Did Gas Turbine Problems Contribute to Alstom's Profit Decline?

Friday, May 11, 2001
Markets will be keen for signs that French energy and transport company Alstom has improved margins and resolved problems with its heavy duty gas turbines when it reports full-year results on Tuesday.

According to consensus estimates provided by the JCF Group, the company is expected to post net profits of $203.4 million for its 2000/01 fiscal year - a substantial decline from the $306 million registered last year.

That decline will stem from exceptional charges for the gas turbine problems and a drop in exceptional gains from asset sales.

Comparisons will be further complicated because Alstom will be consolidating 100 percent of the former ABB Alstom Power equipment business for the final three quarters of the year.

The company agreed to buy the 50 percent of that business it did not own from ABB Ltd in March of last year for $898.7 million.

Operating profit before restructuring charges and goodwill amortization is expected to rise to $964.1 million from 729 million on sales of $20.3 billion - figures that would bring the overall operating margin to 4.7 percent, up from 4.5 percent a year earlier.

Alstom has targeted an operating margin of six percent in the 2002/2003 fiscal year. The margin in the six months to September 30, 2000 was 4.6 percent.

Profitability in the underperforming energy division, which makes up roughly half of group sales, will garner particular attention. Analysts said investors would also welcome signs the company is taking steps to reduce its debt, which rose by $165.5 million to $841 million at the end of September.

"People are keen to hear about the balance sheet and the outlook for profitability of the energy division in the current year," an analyst said. "No other stock within the European capital goods sector has a situation even remotely approaching that of Alstom in terms of off-balance sheet liabilities."

Investors will also be seeking an update on the problem turbines it inherited from ABB.

Last November, the group set a $791.1 million provision, which is to be amortized over 20 years, to cover turbine cooling system modifications required at 25 plants in the United States, South Korea, Taiwan and Europe.

"We will be looking for an update on the heavy duty gas turbine situation - whether they are still happy with the provisions they made and have agreed more settlements with clients," said an analyst at Merrill Lynch.

The turbine problems contributed to a sharp drop in Alstom's share price in the second half of 2000. But in recent months the stock has been among the top performers in France and the sector, rising over 40 percent since late January.

Analysts attribute that rise to the end of a share overhang, which had weighed on the stock in recent years. In early February, top shareholders Alcatel and Marconi placed 33 percent of Alstom's capital on the market, boosting its liquidity.

The market is doubtful, however, whether next Tuesday's earnings will provide further impetus for the shares, which are perched just below their lifetime highs at close to $29.

Maritime Reporter June 2014 Digital Edition
FREE Maritime Reporter Subscription
Latest Maritime News    rss feeds

Marine Propulsion

There’s Still Time for SHIPPINGInsight Award Entries

Entry submissions for the first SHIPPINGInsight Award are due Friday, Aug. 1, but organizers said they will continue to accept nominations through following week to provide some extra time.

Burger Boat to Build New Passenger Vessel

Burger Boat Company announced that it has received a contract for the construction of an 89-foot (27-meter) steel passenger vessel for Wendella Sightseeing Company, Chicago, Ill.

Joint Project Studies Condition-based Engine Monitoring

Classification society ClassNK announced that it will participate in a joint project together with Mitsui Engineering & Shipbuilding Co., Ltd. and MES Technoservice Co.

Offshore

BOEM Extends O&G Lease Comment Period

The Bureau of Ocean Energy Management (BOEM) is extending the public comment period for the Request for Information (RFI) and Comments on the Preparation of the

Total E&P is First to Use FROG-XT4

Total E&P is the first to use Reflex Marine’s newly developed FROG-XT4 on the Odudu field in Nigeria. The French operator purchased the crew transfer device

New Standard gets Revised Program for Cooper Basin Approved

New Standard Energy Limited (New Standard) advises that it has received approval for amendments to its five year work program in PEL570 in the Cooper Basin. As part of the revised program,

 
 
Maritime Careers / Shipboard Positions Maritime Security Maritime Standards Naval Architecture Navigation Offshore Oil Pipelines Ship Electronics Sonar Winch
rss | archive | history | articles | privacy | terms and conditions | contributors | top maritime news | about us | copyright | maritime magazines
maritime security news | shipbuilding news | maritime industry | shipping news | maritime reporting | workboats news | ship design | maritime business

Time taken: 0.1299 sec (8 req/sec)