Harsh conditions dent Alstom’s H1 sales by 10% but orders up 45%
THE harsh economic conditions have taken their toll on one of the West Midlands’ largest employers, Alstom UK.
The French-owned group, which supports around 5,000 jobs in the region, saw first half sales decline by 10% compared with same period last year.
However, orders were stronger – up 45% – giving rise to hopes for a better second half. A continued focus on cost reduction measures, including job cuts is continuing – and will continue – during the next six months the company has said.
Figures show the firm received orders of £8.77bn (€10.2bn) during the first half, however, sales dipped to £8.09bn (€9.4bn). The group has blamed the poor sales on the low level of orders taken during the last economic downturn.
Impacted by the lower volumes, income from operations fell to £539m (€627m), corresponding to a margin of 6.7%. Net profit amounted fell 9% to £312m (€363m), which compared to £344m (€401m) in the first half 2010/11.
Patrick Kron, Alstom’s chairman and chief executive, said: “The commercial rebound was confirmed during this first half with orders exceeding €10bn (£8.6bn) and a book-to-bill above 1 for the fourth consecutive quarter.
“The low turnover of this period, reflecting the trough in orders taken during the 2009 crisis, negatively impacted both profitability and cash.
“The second half should be characterised by an improved volume of sales, a higher operating margin, as well as a positive free cash flow.”
He said that based on this, the group was estimating an operating margin of 7-8% for the year 2011/12.
“In terms of commercial activity, mature markets remained slow, impacted by the lack of visibility in the current economic environment, while emerging markets continued to benefit from the favourable trends already noticed,” added Mr Kron.
The period saw the Thermal Power division secure two large orders Malaysia and Estonia, while the Renewable Power won wind turbine projects in Brazil and Ethiopia, as well as hydro-electric contracts in India and Latin America.
The Transport division secured orders for Russia and high speed trains for Poland, both with additional maintenance agreements.
Grid booked £1.63bn (€1.9bn) of orders including two major contracts in the Middle East.
Cost reduction measures and the ongoing group restructure have seen more than half of the planned 3,500 redundancies in Thermal Power operations in Europe and North America implemented, with plans for the remainder under way. One third of the 1,380 Transport redundancies in Germany, Italy and Spain have also been implemented.
