Ladies and gentlemen, welcome to the Q4 2025 Results conference call. I'm Moritz, your conference 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.
Thanks, Moritz, also a very warm welcome from the Nordex team in Hamburg. Thank you for joining the Q4 2025 and full year results 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, Dr. 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 our CEO, José Luis.
Thank you very much for the introduction, Anja. As said, on behalf of the management board, a very warm welcome to all of you joining us today for the Q4, full year 2025 results. Results that conclude a transformational period and a transformational year for Nordex. 2025 has been a landmark year. We deliver and exceeded our medium-term margin target ahead of schedule, generated positive free cash flow, achieved record order intake, and strengthening our balance sheet. This very much sets the tone for the years ahead of us. Let's now walk you through what drove this performance and how it prepared Nordex for the next phase of profitable growth. Let's start with a short recap of how we were able to deliver, as promised, or on the upper end of the promise.
Over the past 3 years, we have made consistent progress in strengthening the business and our profitability. 2025 is the year in which Nordex demonstrated that the operational and financial improvements we have been working on over the past 3 years are now full translating into our numbers. We deliver robust growth across all major KPIs, increased profitability substantially, generated a strong free cash flow, and strengthened our financial foundation. Combined, these achievements set an strong tone for our longer-term strategic ambitions. Moving on, 2025 was a milestone year for Nordex. We deliver record order intake of 10.2 GW, reached an 8.4% EBITDA margin, and generated EUR 863 million of free cash flow, all well above last year and ahead of our original plan.
These results show that our strategy is working, and that our business is now consistently delivering stronger margins and is cash generative. Based on this track record, we now aim to set the tone for what is ahead of us. First, 2026. 2026 guidance, continued sustainable improvement, capital allocation, the introduction of our first shareholders' return policy, and third, our new strategic mid-term target and upgraded EBITDA margin of 10%-12%. Before we go into more details on the mentioned aspects, let's look at how we performed in terms of market position in 2025 first. 2025 was also a year in which our market position strengthened further. We were again able to keep our number two position globally, improving not in the relative position, but in the market share of the global position.
In Europe, we continue our strong momentum and achieve leadership position for the 4th year in a row. This clearly reflects our competitive product range, our strong customer relationship, and ability to deliver in our core region. In the Americas, we continue to rebuild our market position, mainly driven that year by Canadian orders, reaching an 11% market share in 2025, a solid step forward after the reset in previous years. Let's now start the usual chapters regarding the operational and financial highlights. Let me start with an overview of the fourth quarter and the full year. Q4 was another strong quarter operationally. Our combined order book grew to EUR 16 billion, with the turbine order book up 30% year-on-year to over EUR 10.1 billion, and the service order book rising 20% to nearly EUR 6 billion.
Financially, we closed the year with EUR 307 million EBITDA in Q4, an increase of 188% compared to the same period of 2024. Our EBITDA margin in Q4 reached 12.1%, up more than seven percentage points year-on-year. Service EBIT margin increased further to 19%, marking another quarter of consistent increase. Free cash flow in Q4 reached EUR 565 million, more than doubling last year's level. Our net cash position exceeded EUR 1.6 billion at year-end. We also successfully reached our medium-term EBITDA margin target of 8% already in 2025, and we believe we can deliver further margin improvements based on the levers we see. With this, let me walk you through the operational performance in more detail.
In Q4, we record EUR 3.2 billion of turbine order intake, an increase of around 10% compared to Q4 last year. This corresponds to 3.6 GW, representing 9% growth versus Q4 2024. A few important aspects to highlight. First, orders came from 12 different countries, demonstrating continuous strong diversification. ASP remained stable at EUR 0.89 million per MW, comparable to last year level. The largest markets in Q4 were Germany, Canada, and France, supported by a steady demand in our focus regions and countries. On a full year basis, turbine order intake reached 10.2 GW, representing a record EUR 9.3 billion in order value, an increase of 25% year-on-year. Let's move to the next slide, the order book.
Our turbine order book ended the year at EUR 10.1 billion, up 30% versus the same period of 2024. On the service side, our order book increased to almost EUR 6 billion, up 20% year-on-year. We now have almost 14,000 turbines covered by long-term service contracts, representing 48.3 GW under service, term service contracts. The combination of structurally larger projects order book and a steadily growing service base provides a strong visibility for revenue and margin delivery in 2026 and beyond. Let's talk about the service business. Our service business continue its predictable trajectory in 2025. In Q4, service revenue reached EUR 240 million. Service EBIT reached EUR 46 million, corresponding to 19% EBIT margin.
This marks the eighth consecutive quarter of margin expansion in the service business, driven by improved efficiency, strong availability levels in our store base, and disciplined execution. Let me also highlight a few key operational KPIs. The average availability of our wind turbines under service remain high, at around 97%, and the average tenure of our service contracts continues to be around 13 years. Let's move to the next slide, our installation and production figures. Installations were up by 25% year-on-year, reaching around 2.1 GW in the fourth quarter of 2025. In Q4, we installed 376 turbines, up from 283 in the same period of 2024. Full year installations reached 7.663 MW or GW, compared to 6,641 MW in 2024.
Turbine production increased to 519 turbines in Q4, compared to 445 last year. Payment production remained stable despite temporary delays at one of our suppliers in Türkiye. Now I would like to hand over to Ilya for the financials.
Thank you, José, and a warm welcome, also from my side. Before I start with my usual slides, let's take a brief look at the past fiscal year and the achievements of our goals or targets. The slides on the screen illustrates the highlights of that past year. Following the initial publication of our guidance for 2025, we made strong progress in our operational performance throughout the year. José Luis talked about that. As a result, we were able to further strengthen our profitability, which led us to upgrade our full year EBITDA margin guidance in last October. By year-end, we achieved, and in some areas, even exceeded all of the targets we had. Let me use this opportunity to thank Team Nordex for their tireless efforts worldwide. We're very proud of you.
