First-half sales fell by 7.6% from €556m in 2015 to €522.7m this year while first-half order intake dropped by 10.9% from €585.7 last year to €521.9m in 2016. Order backlog declined by 11.3% from €1.16bn in the first half of 2015 to €1bn in the first half of this year.

Vossloh says the drop in sales was due to delays in orders from Argentina, a reduction in Saudi Arabia despite a significant order for the Riyadh metro, lower sales in the United States, and projects coming to an end in Poland.

Vossloh says a sustained focus on high-margin business together with strict cost control and efficiency improvements are helping to improve the company’s overall financial performance and compensate for the reduction in sales. First-half net income improved from €4.8m in 2015 to €14.6m this year.

Vossloh increased its share capital to €45.3m in June by issuing 2.6 million new shares on the stock market. The company has managed to reduce its net financial debt from €328.9m at the end of 2014, to €200.1m at the end of last year, and to €125.1m on June 30.

Due to the reduction in first-half sales, Vossloh says it now predicts sales of about €1.2bn for 2016, which is the same as in 2015. “The main reasons for the slight decline in the sales forecast are a significant weakening of sales expectations in the USA, primarily due to lower investments by Class 1 railways related to the economic situation, as well as delays in order awards and in individual major projects in the Electrical Systems business unit,” Vossloh says.

Nevertheless, Vossloh still forecasts an Ebit margin of between 4% and 4.5%. In 2017, Vossloh says the Ebit margin should be between 5.5% and 6% based on the current group structure. But if it manages to sell its loss-making Transportation division, it expects “significantly higher profitability.”