Over the third quarter of 2023/24 (from 1 October to 31 December 2023), Alstom booked EUR5.5 billion of orders.
The Group's sales reached EUR4.3 billion in the quarter.
For the first nine months of 2023/24 (from 1 April to 31 December 2023), Alstom's order intake reached EUR13.9 billion, compared to EUR15.2 billion for the same period last fiscal year. The Group sales increased by 4.1% over 9 months, of which 7.3% organic growth, reaching EUR12.8 billion, in line with the targeted trajectory.
The backlog, as of 31 December 2023, settled at EUR90.3 billion, providing strong visibility on future sales.
'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 EUR2 billion inorganic plan in May 2024. Confident in the resilience of our business model, we confirm our short and mid-term targets,' said Henri Poupart-Lafarge, Alstom Chairman and Chief Executive Officer.
Detailed review
During the third quarter of 2023/24 (from 1 October to 31 December 2023), Alstom recorded EUR5,451 million in orders, compared to EUR5,152 million over the same period last fiscal year.
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, Europe accounts for 34% of the Group total order intake. In the United Kingdom, Alstom has signed an eight-year extension to its Train Services Agreement (TSA) with CrossCountry. With this contract extension, valued at around EUR950 million, Alstom will continue to maintain, overhaul, service and clean CrossCountry's Voyager and Super Voyager fleet until 2031.
In France, Alstom has won a twelve-year framework contract worth almost EUR300 million to develop and deploy the NExTEO signalling system on the RER B and RER D lines in the Ile-de-France region. Alstom's Urbalis signalling technology will help infrastructure managers and transport operators to improve the performance and punctuality.
In the Asia-Pacific region, Alstom has been announced as the successful bidder for a contract worth around EUR900 million to maintain the regional rolling stock VLocity and Classic fleets in Victoria, Australia for the next decade.
In Africa-Middle East-Central Asia, the Group reached financial closure for Israel's NTA contract of Tel Aviv's Green Line light rail systems. With around EUR900 million share in the contract, Alstom is set to design, build and maintain the Tel Aviv Metropolitan LRT Green Line by Metropolitan Mass Transit System Ltd (NTA).
The level of base orders (less than EUR200 million of contract value) has exceeded EUR2 billion during this third quarter.
Sales were EUR4,332 million in Q3 2023/24 compared to EUR4,223 million in Q3 2022/23.
Over 9 months, sales amounted to EUR12,775 million, representing a growth of 4.1% on a reported basis and a strong 7.3% on an organic basis compared with Alstom sales in the same period last fiscal year.
For the same period, Rolling Stock sales reached EUR6,765 million, representing an increase of 1% on a reported basis and 5% on an organic basis, driven by a ramp-up of projects in Brazil and in India as well as a solid level of execution in the US and in France.
Signalling sales stood at EUR1,911 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 UK and Australia.
In Systems, Alstom reported EUR1,118 million sales for the 9 months, up 5% on a reported basis and 8% on an organic basis, on the back of a good performance of Turnkey Systems projects in Egypt, Canada and France and a ramp-up of projects in Mexico.
Services delivered a sustained performance and reported EUR2,981 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 UK, in Italy and in the US.
The book-to-bill ratio is 1.3 over the quarter and 1.1 over 9 months.
Main highlights of the third quarter of 2023/24
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 deliveries
In October 2023, Alstom reached a milestone for India's rail revolution with the inauguration of NaMo Bharat, India's first semi-high-speed regional rail service, with both rolling stock and signalling solutions provided by Alstom India. The first phase, the seventeen-kilometre Duhai-Sahibabad section of the Delhi-Meerut corridor which is now operational for general public, also marks the world debut of Level 3 ETCS (European Train Control System).
In November 2023 in Paris, Ile-de-France Mobilites, SNCF Voyageurs and Alstom together inaugurated the RER NG, the 'New Generation RER' in the presence of elected representatives and passengers. The RER NG commuter train, designed and manufactured with the contribution of 9 Alstom sites in France, will bring lasting improvements to travel conditions for the hundreds of thousands of people who use the RER D and RER E lines every day.
In December 2023, for the first time in France, a battery-powered train[1] carried passengers on a non-electrified track in Toulouse, in the Occitanie region. This innovative tri-mode electric-combustion-battery train was presented at Toulouse-Matabiau station before departing for Mazamet. The hybrid train will be tested for a year in commercial service on several lines in the four partner regions.
Also in December 2023, Tren Maya, a brand-new rail service for Mexico's Yucatan Peninsula entered commercial service. The trains were built by Alstom, at its plant in Ciudad Sahagun, in Mexico. Alstom is providing the X'trapolis trains for this project. Alstom is responsible for the maintenance of the trains for the next five years and continues the work to provide signalling as well.
One Alstom team Agile, Inclusive and Responsible
For the thirteenth consecutive year, Alstom has been included in the Dow Jones Sustainability Indices (DJSI), World and Europe, attesting to its leadership position in sustainable business practices.
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.
Alstom has also ranked among Corporate Knights' 2024 100 Most Sustainable Corporations in the World.
In December 2023, Alstom and Fundacion ONCE renewed their collaboration to continue building accessible and inclusive mobility by bolstering their commitments for the social inclusion of people with disabilities. Fundacion ONCE has become a worldwide strategic advisor in terms of inclusiveness and a strategic partner in research, development and innovation.
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 EUR2 billion by March 2025.
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 EUR0.5 billion and EUR1.0 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 EUR2 billion deleveraging plan is the exit of TMH Limited, which was closed early January 2024 for an amount of EUR75 million, contributing to the de-risking of the company's portfolio, and which was accounted for as asset held for sale as of 30 September 2023. The sale of TMH Limited will result in a non-cash loss of around EUR(127) million due to the recognition of the EUR(202) million Currency Translation Adjustment accounted for directly in equity since the acquisition.
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