Wednesday, July 27, 2016

German railway: these are the eight major weaknesses – THE WORLD

In a few days Rüdiger Grube travels to Switzerland. celebrate birthday – and it will be a big celebration. Mine is 65 years of age, he has reached retirement age. But the CEO of Deutsche Bahn (DB) has big plans: “Believe me, I will still work well over the age of 65 also,” he said at the presentation of the half-year figures in Berlin

his appearance there and even more the balance for this year are likely to be crucial if mine really works for a long time – at least as Deutsche Bahn CEO. The Confederation as the owner of the web, by Transport Minister Alexander Dobrindt (CSU), is the state of the state company is far from satisfactory. “We want no more losses, we want that the trains are punctual. And that should finally with the WLAN for the second class,” growled Dobrindt few days ago, when he was the Chief of Track on “Summer Holiday”. These were the conditions for a contract extension through the 2017 addition.

Because it fits perfectly that mine could give the all clear for the first half of the year and provide good numbers. 1.3 billion loss, the first in twelve years, the rail head had to announce for 2015 in March. In the first six months of this year, the Transport Group on the other hand its earnings before interest and taxes (EBIT) increased compared to the same period by 13 percent to 1.007 billion euros, while sales increased slightly. And in the long-distance trains were a total of 66.7 million passengers, 6.4 million more than the same period in 2015 – a record high. “We are confident that we will achieve our financial goals for 2016″, Grube said. Then, the operating profit should amount to 1.86 billion euros

Only. All that sounds better than it is. The current positive figures can not hide the fact that the major problems in the group remain unresolved and that there is a whole series of risks for the company. These are the eight major vulnerabilities that lie behind the web-balance.



passenger and rail freight

passenger traffic in the domestic market and the rail freight weaken further massive. The freight railway Cargo has improved, but still writes deeply in the red. The passenger record in the long-distance trains is expensive bought, with a savings rate offensive, tickets for 19 or 29 euros. 2.3 million “savings rate” tickets were in the first half.

This pit attracts Although more and more passengers in the ICEs or ICs, but he therefore no longer deserves the contrary. Although sales in long-distance traffic grew by 90 million euros or 4.7 percent to around two billion euros. However, the profit before interest and taxes (EBIT, excluding special factors) fell by three million euros or 5.3 percent to 54 million euros. Mine comes with the long-distance trains neither from the deep, still he has found a concept for the remote buses. He now hopes that the Fernbusbetreibern increasingly running out of steam due to the destructive price war during the year.

Photo: Getty Images / Getty Images Europe transport Minister Alexander Dobrindt (r.) is not really happy with the work of Deutsche Bahn CEO Rüdiger Grube

In regional transport, it looks much better. Where adjusted EBIT declined by 14 percent to 334 million euros. German Rail loses more traffic contracts than they win, transport performance fell by 3.3 percent. With mobility companies that are not subject to the pay scale of the DB Group, so can offer cheaper mine aims to counter. The conflict with the employee representatives is programmed.

The vulnerabilities are more serious, as the train this time the train drivers’ union GDL can blame for declining profits. Their strikes had train 2015, the result of hail, to GDL chief Claus Weselky held back this year so far, according to the better would actually be the revenue. In addition, Deutsche Bahn CEO Grube clearly lies with the achieved ratios under the self-imposed targets.



Forecast

The prospects and the economic objectives of which pit speaks, are extremely manageable. The reaction of the Board is aiming for full year only “an order just above the prior year value of 40.5 billion euros” to.

The operating result we hope “to 1.86 billion euros, in any case, better than the 1.8 billion euros” of the previous year to lie – so much of the DB Group had earned before special depreciation in rail freight transport has led to a total loss of 1.3 billion euros at the end.

