When a loss is a win

Polish railways (PKP) has been boasting about its best results ever - last year the company recorded the lowest loss in its history, at zł.707 million. PKP's president, Andrzej Wach, stresses that only four out of 11 companies from the PKP group recorded a negative result, which, according to him, proves that PKP can generate a profit and is a business like any other. "The only difference is that it is a crucial element of the whole economy," says Wach.

PKP claims that 70 percent of its loss stems from a deficit in regional rails that was never paid back by voivodship authorities. Local authorities failed to pay zł.490 million for the services they ordered. At zł.11 billion, PKP's operational costs in 2005 were also the lowest the company ever recorded. According to PKP, this is one of the most significant factors that contributed to the overall financial result. Among the remaining contributors, the company mentions earning more than zł.500 million on the sale of shares in the Coke Plant Przyjaźń, PKP companies performing better than last year, and favorable currency rates that influence PKP's debt.

Last year PKP spent zł.1.7 billion on investments. From this, more than zł.900 million was injected into railway modernization and zł.600 million on the purchase of new rolling stock. Half of the funds came from PKP's own capital, whereas one fifth of it was taken from EU funds. At the end of 2005, PKP's debt amounted at zł.10 billion.

"The financial performance of PKP in 2005 was better than in 2004 mainly due to better results in some of the group's companies, such as PKP Intercity, PKP PR, PKP PLK and PKP Informatyka," says Wach. He stresses that improving the performance in the future will be impossible without improving management efficiency and solving the problem of financing regional connections.