ČD Cargo halves semi-annual profit

Czech rail freight operator ČD Cargo’s profit has halved in the first half year of 2024. The number amounted to 240 million Czech crowns (9,6 million euros), whereas profit was approximately 480 million Czech crowns (19,2 million euros) in the first half year of 2023. The company mostly points to Czech domestic traffic as the culprit for the financial downturn.

“The year-on-year drop in economic results by 50 per cent is mainly due to a significant reduction in transport volumes and sales on the domestic transport market, where performance decreased by almost 3,5 million tonnes”, explains ČD Cargo.

“These were mainly brown coal transports due to the suppression of energy production from fossil fuels and transport for the metallurgical industry due to the limited production of Liberty Ostrava”, the company says.

Foreign business cannot fully compensate

On the other hand, ČD Cargo’s foreign business is showing better results. However, “the growing volumes of combined transport and other commodities, nor the performance of ČD Cargo abroad, cannot fully compensate for this decrease, even though they contributed significantly to the profit achieved.”

Traction energy costs and fuel, as well as wage increases amid inflationary pressure have grown the company’s expenditures. Services, material and energy consumption costs grew by 2,5 per cent, to roughly 3,4 billion Czech crowns (134,5 million euros). Wage costs grew by 4,6 per cent, to around 2,6 billion Czech crowns (105,6 million euros).

“​​The change in the structure of transported commodities and the overall decline in performance of the rail freight transport market in the Czech Republic leads to a necessary reduction of excess capacity for which ČD Cargo has no use”, the company points out.

As a result, “there was a slight decrease in employment, the retirement of surplus freight wagons and locomotives and the suspension of some planned investments.” The results of the remainder of the year will determine how much more ČD Cargo will reduce its capacities, the company says.

‘Unlike many, ČD Cargo remains profitable’

“Structural changes in energy and problems in metallurgy not only in the Czech Republic, together with the recession, or the stagnation of European industry in recent years, influence the continuous decline in ČD Cargo’s performance,” commented Tomáš Tóth, chairman of the board of ČD Cargo to Czech publication Dopravní noviny.

“It is clear that the change in the structure of transported goods is of a permanent nature and leads to a decrease in the volume of goods transported by rail in the Czech Republic. […] We are not alone in this, most of the most important railway freight carriers in Europe face a similar situation, and unlike many of them, ČD Cargo remains profitable. However, it will be necessary to continue adapting our capacities to the current and future needs of the transport market,” added Tomáš Tóth.