April 17 (Reuters) - Alstom shares are expected to fall between 10% and 15% on Friday, traders said, after the train maker pulled its medium-term forecast and reported preliminary results for the 2025
Alstom shares plunge 30% as French rail giant battles cash flow worries
Alstom Faces Renewed Financial and Operational Challenges
By Jakob Van Calster, Danilo Masoni and Hugo Lhomedet
April 17 (Reuters) - Alstom's shares slumped 30% on Friday after the French train maker scrapped its three-year cash flow forecast, its second major cash warning since late 2023 as its new CEO looks to get to grips with delayed projects.
Project problems have hit Alstom's near-term margins and cash flow, fuelling fears it may need to raise capital and that its credit rating could come under pressure.
The 10-billion-euro company has lost around half its market value since late February, after previously recovering from its 2023 warning. The stock is now worth roughly a third of its early-2021 level.
Profitability and Cash Flow Concerns
In preliminary results late Thursday, Alstom cut its 2026/27 profit margin target and withdrew a cumulative free cash flow target of 1.5 billion euros ($1.8 billion) for the three years to the end of that financial year.
It said profitability had been hit by "some large rolling-stock projects (progressing) more slowly than anticipated".
Market and Analyst Reactions
"While there was already investor concern following the pre-close message earlier this month that new CEO Martin Sion may withdraw guidance, the preliminary outlook is worse," Citi said in a note.
Sion, appointed just two weeks ago, said in a call that the group faced execution challenges across several projects. Barclays analysts estimated that at least a dozen projects were affected by multi-year delays.
Second Cash Warning in Three Years
Investor Sentiment and Short Interest
Traders said the warning revived talk that Alstom could need to strengthen its balance sheet, adding that Sion may not yet have had time to uncover all underlying issues. Some analysts, however, dismissed speculation of a cash call.
"We do not expect Alstom to undertake additional liquidity measures such as raising equity," Citi analysts said.
Alstom is among the most shorted stocks in the pan-European STOXX 600 index, with short interest close to 10%, according to Markit data compiled by Mediobanca.
Alstom declined to comment.
By midday, the shares were on track for their worst day since October 2023, when a previous cash flow setback sent the stock more than 37% lower.
Credit Rating and Default Risk
Credit Default Swaps Movement
Alstom's five-year credit default swaps jumped around 20 basis points to the mid-90s, still below 2023 levels when balance-sheet concerns pushed them to around 250 basis points, LSEG data showed. Higher CDS levels signal a greater risk of default.
Potential Credit Downgrade
Barclays warned the company's credit rating could be at risk of a downgrade ahead of bond refinancing due in October 2026, while pointing to its experienced management team, strong order intake, solid liquidity and access to short‑term funding.
($1 = 0.8490 euros)
(Reporting by Jakob Van Calster, Danilo Masoni, and Hugo Lhomedet in Gdansk. Editing by Milla Nissi-Prussak and Mark Potter)
