Alstom Sa · EURONEXT:ALO
Alstom Sa — H1 2014/15 Earnings Presentation
38 slides from Alstom Sa's earnings presentation, Nov 5, 2014
Slide 1: Half-Year Results Fiscal year 2014/15
Half-Year Results Fiscal year 2014/15 5 November 2014
Slide 2: Key takeaways
Key takeaways ● H1 2014/15 results • Transport showing solid operational performance • Orders more than doubling, organic sales growth of 13% • IFO margin (including corporate costs) improving by 30bps to 5% • Energy businesses classified as discontinued operations (IFRS 5) • FCF at €(1,376) million
Slide 3: Agenda
Agenda • H1 2014/15 results • Update on GE / Alstom project • Transport strategy and perspectives P3
Slide 4: Alstom H1 Results – application of IFRS 5 & 11
Alstom H1 Results – application of IFRS 5 & 11 IFRS 5 IFRS 11 • IFRS 11- two JVs: in China and in the UK (signalling) now • H1 2013/14 included in Share in net income sales impact: TRANSPORT CONTINUED of equity investees (previously €(94)m OPERATIONS proportionate consolidation) • H1 2013/14 IFO imp
Slide 5: H1 2014/15 key figures
H1 2014/15 key figures Record orders and margin improvement % change In € million H1 2013/14* H1 2014/15 % change organic Orders 2,741 6,407 134% 136% Sales 2,702 3,056 13% 13% IFO ** 126 152 21% Operating margin 4.7% 5.0% Net income – Cont. operat°s. 105 29 (72)% Net income – Discont. operat°s 270
Slide 6: Strong Alstom orders – boosted by large projects
Strong Alstom orders – boosted by large projects Alstom - Orders Strong order intake In € million 6,407 • Booking of a jumbo rail contract for 2.1 suburban trains in South Africa (around €4 billion) 2,741 • Benefiting from strong demand for urban 1.0 products and systems H1 2013/14* H1 2014/15 • Eme
Slide 7: Alstom orders – New projects across all geographies
Alstom orders – New projects across all geographies Spain: Atlas signalling system for North-West high France: Citadis speed line (€220m) Dualis tram-trains (€80m) Qatar: Turnkey tramway system (€450m) Australia: Metropolis train sets and signalling for Sydney metro (€280m) Algeria: Tramways (€140m)
Slide 8: Alstom sales and operating margin - Strong organic increase
Alstom sales and operating margin - Strong organic increase Alstom - Sales Organic growth of 13% in H1 2014/15 In € million 2,702 3,056 • Main deliveries of suburban, intercity and * high-speed trains in France, Italy and Germany as well as high-speed trains in Poland and Morocco, and tramways in Du
Slide 9: Income statement
Income statement In € million H1 2013/14* H1 2014/15 % change % change reported organic Sales 2,702 3,056 13% 13% IFO ** 126 152 21% Operating margin 4.7% 5.0% Restructuring charges (7) (55) Other non-operating expenses (14) (34) EBIT 105 63 (40)% Financial result (69) (56) Tax result 30 (11) Share
Slide 10: Free cash flow
Free cash flow In € million H1 2013/14* H1 2014/15 • FCF from continued IFO 126 152 operations − Temporary negative Restructuring cash-out (12) (20) cash profile of a few Depreciation 38 36 contracts Capex (41) (34) R&D capitalised, net of amortisation 1 - • FCF from Pensions (2) (3) discontinued op
Slide 11: Liquidity and gross debt
Liquidity and gross debt Liquidity position ● Steam auxiliary components business (€430 million In € billion sales) sold for €730 million (closing on 29 August) 3.6 2.4 ● Reimbursement of the €722 million bond maturing in September 2014 ● A €1.35 billion syndicated credit line maturing in 2016 Mar-1
Slide 12: Net debt & equity
Net debt & equity In € million Net debt In € million Equity 255 216 (131) 5,449 5,109 (3,038) (3,896) (1,376) 627 (109) Mar-14* FCF Acq. & Forex & Other Sep-14 Mar-14* Net income Pensions Forex & Other Sep-14 Disposals * Adjusted after IFRS 11 P 12
Slide 13: Discontinued Operations - Alstom Energy
Discontinued Operations - Alstom Energy Key figures for information purposes In € million Orders and -2% • Orders down 2% book-to-bill 6,537 6,379 • Main booking: steam turbines in India, gas turbine in Mexico (GT24), HVDC contracts, wind turbines 0.94 1.01 in Brazil H1 2013/14* H1 2014/15 -6% • Sal
