SNCF paid dearly for the very hard strike against the pension reform in December, ending 2019 in red when the first eleven months had been “very dynamic”, with strong growth in turnover.
The public group published Friday a net loss of 801 million euros in 2019, against a profit of 141 million a year earlier.
“Without this strike, the year would have been excellent,” regretted SNCF CEO Jean-Pierre Farandou.
The 27-day strike in December cost SNCF around 690 million euros in lost revenue and 614 million operating margins (equivalent to operating profit) – including 85 million in customer reimbursements and trade measures– which add to the debt.
And the continuation of the strike in January resulted in an operating loss of 330 million euros, which will be partly offset by gains in activity, reductions in additional charges, the delay of certain projects, optimization of investments, etc.
There will be no impact on customers or jobs, promised Farandou.
In fiscal 2019, significant accounting effects weighed on the annual net income. Without these effects, the “recurring net result” put forward by management remains negative, at -301 million euros. The difference is mainly explained this year by an impairment of deferred tax assets, an accounting transaction linked to the decrease in the future tax base.
Excluding the effect of the strike in December, the “recurring net result” would be positive, at +313 million euros, notes management.
The group’s turnover increased by 5.1% to 35.1 billion euros driven by the dynamism of the railway activities and of the public transport subsidiary Keolis.
At the same time, the operating margin increased sharply, allowing Mr. Farandou to speak of “profitable development”.
The turnover of Voyages SNCF (TGV and Intercites, in particular) increased by 4.2%, with traffic up by 4.1%. TER and Transilien activities, and even rail freight traffic – internationally – are growing, while Keolis’ turnover jumped 10.3%.
The total amount of the group’s investments is close to 10 billion euros, more than 95% of which is made in rail activities in France. It should exceed 11 billion for the first time this year, forecasts the SNCF.
– 35 billion debt –
Consolidated debt increased by 3.6 billion in 2019, to end the year at 60.3 billion euros (including 51.9 billion for SNCF Reseau).
“There is a huge gap between the cash invested by Reseau and its ability to generate it,” Farandou remarked to journalists. Its financing needs indeed represented 2.5 billion in this increase, including 1.3 billion in financial costs.
SNCF – which became a public limited company on January 1 – therefore started 2020 with a debt of around 35 billion euros, after the state took over 25 billion on January 1. It must still take an additional 10 billion in 2022.
Regarding possible asset disposals, management has launched a “strategic review”, the first results of which Mr. Farandou will present to its board of directors at the end of April. Same deadline to be “well advanced” in the negotiations of the “performance contract” which must bind the State and SNCF Network.
The objective of economic balance imposed by the government is maintained: the SNCF is asked to operate without increasing the debt from 2022.
Jean-Pierre Farandou does not intend to delay the group’s major projects, both the merger of international high-speed services Eurostar and Thalys as the launch of low-cost TGV in Spain.
As for the coronavirus, the head of the SNCF remains cautious: “We are in close collaboration with the State (…) We are preparing for the various contingencies depending on the health level which will be declared by the government.”
“What guides us is the protection of our customers and our employees,” he noted, noting that “adjusted transportation plans” could be put in place if necessary.
Management forecasts 2.7% revenue growth in 2020.