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Train maker Alstom sharpens annual targets after half-year beat

FILE PHOTO: A logo of Alstom is seen at the Alstom's plant in Semeac near Tarbes

By Olivier Sorgho and Dagmarah Mackos

(Reuters) -French train maker Alstom sharpened its annual targets on Wednesday as forecast-beating orders and the integration of Bombardier Transportation boosted its prospects for the second half of the year.

The Paris-based company is recovering from the costly acquisition of Bombardier's rail business that put its cash flow in the red last year.

The manufacturer of high-speed TGV trains now expects a free cash inflow of 100-300 million euros ($104-$311 million) for the year to the end of March. It previously forecast positive cash flow, without specifying an amount.

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The group also forecast an annual adjusted operating profit (EBIT) margin of 5.1-5.3%, and sales for the year consistent with its mid-term guidance for average annual growth of more than 5%.

"Market momentum remains very positive with customers confirming their investment plans in all regions," chairman and chief executive Henri Poupart-Lafarge said in a statement.

"We are aware of some of the macroeconomic challenges but don't see any slowdown of the demand," Poupart-Lafarge told analysts in a call.

At 0937 GMT, Alstom shares were up nearly 4%, topping the French blue-chip CAC40 index.

The group received new orders worth 10.1 billion euros in the six months to Sept. 30, against analysts' average forecast of 9.6 billion in a company-provided poll.

It recorded a free cash outflow of 45 million euros, compared with the 179 million outflow expected by analysts.

Alstom's labour costs were fixed and energy expenses for the full year hedged at 90%, it said, but high inflation will continue to weight on its non-indexed contracts which in the first half of the year represented 50% of total sales, it said.

The group's adjusted EBIT came in at 397 million euros, corresponding to a margin of 4.9%.

The margin was negatively affected by 1.3 billion euros of sales traded at zero gross margin, mostly related to legacy Bombardier Transportation projects, it said.

($1 = 0.9646 euros)

(Reporting by Olivier Sorgho and Dagmarah Mackos; Editing by Milla Nissi and Mark Potter)