Over the first quarter of 2022/23 (from 1 April to 30 June 2022), Alstom booked €5.6 billion of orders. The Group sales increased by 8% reaching €4.0 billion, in line with the targeted trajectory. The backlog, as of 30th June, 2022, settled at €83.4 billion, providing strong visibility on future sales.
More details:
- During the first quarter of 2022/23 (from 1 April to 30 June 2022), Alstom recorded €5,601 million in orders, with notably strong order intake in Rolling Stock and Services. Orders for Services reached a new record level of €1,844 million. Over three months, orders for Services, Signalling and Systems reached 46% of the total order intake.
- On a regional level, Europe accounted for the majority of the orders, i.e. 70% of the Group total. Of particular note, Alstom was awarded a landmark contract to supply 130 Coradia Stream High Capacity electric double-deck trains, together with full maintenance for 30 years, to Landesanstalt Schienenfahrzeuge Baden-Württemberg (SFBW) network in Germany.
- Furthermore, the contract reserves an option to order up to 100 additional trains. With a value of almost €2.5 billion for the first 130 trains and 30 years’ maintenance, this order is a positive indication for Alstom’s market share ambitions in Germany.
- Alstom also signed an historic agreement with Sweden’s national rail operator SJ to supply 25 Zefiro Express electric high-speed trains, with an option of 15 additional trains. The contract for the firm tranche is valued at around €650 million. The new trains will be Sweden’s fastest, capable of operating at maximum speeds of 250km/h. The first train is scheduled for delivery in 2026.
“Alstom has recorded a solid quarterly order intake on the back of a continuously sound market. In particular, the Group secured a landmark contract to supply 130 Coradia Stream trains with 30 years of maintenance for the state of Baden-Württemberg, demonstrating our leadership in Germany. Our sales have developed as expected, thanks to the stabilisation of our Rolling Stock projects and strong performance in Services and Systems. Despite a more complex global environment, marked notably by inflation and the electronic components shortages, the Group continues to progress on the delivery of its Alstom in Motion strategic plan, demonstrating the resilience of its business model,” said Henri Poupart-Lafarge, Alstom Chairman and Chief Executive Officer.
- In the Asia/Pacific region, Alstom has signed a framework contract with the Department of Transport of Victoria in Australia, for the provision of 100 Flexity low-floor Next Generation Trams (NGTs) for the largest urban tram network in the world. Valued at approximately €700 million, the contract includes supply of rolling stock and 15 years of maintenance, making this the biggest tram contract in Australia and in the Southern hemisphere.
- Sales were €4,002 million in Q1 2022/23 (from 1 April to 30 June 2022) versus €3,701 million in Q1 2021/22 (+8%). In Systems, Alstom reported €388 million sales, up 63% vs. last year, including remarkable growth on the Cairo monorail project.
- Services delivered €909 million of sales in Q1 2022/23, up 19% versus last year, demonstrating a sound level of execution. Sales in Rolling Stock stood at €2,175 million, up 1% versus last year, reflecting stronger contributions from projects in India and in the UK, which are ramping-up, and contracts in Switzerland and Canada ramping-down. Signalling sales stood at €530 million in Q1 2022/23, roughly stable versus Q1 2021/22. The book-to-bill ratio is 1.4.
Main highlights of the first quarter of 2022/23:
During the quarter, Alstom reached important delivery milestones, and launched a range of initiatives to accelerate its transformation into a more competitive and agile group.
Key projects achievements:
- In May, the new Elizabeth line entered passenger service under Central London using Alstom’s state-of-the-art Aventra fleet. Alstom has supplied trains, technology and infrastructure for this new line and will also maintain the trains. The transformational railway is set to reduce journey times, to create additional transport capacity, to improve accessibility and to provide an economic boost to the capital and beyond.
- Also in May, Alstom successfully delivered India’s first semi high-speed regional train for Delhi-Meerut RRTS project. The first train has been delivered in less than a year since the beginning of production, and is 100% made in India at Alstom’s factory in Savli (Gujarat). The semi high-speed regional train is designed and built to run at 180 km/h, and is expected to decrease travel time between Delhi-Meerut by 40%. These trains are energy efficient, designed to offer high end comfort and safety features for premium passenger experience for commuters, including those who are disabled.
Smart and Green Mobility:
- In April, Alstom took another step towards Autonomous Train Operation by testing Elta Systems Obstacle Detection System (ODS) with infrastructure manager ProRail and rail freight operator Lineas in the Netherlands. These tests, which were conducted in Oosterhout, near the city of Breda in the Netherlands, have demonstrated that the ODS installed aboard the locomotive is able to detect obstacles up to 500 metres ahead in all weather and visibility (day and night) conditions.
