Alstom Unsp/Adr

Hello, and welcome to Alstom third quarter orders and sales for fiscal year 2025 and 2026. My name is George, and I'll be your coordinator for today's event. Please note, this conference is being recorded, and for the duration of the call, your lines will be in the listen-only mode. However, you have the opportunity to ask questions toward the end of the presentation, and this can be done by pressing star 1 on your double G pad to register your question. If you require assistance at any point, please press star zero and you will be connected to an operator. And I'd like to call over to your host today, Mr. Bernard Delpy, Executive Vice President and CFO. Please go ahead, sir.

Good evening, everyone. Thanks for joining the group's orders and sales update for the third quarter of this fiscal year, 2526. Let's start with the orders on slide three. Alstom recorded 20 billion euros of orders in the first nine months. The book-to-bill ratio was 1.4, accelerating to 2 in the third quarter. As a result, the backlog reached 100.3 billion euros up from 96 at the end of September. Some color by region and product lines. The Americas are on track for the best year ever in terms of commercial momentum, with orders in Mexico and Canada this quarter adding to the large orders in New York and New Jersey booked in the first half. Europe remains the largest contributor, supported by numerous rolling stock options being exercised in France, as well as first-time orders in Central and Southern Europe. The order intake for services accelerated in the third quarter, with several large rolling stock contracts being bundled with maintenance, like for instance PKP in Poland, Baden-Württemberg in Germany, in Mexico, and in Greece. Systems also got its fair share of order intake, thanks to the turnkey contract in Melbourne. Signaling order intake was softer in Q3, but the product line had a solid first half, with contract wins in Italy, Taiwan, Brazil, and Singapore. Turning to slide four and details on the third quarter, where we booked 9.3 billion euros of orders. This record quarter reflects not only strong global demand for rail solutions, but also robust tendering activity and contract awards in geographies that we consider as our home markets. It also demonstrates our ability to provide integrated solutions to clients, not only when we sell rolling stock together with maintenance, but also when we deliver turnkey projects. It also shows the growing success of the rolling stock platforms with some of them already being in service and some others being in the final stages of approval. Looking at examples of large orders booked in the third quarter, the Averia Horizon platform continues to gain momentum as the only very high-speed double-deck solution on the market, with nearly 200 trend sets now on order across multiple clients, both private and public. In the quarter, as part of the framework agreement with SNCF, we secured two additional trenches for a total of 2 billion euros. One trench covers 30 train sets for Eurostar, which will be the first double-deck train to operate through the channel. The other trench is for 15 train sets for SNCF for international operations, notably between France and Belgium. The Coradia Max double-deck regional solution is currently under development and testing for German clients. We booked two major contracts for a total of 2.1 billion euros, one in Poland for the supply of 42 Coradia Max train sets for PKP intercity, together with long-term maintenance, another in Baden-Württemberg, where the region exercised an option for 26 additional train sets, also with NITMIS. Looking at Mexico, we signed a contract worth $920 million for the supply of 47 train sets and the maintenance for new rail corridors in the country. This project builds an awesome strong industrial footprint in Mexico and leverages the development and expertise gained through the Trenmaya project that was recently completed. In Greece, we signed a contract of nearly 400 million with Hellenic Train for 23 Coradia Stream regional train sets and 10 years of maintenance. These trains will be produced at the Svegliano site in Italy using the proven Coradia Stream platform already deployed for several customers across Europe. In Australia, We secured a 1 billion euro share of the suburban rail loop east line contract in Melbourne. Under this system contract, we will deliver 13 automated metro trains, signaling, maintenance, and range of subsystems. And in Canada, we booked a 1.4 billion euro contract for MetroCars for Toronto. I want to emphasize that this record level of order intake does not go against our selective approach when responding to tenders in the last few months a number of large contracts in switzerland or denmark for instance went to competitors because we choose not to participate when our solution was too far from the customer's requirements or because the contractual conditions were considered by us as too stringent all this considered The average margin on new orders continues to exceed the average backlog margin. Moving to