Alstom Aktie

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.

Hello, and welcome to Alstom's First Quarter Fiscal Year 2025-'26 Orders and Sales Call. My name is Saskia, and I will be your coordinator for today's event. Please note that this conference is being recorded. [Operator Instructions] I will now hand you over to your host, Bernard Delpit, Executive VP and Chief Financial Officer. Please go ahead, sir.

Good morning. Thank you, and welcome to this conference call to discuss orders and sales for the first quarter. Starting with order intake on Slide 3. We recorded EUR 4.1 billion of orders in the first quarter, up 12% compared to the same period last year. Book-to-bill was 0.9 for the quarter. Considering adverse FX movements, this brings backlog to EUR 92 billion at the end of June, down from EUR 95 billion at the end of March.

From a regional perspective, Europe is again leading with large orders in France and in Bulgaria. The group enjoyed strong commercial momentum in Rolling Stock with 2 large orders and a book-to-bill of 1 on track to deliver full year guidance of book-to-bill above 1. The Signaling business is also off to a good start with contracts in Italy, Brazil and Taiwan. We recorded EUR 1.7 billion of base orders in the first quarter, which is consistent with the EUR 1.5 billion to EUR 2 billion range we've seen in recent years.

Turning to Slide 4, with a focus on the 2 large orders awarded in the quarter. First, we will provide Coradia Stream regional trains to Bulgaria together with maintenance for a total of EUR 600 million. This contract illustrates the success of the Coradia platform with a high carryover rate for Coradia Stream trains already developed for other customers. Second, French operator, SNCF, ordered an additional 96 commuter trains for the Paris region as part of a framework agreement signed in 2017.

A few additional remarks before moving to sales. First, we have already good visibility on orders for Q2. We signed a EUR 2 billion order with MTA in New York for the provision of 316 cars with an option for 242 additional cars and discussions with other public transport authorities in the U.S. are also progressing well. Second, the medium-term pipeline of opportunities is solid. For instance, the German government has made great progress towards over EUR 100 billion of investment allocated to rail over the next 5 years, which is nearly double the spend compared to the previous 5-year plan. We've already got a framework agreement in place with Deutsche Bahn Networks for Westside Signaling and around EUR 10 billion is allocated to the rollout of ERTMS in Germany, and it provides some upside to medium-term pipeline in Germany.

Third, the quality of order intake remains a top priority and orders taken in the first quarter continues to be accretive to gross margin in the backlog. Turning to sales on Slide 5. Sales reached EUR 4.5 billion in Q1, driven by 7.2% organic growth. All product lines contribute to organic sales growth. In particular, sales in Rolling Stock reached EUR 2.4 billion, representing a 5% organic increase. This was driven by the significant ramp-up in Germany. France also continues to be a meaningful contributor, thanks to the railway as well as TGV projects.

In the U.S., continuous ramp-up for BART in San Francisco compensates for the ramp down of other projects, including Amtrak. Sales in services reached EUR 1.1 billion in Q1, up 2% on an organic basis. The product line continues to benefit from execution in the U.S. as well as the ramp-up of projects in Germany, Italy and South Africa. Sales in Signaling came at EUR 0.6 billion. Organic sales increased by 9%, thanks to project execution, mainly in France, Italy and Germany.

The 5% decrease in reported terms is mainly due to the deconsolidation of the North American conventional signaling business last year and represent the 1.5% negative scope impact for total -- on total sales. Finally, Systems recorded EUR 0.3 billion in Q1, representing 36% organic growth. Systems benefited from the strong ramp-up in Brazil and the Philippines.

Turning to Slide 6. And car production, we see it as a fairly good indicator of activity levels for the Rolling Stock business this year, which accounts for around 50% of sales. Cars produced were broadly stable in Q1 compared to last year. The mix was also positive with ramp-ups for higher-value cars like high-speed and commuter train in France, for instance, compensating for the ramp down of lower-value cars like metros also in France or in Brazil. Also in the first quarter, a higher share of projects were in their ramp-up phase compared to the first quarter of last year. Overall, we continue to expect stable production for the full year, and we expect a positive mix going forward, explaining positive growth of Rolling Stock sales.

Turning to guidance on Slide 7. Let me highlight again the key assumptions behind the guidance for this current fiscal year. We assume market demand remains supportive, no change. We assume stable car production compared to last year with ramp-up in Germany compensating for ramp downs in metro cars in France and Brazil. We assume R&D expenses back to above 3% of sales for the full year compared to 2.8% in the last fiscal year.

Regarding tariffs, the impact on the group's financials was minimal in the first quarter, in part, thanks to constructive discussions we are having with customers regarding the application of change in law clauses in the contracts. For the rest of the fiscal year, we assume we'll continue to mitigate the impact from U.S. tariffs.

Moving to the guidance. We expect book-to-bill for rolling stock and the group to be above 1 for the full year with a book-to-bill ratio in Q1 that is already encouraging. We confirm organic sales growth within the 3% to 5% range with the first half that is likely to be at the top end of that range. We expect adjusted EBIT margin to be around 7% for the full year with the indication that in last year's H1 adjusted EBIT has been close to the full year margin of the fiscal year just reported.

We expect free cash flow seasonality this year to be pronounced for 2 reasons. First, we expect down payments to be more second half weighted. Commercial momentum is strong, but several orders already booked in Q1 or in the pipe for Q2 are options for which cash payments at the time of booking are usually much smaller than down payments received for first-time orders.

And second, the cash impact from the ramp-up in certain geographies will be more visible in the first half than in the second half. For these reasons, we confirm H1 free cash flow guidance for up to minus EUR 1 billion, and we see very limited upside for this level. We have not revised our views on the second half that is to generate at least EUR 1.2 billion of free cash flow, thanks to margin progression, favorable phasing of down payments and the seasonal distribution of activity and progress payments. Hence, we confirm the free cash flow guidance for the full year at EUR 200 million to EUR 400 million.

Thanks for listening, and I will now take your questions.

[Operator Instructions] And our first question today comes from Gael de-Bray from Deutsche Bank.

The first question I have is on the car production level this quarter. I remember, I think last year's Q1 production was impacted by supply chain challenges and this year's Q1 production level is not really any better. Is this just a question of mix? Or do you still see some supply chain disruptions behind there?

Thank you, Gael. No, we have not seen major issue with the supply chain in Q1. And the fact that Q1 this year is comparable to Q1 last year is very much the guidance for the full year. So it doesn't mean that we continue to have supply chain issue. It means that because of the phasing of the production of cars, it's consistent with what we have seen last year. So that's why, I mean -- and as I said, maybe we should emphasize it again, this year, we have a high share of what we call ramp-up projects.

We make the distinction between start-up project, ramp-up project and serial mode. So in start-up, you have not started to produce the cars, you are really in a phase of development, let's say. And in ramp-up, you are in the first train sets of serial. So that's where you have, I would say, not the most difficult part, but I mean, you are starting the production. And then you have serial mode. So this year, in H1, we have a higher share of ramp-up projects versus last year. Last year, the supply chain had an impact on serial production. That's why it was quite significant. This year, the mix between ramp-up and serial is different with a higher share of ramp-up projects.

Okay. That's helpful. And the second question I have is on the free cash flow dynamics. I mean you've had obviously a big success recently with New York, which I think was not necessarily anticipated to be awarded so early, potentially not enough in the year. And you're talking about potentially other projects down the road in North America likely to be back maybe in the second quarter. New Jersey, for example, is certainly one of them, if I'm not wrong. So with that in mind, I mean, do you still expect really to see the same negative seasonality in free cash flow as previously guided? Or do you feel maybe now slightly more confident to perform a bit better than the up to EUR 1 billion negative number you guided for?

Well, Gael, as I said when I reiterated the guidance, the EUR 1 billion -- up to EUR 1 billion is very much what I think the down payments or the orders that you mentioned were very much taken into account, in fact, in the guidance. So no, it's not bringing anything new. That's great. That's good news, but that was taken into account in the guidance. And I take the opportunity to say that what is specific this year that we have a good visibility on a strong order intake. That will be H2 weighted. And specifically on down payments, that will be H2 weighted as well. So nothing new from that point of view. It's great news for you, for everybody. But for us, we expected these orders to come in.

And our next question now comes from Delphine Brault from ODDO BHF.

Can you hear me?

Not so well, but we'll try, Delphine.

My first question relates to Germany. Can you update us a little bit on your strategy in Germany? Where are you in terms of efficiency improvement?

Okay. First, it's not strategy here. It's more execution, right? So we are in the -- at the very beginning of the turnaround plan. Nothing much to report since we explained our plans in May. We are in the middle of discussions with unions on different sites, that we plan to transform into service from Rolling Stock to service sites. We have good discussions with unions. So not much new, but it goes according to plan.

What is happening today in Germany, there are 2 things maybe to underline. First, ramp-up of projects. I mean contracts were awarded to our German sites some years ago. So they were in what I call start-up phase for those years. And now they are entering into the ramp-up phase. So really execution of the last miles of engineering and the first miles of manufacturing is very much where we are today in Germany.

And the second thing that we are looking closely to the announcements of the German government in terms of Signaling and what we see is good. Maybe you've seen that a budget has been presented to the Bundestag, and we've seen even if it's still pretty difficult to understand how you articulate special funds and the budget, we see at least EUR 10 billion of spending on Signaling for the next 5 years. Part of that is on the Westside, and it has been subject to a contract already awarded last year, where we have our share of that. And part of that comes on top of this program, on top of Westside, could be on board or other things. And that has not been taken into account in our pipeline guidance for the moment.

So we are working to see how this will be reflected in our activity. But I must say that today, in terms of options or, let's say, implementation of the volume contract awarded last year. We've seen some delays in the implementation, but it will come, and that's good news. So in a nutshell, for Germany, the strategy, I mean, it's -- has not much change. We think that Germany will be a great country for rail, and we prepare ourselves to respond to this stimulus in the best possible way.

And then maybe a short one. Some update on the level of competition. Last time you mentioned more competition in some regions. I know 3 months is a short period, but was it still the case in the recent months?

First, when I mentioned that, it was in January. So it was not in the full year result. I mentioned some geographies where nothing's changed, but we've seen the competition quite active. We have not seen that again since the beginning of this fiscal year, maybe because we have been awarded contracts in geographies where we have a substantial market share. That's why. But no real change in the competition landscape as of today, Delphine.

And from Goldman Sachs, we now have Daniela Costa with our next question.

I have 2 questions. One is just a quick clarification from the prior question on Germany, and then I'll ask the second main one. But just on Germany, so given the kind of ramp-up phase you're going to get through now, how is your level of capacity utilization there? If we have a big pickup in orders in the coming year or so, would you need to add more capacity now in Germany?

Of course, not. I'm sure you have well understood that we sold -- we disposed a plant in Germany is because we have some spare capacity here. And the idea is to reduce the overall Rolling Stock capacity. So for sure, we have all needed capacity to face a ramp-up. Hello?

How much spare capacity do you have, sorry?

We don't give numbers, but I can tell you that we have not a problem of capacity in Germany. I mean the story is to reduce the overall Rolling Stock capacity in Germany rather than to be short of capacity. So I mean, we will at least double our PC-9 production without any capacity issue in Germany this year.

Got it. Very clear. And then just -- so you had 7% organic sales growth now, which is ahead. And as you said, during the first half, you will stay at the top end of the 3% to 5%. But your car production was marginally down year-on-year. So you probably expect that to accelerate to meet the guidance. So is there a scenario where, what happens in the second half to get you back inside of the guidance range? Is it mix? Is it pricing? Is it something else or the guidance is conservative?

I think -- well, first, it's too early to issue a new guidance. I said clearly that I see H1 at the top end of the guidance. So by that time, we'll be -- we'll have more visibility for the rest of the year. So yes, indeed, if we are at the top end of the range at the end of H1, I see room for improvement in the guidance. But let me please have some more visibility to refine our assumptions.

It's mainly a question of mix for the Rolling Stock. But what I've seen in Q1 is very much what we see for the full year. In Service, it's -- of course, the comparison basis is pretty tough because we had a strong year last year, after kind of 10% CAGR since the merger with Bombardier. So the comps are high. That's why we have seen a pretty low, I would say, a soft Q1 in terms of Service. We see the same for the rest of the year, but we could see some improvement here.

