Škoda Transportation acquires Finnish rival, eyes Scandinavian markets

Photo: archive of Czech Government

Škoda Transportation is one of Europe’s leading rail carriage and tram producers. But while it has successfully built up worldwide sales, Western European markets have not produced the contracts that had been hoped for. The acquisition of a controlling stake in Finland’s biggest rail carriage and tram producer could help crack that problem.

Photo: archive of Czech Government
Plzeň-based transport company Škoda Transportation has taken what it describes as a significant step to further develop in West European markets with the purchase of a controlling stake in Finland’s sole manufacturer of rail vehicles and trams.

The Finnish company TransTech mainly produces double-deck electric carriages and trams. It employs around 500 and has an annual turnover of around 2.5 billion crowns in 2014. It currently has two major contracts in the pipeline: to provide double decker pressure tight carriages for Finnish Railways and a framework contract to supply low-floor trams for use in the capital, Helsinki. Around 35 new carriages are due to be introduced on Helsinki’s tram network from 2015-2018 after successful tests runs since mid-2013.

Škoda Transportation says the impact of the deal goes far beyond Finnish borders and actually puts it in a promising starting position for winning contracts throughout Scandinavia. Several major tenders are expected in the near future. The Finnish company is also seen as being able to contribute to the Czech firm’s manufacturing know how and products portfolio especially with regard to rail vehicles operating in challenging climactic conditions and high speed pressure-tight carriages.

Finnish company Sinituote Oy will stay on as a minority shareholder when the deal is completed. The purchase price for the controlling stake was not given. Škoda Transportation employs around 5,000 people in the Czech Republic. It has invested around 3 billion crowns in research and development over the last three years. It’s turnover last year amounted to 16.4 billion crowns, a year-on-year rise of 12 percent. It has subsidiary companies in Germany, Poland, Russia, and Hungary.

Škoda Transportation has notched up tram and rail contracts in China, Russia, the USA, Poland, Turkey and Italy. However, the company feels that it has not made the inroads into the West European market that it should. Neighbouring Germany has been one of the main targets in the past for expansion.