Alstom Posts Record Orders as Execution Woes Cloud Margin Path

Alstom delivered a record €27.6bn in fresh orders for its 2025/26 fiscal year, lifting backlog to a sector-leading €104.4bn, but the French rolling stock group conceded that operational missteps on large contracts will continue to weigh on margins into the new financial year.

Group sales rose 3.7% to €19.17bn, with organic growth of 7.2%, the company said on 13 May. Adjusted EBIT came in at €1.17bn, broadly flat year on year, while the adjusted EBIT margin slipped 30 basis points to 6.1%. Net profit more than doubled to €324m from €149m in the prior period, and free cash flow held at €336m in line with guidance.

The numbers underline a sharpening divergence in Europe's rail supply industry between commercial demand, fuelled by decarbonisation mandates, fleet renewal cycles and EU support for modal shift, and the operational capacity of suppliers to convert that backlog profitably. Alstom flagged planned margin expansion as impacted by lower production and execution issues on some rolling stock projects, language that has unnerved investors since April's preliminary release wiped roughly a quarter off the share price.

Chief executive Martin Sion, who took the reins in April, has framed FY 2026/27 as a stabilisation year focused on execution discipline, leaner overheads and process simplification ahead of a Capital Markets Day in early 2027. Gross margin in backlog rose 20 basis points to 18.0% as of 31 March, suggesting newer contracts are pricing more favourably than legacy work.

European context is supportive. Berlin's infrastructure spending push, Rail Baltica progress and the EU's high-speed rail strategy all point to a sustained ordering cycle for incumbents including Alstom, Siemens Mobility and Stadler. Conversion, not demand, is now the test. Alstom shares closed at €16.70 on 21 May, leaving the stock down roughly a third over twelve months.