At this time, it’s my pleasure to hand over to Anja Siehler, Head of Investor Relations. Please go ahead.

Thanks, Mathilda. And also a very warm welcome from the Nordex team in Hamburg. Thank you for joining the Q2 2025 Nordex conference 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.

And now I would like to hand over to our CEO, José Luis. Please go ahead.

Thank you very much for the introduction, Anja. On behalf of the entire board, I would like to welcome you to our second quarter results of 2025.

Starting with the recap of the 3 months from April to June ’25. As the title of this slide suggests, we are staying the course, and that course is one of a steady but consistent progress. Overall, the second quarter progressed as planned, delivering improved margins and another positive free cash flow.

In detail, the second quarter, we have seen a strong momentum in our market, resulting in a combined order book of more than EUR 14 billion. We recorded a turbine order intake of 2.3 gigawatts in the second quarter up 82%, which translate to an 83% year-on-year increase in euro value. Profitability continued to improve. Our EBITDA rose by 64% year-over-year, and our EBITDA margin increased by around 220 basis points. This translates into a 5.8% EBITDA margin and a positive net income of EUR 31 million.

Looking at the Service business with an EBIT margin of 17.7% in the second quarter, we are on a steady path towards our previous normalized levels. Important to highlight, we continue to generate positive free cash flow since several quarters now. In the last quarter, we achieved a free cash flow of EUR 145 million driven by the operating business. For the remainder of the year, we remain confident to repeat our performance of the first half of the year despite any provision-related outflows.

And finally, we are seeing good momentum across our core markets and remain on track to deliver guidance for this year and also our EBITDA margin target of 8% in the medium term.

Let’s now turn to the next slide, where I’ll walk you through the current market conditions in more detail.

We continue to see solid demand across our growth regions, particularly in Europe, where Nordex remains the market leader. The onshore installation forecast in our target market continues to show a steady growth trend of around 12% through 2028, with Europe consistently contributing a significant share. Our past order intake reflects this momentum in the first half of ’25, we secured 4.5 gigawatts of new orders with 95% of that coming from Europe. This underscores the strength of our position in key markets like Germany, Turkiye, the Nordics and Baltic states, among others.

In North America, we maintain a strong presence in Canada, while our view on the U.S. remains unchanged. We believe that it continues to be a key market for wind energy in the long run. However, the outlook is uncertain in the short term. We are closely monitoring the impact of the executive orders on the safe harbor provision and order pipeline. On top of Europe and the U.S. market, we continue to be actively engaged in Canada, Australia and Latin America with varying degrees of success.

On the supply side, we continue to see a stable environment in both supply chain and costing aside from a few exceptions. Overall, we anticipate a slightly stronger performance in the second half of the year. All in all, the fundamentals of our market remain solid and Nordex is well positioned to capture the opportunities ahead.

Moving to the next slide. The second quarter of 2024, we saw another strong order intake momentum. Nordex delivered 2.3 gigawatts in Q2, making 8% — 82% growth, an 83% increase in order intake compared to the same period of the previous year. This translates to EUR 2.2 billion in value from orders across 9 countries, strongest individual markets were Germany, Turkiye and Latvia. Pricing remained stable and has been stable now for quite some quarters. As always, important to mention here, the changes in ASP are scope and regional mix effects.

Moving to the next slide, order book. Driven by strong order intake in both segments, our total order book grew to EUR 14.3 billion. The turbine order book increased by 28% to EUR 8.9 billion in the second quarter of 2025, up from EUR 6.9 billion in the second quarter of ’24. Most of these orders will be installed in Europe, followed by North America, Rest of the World and Latin America.

On the service side, our order book increased by 32% year-on-year, reaching EUR 5.5 billion by the end of the second quarter 2025. This growth in service order book reflects the expansion of our turbine business over the past years across multiple regions, now contributing to the service order book.

Moving ahead, Service margin in Q4 2025. I’m pleased to report that our Service business continues its upward trajectory and is steadily progressing towards our target profitability level. Service revenues grew by 17% year-over-year, reaching EUR 207 million in the second quarter of 2025, and the share of Services sales now accounts for approximately 11% of total group sales. As we have outlined previously, EBIT margins are on a clear upward path. In Q2, our Service EBIT margin reached 17.7%, continuing the steady improvement we’ve seen over the past quarters.

And let me highlight a few key operational KPIs for the services activity. Average availability of the fleet under service remained high at around 97%. And the average tenor of our service contract continued to be around 13 years, providing long-term visibility and recurring revenue. As mentioned, in Q1, the margin recovery is not linear, but the trend is clearly visible, and we remain confident in our ability to return to our historical margin levels of 18% to 19% within the next 12 months.

Let’s move to the next slide, installation and production figures. Installations were up 5% year-on-year, reaching just around 2 gigawatts in the second quarter of 2025. In the current quarter, we installed a total of 337 turbines with the majority of installations occurring in Europe followed by Latin America and North America.

On the production side, we assemble around 1.6 gigawatt of nacelles, corresponding to 281 turbines. The decrease in production is only due to project scheduling and generally in line with our internal plan. Blade production in units increased by 8% with 1/3 in-house production.

And with this, I would like to hand over to Ilya to go through the financials.

Yes. Thank you, José Luis, and good afternoon, everyone. And as always, I will start with our income statement.

