(Reuters) -French train maker Alstom on Wednesday beat expectations for its half-year cash position, helped by increased volumes and cost saving initiatives.

Alstom, which makes trains and signalling systems for urban and regional rail networks, reported a cash outflow of 138 million euros ($146 million). Analysts had expected a 354 million euro outflow, according to a company-compiled consensus.

Cash generation over the period was driven by better-than-anticipated sales performance and downpayments that came ahead of schedule, said head of investor relations Martin Vaujour in a press call.

In May, the group detailed a plan to cut debt and reform its finances including a $1 billion rights issue supported by main shareholders Caisse de dépôt et placement du Québec (CDPQ) and Bpifrance.

Alstom's cash issues are due in part to inheriting problem contracts after the 2021 acquisition of Bombardier's rail business.

The train maker expects to increase output to a range of 2,400 to 2,600 train coaches in the second half of the year, from 2,000 units in the first half, Vaujour said.

Overcoming current supply chain issues is one of the priorities set by management, he added, along with expanding the group's industrial footprint, notably in Germany.

The group recorded adjusted operating profit (EBIT) at 515 million euros in the first half of the year, ahead of the 507 million euros expected by analysts on a median basis.

"We are making steady progress on our roadmap, with backlog margins returned to pre-merger levels and a focused shift towards Services and Signalling," group CEO Henri Poupart-Lafarge said in a press release.

The group reiterated its 2024/2025 targets for an EBIT margin of around 6.5%, organic sales growth of 5%, and free cash flow generation within a 300 million euro to 500 million euro range.

($1 = 0.9447 euros)

(Reporting by Alban Kacher and Anna Peverieri; Editing by Mark Potter and Richard Chang)

By Alban Kacher and Anna Peverieri