Nordex Se

Ladies and gentlemen, welcome to the Nordex SE Q3 2025 results conference call. I'm Moritz, the chorus call operator. I would like to remind you that all participants will be in the listen-only mode and the conference is being recorded. The presentation will be followed by a question and answer session. You can register for questions at any time by pressing star and 1 on your telephone. For operator assistance, please press star and 0. The conference must not be recorded for publication or broadcast. At this time, it's my pleasure to hand over to Anja Sieler. Please go ahead.

Thank you, Moritz, and a very warm welcome from the Nordics team in Hamburg. Thank you for joining us for the Q3 2025 management call. As always, we ask you to take notice of our self-harvest statements. With me are our CEO, Jose Luis Blanco, and our CFO, Ilja 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 Jose Luis.

Thank you very much for the introduction, Anja. On behalf of Norwex Management Board, a very warm welcome to the presentation of our third quarter results for 2025, a quarter that marks a significant milestone in Norwex's journey. Let's start with a short recap of our guidance upgrade, which we communicated last week. Over the past three years, we have made consistent progress in strengthening the business and our profitability. Growing order intake is slowly starting to translate into sales. and we have step-by-step improved our margins and free cash flow generation. With an EBITDA margin of 8% in Q3 and six and a half year today, we have continued that positive trend. This performance along with our updated outlook for the remaining of the year has led us to raise our profitability guidance for 2025. If we move to the next slide, let's now start highlighting the key achievements of the third quarter in detail. First, our order book continues to show a strong momentum. Turbine orders in Euro grew by 36% year on year, while service orders rose by 20%, bringing our total order book to an impressive 15 billion. Second, we have made significant progress in profitability. EBITDA reached 136 million, a 90% increase compared to last year, with an EBITDA margin of 8%. Our service segment also continues to strengthen, achieving an EBITDA margin of 18.6%. Third, on cash generation, we are happy to report another quarter of robust performance. free cash flow rose to 149 million and net income increased to 52 million, up from just 4 million in Q3 last year. Our net cash position now exceeds 1 billion, underscoring our financial resilience. Finally, this strong execution across both projects and service enables us to raise our full year margin guidance to seven and a half to eight and a half, bringing our mid-term target of 8% EBITDA margin well within reach. These results clearly demonstrate that Nordisk is delivering on its commitments, enhancing profitability, generating strong cash flows, and building a solid foundation for sustainable growth. Let's now turn to next slide where I will go through the current market conditions in more detail. The third quarter of 2025, we saw another strong order intake moment. NORDES delivered 2.2 gigawatts in Q3, marking a 26% increase in megawatt terms and 27% growth in order intake value year over year. This translates to 2 billion euro in value from orders across 16 countries with most projects coming from Europe, primarily Germany, North America as well, particularly Canada. Pricing remains stable and has been stable now for quite some quarters. Let's move to the next slide, the order book. Driven by strong performance across four segments, our total order book reached 15 billion by the end of the third quarter of 2025. Turbine order book grew by 36% year-on-year and stands at 9.3 billion end of September. Most of these orders will be installed in Europe, followed by North America, here mainly Canada, Latin America, and other international markets. On the service side, our order book increased by 20% year-on-year. This growth is a direct result of the expansion of our turbine two years ago, which now translates into recurring service revenues. Let us move to the service business. Looking at the third quarter of 2025, I'm pleased to report that our service business has continued to improve faster than expected and surpassed the 80% net margin line already in Q3. Service revenue continued to grow at a high level year over year, reaching 219 million in Q3 2025. The share of service sales now accounts for approximately 13% of the total group sales. As we have outlined previously, EBIT margins are on a clear upward path. In Q3, our service EBIT margin reached 18.6%, continuing the steady improvement we've seen over the past quarters. Let me also highlight a few key operational KPIs. Average availability of our wind turbines under service remain high at around 97%, and the average tenor of our service contract continue to be around 13 years. Let's move to the next slide, our installations and production figures. Installations were up by 28% year-over-year, reaching around 2.6 gigawatts in the third quarter of 25. In the current quarter, we installed a total of 420 turbines with the majority of installation occurring in Europe, followed by Latin America and North America. On the production side, we assembled around 2.5 gigawatts of nacelles, corresponding to 428 turbines. Plate production in units was down around 25%. mainly driven by temporary delays at a supplier factory in Turkey. And now, I will, as always, hand over to Ilya to go over the finances.

