2018 Integrated Interim Report – Departure into a new era!

Development in the first half of 2018

  • Positive development in land transport, ocean and air freight.
  • Development in contract logistics and exchange rate effects had adverse impact.
  • Market and competitive environment with positive stimuli. 

DB Schenker

H1

Change

2018

2017

Absolute

%

Shipments in land transport 1)
(thousand)

52,522

50,751

+ 1,771

+ 3.5

Air freight volume (export)
(thousand t)

649.4

613.1

+ 36.3

+ 5.9

Ocean freight volume (export)
(thousand TEU)

1,087

1,063

+ 24

+ 2.3

Total revenues (€ million)

8,333

8,103

+ 230

+ 2.8

External revenues (€ million)

8,301

8,072

+ 229

+ 2.8

Gross profit margin (%)

34.7

34.7

EBITDA adjusted (€ million)

314

305

+ 9

+ 3.0

EBIT adjusted (€ million)

216

208

+ 8

+ 3.8

EBIT margin (adjusted) (%)

2.6

2.6

Gross capital expenditures (€ million)

78

76

+ 2

+ 2.6

Employees as of Jun 30 (FTE)

74,104

69,370

+ 4,734

+ 6.8

1) Including activities outside Europe as of 2018.

The volume development was very positive in air freight. Volumes also increased in land transport and ocean freight.

The economic development improved: the adjusted operating profit figures showed positive development due to a disproportionate rise in income. Adjusted for exchange rates, the development of operating profit was actually significantly more positive. Gross profit (+ 2.6%) also grew, most markedly in air freight, although all lines of business recorded gains. The development of gross profit matched revenue growth, so the gross profit margin remained un­­­changed.

Revenues were generated 43% in land transport, 22% in air freight, 17% in ocean freight and 15% in contract logistics.

The operating profit development was positive and even better when adjusted for exchange rates. The adjusted EBIT was generated 31% in land transport, 26% in air freight, 13% in ocean freight and 21% in contract logistics.

  • The main drivers of the positive revenue development were land transport and air freight. Negative exchange rate effects and the conclusion of a major power plant project the previous year reduced revenues. Adjusted for exchange rate effects, development was positive in ocean freight and contract logistics.
  • Other operating income (+ 21.0%) increased, partly as a result of higher release of provisions including for claims for compensation for damage that did not arise.
  • The cost of materials (+ 2.9%) rose, due especially to vol­­ume development. Higher freight rates also increased expenses in air freight. This was partly offset by lower expenses due to exchange rate effects and the conclusion of a major power plant project in the previous year.
  • Personnel expenses (+ 3.1%) rose in the wake of a great­­­er number of employees. The rise was clearer when ad­just­­ed for exchange rate effects.
  • Other operating expenses (+ 3.8%) rose in part due to the leasing of new space and higher purchases of IT services. Adjusted for exchange rates, the increase was
    significantly higher.
  • Depreciation was at the level of the first half of 2017. Adjusted for exchange rates, it rose slightly at a low level.

Capital expenditure activities increased. Some of this growth came from North America and Asia/Pacific. However, Europe continued to be the main focus. Capital expenditures were made in particular in new construction and the expansion of freight forwarding facilities and terminals, as well as the introduction of new IT systems.

As of June 30, 2018, 29% of employees were employed in land transport, 9% in air freight, 7% in ocean freight and 31% in contract logistics. The number of employees in­­creased. Principal drivers were growth in volume and the takeover of temporary workers.

Land transport line of business

  • Addition of activities outside Europe to the line of business.
  • Within the system transport area, greater focus on international transport services.
  • Europe-wide pricing measures implemented and cost reduction initiatives continued.

Land transport
line of business

H1

Change

2018

2017

absolute

%

Shipments 1) (thousand) 

52,522

50,751

+ 1,771

+ 3.5

System transports (thousand)

31,618

31,438

+180

+0.6

Direct transports 1)(thousand)

4,726

3,907

+819

+21.0

Parcels (thousand)

16,177

15,404

+773

+5.0

Total revenues (€ million)

3,556

3,326

+ 230

+ 6.9

External revenues (€ million)

3,526

3,299

+ 227

+ 6.9

EBITDA adjusted (€ million)

103

96

+ 7

+ 7.3

EBIT adjusted (€ million)

68

62

+ 6

+ 9.7

Employees as of Jun 30 (FTE)

21,700

19,661

+ 2,039

+ 10.4

1)  Including activities outside Europe as of 2018.

Activities previously allocated to contract logistics and other areas will be reported under the land transport line of business from the 2018 financial year onwards. This resulted in restrictions in comparability with the previous year.

In a market environment which was marked by grow­­­ing demand, volume development was positive overall. Adjusted for the effects of the reassignments, volume in direct transports fell due to cross-country declines.

The economic development was positive: the develop­­­­­­ment of adjusted EBITDA and EBIT was better. However, this was due to the reassignments. The increase in revenues from European business was offset by increases in expenses.

