Railcare Group AB: Biting the bullet
Operations in the UK are being shut down
After many years of declining order volumes, yesterday came the announcement that operations in the UK would be shut down. Although cost reductions have been implemented in several instances, they have not been able to keep pace with the decline in sales. A minimum of personnel and machinery must be available, and licences and certifications must be kept alive in order to be able to respond if demand comes back. The assessment now seems to be that it will take too long to see any improvement and that Rail Networks, despite enormous maintenance needs, is not prioritising effective maintenance.
We did not assign any value to the business – neither positive nor negative – in anticipation of this decision in the near future, and the closure costs are small, so the calculation does not really change as a result of this, but it is good that the decision has now been made and that resources can be freed up for activities that contribute positively.
Revenue and earnings1
The report as a whole did not quite meet our expectations. Revenue for the fourth quarter came in 9% below our forecast – albeit 8% higher than last year – at SEK 170.1 million (157.0 for Q4-24). The operating margin was unchanged at 8.8% (8.8%) based on earnings of SEK 14.9 million (13.7), which were well below our expectations of SEK 18.9 million. The main reasons for the deviations lie with Contracting and are attributable to
•an early and harsh start to the winter compared with the mild start to last winter, which affected the contracting business,
•an increased loss in the UK, where operations are now being shut down, and
•no "pit stop assignments" were received; in fact, none were received throughout 2025, despite successful ones in 2024.
For the full year, sales increased by a fairly modest 5.1% to SEK 668 million (635), mainly due to the fact that last year was inflated by "pit stop assignments". Adjusted for this alone, growth would be in double digits, but other factors also limited growth in 2025, albeit to a lesser extent.
1Please note two changes to accounting practices effective from 2025:
•Locomotive rentals are reclassified as leasing (IFRS 16), which means improvements primarily in gross profit and EBITDA, but also in EBIT.
•Change in business area classification: Contracting International will be merged into Construction Sweden, and Lokverkstaden will move from Transport Scandinavia to Machinery & Technology.
We believe that both changes are beneficial for understanding the Group structure, but make it more difficult to compare with historical figures. At Group level, the biggest change is that operating profit and the profit measures above it appear better than before and that cash flows look stronger. The comparative figures for 2024 have been adjusted.