(News Bulletin 247) – The railway equipment manufacturer published its half-year accounts on Wednesday with cash generation well above expectations. The industrial group also clarified its outlook for its entire 2022-2023 financial year.
Alstom continues to make good progress on its financial trajectory. The railway equipment manufacturer unveiled this Wednesday the half-year accounts for its 2022-2023 financial year ending next March, which on the whole clearly exceeded analysts’ expectations.
Order intake stood at 10.07 billion euros, up 4% year-on-year as reported and down 1% like-for-like, but above the 9.6 billion euros expected on average by analysts.
Revenue rose 5% organically to 8.05 billion euros, while adjusted operating income rose 18% to 397 million euros. The corresponding margin was established at 4.9%, whereas the consensus was counting on 4.8%.
The group posted a net loss for the period of 26 million euros, due to accounting items related to the amortization of the acquisition of Bombardier Transportation in January 2021. Adjusted net income stood at 179 million euros against 172 million euros a year earlier.
Encouraging cash generation
But the market’s attention is not so much on the income statement as on cash generation, in these capital-intensive industrial project management businesses.
This is all the more so since the group is still in debt – net debt stood at 2.3 billion euros at the end of September against 2.1 billion at the end of March – and must demonstrate its ability to free up cash to maintain the market confidence and its financial rating. Moody’s also confirmed on Wednesday the group’s “Baa2” rating (the second notch in the investment category) and the negative outlook associated with this rating, after the publication of the half-year accounts.
Alstom’s first half is traditionally marked by seasonal effects which penalize cash. In the end, however, the group only burned 45 million euros, while analysts on average expected a cash consumption of 179 million euros, almost four times more.
“As expected, cash generation was notably negatively impacted by 381 million euros of working capital consumption. […] from ongoing project stabilization efforts, working capital phasing and industrial ramp-up,” the company explained.
Stifel believes that the first half cash generation “is encouraging” given “that the first half of the year tends to be weaker due to seasonality effects”.
Goals above expectations
“Our first-half results are solid, we are totally in line with our trajectory,” said Henri Poupart-Lafarge – who has just won the BFM Award for international conquest – during a conference with analysts. .
On the strength of these satisfactory half-year results, Alstom has given quantified objectives for the whole of its financial year in terms of margins and cash flow. The group thus anticipates an adjusted operating margin of between 5.1% and 5.3%, while the generation of free cash flow is expected between 100 million and 300 million euros. UBS stresses that this outlook is above consensus expectations.
These results are well received on the Paris Stock Exchange where the Alstom share climbs 7.5% to 25.6 euros around 4 p.m., signing by far the best performance of the CAC 40.