Ladies and gentlemen, on behalf of Stadler, I would like to welcome you to the 2025 Capital Markets Day. We have an interesting afternoon lying ahead of us, with insights into Stadler's strategy, an overview by the Group CEO, as well as some insights into Signalling and the strongly growing market, the U.S. We will have some insights from the CFO and a possibility to ask individual questions. After all these interesting figures, at 4:15 P.M., we will serve you an aperol range in order to wrap up this Capital Markets Day. Now I'd like to pass the floor to Peter Spuhler, the Executive Board Chairman, and he's going to tell you more about Stadler's strategy and give an evaluation of the financial year 2024. Ladies and gentlemen.
Ja, das sind schreckliche Bilder.
These were awful pictures, and I can say that 2024 hit us three times with natural disasters. Before I start my presentation, I'd like to really say a few words about the situation last year. Everything started in the Swiss canton of Valais, where the river Rhône flooded the Constellium plant. Constellium is one of our strategic suppliers. We buy over 10,000 tons of pressed profiles, aluminum profiles from them. We also have stock on site at their factory. It was about 1,200 tons that we had stored there. These profiles, they have hollow spaces, and they were flooded, filled not only with water but also with mud. Three quarters of these profiles had to be scrapped afterwards. The plant was closed for five months and will only reach full capacity again in August 2025.
So far, we've been able to more or less keep the situation under control. We've had some shifting of deliveries because these pressed profiles are missing, and there are not many alternative suppliers. The management is doing its best to remedy the situation. On the 17th of September, we were hit again. We've got a provisional commissioning center for the 128 double-decker trains that we are building for the Austrian Federal Railways. At this site, we do commissioning in order to be able to hand over the vehicle in perfect state to the customer. Here again, a dam burst. One vehicle was flooded with sand, with mud, and the entire low floor part or underfloor part was flooded. Then came the real peak of the disaster. That was the 29th of October in Valencia, where the whole south of Valencia was massively inundated.
Thank God at Stadler we had no fatalities. 220 other people were not that lucky. The factory also remained more or less untouched because our plant is north of Valencia, and the flooding happened mainly in the southern part. However, unfortunately, our key strategic sub-suppliers, who are based in the industrial belt in the south of Valencia, 40 of them were hit. Two weeks ago, I was in Valencia again, and you can see there that some factories were just flooded away. I'd never seen something like this before. If you don't get the components and subsystems, you saw the pictures here, then of course you cannot complete your trains. The second problem was that many employees rely on intact roads and public transport.
For five to six weeks, we were only able to work with a reduced team until the entire infrastructure was built up and repaired again. Two warehouses of Stadler Valencia were also hit, one with the heavy Caterpillar diesel engines. They were also flooded, filled with sand and water, and they are now being disassembled. We are not sure yet whether we can continue to use them. In the second warehouse, we mainly had car bogies from Switzerland that were stored there, as well as electric motors which do not withstand sand and water. Everything's being disassembled. I must say that the whole team in Valencia is very motivated. They immediately took measures in a structured way, and I think that we will manage. We cannot tell you yet how much time we will need for that.
I think that for the presentation of the half-yearly figures, we will have more information available and can give you more short-term guidance. About 50 orders are affected, 50 orders that are currently being executed in Switzerland. About 200,000 production hours had to be shifted from the financial year 2024- 2025 and possibly also into 2026. I mean, we already gathered some experience with catch-up plans during the COVID period. Back then, 130 trains had been affected because factories had to be closed, because the market authorization authorities could not do their work, and customers did not have the possibility to travel. We are very much affected. 600 employees lost their homes, their flats, their houses were flooded, were destroyed. Here also, immediate measures were granted, loans were granted for them to bridge the difficulties. I would have loved to make some positive announcements here.
However, it is really important to openly and transparently communicate the whole situation as it is. Let's now close the chapter on the natural disasters and go two slides back. For those of you who are participating in the Capital Markets Day for the first time, what is Stadler? Stadler is a Swiss company, was founded back in 1942 during the Second World War by Ernst Stadler as an engineering firm in the canton of Zurich. Via the canton of Schwyz, it came to Bussnang in the 1960s. I joined in 1987. Back then, we were 18 employees. Today, we are around 15,000, always depending on whether you count FTEs or take the actual headcount. We have around 270 customers, more than 12,000 vehicles produced by Stadler are running in 49 countries on a daily basis. That is trams, metros, high-speed trains, locomotives, so the full range.
Regarding production facilities, I can tell you that we have eight so-called front plants. A front plant is defined as an assembly plant where the full vehicle gets produced. That can be a tram, a train, a locomotive. We have eight supply centers, cost centers that deliver, for instance, bogies, aluminum car bodies, power converters, and so on to the assembly plants. They are in the components division. On top of everything, we have six engineering hubs where they only do engineering, for instance, in Vienna or in Prague. Usually, of course, we have also engineering teams at the individual production plants, but they get supported by our engineering hubs. We have another 2,200 employees in 80 service sites worldwide. That is an area where we got active rather late, also later than many of our competitors. We have catch-up potential here.
That's important for you to know because these businesses offer better margins. You have longer-term contracts. They are contracts with terms of up to 30 or 35 years, which gives you good base load at good margins. Here we see good opportunities to grow further, and the results and EBIT situation can also be improved. Now, the IPO that was on the 12th of April 2019, I already presented that last time. Here you see a comparison of the situation when we started. So 2018, that was the annual result that formed the basis for the IPO in April 2019. We got better everywhere except for the EBIT, which hurts us hard. The entire team is aware, me included, that we need to improve the situation. Unfortunately, over these past few years, we've been hit hard by disaster.
Here we can see the 12th of April 2019 when we went public, shortly after COVID struck. That was two years, 2020, 2021. In 2022, we went back to normality. Came the war in Ukraine. We had one of our best production facilities in Minsk. Of course, we had to fully comply with all sanctions. Out of the 2,000 employees, we needed to lay off the majority, went down to 200. Why didn't we fully close the plant? To make sure that the state in Belarus doesn't nationalize it. We continued to produce some small components there, but basically it's at a standstill, which is a shame. The cost situation was unique. The quality was at Swiss levels. How the situation will continue, we don't know.
Of course, this also cost us a lot of effort, a lot of money. The entire production had to be transferred from Minsk to Poland, including employees, materials, logistics chains that were interrupted, and so on and so forth. Last year, there were these three flooding disasters. This is not an excuse. We need to perform. We need to significantly increase EBIT again. I continue to be convinced that we will make it back to old levels of 7%-8%. Please, without such events as we have seen them recently. The entire management contributed to mastering the situation. Now, let's come to our strategy. I can show you a slide here, which I repeatedly show as it gives a good overview. First of all, how do the figures come about?
We always take the number of vehicles delivered in the past three years and take the average of that. Why do we do that? There are lots of contracts in our industry which are framework agreements. For instance, with SBB, we have a framework agreement of 510 Evo, FLIRT Evo's. 216 of them have been called off. If we took the number in the framework agreements into our books, you just inflate everything artificially and don't know whether you will ever deliver the full number. With deliveries, that's clear. You know the vehicle will be taken over by the customer as it has market authorization. We take a retrospective here, yes. The data that we base everything on is solid. We take the delivered vehicles of the past three years and take the average, the annual average of that.
The order backlog of around CHF 29 billion is not included in this figure. Now, if you look at the bar on the left, rolling stock including infrastructure, that's worth about CHF 2 billion per year. If you deduct infrastructure from that, where we are not active, what remains is around CHF 22 billion for system technologies, and rolling stock is around CHF 140 billion. That's the annual average. If you split the 140 over after-sales and OEM, we are at 59 and 79 respectively. If you go to the middle now, split it up again, then you see that globally, LRVs and trams are ordered in the amount of CHF 3 billion. Cars for CHF 4 billion, high-speed trains CHF 7 billion, locomotives CHF 9 billion, metros CHF 9 billion, and multiple units CHF 12 billion. The fields where we are strongly positioned, these are the segments that form the biggest market worldwide.
Now, we can also split that into our market strategy. We can exclude China here because China is a closed-off market. We do not even need to submit a bid there. We stand no chance of getting an order there, except for Huawei. For them, 18 retro RhB vehicles were built for them, which are now running on the new Huawei campus near Shanghai. That is only local transport on this campus. That was very special. At least we got one order. For normal orders, no chance. Everything is split here by global regions. What is nice to see is the EUR 14 billion in Europe. This is where we are most strongly positioned. This is also the biggest market for public transport and rolling stock. On the very right, you see the split by segment, by market segment.
We see here multiple units with CHF 9 billion, locomotives, CHF 6 billion. You also see that in this area, we can experience major growth. We recently launched new locomotives, two types, six-axle type. We recently won an order for the cargo locomotive, four-axle Bo’Bo’ locomotive for the Swiss Federal Railways. There we will also launch a new product. We will present a deviation from the four-axle cargo and present a four-axle passenger locomotive. We are fighting there against Siemens, which is dominating the market with the four-axle electric locomotive. If we continue now and look at market share, we can maybe start in Europe. Alstom is by far the biggest player here, but we would have caught up with them had they not taken over Bombardier three to four years back. That is Bombardier with Alstom together.
However, we are faring better than Siemens in Europe, have a good market position here. If you then consider, okay, the order backlog of CHF 29 billion, considering that we will get closer to Alstom in the near future. North America, we believe that this is a very good market for us. In the year 2000, we started with 22 trains for New Jersey, which we still completely built here in Bussnang. These were articulated trains. Step by step, we entered the market with different products, starting with the articulated multiple unit and the FLIRT electric and diesel, then the double-decker for the Silicon Valley metro. Now the latest product is our tram that also entered the U.S. market. We have got a good product portfolio, widely supported modern technology. We believe that we stand good chances for future growth.
CIS, maybe a word on that. Here, because of Minsk, we are no longer that active. We received an order from Kazakhstan, 536 sleepers that we are building for the Kazakh railways in Astana. That is our latest plant that we have. It's an assembly plant. The rest of the world and Asia, there we just do some cherry picking. We have no clear market strategy there. If you get the feeling that, yes, this would fit our product portfolio, we do submit a bit. We received two orders from Taiwan, two from New Zealand, but that's really cherry picking, good margin, usually tailor-made special vehicles. The same here for Europe. I do not want to repeat myself. As you can see, multiple units with the trains, we are very well positioned, the mainline trains.
We will continue to grow here in the next few years. The same holds true for trams. We have two new products here, TINA and CITYLINK, TRAMLINK, sorry. For instance, Siemens, they are virtually withdrawing from the tram market. Alstom, they actually also do not have much to offer product-wise, because competitors here are CAF from the Basque countries. In LRVs, we also see good potential to see further growth. The same holds true for locomotives and also for metros. In high-speed trains, we are only active in a market segment up to 250 km per hour, not 300 km per hour. That would be very high speed, because there you only have very few markets where the track network is designed for such high speeds. These are usually closed markets like China, Japan, France, and so on.
Briefly, how do we view ourselves? What do we offer our clients? We are the traditional rail vehicle producer. When I started 37 years ago, electric and bogies was not in our competence. We just built the car bodies. Then ABB came in and they built in the entire electric disposition. The bogies we ordered in Winterthur from SEG or SCM in Winterthur. The next step came. We had to become a general contractor as a rail vehicle producer and supply the client with a completely finished vehicle. We were able to make also this step within a short time. We were able to incorporate all the necessary competencies. It continued. We started to request service offers from the clients.
This domain grew strongly, not in the public railway system, but particularly the liberalization, privatization, particularly in the EU led to it that many private companies were not able to handle the service themselves. There we got some very good orders, long-term orders. One as an example, Liverpool Metro, where we delivered 250 trains, 35 years maintenance and service package. There are several such cases. All of a sudden, we were told, okay, we have no funds. We need to offer financial solutions. About five, six, seven years ago, we made a start with the WESTbahn. Vienna, Salzburg, direction the west, actually the competitor of the ÖBB, the Austrian Railway. We funded it over the TCS holding. There were then various further financing vehicles. Today, apart from the service, we're also able to offer the entire financing.
