PARIS: Alstom shares plummeted on Friday (Apr 17) after the French train maker warned that “execution headwinds” had delayed deliveries to clients, forcing the group to abandon its profit and cash flow targets.
The company unveiled the setbacks late on Thursday while reporting a 4 per cent rise in sales for its financial year to end-March, but a dip in operating margins to around 6 per cent.
“In a business where rigorous planning and disciplined execution are essential, some large rolling-stock projects have progressed more slowly than anticipated, weighing on near-term margins and cash,” Alstom’s CEO Martin Sion, who took up his new post this month, said in a statement.
“We are therefore launching immediate actions to stabilise performance, while preparing deeper operational changes to restore sustainable execution, cash generation and profitable growth.”
Free cash flow dropped to around €330 million (US$389 million) for its full year, compared with €502 million the year before, and Alstom said it would not meet its goal of a total cash flow of €1.5 billion in the three years to March 2027.
It also said profit margins would not improve to 8-10 per cent next year as promised.
The financial warnings rattled investors, with Alstom shares dropping nearly 30 per cent to €16.13 on the Paris stock exchange.