April 13, 2011

SBB profits drop despite good performance

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SWISS Federal Railways (SBB) recorded a 19.3% drop in consolidated profit to SFr 298.3m ($US 321.4m) in 2010 following heavy capital expenditure and the continuing restructuring of its pension plan. Other key figures remained practically unchanged, including operating revenue at SFr 7.84bn and operating expenditure at SFr7.33bn. Operating profit was down by 1% to SFr 509.3m.

sbb-results.jpgCFO Mr Georg Radon says SBB is currently investing more than it earns which is leading to an unhealthy negative cash-flow of SFr 1.8bn. The expenditure is, however, necessary to meet the constant rise in passenger demand; in 2010 the company spent SFr 911m on modernising its passenger fleet, and according to CEO Mr Andreas Meyer, up to SFr 20bn will have to be invested in new trains by 2030. A total of SFr 6bn is already being spent on 100 double-deck trains and 19 TGVs up to 2017.
 
Increasing demand is reflected in the slight improvement in passenger traffic income from SFr 281m to SFr 293m as performance went up by 5% to 17.5bn passenger/km, with international traffic showing above average growth.
 
Losses were also reported at SBB Cargo. The company recorded a SFr 64m reduction, about the same as in 2009, despite a 12% improvement in performance to 13.11bn net tonne/km due to the weakness of the Euro.
 
With demand continuing to grow, SBB's railway infrastructure is being heavily used with an average of 95.4 trains per day passing over every kilometer of track last year, compared with 94.4 in 2009.
 
Infrastructure investments are consequently required to meet higher maintenance costs and to improve the network. Last year, SFr 1.6bn was spent on infrastructure by the Swiss government, which is the sole shareholder in SBB. The government also continued to subsidise the railfreight sector, mainly intermodal traffic, with SFr 22 million allocated in 2010.
 
CEO Andreas Meyer said that in view of these figures, price increases are unavoidable. He would also like to set up a price structure that requires passengers to pay more for travelling at peak times and for using express services with modern rolling stock.

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