In the second quarter of 2025, sales totaled around EUR 1.9 billion, in line with our previous year’s figure. We again were able to improve gross margins reaching 24.8% compared to the 19.3% in the same period of last year. As a result, we achieved an absolute EBITDA of EUR 108 million in Q2 compared to EUR 66 million in the second quarter of ’24. This translates into a further improvement in EBITDA margin both year-on-year, so 3.5% in Q2 ’24 and also sequentially, 5.5% in the past quarter, reaching 5.8% in the second quarter.

Going forward and with the visibility we have as of today, we continue to expect solid improvement in both margin and in absolute EBITDA levels in the second half. And given the overall solid performance in the second quarter, we closed Q2 with a positive net income of EUR 31 million after EUR 8 million in the first quarter. At the current run rate, we should be able to generate quite a healthy net profit for the full year, which may also be the right point in time to decide on other capital allocation topics, hence, with the full year results.

With this, let’s move to the balance sheet. Looking at the balance sheet, the overall structure has not changed much. So very similar to year-end 2024. We completed the second quarter of this year with a cash position of around EUR 1.2 billion. There, the working capital stood at minus 7.5% on track and in line with our internal planning. Equity ratio was 18% at the end of the quarter with a slight increase compared to the previous year quarter, 17.6% and the year-end ’24, where it was at 17.7%.

And now let’s have a closer look how other balance sheet KPIs have developed. Overall, all balance sheet KPIs reflect the solid performance achieved in the second quarter. Strong operating business in the second quarter contributed to a further increase in net cash, which totaled EUR 942 million at the end of the quarter compared to EUR 446 million in the same quarter of the previous year. The working capital ratio, as just mentioned at the end of the quarter stood at minus 7.5% or in absolute numbers, EUR 539 million. The increase is mainly driven by preparing for higher expected activity levels in the second half of this year.

And with that, let’s go to the cash flow and CapEx slide. Cash flow from operating activities before net working capital stood at EUR 232 million at the end of the second quarter, and reflect again the solid operational performance. Working capital only saw some minor changes, just mentioned, minus EUR 54 million in the delta, so that we reached a cash flow from operating activities after working capital of EUR 179 million at the end of Q2. And this is a solid performance and even beyond the same period of last year.

As a result, we generated a solid positive free cash flow of EUR 145 million in the second quarter of ’25, despite working capital outflows in Q2. Although we don’t guide for free cash flow, I am and we are confident that we will achieve a solid positive free cash flow for the full year 2025.

CapEx spending amounted to around EUR 39 million in the second quarter, slightly higher compared to the same quarter of last year. However, overall, we expect to catch up further in the second half of this year, and we’re sticking to our guidance of around EUR 200 million of CapEx for the full year.

Our investment focus remained largely unchanged with investments primarily in blade and nacelle production facilities and tooling for installations and transport.

And with that, I would like to hand back to José Luis for our guidance slide.

Thank you, Ilya, for walking us through the financials. As mentioned earlier, the first half of 2025 has developed fully in line with our expectations, both operationally and financially. This gives us continued confidence in our outlook for the remaining of the year. We expect 2025 to be another year of steady and meaningful improvement in profitability with a solid order book and clear project time lines, we remain comfortable reaching the midpoint of our sales guidance range of EUR 7.4 billion to EUR 7.9 billion. At the same time, we continue to anticipate a consistent step-up in our EBITDA levels over the next 2 quarters, moving us closer to our medium-term target of an 8% marking.

While we are not providing formal guidance, we are confident in our ability to deliver another year of solid free cash flow or in other words, repeating our first half performance despite expected provision-related outflows.

And with this, handing over to Anja to open the Q&A?

Yes. Thank you, both for leading us through this presentation. I would now like to hand over to the operator to open the Q&A session.

[Operator Instructions] The first question comes from the line of Constantin Hesse from Jefferies.

So I’ve got 3 questions. If we could start with José Luis, maybe over to you. After the full year results, we had that breakfast, where I think you hinted towards momentum overall. You expected some growth in ’26 and then potentially an acceleration in ’27 and ’28.

Now I’d just like to talk a little bit about this because looking at the share price performance. I mean, this year, it’s been extremely good from a valuation perspective, we’re trading at relatively higher multiples at this point. And I feel like some investors, and there are some question marks around how much longer can this momentum really continue. I think when we talk about ’25, looking at German auctions, it looks like that’s pretty much in the bag. So we’re looking at probably order intake is probably going to be above last year.

But going into ’26, maybe you could comment a little bit about where do you really see the market trending? What are the markets where you’re seeing this momentum continuing? Because surely, Germany from an auction perspective is probably peaking this year. So just wondering if you could comment a little bit on when you look at ’26, ’27, what are these growth catalysts?

Okay. Thank you, Constantin. We remain optimistic about growing trajectory of the business and profitability improvement of the business. We don’t guide for order intake, but we are optimistic that this year we could repeat or improve last year’s performance. Despite the uncertainties in U.S., which for us is — we mentioned as well in that meeting and in several calls is a safety net, but we are not — we don’t need that to deliver our plan. You name it, Germany is high level volume of permitting or auctions. Our market share in the order intake and in the execution in Germany is — we are happy. We are 1 of the 3. So name it, 30%, 33%, and we expect this to continue. We don’t see any indicator that this might change.

But other than Germany, rest of Europe is strong. Canada is strong, and we see opportunities in Australia. So you saw that the backlog has increased a lot. It means that the processing of those orders is increasing lead times. And as a consequence with the current backlog and expected order intake this year and next year, we think we can support a growing trajectory for ’26, ’27, ’28 is a little bit earlier, but definitely for sure for ’26 and ’27.

