Alstom Sa · EURONEXT:ALO
Alstom Sa — Investor Day (September 2019)
48 slides from Alstom Sa's investor day presentation, September 2019
Slide 1: Investor Presentation
Investor Presentation September 2019
Slide 2: 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 3: Agenda
Agenda 1. Alstom today 2. Market perspectives 3. Strategy overview 4. Finance 5. Appendix (including FY 2018/19 results) ALSTOM – SEPTEMBER 2019 – P 3 © ALSTOM 2019. All rights reserved. Information contained in this document is indicative only. No representation or warranty is given or should be re
Slide 4: Alstom today
Alstom today ALSTOM – SEPTEMBER 2019 – P 4 © ALSTOM 2019. All rights reserved. Information contained in this document is indicative only. No representation or warranty is given or should be relied on that it is complete or correct or will apply to any particular project. This will depend on the tech
Slide 5: The most global player, a leader in all geographies, result of outstanding growth
The most global player, a leader in all geographies, result of outstanding growth Alstom within the top 3 market Growth outperforming the market share in every region1 Alstom sales, by region, in € Bn ALSTOM CAGR 5.5% Americas2 Asia Pacific Market4 #1 #2 2.3% 8.1 7.3 7.3 6.9 1.6 1.3 1.4 1.1 0.9 0.7
Slide 6: A unique multiregional footprint key to the group's commercial success and competitiveness
A unique multiregional footprint key to the group’s commercial success and competitiveness Europe 21,400 Americas Sri City 5,200 USA Bangalore Asia Pacific India 5,200 Brazil Middle East Africa South Africa 4,500 Katowice 36,300 people in New regional hubs Best shoring Global M&A over 60 countries a
Slide 7: A diverse and innovative portfolio of solutions
A diverse and innovative portfolio of solutions New platforms and breakthrough innovations in all product lines Tramway Regional Regional ROLLING SYSTEMS SERVICES SIGNALLING STOCK High Speed Infrastructure Maintenance Mainline networks & Very High Speed Integrated Modernisation Urban networks Citadi
Slide 8: Strong project execution and ability to improve operational profitability
Strong project execution and ability to improve operational profitability Operational excellence Margin evolution Structural cost control Gross Margin on Order Intake, in % SG&A evolution contained despite fast growing sales (in €m) 2015/16 2018/19 As of % sales +15% On time delivery 2015/16 2016/17
Slide 9: Strategy 2020 largely a success, ready for the next step
Strategy 2020 largely a success, ready for the next step Record backlog in the industry, geared for sustainable growth Outperformed market and main competition’ growth Backlog in 2018/19 Sales 2015/161 – 2018/19 €40.5Bn €33Bn €30Bn 5.5% 5.3% 2.5% 2.3% Global Global Global Global Market Alstom compet
Slide 10: Financial objectives for 2022/23
Financial objectives for 2022/23 Sales average annual growth Above 80% Net aEBIT margin1 rate of around 5% Income2 to FCF3 by around 9% in 2022/23 over 2019/20 to 2022/23 2022/23 Sustainable shareholder return: 25 to 35% dividend pay-out as of 2019/20 1 including CASCO JV share of net income 2 Net p
Slide 11: Market perspectives
Market perspectives ALSTOM – SEPTEMBER 2019 – P 11 © ALSTOM 2019. All rights reserved. Information contained in this document is indicative only. No representation or warranty is given or should be relied on that it is complete or correct or will apply to any particular project. This will depend on
Slide 12: Robust macro-economic drivers supporting the steady growth of rail traffic
Robust macro-economic drivers supporting the steady growth of rail traffic Passenger traffic per market segment Sustainable Urbanisation development In basis 100 70% -60% Average growth (2015 – 2025) of urban population -60% CO2 emissions projected by 2050 expected in transport Urban by 2050 (vs.199
Slide 13: A positive rail manufacturing market outlook
