Alstom withdraws three-year cash flow guidance, shares tank

(Sharecast News) - Alstom tumbled on Friday after the French train maker withdrew its three-year cash flow guidance as it said rolling stock projects were moving at a slower-than-expected pace.

The company's three-year cumulative €1.5bn free cash flow guidance over FY 2024/25 to FY 2026/27 was withdrawn. It also said the medium-term ambition of adjusted EBIT margin of 8% to 10% will no longer be met by FY 2026/27.

Alstom said full-year sales rose 4% to €19.2bn, with organic sales up 7%, in line with guidance.

The company manufactured 4,284 cars, down from 4,383 the previous year, mainly reflecting rolling stock projects moving at a slower-than-anticipated pace, prolonging the ramp-up phase, it said.

The adjusted EBIT margin was around 6%, down from 6.4% a year earlier and below the circa 7% previously guided. The order intake was €27.6bn, up 39% on the year and equivalent to a 1.4 book-to-bill ratio, in line with guidance.

Chief executive Martin Sion said: "As I start my role as group CEO, I am convinced Alstom is well positioned, with a €100 billion backlog and a supportive rail market. However, while the group delivered strong order intake and met its cash objectives in FY 2025/26, profitability fell short of expectations.

"In a business where rigorous planning and disciplined execution are essential, some large rolling-stock projects have progressed more slowly than anticipated, weighing on near-term margins and cash. We are therefore launching immediate actions to stabilise performance, while preparing deeper operational changes to restore sustainable execution, cash generation and profitable growth."

At 1530 BST, the shares were down 29% at €16.14.

Jefferies, which rates the shares at 'buy' with a €25 price target, said: "A disappointing FY update, while demand remains strong with a continued growing backlog at better margins, project execution is hampering the progress specifically at FCF, which remains the key for the investment case.

"It shows the complexity in the rail industry when it comes to homologation and working cap investments needed for larger contracts and new platforms, but also clearly room for operational and project execution improvement at Alstom, which will be the key focus for the new CEO, expected to provide an operational plan and new mid-term ambitions later this FY.

"We believe the balance sheet can withstand the weaker FCF near term including the large outflow in H1, with CFO pointing to stable to slight increase in net debt expected in FY27, but the margin of error is getting increasingly small."