VR Group records satisfactory net profit

27. October 2010 News and current issues

VR Group’s net turnover and operating profit continued their growth in the third quarter. VR Group’s operating profit amounted to M€ 34.1 (30.0) in the third quarter and M€ 24.9 (15.1) in the first nine months of the year. VR Group’s net result for the third quarter was M€ 23.4 (24.0) and from the beginning of the year M€ 17.6 (12.7). Major factors in the growth in operating profit were the increase in net turnover and the lighter costs resulting from the programme of change. VR Group CEO Mikael Aro considers the net result for the third quarter and for the first nine months to be satisfactory. “The net result demonstrates that the programme of change has resulted in considerable improvement. Logistics has clearly raised its net result compared to the previous year and passenger services are growing steadily, but we must continue to improve profitability,” says Mr Aro. CEO Aro is particularly concerned about developments in financing in the Government budget for track construction and maintenance, for budget allocations get smaller year by year. “This is not just about the success of VR Group but it concerns the competitiveness of all rail services and the safety of the track network in the long term,” stresses Mr Aro. Moderate growth in passenger services The combined total number of passenger journeys for rail and road services increased 6.2 % in the third quarter from the previous year. The increase in bus services in the Greater Helsinki area was a particular factor in the rise in the number of journeys. VR has won new service routes for bus services in the Greater Helsinki area that were put out to competitive tendering, and these have increased passenger volumes. In rail services, the storms in the summer weakened the punctuality of long-distance services in the first half of the quarter, but the situation improved towards the end of the quarter. Growth at Logistics levelled off Freight carryings by the Group’s Logistics division were 14.1 % higher in the third quarter than in the previous year. During the quarter there were signs that the growth in freight volumes was levelling off, and towards the end of the quarter total carryings were no longer higher than in the previous year. Freight volumes are expected to remain for the final part of the year at the same level as in 2009. Factors in the positive developments in Logistics’ net result were the growth in carryings and the lighter cost structure achieved through the programme of change. Weak outlook for track construction and maintenance VR Track’s net turnover declined significantly from last year, totalling M€ 83.3 in the quarter, compared to M€ 95.8 in the previous year. VR Track’s assessment of its future work situation weakened significantly in the third quarter. Government funding of track maintenance work has decreased considerably, which is reflected in VR Track’s employment situation. The loss of five-year maintenance contracts to a rival has further weakened the company’s prospects. In October VR Track began statutory joint negotiations with personnel in order to adjust its labour force. At the same time VR Track is renewing its organisational structure to make it more flexible and efficient, to ensure the company remains competitive in an increasingly tough market. For further information, contact: CFO Heli Lehtonen, VR-Group Ltd, tel. +358 307 20100