Why Alstom derails on the stock market
Alstom collapses on the stock market after financial forecasts. All the numbers of the crisis of the French train manufacturer (but well rooted in Italy)
Alstom, the French industrial group specializing in the construction of trains ( Italo , for example, uses high-speed AGV models) and railway infrastructure, lost up to 37 percent today on the Paris stock exchange. This is due to cash flow, which the company expects to be strongly negative for the current year, contrary to previous estimates of a "significantly positive" result.
ALSTOM DOES BADLY IN THE EUROPEAN INDEXES
Alstom recorded the worst performances in the CAC 40, the most important stock index on the French stock exchange, and in the STOXX Europe 600, which brings together six hundred of the main European companies with the highest market capitalisation.
ALL ALSTOM NUMBERS
In the 2022-2023 financial statements, Alstom's free cash flow will be between -500 million euros and -750 million. “The acceleration of production, the delay of a rolling stock program in the UK and the postponement of some orders,” explained the group, resulted in free cash flow of -1.1 billion euros in the first half of the financial year, which ended on August 30th. Market expectations were much better.
In the first fiscal semester, according to preliminary data, Alstom recorded a turnover of 8.3 billion (compared to 8 billion in the same period of the previous year), an operating margin of 5.2 percent (compared to +4.9 percent) and new orders for 8.4 billion (last year they were worth 10.1 billion). However, the company confirmed the estimate for the increase in revenues above 5 percent and the medium-term objectives announced in May.
ALSTOM'S NUMBERS IN ITALY
Alstom's performance is of interest for Italy because the company has a significant manufacturing presence in our country, with nine factories – in Savigliano, Vado Ligure and Sesto San Giovanni, for example – and over 3,500 employees.
In addition to Italo, Alstom has important relationships with Trenord, the Trenitalia and FNM Group company that deals with rail transport in Lombardy, to which it will supply fourteen new hydrogen trains .
THE STATEMENTS
“We are committed to a strong acceleration, particularly in the rolling stock business. This, together with the projects that are finishing at the same time, is weighing on cash flow in this first half of the year,” the group said, also speaking of supply chain problems, rising inventories and delays to program completion. Aventra in the United Kingdom (concerns the construction of electric-powered trains).
WHAT THE ANALYSTS THINK
According to analysts of the financial company ODDO BHF, who lowered Alstom's target price from 34 to 32 euros, Alstom's warning "is heavy and not the first, and does not help to nourish confidence in the group's ability to generate cash free flow over time”.
The Swiss UBS, however, confirmed the price target of 33.5 euros and the buy recommendation.
This is a machine translation from Italian language of a post published on Start Magazine at the URL https://www.startmag.it/smartcity/alstom-crollo-borsa/ on Thu, 05 Oct 2023 14:04:03 +0000.