SNCF to buy out Veolia Cargo

Posted on May 14, 2009 by Matthieu Desiderio

Three days ago, French newspaper Les Echos announced Veolia Environnement would be looking for a buyer for its freight rail operation subsidiary. By 2011, the environmental group plans to cede about €3 billion worth of assets, among which Veolia Cargo division… a branch that realised a turnover worth €188 million in 2008. This freight division was first created in 2003 before the freight rail operation market was opened in France in 2005, Veolias Cargo has couple subsidiaries in different European countries (France, Germany, Netherlands, Italy) and two specialized companies (Socorail and CFTA Cargo). Veolia Cargo traffic flows are mainly directed toward Germany and it increased considerably when the company bought out Rail4Chem in February 2008, thus increasing its turnover by 60%.

Since Veolia Environnement is looking for reducing its debt of around €2 billion, since the 2008 net result divided by two from the previous year at €405 million, since the stocks lost 43% of its market value in the last 12 months, the mothers company needs to bring back confidence among its investors. Traffic flows in freight rail dropped up to 40-50% and Veolia Cargo even stopped its cooperation with French marine shipping company CMA-CGM: both companies shut down their joint venture, Veolia Cargo Link, in march 2009… Selling subsidiaries is a way to get cash flow back flowing!

From the outside, we can wonder who will buy out Veolia Cargo: Deutsche Bahn, who already spent €700 million in the United Kingdom to buy out EWS? Another European key-player in freight operation, from Spain or Italy? This will definitely be a way to compete against the French National Railway Company, SNCF… However, from “information or propaganda” to an official “announcement”, the selling of Veolia Cargo seems real enough to have SNCF, the French National Railway company interested in buying out the private company’s freight rail operations! Pierre Blayau, SNCF Fret (SNCF freight division) President confirmed his company’s interest in its direct opponent on the French market.

References

Article: Veolia Environnement met en vente Veolia Cargo, Les Echos, May 11, 2009: here
Article: La SNCF candidat à une reprise de Veolia Cargo, e-Lloyd, May 13, 2009: here

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