Latvian Railway Unites Subsidiary Companies

Latvian Railway initiates the unification of its subsidiaries. The concern aims to consolidate LDz Cargo, LDz ritošā sastāva serviss, and LDz loģistika to cut costs. This is reported by the railway transport news portal Railway Supply.

The Baltic railway transport market shows a significant volume decline. Latvia’s Ministry of Transport notes that over five years, freight traffic dropped from 134 million tons to 52 million tons annually, with a 14.9% yearly decrease since 2018.

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Geopolitical tensions negatively impacted the concern’s business and clients. Latvian entrepreneurs relying on LDz services faced turnover reductions, as cargo transport volumes sharply declined.

LDz Cargo records revenue drops due to reduced freight traffic. The company’s turnover fell from $160.3 million in 2022 to $108.4 million in 2024, with shipments decreasing from 19.97 million tons to 8.4 million tons.

LDz ritošā sastāva serviss loses profit, relying on LDz Cargo. It earns 60–70% of revenue from LDz Cargo, yet its turnover shrank from $64.4 million in 2022 to $47.8 million in 2024.

LDz loģistika faces challenges in the fragmented forwarding market. Its client base shrank from 99 to 67 in 2023, and turnover dropped from $20.7 million to $11.2 million over two years.

All three companies actively implement cost-optimization measures. The ministry states that LDz Cargo, LDz ritošā sastāva serviss, and LDz loģistika continue seeking efficiency improvements.

Latvian Railway Cuts Staff for Savings

LDz Cargo plans to reduce its workforce in coming years. Staff numbers will decrease from 1,017 in January 2024 to 595 by December 2026, yielding cost savings.

LDz Cargo’s financial results signal a recovery trend. In 2024, it ended with a $1 million profit, projecting $105.8 million in revenue and $5.6 million in profit by 2029.

LDz ritošā sastāva serviss ends the year with losses despite efforts. Staff cut from 678 to 530, yet 2024 losses hit $2.9 million, expected to drop to $1.4 million by 2029.

LDz loģistika sees no new optimization opportunities. It reduced staff but closed 2024 with a $0.4 million loss, forecasting annual losses of $0.2 million until 2029.

The ministry views unification as a solution to these issues. It believes LDz ritošā sastāva serviss will stay unprofitable, and LDz loģistika risks bankruptcy by 2028 without consolidation.

Latvian Railway Boosts Profitability by 2029

Unification will create a profitable entity by 2026. The new structure will streamline management, cut costs, and enhance pricing, as companies stop buying services from each other.

Synergy from unification will deliver savings in 2025. Costs will decrease by $1.5 million, with a five-year benefit of $28 million, despite $2.8 million in severance payouts.

The consolidated company will strengthen by 2029. Forecasted turnover will reach $129.6 million, with profits hitting $8.1 million, enabling dividends from 2028.

Reorganization will conclude by the end of 2025. The ministry expects LDz to gain $1.1–2.2 million short-term and up to $4.3 million annually long-term.

Earlier, the concern’s transport volumes fell over 30%. Since early this year, LDz faced a steep decline, but uniting subsidiaries will stabilize operations and lift revenue.

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