Suzlon Energy Ltd · NSE:SUZLON
Suzlon Energy — Q3 FY13 Earnings Presentation
39 slides from Suzlon Energy's earnings presentation, Feb 14, 2013
Slide 1: Q3 FY13 earnings presentation
Suzlon Energy Limited Q3 FY13 earnings presentation 14 February, 2013 Suzlon wind farm in Minnesota, USA 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 • Q3FY13 update – Key highlights − Significant progress made under Comprehensive Liability Management process − Continued order booking momentum along with progress in debt restructuring − Further optimized working capital − Financial snapshot • Industry outlook − Industry estimates suggest
Slide 4: Suzlon Group - Key highlights: Q3 FY13
Suzlon Group - Key highlights : Q3 FY13 Suzlon windfarm at Arataci, Brazil 4 www.suzlon.com
Slide 5: Q3FY13 – Key takeaways
Q3FY13 – Key takeaways Financial • Proposal under Corporate Debt Restructuring (CDR) mechanism approved − Proposal include requests for moratorium, longer repayment profile, interest concessions and working capital support • Negotiations with the FCCB holders and their advisors continue − Bondholder
Slide 6: Crosses 20 GW in installations across the world
Crosses 20 GW in installations across the world….. >21 GW of global installations backed by robust sales infrastructure Europe (Figures in MW) Germany 2,373 France 1,431 UK 885 Others 2,137 Total 6,826 Germany Belgium Turkey Canada UK N. America France China Canada 441 Portugal & Spain USA 3,941 Ita
Slide 7: Group fleet availability
Group fleet availability Global Turbine Availability 100 98 Ø 97 Best-in-class after sales performance and service 96 95 94 Turbine availability 92 consistently above industry average 90 Jan Mar May Jul Sep Nov Jan Suzlon REpower 7 www.suzlon.com
Slide 8: Undertaking Comprehensive Liability management
Undertaking Comprehensive Liability management Holistic Liability Management Extended maturity profile 1 Alleviates liability Long term debt restructuring through CDR overhang Lower interest burden Enables complete 2 Equitization of debt focus on operations Additional working capital Reduced pressur
Slide 9: CDR Update
CDR Update 31 Dec 2012 End of Mar 2013 29 Oct 2012 Final proposal was Likely timeline for Referred to CDR approved by CDR Cell proposal implementation October 2012 November 2012 December 2012 March 2013 8 Nov 2012 Admitted to CDR Cell • Final proposal has following major contours, which would suppor
Slide 10: FCCB: Status update
FCCB: Status update • Prior to maturity had officially sought four months extension for October series with intention to meet our obligations in their entirety - Extension did not achieve required super-majority, resulting in non payment • Continue to be in active and constructive dialogue with our
Slide 11: Financial snapshot
Financial snapshot Rs Crs Q3 FY13 Q3 FY12 FY12 FY11 Particulars Unaudited Unaudited Audited Audited Consolidated Revenue 4,014 4,985 21,082 17,879 Consolidated EBITDA -313 406 1,821 1,047 Consolidated EBIT -516 236 1,160 390 EBIT Margin -12.9% 4.7% 5.5% 2.2% Consolidated Net working capital 4,311 5,
Slide 12: REpower: Robust growth continues
REpower : Robust growth continues • Continues to grow at a healthy pace REpower revenues (€M) - With support from Group on markets and project execution synergies and cost reductions +58% - Consistently posting the best operating metrics 1,698 - Robust order intake momentum and best in class order c
Slide 13: Optimizing Working Capital
Optimizing Working Capital Net Working Capital Ratio* • Working Capital to further improve by: -12% 27.1 -14% - Liquidity support from under 23.8 CDR and uptick in order momentum 20.4 20.0 - Facilitates execution of orders and cash flows generation - Clearing up of commissioning pipeline - Reduced i
Slide 14: Project Transformation: Rationalizing Employee headcount
