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Waning profit

July 25, 2013

German rail operator Deutsche Bahn has failed to live up to earlier profit expectations for the first six months of the year. It reported lower earnings and revenues, but slightly higher passenger numbers.

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An Inter City Express (ICE) train of Germany's Deutsche Bahn waits to take on passengers PHOTO JOHN MACDOUGALL
Image: AFP/Getty Images

On July 25, Deutsche Bahn looked back at a rather bumpy half year, announcing that its net earnings for the first six months of 2013 had dropped by 29.2 percent from the level reached in the same period last year. DB's bottom-line profit totaled 554 million euros ($728 million).

The company's operating profit declined by 23 percent to 19.4 billion euros. DB's CEO, Rüdiger Grube, admitted that earnings before interest and tax (Ebit) were likely to ease by one-fifth for the whole year, while earlier forecasts had suggested the rail operator could end 2013 with a record result of 2.9 billion euros in operating profit.

Basically the only bright spot in the half-year report was the slightly higher number of passengers using Deutsche Bahn's services between January and June. DB said it registered 10 million more passengers in the period under review, logging a total of 991 million people traveling with the operator.

Spiraling costs

DB predicted its full-year turnover would increase only slightly and hover around 39.5 billion euros in a generally difficult business environment.

Deutsche Bahn cited a number of reasons why profits in the first half of the year didn't quite match expectations. Rüdiger Grube pointed to the ongoing financial crisis in Europe.

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He also said, however, that increased staff and energy costs as well as losses after a long winter and the recent floods had taken their toll on business results. In addition, the company was still waiting on more high-speed trains that the engineering giant Siemens had been unable to deliver on time.

hg/mkg (dpa, AFP, Reuters)