If someone had said a few years ago that the Railway Vehicle Factory (TŽV) Gredelj would stand on its own feet again, moreover, have secured work for the next ten years, we would probably have looked at them in disbelief. But a good investor creates miracles, as has been demonstrated, at least for now, by the Slovak company Tatravagónka. After taking it over two years ago, the struggling Gredelj increased its revenue by as much as four times compared to 2021. There is indeed a problem of staff shortages given the increasing number of projects the company is taking on, but this is currently being successfully addressed.
The investor Tatravagónka has been operating since 1922, and together with other companies in its ownership structure, it employs more than 12,000 people worldwide and produces about four thousand freight wagons, ten thousand bogies per year, and is engaged in the transportation of goods around the world. Looking at the good business results since the takeover, we might nostalgically wonder where the Slovaks were before. But it is good that they are here now.
Living Until Bankruptcy
Gredelj, with a tradition in the design, production, reconstruction, modernization, and maintenance of all types of railway vehicles spanning 125 years, has, since Croatia’s independence, been, so to speak, barely surviving, until it went bankrupt in 2012, from which it was rescued by Tatravagónka by settling obligations to creditors.
– The company has no obligations from loans and borrowings, only 5.8 million euros in short-term obligations to suppliers, which represents 4.8 percent of liabilities. Changes in balance sheet positions in 2021 show that a major operational and financial restructuring was carried out in that business year – emphasizes Lider’s analyst Nikola Nikšić, owner of Konter Consulting.
He explains this with the fact that the carried forward loss (44.4 million euros) has been fully covered, short-term obligations to banks (40.3 million euros) have been fully settled, and obligations to suppliers have been reduced to a minimum (from 20 million euros on January 31, 2020, to 1.4 million euros on the last day of 2021).
Although it is stated in Business Croatia that last year’s revenue amounted to 175.5 million euros (it was 26.8 million euros in 2021), the CEO Ivan Petriček warns us that the actual revenue was, in fact, lower – 114 million euros, with the remainder being extraordinary income. However, this revenue is excellent, and the main reason for the sudden increase is the new project for the production of freight wagons, which the company began producing in 2021, after the takeover.
– Gredelj signed a Memorandum of Long-Term Cooperation with the Austrian company Innofreight for the delivery of about a thousand wagons per year. The total value of this future cooperation is around two billion euros over ten years. Last year, we delivered 700 freight wagons worth about 90 million euros, which accounts for almost 80 percent of total revenue – states Petriček.
After several years of losses, last year’s profit of 4.6 million euros probably seemed unreal to the employees. The profit was achieved despite rising costs, primarily electricity, which tripled last year compared to the previous year. Gredelj is a large consumer of electricity, as well as gas, which also increased fivefold last year, Petriček says, and the prices of materials for production have risen. In addition to these costs, the management faced significant pressure to raise salaries to retain the remaining workers who had not left for better opportunities abroad or to other companies in Croatia. Therefore, last year, salary costs increased by 25 percent, and the only solution for survival was to start negotiations with customers to increase the selling price.
