Strategy update Medium term targets The path to profitable ... · PDF fileStrategy update...

Strategy update – Medium term targets

The path to profitable growth

Senvion S.A. Analyst presentation, 16th March 2017

Picture new turbines/ products/ flagship product

1

Disclaimer

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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

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sheet data or any non-financial metrics as of or for the financial year ending December 31, 2016 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.

2

Joined in Jan. 2017

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

Joined in Oct. 2016

22 years experience in

product development

and industrialization

including 6 years in wind

Six Sigma Black Belt

Executive MBA from

Université Paris-Dauphine

and Université du Québec

à Montréal

Strengthened management team

Manav Sharma

CFO

Jürgen M. Geissinger

CEO

Servet Sert

Head of Technology Christian Roth

COO

Management Board

Joining Senvion in June

2017

27 years experience in

the industry sector

Worked for Vestas for 7

years and for GE for 10

years

Mechanical

Engineering and holds

a MBA in Finance &

Management, North

Carolina and New York

David Hardy

Head of Sales

3

Enhancing efficiency c.

Leveraging on competitive product portfolio b.

Agenda

Strategic roadmap and outlook 2017–2019 2

Our path to profitable growth 3

Sales growth across segments a.

Key industry trends 1

Financial targets 4

Key takeaways 5

4

Senvion‘s market environment – Three key trends

1. Wind in long term growth cycle with markets growing at different pace

2. Markets moving towards auctions

3. Fast falling Levelized Cost of Energy (LCoEs)

Industry trends

5

1. Wind in long term growth cycle Growing energy demand with increasing share of wind

Source: New Energy Finance

Conventional sources include nuclear, coal, gas and oil capacities

Other renewables include Geothermal, Hydro and others

Industry trends

World energy production rising…. ..with Wind as major contributor

Energy production by region Cumulative global electricity generation by source (GW)

Source: BP Energy outlook 2017

3,945

1,242

109

5

278

112

5,256

2,153

1,840

1,206Onshore Wind

Offshore Wind

PV

Conventional

Sources +33%

+334%

Other

Renewables

2012 2030

4

8

6

0

2

16

18

14

12

10

2015 2005 2000 1995 2035 2030 2025

+29%

2020 2010 1990

India

European Union Others

US

China

OECD countries

Billion toe

6

1. Wind markets grow at different pace Growth shifting to newer markets

13.7

12.4

0.8

12.2

10.7

1.2

10.7

2.3

8.4

2.5

8.9 8.5

New markets Current markets

Source: 1GWEC (2016) 2MAKE Q4 2016 market outlook

• Penetrate in low wind

areas and maintain

presence in current

markets

Senvion’s strategy

Senvion present in 7 out of 10 largest markets up to date

Our current markets vs our new markets growth (GW)

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, Middle East North Africa region (MENA), Nordics, Serbia, US

Cumulative installations as of 2016 (GW)1

() ()

Senvion markets

Average annual installation (GW)2

• Focus on new growth

markets


( ) – New market entries

21.0

16.2

2017-2019 2014-2016

911121215232950

82

169

Brazil Canada France UK Spain India Germany US China Italy

7.0

9.8

2017-2019 2014-2016

Industry trends

7

2. Wind markets move to market based mechanisms Increasingly subsidy free business model

Senvion’s recent success in Chile auctions show ability to adapt quickly

Source: Bloomberg & MAKE, 2016 & price indication based on lowest winning bid

Chile

2015: $ 79.34/MWh

2016: $ 47.59/MWh

Argentina

2016: $59/MWh

2016: $53/MWh

Peru

2010: $80/ MWh

2016: $37.2/ MWh

Mexico

2016: $55/MWh

2016: $36/MWh

Morocco

2016:

$30/MWh

Italy

2014: €110.5/MWh

2016: €66/MWh

South Africa

2015: $38.32/MWh

Egypt

2015: $41/50/MWh

India

2016 – Avg. Rs4-5/KWh

2017: Rs3.46/KWh

Market-based mechanisms – e.g., auctions, certificate schemes, renewable portfolio standards

