Ladies and gentlemen, welcome to the Nordex Annual Figures 2023 Conference Call. I'm Vicky, the Chorus Call operator. I would like to remind you that all participants will be in listen-only mode, and the conference is being recorded. The presentation will be followed by a Q&A 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 Felix Zander. Please go ahead, sir. Thank you very much for the introduction. Good afternoon, ladies and gentlemen. A warm welcome on behalf of Nordex to our investor and analyst call for the full year 2023. Our CEO, José Luis Blanco, our CFO, Ilya Hartmann, and our CSO, Patxi Landa, will guide you through our slide deck, sharing all the relevant in-topics with you. After the presentation, our Q&A session takes place. Please limit yourself up to three questions, as already mentioned. And now, I would like to hand over to our CEO, José Luis. Please go ahead, sir. Thank you very much for the introduction, Felix. I would like as well to welcome you on behalf of the entire board, Patxi Landa, CSO, Ilya Hartmann, CFO, here with me today, guiding you through our presentation and taking your questions as usual. Moving to the executive summary. As usual- Please go ahead, please go ahead. As usual, I would like to start our presentation with the executive summary of the last year, 2023. As in 2022, we continue with our strong order intake momentum in 2023, especially in EMEA, a market with yearly approximately 16 GW installation. We have ranked number one consistently for two years in a row in terms of order intake. We booked 2.5 GW in the Q4, compared to 1.9 GW last year. Our full year order intake increased from 6.3 GW last year to 7.4 GW this year. The prices and margins in our order book are improving as well, as you can see. Regarding our financial performance, last year developed overall as expected, with a soft start in the Q1, and then gradually improving throughout the year as more and more better quality orders started to flow through our financials. Our full-year sales increased by 14% to EUR 6.5 billion, which exceeded the upper end of our guidance of EUR 6.1 billion comfortably. Our EBITDA margin improved as well, from -9.4% in the Q1 to 3.4% in the last quarter, reaching breakeven on full-year basis, as we had expected and indicated since our Q2 call. We also had a good year in terms of installations, with full-year installations growing by almost 40% compared to 2022. As a reminder, we had started the year with backlog of installations from 2022, and as you will remember, we had some further disruptions during the year coming from earthquake in Turkey, which causes delays resulting from partially destroyed port facilities. All those means we were required to install roughly 450 turbines in the last quarter, against which we could install only roughly 340. On the liquidity side, we ended the year with a positive free cash flow of EUR 20 million, on the back of a strong working capital of -11.5% and a EBITDA breakeven. During the first half of the year, we replaced high yield bonds with lower interest-bearing convertible bond, and also converted shareholder loans into equity. All these initiatives help us to end the year on a strong net cash position of EUR 631 million. Finally, our guidance for 2024 shows a further revenue increase and a margin recovery. The pace of the recovery depends on how far we are impacted by near-term challenges, particularly disruptions in the Red Sea, recovering our installations delayed from 2023, and further building our momentum outside Europe. Having said this, I believe that we have been gradually making a solid progress to reach our mid-term 8% profitability EBITDA target, that we still confirm and maintain. Moving to the next slide. We are also pleased to note that our market share in terms of order intake improved to 17% in 2023, outside China, which makes Nordex the third largest turbine player globally ex-China, and right behind the second player. This is just one example showing that we have successfully scaled up the company to a 7 GW-plus company on the back of our high efficient and competitive product portfolio. In EMEA, we again maintain our first position with a strong contribution from Germany, where we increase our market share to approximately 30%, and we also slightly improve our market share outside Europe. In summary, this is quite an interesting time for us, the Nordex family, as we have successfully repositioned the Nordex brand over the last few years, and now we have a strong, solid platform for further growth. With this, I would like to hand over to Patxi to guide you through markets and order intake. Thank you, José Luis. As just mentioned, our order intake momentum continued to be strong in 2023. We grew our new turbine orders by 16% to 7.4 GW, compared to 6.3 GW in 2022. The majority of the orders came from Europe with 86%, with largest markets being Germany, Sweden, Spain, France, and Turkey. 8% of the orders came from Latin America, and 4% came from North America. The growth of the order intake came with stable prices, as the full year ASP and also the ASP in Q4 stood at EUR 0.84 million per MW, at the same level as in 2022. Moving on, the revenues in our service segment grew from EUR 574 million by 18% to EUR 679 million, with an EBIT margin close to 15% for the full year. Our service margins have gradually improved during the quarter since Q1 2023, and as we had mentioned before, our margins are temporarily affected by inflation effects, turbine mix, and regional mix. We expect our margins to recover in future once the share of older turbine types and share of non-European service contracts go down in our order book. The average availability on the fleet was around 97%, with a total fleet of 35 GW under service. Moving on, the turbine order backlog grew by 6% to EUR 6.9 billion in 2023. The service order backlog grew by 11% to EUR 3.6 billion, leading to a combined order backlog of EUR 10.5 billion at the end of the year. Now I'd like to hand over to Ilya to go through the financials. Thank you, Patxi, and good afternoon, also from my side. As always, I will guide us through the latest financial figures and starting, as usual, with the income statement. In this case, for the full year 2023, as we can see, last year, Nordex achieved EUR 6.5 billion in sales, which is a growth of around 14% compared to the previous year, and it's also around 5% above the upper end of our sales guidance range for 2023. Key were our continued good order intake momentum in