SNCF suffered a heavy loss in the first half of the year. The public group on Thursday published a net loss of 2.4 billion euros, against a modest net profit of 20 million over the first six months of 2019. Successively affected by the strike against pension reform and the coronavirus crisis, the company plays a balancing act between uncertainties and “winning back” passengers while waiting for state aid.
"Before the strike, the SNCF group had relatively secure its fundamentals", with better operational performance and "a marked improvement" in its finances, CFO Laurent Trévisani reminded AFP. But the strike in December and January caused it to lose 1 billion euros in turnover, before the coronavirus virtually shut down its TGVs in the spring.
Decrease in attendance
SNCF's turnover fell by 21% to 14.1 billion euros in the first half. The shortfall due to the end of the strike in January is almost negligible (275 million) compared to the hole dug by the health crisis (3.9 billion). While Geodis (logistics) resisted with a very slight increase in turnover of 0.3%, the other components of the public group saw their income decline: -37% for SNCF Voyageurs (TGV, TER and Parisian suburbs), -12% for Keolis (public transport), -20% for freight and -20% for SNCF Réseau.
The strike, the health crisis and the confinement have reduced attendance by 50% in the TER compared to the first half of 2019, and by 55% in the TGVs from which SNCF usually derives its profits. Only February saw a positive trend. The “operating margin” - an indicator prized by SNCF, close to gross operating profit (EBITDA) - was divided by 21 in one year, to 136 million euros.
To limit the damage, management launched an "exceptional and proactive action plan" to generate savings of 1.8 billion euros over the year (including 1.1 billion in the first half). This plan includes measures to reduce costs - "without affecting the production workforce" - as well as the postponement or abandonment of certain projects.
"Reconquest"
The group has thus given up about 10% of the 5 billion investments that it was to self-finance this year, keeping "only the investments which are strictly essential and corresponding to (its) strategic priorities", according to Laurent Trévisani. SNCF was nevertheless obliged to "burn cash to the tune of 2.8 billion" euros over the semester. Hence a heavier debt, which increased from 3 billion euros to 38.3 billion on June 30. The State had just taken back 25 billion as of January 1.
"To date, the group's treasury is solid and its financing capacities are preserved", insisted the management. "We are not out of the crisis," recalled the CFO. We must always "manage uncertainty", which makes any prognosis risky for the months to come, he said. The SNCF will therefore continue to tighten the bolts, be "very selective" on investments and pamper its cash, "without this being to the detriment of everything that is essential, urgent and essential to rail operations".
For now, attendance is still around 20% below normal. SNCF launched a “commercial action plan” with low prices “to bring leisure back to the TGV”, just as it joined the regions to promote TER. "Reclaiming the + pro + (business travelers, editor's note) will be one of our targets for the start of the school year" with in particular offers for occasional trips - for those who take the train less because of teleworking -, a continued Laurent Trévisani. “Currently, our TGVs are not sufficiently full,” he regretted.
SNCF will also take an interest in rail freight, as part of the support plan being prepared by the government. The Minister for Transport Jean-Baptiste Djebbari recently announced that the SNCF would be helped "to the tune of several billion euros" by the State. "Several options are on the table: the recapitalization of the group or the recovery of an additional part of the debt, for example," he said.
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