VR Group’s Half-year financial report, 1 January–30 June 2022 – Finns returned to rail in large numbers, Eastern traffic was decided to run down due to Russia’s war of aggression

VR-Group Plc, Half Year financial report, 30 August 2022 at 13.00 

VR Group’s Half-year financial report, 1 January–30 June 2022 – Finns returned to rail in large numbers, Eastern traffic was decided to run down due to Russia’s war of aggression 

VR-Group Plc (“VR Group”) reports in its Half-year financial report, that Finns have returned to rail in large numbers. As the pandemic eased, the number of rail passengers has been rising steadily since March. Due to Russia’s war of aggression, it was decided to run down Eastern traffic, as a result of which VR Group’s overall result was at a loss. In order to finance investments in the next few years, the Group’s parent company issued its first green bond. 

April–June 2022 (Q2):

• The Group’s net sales increased by 19.0 per cent to EUR 240.6 (202.2) million. 

• Operating profit (EBIT) was at a loss, EUR -39.9 (-8.3) million, or -16.6 per cent (-4.1%) of net sales. Comparable operating profit (EBIT) was EUR 5.4 (-10.3) million, or 2.3 per cent  (-5.1%) of net sales. 

• The Group wrote off the entire eastern traffic’s Allegro-related rolling stock and spare parts, totalling EUR 45.4 million. 

• Cash flow from operating activities was EUR 56.2 (48.7) million. 

• Journey volumes increased by 99.2% in long-distance trains in April–June, and 3.4 (1.7) million journeys were made. 

• The railway transport volumes of VR Transpoint decreased by -26.5 per cent due to run down of Eastern traffic and were 7.1 (9.7) million tonnes. 

• The legal form of the Group’s parent company was changed into a public limited company. 

• To finance its investments in the next few years, the Group issued a EUR 300 million green bond, which was listed on the Helsinki Stock Exchange.

January–June 2022 (H1):

• The Group’s net sales increased by 13.6 per cent to EUR 442.7 (389.7) million.  

• Operating profit (EBIT) was at a loss, EUR -64.8 (-23.0) million, or -14.6 per cent (-5.9%) of net sales. Comparable operating profit (EBIT) was EUR -19.5 (-25.0) million, or -4.4 per cent (-6.4%) of net sales. 

• The Group wrote off the entire eastern traffic’s Allegro-related rolling stock and spare parts, totalling EUR 45.4 million. 

• Cash flow from operating activities was EUR 59.3 (56.1) million. 

• The Group’s parent company’s CEO Lauri Sipponen was dismissed on 4 April 2022. Topi Simola, SVP VR Passenger Services, was appointed as interim CEO. Elisa Markula (M.Sc. Econ.) was appointed as the new CEO of the company. She will assume responsibilities on 30 August 2022. 

• There were 5.6 (3.0) million journeys in long-distance traffic, an increase of 88.0 per cent year-on-year.  

• The railway transport volumes of VR Transpoint decreased by -19.7 per cent from last year due to run down of Eastern traffic and were 14.9 (18.5) million tonnes. 

  

VR Group’s key figures	4–6/2022	4–6/2021	1–6/2022	1–6/2021	1–12/2021
Net sales, MEUR	240.6	202.2	442.7	389.7	838.3
Operating profit (EBIT), MEUR	-39.9	-8.3	-64.8	-23.0	-22.7
% of net sales	-16.6	-4.1	-14.6	-5.9	-2.7
Comparable operating profit (EBIT), MEUR	5.4	-10.3	-19.5	-25.0	-14.1
% of net sales	2.3	-5.1	-4.4	-6.4	-1.7
Net profit/loss for the financial year, MEUR	-22.5	-3.2	-37.5	-14.4	-13.7
Cash flow from operating activities, MEUR	56.2	48.7	59.3	56.1	138.1
Investments, MEUR	44.6	36.7	74.8	79.6	168.8
Capital invested at the end of the period, MEUR	1,873.3	1,530.1	1,873.3	1,530.1	1,583.1
Return on capital employed (ROCE), %	-4.8	-1.3	-4.0	-1.9	-0.5
Comparable return on capital employed, %	5.6	-1.9	1.2	-2.2	0.0
Interest-bearing liabilities at the end of the period, MEUR	274.1	200.1	274.1	200.1	238.1
Gearing, %	21.4	16.0	21.4	16.0	18.6
Average number of personnel	5,737	5,625	5,681	5,647	5,620

