NRDXF: Q3 Earnings Reveal Surprising Margin Growth!

Q3 Earnings Highlights – Margin Rebound

Nordex SE (OTCPK: NRDXF), a German wind turbine manufacturer, delivered a surprisingly strong turnaround in its latest Q3 results. The company’s EBITDA margin jumped to 4.3% in Q3 2024 – a dramatic improvement from virtually breakeven levels (0.1%) a year earlier (^[1]). This marked the second consecutive quarter of positive EBITDA, achieving €71.5 million EBITDA in Q3 (up 33% year-on-year) (^[2]). Management noted that net profit was positive again in Q3 2024, reflecting sustained operational progress (^[1]). On a nine-month basis, sales rose 14% to €5.1 billion and EBITDA reached €189 million (vs. a €67 million loss in 9M 2023) (^[1]). Encouraged by this momentum, Nordex raised its full-year outlook to the top end of its 3–4% EBITDA margin guidance range (^[2]). Investors reacted positively – the optimistic margin forecast lifted the stock in Frankfurt trading (^[2]). Overall, Q3 earnings signaled a decisive margin rebound, supported by robust order flow and cost improvements, even amid industry headwinds (^[2]).

Dividend Policy & Yield

Nordex does not currently pay any dividend (^[3]). The company halted dividends in recent years as it struggled with profitability and focused on shoring up its finances. Consequently, the forward dividend yield is 0%, and no payout was declared for 2023 or 2024 (^[3]) (^[4]). Looking ahead, there are signs this may change if the turnaround endures. Analyst consensus anticipates Nordex might resume dividends modestly from 2025 onward – projecting a small €0.11 per share dividend in 2025 (approximately a 0.5% yield), potentially rising to ~€0.22 by 2026 (^[5]). These forecasts presume Nordex’s earnings stabilize and grow (consensus sees EPS turning positive in 2024). However, management has not yet announced any dividend reinstatement, so any future payout will likely depend on sustaining net profits and cash flow. For now, Nordex retains earnings to rebuild equity and invest in its operations rather than returning cash to shareholders.

Leverage & Debt Maturities

Nordex’s balance sheet has undergone significant repair, leaving the company in a net cash position. As of Q3 2024, cash and equivalents stood at €882 million against interest-bearing debt of ~€299 million, yielding a healthy net cash of €583 million (^[1]). This is a notable improvement from prior years when Nordex carried substantial net debt. The capital structure has been bolstered by strategic financing moves. In April 2023, Nordex issued €333 million of “green” convertible bonds due 2030 (coupon 4.25%) (^[6]). These bonds, convertible at €15.73 per share, effectively refinanced earlier high-yield debt and extended maturities well into the next decade (^[6]). Nordex also raised equity through its major shareholder, Acciona S.A., which injected €139 million in mid-2022 to support the company (^[7]). Thanks to these measures, Nordex faces no near-term bond maturities or liquidity crunches. The next major debt event would be 2030 (when the convertible matures, if not converted). Nordex’s anchor shareholder Acciona now owns ~47% of the company (^[8]) and has been instrumental in backstopping its capital needs. With equity ratio at 18.5% of assets (up slightly from 18.0%) (^[1]), Nordex’s leverage is much reduced, though its relatively low equity base means the company still operates with a heavy liability load (~81% of assets). Overall, leverage metrics have improved markedly, and Nordex has gained breathing room on its debt profile.

Cash Flow & Coverage

Cash flow generation has turned a corner alongside Nordex’s earnings improvement. In the first nine months of 2024, free cash flow essentially reached breakeven (-€0.4 million), a sharp rise from the –€226 million outflow in the same period last year (^[1]). Most impressively, Q3 2024 alone contributed +€159 million in free cash flow (versus a –€167 million drain in Q3 2023) thanks to healthy customer pre-payments and working capital unwinding (^[1]). This positive cash generation in Q3 helped boost Nordex’s liquidity and underscores improving operational efficiency.

Importantly, interest coverage and debt service metrics have improved now that Nordex is back to positive operating profit. For full-year 2024, the company achieved EBITDA of €296 million (4.1% margin) (^[9]), whereas annual interest expense on its debt is relatively modest (the €333 million convertible at 4.25% implies ~€14 million interest per year). Even using the more stringent EBIT measure, Nordex’s interest coverage turned positive (~1.6× EBIT/interest in 2024) after multiple years of sub-1× coverage (^[10]). In other words, operating earnings can now meet interest obligations, whereas previously the company’s EBIT was negative (insufficient to cover financing costs) (^[10]). The net cash status also means Nordex has interest income offsetting some expense. That said, overall net income remains just around break-even – Nordex posted a small –€8.7 million net loss for 9M 2024, a vast improvement over the –€334 million loss in 9M 2023 (^[1]). As profitability scales up, one would expect coverage ratios to strengthen further, giving Nordex more capacity to self-fund growth. The recent return to positive cash flow and EBITDA indicates that debt service and fixed charges are currently well covered, reducing financial risk compared to the crisis years.

