About
Talgo
2. Significant events of the year
January
- SHYNE: the emergence of Spain’s largest consortium to promote renewable hydrogen. >
February
- EIB and Talgo sign 35 million euro green loan to finance their innovation strategy. >
March
- Talgo and the Fundación de los Ferrocarriles (Spanish Railway Foundation) renew their partnership. >
- Talgo approves dividend of 10 million euros through a Flexible Dividend Programme. >
- Indra and Talgo join forces in Europe’s Rail, the largest railway innovation programme in Europe, aimed at pursuing sector digitalisation and sustainability. >
April
- Talgo develops new tracks for very high speed trains and reduces their weight by 50%. >
August
- Talgo wins new 280 million euro contract in Egypt. >
September
- Talgo beats record in Galicia and reaches 360 km/h between Ourense and Santiago. >
- Completion of the Buyback Programme and Execution of the Capital Reduction Programme. >
- Deutsche Bahn chooses Talgo to design the German train of the future. >
- Talgo presents in Berlin its Intercity train platform and new rail solutions to decarbonise transport. >
November
- Talgo announces the winners of the 2022 Women in Engineering Excellence and Technological Innovation Awards. >
Subsequent events
3. Main financial results
2021 | 2022 |
|
---|---|---|
Adjusted EBITDA (€m) | 66.2 | 52.5 |
Net profit (€m) | 27,5 | 1.4 |
Investments - Capex (€M) | 25.1 | 21.0 |
Net financial debt/EBITDA (x) | 0.5x | 1.9x |
Overall, the Group achieved revenue of 469.1 million euros in 2022, down 15.5% compared to the previous year (555.4 million euros) due to the slower pace of execution of manufacturing projects caused by delays in the supply chain.
Talgo posted adjusted EBITDA of 52.5 million euros in 2022, down 20.7% from the 66.2 million euros of the previous year, due to economic factors such as inflation (higher than budgeted costs) and delays caused by the supply chain (longer working hours), which mainly affected manufacturing projects and led to a reduction in expected margins for the year. The mitigation action plan implemented is already visible, with margins stabilised and recovering. In addition, maintenance contracts include indexation clauses to adjust prices annually and protect the Group against similar scenarios going forward.
Net profit amounted to 1.4 million euros in 2022, impacted by one-off items such as the closure of Russia and the reversal of tax losses at the US subsidiary, as well as higher financial expenses due to the impact on the cost of debt of central bank rate hikes.
Operating cash requirements at year-end 2022 amounted to 217.3 million euros due to temporary natural figures in the cash requirements of the projects, although these requirements decreased in the second half of the year, as expected, reflecting the volatility of cash flow during the execution period of the projects.
The current manufacturing cycle, together with the delays caused by the supply chains in the period, resulted in higher investments in operating cash requirements, thus offsetting the adjusted EBITDA generated in the period. The volume of operating cash requirements at year-end 2022 mainly reflects the degree of progress of projects and outstanding receivables, the risk profile of which is considered low (low technical and collection risk). In 2022, the rescheduling of projects led to a lower degree of progress resulting in delays in collection milestones and consequently higher inventory levels. The very high-speed project in Spain, whose fleet is now fully completed and pending certification, was the main driver of working capital in the year, pending test approvals that will trigger deliveries and consequent cash inflows.
Capex amounted to 21 million euros in the period, in line with what was planned at the beginning of the year, of which 74% corresponds to R&D activities and 12% to capacity additions.
With regard to financial debt, 2022 was a turning point in the funding market, driven by a tough monetary policy implemented by central banks with the primary objective of mitigating inflation. Talgo, for its part, issued excess debt during 2021 and early 2022 in anticipation of this scenario. As a result, leverage at year-end stood at 1.9 times adjusted EBITDA (97.4 million euros of net debt). It is still noteworthy that, of the Group’s total long-term financial debt, 64% is at a fixed rate, with an average cost of 1.7% and an average maturity of 2.5 years. However, the recent rate hikes will impact the financial outcome of future new debt issuance and the structure of project financing.
At the same time, Talgo’s high financing capacity at year-end should be noted, with more than 400 million euros of liquidity (cash, credit lines and project-based financing lines) that allow the company to reliably finance current and future projects.