“This is not the way I was expecting to start my mandate,” Alstom CEO Martin Sion said, delivering a stark assessment of the company’s position after just two weeks in the role. Sion was speaking during an analysts’ call on April 16, held to present the group’s preliminary results for the 2025/26 financial year. In that update, Alstom announced that it was abandoning a pledge to generate €1.5bn in free cash flow over the three years to March 2027, acknowledging that its profitability targets were slipping out of reach.
“The financial results on cash generation are not at the level you should expect from a market leader, especially with a €100bn backlog in a growing industry,” Sion told analysts. “After the last 12 months, we delivered strong organic sales growth of 7%, but this did not lead to margin improvement. In a year of record commercial activity with a €28bn order intake, free cash flow generation should have been much stronger.”
Pointing to deeper problems in the execution of the group’s major rolling stock projects, the reaction from the markets was swift, with Alstom’s shares falling by around 30% the following day. Alstom’s CFO and Executive Vice President Bernard Delpit told analysts that the situation was “not particularly satisfying”.
Results highlight execution gap despite strong demand
Since its €5.5bn acquisition of Bombardier Transportation in 2021, Alstom has been working through a backlog of complex and, in some cases, loss-making rolling stock contracts, alongside the challenge of integrating a fragmented industrial base. As Alstom’s latest financials show, the result has been a company with strong demand but persistent difficulties in delivering projects on time and to expected margins.
The group reported record orders of €27.6bn, with a book-to-bill ratio of 1.4 and an order backlog above €100bn. Sales also held up, rising to €19.2bn, or 7% on an organic basis. However, that growth failed to translate into improved margins.
Adjusted EBIT margin fell to around 6%, below the roughly 7% previously expected, as delays and additional costs weighed on a number of rolling stock projects. Cash generation showed the same pattern, with free cash flow coming in at around €330m. That figure was within guidance but down sharply from €502m a year earlier, with slower project execution apparently weighing on working capital. Meanwhile, production in 2025/26 slipped slightly to 4,284 vehicles as some programs moved through a longer-than-expected ramp-up.
Looking ahead, the company said it still expected organic sales growth of around 5% and margins recovering to about 6.5% in 2026/27. However, those projections were undercut by Alstom’s decision to abandon the €1.5bn free cash flow target that had been central to its medium-term recovery story. In a statement released alongside the figures, Sion said he remained “convinced” Alstom was still “well-positioned” in the rail market, but he acknowledged that profitability had “fallen short of expectations”.
Execution failures
During the call, Sion made clear that the core issue for the disappointing figures lay in execution rather than demand, with problems concentrated in rolling stock projects, particularly newer programmes. “The production ramp-up of new rolling stock platforms has not been as steep as what we expected in the fourth quarter,” he said. “On other projects that met challenges early in their life cycle, we’ve not been able to turn them around as planned.”
He added that the current crisis playing out in the Strait of Hormuz had been “an additional constraint,” adding that all together, these factors would have knock-on effects on the company’s short-term financial performance. “Over the last two weeks since my arrival [at Alstom], I’ve been visiting factories in Italy, France and Germany. I went into the details of financial reviews and processes. I met people that are highly committed and highly competent. I met teams on the shop floor. I met engineers, project leaders, and obviously the regional management. One conclusion is very clear: Our ability to stick to planning is not strong enough.”
In a project business, he said, sticking to planning was “essential,” stating that at the moment, development, industrialisation, and manufacturing across multiple sites were “not always aligned.” Adding that in some cases production had moved ahead while homologation of the rolling stock was still pending, Sion said major adjustments would have to be made.
Necessary steps
“My priority is to drive deep operational changes and improve execution quality. In short, this means tighter day-to-day execution, stronger planning discipline, and better coordination across engineering, supply chain and production. We will also start broader reflections about adopting a more focused product and commercial strategy.”
Alongside these operational changes, Sion said Alstom would continue to develop its services and signalling activities, which he identified as areas with further growth potential, while also working to improve the quality and risk profile of order intake across the group.
He added that, as a newly appointed CEO, he would review the company’s portfolio and industrial footprint, including the existing transformation plan, to assess where adjustments or acceleration may be required. A new action plan is now set to be presented later in the fiscal year. But it’s clear that restoring performance in rolling stock will be the difficult yet central priority: “This is a necessary step to execute the backlog and prepare the group for sustainable cash generation and profitable growth,” Sion said.