INDUSTRY: Alstom must find around EUR 2bn by September 2027 to reduce its debt after Coradia Max delays and problems on other German projects drained its cash. It now expects an adjusted operating margin of around 1% this financial year, down from around 6.5%.
The French manufacturer announced the new outlook on 2 November, a day after a board meeting, together with preliminary and unaudited figures for the half year to 30 September. It now expects a cash outflow of EUR 1.5bn this year. It also expects to build around 4,000 cars instead of 4,400–4,500, and organic sales growth of low to mid single digits rather than around 5%.
The board is reviewing all organic and inorganic options to reduce debt, Alstom said. Its statement named no specific measures.
Coradia Max and Germany
Alstom paused Coradia Max production in the first quarter of its financial year, April to June, to fix problems on the double-deck regional train. It cites difficulties getting the train into series production, a longer approval process, new technical issues and additional testing requirements. Other projects “executed for, and from, Germany” were also hit.
The adjusted operating margin for the first half was around minus 4%, against 6.4% a year earlier, mainly because of margin adjustments on the German projects. Car production fell 8% to 1,860. Free cash flow was minus EUR 1.25bn, and net debt rose to EUR 1.1bn from EUR 0.4bn at the end of March.
Alstom did not name the customers. Its German Coradia Max customers include Baden-Württemberg, Lower Saxony and Bremen, whose 34 trains are now due from 2028, and Schleswig-Holstein, where Alstom told the news agency dpa in October that its 42 trains would also come from 2028.
Orders up, deliveries down
Alstom is still taking more orders than it turns into sales. It booked EUR 11.0bn in the first half, up 5%, against sales of EUR 9.3bn. The full-year cash shortfall comes mainly from milestone payments that move into later years as approval and entry into service slip, including on Coradia Max, the company said.
Alstom is reviewing how the group is organised and where it builds its trains, with decisions due by early 2027. It has not mentioned closures. It has already agreed in principle to hand its Kassel locomotive plant to Rheinmetall.
Chief executive Martin Sion, in the post since April, expects performance to recover from the 2027/28 financial year, with the margin moving towards 8–10% over the medium term. The shareholders represented on the board support the group and are working with management on the review, and the board is committed to keeping an investment-grade rating.
Full first-half results are due on 17 November, and a capital markets day in the second quarter of 2027.