The Group’s net profit amounted PLN 128 million (EUR 30 million), which was 67 % higher than the year before. The sound financial situation allows the carrier to expand in Poland and abroad both by organic growth and through consolidations in Poland as well as potential mergers and acquisitions in Central and Eastern Europe.
At the end of the first half of the year, PKP CARGO reported a nearly 57% share in the rail freight transport market in terms of transport performance and an over 47% share in terms of freight volume. Excluding hard coal transport, which had been stagnant for the preceding few months, the volume of cargo transported by PKP CARGO amounted to 27.8 million tonnes, i.e. 6 percent higher than in the year before, with the market growing by 5 % during that period.
In the first half of 2014, the Group’s revenues amounted to PLN 2.1bn. Operating costs were reduced by 11 percent (i.e. by PLN 234m) year-on-year. This spurred the growth of EBITDA by 12 % to PLN 350m and net profit by 67 % to PLN 128m against PLN 76m year-on-year. For the largest Polish rail carrier, the first half of the year was yet another period of growth in profit and EBITDA margin as well as reduction of costs.
“Record figures at the end of the first half of the year prove that PKP CARGO is able to generate high profits despite turmoil in one of our main markets. The recent internal reorganization of the company is a big step towards effective cost reduction, which will strengthen our competitive advantage in the market. This is good news for our clients, employees and shareholders. The final structure of PKP CARGO will become the foundation of further growth based on strengthening our position in key freight segments, investing in the most promising sectors and expanding through mergers and acquisitions in Poland and abroad,” says Adam Purwin, CEO of PKP CARGO.
wo-digit increase in aggregate transport and reclaimed market position in intermodal operations
Transports of aggregate and building materials increased by 38 % (by 0.8 billion tonne‑kilometres YOY) as a result of the active sales policy and a boom in the infrastructure investment sector. For ore and metal, an 11% drop in transport performance was reported (by 0.3 billion tonne-kilometres YOY). This was due to the fact that during the first half of the year the majority of ore came to Poland and Slovakia from Ukraine rather than via Polish ports. As a result, PKP CARGO carried ore on shorter routes which affected the performance. However, prospects for the next months are quite optimistic as US Steel shifts to import ore by sea via Polish ports, and PKP CARGO implements the contract for transport of over one million tonnes of cargo per year with CMC Poland.
During the last half-year period, PKP CARGO also regained its market position in intermodal operations. Investments in that segment have already brought some profit: during the last few months, the Group put to operation 160 new 80-foot container platforms. The company continues to implement initiatives that will allow it to develop and diversify its portfolio of customers. The results are already visible with new contracts for transport of cars and car parts signed with Hyundai, Suzuki, VW and Skoda, to name just a few.
Coal transport was also affected by the unusual situation in the market. Due to lower coal prices in the world’s markets, its export from Poland (mainly handled by PKP CARGO) went down rapidly. Thus, despite an increase in transport performance in the coal segment in Poland and in transit (by 7 percent to 4 billion tonne-kilometres YOY), the fall in exports (from 2.3 billion to 1 billion tonne‑kilometres YOY) resulted in the drop in the total coal transport by 16% YOY (from 6 billion to 5 billion tonne-kilometres). During the first half of 2014, coal transport represented 37 % of the total transports of PKP CARGO. The company counts on improvement during the next months due to the coming heating season and the resulting peak coal transport volumes. The Group is also well-prepared for the autumn transport peak, with three thousand coal baskets more than the year before. Recently, PKP CARGO has won this year’s largest contract for coal transport with the energy company ENEA (4.6 million tonnes) and a large bid for transport of coal for Grupa Azoty.
“Thanks to our smart sales strategy, we neutralized the negative impacts of the problems in the coal transport market. We took care to ensure optimum use of our rolling stock and thanks to our consistent cost reduction policy; we managed to offer quality services at reasonable prices. The response from our business partners was very positive, which is already manifesting itself in our volume figures. This is another step towards a more flexible, customer-oriented and value-generating PKP CARGO,” says Jacek Neska, Member of the Management Board in charge of Commerce at PKP CARGO.
Record PLN 234m of cost savings and PLN 257m investments
PKP CARGO has again reported cost savings in the three main categories, namely electric energy and fuel, access to infrastructure and employment costs. Overall, operating costs dropped down by 11 % year-on-year, i.e. by PLN 234m (EUR 55.6 million).
Investments in the first half of the year amounted to PLN 257m (EUR 61 million) and were mainly covered through the Group’s own funds, with PLN 213m assigned for upgrades and regular repairs – a PLN 85m increase compared to the similar period in 2013. Over 90 % of repairs were performed within the PKP CARGO Group.
“We have been consistent in carrying out various projects to help reduce our costs and we are still seeking further savings. Our strong liquidity position and realized profits allow us to invest and seek third-party capital to implement further PKP CARGO’s strategy,” says Łukasz Hadyś, CFO of PKP CARGO.
EBITDA margin was 16.7 % (13.6% year-on-year), while net margin was 6.1 % (3.4 % year-on-year).