Alstom to cut jobs, sell high-speed train stake
Paris (AFP) - French heavy engineering group Alstom, known for its high-speed trains, revealed a cost-cutting restructuring on Wednesday to counter weak prospects for growth, signalling job cuts and asset sales.
The group said that it would shed at least 1,300 jobs, most of them in Europe, and that it intended to sell part of its railway equipment division and other assets to raise 1.0-2.0 billion euros by the end of 2014.
The company said that it was aiming to cut costs by about 1.5 billion euros ($2.0 billion) per year by 2016.
For the first half of the group's financial year to September, Alstom reported a 22.0-percent fall in orders to 9.43 billion euros, although activity improved in the second quarter.
Net profit fell by 3.0 percent to 375 million euros, from sales which were little changed at 9.73 billion euros.
The announcement of restructuring pushed the price of shares in Alstom up by 5.63 percent to 28.61 euros in morning trading, in an overall French market which was ahead by 0.73 percent.
One stock broker in Paris commented: "The asset sales will certainly avert a new capital increase and hold net debt at reasonable levels."
He added: "Despite mediocre results, Alstom is holding to its annual and medium-term forecasts for the trend of sales and profitability."
The group said that it had decided to launch the programme because its outlook for growth was weak.
Most of the job cuts would fall in its division making equipment for thermal power stations, accounting for more than 40 percent of group sales, and in administrative and computer activities.
The measures had begun to take effect a few weeks ago, chief executive Patrick Kron said during a telephone press conference, warning that further job cuts were possible.
The group also raised its provisions for annual restructuring charges by 50 million euros.
Alstom employs 93,000 people around the world of whom 18,000 work in France.
The asset sales would probably include the sale of a minority interest in Alstom Transport, and also non-strategic assets, Kron said.
"I can't say if we will sell 20 or 30 percent (of Alstom Transport), it's not important, and still less give you the price, but we have time and we are going to begin the process with all of those concerned."
The new shareholders could be industrial or financial stakeholders, he said, but also remarked that Alstom was not short of capital.
The high-speed train, known by its French initials TGV, is considered in France to be a trademark of French engineering prowess. Alstom builds rolling stock to run on the special TGV high-speed tracks.
High-speed railway networks are being developed by various companies in many parts of the world.