operational highlights on Site 5, starting with some delivery milestones. In the third quarter, the first MF19 metro train entered service in Paris. The deployment of this new generation of rail metro trains will continue across eight metro lines through 2033. This year also includes homologation procedures underway for several major projects. This, of course, includes the available region for the launch customer SNCF under the TGV name, as well as our locomotives and the Coridia MAX double regional train solution. Now, looking at the industrial footprint, we are continuously adapting the footprint, to align with backlog and demand as well as strengthen ASTEM's competitive advantage. For example, construction of a new assembly line in France for Avelia Horizon is progressing as planned. The site in Fes, Morocco, has completed its first production line for driver's cabs and expanding its capacity in components including converters. At the same time, we continue to execute the transformation plan in Germany We are also considering various options to adapt the Bruges site in Belgium in light of current backlog. As a result of this right-sizing initiative, we now expect non-operating expenses to land above the 100 million mark. Turning to slide six on production, volumes remain broadly stable over the first nine months in line with full year plan. In the third quarter, sequential improvement in India for metros and in Germany for EMUs helped offset the seasonal slowdown in South Africa. Compared to last year, the production mix has shifted with now a higher share of projects currently in rampant phases. This evolution in the portfolio mix supports operational momentum and prepares the ground for a volume increase in Q4. We now foresee car production this year to land within a range of 4,300 to 4,400. Turning to sales on slide 7, sales reached 13.9 billion euros in the first nine months, up 7.2% on an organic basis, and down from 7.9 in H1. Q3 organic growth was 5.9%, largely due to a tough comparison base. The same effect should lead to Q4 organic growth moderating. All product lines, with the exception of systems, contributed to the sales growth. In particular, rolling stock sales totaled 7.2 billion euros, reflecting 6% organic growth. This was driven by strong ramp-up in Germany with double-digit growth across multiple regional train projects, continued momentum in France, notably supported by the RER-NG program, and in Asia-Pacific, the locomotive business in India remains an important growth driver. Services sales reached 3.4 billion with 9% organic growth, supported by strong performance in Italy, the UK, Australia, and people movers in the US. Sales in signaling came in at 2 billion, with 13% organic growth, driven by robust execution in France and Italy. Finally, system sales totaled 1.3 billion euros, flashish on an organic basis. It was impacted by the ramp down of the Mexico-Trenmaya contract, which was not fully offset by wrap-ups in the Philippines and Taiwan. We expect this trend to continue through the rest of the year. Looking at inorganic items, foreign exchange was a 3.3-point headwind driven by the euro appreciation against most currencies. To be noted, the same euro appreciation is also expected to have a mildly negative impact on margin and cash for the full year. Scope. At a negative 80 bps impact due to the deconsolidation of the North American signaling business in the first semester last year, scope was neutral in Q3. On a reported basis, sales therefore increased by 3% during the first nine months of the fiscal year. Including with slide 8 on the outlook, the set of assumptions beyond the outlook here, has not changed compared to mid-November when we reported first half results. We assume R&D at around 3% of sales, which is slightly higher than the last fiscal year and the first half year of this year. Regarding tariffs, there is no change either. We remain well protected, largely thanks to the group's multi-local footprint with several manufacturing sites in the United States. Now turning to the outlook. Based on the commercial momentum to date, we will deliver a book-to-bill above 1 at growth level as well as for rolling stock for the full year. We confirm the organic sales are expected to grow by more than 5% for the full year. We reiterate guidance of an adjusted EBIT margin around 7% for the fiscal year, with currency expected to be a bigger headwind than we anticipated back in May last year. We confirmed the free cash flow outlook of 200 to 400 million euros. We are not narrowing the guidance range. The exact timing of some commercial opportunities and operational milestones will determine where we land and whether certain cash-ins fall into Q4 on next fiscal year. With this, I will now take your questions.

Thank you very much, Mr. Depey. Ladies and gentlemen, as a reminder, for questions, please press star 1, and just make sure that your lines are not muted in order that your signal reach your government. Our very first question today will be coming from Mr. Gael Dibery of Deutsche Bank. Please go ahead.