These are little electrifying goals can, and afford the rail pit boss only because transport ministers Dobrindt recently asserted, the web was “not obliged to maximize profits.” The conditions are, at least in the domestic market for railway basically not bad: The economy is booming, people are mobile and on the go like never, and the transport of goods are soaring – only benefited not of the DB Group

Arriva

Currently, among others, the foreign subsidiary Arriva saves the business of mining. The active with buses or trains in 14 European countries subsidiary has increased its passenger numbers by 4.9 percent and the EBIT rose by five percent to 106 million euros.

For years puts Arriva to and gives the parent company a steady income flow – but could end abruptly. Reason is the Proposed referendum on United Kingdom membership of the European Union and its feared consequences. “We predict that the sharp rise in uncertainty in the financial markets with a negative impact on our business,” said Grube.

In the most negative scenarios train a slump in Arriva could cost up to 900 million euros and 30 million euros profit the Group. Officially Confirm you do not want in the web these arithmetic games, however.



debt

It is clear that the proposed IPO at least put to the test. Because deserves Arriva less is even less achieved at a partial sale of the subsidiary. The sale of a minority shareholding of Arriva and Schenker – are planned up to 45 percent – to flush between 4.5 and five billion euros into the coffers of the web.

Schenker is not yet ready to go public long, and if Arriva also weakens, part sales even initially fails, mine has a billion hole. This will drive the debt further into the air. The growing anyway for years.

Current topics are the net financial debt of the railway at 18.2 billion euros. This is an increase of 670 million euros since the beginning of the year. The company had been completely free of debt with the railway reform 1994th At the expense of the taxpayer.



equity

At the same time decreases the equity ratio of the railway. This year, the equity has shrunk by almost 1.4 billion euros to 12.1 billion euros. The equity ratio thus went back to nearly 22 percent. This is due to a dividend payment to the federal government in the amount of EUR 850 million and, secondly, a reassessment of the pension provisions.

The profit is not the way enough this year to pay the dividend to the federal government, because of the expected operating profit of 1.86 billion Euro will probably only remain a good 500 million euros after deducting interest payments and taxes – the difference of EUR 350 million to the railway “from the substance” take as CFO Richard Lutz said

rating

Weak prospects, higher debt and less equity cause the rating agency Standard & amp; Poor’s recently lowered the long-term rating for the DB. Instead of “AA” of the DB Group has now “AA-”. This is a small but not insignificant difference for a company that is on the road in a capital intensive industry.

CFO Lutz says, although, one would like to adapt avoided and hoped to get given more time for the measures to stabilize. “But we still have a very good rating from S &. P” AA- is undoubtedly good, but to gain debt will be more expensive, the web is having to pay higher interest rates.



rail network

Pretty silently but stable hand is running the business with the railways. The subsidiary DB Netz has significantly increased revenue in recent years. Although the lines are financed to a large extent by the federal government, and railway subsidiaries as long-distance and regional services are the best sources of income for the DB Netz. Nevertheless, the division is thriving, has increased in the first six months their tax profit by 68 percent and earned almost 400 million euros.

Photo: Getty Images / Getty Images Europe business with the railways is going well, but the could soon change

however, this high-flying should soon be over. For negotiated with the policy path price brake ensures. This involves a limitation in raising the fees that have to pay the railways for the use of the German railways. Attacks this brake, the profits will shrink at DB Netz. This will pit hit hard because no division has made in the first half as much EBIT as the network.

Although to apply in 2018 the price brake, also was agreed that the countries and collaborations should order regional transport for the money saved more traffic on the rails. Only: There is the question of whether they do so. And if ever enough equipment and space on the paths is. Because they are known to chronically overworked. DB Netz could be the cash cow for the train to worry case.



Group restructuring

Last overloaded continue the Group restructuring on the web. New structures pit has the Group enacted less Holding, strengthening of the divisions is the motto. Faster, leaner, more efficient, the company should be.

The restructuring will cost two billion euros, according to plan. This was taken into account for the most part in the balance sheet for, 2015. But 300 million are pending. The be booked in the second half of the year as an extraordinary burden. The amount may be Peanuts – but at the web currently come many Peanuts together

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