H2 14/15

May 6, 2015

Conference call presenting its annual results for the fiscal year 2014, 2015. I will now hand over to Mr. Patrick Grand. Sir, please go ahead. Yes. Thank you, and good morning, ladies and gentlemen. Welcome to this conference call on our full year results for the fiscal year 2014, 2015, I mean accounts from the 1st April 2014 till 31st March 20 15. I'd like to remind you that all the published elements, the presentation, the financial report, including the MD and A and the accounts as well as the press release are available on our website, www.alstom.com. Let me first, on Slide number 2, give you the main takeaway of this publication on the full year numbers and where we stand with the deal with GE. To start with, I remind you that in compliance with IFRS 5, Alstom Energy has been classified as discontinued operation as we did for H1 and therefore is not included in orders, sales, IFRS and is reported under the net income discontinued operations line. Now when I go to these numbers, my first message will be to say that we actually are fully meeting the full year of 20 14, 20 15 guidance that we gave you. More specifically, Alstom showed in Transport a solid operational performance with orders up over 60% compared to the previous year and an organic sales growth of 7%. You will see also that the Ifo margin after corporate costs have improved by 50 basis points. The free cash flow from continued operation before tax and financial cash out reached EUR 77,000,000 showing as expected a significant rebound in H2, thanks to better cash profiles of few contracts as well as a strict cash flow management. Another critical step in the project between Alstom and GE has been completed with Alstom shareholders approving the transaction last December with over 99% of the vote in favor. We'll also commence the process to obtain competition authorities and regulatory authorizations, which is ongoing with the closing of the transaction that we expect in the coming months. And finally, we'll confirm our midterm guidance for Alstom. I start with the key events of the year and then Jean Jacques Moulin, our CFO, will present the detailed financial results before I come back with some additional remarks. We'll then share the floor with you on the Q and A session. Let's go together please to Slide 4. We summarize our main KPIs for the fiscal year 2014, 2015. You see that the orders at more than €10,000,000,000 were at a record high, up 63% compared to the same period last year, which showed also a good performance. A book to bill ratio over 1.6, thanks notably to the jumbo contract in South Africa of around €4,000,000,000 but also a number of interesting contracts elsewhere. This will be detailed in a second. The ink, the sales are up 7% organically with EUR 6,200,000,000 And as previously announced, the Q4 was slightly down compared to a very high Q4 of last year, because I remind you that Q4 2013, 2014 was something like 27% up versus the previous year. So we had somehow an unfavorable base of comparison. But globally, the sales over the year went up 8%, 7% on a like for like basis. Income from operation, which now includes the corporate costs linked to Alstom Transport activity, increased by 17% to EUR 68,000,000 from EUR 368,000,000. The corresponding operating margin went up by 50 basis points, reaching 5.2% after again after corporate costs. Net income from continued operation was negative EUR 823,000,000 notably impacting by the provision related to the agreement we passed with the U. S. Authorities, U. S. Department of Justice last December as well as some impairment of assets in Russia. Net income from discontinued operation reached €104,000,000 leading to a group's net income of minus €717,000,000 obviously hit by the exceptional elements that I just reminded you. Free cash flow, now from continued operation before tax and financial cash out reached EUR 77,000,000 over the full year with H2 more than offsetting the negative free cash flow of H1, and this is in line with the guidance we gave you also. The final finally, the free cash flow from discontinued operation before tax and operating before tax and financial cash out was positive over the full year, slightly positive over the full year with nearly EUR 1,000,000,000 of free cash flow generated over the second half. And this performance was notably driven by more favorable cash profile of some project as well as strict working management working capital management. So again, fully meeting the guidance we gave you on all the lines that we guided you. If I go back to the orders with a little more words, as you can see on Slide 5, I said that these orders were boosted by strong demand in urban transportation as well as in signaling and services. It also includes the booking of the large contract for suburban trains and associated maintenance in South Africa. It's worth noting that Europe remains sound with representing more or less half of our orders if we exclude this Praca contract. That's more or less EUR 3,000,000,000 out of the EUR 6,000,000,000 outside of Praca. Again, this book to bill of 1,600,000,000, this strong order intake gives us visibility for future revenues as it represents more than 4.5 years of sales. I just want also to pinpoint that this is an exceptionally high level of orders, a record high level of orders. But this is 2014, 2015 is also the 5th year in a row where we have had a book to bill above 1, 5th year in a row. If I go to Slide 6, Slide 6 gives you more example of our commercial successes during this fiscal year. And you see that besides the South African one, we booked several