Luis. Also welcome from my side. Again, as always, I will start with our income statement. In the third quarter of 2025, sales amounted to around EUR 1.7 billion, broadly in line with the same period last year. Sales, as we've mentioned, were held back by project scheduling mix and temporary supplier-related delays in Türkiye. We again further improved our gross margins, reaching 28% in Q3 after 24.8% in the last quarter and 21.6% in the same period of last year. As a result, we delivered an absolute EBITDA of EUR 136 million in the third quarter, nearly doubling the EUR 72 million achieved in the same period one year ago. This corresponds to a further improvement in our EBITDA margin, as we've mentioned several times, reaching 8% in Q3 2025, up from 5.8% in the previous quarter this year and 4.3% in Q3 of last year.
On the back of that performance, we closed the quarter with a positive net income of EUR 52 million, compared, as we've mentioned, also to EUR 4 million in Q3 2024. With net income already totaling EUR 91 million for the first nine months of 2025, we're confident that we will deliver a robust full-year result and hence exceeding last year's net profit substantially. With this, let's move to the balance sheet. Looking at the balance sheet, the overall structure remains largely unchanged compared to the end of 2024, reflecting a similar and, I'd say, robust financial position. We closed the third quarter with a strong cash position of around EUR 1.4 billion, and the working capital improved to minus 8.2%.
That is in line with our internal planning and targets and for the full year, of course, we stand behind our guidance of below minus 9% and think we can go even beyond. The equity ratio reached 18.3% at the end of Q3, showing a steady improvement over Q2 of 2025, 18%, and year-end of 2024, which was 17.7%, underpinned by the strong net income development. Finally, let's have a closer look at other balance sheet KPIs, how they have developed. Overall balance sheet figures continue to perform well in the third quarter of this year, extending the positive trend we have seen throughout the year. Operating performance in the third quarter led to a further increase in net cash, which totaled EUR 1,073 million at the end of the quarter, compared to EUR 583 million in the same quarter of 2024.
Again, the working capital ratio at the end of Q3 stood at minus 8.2%, or in absolute terms, minus EUR 594 million. That brings me to the cash flow and CapEx slide, which is the last one for me. Here we can see that the cash flow from operating activities stood at EUR 180 million at the end of Q3, reflecting the ongoing and explained robust operational performance of the company. We generated a positive free cash flow of EUR 149 million in the third quarter compared to last year's quarter, which stood at EUR 159 million. Looking ahead, we expect to maintain positive free cash flow generation in the fourth quarter, depending, of course, on a few factors: order intake and working capital movements. We anticipate, again, without guiding their specific figure, that the company could add another EUR 200 million-EUR 300 million in free cash flow in Q4.
CapEx spending was at EUR 34 million for the quarter, slightly less than the previous year quarter. Since the beginning of the year, so for the nine months, CapEx totaled EUR 97 million. However, we would expect CapEx to further increase towards the end of the year and to continue moving in the direction of the around EUR 200 million we have and continue to guide for the full year. Our main investment priorities remain largely unchanged, with investments primarily in blade and nacelle production facilities, tooling for installations and transport. With that, I would like to hand it back to José Luis for the guidance slide.
Thank you, Ilya, for walking us through the financials. Again, based on a solid nine-month performance and the review of our forecast for the remaining of the year, we now expect 2025 to register a significant step up in profitability compared to 2024 levels, bringing us very close to the medium-term EBITDA margin target of 8%. Reflecting strong service EBIT margins and solid project execution, we have raised our EBITDA margin guidance to a range of 7.5%-8.5%. While we are not issuing formal guidance on free cash flow, we remain confident in our ability to deliver another year of robust free cash flow generation. All other elements of the guidance remain unchanged. Before I am handing over to Anja to open the Q&A, I would also like to take a moment to thank the Nordex team for their consistent effort and commitment.
Your work is truly appreciated, and we are now able to see this hard work also in our financials. I also want to thank our analysts and investors for your continued trust and support. It means a great deal to us. We will try to continue to deliver on our promises. With this, I am handing over to Anja to open for Q&A.
