HŽ Cargo turns its first ever profit

Croatia's largest domestic rail freight carrier, HŽ Cargo, is at a turning point. The state-owned company, which has been registering losses for a decade, turned a profit for the first time last year, netting two million euros.

The turnaround in the HŽ Cargo rail freight carrier appears to have been driven by streamlining its operations and responsible management. The Chief Executive Officer of the Management Board of HŽ Cargo, Dragan Marčinko: "In terms of costs our payroll was our biggest expense. On the other hand, we have reduced all other costs in terms of IT and legal services to a minimum."

Croatian railways transport 16 million tons of goods per year, mostly grain, petroleum products and minerals. Half of the transport is held by HŽ Cargo. Marčinko notes however, that its fleet of 70 locomotives and three thousand wagons will require modernization: "The modernization of locomotives is something that we started with the Končar Company, and we will probably sign new contracts this year. We still need to make a step forward in the region, because we want to move beyond just a national carrier, and expand our business towards Serbia, Hungary and Slovenia."

Along with the fact that years of mismanagement have left the company on the verge of bankruptcy, the European Commission is also recommending that railways take the lead in freight transport, and with the company in need of €100 million in investment, Government says it is now looking for a strong foreign partner in order to strengthen the company’s competitiveness on the profitable cargo transportation market. However, government insists that this does not mean selling the company outright. The State Secretary at the Maritime Affairs, Transport and Infrastructure Ministry, Alen Gospočić: "Government does not expect the company to go in the direction of sale and recapitalization. We are looking for a strategic partner that will increase the company's capital and market share, and bring new cargo onto the railways. I believe we will put out a request for a letter of intent before the summer, and by the end of the year we will probably choose a strategic partner."

Source: HRT