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Development of business units

Development in the first half of 2022

  • Dampening effects as a result of the war in Ukraine.
  • Performance development stable overall.
  • Increasing factor costs and additional burdens continue to put economic development under pressure.

DB CARGO

 H 1

Change

H 1

2019

2022

2021

absolute

%

 Punctuality (%)

66.9

70.8

– 3.9

73.8

Freight carried (million t)

115.0

115.1

– 0.1

– 0.1

122.4

Volume sold (million tkm)

43,523

43,010

+ 513

+ 1.2

43,738

Volume produced (million train-path km)

85.4

84.0

+ 1.4

+ 1.7

82.9

Capacity utilization (t per train)

509.9

512.0

– 2.1

– 0.4

527.8

Total revenues 1) ( € million)

2,631

2,504

+ 127

+ 5.1

2,270

External revenues 1) ( € million)

2,521

2,388

+ 133

+ 5.6

2,141

EBITDA adjusted 1) ( € million)

– 99

– 21

– 78

20

EBIT adjusted 1) ( € million)

– 299

– 204

– 95

+ 46.6

–132

EBIT margin (adjusted) 1) (%)

– 11.4

– 8.1

– 3,3

–5.8

Gross capital expenditures (€ million)

132

179

– 47

– 26.3

163

 Employees 1) as of Jun 30  (FTE)

30,931

30,877

+ 54

+ 0.2

29,198

1) Figures for first half of 2021 and as of June 30, 2021, adjusted due to intragroup reasignment of the FLS business area.

The punctuality of DB Cargo has decreased as a result of reductions in capacity due to construction measures, increased infrastructure disruptions and highly utilized freight transport corridors. The operating situation was under a lot of strain in many train formation yards. This resulted in increased disruptions in the operating process.

The quantity of freight carried and volume sold increased in the first half of 2022. This was significantly influenced by the performance data of DB Cargo Schweiz being included for the first time. The difficult operating situation caused by construction and disruption and the effects of the war in Ukraine had a dampening effect.

Economic development was weaker. Operating profit figures decreased significantly as a result of additional burdens. The growth in income was more than compensated for:

  • Revenues increased considerably driven by the positive development in all regions.
  • Other operating income (+2.2%/€ +5 million) increased slightly, mainly as a result of non-periodic reimbursements in connection with the noise-based train-path pricing system for previous years, increased asset sales in the United Kingdom and grants for single-wagon transport in France. This was partly offset by a decline in Federal grants (mainly from facility price support).

There was additional strain on expenses, driven by price and performance-related rises in the cost of materials and increased personnel expenses:

  • Cost of materials increased (+10.0%/€ +152 million), in particular due to increased expenses for purchased transport services to stabilize the operating situation and for energy and maintenance.
  • Personnel expenses (+4.1%/€ +38 million) increased, in particular due to an increased average number of employees as a result of the continued training and qualification offensive.
  • Other operating expenses increased (+8.6%/€ +27 million) in part due to increased leasing of locomotives and freight cars.
  • Depreciation also increased (+9.3%/€ +17 million), mainly due to increased leasing (IFRS 16) of locomotives and freight cars.
  • The decline in capital expenditures partly result from the delayed start of the new logistics concept for BASF. This also led to delays in leasing freight cars. In addition, 110 carrier cars were no longer delivered from the Russian manufacturer United Wagon Company (UWC) due to the outbreak of the war in Ukraine. In addition, extended procurement processes pushed back capital expenditures in an overhaul in locomotives as a result of a shortage of raw materials.

The number of employees remained more or less unchanged. The addition and qualification initiative for operative personnel is still being implemented.

  • Performance increases through intermodal transport, in particular trans-Eurasian traffic.

  • Additional burdens as a result of the war in Ukraine, increasing factor costs and lower Federal grants.

  • Operating profit development still under pressure.

