ALSTOM UNSP ((ALSMY)) has held its Q4 earnings call. Read on for the main highlights of the call.
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The recent earnings call for ALSTOM UNSP reflected a generally positive sentiment, buoyed by strong financial performance, strategic improvements, and significant contract wins. Despite some challenges related to contract working capital and potential tariff impacts, the highlights of the call outweighed the lowlights, suggesting an optimistic outlook for the company.
Strong Financial Performance
ALSTOM UNSP reported impressive financial results, with orders reaching €19.8 billion and a book-to-bill ratio of 1.1. Sales were reported at €18.5 billion, marking a 6.6% organic growth. The adjusted EBIT was nearly €1.2 billion, an 18% increase year-on-year, reflecting a margin of 6.4% compared to 5.7% in the previous year.
Improvements in Strategic Priorities
The company made notable strides in its strategic priorities, with the backlog margin improving to close to 18%. Significant progress was also noted in supply chain resilience and industrial efficiency, culminating in record production volumes in the fourth quarter.
Significant Contract Wins
ALSTOM UNSP secured €1.8 billion in large service orders and a €500 million batch of options for RER NG in Rolling Stock. Additionally, two promising frame agreements in Signalling totaling €800 million were secured in Europe, highlighting the company’s robust contract acquisition capabilities.
Sustainability Achievements
The company achieved a remarkable reduction of Scope 1 and 2 emissions by 40% since 2021-2022, surpassing its target by more than five years. Furthermore, it improved its taxonomy sales alignment to 66%, underscoring its commitment to sustainability.
Contract Working Capital Challenges
A headwind in contract working capital is anticipated in fiscal year ’26, primarily due to the project mix in Rolling Stock transitioning from start-up to ramp-up phase. This presents a challenge that the company will need to navigate in the coming years.
Potential Tariff Impact
There is uncertainty surrounding potential tariff impacts on U.S. projects. While the guidance does not currently account for these potential impacts, the company considers it premature to quantify them at this stage.
Forward-Looking Guidance
For the fiscal year 2024-2025, ALSTOM UNSP provided guidance indicating orders totaling €19.8 billion, with a book-to-bill ratio of 1.1. Sales exceeded expectations at €18.5 billion, representing a 6.6% organic growth. The company anticipates a book-to-bill ratio above one, sales growth of 3-5%, and an adjusted EBIT margin around 7% for fiscal year 2025-2026. Free cash flow is projected between €200 million and €400 million, with a more pronounced seasonality compared to the previous year.
In summary, ALSTOM UNSP’s earnings call conveyed a positive sentiment, driven by strong financial results, strategic advancements, and significant contract acquisitions. While challenges such as contract working capital and potential tariff impacts exist, the company’s forward-looking guidance suggests a continued positive growth trajectory.