Alstom Posts 19 Percent Gain In Sales

Friday, July 13, 2001
French turbines to trains group Alstom posted a 19 percent rise in sales to 6.05 billion euros in its first quarter to June, boosted by the full consolidation of its power business and gains in transport.

Alstom shares, among the top performers on the French benchmark index this year, pushed higher on the news, trading up 4.10 percent at 33.50 euros at 0745 GMT, and outperforming the DJ Stoxx European industrials index, which was up 0.07 percent.

Company officials said on Friday that new orders surged 36 percent to 6.22 billion euros during the three-month period which ended June 30, boosting its order backlog to a record 39.5 billion euros. Both the sales and order rise was bolstered by Alstom Power, which was consolidated at only 50 percent for nearly half of the prior year's first quarter. On a like-for-like basis, sales grew five percent while orders rose 17 percent.

"The headline numbers are great, but the impression I get is that the company is trying to play down expectations that the full-year will be as strong as this," said an analyst at Goldman Sachs.

The Alstom Power division, which contributed more than half of group sales in the first quarter, saw order growth of 53 percent on a reported basis and like-for-like growth of 15 percent, as the company showed signs of putting past problems with its heavy gas turbines behind it.

"Demand was strong for steam turbines, boiler products, services and industrial-size gas turbines, particularly in the United States. This more than offset a drop in turnkey steam, hydro and as expected, in large gas turbines," Alstom said.

Growth in the transport division was strongest, however, with orders rising 59 percent on a reported basis to 1.8 billion euros and 48 percent on a like-for-like basis.

Marine orders, which vary significantly from quarter to quarter, were down 78 percent, while sales in the division slid 47 percent to 332 million euros.

Alstom shares, which closed at 32.18 euros on Thursday, are among the top performers on the Paris bourse in 2001, having risen 17 percent since the start of the year.

A top beneficiary of the flight out of technology, telecommunications and media shares, Alstom stock hit an all-time high of 36 euros last month.

Analysts are confident the group is emerging from the clouds linked to its problem heavy gas turbines, which required a 903 million euro provision last November.

But they remain concerned about Alstom's 15 billion euros in off-balance sheet liabilities, which they say is likely to limit further gains in the shares.

"When you look at the stock, you can't forget those liabilities," said the analyst, who downgraded Alstom stock to "market perform" last month because of them.

"No other industrial firm in Europe is saddled with that level of off-balance sheet liabilities."

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