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Introduction & Market Context
Talgo (BME:TLGO) SA (BME:TLGO) presented its first quarter 2025 results on May 26, revealing a challenging period for the Spanish train manufacturer. The company reported declining revenue and profitability metrics while announcing the temporary withdrawal of its full-year guidance amid ongoing negotiations with key customers and project delays.
Despite these short-term challenges, Talgo continues to operate in a favorable market environment with a substantial order backlog of over €4 billion and a robust pipeline of opportunities worth €11.6 billion, primarily concentrated in Europe (70%), followed by the Middle East and North Africa region (17%).
Executive Summary
Talgo’s Q1 2025 performance showed several concerning trends, with revenue decreasing to €154.3 million from €166.5 million in the same period last year. More significantly, EBITDA fell to €13.6 million, representing an 8.8% margin compared to €20.1 million and a 12.0% margin in Q1 2024. The company reported a net loss of €7.1 million for the quarter.
As shown in the following key financial figures:
The company attributed the weaker performance to slower-than-planned progress in manufacturing projects, resulting in higher allocation of indirect industrial costs, as well as decreased activity and higher costs in its high-speed train maintenance operations in Spain.
On a positive note, Talgo highlighted a nearly 50% improvement in both accident frequency and severity rates compared to the same period in 2024, demonstrating progress in health and safety initiatives.
Quarterly Performance Highlights
Talgo’s business performance remains anchored by its substantial order backlog, which stood at €4.1 billion at the end of Q1 2025. The company continues to focus on high-speed and intercity train segments, with 27 Talgo Avril trains already delivered to Spanish rail operator Renfe.
The following chart illustrates the composition of Talgo’s backlog and pipeline:
Maintenance activities represent approximately 50% of the company’s order backlog through long-term projects across eight countries, providing a degree of stability to the business model. However, the company noted that maintenance services registered lower profitability during the quarter, primarily due to service operations for Renfe’s very high-speed trains in Spain.
In February 2025, Talgo registered its second Commercial Paper Programme traded in the Spanish Fixed Income market (MARF) for a maximum amount of €150 million, enhancing its financial flexibility.
Strategic Initiatives
A critical focus for Talgo remains its ongoing negotiations with Deutsche Bahn, which represents the largest manufacturing project in the company’s backlog. These discussions primarily involve scope and scheduling adjustments, with the first units now expected for delivery in the second half of 2025.
The company’s executive summary highlights the key business and financial metrics:
While no significant new contracts were registered during Q1 2025, management expressed confidence in securing substantial order intake during the remainder of the year. This optimism is supported by ongoing public and private investments in railroad passenger transportation systems, which enhance the commercial momentum reflected in Talgo’s €11.6 billion pipeline.
Forward-Looking Statements
Perhaps the most significant development in Talgo’s Q1 presentation was the decision to temporarily withdraw its 2025 guidance. The company cited "unforeseen circumstances related to the main projects and the capital structure" as making it difficult to establish appropriate forecasts.
The original outlook for FY 2025 had projected:
Management indicated that a reassessment of estimates would be conducted once current negotiation processes are completed. The company acknowledged potential temporary adjustments in its main financial metrics and outlined an action plan that includes a new assessment when visibility improves, along with consolidation of its project portfolio, capital, and shareholding structure.
Talgo’s stock closed at €3.29 on the presentation date, well below its 52-week high of €4.50 but above the 52-week low of €2.76. Investors will likely remain cautious until more clarity emerges regarding the outcome of the Deutsche Bahn negotiations and the company’s revised financial projections for the remainder of 2025.
Full presentation:
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