mlkrborn
13 years ago
Alstom Says Emerging Markets to Bolster Order Growth
By Francois de Beaupuy - Jan 20, 2011 7:36 AM ET
Alstom SA, the world’s third-largest power-equipment maker, said growth in orders may accelerate after gaining 30 percent in the fiscal third quarter, helped by an acquisition and rising demand in emerging markets.
The value of contracts won in the three months through December jumped to 5.49 billion euros ($7.4 billion) from 4.22 billion euros a year earlier, Levallois-Perret, France-based Alstom said today in a statement. Revenue gained 12 percent to 5.24 billion euros, compared with an average analyst estimate of 5.32 billion euros.
“These good numbers were supported by the strong commercial performance in emerging countries, which accounted for 60 percent of the total amount of orders received during the quarter,” Chief Executive Officer Patrick Kron said on a conference call.
The proportion of new orders from the Asia-Pacific region, Africa, the Middle East and Latin America doubled to 47 percent of total contracts in the first nine months of the fiscal year from 23 percent a year earlier. Alstom expects further “momentum” as agreements are signed this quarter on supplying 800 million euros in locomotives to Kazakhstan and building a 250 million-euro power plant in Singapore, Kron said.
Alstom rose as much as 1.61 euros, or 4 percent, to 41.47 euros, the highest intraday price since Aug. 19, and was up 3.7 percent as of 1:35 p.m. in Paris trading. The stock has gained 15 percent this year.
Margins and Jobs
In a bid to limit the drop of Alstom’s operating margin to within a range of 7 percent to 8 percent of sales for the two fiscal years through March 2012, Kron said in October that he planned to cut about 4,000 jobs at sites that make coal- and gas-fired power equipment as utilities in Europe and the U.S. delay investments.
Kron reiterated the margin target today and said Alstom will report positive free cash flow in the second half.
Third-quarter orders for power equipment and services rose 6.9 percent to 2.84 billion euros, helped by contracts for gas- fired plants in Singapore and India, as well as renovation and maintenance contracts for French nuclear plants.
Pricing Pressure
Demand in developed markets “remains soft,” Kron said. Pricing for power systems, which was under some pressure in the first half, has stabilized, Kron said.
Sales contracts at the power-grid unit purchased from Areva SA in June amounted to 1 billion euros in the quarter. Alstom confronted pricing challenges in China, where “we face significant competition from domestic competitors,” he said.
Alstom, which makes TGV high-speed trains, competes with companies including Zurich-based ABB Ltd. and Munich-based Siemens AG in power generation, distribution and transportation.
Orders for rail equipment and systems increased 3.9 percent to 1.63 billion euros, helped by contracts to supply high-speed trains to Morocco and subway cars to Montreal, Alstom said.
mlkrborn
14 years ago
Alstom's bid to clear its name
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Graham Ruddick, 21:10, Saturday 12 June 2010
In an exclusive interview Jean-Daniel Laine, head of compliance at the French engineer, explains how the company is still in the dark over the March raids and how the war on bribery now tops the corporate agenda
Almost three months after three of its senior executives were arrested during dramatic dawn raids across the UK, Alstom (Paris: FR0010220475 - news) wants to make a few things clear.
Sitting in the offices of the 11bn (£9bn) power and transport engineer on a serene, tree-fringed street outside central Paris, the drama of the Serious Fraud Office's Operation Ruthenium seems a world away. On March 24, 109 staff from the SFO and 44 police officers raided five Alstom properties and four residential addresses across the UK on suspicion of bribery, money laundering and false accounting. The arrested executives were later released without charge.
Speaking for the first time since the raids, Jean-Daniel Laine, head of ethics and compliance at Alstom, has launched a rigorous defence of the engineer's anti-corruption procedures, suggesting the anti-corruption probe is a world away from reality at the company.
"I know a lot of my peers in the compliance community," he tells The Sunday Telegraph . "I participate in a lot of conferences on the anti-corruption subject. I have the opportunity to review all these topics and issues, and I consider that we are among the best in class."
Since 2006, Laine has overseen the rapid development of Alstom's compliance and ethics programmes, as the threat of corruption investigations has risen up the agenda for companies around the world.