This is, of course, interesting or can be very interesting. Also, five, six years ago, we suddenly realized, oh, we are part of the European Train Control System. This is the new international signalling system, train control security system, which was previously outside of the vehicles. You may remember these signals, these barriers which would go up and down. The entire intelligence today is built into the vehicle. There were three companies who were leading: Siemens, Alstom, Hitachi. It is, of course, no fun if they are faced with a direct competitor. They can, if you then have to purchase the signalling solution from a direct competitor. Within a short time, we were able to adapt so that we could have these systems in-house and offer them in-house. Marc Trippel will be informing this afternoon a bit more in detail on this topic.
Today, we're in the fortunate position. We have 10 country authorizations in the domain of ETCS and in the CBTC communication-based train control market. Ritter in the USA division in Atlanta was able, the entire driverless system for our trains that we were able to, that we can deliver the entire system, which is an order of more than $500 million. This is an enormous strategic breakthrough in a market where we see a lot of growth opportunities. The last point I would like to address is operation. Not railway, but for example, in Berlin, the tender description was such that one of the partners in the consortium also had to assure the operation. There is a sort of division in three categories: vehicles we produce together with Siemens, service together with Siemens and the Deutsche Bahn, and Deutsche Bahn is then the operator.
You can see what complexity and challenges we are faced with in these specific situations. I would say the journey is not yet at its end. We continuously, ongoingly have to adapt to the client requirements, the client needs. I think I can say with a good conscience that we did a good job. Today, we are capable to also stand up faced with Siemens and the other very big ones. Infrastructure so far, we have not touched. These are the turnkey projects where next to the vehicles, you also provide the entire infrastructure, including the railway stations and the maintenance work centers, utility centers have to be built. That just briefly, yes, a look to the time. Just a brief explanation. How are we set up strategically?
Now, we meet every year for two days on the Wolfsberg with the management team, which are approximately 100 management leaders. There we discuss the strategy with each other. We discuss which market segment do we want to launch into. We are not in the freight wagon domain, which is uninteresting and not the very high speed. Anything above 250 km per hour is not ours. Otherwise, we cover all market segments. As soon as this has been established, we then consider with which technology, with which vehicle concept can we or do we want to cover this market segment. Next comes the market strategy. Where do we see the best opportunities in order to be able to be successful with this mix in this market? There are markets where we have to say China is an enormous market, but we do not stand a chance there.
There are other markets where competitors perhaps are not as strong or where we see other advantages. This is then defined and then contributes or shapes the reworked strategy. There are many other aspects, but I focus now on just the three most important of 12. A few examples. Market segment. A few years ago, the whole discussion of decarbonization arose. Nobody wanted to buy diesel vehicles anymore. We sat together to discuss an alternative. The alternative is an electric drive train with battery or based on hydrogen. Here we have to be ready, of course, to understand this technology. And with this technology, you know, particularly hydrogen is a new concept to be able to also develop a vehicle conceptually based on this approach.
We see the locomotives with the new tunnels, which have not been drilled about 1 meter above sea level, but base tunnels. Suddenly, instead of two locomotives, one locomotive, but then with six axles. We developed two such ones. This is the strategic fit, which we then need to take a look at. What are political developments? What are technological trends on the market? What can we use? We need to provide and develop according solutions and products. For example, the FLIRT Akku battery-powered, FLIRT H2 hydrogen-powered, which are currently particularly in North America, where only 1% of the network is electrified. In Europe, it is more the battery-powered because there we have interruptions between 100, around 100 plus minus km. The same thing we see in the locomotives. The latest such development is the RS from Berlin.
We took over the RS once, which we sort of got gifted with. We had a, we sold about 100 such train cars, diesel, and they are now getting older, outdated. Our product team considered what can we do? They developed a one-part set with fuel cells or with battery powering. Which market segment with which products in which markets? You can see in Europe, we are more with FLIRT Akku than fuel cells, hydrogen combustion engines, more in the U.S. This is how we approach it strategically. Every year we rework the strategy. I do not want to go into every detail here, but I think it is important to convey how focused we are strategically. On an annual basis, we revisit our strategy, adapted new trends technologically or political trends are then integrated. One of my favorite slides you see here.
Many of you keep on approaching us and saying, well, you have such an enormous order intake, now such an impressive order backlog, but the revenue is not progressing. There are various reasons for this. One of the reasons is visible here. If you consider now, particularly in regards to fuel cells, how many process steps do we need to achieve before we will find these vehicles again in the revenue or in the EBIT margin? This is something which may not be underestimated. Also in tenders of FLIRT, for example, the 58 BLS trains, which are still in production currently and being delivered. The whole throughput takes 10 years from the moment when the contract is signed until the last one has been delivered. This is an aspect which is hard to convey.
If I may say, large orders, until these are within the production, this takes two, two and a half years. Until this is then turned into recognized revenue and visible in the EBIT, it takes even longer. The second reason I would also like to mention, our CFO, Raphael Widmer, has also tried a few times to explain it. Yes, he's just pointing out that this afternoon he will come back to this point. I still want to make the attempt, even though I am not the CFO. In our accounting approach, we are very conservative. All of our competitors have cost to cost as an accounting principle. If they receive an order in their books and they have calculated a 10% margin from day one, they will already portray it in the recognized revenue and the EBIT margin.
We are in a project business where we ongoingly have unforeseen risks. You can build vehicles for three, four years, and they're put into operation. It is only when they've been put into service that you will realize that there is a technical problem somewhere. With this vehicle, you need to continue into a refit process. For this reason, in order to keep the risk low, we have an accounting based on units of delivery. In our system, the vehicle is only taken into the recognized revenue when we have had the client acceptance. To convey this in this fast living world, such as the stock exchange, that we are very conservative, very cautious, that we are functioning on a very long-term axis is not so easy to convey. We have tried to summarize it here.
You can see 2025, blue is the revenue and green is our production performance. This means that about CHF 1 billion in 2025 will not be reflected in the revenue, but the products are being produced. However, the client has not yet accepted them. We basically are pushing a tremendous wave ahead of us. This is something which is difficult to explain because this long-term approach may not appear so appealing at the stock exchange, but for us, it is more important to be on the safe, conservative side and not have to suddenly deal with unpleasant surprises. Now, briefly, what are our strategic areas of focus as last slide? Geographical expansion. We have tried several times to get a foothold in India, in Asia, because we believe that without a base in this geographical region, we do not have a chance to really build up the business there.
There is no hurry for this. We are ready to go. So far, we always had to come back having lost the race twice in India. We are always trying to assess what could be feasible. In Europe, very strong. We will continue to expand in Europe with the new products. In the U.S., we see very good opportunities, clear setbacks, CIS because of the war, because of the sanctions. This is approximately our current situation. South America, not interesting, very high tariffs. Trump now has 25%. I think in Brazil, the tariffs are even higher. One is forced to have a local plant, and I don't think this will get us further. We had four or five orders, tailor-made orders, amongst which Corcovado, which we were able to have there, for example, the rack and pinion train up to the Jesus monument.
Again, expansion, areas of activities in Europe we want to reinforce. In the U.S., we see good possibilities to grow further. Green technology, we are market leader. No other company has so many vehicles worldwide sold as Stadler, be it on the hydrogen side or in the electric traction train with battery. Then the entire digitalization. Here we are on a good track to close the gap to the market leaders, Siemens, Alstom, Hitachi. Here we need to make further efforts. We need to pass the test so that in Atlanta for the, that we can introduce the CBTC system. We are convinced that this will work. It is a new technology. It is simpler, but I think Marc Trippel will be sharing more on it.
What I also want to address is we are fully aware that currently regarding EBIT, we are not delivering the performance which I expect from myself and from the company. We will be working hard at it, but we are convinced that once these crisis situations have been passed, we will achieve our goals. Thank you very much.
Thank you, Peter Spuhler. The Chairman of the Board is happy to take your questions. Two microphones have been prepared. If you could first introduce yourself with name and function. Who would like to ask the first question? Yes, here up front. Thank you. Thank you, Patrick Rafaisz from UBS. In regard to the geographical expansion, I think for the U.S., we will be hearing more today. You addressed Asia, India, Southeast Asia. Do you remain hopeful? Can you give us some details? What is in the cards?
What could come about? The trigger for these geographic considerations was the EU debt crisis in 2010, 2011, 2012, where we could see that the number of tenders in Europe was reducing. We considered where are there major railway systems with outdated fleets. This was the U.S. and the ex-Soviet republics. On one hand, we broke out to the east. On the other hand, also towards the west, we were able to gain a foothold quickly in the U.S. and we're currently about to double the plant, also the whole car body production. There we can say, tick the box. The Chinese are out for some time. They were very dominant in the U.S. They won four METRO bids, but I think China is out of the game. Of course, with the Buy America Act, 70% local production.
This helps to maintain the competition situation stable. One cannot come from outside from a cheap production country and just export. In the CIS domain, we had a good start, excellent plant. Excellent cost structure, really everything wonderful. Then the Ukraine war came and we had to withdraw. The next consideration is what could we do next? We then made four or five times the attempt to gain a foothold in India, but the prices are so low and one has to have a local base in India. This is something we have not succeeded in doing yet. Hope dies last. Once we have, we see again an interesting tender, we will certainly integrate it into our sales process. We will verify it. Currently, there is nothing to be seen. The rest of Asia, we do have some tailor-made things.
In New Zealand, for example, we have two orders. In Taiwan, we have two orders, one a loco, one a METRO. The METRO orders together with Siemens, who are then doing the signalling. That we would have an Asia strategy with which we can say in two years, this is the objective and then the following objective. That is not the case. We're keeping an eye on it. We are ready to go. The moment something interesting surfaces, we will try to grab it. Further questions from the plenary? Jörg Beckers from Commerzbank. Twice the keyword of aftermarket sales was mentioned this morning also in regards to the product mix of the competitors and that Stadler wants to grow in the aftermarket domain. I mean, what are the success factors in order to be successful in this aftermarket?
First of all, you need to have a vehicle, which I would say is also a good possibility in regards to the maintenance. If it's a vehicle that keeps on stopping and the maintenance costs are going through the roof, this may not be the good, the best precondition to gain such after-service contracts. Now, we, for example, had with the FLIRT initially, we had a situation of 40,000, 50,000 today. We are at 100,000 running days. First of all, we have to have the vehicle in a good maintenance situation technologically and product-wise. You need to give a price per driven km. The composition of this price is always a bit different, which components are integrated in it. This then depends on mileage performance.
For example, with the WESTbahn , where the trains will do 500,000 km and more and S-Bahn perhaps 150,000 km per year. These are then the impacts on the cost rate. To have a maintenance, which is as low cost as possible. Normally you have to build a plant if you have a contract running over 30 years. It is a sort of a puzzle game where different factors are determining in order to win such tenders. It is going quite well. Last year, we were able to win such service mandates for more than CHF 1 billion. We are growing quickly here and the margin is clearly better than currently on the vehicles. One criteria, one criteria fits all does not exist. Question at the back right, please. Johannes Bordten, I have a question on the market segments.
I mean, the high-speed market is also changing and you have already mentioned with the U.S., the Chinese who are no longer existent there. Have these markets also developed in your direction? You have a foothold currently in the domain of 250 km, max if I remember well. Is this a segment which will be opening for you? The products would change, the clients have different needs. Can you say something about this? This is more a mid to long-term perspective. We have had already major discussions on this question. First of all, we have to see in how many countries worldwide is there a network in which you can drive at more than 250 km? In Switzerland, it is 250 apart from the Gotthard base tunnel where you can achieve that speed. It does not make sense also to race through Switzerland at 350.
Probably you will not even be able to get this far because the curves are far too narrow, too tight for this mileage, for this km performance. That is a topic. There are markets where you can see you cannot find a way in as Japan, South Korea, China. France is also a closed market. Spain is well covered by Talgo. Italy, perhaps here certain chances in Germany, but in Germany in the past years, they have already purchased many such trains and that's it. You have the technical risk to make, which does make another jump there. You have the commercial risk. I think here we do have to take into consideration we prefer to play in the B League and be number one there than to be afterwards in the A League and somewhere in midfield.
Strategically so far, this is what we have defined and this is also carried by the board and by the group management. If this will change in future, I do not think so. There is also the question if it makes sense in regards to where and energy consumption to drive so fast. That is a completely different question. Further questions? Yes, here up front, please. Bent Laust, ZKB, sorry, Kantonalbank . I have a question in regards to the vehicle with electric powering. Here Stadler is number one. Is this being appreciated, rewarded by the clients? And are price negotiations there simpler than with traditional trains? Better margins, at least midterm? Thank you. Green technology, you are referring to. Yes, we were very fortunate.
