Alstom’s third quarter 2023/24: good commercial momentum and Free Cash Flow guidance reaffirmed for FY 2023/24
- Q3: strong orders of €5.5 billion, sales at €4.3 billion, book-to-bill at 1.3
- 9-months: orders at €13.9 billion, sales at €12.8 billion, book-to-bill at 1.1
- Full year 2023/24 outlook and mid-term objectives confirmed
- Executing on the deleveraging plan
For the first nine months of 2023/24 (from 1 April to
The backlog, as of
Key figures
Reported figures (in € million) | 2022/23 Q3 | 2023/24 Q3 | % Change Reported | % Change Organic |
Orders received | 5,152 | 5,451 | +5.8% | +6.4% |
Sales | 4,223 | 4,332 | +2.6% | +4.6% |
Reported figures (in € million) | 2022/23 9 months | 2023/24 9 months | % Change Reported | % Change Organic |
Orders received | 15,224 | 13,898 | (8.7)% | (7.0)% |
Sales | 12,271 | 12,775 | +4.1% | +7.3% |
Geographic and product breakdowns of reported orders and sales are provided in Appendix 1. All figures mentioned in this release are unaudited.
“Alstom delivered strong levels of order intake during the third quarter, on the back of positive market momentum in Services and Systems. We are relentlessly focused on the operational action plan to generate cash in the second half of the year, notably through improved production and working capital efficiency. Considering the progress made since November, we will provide the breakdown of each measure of the €2 billion inorganic plan in
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Detailed review
During the third quarter of 2023/24 (from 1 October to
Over three months, orders for Services, Signalling and Systems reached 84% of the total order intake and 66% over the 9 months.
On a regional level,
In
In the
In
The level of base orders (less than €200 million of contract value) has exceeded €2 billion during this third quarter.
Sales were €4,332 million in Q3 2023/24 compared to €4,223 million in Q3 2022/23.
Over 9 months, sales amounted to €12,775 million, representing a growth of 4.1% on a reported basis and a strong 7.3% on an organic basis compared with
For the same period, Rolling Stock sales reached €6,765 million, representing an increase of 1% on a reported basis and 5% on an organic basis, driven by a ramp-up of projects in
Signalling sales stood at €1,911 million for the 9 months, up 8% on a reported basis and 12% on an organic basis, led by a consistent execution across all regions, mainly in the US, the
In Systems,
Services delivered a sustained performance and reported €2,981 million of sales over 9 months, up 7% on a reported basis and 10% on an organic basis, benefiting from a strong ramp-up in the
The book-to-bill ratio is 1.3 over the quarter and 1.1 over 9 months.
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Main highlights of the third quarter of 2023/24
During the quarter,
- Key projects deliveries
In
In
In
Also in
- One
Alstom team Agile, Inclusive and Responsible
For the thirteenth consecutive year,
The Company reached an overall score of 70 out of 100 in the Corporate Sustainability Assessment and remained in the top of the best scored companies of the industry. Significant improvement has been recorded this year in areas such as Resource Efficiency and Circularity, Customer relationship, Environmental Emissions and Human rights.
In
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Progress on Alstom’s action plan to secure financial targets
During this third quarter, the company has been mobilizing around the operational, commercial, and cost efficiency plan:
- Quality of order intake during Q3 2023/24 provides comfort to continue growing the margin in backlog (+0.5% per year in coming three years)
- After 9 months,
Alstom has produced 3,415 cars (compared to 2,998 in 2022/23), continuing to deliver the production ramp-up - Strong actions have been launched to revert the negative trend on inventory days of sales
- Plan to reduce overhead costs has been announced to employees representatives and is expected to be finalized (sizing, cost, modalities and timeline) and launched by the year-end, with the objective to decrease SG&A costs by ca. 1 percentage point of sales by
March 2026 .
Reinforce Balance sheet to maintain Investment Grade Rating
Alstom’s Board of Directors is committed to maintaining a solid and sustainable Investment Grade rating. It has decided to reinforce the Group’s balance-sheet and is targeting a reduction in its net debt position by €2 billion by
Existing reference shareholders are supportive of this plan and are working closely with the management to execute it swiftly.
- Assets disposal processes are progressing, which allows confirmation of the announced range of expected proceeds between €0.5 billion and €1.0 billion.
- Equity-like instruments preparation is also in progress, with advisors mandated and underlying business selection and structuration well advanced.
- Feasibility and sizing of a potential capital increase (with pre-emptive rights for shareholders) is being studied in parallel.
Not taken into account in the €2 billion deleveraging plan is the exit of
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Financial trajectory for FY 2023/24
The Group has based its 2023/24 outlook on a central inflation scenario reflecting a consensus of public institutions. The Group also assumes its continuous ability to navigate supply chain disruptions and macroeconomic and geopolitical challenges as it has done during these first nine months of fiscal year 2023/24.
