On the whole, SBB results were good in 2009. The company faces some major challenges.
Press release, 16.04.2010
SBB Annual Media Conference
On the whole, SBB results were good in 2009. The company faces some major challenges.
SBB exceeded its strategic goals for 2009, achieving record figures for punctuality and quality and for safety. At CHF 369.8 million, the financial result was also encouraging, though this figure benefited from a number of non-recurring factors – notably the sale of real estate amounting to CHF 239.3 million. 327.5 million people travelled with SBB in 2009 – 1.5% more than in the year before. SBB Cargo carryings fell by 7.0% to 11,674 million net tonne-kilometres. SBB has some tough challenges ahead as it endeavours to satisfy the growing customer demand for its passenger services. Despite the progress made, the difficult tasks of restructuring the SBB pension fund and managing the strategic reorientation of SBB Cargo are putting the company and its employees under a great deal of pressure.
SBB continues to pursue its goal of developing the company while achieving a sustainable equilibrium in terms of punctuality/quality, safety and profitability for the 900,000 customers who use the network each day. SBB improved its performance in 2009 thanks to ambitious targets and continuous improvement processes. All three operating targets set for the Group were exceeded.
SBB tightened up its punctuality targets in 2009. First it reduced its tolerance margin from five to three minutes. Then, rather than focusing on "train punctuality", SBB focused on "customer punctuality", which measures punctuality as seen from the viewpoint of the customer. These efforts were rewarded and punctuality showed a significant year-on-year improvement. In 2009, 88.2% of all customers reached their destinations on time or less than three minutes late. In 2008, the year in which SBB introduced its new customer punctuality assessment criterion, the company achieved a figure of 85.4%.
However, a subsidiary goal was only narrowly missed, with 97.2% of passengers successfully making their onward connection in 2009 (2008: 97.2%). This was just under the target of 97.4%. As a result, additional measures are being put in place in 2010 to ensure that more passengers make their connections.
In 2009, SBB improved its overall safety record by 26% compared with 2008. As in previous years, neither SBB nor its customers were involved in any serious accidents in 2009. "Moderately serious" collisions were down by 29% and derailments by 50%. The incidence of occupational accidents fell in 2009 to 13% lower than in the previous year.
The number of assaults against staff was also down by 16%, although these attacks – mostly committed by younger offenders – are becoming increasingly violent. Incidents involving passengers fell sharply back down to the level of 2005. SBB transport police was strengthened and other preventative measures stepped up.
Safety is top priority at SBB, and no concessions will be made here in future either.
Good Group result improved by one-off revenues.
SBB's financial result for the year was also on target. Despite the economic downturn caused by the global financial crisis, the Group result was CHF 369.8 million in 2009, compared with CHF 345.0 million in the previous year.
The financial result can be ascribed firstly to the groundwork done to counter a difficult business climate (early adjustment of capacities, hiring freeze in specific areas, etc.) and, on the other hand, to non-recurring proceeds from sales of real estate totalling CHF 239.3 million (CHF 111.8 million more than in the previous year). Without the revenues from asset disposals, SBB's 2009 operating result would have been CHF 122.8 million, or 38.4% lower than in the previous year (CHF 199.4 million). In particular, the segment result for SBB Cargo was badly affected by the economic crisis, and that of Infrastructure by additional maintenance costs.
Given the financial pinch-points that lie ahead, the positive annual result was sorely needed and will help SBB to overcome the challenges it is soon to face.
SBB’s public-sector funding in 2009 totalled CHF2,674.1 million, which was CHF 123.8 million more than in the previous year. This figure includes the CHF 150 million which the federal government made available to SBB in 2009 as part of its economic stimulus programme.
Some major expense items that had been scheduled for 2009, but were not considered essential for ensuring the high safety and quality standards, were deferred to future years because of the need to prioritise investments.
As in previous years, the funds generated by operations in 2009 were not sufficient to finance investments. The negative free cash flow amounted to CHF -260.7 million in 2009 compared with -CHF 505.4 million in the previous year. As a result, SBB's indebtedness continued to rise.
CHF 1 billion is due to be spent on rolling stock in 2010. SBB will also make an additional contribution in 2010 of CHF 938 million to reduce the shortfall in the company pension fund. Together with the regular annual CHF 31 million additional employer's contribution to the pension fund restructuring programme, SBB will incur extra charges of over CHF 2 billion, which will put a serious strain on finances.
SBB employed more people in 2009 than in the previous year. The number of jobs (full-time-equivalent positions, including subsidiaries) rose by 0.6% to 27,978 (2008: 27,822).
Results of the individual segments.