That’s great. And then maybe over to CapEx, if we could just comment a little bit on maintenance CapEx versus growth CapEx here going forward. I think a level of EUR 150 million to EUR 200 million, is that kind of a level that we should continue to anticipate over the next 2, 3 years? Or is there potentially — sorry?

Yes, yes. No. I would say, ballpark, yes, could be slightly higher because we are with a slightly higher activity than previously expected. But CapEx to revenue, we think should be below 3%…

And I guess what — in total, I’m sorry, José for chiming in. I guess if you take this EUR 200 million as a proxy for a bit of a run rate going forward, I think you’re well calibrated.

Fair enough. So basically, no plan for now to potentially develop a new platform, anything at least until later in the decade?

Yes.

Fair enough. Last question, just on free cash flow. So I was quite surprised. I think you mentioned that you expect a similar performance in free cash flow in the second half relative to the first half, which basically takes you to about EUR 300 million in free cash flow compared to, I think expectations are currently at EUR 180 million, so significantly ahead here.

Can you just give us a bit of an indication? I know you don’t guide us or give us a specific number for Engie, but looking at these potential outflows, how should we think about it? How long are they going to last? Are they pretty substantial already from the beginning? Or just to give us a little bit of an indication if there is a way.

Yes. So very valid question. And I think maybe the change to our previous calls in the full year and Q1 is that while we’re already optimistic on a solid free cash flow for the year, if possible, we are even more optimistic than we were before. And you’re right, we’re not guiding for that, but I will not contradict the numbers you play to us here. So in that realm, if it’s for calibration, not for guidance, I think that is a good orientation. So for the full year, that’s clearly our expectation.

As it comes to the legacy issues, the late legacy issues were not going to be specific on individual customers. However, in terms of outflows, this will, as we said, for the full legacy issue to be a thing of 2, 2.5 years. And maybe in some individual cases, it goes a bit faster. So outflows of course, are happening already in H2, we’ll see some more. But all this is already contemplated in the calibration we’re giving you.

The next question comes from the line of John Kim from Deutsche Bank.

I wonder if we could focus back on the growth potential into ’26 and ’27. Specifically where in Greater EMEA, you see pockets of opportunity to grow the order intake. Also, any color you can give us on the cadence of orders to revenue recognition would be helpful here. And one follow-up, if I may.

John, so the growth in ’26 expected is mainly driven by the growth in the order backlog. There is an effect here that the orders in Germany have a longer lead time for processing those. So those — the order intake today doesn’t mean revenue growth next year, but maybe the year after. And this is why we are cautiously optimistic about revenue growth trajectory for ’26 and as well 2027. Majority of revenue growth next year compared to this year is expected to be in Region Central in Germany as we are ramping up to install a substantial more number of turbines compared to this year.

And other than Germany, where we see first auctions — first permits, then auctions, then order intake than 2 years later installation. Other than Germany, the cycles in other geographies are slightly shorter, and it’s very much order intake driven. So we expect the good order intake momentum to continue in the second half, especially in Germany, but not only Germany, rest of Europe, Canada, among others.

Okay. Great. And one follow-up, if I may. Any color on what you’re seeing in Brazil right now?

That’s a challenging market. We are executing projects. We are in negotiations with customers, but it’s a challenging market. Electricity prices are quite low. There are grid issues to bring projects to the market. It looks like those grid issues are on the way to be resolved in 1 or 2 years. Electricity prices are improving, but at least for us, not sufficiently short term. But we remain committed with the market midterm and long term.

We now have a question from the line of Vivek Midha from Citi.

The connection with the questioner has been lost. We will proceed by taking the next question, which comes from the line of Tore Fangmann from Bank of America.

So I’ve got 2 follow-ups here. Maybe I can follow up on the capital allocation priorities and how do you think about balancing CapEx, balance sheet and rewarding shareholders? And then how do you think about starting dividend payments versus potential share buybacks? I’ll take the second question afterwards.

Yes. I’ll take that first one. Tore, thanks for asking it. And we have been discussing it at least on the last call, if not for the last 2 calls. As I tried to indicate in my remarks on the presentation, we will come back on this comprehensively with the full year results. I said it could be as early as Q3. What we want to see not only the result of this year, but basically, already having solid budget for next year and the business plan for the year thereafter, questions you’re also asking us. But we will come back to that then with a firm answer and basically also a proposal, if any, to shareholders.

The guiding principle will be this company needs to be prepared, and we are preparing it for a cyclical industry. And when this cycle goes into the next one, it needs to be one of the strongest in the sector. So whatever we do, we’ll always put the strength of the company first. Obviously, acknowledging the very valid needs or demands from our shareholders who have been very good with us in the difficult times. So I think you get a balanced picture once we reach the full year results.

And if I may complement to Ilya, keep in mind the evolution of the order backlog, which is an early indicator of revenue growth, and this is for us paramount, derisking the revenue growth of the company.

Okay. My second question, also a follow-up on your comments on the platforms. How do you think about the right time to, let’s call it, pull the trigger on developing the next technology platform? And could you maybe comment on how is the current pace of new technologies with — in the general market for you and also your competitors?

In the markets where we operate with the current products, we can deliver electricity below the grid parity in majority of the regions where we operate. So we don’t see the need to launch new platforms. Of course, this is a competitive dynamic. I mean we are in a market if some of the competitors decide to do so, we don’t want to be caught by surprise and we need to be prepared to react.

But I don’t think we are going to be the ones starting to launch new platforms in the markets where we operate because current platforms deliver value to society and to different countries. So I don’t think there is the need to be in a rush there. It is better to focus in reliability, in product performance, in managing existing supply chain with good quality, with good utilization instead of ramping up another new platform. But market dynamic will tell.