Thank you, Rodrigo, and also welcome from my side. And again, as always, I will start with our income statement. In the third quarter of 25, sales amounted to around 1.7 billion euros, broadly in line with the same period last year. Sales, as we've mentioned it, were held back by project scheduling mix and temporary supplier-related delays in Turkey. We can further improve our gross margins, reaching 28% in Q3 after 24.8% in last quarter and 21.6% in the same period of last year. As a result, we delivered an absolute EBITDA of 136 million euros in the third quarter, nearly doubling the 72 million euros achieved in the same period one year ago. This corresponds to a further improvement in our EBITDA margin, as we've mentioned several times, reaching 8% in Q3 2025, up from 5.8% in the previous quarter this year, and 4.3% in Q3 of last year. On the back of that performance, we closed the quarter with a positive net income of 52 million euros, compared to who's mentioned it also, 4 million in Q3 2024. With net income already totaling 91 million euros for the first nine months of 2025, we're confident that we will deliver a robust full-year result, and hence exceeding last year's net profit substantially. And with this, let's move to the balance sheet. Looking at the balance sheet, the overall structure remains largely unchanged compared to the end of 2024, reflecting a similar and, I'd say, robust financial position. We closed the third quarter with a strong cash position of around 1.4 billion euros, and the working capital improved to minus 8.2%, and that is in nine with our internal planning and targets, and for the full year, of course, we stand behind of our guidance of below minus 9% and think we can go even beyond. The equity ratio reached 18.3% at the end of Q3, showing a steady improvement over Q2 of 25, 18%, and the end of 24, which was 17.7%, underpinned by the strong net income development. And finally, let's look at other balance sheet KPIs, how they have developed. Overall balance sheet figures continue to perform well in the third quarter of this year, extending the positive trend we have seen throughout the year. Operating performance in the third quarter led to a further increase in net cash, which totaled 1.073 million euros at the end of the quarter, compared to 583 million euros in the same quarter of 2024. Again, the working capital ratio at the end of Q3 stood at minus 8.2%, or in absolute terms, minus 594 million euros. And that brings me to the cash flow and capex slide, which is the last one for me. You can see that the cash flow from operating activities stood at 180 million euros at the end of Q3. reflecting the ongoing and explained provost operation performance of the company. We generated positive free cash flow of 149 million in the third quarter, compared to last year's quarter, which stood at 159 million. Looking ahead, we expect to maintain positive free cash flow generation in the fourth quarter, depending, of course, on a few factors, order intake and working capital movements. We anticipate, again, without guiding very specific, figure that the company could add another 200 to 300 million in free cash flow in Q4. CapEx spending was at 34 million euros for the quarter, slightly less in the previous year quarter. Since the beginning of the years of the nine months, CapEx totaled 97 million euros. However, we would expect CapEx to further increase towards the end of the year and to continue moving in the direction of the around 200 million we have and continue to guide for the full year. Our main investment priorities remain largely unchanged, with investments primarily in blade and the cell production facilities, tooling for installations, and transport. And with that, I would like to hand it back to for the guidance side.

Thank you, Idia, for walking us through the financials. Again, based on a solid nine-month performance, and the review of our forecast for the remaining of the year, we now expect 2025 to register a significant step up in profitability compared to 2024 levels, bringing us very close to the median term EBITDA margin target of 8%. Reflecting strong service EBIT margins and solid project execution, We have raised our EBITDA margin guidance to a range of 7.5% to 8.5%. While we are not issuing formal guidance on free cash flow, we remain confident in our ability to deliver another year of robust free cash flow generation. All other elements of the guidance remain unchanged. Before I'm handing over to Anja to open the Q&A, I would also like to take a moment to thank the Nordestein for their consistent effort and commitment. Your work is truly appreciated, and we are now able to see this hard work also in our financials. Also want to thank our analysts and investors for your continued trust and support. It means a great deal to us. We will try to continue to deliver on our promises. And with this, I'm handing over to Anja to open for Q&A.

