Alstom Unsp/Adr

and last opportunity for me to wish you a happy new year. Welcome to Alstom's webcast dedicated to the third quarter of the fiscal year 23-24. I'll start by sharing the key highlights for the period's orders and sales before giving an update on the company action plan presented in November. Starting with the order intake, slide 3. Order intakes totaled 5.5 billion euros in Q3, and now 13.9 billion year-to-date. Commercial momentum in Q3 was good, particularly in Europe, Australia, and in the Middle East. Services and systems continued to deliver a strong book-to-bill. We also saw a good performance of small orders with order intakes above €2 billion in the quarter, which is good for profit and cash. Small orders represent 17% of order in Tokyo to date, above last year mix. Backlog remains stable at 90 billion euros with positive book-to-bill offset by negative FX trends. My second comment is that overall we are very satisfied with the quality of this order intake. The margin on orders continues to largely exceed the margin traded in the P&L. and it is fully consistent with mid-term objectives, both in terms of margin and cash. As a result, margin in backlog is improving, supporting our trajectory of profitable growth. It has improved again in Q3. Looking ahead, we expect this positive momentum to continue in Q4 and in the next quarters. in particular on service and systems. A number of deals have been announced but are not yet booked, like Alula tram system in Saudi Arabia, or a monorail in the Dominican Republic, and we have a good flow of small orders. On slide four, a few contracts reflecting the commercial successes of this third quarter. two major service orders in the UK and Australia for nearly 1 billion euros each, demonstrating the strength of our fleet maintenance franchise. The financial closer of the Tel Aviv Green Line tramway system project should be noted in the context of the region, and a landmark signaling project in France, complex and critical for public transportation in Paris. Turning to sales, organic growth was sustained at 4.6% in Q3 and 7.3% over nine months. Strong performance of service, system, and signaling product lines, all delivering close or above double-digit organic growth over the nine months, and continued ramp-up in rolling stock with organic growth above 5% over the nine months. Forex and Scope continue to weigh negatively on sales profile, mainly due to the strength of the Euro against the USD and other USD-pegged currencies. We also confirm the target of around 1.7 billion Euro of sales at zero gross margin for the full year 2023-2024. As you know, leveraging is our number one priority, and the teams are fully mobilized to deliver on our operational and commercial agenda on cost efficiencies and inorganic measures. First, some update on operational and commercial actions. On the operational front, we continue to ramp up production with 3,415 cars produced over nine months, against less than 3,000 over the same period last fiscal year. On inventory management, we have taken actions to improve inventory turns in days of sales. We expect inventory days to show some improvement during the second half of this fiscal year. December figures on the raw material are very encouraging. We have now implemented rolling forecasts systemically across the business. This process includes a monthly monitoring of contract assets, which allows us to take rapid actions and helps improve visibility and predictability of cash generation. Second, on cost efficiencies. As you see in the slide, process is now well engaged with implementation, mostly expected during next fiscal year, and we confirm the 1% of sales target sales. in terms of savings. Third, the roadmap towards strengthening balance sheets by 2 billion euros from inorganic measures is also confirmed. Since November, we've made significant progress and we are committed to giving the precise magnitude of each inorganic transaction in May. Regarding the progress made to date, On disposals, the target is to raise 500 million to 1 billion. We are working on more than a handful of assets that have a combined potential of proceeds in excess of the top end of the target range of 1 billion euros. For obvious reasons, we do not comment on ongoing processes and transactions. We want to make sure that we strike the right balance between the impact on the overall group strategy and the impact on leverage ratios. Regarding private capital and hybrid solutions, we are considering various options. We deem viable from a strategic and financial standpoint, and we will also contribute towards decreasing the leverage ratios. Finally, as expressed on November the 15th, the need for capital increase is contingent on the progress and the expected proceeds from both disposals and equity-like transactions to meet the 2 billion euro objective. Again, we will be making a decision no later than full year results in May. On slide 7, let me give you a few updates on the two projects we highlighted in November. Amtrak, first, as you remember, the train homologation in the U.S. is the next key milestone. We've made meaningful progress with the numerical model of train behavior on U.S. tracks. This has been now accepted by our customer Amtrak and is being reviewed by the regulator, FRA. Tests have resumed in January as planned. Production is ongoing. and payments are progressing. On Aventra, production is progressing since September. 97% of cars have now been produced, and we expect full completion in the fourth quarter. Acceptances have significantly improved at 82% of the program, and payments are continuing with further progress expected during Q4, and an 89% payment ratio for the full program year to date. As we announced previously, we expect the rest of cash in during the next fiscal year. Let me also tell you that we have constructive talks with the UK government regarding Derby manufacturing capabilities. Decisions regarding the short-term future of Derby will be announced in all probability during the fourth quarter of this fiscal year. So, To conclude, let me summarize the guidance for fiscal year 23-24. The market remains sound, and it's all on us to be disciplined in our tendering policy. We prioritize quality orders in terms of margin, risk, and cash profiles. On the back of a good Q3 and of a good flow of deals already awarded, we are happy to confirm a book-to-bill ratio above 1 for the full year. Regarding sales, following a strong nine-month performance, we also confirm that organic growth will exceed 5% for the full year. We reiterate our adjusted debit margin guidance of around 6% for the full year. And regarding free cash flow, we confirm the range of €500 million to €750 million negative for the full year and therefore expect solid cash generation in the second half of this year. New financial process and improved operations provide comfort on this guidance. We also confirm our mid-term targets and we are working to generate a sustainable cash performance. Thanks a lot for listening. We will now take your questions.

Thank you. As a reminder, if you would like to ask a question or make a contribution on today's call, please press star 1 on your telephone keypad. That is star one for your questions. And our first question today comes from Delphine Brock from Oddo. Please go ahead.

Yes, good morning. Thanks for taking my question. I have two. First, you said December figures in raw material inventories are encouraging. Can you provide some details And second, in your press release, when you mentioned the capital increase, you said that you are studying the feasibility. What do you mean exactly by feasibility? Thank you.