The next question comes from the line of Sebastian Growe from BNP Paribas Exane.

Two questions left for me. The first one would be surprise, surprise also around the order backlog and the related timing. So from what I can tell, I think it’s around 10 gigawatts now. And I was just curious if you would be willing to share how we should think about the timing around those very 10 gigawatts. So that will be the first one.

And then the other question is more on services. So in the meantime, you have 46 gigawatts under services. It appears that the capture rate has meaningfully improved year-to-date. So on my calculations, it’s close to a high 70% level. So I guess my question here is whether you can share what the capture rate in Germany is compared to the rest of Europe? And equally, how terms and conditions might differ between Germany and the rest of Europe?

Yes. That’s precise. I don’t know the second one, but I will try to give you some color regarding the timing of the 10 gigawatts. It changes country to country, and of course, project to project, but from 18 to 24 months. So the German portion more towards 24 months and the rest more to 18 months. What portion is Germany and what portion is others on the backlog, around 40% could be Germany or a little bit more. With that, you can do your early indication of expected revenue growth.

Regarding services, Germany is definitely a longer tenure than the average, substantially longer tenure and the capture rate for long-term service O&M in Germany is almost, I would say, close to 100%. So — and the profitability in the German service business activity is good. I mean, of course, it’s a quite developed region with a lot of service centers. So you are more close to the turbines and to the customers, so you can deliver a better service because of the geographical distribution of your presence in the marketplace and the size of the marketplace as well.

Sounds truly good. And may I just quickly throw in one other question around the provision debate that we had before. Ilya, if you would be in a position to share a number of how much one might expect in the second half of the year in terms of provision-related outflows?

You’re talking again about the outflows, Sebastian?

That’s right. Yes.

Yes. As mentioned before the spread of those provisions, which were specifically geared towards those legacy issues, which is a campaign of repair and replace is ongoing already. So there is outflows happening already because we’re doing that campaign, and we’ll continue. And I would repeat best guess, 2.5 years, something like that when we would put the start at the beginning of this year. And the earlier it is the more of those outflows. So it’s going to be a declining outflow because the campaigns are going to be finished. I wouldn’t like to be more specific than that.

But again, it is already happening as we have done agreements with customers, and it is all contemplated in the free cash flow orientation we’re giving you for this year.

We now have a question from the line of Kulwinder Rajpal from AlphaValue.

So just wanted to get your comments on the U.S. market. Have you had any discussions with the customers following the earlier phaseout of the credits? And what has your feedback been on that so far? And then in the context of that, how do you now think about ramping up the capacity or the mothballed facility in the U.S. now?

Thank you for the question. Yes, we are in close discussions with customers. How can I summarize it? Too early to say. I think we are — customers are evaluating what is the scenario of — on tariffs and what is the practical scenario of the Big Beautiful Bill and the executive order to qualify for continuous construction. More clarity will be given around mid-August. I think it is August 18. And until there, there is not much we can say, but we think U.S. long term is a good market to be, and we are committed with the market long term regardless and despite the final assessment of the bill on August 18.

And regarding a ramp-up in Iowa, as we speak, we are doing so to qualify turbines for continuous construction, if legislation allows that. And until new information is frozen in stone to reassess the situation, we keep committed with our plans.

Right. And so just to clarify, is it more of an uncertainty kind of question that is facing the customers? Or is it more like without the credit, the demand won’t be the same?

It’s — I mean, very much all. I think there is a timing effect always. I mean with or without tariffs, there is a CapEx impact that needs to be translated to PPAs, and this has a timing for that. And the same applies for the tax credits. So the size of the market might slightly change depending that, and continuous construction will determine if we are going to be in a peak of demand of 1 year or in a peak of demand of 2 or 3 years. That’s as far as we can say today.

Okay. And secondly, just to quickly follow up on the service. Obviously, good to see the margins expanding. So I mean, should we expect similar developments for the margin in the second half?

Yes, without going into quarter-to-quarter because we saw certain peaks in certain quarters, but the trend is expected to continue, yes. And eventually, in 1 year from now, we should be in the 18% to 19% EBIT marking. The growth should not be expected as steep as 17%. It is more low 10s and profitability improvement, yes.

The next question comes from the line of William Mackie from Kepler Cheuvreux.

I have 3, possibly 4 questions, if I may. The first one, it comes back to the way in which you or the Board are thinking or planning your capacity development in terms of — if I look at on a rolling last 12-month basis, your order intake is running at about 9.5 gigawatts and your installation rates are running at about 6.5. You’ve mentioned earlier that the time to complete or the book-to-bill period is extending out towards 24 months in some cases. But how are you balancing that natural pressure between your customers wanting to complete and commission projects and, therefore, pushing you for deliveries. And you holding back or developing your capacity expansion and your willingness to deliver faster.

So I’m thinking really the question is, how should we expect you to develop your capacity and installation rates? And what bottlenecks are there, whether it’s logistics or blades or nacelle completion, which might hold back that installation rate?

Yes. I think this is a very good observation. Installation this year, we plan to do slightly higher than that, but less than — definitely less than the order intake. The biggest bottleneck is, at this point, is not blade capacity, nacelle capacity, logistics is customer permits and civil work ready. So it’s very much we are preparing to fulfill our contractual schedules. And factually is that we don’t pay almost liquidated damage much for being late to the projects. It poses different problematics because we need to store the components somewhere because the projects are not ready. And there are certain cost increased discussions with the customers because of those delays. That is very much driven by civil works and availability of permits to get into the site.