Europe, as mentioned earlier by José Luis, and our higher installation levels compared to 2022. Gross margin improved as well, 15.2% compared to 8.5% at the end of the previous year. The improvement basically comes from better priced orders on stable costs flowing through our financials more and more. Result is a break even on the EBITDA level, and to be precise, EBITDA of +EUR 2 million. That is in line with our guidance and the indications we have made on our previous calls. With that, we will have a look at the income statement for Q4 standalone. As mentioned before, our sales have been steadily improving each quarter, with Q4 reaching around EUR 2 billion, the strongest quarter we have seen in the past year. This is around 11% higher compared to Q4 2022. Gross margin stood at 18.6% for the quarter, coming back to more normal levels. That's a strong performance, arguably, particularly when compared to the gross margin of 2.6% in the same period of 2022. Of course, that Q2 2022 had to account for extra costs coming from installation delays and other project issues, which are far less this time around. As a result, our EBITDA margin in Q4 reached 3.4% versus -2.4% in Q4 2022, which is an increase of almost six percentage points. However, let me note that our margins also took some hit in the last quarter because of some extra costs coming from tackling the installation delays, which José Luis mentioned in his comments already. This is also likely to impact somewhat our 2024 margins. We will cover that topic later. But the performance in Q4 gives us confidence to keep building on this momentum as we make good progress towards our midterm target of 8% in the EBITDA margin. With that, we move on to the balance sheet. Overall structure looks fairly robust. We ended the year with a record liquidity level of above EUR 1 billion, and that includes the cash of EUR 926 million and our cash facility of around EUR 19 million. The strong, strong cash position was mainly driven by a good operating performance in the last quarter and tight working capital management, which I will comment in a few moments on the next slide. But in addition to those, financials I mentioned in the last year, to remind us, we repaid, the high yield bonds, we converted the shareholder loans into equity, and we issued a green convertible bond at the beginning Q4, Q2 of 2023. So those measures have helped us. We mentioned it in the past, strengthen the balance sheet in a, in a timely manner and while also reducing our burden in, in cash interest. As announced, the working capital slide is next. The ratio stood in the last quarter, at -11.5%. In absolute numbers, -EUR 746 million. That is even stronger at the end than at the end of Q3. The working capital was predominantly driven by order booking and project collections during that last quarter. Or in other words, working capital ratio did remain constantly stronger than our guided number of below -9% in all quarters of 2023. That brings me to the cash flow slide. Cash flow from operating activities was EUR 161 million, compared to -EUR 350 million at the end of 2022. This development was predominantly driven by continuously improving margins over the last quarters, and an even tighter working capital management towards year-end. Cash flow from investing activities stood at around -EUR 141 million, lower than we had originally planned, and I will come back to this in a minute when we look at our CapEx slide. So as a result, we ended the year with a positive free cash flow of EUR 20 million when compared to minus EUR 451.4 million in 2022. Finally, the cash flow from financing activities totaled roughly EUR 300 million, and that was essentially at the same level as we had already communicated in our Q3 call. The main driver were the inflows from our Green Convertible Bond in April of 2023. So with that, to the investment slide. We can see that our CapEx rate went up in Q4 due to our backlog of activities in line with our expectations. However, our full CapEx spending was lower than the usual level. Basic driver here is some CapEx rollover, especially in execution, equipment, tooling, and the catch-up for that will happen this year. But the focus of our investments in 2023, by content, largely remained the same. This we mainly invested in blade production facilities and new molds, as well as in transport tooling equipment, covering our installation levels. And that brings me to my last financial slide, the capital structure. So as you can see on the slide, our net cash level sharply increased to EUR 631 million, coming from EUR 244 million at the end of the previous year. And again, this positive development was mainly due to the shareholder loan conversion into equity and the repayment of a higher bond last year. And with that, I would switch to my sustainability section. In 2023, we have made good progress in implementing our so-called sustainability strategy 2025. So let me just highlight a few targets. We have submitted Science-Based Targets for reducing greenhouse gas emissions. They are currently still under validation, but we will publish them once that process is completed. As in the previous year, we have managed to achieve our goal of continuously reducing lost time injury frequency, with that ratio LTIF of 1.2 for 2023. Regarding the supply chain, we've taken measures to ensure full compliance with the German Supply Chain Act and have established a human rights officer in our company. On the other topics, activities are ongoing. They're shown on the slide, and we will initiate further actions throughout this year again. That brings me to my second sustainability and total last slide. We can see here, our business activities show a high degree of eligibility and alignment with the EU Taxonomy, contributing to the environmental objective climate change mitigation. We also managed to keep up our good scores in several renowned ESG ratings. To name one, EcoVadis, we have achieved a gold medal now for the third year in a row. And with that, I hand it back to Luis. Thank you. Thank you very much, Ilya. So now let's move to the operational performance in full year 2023. As you can see on the slide, we managed to increase our installation run rate in every single quarter compared to 2022. However, we were still short by around 100 turbines in Q4, as I mentioned earlier. The additional installation during the winter quarter and subsequent delays have impacted our margins in Q4 and will have some impact on our margins in 2024 as