Thank you, gentlemen, for leading us through the presentation. I would now like to hand over to the operator, Moritz, to open the Q&A session.
Ladies and gentlemen, we will now begin the question-and-answer session. Anyone who wishes to ask a question may press Star and one on their touchstone telephone. You will hear a tone to confirm that you have entered the queue. If you wish to remove yourself from the question queue, you may press Star and two. Participants are requested to use only handsets while asking a question. Anyone who has a question may press Star and one at this time. One moment for the first question, please. The first question comes from Vivek Midha from Citi. Please go ahead.
Thank you very much, everyone, and good morning. I hope you can hear me well. I have one question and one follow-up, please. My question is just a broader, maybe more strategic question than just around 26, but your midterm margin target has been around 8%, and you've hit that for the quarter, guiding that for the full year. My question is really around where we go from here. Beyond just further volume developments and movements around a cycle about perhaps a new level, are there any further company-level drivers that you see that can maybe support your margins further in the future? I mean, it would be very interesting if you're thinking about what might be the right timing for maybe considering a new midterm target to supersede the existing one. Thank you.
Thank you, Vivek, for the question. As we mentioned as well in the ad hoc call, give us some time. I think we are confident that we can repeat another good year in order intake to support 2026, but we still have a huge amount of orders to be solved in the remaining of the year. Of course, the biggest drivers for midterm are volume and gross margin per unit, and gross margin is a function of the price in the marketplace and the stability in the cost. That is as far as we can go. If all things being equal, yes, directionally, 2026 could eventually be better, but there are many ifs. All things being equal, we need to keep this good execution, this supply chain stability, this order momentum. The rest, we need to wait until February to talk about 2026 and to talk about the future.
Understood. Just following up on that, then I'll ask my other question. I guess my question was more broad around the transformation. You've done a huge amount of work to transform the group. You obviously rebalanced the cost base and so on. Are there any other initiatives that you're working on at the moment, or are you generally happy with how the cost base looks, how the structure of the group looks, and so on? Thank you.
We have super focus in our main value string: technology, quality, supply chain stability, delivering products on time and with quality with our customers. We enhance our customer base that will repeat business with us. That's our daily job, and I expect this will continue to be our daily job in the future. There is no other strategic initiative ongoing other than keep enhancing our mainstream business.
Understood. My final follow-up is just around the CapEx guidance. I think you said that we should move in the direction of that EUR 200 million CapEx guidance. Clearly, we're just below EUR 100 million. Could there maybe be a bit of a push out of some of that CapEx spend to 2026? I'm just trying to reconcile that step up in CapEx implied in the fourth quarter, which is quite meaningful. Relative to the commentary suggesting EUR 200-300 million of free cash flow in Q4. Thank you.
Vivek, that's a very fair question. Yes, we have been discussing with all folks, especially in operations, about the final stretch of the year, and of course, most is happening now. I think if anything, we will fall a bit short on that CapEx rather than overshoot it. The assumption embedded in your question is there could be a push out. Yes, there really could be. I would not say order of magnitude, but it is not unlikely.
Understood. Thank you very much.
Thank you. The next question comes from Ajay Patel from Goldman Sachs. Please go ahead.
Thank you for taking my questions. I guess I have really two. I'm trying to think. You're largely a European-dominant order backlog, and I'm just kind of thinking forward. Outside of the pickup of Germany, where do you see additional pockets of growth? The other thing is, the business has changed quite a lot over the last five years. To what degree is the manufacturing footprint right-sized with the existing delivery footprint? Just thinking maybe a bit longer term, right? We had a medium-term target, or we still do have a medium-term target of 8%. What is the right margin for the business, given all the experiences we've had over the last five years? Is it a bigger number? What are your aspirations? If it's not driven by volume growth, given that picture has been painted, is it more from the cost side?
