Nordex with a muted start to the new year as expected

As expected, Nordex AG got off to a muted start to the new year. Both revenues and order receipts came under pressure in the 1st quarter as a result of the planned recapitalization measures. Thus, revenues contracted by roughly 35 percent over the year-ago quarter to around EUR 34.9 million (previous year: EUR 53.7 million) primarily as a result of key suppliers’ hesitation to deliver the parts required in view the Company’s financial weakness and the non-availability of commercial credit insurance cover. This left Nordex with insufficient funds to procure the main components required from suppliers upfront. Following the successful completion of the recapitalization measures, deliveries are now being covered by credit insurance again. With the new funds at its disposal, Nordex is now in a position to remedy shortfalls in deliveries and will be able to increase production output significantly as of the second quarter.

At EUR 34.7 million, order receipts fell short of the forecast (previous year: EUR 68.9 million). This was due to delays in projects as a result of uncertainty as to whether the recapitalization methods would be implemented successfully as planned. Thus, customers had no alternative but to hold back orders as they had difficulty finding banks willing to finance their projects. Since recapitalization, new business has recovered at an extraordinarily strong rate. Thus, Nordex has since received new orders worth around EUR 86 million and expects a figure of over EUR 100 million for the 2nd quarter in total, marking the highest volume in its history.

In spite of reduced costs, the Company again posted an operating loss before tax, interest and exceptionals of EUR 7.1 million in the period under review (previous year: loss of EUR 5.5 million) due to the small volume of business. However, cost-cutting in all divisions left positive traces, with other operating expenses net of other operating income shrinking by EUR 0.5 million to EUR 5.7 million (previous year: EUR 6.2 million). Similarly, the cost of materials/sales ratio contracted sharply to 75.1% (previous year: 78.8%).

The cash capital increase of EUR 41.64 million has improved the Group’s financial condition substantially. As of March 31, 2005, bank liabilities stood at EUR 39.0 million, while cash and cash equivalents totaled EUR 41.4 million. On May 13, 2005, the contracts providing for a non-cash capital increase of just on EUR 27.9 million were signed with the banks (see adhoc bulletin of May 13, 2005) and the necessary resolutions passed by the corporate bodies. An application for entry of the non-cash capital increase was lodged with the Companies Register on May 20, 2005. This entry is expected to be registered until June 10, 2005, after which the new shares resulting from the non-cash capital increase are expected to be admitted to trading on the stock market until the end of June 2005. The completion of the recapitalization measures will increase the Company’s equity by around EUR 70 million (cash and non-cash capital increase), the equity ratio will be 30 percent.

In addition, the Company has entered into a syndicated loan agreement with its creditor banks providing for existing and additional credit facilities to be extended by roughly four years to furnish Nordex with the funds required to boost revenues and earnings. Looking ahead over the next few months, Nordex projects a substantial increase in demand in Germany accompanied by growing foreign business. With Nordex’s favorable position in key growth markets and spurred by sizeable order receipts, sales volumes should climb considerably over the next few quarters. Nordex expects to be able to break even as of the 3rd quarter. In the current fiscal year, the Group is targeting order receipts of at least EUR 300 million and revenues of EUR 270 – 280 million. Depending on the revenues generated, the loss before tax, interest and exceptionals will come in at between EUR 2.0 million and zero. The return to profit-making territory is projected for 2006.