With that, let's move on to the next page, where I would like to share a few insights on the development of our income statement. After sales were temporarily affected by product mix and scheduling effects early in the year, we saw a significant rebound in the fourth quarter. Sales increased by 16% to around EUR 2.5 billion, compared with EUR 2.2 billion in Q4 of the year before. Main contributors were Germany, Türkiye, North America and Spain. For the full year, sales reached approximately EUR 7.6 billion, fully in line with our internal planning and almost right in the middle of our guided range, despite some impacts from Türkiye that we discussed with you last year.
We continued to strengthen our growth margins, reaching 27.8% in the fourth quarter, up from 23% in the same period last year. For the full year, gross margin improved to 27%, compared with 21% in the previous year. This corresponds to an EBITDA margin of 12.11% in Q4 2025, up from 4.9% in Q4 of 2024, and of 8.4% for the full year 2025, compared to the 4.1% in the year before. Building on this operating performance, we ended the quarter with a net profit of EUR 184 million, excuse me, compared to EUR 18 million in the fourth quarter of 2024. For the full year, 2025, net profit amounted to EUR 274 million, a significant improvement over the EUR 9 million recorded in 2025, four.
With this, let's move on to the balance sheet. As we can see, our overall financial position at year-end remained solid and has further strengthened compared to the end of 2024, a reflection of the operational and financial performance throughout the year. Cash position at the end of the fourth quarter was around EUR 1.9 billion. Working capital came in at -12.4%, significantly better than our guided number of below -9%. Equity ratio improved steadily through the year and reached 19% at the end of the fourth quarter, compared with 17.7% at the year-end 2024. This positive development is largely driven by the strong increase in our net profit. Now, let's have a closer look how the other balance sheet KPIs have developed in the last quarter.
Overall, all balance sheet figures continued to develop positively in the fourth quarter, continuing the trend we had already seen throughout the entire year. The operating performance in the fourth quarter led to a further increase in our net liquidity, which reached a record year-end level of EUR 1.625 million. Again, the working capital ratio at the end of the fourth quarter was -12.4% or -EUR 935 million in absolute terms. This improvement is largely attributable to the very strong order momentum we experienced in the final month of 2025. Now let's go to the cash flow and CapEx slide. Cash flow from operating activities amounted to EUR 631 million at the end of the fourth quarter. Previous year was EUR 318 million, and to over EUR 1 billion for the full year.
Previous year, EUR 430 million. One more time, this development reflects our consistently robust operational performance throughout the year, and especially the very strong fourth quarter. In the fourth quarter of 2025, positive free cash flow totaled EUR 565 million, compared to Q4 of the prior year of EUR 271 million. The full year, we closed with a positive free cash flow of EUR 863 million versus the EUR 271 million in 2024, supported, of course, by our order intake and further improvements in working capital.
CapEx increased to EUR 72 million in the fourth quarter, compared with EUR 42 million in the prior year quarter. For the full year, CapEx totaled EUR 169 million, higher than last year's EUR 153 million, though still below our full year guidance of around EUR 200 million. With that, I would now like to hand back to José for the final chapter, our guidance and strategic outlook.
Thank you very much, Ilya, for walking us through the financials. Based on the strong foundations we established in 2025, we expect profitable growth to accelerate in 2026. Our guidance for 2026 is as follows: Sales will be between EUR 8.2 billion and EUR 9 billion, meaning a top-line growth between 9%-19% year-on-year. EBITDA margin is in the range of 8%-11%. Again, as in previous years, we believe the midpoint is the most likely outcome as of today. Working capital ratio below -9% and CapEx approx EUR 200 million. This reflects continued margin expansion, steady volume growth, and disciplined capital allocation. Regarding free cash flow, we don't provide formal guidance. However, based on the building blocks we have shared, you can likely conclude that we are positioned to deliver another solid free cash flow year.
As mentioned at the beginning, today is not only about presenting our 2025 results and guidance, it's also about setting the tone for the years ahead of us. With that in mind, let me now walk you through the capital allocation policy we are introducing. Over the past years, many of you have asked for greater clarity on how we think about capital deployment once Nordex returns to a more normalized financial position. Now, let me summarize our approach. First, we remain fully committed to maintaining financial flexibility. A strong balance sheet and ample liquidity are essential to navigate market cycles in our industry, and this discipline will not change. Second, we continue to prioritize operational and strategic growth opportunities. Includes funding core organic investments across our supply chain, product enhancements, and key research and development initiatives.
We also want to retain the ability to pursue selective strategic opportunities, enhance our supply chain resilience, and leverage opportunities to look in turbulence via supporting our customers in advancing their project development pipeline. Third, with these foundations in place, we will consider returning cash to shareholders in a sustainable way. Today, we are introducing Nordex's first shareholder return policy. Under this framework, Nordex will target a minimum annual shareholder return of EUR 50 million to be delivered either through dividends or share buybacks, and always subject to regulatory approvals, our capital structure priorities, and stable market conditions. As many of you know, under German HGB rules, distributable profits sit within the standalone Nordex SE entity, and this will catch up in 2026 due to difference in local GAAP and IFRS. Therefore, we plan the first payout in 2027.
This policy reflects our commitment to a disciplined, predictable, and sustainable approach to capital allocation, balancing the needs of the business with attractive returns for our shareholders. Importantly, this is a first step. We remain open to refining the framework over time, always guided by the principle of maximizing shareholders' return. Moving on, let me now talk about our core markets and why we remain confident about the overall environment and our position within it. According to third-party researchers, onshore wind installations are expected to grow steadily throughout the decade. This growth is driven by 3 main factors: One, strong fundamentals in Europe and North America, which remain the core regions for Nordex. Second, increasing electrification and industrial demand, which supports long-term renewables build-out. Third, selective upsides in markets such as Australia.