Fraud agencies appear to be launching multinational drives to secure high-profile prizes, and new legislation, such as the Bribery Act in the UK, has made businesses more liable for the actions of their employees and even third-party sales agents.
The likes of BAE and Rio Tinto (LSE: RIO.L - news) have already become embroiled in international probes and the consequences of being convicted are potentially catastrophic for businesses. European Union directives are warning that businesses found guilty of corruption could be banned from winning contracts from governments and the reputational damage would likely hurt sales.
At Alstom, Laine says the company's ethics and compliance programme "has reached a point where it is difficult to be better", yet its executives have been arrested and the doors on its properties broken down.
Tommy Helsby, Eurasia chairman at Kroll, the corporate intelligence business, says: "A few years ago the concern was health and safety, then it became competition issues, now it is corruption.
"I can think of only one UK company I have visited in the past six months where it wasn't on top of the agenda. But it was after we had spoken to them.
"The commercial risk balance has changed dramatically. This is not just something that companies ought to do, they need to be able to demonstrate that they have done it, that the procedures are in place."
Laine was brought into his role at Alstom in January 2006, leaving his career in engineering to head an anti-corruption drive amid investigations by Swiss authorities.
A string of new measures have been introduced, such as a new code of ethics being sent to all 76,500 staff, the appointment of 200 compliance ambassadors to spread the standards around the 70 countries in which Alstom operates, and a due diligence process being implemented for the appointment of sales and marketing agents.
Laine says there is a "determination" from the top to the bottom of the company to set the highest ethical standards, and that a carefully choreographed, independent compliance and ethics organisation has been created to enforce it.
Insiders at Alstom are understood, therefore, to be highly frustrated at the SFO's raids in March, although Laine would not say so. Stephen Burgin, the UK president, Robert Purcell, finance director, and Altan Cledwyn-Davies, legal director, were arrested as well as offices and homes searched. Mr Cledwyn-Davies has since died. No allegations have been formally put to Alstom or made their way to the court, despite the investigation trailing back to the early in the last decade.
The company, which is building two gas power stations in the UK and maintains the Eurostar and Virgin Pendolino train fleets, believes it has become a victim of its drive to strengthen its compliance procedures by centralising payments to consultants working for its two divisions power and transport.
It is understood the SFO launched Operation Ruthenium in the UK after a request from Swiss authorities who are pursuing unspecified allegations relating to misconduct before the arrival of current management.
The Swiss inquiry began about 10 years ago when an investment banker being investigated over alleged connections to a Colombian drug cartel was found to have links to an Alstom subsidiary in Switzerland, formed by the engineer to pay consultants doing work for its power business around the world.
Since then, the investigation has been an on-off affair, with Alstom believing Swiss federal prosecutors were suspicious about the use of the centralised payment system and paper trails within it.
In 2008, French officials said they had opened up a preliminary investigation into Alstom reportedly over the bribery of foreign officials to win contracts between 1995 and 2003 but no charges were forthcoming. Alstom has stated that an internal investigation found no evidence of wrongdoing.
When the SFO made its arrests in March, it said it was working closely with federal police in Switzerland on suspicion of "suspected payment of bribes" by companies within the UK in order to win overseas contracts. The UK is where Alstom set up its centralised company for paying consultants in its transport division.
No further comment has been made by the SFO on the specific allegations, prompting Burgin to write a letter to UK staff in May expressing his "dismay" at the conduct of an investigation "which regrettably called into question our carefully built and protected reputation". He wrote: "No charges have been brought against the company or its executives and we still have not been notified of specific allegations."
The SFO told The Sunday Telegraph that its investigation was "ongoing", but would not provide details.
Laine admits he is "disappointed" by the latest searches but insists, despite the inter-agency co-operation involved in the investigation, the company will make no "knee-jerk" changes to its procedures because it has reached a level "where it is difficult to progress".
"Of course I am disappointed because I consider that when you have your name in the press and when you consider that you have done a good job, of course it's not pleasant," he says.
"But we have to face this. It's the reason why I am answering your questions. I consider that sometimes you have to defend your position and defend your integrity programme. We have to reassert that we have very tough and robust procedures."
The growth of Alstom's compliance and ethics programme began in 2000 with the centralising of payments following new OECD (Organisation for Economic Co-operation and Development) regulations, and the formation of ethical rules across the group.
