Alstom has reported a big rise in operating income and raised its outlook yesterday, saying it had turned cash positive after what its chairman called "three intolerable years".
The group, which closed the former Metro Cammell factory in Birmingham last year, skirted bankruptcy in 2003 due to costly problems with malfunctioning power generators that prompted a state-orchestrated bailout in 2004.
But chairman and chief executive Patrick Kron said it had returned to profitable growth from a period of restructuring with asset sales and job cuts.
French building group Bouygues bought the French government's 21 per cent stake and now has a 24.4 per cent holding, the group is back in profit and cash generation and a new agreement with banks means it has also turned cash positive.
In the Midlands, the group continues to employ 700 people in Rugby and 240 in Stafford.
Further good news came for the company when a #1 million compensation claim against it by the last of the workers at Washwood Heath was dropped earlier this year.
And in the half year the group sold ten of the GP26 turbines that were behind its problems.
Mr Kron said: "I'm not nervous each morning about what to do with the cash. We structurally have a negative working capital due to the financing of our clients and it is a lot better to be financed by clients than by banks,"
Alstom reported a 27 per cent rise in operating profit to #277.6 million, in line with a poll of analysts who forecast #277 million.
Mr Kron said it was possible the group would pay a dividend for the current financial year.
Alstom said demand was particularly strong in the power market, driven by economic growth in Asia, the need to retrofit or replace ageing generators and environmental regulations.
Sales came in at #4.44 billion, up eight per cent and compared with an average expectation of #4.38 billion.
Alstom says one out of four light bulbs in the world are powered by its generators while it is global leader in rail transport in terms of orders and number two in urban transport.
Alstom's first-half operating margin was 6.3 per cent and the group said it expected to exceed its previous target of an operating margin of seven per cent in the 2007/08 financial year.
New orders were up 46 per cent to #6.52 billion, bringing the order book to #20.17 billion, up 20 per cent, on September 30.
Net profit reached #152.58 million, up 67 per cent from #91.41 million and above a consensus forecast of #128.7million.
Alstom said its balance sheet was getting stronger, with net debt reduced to #410.7 million at the end of September, compared with #840 million on April 1.
Alstom said a record level of orders received during the first half should translate into sales growth of over ten per cent in the full year 2006/07.
"The operating margin should continue to improve in the second half of 2006/07 and we expect it to exceed our previous target of seven per cent for the full year 2007/08," Alstom added.