ONE of Britain’s biggest train and
bus operators could be en route to a stock market float.
Germany’s state-owned transport giant
Deutsche Bahn (DB) plans a partial sale of Arriva, which it took off the London
market five years ago in a £1.6bn deal.
Arriva runs the London Overground
rail network in a partnership with Hong Kong’s MTR, the CrossCountry franchise,
Chiltern Railways, Trains Wales and open-access operator Grand Central.
It also operates almost 6,000 buses across Britain, including operations in Newcastle, Liverpool, the Midlands and London, where it runs one in five buses.
Deutsche Bahn is considering a partial privatisation of DB
Schenker Logistics as part of a massive corporate restructuring of the group.
In a six-point plan presented to the supervisory board, CEO and chairman Dr Rüdiger Grube warned that the group needed “bold,
forward-looking decisions” to boost its competitiveness after disappointing
interim results.
“Our current cost structures in many areas – for example, at
the corporate level – are no longer competitive and urgently need to be
changed,” he said.
DB Schenker Logistics and international passenger bus and
train division DB Arriva will be brought together under the finance division.
However, Dr Grube noted that the company was “keeping open
the option of a partial privatisation in order to utilise growth potential on
the international markets as effectively as possible”.
But, he added: “Nothing has been decided yet. And I would
like to make it perfectly clear that we are not considering selling these
companies.
“On the contrary, we will retain business management control
of both DB Arriva and DB Schenker Logistics. Should partial privatisation take
place at a later point, it is of key importance to us that we be able to
further consolidate both businesses.”
The group has been hit by a lack of growth in its core home
market of Germany, while poor weather and strikes “left their mark” on the
balance sheet. Strikes between 2014 and 2015 caused financial losses of €500m,
and in the first half of this year they resulted in lost earnings of €250m.
In rail freight, Dr Grube noted that the company was “faced
with more intense competition and pressure on margins, due to the drop in fuel
prices”. Freight tonne km (FTK) fell 6% to 48.9bn.
However, from January to June revenues grew by 1.3% to
€20bn, due in part to positive currency impacts, but EBIT was below
expectations, falling 18.2% to €890m. Dr Grube admitted that even if the effect
of strikes and bad weather was removed, revenue and EBIT were still below
target.
Logistics was more positive. Land transport consignments
grew 3.8%, air freight rose 1.1% and contract logistics was up 16.6%. Only
ocean freight saw a drop, of 3.5% in the first half of the year.
The Deutsche Bahn six-point plan is part of a group of measures
which will save some €700m up to 2020, with group management a particular focus
for savings. Corporate costs there will be cut by €610m over the next five
years, through changes such as the closure of the second headquarters in
Frankfurt and a reduction of the board from eight to six people.
Meanwhile DB Mobility Logistics, which manages integrated
transport networks, will be folded into the group holding company of Deutsche
Bahn, to reduce duplicate structures. DB Schenker Rail will join DB Long Distance.
“Significantly, less bureaucracy means higher employee
satisfaction and more time to spend serving our customers,” said Dr Grube.
He added: “Changes in our markets mean that we, as a service
provider, also have to change. We have to become more dynamic. And to do this,
we need a fundamental shift. This shift is not limited to the corporate level
either. The business units also have areas which we have to tackle with just as
much resolve.
“What we are talking about here is a comprehensive
reorganisation of the entire group. With this reorganisation, our main goal is
to turn our financial results around.”
CFO Dr Richard Lutz said: “We cannot be satisfied with our
earnings in the first half of the year. But we are optimistic that now the
strikes are over, we will be in a position to generate an EBIT of €2bn in the
second half.”
The new structure will see significant management changes.
Jochen Thewes, CEO Region Asia/Pacific at DB Schenker, will become CEO of
Schenker and head of the DB Schenker Logistics business unit on September 1.
Dr Alexander Hedderich, CEO of DB Schenker Rail, will resign
on August 31. In addition, senior managers Gerd Becht, Heike Hanagarth, Ulrich
Homburg and Karl-Friedrich Rausch will leave the company. Dr Grube thanked them
for “their willingness to allow our realignment to take place amicably”.
Over the next six months, further measures to find synergies
in the business units will be developed and presented to the board in December.
