The new geopolitical conditions are no longer having a major impact on the industry, as evidenced by the dynamics of changes in revenues and backlogs of orders of the major players in the rolling stock market. Manufacturers have already adapted, and even Russian companies are reporting revenue growth in local currency. Many players achieved record order numbers and volumes last year. In Europe, one of the most significant deals is expected to be the sale of Talgo, which is performing very well in this context.
Approach to analysis
A typical rolling stock manufacturer is an industrial or engineering holding company with diversified operations and unique management accounting. For the analysis, their financials have been harmonised as much as possible, enabling to even out the differences and distinguish between revenue from the rail or rolling stock segment of the business. In some cases, this is not possible, so the financials of some companies include other lines of business as well.
For the purposes of comparison, the financial indicators were converted into euros at the average annual exchange rate. The manufacturers were selected for the analysis based on two criteria: the existence of a business line engaged in the production of rolling stock and revenues in this business line exceeding €1 bln. Talgo was added as a notable improvement in performance is observed and its sale is anticipated.
We have analysed the change in revenue and orders of the world’s major rolling stock manufacturers in 2023 relative to the previous year:
- 5 companies from Europe: Alstom, Stadler, Siemens Mobility, Talgo, and CAF;
- 4 companies from Asia: CRRC from China, Hyundai Rotem from South Korea, and Hitachi and Kawasaki from Japan;
- 3 companies from USA: Wabtec, Trinity Industries, and Greenbrier (GBX);
- 2 companies from Russia: TMH and Sinara-Transport Machines Holding (STM).
Key comparable financial indicators of rolling stock manufacturers (enlarge). Source: ROLLINGSTOCK
Škoda Group deserves particular consideration. In June 2024, the Czech manufacturer published its financial results for the previous year, which showed a substantial increase in sales, up 81% to €1.382 bln. However, the company has indicated that this figure includes the results of another company from PPF Group, the Turkish bus manufacturer TEMSA. Its website reports that sales for 2023 were $387.5 mln. This suggests that the revenue of Škoda Group is below €1 bln. Another reason for the exclusion of the Czech company from the rating is that Škoda Group manufactures both rolling stock and wheeled transport. For instance, it supplied trolleybuses to customers in the Czech Republic and Slovakia last year. As the company has not published financial statements or annual reports on its website since 2021, it is not possible to separate revenues from the railway segment.
It is also worth noting that there is a discrepancy in the figures. The 2023 financial report of the parent company PPF Group indicates that Škoda Group generated revenue of €1.136 bln, with year-on-year growth of 46% and backlog of orders of €3.2 bln. The same report also indicates that TEMSA generated revenue of €440 mln. In light of the data, we reiterate our assumption that the revenue of the Škoda Group rail business is less than €1 bln.
A fiscal year varies between countries, so data were aligned to a calendar year based on quarterly reporting. As Greenbrier’s fiscal year starts in September, its data are given for a period from December of the previous year to November of the reporting year.
The information regarding backlogs of orders is presented as at 31 December 2023, with the exception of Greenbrier, for which information is given as at 30 November 2023.
Upward trend persists
In 2023, the majority of manufacturers demonstrated positive revenue growth. Two companies exhibited a decline in revenue in their respective national currencies, while four companies displayed a similar trend in euros. The withdrawal of some global leaders from the Russian market did not result in a reduction in their operating revenue.
In general, external constraints no longer have a global impact even on Russian producers, as they have adapted to today’s conditions. While new barriers necessitate process optimisation, they no longer impact the overall situation. Moreover, Russian manufacturers have shown robust revenue growth in roubles and are already ensuring stable production of new rolling stock models.
RSA ranking of global rolling stock manufacturers by revenue (enlarge). Source: ROLLINGSTOCK
The revenue dynamics for non-European companies in a single currency reveals that the strengthening of the euro had a negative impact. CRRC’s revenue in euros fell by 3.9% to €30.4 bln, while in RMB it grew by 5.1%. Despite this, the Chinese manufacturer retains its position as the market leader in terms of revenue, with a value that is 79% larger than that of the next company and almost three times higher than that of the manufacturer rounding out the top 3. The share of revenue generated outside China by CRRC continued to grow reaching 12%, an increase of 1 p.p. from 2022 and the highest value since 2016. This further consolidates CRRC’s position in the global market.