Thank you, gentlemen, for leading us through the presentation. I would now like to hand over to the operator, so Moritz, to open the Q&A session.

Ladies and gentlemen, we will now begin the question and answer session. Anyone who wishes to ask a question may press star and 1 on their touch-tone 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 2. Participants are requested to use only handsets while asking a question. Anyone who has a question may press star and 1 at this time. One moment for the first question, please. And the first question comes from Vivek Mida from Citi. Please go ahead.

Thank you very much, everyone, and good morning. I hope you can hear me well. I have one question and one follow-up, please. My question is just a broader, maybe more strategic question than just around 26, but your mid-term margin target has been around 8%, and you've hit that for the quarter, guiding that for the full year. My question is really around where we go from here. Beyond just further volume developments and movements around a cycle about perhaps a new level, are there any further company level drivers that you see that can maybe support your margins further in the future? I mean, it would be very interesting if you're thinking about what might be the right timing for maybe considering a new midterm target to supersede the existing one. Thank you.

Thank you for the question. As somehow we mentioned as well in the ad hoc call, give us some time. I think, you know, we are confident that we can repeat another year in good year in order intake to support 2026. But we still have a huge amount of orders to be sold in the remaining of the year. Of course, the biggest drivers for need there are volume and gross margin per unit. And gross margin is a function of the price in the marketplace and the stability in the cost. And that's as far as we can go. If all things being equal, yes, directionally, 26 could eventually be better, but there are many ifs. All things being equal, and we need to keep this good execution, the supply chain stability, this order momentum, and the rest, we need to wait until February to talk about 26 and to talk about the future.

Understood. Just following up on that, so then I'll ask my other question. I guess my question was more broad around the transformation. You've done a huge amount of work to transform the group, to rebalance the cost base and so on. Are there any other initiatives that you're working on at the moment, or are you generally happy with how the cost base looks, how the structure of the group looks and so on?

Thank you. We are super focused in our main value stream, in technology, quality, supply chain stability, delivering products on time and with quality with our customers. So we enhance our customer base that will repeat business with us. That's our daily job, and I expect this will continue to be our daily job. in the future. There is no any other strategic initiative ongoing other than keep enhancing our mainstream business.

Understood. My final follow-up is just around the CapEx guidance. I think you said that we should move in the direction of that 200 million CapEx guidance, clearly we're just below 100 million. Could there maybe be a bit of a push out of some of that capex spend for 2026? I'm just trying to reconcile that step up in capex implied in the fourth quarter, which is quite meaningful, relative to the commentary suggesting 200 to 300 million of free cash flow in Q4.

Thank you. That's a very fair question. Yes, we have been discussing with all folks, especially in operations, about the final stretch of the year. Of course, most is happening now. But I think, if anything, we will fall a bit short on that capex rather than overshoot it. So, the assumption and question is there could be a push out. Yes, there really could be. I wouldn't say order of magnitude, but it's not unlikely.

Understood. Thank you very much.

Thank you. And the next question comes from Ajay Patel from Goldman Sachs. Please go ahead.

And thank you for taking my questions. I guess I have really two. I'm trying to think, you're largely a European dominant order backlog, and I'm just kind of thinking forward. Outside of the pickup of Germany, where do you see additional pockets of growth? The other thing is, is the business has changed quite a lot over the last five years. To what degree is the manufacturing footprint right-sized with the existing delivery footprint? And then just thinking maybe a bit longer term, right? We had a medium-term target, but we still do have a medium-term target of 8%. But what is the right margin for the business, given all the experiences we've had over the last five years? Is it a bigger number? You know, what are your aspirations? And if it's not driven by volume growth, given that picture's been painted, is it more from the cost side?

