The results were announced in Berlin this morning by DB's CEO Dr Rüdiger Grube who blamed DB's poor performance on nine strikes by train drivers over several months and a series of severe storms which resulted in a €198m reduction in Ebit to €890m. "Had it not been for the strikes, which cost us €252m, our Ebit would have been slightly above that of the previous year, but that cannot hide the fact that we are also facing structural challenges, which we are determined to tackle with the transformation we have set in motion."
The strikes and storms led to reductions in passenger and freight traffic during the first half of 2015. Overall passenger journeys fell by 1.6% or 16 million to 985 million, with long-distance dropping by 1.2% and local and regional traffic by 2.8%. Railfreight was even more badly affected with a 6% reduction in first-half tonne-km from 52 billion to 48.9 billion.
The reduction in DB's profitability was despite a 1.3% increase in revenue to €20bn, although this was achieved partly as a result of positive currency exchange rates which added €481m to the bottom line. Grube says overall the strikes and bad weather cost DB around €250m in lost earnings in 2014 and another €250m in the first half of 2015.
DB also announced that its long-term debt for the first half increased "in line with expectations" by €1.4bn or 8.6% to €17.6bn.
The restructuring involves the loss of key senior managers at DB including Mr Gerd Becht, who was board member for compliance, legal affairs and corporate security, Dr Heike Hanagarth who was responsible for the now defunct technology and environment division, Mr Ulrich Homburg who was board member for passenger traffic, Dr Karl-Friedrich Rausch who was due to retire this year as board member for freight and logistics, and Dr Alexander Hedderich, who steps down on August 31 as CEO of DB Schenker Rail.
Only three members of the management board will remain: Dr Richard Lutz, head of finance and control, Mr Ulrich Weber, head of human resources, and Dr Volker Kefer, who as board member for infrastructure and services will also take over responsibility for technology.
Two new appointments have been made to the board of management. Mr Ronald Pofalla will head the expanded economic, legal and regulatory affairs division, while Mr Berthold Huber will be in charge of the new traffic and transport division. In addition, Mr Jochen Thewes will become CEO of DB Schenker Logistics on September 1.
DB's supervisory board approved a six-point restructuring plan on July 27 which will start to be implemented on August 1 and is designed to save more than €100m at the corporate level, and more than €700m by 2020 when combined with previously-approved measures.
The biggest change is the integration of freight and passenger operations into the new traffic and transport division encompassing DB Schenker Rail, DB Long Distance, DB Regio, and DB Sales. "This will enable us to focus even more on rail operations in Germany, which is what the German public also focuses on, and rightly so," Grube says.
Another potentially significant change is the option to partially privatise DB's international passenger subsidiary, DB Arriva, and its global logistics business DB Schenker Logistics, which will be brought together in one division. Both of the subsidiaries were originally private companies which DB acquired. DB Arriva saw its first-half revenue rise by 7.5% to €2.4bn.
However, Grube was quick to explain that nothing had been decided yet and DB intends to retain management control of these two subsidiaries. "We are not seeking to completely divest from either of these companies," Grube said. "All we are considering here is a possible partial privatisation and selling minority shareholdings. There is no partial privatisation of the German rail transport companies planned for the foreseeable future. An IPO is not on the agenda at this time."
The other measures comprise:
- the reduction in the number of management board members from eight to six
- the merger of DB Mobility Logistics, which was set up with an IPO in mind, into the DB group
- the disbandment of the technology and environment division and the reassignment of these activities to other divisions, and
- the reorganisation of service functions into a DB Global Service Centre to focus on transparency, cost and efficiency.
Summarising the changes taking place, Grube said: "DB is going to become leaner, faster, more efficient and even more customer focused. Leaner management and structures, and more focus on customers will enable us to successfully tackle the rapidly changing challenges in the world of mobility and logistics."