Interim Report January-September 2024

THIRD QUARTER

• Consolidated net sales increased by 6.2 percent to SEK 169.1 million (159.2).
• Operating profit (EBIT) decreased to SEK 19.0 million (26.8).
• Earnings per share before and after dilution amounted to SEK 0.51 (0.78).

FIRST NINE MONTHS OF THE YEAR

• Consolidated net sales increased by 15.3 percent to SEK 478.3 million (414.9).
• Operating profit (EBIT) decreased to SEK 48.6 million (54.8).
• Earnings per share before and after dilution amounted to SEK 1.29 (1.56).

SIGNIFICANT EVENTS IN THE THIRD QUARTER

• Railcare signed an agreement relating to the acquisition of 40 percent of the shares in new locomotive leasing start-up AC Finance AB.
• Railcare strengthens Group management - recruits new CFO and HR Director.

SIGNIFICANT EVENTS AFTER THE THIRD QUARTER

• Railcare signs 5-year agreement with LKAB Malmtrafik.
• Johan Elveros has been appointed as new CFO of Railcare Group AB. He will take up the position of CFO and join Group management in January 2025.

CEO COMMENTS
Net sales in the third quarter were SEK 169.1 million (159.2) and operating profit was SEK 19.0 million (26.7). This corresponds to an operating margin of 11.2 percent.

“We delivered a stable third quarter with high sales and sustained growth. Our growth journey means that we are already growing the organisation to meet the demands of tomorrow, which initially generates increased costs and lower margins. Some of the agreements we signed during the year have not yet started, and will generate increased volumes and higher margins over time.”

Contracting Sweden continued to generate high volumes in the third quarter, and demand for our services is generally higher than in recent years. Increased government initiatives aimed at Sweden’s railways also sharpens the focus on more efficient maintenance, where Railcare is at at the leading edge both in terms of machines and methods. Increased demand for our services is a step towards reducing the maintenance deficit on Sweden’s railways.

In the transport operations, scheduled assignments on behalf of LKAB, Kaunis Iron and The Swedish Transport Administration’s clearance locomotives were carried out as planned. Contracting transport volumes in connection with track replacements were up on the previous quarter. The locomotive workshop in Långsele continued to experience high volumes, although sales and profit were negatively affected by no major deliveries taking place in the period, and because profit recognition for ongoing projects was adjusted down in the quarter.

In the period, we continued to test the next generation MPV (Multi Purpose Vehicle) with excellent results. The MPV is mainly operated by power from the overhead line, and then relies on battery charge for stretches where there is no overhead line. This shows that our machines not only contribute to efficient maintenance, but also drive development of the track-bound machinery of tomorrow.

Delivery of first Effishunter locomotives
The first Effishunter locomotives have now been delivered to Sweden. This means that we are ready for the extended clearance locomotive assignment due to start on 1 January 2025. The new locomotives enjoy improved environmental performance and are adapted for the new ERTMS signalling system.

5-year agreement signed with LKAB Malmtrafik
In mid-October, Railcare signed a 5-year agreement with LKAB Malmtrafik worth a total of approximately SEK 350 million. In recent years, the assignments on behalf of LKAB have spanned between six and twelve months. The fact that we now received a long-term vote of confidence demonstrates that LKAB are very satisfied with our execution and high delivery reliability. The agreement includes an option to extend the contract for a further three years, corresponding to an order value of SEK 210 million. Even without the additional option, the new contract is Railcare’s third largest ever after the agreements with Kaunis Iron and the Swedish Transport Agency’s contingency assignment.

Record investments in infrastructure
The Swedish government has decided on a new infrastructure bill involving historically large investments. A total of SEK 1,171 billion will be invested in the period 2026-2037. The starting point is that Sweden’s roads and railways maintenance must be improved, while investment in new infrastructure is also needed. “Efficient infrastructure is critical for Sweden to operate and for growth to increase,” commented Infrastructure Minister Andreas Carlson. In October, the Swedish Railway Reform program (Omtag Svensk Järnväg) also presented the report Clear Track for Increased Growth (Klart spår för ökad tillväxt) outlining the challenges faced by Sweden’s railways. It is clear that Sweden has the resources for removing the current obstacles to railway expansion, which are caused by neglected maintenance, and for creating the right conditions for Swedish business and associated future growth by ensuring efficient transport.

For Railcare’s part, this will hopefully lead to increased demand for the services we offer. This mainly relates to the preparatory work we carry out in the contracting operations: cable laying, and reballasting switches, bridges and railway yards ahead of major track renovations. But our hope is that the focus on drainage will also increase. Here, the Lining operations’ offering includes inspection and relining of railway culverts. When extreme weather occurs more frequently, drainage becomes an important function for ensuring the robustness of the railways.

Johan Elveros new CFO
We are delighted to welcome Johan Elveros to Railcare. With his solid experience of financial control he will play a key role as interest from the market increases and on our continued growth journey. The organisation we are now building, alongside our committed employees and increased demand for our services, means that I eagerly look forward to the near future.

Mattias Remahl
CEO