Development in the first half of 2023
- Continued recovery following a return to positive EBIT in 2022, with continued growth in passenger numbers and improved financial performance, resulting in the majority of markets reporting profits in the first half of 2023.
- The development was hampered by the still rising high inflation as a result of the war in Ukraine and the resulting impact on the cost of living. This includes strikes and increased wage demands. However, the impact was partly offset by close relations with the public-sector client bodies and support mechanisms in place within transport contracts.
- The first half of 2023 was strongly influenced by the strategic decision to withdraw from countries that are not part of the core business.
DB Arriva | H 1 | Change | H 1 2019 | ||
2023 | 2022 | absolute | % | ||
Punctuality (rail) (United Kingdom, Denmark, Sweden, the Netherlands, Poland and the Czech Republic) 1) (%) | 90.8 | 92.4 | –1.6 | – | 90.8 |
Passengers (bus and rail) (millions) | 807.2 | 799.9 | +7.3 | +0.9 | 1,124 |
Volume sold (rail) (million pkm) | 2,873 | 3,174 | –301 | –9.5 | 5,973 |
Volume produced (bus) (million bus km) | 420.6 | 465.0 | –44.4 | –9.5 | 542.0 |
Volume produced (rail) (million train-path km) | 42.0 | 54.8 | –12.8 | –23.4 | 81.4 |
Total revenues (€ million) | 1,968 | 2,175 | –207 | –9.5 | 2,690 |
External revenues (€ million) | 1,967 | 2,174 | –207 | –9.5 | 2,687 |
EBITDA adjusted (€ million) | 187 | 197 | –10 | –5.1 | 326 |
EBIT adjusted (€ million) | 43 | –8 | +51 | – | 101 |
Gross capital expenditures (€ million) | 128 | 120 | +8 | +6.7 | 323 |
Employees as of Jun 30 (FTE) | 34,618 | 41,877 | –7,259 | –17.3 | 52,590 |
Annual average employees (FTE) | 37,058 | 42,518 | –5,460 | –12.8 | 53,305 |
1) From July 2022, excluding the sold activities in Sweden (2022 Integrated Report).
The development in the first half of 2023 was influenced by two key factors:
- The sale and effects of preparing to sell activities in non-core countries (in particular in Sweden, with an effect on revenues of € –177 million), and
- The continued recovery from the effects of the Covid-19 pandemic.
Punctuality in rail passenger transport has decreased. This is largely due to UK Trains, where punctuality has been affected by infrastructure disruptions, speed restrictions and strikes.
The performance development has recovered strongly, but the pre-Covid-19 level has not yet been reached again. Overall, the recovery effects led to an increase in passenger numbers (bus and rail) and in rail transport volume produced. The sale of non-core activities had a dampening effect.
Adjusted EBIT improved significantly, mainly due to the ongoing transformation program, which created a framework for active management of the business and portfolio, targeted and focused capital expenditures, and the divestment of markets that are less attractive and do not form the core of the growth strategy (non-core activities). However, any positive effects from the ongoing recovery were absorbed by additional burdens.
The income situation was weaker on the whole:
- Revenues: The decline is mainly due to the sale of non-core activities, particularly in Sweden and Denmark, lower concession fees (especially at CrossCountry due to the contractual mechanism and higher tariffs) and negative exchange rate effects. Higher revenues from fares due to the recovery from the Covid-19 pandemic had a dampening effect.
- Other operating income: Significant increase (+17.5%/€ +25 million), partly due to the new government funding of the capped fare for UK Bus, partly offset by lower Covid-19-related support as a result of the recovery in demand and negative exchange rate effects.
The pressure on the expense side was relieved by effects from the sale of non-core activities and positive exchange rate effects. In contrast, price-related cost increases had a dampening effect:
- Cost of materials: The significant decline (–9.9%/€ –80 million) is mainly due to the sale of non-core activities, lower expenses for train-path usage fees (UK Trains) due to performance, and positive exchange rate effects. Higher energy prices (UK Bus) and the ongoing recovery associated with the Covid-19 pandemic had a negative impact.
- Personnel expenses: Noticeable decrease (–7.3%/€ –76 million), mainly due to the sale of non-core activities and positive exchange rate effects, partially offset by pay scale effects at UK Bus.
- Depreciation: Decrease (–29.8%/€ –61 million), mainly due to the sale of non-core activities.
- Other operating expenses: Decrease (–5.0%/€ –14 million), mainly due to the sale of non-core activities, in particular in Portugal, and positive exchange rate effects. The effects of the reclassification of management fees for the centralization of departments (which were offset in other operating income) and a higher share of external temporary workers (both UK Bus) had a dampening effect.
