Ladies and gentlemen, welcome to the Alstom analyst call. Today's conference is being recorded. Now, I would like to hand over to Mr. Henri Poupart-Lafarge. Sir, please go ahead.
Hello. Good morning, everybody. Welcome to the annual results conference call from Alstom. Welcome, everybody. I hope that all of you and your families are doing well during this specific period. We'll go through the classical agenda. We'll start with the highlight of 2019/2020. We'll do a short market update. Of course, we will cover the COVID-19 crisis and what we did to adapt Alstom to the crisis. We get back to our yearly results and yearly announcements. We will conclude by a short update on Bombardier and the financial results. To start with the 2019/2020 highlights, this is a year finishing which has been a very good year.
As you may recall, we have announced our new strategy, Alstom in Motion, last June. We can say that the first year is totally in line with our new strategy, as this new strategy has given the fruits that we were expecting. First, in terms of commercial momentum, we have orders reaching close to EUR 10 billion, book-to-bill greater than one, particularly with large orders in Europe and Asia-Pacific. We'll come back to that. Sales are 2% growth, in line with our expectations. Actually, slightly better, if you take into account the negative impact of the COVID-19, in line as well with the trend that we have described in the past with the ramp-up of the rolling stock, but also a slowdown in Systems, in particular in the Middle East.
The EBIT margin has continued to grow at 7.7%, in line with our objective of 9% of 2022, 2023, which by the way we confirmed, because we have the necessary backlog to execute this margin. The cash flow was, finally, I would say not as slow as we were anticipating. Thanks to notably the cash focus program, we have managed to mitigate the underlying trends. You remember that the increase of rolling stock activities and the decreasing system have a negative impact on our working cap. Despite that, we have managed to generate some cash flow at a higher level. As I said, Alstom in Motion is now deployed. Finally, of course, the crisis will have a significant impact on 2021.
We are extremely confident on the midterm markets and on the midterm situation of Alstom, and therefore, we confirm our 2022/ 2023 objectives in terms of adjusted EBIT and in terms of free cash flow conversion. The sales growth could be slightly impacted by some tender delays, which we will describe. Solid market fundamentals overall. Just to come back on the numbers I've just mentioned, and I will come back later on the details, EUR 9.9 billion of orders, EUR 8.2 billion of sales, 7.7% margin, a little bit north of EUR 200 million of cash, EUR 446 million of net income, which is, I would say, for the first time, totally a plain vanilla net income without any extraordinary impact. The EPS, which has continued to grow. Going to the next slide.
On terms of market, just to remind you that just before the crisis in 2019, we had an extremely positive momentum. That is important to remember because that is a trend which we believe will come back after the crisis. All operators had record years in 2019, and this is on the back of all investment plans and all the movements, particularly in Europe, but as well as in the world, in favor of sustainable mobility. Public authorities have announced huge investment plans throughout the world, of course, including in Europe. The crisis in 2020, basically, we have, of course, very short term, as you know, a sharp drop of passenger traffic all across the world and in particular in Europe, in the U.S., but also India, but all across the world. A lot of containment measures have been taken by the operators.
Short term, we had the oil crisis, which is an indirect consequence of the COVID-19 crisis, which will impact particularly the Middle East region. Having said that, all measures which are being taken to relaunch the economy are relaunching a green economy, and all the mega projects, including what you see on the slide, the HS2 in the U.K., are sustained. Amtrak is going to receive a fund, it's just one example. Most of the operators in the world will be backed by their states. Actually, we have not seen any cancellation of large orders to come. Of course, not large order in our backlog, but not also some large projects. We believe that there will be short-term deferral of a number of tenders because of practical reasons and because of the fact that some of the projects are slower to mature.