The first major order we were able to win in Germany, Schleswig-Holstein, 55 Akku trains, battery-powered trains with an option of a further 45. They were able to be delivered, put into service actually without too many problems. I think we have proven that our technology, how should I say, is very easy to use in the rail domain. The second one was we built a prototype for hydrogen. We were then able to make the world record that with one fuel tank, we were able to do 2,300, 400 km in Pueblo in the U.S. This contributed to Stadler being able to position itself. One believes Stadler, Alstom was able to use, was to put into service two hydrogen approaches, but then after its technologic, it did not work out and they had to be called back into the plant.
It's also a question of luck, you know, if at the very, if at the right moment, you're able to be at the right place. Price-wise, I would say it is a bit better in this domain, particularly in the U.S. market. In general, the prices in North America are better than in Europe, higher margins. Battery-powered trains in Europe, I would say there is also tough competition going on, such as also in the electric vehicles. Two further questions. The first one, perhaps a consideration on the production setup of Stadler today. What has characterized Stadler excellently in the past years was the high reliability on schedule, maintaining deadlines, quality, which was of course strongly influenced by the setup here in Switzerland, a very strong, reliable culture which had developed over many years. Now perhaps it is more difficult with multiple plants in Europe.
Perhaps just some thoughts on the performance culture in the other plants as compared to Switzerland. How do you view it in future? First of all, we are organized in a very decentralized manner as compared to our competitors where functions such as engineering, purchasing are centralized. Our plants, our assembly plants are organized in such a manner that from A to Z, they can process an entire order. I think this develops a culture, also sort of adhesion from within. There is a different culture, of course, a plant in Poland, a plant in Valencia, a plant in Switzerland. This bracket function, I think, is something that we do master quite well. Once a month, all of the CEOs of the division come together here in Bussnang, where we try to also live this culture.
Performance culture, I would say currently the weakest is Berlin. Here we definitely need to make improvements. There are different reasons for this. I would say in Spain, despite the catastrophe, very well set up and well functional. This is a team with a lot of experience of working together for 20 years. Poland with the new leadership is also achieving Swiss level. They're on a good track. Actually we are very optimistic. I think this is the right approach. Very consciously as decentralized as possible because a project business is decentralized. That is so important. I saw it in A-Train, when they organized strategic purchasing, then one person is basically purchasing in early for some plant in South America. This doesn't function because we purchase a lot built on drawings, sketches.
If there's one mistake, you need short paths, you need to be very close to the supplier, very close to the client. I think we have chosen the right approach. Yes, exactly this topic would have been my second question. Purchase, you have a few thousand suppliers and there are problems, of course, in this context for Stadler, PCS, the one or the other had to be saved, bought up, yes, a wet cell producer somewhere. That could be something. Yes, perhaps a few words on this topic as to how this has developed. Valencia already now 40, which have to be replaced because not all will take up business again. We continuously have conversations as a group management as well as in the board. This question, do we want to build on one supplier or two, three suppliers, diversify?
If we see what has happened in Valencia, one has to say absolutely diversify and more than one. We have many components which have to go through a fire test or tensile strength tests. If you then try to bring multiple suppliers to the same level, you will have enormous costs. These are considerations. Once you decide in this manner, once in the other, it is difficult to define a principle. Of course there are the strategic components that I mentioned where we need to make sure that we do not need to buy from a direct competitor like power converter, transformer, control technology and propulsion system. To some extent, we have even built up second sources. Where we need to achieve improvement is on the supply chain. We've got our metrics project running.
This is a project in the scope of which we introduce SAP company-wide. This allows us to better control capital tie-up in the warehouses and so on and so forth. I think that this provides more potential in operations to achieve improvements regarding purchase prices, warehousing optimizations that can be conducted here to reduce the capital tie-up. I think that CHF 200 million is what we could achieve here in reducing our capital tie-up, but we will only get there as we introduce SAP group-wide. Thank you very much, Peter Spuhler. If there are no further questions, I would like to pass the floor to our Group CEO Markus Bernsteiner in his presentation. He's going to show us what measures he has taken in order to counter the current challenges. Peter Spuhler says, thank you very much. We can continue our discussions over a drink later on.
Thank you very much, Peter Spuhler. He talked about strategy and introduced operations. I'm now going to give you two examples to better understand what we do in terms of operations. We look into the process on the one hand and on the other hand into how parts can be optimized. I would also like to welcome you to the 2025 Capital Markets Day. First of all, I would like to give you an overview of the current situation. I would like to talk about the measures taken as a reaction to the current challenges, namely the natural disasters and the situation in Stadler, Germany. After that, I will tell you more about our key fields of action and some focus points. Finally, we will talk about the implementation of our group-wide operational targets with the focus being on processes, systems, and organization.
As I've already mentioned, I'd like to start with the current challenges and the measures taken. As Peter Spuhler already mentioned, the latest natural disaster events had a major impact on the operational procedures at our plants, and we immediately took measures to deal with the situation. In Sierre, we set up a task force. We implemented cleaning processes. We even changed alloys so that we could get aluminum profiles rather quickly. Unfortunately, 850 tons had to be melted down. That was impressive. 800 tons from Sierre had to be brought to the melting kiln, and that was half a km long, this convoy of vehicles. In Dürenroth, we had this vehicle that had already been finished, was already in type tests, and that then got destroyed. In Valencia, we're currently in negotiations with our customers. 50 customer orders are affected.
We have delays of one to five months there. While we have sent our customers notices of force majeure, we are, of course, in talks with the insurance companies. I mean, you can imagine that there are many claims that were made, and that takes some time until that gets covered. We had to shift 200,000 production hours into the years 2025 and 2026. In summary, we can say that we have taken major or extensive measures in order to tackle the current challenges. Now, Stadler Germany, as I already mentioned this morning, the weak economic development in Germany has a negative impact on our operational procedures. Beyond that, bankruptcies in the supply sector lead to bottlenecks and delays. Another factor is the long wait for the Berlin commuter train tender. For four and a half years, we've been waiting for a final decision here.
Furthermore, the call-off from the BBG framework agreement is delayed. The financially difficult situation gets aggravated by rising energy costs and inflation, which increases the pressure on our management. In order to counter these challenges, we initiated an extensive structure and efficiency program with the objective of lowering costs and increasing efficiency. Currently, we are in negotiations with the social partner in Germany, the IG Metall trade union. We're negotiating an employee contribution, including the introduction of a 40-hour working week. This brings me to the operational fields of action. Let me first of all talk about the developments since the last Capital Markets Day, because we've seen major growth since then. The production capacity of the group was increased by 22%. Furthermore, 18 new sites were opened, including the production plant in Kazakhstan and two components facilities for our toilets and power converters.
Beyond that, 2,000 new employees were recruited and CHF 330 million were invested in the further development of our products and in our production facilities. These investments already show their effect, as you can see in the positive development of our order intake. The market likes our products, and we are faced with high demand. Apart from product development, we have also intensively invested in young talents and promoting young talents. We are glad to now offer 13 different vocational trainings for 13 different professions, and that the number of apprentices was increased by 68%. Furthermore, the dual vocational training system was also exported to our U.S. plant in Salt Lake City. Now I'd like to give you some more detailed information. The increased interconnection and group-wide implementation was one of the key targets that we mentioned at the 2022 Capital Markets Day.
Stadler is organized in a decentralized way, and this is something that will not change. However, effective cooperation in our global environment is of key importance for us because this way we can increase productivity and at the same time become more flexible to adjust. Against this backdrop, the communication and the exchange of best practices has been further optimized, and we are refining our operations alongside four mid- to long-term key dimensions. On the one hand, we build know-how. This is our DNA, our know-how. The commitment of our employees is decisive in this regard. Secondly, we are strengthening our position as innovation drivers with a major focus on innovative drive concepts, alternative drives, and digitization. Thirdly, our innovative products lead to high demand and to an order intake that reflects that.
As a result, we can be selective in tenders, and we can further reinforce our market position. Fourthly, timely delivery or high quality is key to us in order to be profitable in the long run and continue to grow. These dimensions are closely interconnected and contribute to increased efficiency at all sides. The stronger interconnection of our sites and the group-wide implementation of our four core dimensions, which Peter Spuhler mentioned, are being pressed ahead with clearly defined steps. The first step, we did the following. We had a meeting of the entire group management and the Chairman. We met for one and a half days and discussed key processes. In the first step, 26 guidelines were defined as the basis for binding standards. Based on these guidelines, we then started refining and harmonizing our key processes in the group. We have two clear processes.
That's the execution and the sales process. It's our objective to execute our orders in an even more efficient way and to become even more agile. By harmonizing our key processes, we create the preconditions for group-wide implementation of a modern ERP and PLM system, as well as for the improvement of IT hygiene, because we have many different softwares that we use, and this landscape needs to be cleaned up, tidied up. We make structural adjustments also to our organizations, particularly by the optimization of our production technologies. Now I'd like to give you more insights into the execution processes along processes, systems, and organization. Let us start with the group-wide refinement of our two key processes, the execution and the sales process. Let's start with the sales process. In the past three years, we successfully optimized this process.
We now participate in tenders after thorough review whether we should accept these orders or whether it is taking into account our internal strength and the profitability of the respective orders. In parallel, we have the order execution process, and this is the part on the right. Group-wide, we have taken measures to harmonize this process and refine it, and we are continuously improving it. Consistent progress and cost control makes it possible for us to react to deviations in a timely manner and to increase efficiency. Furthermore, we have invested a lot in strengthening our strategic suppliers, which is decisive to guarantee the quality and availability of our orders and to build up sustainable relations. Now I'd like to tell you a little more about these last two points: the newly developed engineering map and assembly optimization.
The engineering map was aimed at harmonizing the engineering process group-wide. It is a clear map or landscape that defines all the interfaces, like a compass for efficiency and growth. Our engineering map reflects exactly that. In order to give you more insights into the specific implementation of the engineering map, I would now like to ask Raffael Kühne , the Head of Engineering in Bussnang, to explain that process. Raffael, the floor is yours.
Thank you very much, Markus, for the introduction. The basis for our successful and efficient development of our complex products is our engineering map, which you see here below the screen. You do not need to understand the details of it. However, it is key to us that the transparency between core support and management processes is conducted so that we can identify the individual dependencies.
Only this way can we work in an efficient way, use synergies in value creation. Based on the engineering map, which you see also here on the screen, we have for our product managers and project managers derived respective methods for the planning, control, and management of our projects. There we work with milestones. These milestones are reflected in our overall planning. Per project, we go into further detail where we then work with sub-project manager planning. We use work packages that we can thoroughly control. At the management level, we have an additional monthly order review where we check the progress made and where the management actively tracks the project and can control them. In addition to the already mentioned methodologies and practices you see on the right-hand side, a total of 14 gates over the entire project lifecycle.
We go through all these processes where the management takes a close look at progress made and, if need be, we can make adjustments. As a result, we can better master potential challenges in the projects, identify them early on, and take measures. In summary, it can be said that thanks to the well-established processes, which you see here on our engineering map, and with the methods adjusted to that, we are well positioned in project management in order to successfully, efficiently, but also effectively manage our products. With this, I'd like to hand the floor back to our Group CEO, Markus Bernsteiner.
Thank you very much, Raffael. That was just some insight into our processes. That was a look into the engineering process, but we have many more processes like procurement, production, commissioning, warranty, and so on and so forth.
What is important is that thanks to our decentralized organization, we can harmonize within the group. This is now the approach that we are taking and where we will implement this into our software landscape. We will introduce this new ERP and PLM system. I would like to give you a second example that shows you what we do, because on the one hand, we have the processes, we buy up products and services, and we optimize assemblies. With this, we can, in a targeted manner, press ahead with further development. Our engineering specialists work in close cooperation with procurement, production, and suppliers. Key issues here are the harmonization of assemblies, the modularization of components, as well as the development of better technical solutions. As a result of this, production lifecycle costs can be reduced, and we can further reinforce our position.
As we have introduced this optimization program, we have already been able to achieve good results regarding cost reduction. Sandro Muster, the Head of Product Management here in Bussnang, is now going to tell you what exactly we do when we optimize assemblies.
