Suzlon Energy Ltd · NSE:SUZLON
Suzlon Energy — H1 FY2012 Earnings Presentation
50 slides from Suzlon Energy's earnings presentation, Oct 22, 2011
Slide 1: H1 FY12 Earnings Presentation
Suzlon Energy Limited H1 FY 12 Earnings Presentation 22nd October, 2011 Suzlon windfarm at Dhule, India 1 www.suzlon.com
Slide 2: Disclaimer
Disclaimer • This presentation and the accompanying slides (the “Presentation”), which have been prepared by Suzlon Energy Limited (the “Company”), have been prepared solely for information purposes and do not constitute any offer, recommendation or invitation to purchase or subscribe for any securi
Slide 3: Contents
Contents • H1 FY12: Strong YoY performance and de-leveraging initiated – Revenues grew by 52% YoY – Group order inflow of $1.8bn – Proceeds from Hansen stake sale received – REpower “squeeze out” registered and Suzlon now holds 100% stake of REpower • Outlook for FY12 and beyond – Industry estimates
Slide 4: Suzlon Group - Key highlights: H1 FY12
Contents Suzlon Group - Key highlights : H1 FY12 • Suzlon Group: Key highlights – Q4 FY2011 – Volumes continue to grow sequentially and YoY – Strong order book, improving visibility for FY2012 – Robust turbine fleet performance across the globe • Outlook for the FY2012 and beyond – Green shoots visi
Slide 5: H1 FY12 – Key takeaways
H1 FY12 – Key takeaways Consistently improving operating performance despite challenging environment - Revenues growing by ~52% YoY basis with improving Gross profit margins On track to meet full year Guidance - First half revenues – ~38% of full year Guidance* - EBIT margin for H1 FY12 @ 6.3%
Slide 6: Financial performance snapshot
Financial performance snapshot INR Crs. Q2 Q2 H1 FY11(a) Full Year Particulars FY12 FY11 H1 FY12 FY11 Unaudited Unaudited Unaudited Unaudited Audited Consolidated revenue 5,071 3,772 9,397 6,170 17,879 Consolidated EBITDA 387 148 877 (398) 808 Consolidated EBIT 239 11 588 (662) 151 Consolidated Net
Slide 7: H1 performance in line with the Guidance
H1 performance in line with the Guidance Guidance FY12: Revenues (Rs Crs) H1 YoY Revenues (Rs Crs) Comments 26,000 9,397 Proportion of H1 revenues 17,879 34%-45% +52% to full year revenues - 6,170 H1FY12 ~38% 24,000 H1 FY11- ~35% FY11 FY12 H1 FY11 H1 FY12 Guidance FY12: EBIT (Rs Crs) H1 YoY EBIT
Slide 8: Q2 performance confirms the upward trend
Q2 performance confirms the upward trend Consolidated Revenues (Rs Crs) Consolidated EBITDA (Rs Crs) Consolidated EBIT (Rs Crs) +34% +161% +2,073% 5,071 387 239 3,772 148 11 Q2 FY11 Q2 FY12 Q2 FY11 Q2 FY12 Q2 FY11 Q2 FY12 8 www.suzlon.com
Slide 9: Improving performance across all parameters
Improving performance across all parameters Consol Gross profit margins (%) Consolidated EBITDA Margin (%) 34.9% 9.3% 31.5% 30.1% 1.5% H1 FY10 H1 FY11 H1 FY12 -6.5% H1 FY10 H1 FY11 H1 FY12 Consolidated PAT (Rs Crs) Consol Cash accruals (Rs Crs)* 108 213.0 -646.0 -808 -1,281 -846.0 H1 FY10 H1 FY11 H1
Slide 10: Hansen stake sale to help de-leverage
Hansen stake sale to help de-leverage • Received $187mn (~Rs. 869 Crs) in October 2011, funds utilised for de-leveraging 912 • Value creation of ~Rs. 900 Crs on cash basis (43%) 869 1,673 477 396 -2,107 -2,503 Initial Debt push Net Acq. Cost 1st Tranche 2nd Tranche Final Value creation Acq. cost dow
Slide 11: SE Forge – on a growth curve
