Alstom share price rebounds after higher quarterly results

  •   20/07/2021 - 13h56
  •   HARMANT Adeline

Alstom's share price is finally ending the downward trend it started on 8 July after presenting its strategic plan, which was not well received by the public. it was not well received by the public, particularly because of a significant negative cash flow for the current year following the acquisition of Bombardier. While the share price had fallen towards 35 euros on Monday, it recovered this morning by 3.2% to 36.29 euros at around 9:50 am following the publication of its encouraging quarterly results.

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Alstom share price rebounds after higher quarterly results

Quarterly results welcomed by the market:

Thus and during the first quarter of its offset fiscal year, which ended at the end of June, the group recorded an order book at 6.44 billion euros against 3.06 billion euros between April and June 2020.

More than 71% of the orders came from Europe, as stated in the press release, including the largest rail contract in the history of Denmark, worth €2.6 billion for 100 Corodia Stream regional trains.

The group's revenues also increased compared to last year with 3.7 billion euros in the first quarter compared to 2.79 billion euros a year earlier. However, we know that the first quarter of 2020 was penalized by the Covid-19 pandemic.

This increase in revenue was boosted by a solid increase in rolling stock projects, which accounted for more than 58.5% of revenue, or €2.16 billion over this period. The remainder came from services (€762 million), signalling (€537 million) and systems (€238 million).

The ratio of orders to sales thus suggests a development of the business in the medium term and stands at 1.74%, as Alstom welcomes in its press release, adding that the order book, which represents more than 5 years of sales at the current rate, provides visibility on future sales.

 

A challenge that remains to absorb the purchase of Bombardier:

But outside of its activities, the main challenge of the Alstom group will undoubtedly be to succeed in completely digesting its takeover of Bombardier Transportation which took place last September for an amount of more than 5 billion euros.

5 billion. Indeed, while this new entity will benefit from an incomparable commercial reach, it will first be necessary to clean up the portfolio and correct several mistakes that were made by the Canadian group during its acquisition.the new entity will benefit from an unrivalled commercial reach, but it will first be necessary to clean up the portfolio and correct several mistakes made by the Canadian group in recent years, such as poorly negotiated and unprofitable contracts, and the neglect of other contracts.

Bombardier's order book has a margin of 3 to 4% while Alstom's margin on its former scope was 8%. The rail construction group's boss had also said that it should find profitability among the best in the market by 2025 and between 8 and 10% once this integration is complete and reaffirmed these objectives today.