Senvion SA Annual Results Presentation 2017 March 15, 2018

Transcription

1 Senvion SA Annual Results Presentation 2017 March 15, 2018

2 Disclaimer This presentation (the Presentation ) has been prepared by Senvion S.A. ( Senvion and together with its subsidiaries, we, us or the Group ) solely for informational purposes and has not been independently verified, and no representation or warranty, express or implied, is made or given by or on behalf of the Group. Senvion reserves the right to amend or replace this Presentation at any time. This Presentation is valid only as of its date, and Senvion undertakes no obligation to update the information in this Presentation to reflect subsequent events or conditions. This Presentation may not be redistributed or reproduced in whole or in part without the consent of Senvion. Any copyrights that may derive from this Presentation shall remain the sole property of Senvion. This Presentation does not constitute or form part of, and should not be construed as, an offer or invitation or inducement to subscribe for, underwrite or otherwise acquire, any securities of Senvion, nor should it or any part of it form the basis of, or be relied on in connection with, any investment decision with respect to securities of Senvion or any other company. Certain statements in this Presentation are forward-looking statements. By their nature, forward-looking statements involve a number of risks, uncertainties and assumptions that could cause actual results or events to differ materially from those expressed or implied by the forward-looking statements. These risks, uncertainties and assumptions could adversely affect the outcome and financial consequences of the plans and events described herein. Actual results may differ from those set forth in the forward-looking statements as a result of various factors (including, but not limited to, future global economic conditions, changed market conditions affecting the wind industry, intense competition in the markets in which the Group operates, costs of compliance with applicable laws, regulations and standards, diverse political, legal, economic and other conditions affecting the Group s markets, and other factors beyond the control of the Group). Neither Senvion nor any of its respective directors, officers, employees, advisors, or any other person is under any obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. You should not place undue reliance on forward-looking statements, which speak of the date of this Presentation. Statements contained in this Presentation regarding past trends or events should not be taken as a representation that such trends or events will continue in the future. In particular, no statements in this Presentation should be construed as concrete guidance as to the results of operations, cash-flows, balance sheet data or any non-financial metrics as of or for the financial year ending December 31, 2017 or any subsequent financial period. Certain financial data included in the presentation consists of non-ifrs financial measures. These non-ifrs financial measures may not be comparable to similarly titled measures presented by other companies, nor should they be construed as an alternative to financial measures determined in accordance with IFRS. You are cautioned not to place undue reliance on any non-ifrs financial measures and ratios included herein. This Presentation does not constitute or contain any investment, legal, accounting, regulatory, taxation or other advice. Due to rounding, numbers presented through out this and other documents may not add up precisely to the totals provided and percentages may not precisely reflect the absolute figures. 1

3 Agenda Key achievements 2017 Orders and installations Financials 2017 Strategic roadmap and guidance 2018 Key takeaways 2

4 1 Key achievements 2017 Building a growth platform for 2019

5 2017 key highlights at a glance Making progress against continuing industry headwinds 1 Financials CY17 revenues at 1,890mn with adjusted EBITDA of 152mn Cash on hand improved to 235mm; net cash generation of 47mn in Q4 Working capital at 2.5% ; likely to become negative by Q2 on commissioning of the Chile project Building platform for Orders from new markets Orders 36% growth yoy in firm orders; 393% growth in new markets Ranked 4 th largest 2 in EMEA in 2017; market share gains in key regions +393% Products 3.6M140 EBC rated as one of the top 3MW+ turbines by WPM 1 Progressing on moving supply chain footprint to low cost countries 2 4 Reductions in 2017 Efficiency Opex savings of 19% from efficiency program; Interest cost lower by c.28% post refinancing; cash interest cost at 30mn/yr (19%) Opex reduction (28%) Int reduction 5 Revenue development Services Service generates 16% of total revenues with double digit growth 10+ years of contract tenors and renewal rate of ~75% +15% Wind Power Monthly, 2. BNEF Feb 2018 for combined market share in onshore and offshore