Thank you, Ajay, for the questions. I would say yes, our backlog relies majority in Europe, and we are tapping as well the German increase in demand that is so desperately needed to improve the energy costs for the country and to improve the resilience of the energy supply. Other than Europe, we have been, and we are very successful in Canada, and we are committed to go back to the market in the U.S. without traditional market share in that market. Today, we do not have sufficient visibility to tell you how much volume is expected from the U.S., but for sure, sooner or later, we will harvest our share in that market, our small share. We have not the ambition like in Europe. We have modest ambition in the U.S., but the U.S. will play a role for us.
We are as well active in Australia, and we are still competing, struggling, but competing in Latin America and South Africa against Chinese competitors. Regarding supply chain, I think we have the right supply chain for the current market conditions. It is flexible enough to adapt to a different macro scenario, name it duties, name it Net Zero Industry Act, name it trade war, and so on. It is not the time, in my view or in our view, to put all the eggs into the most competitive supply chain we see with the view of today. I think we need to take a long view to understand how the dynamics in the world are playing and how to hedge the best possible way to a changing world. Are we fully prepared for any major disruption? We are not. Are we taking that into consideration that disruption might come?
Yes, we are taking that into consideration, and that is why we have several configurations to deal with different scenarios. Your third question in the long term. Of course, we always want better margins for our business and for our company and for our industry. I think our industry is very competitive, has proven the ability to deliver the lowest cost of energy in most of the geographies where we operate, and we deserve recognition for that and for the impact we have in energy independence and the resilience of the energy system. You know very well that this is a market dynamic, and the key factors are volumes of the market, market share, prices that drive prices, and costing. Where this market is going to go, I think the market will tell.
I do not think I can give you more visibility than the one I have nine months ahead, which is why we issued the guidance in February for the year. We will do the same for next year. The current view we have is we are confident that we see moments of stability, and all things being equal, we should be slowly improving year on year. This is as far as we feel comfortable to go.
Okay. Thank you very much. The next question comes from Tore Fangmann from Bank of America. Please go ahead.
Thank you. Good afternoon. Thank you for taking my question. Just one from my side. Your rotor blade output came down year on year, which was connected to the issue in Türkiye. How confident are you that this does not impact markets outside of Türkiye? How do you think about this going into 2026 when you think about timings in your supply chain, but also cost impacts into 2026? Thank you.
No, thank you very much for the question. I think for 2025, beginning of the year, we were spotting that this might be a risk, and we provided for. Finally, we managed to deal with the impact in 2025. As we mentioned in the call, we are, as we speak, negotiating with customers, with government, operationally as well, how to bring blade production in Türkiye back on track. I would say global deliveries, I can confirm that will not be affected. This is Türkiye for Türkiye. Nonetheless, Türkiye for Türkiye, it might affect, it might affect the revenue, it might affect somehow the profitability of next year, but it is a Türkiye topic. We are working around the clock to restart blade production in Türkiye and negotiating with customers and with government and with different stakeholders the best way forward.
One key important aspect to mention is that we are fully committed with Türkiye. We are fully committed not just to deliver these blades as soon as possible for the projects that we sold. We are fully committed to invest in Türkiye for the long term because it is a country with sustainable volumes where we are market leader, where we have a huge brand and reputation, a very good team with the ability to deliver, and we plan to stay doing business there in the long term. Short term, we will figure out how to deal with the situation in the best possible way for all stakeholders.
Thank you. Very well understood. Is there any way to quantify a potential risk going into 2026, or is this too early to say? Thank you.
It's too early to say. It's too early to say because it's too early to say, and I wish I could be more transparent. As this is a moving target and many negotiations are ongoing, I prefer to be prudent. We will give you more light in the 2026 guidance.
Very fair. Thank you.
The next question comes from Richard Dawson from Berenberg Bank. Please go ahead.
