VR Group preparing for large investments

• VR Group's 2012 result was slightly disappointing
• Increased turnover for passenger services and infrastructure engineering
• VR Group preparing for large investments
• The restructuring programme carried out from 2009 to 2012 achieved an improvement of over 90 million euros in operating income

– VR Group's result falls short of expectations. This was due to structural changes in the export industry and increasing costs. Operating income excluding sales profit capital gain improved due to the restructuring measures, says President and CEO Mikael Aro.

 – The trend in passenger services was quite encouraging, in particular at the end of the year. Marketing and price campaigns were successful and the customers benefited from the advantages of the new ticketing and pricing systems rolled out in autumn 2011. Passenger services turnover grew during the fourth quarter by nearly 14% from the previous year. The financial performance of our bus operations was also good, says Aro.

– In 2013 we will decide on the purchase of new electric locomotives. This is the single largest investment in VR's history. We will also acquire new steering and restaurant cars and are currently building a new depot in Oulu. To finance these and other investments the Group must pay close attention to improving profitability and to making operations more efficient, says Mikael Aro.

VR Group's turnover amounted to 1 437.8 million euros, remaining at last year's level. The sale of groupage operations in October makes it harder to compare the figure with 2011. Comparable turnover grew by 3.9% from 2011. The Group operating income was 52.4 (20.9) million euros and net earnings of the financial period amounted to 38.8 (15.3) million euros.

The operating income of the financial period includes sales profit capital gains and one-off items of expenditure improving net earnings by 32.2 million euros. Growth in travel, rail traffic tonnages and construction Passenger services turnover grew strongly in particular at the end of the year. Successful marketing and price campaigns had a notable impact in achieving the positive trend. A total of 95.5 million trips were made in 2012, amounting to an increase of 3.5% in comparison with 2011.

Trips made by rail grew by 1.4% (long-distance services 2.8% and commuter services 1.1%) and passenger kilometres by 3.9%. The turnover of Logistics dropped which was mainly due to the sale of groupage operations to Itella on 1 October 2012. Comparable turnover remained at the 2011 level which can be considered a good achievement in the current economic conditions.

Rail Logistics recorded a 2.3% increase in turnover in comparison with 2011. Comparable road transport turnover decreased by 2.1%. Freight volumes transported by VR Logistics grew by 1.3% and amounted to 35.3 million tonnes. VR Track's turnover grew by 7.8%, whereas during the two previous years turnover had fallen. Turnover grew in all business sectors of infrastructure construction. The backlog of orders grew significantly in 2012 and amounted to 410.5 million euros at the end of the year. VR Group's investments totalled 106.5 (152.3) million euros.

Most of the investments were made in rolling stock, in total 50.0 million euros. The Group's financial position remained strong during the whole financial period. The VR Group restructuring programme which lasted from 2009 to 2012 achieved an over 90 million euro improvement in profitability by streamlining the cost structure, making operations more profitable and by expanding the scale of business operations. However, this is not evident as a direct improvement in net earnings in comparison with previous years due to increases in salaries and the energy prices.

The restructuring programme's impact on staff amounted to 1 408 person-workyears. Staff reductions were carried out mainly through retirements, by assigning staff to new positions and through the outplacement center. The financial statements and the Group Annual Report will be published on VR Group's website in March.