Train travel boom • Higher infrastructure expenses squeeze profits
DB Group generated operating profit in the first half of 2023 despite the difficult economic environment • Around EUR 25 billion in revenues • Record volume sold and capital expenditures • DB Schenker remains very profitable
Despite the difficult framework, with ongoing inflation and falling freight rates on international freight markets, DB Group as a whole again generated an operating profit (adjusted EBIT) which totaled EUR 331 million in the first half of 2023. However, operating profit was over EUR 500 million (around 62%) lower than in the first six months of 2022, due in part to DB's higher expenses up front for improvements to the infrastructure. DB Group's adjusted revenues totaled roughly EUR 25 billion in the first half of 2023 (compared with roughly EUR 28 billion in the same period of 2022).
In addition to the general increase in costs and DB's much higher expenses for the rail network, changes in the Group's operating profit compared with the first half of 2022 were largely due to industry-wide normalization of freight rates in air and ocean freight. As expected, this global development affected DB's logistics subsidiary, DB Schenker. "Even though freight rates in air and ocean freight are normalizing, DB Schenker generated a significant operating profit of EUR 626 million in the first half of the year," Lutz said.
The logistics subsidiary's positive contribution to DB Group's bottom line was nearly three times higher than before the pandemic. In 2022, DB Schenker generated the largest profit in its history, due in part to freight charges, which were extremely high throughout the world at that time.
All units involved in rail operations in Europe (the Integrated Rail System), DB's core business, increased their revenues in the first half of 2023, in some cases considerably. Growing demand for passenger service contributed to these increases. More than 808 million passengers took regional trains in Germany in the first half of 2023 – around 11.5% more than in the first six months of 2022. More than 68 million passengers took DB's long distance trains in the same period, which was an increase of 9 million, or 15.4%.
Becoming more productive in all areas, says CFO Holle.
Holle noted conditions that had deteriorated for DB in 2023, such as lower global freight rates, higher interest rates and continued inflation. He said that expenses will also increase as a result of upcoming collective bargaining agreements.
DB Group expects these factors to lead to a significant operating loss for the full year, as it noted back in March. However, the operating loss is now expected to be lower, at slightly less than EUR 1 billion. The Group's revenues are likely to be around EUR 51 billion. All predictions depend on further developments and are subject to a high level of uncertainty.