Feed-in tariff/premiums

Wind markets are

shifting to market

based mechanisms

Prices and margins

to adapt to auctions

Winning factor is

LCoE leadership

Key trends

Industry trends

https://www.bnef.com/core/insight/13285









8

0 100 200 300 400 500

Coal

Combined cyc e gas

CHP

Nuclear

Large hydro

Small hydro

Biomass – anaerobic digestion

Wind – onshore

Geothermal – flash

Municipal solid waste

PV – no tracking

PV – tracking

Landfill gas

Wind – offshore

PV – thin film

Biomass – incineation

Geothermal – binary

Biomass – gasifiation

Solar thermal – LFR

Solar thermal – tower

Solar thermal – parabolic trough

Marine – tidal

Marine – wave

3. Softening Levelised Cost of Energy Wind already one of the cheapest sources

Co

nve

nti

on

al

Re

ne

wab

les

Source – BNEF H2 2016 LCoE update

Estimated global LCOE range Country LCOEs H1 2016 benchmark H2 2016 benchmark

Fossil technologies: US China Europe Australia

1,037

844

Increase in market demand for wind once grid parity reached

Industry trends

($/MWh)

9

3. Grid Parity already reached in some markets – Others to follow driven by technology

Onshore turbine prices drop in 7 years

Levelised Turbine

Prices (€/MWh)

(42%)

Turbine Prices (€/MW)

(26%)

H2 2009 - H2 2016

Source – MAKE report Sept 2016

Winning auction bids for Mexico, Peru & Chile

wind projects ranged from $37.7/MWh to

$55.5/MWh, almost 50% below regional levelised

cost of electricity baselines

*

• Levelized Turbine Prices: Turbine price divided by Annual Energy production,

• Source - BNEF H2 2016 Wind Turbine Price Index

• LCoE leadership via

• Product innovations and AEP

increase

• Cost outs and organisational

efficiency


Electricity prices and levelised

turbine prices will continue to drop

Impact

Industry trends

10

Offshore – Growing market with deeper depth Current bids require efforts to reach grid parity

Horns Rev II, Dong: 103.1 €/MWh

Borssele I+II, Dong: 72.7 €/MWh

Borssele III+IV, Shell: 54.5 €/MWh

Kriegers Flak, Vattenfall: 49.9 €/MWh

• UK, Germany Auctions

…but huge growth expected and bids falling rapidly

Global offshore demand expected to increase

LCoEs continue to decline – all projects beyond 2020

Trend towards bigger turbines

Low industry experience in 5MW+ category –

Senvion with one of the largest track records

1.8

3.9

2019

4.9

1.3

3.6

2018

3.5

0.8

2.7

2017

3.2

0.5

2.7

2016

1.8

0.6 1.2

2021

5.2

2.3

2.9

2020

5.7

3Above

5MW+

Total

Offshore 14

Onshore 472

Limited offshore

experience…

Industry trends

Source: Onshore and Total Offshore installations from GWEC – Global wind statistics 2016 & above 5 MW+ from BNEF H2 2016 offshore Wind Market Outlook – October

2016, MAKE Q4 2016 market outlook

Global installed capacity (GW) Global installed capacity (GW)

Europe New markets

Short-term:

1. Focus on executing current order book until

2019

2. Exploit floating offshore opportunities

Medium-term:

1. Launch 10MW+ turbine

Senvion strategy

Industry trends

11



Agenda





Financial targets 4

Key takeaways 5

12

Senvion has made strong progress since 2015 and more in the pipeline…

Outlook 2019

Current status March 2017

Note: 1) European refers to current markets of Senvion; 2) Pro forma capital structure at the time of High Yield Bond issuance of €400m

1. Largely German

management team

with similar

background

2. Pure “European1”

player with limited

international reach

3. Lacking key products

including 2MW

variants and 3 MW

low wind product

4. High working capital

leading to weaker

cash position

Management team strengthened with

diverse industry backgrounds and proven

record

1

March 2015

Product portfolio complete

3.4M140 and 3.6M140 launched – Industry leading

wind turbines for low and medium wind sites

Acquisition of 2 MW products from Kenersys

3

Stronger balance sheet

Second best working capital level in

industry: turn around in working capital (from

+8% to -3.7%)

Sound cash position and balance sheet:

