The Estonian rail freight market is one of those hardly impacted by the war in Ukraine. With a 47% decline in goods volumes transported within Estonia, Operail is facing challenging times. Despite that, the carrier reported an operating income of 61 million euros and an EBITDA of 10 million euros. However, there are uncertainties about the future development of the market.
The company was able to partially offset this decline through wagon rentals while experiencing an increase in freight volumes in Finland towards the end of the year. Notably, these lines of business have been discontinued from 2023 onwards.
The combined turnover of Operail's businesses amounted to 61 million euros in the past year, compared to 73 million euros in 2021. The EBITDA for the company stood at 10 million euros, down from 17 million euros in the previous year. However, after considering the revaluation of assets, Operail incurred a net loss of 16 million euros.
Raul Toomsalu, Chairman of the Management Board, explained the reasons behind the financial challenges faced by Operail. "The decline in goods transported within Estonia by 47 per cent, as a result of the ongoing war and sanctions, was further exacerbated by the ban on Russian cargo implemented in January 2023. These factors also had an impact on the company's overall value. Despite this, at the operational level, we achieved positive results. The losses were primarily due to asset revaluations resulting from the aforementioned reasons."
Operail also faced additional expenses of one million euros due to redundancies and advisory costs associated with the sale of wagons and the Finnish business segment. Despite these challenges, Toomsalu emphasised that the financial results were commendable given the circumstances. He attributed the company's resilience to the non-strategic business lines that were still operational in the previous year but have since been discontinued.
In the first quarter of 2023, Operail successfully sold its remaining leased wagons and its freight transport subsidiary in Finland to North Rail Cargo. Consequently, the divested business lines, including wagon rentals and Finnish freight transport, generated an EBITDA of 11 million euros during the reporting period.
Operail anticipates that rail freight transport within Estonia will continue to operate at a loss. To prevent the demise of the Estonian railway sector, Toomsalu emphasised the need for cooperation among the public sector, the infrastructure manager, and all carriers. He stated, "Reforming the railways and maintaining rail freight transport in Estonia is essential to protect our economy, business environment, competitiveness, and society as a whole. Rail transportation remains the most sensible, safest, and environmentally friendly mode for transporting bulk goods."
Operail, which employs around 200 people, specialises in freight transport and the maintenance, repair, and construction of rolling stock within Estonia. Until the beginning of 2023, the company was also involved in Finland's international wagon rental and freight transport operations. However, based on the strategic direction of the Estonian state, Operail decided to withdraw from these activities as they were deemed non-strategic.