Good afternoon, and thank you for taking my questions. Two from my side. Last week, you mentioned that you could see financial costs start to reduce as the financial health of the company starts to improve. It looks like that started in Q3, or really actually started across this whole year with expenses now about $20 million a quarter. Do you see this going lower next year, or is this an appropriate run rate for sort of quarterly assumptions going forward? Second, what's the current status of the factory in Iowa in the U.S.? I believe the last update was that it was ramping up to qualify turbines for the U.S. market. Is that still the case? Thank you.
The second question, I take it, is yes, we are assembling components and nacelles to qualify for the U.S. market, and the ramp-up is as per the plan. We have not changed our plans for the Iowa factory. Regarding the first question, you take it, Ilya?
Yeah. I take the one on the financial interest one. It has started this year, and that's the short version. It started this year and will continue to improve next year because the costs largely here are driven by what we have to pay for our performance warranty bonds, down payment bond, and the like, which is the large bond line we have. The interest we pay for that is, as I said last week, and you mentioned it, is against the risk profile of the company that has substantially improved. Now we're rolling over basically bonds from existing facilities into new arrangements. Those bond costs are typically, not typically, all of them are cheaper than the ones we're getting out the door. I'd say the larger effect we will see next year.
What we've seen this year so far is a start, but that should continue into 2026 when we believe that the full things will be rolled over, always like for like. It means if volume increases further, we will need more bonds. Of course, financial interests will move with that proportionally. On a like-for-like comparison, I repeat what I said last week, we're getting substantial relief on the cost side there.
Okay. That's clear. Thank you.
The next question comes from Constantin Hesse from Jefferies. Please go ahead. Mr. Hesse, your line is open now.
Sorry, I was muted on my own line. Thanks for taking my questions. Just a quick, so staying with Türkiye for a moment. Just trying to figure out what is the worst-case scenario here. I mean, if TPI indeed, I mean, probably goes bankrupt, who takes over that factory? I'm just trying to figure out what's the worst-case scenario. How could this potentially look like for you? Does a third party take over that factory? Would you have to take over that factory? How do scenarios look like?
Let me figure out how I can be transparent without not being fully transparent because that could be contraproductive. We are working as we speak to set up an in-house blade plant to start producing blades somewhere mid next year. We are in conversations to find, if possible, a way to produce blades as well in the existing facilities. Depending on the success and the speed of both projects, that will determine the quantities of blades available for the projects, and that will determine the revenue, the profitability, and the liquidated damages, if any, of those projects next year. As we speak, we are building an in-house plant, and we are negotiating with some stakeholders a safe process to restart blade production there.
Okay. Understood. This was great. Thank you. Next question would be just on the margin very quickly. So Luiso, Ilya, so your comment was, look. Next year, right, you're probably going to have a little bit more volume. So far, supply chains are looking pretty good. So potentially next year, it could look better in terms of the profitability. Just to manage expectations, right? The original guidance this year, including the contingencies, was 5-7%, 6% midpoint. The commentary that you're giving now, because I'm assuming you're not going to suddenly get rid of the contingency procedure next year, you probably will include all these contingencies again next year. So based on your commentary, does that mean that we obviously could look—so thinking of a potential guidance next year, right? Obviously, without giving one, but just trying to figure out the point that we're leaving.
We're not going to be leaving from this new guidance. So when we look at your commentary, should we use the previous guidance as a result? So maybe assume a 7% midpoint guidance next year. Including these contingencies? Or is your commentary already based on this new guidance?
I would say. There is, as we mentioned, there are many ifs. One if is the order intake in Q4. Are we confident? We are. But so far, year to date, it is less volume than last year. We still need to sell a lot to match and eventually improve. Second is stability. Without trying to confuse, but to bring clarity. Last year, what you named contingency, we built contingencies for Türkiye. Next year, in the guidance, we need to build contingencies for Türkiye. The impact of those contingencies might be different in 2025 than in 2026. This might affect the profitability in a different way in 2025 or 2026. Other than this, and other than all things being equal, definitely, we should be able to see directionally a better performance. I do not know, Ilya, if you can.