With revenues of €17 bln, Alstom became the world’s second-largest railway manufacturer by this indicator. Sales to the Americas increased by 16.6% to €3.3 bln, while sales to other regions remained flat. Alstom maintains a global shipping presence, and by geographical region, its revenue is distributed as follows: Europe (58.7%), the Americas (19.3%), Asia Pacific (14%) and Africa and the Middle East (8.1%). As in 2022, rolling stock deliveries constituted the majority of the company’s revenue, accounting for €8.8 bln, or 52.2%.
The second major European manufacturer, Siemens Mobility, ranked third in 2023 with revenue up 11% to €10.8 bln. However, the company’s reporting by business segments, including rolling stock, presents rather a limited amount of data.
As previously stated, 10 out of the 14 companies under review demonstrated revenue growth in 2023 compared to 2022. Notably, there was a substantial increase in sales in euros for the US and Spanish manufacturers.
The freight segment contributed €6.4 bln to Wabtec, representing 12.9% revenue growth in euros and 15.8% in US dollars. This places the company in the fourth position in our ranking. However, the company’s reporting does not allow for the separation of the rail segment from related businesses. As a result, it is highly likely that Wabtec would fall to lower positions in the ranking if only rail revenues were taken into account.
Hitachi’s revenue in the Railway Systems segment grew by 7.7% to €5.46 bln. While revenue increased more strongly in Japanese yen (+20.3%), it is important to note that Hitachi is export-oriented and the home market’s share of revenue is low. For the 2023–2024 fiscal year, only 19% of revenue in the Green Energy & Mobility segment (which includes rolling stock) was generated in the Japanese market. In contrast, Hitachi’s core market (European) accounted for the largest share of sales at 30.3%, while sales in North America grew by 3 p.p. to 21.7%. The manufacturer anticipates revenue growth in 2024 as a result of the acquisition of Thales GTS, a leading global player in the signalling and rolling stock control systems market.
In North America, the renewal of the freight car fleet is continuing, which is leading to an increase in rolling stock output and revenue for manufacturers. While the growth rate is high, it is not reaching the levels seen in 2022. GBX’s revenue for 2023 grew by 21.7% to €3.68 bln and car output by 31.3% to 25,600 units. Trinity Industries demonstrated a similar trend, with revenue up 27.1% to €2.5 bln and car production up 30.3% to 17,400 units. US railcar manufacturers also operate as leasing companies, with Trinity Industries being one of the market leaders. In 2023, leasing accounted for 29% of total revenue for Trinity Industries and 5% for GBX.
The sixth-ranked company is TMH, a Russian railcar builder. In 2023, its revenue reached €4.43 bln, or RUB 411.8 bln. Amid the challenging economic environment, the company achieved a modest 1.7% growth in euros, while in roubles, the figure is more impressive, at +30.8%. Following its inclusion on the US SDN list, it became more difficult to conduct business on the foreign market and interact with foreign partners. Despite these circumstances, TMH remains active in export operations, having implemented significant adjustments to its approaches and business processes.
Another Russian player, STM, retained its 12th place among the global players under review. The company’s revenue for the period in question was €1.14 bln, representing a decrease of 12.7% in comparison to the previous year. In terms of the Russian rouble, revenue increased by 12.3% to RUB 105.9 bln. This revenue is generated from the supply of locomotives and track machinery, as well as the provision of services. In 2023, STM’s deliveries, which account for 63.2% of its total revenue, generated 13.6% more revenue, reaching RUB 66.9 bln. Revenue from services, which excludes locomotive repair, has been growing consistently since 2017. In 2023, the figure reached RUB 14.2 bln, representing a 35% year-on-year increase and twice the figure recorded in 2021.
The stability of Russian manufacturers and their growth in the new geopolitical environment are facilitated by a developed domestic market, high industrial potential of companies, and the presence of their own engineering and design school, which develops rolling stock and components for it. The state order provides the industry with the necessary support to implement self-reliance projects. It is also important to consider export contracts, which are still being concluded despite the official withdrawal of manufacturers from some markets.