Valuation & Peer Comparison

Valuing Nordex is complex given its recent swing from losses to profits. The stock has rallied strongly in anticipation of the turnaround – it doubled in 2023-2024, leaving it trading at a premium on many metrics. Traditional P/E appears high: based on consensus forecasts, Nordex changes hands at roughly 34× 2025 earnings and about 21× 2026 earnings (^[5]) (^[11]). This reflects the fact that EPS is starting from a very low base (€0.04 forecast for 2024, rising to ~€0.69 in 2025 and €1.08 in 2026) (^[5]). As margins normalize, the multiple is expected to compress, but the current price already bakes in significant growth. On a sales or cash flow basis, Nordex looks more reasonable. Its enterprise value is only ~0.6× annual revenues (^[5]) – a low EV/Sales ratio – in line with peers in the challenged wind turbine sector. However, EV/EBITDA is in the mid-teens (around 13–15× on a trailing basis) (^[12]), which is elevated for an industrial manufacturer with mid-single-digit margins. By comparison, larger peer Vestas Wind Systems also trades at high multiples due to currently thin margins (Vestas’ forward P/E is over 40× based on 2024 estimates, as it too recovers profitability, and it recently reinstated only a token dividend) (^[13]). The market appears to be pricing Nordex on future potential – i.e. expecting that the company will hit its mid-term targets and eventually approach industry-normalized margins. Notably, Nordex’s price-to-book ratio is ~4.8× (^[5]), significantly above 1×, indicating investors assign substantial value to intangibles like technology, service contracts, and growth prospects (and also reflecting that book equity is low after past losses). This optimism has its limits: at least one analyst has flagged valuation concerns – RBC Capital recently downgraded Nordex to “Sell” with a €18.50 target, cautioning that the stock’s sharp rise (up ~100% YTD) leaves little margin for error (^[14]). Overall, Nordex’s valuation is richer than its current earnings would justify, implying the stock is a play on continued turnaround execution. Investors are paying up for exposure to the wind industry recovery and Nordex’s improving trajectory, but the company must deliver higher margins to grow into this valuation.

Key Risks and Challenges

Despite recent improvements, Nordex faces meaningful risks and industry challenges that investors should monitor:

3-minute video: How to Chase Weekend Gains

Quick, watchable, and surprising — learn the exact setup that scored $9k+, $37k, and more in single weekends.

Play the Short Training

– Intense Competition & Pricing Pressure: The wind turbine market is highly competitive, with Chinese manufacturers aggressively entering Europe. In 2023, Chinese turbine-makers secured their first orders in Germany, offering cut-rate prices and deferred payment terms (^[15]). European players fear a replay of the solar panel industry, where Chinese competition gutted local manufacturers (^[15]). Nordex’s order book benefitted from strong European demand in 2024, but increased competition could pressure turbine prices and margins going forward. Denmark’s energy minister recently warned that Chinese entrants pose an “existential threat” to Europe’s wind sector if unequal subsidies and low-cost imports aren’t addressed at the EU level (^[15]). Nordex will need to defend its market share and avoid bidding wars that could erode its hard-won margin gains.

– Supply Chain & Cost Inflation: The wind industry has suffered from raw material inflation, supply chain disruptions, and higher logistics costs in recent years. These factors squeezed turbine makers’ profitability in 2021–2022. While some costs have stabilized, any resurgence of commodity prices or component shortages could hit Nordex’s margins given its still-low profitability. Additionally, warranty and quality-related costs are a sector-wide concern – peer Vestas recently warned that high warranty provisions and cost overruns would push its profit margin to the low end of guidance (^[13]). Nordex must ensure strict cost control and quality management to prevent similar setbacks, especially as it ramps up production of new turbine models.

🤖

Project Colossus: Be part of history

Elon’s supercomputer is building Grok 3 — early private shares available now.

Claim Your Spot Free Special Report

Next funding round: Oct 1 From $500

– Policy and Regulatory Uncertainty: Nordex’s business is sensitive to renewable energy policy. Political changes pose headwinds – for example, uncertainty ahead of the U.S. elections has dampened sentiment, as proposals to roll back support for wind projects could slow demand (^[13]). In Europe, the speed of permitting and subsidy frameworks (such as auction designs for wind farms) directly impact order intake. Any adverse policy shifts, delays in renewable targets, or trade barriers (e.g. tariffs in a trade war scenario) could affect Nordex’s growth. Conversely, stronger policy support (like the EU’s response to the U.S. IRA or higher renewables targets) could boost the industry. Navigating these external policy risks will be an ongoing challenge.

