Senvion preparing the path to profitable growth
Senvion, a leading global manufacturer of wind turbines, closed its financial year 2016 with revenues of EUR 2.21bn and adjusted EBITDA margins of 9.3%. Revenues were marginally lower than expected due to minor project delays out of Senvion’s control, but it still grew by 3.4% year-on-year. Senvion has reached firm order intake of EUR 1,304m, and a closing conditional order book of EUR 1,765m, a growth of 10 percent year-on-year. With EUR 32m of free cash flow generation, Senvion exceeded its free cash flow estimate and with minus 3.7% in working capital, Senvion again achieved its working capital target and managed an even healthier balance sheet.
During the fourth quarter, Senvion managed revenues of EUR 757m, with a growth of 25%+ year-on-year and adjusted EBITDA margins of 9.7%. Senvion also achieved quarterly firm order intake of EUR 458m, with a growth of 51% year on year. With 687 MW installations worldwide from October to December 2016, Senvion reported the highest installation rate since 2013.
In the last fiscal year Senvion successfully managed market entries on a global scale in Scandinavia, Chile, and Serbia, in addition to signing a conditional offshore order for 203 MW. In India, Senvion succeeded in entering the market one year ahead of schedule due to the capital efficient acquisition of Kenersys assets and already was awarded with a 500 MW framework agreement.
These developments highlight the effectiveness of Senvion’s strategy of entering and expanding in new markets as well as its competitive product portfolio for all wind classes – low, medium and high wind class. In the last two years, Senvion successfully managed to develop and upgrade seven new product variants within a relatively efficient R&D budget. Senvion continues to have a future focused product pipeline for 2017 and 2018 and expects to improve its product portfolio even further.
As markets move towards increasingly market-based mechanisms, Senvion expects near pricing pressure with wind growth in current markets softening and growth in new markets improving from a low base. In 2016, Senvion has been preparing the base to address these market trends and appropriate action plans have been identified and are already partly implemented as announced earlier.
As Senvion management indicated previously, 2016 and 2017 will be the years of transition where Senvion builds the ground for profitable growth by 2019 as Senvion expands its presence in new markets and works towards commercializing new products. Senvion expects slightly less revenues for 2017 in the range of EUR 2.0bn to EUR 2.1bn and corresponding softer EBITDA margins of about 8% to 8.5% as a result of these near term market trends. After this phase of consolidation Senvion will return to profitable, capital-efficient and international growth by 2019 and will achieve this by the means of three clear priorities: new market entries, product portfolio optimisation, and organisational efficiency. Senvion aims to achieve revenues of EUR 2.6-2.7bn with adjusted EBITDA margins of 9.5%-10.5% in 2019. This means a growth of around 24-35% in revenues and 40-75% growth in absolute EBITDA from 2017 levels.
Jürgen Geissinger, CEO of Senvion, said: “In 2016, we could create a strong base for Senvion’s further development. The expansion into new markets is gaining momentum, with our latest turbines already receiving great response from the market. For the future, we will keep penetrating new segments in our core markets and enter new markets, all based on a product philosophy which aims to reduce Levelised Cost of Energy by 4% to 6% every year, whilst working on improving our organizational efficiency. Our announcement earlier this week was part of the overall strategy to ensure a successful future for Senvion .”
Manav Sharma, CFO of Senvion, said: “Our performance in the last quarter was strong, achieving the highest level of installation and revenues for several years. Overall FY 2016 financial targets were achieved with EBITDA in line with guidance. Profitability should rise again once our new product upgrades are on the market and our efficiency programme fully implemented. With a solid order book, we look forward to tapping into further opportunities in 2017 and beyond.”