With this, given the structural improvements in our business and the visibility provided by our order book and the service portfolio, we are upgrading our midterm EBITDA margin ambition to 10%-12%. The key levers here include, first, continued volume growth in Europe and the Americas, and operating leverage from revenue growth. Second, higher service profitability with EBIT margin crossing the 20% mark. Third, further margin improvement via efficiency measures across production, logistics, and fixed costs due to the bigger volume. As we had mentioned before, we have been working tightly to make this company much stronger over the last 3 years, and 2025 shows the results of these efforts.
Like Ilya, I really like to take this opportunity to thank our people for their tremendous efforts, of course, our customers for the trust, support, banks, and analysts and shareholders for the continued trusting Nordex, especially in difficult times. We believe we now have a good platform to deliver more profitable growth with the support of all of our stakeholders, and remain committed to further strengthening the business in the years to come. With this, let me hand over to Anja for Q&A.
Thank you, José Luis. Thank you, Ilya, for leading us through the presentation. I would now like to hand over to the operator 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 touchtone 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. In the interest of time, please limit yourself to three questions. 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 John Kim from Deutsche Bank. Please go ahead.
Hi, good afternoon, everybody. Thanks for the opportunity. One question and a follow-up, if I may. First, congrats on the numbers. Wanted to understand, when you think about capacity, expansion, and investment, I'd like you to speak a little bit about how we should think about factory loads, any pinch points on supply chain. I have a quick follow-up if I may.
Yep. No, thank you very much for the question, John. I think we have provided you a view of EUR 200 million CapEx. That should be sufficient to deal with the volume growth, even with the upper end of the volume growth, considering the guidance and keeping our supply chain diversification strategy. We plan to keep Europe eventually a small growth. We plan to keep and grow India, and we plan to keep and grow China. At the same time, we are ramping up and growing U.S. We don't plan major disruptions in supply chain. It's kind of keeping the flexibility to shift volume from region to region if needed, and we are confident and well-equipped and provided for in the guidance.
Okay, as a quick follow-up, can you just update us on the situation in Turkey, please, with blade supply?
Yep. I think we made substantial progress in de-risking our situation in Türkiye, as we speak, ramping up blade production in Türkiye. We are committed with long-term investments in the market. We have been very successful in EEG auction. We hope to be equally successful or almost equally successful in GECA 5, we are ramping up the capacity to deliver our commitment to our customers. The government is, of course, happy with our commitment to the country.
Okay. Very helpful. Thank you.
The next question comes from Alex Jones from Bank of America. Please go ahead.
Great. Good afternoon. Two, if I can. The first one on the new capital return policy. Could you outline for us why you chose the EUR 50 million number rather than something smaller or bigger? I guess when I think about, you know, the midterm profits and therefore cash flow of the group, I imagine they'll be substantially larger. Is there something constraining that number in the short term, be that German GAAP profits or whatever else?
No, thank you for the question. I think we try to share with you what our view is about the priorities, which is, you know, having a balance sheet fortress, if you will, to deal with cycles, but as well to deal with opportunities. We think we will find opportunities to deploy capital at a reasonable return, supporting our customers to make their projects through, and consequently, helping the company to grow further in the top line and in the profitability and achieve our midterm EBITDA target. This is what we are focusing now, and Ilya?
I think you said, I think I would add maybe two thoughts. One is, first, this is an idea of a minimum EUR 50 million, so we'll always then decide in a given year if a different number, if appropriate. Other than the points you mentioned of deployment, is not only a fortress of the balance sheet, which I think is one of the key priorities, but also the flexibility, José, to help execution, de-risking, and supply chain changes whenever needed to react, that we have also the resources to do that. I think that's our set of priorities.
That's very clear. Understood. If I can, on the installations in 2026, can you give us any idea? You know, the order intake has been very strong, above 10 GW in 25. Some of that will take a while to come through, but, you know, could we see a year, with installations above 9, for example, growing from the 7.6 you did last year?
I think we, you know, we prefer to guide you in revenue and margin, without going too much specific into the underlying operational figures. Definitely, we see growth in production and installation in 2026. Remain that the year is very young, so we still need to sell a lot. to contribute to POC revenue and margin for 2026, and we need to grow the company in production and installation. Hopefully, the customers will not delay. Hopefully, we will not see major disruptions. We are prepared for that within a reasonable range, and I will say this is as far as I can go today, but its growth is definitely expected in production and installation.
Great. Thank you.
The next question comes from Sebastian Growe from BNP Paribas. Please go ahead.
Hi, good afternoon, everybody. Hi, José Luis and Ilya. My two questions would be around Germany and then also the margin trajectory that you have updated. Let's start on Germany. Apparently, we're seeing the German Economy Ministry planning to make changes to the support scheme for renewables, both from a grid access point of view, but also then from a pricing perspective, with the move to CfDs. Can you comment on how that might impact turbine pricing? What is your most important single market at this point? How has your customer base reacted to the current draft that has been leaked to the public? If you could start there, then continue on the margin part later.
Yeah, let's do this together with here. I know that there is a lot of, or a slight, unrest about the situation in Germany. I tend to see it quite positive. I mean, the German market is gonna deliver 10 years, 10 GW a year for the years to come, and this is amazing. This is record high historical volumes for the next couple of years ahead of us. Yes, 10 is not 15 or 14. Fine, but it's 10. It's gonna be maybe the biggest worldwide market, second to China, and we have a fantastic market positioning in this market, just to set our view. Like in any changes in system, this could bring uncertainty and could slow down the market.
