Alstom to restructure if orders fail to rise

18th June 2004, Comments 0 comments

PARIS, June 18 (AFP) - French engineering group Alstom warned Friday that its financial results could be hurt if orders failed to show a durable improvement this year.

PARIS, June 18 (AFP) - French engineering group Alstom warned Friday that its financial results could be hurt if orders failed to show a durable improvement this year.  

But the troubled giant, which builds high-speed trains, ocean liners and power stations, also said in its annual report for 2003-2004 that it still foresaw positive cash flow in 2005-2006 and an operating margin of six percent.  

Nonetheless, the restructuring warning prompted a sharp fall in Alstom shares, which at mid-day were down four percent at EUR 0.72 on a generally weaker overall Paris market.  

"If the recovery in some of our markets and a return of client confidence, which was noted in the second half of 2003-2004, are not confirmed in a lasting manner it could have an unfavorable impact on our results," the report said.  

The company recalled that its fragile financial situation last year made it difficult to obtain bank guarantees. A EUR 3.5-billion (USD 4.2-billion) line of credit secured in August 2003 was drawn on faster than had been expected in the face of a pickup in orders at the end of 2003 and the beginning of this year and could be used up this summer.  

The report said the group wanted to negotiate new guarantees to cover its needs for next two years, with its principal banks so far agreeing to cover three quarters of such requirements.  

But it warned that it could not guarantee that negotiations to secure the remaining credit would succeed.  

"Difficulties in arranging sufficient guarantees could compromise our ability to win new orders and to receive advances and scheduled payments from our clients," the report said.  

The European Commission is meanwhile considering a French plan, backed by European Competition Commissioner Mario Monti, to provide Alstom with about EUR 2.285 billion (USD 2.75 billion) in various forms of state aid that would be combined with assistance from creditor banks.  

The commission is expected to rule by early July on whether or not the plan is consistent with European Union competition rules.


© AFP

 


Subject: French news


0 Comments To This Article