By In a recent announcement, French trainmaker Alstom revealed its preliminary first-half results, which have caused a decline in its free cash flow. Consequently, the company’s shares experienced a significant drop in early trading on Thursday.
According to Alstom’s report, there has been a cash outflow of €1.15 billion ($1.21 billion) in the first six months of the fiscal year, representing a considerable increase compared to the €45 million outflow recorded during the same period last year. This unexpected outcome is expected to result in a net cash outflow ranging from €500 million to €750 million by the end of Alstom’s fiscal year in March.
Previously, the company had anticipated “significantly positive” free cash flow generation at the conclusion of its first quarter, increasing the shock and negatively impacting management’s credibility. Deutsche Bank analyst Gael de-Bray issued a research note expressing concern, stating that Alstom may end the year with approximately €1 billion more debt than previously forecasted. This assessment places the company’s investment grade rating at risk and suggests an increased likelihood of a capital increase.
As Alstom aims to improve its cash position in the second half of the year, investors remain cautious about future prospects, questioning whether the trainmaker will successfully navigate these challenges.
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