VR Group’s net profit remained satisfactory
17. February 2011 News and current issues
VR Group’s net profit remained at a satisfactory level in 2010.
The Group had an operating profit of M€ 43.1 (28.9) and a profit for the year of M€ 30.0 (18.4).
Net turnover was M€ 1,422.6, an increase of 2.2 % from the previous year. The Group’s financial position remained strong.
“The net profit was in line with our expectations. The recovery in Finland’s economy was reflected in logistics operations and passenger services. Maintaining costs at a moderate level was a vital factor in the improvement in the result, but the rise in the volume of carryings for industry also played a major role,” says President and CEO Mikael Aro.
The programme of change launched at VR Group in 2009 progressed according to plan. “We significantly raised the efficiency of logistics operations last year. Passenger services are aiming to improve the customer’s travel experience. During 2010 we took decisions to purchase rolling stock for a total of M€ 150,” says Mr Aro.
One target of the programme of change, which goes on until the end of 2012, is to improve VR Group’s profitability by some M€ 100 a year. Reductions in personnel will affect 1,200 people. VR aims to achieve these reductions mainly through retirement and staff relocation.
Growth in logistics Carryings by VR Group’s logistics operations, VR Transpoint, increased 10.4 % from the previous year. Rail carryings rose 8.9 % and road freight 17.4 %. The operating loss recorded by logistics fell from M€ 36.9 in the previous year to M€ 1.0. The operating loss made by rail logistics accounted for M€ 5.2 of this.
VR Transpoint restructured its entire transport system in 2010. The focus was on making more effective use of the rail network in rail services and of the network of terminals in road services. Sales and customer service were also re-organised. The purpose of these changes is to offer customers one-stop transport services, comprising rail and road transport and added-value services. The Group’s passenger services grew moderately. The number of journeys by rail increased 2.1 %.
The sales channel with the highest growth was online sales, and they now account for 20.6 % of all ticket sales. Bus and coach services saw growth of 23.0 %, and this was due to the new service lines won in the Helsinki metropolitan area. Passenger services had an operating profit of M€ 38.0 (36.0). VR Track’s net turnover fell 15.2 % due to the general decline in infrastructure construction. Operating profit declined to M€ 6.8, compared to M€ 26.0 in the previous year. Investments in support of growth VR Group’s investments totalled M€ 149.8 (134.5).
The biggest investments were in rail rolling stock, totalling M€ 50.8. Investments of M€ 44.3 were VR’s share of the financing of track renovation agreed with the Finnish Transport Agency. VR Group is financing the renovation of the Oulu−Seinäjoki track section and the line between Tampere and Orivesi and the renovation of the port marshalling yard in Kotolahti. Prospects The logistics sector has become less easy to predict, for the volume of carryings early in 2011 has remained at a lower level than was forecast.
The volume of carryings is expected to increase from 2010 however. New growth areas are distribution in Russia and recycling. The volume of passenger travel should continue to increase moderately. Journeys to and from Russia are expected to increase significantly thanks to the high-speed Allegro link opened last December. VR will gradually introduce demand-based pricing in rail services. This change is expected to improve train filling rates, as passengers will be able to purchase cheaper tickets for less popular trains. For VR Track 2011 is a challenging year. The market for track construction is shrinking, and this is the most important business for the company.