We had a very bad experience in 2017 in Germany, so hopefully, all stakeholders learn from the mistakes, and we do the transition in a smart way, that the volumes are not affected. Third, regarding the new system, I think wind onshore is by far the cheapest energy solution for Central Europe. So we are part of the solution. We can help countries and societies to deal with affordability, with energy independence, if they procure Western with technology independence, and to foster electrification. Of course, the enabler for that, for all those things is grid, grid deployment.
I tend to think that we are in a, in a, in a great momentum, in a great momentum for our sector and for our company within the sector, in a very important market, despite, you know, some challenges that policymakers need to address in order to make this transition in the best possible way. Regarding the leak, I don't think we should comment on leaks, but my take is that wind onshore and our customers, we are part of the solution to lower electricity prices and to deliver society needs. Electrification is, is a must to deal with the competitiveness of Europe and, and Germany.
Grid is the bottleneck that governments across Europe needs to address to make electrification a really powerful tool to address competitiveness.
Well, I mean, if I had anything to add, and that's really not much, I would say, agreeing with you, José, is not to comment on leakages of drafts. However, I would probably remind all of us that this is a government of two parties, and one of the two parties was part of the previous government and has heavily supported the wind industry, and that also led to what you were saying, José, is to the reconfirmation by this current government of the 10-gigawatt annual target in Germany. Let's see what comes out of the process.
To the broader question, Sebastian, I'd say, to me, Germany with that is becoming a more normal market because now auctions from a system perspective start to work, and Germany will find a new normal across the value chain, the auction tariffs, the land leases, the developer fees, the equipment of BOP turbines. After all, we're gonna deal with a market that is very, very similar to many other markets in the world, with similar economics. Then I think if anything to add, José Luis, and that is something we have been considering when giving you this new midterm target. That is already considered.
That's a good segue indeed to my next question. Thanks for that. In the chart, on the margin walk to the 10%-12% of the midterm, you haven't touched on the impact from price. The question that I then would have around this is, am I right to assume that this very 10%-12% range is a through cycle ambition, and, as such, the strong volume visibility at attractive cost margin that you are enjoying right now might even result in a higher margin than this 10%-12% range in a, in a given moment?
It would rather than cater for if we did see this structural transition towards what is then a market price and not so much a, say, determined price by a system, that this would then sort of be indeed a normalized margin. You wouldn't exclude at this point that you might even come out at a higher level. Is that the right way to think about it?
The way to think of course, we have made our view for what mid-term prices could be and what mid-term market shares could be, and what mid-term volumes could be for our sector. We are sharing with you our view on. You are spot on. We've seen that in across the cycle margin. Let's not forget that the volume in Germany is gonna be massive, and the Central European price for forward-looking 10 years for electricity, you know, are in the 70s. The best tool for lowering electricity is more onshore.
We are operating in a region that that has certain price level in the for the for the final electricity pool. I don't expect or we don't expect that the the Central European electricity prices will drop like Finland or like any other countries in Spain, like Spain, in the medium term. Based on that, is what we have for our view and guided you to that mid-term target across the cycle.
Maybe to the second question of Sebastian, I think your answer is perfect in my view, that this is exactly what we want to calibrate you for. Could it be better in a given year? I would not exclude it.
Thank you very much for that. Thank you.
The next question comes from Richard Dawson, from Berenberg. Please go ahead.
Hi, good afternoon, and thank you for taking my questions, two from me. Firstly, on the U.S. market, I'm just wondering if your view in that market's changed at all. You secured the contract at the end of 25 for over a gigawatt, so suggests that order momentum is picking up, but how do you see the opportunity in 2026, and where could your market share go in the U.S.? Then second question is on the EBITDA margin bridge up to that 10%-12%. You've mentioned in the presentation that an opportunity to streamline costs further, you've obviously done a lot of this in the past, but could you provide some more details just on specific initiatives you have in mind for streamlining those costs?
I ask this against the backdrop of a business which is clearly growing, both on the project side and the service side. Thank you.
Yep. No, thank you. Thank you very much, Richard, for the questions. The U.S., let me share with you. I was two weeks ago there meeting customers, and I'm very pleased with the turnaround of the brand in the U.S. market, after facing certain difficulties that you were aware with the former legacy platforms and quality issues, this is all behind us. We managed to turn around this quality situation. We managed to turn around the stakeholders relationships or the brand. Nordex brand is amazingly well perceived now by U.S. stakeholders.
Current Delta4000 platform in U.S. is delivering market availability, and the team did a terrific job as well in restarting the West Branch facility and start to produce certain turbines for preservation orders we have. We see momentum in the U.S. market, so customers are willing to keep investing in developments. Unfortunately, projects are pending permits from the Federal Government, and this is something that honestly, nobody has a view of when those permits are gonna flow. It's not that the permits or the determinations will not get to our customers to make their projects, it's a question of when.
There is no structural issue to reject those permits, it's a question of when those permits will be clear. Which reinforces our strategic decision to invest in that market long term. That market is facing a super cycle, energy, electricity increase, demand cycle. I guess maybe most of it is gonna be delivered by gas, but wind plays a fantastic role to fit more with the demand profile of data centers, which is what is mainly driven electricity and increasing in U.S. I'm without having firm orders, without having a clear view of when the firm orders are gonna land to Nordex, I'm convinced that this was a very good strategic decision for Nordex, and I'm very pleased with the positioning of the plan in the marketplace.
Second, talking about the EBITDA bridge, margin regarding cost further improvements. I mean, the key thing here is stay lean and let's make sure that we keep our overhead as lean as possible and definitely grow substantially less the overhead than the revenue to unpack profitability improvement, number one. Number two, the volume brings always efficiencies a little bit on the cost side, but as well in the underutilization. We still run the company with certain level of underutilization. We want to have optionality, to have three or four supply chain options, and the more volume we grow, the more we reduce the underutilization, the more we support the profitability improvement.
