Alstom SA Earnings Call Nuggets: Gas Turbine Orders and the Shanghai Joint Venture

Alstom SA recently reported its third quarter earnings and discussed the following topics in its earnings conference call.

Gas Turbine Orders

Daniela Costa – Goldman Sachs: Two questions quickly. First one just want to get your latest views on – in the last call, we had – you mentioned that your expected gas turbine orders for this year to be close to last, which I think a number was 14, maybe I’m wrong. You’ve done eight so far. Do you see on tendering for Q4 the remaining number or what is your expectation now? Then just a very quick clarification on the free cash flow comment, you mentioned you expect it to be positive in the second half. I guess this applies to the full year as per your prior guidance as well.

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Intuitive Surgical

Patrick Kron – Chairman and CEO: Two questions. The first one relates to the gas turbines. The second one to the free cash flow. On the first one, you gave the right numbers. We sold 14 gas turbines last year. I mentioned last time that we were expecting more or less the same level and I remind you that we have a medium-term target, which is above that, because I mentioned 20 – it’s fair to say that the market is not great and we are still back. You can see the level of global orders, the market; the world market for the nine months of the calendar year was down by 30% or 35%, in the (McCoy) release which was made available. So we are basically in not an easy environment in this area as well as in others. I remain – I still expect that we view on this 14 number of gas turbines and this means that the fourth quarter we think that field to be stronger and the average of the first three months, but I’m still targeting 14 whether it will be 13 or 15 we’ll see. But this is more or less my current level. On the free cash flow, sorry to – the lack of precision, but you remember that we were positive of the first half. Our guidance has been that we’ll be positive to full year. I just indicated today, that we expected after being positive on the first half of the fiscal year, to be also positive on the second half of the fiscal year and being positive on the two halves of the year will probably lead to a positive number to the full year, that’s what my arithmetics is showing me.

Shanghai Joint Venture

Andreas Willi – JPMorgan: I have two questions please. The first one on your sales guidance for the year, you were looking for 5% growth. At the beginning of the year, you stand at 1% organic as to nine months. You got some help from foreign exchange, which gets you to 3%, but now foreign exchange is going the other way. Again, how realistic is it that you can hit kind of 9% sales growth in Q4 to get to your target? Is that driven by specific phasing of contracts that you’re seeing coming through in Q4? The second question is on the Shanghai joint venture, whether you could give us an update how the discussions are going and how much more time are you going to give these discussions even given it’s almost two years now since the plan was announced?

Patrick Kron – Chairman and CEO: Two very valid and very fair questions. On the first one, yes, we are 3% up globally and actually (to answer), we have not changed our guidance. We remain with the target of 5%. To be totally fair, I said last time that among the various indicators that I’ve given, this 5% goal was not the easiest one and you seem to imply that I was right to say that it is not an easy target. So we are still in that direction. We’ll see where we will go. We are expecting a significant Q4 both in orders and in sales. It is fair to say that the sales on last Q4 were not bad either. So the comparison level is not an easy one. So it is in our guidance. It is not an easy part of the guidance. The second one concerns the Shanghai JV. As I indicated last time, it is fair to say that I am disappointed by the speed of the discussions, which are existing, as we talked, they are ongoing. I never puts to myself nor to partners in this type if complex discussions, any type of intimate talk, so it’s not a either we agree tomorrow morning or it’s dead, it doesn’t make sense and it’s not professional to do so. This being said, I am disappointed by the speed of the discussions. The more it lags, the more difficult it will be to finalize, therefore either of something will happen fast, I mean in the couple of months to come or nothing will happen. So you will know in the months to come, we have not so many (as-is) whether this deal is dropped or it gets to the net step which is an agreement and then the implementation phase. I am disappointed to be (hooked) by the speed and the nature of the discussions.