Good day, ladies and gentlemen, welcome to the Alstom conference call. I'll now hand the call over to Mr. Laurent Martinez. Sir, please go ahead.

Thank you. Good morning, everyone. Welcome to our Alstom webcast on our first quarter for our orders and sales publication. So let's start with the commercial front with, again, a very good quarter with EUR 5.6 billion orders in Q1. We continue to see a very dynamic market with positive traction driven by green transportation transition, urbanization and energy-efficient transport solution. This positive market dynamic and our capabilities to grab these opportunities has been clearly evident as you see in the last 5 quarters, clearly demonstrating our new commercial leadership. Clearly, here, we see 1 plus 1 is above 2 from a commercial standpoint. If we focus on this quarter, clear success in Europe and Asia Pacific, which are 2 very dynamic markets. On Services, we booked EUR 1.8 billion of orders, very strong, including some very large bundled offers with Rolling Stock. Signalling and Systems orders are limited this quarter due to some phasing, but with clear positive momentum ahead. All in all, as you see, we continue to maintain a comfortable book-to-bill above 1. Just to illustrate 4 highlights for this quarter. Baden-Württemberg, our largest orders in Germany, EUR 2.5 billion on one of the most dynamic market segments, including 130 Coradia Stream high capacity plus 100 as option and 30 years of Services contract. This is a clear demonstration of our capability to meet German needs for regional trains, building on the success, as you know, of our Coradia Stream family with more than 700 orders -- train ordered in Europe. In Sweden, as you see as well, very large historic agreement with the national rail operator, SJ for 25 Zefiro Express high-speed train, again, with an option of 15 trains for EUR 650 million. This train, for your information, will be Sweden's fastest train operating at up to 250 kilometers per hour. Moving to the other side of the planet. Australia with a framework contract with the Department of Transport for Victoria for 100 Flexity next-generation train for one of the largest urban tram network in the world for an amount of EUR 700 million, including 15 years this time of Services. And finally, in India, a very large market for us, we have been awarded the contract by Madhya Pradesh Metro Rail Corporation to deliver 156 metro cars and 15 years of Services plus Signalling for Bhopal and Indore metro project for a value of EUR 400 million. Obviously, on this one, these orders clearly evidence our strength in India with, as you know, close to 10,000 people in India. We are clearly a leader on this major market. Moving to sales. We have a positive sales performance development this quarter with EUR 4 billion versus EUR 3.7 billion last year, i.e., 8% up or 5% up organic driven by FX impact. In terms of business segments, positive development in Systems with specifically remarkable progress on Cairo monorail. I remind you as well that System includes a large share of Rolling Stock and Signalling in addition to what is reported on our Signalling and Rolling Stock segment. On Rolling Stock, broadly stable with ramp-up as expected in terms of activities in India and the U.K. and ramp-down in Switzerland and Canada with some of these contracts being completed. Finally, stable in Signalling and very positive step-up in Services, driven by our franchise in U.K. and Canada specifically. All in, all our activities are developing exactly as per our expected trajectories for this year. So globally, as you see, positive Q1 in terms of order and sales. We still have to cope like all industries, some headwinds, in particular with inflation. And we are facing it, I want to stress that, with a resilient business model. And this resilience is definitively embedded in our backlog with, as you know, 2/3 of our backlog covered by indexation clauses. And I want to be very specific here, escalation clauses, in that case, are covering all our cost base natures, labor cost, material and services. If I look at our supply chain, we have 70% of our suppliers contract, which are covered with fixed price or capped prices. So where do we stand? Overall, environment becoming more complex, as you know very well. Movement on evolution of raw materials, which are rather stabilizing, while the global level of inflation including wages is potentially increasing. We have, therefore, put in place a very comprehensive action plan with a range of measures, negotiating with our customers and public sectors stakeholders, strengthening our bidding rules, restricting fixed price bids as far as we can and reviewing price submission based on latest cost evolution. We have implemented as well a range of action with our suppliers and cost-out measures as well. Overall, our target is clear: mitigate the impact of our margin and navigate into this uncertain situation. Looking at the supply chain. On electronic components, situation is becoming more complex. And here, again, we have set up comprehensive processes, dedicated team to mitigate delivery risks. In particular, we are expanding our sourcing channel, reviewing our production process and starting to redesign technical solution. With regard to lockdown to COVID-19 in China. Our factories have been closed for a few weeks since spring at [indiscernible] up and running full steam and catching up with some these delays. Fair to say that taking a step back globally for this quarter's impact on sales remained extremely limited and impact on client deliveries have been fully mitigated so far. This situation remains obviously tight and requires particular focus from our management. So to wrap up, we confirm our '22/'23 financial outlook we have announced on May 11 with sustained sales growth supported by strong backlog and book-to-bill above 1; progressive increase of our adjusted EBIT margin versus fiscal year '21/'22, thanks to our healthy order intake and our sound backlog execution; and positive free cash flow generation. We remain as well committed to our investment-grade rating. I can remind as well that Moody's, as you may have seen, has been confirming our rating last month. We confirm as well our trajectories to our '24/'25 in all dimensions: market share, and again, this quarter, there's been a demonstration; gross adjusted EBIT; and cash generation. So thank you for your attention, and I'll be happy now to take your questions.

