Suzlon Energy Ltd · NSE:SUZLON
Suzlon Energy — H1 FY15 Earnings Presentation
41 slides from Suzlon Energy's earnings presentation, Oct 31, 2014
Slide 1: Suzlon Energy Limited H1 FY15 Earnings Presentation
Suzlon Energy Limited H1 FY15 Earnings Presentation 31st October 2014 Senvion’s offshore windfarm in Ormonde, U.K. 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: Key Takeaways – H1 FY15
Key Takeaways – H1 FY15 Suzlon wind farm in Maharashtra, India 3 www.suzlon.com
Slide 4: Operations Continue to Improve
Operations Continue to Improve Revenue Trend (Rs. Crs) Gross Margin (%) EBITDA Trend (Rs. Crs) +16% 513 bps 187 10,449 9,974 32.5% 8,621 25.5% 27.3% Rs. 520 crs -333 -390 H1’13 H1’14 H1’15 H1’13 H1’14 H1’15 H1’13 H1’14 H1’15 Positive EBITDA in H1 FY15 • Positive EBITDA despite seasonally lower first
Slide 5: Positive EBITDA for 3rd Consecutive Quarter
Positive EBITDA for 3rd Consecutive Quarter EBITDA Trend (Rs. Crs) +56% • Achieved positive EBITDA despite 328 73 114 low volume levels -31 — ~56% QoQ EBITDA increase against -137 ~15% Revenue increase -302 -594 EBITDA Margin (%) 5.0 2.1 • Driven primarily by improving -0.7 1.6 -2.7 business efficie
Slide 6: Accelerated Depreciation (AD) Notified
Accelerated Depreciation (AD) Notified Quarter Key Events Volume Impact • New pro renewables government Q1 FY15 NIL • Sector incentives anticipated • 10th July: AD reinstated, but with pending clarity • No order enquiries given the uncertainty Increase in Order Inflow • 25th July: Verbal clarificati
Slide 7: FCCB Conversion to Equity
FCCB Conversion to Equity Principal Value (US$ Mn) 575.7 • Conversion Details 72.5 — Debt Converted: US$72.5M — Exchange Rate: Rs. 60.225 503.2 546.9 — Conversion Price: Rs. 15.46 per share — Issue of ~28+crs shares 474.4 • Strengthening Balance Sheet — Debt reduced by ~Rs. 450 crs 28.8 28.8 — Debt
Slide 8: Share Base Evolution
Share Base Evolution Equity Shares as on date Shareholding Pattern (In Crs) Public Promoters 307.1 7.5 34% 43% 28.3 271.3 23% As on FCCB CDR Current Banks / FIs 30 May Conversions Lenders 8 www.suzlon.com
Slide 9: Performance Update
Performance Update Senvion’s 3XM turbine 9 www.suzlon.com
Slide 10: Financial Snapshot
Financial Snapshot Rs Crs Particulars Q2 Q2 Q1 H1 H1 FY14 FY13 FY15 FY14 FY15 FY15 FY14 Consolidated Revenue 5,331 4,769 4,643 9,974 8,621 20,212 18,743 Consolidated EBITDA 114 -31 73 187 -333 -141 -1,296 Consolidated EBIT -64 -229 -106 -170 -711 -918 -2,037 Consolidated Net working capital 630 1,67
Slide 11: Suzlon Wind: Increasing Focus in India
Suzlon Wind: Increasing Focus in India India Volumes (MW) • Increasing volumes in India Market +93% ― High growth, high volume market 264 210 • Restructuring efforts paying off ― Manpower expenses lower ~23% since H1FY12 137 ― Other Fixed Expense lower ~25% since H1FY12 90 • 1st Half volumes seasona
Slide 12: Senvion: Strong Performance
Senvion: Strong Performance Revenues (€M) • Strong Gowth Momentum +17.6% ― Lead by installations in Europe and Canada 848 721 • Key Updates ― Expands 3XM series with 3.4M114 and 3.2M114VG ― 3.0M122 prototype commissioned in windfarm Mehrum (Germany) ― First MM92 nacelles assembled for the Australian
Slide 13: Service: Growing Business with Stable Revenues
Service: Growing Business with Stable Revenues Revenues (Rs. Crs)* Key Highlights +29% CAGR 1,460 • H1 FY15 OMS revenue at ~Rs. 1,460 crs 1,312 — >11% higher than H1 FY14 694 672 880 • High growth with stable and consistent 457 margins 766 640 423 • Near 100% renewal track record H1’13 H1’14 H1’15 S
Slide 14: Robust Order Book Position
Robust Order Book Position Total value of US$6.3 bn (as on 30th Sep 2014) Order book by geography – US$6.3bn* Belgium ROW Austria 4% 4% UK 4% • Order book at ~4.6 GW 4% France 4% • Order book value: US$ 6.3bn Australia 5% 46% Germany Emerging : ~US$1.1bn 11% Developed : ~US$5.2bn* Canada • Stron
