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Welcome to the Alstom 2026-2027 First Quarter Orders and Sales Conference Call. [Operator Instructions]

Now I will hand the conference over to Bernard Delpit, Executive Vice President and CFO. Sir, please go ahead.

Thank you. Good morning, everyone, and thanks for joining Alstom's orders and sales update for the first quarter of fiscal year '26-'27.

And let's start with orders on Slide 3. The group recorded EUR 2.6 billion of order intake in the first quarter. This represents a book-to-bill ratio of 0.5 compared with 0.9 in Q1 last year. Similar to prior years, we expect order intake to accelerate in the coming months and reach a book-to-bill ratio above 1 for the full year, starting with Q2, where we also expect a book-to-bill above 1.

Some additional color by product line and region. Rolling Stock was the largest contributor this quarter, representing around EUR 1.2 billion of orders. In particular, the group was awarded a locomotive contract in the Africa, Middle East and Central Asia region for EUR 800 million. Services delivered a solid performance with EUR 0.8 billion of order intake with, in particular, contracts for locomotive maintenance in India and several service contracts in Northern Europe.

Signaling recorded EUR 600 million of orders, benefiting notably from around EUR 300 million of orders in Egypt. So as a whole, a low volume but good quality of order intake with locomotives being a platform we push for and with average margin on new orders being accretive to overall gross margin in the backlog. At the end of June, the backlog amounted to EUR 102.8 billion.

Turning to Slide 4 with some operational highlights in the first quarter. In France, TGV M received homologation from both the European and French authorities to enter passenger service. This is an important milestone for the group, considering that 190 Avelia Horizon trains have been ordered by several customers to date. Some of them, including the ones ordered by SNCF and Eurostar will have 11 cars in total. Some others will be configured with 1 or 2 fewer cars, but all are based on the same platform.

In Egypt, commercial service began on Africa's first monorail system. This marks a significant milestone for the first large turnkey project and the start of the operations and maintenance contract by Alstom for a period of 30 years.

In signaling, we commissioned the first ARGOS Digital Interlocking system in France. This is an important step in the future deployment of the European signaling standard, ERTMS. In the U.K., the first of the 10 Elizabeth line train option based on the Aventra platform has been manufactured and is now undergoing testing.

Finally, in France, serial production programs reached significant milestone. To date, 500 regional trains have been manufactured under the Omneo platform and our customer, Île-de-France Mobility has more than 100 RER new generation trains in commercial service now across the Paris region.

Turning to Slide 5 on car production, which gives an indication of the level of activity for slightly over half of our business. The group produced 940 cars in the first quarter compared with 961 in last -- in Q1 last year. Beyond this 2% decrease, we do note that all regions reported year-on-year growth, except the Americas, partly due to the completion of major programs such as BART for San Francisco.

From a mix perspective, in the first quarter, the group produced fewer metros, but more commuters and regional trains compared to the same period last fiscal year. In addition, we continue to bring the several new platforms we mentioned in Q4 through their industrialization phase. You recall this had an impact on car production in Q4 last year, and it continues to weigh on production in Q1. However, the year-on-year decline moderated to 2% compared with 6% in the previous quarter.

Beyond the usual seasonality, we expect car production to improve relative to last year's levels, particularly in the second half. The full year production target is 4,400 to 4,500 cars compared with 4,284 produced last fiscal year. We also note that the number of cars delivered to our clients increased in the first quarter compared to the same period last year and exceeded the number of cars produced, which is a KPI that we report here since 2024.

Let me now turn to sales performance in the first quarter. The group recorded EUR 4.7 billion of sales in the first quarter, up 4.9% compared to the same period last year. Currency impact on sales was broadly neutral, meaning organic growth was 4.8% over the period. Rolling Stock recorded sales of EUR 2.5 billion, up 6% versus last year on an organic basis. This was primarily driven by the execution of regional and commuter train projects currently in serial production in France, but also the ramp-up of production for regional trains sold in Eastern Europe as well as increased locomotive production.

Services delivered another strong quarter at EUR 1.2 billion of sales, up 9% on an organic basis. Growth was supported by the expansion of our operations and maintenance activities in North America as well as commuter and regional maintenance contracts in Australia.

Signaling sales grew by 4%, reaching EUR 600 million. It was supported by the acceleration of the Perth high-capacity signaling project in Australia, while several signaling contracts in Poland continue to progress according to plan.

Systems sales were EUR 400 million, down 10% on an organic basis. This mainly reflects major projects such as Tren Maya in Mexico and the São Paulo Monorail continuing to ramp down and now reaching the final stages of execution.

Turning to Slide 7, where we confirm the outlook for this current fiscal year as given at the time of full year results in May. We expect a book-to-bill above 1, organic sales growth of around 5% and car production in the range of 4,400 to 3,500 units. The target is an adjusted EBIT margin of around 6.5% and positive free cash flow for the full year. As usual, cash generation will be heavily weighted towards the second half, and we, therefore, continue to anticipate around EUR 1.5 billion of free cash flow consumption in H1 and a strong recovery in the second half.

Finally, regarding capital structure, the group issued its first green hybrid bond last month with a nominal amount of EUR 700 million. This transaction will enable Alstom to continue financing both capital expenditure and operating expenditures that are aligned with the European taxonomy. It also strengthened the group's liquidity position ahead of the repayment of the EUR 700 million senior bond maturing in October this year.

This concludes the presentation, and we will now open the floor to your questions. Thank you.

[Operator Instructions] The next question comes from Delphine Brault from ODDO BHF.

I have 2, and I'll ask them one at a time. Starting with your car production in Q1, down by 2%. Was it in line with what you expected? And is it just a timing effect? Or did you experience any additional tension?

Well, it's almost in line with our expectations. As I said, the ramp down of one of the large projects in Americas was planned. So this one was totally again, expected. It's true that for some units, we were expecting more, but it was embedded in the yearly guidance. So no major deviations.

And then second, in your press release, you mentioned that you expect commercial momentum to accelerate in Q2, and you just confirmed a book-to-bill above 1 in Q2. Can you be a bit more specific on what you see in terms of pipeline and in terms of mix between rolling stock and service signaling systems?

Okay. So in the pipeline, we have orders in the Middle East, possibly confirmed in the coming weeks, both in Israel and in the region, I would say. France and in North America will also have some contracts signed in Q2. I remind you that we also have an exclusive agreement with Virgin for the supply of a high-speed single-deck train and the discussions are moving well.

We have also some tender awards expected in the U.K. for later this year. So we are expecting a year of strong book-to-bill in service coming ahead. You know that first quarter historically are softer than the full year. So there is no change in the demand dynamics, but rather a reflection of the cycle. So I confirm here that the book-to-bill is going to be above 1, both for full year and for Q2, and we have the pipeline to get there.

The next question comes from Gael de-Bray from Deutsche Bank.

Can I just follow-up on your latest comment, Bernard? Because I'm wondering if the slow start to the year in terms of commercial momentum is just a question of lumpiness and phasing effects? Or is there something behind like the organization maybe now paying even stronger attention to the terms and conditions of the contract and maybe with more -- a bit more selectivity on your side?

I would say both, Gael. First, of course, Q4 last year was extremely strong. So there is a kind of cycle here, I would say. And we continue to pay a lot of attention to selectivity. There are a few orders, by the way, last year that we didn't follow. And it has an impact maybe on the book-to-bill of this quarter. But I would say both. We continue to be selective, and there is also the fact that the cycle is such that Q1 was expected to be low.

Okay. Understood. And then post Q1 and with certainly an even greater visibility now on the potential orders you may or not bag in Q2, I mean, would you say that the free cash flow is tracking fully in line with the guidance for H1 or a bit better or a bit weaker even after the soft order intake you had in the first quarter?

Frankly, I don't -- I will not give any qualitative indication. It tracks on line with what we said. And you remember that at the time of the issuance of the guidance, we explained that down payments were planned to be totally imbalanced between H1 and H2. So I confirm that what you've seen here in terms of order is in line with this unbalanced phasing of down payments in H1 and H2. And the rest, I would say, is in line. So we have confirmed the free cash flow guidance, and we have confirmed that the EUR 1.5 billion negative is what we see for H1. No news.

The next question comes from James Moore from Rothschild & Co Redburn.

I wondered if I could ask you a little bit about your soft start on car production. And my understanding was that there was some stopping of production in Germany and then some restarting. And just given the importance of the German contract, could you talk a little bit about the impact of that, how you're feeling about German profitability improvement and the ramifications for free cash flow in Germany?

James, thank you for this question. I will not elaborate on profitability and cash, specifically on Germany. When you say that we have stopped some production in Germany, it's true that we try to adapt as much as possible the production to what we see in terms of engineering and supply chain issues when there are some or to the planning of homologation in order not to build cars that could be subject to retrofit. So that's exactly what happened in Germany. Now it has resumed, and we are, I would say, in line with what we expected.

You refer to the Coradia Max platform for regional trains. So we have a lot of activity on this platform. We expect the first homologation of 6 homologations for the Coradia platform to happen in the -- at the end of this fiscal year. So we prepare for this homologation and the adaptation of the production is done in order to make it as smooth as possible.

Great. And maybe I could try a second one. Obviously, we would love to hear your first thoughts or Martin's first thoughts on what he's going to say next year, but I presume you won't be able to talk about that at all.

But what do you think internally are the exercises that have already been done since Martin's arrival? And what has to be done ahead of the CMD next year in terms of how you want to lay out your own internal understanding of the ability to reach the margin in the backlog and the future improvement in free cash flow beyond this year, just in terms of sequencing of what you're trying to do C-suite level organizationally?

Frankly, I don't think it's -- I'm not the one that should discuss this on behalf of Martin. You will have occasions, opportunities to talk to Martin at a later stage.

What I see that is now -- he has now visited many different sites. He had the opportunity to discuss with many project managers. So I think that moving forward, he has a good sense of how the company is both organized and working and what he wants to change in both the organization and the ways of working.

So we have already started to implement some changes. There are some work streams going on, on the way we are organized, the -- let's say, the deal way, the way we can simplify the organization. We are also launching some initiatives in terms of costs because this is where competitiveness relies. So it's not the timing for me to say anything more on that. But I think that he has an agenda in order to deliver some changes, some improvements in order to meet our backlog gross margin. And I will let it to him to express the impact of what is expected here. Let's wait for H1 disclosures to be more specific on that, James.

That's very helpful.

The next question comes from Daniela Costa from Goldman Sachs.

Just 2 quick things. Can you help us understand a little bit better in terms of like how payments work in terms of the various phases in the contracts? For example, when you -- when there is homologation, do we get an amount of cash that is, for example, similar to when it is in advance? Or is it very different? It would be good to have some color in there.

And the second one also in terms of a bit of help on guidance on how should we think about sort of a platform like the TGV versus -- in terms of like the type of profitability that you get versus your kind of normal group margin? I understand you have a much stronger position probably in terms of market share and dominance in there. Are we talking sort of the highest margin in the group? Or can you help us give some pointers on how should we think about forecasting those type of events?

Okay. So it's sales and order conference today. So I will not elaborate a lot on that, but maybe share with you that on payments, so all contracts are different. And specifically in Germany, the contract that we are discussing here, the one on the Coradia platform, those were well-funded contracts. So the down payments at the time of the notice to proceed to the very start of the program, I think it was in '21, something like that, were high.

So of course, there is some cash in tied to the deliveries of the trains, not specifically to the homologation, but to the deliveries of the train. So it will come after the homologation. There is some payments attached to that, but not that much as a down payment typically at the inception of the contract. So payments will be attached to cars deliveries, and I cannot elaborate more on that, but it's not as much as a down payment to be specific.

On TGV profitability, nothing I can share with you, of course. But I confirm that we have a high market share for TGV in France for sure. But nothing I can share. This is an innovation. This is a high-tech train for -- so there are some risk attached to it, and it's -- the price is in line with the content of the train that for sure, is not the same as for a train for a tram or a commuter. That's the only thing I can share with you.

The next question comes from Andre Kukhnin from UBS.

Can I just pick up on the part of the slide that talks about the higher share of projects in ramp-up phase, up, I think, 2x versus last year. How do you expect that to develop through the year? And if it is heavier in H1 versus H2, should we think about kind of more pronounced margin seasonality for H1 versus H2?

In fact, Andre, thank you for the question. And the full year, the share of ramp-up program on the full year will be higher than the share of ramp-up program in Q1. So we have this profile that explains, by the way, the profile of the cash flow as we have to get prepared for the production of those cars. So no, I mean, it's the opposite. We have more ramp-up projects in -- for the full year than in H1 -- than in Q1, sorry.

That's very helpful. And does that affect profitability or not? Will that affect the seasonality this year?

Not materially, I would say.

Great. And I just wanted to check, so we've gone through, I think, majority of the projects that you mentioned before that were challenging and very clear on the expected time line for the German one. Is there anything else out there that is sizable that we need to sort of keep an eye on and think about this year with kind of the Aventra, TGV on track or kind of making the announce?

I mean I'm not going to give the long list of the critical projects that we are watching. I remind you that the portfolio is made of 2,500 contracts. So it's a lot of different contracts, and we have a list of, I would say, 50 contracts maybe that we are watching more precisely than the others. Coradia Max in Germany is one of them. We have also contracts in the Nordics. We have the TGV revenue service starting in September. I won't go into the list.

I just want to remind you that rolling stock is 50% of our business. And we are dealing here with a portion of that. So don't forget that in signaling, in services, we have also large contracts developing well that do not have this phase of ramp-up, ramp down, start-up series that makes the life more difficult for rolling stock than for the rest of the business by definition.

The next question comes from Vlad Sergievskii from Barclays.

Could you share what influenced your choice for additional hybrid capital? It is clearly more expensive than perhaps playing new bonds, for example, which you have opted for.

Yes, yes. For sure, by definition, the product is not the same as a senior bond. So it comes with additional spread. But -- and that was clearly explained during the roadshow for the hybrid. Going for the hybrid has a lot of merits, including in terms of management of the leverage ratio according to Moody's. So that's a way to manage, again, the leverage ratio, but nothing more in terms of liquidity. We have sized it in order to deal with the repayment of the senior bond in October. So not much more to elaborate on.

Understood. And while you are in the process of getting through those underperforming projects that you mentioned and getting them back on track, should we expect contract assets to keep increasing while you are going through those process and specifically in the first half of this year, if you could give us some idea, please?

Well, by definition, when you are in a ramp-up phase, you have contract assets by definition. And I remind you that the way we report the contract assets and contract liabilities, you should have look at the net of both. So it's -- I think the net of contract assets and liabilities on a long period reflect the cycle of the deliveries of our backlog.

So -- and second, seasonality has also an impact on the amount of contract assets and contract liabilities. For example, as we said that down payments will be back-end loaded. You should expect that contract liabilities will grow in second half rather than in the first half. And because of the ramp-up phase of some contracts, by definition, it will increase contract assets. Now it's far too early to give you more indication on what you're going to find in the H1 for contract assets and contract liabilities. But it has to do with the cycle, and it has to do with seasonality on top.

That's really helpful.

The next question comes from William Mackie from Kepler Cheuvreux.

I would just like to ask a question about your expected growth across the business lines that you're running. And maybe just to dig in briefly into systems. So you've reiterated the approximate 5% organic growth, but we've seen quite a lot of variance across rolling stock services and signaling and systems.

So could you share some more color on where you think those will land for the year in terms of expected growth? And specifically in systems, is there a backlog there to replenish the wind down of the Mexican and Brazilian projects?

I couldn't elaborate that much on the system situation, but I would say that it will continue to be down over the year. But one of the large orders that we booked, I think it was in '23, '24 in the Asia Pacific region will start to ramp up. So that would create some mitigator. But let's wait for H1 to give you more color on the net of ramp down of ramp-up.

For signaling and services, we expect -- well, for services, you shouldn't expect the 9% organic growth to continue at this level for the rest of the year. But by definition, it will be above 5%. Signaling, I would say that you could take what we've seen in H1 as a run rate for the rest of the year. And for rolling stock, as we have some ramp-ups coming in, I would say that also around 5%, maybe north of 5% is my expectation for the rolling stock run rate.

And the follow-up would be relating to efficiency measures that you're undertaking across the group. Clearly, your focus is on project execution and the project process. But I think there was elements of restructuring in Germany and other regions and implementations of various new business processes.

So could you give an update on where those are relative to your plans of last year? And how much of a contribution they're expected to roll into the rest of the year?

Well, I will answer maybe more, I would say, differently. We expect nonoperational expenses and restructuring to be in the region of EUR 100 million in H1, maybe EUR 150 million for the full year. And we will detail the breakdown of those mostly restructuring in H1 when we'll have more visibility on what's going on. But I would say that we have some restructuring going on in different countries, not only, by the way, in Germany, where we have a transformation plan that is going on, but we have also some plans in the U.K., in Australia, in some other regions and Belgium as well. So it's, I would say, not only in Germany.

The next question comes from Martin Wilkie from Citi.

It's Martin at Citi. Just one final one for me. You did mention the guidance assumes no disruption from the Middle East. But in your order list that you mentioned for Q2 and later this year, you had highlighted the Middle East. So should we assume that for now, there is no disruption neither on the operational business nor on order intake? Just to understand if that's sort of just a get-out clause in case of future activities or is there anything that you're seeing at the moment in the region?

Yes. Thanks, Martin. For sure, the situation in the region doesn't help. And it could create some hiccups in the way our operations are managed because we have operations in the Gulf, in Israel and in all the regions.

But I remind you, for example, that the Haifa-Nazareth project has been awarded in 2024. So now we are working on the closing in order to start operations. And frankly, in other countries of the region, people are continuing to plan for larger investments. That's what we are talking about here, and I expect some news in the next weeks or maybe in September in order to book some large new contracts in the region as well.

The next question comes from Akash Gupta from JPMorgan.

I got a couple as well. The first one is on a follow-up on the Middle East. I think we hear from some countries in the region that they are looking to cut their reliance on Strait of Hormuz and I guess, rail could play an important role in transporting both people and goods. So when you talk about this Middle East project, is there something that might be related to like getting more strategic autonomy by reducing reliance on Strait of Hormuz, like is that linked? Or maybe it is too early to talk about those kind of commercial opportunity? That's the first one.

Akash, I will take this one, and then you will continue. Frankly, first, we are not that much involved in the freight business. So I do not see today any major projects popping up because of the situation in the Strait of Hormuz, creating some new investments in order to run logistics in a different way. So my short answer is no.

And then my second one is on input cost development in the quarter. Is there anything to call out there in terms of any unexpected positive or negative development that we should be watching out for?

In terms of costs. Yes, it...

Transportation.

Yes. No, it's true that the situation in the region has created some tensions on transportation costs. We see some tension on sea transportation, some impact also on air traffic as well. The mix, of course, for us is more on ocean transportation, and it creates some tension. So let's see how it will develop, but it's true that the index has been increasing. So part of that is hedged or locked, I would say, but some of that is on a spot basis. So it has some impact, and so we are trying to mitigate that as much as possible.

And lastly, a housekeeping question on H1 versus H2 margin split. Like historically, we had around 90 bps variation between H1 and H2? And is there any reason why it would be different this year?

Yes, yes. And the usual way we guide for H1, and we continue to guide this way, we expect that H1 will be in the vicinity of the full year EBIT of last year, full year EBIT, so more in the region of 6%. And as we have guided for 6.5%, I think it would be -- it should be, by definition, above 6.5% in order to land as an average 6.5%. But I would say maybe lower than the usual 90 bps gap between H1 and H2.

But we are -- I mean, I don't want to refine too much on those. But let's for a moment, concentrate on focusing on H1. I see it very much as around 6% and we stick to the guidance of 6.5%. We will refine that at the time of the H1 disclosures.

The next question comes from Louis Billon from AlphaValue.

So my question is about order intake. Could you provide more color on which countries or geographies came in below your expectation in the first quarter? And also, could you give us more color on the pipeline in Germany and maybe also in France because you mentioned France would be strong in Q2 -- in the second quarter. So could you give us more details on the tender in France?

Frankly, I couldn't really elaborate on the situation on a country basis. In France, we are not expecting huge orders in the coming quarters. Frankly, we are delivering on the existing backlog. That is very much what is at stake. Now we are expecting a specific order in France for a specific project, and I cannot share with you more details, but it's one of its kind. So I don't want to elaborate on that. It has nothing to do with previous orders, and it is going to be a very specific one. I hope that we can share that with H1 disclosures.

In Germany, we have some options, I would say. So not one brand-new project that we are working on, a specific one, but also options for rolling stock. But I wouldn't elaborate so much on a country-by-country basis.

Ladies and gentlemen, thank you for your questions. Let me hand the conference back to the speakers for any closing comments.

No specific closing comments. I wish you a good summer break for those of you who will take some vacation and hope to talk to you soon in September. Thank you. Bye-bye.

Thank you, ladies and gentlemen. The live presentation is now over. You may now disconnect.

Good afternoon, ladies and gentlemen. Dear shareholders, I declare open this session of the combined shareholders meeting of Alstom. First of all, I would like to thank the shareholders attending the meeting as well as shareholders who did connect remotely to attend this shareholders' meeting. I have the honor to preside.

Attending today on stage, Mr. Martin Sion, the new CEO of your company. He will introduce himself in the moment. Madam Emmanuelle Petrovic, General Counsel; and Mr. Bernard-Pierre Delpit, Chief Financial Officer. I would like also to welcome here in the first road members of our Board of Directors. In accordance with the law, it is now my responsibility to appoint the presiding officers. I call upon the 2 members of the meeting, you represent the larger number of votes, and you have agreed to take on this role as [indiscernible] Quebec as scrutinies [indiscernible] Quebec share [ 80,937,484 ] shares represented by Mrs. Kim Thomassin. And BPI [indiscernible], which holds [ 34,937,254 ] shares represented by Mr. Samuel Dennis in the second row.

I would like now with the agreement of the scrutineers, to appoint Madam Emmanuelle Petrovic as Secretary of the shareholders' meeting presentative from [indiscernible] and PricewaterhouseCoopers Audits. Statutory auditors for Alstom are also attending this meeting, and I would like to thank them indeed for being here with us.

I shall now hand over to Mrs. Emmanuelle Petrovic.

Thank you, sir. The year ended and the resolution put to the vote of this combined shareholders meeting are set out in the Notice of Meeting, which is available online on our website and that has been to registered shareholders. The agenda and these resolutions are also set out in the notice of meeting published in the [indiscernible] on June 1, 2026. The Board of Directors' report on the resolutions is included in this [indiscernible] of meeting. The statutory auditors reports have also been made available to you and are included in the notice of meeting. To avoid unnecessarily prolonging the meeting, I will not be reading at the agenda in these reports. The [indiscernible] on the table contains the documents required by law, a list of which will be recorded in the minutes of this meeting. All of the documents have been made available to shareholders at the company's registered office.

Having clarified these points, I would like to inform you about the following: our Chief Executive Officer, Mr. Martin Sion will present a review of the financial year and provide an update of the group's outlook, Mr. Bernard-Pierre Delpit, Chief Financial Officer, comment on the group's financial results for this financial year. Then Mr. Kevin Cogo, Head of group strategy will outline the group's CSR priority and achievements. Corporate governance and remuneration matters will then be presented by Mr. Philippe Petitcolin, Chairman of the Board of Directors. And Mr. [indiscernible] his capacity as Chairman of the Nomination and Remuneration Committee.

Finally, the statutory auditors will present their reports. Following these presentations, there will be the audience during which, you will be available to ask questions whether verbally or in writing using the form provided to you. We will then conclude with the presentation and vote of resolutions. As usual, to facilitate voting and enable results to be displayed more quickly and electronic verdict system will be used about entering the room, you were given an electronic voting device, which I would I would like to ask you to keep at hand and not if we get to return them to the hostesses on the way out. I would like to point out that the attendance register is currently being checked and that will be -- and we will be welcoming shareholders up until 3:00 p.m. As a deregulate for shares carrying at least 1 voting rights, your company's share capital comprises [ 462,616,024 ] shares. According to the provisional attendance registered shareholders represent an passion or by proxy hold [ 303,348,000 ] votes 30% carrying voting [indiscernible].

The forum required for this general assembly, which will be held [indiscernible] 20% for the ordinary part and 25% for the extraordinary part. The 25% quorum has therefore been already achieved and the meeting will be able to deliberate. I'd like to remind you that this meeting is being felt and broadcast live on the company's website. I would also like to inform you that a Judicial officer is in this room. Thank you for your attention. Now I hand over back to the Chairman. Thank you. Madam Secretary, I will now hand over to Mr. Martin Sion, Chief Executive Officer.

Ladies and gentlemen, dear shareholders, it is with great honor, but also a strong sense of responsibility that addressed you today for the first time as Chief Executive Officer of Alstom. I joined the Alstom Group on April 1 after 36 years working at Safran, the Aerospace & Defense Industries. Let me say a few words about my career. I began my career in technical and engineering role. Before moving into transformation and continuous improvement, I held industrial management rules then manage 3 companies with [indiscernible], Electronics and Defense, some of you have known in a session. And finally, Arian Group, which is a joint venture between [indiscernible].

So what is the link between rocket engines, aircraft engines, electronic equipment and launches and the railway sector. Well, in reality, there are many. Looking at each of these fields, we are always talking about high-level engineering, technology, complex systems reliability, industrial performance. and rigor and execution. The environment is different. The size of the company is different. But as soon as you look at the details, you understand that skills involved are very similar. So this experience of major industrial projects I want to bring to Austin.

