Alstom Presentation
March 2017 Disclaimer
This presentation contains forward-looking statements which are based on current plans and forecasts of Alstom’s management. Such forward-looking statements are by their nature subject to a number of important risk 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 forward-looking 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.
ALSTOM – February 2016 – P 2
© ALSTOM 2016. 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 or disclosure to third parties, without express written authority, is strictly prohibited. A dynamic market with solid long-term drivers
URBANISATION GOVERNMENTAL FUNDING SUSTAINABLE DEVELOPMENT ECONOMIC GROWTH
Market size in 2016/18 Solid growth drivers €51bn Market worth more than €100 bn bn €31 Market driven by urban €18bn €10bn & integrated systems Dynamic growth in Asia Pacific
Average annual growth AMERICAS ASIA EUROPE MIDDLE EAST between 13/15 – 19/21 PACIFIC AFRICA + 2.3 % + 5.4 % + 3.0 % + 3.2 %
Note: Annual average– Accessible market Source: UNIFE Market Study 2016
ALSTOM – February 2016 – P 3
© ALSTOM 2016. 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 or disclosure to third parties, without express written authority, is strictly prohibited. Activities: a complete range of solutions
Tram, metro, suburban/regional, high speed, very high speed, locomotive Components: traction, bogie, motor 46%
Maintenance Modernisation Spare parts, repairs & overhaul 21% Support services
Signalling solutions portfolio for: main lines, urban, control and security Sold as products or solutions 19%
Integrated solutions Infrastructure 14%
Note: % of H1 2016/17 sales ALSTOM – February 2016 – P 4
© ALSTOM 2016. 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 or disclosure to third parties, without express written authority, is strictly prohibited. H1 2016/17 key figures
% change % change In € million H1 2015/16 H1 2016/17 reported organic
Backlog 27,719 33,570 21% 22%
Orders 3,897 6,212 59% 66%
Sales 3,303 3,570 8% 7%
Adjusted EBIT 167 200 20%
Adjusted EBIT margin 5.1% 5.6%
Net income – Group share (57) 128
Free cash flow (1,336) 333
ALSTOM – February 2016 – P 5
© ALSTOM 2016. 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 or disclosure to third parties, without express written authority, is strictly prohibited. An ambitious strategy for 2020
OUR VALUES TEAM, TRUST & ACTION ETHICS & COMPLIANCE
1 CUSTOMER-FOCUSED ORGANISATION OUR ORGANIC 2 COMPLETE RANGE OF SOLUTIONS GROWTH VISION OUR BOOSTED PREFERRED 3 VALUE CREATION THROUGH INNOVATION STRATEGY BY PARTNER FOR SELECTIVE 4 OPERATIONAL AND ENVIRONMENTAL EXCELLENCE TRANSPORT ACQUISITIONS SOLUTIONS 5 DIVERSE AND ENTREPRENEURIAL PEOPLE
OUR BRAND POSITIONING DESIGNING FLUIDITY
ALSTOM – February 2016 – P 6
© ALSTOM 2016. 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 or disclosure to third parties, without express written authority, is strictly prohibited. Customer-focused organisation and multi-local presence
31,000 employees working on 105 sites in 60 countries serving 200 customers
• Regions: close to customers, in charge of execution
EUROPE
• Operational functions: AMERICAS 21,250 EMPLOYEES global cohesion, processes and platforms MIDDLE EAST 4,850 ASIA PACIFIC EMPLOYEES AFRICA
3,200 1,700 EMPLOYEES • Support functions: finance, legal, HR EMPLOYEES global efficiency
Being a reference player in each region
ALSTOM – February 2016 – P 7
© ALSTOM 2016. 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 or disclosure to third parties, without express written authority, is strictly prohibited. A complete range of solutions
Tramway integrated system for Lusail Sydney metro & signalling Coradia Nordic Bogie in Sweden for Citadis
FULLY BUNDLED OFFER INTEGRATED SYSTEM BETWEEN INDIVIDUAL 2 SOLUTIONS SOLUTION COMPONENTS
Systems, Signalling and Services to represent around 60% of sales by 2020
ALSTOM – February 2016 – P 8
© ALSTOM 2016. 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 or disclosure to third parties, without express written authority, is strictly prohibited. Staying a step ahead
1 2 3
Boost technical Invest in Optimise innovation to increase competitiveness- customers’ total cost differentiation oriented technology of ownership
Citadis X05 Attractis tramway system Coradia maintenance
