Rail News

May 12 , 2022

Train maker Alstom's shares slide as cash flow divides

May 11, 2022 (France)

  • Company posts FY EBIT of 767 mln euros vs 757 mln consensus
  • End-March record high order backlog up 9% at 81.01 bln euros
  • FY adjusted net loss hits 173 mln euros on Russia impairment

Alstom's (ALSO.PA) shares slipped sharply on Wednesday, erasing earlier strong gains as the French train maker's comments on cash flow generation and guidance divided the market.

The stock climbed 9% after the market opened, before plummeting nearly 12%. By 1229 GMT, shares were down 9.8%.

"There is a strongly bifurcated opinion on the mid-term prospects for Alstom, and specifically the group's ability to generate cash and strengthen the capital structure," Kepler Cheuvreux analyst William Mackie said.

France's high-speed TGV trains maker reported a positive free cash flow of 469 million euros ($494.7 million) in the second half of its fiscal year ended March, which Credit Suisse found "most reassuring".

However, inherited costs from assimilating legacy projects after buying Canadian Bombardier's (BBDb.TO) rail unit held cash flow for the whole fiscal year in the red at 992 million euros.

"We have settled almost all the disputes ... and we have now a risk portfolio that is much more limited," Chairman and Chief Executive Officer Henri Poupart-Lafarge told reporters.

Alstom said it expected to record 400 million euros in cost synergies from the acquisition during the fiscal year 2024-2025 and 475 million-500 million annually from 2025-2026 onwards.

But Kepler's Mackie said the company had been unable to offer clear cash flow guidance for the current year.

"The market was clearly hoping for more granularity on free cash flow, including seasonality," Jefferies wrote.

Alstom said it planned to propose a dividend of 0.25 euros per share which, according to JPMorgan, should ease investors' concerns over the need for a capital increase.

French financial news website BFM Business reported on Wednesday, citing sources close to the firm, that Alstom was in talks with Russian oligarchs to sell its 20% stake in Moscow-based Transmashholding, after taking a 441-million-euro hit in the wake of the conflict in Ukraine.

"We will be opportunistic depending on events," Poupart-Lafarge said on the recent geopolitical concerns.

($1 = 0.9480 euros)


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