Alstom Unsp/Adr

Hello and welcome to Alstom's first quarter fiscal year 2025-26 orders and sales call. My name is Saskia and I will be your coordinator for today's event. Please note that this conference is being recorded and for the duration of the call, your lines will be on listen only. However, you will have the opportunity to ask questions at the end of the call. This can be done by pressing star one on your telephone keypad to register your question. If you require assistance at any point, please press star zero and you will be connected to an operator. I will now hand you over to your host, Bernard Delpitte, Executive VP and Chief Financial Officer. Please go ahead, sir.

Good morning. Thank you and welcome to this conference call to discuss orders and sales for the first quarter. Starting with order intake on slide 3, we recorded 4.1 billion euros of orders in the first quarter, up 12% compared to the same period last year. Book-to-bill was 0.9 for the quarter. Considering adverse FX movements, This brings backlog to 92 billion euros at the end of June, down from 95 at the end of March. From a regional perspective, Europe is again leading with large orders in France and in Bulgaria. The group enjoyed strong commercial momentum in rolling stock with two large orders in and a book-to-bill of one, on track to deliver full guidance of book-to-bill above one. The signaling business is also off to a good start, with contracts in Italy, Brazil and Taiwan. We recorded 1.7 billion euros of base orders in the first quarter, which is consistent with the 1.5 to 2 billion euro range we've seen in recent years. Turning to slide 4, with a focus on the two large orders awarded in the quarter. First, we will provide Coradia Stream regional trains to Bulgaria, together with maintenance for a total of 600 million euros. This contract illustrates the success of the Coradia platform with a high carryover rate for Coradia's stream trains already developed for other customers. Second, French operator SNCF ordered an additional 96 commuter trains for the Paris region as part of a framework agreement signed in 2017. A few additional remarks before moving to sales. First, we have already good visibility on orders for Q2. We signed a €2 billion order with MTA in New York for the provision of 316 cars, with an option for 242 additional cars. and discussions with other public transport authorities in the U.S. are also progressing well. Second, the medium-term pipeline of opportunities is solid. For instance, the German government has made great progress towards over 100 billion euros of investment allocated to rail over the next five years, which is nearly double the spend compared to the previous five-year plan. We've already got a framework agreement in place with Deutsche Bank Networks for website signaling, and around 10 billion euros is allocated to the rollout of ERTMS in Germany, and it provides some upside to medium-term pipeline in Germany. Third, The quality of order intake remains a top priority, and orders taken in the first quarter continues to be accretive to gross margin in the backlog. Turning to sales on slide 5, sales reached 4.5 billion euros in Q1, driven by 7.2% organic growth. All product lines contribute to organic sales growth. In particular, sales in rolling stock reached 2.4 billion euros, representing a 5% organic increase. This was driven by the significant ramp-up in Germany. France also continues to be a meaningful contributor, thanks to the RER as well as TGV projects. In the U.S., continuous ramp-up for Baft in San Francisco compensates for the ramp-down of other projects, including Amtrak. Sales in services reach $1.1 billion in Q1, up 2% on an organic basis. The product line continues to benefit from execution in the U.S., as well as a ramp-up of projects in Germany, Italy, and South Africa. Sales in signaling came at 0.6 billion euros. Organic sales increased by 9% thanks to project execution, mainly in France, Italy, and Germany. The 5% decrease in reported terms is mainly due to the deconsolidation of the North American conventional signaling business last year, as we present today. the 1.5% negative scope impact on total sales. Finally, systems recorded 0.3 billion euros in Q1, representing 36% organic growth. Systems benefited from the strong ramp-up in Brazil and the Philippines. Turning to slide six, and car production. We see it as a fairly good indicator of activity levels for the rolling stock business this year, which accounts for around 50% of sales. Cars produced were broadly stable in Q1 compared to last year. The mix was also positive with ramp-ups for higher value cars like high-speed and commuter train in France, for instance, compensating for the ramp-down of lower-value cars like metros, also in France or in Brazil. Also in the first quarter, a higher share of projects were in their ramp-up phase compared to the first quarter of last year. Overall, we continue to expect stable production for the full year, and we expect a positive mix going forward, explaining positive growth of rolling stock sales. Turning to guidance on slide 7, let me highlight again the key assumptions behind the guidance for this current fiscal year. We assume market demand remains supportive, no changes. We assume stable car production compared to last year with ramp-up in Germany compensating for ramp-downs in metro cars in France and Brazil. We assume R&D expenses back to above 3% of sales for the full year compared to 2.8% in the last fiscal year. Regarding tariffs. The impact on the group's financials was minimal in the first quarter, in part thanks to constructive discussions we're having with customers regarding the application of change in law clauses in the contracts. For the rest of the fiscal year, we assume we'll continue to mitigate the impact from U.S. tariffs. Moving to the guidance. We expect book-to-bill for rolling stock and the group to be above 1 for the full year, with a book-to-bill ratio in Q1 that is already encouraging. We confirm organic sales growth within the 3-5% range, with the first half that is likely to be at the top end of that range. We expect adjusted EBIT margin to be around 7% for the full year, with the indication that in last year's H1 adjusted EBIT has been close to the full year margin of the fiscal year just reported. We expect free cash flow seasonality this year to be pronounced for two reasons. First, we expect down payments to be more second-half weighted. Commercial momentum is strong, but several orders already booked in Q1 or in the pipe for Q2 are options for which cash payments at the time of booking are usually much smaller than down payments received for first-time orders. And second, the cash impact from the ramp-up in certain geographies will be more visible in the first half than in the second half. For these reasons, we confirm H1 free cash flow guidance for up to minus 1 billion, and we see very limited upside for this level. We have not revised our views on the second half, that is, to generate at least 1.2 billion euros of free cash flow, thanks to margin progression, favorable phasing of down payments, and the seasonal distribution of activity and progress payments. Hence, We confirmed the free cash flow guidance for the full year at 200 to 400 million euros. Thanks for listening, and I will now take your questions.

Thank you. Ladies and gentlemen, 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. To withdraw your question, please press star 2. And our first question today comes from Gail Debray from Deutsche Bank. Please go ahead. Your line is open.