Alstom Sa · EURONEXT:ALO
Alstom Sa — FY2007/08 Earnings Presentation
48 slides from Alstom Sa's earnings presentation, May 7, 2008
Slide 1: Annual Results Fiscal Year 2007/08
Annual Results Fiscal Year 2007/08 7 May 2008
Slide 2: Agenda
Agenda 1. Key events of the year Page 3 2. Operational review by Sector Page 16 3. Financial results Page 36 4. Outlook Page 45 P2
Slide 3: Key events of the year: Key figures
Key events of the year Key figures In € million Very strong performance March 2007 March 2008 Variation Guidance +23% actual/ Orders received 19,029 23,472 +24% organic* +21% actual/ Backlog 32,350 39,222 +23% organic* +19% actual/ Sales 14,208 16,908 +15% organic* +19% organic* Income from operatio
Slide 4: Key events of the year: Orders received
Key events of the year Orders received In € billion Record commercial activity in all Sectors 23.5 +23% actual 19.0 7.5 +24% organic* 5.4 Transport 4.4 Power Service 4.1 Power Systems 11.6 9.5 March 07 March 08 P4 (*) same scope (retreatment of disposals and acquisitions) and exchange rate
Slide 5: Orders received by country of destination
Key events of the year Orders received by country of destination Orders well balanced by region and Sector Europe (50%) North America (13%) Asia (14%) South America Middle East & Africa (4%) (19%) Power Systems Power Service Transport P5
Slide 6: Key events of the year: Backlog
Key events of the year Backlog In € billion Increase in volume and quality +21% actual 39.2 32.3 17.3 +23% organic* Transport Power Service 15.2 Power Systems 5.9 5.2 11.9 16.0 March 07 March 08 P6 (*) same scope (retreatment of disposals and acquisitions) and exchange rate
Slide 7: Project execution
Key events of the year Project execution A strict process in place at all levels, from Units to Corporate Risk Committee chaired by CEO Tendering Contract Execution Commissio- Warranty phase award phase -ning period Review & approval of tenders Review of projects during execution Selectivity in orde
Slide 8: Capital expenditure
Key events of the year Capital expenditure Optimising the industrial base Adapt cost base • Grow production from Capital expenditure (in € million) low cost countries (Poland, Mexico, India…) 374 +34% 30 Debottleneck • Increase blade production manufacturing (Europe / 280 85 Mexico / China) and capa
Slide 9: Human Resources
Key events of the year Human Resources Managing our forces Headcount 31 March 08 • Headcount March 2008: 76,000 Africa/ME − 10,500 recruitments over 12 months Asia 1% 17% − 4,500 new employees through acquisitions Europe 60% 22% Americas • Particular efforts put on high growth regions (e.g. Asia…) a
Slide 10: Research & Development
Key events of the year Research & Development Fuelling future growth Chilled ammonia • 5 partnerships for pilot CO2 capture programmes plants in USA, Canada, Sweden, Norway Advanced amines • Joint development with Dow Oxy-combustion • 2 pilots in Germany and France AGV • Prototype unveiled in La Roc
Slide 11: Sustainable development (1)
Key events of the year Sustainable development (1) A key priority Initiatives • Adhesion to Global Compact in March 2008 − Respect of principles for environmental protection, human rights, labour standards and business ethics • Creation of a Foundation for the Environment − Objective: support initia
Slide 12: Sustainable development (2)
Key events of the year Sustainable development (2) Social • Strong voluntary actions for safety Injury Frequency Rate at work: − Major improvement to be 12 10 continued 8 • Alstom University 6 3.8 − 3,500 trainees/year, 80 4 programs in 7 languages 2 − 10 e-learning courses in self- 0 service 5 M 5
Slide 13: M&A
Key events of the year M&A External development to boost organic growth Acquisitions • Coal: Wuhan Boiler Co in China • Wind: Ecotècnia in Spain Joint Ventures • Nuclear: JV with Atomenergomash in Russia • Signalling: JV with Balfour Beatty in UK and Ireland • Train maintenance: JV with RENFE in Spa
Slide 14: Share
Key events of the year Share Strong performance of the stock price Shareholders distribution 31 March 08 Base €98.31 as of 02/04/07 Alstom CAC 40 Individual shareholders 180 Institutional 7% 160 investors 140 30% 62% 120 1% 100 Employees 80 Rest of Europe 60 22% 40 France Americas 22% 54% 7 07 08 07
Slide 15: Agenda
Agenda 1. Key events of the year Page 3 2. Operational review by Sector Page 16 3. Financial results Page 36 4. Outlook Page 45 P 15
Slide 16: Power: General context
Power General context Favourable market conditions to continue • High volume for new equipment − Demand in fast growing countries driven by strong power needs (China, India, Russia, South Africa…) − Replacement market in developed countries • Diversification of technologies influenced by several fac
Slide 17: Power Key figures (1)
