In a press release issued yesterday, the Alstom group indicated that it was expecting a slight decrease in its sales in 2020 and 2021. The equipment manufacturer has indeed suffered a first half 2020 constrained by order delays and because of the health crisis. It is therefore not surprising that the group has indicated that the current crisis is negatively affecting its financial performance for its 2020-2021 financial year. However, the group remains very optimistic and envisages a solid commercial pipeline for the second half of 2020/2021. It also sees a strong recovery in production in the second half of the year. This is in any case what it indicates in its mid-week press release.
The French group is currently expecting a turnover of between EUR 7.6 and 7.9 billion for this financial year compared with a turnover of EUR 8.2 billion for the financial year 2019-2020. In addition, the company is also targeting an adjusted operating margin that is at least stable at 7.7% and could reach 8%.
Net income from operations was €161 million for the first half year ended end of September compared to €213 million for the first 6 months of the previous year. Adjusted operating income reached €263 million compared to €319 million last year and a margin of 7.5% of sales compared to 7.7%. Sales fell by 15% on a reported basis and by 13% on an organic basis to 3.52 billion euros.
Note that analysts were expecting a result of 109 million euros, a turnover of 3.31 billion euros and an adjusted operating profit of 221 million euros.
The Alstom group has of course commented on these results by indicating that this decrease was expected, due to the delay in commercial activity in the context of the health crisis of the new coronavirus.
However, Alstom warns that the target of the current average growth rate of 5% over the period 2019/2020 to 2022/2023 is likely to be slightly impacted by the temporary slowdown in tendering activity. However, the 2022/2023 objectives of an adjusted operating margin of 9% and conversion of net income into free cash flow above 80% remain confirmed.
The Chairman and CEO of the Alstom Group stated during a conference call: "All tenders that had been postponed have been reactivated and launched. We are confident that the various stimulus packages and the growing demand for clean mobility solutions will lead to a solid market recovery".
In addition, the group also confirmed that it plans to finalize the acquisition of the Bombardier Transportation Group in the first quarter of 2021. This transaction will be financed in part by a capital increase that the group expects to raise subject to market conditions between now and the first half of next year.