Friday, March 11, 2016

After historic losses, the SNCF is seeking an economic model for the TGV – Le Figaro

SNCF Group reported a loss of 12.2 billion euros for 2015 and responded to competition by lowering its prices.

The exercise is brutal realism. In its first year, the SNCF group, created last summer for the reunification of the SNCF and Réseau Ferré de France (RFF), displays € 12.2 billion net loss. This abysmal deficit results from an impairment of assets which, it is claimed to SNCF must not hide res encouraging performance with a virtually flat operating margin in 2015, to 4.4 billion euros.

The loss of 12.2 billion accounting is actually its only impact being to go into negative equity territory of railway network (RFF former, under IFRS). But it says a lot about the future impairment of assets means lower expectations of future earnings of the group.

These include the expected revenues TGV looming leaner than expected for SNCF SNCF for Mobility and Network, is to say both to the turnover of the ticketing and tolls paid for the network.

In fact, the accounting period made by SNCF is a reflection of a paradigm shift. The TGV undergoes more competition than ever, that just does not – or not yet – other railway operators, but the plane, coach to the offensive from Macron law, carpooling entered the French daily and in their smartphones, and good old family car, whose use is revitalized by lower fuel prices. “For a long time, the air industry believed that the low-cost companies will take a small part of the market. I will not make the same mistake, “said Guillaume Pepy, head of SNCF Mobility. The company has engaged the switch to this new world where price is more crucial than ever. SNCF multiplies the low prices and develops its range “Yes.” The offer “Ouigo” for the TGV will double this year.

This marketing strategy is bearing fruit. After two years of erosion, the TGV has returned to a growth in turnover, albeit very modest, at 0.5%. Growth that will be paid in 2016 and 2017 with the opening of the new high-speed line, and secondarily by the benefits of policies against fraud and installation of security gates famous.

But the SNCF known, the average shopping basket of customers is doomed to decline. After the accounts, the operation of the company must adapt to this new situation. The group put on a better efficacy with the renegotiation of social agreements which kick off was given Friday by the government and the publication of the “decree-base” on the basis of agreements that will govern the sector.

the rail industry at large must also adapt. The TGV trains called “the future” that SNCF command for renewals from 2020 will have to meet a requirement “to be 25% to 30% cheaper than earlier,” according to Guillaume Pepy

But the SNCF also warns all those who keep the HST image of a French industrial conquest: “the” TGV to do anything “, it’s over,” said Guillaume Pepy to mean that it is not realistic want to cover the entire territory of the high-speed network or even multiply the routes, too numerous to profitability. SNCF Group has clearly more appetite for new lines. He did not in any case means, said Jacques Rapoport, the boss on the starting SNCF network. With a net debt of 42 billion which continues its romp (+ 3 billion in 2015) and investment needs of maintenance and renovation, SNCF now has other priorities.

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