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Shares in French train manufacturer Alstom crashed by more than 35% following a reduction in the company’s forecast for free cash flow. As of this writing, Alstom shares are selling at €13.76, a 35.88% plunge from its previous close at €21.46.
Alstom published a press release containing preliminary financial information for the first half of fiscal 2023/24. The first half ending September 30, saw the company’s free cash flow falling from negative €45 million from last year, to the current level at negative €1.15 billion. Alstom then added that it expects the full-year free cash flow to be in the range of €500 – €750 million. This is a disappointing forecast for the company considering that its previous prediction had the cash flow as “significantly positive.” The plunge resulted in a temporary suspension of Alstom shares at the Paris Stock Exchange.
Alstom’s press release offered some explanation for the plunge in free cash flow. Firstly, the company mentioned that its backlog, now €87 billion, has grown over the last two years, and caused a spike in production. The backlog, in addition to disappointing supply chain conditions, caused Alstom to increase inventories and assets to avoid production disruptions and delivery delays. Alstom also noted that delays in its Aventra program as well as a reduction in down payments, are factors that affected the free cash flow.
Chairman and Chief Executive Officer Henri Poupart-Lafarge stated:
“Supported by a 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 finalized at the same time, is weighing on the free cash flow in this first half.”
The Alstom press release also highlighted a reduction in orders from €10.1 billion in the first half of the last fiscal year, to the current €8.4 billion. Sales were better as the company recorded €8.3 billion in the first one, more than the €8.0 billion from the same period in the previous fiscal year. In addition, Alstom said profitability was higher, as the company’s adjusted EBIT margin is 5.2%, over the 4.9% from last year.
Alstom and Italian public transport company Ferrovie Nord Milano (FNM) have announced Italy’s first zero-emission train. Presented by FNM, the train will begin commercial service in Valcamonica sometime from late 2024 into early 2025. Both companies signed a €160 million contract agreement in 2020 to produce six hydrogen fuel cell trains for Italy. The new train is the first phase of the H2iseO project. The project aims to create “Italy’s first Hydrogen valley” in the province of Brescia.
Alstom Italy General Manager Michele Viale said the announcement of the first locomotive as advantageous to the railway industry. Viale described it as “a project that represents significant progress for the entire rail sector and confirms Alstom’s role in anticipating and shaping the future of mobility with new, highly sustainable transportation solutions.”
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Tolu is a cryptocurrency and blockchain enthusiast based in Lagos. He likes to demystify crypto stories to the bare basics so that anyone anywhere can understand without too much background knowledge.
When he’s not neck-deep in crypto stories, Tolu enjoys music, loves to sing and is an avid movie lover.
Automotive corporation Stellantis targets global BEV sales of 5 million by 2030 following its commendable full-year results.
Stellantis recently posted its full-year 2022 earnings results, which showed a 26% rise in net profit to a record 16.8 billion euros, or $17.9 billion. The multinational automotive manufacturing corporation also experienced a 41% annual jump in electric vehicles and global battery sales.
Following its commendable full-year outing, Stellantis announced a massive 4.2 billion euros ($4.47 billion) dividend payout to shareholders. This payout scheme is still subject to shareholder approval and represents 1.34 euros per share. Furthermore, the company’s board approved a share buyback of 1.5 billion euros, executable by the end of 2023.
Stellantis’ shares increased by 1.6% during the early trading session in Europe.
According to the company, net revenue surged 18% to 179.6 billion euros due to a combination of favorable parameters. These factors include a favorable vehicle mix, strong net pricing, and positive FX translation effects. Stellantis chief executive Carlos Tavares also explained that the results reflected the company’s Europe electrification strategy effectiveness. This strategy saw the sale of 288,000 battery and electric vehicles (BEV) in 2022. In addition, Stellantis currently has 23 BEVs up for sale, which is expected to double by the end of 2024. The Amsterdam-based automotive manufacturer is targeting global BEV sales of 5 million by 2030.
Commenting on Stellantis’ progress and 2030 renewable energy automotive agenda, Tavares explained:
“We now have the technology, the products, the raw materials, and the full battery ecosystem to lead that same transformative journey in North America, starting with our first fully electric Ram vehicles from 2023 and Jeep from 2024. My deep appreciation to each and every employee and our partners for their contributions to a more sustainable future.”
