AI assistant
Alstom Investor Presentation 2024
1099_iss_2024-11-13_a80ac674-ac92-439b-8b34-142697f6d075.pdf
Investor Presentation
Open in viewerOpens in your device viewer
1
Half Year Results Fiscal Year 2024/25
13 November 2024
Disclaimer
- This presentation contains forward-looking statements which are based on current plans and forecasts of Alstom's management. Such forward-looking statements are relevant to the current scope of activity and are by their nature subject to a number of important risks and uncertainty factors (such as those described in the documents filed by Alstom with the French AMF) that could cause actual results to differ from the plans, objectives and expectations expressed in such forwardlooking statements. These such forward-looking statements speak only as of the date on which they are made, and Alstom undertakes no obligation to update or revise any of them, whether as a result of new information, future events or otherwise.
- This presentation does not constitute or form part of a prospectus or any offer or invitation for the sale or issue of, or any offer or inducement to purchase or subscribe for, or any solicitation of any offer to purchase or subscribe for any shares or other securities in the Company in France, the United Kingdom, the United States or any other jurisdiction. Any offer of the Company's securities may only be made in France pursuant to a prospectus having received the visa from the AMF or, outside France, pursuant to an offering document prepared for such purpose. The information does not constitute any form of commitment on the part of the Company or any other person. Neither the information nor any other written or oral information made available to any recipient, or its advisers will form the basis of any contract or commitment whatsoever. In particular, in furnishing the information, the Company, the Banks, their affiliates, shareholders, and their respective directors, officers, advisers, employees or representatives undertake no obligation to provide the recipient with access to any additional information.
Highlights of the first half of fiscal year 2024/25
Henri Poupart-Lafarge, Chief Executive Officer
H1 2024/25 financial results
Bernard Delpit, Executive Vice-President and Chief Financial Officer
―――――――――――――――――――――――――――――――――――――――――――――――――――――――――――――――――――
―――――――――――――――――――――――――――――――――――――――――――――――――――――――――――――――――――
4
Highlights
Henri Poupart-Lafarge Chief Executive Officer
Free Cash Flow at €(138) million benefiting from commercial activity Confirmation of FY 2024/25 outlook
- ✓ Strong commercial momentum with margin-accretive order intakes
- ✓ Sales and profitability in line with trajectory
- ✓ H1 Free Cash Flow phasing benefiting from downpayments
5
✓ FY 2024/25 outlook confirmed
3-year pipeline at ~€200bn: Asia-Pacific and Middle-East growth
€7.3bn orders in Q2: Landmark wins in Germany, Australia and France and good flow of small orders
PROXIMA (TRAINS & MAINTENANCE- France)
S-BAHN KÖLN (TRAINS & MAINTENANCE - Germany)
PERTH (SIGNALING - Australia)
Strong backlog with confirmed gross margin improvement trajectory
Backlog stratification – Gross margin evolution
8
Integration process finishing, amidst rising supply chain challenges
- All sites with Alstom's tools and processes by year-end
- Inflationary pressures largely mitigated through escalation clauses on new orders
- Demonstrated agility in managing electronic component shortages
- Quality indicators and Net Promoter Score improving
CONTINUED OPERATIONAL PROGRESS …HINDERED BY SUPPLY-CHAIN CHALLENGES
- Supply chain is the primary cause when Rolling Stock contracts delays occur
- Suppliers' bottlenecks and capacity issues following orders peak in recent years
- Some emerging technologies need to be stabilized
Management focus on Supply Chain to secure On-Time Delivery
Relentless effort on optimising execution of all major projects
PARIS PROJECTS DELIVERED AS PLANNED
URBAN MP14 with 3 metro lines, and 2 CITADIS tramway lines
MULTIPLE LEGACY PROJECTS SUCCESSFULLY TURNED AROUND
South Africa Locomotives
COMMUTERS RER NG: 1 line extension
Belgium commuters
Talent 3 to RockRail
CONTINUOUS EFFORTS ON SELECTED PROJECTS
AVENTRA
- ✓ 130 cars delivered during H1
- ✓ Modification program execution ✓ Contracts close-out negotiations in H2
AMTRAK
- ✓ Progress on testing
- ✓ Expecting FRA decision
Production shift towards better margin projects with the end of Aventra in Derby
Quantity of cars produced per quarter
FY 2022/23 FY 2023/24 FY 2024/25
© ALSTOM SA 2024. 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 technical and commercial circumstances. It is provided without liability and is subject to change without notice. Reproduction, use, alter or disclosure to third parties, without express written authorisation, is strictly prohibited.
