Nordex SE (NDX1) Q2 2026 Earnings Call Transcript

Ladies and gentlemen, welcome to the Q2Figures 2026 conference call. I'm Moritz, the chorus call operator. I would like to remind you that all participants will be in a 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 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 Anja Siela. Please go ahead.

Thanks, Moritz. A warm welcome from the Nordics team in Hamburg. Thank you for joining the Q2-2026 results management call. As always, we ask you to take notice of our St. Harvard statements. With me are our CEO Jose Luis Sanko and our CFO Ilya Hartmann, who will lead you through the presentation.

Afterwards, we will open the floor for your questions. and now I would like to hand over to you with the Louis thank you very much for the introduction area on behalf of management board I would like to welcome you to our second quarter results of 2026 let me start with a brief overview of the key highlights of the quarter overall I'm pleased to report that the second quarter of 26 reflects continued positive momentum for Nordex we deliver revenue growth achieve a double digit EBITDA margin generated healthy free cash flow and maintain a strong financial position first order intake reached 3.1 gigawatts representing growth of 32 percent year-on-year. Europe continued to be our larger region, accounting for 74 percent of the project of the intake, while Germany and the United States were the most important individual markets during the quarter. Second, we continue to deliver a strong revenue growth total revenues increased by 16 percent year-on-year to 2.2 billion euros project revenues accounted to around 90 percent of total revenue and grew by 18 percent reflecting continued progress in project execution at the same time our service business continue its positive development, while revenues increase by 8% year-on-year, and EBIT margin going to 19.7%. Third, profitability improves further. We achieve an EBITDA margin of 10.3%, exceeding the 10% threshold, and improving by 450.6% compared to last year. Finally, cash generation remained strong. We generated free cash flow of 165 million euros, while working capital remained stable at minus 8.3%. In addition, we strengthened our financial flexibility by securing 2.5 billion euros of bank warranty facilities on improved commercial terms. At the end of the quarter, our net cash position stood at €1.7 billion, underlying the strength of our balance sheet. Overall, the second quarter demonstrates the continued progress we are making across the business. We remain focused on discipline execution, profitable growth, and delivering on our guidance for the full year 2026. Moving on, turning to our activities in North America, particularly in the U.S., on page 5, I am happy to report that we have successfully re-established our presence in the market. Year-to-day, we have secured around 800 megawatts of orders until the end of June, supported by a diversified customer mix, and we keep on working on increasing the pipeline. At the same time, the ramp-up of our Iowa facility is progressing well. Production is underway, the facility is ready to scale with demand, and no further capex will be required. Combined with our established service footprint and growing regional organization, we believe we are well positioned to capture future opportunities in the U.S. and Canada. And let me turn now to our operational performance. starting with the development of our order intake. As published in our order intake press release on July 9th, we saw a strong uptick in orders driven by various regions. During the second quarter, we recorded 3.1 gigawatts of order intake, an increase of 32% year-on-year. the growth was supported by major u.s orders entering the book consequently order intake for the first six months of the year reached close to five gigawatts in euros turbine order intake total almost three billion orders were received from 10 different countries and the average selling price of 0.97 million euros per megabat was stable when compared with second quarter of previous year although other selling prices are influenced by the specific project and regional mix in any given quarter we continue to see stable pricing across our markets from a regional perspective europe remained the main region and accounted for 74 percent of the other intake While, and as usual, we are not providing specific guidance for order intake for 2026, we continue to expect a good order momentum for this year. And with this, let's move to slide A, where I will discuss the development of the order book. The combined order book strengthened further and exceeds 18 billion euros at the end of the second quarter of 2026 reflecting continued positive momentum of both our turbine and service business Turbine order book reached 11.6 billion and most of the orders came from Europe followed by North America, rest of the world and Latin America In the service segment, the order book increased to 6.8 billion euros By the end of the quarter, the service portfolio crossed an important milestone. For the first time, we have over 50 Gb under service, representing more than 14,000 wind Overall, the order book develops to post-planning visibility and reflects the expansion of our install base over the past years. Let us move to slide number 9 and have a closer look into the service business. The second quarter of 26 continued to show solid progress in the service business. Service sales increased by 8% and reached 223 million euros, representing 10% of total group revenues. EBIT margin further improved to 19.7%, progressing towards our mid-term EBIT margin target of crossing the 20%. Operationality, fleet availability remained stable at around 97% and the average tenure of service contracts increased to over 14 years. Let me move to the next slide. Giving you some insights into our installation and productions, In page number 10, installations developed according to plan, and total 1.2 GB. The reduction year-on-year was primarily driven by project scheduling, with a large share of installations waited for the second half of the year. There were also some original mix effects on customers' delays, and as previously communicated, delays-related performance into a year. While installations in Germany increased year-on-year, this was not sufficient to fully offset these regional mix effects. The key takeaway is that these are primarily timing-related factors. We continue to expect full-year installation to grow compared to 2025. On the production side, turbine output increased to 337 units, reflecting project scheduling and delivery requirements. Blade production remained stable at around 1,343 blades. And now I would like to hand over to Ilia to talk about the finances.