well. In summary, we erected 1,429 turbines, so 300 more in 24 countries, with around 7.3 GW, again, the majority in Europe. We assembled 1,500 turbines, slightly more than last year, but in terms of MWs, that means around 7% growth year-over-year. Similarly, we produced roughly 4,600 blades, a bit less than the previous year. Around 25% were produced in-house, nearly the same level than last year. Finally, let me also note that we keep working on optimization of our production and supply chain in order to optimize our cost structure. Which brings me to the guidance, and as I mentioned earlier, and we have confirmed our guidance for 2023 via our press release, with the preliminary figures released on February the 12th, our performance was overall in line with the expectations and with the guidance. Now, I would like to share with you where we are on our path to the strategic margin target level of 8%, which I herewith would like to confirm. In early 2022, we had provided our plan towards the mid-term profitability target, and as expected, after managing the very volatile years of 2021 and 2022, with the war in the Ukraine, supply chain disruptions, extreme price increases, and logistics challenges, we are now in the middle of the stabilization period. In 2023, our margin improved each quarter on the back of increasing turbine prices and stabilizing the cost environment. In 2024 and beyond, we expect further margin recovery to materialize. In the next few years, we believe three key levers will continue to support this margin recovery, assuming a stable supply chain and assuming that the recent disruptions in the Red Sea and the geopolitical events are contained. First lever is volume growth, based on continued growth in our key markets, Europe. Second lever, improving order book quality, and third lever, a growing service business with improving margins. In summary, we feel we are on track of the roadmap that we shared in early 2022. And let me give you some more details in the next slides. Market. So you know, the onshore wind market size, ex-China, is likely to grow by around 14% for the next five years, and growth in Europe will be a substantial part of it. Europe aims for 500 GW of wind capacity by 2030. Of that, around 389 GW needs to come from onshore wind. Despite this growth outlook, Europe is likely to fall short of this target by a decent margin. We believe that ongoing political support, policy changing, especially easing of permitting processes across Europe, could further fuel this growth outlook in the mid term. And with our leading market position and product portfolio, we could really benefit from it. The development in the European market is also benefiting from the recovery in our home market, Germany. Again, like Europe, Germany is likely to fall materially short of its target, despite a very solid growth outlook of close to 15%. As you are aware, we have a strong position in Germany with around 30% market share. In 2023, we increased our order intake by 36% and our market share in the completed auctions in 2023. Beyond Europe, the US is an important market for us. While we had decent traction in Canada and Latin America in 2023, we did not really make much progress in US However, we intend to change this in the future, given our success in Europe. Let's move to the next slide, and let's talk about the next two levers, which are internal levers and that are on track. As we have stated before, we have been successfully increasing turbine prices to lift margins in our order book. As you can see, our margins have increased by around 4% to 5% in the last couple of years on the back of a robust order intake in Europe. We still have some old legacy orders left in our order book, which will impact our margins in 2024. However, we expect to complete those orders largely within this year. In addition, we expect some temporary pressures on our margins due to the current geopolitical disruptions, installation delays from 2023, and a slightly higher execution cost in Germany due to slow transportation patterns. The last lever to our profitability comes from our consistently growing service business. In addition to the operating leverage from growing sales, we expect the margins in service to revert to our normal levels over the medium term, as the older turbines contracts run out, and the share of more profitable Delta4000 current contracts are starting to flow and to grow. This brings me to the one of the last slides, which against this background, I would like you to guide you through the guidance for 2024. We see 2024 as a year in which we make further progress in our profitability. We assume generally a similar pattern as in the last year, starting slowly and then building up gradually each quarter on activity and profitability. We expect our orders, revenues to be between EUR 7 billion and EUR 7.7 billion, driven by our order book and the expected order intake. We expect our EBITDA margin in the range of 2% to 4%. We keep our working capital guidance on the same level, below -9%, despite a good performance in 2023, and we expect our CapEx around our usual level of EUR 175 million. However, also, please note that this doesn't include any material growth CapEx in the US, which is gonna depend on the order intake, visibility. Moving to the last slide before the Q&A. I like to give you an update of where we are in our new initiatives in the green hydrogen sector. Remember, we started two joint ventures in the project development business and the electrolysis manufacturing. Let me reiterate that we see a huge potential in the demand of green hydrogen, and our strategy allows us to benefit from this growth while keeping our capital commitment risk very low. On the project development side, I'm happy to confirm that the new JV company has been formed with Acciona, and the new entity has a pipeline of over 50 GW across US, Latin America, and North Africa. On the electrolysis side, a new JV company was as well formed with Sodena. 50-kW prototype is already in testing, and good promising results, and the development of the final 500-kW stack prototype is on track in the next months. In summary, I will say that we are on track, but it will take some time until we see results impacting our P&L. And with this, I would like to hand over to Felix to open Q&A. Thank you very much for the detailed presentation. Now I would open the floor for the Q&A. I'd like to ask the operator to open the floor. Thank you. 