2023-11-15 15:48:54
By Le Figaro with AFP
Published 5 hours ago, Updated now
Alstom will cut 1,500 jobs worldwide, or 10% of commercial and administrative functions. REGIS DUVIGNAU / REUTERS
The French railway equipment specialist has set itself the objective of reducing its debt by 2 billion euros by March 2025.
Alstom, weighed down by commercial and financial difficulties, announced on Wednesday a cost reduction plan including the elimination of 1,500 jobs or 10% of commercial and administrative functions. The railway group has set itself the objective of reducing its debt by 2 billion euros by March 2025, via an asset sale program and possibly, “depending on market conditions», a capital increase, according to a press release.
The world’s second largest railway manufacturer has been going through a crisis since announcing to investors on October 4 that it was excessively burning cash. Its free cash flow plunged into the red during the first half of 2023/2024 of its financial year shifted to -1.1 billion euros.
The next day, the stock plunged more than 37% and has not recovered since. This cash flow problem in the first half “is a clear call for change», insisted the CEO of the Henri Poupart-Lafarge group quoted in the results press release. “Although demand remains at a sustained level, despite some volatility, our commercial performance has been weak», he added, in particular due to the delay in finalizing the Aventra program, 443 trains intended for the United Kingdom and inherited from the Bombardier Transportation portfolio purchased at the start of 2021, and a lower payment of advances than expected .
The action plan therefore provides for asset sales for an amount between 500 million and 1 billion euros or even an improvement in operational performance with the reduction of delivery times. The group also wants to position itself on quality order intake where the potential margin is greater. The restructuring also affects the top of the group since it was decided to dissociate the functions of chairman of the board of directors from that of general manager from July 2024. Henri Poupart-Lafarge, CEO since February 2016, will only remain general manager.
Former Safran CEO Philippe Petitcolin is to be named chairman of the board of directors. In the first half of its staggered 2023/2024 financial year, Alstom presented a turnover up slightly by 4.9% to 8.4 billion euros and a net profit share of the group just in the green at 1 million euros (compared to a net loss of 21 million euros a year earlier). It hopes to improve its free cash flow in the second half to bring it down to between -500 and -750 million euros over the entire financial year.
Following these announcements, Alstom’s share price plunged by more than 11% in early trading on the Paris Stock Exchange on Wednesday. The railway group fell 8.82% to 12.92 euros around 9:20 a.m.
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