I mean, I think stripped out the question, I think you answered it completely if you allow me. All things being equal, is the midpoint moving from 6 to 7? I think that's the question that Constantin was asking us. We have to ask for patience until we come back to that new guidance. I think the statement, Constantin, that we're making is, as far as we can see, which, subject to order intake, seems stable, or as far as we can see, we continue with our statement, which we have given at the beginning of the year and throughout the year. Next year should be, all things being equal, better than this one, because this is now a steady-state company in that sense. You have always the unforeseen, like the Turkey topic, but this is how we see the company.
Understood. No, it's clear. Thank you so much. Maybe just lastly, and that's just quickly just to understand this a little bit. I would have expected maybe a little bit more in terms of your order book in service. I think service order intake was something around EUR 300 million in Q3, which sounded a little bit low. I mean, maybe this is just timing. I don't know. I haven't really necessarily looked at the order intake overall very often, but just wondering, is there a particular way to look at it? Are there any concerns, or have orders slowed for some reason, or how should we think about this?
No. I think no concerns. I think the renewal rate is the one we want. I mean, quarter might be higher, might be lower. The order intake that we landed in Q3 is good. It is associated with good service orders, and that trend is expected to continue. No changes in our view. I think service business should be growing very high single digit year on year, and our view has not changed.
That's great. Thank you so much.
The next question comes from John Kim from Deutsche Bank. Please go ahead.
Hi, good afternoon. I'm wondering if you could just comment on how you're feeling about the order book pricing relative to your input costs. If I understand correctly, timelines are extending in court, particularly Germany. I'm just wondering about your cover there.
I would say generally we see a slight inflation pressure in Europe driven by high demand. Not as high pressure as we saw maybe one year ago. It is slightly easing a little bit. We see stability in Asia, where we procure. We see stability in the shipping. We see spikes in certain commodities. All in all, I will categorize that as stability. Cost improvements in certain areas, slight inflation in other areas. All in all, stability.
Okay. Just a point of clarification. I understand the issue in Türkiye, but when I look at your in-house production on blades, it looks to be a bigger drop than that of third party, if I'm reading the graphic correctly. Is that where Türkiye would have booked?
No. No. That we need to clarify because the in-house production is doing okay. It's Spain and India. Türkiye should be qualified as a third party. The biggest drop we have is related to Türkiye because that factory was in strike since May and did not produce any blade since.
Okay. Fair enough. Just also to clarify, in the Q3 print, given what you know now of the Turkish situation, was there any extra provisioning we should be aware of? Or is it too far away in terms of the cadence of delivery in the country?
No. Everything we know is considering the guidance for this year. Everything we can forecast for next year will be included in the guidance of next year.
Okay. Stepping back from kind of near-term situations to kind of the bigger scope, which markets are you excited about next year in terms of order intake? Any color you can provide here would be helpful.
Of course, Europe, Germany. I mean, this is the known market where we want to protect our market share. We need to and want to succeed in the next YEKA tender in Türkiye. We are fully committed with the market long-term, doing investments there. We want to keep the good momentum we have in Canada. I wish to see some orders from the U.S. and from Australia.
Okay. Okay. Helpful. I think you had mentioned you're committed to Türkiye, but the nature of competition in South Africa and Brazil feels a bit more intense with the Chinese. Is that a fair comment?
The Chinese are very active in Türkiye. It's a serious competitor. So far, we managed to keep our leading position in the marketplace. That's our view. Our proven track record in the market, the service performance, the local content requirements, and so on should allow us to keep as a key player. For non-local content turbines, of course, Chinese will do some market share there. For local content, we don't know what their plans are, if they plan to set up local manufacturing facilities in Türkiye or not.
Understood. Last question, if I may. Any sense of auction sizes in Germany next year, or is it too early?
No, I think it's clear. I think with the current legislation that cannot change, it already sets the volume for next year of auctions, which, if I'm not wrong, is 11.3 gigawatts.
