Senvion Brief Presentation June 2018 0
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. Forward-looking statements involve all matters that are not historical by using the words may, will, would, should, expect, intend, estimate, anticipate, believe and similar expressions or their negatives. 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 Senvion Group operates, costs of compliance with applicable laws, regulations and standards, diverse political, legal, economic and other conditions affecting the Senvion Group and the Senvion Group s markets, and other factors beyond the control of the Senvion Group). The Senvion Group, including its directors, officers, employees, advisors and any other persons, is under no 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. 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, cashflows, 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 this 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 other 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
Agenda 1 2 3 Senvion today Key highlights Key financials 2
Onshore Offshore Senvion at a glance A leading global player in wind energy Key facts Revenues (2017) 1,890m Adj. EBITDA / margin (2017) 152m / 8.0% Installed base (YE 17) 17.0 GW Order book (YE 17) 5.0bn 1 Revenue breakdown By business (End-17) Total: 1,890m Installed base breakdown² By region (End-17) Total installed base: 17.0 GW Service coverage By serviced fleet (End-17) Total installed base: 17.0 GW Offshore 18% Services 16% Onshore 65% North America 16% Asia 2% Australia 3% Europe 79% MW not under service 20% Serviced base: 13.6 GW MW under Service ~80% Product portfolio snapshot 3 MM series 2.XM series 3.XM series 6.XM series First mover and technological leader in 3MW class Strong player in all wind classes Released industry-leading low wind turbine 3.4M140 Expanded portfolio via acquisition of Kenersys assets in India First mover in 5MW+ class Largest operating fleet in 5MW+ class Largest commercially proven turbine by power rating 10MW+ turbine study announced Notes: 1. Includes net firm orders, signed contracts and service order book 2. Europe: Germany, France, UK, Italy, Belgium, Poland, Portugal; North America: Canada, USA; Other: Netherlands, China, Japan, Austria, Hungary, Czech Republic, Spain, Sweden, India, Greece, Russia, Korea, Switzerland, Romania, Turkey 3. Selected products 3
Significant track record through 17 GW of installed base Turkey Romania Poland & Belarus Sweden & Norway Germany Netherlands & Belgium France UK Spain Portugal Senvion installed worldwide, MW Europe Germany 5,792 France 2,323 UK 2,148 Italy Others 930 1 Russia 2,291 Total 13,484 Canada Japan Switzerland USA North America Canada 1,383 USA 1,264 Total 2,647 Italy Czech Republic Austria Hungary & Serbia Greece South Korea China India Asia China 234 Japan 118 Others2 Total 23 375 Australia As per end of CY 2017; Includes all installed and SCADA connected systems 1. Austria, Belarus, Belgium, Czech Republic, Greece, Hungary, Netherlands, Norway, Poland, Portugal, Romania, Russia, Serbia, Spain, Sweden, Switzerland, & Turkey 2. India & South Korea Total 468 4
Production footprint optimisation Faster production cycle and leaner manufacturing From Germany focused to globally streamlined footprint Key benefits Reducing complexity by consolidating global production facilities Nacelle Blades Nacelle Blades Generating synergy effects and benefitting from scale Bremerhaven Husum Trampe Oliveira de Frades Bremerhaven Vagos Bremerhaven Oliveira de Frades Baramati Vagos Ustron, Warszovice Realizing shorter production cycle times Leveraging capacities in low cost countries 3.6 GW Nacelle capacity CY16 installations 1.7 GW 2.7 GW Nacelle capacity Sufficient capacity for growth 5
Senvion s market environment Attractive long-term outlook 1 World energy production will rise significantly. Energy production by region Billion toe 18 16 14 12 10 8 6 4 2 OECD countries European Union US China +29% 0 1990 1995 2000 2005 2010 2015 2020 2030 2025 2035 India Others 2...with wind as a 3 major contributor Cumulative global electricity generation by source (GW) Onshore wind Offshore wind PV Other renewables 1 Conventional sources 2 5 278 112 109 2012 1.206 1.242 1.840 2.153 2030 +334% 3.945 5.256 and already competitive with conventional sources ($/MWh) H1 2017 onshore wind LCOE Marine wave Marine tidal Solar thermal tower Solar thermal LFR Solar thermal Parabolic rough Biomass anaerobic digestion Biomass incineration Wind offshore Biomass gasification Waste-to-waste energy Geothermal binary PV no tracking Hydro small Hydro large Wind onshore PV tracking Geothermal flash Landfill gas 0 Estimated global LCOE range Grid parity 100 200 300 400 500 1,037 844 H1 2017 benchmark Global energy production is expected to increase by c.30% by 2035 Positive, disproportionate growth from onshore wind over the medium term Technology and pricing to define leaders Wind markets shift to auction mechanisms with reduced reliance on subsidies will pose near term challenges but potential for expansion post grid parity Wind installations to grow 334% by 2030 as a cost-competitive energy source Sources: BP Energy outlook 2017, Bloomberg New Energy Finance, Bloomberg New Energy Finance H1 2017 LCOE update Notes: 1. Other renewables include Geothermal, Hydro and others 2. Conventional sources include nuclear, coal, gas and oil capacities 6
