Alstom booked a sound level of orders, but continuing weakness in Thermal Power’s new build weighs on outlook
Wednesday, Jan 22, 2014
Over the third quarter 2013/14 (from 1 October to 31 December 2013), Alstom booked €5.6 billion of orders, up 11% compared to the same period last year. Thermal Power received orders of €1.6 billion during the third quarter with good commercial activity in Services but orders for new build remained very weak. Orders in Renewable Power were robust at €0.8 billion while Grid's orders, at €0.7 billion, were temporarily softer. Finally, with orders at €2.6 billion, Transport delivered a record high commercial performance, supported by the €1.2 billion order for the metro project in Riyadh. The Group's sales were up 2% organically over the third quarter 2012/13 before a foreign exchange negative impact of 4%.
For the first nine months of 2013/14 (from 1 April to 31 December 2013), Alstom's order intake reached €15.1 billion, a 12% decrease compared to the first nine months of 2012/13. Orders were strong in Renewable Power and Transport. The Thermal Power commercial activity was low in spite of a strong performance in Services. Grid orders were affected by difficult market conditions and a lack of big tickets. The Group's sales reached €14.5 billion, up 3% organically compared to the first nine months of 2012/13 and foreign exchange had a 4% negative impact on sales.
At €51 billion on 31 December 2013, the backlog represented 30 months of sales.
"Despite a sound level of total orders in the third quarter 2013/14 and a strong commercial performance in a number of businesses, Alstom is affected by continuing low orders for new thermal power plants. In this Sector, demand remains subdued in mature markets and has slowed in emerging countries. This is impacting some key performance indicators, notably the free cash flow over this year as well as the sales and profitability anticipated in 2014/15 for Thermal Power. In these conditions, we now anticipate for the Group a moderately negative free cash flow in the second half of this year. The operating margin should remain around 7% this year and may slightly decline next year with the anticipated rebound being postponed. In this difficult environment, our focus remains on the implementation and acceleration of the ambitious cost savings initiatives which have been launched", said Patrick Kron, Alstom's Chairman & Chief Executive Officer.