Alstom profit steady as execution issues persist
Alstom Reports Stable Profit Amid Ongoing Challenges
By Dimitri Rhodes and Matthieu Huchet
May 13 (Reuters) - Alstom on Wednesday reported stable full-year adjusted operating profit as delays on large train contracts offset strong orders, in a result that suggested recent execution problems were still weighing on the business.
Financial Performance Overview
Adjusted earnings before interest and taxes were 1.17 billion euros ($1.37 billion), with a margin of 6.1%, versus 1.18 billion euros and the same margin a year earlier, the French train maker said. Its shares were up 2.7% by 0702 GMT.
Management’s Response to Execution Issues
"Our priority is to improve execution quality, including tighter day-to-day project management, reinforced planning discipline and improved coordination across engineering, supply chain and manufacturing," CEO Martin Sion said in a statement.
Analysts at J.P. Morgan said the details were "reassuring" in a note to investors.
Impact of Previous Forecast Adjustments
The result follows Alstom's April decision to drop its three-year cash flow forecast after project problems hurt near-term margins and cash generation, and to cut its operating margin target for the 2026/27 year to 6.5% from a previous 8% to 10%.
Balance Sheet and Capital Measures
Rules Out Equity Raise
The company also moved to address balance sheet concerns.
Chief Financial Officer Bernard Delpit told reporters that Alstom had fully ruled out a capital increase, a step some traders had feared after its latest profit warning sent the shares down 30%. He said the group's credit measures were in line with its goals for 2026 and forecasts for 2027.
"Our figures, which we'll call credit metrics, the very metrics that Moody's rating agency looks at, are completely in line for 2026 and with our forecasts and announcements for 2027, and with the agency's expectations," he said.
Investor Concerns and Order Performance
Alstom has issued two major cash warnings since late 2023, raising investor concern over contract execution, debt and liquidity.
Despite record orders of 27.6 billion euros, Sion said weak execution on major rolling stock contracts had hurt its near-term performance, while production of 4,284 cars missed the company's target after a weak fourth quarter.
Additional Information
($1 = 0.8522 euros)
(Reporting by Dimitri Rhodes and Matthieu Huchet in Gdansk; Editing by Matt Scuffham)
