The French rail infrastructure group Alstom (ISIN: FR0010220475) has shocked the capital market with another sharp downward revision to its guidance. The trigger is serious execution and approval delays in German train orders, which are leading to high rework and penalty invoices. To prevent a deterioration in its credit rating, management announced a comprehensive debt-reduction program worth two billion euros.
Forecast collapse: adjusted EBIT margin near zero
Alstom has drastically lowered expectations for fiscal 2026/27. The adjusted EBIT margin is now expected to be only around 1%, after roughly 6.5% had previously been targeted. Free cash flow has also turned sharply negative: instead of the positive cash flow originally forecast, the group now expects a cash burn of around €1.5 billion. Organic sales growth has been reduced to a range of 2% to 4%, while the target for train car production has been cut to about 4,000 units.
Project debacle at Coradia Max in Germany
The main cause of the operational slump is significant delays and quality problems in the Coradia Max regional train program in Germany. Six major orders with a total volume of around €5 billion are experiencing development and certification bottlenecks. The necessary retrofits on units already produced have severely slowed the production process. Since the key initial certification is now targeted for March 2028, milestone payments are being pushed back, putting heavy pressure on liquidity and project margins.
Balance sheet repair: €2 billion planned through asset sales
To contain net debt, which rose to around €1.1 billion at the end of September 2026, and secure investment-grade ratings, Alstom is launching a €2.0 billion debt-reduction program. This is to be achieved primarily through the sale of equity stakes and non-core businesses. However, the market is debating intensely whether a dilutive equity measure may ultimately be required if disposals are delayed.