Slide 14: Agenda
Agenda • H1 2014/15 results • Update on GE / Alstom project • Transport strategy and perspectives P 14
Slide 15: Project with GE on track
Project with GE on track Completed • Information – consultation with works councils • Finalisation and signing of sale contract and other associated agreements • Finalisation of GE Signalling acquisition and global rail alliance • French Foreign Investment authorisation obtained Ongoing • Competitio
Slide 16: Use of proceeds
Use of proceeds • Provide the Group with a solid balance sheet structure • Deleverage the Group • Pension deficit mechanically reduced to €0.35bn (from €1.5bn) • Support development of the Group • €0.6bn for the GE Signalling acquisition • €2.6bn of reinvestment in the JVs with GE • Headroom for fut
Slide 17: Agenda
Agenda • H1 2014/15 results • Update on GE / Alstom project • Transport strategy and perspectives P 17
Slide 18: Alstom Transport: a strong position in a solid market
Alstom Transport: a strong position in a solid market Rail: a large, Solid growth expected in Signalling, Services and resilient and 1 Urban trains as well as in Emerging countries growing market 2 Customer-focused geographical footprint Alstom Transport: ALSTOM uniquely positioned 3 Complete range
Slide 19: A growing worldwide market
1 A growing worldwide market DRIVERS Urbanisation Public funding support Sustainable development Economic growth 2.8% market CAGR for 2011/13 – 2017/19 period • Europe: strong development of Europe Regional and Urban, opportunities [€33bn] CIS in Services +1.7% [€12bn] +0.8% • North America: growth
Slide 20: A growing worldwide market
1 A growing worldwide market Market growth driven by Services, Urban and Signalling Accessible rail market 2011/13-2017/19 • Solid growth expected in In € billion CAGR Signalling and Urban 122 +2.8% trains as well as in 103 12 +1.2% Services 11 11 +4.1% 9 9 +0.3% • Ageing fleet to create 12 9 +1.1%
Slide 21: Alstom: a customer-focused geographical footprint
2 Alstom: a customer-focused geographical footprint Addressing customers’ strong requirement for localisation Global footprint Multi-local approach • Capture the full potential of fast growing markets and mitigate local cycles • Fragmented regulatory framework • 1 Product platform / 1 Process platfo
Slide 22: Alstom: a complete range of solutions
3 Alstom: a complete range of solutions A complete portfolio of activity to meet all customer needs Recent commercial success Complete Bundled Saudi Arabia: Complete system system offer for Riyadh metro (€1.2bn) Integrated solutions between 2 - Trains: 69 Metropolis trainsets segments with - Signall
Slide 23: Alstom: differentiation through innovation and technology
4 Alstom: differentiation through innovation and technology Offering best-in-class technology thanks to Examples of commercial successes targeted R&D investments to improve France: Lille metro Line 1 renovation (€250m): • Safety & performance • Integrated metro system, including train- • Sustainable
Slide 24: Alstom: focus on an innovative total cost of ownership offering
Alstom: focus on an innovative 4 total cost of ownership offering Answering clients’ recent focus for opex optimisation Energy savings Maintenance • Most recent HESOP system leading to significant • One of the largest footprint in Rail Services energy savings (99% brake energy recovery) • Launch of
Slide 25: Profitability improvement
5 Profitability improvement Sound profitability levers Challenges • Record backlog providing for highly • Competitive landscape visible growth • Uncertain global GDP growth • Growing share of services and signalling based on current market • Budgetary constraints in a number of trends mature economi
Slide 26: Record backlog providing good visibility
5 Record backlog providing good visibility Backlog % of expected sales covered by backlog In € billion In % of sales 26.9 90% 22.7 22.9 75% 50% Mar'13 Mar'14 Sep'14 2014/15e 2015/16e 2016/17e • Current backlog covers more than 4 years of • 75% of expected sales in 2015/16 and 50% in sales 2016/17 al