Thank you very much, Markus. We have heard it several times already. Everything is very complex. I am now trying to give you an example here. Up here on stage, you see a machine room paneling. Where are we? In a vehicle, in a flat, in a flood. This machine room is behind the machine room. In the case, we have it two to six times. In the case, we see it twice. Remember that number because I will come back to that. Now, of course, you can do lots of different optimization measures, which we completed successfully.
I will show you six optimizations that reflect why we actually do what we do. As Markus has already mentioned, harmonization is key. It is extremely important to us that these trains get harmonized. A single decker and a double decker have lots of things in common. You might not see that at a first glance, but we want to make use of these commonalities. Harmonization goes beyond that. We also harmonize between the engineering sides. You have seen it: six engineering offices, different assembly plants, and the assembly group optimizations go beyond the individual sites. We harmonize group-wide. Second example: no welded parts. The focus is clearly on simple designs coming from our suppliers, fewer working hours, lower costs. Here we added air inlets in the machine room, and we introduced laser cutting here instead of hand-welded parts.
It's much simpler, much faster, and much more cost-efficient. The third example: wherever possible, we introduce standard parts. You see this little thing here, secondary retention. You see that you only get market authorization if you have a secondary retention for the door. For this, you can use standard parts, but you need to think about where you find them, how to use them in high volume. During the break, please have a look at this part. It's simple, and you can save a lot of cost if you are consistent. Another example is that over the years, this paneling was developed and got more and more complex. The next year, new fire protection requirements were introduced. The customer wanted something new, and we always added complexity.
In the end, this door consisted of six layers, and we were then able to reduce that thanks to the latest technologies, the latest materials, fire protection materials, and were able to simplify this product again. It looks simple, but the requirements are extremely complex, and we could bring the complexity down to reasonable levels. Third level or third example: the simplification of the frame. I could not bring the entire frame or machine room here, but the frames consist of profiles that you put these doors in. Here we could change back to standard profiles, and we used riveting techniques here in production to join them more quickly. We no longer need to straighten for the welding process, so it is more easily assemblable. Production is faster and easier, and that is another focus point for us.
Last but not least, you must not forget that we all have LED lights at home now in order to reduce energy costs. We need to do the same because only this way will the vehicles remain interesting. That might not be obvious as a first step, but only this way can the machine room make a contribution for a competitive vehicle. That is also interesting for our services division. In summary, and you see that on the right-hand side, we have already implemented that. I told you in the beginning you should remember we installed it two to six times in a flood, twice in the case. Now you see that we have all the fleets of SZU, ÖBB, SBB. If you multiply this improvement with the number of orders and trains, you see that quite some savings could be made.
Thank you very much. I will pass the floor back to Markus.
Thank you, Sandro. With these two examples, I just wanted to give you some insights into our constant improvement processes, improvements in processes and organization, but also, of course, in products. This happens in cooperation with production, with procurement, with engineering, with the suppliers also. We are really trying to turn five parts into one and are permanently working on innovation. These are just two examples from operations. I would now like to quickly talk about processes with you and how we refine them. The objective of the modernization of our system landscape is to improve IT hygiene, you would say, and improve interfaces. Before 2022, Stadler Group used different applications, different PLM systems, different ERP systems, engineering tools, and HR systems.
Until 2028, we intend to reduce the number of systems and providers, as well as the interfaces related to that, in a significant way. Through the harmonization of processes, we would like to create a basis for a harmonized application landscape, increase efficiency and transparency. The implementation of this is ongoing and successfully so, as you can see on the next few slides. In the initial phase, Germany was able to successfully implement the first release. Now comes Switzerland. We're about to roll out. The Wave 2, as it is called, is continuously further developed, and it will then go as an upgrade. It will be implemented in the division Germany. Apart from these processes, we continuously work on developing our organization, and I would like to give you a few examples of these organizational modifications since 2022.
Stadler U.S. has grown strongly, and North America is an important focus market for us. This can be seen by the delivery of up to 80 LRVs for Salt Lake City, which is why we established an own division of North America Stadler. We want to emphasize how important the market is for us. We want to create optimal conditions for future growth, and we want to reinforce the site. In order to intensify the network between the different sites, we developed and further expanded the so-called cross-site exchange in order to reduce redundancies and to optimize costs. In our digital transformation, we are developing high-performance digital platforms, which are to maximize the products for the overall system of rail with data-supported solutions and connected technologies. With this, we are assuring that we can understand the needs of our clients better and optimize them.
Now, I would like to give you a short insight into the current expansions of our production sites and investments in new production technologies. Let us start with the plant expansions. In Poland, we have a competence center for power converters and electric pre-assembly, which we have installed, and we have also expanded the capacities for steel car body capacities. In Valencia, we have established aluminum car body production, and we have expanded production capacities. In the U.S., we are expanding the aluminum production and also the assembly capacity. In Szolnok in Hungary, we are increasing the capacity for aluminum car bodies. It is so far 500. Now we're increasing it to 750 car bodies per year. In Switzerland, there is a current project on the table for a further expansion of production capacity in Sankt Margarethen. It is being discussed.
Let us now move on to a few examples in innovative production technology. Visual inspection. We are able with a visual inspection, so the electrician, the mechanic can wire something, then someone comes with an iPad, takes a photo. The photo can then be aligned with the engineering requirements. This is an example of the visual inspection. FSW, friction stir welding, so through heat at a high power level, we can then optimize the welding procedure. Digital optimization. Now, every component can be positioned digitally. I would like to give you an example. On a car body, there are hundreds of such rails. With a digital ray, they can be positioned, or the holes can be marked where exactly the welding needs to take place. This is just a small input in regards to innovation and as to how we can increase our competitivity.
I would like to summarize in conclusion. We are pursuing a clear strategy to improve our production processes, which is focused on optimizing our networking. What is very important is to strengthen cross-site collaboration in order to exchange expertise and also to increase operative efficiency. The foundation for this is found in the developed guidelines in order to harmonize processes and systems. The core dimension for sustainable growth is innovation, training, talent management, digitalization, as well as the development of new production technologies. We have selected participation in tenders in order to optimize the profitability in our orders. In addition, we have made various organizational adaptations, such as in North America, to support the growth of Stadler in the USA. I have given you an overview of our operative activities and a small insight into our current initiatives. Beyond this, we have many other such initiatives and projects running.
These activities, in combination with our product innovation, with the entire dedication of our teams, all this renders me very optimistic that Stadler is positioned in an excellent manner for long-term success. Thank you very much. Thank you very much, Group CEO Markus Bernsteiner. After the presentation of CFO Raphael Widmer, there will be the possibility also to ask questions to the Group CEO Markus Bernsteiner.
Marc Trippel, head of Stadler division Signalling, is telling us why Stadler is more than just rolling stock, and he's giving us a look into the strategic positioning of Stadler in the fast-growing signalling market. Our head of division will be joined by Sazi Enicker , Head of Sales ETCS, and Ankit Dabral, Head of Business Development from signalling.
Thank you, Marc. Good afternoon from my side.
As you already said, Signalling, it's so we're always facing with the challenge about being a rolling stock company. What is signalling? Why do we need signalling? You might allow me to spend just a few words on the importance of signalling in nowadays' railway market. When we look at signalling, historically speaking, it's about safety. It's about avoiding collisions, train, train, train to cars, for example, and about speed supervision so that we do not have a derailment. Really, it's about safety, about avoiding accidents. Nowadays, signalling is becoming increasingly important also when it comes to capacity and efficiency gains, as the infrastructure is very often limited. It's more efficient to invest into software, into systems, rather than investing into an additional track, or often you do not even have the space anymore for further investments into the infrastructure.
What we also observe when it comes to especially the urban market, to some branch lines, for example, is the fact that the competitiveness of the railway system is becoming, in some regions, more and more challenging. We see signalling also contributing to the railway system in the competition against automobility providers. The solution portfolio, the offering that we are facing nowadays is a little bit we are separating that into onboard. What is on the train, historically also being heavily a part of the Stadler business, then the infrastructure part, and then to some degree the overall system approach. We look at that from a second dimension, which are the mainline, urban, and metro world, as they are following a little bit different drivers.
On the mainline onboard part, we have the European Train Control System, which is nowadays almost involved in every rolling stock project here in Europe, at least for mainline, where we have the second part of our discussion on signalling. We will dig deep, deep diver into this topic, so the European Train Control System, and also a little bit our ambitions about getting into the infrastructure on the mainline business, so the interlocking business, as this is historically speaking the biggest portion of the signalling business. The urban part, that's actually where we play, I would say, a leading role nowadays in the innovation part, so where Stadler is investing massive amounts for new technologies, combining historical conventional signalling with more modern approaches that are also providing part of the answer to more efficiency gains and competitiveness. The third approach or the third segment, metros.
Here we do have very similar solutions to the urban part, but as we are coming from the urban segment, we are more also moving towards the metro field. This again is a little bit more complex and a bigger playing field in terms of the expectations, the volumes of the projects. The complexity is much higher than usually in an urban project. This may be a little bit an overview. Looking at the market, we do face very strong market drivers looking at the signalling market, on one hand driven by those global trends, urbanization as being one of the biggest drivers. More and more people obviously living in cities, so there is a need for a better, a more efficient, a bigger infrastructure for railways and public transportation.
Climate change is also, or signalling is also contributing to the discussion on climate change, on CO2 reduction. As such systems can provide additional information, they can also take over the control about driving more energy efficient. There are even projects where we start discussing about optimizing the energy consumption on an overall track, where we also have a favorable driver in this overall market. As some customers, some markets, we see that the financing is becoming more and more challenging, so we see a lot of discussions also going into the direction about the extension of life cycles, where especially with our competence on the conventional signalling portfolio, we can provide inputs, good ideas, and value add to those extension projects.
Then again, the life cycle management, of course, also being then part of this driver that is resulting in an overall signalling market of $22 billion-$27 billion, with a growth rate of close to 4% per year. For us, the segments that are in particular interesting when you look at it is, of course, is Europe, leveraging the existing Stadler footprint, and as mentioned already earlier today, North America. Those are in terms of the geographical footprint, the main drivers for our growth. Our backlog as of the end of last year was closed at $1 billion. Just looking at signalling, we see that this is a factor of almost nine if you look back to 2021. Why 2021? This is a bit the time when the signalling activities within Stadler actually started to pick up. This was in combination with two acquisitions.
What's also interesting to see now is that the order backlog mix between internal and third-party projects is now about two-thirds of our backlog as third-party business, and one-third is still internal business that is connected to the rolling stock colleagues. A bit of order intake highlights. Saudi Arabia, this is a project that Stadler is doing where we do for the first time an ETCS onboard component on a project that is not running in Europe. So ETCS is going beyond Europe. The second one is probably the biggest breakthrough, this big project in Atlanta in the U.S., where we for the first time apply this new communication-based train control system in a large-scale project in the U.S., which also stands for the market entry in this global market.
The third project with SA2 in Zurich here in Switzerland is the market entry for the mainline interlocking business. We see that these market entries that we are working on are slowly picking up. When we look at the strategic positioning in signalling, we face in the addressable market, so this is mainly excluding China, we see that there are three big players with Siemens, with Hitachi now, and with Alstom. Those three are the real global players with revenues clearly above $1 billion, with a real global footprint. We do have the local players, right? Basically an indefinite number of different companies in niches in specific markets. In between, Stadler is well positioned, being much smaller than the big ones, but still having the ability to provide in different segments, in different market solutions, pushing innovation, being close to customers.
I think this is the major point here and also the USP to the competitors really leveraging rolling stock. The organization currently working in signalling is about 1,000 people. This is also comparably small to competitors, but we have a clear focus on the high value or on the core developments. There is a lot of our strategy implicates that we are buying whatever is possible in the market that is not really the core competence, where competition usually has a the value chain is a little bit different, as they're often coming from a historical production of components that nowadays we would simply no longer make, but buy. We have a much closer collaboration within the group, within rolling stock colleagues, as those organizations are still highly interwoven on projects and locations.
