Royal Railway Plc (RRC), a Royal Group of Companies Ltd (RGC) subsidiary with corporate bonds listed on the Cambodia Securities Exchange (CSX), reported an on-year increase in revenue in the second quarter of 2023 despite the slowdown in economic activities as a result of the ongoing Russia-Ukraine war.

In a filing with the CSX last week, RRC posted total revenue of 13.4 billion riel ($3.3 million) in the second quarter ended June 30, 2023, up 22.6 per cent year-on-year, with net loss for three-month period at nearly eight billion riel, which expanded 68 per cent from the same period in 2022.

As of June 30, 2023, total assets slipped seven per cent to 144.7 billion riel while total equity rose 71 per cent to 16 billion riel compared to December 31, 2022.

RRC and RGC chairman Kith Meng said Cambodia’s economic recovery, according to the Asian Development Bank, is forecast to grow at 5.5 per cent in 2023 and six per cent in 2024 on robust tourism recovery and increased growth in the services sector.

ADB reportedly said the tourism sector is expected to grow 7.3 per cent in 2023 before easing to 6.8 per cent in 2024. Inflationary pressure is anticipated to moderate at an average rate of three per cent in 2023 and four per cent in 2024.

Cambodia’s economic outlook also hinges on the country’s continuing efforts to scale up green investment to unlock long-term growth potential, Kith Meng said, quoting ADB.

Growth in exports of garments, footwear, and travel goods is projected to decelerate due to weak external demand in the US and Europe, the main export destinations.

The industrial sector, however, continues to benefit from policy reforms including the investment law 2021, which created a one-stop service for investors, and new trade agreements.

Amid the challenging business environment, RRC has played an essential part in contributing to sustainable economic development by engaging continuously with new clients for freight services, along with very reasonable prices to fit with the changes of the economic environment.

On the financial performance side, as of the second quarter of 2023, the increase in total assets and revenue were fuelled by the company’s successful implementation of a sound business strategy on the back of consistency and discipline until the goal of the company is reached, Kith Meng said.

“The board and shareholders have confidence that RRC’s leadership, strategy and people would enable it to continue its high level of performance for all investors,” he added.

RRC generates revenue from the three major sources - rail freight, train related value-added services, and warehousing service or lease.

Under the rail freight income category, freight service is provided to customers on both the Northern Line and Southern Line.

As train related services, fees are collected from lift-on-lift-off containers, customs scanned containers, customs clearance, storage fee and passenger fare.

Passenger service is offered on the Southern Line, which runs between Phnom Penh and Sihanoukville, and the Northern Line, from Phnom Penh to Poi Pet.

RRC listed its corporate bonds on CSX on October 31, 2022, raising about $10 million to expand their operations. Another $24 million was raised via bond issuance at the end of 2022.