Power Key figures (1) In € million March 2007 March 2008 Variation Orders Power Systems 9,535 11,569 +21% Power Service 4,058 4,401 +8% Total Power 13,593 15,970 +17% Backlog Power Systems 11,873 16,039 +35% Power Service 5,219 5,900 +13% Total Power 17,092 21,939 +28% Sales Power Systems 5,673 7,76
Slide 18: Power Key figures (2)
Power Key figures (2) In € million March 2007 March 2008 Variation Income from op Power Systems 201 415 +106% Power Service 510 592 +16% Total Power 711 1,007 +42% Operating margin Power Systems 3.5% 5.3% Power Service 15.9% 16.4% Total Power 8.0% 8.9% P 18
Slide 19: Power Key achievements 2007/08
Power Key achievements 2007/08 Gas • 38 gas turbines (of which 18 GT26) booked: RECORD YEAR! • Successes mainly in Europe and Middle East/Africa Operational priorities: capacity ramp-up, preparation of GT 24 comeback Coal • Acquisition of Wuhan completed • Biggest contracts ever awarded in South Afr
Slide 20: Power Key achievements 2007/08
Power Key achievements 2007/08 Nuclear • ‘Arabelle’ technology chosen in the USA & China • JV in Russia implemented Operational priorities: participation in worldwide nuclear revival (South Africa, India, Russia…) Hydro • Large contracts awarded in Vietnam, Uganda, Brazil and China • New opportuniti
Slide 21: Power Key achievements 2007/08
Power Key achievements 2007/08 Retrofit • Growing activity in coal, notably in Europe and USA, driven by environmental concerns and need for higher efficiency • Large contract for the retrofit of a nuclear steam turbine in Mexico Operational priorities: leverage of our large installed base; grasping
Slide 22: Power Systems Strategy: clean power
Power Systems Strategy: clean power Strengthen portfolio of clean technologies and promote clean combustion N°1 in hydro N°1 in conventional islands Recent acquisition of N°1 in environmental control of nuclear power plants Ecotècnia systems • Clean combustion: Main priority areas of Alstom: Install
Slide 23: Strategy: plant integrator
Power Systems Strategy: plant integrator Optimise the whole power plant Plant 9 Large GT 9 Architect Engineers (A/E) Alstom Large ST 9 Turnkey/EPC Boilers 9 Comp. Comp. 2 Gene- 3 rators 9 Comp. 1 HRSG/ HEX 9 Component suppliers ECS 9 P 23
Slide 24: Strategy: industrial platform re-balancing
Power Systems Strategy: industrial platform re-balancing Grow Asia and Americas Debottleneck supply chain Gas, steam and nuclear turbines (Chattanooga) Hydro (Tianjin) Foundry (Elblag) Boilers (Wuhan) Parts for turbines (Morelia) Hydro (Baroda) Hydro (Taubate) P 24
Slide 25: Strategy: modernisation/maintenance of installed base
Power Systems/Power Service Strategy: modernisation/maintenance of installed base Alstom to take advantage of the ageing fleet GW Installed capacity reaching 40 years by region 95 GW p.a 120 87GW p.a 93GW p.a 100 Asia excluding China 64GW p.a China 80 37 GW p.a South&Central America 60 27 GW p.a Mid
Slide 26: Power Service Strategy: stronger presence to serve installed base
Power Service Strategy: stronger presence to serve installed base Alstom to benefit from its own large installed fleet (25%) Global service network • 38 engineering locations • 31 field service hubs and 27 service workshops • 18,000 people 20 0 9 1 0 8 9 1 0 7 9 1 0 6 9 1 0 5 9 1 0 4 9 1 Power Servi
Slide 27: Power Service Strategy: added value for customers
Power Service Strategy: added value for customers Technology and innovation to improve plant performance Gas turbines GT13 E2 XL upgrade • Improved lifetime / availability at minimal cost Steam turbines Control Valve upgrade • Reduced pressure losses to increase plant efficiency 20 0 9 1 0 8 9 1 0 7
Slide 28: Transport: General context
Transport General context A faster than anticipated growth • Sustained demand in Europe, expanding also outside Europe, driven by urbanisation, mobility and environmental concerns • Strong market for very high speed trains and mass transit • Growth in service and signalling activities P 28
Slide 29: Transport Key figures
Transport Key figures In € million March 2007 March 2008 Variation Orders 5,388 7,467 +39% Backlog 15,239 17,283 +13% Sales 5,288 5,509 +4% Income from op 350 397 +13% Operating margin 6.6% 7.2% P 29
Slide 30: Transport Key achievements 2007/08
Transport Key achievements 2007/08 High speed/ • Large orders for TGVs in France and Argentina* Very high speed as well as AGVs in Italy* • Contract of Pendolino trains for Helsinki-St Petersburg line • Very high speed trains prospects in Morocco, Germany, Saudi Arabia… Operational priorities: maint
Slide 31: Transport Key achievements 2007/08
Transport Key achievements 2007/08 Regional and suburban trains • Success of CORADIA in Germany • Contracts for suburban trains in Spain and X’TRAPOLIS in Australia • Large tenders expected in France Operational priorities: reinforcement of product offering to differentiate in a competitive environm
