Alstom, the French industrial group specialized in train construction (Italo, for example, uses the high-speed Agv models) and railway infrastructure, lost up to 33 percent today on the Paris stock exchange, then stabilized at a price of about 16.4 euros per share (-28.2 percent).
The cause of the crash was the revision, the day before, of the three-year estimates on free cash flow, an indicator particularly relevant for investors because it measures a company’s liquidity after covering operating expenses and investments. As explained by analysts from Citi and JpMorgan, the market expected a negative announcement from Alstom, but not of such magnitude.
ALSTOM WITHDRAWS THE FREE CASH FLOW FORECAST
Alstom has withdrawn the free cash flow target of 1.5 billion euros for the three-year period ending with the 2026-2027 fiscal year. It now expects, on the contrary, a cash outflow of about 1.5 billion in the first quarter of the fiscal year that began last April 1, then returning to positive flow by the end of the year.
PROFITABILITY FORECASTS CUT
In addition to cash, Alstom also revised down its operating profitability. The adjusted Ebit margin – which indicates, simply put, the profit generated for every euro of revenue – for the period ending in March 2027 was reduced to 6.5 percent, compared to the previous range of 8-10 percent.
THE WORDS OF THE CEO
The revisions signal problems with some projects related to trains and railway rolling stock.
On this matter, CEO Martin Sion said he is convinced that Alstom “is well positioned, with an order book of 100 billion euros and a favorable railway market. However,” he added, “profitability has been below expectations. In a sector where rigorous planning and disciplined execution are essential, some major rolling stock projects have proceeded more slowly than expected, impacting margins and short-term liquidity.”
WHAT ALSTOM DOES IN ITALY
Alstom’s performance is of interest to Italy because the company has a significant production presence in our country, with nine plants – in Savigliano, Vado Ligure, and Sesto San Giovanni, for example – and over 4,000 employees. Alstom’s industrial plan foresees, by 2026, investments totaling 63 million euros in Italian factories.
Besides Italo, Alstom has important relationships with Trenord, the Trenitalia and Gruppo Fnm company responsible for railway transport in Lombardy.