We put much more focus on strategic partnerships, on alliances, as we believe that time to market might be more crucial than doing everything on our own. The local footprint of signalling only is clearly this is the core developments are in Switzerland, in Germany, and in Italy. We are now ramping up the North American organization, as this is driven by some one large-scale project, but a lot of opportunities ahead. For the rest, we're really leveraging the existing organization, which means we are faster. We don't need to spend too much time on coming up with a new legal setup. We are profiting from existing footprints with Stadler, the more than 80 service sites, the production sites, leveraging not only support functions, but actually just being much faster. Good.
On the achievements, I think for those of you who participated in the last capital markets date, this slide is very similar to what we showed two years ago. I think it's nevertheless remarkable to note that the achievements, so the mainline, we were successfully, we are nowadays at 10 country homologations for the ETCS onboard part. We did now the market entry for the mainline business in Switzerland. We are actually well on track on these achievements or on the targets we had for mainline. When it comes to urban, we are playing with the field of conventional solutions, migrations, and the new communication-based train control system. Where now with MARTA, we have the first project in this field. We also think that we have a solid base now for much more innovation, always together with our colleagues in rolling stock.
Digitalization, there is a lot of discussion on energy optimization, on some kind of driver assistance systems. It's interesting. It can make the difference, but it will never become a, I mean, it will always be a very minor portion in the overall business compared to the overall system. Nevertheless, we see there more and more interest from customers, especially when it comes to topics where they can support the operations. M&A might be an option, but I think this would rather be a bolt-on topic if this is really fitting into the portfolio or a specific market. Good. Before handing over and going more into the details of the mainline business, I think we have this independency as being a very big topic from the rolling stock perspective, being independent from competitors, but also creating value add.
This is, I think, one of the pillars we are setting up the signalling strategy. We have these innovation-driven topics where we play a leading role, especially when it comes to the urban markets. This Stadler DNA, we are also living that within signalling. This is a differentiator. This makes us, in some situations, really, really having an advantage. It is shown in the growth, in the speed or in the time to market when it comes to the development of new solutions, talking to customers, understanding their situation. To the segments in mainline, moving on with the ETCS strategy, where especially the refit, the retrofitting of all the existing fleets that need ETCS onboard equipment, we see a huge potential, where we are well positioned also together with rolling stock.
The leading innovation driving topics in this urban segment and metro, we are already working on the entry, but need the right project.
Good. Sazi.
Thank you, Mark. I'm really happy to be here today to give you an overview about our area TRMS in division Signalling, particularly ETCS onboard and also on the wayside. I will discuss our strategic framework and our focus areas and give you an overview of our different project setups that we currently have and what we've managed to achieve in a relatively short period of time, particularly in our successes in the ETCS refit business and also in the wayside. About the framework. As Marc has already said, for Stadler Group's rolling stock business, independence for ETCS train protection is critical for us to have a continued long-term success.
For this reason, this is why we have entered this business, okay, to be independent from our competitors. However, the ETCS business is complex, it's demanding, and requires very significant upfront investments. For new market entries, this is heavily dependent on the integration of the Class B system, so the legacy train protection system of that specific country. Each country has its varying homologation efforts. For this, we need to amortize our investments relatively fast. Equipping Stadler vehicles alone is not sufficient. Therefore, we have to drive the third-party business, third-party refits, think about ETCS outside of Europe, think about fitting ETCS of other OEMs, and so vital. Oh, I'm mixing now. About our strategic focus areas, here you'll see the four pillars of our focus areas. Of course, new Stadler vehicles is our number one priority.
Our focus is to drive the margin by equipping the new vehicles in markets that we've already entered, because this is what we know. Secondly, Stadler has a very healthy installed vehicle base. Here we can focus on driving the margin by addressing the refits of these existing vehicles in markets, again, that we've already entered. Of course, we need to think about new markets, but we have to also do it in a sustainable way. Our focus is to enter new markets by the means of a Stadler vehicle, of course, and also with Mermec, which is our partner in the joint venture of ETCS. Where possible, try to combine these new markets with ETCS infrastructure opportunities also. Last but not least, something that we will deep dive into just now is third-party fleets.
In order to achieve these economies of scale, we should also focus on these markets, especially in the markets that we've already entered. Just very quickly, as I said, we are used to different project setups. Of course, new vehicles, Stadler vehicles, we have numerous projects that we have completed that are ongoing. The refit opportunities are also there, but require different setups because the business models are different and the competencies are obviously also naturally different. At the moment, as I said, division Signalling is able to manage both or handle both, and we are ready for all these kinds of opportunities. As we've said numerous times, maybe it was not explicitly said at the beginning, but Stadler Signalling was established in 2017. In a relatively short period of time, eight years, we've managed to homologate in 10 countries.
We have quite a strong imprint or footprint in Europe. As Marc previously said, we've entered now outside of Europe with our first project in Saudi Arabia. Of course, continuing in Europe with key markets such as France and in Eastern Europe. With that said, today we have currently, or will have, in fact, also 1,500, 400 vehicles and more without ETCS, further increasing our market share. If you look at the graph on the left-hand side, you can see a snapshot in time between 2022 and 2023, where there were a significant amount of new OBUs from our competitor Alstom, but we are not so far behind as a second entry with new OBUs or onboard units that is from ETCS in this period of time. Of course, all of these vehicles have customers.
We have a very strong and established customer base who have already trusted us with some of their refit projects. As you see on the right-hand side, the average age of rolling stock, more or less, sooner or later, our customers that we already have established relationships with will need to come to us for refit opportunities in this market. Some success stories. I would go through now three refit projects that we have completed and one that is still ongoing. The first one is the locomotive that was manufactured by Bombardier. It's called the BR 185. There are over 500 of these locomotives in the market. What is key with these refit projects is that we had absolutely no involvement with Alstom or Bombardier. This was mandatory. Everything was done on our own at division Signalling.
Of course, a lot of reverse engineering was required, a lot of investigations onto the vehicle, but we succeeded at the end. How did we succeed? We were able to limit the amount of modifications to ease the homologation authorization process. Of course, there was extensive testing that we had to do and had to master in order to succeed. Last but not least, we had to re-homologate the vehicles using a framework of Delta justifications. Sounds a little bit complicated, but it is. Those of you who are interested, maybe I can tell you a bit more during the apero. The second example we have is the BR 605. This is a train from Siemens that was built in 2005. Again, here, what was mandatory was absolutely no involvement from the original manufacturer. Everything done by Stadler, by division Signalling on our own.
What was also complex was that the two projects that I've just mentioned had to be done in parallel, but we succeeded. The way we succeeded was, of course, knowing the history of the vehicle modifications, adapting the equipment to the latest standards, and last but not least, being able to introduce the new operational ways that were implemented due to the ETCS. The last example I have is the yellow machines. They are called yellow machines because they are yellow. They are maintenance vehicles for ETCS in Germany. They were manufactured in 1998. I think the vehicle is even older than some people in my team, but okay. Here's a little bit different. The original manufacturer was involved, so the setup was a little bit different.
Still, reverse engineering we had to do, it was complex because the vehicles are old, so there was not so much technical documentation available. Somehow we managed, and this year we will receive the authorization. How we managed this was being able to really master the safety analysis for such a complex machine. I mean, this is not a locomotive, it's not a train. It's something like kind of in between, which we never did before, but now we have succeeded. Again, understanding the operational rules of such a maintenance machine and how they are regulated. Last but not least, something that's very important that Marc touched upon also was establishing partnerships and different commercial setups that we are open to, that we realize that we cannot do everything. To be very quick to market, we need to think about this in every single project.
Last but not least, as Marc said, we have in 2024 reached an important milestone. Our first ETCS infrastructure project is that you awarded it to us. It is a partnership, long-term implementation from contract planning to installation to testing to commissioning. Really the full package. Of course, what is really important, it was a market entry for Switzerland, and not only mainline interlocking, but also ETCS equipment. On top, SBB also awarded Stadler 17 FLIRTs, which by the way will also be equipped with our ETCS, so full package. This is also an example of innovation where Stadler rolling stock and Stadler Signalling can come together to provide a solution for one customer. That is it from my side.
Thank you, Sazi and Marc. Good afternoon, everyone, on a very nice sunny day today. It is quite a nice change.
Innovation, before jumping into the slides, innovation brings endless possibilities. This is why for us in Stadler Signalling, this is one of the most important cornerstones. This is our focus in every product that we are building. There are two major focuses that we try to build our products on. One is to be ahead of the curve, especially with respect to the market, especially because Signalling is a very software-heavy system, and you need to be ahead of the curve because there are always new innovations and evolutions of the existing product. Second, we are also a very infrastructure-based system, or this is what we are providing to our customers. Every customer is unique, and to cater to every customer requirements, we have to be innovative.
Focusing on innovation, what we have done is we are, these are four examples of our products on top of ETCS that we have, where we have applied innovative techniques in the last seven, eight years since the existing of Stadler Signalling, and have come up with special, unique, one of the kind solutions in the industry. The first one is communication-based train control. This is a system which is based on, which is applied to metros or to LRVs. It is based on modern communication methods. It is a pure moving block system, which means the train itself is a block. This makes the operations quite efficient. What we provide is one of the kind solutions in the industry. We are quite different and unique with that respect. We have depot automation.
You have seen many yards all across the world where you have many staff, many drivers, which you have to manage such a complicated yard. There we have solutions which can completely modernize these depots, make them even driverless. Saving cost for the customer, not just to procure such a system, but also the overall lifecycle, which can last up to 25-30 years. Coming from the metro world with communication-based train control system to depot automation, which can be applied in any kind of railway towards the light rail system, where we have much modern artificial intelligence-based sensor systems, which can detect people, different obstacles. This is an add-on system which our customers can install on the trains, which we install on all our LRVs. This helps the drivers to drive and ensure further safety.
These are all innovations that we are giving to our customers to make the railway much more safe than it is today. Lastly, to summarize, focusing towards digitalization, we have heavy focus on automation. As I said initially, innovation is driven for our customers. We focus on being tailor-made. We go to every customer and try to fulfill all their needs with respect to any kind of scenario that is coming. It can be predictive maintenance, it can be digital twins, or further innovations that are required by the customers. As said, focusing then more a bit on communication-based train control system. Normally, traditionally in the industry, these systems were developed over a backpack of existing conventional old systems.
Since we started from a blank piece of paper, we could actually focus on innovation and build something which is completely new and disruptive in the market. This is why we chose a path which is lean so that our customers get a system which is easy to procure, easy to implement, and then easy to operate over its entire lifecycle. This is a drastic change that we are seeing in the industry and the feedback that we receive from our customers as well, which is very positive. With this approach, we were also able to develop the system and implement our first project within three to four years. The system is already mature, and as said before, we have already won a very large contract in Atlanta based on this system.
One more topic, migration, which is key, especially with respect to projects where we have to upgrade an existing Signalling system. There as well, such a lean system which is not talking to an existing old system brings an easier way to migrate. With this approach, the customers don't have to stop their existing operation and can be a very smooth and seamless migration technique. The first application for such a system was done in Basell with BLT, Waldeburger Line 19, where we signed the contract in 2019. I think this would be one of the records where we implemented the system successfully already in December 2022. Within three years, the system was developed and implemented end-to-end. It is scalable to go to completely driverless as well. The depot of BLT will be driverless already this year.
The project also includes the collision warning system and provides the solution itself being innovative, provides endless opportunities for our customer. Further from this project, we have signed another one which we are implementing now. This is Rheineck–Walzenhausen in the Appenzell region of Switzerland, where we are upgrading a small rack rail into a fully driverless system. There would not be any need for any driver. It can be on-demand arrival of trains where a passenger presses a button at the station and the train arrives at any time during the day. Reducing the need of human factor, we are with innovation, we are providing more efficiency and more service to our customer, but also the passengers at the end. The commissioning of the system will be live already in 2017.
Yes, it is based on, and we will be communicating the system based on public network like 5G LTE through Swisscom. Good. Going then towards depot, as said, these can be smaller yards of a BLT, of a tramway. It can be a yard of an SBB. It can be a yard of any other major operator all around the world. It can be any kind of train. We can come in and offer conventional systems, which are coming from one of the acquisitions in Germany, but we can also offer fully automated depots. This means once the passenger service is done, the driver can get out of the train and the trains can automatically, in driverless manner, automatically go inside the depot, wash the train, and then it is parked.
