The company's management emphasized that there are no plans to shut down or declare bankruptcy, contrary to reports from various media outlets and statements from political figures.
PKP CARGO's management, which has been in place since April 26, is working to correct what it describes as the detrimental and politically influenced management of the past nine years. The Ministry of Infrastructure and its representatives, including Minister Dariusz Klimczak, have reiterated the strategic importance of PKP CARGO to Poland, stressing that its liquidation is not an option.
No liquidation, but rehabilitation
The company is undergoing rehabilitation proceedings, a process aimed at restoring its liquidity and competitiveness while preserving as many jobs as possible. This move is contrary to bankruptcy or liquidation and is part of the management's effort to stabilize the company's finances.
In a nutshell: Problems of PKP CARGO
Accounting manoeuvres of the past
PKP Cargo's current troubles stem from years of what it describes as poor management and economic policies under previous administrations. Despite reporting a profit of €19.5 million in 2023, this figure was achieved through accounting manoeuvres like the sale and leaseback of locomotives, rather than operational success. The transport segment of the business has been suffering significant losses.
Losing its market share to a half in a decade
Over the last decade, PKP CARGO has seen a drastic decline in market value, dropping from over €957 million in 2014 to approximately €143.5 million in April 2024. The company's share in the Polish market has also plummeted from 60% in 2013 to less than 30% in the first quarter of 2024. Rising costs and salaries, combined with lost contracts and declining revenues, have exacerbated the situation, pushing the company's debt to nearly €1.25 billion.
PKP Cargotabor, however, files for bankruptcy
Adding to the complexity, PKP Cargotabor, a subsidiary of PKP CARGO specializing in the repair and modernization of railway rolling stock, has filed for bankruptcy.
What about the people
This development has led to mass employee reductions of over 4,000 employees, with many workers being absorbed by other companies in the PKP group and beyond, including PKP Intercity, Polregio, PKP PLK, PKP Intercity REMTRAK, and most recently, PESA.
Signs of PKP CARGO recovery
Despite these challenges, there are signs of potential recovery. PKP CARGO has recently submitted the best offers in a tender organized by ENEA Trading for the transport of thermal coal from LW Bogdanka. The total gross value of these offers is approximately €31.3 million. The company is awaiting official confirmation but remains optimistic about securing the contract.
Additionally, Sektor Kolejowy reports that PKP CARGO has received positive evaluations for proposals to transport goods for ArcelorMittal Poland and ArcelorMittal Warszawa, with contracts expected to last for two years.
A new framework agreement with Ukrainian Railways has also been signed, aimed at enhancing cooperation and transport processes between Poland and Ukraine.
These new contracts and agreements represent a potential turnaround for PKP CARGO amidst its ongoing restructuring efforts.