The moving parts were on System and Signaling where what we have seen in Q1 is much better than what we forecast for the full year. So System is limited in terms of total size. So I don't think that it will be a game changer, but still, it could account for some tens of basis points of growth. And for Signaling, let's see because part of the -- of sales are coming from what we call small base orders. So that could be a potential upside. But I'll be in a better place in November when giving the full year guidance to refine our sales guidance.

And our next question now comes from Andre Kukhnin from UBS.

I'm sorry, but I'll start with another follow-up on Germany, please, given all the news flow. Could you give us some idea of how much of that EUR 10 billion is Westside versus other? And also, could you give some color on what is your kind of entitled market share in this market?

Andre, I'm sorry, but I'm not in a position because I don't know, in fact, what is the mix for the EUR 10 billion, what will come from Westside, onboard and potentially other segments of the Signaling business. So difficult to give more color on that. So the only thing I can say is that our market share on onboard Signaling is higher than our market share on West side.

And the volumes that were allocated last year were only on West side. So I think that the additional volume coming from the EUR 10 billion figures that I mentioned before, we will see some higher share for Alstom going forward. So from that point of view, it's good news. But as soon as we have some news in the mix of the EUR 10 billion, which for the moment is a draft. It has not been validated by the German parliament. As soon as we get some clarity, we'll update our pipeline to reflect that.

That's really helpful. And secondly, I just wanted to dig in a little bit more into the Rolling Stock business mix when you talk about the ramp-up versus serial production. Could you give us some idea on what normal is or kind of where were we, say, last year in H1, H2 in terms of mix of revenues, how much was coming from kind of ramp-up projects versus serial? And maybe also indicated by how much it's shifting H1, H2 this year so that we can kind of appreciate the cash flow and margin dynamics.

Well, we do not go into those details. We try to explain why the car production level is at that level, but we don't go into much more details, and it's difficult to have a read across of the mix in terms of volume, the mix in terms of sales. We just want to explain to you why with a car production that is stable, we still have some increase in sales because of the mix, and that's pretty logical.

When you produce less metros, but more TGV, you have a mix impact and the cars that you produce have a higher value in terms of cost and in terms of sales and in terms of margins than the one you produced before. So that's why you know that Alstom has, I mean, only published a number of cars recently. And I can understand why because it's an indicator that is pretty difficult to interpret because one car could be a TGV or a local or a metro.

But I think it's good for you to have that because it reflects some -- our industrial or day-to-day life, and it's one of the driver of sales and main driver in terms of cash. The only thing that I could tell you that the ramp-up projects, so not the start-up and not the serial mode will account between 15% and 20% of the total volume for this year, okay? That's what I can tell you. Now the impact on free cash flow, the impact on margins. This is something else. But considering that we have a higher share of ramp-up, it goes with some free cash flow headwind. So that's at least consistent.

That's really helpful. I'm sorry, if I may, just the 15% to 20% for this year, would I be right to think that it was similar last year, but the mix between H1 and H2 is different this year versus last year and hence, the cash implication.

No, no, that's higher than last year for the full year. The 15% to 20% is a full year picture, and it's higher than last year.

And from Citi, we now have Martin Wilkie with our next question.

It's Martin, just a question coming back to your opening remarks. You mentioned that the gross margin in the backlog has seen an accretive benefit from orders this quarter. If we go back to the full year numbers a few months ago, I think the backlog gross margin was unchanged, and there were a couple of headwinds that caused that. What's driven the expansion this quarter? Is it just the quality of new orders? Or have some of those drags that you saw last time around? I think it was FX and some other inflation that limited the expansion last quarter. Has that now reversed? Or what's driven that expansion this time around?

Martin, I think it has to do with the quality of the order intake. I would say that the FX is more or less neutral in terms of order intake margin. So no, it's not a question of FX. It has to do with the first -- the mix between Rolling Stock and the rest and where we have put the bar in terms of gross margin.

So yes, I slightly changed the wording because the previous wording was always to say, we are happy with the quality of order intake, which is above the average gross margin in the backlog, which in turn is above the P&L. So I slightly changed it, but the meaning is the same. We are happy with the order intake margin because it's accretive to the backlog. It means that it's above the average backlog, but it reflects both quality of the orders, increased gross margin in the same segment for Rolling Stock and also the mix. But the mix in terms of Service has not played a role in the quality of the gross margin this quarter.

Great. That's helpful. And if I just have a follow-on question as well. When we think about the order intake that you've seen so far this quarter, you mentioned already this was partly in your expectations already. When we think about the remainder of the year, the Rolling Stock portion of orders have been very, very strong. But obviously, you've got an intention in the medium term for Rolling Stock to become a gradually smaller part of the mix.

It doesn't seem that's happening yet. So just in terms of how we should expect the mix of orders over 2 or 3 years. Do you still have that view that Rolling Stock gradually becomes a smaller part as Signaling and Systems and so forth become larger?

Yes, absolutely, Martin. Definitely, we don't intend to grow again the share of our Rolling Stock. I mean we like Rolling Stock because it's core to a pure player such as Alstom. But the direction of the journey is clear. we want to have an activity balanced between Rolling Stock and Service and on top of that to have a good business in Signaling. So the 40-40-20, which is a mix between Rolling Stock, Services and Signaling is very much what we intend to have in the backlog in the coming years.

So it will take some time before being reflected in sales, of course, because the duration of Rolling Stock contract and Service contract is not the same, but there is absolutely no change in the strategy. You've noticed that the book-to-bill for rolling stock was below 1 for the last 2 years. So I mean, we have, in a way, accelerated the transition to a more service weighted backlog. But if we continue like that, we would be below 40% for sure for Rolling Stock.

So there is a kind of rebalancing in terms of order intake, but there is absolutely no change in the strategy. We want to reduce the share of rolling stock on our sales. It was above 50% last year on sales, and it will be in the next decade below 40% -- 50%, sorry. No change in the strategy, Martin.

And we now take a question from Jonathan Mounsey from BNP Paribas.

Yes. Maybe the first question. I see in the assumptions underpinning the guidance, it's just a very minor tweak compared to last quarter, the full year results. I think you say the U.S. tariffs, you now expect to be able to mitigate them, whereas I think previously, you were sort of saying guidance was given excluding any impact of tariffs.

Maybe just an update on why you're able to feel more confident on that. Is it purely that the sort of the larger tariff threat has maybe waned a bit or you're able now to sort of scope the actions that you're going to take? Just really why are we now confident that the tariffs will not actually be an issue?

Hi, Jonathan. I would say it's a combination of 2 things. First, some months ago, it was pretty difficult to see where this tariff discussions would lead us in terms of impact on our backlog. Now we have more clarity. And one of the important aspects of that is the end game for -- in Northern America with Canada and Mexico. And so I think that the landscape is now clearer, and that's important for us. So we have a better views of the impact on tariffs.

And it's not as extreme as we thought a few months ago. It has an impact, for sure. It's not good, but it has an impact. And the second reason is that we manage it. We had very constructive discussions, as I said, with our clients in order to absorb that because that's just a reflection of our contract structure. We have change in law, and we just need to make sure with the clients that we have the same reading of the contract, and we have a very high confidence that based on that, we'll be able to, I would say, to reflect in our sales, the impact of something that was not in the initial contract.

So that's why, first, the gross impact and then the net impact, we have better visibility, and we think we'll manage that.

Maybe just a follow-up. The guidance on free cash flow, really specifically for the first half, the EUR 1 billion, the up to EUR 1 billion burn, it's always sounded to me like you're effectively describing the worst-case scenario. I mean you're 4 months into the half now. Are you any more able to understand the true outlook? I'm really thinking what's the best case scenario? What's the expected value?

I mean, I guess the range of outcomes is perhaps on like a bell curve. What's the outcome with the largest probability? And I'm saying that in the context, I think consensus has maybe got a burn of about EUR 750 million. So it hasn't gone to the worst-case scenario. But do you -- are you happy with that? Do you think that's fair as a sort of consensus assumption?

You know that I never comment consensus. I would reiterate the wording because we have put a lot of ourselves in wording exactly what we think on H1. We see limited upside, very limited upside on the EUR 1 billion. I still consider that EUR 1 billion is kind of maximum, but I see limited upside on that. You know that managing for a few hundred millions, the landing is extremely difficult in our industry. So I will not elaborate more.

But I mean, I'm sure you have well understood what I said, limited upside to the EUR 1 billion max on H1 and at least EUR 1.2 billion in confidence on the EUR 1.2 billion cash generation on H2. So when you combine both, I think you should have a good understanding of where we sit today. It has to do with what we think about FFO progression over the full year, and it has to do with the down payment weighing and total amount between H1 and H2.

And again, I want to maybe -- something that could come as a surprise to you. But when you have large options, so that's big in terms of orders, but that's not as big in terms of down payments because down -- I mean, options do not come unless we negotiate differently with down payments. So when looking at that, it explains why we see more down payments in the second year. And that's why we see a significant increase in H2 free cash flow versus last year.

And now we take a question from Vlad Sergievskii from Barclays.

Thank you very much for taking my 2 questions. Both of them are on Service. Service growth 2%, as you mentioned, in the first quarter. Is there upside or ramp-up to this 2% rate through the rest of the year and perhaps into next year, particularly given how strong the order intake in Service was over the past years?

And second, a more conceptual question on Service. Obviously, you mentioned very strong 10% CAGR of Service revenue growth since BT deal. But the book-to-bill was even greater than that, much greater than 1.5 since the BT deal. Why there is a fundamental difference and such a big difference between revenue growth in Service and book-to-bill in Service? Is it something to do with extension of the Service backlog and duration or something else?

Well, I think that I already answered on Service growth, if it were well -- if I understood well your first question. The 2% is indeed less than last year, but the comps were tough last year. I think that last year, Q1 for Services was something like 13% up. So that's why it's below that this year, but it's still growing. And now -- and maybe back to your second question, it has to do with the phasing of Service contract.

Some Service contracts start with what we call a mobilization phase. We need to get prepared. So it's not really development, but we need to prepare for the maintenance to start. So at the very beginning, we have kind of start-up phase like in Rolling Stock, but not as pronounced, and it's not funded, where we have to mobilize resources. So it comes with costs ahead of what we can invoice in terms of maintenance.

So because the book-to-bill was very high, and we were in a phase where we have increased our Service base, we have kind of mobilization phase we have been through. And this phase now has, I would say, not ended, but is less pronounced than in the past. So it explains kind of phasing of Service growth versus last year.

And now from JPMorgan, we have a question from Akash Gupta.

I have just one question left, and that is on the pipeline of orders. Can you provide us a bit more color in terms of what size of projects are you expect to see in the remaining part of the year? And we had already 2 very large orders in the first 4 months. But I'm wondering if we have more orders of EUR 1 billion or EUR 2 billion size or the pipeline is skewed with high triple-digit midsized orders?

And the background of the question is just because larger order size and lumpy they are in terms of the timing of those orders. So any color on the pipeline, size of pipeline in orders, that would be great.

Well, I will not give you too much color because it's -- we have a view on the size -- total size of the orders. So we are keeping the same optimistic view on the total order coming in the next quarters. But in terms of kind of orders, we are working on multiple different opportunities, should it be high-speed commuters or regional trains and Signaling as well. So I think it's going to be a combination of all that.

I do not see mega contracts coming in the next, I would say, 7 months. Even if we are, we are working on significant opportunities. But no, the large ones are the ones that have not been recorded in Q1, but that you have seen in July in the U.S. We are also working on different opportunities in APAC as well and in Canada as well. So it's coming, but I think it's too soon to give you more granularity.

The only thing you can say that we are pretty optimistic that the total size of the order intake will be higher than last year. and with a book-to-bill for Rolling Stock above 1. And because of the 2 orders that you've seen in July or that could come through and be booked on Q2, I think that the book-to-bill of Rolling Stock will be substantial -- substantially higher in Q2 than in Q1. So that's what I can say, Akash.

And maybe just a follow-up to that. When we look at your base orders in Q1, they were somewhere in the middle of the EUR 1.5 billion to EUR 2 billion range. For the rest of the year, how do you see prospects of base orders versus last year? And do we see similar growth in base orders as well? Or this higher order intake is entirely coming from your expectation on larger orders or more than EUR 200 million in size?

Well, yes, yes. I see where you stand. I would say that I do not see major difference in terms of base orders this year versus last year. So we are still in the region of EUR 1.5 billion to EUR 2 billion per quarter. Nothing has really changed, and we don't bet on higher large -- sorry, base orders to reach our order intake target this year.

