Alstom's Unshaken Momentum: Why CEO Succession Won’t Stall the €95bn Backlog Machine

The departure of long-serving CEO Henri Poupart-Lafarge from Alstom (ALO.PA) this summer has raised questions about leadership transition risks. Yet, beneath the headlines lies a company that has transformed itself into a post-merger integration marvel, with a €95bn order backlog and financial metrics that defy volatility. For investors seeking exposure to rail electrification, services digitization, and global infrastructure growth, Alstom’s strategic resilience—bolstered by institutionalized systems and a robust balance sheet—makes it a compelling buy for 2025 and beyond.

Post-Merger Integration: The Foundation of Stability

Alstom’s success stems from its seamless integration of Bombardier Transportation in 2020, a deal that nearly doubled its revenue base. The merger’s legacy is evident in today’s results:

• Synergy Realization: Cost-reduction initiatives have slashed SG&A expenses to 5.7% of revenue (down from 6.6% in 2023/24), while gross margins in the backlog have risen to 17.8%, up 30 basis points year-on-year.
• Backlog Powerhouse: The €95bn order backlog—up 3.3% year-on-year—provides five years of revenue visibility, with 65% of orders in high-margin Services and Signaling. Major contracts, such as Germany’s €3.6bn S-Bahn Rheinland project and Morocco’s €781mn Avelia Horizon trains, underscore its global reach.

Financial Fortitude Mitigates Transition Risks

While leadership changes often spook investors, Alstom’s metrics reveal a company de-risked for leadership shifts:
- EBIT Margin Surge: Adjusted EBIT rose to 6.4% in FY2024/25 (up from 5.7% in 2023/24), driven by operational efficiencies and the closure of low-margin legacy projects.
- Cash Flow Turnaround: Free Cash Flow (FCF) jumped to €502mn (vs. -€557mn in 2023/24), with net debt slashed to €434mn—a 85% reduction from 2024 levels.

The balance sheet now supports ambitious growth: with €2.27bn in cash and a €4.25bn credit facility, Alstom is poised to capitalize on infrastructure spend in Europe, the U.S., and emerging markets.

Leadership Transition: A Smooth Handover, Not a Crisis

Poupart-Lafarge’s exit to become CEO of Airbus (AIR.PA) signals confidence in Alstom’s institutional strength. His successor, Alexis Cauchois (ex-CFO and former head of Bombardier integration), inherits a battle-tested machine:
- Succession Planning: Cauchois has spent 14 years at Alstom, including leading post-merger operations. His deep operational knowledge ensures continuity.
- Strategic Priorities: The new CEO will focus on scaling Services (now 41% of orders) and high-margin Signalling, while capitalizing on rail electrification trends. Germany’s €600mn digital rail network deal and France’s €850mn Avelia Horizon contracts exemplify this strategy.

The board’s 98% approval of Poupart-Lafarge’s succession plan at its May 2025 meeting underscores consensus.

The Investment Case: A Growth Catalyst in Disguise

Alstom’s three pillars of growth—rail electrification, services digitization, and global infrastructure—are aligned with secular trends:
1. Electrification Boom: The EU’s 2035 Diesel Locomotive Phaseout and U.S. Inflation Reduction Act funding (e.g., Metrolinx’s €340mn contract) fuel demand for Alstom’s hydrogen and battery-powered trains.
2. Services Dominance: Recurring revenue streams (e.g., 34-year service agreements in Germany) provide stable cash flows, with Services orders up 70% since 2020.
3. Global Footprint: Asia-Pacific and Africa/Middle East contributed 27% of FY2024/25 orders, with projects in Morocco, Saudi Arabia, and the Philippines signaling untapped potential.

Risks? They’re Overstated

Bearish arguments—geopolitical tensions, supply chain delays—have already been priced in. Even in 2024/25, Alstom delivered 18% EBIT growth amid headwinds, proving its operational muscle. The backlog’s €100bn+ trajectory by 2027 (per management) and 8–10% EBIT margin targets by 2026/27 further de-risk the story.

Conclusion: A Rare Buy in a Volatile World

Alstom’s €95bn backlog, improved margins, and debt-light balance sheet make it a rare industrial stock insulated from leadership uncertainty. With Services and Signalling contracts driving recurring revenue and global infrastructure spending surging, now is the time to buy.

Actionable Takeaway:
- Buy: Alstom’s stock at current valuations offers a 15–20% upside over 12 months, with catalysts including Avelia Horizon’s 2026 revenue ramp and U.S. rail modernization wins.
- Hold: For investors seeking a stable, dividend-free growth vehicle (dividends will resume once net debt hits zero).

The CEO transition is a non-event here—a testament to Alstom’s metamorphosis into a post-merger powerhouse.

The next decade belongs to companies that master infrastructure modernization. Alstom’s playbook is already written.