An R&D strategy focused on differentiation and competitiveness Sustain R&D expenses and reach 30% of total orders coming from newly developed products by 2020
ALSTOM – February 2016 – P 9
© ALSTOM 2016. 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 or disclosure to third parties, without express written authority, is strictly prohibited. Operational excellence
Competitive offering • Sourcing • Global footprint
Excellence in delivery • Global business transformation underway • Strong project management skills • Flawless execution Production of Citadis Spirit for Ottawa, Hornell (USA) A digitalisation plan to create an agile and effective information system
Cash focus programme
To remain competitive while supporting margin improvement
ALSTOM – February 2016 – P 10
© ALSTOM 2016. 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 or disclosure to third parties, without express written authority, is strictly prohibited. 2020 objectives confirmed
2020 OBJECTIVES
Sales expected to grow at 5% per year organically Adjusted EBIT margin to reach around 7% c. 100% conversion from net income to free cash flow
ALSTOM – February 2016 – P 11
© ALSTOM 2016. 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 or disclosure to third parties, without express written authority, is strictly prohibited. www.alstom.com Appendices
1 Alstom H1 2016/17
2 Alstom 9M 2016/17
3 Alstom 2020 strategy
4 Alstom 2020 objectives
ALSTOM – February 2016 – P 13
© ALSTOM 2016. 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 or disclosure to third parties, without express written authority, is strictly prohibited. Customer-focused organisation Continued strong commercial performance
Orders (in € billion) 3.9 6.2 Strong order intake of €6.2bn 0.3 1.3 +59% Book to bill above 1.7 0.6 2.6 1.0 New record-breaking backlog of €33.6bn 0.8 1.4 2.1
H1 2015/16 H1 2016/17 Europe Americas MEA Asia Pacific
3.9 6.2 1.6 +59% 0.4 0.8 1.3 0.9 0.5 3.0 1.6
H1 2015/16 H1 2016/17
Trains Systems Signalling Services % change reported
ALSTOM – February 2016 – P 14
© ALSTOM 2016. 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 or disclosure to third parties, without express written authority, is strictly prohibited. Complete range of solutions Organic sales growth of 7%
Sales (in € billion) 3.6 5% growth in standalone Trains 3.3 0.7 0.8 • Suburban, regional and high-speed trains in Europe 0.7 0.5 (France, Italy, Sweden, etc.) +8% 0.5 0.4 • On-going execution of PRASA project 1.6 1.6 • Tramway deliveries in Algeria
H1 2015/16 H1 2016/17 20% growth in Systems • Progress on metro system in Saudi Arabia Trains Systems Signalling Services • Tramway systems in Brazil and Qatar • Infrastructure in UK 3.6 3.3 33% growth in Signalling 0.3 0.4 0.5 • Deliveries in Canada 0.5 +8% 0.5 0.6 • Contribution of GE signalling
2.0 2.1 Slight decrease in Services • Adverse forex impact on UK contract H1 2015/16 H1 2016/17 Europe Americas MEA Asia Pacific % change reported ALSTOM – February 2016 – P 15
© ALSTOM 2016. 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 or disclosure to third parties, without express written authority, is strictly prohibited. Operational excellence Continued strong operational performance
Volume increase Adjusted EBIT (in € million) Portfolio mix improvement with accretive As % of sales acquisitions
On-going initiatives for operational excellence +20% 200 167
5.6% 5.1%
H1 2015/16 H1 2016/17 % change reported
ALSTOM – February 2016 – P 16
© ALSTOM 2016. 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 or disclosure to third parties, without express written authority, is strictly prohibited. Income statement
In € million H1 2015/16* H1 2016/17
Sales 3,303 3,570
Adjusted EBIT 167 200 Adjusted EBIT margin 5.1% 5.6% Restructuring charges (14) - Other charges (29) (32) EBIT 124 168
Financial result (86) (71) Tax result (2) (32) Share in net income of equity investees 13 47 Minority interests from continued op. (8) (8) Net income – Discontinued operations ** (98) 24
Net income – Group share (57) 128
* Includes mainly the reclassification of separation costs of €(23) million from other charges to net income - discontinued operations ** Group share
ALSTOM – February 2016 – P 17
