Stadler presents its annual results
Stadler has sold more trains in 2019 than ever before. Incoming orders for 2019 amount to 5.1 billion Swiss francs and are over 700 million francs higher than the previous year
The year 2019 was marked by spectacular growth not only in terms of incoming orders, but also in other areas: a total of 444 trains and locomotives were delivered in the past financial year. This represents an increase of around 80 percent compared to the previous year. Seven fleets of vehicles which have received approval in various countries and now started regular passenger operations represent an essential component of these new deliveries; they include the Giruno high-speed train for SBB and the double-decker train for Mälardalstrafiks in Sweden.
Strong increase in sales
In the financial year 2019 Stadler achieved growth in revenue of 60 percent compared to the previous year, generating revenue of 3.2 billion Swiss francs (prior year: 2 billion Swiss francs). However, due to postponements in projects (primarily Greater Anglia), revenue in the reporting period was lower than expected, which also weighed on the result.
The Greater Anglia order presents Stadler with specific challenges in several respects: firstly, the camera system of a British supplier, which had been taken into consideration at the request of the customer, did not meet expectations in terms of performance and stability. Secondly, the infrastructure in this region is partly dated, which led to disruptions during the introduction of the bi-modal FLIRT vehicle. However, approval for the bi-modal (BMU) and electrical (EMU) multiple units was achieved in record time.
EBIT margin of 6.1 percent
Stadler also succeeded in increasing its operating result (EBIT). However, the EBIT margin was 6.1 percent, lower than in the previous year, and failed to meet expectations. Postponements and additional costs for individual orders had a significant impact on the result. As a result of the record order intake, EBIT was also affected by higher than expected sales expenses. In the same way, exchange rate movements, particularly between the Swiss franc and the Norwegian krone and Swedish krona, had a negative effect on the operating result.
Capacity expansions required
In order to ensure that the vehicles ordered last year can be delivered to the usual high standard of quality, capacity needs to be expanded at several locations and the provision of more specially trained staff ensured. Last year, Stadler’s headcount rose by 2,044 employees across the group (average FTEs), which represents an increase of around 23 percent. In 2019 an average of over 10,900 employees worked at Stadler.Introductory training of new employees in particular led to extra expenses for several orders. Further capacity and staff expansion is taking place, in addition to Switzerland particularly in Germany, Spain and Belarus.Switzerland continues to be the largest division in the Group with over 3900 employees.
With the new plant in St. Margrethen, optimum conditions have been created to enable us to remain competitive in a fiercely contested market, despite being based in the high-wage country of Switzerland. The investment in Switzerland as a manufacturing location at the St. Margrethen site, spread over several years, amounts to over 86 million Swiss francs. In 2019, significant investments were again made at various locations to expand capacity.
After growth-related above-average investments in net working capital and delays in individual projects, net cash flow from operating activities amounted to -186.8 million Swiss francs (compared to -193.3 million Swiss francs the previous year).
Stadler has been successful in Asia in two respects: firstly, 34 diesel-electric locomotives have been sold to Taiwan. Secondly, Stadler has signed a joint venture agreement with PT Inka in Indonesia in September 2019
Stadler sees the base in Indonesia as the best possible prerequisite for achieving profitable growth in this region. The first US FLIRT trains have been in scheduled service in Dallas Fort Worth since the beginning of the year. On 13 May the new assembly plant in Salt Lake City (Utah) was inaugurated. The very first service contract was won in the USA at the beginning of June: the order for the delivery of eight FLIRT trains for Dallas Rapid Transit (DART) also includes the planning of a service depot. In November, the Metropolitan Atlanta Rapid Transit Authority (MARTA) awarded Stadler a contract for the delivery of 127 METRO trains with two options for 25 additional trains each. For Stadler this is the largest single order for vehicles in the history of the company, and also marks the first major METRO order in the USA. Also in November, Stadler was able to secure its first contract for a hydrogen-powered train. Stadler is building the first FLIRT H2 vehicle for the San Bernardino County Transportation Authority (SBCTA), which is to be put into passenger service from 2024.
Service business experiences rapid growth
Incoming orders in the Service and Components reporting segment amounted to 833 million Swiss francs in 2019, well above the previous year’s level. In May, Stadler signed a contract for the maintenance of over 100 trains operated by Vy in Norway. It is the largest single fleet Stadler has ever contracted. In the area of modernisation and refit, Stadler won two major orders from Bogestra and Netinera in Germany. Orders for the installation of the Stadler diagnostics device (RDS system) are smaller in volume, but strategically important in the current context of digitalisation.
