Alstom Shares Plunge 25% After Slashing Earnings Outlook

Alstom shares dropped 25% in Paris trading after the French rail manufacturer slashed its earnings outlook and forecast a 1.5 billion euro cash burn. The financial distress follows engineering issues with Coradia Max regional trains in Germany, which necessitated expensive retrofits and caused delays and penalties that pushed the project's gross margin into negative territory.

As a result of these failures, the company lowered its adjusted operating margin forecast for the fiscal year from 6.5% to approximately 1%. Alstom also reduced its train-car production target to 4,000 units. To stabilize its balance sheet, the company signaled plans to sell assets as part of a potential 2 billion euro deleveraging plan.