* Q1 transport orders 4.8 bln eur with Prasa contract
* Thermal and renewable power sales fall 10 pct
* Sees "sustained" organic sales growth in transport
* Says cannot yet provide detailed guidance
(Adds details, background)
PARIS, July 23 France's Alstom said it
expected sustained organic sales growth at its rail arm this
year but would not provide a revenue or profit target following
a deal that will see General Electric buy most of its
The engineering group achieved record orders for rail
equipment that offset a drop in sales in its power activities in
the first quarter of its fiscal year. Over the period, these
activities - thermal power, renewable power and electricity grid
- had been the target of a two-month bidding war between GE,
Mitsubishi Heavy Industries and Siemens.
Alstom has over the past years suffered from weak orders for
power equipment that hit its cash flow and credit ratings. But
it agreed last month on a 12.4-billion-euro ($16.7 billion) deal
that will see GE buy the bulk of that business while Alstom
focuses on its better-performing rail arm.
In a statement on Wednesday, Alstom said transport orders
reached 4.8 billion euros in the first quarter of its fiscal
year, helped by a 4-billion-euro contract in South Africa.
Transport sales grew 17 percent on an organic basis.
Quarterly sales in thermal and renewable power dropped 10
percent while sales in grid fell 5 percent.
While the level of organic growth in transport "should not
be extrapolated" over the full year, sales should grow at a
"sustained pace" this year, mainly through the execution of a
record backlog, Alstom said.
The GE deal, which sparked a two-month tug-of-war with the
French government, is expected to be submitted to shareholder
approval by the end of this year and to close by mid-2015.
Alstom plans to use the proceeds from the deal to pay off
debt, strengthen its rail arm via acquisitions and return cash
to shareholders, but it has not given details. Some analysts
expect it to put aside around 2 billion euros for acquisitions
and to return 2 billion to shareholders, via a special dividend
or a share buyback.
The government intervened in the deal to preserve jobs and
ensure Alstom still had a future in the strategic power sector.
As a result, three 50:50 joint ventures will be set up in
electricity grid, renewable energy and nuclear power. Alstom
will also buy GE's rail signalling unit to beef up its rail arm.
($1 = 0.7428 Euros)
(Reporting by Natalie Huet; Editing by James Regan and Mark