SECOND QUARTER

• Consolidated net sales increased by 24.3 percent to SEK 179.8 million (144.7).
• Operating profit (EBIT) increased to SEK 15.8 million (14.9).
• Earnings per share before and after dilution amounted to SEK 0.41 (0.41).

FIRST SIX MONTHS OF THE YEAR

• Consolidated net sales increased by 20.9 percent to SEK 309.2 million (255.7).
• Operating profit (EBIT) increased to SEK 29.6 million (28.0).
• Earnings per share before and after dilution amounted to SEK 0.78 (0.77).

SIGNIFICANT EVENTS IN THE SECOND QUARTER

• Railcare signed an agreement relating to the acquisition of 40 percent of the shares in new locomotive leasing start-up AC Finance AB.

CEO COMMENTS
Net sales in the second quarter were SEK 179.8 million (144.7) and operating profit was SEK 15.8 million (14.9). This corresponds to an operating margin of 8.8 percent.

“We returned record sales in the second quarter due to high volumes in Contracting Sweden and Transport Scandinavia. After the long and cold winter, we started and completed a number of maintenance projects in the second quarter at the same time as transport operations continued according to plan. The lower margin was largely due to low volumes in the UK, which led to weak results in the quarter.”

The contracting operations in Sweden generated record volumes in the second quarter. This was partly due to a major assignment near Västerås, where we carried out reballasting of bridges and switches in collaboration with subcontractors. The project involved a number of subcontractors with invoicing passed on to the customer, implying high turnover but slightly lower margins. The reballasting project was completed successfully with several stages carried out in parallel, in line with our pit stop method. Collaboration with a range of partners is key to increasing maintenance efficiency and minimizing traffic disruptions. 

We have seen a general increase in demand for our services, an important factor for improving accessibility on Sweden’s railways in the longer term. 

The relining operations have now started in earnest following the long winter, which meant that a number of assignments were delayed.

In the transport operations, most contracting transports for track replacements did not start until at the end of the second quarter, later than in previous years. Assignments involving transport of iron ore and iron ore concentrate for LKAB and Kaunis Iron were completed according to plan, as well as contingency assignments for clearance locomotives.

The locomotive workshop in Långsele completed the delayed TB locomotives for Infranord.

Continued uncertainty relating to UK operations 
As expected, volumes in the UK contracting operations have been very low. The new control period CP7 started in the second quarter. Funds allocated to the coming 5-year control period are in line with the previous control period, implying a reduction in real terms given the high inflation in recent years, which means that maintenance will need to become more efficient and can be expected to decrease during the coming control period. As previously reported, discussions are underway with Network Rail regarding demand and potential development of our services.

Railcare ensures access to locomotives with increased environmental performance
At the Extraordinary General Meeting on 24 July, a unanimous Meeting resolved to authorize Railcare’s acquisition of 40 percent of the shares in new locomotive leasing start-up AC Finance. Other owners include Nornan Invest AB, Railcare’s largest shareholder, and Actinvest AB, which both own a 30 percent stake in the company. 

Several years ago, we identified access to locomotives with the right environmental performance as a pre-requisite for the green railways transition and for creating attractive business opportunities. This was confirmed when the Swedish Transport Agency, in line with its new environmental targets, stepped up its demands on locomotives during the two latest procurement negotiations for contingency assignments relating to clearance locomotives. The access to new EffiShunter locomotives we have now secured through the stake in AC Finance AB ensures favourable prospects for winning new assignments in future. 

This means that we are shouldering our share of the responsibility for the sector transition, while also positioning ourselves to ensure good business opportunities and a financially profitable and sustainable company. This is possible as a result of the progress we have made in recent years, which we have all worked very hard to achieve and are very proud of. 
 
Mattias Remahl
CEO