* French engineer to cut 1,300 jobs, mainly in Europe
* Eyes 1-2 bln eur of asset sales by December 2014
* To ramp up annual cost savings to 1.5 bln eur by 2016
* CFO says more layoffs could follow
* CEO says no capital hike needed
(Adds transport unit valuation, comments from analyst call,
By Natalie Huet and Benjamin Mallet
PARIS, Nov 6 France's Alstom said on
Wednesday it would shed at least 1,300 jobs worldwide and sell
up to 2 billion euros ($2.7 billion) of assets, as it strives to
raise cash after a difficult first half to its business year.
The job cuts, which chief financial Officer Nicolas Tissot
said could be followed by more layoffs, put the power and
engineering firm on a potential collision course with the French
government, which is trying to bring down double-digit
Alstom hopes to sell a minority stake in its unit known for
making high-speed TGV trains, along with non-strategic assets,
by December 2014, and to ramp up annual cost savings to 1.5
billion euros by 2016.
The company, which also makes turbines for wind farms and
power stations, was bailed out by the French state a decade ago
and has strongly relied on orders from national rail operator
SNCF and utility EDF.
Wednesday's job cuts account for close to 1.4 percent of
Alstom's 93,000-strong workforce, just under a fifth of whom are
employed in France.
Chief Executive Patrick Kron did not give a breakdown of the
cuts but said they would hit Alstom's German coal-fired boiler
business and IT jobs in France.
Asked about the job cuts, French Industry Minister Arnaud
Montebourg appeared to contradict Alstom, saying the group's
plan would not have an impact in France.
Shares in Alstom were up 6.5 percent at 1556 GMT after
jumping 8 percent to a five-month high, and were the strongest
performers on France's CAC 40 blue-chip index.
While down from a year ago, its results beat market
expectations and the company confirmed its full-year targets,
saying it expected larger orders and more down payments in the
second half to support a return to positive free cash flow.
Like rivals Siemens and ABB, Alstom has
faced a dearth of large orders, especially in thermal power, as
utilities delay spending in a weak global economy.
NO CAPITAL HIKE
"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.
Kron said Alstom could sell a 20 to 30 percent stake in its
transport unit. He said various options were on the table, from
a sale to industrial or financial partners to a stock market
He refused to give a price for the business, which some
analysts value around 3 billion euros, based on a sector
multiple of nine to 10 times operating profit.
Kron said cash from such a sale would help Alstom strengthen
its balance sheet and give it room, if needed, for future
acquisitions. He said the company had a solid balance sheet and
did not need to raise fresh capital, especially not at current
valuations he called "unpleasant".
Alstom shares have lost more than half of their value since
the 2008 downturn depressed demand for power demand and prompted
utilities to halt investment in new equipment. Shares are
trading at around nine times forecast earnings, compared to a
forward PE of around 15 for its peers.
Alstom's free cash flow turned positive in the last fiscal
year after two years of outflows, and Kron has made cash
generation a priority. But the outflow in the first half to
September was 511 million euros, partly due to payment timings,
while orders fells 22 percent to 9.4 billion.
Based on hopes for larger orders and more down payments in
the second half, the group stuck to its full-year targets for
positive free cash flow, low single-digit organic sales growth
and a stable operating margin.
The book-to-bill ratio, a measure of new orders against
actual shipments, was close to 1, while the order backlog
totalled 51 billion euros, representing 30 months of sales.
First-half net profit fell 3 percent to 375 million euros
while sales were little changed at 9.73 billion. Analysts polled
by Thomson Reuters I/B/E/S had on average expected net profit of
352 million on sales of 9.59 billion.
($1 = 0.7421 euros)
(Additional reporting by Olaf Storbeck in London and Alexandre
Boksenbaum-Granier in Paris, Editing by James Regan, Elizabeth
Piper and John Stonestreet)