- Book to bill ratio above 1
- Sales organic growth above 5%
- Adjusted EBIT Margin around 6%
- Free Cash Flow within the range €(500)m - €(750)m
As already announced, the Board will propose to the Shareholders’
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Mid-term financial trajectory and objectives to be reached in FY 2025/26
- Sales: Between 2020/21 (proforma sales of €14 billion) – and 2025/26,
Alstom is aiming at sales Compound Annual Growth Rate over 5% supported by strong market momentum and unparalleled €90.3 billion backlog as of31 December 2023 , securing sales of ca. €38 to €40 billion over the next three years. Rolling Stock should grow above market rate, Services and Signalling at high-single digit path.
- Profitability: the adjusted EBIT margin should reach between 8% and 10% from 2025/26 onwards, benefiting from operational excellence initiatives, strong margins on new orders including improved indexation, 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 2025/26 onwards, the conversion from adjusted net profit to Free Cash Flow should be over 80%1 driven by mid-term stability of trade working capital, stabilisation of CAPEX to around 2% of sales and cash focus initiatives while benefiting from volume and synergies take up.
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Conference Call
A live audiocast will also be available on Alstom’s website: Alstom’s orders and sales for the third quarter of fiscal year 2023/24.
To participate in the Q&A session (audio only), please use the dial-in numbers below:
UK +44 (0) 33 0551 0200USA +1 786 697 3501France +33 (0) 1 7037 7166
Quote
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For more information, please visit www.alstom.com | |||
Contacts | Press: Coralie COLLET - Tel. : +33 (0) 7 63 63 09 62 coralie.collet@alstomgroup.com Samuel MILLER – Tel. : +33 (0) 6 65 47 40 14 samuel.miller@alstomgroup.com Thomas ANTOINE - Tel. : +33 (0) 6 11 47 28 60 thomas.antoine@alstomgroup.com Investor relations : Martin VAUJOUR – Tel. : +33 (0) 6 88 40 17 57 martin.vaujour@alstomgroup.com Estelle MATURELL ANDINO – Tel.: +33 (0)6 71 37 47 56 estelle.maturell@alstomgroup.com |
This press release contains forward-looking statements which are based on current plans and forecasts of Alstom’s management. Such forward-looking statements are relevant to the current scope of activity and are by their nature subject to a number of important risks and uncertainty factors (such as those described in the documents filed by
This press release does not constitute or form part of a prospectus or any offer or invitation for the sale or issue of, or any offer or inducement to purchase or subscribe for, or any solicitation of any offer to purchase or subscribe for any shares or other securities in the Company in
APPENDIX 1A – GEOGRAPHIC BREAKDOWN
Reported figures | 2022/23 | % | 2023/24 | % |
(in € million) | 9 months | Contrib. | 9 months | Contrib. |
9,395 | 62% | 8,224 | 59% | |
1,510 | 10% | 1,767 | 13% | |
2,104 | 14% | 2,977 | 21% | |
2,215 | 14% | 929 | 7% | |
Orders by destination | 15,224 | 100% | 13,898 | 100% |
Reported figures | 2022/23 | % | 2023/24 | % |
(in € million) | 9 months | Contrib. | 9 months | Contrib. |
7,343 | 60% | 7,391 | 58% | |
2,074 | 17% | 2,516 | 20% | |
1,797 | 15% | 1,782 | 14% | |
1,057 | 8% | 1,086 | 8% | |
Sales by destination | 12,271 | 100% | 12,775 | 100% |
APPENDIX 1B – PRODUCT BREAKDOWN
Reported figures | 2022/23 | % | 2023/24 | % |
(in € million) | 9 months | Contrib. | 9 months | Contrib. |
Rolling stock | 7,648 | 50% | 4,666 | 34% |
Services | 5,047 | 33% | 4,943 | 36% |
Systems | 852 | 6% | 2,419 | 17% |
Signalling | 1,677 | 11% | 1,870 | 13% |
Orders by product line | 15,224 | 100% | 13,898 | 100% |
Reported figures | 2022/23 | % | 2023/24 | % |
(in € million) | 9 months | Contrib. | 9 months | Contrib. |
Rolling stock | 6,667 | 54% | 6,765 | 53% |
Services | 2,775 | 23% | 2,981 | 23% |
Systems | 1,062 | 9% | 1,118 | 9% |
Signalling | 1,767 | 14% | 1,911 | 15% |
Sales by product line | 12,271 | 100% | 12,775 | 100% |
APPENDIX 2 - NON-GAAP FINANCIAL INDICATORS DEFINITIONS
This section presents financial indicators used by the Group that are not defined by accounting standard setters.
