HŽ Cargo and Passenger Transport End the Year with Losses

Of the three companies that were part of HŽ Holding until November 1, two will conclude this year with a loss, namely HŽ Passenger Transport and HŽ Cargo, it was announced at today’s conference.

According to HŽ’s estimates, HŽ Passenger Transport will incur an operating loss of 158.1 million kuna this year. In conditions of recession, i.e., a decline in macroeconomic indicators, particularly industrial production and GDP, as well as an increase in debt and unemployment, public enterprises are particularly affected. Due to a lack of funds in the budget, the railway is today, especially passenger transport, in a more uncertain position than in previous periods, the company emphasizes.

HŽ Passenger Transport expects revenues of 935.7 million kuna in 2012, which is an increase of 9.3 percent compared to 2011. The planned total expenses are at the level of 1.09 billion kuna, which is over 23 percent higher.
The reasons for this increase in expenses at HŽ Passenger Transport are seen in increased costs of track leasing by 29.8 million kuna, operating energy by 44 million kuna, maintenance services by 29.4 million kuna, and depreciation by 20 million kuna; severance payments for excess employees are projected at 42 million kuna, which will be financed from loan debt.
Investments this year amount to 82.2 million kuna.

The loss of HŽ Cargo is estimated at 91.9 million kuna; the business was marked by a strong impact of mainly negative economic trends and competition in the transport market, as well as a lack of budget funds. They emphasize that HŽ Cargo experienced a smaller decline in transport than in the countries of the region – Slovenia and Bosnia and Herzegovina.

HŽ Cargo expects revenues of 923.6 million kuna, while last year’s revenues amounted to 987.9 million kuna. The planned total expenses are at the level of 1.01 billion kuna, and they say that they have primarily increased due to the costs of electric operating energy amounting to 40 million kuna, which were not borne by operators in previous years. Total investments amounted to 114 million kuna. Next year, along with a reduction in the number of employees (427 by July 1), further business rationalization is planned. Total investments will amount to 182.2 million kuna, of which 127.2 million kuna will be allocated for the modernization of 600 wagons and 18 locomotives, while the remainder will be invested in transport-related activities.

HŽ Infrastructure is expected to conclude this year with a positive result of 0.1 million kuna. Revenues will remain at the level of 2011 and will amount to 1.3 billion kuna, and by the end of the year, 505 million kuna will be invested in railway infrastructure. Next year, it is also expected to operate positively, with a profit of 0.2 million kuna. The number of workers is planned to be reduced by 650 by the end of the year.

HŽ Passenger Transport has requested a fare increase, so train travel will likely become 15 percent more expensive from the New Year, said HŽ Passenger Transport Director Dražen Ratković at today’s press conference.
He noted that train travel prices have not been raised for several years, during which fuel prices have increased by 25 percent, and the payment for electricity for the operation of electric locomotives has also become a cost for HŽ Passenger Transport.