Suzlon’s First-Quarter Loss Doubles on Weaker Euro (Update1)

Aug. 13 (Bloomberg) -- Suzlon Energy Ltd., India’s biggest maker of wind turbines, said its first-quarter loss doubled as a weaker euro devalued its overseas assets.

The company’s loss in the three months ended June 30 widened to 9.1 billion rupees ($195 million) from a 4.5 billion-rupee loss a year earlier, it said in an e-mailed statement today. The performance was the Ahmedabad-based company’s sixth loss in eight quarters and exceeded the mean estimate of a 2.8 billion rupee loss from 12 analysts surveyed by Bloomberg.

“The company is exposed to foreign exchange losses because a large portion of its business is in Europe and the U.S.,” said Anuj Upadhyay, a Mumbai-based analyst with Wallfort Financial Services Ltd. by telephone. “But this is a lot worse than was expected.”

The Indian rupee’s appreciation against the euro contributed 2.5 billion rupees to the quarterly loss and diminished the value of the company’s assets in Europe, Suzlon’s biggest market in terms of revenue, Robin Banerjee, chief financial officer, said by telephone. India’s rupee appreciated 7 percent against the euro in the first quarter, according to Bloomberg data.

“Next quarter this loss will be recovered,” as the euro has started to strengthen against the rupee, Banerjee said. Sales volume is seasonally lower in the first quarter, he said.

The company’s order book grew 14 percent to $4.9 billion compared with the previous quarter, driven mostly by demand in India, Banerjee said.

Suzlon shares have fallen 38 percent this year compared with a 4 percent gain in the benchmark Sensitive Index of the Bombay Stock Exchange. The stock fell 1.9 percent to 56.45 rupees today before the announcement.

Global investment in wind power slowed during the economic slump in the U.S. and Europe, lowering prices paid for wind farms, according to Bloomberg New Energy Finance. Wind-turbine makers are most at risk as overcapacity narrows margins, Justin Wu, an analyst for Bloomberg New Energy Finance, said on June 21.

To contact the reporter on this story: Natalie Obiko Pearson in Mumbai at npearson7@bloomberg.net

To contact the editor responsible for this story: Clyde Russell at crussell7@bloomberg.net