That would be the steady state. I think maybe the full answer would be we do not have more specific data points. So absent any changes, what José Luis is saying would be the expectation for the auctions. Maybe in addition to that, when we had this conversation back in June, the sector, including ourselves, was a bit more cautious after the new government took office. Once the summer was over, that monitoring report came out. I would say a bit inconclusive. We had conversations with the government and in the industry where José Luis is probably a bit more optimistic than we were a few months ago because signals are that onshore wind is not really in the focus of any changes. We have to wait and see for the final legislation.
I believe we are going to see some kind of a draft legislation end of this year, early next year. That will tell. Today, BEC's expectation is the one that José Luis just mentioned. No changes means continued volume for 2026.
Great. Thanks so much.
The next question comes from Sebastian Growe from BNP Paribas. Please go ahead.
Yeah. Hi, Anja. Hi, José Luis and Ilya. Thanks for taking my questions. It would be on execution either. José Luis, you said in your introduction that the order intake is slowly translating into sales. In fact, the backlog is about EUR 3 billion higher than this year's sales in the project business. That compares, I think, to about EUR 1 billion-plus or so in the last two, three years. If I square that also with your statement from the call last week where you said that the lead time has increased to 18-24 months, then this suggests to me that the growth should meaningfully accelerate in 2026, apparently provided no hiccups in the supply chain. If you could just provide your views here and, yeah, simply provide your opinion, that would be much appreciated.
Yeah. I fully concur with you. You are right. Other than Türkiye, this is the case. We start to see more orders in execution in Germany, which is usually a long lead time market. Year on year, definitely we see more volume. Directionally, we should see higher revenue and higher growth, normalizing the lead times of the company to a higher number than previous years. The only caveat is Türkiye, and that we will quantify and give you our view in February.
Got it. If we look at the overall production capacity, if I look at the current turbine assembly output and unit numbers, at the peak, apparently, you were able to do around 1,500 per year. This is now down to around 1,300 and was in 2024 and is presumably going into a similar direction for the year 2025. The question that I simply have, what's really the capacity leeway that you have? I think you spoke in the past also about maybe up to 2,000 turbines that you could do at some point in time. If you could just update us on that front.
Yep. No, and that's slightly more complex because it depends a lot on the turbine type. From a pure assembly capacity, yes, we have the possibility to do that because structurally, we are running with overcapacity. We want to keep our options in Europe for assessing Net Zero Industry Act and the resilient criteria to play in the European markets. We are fully committed with supply chain from China, but we want as well supply chain from India because in times of political uncertainty, you always want to have backup in place. So long history short, we have excess of assembly capacity in ourselves, which we plan to keep. It's not our intention to rationalize any plant in seeking better efficiency. I think it's better to sacrifice a little bit efficiency versus certainty and ability to grow if the market comes. The question is blade modes.
There the situation is different because there are different demand profiles for different types of products and different available capacity for those types of products. The Turkey example is a good example where having certain flexibility is advisable. We managed this year to improve profitability in the company while having a hit in the top line. This was because we had spare capacity, unfortunately not in Turkey for Turkey, but the rest of the projects worldwide were mostly unaffected for that situation. This is one example of not going always to the limit to optimize the last penny and taking a management view on things that could go wrong and how do you plan for those things that could go wrong. Do we have the ability to do more? We do. We do.
Okay. That's helpful. The last one, just quickly on service. I think in the past, you said that you would be striving for double-digit top-line growth in the business. I think most of our discussions in the past have always been focusing on especially pricing around the project business. However, I would be greatly appreciating if you could also provide us with your views on the pricing quality in the service business and also the phasing in the wake of what I said before might be double-digit top-line growth and how to think about that going forward.
I would say top line, we always say. Low teens or high single digit. But in that range, in the foreseeable future, depending a little bit on the timing of the new build, which is what mainly affects the top line. Regarding quality, of course, quality is a factor of pricing and failure rate and cost stability versus your cost forecasting. So we are confident about the quality of the order intake in services.
Yes. I guess Sebastian asked one step ahead. I said, "How do you feel about pricing in the service?