Under Laine, the Alstom Integrity Programme has developed quickly. The first code of ethics was launched in 2007 and other measures include the 35,000 managers in the company being required to complete an online training course called e-Ethics, and the creation of an alert procedure for workers identifying violations of the code.
However, the backbone of Alstom's compliance and ethics programme is the rules for dealing with sales and marketing agents, the area where bribery proceedings over the last few months, such as the BAE case, have been particularly targeted.
Emma Scott, representations manager at the Chartered Institute of Purchasing and Supply, said it was "really important" for companies to be aware of where the tension points could be in their supply chain. "I don't think companies are aware of the scale of the dangers," she added. "It is one thing to put measures in place for staff, but it is also needed for external partners."
Laine and his team of 17 must approve every consultant appointed by Alstom. Each manager is quizzed on the purpose of the agent they are looking to appoint. A due diligence process, combined with an external audit report, checks the financial status and reputation of the third party. The remuneration and appointment must then be unanimously approved by a five-man compliance panel, before the payment is made from one of the two dedicated payment subsidiaries.
Alstom, which has benchmarked its rules against global companies, believes it is the strongest process in the engineering industry. The procedure has been externally certified by Ethic Intelligence International and Swiss audit company SGS.
However, whether it has been a success is questionable. It has not stopped Alstom being investigated although the case originates from before Laine took up his role, and the compliance chief accepts it will be years before it emerges whether the rules have prevented fraud during his tenure.
"What we want to apply is a zero-tolerance policy," he says. "The objective is to have zero risk, but it is like in health and safety. We want to take all the measures to prevent accidents but sometimes we have an accident. We consider that if we can validate the consultant, we have little risk with this consultant."
"Several" members of staff a year have contacted the compliance unit with concerns since Laine took over usually relating to conflict of interest complaints and more than 10 staff have been dismissed each year. However, only when it is clear that no fraud probes have been launched relating to incidents during his tenure will Laine's effectiveness be known.
It is a situation that highlights how dealing with potential corruption in businesses is riddled with uncertainty. Laine, who has avoided becoming involved in the internal response to the SFO's searches, insists the key is influencing each employee.
"For me, this [the latest searches] shows that I have to continue like this. To be more tough. We must take profit out of this bad experience to continue to strengthen, to mobilise the employees.
"We must be ethical individually and collectively. We could have the best thoughts and the best procedure, but acting with integrity is a personal attitude. We have to have all the employees to adhere to this concept."
Given that the employees of multinational companies are spread across every corner of the globe and a variety of cultures, that is a major challenge for ethics and compliance teams. And it is one now being tested to the full by the international co-operation of fraud agencies.
More finance stories from telegraph.co.uk
mlkrborn
14 years ago
Feb. 10 (Bloomberg)
Alstom SA is bidding to supply the world’s fastest train to China as the nation spends 5 trillion yuan ($732 billion) on new railways by 2020.
“In the coming years, China will need many, many more trains,” Philippe Mellier, president of Alstom’s transport sector, said in an interview in Beijing yesterday. The demand “is never ending.”
Alstom, the world’s second-biggest trainmaker, has offered the in-development 360 kilometers-per- hour (224 miles-per-hour) Automotrice Grande Vitesse, or AGV, train as it competes with Bombardier Inc. and domestic suppliers for Chinese contracts. The nation plans to extend its rail network to 120,000 kilometers by 2020, including 18,000 kilometers of high-speed lines.
“The budget is there,” said Mellier. “China has so many cities with more than 1 million people -- the potential is very big.”
The trainmaker is targeting opportunities nationwide, particularly in secondary cities adding new lines, he said. The company may also seek more partners in China.
Since 2007, Alstom has supplied CRH5 high-speed trains with partner Changchun Railway Vehicles Co. for lines connecting Beijing to northern cities including Shenyang, Harbin and Taiyuan.
Bombardier’s Chinese venture won a $4 billion contract in September to build 80 high-speed trains. Siemens AG, Europe’s largest engineering company, and Chinese partners received a 750 million-euro ($1 billion) order in March for 100 trains.
China South Locomotive and Rolling Stock Corp. signed train-car orders worth 10.8 billion yuan in 2009, accounting for 53 percent of contracts nationwide, according to a company statement.
