VR Group can look back on the year 2016 with satisfaction. There was substantial growth in the number of rail passengers. VR Transpoint was also able to increase its transport volumes and it posted record operating profits. VR Track expanded its operations in Finland and the result for the year was excellent.
There were also disappointments during the year. The biggest of them was the loss posted by VR Track in its Swedish operations. The substantial loss, most of which resulted from a failed maintenance contract, pushed the company into red.
Our net sales have declined for five successive years, which is the second major concern for the Group. In fact, the aim for the year 2017 is to achieve growth in net sales. The fact that more people are travelling by train and more goods are transported by rail will make this easier even though the price competition will remain tough. The economic upturn will also help VR, for the first time since 2009. We are actively seeking growth in new areas, such as travel chains, additional logistics services and tramway construction.
Safety is always at the centre of our responsibility thinking. During the past few years, we have focused our efforts on occupational safety and substantial improvements have been achieved in this field. Accident frequency rate is now one third of what it was five years ago. We have every reason to be proud of this achievement.
As part of its environmental responsibility, VR Group managed to increase the proportion of electric traction to a record level. This will reduce the climatic impacts of rail transport and help us to serve our customers more efficiently. VR Group has laid out a number of environmental objectives and the target for the proportion of renewable energy set for 2020 has already been achieved.
We have always received a large amount of direct feedback from our customers. One of the achievements of 2016 was the improvement in customer satisfaction levels. We have focused on two issues: understanding customers’ needs and listening to our customers. Each of our staff members is serving end customers, in one way or another. Each staff member must understand how they can help VR Group to meet its customer pledges.
In addition to seeking new areas of growth and ensuring customer orientation, we are also continuing our work to achieve efficiency improvements. VR Group is constantly seeking new ways of improving its competitiveness. The new electric locomotives, which will soon enter commercial service, will help us to serve our logistics customers more efficiently: With their diesel engines, they are able to use non-electrified tracks at ports and loading areas, which means that there is no need for separate shunting locomotives. They will replace the old and slower electric locomotives in the next few years and will be an essential part of the strategy to shorten travel times in passenger services.
For many decades, VR Group was the only rail operator in Finland. This is no longer the case: Both the domestic freight traffic and the freight traffic between Finland and Russia have been deregulated. The way in which we are able to defend our market share will depend on our efficiency and our ability to serve our customers.
Helsinki Region Transport (HSL) is consistently proceeding with its plans to open commuter traffic to competition. The tendering process for the next contract will probably be launched next year and a large number of international operators are expected to submit bids.
VR has exclusive rights for operating long-distance services until 2024. International examples have shown that this is a short time in major changes affecting rail systems. Rail traffic plays a hugely important role as a provider of transport connections at national level and a carrier of export goods. This means that it must be decided how rapidly competition in long-distance services is introduced so that the process can be properly managed. The condition and capacity of the rail network are the crucial factors in the efforts to increase rail traffic in Finland.
President and CEO