Slide 32: Transport Key achievements 2007/08
Transport Key achievements 2007/08 Signalling • JV with Balfour Beatty to serve UK and Irish markets • Order for a signalling system in Belgium • First ERTMS level 2 operational in Italy Operational priorities: technological leadership to maintain; acquisitions opportunities to grasp Service • JV wi
Slide 33: Transport Strategy: platforming & cost optimisation
Transport Strategy: platforming & cost optimisation 5 product centers of excellence High Speed Trains >250kph Intercity Trains: from 140kph to 250kph Regional Trains: from 100kph to 180 kph (La Rochelle, France) (Savigliano, Italy) (Salzgitter, Germany) TGV/AGV PENDOLINO/’Minuetto’/X’TRAPOLIS CORADI
Slide 34: Transport Strategy: geographic expansion
Transport Strategy: geographic expansion Emerging opportunities outside Europe Intercity projects • TGV in Argentina (Buenos Aires- (outside Europe) Rosario-Cordoba) • TGV in Morocco (Tangier- Casablanca) • Very high speed line in Saudi Arabia New markets to penetrate • North Africa (tramways…) • Ru
Slide 35: Agenda
Agenda 1. Key events of the year Page 3 2. Operational review by Sector Page 16 3. Financial results Page 36 4. Outlook Page 45 P 35
Slide 36: Sales
Sales In € billion +19% actual 16.9 14.2 5.5 +19% organic* Transport 5.3 Power Service 3.6 Power Systems 3.2 7.8 5.7 March 07 March 08 P 36 (*) same scope (retreatment of disposals and acquisitions) and exchange rate
Slide 37: Income from operations
Income from operations In € million +35% actual 1,295 397 957 +35% organic* 350 Transport 592 Power Service Power Systems 510 Corporate & others 415 201 (104) (109) March 07 March 08 IO Margin 6.7% 7.7% P 37 (*) same scope (retreatment of disposals and acquisitions) and exchange rate
Slide 38: Income Statement
Income Statement In € million March 2007 March 2008 Variation Income from operations 957 1,295 +35% Restructuring costs (68) (35) Capital gains & other (63) (39) EBIT 826* 1,221 +48% Financial result (111) (69) Tax result (145) (291) Discontinued operations (32) - Minority interest & other 9 (9) Net
Slide 39: Free Cash Flow
Free Cash Flow In € million March 2007 March 2008 Income from operations 957 1,295 Restructuring cash out (102) (87) Depreciation 216 223 Capital expenditure (280) (374) R&D cap. & amort. of acq. techno. 16 (7) Pensions (404)* (102) Change in working capital 540 777 Tax cash out (116) (127) Financia
Slide 40: Evolution of net debt
Evolution of net debt In € million 1,635 (117) (635) 85 904 (64) Net debt Free cash flow Dividends Acquisitions Capital increase* Net cash 31 March 2007 +other 31 March 2008 P 40 (*) Employee share purchase schemes and stock options
Slide 41: Main financial events
Main financial events In € million Nominal amount Rating • Investment Grade rating to be published: BBB+/Baa1 Bonding programme • Needs covered until July 2010 2,270 • Decrease in bonding costs Cash Bonds • €866 million of the Debt buy-back 424 3 bonds bought back in 1,000 Available March 2010 2007/
Slide 42: Evolution of equity
Evolution of equity In € million (117) 30 105 (896)** 852 2,271* 2,245 1,375 Equity Pensions Restated equity Net income Dividends Pensions Capital Equity 31 March 2007 1 April 2007 variation in increase 31 March 2008 equity +other (*) as reported as of 31 March 07 P 42 (**) Adoption of full amortisa
Slide 43: Pensions
Pensions In € million Situation at 31 March 2007* Situation at 31 March 2008 4,770 (911) 4,110 (750) 3,859 3,360 Defined Funding Fair value of Defined Funding Fair value of benefit status plan assets benefit status plan assets obligations obligations P 43 (*) After SoRIE restatement
Slide 44: Agenda
Agenda 1. Key events of the year Page 3 2. Operational review by Sector Page 16 3. Financial results Page 36 4. Outlook Page 45 P 44
Slide 45: Next steps
Next steps • Short-term priorities − Continued selectivity in order intake − Execution of our backlog − Development of our human resources − Investment to support sales growth − R&D efforts to pursue • Long-term priorities − Differentiation and innovation − Increase of geographical (Asia, Russia…) a
Slide 46: New forecast
New forecast • March 2010 operating margin forecast reviewed upwards: around 9% for the Group − Power: between 10% and 11% − Transport: between 7% and 8% • Based on current market conditions and trends, operating margin should further increase beyond March 2010 P 46
Slide 47: Disclaimer
Disclaimer This presentation contains forward-looking statements which are based on current plans and forecasts of ALSTOM’s management. Such forward-looking statements are by their nature subject to a number of important risk and uncertainty factors (such as those described in the documents filed by
Slide 48: www.alstom.com
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