What you need to know
- SNCF is one of the best-rated players in the rail industry—in Europe and around the world.
- Though our 2019 results were affected by strikes at the end of the year, revenue and EBITDA were up sharply.
- Since the reform, the Group’s credit rating has been very high, thanks to our strong competitive position, sound financial structure, and continued close ties to the French State.
Group ratings and key figures
Transport strikes at the end of 2019 affected our results for the year, trimming EBITDA by €600 million, but both sales and EBITDA were up significantly. Meanwhile, we’re still deeply committed to overhauling the French rail system, with a historic capital investment of €10bn. Of that total, 95% went to rail operations overall, with over half going to the network proper. And we’re working harder than ever to advance the ecological transition: Green Bonds account for 55% of our financing, and we floated the market’s first 100-year issue, maturing in 2119. Enfin, plus que jamais le groupe SNCF s’engage en faveur de la transition écologique avec 55% de ses financements réalisés en format Green Bonds et la première émission Green Bond centenaire du marché (maturité 2119).
The graphic features two rows of square boxes with text in each.
The first row contains three boxes.
From left to right:
- Box 1 reads “AA-” with “S&P rating” underneath; this is the financial rating assigned by Standard & Poor’s
- Box 2 reads “Aa3” with “Moody’s rating” underneath; this is the financial rating assigned by Moody’s
- Box 3 reads “A+” with “Fitch rating” underneath; this is the financial rating assigned by Fitch Ratings
The second row contains four boxes. Reading from left to right,
- Box 1 reads “35.1 billion” and underneath, “2019 revenue (⅓ outside France); this is the amount of 2019 revenue in billions of euros
- Box 2 reads “5.6 billion” and underneath, “2019 EBITDA”; this is the amount of earnings before interest, tax, depreciation and amortization for 2019, in billions
- Box 3 reads “5.2 billion” and underneath, “CAPEX funded by the Group in 2019”; this is the amount of investments for 2019, in billions
- Box 4 reads “25.3 billion” and underneath, “Net debt for 2019 pro forma after debt transfer”; this is the amount of net debt for 2019, in billions
Under France’s rail reform package, SNCF SA is the Group’s sole vehicle for raising financing on the bond markets, and its ratings are aligned with those of the French State: -1 notch from S&P and Moody’s and -2 notches from Fitch.
Learn more about SNCF Group’s credit ratings
S&P Global - Société Nationale SNCF SA 'AA-/A-1+' Ratings Affirmed On Announced State Support; Off Watch; Outlook Negative
Published on 21 October 2020 at 14:26
|2017||2018||2019||2019 PF||2019 PF vs 2018|
|Revenue (in €b)||33.5||33.3||35.1||35.1||+1.8|
|EBITDA (in €b)||4.7||4.0||5.6||4.6||+0.6|
|Profit/loss for the period (in €b)||-1.5||-1.4||-1.9||-1.7||-0.3|
|Net profit (in €b)||1.5||-0.2||-0.3||NA||-|
|Gross investment (in €b)||-8.8||-8.9||-9.9||-9.9||-1.1|
|Net investment (in €b)||-5.1||-5.1||-5.3||-5.3||-0.2|
|Free cash flow (in €b)||-1.9||-2.6||-2.3||-2.3||+0.2|
|Net debt (in €b)||54.6||56.6||60.3||60.5||+3.9|
|Shareholders’ equity (in €b)||-5.9||-6.5||-8.7||-8.7||-2|
|Net debt/EBITDA (x)||11.4||14.2||10.8||13.1||-1.0|
|FFO1 / Net debt (as a %)||5.5||3.4||5.8||4.4||+1|
1 FFO (Funds from operations) = EBIT - interest expense (TFT) – taxes paid (TFT)
About our 2019 results
More information on our revenue, EBITDA, net profit and free cash flow:
- Revenue: strong performance in 2019 with 5.1% underlying growth, buoyed especially by our transport business;
- EBITDA: up +€430 million over 2018 (excluding impact of IFRS 16 and changes in scope of consolidation). Steep year-on-year rise in EBITDA thanks to increased revenue and our successful performance plan, which generated competitivity gains of €560 million in 2019;
- recurring net profit was a negative – €301 million. Without the strike, this would have been a positive €313m;
- free cash flow: stable if the impact of strikes in 2018 and 2019 is excluded. Group-wide, we aim to achieve positive free cash flow by 2022.
