October 05, 2023: Shares of French train maker Alstom plunged by as much as 38% on Thursday, October 5, 2023, after the company slashed its full-year free cash flow guidance by over 50%. The warning wiped out over $3 billion in market value.
Alstom blamed the shortfall on order delays and production ramp-up issues. The company now expects a free cash flow outflow of 500 million to 750 million euros in the full year, down from its previous guidance of a positive 200 million to 300 million euros.
The warning raised concerns about Alstom’s debt levels and ability to generate cash. The company’s net debt stood at 4.4 billion euros at June 2023.
Alstom’s chief financial officer, Bernard Delpit, said the company is improving its cash flow performance, including reducing costs and accelerating customer payments. However, he said the company expects to return to positive free cash flow in the 2024-25 financial year.
Alstom’s cash flow warning has several implications for businesses, consumers, and investors.
Alstom’s cash flow warning may affect businesses operating in the rail industry. For example, businesses that supply goods and services to Alstom may need more time to receive payments.
Consumers are unlikely to be directly affected by Alstom’s cash flow warning. However, the warning could indirectly impact consumers if it leads to delays in the delivery of new trains or other rail projects.
Investors in Alstom stock should be aware of the potential impact of the cash flow warning on the company’s financial performance. The warning could lead to increased volatility in Alstom stock and make it more difficult for the company to raise capital.
Alstom’s cash flow warning is a significant development for the company and its investors. The warning raised concerns about Alstom’s debt levels and ability to generate cash. Businesses, consumers, and investors should be aware of the potential impact of the warning.
Alstom is one of the world’s largest train makers. The company supplies trains to several countries worldwide, including France, the United Kingdom, and the United States.
The company’s cash flow warning shows the challenges facing the rail industry. The industry is facing rising costs and supply chain disruptions. In addition, the industry is facing competition from other modes of transportation, such as air travel and buses.
Overall, Alstom’s cash flow warning is a negative development for the company and its investors. The warning raised concerns about Alstom’s financial performance and could make it more difficult for the company to raise capital.