China National Railway Group Co., Ltd (hereinafter referred to as China Railway Group) had a total debt of 6 trillion yuan ($874.79 billion) and a net loss of 80.4 billion yuan ($11.72 billion) in the first half of this year, more than the total losses of the three major airlines on the mainland.
The financial report for the first half of 2022 published by China Railway Corporation on August 31 stated that as of June 30, China Railway Group’s total assets were 8.99 trillion yuan, and the asset-liability ratio was 66.81%, up 0.48% from the end of last year.
In the first half of this year, China Railway Group’s total revenue was 485.69 billion yuan, down 5.28% year-on-year; with a net loss up 58.49% from a loss of 50.7 billion yuan in the same period last year.
China Railway Corporation lost 46.09 billion yuan in the first quarter of this year. Based on this calculation, the second-quarter loss is expected to be more than 34.3 billion yuan ($5 billion).
In the first half of this year, the losses of the three major airlines (Air China, China Eastern Airlines and China Southern Airlines) reached record highs, with a total net loss of about 49.7 billion yuan, while the loss at China Railway Corporation exceeded their combined loss.
China Railway Group said that the main cause of the net loss was that the pandemic had greatly affected railway activities, especially passenger transportation and multi-modal business.
Sources close to China Railway Group told China Business News that the increase in new passenger routes over the past three years has increased transportation costs, however, the pandemic has reduced passenger traffic over the same period, and these are key to the sharp drop in net profits.
China Railway Corporation was established on June 18, 2019, formerly known as the Ministry of Railways of the CCP and China Railway Corporation. After the restructuring, China Railway Corporation became a 100% state-owned enterprise. The CCP Finance Ministry on behalf of the State Council performs the investor’s responsibilities.
On April 30, 2021, data released by China Railway Corporation showed that in recent years, railway construction investment has remained at a high level. As of the first quarter of 2021, Railway Group China had a total debt of 6 trillion yuan.
In June 2021, Base Easy reported that, according to statistics, in the first half of 2020, China Railway Group lost 95.5 billion yuan, just a step away from 100 billion. The cause of the loss was due to the impact of the pandemic, passenger traffic dropped sharply, while costs kept escalating, the hole continued to deepen.
Throughout 2020, China Railway Corporation lost 152 million yuan ($22.16 million) per day.
The article analyzes the main factors that cause the China Railway Group to suffer such huge losses: one was the pandemic, passenger traffic of China Railway Group in 2020 plummeted, causing a sharp drop in the main business income; and the second was expenses for railway are quite large. The total number of employees is up to 2 million people, equivalent to a class 3 city, the salary alone is huge.