Cargo, Latvia, Logistics, Railways, Transport

In the management report, the decrease in turnover by 7.5% is attributed to the fact that cargo transportation volumes, which form the most significant part of the group's consolidated turnover, decreased by EUR 15.251 mln or 6.9% last year.

Most of the revenue of Latvijas Dzelzcels Group is generated by the transport and logistics subsidiary LDz Cargo. Last year, 41.49 mln tons of freight was transported by rail, which is 7.77 mln tons or 15.8% less than in 2018. Import shipments accounted for the largest share or freight transport, 79.4%, and their volume reached 32.949 mln tons last year, a decrease of 18.6% on 2018.

In terms of the origin of the freight transported, the largest cooperation partner is Russia, which provides 70.4% of all freights, Belarusian freights account for 21.7%, Lithuanian for 5%, Kazakh for 1.2%, Ukrainian for 1.1%, Estonian for 0.3%, and Uzbek freights make up 0.1% of the total freight turnover.

Coal shipments of 17.473 mln tons account for 42% of the total freight turnover, followed by oil and oil products - 9.398 mln tons or 22.7%.

The amount of Latvijas Dzelzcels Group's capital investments last year amounted to EUR 29.742 mln. Financial resources have been invested in the renewal, modernization and acquisition of fixed assets, intangible investments, as well as in the construction of new facilities. Of this amount, EUR 23.69 mln was invested in the Latvijas Dzelzcels parent company - EUR 13.194 mln was invested in overhauling railroad infrastructure, EUR 972,000 in modernization of IT systems, and EUR 7.458 mln in infrastructure development.

Capital investments made by LDz Cargo reached EUR 2.61 mln last year, which was invested in the renewal, modernization and acquisition of fixed assets and intangible assets.

The group's management report says that, with the rapid decline in freight amounts, work has begun and will continue to improve the group's operational efficiency by revising business, organizational and technological processes to increase business efficiency and reduce costs, as well as ensure competitiveness and sustainability in the future.

In addition, downsizing of the group, which began in 2019, will continue in 2020.

The management report states that the trends in freight transport at the beginning of 2020, as well as the current global and regional developments indicate that the situation in freight transport will not improve significantly. In addition, business and economic development is hampered by the crisis caused by the Covid-19 pandemic.

In response to the changing freight volumes, the companies of the group have revised their budgets approved at the beginning of the year, and prepared amendments assuming that the total volume of freight transport will decrease significantly. The group has developed a crisis action plan, which envisages a number of measures to reduce total costs. Optimization of the number of employees is continuing; 906 workers were laid off in the first quarter.

A new business model of the group is currently being developed, the implementation of which will start in the second half of this year.

Latvijas Dzelzcels is the manager of public railroad infrastructure and the parent company of the Latvijas Dzelzcels Group.