Thank you, Ajay, for the questions. I will say, yes, our backlog relies majority in Europe, and we are tapping as well the German increasing demand that is so desperately needed to improve the energy costs for the country and to improve the resilience of the energy supply. Other than Europe, we have been and we are very successful in Canada, and we are committed to go back to the market in U.S. with our traditional market share in that market. Today, we don't have sufficient visibility to tell you how much volume is expected from the U.S., but for sure sooner or later, we will harvest our share in that market. Our small share, not the ambition like in Europe. We have modest ambition in the U.S., but the U.S. will play a role for us. We are as well active in Australia, and we're still competing, struggling, but competing in Latin America and South Africa against Chinese competitors. Regarding supply chain, I think we have the right supply chain for the current market conditions. It's flexible enough to adapt to a different macro scenario, name it duties, name it net zero industry act, name it, you know, trade war, and so on. So it's not the time in my view or in our view to put all the eggs into the most competitive supply chain we see with the view of today. I think we need to take a long view to understand how the dynamics in the world are playing and how to hedge the best possible way to a changing world. Are we fully prepared for any major disruption? We are not. Are we taking that into consideration that disruption might come? Yes, we are taking that into consideration, and that's why we have several configurations to deal with different scenarios. And your third question in the long term, of course, we always want better margins for our business and for our company and for our industry. I think our industry is very competitive, has proven the ability to deliver the lowest cost of energy in most of the geographies where we operate. And we deserve recognition for that and for the impact we have in energy independence and the resilience of the energy system. that you know very well that this is a market dynamic. And the key factors are volumes of the market, market share, prices, that drive prices and costing. So where this market is gonna go, I think the market will tell. I don't think I can give you more visibility the one I have nine months ahead, which is why we issued the guidance in February for the year. We will do the same for next year. So, the current view we have is we are confident that we see moments of stability, and all things being equal, we should be slowly improving year on year. as far as we feel comfortable to go.

Okay. Thank you very much.

The next question comes from from Bank of America. Please go ahead.

Thank you. Good afternoon. Thank you for taking my question. Just one from my side. Your rotor blade output came down year on year, which was connected to the issue in Turkey. How confident are you? that this does not impact markets outside of Turkey, and how do you think about this going into 2026 when you think about timings in your supply chain, but also cost impacts into 2026? Thank you.

No, thank you very much for the question. I think for 2025, beginning of the year, we were spotting that this might be a risk, and we provided for. Finally, we managed to deal with the impact in 25. As we mentioned in the call, we are, as we speak, negotiating with customers, with government, operationally as well, how to bring blade production in Turkey back on track. I would say global deliveries, I can confirm that will not be affected. at Turkey for Turkey. Nonetheless, Turkey for Turkey, it might affect. It might affect the revenue. It might affect somehow the profitability of next year, but it's a Turkey topic. We are working around the clock to restart production in Turkey and negotiating with customers and with government and with different stakeholders the best way forward. One key important aspect to mention is that we are fully committed with Turkey. We are fully committed not just to deliver these plates as soon as possible for the projects that we saw. We are fully committed to invest in Turkey for the long term because it's a country with sustainable volumes, where we are market leader, where we have a huge brand reputation, a very good team with the ability to deliver, and we plan to stay doing business there in the long term. Short term, we will figure out how to deal with the situation in the best possible way for all the stakeholders.

Thank you. Very well understood. Is there any way to quantify a potential risk going into 26? or is this too early to say?

Thank you. It's too early to say. It's too early to say because, you know, it's too early to say, and I wish could be more transparent, but, you know, as this is a moving target and many negotiations ongoing, I prefer to be prudent. We will give you more light in the 26 guidance. Very fair. Thank you.

And the next question comes from Richard Dawson from . Please go ahead.

