Challenging start to the year for VR Group - competitiveness enhanced by continuing efficiency improvement measures

28.04.2015 17:30 Press releases

The number of trips in VR long-distance services dropped further during the first quarter and the average ticket price fell. The turnover and result for commuter services increased in line with set targets. VR Transport saw a decrease in transport volume due primarily to overall negative economic growth.

Turnover for passenger services decreased during the first quarter by 5.6 per cent, falling to 135.4 (145.1) MEUR. This decrease in turnover was primarily affected by the challenging situation in domestic long-distance services. Increased competition in mass transit services puts a great deal of pressure on prices for rail services and routes with higher passenger volume. The weak economy also has a significant impact on demand, which is reflected in passenger volume. The decline in traffic between Finland and Russia can be attributed to the weak rouble and crisis in the Ukraine.

A total of 27.0 (26.6) million trips were made by rail and road. There was a 1.4 per cent increase in the number of trips over the previous year: road trips increased 3.0 per cent and rail trips a total of 0.5 per cent. Although the number of long-distance trips in rail services fell 5.5 per cent, there was an increase in commuter services.

Decrease in rail logistics transport volume

The volume of tonnes transported in both rail logistics and road services fell below the previous year's levels. VR Transpoint turnover for the first quarter totalled 96.5 (111.9) MEUR, falling 13.1 per cent year-on-year. Operating profit fell sharply, totalling 3.5 MEUR (6.5).

Logistics services growth and turnover were negatively affected by, for example, the world market price for certain raw materials. In addition, elimination of the track tax at the beginning of 2015 will reduce turnover for VR Transpoint. Efficiency improvement measures were continued due to sluggish growth in volume.

Increase in turnover for VR Track

Turnover for VR Track saw a year-on-year increase of 9.1 per cent, amounting to 52.2 (47.9) MEUR in the first quarter. This increase was primarily due to growth in Swedish operations and Finnish maintenance operations. The order book remained strong. There was a year-on-year decrease in operating loss, totalling 4.6 MEUR (10.3).

Group earnings falling

First quarter turnover for the VR Group was EUR 287.3 (316.1) MEUR. Comparative turnover decreased by 6.4 per cent. Reported turnover dropped 9.1 per cent from the previous year. Finrail Oy, which was separated from the VR Group on 1 January 2015, accounts for the biggest difference in reported and comparative turnover.

The quarterly operating profit was down 7.6 MEUR, falling below the previous year's level (5.5 MEUR). The VR Group's earnings for the first quarter was down 7.0 (1.3) MEUR.

The comparative turnover for the whole year is expected to fall, thus resulting in significantly lower year-on-year earnings. In particular, growth in logistics transport volumes and long-distance passenger service sales make forecasts uncertain.

On 4 May, the VR Group will enter into co-determination negotiations concerning rolling stock maintenance due to financial, production and operational restructuring reasons. The aim is to improve maintenance to such an extent that, in the future, the VR Group will be able to provide the service in-house.

The co-determination negotiations concern all personnel serving in a supervisory capacity and not included in the collective bargaining agreement. Approximately 300 persons will be involved in the negotiations. According to a preliminary estimate, any need for a reduction in personnel would involve no more than 100 persons. The aim is an annual savings of several million euros.

Related to: VR Group