Hitachi Energy India Limited announces Q3FY23 results: Orders show robust growth

QUARTER HIGHLIGHTS

• Renewables, data centers, and industry drive 31% YoY order growth
• Revenue declined 8% YoY due to supply chain constraints
• Chips shortage, commodity price fluctuation continue to pressure the margins
• PBT at INR 13.4cr; PAT at INR 4.6cr
• Solid cash performance

Bangalore, Feb 06, 2023 – Hitachi Energy India Ltd. announces results for the financial period from Oct to Dec 2022.

“Our focused approach to advancing a sustainable energy future backed by our commitment towards supporting the customers to integrate renewables at scale and embrace digital transformation has been helping us build a robust order pipeline,” said N Venu, Managing Director and Chief Executive Officer, Hitachi Energy India Ltd. “However, in the short term, the global macro-economic forces, together with supply chain constraints, continue to impede margin accretion.”

Orders

In the quarter ending 31 December 2022, orders maintained double-digit growth, up 31.3% YoY to INR1,222.1 crore. Driven by orders for transformers for renewable energy evacuation and interstate power transmission projects, high-voltage products to a state-backed greenfield refinery and CoreSense™ technology to help a steel major in the digital transformation of their power assets. Transportation orders continued on the back of 100% electrification and hi-speed railway initiatives.

Exports contributed over 20% of total orders from established markets in Middle East and Bhutan, and new inroads in South Africa, Central Asia and Europe. Services continued healthy growth for our GIS substations, transformers, and high voltage products as we continue to deliver significant customer value as trusted long-term partners.

As of December 31, 2022, the order backlog stood at INR 7,231.3 crore.

Revenue

Revenue declined 8.5% YoY reaching INR 1,041 crore for the quarter that ended December 31, 2022, mainly due to supply chain constraints, led by shortage of chips and electronics. The company focused on improving liquidity through cash management, to help us capitalize on the continued market investment. This resulted in solid cash generation in the quarter.

Profit and operations

Year-long geopolitical tension has led to adverse inflation and interest rates, rising commodity prices, forex fluctuations, as well as global supply chain constraints. Despite redoubled efforts towards supply chain management - including restoring channels for chips and electronics – and improving operational efficiencies, these persistent challenges continue to pressure margins in the short term.

Efforts are underway towards further accelerating operational efficiencies and optimizing at factory levels to improve competitiveness and liquidate inventory. Driving strategic investments in high-growth segments will also help strengthen profitability and should ensure the bottom line remains healthy in the long run.

The profit before tax in the quarter stood at INR 13.4 crore, and the profit after tax was INR 4.6 crore. Operational EBITA stood at INR 29.9 crore in the quarter.

Outlook

As the world grapples with multiple economic and geopolitical challenges, the pressure on supply chains, including chips and electronics should ease with manufacturing capacities gradually clearing out backlog over the coming quarters. Against this backdrop, we expect the energy transition momentum to continue driving growth of energy network infrastructure such as flexible grids, driving demand in the medium to long term.