Schenker does well as Deutsche Bahn is in crisis

DB Group reported its half-year results with total Group revenues of €21.8bn, up 12.2% compared with the same period in 2020.

Deutsche Bahn has had a bad six months, described by its CEO, Dr. Richard Lutz, whilst presenting the organisation’s half-year results on Friday (July 31), as the “worst financial crisis in its history”. However, its contract logistics and forwarding subsidiary, Schenker seems to have “done well in the crisis”.

As usual with Deutsche Bahn, information is scarce with the numbers on the performance of Schenker buried in the results of the wider group. What Deutsche Bahn did say, was that whilst Schenker saw a “slight fall” in revenues it “still closed out the first half of 2020 in the black, with operating profit of €278m”. It seems that margins improved as operating profits rose 17.0%. Dr. Lutz continued, saying that “depending on how the wider economy performs, we currently expect DB Schenker to remain in the black for 2020 as a whole”. Looking at the numbers that Deutsche Bahn managed to publish it seems that revenue at Schenker fell by 7.0% to €8.429bn.

Based on this small amount of evidence, it might be suggested that DB Schenker benefitted from the shortage of air freight, a sector of the forwarding market where it is strong. Dr. Lutz made some reference to warehousing, but it is hard to know what that means.  

The rest of Deutsche Bahn, including its freight operations, are stressed. The organisation made a loss in terms of ‘Earnings Before Interest and Tax’ of €1.78bn for the half-year and the ‘Net Loss’ is twice this. The organisation’s financial position continues to deteriorate, with a 13.8% jump in its indebtedness. 

The management estimated that “total operating losses of possibly up to €3.5bn for 2020 as a whole. Extraordinary losses – €1.5bn as of mid-year, mainly due to Arriva – will also play a role” whilst “revenues could sink as low as €38.5bn”.

The contrast between the apparent strength of Schenker and the financial distress of Deutsche Bahn seems only to strengthen the move to sell all or part of the contract logistics and forwarding company. Already supposedly being prepared for a partial sale, the logic of a complete sale may seem more compelling, simply because Deutsche Bahn needs the money so badly.

Source: Transport Intelligence, August 4, 2020 

Author: Thomas Cullen