© ALSTOM 2016. 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 or disclosure to third parties, without express written authority, is strictly prohibited. Free cash flow
In € million H1 2015/16 H1 2016/17 High contribution of operating profit Adjusted EBIT 167 200 Positive evolution of working Depreciation & amortisation 74 69 capital Restructuring cash-out (24) (18) • Several large down-payments Capex (50) (43) • Volatility on short period R&D capitalisation (28) (21) Phasing of both capex and Change in working capital (164) 188 legacy cash-out Financial cash-out (83) (11) Tax cash-out (162) (40) Other* (1,066) 9
Free cash flow (1,336) 333
*includes free cash flow from discontinued operations
ALSTOM – February 2016 – P 18
© ALSTOM 2016. 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 or disclosure to third parties, without express written authority, is strictly prohibited. Capex developments
Control of recurring capex Capex* (in € million) Slow ramp up of transformation capex
50 43
H1 2015/16 H1 2016/17
* excluding capitalised development costs
South Africa: beginning of site construction
New sites to meet customers’ growing demand for a local presence c. €300m transformation capex expected over next 3 years
ALSTOM – February 2016 – P 19
© ALSTOM 2016. 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 or disclosure to third parties, without express written authority, is strictly prohibited. Liquidity and gross debt
Liquidity position In € billion Liquidity 2.7 2.4 €2.3bn cash and cash equivalents as of 30 September 2016
€400m revolving credit facility ; fully undrawn
Flexibility with Energy JVs put options Mar-16 Sept-16 Undrawn credit line Gross cash
In € million Gross debt Gross debt 596 €2bn outstanding bonds as of 30 September 2016 453 371 Next maturity in February 2017 (c.€0.5bn) 272 283
Feb 2017 Oct 2017 Oct 2018 July 2019 March 2020 Interest rate 4.125% 2.25% 3.625% 3% 4.5%
ALSTOM – February 2016 – P 20
© ALSTOM 2016. 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 or disclosure to third parties, without express written authority, is strictly prohibited. Net cash & equity
In € million Net cash/(debt) In € million Equity
(43) 128 (85) 333 (33) 44 3,415 54 3,328
(203)
Mar-16 FCF Acq. & disposals* Forex & other Sept-16 Mar-16 Net income Pensions Forex & other Sept-16
* includes GE related separation impact (e.g. IS&T)
ALSTOM – February 2016 – P 21
© ALSTOM 2016. 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 or disclosure to third parties, without express written authority, is strictly prohibited. Appendices
1 Alstom H1 2016/17
2 Alstom 9M 2016/17
3 Alstom 2020 strategy
4 Alstom 2020 objectives
ALSTOM – February 2016 – P 22
© ALSTOM 2016. 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 or disclosure to third parties, without express written authority, is strictly prohibited. 9M 2016/17 Orders
Orders by region Orders by products (in € million) (in € million)
7,235 7,235 6,255 6,255
9M 2015/16 9M 2016/17 9M 2015/16 9M 2016/17
Europe Americas MEA Asia Pacific Trains Systems Signalling Services
ALSTOM – February 2016 – P 23
© ALSTOM 2016. 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 or disclosure to third parties, without express written authority, is strictly prohibited. 9M 2016/17 Sales
Sales by region Sales by product (in € million) (in € million) 5,225 5,225 4,916 4,916
+ 5 % + 5 %
% organic growth
9M 2015/16 9M 2016/17 9M 2015/16 9M 2016/17
Europe Americas MEA Asia Pacific Trains Systems Signalling Services
ALSTOM – February 2016 – P 24
© ALSTOM 2016. 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 or disclosure to third parties, without express written authority, is strictly prohibited. Appendices
1 Alstom H1 2016/17
2 Alstom 9M 2016/17
3 Alstom 2020 strategy
4 Alstom 2020 objectives
ALSTOM – February 2016 – P 25
© ALSTOM 2016. 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 or disclosure to third parties, without express written authority, is strictly prohibited. Railway traffic evolution
Worldwide traffic evolution from 2007 to 20151 Average Growth growth vs LY (2007–2015) Urban +1.8% +5.3% Mainline Freight +1.6% +4.0%
-10.9% -0.2%
Passenger traffic for urban & mainline keeps growing, but freight is strongly decreasing
