Investing.com — plunged sharply on Friday after the French train maker withdrew its medium-term free cash flow (FCF) target and reported disappointing preliminary results for fiscal year 2025/26.
The stock was down about 28% at 16.5 euros, its lowest point since mid-2024.
The company said it now expects to generate “positive” free cash flow in fiscal 2026/27, scrapping a previous commitment to deliver €1.5 billion in cumulative FCF over a three-year period.
It also flagged a cash outflow of around €1.5 billion in the first half of the year that began on April 1, well above analyst expectations of around €560 million.
Alstom’s medium-term ambition of an adjusted EBIT margin of 8-10% will also no longer be met by FY2026/27, the company said.
Alstom on Thursday pre-released its fiscal 2025/26 results, with fourth-quarter orders coming in at €7.6 billion, nearly 30% ahead of Visible Alpha consensus, according to Jefferies. This pushed the full-year book-to-bill ratio to 1.4x and the backlog above €100 billion for the first time.
Full-year sales grew 4%, with organic growth of 7%, also beating expectations.
Yet, the full-year EBIT margin came in at around 6%, roughly 100 basis points below the company’s own guidance of approximately 7%, with analysts pointing to execution issues and a slower-than-expected ramp-up of new projects.
Looking ahead, Alstom guided for organic growth of around 5% in fiscal 2026/27 and an EBIT margin of 6.5%, both below consensus estimates of 5.4% and 7.1%, respectively.
“A disappointing FY update, while demand remains strong with a continued growing backlog at better margins, project execution is hampering the progress specifically at FCF, which remains the key for the investment case,” Jefferies analysts led by Lucas Ferhani said in a note.
“We believe the balance sheet can withstand the weaker FCF near term including the large outflow in H1, with CFO pointing to stable to slight increase in net debt expected in FY27, but the margin of error is getting increasingly small,” they noted.