Railway sector services provider Alstom Group announced in its “outstanding” fiscal year 2016/17 results that the sales of trains reached €1.6-billon, with the ongoing execution of the Passenger Rail Agency of South Africa (PRASA) project in South Africa a part of the deliveries of suburban, regional and high-speed trains in Europe, and tramway deliveries in Algeria.
PRASA’s ongoing projects include a project for rail company Gibela – a consortium formed to replace South Africa’s outdated rolling stock which Alstom is a majority shareholder of – which will deliver 600 passenger trains into the South African rail network over the next ten years.
PRASA, in commissioning the project, is executing its mandate in terms of the National Development Plan (NDP) 2030, which aims to significantly advance prosperity and equity for all South Africans. This involves improving national infrastructure, including public transport, and boosting the economy to create jobs.
Engineering News reported that PRASA and Gibela had signed the manufacture and supply agreement, as well as the related technical support and spares supply agreement in October 2013, as part of PRASA’s New Rolling Stock Acquisition Programme.
It further reported that the programme involved the acquisition of 7 224 new rail vehicles to be rolled out in two ten-year phases, and that the project would create 65 000 direct and indirect jobs. The manufacturing contracts are valued at R123.5-billion.
The latest developments reported by PRASA are that the manufacturing of the trains is progressing well, the test track and test facilities at the Wolmerton Depot have also been completed and the Wolmerton Depot was the first depot to receive new trains.
2020 Strategy on Track
Alstom CEO Henri Poupart-Lafarge confirms in the results that the company’s 2020 objectives and the pillars that support these remain unchanged.
He says that the first pillar is providing a complete range of solutions, highlighting that, in the company’s 2016/17 first half, railway sales were up 8% and reached €3.57-million.
He notes that signalling, systems and services represented 54% of sales in the first half, in line with the 2020 objective of 60%. Also, signalling sales growth of 33% was supported by the integration of GE Signalling & Deliveries in Canada.
Systems sales increased 20% with the progress of the Riyadh metro system in Saudi Arabia, urban systems deliveries in Brazil and Qatar, as well as infrastructure projects in the UK. Services slightly decreased to €0.7-billion in sales with the adverse forex impact on a maintenance contract in the UK; however, as previously mentioned, sales of trains reached €1.6-billon.
The second pillar is maintaining a customer- focused organisation. Poupart-Lafarge says that the group confirmed its leading position with a high level of orders of €6.21-million booked in the 2016/17 first half, compared with €3.89-million registered over the same period last year.
Alstom was awarded several major projects during the semester. The group signed contracts with passenger railroad service provider Amtrak in the US for new-generation Avelia high-speed train and services. Alstom-led consortium Expolink won a contract with Dubai’s Roads and Transport Authority for the extension of Dubai Metro’s Red Line. “Other commercial successes for this first half included Coradia regional trains in the Netherlands and Italy, high-speed Avelia Pendolino trains as well as their maintenance, in Italy, new metro cars in Peru, as well as maintenance contracts in Canada and in the UK,” the company details.
The backlog reached a new record high and amounted to €33.57-million on September 30.
The third pillar entails value creation through innovation. Alstom sustained its level of research and development (excluding capitalisation and amortisation) at €62-million in the 2016/17 first half.
The main programmes included the renewal of mainline and urban train ranges, signalling and predictive maintenance.
The fourth pillar is the operational and environmental excellence that contributes to the 2020 strategy. Alstom delivered adjusted earnings before interest and taxes (Ebit) of €200-million in the first half, compared with €167-million over the same period last year, representing a 20% increase.
The adjusted Ebit margin reached 5.6%, compared with 5.1% in first half of 2015/16. This continuous improvement was driven by volume increase, portfolio mix and ongoing initiatives for operational excellence. During the 2016/17 first half, net income (group share) amounted to €128-million.
Moreover, Alstom invested €43-million in capital expenditure (capex) in the first half of 2016/17 to strengthen its global footprint in the emerging markets while modernising its existing facilities.
Group free cash flow was high at €3.33-million, benefiting from a combination of several large downpayments and the phasing out of both capex and legacy cash. Alstom had a net cash total of €54-million by September 30, compared with a net debt position of €20.3-million in March earlier this year.
“Alstom also achieved a 7% reduction in the overall energy consumption of its portfolio, compared with a year ago. The group is on track to meet its objectives to reduce the energy consumption of its solutions by 20% by 2020,” comments the Alstom board.
The final pillar is diverse and entrepreneurial people. Alstom pursues this strategy to reflect its passenger base: the company’s ambition is to increase diversity, aiming for 25% of management or professional roles to be occupied by women, and for 50% senior management to be non-European within five years. “Alstom’s employees around the world all share the same culture, underpinned by strong values, integrity and ethics,” the company says.
Therefore, the Alstom board of directors concludes that the confirmed objectives for 2020 include that sales should grow organically by 5% every year by 2020, the adjusted Ebit margin should reach around 7%, driven by volume, and an improved portfolio mix, backed by operational excellence actions.