Project Transformation: Rationalizing Employee headcount Employee Headcount Suzlon Wind SE Forge REpower 10,038 709 - 58% 3,257 -5% +23% 296 517 413 614 9,521 2,643 Dec ’11 Reductions Dec ’12 Dec ’11 Reductions Dec ’12 Dec ’11 Increase Dec ’12 Employee Cost rationalisation (On quarterly run rate bas
Slide 15: Order intake momentum continues in Q3
Order intake momentum continues in Q3 Quarterly order intake (MW) 3QFY13 Order Intake (MW) 9MFY12 : 2,844 MW 9MFY13 : 2,631 MW 1,490 1,071 1,104 774 728 580 456 376 Pre 31 Dec 2012 Post 31 Dec 2012 Q1FY12 Q2FY12 Q3FY12 Q1FY13 Q2FY13 Q3FY13 Pre CDR Post CDR • Strong uptick in order momentum post CDR
Slide 16: Robust order book position
Robust order book position Total value of US$7.7 bn • Order book at ~5.7 GW Order book by geography – US$7.7bn ROW India • Order book value: US$ 7.7bn 17% 17% - Onshore markets: France 4% • Emerging : ~US$1.8bn Brazil 5% (India, Brazil and South Africa) UK 6% 30% Germany • Developed : ~US$4.3bn 8% B
Slide 17: Announced framework contracts of ~4.5 GW
Announced framework contracts of ~4.5 GW Developed markets ~3.5 GW 1. RWE Innogy for up to 250 units of 5 MW / 6 MW offshore turbines 1,500 MW • 627 MW already converted to firm orders 2. Frame contract with EDF Energies Nouvelles for onshore turbines 954 MW • Total 902 MW converted to orders 3. Fra
Slide 18: Announced framework contracts of ~4.5 GW
Announced framework contracts of ~4.5 GW Emerging markets ~1.0 GW 1. Frame agreement for up to 200 wind turbines in South Africa with 420 MW ‘African Clean Energy Developments’ • 138 MW converted into firm order in Feb 2013 2. Business agreement with Techno Electric in India 300 MW 3. Framework with
Slide 19: Q3 FY13 industry update and outlook
Q3 FY13 industry update and outlook Suzlon windfarm at Jaisalmer, India 19 www.suzlon.com
Slide 20: Wind market to recover after a blip in 2013
Wind market to recover after a blip in 2013 Industry estimates for annual installations (GW) 52 53 50 47 1 1 45 1 41 0 1 0 21 25 27 27 21 23 11 12 13 14 11 12 15 12 11 9 8 10 2011 2012e 2013e 2014e 2015e 2016e Source: Make Consultancy ROW Asia Pacific Europe Americas • Global new order intake plumme
Slide 21: Offshore segment to grow at a rapid pace
Offshore segment to grow at a rapid pace Grid connected installation in Global annual offshore outlook (MW) Europe (MW) Y-o-Y: 34.6% CAGR (2011-16): 44% 5,599 1165.5 Source: Make Consulting 4,635 866 3,623 3,000 1,416 920 2011 2012 2011 2012e 2013e 2014e 2015e 2016e Source: EWEA The UK and Germany w
Slide 22: USA: Onset of another boom cycle
USA : Onset of another boom cycle PTC Boom & Bust Timeline Potential PTC Potential PTC Expiration in Expiration in 2014 2012 PTC Extended till 2012 13,124 PTC Extended till 2009 12,000 10,004 In March 2002, PTC Extended 10,000 PTC extended till 2008 8,363 6,819 PTC Extended PTC expired PTC expired t
Slide 23: Policy uncertainty has dampened Indian growth story
Policy uncertainty has dampened Indian growth story • Key Concerns Annual Installations (MW) - Withdrawal of key policy initiatives -53% like GBI and AD benefits - Reduced investments from Retail 3,197 and captive SMEs +29% - Concerns over implementation of 2,349 RPO targets impacting demand of RECs
Slide 24: IPP + REC: Elevated Indian market
IPP + REC: Elevated Indian market Expanding IPP activity to ensure sector growth Fig. in MW Mytrah 5,000 Techno Electric 1,250 Green Infra 1,000 Renew Power 1,000 Greenko 1,000 NSL Power 816 CLP 793 ~15 GW of installation Tata Power 486 Orient Green 450 plans from IPPs Reliance Power 400 Panama Wind
Slide 25: Wind competing with conventional energy
Wind competing with conventional energy Life cycle cost of energy, $/MWh, Q4’12 STEG - Parabolic Trough 128 438 PV - c-Si 90 350 Wind - Offshore 137 329 STEG - Tower & Heliostat w/storage 114 246 Biomass - Gasification 83 210 Biomass - Anaerobic Digestion 87 195 Nuclear 83 137 Geothermal - Flash Pla
Slide 26: Focus areas for FY14
Focus areas for FY14 Suzlon wind farm in Paracuru, Brazil 26 www.suzlon.com
Slide 27: Specific Priorities for FY14
