Alstom reaps the rewards of its Profitable growth strategy

During fiscal year 2006/07, Alstom registered an outstanding order intake (+34%), reflecting the strong positions of the Group on its markets, a sharp rise in sales (+14%) and a strong progression in financial performance. The operating income reached Euro 957 million, up 40% from 2005/06, generating a margin of 6.7% as compared to 5.5% last year. Alstom recorded a net result of Euro 448 million and a strong free cash flow making the company debt free in March 2007. Alstom will propose to its next Annual General Meeting to pay a dividend of 0.8 Euro per share.

"The performance registered during fiscal year 2006/07 is excellent with a record level of orders, a strong growth of sales, a marked improvement of results and a high free cash flow resulting in a debt free company. Its solid backlog gives good visibility for future growth that the acceleration of research and development programmes and capital expenditures made in 2006/07 in both Power and Transport will support. Over the coming period, Alstom will continue to combine growth, both organically and through targeted acquisitions, and performance improvement. In fiscal year 2007/08, the Group should experience a double-digit growth of its sales on a comparable basis while the operating margin target of 7% should be exceeded. Margin should further increase and, for fiscal year 2009/10, it should be over 8%", said Patrick Kron, Alstom’s Chairman & Chief Executive Officer.

During fiscal year 2006/07, the Group booked Euro 19 billion of new orders, a 34% increase from previous fiscal year on a comparable basis, bringing its backlog to Euro 32 billion (+22%), which represents 27 months of sales.

The strong growth in order intake came from all Sectors: Power Systems (+65%), Power Service (+22%) and Transport (+8%).

The Group fully benefited from its good positioning on a sound power market. Power Systems booked twenty gas turbines of which thirteen GT26 as well as three major coal power plants and received a key order for the conventional island of the new EPR nuclear power plant in France. Power Service signed several major contracts for Operation and Maintenance as well as for various upgrades of plants, gas turbines, steam turbines and boilers, notably in Europe and in the US.

Transport achieved a high level of order intake in a competitive environment, booking significant orders for regional trains in Europe, metros and tramways in numerous cities, locomotives in China, rail infrastructure in Turkey as well as several maintenance contracts (UK and Argentina).

Sales in fiscal year 2006/07 amounted to Euro 14.2 billion compared to Euro 12.4 billion for fiscal year 2005/06 on a comparable basis, representing a 14% increase, as a result of the growing order intake during the last periods. All Sectors contributed to this growth: Power Systems (+20%), Power Service (+18%) and Transport (+7%).

Recruitment has been particularly important to support this strong order intake. Over the financial year, 8,700 employees have been recruited, including 4,100 engineers and managers. Training efforts were also a crucial part of Alstom’s active human resources management. Similarly research and development expenses rose substantially (up 26%) as well as capital expenditures (up 35%) to support the future growth.

Source : Equity Bulls

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