Deutsche Bahn remains an organisation facing big challenges, although it appears that freight forwarding and contract logistics at Schenker are not really a part of these.
The annual results for 2018, which have just been released, show that the German State Railway is experiencing modestly growing demand with its core passenger business, seeing the number of travellers increasing in low single digit percentages. Overall sales were up modestly, with ‘adjusted’ revenue rising 3.1%, however the profitability figure was confused with profits before taxes up 21% but ‘EBIT Adjusted’ down 1.9%. As has been the case for the past several years, Deutsche Bahn remains encumbered by its debts and its heavy capital investment requirements.
The performance of the logistics specific divisions of Deutsche Bahn was mixed. Richard Lutz, CEO of Deutsche Bahn, was quick to draw attention to the 5.5% increase in ‘adjusted’ EBIT to €503m on an increase in revenue of 3.8% to €17.05bn. As usual with Deutsche Bahn the numbers are not particularly detailed, however it appears that DB Schenker had a mixed year in terms of revenues. Air freight forwarding revenues grew 7.8%, whilst sales in ocean freight fell by 0.4%. Volumes of ocean freight were up 1.6% to 2.1m TEU whilst air freight saw an increase of 0.3% to 1.3m tonnes. Schenker Land Transport seemed to do quite well, with a 7.3% rise in revenue to €7bn on a volume increase of 6% although no profit numbers were provided. Contract logistics saw a fall of 0.5% in revenue to €2.6bn.
Deutsche Bahn Cargo did not do quite so well. Revenue fell by 1.5% and profits measured in terms of Earnings Before Interest and Tax (EBIT) fell from a loss of €90m in 2017 to a loss of €190m in 2018. As ever capital expenditure played a significant role here.
These results, as far as can be measured on such limited information, suggest that the logistics businesses of Deutsche Bahn are stable but not very exciting. However, they are overshadowed by the capital demands of the wider rail business where debt levels increased by €900m to €19.5bn over the past year. Such debts have prompted Deutsche Bahn to embark on selling its investments in the British rail operator Arriva, however there were no indications that Schenker would be sold, either in-part or wholly. There were rumours prior to the publication of these results that Deutsche Bahn would receive heavy new subsidies from the German Government.
Source: Transport Intelligence, March 28, 2019
Author: Thomas Cullen