SNCF Group’s credit profile
We’re rated AA-, Aa3 and A+, reflecting SNCF Group’s inherently strong credit and our close ties to the French State. In addition, merging the activities of SNCF Réseau and SNCF Mobilités into one group has improved our business profile, in compliance with the European Union’s fourth railway package.
Our financial position is still very much affected by our high level of debt, but that will change as part of the total is transferred to the French State. This will take place in two tranches: €25 billion in 2020 and €10 billion in 2022.
Key factors in our credit profile include:
- Thanks to our integrated business model and sustainable development strategy, we’re ready to meet the challenges of mass transport;
- We’re set to benefit as passenger transport gradually opens to competition;
- We’re a world leader in urban mass transit and logistics, with a presence in over 120 countries.
Sound financial structure
- Group-wide, we aim to achieve positive free cash flow by 2022.
- Our financial ratios have improved thanks to the transfer of €35 million in debt to the French State and tighter limits on our Golden Rule ratio, now reduced to 6x and expanded to include all capital expenditures by SNCF Réseau SA.
Critical role of the French State
- SNCF Group is wholly owned by the French State, which appoints our parent company’s CEO. Shares in the Group may not be sold or transferred;
- We perform strategic missions for the State, reflecting our key role in the economy, employment, regional development, commuter mobility and equal access to every part of France—as well as our contributions to meeting COP 21 targets for reducing greenhouse gases, the energy transition and national defence;
- A large share of our revenue comes from regulated transport delivered under contracts with regional authorities;
SNCF Group bonds qualify for the ECB’s bond-buying programme.
The SNCF Mobilités and SNCF Réseau financing programmes are now being phased out. In their place, SNCF SA has adopted a new long-term financing programme with effect from 1 January 2020:
- €12 billion in euro medium-term notes (EMTN)
- developed under French law
- compatible with the EU’s Prospectus 3 Regulation
SNCF SA has also developed two short-term financing programmes:
- €3bn in Negotiable European Commercial Paper (NEU CP)
- €5bn in Euro Commercial Paper (ECP)
Financing for the future
How it works
As the Group’s sole bond issuer, SNCF SA is responsible for raising financing on behalf of all our subsidiaries, including SNCF Réseau. Proceeds are allocated within the Group based on need, through intra-group loans between SNCF SA and the subsidiaries.
What we need
Our plans call for issuing bonds totalling around €4 billion in 2020, with another €2-4bn in 2021 and €1-3bn thereafter.
Our bond market strategy is three-pronged:
- construct credit spread curves in euros and dollars and on green bond markets with benchmark issues, focusing on long maturities
- be active where and as possible in public sterling and Swiss-franc bond markets, where SNCF Réseau has benchmark curves;
- issue innovative products such as inflation-linked bonds and NSVs, rounding them out with tailor-made private placements.
Our financing strategy focuses primarily on public benchmarks and tap issues. Private placements, in various currencies and formats, account for around 25% of our total.
We’re also diversifying our investor base by pursuing an energetic investor relations strategy in the Americas, Asia, Europe and the Middle East.
Protecting our credit ratings with ambitious targets
Title of infographic: Financial strategy
In the centre is the image of a train emerging from a tunnel and continuing along a track. Around the image are 5 numbered boxes.
- Box 1 reads: “Protect the Group’s ratings by maintaining ratios consistent with SA status”:
- Net debt/EBITDA < 5X
- FFO / Net debt > 10%
- Positive free cash flow by 2022”
- Box 2 reads: “Limit structural subordination of debt held by the parent company”
- Box 3 reads: “Maintain adequate resources (cash and retained cash flow) to keep our current ratio above 1.2x (current assets/current liabilities)”
- Box 4 reads: “Adopt a prudent strategy for hedging our top financial risks, including currency, interest rates and inflation”
- Box 5 reads: “Make financing solutions available to the Group at the lowest cost and at the best market terms”
1 FFO = EBIT - interest expense (TFT) – taxes paid (TFT)
2 PF = Pro forma offsetting impact of IFRS 16