Thank you, Jotubis, and welcome from my side. As always, I will start with our income statement. Some of that has been highlighted by Hosuhis already. In the second quarter of 26, sales increased 16% to almost $2.2 billion, reflecting higher activity levels in both project and service business. Cross-margin continued its positive year-on-year development, improving to 26.9% from 24.8% in the second quarter of 2025. As a result, EBITDA more than doubled and reached $224 million with an EBITDA margin of 10.3% for the quarter. On the back of this operating performance, we reported a net profit of 111 million euros for the quarter, representing a substantial improvement of 80 million euros when compared to last year's quarter. And with that, we're moving on to the balance sheet. Well, in analyzing the balance sheet, the overall structure remains on a very comparative level when looking at year-end 25. The second quarter ended with a strong cash level again of approximately 2 billion euros, and the equity ratio continues to improve and reached 20.6% at the end of the second quarter, backed by a further increase in net profit and equity, outpacing the increase in the total assets. And that moves us to the next slide, which are the other balance sheet KPIs from their development. So net cash increased further and totaled 1.7 billion euros at the end of the quarter. and that is again supported by the operational performance that José Luis explained earlier. Working capital stood at minus 663 million euros and remained at a stable ratio of minus 8.3% water on water. Let me now go to the next page and spend a moment on a financing highlight, which is not our regular set of slides, But what we believe in order to comment on, and that is the closing of a so-called multi-guarantee facility that we signed in July, so only a few days ago, about 2.5 billion euros. And it has not only been a significant development for the company, but particularly in two, three aspects that we want to discuss. it is a much larger facility than the previous one almost doubling the volume of the previous NGF which is the acronym of 1.3 billion it has a longer term almost twice as long than the previous one that was three years now the new one is five years the interest rate so the cost of those funds are material lower than in the previous facility and without getting into details, but the other terms in that MGF is far better than in the last one and arguably close to an investment great company facility. It is backed by 15 banks, so less than last time with larger tickets. Obviously, the volume is higher and the banks are a reduced number, So that is a substantial progress which Nordic has made in the recent years, especially in strengthening the balance sheet and the overall financial profile of the company, or in other words, it is a token of trust. Back to the usual flow, and that is now the cash flow on the next page. Again, on the back of the operational performance, the cash flow from operating activities before net working capital increased to 267 million euros. With working capital normalizing, the cash flow from operating activities was 240 million euros. And as a result, we generated a positive free cash flow of 165 million euros in the second quarter of 2026. for the full year we continue to expect a solid free cash flow generation cap expandings amounted to 46 million euros in the second quarter that is 19 above the last year mainly due to the ramble of the new blade facility in turkey which we spoke about a few times in the past calls then our investment focus remains largely unchanged compared to last year and the years before with investments primarily in blade and the cell production facilities and tooling for installations and transport reflecting the higher