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. The first question is from John Kim, Deutsche Bank. Please go ahead. Hi, good afternoon, everybody. Thanks for the opportunity. Three unrelated questions. On Brazil, can you help characterize for us this year and possibly next, what you think the market outlook how the market outlook will change from 2023 levels? If you could speak to what you're seeing on weather patterns and comp, competition from Chinese OEMs, that would be helpful. Second question: on the US, you mentioned this as a priority market in 2024. What initiatives or what sort of, activity levels, lead indicators can we look at to see, if or when Nordex will start to win orders in that space or in that market? Last question on cost structure: can you speak to us a bit about your outlook for wage inflation and logistics costs, given what's happening with global supply chains and shipping costs? Thank you. Okay, so let's go with the first question. Let me take the first one. With Brazil, the situation is the market continues to be low from a contracting perspective. Combination of low electricity prices, high interest costs, high CapEx, is making that the market is low at this point in time. However, pipelines of projects are very developed. There is a substantial amount of customers lined up and measuring when the conditions in the market are gonna be changing, reaching the required returns and the required PPA prices that will enable the projects to fly. We don't see that happening in the next few quarters. I would say cautiously, I would say 2 to 3 quarters, but it's going in the right direction. It's moving in the right direction, and we can expect the Brazilian market to come back. Unknown at this point in time, when this will happen, but we do see the usual players lined up with mature projects, waiting for the conditions of the market to be back at their point levels. So with this, I would say that expectations for this year are low, and eventually, expectations for next year remains to be seen, but are going in the right direction. Regarding US, it's a key market for us. It's the biggest market worldwide, ex-China. We used to have a market share there from 10% to 15%. We had a plan to develop this market and to be part of that market. Our competitors launched specific high Net Capacity Factor products for mainstream US We thought we had a business proposal, but reality, we need to we need to reassess and react and develop a similar similar product. On the contrary, our product portfolio is very successful in in land-constrained markets. And as a proof of that, is the market share in Europe, we are gonna take that competitiveness into account in order to reach in Canada and in land-constrained parts of the markets in in US, in the interim. So with both combined, we still plan to sell sizable volume in North America. At the same time, we are reacting to our competitors' products and basically, long story short, developing a high net capacity factor machine similar to our competitors to target US market. It's a minor modification. It's basically bigger blade for certain turbulence intensity class that you put in N163 platform. And we are doing that as we speak. So once the product is back in competition for this very specific site conditions in US, we will expect to get our share on the marketplace, and for the time being, focusing in parts of the American market that demands high nameplate capacity factor machines. And regarding inflation- Let's do this together. Let's do together. But very much, wages inflation is true. We see that in Europe, we see that in North America. It's part of our guidance, it's part of our cost structure. So far, we have been able to pass through this inflation to customers. But it's true that in certain areas of the business, it has a temporary effect, like in services, because the inflation hits you today in the cost, and you recover the revenue in the future. So there is a timing effect on the margin profitability in services, not long term, but temporary. And other than that, I would say part of the guidance. Yeah. Yes, and maybe you wanna give one or two sentences on the Red Sea and on the Suez thing, but before that, probably use the occasion, but I think we have not seen the supply chain and the operations as stable as last year, for years. So of course, this is a project business and it remains a fragile element, but the stability we are experiencing. I think also the industry, not only Nordex, is very good, and that's also true for the costs. There is always a new piece, José. I think this one, we think, is a handleable one. But the Red Sea, do you want to say two or three words on? Well, very much Red Sea impacts are impacting our profitability because you need more time. More time means more cost, and means not delay at least, because I think we are good on that. But if the project lasts longer, you have more running costs and less profitability on the project. So we expect this to ease, and it's part of the guidance. We expect this to ease in the second half. If that is not the case, you know, we might go a little bit upper or lower the middle range of the guidance. For 2025, we are not very concerned because we are already selling with two options, with and without, and a majority of the customers are accepting that. Great. Thanks so much. The next question from Vivek Midha, Citi. Please go ahead. Thanks very much, everyone. I have a couple of questions. I'll go one at a time. On cash flow, firstly, so CapEx came in below your guidance for 2023, and while you're guiding for CapEx to be up in 2024, it's still below the original 2023 guidance. So why are we not seeing a stronger catch-up effect in 2024? Thank you. I think this, this is—well, first is cash flow management and, and rigorous management of, of, of the CapEx investment to the absolute required in order to protect, free cash flow. I think this is the utmost priority for the management of the company. Second is a timing effect, a temporary timing effect. And you don't see that recovery in 2024, because I mentioned before in the call, this is all dependent on the CapEx needed for the US, the ramping up of the Iowa facility. I think we can do within a normalized CapEx, but the new blades that we need to design and produce may kick in in 2024 or in 2025. And that's very much the explanation. Understood. Understood. My second question was just to follow up on the margins. You commented that there's likely to be a slow start to the year. Is it possible at all to