Like all transport companies, SNCF was hit hard by the Covid-19 health crisis, whose impact will be felt
through year-end 2020 at least. At the pandemic’s peak, for example, the Group reduced capacity to 7%
for TGV high-speed lines, 34% for Transilien commuter service in the Paris Region and 16% for TER regional
service. Group finances also suffered, with operating margin (EBITDA) dropping €3.2bn in the first half of
2020, and provisional estimates calling for the toll to reach over €4bn full year.
From the very start of the crisis, SNCF moved quickly to adopt an ambitious, proactive action plan to temper
the pandemic’s impact on its projected financial trend. This paid off quickly, boosting available cash by
€1.1bn at 30 June. Cash flow savings generated by the plan are expected to reach €1.8bn by the end of the
year.
Long-term confidence in rail
While current economic conditions are exceptional, rail transport remains a powerful tool for growing
regional economies and fighting climate change. The State’s stimulus plan recognizes and confirms this
central role, allocating €11.5bn for transport, including €4.7bn specifically for the rail sector, reflecting its
confidence in the future of sustainable mobilities.
Included in the package is a €4.1bn capital increase for SNCF SA, with proceeds going to subsidiary SNCF
Réseau, the French rail network manager, to enhance network safety and accelerate planned upgrades. An
additional €0.6bn will be injected in the form of budget credits for the rail sector, focusing on upgrades to
small local rail lines and investments needed to reintroduce overnight trains.
Jean-Pierre Farandou, Chairman and CEO of SNCF said: “The stars are aligned: for many stakeholders, it’s
clear that rail has a bright future and that SNCF has what it takes to meet the challenges of the ecological
transition and regional development. The French State has committed to a €4.7bn stimulus, in addition to
its assumption of €35bn in debt—all of which represents a major show of collective support for rail, for the
people of France, for railway workers and for SNCF. At the Citizens’ Climate Convention, the people of
France had already come out in support of rail transport for passengers and freight. They clearly want
trains. Finally, the European Union’s green pact calls for doubling rail freight over ten years through an
infrastructure funding programme.”
Meeting the goals of France’s 2018 rail reform package
This State stimulus will help SNCF meet the strategic goals identified when French legislators adopted the
Rail Reform Act in 2018. In operations, the Group is committed to an all-out drive to upgrade the network and improve safety, on-time arrivals and passenger information. Business and financial performance is also
a priority, with a special focus on optimizing cost structures, raising profitability and bringing finances onto
a sound, sustainable footing. In keeping with the goals set in the 2018 reform package, SNCF Group plans
to achieve a positive free cash flow in 2022 and a net debt/EBITDA ratio below 6 in 2023.
Recovery for future success
The State rail stimulus plan offers a tremendous springboard for “Tous SNCF”, a strategic roadmap that will
build on a core business—rail—and a core domestic market—France—to make SNCF Group a world leader
in sustainable mobility for both passengers and freight by 2030. Sustained and selective goals for Keolis, a
world-class player in mass transit, and Geodis, a world-class player in logistics, will drive future growth on
international markets, and contribute to the Group’s resilience and profitability.
This programme relies on four key strengths:
- Human resources. SNCF is counting on the full engagement of all 275,000 employees; it aims to
rank among France’s 10 best companies to work for by 2030, and will ramp up training by
dedicating 7% of its payroll to developing skills.
- Care for the environment. Fighting climate change is not a choice but a necessity. SNCF has defined
10 commitments and 25 goals, including (i) reducing greenhouse gases, (ii) actively promoting
biodiversity and the circular economy, and (iii) boosting the share of renewable sources in its energy
mix.
- Innovation and digital technology. Now more than ever, digital solutions and data play a critical role
in customer services and production processes, through predictive maintenance, driverless trains,
and more.
- Regional development. Under its regional strategy, SNCF has appointed 11 coordinators to work with
each region and strengthen the Group’s role as a key partner for local communities—promoting
growth in the rail industry, in the economy and in employment within French regions.
SNCF Group has set its sights on achieving these long-term goals, while continuing to address more
immediate priorities. In this, it can draw on unimpaired financing capacity and a solid cash position, with
liquid resources of €6.0bn and an available credit facility of €3.5bn. As SNCF SA, the Group’s parent
company since 1 January 2020 and its new vehicle for issuing bonds, it has raised €4.3bn on bond markets
since the beginning of the year, a clear sign of investor confidence in its future.