11
12
Financial Results
Bernard Delpit Executive Vice-President and Chief Financial Officer
H1 orders boosted by strong Q2 Services and Signaling exceed 50% of order intake
ORDERS H1 2024/25 (in €bn)
13
Group organic growth in line with guidance Double digit Services growth since merger
H1 2023/24 Reported F Impact Scope Impact H1 2023/24 Organic Q1 2024/25 Organic Q2 2024/25 Organic H1 2024/25 Reported +3.9% * €8,443 €8,775 (0.9)% (0.7)% + 5.9% + 5.3% €8,311 +5.6% Organic growth
* Spanish JVs and disposal of US signaling
SALES H1 2024/25 (in €m) H1 2024/25 SALES SPLIT BY PRODUCT LINES
ROLLING STOCK: €4,531m (+2% vs H1 2023/24, o/w 2% organic growth) Ramp-up in France, Brazil and Asia/Pacific offsetting legacy German and UK contracts phasing out.
SERVICES: €2,197m
(+11% vs H1 2023/24, o/w 12% organic growth) Strong growth in Germany, Asia/Pacific and Middle East.
SIGNALING: €1,247m
(+0% vs H1 2023/24, o/w 3% organic growth) Consistent execution year on year, Asia/Pacific growth compensating Canada/US ramp down.
SYSTEMS: €800m
(+7% vs H1 2023/24, o/w 14% organic growth) Good performance of Turnkey Systems projects in Mexico compensating successful completion of Egyptian monorail.
aEBIT margin improvement in line with FY 2024/25 trajectory
| (in € million) | H1 2023/24 |
H1 2024/25 |
Evolution |
|---|---|---|---|
| Sales | 8,443 | 8,775 | +3.9% |
| Cost of Sales | (7,278) | (7,547) | +3.7% |
| Adjusted Gross Margin before PPA¹ As a % of sales |
1,165 13.8% |
1,228 14.0% |
+20bps |
| Research and development expenses before PPA2 As a % of sales |
(254) 3.0% |
(256) 2.9% |
(10)bps |
| Selling & Administrative expenses As a % of sales |
(538) 6.4% |
(528) 6.0% |
(40)bps |
| Net interest in equity investees pickup3 | 65 | 71 | +9.2% |
| Adjusted EBIT ¹ |
438 | 515 | +17.6% |
| Adjusted EBIT margin¹ | 5.2% | 5.9% | +70bps |
-
Definition in Appendix
-
Excluding €(28) million of amortisation expenses of the purchase price allocation of Bombardier Transportation.
