Restructuring for growth

VR Group’s net profit for 2009 will be significantly weaker than for the previous year. The savings measures agreed in the spring have had a corrective effect on the 2009 net result, but they do not resolve the long-term challenges arising from the structural changes in heavy industry. Through the restructuring programme that VR launched in August and the changes to the Group structure, VR aims to improve its profitability and boost future growth.

The weaker figures for VR Group’s net turnover and net profit are due to the decline in traffic volumes. Freight carryings have dropped by almost 30 % in comparison to last year, but rail passenger volumes are also down slightly. The decline in freight services was not so sharp in the third quarter, and towards the end of the quarter there were some weak positive signs.

“Freight services seem to have stopped their sharp fall for the moment, but no significant growth in demand can be expected in the near future. The structural changes in heavy industry are a permanent feature, so we need long-term measures. The restructuring programme and the related changes in the Group structure are essential to safeguard VR Group’s profitability and future growth,” comments VR President and CEO Mikael Aro.

The Group’s net profit for the third quarter was M€ 22.5 and the total for the first nine months M€ 7.5, compared to almost M€ 55 in the previous year. The full year net result for 2009 is forecast to be slightly positive.

New structure at start of year
In response to changes in its business environment, in August VR launched an extensive restructuring programme that aims to improve the company’s profitability by M€ 100 by the end of 2011. To start with, the programme has focused on enhancing and reorganizing VR Group’s logistics operations.

“Several projects have been started in freight services, aiming to raise the efficiency of business operations and of the transport systems. The goal is to achieve growth cost-effectively and on the customers’ terms,” states Mikael Aro.

The restructuring also involves a lighter corporate structure. The Group has already starting working in accordance with the new management system during the autumn, although legally the new structure starts to function at the beginning of 2010.

A separate redundancy pool has been set up in VR Groupto provide support for those whose jobs are at risk and help them find new jobs, either within the Group or elsewhere.
 

Source: Transportweekly