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Alstom CEO faces credibility challenge as market value plunges

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Alstom CEO Faces Credibility Crisis as Shares Plummet

Alstom, the French train maker, suffered a significant blow as its market value plummeted by 35%, amounting to 3 billion euros, following the company’s announcement that it would incur negative free cash flow of 500 to 750 million euros this year. This dramatic reaction from investors suggests a lack of confidence in Alstom’s profitability.

The company outlined three main reasons for the financial hit. Firstly, increased inventories resulting from the ramping up of wagon and locomotive production over the past two years to fulfill a backlog of orders. Secondly, delays in completing the Aventra program in the UK, which provides trains for the London Underground and UK railway companies. Lastly, weaker than expected orders in the first half of the year generated less cash in the form of down payments.

Many are questioning why Alstom CEO Henri Poupart-Lafarge failed to anticipate these challenges. With the company’s net debt potentially reaching 3 billion euros by the end of the year, 1 billion euros more than originally predicted, analysts at Deutsche Bank believe that a capital increase may soon be necessary. Alstom, however, remains confident that this will not be the case. The company will now have to work diligently to ensure that this forecast becomes a reality.

The news of Alstom’s financial struggles raises concerns about the future viability of the company. It is crucial for Poupart-Lafarge to regain credibility and instill confidence in his leadership. Alstom’s ability to overcome these challenges will determine its long-term success in the competitive train manufacturing industry.

More detail via Reuters here… ( Image via Reuters )

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