photo: PKP CARGO / Public domain/PKP CARGO
PKP CARGO posts significant losses in 2024, but with a new management team and restructuring plan, it aims for recovery.
PKP CARGO S.A. has reported a significant loss for the first three quarters of 2024, posting a net loss of EUR 186.3 million. Despite a decline in revenues, which amounted to EUR 789.2 million, the company is working towards a strategic restructuring to recover from its current financial difficulties and strengthen its position in the competitive rail transport sector, according to the company's press release.
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The Challenges of Poor Management and Mismanagement
The financial difficulties experienced by PKP CARGO can largely be attributed to years of poor management and irresponsible decision-making by previous administrations, as previously reported by RAILTARGET. Dr. Marcin Wojewódka, Acting CEO of the company, pointed out that the current situation results from politically motivated decisions, nepotism, and lack of proper execution of the company's core functions. According to Wojewódka, when the new management took over in April 2024, they inherited a company marked by high levels of debt, overstaffing, and a lack of operational work for both employees and rolling stock.
PKP CARGO has started a restructuring program in response to these challenges. Since the arrival of the new management team, the company has initiated sanitation proceedings, made necessary layoffs, implemented cost-cutting measures, and restructured the company’s internal organization. According to Monika Starecka, Member of the Board of Directors for Finance at PKP CARGO, these actions are crucial to restoring liquidity and ensuring the company’s financial stability. However, despite these efforts, the company still faces considerable challenges.
The Decline in Market Share and Lost Contracts
A significant concern is the decline in market share for PKP CARGO over the past decade. According to Dr. Wojewódka, the company's stock value dropped by 90%, from over EUR 936.6 million in 2014 to just under EUR 140.5 million in 2024. This was due to poor management, the loss of contracts, increasing costs, and rising wages. Former management decisions, including a sale of locomotives to finance unjustified salary increases, also played a key role in the company’s financial decline.
The company’s inability to secure long-term contracts in 2023 compounded the challenges, and the lack of transport work in 2024 resulted in an imbalance between the company’s staffing levels and the available contracts. Nevertheless, PKP CARGO is now working to reverse this situation by securing new contracts and ensuring work for its employees and rolling stock.
Efforts to Rebuild and Increase Market Competitiveness
Despite the ongoing challenges, Nakolei.pl reports that the new management has already secured major contracts, including a deal to transport coal for companies such as Tauron Ciepło, PGE Energia Cieplna, and ArcelorMittal. The total value of these agreements exceeds EUR 70.2 million, which is expected to help stabilize the company’s operations and improve its financial standing.
The restructuring plan focuses on increasing financial stability and improving operational competitiveness in the railway sector, according to the International Railway Journal. PKP CARGO aims to diversify the cargo groups it transports and develop innovative transport solutions to strengthen its position in the market. As part of this strategy, the company plans to expand its market presence and attract foreign investors, which will be vital for sustaining long-term growth.
Financial Results for 2024
In terms of financial performance, PKP CARGO S.A. reported a 19.1% drop in revenue compared to the previous year. EBITDA fell by 86.1%, reaching only EUR 27.7 million. The EBIT result was negative, with a loss of EUR 185.3 million, compared to EUR 60.6 million profit in 2023, according to Rynek Kolejowy. In the first three quarters of 2024, the company transported 52.2 million tons of cargo, a decrease of 16.2% year-on-year. This was largely attributed to lower transport volumes and reduced demand, particularly for coal transport.
As PKP CARGO continues with its restructuring, it will focus on improving its operational efficiency, securing new contracts, and stabilizing its financial situation. The company has EUR 124.6 million in investments for the year, which represents a significant drop from the previous year’s investment figures. These investments have been directed toward repairs, modernizations, and periodic inspections of rolling stock, which will be critical to the company’s recovery.
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Source: PKP CARGO; Rynek Kolejowy; Nakolei.pl; International Railway Journal