A positive rail manufacturing market outlook Global rail OEM market, in € Bn Global rail OEM market, in € Bn CAGR CAGR +3.0% +3.0% LATAM TURNKEY 125 125 Uncertain momentum Strong potential 0.7 4.9 114 constrained by uncertain 114 9.5 momentum in MEA 0.6 MEA 4.5 25.1 7.6 INFRA Economic slowdown may 2
Slide 14: A changing market
A changing market ⚫ With a more diverse set of clients ▪ Longstanding clients: National operators on traditional markets ▪ New clients: Internationalized Operators, Private operators, Transport Authorities, Infrastructure funds ⚫ Growing environmental concerns while rapid advancement of green techno
Slide 15: Strategy overview
Strategy overview ALSTOM – SEPTEMBER 2019 – P 15 © ALSTOM 2019. All rights reserved. Information contained in this document is indicative only. No representation or warranty is given or should be relied on that it is complete or correct or will apply to any particular project. This will depend on th
Slide 16: Be the leading global innovative player for a sustainable and smart mobility
Our mid-term ambition Be the leading global innovative player for a sustainable and smart mobility ALSTOM – SEPTEMBER 2019 – P 16 © ALSTOM 2019. All rights reserved. Information contained in this document is indicative only. No representation or warranty is given or should be relied on that it is co
Slide 17: AiM – Alstom in Motion: our strategic plan for 2019-2023
AiM – Alstom in Motion : our strategic plan for 2019 - 2023 GROWTH INNOVATION EFFICIENCY, by offering in smarter and powered by greater value greener mobility digital to our customers solutions Driven by One Alstom team, Agile, Inclusive and Responsible ALSTOM – SEPTEMBER 2019 – P 17 © ALSTOM 2019.
Slide 18: Growth by offering greater value to our customers
Growth by offering greater value to our customers ◄ Leverage our recognised expertise and our customer intimacy worldwide ► SERVICES SIGNALLING ROLLING STOCK & SYSTEMS Become Gain product Grow profitably leveraging the undisputed leader and market leadership our new platforms #1 OR #2 IN OUR MARKETS
Slide 19: Services: become the undisputed leader
Services: become the undisputed leader Outstanding market potential Alstom best positioned with unique assets and excellent track-record Accessible market by 2023: ~€42bn1, ⚫ Installed base + 50,000 vehicles, only 1/5 clients have largely untapped service contracts today ⚫ Numerous success stories o
Slide 20: Signalling: gain product and market leadership
Signalling: gain product and market leadership Accessible Market Segment Breakdown1 NEXT PRIORITIES: UNIFE Accessible market ⚫ Leverage our assets to capture growth: Mainline: driven by Europe and ETCS upswing ✓ ETCS expertise URBAN: large ✓ Complex project know-how roll-outs planned 34% ✓ #1 in Chi
Slide 21: Rolling stock & Systems: leverage our new platforms to further expand
Rolling stock & Systems: leverage our new platforms to further expand Already a leading position in our markets1 NEXT PRIORITIES: Market shares 3Y Orders – March 19, in % ⚫ High technology products ⚫ Competitive on price (Total Cost 20% 17% 15% of Ownership) quality and time ⚫ Higher penetration 10%
Slide 22: Already recognised breakthrough innovations in green and smart mobility
Already recognised breakthrough innovations in green and smart mobility First Hydrogen train Unique electric bus €360m first contract Built from base zero Won one of the largest European tenders Alstom assets Rolling stock - Coradia ILint ⚫ Long-term customer intimacy New platform - Aptis 99% of rec
Slide 23: Six priority innovation areas to respond to mid and long term business drivers
Six priority innovation areas to respond to mid and long term business drivers Road electromobility 2 GREEN 1 3 Green traction Eco-design and manufacturing MOBILITY 6 4 SMART Multimodality Autonomous train and Flow management MOBILITY 5 Data driven rail mobility LEAD IN GREEN AND SMART SOLUTIONS ALS
Slide 24: Efficiency, powered by digital
Efficiency, powered by digital A TOP PRIORITY FOR THE GROUP Additional levers 2020 objective of 7% aEbit margin reached ⚫ Digital transformation Thanks to: ⚫ Footprint stabilisation & optimisation ⚫ Sourcing cost reduction – €250m ⚫ Best-in-class project execution, including cash focus ⚫ 60% of manu
