Train maker Alstom’s sales rise but inflation, supply chain woes linger

French train maker Alstom (ALSO.PA) reported on Tuesday an 8% jump in quarterly sales and confirmed its full-year outlook, but reiterated concerns over inflation and component shortages.

Alstom’s shares, which had tumbled 6% by 1008 GMT, have lost a quarter of their value this year as Russia’s invasion of Ukraine drove costs higher and new lockdowns in China further disrupted global supply chains.

Chief Financial Officer Laurent Martinez told analysts in a call that supply chain disruptions had not affected deliveries in its first quarter which ended on June 30 and the situation was “tense but so far under control”.

“The supply of electronic components is getting more complex and it’s something we are now fighting with on a day-to-day basis in terms of protecting customer deliveries, so something that is (among) our top priorities,” Martinez said.

Alstom, which makes trains and signalling systems for urban and regional rail networks, said in May it expected inflation to weigh on profitability this year, while the components shortage could hamper deliveries.

It recorded sales of 4 billion euros ($4.06 billion) in the first quarter, compared with 3.70 billion a year earlier.

The company received orders worth 5.60 billion euros in the quarter, down 13% from last year, resulting in a backlog of 83.4 billion euros at the end of the period.

The rail infrastructure group still sees sales growth, a progressive increase in the margin for adjusted earnings before interest and taxes (EBIT) and free cash flow generation for the full year. It also confirmed its mid-term targets.

“While sales and margins are still expected to grow for the full year … we believe they will disappoint relative to previous expectations,” Morningstar analyst Joachim Kotze wrote.

“This is another spanner in the works for a business that is desperately trying to convince the market of its long-term investment case,” he added.

($1 = 0.9862 euros)