And we now move on to a question from James Moore from Rothschild & Company.

Bernard, maybe I could start with 1, 2 follow-ups. I noticed you dropped the language on R&D to sales being above 3%. And I wondered if that was a function of gross margin progression being perhaps a touch short of your 100 bps for the year and wanting to hit the 7% adjusted margin or more a function of timing and the challenge of spending that amount of R&D dollars. I guess that's the first one. And maybe I could come back on the other 2.

Yes, please. On R&D, it was not intentional to change the wording on that. But it's my job to make sure that you manage different moving parts of profitability bridge. So it doesn't mean that we will reduce the R&D target that we believe needs to be above 3% to get to the 7%. But that's in the -- that's one of the possibility that we have in order to reach the 0around 7% commitment. So no change in the plan. So don't see in the wording any implied consequences in the gross margin. We are still in the same perspective as in, when we issued the guidance in May.

Very helpful. And you mentioned the change of law clauses. Maybe this is a question about the fact that in the supply chain crisis, Alstom talked about trying to add more escalated clauses. And I wondered if you could help me understand the difference between what those escalated clauses that were added a couple of years ago, how that differs to now adding surcharges for tariffs. Presumably, they're the same sort of mechanism. I wondered why that wasn't covered already in the old surcharge adjustments that were put into contracts.

Well, at the end of the day, when you take a kind of helicopter view, it has the same impact because you want to pass through your clients some things that were not priced or costed like that at the very beginning of the contract. But I mean, next time, I will bring my legal people to answer to your question. But contractually, you do it, there are things that you -- where you make provisions for at the time of the bid and things -- you don't want to increase your price because you will be less competitive, but you are clear on the formula of escalation of your price to reflect different landscape or potential events that could happen in the execution of the contract.

So it's a bit kind of contract management issue here. But when it comes to tariffs, when we offer a price and that a large part of the bill of material is not -- is built in the country, but sometimes come from outside, you have to be very specific. And we'll be more and more specific considering the landscape in terms of tariffs.

But in a nutshell, what we call CPA, so escalation and change in law is different. I mean you can't escalate a cost base for tariff. You have to be extremely detailed and you have to come to your client to say, well, at the time of the bid, we thought that the tariffs on such and such part of the bill of material was such. Now it has changed. It has nothing to do with the economic environment.

It has to do with what your government is deciding. So it has to be reflected in the price. So we have both, escalation formula, and you know that we think that we are well protected from that point of view and change in law where things that cannot be reflected in an escalation formula have to be implemented.

Yes. And lastly, if I could, you mentioned the EUR 100 billion German budget. And you mentioned the Signaling opportunity, but didn't seem to expand so much on the Rolling Stock opportunity. I presume you see a very attractive Rolling Stock opportunity also in Germany. I wondered if you could expand a little on that.

It's a bit early, James, to elaborate on that. I understand that there is a lot that will be done on the infrastructure of the network in Germany. You know that some part of that infrastructure we are not in. I think it will be a material part of the EUR 100 billion. So we don't know exactly. We have not changed our views. I mean, when you want to modernize your network, you have to start with the network itself in terms of Signaling, if you want to improve your traffic management, but in some -- in terms of infrastructure as well.

So we have not seen a lot in terms of Rolling Stock. By the way, our backlog is quite heavy in Germany with the existing backlog for Rolling Stock. We now have to deliver. In the years, I would say, since the merger, we have taken some good order intake and some great ones. So now we have to execute. We are in the ramp-up phase of those contracts. So if it comes with new Rolling Stock orders, that will be great. But I have no details on the granularity of this because, again, the government has to fund infrastructure, Deutsche Bahn. When it comes to local public transport authorities, we don't know yet. It's too early, James, too early.

And we now move on to a question from Louis Billon from AlphaValue.

Could you provide more details on the projects in ramp-up phase? And -- so what are the projects in ramp-up phase? Is there a risk in the development of those projects? And if yes, to what extent is this risk included in the full year free cash flow guidance?

And also maybe could you give us the recent development for the TGV M project?

Okay. I mean, generally speaking, all our projects come with risk and opportunities. So it's our task to manage both. And yes, when you have a higher proportion of ramp-up projects into the year, it's -- from that point of view, it's more risky than a year with only serial projects. When you have a high proportion of serial projects, what you face could be supply chain issues. That's what happened last year.

Now we are in a different environment. We don't think that the supply chain will be the driver. It's more the end of the engineering phase and the handover between engineering and manufacturing, that's where we are. Is it taken into account in our free cash flow guidance? Yes, in a way that by definition, when you have more ramp-up projects, I mean, you burn cash because you are ordering raw material, you have a higher proportion of WIP and finished goods waiting for the homologation.

That's why, by definition, a year with heavy ramp-up project is more challenging in terms of cash generation. And of course, it still has some risk of execution, but that's our day-to-day job. There is nothing much I can elaborate. The only thing I could say that this year, ramp-up projects are mostly in Germany and in France.

And you mentioned one of those, which is the TGV M, not much I can say. By the way, it's the client that will decide when to go for revenue service. We are ahead of this moment. We are still in the testing phase, and we'll have the homologation phase. So still a long way to go. And it's not to me to give any specific news on the TGV, it's the client.

[Operator Instructions] And we now move on to a question from William Mackie from Kepler Cheuvreux.

A couple of questions. I guess the first one would be, could you update us on the progress of a number of the legacy contracts, the tail risk at the end of your backlog? And what level of -- I'm thinking particularly the Amtrak contract for high speed. There's a number of contracts in Denmark and France, which are perhaps under some scrutiny externally. Update on how you see those progressing and the potential impact or drag that's going to have on the full year operating profitability.

My second question moves across to Asia and just to see if you can provide any more color on your thoughts about progress of the business in China and some of the assumptions you might be making for contributions from JVs this year?

Okay. So we are moving from orders and sales to profitability here. And so not much I can share with you today, Will. But by definition, all contracts that have a high percentage of completion are in the dedicate phase of the end of the program. So you mentioned some of them. So as I said before, as now the Aventra is totally executed in terms of manufacturing, we are the end of it.

So I don't mention it as a major drag on our margin. And having not Aventra will be kind of improvement versus last year, even if we are still refining some discussions with the client for the reliability phase of the program. So we are not definitely out of it. But I mean the most painful part of that has been done and has been provisioned, I would say.

Nothing specific to discuss on DSB. Maybe on Amtrak, we are expecting some news. Could have been this morning, could be in the next days in terms of start of the revenue service. So still expecting some good news. We have had some cash, I must say, since the beginning of the year. We see more coming, and it will take some quarters in order to reduce what we see as a positive working cap, so waiting on our cash situation. So it will be recovered over the next quarters. I think it will take between 2 and 6 quarters to recover the cash from Amtrak.

So we're optimistic about this one. It will come shortly. I hope that you will see some news from our client in the coming days. Now in -- yes, I shouldn't say days because I don't know exactly. It could be weeks, and this is beyond my control. So don't forget about the horizon. It's up to the clients, not up to me.

And in terms of Asia, we have no specific news to share with you on our business in China. We've seen some good results from the JVs. So nothing to flag in terms of potential negative impact in H1. I mean the contribution remains robust. And when I mean robust, I mean, in line with what we've seen in previous years, both in terms of contribution to adjusted EBIT and to dividends and cash. So nothing really new here.

A quick follow-up. Just to frame this discussion about contracts in ramp-up or serial phase. You talked about the 15% to 20% share on a number of occasions. Just to frame it in perhaps a medium-term context, do you have in mind a sort of balance of how the mix of Rolling Stock, the ebbs and flows of the business through a cycle should normally sit? Do you think ramp-up should be 5 to 10 or it's about where it should be? Or is it just only possible to sort of make an observation about the current state of development of the business?

Well, it's already pretty difficult to have a view of the end game in terms of total cars. So for the moment, I keep my view that 5,000 cars will be the cruise speed level in the next years. So we are not there yet. So I think a book-to-bill above 1 is the journey, book-to-bill in this year and the next year maybe to there.

But now elaborating on the mix between serial ramp-up and start-up is very difficult. By definition, as we will have a book-to-bill above 1, it means that we'll have more start-up projects coming in the pipe for the next 2 years, and that will be reflected in the ramp-up in, let's say, 3 to 5 years. And then serial mode, 5 to 6. That's what I say, what I believe.

Now it's extremely difficult because it depends on the number of cars and the delay and the execution risk that we have. And all projects have not the same development phase. It depends on the carryover. So the more gaps you have to bridge between your solution and the client has, the longer it takes in terms of development and the longer intake to switch from start-up to ramp up.

So sorry to be a little bit vague here, but it's extremely difficult to give you more granularity on what is the ideal mix between serial start-up and ramp-up. But I will think about that if you think it's really a key parameter into thinking about the cash, normalized free cash flow going forward could be important.

I think that we are done now. Thank you very much for your time, and let's have a good summertime, summer break, and we'll be happy to talk with you when necessary. Thank you. Bye-bye.

Thank you for joining today's call. Ladies and gentlemen, you may now disconnect.

Ladies and gentlemen, dear shareholders, I declare the meeting of the Combined Shareholders Meeting of Alstom open.

First of all, I would like to extend my warmest thanks to the shareholders present here today as well as the shareholders who've kindly logged in to attend this meeting remotely. It's the very first Alstom shareholders meeting I have chaired.

With me on the stage Henri Poupart-Lafarge, CEO; Mrs. Petrovic, General Counsel; and Bernard Delpit, CFO of the Alstom Group.

I would like to welcome in the first row, the members of our Board of Directors with the exception of Jay Walder, who sends his apologies for not being able to attend this meeting. We also have the pleasure of welcoming Jean-Pierre Farandou, Chairman and CEO of the SNCF Group, who will do us the honor of speaking.

In accordance with the law, it is now my term to elect the officers of our Board. I would like to call as scrutineers, Kim Thomassin, representing the Caisse de Dépôt et Placement du Québec, our largest shareholder, holding 80,930,484 shares; and Mr. Jose Gonzalo representing Bpifrance Investissement, which holds 34,930,254 shares. The two members of the shareholders' meeting, who represent the greatest number of votes and who have accepted this function. They are with us, and I would like to thank them for that.

I propose with the agreement of the scrutineers to appoint Ms. Emmanuelle Petrovic as the Secretary to the Board officers. We also have our company statutory auditors, Dominique Muller representing Forvis Mazars and Richard Béjot and Hugues Gérard representing PwC audit. I would like to thank them as well for being here. I'm going to give the floor to Emmanuelle Petrovic.

Thank you, Chairman. The agenda and the resolutions to be put to the vote at this combined shareholders meeting are set out in the Notice of Meeting Brochure online and thanks to our shareholders. The agenda and the resolutions are also set out in the notice of meeting published in BALO on the second of June '25. The Board of Directors report on the resolutions is included in the Notice of Meeting brochure, the statutory auditor's reports have been made available to you as well and are also in the brochure.

In order not to prolong the meeting unnecessarily, I propose we do not read out the agenda in these reports. The documents on the desk here required by the law and listed in the minutes of this meeting are included in the file placed on the desk. All these documents have been made available to the shareholders at the registered office.

Having made this clarification, I hereby inform you that the meeting will be conducted as follows. Our CFO (sic) [ CEO ] Henri Poupart-Lafarge will present a review of the financial year '24, '25 and an update on strategy, including a presentation of the high-speed train.

Jean-Pierre Farandou, Chairman and Chief Executive Officer of the SNCF Group will also honor us with his speech. Bernard Delpit, our CFO, will comment on the group financial results for the year. Then the priorities in terms of CSR presented by Kevin Cogo, Head of the Group strategy. Corporate governance and remuneration issues will be presented to you by Philippe Petitcolin, Chairman of the Board of Directors; and by Baudouin Prot in his capacity as the Chairman of the Appointments and Remuneration Committee. Finally, the statutory auditors will present their report.

Following all these presentations, there will be an opportunity for discussion with the audience. You'll be able to ask your questions orally or in writing using the form you will be given as you enter the meeting.

Finally, we'll conclude the presentation and vote on the resolutions. As usual, in order to display the results more quickly, an electronic voting system will be used. When you enter the meeting room, you'll be given an electronic voting box, I ask you to keep close at hand and please do not forget to give it to the hostess on your way out.

