Nordex has recently had to battle through gusty phases in the truest sense of the word. In the wake of rising costs, an economic slowdown and rising interest rates, the wind turbine manufacturer's earnings have gone into reverse in recent years. And that's not all: in 2022, the Group even reported a loss of EUR 244 million on an EBITDA basis. It therefore comes as no surprise that the share price also slumped in line with the operating business performance. Over the past three years, Nordex's market capitalization has more than halved.
Recently, however, the share price has regained momentum and at least managed to return to the double-digit range. This recovery goes hand in hand with improved general conditions on the one hand and good figures for the past financial year on the other. Nordex was even able to exceed its forecasts in part with the fresh 2023 results presented at the beginning of the week. Sales climbed to just under EUR 6.5 billion, an increase of 14%, exceeding the upper end of the forecast range of EUR 5.6 to 6.1 billion. On the earnings side, the wind turbine specialist achieved the hoped-for break-even on a full-year basis. The company generated a small operating profit before interest, taxes, depreciation and amortization (EBITDA) of EUR 2 million, putting the EBITDA margin almost in the middle of the expected corridor of minus 2% to plus 3%. "2023 was a year of transition with a step in the right direction," commented CEO José Luis Blanco on the figures.
A glance at the order book reveals that the growth curve could continue to point upwards in the new year. At constant prices, Nordex recorded an order intake of 7.4 gigawatts (GW) with simultaneously rising market shares. Overall, the increase amounted to 16%, with the period from October to December again proving to be the growth driver. In the last three months of the year, the increase in orders amounted to almost 30% with a total output of around 2.5 GW. However, it is not just the sheer volume of orders that gives cause for optimism; prices and therefore margins are also pointing upwards again. The average sales price per MW increased to EUR 0.84 million in the fourth quarter from EUR 0.79 million in the previous quarter due to the improved regional mix.
Investors will find out exactly what will happen in the new year when the final figures are presented on February 29. However, according to the CEO, the company has already laid a "good foundation for future business development" by reaching the break-even point. Analyst consensus currently expects Nordex to achieve a turnaround on a net basis in 2024 and then take off in 2025. Based on the estimate of 62 cents per share, this results in an attractive 2025 P/E ratio of 15, while the competition in the form of Vestas and Siemens Energy are valued at over 20 and 30 respectively.
Speaking of Siemens Energy, its struggling Spanish wind subsidiary Siemens Gamesa recently withdrew from onshore wind energy generation due to problems with its onshore platforms. A decision on when the business can be resumed will not be made until later this year. This in turn plays into Nordex's hands as a purely onshore wind power company and could further increase the Hamburg-based company's market presence.
Following the latest developments, analysts have become more confident about the Nordex share. As recently as mid-January, analysts at Goldman Sachs upgraded the MDAX stock from "Neutral" to "Buy". Looking at all 13 research studies listed by Refinitiv, the buy recommendations predominate. The average price target is currently EUR 14, which corresponds to a 12-month potential of exactly one third.
However, the Nordex share does not need a tailwind for the new barrier reverse convertibles to yield high profits. The products promise double-digit percentage returns even with stagnating or moderately falling share prices. Two single soft-callable BRCs have been launched: the CHF variant offers the prospect of a maximum return of 12.00% p.a., while in EUR 14.00% p.a. is even possible within the maximum term of 18 months. The attractive potential returns are combined with extremely high risk buffers of 51% in each case. This means that the barrier is at a level that is significantly below the share's previous low of EUR 6.40. The term can be shortened to a maximum of 6 months due to the soft callable function. Thereafter, the observation days take place quarterly.
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