VTG : Review of 2020

CONSTANT THROUGH CHANGE

REVIEW OF 2020

Dear readers, dear friends of VTG,

No review of the year 2020 can ignore one major topic: the coronavirus pandemic. The virus continues to occupy center stage, as it has done so often over the past twelve months, and it still has the world firmly in its grip. If I had to sum up the past year in just one word, as objectively as I can and from a VTG perspective, I would have to choose the word "challenging".

When we went into the first lockdown in March 2020, rapid response was the order of the day. We had to set up a professional crisis management team on the fly -

a team that would both protect our staff and keep our business operations running as best as possible.

To do so, we mapped out a five-phase crisis concept, the first three phases of which focused on dealing with the immediate crisis. At this stage, we already prepared

2 C O N S TA N T T H R O U G H C H A N G E E D I T O R I A L

ourselves for several successive waves and drew up a variable, agile plan of action. The two remaining phases looked to the future. And thanks to our successful crisis management response, we were able

to advance both at the same time, antici­ pating robust solutions for the time after the pandemic.

Phase one of our crisis concept initially centered around countering the general uncertainty with a resolute response, implementing the measures prescribed by the government and, as a company, fleshing them out as quickly as possible. This was followed by phase two, which became a test of all our endurance - for VTG as a whole and for each individual employee. Every one of us was called on to be extremely flexible and resilient when a large chunk of our activities was trans­ ferred from the office to our own four walls at home. Digital solutions were needed, as was the exceptional dedication of our staff

at the repair shops, to enable us to continue meeting the needs of our customers in the usual manner and playing our important part in safeguarding supply chains. Summer brought a long-awaited breather - for the hospitals and society at large, but also

for the economy and those involved in it. We were thus able to move on to phase three of the crisis concept and return at least in part to something like normality.

We are pleased to report that our crisis management proved decidedly effective. We saw this at the start of the second lockdown, when working in crisis mode already felt almost like a well-trodden path. Even stronger evidence stems from the fact that we ended the pandemic year with fleet capacity utilization of 89.7 percent, that none of our facilities had to close, that we were able to continue the seamless delivery of logistical and transport services - and that we did not record a single case of infection at the company.

As I see it, there are two reasons why we have been able to weather this crisis to date only slightly below the figures achieved in the successful preceding year. The first is our customers' confidence that we would continue carrying their precious goods safely and reliably through the chaos of the pandemic. Investors too demon­ strated their trust and were able to rely on the infrastructure-like nature of our business model as a safe investment even in a year such as 2020.

The second reason for this achievement is our workforce: Over the past year, our people have once again excelled them­ selves. Their untiring dedication was instrumental in enabling mobile and connected work models to take root and flourish in every part of the company - models that were inconceivable ahead of the pandemic. In many areas of our business, 2020 also allowed us to tear down old barriers, completely rethink the

E D I T O R I A L   C O N S TA N T T H R O U G H C H A N G E 3

"We have emerged from the 2020 pan­ demic a more flexible, more digital VTG."

D R . H E I K O F I S C H E R ,

C H A I R M A N O F T H E E X E C U T I V E B O A R D ( C E O ) O F V T G A G

way we organize our work and, as a result, provide customers with even more seam-­ less transport and logistical solutions. VTG is not the company it was at the start of the year: Today, we are a more flexible, more digital VTG.

For a company in the rail transport sector, that is no mean feat. Players in our industry tend to stick with what they know and follow their proven routine. They would rather be overcautious than too hasty. So it is not easy to map the culture of innovation we see in the digital universe onto our world of steel and wheels. Not easy, but possible - as we have been proving for years with industry premieres such as VTG Connect and the digital traigo platform that went live in 2020. Our customers can now track information about their transports in real time. Nor is this capability limited only to hired wagons: It also includes current repair shop capacity all over Europe, as well as details of restrictions arising from

measures to combat Covid-19. Innovations such as these have established VTG's wagon fleets as the most modern and adaptable in the industry.

