Alstom Posts Record Orders but Struggles with Execution, Targets 8-10% EBIT Margin
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.
- Sales grew 3.7% to €19.2 billion, but adjusted EBIT margin declined 30bps to 6.1% due to execution challenges on rolling stock contracts.
- Net profit more than doubled to €324 million, driven by strong performance in joint ventures and reduced costs.
- Free cash flow was €336 million, in line with guidance despite working capital headwinds.
- Alstom aims to improve execution, simplify processes, and target an adjusted EBIT margin of 8-10% over time.
The big picture
Alstom's fiscal year 2025/26 results highlight a tension between strong commercial performance and operational execution challenges. The company's record order intake reflects robust demand for sustainable mobility solutions, but profitability was impacted by delays and inefficiencies in large rolling stock contracts. Alstom's strategic focus on improving execution, simplifying processes, and targeting higher margins aligns with broader industry trends toward operational efficiency and digital transformation in rail transportation. The company's ability to convert its €104 billion backlog into sustainable cash flow and profitability will be a key driver of its long-term success.
What we're watching
- Execution Risk
- Alstom's ability to improve project management and coordination across engineering, supply chain, and manufacturing will be critical to restoring margins.
- Cost Optimization
- The company's focus on a leaner cost base and accelerated procurement savings will determine its ability to meet medium-term profitability targets.
- Market Momentum
- Sustaining strong order intake across Europe, the Americas, and Asia/Pacific will be key to maintaining backlog growth and future sales visibility.