At the ICF Board Meeting on 26 November, the ICF Board was given a progress report on the steps being taken to reposition the company. ICF is now in line with the new market conditions, with a newly defined core network of 160 terminals in Europe and adaptation of its internal structures. Its goal is to return to profitability at the latest by 2005.

ICF carried a total of 758.598 TEU (20’ equivalent units) for its rail - road combined transport customers in 2002, and that is 9,1% less than in the previous year. This enabled ICF to consolidate its position as a long-haul pan-European network operator. The average distance per haul was 1.107 km and that is a little less than in the year before (- 1.9%) but it still remains well above the 1.000 km mark.

A negative economic trend and structural changes in the production systems of a number of railways have impacted negatively on business at pan-European network operator ICF. Prices and services that fall short of market requirements, and strikes on a variety of railways have led to delays in new ICF product introduction.

These are the main reasons for the further fall in ICF transport volumes in the first six months of this year. At 367.000 TEU (twenty foot equivalent units) these are 4% down on the same period of the previous year and 19% under budget. Turnover was 135,1 million EUR, and that is -1,5% compared to 2002 and -13% in relation to budget.

At the beginning of September, the ICF Board decided therefore that the time had come to reposition ICF SA by creating a tighter network controlled by ICF and enforcing cost-cutting measures in both internal and external ICF structures. These moves should enable the company to break even in 2004 and return to profitability from 2005.

ICF has decided upon vital changes in the offer for 2004, in order to reposition the company in the competitive European transport business. A 5-point plan will lead the company into the new year.

5 point plan

Since September 2003 the following measures have been introduced as part of a 5-point plan:

1.       Network redefinition

From 1 January 2004 ICF is to provide services on a core network consisting of 160 terminals in Europe’s most important seaports and economic centres. The terminals will be connected via ICF’s own large-scale hub systems (Qualitynet in France, X.net in Germany, and Sopron in Hungary) and by point-to-point block or shuttle trains. Some 85% of all traffic will be handled in this manner. A further 290 terminals have been identified to form part of the so-called secondary network that ICF will serve under specific conditions to be individually agreed with the customers concerned.

All traffic on these networks will be managed by using ICF’s own IT systems.

2.       Immediate measures

As one immediate measure, the following five trains were withdrawn from service in the last quarter on cost-effectiveness grounds:

• Bettembourg - Rotterdam: operated 6 times per week,

• Herne – Milan 8 times,

• Herne - Prague: 6 times,

• Herne - Salzburg: 4 times and

• Zeebrügge - Milan: 8 times.

3.       Cost cutting measures – loss of 45 jobs

Between September 2003 and June 2004, 45 jobs, essentially of an administrative nature, are to disappear at ICF’s Basel Headquarters. In 41 cases downsizing will involve dismissal and in the remaining 4 early retirement. A social plan has been drawn up for the staff concerned and a total of 2,2 million EUR (3,5 million CHF) earmarked in this connection.

4.       Adaptation of internal structures

On 10 September 2003 the structures at ICF Headquarters in Basel underwent reorganisation. Zeno Baggio remains CEO and Chairman of the Executive but Patrice Pinoli, Director and Member of the Executive, has taken over his responsibilities in "Sales & Operations". Christian Zörner heads the new "Business Development" department. Angela Kopp is in charge of the "Human Resources & General Affairs" department. For the time being, Zeno Baggio is acting head of the "Finance & Controlling" department until the arrival of the new Manager on 1 January 2004. Lastly, Jean-Marie Portha and Jean-Luc Helmer run the IT department (Information Technology).

10 Area Managements and 2 Network Managements (X.net and Qualitynet) have replaced the three divisions in the Sales & Operations department. These report directly to the Director of Sales & Operations.

5.       Magna Carta

The Board also approved a "Magna Charta" at its meeting on 26 November, confirming the company’s business principles, for example free choice of traction supplier, exclusive concentration on profitable core links, etc.

With the slight economic upturn forecast for 2004 and the measures it is taking, ICF expects to increase its turnover and to return to profitability from 2005.