State and Enterprises in the Railway Industry Mauro Moretti Chief Executive Officer, Ferrovie dello Stato Italiane 24th November 2013
FS FS Italiane Group: Economic KPI Operating Revenues (M ) 7680 7816 7821 7985 8264 8228 Operating costs (M ) 7353 7219 6703 6781 6463 6312 6482 6310 2006 2007 2008 2009 2010 2011 2012 2006 2007 2008 2009 2010 2011 2012 EBITDA (M ) 1035 1358 1673 1782 1918 Net result (M ) 16 54 129 285 381 461 2006 2007 2008 2009 2010 2011 2012 2006 2007 2008 2009 2010 2011 2012-409 -650-2.115
FS Italiane Group: Benchmark with DB & SNCF FS Italiane is the European Top Player to profitability Annual Reports FS, SNCF & DB
Relationship State/Enterprises State and Enterprises both play a crucial role in order to Promote Economic Development Enhance Social growth Boost the investment opportunities and innovation In the railway industry, due to its specificity (long term and capital intensive investment cycle), this interaction is even more important
State and Railways role State Railways Establishes the regulatory framework including social protection and welfare conditions Guarantee returns to every stakeholder (shareholders, investors, customers, etc.) Provides the funding to finance maintenance and the development of railway infrastructure and the public service obligation Offer services in respect of the regulatory framework and maximize the corporate value It is the main investor/operator (in Italy holds 100% of FS Italiane) Invest and innovate (technology, network, stations, rolling stock)
Investment in inland transport infrastructure 1995-2010, as a percentage of GDP, at current prices and exchange rates In Europe railway infrastructure investments are mainly provided by public funds with strong public role; in Russia transport needs and investments due to the country size exceeds Western Europe needs The railway industry is more capital intensive and long term than most other industries
Favourable conditions to promote investments In Europe railway infrastructure investments are mainly provided by public funds (grants or PPPs with strong public role) The railway industry is far more capital intensive and long term than most other industries therefore, railway investments are strictly linked to the regulatory framework: Rules on railway infrastructure access (open access, franchise, legal monopole) Imposition of public service obligations (and relative compensation) Contract relations between Governments and infrastructure managers (investments and/or operations/maintenance funding) Rules on railway track access charges Common technical standard Profitability, coupled with long term and capital intensive specificities, should make railways a preferred sector for bondholders Due to the specificity of the railway industry the regulatory framework on train operations has an important impact also on infrastructure investments
UE Regulatory framework: 4 th Railway Package Effects on public and private investments Despite 22 years of EU rail legislation the regulatory framework still needs other rules to achieve stability and harmonization. A 4 th Railway Package is currently still under discussion Open access to railway infrastructure for national passenger transport More certainty on timing and cost of rolling stock authorization Stable and fair contract relations Governments-IM and track access charge More investments (stable revenues are the key to finance both equity and especially bonds on international markets) Public service compensations level and adequate return on investment
FS Italiane Group: our performances Revenues 2012 8.228 M Revenues in foreign markets 8,1% Staff 2012 71.930
Italian High Speed: connection with Trans European Network Corridor provided by UE Reg. 22/09/2010 Substantial but not complete overlap between freight corridors and TEN-T axis 1, 3, 5 and 6 corridors will involve Italy
Investment in the railway industry Example: Italian high speed system
Italian High Speed: The High Speed / High Capacity System HS/HC NETWORK 1000 km Mobilità RM-MI 35% 55% TRAVEL TIMES ON ETR TRAINS FUTURE Lines TO-MI MI-BO BO-FI RM-NA RM-MI RM-MI 2:55 no stop 2:30 no stop 2013 1: 00 1: 02 35 1: 08 2:40 MI Rogoredo RM Tiburtina 2:15 MI Rogoredo RM Tiburtina
Italian High Speed: The modal split revolution Modal split Milan Rome (%) 2012 57 % 10% 2% 31 %
Italian High Speed: the Train fleet 59 ETR 500 Freccia Rossa Max Speed: 350 km/h 2010 Fleet ETR AV 91 19 ETR 600/610 Freccia Argento Max Speed: 250 km/h 2011 91 2012 93 2013 93 2014 99 2015 109 New interoperable UE Trains (since 2014) 15 ETR 485 Freccia Argento Max Speed: 250 km/h 50 new ETR 1000 commercial speed 360 km/h running on traditional rail network (designed for 300 km/h comm. speed) Maximum speed: > 400 km/h 2018 complete HS fleet (143 trains)
Italian High Speed: The new Frecciarossa 1000 train ETR 1000 made by AnsaldoBreda and Bombardier length: 202 m 8 coaches seats: 469 + two spaces for PRM can carry up to 600 passengers Technological innovation commercial speed: 360 km/h running on high speed network maximum speed: 400 km/h acceleration at start 0,7 m/ s² Interoperability completely interoperable (multi-system trainset to operate in Austria, Belgium, France, Germany, the Netherlands, Spain and Switzerland)
Italian High Speed: state-of-the-art high speed stations Torino Porta Susa Firenze Belfiore Napoli Afragola Project: Gruppo AREP Surface: 37.000 sqm Cost: 69m Work progress status: railway construction advanced to 90% and passenger building advanced to 80% Activation date: Jan 2013 opening ceremony, Dec. 2013 project conclusion Project: Norman Foster & Ove Arup Surface: 45.300 sqm Cost: 410m Work progress status: railway and passenger building construction in progress Activation date: Dec 2018 railway and passenger building Project: Zaha Hadid Architects Surface: 15.000 sqm (extendable to 31.000 sqm) Cost: 77m Work progress status: advanced to 15% Activation date: Dec 2015 activation of passenger building for high speed transport Bologna Centrale Roma Tiburtina Reggio Emilia Project: Ove Arup & Partners Surface: 77.500 sqm Cost: 530m Work progress status: advanced to 85% Activation date: June 2013 Project: ABDR (Paolo Desideri) Surface: 35.000 sqm + 15.000 sqm (2 nd phase) Cost: 196m Work progress status: advanced to 90% Activation date: Nov 2011 opening ceremony Project: Santiago Calatrava Surface: 28.000 sqm Cost: 79m Work progress status: advanced to 80% Activation date: June 2013
Cooperation between RZD and FS Italiane Very High Speed Project in Russia (starting from Moscow-Kazan) Exploitation of Railway Stations in Russia TEKOM Trans Eurasian Kontainer Magistrali: transport of containers from China to EU Cooperation in foreign markets
Cooperation between RZD and FS Italiane: Very High Speed Project Moscow-Kazan Value of the project: 928 bio RUB (22,25 bio ) Project Financing scheme for design and construction: PPP (70% public - 30% private) IRR 6,88 %.
Cooperation between RZD and FS Italiane : Creating new concepts KOLPINO STATION / Russia
Cooperation between RZD and FS Italiane: Integrating old Values with new functional Areas DETSKOE SELO STATION / Russia
Cooperation between RZD and FS Italiane: Creating new solutions to solve structural problems LYUBAN STATION / Russia
Cooperation between RZD and FS Italiane: Development of international passenger operations Annual Reports RZD 2011
Cooperation between RZD and FS Italiane: Freight international transport corridors Дo Slovakia бр а Classical route of cargo transshipment goes from Asia to Moscow via Nothern sea ports. Route length 22 000 km. Time 45-50 days. Annual Reports RZD 2011