major orders such a large metro contract in Paris, tramway system in Qatar, Sydney Metro and tramways among others. You have here a full set of examples. We saw commercial successes in the 5 continents. And this confirms that we are able to capture opportunities and that there are such opportunities both in emerging markets and developed economies. Moving on to Slide 7, sales increased 7% organically, fueled by delivery of suburban intercity and very high speed in France, Italy and Germany as well as very high speed trains in Morocco and tramways in Dubai. Emerging markets represented around a third of the sales, 30% plus during the fiscal year. Income from operation increased by 17%, EUR 318,000,000 as I said and include a share of corporate cost allocated to Alstom Transport activity, which represented €27,000,000 negative, a charge of €27,000,000 in 2014, 2015. The operating margin went up from 4.7% to 5.2%, improving by 50 basis points, thanks to sound project execution, tight cost control partly mitigated by ramp up costs associated with new platforms such as the Regulus 1, as mentioned in our previous communication. A word that you can see on the following slides in the cost improvement program or performance program called Dedicated to Excellence, which we are moving in line with the various elements and guidance we gave you in the past. So the numbers that you see here are run rate numbers, but this is what we are gradually implementing starting in end of 2014, where we first presented to you our plan. You see in Slide 9 some example of the initiatives which are ongoing and have been fruitful so far and continue to do so. And they basically cover all the areas of our cost base, starting with sourcing, very important, but covering also manufacturing footprint, industrial footprint as well as overheads. On the next slide, on Slide 10, you also see a couple of numbers, a few numbers on our investment for future growth, both on R and D, innovation is clearly in our DNA and we're investing for the future growth. R and D represented EUR 116,000,000 during the fiscal year. And we also invested EUR 100,000,000 in modernization and expansion of our industrial footprint. The slide gives you also a few example of our main research and development as well as CapEx programs. Now I leave the stage to Jean Jacques for the detailed presentation of our financial results, which we published today. You have the floor. [SPEAKER JEAN FRANCOIS XAVIER BOUVIGNIES:] Thank you, Patrick. Good morning, ladies and gentlemen. So turning to the P and L on Page 12 and moving to exceptional item below the IFO line that impacted the EBIT of the company. You have restructuring charges this year, which amounted to EUR 106,000,000. This relates mainly to restructuring at Aasta Mid Quarter and in some European facilities and should not be considered as normative. It has already been mentioned that we expect a recurring level of restructuring for Alstom in its present scope of around $30,000,000 a year. Other non op expenses include our agreements with the U. S. Department of Justice as well as some asset write offs. As already mentioned, the cash out linked to this agreement with the DOJ will occur after the close of the transaction with General Electric. Financial results stood at minus €137,000,000 which reflects high level of charge in this transitory period and is not again representative of Alstom expected financial structure. The decrease versus last year reflected reimbursement of 7.22 €1,000,000 bond back in September 2014. Tax result was a positive €8,000,000 Share in net income of Equity Investisse amounted to EUR 18,000,000 with a lower operational performance of TMH over the period, largely amplified by the impact of the severe drop of the ruble. Consequently, we made an impairment of TMH value on March 31, 2014. Net income from discontinued operations decreased to €104,000,000 mainly as a result of lower sales, which impacted profitability. This net income also includes a number of specific item, positive and negative, and amongst other capital gain on disposal of the auxiliary business, a deal cost as well as restructuring and some exceptional charges. As a result of all the above, the net income group share amounted to a negative EUR 719,000,000. So let's move now to the next slide, Slide 13, which deals with the free cash flow. So the free cash flow from continued operation, which I remind you is before tax and financial cash out, was a positive EUR 77,000,000 for fiscal year and with an H2 that more than offset the negative figure of H1 as we expected. While over H1, the free cash flow was affected by temporary negative cash profile of a few contracts. This statement partly reversed in H2. We have mentioned that several times, the volatility is to be expected from 1 quarter to the other one in working capital and in that sense this year has been no exception. Moving to free cash flow from discontinued operation, again, before tax and financial cash outlay, it was slightly positive at €19,000,000 The second half showed a strong cash generation of about EUR 1,000,000,000 thanks to a more favorable again cash profile from projects executed over this period as well as a very strict cash management from the operations. We now move to Slide 14. On Slide 14, we'd like to spend a few moments on our financial structure and give you an update on the balance sheet items. So the liquidity position remains sound with EUR 1,600,000,000 of gross cash at the end of March and EUR 1,350,000,000 of Android credit line. As mentioned before, we did reimburse EUR 722,000,000 bonds which matured