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The value of the day in Paris Alstom: annual accounts in the red

(AOF) – The session is particularly volatile for Alstom. If the railway giant won up to 9% at the start of the morning, it now drops by 6.73% to 21.49 euros per share. The group unveiled annual results broadly in line with expectations, but they nevertheless remain in the red. In addition, investors are still worried about the costs associated with the integration of Canadian Bombardier Transportation, as well as the future of the 20% stake in the Russian company TMH.

In its 2021-2022 financial year (ended at the end of March), Alstom published an adjusted net loss of 173 million euros, compared to a net profit of 301 million euros in the previous financial year. The railway specialist is penalized by an impairment charge linked to its stake in the Russian TMH. Before this impairment, adjusted net income amounted to €268 million.

For its part, adjusted operating income amounted to 767 million (+19% over one year), representing a margin of 5% (against 7.3% a year earlier).

For its part, free cash flow remains in the red at -992 million euros, against -703 million euros last year. It is still affected by the heavier-than-expected integration costs of Canadian Bombardier Transportation. However, the consensus was expecting -1.2 billion euros and cash flow became positive again during the second half of the year (469 million euros).

As for turnover, it reached 15.47 billion euros, up 76% on a reported basis and 11% on a proforma basis. The group has won significant contracts in Europe but also in Latin America, Taiwan and Australia.

In total, the order book stands at a historic level of 81 billion euros, up 9% on a reported basis.

“Our annual results are fully in line with our objectives, both in terms of financial and operational performance,” said Henri Poupart-Lafarge, CEO of Alstom.

Given these elements, the group will propose the payment of a dividend of 0.25 euro per share, stable compared to the previous financial year.

Regarding its outlook for its 2022-2023 financial year, the group is counting on an increase in sales; gradual growth in adjusted operating margin compared to fiscal year 2021-2022; and free cash flow generation.

Alstom reports that the current economic and political context creates uncertainties on its operational activities. In particular, inflation will weigh to some extent on current year profitability, and shortages of electronic components could create pressure on deliveries.

Finally, the medium-term objectives are confirmed, with synergies revised upwards to 475-500 million euros from 2025-2026.

As a first approach, UBS maintained its Buy recommendation and its target price of 44 euros on Alstom shares.

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