19 November 2021 Europe

Talgo Reports Net Profit Of 21 €M In 9m 2021 Driven By Improved Operational And Financial Performance

In terms of current projects, it is worth highlighting the high level of execution of the Spanishnproject for RENFE for Very High-Speed trains, which is already in the testing phase, and the project for DB in Germany, which it is expected to be the main revenue generator from 2022bonwards. To which must be added the start of the manufacturing phase of the projects for DSB (Denmark), ENR (Egypt) and ADIF in Spain, among others.

Talgo S.A., a leading company in the design, manufacture, and maintenance of high-speed light trains, registered a record revenue of 427 €m in the first nine months of 2021, up by 25.8% compared to the 339.4 €m registered in the same period of the previous year. Likewise, Net profit in 2021 has grown to 21 €m compared to a negative result of 8 €m in the third quarter of 2020. Net profit increase is the result of an improved operational and financial performance; while in terms of revenues is attributable to the ongoing phase of the manufacturing and overhaul projects, led by RENFE's Spain Very High-Speed project and to an increased maintenance activity.

Talgo reported adjusted EBITDA of 49.8 €m (11.7% margin) in the first nine months of 2021, up from 22.6 €m, (6.7% margin) in the same period last year. This increase reflects a higher industrial activity in the manufacturing business line, together with the continued recovery of maintenance services in all markets and it shows.

In addition, the company expects to meet the target set to reduce overheads by 15% in the period 2021-22 to improve competitiveness and flexibility.

Increasing prices of raw materials and transport services has no impact in projects with high degree of advance, while it has been updated in the margin of those with a lower degree of advance.

Solid backlog and commercial strategy

The company has a solid order backlog of 3,013 €m, a figure that rises to 3,262 €m when including the 249 €m of contracts awarded in 9M2021 and still to be signed. This is a high quality and well-diversified order book, with around 1,000 €m in manufacturing and overhaul orders, which guarantees strong industrial activity until 2024.

The maintenance activity is close to fully recover its profile as a recurring and stable business unit, supporting the generation of revenues and cash flows of the business.

In terms of current projects, it is worth highlighting the high level of execution of the Spanishnproject for RENFE for Very High-Speed trains, which is already in the testing phase, and the project for DB in Germany, which it is expected to be the main revenue generator from 2022bonwards. To which must be added the start of the manufacturing phase of the projects for DSB (Denmark), ENR (Egypt) and ADIF in Spain, among others.

Talgo aspires to become a benchmark in the market as a provider of more sustainable solutions for medium and long-distance trains. In this sense, the company continues to focus its commercial activity on its strategic long-distance and high-speed segments, where it is already one of the international leaders, while using its Talgo Vittal platform to position itself in the commuter/medium-distance segment, with the Vittal-One variant through which it is developing its green hydrogen technology as the most ecological solution to contribute to the process of decarbonisation of transport in the coming years and which will be the world's first dual hydrogen-electric train.

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