French government owned railway and logistics operator SNCF reported a 16.8% y-o-y growth in adjusted operating profit to €6,955m on revenues that grew 4.8% to €43.8bn in 2024. While the national railway operator benefitted from the Paris Olympics last summer, its global logistics arm Geodis also fared well despite macroeconomic headwinds.
Geodis – Margin up 1.1 basis points
Geodis accounts for close to 26% of its parent company’s revenues. In 2024 it saw revenue grow by 0.3% y-o-y to €11,252m but EBITA grew 7.7% in the same period to €1,203m. The result was that its EBITDA margin grew 1.1 basis points y-o-y to 10.69%, despite headwinds that impacted logistics in its two major markets, North America and Europe.
In 2024 Geodis had to face up to the problems of the North American and European economies. In North America it had to contend with declining consumer/retail product volumes, while in Europe, manufacturing production was down and this too impacted the logistics operator’s volumes. At the same time it faced volatile freight rates for its forwarding business, that were impacted by issues such as the ongoing war in Ukraine and the Red Sea crisis.
According to SNCF, the margin growth was down to two factors – a diversified business portfolio limiting its exposure to any one factor, and cost control. Its business lines that benefitted most from cost control were distribution/express delivery, freight forwarding, European road transport and contract logistics in the US and Europe.
Rail Logistics Europe fared well too
SNCF is one of the largest railway operators in the world, and its European rail freight arm Rail Logistics Europe did well in the face of the same headwinds its sister company Geodis faced. Revenue grew 7.9% y-o-y to €1,843m and EBITDA grew from €128m in 2023 to €211m in 2024. Though like Geodis it had issues with manufacturing and industry volume declines, the company seems to have benefitted from bulk petroleum products transport that helped its margins on an upward trajectory.
2025 – French economy will impact revenue growth
By far the majority of SNCF’s revenues stem from France, with the company owning and running the entire railway network, trains and stations. As such with the forecast that the French economy is set to grow by 1% in the next 12 months despite inflation falling to 1.6%, as a whole it is not expecting any great revenue growth.
For Geodis, just under 40% of its revenues stem from North America, in which uncertainty is a big issue for the logistics industry. That and the stuttering European economy will hamper any strong growth in the division. As such, SNCF’s leadership has signalled that profit growth is likely to come from cost control in 2025 as it did in 2024.
Author – Richard Shrubb
Source: Ti Insight
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