The attendance sheet is currently being checked, and we will welcome shareholders until -- at the date of registration of the shares to which at least 1 voting right is attached, the share capital of your company comprises 461,944,866 shares with a par value of EUR 7 each. According to the provisional attendance register. The shareholders present or represented or voting by proxy hold 3 -- the 73.19% of shares with voting rights. The quorum required for this general meeting, which is being held on first call is 20% for the ordinary part and 25% for the extraordinary part. The quorum of 25% has therefore already been reached, and the shareholders meeting can validly deliberate.

I would like to remind you that this meeting is being filmed and broadcast live on the website. And I would like to inform you that [indiscernible] is also present in the room. Thank you very much. And I'm going to give the floor back to our Chairman.

Thank you, madam, Secretary. I'm going to give the floor to Henri Poupart-Lafarge, CEO.

Good afternoon, ladies and gentlemen. It's a pleasure to meet you each year. It's an important moment in the life of the company. And since the listing of Alstom, the 22nd of June 1998, I attended all shareholders' meeting, irrespective of my positions, I'm saying that to you because this shareholders' meeting is quite a specific I have been the head of the group for 10 years now, almost 30 years that I have been dedicating my complete energy, and we have to choose the right moment to pass on the baton. And this moment came and it came mainly because Alstom and you will allow me to say it Alstom is on a very good track. You'll see when we illustrate the strategy, Alstom is very well positioned. Alstom is very robust. And we see it given the geopolitical uncertainties, the resilience of Alstom is quite high. The portfolio is very robust as well. So we are on the right track, very good track.

And furthermore, Alstom has a very good management team and very good employees, 95,000 employees throughout the world, and they will keep on developing the company and strengthening the success stories. And here around the table here, we have our directors representing the shareholders and Alstom is lucky to have two very solid shareholders to support its growth long-term shareholders. So Alstom is on a very good track and a decision made serenely, well thought over and I will support, of course, this moment, the transition, succession is always an important moment. So it will be dear to my heart, not only to strengthen the development of this group right to the last day but to make sure as well that the succession takes place under the best conditions.

So yes, we celebrate somehow the 10 years, the 10-year anniversary of the creation of Alstom as a company fully focusing on railway. If you remember, 2015 selling the power activities of Alstom General Electric giving rise to the Alstom as we know it now. In reality, an in-depth transformation took place. And at that time, in 2015, Alstom was facing with internal -- was facing internal and external challenges. We were focusing on domestic markets in France. If you remember, Alstom depended on this domestic market. There were discussions on that. And we were depending on the Rolling stock as well. This business is volatile by nature, a risky one with production cycles. And by definition, they cannot be foreseeable.

And we also have external challenges at that time. The competition in Europe not only in Europe, but especially in Europe, this competition was fierce, we're #3 in Europe by that time without talking about the Chinese competitors and in a lot of players for signaling it was necessary to have our industry consolidated. So we rolled out a strategy, globalization strategy for our group, and we wanted to refocus on the not only Rolling Stock business, but the digital business and service business. And this took place in two steps. I'm not going to tell you the full story, but [ 2019 ], 2020 -- with -- 2015 and 2020 to widening our portfolio to define the service business and extend our geographic footprint and launch the renewal of our range of products. It was necessary to renew this products given our status.

And then 2025 was the second step -- second milestone where we sped up this strategy with the acquisition of Bombardier but not only, and this allowed us to reach to a point we are in today, i.e. we are a major stakeholder. We are a leader -- global leader, no longer #3 in Europe who were centered on Europe in the past, now we are present in all possible large markets. Therefore, we can strike a right balance. And here on this slide, you talk of 63 countries and 225 sites. So, it may seem a bit complex to manage, but it's very useful.

Proximity today to be close to your customers and in a fragmented world with geopolitical tensions. I can tell you that Alstom is a resilient, very resilient industrialist because of this geographic fragmentation and proximity as well and sometimes it is imposed upon us in a number of countries. And we also acquired central positions in the digital business, number one, for instance, for the urban signaling in the train automation, and service portfolio unmatched really for services, we do business equivalent to what Alstom did 10 years ago for all businesses.

Coming back to those main milestones. Here we are. The first step was from 2015 to '20 was organic growth. I am sure some of you were there already. We said we would invest EUR 300 million in a number of plants throughout the world, either directly or through partnerships. It is quite striking to see now that the most iconic plants, those are making trains in South Africa, in India or in Kazakhstan, are among the plants that have the best performance in Alstom. They are very modern. They've been built under 10 years ago. If you haven't been to Madhepura to Johannesburg or [indiscernible], you cannot understand the power, the strength of Alstom's model.

In these countries, we use the local industrial footprint. We hire our staff locally. You see that Bihar, for example, is one of the poorest states in India, very far from production centers. And this is where we produce trains every month with a great quality. In Johannesburg, we recruit people from a township just around Johannesburg, and we have the best or most performing plant, producing 10% of our activity there.

The inhabitants, the local communities are providing us with that manpower and also local competencies. And that's really what is so unique about Alstom. We are the only operator going to all the geographies with a new operational model. We can grow and develop those plants with great success. Either directly, as I said, or through partnerships. As you see, we have been able to go in many new countries.

Thanks to that experience. And thanks to this new operational model and with new deployment because we know that we need to have an overall operational system that is well controlled, well defined, very precise. So thanks to all this, at the moment of consolidating our organization, as we knew was going to happen, we were in a very good position to make the acquisition of Bombardier.

With this acquisition, we were able to scale up and bridge the gap in the areas where we were under-critical in terms of mass. So the strength of Bombardier and the strength of Alstom combined perfectly, as you can see in Germany, the United States, Mexico, and markets such as Germany and the U.S., which are the most dynamic markets worldwide. You might have seen the news lately, the orders for the subway in New York, for example. So you see that even in the country of cars there are trains and Alstom is well positioned on that market in spite of the political and geopolitical tensions, we continue to develop.

This complementarity, which is geographical is also completed by our product complementary. We now have a modern product range. It is well deployed. We've reached a good critical size to become leaders in the Western world, #2 after a Chinese operator. So Bombardier also had great competencies in services, which really balanced our portfolio. We now have this service activity, which provides great technology with predictive maintenance and also a lot of operational stability. We also have been able to build customer intimacy, which is something we didn't have previously to having this service activity service business. So we can better meet our customers' needs with this. And again, as you see, a great balance of 1,000 customers, it's a more resilient customer base we ever had.

You all heard about this integration phase of Bombardier Transportation. It was made possible, thanks to the model we put in place and all the teams we have worldwide who've done an incredible job. The reason why we acquired Bombardier are reasons that are still valid today and could totally confirmed because we didn't know by then that the world would all split up. And the presence of Alstom locally is more significant than ever. We didn't know that the digital economy would be so significant. However, now we see that the digital is really at the heart of our business.

So by combining our strengths with Bombardier, we were able to step up to a better scale in terms of the digital offer. So now this integration is done. We achieved the most difficult part of our journey. It was an incredible journey, I must say, very enriching may be challenging for most of our teams, but it is now behind us. And our customer satisfaction has reached a record level.

Our portfolio has been completely reshuffled and is now stabilized. The EUR 400 million in synergies were also achieved and our operational indicators are now again in the green. So moving forward, we can say that Alstom is one single company working all over the world with one same performance level.

I was talking about our product portfolio. It is important. We don't describe this well enough. About 10 years ago, we decided to completely renew our offering, beginning with the tramway from 2012 to '15, and then the subways, regional trains, and the last stage of the Rocket was the renewal of our French TGV a Fast Train. And also with the technology of Bombardier, we are able to improve and reinforce our locomotives and with the technology coming from Alstom. So great efforts were made in terms of R&D in terms of innovation. These are many challenges at the time of starting our first projects when we start a new platform, a new tramway or a metro platform, this is a new challenge, of course. And we are happy to see that now we are moving forward and with Jean-Pierre we're going to commission the TGVM this year, and this will be the last stage of the renewal of our platforms. And we have at least 3 or 4 projects in each platform.

In terms of signaling also the modernization is there. We modernize the signaling range for the European Rail. It is under a number of standards, and we comply to those functionalities. And you also heard about the urban signaling we've been able to develop a new comprehensive urban signaling system. We are the only ones to master that technology. It is not just about having track equipment with the signaling and signals that will say whether a train can go or no go.

Well, now it's going much further. We have train-to-train communication now. We can say that trains give themselves orders, so passing or not passing. This dialogue is much more efficient than having to go through the voice system. And now this signaling system is implemented in France, in China and many other geographies. And the -- we'll have that also on the 18th metro line in Paris. We are thus celebrating the first equipment on our 18th line. So I insist once again on the fact that we have renewed our services range. This is one of our main assets. We have an installed base of 150,000 wagons. We have 30,000 cars that are served. We have invested heavily in the quality of services, predictive maintenance, the digital monitoring of our fleet. We now have a database with 150,000 wagons. So this allows us to know when they will need services.

We don't have to wait until our partners require services on their cars. We can do a predictive maintenance, and we anticipate the needs of this fleet throughout the world. This is why our services have exponentially grown in the past few years. I'm not going to bore you with numbers, but the main message you need to remember here is twofold. First, the size of the group has tripled in the past 10 years.

And also the second message each year our group has grown organically. This reflects the strength of Alstom's model. Of course, there are risks. We do live up to our technical challenges, our delivery times that need to always be improved to serve our customers better. However, in terms of market, in terms of business, we now have a global coverage, and this makes us extremely resilient in the face of the economic cycles.

Remember that all this happened in the past few years where there were huge difficulties worldwide. We went through the COVID, war, inflation, huge challenges globally, but also locally in France, with our political upheavals in France, whatever the conditions in terms of pressure, well Alstom was able to grow in a measured way. And we weathered through all that, we will continue to grow in a very well controlled way. With our objective of 5% growth per year that we wish to fulfill this year again.

One last zoom here on the period following the acquisition of Bombardier. This is also another major challenge. Strategically, it is quite rational. The purpose of this acquisition is totally justified as we see in the model and in all the assets it's providing us in terms of geographic coverage in particular. And in the past few years, unlike what might happen in the times of integration, we didn't have any reduction in the activity. There's been no removal, no loss of businesses, of customers. And you see that in the past 3 years, our growth is exceeding 20%. And each business had a double-digit growth more than 10% for each activity, more than 20% for the past 3 years, moving from 15.5% to 18.5%.

We had the previous years before the merger, it was around 14. So as you know, we had some operational challenges, but we were able to reestablish our performance and we have now a margin of 6.4 instead of 5. We have EUR 1.2 billion in profit and our margin is higher than our industry's average. So it's possible to say now that we've reached a very strong and robust situation.

I will come back on our perspective after speaking about 2024, '25. But previously, we decided to deep dive on the TGV, which is our star product in the group. Let's have a look at the last renewal and the last innovations in our range. I would like to open another slide here. Here we go.

For the TGV, we have a high-growth market, plus EUR 2.7 billion, plus 7% in market growth. It is great performance everywhere in Europe, particularly in France and fueled by newcomers in the different countries. They can be traditional operators from one country going to another country. This is the case in France, Spain and Italy. Or it can be some private new operators giving new momentum to the market. So this year, we had some commercial success in France with the SNCF, also with private operator Proxima and also some success in Morocco with a new tranche of Moroccan TGV .#1 ambition this year is the commissioning of the TGVM. And as a coincidence, we also have the commissioning of the American TGV. The American TGV commissioning should take place very soon. On the same platform, same as the TGVM, of course, modified to comply with the American standards. Given this success, we adapt our production capacity. And we said that we were going to invest EUR 150 million in our production capacity, that same multiplied by 3 our production capacity in France in order to meet the demand in terms of TGV.

Let me remind that we have two high-speed trains the TGV, we call Avelia Horizon. This is our double deck train, trainset. It is called Liberty in the American version, a large capacity, very efficient in terms of the cost of acquisition, the energy and maintenance and train with one deck only, the origin is rather of an Italian origin, that was our Pendolino range sold in Europe, across Europe. It was a high speed, not a very high speed, 200, 250 per hour. And it ramped up throughout Europe. So the markets are different for Avelia stream and Horizon. Some players rather have the single deck train. And other stakeholders would like to have a double deck train because of the large capacity. And this double deck train is scalable, you can change the number of cars according to your needs.

