Investing.com -- Alstom (EPA:ALSO) shares tumbled more than 16% on Wednesday after the company issued guidance for fiscal 2025-26 that came in below market expectations, overshadowing stronger-than-expected earnings and free cash flow for the second half of fiscal 2024-25.
The French train maker reported adjusted EBIT of €1.18 billion for the second half of its fiscal year, 2.8% above company-compiled consensus, driven by better-than-expected revenue of €5.04 billion, which came in 4% ahead.
Fourth-quarter orders totaled €4.64 billion, exceeding consensus by 4.6%, led by a strong performance in services order intake.
Full-year free cash flow came in at €502 million, ahead of the €330 million expected by analysts.
Despite the solid finish to the fiscal year, the focus turned to the company’s outlook for fiscal 2025-26. Alstom projected organic revenue growth between 3% and 5%, compared with Visible Alpha consensus of 5.3%.
It also forecast an adjusted EBIT margin of around 7%, below the 7.3% expected. Based on the midpoint of guidance, the company’s EBIT forecast implies a 3.5% downgrade to consensus estimates for the year.
Free cash flow guidance for 2025-26 was set at between €200 million and €400 million, below the €625 million forecast.
The company said it expects a first-half free cash outflow of up to €1 billion, with positive free cash flow in the second half to reach the full-year target.
Alstom maintained its target for cumulative free cash flow of at least €1.5 billion over the three fiscal years ending in 2026-27.
With €500 million delivered in 2024-25 and €300 million targeted for the current year, that implies at least €700 million in fiscal 2026-27.
The company reported a book-to-bill ratio above 1x and highlighted continued momentum in its services segment.
“We do not find this profile overly compelling relative to the sector given the project nature of Alstom’s business, hence retain an Equal-weight rating,” said analysts at Jefferies in a note.