Just as volume increases and streamlining synergies would have resulted in profitability, a winter characterised by the Swedish Transport Administration's failure to keep shunting yards open had a major impact on Green Cargo's earnings. Rail freight customers have in many cases been faced with an unreasonable situation and we now share joint responsibility with the Swedish Transport Administration to strengthen faith in rail as a desirable mode of transportation both from an environmental and a quality perspective.
The Group's earnings after financial items in the first quarter were -10.3 million EUR (-19.1). Net sales for the period totalled 151.8 million EUR (146.4).
"Snow-filled tracks and closed shunting yards resulted in increased costs for personnel and maintenance at the same time as income fell since rail traffic literally was standing still for several weeks in February and March. The fall in earnings was significant and continued to have an impact into the second quarter. We are discussing both financial claims and better resources and methods for snow removal with the Swedish Traffic Administration," explains CEO Mikael Stöhr.
Many customers have demonstrated an understanding for how difficult it has been to maintain reasonable rail freight traffic given the conditions of the first quarter.
"But they naturally would like to know what is being done by the Swedish Traffic Administration to ensure that the events of this winter are not repeated, and both we and our customers have been promised an answer no later than 16 June."
Due to the considerable focus and resources needed to handle the acute winter traffic problems, the tempo of the rationalisation programme was affected but the target cost savings for the year and up to 2012 are still in place, says Mikael Stöhr.
"Having recently taken over as CEO, I can only comment with extreme caution about a period when I was not here. But what strengthens my belief in the future is that we are seeing a large interest in rail freight solutions from the market and there is a shared view within the company that we need to become more customer-oriented with improved profitability," says Mikael Stöhr.
The first quarter in brief:
- After the problems during the winter, rail freight traffic posted a clear recovery starting in March and all customer segments reported increased volumes compared to the previous year.
- Green Cargo is forming the Xrail alliance with 6 other European freight rail operators to develop international rail freight.
- Bombardier is delivering the first of 16 energy efficient locomotives to pull SSAB's steel trains. Ordered investments that have yet to be delivered, primarily related to locomotive modernisation and wagons, total 91.9 million EUR.
- In March, the first customer agreements were signed that created a commercial foundation enabling Green Cargo to move forward and start its own intermodal shuttles between Sweden and Germany.
- Green Cargo's third-party logistics increased its income by more than 19 percent compared to last year. The 25 percent increase in terminal capacity built last year has already been utilised.
- Green Cargo's Road operations posted an 8 percent increase in income compared to the same period last year.
