German state-owned rail freight operator DB Cargo made a loss of around 350 million euros in 2024. The company, which the EU has obliged to become profitable by 2026, is struggling to improve its financial position despite restructuring proceedings.
Deutsche Bahn will present its 2024 figures on 27 March, but numbers on DB Cargo are already circulating. For example, German publication Tagesspiegel reports an EBIT of minus 356 million euros. At the same time, publication DVZ says that it had a similar number confirmed by DB Cargo CFO Martina Niemann in early February.
DB Cargo incurred by far the biggest share of the loss in the first half of the year: 291 million euros. The remaining 65 million euro losses appeared on the balance sheet in the second half of the year. It must, however, be noted that DB Cargo received single wagon load subsidies during those months, which amounted to approximately 180 million euros. That suppressed the financial damage for Q3 and Q4.
Improvement from 2023
Even though a 350 million euro loss is nothing to brag about, it is an improvement compared to 2023. In that year, DB Cargo made a 497 million euro loss (EBIT). All in all, 2024’s result would be around 30 per cent better than that.
Martina Niemann told DVZ earlier this year in which areas DB Cargo has been able to make financial improvements. She mentioned administrative and production management expenses (60 million euros), as well as portfolio streamlining. “We divested ourselves of loss-making transports, achieved price increases in all areas, and were thus able to offset losses from cyclically driven downturns”, Niemann is cited as saying.
There is some time pressure for DB Cargo to start turning profits. This is because the rail freight operator may need to start paying back government aid by requirement of the EU, which set a deadline for profitability of 2026. that will prove to be a challenge. The company’s restructuring programme does not seem to be going great: “These restructuring concepts are unconvincing, cause an annoying number of operational problems, and there is still a lack of adherence to the plans”, a supervisory board member is quoted as saying in Tagesspiegel.
DB Cargo’s restructuring
Moreover, the EU banned any financial aid to DB Cargo from parent company Deutsche Bahn. The freight operator will have to make do with its own financial resources. However, the EU did approve 1,9 billion euros in government aid to help the company implement its restructuring programme.
DB Cargo’s restructuring entails breaking up the company into six separate business units. They will be Steel, Automotive, Liquids & Bulk, Full Load Solutions and the largest single wagon network in Europe. Combined Transport (maritime and continental) will also remain within DB Cargo’s task, after some pressure from trade union EVG. The restructuring will lead to 2,300 jobs being cut.