Alstom earns $1.48 billion profit; France buys more TGVs

High speed train building is booming in France, where the government regards it as a recession buster, and the earnings of TGV builder Alstom reflect it. Alstom announced Monday that it earned a net profit of 1.1 billion euros ($1.48 billion) in the year ended March 31. That was up from 852 million euros in the prior year. Alstom notched full-year sales of 18.75 billion euros ($25 billion) that were 11% higher than 2008 sales levels, and close to the analyst forecast of 18.99 billion euros.

At a news conference in Paris Tuesday, company CEO Patrik Kron acknowledged that Alstom could be adversely affected by global economic crisis this year, noting, “The brutal downturn in the world’s economy has created uncertainties in our markets.”

But Kron also noted that government stimulus plans in the United States and China contain "a rail infrastructure element.” What this will mean for Alstom depends on "the timescale and nature of the projects," he added. By contrast, demand for new electricity generation equipment, another key business sector for the company, was seen to be declining as some future projects face postponement.

The just-published May issue of Simmons-Boardman’s overseas publication, International Railway Journal, spotlights the high speed scene in a cover story, "France invests its way out of the recession." IRJ reports that French National Railways (SNCF) will increase its total planned investment by 42% this year to 2.27 billion euros as part of  the government’s economic revival plan. This means, among other things, that expansion of the TGV fleet is being accelerated, and Alstom should benefit.

This year SNCF will receive 15 TGV Duplex high speed trains, one more than previously planned, at a cost of 100 million euros; an additional 100 million euros is being made available to increase another Duplex order from 13 trains to 17; and 165 million euros is allocated for rehabilitation of older trains.