The CEO's report

The 2010 results confirm the Group’s ability to deliver a positive performance even under difficult economic conditions, once again fully meeting the forecasts communicated to the market.
The income statement and balance sheet figures demonstrate significant further growth: the Group is now a global player with a geographically diversified order book and a full range of high-tech products.
In addition, the launch of our cost-cutting plan and our new internal organization enable us to better meet the challenges of a market in which demand is progressively becoming more globalised.
In 2010 Ansaldo STS Group made a net profit of EUR 94,908 thousand as against EUR 87,800 thousand in 2009.
The Group’s 2010 revenue was EUR 1,283,710 thousand, as against EUR 1,175,640 thousand in 2009.
The Group’s operating margin was 10.7%, in line with that of 2009.
At 31 December 2010 the orders were EUR 1,985,012 thousand as against EUR 1,786,071 thousand in 2009 - an increase of EUR 198,941 thousand.
New orders received in 2010 were as follows.

  • In the Transportation Solutions Unit: acquisitions of EUR 1,142,756 thousand, mainly in respect of the award of the contract for the Copenhagen “Ring” metro (EUR 344,400 thousand), the linked Operation and Maintenance contract (EUR 232,400 thousand) as well as the Operation and Maintenance for Copenhagen’s existing lines (EUR 221,500 thousand).
  • In the Signalling Unit: acquisitions of EUR 890,205 thousand mainly in respect of the Sirte-Bengazi railway line in Libya (EUR 201,800 thousand), contracts awarded in Italy (EUR 199.500 thousand) and other work acquired in the US, Brazil, the PRC and Australia.

The backlog at 31 December 2010 was EUR 4,551,127 thousand, due to acquisitions. It increased by 21% over the end  2009 backlog, which was EUR 3,759,671 thousand.

These figures speak of a highly gratifying year in terms of the Group’s growth, profitability and capital and financial solidity.

The action taken and the results achieved in 2010 lay the foundation for a continuance of the Group’s achievements in the immediate future.

The Transportation Solutions Unit’s exceptional level of new orders in prior years - together with the excellent level of acquisitions in 2010 - cause the backlog to exceed the already favourable level achieved at the end of 2009 reaching EUR 2,721,540 thousand; we expect this business to grow significantly over the next three years. For the Signalling Unit 2010 was a year of considerable extension of its potential market in terms of geographies, which has already yielded good results in terms of new orders in particularly important countries and business segments. The Signalling Unit’s backlog was EUR 2,090,584 thousand at 31.12.2010 as against EUR 1,980,191 thousand at 31.12.2009.

The solid competency already acquired (ERTMS and driverless ATC) and being consolidated (CBTC) in the sector’s strategic technologies, the Group’s special geographical distribution worldwide and the additional efforts underway to penetrate new highgrowth areas (Central and Eastern Europe and the Middle and Far East) further underline the Group’s good competitive position and enable us to look ahead with reasonable confidence, unless there are political or macroeconomic changes which at the moment cannot be clearly foreseen.

The Group’s latest strategic plan, which was announced to the financial community in December 2010, is based on a forecast of further growth in orders and revenue over the next three years. This projection seems credible, first, because the Group’s market is forecast to grow (at an average annual rate of 4.5% according to the most respected analysts), and secondly because the Group as a concrete chance of increasing its market share, given its specific business model and its competitiveness, technological edge and international market presence, as mentioned above.

This positive outlook is tempered by the awareness of possible threats. First, competition is becoming sharper, due to market globalisation and product standardisation. To counter the effect of the consequent pressure on pricing, the Group has launched an internal and external cost reduction programme, in order to protect unitary margins in coming years.

Potentially more serious, because it cannot easily be countered, is the threat of a deterioration of the political and macroeconomic scenario, especially in those emerging markets in which the Group has made its strongest penetration: the Middle East and Libya in particular are the focus of this.

Developments in the destabilising events that are occurring as this note is being written and their consequences for Ansaldo STS’s business prospects are difficult to foresee, at least in the current situation.
From an organisational point of view 2010 was marked by completion of the Fast Forward Driven by Business (FFDB) project; this was decided on in 2008 and drawn up in detail in 2009; it has transformed Ansaldo STS S.p.A. from its original role as a strategic financial holding company into an operating company in which all business decisions are concentrated. This process was initiated in 2009 with the absorption of the previous Italian subsidiaries Ansaldo Segnalamento Ferroviario S.p.A. and Ansaldo Trasporti Sistemi Ferroviari S.p.A., and was extended in 2010 to all the Group’s worldwide operations, which had previously been managed with ample autonomy by non-Italian subsidiaries.
Under the new organisational structure Ansaldo STS S.p.A. includes two Business Units, respectively Signalling and Transportation Solutions, the Standard Platforms and Products unit and all staff functions.
Consequently, all decisions and operating instructions emanate from Ansaldo STS S.p.A.. The non-Italian subsidiaries are responsible for local compliance and supporting the implementation of the global strategy.
The main objective is to ensure maximum effificiency and effectiveness throughout the Group in a market in which globalisation is ever more evident.

Sergio De Luca
CEO Ansaldo STS Group

Sergio De Luca CEO Ansaldo STS Group