[Operator Instructions] Today's first question is coming from Mr. Andre Kukhnin calling in from Credit Suisse.

Just wanted to start with the, one, on the kind of 0 backlog and revenue delivery. Could you give us an update on how that's gone in Q1? And should we expect kind of a similar phasing to what we saw in 2021 with about EUR 1.3 billion in the first half?

Thanks for your question. So globally, if I look at our deliveries and project execution, we are very well on track. We don't have any more some large technical issues in production, and train acceptance processes have been resuming all over the place. So globally, in terms of the sales execution, we said that we are expecting the same order of magnitude in terms of the 0 margin sales with regard to last year, which was EUR 2.6 billion. So slightly below maybe, but to the same orders of magnitude. So EUR 1.3 billion for H1, EUR 2.6 billion or a bit less for the full year is the right proxy.

Great, that's very helpful. And on margin guidance, if I may, obviously, the language is completely unchanged, the outlook is unchanged. But within that progressive margin improvement comment, I guess there is a range behind it. I just wondered if you could comment at all on whether your thinking within that range has changed at all in the last 3 months given the commodity prices changes and other kind of evolutions like China?

Well, this is -- indeed, as I explained, the situation specifically related to inflation is more complex and with contrasted situation, to be honest, with I would say some stabilization or reduction on the raw materials and some acceleration on the global inflation. So might be a bit more pressure globally, but we do confirm our adjusted EBIT margin increase versus fiscal year '21/'22, including with the current macro environment background we have as we speak.

Got it, got it. And last one, I guess, I'd have to ask on cash. There's obviously no comment and I think you made it very clear that we shouldn't expect one, but is there anything you can tell us at this stage in terms of how H1, H2 may pan out? Could we go back to kind of more of a historic normal cash phasing for Alstom now in the new shape? Or should we think about any specific drivers for the first half?

So on the cash, again, we focus on our full year objectives and we don't aim to provide quantitative guidance for our half year basis. But to give you some color, I would say, as expected, usual seasonality between H1 and H2, as I say, on May 11 on volume, CapEx, R&D and the like. Our key drivers for the full year cash has not changed compared to May 11. And of course, we are dealing with this tight supply of electronic components with maybe some phasing impact related to final deliveries to customers. But globally, our free cash flow target has not changed. And we are obviously still laser focused on generating cash in '22/'23.

We'll now take questions from Gael de-Bray calling in from Deutsche Bank. Gael de-Bray: Two questions, please. The first one on the supply chain challenges, I mean, some of your peers at Siemens Mobility, in particular, have recently flagged severe supply chain challenges impacting margins. Others like Talgo have even notified some of their customers about manufacturing delays and have claimed force majeure. So I'm surprised there was absolutely no specific issue or delays in reaching milestones so far. So can you help us understand a bit more what makes you different in this very challenging environment? So that's question number one. And question number two is on the wage inflation. Could you give us an idea of the range on the wage inflation you have assumed for the year, and in particular in India?

