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Nov 27, 2007 15:04 EEST
November 27 (SeeNews) - Bulgarian state railways company BDZ will cut its loss to zero or even turn to small profit in the current year, BDZ chief financial officer Mihail Dragiev said on Tuesday.
The end-year financial result will be due to revenue from activities not related to the company's main line of business, including sales of non-core assets, Dragiev told SeeNews on the sidelines of a BDZ news conference.
BDZ said earlier it pared its first-half loss by 21 million levs ($14.6 milion/10.7 million euro) on the year to 1.7 million levs, due to cost cuts and increased revenue from sales of non-core assets. The company ended 2006 with 29 million levs loss.
On Tuesday, BDZ announced that the split of the company into three divisions - passenger transportation, freight transportation and locomotives - has officially taken effect. The split is aimed at ensuringt that expanding freight service of BDZ will no longer subsidise the loss-making passenger service.
“The freight transportation and locomotives divisions are expected to be profitable,” company CEO Oleg Petkov told reporters at the same news conference.
The passenger transportation division will continue to rely on government subsidies, which have to cover the company's expenses for discount travels, Petkov added.
Currently over the half of BDZ passengers use up to 50% discounts.
Last week BDZ placed a 120 million euro ($177.9 million) 10-year bond, aiming to raise funds for debt repayment and upgrade of its rolling stock.
BDZ will also use some of the funds to increase its market share in freight transportation in Bulgaria, which is currently about 92%, Petkov said without elaborating.
The bond is part of the recovery programme for the Bulgarian railway transport in the years up to 2017. Under the programme, BDZ will take out loans of 25 million levs in each of the next 10 years to secure its financial stability and upgrade its rolling stock and equipment.
BDZ plans to carry more than 34.5 million passengers this year, up from the 33 million in 2006, Petkov said. Its freight tonnage will slightly fall to some 20 million tonnes in 2007, he added.
(1 euro= 1.95583 Bulgarian levs)
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