Alstom forecasts softer cash flow after strong annual beat, shares fall

By Anna Peverieri

(Reuters) -French train maker Alstom reported an annual free cash flow well above market expectations on Wednesday, in a sign its cash issues were now solved, but its shares slumped after its forecast for the current year disappointed investors.

Alstom, which had taken long to recover from its costly 2021 acquisition of Bombardier's rail business, reported a free cash flow of 502 million euros ($561.6 million) for the year that ended on March 31, ahead of the 330 million analysts polled by the company had expected.

The earlier cash issues had been partly due to Alstom inheriting problem contracts through the acquisition.

It guided for annual free cash flow generation below last year's level, in a range of 200 million to 400 million euros, which a trader said was also below market expectations.

The shares fell more than 15% in early trading to the bottom of Europe's benchmark STOXX 600 index and were on track for their worst day since October 2023 if the losses hold.

"Solid finish to the year, guidance somewhat light," analysts at J.P.Morgan said in their first take on the news.

Alstom, which builds trains and signalling systems for urban and regional rail networks, also forecast an adjusted operating profit margin of 7% and organic sales growth of 3% to 5% for the coming year.

It reported a margin of 6.4% based on adjusted earnings before interest and taxes (EBIT) of 1.18 billion euros for the fiscal 2024/25, while its sales grew 6.6% organically.

Alstom said the new guidance was supported by the full execution of its deleveraging plan and the end of the Bombardier integration process.

In May 2024, it had detailed a plan to cut debt and reform its finances, which included a $1 billion rights issue supported by its two main shareholders.

The outlook is also helped by supportive market demand, but excludes any potential impact from tariffs, it added.

"We are a bit more prudent on the Americas with some delay in decision making on a few large scale rolling stock and system projects, in part due to the current macro environment," CEO Henri Poupart-Lafarge told analysts in a call.

($1 = 0.8938 euros)

(Reporting by Anna Peverieri in Gdansk, editing by Milla Nissi-Prussak)