On the occasion of its quarterly publication, the railway equipment manufacturer reaffirmed its objectives for 2025, and is confident after several difficult years. While the stock has increased by 77% in 2024, is all the good news in the prices?
The Alstom case is a very interesting case. Order books are full, the development of rail is being pushed by many governments to decarbonize transport, but the stock has experienced a chaotic stock market performance in recent years, often mentioned in these columns. The fault lies with the difficult integration of Bombardier, the weight of a high debt, and operational efficiency which leaves something to be desired. Alstom has burned 2 billion in cash over the last 4 years. Result, a stock price which plunges by 70% between the beginning of 2020 and mid-March 2024, the time of Alstom’s exit from the CAC 40.
The end clap for Alstom ? Not at all since since then Alstom has taken over… almost 70%. At this moment, I know that those who are the best at math will tell me that -70% followed by +70%, that is not a return to square one, but let us still salute this beautiful comeback. Indeed, thanks to a capital increase of 1 billion euros, a debt reduction plan and a valuation that is ahead of the curve, Alstom achieved the best performance in the SBF 120 in 2024.
A good quarter
The railway equipment manufacturer published on Tuesday an increase in turnover for the third quarter of its staggered financial year. Over the period from October to December, the group achieved a turnover of 4.67 billion euros (compared to a Factset consensus of 4.33 billion euros), up 9.8% at scope and rate. constant exchange rates.
If orders are down over a year, and below analysts’ expectations, this is part of Alstom’s strategy of prioritizing the quality of contracts over volumes. In fact, Alstom had inherited unprofitable contracts with the takeover of the Canadian Bombardier. This strategy is all the more relevant as the order book is already full. It reached 94.7 billion euros; which represents approximately five years of turnover.
-Encouraging prospects… but already in the prices?
Alstom’s outlook for 2025 is encouraging: sustained demand in particular for service and signaling activities, the end of the Bombardier integration and an order intake to turnover ratio greater than 1.
On a financial level, Alstom forecasts organic growth in turnover of 5%, a return to positive free cash flow, of around 300 to 500 million euros. And net debt should be more than halved at the end of 2025 compared to the end of 2024.
For the moment, Zonebourse analysts remain cautious and will be attentive to the execution risk, particularly with regard to the increase in rolling stock production. This will depend on Alstom’s ability to cope with the constraints on its supply chain. And recent years have shown us that many external shocks can undermine supply chains.
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