Romanian CFR Marfă sees losses increase by 70% in first half year

The Romanian state-owned rail freight operator CFR Marfă did not have a great first half of 2024. It saw its losses spike by 70 per cent, amounting to approximately 27 million euros.

CFR Marfă’s income and turnover were most certainly not the reason behind the growing losses. The company’s net turnover grew from approximately 356 million Romanian lei (71,5 million euros) in H1 2023 to nearly 358 million lei (72 million euros) during the same period of this year. Similarly, operating income grew from 397 million lei (79,8 million euros) in H1 2023 to 433 million lei (87 million euros) between January and July of 2024.

The losses are primarily attributable to a growth in costs. Those grew by 17,2 per cent to 575 million lei (115,6 million euros), outpacing the growth in income and leading to the 70 per cent increase in the company’s losses, which amounted to approximately 27 million euros in H1 2024. By comparison, Poland’s PKP Cargo registered a loss equivalent to 94 million euros in the same period,

Romanian publication Club Feroviar identified multiple reasons for the losses of CFR Marfă. Firstly, personnel costs grew by 36 per cent to 203 million lei (40,8 million euros). The publication notes that this is no anomaly, as all railway companies reportedly faced additional personnel expenses. Secondly, some of the company’s rolling stock was sold at only a quarter of the inventory costs by Romania’s tax agency.

Illegal state aid

CFR Marfă’s losses have been growing in recent years. For example, the 2023 loss of 231 million lei (46,4 million euros) was higher than the final score of 2022 by the equivalent of 16 million euros. A part of the financial issues at CFR Marfă are explained by the forced return of half a billion euros in state aid.

In 2020, the European Commission determined that a debt-to-equity swap of 363 million euros in 2023, as well as a failure to collect social security debts and outstanding taxes, amounted to illegal state aid, forcing the operator to pay back over half a billion euros.