back in September 2014. This liquidity position is also backed by a new bridge facility of EUR 1,600,000,000 until the GE deal completes. This was put in place to address working capital volatility, which as you've seen has been pretty strong over the year. We did obtain a waiver on our financial covenants for all facilities until the completion of the GE transaction. The covenants were no longer reflecting the reality of the current situation considering the expected closing of the deal in the coming months. So finally, on this section, we are currently negotiating new bonding and revolving credit facilities to replace the existing one after the GE deal completion. And we expect from those negotiations better conditions. Moving now to Slide 15. As at March 2015, the net debt was stable year on year at about EUR 3,100,000,000 compared to EUR 3,000,000,000 last year. And it is substantially down compared to the EUR 3,900,000,000 that we had experienced at the end of H1. This overall stability resulted mainly from the negative free cash flow over the period on one hand and the proceeds from the sale of the steam auxiliary business on the other hand. On the right side of the slide, you see the equity development, which decreased about the period at EUR 4,200,000,000 and it is mainly the combined effect of net income as well as pension liability variation. Once again, the net debt level you see is obviously reflecting a transitory period for Alstom and is not significant of the future financial structure of that Alstom will have after the deal with General Electric. So we now move to the next slide, the Slide 16, which deals with pension. You see on the chart that the pension underfunding position increased to EUR 2,200,000,000 impacted by the lower discount rate assumption as well as some foreign exchange effect coming from Swiss franc and British pound. Out of the EUR 2,200,000,000 of underfunding, the portion that relates to continuing operation was EUR 450,000,000 euros We now move to a summary slide on discontinued operation and some key figures for information. So you see on that table on the upper left corner that orders went down 12%, remaining affected by the lack of big tickets. Main bookings related to a coal plant in Thailand, steam turbines in India And over the years, 3 gas turbines were sold, as well as a number of important HVDC contracts and wind turbine in Brazil. As expected, this the sales decreased and consequently, reflecting this slower intake in recent quarters. Profitability has been behaving in line with the trend shown in H1. As for net income, as Patrick already indicated, it was deal on the disposal of the auxiliary business. Such as the deal on the disposal of the auxiliary business, some deal costs related to the GE transaction and financial charges. The free cash flow from discontinued operation before tax and financial again was slightly positive at EUR 19,000,000 and it showed hence a strong generation of EUR 1,000,000,000 in the second half, thanks again to a more favorable cash profile in some projects as well as a very strict cash management from our business. Thanks. So Did you finish, Mr. JJ? Yes, it's done. So please. So I take over to say a few words on generic. Thank you, JJ. As you can see on Slide 19, I mean, the process regarding the projects with GE and the energy activities is on track. We had over the last 6 months a number of key steps achieved. We are currently as indicated there, but you all know that. So I'm not going it's just a reminder. We are currently we have filed a number of filings in a number of jurisdictions, 27. We already got something like 10 approvals and it was cleared in 10 area. And we are actively working with GE on all the remaining ones. So the timing of the closing will obviously depend on the positive completion of this regulatory and antitrust approvals. We expect it to happen in the coming months. As you also know, we intend after the closing to call for shareholders' meeting for a vote on public share buyback of Opera, which is the option favored at this stage to move part of the proceeds towards the shareholders. And turning to this use of the proceeds on Slide 20, what we already said and confirmed is that we obviously expect these proceeds to provide the group with a solid balance sheet, headroom for future growth. We plan to maintain strong liquidity to reimburse progressively part of the understanding debt and depending on the opportunities to do so, accelerate if it makes economic sense, don't if it doesn't. Should the company decide in due time to exercise its put options in the energy JVs, this will provide additional financial flexibility, notably for the reimbursement of the remaining outstanding debt. And we anticipate, as I already said, the cash return to shareholder to be in the range around €3,500,000,000 to €4,000,000,000 taking the form of a public share buyback. And thus, if confirmed in this line, which I expect will be the case, lead to a shareholders meeting after closing to ask our shareholders to vote on this cash return. I will just conclude this presentation with an update on our outlook. We provided last November a new guidance for both this year, which is fully met and for the medium term guidance, when I said fully met, you have here the comparison of the guidance given for 2014, 2015 and what are the actuals. So we have achieved all our forecast there. And the medium guidance, we confirm it. We expect the sales to grow over the 5% over 5% per year organically, the operating margin to gradually improve within the 5% to 7% range and the free cash flow of the range and