Alstom slides after free cash flow warning

Alstom shares tumbled on Thursday after it cautioned that free cash flow was set to turn negative this year due to a rolling stock program delay in the UK and order intake delays.

For FY203/24, the French train manufacturer guided to a range of negative free cash flow of €500m to €750m, having previously said it would be "significantly positive".

In its preliminary results for the first half, Alstom said free cash flow was negative €1.15bn, compared to negative €45m in the same period a year earlier.

Among the factors affecting free cash flow - aside from usual seasonality - Alstom pointed to a delay in completing the Aventra program in the UK, with completion now expected in the beginning of fiscal year 2024/25.

It noted a drop in the level of downpayments compared to the same period last year due to weaker-than-expected orders booked in the first half.

Alstom also pointed to a rise in the level of inventories. The strong growth of its backlog in the last two years resulted in a steep acceleration of the production ramp-up, exceeding 10% per year in average volume increase for its rolling stock activity, it said.

This, along with tight supply chain conditions, meant there was a "significant" increase in the level of inventories and contract assets built in order to avoid production disruption and delivery delays during the first half of the year, particularly in the Americas and in Europe.

At 1000 BST, the shares were down 35% at €14.02.