Suzlon Energy Ltd · NSE:SUZLON
Suzlon Energy — Q1 FY2013 Earnings Presentation
37 slides from Suzlon Energy's earnings presentation, Aug 13, 2012
Slide 1: Suzlon Energy Limited Q1FY13 earnings presentation
Suzlon Energy Limited Q1FY13 earnings presentation 13th August, 2012 REpower offshore project Alpha Ventus 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 • Q1FY13 update – Key highlights − June FCCBs paid in cash on maturity − Deleveraging through non-critical asset sales − Performance snapshot − S111: Focus on reducing cost of energy with robust technological advancements − Order inflow momentum continues with strong orderbook position of ~
Slide 4: Suzlon Group - Key highlights: Q1FY13
Suzlon Group - Key highlights : Q1FY13 Suzlon windfarm at Arataci, Brazil 4 www.suzlon.com
Slide 5: Q1FY13 – Key takeaways
Q1FY13 – Key takeaways Operational • Q1 revenues at Rs 4,747 cr and EBIT margin of (9.2)% • Order inflow momentum continues in Q1 – 456 MW − Strong order book position of ~US$ 7.2 bn • Surpassed 1 GW of signed contracts in UK • Successfully completed offshore installation for phase II of the Thornto
Slide 6: June FCCB fully redeemed in cash on maturity
June FCCB fully redeemed in cash on maturity Enhances credibility with all our stakeholders (US$ mn) • Total number of shares to be issued on conversion: Reduced to US$ 261.6 mn from ~US$ 381.6 mn FCCBs Principal Redemption • Payment through bank loan of US$ 300 mn and internal due in amount amount
Slide 7: Deleveraging through ongoing sale of non core assets
Deleveraging through ongoing sale of non core assets 7 www.suzlon.com
Slide 8: New product launch
New product launch 2.1 MW S111: A market defining solution Higher energy yield Lower cost of energy Higher returns S88 S95 / S97 S111 • S111 is the latest generation of Suzlon’s 2.1 MW fleet launched in this quarter —One of the highest yielding IEC Class III wind turbines of any comparable class mac
Slide 9: Financial performance snapshot
Financial performance snapshot Rs cr Q1FY13 Q1FY12 FY12 FY11 Particulars Unaudited Unaudited Audited Audited Consolidated revenue 4,747 4,326 21,082 17,879 Consolidated EBITDA (257) 552 1,821 1,047 Consolidated EBIT (435) 411 1,160 390 Consolidated net working capital* 5,831 5,132 4,861 3,788 Consol
Slide 10: Issues impacting performance in Q1
Issues impacting performance in Q1 - Historically, Q1 sees lower volumes leading to under absorption of overheads - Shift in market mix: - Higher volumes in low margin American markets Operational - Low volumes in high margin Indian markets - India: - Focus is on commissioning our huge pipeline of ~
Slide 11: Identified key priorities to improve performance
Identified key priorities to improve performance ALREADY UNDER EXECUTION 1. Working capital facilities enhancement by ~US$ 200 mn already in pipeline 2. Request made to all our senior secured lenders for interest rate reduction • ~2.5% interest rate reduction ALREADY ACHIEVED from some large banks 3
Slide 12: Orderbook – momentum continues
Orderbook – momentum continues Total value of US$7.2 bn Fig in MW • Robust order intake of 456 MW Suzlon India 1,162 • Orderbook at ~5.6 GW (21%) (up 18% YoY) 660 • Orderbook value: (12%) Suzlon International 3,775 ― Suzlon India - US$ 1.1bn (67%) ― Suzlon international - US$1bn REpower ― REpower -
Slide 13: Order inflow momentum intact
Order inflow momentum intact Agreements totaling 656 MW signed in Q1 FY13 Firm orders Frame agreements India – 153 MW 200 (30%) • 100 MW of firm order from ReNew Power • 53 MW of misc. orders 456 (70%) Europe – 275 MW/ANZ – 29 MW Firm orders • 219 MW of cumulative orders of REpower • 66 MW of order
