Pkp Cargo (PKP) Q2 2024 earnings summary

Executive summary

• Net loss reached PLN 453.1m for H1 2024, reversing from a prior-year profit, driven by a 20.7% revenue decline and significant impairment charges.

• Freight volume dropped 17.7% and freight turnover decreased 21.6% year-over-year, reflecting a challenging market and restructuring impacts.

• The Group entered court-supervised restructuring in July 2024 due to liquidity issues, breached loan covenants, and a sharp drop in freight volumes, with a remedial plan including mass layoffs and asset sales.

• Restructuring aims to restore financial stability, optimize costs, and improve competitiveness, with up to 30% workforce reduction and expected annual personnel cost savings of PLN 423.4m.

• The Group remains Poland's largest rail freight operator but is highly exposed to market downturns, energy price shocks, and regulatory changes.

Financial highlights

• Revenue for H1 2024 was PLN 2,300.5m, down 20.7% year-over-year, mainly due to a 17.7% drop in freight volumes.

• EBITDA fell 61.2% to PLN 237.0m; EBIT was negative at PLN -463.2m, mainly due to a PLN 310.5m increase in depreciation from asset impairments.

• Net loss per share was PLN -10.12, compared to earnings per share of PLN 2.45 in H1 2023.

• Cash and cash equivalents decreased to PLN 170.9m from PLN 263.7m at year-end 2023; operating cash flow was PLN 501.7m, down from PLN 695.7m year-over-year.

• Capital expenditure was PLN 436.0m, down 54.7% year-over-year, with reductions across all major investment categories.

Outlook and guidance

• Management initiated a recovery program, including a 12-month non-performance of work program for up to 30% of employees, aiming to rebuild company value.

• Restructuring measures, including layoffs and asset sales, are expected to improve liquidity and operational efficiency, financed from internal and external sources.

• The Group is actively seeking new freight contracts and optimizing logistics to counteract market headwinds.