the free cash flow of the group to be in line with the net income before any G JVs results. That means stability of the working capital, which is the underlying assumption. And we also know that there is volatility of this working capital impacting, as you have seen in this recent period. And it's always possible some volatility on short periods. Okay. This is the conclusion of our presentation. I thank you for your attention. And with Jean Jacques and Delphine, we are now ready to answer your questions. Thank you very much again. Thank you. We have a question from Andres Willey from JPMorgan. Please go ahead. Yes. Good morning, gentlemen. My first question is on the outlook for the continued operations for the year 2015, 2016. You haven't you have maintained the longer term guidance, but not said anything specifically on the year. Is there anything you can say about the pace of organic growth and the margin improvement? Should we expect a linear improvement over time? Or is there anything specific about the current financial year in terms of margin progression? The second question on your cash distribution to shareholders, the SEK 3,500,000,000 to SEK 4,000,000,000. Is that number set in stone? Or could that change given that there's quite a lot of potential consolidation going on in the industry in which you may want to participate? And the last question, what's your outlook and expectations for some of the large high speed orders that are currently in the market as potential tenders such as Turkey and Spain? Thank you. Look, on the outlook, we don't see anything specific in 2015 2016 which justifies a specific outlook and specific guidance. We told you that we expect the top line to grow by 5% per year over 5% per year. We this is in line with what we expect to happen. We say that we have a gradual improvement. That's also we just don't see the medium term guidance, which will be the sales going up 20% a year and minus 10% the next year and then up 20% again. So this is why we think that we are in a gradual in this mode of having the sales growing, 5% plus having the income from operation gradually improving and the free cash flow moving towards this cash flow equal net income target. So no really details which need to be specifically plugged in the 'fifteen, 'sixteen year. On the EUR 3,500,000,000 to EUR 4,000,000,000, look, nothing is engraved in stone. But at the same time, we confirm this indicative number. There is nothing which has changed compared to the previous indications. We'll see within this bracket where it makes sense to stand. Again, my view is that the company in the future will be a pure play in transport with some JVs in energy and will have a strong balance sheet. So I don't think that and I said that one of the priorities is to make sure that this company has the means to move. So I don't think that this level of distribution of share buyback is going to impact the future ability of the company to move. So we are not going to and again, I don't want to speculate on the speed of any energy of any industry consolidation. As I said, we are not in a must do mode. Our priority is to continue to grow organically, and I think that the year we are just closing gives some credibility to the strategy. If there are opportunities, we will look and the company will have the means of take actions in order to be able to move. But so therefore, there is no specific reason to change this outlook of the distribution of the Opera level. Concerning the tenders, as you can expect it, Andreas, I'm not going to comment specifically tender here and there. We are interested by ASPEED by nature, but no specific comments. Thank you. Thank you. We have a next question from Olivier Espinosa, Exane. Please go ahead. Yes, hello. Good morning, Patrick. Good morning. Good morning. I'd like to start with the update on the payment for GE Signaling. With the FX change, can you maybe update us on if there's any change on the amount you have to pay for it? And if you happen to have an update on the performance of that business in 2014, that would be great. Now I noted you would have preferred to keep the financial statement confidential, but I have some questions on the account as well. It mentioned that and that's on the cash actually and the interest charge. GE is supposed to carry the risk of the free cash flow variation since March 2014 as Tom carries rail. What about the share between you and GE of the interest and tax charge, which is actually the most significant amount in the cash flow statement. That's number 2. I'll give you number 3 as well. I mean, the account they mentioned that the business plan has been revised for TMH. I guess it's not just the ruble, which is driving the revision of the asset value, but also the new business plan. I wonder if you could share a little bit with us what you see how the business plan has been revised for TMH. Thank you. Well, on the first point, the signaling business, there is nothing new under the sky. The price of the deal is fixed and there is nothing new. I will comment on the signaling in the next steps when we will get that closing level, but there is nothing that I should report here. I would say that this business has not we have not changed our position as far as how interesting this business is for us. It's a good complement both geographically and in terms of technologies. So there is nothing to add on that position. On that point, this is a very strong business in North America. It remains a very strong business in North America. And again, no specific comments in terms of nothing fundamentally new under the sky. If we look