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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,
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Certain financial data included in the presentation consists of “non-IFRS financial measures”. These non-IFRS financial measures may not be comparable to similarly
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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
Senvion’s strategy
( ) – 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: $41/50/MWh
India
2016 – Avg. Rs4-5/KWh
2017: Rs3.46/KWh
Market-based mechanisms – e.g., auctions, certificate schemes, renewable portfolio standards
Feed-in tariff/premiums
Wind markets are
shifting to market
based mechanisms
Prices and margins
to adapt to auctions
Winning factor is
LCoE leadership
Key trends
Industry trends
8
0 100 200 300 400 500
Coal
Combined cyc e gas
CHP
Nuclear
Large hydro
Small hydro
Biomass – anaerobic digestion
Wind – onshore
Geothermal – flash
Municipal solid waste
PV – no tracking
PV – tracking
Landfill gas
Wind – offshore
PV – thin film
Biomass – incineation
Geothermal – binary
Biomass – gasifiation
Solar thermal – LFR
Solar thermal – tower
Solar thermal – parabolic trough
Marine – tidal
Marine – wave
3. Softening Levelised Cost of Energy Wind already one of the cheapest sources
Co
nve
nti
on
al
Re
ne
wab
les
Source – BNEF H2 2016 LCoE update
Estimated global LCOE range Country LCOEs H1 2016 benchmark H2 2016 benchmark
Fossil technologies: US China Europe Australia
1,037
844
Increase in market demand for wind once grid parity reached
Industry trends
($/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
Senvion’s strategy
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
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
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
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
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
Sales growth across segments
18
The path to growth in 2019 Maintaining strong sales in other current markets
A
Sales growth across segments
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 Installations (GW)
Onshore Market share target
Onshore Installations (GW)
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
Sales growth across segments
Flexible product solutions
Leverage volume effects
of projects
Support existing customers and
expand relationship to local
customers
Onshore Installations (GW)
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
Onshore Installations (GW)
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
Onshore Installations (GW)
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
Source – MAKE Q4/2016 Total Market Outlook, 2013–2025e
* - 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
Sales growth across segments
21
Basket of other smaller markets To deliver steady revenues
Source – MAKE Q4/2016 Total Market Outlook, 2013–2025e
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
Onshore Installations (GW)
Onshore Installations (GW)
Onshore Installations (GW)
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
Sales growth across segments
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
Sales growth across segments
B
23
Case study: 302MW* order from Nexif in Australia Product leadership and customer focused solutions
Sales growth across segments
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
Sales growth across segments
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
Sales growth across segments
D
26
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
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
Leveraging on competitive product portfolio
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
Leveraging on competitive product portfolio
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
Leveraging on competitive product portfolio
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
Leveraging on competitive product portfolio
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
Leveraging on competitive product portfolio
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
Leveraging on competitive product portfolio
~80% 100%
Current cost in Europe Asia sourcing -
Landed cost in Europe
-20%
0%
50%
2018 2016 2017 2019
~87% 100%
Current cost in Europe Asia sourcing -
Landed cost in Europe
-13%
0%
50%
2018 2016 2017 2019
~80% 100%
Current cost in Europe Asia sourcing -
Landed cost in Europe
-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
Leveraging on competitive product portfolio
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
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
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
Enhancing efficiency
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
Enhancing efficiency
40
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
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
Enhancing efficiency c.
Leveraging on competitive product portfolio b.
Agenda
Strategic roadmap and outlook 2017–2019 2
Our path to return to growth 3
Sales growth across segments a.
Key industry trends 1
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
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