Alstom lowers its annual targets: adjusted EBIT margin target cut to 1% from 6.5%
On 2 November 2026, the rail manufacturer published preliminary unaudited half-year results, marked by a negative adjusted EBIT margin and execution difficulties in Europe, mainly on its Coradia Max platform.
Chief Executive Martin Sion, in the role since April 2026, presents these revisions as the result of a project-by-project risk review, with the aim of normalising performance from the next financial year.
A negative half-year margin despite rising orders
In the first half of fiscal year 2026/27, ended 30 September 2026, Alstom recorded €11.0 billion in orders, compared with €10.5 billion a year earlier, an increase of 5%. Commercial momentum accelerated in the second quarter, with €8.4 billion in orders and an order-to-sales ratio of 1.8.
Across the whole half-year, this ratio reached 1.2, a level consistent with the target set for the financial year. Revenue rose 3% on a reported basis and 2% on an organic basis, to €9.3 billion compared with €9.1 billion.
Production, however, declined: 1,860 railcars left the factories, compared with 2,017 a year earlier, a drop of 8%. Manufacturing of the Coradia Max was suspended in the first quarter in order to correct the issues identified and limit subsequent rework.
On profitability, the adjusted EBIT margin stood at approximately -4%, compared with 6.4% in the first half of the previous financial year. According to the group, this decline is largely due to gross margin adjustments on projects carried out for Germany and from that country.
During the half-year, new technical problems and additional testing requirements emerged on the Coradia Max. In parallel, enhanced reviews of several critical rolling stock projects led to revisions of the estimated margins at completion on certain contracts.
Free cash flow came in at -€1,248 million, compared with -€740 million a year earlier, a level the group attributes to seasonality. Some milestone payments and advance payments made during the half-year partly limited this cash outflow compared with what had been planned.
Production, growth, margin and cash flow: annual targets revised
These preliminary results led Alstom to revise all of its annual targets, with the exception of the order-to-sales ratio, which is still expected to be above 1. The group bases this maintained target on demand and on its portfolio of opportunities.
This maintained target comes as two contracts announced in October will be booked in the third quarter: €947 million for the maintenance of Greater Anglia trains, announced on 16 October 2026, and €800 million for metro systems in Hanoi, announced on 19 October 2026.
The targeted production volume has been reduced to approximately 4,000 railcars, compared with 4,400 to 4,500 previously, partly due to the delay incurred in the first half. The expected organic growth has moved from approximately 5% to a progression between low and mid single digits, partly penalised by this lower production.
The adjusted EBIT margin target now stands at approximately 1%, compared with 6.5% previously announced. This target assumes a recovery of the margin to approximately 6.5% in the second half.
Annual free cash flow is expected to be -€1.5 billion, whereas the group had previously forecast a positive figure. The gap mainly stems from the postponement of milestone payments to subsequent financial years, linked to longer homologation processes and commercial service launches later than expected, including that of the Coradia Max.
The risk review must be completed by the end of the financial year. Alstom anticipates a normalisation of its performance from fiscal year 2027/28 and a trajectory tending towards 8 to 10% adjusted EBIT over the medium term, for a group that had reported, in its annual accounts published on 2 June 2026, revenue of €19.17 billion for the financial year ended 31 March 2026.
Rising net debt and review of deleveraging options
Net debt reached €1.1 billion as of 30 September 2026, compared with €0.4 billion as of 31 March 2026. This increase mainly reflects the consumption of free cash flow, a €44 million coupon paid on perpetual subordinated securities, and an increase of €81 million in lease liabilities.
The issuance of a green hybrid bond in June 2026, which raised €694 million, partly offset this. The group also held €1.65 billion in cash and cash equivalents at the end of September.
In addition, there is an undrawn €2.5 billion revolving credit facility maturing in July 2029, and a backup line of €1.75 billion maturing in January 2029. The latter is backed by a €2.5 billion commercial paper programme, which had no outstanding amount as of 30 September.
On 1 November 2026, Alstom entered into a new €2.0 billion revolving credit facility with a major international bank, with no financial covenant and maturing in November 2028.
To preserve an investment-grade credit rating, the board of directors has launched a review of all organic and non-organic options in order to reduce debt by approximately €2 billion by September 2027. Shareholders represented on the board support this initiative, with the group retaining control over the timing and scale of the measures.
Operationally, work has been underway since April 2026: lean production, faster resolution of incidents, accountability of project managers, discipline on costs and purchasing, and process simplification. Decisions arising from the review of the organisational model are expected in early 2027.
An investor day, planned for the second quarter of 2027, will detail the strategic plan and medium-term outlook. In the meantime, final half-year results are expected on 17 November 2026, followed by third-quarter orders and sales on 19 January 2027.