quantify how slow the start to the year is? Presumably, Q1 last year was particularly weak, but should we consider the first half as likely to be loss-making? Thank you. ... I mean, we don't, you know, we don't guide quarters, but that's not our assumption. Our assumption is improving quarter on quarter, but starting from positive. Perfect. Thank you very much. Thank you very much. The next question from Sebastian Growe, BNP Paribas. Please go ahead. Sebastian Growe, your line is open, you can ask your question. We will take then the next question from Sean McLaughlin, HSBC. Please go ahead. Good morning. Can you hear me? Yes. Oh, super. Thank you for taking my question. Can we just look at the competitive environment on order intake just to understand in a little bit more detail how the exit of one of the competitors has changed the competitive dynamics? I understand it's clearly, you know, well, both you and Vestas have had a very strong order intake. I mean, how meaningful has that already become in Q4? And what kind of support, if you like, can it give to higher order intake through 2024 on a year-on-year basis? Yes, not to underestimate the effect of having one large player in the market, having not zero, because they have continued to sell, but of course, they have not been selling at the levels. It's speculative to say, because they have clearly publicly announced that we'll be back in the market. So I would not dare to speculate when or how this will happen. What I can confirm is that for a short period of time we are benefiting from a competitive intensity, especially in Europe, where we are market leaders, where also other competitors are having a strong position. But we can clearly see that having one player less is improving the intensity of the competition. It's different dynamics in other markets, where Chinese players have a position, especially in Latin America and also South Africa and other markets, and a totally different dynamic also in the US and Canada, you know? But specifically to your comment, I would say that we are clearly seeing this in the European markets where, essentially other competitor and us are at this point in time taking the most part in the market. Which helps the pricing and the margin. Understood. And just with regards to the slide 27, where you show that improving order backlog, I mean, what is the scope, in fact, given the current environment and the fact you benefit, I mean, could you expect this to be a margin positive environment compared to your current backlog? 27, you mentioned? Yeah, that's where we show the order improvement for that l egacy orders out, and the other ones go up. So that is... Yes, is from, from, I think 27, what the competitive environment, and as I said before, speculative on, on when and how competitors are going to be back in the market. And again, they have probably been stated that they will. So with the current information that we have, is how we have built, the scenarios, and of course, we will have to revisit those if the situation materially changes. Yeah, but we expect, I mean, basically, the market should grow and should have absorbed even the new competitor coming to the market when that comes, if that comes, when that comes. Thank you. That's very clear. And another question on free cash flow. You know, positive free cash flow for 2023, the balance sheet issues have been fixed, a good net cash position coming out of 2023. Clearly, margins improving on higher volume. Is there any reason for us to assume that you shouldn't be free cash flow positive going forward? Yeah. I'll take that one for the current year we're in, and then maybe, Luis, between you and me for the following ones. I think the short answer is no. If you take the building blocks of the guidance we've been providing, and you go through, take midpoint, then of course, from an operational perspective, working capital being equal, you would probably come to, for this year, a neutral, slightly negative cash flow. If we do even better on working capital, then that reverts. I guess, not guiding, not daring a real- Well, we- But 2025, again, we believe business is going to be stronger again than 2024. So if this is a neutral, minimally negative or positive free cash flow, that is only to improve. So I repeat the short answer, no, there's no reason that you should think that. No, I think the important message is stability and is step by step improving. And then, you know, a quarter more, a quarter less, I think it's not that relevant in the journey. The important is the journey that we are in, that we expect the same trend to continue in 2024, 2025, 2026. 2026, of course, is long term, but 2025, we start to see some visibility about that. Understood. Thank you. Thank you. You're welcome. Thank you very much. The next question from Constantin Hesse, Jefferies. Please go ahead. Hi there. Thank you very much for taking my question. My first one will be a follow-up from Vivek, which is basically the margin ladder here, but instead of starting off, I'd like to have a discussion on potentially where it ends this year. I mean, given the current legacy backlog, you have about 1.5 GW, and you're obviously delivering a lot, well, most of it this year. We obviously had big swing this year from -900 basis points to +3. So could we be ending up this year, towards the mid-single digits of 5%, 6%? And then is there a reason to believe why you shouldn't be at 8% already in potentially Q1 or Q2 next year? That would be my first question. No, thank you for the question. I mean, we don't disagree with you conceptually, because, you know, we have, legacy orders, 1.5 GW. This is draining, profitability. We expect, extra, extra volume in the future with Europe growing, you know, US, we need to succeed. Eventually, Latin will recover, so this extra value, volume for next year should give, as well, a profitability jump substantially. Then we mentioned that, our 2023 is impacted by temporary topics, like the 100 turbines delay from 2023 to 2024, like the temporary impacts of the Suez Canal, higher, costs to executing in Germany. Hopefully, those issues will not repeat next year, and this is another profitability lift. And the fourth lift is the normalization of the service margins that, you know, not sure if 25 or mid-25, or we expect medium term, this will contribute as well to lift the profitability towards the mid term, middle, mid-term 8% target. So those are the four building blocks. That's gonna be Q1 2025? I don't think