Strongest first-quarter profit ever.
FIRST QUARTER
- Consolidated net sales amounted to SEK 152.1 million (123.0).
- Operating profit (EBIT) amounted to SEK 19.2 million (4.4).
- Earnings per share before and after dilution amounted to SEK 0.45 (0.19).
SIGNIFICANT EVENTS IN THE FIRST QUARTER
- Railcare winds down the UK operations.
- The Swedish Transport Administration exercises option year for clearance locomotives, worth SEK 45 million.
- Railcare acquires radio control technology for locomotives.
CEO COMMENTS
Net sales for the first quarter increased by 24 percent and totalled SEK 152.1 million (123.0) and operating profit increased to SEK 19.2 million (4.4). This corresponds to an operating margin of 12.6 percent (3.6), which is in line with Railcare’s long-term targets.
“We delivered a very strong start to the year. The Contracting operations in Sweden show the most significant improvement compared with the previous year. The new snow clearance contract, extended through March, combined with an early start to contracting works, provides strong leverage and contributes to high net sales and very strong profit. At the same time, the Transport segment delivered a stable quarter, with the lower volumes of contracting transport services largely offset by the new clearance locomotives. Overall, this resulted in our strongest first-quarter profit ever.”
Contracting stands out
It is primarily the Contracting segment that stands out compared with the previous year. The new snow clearance contract has been extended by two weeks and now runs through the entire month of March. This, combined with an early start to contracting works, results in high utilisation and strong operating leverage, supporting both profit and margins. The expected full-year volume is somewhat lower than in the previous year, as a large number of track renewals have been prioritised by the Swedish Transport Administration. This means that a portion of the preparatory works ahead of track renewals carried out by our Contracting segment will be deferred to the coming year. The relining operations recorded seasonally lower volumes in the first quarter, but the full-year volume is expected to be in line with the previous year.
Within the Technology segment, tests have been carried out on the Railvac machine sold to Norwegian Baneservice towards the end of the first quarter, with good results. A number of minor measures remain to be completed before the machine is ready for delivery. During the first quarter, a higher number of external assignments were carried out at the workshop in Skelleftehamn. At the workshop in Långsele, volumes remain high. The detailed development plan for a potential expansion is expected to be completed by the end of the second quarter, when the various options will be reviewed.
All clearance locomotives operational
Within the Transport segment, all clearance locomotive assignments are now in operation. The increased volume from clearance locomotives offsets the lower volume of contracting transport services, as sleeper transport on the Iron Ore Line was carried out in the first quarter of the previous year. At the beginning of the year, the Swedish Transport Administration exercised the option to extend the clearance assignments in Långsele, Boden, Vännäs and Kiruna. The assignments now run until the end of 2027. Our other fixed assignments (LKAB and Kaunis Iron) were carried out according to plan. A large number of track renewals are planned for 2026. For the majority of these, we will perform contracting transport services, such as the transport of sleepers and ballast.
Access to locomotives is a strategically important issue for the Group. To date, we have largely leased locomotives for our assignments and matched the lease terms to the duration of transport contracts. This reduces the Group’s financial risk, but typically results in higher costs. Lease liabilities are amortised over the contract term, which means that the liability currently recognised in the Statement of Financial Position will, for the most part, be amortised by 2031.
Railcare winds down the UK operations
Railcare is discontinuing its contracting operations in the United Kingdom after several years of declining volumes, despite a significant need for railway maintenance. The reason is insufficient public funding, which has meant that the necessary increase in volumes to achieve profitability has not materialised. Ongoing projects will be completed, and the wind-down of the operations has commenced. This includes reviewing the possibility of leasing out the machines located in the country.
Railcare stands firm in a changing environment
Uncertainty and volatility in the external environment remain high. Conditions are changing rapidly, and it is difficult to assess both the short- and long-term consequences of current developments. At present, we are not seeing any significant impact on Railcare. For example, the impact of the recent increase in oil and energy prices is limited, as the cost is in most cases passed on to customers.
We continue to work towards our established targets while closely monitoring developments and remaining prepared to act quickly should the situation change. We are well positioned and see good opportunities to capture new business opportunities in the current environment.
Mattias Remahl
CEO