-
Definition in Appendix. This mainly includes Chinese joint-ventures
Profit improvement coming from volume and cost savings initiatives
aEBIT (in %)
16
Improved EBIT drive Net income increase
| (in € million) | H1 2023/24 | H1 2024/25 | Evolution | |
|---|---|---|---|---|
| Sales | 8,443 | 8,775 | +3.9% | |
| Adjusted EBIT |
438 | 515 | +17.6% | |
| Adjusted EBIT margin | 5.2% | 5.9% | +70bps | |
| Capital gain and other non-operating income | 1 | 21 | - | |
| Restructuring and rationalisation costs | (7) | (1) | (85.7)% | o/w Integration costs €51m |
| Integration, acquisition and other costs | (92) | (82) | (9.9)% | Legal fees and others €31m |
| Reversal of net interest in equity investees pickup¹ | (65) | (71) | +9.2% | Net interest decrease by (€24m) |
| EBIT before PPA and impairment | 275 | 382 | +39.3% | Hedging, bank fees & others |
| Financial results | (98) | (107) | +9.2% | increase by + €33m |
| Tax results |
(44) | (101) | x2.3 | ETR 37% |
| Share in net income of equity investees |
53 | 60 | +13.2% | |
| Minority interests from continued op. | (12) | (10) | (16.7)% | |
| Net profit2 Adjusted |
174 | 224 | +28.7% | |
| PPA net of tax | (173) | (169) | (2.3)% | |
| Net Profit - Continued operations, Group share |
1 | 53 | - |
1 This mainly includes Chinese joint-ventures
2 Definition in appendix
Structural FCF seasonality mitigated by improved working capital phasing
From EBIT* to Free Cash Flow (in € million)
* EBIT Before PPA and impairment
(1) Change in Working Capital (Trade + Contract working capital change) for €(420)m corresponds to the €(448)million changes in working capital resulting from operating activities disclosed in the condensed interim consolidated financial statements from which the €31 million variations of restructuring provisions and €(2) million of variation of Tax working capital have been excluded. .
Trade Working Capital Seasonality on inventories, discipline maintained on overdues and payables
| (in € million / days of sales) | 30 September 2023 |
31 March | 2024 | 30 September 2024 |
||
|---|---|---|---|---|---|---|
| Inventories | 4,216 | 91 | 3,818 | 79 | 4,204 | 85 |
| Trade payables | (4,223) | (91) | (3,444) | (71) | (3,474) | (71) |
| Trade receivables | 3,019 | 65 | 2,997 | 62 | 3,093 | 63 |
| Other assets/ liabilities |
(2,107) | (45) | (1,705) | (35) | (1,630) | (33) |
| Capital1,2 Trade Working |
905 | 20 | 1,666 | 34 | 2,193 | 45 |
Inventories increase due to usual H1 seasonality
Trade payables and trade receivables maintained at stable level in H1
-
Definition in appendix
-
Excluding restructuring provisions and corporate tax changes
Contract Working Capital Larger quantity of projects in startup phase
| (in € million / days of sales) |
30 September 2023 |
31 March | 2024 | 30 September 2024 |
||
|---|---|---|---|---|---|---|
| Contract assets |
5,369 | 116 | 4,973 | 103 | 5,476 | 111 |
| Contract liabilities | (6,958) | (150) | (7,995) | (166) | (8,538) | (174) |
| Current provisions Of which Risks on contracts |
(1,750) (1,141) |
(38) | (1,612) (981) |
(33) | (1,583) (943) |
(32) |
| Contract Working Capital1 |
(3,339) | (72) | (4,634) | (96) | (4,645) | (94) |
Net Contract Assets / Liabilities stable since March 2024 at (63) days of sales
Provisions on contract risks reducing as planned
1 Definition in appendix
Net financial debt reduced by €2,067m to €927m following deleveraging plan
- Sale of TMH for €75m executed during FY 2023/24. Rights issue, hybrid issuance and sale of US conventional Signaling net of advisory fees.
