In a challenging commercial environment, Alstom posts excellent operational results for the fiscal year 2009/10

Between 1 April 2009 and 31 March 2010, driven by the quality of its
backlog, Alstom registered record sales (19.7 billion) and income from
operations (1.8 billion), up respectively by 5% and 16% over the previous
year. The operating margin reached 9.1%, whilst the net result amounted to 1.2
billion (+10%). During the same period, order intake was heavily impacted by
the economic recession. At 14.9 billion, orders were down by 39% from the very
high level of last year. Alstom generated a free cash flow of 185 million.

At its next Annual General Meeting, Alstom will propose to increase the
dividend from 1.12 to 1.24 per share (+11%).

Key figures  

 

Fiscal year
2009/10 was marked by a major contraction in demand for power generation due to
the strong economic downturn, whilst the transportation market resisted better,
supported by the focus on rail projects in government budgets. After a low
point in orders during the first half of the year, the second semester saw a
modest improvement. Although tendering remains active, it is still difficult to
assess the timing and the magnitude of the expected recovery. The backlog
continues to be robust despite its slight decline. Driven by its quality, sales
and income from operations have reached record levels and the operating margin
target of 9% has been exceeded. In response to the economic uncertainty, Alstom
intends to remain focused on strictly controlling costs and maintaining
flexibility and smooth project management. To support its organic long-term
growth strategy, the Group plans on keeping a sound level of capital
expenditures and research and development expenses, although programmes will
continue to be strictly prioritised. Additionally, the acquisition of
Transmission activities will strengthen Alstoms offering. Over the next two
years, we expect the Groups operating margin to stay within a 7 to 8% bracket
, said Patrick Kron, Alstoms Chairman and Chief Executive Officer.

Low level
of order intake  

During the fiscal year 2009/10, Alstoms markets were impacted by the
global economic downturn. The Group booked 14.9 billion of new orders, a 39%
decrease from the exceptionally high level of the previous fiscal year, which
included several very large contracts. On 31 March 2010, the backlog amounted
to 42.6 billion (-7%), representing 26 months of sales.

 

In Power, Thermal Systems & Products received orders for a large gas
power plant in the UK, coal
power plants in Slovenia, Germany and India
as well as plant management systems in South Africa. Thermal Services
registered a flow of small and medium-sized orders, particularly in Europe and
in the USA,
for both retrofit and service and booked three operation and maintenance
long-term contracts during the fourth quarter. In Renewables, the main orders
recorded during the period were for hydro projects in Switzerland.

 

In Transport, the main contracts recorded during the fiscal year
included regional trains in France and Germany, suburban trains in France,
metros in Brazil and the Netherlands, tramways in Brazil, Morocco and France,
as well as various signalling systems and maintenance orders.

 

Record
sales and results  

 

The progressive delivery of the backlog has led to a further growth in
sales. They reached the record level of 19.7 billion in the fiscal year
2009/10 from 18.7 billion in 2008/09, representing a 5% increase. Sales grew
by 6% in Power and by 1% in Transport.

 

In the fiscal year 2009/10, income from operations amounted to 1,779
million, up 16% from 1,536 million in the previous year and operating margin
improved from 8.2% to 9.1%, both Sectors having achieved their operating margin
objectives. Powers operating margin grew from 9.6% to 10.6%, whilst
Transports operating margin remained stable at 7.2%.

 

On the back of an improved operating performance, net profit increased
by 10%, amounting to 1,217 million compared to 1,109 million in the previous
fiscal year.

 

Sound
financial structure  

 

Free cash flow was positive at 185 million during the fiscal year
2009/10. The operational profit has more than offset the expected deterioration
of the working capital linked to the low level of orders.

 

Alstom had a net cash position of 2,222 million at 31 March 2010,
compared to 2,051 million at 31 March 2009. A syndicated line of bonding
facilities amounting to 8.3 billion has been renewed for three years at the same
conditions as the previous one.