Good afternoon and thank you for taking my questions. Two from my side. Last week you mentioned that you could see financial costs start to reduce as the financial health of the company starts to improve. So it looks like that started in Q3 or really actually started across this whole year with expenses now about 20 million a quarter. Do you see this going lower next year or is this an appropriate run rate for sort of quarterly assumptions going forward? And then second, what's the current status of the factory in Iowa in the U.S.? I believe the last update was that it was ramping up to qualify turbines for the U.S. market. Is that still the case? Thank you.

The second question I take it is, yes, we are assembling components and to qualify for the U.S. market, and the ramp up is as per the plan. So we haven't changed our out plans for the Iowa factor regarding the first person to take it in?

Yeah, I'll take the one on the financial interest one. So it has started this year, and that's the short version. It started this year and will continue to improve next year because the costs largely here are driven by what we have to pay for our performance warranty bonds, down payments bond and the like, which is the large bond line we have. And the interest we pay for that is, as I said last week, and you mentioned it, is against the risk profile of the company that has substantially improved. So, now we're rolling over basically bonds from existing facilities into new arrangements. Those bond costs are typically, not typically, all of them are cheaper than the ones we're getting out the door. But I'd say the larger effect we will see next year, so what we've seen This year, until so far, is a start, but that should continue well into 26 when we believe that the full things will be rolled over. Always like-for-like, no? So, it means if volume increases further, we will need more bonds, and of course, financial interests will move with that proportionally, but on the like-for-like comparison, I repeat what I said last week, we're getting substantial relief on the cost side there.

Okay, that's clear. Thank you.

And the next question comes from Konstantin Hesse from Jefferies. Please go ahead.

Mr. Hesse, your line is open now. Sorry, I was muted on my own line. Thanks for taking my questions. Just a quick, so staying with Turkey for a moment. Just trying to figure out what is the worst-case scenario here. So, I mean, if TPI, indeed, I mean, probably goes bankrupt, who takes over that factory? I'm just trying to figure out what's the worst-case scenario. How could this potentially look like for you? Does, like, a third party take over that factory? Would you have to take over that factory? How do scenarios look like?

Yeah. Let me figure out how I can be transparent without not being fully transparent because that could be counterproductive. We are working as we speak to set up in-house blade plant to start producing blades somewhere mid-next year, and we are in conversations to find, if possible, a way to produce blades as well in the existing facilities. And, you know, depending on the success and the speed of both projects, that will determine the quantities of blades available for the projects, and that will determine the revenue, the profitability, and the liquidated damages, if any, of those projects next year. But as we speak, we are building in-house plant, and we are negotiating with some stakeholders safe process to restart blade production there.

Okay. Understood. This is great. Thank you. Next question will be just on the margin very quickly. So, Emilia, if, so your comment was, look, next year, right, you're probably going to have a little bit more volume. So far, supply chains are looking pretty good. So, potentially, next year, it could look better in terms of the profitability. Just to manage expectations, right, the original guidance this year, including the contingencies, it was 5 to 7, 6% midpoint. The commentary that you're giving now, because I'm assuming you're not going to suddenly get rid of the contingency procedure next year. You probably will include all these contingencies again next year. So, based on your commentary, does that mean that we obviously could look, so thinking of a potential guidance next year, right, obviously without giving one, but just trying to figure out, The point that we're leaving, we're not going to be leaving from this new guidance. So, when we look at your commentary, should we use the previous guidance as a result? So, maybe assume a 7% midpoint guidance next year, including these contingencies? Or is your commentary already based on this new guidance?

I would say. There is, as we mentioned, there is many ifs. So one if is the order intake in Q4. Are we confident? We are. But so far, year to date, it's less volume than last year. So we still need to sell a lot to match and eventually improve. Second is stability. you know, without trying to confuse, but to bring clarity, last year, what you named contingency, you know, we build contingencies for Turkey. And next year, in the guidance, we need to build contingencies for Turkey. And the impact of those contingencies might be different in 25 than in 26. And this might affect the profitability in a different way 25 or 26. Other than this, and other than all things being equally, definitely we should be able to see directionally a better performance.