However, we believe that the resilience of the market midterm is extremely strong, and it's always very difficult to discuss about what will be the world after the crisis, and everybody has its own idea. I think there is a consensus to say that the sustainability and the transition of the mobility as well as the transition of the energy, by the way, is going to accelerate after the crisis. Of course, as you know, train is the most appropriate mobility system to tackle these issues. Short-term, the crisis, basically the philosophy of our adaptation to the crisis is twofold. One is to recognize that we have some difficulties. We had some difficulties to produce in a number of our sites in the world. Two, at the same time, that we have a strong market in front of us.
There was no intention to limit the production, but on the contrary, we tried to keep our site as open as possible, while, of course, preserving the safety of our employee. And we managed to work as much as we could. We put, of course, a crisis cell. We closed temporarily all the sites to adapt the sites to the new sanitary situations, and we launched remote working. To be fair, there were more than 24,000 employees working from home, with a lot of good successes of this work from home. Basically, at the peak of the crisis, we had 24,000 people working from home, 6,000-7,000 people working on site, in different site, and 6,000-7,000 people who couldn't work.
In terms of production, because it's true that even though only, I would say 6,000, 7,000 of people could not work, these are the people who are assembling the trains. As you can see, we have tried to illustrate graphically the level of activity. Of course, rolling stock was the most impacted part because this is where the sites had to be closed, particularly, of course, in France, in Spain, in India, but in the U.S. as well. At one point in time, at the peak, most of the sites were closed. We have recovered. Systems was also impacted because of the difficulty to work on sites. Services has declined, of course, with closure of depots, but more importantly, most of the long-term maintenance projects were affected by mileage, so when the trains are stopped, we are stopped working.
Signalling has been impacted less, but has been impacted because of the installation. As you can see on the graph, we have restarted manufacturing on all our sites worldwide, not to the nominal level yet as we speak, and we intend to come back to the nominal level beginning of [two]. In terms of orders, I said no cancellation of orders in our backlog, some slowdown in tender activities, and again, we don't believe that there will be any negative impact midterm with some clusters of stimulus package. In terms of our own adaptation, we recognize, and we said it in the press release, that this will have some impact on the financials of Alstom this year. We have tried to mitigate and to weather this impact using holidays, part-time work. We are going to reduce discretionary spending.
We are going to tighten the control on recruitment, and we are going to take a number of internal measures in order to limit the impact of this underactivity. Coming back to a more classical agenda, Alstom in Motion. You may recall that the three pillars, growth, not only by geography, which we did during Alstom 2020, but also by enhancing our value proposals to our customers. Innovate, definitely in favor of smart and green solutions. Sustainability, as I said, at the heart of our strategy, and of course, efficiency to deliver our backlog and to increase our global site efficiency. Starting with growth orders, as mentioned, EUR 9.9 billion. Last year, of course, we had some jumbo projects, still a little bit of decrease as compared to last year, the book-to-bill, which is much better than one.
As you can see, predominance of Europe this year, which has grown as compared to last year, while some regions, as expected, are more struggling, in particular, of course, Latin America, Asia, Pacific and Middle East, Africa. Asia Pacific had a good year, particularly in Australia. In terms of activities, Services, as I said, particularly a good year with EUR 3.3 billion orders. Some nice pictures of our projects. In Australia, as I said, a very good year in Australia. A lot of activity in Australia, Europe, [audio distortion], a lot of regional trains. By the way, there are still a lot of tenders going on regional trains. The market is buoyant in that respect, following the traffic increase. Some metros in Barcelona, some sales activities in the U.K., and metros in France as well as Marseille.
In terms of sales, as expected, I would say, we have a huge ramp-up in rolling stock, in particular in Europe, but also with the ramp-up of our mega projects in the U.S. and in South Africa. Some decrease in Services, which is not in line with the long-term trend, but due to some one-off projects in the U.K. last year. Signaling, I will come back to that. A very good year of Signaling in line with our Alstom in Motion strategy. Finally, not surprisingly, the end of the execution of the Systems project, particularly in Middle East, whether we're talking in Dubai, in Qatar, or in Riyadh. Signaling, just a snapshot on Signaling. A very good year of Signaling with more than EUR 1.7 billion order, which is a record high, and EUR 1.5 billion of sales as well, a record high.
