In a business with anemic profitability - 1.9% last year, 3.3% this year - and dismal dividends, faced with AAA bond yields approaching 20-year highs, the lack of investor appetite can be easily understood.
An indisputable industrial flagship, Alstom, which published its annual results this morning, nonetheless remains engaged in a highly demanding, hyper-capital-intensive sector, subject to very long cycles and vulnerable to repeated negative surprises. Even three years ago the group had never truly been capable of generating cash for its shareholders.
The acquisition of Bombardier, announced a few weeks before the start of the pandemic and finalized eleven months later, is now well digested - though not without complications. It has so far failed to produce the expected impact on the group's bottom line. While it allowed Alstom to double in scale, it has not translated into hard profits or any real value creation for shareholders.
The good news is that there is progress, as well as a notable - albeit timid - improving trend. The outlook for the order book is bright as well, with €104bn signed, representing a 10% increase for FY 2026, and positive free cash flow for the second consecutive year.
The main shadow over the picture remains the disappointing commercial performance in both North America and Asia, where regional manufacturers benefit from impregnable favoritism. Consequently, Europe - accounting for 60% of consolidated revenue - remains the group's primary engine.
Two years ago, Alstom projected generating a cumulative free cash flow of €1.5bn over the next three years, before reiterating this target in early 2025, only to finally abandon it last month. In practice, the manufacturer generated €838m in cash profit over fiscal years 2025 and 2026, and its forecast for 2027 is limited to the adjective "positive".