Since my arrival, I have been keen to get out into the field as quickly as possible. I visited about 20 sites during the first 3 months. I did not mean to observe as them from a disti but rather to ground my assessment in the company's industrial reality, that is a meeting with teams, partners and customers alike. This initial visits have confirmed a very strong conviction of mine. Alstom has considerable strength, technologies, products, a global footprint, a leading backlog as you well know, but it's also women and men who demonstrate remarkable commitment and expertise. Still, these assets must now be reflected more clearly in our performance. We need more regularity in execution, more consistency, a greater discipline in steering our projects, more predictability in our deliveries and more simplicity in the way we operate.

While this assessment is not based solely on figures. It also stems from what I have seen, what I have heard and the discussions that I've had with our teams, customers and partners. Recent financial results show that we are not yet performing at the expected level for a leader such as Alstom. However, they do not call into question the quality of our fundamentals or the potential of the company. My message is therefore simple. Alstom is not a company that needs to be reinvented. It is a company who's full potential must be realized by raising the bar. And this is precisely what we are about to enter now.

I would like now to cover the year 2025, 2026. Starting with the highlights of this year. First of all, it was a record year in commercial terms, nearly 28 billion of turnover of orders. The turnover rose by 3.7% with adjusted for changes of scope and currency effects, the organic growth stood at 7.2%. All business units contributed. Rolling stock services and industrialization, but the adjusted EBIT margin fell short of our expectations down on last year. This is mainly due to the underperformance in rolling stock. This is mainly explained by 2 types of problems. First of all, industrialization and homologation processes and some projects reaching the end of the execution, which started had a difficult start. And then the free cash flow generation stood at EUR 336 million, in line with our target.

Let's now turn to the group's commercial performance over the past financial year. Aston recorded EUR 27.6 billion in order intake, which is a record level with an order to turnover ratio of 1.4. This performance is well balanced, both geographically and by business segment. Europe remains the main contributor with EUR 15.6 billion. Among the major contracts, there is EUR 1 billion in Portugal, EUR 1.5 billion in Poland, for our Coradia Max regional platform, including maintenance, EUR 1.4 billion with Eurostar in France and EUR 1.6 billion for [indiscernible] trains in the Paris region. Americas are also seeing ground strong growth with EUR 7.9 billion orders. This is driven by several major successes in North America. First of all, a EUR 2 billion contract for the metro in the New York metropolitan area. EUR 1 billion for the New Jersey commuter rail [indiscernible] and EUR 1.4 billion in Canada for the Toronto Metro.

By product line, rolling stock leads the way with EUR 14.3 billion, pretty much half of the order intake. Services follow with EUR 6.5 billion and signaling and systems accounting each for EUR 3.4 billion approximately. Beyond the figures, this performance confirms the group's platform strategy. Horizon, for instance, our high speed train platform is going strong in several markets as shown by the significant proportion of options included in orders, and the backlog now stands at over EUR 104 billion.

Now let me talk about key operational achievements. In the United States. Next, [indiscernible] has entered commercial service on abstract Northeast corridor with trains designed and manufactured in the U.S. for the U.S. market. At this stage, more than 10 train sets are already in commercial operation. In India, the new metro lines have been brought into service in [indiscernible] and extensions to the New Delhi network incorporating Alstom's latest signaling technologies. In France and [ F 19 ] has entered service on line 10 of the Paris Metro deployment will continue gradually across 8 metro lines by 2033. And finally, in Australia, we achieved a first for the country with the commissioning of the Melbourne Metro Tunnel.

Let me now switch to that part of my presentation to share with you my assessment of the group current situation. Alstom is in the business of industrial projects for this kind of business, the quality of execution and financial performance depend above all on the backlog at size, balance and margin levels. From that point of view, the progress made recently is very important. The backlog has went up over EUR 6 billion over 5 years. It is also better balance across rolling stock, services, signaling and systems. At the same time, the margin embedded in the backlog has improved by approximately 2 percentage points. Several factors explain this development.

Well, first of all, the railway market has performed well with approximately EUR 210 billion identified worldwide over the next 3 years. This gives us visibility but it also requires a real discipline in the way we like our projects. Secondly, the combination of rolling stock and services is a unique driver of growth. In practical terms over the last 2 years and 50% of the trains sold was accompanied by a maintenance contract. Finally, Alstom has built a strong position in digital signaling solutions, both in stand-alone projects and an integrated 10 key projects. All of this provides a sound foundation. In an industrial pro-based business, such as Alstom, a strong balance sheet and cost discipline are essential to our success. Progress has been made these last 3 years. The debt reduction plan that was launched in 2024 that strengthened the balance sheet and fixed costs have fallen as a proportion of turnover.

Progress has also been made on the environmental front. Scope 3 images, which are linked to passenger trains sold to our customers have fallen by around 20% over 3 years' time. This reflects both the evolution of our products and a growing need and demand for low-carbon mobility solutions. Now also being operational improvements in manufacturing, quality has improved, and the transformation plan has been launched in Germany [indiscernible] to adapt industrial footprint and boost efficiency and competitiveness. This does not solve everything. But these progress clearly show that the actions we have taken are beginning to yield results. This slide shows that there is still room for improvement in terms of execution. You can see the production of car these last 3 years. So every quarter, regarding the rolling stock, we haven't reached yet the expected level of consistency. This has impacted our operational performance and reduced financial visibility, especially during Q4.

Regarding production, the first 9 months of the year were kind of stable. However, Q4 showed with a total of nearly 100 cars fewer than planned for the year. Most of this shortfall stems from several major platforms where the development and industrialization phases are overlapping and taking longer than anticipated. It means delays and additional costs. teams remain on task for a longer time. The taking phases are extending. In some cases, some changes have to be made retrospectively. All of this puts pressure on margins and cash generation in the short term, deliveries are not canceled, but postponed over time, consequently, to our cash inflows. At the same time, the group is finalizing a small number of contracts with additional problems were identified during project reviews in Q4.

On the next slide, you will see some very tangible short-term actions to stabilize the situation and start turning things around. First of all, we are working a strengthening manages attention on execution. We do insist on operational discipline with faster lean practices implemented for engineering and execution. We also want to strengthen the quick problems feedback coming from the field. Then we want to review rules and the decision rights in the companies to reinforce the empowerment of our project managers. We try to simplify our operating modes. Our teams have more time to dedicate to execution. Third line, we are working towards an even greater control cost. Focusing our resources on the key projects and aligning with delivery requirements.

Finally, we are accelerating procurement initiatives in order to capitalize on the size of our backlog when negotiating with our suppliers. All these actions target fundamentals of execution. We will implement them with determination. At the same time, we are preparing for more far-reaching operational changes. And I mean a better alignment of our operations, operating move, industrial footprint and office.

This concludes my presentation. I would now hand over to Bernard-Pierre Delpit for the financial review.

Thank you, Martin. I am now going to invite Bernard Delpit, Financial Director to take the floor.

Thank you, Mr. Chairman. Ladies and gentlemen, dear Alstom shareholders, it's an honor for me to present to you the group's consolidated income statements for the financial year ending 31st of March '26, and I'm going to do this by highlighting a number of financial indicators.

To start with, with the key elements of resolution #2, which is going to be subjected to your vote. Concerning the consolidating accounts of Alstoms, and you see here on the right-hand side column that the sales figure of your company reached EUR 19,171,000,000 for the last financial year, which represents organic growth. In other words, outside of some currency and scope effects of 7.2%. The operating income of your company reached EUR 1.168 billion, in other words, a fairly stable level compared to last year. This represents an adjusted operating margin of 6.1%, down by 30 basis points compared to the previous financial year, readjusted with currency and scope effects. This operating margin is stable compared to the past year. now issues of execution of some projects for rolling stock have therefore been offset by the correct execution of the rest of the portfolio and the good effective control of our central costs and the strong performance of our joint venture projects in China.

Nonoperating expenses continue to fall going from almost EUR 200 million to EUR 155 million last year. These include, in particular, restructuring and streamlining costs to adapt our industrial base as well as legal costs. And this decline reflects the gradual normalization of these expenses following the integration of Bombardier. As a consequence, the operating profit is now at EUR 797 million. In addition to which the financial result is improving significantly with EUR 165 million compared to EUR 214 million last year, [ besetting ] in particular, from the efforts for a debt reduction of the group. Now the tax rate that you see on this line, so effective tax rate is now at 35% of taxable income, which is stable compared to last year. All of these factors leads to an adjusted net profit of EUR 559 million compared to EUR 498 million last year. Finally, after taking into account the amortization of goodwill, as it's called, in particular related to past transactions.

Net profit attributable to the group is now at EUR 324 million, a significant improvement on the EUR 149 million of last year. And this is the result that we suggest you approved in the second resolution. I would also like to take this opportunity to mention the company accounts in French law. So for Alstom, which is the parent company of the group Alstom, that you are the direct shareholders of the amount of the general reserve at the end of March '26 stands at approximately EUR 6.7 billion, following allocation of the profits from previous year. And so this year, we suggest to allocate to this general reserve, the results of the year. In other words, in French standards of EUR 100 million. Just like last year, we do not suggest any dividends for the year '25, '26. This decision is in line with the financial policy of the group. In other words, to -- with the objective of favoring the strengthening of the balance sheet and the pursuing efforts for debt reduction.

And speaking of debt reduction that net of your company, which was EUR 34 million on the 31st of March '25 is now today at EUR 404 million. This evolution is explained. First of all, with the generation of cash flow, which reached EUR 323 million for this financial year, in line with the forecast that were made in May of '25. In addition to this cash generation, a number of factors have also influenced this change in debt. in particular, the paying of dividends to minority shareholders and the coupon payments on what is called a hybrid debt, which we had issued in May '24 in this plan of debt reduction for the Alstom Group. In addition to which our rent payments amounted to EUR 172 million paid over that period. And finally, exchange rate effects contributed to a reduction by EUR 553 million of debt.

All of these flows are favorable for cash generation and unfavorable for the other factors that I just mentioned, explain the fairly moderate evolution of debt reduction and so reaching EUR 404 million. Now concerning the cash flow of the group, the -- so free cash flow and equivalents are now EUR 2.3 billion in March of level, which is overall stable compared to last year, in addition to which the group has revolving credit facilities, a line of EUR 2.5 billion, which was not drawn and a commercial paper program, allowing it to also issue short term for an amount of EUR 2.5 billion. Overall, these elements give the group a situation for cash flow that allows it to meet its operating needs and concerning the profile of the debt that you see on the right here.

So the -- so bonds of EUR 700 million are going to be due in October of this year. And this debt maturity was already refinanced with the debt you mentioned in the month of June that I'll come back on shortly. And so the EUR 700 million will be paid back in the month of October. Taking this opportunity as well to tell you about the objectives that were announced for this financial year '26, '27. First of all, we continue to anticipate sustained demand on our markets, in particular, for rolling stock, but also for signaling and services. And in this general situation, we expect business activities to be quite buoyant with a order to turnover ratio exceeding 1. And so an accumulation of order intake above the level of the turnover of the year. This turnover, we expect to have increasing by over 5%, in line with our ambitions, midterm ambitions. In this respect, we estimate that the number of carriages so being either a car, a locomotive or metro carriage.

So we estimate that this overall number of carriages produced, so a physical estimation, which represents about 50% of our activity should be in the range of 4,400 to 4,500 units in this financial year, which is a crucial indicator in particular, of the efficiency of our production tool and of the quality of our engineering. Now concerning profitability, we are targeting a gradual improvement of the adjusted operating margin with the objective of 6.5% compared to the 6.1% for the previous financial year that was just closed, which translates the ongoing efforts to enhance operational efficiency and of the product mix. Now in terms of cash generation, we are targeting positive free cash flow for the financial year. And as you know, Alstom has a financial year that starts on the 1st of April. And so in the first half of the year, there's 2 -- so lower months of activity, so the summer months. And so cash flow is strongly affected by the seasonality, and we have, therefore, indicated that we should have a negative cash flow up to minus EUR 1.5 billion during the first half of our financial year.

Now a few striking elements for the first quarter '26-'27. First of all, the TTPM obtained so the authorization for commissioning. So in May, with so are a commercial review by the SNCF in the month of September. We now have a commercial start, which is aligned with our expectations on signaling and services. So a little bit lesser for selectivities for rolling stock. And as I indicated previously, at the beginning of June, we issued a hybrid bond as it's called, and so most especially green bond with characteristics connected to efforts for decarbonization conducted by Alstom, which was also met with quite a bit of success with a rate that is considered successful performing -- high performing. And I would not leave you without showing you, as I usually do, the evolution of the share price for this period of time since our last shareholders' meeting compared to the SBF 120 index for the first part of the period, the share price performed overall positively, reflecting, in particular, the strength of the commercial policy of the group with a record order intake and an order book offering strong visibility.

We then observe a period of increased volatility, which is explained, first of all, by the market environment, which is more uncertain, characterized, in particular, by geopolitical tensions in the Middle East, which, of course, impacted all equity markets and even more so on Alstom and secondly, the publication of our preliminary results mid-April, with the revision of our outlook prospects, which triggered a clear market reaction. Over this whole period, the shares performance is therefore lagging behind the benchmark index reflecting these specific factors. Against this backdrop, our priority is clear, strengthening operational execution, improving discipline in our projects, and gradually restoring our path to profitability and cash generation. This, in the long term, will allow for value creation for our shareholders. Thank you.

Thank you, Bernard. It's rare to see a financial officer being applauded this way. And so giving now the floor to Mr. Kevin Cogo in charge of the strategy.

Hello. Thank you, Mr. Chairman. Thank you, Bernard. Hello. So I'm going to now tell you about the results and the assessment of our CSR strategy. Our strategy is based on 5 pillars that covers all of our value chain, and the objective is to reconcile industrial performance and strengthen our resilience and reduce our environmental impact while at the same time, favoring so 0 emissions mobility is at the heart of our mission.

We are a key player of decarbonization of mobility with a portfolio of comprehensive solutions with 0 carbon emissions, and we also carry many efforts in terms of reducing our own impacts, whether in our own production plants, industrial activities and services. The preservation of resources is a material impact for the group. And so we established a number of actions in terms of circular economies, and we're especially ramping up recycled materials in our rolling stock in '25, '26, 27% of materials used were recycled for all rolling stock. Our support to local communities through our different operations is also a key element through our foundation, in particular, and also activities that we perform in different regions. We have over 373,000 beneficiaries in '25, '26, and we're also working hardly for our different partners to increase diversity in the group and a culture on EHS, security, safety a crucial element as well and a differentiating element. And finally, we put a lot of effort into building a respectable and respect and responsible value chain with our customers, partners and suppliers.

Now concerning the results. We have -- so for this financial year, '25-'26 made a lot of progress, so one more year in the right direction. We reduced our emissions. So measured in scopes 1 and 2 going down by 12% compared to last year. As mentioned, the solutions that we deliver, our customers have also progressed by 26% in terms of emissions compared to the 2021 reference here. And now in terms of social indicators, we are also making progress. It's been more than 10 years that we've been systematically reducing incidents in our production plants and with our customers and the framework of our services to reach in '25, '26 or 1.4% in terms of results. And our diversity is in progress as well with 26.6%, so women in managerial teams. These results confirm the efficiency of actions conducted and the, of course, mobilization of management. Taking this opportunity to give you a few illustrations of these -- some of these key elements.

Now in terms of impact, and environmental priorities. In '25, '26, we reached 100% renewable energy in the group. In other words, through actions conducted on production sites with solar panels, for instance, and also by signing contracts for pure renewable energy contracts. And so we also worked on our own consumptions with a lead plan [indiscernible] 82% of sites are equipped with LED lighting, which is a significant improvement of our electricity consumption. Now in terms of our value chain and suppliers, vendors, we have multiplied contracts, in particular for raw materials. And so [ Auto Compo ], which is one of our major suppliers is now giving us. So access to low carbon steel. And on this commodity, we reduced by 93% our carbon impact, which is extremely significant.

Finally, and as mentioned by Bernard, we are using the excellent results of our European taxonomy in relation to our engagements on climate engagements so as to be able to go into a EUR 700 million of issuing of green bonds, which, as you heard, was a great success. Finally, we are continuing our social engagement through our foundation with ASO safer, more inclusive, more accessible and greener mobility for all regions. And I mentioned here, a project in Mexico, which so fulfilled all these criterion is a beautiful illustration of what we are doing in these different regions. And so this is for us a very strong commitment, a mobilization of all times and of all hands.

So thank you for listening to me and giving the floor back to the Chairman.

Thank you so much. Let me now present some information connected to the governance of your company. And then I will ask Mr. Baudouin Prot, who is presiding the Compensation and Appointment Committee to take the floor. As you well know, the past year has been marked by the departure of [indiscernible] from the CEO, who was Director of this company. He left his 2 roles on March 31, 2026. Ever since April 1, 2026, the Board of Directors. I'm presiding is composed of 11 administrators -- or directors, including 2 directors representing employees and 1 scrutineer.

The independence rate within this council is quite high. 89%. The diversity is entered by the balance between women and men, but also different nationalities represented an expertise and experiences that are diverse and complementary. This allows your Board of Directors to comply with the regulations in force and with the best corporate governance practices. I also would like to say that the Board of Directors met times during the previous fiscal year and 7 executive meetings were convinced with an attendance rate of 100%.

Now if we switch to the mandates of directors that are expiring, there are actually 3 of them. Mrs. [indiscernible]. The Board of Directors would like you to vote on a certain number of proposals relating to its composition after this general meeting. Mr. Baudouin Prot expressed his will to run for a reference within the Board of Directors. After considering this request, he -- we decided to renew a mandate or proposed to renew this mandate for 4 years, which is resolution #5 to replace Madam [indiscernible] who do not wish to renew the terms of office. The Board of Directors after proceeding to rigorous selection together with the support of an external firm would like to propose to appoint Mr. [ Pascal Bucha ] and Madam [indiscernible] for a 4-year term of office. These nominations will be voted for on resolutions 6 and 7.

And the Board of Directors would also like to propose Resolution #8, That is the nomination of Mr. Martin Sion as independent administer trader or a director for a full year term. All the information pertaining to these applications are included in the notice of invitation. Martin expressed himself at the beginning of this meeting, and I believe that his speech will have convinced you of the relevance of his attendance to the Board of Directors. Mr. [indiscernible], also attending this shareholders' meeting, and I would like to invite them to take the floor so that they can introduce themselves. Pascal?

Thank you, sir. Hello, dear shareholders, I'm Pascal [indiscernible], up until recently, how was the CFO and IT directors for [ Telus ] with a lot of engineering businesses in aerospace, defense, cybersecurity and digital identity industries. Before this, I spent an important time of my career in the chemical industries, I'm a chemical engineer by training, and I graduated, I have 2 MBAs. And I started out as RND Engineer, before swing to a set number of industrial roles used to be production manager and then turn to the financial job roles. Before joining Telus, I used to be the Deputy CEO in charge of Finance and IT systems of [ Rhodia ] and [indiscernible] Group merged with [ Solvay Eversense ]. Thank you for your attention, and thank you for your support in advance. Thank you.

Thank you, Pascal. I will now hand over to Anna. Thank you.

Ladies and gentlemen, dear shareholders, thank you for having me and give me the chance to introduce myself on Spanish. I'm [indiscernible], I stated in Barcelona in the Polytechnic engineering school. My career has moved from one industry to the other, even though 20 years -- I spent 20 years of my professional life in the runway industry is using -- taking different roles, product management then services. And I've been in charge of major service business unit and [indiscernible] also was working for the general management in the railway industry still.

And then I used to be an international manager at Suez and working in the waste and water and infrastructure businesses. For the past 4 years, I've been working at [ Equant ] as DTA, it is working in the energy and service industries and is a global player in these fields. So all these experiences European international and diverse industries I would love to utilize in order to work at the Alstom Board directors operating in the railway industry, which is a great transition industry in order to evolve towards a decarbonated connected economy. Therefore, it is a great pleasure for me to be with you today. Thank you for your trust and for your attention.

Thank you, Anna. Ladies and gentlemen, dear shareholders, should you decide to approve these resolutions after this shareholders' meeting, the Board of Directors will be made of 12 directors and 1 scrutineer with an independence rate of 80%. And man-to-man ratio of 40% and 60% with 7 different nationalities represented.

Regarding now, the committees, there are 3 of them, after the shareholders' meeting, there will be a follow Mr. Baudouin Prot would be renewed as the President of the Nominations and Remuneration Committee Mr. Pascal Bucha would become the Chairman of the Audit and Risk Committee and Chair for the FX and Sustainability Committee. The number of members attending each committee would remain the same. Each committee being made of at least 2/3 of independent directors. All of this information pertaining to the direct Board of Directors and committees' activities during the past year and even more detailed information about all the topics that were studied last year are to be found on [indiscernible] 5 or the Universal registered documents 2025, 2026.

Thank you for your attention, and I will now ask Mr. Baudouin Prot, Chairman of the Nominations and Remuneration Committee to please join us on stage in order to present the resolutions you will have to vote in terms of compensation. Baudouin?

Thank you. Ladies and gentlemen, shareholders, as the President of the Alstom remuneration and nomination committee, please let me read the resolution for you to vote about the remuneration palaces for 2026, 2027 and the rest, remuneration for the past year, as a corporate officer for your company, list of this resolution being despite on state.

First of all, I would like to give you some information about the but conditions for Mr. [indiscernible]. A transactional agreement has been reached with the former CEO of your company on February 27, 2026, providing for the prevention and end of any litigation as he left his role of CEO. According to that agreement, a transactional amount will be paid out for [ EUR 1,325,764,000 ]. In counterpart of the commitment of Mr. Par Near to continue and cooperate with the company on prelitigation, all litigation procedures involving the company.

This agreement has led to 2 specific vote. Resolution #4, since there is a regulated convention and resolution #9, asking you to approve the remuneration policy '25, '26 that did not include such an agreement. On top of it, and I'll come back to this in a moment. You will also have to vote on that indemnity considering more general framework presented in resolution #15. Regarding the 2026, '27 remuneration policy for the new CEO, there are 2 resolutions pertaining to this matter. Resolution 10 about the remuneration policy of including all the components with the main change in increase of the fixed annual remuneration of [indiscernible]. And Resolution #11 about a sign-on bonus that is not recurring with the performance shares. The remuneration policy for the CEO includes other components, those conditions remain the same. Benefits in kind, a supplemental pension schemes and noncompetition payment. All the information will be available at Page 269 to 280 of the universal registration document 2025, 2026.

Regarding the remigration policy '26, '27 for the Chairman of the Board of Directors, you will have to vote on Resolution #12. This remains the same as compared with the past year. It is made of a fixed annual compensation and benefits in kind. All of this detail information, you can read on Page 280 of the Universal Registration Document '25, '26. The 2026, '27 remuneration policy for the directors will be voted for in Resolution 13. It remains the same. It is unchanged versus 2025, 2026 policy. This policy has been established on the basis of the overall envelope of EUR 1.3 million approved by the shareholders on July 1, 2014. And this envelope has remained the same Edison. With the fixed part, and a variable part. Those information you can find in details on Page 269 of the 2025, 2026 Universal registration document.

Now talking about the remuneration of the past year, resolutions 14 and 16. According to Resolution #14, you will have, first of all, to vote for or against the overall global remuneration report, providing information about the past fiscal year for all of the corporate officers. I will not give you any detail in terms of remuneration for the directors and the Chairman of the Board since there will be specific resolutions to vote in a moment. There are kinds of information on this report. First of all, it's about the remuneration of the Board of Directors that received amounts to of 836,000 and information pertaining to the ratio of remuneration compared with determine of the Board's remuneration and compared with the remuneration of the group's employees. All these information, you can find on Page 281 and 291 on the Universal Registration document, '25, '26.

Now switching to the remuneration for the past and Chairman of the Board. The '25-'26 remuneration of Mr. [ Henry Kuparlafaj ], who was the CEO up until March 31, 2026 will be voted on Resolution 15. On and on, Mr. [indiscernible] received a fixed remuneration of EUR 950,000 during the past year. And after this meeting, he will receive -- or is supposed to receive a variable remuneration, EUR 456,000 reaching its objective by 48%. On top of this variable remuneration, there would be a transactional amount of 1,325,964 as presented a moment ago. Regarding the noncompetition indemnity of [ EUR 2.808 ] million. This amount has already been paid for partly about EUR 117,000 since April 1, and this payment will continue up until March 31, 2028. All this information is detail on Page 292 of the Universal Registration Document '25, '26.

Finally, Resolution #16. You will have to vote on the remuneration paid to the Chairman of the Board of Directors, '25, '26. Mr. Philippe Petitcolin received a fixed annual compensation as Chairman of EUR 450,000. Here, again, information detailed on Page [ 290 ] of the Universal registered document 2025, '26. Thank you, ladies and gentlemen, dear shareholders, for your attention. Over to the President of our Chairman for the rest of this meeting.

Thank you, Baudouin. I will now ask Mr. Richard Bijou of PricewaterhouseCoopers to please make a presentation of the statutory auditors report.

Thank you, Mr. President, ladies and gentlemen, shareholders and the name of the statutory auditors, the covenants PricewaterCoopers and [indiscernible], have the honor to give you the results of our missions as for the financial years finished. So ending at 31st of March '26. And so I'm going to summarize the terms of our report, which were given to your attention by the company.