Slide 15: Debt Overview
Debt Overview Suzlon wind farm in Camocim, Brazil 15 www.suzlon.com
Slide 16: Sustainable Solution to Debt
Sustainable Solution to Debt As on 30th Sep 2014 Suzlon Wind Rupee Foreign Currency Denominated Denominated 1 FCCBs(2) $503M 1 Secured Domestic Debt(1) Rs. 8,902 Crs. Effective Interest Rate @ ~3.3% Effective Interest Rate @ ~11% Restructuring concluded 5 yr bullet maturity in FY2019-20 Restructured
Slide 17: Technology Update
Technology Update Suzlon wind farm in Rajasthan, India 17 www.suzlon.com
Slide 18: New Product Updates
New Product Updates • Prototype installation completed • Type Certificate Received • Inauguration planned on 6th Nov 2014 S97_120M HYBRID Tower • First Blade SB54 produced and tested • Proto type installation approval received from TANGEDCO • Proto type installation on track for completion in FY15 S
Slide 19: Expanded Our Successful 3XM Offering
Expanded Our Successful 3XM Offering Optimized yield for medium wind sites Class II: Medium Wind Sites Higher energy Lower cost of yield energy Higher returns • Aerodynamically optimized product • Hub Height: Available in 93, 123 and 143 M • Certification in process • Proto-type: Already Installed •
Slide 20: R&D focus to better our products and improve yields
R&D focus to better our products and improve yields Expansive product portfolio covering all wind classes Class I Class II Class III S52 S66 S82 S86.5 S89 <1.5 MW MM100 MM100 MM82 S97 90 S88 AEP 25% S111 S97 120 (Vs S88) AEP 20% 1.5 – 2.5 MW MM92 AEP 10% S95 (Vs S97 90) (Vs S97) 3.4M104 3.4M114 3.0M
Slide 21: Moving Towards Newer and Bigger Turbines
Moving Towards Newer and Bigger Turbines Class III: Low Wind Sites Higher energy yield Lower cost of energy Higher returns • Better generation • Lower cost of energy • Higher IRR for customers S88 S9X S111 • Makes low wind sites viable ~5.5 GW already ~900 MW already First agreement in US installed
Slide 22: Hybrid Towers: First of its Kind
Hybrid Towers: First of its Kind Hybrid Tower • Hybrid Tower ― Combination of lattice and tubular ― Saves costs • Higher Hub height – 120 mts (33% increase over current 90 mts) ― ~ 3-4% better wind speed at higher height ― 10-12% increase in annual generation • Higher generation and lower costs resu
Slide 23: India Wind Story – A Huge Opportunity
India Wind Story – A Huge Opportunity Suzlon wind farm in Rajasthan, India 23 www.suzlon.com
Slide 24: Triggers for Growth
Triggers for Growth Accelerated Overview and Policy Depreciation • Withdrawn in Mar 2012, reintroduced in July 2014 and notified in September 2014 (AD) Impact: Brings back SME interest, Captive demand Generation Overview and Policy Based Incentives • Withdrawn in March 2012, reintroduced in Mar 2013
Slide 25: Accelerated Depreciation Reinstated
Accelerated Depreciation Reinstated Annual Wind Installations (MW) - India Growing wind competitiveness and increasing preferential tariffs SME + Captive Only SME + Captive mostly IPP mostly Growing IPP (Improved GBI) Emergence of IPP SME + Captive minimal SME + Captive demand restored (AD) +24% +29
Slide 26: Senvion
Senvion Clauen Onshore Wind Farm, Germany 26 www.suzlon.com
Slide 27: Higher Profitability Despite Lower Volume
Higher Profitability Despite Lower Volume Financial Performance (€M) Highlights of FY14 • Performance on track despite adverse market Revenue dynamics -19% 2,221 1,675 1,806 ― ~25% increase in profitability despite ~20% decline in revenue • Restructuring goal achieved FY12 FY13 FY14 ― Exceeded the €
Slide 28: Strengthening Market Position
Strengthening Market Position 3 3 2 Germany United Kingdom Poland 15.0% 11.0% 14.0% 11.0% 7.0% 5.0% 2012 2013 2012 2013 2012 2013 2 2 2 Canada France Austria 30.0% 20.0% 18.0% 17.0% 10.0% 11.0% 2012 2013 2012 2013 2012 2013 Source: MAKE consult report 2013 Market Position Strengthened position in co