SE Forge – on a growth curve SE Forge – Revenues (Rs Crs) Developing trends • Recently signed two major third +244% +46% party agreements worth Rs 200 358 217 Crs from two large wind players 149 • Marquee client profile, from 104 both wind and non-wind industries • Volumes continue to improve FY10 F
Slide 12: Group firm order book - ~4.7 GW/$6.5bn
Group firm order book - ~4.7 GW/$6.5bn Order book in MW – 4,734 MW Order book Value Suzlon India • Value: $1.4bn Suzlon India 1,291 Suzlon International (27%) • Value: $1.0 bn REpower 2,692 REpower (57%) • Value: $4.1bn 751 (16%) Suzlon International •Exchange rate: 21 October 2011: 1 EUR= 1.3778 US
Slide 13: Announced framework contracts of ~4.1 GW
Announced framework contracts of ~4.1 GW 1. RWE Innogy for up to 250 units of 5 MW / 6 MW offshore turbines 1,500 MW - 295 MW already confirmed for 6M turbines announced in Jan’10 2. Frame contract with EDF Energies Nouvelles for onshore turbines 954 MW - 300 MW & 80 MW already confirmed announced i
Slide 14: REpower: Well balanced exposure to strong markets and large utilities
REpower: Well balanced exposure to strong markets and large utilities Order book of $4.1 bn (As on 21st October, 2011) ...with majority orders from Large utilities USA Others UK Private Investors Italy 5% 6% 4% Belgium 19% 6% 15% 51% Large utilities 16% Canada 39% 30% IPP Germany 9% France 1/3rd -
Slide 15: Group H1 order inflow – 1,355 MW/$1.8bn
Group H1 order inflow – 1,355 MW/$1.8bn Asia Europe North America India Germany Canada 100 MW order from OGPL 114 MW from Various 51 MW order with 85 MW from Various customers Windworks customers 32 MW order from Sprott 50 MW from NALCO Netherlands Energy 30 MW of repeat order 121 MW
Slide 16: Robust turbine fleet performance
Robust turbine fleet performance Outlook for the FY12 and beyond Improving global fleet availability*... ...is the result of a globally coordinated execution effort Total installations across the Globe over 10 GW OMS teams across Suzlon have worked on a program focussed on increasing availability Gl
Slide 17: Industry estimates for annual installations
Industry estimates for annual installations Europe Americas Asia (incl OECD) RoW 64,059 +14% 58,304 52,598 17,675 48,152 16,211 14,768 40,018 12,728 15,372 33,995 10,369 14,313 12,165 9,664 12,897 9,189 7,344 26,280 29,672 24,200 20,035 21,427 16,658 331 425 1,100 1,465 1,500 1,340 2010 2011 2012 20
Slide 18: Offshore: Next Big Growth Story
Offshore : Next Big Growth Story 5,857 Europe RoW +37% 4,926 4,529 3,800 3,256 2,628 3,211 2,070 1,212 1,413 911 1,901 1,715 2,057 907 1,186 305 502 CY10 CY11 CY12 CY13 CY14 CY15 Source: MAKE Consulting, 2011 • Offshore market’s global share in total installations will increase from ~3.5% in CY10 to
Slide 19: India: Rapid Growth
India: Rapid Growth Analysts estimates market to touch ~5 GW by 2015 5,251 Actual installations +16% 4,527 3,902 +60% 3,364 2,900 2,500 1,565 FY10 FY11 FY12 FY13 FY14 FY15 FY16 Source: World Institute for Sustainable Energy, India, 17 March, 2011 • The World Institute for Sustainable Energy, India (
Slide 20: Emerging economies continue to grow strongly
Emerging economies continue to grow strongly Brazil: • Brazil awarded 20-year PPAs for 1,928MW of new wind power projects scheduled for commissioning in 2014, in the latest auction conducted • contracted wind projects posted some of the most competitive pricing, even undercutting hydroelectricity in
Slide 21: Western Markets Making a Comeback