And so I'm going to start with our report on consolidated accounts of the court that we're prepared so according to the IFRS. This as adopted by the European Union. We certified the consolidated accounts of the group without any reservations or observations, we considered as key points of the additive following elements, elements that were considered to be the most substantial and were, therefore, given special attention from our part. And so the elements are concerned. So the -- so margin on long-term contracts, the evaluation of -- so litigation and investigation and we see here that our main mission is to obtain a reasonable assurance on sincerity, regularity and faithful image of accounts and to make sure that these accounts do not have any significant not only to do so. We intervene in all significant entities of the group, whether in France or abroad.

And so the verification of management report and other documents are given to the disposal of shareholders does not lead to any comments on our part. Now concerning our reports on annual accounts of your company, and so this time presented according to the French standards. So we considered so as key points of our audit, the assessment of the inventory so value for securities and Alstom Holding. We validated these accounts without any reservation with just 1 observation of technical nature. So concerning the application of the general rules. So for the first article of the general rules, which applies to all companies in this industry in France are concerning. So the accounts. We have a new convention, which was subjected to your counseling, which is, therefore, subjected to your approval today and is detailed in our special report on the Page 305 of the universal registration document. And we also have a convention already approved by assembly and the execution being pursued during this financial year.

Now concerning our work on information published in terms of sustainability, your company published for the second time the information for sustainability according to the provisions of the EU directive called CSRD, and we admitted a report to give us a limited assurance in terms of conformity of elements in this report that have to do with 3 dimensions of conformity. So according to ESRS standards of the processes of the company to determine impact risks opportunities conducted in relation to sustainability and conformity of published information in line with regulatory requirements of CSRD and taxonomy. And on the basis of the procedures that we implemented, we only -- we did not identify any errors or missions or significant consistencies concerning conformity of information with ERS and European regulations.

And finally, in terms of the extraordinary part of your general assembly, we emitted 5 reports concerning resolution projects objected to the vote this afternoon and having to do with capital changes in social capital, and we have no objection on the principal of the resolutions proposed by your President. And so Mr. Chairperson, ladies and gentlemen, shareholders, thank you for your attention.

Thank you, Mr. Baudouin. We are now going to open the floor for the debates, and I would like to call your attention to the fact that you have these young ladies in the room to collect your questions. So you can either ask out loud with the microphone that will be added to you or through this question form that was given to you when you entered the room.

Before we start, however, I'd like to call your attention to the fact that the company received questions in written form in relation to Article are 225-84 of the code of commerce on the part of its shareholders and from the CFDT trade union, so with the salesperson so Mr. [indiscernible] as well as Mr. [indiscernible], who is present today is from the Church of England Pensions Board in London. And thank you for the questions. And I'm now going to read the questions that were asked in writing to start with Mr. [ Ostertag ] in the name of the CFDT.

Two questions from [indiscernible]. First of all, first question. The risk of evolution of the industrial organization in its press release of April 26, Alstom put forward the level of cash flow that wasn't up to our expectations and the objective of an operational transformation plan and new ambitions midterm in the -- during this financial year. What causes have led to this cash flow situation and issues? Is this impossible to remedy what evolutions are to be predicted and where? And in this logic of social responsibility on the part of Alstom's how is Alstom going to involve all potentially impacted stakeholders in the building of this new industrial organization? And so you see this is a very substantial question.

Second question, of the CFDT as well. In terms of European context. Now to support its industry, both in terms of weight, richness, sovereignty. Europe is building a project for regulation, which is called the Industry Acceleration Act. And the rail industry is not mentioned in the concerned industry. So first point is Alstom defending, advocating the interest of being included in the IAA, so the Industry Acceleration Act. And second point for Alstom's industrial projects of rail building in Europe, what is the weight in added value of European local content? And third point, what is Alstom's ambition of either maintaining or increasing this weight in the future years and in what segment. And we are now going to let at answer these 2 questions from the CFDT trade union, and we'll go back to the second question from our British friend next.

Thank you, Philippe. So for the first question, now concerning the question of cash flow, and so this was recalled by Bernard, the level of debt of -- also today has improved, including during this financial year of '25, '26 so around EUR 400 million. We generated EUR 800 million in free cash flow during the last years. And so as I just recalled previously and also Bernard said it as well. So the performance that we had in '25, 26 led to the fact that we didn't generate this economic generation. And so we had to review the EBIT generation for next year by 1.5 points.

And so relatively speaking, the impact on EBIT, of course, has an impact on the free cash flow. And so our guidance is now a free cash flow that's positive, and this is what creates the situation. And so these are the consequences of our operational overcosts, so the projects that we already mentioned. And the question to know whether this situation can be remedied. Well, of course, it can be remedied, but we have to improve operational performance, execution so that we also go back to free cash flow generation that will therefore, improve our situation.

Now in terms of restructurations. Now -- so in '25, '26, we continued having optimization projects for our industrial footprint. There's a transformation projects underway in Germany that was already communicated on the [indiscernible] side. We also so engaged head count reductions, which are the consequence of the fact that we were not selected by the SNCF for a program of regional trains. And we are going to, in any case, continue, so improving our industrial footprint to see how and where we have to develop and where, on the other hand, we have to maybe reduce or optimize the site of our of our sites. It depends on the markets that we win, and there's already a number of optimization projects underway, for instance, in England, Australia and this is done without any slight closures. And generally speaking, what's important for science is to see their progress momentum the dynamics.

And this is something that I was very keen about when I went to site visits the progress room for maneuver in each site, and this is crucial to keep in mind, a comment on social responsibility of Alstom and the way that we bring all stakeholders on board. And so generally speaking, Alstom maintains constant social dialogue with representative bodies, including of employees in the different countries where we have operations. And I had the occasion to the 2nd of July. So taking part in the European Work Forum, the European Counsel and which allowed me to exchange with the different trade unions and organizations represented and we will also align with all collective agreements and legislations when necessary, of course.

And question number two, concerning the European local content. Now on the Industry Acceleration Act. So this Industry Acceleration Act, for those of you who do not know what it is, it's a proposal that was made on the part of the European Commission to recommend the use of aluminum steel and cement that be sustainable and European sourced and to lead to a certain number for it to become an obligation for a certain number of industries. And here, the concerns of rail for infrastructure because rail infrastructure is already going to be included. What's true, however, is that today, the European Commission is so making a reference to rolling stock in a future revision of the IAA, which means that rolling stock is not yet part of the IAA at this stage. And we consider that this 2-phased approach is consistent.

First of all, because rolling stock is not representative of big volumes in terms of steel and aluminum and in addition to which there is requirements in terms of quality and nuances in this respect that are essential to guarantee the life span of projects over more than 50, 40 years. And so for us, it's important that we could -- so ruling to be considered into the AI once there is this availability of sustainable steel and aluminum and that, that situation improved. Now in terms of the industrial the European content of our projects and if I try to have the minimal amount, there were always above 50%. I of European content in our projects in Europe and sometimes way above that level. Now how is this going to change over time, we found a balance today to have the right level of competitive competitivity by advantage of our different locations worldwide.

And so it's always advantageous logistically speaking, to be as close as possible, but we also have to also make the best of our costs, thanks to this worldwide footprint. And to go back to my first comment, we have to look at the competitiveness of our sites and the speed at which we can improve our economic performances for each site. And that comes into the equation as well.

So thank you, Martin. I'm now going to move on to the question that was asked by Mara lily from the Church of England Pensions Board in London, and since the question was asked in English, I am now going to let Emmanuel rephrase the question in French and potentially give it an answer as well. Emmanuel, go ahead.

Thank you, Mr. Chairman. Two questions were asked, which I'm first going to read to you, and then I'll try to give you an answer. The first question with following the removal of the project of the [indiscernible]. The question is what were the guarantees that were given to the Board of Directors that the underlying risks were managed and what safeguarding measures and controls are now in place to preclude any similar risks in the future.

The Alstom Group has been observing for always a strict political neutrality and as a worldwide mobility player, we supply transportation solutions that will be beneficial to all communities in the world, including [indiscernible] so we do not answer what's real. And so we consider the access to transportation is a key element for social and economic development. Our participation in any project relies on an ethics program strict conformity respectful of French legislation and any legislation applicable. And we salute the decision of 2025, which in this respect, you voted for of the United Nations Human Rights commissary so of the UN. So concerning settlements in Israel. And this decision -- so it's aligned with the position of the position that Alstom has since 2023 stating that Alstom does not exercise any activity. So in line with occupied Palestinian territories. Alstom has to test no activities of operations in line with occupied Palestinian territories and has no intention of doing.

So the second question was [indiscernible] transmitted was to know if more broadly how the Board of Directors supervises and make sure that human rise are integrated in all projects and partnerships that are conducted in different situations and/or countries at high risk including co companies or joint ventures and supply chains. And on what guarantees do we rely to ensure true efficiency of these processes. Now the Board of Directors as well as the ethics committee, make sure that integration of human rights are included in governance and in the risk assessment of the group, these risks are included in the mapping of [indiscernible] Alstom and are subjected to monitoring and regular monitoring with the ethics and Risk Committee. In terms of operations also applies due diligence measures that are strengthened and bolstered all along the project. So risks connected to human rights are assessed as of tender, thanks to analysis grid, which integrates specific criteria, in particular for high-risk countries that are affected by conflict before the implementation of mitigation measures when this is necessary.

We also apply rigorous controls to our suppliers, subcontractors in any third including regular assessment due diligence, specialized utilities and corrective actions as necessary in terms -- in case of a serious nonconformity we put an end to the commercial relations and the efficiency of these provisions verified by this continuous monitoring process, including assessment of suppliers third-party controls the people we work with and plans and remedying actions and alerts through the alert raising programs are conducted at best. Thank you for your question.

Thank you, Emmanuel. We have several questions, and I have 4 documents that were just handed over to me the first coming from Mr. Philippe Petitcolin, who says, so since this idea of buying Bombardier, there is the forecast plan considered to be adequate. And the second question from the same gentlemen.

So in terms of climate conditions, in particular, heat is the new-generation TGV going to be well adapted. Well, that's a very good question and very topical. So I'll take the first question. Now Bombardier trajectory is not the one that we considered, let's say. So the trajectory for projects coming from Bombardier was not what was expected in 2021. That's a fact. And now in terms of the quality of financial forecast in '23, this has been improving. Now what I'd like to say is that -- so we talked about how crucial our order intake is and how crucial it is to have it be balanced. And the fact that we have -- so high activities of service at Alstom is essential for the group, in my opinion, and this was brought to the group by Bombardier.

And so I would say that Bombardier, we're not looking at what was going on in the past a few years ago, but the fact that we have this order intake now, which takes advantage of recurring activities and higher margins with the services is an advantage for the group. And in addition to which, when you look at the situation of rail at the time, consolidation was a good thing in my opinion.

Thank you, Martin. I now have a question from Mrs. [indiscernible]. Oh, apologies. I didn't talk about heat and trains, heat waves and trains because quite a few people are interested in this matter these days. So TJVM was designed with -- so nominal, so running temperatures of -- so 45 degrees, which is higher than what was taken into account with previous TGVs, which was around degrees and it can run at temperatures that are even beyond 45 degrees.

And so yes, indeed, the [indiscernible] our Avelia Horizon range and all of it's so connected carriages and appliances are adapted to these high temperatures. And it is the application that is going to be -- so allowing us to adapt to AC systems to customers' requests. And it's been years that we've had the TGV lines, for instance, in Morocco. -- at these high temperatures. And keep in mind, this is not the question. But do keep in mind that if TGVs are not running today could also be for other reasons, for instance, so the high voltage lines and the whole infrastructure weather. So electrical, in particular, which is affected with the high temperatures.

Thank you, Martin. I think you're going to like this question, Mr. Mrs. [indiscernible], if possible, a club of shareholders visiting the site of Santa our offering drinks or sweet buffet for shareholders. That question is for me, I believe, to answer.

I will answer this one. Yes, I am in favor of creating a club of shareholders. I do believe this is a good idea. We'll think about it, and we'll come back to you hopefully before next year. but the very principle of shareholders of our company in this difficult time, as you heard it, we're not in a very favorable situation. If shareholders could actually see, understand discuss with the teams about what Alstom actually is, the actual asset value is to me, extremely positive.

So I'm backing your request, and we will favorably answer your question. It will take some time, of course, because that's -- we have things in this company. But I believe that before the end of the year, we will be able to set up a club of shareholders. You will, therefore, meet and have a chance to discuss what this half, what the teams discover the products as well, this company is able to manufacture at the drinks and food, of course, I agree, it's not a problem. Next year, you will have access to drink and sweet buffet. So sweet snacks only.

Now seriously, a question from Mr. [ Bernard Nigel ]. What about the future for the joint venture? And why so much delay in TGV and deliveries? Well, about the joint venture. The joint venture has played a major role in the high speed train innovation for us. On one side, you have the TV and then you also had the joint venture that led to the project with [ Italo ], the train operated in Italy. It's really real pride for our teams to see how successful Italo is, which is a success shared with Alstom. The architecture is quite different from our own TV since is an architecture that is articulated. So the technology embedded has helped Alstom develop know-how and therefore, to address the overall market. So it's definitely part of our technology portfolio so that we can address the high-speed train market.

Regarding the delays for the high-speed train deliveries. I will not get into the details because I haven't experienced it directly, but what I can see is that with the TGV joint and [indiscernible], we have embarked a lot of technology indeed, and it is a project that hasn't seen last 30 years, it's not just incremental train. It's a brand-new train. And it also is a brand-new generation of designers, we are working with and has it ramping up. That's -- it's unusual to come up with such a train that will be a major asset for Alstom. Such a train with the state-of-the-art technologies and the best level global teams is unprecedented. And this is what I would like to insist on.

And I noticed that when we are rodent article with SNCF about the commissioning of this train in September. The title, the journalist decided to keep was in a few months from now, we will not be talking about delays and there was quoting someone working at SNCF. How many trains are being tested currently? Well, currently, we are putting trends in conformity with the homologation process that was launched on May 22. There are some retrofit operations and some trains are in the pre-commercial phase that is they are operated by SNCF in order to be able to train some drivers. And we want to have 6 trains or 3 multiple units, rather, that will be available in September and 13 trains in total at the end of the year. And then we will reach our full potential in 2027 in terms of manufacturing. And regarding all the customers that we landed with Avelia, we launched an additional assembly line this year.

One question for Mr. [indiscernible]. Sorry if I'm misreading your name, is pronouncing the name. It is a handwritten note. Question for our CFO. What about the financial cost which is EUR 165 million in 2025 for a debt of EUR 400 million. That is to say 40% of annual interest rates, can you explain why such a high cost, considering the limited 6% industrial margin. Of course, it is a very meaningful question that requires further explanations from me, but it would be quite difficult to reconcile the financial results with a net 2 reasons actually.

First of all, the debt is net of cash, whereas the gross margin we're paying interest on is EUR 2.650 billion. You saw that in the graph. You saw the deadlines. So at the moment, we need to pay the money back. And when you add the 2, the growth debt is EUR 2.640 billion. So we're not being interested on EUR 400 million, but on EUR 2.6 billion. Reason number two is that the EUR 160 million do not represent the interest that we're paying out, but it rather reflects the financial result, which is in aggregate, including the pensions cost evolution, but also the current effect also the cost of the debt, I mean, it includes many different things.

So to answer your question more specifically, the cost of our debt burden is very limited. The reason to this is that we contracted this debt when interest rates were close to 0. So the cost of net is not 40%, but between 0% and 0.5%. And that is one of the problems we have to cope with the interest rates are now going back up. And the new debt we are taking the loans at a much higher rate, which is one of the financial challenge for the future.

Thank you, Bernard. Now perhaps we could turn on the lights in this room. We need some more light, please. So let's start the questions here. I have a question about the problems in execution during the past fiscal year. According to counsel, March 31, 2026, the adjusted operating margin was 6.1% instead of 7%. That was announced repeatedly at the beginning of the year. This operating margin has been suffered by execution problems in '25, '26 that triggered late deliveries and complaints from SNCF and RATP. How do you intend? And that is my question, how do you intend to reestablish homogeneous and controlled deliveries for all of your product lines? How do you, hence, intend to restore credibility and trust of markets? And revalue the Alstom share value that has remained way too low for many years?

It's a very good question indeed. And I fully subscribe to that question actually and have therefore ask this question to our CEO. That's the heart of the matter. That's what you insisted on. This has been the problem for this company for many years. Thank you for that question, Martin. Well, there is no [indiscernible] recipe. If it -- I mean, if we involve a couple of decisions and a few staff changes, this would have been done a long time ago, but it's important to understand to comprehend the company's culture and to understand how to strike the balance between project management, businesses, sites, relationships with our customers since this is part of them -- of the way specificities.

When we talk about delayed, Alstom is not the only industrial players suffering from late deliveries. We have our own issues to cope with, but unfortunately, will work in an industry whose practices lead to delays. You're right, we have our own share to take and deal with, and so we do, but let's not forget that there are things to do in a more general way for the overall industry. And there was a meeting with 2 ministers that was held this very weak in order to try and work on the railway sector and somehow to try and improve our working ways with our customers. Now back to what Alstom has to do what I've seen so far, I believe that we had to work on design offices and in the factories in order to improve our lean management, but also our operational excellence practices. There are standards in the way to actually implement them and to create change culture are important elements that involve the size that produce trains and all the regions. I believe there are things to improve in operating modes.

So we are doing -- so with the Alstom leadership team. And regarding costs, we said that we are trying to optimize some sites, [indiscernible], U.K., Australia. There will be things to do here this here, too. And that is the reason why we wanted to take some time before announcing and kicking off a plan. Some programs have been kicked off already to give more empowerment to product managers and to somehow simplify some operating methods. We are currently working on decreasing our cost and boosting our procurement policies. So it wouldn't be realistic to tell you that the solutions will be implemented in a few months time. But we will be able to follow a rule that it will be much more performant than what we followed in the past.

Are there other questions in the room? Please. Aman Schneider. Going back to the industrial sites. You talked about Bruce and the SCB order that you did not get. Regarding Germany, I'm referring to legomative workshop, which was created 200 years ago with very good practices and many different public and private freight customers. These new committees we see everywhere, including in France. And we do not understand what the benefits will be attached to the selling of this unit. Could you please further elaborate and explain why you decided to sell this factory?

Well, we have been approached in order to enter discussions -- into discussions about the slide you referred to. Today, we have no specific project attached to this. But considering the current situation, if we were to find solutions for our employees, for our sites in order to improve our product lines competitiveness, it would be, of course, my responsibility to consider these.

To date, we haven't found a specific avenue to follow, but I'm always open to suggestions, and it wouldn't be reasonable to tell you that if we identify the solution to preserve jobs to improve our footprint and to improve the product competitiveness, which is what we need to conclude the successful project, it wouldn't make sense not to consider that project. But to date, there is no such thing. Any other question? And Bernard wants me to say, it's not about stopping the -- producing locomotives. It goes without saying. [indiscernible]?

Mr. [indiscernible]. I don't know if you can see me. I have a quick question. There was a change in management general management, I'm very surprised that in such big companies, we have to recruit outside. I believe that there were production issues and that these problems were reported on internally why these people who perhaps acted against their hierarchy by selling your warning message are not rewarded and are not promoted. I think it's a [indiscernible]. That was the first thing. [indiscernible] departure. He will cash in 1.3 million. This is Resolution #4, plus EUR 2.8 million of non-compensation costs paid out during the next 24 months to come, plus the lower use costs paid for by Alstom.

Could you remind us of these litigations? And one more thing about the rival of Mr. So Resolution 11, there's a [indiscernible] combos of EUR 1.1 billion. And looking at the annual report, it is justified considering its former ISPs compensation levels that remain confidential. That includes compensation and stock options. [indiscernible] is confidential, and we say nothing about it or we have provided clear indications about this amount. So that shareholders can actually understand what this EUR 1.2 million is about. That's why I would rather have -- I would rather see internal people, asked them people being promoted, especially since they reported on the past problems.

Well, I think there are many, many things attached to your question. I will try to give you an answer, but don't hesitate and if I do not answer everything. About internal or external recruitment. You know what? That's not how we thought how we considered the question. When we decided -- when the Board of Directors met and decided that it was time to make a change, we worked with the nomination and remuneration committee relied on the headhunter, if you like. You considered a certain number of applications, both internally and externally in and out and there were perhaps 30 potential candidates.

And there was a preselection that was operated. We shortlisted 10 candidates. And I will give you names, but there were internal candidates. And on these 10 applications, there was a selection. We shortlisted 5 candidates, the 5 candidates, the Remuneration and Nomination Committee supported [indiscernible] application as new CEO. But there was no exclusive selection process, focusing only on external candidates versus internal candidates, both internal and external candidates were considered. For what I understand in your question, perhaps there was a lack of acknowledgment and internal promotion. This is part of the questions that Martin is currently working on. I believe indeed that someone who spent a such a number of years working for a company who knows the company.

And you contributed to the company's results should be thanked and should benefit from career development opportunities, agreed on this. Internal promotion schemes are considered, but sometimes, we need to recruit outside because we believe the right talents are not identified internally when they are required. This is part of the manager's decision. Regarding the transactional agreement, I have nothing to say. This is something that is submitted to you today. It's your decision, you will decide. This is how things have been planned right from the start. A transactional agreement is subject to the submitted to the shareholders' meeting that will see whether they are supporting or not this transactional agreement. And the other elements you are referring to about the noncompetition agreement or the bonus of Mr. [indiscernible].

These are contractual elements included in the statuses of our company. So we only implement the rules of our companies, nothing more, nothing less. About the compensation package of Mr. [indiscernible]. Well, indeed, we supported the proposals that were made by the remuneration and appointments nomination committees, to cement all the remuneration proposals as presented to you by Mr. Bula Po. The basic salary of Martin compliance with what is adopted in France. And I cannot tell you what this remuneration could be if we were part of a European or global system, salaries in France are way below what they are in Europe, not to talk about America because that would definitely scare your way.

Now regarding the sign-on bonus, that you will have to vote on regarding Martin Sion arrival. It represents share of what Martin lost when he left his former job. Maybe you know or some of you know that wages and compensation of executive managers are at 3 part, there's a fixed compensation, short-term bonus with the objective of the years to each, and there is a longer-term bonus that is calculated over 3 years to try and going back to what you said, to the internal promotion schemes to try and retain the people we do not want to leave. That's what we call the long-term incentive. And so this long-term incentive, Martin was entitled to his former company. It is a private company, so we don't -- we do not have to know the specific amounts. But what I can tell you is that what we are proposing today in terms of sign-on bonus is just a part of what margin lost. It's just not 100%, but it's a part of what he lost.

And what we already decided altogether was not to pay out cash, but rather to give performance shares. So this bonus is subject to the performance of Martin and of the company in the 3 years ahead. So I believe that we are definitely in line with the market and with the international company's operating rules. Are there other questions?

So I'm an individual director, a shareholder. There we also generated about so EUR 1 million in profits, and we decided, so again, to not issue any dividends. And so postponing of EUR 6.4 billion, what is the advantage of keeping this in your accounts? Or is there a strategy for using this amount? Substantial amount. Second question, the hydrogen trains. There is quite a bit of noise around this, a bit of publicity. And so where do we stand today? Could you give us take stock of the situation?

Third point. The renewal of [indiscernible], we all know and recognizes qualities. But I would say that comes a time at an age where maybe you have to hand over. Thank you.

So you have 3 questions, actually. Okay. So the first, I'll leave to Bernard. Bernard Delpit, our Financial Officer.

Yes. Thank you for your question, dear gentlemen. Now unfortunately, there is unfortunately no massive sum, as was said in French is certainly not to the extent of EUR 6.7 billion, which is an accounting figure, which assesses reallocated reserves and to which a certain profit is reallocated, which is an accounting amount. So within French standards, financial accounting standards and which is not the representation of cash that could have been generated for the company.

But I do understand your frustration in terms of dividends. And so with the caveat of what the general assembly will approve. But the logic that was retained was first to want to reduce the level of debt of the company. And the net debt being EUR 400 million, which was reduced by about EUR 40 million this year. And so if a fraction of the EUR 100 million, not the EUR 100 million, but the EUR 300 million in net consolidated so profit. So back if we -- so did this profit sharing back, it would increase debt of the company. And so paying dividends, so -- and therefore, increasing the debt is not according to us, a good logic, but it's up to the shareholders' approval. And so I'm just going to highlight the logic. But if there was, however, EUR 6.7 billion of favorable cash flow, I'd be a lot more relaxed right now, which is not the case.

Well, that's unfortunate. So now, what about hydrogen fired trains?

So the news in the last few months is the acquisition that we made and this appear to us as being the only solution to have a control over this product that we absolutely need to uphold the commitments that we made vis-a-vis our customers. And so what I expect is thanks to the integration of these operations within Alstom. And thanks to the support that we can bring in this respect. And we have a number of technologies that we're working on. And so my expectation is for us to have a high-quality product, which allows us -- will allow us to have a competitive edge. And from there, will be implementing a strategy. And so for now, we're just in the consolidation phase of our products so that we can meet our commitments and then we can move forward from there.

So thank you. The question on Baudouin now. Baudouin has demonstrated his value and his expertise during his last 2 mandates as a director, and he conducted quite successfully and diligently the work in terms of the succession of the General Director. And this is the reason for which the Board of Directors also plans to renew his mandate as the Chairman of the Nominations and Remunerations Committee. At [indiscernible] general fashion, the Board of Directors considers that the age of a director does not stop him or her from conducting his missions successfully. The average age within our Board is 62. If you look at the SBF 120, it's a little over 60. And so we are within the industry average. And we were talking about Baudouin. But in the first row, you have a director who is 33. And so is he too young? So it's a whole -- a comprehensive whole Board of Directors and a set of shareholders for that matter is a whole set of skills, experience, expertise and a bit of common sense as well, if you have that amount of common sense that you need to be sure that you can so analyze and criticized management win is needed and do the work that you and trust us with you as shareholders and we as directors, I think that we do our work well.