1 Urban traffic figures are for Top 30 cities worldwide; mainline & freight traffic figures are for all major national operators worldwide. ALSTOM – February 2016 – P 26
© ALSTOM 2016. 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 or disclosure to third parties, without express written authority, is strictly prohibited. Market forecast
Average annual accessible market (€bn) 13/15 – 19/21 13/15 – 19/21 CAGR CAGR 101 110 122 +3.2% 101 110 122 +3.2% 11 +3.2% 10 +4.6% 10 9 11 Middle-East Africa 22 +5.4% 9 Urban trains +4.1% 18 8 10 9 Asia Pacific 16 Regional trains 8 7 4 15 +12.1% Mainline trains 13 34 16 31 Freight trains -0.6% Americas 30 +2.3% 38 36 +3.1% Services 32
55 Europe 46 51 +3.0% 25 Infrastructure 21 23 +3.2%
Signalling 11 12 14 +2.9%
2013-2015 2016-2018 2019-2021 2013-2015 2016-2018 2019-2021
Significant growth in all geographical regions confirmed by latest market study
Source: UNIFE Market Study 2016 ALSTOM – February 2016 – P 27
© ALSTOM 2016. 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 or disclosure to third parties, without express written authority, is strictly prohibited. Share of systems within the urban market
System market within urban market Share of urban market addressed through systems Annual average 2017-2019
Rest of NAM urban market MEA
LAM 43% Metro 30% system Europe Tram system APAC 2013-2015 2017-2019 UNIFE UNIFE (past market) forecast Market addressed through systems Rest of the urban market
Systems continue to grow up to ~40% of the urban market, especially in MEA, LAM and APAC
Source: Alstom estimation, UNIFE Market Study 2016 ALSTOM – February 2016 – P 28
© ALSTOM 2016. 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 or disclosure to third parties, without express written authority, is strictly prohibited. An ambitious strategy for 2020
OUR VALUES TEAM, TRUST & ACTION ETHICS & COMPLIANCE
1 CUSTOMER-FOCUSED ORGANISATION OUR ORGANIC 2 COMPLETE RANGE OF SOLUTIONS GROWTH VISION OUR BOOSTED PREFERRED 3 VALUE CREATION THROUGH INNOVATION STRATEGY BY PARTNER FOR SELECTIVE 4 OPERATIONAL AND ENVIRONMENTAL EXCELLENCE TRANSPORT ACQUISITIONS SOLUTIONS 5 DIVERSE AND ENTREPRENEURIAL PEOPLE
OUR BRAND POSITIONING DESIGNING FLUIDITY
ALSTOM – February 2016 – P 29
© ALSTOM 2016. 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 or disclosure to third parties, without express written authority, is strictly prohibited. 1 Customer-focused organisation and multi-local presence
31,000 employees working on 105 sites in 60 countries serving 200 customers
• Regions: close to customers, in charge of execution
EUROPE
• Operational functions: AMERICAS 21,250 EMPLOYEES global cohesion, processes and platforms MIDDLE EAST 4,850 ASIA PACIFIC EMPLOYEES AFRICA
3,200 1,700 EMPLOYEES • Support functions: finance, legal, HR EMPLOYEES global efficiency
Being a reference player in each region
ALSTOM – February 2016 – P 30
© ALSTOM 2016. 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 or disclosure to third parties, without express written authority, is strictly prohibited. 1 Strategic acquisitions and partnerships
2010 Russia - TMH (trains) 2014 Kazakhstan - EKZ (locos) - 25 % additional shares Kazakhstan - EKZ (locos)
UK - SSL (signalling)* Algeria - CITAL (trams) India - Madhepura (locos) 2011 France - Metrolab (R&D) 2015 Sweden – Motala Train AB (services)* Morocco – Cabliance (cabling) Russia - TMH (trains) - 8 % additional shares Worldwide - General Electric signalling* France - SpeedInnov (trains)
2012 France - NTL (trams) 2016 South Africa - Ubunye (modernisation) Morocco – Cabliance (cabling)*
2013 South Africa - Gibela (suburban trains) Kazakhstan - KEP (signalling)
* Acquisitions
Solid, efficient and well-established network of partners
ALSTOM – February 2016 – P 31
© ALSTOM 2016. 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 or disclosure to third parties, without express written authority, is strictly prohibited. 1 Case study: Prasa project
Scope • Design, manufacture and supply 600 trains for South Africa fleet renewal • Parts supply & technical support for 19 years • Gibela Joint Venture led by Alstom (61%), local factory, 65% average local content
Status • First train delivered from Brazil end 2015 • Local factory construction started in March 2016 • First train to be manufactured in South Africa end 2017/18
