Infrastructure condition, strikes and severe weather put pressure on half-year results

The structural weaknesses of Germany's rail network and the challenging operational situation, due in part to strikes and severe weather, had a negative impact on the economic performance of Deutsche Bahn Group (DB Group) in the first half of 2024. To ensure that urgently needed infrastructure measures could begin quickly, DB Group also made significant pre-financings of additional maintenance expenses for the Government, as it did in the first half of 2023.

DB Group closed the first half of 2024 with an operating loss (adjusted EBIT) of EUR 677 million – a decline of more than EUR 950 million compared to the first half of 2023. The net loss after taxes was EUR 1.2 billion (compared with a loss of EUR 71 million in the first half of 2023). DB Schenker, DB Group's highly profitable logistics subsidiary, again made considerable positive contributions to the overall result, but could only partially offset the losses in DB Group's core business. DB Group reported an operating loss from its core business, the Integrated Rail System (mainly comprising the mobility, rail freight and rail infrastructure business), of EUR 1.2 billion in the first half of 2024 (compared with a loss of EUR 339 million in the first half of 2023). Group revenues fell slightly, by 3%, to EUR 22.3 billion.

DB Group once again increased its capital expenditures in the rail network and in better rail services in the first half of 2024 thanks to a major increase in Government funding. In doing so, it continued to systematically implement its expansion strategy for Strong Rail in Germany. Net capital expenditures (including Government equity support) increased by about 35% compared with the first half of 2023 to EUR 4 billion. Gross capital expenditures totaled EUR 7.3 billion, an increase of 18%. Despite the loss in the first half of 2024, DB Group is standing by its target to improve its EBIT in the Integrated Rail System by about EUR 2 billion in 2024 as a whole compared with the previous year, essentially confirming its forecast from March 2024. The new Government support for infrastructure maintenance expenses, which the Government plans to implement in the second half of 2024, will contribute to this, among other things. This includes reimbursements for maintenance expenses pre-financed in 2023 and 2024 by DB Group. At the same time, DB Group is continuing its measures to reduce costs and improve efficiency, especially in administration.

More powerful rail services start with the rail network, says DB CEO Lutz

"Unprecedented extreme weather events have stretched the rail infrastructure, which was already in need of a modernization, beyond its limits, and worsened the operational and financial situation in passenger and freight transport. On top of that, there were strikes and accidents, such as the one that happened at the Raueberg Tunnel," said DB CEO Dr. Richard Lutz. "In long distance transport, the extreme weather burdened punctuality by seven percentage points in the first half of 2024 and also dampened demand. Despite these challenges, we want to return to generating an operating profit in 2024 as a whole. Therefore, in addition to modernizing the infrastructure, we have also introduced short-term measures to stabilize the operational and economic situation," Lutz said.

Through its action plan for punctuality, DB Group is focusing on the punctuality of train run starts at especially congested nodes, for example. To improve the economic situation in the short term, DB Group has implemented a strict spending monitoring and control program in the Integrated Rail System. So far, DB Group has saved some EUR 110 million in material expenses. In addition, it has introduced medium and long-term measures to increase profitability in all areas of the Integrated Rail System.

The failure-prone infrastructure, high level of construction and lower punctuality (62.7% in long distance service, compared with 68.7% in the first half of 2023) had a major impact on the performance, revenues and profits of DB Group's train operating companies in the first six months of 2024. Train kilometers on track infrastructure fell slightly, by 1.8% on the same period last year, to 548 million train-path kilometers in the first six months of 2024.