This is what is driven the different pace of order intake, the different pace of production and the different pace of installation. But without underestimating the challenge ahead of us, we see substantial growth especially in Central and in Germany, but we are prepared, and we do not see any major issues from our side to deliver the expected increase in activity next year.

The second question really draws on your privileged position and insight on the end markets and how they might behave. I guess would you be willing to share a view on perhaps how — if the treasury adopt a very strict interpretation of the OBBA in the U.S., and we see perhaps the safe harbor statements go away or at least the safe harbor system go away, what sort of impact could that have on market dynamics?

And then in a similar vein, in Germany, do you have any initial thoughts or indications about how the German government may interpret or stand with regard to their willingness to commit to renewables in the medium term?

Let’s go. U.S., we — if you allow us, prefer not to speculate. Let’s see what the legislation says. For us that position is easier because for us, U.S. is a safety net. We are prepared for a rush, if a rush is needed, but we are not counting with that in our internal planning. So for us, it’s more an upside than anything else. But let’s wait to see what the interpretation of the law is and react accordingly.

Regarding Germany, we see — we saw massive improvement in permits, in auctions this year, another 2 auctions are expected to land with good volumes expected. We don’t have any indication about the future. We are optimistic that Germany is committed to reduce the dependency from foreign resources and wind is delivering value to society.

How big the volume is going to be, the sustainable volume in Germany to be seen, but Germany is the biggest economy by far in Europe. And contrary to other European markets, the subject of energy is not that straightforward because there is no natural resources and the electricity price is high due to limited interconnections across Europe, especially with Nordics and with other geographies.

And the best way for the German government to reduce the energy bill is to install as much as you can. I mean it’s a supply and demand. The more you install variable sources of electricity, the more you reduce the pool price of Central Europe. But difficult to assess or at least, we don’t have any indication what the thoughts are in the German government.

I don’t know, Ilya, if you want to complement here?

Not much. I think the rationale that you gave for what to consider in those conclusions were all given by you. I think there is a bit of a formal view on this that the government announced. And I think we mentioned it in the Q1 call. Shortly after taking office that it will launch a so-called monitoring period. So that means that they want to reassess some electricity demand for the years to come versus the grid capabilities, the mix of generation. So that is underway. And if my timing is not wrong, those 6 months would probably put us somewhere in the end of October, beginning November, let’s say, in the fall, late fall. And I think that we will get a more formal position from the German government as well.

That’s insightful. The last area I just wanted to touch back on, it’s been asked a bit. But when we think about provisions and particularly warranty use, the warranty use in Q2 has jumped to the highest level we’ve seen in years, almost, in fact, if not the highest level ever, EUR 85 million, if my numbers are correct. How should we expect that to develop? When you talk about 2.5 years of provision use, is that sort of rate of provision use on a quarterly level we should anticipate now well into 2027?

No, actually it was — sorry, go ahead.

Sorry, I mean if it — and what does the warranty use relate to? Is it more of the legacy ACCIONA turbines or something else?

Very valid question, William. But certainly short answer is no that is not representative of the quarterly usage ratio of the provisions. In that specific case, without going to specific customers, this is something that where we have now reached all the final agreements, final agreements with everyone. And in that case, basically, we have moved already part of those provisions for specific cluster deal into the liabilities as a firm liability of the company. So that usage is basically a booking change, but nothing in nature. So there is no additions or anything else. It is basically that we now will recognize or have recognized these obligations as firm ones already in the books. So in the substance, there is no difference.

And second, no, that is not going to repeat itself. It’s a more steady outflow, again, more at the beginning, then decreasing, but nothing near what we are just talking about.

We now have a question from the line of Ajay Patel from Goldman Sachs.

I really want to tackle 2 areas. I’m going to start with the first one, which is cash flow. But bigger picture here, right? I looked at the VOICE’s consensus for next year, and we have EUR 990 million in net cash compared to the EUR 942 million that you delivered in the first half. And if I look to basically no cash generation relative to that number. And you start thinking, well, second half of the year, you’re going to probably have 60% of your revenues. Margins will probably be better because of operational leverage. Admittedly, investments will be higher in the second half of the year than the first to make up the EUR 200 million that you guided for the full year.

But it points to a sizable amount of cash flow generation. And I just want to know, is there anything else that we should be adjusting off that? And why has the picture changed so much? Because when we were talking about the full year results, that EUR 180 million number, which is where consensus is for this year seems about right. And obviously, you have outperformed on this side. Can you really maybe scratch that a little bit more and give us a little bit more detail just because I feel like this has implications to pretty much every year in the forecast. So maybe some color there first. And then I have one further question to follow up on.

Yes. I guess, I’ll take the first one, and maybe you get some business background from the CEO as well. But basically, a, we stick to the message that we want to calibrate you around the midpoint of the guidance in terms of EBITDA margin. We will say that if we were confident already in the full year call and in the Q1 call, if at all possible, we’re more confident about that than we have been before. What I’m trying to say is probably — if there’s any down upside to that, we clearly see only upside to that position. So that basically is where we want to steer you towards.

But given that the 60%, 55% as you indicated, activity is still lying ahead of us, and we have seen certain hiccups, at least on paper between tariffs, permanent magnets and the likes, we would continue to be cautious to go beyond anything what we’ve mentioned on the call today in terms of the guidance for the cash flow and for — which is not a guidance to repeat that and for the profitability. And I think that matches for at least how we see business, don’t we?