The calculation formulas for the figures are disclosed in VR Group’s Annual Report for 2021. 

The figures are unaudited. 

Interim CEO (until 29 August 2022) Topi Simola:

“In VR Group we are pleased that Finns have returned to rail in large numbers. The number of rail traffic passengers has been rising steadily since March – in July, we reached an all-time high in long-distance traffic passengers, with 1.4 million passengers transported in one month. 

The increase in the number of journeys has been strong since the pandemic eased. At VR Group, we have worked continuously and productively to increase the attractiveness of rail travel. We have kept ticket prices low despite cost increases, increased supply and modernised our services. Also the increase in fuel prices in the spring decreased the popularity of car traffic. 

On the whole, the six-month period was sharply divided by nature. While the pandemic eased and passenger traffic recovered, the Russian-instigated war of aggression in Ukraine caused an international crisis. The Russian war of aggression and sanctions imposed due to the war led to the decision by VR Group to suspend all Russian related operations. As a result of which VR Group’s overall result was at a loss. 

VR Group has decided to discontinue Eastern freight traffic by the end of the year. Allegro passenger traffic was suspended in March. VR Group has started negotiations in which the Group will divest its associated companies and subsidiaries related to Eastern freight traffic. 

During the crisis, VR Group has strived to show its support for Ukraine in many ways. For example in March by donating EUR 160,000 to Ukraine for humanitarian aid, when VR Group celebrated its 160th anniversary. In Finland, Ukrainians can board VR’s long-distance and commuter trains free of charge by showing their Ukrainian passports. 

The COVID-19 pandemic continued to slow down train travel still in early 2022. The Omicron variant and the restrictions imposed by the authorities affected the number of journeys, especially in January–February. In March, the number of journeys turned into promising growth, and since then, the trend has only been rising. In May and June, the number of journeys reached almost pre-pandemic levels. After the end of the six-month period, we reached an all-time high in long-distance traffic passengers in July, with 1.4 million passengers transported in one month. During the review period the railway maintenance work done by the Finnish Transport Infrastructure Agency hampered the rail traffic and negatively impacted punctuality of trains. 

In the next few years, VR Group plans to invest approximately EUR 1 billion in new environmentally friendly rolling stock. In 2022–2026, we will invest in new electric locomotives, commuter and night train rolling stock and the maintenance and lifecycle extension of existing rolling stock, among other things. To finance our investments, we issued our first green bond.  

The green financing investment programme will enhance the realization of VR Group’s environmental goals. VR Group has set ambitious Group-level environmental goals for the years 2021–2025, consisting of reducing emissions, increasing energy and material efficiency and improved chemical safety. We are also committed to the Finnish state’s climate goals, according to which Finland will be carbon neutral in 2035 and carbon negative soon after. 

In March, we announce the big news of expanding our operations into Sweden. We acquired the Swedish bus and rail operator Arriva Sverige. The transaction was completed on 1 July 2022. Arriva Sverige was acquired into the group as part of VR Passenger Services. The company has 3,400 employees  and its annual net sales are around EUR 300 million. With the transaction, we aim for strategic growth in the Nordic public transport market in accordance with our strategy while strengthening our expertise in urban and commuter transport.”

VR-Group Plc 

Board of Directors 

  

More information: 

VR Group Media Desk, tel. +358 (0)29 434 7123 

 

Attachments: VR Group Plc Half-year financial report, 1 January–30 June 2022 (pdf)