Yes. So on the supply chain, as I say, the situation is complex. And just to be very precise, in the short term, in the last quarters, we confirm no impact on final deliveries because I think we have been basically able to mitigate all of the supply chain issues and to cope with the final deliveries by basically reviewing the production process, mainly on the electronic components. So our key focus areas is electronic component and the rest, I would say, that there is very much less issues. On the midterm, if I look at the midterm, we are definitively in constant dialogue with our clients to prioritize the deliveries. We can, in some cases, process with partial acceptance, for instance. And with the electronic board, we are optimizing as well the production and the testing processes with kind of dummy electronic board, if you want, to optimize our processes. And we are as well chasing new sourcing channels including brokers to expand our capabilities to get parts. So that's basically the plan. We are, again, laser focused on meeting our deliveries toward our customers. If I look at the long term as well, we are implementing alternative technical solution, redesign to expand our capabilities in terms of technical solution. So that's where we stand on the supply chain. Tense situation, but so far, under control with a lot of effort from the teams. In terms of the wages, your second point, Gael. So basically, wages has been negotiated in winter, early 2022 for the full year. So the next wave of negotiation will be next winter and early next year. And it's fair to say, it's a good point you are making, that we have in our labor cost footprint a lot of best cost countries like India, China, Brazil, Africa, countries where we are used to manage with high wage inflation. And the typical wage inflation we have in India is consistent with this trend. So it is a high single digit kind of numbers.

We'll now go to Daniela Costa calling in from Goldman Sachs.

Just two from my end as well. First, can you comment on like that overall big tendering pipeline that you talked to at the CMD and how that has evolved lately, especially thinking about sort of how do higher rates normally impact the operators and their willingness to invest. If you could give us some color from past there. And then the second point, just regarding -- just a follow-up on escalation clauses and inflation. Normally, how do you see the lag because now we're seeing some raw materials starting to decelerate, things like steel. So I imagine the escalation clauses will work both ways. But is there a gap of which you would expect this to turn into a tailwind? And would that be second half of this year, the next fiscal year? How should we think about those gaps on the escalation clauses?

Thanks for your questions. So starting with the market, the market remains extremely positive, Daniela. We don't have any stop, pause or whatsoever in terms of the tender activities. So the EUR 180 billion of commercial pipeline remains fully intact, and we are executing on this commercial pipeline. To give you a sense, definitively, very positive market dynamic in India, as I mentioned, focused on the transport transition and the electrification of the rail activities in India. Germany, again, with a number of regional train and commuter trains. Australia, we are the very clear leaders. We have 80%-plus of the market in Australia. We have a number of options, which will come as well in France. Middle East and Africa is coming back as well. In that case, oil price is helping. And of course, Saudi Arabia, Egypt, as you know, we have been selected on 2 flagship projects in Cairo. Israel are extremely positive activities ahead. So market remains buoyant and I do not see any change whatsoever on that. Just a last word, I've been meeting personally 2 of our large customer CFO in the recent 2 weeks and they all confirmed their CapEx and investment plan with the request, in some cases, even to accelerate. On inflation. To your point, indeed, some deceleration on our raw material and which represents 7%, as you know, of our cost base, mainly on aluminum. Steel and copper is more stable. So as you rightly say, the escalation formula works both ways, but this is, of course, so far limited evolution as we see it. So we'll see how things will evolve in the future.

We'll now go to Akash Gupta calling in from JPMorgan.

My first one is on China. So you said you had some impact there in production because of the lockdown. Can you clarify, is that all -- is that entirely in the joint venture you own and you have there in the country or some of it was your own production? And the second one I have is demand outlook for Middle East, in particular. And there were some press reports recently that a number of countries in the Middle East region are looking to place orders, also given the rebound in oil prices. So maybe if you can comment specifically about how does the pipeline look there? And how soon some of these orders from the Middle East could come forward?

Thanks for your questions. So on China, indeed, the lockdown has been both on our joint ventures and our own production site, mainly in the south of China, for sure, around Shanghai. There's been a stop of a few weeks, 5, 6 weeks maximum. And as I say, now the teams are catching up with the clear target to catch up fully within this fiscal year. So something which is very limited impact as we speak. To your second point, indeed, on Middle East, we see a positive momentum in terms of market dynamics. I can quote Saudi Arabia's NEOM project, which is a flagship, a new city, as you know, and something we are working with in terms of supporting the transportation backbone on this project. Definitively very positive in Israel, on Tel Aviv. In again, Cairo, the Line 1 and Line 6. So this is definitively a market, which is picking up very nicely as we speak.

We'll now take questions from Mr. Vlad Sergievskii calling in from BoA.