Yes. I think you name it. I think 60% of the volume we need to execute, 55%, 50% in terms of production, installation, so on and so forth. I mean there is very little to non-order intake risk for delivering this year number. But one thing is order intake risk, the other is the execution itself that there are risks and chances. Today, we see slightly more chances than risks, that is half a year ahead of us to execute.

Really, the big variable here is you execute like you have over H1 and H2, then I think earlier in the call, someone was inferring EUR 300 million of cash flow. It isn’t — that is an impossible number. It’s just a case of you need to get through it. You need to get through the court. That’s the law, sorry. That makes sense. And it almost leads to the second part of this question. On Slide 21, you’re very fine in giving us a bridge, the 4.1% to the 8% margin target. And you look at those variables and you got better execution, growing service, additional volumes.

Well, the service margins have seen sizable improvement. You’re highlighting that Germany has a good intake path ahead of it. And I think that we’ll have to see with the U.S., that there’s a possibility on that side. And you’re executing very well over this half. The hope is that, that becomes continued momentum going forward. What’s effectively holding you back from that 8% margin target next year? What is — is it purely just the reason that you — when we asked this question, is it possible to hit the 8% margin next year? Is it that you just want to be conservative on the execution until you get everything perfectly humming correctly?

And I think your order intake in the first half was about 4.5 gigs. Is 9 gigawatts unrealistic this year? Or is there some timing in the order intake that we need to take into account? Because obviously, you have more visibility to your pipeline than we do.

Yes. That’s — how can I say it without guiding you. I think all things being equal, if we improve the order intake of last year, which we think can be done, then the additional volume that is needed in this bridge might come next year. So if the other 3 building blocks remains true, which is no hiccups or massive disruptions. your assumption or your math might be doable, but we are in July. The budget, we are — after summer break, we will start planning for next year. Budget will be approved in December, and guidance for next year will be issued in February. So I mean, we still have — we have a journey to go, but everything looks good.

The next question comes from the line of Sean McLoughlin from HSBC.

My first question is on the gross margin. Just thinking about the 500-basis-point year-on-year gap, can you talk about kind of effectively what is driving that? Is that execution mix, all of the above? And maybe thinking about the second half, any reason why this gross margin strength should not continue, maybe any puts and takes you expect on the gross margin in the second half? That’s my first question.

Yes. I mean, let’s do this together, Ilya. I think gross margin is, of course, a very relevant KPI, but doesn’t reflect the profitability of the project because it changes a lot depending on your make-or-buy strategy, your project portfolio, locations and so on. But basically, they make-or-buy might affect your peaks or valleys in gross margin. But the trend is an indicator. If you take last 12 months trend, and you combine a little bit with the last 12 months make-or-buy strategy, especially in place, then you can forecast as well the profitability — reconcile that with the profitability improvement, taking the Service business aside. And that’s — those are the building blocks.

Yes, I think you’re describing also the imperfections of that KPI, which is why we keep going back to the EBITDA as a profitability measure. And here, we would repeat our message, slowly but steadily increase in both Q-on-Q in absolute numbers of EBITDA and gross margin percentage on the EBITDA level. So I think that is the more accurate one. And of course, the net profit goes in line with it. But if it’s a wider commercial question, I would subscribe to José Luis, it’s a trend that we will see to continue, especially when we look at the EBITDA level.

That’s very clear. I just wanted to dig in also to a point you made about Lat Am. You were talking about varying degrees of success across markets. I mean, how much of this is due to competition from China? And how much is potentially company or country specific?

I would say we respect a lot of our Chinese competitors, of course, great companies. I think there are — and the rest of our competitors, of course. So I think the company in Germany and in Europe in general has a very good positioning in the marketplace. Reliable products, reliable execution, quality under control and competitive. So we are very, very competitive, same is Canada, U.S. Unfortunately, we are not in that situation, because it took some time to solve our legacy issues there. We might be slightly late compared to the market leader. And the other market — our peer — market leader in the market, and market participant.

Latin America is very difficult because of the low electricity prices. So of course, we suffer more in Latin America because it’s more easy to change permits. It’s easy to execute. You don’t have the restriction of roads, permits, noise, high sophisticated machines that are needed to play a role in Europe. You have more big utilities that do balance sheet that do not require project finance. Project finance, of course, we need to have a service solution for 20, 25 years, proven track record in the marketplace. So I would say Europe is more difficult to lose that market position compared to other geographies.

We now have a question from the line of Vivek Midha from Citi.

Can you hear me now?

Yes.

Many, sorry — many apologies for the technical issues earlier. So my first question is just a follow-up or clarification on some of the questions, again, around the legacy warranty issues. You mentioned there was a movement from provisions into liabilities. But just to check, were there any additional warranty provisions taken in the quarter? I saw in the notes, I think there’s EUR 54 million of compensation taken in the quarter. So just to check, were there any additional legacy warranty provisions taken?

Yes. I’ll take the first one. The answer to that one is yes, because the final deal with one of the large customers required us to, in that specific project make one last step towards the customer. So just like what we have seen before that was it and all provisioned for, we had to make this last step because that customer, again, being a large global player, has, as is not unusual in the business, basically in return, giving us some additional business in multiple other geographies. So it’s a package deal, where in a specific project, it increases, but overall, enhances the business. So yes, that would be reflected in that figure.

Understood. Because I guess that leads into my next question, which is that, that presumably would have had a P&L impact as well. There may be some other one-off onetime issues in the quarter. And I understand that within the project business the line between what is a one-off cost and what isn’t is very blurry. But it does imply that the underlying margin momentum within your performance is very good right now.