Short-term debt reimbursed, strong increase in Cash & cash equivalents
(2,000)
Cash Cash Eq. S/T Debt
- ~€869m increase in Cash equivalents
- ~€1.2b reimbursement of short-term debt during H1
- No financial covenants and fixed coupons on all bonds
- No planned redemption before October 2026
23
Conclusion
Henri Poupart-Lafarge Chief Executive Officer
FY 2024/25 outlook and mid-term ambitions confirmed
Assumptions
- Supportive market demand
- FY 2024/25 downpayments consistent with FY 2023/24
- End of integration in FY 2024/25
Outlook for FY 2024/25
- Book to bill above 1
- Sales organic growth: around 5%
- aEBIT margin around 6.5 %
- FCF generation €300m to €500m
24
Mid- to long-term ambitions confirmed as per May 8, 2024 announcement*
* See Appendix 2
Contacts & Agenda
Martin VAUJOUR VP Investor Relations
Estelle MATURELL ANDINO Deputy Head Investor Relations
26
Financial Calendar
| H1 FY 24/25 roadshow in Paris - ODDO |
Paris, FRANCE |
|---|---|
| H1 FY 24/25 roadshow in London - Jefferies |
London, UK |
| H1 FY 24/25 roadshow in NYC – CITI |
NYC, USA |
| H1 FY 24/25 roadshow in Chicago – CITI |
Chicago, USA |
| Forum by Market Solutions 2024 - CIC |
Paris, FRANCE |
| H1 FY 24/25 roadshow in Toronto – JP Morgan |
Toronto, CANADA |
| H1 FY 24/25 roadshow in Los Angeles – Redburn |
Los Angeles, USA |
| H1 FY 24/25 roadshow in San Francisco – Redburn |
San Francisco, USA |
| H1 FY 24/25 "virtual"roadshow in Europe – Deutsche bank |
VIRTUAL |
| Investir Day – Les Echos Le Parisien |
Paris, France |
| H1 FY 24/25 "virtual"roadshow in Singapore, Hong-Kong Australia – Macquarie & Kepler Cheuvreux |
VIRTUAL |
| H1 FY 24/25 roadshow in Dublin – Deutsche bank |
Dublin, IRELAND |
| The Premium Review conference – Bernstein by Societe Generale |
Paris, FRANCE |
| H1 FY 24/25 roadshow in Switzerland – Deutsche bank |
Zurich/Geneva, SWITZERLAND |
| H1 FY 24/25 "Fireside chat" – Kepler Cheuvreux |
VIRTUAL |
| Annual European Industrials & Autos conference 2024 – Goldman Sachs |
London, UK |
| Alstom Sricity site visit | Sricity, INDIA |
Financial Calendar
| 5 December | One-Stop-shop Brussels – Kepler Cheuvreux |
Brussels, BELGIUM |
|---|---|---|
| 9 January 2025 | ODDO BHF Forum 2025 in Lyon | Lyon, FRANCE |
| 5 June 2025 | CEO conference – BNPP Exane |
Paris, FRANCE |
| 12 June 2025 | CEO conference – JP Morgan |
London, UK |
29
Equity in € million
H1 2024/25 backlog by region and product line
Backlog breakdown by region (in € million)
Backlog breakdown by product line (in € million)
H1 2024/25 Sales by region and product line
Sales breakdown by region (in € million)
Sales breakdown by product line (in € million)
25%
14%
Sales by currency
| Currencies | H1 2024/25 as a % of sales |
|---|---|
| EUR | 47.1% |
| GBP | 9.3% |
| USD | 8.9% |
| CAD | 4.7% |
| INR | 4.4% |
| AUD | 4.9% |
| SEK | 2.8% |
| MXN | 3.4% |
| ZAR | 3.1% |
| BRL | 1.9% |
| KZT | 1.4% |
| SGD | 1.6% |
| Currencies below 1% of sales |
6.4% |
Bombardier Transportation PPA provisional amortisation plan
| (in € million) | As per P&L 1 Booking |
|---|---|
| FY 2020/21 | (71) |
| FY 2021/22 | (428) |
| FY 2022/23 | (436) |
| FY 2023/24 | (357) |
| FY 2024/25 | (371) |
| FY 2025/26 | (264) |
| FY 2026/27 | (213) |
| FY 2027/28 | (203) |
| FY 2028/29 | (166) |
| FY 2029/30 | (139) |
| FY 2030/31 | (107) |
| FY 2031/32 | (97) |
| FY 2032/33 | (95) |
| FY 2033/34 | (47) |
| Beyond | (151) |
● The Gross PPA amortisation plan will be subject to FX evolution in future years or subject to potential impairments
- Excludes PPA other than related to the purchase of Bombardier Transportation
Bridge consideration – From Enterprise Value to Equity Value
| (in € million) | H1 2024/25 |
|---|---|
| Total Gross debt, incl. lease obligations (1) |
3,473 |
| Pension liabilities net of prepaid and deferred tax asset related to pensions (2) |
770 |
| Non controlling interest (3) |
110 |
| Cash and cash equivalents (4) |
(1,789) |
| Other current financial assets (4) |
(71) |
| Other non-current financial assets (5) |
(85) |
| Net deferred tax liability / (asset) (6) |
