Alstom stock falls as free cash flow drops in first half of 2023

Alstom (ALSMY) shares sank in early trading as the company reported that free cash flow dropped in the first half of 2023 from negative €45 million to negative €1.15 billion.

Yahoo Finance Live discusses the reasons for this drop. For more expert insight and the latest market action, click here to watch this full episode of Yahoo Finance Live.

Video transcript

AKIKO FUJITA: Well, we are watching shares of Alstom sinking today. More than 26% after half year results show the French train manufacturer saw the free cash flow fall from negative 45 million euros to negative 1.15 billion euros. The company is on course for its worst trading day in at least 20 years, according to London Stock Exchange data.

And, Rachelle, some of that the company pinning on delays that they saw, particularly in the US, while Europe included as well, some of those payments getting pushed back on these large contracts and the company pinning some of the blame on that as well.

RACHELLE AKUFFO: It's true. I mean, also for the full year, looking at the free cash flow estimates, and now in the range of negative 500 million to 750 million. They were supposed to be originally forecast at being significantly positive, so really having that sort of turnaround stunning investors at the moment.

And, I mean, a number of issues at stake here. I mean, you mentioned the UK contract, that they had some issues also with a rise in inventories. They also had a rocky acquisition of Canadian manufacturer Bombardier. And then when they were asked about divestment, CFO Bernard Delpy said, if there are good opportunities, of course I will discuss it with the board. So a lot of uncertainty here, especially in that full year guidance, really shaking investors there.

AKIKO FUJITA: Yeah, and a steep, steep decline today on the back of that as well.