“DB Schenker remains very profitable” states Deutsche Bahn in its latest Half-Year financial results. However, the not perfectly detailed results indicate that profits have seen a sharp fall over the past six months, with ‘adjusted’ Earnings Before Interest and Tax (EBIT) shrinking by half as compared to the same period last year, with H1 2022 seeing an extraordinary €1.2bn profit whilst H1 2023 saw €0.6bn.
By comparison H1 in 2019 saw an EBIT of €0.2bn so there is possibly still room for further falls in profits. The reason for these results is lower freight rates, with DB stating that “ocean freight rates have continued to fall from their all-time highs, although the fall has been at a much slower pace than in previous months”. Volumes handled by the air and sea freight forwarding operations also fell, although the magnitude of falls for DB Schenker seem to be quite substantial, with air and sea freight seeing year-on-year drops of 15.2% and 8.6% respectively.
DB Schenker’s contract logistics business also appears to have suffered, with revenue having fallen by 14.2% year-on-year, to €1.386bn. Why this should be is unclear, with the contract logistics business exposed to areas such as US consumer and automotive, it ought to have been growing. The large road freight network business also saw falls in volume of 2.7% in shipments, although these were in-keeping with trends in the market.
Deutsche Bahn as a group continues to struggle, with demand for the core rail operation growing but the demands for capital investment also growing. The state-owned rail organisation made a slight loss in H1 2023 but its large debt burden seems under control. Yet the divestment of Schenker is still necessary. Deutsche Bahn states that it is still assessing its options over the sale, with its Finance Director commenting “It will take some more time, as is normal in these situations.”
Author: Thomas Cullen
Source: Ti Insights
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