EUR 850.00 For Business Accounts Only

Morningstar | Alstom Report July 2019

In 2015, Alstom sold its energy business to General Electric. As result of the deal, Alstom’s financial flexibility increased tremendously, opening the door for targeted investments in the railway equipment, signaling, and solution business. The exit from all energy-related businesses was completed in October 2018, when Alstom transferred all its interests in three Energy Alliances (Joint Ventures) to General Electric, after exercising its put options.Formidable positions in the rail space, especially in the high-speed rolling stock market, make Alstom a primary beneficiary of global infrastructure stimulus plans. Economic and demographic growth in emerging countries creates a growing demand for infrastructure, trains, and signaling in these countries. But Alstom’s product offering is also well suited to participate in projects aimed at updating and modernizing existing infrastructure in mature markets. Alstom’s solid safety record with limited accidents is an excellent selling point, and the firm’s products and services are well integrated into the daily operations of railway owners. However, these two barriers--knowledge and reputation--will not prevent Asian players from winning big contracts and gaining market share.The Alstom-Siemens mobility merger proposal to create the second-largest manufacturer of rolling stock was blocked in February 2019 by the European Commission, who raised concerns about higher prices, safety and ineffective competition in signaling systems and very high-speed trains. The merger was intended to better cope with increasing competition from Chinese companies. Alstom had been carving out its strategic energy assets in accordance with the agreements of the possible combination with Siemens, which will not be completed.