No dividend
Alstom widens loss – capital increase is intended to reduce debt
May 8, 2024, 1:56 p.m
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The world’s second largest train manufacturer is saddled with a lot of debt after taking over competitor Bombardier. It is expected to become significantly smaller in the coming years. To do this, the French are raising new funds and divesting themselves of business areas. Operations are currently going solidly.
The French train manufacturer Alstom slipped deeper into the red last year despite higher revenues. As the company announced, the loss increased to 309 million euros in the financial year at the end of March. The year before, the deficit was 132 million euros. Revenue increased by 6.7 percent to 17.6 billion euros in the same period. However, 8.4 percent fewer orders came in. The company estimated their value at almost 19 billion euros. Adjusted earnings before interest and taxes – the company’s most important key figure – rose by 17 percent to 997 million euros. The margin improved from 5.2 to 5.7 percent.
Nevertheless, the group was able to score points with investors. Because Alstom is now tackling its high mountain of debt. This had accumulated for the world’s second largest train manufacturer behind the Chinese state-owned company CRRC through the takeover of Bombardier’s train division in 2021. Net debt recently rose to almost three billion euros. By March 2025, however, it should be reduced by a third.
To this end, the TGV manufacturer is planning sales of around 700 million euros and a capital increase of around one billion euros. This should be carried out in September at the latest. The two main shareholders CDPQ and Bpifrance, with shares of over 17.4 percent and 7.5 percent respectively, have agreed to participate, it said. In April, Alstom announced the sale of its railway signaling technology division in North America to Knorr Bremse for 630 million euros. Finally, hybrid bonds worth more than 750 million euros are planned.
“The group is benefiting from solid operational progress over the past three years and is launching new initiatives to improve its industrial performance and reduce overhead and indirect procurement costs,” said CEO Henri Poupart-Lafarge.
Alstom does not want to propose a dividend for the past financial year. For the current financial year, the company expects an adjusted operating margin of around 6.5 percent and around 5 percent organic sales growth.
The plans to reduce debt are particularly well received on the stock market. With an increase of almost five percent at times, the papers were well ahead in the Stoxx 600 index. The new cash flow forecast also met with recognition. Citi says that this could reduce debt to net zero by 2026. There are also concerns in the retail sector about reports of up to 10,000 layoffs in Germany. “That would fit in with a cost-cutting plan,” says one dealer.