With some key milestones achieved in Europe, notably Paris-Lyon ETCS, which is the start of the conversion of the various speed lines in France to ERTMS, where we are also confirming our onboard successes. Some CBTCs across the world, from Marseille to Sydney, I would say. Freight and mining, we have a number of, I would say, success in freight and mining. I have to say that freight and mining will be impacted by the COVID, probably more sharply than other segments. Services, I think this is something where, I think I said it last time during our strategy presentation, that we were lagging behind. We have doubled the revenues. It's still not at the level where it should be, but clearly, we have taken a good momentum in Services. Innovation.
We were well known, and we are well known for our hydrogen train, which we have launched in Germany two years ago, as you may recall, and which is working properly, and we have now a number of commercial contracts. This year has been marked by the first contract in battery electric trains. You know that we believe that hydrogen train is the solution for, I would say, long haul or relatively long distances. Battery could be the solution for short distances. I'm talking, of course, about non-electrified lines. We have also developed a number of predictive tools for maintenance, for traffic analysis, and we have been the first one to deploy ERTMS Level 3. We are continuing both in terms of digital and in terms of green innovation to progress towards our end objective. In terms of operations, we are continuing to work steadily.
It's really a day-to-day work to improve the project management, to stabilize the footprint. As I said, Alstom 2020 was really the expansion of the footprint worldwide with a number of new sites. Alstom in Motion, there will be fewer new sites as we are already covering the five continents, but more stabilization, more efficiency within the sites. We are continuing to allocate, I would say, engineering workload to India, with now 24% of our full engineering of Alstom is being done in Bangalore, in our site in Bangalore. We are automating our sites, notably in Europe, with some welding robots everywhere and some very high capacity welding robots. We are digitalizing our systems.
We have now one core model of SAP worldwide, which enables us, it's not the SAP, which is the most important part, enables us to have the full suite from engineering, manufacturing, quality on one system. EBIT has increased in line with objectives. One snapshot on ESG, which is part of our strategy, intrinsically part of our strategy. As I said, we are definitely at the heart of the sustainable mobility, and we need to be also exemplary in terms of decarbonization, in terms of caring for the people, and of course, creating a positive impact on society, and we have to develop our supply chain. We believe that intrinsically, again, train is covering these full aspects, but nevertheless, we should strive to improve each pillar.
In terms of mobility solution, sustainable solution, we are developing green traction, as I said, batteries, hydrogen, signalling system for better efficiency of the networks. In terms of rolling stock, we are decreasing the energy consumption while increasing the capacity. Of course, the energy per seat is decreased tremendously. If you add a new signalling system, you can increase a lot the capacity of a line. Just to take one example, on Paris-Lyon, we are going to move from 13 train per hour to 16 train per hour, which is a 20%-25% increase. The trains themselves will increase by more than 20% their capacity, meaning that the full capacity of the line will increase by more than 40%, about 40%-50%, without touching the infrastructure. Of course, from an Alstom standpoint, this is, I would say, a very nice solution.
Our own operations are decarbonized. We have a goal of having 100% electricity from renewable sources by 2025, and we are implementing that thoroughly side by side. We have, of course, engaged ourselves in the fight against COVID-19 through donation of masks, through financial donations, through Alstom Foundation. By the way, we are going to increase the budget from EUR 1.5 million- EUR 1.9 million for that, and through 3D printing. We have also worked with our supply chain in order to supply masks, for example, to our suppliers for them to restart earlier. A word on Bombardier transaction. Nothing to say, to be fair. We are fully engaged in this transaction. We are working extremely well with Bombardier. We have engaged our discussions with the European Commission. We have engaged our discussions with our labor representatives at the European Works Forum.
We have managed to secure the financing, the bridge facilities. Now we are waiting for the next step, which is to sign actually the share purchase agreement. Today, we are still in the MOU phase, to have the approval of the deal during the Alstom AGM targeted October 2020 and to close the deal first half of 2021. I will move over the floor to Laurent, who will explain to us the financial results 2019/2020. Laurent?