Even before the Covid-19 pandemic, we had set out along the road to constant change. In hindsight, the extraordinary year under review confirmed that we were on the right track. One important concept in this context is modularization. The freight wagon must be reimagined from the ground up and aligned with the needs of our customers. With this in mind, we launched an internal thinktank in early 2020. Its mission was

to design an even more flexible wagon architecture across all our transport solutions. "Standard issue" is a thing of the past. In its place, we want to give our customers integrated and above all tailor-made solutions combining different assets and logistical services, preferably on an international scale. When customers approach us with even the most complex

concerns, they should be able to do so in the full knowledge that they can rely on VTG absolutely.

In 2020, we continued to chart our course as an innovative market leader, a company that is actively involved in shaping key developments in our industry. That means drawing on sustainable transport and transshipment solutions such as r2L technology, implementing digital tools such as VTG Connect and traigo, and rigorously focusing our service portfolio on the needs of our customers.

Over the past year, these considerations led me to wonder whether we need to rethink global supply chains to make them more resilient in the face of crises. The develop­ ments we have witnessed in recent months confirm to me that this is indeed so. While border crossings were closed and trucks were stuck in traffic queues, and while a single container ship running aground was

enough to bring the world's freight traffic grinding to a halt for days on end, rail has shown itself to be a transport option with unparalleled reliability.

As if that were not enough, we now know that even when the pandemic gradually - hopefully - begins to subside, other challenges will take its place. First among these is climate change, which demands sustainable answers. By 2030, emissions in the transportation sector alone must be slashed by around 40 percent. And I am convinced that a clear pro-rail policy can make a huge contribution to achieving this goal.

In writing this, I would remind the reader of what I said at the outset: There is no question that 2020 was a challenging year. But we have come through this challenge with flying colors, emerging from it even stronger. We can be proud to have deliv­ ered such healthy results in such a

turbulent year. Yet we must not forget that the uncertainties of the past year are still with us as the current year unfolds, and that we as a Group must work hard on our profitability. That is why we must use 2021 to stabilize our business and get our wagons moving profitably for the long haul. This in turn will require carefully focused investment, the further optimization of our processes and a critical look at costs. That said, if we retain our attitude of forward-thinking and a clear mind, the next annual review will undoubtedly be

a positive one.

Kind regards,

DR . HEIKO FISCHER

C H A I R M A N O F T H E E X E C U T I V E B O A R D ( C E O ) O F V T G A G

4   C O N S TA N T T H R O U G H C H A N G E E D I T O R I A L

E D I T O R I A L   C O N S TA N T T H R O U G H C H A N G E 5

2020 TIMELINE
JANUARY	FEBRUARY	MARCH	APRIL	MAY	JUNE
BUSINESS
DEVELOPMENT				VTG AG successfully wraps up a long­term
			lockdownCovid­19First	€2.9 billion refinancing package to
			safeguard the Group's investment plans
				going forward.
TECHNOLOGIC AL
ADVANCES				More, quieter, safer:
				VTG completes the
				modernization of its
				liquid gas fleet.

INTERNATIONAL

EXPANSION

VTG launches its	VTG expands its corri­	Sinceits takeover,
own country	dor network by buying	Carbo Rail has operated
organization in	Slovakian railway	under the name Retrack
Japan.	company Carbo Rail.	Slovakia.

6 C O N S TA N T T H R O U G H C H A N G E

JULY

AUGUST

SEPTEMBER

OCTOBER

NOVEMBER

DECEMBER

	Despite the corona­		For the first time, VTG	lockdown
	stable results.		€746 million through the
	virus crisis, VTG ends		placed sustainability­
	the first half­year with		certified bonds worth
			"Climate Bonds Initiative".	Second Covid­19
The digital traigo	VTG and DB Cargo unveil	3,000 freight	VTG sources	VTG successfully
platform goes off the	a modular wagon	wagons are fitted	CO2­saving hybrid	completes conversion
blocks after an intensive	platform as part of	with temperature	engines with	of its fleet in Germany
test phase.	the m² project.	sensors.	European Loc Pool.	and Switzerland to
				quiet brake blocks.

Transpetrol is	VTG acquires	The VTG companies in	VTG FastTrack can now
renamed VTG Rail	Slovakian maintenance	Moscow, St. Petersburg	be booked for ad­hoc
Logistics Polska.	facility Želos.	and Klaipe˙ da take control of	transports at the port
		local tanktainer business.	of Gothenburg, too.
			C O N S TA N T T H R O U G H C H A N G E 7