French locomotive manufacturer Alstom has published preliminary financial information regarding H1 2023 results, demonstrating a decline in previous cash flow trajectories but emphasising a continued “positive” outlook.

The global manufacturer, which expressed in its Q1 results a “significantly positive” free cash flow track, reported a negative cash flow range of roughly €500m ($530m) to €750m ($795m).

Following this announcement shares plummeted by at least 35% over the past five days. As reported by Reuters, this represents the manufacturer’s greatest share drop in more than 20 years, wiping off €3bn from Alstom‘s market value.

Traders were spooked by the announcement on cash, as it raised questions about the French firm’s debt levels and whether it will be able to maintain them.

According to the manufacturer, in addition to seasonality, the first half (H1) of the current fiscal year as well as the rapid rise of its €87bn backlog were driven by numerous factors.

Alstom stated that these elements include a “steep acceleration of production exceeding 10% per year” alongside “tight supply chain conditions” and represent half of the cash flow issues.

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By GlobalData

However, Alstom reported 6.5% sales growth compared to H1 2022, setting the company on track to meet full-year sales expectations of €1.7bn, with H1 sales at zero gross margin already exceeding €1bn.

Alstom chairman and CEO Henri Poupart-Lafarge emphasised how the company is still supported by “positive” market momentum: “Alstom is accelerating on its organic growth trajectory. We are engaged in a steep ramp-up, in particular in the rolling stock activity.

“This, combined with legacy projects being finalised at the same time, is weighing on the free cash flow in this first half. The management team is strongly engaged on the operational excellence and cash focus plans. We remain committed to mid-term profitability and cash generation targets.”

Furthermore, the company maintains a stronger outlook across its order book, with a book-to-bill ratio of 1.0 for the first half of the current fiscal year, representing a slight increase over the first quarter.