From net debt (€274m2)to net cash of €27m

4

€1Bn+ orders in new markets: Chile

Australia, India and Nordics, Serbia, Japan 2

13

2016 2017

2019

2019

Senvion 2019 target Achieving profitable growth

Revenue

2019 targets 2016 2017 Guidance

Transition phase Growth phase

2016 2017

€2.21bn €2.0-2.1bn* €2.6–2.7bn

Firm Order

intake

€1.3bn

€2.0bn+

Min 1.0x

On-shore Book to Bill

Adj. EBITDA

Margin

2016 2017

€206mn

9.3% ~8.0–8.5%*

~9.5%-10.5%

* - Potential delays in the conversion of the 300 MW Chile order beyond couple of months may lead to a partial (or full) shift of revenues and corresponding EBITDA to 2018. The

exact impact on financials can be ascertained once the order becomes firm.

Outlook 2019

2019

Absolute adj. EBITDA

14

Path to growth in 2019 New markets drive international expansion

Onshore sales

(new markets)

Service

Offshore

Onshore sales

(Current

markets)

2016 2017

Revenue

€1.6bn

Revenue*

~€1.1bn

2019

Transition phase Growth phase

Revenue

€0.0bn

Revenue

~€0.4bn

Revenue

€0.28bn

Revenue

~€0.31bn

Revenue

~€0.38bn

Revenue

€0.3bn

Revenue

~€0.3bn

Revenue

~€0.2-0.3bn

Revenue

~€2.1bn

*Base case: Incl. Chile, excluding upside potential from floating offshore opportunities, M&A activities

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, US

Total €2.2bn €2.0-2.1bn €2.6-2.7bn

Outlook 2019

A

B

C

D

15



Agenda





Financial targets 4

Key takeaways 5

16

Senvion in transition Two-fold sales approach

Sales growth across segments

*Nordics 360MW+, India 500MW, Australia 300 MW, Serbia 42 MW

Two-fold sales approach

(1) Others - Italy, Portugal, Austria, Belgium, Canada

Onshore revenue development (€bn)

Maintain and grow market

share in current markets

Enter new growth markets

with good fit to Senvion’s products

Strategy

Further penetrate existing markets through

market share growth in low & medium wind

speed segments

Rollout new 3.XM and 2.XM products

Holistic solutions for key accounts

Strategy

Deploy proven new market entry approach

(Canada, Australia, Chile, etc.)

Launch product variants for new markets

Adapt supply chain towards new geographic

composition

A B

CY19e CY17e

~1.1

CY16

1.6

CY15

1.8

FY14

1.5

Others UK France Germany (1)

CY19e CY17e

~0.4

CY16

0.0

CY15

0.1

FY14

0.2

Basket of smaller markets

Nordics

South Cone

India

Australia

17

Germany Win back market share with 3.xM14x

Onshore Installations

Market share

Shift to auction will limit market volumes (2.8 GW/p.a.)

More installations expected in Southern Germany,

currently not covered by Senvion

Mid size developers and larger utilities likely to play

bigger role

Increase in repowering projects due to aging fleet

Maintain market share in North Germany

Participate in bids in South Germany from Mid 2017

Build significant market share with 3.XM14x

Co-financing and auction support

Upfront selling (e.g. Framework Agreements, co-

development)

Maintain healthy relationship with key accounts –mid

size players and large utilities

Source: Historical data from MAKE, CY19 estimate – as per

Govt cap

Market specific trends

Senvion Strategy

2.8

4.23.8

4.6

CY19 CY14 CY15 CY16

14%

20%

CY14

15-20%

CY16

Proj

CY15 CY19

target

Source: MAKE database

North

South

A

North: North Germany defined according to grid definition with yearly restriction of 900 MW


18

The path to growth in 2019 Maintaining strong sales in other current markets

A


Revenues from Portugal via Frame

agreement with EDPR

Leverage on customer relationships

Target “Corporate “PPAs”

2 MW and 3 MW new variants

subject to hub height and tip height

restrictions

Onshore Installations (GW)

Onshore Market share target


Onshore Market share target


Revenues (€mn)

