Bumper profits for Schenker promise IPO in 2008
published: cw 15, 2007 in Logistics & ShippingDeutsche Bahn (DB) has been the latest big logistics service provider to announce bumper profits and big increases in revenue. The headline figures announced by the CEO, Hartmut Mehdorn, were strong with a 20% increase in revenue to €30bn and an EBIT up by €1bn to €2.5bn, but the figures for DB’s logistics business seem even stronger.
Its Transport and Logistics business unit has grown by over 25% to €17bn and EBIT has increased to €609m led by a doubling at Schenker. A large proportion of this growth is due to the acquisition of BAX Global, although profitability seems to have increased organically. Both air and sea freight volumes have grown strongly, with growth of 16% and 18% respectively. Rail-freight volumes are up 10% leading to greatly improved profitability at Railion. What is not clear from these figures is the strength of businesses such as Schenker’s network road transport or its contract logistics although the company will elaborate on these in the near future.
The big picture from these results is that Hartmut Mehdorn is building up the company for its launch on the German stock exchange in 2008. It is critical that there is a constant stream of good news to create confidence in the IPO. In this the company is being aided by Germany’s reasonably healthy -although not hugely dynamic - rail sector both for passengers and particularly for freight. There is a general trend in the sector of low double-digit increases.
DB is positioning itself as a “European Champion” in the rail sector, but its overall strategy will inevitably be affected by domestic politics. Like its rival DPWN, DB is changing into some sort of new company, although it is still not entirely clear what that company will look like.
Source; Transport Intelligence
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