Alstom SA (ALO), the world’s third-largest power-equipment maker, reported first-half operating profit that beat analyst estimates as orders rebounded.
Income from operations fell 18 percent in the six months ended Sept. 30, from 627 million euros ($864 million) a year earlier, the company, based in Levallois-Perret near Paris, said in a statement today. Analysts surveyed by Bloomberg estimated profit of 611 million euros. Orders climbed 45 percent to 10.2 billion euros, beating an estimate of 9.93 billion euros.
Alstom, which also makes rolling stock and power-grid gear, is cutting jobs in Europe and in the U.S., where demand from utilities and debt-laden governments is struggling to recover. The French company is investing and forging partnerships in faster-growing countries such as India, China and Russia to tap rising infrastructure needs.
“Emerging markets continued to benefit from the favorable trends already noticed,” Chief Executive Officer Patrick Kron said in the statement. “The second half of the year should be characterised by an improved volume of sales, a higher operating margin, as well as a positive free cash flow.”
Sales in the period declined 10 percent to 9.39 billion euros as deliveries of thermal power equipment, trains and metros receded. Excluding exchange rate fluctuations and acquisitions such as the power-grid unit bought from Areva SA in June 2010, revenue dropped 15 percent in the period.
Alstom defines income from operations as sales minus the cost of sales, research and development expenses, selling and administrative expenses.
Alstom’s operating margin narrowed to 6.7 percent of sales in the six months, from 7.3 percent a year earlier. The margin will remain in a range of 7 percent to 8 percent of revenue in the fiscal year ending March 2012, Kron reiterated today. Net income fell to 363 million euros from 401 million euros.
Kron said last year he will cut about 4,000 jobs at sites that make coal- and gas-fired power equipment in Europe and the U.S. as local utilities delay investments as he seeks to sustain the margin. In March, Alstom announced 1,380 job cuts at its transport unit in Europe.
Alstom is the third-largest power-equipment maker, trailing General Electric Co. (GE) of the U.S. and Germany’s Siemens AG. (SIE) The French company also competes with companies such as Siemens and Canada’s Bombardier Inc. on rolling stock, and with Siemens and ABB Ltd. (ABBN) on power-transmission markets.
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