France’s Alstom trains sights on higher synergies after profit beat

By Juliette Portala

(Reuters) -French train maker Alstom on Wednesday reported annual operating profit above expectations and said it expected higher synergies from its acquisition of Bombardier’s rail business to start flowing in from 2025-2026.

The company posted adjusted operating profit (EBIT) of 767 million euros ($808.03 million) for the fiscal year ended March 31, up from analysts’ average estimate of 757 million euros in a company-compiled consensus.

Its order backlog at the end of the period stood at 81.01 billion euros, compared with 74.54 billion a year earlier.

“Our fiscal year results are fully in line with our objectives, both in terms of financial and operational performance,” Chairman and Chief Executive Officer Henri Poupart-Lafarge said in a statement.

Although strong growth in Europe fuelled the profit beat, Alstom continued to foot the bill of assimilating challenging projects costs it inherited after buying Canadian Bombardier’s rail unit last year, holding its cash flow in the red.

The Paris-based firm, which makes trains and signalling systems for urban and regional rail networks, recorded positive free cash flow in the second half of the year but outflow for the full year at 992 million euros.

Alstom now expects to deliver 400 million euros in cost synergies from the acquisition in fiscal 2024-2025 and raised the annual synergy estimate to 475-500 million euros from 2025-2026 onwards.

France’s high-speed TGV trains maker posted a 441-million-euro impairment charge from its 20% stake in Russian locomotives and rail equipment provider Transmashholding that sent its adjusted net income into negative territory.

French financial news website BFM Business reported on Wednesday, citing sources close to the group, that Alstom was in talks with Russian oligarchs to sell the minority stake.

The group plans to propose a dividend of 0.25 euros per share.

($1 = 0.9492 euros)

(Reporting by Juliette Portala, editing by Milla Nissi)