volume and with that I would like to hand it back to all of these all the next slides thank you very much here so before turning to a bias let me make a few brief comments on the market outlook overall the medium and long-term fundamentals for onshore wind remain attractive across our core markets we continue to see supportive policy frameworks strong option activity and growing demand for secure and cost competitive renewable energy one notable development since our full year results is the publication of the draft EEG and grid packets in Germany. While both proposals are still subject to the legislative process and might change, our initial assessment is cautiously positive. The proposal points to higher option volumes and provide greater clarity around grid-related topics which could help reduce uncertainty for developers and investors. beyond germany we continue to see encouraging developments in the us turkey france canada and several other markets supporting a healthy long-term outlook for the industry and with this and based on our performance here today i can confirm that we remain on track to reach the guidance we set out in February. We continue to expect 2026 to be a profitable year, assuming no material disruption resulting from geopolitical developments. To rate the rate, we expect a top-line growth between 9% to 11% year-on-year, with the Navita margin in the range of 8% to 11%, with midpoint plus at the most likely outcome as of today, and expect another good year for free cash flow generation. And now I'm going to the page number 20, where we talk about the mid-term targets. As you can see on the slide, the first half of 26 provides further evidence that we are moving in the right direction. Our EBITDA margin improved to 9.4%, reflecting continued progress across the business. the main building blocks remain unchanged, growing volumes, stronger contribution for our service business, and the ongoing efficiency measures that we have implemented throughout the company. While there is still work to do, the results achieved so far give us confidence that we are on track towards our mid-term EBITDA margin target of 10 to 12%, and that we are building a more profitable and resilient Nordics. And with this, handing over to Anya to open the Q&A.

Thanks, gentlemen, for leading us through the presentation. I would now like to open the Q&A.

Ladies and gentlemen, we will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on the touchdown telephone. You will be atoned 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 two questions. Anyone who has a question may press star and one at this time. And the first question comes from Richard Dawson from Werenberg. Please go ahead.

Hi, good afternoon, and thank you for taking my questions. There are two from me. First one on the U.S. orders. So now that we've seen a restart in those U.S. orders, are you ever described any color on any margin difference between those U.S. orders and the German orders? I'm thinking more broadly about any potential inefficiencies you have in the Iowa facility just as you're starting the ramp up, but also any cost differences on those U.S. turbine variants compared to the European ones. And then secondly, Ilya, maybe one for you and a bit more detailed on the balance sheet. If I look at production levels versus installations for the first half, you're running about a gigawatt ahead on production versus installations, but your inventory figure is broadly flat for the period. So, just wondering why there hasn't been a corresponding increase in your inventory on the balance sheet given that outrun in production, or is that not the right way to Thank you for the question, Richard.

So, the first is quite simple, I think without going into details, ballpark, similar profitability as German.

And then I go to the question on the revenue recognition and on the inventory part. So, yes, fair question. Maybe use the opportunity to say revenue recognition, that's not a question, is done, again, mostly cost-to-cost when we produce our components, so not so much on the installations. That is why we see that revenue number to that order by dude. why not the inventory? Because that production that outpaces also the installations is done mostly, really, by and large under existing contracts, and we're getting paid by our customers. This is why you don't see that as an increase in the inventory.

Thank you for the color.

And the next question comes from Vivek Mida from Citi. Please go ahead.

Hi, thank you very much, everyone, and good afternoon. So, my first question is a follow-up on Germany, you've talked about the stable turbine prices, I see weaker auction prices you've seen for the power in those auctions. Is there any reason to think that the future of normalization of turbine pricing in Germany could exceed any of the assumptions you made underpinning the midterm normalized margin target that you gave us and do you expect auction pricing to stabilize given the further improvements involved in in 2027-28 thank you well German pricing so far we we we see a stability in the in the in the pricing a future pricing you know

is hard to have to have to predict what we can comment is what we see today and what we see today is this stability regarding future options it's going to be a new system and it's a little bit you know crystal ball reading but but you know all things in equal if if there is no market upside prices should recover in the options but again this is crystal crystal ball reading i mean for me the positive aspect is that there's going to be substantial volume and and which is in line what the german government needs you know needs more electricity to help to reduce the price for citizens and and industries and this is a good opportunity for having a healthy margin for the market participants that's that's our assumption that's it thank you my second question just as a follow-up on on the notes um it looks like you've had uh some impairment of trade receivables um over the last year and including in the first

half gone up from 55 million to 92 million so could you just comment as to why um that maybe in the case, and if there's been any P&L impact from that.

Thanks for that question. But there is basically nothing out of the ordinary. That's not because of any customers kind of faltering or et cetera. It's just some sanitizing of books, but nothing where a customer basically is not able to meet its obligations, his or her obligations.

