Alstom expects €1.5 billion cash outflow in 2026/27
Key Facts
Alstom expects to post free cash flow of €1.5 billion negative in fiscal 2026/27, reversing its previous guidance for positive cash flow, the company said in a statement. The revision puts liquidity at the forefront of challenges facing the French rail group in the current financial year. The annual forecast reflects pressures already evident in first-half results, when free cash flow was €1.248 billion negative. Net debt also rose to €1.1 billion on September 30, 2026, from €0.4 billion on March 31. In May, Alstom had set a target for positive free cash flow for the same year, alongside an adjusted EBIT margin of about 6.5%.
Adjusted EBIT margin was about 4% negative in the first half of 2026/27, compared with a positive margin of 6.4% in the same period of the previous financial year. Alstom said gross-margin adjustments on projects executed for and from Germany were a main reason for the decline. The comparison shows a widening gap between initial performance and the forecast the company announced in May, when it targeted an adjusted margin of about 6.5% for the full year. Still, first-half sales reached €9.3 billion, up 3% on a reported basis and 2% organically year on year. In the first quarter, sales grew a reported 4.9% and an organic 4.8%, meaning weaker margins and liquidity coincided with continued revenue growth.
Alstom attributed part of the pressure on cash flow to milestone payments being delayed and shifted into later financial years. It said lengthy approval procedures for Coradia Max trains and delays to their entry into commercial service were among the reasons for the payment shifts, and that the project was one of the major projects affecting the forecast. Group production fell to 1,860 cars in the first half, down 8% from 2,017 cars in the comparable period. The company said it halted production of the Coradia Max platform during the first quarter to address problems and reduce subsequent modification work. It also cut its forecast for organic sales growth for the financial year to a low-to-mid single-digit range, from about 5% previously, citing in part production of fewer cars than planned.
Net debt rose from €0.4 billion at the end of March to €1.1 billion at the end of September, as free cash flow consumption weighed on the financial position. Alstom said cash consumption was €1,248 million in the first half, alongside a €44 million coupon payment and an €81 million increase in lease liabilities. These factors offset some of the proceeds from a €694 million hybrid green bond issuance in June. The debt figures show that the issuance offset part of the pressure but did not prevent net debt from rising in the six months to the end of September. In May, the company's guidance for the financial year included production of between 4,400 and 4,500 cars, a target whose trajectory has been affected by first-half production below plan.
Alstom's order backlog stood at €102.8 billion at the end of June 2026, according to the company's first-quarter announcement. But the book-to-bill ratio that quarter fell to 0.5 times, from 0.9 times in the comparable period, despite sales growth. Chief Executive Martin Sion said at the time that his immediate focus was on strengthening execution and advancing major projects, with commercial momentum expected to accelerate in the second quarter. This background shows that execution and approval delays remained a significant operational issue as the company revised its cash forecasts. Alstom shares closed at €15.81 on October 30, 2026, before the preliminary results announcement.
Alstom set a target to reduce debt by about €2 billion by September 2027 and said its board was committed to maintaining an investment-grade credit rating. The company will announce its official first-half results on November 17, 2026, the next date that could provide detailed figures for the period. It also plans to present its long-term strategic and operational plan at a capital markets day during the second quarter of 2027. The debt-reduction target follows a rise in debt to €1.1 billion at the end of September and comes amid expectations of negative free cash flow for the current financial year. The previous guidance announced in May combined positive cash flow, an adjusted margin of about 6.5% and organic sales growth of about 5%.