Talgo increases its net profit by 52.8% and obtains €40.1 million in FY2019 - corporate
null Talgo increases its net profit by 52.8% and obtains €40.1 million in FY2019
27 Feb 2020
Talgo increases its net profit by 52.8% and obtains €40.1 million in FY2019
- Net turnover reached €401.7 million, up by 23.8 per cent compared to FY2018
- The significant increase in net turnover and net profit is driven by strong backlog execution and confirms the company's growth trajectory on a solid upward path
- Talgo hired 250 people in 2019, thus giving continuity to its role as key driver for economic prosperity in its ecosystem
- New order intake exceeded €1.1 bn euros. Additionally, Talgo’s backlog increased to €3.79 bn reaching highest historical top-line levels
Talgo SA, a leading specialized rolling stock engineering company focused on designing, manufacturing and servicing technologically differentiated, fast, lightweight trains, has registered a net turnover of €401.7 million in 2019, representing 23.8 per cent increase compared to €324.4 million in the previous year. The significant increase in net turnover is driven by strong backlog execution during the year and confirms the company's growth trajectory on a solid upward path.
Net profit reached €40.1 million in FY2019, up by 52.8 per cent compared to FY2018, which is driven by the good progress made in the execution of its industrial activity and lower financial costs registered. Adjusted Ebitda stood at €73 million in 2019, maintaining its margins at 18 per cent, which reflects the excellent execution of the ongoing projects and the fulfilment of the objectives set at the beginning of last year.
On the commercial activity front, it is worth highlighting a significant increase in new orders, which exceeded €1.1 billion, the highest level since 2011. The excellent commercial results in 2019 generated an increase in the order intake amounting to €3.34 billion in 2019, or €3.79 billion considering the awarded projects as of February 2020, thus reaching highest historical top-line levels. Approximately 95 per cent of these new projects have been awarded in international markets.
Talgo had a comfortable net cash position of €59 million by the end of 2019, mainly as a result of new awards and recurrent maintenance activity, where Talgo implements its strong know-how in both existing and new projects, while increasing the maintenance fleet to 2,839 vehicles.
With regards to ongoing projects, it is worth highlighting the successful performance of the Very High-Speed project ‘Avril’ for Renfe, for the manufacturing of 30 VHS trains and their maintenance for 30 years. This project is currently under the chassis integration and cars’ and locomotives’ bodyshells integration phase, as well as under the assembly phase. Deliveries will start in 2021.
Talgo has fully met the targets set at the beginning of 2019. In addition, it should be noted that, as a result of its growth, the company has increased its workforce by 250 people, thus continuing its role as key driver for economic prosperity in its ecosystem.
Talgo has continued executing its Share Buy-Back programme. To date, the company has executed nearly 70% of it and has invested €18 million in capex.
Successful commercial activity focused on high quality products and services
The record figure of new orders, which amounts to €1.134 bn, confirms the successful implementation of its commercial strategy based on an increase in Talgo’s commercial strength, greater products and geographical diversification, with particular focus on developed countries with solid and stable markets, and a careful selection of high-quality opportunities that generate long-term value and guarantee the sustainability of the business model. This strategy has opened a new cycle of diversification and sustained growth with quality projects.
Last year has been marked by the framework agreement signed with the German operator, Deutsche Bahn, in February 2019, which includes the manufacturing of 23 long-distance trains (Talgo 230) for a total value of 550 €m. This project is comprised within the framework agreement signed for the manufacturing of up to 100 trains, with an expected value amounting €2.3 bn. It is also worth highlighting the international contract signed with the Egyptian operator ENR, which includes the maintenance of six trains in Egypt for a total value of €157 million.
Likewise, Talgo continues its industrial activity in the United States with the project awarded by Metrolink for the remodelling of 121 railway vehicles for $138 million (circa €130 million), with an initial order of $35 million (circa €30 million) for the remodelling of 50 vehicles.
This intense industrial activity continues in 2020. In February 2020, Talgo signed a framework agreement of up to €500 million with the Danish state operator, DSB, with an initial order for the manufacturing of 8 long-distance trains (Talgo 230) for a total value of €134 million.
For FY2020, Talgo expects significant revenue growth, reflecting manufacturing ramp-up of ongoing projects, which provides long-term visibility. The successful execution of ongoing projects will generate extensive potential both with new clients and in the peripheral markets, where Talgo will demonstrate the competitive advantages of its products and the excellence of its services. In terms of profitability, the company expects to maintain its adjusted Ebitda margin target at 16.5% for FY2020.
With regards to future contracts, Talgo has submitted bids during 2019 for an approximate value of around €5.2 bn, of which €3 bn are related to the HS2 UK project.
Additionally, Talgo is working to geographically expand its commercial presence which, together with its product portfolio diversification, is expected to contribute to receiving new projects in 2020 and the following years. To this end, Talgo is currently working on several tenders for a total value of €8.4 bn to be awarded over the next 24 months. 60% of these opportunities will be awarded in the UK and Spain.
Talgo S.A. is a leading specialized rolling stock engineering company mainly focused on designing, manufacturing and servicing technologically differentiated, fast, lightweight trains with industrial presence in seven countries: Spain, Germany, Kazakhstan, Uzbekistan, Russia, Saudi Arabia and United States. The Company is renowned worldwide for its innovation capacity, its unique technology and reliability. TALGO is the rolling stock provider for the Haramain high speed railway line between Mecca and Medina in Saudi Arabia.
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