April 14, 2015

German rail industry revenue up 25% in 2014

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THE German rail industry achieved a 25% increase in revenue last year to €12.5bn, with domestic orders rising 26% from €5.3bn to €6.7bn and exports increasing by 23% from €4.7bn to €5.8bn. The results were announced on April 14 at the annual press conference of the German Rail Industry Association (VDB) in Berlin.

Mr Martin Lange, president of the VDB, says the increase in sales is mainly due to a large order backlog and the fact that rolling stock manufacturers could finally bill customers for vehicles they had built but which could not be delivered due to excessive delays in obtaining operating certificates from the Federal Railway Agency (EBA). Changes to legislation and the regulatory framework in Germany have finally eliminated the backlog in the approval process.

"In Germany alone, sales of rail vehicles and their components increased last year by 44% to €4.9bn, and the revenue from international business in this segment increased by about a quarter to €4.6bn," says Lange.

However, the VDB says the strong sales growth is overshadowed by a decline in demand. Orders for railway equipment fell by 36% last year to €9.5bn. "2014 was a rather poor year for major tenders," Lange revealed. "In addition, the conditions in important railway markets such as Russia and China have changed. EU sanctions against Russia due to the Ukrainian crisis are driving Moscow into the hands of China, while China is becoming increasingly technically self-sufficient and stronger in exporting. While German train manufacturers face heightened international competition, these developments offers opportunities for medium-sized suppliers."

Infrastructure-related sales stagnated last year with total sales of €3bn. However, Lange predicts a noticeable upturn in business this year following a planned increase in spending on the existing rail network in Germany. VDB also finally sees slow movement in the equipment of the major European rail corridors in Germany with ETCS. The VDB says the German government has sufficient funds to equip the Emmerich – Basle section of Corridor A linking Rotterdam and Genoa up to 2022.

"These advances are forward looking," Lange says, "but need to be implemented much faster in order to increase the competitiveness of rail services across borders. Paradoxically, high-tech Germany is not a leader in the European Union in the installation of ETCS."

The VDB is highly critical of the level of federal funding for the provision of regional rail services. The government has increased the funding by what the VDB describes as a meager 1.5% to €7.5bn, but the VDB wants the fund to be increased to €8.5bn followed by an annual increase of 2%. "Otherwise the performance of environmentally-friendly regional rail services could suffer significantly," says the VDB's managing director Mr Axel Schuppe.

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