Largest contract ever in Alstom history (c. €4bn), well on its way
ALSTOM – February 2016 – P 32
© ALSTOM 2016. 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 or disclosure to third parties, without express written authority, is strictly prohibited. 1 Case study: eLoco project in India
Scope • 800 electric locomotives • Associated maintenance: 13 years for the first 250 locos and 4 years for the following 250 • €200m investment incl. set up of manufacturing plant and two depots • JV with Indian Railways (74%/26%)
Status • Contract signed in November 2015 with Indian Railways • Booking in Q4 2015/16 • Deliveries expected between 2018 and 2029
€3.2bn contract for 800 electric locomotives and maintenance
ALSTOM – February 2016 – P 33
© ALSTOM 2016. 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 or disclosure to third parties, without express written authority, is strictly prohibited. 1 Case study: NTV in Italy
Options of previous contract signed in October 2015
4 Pendolino trains and related maintenance services
Extension of maintenance services for NTV’s entire fleet from 20 to 30 years
Delivery scheduled end 2017 and ready to enter into service in 2018
NTV’s renewed confidence in Alstom expertise
ALSTOM – February 2016 – P 34
© ALSTOM 2016. 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 or disclosure to third parties, without express written authority, is strictly prohibited. 2 A complete range of solutions
Tramway integrated system for Lusail Sydney metro & signalling Coradia Nordic Bogie in Sweden for Citadis
FULLY BUNDLED OFFER INTEGRATED SYSTEM BETWEEN INDIVIDUAL 2 SOLUTIONS SOLUTION COMPONENTS
Systems, Signalling and Services to represent around 60% of sales by 2020
ALSTOM – February 2016 – P 35
© ALSTOM 2016. 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 or disclosure to third parties, without express written authority, is strictly prohibited. 2 Case study: a fully integrated metro system in Dubai for Expo 2020 link
Alstom, leader of ExpoLink consortium
50 Metropolis trainsets and electromechanical works
New route extends 15 km and serves Expo 2020
Delivery of the system before 2020
Dubai: Expo 2020 metro station
A fully integrated metro project for Alstom, with a non-negotiable deadline
ALSTOM – February 2016 – P 36
© ALSTOM 2016. 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 or disclosure to third parties, without express written authority, is strictly prohibited. 2 Case study: Dubai tramway system
Scope • Fully integrated tramway solution incl. trains, signalling, infrastructure and 13 years maintenance contract
Status: already a success • Availability and punctuality above 99.5% • Robust operation under heavy rain and sand storm • Up to 30,000 passengers / day at peak
Customer: Roads and Transport Authority Phase 1 (done): 11 km and 11 stops
A fully integrated world premiere
ALSTOM – February 2016 – P 37
© ALSTOM 2016. 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 or disclosure to third parties, without express written authority, is strictly prohibited. 2 Case study: Riyadh lines 4,5 & 6 metro system
Scope • 69 driverless Metropolis trains • Signalling system • Infrastructure: third rail and track, using Appitrack and power supply incl. Hesop substations
Status • Train production started in Katowice in Nov. 2015
Customer: Arriyadh Development Authority Contract: 2013 – 2018 Lines length: 65.1 km # of stations: 25
First driverless metro in Saudi Arabia and biggest contract ever for an urban system project (€1.2bn)
ALSTOM – February 2016 – P 38
© ALSTOM 2016. 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 or disclosure to third parties, without express written authority, is strictly prohibited. 3 Staying a step ahead
1 2 3
Boost technical Invest in Optimise innovation to increase competitiveness- customers’ total cost differentiation oriented technology of ownership
Citadis X05 Attractis tramway system Coradia maintenance
An R&D strategy focused on differentiation and competitiveness Sustain R&D expenses and reach 30% of total orders coming from newly developed products by 2020
ALSTOM – February 2016 – P 39
© ALSTOM 2016. 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 or disclosure to third parties, without express written authority, is strictly prohibited. 3 Main innovative programmes