Slide 29: Gaining Strength in Offshore
Gaining Strength in Offshore • Proven product technology ― Largest commercially proven offshore turbine – 6.2 MW Evolving Product Technology ― Large rotor diameter with sweeping area larger than 3 football pitches – 152 mts 2014 Prototype Sold ― Nacelle alone is as big as two detached houses • >10 y
Slide 30: Offshore Track Record and Success Story
Offshore Track Record and Success Story Beatrice Thornton Alpha Ormonde Thornton Nordsee Bank I ventus Bank II/III Ost 2006-2007 2008-2009 2009-2010 2011 2012-2013 2014* *under installation 30 www.suzlon.com
Slide 31: Completed its Largest Offshore Wind Farm in FY14
Completed its Largest Offshore Wind Farm in FY14 325 MW Thornton Bank project with 6M • Project with largest fleet of 6M turbines • One of the largest project financed offshore wind farms in Europe (~€900mn) • Total project cost: ~€1.3bn • ~30KM off the coast & up to ~30 meters deep) • On time and w
Slide 32: Lot of Value has been Created Since Acquisition
Lot of Value has been Created Since Acquisition Senvion Performance (€M) • High Growth and Profitability Revenue ― Revenue 4x since acquisition, profitability 8 times +19% • Newer markets ― Entered new high growth markets such as 2,221 1,675 1,806 USA, Canada, Australia, Romania etc. 1,209 1,304 1,2
Slide 33: FY15 Outlook and Next Steps
FY15 Outlook and Next Steps Suzlon Manufacturing unit in Dhule, India 33 www.suzlon.com
Slide 34: Suzlon Group: Improving Business Environment
Suzlon Group: Improving Business Environment Factors Past 2 years Current Impact / Change • GBI + AD re-introduced • Market Size Halved • Lack of Incentives • Low cost fund from National India • Unfavorable policy shifts Clean Energy Fund Industry • Political Uncertainty • Strong renewable push from
Slide 35: Our Strategy
Our Strategy Focus on Select Markets • High Growth, High volume, Better margin markets only Superior Technology • Continued focus on R&D aimed at reducing cost of energy Increasing Market Competitiveness Best in Class Service • Aimed at maximising energy yield, increasing customer IRR Operational Ef
Slide 36: FY15: Key Priorities
FY15: Key Priorities Specific Priorities for FY15 1 2 3 Volume Ramp up Focus on Business Efficiencies Optimizing Capital Structure • Suzlon Wind: • Improving Margins • Asset Sale Program ― Thrust on India market ― Focus on profitable orders ― Focus on monetizing India based ― Value engineered newer
Slide 37: Detailed Financials
Detailed Financials Suzlon Wind farm in Cookhouse, South Africa 37 www.suzlon.com
Slide 38: Consolidated Financial Results
Consolidated Financial Results Rs Crs. Particulars Q2 FY15 Q1 FY15 Q2 FY14 H1 FY15 H1 FY14 FY14 FY13 Revenue from operations 5,331 4,643 4,769 9,974 8,621 20,212 18,743 Less: COGS -3,649 -3,087 -3,533 -6,736 -6,264 -14,435 -13,640 Gross Profit 1,681 1,556 1,236 3,238 2,356 5,776 5,104 Gross Profit %
Slide 39: Consolidated Net Working Capital
Consolidated Net Working Capital Rs Crs As on As on As on As on As on As on As on Particulars 30th Sep’14 30th Jun’14 31st Mar’14 31st Dec’13 30th Sept’13 30th June’13 31st Mar ’13 Inventories 3,838 4,104 4,033 5,016 5,274 5,386 5,264 Trade receivables 5,196 5,953 5,946 5,725 5,889 5,759 6,382 Loans
Slide 40: Consolidated Balance Sheet
Consolidated Balance Sheet (As per new Schedule VI format) Rs Crs. Liabilities Sep’14 Mar’14 Assets Sep’14 Mar’14 Shareholders' Fund Non Current Assets a)Share Capital 611 498 b) Reserves and Surplus -2,571 -1,041 a) Fixed Assets 13,279 13,948 -1,960 -544 b) Non Current Investments 3 4 Share applica
Slide 41: Thank You
Thank You Suzlon wind farm in Paracuru, Brazil 41 www.suzlon.com