Is there another question? Microphone #3.

[ Michel Cura ], individual shareholder. I'm more specifically interested in the level of debt. I've been -- so I am a shareholder of different listed companies who -- which within their debt either have a bond maturity plans or bonds that can be paid back in shares, and these are programs that are not very well explained usually. And not very well measured by shareholders and that could disrupt the share prices quite a bit.

And so I'd like to know if in your debt, you have these types of elements that are actually connected to issued bonds and/or the payment of bonds in the form of shares. And if this is the case for the future, I would finish with a piece of advice, please give very precise and clear information so that shareholders not end up multiplying by a certain number of a certain percentage, the impact of this type of debt product or vehicle.

I'm not going to take that one. Okay. So dear sir, in our debt, we do not have so convertible bonds as they're called. We don't have this type of thing. And so we do have more classic types of debt that are going to be paid back in cash.

And since 2024, we've had a hybrid debt as it's called, which is also something that needs to be paid back cash, but for which we also have the possibility to postpone the maturity. And so it's hybrid in the sense that it looks like that, but it could also look like capital in the sense that it could be permanent at. And the cost of the study is connected to the fact that interest represent -- illustrate the possibility of transforming a so dated instrument into a perpetual instrument. But we don't have this type of vehicle where -- so at the discretion of the company could lead to a share issuing. So when we do share issuing, we ask it to a general assembly in this afternoon, we are going to have a date on the possibility of conducting capital increases, but certainly not as of today, any debt that would lead to share issuance in a discrete fashion, if that's your question.

Is there another question? Apparently not. I don't think I see anybody else. Is there one more? Okay. Well, this will be the last one then.

I'm also an individual shareholder. I was wondering about the quality of the delivered carriages and lines. I use the RER and NG RERs, in particular. And so I see that the seeds are already damaged and there numbers are degradation. And I'm not -- I'm wondering if we are taking the sustainability of the quality of the carriages into consideration. And because they are degraded quite quickly. And so wondering about this.

Okay. So the question is for me, probably. And so this is not a comment that I've heard very often. Actually, I've heard quite the opposite. The great satisfaction of our customers, including the rate and SNCF train lines in terms of the quality of the products that we deliver. And there's a reason for this is that when we talk about the trains that we make in France for the RTP and essentially, if there's work that's done in common jointly specifications that are extremely precise from our customers. And sometimes, our teams complain about this, but there is this experience of the RTP and SNCF in that matter for trains to last as long as possible and the total cost of ownership as it's called in English for it to be as optimized as possible.

And so of course, we take advantage of their experience to choose the raw materials, fabrics, et cetera. So I don't know the specific of the IRR that you mentioned, but all the feedback that I'm getting is going the other way, usually. And so expanding the scope when you have serial trains produced so -- in CRE, the feedback that I am getting from our customers is also very positive in terms of what we deliver. And so I will look into the one train that you mentioned more specifically, if I find any information. But the 3 months that I spent here, I received this message that we do make very high-quality and long-standing trains and up our customer satisfaction.

Thank you, Martin. I suggest we now move on to the presentation and voting on the resolutions, and I would like to ask the Secretary of the select committee to conduct the vote. Emmanuelle, go ahead.

Thank you, Mr. Chairman. We are now going to present the electronic voting procedure. Ladies and gentlemen, shareholders, the box that was given to you after you signed the register is strictly personal. The number of votes that you have and/or that you represent is downloaded in the screen and is seen -- so in the box and seen on the screen, you just need to use the green, yellow and red keys.

Green is in favor. Yellow is abstention and Red is against. After the reading of each resolution, you then have to vote immediately and the vote will be considered open at that time. You will be seeing on your screen a rectangle that gives you the countdown of seconds that you have for voting. When the countdown has been completed, the vote will be declared closed, and you can then not vote. The posting of results will be displayed on the screen a few seconds after the closing of each vote. One line clarification. Please make sure that you turn off your cell phones during the whole duration of the vote and make sure that you give the voting boxes back when you exit the room.

As indicated at the beginning of the session, the quorum is 20% for ordinary resolutions and 25% for extraordinary resolutions and the attendance sheet demonstrates that shareholders represented or voting remotely have 398 million actions. So representing [ 71.64% ] of shares carrying voting rights. And so we've reached the quorum, resolutions, we'll have to be so adopted by a majority of the votes held by shareholders present or represented or voting remotely. So for the ordinary part of the meeting, and by the 2/3 majority for the extraordinary part and I suggest to give you the title of the resolution summarizing the resolution If, of course, no one requests that it be read in full, and I see that there are no objections. I therefore, I'm going to present the resolutions and invite you to vote for each one in turn. Once I declare the vote is open.

First resolution, ordinary resolution, approval of the annual accounts financial year ending on 31st of March. The resolutions have been adopted resolution, ordinary solution approval of the consolidated accounts for the financial year ending 31 of March '26. Vote is open.

[Voting]

Vote closed, resolution adopted. Third ordinary resolution, appropriation of the results for the financial year ending 31st of March '26. Vote is open.

[Voting]

Vote closed. Resolution adopted. Fourth, ordinary resolution approval of a regulated agreement. Vote is open.

[Voting]

Vote closed. Resolution adopted. Fifth resolution, ordinary resolution, renewal of the term of office of Mr. Baudouin Prot as a Director. Vote is open.

[Voting]

Vote closed. Resolution approved. Ordinary Resolution #6, appointment of Mr. [ Pascal Bucha ] as a Director. Vote is open.

[Voting]

Vote closed. Resolution adopted. Seventh resolution, ordinary resolution, appointment of Mrs. [indiscernible] as a Director. Vote open.

[Voting]

Vote closed. Resolution adopted. Eight resolution, ordinary resolution as well, appointed Mr. [indiscernible] as a Director. Vote open.

[Voting]

Vote is closed. Resolution adopted a ninth resolution, ordinary resolution, approval of the change of the remuneration policy for '25, '26 for the Chief Executive Officer. Vote open.

[Voting]

Vote closed. Resolution rejected. Tenth ordinary resolution approval of the '26, '27 remuneration policy for the Chief Executive Officer, excluding sign-on bonus. Vote open.

[Voting]

Vote closed. Resolution adopted. 11th resolution, ordinary resolution approval of the sign-on bonus as part of the '26, '27 remuneration policy the Chief Executive Officer. Vote open.

[Voting]

Vote closed. Resolution adopted. 12th resolution, ordinary solution approval of '26, '27 remuneration policy the Chairman of the Board of Directors. Vote open.

[Voting]

Vote closed. Resolution adopted. Ordinary Resolution #13 approval of the '26, '27 remuneration policy for Directors. Please vote.

[Voting]

Vote closed. Resolution adopted. Ordinary Resolution 14, approval of the information specified in Article [indiscernible] out of the French commercial code report on remuneration. Please vote.

[Voting]

Vote closed. Resolution adopted. On Resolution 15, approval of the fixed, variable and exceptional components of the total remuneration and benefits of all kinds played during the last fiscal year or allocated for that fiscal year to Mr. [ Henry Puppa Lafarge ] in his capacity as CEO, please vote.

[Voting]

Vote closed. Resolution approved. Ordinary Resolution 16 approved the fixed variable and exceptional components of the total remuneration and benefits of all kinds, paid during the last fiscal year or allocated for that fiscal year to Mr. Philippe Petitcolin as Chairman of the Board of Directors. Please vote.

[Voting]

Vote closed. Resolution adopted. Ordinary Resolution 17, authorization to be granted to the Board of Directors to trade in the company's shares. Please vote.

[Voting]

Vote closed. Resolution adopted. Extraordinary Resolution of the 18. Authorization to be granted to the Board of Directors to reduce share capital by canceling treasury shares. Please vote.

[Voting]

Vote closed. Resolution adopted. Extraordinary Resolution 19, delegation of authorities authority to be given to the Board of Directors to decide to increase the share capital gap by capitalization of premiums, reserves, profits or any evidence. Please vote.

[Voting]

Vote is closed. Adopted Resolution #20, ordinary resolution delegation of authority to be given to the Board of Directors to decide to increase the share capital. The cabin of or of any company by issuing shares and/or securities within made future access release adopted extraordinary resolution 21, the obligation of authority to be given to the Board of Directors to decide to increase the share capital of the company or any other company by issuing shares and/or securities giving immediate or future access to the share capital without preferential public [indiscernible] offering. Please vote.

[Voting]

Resolution adopted. Extraordinary Resolution 22, delegation of authority to be given to the Board of Directors to decide to increase the share capital of the company by issuing shares or security giving or future access to the share capital without preferential subscription rights. According to Article [indiscernible]. Please vote.

[Voting]

Vote is closed. Adopted Extraordinary Resolution 23, delegation of authority to be given to the Board of Directors to decide to increase the company's share capital by issuing shares and/or securities giving immediate or future access to share capital without preferential rights reserved for members of savings plans. Please vote.

[Voting]

Vote closed. Resolution adopted. Extraordinary resolution 24, delegation of authority to be given to the Board. [indiscernible] to decide to increase the company's share capital by issuing shares and/or securities, giving immediate or future access to the share capital with preferential right. Please vote.

[Voting]

Vote closed. Adopted. Extraordinary Resolution 25, delegation of authority to decide to increase the company's share capital by issuing shares and/or securities given the immediate future access [indiscernible].

[Voting]

Vote is closed. Adopted. Extraordinary Resolution 26, delegation of authority to increase the Board of securities to be issued in the amount of capital increase. Please vote.

[Voting]

Vote is closed. Resolution adopted. So Resolution 27, right to issue shares and/or securities giving immediate or future access to shares to be issued by the company for contribution to [indiscernible] kind. Please vote.

[Voting]

Vote is closed. Adopted. Extraordinary Resolution 28, delegation of authority to issue shares in the company following the issue by subsidiaries of the company and securities given access to the company's share capital without preparation subscription right. Please vote.

[Voting]

Vote is closed, adopted extraordinary Resolution 29 authorization to be given to the Board of Directors to make free grant of existing shares or shares to be issued to employees and corporate offices. Please vote.

[Voting]

Vote closed. Approved. Extraordinary resolution 30, amendment to the Articles of Association staggering of directed terms of office. Please vote.

[Voting]

Vote close. Resolution adopted. Last and 31st Ordinary Resolution, [indiscernible] to carry out legal formalities. Please vote.

[Voting]

The vote is closed. Resolution adopted. Thank you very much.

Thank you, Emmanuel. I would like to remind you that houses are here to help you and collect the voting devices that can only be used here anyway, so they will be only used for electronic vote.

Before the session is closed, I would like to thank you indeed and again, for your attendance and renewed trust. Thank you so much.

[Statements in English on this transcript were spoken by an interpreter present on the live call.]

Welcome to the Alstom 2025-2026 Full Year Results Conference Call. [Operator Instructions] Now I will hand the conference over to Martin Sion, CEO. Sir, please go ahead.

Good morning. Good morning, everyone, and thank you for joining us to discuss Alstom results for the fiscal year '25-'26. It is fair to say that I joined the company at a critical time. The past year has demonstrated both our strength and the areas where we must raise the level of performance.

On the one hand, the order backlog is at a record high. We've got a solid base to build on. Progress has been made in the last few years on several aspects. On the other hand, the execution challenges we have faced on some Rolling Stock projects are highlighting areas of project execution that require improvement. This improvement will ensure that we convert our backlog into sustainable profit and cash generation.

The shortfall in car production in the fourth quarter was not a one-off event, but instead highlights a lack of consistency in project execution within the Rolling Stock product line that led to guidance being revised. After only 6 weeks in the role, it would be presumptuous for me to claim that I have the answers to improve operational performance and financial trajectory of such a large and complex business.

Today, therefore, I will begin by highlighting key takeaways from the past fiscal year before showing my assessment of the current context and outlining my priorities for the group. Bernard will then talk and walk you through the financial performance for the year, and I will conclude with the outlook of the '26-'27 fiscal year.

So starting with some highlights for the year. Last fiscal year was a record high for order intake with nearly EUR 28 billion for new orders. This reflects the commercial success of several new platforms, including Avelia Horizon for very high-speed trains and Coradia Max for double-deck regional train solutions.

In addition, Alstom achieved a record level of orders in Signalling, confirming its position as one of the leading players in digital rail solutions. Group sales grew organically by 7.2% in the last fiscal year. All product line contributed to growth except for Systems. Adjusted EBIT margin was below expectation and below last year's level. This was mainly driven by underperformance in Rolling Stock with a mix of projects in industrialization and homologation as well as some projects in late-stage execution. I will come back to this in more details in the following slides.

Free cash flow reached EUR 336 million, in line with this guidance. So this slide illustrates the commercial success of our Rolling Stock platforms with a particular focus on Avelia Horizon. The first order of Avelia Horizon was signed with SNCF 8 years ago. Since then, we have continued to secure additional orders based on the same platform with different customers.

Each new order relies on a proven core design. This brings clear benefits to both Alstom and our clients. It limits development risk and cost, makes better use of an established supplier base and shortens the time between order intake and entry into commercial service. This ability to reuse and scale platforms across customers and geographies is a clear strength for Alstom.

It shows that we can industrial platforms while still adapting them to specific customer needs. It also strengthens our credibility with customers who are looking for reliable solutions, predictable deliveries and faster time to market once homologation has been reached.

Going forward, this platform-based approach will remain the foundation of how we build and manage Rolling Stock backlog with discipline and a strong focus on execution and risk control. Moving to a selection of key operational milestones delivered during the fiscal year. In the U.S., NextGen Acela entered commercial service on the Northeast corridor for Amtrak with trains built in the U.S. for the U.S. market.

As of this month, there are over 10 trains running for commercial service. In India, Metros entered service in Bhopal and then Delhi line extensions, incorporating Alstom CBTC Signalling technology. In France, MF19 entered service on Metro Line 10 in Paris with further deployment planned across 8 lines through to 2033. And in Australia, we delivered the country's first brownfield CBTC installation with the opening of Melbourne's Metro Tunnel.

Turning now to this section, which explains -- and this slide, we explain how I look at the current situation of the group. Alstom is an industrial project business. In this type of business, execution quality and financial performance depend, first and foremost, on the backlog, its size, its balance and its margin profile.

From this perspective, clear progress has been made over the past few years. The backlog has increased by more than EUR 20 billion over 5 years. It is also better balanced across Rolling Stock, Services, Signalling and Systems. At the same time, the gross margin embedded in the backlog has improved by around 200 basis points. Several factors explain this progress.

First, rail market fundamentals are strong with around EUR 210 billion of identified opportunities globally over the next 3 years. This provides visibility, but also requires discipline in how we select projects. Second, the combination of Rolling Stock and Services strengthened visibility on life cycle economics. Over the past 2 years, around half of the Rolling Stock volumes secured also included maintenance contracts. Third, Alstom has built a strong position in digital rail solutions, supporting both stand-alone Signalling growth and integrated turnkey projects.

Overall, this gives a solid base to build upon and gives me confidence that the business can be set back on course. In an industrial project business like Alstom, balance sheet strength and cost disciplines are essential. Progress has been made on this front over the last 3 years. The deleveraging plan launched in 2024 strengthened the balance sheet and fixed costs have declined as a percentage of sales.

On the environmental side, Scope 3 emission linked to passenger transport products sold to customer has been reduced by around 20% over 3 years, reflecting both product evolution and customer demand for low-carbon mobility. Some progress has also been achieved operationally. Manufacturing quality has improved and the transformation plan has been launched in Germany, where the industrial footprint is being adjusted to improve efficiency and competitiveness. These improvements do not solve all issues, but they show that actions taken in recent years are starting to deliver results and create a stronger foundation.

This slide shows clearly that further progress is required on execution. Execution in the Rolling Stock business has not yet reached the level of consistency we expect. This has affected operational performance, reduced financial visibility and complicated forecasting, particularly in the fourth quarter. Car production was broadly stable over the first 9 months of the year, but fell short in Q4, resulting in full year production finishing nearly 100 cars below plan.

Most of the Q4 shortfall relates to several major Rolling Stock platforms where development and industrialization phase are happening at the same time and are taking longer than expected. As a result, homologation has been delayed and additional costs have been incurred. Resources remain engaged for longer, testing phases are extended and in some cases, retrofits are required. These factors are putting pressure on near-term margins and cash. They do not lead to deliveries being canceled, but rather delay them on the associated cash inflow.

In parallel, the group is finalizing a limited number of contracts where additional challenges were identified during project reviews in the fourth quarter. So this slide highlights the margin impact of execution inconsistency and industrial inefficiencies. In short, we should be operating at a gross margin level much closer to the 16% to 16.5% implied in the backlog. This gap is not structural and closing it is my #1 priority. Both before defining solution, it is clear to fully -- it is critical, sorry, to fully understand root causes.

First, planning execution is often impacted by insufficient end-to-end coordination between teams, suppliers, customers and regulatory authorities, leading to overlaps in development, industrialization, testing and homologation. Second, while our engineering capabilities are strong, we need to reach a level of quality and technology in order to have a maturity which come faster with a clear right first-time approach.

Finally, development and manufacturing are often organized through highly optimized but complex setups. When project management is not strong enough and business processes are not fully aligned across the group, this can lead to blurred accountability and execution inefficiency. This issue can be fixed, and the team and I are fully focused on delivering tangible operational improvements.

In the meantime, on this slide, you see that we are already launching a number of pragmatic short-term actions that can start making a difference quickly. First, we are reinforcing lean operating discipline with shorter management cycles, faster decision-making and earlier issue identification closer to the shop floor. Second, we are strengthening accountability across teams by clearly defining roles and decision rights. We are simplifying the way we work so teams can focus on execution rather than coordination.

Third, we are maintaining a lean cost base with resources prioritized towards critical projects and spending tightly linked to delivery needs. Finally, we are accelerating procurement actions through faster sourcing, increased standardization and better leverage of our order book in supplier negotiations. These actions contribute to core execution fundamentals.

We will be implementing these actions with determination, and I will keep you regularly informed on how we are progressing. In the meantime, we are preparing for deeper operational changes. And by deeper changes, I mean aligning offering, footprint and operational organization.

This concludes my preliminary remarks, and I will now hand over to Bernard for the financial review.

Good morning, everyone. As shown on Slide 15, Alstom recorded EUR 27.6 billion of orders in the fiscal year. The book-to-bill ratio was 1.4 at group level. As a result, the backlog reached EUR 104 billion compared with EUR 95 million at the end of March 2025. The increase was driven by strong order intake, partly offset by negative currency effects. All product lines contributed to growth of the backlog.

In Rolling Stock, the book-to-bill was also EUR 104 billion. It's important to underline that this performance was in part supported by several options exercised during the year. Those options represent 37% of the order intake of the Rolling Stock product line. This includes Avelia Horizon high-speed trains, RER NG commuter trains in Paris, New Jersey Transit trains in the U.S. and Coradia Max regional trains in Germany.

This reflects the strength of our platforms and the quality of the discussions we have with our clients rather than a purely opportunistic commercial decision to tender. And of course, orders booked as options have a different cash impact compared to new orders. Signalling had a record year for order intake.

We secured major contracts in Italy, Taiwan, Brazil and Singapore. In Services, order intake accelerated in the second half of the year, driven in particular by operations and maintenance contracts in the U.S. and Canada. While the share of backlog from Services decreased slightly to 38% at the end of March '26, we continue to ambition a share of above 40% in the short term.

Looking at regions, the Americas delivered their best year ever, including a large commuter train order in New York. Europe continues to stand as the largest region for Alstom, supported by strong momentum in France as well as flagship contracts in Portugal and in Poland.

Turning to sales on Slide 16. Sales reached EUR 19.2 billion for the year, up 7.2% on an organic basis. All production lines with the exception of Systems contributed to sales growth. Rolling Stock sales totaled EUR 10 billion, representing 9% organic growth. This reflects good momentum in France, particularly supported by the RER NG program, continued momentum in Asia Pacific with locomotives in India and project execution in Italy.

Service sales reached EUR 4.7 billion with 7% organic growth, supported by strong performance in Italy, the U.K., Australia and airport people movers in the U.S. Sales in Signalling came in at EUR 2.7 billion with 8% organic growth, driven by robust execution in France, Italy and Germany. Reported growth was more modest, 2%, mainly due to the deconsolidation of the North American conventional Signalling business.

Finally, Systems sales totaled EUR 1.8 billion, representing a 5% organic decline. Performance was impacted by the ramp down of the Mexico Tren Maya contract, which was not fully offset by ramp-ups in the Philippines, Taiwan and Brazil. Looking at inorganic items, foreign exchange was a 2.8 point headwind driven by euro appreciation against most currencies. Scope had a negative 0.6 point impact also. On a reported basis, sales, therefore, increased by 3.7% during the fiscal year.

Let me now turn to the P&L on Slide 17. Gross margin was EUR 2.5 billion for the fiscal year, representing 13.3% of sales. This is a decrease of 80 basis points compared with the previous fiscal year. Excluding scope and currency, the gross margin percentage decreased by 60 basis points. On the one hand, we continue to make progress on industrial efficiency, contributing 50 basis points to gross margin.

While total car production declined at group level, production increased in countries that previously had excess capacity. In particular, production in Germany almost doubled compared with the prior fiscal year. On the other hand, -- this improvement was more than offset by project execution challenges. These mainly relate to higher-than-expected cost at completion on several Rolling Stock projects.

This resulted in a negative impact of 110 basis points on gross margin. Despite currency, scope and gross margin headwinds, adjusted EBIT was broadly unchanged at EUR 1.2 billion compared with the prior fiscal year.

Turning to Slide 18 and the analysis of adjusted EBIT margin development for the fiscal year. Scope and currency had a negative 30 basis point impact. Adjusted for these items, adjusted EBIT margin was stable compared to the prior year.

For the reasons I just discussed, gross margin was a headwind on adjusted EBIT margin for 60 basis points. R&D expenses accounted for 3% of sales in the year, 20 basis points higher than in the prior fiscal year with stronger spend in H2 compared to H1 as per plan. Headwinds from gross margin and R&D were offset by continued tight control cost on SG&A contributing to 40 bps improvement as well as a strong performance of joint ventures contributing 40 bps.

I would stress that the later reflects strong performance for JVs overall, but also an exceptional contribution from one specific JV in China upon the successful completion of propulsion contracts. Together, adjusted EBIT margin was down 30 basis points to 6.1%.

Looking at net profit on Slide 19. Nonoperating expenses have reduced to EUR 155 million in the fiscal year. Nonoperating expenses mostly related to rightsizing initiatives of the footprint in Belgium, in France also and the German transformation plan and some legal costs. As a reminder, integration costs were nil in the fiscal year as Bombardier's integration program was included in the prior fiscal year.

Net financial expenses decreased to EUR 165 million from EUR 214 million last year, thanks to lower interest charges and benefit from currency hedging compared to the prior year. Effective tax rate was 35%, stable compared to the prior year, reflecting some depreciation of deferred tax assets in a limited number of countries with a structural tax rate remaining around 27%. Finally, adjusted net profit increased by 12% to EUR 559 million for the year.

Turning to free cash flow on Slide 20. Free cash flow came at EUR 336 million, in line with guidance. Let me highlight a few items. Adjusted EBITDA was EUR 1.5 billion, broadly unchanged compared to the level of the prior year. CapEx and Cap Dev together amounted to EUR 567 million, up EUR 85 million compared to the prior year, representing 3% of sales, in line with the medium-term view.

Financial and tax cash out together amounted to EUR 356 million, similar to the level recorded in the prior fiscal year. This resulted in funds from operations of EUR 507 million for the fiscal year, down compared to EUR 553 million in the prior fiscal year. Finally, working cap was a EUR 171 million headwind last year.

Turning to trade working cap on Slide 21. Trade working capital stood at 29 days of sales at the end of March compared with 34 1 year ago. The change in trade working capital resulted in an actual cash inflow for EUR 119 million over the year with a stronger contribution in the second half. Trade working cap has been more tightly managed in the context of greater contract working capital consumption. Payables and inventories days have converged, standing at 82 days and 81 days, respectively.

Let me now turn to contract working cap on Slide 22. Contract working cap moved from a favorable 89 days of sales 1 year ago to 81 days at the end of March and now stands at negative EUR 4.3 billion, less favorable than last year, where it was negative EUR 4.5 billion. Over the year, contract working cap represented a cash outflow of close to EUR 300 million.

Contract liabilities, net of contract assets decreased from a favorable 59 days 1 year ago to 55 days at the end of March. Solid down payments and the continued contribution from well-financed contracts supported contract working cap. This was offset by a higher proportion of projects in ramp-up compared with last year. During this phase, pre-series cars are being produced and key homologation milestones have not been reached.

Rolling Stock projects typically move from a contract liability position to a contract asset position, therefore, consuming working capital. Finally, provisions continued to decrease by EUR 177 million as expected, reflecting the ongoing execution of the legacy backlog.

Turning to Slide 23 on cash seasonality. In last fiscal year, seasonality was more pronounced than 2 years ago. But overall, it remained fairly consistent with the normal pattern of our business where -- that we have already underlined over the last 2 years. As a reminder, the first half of the fiscal year has fewer working days than the second half and therefore, lower production, fewer deliveries and lower cash inflows.