Strategic partnership with

existing and new customers

New products including newly

acquired 2 MW products

Executing the existing pipeline

Leveraging UK team to focus on

Irish markets

Offer new products in the 3 MW

platform

Senvion strategy

France UK Other current Markets

Senvion strategy Senvion strategy

Source – MAKE Q4/2016 Total Market Outlook, 2013–2025e

CY19

~ 15-20%

CY16

Proj

CY15

17%

CY14

19%

0.81.21.11.1

CY19 CY16 CY15 CY14

CY19

~30%

CY16

Proj

CY15

45%

CY14

10%

0.4

1.7

0.71.0

CY19 CY16 CY15 CY14

1.82.22.93.0

CY19 CY16 CY15 CY14

613594

CY19 CY16 CY15

Italy, Portugal, Austria, Belgium, Canada, Netherlands Great Britain including North Ireland

19

Australia* South Cone Nordics

Our new markets Volumes to grow substantially

B


Flexible product solutions

Leverage volume effects

of projects

Support existing customers and

expand relationship to local

customers


Market share target

CY19

30%+

CY16

Proj

CY15

60%

CY14

19%

0.7

0.1

0.7

0.3

CY 19 CY 16 CY 15 CY 14


Market share target

CY19

5-10%

CY16

Proj

0%

CY15

0%

CY14

0%

2.71.81.71.7

CY 19 CY 16 CY 15 CY 14

Market for medium wind class

(existing 3M114/140 and

new 3.6M140)

Support client to sell Power

Purchase Agreements

(Co-)development with customer

Financial advisory roles in some

cases


Market share target

CY19

15-20%

CY16

Proj

0%

CY15

0%

CY14

0%

1.31.11.21.3

CY 14 CY 19 CY 15 CY 16

Great product fits

Focus on large scale projects

Customer specific approach

Cold climate products

Project advisors in selected cases

(planning, financing, risk analysis)

Senvion strategy Senvion strategy Senvion strategy


* - We consider Australia as a renewed market, given no activity in last 2 years in the market

Norway, Finland, Sweden LatAm ex Brazil

20

India: Acquisition of Kenersys assets Successful, accelerated and capital efficient India entry

Market From accelerated

entry… to products and

orders

250 MW nacelle facility

Low cost, low wind, 2

MW product portfolio

and local supply chain

Running Operating and

Maintenance

operations

…to taking off

Framework agreement

signed – 500 MW

Large IPP as customer

Kenersys products –

now part of Senvion

2MW platform

Next steps

1. Upgrade of 2.XM products

2. Potential further localization of supply chain

3. Leverage products in further new markets

Market share target 2019

75.0%

1 3 2

Asset acquisition

One of the fastest growing markets globally

Markets favoring large, sophisticated IPPs

Market size to reach 4 GW in medium term

Signed framework agreement reflects potential from acquired products

Senvion 10%

90% Peers

B

From Kenersys to Senvion


21

Basket of other smaller markets To deliver steady revenues


0.50.4

0.20.1

CY19 CY16 CY15 CY14

0.30.5

0.20.3

CY19 CY16 CY15 CY14

4.0

1.52.42.3

CY19 CY16 CY15 CY14

Japan

Ireland

MENA + East EU




Market entry strategy

1. Market entry and penetration strategy customized for

individual markets

2. Focus on niche markets with good product fit

3. Building on existing relationships and cross selling

First milestones reached

Successful relationship building in Japan

Japan 24MW firm order and conditional orders for MM

platform

42 MW conditional order in Serbia

Advanced negotiation opportunities in MENA

(Ex Poland)

B


22

Project specific

foundation

solution for WTG

foundation on

rock

Project specific

tower:

Adaption of 93m

tower for better

AEP

Cost efficient

solution

Case study: 112 MW order in Norway Customer centric flexible approach

Unique proposition to customer

Project New client Customized solution

Independent

renewable energy

company

Strong track record

and >330MW

development

pipeline

Long-term orientation

1 3 2

3 strategic pillars

Partnership

approach

Strong relationship

with sponsor

Cooperation

agreement with NVE

concerning pipeline

112 MW

33x 3.4M114 @93m

Installation 2017

Challenging topography: steep, rocky mountains


B

23

Case study: 302MW* order from Nexif in Australia Product leadership and customer focused solutions


14

0m

3.4M140

14

0m

3.6M140

Same tower design

Power upgrade

AEP: +3%

1. Turbine power upgrade

Optimised product for better site suitability

Higher AEP

2. EPC solution

Minimisation of interfaces

Proven and experienced team in Australia

3. Tailor made delivery schedule

Faster to the market

Accelerated revenue generation for customer

Underpins Senvion’s execution strength and success of new products

* Conditional

AEP = Annual energy production

Project Glenn Innes Lincoln Gap

Location New South Wales South Australia

Volume 90 MW 212 MW

Senvion turbines 25 x 3.6M 140 @80m 59 x 3.6M 140 @80m

Installation End of 2017 Beginning of 2018

B

24

Highly efficient and growing service business With attractive margins

Revenue growing….

