Suzlon suffers as income slides

The world's third-largest wind turbine maker, Indian manufacturer Suzlon, saw its share price fall six per cent late last week as the company reported a 42 per cent decline in income for its second quarter compared to the same period a year ago.

Losses for the three months ending June 30 widened to 9.1bn rupees (£123m) from 4.5bn rupees a year earlier, thanks to falling sales and the strengthening rupee. The rupee appreciated seven per cent against the euro in the first quarter, according to data compiled by Bloomberg, having a direct impact on the value of Suzlon's exports.

Suzlon chairman and managing director Tulsi Tanti said the company still maintained a bright outlook, despite reporting losses during six of the last eight quarters.

"This has been a challenging quarter for us," he admitted. "However, we see strong momentum for the wind sector led out of emerging economies – particularly India, China, Brazil and Western Europe – while the US and selective European markets remain difficult."

Companies in Europe and the US have postponed orders for wind turbines as the financial crisis makes it difficult to raise funds for renewable-energy projects, the firm said in June. But Tanti claimed a strong domestic order book and a reduction in working capital would help the company return to growth.

"We are, as a group, focused on improving efficiency and reducing costs and at the same time bringing the best technology, products and service offerings to take advantage of opportunities in key growth markets and in the rapidly growing offshore segment," he said.

Recent reports in India's Economic Times have suggested Suzlon is looking to sell a 25 per cent stake in its German wind energy subsidiary, REpower Systems, for $500m.

Suzlon is one of Asia's leading clean-tech success stories, having started operations in south India in 1995 with just 20 people before growing to reach a manufacturing capacity of 4,200MW a year at the height of operations two years ago, accounting for around 10 per cent of the global wind turbine market.

At present Suzlon has more than 1,750MW of wind turbine capacity installed in the US, which it expects to ramp up to 2,480MW by the end of the year.

The firm has a share of 12.3 per cent in the global wind turbines market but is now facing growing competition from emerging Chinese players as well as established conglomerates such as GE, Vestas and Siemens.

In related news the company also reported that it has refinanced its existing rupee-denominated term loans and working capital loans through new facilities from a syndicate of 22 banks, for a total of 10,624bn rupees ($230m).