I'll ask two one by one, starting with the first one on Rolling Stock revenue progression. They were up by 1% and I think there was some currency help in there potentially as well. I think you mentioned solid ramp-up in production of Rolling Stock and specifically, obviously, on public projects at your conference call in May. When do we now expect this ramp-up to be actually reflected in sales? And also just wondering if you would be willing to share the organic growth number for Rolling Stock sales this quarter.

Thank you, Vlad. So in this Rolling Stock evolution for these quarters, we have some mixed effect. We have a ramp-up in some part of our activities like U.K. and as well India. And we have some activities, which are basically being completed, which is ramp down. You need to have in mind as well, Vlad, that within our System activities, we have a large share of this System growth, which is coming from Rolling Stock, and that represents around 50% of our System activity. So if you want to compare from an industrial perspective, you need to sum these 2 elements. Definitively, we continue to see a ramp-up on Rolling Stock moving forward, of course, in the next quarters based on our backlog and ramp-up execution. Derby, we had a number of visitors in Derby recently, has been evidencing this ramp-up as one example.

That's great, Laurent. And my second one is on financing because this part, of course, is front and center of investors' minds. Just looking at the most recent commercial paper evolution, the borrowing has increased for Alstom like over EUR 1 billion, I think since full year results. Just wanted to check if you are willing to share the reasons for this increase. Is it indicative of your cash flow generation in the first 3 months of the year? Or it is just because you would like to carry a bigger gross cash position at certain points for some reason? Appreciate the color here.

Sure, Vlad. So just want to underline clearly, Vlad, that our daily target management is cash generation. That is top priority with customer deliveries across the companies. To achieve that, we need to, of course, manage our working capital, which is basically in line with our production cycle. And we use commercial papers, as you know, as part of our corporate treasury toolbox to fund this working capital cycle. And as part of this working capital, this treasury toolbox, commercial papers is helpful because it is basically with negative interest. So at each point in time, we have both large commercial papers and a large gross cash as well. So nothing to be worried about that. It is basically good corporate treasury processes that we are having with these commercial papers management.

We'll now go to Mr. Martin Wilkie calling in from Citi.

It's Martin from Citi. Just 2 questions, I'll ask it one by one. The first one, there's a lot of focus on risks in Germany with gas supply and so forth. And obviously, it's very difficult for us to understand the risks if gas supply gets reduced in some way. But could you remind us following the Bombardier deal what percentage of your assembly is now in Germany? And is it possible to even plan at this stage if there are going to be gas curtailments later in the year? Can you sort of deal with that? Or what's your thinking around that potential risk in the second half?

So highly topical subjects, indeed. Just to give you some color, Martin, on these subjects. So if I look at our own operations not only in Germany, but in Europe more globally, there is no direct impact on Alstom facilities in case of disruption with gas shortage. Gas is used only for heating systems. We are not using gas in our factories for any key industrial processes, which is extremely important. Second point, more complex will be the supply chain and our Tier 2, Tier 3, Tier 4 suppliers. So this would be, of course, a much more complex equation not only for Alstom, but globally. So we are monitoring carefully the situation. But to your point, there is no risk directly attached to the assembly or the production in Germany to a potential shortage of gas.

Okay. And if I can ask a second question, it's unrelated. There was an announcement last week from the European Commission on hydrogen. And I think there's over EUR 5 billion to various companies, and Alstom was listed as one of the potential beneficiaries. Just any clarity here on what that is. Is this R&D funding? Or what sort of money is the EU potentially going to be investing Alstom could benefit from in terms of hydrogen?

Thank you, Martin, for this question. Yes, an important one. Yes, so we have been very pleased to be selected, indeed, as part of this global R&D funding from EU, mainly in France and in Italy. This project has several structuring technological innovation in the field of this zero emission mobilities. And as you know, we are definitively a leader in hydrogen. And we, as you know, are -- have been starting operations since now more than 3 years in North Germany. So something which will be a significant support in terms of innovation for our hydrogen technology. So we welcome and very pleased by this EU decision.

We'll now go to Mr. Jonathan Mounsey calling in from BNP Paribas Exane.

