Outlook for the new year

VR Group’s Business Review 1 January–31 March 2023 (28 April 2023):

VR expects that the comparable operating profit (EBIT) for 2023 will improve compared to 2022.

The general economic situation in Finland is clouded by high inflation, rising energy prices, higher interest rates and low consumer confidence in the economy. The underlying factors are Russia’s invasion of Ukraine and geopolitical uncertainty. The economic situation is significantly reflected in VR’s business operations, profitability and near-term outlook. Especially high inflation has a negative impact on VR’s profitability.

VR discontinued its Eastern freight traffic completely in 2022 due to Russia’s war of aggression, which will reduce total rail logistics volumes this year. VR expects domestic transport volumes to increase, especially in roundwood transports. This will also be affected by the forest industry’s new investments, such as the Kemi bioproduct mill that is set to come online. The general economic development affects Finnish industry and, consequently, transport needs and volumes.

Train travel has recovered after the COVID-19 pandemic eased. Nevertheless, the pandemic has changed the way people work and, as a result, their mobility patterns. Remote work has become increasingly common, and travel demand has been driven by leisure travel. The total number of long-distance journeys is expected to increase from the previous year. This increase will mainly take place in the early part of the year, as the pandemic reduced travel volumes particularly in early 2022. The temporary VAT rate reduction for public transport, effective in the first four months of the year, has been fully passed on to ticket prices by VR. In city traffic in Sweden, net sales and profitability will decline compared to 2022 due to some of the existing agreements expiring and the new agreements not starting until late 2023.