(680) |
| Investments in associates & JVs, excluding Chinese JVs (7) |
(112) |
| Non-consolidated Investments (8) |
(75) |
| Bridge | 1,541 |
(1) Long-term and short-term debt and Leases (Note 20), excluding the lease to a London metro operator for €87m due to matching financial asset (Notes 14 and 20 in the Financial Notes)
(2) As per Note 22 (in the Financial Notes) net of €63m of deferred tax allocated to accruals for employees benefit costs
(3) As per balance sheet
(4) As per balance sheet, adjusted with the deposit for the NMTC loan for €26m (Note 20 in the Financial Notes)
(5) As per balance sheet – excluding assets related to pensions for €341m, long term contract receivables for €114m and the deposit for the NMTC loan for €26m
(6) Deferred Tax asset and Liabilities - as per balance sheet net of €63m of deferred tax allocated to accruals for employees benefit costs
(7) JVs - to the extent they are not included in equity pickup / FCF, ie excluding Chinese JVs.
(8) Non-consolidated investments as per balance sheet
Reconciliation between consolidated income statement and the MD&A management view as of 30 September 2024
| (in € million) |
Adjustments | Total | ||
|---|---|---|---|---|
| Consolidated | Consolidated | |||
| Financial Statements |
(1) | (2) | Financial Statements |
|
| (GAAP) | (MD&A view) | |||
| 30 September 2024 | ||||
| Sales | 8,775 | 8,775 | ||
| Cost of Sales | (7,702) | 155 | (7,547) | |
| Adjusted Gross Margin before PPA & impairment (1) | 1,073 | 155 | - | 1,228 |
| R&D expenses | (284) | 28 | (256) | |
| Selling expenses | (180) | - | (180) | |
| Administrative expenses | (348) | - | (348) | |
| Equity pick-up | - | 71 | 71 | |
| Adjusted EBIT (1) | 261 | 183 | 71 | 515 |
| Other income / (expenses) | (62) | (62) | ||
| Equity pick-up (reversal) | - | - | (71) | (71) |
| EBIT / EBIT before PPA & impairment (1) | 199 | 183 | - | 382 |
| Financial income (expenses) | (107) | (107) | ||
| Pre-tax income | 92 | 183 | - | 275 |
| Income tax Charge | (81) | (20) | (101) | |
| Share in net income of equity-accounted investments | 54 | 6 | 60 | |
| Net profit (loss) from continued operations | 6 5 |
169 | - | 234 |
| Net profit (loss) attributable to non controlling interests (-) | (10) | (10) | ||
| Net profit (loss) from continued operations (Group share) / Adjusted Net Profit (loss) (1) | 55 | 169 | - | 224 |
| Purchase Price Allocation (PPA) & impairment net of corresponding tax effect | - | (169) | (169) | |
| Net profit (loss) from discontinued operations | (2) | (2) | ||
| Net profit (loss) (Group share) | 53 | - | - | 53 |
Adjustments as of 30 September 2024:
- Impact of business combinations: amortisation of assets exclusively valued when determining the PPA, including net income of equity accounted investments, and including corresponding tax effect; 2. Reclassification of share in net income of the equityaccounted investments when these are considered to be part of operating activities of the Group
Reconciliation between consolidated income statement and the MD&A management view as of 30 September 2023
| (in € million) |
Adjustments | Total Consolidated |
||
|---|---|---|---|---|
| Financial Statements (GAAP) |
(1) | (2) | Financial Statements (MD&A view) |
|
| 30 September 2023 | ||||
| Sales | 8,443 | 8,443 | ||
| Cost of Sales | (7,432) | 154 | (7,278) | |
| Adjusted Gross Margin before PPA & impairment (1) | 1,011 | 154 | - | 1,165 |
| R&D expenses | (284) | 3 0 |
(254) | |
| Selling expenses | (180) | - | (180) | |
| Administrative expenses | (358) | - | (358) | |
| Equity pick-up | - | 65 | 65 | |
| Adjusted EBIT (1) | 189 | 184 | 6 5 |
438 |
| Other income / (expenses) | (98) | (98) | ||
| Equity pick-up (reversal) | - | - | (65) | (65) |
| EBIT / EBIT before PPA & impairment (1) | 91 | 184 | - | 275 |
| Financial income (expenses) | (98) | (98) | ||
| Pre-tax income | (7) | 184 | - | 177 |
| Income tax Charge | (28) | (16) | (44) | |
| Share in net income of equity-accounted investments | 48 | 5 | 53 | |
| Net profit (loss) from continued operations | 13 | 173 | - | 186 |