Orders received
A new order is recognised as an order received only when the contract creates enforceable obligations between the Group and its customer. When this condition is met, the order is recognised at the contract value. If the contract is denominated in a currency other than the functional currency of the reporting unit, the Group requires the immediate elimination of currency exposure using forward currency sales. Orders are then measured using the spot rate at inception of hedging instruments.
Book-to-Bill
The book-to-bill ratio is the ratio of orders received to the amount of sales traded for a specific period.
Gross margin % on backlog
Gross Margin % on backlog is a Key Performance Indicator to present the expected performance level of firmed contracts in backlog. It represents the difference between the sales not yet recognized and the cost of sales not yet incurred from the contracts in backlog. This % is an average of the portfolio of contracts in backlog and is meaningful to project mid- and long-term profitability.
Adjusted Gross Margin before PPA
Adjusted Gross Margin before PPA is a Key Performance Indicator to present the level of recurring operational performance. It represents the sales minus the cost of sales, adjusted to exclude the impact of amortisation of assets exclusively valued when determining the purchase price allocations (“PPA”) in the context of business combination as well as non-recurring “one off” items that are not supposed to occur again in following years and are significant.
EBIT before PPA
Following the
Adjusted EBIT
Adjusted EBIT (“aEBIT”) is the Key Performance Indicator to present the level of recurring operational performance. This indicator is also aligned with market practice and comparable to direct competitors.
Starting
aEBIT corresponds to Earning Before Interests and Tax adjusted for the following elements:
- net restructuring expenses (including rationalization costs)
- tangibles and intangibles impairment
- capital gains or loss/revaluation on investments disposals or controls changes of an entity
- any other non-recurring items, such as some costs incurred to realize business combinations and amortization of an asset exclusively valued in the context of business combination, as well as litigation costs that have arisen outside the ordinary course of business
- and including the share in net income of the operational equity-accounted investments
A non-recurring item is a “one-off” exceptional item that is not supposed to occur again in following years and that is significant.
Adjusted EBIT margin corresponds to Adjusted EBIT expressed as a percentage of sales.
EBITDA + JV dividends
EBITDA + JV dividends is the EBIT before PPA, before the depreciation and amortisation, with the addition of the dividends received from the JVs.
Adjusted net profit
Following the
Free cash flow
Free Cash Flow is defined as net cash provided by operating activities minus capital expenditures including capitalised development costs, net of proceeds from disposals of tangible and intangible assets. Free Cash Flow does not include any proceeds from disposals of activity.
The most directly comparable financial measure to Free Cash Flow calculated and presented in accordance with IFRS is net cash provided by operating activities.
Funds from Operations
Funds from Operations “FFO” in the EBIT to FCF statement refers to the Free Cash Flow generated by Operations, less Working Capital variations.
- Inventories
- Trade Receivables
- Trade Payables
- Other elements of Working Capital, defined as the sum of Other Current Assets/Liabilities and Non-Current provisions
- Contract Assets & Liabilities, which includes the Customer Down-Payments
- Current provisions, which includes Risks on contracts and Warranties
Net cash/(debt)
The net cash/(debt) is defined as cash and cash equivalents, marketable securities and other current financial asset, less borrowings.
Pay-out ratio
The pay-out ratio is calculated by dividing the amount of the overall dividend with the “Adjusted Net profit from continuing operations attributable to equity holders of the parent, Group share” as presented in the management report in the consolidated financial statements.
Organic basis
This press release includes performance indicators presented on an actual basis and on an organic basis. Figures given on an organic basis eliminate the impact of changes in scope of consolidation and changes resulting from the translation of the accounts into Euro following the variation of foreign currencies against the Euro.
The Group uses figures prepared on an organic basis both for internal analysis and for external communication, as it believes they provide means to analyse and explain variations from one period to another. However, these figures are not measurements of performance under IFRS.
Q3 2022/23 | Q3 2023/24 | ||||||||
(in € million) | Reported figures | Exchange rate and scope impact | Organic Figures | Reported figures | % Var Act. | % Var Org. | |||
Orders | 5,152 | (28) | 5,124 | 5,451 | +5.8% | +6.4% | |||
Sales | 4,223 | (83) | 4,140 | 4,332 | +2.6% | +4.6% |
9 months 2022/23 | 9 months 2023/24 | ||||||||
(in € million) | Reported figures | Exchange rate and scope impact | Organic Figures | Reported figures | % Var Act. | % Var Org. | |||
Orders | 15,224 | (275) | 14,949 | 13,898 | (8.7)% | (7.0)% | |||
Sales | 12,271 | (370) | 11,901 | 12,775 | +4.1% | +7.3% |
Attachment
Alstom - PR Q3 2023-24 ENG - Final
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