News / Sale of profitable Schenker on course, but 'it will take some time', says DB

27/07/2023

“As you know, we are looking into our options regarding a sale of DB Schenker. This analysis is going as planned. It will take some more time, as is normal in these situations.”

So said Deutsche Bahn as it released its half-year results this morning, revealing an operating profit of €331m ($366m), down 62%.

DB Schenker, on the other hand, made a H1 operating profit of €626m (down 47%, YoY) on revenue of €10bn, which was down just 29%. (Compare and contrast to DSV’s H1, revenues of €10.5bn, down 36%, for ebit of €1.25bn, down 32%. And K+N, with revenues down 38% to €13.3bn, with an ebit of €1.19bn, down 48%.)

But it may well “take some more time” to wean the parent off its profitable subsidiary.

DB noted: “In a market with much different conditions, our logistics unit still generated a significant operating profit… still nearly three times higher than in the first half of 2019. That means profits at DB Schenker are at a much higher level than before the Covid-19 pandemic.

“DB Schenker is in a great position in its business segments and the excellent prospects for the future. Despite volatility, the logistics sector remains a very interesting growth market, with very good opportunities.”

It acknowledged that Schenker, which “has remained very profitable”, “was able to make an important contribution to the group’s bottom line. On balance, DB Schenker generated an operating profit.”

In contrast, rail freight subsidiary DB Cargo was loss-making.

“DB Cargo was able to increase revenues, however it continues to make losses. We intend to consistently transform Europe’s largest freight rail company to make it economically viable and fit for the future,” it said.

“The fact that the competitive environment for rail transport has deteriorated, electricity prices have risen much higher than fuel prices and the market is not very dynamic to begin with, had a negative impact.”

Overall, DB Group said it expected “a significant operating loss for the full year”, although it would be better than first thought, at just under €1bn. And, although a sale of Schenker would help reduce debt at the group, retaining it will mean DB’s full-year operating loss could be halved.

Ti, in its comprehensive Global Freight Forwarding 2023 report, released this week, notes: “Deutsche Bahn describes a railway that has ‘suffered decades of financial neglect’ and will require continued high capital expenditure. This is clearly why Deutsche Bahn wants, or rather needs, to sell Schenker, despite Schenker supporting the profitability of the whole organisation.

“Yet even here, Deutsche Bahn is not so optimistic, stating that ‘Schenker is unlikely to see a repeat of the exceptionally high freight rates of recent years’. One might be tempted to draw the implication that Deutsche Bahn will be interested in gaining as much from the sale of Schenker as it can, as it needs the money.”