Menu
News

Press releases

3/18/2016 12:00:00 AM

PKP CARGO Group posts a greater volume of freight transport and higher revenues on a demanding market

PKP CARGO Group’s 2015 net profit was PLN 31 million. The Company’s impairment losses contributed to this result but in no way did they alter the Group’s liquidity position. 2015 was characterized by PKP CARGO’s actions focused on maintaining its position as the unchallenged leader in Poland and the leading logistics operator in the Central and Eastern European region. In 2016 Poland’s largest carrier will continue to execute its strategic objectives.

While operating on a very demanding and competitive market we focused on executing our strategic objectives. We grew the volume of freight transport and revenues. Our market share is stable and we have expanded our footprint abroad. All this taken together means that despite the impairment losses taken for property, plant and equipment - rolling stock - and inventories, amounting to more than PLN 177 million, we have generated satisfactory financial and operating results”, says Maciej Libiszewski – CEO of PKP CARGO.

In 2015, the PKP CARGO Group carried more than 116 million tons of cargo (+5% yoy) and achieved freight turnover of nearly 30 billion tkm (+3% yoy). Five entities in the Group performed freight transport: PKP CARGO, PKP CARGO SERVICE and three carriers in the AWT Group forming part of the PKP CARGO Group operating in the Czech Republic, Slovakia and Hungary. The growth in freight transport outside Poland significantly contributed to the results generated totaling 12 million tons and 1.6 billion tkm. This signifies annual growth of 344% and 336%, respectively.

PKP CARGO Group’s share of the Polish rail freight market in 2015 was 55.8% measured by freight turnover and 47.7% measured by freight volume. The very demanding market circumstances affected PKP CARGO's freight transport, especially the sharply shrinking aggregates market and the coal industry crisis.

Despite market turmoil, in 2015 the PKP CARGO Group’s revenues were PLN 4.55 billion (+7% yoy), while operating expenses were PLN 4.5 billion (+8% yoy). EBITDA rose to PLN 705 million (+40% yoy) and net profit was PLN 31 million (-60% yoy). A non-recurring impairment loss on assets of PLN 117 million was charged to this result. It does not have any impact on the Company’s liquidity position.

Active commercial policy, real footprint on four EU markets

In the last twelve months cargo rail carriers grappled with very demanding market conditions. The following factors affected rail transport in this period: delays in commencing large-scale infrastructural investments leading to diminished transport of aggregates, the crisis on the commodities market and the economic slowdown in China reflected by the decline in the transport of metals and coke, the conflict in Ukraine in the Donbas region manifested by the lower transport of metals, the industrial actions at the turn of January and February and the overall events driving coal transport: lower coal production caused by the high level of inventories. As a consequence, the cargo rail transport market in Poland shrank by nearly 2% on an annual basis.

  • Solid fuels: PKP CARGO’s largest cargo class consists ofsolid fuels (coal, coke). In 2015 they accounted for a total of nearly half of the PKP CARGO Group’s total freight turnover (46%). The freight turnover the PKP CARGO Group generated in this market segment in 2015 totaled 13.6 billion tkm (+12% yoy), with 13 billion tkm (+9% yoy) attributable to PKP CARGO itself. In Q4 the growth in solid fuels transport measured by freight turnover was 19% quarter on quarter for the overall Group and 12% for PKP CARGO.

  • Aggregates and construction materials: the delayed infrastructural investments affected transport of aggregates and construction materials, the PKP CARGO Group’s second largest transport market (18% of total freight turnover in 2015). The Group’s freight turnover generated in this market segment in 2015 totaled 5.3 billion tkm (-14% yoy), with 5.2 billion tkm (-15% yoy) attributable to PKP CARGO itself. In Q4 alone the decline in this part of the market was 22% quarter on quarter for the overall Group and 23% for PKP CARGO. Analysts anticipate that the transport market for aggregates and construction materials in Poland should revive in the upcoming months in connection with the expected commencement of infrastructural investments worth many billions.

  • Metals and ores: the PKP CARGO Group generated visible growth in 2015 in the transport of metals and ores - in this transport class it provided 2 billion tkm (+2% yoy), with 1.96 billion tkm (+3% yoy) delivered by PKP CARGO. In Q4 the Group’s freight turnover in the metals and ores class was up 14% and 11% in PKP CARGO itself, compared to the analogous period of 2014.