SBB benefited from its prompt action to deal with the impending financial and economic crisis in the late summer of 2008, when it adjusted capacities and introduced a sector-specific recruitment freeze together with a number of cost-saving programmes. The main victim of the economic downturn was freight: demand for goods shipments slumped worldwide.
Overall, 327.5 million passengers travelled with SBB in the year under review. This was 1.5% more than the previous year (322.6 million). 2008 had seen a year-on-year rise of 5.2%. In 2009, 900,000 people travelled by SBB every day. The number of passenger kilometres travelled was 16,677 million. Carryings were thus 3.5% up on the previous year (2008: 16,115 million).
The segment result for SBB's Passenger Division was CHF 280.6 million (2008: CHF 276.8 million). Traffic revenues totalled CHF 2,724.8 million (2008: CHF 2,670.4 million).
In 2009, SBB Cargo saw freight revenues in its international business fall by 15%. In domestic wagonload traffic, freight revenues dropped by 9%.
SBB Cargo posted a loss of CHF62.5 million in 2009, compared with a deficit of CHF 29.9 million in the previous year. As a result of the economic crisis, traffic revenues fell by 12.3% to CHF 915.6 million (2008: CHF 1,044.2 million).
real estate market
In contrast to the previous years, SBB was unable to increase its rental income at the RailCity locations in 2009. Revenues from shops and catering outlets at RailCity stations fell by 0.1%, which was a result not only of economic factors but also of the construction work being carried out at a number of RailCity locations. Thanks to positive sales growth at the 23 "More station" locations, a 0.6% increase in revenues was still achieved overall at the 32 largest stations. Spread over the Swiss population as a whole, station-based businesses generated approximately CHF 190 in sales per capita during the year.
The segment result reported by SBB Real Estate in 2009 was a surplus of CHF6.2 million (2008: CHF 3.3 million). The segment operating profit before interest and amortisation payments to help restructure the SBB pension fund (CHF 196.3 million) as well as compensation payments to the Infrastructure division (CHF 85 million) was CHF 287.4 million (2008: CHF 204.4 million.).
The number of train-path kilometres sold in 2009 increased by 1.8% to 161.6 million (2008: 158.7 million). Additional services on long-distance routes, on the Zurich S-Bahn and in Central Switzerland, gave rise to this extra traffic. At the same time, the decline in bulk freight led to loss of income from the sale of train paths.
In the Network unit, the annual result was again a negative CHF -23.7 million (2008: CHF -10.1 million). This was consciously accepted in 2009 in order to maintain quality and safety in the heavily used network. The decline in freight traffic generated lower train-path revenues, and train-path subsidies from the federal government fell accordingly. But these decreases were largely offset by productivity gains and savings in other operating costs. The result was adversely affected by various non-recurring items (provisions relating to the programme to reduce administrative costs in the Infrastructure division and the reorganisation of marshalling activities).
The Power unit posted a surplus of CHF 17.2 million (2008: CHF 40.5 million). The unit's lower earnings and expenses were due to considerably lower trading prices on the energy market.
The provision of traction power totalled 2390 GWh in 2009 (2008: 2407 GWh). As in previous years, SBB obtained about 70% of its power for rail operations from hydroelectric plants in 2009.
Challenges facing SBB and policy-makers.
A major effort will be required by all concerned if these additional needs are to be financed. SBB will have to make a significant contribution to raising the additional funds required by continually increasing productivity. The public sector will have to increase its contributions to cover the additional asset maintenance costs. And rail customers will no doubt have to contribute to these costs by paying more for their tickets. It is important that steps are taken to maintain the attractiveness of rail travel and to ensure that the modal split does not shift to the disadvantage of the railways.
negative free cash flow
SBB pension fund
SBB keeps Switzerland moving.
SBB makes a major contribution to Switzerland's economy, to its attraction as a place to do business and to its appeal as a leisure and tourism destination. SBB is Switzerland's largest transport operator and its fourth-largest employer. It directly employs just under 28,000 staff while providing work for a further 15,700 people in supplier companies. In 2009, it allocated 87% of its procurement budget of nearly CHF 3.5 billion to Swiss companies. In view of the fact that the WTO Agreement on Public Procurement and the corresponding federal law prevent SBB from granting any advantages or privileges to Swiss suppliers when awarding contracts, this is remarkable.
The company also does a great deal for nature and the environment. Travelling by train uses only a quarter of the energy needed to travel by car or plane and produces a twentieth of the carbon emissions. The environmental benefits of moving freight by rail are just as significant; in 2009, SBB Cargo was responsible for preventing nearly 1 million tonnes of CO2 emissions.
In the interests of the country and its population, it is vital to ensure that SBB continues to perform these important roles in the future as effectively as it has done in the past.