Alstom Chief Says Markets Are Tough as Mature Economies Struggle

Alstom SA (ALO) Chief Executive Officer Patrick Kron said markets are “tough” as mature economies struggle, making it hard for the French maker of trains and power equipment to predict continued growth in its backlog.

“We’ve been 10 quarters in a row with orders exceeding sales, and that has been great,” Kron said in a Bloomberg Television interview in St. Petersburg. “Whether it continues, we’re going to see, but I mean, today, markets are tough.”

Kron in May lowered his forecasts for sales and margin growth by 2015, citing slower global economic expansion. Alstom, which has cut jobs in Europe and the U.S. to adjust to lower demand from utilities in recent years, is now shutting plants to adapt to falling prices of onshore wind turbines and power-grid equipment, the CEO has said.

“Mature markets are in wait-and-see attitude because there is no economic growth, and we see demand moving in emerging markets in general,” the CEO of the company based in the Paris suburb of Levallois-Perret said today.

New orders at Alstom jumped 9.5 percent to 23.8 billion euros ($31.4 billion) in fiscal year ended March 2013, helped by a rebound in demand for regional trains and power-transmission equipment, the company said on May 7. Sales climbed 1.7 percent to 20.3 billion euros as some grid and hydro projects were delayed.

BRIC Partnerships

Alstom, which bought 25 percent of Russian trainmaker Transmashholding last year, is seeking to adapt to a shift in demand by building plants and forging partnerships in countries such as Brazil, Russia, India and China.

“There’s a massive need of modernization and development of Russian railways,” from freight locomotives to intercity and suburban trains to metros and tramways, Kron said today. “All markets are tough; Russia is tough because we have competition.”

He said a potential escalation in the trade dispute between the European Union and China may hamper growth.

“Any problems which lead to some limitation in exchanges is bad for us,” Kron said. “There has to be fair competition, reciprocity; that means that Chinese companies are welcome in Europe, subject that we are welcome in China.”

The French company ranks behind General Electric Co. (GE) and Munich-based Siemens AG (SIE) in the power-equipment industry. Alstom also competes with Siemens and Montreal-based Bombardier Inc. (BBD/B) on train cars, and with Siemens and ABB Ltd. (ABBN) on power-transmission markets.

To contact the reporters on this story: Francois de Beaupuy in Paris at fdebeaupuy@bloomberg.net; Ryan Chilcote in London at rchilcote@bloomberg.net

To contact the editor responsible for this story: Simon Thiel at sthiel1@bloomberg.net

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