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Alstom (OTCPK:ALSMY) (OTCPK:AOMFF) -15.2% in Paris trading Wednesday after the train maker swung to an H1 profit but said it will sell assets, scrap its dividend and consider a capital raise as part of a cost-savings plan to cut debt and improve profitability.
The stock already fell by more than a third in early October when the company said it suffered a €1.15B cash outflow in the first half of its fiscal year and expected negative free cash flow of €500M-€750M for the year to March 2024.
"The negative free cash flow of Alstom during this first half is a clear call for change," said Henri Poupart-Lafarge, who will step down as the company's chairman but remain as CEO.
Alstom (OTCPK:ALSMY) (OTCPK:AOMFF) said it hopes a divestment program will raise €1B, while reducing costs through ~1,500 job cuts, as it targets a €2B reduction in its net debt by March 2025.
Poupart-Lafarge said that while Alstom (OTCPK:ALSMY) (OTCPK:AOMFF) is considering a capital increase, it is not the preferred option, but whether the company proceeds would depend on the success of asset sales.
"Until the 'will they/won't they' question is resolved on an equity raise, share[s] can remain volatile," Citi analyst Martin Wilkie said.