As a result, in any given year, we typically see a cash imbalance between the 2 halves, corresponding to an EUR 800 million to EUR 900 million drag on free cash flow in H1. This imbalance can then be mitigated or could be amplified by the timing of down payments as well as by trade working capital management.

In fiscal year '26-'27, cash consumption was EUR 740 million in the first half, followed by cash generation of EUR 1.1 billion in the second half. The phasing of down payments ended up relatively even throughout the year. In the first half, the slightly better-than-expected cash consumption was driven by strong receivables collection and the lower buildup of contract assets.

In the second half, cash generation improved in line with the usual seasonal pattern, although cash collection from milestone achievements was lower than usual. This was partly offset by effective trade working capital management.

Turning to fiscal year '26/'27. We expect seasonality to be more pronounced than last year for 3 reasons. First, trade working cap is expected to be a drag in H1 due to activity. Second, down payments are expected to be more weighted towards the second half.

And third, the phasing of milestone payments in Rolling Stock will also be even more H2 weighted than usual, partly reflecting the progress made on some contracts currently undergoing homologation and a number of commercial negotiations. As a result, we expect cash consumption of around EUR 1.5 billion in H1, followed by strong cash recovery in H2 to generate positive free cash flow for the year.

Slide 24 shows how net financial debt slightly decreased to EUR 404 million at the end of March '26 compared to EUR 434 million 1 year ago. In addition to free cash flow, leases, dividends to minorities, combined with the hybrid bond coupon amounted to around EUR 250 million total cash outflow during the fiscal year. The EUR 53 million of FX and others largely relate to the negative translation effect from the appreciation of the euro on cash balances held in non-euro-denominated currencies.

You will find in appendix of this presentation, the updated bridge computation from enterprise value to equity value, reflecting these evolution. Now the cash generation trajectory update is, of course, not the one we anticipated when we issued the EUR 1.5 billion cumulative free cash flow generation over the 3 years through to fiscal year '26/'27.

Having delivered around EUR 500 million in fiscal year '24/'25, EUR 336 million in the last fiscal year, the free cash flow guidance of positive for fiscal year '26/'27 issued last month mechanically implies a EUR 600 million to EUR 700 million shortfall compared to the plan. In simple terms, this can be explained by around EUR 100 million of currency headwinds, EUR 100 million of investments being put forward and around EUR 450 million of lower-than-expected margin resulting from additional costs linked to specific Rolling Stock projects, some nearing completion.

Last, turning to Slide 25. The group's commitment to investment-grade rating conservative financial policy are unchanged. We have open discussions with the credit agency that issued a position paper on April 21, with rating unchanged based on preliminary '25/'26 results and '26/'27 updated outlook that we confirm today. Looking at liquidity. Cash and cash equivalents stood at EUR 2.3 billion at the end of March, broadly unchanged compared with 1 year ago.

In addition, the group has access to a EUR 2.5 billion revolving credit facility and a EUR 2.5 billion commercial paper program, both of which were undrawn at the end of March. Taken together, this provides the group with strong liquidity to support working capital needs. Turning to debt maturity. A EUR 700 million bond will mature in October this year. We plan to refinance this maturity, balancing liquidity, cost and leverage ratio in line with our commitment to investment-grade rating. This concludes my comments on the financial performance.

I will now hand it back to Martin for the outlook.

Thank you, Bernard. As discussed last month, when we released preliminary figures, we adjusted our objectives for fiscal year '26/'27 following the execution challenges we are facing. In the context of strong rail market, we guide for a book-to-bill ratio above 1 at group level, but below the level reached last year '25/'26. We expect organic sales growth of around 5%, driven by improved execution in Rolling Stock and continued growth in Services.

Adjusted EBIT margin is expected to recover to around 6.5%. This reflects a step-up in gross margin from the very low level seen in the second half of '25/'26, which was impacted by a limited number of projects. These projects are now under tighter monitoring, particularly during their ramp-up phase. We also guide for positive free cash flow. EBITDA is expected to improve year-on-year, while capital expenditure will increase to support new platforms and Services growth.

We expect working capital headwinds mainly in the first half. Improving project-related working capital is a clear priority, and I will engage directly with key customers. This is not the trajectory we set at the beginning of 2024. While issues became visible in the last quarter, the underlying gaps in operational excellence have existed for some time. Our current operational performance does not yet meet the standards expected from a world leader.

The integration of 2 companies with different cultures and operating model has not fully translated yet into a robust and consistent delivery model. There is no quick fix in this industry, but I believe that proven ways of working that I have learned and applied during my career can be used here. Over the coming months, I will review our strategy and commercial approaches to ensure that offering, operations and footprint are consistent and to make sure we are maximizing opportunities in Signalling and Services.

The outcome, together with our financial ambitions will be presented at the Capital Market Day in early 2027. What Alstom needs is not just another cost saving plan. We must address execution issues at their root. Successful implementation of the operational plan presented at the CMD is critical to bolting Alstom back on track for profitability improvement towards 8% to 10% and cash generation in line with best-in-class peers across our segments. This concludes our presentation.

Thank you, and we can now open for Q&A.

[Operator Instructions] The next question comes from Akash Gupta from JPMorgan.

I got 2. My first one is for Martin. In your press release comments, you said that execution on some major Rolling Stock contracts continue to weigh on near-term margins and cash generation. I'm wondering if you can give us some indication of how many orders are we talking about here?

And how does these compare to your overall EUR 104 billion backlog. We have heard about these projects before. And also, if you can clarify, are they still the same versus what was talked before? Or has there been any addition to the list.

The second one I have is for Bernard, and that is the margin outside of Rolling Stock. We give a lot of attention to Rolling Stock, but maybe if you can talk about if we take Rolling Stock out and look at the margin for other businesses, how does last year compare to year before? And then when we look at margin in the current financial year '26, '27, what have you embedded in your guidance in -- which imply 40 basis points at group level?

Okay. Maybe I'll take the first one. So we don't communicate which are the projects which are facing the difficulties. But to give you some light on the situation, in the past, we have usually focus our attention on some difficult low-margin programs coming from the legacy Bombardier. And today, we have to recognize that we have also some difficulties on more recent programs, especially some of them are in the late phase of their development.

It is a part of the development where we are making the validation, the homologation and in parallel, the production ramp-up. And we have been late in some engineering projects, which created late homologation. And this late homologation triggered engineering changes, which pushed us to order new parts to supplier and disrupted the production and leading also to retrofit. So this is a kind of topic that we are facing.

And this is also a kind of problem that we have because we have a lot of new product lines -- a lot of new products in our different product lines. And this is a topic which will be solved when we will be in a serial mode because in serial mode, our products are good in terms of quality and in terms of cost. So it's really the end of development programs, which are facing the most difficulties.

Bernard, maybe you can take the second part of the question.

Yes. Akash, definitely Rolling Stock is the product line where we had those difficulties in '25, '26 and where we need to see some recovery in '26, '27. Well, that's our guidance. For the other Rolling Stock...

Product line.

The other -- sorry, product lines. SIC Signalling was doing very well, and we expect this performance in terms of percentage to be pretty stable next year. Service did also pretty well.

And we expect next year an increase in sales and an increase also in performance. We don't disclose margins by product lines. But let's consider that we can see stability in Signalling, improvement in service, looking at other than Rolling Stock product lines.

The next question comes from Gael de-Bray from Deutsche Bank.

Martin, I think you've talked a lot about restoring consistent execution. But do you think that the company also needs to rethink entirely the group's commercial strategy and perhaps become far more selective than before, especially around the Rolling Stock category?

And I guess the question is, from a balance sheet perspective, obviously, if you're becoming more selective, there is kind of a trade-off between the near-term pain on the cash flow side and the long-term gain. So how long do you think the group could afford being more selective with lower down payments impacting cash flows?

Thank you for the question. First, there is 2 aspects to the question. On selectivity, what I have observed is that there is a strong process which has been put in place in recent years in order to be -- to have golden rules and to be sure that we bid only on good bid. And I think that this is recognized by the increased margin in the backlog, but also by the fact that I believe that the level of risk which is embarked in this order book is better than in the past. Nevertheless, we have to progress in that. And it comes also to a topic of strategy. It is where do we want to be present.

Today, we have identified 13 priorities in terms of markets. What kind of offering do we want to do on these different markets. And this is a topic I will look at in the next months and which will be part of what we will present in the CMD because you're right, the market is very strong. So we have a lot of opportunities. And it's -- for us, it's important to focus on lower risk at the same time with a good gross margin, but the level of risk that we embark is key.

Today, what we are -- the guidance we are giving is a book-to-bill which is higher than 1. But when we say that we don't plan to have the same level of order intake than last year, it also shows that our ambition is really to be selective. And we are taking orders because it's necessary in a project company. I mean that's the blood of a company to have new projects. We should not be driven by down payments.

Yes. Maybe, Gael, I will do a follow-up on this one. Definitely, we do not take new orders for cash reasons. I mean, I do not see a single of the order intake in the Rolling Stock product lines that we have taken -- that we have been awarded in '25, '26 that is -- that has been done for only cash reasons. By the way, it's a decision of the client to order the contract. It's not us. And we have raised the bar in terms of cash curve.

And what we have seen in some, I would say, cash-in headwinds this year is coming from progress payments that are not in the timing that we expected, okay? And the down payments from new order has a limited share of total cash in into this year. So I would definitely decouple the question of liquidity and balance sheet management and the question of selectivity that has to do with the quality of the execution. That is another topic that we will address during the Capital Market Day.

The next question comes from Daniela Costa from Goldman Sachs.

I have 2 questions. The first one is kind of going back to the backlog and how quickly you can act on things in the backlog. I was wondering if you could help us understand at the how many -- what the percentage of products is at each phase? How much of your backlog is kind of in the early design phase, early ramp-up phase and the well-advanced stuff where it might be hard to act as too much has already happened that compromises maybe the gross margin going forward. It would be interesting to know that.

The second question just regarding sort of your points you made before on the balance sheet. I was wondering if you would also consider like you did some years ago, some inorganic measures to further strengthen the balance sheet before the refinancings and the other things you've mentioned.

Maybe I have to clarify what is my ambition in terms of operational excellence. I don't focus on solving a few projects in terms of improved delivery, better, right first time engineering, et cetera. What I believe that we have to do and that what we are starting to do is to put the system under tension in order to improve our operational efficiency across the board and to improve all projects, even the projects which are going well.

And so yes, the problem that we have had last year, which led to the change of guidance were a limited number of projects. But what needs to be done and what we are starting, it's to improve the performance on all projects and to improve our lean standard in all our shop floor and all our engineering office.

So I don't think that it should be a good way to see -- to measure the speed at which we will recover based on only a few projects. It's more the speed at which we will improve the performance in all shop floor, all design office. And as I said, it is a progressive improvement that we are expecting and we -- that we have put also in our guidance '26, '27. Bernard?

Yes. I will take the second one on balance sheet. The current rating position does not rely on inorganic actions. Current metrics are in line. Next year metrics are in line without inorganic actions, but selective measures could provide opportunistic upside, and that's part of the review of the new CEO, but it's not needed from a balance sheet and rating point of view.

The next question comes from Vlad Sergievskii from Barclays.

I'll ask a couple one by one. First one is on provisions, which appear to be supporting profitability in the second half. New risk on contract provisions were at the lowest level since 2021. Could you help us to reconcile such a low level of new provisions with actually very high order intake, steady revenue growth and several problem projects that you actually highlighted today?

Okay. I will take this one. I mean risk on contracts are -- I mean, the provisions are down from EUR 921 million to EUR 866 million. So it's a variation of EUR 55 million. So that's not a huge impact. And it's driven by the natural loss contract provision burn off that comes naturally with the completion of such contracts. So I see the trend in provisions on contracts totally consistent with the end of such legacy contracts.

Understood. I was talking about new provisions, right, which were at a lower level compared to the prior periods. If I can also ask on contract...

If I may do follow up on your comment. On new contracts, we don't take a provision because we do not take any onerous contracts. So we might revise the gross margin at completion, but not create provisions for losses.

Understood. If I can ask about contract assets. It's obviously another half year of increase. It has been steadily increasing for 2 years. Have you done the full review of the quality of contract assets? And are you comfortable that all the EUR 6.5 billion are genuine assets that will be invoiced to customers in due course? And would you be prepared to commit when do you think contract assets for Alstom will start going down?

What I did is an extensive review with all regions on their full business and regions at work contract by contract. But at my level, what I did so far is regions by regions. We did also the first management business review, and we will adapt the governance to be more focused on deliveries.

Today, I don't have the figure and maybe, Bernard, you can help me on that to see when will the contract asset decrease. This is not -- what we are looking at is how we can improve deliveries, how we can improve working cap project by project. not contract assets directly. But maybe, Bernard, you can help me on that.

Yes. Maybe a follow-up on this one. Definitely, yes, we plan to reduce contract assets and that's part of the plan. The timing is subject to some, I would say, actions. So I will not commit on anything like that today. But just to, again, to look at that, I mean, contract assets, yes, indeed have increased. Contract liabilities also have increased. As you know, we look at the net of that. And the net of that has just increased by EUR 85 million, EUR 85 million.

So when we work on a backlog of above EUR 100 billion, a variation of EUR 85 million is something, of course, that is significant on a yearly basis. When we look at the scale of what we are doing, I don't think it's that material. On top of that, what I wanted to say that the EUR 600 million increase in contract assets is EUR 400 million for Rolling Stock, but EUR 200 million for service.

And one part of that, that you may have missed is the impact of CPA, so inflation escalation of our prices that we recognize year-on-year. But in terms of cash, sometimes it comes at deliveries or at the end of the contract. So this inflation impact that has been quite significant in last year plays in a way, a role in the increase of contract assets and in the gap between margins and cash.

The next question comes from Delphine Brault from ODDO BHF.

I have 2. First, your Chinese JV contributed significantly to adjusted EBIT plus 40 bps. How sustainable is this contribution? You mentioned notably an exceptional contribution. So what should we expect for this year?

And second, if I remember correctly, 2 years ago, you stated that working capital should deteriorate by a cumulative EUR 1 billion over 3 years. Is this assumption still valid?

So maybe I can take the first one. The contribution of China's JV in '25, '26 was exceptional. And so what we have put in our guidance is a normalization of the contribution of Chinese JV to our P&L.

Yes. Just to be sure, Delphine, I mean, having a great contract execution of some of our JVs is good news. By the way, some deterioration in some contracts has the same nature of one-off as a good contribution in China from some JVs. So it's 2 different lines in terms of P&L. Maybe the governance is not the same, but the nature of it is totally consistent with what we see in the execution of other contracts in the gross margin.

Now back to your second question, the deviation that we have seen in the third year of the EUR 1.5 billion cumulative cash guidance is coming from margin deviation, FX and CapEx. So we could consider that part of the CapEx increase is part of the EUR 1 billion headwind that we explained 2 years ago. The rest is pretty new.

So I still see some headwinds coming from the change in the mix and to kind of normalization of the working cap. So I would say the story is the same.

The next question comes from Jonathan Mounsey from BNP Paribas.

Maybe a couple of accounting questions. Obviously, you report today on the same day as Siemens does. I'm just looking at Mobility today, they actually cut guidance on revenue. And as I understand it, the reason they did so was because U.S. tariffs have an impact on cost.

And obviously, they are recognizing revenue on IFRS 15, and that therefore has an implication. So the actual -- the revenue is missing and it will miss all year versus previous expectations. Is there potentially a similar effect to come for you too?

And just secondly, on interest costs, you will be refinancing that, I think, EUR 700 million in October. Obviously, the coupon is exceptionally low on the existing bond. I guess we can expect interest charge to rise over the final 6 months of the year and obviously, for the year to follow. Could you give any guidance on what the impact of all that is likely to be, please?

Jonathan, yes, by the way, we have the same IFRS rule as Siemens, just to be sure you get that. But for us, the U.S. tariff situation is pretty different. I mean 85% of what we do in the U.S. is Buy American compliant. So we do not have the same impact. And that's something that we explained for the last 12 months. We discussed with the clients, and there is a kind of reinvoicing of the impact with the clients.

So no major impact such as the one you mentioned before. By the way, the situation needs some clarification in terms of legal framework, in terms of tariffs and impacts on clients. So to make a long story short, we do not see at all the same impact on gross margin at completion and revenues as the one that you mentioned.

On financial costs, the answer is yes. The refinancing will have an impact. The interest on the bond that is maturing in October was almost nil. So by definition, when you look at the interest rate situation, it would go up. So we expect total financial expenses to increase next year compared with this year -- or I should say, this year compared to last year.

The next question comes from Andre Kukhnin from UBS.

Can I just start with thinking about the profit bridge for the fiscal year that you've just started, EUR 66 million, EUR 67 million. When we get there in a year's time, how do you expect it to look vis-a-vis the guidance for 40 basis points margin improvement? Is that from kind of project execution issues not reoccurring? Do you expect further operational improvement like you saw 50 basis points in 2026. Just want to understand how you see the mix of these likely conflicting drivers to play out in the next 12 months?

Andre, I will take this one. So to make it very simply, we see 50 bps negative coming from a combination of higher R&D and normalization of JV contribution and 100 bps improvement coming from gross margin increase, which is going to be, again, a combination of many things in many contracts, plus 10 bps coming from maybe FX, no more scope, but impact. So to make it very simply, 50 bps headwinds from higher R&D, lower JV contribution and in the region of 100 bps improvement in gross margin.

Maybe I can add something here. You could wonder why we are increasing R&D. The increase of R&D is a decision in order to speed up the maturity of technologies and platform below bid and tenders so that we derisk contracts. I believe that this is one of the good decisions in order to be more predictable in what we deliver in the gross margin of the projects.

That's really helpful. And obviously, this bridges year-on-year impact. And can you help us quantifying the kind of the overall burden on the margin now from the execution issues? Is that the 60 bps that you incurred in fiscal 2026? Or I guess, that added up over the last couple of years at least?

Yes, I can take this one. When you add up the -- all the impacts on the last years, yes, I mean, the total contribution of project execution was a negative in the 150 bps region as a total. Part of that was compensated by the improved industrial efficiency, but project execution by itself is weighing something in the 150 bps region as a total this year.

The next question comes from James Moore from Rothschild & Co Redburn.

I've got a short one on free cash margins and a longer one on engineering and perhaps we should go one at a time. Just on the free cash flow margin, Martin, you talked a bit about a longer-term ambition of being in line with the best peers, best-in-class peers.

I think your German friends have been rolling close to 10% free cash margins for a few years with the odd exception versus your 0 this year or 1% to 2% over 3 years. I understand there's no quick fixes. I just wonder how long do you think that would take? Is it a 5-year story or a 10-year story? That's the first question.

Okay. And this is -- I understand the question. I was expecting it. And this is typically what we plan to work on in the next months in order to have a comprehensive presentation at the Capital Market Day beginning of next year. I think it would be present. I have not been here for more than 2 months, I mean, 7 weeks exactly to tell you how long it will take. But it's clear that our ambition is to be at the benchmark of the market.

Very fair answer. And could you talk a bit about engineering, please? And sort of a freeze discipline and standardization. I mean from your own understanding, have you got to the idea yet as to what Alstom is doing in terms of percentage of value engineering?

How much is a design freeze today and whether you'd like to change that and whether you'll say no to bespoke customer specs even at the cost of orders and where you see the biggest productivity bottlenecks today on that? Is it design validation or more homologation or more supplier readiness or factory flow? Just to understand what you're seeing at this early glance on the problems.

Okay. I mean you have identified a lot of the root causes. First, it starts by the bidding and the selectivity of the process. And it's true that in the golden rules that have been set in Alstom in order to decide if we bid or not bid, the proximity of what the customer is expecting compared to an existing platform is something which is absolutely -- which is important.

The way we measure that, the way we identify what are the gaps between what we already do and what the customer needs has to be very strong. In the past, sometimes we underestimated the number of modifications that we had to do. And then it has a domino effect because it creates extended development, desynchronization between developments on the same platform. And this is one of the pillar of what we need to do to improve.

And that's why left shifting some platform maturity before bid is absolutely necessary. Then the good thing that I see in our Rolling Stock product line is that we have a lot of new products which have been decided and which are being developed today in high-speed train, regional, et cetera.

And so today, we have -- in the last 5 years, we have faced a lot of engineering activities, a lot of new people have joined us, which is a good asset for the future. But it's true that skills have been building progressively. And I think that we have to be very careful on the staffing and the way our teams are managed for that. And the third topic I'd like to underline, and please remember, I'm new in this job, but what I see is that we have some complexity in the way we work between regions because I believe that the fact that Alstom is global is a very good thing.

We discussed about tariffs before. But even when we speak about engineering because we are making a lot of development worldwide, which allow our team to gain experience. Now we have to share this experience between regions, between countries. And what we are engaging today is to have a tiger team, which will help some critical projects in some regions, leveraging on skills which exist in other regions in order to make sure that we can leverage on all the skills existing in the company. And today, I have to see that sometimes between engineering teams in different parts of the world, we have not been always with harmonized processes and seamless activity. So sorry if it was a little bit not very structured, but that's the way I see the situation in engineering.

[Operator Instructions] The next question comes from Martin Wilkie from Citi.

It's Martin from Citi. I just wanted to come back to the gross margins. And obviously, you've given for some time now the gross margin in the backlog at 18%, it's similar to where you were 6 months ago. And I know there's a lot of moving parts in that because there are longer-dated contracts in service and Signalling and things like that. But I was surprised that, that number hadn't gone down slightly given some of the Rolling Stock contracts that you have at the moment that are going through a lower gross margin.

Can you just give some of your thoughts as to sort of why that remains unchanged and what you're effectively embedding in terms of the assumed remaining gross margins in the backlog for some of these problematic Rolling Stock contracts?

Martin, this is Bernard. I will take it. So yes, the gross margin is pretty stable. It's up 20 bps year-on-year. So a lot of moving parts. On the plus side, positive side, I think the quality of order. I will not quantify it, but it's true that the quality of the order intake is still very good with kind of strategic binding approach, focusing on the good opportunities, maybe more pricing discipline across the industry as well. So that was a positive.

On the negative side, the mix this year was not as good as last year because you've seen a very strong book-to-bill on the Rolling Stock side. So that was more a kind of headwind. Same thing for the negative revisions of margin at completion, you've seen a quite strong impact in the gross margin that we have traded. That was discussed before, some loss at completion and the reduction in provision as well. So the maximum impact came from the revision -- the maximum negative impact come from the negative revisions of margin at completion.

The vast majority of that came as an impact in the P&L as well as in the backlog and still some to be traded when it's not onerous contracts and when the percentage of completion is not 100%. And then I must say, we also take some, let's say, cautiousness in the way we book some contracts in order to have some buffers going forward. So these are all the moving parts when you analyze the gross margin over more than EUR 100 billion backlog.

Great. And if I could have a follow-up, just unrelated on car production. You've guided for an increase next year. I know it's slightly lower in the fourth quarter, and that does suggest that some of these throughput rates is going higher.

Do we have any sort of measure as to what that looks like compared to what you might have thought a couple of years ago? So when we -- even though it's up sequentially relative to where you might have been thinking, is that car production level still lower than what you might have hoped if we were thinking of this a couple of years ago?

Or is that back up to the level that you would have thought? Just to give us some sort of sense as to where you are in that trajectory of improving car production?

Yes. I was not there a few years ago, but I will try to answer it compared to based on what I understood of the situation. I think that the capability of the company is to deliver much more than 4,500 in terms of industrial capacity, et cetera. And we did that and we were aiming to higher number in the past for sure.

At the same time, delivering a car in serial production is quite different in terms of workload, in terms of complexity than delivering a car which is in ramp-up situation. So it's not always obvious to compare a situation where we had more serial production car and potentially simpler cars because high-speed train is not similar to other car.

And so we have to be careful when we are comparing the situation at several years of difference. When we have set this objective, it's clear that it needs significant improvement operationally in order to overcome the difficulty we had last year and to go further in terms of car deliveries.

Thank you. So it's now time to close this call. And so maybe a few words. This was my second call with the investment community since the start of my mandate in -- so in 7 weeks. And my objective has been to be candid about where the group is and where it is performing well, equally where we need to raise the bar in terms of level of execution and particularly in Rolling Stock.

To be clear, I'm mindful that there is a lot of work which remains to be done. And some actions have already been launched. Now the urgency is also to work on deeper changes. That's the purpose of what we will discuss in the Capital Market Day beginning of '27. So thank you for your time, and have a good day.

Thank you, ladies and gentlemen. The live presentation is now over. You may now disconnect.

Welcome to the Alstom conference call. [Operator Instructions] Now I will hand the conference over to the speakers. Please go ahead.

Good evening, everyone. Thank you for joining us tonight at short notice. I'm Martin Sion, Group CEO of Alstom. Joining me is Bernard Delpit, Executive Vice President and Chief Financial Officer. We'll start with a few opening remarks on tonight's announcement, and then we'll open the line for Q&A. First, let me be very clear from the start. This is not the way I was expecting to start my mandate. The financial result on cash generation are not at the level you should expect from a market leader, especially with a EUR 100 billion backlog in a growing industry.

After the last 12 months, we delivered strong organic sales growth of 7%, but this did not lead to margin improvement. And in a year of record commercial activity with EUR 28 billion of order intake, free cash flow generation should have been much stronger. Multiple factors are at play here. The production ramp-up of new rolling stock platforms has not been as steep as what we expected in the fourth quarter. On other projects that met challenges early in their life cycle, we've not been able to turn them around as planned.

