Alstom struggles for liquidity - investors cringe
TGV manufacturer Alstom is working hard to tackle its mountain of debt. This is to be reduced considerably over the next two years. To achieve this, the company is cutting its workforce and looking for new sources of income. This is not going down well on the stock market.
The rail technology company Alstom is stepping on the brakes. Faced with high debts, the company is cutting 1500 jobs and the dividend. The French train manufacturer announced that further steps are being examined, including the sale of assets, the issue of shares and share-like securities as well as a capital increase. The steps are causing horror on the market - the already battered share is going downhill. Since the beginning of the year, the shares have lost around 38 percent.
The measures are intended to help the TGV manufacturer achieve the medium-term profit and cash generation targets that the Group has set itself following the merger with Canadian rival Bombardier Transportation, which was completed in January 2021. In May, Alstom announced that the targets would be achieved a year later than previously planned, namely in the 2025/26 financial year. And in October, Alstom had withdrawn its annual cash flow forecast due to delays on a contract in the UK, casting doubt on its ambitions. "Alstom's negative free cash flow in the first half of the year is a clear signal for change," explained CEO Henri Poupart-Lafarge.
Corporate management to be restructured
Alstom also wants to restructure its management to improve accountability and financial discipline. The Board of Directors plans to propose the former Safran CEO Philippe Petitcolin as Director and later as Chairman. This would separate the position of Chairman from that of CEO. Poupart-Lafarge will retain the position of CEO.
Alstom wants to reduce its net debt by 2 billion euros by March 2025 from its current level of 3.4 billion euros. A plan to sell assets that has already been initiated could generate up to one billion euros. The Board will propose to shareholders that no dividend be paid for the 2024 financial year, Alstom announced. In March 2023, Alstom employed more than 80,000 people, according to its annual report.
Meanwhile, the Group returned to the black in the first half of the 2023/24 financial year and earned one million euros. In the previous year, a loss of 21 million euros was recorded. Turnover rose from just under 8.1 billion to more than 8.4 billion euros. Incoming orders amounted to a good 8.5 billion euros and the adjusted return on sales before interest and taxes was 5.2 percent. Both were in line with the preliminary figures. Alstom confirms its outlook for the financial year ending in March.
Alstom's quarterly figures have shown a challenging period, with the company reporting a net debt of 3.4 billion euros. The company is aiming to reduce this debt by 2 billion euros by March 2025, in part by selling assets and temporarily suspending the dividend.
Despite these efforts, Alstom's shares have plummeted by around 38% since the beginning of the year, reflecting investor concerns about the company's financial stability and its ability to meet its medium-term targets.
Source: www.ntv.de
