Rail 'buoyant' at troubled Alstom
ALSTOM'S full-year results showed orders received for the year to March 31 2003 as €19·1bn, down 4% from the previous fiscal year. Sales totalled €21·4bn, up 1% on a comparable basis. Operating margin before exceptional items was 4·1%, up from 4·0%.
According to Chairman & CEO Patrick Kron, 'our profitability is unsatisfactory, our debt clearly remains too high, and we continue to pay the price of past problems which we are working to close out'. However, he believes 'good progress' has been made on the action plan to tackle the problems, which was outlined in March (RG 4.03 p190).
Despite an unfavourable economic climate the rail market was 'generally buoyant'. Orders in the Transport sector were up 4% compared to 2002, or 17% on a comparable basis, with strong growth in all segments except Intercity. Europe remained the most significant rail market, accounting for 60% of orders. Transit was the main segment by volume, helped by an order from Sweden's AB Transitio for 55 Coradia commuter trains. Rolling Stock America performed well, while Transport Information Solutions and Systems remain stable.
Sales in Transport increased by 15% to €5·1bn, a 27% increase on a comparable basis. Excluding a gross provision of €140m to cover additional costs on regional trains and West Coast Main Line contracts in the UK, the Transport sector operating income was €189m and margin was 3·7%. This figure was adversely affected by low workloads in the UK and Canada, and in the locomotive business.
In the next year Alstom expects the transport market to 'remain sound, even if activity may be slightly lower than last year's exceptionally high level'. It is refocusing its activities on the power generation and rail transport markets, through sales of the Transmission & Distribution and Industrial Turbines businesses, and is 'confident of achieving our target of 6% operating margin by fiscal year 2005-06.'
- Alstom is to cease assembly of trains at Washwood Heath in the UK once the Virgin Pendolino contract is completed, and will close its Transit operation in Preston later this year. Up to 295 jobs are to go at the plant in Belfort, which currently employs 680 people. A round of redundancies confirmed on June 6 will see up to 445 jobs go at Alstom businesses across France, as the company aims to save €500m a year over the next two years.