And fair to say that the current situation in the Middle East has been an additional constraint. Taken together, this factor will have knock-on effects on near-term financial performance. Over the last 2 weeks since my arrival, I've been visiting factories in Italy, France and Germany. I've got -- I went into the detail of financial reviews and processes. I met people that are highly committed and highly competent. I met teams on the shop floor. I met engineers, project leaders and obviously, the regional management. But one conclusion is very clear. Our ability to stick to planning is not strong enough. In a project business, sticking to planning is essential. And today, development, industrialization and manufacturing across multiple sites are not always aligned, creating complexity. In some cases, productions move ahead while homologation is still pending. That's why my priority is to drive deep operational changes and improve execution quality.

In short, this means tighter day-to-day execution, stronger planning discipline and better coordination across engineering, supply chain and production. We will also start a broader reflections about adopting a more focused product and commercial strategy. Of course, in parallel, we will continue to further improve results in Services and Signaling, where I see more opportunities and we'll continue the work done in recent years to improve the quality and risk profile of the order intake across all product lines.

As I'm new in the role, I will also be reviewing the portfolio and industrial footprint. This includes reviewing the industrial transformation plan already in place and assessing where adjustment or acceleration is required. Restoring performance in rolling stock is a major opportunity for the group. It is achievable with discipline. This is a necessary step to execute the backlog and prepare the group for sustainable cash generation and profitable growth. We will keep you informed on our progress, and we will outline our action plan later this fiscal year. And I now hand over to Bernard.

Thank you, Martin. I will now comment on the preliminary unaudited figures for the fiscal year '25, '26 as well as the preliminary outlook for the next fiscal year. Starting with orders. Alstom recorded EUR 27.6 billion of orders in the fiscal year, representing a book-to-bill of 1.4. The second half saw a higher proportion of services contracts compared to the first half. Overall, order intake was well balanced by product line over the full year with both rolling stock and services at a book-to-bill of 1.4.

Turning to operations with a particular focus on car production. The group produced 4,284 cars during the fiscal year, down 2% year-on-year. In the fourth quarter, car production came in below our January expectations as some rolling stock projects are ramping up more slowly than anticipated and homologations have shifted.

Moving to sales. Alstom recorded EUR 19.2 billion of sales in the fiscal year, up 4% compared to last year. After adjusting for negative currency and scope effects, organic sales grew by 7%. All production lines contributed to organic growth with the exception of systems, which faced a tough comparison base.

Turning to profitability. Adjusted EBIT margin for fiscal year '25-'26 lands at around 6%. At constant currency and scope, adjusted EBIT margin is broadly stable compared to the prior fiscal year. On the one hand, execution of contracts signed over the recent years and tight control over SG&A supported margins. On the other hand, this was more than offset by a slower-than-expected execution on some large rolling stock projects and therefore, with associated costs, all those most visibly in the fourth quarter, but also stronger-than-expected execution headwinds on a limited number of late-stage projects in rolling stock as well as higher R&D expenses, it has a negative impact on adjusted EBIT. Altogether, adjusted EBIT margin is coming lower than last year and to the guidance.

Moving to free cash flow. Free cash flow for fiscal year '25-'26 amounted to around EUR 330 million. Despite execution challenge, adverse currency effects and effects of geopolitics on payments related to Middle East contracts, we've achieved free cash flow in the guided range. Contract working capital increase was offset by down payments, reflecting strong commercial momentum and by favorable trade working capital. This is not particularly satisfying having met cash guidance 2 years in a row that we are not reconfirming the cash plan for the next fiscal year.

Financial net debt is coming as expected, around EUR 400 million at the end of fiscal year '25-'26. Liquidity is solid with a gross cash position of EUR 2.3 billion at the end of March '26, revolving credit facilities of respectively, EUR 2.5 billion and EUR 1.75 billion and a EUR 2.5 billion commercial paper program.

Turning now to the preliminary '26-'27 outlook. Commercial activity should remain strong, and we guide for a book-to-bill ratio above 1. Organic sales growth should be around 5%. We expect the adjusted EBIT margin to return to around 6.5% in fiscal year '26-'27. With R&D expenses expected to increase as a percentage of sales, the improvement will be driven by a rebound in gross margin back to levels seen in fiscal year '23-'24.

Gross margin in the backlog now stands at 18%. We expect positive free cash flow for year '26-'27. On the one hand, we expect commercial activity will be robust, driving solid down payments. On the other hand, lower margin than previously anticipated. CapEx to support the growth of services being put forward as well as trade working capital changes will weigh on the cash compared to what we previously planned. This concludes our introduction remarks. Now Martin and I will open the floor to your questions.

[Operator Instructions] The next question comes from Gael de-Bray from Deutsche Bank.

I guess the first question is for Mr. Sion. I'm wondering if you had time to go through some of the projects yourself. I mean, if the project review, I guess, is not finalized, but I guess I'm trying to judge whether there will be a second round of adjustments potentially later in the year. So that's question number one. Question number two is around the free cash flow guidance, which apparently you expect to remain positive in the upcoming year, although with a negative free cash flow that is expected to be around EUR 1.5 billion in H1. So I don't really get how you hope to turn it into a positive free cash flow for the year given the pretty slow start. And then lastly, at the end, I mean, do you expect the group's net debt to decrease or increase by the end of the next fiscal year?

Bernard, maybe I take the first one and you take the two other. What did I do in the last two weeks? I shared my time between [Technical Difficulty] regional reviews and product line reviews. We were concentrating on the budget process, which was being achieved. So regions by regions, we had the concatenation of all programs and with an overview of all the challenges and also all the achievements of each program. So I did not do a specific program review for each of the programs, but it was regions by regions and product line by product line.

The other half of my time, I was in the different sites in France, Germany, and Italy [ and other ] sites to confront what was assumptions -- operational assumptions, which will be behind the financial figure. If we look at today’'s situation, I acknowledge the situation that this is what I know today. It’s true that we have already identified areas where we can put in place immediate improvement in terms of operational excellence and our priority is to secure execution of the projects to deliver what is mentioned in this guidance. Bernard?

Yeah. As you said, Gael, we expect a strong seasonality in the next year, both in H1 negative around EUR 1.5 billion, you spotted it well. In H2 with a very positive free cash flow expected. By the way, when you look at the track record of those last years, H2 has been stronger and stronger year-over-year. So yes, I confirm strong H2 expected, bringing the cash flow for the year in positive territories and regarding the debt, I expect it’s going to be stable or a slight increase.

The next question comes from James Moore from Rothschild & Co Redburn.

I don't know if you can hear me because I couldn't hear your answer to the last question. There seem to be some distortion on the line, but I'll try anyway. I just -- it's a philosophical question really. And if we think about the last 20 years, free cash conversion has been about 50%, 60%. It's been a long-standing topic. And if we take the free cash, including your new guidance for the 7 years since the merger, you're talking about declaring EUR 1.2 billion of free cash, but probably closer to EUR 2.5 billion of free cash burn if we adjust for hybrid and lease payments and minorities.

I have to confess to believing with a number of the managerial changes in the last couple of years that you would be able to change the free cash management of the company to deliver an improved outcome, which we now appear not to be able to achieve. I guess the question would be when you look at the last couple of years, Bernard, and you compare it to, say, your main competitor making a high single-digit free cash margin, what is it you think you've come to understand about the challenges of delivering an improved free cash flow?

James, to make it very simple, execution makes a difference. And that's where we have -- we are facing some challenges here. So there is no magic trick here. We need to improve execution. So again, I said that I was not really happy with having met the guidance in the last years and semesters and not doing it again next year. I will not answer over the longer cash conversion because what was Alstom 20 years ago is totally different from what Alstom is today. And our plan is to have Alstom very different in the next years from what Alstom has been since the merger in 2021.

So we are in this phase, true. And we'll discuss the bridge on free cash flow on the 13th of May when we will have some detailed analysis on what makes the gap to the EUR 1.5 billion that we planned 2.5 years ago. And so we'll make it clear that project execution -- simply project execution makes the difference.

And if I may complete, I mean, the project execution is really concentrated on rolling stock and among rolling stock in the part of the projects, which are -- significant part of the problems are in a part of the projects where we are developing new products, and there are a lot of new products which are being introduced in service. And the end of development, homologation and ramping up production, is a challenge in some sites. The good news is that when we are in serial production, the products are produced efficiently with a good quality and customer satisfaction. So I don't want to give the feeling that it's all the projects on all phases. There are some topics where we should concentrate the effort.

And Martin, maybe if I could follow up and very nice to meet you, but I noticed a huge improvement in the operational performance in your previous business, Arianespace. And I wondered if you could talk about some of the levers that you use to improve that performance and what you think is relevant for your current role? And from your early exploration of the company, what you identify as topics that could be changed in the way that you perhaps previously changed them in that position?

Yes, I was [ in just 3 ] previous years, CEO of ArianeGroup, which is also a project company with 2 big projects and the one you're mentioning is Ariane 6. And it's clear that one of the levers that we use on Ariane 6 was to really focus all the management in order to secure first as the first flight date and then the production ramp-up. There are levers which are, I would say, usual levers of improvement, which exist in all industrial company. And in a project company, we need to have a strong focus on planning adherence, which is clearly a key even more than in other companies.

At the same time, one of the specificity of Alstom compared to Ariane Group is that we've got hundreds of projects. We have an industrial footprint which is very different. We are multi-local. And so it will not be a copy-paste from things we have done before. But I believe that with the people I met in the factories, on the site, we do have the resources in order to improve operational excellence. It will not be something which will be from day 1 to day 2, but there are things that we can start very rapidly.

The next question comes from Akash Gupta from JPMorgan.

I got 3 questions as well. My first one is a follow-up to previous question when you answered that the problems are in some rolling stock projects. So I mean, we have heard before that Alstom in a given year is working on hundreds of projects in a year. Can you quantify, are we talking about issues in just a handful of projects? Or is it more widespread across the organization, which means that it might take significantly longer to fix? So that's number one to quantify how many projects out of the total projects that you're working on are really this problem child.

The second one is on balance sheet. So when you -- when we look at your cash flow guidance and you're guiding EUR 1.5 billion outflow in first half, when you speak to rating agencies, is your balance sheet strength enough to cope with this first half cash outflow? Or do you think that some action might be required to strengthen the balance sheet?

And then the third and final one is on contract assets. When I look at your revenue for last fiscal year as well as guidance, I don't see any haircut on your revenues, which to me doesn't indicate that you are -- you have taken any haircut on contract asset or you are planning to take any haircut on contract asset. And can you confirm if that is really the case?

So what I can say is that there are several projects which are in difficulty, but it's obvious that there are some big projects. And when we are late, then you've got domino effect with significant consequences. But an addition of small projects which are late can have also consequences on the -- for the company. So what we really consider is that we have to improve execution throughout our rolling stock activity, and it's not a topic of solving 1 or 2 or 3 projects. It's more something that we have to address in general and concentrating on the critical phase, which is the ramp-up, which is the headwind that we had this year. By the way, you also know that we have also some projects which are at late stage of execution with low margin, but I think that has been already discussed in the past.

Yes. Akash, I will take the next one. Yes, I believe the balance sheet is strong and robust enough to deal with the seasonality of H1. Credit metrics are estimated in line with previous fiscal year with solid cash position. The business plan confirms consistency with Baa3 rating expectations. And we are, of course, totally committed on investment-grade rating and further credit metrics improvement. We have an open dialogue with credit agency, but I would not -- and I cannot speak on behalf. But we have an open and transparent dialogue with the agency. And on your last question, contract assets, no indeed, no haircut on contract assets.

The next question comes from Daniela Costa from Goldman Sachs.

I have 2 as well. But I just wanted to actually understand in the last 3 months, since you had reiterated the 7% guidance before, exactly sort of like all of these -- was it just all of these projects coincided on that? Was it a bit of Middle East pause? Or is it pretty -- a very big chunk and with like 100% drop-through lost? How come you -- that everything just came now or you just found it out now and you had to do adjustments maybe to what was going on before just -- because it was fairly shortly that you've actually had reiterated the 7% margin guidance.

I will take this one, Daniela. It's true that the operational situation was not the same at the end of December, at the end of Q3. And you remember that we said since the very beginning of the year that the ramp-up was back-end loaded and Q4 was key for volumes and for homologation, for project milestones. So it's true that what happened in Q4 has changed our view on the way to address project reviews that are happening, by the way, in February, March and beginning of April. So that's absolutely true. The situation has changed in the last quarter. But in a way, it was expected that the Q4 was kind of a critical time for the full year.

Got it. And then just thinking about sort of like the margin guidance for next year and what you factored in, is it sort of the whole versus what you had before, just continuing to roll these problems for longer? Or how much have you factored in already from things like the new way the Section 232 is calculated in the U.S. where it seems like final products now get 25% and the USMCA is overwritten and just general inflation? And then how different are you in being able to deal with this general inflation versus what you were able to do like 2, 3 years ago when we had a similar situation?

Frankly, Daniela, I don't see the inflation topic as totally crucial for the way we assess our margins going forward. I don't know if it's the time now to give you a proper bridge in terms of moving parts from gross margin in '25-'26 to '26-'27. But for sure, we see a strong improvement from last fiscal year to the next one. And on top of that, you have also to consider volumes. You need also to take into consideration some -- maybe some cautiousness in the way we assess next year challenges because as Martin said, we are in the ramp-up phase. We have not been able to be totally successful, the least we can say in Q4 this year.

So the ramp-up continues, and it will be on our agenda -- top of the agenda for H1 this year. And that's why, by the way, we have this kind of seasonality. So inflation, I do not see that as a major topic because as [ you ] said before, we are -- we think, well protected. We look at -- very carefully at everything that happens on logistics and commodities. But I do not think that's the main point that we wanted to raise by updating the margin in '25-'26 and '26-'27.

The next question comes from Vlad Sergievskii from Barclays.

I have 2 groups of questions. I'll start with first on free cash flow. The guidance is up to EUR 1.5 billion cash outflow in the first half. But at the same time, you -- I understand plan to make some positive EBIT in the first half. So can I ask why this gap between cash flow and earnings just keeps widening. The other one, why swings between first half and second half cash flows are just getting bigger and bigger every year? And maybe finally, on cash flow, which component of trade working capital will be driving a big cash outflow in the first half? Is it contract assets or contract liabilities?

I will try to answer to your question. So it's true that we have a strong seasonality. EBIT has also kind of seasonality. But let me take a step back. When I try to explain what is missing in the cash with the previous plan, it comes from FX, it comes from CapEx, but it comes also from EBITDA. So from that point of view, I think we have very good consistency with what we were saying on EBIT and margin and what we are seeing in terms of free cash flow. Now to your last question, what we see for the working capital, it has to do first with the seasonality in terms of contract liabilities. I mean we think that the phasing of down payments will be more pronounced with less in H1 and more again in H2. And we also have trade working capital in H1 that would be adverse with some payables increase in H1. So I don't know if you can -- it answers all your questions, but please that, that are the moving parts in the equation of free cash flow next year.

Can I also ask then on the balance sheet? It looks like you could have net debt in excess of EUR 2 billion in September and intra-period potentially even higher. Do you think in principle, this is the right balance sheet for a project business, which carries sizable multibillion prepayments? And also, just to clarify, did you manage to speak to Moody's already on those numbers or this conversation is yet to happen?

Okay. So I say again what I said. We have an open dialogue with Moody's, but I will not share more on that with you. We speak, of course, with Moody's on regular occasions, so they are aware. And second, on the balance sheet, I keep saying the same for the last 2 years. We need to have a strong balance sheet. I think we need to be net cash considering the size of the backlog and the kind of activity that we have.

It's not that different from other integrators with some seasonality in what they do. So I have not changed my mind. We need a strong balance sheet to operate in this business. But looking at it with another angle, our liquidity is ample today, and I do not see that at all as an issue.

The next question comes from Jonathan Mounsey from BNP Paribas.

Just really thinking back to -- obviously, we had a -- we had to clear the [ decks ] exercise in, I think, 2024 and '25 rights issue, hybrid bond, as I remember it. And on the hybrid bonds, my remembering is that the plan was probably to redeem it at the first opportunity, which I think is like 5 years, isn't it 2029? And from memory, if you don't do that, it's almost 3% margin on top of the going rate. Do you think -- I mean, obviously, we're not going to generate at least EUR 1.5 billion to the end of '27. I don't know what comes after, but the starting point on the margin is only 6.5% now. It should have been somewhere in the 7s, high 7s by the end of '27. It's not going to be so now. So all points to less cash generation. What's going to happen to that hybrid now? I understand you've got liquidity for now, but your liquidity would be greatly reduced if you had to redeem that bond? Or is there a potential here that we're just going to turn it into equity?

Jonathan, I mean, as you said, [ it's an uncalled 5 that we have -- an uncalled 5.25% ], by the way, that we have issued in May 2024. So that's not a question for the short term. And we have not discussed and we will not discuss free cash flow beyond March '27. So it's not a question for today. And the way we will deal with hybrid is something that we discuss at a later stage. But I take your point, but I don't think it's on the agenda for the coming, I would say, months and quarters.

There are no more questions at this time. So I hand the conference back to the speakers for any closing remarks.

Thank you very much. Just want to reiterate that we were dealing with preliminary figures and preliminary outlook. So we will talk to you next on the 13th of May with our fiscal year results and usual financial communication. Thank you very much. Good evening.

The conference is now over. You may now disconnect.

Hello, and welcome to the Alstom Third Quarter Orders and Sales for Fiscal Year 2025 and 2026. My name is George, and I will be your coordinator for today's event. Please note that this conference is being recorded. [Operator Instructions]

I'd like to turn the call over to your host today, Mr. Bernard Delpit, Executive Vice President and CFO. Please go ahead, sir.

Good evening, everyone. Thanks for joining the group's orders and sales update for the third quarter of this fiscal year '25, '26.

Let's start with orders on Slide 3. Alstom recorded EUR 20 billion of orders in the first 9 months. The book-to-bill ratio was 1.4, accelerating to 2 in the third quarter. As a result, the backlog reached EUR 100.3 billion, up from EUR 96 billion at the end of September.

Some color by region and product lines. The Americas are on track for the best year ever in terms of commercial momentum, with orders in Mexico and Canada this quarter adding to the large orders in New York and New Jersey booked in the first half.

Europe remains the largest contributor, supported by numerous rolling stock options being exercised in France as well as first-time orders in Central and Southern Europe.

The order intake for services accelerated in the third quarter with several large rolling stock contract being bundled with maintenance like, for instance, PKP in Poland, Baden-Württemberg in Germany, in Mexico and in Greece. Systems also got its fair share of order intake, thanks to the turnkey contract in Melbourne.

Signaling order intake was softer in Q3, but the product line had a solid first half with contract wins in Italy, Taiwan, Brazil and Singapore.

Turning to Slide 4 and details on the third quarter where we booked EUR 9.6 billion of orders. This record quarter reflects not only strong global demand for rail solutions but also robust tendering activity and contract awards in geographies that we consider as our home markets. It also demonstrates our ability to provide integrated solutions to clients not only when we sell rolling stock together with maintenance, but also when we deliver turnkey projects. It also shows the growing success of the rolling stock platforms with some of them already being in service and some others being in the final stages of approval.

Looking at examples of large orders booked in the third quarter. The Avelia Horizon platform continues to gain momentum as the only very high-speed double-deck solution on the market with nearly 200 trainsets now on order across multiple clients, both private and public.

In the quarter, as part of the framework agreement with SNCF, we secured 2 additional tranches for a total of EUR 2 billion. One tranche covers 30 trainsets for Eurostar, which will be the first double-deck train Channel. The other tranche is for 15 trainsets for SNCF for international operations, notably between France and Belgium.

The Coradia Max double-deck regional solution is currently under development and testing for German clients. We booked 2 major contracts for a total of EUR 2.1 billion, one in Poland for the supply of 42 Coradia Max trainsets for PKP Intercity, together with long-term maintenance. Another in Baden-Württemberg where the region exercised an option for 26 additional trainsets also with maintenance.

Looking at Mexico, we signed a contract worth EUR 920 million for the supply of 47 trainsets and the maintenance for new rail corridors in the country. This project builds on also Alstom's strong industrial footprint in Mexico, and leverages the development and expertise gained through the Tren Maya project that was recently completed.

In Greece, we signed a contract of nearly EUR 400 million with Hellenic Train for 23 Coradia Stream regional trainsets and 10 years of maintenance. These trains will be produced at the Savigliano site in Italy using the proven Coradia Stream platform already deployed for several customers across Europe.

In Australia, we secured a EUR 1 billion share of the Suburban Rail Loop East Line contract in Melbourne. And as this System contract, we will deliver 13 automated metro trains, signaling maintenance and a range of subsystems.

And in Canada, we booked a EUR 1.4 billion contract for metro cars for Toronto.

I want to emphasize that this record level of order intake does not go against our selective approach when responding to tenders. In the last few months, a number of large contracts in Switzerland or Denmark, for instance, went to competitors because we choose not to participate when our solution was too far from the customers' requirements or because the contractual conditions were considered by us as too stringent. All this considered, the average margin on new orders continues to exceed the average backlog margin.

Moving to operational highlights on Slide 5, starting with some delivery milestones. In the third quarter, the first MF19 metro train entered service in Paris. The deployment of this new generation of rail metro trains will continue across 8 metro lines through 2033.

This year also includes homologation procedures underway for several major projects. This, of course, includes the Avelia Horizon for the large customer SNCF under the TGV name as well as locomotives and the Coradia Max double-deck regional train solution.

Now looking at the industrial footprint, we are continuously adapting the footprint to align with backlog and demand as well as strengthen Alstom's competitive advantage. For example, construction of the new assembly line in France for Avelia Horizon is progressing as planned.

The site in Fez, Morocco has completed the first production line for drivers' cabs and expanding its capacity in components, including converters. At the same time, we continue to execute the transformation plan in Germany. We are also considering various options to adapt the Bruges site in Belgium in light of current backlog. As a result of this rightsizing initiative, we now expect nonoperating expenses to land above the EUR 100 million mark.

Turning to Slide 6 on production. Volumes remained broadly stable over the first 9 months, in line with full year plan. In the third quarter, sequential improvement in India for metros and in Germany for EMUs helped offset the seasonal slowdown in South Africa. Compared to last year, the production mix has shifted with now a higher share of projects currently in ramp-up phases. This evolution in the portfolio mix supports operational momentum and prepares the ground for a volume increase in Q4. We now foresee car production this year to land within a range of 4,300 to 4,400.

Turning to sales on Slide 7. Sales reached EUR 13.9 billion in the first 9 months, up 7.2% on an organic basis and down from 7.9% in H1. Q3 organic growth was 5.9%, largely due to a tough comparison base. The same effect should lead to Q4 organic growth moderating.

All product lines with the exception of systems contributed to the sales growth. In particular, rolling stock sales totaled EUR 7.2 billion, reflecting 6% organic growth. This was driven by strong ramp-up in Germany with double-digit growth across multiple regional train projects, continued momentum in France notably supported by the RER NG program. And in Asia Pacific, the locomotive business in India remains an important growth driver.

Services sales reached EUR 3.4 billion with 9% organic growth, supported by strong performance in Italy, the U.K., Australia and people movers in the U.S.

Sales in signaling came in at EUR 2 billion with 13% organic growth, driven by robust execution in France and Italy.

Finally, system sales totaled EUR 1.3 billion, flattish on an organic basis. It was impacted by the ramp down of the Mexico Tren Maya contract, which was not fully offset by ramp-ups in the Philippines and Taiwan. We expect this trend to continue through the rest of the year.

Looking at inorganic items. Foreign exchange was a 3.3% headwind driven by the euro appreciation against most currencies. To be noted, the same euro appreciation is also expected to have a mildly negative impact on margin and cash for the full year.

Scope had a negative 80 bps impact. Due to the deconsolidation of the North American signaling business in the first semester last year, scope was neutral in Q3. On a reported basis, sales, therefore, increased by 3% during the first 9 months of the fiscal year.

Including with Slide 8 on the outlook, the set of assumptions behind the outlook here has not changed compared to mid-November when we reported first half results.

We assume R&D at around 3% of sales, which is slightly higher than the last fiscal year, and the first half year of this year.

Regarding tariffs, there is no change either. We remain well protected, largely thanks to the group's multi-local footprint with several manufacturing sites in the United States.

Now turning to the outlook. Based on the commercial momentum to date, we will deliver a book-to-bill above 1 at group level as well as for rolling stock for the full year. We confirm the organic sales are expected to grow by more than 5% for the full year.

We reiterate guidance of an adjusted EBIT margin around 7% for the fiscal year, with currency expected to be a bigger headwind than we anticipated back in May last year.

Finally, we confirm the free cash flow outlook of EUR 200 million to EUR 400 million. We are not narrowing the guidance range. The exact timing of some commercial opportunities and operational milestones will determine where we land and whether certain cash-ins fall into Q4 or next fiscal year.

With this, I will now take your questions.

[Operator Instructions] Our first question today will be coming from Mr. Gael de-Bray of Deutsche Bank.

I have 2 questions, please. Good evening, maybe to start with. The first question is related to these 2 additional orders you got from SNCF for Avelia trains this quarter. I was wondering if we can infer from these announcements that the TGV M is now fully back on track in terms of quality and in terms of ramp-up. So that's question number one.

