Alstom powers to profits on strong energy sector 14/05/2007 00:00

PARIS, May 14, 2007 (AFP) - French engineering group Alstom powered into profits on Monday, turning its back on a crisis four years ago with strong orders in the energy sector, slashed debt and resumption of a dividend.

The group, which builds power stations and the French TGV high-speed train, reported a 152-percent rise in net profit in 2006-2007 to 448 million euros (609 million dollars).

And it hinted it was looking for takeover targets, possibly in the renewable energy sector.

Alstom is also the subject of rumors of a possible alliance with French nuclear power group Areva and construction company Bouygues.

In 2005-2006, when Alstom returned to profit after three years of losses, it had made a profit of 178 million euros.

Analysts surveyed by Thomson Ibes had expected a figure of 484.5 million euros. The price of shares in Alstom was nonetheless showing a gain of 1.28 percent to 114.60 euros in early trading.

Alstom stood by a forecast that it would achieve an operating margin of more than 7.0 percent this year and said it expected to increase sales by 10.0 percent or more. For 2009-2010 it expected to raise the margin to more than 8.0 percent.

Chief executive Patrick Kron, who has overseen the recovery of the business from near bakruptcy, said at a press conference: "Is eight percent the final objective? I hope not."

The group said that it wanted to pursue internal growth but was also considering "development by means of targeted acqusitions."

Kron said that the group was not targeting specific sectors of regions but that "it is clear that we will continue to make acquisitions in areas where there is the strongest growth," mentioning Asia.

He also said that Alstom was interested in renewable energy but that big stock-market listed companies in this sector seemed to Alstom to be over valued.

Operating profit rose by 40.0 percent on a comparable basis to 957 million euros, and by 28.0 percent overall. Analysts had expected an outcome of 881 million euros.

Sales rose by 14.0 percent on a comparable basis and by 5.9 percent overall to 14.2 billion euros, driven mainly by the energy division. This exceeded the group's own target for an increase of 10.0 percent on a comparable asset base.

The value of orders taken rose by 34.0 percent to 19.02 billion euros. Most of them were in the energy sector. The value of the total order book stood at 32 billion euros.

Cash available totalled 745 billion euros from 525 million euros 12 months ago, and net debt was slashed to 64 million euros from 1.248 billion euros.

The company also said it would recommend to shareholders a resumption of dividend payments, with a distribution of 0.8 euros per share.

In 2002-2003 Alstom, crippled by debts, reported a record loss of nearly 1.4 billion euros from a profit of 139 million euros the previous year.

The French state came to the group's rescue, acquiring 21 percent of the business having negotiated a rescue plan with European Union competition authorities in Brussels.

Under the plan, the group had to dispose of some assets, including shipyards, and thousands of jobs were lost.

The group focused on transportation and energy with support from French construction company Bouygues which bought the state's holding in April 2006.

On May 1, Bouygues owned 25.35 percent on Alstom.

Reports of a possible alliance between Alstom, Bouygues and Areva have been been strengthened by the election of Nicolas Sarkozy as president of France.

Kron has said there reasons for strengthening relations between Alstom and Areva, particularly for the construction of nuclear power stations but that nothing had changed so far because of the election.

Copyright AFP

Subject: French news