Formed by a merger of Italian-American conglomerate Fiat Chrysler Automobiles (FCA) and the French PSA Group, Stellantis is a leading automobile manufacturer. Considered one of the largest carmakers in the world, the company is behind several popular individual auto brands. These brands include Peugeot, Jeep, Dodge, Fiat, Chrysler, and Alfa Romeo.
Stellantis full-year 2022 figures also underscores the company’s position as the world’s fifth-largest automaker in global vehicle sales last year. The company ranked behind Toyota, Volkswagen, Hyundai, and General Motors.
Last September, Stellantis announced a partnership with Uber (NYSE: UBER) to make a play for France’s electric vehicle market. At the time, the announcement revealed that car rental service provider Free2Move would also be part of that deal.
Under the partnership, Free2Move would facilitate Uber’s agenda to convert 50% of its French vehicle fleet to electric vehicles. Furthermore, Stellantis’ overlapping EV scope also stood to benefit from that development. The company, which sought to produce and sell more electric and hybrid cars, also aimed to keep its profit margins high. Commenting on Stellantis’ capacity to attain all sales targets at the time, Tavares said:
“We are proud to be a legacy automaker. Being a legacy automaker shows our ability to design and produce safe products at scale.”
Nonetheless, Stellantis still faces substantial challenges in transforming its traditional combustion engines to zero-emission.
Tolu is a cryptocurrency and blockchain enthusiast based in Lagos. He likes to demystify crypto stories to the bare basics so that anyone anywhere can understand without too much background knowledge.
When he’s not neck-deep in crypto stories, Tolu enjoys music, loves to sing and is an avid movie lover.
Volkswagen posted first half earnings of $13.5 billion and now expects operating return on sales to go as high as 7.5%.
German automaker Volkswagen AG (XETRA: VOW) on Thursday, July 29, posted record first half sales of 11.4 billion euros ($13.5 billion) after experiencing a surge in demand for its products. The increased demand for premium cars in Europe and the Americas, and the tripling of electric car sales majorly contributed to the company’s sales volume. As a result, Volkswagen has now raised its projected profit margin target for the second time in three months. The company’s expected operating returns on sales is now between 6% and 7.5%. This is higher than the previously projected range between 5.5% and 7%.
The German car maker’s second-quarter deliveries were pegged at 2.55 million vehicles. This is an increase from the 1.89 million reported in the first half of 2020. Quarterly group sales revenue came in at 67.29 billion euros, up from 41.08 billion euros for the same period the year before. Furthermore, Volkswagen posted operating results before special items at 6.55 billion euros, up from -2.39 billion euros the previous year.
Volkswagen reports that it expects half of its sales in 2030 to battery-electric hybrids by 2030. It also stated that almost 100% of its new vehicles in major markets by 2040, will be zero-emission.
Volkswagen CEO Herbert Diess is happy with the realized first half operating profit before special items. In a recent statement, he attributed this to “…clear proof of how strong our brands are and how attractive their products are.” Diess suggested double-digit returns in the premium division of the company as well as rising demand for electric cars. The recent report suggests remarkable growth, considering that only last year the automakers had to lower their delivery expectations amid growing uncertainty.
Despite the recent sales optimism, Volkswagen expects to brave a peculiar and ongoing industry issue: a shortage of semiconductors. These semiconductors, also called ‘chips,’ are highly integral to the manufacturing of cars. The crippling effects of COVID 19 and rising demand have created a deficit of these said ‘chips’ in the industry. An effect so severe that even Nissan CEO, Makoto Uchida, has weighed in on it. The Japanese automaker’s top exec expects his company to manufacture half a million fewer vehicles in 2021, as released in a statement. As it stands, there’s also a shortage of factories making the older, less advanced chips that used in cars.
Volkswagen believes that there will still be hurdles to overcome in the future. In its earnings report, the carmaker cited economic challenges of the supply chain variety that will arise from a recovering global economy. Other issues it expects to tackle head-on include an increase in competition intensity and volatile commodity and foreign exchange markets. Lastly, there is the obligation to produce ‘greener’ vehicles that emit less carbon in the face of stringent emissions-related requirements.
Regarldess of the possible problems, the recent development is an improvement on the company’s situation exactly a year ago. At the time, the COVID-19 pandemic severely affected its sales volume.
Tolu is a cryptocurrency and blockchain enthusiast based in Lagos. He likes to demystify crypto stories to the bare basics so that anyone anywhere can understand without too much background knowledge.
When he’s not neck-deep in crypto stories, Tolu enjoys music, loves to sing and is an avid movie lover.