Alstom did not find any other unpleasant surprises in Bombardier Transport’s contracts, allowing its action to recover. Despite everything, the placement of the Caisse de depot et placement du Québec (CDPQ) in this French giant has taken its toll since the institution became its largest shareholder.
Its value has fallen by around CAN 1 billion since January 29 – when Alstom officially hooked Bombardier’s rail division to its wagons – when one takes into account the stock market decline of the French multinational’s stock and the decline in the market. euro (- 7%) against the Canadian dollar.
“As a long-term investor, it is from this perspective that we assess our investment decisions,” said CDPQ spokesperson Elena Gabysz in a statement sent by email. In addition, as part of this transaction, we negotiated very important commitments for Quebec. ”
The Quebecois woolen stocking, which held about a third of Bombardier Transport, had converted its stake in Alstom, in addition to buying several hundred million euros in order to buy 64.7 million shares of the French giant from a price of 40.67 euros – an investment of CAN 4.1 billion.
At the closing of the transaction, the block of shares was worth some 4.5 billion CAN since the title of the French manufacturer of rolling stock had closed at 44.86 euros.
Skeletons in the notebook
Over the months, the title of the French multinational has lost feathers on the Paris Stock Exchange. The decline has accelerated since July 5, when the company predicted it would take three years to digest the former rail division of Bombardier, plagued by numerous execution problems.
The multinational predicted it would cost it up to C $ 2.7 billion in the first half of the year, which ended on September 30. On Wednesday, Alstom said that it was ultimately about CAN 2 billion that were spent, below the range mentioned.
“There are no hidden elements that we have not seen,” said Alstom CEO Henri Poupart-Lafarge during a conference call with analysts on Wednesday in order to comment on the financial performance of the company. We have really good control over the entire portfolio. ”
PHOTO FRANÇOIS LO PRESTI, FRANCE-PRESSE AGENCY
Henri Poupart-Lafarge, big boss of Alstom
Investors seemed reassured. On the floor of the Paris Stock Exchange, Alstom’s action took 9.75% to close at 35.01 euros. Despite everything, the decline has been 19% since July and around 25% for the year.
“This difference can be explained in particular by the integration of Bombardier Transportation activities, which requires several months,” said Mr.me Gabrysz, in response to a question on the current price of Alstom’s shares in relation to the price paid by the CDPQ for its shares.
Small consolation for the Quebec institutional investor: he received a dividend of some 25 million CAN last August.
Alstom did not disclose the list of problematic contracts. In the past, Bombardier had already pointed out major projects in Switzerland, Germany, London and New York to explain its setbacks.
Not surprising
Professor in the Department of Management at McGill University, Karl Moore is not surprised by the warnings issued by Alstom since it became the owner of Bombardier Transportation.
“You often see bad news because the buyer learns things he didn’t know before he became a homeowner,” he says. It’s also a strategy: get out all the bad news quickly because you can shift the blame to the old leaders, and rightly so. ”
As things stabilize, Alstom’s stock should continue to rise, said Moore, who was not concerned about the CDPQ’s placement.
Without commenting on the Caisse’s investment, HEC Montréal strategy professor Louis Hébert anticipates other important announcements since the integration phase is not over.
“Bombardier was in serious trouble and Alstom was in good shape, but for how long? he stressed. There was a strategic logic behind the transaction to face Asian competitors. Will it turn into profits? We don’t know yet. ”
The acquisition of Bombardier Transportation is expected to enable Alstom to generate annual revenues estimated at CAN 24 billion, which remains a far cry from the turnover of CAN 43 billion of Chinese giant CRRC – the number one in the industry.
Taking into account the integration of Bombardier Transportation, Alstom posted a net loss of CAN 37 million in the first half of the year ended September 30.