so, because Q1 2025, we are gonna have always a dip in volume and high annual utilization. But, we expect 2025 another substantial jump in average profitability versus 2024 in a full year. That's understood. So maybe just a little bit of color on the volume side of things, and Patxi, maybe over to you on the order intake momentum you're seeing in Q1 as well as the pricing discipline. Are we seeing a better momentum this year compared to the start of last year? And if you could comment on the pricing discipline, that would be great as well. Thanks. Yes, as we expect we are, of course, in the two-thirds of the quarter already, so still, and this is a great business. But how I see the quarter, the quarter is gonna end well and certainly above last year's result as well. The good order momentum continues for the first half of the year; we see also the momentum continuing. And from a pricing perspective, as you mentioned, we see also competitors behaving well in that sense, being disciplined, same as we are, trying to maximize both prices and margins of the orders that we take. So good momentum continues. Understood. Okay. And then lastly, third question would be on warranties and provisions. I mean, just to get any color that you can give, this Engie announcement, I, I understand that all of that is already included in your guidance. Is there any downside risk here, and any color on the more material warranty provisions that you booked this year on the EUR 109 million? Let's do together with chili. I think the Engie announcement is a little bit a surprise to us because we are under non-disclosure agreement. What we can comment there is that it's a very important and valuable customer for many years, and that we did several projects in Europe and US, and we are currently working with them in other projects in Europe. All the effects are already included into the 2023 figures and into the 2024 guidance. We don't expect further deterioration coming from this discussion. And it's very... I would like to reemphasize that this is not affecting current products, it's not affecting Delta4000. It's a discrepancy in old product, despite technology, of a special turbine type of only few smaller numbers have been sold, and unfortunately, we are negotiating the outcome, but we don't expect this to impact our 2024 guided figures. Sorry, do you mean then, José Luis, that we could see a 25 figure, a negative impact in 2025 from this still? No, no, no. All the forecasted impacts we have already in our balance sheet. Understood. Thank you. The next question from Ben Heelan, Bank of America, please go ahead. Yes, good afternoon, guys. Thank you for taking the question. I just wanted first to ask a clarification. I just wanted to understand that in terms of the poorly performing contracts, so will they be largely completed by the time you get through the end of 2024? That's the first one. Secondly, we'd heard from some peers that the environment in Germany has gotten a lot better in terms of the auction process and the outlook there. Could you maybe comment on that a little bit? And then into 2024, the revenue growth that you've guided for was definitely stronger than what I was anticipating. Could you talk a little bit about the breakdown there between the services and the installations of turbines, et cetera? Thank you. Okay. The first one is very simple, yes, that is the assumption. We expect that, you know, 90%+ of the low profitability orders will go through the P&L within this year, and that's part of considering the guidance in the-- regarding Germany. Yes, for Germany, I would agree with the statement. We also see that the conditions are improving from a permitting perspective, north of 70 GW of permits were awarded last year. We expect north of 10, easily north of 10 GW of PPAs auction this year. So, in combination, available volumes and available orders to be awarded are gonna be significantly increasing. And as a market-leading position, we expect to harvest that growth and hence improve also our results versus previous years. So yes, situation in Germany is improving. Regarding projects and service, I mean, generally speaking, the service business should grow around low double digits, high single digits on a year-on-year basis. I don't think we have here the total breakdown of the revenue growth in projects and service. You know what I think, Ben, is asking for the calibration between project and services. Yeah. If you plug in a service number for 2024 and use of some EUR 750 million, then, and you have the rest, then you get a good picture- That's it ... of how the distribution is. Very clear. Thank you, guys. The next question from Ajay Patel, Goldman Sachs. Please go ahead. Good morning. I wanted to ask, how much of Is there any LDs with the capacity that rolls over into 2024? Is there any sense of the downward impact that legacy projects has had for 2024? Lastly, do we have any sense of what percentage of the backlog is legacy versus ones that are consistent with your 8% margin target? Yeah. I think, at least we still have some in our, in our guidance and forecast. Nothing compared to last year. Last year was heavily impacted by delays. This year, we still have some, but I don't know. I you know don't have the full detail with me here, but in the range of less than 1% of revenue. I think in that little bit, even less than that. And regarding the backlog of low profitability, is 1.5 GW that we plan to execute this year. Thank you. Thank you. The next question from Sebastian Growe, BNP Paribas. Please go ahead. Yeah. Hi, good afternoon, everybody, and hope now you can hear me. The first one would be on the order intake funnel. I heard your comments around specific markets. I would just like to touch on the sort of bigger picture here, what you would see for 2024. We had obviously a pretty strong 2023 order intake. And the question simply is, in wake of the positives being, I think, especially the German market share, that you singled out a couple of times now, there should be a pretty material catch-up, I think, for you guys in this year, 2024. So would it be a fair assumption that order entry should be up from what you can currently see over 2023? If we could start there. So that would, Sebastian, essentially be guiding our intake, which, as you know, we never do. But I can reiterate my comments that I see the good momentum continuing, strong Q1, Q2, and yes, and I think that would be enough for you to have a feel of how orders may play out. Okay. And