So really, just from that, could you maybe clarify your comments regarding getting towards the midterm target as we improve through the year on the margin? Could we potentially be at the 8% by Q4?

It’s too early. I would say regarding your assessment of provisions, totally right. This is a Project business. And — but I don’t expect or we don’t expect, Ilya correct me, if I don’t have the right understanding that those provisions or moving provisions to obligations do not — I don’t expect more P&L impact coming from that in the future. This is done and dusted and is provided for in the numbers and in the guidance for the year.

And regarding the guidance for the year, this is as far as we can go. I think we have 60% of the activity to go. With risks and opportunities, we see more opportunities than risk, but 60% needs to be executed. So let’s wait a little bit and see how things go in this quarter because it’s a high activity quarter. And in last quarter as well as this quarter is high activity in installation mainly. Last quarter is as well, high installation, not as big as this quarter, but high activity in production. So we need to see how the execution goes. But with the information we have today, we see more opportunities than risks to execute the remaining of the year.

Very clear. My final question is on working capital, a follow-up there. You have the busiest second half of the year. But just when I look at the balance sheet, inventories look relatively flat relative to the end of last year. If I look at contract assets from Projects that looks slightly down relative to the end of last year. So just in terms of the ramp-up of activity going into the second half of the year, perhaps those look a little bit surprising. So maybe could you just talk towards — about the path towards going back to the minus 9% of sales as we go through the second half?

Yes. I think there’s 2 things to say that. So one, when we talk about that ramp-up of activity, of course, we’re not only talking about the manufacturing and the production or any inventory we’re building up, but all the toolings, all the preparations that we need to do. But I think the more relevant, I guess, response to that is that when we look at our forecast, we clearly see that as — that we will be returning to those minus 9% or lower in the working capital ratio. So we’re not changing anything there.

In the past, we have done consistently better than what we were saying to you in that guidance this year probably, again, maybe again, but for sure, we are sure that we’re going to hit that number by the end of the year.

The next question comes from the line of Christian Bruns from Montega AG.

I have only one left. This is on your capital allocation. You have a stronger finance profile and you said that you prefer to strengthen your business, if I understood that correctly. But I would like to know which part of the value chain of your business would you prioritize or prefer to strengthen. So the product production or R&D or the customer service?

Well, the first — and Ilya, you complement. The first thing is we expect growth in the business. And growth means more bonds, eventually more liquidity needs in case you are achieving bond limits or so on. And we don’t want to be in a position to lose orders because of that. As we see an important order intake momentum ahead of us, let’s harvest that. That’s foremost our first priority.

Second, we don’t want to be short on cash, which given the amount of cash we have, doesn’t look that is the case in terms of CapEx needed to execute the growth expected. And those are the 2 main priorities that need to be dusted before — and with sufficient buffers before talking about any other thing. Ilya?

I think that — so my answer would have been all of the above with exactly — coming back to the question, but then those 2 key items are highlighted by you, of course, acknowledging that I repeat myself that shareholders have trusted and helped us in the past. So when it comes to make those decisions, we will, of course, take that into consideration. But the core items are the 2 ones that José Luis just mentioned, derisking as much as we can, the full supply chain from manufacturing to execution and the order intake. That’s the key.

We now have a question from the line of Xin Wang from Barclays.

So my first one is on order ASP. This has been stable despite the regional mix. Is it fair to say underlying pricing has actually worsened?

No, it’s not. I think, the ASP is, as we talk always is an indicator that the market demands from us and doesn’t reflect the profitability of the business. The profitability of the order intake is slightly improving.

Okay. But do you still think the European orders, for example, are better priced than rest of the market?

It’s mainly driven by tower heights. In this quarter, we had a lot of order intake from Turkiye, where the tower is a very short tower. So the ASP is lower, but profitability is super good. So you do super high towers, then the ASP goes up, but this doesn’t tell you what is the profitability of the project. It tells you what’s your TSA divided by the number of megawatts of the machine and this can go from 0.7 to 1.2.

Okay. And then my next question is on interest expenses. So both P&L charge and cash payments continue to increase year-on-year. And look, very outsized against the size of borrowing you have on balance sheet. I think you renewed your guarantee facility in April. Should we — or when can we expect lower interest expenses and payments?

Yes. Xin, very fair question. Maybe I take 90 seconds on that one because it goes in 3 steps. So yes, we renewed that existing facility, but — and I think we’ve mentioned it before, it is the syndicated bond facility with a club of banks. The renewal is part of a phaseout. So basically, now over the last 15 to 18 months, we’ve already started and far advanced with the wind down of that facility. There was a remainder opened under that facility. So we extended it for another year. But hopefully, by April, May next year, we’ll be done with that.

In parallel, also mentioned on past calls, ACCIONA has, in the same period, come up with support for Nordex with its own bond line. It’s very similar. Of course, it’s not a syndicated one, but it’s very similar in terms and conditions and pricing. So that is being utilized because the business continues to grow. And in parallel, we’re now basically partially refinancing that bond line in the market stand-alone Nordex and a bit of a different structure.

But the good thing about that is that now the interest costs for those bonds are substantially lower than the ones we have to pay under the previous 2 bonds. That might not show until next year because, of course, these bonds then need to get into the field, and it will take a bit of time. But given the profile of the company and the risk profile, those costs are coming down substantially.

Now in total numbers, it is going to be a bit more difficult to tell because the business is growing. So while per bond, we’re going to pay significantly less than we have in the past years. Depending on the additional volume we need in total numbers, that might still be a higher number. But of course, it would sustain a much larger volume as José Luis and others have been discussing on the call. So that’s the picture on the interest.