So quite a lot have been asked already, but maybe just some specifics around the problem backlog. I saw in the press just in the last few days, I think SBB has announced that it's abandoned the plan to try to get the roll compensation systems working on the Bombardier double-decker trains. I guess that brings an end to attempt to solve these technical problems. I suppose -- I mean, what happens next? I believe the trains aren't going to run as quickly between the stations. So obviously, that sounds like a sort of failure to deliver a product that met the specifications. Have you agreed what the financial compensation will be for this? And if so, will we see cash out in the first half? And then I've got a follow-up question as well, please.

Jon, thanks for your question. So I will not be super specific on any contract. But what I can tell you related to SBB is that this decision has been taken in a full coordination with us. It's not a technical solution, it's more comfort issues. So it's something, which is for the comfort of the passengers. So -- and that's why it has been a final decision from the customers in coordination with us. And it is not, as you allude to, a failure of the technical solution. When it comes to the compensation issues, I will not, of course, comment on any specifics. I just want to reiterate that I'm very comfortable with the global provision we have booked in May 2021, and there is absolutely no elements which will make this provision change as we speak. And the last point maybe, Jon, because you talk about SBB, we are so proud to have been delivered the last train 10 days ago. So this is a project is going to the end and we had dialogue and working together with SBB.

Maybe a follow-up question about China. I see that the China HS market is probably weakening, perhaps on a multiyear basis. I guess that's probably been quite important as a driver of profit for you in your China JVs. Is that likely then to throw those sort of China businesses into sort of decline? Are we likely to see JV profit coming down in the next few years? Or can you offset with growth elsewhere in the local market?

Yes. Thanks, Jon, for that. So if I take a step back on the Chinese market, very positive on Signalling. Our CASCO joint venture is working extremely well, including putting some new technologies like Fluence, which are state-of-the-art implementation of signalling in China. Remains, as well, positive on the urban market, which is as well a second positive activities development. Fair to say, indeed, that on the high-speed, we have a reduction. But you need to have in mind, Jon, that we are having less than 10% of the market share. So it's not only a matter of the global market, it's a matter as well of the balancing of the market share. We do have Services, again, as well on these high-speed activities, which is a kind of counter cycle as well. So globally, I see a stabilization, a very limited reduction in terms of the contribution of the JV China to our Alstom results this year and next year but not at all a large decline.

We'll now go to Katie Self calling from Morgan Stanley.

Most of mine have been asked, but just 2, if I could. First, I just wanted to get confirmation, if I could, on the settlement discussions from the sort of the customers from the 0 margin projects from Bombardier. Can you just confirm all the negotiations are complete and that's kind of behind us now? And then my second one would just be whether you could update us on the progress of the German restructuring program, whereabouts are we in that now?

Yes. So to your question on the 2 settlements. These 2 settlements are ongoing, well engaged and we confirm that our target is to close this in -- during this fiscal year. But very much in line with our expectation. In terms of the German restructuring, we are -- basically have been signing a first agreement in terms of the voluntary leave with our social partners, so progressing as well positively. I remind that we will have probably a second phase of restructuring provision for this year, in addition of the one we've been booking last year, which will be around half of what we have been booking last year. So progressing as per expectation with, I remind, in terms of the transformation of Germany, reduction on manufacturing and increase in terms of Signalling software, which is a major market for Germany and which we are, of course, developing extremely positively.

The next question is coming from Mr. Guille Peigneux calling from UBS.

Just one from my side. If you were to exclude Bombardier legacy, our new orders, booked as we speak, incremental to backlog margins? So are you seeing a change of that trend?

So definitively, if I look at our global order intake for this quarter, we are definitively pleased by the quality of this order intake, which is globally consistent, Guillermo, to your point, with our fiscal year '25 target on EBIT and on cash. And I just want to underline as well that of course, for these orders and the orders to come, inflation is fully considered in terms of, of course, the price, cost evolution and the protection mechanism when it comes to the T&Cs.

We'll now move to Mr. William Mackie calling from Kepler Cheuvreux.

I wonder if we can just build on the comments you make about the order tender pipeline. Could you perhaps provide a little bit of color on what you might expect for bookings in Q2, and therefore, H1? Should we see a similar positive level of momentum that we saw in Q1 rolling into Q2? I know you've booked at least 1 large order. So book-to-bill, again, strongly positive is the question in Q2. And then on revenues, I think we've touched on the question of slow growth in Rolling Stock. But I noticed the decline in Signalling both for orders and revenue bookings. Maybe could you provide some color on how you would expect each of the business lines or you could discuss that relation to geographies to develop in the current year based on the visibility from the backlog?

