Green Cargo Group's profit for the first quarter of the year reflects the development of the Swedish market. Transport volumes and earnings dipped sharply and a program to reach annual savings of SEK 300 million was initiated.
The Group's earnings after financial items in the first quarter were SEK – 186 million (12). Volumes in the rail operations fell by 30 percent and revenues decreased 10 percent in comparison with the same period in 2008. The largest decrease in volumes was in transports for the steel, automobile and the manufacturing industries.
"In October, we began adjusting our resources. During the quarter, we reached an agreement with the trade unions concerning 400 redundancies and developed assurance solutions that meant that many of our later employees could remain in the company," says CEO Sören Belin.
Redundancy and pension solutions burdened the quarter with one-off costs of SEK 72 million. The volume adjustments being made now will reach their full effect in 2010, with annual cost savings of SEK 300 million.
"We are continuing to focus on prioritised areas of our investment program. We primarily need locomotives, wagons and logistics facilities for future customer assignments and we have secured the financing resources we need for the investments we will be making," says Sören Belin.
Despite the downturn for Green Cargo's established customer groups, the market is demonstrating considerable interest in rail logistics. Key transport agreements were extended and more new business was created in January and February than in the same period the previous year.
"Our third-party logistics experienced more than a 20 percent increase in profitability and continued to grow even in the first quarter of 2009. We successfully attracted new customers in the book and media industry, which further widens our customer base.
The quarter in brief:
- A savings program to decrease annual costs by approximately SEK 300 million was developed in response to the downturn in the industry. Personnel redundancies burdened the quarter with one-off costs of SEK 72 million.
- Investments of SEK 348 million were made during the quarter primarily in locomotives, wagons and logistics facilities.
- High punctuality for freight trains: 95 percent over a period of more than two years. In March, punctuality reached 97 percent, a record-high result.
- Third-party logistics signed an agreement with Akademibokhandeln and Berling Media.
- Extended rail agreements with Trätåg AB concerning transports for Stora Enso and Korsnäs and with LKAB's rail company, MTAB, for ore transports.
