By John Meyer, consultant in financial affairs – Eurasia Business News, October 5, 2023

French Alstom’s shares fell sharply on October 5, 2023, after the company slashed its free cash flow target. Stock hit its lowest since 2005 at less than 14 euros this Thursday, at 13.39 euros.

The company’s worst one-day share fall in more than 20 years wiped some 3 billion euros off its market value, following the announcement, the day before, of cash flow difficulties in the first half of the year, which will continue for the rest of the delayed financial year (April 2023-March 2024). 

The French group’s shares were down 38% on Thursday afternoon trading in Paris. Alstom pinned most of the blame on a big increase in inventory. The preliminary first-half results showed cash woes, which led to the tumble in the company’s shares.

The adjusted operating margin is expected to be 5.2% for the 1st half of the fiscal year, compared to 4.9% in the 1st half of the previous year, in line with the trajectory. 

At the end of a Board of Directors meeting held on Tuesday and Wednesday under the chairmanship of its CEO, Henri Poupart-Lafarge, Alstom announced a turnover of €8.3 billion for the first half of the year (+6.5%). But above all, it revealed that it had recorded a negative free cash flow of 1.15 billion euros in the first half of the year; It forecasts that it will amount to between −500 million and −750 million for the year as a whole.

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“We confirm our outlook for an adjusted operating margin of approximately 6% for the fiscal year 2023-2024,” the group said. But it is above all the announcement of free cash flow that does not pass on the stock market: it stands at -1.15 billion euros for the 1st half of this fiscal year, against -45 million euros in the 1st half of the previous year. Free cash flow for the 2023-2024 fiscal year is now expected in a range between -500 and -750 million, whereas it had previously been announced as being ‘significantly positive’…“, said the group.

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