That's very clear. Thank you very much.
The next question comes from Constantin Hesse from Jefferies. I'm sorry, it looks like the question was just withdrawn. We go on with Ajay Patel from Goldman Sachs.
Thank you for the presentation. Congratulations on the results. I have two questions for these. Firstly, I just wanna focus on capital allocation again. I'm not sure I'm fully appreciating everything here. It looks like over the course of 2026, you're gonna be towards EUR 2 billion in net cash. You're not gonna be really distributing too much on the dividend side until 2027. Then that will ramp. It therefore still implies there's gonna be a lot of cash on the balance sheet. I just wonder, how should we be thinking about that? Like, when you talk about the potential for opportunities to invest, are we, are we talking, manufacturing sites? Are we talking maybe adjacent types of business activities? I'm just trying to understand how that capital allocation thought works.
Then if the cash is not being utilized, maybe for distributions in at least the shorter term, could it be paying down debt or reducing use of facilities that we see a meaningful impact to interest costs? If that's the case, what kind of improvements could we see? The second sort of set of questions is around the midterm target, the one on page 23. The chart sets up in a way that it looks at these three variables that gets us to the new midterm target and it has it evenly distributed. I'm wondering in my head, well, how much is actually in your own hands already? You have enough visibility of auctions that have gone through Germany that eventually will convert to orders. You have enough of a pipeline in the U.S.
You have a viewpoint on the efficiencies you're taking out of the business, that a good amount of this target's under control, or how much is it just dependent on market activity going forward? I was just trying to understand, you know, how robust this is.
Let's just start with the second question on Ajay . The year 2026 is still very young, and we haven't sold what we need to sell to make the 2026 guidance. We still need to sell a lot of volume in Q1 and Q2. Definitely, this midterm target is subject to volume. Our assumption in this midterm target is that we will grow with the market. Some markets will grow, some markets will decrease. Germany, long term, will be an amazing market, but will be an amazing market of 10 GW, not an amazing market of 14 GW. Eventually, this will be compensated by U.S. picking up or other geographies.
This is a long-term view across the cycle, taking into account that we will grow with the market. We are not taking the assumptions that we will grow market share. Of course, before talking midterm, we need to still deliver the 26 guidance, for which we still need to sell. We are exposed to the market, to the market dynamics for the midterm. With that being said, I think things don't change radically year on year. I mean, your product, if it's super competitive today, should remain at least competitive the next year. The market shares don't change dramatically over time, year on year. Markets, given the capillarity we have and the number of countries where we operate, we should be able to compensate some markets with others.
Regarding capital allocation, let's do this together, Ajay. I think the first priority, I mean, we need to have sufficient headroom to deal with situations like the one in Turkey last year or eventually more to come. We don't want to lose any opportunity to de-risk the company, to further grow the company, to further improve the profitability of the company. Some of those potential opportunities might require investments above the guidance that we have given to you, and we want to be prepared for that. Not saying that we have a concrete plan for that, otherwise we should share it with you, but we want to retain the option. The first and foremost important thing is support our customers to make their projects reality.
I think Germany, we heard that, there are difficulties, and we want to use, the liquidity of our shareholders, because this company is the company of our shareholders, to further invest this liquidity in supporting our customers, helping the company to further grow and to further improve profitability.
Yeah, this is, I think the recount of the priorities may be, I mean, very good question, Ajay. The point here is, there is not much debt to pay for the company because there is only really a convert out there, and our interest is largely determined by the bond line, which is not debt that you repay with cash. We've been working a lot on bringing the interest on the bond line down, so we will have positives there, but that's not done with the cash. Maybe to kind of support José Luis' thinking there is... I mean, for Nordex, that's the first time ever, that in the history, when it's as a listed company of more than three decades, that it moves into the territory of those shareholder returns.
I think we should not forget that and where the company comes from. On the other side, I repeat what I said maybe 10, 15 minutes ago, we're setting here a minimum. When seeing the actual cash levels, the other opportunities that José Luis was describing, I think we will then come back with a more specific number. That was to set the tone and introduce that shareholder return policy for the first time. José Luis, that would be my-
Yeah, yeah.
... my comment.
May I just follow up on something? Just talking about that cash profile, is it fair to say... Look, and these are very broad numbers, and I'm not asking you to sort of say these are right. You know, I think previously we talked about a 9 GW of installations in the future, which effectively would move about EUR 10 billion of revenue. On these types of margins, it would broadly imply EUR 1 billion to EUR 1.2 billion of EBITDA. That's clearly a massive increase in EBITDA relative to what you've just delivered in 2025. I just wonder if CapEx follows, or actually, the pace of which CapEx increases in this type of picture, in broad terms, isn't gonna be as fast, and therefore, there's a much stronger picture of free cash flow at developing.
Yeah, I think the CapEx is gonna depend a lot if we need to do one-off things, which we are not planning to do. The rest building blocks, you can do the math of cash to EBITDA conversion, more normalized levels than this exceptional year. It's fair to say that 2026, we expect to generate a good cash flow. Yeah.
I would only add, and I think, Ajay, your rough math, and it's fully right when you say that in our core business, provided the unforeseen, the CapEx growth rate might be slower than the other building blocks you gave us. Yes, but then, of course, again, José Luis listed a few priorities on where money might be deployed, always strengthening the core business, strengthening the balance sheet, and helping our customers where needed to get projects over the hurdle, in a bit of a difficult environment in some markets, like the U.S. and others. Second, yes, on the cash flow, on the free cash flow, I probably to calibrate it. Yes.
If you plug an EBITDA to cash conversion rate of 50-60 into your models without guiding and the caveat and all that, I think then you get a bit, then you get a good picture of what we expect.