at the free cash flow, I mean, you know that the deal includes some cash, which is transferred to GE and there is, as you know, also a locked box mechanism, which makes the consequences of the free cash flow of the energy business, the global free cash flow of the energy business taken over by GE. There is a good news for GE, which is that after a very negative H1, H2 has reversed largely reversed the cash outflow that we have in H1, which has been positive in H2. Now we have obviously some the cash and the tax and the financial cost is associated to some businesses. We pay taxes because of what happens in the specific business. We have this financial cost in relation to what happened. I would say that the split is done by entities. I would say that the financial and tax cash out is probably something like 80% in the energy side and 20% in the transport 1. Last question on TMH. Yes, indeed, what we face in Russia and this is something I mentioned clearly, I think, in our H1 report, is the fact that TMH is exposed, 1, to a slowdown of the Russian economy, implying a slowdown of its activity and 2, the devaluation of the ruble, which even if it recovered from a very low point that was reached by the end of the fiscal year. Still, there is a depreciation of the ruble against the euro or something like 30% from the start to the end of the year. And this combination of a slowdown and the discernible led us to take a write off. To be fair, I think that we'll remain with a low tide for a limited period of time, which is obviously difficult to quantify. But we have not changed our view on the potential of the Russian market, the ability to take to seize opportunities in this market through our partnership with TMH. And I personally am extremely positive on the medium prospects of both the market and our position in this market. I may add that in spite of this write off, it confirms that our strategy, which has been a partnership strategy in this market, is the right one, not only for political reasons, I would say, but also for economic ones. So okay, yes, we'll have for a couple of half years a contribution, which should be substantially lower than what it has been last year or the year before. But it doesn't change our expectation of a rebound in this market and new opportunities taken by TMH and OSS. We have a next question from Gael DuPree, Societe Generale. Please go ahead. Hi, good morning everyone. Good morning. Maybe two questions on the financials and one on the outlook. So firstly, how do you explain the 100 bps decline in the gross margin this year despite the pretty good sales growth? Secondly, maybe could you give us an indication in terms of what proportion of the backlog should be executed in the coming 2 years in theory? And the third question is on the maintenance business. Generally, how do you see the demand for maintenance and services, particularly in Europe? I mean, it seems there is an increasing trend towards more outsourcing of the maintenance and services activities amongst some of the rail companies in Europe. So maybe could you elaborate on the potential for you to benefit from services market growth here? Thank you. On your question on the gross margin, the evolution of the margin, I mean, I start by telling you that as you can see, basically on the bottom line, I mean the iPhone line, our margin increased by 50 basis points. Now if you look at our margins, I think that there are several factors which can explain the gross margin evolution that you mentioned. The first one is that we have a mix which includes during the year some we had the growth which was more in rolling stock than the rest of the activities this year. I mean our rolling stock has been up at a higher level than the average growth. So the mix is in the kind of relatively dilutive, so offsetting some of the positives of the mechanic impact of the volume growth. So that has been one. The second one is we also have some ramp up costs on some new platforms and notably Regiolis, which is a platform in which we have a very ambitious program of development of 7 new trends within the global platform. And this is basically what explained the point. Your question around services in Europe, well, again, Jael, our yes, it's true that we have a number of customers looking for outsourcing and we have been working on that. But this is a slow trend. And basically, we it's a priority. I think we are well positioned, and I think that we will seize opportunities. Again, my view is that when we look medium to long term, we should grow and will grow the signaling and the service better than the at a higher speed than the rolling stock one. On the backlog question and how fast will the backlog flow through the P and L, just to summarize your question. And so again, I don't have the number on my head right now. I would say that I think that we are typically we are in a classical situation where we expect the sales of this year, the current year to be something like 80% plus or 90% within our backlog. So that's what happens this year. And we think and I would say that the number for next year is probably around 60%, 70%. That type of 60% is probably the level, I would say. So you say we have 85%, 90% in the backlog for this year and probably 60% for next term. If I am grossly wrong, I will correct it towards you. Okay. Thank you, Patrick. Thank you. Thank you. We have the next question from William Mackey from Kepler Cheuvreux. Please go ahead. Yes. Good morning. Three questions, please, Patrick. First of all, as detailed on financials, With regard to the corporate costs for the transport business, should