Thank you, Henri. Good morning, everyone. Let's start with our income statement for 2019/2020. On the adjusted EBIT, we progressed by 4% up to EUR 613 million, driven by volume and execution. Going straight below the adjusted EBIT, EUR -18 million for certain charges, mainly in Latin America and in Germany. We also classified the COVID-19 incremental and inefficiency cost for an amount of EUR 24 million. Other item that you see reach EUR 14 million, which includes the CASCO mechanical reversal to EBIT at EUR -38 million, and EUR -5 million, which includes the usual amortization of our intangible assets, some deal costs related to Bombardier acquisition, asset impairment, and offset by positive impact from some legal proceeding outcome. As a reminder, last year, we booked on this specific line financing costs for EUR 74 million.
On this basis, you see our EBIT steps up by 34% versus last year, reaching 6.6%, and our net income reached EUR 466 million. Moving to adjusted EBIT. During this year, we listed our operational margin at 7.7% versus 7.5%. This increase was chiefly steered by the quality in our project execution and step-up of our Alstom in Motion efficiency plan. Selling and administrative costs remained roughly stable at 7.2%, and our net R&D reached 3.7% versus 3.6% last year. This in line with our objective to maintain a constant and sound R&D investment. 2019/2020 was the year of acceleration for our Avelia very high-speed platform and also as well on the Signalling solution, this in line with our strategy. On backlog, we are pleased to see this year again a continuous improvement of our backlog average profitability.
This is driven by our increased competitiveness, and as Henri explained, our positive order intake momentum. Moving to the bridge on the net income versus last year, our EBIT stood at EUR 545 million, up EUR 137 million versus last year. Financial items and results decreased by EUR 12 million, consistent with the repayment of our bonds, includes as well some subsidiary debt and hedging costs. We had income tax charge up by EUR 46 million, corresponding to an effective tax rate of 25%. Remind you that last year it was 22%, and this is very much in line with our target tax rate in the 25%-30% range. Finally, on the share of net income from equity increased by EUR 93 million, which benefited last year from the GE joint venture specific item at EUR 106, which we do not have this year.
This year, the main contribution come from CASCO, EUR 38 million, and TMH, which benefits from a good momentum in Russia, stable at EUR 65 million. All in, as a result, net income at EUR 446 compared to EUR 433 million, including this specific GE JV item. To the free cash flow, we achieved EUR 206 million versus 150 last year. We see this definitively as a positive, given the working capital required for our major project ramp-up and as well in the COVID context. Related to CapEx, transformational CapEx are behind us, and we stabilize at EUR 195 million, which is 2.4% of sales, with a clear focus on our site in Europe, India, and in the U.S. As planned from the working capital, working capital impacted negatively our free cash flow by EUR 249 million, as anticipated.
This, as you have seen, mainly during the first half of the year, with the expected ramp-up of the major projects such as PRASA in South Africa, [loco] in India, and our Coradia regional trains in Netherlands, in Italy and Germany. This has been, I would say, offset in the second half by some level of cash collection and cash focus actions outcome. We'll come back on these subjects. Financial cash out stands at EUR -95 million as a result of mechanical coupon payments and the net cost of hedging. Finally, dividend inflows were positive in 2019/2020, mainly from TMH and CASCO, and recorded in the line other item that you see on this slide. For reference, last year, this line was impacted by change of consolidation of EKZ and TMH capital gain elimination.
Moving to the cash focus program, our free cash flow performance demonstrates that this program is bringing tangible results. First of all, we embedded free cash flow generation, but as well specific local cash drivers targets in the objectives of 10,000 of our employees and our staff, and this to foster cash performance across the board. Second battlefield is on the tender. This is where the cash performance is formed for our commercial team, and we clearly enjoyed this year an improved profile, thanks to specific targets that we have set on down payments, but as well on progress payment profile. We improved as well our cash collection cycle, resulting in a Day Sales Outstanding reduction of 13%, which is a very positive achievement.