So the high-speed market is expanding. In the last 10 years, we went -- we increased by almost 50% the network in Europe, the very high speed and the high-speed network. We have a lot of projects in the pipeline, not only the market is getting more advanced because of the traffic increasing growing, but it is extending as well. There is a major project of high-speed lines in Central Europe. The large TGV countries by tradition were France and then Germany, Italy, Spain, Poland now with one line supplied some years ago. They would like to have a network and the interlinks between countries in the Eastern Europe from Poland directly to Berlin and then right up to Vienna. You have a lot of cross-European projects boosting high speed.

I'm not going to elaborate on that because you will see a video on that. It's the story of our partnership with the SNCF. And of course, I would like to thank our friend, Jean-Pierre to be with us. Philippe agrees, of course, with me. We have a long story with Jean-Pierre. It's an honor and a professional honor and an amicable honor to have him with us the story of Alstom with SNCF and TGV is a wonderful, started in 1981 with the first TGV trains, and it is prolonged today with Avelia Horizon. And this date of 1996 was the first double deck trains.

So just to tell you that what we are doing today with the SNCF differential way, we are not going to repeat that every 5 years. It is -- it takes place once every 30 years. When I'm talking of the renewal of our product ranges, those life cycles are quite long. The last time we had the same level of effort in terms of range renewal. It was in 1996 as we launched the double-decker trains with Euroduplex we had innovation, the architecture remain the same. Whereas here, we are completely changing the architecture of the train, the technology of the train. So the effort to deploy today takes place every 30 years, it's not going to be repeated that much often.

I unveiled the topic. The major characteristics of the TGV is plus 20% capacity, minus 20% energy consumption, minus 30% maintenance cost. So minus 20% of power consumption is for the track -- for the trainsets. So it means per person, it's almost 40% less energy per passenger. And what we wish you is for you to have the most efficient TGV. Some years ago, we set the -- we brought the speed record 574.8 kilometers an hour. So we do not want to have the highest record, but the most efficient, the most comfortable TGV, the most available TGV for the operators. Jean-Pierre it is going to be your turn.

Okay. So I'm going to give the floor to Jean-Pierre. Once again, I would like to thank you because I know that you have a very heavy agenda and please give him a round of applause.

Good afternoon to you all. Yes, it's a great pleasure for me to be with you. Thank you very much, Henri, for putting a tie to welcome me here.

Okay. So indeed, it has been a wonderful story, a very strong partnership between Alstom and the SNCF, this national pride is called TGV, our engineers ability in the 70s and it arrived in 1981. So my personal story, well I joined the SNCF in 1981, that's a nice symbol. We started together the TGV and I, and I can define myself as a TGV baby at the SNCF because I was lucky to participate in the launching of three TGVs. So to tick the box three times is good. And so I started with a small TGV, innovative one. North between Paris and the North of France. It was Nord-Pas-de-Calais at that time. It was not called Hauts-de-France yet. The volume was not that big, but is a new generation of TGV, the network TGV, good soldier, well-born baby. We've been working quite a lot, went across France, network went across France. And you remember these TGVs quite innovative in terms of tariffing because it was the first time we did lean management, 30 years later, we are still talking about it.

So it was 1993. I was a project leader. I was not dealing with the train, Alstom was dealing with. I was not dealing with truck, but services. We offered frequencies, tariffing, distribution, marketing and we wanted, of course, to be a bit profitable. So it was my first experience.

Second experience at the SNCF for me with Thalys, of course, the brand Thalys is no longer there, but it's just my heart because we put it up, and it's a European experience. The SNCF was playing this card well with structuring and strategic partnerships with the neighboring countries to take the lead of the high speed, but the soft lead. We do not want to impose ourselves, but we want to find a joint brand, a joint vision and Thalys continued.

In the first launch of Thalys, you had Paris, Brussel, Amsterdam in May '96 and then in December, '97 opening to Germany, very symbolic. The relationship with DB, Deutsche Bank is complex, but we were right in reaching Germany. So it was a huge success story, and I was very proud for this innovation and proud of this robustness who are ready on time, commercial success immediately marketing innovations, quite pleasant ones, very, very good memories.

And the third intersection is not of the same order I was not lead -- a project leader in the same sector, but it was production. It was for Marseille TGV. It was a technical project, a complicated project. We launched it in May. And we control it more or less in August. So we have three technical innovations, difficult to monitor. We had to tame it. We had some works on the road and river, not fully stabilized. So we had to reduce speed for safety reasons. We had sensors that are triggering not the right way. So we had to apply safety rules. So we had to do dismantle road TGV to realize everything was fine but in the same time, in the meantime, a train we are missing.

And in Marseille, the switching station was changing the interface between man and machine. In the past, we all pressed down the button with a clear vision of the itineraries. But here, it was through IT. And on the keyboard, they were lost. So they were slowing down the throughput, it was not possible to have the number of trains scheduled therefore, delays, so -- and we decided to have a lighter original plan to give the priority to the TGV is not good, but I hope that the region would not complain about it, but it was 20 years ago. So a very strong link between me and TGV. Hence, my tie very proud of showing this TGV tie.

TGV, of course, beyond Alstom -- beyond Alstom and SNCF, it's a national pride. If we ask the French people. What are the major innovations striking the population? One was wonderful, but the future of which was reduced, the concord. We were very proud, supersonic aircraft, 3 hours to go to New York. It's wonderful, but we know the fate of Concord, unfortunately, some people were not really likening the Concord. And you remember these accidents, divesting accidents. And the nuclear power plants, of course, with ups and downs and now ups again. The nuclear power is really a source of pride, French pride. Unfortunately, we had some problems in the past, but now up again, and TGV is a linear success. No weak points, always moving forward and immediate success, commercial success, a reputation success, image success and a major advantage of TGV is that it is environmental friendly.

And as the ecological transition came to the public debate. Well, nuclear power, you can discuss it even its decarbonated aircraft, what is nice, but TGV, well, wonderful. It's environmental friendly. It's a solution. And a few years ago, we -- they said that we were 93x less polluting than aircraft. The aircraft industry didn't like us that much. But TGV is the right solution to long traveling to a distance of between 500 and 800 or even more kilometers. And of course, the tourists use the TGVs, but even the business customers now accept to stay 3 or 4 hours on the TGV. So it extends thanks to the speed. It extends the offer, of course, for SNCF in terms of addressable market. We, as an operator, are lucky.

And the last born -- the newborn, whether we have this common platform, we have Eco-design, the codesign. As you said, TGV, you didn't say it was recyclable 97% of it. That's a circular economy because it lasts 40 years, which is not negligible. And on top of that, after 40 years, 97% of the raw materials can be recycled to produce another type of TGV of another generation. So it is the complete demonstration to which extent the railway business now is on the right side. It's in ecology, fuel consumption, sustainability and so on.

It is difficult with this new TGV and not everything is easy, but it's better to wait a few months and make sure everything is fine. And take all the innovations on board, 400 innovative aspects to this TGV, it will be a major milestone. It's going to be the most modern train in the world. I hope for the longest time, we compared with our the builders and the operators. Our operators by the TGV understand now that if they didn't buy them, they would be in dire straits. So it's great to have that, and we have this new design, and it is recognized as having a great value. So it's better to have it than not have it.

It is also meeting a very strong demand. Our trains are full. They are as users a great option, and we're very happy to see the commercial success of our trains. We could sell more trains. So we're Happy to have a new one. We are impatient to be able to market that, but we need to improve our capacity. We make a lot of proof of imagination to have as many passengers as possible. And some are ready to work by night to make sure the day shift will be up and running. So this is very important. Everybody is making an effort, and we have great performance now in terms of operation and different ships. We have a very, very good operator for high-speed trains.

Alstom has competitors and SNCF also is discovering competition, and this is new for us.

Now a word about the future to agree with -- good news, mobility is expanding. This is great. We -- a lot of people spoke about depression, about reduction of travel and not at all. We see that people are happy to move to travel in France, in Europe or even now we call it the great Europe. You have seen the Draghi report, we speak about Utopia, but it is reachable with a TGV that would reach all Europe enlarged, and we have thanks to the train, made possible to have a United Europe. We are traveling with passengers and with goods as well. So there's also a military mobility. It might not be on a TGV, but the Army is also discovered that when the front is 2,000 kilometers away, it's better to travel by train because you can carry more stuff. So we have to be prepared. As you say, if you want peace, prepare for war. So the train still has a very strong and strategic position.

In France, competition can be seen as a spur. It means that our business is attractive. It will create more opportunities. We know that competition will stimulate business. The travelers will want the good quality for money. This is also a way to grow the market. And the real competitor is the plane and the car. It's not even the plane in France. It's the car. So we have to continue and convince people to leave their cars in the parking and take the train. We have many projects and our ex-Prime Minister, Jean Castex has launched a growing line going on the Southwest on the Riviera, which is the best way to reach the Riviera is the train because it is a such a tight place to go between mountain and the sea. So there are plenty of spaces still where we need to go and conquer.

We think of a great European network of high-speed trains. Eurostar is there as well. There are business opportunities here. There's a lot of negotiation underway. We hope to conclude that, find win-win convergence. Eurostar is going to buy many, many trains. This is great. The Paris, London is one, but also the ex-Thalys dimension is great, too. We continue to export to Italy, in particular, where we have many orders. We will have trains if we can solve the problems with Italy and have the opening. We have more opportunities there also between Belgium and France. There are many Belgium customers who want to go to the south of our country or south of Europe. So it's also a great opportunity. We also work in cooperation with Spain because Alstom is maintaining our trains in Spain.

So you see our plane ground is quite extensive. We will need to continue there to continue to grow, and we will need Alstom to succeed.

Worldwide, also, we have some projects. SNCF is part of it, like in Morocco, for example, where Alstom has sold a number of trains. It's the only thing where I said to Henri there's the World Cup, the Football World Cup. So I can accept to go to Morocco. And I think you understand why this is said. It is now made public and you can understand my position. And I'm generous. I can privilege the American football to our business. You see how generous I can be.

In Morocco, we also have a very good tradition of partnership. We really helped Morocco to start the first stage with a very sincere cooperation. We have a maintenance JV with Alstom services. We have engineers who came to SNCF and went back to Morocco. So we have a historical relationship with Morocco.

In diplomacy, there's been ups and downs, but we are on the up, again. So we're very happy to relaunch this partnership. I was in Morocco week ago, I was able to sign this contract for partnership, maintenance and services. It's 400 kilometers of track, trains, workshops, it's the Casablanca local train also that will be launched, like for the suburbs. They have 6 million inhabitants in Casablanca. And also intercity trains, well, they don't buying them from Alstom. That's too bad.

And then there's also Canada I think that as Depot is one of -- is part there. It's the #1 shareholder. I think you know the project very well. I think it's quite huge projects seeing this wonderful country using now high-speed trains. You see in Europe, we have many, many towns here with the high-speed train. We thought it would be great for Canada since the distances are so big, but we needed to have all the right conditions in place. And it seems that things are now happening with Caisse de depot, an ex-partner of SNCF. We have excellent relationship with your main shareholder, by the way. And together, we were able to get new business. We will start all the proprietary work. And personally, I consider this as a wonderful, beautiful project and SNCF could maybe contribute for the success of this project, I would be proud of that.

So a friend state like Canada starts high speed, you're choosing a French solution, it's really great. It's something that is really great, and we are happy to continue and maintain our relationship. It's a very long-term relationship. And there can be attentions like in any relationship, but it's a good one, a good partnership, and I hope it continues in the future.

Obviously, you are our best supplier or greatest supplier. We are your best client. We have common interests. And I think that it is possible to continue. We need to go through a number of major steps if we want to move forward and for our two companies and for our country, our government we need to find the right convergence. I'm sure that this is at reach. It will go through the men and women of our companies.

In the past, we knew that we would be able to reach that goal. And thank you very much. Enjoy your meeting.

[Presentation]

Before I give the floor to Henri again, I wanted to say that it is great to see a client who is so passionate about his industry and our products. It's great to see that in the middle of a general meeting such as ours. Henri, would you like to continue, please speaking about achievements.

