This article first appeared on GuruFocus .
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Car Production:1,860 cars in H1, below prior year, reflecting reduced Coradia Max cadence; full-year guidance revised to ~4,000 cars (from 4,4004,500).
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Sales:EUR9.3 billion in H1, up 3% reported and 2% organic; full-year organic growth now expected in low to mid-single digits (from ~5%).
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Adjusted EBIT Margin:~negative 4% in H1 vs. positive 6.4% in H1 last year (~10 percentage-point decline); full-year guidance revised to ~1%, implying ~6.5% in H2.
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Free Cash Flow:Negative EUR1.2 billion in H1, slightly better than expected; full-year guidance now negative EUR1.5 billion.
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Liquidity:EUR1.6 billion cash at end of September; additional EUR2 billion credit facility added to existing facilities.
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Debt Reduction Plan:~EUR2 billion plan combining organic and inorganic measures, to be implemented no later than September 2027.
Release Date: November 02, 2026
For the complete transcript of the earnings call, please refer to the full earnings call transcript .
Positive Points
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Alstom SA ( ALSMY ) has launched urgent operational actions, including lean management, simplified processes, and accelerated cost savings, to drive early improvements.
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The company deployed dedicated 'tiger teams' to critical projects, which have successfully developed technical solutions and mitigation measures for the Coradia Max issues.
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Other major projects are progressing well, such as the Avelia Horizon high-speed platform, which was homologated and will enter commercial service this week.
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A significant share of the backlog is in serial production and achieving production targets, including commuter trains in France, locomotives in Kazakhstan and India, and regional trains in South Africa.
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Alstom SA ( ALSMY ) is taking decisive action to strengthen its balance sheet with a EUR2 billion debt reduction plan and has reinforced liquidity with an additional EUR2 billion credit facility.
Negative Points
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Alstom SA ( ALSMY ) reported a challenging first half with adjusted EBIT margin at around negative 4%, a decline of about 10 percentage points, entirely due to the Coradia Max gross margin adjustment and issues in Central and Northern Europe.
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Full-year guidance was revised downward: car production is now expected around 4,000 units (vs. 4,400-4,500 previously), organic sales growth in low to mid-single digits (vs. ~5%), and adjusted EBIT margin around 1% (implying a second-half margin of ~6.5%).
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Free cash flow for the first half was negative EUR1.2 billion, and the full-year outlook is now negative EUR1.5 billion, driven by delayed milestone payments and geopolitical uncertainties in the Middle East.
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The Coradia Max platform issues have led to a negative gross margin on the six projects, which represent around EUR5 billion in backlog, with knock-on effects and extended homologation timelines.
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The company faces potential challenges in maintaining its investment-grade rating, as its metrics may not meet Moody's thresholds, and the deleveraging plan's details, including the mix of organic and inorganic measures, remain uncertain.
Q & A Highlights
Q: What is the size of the Coradia Max backlog, and what is the new gross margin level in the backlog? A: CEO Martin Sion stated that the six Coradia Max projects represent around EUR5 billion of the backlog (rolling stock only, excluding service contracts). CFO Bernard Delpit added that the gross margin for the Coradia program is now negative, and the group's overall backlog gross margin is around 18%, as most of the deterioration comes from program contracts now in negative territory.
Q: How much of the 10-point margin decline in H1 is due to Coradia, and what needs to happen in H2 for the 6.5% margin to materialize? A: CFO Bernard Delpit declined to give a full breakdown of the roughly EUR950 million impact but confirmed it includes both additional costs and customer penalties, with the full reassessed impact at completion taken in H1. The revised full-year adjusted EBIT margin guidance is around 1%, implying a second-half margin of around 6.5%.
Q: What is the rationale behind the EUR2 billion deleveraging plan, and how does it relate to the free cash flow outlook? A: CFO Bernard Delpit explained that of the EUR1.5 billion negative free cash flow this year, around EUR1 billion should reverse over the next years as progress payments shift. The margin deterioration of roughly 0.9 booked in the P&L will impact free cash flow by EUR1 billion to EUR1.5 billion at completion, leading to a cumulative deleveraging need of EUR1.5 billion to EUR2 billion. The plan combines organic and inorganic measures to be implemented no later than September 2027.
Q: What changed in the H2 planning assumptions to drive the roughly EUR1.5 billion cash flow revision? A: CFO Bernard Delpit corrected the assumption, noting the revision is around EUR1.5 billion rather than EUR1.8 billion, since H1 included some left-shifting of progress payments expected in H2. The vast majority of the revision comes from cash inflows on Coradia and German projects right-shifting, plus added caution due to Middle East geopolitical uncertainty affecting commercial momentum.
Q: Are all six Coradia contracts now considered onerous, and over what timeframe will they deliver? A: CEO Martin Sion confirmed the negative gross margin applies to all six Coradia projects. The logic was for the first development to cover most homologation for the others, so delays on the first have a knock-on effect across all five others, with significant penalties creating the cliff effect. Entry into service will start in 2028 and should end around early 2030.
Q: How confident should investors be that the Coradia homologation timeline is now fixed and deliverable? A: CEO Martin Sion said tiger teams of company experts worked with project teams to assess the robustness of hypotheses. Technical solutions were found for the problem that paused production in July, and while the tiger team identified weaknesses in testing and validation planning, a robust plan has now been validated with Alstom's most knowledgeable people. He expressed confidence this will be the last rescheduling for Coradia, a commitment made to the customer.
Q: What is the split between organic and inorganic measures in the EUR2 billion deleveraging plan, and would Alstom consider divesting a best asset such as Signalling? A: CFO Bernard Delpit said a large part of the EUR2 billion will be inorganic, while organic measures involve discussions with clients on payment terms and contractual adaptations. CEO Martin Sion added that a review of potential divestments has been initiated, focused on profitable activities not at the core of the business, but declined to name specific assets at this early stage.
Q: Could there be material write-downs on contract assets, which stood at about EUR6.5 billion in March? A: CFO Bernard Delpit said he does not expect material write-downs on contract assets, noting that the majority of the consequences of today's announcements will be an increase in provisions for loss at completion.
Q: How much of the reduced full-year production outlook of around 450 railcars is driven by Coradia versus non-Coradia projects? A: CFO Bernard Delpit stated that the Coradia Max projects represent the vast majority of the revised production outlook, with the gap coming from Coradia. Full-year production guidance was cut to around 4,000 cars from 4,400 to 4,500 previously.
Q: Is the Coradia issue purely an execution problem, or are the original contract terms also a factor, and have terms on new orders changed? A: CEO Martin Sion attributed the situation to a combination of development project management weaknesses and very stringent terms and conditions, adding that in current tenders such terms would be identified at the tender phase. CFO Bernard Delpit clarified that the severe terms and conditions impact is limited to two of the six Coradia contracts and is not present in other contracts.
Q: Why size the deleveraging plan at EUR2 billion rather than more, and what is the purpose of the new EUR2 billion revolving credit facility without financial covenants? A: CFO Bernard Delpit said the EUR2 billion sizing reflects the current forecast for this year and next year's cash generation and is the right balance, validated after lengthy discussion. The new revolver is intended to provide comfort on liquidity management over the coming quarters and gives horizon to strengthen the balance sheet.
Q: Would Alstom consider entry of the French state into its capital? A: CEO Martin Sion said this is not something being discussed today. CFO Bernard Delpit added that while the French government's support is obvious given Alstom is a very large employer in France, no such discussions have taken place with the French government.
For the complete transcript of the earnings call, please refer to the full earnings call transcript .