Thank you.

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

Hi. Good afternoon. Two from my side, if I may. If we think about the QT print, you had quite a bit of production contribution to the revenue, not so much on the deliveries. Are you expecting this to normalize in the second half of the year, or is the cadence of this year off versus, quote, unquote, normal, given the Turkey situation and perhaps German permitting connection delays?

I think we'll catch up. But in the second half, at least that is what our planning says, and going forward with more geographies and more diversification and recovering the delays in Turkey, we will go to a more normalized level in the future. But definitely in the second half, we'll catch up. And if we think about the things that need to be true to deliver very strong deliveries in age two where are you under factory loads uh and how should we think about that in terms of cost of fill or opex i would say that in from that aspect the year is not that different than the previous year very much in the second half to do 60 to 65 percent of the activity of the of the year and we are well prepared so I would say it's not a new rampage that we need to do. This is very much repeat in the year that we did last year from the production side.

Okay thank you.

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

Thank you very much for taking my questions. A couple of questions from my side. The first one I'd like to focus It was a little bit on Germany, because clearly this EEG announcement is absolutely massive, assuming that the grid package is balanced enough between government and developers. So I just want to understand what have your conversations with developers been with regards to this grid package? You know, I've heard a lot of feedback with regards to the latest draft. I heard the government just achieved an agreement a couple of hours ago. I haven't seen any new drafts yet, but I'm just curious to see what the announcement was, because if this grid package is balanced and the developers are happy with it, I mean, I'm looking at this forecast that you have on page 18. It's very conservative what Germany could actually go to, right? I think this forecast has Germany declining installations-wise again in 2030, and if this goes through, we could see growth into the early 2030s with further order intake growth, ie Nordex could even be installed in low teens gigawatt numbers in a couple of years to three years time so I'm wondering you know what have your discussions been and what's your opinion on this current grid package please well thank you very much for the question I think our view and chip in media and to the association and to the government is you know you need to be a ton of renewals you need to be you need to beat a lot of grid in order to reduce the dependency

and reduce the price for consumers and the industry that's the equation so then you can take different approaches but delaying the deployment of of wind non-shock because the grid is slightly delayed is not very advisable I mean and second if if you are outpacing a little bit the the problem of we know sure versus the deployment of a grid this is a temporary thing because at the end both both investment needs to be done in both sectors and it's going to be materially impossible to do synchronize the pace of those investments so assuming that that's the way forward then you could question if there is a certain containment who should pay for that and in our humble opinion from a country point of view the more you do the risk investment decisions for for investors the better for consumers if you ask every investor to put a risk premium into into what the curtailment is going to cost. At the end, it's going to be a higher price in the option and a higher price for consumers. So we cannot comment much on the draft because it's just from the oven, but at least there is a cap. And it's better to have a cap than having uncapped figures to price that risk. Because if the cap is 20%, It's a different thing, pricing 100% of the risk or 20% of the risk. So we wish to see a lower number there. So as our customers as well, that at least there is a number. I don't know.

But I don't think I would be under the danger of repeating what you said. So I think constantly mentioning the question. The government has announced informally in the past month that it wants to have an additional 12 gigawatts on top of the already, we probably agree, very high German volume connected to be in 2030 or before. And it has now put that into the draft. So not knowing what finally the government decided on that one, but I guess they would approve this, meaning that we have auctions in 27 or 15 gigawatts and 28 or 15 gigawatts. and then 29 of at least 12 gigawatts. So that is the acceleration that Khosrowiz was mentioning. And when it comes to retainments and who pays what, let's wait what the final outcome is, but I have two points. One Khosrowiz made, which is the certainty that the government appears to acknowledge that there needs to be a certain number and that goes especially, I guess, to the financing sector to make projects banking. And the other comment I would have, not knowing what happens in the future, but the auctions have worked from a system perspective. They have done price discovery. Maybe it's not even final. So there's a price discovery, and that is what the system wanted. And it's based on a certain set of rules. So now, if you change those rules, your price discovery will continue, but it might lead to a different pricing point or what we was indicating auction bids might go up again if the system wants to pay the cost that way that's a political choice what we're saying is you will ultimately at least I have bear in mind that auctions can go both ways and from that perspective I would say from an OEM perspective we're fine with it from system perspective politicians need to make their decisions understood thanks second question if I may just quickly Obviously, the second half is going to be pretty significant in terms of activity.

