DB Schenker appears to be stable

Deutsche Bahn appears to have fought its way back into profit in 2016 although without properly audited accounts it is hard to know for sure. The latest numbers released by the state railway organisation give ‘adjusted’ revenue for the financial year of €40.5bn, up 0.3%, whilst profit before tax was €706m, in contrast to 2015’s loss of €932m.

Of course, Deutsche Bahn is dominated by its German passenger rail operations which are complex and demand very large capital investment. However, buried inside the organisation are the major logistics businesses of Schenker and DB Cargo. As ever with Deutsche Bahn, transparency is poor but it seems that the two businesses performed differently over 2016.

Schenker saw revenues fall by 2.1% to €15.128bn. The air and sea forwarding saw their revenue fall by 7.3% to €6.25m, however that does not tell us much about the profitability of the division as it may just reflect the impact of lower fuel prices. The road freight business saw an uptick of 0.6% and in keeping with last year’s performance, the contract logistics business grew by 5.6%. Deutsche Bahn has not given profit numbers for these businesses, however overall Schenker saw EBITDA (Earnings Before Interest, Depreciation and Amortisation) rise by 1.7% to an ‘adjusted’ number of €599m.

Underlying demand was quite low with volumes in forwarding rising in low single figure percentages. Air freight was up by 4.5% in terms of tonnage whilst sea freight rose by 3.3% in TEU. This is roughly in line with the market. Contract logistics saw warehouse capacity up by 3.9% which implies that the level of business increased here.

Things were not so happy in the DB Cargo business. Revenue fell by 4.3% and although EBITDA remained positive at €120m, this was due to external revenue with DB Cargo’s own operations making an operational loss of €81m. This did represent a recovery from 2015’s loss of €183m, but it represents an underlying fall in activity of 3.8%.

With large gaps in the data it is hard to make sense of the performance of Schenker and the other logistics businesses of Deutsche Bahn. Judging by last year’s more complete figures they may be in reasonable shape but it is hard to be certain. What is also is unclear is the strategic direction of Deutsche Bahn as a business. The plans for the partial flotation of Schenker still seem to be on hold and are even more unclear with the previous CEO, Dr Rüdiger Grube rapidly exiting the organisation and his replacement, Richard Lutz, only just announced.

Source: Transport Intelligence, March 24, 2017

Author: Thomas Cullen