Members of SET Management Board Strong management team with extensive experience in mature manufacturing industries Manav Sharma Acting CEO & CFO 13 years experience in industrials and consumer Leads Finance Team at Senvion since 2013 Bachelor s degree in Computer Engineering and a post-graduate diploma in Management from the Symbiosis International University Pune, India. David Hardy CSO & Executive Director Joined Management Board in June 2017 27 years experience in the industry sector Worked for Vestas for 7 years and for GE for 10 years Degree of Mechanical Engineering and holds a MBA in Finance & Management, North Carolina and New York Christian Roth COO Servet Sert CTO Anette Tronnier-Meyknecht EVP HR Livia Musso EVP Compliance & Legal 20 years of experience in aerospace and steel and forging industry Graduated in earth sciences at the University of Würzburg, Germany Doctorates in conjunction with the Fraunhofer Institut in Dortmund, Germany 22 years experience in product development and industrialization incl. 6 years in wind Six Sigma Black Belt Executive MBA from Université Paris-Dauphine and Université du Québec à Montréal 22 years of management experience incl. 11 years in the industrial sector Holds Law degree with a focus on labor law Graduated law at Eberhard- Karls-University in Thübingen More than 12 years experience in the industrial and automotive sector 10 years of experience in the wind sector Holds a degree in law from the University of Florence 7 SET = Strategic Executive Team
Senvion successfully adapts to wind markets evolution Focused on further supporting growth initiatives 1 Key developments Volume shift towards emerging markets Senvion achievements Order intake growth of +36% LTM Order intake growth in new markets: +400% 2 Better products required to improve LCoEs Attractive portfolio throughout the segments, supported by project optimised, modular-based product philosophy 3 Auctions favour flexible OEM suppliers Run-rate savings of c.20% from efficiency program and shifting supply chain footprint to low cost countries 4 Volume and margin volatility in turbine business Platform with industry leading coverage and renewal rate of ~75% Service revenues 16% of the total revenues Senvion has successfully adapted its business model and is now focused on further expanding efforts in proven growth areas 8
Agenda 1 2 3 Senvion today Key highlights Key financials 9
4 strategic pillars 1 Focus on higher growth markets to benefit from expansion of global installations 2 Best in class technology and modular product portfolio underpinning high entry barriers 3 MOVE FORWARD significant operational improvement initiative well underway 4 Growing Service platform providing an annuity-like backbone to cash flow generation 10
1 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% 10 7 2017 2020 New markets Offshore Current markets New markets +36% 1,776 306 1,304 Country Firm orders Order pipeline 4 Australia Nordics 1 South Cone 2 432 MW 117 MW* 395 MW Conditional orders 380 MW Multiple exclusivities and preferred supplier status in place for future volumes 17 +18.4% 28 1,159 755 India Others 3 131 MW 156 MW Aim to gain market share in key regions 715 ~4x 145 Total 1,230 MW+ 1,500 MW+ 2017 2020 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, Q4 2017 1. 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 2017 11
2 Best-in-class technologies More efficient products with lower lifetime costs 2003-2014 Evolution of onshore turbines 2015 2017 (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 12
3 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^ 53 39 35 36 42 40** Q1 16 Q2 16 Q3 16 Q4 16 Q1 17 DONE Q2 17 Q3 17 Q4 17 2016 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 13
4 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 65.4 65.5 72.8 +11.6% 72.6 78.8 CY17: 308m 68.2 88.8 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 10.8 11.4 11.9 12.1 12.1 12.7 12.8 13.6 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 14
Agenda 1 2 3 Senvion today Key highlights Key financials 15
Key financials 2017 Performance on target despite challenging environment ( mn) Adj. Q4 CY16 Adj. Q4 CY17 Adj. CY16 Adj. CY17 Revenue 757 580 2,210 1,890 Gross profits 192 141 619 538 Gross margin % 25.4% 24.2% 28.0% 28.5% Adjusted EBITDA 73 49 206 152 Adjusted EBITDA % 9.7% 8.4% 9.3% 8.0% Adjusted EBIT 56 30 142 86 Adjusted EBIT % 7.4% 5.1% 6.4% 4.5% Adjusted PAT 54 11 81 45 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/Q2 2018 Cash on hand 441 235 441 235 Net Debt / EBITDA <0 1.1x <0 1.1x 16
Order book of 5.0bn Onshore order book improving Q4 17 1.2 0.3 1.5 Q3 17 1.0 0.5 1.5 Q2 17 1.1 0.5 1.6 Order book ( bn) Net Firm Orders Conditional Service Total 1.0 1.3 1.4 2.5 2.5 2.3 5.0 5.3 5.5 Q4 2017 split by geography Net firm orders at 1.5bn Figures in mn 1,471 Offshore 306 Q1 17 1.0 0.3 1.3 1.3 0.3 1.6 2.3 5.3 Q4 16 0.9 0.4 1.3 1.5 0.3 1.8 2.2 5.5 New markets 659 Q3 16 0.8 0.7 1.5 1.6 0.3 1.9 2.1 5.6 Onshore 1.2bn Q2 16 1.1 0.6 1.7 1.7 2.1 5.6 Germany 154 Q1 16 1.2 0.6 1.8 Q4 15 1.2 0.6 1.8 1.7 1.6 2.0 1.9 5.4 5.4 UK France Others 186 97 69 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. 17
Net working capital and cash flow summary Working capital to improve by H1 2018 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) 99 4,6% 8 0,4% 47 2.5% Q4 impacted due to delayed order conversions Likely to improve by Q1/Q2 2018 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) 185 23 (68) 64 14 (109) (173) 44 Dec-15 Mar-16 Jun-16 Sep-16 Dec-16 Mar 17 Jun 17 Sep-17 47 Dec-17 Consistent cash flow generation excluding exceptional items Negative free cash flow in H1 2017 mainly driven by inventory for Chilean projects Free cash flow Operating cash flow Investing cash flow Positive free cash flow in H2 2017 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). 18
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