PARIS (The Deal) -- France's Alstom on Wednesday underlined the extent of the woes that have made it a target for General Electric (GE) and Siemens (SI), unveiling declining full-year orders, tumbling earnings and a large rise in net debt.
Alstom CEO Patrick Kron responded to the profit shortfall by scrapping a planned dividend and eschewing forecasts for the financial year ending March 2015, declaring that his focus was on completing a rapid sale of Alstom's struggling power business.
Alstom at the end of April said that it supported GE's plan to pay 11.4 billion euros ($15.9 billion) for its power operations, though it held off accepting the bid while it waits for a counteroffer from Germany's Siemens, which has proposed swapping some of its transport assets for Alstom's power businesses.
"My goal is that the process doesn't carry on endlessly," Kron told reporters on a call. "Alstom isn't in a crisis ... It has strategic problems in energy that we want to address."Kron's hopes of a quick deal have been complicated this week by the French government, which told General Electric that it needs to improve its offer for Alstom by contributing some transport operations to the French business. GE said that it was willing to discuss its plans. Siemens, which on Wednesday announced a major restructuring of its operations, is still pondering the details of its bid and said it would take its time to make a counteroffer. "We got the opportunity to look into the assets for four weeks and then we will decide if we make an offer for something," Siemens President and CEO Joe Kaeser told an analyst meeting on Wednesday. "We are pretty cool about the process." Asltom received orders of 21.5 billion euros in the year ended March, down 10% year-on-year. Revenue held steady at 20.3 billion euros, while net profit tumbled to 556 million euros, down 28% year-on-year from 768 million euros, resulting in a net cash outflow of 171 million euros. "Challenging macro-economic conditions continued to weigh on Alstom's commercial performance," the company said. "A large number of major infrastructure projects have been postponed, notably in thermal power." Alstom wants to sell its electricity generator manufacturing and electricity grid businesses, in which it lacks the scale to compete with larger rivals including GE and Siemens. The sale would transform the French manufacturing group, cleaving off units that account for about 70% of its total revenue. Cash raised from a deal for the power businesses would be used to reduce debt, which grew to 3 billion euros over the 2014 financial year, up from 2.3 billion euros a year earlier, and to invest in its remaining train and rail equipment manufacturing operations. Alstom shares traded Wednesday at 28.84 euros, up 0.12 euro, or less than 1%. The company has a market capitalization of 8.9 billion euros.
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