Key highlights

Best in class service metrics – Industry leading tenor of >10 years – 80+% renewal rate for 3 years

Efficiency improving… Availability on par

180 233

276

19%

2019E Dec-16 Dec-15 Mar-14

6.3 8.1

9.9

64%

Dec-16 Mar-14 Mar-12

(€M) MW / Employees

95%

96%

97%

98%

99%

Dec. Sep. May Jan.

3.XM MM

Availability in 2016 consistently above 97%

29%

Strategy

1. Customer-oriented and flexible service options

2. Introducing new data driven upgrades and leverage

3. Cost optimized service business with locations in Poland as well as Germany


C

25

Offshore strategy Leveraging on 6MW platform before launch of 10MW+

Senvion offshore installations

Cumulative Installed Capacity (MW)

Target to launch a market leading product built on our current track record

Market share in 5MW+ segment

Short-term

Full order book until 2019

Promising floating opportunities

Potential beyond 2025

Early mover advantage

Smaller turbines required (6MW still competitive)

High governmental support

Medium-term

Trigger investment phase for 10MW+

Feasibility study complete

Product design and power curve in 2017

Market feedback before triggering next phase

of investment

Targeting to participate in 2018 German

offshore auction

Nordsee One

Trianel

1,6951,492

1,050939

610

2871358650

Dec-17 Sep-15 12-13 Dec-19 11 09-10 08-09 Dec-16 06-07

10% 6%

19%

28%

37%

Siemens

Others

BARD

Adwen

Senvion

Source: BNEF H2 2016 Offshore Wind Market Outlook – October 2016


D

26



Agenda





Financial targets 4

Key takeaways 5

27

Senvion today Competitive portfolio for all wind classes

Leveraging on competitive product portfolio

3M

W c

lass

2M

W c

lass

Platform development with significant AEP1 improvement to lower customer LCoE

High wind Medium wind Low wind

On

sh

ore

O

ffs

ho

re

5M

W+

cla

ss

CY16: 136 MW

Total: 1.2GW

CY16: 148MW

Total: 2.9GW

CY16: 617MW

Total: 6.4GW

CY16: 150MW

Total: 0.5GW

Introduced in last 2 years

Notes: 1) Annual energy production; Further 440MW were installed in 2016based on 3.0M122, 3.2M122, 3.2M114

CY16: 160MW

Total: 0.2GW

CY16: 112 MW

Total: 0.8GW

(Acquired in 2016)

(Acquired in 2016)

Installations

Introduced 7 new product variants in 2 years -– Testament of our capabilities

Total: 0.1GW

28

Driving down LCoE with product upgrades and cost reduction

Cumulative cost reduction in %

Cumulative energy yield improvement in %

Levers

Modularization

Multiple rotor diameters

Increased rated power

Multiple hub heights

Advanced turbine control

Improved turbine operation

Levers

Implementation of new

technologies across

platforms

Supply chain optimisation

Project-specific solutions

Global sourcing

Target costing

Value engineering

Medium term plan for LCoE reduction in place to win in auctions

A

B

~ 14–18%

LCoE Reduction

Plan until 2019

2019 2017 2016 2018

Specific example

3.XM EBC product in typical low wind site, Germany

2019 2017 2016 2018


29

Product portfolio moving towards modularisation Standardization with customization and flexibility