Complete renewal of the ranges: Avelia range Citadis Spirit, Citadis X05 Coradia iLint New range of standard metro Silicon carbide (SiC)
HealthHub Predictive maintenance
Atlas, main lines ERTMS Urbalis, CBTC ATO, geolocalisation, 4G
Axonis metro system Attractis tramway system Hesop, reversible power-supply substation
ALSTOM – February 2016 – P 40
© ALSTOM 2016. 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 or disclosure to third parties, without express written authority, is strictly prohibited. 3 Sustained level of R&D
R&D* (in € million) Main R&D programmes Renewal of mainline and urban train ranges As % of sales Signalling programmes Predictive maintenance
85 71
2.1% 2.4%
H1 2015/16 H1 2016/17 * R&D including externally-funded programmes, excluding capitalisation and amortisation
ALSTOM – February 2016 – P 41
© ALSTOM 2016. 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 or disclosure to third parties, without express written authority, is strictly prohibited. 3 Case study: High speed train contract with Amtrak - US
28 Avelia Liberty trains, new generation of Alstom very high speed trains
Optimised maintenance costs
Improved energy management
Enhanced comfort for passengers
A €1.8bn contract: deliveries expected to
start in 2021 Avelia Liberty for Amtrak
A new generation of train with high level of innovation for both passenger and operator
ALSTOM – February 2016 – P 42
© ALSTOM 2016. 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 or disclosure to third parties, without express written authority, is strictly prohibited. 3 Case study: Nice tramway project
€91m project
Awarded in October 2015
Scope 19 Citadis X05 tramway SRS, Static Recharge System Citadis Ecopack
Latest generation of tramway for the city of Nice
ALSTOM – February 2016 – P 43
© ALSTOM 2016. 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 or disclosure to third parties, without express written authority, is strictly prohibited. 4 Operational excellence
Competitive offering • Sourcing • Global footprint
Excellence in delivery • Global business transformation underway • Strong project management skills • Flawless execution Production of Citadis Spirit for Ottawa, Hornell (USA) A digitalisation plan to create an agile and effective information system
Cash focus programme
To remain competitive while supporting margin improvement
ALSTOM – February 2016 – P 44
© ALSTOM 2016. 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 or disclosure to third parties, without express written authority, is strictly prohibited. 4 Competitive offering: Sourcing contribution (1/2)
Integration Body shell 60% of Alstom products cost are
Gangway HVAC purchased Interior linings, windows • c.€4bn external supplies Pantograph Doors Electrical Seat harness
Bogies Partnership Auxiliary supply • 90 global partners (50% of the spend), able to Battery box follow Alstom worldwide Brake resistor • 750 suppliers covering 80% of the spend Traction Air supply
MAKE BUY
• Sourcing, a key cost reduction driver
ALSTOM – February 2016 – P 45
© ALSTOM 2016. 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 or disclosure to third parties, without express written authority, is strictly prohibited. 4 Competitive offering: Sourcing contribution (2/2)
Savings per lever Volume • Bundle approach: different products under one negotiation • Total cost of ownership: improve full product life cycle cost under Low cost one negotiation and protect our margin on after sales 20% countries Design to cost Design to cost 50% Volume • Catalogue approach: on sub-systems: HVAC, doors, etc. 30%
Low cost countries • Steady increase of sourcing volume in India
• Objective to increase sourcing savings to €250m /year (cost to complete)
ALSTOM – February 2016 – P 46
© ALSTOM 2016. 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 or disclosure to third parties, without express written authority, is strictly prohibited. 4 Competitive offering: Global footprint
Worldwide trains manufacturing Bangalore (India) engineering center ramp up
FY 14/15 2020 Objective 2020 Objective Signalling
Trains
Rest of the world 33% Rest Western Western of the world Europe Europe 60%
• Rapid growth of global manufacturing and engineering capabilities • Adaptation to workload in Europe