This is the innovation that we are providing already to our customers in Europe, but targeting all around the world. One of the examples of depot automation, this is the depot with one of our customers where you can have partial automation where there is still a driver, but it's assisted by the system. We can go up to fully automatized depot where the shunting operation or parking or washing the train or preparing the train can be done automatically. With this, if you look at the business case and for the customers, they can save every day up to one hour and the time of the drivers. This can result in more trains getting into operations on time and carrying more passengers. The use cases would be, as said, autonomously shunting the trains to the workshop from the main track, coupling two trains together automatically.
Generally, two trains, two drivers. In this case, driverless, you can do it without drivers. This is a potential cost-saving driver for the customer. You can wash the train automatically, and you can prepare the train automatically as well for the departure in the morning. Lastly, parking the train in a driverless manner. Moving on from depot automation now to digital twins or the digital solutions that we offer, these are the add-ons that we provide to customers. This helps them to test their system, to operate their system, and to maintain their system as well. For example, digital twins is nothing but a virtual copy of a system with which the customer can use to train their operators or even the maintenance staff, but can also debug the issues or replace the issues as they are and train the people.
We also offer ATO. ATO is Automatic Train Operation. This is a system, a non-safe system which goes on the train with which the train can drive driverless. We also offer a collision warning system, which is warning the driver. Finally, the passenger information system, which can be on the train, but also on the track side. Signalling is a new division, but we are a proud part of Stadler. We have learned the way of being tailor-made for our customers. Migration, moving from an existing system to a new one, involves being pragmatic and innovative. This is why we do not focus on platform solution, which means being dependent on one kind of technology or hardware. We are quite open and innovative with that respect. We are customer-specific. We can install our system in parallel to existing systems.
We have a wide portfolio which can cater to every kind of railways. That is our uniqueness as well, that we are small, but we still run fast. Lastly, I mean, innovation is the ability to convert ideas into projects. Projects bring revenue, and this is what we are running after. Thank you very much.
Thank you very much. Our kids, Sazi and Marc, all three will be available afterwards at the end at the question and answers. I would suggest we will do a short coffee break until 3:25 P.M. and then keep going on with operations, meaning, sorry, with a deep dive into the U.S. market with our Head of Sales, Ansgar Brockmeyer. Thank you very much, and see you soon.
Dear ladies and gentlemen, welcome back to the second part of our Capital Market Day.
After a lot of figures which were presented, I promise you that you will now see many rail vehicles in the presentation of Head of Sales, Head of Marketing and Sales, Dr. Ansgar Brockmeyer, who will take you along on a trip to the USA into our growth markets, green technology, North America. Please, Ansgar.
Thank you very much for the introduction, Marc. Dear ladies and gentlemen, I permit myself to continue now in German, not because I think it is appropriate to be speaking about the U.S. in German, but also so that our charming interpreters do not lose their practice. On the last Capital Market Day, I was able to inform you about green technology, alternative traction, and you have seen that Stadler is not just market leader, but also technology leader with three world records in this domain.
This is not something I need to tell you again. Rather, this time we wanted to tell you something about the U.S. today, because the U.S, at least since the new presidency, is every day in the headlines with a new topic. It is probably also good to know that Stadler is able to make a contribution. This is a photo of our double-decker train set, multiple unit train, how it is being towed through the prairie in North America from Pueblo, from the test center. The test center of the American Railway is in Pueblo in Colorado. From there, it was towed to California. It is not able to drive there on its own. You just see the small diesel lock right up front, which is basically towing, dragging this train over the mountain.
Then afterwards, it will be driving alone, of course. The story of Stadler in the USA., Peter Spuhler already in his introductory remarks has described, and it started with the exchange rate crisis. Pretty accurately, 10 years ago, with the exchange rate shock in Switzerland, where the fixed franc binding was unpegged, and whereas Stadler, we were actively thinking how it could continue for Stadler outside of Western Europe, outside of Switzerland. You have seen a $2.5 billion market is available, accessible in the USA, is waiting for modern technology. We took the decision at the time to launch into it 2015, 2017. We laid the cornerstone for our plant in Salt Lake City, and ever since we have been active in this market.
Now, how this has developed since, also in regards to market share, delivered trains, Peter Spuhler has already presented to you. I want to come back to these figures with a focus on North America. You can see in this $2.5 billion market in regard to delivered vehicles, we're no longer a nobody, but we're also not yet there where we want to be. Currently, we are at a market share of 6%-8%. 6% was the previous year value, 2024. You can already see that within one year, we have seen a growth by two percentage points. If you also see our order volume, which we do not publish regionally, we had about $500,000,000 on vehicles and $500,000,000 on vehicles, which we have won in the U.S.
This is one fifth of the mentioned already sum, so that is 20% market share. This will also show itself in these years in our growth trajectory in the USA. How did we achieve this? I would like to mention a few aspects about the U.S. rail market characteristics and then get back to the topic of how did we achieve the success. What is specific to the U.S. is building prototypes and testing them somewhere in the Sahara, et cetera. This is something which does not work here in Switzerland. Our business model cannot be lived in this manner. It cannot just be copied and upscaled in different markets, particularly not in the U.S., because the U.S. is an enormous country, 4,500 km times 2,510 million sq km.
If you look at the population density, you will see that the population is concentrated actually at very few spots. There, where the population is concentrated, this is a good task for rail for these long stretches, but it is also a challenge with the low densification. By this, we see that today, the U.S. railway network has almost 300,000 km. In Germany, we're at 40,000 km. The second largest railway system is in China currently with about 400,000 km. It is a tremendous network, but it is mainly used for freight, for cargo, and everything which you see here in black is running on diesel, and everything in color is with electric powering. You can see this is approximately East Coast, the corridor from Boston over New York to Washington, where we have an electrified system.
On the very left in San Jose, you can see there is also a small stretch, which is the new line from San Francisco to San Jose, which has been electrified with our trains. I will be still speaking about these trains as well. The challenge is we need alternative traction methods, and we need alternative vehicle concepts. Alternative vehicle concepts, you can see this very nicely in this one picture. These are the three generations of vehicles which have been driving, will be driving on Caltrain. On the connection from San Francisco to San Jose, on the very left, these were the previous trains in the past with a big, heavy diesel loco, which is also black from all of the diesel fumes coming out. You can also see a sort of a stair or a ladder indicated.
You actually had to climb into this one and a half deck train. Very bad driving comfort, bad energy efficiency. This was an outdated diesel propulsion. This was modernized, what you can see in the middle. This is already the next generation, and it has a very rather strange form, but it is a sort of double-decker. It is still pulled by a diesel loco, and what we are now delivering, which was approved in autumn, one can see behind, which is the modern multiple unit train, as you know it already from Europe, from Switzerland. It is in the form of a double-decker. It is a train set. It does not have one loco ahead, so the entire traction is distributed over the vehicle. The whole length of the vehicle is available for passengers, and this is now state of the art.
All the computer nerds in Silicon Valley can now board this train. There is a large modernization need. There are also certain specificities in this market. We have decentralized piloting. We do not have a federal authority which is organizing it. Funding is basically unlimited for projects which are in the core focus of development. Unfortunately, there are not many there. There is not a lot of centralized control system. The regulation authority is slow. Typically, these authority bodies are. They are also reluctant, resistant to change. They are quite conservative in regards to technological developments and requirements, which are different to in Central Europe. For example, a car body in Europe has to stand a pressure of 150 tons. In the USA, it is 200 tons. There, the regulator is also not ready to reduce the requirements.
If one doesn't want to do this and one wants to come with modern vehicle concepts, one has to be able to prove comparable assurances. We have learned to do this, and we are now well on the way with certain innovations where we are consciously going beyond the regulation requirements. Based on the attractivity of vehicles, if we have an innovation like Caltrain, then suddenly a completely new type of audience is ready to go by train, and this can then induce further transitions. What we also have to say, or I have already said, is the infrastructure is mainly in the hand of the freight railways. Very bad rail wayside quality. They have not waited for the passenger transportation.
With the operators of this railway infrastructure, one has to define very good availability dispositions and also exclude that at any given time, one of these passenger trains could encounter problems. Many specific characteristics are quite different to the European market. This is how we launched in the USA with a cascade of innovations. It started in the year 2015 with the Euro Swiss franc shock, which triggered actually that we launched in the USA and with our products one after the other in a successive manner. We had to deliver comparative assurance to fulfill the regulations. We started with our best seller, FLIRT, and we managed to sell it to TEXRail in Texas. From FLIRT, you can basically see the family tree of FLIRT in the USA. We then developed the further options.
The hydrogen versions, the electrified versions, the battery version, and this continues with accelerated development. I will be sharing some more on some of these projects. The second was the KISS, our double-decker train, which we are all well familiar with here from Switzerland, with the project in California. Also, this train was further developed last year. Out of the KISS, we developed a battery EMU. Actually, a KISS, which is running with batteries, not yet electrified. Afterwards, we continued with the Metrolines 2020, 2021, the breakthrough with the modern metros, MARTA in Atlanta. Just at the beginning of the year, we had the pleasure of being able to present the vehicle there. I'll be coming back to that as well.
Last year, what we have been working towards strategically, the longest there we had the breakthrough, which was the light rail vehicle in our hometown, Salt Lake City, where we received a major offer and were able to win it. Also, in the U.S., we are the absolute market leaders in zero emission technology. We have a complete new METRO technology, which we've been able to introduce to the market, which was basically unknown up until that moment. Also, with the light rail vehicles, we were able to achieve this. Here, a few more technical details, which are probably more appropriate for some self-study. I don't want to present all these details here. What I would like to mention is that apart from the vehicle platforms, we also have our tried and proven Stadler Rail service, our maintenance service, which we are able also to accomplish regionally.
About Signalling, my colleague Marc has already reported. Also, here we have the complete portfolio on offer in the U.S. Our factory, I have already mentioned. In 2017, we had the cornerstone set, and ever since we have continued to expand. We started with what you see here as a building. On the overall yellow surface, we were able to continue with expansions. What you see in red has already occurred. This is a further assembly hall. At the top right, you can see in autumn last year, Peter Spuhler was able to lay the cornerstone for a further expansion so that in future, we not only can assemble vehicles there, but we can produce car bodies.
The plant within a few years will offer the same possibilities as our other plants in the group and will be basically able to produce all other elements apart from the locomotives. As I have said, almost in the center of the U.S., in Salt Lake City, we are producing vehicles. I would now like to present to you the projects that are currently being executed there. This is the Caltrain, which I already mentioned, 19 electric multiple units and two additional options, which we are currently building at our Salt Lake City plant, the SBCTA. That is our world record train. Three diesel trains are being built here, and the customer ordered an additional hydrogen train, which we built with a similar concept, only with a middle power car, which does not run on diesel, but is equipped with a fuel cell module.
With this, we ran this world record. I also already mentioned MARTA. We have a research project ongoing with the U.S. State University in Utah. We are building a battery prototype, and we were also able to sell 10 four-part options of our hydrogen train and the KISS battery option at the bottom of the slide. Last year, a few more trains were added. The battery option of the KISS in Chicago, eight battery FLIRTs were added. TEXRail ordered another four options of the vehicle that was actually once our breakthrough vehicle in Texas, and the 20 CITYLINKs for Utah were also already mentioned. This now brings me to some further insights into these projects.
The KISS multiple unit here, we can say that after a long time, they made a decision in the U.S. to electrify a track, and they noticed that it is about 10 times as expensive to electrify tracks in the U.S. than it is in Europe, particularly in the Silicon Valley, because we do not only need to put some poles and masts there and put on the wires, but they need to build substations and create the whole electrical infrastructure. This is, well, quite extensive. You need to acquire land for that and so on and so forth. They did it last summer. The leg was completed. It's running now to San Jose. Now our trains are running here. The ridership is more than 65,000 people per day. Many more people now use the train here in this region.
We do assume we can sell more vehicles in the future. The Atlanta vehicle I already mentioned on that. That was the presentation that we had at the beginning of the year. You see when we presented the vehicle, people were standing there, impressed, really, everyone taking pictures. You should see it from the inside, actually, because in the US, it is common that you have married pairs, always two cars coupled together. After that, you've got a gangway, which you actually cannot cross. That's only for maintenance. This had always been the case in the U.S. All the vehicles in New York are also like that. Here, we've changed that. You can go through four vehicles, and you can look through everything from the first to the last car, which gives you another completely different feeling of safety, makes the vehicle look lighter.
