positioning slovenian transport and mobility for europe

POSITIONING SLOVENIAN
TRANSPORT AND MOBILITY
FOR EUROPE
BRDO PRI KRANJU / SEPTEMBER 13TH, 2010
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VISION
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OUR FUTURE VISION
Customer oriented companies and services
Strong players in the European environment
Profitable companies
No subsidies needed
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OUR FUTURE VISION
Attractive for foreign partners and capital
Bundling of Slovenian know-how
Safeguarding employment in the sector
Nucleus for the country’s core competence
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SOLUTION
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BUNDLE
Intereuropa
Slovenske železnice
Luka Koper
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MARKET
CONDITIONS
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WHAT IS HAPPENING
ON THE MARKET?
Customers
• Require integrated solutions for the region
• Expect international offers
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WHAT IS HAPPENING
ON THE MARKET?
Competitors
• Consolidate
• Extend portfolio
• Internationalize
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WHAT IS HAPPENING
ON THE MARKET?
Market prospects
• Sustainable growth of the logistics market
• Ship and rail transport are the future
• Region is developing
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SLOVENSKE ŽELEZNICE
INTEREUROPA
LUKA KOPER
Their activities are structurally loss-making and no sustainable
concept exists for future revenue and cash generation to support
investments.
• Passengers - Dependent on subsidies
• Cargo – public stand-alone business plans represent
unrealistic figures
• Infrastructure – needs extensive new investment, but lacks
financing concept
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SLOVENSKE ŽELEZNICE
INTEREUROPA
LUKA KOPER
Low cost market, low margin, trends in Europe offering
commodity without differentiation from competition
• Illiquidity has to be expected
• Major debt restructuring has to be realized
• An equity increase is demanded
• Only intercontinental forwarding is generating profit
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SLOVENSKE ŽELEZNICE
INTEREUROPA
LUKA KOPER
Dependent on hinterland connections
• In the past, Luka Koper already tried integrating forwarding
and rail services. For a good reason!
• Heavy investment needed
• Competition will increase in the future
• Luka Koper is currently profitable, but there is much room for
performance improvement
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POTENTIAL
SCENARIOS
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RESTRUCTURING FIRST
RESTRUCTURE AND BUNDLE
VOLUME
TO DO NOTHING
TIME
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TO DO NOTHING
RESTRUCTURING FIRST
RESTRUCTURE AND BUNDLE
• Slovenia is loosing its geostrategic position and logistic
know-how
• The three companies are unable to develop and maintain the
European network
• Intereuropa standing alone is in question
• Slovenske železnice will lose its market share and require a
public subsidy of 10-15 EUR million per year (10 % of revenue)
• Performance of Luka Koper will be affected by the reduction of
hinterland services
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RESTRUCTURING FIRST
RESTRUCTURE AND BUNDLE
VOLUME
TO DO NOTHING
TIME
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TO DO NOTHING
RESTRUCTURING FIRST
RESTRUCTURE AND BUNDLE
• Shrinking of Slovenske železnice by more than 50 %
• During restructuring period, the competition will establish
stronger market presence
• Losing know-how, time and business opportunities in the region
• No future perspective for the employees
• Isolated restructuring costs 250 million EUR
• No real chance to create a differentiation value proposition
• No chance to differentiate from competitors
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RESTRUCTURING FIRST
RESTRUCTURE AND BUNDLE
VOLUME
TO DO NOTHING
TIME
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RESTRUCTURE AND BUNDLE
PASSENGER
CARGO
RAIL
FORWARDING
BUS
LOGISTICS
INTEGRATED SOLUTIONS
RAIL INFRASTRUCTURE
HARBOR
TRACKS
TERMINAL OPERATIONS
STATIONS
WAREHOUSING
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EXPECTED
SYNERGIES
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BUNDLING THE THREE
COMPANIES WILL LEAD TO
• Immediate synergies of 20 million EUR per year
• Later expected up to 40 million EUR per year
• Save more than 50 million EUR in accumulated investments
SLH is an answer to increased competition and the changing
market environment in Europe
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SYNERGIES WITHIN
THE HOLDING
• Unique integrated offer for the market
• Key account management
• Supply chain management
• Integrated services through mobility solutions
• Economies of scale
• Powerful position for further acquisitions
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SYNERGIES WITHIN
THE HOLDING
• Resources and product planning, management, training
• Common quality management and improvement
• Internal job market
• Purchasing power
• Shared services
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ORGANIZATION
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ORGANIZATIONAL
PRINCIPLES
• Entrepreneurial freedom
• Independent supervisory board of Slovenian industry
entrepreneurs and experts
• Joint executive board, combined out of business units to
manage the company in an integrated way
• Corporate functions to support executive management
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ORGANISATIONAL
PRINCIPLES
• Service functions to explore synergies
• Regulation agency in accordance with EU law
• All business units remaining with their own P&L and
independent balance sheet
• Corporate spirit respecting different corporate cultures
• No cross-financing among business units
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OWNERSHIP
PRINCIPLES
• 100 % ownership of business units will be by SLH
• Majority owner of SLH will be the Slovenian government
(never below 51%)
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MANAGERIAL STRUCTURE
SHAREHOLDER:
SLOVENIAN GOVERNMENT
SUPERVISORY BOARD
EXECUTIVE BOARD
REGULATOR:
GOVERNMENT
MANAGEMENT
CFO
CEO
RAIL INFRASTRUCTURE
SERVICE
FUNCTIONS
• Maintenance
• Traction
• IT - Service
• Rail technique
CEO
RAIL
PASSENGER
CEO
CEO
BUS
TRANSPORT
CEO
RAIL
CARGO
BUSSINESS UNITS
CUSTOMERS
HR
CORPORATE
FUNCTIONS
CEO
HARBOR
KOPER
CEO
FORWARDING
AND LOGISTICS
• Strategy
• Controlling
• Legal affairs
• Key Account
Management
• Public Relations
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NEXT STEPS
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IMMEDIATE NEXT STEPS
Immediate principal decisions of the government:
RESTRUCTURING
• Integration requires immediate action regarding restructuring
• Restructuring of Slovenske železnice should be
urgently reinforced
• Additional liquidity for Intereuropa is a precondition
for integration
• Performance increase program for Luka Koper
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IMMEDIATE NEXT STEPS
Immediate principal decisions of the government:
ESTABLISHING THE INTEGRATED COMPANY
• Closer cooperation should start as soon as possible
• Start-up activities should start now
• The fully integrated company should be launched
without delay
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2010
SEP OCT
NOV
2011
1
DEC JAN
FEB MAR
APR
MAJ
JUN JUL AUG
SEP OCT
NOV
DEC
National conference
Government decision-making
Proposal finalization
Go / No-go decision
Progress verification
Setting-up SLH
Planning&Preparation
Formation
Implementation
Restructuring
Target & Concept definition
Planning & Funding
Implementation
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CONCLUSION
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SLH can support Slovenske železnice in strengthening
and defending its market position in Slovenia and the
region, and developing customer-added solutions
against increasing competitive pressure
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SLH can strengthen Luka Koper's market position
against other European ports due to seamless and
efficient hinterland connections
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Close cooperation with the port and railway will allow
Intereuropa to benefit from lower costs of capital –
being a sound company with a strong shareholder – for
its capital intensive logistics business
SLH will allow Intereuropa to differentiate itself from its
competitors
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SLH will be a strong player in a globalised European
environment - as a solution-provider for the region
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THE FUTURE IS NOW!
Let’s bundle Slovenian logistics into a holding!
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