6 1 Key highlights Performance in line with guidance Guidance 2017 Achieved bn 1.89bn Revenues Revenue slightly lower than expected due to minor project delays Margins Adj. EBITDA around % Adj. EBITDA at 8.0% Achieved ~ 2.0bn ~ 1.8bn Two key order conversions delayed Firm order Intake MW+ orders already converted in India & ANZ Financial targets in 2017 achieved 5

7 2 Senvion in EMEA and globally Senvion gaining market shares in key regions EMEA Region 2017 market share 1 Global (Ex China) 2017 market share % 4 6 (2016: 9.6%) 5.7% (2016: 4.9%) 17 GW Others 89% 34 GW Others 94.3% Selective global approach Aiming for significant market share gains in targeted new markets by 2019 Large player in all key markets Market share gains in Germany and France key current markets Source BNEF Report Feb 2018 based on commissioned windfarms; 1. Onshore and Offshore combined 6

8 2 Focus on higher growth markets 393% growth in orders from new markets Focused growth strategy in new markets Firm WTG order intake ( m): + 36% growth yoy Annual Installations (GW) CAGR Order intake ( m) Progress in new markets leading to achievement of 2019 targets Current markets -8.7% New markets Offshore Current markets New markets +36% 1, ,304 Country Firm orders Order pipeline 4 Australia Nordics 1 South Cone MW 117 MW* 395 MW Conditional orders 380 MW Multiple exclusivities and preferred supplier status in place for future volumes % 28 1, India Others MW 156 MW Aim to gain market share in key regions 715 ~4x 145 Total 1,230 MW+ 1,500 MW CY 2016 CY 2017 (Includes firm and conditional orders as of December 2017 plus announced orders as of 15 th of March 2018) Strong project pipeline with exclusivity agreements further supports 2019 outlook Current markets: Austria, Belgium, Canada, Germany, France, Italy, Netherlands, Poland, Portugal, UK, New markets: Australia, Eastern EU countries, Egypt, India, Ireland, Japan, LatAm excl. Brazil, MENA, Nordics, Serbia Source: MAKE consulting, Q Nordics = Sweden, Norway, Finland, 2. South Cone = LatAm ex Brazil, 3.Others = Eastern Europe, Japan, Ireland, Middle East and Africa, 4. Order pipeline is subject to usual market risks and is not a guarantee for further market share gains or final conversion into firm orders. *Nordics firm order contract won in 2016 and booked in revenues in

9 3 Product philosophy driven by high level of modularity New modular products to drive margin recovery Evolution of onshore turbines (with modular approach) 2018 pipeline 2.xM 3MW+ 2.xM 3MW+ 2.xM 3MW+ IEC I 4.M 11x IEC II 2.M 1xx 4.M 14x IEC III 2.M 1xx 4.M 14x Higher AEP increase with much lower cost increase More product variety, with less component variety IRR multiplying effect Targeting cost reductions Competitive offering Project optimized turbines Region specific product fit 8

10 4 MOVE FORWARD Progress card 52mn fixed cost savings achieved Opex run rate Interest costs Supply chain transformation Consistent and sustainable reduction in Opex Opex ( m) -20% Net interest down by 28% 42% reduction in annual interest costs of high yield bond Net Interest ( m) 2.7 GW capacity; sufficient for growth Closed three factories in Germany Increasing sourcing from LCC (from sub 5% to 30%+) -18% -22% 56* -28% 47^ 45^ -17% 44^ ** Q1 16 Q2 16 Q3 16 Q4 16 Q1 17 DONE Q2 17 Q3 17 Q DONE ^ Adjusted for IPO costs/transaction costs * Adjusted by shareholder loan interest ** Underlying interest costs without pre payment premium of earlier High yield bond and other related one time expenses of refinancing LCC = Low cost countries 2017 Increased proximity to growth markets 9