Western Markets Making a Comeback Americas - Growth in Canada and Brazil to offset sluggish US market USA: • Market is showing improved prospects for 2011-12, compared to 2010 lows. • Extension of cash grants continue to drive the market • Uncertainty continues with low PPA prices Canada: • Most of
Slide 22: Few other economies showing promise
Few other economies showing promise Rest of the World - Positive developments continue Australia: • Australia saw a drop in installations in 2010 due to fall in prices of RECs • New orders have started to flow in and market is expected to rebound in 2012-13 • It is estimated that about 8000 MW of ne
Slide 23: Chairman's Message
Chairman’s Message Mr. Tulsi Tanti, Chairman and Managing Director – Suzlon Group, said: “I am pleased to Focus Areas for FY12 report that our Group performance is steadily improving. Emerging, offshore and key matured markets are showing sustained momentum. Our strategy to focus on these markets is
Slide 24: Focus areas FY12: Turnaround year
Focus areas FY12: Turnaround year 1 2 3 4 Operational Markets Products Strategic Efficiency • Increased focus on • High penetration of • Reduction in COGS • Strengthening India, emerging new products in • Focus on cash Group’s competitive markets, select various markets generation positioning develo
Slide 25: Strengthening our position in emerging markets through end-to-end business model
Strengthening our position in emerging 1 markets through end-to-end business model • Allows customers to benefit Wind from cost-efficiencies and resources mapping economies of scale in wind Support to customers for all Land and farms site ancillary identification activities • Avoids need for custome
Slide 26: Successful track record of executing large end-to-end projects in India
...backed by successful track record of 1 executing large end-to-end projects in India Some of our largest wind farms in India • Installed base of 6,700+ MW in India (>1,000 MW sites in four Jaisalmer Windpark in states) Asia’s largest wind farm at Rajasthan with a total Kutch, Gujarat Over 880 MW c
Slide 27: Focus on executing offshore projects
1 Focus on executing offshore projects Some of our large operational offshore projects Alpha Ventus Project, Thornton Bank Project, Germany Belgium Customer: Consortium of EWE, Customer: C-Power E.ON & Vattenfall - 6 WTGs of 5M (Phase I) - 6 WTGs of 5M - Installed in 2008 - Installed in 2009 - Next
Slide 28: High penetration of new products in various markets
High penetration of new products in various 2 markets • New products backed by proven performance and efficient processes, as well as customer-focused team: a global company with local reach • Enhancements, innovation and comprehensive design driven through the entire technology platform for even be
Slide 29: S9X turbines already installed in India and Australia
2 S9X turbines already installed in India and Australia S9X: Focus on providing higher yields at a lower cost from low wind sites Operating successfully across the world….. 2 MW-class turbines, designed for moderate to low wind regimes S9X in Australia Robust, reliable design optimized to delive
Slide 30: Complete commercially proven portfolio
2 With new products, Suzlon Group boasts a complete commercially proven portfolio 0.60 – 1.25 – 1.5 – 2.5MW 2.5 – 3.XMW 5.0 – 6.15MW 1.25MW 1.5MW India China USA / Australia / Brazil / Europe Offshore Products spanning all capacities - sub-MW to multi-MW turbines Products spanning technologies - var