Fantastic. Thank you.
Awesome. Thank you.
The next question comes from Constantin Hesse from Jefferies. Please go ahead.
Thanks so much. Sorry, guys, before I had some technical issues. I've got three questions on my side. One is: Look, I think there's obviously one question mark that, and it's basically being created around this potential risk of Germany updating their renewable energy target. Thinking about the order intake outlook into 2026, if you could maybe just provide some commentary on what you're seeing in Q1. Then I'm trying to think about the building blocks for 2026, and unless, I haven't seen any markets that have announced any kind of slowdown. I mean, Italy confirmed their numbers, Germany is doing 11, UK is accelerating, Baltics continue to be good, Australia, Canada, relatively fine. Are there any markets currently that you see as potential risks that could slow down orders? That's my first question. Thanks.
Yeah. Thank you, Constantin. Great to get your questions. Regarding order intake in 26, I think you know, we don't guide for order intake, the year is starting, it's very young. The quarter is not that so young, we see a weaker quarter compared to the same period of last year. Let's see, far, you know, we are presenting to you a guidance and a mid-term target with our view, on a quarterly basis, it could be changes depending timing, we don't see substantial disruptions altogether. Markets that might be VA, which for us is important, is U.S., that this might or might not come.
We have certain contribution from U.S. in our order intake planning, not from a guidance perspective and PNL, but from a order intake planning for mid-term target. Other than that, I tend to agree with you. I don't see any major crisis in markets for order intake.
Understood. Thank you. Luis, the second question, just around the medium-term margin. I mean, most of my questions have been answered there, but one that remains is, I just saw an article that came out about 30 minutes ago. Luis, where you comment on potentially having to negotiate prices down in Germany if auctions continue to come down. When we look at the medium-term margin outlook, the 10%-12% that you gave, are any potential cuts to pricing in Germany already included in that?
I think. How can I phrase it? We don't plan, nor I think it's advisable to enter here into a price war. That's not the point. I think. We need to see this from a different angle. I think it's a huge volume in Germany. Prices for Central Europe are at high levels, which might go, might be reduced, the more renewables you introduce. This is what we consider into our mid-term target. Of course, we need to support our customers to make the projects through. This might somehow have a slight effect, where, as I mentioned, everybody needs to contribute their part, the developer, the land leases, the construction work, and the turbine.
I think, we have sufficient action plan in house to be able to contribute our part, without deteriorating the margin.
Understood. Any price decreases are still I mean, so some decreases are still included in the medium-term target, is what I understood.
Yeah.
lastly, on capacity, I mean, you just booked 10.2 GW of orders. Looking at installations over the next couple of years, it's pretty obvious that things continue to move up quite significantly. What is the current nameplate capacity of Nordex? Where do you get to the point where you would have to start building more space, more capacity?
That depends a lot, product- to- product. Of course, on the N175, which is the product that over time will take over N163, we are building up capacity, and we might need to do more or less, depending the timing of the installations. On N163, I think we have sufficient capacity. It depends a lot about what type of capacity, assembly capacity. I think we are well, we are running with flexibility and over capacity structurally, because of two reasons. First reason is the de-risking single geography dependency. Second is having optionalities. Third is managing working capital.
If you run too short in capacity, you need to pre-produce a lot, you need a lot of working capital investment there, which we don't want to do. We run with over capacity. It means higher underutilization cost, which I think is the right investment to do, versus flexibility and de-risk. In place, it's slightly different. Long history short, for this volume and for this additional volume that we put in the building block for the mid-term target, I think we can do that within the range of capacity that we gave to you in the guidance.
Understood. Thank you so much.
The next question comes from William Mackie, from Kepler Cheuvreux. Please go ahead.
Good afternoon. Thank you for making the time for the questions. A couple of larger picture and some specific. First of all, focusing on supply chain and gross margin, but supply chain broadly, I think ahead of the Chinese 15th Five-Year Plan, they have announced or declared a grand intention for wind installation domestically, which sort of looks in the region of a 40% increase in installation volumes. The impact of that, of course, is on the local manufacturing and supply chain. You have always been flexible and seeking partnership and qualifying suppliers from around the world to optimize your cost base and gross margin.
Within the longer-term thinking, and perhaps in the context of your chancellor in Germany, what is your thinking about the future relationship with China, and how you can leverage that supply base to your benefit?
That's. Thank you very much, William. I think that's super good question. We thought a lot about that many years ago. I think we, as an industry, we need to leverage, and as a company, we need to leverage on hardware economies of scale of Chinese supply chain. Software, we want to keep in Europe. Software and control, we want to keep in Europe. Within the hardware, despite Europe is cannot be competitive in the current setup, we decided to keep a foot in Europe and support the policy about made in Europe and Net-Zero Industry Act.
Depending how geopolitics works, we might need to ramp up Europe or not, but we want to have the possibility to do so. We want as well to grow India as a balancing act for our supply chain strategy. But fully committed with China, with our team in China, with our suppliers and partners in China, they are part of our trajectory. If geopolitics play a different role, we will adapt accordingly.
When you put together in your assumptions, input costs, tariffs, changing supply base, how do you see gross margins developing? Your gross margins, I think, exclude your direct labor costs, so it's effectively an indirect input cost impact. They seem to be plateauing. Is this a normalized level for your business? Do you envisage their scope for growth or expansion?
It's gonna depend a lot of make or buy strategy, how much you do internal, how much you procure. All things being equal, in the make or buy strategy or in the make or buy share on the make or buy strategy, that's a fair assumption. Plateauing is a fair assumption.