Slide 14: Announced framework contracts of ~5.6 GW
Announced framework contracts of ~5.6 GW Developed markets 3.8 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 • Total 543 MW conver
Slide 15: Announced framework contracts of ~5.6 GW
Announced framework contracts of ~5.6 GW Emerging Markets 1.8 GW 1. Frame agreement for up to 200 wind turbines in South Africa with 420 MW ‘African Clean Energy Developments’ • South African Dept of Energy awarded PPA for 135 MW to the client in December 11 2. Business agreement with Techno Electri
Slide 16: Suzlon Group: Well positioned as 4th largest
Suzlon Group: Well positioned as 4th largest Ranking 2010 Ranking 2011 Strengthened global position # 4 in the global wind market # 2 in Offshore # 4 in Asia # 1 in India 4 # 1 Australia 5 # 4 in Americas # 4 in USA # 5 in Europe # 2 in Italy & France # 3 in Germany & UK # 4 in Portugal & Spain (1)
Slide 17: Q1FY13 industry update and outlook
Q1FY13 industry update and outlook Suzlon windfarm at Jaisalmer, India 17 www.suzlon.com
Slide 18: 2012 expected to be a record year, despite macro headwinds
2012 expected to be a record year, despite macro headwinds Industry estimates for annual installations (GW) CAGR (2011-16): 5.5% 52.9 53.1 51.0 48.0 45.7 40.6 21.1 25.5 27.1 27.7 23.2 20.9 12.2 12.4 13.3 14.1 10.6 11.9 14.2 11.7 11.0 9.0 9.9 10.1 CY11 CY12e CY13e CY3e CY14e CY15e CY16e Source: Make
Slide 19: Wind competitively placed compared to other energy sources
Wind competitively placed compared to other energy sources Life cycle cost of energy, Marine - Wave 278 789 $/MWh, Q2’12 STEG - Parabolic Trough 129 440 Wind - Offshore 136 333 STEG - Tower & Heliostat w/storage 115 248 PV - c-Si 98 218 Small Hydro 28 215 Biomass - Gasification 84 211 Biomass - Anae
Slide 20: Offshore to lead next wave of growth in wind
Offshore to lead next wave of growth in wind Grid connected installation in Global annual offshore outlook (MW) Europe (MW) Y-o-Y: 50% CAGR (2011-16): 46% 6,044 Source: Make Consulting 523.2 5,167 4,046 348.1 2,851 1,558 920 H1'11 H1'12 CY11 CY12e CY13e CY14e CY15e CY16e The UK and Germany will cont
Slide 21: IPP + REC to elevate India to 3.5 – 4 GW market size
IPP + REC to elevate India to 3.5 – 4 GW market size Expanding IPP Activity to ensure sector growth Mytrah 5,000 Techno Electric 1,250 Green Infra 1,000 Renew Power 1,000 Greenko 1,000 NSL Power 816 CLP 793 Tata Power 486 ~15 GW of installation Orient Green 450 plans from IPPs Reliance Power 400 Pan
Slide 22: IPP + REC to elevate India to 3.5 – 4 GW market size
IPP + REC to elevate India to 3.5 – 4 GW market size REC Market: Price stabilizing at attractive levels, (Rs/REC) 4000 3900 Forbearance Price 3,300 2000 1,500 Floor Price With improving volumes 0 REC accredited capacity reaches 2900 MW mark Industry shifting 2,915 towards REC model 2,743 2,229 1,837
Slide 23: Focus areas for FY13
Focus areas for FY13 Suzlon wind farm in Paracuru, Brazil 23 www.suzlon.com
Slide 24: Focus areas: Specific priorities for FY13
Focus areas Specific priorities for FY13 1 2 REpower Strengthening balance sheet • Accelerate realisation of • Manage all our debt obligations operating synergies • Achieve significant debt • Capitalise on market synergies rebalancing within the Group • Leverage Asian supply chain – • Interest cost
Slide 25: Synergy realization and consolidation with REpower on accelerated track
1 Synergy realization and consolidation with REpower on accelerated track Key initiatives being executed/targeted Markets • Streamline market SBUs – One organization, one team & one product portfolio • Suzlon Australia and Europe operations realigned with REpower Key outcomes in FY13: • Create regio
