DSB cuts losses but struggles with debt
Danish government will guarantee struggling transport operator's loans to the tune of eight billion kroner
State-owned transport operator DSB has posted a vastly improved result for the first three quarters of 2012, though it remains saddled with 11.7 billion kroner of debt.
The company announced pre-tax losses of only 44 million, a reversal of fortune on the losses of 512 million it announced for the same period in 2011.
This year’s third quarter has been particularly buoyant, after increased ticket sales and voluntary redundancies allowed the company to make a pre-tax profit of 81 million kroner.
“We are far from the goal, but we’ve turned the corner,” DSB's chief executive, Jesper Lok, said in a press release.
DSB announced that delays were down on 2011, particularly on long-distance journeys, while customer satisfaction remained the same.
Looming above the company, however, is a debt mountain that costs about 400 million kroner a year to service.
Out of fear that DSB will have difficulty financing the debt, the Danish state has now offered to stand as a loan guarantor for infrastructure investments and for the daily running of the business.
“We have reduced our interest-incurring debt by 386 million in the first nine months compared to the same period year before,” the DSB finance director, Jacob Kjær, told financial daily Børsen. “In other words, we’re well on our way to developing a healthy economy. I am convinced that we will achieve the necessary one billion kroner of annual savings in 2014,”
Without state support, it is not likely that DSB will secure the eight billion kroner it needs up to 2014.
“A state guarantee will ensure that DSB will get the necessary loans regardless of the developments in the financial markets,” the transport minister, Henrik Dam Kristensen, (Socialdemokrat) told Børsen.