11 5 Growing Service business Efficient set-up to drive resilient and profitable growth Key results Key attributes Service revenue ( mn) Significant growth Consistent, high growth Increasing relevance of service offering CY16: 276m % 72.6 CY17: 308m High visibility from 2.5bn service order book High visibility 10+ years 2 average duration providing annuity-like revenue High renewal rate 1 (~75% last 3 years) Mar-16 Jun-16 Sept-16 Dec-16 Mar-17 Jun-17 Sept-17 GW under service +12.4% Dec-17 High margins and cash flow contribution Stronger contribution margin v/s turbine business ~16% share of revenues Higher FCF contribution Mar-16 Jun-16 Sep-16 Dec-16 Mar-17 Jun-17 Sep-17 Dec-17 Service provides a growing, annuity-like cash flow stream to the business Notes: 1.Turbine renewal rate of service contracts since 2016 based on quarterly data 2.Only includes active contracts and tenors weighted by no. of WTGs 10

12 2 Orders and installations

13 Senvion installations Installation rate in line with revenue plan Installations (MW) Germany France UK Other current markets Other new markets Offshore Annual Installation -16.1% 1, , Q1-Q installations Decline in installations in line with revenue guidance Q4 installation rate mainly impacted by installation shifts from the 299 MW order in Chile to 2018 Final commissioning of Nordergrunde and Nordsee One offshore windfarms achieved in Q CY 16 CY 17 Q1 17 Q2 17 Q3 17 Q

14 Order book of 5.0bn Onshore order book improving Q Q Q Order book ( bn) Net Firm Orders Conditional Service Total Q split by geography Net firm orders at 1.5bn Figures in mn 1,471 Offshore 306 Q Q New markets 659 Q Onshore 1.2bn Q Germany 154 Q Q UK France Others Q4 17 Offshore Onshore Note: Figures prior Dec 15 relate to Senvion GmbH Net Firm orders are confirmed orders minus PoC revenues already booked. Conditional orders are signed contracts where either building permit and/or grid connection and/or financing is missing. 13

15 Order intake growth of more than 36% yoy Growth mainly driven by new markets Firm WTG order intake ( mn) Offshore Others France Germany New markets Q4 +9% Offshore Onshore current markets Onshore new markets 36% growth yoy Q2 +106% Q3 +15% +36% New markets growth of 393% 586 Q1 +31% Mar-16 Jun-16 Sep-16 Dec-16 Mar-17 Jun Sept 17 Dec-17 1,304 1, CY , CY % 397 MW in LatAm 206 MW in ANZ 156 MW in Ireland, Eastern EU countries and Japan Pipeline continues to be strong 14

16 3 Financials 2017 Delivering on promises made

17 Key highlights Performance on target despite challenging environment ( mn) Adj. Q4 CY16 Adj. Q4 CY17 Adj. CY16 Adj. CY17 Revenue ,210 1,890 Gross profits Gross margin % 25.4% 24.2% 28.0% 28.5% Adjusted EBITDA Adjusted EBITDA % 9.7% 8.4% 9.3% 8.0% Adjusted EBIT Adjusted EBIT % 7.4% 5.1% 6.4% 4.5% Adjusted PAT Net working capital % (3.7%) 2.5% (3.7%) 2.5% Revenues in line with guidance Stable gross margins; likely to be impacted by 1.5%-3% in 2018 EBITDA margin of 8.0% achieved in challenging market environment Net working capital influenced by Chilean project inventories and slightly lower order intake; further reduction expected to happen in Q1/Q Cash on hand Net Debt / EBITDA <0 1.1x <0 1.1x 16