If you then see how smoothly it runs, how quiet it is, it's a real game changer. The audience really welcomed it. This is going to be a really great story for metro systems in the U.S. I already mentioned this vehicle. That is our research project with the Utah State University. At some point in the future, I think some more copies of this train might be ordered. What does the future look like from our one SBCTA FLIRT? Nine were added. It's now a total of 10, and they were ordered by the Ministry of Transport of California. I mean, it's not quite sure yet where they will be running. The ministry still has to define that. What is clear is that they needed to increase capacity. They needed a four-part vehicle.
Therefore, it is going to look like this. There's also options for another 19 vehicles, meaning that the success story of hydrogen might continue. Maybe a few more words on hydrogen, actually. In Germany, there's been a lot of talk about hydrogen now. Peter Spuhler also mentioned it. He said that particularly on the two Alstom networks, there were some technical problems. Here, you need to say that the technical concept that we use for hydrogen is completely different to the Alstom one. We didn't take existing vehicles and just put on the hydrogen technology. No. We took what we always do to localize our propulsion system. We took the power car, this module in the middle, and threw out the diesel engines, put in the fuel cells and the hydrogen tanks. The whole hydrogen technology is concentrated in this one middle car.
We do not need to bring hydrogen through gangways. I mean, imagine that there's a high pressure here, 350 bars. Imagine a tubing under pressure here, which our competitors have going through the gangways. Therefore, as we do that differently, we had no reliability problems. We tested it for almost a year. It is now about to go into operation at the San Bernardino pass. So far, there are no problems with the reliability, thanks to our concept. This is the battery double-decker that I already mentioned. Here, you can clearly see that it's equipped with a battery. You can find it in this end car. There is so much battery in it. It's written down there, 1.8 MW hours of battery power in there. Typically, it's half a MW hour that a battery train is equipped with.
Here, it's much more because this train, and you can see that on this slide here, this train is set to continue to Gilroy. It's not at scale here, this last part, but it's another 65 mi to Gilroy. It is set to be coupled to an electric train. Then, without passengers having to change, it will continue to Gilroy with one daily connection. This is why they have so far only ordered one train running one direction in the morning and back in the evening. If they successfully test it, they will certainly also order more trains. This is a project that we are particularly proud of because that was a tender where they didn't define any technology. The customer was even considering diesel.
We managed to convince them to not only use battery technology, but also turn their backs on the heavy push-pull locomotives and change to a European multiple unit system, which offers comparable safety, which we have proven. We can repeatedly prove that. That saves a lot of weight, a lot of CO2 emissions, a lot of energy. We run at zero emissions in the suburbs of Chicago, which is an absolute novelty. Last but not least, our new CITYLINK for Utah. Utah has a rather extensive tram network built from scratch a few years ago because they decided to increase the city tax by 1%-2% to finance that. So far Siemens trains had been running there. This will change now. Now, TEXRail, I already mentioned it. It is a reorder of a conventional diesel, but also there are no more locomotive-hauled trains.
They now use the FLIRT technology. That is also a project that Marc Trippel mentioned already in Atlanta. We will not only deliver the vehicles, but also the signalling technology. The signalling technology is disruptive, you could say, because it is not traditional signalling technology that you build in. With traditional signalling technology, if you are at an interlocking station, they decide what train can go where. In order to be able to decide, you need to know where the trains are. In a traditional system, that is the infrastructure that identifies where the train is via axle counters or where the track systems. The infrastructure tells you where the train is. The interlocking station tells the train where it can go. Now we have a new technology where the train tells you directly where it is.
Infrastructure does not know where the train is, which saves enormous investments in infrastructure if you no longer need these axle counters. That is so disruptive about our approach that the trains communicate with the interlocking station, tell the interlocking station where they are, and the interlocking station gives them the good to go. We have managed to sell that now in North America. For the first time, we have integrated that into the network, and we see major potential to launch that at other operators in North America too. With this, I would like to terminate my deep dive into the U.S. market, and questions can be asked at the end.
Thank you very much, Ansgar, and thank you for your attention. We will now pass the floor to our CFO, Raphael Widmer.
Okay, I am the last speaker today.
Most of the people sitting here were here already this morning, so I'm not going to comment on all my slides. My colleagues have already told you a lot about our products, our strategy, and the uniqueness of our company and how we are positioned for the future. I'm now going to show you what impact that has on our financials and what targets we have set ourselves for the coming years. Before I go into detail, I would like to give you some background information on our accounting principle. Okay, so this morning, the slides changed automatically, but now I need to click through. This might sound banal, but I will nevertheless repeat it. We only recognize fixed orders. No options from contracts get recognized as orders. Regarding invoicing or revenue recognition, we use the POC method.
In most cases, we use the units of delivery method. In certain exceptions, we use cost to cost, but this is primarily the case for services and in part also for signalling orders. It is marginal, I can say. The expenses in our P&L are recognized by cost type, not by cost center. Goodwill from acquisition is offset directly against equity, so it is not left in the balance sheet where you have to regularly check it via an impairment test. No, it is automatically taken off the balance sheet. Of course, we use Swiss GAAP FER, and this has been approved by the Swiss Exchange. Now, a few comments on financial risk management. FX risks were a major burden for us in the past.
Whenever possible, we use natural hedging, meaning that the cash that we get in one currency will be spent again in the same currency. If there is a mismatch between revenue and expenses, we systematically use normal hedging methods, the typical FX forwards. For euro orders, and this was what hurt us most in the past, if we executed euro orders in Switzerland, we have now implemented a macro hedging concept so that if we sign a contract in euros, we have cash in and cash out over a timeline of three to four years. We do hedging there. It's not 100% that we can hedge, but it has significantly reduced the volatility in the system. We've made a major step ahead here. Treasury and risk management monitor financial risks. With regard to FX, interest rates, loans, and liquidity, the sales process is centrally managed.
There are clear margin targets and red flags that we accept in contracts or not. What is key is that all projects being executed are subject to a monthly review by the division management. Issues get escalated, identified so that the management gets active if there are problems. Let us now have a look at the key financials. You can see up here the order intake on top and revenue at the bottom. We have an impressive growth journey behind us. You can also see that our business is backlog driven. You see that the order intake can vary over the years. Revenue is nevertheless rather stable or has grown stably. You also see that we've always grown in steps. We went from an order intake of CHF 2 billion then to CHF 4 billion, and now we are going towards CHF 5 billion.
Profitability has remained more or less stable. It was a bit higher in the past, has gone down now because of the COVID crisis, then because of the situation last year, but also as a result of international expansion where we entered markets where contribution margins are a little lower. This had an impact on margins, but it's clear where we're headed here. Our business offers long-term visibility, so we can plan ahead. We can also plan expenses rather well. It's not that we invest and then have to wait and see what it pays off. No, we can allow ourselves to accept an order. I think that was the case with Caltrain. We signed in 2017. I remember that so clearly because that was when I started here. When we accepted the order, we didn't know yet where we would produce the vehicle.
In parallel, we then started the engineering work and looked for the perfect site to produce this order. What is really clear is that the order backlog indicates that revenue will continue to grow. We have also seen that already today when we said that in 2026, we will exceed the CHF 5 billion threshold. I have already talked about order backlog today, but what I wanted to mention is that we have got a high services share of 26%. This business will continue to grow. Signalling is still marginal only and somebody this morning asked why do Siemens and Alstom have a high margin and it's clear t hey have a higher share of signalling and services orders in their revenue mix. CapEx, I also commented on that in the morning session.
Here we are expanding capacities thanks to our success in the market and the orders that we received. What also needs to be mentioned here is that we are also investing in intangible assets. That is mainly the development activities for alternative drive systems, locomotives, and the signalling business. This will then cause further growth, but also growth in CapEx. Now a few more words on the cash flow dynamics in our orders. On this slide, you see two potential order execution patterns. Firstly, the case of front-end loaded cash, that is the case on top. That is an order with an always positive cash balance. The accumulated down payments are always higher than the cash that you use for producing, meaning the networking capital is negative. This is what we are striving for. There is, however, also the opposite case.
We've got a customer in Germany that generates back-end loaded cash for us. We have a negative cash balance, and the situation only changes once the vehicles get delivered at the end of the order. The networking capital is always positive on such orders. In such a case, the financing costs usually get included into the sales price. Wherever possible, we will try to have orders with front-end loaded cash. The mix of orders with front-end loaded and back-end loaded cash always influences the cash situation of the overall group. We have a strong and strict focus on the cash in, and whenever possible, we try to reach the payment milestones earlier. In 2024, we were really able to do that, and as a result, had a very good cash situation.
These cash flow cycles significantly influence our networking capital, as you can see in this slide. That's the history, the historic figures starting with 2016. I will slowly comment on the individual phases. In the years 2016-2017, we had order intake with high down payments, and in combination with the milestone payments from ongoing orders, this led to a strongly negative networking capital. In the years 2018 to 2020, the down payments were used for production. Even harder was that because of the COVID-related lack of market authorizations and vehicle handovers to customers, no final payments came in. We had the vehicles standing around. We didn't have market authorization. As a result, we were not able to hand over vehicles, couldn't invoice them as a result, so no cash came in. This was a difficult phase. From 2021, the situation started to change again.
The negative COVID effects were balanced out, and we received good down payments on new projects, and the networking capital became strongly negative again, and we are now at a record level of over CHF 1 billion. In the long run, we expect a slightly negative networking capital with fluctuations, of course, as there are different cycles. Usually, one four years in the rolling stock business corresponds to one year in a normal business. We always take a snapshot at one specific date, and then you need to explain the situation as it is. A one-year perspective in our business is not very telling. Now, let's look at the development of the net cash position. The net cash actually mirrors the networking capital. The more negative the networking capital, the more positive the net cash. Here, you nicely show how this developed.
It's exactly the mirrored image of the networking capital. We are now at CHF 368 million. What you also need to know is that net cash was burdened by CapEx. We used a lot of the net cash for building factories, expansion, and we had higher than expected growth, which also had an impact on the net cash situation. This is why net cash is not as much or did not increase to the same extent as the networking capital decreased. Maybe that is a bit too much for some of you. We will do a deep dive into our accounting principles. I would like to also give you an example here of what it means to follow this conservative revenue recognition principle. I will show you the difference between cost to cost and units of delivery.
As I've said, as is common in our industry, revenue recognition happens according to the POC method. What you can nicely see here are the orders cash flows on top of the project phases running from six months to three to six years. You then see the milestone payments coming in. You see the cash flows, down payments, and cash out and cash in. On the individual line, you see the net cash of an individual order. That's a typical example of a cash positive order. On the very right, you see that revenue only gets recognized at the end of the project and not after six months or a year. Peter already mentioned it.
With cost to cost, you could theoretically, on the very first day, once you have signed the contract and recognized the engineering costs as part of the order, you could already see that. We do not do that. I mean, would it not be much nicer if you had linear curves? Here is what many analysts say. There is an operational reason. We want to exert pressure on the management. The people working at the factory need to make sure they finish production. Only then can we invoice the vehicle. If we followed cost to cost, it would be the bookkeeper, the accountant in the end, who then just creates a ratio between cost incurred and cost planned. Exactly this ratio is then recognized as revenue. The margin gets realized based on a precalculation.
It's the quality of the figures or the result is not so high because it's never clear whether the margin that you plan with in the beginning will really be achieved. We have a higher certainty with our method that the margins can be achieved because when we deliver the vehicle to the customer, it's of course already built. Again here, I'm showing you the slide of the production output, which I will leave out now because you've seen that already. Now, let's look at the accounting figures. On this slide, you see an order. You have production costs of 80, let's say as an example. We have a cash in, meaning a contract value of 100, a margin of 20, and we have a total of five vehicles. With the units of delivery method, that would be the dark blue table.
The following would happen there. In the first two years, even though we are working on the order, you see production costs increase, 13.6, 13.4, but nothing happens. In year three, which would here be the year 2027, this is when the vehicles get delivered. That is four vehicles that we deliver. We recognize the revenue, we invoice the vehicles, we look at what was the cost compared with the total cost. The cost is divided by four, five, and then the four vehicles are taken into account in the P&L. The vehicle price per vehicle is recognized as revenue. What remains here is the CHF 60 million. The last vehicle gets invoiced later on. Here you have cost of CHF 16 million, a margin of CHF 4 million. In the end, this gets recognized. With cost to cost, this works differently.