that wouldn't be sort of undermined by the fact that we still have lower power prices and potential return of one competitor later this year, that has temporarily ceased the selling of its 5-MW turbines, so that, that wouldn't sort of provoke any sleepless nights at your end, yeah? We don't see, I mean, power prices are delaying order intake in Latin America, that is true, and in Brazil. In Europe, it's true that power prices are decreasing, but we don't see projects being postponed so far, and hopefully this trend continues. But so far, we see zero delays in project execution due to power price temporary decline. Okay, quickly on the onshore wind market. So you made some comments around the US and then Canada. You have not, I think, mentioned Australia at this juncture. So could you just comment on what you're seeing there, and if there's a good likelihood to eventually score a project somewhere during 2024? Yes, Australia is a very attractive market with good volumes that will continue the midterm, at least that is our view. Undercrowded from a OEM perspective, so hence the competitive intensity lower as well. With some barriers of entry, essentially with grid codes, with some cycles that. So from a selling cycle, which is longer than average. So we are actively working in the Australian market. We will see the results more towards the midterm rather than the short term. But yes, it's a capital market for us, and we are actively there. And we can expect good results, probably more towards the midterm rather than the short term. I'd say a big game changer for the perception of the brand in Australia was receiving the approval to interconnect MacIntyre, which is a giga scale wind farm, and where Nordex performed amazingly well with the technical capabilities. And this has somehow brought high interest from many other customers that are very interested to cooperate with us, to eventually replicate that success. And Canada, I would say there is very good momentum, and our turbine fits perfect there. US, very good momentum as well, but we missed temporarily the turbine for mainstream high capacity factor sites, that we are trying to catch up rapidly and concentrating more on areas where land-constrained turbines are needed. And then we can, we can expect very good outcomes also in the short term. I think that this year we expect to sell significant volumes in the Canadian market. Okay, sounds good. And then the very last one for me is just on the margin guidance. I think you sounded very, very optimistic on earlier calls with regard to the 8% EBITDA margin target. Now, the midpoint of the 2024 guidance range is 500 bps short of that. Obviously, I think it was a very positive surprise around the revenues that you are having online now for 2024. So the question that I simply have is, what is sort of baked in the bridge when it comes to the legacy projects? You mentioned the 1.5 GW, but maybe you could also give us a bit of an idea how zero or negative they are. And the second then, around then, the Red Sea issues that you have eventually factored into that guidance, because I cannot escape the impression that at least the midpoint would be very much an attempt to play it as safe as you possibly can at this juncture. Let's start with the second. I think the assumptions for Red Sea are included in the midpoint of the guidance, provided the situation improves in the second half. If the situation doesn't improve, we will deteriorate a little bit in the second half. I don't know, it's a double-digit number and not close to the three-digit. The potential worst case deterioration that we see if situation doesn't improve in the second half. And in 2025, we don't expect an impact because we are already quoting with the option with Red Sea and around Africa. So 2025 should not be impacted. The legacy orders, you know, 1.5 GW, I mean, those orders are not at zero margin, let's put it that way. Those are positive contribution margin, but not to the 18% or to the 8%. So are those at zero positive contribution margin? For sure. You know, how much this is dragging profitability, you know, cannot be very specific here, but substantial money. I mean, high double digits will be, let's put it that way. Extra volume is the biggest lever. I think we have substantial available capacity, and if we manage to sell more and to use this capacity, this could substantially improve profitability. The extra cost in 2024 coming from the delays in 2021 and the temporary issues in Germany, again, let's say mid-double digit plus minus, and normalized service margin, you can do the math. Okay, thank you. That's helpful. As a reminder, if you wish to register for questions, please press star and one on your telephone. The next question from William Mackie, Kepler. Please go ahead. ... Good afternoon, gentlemen. Yeah, three questions. The first one, just to pick up on your comments about available capacity. You know, you produced more turbines than you installed last year. Can you maybe describe what your central case thinking is for the volume of installations that you can achieve in 2024, and the sort of impact that we will see as the mix shifts to Europe and away from Latin America? And when we think about the capacity, just, you know, you have capacity, but to what extent in Europe do you think there's available capacity in the logistics value chains downstream? Because not just you, but the whole industry is gonna be chasing the movement, logistics, and installation services of many of your suppliers. No, indeed, and this is why in Europe, we are facing inflation and certain temporary adaptations to move goods to the sites with, you know, Germany is a good example. I think we are working together with our competitors and the industry and the government to remove those roadblocks. The government, of course, is fully supportive, but temporary transportation is not 100% flowing. Other than transportation in Germany at this point, from a product availability perspective, I don't see shortages of capacity for a growing market. Our level of utilization of nacelle plants is very low because unfortunately we have low level of activity in the first half, coming from a very backloaded end in order intake. So we start to ramp up rapidly in the second half, and you need to produce in the second half at a pace of, I don't know, 12 GW a year. So if we manage to sell more evenly within the year and to produce more evenly within the year, we have a free capacity available that not just generate