Thank you. My second, I know we've been trying to understand your capacities from your internal capability. My question is more thinking about installation capability. I think historically, you've delivered maybe above 1,600 turbines or installed over 1,600 turbines in a year in the recent past, but with a different geographic mix. As we look forward, the mix is biased towards Western Europe and Germany and your installation partners, do you see sufficient capacity, whether it's crane lift, install, EPC completion, which enables you to run at higher rates, as Germany and these other markets begin to increase their installation rates?
I think that's a super good question. The answer is, we have a plan for that, but it's not without risk. Let's put it that way, because the record levels is gonna put challenges everywhere, from police escorts, to transportation permits, to building permits, to all the supply chain needs to stay tuned and in focus, and all government, federal, and states, and municipalities needs to support the journey, which so far I think it's the case, because it's a country mission, what we are discussing here, but it's not without challenges. I mean, the volumes that we are gonna install in Germany are massive, and the number of special permits and the disruption in the highways at night. You know, this is gonna be a challenge for the whole industry, indeed.
Super. Thank you. The final question may be for Ilya, is financial. Rounding back on an earlier question for clarification. I mean, you're running an increasing level of bonding lines or project bonding lines. I think historically, you've used a number of sources for that capital, but your historic weak capital structure has resulted in higher costs. I think you were in negotiations to syndicate with new banks. Looking forward, as your capital structure increases, how could we expect your bonding line costs to change?
Yep. Thank you, William. That's indeed a very good question. I alluded it earlier, but also when I was answering to Ajay's 3rd question. In, I mean, without going to these other structure, right now, we have been, in the past year, 25, ramping up a lot of bonding lines already on a bilateral basis with banks. Whether that goes into a syndication or continues to be bilateral, I think that is a matter of choice and terms and conditions. For both, fortunately, true is that now the costs for those bonds have come down, significantly from those high levels you were talking about in the times of a weaker financial standing of Nordex.
In a like-for-like volume, at the end of this ride, they could almost halve from the peak. We could talking about half the costs, maybe even better than that. Of course, we're doing now more volume, so we're using more bonds. Germany requires more bonds than other countries. In absolute terms, the decrease might not be that much, but in relative terms, it could be almost 50% of the peak values. If you wanna do this for 2026, and we've traditionally given you values of something like EUR 90 million to EUR 100 million of those interest costs, I think if you plug in for this year. Again, we're still on the journey to recycle all those bonds.
If you're talking a more 70-ish number, I think for this year, it's a good calibration, then we hope to improve this further, as I said, during this year then for the years to come.
Super. Thank you very much. Congratulations.
Thank you very much.
The next question comes from Sean McLoughlin from HSBC. Please go ahead.
Thank you. Good afternoon, and congratulations from me also. Just coming back to German auctions, it sounds from your comments like we have seen pressure on turbine pricing as a result of the price compression in the latest onshore bids. It sounds like this is not all getting competed out at the developer level. Just to understand, what kind of change are you seeing in conversations with your developer customers in thinking of bidding at the next auctions, and how you're planning on remaining margin neutral? That's my first question.
I think our take there is, and let's do this together, Ilya, is that wind is an amazing part to solve the problem of competitiveness of Europe and Germany and lower electricity prices. The floor price of the auction is substantially lower than the 10-year forward prices of Central Europe. We somehow wish that our customers take that into consideration. You know, we can support equally the German ambition without doing unnecessary or unsustainable changes in that.
I mean, if you want, then I'll subscribe to that. I think the one, probably many people here on the call as well, have been following this industry for quite some time, and you and I have been in this industry for 20, or in some cases, 20-plus years. We've seen a few cases where systems start to get into auctions, and Germany has officially started that in 2017, but since it was undersubscribed, it never really was an auction system. With the oversubscription really taking only place since 2024, and really since last year, I probably see that 2026 is one of those transition years.
In those markets we've been working with José, in the past, be it in the U.S., be it in Latin America or South Africa, people need to find a new normal, and sometimes they take somewhat irrational decisions. After a not so long time, markets normalize. I would say, José, to your point about the electricity pricing in Europe, sooner or later, we will see that new normal. I wouldn't take the 26 auctions for too much. Let's see 3, 4 auctions down the road, where the final pricing of electricity in these auctions has leveled out.
Especially after the new policy next year, let's figure out. I think I tend to see it positively in a way that is big volume. 10 GW for the foreseeable future is big volume, and the ultimate price in Central Europe is a decent price for everybody to be profitable.
Thank you. Just another question, just to understand a little bit the bottom end of the guidance range. You know, you're implying a margin fall despite roughly 8% higher revenue. Just to understand, what you know, what are your bearish assumptions to get to that bottom end of the range? Thank you.
I mean, the biggest. I mean, there are 2 or 3. I mean, one is substantial delay on the order intake. We still need to sell order intake this year for a percentage of completion of products that we plan to manufacture this year. If the order intake is in come, we don't produce to stock, we produce to order. Even if we produce to stock, if we don't have the orders, we cannot recognize revenue and margin. This is the biggest risk. Second bigger risk is delays either due to us or to our customers, or to permits, installation delays, construction delays. The third is disruptions in supply chain that we have factored.
certain minor disruptions, if there is, you know, this will depend how much this disruption will affect your supply chain.
I think, it's a good, very good question. We haven't mentioned it before, because if we give you a range for both revenues and for EBITDA margin, of course, we shouldn't fail to calibrate you and then also to mention it here. We would like to calibrate you for both those ranges from what we see today.
Yeah, midpoint.
In the midpoint, on the revenues and in the EBITDA margin, It's a midpoint view, and José Luis looking at you.
Midpoint plus.
Midpoint plus. If you ask us something, it's midpoint. If you ask us if it's rather midpoint minus or midpoint plus, I think our answer is this is a midpoint plus view on the.
And-
EBITDA margin guidance.