Thank you. Yes, I'm sorry that temperature is cooling down where we speak about numbers and describing this year's P&L. We are coming back to more tangible achievements of effects. We're going to have the facts and figures, EUR 19.8 billion in orders booked in 2024, '25. This ratio between orders and turnover, which is higher than one, and it is diversified with the different business lines and also among the different continents. I'd like to focus on a couple of orders here. We spoke about the TGV and Germany also, which is the #1 market in Europe. It's one of the main challenges of our integration with Bombardier. We won the two best orders, the urban one for Hamburg or suburban for the Colonia region. Services, with the regional fleet. Signaling also is very important. We reached a record level in terms of orders, almost EUR 8 billion. And EUR 3 billion in orders with two framework agreements that are very important in Europe. So a great year in terms of commercial aspects.

Jean-Pierre spoke about the markets and the opportunities. You see that our commercial activity is growing. We're very active and this success should continue for the next few years. We have a solid performance, and we will come back to that later. EUR 18.5 billion in orders, EUR 5 billion in sales. We are in line with our objectives, which is 5% organic growth per year. It's actually 6.6% achieved this year. This is a regular solid and resilient growth year after year. Our EBIT is in line with our objectives with a margin of 6.4% and 18% increase in our EBIT year after year or operating margin income. And the free cash flow is at the top of our estimates. We thought it would be between EUR 300 million and EUR 500 million, and we achieved EUR 502 million in cash generation. This is linked directly to our commercial activities since we are funded by our customers and also to the operational quality of our deliveries and the fact that we are maintaining our deliveries Jean-Pierre highlighted this aspect, and I am totally in agreement with him.

There's an important environmental interest in the train. It's what we call green mobility by excellence. And this is putting a number of obligations upon us. The products have to be environmentally friendly. Much better than other mobility possibilities, and we have to make them ourselves. We want to have this insured. We have Scope 1 and 2, which is for the internal part of CO2 emissions. We reached minus 8%. It's a 40% reduction over the past 5 years, and we are ahead with our objective. We are ahead of 5 years. We are working a lot with SNCF and all the different operators. And there's Scope 3 that is the emissions by the products we make for example, the TGVs lifeline emissions, it will also depends on how much electricity or power will be put by the operator.

In France, as you know, electricity is decarbonated. So we have this great comparison against aircraft, for example. And in other countries, electricity is with more carbon. So we have to be careful in view of Scope 3. And technically speaking, we are the industry with the highest taxonomy rate and this is quite natural given the environmental value of the trains we have.

Just a brief update on the operational aspects. We made a lot of progress last year in the delivery of our train cars, the beginning of the year was a bit more difficult because of supply problem that solved in the course of the year. The good progress, therefore, on our sales, production and sales of cars in the last quarter.

Since 2023, we have increased our production by 9% each year. We achieved our objectives of last year. Germany, as I said, is one key point for Alstom. It's one challenge. We adapted a lot of our industrial footprint. We disposed of one of our sites. And this way, we could streamline our industrial tool. I'm very proud of that without any labor problems. KNDS is going to take over the head count of our factory, as you know.

In Germany, we regained a very strong sales positioning, and we were awarded two major projects. And a few indicators. And now since the integration of Bombardier, we have reduced -- we have divided the external demerit by four. We have manufacturing throughput plus 43% since March 2023. So we increased by 43% as throughput once again post COVID. And for the Rolling Stock, we also increased the points. I would like to thank Jean-Pierre for the relationship we have with SNCF. We co-design at TGV with the SNCF, it's not always easy, but we are working hand-in-hand to improve the execution and therefore, the delivery time, and we increased by 21%, the trains delivered on time, which has an immediate impact on the NPS, record NPS.

Okay. So some trends are on good track, as I said, but the story is not over, of course, far from that. And we are opening a new chapter. We had a strategy called AiM 2025. So we are going to open up a new chapter because this chapter of globalization, this chapter of renewal of the product range and increasing services. This chapter is there, is well robust. And we are going to open up a new chapter with new challenges and new ambitions.

Among the main priorities, I'm going to comment on this slide, Page 25, we want to seize the profitable opportunities and shape the profitable opportunities. We want to rely upon our industrial footprint, our engineering footprint across the world.

As I said, many -- very much proximity, very close to customers, a fragmented world asking for this local industrial footprint and we have a positioning which is unique. So we want to rely upon this unique positioning to be even closer to our customers and through partnership, we can then have more profitable opportunities.

When I say more profitable opportunities, it's not necessarily the fact that we're going sell our trends at a higher price. Now, the fact that we are close to our customers will allow us to define with the customers, the best solutions for the customer and for Alstom, be profitable for Alstom, but also more efficient for customers.

And this commercial work is made possible because we are close to our customers thanks to this fragmented structure and our very strong local geographic organization. We absolutely need to improve execution. That's key. Of course, it was true 10 years ago. It will be true 10 years later. It is really our daily work. We need to be swifter in developing trends and the quality should improve. Why do we say it constantly? Well, it's because the requirements are higher and higher. The world is becoming more and more demanding, the ecology, the reliability of trains, all those requirements, if Jean-Pierre was there. Well, he said it, by the way, that some trains in the past had some difficulties. But what customers expect that on the very first day of commissioning, the train should be perfect, that it should be made available. And it was not that much the case 10 years ago or 20 years ago. So the electronic complexity of trains and so on. So we need, therefore, to keep on improving the execution, meeting the requirements.

Two differentiators, service and here, we already talked about services. But here, we need to change the DNA of the group. Based on a project transactional one in the past, two daily service DNA for the future, which means that service is our front face. It's our door open to the customers. So there is much work to be done, not only to increase volume but also change in depth, the DNA of the group, which is very much focused -- project focused in order to be more service driven. This is, of course, consistent. Once again, our geographic proximity allows us to have that. We have hundreds and hundreds of warehouses and service points worldwide. Therefore, this machine.

And finally, digital, digital technology, extremely important to improve the execution internally and we have common tools throughout the group but there is a last effort to be made on engineering and the digitization of our engineering, the automation of our engineering, which is not at the right stage yet. But we are also mentioning the digital solutions. Our operators, our customers want us more and more to take on board their digital information services to incorporate our trends in their complete systems, and we have to do it. But safely, of course, let us say that we take care of the cyber security of our customers. This, again, is fully consistent, and therefore, we need to be close to our customers throughout the life cycle of the trains and to be in partnership with our customers. As you know, cyber security is a moving item which has to be adapted constantly. So those priorities are very strong priorities. And we're going to work detailing this new road map. It's a highly ambitious one focusing on execution services and digital technology.

This is it. I'm going to give the floor to Bernard. And once again, I would like to finish in saying that I will pay great attention to this transition period so that the succession takes place successfully in developing the group each day while securing the transition and succession the best way. As Jean-Pierre said, we can all be proud of having a large leading group. And I would like to say to our friends beyond the Atlantic ocean, we -- well, we are very proud to have a French national company and the SNCF and so on, and we have to preserve that.

Bernard, the objective is to make sure that the audience is a lively one. Okay. That's your objective.

Ladies and gentlemen, dear shareholders of Alstom, it is an honor for me to present the financial statements of your company for the financial year ended the 31st of March 2025, and I'll try and do it in giving you figures and the resolutions submitted to your vote, especially resolution #2, where you will have to vote on the consolidated financial statements of the Alstom Group for the fiscal year '24, '25. The main figures were commented upon by Henri, sales EUR 18.489 billion. Organic growth, 6.6% and for the total growth versus the last financial year, 4.9% because the currency impact was negative. The contracts we executed in currency, which is not in euro. When we transfer them into euro, it had a negative impact because of the appreciation of the euro. So the operating income adjusted EUR 1.176 billion, plus EUR 180 million versus the previous year, representing adjusted operating margin of 6.4%. That is a plus 70 basis points versus last year. Because of -- thanks to the volume, mainly on the increase, sales increasing, but also cost reduction.

And the operating margin, you have nonoperating expenses on the decrease last year from EUR 610 (sic) [ 510 ] million to EUR 198 million, and it will be still further reduced because those expenses were representing the integration or onboarding expenses of Bombardier. This integration phase is now over, and therefore, those costs which were nonrecurring. That's why they are regarded as nonoperational, we'll keep on reducing. And last year, they already decreased to a large extent.

Furthermore -- and this operating or this margin, you have financial expenses, EUR 214 million last year, down versus EUR 242 million previous year. And we have to see the impact of the deleveraging plan implemented very early during the financial year. Therefore, we reduced the debt of the group, so it's a favorable result. Thanks to the increase in the capital you voted on last year. So the increase in profitability, there's an increase in taxes. Unfortunately, we have to pay -- they went from EUR 33 million to EUR 217 million this year. And we pay about 35% of our EBIT before taxes. And our objective is to reduce this rate while, of course, complying with the tax legislation in all countries were represented in. All these items lead us to an adjusted net profit on the very strong increase versus last year. Now EUR 498 million versus EUR 44 million last year. And if we incorporate the depreciation and the goodwill accounting impact related to the acquisition operations of Bombardier in 2021, you will see the increased income going from a loss of EUR 307 million to a positive result in this year of EUR 153 million.

I'd like to take this opportunity to speak also about our social results following the French standards and no longer the international IFRS standards. So the head company, right, of which you are directly shareholders. The net income of Alstom is a profit of EUR 84.6 million, so the reserves are now of EUR 6.6 billion. There will be no dividends this year. This is due to the payment of the debt, that's a plan we continue in '24, '25 and as well in '25, '26.

Because of this situation and because of this plan to reduce our debt, last year's debt at the same date was about EUR 3 billion. It was first reduced, thanks to the execution of the [ dis-indebtment ] plan. We have a divestiture of assets in the United States.

Debt emission, one component of the capital, so it's deleveraging and EUR 1 billion in capital reduction that has been voted here. With this deleveraging plan, there was also a cash flow generation, as Henri described for EUR 502 million this year. And by the way, this EUR 500 million is the highest cash generation ever made by Alstom for many, many years and particularly since the creation of Alstom Transport. So it's a positive performance. It is also the fruit of increase of margins and a good control of temporary treasury movements, what we call the working capital requirement, which was quite limited this year when traditionally, it can be quite high in our industry based on projects.

Beyond the free cash flow, there are two other items that are worth noting. The interests of this hybrid debt, what we call the hybrid coupon that has to be paid back and also the interest that will vary according to the accounting laws but are integrated in the debt. So the payment of the debt is reducing the lease, so instead of EUR 3 billion last year, it's EUR 434 million this year. So you see the debt has been reduced considerably and the rating agencies, which are important in our environment since they determine our rating, therefore, the cost of borrowing and also the cost of the guarantees, we use to manage our activities vis-a-vis our customers.

So Moody's, this rating agency confirmed our debt when last year, it was going to be degraded. Speaking about the debt. Alstom's debt is EUR 2.8 billion and the gross debt is EUR 2.3 billion or EUR 2.4 billion in cash. So the debt is roughly EUR 400 million as presented. The maturity is 3 to 4 years. This year, we have no debt to repay. We will have EUR 500 million to pay in '26 or EUR 700 million and it is not at a high price since the interest rates were negative when the debt was started. And when the interest rates increase, we will change our plans. We'll see.

Here, the perspective, the outlook that was announced to the investors in May. This outlook is based on a number of assumptions we made. Hypothesis that are very robust. First, because we think we have a supportive market demand, as was explained earlier. The number of carriages or cars produced. It can be locomotive or it can be TGV carriage gives you an idea of our industry. The number of cars produced would be stable, around 4,500 this year, knowing that the number of cars is only one indicator of Rolling Stock. But next to that, we also have signaling and services. However, it is a significant indicator that we monitor.

R&D expenses will also increase to exceed 3% of our sales. And finally, we exclude potential negative impact from tariffs, particularly the American customs on the execution of our contracts in the United States. We consider that we are well protected, and we are able to measure what those tariffs will be after all the announcements are translated in reality. We think we are well protected, thanks to our contracts, and we can reclaim part of the impact from our customers.

With this outlook, we think we'll have a good commercial activity. That is that the ratio between our orders intake and turnover will be higher than one. Particularly for Rolling Stock where the ratio was under one in the past 2 years. Our sales organic growth should be from 3% to 5% which seems a little compared with a 6% last year, but there are a number of technical reasons to that. We think we will be on the higher part of this bracket.

The EBIT margin will be around 7% when it was 6.4% last year. So it's going up. We think we'll have a positive cash flow generation from EUR 200 million to EUR 400 million, and we indicated to the market as you have -- might have noted, when we speak about the half year results, we have a negative cash flow generation on the first half of the year of EUR 1 billion linked to what I said before, the volatile cash linked to the execution of our contracts. For some contracts, we are in a phase where we will not receive as much payments as we will have in expenses for -- to deliver our trains.