margin, but avoids underutilization costs. Latin America is, as you know, in a slowdown mode. We expect this to recover, and we have available capacity there. But we have plenty of available capacity, let's put it that way. Sorry, two things I didn't pick up. The first was the installation units that you might achieve compared to the 1,429 in 2023. Also, I think you made a comment just then about second half production rates, implying, I think you mentioned the equivalent of 12 GW annualized capacity output. Was that correct? Sorry. I would say installations, we didn't go into that detail. I think the profile will be similar than last year. And without guiding numbers, the numbers should be in the range. Of course, with higher nameplate turbines, but we don't expect a big increase in numbers of installations. When we talk about blade production, the blade production is quite stable over the years, because it's driven by the mode. And when you talk about nacelle production, it's driven by working capital management. So you try to produce in the last minute that is required for the project in order to optimize the working capital manage. As the sequence of orders in the north part of the world during winters, the activity is low. There are two effects. During winters, the activities is very low compared to the spring, summer, and fall. And if you analyze our order intake evolution over the year, there is always a big jump in July before the summer break or around the summer break, and another big jump before Christmas. Which triggers that the activity to assemble those nacelles is always substantially higher in the second half than in the first half. As the activity is low in the first half, you have low revenue, low margin, high underutilization costs. In the second half, you have high volume, high margin, and very good, and low underutilization costs or very low underutilization costs. Those are very much the levers that move the P&L evolution quarter-over-quarter. That's great. Thank you for the question for the color on that. The second question relates to the US or North America, more generally on two points. Firstly, you've mentioned the need to prepare a new machine, and then the board will assess the reopening of the factory, dependent on order flows. I mean, what sort of level of investments are you starting to think about that you might need to make in non-recurring development expense and non-recurring capital expense in jigs, tools, fixtures to be ready to go into the market? And then more specifically on the blade side, what are you thinking about your relationship with TPI on the outsourced blades for the region from Mexico, which I think comes up for renewal later in the summer? Yes. I would say, you are right. I think regarding our initial plan was to serve the US market with existing products and reopening the Iowa facility. That CapEx was, I think we could deal with that within the 2% to 3% CapEx on revenue. If a new mold has required this, an extra CapEx is gonna be required. We haven't assessed that yet, although what we expect to do is a similar thing that our competitors did, which is a minor enhancement of existing machines, of all proven track record machines. So it's not developing a new machine, it's developing a new blade for an existing machine. Nonetheless, not to underestimate the CapEx in molds, in transportation tools, and so on and so forth. At this point, we don't have the detailed analysis. It's something that we think the balance sheet of the company can deal with, but we don't have the detailed analysis. Regarding TPI, it is a very good supplier. And the Mexican factory to be decided what we are gonna do with that. We don't have yet made a decision. What we have done is extended contracts with them in Turkey and in India, and we are very happy with those two TPI factories. Super. The very last question area relates again to the provisions. I mean, if I strip out the 109 that you took exceptional on legacy technology Q4, your underlying provision rate is still 3.8%, and on an annualized basis, against sales. On an annualized basis, it's still much lower than your peers. You know, how should we think about provision development going into 2024 and 2025? And, how are you providing against your Delta4000 and new related technologies, or relatively new? I think maybe Adrian goes into the details. On the concept, we are not happy with that non-quality cost and provision level. I think the industry needs to go back to the previous times, and our quality program calls for reducing the non-quality costs over time in the next few years. So 3.6 is slightly less than some other market participants, but for me, it is not good enough long term. I think if the sector keeps the mindset on focusing in existing platforms, reinforcing the quality, the quality programs, the reliability, and so on, that should be possible. In the case that the sector, you know, goes to another race to the bottom in technology, that has always consequences. You know, because you're selling mature, you're selling mature products. But we keep selling mature products, focusing in the quality enhancement programs, solving the legacy issues that we have here and there. This, in the long term, should be part of the profitability recovery of the company. Best of luck for the year. Thank you. Okay, thank you very much. Now this closes our Q&A session, and, I'd like to say goodbye, but the last word is with our CEO, José Luis, for the final comments. Please go ahead. Thank you very much. So let me outline the takeaways from this year. The first one, very important, policy momentum remains strong across Europe, US, and our home market, Germany, which are supporting our expectations of continued sales growth. 2023 performed as we expected, with improving sales and margins. At the same time, we start the year with a healthy balance sheet and cash levels. Our margin outlook for 2024 improves as we build on 2023, in line with our roadmap, despite some temporary challenges in the form of geopolitical risk, installation delays, and higher project costs in Germany. And last but not least, we see a clear path to our midterm target on the back of volume growth, margin improving, growing service business, and as last mentioned, quality improvement, long term. Thank you very much for your participation in the call. Wish you a nice afternoon, and see some of you hopefully at the WindEurope fair in Bilbao. Goodbye. 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.