International transport and logistics company Operail earned a net profit of 9.2 million euros last year.
According to the audited annual report for the 2018 financial year, Operail’s exceptionally good results saw an improvement in all major financial indicators in addition to profits. “Compared to the previous year, we increased our 2018 operating income by half and EBITDA almost threefold,” said Raul Toomsalu, Chairman of the Board of Operail. Operail’s operating income in 2018 was 72.7 million euros and EBITDA was 15.7 million euros, compared with the previous year’s figures of 49.5 million and 5.5 million euros respectively.
According to Toomsalu, there was a strong boost to the company’s large net profits thanks to the growth in wagon rental business area in the last year. “We anticipated that wagon demand would grow on the 1520mm broad gauge network, and wagon rental prices have increased as a result of the limited supply of wagons and growth in rail freight volumes,” explained Toomsalu. Operail earned 9.3 million euros from wagon rentals. “At the end of last year, we had rented out more than 2000 wagons.”
Operail also grew freight volumes by almost a third last year and transported 13.4 million tonnes of freight, which made up 99% of all freight traffic on Estonian Railways infrastructure. “Most of the freight moving by rail was fertilisers, mineral fuels and oil shale, making up 84% of total freight volumes. We hope that we have managed to overcome the slump in transit traffic and we will see an increase in freight transport in the coming years too,” said Toomsalu.
As freight volumes are expected to increase, Operail needs to direct more resources toward locomotive maintenance and repair. In addition, the locomotive modernisation project will continue this year. “At the moment, we are reviewing the work of our repair business unit, and we hope to find the most profitable and efficient model for ensuring the resources needed to successful business,” said Toomsalu.
According to Kuldar Leis, chairman of Operail's supervisory board, the company's result for 2018 was very good, but at the same time it pointed the new direction where Estonia is no longer competitive with local labor and other costs in areas that are very labor intensive. "As a result, Operail will be vigorously engaging in digitalisation and higher value-added work in the coming years, such as the modernization of locomotives for export markets," Leis added.
Operail is an Estonian state-owned railway company whose main business areas are freight transport, locomotive and wagon repair and construction, and rolling stock rental. The company employs more than 690 people.