Alstom shares plunge 30% after profit warning and cash flow concerns
French rail technology company Alstom has shocked investors with a significant profit warning.
The company now anticipates a reduced adjusted EBIT margin of just 1 percent for the fiscal years 2026/27, down from a previous projection of 6.5 percent.
The expected cash outflow is particularly concerning, with a free cash flow of negative €1.5 billion projected for the current fiscal year.
This news sent Alstom’s stock price tumbling by approximately 30 percent.
The issues facing Alstom are substantial, primarily stemming from difficulties in the execution of the Coradia Max train platform.
Six projects, representing a total order volume of around €5 billion, are affected by these problems.
Production issues, retrofits, and delays are driving up costs, compounded by penalty payments related to German projects.
These burdens are impacting not only profitability but also liquidity.
The extent of the problem is highlighted by the cash flow situation.
In the first half of the year alone, the free cash outflow amounted to €1.2 billion.
Alstom now forecasts a total free cash outflow of €1.5 billion for the entire year.
Management estimates that approximately €1 billion of this outflow will be reversed in the coming years as outstanding milestone payments are received, but this offers no immediate relief.
Operational targets have also been revised downwards.
The planned production of rail cars will decrease from the previously stated 4,400 to 4,500 units to around 4,000.
Organic revenue growth is now expected to be in the low to mid-single-digit percentage range.
While revenue increased in the first half of the year compared to the previous year, this growth cannot offset the significant problems in project execution.
Alstom intends to take corrective action, planning to reduce debt by approximately €2 billion by September 2027 at the latest.
This could involve the sale of business units and stakes.
The specific assets to be divested remain to be determined.
A detailed roadmap will be presented by the company in the second quarter of 2027.
Source
“Minus 30 Prozent: Milliarden-Abfluss lässt Alstom-Aktie einbrechen”
Read the original report (in German) ↗This story is an AI-assisted version of the original report, checked and edited by the Plainwire desk before publication. Read our editorial policy · Report an error
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