The rest is the scenarios. The scenario that we need to plan for. Hopefully, those downside scenarios will not materialize, but in case those materialize, we don't want you surprised.
Super. Thank you so much.
The next question comes from Vivek Midha from Citi. Please go ahead.
Hi, everyone. Good afternoon. Thank you very much for taking my questions. Congratulations again to myself as well. I have a few follow-ups, if I may. The first on the market. You mentioned that the U.S. is contributing to your order intake assumptions underpinning the midterm guidance. It just helps to understand, yeah, would you be able to share your assumption around that U.S. market volume within that guide? Thank you.
That's. I mean, you know that we don't discuss order intake guidance, nor distribution of the markets within that, even in the year. I fear we cannot be very specific there. Our ambition for U.S. was returning to our previous market share. Our view, and we might be completely right or wrong, is that we don't see reasons why U.S. medium term is not a sizable market as Germany. Do we see that short term? We don't. That's our assumption medium term, that U.S. should be a sizable market as Germany, and that we should be able to deliver there our traditional 20% market share.
That's very helpful. Thank you. My other follow-up was on the cash flow side, following up on your comment, Ilya, around the sort of cash conversion, how we can think about that going into free cash flow. If I'd look at the sort of key building blocks of EBITDA, working capital, and the CapEx, that would appear to imply around EUR 450 million, in line with that view, 50%-60%. That doesn't include any changes around the warranty provision topic. Should we expect any cash outflows from that? Is that material at all? Thank you.
Thanks, Vivek. A very good question, and I'm afraid I do my caveat one more time that I don't want to guide you for the free cash flow. If I was accepting your number for a second, and you're always doing very well, the building blocks for us, then I would say that includes all potential outflows from anything on our provisions.
Fully understood. Thank you very much for time.
We do have a follow-up question from John Kim from Deutsche Bank. Please go ahead.
Hi, thanks for the opportunity. More of a conceptual question. Wondering if you had a view as to longevity of the Delta4000 platform. As the market evolves, you tend to need to refresh. How should we think about a new platform in the next 3 to 5 years?
Let me see. I think our current platform, with minor evolutions, are very good to deliver what market needs in the markets where we operate. In Europe, where you have no restriction, logistical challenges, same applies to Canada, to U.S. We are not going to be the ones first to launch a new platform to the marketplace. In the horizon of what we see, the medium term, we don't see the need. Nonetheless, we need to be prepared in case our competitors do so. But I don't see the need, because we can deliver the cheapest electricity source of energy in Central Europe with the current products, and there is no need for that.
Let's see what the market does. In our view, the best way for all the stakeholders in the marketplace is reliable products. Reliability comes from testing, from field experience, for operational platform, and from taking the time to ramp up and staying on nominal capacity as many years as reasonably possible. That's the key for profitability and sustainability. Hope that the market remains that way as it is, as it has happened with Delta4000.
Okay, helpful. If I can ask an unrelated question, can you just comment on price cost dynamics in your service business? You've had very strong sales, you have very strong backlog here, but I'm wondering how we should think about cost to serve, given the growth in the fleet and what levers you're throwing to kind of optimize that.
I mean, on our midterm target, we are considering that the service business should contribute with the growth and with a slightly profitability improvement, and the profitability improvement comes especially from more reliable turbines, with less problems in the field, to replace and repair. If the growth is coming, as is expected in areas where you have a strong service business fleet, you don't need to grow up overhead and new capacity, so you take certain efficiency from the growth in existing geographies. Those are the levers. Our target, I mentioned in the speech, we should hit someday the 20%. Is this gonna be a profitable business as the market leader?
No, because we don't have the size of that business for the time being. Long term, maybe, but medium term, no, but definitely crossing the 20% is something that we are ambitioning.
Okay. Thank you.
Thank you very much.
We do have one for more follow-up question from Constantin Hesse from Jefferies. Please go ahead.
Thank you for the opportunity. Just one quick follow-up on tax. Ilya, can you just remind us, I mean, after so many years of pretty substantial losses, you must have built quite a good portfolio of some tax loss carry-forwards. How to think about tax over the next few years?
Yeah, good question. As a company now that makes profit, it needs to think about taxes even in a more intense way than before. Of course, ultimately, the applicable tax rate, and that's what we're giving you on a P&L side, is that German 30% rate. When you think about cash taxes, you should more think about a 15%-20% cash tax rate. I mean, we're working on this, so take it as a very early non-guided number, but to give you an order of magnitude, that's where we're going, using the losses from the past, and let's see how optimal we can get that.
Can I just ask you, like, in terms of how long can this last for, in terms of that range that you just discussed?
I mean, it will depend. I mean, according to our midterm target, and now we're really entering a territory where we're typically on a public call, wouldn't. Of course, if we go at that rhythm, and we're talking midterm, maybe of a common understanding here, in 3-4 years, we might have absorbed and consummated, consumed, all of those past losses.
Great. Thank you so much. It's really helpful, and congrats again.
Thank you.
It looks like there are no further questions at this time, so I would like to turn the conference back over to José Luis Blanco for any closing remarks.
Thank you. Thank you very much for the, for the, very good, and intense Q&A session. Let us conclude with our key messages for today. First, 2025 was a record year with a strong operational performance and major financial and operational improvements. Second, a strong free cash flow and net cash position above EUR 1.6 billion is strengthening our strategic flexibility. Third, we are well positioned for 2026 and beyond. Fourth, our shareholder return policy is an important milestone in Nordex's development. It's first time ever. Finally, we reached our midterm EBITDA target ahead of plan. Now we are setting up to improve it further towards 10%-12% across the cycle. Thank you very much for your time, and wish you a wonderful day ahead.
Ladies and gentlemen, the conference is now over. Thank you for joining, and have a pleasant day. Goodbye.