Okay. Gael, thank you for your question. Yes, there is absolutely no change as of today to what was previously said in terms of time line for the homologation. And I will let SNCF make any announcement on the revenue service start, no change from our point of view.

Okay, understood. And the second question is on the order dynamics. I mean obviously, they've been super strong this quarter, but I'd say more generally, that's been the case over the past couple of quarters. Is there any risk that you had so many orders falling this quarter that, that eventually will get a bit of an air pocket for orders in the next few quarters?

Okay. Fair question. And frankly, no air pocket ahead. We have good visibility on orders for the next quarters, I would say, with, of course, some uncertainty on the timing of the booking and then the timing of some down payment collection.

But for instance, we have the regional trains for CP in Portugal that now has been on the back-burner for quite a while. We have several opportunities for which customers have already made some announcements. Just to illustrate that, the turnkey project in Belgrade, the Virgin project for very high speed for the Channel with -- we see some commercial news flow possibly in the America region. So we have good visibility. I do not expect an air pocket even if, for sure, not every year will be as strong as this fiscal year.

Our next question will be coming from Akash Gupta from JPMorgan.

I have 2 questions as well. My first question is on working capital. So you gave this EUR 200 million to EUR 400 million free cash flow guidance months ago when visibility on several working capital line items was low. Maybe if you can talk about how in the course of years -- course of the year, these assumptions have changed. And based on 9 months progress and the outlook for the remaining couple of months, what do you expect in your latest plan versus original plans?

Or in other words, what I want to know is that, which line items could be better than expected and which line item there may be some uncertainty versus original plans. So that's number one.

And number two is on -- a question on nonoperating expense. So you are guiding for above EUR 100 million because of the options for Belgium site. And when we look at your backlog at various sites, is this one is kind of a one-off or there any future need for adaptation in other sites that can lead to these nonoperating expense can be above EUR 100 million in coming years?

Thank you, Akash. Let me rephrase your question to be sure to check that I get them right. So first, on working capital. Yes. In fact, it goes as we thought in the beginning of the year. So the -- on the one hand, the outstanding commercial momentum was anticipated. Hence, we felt that the down payments could be back-end loaded. We have visibility on that. So down payments in H2 should be higher than in H1. It goes as planned, nothing has changed, but it's still back-end loaded as we anticipated since the beginning of the year.

On the other hand, it's true that we have a higher share of options in the order intake. So when you are considering the record level of order intake, you need to keep that in mind when making your inception in terms of cash-in.

We have several orders that are booked in H2, but with no down payments, but rather what I would call installments of a few quarters, okay? So that also has to be considered in the working capital dynamics. And we have also some projects that are still awaiting homologation milestones. I will not discuss again the TGV. So you know this one will come next fiscal year, but we have also projects that are still in the homologation phase. So it could fall either in Q4 or next year.

So therefore, the guidance is unchanged. We keep the range as it is. You know that I consider it's already a very narrow range in terms of lending for cash. We are managing billions of cash in and cash out every month. So I'm not narrowing the guidance, as I said, I think because it goes as planned since the very beginning of the year. Does it answer your question, Akash on working capital?

I mean it does. But maybe some color on like when we look at the level of contract assets, what's your thinking now versus start of the year? Do you think you are still on track? Or will there be more? I mean overall working capital is fine with your plan, but I was asking more on the different line items. Has there been any change versus your original anticipation at the start of the year?

Frankly, it's difficult for me to go into the detail of the balance sheet at the end of Q3. So I will not elaborate on that. We see very much this year as a kind of -- with working capital as a headwind to cash generation. But contract working capital could be a tailwind in H2 versus what you have seen in H1? So that's all I can say at that stage of the year. Now your second question was on nonoperational expenses. Was it, Akash?

Yes. So you guided for more than EUR 100 million this year because you are considering option for Belgium site. I wanted to ask when we look at the other sites, is this one-off? Or could this nonoperating expense may be above EUR 100 million in the coming years as well?

Yes. By definition, all nonoperational expenses are one-offs. And for the moment, we were just considering some rightsizing of the Bruges site. We are contemplating different scenarios for the future of the site. So let's say, it's our view as we speak today.

By the way, we have some other sites in terms of engineering that -- and I will not detail the geographies where we are also thinking of some restructuring. So I was just mentioning that because as previously I guided for a EUR 100 million NOE. It could be north of NOE, you could maybe take EUR 150 million in your model, if it helps you.

We will now go to Vlad Sergievskii of Barclays.

I'll try to ask on free cash flow guidance as well. So to deliver the second half cash flow that you're aiming for, you would require significant positive working capital contribution. Can I ask outside of the arguably higher prepayments or contract liabilities, are there any other working capital lines that could contribute meaningful positive number? Or we will be talking predominantly about contract liabilities here?

And my second question related to cash flow is on the dividend from Chinese JVs. Do you expect any cash flow contribution from this dividend in second half of this year? I can see previously sometimes you've got these dividends in the second half and sometimes you didn't. Any plans for this year would be very helpful.

So I will start with the second one. So it's some balance between H1 and H2 in terms of dividends. This year would be strong in terms of contribution of the JVs. But in terms of dividends, yes, indeed, it's pretty balanced between H1 and H2. So I expect H2 to be below H1 this year.

Now in terms of free -- on contract working cap, I see down payment as a driver for contract liabilities. But also, we'll see that it will depend again on homologation timing, some contract assets moved as well. But beyond those 2 points, nothing really to mention here.

Next question this evening will be coming from demoiselle or I should say, Ms. Delphine Brault of ODDO BHF.

Yes. I have 2. First, as regards to Germany, can you update us a little bit on your strategy there? Where are you in terms of efficiency improvement because, well, you mentioned production ramp-up and you continue to sign orders. So any inflection as compared to what you told us a few months ago?

And second question, it seems that CAF, your Spanish competitor may consider or be advised to consider your participation to the contract you lost recently against them. What is your view on this potential offer?

So on Germany, no change. No change in our strategy. We continue to adapt our footprint to the demand and to what we consider will be a normal and average level of business in Germany. So no change here. The total PC -- I mean the production of cars this year will increase a lot. So that will help to reduce the under-absorption of fixed costs in Germany. So that goes in the right direction. But it's only one step. There are continuous steps in order to turn around the business here in Germany, but it goes in the right direction.

And it's not because we have been awarded new contracts that we will change our strategy because we need, again, to reshuffle our capacity there and to turn the business with more services as the installed fleet will continue to grow.

But in terms of, I would say, car production assembly line, we stick to the plan. We are happy because the Görlitz plan now is ready to be handed over to KNDS. That's done. That's well executed. And we continue to discuss with unions on the future of different sites.

So no change in the policy. We are very happy with the new awarded contracts, but it doesn't change our view of the need to restructure our business in Germany.

Now for CAF, I haven't received any call from our partner. We know them well. If they are interested in Bruges, happy to discuss.

Next question is coming from Daniela Costa of Goldman Sachs.

I have 2. So on the first one, I just wanted to check. This year, I think you said the share of ramp-ups that were in terms of what you were executing was higher than last year given we see this big order intake in this quarter and recently. Do you expect the profile to continue to be sort of more skewed to ramp-ups also looking into the next year? That's the first question. I'll ask the second after this.

Yes. I will not start to discuss next year, Daniela. So I will limit myself to give you one number. The ramp-up projects that represented, I would say, something like 10% of the total cars that we produced last year, it will be 20% this year. So that's a change. That's a change.

So when you consider that we will end the year at the same level as last year, the effort to get there is much greater because the ramp ups are, by definition, more challenging project. But for next year, let's wait the guidance in May to discuss it.

Sure. And my second question, maybe you won't reply given it relates to next years. But I guess in the past, Alstom used to have a slide at some Capital Markets Days where you had like how much of the backlog was covering already the next few years?

So if we look at how big the backlog is now, can you walk us through which visibility it is giving you, how much is covered next year, the year after, like you used to do in the past?

I'm not sure I get that. You know that our, I would say, usual long-term guidance is to have a book-to-bill above 1. It will not change. So this year, yes, it's a record year. But frankly, it doesn't change our long-term view on our policy to continue to grow and to change the mix, which is an important part of our strategy.

And I'm sure you noticed that the share of bundled deals is pretty strong, which goes in the right direction. So we'll come back to you with more figures at the end of the year to see how much of a next year program is already covered by the existing backlog. But I guess that the vast majority of what we will have to produce and deliver next year is already booked by definition.

We'll now go to Lucas Ferhani of Jefferies.

I have 2 questions as well. Maybe the first one, it was a very helpful comment on the selectivity, the margin in the backlog. I guess just to be more precise, if we were to show that slide on the backlog and the gross margin development, I think you reached kind of 18% in H1. Obviously, the mix of rolling stock is quite heavy this time, but do you think it would continue to go up sequentially? That will be the first one.

And the answer is yes.

Perfect. And the second one would be on restructuring. I think you mentioned you're still looking at restructuring in other geographies potentially. Just wondering where do you think maybe the balance of demand capacity is still not right? Where would you look at making changes?

Well, frankly, what we've seen into this year is really helping in terms of balancing capacity and activity because where we could have faced some other capacity was in the U.S. And as the order -- the orders were very strong this year, now we do not foresee a potential restructuring or overcapacity in this country.

I would say the same thing in Mexico. We are at the end of the deliveries of the Tren Maya project. And now we have a new one in Mexico. So I would say that the granularity of our order intake this year fits well with where we have capacities.

So no specific geographies, except the one I mentioned already in Europe, both in Germany and in -- maybe in Belgium, where we are thinking of the different options because of the decision of SNCB.

[Operator Instructions] We'll now go to Martin Wilkie calling from Citi.

It's Martin from Citi. The question I had was on raw material inflation. You mentioned earlier that you were well protected on tariffs, but also, we have seen some metal prices creep up at the end of last year, particularly copper and so forth.

And I know in the past, you've talked about indexation and other ways that you are protected from that. But given how quickly those prices have come up in the end of 2025, are you comfortable that you're protected from any rise in both aluminum and copper in terms of what you're producing over the next 2 or 3 years?

Hi, Martin. Nothing really specific to report here. We have contracts. We think we are protected both in terms of cost -- on the cost side, with some long-term contracts for some raw material and also on the selling price side with escalation clauses. So we think we are pretty well protected. And I have not been reported that we have any specific issues on some specific raw mat items.

Next question coming from Louis Billon of AlphaValue.

So my first question is about signaling. So the ForEx impact in signaling is quite high, but you have mentioned that the signaling was -- the execution was solid in Italy and in France. So from which country is the impact of ForEx? And should we not -- what is the situation in Germany for signaling and why you haven't mentioned it in the solid execution.

Well, in fact, yes, we are growing our signaling business in Germany, but maybe not as much as we hoped because it takes time for the local operator to award some contracts in signaling. So it takes more time than what we expected.

I don't know exactly what you were mentioning in terms of scope. You know that last year, we exited other conventional signaling business in the U.S. That's why we have this negative scope impact, and it has to be taken into account when looking at sig evolution, signaling evolution. But nothing really to -- nothing specific to report. Indeed, good execution in Italy, in the U.K., in France, and it's ramping up in Germany, but not at the pace that we expected.

Okay. My question was about ForEx impact, not scope impact. So, yes. And maybe -- also on the Deutsche Bahn new CEO, I understand that from your peers that from your peers that Deutsche Bahn was a bottleneck. And do you think with the new CEO, it could help your business in Germany?

Well, frankly, no views from my -- from me on any specific question on the new CEO of DB. And then FX, nothing really to mention. Most of our signaling business is in Europe, by the way, so not really a lot of FX. But in the U.K., where we have a large signaling business, and yes, indeed, there is an FX impact. So for signaling, we are 4% up on reported terms on the first 9 months. That's 13% organic growth. So it's moving definitely in the right direction.

Okay. Maybe last question, if I may. So in the last earning call, you mentioned that you were maybe thinking of increasing your guidance and you haven't. So what are the reasons for not upgrading the guidance. And is it related to the postponement of the high-speed train with the Avelia's platform?

Not really. I mean, yes, indeed, the -- and that's what I think I said just before. Now the cash-in from TGV will mostly come starting next year.

But no, I said that I didn't narrow the -- we did not narrow the guidance because we have still some important milestones both from a commercial point of view and operational point of view in Q4. So some uncertainties. That's why it was not the proper time to narrow the guidance. That's it.

And again, EUR 200 million gap range is really something that for me is not material, considering all the amounts of cash in and cash out that we manage every quarter.

We'll now go to Jonathan Mounsey of BNP Paribas.

A couple of questions. First, it's really a housekeeping question. When I look at Bloomberg consensus, it has a positive dividend for 2026. I was thinking more as if this was not the time to start reinstating the dividend? Maybe just a bit of a clarification on that one.

And then as a second question, thinking more out into the latter years, obviously, couple of years ago, you set the target. And I think the key target is the cumulative free cash flow, the EUR 1.5 billion or at least EUR 1.5 billion by 2027.

Obviously, in May, we'll be kind of less than a year away from that. And I just wonder, are you going to wait to deliver the free cash flow before thinking about what comes next or with a year to go, can we maybe expect in May you may be thinking about new midterm targets pushing out maybe to '29 or 2030. Just want to get some expectations of how we'll be thinking about the company? Usually, the investment case extends beyond the year. So maybe May is the time to start talking about the years that come after 2027.

Okay. Jonathan, thank you for those 2 questions that I will not answer, of course, because when it comes to dividend, it's not my decision, but it's going to be a Board decision. You know the kind of framework we shared during the 2023, 2024 deleveraging period, we said that we would start to reinstall dividend once we get to net debt zero. I don't think we'll be there at the end of this fiscal year, maybe the next one. So I think we'll answer to your question, which is a fair one in due time.

And then for free cash flow guidance, in the midterm, please wait for Martin Sion to join the company and to make his mind. The commitment is EUR 1.5 billion, and I reiterate it tonight. So let's do it, and we'll see what we will do in terms of midterm guidance in May.

I think we are done for tonight. Thank you very much for your time. Thank you for your questions. And looking forward to meeting you in the next weeks and for the next call in May with Martin Sion. Bye.

Thank you very much, Mr. Delpit. Ladies and gentlemen, that will conclude today's conference. Thank you for your attendance. You may now disconnect. Have a good day, and goodbye.

Hello, and welcome to the Alstom Half Year Results for Fiscal Year 2025-2026. My name is George, and I'll be your coordinator for today's event. Please note, this conference is being recorded. [Operator Instructions].

I'd now like to hand the call over to your host, Mr. Henri Poupart-Lafarge, CEO; and Mr. Bernard Delpit, Executive Vice President and CFO. Please go ahead.

Thank you. Good evening, everybody, and thanks for joining Alstom's first half results conference call. I'm Henri Poupart-Lafarge, Group CEO, and I'm joined by Bernard Delpit, EVP and CFO. I will first comment on the highlights of the first half before Bernard will walk you through the financial results. I will then comment on guidance before opening the floor for your questions.

So let me start with the key figures for the first half. Orders reached EUR 10.5 billion with strong commercial momentum in Q2, particularly driven by Rolling Stock and North America. The book-to-bill ratio stood at 1.2, fully aligned with full year guidance. Sales came in at EUR 9.1 billion, reflecting 7.9% organic growth with all product lines and regions contributing. Adjusted EBIT was EUR 580 million, up 13% year-on-year, representing a 6.4% margin compared to 5.9% in the same period last year.

Free cash flow was negative EUR 740 million as expected, reflecting typical in higher seasonality. The solid performance underscores the strength and resilience of our business model. Let me highlight 3 key competitive advantages that I believe will continue to drive commercial and operational success. First, the multi-local footprint is more relevant than ever in today's macroeconomic and geopolitical environment. It allows us to win business and execute projects effectively, and we are continuing to expand in this direction.

Second, the integrated approach across Rolling Stock services, signaling and systems is delivering strong sales synergies. In particular, most of our Rolling stock orders are now linked to long-term service contracts, reinforcing revenue visibility. Third, the harmonization of the Rolling Stock portfolio is delivering results, particularly in high-speed rail. Progress towards the homologation of the Avelia Horizon platform is encouraging, and we have secured additional orders for the platform in the recent months.

In the meantime, we continue to execute on our strategic priorities. With the Bombardier Transportation integration now complete, we are focusing on driving industrial and development performance. The transformation plan in Germany, in particular, is progressing well, and we are rolling out efficiency initiatives across engineering and manufacturing.

Looking now at Page 6. Alstom's addressable market remained stable for the 3 fiscal year beyond March 2026 at around EUR 200 billion. Europe continues to stand as our first market, concentrating many Rolling Stock commuter and mainline signaling opportunities. American customers will tender train replacement opportunities in the North with mainline and urban network expansions being expected again in the South.

Half of AMECA's EUR 31 billion pipeline will be made of turnkey projects, and Alstom stands ready to tap into those. In Asia Pacific, Australia and India will continue to be our main markets with India focusing on freight and urban developments, while Australia could see the exercising of several Rolling Stock optional tranches.

Now turning to Slide 7, focusing on orders in the second quarter. The Americas region had a very successful semester this year with 2 landmark orders. This includes a EUR 2 billion Rolling Stock contract with MTA in New York, EUR 1 billion Rolling Stock option exercised by NGT in New Jersey. In Asia Pacific, commercial activity was also strong in the second quarter with key wins such as another metro project in India, confirming Alstom's long-lasting presence in the city of Mumbai, EUR 500 million Rolling Stock and maintenance contract in New Zealand in addition to the KiwiRail signaling project signed by Alstom in 2022, a signaling order in Singapore, enabling faster travel times from the Shanghai Airport.

Together with other small order, Alstom recorded EUR 6.4 billion in total orders for the second quarter. This brings the book-to-bill ratio for the first half of the year to 1.2.

Moving to Slide 8, highlighting large orders announced and booked since the start of the second half. Let me start with Eurostar. Eurostar has placed an order for 30 Avelia Horizon double-decker, very high-speed trains for a total value of EUR 1.4 billion. The agreement also includes an option for the purchase of 20 additional units. This is a strong validation of the Avelia Horizon platform, which is now close to homologation and has built a very solid order book of more than 170 trains, serving multiple clients, both in France and abroad.

On the right-hand side, Polish operator PKP awarded Alstom a contract worth EUR 1.6 billion for the supply of 42 Coradia Max trains together with 30 years of maintenance. This award illustrates the strength of the Coradia platform as well as the increasing share of Rolling Stock contracts being bundled with long-term maintenance. The agreement with PKP also include an option for the purchases of 30 additional trains.

Turning now to the backlog on Slide 8. The average gross margin in the backlog stands at 18% at the end of the first half compared to 17.8% at the end of the same time last year. This represents a 20 basis point increase compared to the end of the last fiscal year. Considering the weight of Rolling Stock orders in the first half, the increase in the gross margin in backlog demonstrates the quality of the order intake across all product lines.

Our commercial wins this semester have shed a particular light on the North American rail market, as explained on Slide 10. We have seen over the recent years, ridership increasing closer to pre-COVID activity with Amtrak ridership in the U.S. already exceeding the pre-crisis level. The need for enhancing passenger experience and upgrading aging train fleets remain a powerful commercial driver, with 50% of the U.S. installed base needing replacement in the short to medium term.

The U.S. railway supply market, as addressed by Alstom has witnessed further concentration with the 3 largest players accounting for about 3/4 of all orders in the last 3 years. Finally, in Canada, Alstom enjoys a unique position, thanks to 5 main sites and 5,000 employees. Continuing with North America on Page 11. On the delivery aspects, we celebrated in August the debut of the Amtrak's high-speed Next-Gen Acela on the Northeast corridor. These are the fastest and most technologically advanced trains in the U.S. that Alstom manufactured at its own hub.

This facility in Upstate New York is the largest dedicated passenger rail manufacturing facility in the U.S. Hornell is also where the trains from the newly signed MTA's M9A order will be delivered with further investment made there to manufacture carbody shells. On the West Coast, the Bay Area Rapid Transit, BART in California accepted the 1,000th car from the fleet of the future. This railcar came from Alstom's Plattsburgh facility, where the group is also manufacturing the NGT multilevel 3 double-deck EMUs.

Turning our attention to France on Page 12. The first MF19 Metro interlink service on Paris Metro Line 10 has brought the focus back on the widest generation of train innovations that Alstom has seamlessly matured. Within the time frame of only 5 years, no less than 5 new train platforms will have reached operational service stage, among which MF19, AriaNG and Avelia Horizon for high speed. The AriaNG, in particular, commuter trains have been running on the Aria E line since November 2023 and on Aria D line since December 2024. Combining single and double-deck cars, this train embarks numerous capacity, comfort and accessibility innovations.

And last, the Avelia Horizon platform witnessed several further milestones with TGV M starting endurance tests in France following completion of certification test and with another high-speed commercial success achieved with Eurostar.

On Page 13, we reflect again on car production levels, providing insights into the Rolling Stock business, which together with the train components represents about 50% of sales. Production volumes were broadly stable in the first half compared to last year. Some projects saw an increase in production, including our RER NG and TGV M in France, commuter trains for BART in the U.S. or several German projects where volumes are on the rise.

At the same time, some large projects that contributed to volumes last year have now been completed. This includes some tighter metros in Paris, some metros in Sao Paulo, the Tren Maya project in Mexico or the Avelia Liberty for Amtrak in the U.S. In addition to a favorable mix of cars on sales, it's worth noting that more cars produced in the first half were part of projects in ramp-up phase compared to same period last year, which also contributed to Rolling Stock sales growth. Overall, we continue to expect stable production for the full year.

Let me now pass it on to Bernard, who will comment the first half results.

Thank you, Henri. Good evening, everyone. Let's start with the order intake as shown on Slide 15. We recorded EUR 10.5 billion of orders in the first half. The book-to-bill ratio that was 0.9 for the first quarter accelerated to 1.4 in the second quarter, resulting in a book-to-bill of 1.2 for the first half, of which 1.4 for Rolling Stock. The backlog reached EUR 96.1 billion, up from EUR 95 billion at the end of March. This increase was driven by the strong book-to-bill, but partly offset by negative currency effects.

Looking at the regions, the Americas had their best semester ever with large orders from New York and New Jersey. Europe remains the largest contributor, supported by strong momentum in France. And the Signaling business had a solid start to the year with contract wins in Italy, Taiwan, Brazil and Singapore.

Turning to sales on Slide 16. Sales reached EUR 9.1 billion in the first half, up 7.9% on an organic basis. All product lines contributed to sales growth. In particular, Rolling Stock sales totaled EUR 4.7 billion, reflecting 6% organic growth. This was driven by a strong ramp-up in Germany with double-digit growth across multiple regional train projects, continued momentum in France, notably supported by the RER NG program. In the Americas, increased production volumes for BART in San Francisco offset the completion of other projects, including Amtrak.

In Asia Pacific, the locomotive business in India remains an important growth driver. Service sales reached EUR 2.3 billion with a 6% organic growth, supported by strong performance in Italy, the U.K., Australia and airport people movers in the U.S. Sales in Signaling came in at EUR 1.3 billion with 17% organic growth, driven by robust execution in France, Italy and Germany. Reported growth in Signaling was more modest at 4%, mainly due to the deconsolidation of the North American conventional Signaling business as of September last year.

Finally, Systems sales totaled EUR 0.8 billion, representing 10% organic growth. Second quarter performance was impacted by the ramp down of the Mexico Tren Maya contract, which was not fully offset by ramp-ups in the Philippines, Taiwan and Brazil. The trend seen in Q2 will continue into the second half. Looking now at inorganic items. Foreign exchange was a 3.3 point headwind driven by euro appreciation against most currencies and scope had a negative 1.2% impact due to the deconsolidation of the U.S. Signaling business that I mentioned above. Scope will be neutral in H2. So as a result, sales grew 3.2% on a reported basis.

Looking now at the P&L on Slide 17. Gross margin reached EUR 1.2 billion, representing 13.6% of sales, a slight decrease compared to the prior fiscal year. In absence of a scope and FX impact, the gross margin percentage would have remained stable. The improvement in project execution and industrial efficiencies was offset by regional mix headwind with, for instance, Asia Pacific being broadly flat at current FX rates, while Germany grew solid double digits in the first half, but at lower gross margin.

Net R&D costs accounted for 2.7% of sales, notably due to cost discipline, project phasing, but also to the disposal of the North American Signaling business, which was more R&D intensive. Selling and administrative costs have reduced both in absolute terms and as a percentage of sales, now representing 5.7% of sales in the first half, demonstrating continued efforts on cost efficiency.

We also benefited from a solid EUR 100 million contribution from the joint ventures. These demonstrate both the resilience of the Chinese market and the dynamism of the broader Asia region to which several of those JVs are exposed. Taken together, the adjusted EBIT increased by EUR 65 million, reaching EUR 580 million this semester.

Turning to Slide 18 and the analysis of adjusted EBIT margin development in the first half. The 50 bps improvement to 6.4% is the combination of 40 bps headwind and 90 bps performance. On the one hand, adjusted EBIT margin faced a couple of inorganic headwinds. Scope had a negative 20 basis point impact, slightly less than the impact on gross margin due again to the higher weight of R&D for the North American Signaling business compared to the group average. FX had a negative 20 basis point impact from a translation effect.

On the other hand, these headwinds were more than offset by progress on project execution and industrial efficiencies contributing around 20 bps to margin improvement. Fixed costs, looking at R&D and SG&A together contributed to a 50 basis point increase. Other elements, including the increase in net interest and equity investors pickup contributed 20 basis points overall.

