French maker of high-speed trains blames increase in inventory build-up and delivery delays
Alstom, the manufacturer of Luas carriages, blamed a big increase in inventory build-up and delivery delays for tighter cash flow that alarmed investors and hit it share price. Photograph: Alan BetsonAlstom shares plunged as much as 37 per cent on Thursday after the French maker of Luas carriages and high-speed trains slashed its forecast for free cash flow as a UK project and other deliveries were delayed.
The rapid deterioration alarmed investors, with the group’s shares down 34 per cent to €14.20 in Paris in early afternoon trading, valuing the company at €5.46 billion. A third of the cash flow squeeze stemmed from delays in completing the Aventra programme in the UK, an electric train project that it took on with the purchase of Bombardier Transportation of Canada.
The hit to cash flow is “a major blow to management’s credibility”, noted Gael de-Bray, an analyst at Deutsche Bank. Alstom’s investment grade rating “now looks at risk, with a capital increase becoming increasingly likely”.
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