The French railway equipment company Alstom has suffered a sharp punishment on Monday on the stock market, with a plunge of more than 25% after lowering its forecasts for the current fiscal year as a result of profitability problems recorded in the first half of the year.
At 14:53 hours, Alstom shares on the Paris Stock Exchange were trading at 11.60 euros, which implies a decline of 26.63% compared with the closing price of the previous session.
The company has indicated that the adjusted operating margin will move around 1%, well below the 6.5% it previously anticipated, while train production will remain at some 4,000 units, compared with the initially contemplated range of 4,400-4,500.
Likewise, projections for growth in turnover have been cut and free cash flow has gone from being "positive" to showing a hole of 1.5 billion euros.
Among the reasons for this downgrade of targets, Alstom has referred to delays linked to certification processes and cost overruns on the Coradia Max train platform. In addition, the company has detected that "other projects executed for and from Germany have also been affected", which indicates that execution difficulties affect a broader range of group contracts.
In the first half-year, free cash flow has recorded a negative balance of 1.248 billion euros, "which reflects seasonality", although the outlook for the year as a whole points to an additional deterioration.
The half-year accounts show the impact of these incidents, with a car production of 1,860 units, "below the expected trajectory", and an operating margin in negative territory, around -4%. The group's revenue has risen to 9.3 billion euros, 3% more than in the same period of the previous year, "including organic growth of 2%", although this increase has not been enough to offset the operational problems.