Alstom S.A.

Alstom reported FY25-26 orders of EUR 27.6 billion, implying a book-to-bill of 1.4. FY25-26 sales were EUR 19.2 billion, up 4% year on year, with organic sales growth of 7%. Adjusted EBIT margin was around 6%, and free cash flow was around EUR 330 million. The group produced 4,284 cars, down 2% year on year. Net debt was around EUR 400 million at year-end, and gross cash was EUR 2.3 billion. For FY26-27, management guided to book-to-bill above 1, organic sales growth around 5%, and adjusted EBIT margin around 6.5%. They said the margin improvement should come from a rebound in gross margin, with gross margin in the backlog currently at 18%. Free cash flow is expected to be positive, but management warned that CapEx for services growth and trade working capital changes will weigh on cash versus prior plans.

Martin Sion’s tone was blunt and corrective rather than celebratory. He said the current financial result and cash generation are below what should be expected from a market leader with a EUR 100 billion backlog, and emphasized that planning discipline and execution quality are not strong enough. He said the problems are concentrated in rolling stock, especially new-product ramp-up and homologation phases, and that he is reviewing the portfolio, industrial footprint, and product/commercial strategy. His message was that restoring rolling stock performance is achievable, but only through deep operational changes and tighter day-to-day control.

Bernard Delpit said FY25-26 orders were EUR 27.6 billion and sales EUR 19.2 billion, with organic sales up 7% but adjusted EBIT margin only around 6%. He attributed the margin shortfall to slower-than-expected execution on some large rolling-stock projects, late-stage project headwinds, and higher R&D expenses, partly offset by SG&A discipline and contract execution. Free cash flow was around EUR 330 million, supported by down payments and favorable trade working capital, but he said he is not reconfirming the cash plan for next year. He said liquidity remains solid, with EUR 2.3 billion gross cash, EUR 2.5 billion and EUR 1.75 billion RCFs, and a EUR 2.5 billion commercial paper program; he expects net debt to be stable or slightly higher next year.

Analysts focused on whether the issues were isolated to a few projects or more widespread, why cash outflow could be about EUR 1.5 billion in H1 yet full-year cash is still positive, and whether the balance sheet is strong enough. Management said there are several projects in difficulty, but the main issue is broader execution in rolling stock, especially ramp-up phases, not just one or two projects. On cash, Delpit said H2 is expected to be very strong and that seasonality, down payments, and trade working capital should drive the full-year positive outcome. On balance sheet and contract assets, he said the balance sheet is strong and robust enough, credit metrics remain in line with prior years, and there is no haircut on contract assets.