France’s Alstom sees income halved, record order backlog
PARIS: French high-speed train maker Alstom saw net income halve to 227 million euros ($252 million) in the six months of April to September as sales rose but new orders declined by a third on a year earlier. Announcing earnings results for the first half of its 2019/2020 financial year, the company that pioneered the TGV train reported “positive commercial momentum” and said it was targeting average annual sales growth of about five percent up to 2023.
The company received orders worth 4.6 billion euros in the period under review, a 35-percent decline from a year earlier when it netted “exceptional” contracts including a “TGV of the Future” project in France and a large Montreal metro order. “This first half, Alstom continued to achieve a high level of order intake, including emblematic contracts such as the maintenance of the Santiago metro, the renewal of Barcelona metro and CDG Express in France, as well as the signalling system for (the) ParisLyon high-speed line,” chief executive officer Henri Poupart-Lafarge said in a statement.
“The continuous improvement in our operational performance demonstrates the Group’s focus on profitable growth.” Sales in the half rose three percent to 4.1 billion euros.
The decline in net income is explained partly by a steep rise in taxes and a drying up of income from equity investees, related in part to Alstom selling its power and energy business to US conglomerate General Electric. Adjusted earnings before interest and taxes (aEBIT) — a measure closely watched by analysts — increased to 319 million euros in the half from 303 million euros a year earlier, boosting the operating margin by 0.2 percentage points to 7.7 percent.
Alstom said it was targeting an aEBIT margin of about nine percent in 2022/23, “and a dividend policy with a pay-out ratio between 25 percent and 35 percent.”
The company now has orders worth 41.3 billion euros on its books, a record Alstom said provided “strong visibility on future sales”. “The 2019/2020 fiscal year will be a year of stabilization of growth after a 2018/2019 fiscal year with an exceptional sales and profitability growth,” the statement said.