Photo credits @ Deutsche Bahn AG / Volker Emersleben

DB balance sheet: profit slump at Schenker; group in the red overall

Deutsche Bahn has presented its financial results for 2023. The DB Group's loss was significantly higher than in the previous year. The reasons for the red figures are the profit losses of the subsidiaries DB Cargo and DB Schenker. The group also cites high expenditure on the dilapidated rail network.

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According to the DB Group’s annual report on 21 March, revenue in the 2023 financial year amounted to around 45.2 billion euros, around 13 per cent less than in 2022. The group also posted operating losses. Earnings before interest and tax (EBIT) fell to a negative figure of almost one billion euros, compared with a positive figure of around 1.2 billion euros in 2022.

The reason for the poor figures in the company’s balance sheet is the additional expenditure on infrastructure and substantial advance payments to the federal government totalling more than one billion euros, which, as expected, had a negative impact on DB’s operating result (EBIT). Nevertheless, the reorganisation of the infrastructure will continue.

Together with the Federal Government, we have adopted the largest and most comprehensive investment programme since the rail reform of 1994. We are no longer operating the rail network on a wear-and-tear basis, but are renovating and modernising the infrastructure from top to bottom. Thanks to the substantial increase in the federal government’s budget, we can invest an additional 30 billion euros, said DB CEO Dr Richard Lutz.

Compared to 2022, DB invested around 16 per cent more in infrastructure upgrades, meaning that the Group spent around €7.6 billion of its own funds in 2023.

Logistics sector profits fall

This year’s poor performance is also due to the ongoing economic problems at the subsidiary DB Cargo and the industry-wide normalisation of freight rates in international logistics, which DB Schenker also felt as expected, the group said.

Revenue from transport and forwarding services was mainly generated by the companies in the DB Schenker, DB Regio, DB Fernverkehr and DB Cargo segments.

The logistics subsidiary Schenker, which is up for sale, only made a profit of 1.1 billion euros last year – compared to 1.8 billion euros in 2022. The Group’s combined management report shows that turnover in 2023 fell by 30.7 per cent compared to 2022 and amounted to 19,127 million euros (2022: 27,545 million euros). In the Air and Sea Freight segment, revenue fell by 48.4 per cent compared to 2022 to EUR 8,535 million. By contrast, revenue at DB Cargo rose by 6.4 per cent to around 5.6 billion euros in 2023.

Our logistics subsidiary DB Schenker ended 2023 with an adjusted operating profit of 1.1 billion euros. This is more than twice as much as before the coronavirus pandemic, but less than in the record year of 2022. The logistics market continues to offer very good long-term growth prospects, said DB CFO Levin Holle.

Schenker sale to reduce debt

The contract is expected to be signed this year, probably in the second half, with the final sale scheduled for 2025. According to industry sources, the purchase price is estimated at 12-15 billion euros. Deutsche Bahn will only proceed with the sale if it is economically advantageous for the group.

In the current sales process for DB Schenker, we are very satisfied with the broad interest in the market. We will only sell if it is economically advantageous for DB, says Holle.

Outlook for 2024

For 2024, the DB Group anticipates an increase in revenue to around 47 billion euros. The operating result is also expected to be clearly positive again, at more than one billion euros. The main drivers are the repayments of prepayments made for maintenance work in 2023. The DB Group also expects positive effects from a renewed increase in demand for rail passenger transport and from efficiency enhancement measures.