SNCF is making a strong comeback with a net profit of almost one billion euros in the first half

The end result is good, even too good for SNCF in this first half. Revived by site visitors restoration, boosted by the efficiency of its subsidiary Geodis and relieved of a massive half of its debt burden by the state, the rail group achieved an sudden degree in the first half of 2022. All lights are inexperienced with some indicators above 2019 ranges. However, a shadow is very current on the board: the menace of a reversal after the summer season.

The first seen aspect of this restoration, turnover reached 20.3 billion euros. This is 27% larger than the similar interval final yr, however total 14% larger than 2019 – the final reference yr earlier than the well being disaster. Already a driving pressure final yr, Geodis ” In line with 2020, with a important enhance in its actions in all its sectors “, defined Laurent Trevisani, Deputy Managing Director of Strategy and Finance of the SNCF Group. With revenues of 6.7 billion euros, the logistics subsidiary improved its efficiency by 34% in one yr and by 67% in comparison with 2019. The alternative to emphasise the significance of this diversification in the technique of the supervisor SNCF. took, the place some imagine it ought to refocus on nationwide rail operations. Keolis additionally strengthened an argument with a 2% enhance in comparison with 2019 to three.3 billion euros.

At the core of the group’s operations, SNCF Voyageurs reached 8.4 billion euros with a 36% enhance over the yr, however nonetheless barely decrease than in 2019 (-4%). After being strongly affected by the air pollution wave at the starting of the yr, site visitors will increase strongly from March-April. ” We have had a very strong restoration in our practice presence. And once I say very strong, it actually is very strong “, welcomes Laurent Trevisani. In TGV exercise, with all rolling inventory in place, the occupancy price exceeded 70% in the second quarter and even exceeded 80% in June, with good efficiency not solely on weekends, but in addition throughout the week.

To clarify this enthusiasm, the monetary director pointed to the present urge for food for journey, the desire for trains resulting from its lowered environmental footprint in comparison with different modes of transport, but in addition the financial benefits supplied by trains over automobiles and the value of gasoline. SNCF Réseau additionally benefited from this restoration in exercise by means of tolls, rising by 7% in comparison with 2019 to three.5 billion euros.

Profitability from exercise

Perhaps extra importantly, SNCF Voyageurs succeeded in changing this renewed exercise into profitability. From a detrimental margin of 6% final yr, the subsidiary moved to a optimistic margin of 11%. This enabled it to generate 900 million Ebitda (earnings earlier than curiosity, tax, depreciation and amortization). It thus returns to the similar degree as SNCF Réseau, which was worthwhile throughout the disaster and which elevated its margin by one other 4 factors to 26%. Geodis was the third largest contributor with 598 million euros (9% margin) adopted by Keolis with 314 million (10%).

In reality, the group doubled its Ebitda in comparison with the first half of 2021 and barely exceeded that of 2019 with 3 billion euros. This allowed it to publish a margin of 15% (in comparison with 16% in 2019).

The net end result improved vastly: SNCF went from a loss of 780 million euros to a profit of 928 million in 2021. The efficiency is exceptional, particularly since solely 20 million euros have been generated in 2019. And greatest of all, the group is as soon as once more producing money, with a free money circulate of 1.1 billion euros, in opposition to a detrimental circulate of 745 million euros final yr.

Leverage impact and financial savings plan

The rail enterprise is a mounted value economic system. When you fill your trains higher, it finally ends up proper on the sidelines. This is the similar leverage impact, however in reverse, that we noticed throughout the disaster », element Laurent Trevisani. But he cautions that this is not the solely issue to elucidate this enchancment in profitability: ” This is additionally resulting from the efforts of the home, which continues to implement its efficiency plan in the first half of 2022. We plan to save lots of 660 million euros in the monetary yr. In the first half of the yr, we reached the goal of 55% or 360 million euros. »

In order to attain this, the group is notably targeted on the contribution of digital know-how (290 million euros), the optimization of its heavy group with a higher distribution of obligations between the central entity and the fields (30 million) and at last the discount of challenge prices by means of standardization and higher negotiation of funding prices. On this final level, it was ready to make use of its dominant floor space with an funding of round 11 billion euros per yr (SNCF and co-financiers) to generate and acquire stress on the ecosystem. proper value

Laurent Trevisani, on the different hand, didn’t have a look at the impact of the discount of workers or the gradual disappearance of the standing of railway employees in phrases of value discount. SNCF has thus lower a median of round 2% between 2011 and 2021, and final September Group Chief Executive Officer Jean-Pierre Farandu introduced the imminent elimination of 2,000 to three,000 posts.

Summer will likely be good, however later?

Thanks to his outcomes, Laurent Trevisani is assured of SNCF’s skill to take care of its dedication to the state throughout the 2018 rail reform to generate optimistic free money circulate in 2022. We are on the proper observe. The first half accounts present this and it makes us assured about the yr “, he congratulated himself.

However, the technique and finance director is cautious to not trumpet the figures, complacent by claiming the group will do higher than break even. For now, summer season is going very positively, in line with the upswing seen since spring, however Laurent Trevisani is cautious of adjustments after summer season: “ In the final time period, from September to December, I’m extra cautious resulting from exterior elements comparable to the deterioration of the Ukrainian disaster, a new episode of Covid, the tightening of the financial scenario which is creating social stress… Affects us and slows down exercise. And the leverage impact we have seen, it may well go in a short time. »

The scenario is much more alarming as enterprise site visitors restoration nonetheless lags considerably behind leisure site visitors. In the first quarter, affected by the Omicron variant, it was solely half of its pre-crisis degree. Although the statistics have improved, the hole stays substantial. However, in September, these enterprise purchasers partially took over from holidaymakers.

2023 will value inflation

It will even have an effect on inflation. As for funding prices, the group ought to save for the very brief time period, however just for the very brief time period. ” Like all corporations, our service suppliers have been regularly asking us for value will increase. We have entered into troublesome discussions, however this is solely the first step. The affect will likely be restricted in 2022, however a lot stronger in 2023. »

Added to this will likely be the wage calls for of railway employees in order that they don’t have to undergo from inflation. The first social actions have already taken place at the starting of the vacation.

Thanks to SNCF’s multi-year hedging coverage, the affect of rising vitality costs also needs to be average for now. They permit it to purchase electrical energy at a predetermined price, which is very handy in the present context, however will unravel over time. The group additionally has regulated entry to historic nuclear energy, the well-known Aren, which provides entry to one megawatt hour (MWh) for 42 euros, in comparison with 900 euros on the spot market. But this course of should finish on December 31, 2025. This nonetheless offers SNCF time to show round, however the extra prices could be very heavy.

Laurent Trevisani judged that it was untimely to speak about ticket value will increase in 2023 for future value will increase, preferring to recall that SNCF didn’t increase its costs in 2022.