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Introduction & Market Context
Spanish railway and bus manufacturer Construcciones y Auxiliar de Ferrocarriles SA (BME:CAF) presented its first quarter 2024 results on May 9, showing continued revenue and profit growth despite a significant decline in new orders. The company maintained its positive outlook for the full year, citing a favorable pipeline of potential contracts for the remainder of 2024.
CAF, which designs, manufactures, maintains and supplies equipment and components for railway systems, continues to execute on its strong backlog while facing a temporary slowdown in new order intake during the first quarter.
Quarterly Performance Highlights
CAF reported revenue of €1,008 million in Q1 2024, representing a 6% increase compared to the same period last year. The company’s operating profit (EBIT) grew at an even faster rate of 9% to reach €47 million, resulting in a slight improvement in EBIT margin to 4.7%. Net attributable profit showed the strongest growth, rising 16% year-over-year to €23 million.
As shown in the following key financial figures chart, the company demonstrated growth across all major profitability metrics:
However, order intake declined significantly to €444 million, 42% lower than Q1 2023. The company’s backlog also decreased slightly by 4% from year-end 2023 to €13,636 million. Despite these declines, CAF noted that the Q1 figure doesn’t include contracts awarded and announced for approximately €350 million, and that significant projects are in advanced stages of awarding.
The order intake distribution shows a diverse mix across business lines, with buses representing 38% of new orders, followed by rolling stock at 28%, integrated solutions at 21%, and services at 13%. Geographically, Europe dominates with 90% of new orders.
Detailed Financial Analysis
The consolidated statement of profit or loss reveals that CAF’s financial performance improved across multiple metrics. The 6% revenue growth was accompanied by a 9% increase in EBIT and a 15% improvement in financial result, leading to a 15% rise in profit before tax and ultimately a 16% increase in profit attributable to the parent company.
Breaking down revenue by segment, the railway business showed strong 11% growth to €816 million, now representing 81% of total revenue. Meanwhile, the buses segment declined by 10% to €192 million, accounting for 19% of revenue. The company explained that the negative year-on-year comparison in buses was due to an unusually high number of deliveries in Q1 2023 intended to reduce component inventory during the previous supply chain crisis.
The backlog analysis shows that despite the temporary decline, CAF maintains a healthy backlog-to-revenue ratio of 3.6x overall, with the railway segment at 4.1x and buses at 1.7x. This provides substantial visibility for future business.
Strategic Initiatives & Sustainability
CAF continues to emphasize sustainability as a strategic pillar. During Q1, the company received an AA rating from MSCI ESG, an improvement from its previous A rating in less than a year. The company was also ranked among the 30 most sustainable Spanish companies according to the S&P index.
A notable development was the publication of CAF’s first Green and Sustainable Financing Framework, which will allow the company to qualify financial products as green or sustainable, potentially reducing debt costs and affirming its position in the transition to a decarbonized economy.
The company’s focus on sustainable transportation solutions is evident in its order intake, with zero-emission buses representing 91% of total buses ordered during the quarter. Key orders included hydrogen buses for Cologne, Germany (20 vehicles) and the Paris region in France (22 buses), marking CAF’s first zero-emissions bus contract in France.
Forward-Looking Statements
Despite the slow start to the year in terms of order intake, CAF maintained its positive outlook for 2024. The company expects a book-to-bill ratio of at least 1 for the full year, revenue growth of approximately 10% compared to 2023, and improved profitability in terms of both EBIT and net profit.
The company’s guidance for 2024 includes:
CAF emphasized that the pipeline for commercial bids in the financial year is at record high levels, suggesting confidence in achieving its order intake targets for the remainder of the year. The company also noted that its backlog does not yet include recently awarded projects such as 354 buses for Rome and 20 metro trains for Oslo, with a combined value of close to €350 million.
With a solid backlog, improving profitability metrics, and enhanced sustainability credentials, CAF appears well-positioned to navigate the temporary slowdown in order intake while maintaining its growth trajectory for 2024.
Full presentation:
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