Reduced Profits Reported at Alstom, Manufacturer of Trains for London Underground
In the financial year ending 31 March, 2025, Alstom, the UK and Ireland's largest supplier of new trains, reported a significant drop in profit for its train manufacturing division. The pre-tax profit for the year was £21.9m, a stark decrease from the £121m recorded in the previous year.
Based in France, with a history dating back to 1928, Alstom operates factories in Derby, Widnes, Crewe, Ilford, and Plymouth. The group's revenue for the same financial year was a impressive €18.5bn.
The profit decline can be attributed to a combination of financial restructuring pressures, strategic business sales, and transitional production changes. Alstom planned to issue €1.75 billion in shares and bonds to reduce debt, which was at risk of a downgrade into junk bond status, indicating financial strain affecting profitability.
In addition, the sale of Alstom's American rail signalling business for $690 million in September 2024 suggests a strategic divestment that may have impacted revenues and margins in the short term.
Structural changes such as ceasing locomotive manufacturing at one site and transferring it to another, which can involve transitional costs, also played a role. New orders like those in Taiwan and agreements for new trains in 2025 may not yet have offset these impacts in 2024-2025.
Volatile material markets, particularly the iron ore market, may have indirectly influenced raw material costs or supply chains. However, it's important to note that these external factors were not directly tied to Alstom's profit decrease.
Despite the profit reduction, Alstom continues to supply trains to major UK companies such as Avanti West Coast and Greater Anglia. The value of orders received by Alstom in the year fell from £181.9m to £164.4m, and the turnover for the same period fell from £672.8m to £555.4m.
The rejection of Alstom's plans to operate a passenger rail service in the UK under the name Wrexham, Shropshire and Midlands Railway (WSMR) by the Office of Rail and Road (ORR) in July 2024 did not directly contribute to the profit decrease.
In a move to address the financial pressures, Alstom cut its dividend from £210m to £30m in the latest financial year. The earnings before interest, expenses, and taxes for the same financial year were €1.1bn.
Despite the challenges, Alstom remains the UK and Ireland's largest supplier of new trains, having built, or currently building, around 40% of the UK mainline train fleet, the entire fleets in service with London Underground, and Dublin Luas.
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