VR Group’s net result improved, new Chairman of the Board – Hannu Syrjänen
VR Group’s first quarter net turnover increased considerably from that in the previous year. Net turnover in the period totalled M€ 332.7 (309.8), an increase of 7.4 %. The first quarter operating result was a loss of M€ 10.5, compared with M€ -22.1 in the previous year. The net result in the first quarter was M€ -8.2, compared with last year’s figure of M€ -16.7. “The improvement in VR Group’s operating profit was significant. We succeeded in improving the net profit from the previous year, despite the costs arising from the cold winter weather and heavy snow at the start of the year. This shows that the restructuring started in the Group is having an impact, and we are continuing with this programme,” says VR Group President and CEO Mikael Aro. The first quarter net result was depressed by the higher service costs caused by the winter. Personnel costs, compensation for customers and energy costs all rose. The losses suffered by Infrastructure Construction on projects in Sweden were further exceptional items that affected the result, which also includes capital gains of M€ 4.6 from the sale of property. VR Group’s operating profit excluding these one-time items was M€ -7.9. Steady growth in Passenger Services – Allegro an immediate success Altogether 23.5 million journeys were made in rail and road services during the first quarter, and 17.0 million of these were by rail. The total number of journeys was similar to that in the previous year. VR is continuing its action to improve punctuality during 2011. The new high-speed link between Helsinki and St Petersburg on the Allegro trains was a big success straight away. The number of passengers on services to and from Russia increased 21.8 % and between Helsinki and St Petersburg 34.8 %. The number of daily Allegro trains will increase from two to four in each direction at the end of May, which will further boost travel volumes. In March VR Group ordered 15 restaurant cars and 12 power cars from Transtech Oy. The new coaches will be delivered in 2013–2014, and the goal is to improve the level of service on rail services. The power cars will also ease the congestion in the Helsinki marshalling yard. Carryings by Logistics increased Freight carryings totalled 10.1 million tonnes in the first quarter of the year, an increase of 5.0 % from the previous year. Volumes have started to rise moderately in both domestic and international carryings, and the situation is expected to remain like this in the near future. Volumes and net turnover for freight carryings in 2011 are expected to be higher than in the previous year. In March the decision was taken to build 200 new round timber wagons. The wagons will be built at VR’s workshop in Pieksämäki and this investment will take place in the period 2011–2015. Uncertainty in Infrastructure Construction Net turnover for Infrastructure Construction was M€ 47.2, an increase of 17.1 % from the previous year. Infrastructure Construction’s order book for 2011 is turning out to be smaller than had been anticipated, which will have a major impact on VR Track’s prospects for the rest of the year. The Finnish Transport Agency decided to cancel the competitive bidding for the life cycle project to build the Kokkola–Ylivieska dual track, for it considered that the M€ 660 authorized by Parliament would not be sufficient to carry out the project. The project will now be funded as part of normal budget financing and is expected to be completed in 2017. If it had been carried out as a life cycle project, the renovated track section would have been taken into service in 2014. Hannu Syrjänen is Chairman of the Board of VR-Group The AGM of VR-Group Ltd decided not to pay a dividend for 2010, in accordance with the Board proposal. Hannu Syrjänen, former President and CEO of Sanoma Corporation, was elected new Chairman of the Board of Directors, and Christer Granskog, Maaret Heiskari, Antti Mäkelä, Soili Suonoja, Arja Talma and Markku Tapio continue as members of the Board. Riku Aalto was elected a new member of the Board. Lauri Ihalainen, who served as a Board member from 2009, was elected to Parliament and was no longer available to be a Board member. Matti Ahde was re-elected chairman of the Supervisory Board. Lauri Ratia, who served as Chairman of the Board up until the AGM, was elected to this position in the situation where the previous Board Chairman and the company’s President and CEO had resigned at the same time. It was Mr Ratia’s task to stabilize the company’s operations, choose a new President and CEO, and launch a broad overall assessment of VR’s strategy and operations. These tasks have now been completed. The main experience of new Chairman Hannu Syrjänen is in demanding consumer business, and VR was specifically looking for knowhow in this area to continue the development of the company.