Schenker sale still on as Deutsche Bahn’s debt rises

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

It is not hard to understand why Deutsche Bahn wishes to sell Schenker. As outlined in the German state-owned rail company’s annual results, Deutsche Bahn’s debt increased by €5.2bn to €34bn over the Financial Year 2023, driven by capital investment in German railways. The money from any sale of the logistics service provider could halve this number. Yet there is little news on who will buy Schenker. 

Over 2023, in-line with much of the rest of the market, Schenker saw its sales head downwards. Its road freight network saw shipments fall by 1.9%, its air forwarding tonnage handled fell by 13.4%, sea freight forwarding by 6.6% and, more surprisingly, its contract logistics sales were down by 14.2%. 

The financial numbers published by Deutsche Bahn are not overly detailed, however what numbers they have produced, whilst unsurprising, are not very upbeat. Revenue at Schenker fell by 30.6% year-on-year in the Financial Year 2023 to €19.1bn, whilst ‘adjusted’ EBITDA (Earnings Before Interest, Depreciation and Amortisation) fell by 24% to €1.9bn. However Deutsche Bahn pointed out in its presentation around the results that Schenker’s “operating profit was still more than twice as high as it was before the Covid pandemic. And DB Schenker’s 2023 revenues, at €19.1 billion, were also above pre-Covid levels”. Certainly, for road freight and the freight-forwarding businesses this is understandable, however it is less clear why this should be the case for the contract logistics division. 

As for progress of the sale of Schenker, Deutsche Bahn commented that it was “very pleased with the general market interest in our attractive logistics subsidiary”, however “the rest of the process will be confidential, as is customary” and that “we will only sell if it makes financial sense to do so”. This might sound equivocal, reflecting the reluctance to sell amongst a number of interest groups within Deutsche Bahn and amongst some politicians. However, the wider financial position of the company is such that these objections are likely to be ignored. Deutsche Bahn needs the money and there are willing buyers for Schenker.

Author: Thomas Cullen

Source: Ti Insight

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