French railway SNCF returns to profit, seeks more

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French state rail operator SNCF on Tuesday announced a return to profit in the first half of the year but said the results fell far short of what the group needed to cover its investment needs.

The SNCF reported net earnings of 80 million euros (102 million dollars) in the January-June period against a loss of 496 million euros in first half 2009.

"The first half of 2010 constituted a partial recovery in activity that was lost in the first half of 2009, particularly in freight transport," SNCF chairman Guillaume Pepy said in a statement.

Sales rose 25.1 percent to 14.95 billion euros, largely due to the integration of new companies into the SNCF network.

Excluding such transactions, net earnings would have been 12 million euros.

The company's operating profit jumped 76 percent to 995 million euros, or 6.7 percent of revenues, which financial director David Azema attributed to improved "cost and investment management."

But he described the performance as "insufficient."

"Today, with the activities we are engaged in, such as the TGV (high-speed train), we cannot finance our operations and investments if we don't have an operating margin of around 10 percent (of sales)."

He said the company had been especially hard hit by the economic crisis in the first half of 2009.

"You cannot rebound in a year from so deep a crisis and you can rebound even less if structural problems remain and intensify," he said.

Given an overall economic climate that has yet to stabilise, he said, "we are cautious" on prospects for this year, adding that the group was nonetheless likely to maintain a profit.

"We're moving in the right direction."

© 2010 AFP

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