 

Equity increased from 2,884 million at 31 March 2009 to 4,101 million
at 31 March 2010 as a result of the strong net income.

 

Dividend  

 

The Board of Directors has decided to propose a 1.24 per share dividend
at the next Annual General Meeting, to be held on 22 June 2010. It represents a
11% increase compared to the dividend of 1.12 paid last year. If
approved, the dividend will be distributed on 29 June 2010.

 

Composition
of the Board of Directors  

 

At the next Annual General Meeting, to be held on 22 June 2010, the
Board of Directors will propose the appointments of Mrs Lalita Gupte, former
Joint Managing Director and member of the Board of ICICI Bank Ltd, and Mrs
Katrina Landis, Chief Executive Ofiicer and Group Vice President of BP
Alternative Energy, as Directors, as well as the renewal of the appointments of
Georges Chodron de Courcel, Olivier Bouygues and Bouygues SA, as Directors.

 

Adaptation
to the new environment  

 

To adapt to the more challenging markets, Alstom has intensified its
measures to reduce costs; for example, selling and administrative expenses
decreased from 7.4% of sales in March 2009 to 6.8% in March 2010.

 

The total workforce has been adjusted with a decrease of 5,000 people
over the year, by natural turnover, non-renewal of some fixed term employment
contracts or downsizing of some sites.

 

To keep and reinforce its technological leadership and industrial
efficiency, the Group maintained R&D expenses and capital expenditures at
high levels, respectively 614 million and 470 million.

 

Update on
portfolio evolution  

 

On 20 January 2010, Alstom and Schneider Electric signed with Areva the
agreement for the acquisition of its Transmission & Distribution (T&D)
business. The proposed transaction was approved by the European Commission on
26 March 2010; it remains subject to the approvals of competition authorities
in certain countries and of the French Commission des Participations et des
Transferts which are expected shortly. Alstom and Schneider Electric are
working closely with the management of Areva T&D in order to implement a
rapid and smooth integration.

 

On 1 March 2010, Alstom and Transmashholding (TMH), the largest railway
equipment manufacturer in Russia,
firmed up the strategic partnership that they had previously concluded. This
agreement is subject to final documentation and authorisations.

 

Outlook  

 

Power remains focused on developing in high growth areas, keeping the
lead in clean power and leveraging opportunities in the installed base. Transport
aims to strengthen its positioning in mature markets, whilst targeting emerging
ones with suitable solutions. Along with the integration of Transmission's
activities into the Group, Alstom will seek to boost its growth through
selective acquisitions if opportunities arise.

 

Alstom's operational priorities are geared towards leveraging its
competitive advantages to get profitable orders as well as adapting to the load
whilst maintaining flexibility. Focus remains centred on quality, project
execution and strict cost control.

 

In the current context, Alstom has set a new operating margin forecast
between 7 and 8% over the next two years, based upon proper contract execution
and gradual recovery of demand.

 

The Group activity and the consolidated
financial statements, as approved by the Board of Directors, in its meeting
held on 3 May 2010, are available on Alstoms website at www.alstom.com.
The accounts have been audited and certified.

 

In accordance with AFEP-MEDEF recommendations,
information related to the remuneration of Alstoms Executive Officer is
available on Alstoms website: www.alstom.com, under About us/Corporate
Governance/Remuneration of the Executive Officer.

 

 

This press release contains forward-looking statements which are based
on current plans and forecasts of Alstoms management. Such forward-looking
statements are relevant to the current scope of activity and are by their
nature subject to a number of important risk and uncertainty factors (such as
those described in the documents filed by Alstom with the French AMF) that
could cause actual results to differ from the plans, objectives and
expectations expressed in such forward-looking statements. These such forward-looking
statements speak only as of the date on which they are made, and Alstom
undertakes no obligation to update or revise any of them, whether as a result
of new information, future events or otherwise.