18 Revenue development New markets starting to grow at a fast clip Revenue split 2016: 2.2bn Onshore 1.6bn Offshore 0.3bn Service 0.3bn Revenue split 2017: 1.9bn Onshore 1.2bn Offshore 0.3bn Service 0.3bn Onshore Offshore Service All figures in mn Q1 16 Q2 16 Q3 16 Q4 16 Q1 17 Q2 17 Q3 17 Q4 17 Other revenues at 5m for 2016 and 9m for 2017 Onshore revenue breakup ( mn) CY16-36% CY17 Current markets 2017: Current market revenues declined led by UK & Canada 2018: Revenues in Germany to shrink due to issues with auction systems +1,704% CY16 CY17 New Markets Revenues from New markets grew led by Nordics Revenues likely to grow at a fast rate in 2018 led by Chile and Australia Others UK France Germany Others Nordics South Cone ANZ 17

19 Additional key performance metrics Cost ratios in line with expectations Material cost development ( mn) 1, % 1, % 1, % Adj. COGS 497 Gross margin 317 Stable gross margins Likely to decline by 1.5%-3% in 2018 due to competitive pressures 25.4% 24.2% PF Adj CY15 CY16 CY17 Q4 CY16 Q4 CY17 Adj. COGS Gross margin Cost breakdown ( mn) -12% Q1 16 Q2 16 Q3 16 Q4 16 Q1 17 D&A Q2 17 OPEX Q3 17 Personnel Q4 17 Sustainable Opex reduction driven by MOVE FORWARD program Employee costs likely to go up in 2018 due to build up of service business, new markets Further Opex reduction likely offset the increase in employee costs in 2018 Note: Financials adjusted for PPA, offshore provisions, IPO related costs. 18

20 Breakup of total Capex and R&D Achieving more within similar cost budgets Total intangible and tangible capex 1 ( mn) 1.5% 2.6% 2.2% 1.4% 2.7% 2.7% Investments focused on the expansion of the blade facility and consolidation of nacelle facility in Portugal März-13 März-14 März-15 PF adj CY15 CY16 CY17 Senvion GmbH Senvion S.A. [%] Capex over LTM sales R&D expenditure ( mn) 1.8% 2.6% 3.0% 3.1% 3.1% 2.9% R&D spending in line with previous year Mar Mar-14 Senvion GmbH Mar PF adj CY15 [%] R&D over LTM sales Expensed CY16 Senvion S.A. Capitalised CY17 Key R&D spending focused on development of 3xM, 2XM platform Increasing product portfolio within the same R&D costs thanks to modularity and cost savings due to various measures such as insourcing of project managers, efficient certification management etc Note: 1. Excluding capitalised R&D. 19

21 Net working capital and cash flow summary Working capital to improve by H Quarterly net working capital 1 evolution ( m) (4.7%) (6.4%) (101) (132) (2.7%) (57) (5.8%) (3.7%) (0.2%) (5) (83) (119) % 8 0.4% % Q4 impacted due to delayed order conversions Likely to improve by Q1/Q on the back of order intake and commissioning of Chilean project Dec-15 Mar-16 Jun-16 Sep-16 Dec-16 Mar 17 Jun 17 Sep-17 Dec-17 Net working capital NWC 1 % of trailing 12 months revenue Quarterly cash flow evolution ( m) (68) (109) (173) 44 Dec-15 Mar-16 Jun-16 Sep-16 Dec-16 Mar 17 Jun 17 Sep Dec-17 Consistent cash flow generation excluding exceptional items Negative free cash flow in H mainly driven by inventory for Chilean projects Free cash flow Operating cash flow Investing cash flow Positive free cash flow in H Note: 1. Net working capital defined as current assets (adjusted for liquid funds and assets of disposal Group classified as held for sale) minus total current liabilities (adjusted for provisions, liabilities of disposal Group classified as held for sale and short-term loans and current portion of long-term loans). 20

22 4 Strategic roadmap and financial goals Enhancing efficiency to achieve 2019 targets

