Alstom allays cash concerns

French engineering group Alstom, which builds high-speed trains and power plants, reported an 11.0-percent rise in net profit in the first six months and said yesterday that it had sharply improved its cash position. This reassured investors and the price of shares in the group rose by 4.15 percent.   For the first six months of the year beginning in April, the group reported a net profit of 403 million euros ($ 515.6 million) and said that sales had risen by 4.0 percent from the equivalent figure last year to 9.7 billion euros. The group said that the value of orders taken had risen by 19.0 percent to 12.1 billion euros and that its total order book had risen by 10.0 percent to 52.0 billion euros. Chief Executive Patrick Kron said that orders in the first six months had held up in an economic climate which remained difficult. The results were in line with the group's forecast and expectations of analysts, he said in a telephone press conference. The price of shares in the group was showing a gain of 4.15 percent to 28.75 euros at around mid-day. The company's cash position, closely watched by analysts, was positive to the extent of $ 101 million from a deficit of 914 million euros 12 months ago. Concern about the cash position had run through the stock market after the group had surprised investors with an operation to raise 350 million euros of capital to pay for the purchase of 25 percent of Russian rolling stock maker TMH. Kron said that this deal was "very positive" for Alstom. The transportation division showed sales growth of 13.0 percent, but energy activities accounting for three quarters of total business were slower with power station sales growing by 5.0 percent. Sales by the division handling electrical networks were steady and sales by renewable energy activities fell by 17.0 percent. However the fall for renewable energy reflected a drop in billing linked to contracts for hydroelectricity in Latin America, and the group expected to make this up in the second half, Kron said. The group stood by its financial targets for the current year and for the next two years. It expects sales to rise by more than 5.0 percent per year, its operating margins to improve to about 8.0 percent in 2014-2015, and to achieve positive free cash flow in each of the three years.