CZ/SK verze

ČD Group responded better to the crisis than most Western companies, says railway expert on ČD's economic result

ČD Group responded better to the crisis than most Western companies, says railway expert on ČD's economic result
30 / 04 / 2021

The České dráhy Group closed 2020 with a loss of CZK 4.1 billion. This loss occurred as a result of the COVID-19 pandemic. The decrease in sales affected the entire ČD group, not only passenger transport, but also freight transport carried out by the largest Czech freight carrier, ČD Cargo. According to railway experts, the ČD Group has put in place the right measures and has dealt with the consequences of the pandemic very well compared to other Western companies.

The biggest decrease in sales occurred in passenger transport. "However, we provided basic transport services for citizens all the time and the costs associated with this were not fully covered by sales. This is the main reason why passenger transport ended up losing almost CZK 4 billion," Ivan Bednárik, Ceo and Chairman of the Board of Directors of České dráhy, said in the media.

The number of passengers has fallen by a third. Nevertheless, it was necessary to keep the lines running. Passenger transport is the backbone of every state, and if there were blackouts, there would be serious complications. Therefore, passenger transport continued to operate despite the trains running half-empty. In this respect, however, ČD's management had little choice.

There was also a rapid decrease in freight transport. In the year-on-year comparison, about 4 million tons fewer goods were transported, so 2020 was the most difficult year in the history of ČD Cargo. This loss was also affected by ČD Cargo's profit or loss, which reached -CZK 248 million after tax. However, in the first quarter of 2021, the situation improved and ČD Cargo is back in the black.

"Unfortunately, the coronavirus crisis of the past year and this year has decided for us. A variable called "performance" or "sales" is given and difficult to influence. Lock down-s, travel ban, reduced production in all sectors of the economy – all this limits sales in the field of both freight and passenger rail transport to   historically unprecedented level.", adds railway expert Radek Rybáček to the published economic results of České dráhy.

ČD's passenger transport is also starting to see greater demand for transport. Given that the last five years the ČD Group's profit was profitable and in 2019 it even reached CZK 1.3 billion, it is expected that in 2021 the group will return to the black.

According to the railway expert Radek Rybáček, the result of the ČD Group is satisfactory compared to other Western companies. "Although the results of all companies have not yet been published, it is already clear that there are several companies whose economic results are significantly worse as a result of the pandemic".

The ČD Group has launched many measures to minimise the economic impact of the pandemic. Thanks to them, the company managed to increase the use of internal capacities. There has also been a temporary reduction in the necessary costs. As a result of the austerity measures, there had to be redundancies in both the operational and administrative areas. Wagons that were not able to operate for a long time were excluded from the fleet. Several dozen locomotives were also decommissioned. Without these measures, ČD Cargo's bottom line would be at a much larger loss.

"If anything has succeeded in ČD and ČDC, it is precise that they react flexibly and efficiently to the need to reduce costs. Historically, no management has been able to achieve what is happening within the ČD Group. Respond to a crisis, lighten costs with incredible elegance, but also hardness and efficiency. Personnel savings at ČD and ČDC are the largest in history and very effectively targeted – targeted/tripled managerial functions are being dismantled, stocks in inefficient areas are being reduced. It can be said that personnel costs are being rapidly reduced without jeopardising the future return to performance gains and maximizing transport," adds railway expert Rybáček.

The ČD Group has also prepared several projects to take full advantage of the business opportunity. Despite the pandemic, for example, ČD Cargo continued to expand into foreign markets in Austria, Germany and Hungary, where it established itself. More business opportunities can therefore be expected to help kick-start the group's economy and lead back to profit.

The management of ČD Cargo seems to have behaved like a good manager. "I would expect a similar approach in the most sophisticated and efficient private Western company, not with a state-owned company," said Mr. Rybáček, who has great experience in the field of top management of the railway company.