Slide 31: Focus on cash generation
3 Focus on cash generation • Operations to be cash generating - Maximise volumes, focus on key markets, improvement in margins, optimisation of costs - Endeavours to generate cash from operations, while keeping investments into balance sheet at a minimum • Focused efforts to reduce working capital i
Slide 32: Suzlon owns 100% stake in REpower with successful completion of Squeeze out
Suzlon owns 100% stake in REpower with successful 4 completion of Squeeze out Squeeze out process: Possible benefits that can accrue: Squeeze out initiated by Suzlon’s Supply chain synergies to drive down costs wholly owned subsidiary - Manufacturing and Sourcing in Low cost countries of Asia
Slide 33: Group well positioned in current market environment
Group well positioned in current market environment • India: high growth market 1 Emerging markets • Entrenched in China, Brazil • Early entrant in South Africa, Chile, Argentina and Mexico Offshore & key • Comprehensive product portfolio for Offshore 2 stable Developed • Performing well in Germany,
Slide 34: Suzlon Group: Guidance for FY12
Suzlon Group: Guidance for FY12 We continue to reiterate the Guidance: • Revenues: Rs 24,000 – 26,000 Crs ($5.3bn – $5.8bn) • EBIT Margin: 7% - 8% 34 Assuming exchange rate Rs 45/$ www.suzlon.com
Slide 35: Detailed financials – Q2 FY2012
Chairman’s Message Mr. Tulsi Tanti, Chairman and Managing Director – Suzlon Group, said: “I am pleased to Detailed financials – report that our Group performance is steadily improving. Emerging, offshore and key Q2 FY2012 matured markets are showing sustained momentum. Our strategy to focus on these
Slide 36: Consolidated financial results
Consolidated financial results (Suzlon Wind + SE Forge + Hansen + REpower) INR Cr. Q2 FY12 Q2 FY11 H1 FY12 H1 FY11 Particulars Unaudited Unaudited Unaudited Unaudited Sales 5,071 3,772 9,397 6,170 Raw material cost 3,304 2,537 6,117 4,314 Gross Profit 1,767 1,235 3,280 1,856 Gross Profit margin 34.8
Slide 37: Consolidated financial results – Q2FY12
Consolidated financial results – Q2FY12 Q2 FY12 (unaudited) (INR Cr.) Q2 FY11 (unaudited) (INR Cr.) Particulars Suzlon SE Forge REpower Consol. Suzlon SE Forge REpower Consol. Sales MW 420.55 - - 361.20 - Sales 2,676 102 2,380 5,071 2,188 94 1,559 3,772 Raw material cost 1,651 46 1,696 3,304 1,444 5
Slide 38: Consolidated financial results: H1 FY12
Consolidated financial results: H1 FY12 H1 FY12(unaudited) (INR Cr.) H1 FY11(unaudited) (INR Cr.) Particulars Suzlon SE Forge REpower Consol. Suzlon SE Forge REpower Consol. Sales MW 857.55 - - 568.65 - Sales 5,266 217 4,094 9,397 3,628 149 2,508 6,170 Raw material cost 3,338 108 2,843 6,117 2,503 8
Slide 39: Consolidated financial results: Full Year
Consolidated financial results: Full Year FY11 (audited) (INR Cr.) FY10 (audited) (INR Cr.) Particulars Suzlon SE Forge Hansen REpower Consol. Suzlon SE Forge Hansen REpower Consol. Sales MW 1,521 1,460 Sales 9,175 358 -- 8,615 17,879 9,635 104 2,656 8,502 20.620 Raw material cost 6,061 212 -- 6,443
Slide 40: Suzlon Group order book
Suzlon Group order book Orders as on New Sales in Orders as on Region Sales in FY11 Sales in FY10 Sales in FY09 29/07/11 Orders Q2 FY12 22/10/11 India 1,255 432 396 1,291 1,169 688 749 North America 277 277 27 410 989 China 265 25 241 201 182 249 ANZ 0 0 57 128 430 Europe 105 105 61 53 166 S. Americ