In medium term, we will confirm our ambitions. The book-to-bill level will be above one. The average sales growth will be around 5%. The EBIT margin might exceed this 8% to 10% rate. And there's another perspective, which is the free cash flow conversion trending to 100% over the cycle.

Last year, we had EUR 500 million in cash generation, so we've done that already, and we look at this for the next years. And we confirm our objective, which is to generate for the third consecutive year, last year, this year and next year, a EUR 1.5 billion cumulative free cash flow. Here is the share price evolution since the last general meeting, you see that Alstom's share price has increased faster than the French CAC 40 and the SBF 120 during that same period. Last year, we said that there had been a sharp decrease of the share price in October '23. Since then, it's been a good evolution with even a peak around EUR 26 during Q1 due to the announcement of a great infrastructure plan in Germany, Alstom should benefit from. It decreased due to the announcement of our free cash flow seasonality effect, which discouraged our investors. And yesterday, the share price exceeded EUR 20 once again. So this is what I wanted to explain today.

Thank you, Bernard. We see with the applause that you made this financial presentation quite exciting. And now I would like to give the floor to Kevin Cogo, our Chief Strategy Officer. He will describe our CSR priorities and the results for Alstom.

Good afternoon, ladies and gentlemen. It's the first time I attend this shareholders' meeting. So I'd like to thank you in advance for your attention. We're going to speak about our Corporate Social Responsibility and our priorities by 2030. We'll speak about our ambitions and the previous achievements.

I would like to thank Henri and also Jean-Pierre Farandou because as you heard -- many aspects are not only for CSR, but also for business have to be seen under the angle of CSR.

Here are the five priorities. Number one, mobile -- facilitate the zero emission mobility. We develop new technologies to support that. In our portfolio, we made a number of choices on electricity only, and we are also investing in hydrogen-based batteries to improve our impact with our Rolling Stock.

The second priority is our resource preservation biodiversity, thanks to eco-design and also the circular economy. This year, we have signed a contract for our low-carbon steel, which guarantees 95% recycling in the steels that we're going to use. This is a contract we signed with the SSAB company.

The third priority is to improve the security and safety of our employees. As you know, we have many, many people in the plants out there in the field. It's a top priority, and we continue this year, and we exceeded our objectives in this year in terms of incidents and accidents.

Our fourth priority is people care and growth and also access to mobility. And that's one of the key aspects for TGVM. It's the access possibilities for people with disabilities. We've been working with a number of associations to understand the needs and find the right options and solutions that could be available on the new TGVs.

And the last ambition is our responsible value chain. It is a major challenge for us, as you will see in this slide. We are taking also our suppliers in this social performance journey. We continue to inform our suppliers in the next few years. They represent a great part of our impact.

Speaking about our objectives. This is our transition plan to net zero in 2050. To achieve that, we have three main implementation areas Henri started speaking about this for our results. The first one is the upstream Scope 3. And this is actually embarking all our supply chain and all our suppliers. We want to reduce by 30% our CO2 impact by 2030. We confirm this ambition, and we are committed with an action plan with our suppliers.

The second point is Scope 1 and 2. We have a lot of tools for that because it has to do with our plans, our footprint only accounts for 1% of the emissions along the total value chain. But that's where we have the opportunity to make a difference. We confirm the objective of minus 40% in 2030. We have already reached it. We reached it because of mild summer -- winter, sorry, and large variation in our electric consumption. But in the years to come, we'll have some challenges. That's why we maintain this objective.

And the last point, which is the biggest challenge that Scope 3 for the Rail downstream. The use of our technical solutions by our customers. Our ambition is to reduce by 42% of the CO2 impact per passenger, per kilometer by 2030. You saw the TGVM reduced -- reduction by 20%. But for passengers, it's almost 33%, 35% of reduction per passenger. That's the most difficult challenge for us. We invest a lot in R&D, to introduce new technologies, but also more efficient traction chains.

What matters is that the rail by nature, as explained by Mr. Farandou is a strong contributor to the emission reduction for 1 ton spent when you take the train, you avoid about 5x more if you had used different modes of transportation, be it the car or the plane. This is very important for Alstom. And that's why we invest so much in this field. If we look at what we've been achieving some major achievements, we have 53 sites equipped with LED lighting. This investment was started some years ago. 31 sites are in progress, 100% -- moving to 100% of LED lighting, significant impact on consumption. Since the first of January in Europe, 80% of the electric power consumed comes from renewable sources. And we also invest in solar panels heavily for some of our plants. We equipped it 12 -- we produce 12 gigawatts on our sites and the investment plan continues. It accounts for about 3% of the consumption, but it remains investments, and our sites become a bit more autonomous in terms of energy or electricity generation.

And the last point is the renewable electricity share in the world went from 77% to 88% in 2024, mainly thanks to some countries like Australia, the Czech Republic, Romania, but also Canada with contracts of renewable energies. That's what I wanted to share with you. I thank you very much, and I'm going to...

To me, to me.

Okay. Thank you.

Thank you, Kevin. Okay. So I'll be talking about the governance. And I will invite afterwards, our Chairman of the appointment of Remuneration Committee, Baudouin Prot to take the floor.

Regarding the governance. Next slide, please. Here you are. The Board of Directors, which I have chaired since last year, is made up of 12 directors among whom compared to last year. We have two new directors appointed on the first of January, representing the employees, Mr. Claude Mandart and Mr. Mario Orlando Campo, maybe you can stand up so that our shareholders can see you. Mario Orlando Campo, thank you. Well, I don't know whether you've seen them, okay.

We also have new representative for the sensor, Mr. Edouard Ringuet, the observer. He joined us recently replaced Benoit Raillard, maybe can you stand up, Edouard, thank you, the observer. And the independence rates within the Board is high, 80% and the diversity, especially well, it's good equilibrium, 50% men and women, various nationalities. And various expertise and experiences. It's complementary. Your Board of Directors complies with the regulation, therefore, and the best practices of governance.

You will note that the Board has been strongly committed and engaged with 11 meetings and independence rate of 98%, 4 executive sessions without the general management level of 100% attendance rate.

Now if you look at the committees, we have 3 committees within the Board of Directors, each committee is made up of at least 2/3 of independent directors. You will note that last June, we terminated the integration committee set up for the acquisition of Bombardier Transport.

The three committees in place now had a higher rate of activity during the past year. With 4 and -- to 6 meetings each year, and the attendance rate is between 96% and 100%. If you are interested, you can find all these details and even more detailed information especially on the topic, submitted by the committees during the financial year in Chapter 5 of the universal registration document, Page 198 right up to 245.

Then you will have noted the absence of resolution relating to the composition of the Board of Directors this year. Indeed, no terms of office is expiring after this shareholders' meeting. So thank you very much for your attention, and I'm going to ask Baudouin Prot, the Chair of the Remuneration and Appointment Committee come to the podium in order to present the resolutions submitted to your vote in terms of remuneration.

Thank you, Chairman. Ladies and gentlemen, shareholders, good afternoon as the Chair of the Appointment and Remuneration Committee of Alstom, allow me to present the resolutions between 5 and 10 submitted to your vote. Regarding the remuneration policy for the financial year '24/'25. And furthermore, the remuneration the corporate officers of the past year. .

First of all, Resolution #5 regarding the remuneration policy '25/'26 of the CEO. Regarding this remuneration policy. It is unchanged versus the previous year, and it is a matter of three components. Yearly fixed compensation unchanged since 2021. Variable short-term compensation, 80% of which will depend on the overall objectives of the group and 20% specific to objectives of the CEO. And the third component, a variable long-term compensation performance shares, the acquisition of which will be submitted to internal performance conditions.

Let's come to the remuneration of the CEO, it includes also benefits in line -- defined contribution pension schemes and noncompetition indemnity. You will find the information on Page 249 and further following of the universal registration document.

Let's come to the remuneration policy, 2025/'26 for the Chairman of the Board, Resolution #6. Regarding the remuneration policy, '25/'26 for the Chairman of the Board, and you'll be you would be voting on it, Resolution #6. It has remained unchanged versus the remuneration policy of the previous year with a fixed annual compensation and benefits in kind mainly. And you'll find all details Page 256 of the registration document, the URD.

Remuneration Policy '25/'26 for the Board members. The compensation policy of 2025 for the members of the Board of Directors are the subject of resolution #7 is unchanged versus the previous year. This policy was based on an annual envelope of EUR 1,300,000, authorized for the first time by the 1st July 2014 shareholders' meeting. Allocation rules set by the Board of Directors are comprising a fixed portion and portion attached to the attendance rate, and you had information on the attendance rate of the various sessions. You'll find this information on Page 248 of URD.

Back to -- now the remuneration of the past year, Resolution #8, 9 and 10. We'll start with a general report on the remuneration. And after resolution #8, you will be invited to vote on the general report on remuneration. So remuneration of all corporate officers of your company, I'm not going to enter into the details of the Chairman of the Board and the CEO because I'm going to talk about those conversations subject of two specific resolutions I'll present later on. This report comprises other information as well remuneration of the Board members. Altogether, they received an envelope of EUR 848,124, (sic) [ EUR 948,124 ] representing approximately 73% of the total envelope. And the part paid by reason of attendance amounts to around 64%. And for the remuneration of your Chairman and the CEO. Well, you'll have all the details regarding the average statistics and this remuneration of the Chairman of the Board and the CEO, Page 257 to 267 of the URD.

Remuneration of the past year. Henri Poupart-Lafarge, CEO of our company, Resolution #9. Henri Poupart-Lafarge received a fixed annual compensation of EUR 950,000, will receive a variable yearly remuneration of EUR 1,117,200 corresponding to the achievement of objectives of 117.6% linked to the overall performance of the group, 80% and specific objectives 20%. This variable remuneration can only paid to Henri Poupart-Lafarge if your vote on the resolution is positive. The fixed and variable remuneration for '24/'25 will be then reaching a total amount of EUR 2,067,204. On top of that, you have benefits in kind and the shares received for Performance Share Plan 2021, acquisition in July 2024 and the defined contribution pension schemes, it's in the URD.

Finally, with regard to the remuneration of our Chairman of the Board of Directors, Resolution #10. You will have to vote on the remuneration of the Chairman, Mr. Philippe, I received an annual fixed remuneration as the chair, EUR 352,500. This compensation was paid. The day he was appointed as the chair, that is from the 20th of June 2024. Mr. Philippe Petitcolin received remuneration as a Director and did not receive it once he became the Chairman. You'll find all details on these conversations on Page 267 of the URD '24/'25.

Ladies and gentlemen, dear shareholders, thank you for your attention, and I'm going to hand the floor back to our Chairman.

Thank you very much, Mr. President of the Committee of Remunerations. I would like now to ask Dominique Muller from Forvis Mazars firm to come and present the statutory auditor's report.

Thank you, Mr. Chair. Ladies and gentlemen, shareholders, good afternoon. On behalf of the statutory auditors, Mazars and so I'm happy to present the auditor's report for 2025. And I'm going to summarize the terms of the different reports, which are at your disposal and are in the URD, which was also delivered.

I would like to start with a report on consolidated accounts. This report was presented following the IFRS standards in Europe. We serve -- all these -- certified those accounts with no unqualified or unmodified remarks and some aspects have been attracting our attention. The audit looked at the reflection of the long-term contracts and the evaluation of investigations and disputes.

The fundamental part of our mission is to have a reasonable assurance about the true and fair view of the accounts. I want to make sure that the accounts have no significant anomalies. In order to do that, we want to see all the significant subsidiaries of the group, and we made a report on all the business activities and organizations of the group. We also verified the management report and any other document sent to the shareholders, bringing no further comment.

Concerning the annual report of the accounts of Alstom SA according to French accounting standards, we looked at the evaluation of the participation in Alstom Holding. We certified these accounts in an nonqualified and unmodified way. Concerning our report on regulated conventions. We have a new convention for the exercise on 31 March 2025, authorized by your Board of Directors and view of a contract between your company and a financial establishment. We have never -- not seen any other convention where there would be the development during the excess -- the last fiscal year. We can also speak about the report on sustainability, which is the first report of that kind in -- presented in March '25. Our remit was to give an unlimited reassurance on the CSR of Alstom. One is the compliance of the analysis system of double materiality, assessment of your company in respect of the obligation of consultation of the social committee. It also covers the compliance of information provided with the sustainability standards, the [ OCRS ] and the request for a publication in view of the regulation on taxonomy.