In the 7th place in the ranking is Stadler. In 2023, the decline in revenue from train deliveries, one of the company’s key business segments, has led to a 0.4% decrease in revenue in euros to €3.72 bln and a 3.8% decrease in Swiss francs. In 2022 and 2023, the share of revenue derived from train deliveries was 54.2% and 41.4%, respectively. This represents a decrease of 12.8 p.p. from the previous year. While other product groups experienced revenue growth in 2023, revenue from train deliveries decreased by 26.5% to CHF 1.5 bln. There was a 26% increase in deliveries to CIS countries in 2023, with Europe being the primary market for Stadler’s rolling stock. Although, the current regional share is below 2%, it is anticipated to grow in the coming years as a result of the implementation of a major contract in Kazakhstan.
In 2023, Hyundai Rotem resumed publishing detailed financial statements with Railway Solution revenues. The segment’s revenues in euros decreased by 16.6%, while in Korean won they decreased by 12.7%. Since 2022, there has been a sharp increase in orders for defence products, which had a negative impact on revenue from the rolling stock segment in 2023.
CAF is steadily gaining ground on the leading rolling stock producers. Revenue from the railway business grew by 21.7% to €3 bln, with rolling stock supplies accounting for 58% of this, followed by integrated digital solutions and systems at 22.4%. The revenue growth by sector is as follows: +24.6% to €1.75 bln in rolling stock, +28.3% to €674 mln in digital solutions, and +8.1% in services, representing the lowest growth figure.
As Talgo is preparing for its own sale, it is in the company’s interest to conclude the deal on the most favourable terms possible. In light of these circumstances, financial reporting has become less detailed than in previous years. For 2023, Talgo reported the largest revenue growth of 39% to €650 mln, with 2022 revenue down 15.5% on 2021. There is a possibility of optimising the reporting by quarter in 2022–2023 to increase the value of the asset.
It should be noted that in the ranking of global manufacturers, there may be other companies between Talgo and Hyundai Rotem that have not yet reached the €1 bln revenue threshold. One such company is the Russian freight car builder United Wagon Company, which reported revenues of RUB 82 bln (€883 mln) at the end of 2023.
Orders hit new records
The backlog of orders provides insight into manufacturers’ future utilisation and, consequently, their potential and financial stability. It is important to note that not all companies reviewed disclose this information.
Backlogs of orders of the world’s largest rolling stock manufacturers in 2022-2023, € bln (enlarge). Source: ROLLINGSTOCK
Following the merger with Bombardier Transportation, Alstom’s backlog of orders has consistently outperformed that of other global players, and the company still maintains its position as a strong industry leader. After the acquisition of the Canadian manufacturer, the backlog grew by 86% to €74.5 bln from December 2020 to March 2021. Over the following quarters, Alstom’s potential continued to grow consistently, reaching €90.3 bln at the end of 2023, an increase of 6.7% from the end of 2022. Now, approximately 45% of orders are for rolling stock and 37% for services. Maintenance, signalling and communication systems have seen a notable increase in recent years. Over half of the expected deliveries will be to European countries.
Siemens Mobility has made significant progress in reducing the lag behind the leader. By the end of 2022, the German manufacturer had a backlog that was 2.35 times less than that of Alstom. By the end of 2023, Siemens had reduced the lag to 1.92 times. In 2023, its orders grew by 30.6% to €47 bln, driven by successful participation in tenders in various regions of the world in 2022. The figures show a sharp increase in large orders, including a €2.9 bln delivery and maintenance of 1,200 locomotives to India, a €2.5 bln order for the first line of a turnkey rail system in Egypt, and a €2.1 bln order for commuter trains for Germany.
CRRC, the global industry leader in terms of revenue, was again ranked 3rd with a backlog of €35.1 bln (RMB 270.3 bln). The Chinese railway train builder’s backlog is traditionally comparable to its annual revenue. 2023 was no exception, with orders representing 1.2 revenue, which is one of the lowest figures in the industry. ROLLINGSTOCK estimates that CRRC has a low share of long-term contracts in the Chinese market but it is consistently growing. This is evidenced by the surplus of annual new orders in the Chinese market over revenue and backlog.
