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June 26, 2017

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Alstom profits plunge as rival firms engage in takeover bids

PARIS--Alstom, the French engineering group juggling two takeover bids, said Wednesday its net profit plunged by nearly a third in the last financial year and it would not pay shareholders a dividend.

Net profit fell by 28 percent to 556 million euros (US$774.5 million).

Alstom is mulling a 12.35-billion-euro offer from U.S. group General Electric for its energy assets, and an offer from German group Siemens.

Siemens, encouraged by the French government, is proposing to exchange assets which would leave the French group focused on railway activities.

Alstom, which builds power stations and electricity generating equipment as well as the French TGV high-speed train, has been rumored for some time to be running into difficulties, and last year its shares fell heavily.

The group did not repeat the forecasts for the coming financial year that it had published in January.

The price of shares in Alstom slipped by 0.59 percent to 28.54 euros in early trading. The overall French CAC 40 index was down 0.24 percent.

In a results statement on Wednesday, Alstom blamed the plunge in its performance on difficult economic conditions, asset writedowns, and an increase in restructuring costs.

The company said the restrictive economic conditions in several countries with mature energy markets meant big infrastructure projects, notably power stations, had been delayed.

This was a reference to over-capacity in the European electricity generating business.

Sales were steady compared with the previous year at 20.7 billion euros, but operating profit fell by 3.0 percent to 1.4 billion euros. The operating margin fell to 7.0 percent from 7.2 percent, as the group had forecast.

But the value of new orders taken fell by 10.0 percent to 21.5 billion euros, putting the total order book at 51.5 billion euros representing two and a half years of work.

Cash Outflow

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