Alstom to cut 1,300 jobs, sell part of transport unit
By Natalie Huet and Benjamin Mallet
PARIS (Reuters) - French power and engineering firm Alstom (ALSO.PA: Quote) said it would shed 1,300 jobs and sell a stake in its transport business to raise between 1 and 2 billion euros after a drop in orders hit first-half profit and cash flow.
The disposals of a minority stake in the unit known for making high-speed TGV trains and non-strategic assets will take place before December 2014, but the job cuts, which will run to 2016, will put the company on a possible collision course with the French government.
Alstom, which also makes wind turbines and turbines for power stations, was bailed out by the French government a decade ago and has relied on orders from state rail operator SNCF and utility EDF (EDF.PA: Quote).
Shares in Alstom rose 8 percent to a five-month high in morning trade, the strongest performers on France's CAC 40 .FCHI blue-chip index.
"Overall, the results were higher than the estimates, book-to-bill looks very good, although the free cash flow is disappointing," a Paris-based trader said.
Chief Executive Patrick Kron told reporters the job cuts would centre on Europe. He did not give a breakdown but said they would particularly hit its German coal-fired plant business and IT jobs in France, where the Socialist government is battling to contain double-digit unemployment.
Like rivals Siemens (SIEGn.DE: Quote) and ABB ABBN.VX, Alstom is facing a dearth of large orders, particularly in thermal power, as utilities delay spending in a sluggish global economy.
"During the first six months of 2013/14, the macro-economic conditions have remained challenging with a sluggish economic environment in mature countries and slower growth in some emerging countries," Alstom said in a statement. Continued...