| Net profit (loss) attributable to non controlling interests (-) | (12) | (12) | ||
| Net profit (loss) from continued operations (Group share) / Adjusted Net Profit (loss) (1) | 1 | 173 | - | 174 |
| Purchase Price Allocation (PPA) & impairment net of corresponding tax effect | - | (173) | (173) | |
| Net profit (loss) from discontinued operations | - | - | ||
| Net profit (loss) (Group share) | 1 | - | - | 1 |
Adjustments as of 30 September 2023:
- Impact of business combinations: amortisation of assets exclusively valued when determining the PPA, including net income of equity accounted investments, and including corresponding tax effect; 2. Reclassification of share in net income of the equityaccounted investments when these are considered to be part of operating activities of the Group
Appendix - Non-GAAP financial indicators definitions (1/3)
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 Group and its customer. When this condition is met, the order is recognised at the contract value. If the contract is denominated in a currency other than the functional currency of the reporting unit, the Group requires the immediate elimination of currency exposure using forward currency sales. Orders are then measured using the spot rate at inception of hedging instruments.
• Book-to-Bill
The book-to-bill ratio is the ratio of orders received to the amount of sales traded for a specific period.
• Adjusted Gross Margin before PPA
Adjusted Gross Margin before PPA is a KPI that presents the level of recurring operational performance. It represents the sales minus the cost of sales, adjusted to exclude the impact of amortisation of assets exclusively valued when determining the PPA in the context of business combination as well as significant, non-recurring "one off" items that are not expected to occur again in subsequent years
• Adjusted EBIT
Adjusted EBIT ("aEBIT") is the Key Performance Indicator to present the level of recurring operational performance. This indicator is also aligned with market practice and comparable to direct competitors.
Starting September 2019, Alstom has opted for the inclusion of the share in net income of the equity-accounted investments into the aEBIT when these are considered to be part of the operating activities of the Group (because there are significant operational flows and/or common project execution with these entities). This mainly includes Chinese joint ventures, namely CASCO joint venture for Alstom as well as, following the integration of Bombardier Transportation, Alstom Sifang (Qingdao) Transportation Ltd., Jiangsu Alstom NUG Propulsion System Co. Ltd
aEBIT corresponds to Earning Before Interests and Tax adjusted for the following elements:
- net restructuring expenses (including rationalisation costs);
- tangibles and intangibles impairment;
- capital gains or loss/revaluation on investments disposals or controls changes of an entity;
• any other non-recurring items, such as some costs incurred to realise business combinations and amortisation of an asset exclusively valued in the context of business combination, as well as litigation costs that have arisen outside the ordinary course of business;
• and including the share in net income of the operational equity-accounted investments.
A non-recurring item is a "one-off" exceptional item that is not supposed to occur again in following years and that is significant.
Adjusted EBIT margin corresponds to Adjusted EBIT expressed as a percentage of sales.
Appendix - Non-GAAP financial indicators definitions (2/3)
● EBIT before PPA
Following the Bombardier Transportation acquisition and with effect from the fiscal year 2021/22 condensed consolidated financial statements, Alstom decided to introduce the "EBIT before PPA" indicator aimed at restating its Earnings Before Interest and Taxes ("EBIT") to exclude the impact of amortisation of assets exclusively valued when determining the purchase price allocations ("PPA") in the context of business combination. This indicator is also aligned with market practice.