I don't know, , if you can. I mean, I think the question, I think you answered it, if you allow me. Should all things being equal, is the midpoint moving from six to seven? I think that's the question that was asking us, and we have to ask the patients until we come back to with that new guidance. But I think the statement, Constantine, that we're making is, as far as we can see, which subject to order intake seems stable. or as far as we can see, we continue with our statement, which we have given at the beginning of the year and throughout the year, next year should be, all things being evil, better than this one. Because this is now a steady state company in that sense, and you have always the unforeseen, like the turkey topic, but this is how we see the company.

Understood. No, that's clear. Thank you so much. And then maybe just lastly, and that's just quickly just to understand this a little bit. I would have expected maybe a little bit more in terms of your order book in service. I think service order intake was something around $300 million in Q3, which sounded a little bit low. I mean, maybe this is just timing. I don't know. I haven't really necessarily looked at the order intake overall very often, but just wondering – Is there a particular way to look at it? Are there any concerns? Or has orders, have orders slowed for some reason? Or how should we think about this?

No. I think no concerns. I think the renewal rate is the one we want. I mean, quarter might be higher, might be lower. And the other intake that we landed in Q3. is good, is associated with good service orders, and that trend is expected to continue. So no changes in our view. I think service business should be growing very high single digit year on year, and our view hasn't changed. That's great. Thank you so much.

And the next question comes from John Kim from Deutsche Bank. Please go ahead.

Hi. Good afternoon. I'm wondering if you could just comment on how you're feeling about the order book pricing relative to your input cost. If I understand correctly, timelines are extending in core Europe, particularly Germany. I'm just wondering about your cover there.

I would say generally, So we see a slight inflation pressure in Europe driven by high demand, not as high pressure as we saw maybe one year ago, slightly easing a little bit. And we see stability in Asia where we procure. We see stability in the shipping. We see spikes in certain commodities, but all in all, I will categorize that as stability. Cost improvements in certain areas, slight inflation in other areas, all in all, stability.

Okay. And just a point of clarification, I understand the issue in Turkey, but when I look at your in-house production on blades, it looks to be a bigger drop than that of third party, if I'm reading the graphic correctly. Is that where Turkey would have booked?

No, no, that we need to clarify because the in-house production is not, is doing okay. It's Spain and India, Turkey should be qualified as third party and the biggest drop we have is related to Turkey because that factory was in strike since May and didn't produce any blades since.

Okay, fair enough. And just also to clarify, in the Q3 print, given what you know now of the Turkish situation, was there any extra provisioning we should be aware of? or is it too far away in terms of the delivery in-country?

No. Everything we know is considered in the guidance for this year, and everything we can forecast for next year will be included in the guidance of next year.

Okay. And stepping back from kind of near-term situations to kind of the bigger scope Which markets are you excited about next year in terms of order intake? Any color you can provide here would be helpful.

Of course, Europe, Germany. I mean, this is the new market where we want to protect our market share. We need to and want to succeed in the next JECA tender in Turkey. We are fully committed with the market long term with investments there. We want to keep the good momentum we have in Canada, and I wish to see some orders from U.S. and from Australia.

Okay. Okay. Helpful. And I think you had mentioned you're committed to Turkey, but the nature of competition in South African Brazil feels a bit more intense with the Chinese. Is that a fair comment?

The Chinese are very active in Turkey, and it's a serious competitor. So far, we managed to keep our leading position in the marketplace, and that's our view, that our proven track record in the market, the service performance, the local content requirements, and so on, should allow us to keep as a key player. For non-local content turbines, of course, Chinese will, you know, do some market share there. But for local content, as we don't know what their plans is, what their plans are, if they plan to set up local manufacturing facilities in Turkey or not. Understood.

Last question, if I may. Any sense of auction sizes in Germany next year, or is it too early?

No, I think it's clear. I think that with the current legislation that my, you know, cannot change, it already sets the volume for next year of options, which if I'm not wrong, is 11.3 gigawatts.

