VR Group posts moderate interim result

27. October 2011 News and current issues

VR Group’s net turnover in the third quarter totalled M€ 374.1 (377.7) and from the beginning of the year M€ 1,057.1 (1,043.0). Net turnover increased in the quarter in passenger services and logistics. The operating profit declined in the quarter from the previous year to M€ 25.5 (34.1), and M€ 22.0 (24.9) from the beginning of the year. The cumulative increase in net turnover was 1.4 %. VR Group’s net result in the third quarter was M€ 18.4 (23.4), and M€ 15.0 (17.6) for the first nine months. ”The net result is reasonable,” stated President and CEO Mikael Aro . ”In Passenger Services we increased the number of services operated by the Allegro trains in May, and thanks to this the number of passengers on services to and from Russia remained high. The growth in Logistics net turnover came to an end, and demand declined clearly towards the end of the quarter. The net turnover of Infrastructure Engineering was considerably lower than last year due to the low volume of construction work.” The low volume of work has a visible impact on the net result for the review period. “The restructuring programme in progress at VR Group is proceeding on schedule and according to plan. The restructuring is having a positive impact on the cost structure,” states Aro. The measures to improve punctuality are also still continuing. Traffic to and from Russia continues to grow Net turnover for Passenger Services increased 4.3 % in the third quarter compared to the previous year, and cumulative growth from the beginning of the year was 3.5 %. The number of journeys in rail and road services increased 2.1 % in the quarter. Cumulative growth in the total number of passengers was 1.4 %. The number of journeys in long-distance rail services rose 3.1 %. The increase in international services contributes to this increase. The number of journeys in services between Finland and Russia increased 32.6 %. The number of services operated by the Allegro trains was doubled at the end of May, which kept passenger numbers in services to and from Russia high in the review period. During the review period VR introduced a new ticket sales system for passenger services where passengers can buy cheaper advance tickets. The work continues to correct the faults discovered during the commissioning phase for the system. Growth in Logistics’ net turnover came to an end Net turnover for Logistics increased 0.2 % in the third quarter from the previous year, and cumulative growth from the beginning of the year was 4.7 %. During the quarter the growth in the volume of carryings came to an end, due to the decline in demand. Demand has been low especially in services to and from Russia. Rail carryings were down on the previous year’s figures, whereas road services saw growth in the volume of carryings. The tonnes carried by Logistics declined 1.6 % in the quarter from the previous year. The total tonnage transported from the beginning of the year increased 0.2 %. Fall in demand has visible impact at Infrastructure Engineering Net turnover for Infrastructure Engineering fell 14.6 % in the quarter and 12.3 % from the beginning of the year. The biggest factor in the decline in net turnover is the considerable reduction in the volume of construction. The appropriations allocated by the Government for track construction are less than in the past, which affects the volume of infrastructure construction. The work load for engineering and electrification has been at a good level, however. Major investments in rolling stock After the end of the review period VR took the decision to start the process for purchasing 80 new electric locomotives. This investment will be financed entirely by VR’s internally generated funds and with financing to be obtained externally. The first locomotives will enter trial service in 2014–2015.