On the operational side, we moved on testing and commissioning, reduction by 20% on pilots with success, together with a tight monitoring on project working cap. Last, we decreased our CapEx spending by 6% while we are managing rolling stock project ramp-up. Overall, this to say that our cash focus is moving on successfully down to shop floors and on all key drivers. Moving to the liquidity status, we have, as of end of March 2020, a strong liquidity position amounting to EUR 2.6 billion, including undrawn EUR 4 million RCF. In the context of C-19, we decided in April to secure an additional EUR 1.7 billion RCF, aiming at stepping in for our usual EUR 1 billion commercial paper program and providing us extra liquidity buffer.
Concerning bonds, as we know, we have reimbursed our past expensive bonds and issued a new one in October at a record condition of 0.25% fixed rate. All in, group liquidity pro forma end of March is above EUR 4 billion, which is a very strong position. Our target remains, in terms of rating, obviously, to stay in a strong Baa2 rating. Related to shareholder distribution this year, under the context of the current crisis, the board of directors will propose a suspension of dividends to the next shareholder meetings, which will take place on July 8th. I now leave the floor to Henri for the conclusion. Thank you very much.
Thank you, Laurent. Just as a conclusion, again, 2019/2020 has been a year totally in line with our Alstom in Motion strategic plan, both in terms of numbers, as well as in terms of action and evolution of the company, the progression of the company. The Bombardier transaction progressed as planned. I think there is, again, no particular element. We are in line with our objective there. The COVID-19 crisis will impact negatively 2021. That's clear. At the same time, the objective for 2022, 2023 are maintained, notably the 9% adjusted EBIT on the free cash flow conversion with the annual growth rate being impacted mechanically. That would be the final say, I think Alstom is extremely well-placed to weather the crisis, and we are proving that we can go through the crisis.
Well, it's always important to enter into a short-term crisis as such in very good position and in very good health, both financially and operationally, and this is the case. We are weathering the crisis. We are extremely positive on our ability to capture opportunities whenever they come. I can tell you that the tendering pipeline is still extremely buoyant, which is in line with the sustainable mobility transition. Thank you. Thank you, all of you. Now, I think, operator, Julia, we can take the questions, move to the questions. Thanks.
Of course. Thank you, sir. Ladies and gentlemen, if you would like to ask a question, please signal by pressing star one on your telephone keypad. If you're using a speakerphone, please make sure your mute function is turned off to allow your signal to reach our equipment. In the interest of time, please note that only one question will be allowed at a time. Again, please press star one to ask a question today. We'll now take our first question from Daniela Costa from Goldman Sachs. Please go ahead. Your line is open.
Hi. Good morning, everyone. Thanks for taking my question. Hope you're all well. I wanted to follow up, maybe a two-part question, sorry. On the growth, on the 5% average, understand a little bit better, why did you have to change that? Understand that you see a slight deceleration on tendering activity. How shall we tell that with your five years of visibility still in the backlog? Also with, I guess as you mentioned, Green Deal, Fourth Railway Package, European Commission saying 2021 is the year of rail. How do you see sort of when will that stimulus hit, if ever? Is that post your 2022 to 2023 horizon? Yep. That's my question. Thank you.
Thank you, Daniela. Yes, as you know, we have a very large backlog, more than EUR 40 billion, five years of sales. Having said that, as you know, it's not five years and then nothing. The impact of our backlog on year one is quasi 90%. 90% of the sales of year one are in the backlog, but then it moved to 60%, 40%. In 2022, 2023, of course, we need to record a number of orders in order to achieve our objective in 2022, 2023. Even though we believe that the market is still extremely buoyant, and I think, as I said, and see your second question, the stimulus packages will hit very quickly. I think at the end of this financial year, we'll see. However, in the next six months, we'll have a sharp drop in tendering activities, and therefore in orders.
