DB Schenker remains profitable, sale process on course

Listen to this Article

DB Schenker reported an operating profit of €520 million for the first half of 2024, down 17 percent from H12023 profit of €626 million despite the further normalisation of freight rates in air and ocean freight.

Total turnover was down seven percent at €9.4 billion compared to €10.1 billion in H12023.

DB Schenker, the logistics arm of Germany's Deutsche Bahn Group (DB Group), continued to perform more than twice as well as before the Covid-19 pandemic, says an official release.

"Thanks to a successful efficiency programme, DB Schenker has good opportunities to leverage additional profit potential in the future too," says Levin Holle, Chief Financial Officer, DB Group.

Sale on course
The process for a possible sale of up to 100 percent of the shares in DB Schenker continued as planned in the first half of 2024, the management said in its update.

"The outcome is still open. According to the resolution of the Supervisory Board, proceeds from a possible sale of DB Schenker should remain entirely in the DB Group and lead to a significant reduction in the DB Group's debt. A sale will only take place if it is economically advantageous for the DB Group."

Air freight - two parts
In the first half of 2024, the air freight market can be divided into two different segments: the market including the new e-commerce business from China and the traditional air freight market, DB Schenker said in its update.

"While the traditional market was only slightly in the growth area in the first quarter of 2024, the market grew in just under double digits when the e-commerce segment was taken into account. In conjunction with the extreme regional differences in demand triggered by the e-commerce boom, with the associated imbalances in available capacities, we are seeing freight rates rising globally, albeit with very different characteristics and directions from region to region."

Air freight volume increased marginally (one percent) to 576,700 tonnes but air and sea freight division turnover dropped nine percent to €4.2 billion. Adjusted EBIT declined 12 percent to €342 million.

Air freight saw slight increase in line with the non-e-commerce market with a low share of the rapidly developing low-price new e-commerce market. Freight rates were constant or declining outside Asia/Pacific, where DB Schenker's share is low.

Structural weakness hits DB operations
DB Group closed the first half of 2024 with a net loss after taxes of €1.2 billion (compared with a loss of €71 million in the first half of 2023).

"The structural weaknesses of Germany's rail network and the challenging operational situation, due in part to strikes and severe weather, had a negative impact on the economic performance of DB Group in the first half of 2024. To ensure that urgently needed infrastructure measures could begin quickly, DB Group also made significant pre-financings of additional maintenance expenses for the Government as it did in the first half of 2023."

DB Cargo, DB Group's rail freight business unit, transported about 93 million tonnes of freight in the first half of 2024, about 10.2 percent less than in the first six months of 2023, the release adde. "Volume sold fell by 7.6 percent, in part because of decreased production in energy-intensive industries and lower transport demand due to economic conditions. The new industry-wide support for single wagon transport introduced by the Federal Government will take effect in the second half of 2024.

"At €2.8 billion, DB Cargo´s revenues were down by €106 million. The effects of the strikes and decreased subsidies for track access and service facility charges also had a negative impact. Adjusted EBIT decreased compared to the first six months of 2023 by €66 million to an operating loss of €261 million."

DB Group completed the sale of DB Arriva in May 2024 as planned, and its debt has fallen by more than €1 billion, the release added.

DB Group has lowered its forecast for revenues slightly, matching the previous year's level at about €45 billion. DB Group aims to generate an operating profit (adjusted EBIT) of about €1 billion for 2024.