So just understanding your exposure here, the markets that you're in, fair to say that you're all set up in terms of the local infrastructure, cranes, everything. Is there any exposure that could add to this execution risk or from today's perspective, you're really well placed from local infrastructure requirements to get everything built in time?

I would say we have properly staffed if I can point the risk is maybe transportation permits in Germany due to the high activity in the market other than that we are well set and even in Germany I think we are discussing with the different government agencies and and so on to overcome as an industry this potential bottleneck.

Thank you. And the next question comes from Sebastian Grover from BNB Paribas. Please go ahead.

Hi, everybody. Thanks for taking my questions. The first one would be around services. The order momentum has been stronger than what I would have expected with the ratio compared to the project segment or that's running at a very high level compared to historical standards. So what is the root cause for the strong service order intake? And can you talk us through the terms of the contract renewals in particular and how these might fit and also to your target to cross the 20% margin level in the not too distant future? And secondly, on the U.S., you had pointed to the 800 megawatt plus of orders in the backlog. Can you give us an indication with regard to the size of your remaining pipeline? And while you've been pointing to market share mostly on prior calls in the U.S., what absolute volume are you targeting in that market? And if I may very briefly chip in one more clarification to an earlier question that was asked, it was more around pricing. I think we know that normally there's data on pricing, which might be better typically in the U.S., but you probably then kind of have to pay for it at the expense of less favorable working capital terms. so you could just walk us through also the working capital on the side of the U.S. business. I'll take you one. Thank you.

Thank you Sebastian. So services I would say the the main rationality behind that is the higher volume from Germany where most of the contracts have a long-term duration and And the way we count the backlog is very much, you know, the expected revenue for those service contracts. So, if the service contract that we landed in the last quarter, the average tenor is higher than the cumulative one. And that's why that is increasing, that's the ratio. regarding US we need to be cautious here because you know we have certain healthy pipeline to achieve and if not even exceed what we think could be volumes that we did in the past but you know I don't feel confident you know to guide you on other intaking in general and less even to do specific into a market but we are investing there because we are optimistic about the market and we are optimistic that we have produce and things and solutions to harvest a decent market share in that market. Our ambition before that was previously communicated was why not 20% and we and we stick to that, so why not 20% or even more, maybe, and regarding pricing working capital and conditions of the US deals, you know, without going into much detail, but those are not that different than the ones in Germany, so that's a good quality good quality it is sorry sorry for the 20 um what you just mentioned i also asked around the 20 margin for service or it's kind of a new type level in a way right so is there anything that's okay okay sorry sorry sorry i didn't i mean the the service business is profitability improvement is a slow-moving piece because you know you do slightly marginal improvements and you do 10% growth year-on-year and this is what drives profitability improvement so we are originally convinced that we will hit that 20% but it's a slow-moving journey

Then the next question comes from Alex Jones from Bank of America. Please go ahead.

Thanks very much for taking my questions. Just following up on that U.S. order pipeline comment, could you talk about the extent to which the 4th of July tax credit deadline was an important driver for the orders to come through in Q2 specifically, sort of per your discussions with customers, and whether there are any other catalysts, you know, tariff discussions or otherwise that would catalyze and more orders coming through from that healthy pipeline that you highlighted. And then the second question, just on the installation, sort of back-end loaded nature of this year, you highlighted customer delays being temporary as one factor driving that. Can you talk about the confidence in the sort of temporary nature of those and whether you've started to see those delays ease in July already?

So, regarding US, I don't think there is any specific milestone that trigger those orders. You know, the pipeline, one way or the other, you know, some of them is relying on certain federal permits or the other don't. I think what we see now is that a substantial volume was safe harbor under current legislation, and we plan to take a share of that safe harbor volume. Some with the preservation agreements, others don't, but we are optimistic given the momentum that we see in the market that we will get our share into that market. and the volume that was hard work, I mean, nobody knows precisely there are different reports out there pointing into sustainable volume and that's as far as we can go I think regarding installations you know, if you look at it year on year certain geographies didn't contribute, like Nordics or Spain A little less installations in North America, although this was expected to dramatically change one year from now, and the delay in Turkey due to availability of plates. That was partially compensated by more installations in Germany year-on-year, but not sufficiently. And it's true that even with those increased installations, we were expecting to do more, but customers were not ready with the sites and as approval of fact we are not booking liquidated damages for late delivery it means that we are ready to deliver but either sites are not ready or projects are not ready we expect this situation to change in the in the second half and our assumption is that we are going to be ready when the projects are ready. Thanks.