This will have a diluted impact on the sales growth a little bit for year one, more for year two and year three. That's why we need to put this small warning on our sales growth. All that is being averaged. It's not an order this year will have a mechanical impact in 2022, 2023. All that is averaged over two to three years. Overall, in terms of annual growth, average annual growth, we have this slight impact about the tender delays.
Thank you. We'll now take our next question from Akash Gupta from JP Morgan. Please go ahead.
Yes. Hi, good morning, everybody. My question is more specific towards what should we expect for FY 2021 or the next financial year. I know it may be a bit early, but I think if we look at the current stage of what is happening in the industry, then most of your customers are having very little sales, and they're running out of cash, and we see headlines every day that one of the rail operator is looking for state bailout. I want to understand how should we think your sales in the next 12- 18 months on that backdrop, where basically your customers need bailout and some of them may need to reduce spending as part of bailout package. Thank you.
I think we have not seen today any impact from the customers. There is no request from the customers to delay contracts. On the contrary, we are working on the customer to see how we can accelerate the deliveries of our projects to catch up the delays which have been, I would say, experienced during the crisis. I read what you read, and there are a number of customers, of course, a large number of customers which have been directly impacted by a loss of revenues. In terms of project delivery, they need the trains. We have not seen any direct impact of that. For the moment, the full impact is in the question of production.
As I showed on the slide, we have an impact on our production, and because we were running full speed, it's quasi impossible to catch up what has been lost. We try to do that to some extent, but it will not be possible to fully catch up. If we don't catch up, it's not because of the customers, it's because of our inability to double a production line just for six months. For example, we have a production line for one train. Impossible to do a second production line just to catch up one or two months of production.
Thank you. Our next question comes from Gael de-Bray from Deutsche Bank. Please go ahead.
Yes, thanks. Good morning, everybody. Can I ask about the cash flow situation? First of all, what's the true underlying operational cash flow performance in the full year? If you could perhaps quantify the impact of IFRS 16, the impact of factoring, and of the dividends you received. I was also interested about your comments about the cash flow battlefield happening at the level of tenders, with a better financing profile being secured right now. Is there some kind of industry push for these better financing terms, or is it really Alstom specific? Thank you.
I think I will leave the floor maybe to Laurent to answer to this question. We are pushing a lot on the payment terms. I guess it's not Alstom specific, but clearly an Alstom battle as well. Laurent, maybe you can take the question.
Sure. Good morning, Gael. Thanks for your question. Just complementing on the tender, there is no industry standard into it. This is something that we have been tailoring within Alstom in terms of guidelines toward our commercial team to respect certain payment profile, both in terms of down payment and progress profile, and this is something which is negotiated on a case-by-case basis with our customers. This is a stronger focus and stronger tight monitoring and target on the payment profile. This is what we have been implementing in cash focus. To your first question, Gael, IFRS 16 impact is EUR 84 million in our notes and in the slide as well. We didn't have any factoring in the second half nor in the full year of 2019/2020. Thank you.
There was no receivables being de-recognized in the full year?
No. Absolutely not. Yeah. There was in H1, that's correct. As I said, it was a one-off, so it was repaid in H2, and there is nothing left in the full year 2019/2020.
Thank you. We'll now take our next question from Simon Toennessen from Jefferies. Please go ahead.
Yes. Good morning, Henri and Laurent. I've got a question on the service performance. You probably have heard one of your key European competitors talking about very strong service business in the last quarter. Looking at your business, which I think was down year-over-year, do you think it's a timing issue, or do you see anything else? Because in theory, one would expect that both of your businesses are impacted by, let's say, less rolling stock running and therefore less mileage, et cetera. They talked a lot about digital services being a very key driver for performance. I have to ask kind of whether you think technology might be a difference in the performance here. Yeah, any color on service in the quarter, but also maybe how you see this in the first half of your fiscal 2021. Thank you.