That would be the steady state. I think maybe the full answer would be we don't have more specific data points. So, absent any changes, what José Luis is saying would be the recommendation for the auctions. Maybe in addition to that, when we had this conversation back in June, the sector, including ourselves, was a bit more cautious after the new government took office. But once the summer was over, that monitoring report came out, I'd say, maybe a bit inconclusive. We had conversations with the government and in the industry We're probably a bit more optimistic than we were a few months ago, because signals are that onshore wind is not really in the focus of any changes. But we have to wait and see for the final legislation. And I believe we're going to see some kind of a draft legislation end of this year, early next year. And that it will tell. But today, expectation is the one that was just mentioned. No changes means continued volume for 26.

Great. Thanks so much.

And the next question comes from Sebastian Grover from B&B Paribas Exxon. Please go ahead.

Yeah. Hi, Amir. Hi, Jose Luis. Thanks for taking my questions. It would be on execution either. Jose Luis, you said in your introduction that the order intake is slowly translating into sales. And in fact, the backlog is about 3 billion higher than this year's sales in the project business. And that compares I think to about a billion plus or so in the last two, three years. So if I square that also with your statement from the call last week, where you said that the lead time has increased to 18 to 24 months, then this suggests to me that the goals should meaningfully accelerate in 26, apparently provided no hiccups in the supply chain. So if you could just provide your views here and yeah, simply provide your opinion, that would be much appreciated.

Yeah. Yeah. And I fully agree. concur with you, you are right. And other than Turkey, this is the case. We start to see more orders in execution in Germany, which is usually a long lead time market. And year on year, definitely we see more volume. So directionally, we should see higher revenue and higher growth, normalizing the lead times of the company to a higher number than previous years. And the only caveat is Turkey, and that we will quantify and give you our view in February.

If we look at the overall production capacity, if I look at the current turbine assembly output and unit numbers, then at the peak, apparently you were able to do around 1.5 K per year. This is now down to around 1.3 and wasn't 24 and presumably going to a similar direction for the year 25. The question that I simply have, what's really the capacity leeway that you have? I think you spoke in the past also about maybe up to 2,000 turbines that you could do at some point in time. So if you could just update us on that front.

Yep. No, and that's slightly more complex because it depends a lot of the turbine type. From a pure assembly capacity, yes, we have the possibility to do that. Because structurally, we are running with overcapacity. We want to keep our options in Europe for assessing net zero industry act and the resilient criteria to play in the European markets. We are fully committed with supply chain from China, but we want as well supply chain from India because, you know, in times of political uncertainty, you always want to have So long history short, we have excess of assembly capacity ignisers, which we plan to keep. So there is not our intention to rationalize any plant in seeking better efficiency. I think it's better to sacrifice a little bit efficiency versus certainty and ability to grow if the market comes. Then the question is blade molds. And there the situation is different because there are different demand profile for different type of products and different available capacity for those type of products. And the Turkey example is a good example where having certain flexibility is advisable. So we manage this year. to improve profitability in the company while having a hit in the top line. And this was because we had spare capacity. Unfortunately, not in Turkey, for Turkey, but the rest of the projects worldwide were mostly unaffected for that situation. And this is one example of not going always to the limit to optimize the last penny. and taking a management view on things that could go wrong, and how do you plan for those things that could go wrong? So do we have ability to do more? We do. We do.

Okay, that's helpful. And then the last one, just quickly on service. I think in the past you said that you would be striving for double-digit top-line growth in the business. I think most of our discussions in the past have always been focusing on especially pricing around the project business. However, I would be greatly appreciating if you could also provide us with your views on the pricing quality in the service business and also the phasing in the wake of what I said before might be double-digit top-line growth and how to think about that going forward.

I would say top-line, we always say, you know, low tens or high single digits. But in that range, in the foreseeable future, depending a little bit the timing of the new bill, which is what mainly affects the top line. Regarding quality, of course, quality is a factor of pricing and failure rate and cost stability versus your cost forecasting. So, we are confident about the quality of the order intake in services.

