VR on Monday reported a vastly improved result for the third quarter of the year.
The Finnish state-owned railway company revealed that its revenue increased by more than 53 per cent to roughly 337 million euros and comparable operating profit by more than 100 per cent to 25.3 million euros.
Its profitability improved primarily due to the number of journeys made on long-distance trains rising almost 45 per cent from the previous year – exceeding levels that preceded the coronavirus pandemic. The number of journeys was 17 per cent higher than before the pandemic in July, and two per cent higher in August and September.
“The number of long-distance journeys increased to a good, pre-pandemic level primarily due to an increase in leisure travel. We made an all-time record of 1.4 million journeys in July,” commented Elisa Markula, the CEO of VR.
Short-distance services, though, have yet to rebound to pre-pandemic levels, despite the number of journeys increasing by 50 per cent year-on-year between July and September. The number fell short of pre-pandemic levels by 13 per cent.
The volume of rail cargo decreased by roughly 20 per cent from the previous year as the state-owned company continued winding down its services to and from Russia. The services had been reduced by roughly 65 per cent by the end of last month and are to be discontinued completely by the end of the year.
Some of the loss of volume is expected to be offset by domestic demand.
“The demand for all services in domestic cargo traffic has increased significantly, which is replacing some of the volume in eastbound traffic,” said Markula. “The growth has been spurred especially by rising domestic transport volumes of round timber.”
VR highlighted that changes in energy prices do not have a major impact on the profitability of its domestic cargo services because they are provided under contracts that stipulate that energy prices are taken into account in the service prices.
Russia’s invasion of Ukraine and global political uncertainty, though, continue to affect the operations and profitability of the railway company. The war prolonging could hamstring economic growth, raise energy prices and speed up inflation.
While the unusually high electricity prices are expected to have a negative impact on the profitability of passenger services in the final quarter of the year, the company reminded that in the longer term its business is boosted by the megatrends of urbanisation and growing environmental awareness.
VR on Monday also revealed that it has decided to supplement its short-distance rolling stock with 20 electric locomotives from Switzerland’s Stadler Bussnaug. The 250-million-euro acquisition contains an option for acquiring another 50 electric locomotives and maintenance services.
Aleksi Teivainen – HT