– Macro Environment & Financing: Building wind farms is capital-intensive for developers, so high interest rates and tight financing conditions can reduce customer appetite or delay projects. Many offshore projects have been canceled or renegotiated recently due to cost of capital increases – while Nordex focuses on onshore, a general pullback in wind investment due to economic conditions could hit new orders. Additionally, Nordex’s own financing, while solid for now, relies on maintaining investor confidence (e.g. for any future bond or equity raises). A deterioration in credit markets or drop in Nordex’s share price could constrain its financial flexibility if additional capital were ever needed.

Skimmer Meter

When the meter spikes, Larry's followers act — and profits often explode.

Get Alerts

– Execution & Order Backlog Risks: Nordex has a record order backlog (~€9.8 billion as of mid-2023) (^[8]), which is positive, but executing this backlog profitably is critical. Many orders were taken when costs were higher or fixed-price contracts didn’t fully reflect inflation, meaning legacy projects could carry slim margins. Project delays, cost overruns, or technical hiccups on any large contracts pose a risk to earnings. The company’s global footprint (installations in 40+ countries) also means managing logistics, local regulations, and project execution across diverse regions – a complex operational challenge. Any slip in fulfilling orders on time and on budget could trigger penalties or erode customer trust.

In summary, Nordex operates in a volatile and competitive environment, and its recent turnaround is still fragile. The company must contend with competitive pricing, ensure supply chain stability, and adapt to policy shifts – all while executing flawlessly – to continue its margin expansion trend.

Red Flags & Concerns

While Nordex’s outlook is improving, there are specific red flags and historical issues that investors should note:

– History of Losses & Dilution: Nordex’s path to this point has been rocky. The company posted heavy losses in prior years (for example, –€283 million net loss in 2022 and continued deep losses into early 2023) (^[16]) (^[16]). To survive, Nordex relied on substantial equity infusions – notably a €139 million rescue capital increase in 2022 underwritten by Acciona (^[7]), and other capital raises that expanded shares outstanding (the share count jumped ~100% from 2019 to 2023) (^[5]). This dilution and dependence on shareholder bailouts are warning signs. Although prospects have improved, any reversion to losses could force Nordex to seek new capital again, which may dilute existing investors further.

– Weak Equity Base: Even after recent capital injections, Nordex’s equity ratio is only ~18% (^[1]) – meaning roughly 82% of its assets are financed by liabilities. This thin equity cushion is a concern; it leaves the company vulnerable to shocks. A few bad quarters or large write-offs (e.g. warranty provisions) could significantly impair equity. By comparison, healthy industrial firms often have 30–40% equity ratios. Nordex’s low capitalization is a legacy of past losses that will take time to rebuild. Until equity is strengthened through retained profits, Nordex has less margin for error in its finances.

– Customer Turbine Issues: A glaring red flag emerged recently regarding turbine reliability. In a U.S. wind farm operated by French utility Engie, Nordex’s turbines suffered major operational problems – running at only ~30% availability (versus ~95% expected), making the project uneconomic (^[17]). Engie took a €714 million impairment charge in 2023 related to these Nordex onshore turbines (^[17]) (^[17]). Nordex has not disclosed the technical cause, stating it handles such issues privately with customers (^[17]). While this appears to be an isolated case, it raises concerns about product quality or design flaws. A severe failure like this can damage Nordex’s reputation and lead to costly warranty or remedial obligations. Investors should watch whether similar issues arise elsewhere or if Nordex ramps up warranty provisions. The Engie incident underscores that execution risk and technical reliability remain areas to watch closely.

– Acciona’s Control: The ownership structure could pose governance questions. Acciona, a Spanish renewable energy conglomerate, now owns almost half of Nordex and fully consolidates Nordex in its financials (^[8]). Acciona’s support has been valuable, but such a dominant shareholder may act in its own strategic interest. There’s a risk that Nordex’s strategies and related-party transactions could favor Acciona (for example, preferentially supplying turbines to Acciona’s projects, or Acciona influencing Nordex’s capital allocation). Minority investors have limited say, and if Acciona were to increase its stake or take Nordex private, it could impact the stock’s liquidity or valuation. Thus far, Acciona’s involvement has been a stabilizing force, but this close relationship warrants a watchful eye.

– Low Margins vs. Peers: Even after recent gains, Nordex’s profitability is still lagging leading competitors. Its EBITDA margin for 2024 was ~4%, whereas historically companies like Vestas aimed for double-digit margins in good years. Nordex’s gross margin (around mid-20s%) remains relatively low, indicating limited pricing power or higher costs (^[18]). The company is pursuing an 8% EBITDA margin target mid-term (^[1]), but until it achieves this, Nordex has less buffer to absorb surprises. Any new headwinds could quickly push margins back to zero or negative, as happened in the past. This thin margin profile is a cautionary sign that the turnaround, while real, is not yet complete.

