HŽ Cargo Reports Profit for the Second Consecutive Year with a Net Income of €260,000

The freight transport company HŽ Cargo reported on Wednesday that in 2024 it achieved revenues of €59.4 million, which is on par with the previous year, and a net profit of €260,000.

This marks the second consecutive year in which HŽ Cargo has reported a profit.

The decrease in profit was primarily influenced by a decline in the railway transport market in the fourth quarter, increased operational costs due to frequent track closures, obligations to replace brake inserts on wagons as required by the European Commission, and the continuation of operations on the Lika railway, according to HŽ Cargo’s statement.

HŽ Cargo continues to operate transport on the Lika railway, the only railway connection between Dalmatia and the rest of Croatia, despite the fact that it is an economically unsustainable section that continuously generates losses due to the state of the infrastructure and low volumes. Given the strategic importance of the Lika railway as the only railway link between Dalmatia and the rest of Croatia, HŽ Cargo, as a public freight carrier, continues to provide transport on this section. Although it is an economically unsustainable route that other commercial carriers avoid due to outdated infrastructure and low cargo volumes, the company fulfills its obligation to ensure the continuity of railway traffic at the national level, the statement reads.

However, they emphasize that the works cause increasingly frequent track closures, which seriously affect the operational capacities of all carriers. On the RH2 corridor, for example, the track was closed for as many as 70 days in 2024.

As frequent track closures lead to reduced revenues and increased operational costs for carriers, HŽ Cargo notes that it is essential to establish support mechanisms to preserve the sustainability of railway freight transport. For this reason, HŽ Cargo supports initiatives to reach an agreement with the Government on the introduction of subsidy mechanisms to maintain the competitiveness of railway freight transport.

HŽ Cargo has maintained a market share of 38 percent based on transported tons.

During 2024, the company faced significant challenges related to the availability of qualified labor, with increased employee turnover towards competing carriers being evident. Concurrently, due to the expiration of the current Collective Agreement, regular negotiations with unions were initiated, during which amendments were agreed upon that include salary increases and improvements to the material rights of employees. A new collective agreement was concluded in February of this year.

HŽ Cargo’s Director Dragan Marčinko believes that for the long-term sustainability of operations, a series of key measures must be implemented, among which introducing significant changes in technology and work organization in the field holds a special place, representing a demanding process that entails extensive operational adjustments and substantial financial investments.

“In parallel, the focus is on expanding market reach through stronger cooperation with carriers in the region and enhancing interoperability, as well as on rational asset management, including the sale of non-operational assets. At the same time, significant investments are planned for the modernization of existing and the procurement of new locomotives, aimed at strengthening efficiency and adapting to market demands,” emphasized Marčinko.

He also adds that the entry of a strategic partner, through the enhancement of business competencies, strengthening investment potential, and better connectivity with regional markets, could accelerate the realization of these goals and contribute to strengthening the company’s position in the markets of Central and Eastern Europe.

The process of seeking a strategic partner began in 2023, and in 2024, the first phase was completed, during which interested companies submitted non-binding letters of intent. Binding offers are expected to be submitted in the middle of this year, with the aim of concluding the process by the end of the year.