- It can be operated as a Driver Assistance System, as well as a fully automated system in conjunction with Alstom’s AutoPilot component. The next steps, to be finalised this summer, will be to test ODS in combination with Automatic Train Operation (ATO) to pave the way for GoA4 [1] in freight.
- At the end of May, Alstom signed a strategic cooperation agreement with PKN ORLEN for the supply of zero-emission, eco-friendly trains and hydrogen fuel for public rail transport. The corporation, which is implementing the hydrogen strategy, announced earlier this year that it will provide the refuelling infrastructure for trains produced by Alstom. Under the agreement, Alstom will be responsible for the supply of zero-emission trains powered by hydrogen fuel cells.
One Alstom team Agile, Inclusive and Responsible:
- In May 2022, the Group disclosed its enhanced ESG 2025 targets applicable to the whole new perimeter as well as its commitment to achieving Net Zero carbon in its value chain by 2050. CO2 emissions targets have been set for 2030 covering Alstom’s own direct and indirect emissions (scope 1 & 2) as well as indirect emissions from Products sold (Scope 3). Alstom plans to further engage with suppliers and customers to make its solutions Net Zero through their entire life cycle.
- The reinforced strategy reflects the Group’s commitment to deliver a strong response to increased expectations on sustainability performance from stakeholders. Its priorities remain: Enabling decarbonisation of mobility; Caring for our people; Creating a positive impact on society; and Acting as a responsible business partner.
Financial trajectory for FY 2022/23:
- The current economic and political context, becoming more complex, creates uncertainties in business activities, and Alstom is no exception. In particular, inflation is expected to weigh to some extent on FY 2022/23 profitability, and the electronic components shortages may create tension on the deliveries. The Group has therefore put in place strong risk mitigation and cost-out actions to navigate these uncertainties.
- As the basis for its 2022/23 outlook, the Group assumes neither further disruptions to the world economy (including further inflation or aggravated geopolitical crisis), nor significant supply-chain shortages, that would materially impact the Group’s ability to deliver products and services.
- Sales growth supported by solid order backlog and Book to bill ratio above 1 Progressive aEBIT margin increase vs FY 2021/22 through healthy order intake and sound backlog execution Free Cash Flow generation.
Mid-term financial trajectory and objectives:
The outlook given in connection with Alstom in Motion 2025 is confirmed.
- Market share: By 2024/25, Alstom is aiming to grow its market share by 5 percentage points [4] by leveraging its unique strategic positioning, supported by its enlarged group momentum and its competitive offering.
- Sales: Between 2020/21 (proforma sales of €14 billion) – and 2024/25, Alstom is aiming at sales Compound Annual Growth Rate over 5% supported by strong market momentum and unparalleled €83.4 billion backlog as of 30 June 2022, securing sales of ca. €35 to 37 billion over the next three years. Rolling stock should grow above market rate, Services at solid mid-single digit path and Signalling at high single digit path.
- Profitability: The adjusted EBIT margin should reach between 8% and 10% from 2024/25 onwards, benefiting from operational excellence initiatives, the completion of the challenging projects in backlog while synergies are expected to deliver €400 million run rate in 2024/25 and €475 – 500 million annually from 2025/26 onwards.
- Free Cash Flow: from 2024/25 onwards, the conversion from adjusted net profit to Free Cash Flow should be over 80% driven by mid-term stability of working capital, stabilisation of CAPEX to around 2% of sales and cash focus initiatives while benefiting from volume and synergies take up.
- Alstom will maintain its disciplined capital allocation focusing on maintaining its investment grade profile, while keeping flexibility and ability to pursue growth opportunities through focused bolt-on M&A. Alstom’s Baa2 rating with a negative outlook was confirmed during Q1 by Moody’s.
- Alstom is committed to delivering sustained shareholder returns with a dividend pay-out ratio of between 25% and 35%.
Combined Shareholders’ Meeting:
- The Combined Shareholders’ Meeting of Alstom was held on July 12, 2022, under the chairmanship of Mr. Henri Poupart-Lafarge. The Shareholders’ Meeting was the opportunity to review the highlights of the fiscal year 2021/22 as well as the first year of integration of Bombardier Transportation.
- The Combined Shareholders’ Meeting approved the dividend related to the 2021/22 fiscal year for an amount of €0.25 gross per share, and has decided to offer to each shareholder an option, with respect to 100% of the dividends attached to the shares owned by such shareholder, for payment of such dividend to be made in cash or in new shares. The shareholders adopted all the resolutions approved by the Board of Directors.
Source: Alstom -Press Release | Image Credit: Alstom