My next question, I’m not sure if you can comment on this, but on Australia, is your comments on the market or your own pipeline, do you expect orders from other than ACCIONA from the Australian markets?

We do. Maybe not this year, but definitely midterm, we are fully committed in that market and optimistic about that market.

We have a follow-up question from the line of William Mackie from Kepler Cheuvreux.

I think perhaps this is a little unfair because it relates to external advisers numbers. But I just wanted to touch on Slide 5 and your market projections. At the end of last year, in Q4, you presented a series of market projections which were aggregated from third-party suppliers. And now you presented another set of projections over the next 4 years. If I strip out the obvious changes in the North American projections, there’s still a 10% decline in ’25 and a 17% decline in ’26 in the installation forecast for ’25 and ’26 in the 6-month period, which is a little counterintuitive, given some of the optimistic stance we have on installations in Europe. So I guess the question is do you recognize that, that’s changed in the data? And what do you think has changed from third-party expectations?

And then maybe the add-on to that is when we look at the projections on that slide, the expected growth in Europe in ’28 over ’27 is like 24%, which is a big change in trend. I’m just wondering how you see that evolving and what would drive that big step-up? Is it all relying on Germany?

Very good. I think we took external information to give you the view that the company is a market leader in Europe, and Europe has a growing trajectory, without going much into the detail of the granularity of Europe. Of course, we saw auction volume in Germany high in ’24, in ’25, which supports installation growth in ’26 and ’27. Eventually, the trend continues. So Germany will not go fast, will be — I hope, will be the key European market. So this will support installations as well in ’28.

On top of Germany, U.K. is expected to have a substantial growth. Turkiye, where the company is market leader, is committing to long-term [indiscernible]. Mediterranean is delivering substantial volume. Eastern Europe and Baltics is delivering more than for us very big volume, I mean, close to — in the gigawatt range. Nordics, depending a lot, ups and downs. But long term it is a very good wind. There is land a little bit of interconnection issues, that is a market without entering into any specific granularity of the analysis, what we wanted to show you here is this is what external parties — how external parties see the volumes coming.

We have similar view, maybe not year-on-year because we see more activity in ’26 than ’25 and as well ’27, but that details. I mean from quarter-to-quarter, the view of these external consultants, change and adapt. Spain is a good example that they were more bullish than they are now due to several court cases and grid issues. Other than that, U.S. has reduced. I mean, reasons being what was commented in this call. And Italy as well and a slight reduction.

But other than that, important from our view is the trend, and we see the similar trend as they see that. I mean, ’28 is a little bit uncertain. We don’t have such a long-term view. But ’26 and ’27, we see Nordex growing and it’s difficult to grow increasing market share when you have the market share that we have in those markets. So it means that if we see growth is because the market is growing.

We now have a follow-up question from the line of Anis Zgaya from ODDO BHF.

I have only one left question. So could you help me understand, please, why operating cash flow before working capital are significantly above EBITDA? What are the main noncash elements impacting EBITDA and not the operating cash flow?

I think the question indicates that, José Luis, it’s the improved operating performance of the company. That’s the largest driver for that. And then, of course, some of the other elements are noncash relevant. But the key driver for that, besides working capital, again, I stand at my statement that we will go back to the minus 9% or lower levels. That’s the key driver.

We have a follow-up question from the line of Constantin Hesse from Jefferies.

Very quick one. Call has been obviously very long, but very quick one. Just a homework question. On the competition front, anything from Siemens Gamesa or anything from any of the Chinese OEMs in Europe that you’ve seen that you’re currently keeping an eye on? I think Siemens Gamesa, they celebrated their first order in a long time a few months ago, but anything else that you’ve seen there?

No, I think respect, of course, for our competitors. But without — with that taking into account, we think we can improve the order intake of the previous year. I don’t think we are going to — I mean, knock on wood, I don’t think we are going to lose substantial market share in Europe this year compared to the previous year.

Okay. That’s perfect. And then just lastly on Service. I mean if you continue to install, say, 8 to 9 — let’s call it 8 first gigawatts a year, let’s say, over the next 3 years, maybe you stays stable, maybe you accelerate. But I mean is there anything that is currently holding back the Service business of being a EUR 1.5 billion top line business by the end of the decade given the current installation rate that you’re running on?

End of the decade, maybe slightly optimistic. But if we keep that level of installation and the renewal rate, maybe slightly aggressive, but not far away. End of the decade, 2030. Yes.

Ladies and gentlemen, that was the last question. I would now like to turn the conference back over to Anja Siehler, Head of Investor Relations, for any closing remarks.

Thank you, Mathilda. Thank you, everyone. As usual, I would like to hand over to José Luis for his final remarks.

Well, again, thank you very much for your time, your participation and the questions. Let me outline our key takeaway for this quarter. First and foremost, we delivered another strong quarter in terms of order intake, and we are confident of achieving another good year, with total order intake expected to be above last year’s level without guiding on specific numbers.

Second, our focus is on continuing to improve our profitability levels and delivering a positive and sustainable free cash flow. That’s the key, focusing in free cash flow. And last but not least, we are on track to achieve our guidance and to deliver margin improvements, reiterating our medium-term margin target of 8% now looks like more close.

And with this, thank you very much. Wish you a wonderful rest of the day.

Ladies and gentlemen, the conference is now over. Thank you for choosing Chorus Call, and thank you for participating in the conference. You may now disconnect your lines. Goodbye.