A 12.7% margin quarter, a service business through 20%, and the same capital-allocation question deferred for the sixth time
NDX1.DE · Earnings Call · 2026-11-05
A blowout that its own installation crews didn't attend
Nordex's third quarter of 2026 is, on the numbers, the best operating print in its modern history. Sales rose 28% to EUR 2.2 billion, EBITDA more than doubled to EUR 278 million, and the margin hit 12.7% — comfortably above the 11.5%-12.5% band management had only just raised three weeks earlier. Free cash flow was EUR 379 million against EUR 149 million a year ago, net cash crossed EUR 2 billion, and the equity ratio climbed to 21.1%. Project order momentum stayed intact at 2.8 GW, up 30%, and the combined order book pushed past EUR 19 billion.
Then look at the physical line items. Installations were 2 GW, or 331 turbines, versus 420 in the prior-year quarter — down 22%. Turbine output fell to 367 from 428. Blade production actually rose 17%. That is not a picture of a company delivering more; it is a picture of a company being paid for building things that are still sitting somewhere waiting for a permit, a crane, or a customer's balance of plant.
Those turbines have been produced, invoiced, paid, and cashing. You see those turbines in the cash balance of the company.
That single answer, to Barclays' Vlad Sergievskiy, is the hinge of the whole quarter. Nordex is a Project business running cost-to-cost revenue recognition, which means revenue tracks manufacturing, not installation. Ilya Hartmann was explicit that the missing piece is towers — production "substantially up" — while nacelles fell. So revenue grew while installations shrank, and the gap between what Nordex has been paid for and what it has put in the ground is now the reason its cash balance looks the way it does.
The conservatism question, asked again
Richard Dawson of Berenberg asked the question that has become a fixture of these calls: is the company simply conservative, releasing project contingencies late in the year and calling it a beat? José Luis Blanco pushed back — but his pushback was a description of a recurring process, not a denial of it.
“The last two years, we saw the same pattern, that the risk that we have evaluated beginning of the year didn't materialize in full... Is this called conservatives? I wouldn't say that. I think it's trying to provide for the geopolitical situation we operate.” — José Luis Blanco · 2026-11-05
He is right that it is not new. On the October 2025 call the same mechanism was spelled out in detail: contingencies built at order intake, reviewed as the year's visibility improves, and released if execution beats the plan. “We might revisit that. But for the time being, we haven't done that because the macroeconomic is quite still uncertain.” — Jose Luis Blanco, CEO · 2025-10-28 A year later, management says provisioning has stepped up to roughly 4% of additions— "a reasonable level" per Blanco — and that the method hasn't changed "for many, many quarters." The honest read is that Nordex's headline margin contains a structural cushion that flatters the reported number relative to underlying project economics, and management has now told investors twice that it intends to keep that cushion.
The service business finally crosses its North Star
The cleanest genuine improvement is service. Sales rose 8% to EUR 237 million and the EBIT margin hit 20.6%, the first time above 20%, with fleet availability around 97% and average contract tenure of 14 years. Blanco called the 20% threshold the segment's "North Star" and said there is no reason to expect deterioration. That is a step change from July, when the same executive was more measured: “We are reasonably convinced that we will hit that 20%, but it's a slow-moving journey.” — Jose Luis Blanco, CEO · 2026-07-29 They got there a quarter early, and the Service business is now the highest-quality earnings stream in the group — recurring, backlog-backed at EUR 7.1 billion, and largely insulated from the turbine price cycle.
Germany: the grid package has become a waiting game
What has quietly shifted is the policy narrative. In the second quarter the grid package was the dominant theme — price discovery, CFD mechanics, customer pushback on curtailment risk. This quarter that phrase is gone from the top of the keyword stack, replaced by vaguer, more defensive language: legislation, draft, voting window, sentiment. Management is no longer debating the design; it is waiting for parliament.
“I would say we're still confident and above all hoping that now the next voting window mid-November gets really used by parliament and government.” — Ilya Hartmann, CFO · 2026-11-05
The volume commitment — 15 GW of auctions in 2027 and again in 2028 — has not changed, and that is the number that matters for the order book. But the near-term bottleneck is physical, not political: German transportation permits are throttling the entire industry's ability to move turbines to site. Blanco said Nordex is working with competitors, the government and waterways to unblock it, and that Q4 will look like Q3. If those installations slip, liquidated damages stay small — but revenue recognition slips with them.
Two billion dollars and a promise to talk in February
The most conspicuous non-answer was capital allocation. Ajay Patel of Goldman Sachs asked, as he has asked on essentially every call since April 2025, what the company intends to do with its cash. The response was the same one investors have heard for six quarters.
“I am afraid we are repeating our communication that this would be coming with our full-year results. So end of February.” — Ilya Hartmann, CFO · 2026-11-05
In February 2026 Nordex introduced its first-ever shareholder return policy — a minimum of EUR 50 million — and promptly declined to specify timing or form. In July, Hartmann said “there is no update” — Ilya Hartmann, CFO · 2026-07-29. Now, with net cash at EUR 2 billion and free cash flow running at a rate that makes EUR 50 million look almost tokenistic, the company is still deferring. The stated priorities are unchanged: protect the balance sheet, de-risk operations, and make bolt-on investments. The new EUR 3 billion guarantee facility — upsized by EUR 500 million during the quarter — is the tangible expression of that caution, and it is a legitimate one for a company that nearly ran aground on warranty costs a few years ago. But it is also a choice, and one that leaves a growing cash pile earning interest while shareholders wait.
The quarter itself is not in doubt: guidance has been raised, the order book is at a record, and the margin trajectory is real. What is in doubt is the conversion. Installations are down double digits, German permitting remains a live risk, Türkiye blade issues are only just behind the company, and the next leg of the equity story depends on a German legislative vote in mid-November and a capital-markets answer in late February. Nordex has bought itself time and credibility. It has not yet spent either.