Thank you for the question. In terms of number, for us, it's totally related to the end of renovation projects in the U.S.. The underlying service activity is still very strong, and you have seen the order intake in services, EUR 3.3 billion. [audio distortion] Yes, digital services play a strong part. When you talk about digital services, we can talk about predictive maintenance on classical rolling stock. We talk also about signaling activities. On this one, as I mentioned, we were lagging behind, and we are growing extremely fast on signaling services. I agree. Now, on the short term, there is an impact of COVID-19, and it's maybe true, if I had to have a slight differential with the competitor you are mentioning, but probably in Germany, trains have run a little bit more than in Western Europe.
You may have a slight different impact on the very short term. Overall, I fully agree with my competitor comment that Services is growing extremely strong.
Thank you. Our next question comes from Alexander Virgo from Bank of America. Please go ahead.
Morning, Henri. Morning, Laurent. Very many thanks for taking my questions. Just I wanted to touch a little bit on cash conversion in 2020, and you touched a little bit on tendering, you touched a little bit on COVID impact. I guess my question was really, you had a stronger than expected cash conversion, I think, in 2019/2020. How do we think about the lower tendering, the prepayment balance, et cetera, in 2021 as a function of COVID, I suppose. Just trying to understand the trajectory, I guess you've guided in the past, the first couple of years of AiM would be a little bit weaker in conversion before we get up to that 80% target. I think this year came in a bit better. I'm just thinking, does 2021 come in a bit worse because of the virus? Thank you.
Laurent, you take it?
Good morning, Alex, thanks for your question. The cash 2021 will be a complex equation in the framework of the COVID-19 impact. The trend that we've been describing remains, i.e., the working capital will continue to ramp up. We have headwinds related to the work project, rolling stock ramp-up, as we had in 2019/2020. That is one fundamental trend will remain. On the CapEx, we'll be prioritizing and monitoring that carefully, for sure. The other part of the equation will be, of course, the tender developments and dynamics. As Henri said, the pipeline is buoyant. We may expect, however, some shift. That could be a key part of the equation of cash. All in H1, we probably will have some headwind pull together and recovery in H2, while the tenders and the deliveries will be accelerating and getting to a full steam status.
It's difficult to say more at this stage, Alex.
Okay, thank you. We'll now take our next question from Guillermo from UBS. Please go ahead.
Good morning, everyone. Guillermo Peigneux from UBS. I wanted to ask a question on the outlook for working capital expansion. I think in the past, you guided to obviously an expansion in this fiscal year that just ended. Now thinking about the fiscal year 2021, do you still have the same prognosis as to the working capital increase that is needed given the impact, actually, from COVID-19? That's the first question. Thank you.
Good morning, Guillermo. I'll take it as a follow-up of the previous one. As I said, yes, there will be still a working capital headwind in 2021 related to the ramp-up of our rolling stock project. The fundamentals do not change. On the positive side, as you have seen, cash focus positive actions is kicking in in 2019/2020 and will kick in in 2021 to offset a part of it. I would say the fundamental evolution of the working cap for 2021 is unchanged versus our capital market day. The only impact we may have indeed is rephasing of the deliveries with, of course, a deceleration in the first quarters or the first few months and an acceleration in the second half.
Okay. Our next question comes from Jonathan Mounsey from Exane BNP Paribas. Please go ahead.
Hi. Thanks for letting me ask a question. I wanted to talk about the Bombardier Transportation news in Q1. I think CDPQ injected some extra capital into Bombardier Transportation. I just wonder, does that change anything in terms of the deal from your point of view following that cash injection? As part of that, the fact that Bombardier Transportation needed a cash injection in Q1, and what does that mean for the order intake of Bombardier going forward? I would have thought that customers would be very nervous giving significant orders to a company that was needing to have money pumped into it as recently as a month or two ago.
If the order intake then does disappoint at Bombardier over the coming 12 months, how does that change your attitude towards the deal, as obviously it would change the outlook for the business just as you inherit it. Thank you.