Slide 25: Environment and social impact at the heart of our strategy
Environment and social impact at the heart of our strategy 2025 targets 1 ENABLING 25%1 energy reduction in solutions (CO2) decarbonisation of mobility 100 % electricity supply from renewables 2 Total recordable injury rate at 2 CARING for our people 25% Women in management & professional roles Glob
Slide 26: Finance
Finance ALSTOM – SEPTEMBER 2019 – P 26 © ALSTOM 2019. All rights reserved. Information contained in this document is indicative only. No representation or warranty is given or should be relied on that it is complete or correct or will apply to any particular project. This will depend on the technica
Slide 27: Growing Sales Sustainably Above Market
Growing Sales Sustainably Above Market ⚫ Record €40Bn backlog securing €16.5-17.5Bn sales over next 3 years €8.1Bn ⚫ Boost Signalling sales ⚫ Foster Services momentum ⚫ Revenue from Services and Signalling to reach 40% by 2022/23 ⚫ Build on Rolling Stock and Systems capabilities ⚫ Softer FY 2019/20
Slide 28: Objective: Uplifting margin to Benchmark Level
Objective: Uplifting margin to Benchmark Level 9.0%* ⚫ Volume/Price ▪ Sustainable top line growth ▪ Consistent price dynamics trends 7.5%* ⚫ Portfolio Mix Operational Excellence ▪ Growth towards Services & Signalling (toward 40% of Mix Casco sales in 2022/23) Volume/price ⚫ Operations Performance 7.
Slide 29: Driving Performance through Cash Focus Programme
Driving Performance through Cash Focus Programme Programme Architecture ⚫ Key drivers Tender ▪ Tender - Progress payment & Working Capital optimisation ▪ Inventory - 20% reduction of testing duration Sourcing Tools & - 15% Hard Inventory coverage reduction process Payment - Vendors Managed Inventori
Slide 30: Delivering FCF Performance
Delivering FCF Performance ⚫ FCF key drivers ▪ EBIT growth driven by volume & margin expansion ▪ Working Capital: inventory impact during 2 years, and stable mid-term target ▪ Capex stabilising to 2% of sales ▪ Financial cash out benefiting from bonds repayment ▪ Tax cash out supported by tax losses
Slide 31: Capital Allocation Policy & Shareholder return
Capital Allocation Policy & Shareholder return FCF improvement Strong Sustainable Disciplined Balance Shareholder M&A Sheet return ⚫ Strong net cash position maintained to sustain growth ⚫ Solid investment grade rating maintained ⚫ Sustainable shareholder return: 25 to 35% dividend pay out as of 201
Slide 32: Key Take Aways
Key Take Aways ⚫ Well positioned in a growing market, supported by an industry-leading backlog, a global footprint and range of products / services EPS ⚫ Translating in industry-leading margins and cash flow Growth generation ⚫ Significant firepower to implement disciplined M&A and innovation ⚫ Mana
Slide 33: www.alstom.com
www.alstom.com www.alstom.com www.alstom.com
Slide 34: Non-GAAP financial indicators definitions
Appendix 1 - Non-GAAP financial indicators definitions This section presents financial indicators used by the Group that are not defined by accounting standard setters. ⚫ Orders received A new order is recognised as an order received only when the contract creates enforceable obligations between the
Slide 35: Non-GAAP financial indicators definitions
Appendix 1 - Non-GAAP financial indicators definitions ⚫ Free cash flow Free cash flow is defined as net cash provided by operating activities less capital expenditures including capitalised development costs, net of proceeds from disposals of tangible and intangible assets. In particular, free cash fl
Slide 36: Appendix Full Year 2018/19 Results
Appendix Full Year 2018/19 Results ALSTOM – SEPTEMBER 2019 – P 36 © ALSTOM 2019. All rights reserved. Information contained in this document is indicative only. No representation or warranty is given or should be relied on that it is complete or correct or will apply to any particular project. This
