Alstom Misses Profit Targets Amid Rolling Stock Delays
Event summary
- Alstom reported record order intake of €27.6 billion for FY 2025/26, up 39% YoY, with a book-to-bill ratio of 1.4.
- Adjusted EBIT margin fell to ~6%, below the ~7% guidance, due to slower-than-expected rolling stock project execution.
- Free Cash Flow reached ~€330 million, within the guided range of €200-400 million, despite working capital headwinds.
- Alstom revised its preliminary outlook for FY 2026/27, targeting an adjusted EBIT margin of ~6.5% and positive Free Cash Flow.
The big picture
Alstom's FY 2025/26 results highlight the challenges of integrating large-scale rolling stock projects, a common issue in the rail industry. The company's revised outlook for FY 2026/27 suggests a focus on stabilizing operations and improving execution, which will be critical in a market where disciplined project management is essential. The strategic shift towards operational transformation indicates a recognition of the need for deeper changes to sustain long-term growth.
What we're watching
- Execution Risk
- How Alstom's operational transformation plan will address delays in rolling stock projects and restore profitability.
- Profitability Challenges
- Whether the revised adjusted EBIT margin target of ~6.5% for FY 2026/27 is achievable given current execution headwinds.
- Cash Flow Management
- The pace at which Alstom can improve Free Cash Flow generation amid working capital challenges.
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