DB Schenker appears to have had a tough year

It seems that DB Schenker has had a tough twelve months with revenue from the ‘DB Schenker’ division of Deutsche Bahn falling by 3.5% to €14.8bn, although this was part of a mixed picture. Volumes across all its constituent businesses were either flat or fell slightly except for contract logistics. Schenker’s large European road freight business saw consignments edge-up by 0.2% but air and sea freight forwarding fell in terms of tonnage and TEUs by 0.3 and 0.7% respectively. At contract logistics however revenues rose by 5.2% to €1.8bn. DeutscheBahn Schenker’s other logistics business, rail freight, also saw a decline of 1.5% in terms of volume, which DB in part blamed on flooding, with revenue falling by 2.1% to €4.8bn.

In terms of profitability, the picture does not split out the performance of each business, however in terms of ‘adjusted’ EBIT (Earnings Before Interest and Tax) income at DBSchenker fell by 22.4%. This was split between a fall of €30m in DB Schenker Rail, to €57m, and a fall of €85m for DBSchenker Logistics, to €335m. Although it is not wholly clear from the numbers presented by Deutsche Bahn, it seems that after accounting for financial and capital investment neither business is much above break-even.

The rest of Deutsche Bahn’s huge business saw a mixed picture as well, but bearing in-mind this is largely driven by the domestic Germany economy and the appetite for passenger rail services the link between the two parts of Deutsche Bahn is not that relevant. Overall revenues for the whole DB Group were down by 0.5% to €39.119bn and EBIT was down 17.4% at €2.2bn. The board decided to cut the dividend.

It appears from the limited data available that DB Schenker is suffering from the effects of weaker air and sea freight markets but measuring by how much is difficult. How successfully its contract logistics business will grow its sale or sustain profits, and what the impact of its problems in North America will be remain significant unknowns. All that we can really say is that the company is reasonably profitable although the issue of “extraordinary items” is concerning.