Alstom cuts its cash outlook after German train-project setbacks
Alstom now forecasts an annual free cash outflow of 1.5 billion euros after technical problems and approval delays in Germany hurt its first-half profitability. The train maker lowered its production target and reported a negative adjusted operating margin. Orders still grew, while management began reviewing options for a debt-reduction programme and arranged a new credit facility.
Economics & Markets··Evening
Project delays lower the annual outlook
Train maker Alstom reduced its annual adjusted operating margin forecast to around 1 per cent after problems with its Coradia Max train programme in Germany damaged first-half profitability. Management now forecasts a free cash outflow of 1.5 billion euros for the financial year. Technical work, testing and approval delays have pushed some milestone payments into subsequent years. The figures released on 2 November are preliminary and unaudited, covering the half-year that ended in September.[1], [2]
Orders rise while production falls
Half-year orders rose 5 per cent to 11 billion euros from 10.5 billion euros a year earlier. Sales increased to 9.3 billion euros from 9.1 billion euros, representing reported growth of 3 per cent and organic growth of 2 per cent. Yet production fell to 1,860 cars from 2,017. Coradia Max manufacturing paused during the first quarter so technical problems could be addressed before further retrofit work accumulated. The adjusted operating margin was approximately negative 4 per cent, compared with positive 6.4 per cent a year earlier.[1]
Cash outflow raises debt as a new facility is signed
First-half free cash outflow reached 1.248 billion euros, against 740 million euros a year earlier. Net debt rose from 400 million euros at the end of March to 1.1 billion euros. Management cut expected annual production to 4,000 cars from 4,400–4,500. Alstom signed a new 2 billion euro revolving credit facility on 1 November, maturing in November 2028 without financial covenants. It is reviewing options to reduce debt by around 2 billion euros by September 2027. Detailed half-year results are scheduled for 17 November.[1]
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