OFFERING MEMORANDUM Global Offering of up to ... - Nordex

F-64
MANAGEMENT REPORT
FOR THE FISCAL YEAR
ENDED SEPTEMBER 30, 2000
Business trend and situation of the Company
NORDEX continues its astounding uptrend. The soaring growth rates of order inflow and sales in
absolute terms are well comparable with previous years. Sales jumped by 52% from fiscal 1998/99 to
DM 438 million, and incoming orders surged 33% to DM 552 million. As in the years before, the
Company came a good deal closer to the achievement of its prime strategic goal of acquiring orders
and generating sales not only in the strong German market but also and increasingly in the major
markets of the world. The share of non-German sales (DM 134 million) was pushed up from 20% to
31% in the fiscal year 1999/2000. For the first time, the volume of orders received from abroad
accounted for more than 50%.
Earnings before taxes leaped 84% to DM 13.8 million.
In comparison to the calendar year 1999, the German wind energy market experienced a clear
downtrend early in the year, mainly due to political uncertainties. Nonetheless, the newly installed
output capacity estimated at 1,200 MW will still be a world record. Contrary to 1997 and 1998,
NORDEX unfortunately lost market shares in Germany in 1999 and 2000, primarily since the newly
developed 2.5-MW turbine had reached industrialization level at fiscal year-end only and since
presently wind turbines with a minimum rotor diameter of 70 m are in demand. For strategic reasons,
however, NORDEX currently does not offer wind turbines with 70-m rotors because this segment is
covered by its same-tier affiliate, Südwind Borsig Energy GmbH.
As stated, the somewhat depressed German business was outcompensated by successful
internationalization. In the calendar year 1999, NORDEX had a 7.8% share in the world market.
It will be possible to raise this world market share to just under 10%. In the megawatt-turbine
segment, NORDEX has so far retained its world leadership with a market share of 20%+.
In the period, 148 N43/600kW turbines were installed and 152 sold. This relatively small wind turbine
(600 kW rated output and 43 m rotor diameter) thus experiences an encouraging renaissance. The N50/
800kW turbine, of which 22 were installed and 35 sold, showed a remarkable success, especially in
Denmark, and was well received by the market. In the megawatt, 160 N60/N62/1.300kW turbines were
installed and sold. NORDEX benefits from the fact that it is one of the few manufacturers that install
megawatt turbines not only in Germany but worldwide, such as in Finland, United States, Spain,
Portugal, Denmark, Latvia, and shortly even in China.
The new production facility in Rostock, Germany, started in January 2000 to produce wind turbines.
Several major supplier plants, particularly the sister companies BPA and Borsig Rotortechnik GmbH, are
meantime located in the direct neighborhood of the production shop, which has resulted in initial
savings. Apart from the Give, Denmark, production facility, the joint venture in Xian, China, also started
up production, assembling and successfully delivering the first wind turbines in the year under review.
The preparations for setting up a further production site have commenced in Spain.
The Company’s headcount grew from 338 at 9-30-1999 to 438 as of September 30, 2000.
Information on significant risks inherent in future development
Worth mentioning for risk reporting purposes are quality problems experienced with one blade supplier
in several N60 turbines. Currently, a repair and replacement program is in progress to be completed by
end-January. Another supplier has meanwhile been contracted. Most of the additional blade repair
expenses are borne by insurers and, therefore, no long-term impact on the Company’s profitability is
expected from this situation.