23 New markets Current markets Auction systems bring larger volumes at lower prices Prices stabilizing with Senvion gaining ground Markets dominated by auctions Onshore auction volumes (GW) /MWh 70 FIT Volumes growing and prices now stabilizing % 46 May-17 Aug-17 Nov-17 Feb MW with avg bid price going up by 24% Govt discussing to add 1.4 GW extra auctions in 2018 Senvion increasing market share /MWh -12% Stable market, auctions volume to flow into 2020 Senvion maintaining 10-20% market share +20.0% INR/KWh 4.50 FIT e % 2.85 Indian government plans 10 GW of auctions between Senvion with 131 MW orders, a healthy pipeline and increasing market share FIT Jan.- 17 Okt.- Gujarat Febr Maha E Wind auctions in 2017 Auctions in previous years, no wind activity in 2017 $/MWh Decent auction prices Senvion gaining market share 100 MW of co-investment project Positive changes supporting 2019 outlook Source: Bloomberg auction overview & MAKE regional reports, Senvion Market Intelligence Prices correspond to the latest average auctions results in each country 22

24 High degree of comfort developing on 2019 volumes Closing gap on 2019 revenue targets Increasing visibility on 2019 revenues Key comments Service+Offshore New markets Current markets bn 1 Service and offshore growth largely covered by firm orders 3 2 Improving order pipeline in new markets 1.9bn 35% bn 25% 1 2 India: Gaining market share, additional upside if further auctions are conducted on time Argentina: Large market share likely in RENOVA 2 auction Australia: c. 600 MW of volume visibility based on orders in hand for % ~40% Chile and North Africa: Exclusivities for large volumes 3 Germany 54% ~35% Market share growing from 7% to 10% in Extra volume expected if proposal to expand auction volumes by 50% go through Guidance Service+ offshore New markets upside Germany upside potential 2019e Key risks Market developments delayed in India and Germany Delays in order conversions/postponements Expanding pipeline with market share gains 1 Onshore market share as per BNEF market share file released in Feb 2018 and Feb

25 LCoE roadmap in place with early stages of cost outs Intensive efforts required in light of pricing pressure Product LCoE roadmap ready LCoE -16% 3.xM 12X Progress being made on cost outs Increasing sourcing from LCC 1 Agreements in place for generators and blades from China Sourcing agreements for towers and Gearbox from China also in place Key Risks Delays in new component sourcing Competition pressures on new turbines and components -4% Simplifying processes Delays in new product introductions 3.xM 14X EBC -12% Lower transport costs Lower crane and installation costs Risks of quality, testing period delays cannot be ruled out Reduction in BoP costs Reduced time for installation Cost out plans initiated, but execution risks remain LCoE calculation based on reference project for Germany (6.5m/s at 140m, 8WECs), including all project cost from customer perspective 3.xM12x at 139m hub height 3.xM EBC at 130m/128m/126m hub height 1. LCC Low Cost Countries 24

26 Senvion 2018 guidance Margin impact less severe with stable revenues 2017 Guidance 2018 Onshore Offshore Service Revenues 1.89bn Shrinking current markets, offset by growth in new markets Revenues already in firm order book Double digit growth expected Revenues bn 2017 Guidance 2018 Pricing pressure Margin pressure Adj. EBITDA margin 8.0% Lower turbine ASPs Cost structure in the process of being adjusted Gross margins likely to impacted by 1.5%-3% Delivering on savings programme is essential Adj. EBITDA margin 5% - 6.5% 25

27 5 Key takeaways

28 Key takeaways 1 Performance in line with guidance 2 Market share gains followed by solid order intake from new markets 3 Expanding product portfolio within same R&D budgets and with a healthy product pipeline 4 Significant cost cuts achieved under MOVE FORWARD as promised 5 Service business continues to grow 27

29 MM tubines in France Appendix

30 Financial calendar Financial Calendar 2017 Event Date Annual Results 2017 March 15, 2018 Q Results May 15, 2018 Your Investor Relations Team: Dhaval Vakil Vice President Capital Markets and M&A Phone UK: Mobile: Anja Siehler Sr. Manager Capital Markets Phone Lux: Mobile: Annual General Meeting May 31, 2018 For general queries: Q Results August 14, 2018 Q Results November 14,

