Business News

Rail Operator Making Headway on Costs, Revenue Still Problematic

Ljubljana, 16 April (STA) - Rail operator Slovenske železnice posted a net profit of EUR 2.9m for 2012. The company's boss Dušan Mes told the STA the turnaround was a result of cost cutting, but there is work ahead in increasing revenue.

Last year's net profit was a result of a new collective agreement, which saved the company EUR 12m, savings in purchasing of about EUR 9m and reduction in other operating costs, according to Mes.

Additionally, the company shed 600 workers last year and plans to let go of another 400 this year, mostly through attrition. "The average age of employees is over 50, in case of redundancies the young would be on the chopping block, which would be a disaster for the company."

"On the revenue side, however, it is difficult to even maintain the present level of business, as the transport industry in Slovenia is shrinking," Mes said.

Current operations are in line with plans and the company plans end-year net profit of EUR 4.6m. "I'm convinced we will realise the plan," he said.

Total debt stands at about EUR 335m after the company paid EUR 57m in principal in the past 18 months, but Mes was quick to point out that the company is owed EUR 134m by the state plus EUR 30m for passenger transport.

"If the state's liabilities were covered, Slovenske železnice would not be such a highly indebted company," Mes commented.

The state has deferred the payment of its EUR 135m liability by 10 years, but Mes is hopeful that the relevant legislation will be tweaked so that the company can borrow against the outstanding payment.

Quizzed about the impact of Croatia's EU accession on Slovenske železnice, Mes said little will change in passenger transport until the infrastructure improves and travel times are shorter.

Croatia's membership will, however, make shipping goods through the former Yugoslavia attractive once again, in particular when Serbia joins the bloc as well.

"But the fact is that the Croatian rail market will be liberalized, which will exert pressure on quality and prices."

Commenting on the key rail infrastructure project in Slovenia, the expansion of the track between the port of Koper and the Divača hub, Mes said it was vital.

"If construction of the second track is delayed by ten years or more, we will not need it any more because the transport flows will bypass us. The second track must be built by 2020," he said.

Investment is also needed on the entire south-north and east-west network in order to speed up goods and passenger transport.

Mes said Slovenia invested too little in rail infrastructure, which had to take a back seat to motorways. "The poor state of infrastructure making it more expensive to do business, which hampers our competitiveness," he said.

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