(Paris) Still handicapped by charges linked to the acquisition of Bombardier Transport, the railway manufacturer Alstom sharply reduced its loss in its staggered 2022-2023 financial year (ended at the end of March), but the international economic situation forced it to delay one year its medium-term profitability objectives.
Alstom published results on Wednesday in line with expectations, with a net loss of 132 million euros (one euro = C$1.47) due to depreciation related to the acquisition of Bombardier’s rail activities in January 2021.
For the same reasons and because of a charge linked to the depreciation of its stake in the Russian manufacturer Transmashholding, Alstom had lost 581 million euros in 2021/22.
Without these elements, the “adjusted net income” for the year came to 292 million euros, against a loss of 173 million a year earlier.
Adjusted operating income climbed 11% to 852 million euros, giving a margin of 5.2%, up 0.2 points in one year.
“It’s going well,” summed up the group’s CEO, Henri Poupart-Lafarge, in front of journalists.
“We achieved a solid commercial performance this fiscal year,” he said.
The group has notably “returned to a normal life” with former customers of Bombardier Transportation, from which it inherited a number of contracts that were difficult to honor and/or at a loss. “We have restored confidence”, underlined Mr. Poupart-Lafarge, claiming a position of “leader in a buoyant market” – behind the Chinese giant CRRC – with in particular 35% market share in rolling stock (excluding China) .
The leader of Alstom had given himself three to four years to digest Bombardier Transport, which was much less profitable than its buyer before its takeover. Some factories still need to be brought up to standard, he said.
The acquisition of Bombardier Transportation will further disrupt Alstom’s results for some time as the purchase price allocation amortization plan, totaling €3.2 billion, runs until beyond 2033. The expense passed in the 2022/23 accounts reaches 420 million.
Diesel trains to be replaced
The turnover of the French railway industry giant increased by 7%, to 16.5 billion euros in 2022/23, including 8.8 billion for rolling stock, 3.8 billion for services ( including maintenance) and 2.4 billion for railway signalling.
Order intake, a key indicator for the sector, increased by 7% to 20.7 billion euros, enabling the order book to reach a record level of 87.4 billion euros at 31 March.
In particular, Alstom sold additional TGVs in France, trains in Germany, France and Sweden, trams in Australia, metros in India and Egypt, and locomotives in Kazakhstan.
Management sees the rail market growing everywhere, with “120 billion euros of opportunities over the next 18 months”. She is salivating at the investments planned for signaling in Germany and Italy, the 100 billion euro “rail plan” in France, the projects in India and the United States and the 6,000 diesel trains to be replaced in Europe.
“There is a very strong demand for innovation,” noted Mr. Poupart-Lafarge, who wants to increase the research and development budget, in terms of green traction, development of autonomous trains, cybersecurity, etc.
The group confirms its medium-term outlook, but has delayed the deadline by one year, to 2025/26, “mainly due to the new macroeconomic environment, and in particular the effect of inflation”. It aims in particular for an adjusted operating margin of between 8 and 10% as well as an annual increase of at least 5% in turnover.
At the same time, management abandoned its objective of gaining 5 points of market share in four years.
In the meantime, the adjusted operating margin should reach “around 6%” in the 2023/24 financial year, with a “significantly positive” cash position, according to management.
Rating agency Moody’s immediately lowered Alstom’s rating from “Baa2” to “Baa3”, giving it a stable outlook. She points out that the group is doing better than a year ago, but continues to worry about its financial capacity in the event of a hard blow.
On the Paris Stock Exchange, Alstom shares lost 3.64% to 22.79 euros at 12 p.m. in a market down 0.22%.