we take the bookings that you've taken in the last year as a fair value of the centralized costs for transport? Or were there any particular transition charges in there that might affect that going forward? Secondly, on restructuring, I hear that you reiterated the level of ongoing expense at around €30,000,000 but the charges last year were high. I'm sure some linked to the D2E program. How should we think about the level of expenses into the 2015, 2016 year given that you have about another EUR 150,000,000 of cost objective linked to D2E? Lastly, on the financials, perhaps coming back to the level of the deferred tax asset, which is sitting at about EUR 720,000,000 in the accounts. How should we think about the effective tax rate of the transport business given the opportunity to realize the benefits from those tax assets on the balance sheet in future years? That's the three detailed ones. Thank you. On the first question, which are the corporate costs, we told you we have this year something like 27, if I'm not wrong, of corporate costs impacting the transport activity. This is both the fair share of our current cost allocated to transport, but also a good assessment of what can be the future one of the Alstom standalone, which we guided in the past at being around 30%. So you know there. So it's not something which is impacted by transition. We may have a few millions, which instead of being here, are already embedded in the number of transport Alstom transport itself. But basically, the corporate cost, which is current transitory but will remain. At the end of the day, the functions which are currently provided by Alstom will have to be done by someone and the one will have to be paid. So basically, this will remain. I think that this is not creating any distortion to consider the current situation as the future one. So 30% is around €30,000,000 sorry, is around that. So we are on the 30, 30, 30 in all your questions, I'm sorry. The second one is €30,000,000 again. Again, that I told you that this is a kind of recurring level that I have in mind when you talk about restructuring of transport. It's not impossible that this 15, 16 number will be above this €30,000,000 because we have some still some adjustment to do here and there, and we have this T2E program, which will continue. It's obviously not over. So I don't necessarily say that it's going to be at the present year level. At the same time, it will be above 30, so somewhere in between probably. The third question is also 30%. We guided you in the past that because of the geography of the profits, etcetera, it would be wise to consider tax rate somewhere in the range of 30%. So 30% all your points. Perfect. So that thirty-thirty vision. Thank you. A follow-up then briefly, if I may. Just relating to the mix of the business, you alluded to the strength of revenue growth in the rolling stock segment during 2014, 2015 as being above your group average. Could you provide a bit more color as to how the revenues developed in Service and Signaling and Maintenance, please? We have signaling and services, which I mean, both rolling stock signaling and services increased. But again, I don't want to overpress one point or another. There is volatility. You reach milestone at one point in time, which implies a higher point here and there. So we have the signaling going up, services going up. I mean that's it's not very relevant. It's not very relevant, very relevant that the rolling stock represents something like 50% of our total sales. You have turnkey, you have signaling and you have services. So that's more or less the split. Got you. Thank you. We have a next question from James Moore from Redburn. Please go ahead. Yes. Good morning, everyone. I've got 2 on margin issues and I'll try a hopeful one on antitrust. In terms of the savings progression, I see that the annualized run rate has done well, got up from €150,000,000 to €300,000,000 But I wonder if you could help us a bit with how much was actually realized in the P and L in the last year out of the €300,000,000 I'm really trying to understand whether the year on year effect in the P and L last year was higher than it's going to be in the coming years or a bit lower and how that's going to progress? The second question is on mix. You mentioned rolling stock growing faster than service and signaling. You also mentioned ramp up costs. I know that no one issue is that important and there is volatility. But as we move forward into the 'fifteen, 'sixteen year, could you give us some idea as to whether you see continued ramp up costs and continued faster growth in rolling stock or whether you see any change to that effect? And I'll try a third one if I can. Can you say anything at all about whether the questions from the European Commission have centered around investment and R and D concerns or whether there have been greater questioning on issues of market shares and the impacts they may have on turbine prices and ultimately consumer electricity prices. My sense from press commentary is that innovation and investment seem to get mentioned, but nobody is talking about electricity pricing, which makes me feel hopeful. Is there anything you can say on that debate? Thank you. On the D2E program, you know that I've been over the years reluctant to give this type of data because I wanted you not to be misled on the consequences of the data which would be released. And I was right to be shy in giving the numbers because we are currently talking about run rate. These are actually savings that we are doing. That means that when we look at our cost base today and