● Adjusted net profit
The "Adjusted Net Profit" indicator aims at restating the Alstom's net profit from continued operations (Group share) to exclude the impact of amortisation & impairment of assets exclusively valued when determining the purchase price allocations ("PPA") in the context of business combination, net of the corresponding tax effect.
● 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. Free Cash Flow does not include any proceeds from disposals of activity.
The most directly comparable financial measure to Free Cash Flow calculated and presented in accordance with IFRS is net cash provided by operating activities.
● Net cash/(debt)
The net cash/(debt) is defined as cash and cash equivalents, marketable securities and other current financial asset, less borrowings
● Organic basis
This presentation includes performance indicators presented on an actual basis and on an organic basis. Figures given on an organic basis eliminate the impact of changes in scope of consolidation and changes resulting from the translation of the accounts into Euro following the variation of foreign currencies against the Euro.
The Group uses figures prepared on an organic basis both for internal analysis and for external communication, as it believes they provide means to analyse and explain variations from one period to another. However, these figures are not measurements of performance under IFRS.
Appendix - Non-GAAP financial indicators definitions (3/3)
● Gross margin % on backlog
Gross Margin % on backlog is a KPI that presents the expected performance level of firm contracts in backlog. It represents the difference between the sales not yet recognized and the cost of sales not yet incurred from the contracts in backlog. This % is an average of the portfolio of contracts in backlog and is meaningful to project mid- and long-term profitability.
● EBITDA + JV dividends
EBITDA before PPA plus dividends from joint ventures is the EBIT before PPA, before depreciation and amortisation, with the addition of the dividends received from joint ventures.
● Funds from Operations
Funds from Operations "FFO" in the EBIT to FCF statement refers to the Free Cash Flow generated by Operations, less Working Capital variations.
● Contract and Trade Working Capital
Contract Working Capital is the sum of:
- Contract Assets & Liabilities, which includes the Customer Down-Payments
- Current provisions, which includes Risks on contracts and Warranties
Trade Working Capital is the Working Capital that is not strictly related to contract. It includes all the elements of the working capital but
- Contract Working Capital
- Income Tax receivables and payables
- Restructuring provisions
.
41
Non-linear aEBIT margin trajectory with impact of restructuring plan kicking in during second half of FY 2024/25
aEBIT (in %) a 2023 24 ol me mi n strial efficienc S A a 2024 25 5.7% ~6.5% 30-35 bps ~30 - 40 bps 10 -15 bps
Main drivers to 8-10% aEBIT mid- to long-term ambition
- Rolling Stock margin uplift from progressive improvement of margin in backlog
- Reduction of industrial inefficiencies
42
- Full-year effect of the SG&A plan
- Indirect procurement action plan
in irect roc rement
Capital allocation priorities
- Priority to deleverage and maintain Investment Grade rating
- Dividends policy to be reevaluated once zero net financial debt is reached
- M&A policy:
- Pursue bolt-on acquisitions (Innovation, Digital, Services)
- Dynamic portfolio management
43
Graph not at scale, for illustration purposes
Guidance for FY 2024/25 and mid-term ambitions
Assumptions
- Supportive market demand
- FY 2024/25 downpayments consistent with FY 2023/24
- Balance sheet plan fully executed in FY 2024/25
- End of integration in FY 2024/25
Outlook for FY 2024/25
- Book to bill above 1
- Sales organic growth: around 5%
- aEBIT margin around 6.5 %
- FCF generation €300m to €500m
- Seasonality driving:
- Negative FCF within a range of €(300)m to €(500)m in H1 2024/25
- aEBIT margin development to be more H2 weighted
Mid- to long-term ambitions
- Book-to-bill above 1
- Sales average growth ~5% / year
- aEBIT margin within 8-10% range
- FCF conversion trending to 100%* over the cycle
44
* Of adjusted net profit
At least €1.5bn c m lative C from 2024 25 to 202 27
45