Alstom: a strategy on the right track

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The title climbs nearly 10% since the beginning of the year. (© Alstom)

The railway equipment manufacturer continues its growth momentum. The improvement in margins should allow a better market valuation. Our detailed analysis on Alstom six months after the failed merger with Siemens.

The failure of the merger with Siemens Mobility last February did not unduly penalize the title, which is about 10% since the beginning of the year.

Taking into account the super-dividend of 5.50 euros paid in July, the return for the shareholder is 25%. If the planned merger with the German conglomerate's railway subsidiary promised attractive synergies, it is clear that Alstom it's doing very well alone.

As of June 30, the TGV manufacturer had a backlog of 40 billion euros, equivalent to five years of turnover!

In its most recently completed financial year end of March, sales rose 10% to $ 8.07 billion and adjusted operating margin increased 1.7 percentage points to 7.1%. Free cash flow – a key indicator for the company – rose nearly 20% to 153 million euros.

Credible ambitions

On the strength of its successes, the group led by Henri Poupart-Lafarge set new goals as part of its strategic plan Alstom in Motion presented last June.

It aims for an average annual growth rate of turnover of about 5% in four years, and an adjusted operating margin of around 9% in March 2023. A roadmap deemed credible by

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