(BFM Bourse) – The railway equipment manufacturer experienced a black Thursday on the stock market, weighed down by a heavy warning on its cash flow. But another company did worse, just barely, in the late 1990s.
Alstom’s fall on the stock market takes us back to times that those under 25 cannot experience. The railway equipment manufacturer plunged 37.58% on Thursday on the Paris Stock Exchange, a dizzying descent.
The market massively sold the company’s shares following a new disappointment on the cash flow. The group plans to burn between €500 million and €750 million in cash flow in the current financial year, following a surprising outflow of more than €1 billion in the first half.
Alstom’s stock market performance has experienced several accidents in recent years, many of which relate to its difficulty in satisfying the market on cash generation. The group thus seems to have “a seemingly endless free cash flow problem”, asserts Deutsche Bank.
“Unexpected shocks of a billion euros on FCF (free cash flow) seem to be becoming a bad habit at Alstom,” points out Stifel. The bank is struggling to accept one of the group’s explanations, namely that on stocks. Alstom gave as the first reason for its poor performance an “overstocking” of raw materials and components which was not in line with its production trajectory, which was less steep than anticipated by the company. “It is difficult to understand why inventories can increase so massively in an improving supply chain environment,” she notes.
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SES-imagotag did worse on the SBF 120 this year
But let’s return to Alstom’s stock market plunge. Such a variation over a day on the CAC 40 mobilizes the memories of specialists. Even when the pandemic broke out, no decline of this magnitude was observed. The car manufacturer Renault thus lost 21.9% on March 12, 2020. A fall half as small (or almost) as that of Alstom.
Let us specify that on the SBF 120 (the CAC 40 to which we add 80 values), SES-imagotag had for its part suffered a plunge of 58.3% in June, after the short seller Gotham City Research carried out an attack which will be moreover quickly mistreated by the good defense of the company.
But in the stock market elite, almost no decline as strong as that of Alstom has occurred in the history of the CAC 40. As noted by our colleague from BFM Business, Antoine Larigauderie, only one company has done “worse “: Alcatel, September 17, 1998.
The fall then reached 38.4%, according to a paper at the time in the newspaper Le Monde. Les Echos for their part notes, in a 2017 article, that this plunge by the former telecoms networks specialist was the strongest in a session for the CAC 40 since at least 1993. Other titles have experienced hyper falls. pronounced, such as Sodexo (-30% in September 2002, according to the economic daily) or Dexia (-28.5% at the end of September 2008)
But therefore (almost) no company has “beaten” Alstom. Concerning Alcatel, the fall of the stock in September 1998 was then due to comments made by its CEO, Serge Tchuruk, one of the great captains of French industry. Presenting his results for the first half of 1998, the boss had issued a warning on results (definitely) referring to an operating result up compared to 1997 but “less strong than expected”, explains Le Monde. Investors then pointed out what they considered to be a lack of transparency on the part of the CEO.
Julien Marion – ©2023 BFM Bourse