VTG boosted first-half profit by almost 50 percent as the German rail wagon leasing and logistics group benefited from lower financing costs and synergies from the acquisition of a rival company.
The Hamburg-based firm’s net profit jumped to 26.7 million euros ($29.9 million) from 18.1 million euros a year earlier, but revenue dipped to 493.3 million euros from 512.3 million euros as low diesel prices shifted traffic from rail to road.
“The results for the first half of this year show that we are well on the way to further increasing our profitability,” Heiko Fischer, CEO of the Frankfurt-listed company, said.
“Thanks to successful refinancing and the realization of valuable synergies resulting from the AAE acquisition, we can be pleased with an above-average increase in group net profit and earnings per share.”
VTG’s all-share acquisition of AAE, a German intermodal company, in January 2015, boosted its fleet from around 50,000 to 80,000 rail wagons in Europe, North America, Russia and Asia.
Revenue and operating earnings were hampered, however, by external factors such as the low price of oil and the reduction in truck tolls in Germany, which favored road transport, Fischer said.
The rail car division posted a 6.5 percent decline in revenue to 254.7 million euros as the shift of traffic to trucks triggered lower utilization of intermodal wagons in particular. A 10.4 percent increase in investment to 102.9 million euros was almost entirely spent on expanding and modernizing the fleet.
The rail logistics unit saw revenue slip by 1.3 percent to 155.6 million euros as a result of clients’ lower production, slacker demand for transportation of agricultural products, the discontinuation of low-margin business and a locomotive drivers’ strike in France.
VTG said it is unlikely to make up for the lower revenue in the second half due to moderate global economic growth and so expects full-year sales to be slightly lower than the 1.03 billion euros booked in 2015.
It reiterated its forecast of earnings before interest, tax, depreciation and amortization of 345 million euros — 345 million to 355 million euros for 2016 with the outcome nearer the lower end.
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