In the overseas market, CRRC has consistently received new orders. By the end of 2023, the Chinese manufacturer’s share of export contracts stood at 41.2%, or RNB 112.7 bln, representing a 13.9% increase from 2022. Should the current trend of growing long-term orders within China and expanding into foreign markets continue, CRRC will become the industry’s clear portfolio leader.
At the same time, there’s mounting opposition to CRRC’s expansion into the European and US markets. Under the new regulation, the European Commission initiated an investigation into the Chinese company’s bid to supply passenger trains to Bulgaria. This resulted in the company being forced to withdraw its bid for the tender. The failure to meet delivery deadlines to the US market led to the cancellation of a major contract.
As we noted above, there’s a continued high demand for new freight cars in North America. This is resulting in GBX’s orders growing by 9% to €3.5 bln (or 11.8% to $3.8 bln) in the absence of any public announcements of significant deals in recent years. The company’s backlog of orders in kind increased by 4.9% to 29,700 cars.
The backlog of orders of the second-largest US railcar builder, Trinity Industries, decreased by 19.8% to €3 bln. Despite representing a twofold increase on the 2021 figure, it remains the lowest of the companies under review. The decline is due to the fulfilment of a large 2022 order for GATX for 15,000 railcars. In general, US railcar builders have a low revenue-to-backlog ratio, with GBX and Trinity having the ratio of 1 and 1.2, respectively.
Wabtec’s backlog decreased by 4.3% in local currency and 6.7% in euros to €16.5 bln as a result of the company’s 15.8% year-on-year growth in freight car sales by $950 mln.
In 2023, Stadler continued to expand its global rolling stock market presence, with its backlog growing by 15% to €25.2 bln (or 11.1% to CHF 24.4 bln). The company is pursuing a strategy of expansion in the post-Soviet countries. For instance, Kazakhstan Temir Zholy is expecting to receive 537 coaches and maintenance for 20 years, worth €2.3 bln. The first order was received from the Lithuanian rail operator LTG Link, which plans to purchase up to 54 FLIRT trains. Under the firm part, Stadler will supply nine EMUs for intercity services and six battery-powered trains for operation on non-electrified railway lines. Significant orders are to be fulfilled for OBB, and Stadler is expanding its US contract base for alternative traction rolling stock, such as batteries or hydrogen.
Hyundai Rotem’s backlog increased by 46% to €8.1 bln. The company continues to receive new large orders in 2024, including the largest tender in its history in the US for the supply of 91 two-car metro trains for Los Angeles for $663.7 mln, excluding the option for 50 cars.
Following a 25.7% decrease resulting from the completion of large orders from previous years without comparable new contracts, the backlog of Kawasaki Rail amounts to €3.2 bln, or JPY 490 bln.
CAF’s backlog of orders set a new record of €12.8 bln at the end of 2023, representing a 3.9% increase over the 2022 level. The company entered into contracts primarily in Europe, with the majority of them in Spain. These included a contract for 29 commuter trains valued at €200 mln and 32 interregional trains valued at €190 mln. At the end of 2023, it was announced that CAF had won the largest tram tender in Rome’s history: the €457 mln framework contract will include the supply of up to 121 five-section bi-directional trams.
In 2023, Talgo received a significantly higher number of orders than in the previous year. The backlog increased by 53.7% to €4.2 bln, with a record new order intake of more than €2.1 bln in 2023. These new contracts include an option by German operator Deutsche Bahn for around €1.4 bln for the delivery of 56 ICE L low-floor locomotive-hauled trains based on the Talgo 230 platform.
Russian manufacturers do not publicly disclose their orders. However, in the spring of 2024, STM indicated that it has orders until 2054 worth RUB 1.7 trn, or €18.3 bln, excluding high-speed trains. The country is gradually enhancing its practice of long-term rolling stock orders and there has been an increase in demand from Russian Railways and other customers. The national rail operator has indicated that its annual demand for locomotives alone will exceed 1,000 units per year from 2025 onwards. This suggests that both TMH and STM may also become among the ten or even five largest global players in the rail rolling stock market in terms of backlogs of orders.
