Alstom shares plunge after it cuts guidance, plans overhaul in second warning

Alstom’s anticipated positive free cash flow was revised to an expected cash burn of €1.5 billion (S$2.1 billion).

Alstom cut its full-year guidance and announced a deep overhaul after delays in key German projects led to penalties and hurt margins, plunging the French train maker into a fresh crisis.

Its stock slumped as much as 27% in early Paris trading on Nov 2, after the company slashed its profit margin, cash flow and train car production targets for the fiscal year. The shares have lost more than half of their value in 2026.

Alstom now expects an adjusted Ebit margin of about 1% for the fiscal year, down from 6.5% previously, it said on Nov 2.

An anticipated positive free cash flow was revised to an expected cash burn of €1.5 billion (S$2.1 billion).

Alstom also downgraded its train car production target for the period to about 4,000 units from as many 4,500.

The latest warning is tied to the Coradia Max orders, a series of projects including regional trains ordered by German states such as Baden-Wurttemberg and Lower Saxony that were meant to be the company’s biggest ramp-up in 2026.

The delays in one of the Coradia Max projects, caused by problems in the final development phases, had a “domino effect” on other German projects, leading to penalties that weighed on margins, chief financial officer Bernard Delpit said on a media call.

The problem was detected after chief executive officer Martin Sion, who took the helm in April, sent out teams to deal with struggling projects, Delpit said.

The CEO found that “not only were there engineering issues, but the organisation surrounding project management was neither efficient nor effective”, Delpit said.

Alstom is now tackling a broader review of its organisation to improve execution and accountability, to lower costs and to make processes simpler. It also will carry out a new plan to slash debt by about €2 billion, which will include further divestments.

“We have identified the assets and are beginning the process,” Delpit said on the call, when asked about the group’s possible future divestments. He declined to elaborate on details, saying it was too early.