And just to follow up on that US point, do you have an expectation for when Section 232 tariffs might become clear? And some people expect that in the next week. Is that in line with your views? Yeah.

I think we have no specific, no specific on that, so no. And I think that's the larger question that you have. I can only say it is when you see those orders apparently or obviously not hindering too many customers customers from moving ahead so they're very important determination but customers have just decided to go ahead thank you the next question comes from flat like yes key from Barclays please go ahead thank you very much for the opportunity my first one is a margin very strong double-digit margin this quarter interesting that it seems to have some mechanical headwinds

such as elevated provision in this quarter or a receivable write down as well would it be fair to assume then that those headwinds masked your true margin potential this quarter which otherwise would have been substantially high assuming normalization of provision for example your EBITDA margin could have been in teams or meetings. That's a tough question.

Then I take the first one and then use whatever it comes with. Thank you for the question. It's a good one. Maybe two lines of response. One to the provision themselves and then to the assumption, which I think we need to release for as well when it comes to the total margin. So the provisions have been a bit above and slightly, I would argue, about what we kind of calibrated for as up to 4%. That is nothing out of the ordinary. It's more mechanical because we've been selling a lot of stuff in the past quarters, as we know. And then the revenues for this H1 are just not a 50% reflection of full year. So the percentage of, I think, 4, 6, 4, 7 of additions is a bit above that. That we clearly think will normalize around that 4% number for the full year. So there's nothing out of the ordinary in those provisions. When it comes to what you're pointing to, to what margins could be, I think the larger role, and then maybe I'm already anticipating too much, is that it will depend on how the execution in the second year goes. So more back to our contingency conversation of last year, there's a risk profile of execution in the second half of the year, which has given its volume a lot of potential, but also certain risks. So, I don't think that's on the provision we can read too much and enter into anything called as underlying margin.

Very good.

Thank you for that. If I can quickly follow up on this provisioning point, you're also suggesting that there were some revisions to cost estimates, which drove those provisions up.

Were those revisions related to Nordic-specific methods, certain specific projects or regions? all those cost revisions are driven by more general inflation across the board that you are seeing no it is it is very in the mean the order of magnitude there is is not that substantial is here and there are some adjustments updates yes we do see some inflation certain components but nothing no which gives the order of magnitude I would say if I I mean every every every we requested to have more visibility about the year, so we started the year with the

Iran war and a lot of spikes in certain commodities, and it's true that we have suffered cost increases in certain commodities, but every year there are risks and chances, and the way we look forward and the way we see the year, we think that the chances can compensate the risk and this is the reason why we are guiding you midpoint plus so because we despite the cost increases i think we managed to to deal with those with other productivity and efficiency measures great uh final quick one from me there will be ifrs 18 accounting change

from 2027 which among other things will require some project related financing costs to be declassified into alterating profit line have you already done any preliminary assessment of potential impact of this accounting chain on Nordics and if you've done that what would be the preliminary conclusions please thank you very much thank you that's a very good question it's gonna be with us next year so it's gonna be we're gonna have an interesting and detail conversation when we're going into next year yes but still early to assess of course most of it will influence them the lead line and look let's have that conversation once we get there but I dare to say that the effect is not I mean what does that mean but you have to probably trust

me it's not that substantial so given what those costs are I mean they're there but also they're going down as we have talked in the presentation so the order of magnitude of that is not that significant but we will have that as a detailed technical conversation beginning of next year and thank you very much then the next question comes from AJ Potter from Goldman Sachs please go ahead afternoon thank you very much for taking my question and I guess mine is looking at the margin for this quarter 10% and then thinking about the second half of the year where you have a higher revenue and she's trying to wonder to what how did you perform versus the contingencies you put in Q2, and what contingencies do you have for the second half of the year? Because with assuming some operational leverage, you know, it would seem that you would, you know, why are we thinking about a situation where we're talking midpoint plus plus, for example? So just try and understand the underlying assumptions, or is it just a case of there's a lot to execute on and you'd want to get through it before you were more visible?