Slide 41: Consolidated Net Working Capital
Consolidated Net Working Capital INR Cr. Particulars As on As on As on As on As on 30th Sept’11 30th June’11 31st Mar’11 31st Dec. ’10 30th Sept. ’10 Inventories 5,907 5,755 5,352 6,907 6,321 Receivables 6,332 6,131 5,915 5,010 4,283 Advances 2,229 2,145 1,973 1,915 2,268 Deposit / Advance Tax 475 4
Slide 42: Suzlon Wind: Net Working Capital
Suzlon Wind: Net Working Capital INR Cr. Particulars As on As on As on As on As on 30th Sept’11 30th June’11 31st March’11 31st Dec. ’10 30th Sept. ’10 Inventories 3,530 3,207 3,144 3,241 3,013 Receivables 4,895 4,510 4,156 4,180 3,304 Advances 1,287 1,262 1,274 1,266 1,578 Deposit / Advance Tax 474
Slide 43: Suzlon Wind: Volumes by geography
Suzlon Wind: Volumes by geography Region Q2 FY12 Q2 FY11 H1 FY12 H1 FY11 FY 11 Sales FY10 Sales FY09 Sales (MW) (MW) (MW) (MW) (MW) (MW) (MW) India 396 290 700 429 1,169 688 749 USA 2 27 27 410 989 China 25 69 64 108 201 182 249 ANZ 4 -- 57 128 430 Europe & ROW 90 4 67 52 373 Total 421 361 858 569 1
Slide 44: Group Financial Leverage
Group Financial Leverage(a) As at 30th Sept. 2011 As at As at As at As at 30th June. 2011 31st Mar. 2011 31st Dec. 2010 30th Sept. 2010 Particulars SEL Consol. SEL Consol. SEL Consol. SEL Consol. SEL Consol. Wind Group Wind Group Wind Group Wind Group Wind Group (a) (a) (a) (a) (a) (a) (a) (a) (a) (
Slide 45: Suzlon Wind: Financial leverage
Suzlon Wind: Financial leverage(a) INR Cr. Debt type Balance as on Balance as on Balance as on Balance as on Balance as on 30th Sept. 2011 30th June 2011 31st Mar. 2011 31st Dec. 2010 30th Sept. 2010 Acquisition loans 2,277 2,079 2,074 2,073 2,085 FCCBs 3,203 2,924 2,136 2,141 2,153 W.Cap, Capex and
Slide 46: Consolidated Balance Sheet: Sources of Funds
Consolidated Balance Sheet: Sources of Funds H1 FY12 FY11 H1 FY11 Particulars Unaudited Audited Unaudited Share Capital 349 355 355 Employee Stock options 20 20 20 Reserves and Surplus 5,892 6,160 6,150 Shareholders’ funds 6,535 6,526 6,260 Preference share issued by subsidiary company 3 3 3 Minorit
Slide 47: Consolidated Balance Sheet: Applications of Funds
Consolidated Balance Sheet: Applications of Funds INR Cr. H1 FY12 FY11 H1 FY11 Particulars Unaudited Audited Unaudited Gross block 13,668 12,852 11,930 Less: Accumulated depreciation / amortization 2,261 1,933 1,618 Net block 11,407 10,919 10,312 Capital work-in-progress 556 420 453 Net Fixed Assets
Slide 48: FCCBs: Post restructuring & new issuance
FCCBs: Post restructuring & new issuance Maturity value Outstanding amount Conversion Key Terms: FCCBs (USD mln) price (Rs.) Maturity date Coupon rate with Redemption premium June 2012 - Old 211.3 97.26 June 2012 0% 145.23% October 2012 - Old 121.4 97.26 October 2012 0% 144.88% June 2012 - Exchange
Slide 49: REpower Net Profit Reconciliation
REpower Net Profit Reconciliation Q2 FY 2012 H1 FY 2012 Particulars EURO m INR Crs. EURO m INR Crs. Profit / (loss) as per REpower books 7.5 49 11.6 76 Less: Policy alignment impact (0.8) (3) (0.8) (3) Profit / (loss) before translation loss 8.2 52 12.4 79 Less: FX loss/(gain) on translation of COGS
Slide 50: Thank You
REpower Net Profit Reconciliation Q4 FY 2011 9m FY 2011 Particulars EURO m INR Crs. EURO m INR Crs. Profit / (loss) as per REpower books 4 32 26 158 Less: Policy alignment impact (6) (36) (2) (12) Profit / (loss) before translation loss 10 68 28 171 Less: FX loss on translation of COGS Profit / (los