CENTRAL EUROPE REGION

 H 1

Change

H 1

2019

2022

2021

absolute

%

 Freight carried (million t)

120.5

116.2

+ 4.3

+ 3.7

116.1

Volume sold (million tkm)

35,268

34,712

+ 556

+ 1.6

35,052

Volume produced (million train-path km)

68.5

67.6

+ 0,9

+ 1.3

64.8

Total revenues 1) (€ million)

2,704

2,609

+ 95

+ 3.6

2,489

External revenues 1) (€ million)

1,866

1,778

+ 88

+ 4.9

1,736

EBITDA adjusted 1) (€ million)

– 153

– 75

– 78

+ 104

26

EBIT adjusted 1) (€ million)

– 295

– 203

– 92

+ 45.3

–80

Gross capital expenditures  (€ million)

93

126

– 33

– 26.2

147

 Employees 1) as of Jun 30  (FTE)

22,052

21,969

+ 83

+ 0.4

19,343

1) Previous year adjusted due to changes in the presentation of Eurasian transport (from the Eastern Europe region to the Central Europe region).

The development of the quantity of freight carried and volume sold in Central Europe was influenced considerably by the economic recovery and first-time inclusion of the DB Cargo Schweiz performance data in the first half of 2022. The positive business development of intermodal transport, in particular on the trans-Eurasian corridor at the start of the year was largely offset by the dampening effects from restrictions in track infrastructure caused by construction and disruptions, operational bottlenecks and effects from the war in Ukraine (including the suspension of transports to Russia). Overall, the volume was slightly higher than before the Covid-19 pandemic.

Economic development remains very challenging due to the operational situation. The operating profit figures deteriorated significantly:

  • Revenues rose, largely as a result of price increases. The slightly positive performance development had a supporting effect.
  • Other operating income was at the level of the first half of 2021. Decreases due to a reduced volume of subsidies from the facility price system and the expiration of subsidies for the conversion of freight cars to whisper brakes (“brake shoes”) could be compensated by non-periodic reimbursement from the dissolution of the “noise bonus pot” due to the completed freight car conversion.

On the expense side, there were additional burdens driven by the cost of materials:

  • The cost of materials increased in particular due to increased purchasing of transport services. For train paths and energy expenses, a higher price level in connection with a slight increase in quantity led to additional burdens.
  • Personnel expenses increased mainly as a result of collective bargaining agreements, with a slight increase in the number of operating employees.
  • The increase in other operating expenses was mainly due to an increase in freight car leasing, higher compensation payments to customers, and higher IT costs.
  • Depreciation increased in part as a result of additional leasing (IFRS 16) of locomotives and freight cars.

The decrease in capital expenditures resulted mainly from delays in the procurement of freight cars.

The number of employees was at the same level as of June 30, 2021. The addition and qualification initiative for operative personnel was continued.

  • Difficult market environment in the United Kingdom and France, Spain is recovering.

  • Burdens as a result of increased energy prices – However, one-off effects in the United Kingdom and France have an offsetting positive effect.

WESTERN EUROPE REGION

H 1 

Change

 H 1

2019

2022

2021

absolute

%

 Freight carried (million t)

21.6

22.9

– 1.3

– 5.7

24.7

Volume sold (million tkm)

5,700

5,852

– 152

– 2.6

6,308

Volume produced (million train-path km)

12.7

12.3

+ 0.4

+ 3.3

14.2

Total revenues (€ million)

377

347

+ 30

+ 8.6

358

External revenues (€ million)

283

261

+ 22

+ 8.4

288

EBITDA adjusted (€ million)

26

30

– 4

– 13.3

32

EBIT adjusted (€ million)

– 16

– 11

– 5

+ 45.5

–4

Gross capital expenditures (€ million)

19

47

– 28

– 59.6

11

 Employees as of Jun 30 (FTE)

4,287

4,280

+ 7

+ 0.2

4,335

Performance development in Western Europe was differentiated in the first half of 2022:

  • At DB Cargo France, portfolio adjustments in particular (replacing heavy automotive transport with lighter intermodal transport) led to lower volume.
  • Reductions in volume had a negative effect at DB Cargo UK for building materials transport in particular.
  • In Spain, an upturn in the pivotal automotive sector led to higher volumes.

Economic development continued to be challenging. The operating profit figures declined due to additional costs.
Income grew:

  • Higher volumes in Spain, higher prices in the United Kingdom and positive exchange rate effects led to an increase in revenues.
  • The increase in other operating income resulted in particular from an increase in state grants in France to support single-wagon transport and from increased income from the disposal of locomotives, freight cars and real estate at DB Cargo UK.