In light of these red flags, investors should remain vigilant. Nordex has made commendable progress, but its foundation is still being rebuilt. Execution missteps, unforeseen costs, or shifts in support could rapidly revive old problems. The recent margin growth is encouraging – yet the company’s history and certain warning signs counsel a degree of caution.

Open Questions & Outlook

As Nordex moves forward, several open questions and unknowns will determine its long-term investment thesis:

– Can Margin Expansion be Sustained? – The Q3 margin uptick was impressive, but will Nordex maintain and grow margins in coming quarters? Management targets an 8% EBITDA margin mid-term (^[1]). Achieving that would roughly double the current margin. It remains to be seen if ongoing cost efficiencies, pricing discipline, and a richer product mix (e.g. more Service revenue) can consistently lift profitability toward that goal. Investors will be watching whether the company’s quarterly margins continue to climb into 2025 or if they plateau due to competition and cost pressures.

– What is the Path to Net Profitability and Dividends? – Nordex is on the cusp of net profitability (9M 2024 net loss was only €9 million (^[1])). A key question is when Nordex will achieve a full-year net profit and whether it can sustain positive earnings thereafter. This ties directly to the potential resumption of dividends or share buybacks. Analysts predict a small dividend in 2025 (^[5]), but management may choose to retain earnings to rebuild equity. Clarity on the timeline for meaningful free cash flow and shareholder returns (dividends) will influence the stock’s appeal to income-minded investors. Essentially, can Nordex’s turnaround translate into tangible returns for shareholders in the near future?

– How Will Chinese Competition and Trade Policy Evolve? – The next 1–3 years will reveal how aggressively Chinese turbine makers penetrate Western markets. Will the EU enact measures (tariffs, local content rules) to shield firms like Nordex, or will price pressure intensify? This is an open question with huge implications for Nordex’s pricing power and volumes. Similarly, global trade tensions or cooperation could swing outcomes. Nordex’s strategy to handle potential low-cost entrants – perhaps by emphasizing technology, service, and local relationships – will be critical. Investors should watch for any shifts in market share or order pricing that indicate competitive dynamics changing.

– Are Reliability Issues Truly Isolated? – The Engie turbine failure raises the question: is this an outlier or a symptom of broader technical risk? Nordex will presumably work to fix the issues and ensure other projects don’t suffer similar fates. However, until more information is known, a cloud remains over that project. Going forward, transparency on fleet performance, warranty claim trends, and any design modifications will be important to gauge if Nordex has fully ironed out quality kinks. The market will be sensitive to any news of major faults or large warranty provisions, given what happened at Siemens Energy’s wind division. Consistently high turbine availability and customer satisfaction will need to validate Nordex’s product reliability.

– Will Nordex Need Additional Capital or Partnerships? – With a net cash balance now, Nordex is funded for its current plans. But if the company aims for significant expansion – e.g. developing new turbine models, scaling production, or entering new markets – will internal cash generation suffice, or might Nordex seek new equity/debt? Another angle: could Nordex partner or merge with another player (for technology sharing or scale)? The wind industry has seen consolidation in the past. Acciona’s large stake and the presence of other big industry players mean strategic options can’t be ruled out. How Nordex funds growth (organically vs. external capital) and whether it remains independent are open strategic questions that could shape its future.

– What is the Long-Term Service Strategy? – Nordex’s Service segment (maintenance contracts, parts, etc.) grew 13% in revenue in 9M 2024 (^[1]) and new service orders nearly doubled (^[1]). Service is a high-margin, recurring business that can smooth cyclicality. A question is how much Nordex can expand its Service business as a profit driver. Will it capture a larger share of servicing its installed base (and even competitors’ turbines)? Growing service contracts could improve overall margins and cash flow stability. The extent to which Nordex can leverage its 52 GW installed base for aftermarket revenue will be an important part of its valuation story in the coming years.

As these questions suggest, Nordex’s story is still unfolding. The company has moved from survival mode toward a growth and profitability phase, but the durability of this transition is unproven. Investors should look for execution on guidance (e.g. hitting margin targets), evidence of competitive moat (order wins without sacrificing margin), and prudent financial management (maintaining net cash or modest leverage). If Nordex can answer these open questions positively, it could solidify its turnaround and reward shareholders with sustained value creation. Conversely, any setbacks on these fronts would indicate the road ahead may remain bumpy. The next few earnings reports and industry developments will be crucial in determining which trajectory Nordex follows.

Sources: Nordex SE investor relations releases and financial statements (^[1]) (^[1]); Reuters news reports on Nordex’s earnings and industry context (^[2]) (^[15]); Market data from MarketScreener and AlphaSpread for valuation and forecasts (^[5]) (^[11]); and other publicly available information as cited. All information is current as of the latest reported quarter and may be subject to change.

Sources

For informational purposes only; not investment advice.