French train maker Alstom SA reported a 7.2 percent increase in annual organic sales to €19.2 billion, but saw its adjusted operating margin slip to 6.1 percent as it grapples with execution issues on key contracts.
"While our teams deliver successfully every day across our portfolio, execution on some major rolling stock contracts continues to weigh on near term margins and cash generation," CEO Martin Sion said in a statement.
The company's performance for the fiscal year ending March 31, 2026, showed a sharp contrast between commercial success and operational headwinds. While sales grew, the adjusted EBIT margin declined by 30 basis points from the prior year.
The results underscore a divergence between strong commercial momentum, with a record backlog of €104.4 billion, and persistent profitability challenges. Alstom is targeting a margin recovery to around 6.5 percent in the next fiscal year, with a longer-term goal of 8-10 percent.
Alstom's commercial performance was a clear highlight, with a record order intake of €27.6 billion, driving its book-to-bill ratio to 1.4. The growth was led by the Rolling Stock division, which secured €14.3 billion in new orders, up from €7.5 billion in the prior year. Significant contracts were won in Europe, which accounted for 56% of the total, and the Americas, which saw orders jump to €7.9 billion from €3.4 billion.
Despite the surge in orders and a 7 percent organic rise in sales to €19.17 billion, adjusted EBIT was stable at €1.17 billion. The company attributed the margin pressure to lower production and challenges on some rolling stock projects. Free cash flow remained positive at €336 million, though this was down from €502 million in the previous year, impacted by working capital headwinds from contracts in their ramp-up phase.
For the upcoming 2026/27 fiscal year, Alstom is guiding for organic sales growth of around 5 percent and an adjusted EBIT margin of approximately 6.5 percent. The company also anticipates positive free cash flow, though it warned of a seasonal consumption of around €1.5 billion in the first half.
The slight margin decline despite higher sales puts pressure on management to deliver on its action plan for fiscal 2027. Investors will be watching the Capital Markets Day in early 2027 for a more detailed operational plan to restore profitability.
This article is for informational purposes only and does not constitute investment advice.