Capital expenditures increased as a result of developments in Hungary and Slovakia in connection with tenders awarded.
The number of employees decreased due to the sale of non-core activities.
- Positive impact on performance development and revenues from new tenders awarded and indexation uplifts in London and regional areas.
- Increased government support — new capped fare funding grant.
- Cost increases due to driver shortages, inflationary pressures, wage effects and higher fuel prices.
UK Bus line of business | H 1 | Change | H 1 2019 | ||
2023 | 2022 | absolute | % | ||
Passengers (million) | 292.1 | 262.5 | +29.6 | +11.3 | 353.7 |
Volume produced (million bus km) | 141.8 | 143.0 | –1.2 | –0.8 | 172.8 |
Total revenues (€ million) | 460 | 467 | –7 | –1.5 | 543 |
External revenues (€ million) | 460 | 467 | –7 | –1.5 | 542 |
EBITDA adjusted (€ million) | 24 | 47 | –23 | –48.9 | 59 |
EBIT adjusted (€ million) | –25 | –1 | –24 | – | 15 |
Gross capital expenditures (€ million) | 22 | 19 | +3 | +15.8 | 28 |
Employees as of Jun 30 1) (FTE) | 13,187 | 13,302 | –115 | –0.9 | 15,475 |
1) Figure for the first half of 2022 or respectively as of June 30, 2022, adjusted.
UK Bus saw an increase in the number of passengers following the end of Covid-19-related restrictions and due to the positive impact of ticket price capping.
Schedules were adjusted to match current service levels to demand, reducing regional transport services.
Economic development was weak. The disproportionate growth in expenses compared to income led to a decline in operating profit figures. Overall, income development was positive:
- Revenues: Slightly down due to negative exchange rate effects. Excluding exchange rate effects, the development was higher than in the first half of 2022. The increase due to performance development was almost offset by the elimination of vehicle sales in the first half of 2022 in the non-core business at DB Arriva Bus&Coach.
- Other operating income: Considerable increase, mainly due to the new state financing of the ticket capping and the reclassification of effects from the mineral oil tax reduction (offset in cost of materials). Among other things, the negative exchange rate effects had a dampening effect.
On the expense side, higher personnel expenses and a rise in the cost of materials led to an increase:
- Personnel expenses: Increase due to pay scale effects (mainly as a result of inflation). Positive exchange rate effects, among other things, had a dampening effect.
- Cost of materials: Increase due to the reclassification of effects from the mineral oil tax reduction (offset in other operating income). Among other things, the positive exchange rate effects had a dampening effect.
- Other operating expenses: Increase, among other things, due to a higher proportion of external temporary workers to cover the continuing lack of drivers. Partly offset by positive exchange rate effects.
- Depreciation: Depreciation was at the level of the first half of 2022.
Capital expenditures increased due to higher purchases of public service vehicles (PSVs).
The number of employees dropped slightly as a result of the suspension of bus transport in Winsford and the ongoing challenges related to sickness and operations.
- Improvements in revenues at CrossCountry and Chiltern Railways largely offset by cuts in government support.
- Continued recovery of the Grand Central’s passenger numbers leads to an improvement in profits.
- Development influenced by the omission of one-off effects in the first half of 2022 (structural changes in the contract for Chiltern Railways).
UK Trains line of business | H 1 | Change | H 1 2019 | ||
2023 | 2022 | absolute | % | ||
Passengers (million) | 93.9 | 80.7 | +13.2 | +16.4 | 180.5 |
Volume sold (million pkm) | 2,423 | 2,114 | +309 | +14.6 | 4,846 |
Volume produced (million train-path km) | 23.8 | 24.0 | –0.2 | –0.8 | 55.0 |
Total revenues (€ million) | 582 | 600 | –18 | –3.0 | 1,071 |
External revenues (€ million) | 554 | 582 | –28 | –4.8 | 1,048 |
EBITDA adjusted (€ million) | 16 | 16 | – | – | 105 |
EBIT adjusted (€ million) | 9 | 5 | +4 | +80.0 | 38 |
Gross capital expenditures (€ million) | 6 | 0 | +6 | – | 179 |
Employees as of Jun 30 (FTE) | 4,786 | 4,759 | +27 | +0.6 | 10,965 |
The performance development at UK Trains was mainly driven by the sustained Covid-19 recovery process.
Economic development was better, but still challenging. Positive effects from the ongoing recovery were partly offset by additional expenses.
