CEO’s review

The 2014 financial performance of VR Group was strong even though turnover declined. Cost effectiveness helped to boost profitability. VR Transpoint and VR Track substantially increased their operating profit, while as a result of changes in the market, the turnover and performance of passenger traffic declined.

VR Group continued to modernise its rolling stock. In January, we presented our new double-deck restaurant car. Deliveries of steering cars continued and in February, VR Group signed a contract for new electric locomotives, the first of which will be taken into commercial service in 2017. VR Group is purchasing new buses and coaches as new services are opened.

Development of the group's electronic services means increased digitalisation. VR Group revamped its website, started a chat service for CarTrain customers, updated the VR Mobile interface and opened a wireless network for Pohjolan Liikenne express coaches. Changes in customer buying behaviour prompted VR to reduce the number of its ticket offices at stations. At the same time, we launched cooperation with R-kiosks, which increased the number of ticket sales outlets.

We have worked hard to strengthen the competitiveness of VR Group. Results have been achieved but they are also needed. Even though VR will retain its monopoly in long-distance rail services until 2024, trains are in competition with other modes of transport, especially private motoring. We do not need to wait ten years to find ourselves in a tough competitive environment in passenger services, logistics and infrastructure engineering. We must continue to cut costs so that jobs can be secured. As part of the preparations for competition, commuter services were made into a separate profit centre.

The outlook for 2015 has rapidly weakened. Increasing turnover is extremely challenging in the current economic situation and in conditions of tougher competition. I expect our financial performance to weaken this year.

Carryings to and from Russia account for one third of all rail freight. The exchange rate for the rouble and the economic situation in Russia have a direct impact on rail traffic. A reduction in the number of Russian passengers has caused a substantial reduction in the number of passengers on Allegro trains.

Last year, we discussed the most important areas of responsibility in VR Group. Safety, customer focus, ensuring job satisfaction, environmental matters and transparency were the key topics. Responsibility issues are reported in the annual report under these topics.

Combating climate change requires energy efficiency and low emissions in all sectors of Finnish society. As an environmentally friendly mode of transport, the railways will play an increasingly important role in a sustainable transport system in the future. Up-to-date rolling stock and energy efficient driving are reducing energy consumption in the rail and road transport operations of VR Group.

According to the results of the annual personnel survey, the work of the supervisors in the VR Group is developing in a positive manner. Internal communications and interaction must be improved and the trust between personnel and management must be strengthened. Occupational safety has improved but not quite as much as set out in the targets. The aim is to achieve a ten per cent decrease in the accident frequency rate each year.

More transparency is expected of state-owned companies and this applies particularly to competitive tendering. The substantial investment programme of the VR Group, which amounts to about two billion euros, will continue well into the 2020s. Ensuring financing for the investments will guide the operations of the VR Group in the next few years.


Mikael Aro, President and CEO