Looking at net profit on Slide 19. Nonoperating expenses have reduced further to EUR 37 million in the first half. Nonoperating expenses mostly relate to the impact of the German transformation plan and some legal costs. As a reminder, integration costs were nil in the first half of this year as Bombardier Integration program was concluded last year.

Net financial expenses decreased to EUR 75 million from EUR 107 million as a consequences of deleveraging plan that occurred in H1 last year. Effective tax rate came back to a structural level of 28% compared to 37% in the same period last year. Finally, adjusted net profit increased by 51% to EUR 338 million for the half year, and net profit group share after PPA reached EUR 220 million, 4x last year net profit.

Turning now to free cash flow on Slide 20. Free cash flow came at a negative EUR 740 million, consistent with expected seasonality. Let me highlight a few moving parts here. Adjusted EBITDA, including dividend payment from JVs reached EUR 800 million versus EUR 708 million last year. CapEx and CapDev together amounted to EUR 225 million or 2.5% of sales with some favorable phasing impact of investments that will reverse out during the second half.

Financial and tax cash out together amounted to EUR 152 million, coming in close to the P&L expense. This results in a solid increase of funds from operation to EUR 411 million for the first half, up more than EUR 100 million compared to the same period last year, confirming the trajectory observed over the last 3 years. Finally, working capital was a EUR 1.2 billion headwind, slightly better than expected.

Talking trade working capital on Slide 21. Trade working capital stood at 43 days of sales at the end of September, broadly stable compared to the first half of last year. The increase compared to March '25 represented a EUR 500 million headwind for cash generation in H1 this year. Inventories increased by EUR 315 million over the 6 months and stand at 87 days of sales, not very different in terms from September 2024. This is largely explained by the anticipated acceleration in Rolling Stock production during the second half of the year with higher value train sets to be manufactured this year. In comparison, days of payables progressed slightly less than days of inventories.

Looking now at contract working capital on Slide 22. It went from a favorable 89 days of sales to 79 days at the end of September and stands at negative EUR 3.9 billion, so generating close to a EUR 600 million headwind during the half. Net contract assets and liabilities went from negative 59 to negative 48 days of sales, just below EUR 2.5 billion. The vast majority of the decrease in the net position was driven by Rolling Stock with 3 dynamics. First, the increasing share of projects in a ramp-up phase compared to last year. During this phase, when [indiscernible] cars are being built and homologation milestone is not reached, then Rolling Stock contracts pivot from a contract liability position to a contract asset position and therefore, consume working cap.

Second, the phasing of down payments this year is very different to last fiscal year, less down payments in the first half, more to be expected in the second half. And third, a few large Rolling Stock contracts have only recently reached cash milestones, including, for example, Amtrak with the launch of commercial service in August and cash-ins to be collected over the next quarters. We anticipate the 3 dynamics will remain valid through the rest of the year, but the timing of down payment will largely drive the improvement in contract working cap in the second half. Finally, provisions are decreasing as expected with the execution of the legacy backlog.

Net financial debt on Slide 23, it increased to EUR 1.4 billion at the end of September, up from EUR 434 million at the end of March. In addition to free cash flow changes, leases and dividends from minorities, combined with a EUR 44 million annual bond coupon paid for the hybrid bond amounted to nearly EUR 150 million total cash outflow during the first half. And the strong appreciation of the euro had a negative translation effect on cash balances held in non-euro-denominated currencies of EUR 65 million.

This translation adjustment is, by definition, noncash, but does impact the net debt in euro terms. You will find in appendix of this presentation, the updated bridge computation from EV to equity value, reflecting these evolutions.

Finally, looking at cash and debt profile at the end of September on Slide 24. Cash balances stood at EUR 1.7 billion at the end of September compared to EUR 2.3 billion at the end of March. The amount of short-term debt entirely through commercial paper stood at EUR 400 million, while the balance was nil at the end of March, leading to a net cash position, excluding long-term debt of EUR 1.3 billion. These moves are explained by free cash flow consumption as detailed in previous slides, the agreement with the rating agency to earmark a portion of cash to identify future debt repayments and the need to keep a certain amount of cash to run the business.

This concludes the financial review. Let me pass it on to Henri for final remarks.

Thank you, Bernard. So turning to the outlook with first taking stock of the assumptions that we laid out in May and that underpin the full year guidance. First, commercial momentum has been particularly strong, driven by robust underlying demand and some competitive positioning in key markets. Second, car production remained stable in the first half, and we expect this trend to continue through the full year. Third, innovation remains a strategic priority for the group. However, given stronger-than-anticipated sales momentum, we now expect R&D to represent around 3% of sales for the full year compared to slightly above 3% previously.

Fourth, exposure to U.S. tariffs remains limited as most projects meet minimum U.S. sourcing requirements, and we have legal safeguards through change in law clauses. Year-to-date, the vast majority of tariffs paid have been agreed for reinvoicing with clients. On that basis and in light of our first half performance, we confirm the objective of a book-to-bill ratio above 1, both at a group level and for Rolling Stock. We now expect organic sales growth to exceed 5% compared to 3% to 5% previously.

We confirm the adjusted EBIT margin guidance of around 7%, and we continue to expect free cash flow generation within the EUR 200 million to EUR 400 million range. Finally, as mentioned in the press release issued earlier tonight, medium-term ambitions are unchanged, including the 3-year free cash flow objective of EUR 1.5 billion.

This concludes the presentation, and Bernard and I will now be happy to take your questions.

[Operator Instructions] Our very first question this evening is coming from Akash Gupta calling from JPMorgan.

I've got 2. I have one for Henri and one for Bernard. The first one I have is on the pipeline of projects that you show in the presentation. So we see European pipeline reduced by EUR 12 billion in past 6 months. And the question is, is this largely reflecting the awards that we have seen in the period? Or is there something else that has moved as well? And similarly, if I may also ask what is driving the increase in pipeline in AMECA region where you see EUR 9 billion increase in the next 3 years award. So that's the first one.

No. Thank you, Akash. On the first -- on the pipeline. So first, let me reiterate that the market is extremely positive. As you know, we have still a long-term market growth, which is estimated around 3% by UNIFE. And that is the kind of macroeconomic view and the pipeline, which we look at, which is the sum of all the opportunities which we have in front of us, as you have seen, is still very positive. So you're right. On Europe, time goes, a lot of -- as you have probably seen in the press and the media, a lot of orders which have been allocated to Alstom, but not only in the recent period. And therefore, there is a slight decrease of the pipeline. On the growth -- the second part was on which region you were asking for the growth?

It's AMECA region where your pipeline has increased by EUR 9 billion?

On this -- so we have -- it's true in AMECA, therefore, particularly in Middle East, we have a number of turnkey projects which are coming and which have been rejuvenated, if I may say, Riyadh, for example, Line 7 of Riyadh and so on. So we have increasing turnkey jobs, which are coming in the region.

Then the question for Bernard is on cash flow. So when you gave EUR 200 million to EUR 400 million free cash flow guidance in May, you had much lower visibility than what we have today. And now we have roughly 6 months gone and H1 outflow was much better than expected. You have already announced couple of large orders for Q3. So my question is, how do you feel about the range? And could we say that upper half of the range may be more likely? Or is it still too early to conclude that?

Thank you, Akash, for that. Frankly, I will not refine the guidance that we have just reiterated of EUR 200 million to EUR 400 million. It's, by the way, a quite narrow range from my point of view. There is nothing really new. It's true that H1 was better than anticipated, but kind of phasing rather than anything else. All the good news that you have seen from a commercial momentum point of view were also in the initial guidance. So no change. I hope that by the end of Q3, I will be in a position to refine this assumption. But let's keep the EUR 200 million to EUR 400 million range, positive free cash flow as our assumption today.

We'll now move to Mr. Andre Kukhnin of UBS.

Could I ask about the margin first? You've put in a pretty solid H1 performance, and it looks like the revenue guidance increase is coming mainly from Services signaling judging by the beat in Q2 and that R&D intensity is slightly lower. So I was kind of thinking about the 7% now as a number that starts with 7% and could be something around 7%, but 7.12% as opposed to sort of high 6s. Is that -- would that be the right way to think about the way the margin is progressing? And then I've got another one.

Okay. Andre, I will take this one. No, frankly, we keep the guidance absolutely intact. To tell you the truth, we have some headwinds coming from FX and we mitigate this negative with the R&D new guidance. But for the rest, we keep it as we issued it in May. And I think it's already good to mitigate the FX impact. And sales growth will have limited impact on our adjusted EBIT as well. So here again, I think it's good to keep the same line. I know that you guys are waiting for an upgrade. We have upgraded the sales growth. But when talking cash and adjusted EBIT, I mean, keeping the initial guidance was, I think, a good thing. Let's stick to what we said.

Got it I guess I had to try. Can I just ask a quick follow-up? In terms of -- so you told us the backlog margin has improved by another 20 basis points. Could you comment on where your order intake margin is trending at the moment?

Thank you for the question. I mean it's a very important and I would say very positive development in the first half. We had indeed a very nice gross margin in order intake in all our segments, in all our activities because as you have seen, as compared to previous years where we had a good gross margin in order intake, but which was supported by the mix, which was, I would say, more favorable to Signaling and Service.

Here, we have recorded a number of Rolling Stock orders. And I would say, despite that, which kind of a mechanical negative mix impact, we have recorded a very healthy gross margin in the order intake, so which has enabled us to increase. It's always a slight increase because we are talking a very large order backlog. So of course, 6 months addition has only a relatively limited accretive impact, but still an accretive impact, which reflects a good level of order -- of margin in order intake.

And if I may, on this. We have also a negative -- Andre, we have also a negative FX impact when we translate all those orders in euro. So having a 20 bps improvement in this environment, including the 1.4 book-to-bill for rolling stock, I think it's a great performance.

[Operator Instructions] The question will be coming from that is from Gael de-Bray of Deutsche Bank.

Can I ask you again, I'm curious about the free cash flow performance. I mean, what surprised you to the upside in H1 and is not expected to be repeated in H2?

Yes. This one is for me, Henri. Yes. So it's really a question of phasing. Things that were expected to be in H1 will be pushed to H2. And we have also some VAT phasing because some of the cash came later than expected. So we had no time to repay that to the treasury. It's limited, of course. But I mean when we are talking EUR 10 million here, EUR 10 million there, it can play. So nothing really changed our view. I remind you that, yes, we said upto and in July, I said I had no visibility to improve that. But there is absolutely no reason why the way we have described the year with seasonality will not happen like we described it. So it's very much like, call it, seasonality or cutoff, but as we planned initially, Gael.

Okay. And the second question is on the gross margin development. So you said it was about flat if we exclude FX and scope, but it is only not disappointing given the higher share of Signaling and Service revenues in the mix in H1?

Well, I wouldn't say disappointing. It's a combination of many things. And maybe something that was not flagged. We have kind of regional mix impact as we have a strong growth of some LRV programs in Germany, and we have some more flattish situation in APAC, for example, it explains why we have this kind of impact on the gross margin. So I wouldn't say disappointing. It was much expected, but I suspect that gross margin will come back to a larger growth in H2.

So this regional mix impacts may reverse to a degree in the second half?

I wouldn't say so, no. You'll see some improvement coming from performance, from volume, from different things, but the increase of our production for programs in Germany will continue in H2.

Okay. I guess there is no way you could separate the volume and the mix impact, the 20 bps you mentioned?

No, no, difficult to refine it more than that.

Next question will be coming from Daniela Costa of Goldman Sachs.

I have 2 as well. One is kind of a follow-up actually on the topic of Germany and on the topic of the pipeline that Henri commented on, on the first question. Can you clarify that pipeline includes the potential opportunities going forward with German stimulus already? Or shall we think about a top-up to that once it becomes concrete what those opportunities are and what sizes should we think about in there? And then I'll ask the second one.

Yes. So on Germany, it includes the orders and which are today, I would say, under submission and which are part of our actual commercial plan. But it does not include a kind of theoretical view of the German market, which will be triggered by the investment plan of Germany. So if it has not been translated into actual tender and projects, it's not been included. So the vast majority is not included of basically the EUR 10 billion, which will flow one way or another on the German market for infrastructure.

Got it. And then the second point relates to Siemens at their Investor Day today was talking to about that being less interested in pursuing metro and CT opportunities given those weren't, I guess, as good on margin for them. Can you talk about sort of like how you view the attractiveness of those type of orders for yourself? And also, I guess, the market share you have and the opportunity that if Siemens pulls out more actively of that market, that could give for you?

Sorry, I didn't get, what was dropped by Siemens?

No, I think they were saying sort of that they were less interested in sort of actively pursuing the Metro and the city part and more focused on other segments in rail going forward?

Yes. So first, thank you, it's a good indication. Yes, it's not new from Siemens time. I mean there's always the difficulties in metro. And their last order was, for example, in London, where they suffered a lot. And we've seen then -- and they were -- it was not their priority, the metro business. City, probably as you've seen, they are still in S-band, for example, in Germany. But they are not our main competitors in that area.

As you know, we have different competitors depending on the market. If you are, of course, in India, you have local Indians. If you are in Europe, you have more people like CAF, Stadler just injuring into the metro market. So it's not a surprise to us, what you say. It will not dramatically change the picture. What is interesting is that, as you know, we are more and more in turnkeys in cities, so both rolling stock and signaling.

So to some extent, Siemens may have some difficulties to sustain a Signaling business -- normal Signaling business if they totally withdraw from the metro one. So it's probably more complex. So I would say not totally a surprise, not a radical shift, but a confirmation that the market is consolidating around a few players.

Next question will be from William Mackie of Kepler Cheuvreux.

A couple, please. Firstly, on cash flow for the second half. I think if I heard you correctly, you said it remains highly dependent on the inflow of prepayments. So could you explain, first of all, how much visibility you have on that? And how you also expect the contract assets and inventories to develop in your working capital calculations in the second half? I'll come back to the second question.

Will, I will take this one. So yes, definitely, we expect a strong inflow of -- coming from new contracts with down payments expected in H2. I would say that we have good visibility. We still some uncertainty about the amount and the timing of those. But we expect, as I said, a strong book-to-bill in H2. So there is always uncertainty, and it could be a couple of hundred millions by definition, considering the size of certain of our contracts, as you've seen for Eurostar or PKP in Poland.

So I wouldn't go beyond those comments in terms of visibility, but it's true that there is uncertainty here by definition, but it was also the case last year, by the way. Contract assets will continue to grow as we are in the ramp-up phase for a lot of projects with some homologation dates that will create some contract assets, namely in Germany or for some local markets. So well, I don't expect the contract assets to go down in H2.

Regarding inventories, it will depend on the quality of execution in our second half. We have a strong ramp-up as well. So we are ordering parts. It's what you've seen in H1. It will continue because we have also a strong Q4, but we expect we will consume part of those inventories. So as you've seen in H2, the last 2 years, we have consumed some part of our inventories. So I expect that in terms of turns, it will come back to what we've seen in the past.

A couple of -- well, questions to clean up some points on the P&L and how you're building the budget and thinking. I note you've achieved a very good contribution in the equity pickup in JVs, particularly from the [indiscernible] JV. Just how are you thinking about the continuity of that in the second half? Should we expect a similar sort of performance the way that you've been speaking to your partners and the sense of how you expect that to develop?

And then on the R&D, I'm just interested, I wasn't sure how you were communicating whether the change in R&D guidance relates to higher sales or whether there's an absolute change in the expectation for spend or provision on R&D? And if there's an absolute reduction, then what is it that's driving that against the backdrop of rising activity across the group?

Thank you for the question. So 2 things. First, let me say that the joint ventures are doing extremely well on the Chinese market. Just one word on the Chinese market. We have seen contrasted trends on the Chinese market. The mainline market is going fast. The urban market is slower, and we are not -- in the past, I don't know if you remember, there were like 15 lines being opened per year. We are probably half this amount today. There are some extensions and so forth.

So it's more than -- it does not mean that the market has halved, but it means that it has decreased. And as you say, the AST, which is our very high-speed joint venture is benefiting from this growth on the high-speed market. Having said that, the phasing of the profitability of the joint venture is such that H2 will be not as good as H1. But don't take it as a sign of any slowdown of the market. It's just a fading of the profitability in the year.

For your second question, no, it's just a question of relative terms. So in absolute R&D is as expected, but sales are higher. So we have slightly revised downward the assumptions in terms of percentage of sales, but no change in terms of absolute number and investment.

[Operator Instructions] We'll now go to Delphine Brault from ODDO BHF.

Sorry, I've been disconnected. So I hope my questions have not been asked already. First, it relates to gross margin. Your gross margin in the backlog further improved to 18%. Do you plan this type of improvement, same kind of improvement by the end of the year?

Delphine, well, the name of the game is not to grow it up to, I don't know, 20%. So at a certain point, the question is more on the execution of the backlog than growing it, growing it, growing it. So we think that will continue to grow the gross margin in the backlog. Now the magnitude of the growth in H2 might be a little too early to tell you because it will depend also on the mix. We have a large mix of Rolling Stock on the order intake. By definition, it has an impact on the growth of the gross margin. And then FX also, so it's a bit too early to tell you, but I think that kind of 10 to 20 bps improvement is what we could see in the next half.

We have -- you have heard from us a confident outlook on the order intake. So we have a good visibility of the commercial momentum and orders which are already won but not yet booked and which are containing healthy margin. So this would support the growth. But indeed, some of the service orders are still being negotiated. So it would depend as well on the mix between Rolling Stock and service during the second half. But yes, it will continue to increase. The gross margin in the order intake for the first half is much higher than the gross margin in the backlog. So we still have some way to continue to improve the gross margin in the backlog.

Okay. And my second question is the European Commission recently called for more standardization in the highway sector, including Rolling Stock. And I'm wondering if you believe that the European operators will follow this recommendation?

As you have seen, there are several recommendations -- recent recommendations from the European Commission. We had also a long paper on very high-speed development in Europe and investment in Europe for interoperability. So the answer to -- for all these papers basically and also to your question is twofold. On one hand, what say the commission never occurs as planned. So it takes always more time, and it's not as -- I would say, as dramatic as they would like it to be. But at the same time, it pushes the needle in the right direction. And not only when they say they want standardization, it's not only the operators which are at stake, it's also all the national rules.

And there is a huge program being made by the ERA, the European Railway Authority -- Agency, sorry, which is trying to make all national rules progressively converging. And this will help, and this is helping the standardization. Now there are some, I would say, some opposite directions because, of course, all the operators, they want to have their own trains, they want to have their optimized trains for 50 years and so forth. So they want to have their own dedicated trains. But at least, the main standards and the main norms are progressively converging.

We'll now move to Martin Wilkie of Citi.

It's Martin at Citi. Just to come back to the question on revenue growth, and you touched upon it already. But just to clarify, the faster growth, I mean, normally, of course, you're delivering largely from the backlog and that's sort of defined by the customer schedule. So what drove the -- both the better growth in the quarter and the uplift in the year? Is it sort of alleviating bottlenecks, whether it's labor or supply? Or what allowed you to drive the growth in revenue faster than previously expected?

You're right. On a number of projects, it's being driven by customer ability to take the trains. But on other projects, when we are delivering infrastructure projects in signaling, it's also our own speed, I would say. So we have some flexibility in some places where depending on our own speed, we can deliver more or less fast the backlog.

So on that one, we made some progress. And also, we have some short-term orders, and we have put a lot of attention in the recent period on being much better into what we call gardening, i.e., to have very short-term orders. And this has been particularly positive during the first half. And this has led to also a positive move on the sales.

That's great. If I could just have one other question on the pipeline. I mean, obviously, you've announced the Eurostar order quite recently. Obviously, a lot in the press about additional operators using the channel tunnel and not just in London and Paris, but elsewhere. Is that included in your pipeline that, that line could potentially be a lot larger for that particular platform of train?

We are very pleased because as you have seen, we have been awarded the Eurostar order. But as you've probably seen, it's a very technical decision, but this has quite important consequences. There was a decision by the ORR, so the regulator in the U.K. on the access to Temple Mills, which is one of the maintenance depot in the U.K. And this access has been provided to Virgin and Virgin being our partner also for the Paris to London route with high-speed trains are not coming from the same platform. So it's not a double-deck. It's a single-deck platform, which we are developing in Italy.

We have high-speed single deck in Italy and high-speed double-deck in France. And this has been, I would say, awarded to Virgin, which was competing against other operators coming with other trains from competitors. So it's very good news. So yes, we have a particular success of our very high-speed platforms. And they are in the -- so this is in the pipeline. In the pipeline, you have also a number of operators wanting to go outside their domestic markets. You have SBB wanted to go outside Switzerland. You got Trinitalia with some ambition as well in Germany as well as in France. You have private operators trying to also establish new route, whether it's Dutch in the Netherlands, Dutch operators or another French operator. So yes, all that is included in the pipeline.

We'll now move to James Moore of Rothschild & Co.

A number of my questions have been asked and answered. So maybe I could switch to Germany and German production. It looks to me like your car production in units is relatively stable in the first half, and you're looking for German production to potentially double this year. Could you talk a little bit about German production? Is that something that's more loaded to the second half? And how is that developing?

So your analysis is correct. The German production is more loaded in the second half, definitively. There have been a start of increase at the end of the first half. So if you look -- I mean, monthly numbers, obviously, but the second quarter was higher. So we start to see the ramp-up. But it's true that the large ramp-up is during the second half. In Germany, we are, in general, at a stage where we are waiting for some homologation and certification. So we have projects which are what we call in the ramp-up phase. So it's after a start-up phase where we are just developing ramp-up phase.

So we are starting to produce, but in parallel, we need to monitor very closely the speed of -- and the timing of the homologation and certification so that we adjust our production schedule to the actual ability to deliver the trains to the customer once certified. So we are in this delicate phase. But yes, it's H2, which we will see the growth in production in Germany.

We have a follow-up question from William Mackie of Kepler Cheuvreux.

I just wanted to dot the i's and cross the t's on a couple of points. There's a note where you talk, I think, about customer advances being revised from EUR 320 million to EUR 511 million within the half year period, but it's not well explained. Could you provide -- throw a bit of color on what that advanced payment reassessment is within the period that you've put as a note to the accounts? That was the first.

And then secondly, with regard to the rating agencies, could -- have you spoken to the rating agencies recently in this interim period? And could you share any feedback from your perspective of the input you may have received?

Yes. I will take the last one, giving time to my colleagues to look for this note because I can't answer on the top of my mind on this advanced payment scheme. On the rating agencies, by the way, we should say rating agency because, as you know, we are only rated by Moody's. Yes, we've discussed this print with Moody's. And I mean, they are -- I mean, it's up to them to react to our print, but nothing new. Nothing has changed as they've taken a 12- to 18-month view when they issued the last press release. So they are totally aware of the seasonality of our free cash flow, if it's the question. And there is nothing new on that front. And we'll come back to you on this note on prepayments from customers because I don't see exactly what you referred to.

Okay. It's on Note 15.2, but I'll try something else then just to answer a follow-up from Andre's question and a couple of points you've made earlier. You've stated that the gross margins on recent order intake has been significantly better than the 18% in the backlog and that the change in the backlog is going to evolve slowly due to its scale. But can you give us a sense of what sort of differential there is between the average in the backlog and what you're typically booking now having changed the nature of your sales acceptance and the landscape of the competitive environment having shifted perhaps to a more consolidated and perhaps sensible or disciplined environment?

Yes. So good question. So that's -- the scale is significant. We -- basically, this first half, we are again at a record high, again, despite the mix. And we are talking in the vicinity of 4 points.

Well, on the question of advanced payments, I guess it's just an options or something like that. It's not really a down payment. It's maybe something like that. But we will refine the answer and come back to you. I've just read the note, and I will come back to you with more details on that.

We will now go to Louis Billon of AlphaValue.

So just my question on the order intake. So signed orders were more weighted at the end of the quarter. And therefore, I guess, down payments are not yet reflected in the cash position. So should we expect these amounts to impact future free cash flow? And would it be significant?

The phenomenon that you are describing is frankly, a nonsignificant impact, very small. We expect a larger amount of order intake during the second half than during the first half. I mean we said that it's book-to-bill above 1. But as you have understood from our comments, we are quite optimistic on this part. So we expect down payments to be higher during the second half on the back of larger orders in the second half. And the phenomenon that you are describing is insignificant.

Okay. And maybe another question. So what is the competition in the America? Do you see less competition with the tariff in place? And what is the competitive environment in North America?

So the market -- and I think I said it a little bit in the text. The market has consolidated around a few players. So we have Siemens still being present. We have Kawasaki specialized on New York. Stadler has a few orders. So it's -- I would say, it's a classical competition. Traditionally, in the Americas, you have a Japanese player. So Kawasaki is there. And you had Nippon Sharyo in the past, but which is not very present anymore.

What has changed recently is in Canada because as they have passed a kind of by Canadian Act, for example, in the metro of Toronto, they are now discussing a kind of direct negotiation with us because we are the only one to be able to provide local manufacturing capabilities. So this has changed the competitive landscape, of course. But in the U.S., I would say, the usual suspect, plus from time to time, some Japanese player that we don't see anywhere else.

Okay. I come back well to the Note 15.2 to say that it relates to 2 contracts with Deutsche Bank in Germany that are included in a program of hybrid for fighting. So it has increased our progress payments in the first half.

As we have no further questions at this time. Ladies and gentlemen, this will conclude today's conference. We thank you very much for your attendance. You may now disconnect. Have a good day, and goodbye.