Hitachi Energy India Limited announces Q1FY24 results: Energy transition drives broad-based order momentum

QUARTER HIGHLIGHTS

• Orders, excluding HVDC, up 6% YoY
  
• Strong contribution of exports orders
• Continued delays in chips and electronics impact revenue, and thus profitability
• Order backlog of INR 7,024 crore
• Published integrated annual report for FY22-23

_{**The company evaluates the profitability based on Operational EBITA. Operational EBITA represents income from operations excluding: (i) amortization expense on intangibles, (ii) restructuring and restructuring-related expenses, (iii) non-operational pension cost, (iv) gains and losses from sale of businesses, acquisition-related expenses and certain non-operational items, as well as (v) foreign exchange/commodity timing differences in income from operations consisting of: (a) unrealized gains and losses on derivatives (foreign exchange, commodities, embedded derivatives), (b) unrealized foreign exchange movements on receivables/payables (and related assets/liabilities).}

“We remain focused on balancing our operational complexity and efficiencies to preserve the growth momentum,” said N Venu, Managing Director and Chief Executive Officer, Hitachi Energy India Ltd. “While persistent delays in chips and electronics, led to lower revenue in the quarter, sustained operational excellence efforts provide visibility in the near term. We continue to convert opportunities germinating from energy transition across India and the world.”

Orders

In the quarter ending June 30, 2023, we received orders worth INR 1,147.5 crore, up 6% yoy (without HVDC order in corresponding quarter). Orders reflected the growing urgency for energy transition and electrification, led by renewables – with orders like renewable studies for utilities and industries, solar integration substations in Rajasthan and power quality orders. Capex by industries and consequent power infrastructure led to cross-portfolio orders from steel, cement, battery manufacturing, and so on.

In addition, high growth segments like datacenters and rail & metro bolstered products, services and digitalization orders. Datacenter customers are becoming keen adopters of digital service solutions like RelCare. Whereas, in keeping with gaining electrification of urban mobility, transformer capacity enhancement services for metro rail systems also added to orders.  

Exports contribution grew to over 30% of total orders in this quarter. Orders from renewable and rail segments in Africa, and demand for power quality products from US and Chile to Iraq, illustrated a world in energy transition. Our strategy of making in India for India and the world has augured good results, as our feeder factories continue to receive steady orders.

As of June 30, 2023, order backlog stood at INR 7,024 crore, providing revenue visibility for the coming quarters.

Revenue

While a focus on portfolio led to diversified order growth, revenue held steady at 5% YoY growth at INR 1,043 crore for the quarter ended June 30, 2023, it has declined compared to the previous sequential quarter. Supply limitations such as continued delays of chips and electronics and delays impacted revenue conversion.

Profit

A lower revenue base and operating fixed costs impacted profitability. Profit before tax at INR 3.4 crore and profit after tax at INR 2.4 crore demonstrate double digit YoY growth on a low base. We continued balancing operational complexity with efficiencies. Along with enhancing our strategic approach and go-to-market mechanism focusing on high growth segments, for resilience in future markets.

Sustainability 2030

As part of the integrated annual report for FY2022-23, Hitachi Energy India reported its steps towards its Net Zero ambitions. In the period under review, the Company has continued to use 100% fossil-free electricity in its own operations. It has replaced diesel generators with solar panels to power its site offices and introduced rooftop solar at its factory in Maneja. The Company has switched over to clean piped natural gas from high-speed diesel for ovens & dryers at manufacturing facilities. It has maintained its Zero Liquid Discharge approach across locations and continued on its path to reduce freshwater consumption.

Outlook

India is projected to continue as the fastest growing large economy in 2023, which will continue to add to the power demand. Despite ongoing chips and electronics shortage, fundamental market drivers remain intact led by the acceleration of the energy transition. High growth segments - rail, data centers, etc. will continue to deliver in the coming quarters. Tariff-based bidding for the transmission corridors – including HVDC – for evacuation & integration of 500 GW of renewables provides opportunities and market expectations of private CAPEX revival, driven by favorable policy and interest rates, hold further potential for our tradition and digital technologies.