compare it to what was our cost base 2 years ago when we started the program, there is that this is the difference. But this difference of cost first gets into the backlog in elements which are not going to be externalized immediately. It also goes to the customers because we are under price pressure across the portfolio because of the environment, the competitive environment that you know. So at the end of the day, we have the volume impact, we have the mix impact, we have the cost impact, we have the execution impact, we have the ramp up cost impact and all this gives ups and downs. And that's why we at the end of the day, the €300,000,000 you don't find them in the P and L day 1 and you will not find them in the P and L day 2. So this goes into this crushing machine that I just described. And at the end of the day, what we expect is the bottom line to move up. 2, on the we said, look, we are in a market where we don't see discontinuity. We don't see our operating income to go to hell. We don't see it going to the sky next year, etcetera. And we are on this medium term guidance that we gave you. I'm not going to go in the guidance per product line because I don't think it's realistic to do. We have I'm very happy to see rolling stock growing. I hope it's going to continue to grow. I hope also that signaling and services are going to grow as fast, if not faster. So that's where we are because typically, you have better margins in the signaling and service business that you have in rolling stock. But again, my job and our efforts is to grow the rolling stock as we grow the rest because all this is globally value creative, but I'm not going to give you the guidance per product line, etcetera. Is the pressure from ramp up of new platform going to continue? Yes, we are going to continue to ramp up new products. And when the ramp up of 1 platform will be over, we start the ramp up of a new one. So this is part of the game. At the end of the day, we say that we will expect to improve the bottom line. On the EC, look, you don't expect me to comment on ongoing regulatory processes. I'm not going to take the decision. I'm going to provide GE, with our help, are providing the necessary data to all the regulatory authorities. This is true as in Europe as elsewhere. And I can say very candidly that we are working constructively through all the regulatory processes in all the geographies in which this is happening. I also tell you that our deal is structured on the basis of very complementary technologies and very complementary geographies and nothing that we have looked at over the recent period changes our mind on that. So I am very positive on what will be the outcome of all these processes. At the same time, I recognize that it's a large and complex deal, and I recognize it's not something that is great because transitions are painful by nature. People like stability and predictability. So therefore, I hope this will be completed as soon as possible. But basically, I fully understand, and this is a surprise neither for GE nor for us, that these reviews take time as they are very analytically addressed With the regulatory authorities and notably the reopen commission look not only on the competitive environment, but its consequences on the industry in Europe, innovation in Europe, etcetera, I expect them to do, but I'm not the guy taking the decision. So what we do is we provide elements. I think that this deal is good for the customers, is good for innovation, is good for industry and is good for jobs in Europe. We have a next question from Frederic Stahl from UBS. Please go ahead. Yes. Hi, good morning, everyone. It's Frederik here from UBS. I just want to go back to the product launches and the cost relating to that. It's not clear to me that well, the question is, are the product launches and the associated costs in the fiscal year that you just closed, have they been higher than normal? And if so, how long does it take for them to normalize again? That's the first two questions. And then the second question is, I was wondering if you could give us some help with the FX impact on your P and L in the new fiscal year here. Thank you. On the first one, look, no, we have we're probably in a period where we have probably more launches than the normative level. You expect us to keep on developing new products and launching them. I would say I probably think that we are currently in a situation where the launch of products is above a kind of normative level. Will this continue next year? My answer is yes. I don't see a discontinuity there. We have both in signaling, in rolling stock, we have a number of very good and innovative products. And again, I mentioned that this is not something new under the sky. When we start a program, the profitability of the program is impacted by the fact that it is a ramp up in Industrial Efficiency and that we include in our margin recognition a number of precautions on the way the overall contract is going to be executed. So classically, we have a better performance at the end of the program than at the start of the program, but this is not something new. So to cut a long story short, yes, we have significant ramp up costs. Are these going to disappear next year? No. Normatively, should they be a bit lower? Possibly. On ForEx, I would say that on ForEx, you have the impact of the ForEx, which was somehow quite limited between you and me, 8% organic growth and 7% and 7% 8% published growth, 7% organic growth. So I mean, this has not the numbers are not massive, and they are not massive because of our international footprint. So no specific guidance