Green Cargo is one of the few profitable European rail logistics operators. Good profitability strengthens our effort to offer sustainable logistic solutions. Good results in other target areas largely correspond to financial performance. The Finance target area measures our profitability and productivity and is the only target area that covers the entire Group.
Priorities for 2010
It is necessary to apply a long-term perspective to all of our decisions since the nature of our business is capital-intensive and requires a functional network of resources to operate efficiently. Our priorities in 2010 will to a large extent include measures and investments decided in 2009 and earlier.
On track in 2011
Using the savings program initiated to counteract the downturn of the economy in 2009 as a starting point, an action plan was developed to improve long-term profitability within the Rail operations. This will ensure our survival in the long run so we can implement necessary investments. The plan consists of six different change initiatives, all of which improve profitability, and is in effect until 2011. In order to build customer solutions that are sustainable in the long run, we are adapting our market strategy and creating a service offer that utilises Green Cargo's competitive advantages in a more advantageous manner. The new strategy affects both transport and handling and makes it possible to meet the differing needs of our customers more cost-efficiently. The plan will affect all central processes within sales and production and will focus on ensuring that individual initiatives within other areas, such as service offers, the ordering of capacity and production strategy, work together to achieve the profitability target.
Investment program continues into next phase
Green Cargo is now in its most investment-intensive period since the company was formed in 2001. Investments made during 2009 totalled just under SEK 1 billion and the same amount was posted as Ordered investments at year-end. The locomotive modernisation project has entered a new phase and deliveries of rebuilt diesel locomotives will be received throughout all of 2010. During the spring the first prototypes for the electric locomotives will be delivered and deliveries of the final product will begin later in the year.
At the same time, tough, extensive testing of the state-of-the-art TRAXX locomotives is underway. These locomotives were ordered following the signing of a 10-year agreement with SSAB. They will guarantee a high level of quality and decreased environmental impact when they enter into operation in 2010. Green Cargo has invested in a total of 16 straight-off-the-assembly-line locomotives that have a total value of more than SEK 0.5 billion.
Expansion of our international network
The investments made in the past few years and the restructuring of the associated company, DB Schenker Rail Scandinavia A/S, created an efficient production company for rail transports between Scandinavia and the Continent. However, a number of challenges remain, both for the cooperation within rail production and on the marketing side. Our long-term co-operation agreement with DB Schenker Rail in Germany should contribute to a greater utilisation of the "green corridor" toward the Continent. At the same time, Green Cargo is focusing on showing our own customers how production solutions and new products will allow them to enjoy the benefits of high-quality international transports.
