Swiss Federal Railways anticipates stable profits amid ongoing debt challenges

Swiss Federal Railways (SBB) is expected to end the financial year 2024 with a profit similar to that of 2023, according to Monika Ribar, the chair of the company's board of directors.

SBB's Financial Outlook

SBB reported a net profit of CHF267 million in 2023, driven by strong passenger numbers. Ribar expressed optimism that strong demand, particularly in the latter half of 2024, could exceed expectations. However, SBB faces long-term financial challenges due to the debt burden caused by the pandemic. The company's net debt reached CHF11.6 billion in the first half of 2024, exceeding the debt coverage ratio mandated by the government for 2030. Ribar emphasized the need for SBB to contribute significantly to its financial recovery, despite state support.

Increase in Passenger Numbers

The increase in passenger numbers has been crucial for SBB's financial recovery. The company experienced a notable increase in ridership, leading to profits for the first time in three years. Ribar expects even stronger passenger demand in the second half of 2024. However, the current profit levels are insufficient to meet SBB's long-term investment needs. The company requires an annual profit of around CHF500 million to align its debt levels with its earning capacity and fund necessary infrastructure investments.

SBB's Strategy

SBB's strategy focuses on reducing debt and increasing profitability. The company generated a profit of CHF50.8 million in the first half of 2024, but this represents a decline compared to the previous year. SBB is working to balance operational costs with the need for investment. While state support has been crucial, Ribar emphasized the importance of SBB taking substantial steps on its own to ensure a sustainable financial future.

Future Plans and Initiatives

Looking ahead, SBB is focused on adapting to the post-pandemic landscape and enhancing service quality and operational efficiency. The company aims to remain competitive in the rail sector and secure its revenue streams. SBB's strategic initiatives are aimed at maintaining its position as a preferred mode of transport for Swiss citizens.

In summary, SBB is navigating a complex financial landscape, with a focus on increasing passenger numbers and reducing debt. The company is positioning itself for a more stable and profitable future, even as it faces the lingering impacts of the pandemic.

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