Suzlon Group turns EBITDA positive in Q4, after 7 quarters

Suzlon Group, the world’s fifth largest* wind turbine maker, announced its results for fourth quarter (Q4) of financial year 2013-14 (FY14).

Mr Tulsi Tanti, Chairman – Suzlon Group, said: “FY14 has been an important year for Suzlon, wherein we achieved significant progress by improving our business efficiency. The group is now transiting from a restructuring mode to a growth phase given the opportunities due to strong industry outlook. On the global front we remain confident about the wind sector and expect ~40% growth in Industry due to buoyancy in global markets, policyinitiatives and economic recovery. The Indian markets will show growth and momentum with the re-instatement of GBI, availability of funds and a stable government.

In FY15, our key priorities will be to ramp up volumes, improving business efficiency and rebalancing our capital structure. Withinnovationsin technology and solutions, we remain competitive and well positioned in all the key markets for onshore and offshore WTGs.”

Mr. Kirti Vagadia, Group Head of Finance, said: “We have delivered revenues of Rs. 6,581 crore in quarter four (Q4) which is the highest in the last 8 quarters. We turned EBITDA and EBIT positive after 7 quarters. Our Q4 EBIDTA show significant improvement by Rs 923 crores on YoY basis. We continue to improve on Net working Capital which is at 3.6% of revenue as against 13.6 % in FY13. On the FCCB front, we have concluded our discussions with the ad-hoc committee of bondholders. The Board has approved cashless restructuring of its Foreign Currency Convertible Bonds (FCCBs) and the new restructured FCCBs will come up for maturity in July 2019.”

Key Updates -

​Financial Performance:

Revenues:

•  Rs. 6,581 Cr in Q4 FY14, a 54% YoY growth.
• Consolidated revenues of Rs. 20,212 cr in FY14, a 8% YoY growth

EBITDA & EBIT:

• Positive EBITDA achieved after 7 quarters
• Positive EBITDA at Rs. 328 cr/~US$ 56mn, vis-a-vis negative Rs.(594)cr / US$ (101) mn
• Increase in revenue by leveraging on a favourable geographic and product mix with focus on cost reduction
• Substantial progress achieved in cost reduction through group wide restructuring efforts

Robust performance by Senvion; Increased Profitability:

• EBITDA at ~EUR 146mn is 22% higher, despite 19% drop in revenue at ~EUR 1,806mn

Robust Order book :

• Consolidated Group order book at ~5.3 GW approx. Rs.46,141 crore / USD 7.6 bn:
• Onshore markets: Emerging : ~US$ 1.3 bn ( India, Brazil, Turkey & Uruguay), Developed : ~ $5.1 bn  
• Offshore – US$1.2 bn

Comprehensive Liability Management:

Suzlon launched a Comprehensive Liability Management Programme last year.  With the CDR implemented, overseas FX facility refinanced via largest and unique credit enhanced bonds issuance the programme has now reached its last leg.  The bondholder’s meeting is scheduled on 9th July 2014 to approve a restructuring proposal including cashless exchange into new bonds with 5 year bullet maturity.

• Negotiations with ad-hoc committee of FCCB holders concluded
• Equity infusion under CDR completed.

Project transformation completed:

• Approx. 3,200 headcount right sized since FY12
•  ~31 % fixed opex reduction since FY12 (Suzlon Wind)
• Restructuring goals at Senvion achieved, savings significantly exceeded target
• Working capital rationalized to ~3.6%

Asset sale achieved during FY14

• Big Sky wind farm sale completed for ~US $ 90mn   
• China asset stake sale completed for US $ 28mn

OMS: Owing to a large installed base in the country i.e. installation to the tune of over 8GW, the India OMS business has been carved out into a separate wholly owned subsidiary namely; Suzlon Global Services Limited. This has enabled better transparency and helped realize business efficiencies.In FY14, Suzlon Group OMS division has achieved revenues of ~Rs.2,700 Cr, with ~37% YoY growth.

Senvion:  Suzlon acquired Senvion in 2007 and has enabled it grow manifold. From revenues of ~€400m, Senvion has now grown to ~€1800m of revenues with strong presence not only in its traditional European markets (Germany, France and UK) and but also acquired dominating position in new markets like Canada and Australia.  Senvion has also solidified its position in offshore segment with its 5M/6M products and now boasts of 100+ offshore turbines operating.  Over the last five years, Senvion has been probably one of the very few companies to have consistently remained profitable despite very difficult market conditions. Some of the key highlights of Senvion FY14 performance:

• Achieved ~26% increase in EBIT despite~19% decline in revenue
• Senvion successfully closed its cost restructuring exercise by significantly exceeding its initial cost saving target
• Crossed the 1 GW milestone in UK bringingits cumulative installation to > 10 GW while strengthening its position in core markets around the world

The Group is now transiting from restructuring mode to growth phase given the opportunities and strong industry outlook. In FY15 they are set to focus on enhancing business efficiency, increase in sales volumes and rebalancing our capital structure. The group remains confident of improving the performance further in FY15.