ALSTOM – February 2016 – P 47
© ALSTOM 2016. 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 or disclosure to third parties, without express written authority, is strictly prohibited. 4 Competitive offering: update as end Sept. 2016
Sourcing Global footprint
Alstom Alliance India ramp-up • Premium partnerships with strategic suppliers to • 2,300 people as end of September 2016 support geographical expansion, share innovations and mutualise development of key components • Quality, cost-effective and reliable solutions • Total of 34 members with 10 new ones during Innotrans fair
Global sourcing • Increase of India sourcing volume • Above one third purchased in low cost countries
ALSTOM – February 2016 – P 48
© ALSTOM 2016. 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 or disclosure to third parties, without express written authority, is strictly prohibited. 4 Optimised train product ranges: a platform approach
Optimised costs
Improved modularity and design
Better energy efficiency
Urban Mainline
Metropolis Citadis Coradia Avelia
ALSTOM – February 2016 – P 49
© ALSTOM 2016. 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 or disclosure to third parties, without express written authority, is strictly prohibited. 4 First successes for our new generation of Coradia trains
79 Intercity trains for the Netherlands 150 regional trains for Trenitalia with first operator order of 47 trains
. €0.8 billion . €0.9 billion for the frame contract . First deliveries by 2020 . First deliveries by early 2019
Optimised layout, weight, modularity and cost
ALSTOM – February 2016 – P 50
© ALSTOM 2016. 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 or disclosure to third parties, without express written authority, is strictly prohibited. 4 Excellence in delivery
New tools deployment started • Alstom integrated information system massive roll- out launched (10 countries deployed in 15/16)
• APSYS, lean manufacturing system extending to Engineering and Project Management Manufacturing execution system
• New electrical organisation (NEO) in main sites in Europe
New electrical organisation (NEO)
ALSTOM – February 2016 – P 51
© ALSTOM 2016. 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 or disclosure to third parties, without express written authority, is strictly prohibited. 4 Excellence in delivery: Project management
Key practices Results
Anticipation before tendering 1. Intense activity
• 20 tenders per month Stringent Go / No Go decision • 3 months average per tender Rigorous transfer from tender to project (tender transfer meeting) • c.450 major contracts in execution
Management involvement (winning roadmap, 2. Hit rate: [30-40] % monthly project review, global project review)
Strong project management skills from tender to execution
ALSTOM – February 2016 – P 52
© ALSTOM 2016. 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 or disclosure to third parties, without express written authority, is strictly prohibited. 4 Cash focus programme
Main levers Key practices • Worldwide training (e.g. sales community) Terms and conditions • Upfront review of cash information, • Level of down payment now stabilised from the anticipation phase • Regular meetings during project execution Design to cash actions such as:
• Planning of supplies Example • Manufacturing lead-time • Time to market of new standard metro: 12 months • Inventory management, … (actual 15 months)
Strong management actions in place to optimise working capital
ALSTOM – February 2016 – P 53
© ALSTOM 2016. 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 or disclosure to third parties, without express written authority, is strictly prohibited. 4 A responsible company
Ecodesigned & environmental-friendly solutions
Since 2011, Alstom has been included in the Alstom sites showcase its commitment Dow Jones Sustainability Indices (DJSI). to safeguarding the environment
A culture based on health & safety
State-of-the-art spray booths, Katowice site (Poland) Villeurbanne site (France)
ALSTOM – February 2016 – P 54
© ALSTOM 2016. 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 or disclosure to third parties, without express written authority, is strictly prohibited. 4 Environmental excellence
Improve our environmental footprint • Continue our efforts on energy saving,