I think you name it Last part of your Of your question is Is our view Let's Let's take a little bit more Comfort into How high level of execution Going Still the world has a lot of Geopolitical issues not fully settled And We just need more comfort Okay And then if I was to take a second question just more on capital allocation, right?

The sizeable amount of cash sitting on the balance sheets. I know that you're committed to returning or increase returns to shareholders maybe going into next year. What do you think about that cash position? It's building quite nicely as we go through the years. What are the allocations that you're thinking, you know, is there any update that you can give us on this side?

Thanks for the question. And that is always a very valid question, especially when a company has a cycle like ours. I think the short answer is, I don't know if you like it or not, there is no update. We'll come with that when we get in front of you with our full year results, with the final tally event, when we've seen all the things that Khosuliz mentioned that still need to evolve. So to deal with that question hypothetically is too early, and I would say undue. so we will update this once the full year results are in and we're doing the call and until then our position of the order of magnitude that we gave with the full year call and whether that's going to be buyback or dividends is just the same.

Then the next question comes from Sean McLaughlin from HSBC. Please go ahead.

Good afternoon. Thank you for the time. Just looking at the order intake another strong quarter you're trending ahead in h1 uh of what was a historically high demand year like last year maybe just to gauge your degree of confidence on this on that demand strength through the second half and any markets you'd want to highlight where you see incrementally positive or negative uh demand potential in the second half thank you no thank you very much for question john no i think we are we are very much going with the market other than us that we are

so pleased to to announce our rent into the into the market for the second half is business as usual and i'm going with the with the market so you know with the market share we have in the markets we operate that should be a good proxy and would you be comfortable with with a total volume of order intake at least at last year's level we don't we don't you know we usually we don't guide order intake but we expect to be another

good year super thank you then the next question comes from William Mackey from Kepler-Schiffre. Please go ahead.

Good afternoon. Thank you for taking the questions. My first question would be about the US again. Great success in making your presence in the US market clear. And I hear your comments about further opportunities to build on the 800 megawatt backlog. But I wanted to ask about cost recovery. Your plants in Iowa are staffed and building but there's presumably no throughput there yet so can you share what level of throughput is needed in the U.S. to get to a sort of at least a break-even level rather than a cost level for the group as a whole and then perhaps some thoughts about what your initial plans are on the ramp up volumes and throughput in the U.S. over the next 12 to 18 months the plans are in you know have been operating for one year at a low activity level and to meet the project demand when we mentioned before similar

margins done in Germany is including the including the cost associated to have the local activities in u.s or u.s so if you sell i don't know 200 even 100 units a year you you recover your your your costs so that's not that's not the the killer of the of the business i think the cost is is quite reasonable to do the the local activities in the u.s and we are planning to double the output in the months ahead and to go to nominal capacity beginning of next year.

Thank you. With regard, my second question then would reflect back on the questions about capacity, your group's capacity when you want to think or frame it at the moment. Clearly, there's opportunity or optionality to the upside in terms of volume and the wins that you could have in share and in absolute market volume. But on the supply side in your own organization, I think you've talked up to about 11 gigawatts of throughput or installation volume. theoretically how do you see the set up today in terms of the capacity without significant capex and where would the constraints be would it be primarily blades or do you see other elements of the supply chain that could constrain your ability to grow over a three or four year period I think we run the company with substantial over capacity in in a cell assembly because geopolitics

and net zero industry act and you need to assess the situation before putting all eggs into the same basket as well the political situation China China US so So you need to have optionality, and optionality costs you money, but decreases your delivery. So from a nacelle perspective, we have substantial overcapacity in blades as well, although I will say slightly less in blades than in nacelles, so blades will be the less overcapacity, although we have our capacity as well in blitz.

Thank you, very clear.

Then the next question comes from Klaus Ringel from AutoBHF. Please go ahead.