Yes, and I guess Sebastian asked once, how do you see the pricing in the service?

So far stable, like the turbine business is following the same pattern in the marketplace, so we see stability. The market dynamic and, of course, it might change. The market dynamic today is wind is super valuable for the energy systems in the markets where we operate. Of course, prices are important. It's a factor of competition, but prices are lower than most of other alternative sources most of the markets where we operate and as there is growth expected, you know, looks like the focus now is reliable partners that can execute the projects as the market demands. Especially Germany.

Sorry. Can I just come back to the cadence within, the service business and specifically in regards to executing the backlog. So my understanding has been that apparently the overall now favorable development that we have seen in the margin improvement and services function of better pricing, better volume, then also the regional mix more towards Europe, and then also clearly the exit of probably old contracts from the AWP side. So how far advanced are we in this journey? So is this just really the very beginning of a longer duration sort of improvement cycle? Yeah, if you could just sort of help us better understand where we are on a scale from, I don't know, zero to 10 or so.

That's a good one. I would say the low-hanging fruits are behind us. So now, every small improvement is going to take more efforts because the legacy topics are on the way. you know, some of them already behind us, another on the way to be addressed, and overall diluting into a new fresh water coming into the tank. So all in all, I would say yes, there is possibilities to keep improving, but maybe not. Maybe not at the same pace, but I don't want to anticipate a guidance discussion, Sebastian.

I would get back to that then in February, I guess. All right.

Thank you so much. Thank you. And the next question comes from Xin Wang from Barclays. Please go ahead.

Hi. Good afternoon. Thank you for taking my questions. I'll start with a very ignorant one. Installations in Q3 is record high. Turbine production is close to recent high. Only weakness is blade production. Why is revenue so low in the quarter?

But it is, I mean, all the observations are true, but basically it is coming from that shortfall in the blade production. I mean, it's not a minor one. So we've been saying full year effect without being very specific. between 200 and 300 million there. But all of that is falling early because now we, for all the blades that don't go to Turkey, we found alternatives. But in the beginning, of course, that took some time. So that's the major reason.

Thank you for clarifying that. And then looking on the cash flow. I think if I look at the bridge you provided for movement in networking capital, I think what shocked me was orders was at record high this year, current year high, record high, and revenue obviously very low. So book to bill firmly above one, but prepayment is a drag to cash flow. So that's the one thing I struggled to understand in the bridge. Secondly... is the 200 million tailwind for cash flow generation in the quarter. Is this a specific issue related to a specific supplier or just a timing issue that we expect to reverse in Q4?

I take that one. No, in both cases, I don't think they have any influence on the cash flow picture we're trying to give you last week and today again. If you look at that from a, let's say, a bit of a commercial standpoint, profitability at a midpoint of the new guidance we've been giving adds that substantial portion of this 200 to 300 without guiding that we're giving you for additional cash flow. And if then you put, let's say, an improvement from this minus 8.2 to, for sure, better than minus 9%, then our tracker group's saying probably a good deal better than that. this is where that free cash flow is coming from or will be coming from.

Okay. I'll go back to the queue. Thank you.

So, ladies and gentlemen, this was the last question. I would now like to turn the conference back over to Jose Luis Blanco for any closing remarks.

Thank you. Thank you very much for participating in the call and for your questions. Let me outline our key takeaways for this quarter. So, first, we deliver another strong quarter in order intake, and we expect a full year order to match or slightly exceed last year's level. We have increased our full year EBITDA margin guidance to 7.5 to 8.5 and remain focused on improving profitability and generating positive sustainable free cash flow. We are on track to meet our guidance, deliver margin improvements, and can confirm that the median margin target 8% is enriched. Thank you very much. Wish you a good rest of the day.

Ladies and gentlemen, the conference is now concluded and you may disconnect. Thank you for joining and have a pleasant day.

Goodbye.