Slide 27: Orders and sales - Sustainable growth
5 Orders and sales - Sustainable growth Orders Orders boosted by mega contracts In € billion Book-to-bill ratio • Steady order growth in emerging 2.1 countries 1.2 1.3 1.1 • Continued healthy services orders 6.2 6.9 6.1 averaging €1.3bn per annum H2 3.4 6.4 H1 2.7 2011/12 * 2012/13 * 2013/14 H1 2014
Slide 28: Investing for future growth
5 Investing for future growth R&D Main R&D programmes In € million 129 128 132 − Axonis and Urbalis Fluence, major innovative solutions in metro systems and signalling − New Citadis tram − HealthHub, a new predictive maintenance tool 51 − Atlas 400 & 500, the first scalable ERTMS solutions 2011/12 *
Slide 29: Progress of operating profit and margin
5 Progress of operating profit and margin IFO and operating margin Sustained improvement of IFO In € million margin over the last 3 years As a % of sales 330 Pro-forma, restated from IFRS 5 & IFRS 11 • Volume growth 297 264 5.6% 268 • Increased services and 5.4% signalling activities 152 supporting
Slide 30: “Dedicated to Excellence” plan well on track
5 “Dedicated to Excellence” plan well on track One third of the target achieved to date d2e realised and target savings (run-rate) In € million 450 150 End Sept 14 End March 16 €450 million of savings targeted by end March 2016 vs. 2012/13 cost base P 30
Slide 31: D2e: examples of initiatives
5 D2e: examples of initiatives Sourcing Manufacturing • Increasing LCC sourcing • Building a gobal network content of centers of excellence • Reducing number of • Maintaining customer suppliers intimacy through manufacturing Industrial footprint S&A • Optimising the global • New organisation: shift
Slide 32: Profitable investments in JVs and associates
5 Profitable investments in JVs and associates Joint ventures investments • A successful strategy to penetrate specific P&L contribution from associates local markets and JVs • Main associates include TMH (25%, In € million Russia) and CASCO (50%, China) 72 70 H2 29 44 TMH, a leader on the Russian m
Slide 33: FCF reflecting working capital fluctuations over short periods
5 FCF reflecting working capital fluctuations over short periods In € million H1 H1 2012/13* 2013/14* 2013/14 2014/15 IFO 297 330 126 152 • Implementation of more stringent policy Management fees (52) (55) for working capital management Restructuring cash-out (38) (29) (12) (20) • Working capital De
Slide 34: Convincing strategy of global expansion
6 Convincing strategy of global expansion 1986 1995 2000 2007 2011 2014-15 • CASCO: JV with • Acquisition of • Fiat Ferroviaria, • JV with Balfour • CITAL: JV for the • Acquisition of GE CRSC (Signalling CMW, beginning of specialist in trains, Beatty Rail maintenance and Signalling systems) producti
Slide 35: Acquisition of GE Signalling and Global Rail Alliance with GE
Acquisition of GE Signalling 6 and Global Rail Alliance with GE GE Signalling: a strategic acquisition* Global Rail Alliance • Sales of €400 million, around 1,200 • Commercial support from GE in selected employees in 15 sites geographies, notably in the USA • Reinforcing Alstom’s global position in
Slide 36: Guidance
Guidance Current year Medium term Organic sales growth • High single digit • Over 5% per year Operating margin* • Over 5% • Gradual improvement within the 5-7% range Free cash flow - • Positive over the full- Continued operations year (before tax and --- financial cash-out) • Substantially positive
Slide 37: Contacts and agenda
Contacts and agenda CONTACTS AGENDA Delphine BRAULT Vice President Investor Relations 19 December 2014 +33 (0)1 41 49 26 42 Shareholders’ meeting Anouch MKHITARIAN Investor Relations Manager +33 (0)1 41 49 25 13 21 January 2015 Perrine DE GASTINES Q3 2014/15 orders and sales Individual Shareholders
Slide 38: www.alstom.com
www.alstom.com ALSTOM Shaping the future