waste and CO2 ENERGY INTENSITY REDUCTION BY 10% • ISO 14001 for all operational units with more than 200 people
Improve energy consumption for solution • Better sizing and energy consumption measurement ENERGY CONSUMPTION REDUCTION BY 20%
Safety at work • Alstom Zero Deviation Plan • Zero Severe Accidents on High Risk Activities IFR1 AT 1 BY 2020
ALSTOM – February 2016 – P 55
© ALSTOM 2016. 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 or disclosure to third parties, without express written authority, is strictly prohibited. A culture based on diversity & entrepreneurship
Diversity in terms of gender, generation, nationality, social and cultural background targeted: 25% women in management or professional role by 2020 Training plans, development programmes…
ALSTOM – February 2016 – P 56
© ALSTOM 2016. 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 or disclosure to third parties, without express written authority, is strictly prohibited. The Alstom Foundation to support local communities
Support and financing for projects proposed by Alstom employees aimed at improving living conditions of communities local to where Alstom has a presence whilst protecting the environment.
ALSTOM – February 2016 – P 57
© ALSTOM 2016. 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 or disclosure to third parties, without express written authority, is strictly prohibited. Sharing a common culture of ethics and values
Ethics & Compliance (E&C) • Certified procedures • A Code of Ethics and an Integrity Programme applicable to each and every employee around the world
Team, Trust and Action
ALSTOM – February 2016 – P 58
© ALSTOM 2016. 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 or disclosure to third parties, without express written authority, is strictly prohibited. Organic growth boosted by selective acquisitions
Small to mid-size acquisitions
Support international expansion and strengthen leading positions
2015/16 acquisitions • GE Signalling • SSL, Signalling in UK • Motala Train AB, Services in Sweden
ALSTOM – February 2016 – P 59
© ALSTOM 2016. 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 or disclosure to third parties, without express written authority, is strictly prohibited. Appendices
1 Alstom H1 2016/17
2 Alstom 9M 2016/17
3 Alstom 2020 strategy
4 Alstom 2020 objectives
ALSTOM – February 2016 – P 60
© ALSTOM 2016. 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 or disclosure to third parties, without express written authority, is strictly prohibited. Sales evolution
Sales (in €bn) 5% annual organic growth 6.9 6.2
FY 14/15 FY 15/16 FY 16/17 FY 17/18 FY 18/19 FY 19/20
Current backlog of c.€30bn* providing strong visibility on future sales
*at 31 March 2016 ALSTOM – February 2016 – P 61
© ALSTOM 2016. 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 or disclosure to third parties, without express written authority, is strictly prohibited. Progressive margin improvement
Adjusted EBIT margin (in % of sales) Volume/Price Cost absorption driven by solid top-line growth c. 7% Partly offset by price dynamics and competitive Excellence Footprint environment Sourcing 5.0% Portfolio mix Growth towards more profitable activities Services, signalling, systems to represent c. 60% of sales in 2020 Operational excellence Sourcing savings Global footprint
Adjusted EBIT Volume/Price Portfolio mix Operational Adjusted EBIT Excellence in delivery with solid project execution H1 2015/16 excellence FY 2019/20
Adjusted EBIT margin to reach around 7% in 2020
ALSTOM – February 2016 – P 62
© ALSTOM 2016. 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 or disclosure to third parties, without express written authority, is strictly prohibited. Cash conversion objective
2016/17 2017/18 2018/19 2019/20
Short-term impact of legacy cash-out and transformation capex
Working capital stabilised
Possible volatility on short periods
Key focus with strong management actions in place
Core free cash flow Legacy cash-out Transformation capex
c. 100% FCF/net income conversion in 2020
ALSTOM – February 2016 – P 63
© ALSTOM 2016. 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 or disclosure to third parties, without express written authority, is strictly prohibited. www.alstom.com