Configurable product portfolio allows best LCoE for each wind site

Large number of products

Individual variants for specific markets and conditions

Longer R&D cycles

No scale effect in sourcing

Less products with multiple variants

Reduction of R&D cycles

Higher quality by re-use of proven and

validated technology

Cost savings by standardisation

A

From sequential individual turbines… …to modular turbines

104m

114m

122m

Towers Blades

Some examples

140m

Variable heights

Project specific towers

Optimised supply chain,

logistics and installation

Higher AEP

Weight reduction

Modular tower sections

Benefits

Multiple blade lengths for variety of sites


30

Case study: Modularisation Senvion with tailor made solutions to market needs

Australian 302MW order confirms product strategy of 3.6M140

122m

140

m (

= 3

0%

mo

re a

rea

)

3.2M122 3.4M140

140m

3.6M140

Challenge

Solution

Blades

Increase of weight and

load

Tower

Prevent costs for new

tower design

Electrical system

Ensuring minimal costs

with upgraded AEP

Modular blade architecture

Advanced control technology

Dynamic and adaptive

control

A

Same tower design

Power upgrade

Longer blades

AEP: +20%+

Same tower design

Power upgrade

AEP: +3%

Modular electrical

system to contain cost


31

Current product Upgraded product Available for sale Installation Markets 2019

New products in pipeline Higher AEP through innovation

2.XM H2/2017 H2/2018

Rotor upgrade

4

2

Power upgrade

Rotor upgrade

3.XM H2/2017 H2 2018

2.XM H2/2017 H1/2018

Power upgrade

Rotor upgrade

Wind class upgrade

3

A

5 10MW+ 2018 2022

Rotor upgrade

Power upgrade


1

Power upgrade

Rotor upgrade

Wind class upgrade

3.XM Mid 2017 H1/2018

32

Operational excellence enabling significant cost

reduction across the value chain

Cost reduction across the value chain

Supplier Management

Best cost country sourcing

Economies of scale

Part reduction on latest 3MW developments

Reduction of lead times

Make-to-order

Differentiation of inventories

Make or Buy

Forward sourcing

Supplier involvement in Service Strategy

Working capital optimization

Global Sourcing

Dual / Multiple sourcing

Local content as Sales enabler

Asset-light manufacturing footprint

In-house blade production at low cost region

1

3

2

4

Enabling

Levelized cost

of Energy

reduction

B


33

Asia sourcing Cost saving potential across key components

B

Asia Sourcing enables incremental cost savings of up to 20%

Blades

Main Carrier

Gearbox

Housing and Blocks

Main bearing

Pitch drives

Yaw drives

Fabrications

Nacelle

Tower

Blade casting

Hub casting

Project specific

landed cost approach

Benefit in costs – Few examples


~80% 100%

Current cost in Europe Asia sourcing -

Landed cost in Europe

-20%

0%

50%

2018 2016 2017 2019

~87% 100%



-13%

0%

50%

2018 2016 2017 2019

~80% 100%



-20%

0%

50%

100%

2018 2016 2017 2019

Gearbox – Savings potential Ramp up in sourcing from Asia

Ramp up in sourcing from Asia

Ramp up in sourcing from Asia

Blade material – Savings potential

Blade bearing– Savings potential

34

Creating value with products and operations Multistep approach with multiple value driving levers


Opportunities for technology driven companies remain in medium term

From technology evolution to driving scale Industry maturity level

Long time to go before the

technology curve flattens in

the sector

Opportunity for smaller

players to compete on

production innovations

Limited scale benefits

available in sourcing today

(Limited to few components)

Senvion’s approach

Modularisation as product

philosophy

Off the shelf component

sourcing in some cases

One mould – multiple blades

for efficient use

B

To Driving scale

Modularisation

Data analytics

• Data driven turbine

performance improvement

• New and extensive use of

data in service

From Technology evolution….

• Rotor sizes, hub heights

changing

• New materials being tested

• Better turbines coming up

Time

Ma

turi

ty le

ve

l • Modular turbines

• Partial standardisation

35



Agenda





Financial targets 4

Key takeaways 5

36

Product

competitiveness

Move Forward Some of key initiatives already under way and early successes visible

4

Key levers

Sales

Success

Five modules

Organisational

efficiency

Operational

efficiency

Quality

Some examples:

