What is going wrong in Germany
The snag is on Coradia Max orders, a set of regional train contracts for German states that was supposed to be the year's biggest production ramp. Alstom said the first problems emerged after trains were already on the line, forcing expensive rework.
Those retrofits are pushing schedules back and triggering penalties on other German programs. Most of the manufacturing is in Germany, while development is led from sites in Northern France. Management said the setbacks are execution-related, not supplier driven. Chief Financial Officer Bernard Delpit said the Coradia project now has a negative gross margin, and added that CEO Martin Sion's review found "not only were there engineering issues, but the organization surrounding project management was neither efficient nor effective."
The hits to guidance and cash
Alstom cut its outlook again. The new goal is for the adjusted Ebit margin to be roughly 1%, compared with 6.5% before. A once positive free cash flow view flipped to an expected €1.5 billion cash burn, and the company trimmed its train car output goal to roughly 4,000 units from as many as 4,500.
The market reaction was swift. The stock fell up to 31% in Paris, then recovered part of the drop to trade 23% lower. Shares have more than halved this year, leaving a market value of €5.29 billion, or $5.9 billion.
Debt, disposals, and who owns what
To protect an investment grade rating, Alstom is weighing asset sales. Executives would not say which ones, but Delpit noted, "We have identified the assets and are beginning the process," without giving details. Asked about any talks to boost the French state's stake, Sion said that is not "something that we are discussing today."
The company also kicked off a broader overhaul to tighten execution and accountability, cut costs, and simplify processes. It plans a new effort to reduce debt by about €2 billion. Former CEO Henri Poupart-Lafarge finished an earlier €2 billion debt-reduction program. Bpifrance and Quebec's public pension manager La Caisse together own 25% of Alstom, according to Bloomberg data.
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What to watch next
Sion, who took over in April, sent teams to tackle struggling projects, which led to the Coradia Max findings. Back in April, the company jolted investors when it pulled its financial guidance because several programs were advancing too slowly. Bloomberg Intelligence analysts Omid Vaziri and Sakshi Batra said, "Coradia Max delays have spread into other German projects, turning margins negative and pushing milestone cash into later years," adding that "The need for a new €2 billion deleveraging plan, potentially including disposals, is more concerning just two years after the prior recapitalization."
There are product milestones, too. The newest double-decker TGV is slated to be finished this week, more than two years late versus its planned debut at the Paris Olympic Games. Alstom, a rival to Siemens and China's CRRC, maintains that its order book remains strong and that operations should return to more typical levels in its next fiscal year. Full fiscal results will be released on Nov. 17, and the company plans a capital markets day during the second quarter of 2027.
The bottom line: execution problems in Germany have dented earnings, cash, and output targets, and management is focused on fixes and potential divestments. For your portfolio, the near term catalysts are the Nov. 17 results, any detail on asset sales and the new €2 billion deleveraging plan, and the 2027 strategy day.
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