In synthesis on the sustainability report, we haven't seen no inconsistencies, mistakes or emissions concerning the compliance of the process and information in terms of reliability in terms of IFRS. We have made an unqualified and unmodified comment. Concerning the extraordinary part of this general assembly, we provided five reports, you can see on the screen. With resolution projects that are submitted to vote this afternoon and concerning the operations on equity.

We made no observation on the principal mode that was presented by the Board of Directors. Mr. Chair, ladies and gentlemen, shareholders, thank you for your attention.

Thank you, Mr. Muller. We are now going to open the floor for discussion. You have hostesses in the room, you can ask your questions in written or orally. If in written, you can use the form that was given you at the entrance of this room.

Before we start, I'd like to draw your attention on the fact that Alstom Company received a written question relative to our [ 225-84 ] of the code of commerce by Mr. [indiscernible] I'd like to thank him. The answer to this question is compliant to the regulation and was sent online on the company's Internet website previously to this assembly. So we will not address this question in this meeting. And now I give the floor further to the floor.

Yes. Good afternoon, Mr. Chairman, and good afternoon, ladies and gentlemen. 30 years ago, you said there would be a link between Thalys and Houston with the TGV. But this project never took place. Why are there so few developments of Alstom in the United States? And I don't think there is any fast train development like the TGV in U.S. when we have so many links between 500 to 1,000 kilometers between the cities, it will be a great competitor to cars and planes. .

My second question is about hydrogen. You are investing in hydrogen. What is the economic interest for Alstom with this type of investment.

Thank you. We'll answer those two questions. Thank you for your questions. Speaking about the high-speed trains in the United States, we do have a number of projects in the United States. But as you say, this has been around for a very long time and none really succeeded. There's a sort of triangle in Texas that was always promoted by the Japanese with Japanese investments. And this project failed and was never implemented although this is still an intention of the Texas government.

In California, there's another high-speed train project, but it is hard to find investments for that or funding. There's a private operator Brightline line trying to commission link by 2030 between Los Angeles and another town in California. There are many other projects in Chicago and so on.

As far as Alstom is concerned, we were the first to sell the TGV in the States. So the TGVM for the Northeast corridor, this corridor goes from Washington to Boston. This TGV will be commissioned in the next few weeks. Now why is it a specific project and why we did not qualify it in the same way because we are using an existing line or and Amtrak didn't want to start a new track. You can imagine the price of a new track between Washington and Boston, given the real estate and all the investments this will mean. So there's also the Avelia Liberty, which is on that TGV, Brightline will be covered by a competitor, but we do have some presence on the American territory with that TGV.

However, you are absolutely right, and this was mentioned by Jean-Pierre Farandou seen from Europe, there are many places in the world where we could have TGVs. We spoke about the Canada, the United States, Australia, where there is also an obvious corridor between Sydney and Melbourne. It could be Kuala Lumpur to Singapore is an obvious corridor. A few things are developing. Vietnam, for example, has a TGV project. China also is funding a number of high-speed projects or TGVs in the Southeast Asia or Pacific Rim. India also is launching a high-speed train project, and we would like to take part of that. So yes, TGV is not only European and Chinese, it is more and more global project.

Concerning our investment in hydrogen, let me give you some context to that. In Europe, half of the train network is not electrified yet. So the question is, how should we electrify the rails and stop having diesel locomotives. It's the same in the United States, where 97% of the network for American Freight is not electrified. So what technology is available. You can electrify through catenaries but the infrastructure is very expensive, and this can only be justified if you have a very dense network.

India, for example, has accomplished a great work here with electrification moving from 70% to 97% in a few years. It's 50% in Europe, almost nothing in the States and 100% in India. It doesn't seem obvious, but they have more electrified networks in those countries.

If you don't use catenaries and you can use batteries, for example, which is one other technology, which is more mature than hydrogen. But the problem with batteries is the autonomy. You can have 100 or 150 kilometers with batteries, but we are looking at mix or combined power with catenaries at the beginning and then batteries for the rest of the 150 kilometers. That's one possibility.

Now what do we do for large distances. And the only technology we can look at is hydrogen. It was slowdown. It was slowed down in the past few years. Given our hopes in this idea, we invest very little in hydrogen actually. We are investing in cell -- fuel cell batteries. And we integrate batteries also in our trains. We do not develop those fuel cells ourselves. We've sold a number of trains in Germany, for example, in France or in Italy with hydrogen powered systems. But it will be only one part of the fleet. It's 20% of the fleet because it is only for the less dense networks, different ways to do that, it might reach 5% to 10% of the market, max. But the hydrogen technology did not develop as fast, did not mature as fast as we would have wished or as it was sold to us, actually. So it is taking some time to become a reality. We think there could be a good commercial growth in the next few years, but it was postponed by a few years.

To address this market, we need to find a solution to decarbonate transport. Fuel cells are a great idea. They are successful. And we are the only ones to have a train operating every day in Germany, for example, people are commuting every day on a hydrogen-powered train. But as you said, it is expensive. Also, it's not always available. Maintenance is another issue. So, it's not a mature technology, but it will happen.

Thank you, another question I think they all fell asleep. Well, if there are no further questions, we can now move on to our resolutions. And I'd like to give the floor to Emmanuelle Petrovic, who will start the voting process.

Thank you, Mr. Chairman. We will start to present you the vote procedure, the electronic vote.

[Operator Instructions]. As indicated at the beginning of this meeting, the quorum needed for this is 20% for the ordinary part and 25% for the extraordinary part. The final statement of the attendance sheet shows that the shareholders present or represented or voting by proxy hold 338,111,180 shares with voting rights, which is 73.19% of shares with voting rights. Therefore, the quorum is reached.

Resolutions must be adopted by a majority of votes held by shareholders present, represented or voting by mail or by distance for the ordinary business and 2/3 majority for the extraordinary business. I propose to present title summarizing is resolution provided that no one requested it be read in full. I see that there are no objections. Therefore, I will present the resolutions and invite you to vote on each of them after I have declared the vote is open.

First, ordinary resolution, approval of the annual accounts for the financial year ending on March 31, 2025.

[Voting]

Vote is closed. The resolution approved.

Resolution #2, ordinary resolution, approval of the consolidated financial statement for the financial year ending on 31 March 2025.

[Voting]

The vote is over. Resolution approved.

Third resolution, ordinary, appropriation of the results for the fiscal year ended 31st March 2025. The vote is open.

[Voting]

Voting over. Resolution approved. Resolution #4, ordinary. Special report by the Statutory Auditors on regulated party agreements, approval of the regulated party agreement. Vote is open.

[Voting]

Voting over. Resolution approved.

Resolution #5, ordinary resolution. Approval of the remuneration policy '25/'26 for the CEO. Voting is open.

[Voting]

Voting over. Resolution approved.

Resolution #6, ordinary resolution. Approval of the '25/'26 remuneration policy for the Chairman of the Board of Directors. The vote is open.

[Voting]

The vote is over. Resolution approved. .

Resolution #7, ordinary resolution. Approval of the '25/'26 remuneration policy for the members of the Board of Directors. The vote is open.

[Voting]

The vote is closed. Resolution approved.

Resolution #8, ordinary resolution. Approval of the information specified in Article L. 22-10-9 of the French Commercial Code, report on remuneration. The vote is open.

[Voting]

Voting over. The resolution is approved.

Resolution #9 ordinary one. Approval of 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 Henri Poupart-Lafarge, in his capacity as a Chairman and CEO and then as Chief Executive Officer. The vote is open.

[Voting]

The vote is closed. The resolution was approved. Resolution #10, ordinary resolution. Approval of fixed, variable, exceptional components of the total remuneration and benefits of all kinds paid during the last fiscal year to Mr. Petitcolin as Chairman of the Board of Directors. The vote is open.

[Voting]

Voting over. Resolution approved.

#11, ordinary resolution. Authorization to be granted to the Board of Directors to trade in the Company's shares. The vote is open.

[Voting]

Voting over. Resolution approved.

#12, extraordinary resolution. Authorization to be granted to the Board of Directors to reduce the share capital by canceling treasury shares. The vote is open.

[Voting]

Voting over, resolution approved.

#13, extraordinary resolution. Delegation of authority to be given to the Board of Directors to decide to increase the share capital by capitalization of premiums, reserves, profits or any other sums. The vote is open.

[Voting]

Voting over, resolution approved. .

#14, extraordinary resolution. Delegation of authority to be given to the Board of Directors to decide to increase the share capital of the Company or of another company by issuing shares and/or securities giving immediate or future access to the share capital with preferential subscription rights. The vote is open.

[Voting]

Over, resolution approved. #15, extraordinary resolution. Delegation to the Board of Directors to increase the share capital by issuing shares and/or securities giving access to the share capital without preferential subscription rights by public offering other than the public offerings. The vote is open.

[Voting]

Over, resolution approved. #16, extraordinary resolution. Delegation to the Board of Directors to increase the share capital by issuing shares and/or securities giving access to the share capital without preferential subscription rights by public offering specified in #1 or article L. 411-2 of the French Monetary and Financial Code. The vote is open.

[Voting]

The vote is closed and the resolution is approved. #17 extraordinary resolution. Delegation to the Board of Directors to increase the Company's share capital by issuing shares and/or securities giving access to the share capital without preferential subscription rights, reserved for members or saving plans. The vote is open.

[Voting]

Voting over, resolution approved. #18, extraordinary resolution. Delegation to the Board of Directors to increase the Company's share capital for -- reserved for a category of beneficiaries without preferential subscription rights. Vote is open.

[Voting]

Voting over, resolution approved.

And #19, extraordinary resolution. Delegation to be given to the Board of Directors to increase of securities to be issued. The vote is open.

[Voting]

Over, resolution approved.

#20 extraordinary resolution. The increase in capital by an increase in shares of securities as consideration for contributions in kind consisting of equity securities or securities giving access to the capital. The vote is open.

[Voting]

Voting closed. Resolution approved. .

#21, extraordinary resolution. Delegation to the Board of Directors to issue shares in the company, following the issue by subsidiaries of the Company of securities giving access to the company's share capital, without preferential subscription rights. Vote is open.

[Voting]

The vote is closed. Resolution was approved.

Resolution #22, extraordinary resolution. Authorization to be given to the Board to make free grants of existing shares or shares to be issued, to employees and corporate officers of the Group or to some of them. Vote is open.

[Voting]

Closed, resolution approved. .

#23, extraordinary resolution. Ratification of an amendment to bring the Articles of Association to compliance -- participation of directors in Board meetings via means of telecommunication. Vote is open.

[Voting]

Over. Resolution was approved.

#24, extraordinary resolution. Amendment to bring the articles of Association into compliance -- proxy voting by shareholders. The vote is open.

[Voting]

Voting over. Resolution approved.

#25, amendment to bring the Articles of Association to compliance -- participation of shareholders in shareholders' meeting via means of telecommunication. The vote is open.

[Voting]

Over, resolution adopted.

And #26, the extraordinary resolution. Amendment to bring the Article of Association into compliance -- participation of bondholders in bondholders' meetings via a means of telecommunication. The vote is open.

[Voting]

Voting over, resolution approved.

#27 extraordinary resolution. Amendment to bring the Articles of Association into compliance -- procedure applicable if the shareholders equity falls below half of the share capital. The vote is open.

[Voting]

Voting over, resolution approved.

#28. Amendment to the Articles of Association -- decision of the Board of Directors via a written consultation. The vote is open.

[Voting]

Voting over. The resolution was approved. .

#29, extraordinary resolution. Amendment to the Articles of Association -- postal voting by Directors. The vote is open.

[Voting]

Voting over. Resolution approved and the last resolution #30. Ordinary resolution, Powers to carry out legal formalities. The vote is open.

[Voting]

Voting over. Resolution approved. Thank you very much.

Thank you to our secretary. I would like to remind you that hostesses are available in the reception hall to collect the voting boxes that you have been given and which can only be used for electronic voting in shareholders' meeting. So thank you to give them back. Before joining this meeting, I would like to thank you once again for your attendance and your renewed confidence for the company. Also, I wish you a very pleasant evening. Thank you.

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