31 Income statement 2017 Bridge between reported and adjusted earnings mn Q4 17 Adj. Adj Q4 17 CY17 Adj. Adj CY17 Revenue ,890 1,890 Total performance ,893 1,893 Material expenses (317) (317) (1,355) (1,355) Q Key adjustments Includes PPA impact of 15.2mn Gross profit Gross margin % 24.2% 24.2% 28.5% 28.5% Other operating income Personnel expenses (57) (57) (260) (260) 2 3 Includes 0.6mn restructuring provision reversed Includes positive PPA impact of 5.5mn Opex (42) (42) (153) (153) CY 2017 FX gain/loss (3) (3) (4) (4) EBITDA EBITDA % 8.4% 8.4% 8.0% 8.0% D&A (34) 1 15 (19) (158) 4 92 (66) EBIT (6) 86 EBIT% 2.4% 5.0% (0.3%) 4.5% Extraordinary Expenses 1 2 (1) (0) (54) Net interest (10) (10) (61) 6 20 (41) Taxes (3) 3 (6) (8) 28 7 (28) (0) Net profit (Con. Ops) 2 11 (93) 45 PAT % 0.3% 1.8% (4.9%) 2.4% Includes PPA impact of 92.1mn Includes 54.1mn of restructuring measures Includes 20.4mn of bond refinancing costs Includes positive PPA impact of 28.3mn 30

32 Senvion S.A. Balance sheet Assets ( mn) Dec 17 Sep 17 Dec 16 Liquid Funds Current Assets (excluding liquid funds) Receivables Inventories Others Property, plant & equipment Other intangible assets Other non current assets* Deferred tax assets Total 1,808 1,808 2,101 Liabilities ( mn) Dec 17 Sep 17 Dec 16 Loans (short term, long term and High Yield Bond) Current liabilities (excluding provisions and short term loans) Advance payments received Trade payables Gross amount due to customers for contract work as a liability Others Provisions Deferred tax liability Total equity capital Total 1,808 1,808 2,101 * - Includes assets held for sale 31

33 Senvion S.A. Cash flow summary Senvion S.A. Senvion S.A. Senvion S.A. ( mn) Q4 CY16 Q4 CY17 CY16 CY17 Result before income taxes (38) 5 (89) (121) Adjustments for Senvion S.A. Depreciation on property, plant and equipment, amortization of intangible assets and write-offs on financial assets Interest income (0) (2) (1) (4) Interest expenses Increase/decrease in provisions Change in working capital (35) (27) (23) (100) Interest received Interest paid (14) (18) (40) (68) Income tax paid/received (0) (3) (12) (36) Cash flow from operating activities (91) Cash receipts from the sale of property, plant and equipment, intangible and other long-term assets 1 (0) 3 3 Cash payments for the purchase of intangible assets (13) (8) (50) (42) Cash payments from purchase of property, plant and equipment and other long-term assets (20) (2) (58) (59) Cash payments from loans granted to related parties Acquisition of subsidiary: Net of cash acquired (0) (1) (0) (1) Cash flow from investing activities (32) (11) (105) (99) Acquisition of treasury shares (4) 0 (7) (8) Net Cash repayments of amounts borrowed / repayments (1) (0) (5) (4) Cash flow from financing activities (5) (0) (12) (12) Increase/decrease in cash and cash equivalents (203) Cash and cash equivalents at the beginning of the period Cash and cash equivalents at the end of the period Liquid funds Short-term bank liabilities (8) (5) (8) (5) Cash and cash equivalents at the end of the period

34 Overview of PPA Adjustments Net PPA booked in CY17 ( mn) Expected yearly P&L effects 1 ( mn) 64 Q Dez Q Dec-18e 28 Q Dec-19e 28 Q Dec-20e 27 CY 2017 Notes: 1. Including deferred tax impacts and is not the complete schedule; assumed group tax rate of % for calculations. Source: Company information; Deloitte analysis. 33

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