Alstom: Record Orders at €27.6 Billion, But Operating Margin Disappoints
On Thursday, Alstom reported a record business activity for the fiscal year 2025/26 ending March 31: €27.6 billion in order intake, up 39%, with an order book exceeding €100 billion. However, this momentum masks operational tensions: the adjusted operating margin fell to about 6% from 6.4% the previous year, penalized by slower than expected ramp-ups on several rolling stock projects.
Record Order Intake and Revenue Growth
Order intake reached €27.6 billion for the fiscal year 2025/26, marking a 39% increase in reported figures and 42% in organic growth compared to the previous year (€19.8 billion). This level results in a book-to-bill ratio of 1.4, in line with the group's forecasts. The order book now exceeds €100 billion, consolidating long-term commercial visibility. In contrast, revenue amounted to €19.2 billion, up 4% in reported figures. After adjusting for currency effects (negative impact of 2.8 points) and scope (negative 0.6 point), organic revenue growth reached 7%, in line with forecasts. The number of cars produced was 4,284 units, down from 4,383 in the previous year, directly reflecting the slowdown in rolling stock projects.
Adjusted Operating Margin Declines
The adjusted operating margin for the fiscal year 2025/26 was around 6%, a decline from 6.4% in the fiscal year 2024/25 and below the previously communicated forecast of about 7%. This decline is explained by the unexpected slowdown in certain major rolling stock projects, which weighed on margins. After adjusting for currency and scope effects, the adjusted margin is broadly stable in comparison but remains below expectations. The group's free cash flow stood at approximately €330 million, down from €502 million in the previous year but within the previously communicated range of €200 to €400 million. The reduction in cash flow primarily stems from unfavorable factors affecting the working capital needs related to the slower progress of certain projects. The group's financial structure remains solid: net debt slightly decreased to about €400 million (compared to €434 million as of March 31, 2025), and available cash was €2.3 billion as of March 31, 2026. The group also has two undrawn revolving credit lines (€2.5 billion and €1.75 billion), enhancing its financial capacity.
Outlook for Fiscal Year 2026/27
For the fiscal year 2026/27, Alstom anticipates an organic revenue growth of about 5%, an adjusted operating margin projected at around 6.5%, and a positive generation of free cash flow. The group expects seasonality to result in a free cash flow consumption of about €1.5 billion in the first half of 2026/27. However, the group is revising its previous targets: the cumulative free cash flow target of €1.5 billion over the three years from fiscal 2024/25 to 2026/27 is not maintained. The medium-term ambition of an adjusted operating margin of 8 to 10% will not be achieved by the fiscal year 2026/27. Martin Sion, the new CEO, has announced the launch of immediate actions to stabilize performance and the preparation of an operational transformation plan and new medium-term ambitions, to be presented during the current fiscal year.