AGV Services
Alstom’s AGV, the world’s fastest conventional train in terms of designed commercial speed, is due to begin its first commercial services in Italy next year. A Chinese delegation led by a vice minister of the National Development and Reform Commission has visited La Rochelle, France, where the train is built and tested, Mellier said. Talks are on-going, he said.
The French trainmaker, which first supplied electric locomotives to China in 1958, has sold more than 1,200 cars in Shanghai and at least 400 more in Nanjing.
mlkrborn
14 years ago
Barchart.com U.S. Morning Call for Tuesday, January 19, 2010
Overnight Developments
* Global stocks are mostly lower with the European DJ Stoxx 50 Index down -0.66% and March S&Ps down -2.00 points. The dollar index climbed to a 1-week high and pushed most commodity prices higher, except for crude oil which slipped to a 3-week low on demand concerns. The biggest drag on European stocks is the larger-than-expected decline in the Jan German ZEW economic sentiment survey, which fell for the fourth straight month, -3.2 to 47.2, amid signs the economic recovery is slowing. Bank stocks are leading the way lower today with HSBC, Europe's largest bank, sliding 2.2% after Exane downgraded the bank to "underperform" from "neutral," while Barclays PLC dropped 2.2% after Credit Suisse AG cut its price estimate on Barclays by 13% saying its forecasts imply a "sizable capital deficit." Alstom SA, the world's second-largest train maker, fell 3.8% after it reported Q3 fiscal sales of 4.69 billion euros ($6.75 billion), well below analysts' estimates of 4.81 billion euros. Limiting losses in European stocks was the 3.7% jump in shares of Cadbury Plc after its board agreed on a revised 11.9 billion-pound ($19.7 billion) takeover offer from Kraft Foods.
* The Asian markets today closed mixed with Japan down -0.83%, Hong Kong +1.02%, China +0.19%, Taiwan -1.07%, Australia -1.02%, Singapore +0.03%, South Korea -0.11%, India -0.88%. Asian technology companies fell after a benchmark gauge of prices for dynamic-random-access memory chips fell 1.7%, the sixth straight day of declines, according to Dramexchange Technology. Japanese bank stocks closed lower after Barclays Capital said that Japanese banks' income from lending may slump, while Japanese car and electronic makers fell after the yen rallied to a 4-week high against the dollar and threatened the value of export earnings. Japan Airlines filed for bankruptcy under a 900 billion yen ($10 billion) turnaround plan after four government bailouts failed to revive the carrier. Asia's largest airline will shed staff, cut unprofitable routes and retire older planes as it restructures following a 131 billion first-half loss. Hong Kong stocks jumped after the head of Shanghai 's financial services office said that Shanghai is considering allowing individuals to invest in Hong Kong and "other overseas areas." Allowing Chinese individuals to invest overseas may help counter the flows that have helped boost China's foreign-exchange reserves to a record and spurred concern about asset bubbles.
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mlkrborn
14 years ago
QUARTERLY REPORT:
Press Release
19 January 2010
Alstom’s orders recovered in the third quarter of 2009/10,
whilst sales remained sustained
During the first nine months of 2009/10 (from 1 April to 31 December 2009), the level of orders booked by Alstom reached €11.4 billion. Sales, at €14.4 billion, continued to grow, up by 6% as compared to the same period of last year.
Orders booked during the third quarter of 2009/10 amounted to €4.2 billion. Order intake in both Sectors strongly improved as compared to the previous quarter. Power received orders of €2.7 billion, with commercial successes in coal in Europe. Transport registered contracts amounting to €1.6 billion, benefiting notably from a large order for regional trains in France.
Sales for the third quarter of 2009/10 at €4.7 billion were up by 3% compared with the same period of the previous year.
The total backlog reached €44 billion at 31 December 2009, representing approximately 27 months of sales.
Key figures Actual figures
2008/09
2009/10
2008/09
2009/10
Var. %
(in € million)
Q1
Q2
Q3
Q4
Q1
Q2
Q3
9 months
9 months
Act.
Org.
Orders received
6,552
8,849
6,122
3,057
4,768
2,366
4,223
21,523
11,357
-47%
-47%
Sales
4,502
4,454
4,555
5,228
4,806
4,877
4,691
13,511
14,374
+6%
+6%
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