Specific Priorities for FY14 • Debt reduction Priority # 1 – Through sale of non critical assets and working capital reduction – Through equitization of debt • Reduce break even point Priority # 2 – Improved contribution margin through material cost reduction by 5% – Partly through reduction in manp
Slide 28: Debt reduction efforts to continue
1 Debt reduction efforts to continue • Ongoing assets sale - About $400-500m of non critical assets identified for sale • Working capital rationalization - Target to reduce working capital to 20% of sales - Focus on realization of sticky receivables • Equitization of debt as part of ongoing comprehe
Slide 29: Focus on reducing break even
2 Focus on reducing break even Cost reduction Reduced break even Target material cost reduction by 5% • Lower fixed cost structure Project Transformation: • Ongoing rationalization of fixed cost • Reduced cash interest burden on debt facilities after Liability ― Reduce employee headcount by 20% and
Slide 30: Focus on execution and continue order book momentum
3 Focus on execution and continue order book momentum Orders with shorter Strong liquidity for FY14 Drive execution delivery schedules • Majority orders in the • Enhanced working capital • Ramp up S9X order book with short under CDR production term delivery - Rs 1,800 Crs of additional • Focus on re
Slide 31: Group synergy realization and consolidation on accelerated track
4 Group synergy realization and consolidation on accelerated track Key initiatives being executed/targeted Markets • Streamline market SBUs – One organization, one team & one product portfolio Key outcomes in FY14: • Suzlon Australia and Europe operations realigned with REpower • Leverage Suzlon inf
Slide 32: Detailed financials – Q3 FY13
Detailed financials – Q3 FY13 Suzlon wind farm in Utah, USA 32 www.suzlon.com
Slide 33: Consolidated financial results
Consolidated financial results Rs Crs. Q3 FY13 Q3 FY12 Q2 FY13 Particulars Unaudited Unaudited Unaudited Revenue from operations 4,014 4,985 5,702 Less: COGS 2,673 3,334 4,226 Gross Profit 1,341 1,651 1,476 Gross Profit % 33% 33% 26% Employee benefits expense 553 528 541 Other expenses 1,087 730 1,0
Slide 34: Consolidated financial results
Consolidated financial results Rs Crs. 9M FY13 9M FY12 FY 12 FY11 Particulars Unaudited Unaudited Audited Audited Revenue from operations 14,463 14,383 21,082 17,879 Less: COGS 10,454 9,452 14,074 12,454 Gross Profit 4,008 4,931 7,009 5,425 Gross Profit % 28% 34% 33% 30% Employee benefits expense 1,
Slide 35: Consolidated Net Working Capital
Consolidated Net Working Capital Rs Crs As on As on As on As on As on Particulars 31st Dec ‘12 30th Sept’12 30th June’12 31st Mar’12 31st Dec’11 Inventories 5,928 5,421 5,960 5,580 6,152 Trade receivables 6,990 8,584 8,265 8,201 7,323 Short-term loans and advances 2,375 2,549 2,677 2,368 2,533 Other
Slide 36: Group Financial Leverage
Group Financial Leverage(a) Rs Crs. As at As at As at As at As at 31st Dec 12 30th Sept 12 30th Jun 12 31st Mar 12 31st Dec 11 Particulars SEL SEL SEL SEL SEL Consol. Consol. Consol. Consol. Consol. Wind Wind Wind Wind Wind Group (a) Group (a) Group (a) Group (a) Group (a) (a) Gross 14,177 15,040 13
Slide 37: Suzlon Wind: Financial leverage
Suzlon Wind: Financial leverage(a) Rs Crs. Balance as on Balance as on Balance as on Balance as on Balance as on Debt type 31st Dec 12 30th Sept. 12 30th Jun. 12 31st Mar. 12 31st Dec. 11 FX term loans* 3,555 3,475 2,053 1,920 2,004 FCCBs 2,239 2,152 3,641 3,327 3,473 W.Cap, Capex and 8,383 8,084 7,
Slide 38: FCCBs: Status update
FCCBs: Status update Outstanding Conversion Coupon Maturity value with FCCBs Maturity date amount (US$ mn) price (Rs) rate redemption premium October 2012 – Old 121.4 97.26 October 2012 0% 144.88% October 2012 – 20.8 76.68 October 2012 7.5% 157.72% Exchange July 2014 – New 90.0 90.38 July 2014 0% 13
Slide 39: Thank you
Thank you Suzlon windfarm at Texas, USA 39 www.suzlon.com