Development in the first half of 2019

• Rail freight transport campaign with a positive effect.
• Omission of negative one-off effects from the first half of 2018, but slowdown in economic development and factor costs are having a dampening effect on development.
• Effects from quality problems in the previous year continue to linger.

Performance development in Central Europe declined due to the drop in raw steel and automotive production in Germany. The business expansion in Belgium had a partially compensating effect. Capacity utilization was slightly more improved.

The economic development continues challengingly. Income increases were not able to offset the increase in expenses, causing adjusted EBIT to decline. Growth in adjusted EBITDA resulted from the first-time application of IFRS 16.

• Despite the performance decline, it was possible to achieve a slight increase in revenues. This was caused, among other things, by the omission of negative effects from the first half of 2018 and the business expansion in Belgium.
• Other operating income increased significantly, particularly due to the train-path price support (2018 Integrated Report) (offsetting effects in revenues).

The expenses side saw an increase, driven mainly by personnel expenses and cost of materials:

• Cost of materials increased particularly due to an increase in purchased transport services, among other things, to stabilize production in Germany.
• Personnel expenses increased as a result of the collective agreement and the higher number of employees.
• The increase in other operating expenses was mainly caused by higher received services and IT services. The expense-reducing IFRS 16 effect was more than offset.
• The increase in depreciation resulted mainly from the IFRS 16 effect. Gross capital expenditures increased, among other things, as a result of the IFRS 16 effect and higher capital expenditures in freight cars and IT.

The number of employees increased due to a workforce expansion as part of additional personnel increases in operational function groups and of new business, particularly in Belgium.

• The performance and profit improvements are driven by the developments in Spain and Great Britain.
• Growth was supported by the omission of negative effects (strikes in France, storms in Great Britain).

In Western Europe, volume sold and volume produced recorded significant increases. The volume of freight carried increased slightly. Growth in Spain and the absence of negative effects in France and Great Britain from the first half of 2018 had a positive influence. In addition, the business expansion with new and existing customers, particularly in Great Britain, contributed positively to performance development.

Economic development was significantly above that of the first half of 2018: revenue growth was stronger than expenses, resulting in improved operating profit figures.

• Revenues increased due to the omission of negative effects experienced in the first half of 2018 (strikes in France, storms in Great Britain) and increases in vehicle, metal and intermodal areas. 
• Other operating income declined due to exchange rate effects.

The expense side saw an underproportional increase, driven mainly by cost of materials:

• The cost of materials increased mainly due to higher purchased transport services. Lower maintenance expenses had a compensating effect.
• Personnel expenses were somewhat above the figure of the first half of 2018 due to newly hired operating personnel in Spain and France.
• Other operating expenses declined due to the completion of IT projects in Spain and IFRS 16 effects (offsetting effect in depreciation).
• Depreciation increased due to IFRS 16 effects.

Gross capital expenditures declined due to the delay in the implementation of planned projects in Great Britain.

Employee numbers increased among other things in operating personnel (France) and in maintenance (Spain).

• Performance development slightly declined.
• Price measures only partially offset factor cost increases.
• Increase in personnel costs due to a tense employment market situation.

Performance development in Eastern Europe related to volume sold and volume produced showed slightly weaker growth. The volume of freight carried decreased significantly due to lower traffic volume in logistics and intermodal in Poland, among other things.

The economic development remains challenging: the adjusted operating profit figures EBITDA and EBIT declined slightly, due to the omission of positive effects from the first half of 2018 (sale of locomotives and freight cars), among other things.

• Revenue increases were mainly price-driven. Moreover, logistics services and Europe-Asia transport showed positive growth. However, the capacity-based business decrease in the Polish sea ports had the opposite effect.
• Other operating income significantly decreased due to the omission of positive effects from the sale of locomotives and freight cars.

The expense side experienced an increase, driven by cost of materials:

• Cost of materials significantly increased mainly driven by higher purchased transport services.
• Personnel expenses increased due to wage increases, primarily driven by the tense employment market situation in Eastern Europe.
• Other operating expenses declined significantly. This resulted from IFRS16 effects (offsetting effect in depreciation).
• Depreciation increased significantly accordingly.

Capital expenditure activities increased on a low level, among other things, due to IFRS 16 effects.

The number of employees declined, mainly due to optimization measures in Poland and Romania. This was offset by the rise in employee numbers for performance reasons in the Europe—Asia corridor.