VR Group net turnover increased in first part of the year

23. August 2011 News and current issues

VR Group’s net turnover increased in the first part of the year. The Group had a net turnover in the first six months of the year of M€ 683.1 (665.4), which is an increase of 2.7 % on the corresponding period in the previous year. VR Group’s net turnover in the second quarter of 2011 totalled M€ 350.3 (355.6), a decline of 1.5 % from the previous year. The operating result for the quarter was a profit of M€ 6.9 (13.0) and from the beginning of the year a loss of M€ -3.5 (-9.2). VR Group recorded a net profit in the second quarter of M€ 4.8 (11.1) and a net loss of M€ -3.4 (-5.8) for the first six months. Allegro gains popularity Net turnover for Passenger Services increased 4.6 % in the quarter from the previous year. Altogether 21.6 (21.2) million passenger journeys were made in rail and road services during the second quarter, an increase of 2 % from the previous year. Growth was highest in long-distance rail services and in road services. The number of passengers on the Allegro trains continues to exceed forecasts, and the extra two daily services added at the end of May boosted the popularity of the trains still further. Another factor that boosted the number of rail journeys in the quarter was the late date for Easter. Rail services were disrupted during the second quarter by the frost damage that mainly affected sections of line in the north of the country. VR introduced new timetables for the spring that took into account the slower speeds necessitated by the frost damage. Uncertain outlook for Logistics Freight carryings stopped growing during the second quarter. Rail carryings fell below the level for last year but carryings by road continued to increase. A total of 11.2 (11.4) million tonnes of freight were transported in the quarter, a decline of 1.9 % from the previous year. The biggest factor contributing to the decline in freight carryings has been the reduction in carryings between Finland and Russia. However, in the first six months of the year VR still transported slightly more tonnes than in the same period in the previous year. Forecasting developments in freight services is difficult due to the overall economic uncertainty. VR Track wins first alliance contract VR Track’s net turnover fell in the second quarter. Net turnover totalled M€ 49.1 (67.4) in the quarter and M€ 96.3 (107.7) from the beginning of the year. The reduction in construction was the biggest factor contributing to the decline in net turnover. VR Track won the competitive tendering contract for the renovation of the Lielahti–Kokemäki track section that is being implemented using project alliancing. This is the first project alliance for public procurement to be carried out in Europe, and it has a total value of some M€ 90. In a project alliance, the client, engineers and contractors together share the risks in planning and carrying out the project. The contract includes the development stage of the project and the implementation, subject to certain conditions. Major property transactions VR Group carried out several major property transactions in June. The station property in Pasila was sold to Senaattikiinteistöt and a property in the Pasila workshop area in Helsinki was sold to YIT Rakennus Oy. VR Group also signed a letter of intent with YIT Rakennus Oy to acquire building rights in Helsinki, Turku and Hämeenlinna. Under the terms of these agreements the transactions will have a value of about M€ 80 on completion, and they comprise building rights for more than 100,000 floor square metres of residential and commercial premises.