Good afternoon, thanks for taking my question and it would be on the MGF facility that you highlighted in presentation. Question here is if you could quantify an impact on your financial results looking ahead from that.

Yep, thanks Klaus. Very great question, that's one we didn't directly address in the presentation so maybe two remarks the second one is I guess geared to your question directly first remark is as I said in the presentation now in any like-for-like scenario that new MGS now reduces the financial cost the integral interest costs per bonds unit so to speak substantial and as much as in the in the final stage 60 65 percent from its peak range under the old MGR, so a substantial reduction. But now, of course, that depends also on the volume you utilize, so in order to maybe calibrate what you would want to model, so basically what we would for 26 and then 27 will be a moving target because let's see what the volume does, and of course we're also generating more interest revenue the more tests we have, but for this year, if you stick with and plug in a total number of 60 plus 60 to 70 million total interest costs then you're on the safe side rather probably 60 minus maybe that's the best calibration I have for you today okay thank you much as a

reminder anyone who wishes to ask a question may press star and one and we do have a follow-up question from John Kim from Deutsche Bank please go ahead I'm sorry for the pause.

I'm wondering if we think about service revenue growth. You've had very strong order intake. You've had a very strong base effect. When will we see kind of substantial acceleration in the revenue lines and further division? And then a follow-up, please.

Yeah, but, you know, we need to differentiate two things. One is the order intake, which is X number of megawatts multiplied by X number of years, but the contribution per year is related with the number of megawatts, not with the number of years. The number of years gives you the backlog, not the growth on the order intake. So, from that point of view, I think we will see in the 10th, 10% revenue growth year-on-year. Despite the order backlog grows way faster because you increase your tenure of the contracts.

Okay, got it.

Thank you. I don't know if I explain but you know you have 50 gigawatts and under service and then you contract 8 gigawatts and then you are gonna have 58 the year after and another 8 gigawatts 64 and that's the range of growth that you should expect from this business despite these eight gigawatts might have 20 years of life but it's already over 20 years not not growth in the year number one yeah i got that um

one follow-up question unrelated uh i think we had spoken to the platform development earlier you think beyond kind of this year or the existing backlog when should we think about a new platform and I think you've spoken before that you would you would look at competition but not necessarily leave the charger I'm just wondering if you comment on that dynamic as well whether you see other OEMs we speak with the same we speak with the same strategy prepare the ingredients in order to cook the meal if needed but we are not going to start cooking the meal if it's not

is not needed it means that we will in this case we'll be followers okay all right thank you and we do have one more follow-up question from from Barclays please go ahead yes gentlemen thanks very much last question from me is on course you reported cost of raw materials and other supplies down about one percent in the first half of 26 that's at least what your disclosure suggests. At the same time, your revenue was up 14%, which suggests the physical volume of work recognized in the P&L is probably up double digits, which means average raw material cost located to a turbine should have been down to 10% or potentially more than that. This is, of course, some impressive cost-cutting and cost-efficiencies, given that we're seeing more inflationary backdrop right now. Can you give us some idea how these cost cuts have been achieved?

I don't think you can draw conclusions from that point of view because the way we do accounting and the way we report is not based on cost of goods results. So as a consequence, it depends a lot of your in-house activities. If you produce or you procure, you know, you have more or less personal costs, more or less, you know, supplies. So, and the cost base is going down in certain part numbers. It's going up in other part numbers. In services, it's going up. But I cannot, you know, unfortunately, I cannot give you a precise answer to your question.

Thank you all for waiting, Carl.

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 very much, all. And let me close with a few key takeaways from the second quarter. First, we continue to deliver on profitability with further margin improvement and solid order intake, including important successes in the US. This gives us confidence in our trajectory for the remaining of the year and provides good visibility for the coming quarters. Second, we further strengthen our financial position. We remain focused on generating positive free cash flow while the signing of the new 2.5 billion warranty facility increases our financial flexibility and provides additional capacity to support further growth. And third, based on our performance in the first half of the year and the visibility we have today, we are confirming our guidance for 2026. Overall, our results demonstrate continued progress. Profitability and financial strength are improving. Execution remains solid. Together, these achievements support our path towards a mid-term medita margin target of 10 to 12 percent. Thank you very much we wish you a wonderful rest of the day and holiday season if you manage to enjoy it