Thank you. On Bombardier, to be straight, the injection of cash from CDPQ does not change at all the deal. By the way, this was a short-term injection to allow Bombardier to stabilize, improve its liquidity position, and it may not be there when building will be done. There's a commercial momentum of Bombardier. They have recorded some orders recently, so I've not seen any impacts of what you are saying. As I said during the presentation, we are fully engaged in the transaction. We are very positive and optimistic on the midterm future, on the resilience of the market. The strategic rationale is still there. We are totally committed to the deal.
Thank you. Our next question comes from Alfred Glaser from ODDO. Please go ahead. Your line is open.
Yes, good morning. I just want to get back on the business outlook for the new fiscal year. Could you give us a sense of how the business is evolving in rolling stock compared to Services, compared to Signaling in terms of activity reduction due to the crisis environment?
It's difficult to give you some precise numbers on the different activity. Rolling stock has been the one the most impacted because of the difficulty to produce trains. Difficulties were not only coming from our own sites, as you can imagine, but from the full supply chain. You need to have all the parts in order to produce your train. Even if only 20% of your supply chain is missing, then you cannot produce a train. Rolling stock was the most impacted. I would say Systems was second, but overall for the year, projects like Dubai, they were a little bit delayed by the crisis. At the end of the day, they will be completed during the year, so it will not change. Then Services and then Signalling. In this order, Services has been impacted, but we recover soon. That's the color.
Thank you. The reminder that star one to ask a question today. Our next question comes from William Mackie from Kepler Cheuvreux. Please go ahead. Your line is open.
Good morning, gentlemen. Thank you for the time. My question would relate to how you're phrasing the situation. You've very much framed everything here as a supply side issue rather than a demand side issue over the next 12 months and beyond. I wanted to go back to the slide 12, where you have provided an indicative view of the production system across the group and how it is performing. Against that backdrop, could you walk through how you see the production system today and how quickly it will catch up in each of the relevant countries, particularly South Africa and India? Against the comment that you made earlier that you expect to be back to normal levels of production by this fiscal Q2. Thank you very much.
Thank you. I think you said it very well. Our crisis is a supply crisis and not a demand crisis. That's how we see it here and how we see our customers. This is, by the way, I think in line as well with the comments of our competitors. I think this is how the market sees it. If you go back to the slide, you see the shape of the curve, which illustrates the shape of the production on our sites, on our production sites. Basically, the situation today is that all our sites worldwide have reopened. We are not at full speed on all the sites. The last ones to reopen, as you have rightly said it, were in India, in South Africa, as well as in Kazakhstan, by the way.
When you say catch up, as I said, I want to be also fully transparent. We will go back to a normal activity, as I said, during the month of June. However, we are not going to catch up the sales which would have been lost during this period. We are going to try to do it on some occasions and on some sites, but at that stage, we have no plan to fully recover the sales which would have been lost. As you may recall, Alstom was full speed and the production of Alstom was full speed, so it is quite impossible to accelerate even more than what we were anticipating. As you said, South Africa is starting again, India is starting again. We need to have a specific operation in India to start, which we did get. We are starting again, and things are going smoothly.
We are also adapting the sites to minimize the loss of productivity because we need to take some sanitary measures which could impact the productivity. That will be back, as I said, in June.
Thank you. We have no further questions, and I'll turn the call back to the speakers for any additional or closing remarks.
Thank you very much for your attendance, for your attention. I think the last question was the concluding question. We are facing a supply crisis which we are weathering within Alstom, and I think it's fair to recognize that a lot of agility was there. I've not mentioned some extraordinary things that we have done just for the anecdote, but I think it illustrates the full thing. As you know, we are testing our new very high-speed train in the U.S., as we are introducing the very high speed in the U.S., and this test has been conducted from home, from Le Creusot in France, where the people could test it remotely from their home, which shows the agility that Alstom can have during this crisis to adapt itself.
We are, as you have seen, extremely confident on the future and on the resilience of our market on the back of sustainability transition. Thank you a lot. I'm sorry that we will not meet in person this year, but we'll have new opportunities in the future. Thanks a lot.
Thank you. This concludes today's conference call. Thank you for your participation, ladies and gentlemen. You may now disconnect.