Here, already in the first year, 2025, you have costs incurred of CHF 13.6 million. If you compare that with my planned overall cost of CHF 80 million, this results in a completion rate of 17% in revenue. You take the production cost of CHF 13.6 million, and the resulting margin is CHF 3.4 million. You continue with that. Every year when costs go up, you recognize profit. This is how this gets reflected in the P&L. Here you can nicely see the two different scenarios. The problem is that with cost to cost, if you notice that your margin's not 20% but only 10% because your production costs were higher, you must correct your profit with retrospective effect. If I produced in 2025 and 2026 and use up more money, you must correct in 2027, which leads to major changes and deviations.
We have peers in the market that use this method and Bombardier. They really fell victim to this method. They banked too much on cost to cost. This is why we do not follow this method and are more conservative. You could also visualize that. You see it again with the units of delivery method. As a curve, you see it clearly, 2025, 2026, nothing's happening. You see the result and the revenue coming in 2027, 2028. You see the same thing and what it would look like from a cost to cost perspective. Now, our balance sheet, how is that reflected in our balance sheet? You see here, and except from our annual report, you have the working progress here. You have, of course, assets and liabilities.
You calculate if you have the cost incurred in the working progress and deduct from that the down payments received by customers. This results in the working progress that you show in your balance sheet. In the annual report, you can nicely see that and also see how that works with our accounting principles. Working progress can be split into assets and liabilities. It's simple. If the working progress is higher than the down payments, then it's an asset. If the working progress is lower than the down payments, it's a liability. You can have working progress on both sides of the balance sheet. Here, you can nicely see the dark red and the green boxes. This is how it is reflected in the balance sheet in our annual report.
That's the working progress, which is positive on the left-hand side of the balance sheet, meaning an asset. The liabilities from working progress, that is a liability on the right-hand side. Meaning working progress minus the respective down payments. You have the special case of compensation claims. That's also a special case going hand in hand with this method. Compensation claims are also described in detail in our annual report. Usually, once the vehicle gets accepted, we have the full revenue recognition based on the invoice. If the payment plan doesn't go in line with the takeover plan, we book a compensation claim. There are cases where, for instance, we hand over a vehicle to the customer. The ownership rights and risks are passed on to the customer according to the contract.
The customer demands that Stadler wait for the payment until a minimum number of miles are reached. Only then can we invoice the vehicle. As the transfer of risk and ownership has already happened, I need to recognize the revenue and profit. It is for contractual reasons that we need to do that. The auditors strictly monitor that. Such cases must always be justified. The auditors take a close look at that. Another case where compensation claims can occur is if, for instance, we have built the vehicle and the customer is not ready with the infrastructure. That was the case with Caltrain. The vehicles are there. We could deliver on time, but they cannot run. It is not our fault, but we cannot recognize revenue and profit in such cases. I can use this method in order not to fall short with revenue recognition.
These are exceptions. This really needs to be looked into and reviewed by the auditors. That is not something that we can do as we like. With cost to cost, that would be different. Nobody would care about that if you use the cost to cost method. There with Caltrain, we would just say, "Okay, infrastructure's not there, but the cost has been incurred." We can automatically recognize 100% of the revenue. We would not have to justify to the auditors why we already recognize revenue for the vehicle. So much on accounting. If somebody wants to know more about the details, they are more than welcome. I thought that maybe I should give you some background information that will also help you when reading the annual report. Now, a few final words on our order backlog.
I just wanted to show you how diversified our order backlog is. It is split by regions. Western Europe and the German-speaking countries are predominant here. The other regions are CIS, Eastern Europe, Americas, and the rest of the world. The German-speaking countries and Western Europe account for 77%. That is still the lion's share of our order backlog split by regions. If you now look at the split by market segments, you see that it is mainly multiple units and the services business that drive our business. The tailor-made business also accounts for 11%, not negligible, followed by LRVs with 10%, metros with 7%.
What is also important, if you take a look at the very right, if you look at the 10 biggest orders that we have and look at how much they account for in our order backlog, we can say that the 10 biggest orders account for 34% of our order backlog. We have some very big orders in our backlog. Now, the Abbott Bridge and a few comments on the midterm guidance. We have the 3.1% that we had in 2024. The one-off effects that we mentioned earlier today account for 2%. We expect SG&A to rise less than revenue in future. This will again have an impact of 1%-1.5%. Another comparable EBIT effect is expected through improved margins.
Operational excellence in the factories and a more selective behavior in the market will be decisive, which will bring us to the 6%-8% that we are striving for in the long run. This slide repeats everything that Markus Bernsteiner mentioned already in the morning session. This is our guidance order intake. We expect to achieve 1-1.5 times the book-to-bill average. Net revenue for 2025, we expect an increase compared to 2024. In 2026, we will definitely exceed CHF 5 billion. We will build the vehicles now, increase the work in progress so that we can then in 2026 harvest what we sold. CapEx, we expect CapEx to remain high in 2025. In 2026, it will go down to CHF 200 million. The dividend policy, you see it again, remains 60%. I'm closed with that. Thank you very much for your attention.
Thank you very much, Raphael Widmer. We can now open the Q&A session. Group CEO Markus Bernsteiner, CFO Raphael Widmer, Head of Sales Ansgar Brockmeyer, and the Signalling division represented by Marc Trippel are available for your questions. We have two microphones in the room. Who would like to have the floor? Hello, Sebastian Schmahl from BNP Paribas. I've got a question regarding order backlog. Basically, you want to achieve 1-1.5 times x. How do you make sure that you can actually deliver that? You're now at CHF 30 billion. From what level onwards is too much order backlog affected that you're taking into account? I've explained that actually our order backlog contains 26% of services shares. These are very long contractual terms. You would have to deduct that. Then we'd be left at CHF 22 billion.
If new tenders come out and we'd participate, we also always look at our capacity plan. We don't just go out there, shoot at everything that's moving. No, we say this would fit our capacities in the future. We can plan in the respective orders. I've said it already. We are in a good situation in our business. When new tenders come out, we can sign a contract and afterwards expand capacities. That's always possible. That was also what we did with Caltrain. Another question, somebody in the middle? Thank you very much. A very impressive development in the U.S.. Thank you very much for the explanations. It looks like the potential there is enormous. How will the U.S. grow in future in comparison with the core markets in Europe?
The market development in the U.S. is something that we will have to see under the last U.S. administration. Major funds had been earmarked, funds that could not actually be made use of because there were not sufficient projects. This METRO project in Chicago is an example of that. Much more could have been done, but it could not be put into practice. What the new U.S. administration will do now, whether they will invest in the railway sector, we will see. There is a major need for modernization in all tram and metro networks, and particularly also in long-distance mainlines. We do hope that they will continue to invest, but somehow we do not see a strategy yet. At least not, I cannot see a strategy there. Further questions in the front? Thank you very much. I have got two questions. One for Signalling.
Do you want me to ask the question in English? No, no, no. You can ask the question in German. In the past, you bought the signalling technology, and now you've got the respective capabilities in-house, but many small competitors don't have that. Is that also part of your strategy that you might want to sell your signalling technology to competitors? That's my first question. The second question is about the macro hedging strategy for euros. In the past, you always said the sensitivities with ranked euros 10% means 50 to 100 bp on the margin. How has this sensitivity changed after introducing this macro hedging principle? Marc Trippel will answer for signalling. The short answer is yes, we do third-party business.
Of course, always under the reservation that if we compete with ourselves here, then we will make sure that, of course, to the extent possible under antitrust law, we do not torpedo ourselves. The driver behind that is the use of economies of scale. The hedging question, euro Swiss franc? The macro hedging strategy, you would have to look at the development. When we went public, the euro was at CHF 1.18, CHF 1.17. Today, I think we are at CHF 0.96. Last year, it was even down to CHF 0.93. These are no longer fluctuations of just 3%-4%. From a Swiss perspective, the euro is really losing strength. As a result of this, we decided to hedge the euro, whereas in the past, we did not do that.
I can't really tell you now how many basis points these are, but we've thus been able to significantly reduce volatility. There can still be FX effects from the projects, from the stock. We are not able to fully eliminate the risk, but we have massively reduced volatility. Are there further questions? The gentleman in the middle? In the past few years, there were always CHF 60 million-CHF 80 million of CapEx spent on capitalization of intangibles. Will that level be maintained? Will it increase? How about amortization? From when on, can you expect this amortization to increase? Raphael Widmer says, the development work for locomotives, for alternative drive concepts, but also for signalling will more or less remain in the same range, I believe. Of course, it depends on what needs to be developed.
What is important is that this gets amortized over the number of vehicles. Whenever we make a development, we add it to the vehicle price. As we recognize revenue on the vehicles, the contribution margin comes in. We thus amortize these developments. With all these new developments that we had with the locomotives, we can say that the first few have already been written down completely. They are no longer on the balance sheet. Once something has been developed and you get the orders in high unit numbers, you can quickly amortize them. Okay, are there further questions?
Hi, Vivek Mehta from Citi. Another couple of questions in English, if I may, both for Raphael. The first question is on Signalling and the scale-up here. Thank you very much for the color around how the revenue recognition works with rolling stock.
I'm curious now, having built up the backlog in signalling, how quickly can we expect that to scale? CHF 49 million in revenue this year, substantial order now in the U.S. When can we maybe start to see Signalling hit maybe CHF 100 million, CHF 200 million or so revenue as milestones? The second question is just a clarification on maybe some of the earlier questions on cash flow. You highlighted that this moves in multi-year cycles. Should we expect that maybe as you start to move into production, as you're ramping up revenues, that it's not just the adjustment on working capital might take several years? Maybe it's not just 2025, but could there also be a headwind to 2026? Thank you.
Signalling, I think, is something that's central.
When you see a new Signalling, it's very important to see what the revenue is, what the revenue is going to be used for the future in production. What we see is the third-party B2C projects. If these are third-party projects, their revenue will also happen. We were given a smart calculator for CSAP, but we definitely will be moving up in the hundreds of millions in the next two to three years on revenue recognition. Yes, what do you see? As of last year, if you just look at Signalling revenues in total, as of last year, we were above CHF 100 million. If you just look at the third-party business, then it depends a bit on the notice to proceed now in Atlanta. This year depends on this decision, and by next year, we will also be above CHF 100 million when you just look at.
To your question about $200 million, $300 million, this a bit depends on the next bigger project. There are a few in the pipeline, but as we know, the decision on when we really get the notice to proceed that would be relevant in order to recognize revenues, I assume two to three years.
Okay, I'll come back with the question on the cash flow. I missed that one. Can you please repeat that again?
Sure, just clarifying some of the earlier questions on free cash flow. You highlighted that the working capital tends to move in multiple year cycles. You have given us some color around 2025, but should we potentially expect some further adjustments on working capital given that multi-year cycle in 2026? Thank you.
I only can repeat what I said this morning already.
Of course, we have very good networking capital right now, which is below CHF 1 billion. A lot of that now is going to be of the cash we have received, is going to be used to build basically our products. That will, of course, need cash. On the other hand, we still keep a strong focus on the cash generation in execution. Whenever possible, we try to advance payments and so on and to produce faster. The not so predictable portion is the order received side. I mean, how many orders do I get and what is the advance payment pattern on these orders? As I said, there are certain customers that pay. I just made the example of the back-end loaded projects. We still have a few of them, but they also have a lot of front-end loaders.
The mix of those will basically define the cash situation and network capital situation. Again, also in 2024, we basically expected a much lower cash flow. We really, through our joint effort, have driven that to a very good number. I think with that fighting spirit, we're also going to 2025.
Gibt es weitere Fragen im Plenum oder im Webcall? Für die Questions von den Leuten, die sich per Webcall zugeschaltet haben?
If there are no further questions, you can contact us anytime. You can contact Daniel Strickler from Investor Relations or me, Marc Meschenmoser, from Group Communications. When you leave the room, you will find our annual report, which you can, of course, also download as a PDF file under stadlerrail.com Investor Relations. I'd like to thank you for coming, for your interest in Stadler, in public transport, and our solutions.
I hope you will now have nice chats over a glass of wine.