’THE RESULTS we are presenting today clearly demonstrate the ongoing recovery of Alstom’, said Chairman & Chief Executive Officer Patrick Kron, following board approval on May 30 of the group’s accounts for the year to March 31 2005. ’All key indicators are in line with or better than the guidance previously given.’

Orders received by Alstom Transport during the year totalled €5·5bn, up 17% on a comparable basis ’due to a higher order intake in Asia and southern Europe.’ Sales were up 6% to €5·1bn, with the largest contribution in Europe. Operating income amounted to €260m, up from €71m in 2004 and an €8m loss in 2003. Operating margin rose from 1·5% to 5·1% ’mainly due to better project execution and continued cost reduction.’

Sales across the Alstom group totalled €13·7bn and orders €15·8bn, giving an operating income of €550m and a margin of 4%. The net loss of €865m resulted from high restructuring charges, financial expenses and tax expenses from the write-off of deferred tax assets, but was down from a loss of €1·8bn in 2003-04.

Explaining the Alstom Transport results at the UITPCongress on June 8, President Philippe Mellier said the company had boosted its market share from 17% to 20·8%, although the size of the rail market had fallen from €30bn to around €26bn; he believed that Alstom was ’the most profitable transport integrator in the world’. Only 17% of Alstom Transport’s sales are now in France; he expected Europe’s share to continue falling, with the Asia-Pacific region forecast to grow from 13% to 25%.

With Alstom being ’more selective in the orders we are taking’, Mellier insisted that ’we are growing the business in a profitable way. We have restructured the group, with the support of our customers, turned around Alstom Transport and we are moving ahead at full speed.’ He said Alstom Transport has around three years’ workload on its books, and ’all plants are loaded at more than 98% of capacity.’ His aim is to improve the operating margin to 7% by March 2006.

Kron confirmed that Alstom has begun the sale of its Power Conversion business, which will complete the disposals required by the European Commission as part of the French government’s rescue package.

Terms were agreed with United Group on June 2 for the sale of Alstom Transport’s Australian and New Zealand business for A$267·5m. The transaction was described as ’attractive’ by United, at 7·4 times the forecast Ebita for the year to March 31 2006. Alstom could receive a further A$30m subject to performance over five years.

Managing Director & CEO Richard Leupen said ’United Group will become the clear leader in rail supply and maintenance services in Australia, with emerging presence in New Zealand and Hong Kong.’ United will form a strategic alliance with Alstom giving it access to light rail technology.

Expected to achieve financial close this month, the deal is being funded by a combination of debt and equity, including a A$140m placement underwritten by UBS. Additional equity will be raised through a share purchase plan.

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