Will, thanks for your questions. So on Q2, it's a bit specific as a question. So globally, if I take the full year, definitively we'll book-to-bill above 1. Again, a large contract expected in Middle East. We have flagship contract as well coming in Canada, frame option contracts in France, Australia, Germany. So that's the geographies we are looking at a positive momentum in terms of order intake. For the full year, there is always some phasing between second quarter, third quarter, fourth quarter so I will not be specific at this stage. If I look at the trend by product line, by business segment, if you want, moving forward, definitively to your point, a step-up in terms of Signalling that we are expecting both in terms of orders and sales for the rest of the year. Systems and Services will remain steady, if I look ahead. So you have seen a very strong performance in terms of System and Services, that will remain steady. And Rolling Stock, as I said before, will continue to have definitively a step up mainly in the second half of the year. So all in, as I say, developing as expected on the product line and regional perspectives.

But just a quick follow-up on the supply chain. In the slide deck, you comment that there was no impact in Q1, but you imply that there might be some impact later in the year. Obviously, there's a time delay between what is happening in your Tier 2 or 3 suppliers and what is happening in the assembly line. What point do you think there may be some effects from the supply chain disruption due to, for example, late deliveries of components from China?

So as I say, the supply of electronic component is getting more complex and it's something we are now fighting with on a day-to-day basis in terms of protecting customer deliveries. So something that is our top priority. So as I say, we may have some phasing impact related to the final deliveries of customers. So far, we have been able to mitigate that. And we continue to target to mitigate this impact, obviously, with the various streams of action that we are implementing. But tight situation.

We'll take the next question coming from Jonathan Day calling from HSBC.

Just one question, really a bit of a follow-up on an earlier one. And just thinking about mix in terms of the evolution of mix and how much of the mix evolution may be factored into your guidance. I was wondering if you could just talk a little bit about that, please.

Yes. So yes, indeed, this quarter, we had, as I explained, a very favorable mix, so to say, on Services and with a large step-up. If I look at the full year, Jonathan, to your point, I see a similar mix in fiscal year '22/'23 with regard to the mix of last year. So stability globally in terms of the mix evolution. So in that case, of course, there are no significant margin mix potential impact to expect on these subjects.

We'll now go to Jonathan Mounsey for a follow-up question who's calling in from BNP Paribas Exane.

Just a very quick follow-up on the second to the last question. So you said it's a tight situation in terms of deliveries. We could have some disruption with shortages of electronic components. Can we hypothesize as to what happens if that scenario, the delays, plays out? Can you claim force majeure? Are there cost consequences? Or are the customers likely to be very understanding? If you can't manage the situation, is it going to impact profitability and cash?

So number one, our target, Jon, is, of course, again, to protect final customer deliveries. In case of delay, to your point, of course, we'll try to go to force majeure. So that's something, which is a case-by-case discussion, for sure. Our customers understand where we stand in terms of both the electronic component and the inflation. Remind that we are dealing with public customers. These public customers are operators. They are buying themselves electronic components for services in most of the cases. So there is globally a good understanding. So that will be a case-by-case discussion, Jon, in terms of contractual impact. And just to add on this, of course, this is all considered in our confirmation of our outlook for this year.

As we have no further questions, I'd like to turn the call back over to Laurent for any additional or follow-up questions.

Yes. So thank you, everyone, for this exchange. Let me conclude maybe with a few reminders of our, what I will call, Alstom fundamentals. So number one, we are the leader in a very dynamic market, as I explained, with very solid drivers, public customers, which are focusing on long-term; and as you have seen, unparalleled market outreach supported by our innovation capabilities. Second point, competition has been clarified recently with, of course, the merger -- the acquisition of Bombardier by Alstom, but as well Hitachi tales merger to come. And third, we have, as you know, a long visibility with EUR 83 billion backlog, very large Signalling and Services franchise and multi-local footprint and supply chain. So with all of this, we demonstrate the resilience of our business model in the global environment. Thank you all for your attention, and I expect to talk with you for our H1 results, which is expected on November 16. Wish you all a very good summer. Thank you very much.

Ladies and gentlemen, this conference is now over. Thank you for your participation. You may now disconnect.