1. Production footprint

optimisation

2. Nearshoring

3. Right sizing certain

departments

4. Offshoring some non

core R&D functions

1. Efficiency gains in

Opex and HR costs

2. Faster and project

driven organisation

3. R&D budget and new

product development

cycles optimised

Benefits

Being implemented

Being implemented

37

Effects of our first initiatives under MOVE FORWARD

Enhancing efficiency

-14%

Targeted after

this initiative

~4,100

New

personnel to

support growth

~~120

Reductions

planned

~780

Employees

at Jan 17

4,662

Employee Base Key target areas

~Employees mostly, in Germany

Reductions in German

production facilities at Husum,

Trampe and Bremerhaven

Reductions via efficiency gains

in headquarter and R&D offices

~50 employees outside of Germany

Adding ~100 employees in Portugal

Readjusting capacities for

increased production

Adding new mould lines in our

extremely efficient blade facilities

Adding ~20 employees in new markets

Target reductions of ~14% across the board for improving our fixed cost base

38

Production footprint optimisation Faster production cycle and leaner manufacturing

From Germany focused… …to globally streamlined footprint

Nacelle Blades

Bremerhaven

Husum

Trampe

Oliveira de

Frades

Bremerhaven

Vagos

Nacelle Blades

Bremerhaven

Oliveira de

Frades

Baramati

Vagos

Ustron,

Warszovice

Key benefits

Reducing

complexity by

consolidating

global production

facilities

Generating

synergy effects

and benefitting

from scale

Realizing shorter

production cycle

times

Leveraging

capacities in low

cost countries

2.7 GW Nacelle capacity


Sufficient capacity for growth

3.6 GW Nacelle capacity

CY16 installations – 1.7 GW

39

Transformation towards a lean and process optimized

organisation

Core value-driving processes identified

Definition of cross-functional processes

Fully standardized and integrated Clear defined targets

Lean organisation with faster responses to the market

Specific examples

Streamlining of processes 1

Consolidation of service sites in central Europe

Definition of work packages with standard times which are better than benchmark

Insourcing service employees in some regions

Downsizing number of warehouses for O&M

Service center harmonization

Reduction of working capital while maintaining high level of service quality

2

3

Efficiency gains in services

Warehouse management


40



Agenda





Financial targets 4

Key takeaways 5

41

3.7% 7.5% 9.8% 8.0-8.5%

Building brand name and expertise

Transition

Growth

Senvion From a local company to a global player

5.1% 9.1% 9.3% 8.1% 7.1% 7.5% 9.3% 9.5%-10.5%

Adj. EBITDA Revenues

2,1391,922

1,759

2,294

1,675

1,2161,3041,209

680459

2,210

206210

144125

89

136113119

91

3517

250 - 280

2,600-

2,700

CY17

2,000- 2,100

160-180

CY16 CY15 FY15 FY14 FY13 FY12 FY11 FY10 FY09 CY07 CY06

25%+

CY19

*

* - EBITDA lower due to non profitable US business

3.4%

Financial targets

Note – Figures prior to FY13 have not been restated post accounting policy change in revenue recognition

42

Transformation fully reflected in sales by CY19

Current Markets – Germany, France, UK, Italy, Belgium, Portugal, Canada

New Markets – India, ANZ, LatAm (ex Brazil), Scandinavia, Ireland, Japan etc

Current markets

Germany – Market share to

grow in Southern Germany

France – Maintaining market

share of 20%

New markets

Australia – Leveraging 3.xM

products – increase in activity

India – Growth in market

share based on frame

agreement and progress in

order negotiations

South Cone/Nordics –

Maintaining decent market

shares in auctions and

targeting large projects

Focusing on other smaller

markets with good turbine fit

Revenue evolution (€M)

Financial targets

2,210

Current markets

Service Service

Service

Offshore

CY19

2,600-2,700

Offshore

New Markets

Current markets

CY18 CY17

2,000-2,100

Offshore

New Markets

Current markets

CY16

43

The path to higher profitability in the medium-term

CY19

€250-280m

Continuous

efficiecy and

quality

improvements

Fixed cost

increase

to support

growth

Service

margins

Pricing net of

cost outs &

product

improvements

New

products

Volume

effect

CY17

€160-180m

Footprint

consolidation

Lower OPEX

& Efficiency

improvements

Service

margins

Pricing net

of cost outs

Volume

effect

CY16

€206m

EBITDA development and improvement levers

Margin improvement driven by growth effects and efficiency measures

Volume effect

Benefit of

operating leverage

New markets

growth

Pricing

Competitive pressures

Product cost out

Low cost sourcing

Value engineering

Product Innovations via

modularisation

Suppliers renegotiations

Organisational efficiency

Optimised Opex

Production footprint

Lean processes

Lean structures

Financial targets

Other measures

Better quality management

Better inventory management

1 3

2

2 1

2 1 3

44

Fixed costs – Opex rationalisation already under way

Quarterly Opex run rate (€m)