Slide 37: Income statement
Income statement % change % change In € million FY 2017/18* FY 2018/19 reported organic Sales 7,346 8,072 10% 11% Adjusted EBIT 397 570 44% Adjusted EBIT margin 5.4% 7.1% Restructuring charges (47) (65) Other charges (86) (97) EBIT 264 408 Financial result (99) (88) Tax result (59) (70) Share in net
Slide 38: Free cash flow
Free cash flow In € million FY 2017/18* FY 2018/19 EBIT 264 408 168 194 ◼ Positive EBIT evolution Depreciation & amortisation Capex (203) (207) ◼ Phasing of transformation capex R&D capitalisation (90) (68) 91 (12) ◼ Working capital limited evolution, Change in working capital (66) (90) impacted by
Slide 39: Capex developments
Capex developments Ramp up of transformation capex Capex* (in € million) 203 207 108 110 95 97 2017/18 2018/19 Capex Transformation Capex South Africa factory * excluding capitalised development costs Strategic transformation of our footprint €269m spent out of c. €300m transformation capex ALSTOM –
Slide 40: Liquidity and gross debt
Liquidity and gross debt In € million Liquidity position Liquidity 3,832 ⚫ €3,432m cash and cash equivalents as of 31 March 2019 1,631 ⚫ €400m revolving credit facility ; fully undrawn ⚫ Energy JVs fully cashed in for €2.6bn Mar-18 Mar-19 Undrawn credit line Gross cash In € million Gross debt Gross
Slide 41: Net cash
Net cash In € million Net cash/(debt) 19 2,472 (84) 20 2,325 (255) 153 Mar-18 FCF Acq. & disposals* Capital increase Dividend paid Forex & other Mar-19 * includes GE disposals put option exercise for €2,594m and stakes of TMH for (€115m) ALSTOM – SEPTEMBER 2019 – P 41 © ALSTOM 2019. All rights reser
Slide 42: Equity
Equity Equity In € million (49) 136 4,159 (78) 39 681 3,430 Mar-18* Net income** Pensions Dividends Share base payments Forex & other*** Mar-19 * Restated for IRFS 9 & 15 ** Group share *** Of which Forex for €36m and €53m related to fair value adjustment of Locotech investment in TMH ALSTOM – SEPTE
Slide 43: Shareholder distribution
Shareholder distribution 2,325 ⚫ Board of directors proposed a dividend of €5.50 (1,230) per share, based on net cash position at 31 March 31 2019 1,095 ⚫ Net cash post dividend will be at €1,095m without considering IFRS16 impact estimated between €400m and €500m Net Cash at 31 Dividend Net cash re
Slide 44: Appendix Case Study
Appendix Case Study ALSTOM – SEPTEMBER 2019 – P 44 © ALSTOM 2019. All rights reserved. Information contained in this document is indicative only. No representation or warranty is given or should be relied on that it is complete or correct or will apply to any particular project. This will depend on
Slide 45: Alstom in India
Alstom in India An Established Footprint ⚫ India: key contributor to Alstom strategy with high Total 4,040 Employees standard sites for R&D, engineering and manufacturing ▪ Bangalore: Alstom’s largest engineering center for Rolling Stock & Signalling Madhepura 370 Employees → 22% of global engineeri
Slide 46: Alstom in India: A Proven Track-Record
Alstom in India A Proven Track-Record ⚫ Metro RS: LUCKNOW – €150m a proven Track-Record of Projects executed from India, to address Domestic & Export Markets: Rolling Stock ▪ Chennai, Kochi, Lucknow, Sydney, successfully commissioned Signaling ▪ Montreal, Mumbai in execution 1st completed “Make in I
Slide 47: Digital Transformation: Use Case TGV2020
Digital Transformation: Use Case TGV2020 Extensive use of digital Parts handling Manufacturing Execution System with Cobot and new technologies Digital worksinstruction and monitoring Welding automation Virtual Training welding and painting -25% Manufacturing hours vs previous generation 3D printing
Slide 48: Footprint Stabilisation & Optimisation: Use case Sydney Project
Footprint Stabilisation & Optimisation: Use case Sydney Project Worldwide organisation serving Sydney Project Europe ➔ EXPERTISE Project Set up: India ➔ EXPERTISE & COMPETITIVENESS 20% savings vs previous organisation Sydney ➔ CUSTOMER INTIMACY & MAINTENANCE CONTRACT OVER 15y ALSTOM – SEPTEMBER 2019