that we would give you on that. That's clear. Thank you. Thank you. We have a next question from James Stettler from Barclays. Please go ahead. Mr. Stettler just hung up. So we will take a next question from Andrew Carter, RBC. Please go ahead. Yes, good morning. Most of my questions have been answered, but if I could just ask 2 quick ones. Firstly, thank you very much for providing the continuing share of the net pension deficit, so the bit that goes with Alstom Transport. Are you able to provide us with the same number for the net debt, so the net debt that we'll continue with Alstom Transport based on the year end? And then the second one was just I did notice that the net working capital in the ongoing business continued to increase. And I wondered if you could talk about that a little bit. My impression was that Alstom Transport was a business that operates with negative net working capital. So I would have thought when the business was growing, you'd actually get a cash flow in for net working capital. Now I recognize that things can be a little bit volatile, but I was wondering if you are seeing any change in any of the sort of the terms of trade that the business is doing. Thanks. First question is on the debt that you mentioned, the pensions and the funding, etcetera. Yes, on the look, the net debt of the business is basically the net debt at the start of the year, plus or minus the free cash flow of transport. And you can see that the free cash flow of transport over the next over the period was not very significant. I mean, we had a positive free cash flow before investment tax. This is more or less offset by the tax and the expenses, financial expenses related to the continued operation. So basically, the net debt is more or less stable. On the second question, which is related to changes in trade, No, I'm not aware of any substantial of any material change of anything over the recent period. Thank you. We have a next question from Alfred Glaser from ODDO. Please go ahead. Yes, good morning, Alfred. Yes. I was wondering on CapEx, first of all, the numbers are in fact going down over the last 2 years despite the ramp up of new product ranges. Should we expect these numbers to slide further in the coming years? Or do we have some reached some kind of flow here on CapEx numbers? And then I also wanted to ask you on TMH and Russia. You said previously that you're targeting more export business from TMH benefiting from the weak ruble. Is this progressing? Do you have any tangible elements here that you could share with us? And regarding also TMH, currently you're holding 25% of this business. Do you think that with the cash you're going to get from the GE deal, you might increase your stake in TMS? Thank you, Alfred. On the CapEx, frankly, as you know, we had a large number of very large projects, which are ongoing, typically a new, a brand new rail factory in India, etcetera. So really, the fact that we went at 110 and we go to 100 doesn't mean that we are going to be 90 next this year and 80 the next year. I mean, so you I must admit pituitously that I don't monitor the CapEx, plus or minus €10,000,000 So it's not a trend. CapEx at €100,000,000 plus is a normal level that we expect is as necessary to modernize and expand our manufacturing footprint. So okay, it was 100 it could have been 110 or 95 without me changing the way I described the situation. Concerning TMH, I told you this is a good investment. We hold 25% in this business. There is I will not speculate on whether we are going to increase or decrease this level. We are happy with our investment in TMH. We suffer as an investor from the current slowdown of the Russian economy. We took a write off. It doesn't change, in my view, the possibility to develop this business both on Russia and on other geographies. As you know, one of the footprint one of the developments of our JV in Russia has been the possibility to develop a position in Kazakhstan by a combination of by a joint venture between TMH, Kazakh Headways and ourselves. So this is one example. We will also, as we move forward, use more what happens what is done in Russia to support some projects in nearby countries. So Kazakhstan is one example. I hope that I'd be able to provide you with others, but I don't change my mind. TMH is a good base to develop business in Russia. The business in Russia will resume and it's a good base also to develop business in a broader geography. That's the comment I can do on TMH. It's fair to say that the current contribution of TMH in our P and L will be as been in H2 and will be this year lower than what it has been in the past. That's a given. Ladies and gentlemen, I think it's time to discontinue. Thank you very much for your interest, JJ Delphine and if necessary myself remain obviously at your disposal to answer any additional concern or questions you may have after looking at our results. But again, to cut a long story short, I think that we have shown during this fiscal year a strong performance in our transport activity. We expect this to continue, and we have a great business here, supported by a great backlog in the business, which is not an easy business because we are in a competitive environment, but well placed within this competitive environment. And as far as the GED is concerned, we are in the transitory period. We have moved through a number of key steps. We are in the regulatory stage, and I hope that this will come to an end in the coming months, allowing the deal to be closed and to move in the next steps. Thank you again and looking forward your potential additional questions. Thank you.