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DB Schenker Reports Mixed Half-Year Results Amid Strikes and Weather Challenges

Deutsche Bahn Group (DB Group) has faced a turbulent first half of 2024, with infrastructure issues, severe weather, and strikes significantly impacting its financial performance. The company reported an adjusted EBIT of EUR -677 million, a stark contrast to the previous year’s figures. The net loss after taxes surged to EUR 1.2 billion, highlighting the immense pressure on DB Group’s operations.

DB Schenker, the highly profitable logistics subsidiary of DB Group, managed to maintain its strong performance, contributing positively to the overall results. Despite this, it wasn’t enough to fully counterbalance the losses experienced in DB Group’s core operations. The core business, which includes mobility, rail freight, and infrastructure, recorded an operating loss of EUR 1.2 billion, a substantial increase from the previous year’s EUR 339 million loss.

The company’s revenue fell by 3%, down to EUR 22.3 billion. However, DB Group’s commitment to expanding and improving Germany’s rail network remained unwavering. Capital expenditures saw a significant boost, increasing by about 35% to EUR 4 billion, thanks in part to increased government funding. Gross capital expenditures also rose by 18%, reaching EUR 7.3 billion.

DB Group is optimistic about improving its EBIT by EUR 2 billion by the end of 2024, bolstered by government reimbursements for pre-financed maintenance expenses and continued efforts to cut costs and enhance efficiency. DB CEO Dr. Richard Lutz emphasized the need for modernization and immediate measures to stabilize the situation, especially in light of extreme weather events and operational challenges.

One of the most notable impacts was on DB Group’s long-distance services. Punctuality plummeted due to severe weather and strikes, with long-distance punctuality dropping by seven percentage points. Passenger numbers also fell, with 64.2 million passengers using long-distance trains, a decrease of 6% compared to the previous year. Despite these challenges, June 2024 was a record month for long-distance revenues, indicating a potential recovery.

DB Regional saw a positive uptick, driven by the Germany-Ticket, resulting in a 6% increase in passengers and a 17% rise in rail volume sold. However, DB Cargo, the rail freight division, struggled with a 10.2% drop in freight volume, exacerbated by strikes and reduced subsidies.

DB Schenker stood out with an operating profit of EUR 520 million, showing its resilience and efficiency even as freight rates normalized post-pandemic. DB CFO Dr. Levin Holle underscored the need for profitability across all business units, emphasizing cost efficiency and structural changes.

The sale of DB Arriva in May 2024 reduced DB Group’s debt by over EUR 1 billion, providing some financial relief. Government support continues to be a critical factor, with DB Group receiving EUR 3 billion in equity injections, stabilizing its financial position.

Looking ahead, DB Group plans to complete the modernization of the Riedbahn line, aiming to transform Germany’s congested network into a high-performance one. The focus remains on strategic investments and operational improvements to ensure a profitable and efficient future.

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