Train maker Alstom's shares surge on softer-than-expected cash hit
Nov 10 (Reuters) - Alstom's shares soared on Wednesday after the French train maker reported a softer-than-expected cash hit as it integrates projects inherited as part of its deal with Canada's Bombardier .
The shares jumped as much as 10% in early trading and were on track for their best performance since March 2020, boosting the company's market value by more than one billion euros, based on Refinitiv data.
Analysts from Credit Suisse and JP Morgan welcomed Alstom's performance on cash flow as "reassuring" and "better than feared".
The company, which makes trains and signalling systems for urban and regional rail networks, finalised its purchase of Bombardier Transportation early this year - a 5.5 billion euro deal that should make the French train maker the second-biggest player in its sector behind China's CRRC.
But stabilising some legacy projects had caused Alstom to predict "significant" cash outflows for its current financial year.
The company reported a negative free cash flow of 1.46 billion euros ($1.69 billion) for April to September 2021, compared with a negative 1.6-1.9 billion euros it had forecast in July.
A year earlier, it had reported half-year outflows of just 253 million euros.
Chief Executive Henri Poupart-Lafarge said in a statement that the integration of the rail business and stabilisation of its projects was "fully on track."
"The group had a very strong commercial performance across all regions and product lines, illustrated by significant wins in Mexico, Taiwan, or Europe," he added.
The company confirmed its forecast that it would begin to generate cash from the second half onwards, as well as confirming its mid-term financial targets over the next four years.
Alstom reported a 14% increase in half-year sales, adjusting for acquisitions and foreign exchange rates, while its adjusted net profit for the period edged up to 172 million euros. ($1 = 0.8655 euros) (Reporting by Sarah Morland. Editing by Jane Merriman)