53444547

Q4 19 Q4 17 Q4 16 Q3 16 Q2 16 Q1 16

64646662

Q2 16 Q3 16 Q4 19 Q4 17 Q4 16 Q1 16

Quarterly Employee costs run rate (€m)

Some examples:

Reduction in headcount in 2017

due to optimized footprint

Transformation to a flatter

organization

Streamlining processes in sales,

project realization and services

Nearshoring R&D services

supporting volume growth and

new product variants

<>

Some examples:

Insourcing of R&D

Best cost country sourcing

Reduction of consultancy and legal

costs

Nearshoring of admin functions

Optimising manufacturing footprint

Streamlining IT services and

tendering processes

Financial targets

45

Capex and R&D targets Investments in 16/17 trigger growth from 2019 onwards

R&D expense outlook(€m)

2.6% 3.1% 3.0%

Total tangible capex1 outlook (€m) Key highlights

Slight increase in 2017

reflects inter-

nationalisation and

product ramp-up

Capex to shrink by

CY19

R&D spent increased

post IPO

Likely to continue at

3.5% in medium term

2.2% 2.6% 1.4%

of revenue

60

30

4346

CY17 CY19 CY16 PF adj

CY15

Mar-15 Mar-14

2339 45 45

21

1922 23

Mar-14

44

Mar-15

58

PF adj CY15

67

CY16 CY19 CY17

68

%

3.5%

2.7%

1) Excluding capitalised R&D

Cap. R&D Exp. R&D

Financial targets

46

Expected free cash flow profile* (€M)

Path to free cash flow by CY19

Profitable growth by 2019 to lead to free cash flow generation

32

CY19 CY18 CY16 CY17

Free cash flow generation from

2018 onwards

Increase in cash to be triggered by

new market entries and higher

sales

Capex expected to be reduced

Cash flow generation based on

stable working capital levels

Financial targets

* - without the effects of new offshore platform R&D, capex costs

47

(0.01)

(0.14)

0

Sound balance sheet

8.3%

12.1% 9.2%

Senvion GmbH Senvion S.A.

211 213

160

Dec-15

(101)

(4.7%)

Mar-15

8.3%

Mar-14

12.1%

Mar-13

9.2%

(83)

Dec-16

(3.7%)

Net working capital development (€m)

NWC % of trailing LTM

Net working capital

Net Debt/EBITDA

Within our WC guidance thanks to

consistent working capital management

Sustainable WC target of +2% to -4%

Target range reflects business cyclicality and

market entries

CY15 CY16 CY19

<1x Target to keep leverage under 1x

Evaluating options for refinancing of High

yield bonds and LG facilities

Strong balance sheet to support growth

Financial targets

48

Key upsides and risks

Possible upsides Key risks

1. Gaining market share in the US

2. Less pricing pressure than

anticipated currently

3. Any potential collaboration in offshore

4. Grid parity to be reached sooner than

expected, opening new opportunities

1. Delay in Chile order conversion – Risk

of revenues delayed to 2018

2. Delays in order intake conversion

3. Managing supply chain specially for

blades

4. Delays in product announcements

5. Effects from saving programme taking

more time than expected

6. Any other unforseen expenses and risks

in new markets

1

2

3

4

1

2

3

4

5

6

Financial targets

49



Agenda


Our path to return to growth 3



Financial targets 4

Key takeaways 5

50

Key takeaways

Senvion well prepared to leverage opportunities in subsidy free world 1

Path to profitable growth by 2019 backed by detailed plans… 2

…Supported by efficient modular products in key markets 3

…in less complex, more responsive organisation with smarter

spending 4

© Senvion S.A.

All rights reserved. No part of this document may be

reproduced or transmitted in any form or by any means,

electronic or mechanical, including photography,

recording, or any information storage and retrieval

system, without permission from Senvion S.A.

Thank you for your participation

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