So far, stable. Like, the turbine business is following the same pattern in the marketplace. We see stability.
If I may just.
In the market. The market dynamic, and of course, it might change. The market dynamic today is super valuable for the energy systems in the markets where we operate. Of course, prices are important. It's a factor of competition. Prices are lower than most of other alternative sources in most of the markets where we operate. As there is growth expected, it looks like the focus now is reliable partners that can execute the projects as the market demands. Especially Germany.
Yeah. And if I may just can come back, no worries, to the cadence within the service business and specifically in regards to executing the backlog. My understanding has been that apparently the overall now favorable development that we have seen in the margin improvement in service is a function of better pricing, better volume, then also the regional mix more towards Europe, and then also clearly the exit of probably old contracts from the AWP side. How far advanced are we in this journey? Is this just really the very beginning of a longer duration sort of improvement cycle? Yeah, if you could just sort of help us better understand where we are on a scale from, I do not know, 0 to 10 or so.
That's a good one. I would say the low-hanging fruits are behind us. Now every small improvement is going to take more effort because the legacy topics are on the way. Some of them are already behind us and others are on the way to be addressed. Overall, diluting into a new fresh water coming into the tank. All in all, I would say, yes, there are possibilities to keep improving, but maybe not at the same pace. I do not want to anticipate the guidance discussion, Sebastian.
I will get back to that then in February, I guess. All right. Thank you so much.
Thank you.
The next question comes from Xin Wang from Barclays. Please go ahead.
Hi. Good afternoon. Thank you for taking my questions. I'll start with a very ignorant one. Installations in Q3 is record high. Turbine production is close to recent high. Only weakness is blade production. Why is revenue so low in the quarter?
It is, I mean, all the observations are true, but basically, it is coming from that shortfall in the blade production. I mean, it's not a minor one. We've been saying the full year effect without being very specific, between EUR 200 million and EUR 300 million in there. Barclays, that is falling earlier because now for all the blades that do not go to Türkiye, we found alternatives. In the beginning, of course, that took some time. That is the major reason.
For all the blades.
Yep. Go ahead.
Thank you for clarifying that. Then looking on the cash flow, I think if I look at the bridge you provided for movement in net working capital, I think what shocked me was orders were at record high this year, current year high, record high, and revenue, obviously, very low. Book to bill, firmly above one, but prepayment is a drag to cash flow. That is the one thing I struggled to understand in the bridge. Secondly, payables is a EUR 200 million tailwind to free cash flow generation in the quarter. Is this a specific issue related to a specific supplier or just a timing issue that we expect to reverse in Q4?
Thanks. I take that one. Now, in both cases, I do not think they have any influence on the cash flow picture we are trying to give you last week and today again. I mean, if you look at that from, let's say, a bit of a commercial standpoint, profitability at a midpoint of the new guidance we have been giving adds that substantial portion of this EUR 200 million-EUR 300 million without guiding bandwidth we are giving you for additional cash flow. And if then you put, let's say, an improvement from this minus 8.2% to, for sure, better than minus 9%, then our tracker could say probably a good deal better than that, this is where that free cash flow is coming from or will be coming from.
Okay. I'll go back to the queue. Thank you.
Ladies and gentlemen, this was the last question. I would now like to turn the conference back over to José Luis Blanco for any closing remarks.
Thank you very much for participating in the call and for your questions. Let me outline our key takeaways for this quarter. First, we deliver another strong quarter in order intake, and we expect our full-year orders to match or slightly exceed last year's level. We have increased our full-year EBITDA margin guidance to 7.5%-8.5% and remain focused on improving profitability and generating positive, sustainable free cash flow. We are on track to meet our guidance, deliver margin improvements, and can confirm that the medium-term margin target, 8%, is in reach. Thank you very much. Wish you a good rest of the day.
Ladies and gentlemen, the conference is now concluded, and you may disconnect. Thank you for joining, and have a pleasant day. Goodbye.