Blow for Alstom as orders slump

DISASTER struck French heavy engineering group Alstom today as it admitted orders slumped by more than a 20% during the first quarter and sales slid 9%.

Dismal sales of e4.34bn (£3.04bn) and orders of only e4.03bn confirm the scale of challenge faced by chief executive Patrick Kron as he battles to restore a group where former Marconi boss Lord Simpson sits on the board.

The firm was built from the rail and power station engineering businesses of Marconi and Alcatel more than a decade ago.

With a e600m rights issue looming this autumn to restore the wrecked balance sheet, only a planned e1bn back-door cash injection through the sale of the group's power transmission and distribution business to Areva of France provides any hope for longsuffering investors.

Kron said both sales and orders were battered by falling demand and the weak dollar, but insisted that power orders, while down on the first quarter of last year, showed strong recovery from the final quarter of 2002-3. In particular-the group has won orders for extending or overhauling generating stations in the Gulf state of Bahrain, Germany, the US, China and Brazil.

On the rail engineering side, where delays and cost-overruns caused huge write-downs last year, a contract to supply trains for London Underground's Jubilee line helped keep the overall group order book at e30bn, or 22 months' sales. The French government also played its part, ordering a methane tanker with a second on option.

Analysts believe Alstom must quit shipbuilding fast - possibly selling its Chantiers d'Atlantique shipyard to French warship builder DCN.