  • Revenue development was up as a result of price and volume effects and the reassignments. This was partly offset by negative exchange rate effects.
  • The cost of materials (+ 6.7%) rose. This was partly due to the higher direct and groupage transports. Exchange rate effects had an offsetting effect.
  • Personnel expenses (+ 7.1%) increased, mainly as a result of the increase in the number of employees.
  • Other operating expenses (+5.4%) increased noticeably as a result of higher rental and IT expenses.

The number of employees has increased as a result of business development and the takeover of temporary workers.

Air freight line of business

  • Noticeable effects due to positive development of volumes and increasing freight rates.
  • Focus on increasing productivity through standardization.

Air freight

line of business

H1

Change

2018

2017

absolute

%

Air freight volume (export) (thousand t)

649.4

613.1

+ 36.3

+ 5.9

Total revenues (€ million)

1,806

1,649

+ 157

+ 9.5

External revenues (€ million)

1,806

1,649

+ 157

+ 9.5

EBITDA adjusted (€ million)

61

55

+ 6

+ 10.9

EBIT adjusted (€ million)

57

51

+ 6

+ 11.8

Employees as of Jun 30 (FTE)

6,877

6,431

+ 446

+ 6.9

Volumes increased significantly in air freight. This growth was driven by routes from North America to Asia/Pacific and Europe as well as transpacific transports.

The economic development was positive, adjusted EBITDA and adjusted EBIT both increased significantly. The significant market growth combined with weaker growth in cargo space caused freight rates to rise.

  • The main drivers of revenue growth were freight rate and volume trends. Adjusted for exchange rates, revenues increased even more sharply.
  • The cost of materials (+ 12.5%) also rose significantly accord­­ing to volume and freight rate development.
  • Personnel expenses (+ 3.1%) rose in the wake of a great­­er number of employees.

The number of employees increased as a result of business development.

Ocean freight line of business

  • Effects of increase in performance are offset by exchange rate effects.
  • Focus on efforts to optimize capacity utilization, costs and purchase prices.

Ocean freight

line of business

H1

Change

2018

2017

absolute

%

Ocean freight volume (export)
(thousand TEU)

1,087

1,063

+ 24

+ 2.3

Total revenues (€ million)

1,420

1,458

38

2.6

External revenues (€ million)

1,420

1,458

38

2.6

EBITDA adjusted (€ million)

29

22

+ 7

+ 31.8

EBIT adjusted (€ million)

28

21

+ 7

+ 33.3

Employees as of Jun 30 (FTE)

5,006

4,859

+ 147

+ 3.0

Ocean freight volume increased in line with market development. Transpacific transports and exports from the Middle East recorded significant increases. This was partly offset by weak demand for routes between Europe and the Far East.

The economic development was positive, adjusted EBITDA and adjusted EBIT both increased.

  • Revenue development declined as a result of exchange rate effects. Adjusted for exchange rates, revenue in­­creased for performance-related reasons.
  • The cost of materials (– 3.8%) fell despite the positive volume development due to countervailing exchange rate effects. Adjusted for exchange rate effects, the cost of materials increased slightly.
  • Personnel expenses (+ 1.1%) were just above the level of the first half of 2017 as a result of collective bargaining agreements. This was driven by the increase in the number of employees. Adjusted for exchange rate effects, personnel expenses increased significantly.

The number of employees increased as a result of business development.

Contract logistics line of business

  • Negative effects of reallocating activities to land transport.
  • Growth in Europe and America continues.
  • Business development in Asia/Pacific is weaker.
  • Contracts with major customers completed, extensive activities to gain new business. 

Contract logistics

line of business

H1

Change

2018

2017

absolute

%

Total revenues (€ million)

1,265

1,301

36

2.8

External revenues (€ million)

1,264

1,300

36

2.8

EBITDA adjusted (€ million)

69

79

10

12.7

EBIT adjusted (€ million)

46

56

10

17.9

Employees as of Jun 30 (FTE)

22,864

20,572

+ 2,292

+ 11.1

Some activities previously allocated to contract logistics will be reported under the land transport line of business from the 2018 financial year onwards. This reduces revenue and expenses, resulting in restrictions in comparability.

The economic development in contract logistics was unsatisfactory: the development of adjusted EBITDA and EBIT was below the level of the first half of 2017 as a result of weaker business development and the reclassification of activities.

  • Revenue development was negative due to exchange rate effects. Adjusted for exchange rates, revenues increased slightly. The good business development in Europe and North America was noticeable here.
  • The cost of materials (– 16.4%) decreased as a result of ex­­change rate effects and the reclassifications.
  • The increase in personnel expenses (+ 6.5%) was driven by an increase in the number of employees. Exchange rate effects and the reclassifications had an offsetting effect, reducing expenses.

The increase in the number of employees was due to the continued business expansion as well as the taking on of temporary workers.