Suzlon reports significant q/q drop in fiscal Q1 profit

Suzlon turbines. Author: Janusz Sobolewski. License: Creative Commons, Attribution 2.0 Generic.

Indian wind turbine maker Suzlon Energy Ltd (BOM:532667) reported a net profit of INR 480 million (USD 7.4m/EUR 6.3m) for the quarter to June 30, 2017, significantly below the January-March result of INR 5.89 billion.

The net profit achieved in the first quarter of Suzlon’s fiscal 2017/18 was still an improvement from a loss of INR 2.63 billion a year ago. In the seasonally low-volume quarter, the company delivered 412 MW, including 86 MW solar.

The first wind auction in India was held in February and 1,050 MW of projects were successful. They will sell power at a price of INR 3.46 per kWh. The transition to tenders slowed orders in the Indian market, which impacted Suzlon's results. Revenue in April-June was down by 46.6% from January-March.

“The transition from FiT to competitive bidding has created temporary volatility in terms of volume and margins. In the long‐term, all stakeholders will benefit from higher volumes,” said CEO J P Chalasani.

Details on Suzlon’s performance in the quarter are in the table. New products, including the S111‐120m and S111‐90m wind turbines, accounted for 76% of the revenue in the reporting period.

Results in INR million	Q1 FY 2017/18	Q1 FY 2016/17
Reported net profit	480	2,630
Net profit before forex	900	2,060
EBITDA before forex	4,750	1,770
Gross margin (in %)	41.3	44.1
Revenue	26,650	16,480

At the end of June, Suzlon’s order book amounted to 1,169 MW. Consolidated customer advance stood at INR 9.45 billion.

CFO Kirti Vagadia said that to cope with the temporary uncertainties in the domestic market the company has further strengthened its risk management in order to maintain margins.

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