Due to exchange rate effects, income development was below that of the first half of 2022:
- Revenues: Slightly down due to negative exchange rate effects. Adjusted for these effects, revenues increased slightly due to the indexation at Rail London and the increase in revenues for Grand Central. Lower government grants to CrossCountry as a result of the contract structure had a counteracting dampening effect.
- Other operating income: Nearly at the level of the first half of 2022.
On the expense side, positive exchange rate effects led to a decrease:
- Cost of materials: Decrease mainly due to positive exchange rate effects and lower expenses for train-path usage (performance-related). In contrast, higher maintenance expenses and increased costs were due to the ongoing recovery at CrossCountry.
- Depreciation: Significant decline at Chiltern Railways, where the assets were fully depreciated in 2022.
- Other operating expenses: Development in line with the first half of 2022.
The increase in personnel expenses had an offsetting effect:
- Personnel expenses: Considerable increase, mainly due to pay scale effects, were largely offset by positive exchange rate effects.
Capital expenditures increased, mainly due to the elimination of a one-off effect at Chiltern Railways in the first half of 2022 (new National Rail contract).
The number of employees was nearly at the level of the first half of 2022.
- Core business with overall positive development – mostly favorable fuel prices, including the advantage of delayed indexation of prices for 2022 (especially in the Czech Republic and Hungary). Sustained recovery from the Covid-19 impact on net cost contracts.
- Sale of activities in Sweden, Portugal, Denmark, Serbia and the bus business in Poland influenced the development in the first half of 2023.
- Inflation-related cost increases and fuel cost reductions were largely offset by indexation.
Mainland Europe line of business | H 1 | Change | H 1 2019 | ||
2023 | 2022 | absolute | % | ||
Passengers (bus) (million) | 401.4 | 403.8 | –2.4 | –0.6 | 527.7 |
Passengers (rail) (million) | 19.8 | 52.9 | –33.1 | –62.6 | 62.6 |
Volume sold (rail) (million pkm) | 449.8 | 1,059 | –609.2 | –57.5 | 1,127 |
Volume produced (bus) (million bus km) | 278.8 | 322.0 | –43.2 | –13.4 | 369.2 |
Volume produced (rail) (million train-path km) | 18.2 | 30.9 | –12.7 | –41.1 | 26.4 |
Total revenues (€ million) | 974 | 1,214 | –240 | –19.8 | 1,165 |
External revenues (€ million) | 946 | 1,126 | –180 | –16.0 | 1,097 |
EBITDA adjusted (€ million) | 166 | 166 | – | – | 182 |
EBIT adjusted (€ million) | 67 | 22 | +45 | – | 70 |
Gross capital expenditures (€ million) | 97 | 100 | –3 | –3.0 | 106 |
Employees as of Jun 30 (FTE) | 16,402 | 23,492 | –7,090 | –30.2 | 25,725 |
The sale of activities that are not part of the core business results in a limited comparability with the first half of 2022.
The performance development differed. Positive effects due to a recovery in demand were offset by the impact of the sales:
- Rail transport: The decline in performance is due to the sale of activities in Sweden and Denmark. Recovery effects had a positive impact.
- Bus transport: The number of passengers increased, primarily due to the recovery from Covid-19, partly compensated by the sales. Volume produced and volume sold decreased due to the effects of the sales.
Economic development was driven primarily by the sales, effective portfolio management and recovery after Covid-19. Adjusted EBIT increased significantly:
- Revenues: The decrease is due to the effects of the sales and exchange rate effects, partially offset by the continued recovery in demand, as well as indexing and price effects in the Netherlands.
- Other operating income: Increase due to the reclassification of effects from the sale of fuel and maintenance services in Slovakia and the Czech Republic (counter-effect in revenues) and from income from renewable energy credits in the Netherlands (countereffect in cost of materials). The sales (especially Portugal) had a dampening effect.
The expense side was strongly influenced by declines as a result of the sales, partially offset by inflation-related cost increases:
- Personnel expenses: Sharp decline. Effects from lower numbers of employees (mainly due to the sales) and positive exchange rate effects were partly offset by higher costs, primarily due to inflation and the shortage of drivers.
- Cost of materials: The decline is mainly due to the sales. Inflation-related cost increases had a dampening effect.
- Depreciation: Here, too, the sales were key. Adjustments to the useful life of assets also had a positive impact.
- Other operating expenses: Decrease mainly due to
the reclassification of effects from the transfer of income from consortiums in Italy (countereffect in revenues) and the sales.
The increase in capital expenditures is due to greater capital expenditures in Hungary and Slovakia, resulting from awarded tenders.
The number of employees decreased significantly due to the sales.