At the newly opened service location in Herne, Germany, Stadler will maintain 41 vehicles of the new fleet for the Rhein-Ruhr S-Bahn over a period of 32 years on behalf of the Verkehrsverbund Rhein-Ruhr (VRR). And in the UK, after delivering 52 new METRO trains for Merseytravel in Liverpool, Stadler will continue to be responsible for the maintenance of the trains in the ultra-modern new depot in Liverpool-Kirkdale for 35 years. Stadler Service will be in charge of the maintenance of the newly developed battery-powered FLIRT vehicles sold to Schleswig-Holstein for a period of 30 years.
Establishment in the signalling business
Stadler has been constantly developing and expanding its signalling division since 2016. At the Wallisellen signalling location, several teams of highly qualified engineers are working on the implementation of the signalling strategy for the mainline, branchline and metro products. The first successes were seen last year: the ETCS train control system GUARDIA developed by Stadler and Mermec within the Angelstar joint venture received generic approval in 2019. The system is being used in BLS’s new FLIRT trains, which will be presented to the public for the first time this summer. Equivalent projects are also currently under way in Poland, Hungary, Slovenia, Italy and Germany. In addition, further projects are emerging, and country-specific approval for Stadler GUARDIA will progressively be sought in ten countries by 2022. Stadler Signalling was converted into a separate company at the beginning of 2020.
In 2019, the Board of Directors and the Group Executive Board underwent a number of changes, most of which were the result of a long-planned generation change. Jure Mikolčić assumed responsibility for the Division Germany on 1 February 2019. Markus Bernsteiner took over as manager of the Altenrhein plant from Markus Sauerbruch on 1 June 2019. Sales Director Peter Jenelten handed over to Ansgar Brockmeyer in May and, after 19 years of service at Stadler, moved to PCS Holding in Frauenfeld. At the Annual General Meeting in March 2019, Barbara Egger-Jenzer, former member of the Berne government, became the first woman to be elected to Stadler’s Board of Directors. Unfortunately, in mid-July we learned of the death of the highly esteemed, long-standing member of the Board of Directors Dr. Werner Müller (since 2003), former German Federal Minister for Economic Affairs. At the General Meeting to be held on 30 April 2020, the Board of Directors will propose Doris Leuthard, former Swiss Minister of Transport, for election to the Board of Directors. Friedrich Merz will not stand for re-election.
Stadler Rail AG has been listed on the SIX Swiss Exchange since 12 April 2019. The highly acclaimed IPO can be seen as a great success. The share price has performed well since the first day of trading. As at 31 December 2019 it had increased by more than 27 percent in relation to the issue price of 38 Swiss francs. The stock is very broadly diversified: as at 31 December 2019, Stadler had over 30,000 shareholders, including a large number of small shareholders. Around 20 percent of the shareholders own no more than 50 shares.
After exercising the over-allotment option, a total of 40,250,000 existing shares, or 40.25 percent of the share capital, were placed in the course of Stadler’s IPO. The placement volume corresponded to 1,530 billion Swiss francs. Peter Spuhler holds 39.9 percent of Stadler’s share capital directly and indirectly via PCS Holding AG. Another ten percent is held by the German RSBG SE (wholly owned by the RAG Foundation). The costs for the IPO process are fully borne by the selling shareholder.
For the current financial year, Stadler once again expects growth in revenue in the double digits, assuming that the currency situation remains stable, and anticipates a similar result to 2019. Ongoing high investments and additional costs in connection with the expansion of capacity will continue to impact profitability this year. The medium-term financial objectives have been explicitly confirmed. The Board of Directors intends to put forward a proposal to the General Meeting for the payment of a dividend of 120 million Swiss francs (1.20 Swiss francs per share) for the 2019 financial year. For the 2020 financial year, Stadler plans to pay a dividend amounting to around 60 percent of the Group result.
International rail vehicle construction company, Stadler, is headquartered in Bussnang in Eastern Switzerland. Founded in 1942, it has a workforce of nearly 11,000 based in various production and over 40 service locations. Stadler provides a comprehensive range of products in the heavy and urban transport segments: High-speed trains, intercity trains, regional and commuter heavy rail trains, underground trains, tram trains and trams. Stadler also manufactures main-line locomotives, shunting locomotives and passenger carriages, including the most powerful diesel-electric locomotive in Europe. It is the world’s leading manufacturer in the rack-and-pinion rail vehicle industry.