  • Intermodal transport: intermodal transport is the most rapidly growing part of the rail cargo transport market in Poland. Last year the PKP CARGO Group generated in this market segment more than 2 billion tkm (+11% yoy), with 1.93 billion tkm (+5% yoy) attributable to PKP CARGO itself. Intermodal transport rose in particular in the fourth quarter - the Group drove up freight turnover in this segment by 31% with PKP CARGO doing so by 19% compared to the last three months of 2014. In connection with numerous investments in combined transport (infrastructure, rolling stock) and product development, PKP CARGO is counting on further group in this cargo class.

Terminal network expansion and international business growth

For rail carriers the chance to grow the magnitude of business in the promising intermodal segment is the rail connection between China and Europe, known as the New Silk Road. The PKP CARGO Group is participating in the execution of this project, jointly organizing nearly 20 connections a week along the East-West route and transporting containers from the border with Belarus to Germany, the Netherlands and countries in Southern Europe, as well as in the opposite direction.

Crucial infrastructural and rolling stock investments made in 2015 served to strengthen PKP CARGO’s position in the intermodal segment. Today, the PKP CARGO Group has an expanded network of intermodal terminals in Poland and the Czech Republic. Responding to market needs, in 2015 PKP CARGO enlarged the modern container terminal in Poznań Franowo for a price of nearly PLN 7 million. Every day it transships containers being transported between the north and south of Poland and it launched the expansion of the strategic intermodal terminal located in Paskov in the vicinity of Ostrava. This facility will handle among others the automotive center in the Czech Republic, Slovakia and southern Poland. Based on these assets Poland’s largest operator is offering its clients logistics solutions aligned to their needs (among others operator trains, ferry transport, cross-border transport and door to door service).

In 2015 PKP CARGO signed a historic agreement to purchase 15 multi-system locomotives for PLN 330 million to handle cross-border traffic. These locomotives make it possible to transport freight across several countries without switching locomotives. The first six new locomotives have already started to handle connections between Poland and Germany. The next locomotives will be used to transport coal, containers, automobiles and other cargo to the Netherlands, Austria, the Czech Republic, Slovakia and Hungary.

Objective: leading operator in Central and Eastern Europe

In 2015 PKP CARGO persistently built the foundations to bolster its position in Poland and international market expansion. The acquisition of AWT, one of the largest private rail carriers in Europe and signing an agreement to purchase PKN Orlen’s rail assets formed a genuine lever for its operating business. These acquisitions were supported by establishing strategic cooperation with HŽ Cargo, Croatia’s national carrier, giving PKP CARGO access to the Adriatic ports.

PKP CARGO has stipulated its growth plans and the actions to achieve them in the strategy for 2016-2020. The major objectives for Poland’s largest operator are maintaining the position of the undisputed leader of railway transport in Poland, the comprehensive handling of international freight traffic passing through Poland and taking the position of a leading intermodal operator in Central and Eastern Europe. Striving to achieve them will grow the magnitude of business and to a greater degree make the PKP CARGO Group more independent from transport of its current core markets, i.e. coal and aggregates.

2016 is the first year in which we will be implementing the PKP CARGO Group’s new strategy. We will analyze the outcomes achieved, especially with an eye to the return on the capital expenditures incurred. If the circumstances in the external environment morph in a way requiring us to respond, we will update our strategy, always remaining cognizant of the interests of the Company and its shareholders”, emphasizes Maciej Libiszewski, CEO of PKP CARGO.

Cost discipline, certain sources to underwrite growth

In 2015 the PKP CARGO Group steadfastly maintained cost discipline. The voluntary redundancy programs administered last year will accrue at least PLN 130 million in annual savings. By reducing headcount EBITDA was nearly PLN 30 thousand per employee (growth of 50% yoy). The costs of salaries also edged down when calculated per ton kilometer of freight turnover provided (-3% yoy), as did energy and fuel (-1% yoy) and access to infrastructure (-4% yoy).

The Group has put in place certain sources to underwrite growth. PKP CARGO has access to more than PLN 1 billion in funds for investments, with cash totaling PLN 280 million. The remainder consists of lines of credit backed by Bank Gospodarstwa Krajowego [National Economy Bank], European Bank for Reconstruction and Development and commercial banks.

Read also:

By using this website you agree to the use of cookies. See Cookies Policy for details

I agree