However, the increase in expenses was more pronounced, driven by the cost of materials:

  • Cost of materials increased mainly as a result of higher energy costs, higher maintenance expenses in the United Kingdom and exchange rate effects.
  • Personnel expenses increased as a result of higher pension costs and a higher average number of employees at DB Cargo UK. Adjusted for exchange rate effects, the increase was less significant.
  • Depreciation increased as a result of leasing activities in the United Kingdom and as a result of currency exchange rates.
  • The slight increase in other operating expenses was caused by currency exchange rate effects. Adjusted for exchange rate effects, they were at the level of the first half of 2021. Effects from a release of provisions in the United Kingdom were almost completely offset by losses from asset disposals.

Capital expenditures decreased. In the first half of 2021, there was a change of accounting method at DB Cargo UK following the SAP migration from recording net fixed assets to record­ing gross fixed assets, resulting in an apparent increase.

The number of employees was at the same level as of June 30, 2021.

  • New transport and expansion of available offers, in particular in Poland and the Czech Republic.

  • Burdens resulting from the war in Ukraine and increased factor costs, especially for energy.

EASTERN EUROPE REGION

H 1

Change

 H 1

2019

2022

2021

absolute

%

 Freight carried (million t)

8.8

8.7

+ 0.1

+ 1.1

7.5

Volume sold (million tkm)

2,555

2,447

+ 108

+ 4.4

2,377

Volume produced (million train-path km)

4.2

4.0

+ 0.2

+ 5.0

3.9

Total revenues 1) (€ million)

179

154

+ 25

+ 16.2

176

External revenues 1) (€ million)

107

91

+ 16

+ 17.6

116

EBITDA adjusted 1) (€ million)

18

14

+ 4

+ 28.6

13

EBIT adjusted 1) (€ million)

6

3

+ 3

+100

3

Gross capital expenditures 1) (€ million)

17

6

+ 11

4

 Employees 1) as of Jun 30 (FTE)

3,965

3,954

+ 11

+ 0.3

3,893

1) Previous year adjusted due to changes in the presentation of Eurasian transport (from the Eastern Europe region to the Central Europe region).

The performance development in Eastern Europe was positive, driven by new transport (inland transport at DB Cargo Polska and market entry in Austria by DB Cargo Czechia) and the expansion of existing transports (chemistry, coke and automotive transport by DB Cargo Romania and new production concepts at DB Cargo Hungaria), and was above the pre-Covid-19 level.

The economic trend was encouraging: the operating profit figures improved significantly. This was driven by a growth in income:

  • Revenues increased significantly, in particular as a result of demand. Price measures also helped. Adjusted for exchange rate effects, the increase was even more pronounced.
  • Other operating income increased, partly as a result of asset sales in Poland and insurance reimbursements in Romania.

On the expense side, there was a significant but disproportionately low increase due to performance.

  • Cost of materials increased significantly, largely as a result of the growth in demand, an increase in maintenance and purchased transport services, and rising energy costs. Exchange rate effects had a partially compensating effect.
  • Personnel expenses increased, in particular in Poland and Czechia as a result of collective bargaining agreements. Positive exchange rate effects also had a partially compensating effect here.
  • Other operating expenses also increased due to volume as a result of additional leases and purchased services.
  • Depreciation increased as a result of higher locomotive and freight car maintenance services (overhauls) being eligible for capitalization.

Gross capital expenditures increased considerably due to procurement of freight cars and locomotives. Net capital expenditures remained more or less unchanged due to funding received from the EU.

The number of employees was at the level as of June 30, 2021.

  • Road and special transport as a growth driver.

  • Burden on Eurasian transport due to the war in Ukraine.

FLS

 H 1

Change

 H 1

2019

2022

2021

absolute

%

 Total revenues (€ million)

323

316

+ 7

+ 2.2

External revenues (€ million)

265

254

+ 11

+ 4.3

EBITDA adjusted (€ million)

11

9

+ 2

+ 22.2

EBIT adjusted (€ million)

8

7

+ 1

+ 14.3

Gross capital expenditures (€ million)

3

1

+ 2

 Employees as of Jun 30 (FTE)

627

674

–47

–7.0

A significant driver of positive revenue development was the increasing volume of road and special transport in Germany which grew by approximately 12%. Further significant growth was recorded in the smallest area of the intermodal business in Italy (+20%). The rail business experienced stable performance. The Eurasia business recorded significant declines of approximately 24% as a result of the war in Ukraine.

The improved revenue development is reflected accordingly in EBIT and EBITDA.

Gross capital expenditures increased. This was a result of the long-term lease extension for a commercial building.

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