DB Cargo continues being the ‘black hole’ of the Group’s finances

The half-year report of the Deutsche Bahn (DB) Group is shadowed by an overall negative performance which mainly highlights DB Cargo’s losses. The Group’s freight division completed the first six months of 2023 with a loss of 195 million euros before taxes. The loss is less than the first half of 2022; however, it signals that DB Cargo will likely not meet its performance goals for this year or the years to come.

DB Cargo has been producing negative figures for years, raising concerns about the company’s structure. Indicatively, between 2015-2022 DB Cargo contributed to the Group’s losses by 3 billion euros. Last year only, the rail freight company’s losses accounted for 858 million euros, almost as high as in 2020, when the Covid-19 crisis hit the market. It must be noted, however, that last year could be even worse than 2020 if the company had not received 180 million euros of financial aid from the German state.

Jörg Hensel, chairman of the European Works Council (EWC) of DB, explained earlier in July that DB’s plan for the cargo division was to close 2023 with a loss of 225 million euros–considerably less than last year. Additionally, he explained that the company’s goal for 2024 was to return to positive results.

Even before the half-year results, Hensel stressed that DB’s return to positive results could be a “suicide mission”, probably also entailing employee layoffs and the sacrifice of certain business segments like single wagon transport. Despite DB Cargo’s CEO Sigrid Nikutta refuting such scenarios, the company’s figures indicate that reaching the financial goals mentioned above could prove impossible.

Restructure or close shop

Rail transport association Die Güterbahnen was very critical of DB’s situation. DB attributed the repetitively negative results to the generally gloomy outlook of the market, in which inflation, high energy prices, strikes and wage negotiations contributed. Additionally, it expects the pressure to keep growing despite the possibility of customer demand rebounding in the second half of the year.

Nevertheless, for Die Güterbahnen, the situation is a bit more straightforward. The association stated that DB’s reasoning behind the losses is incorrect, considering that other private companies in Germany face the same issues but still produce positive results. Especially since DB has been in the spotlight for receiving generous sums of financial state aid, the losses are not justified. Die Güterbahnen is concerned that even more state money will be spent to salvage DB Cargo, which Sigrid Nikutta indirectly confirmed a few days ago.

The association’s demand was clear in this regard: “The black hole at DB Cargo must not continue to grow. The federal government, which owns DB Cargo, must either enforce effective restructuring or withdraw from the company,” it said. In Die Güterbahnen’s view, the state budget should not be spent on attempts to save DB anymore because the extra costs jeopardise the general performance of railways in Germany. How the situation will unfold is still unclear; however, DB seems that will need to pull some strings to make ends meet in the coming years.