Slide 26: Improving balance sheet
2 Improving balance sheet Majority of Group debt at India level , with assets across the globe Potential for debt rebalancing • Our international assets are relatively debt free • Suzlon + REpower synergies adds substantial value to our international assets − Making it a strong investment case • H
Slide 27: Suzlon Group: Guidance for FY13
Suzlon Group: Guidance for FY13 Rs cr Guidance in the current context: Historical FY11 FY12 • External environment challenging – volatility and uncertainties Revenue 17,879 21,082 increasing EBIT margin 2.2% 5.5% • Focus on managing our debt obligations first Guidance FY13 • Slow working capital fin
Slide 28: Conclusion
Conclusion Industry • Near term outlook challenging: Weak macroeconomic environment and uncertain regulatory framework in USA and Europe • However, medium term / long term prospects remain fundamentally strong due to: • Wind is directly competing with conventional sources of energy in certain parts
Slide 29: Detailed financials – Q1 FY13
Detailed financials – Q1 FY13 REpower wind farm in Hudong, China 29 www.suzlon.com
Slide 30: Consolidated financial results
Consolidated financial results (New Schedule VI format) Rs Crs. Q1FY13 Q1FY12 Q4 FY12 FY12 FY11 Particulars Unaudited Unaudited Unaudited Audited Audited Revenue from operations 4,747 4,326 6,699 21,082 17,879 Less: COGS 3,555 2,813 4,622 14,074 12,454 Gross Profit 1,191 1,513 2,077 7,009 5,425 Gros
Slide 31: Consolidated Net Working Capital
Consolidated Net Working Capital (New Schedule VI format) Rs Crs. As on As on Particulars 30th Jun’ 12 31st Mar’ 12 Current investments 0 64 Inventories 5,960 5,580 Trade receivables 4,799 5,315 Short-term loans and advances 2,227 1,912 Due from customers 3,466 2,861 Other current assets 77 109 Tota
Slide 32: Consolidated Net Working Capital
Consolidated Net Working Capital (Old Schedule VI format) Rs cr As on As on As on As on As on Particulars 30th June’12 31st Mar’12 31st Dec’11 30th Sept’11 30th June’11 Inventories 5,960 5,580 6,152 5,907 5,755 Receivables 8,265 8,201 7,323 6,332 6,131 Advances 2,677 2,368 2,533 2,229 2,145 Deposit
Slide 33: Group Financial Leverage
Group Financial Leverage(a) Rs cr As at As at As at As at As at 30st Jun. 2012 31st Mar. 2012 31st Dec. 2011 30th Sept. 2011 30th June. 2011 Particulars SEL SEL SEL Consol. SEL Consol. SEL Consol. Consol. Consol. Wind Wind Wind Group Wind Group Wind Group (a) Group (a) Group (a) (a) (a) (a) (a) (a)
Slide 34: Suzlon Wind: Financial leverage
Suzlon Wind: Financial leverage(a) Rs cr Balance as on Balance as on Balance as on Balance as on Balance as on Debt type 30th Jun. 31st Mar. 30th Sept. 30th June 31st Dec. 2011 2012 2012 2011 2011 Acquisition loans 2,053 1,920 2,004 2,277 2,079 FCCBs 3,641 3,327 3,473 3,203 2,924 W.Cap, Capex and 7,
Slide 35: FCCBs: Status update
FCCBs: Status update Outstanding Conversion Coupon Maturity value with FCCBs Maturity date Status amount (US$ mn) price (Rs) rate redemption premium June 2012 – Old 211.3 97.26 June 2012 0% 145.23% REDEEMED October 2012 – October 121.4 97.26 0% 144.88% Old 2012 June 2012 – 35.6 76.68 June 2012 7.5%
Slide 36: Suzlon Wind: Volumes by geography
Suzlon Wind: Volumes by geography Q1 FY13 Q1 FY12 FY12 FY11 Region (MW) (MW) (MW) (MW) India 60 304 1366 1169 USA 40 0 59 27 Brazil 50 90 90 6 China 0 39 64 201 ANZ 0 4 4 57 Europe & ROW 0 0 0 61 Total 150 437 1583 1521 Domestic 40% 70% 86% 77% International 60% 30% 14% 23% 36 www.suzlon.com
Slide 37: Thank You
Thank You Suzlon windfarm at Snowtown, Australia 37 www.suzlon.com