2018 Integrated Interim Report – Departure into a new era!

Development in the first half of 2018

  • Strikes at UK Trains and in the Netherlands as well as weather-­related restrictions had a dampening effect.
  • Challenging market and competitive environment in Northern Europe and the UK Bus line of business.
  • Positive impacts due to passenger revenue growth and performance improvements in the UK Trains line of business.
  • Negative exchange rate effects due to weaker pound.

DB Arriva

H1

Change

2018

2017

absolute

%

Punctuality (rail)

(Great Britain, Denmark, Sweden,
the Netherlands and Poland) (%)

91.2

93.2

Passengers bus and (rail) (million)

990.3

999.7

9.4

0.9

Volume sold (rail) (million pkm)

6,378

6,560

182

2.8

Volume produced (bus) (million bus km)

538.0

543.2

– 5.2

– 1.0

Volume produced (rail)
(million train-path km)

87.9

92.3

– 4.4

– 4.8

Total revenues (million)

2,706

2,662

+ 44

+ 1.7

External revenues (million)

2,702

2,659

+ 43

+ 1.6

EBITDA adjusted (million)

243

238

+ 5

+ 2.1

EBIT adjusted (million)

106

110

– 4

– 3.6

Gross capital expenditures (million)

153

184

– 31

– 16.8

Employees as of Jun 30 (FTE)

54,658

54,145

+ 513

+ 0.9

The punctuality in rail passenger transport (Great Britain, Denmark, Sweden, the Netherlands and Poland) for the first half of 2018 has decreased. This relates primarily to the impact of bad weather together with infrastructure disruption and the May timetable change in Great Britain.

The performance development figures were slightly negative mainly due to industrial action and engineering works in UK Trains and the cessation of the Tyne and Wear Metro concession in March 2017.

The economic development was dampened, mainly driven by revenue losses due to strikes and severe weather. Overall, adjusted EBITDA improved slightly, but increased depreciation due to significant capital expenditures in 2017 resulted in a slight reduction in EBIT.

  • The UK Bus line of business generated 20% of DB Arrivaʼs revenues, the UK Trains line of business generated 41%, and the Mainland Europe line of business generated 39%. The increase in revenues is mainly attributable to passenger revenue growth inUK Trains and the acquisition of Autotrans in August 2017. Exchange rate effects (development of the British pound), strikes at UK Trains and market- and competition-related declines at UK Bus had a dampening effect.
  • Other operating income (– 3.9%) was mainly influenced by funding income for project costs (offset by higher other operating expenses). Ex­change rate effects, in contrast, had a dampening impact.
  • The cost of materials (– 0.2%) remained almost un­­changed. Exchange rate effects had a positive impact here.
  • Personnel expenses (+ 0.7%) increased due to the ac­­qui­­­sition of Autotrans, increased statutory charges in the UK and wage inflation. This was largely offset by an accounting change with regard to pensions and a significant positive exchange rate effect.
  • Other operating expenses (+ 5.8%) increased due to project costs (offset by higher other operating income), franchise payments in UK Trains and insurance claims costs in UK Bus.
  • Depreciation (+ 7.0%) was mainly driven by the higher capital expenditures in 2017 and the acquisition of Autotrans.

Capital expenditures at UK Bus were lower due to high capital expenditures in new transport contracts in London in the first half of 2017.

DB Arriva employs 29% of its employees in the UK Bus line of business, 23% in the UK Trains line of business and 47% in the Mainland Europe line of business. The number of employees increased slightly, driven by the acquisition of Autotrans. The discontinuation or adjustment of transport contracts countered this effect.

UK Bus line of business

  • Challenging market environment and operational cost pressures in the regional bus markets.
  • Market share in London increased, despite challenging environment.
  • Weaker pound leads to negative exchange rate effects.

UK Bus
line of business

H1

Change

2018

2017

absolute

%

Passengers (million)

348.8

350.0

1.2

0.3

Volume produced (million bus km)

176.7

180.4

– 3.7

– 2.1

Total revenues (million)

529

546

– 17

– 3.1

External revenues (million)

528

545

– 17

– 3.1

EBITDA adjusted (million)

60

69

– 9

– 13.0

EBIT adjusted (million)

20

32

– 12

– 37.5

Gross capital expenditures (million)

26

76

– 50

– 65.8

Employees as of Jun 30 (FTE)

16,005

16,349

– 344

– 2.1

The number of passengers declined slightly, mainly due to route rationalization in the regions and in London.

Adjusted EBITDA and EBIT decreased primarily due to the challenging market environment including cost pressures and regional passenger revenue shortfalls.

  • Revenue development was negative due to shortfalls in regional passenger revenues (including effects of route rationalization) and the cessation of contracts in non-­emergency patient transport. There was a positive ef­­fect from improved performance settlements in London. Exchange rate effects had a negative impact.
  • Other operating income (+ 53.3%) grew strongly, but the increase was offset by corresponding changes in other operating expenses.
  • The cost of materials (– 7.4%) decreased slightly, mainly due to lower volume produced, driven by route rationalization.
  • Personnel expenses (– 1.3%) were driven by increased statutory charges in the UK and wage inflation. Ex­­change rate effects had a positive impact.
  • Other operating expenses (+ 19.4%) increased due to higher consulting expenses and insurance claim costs.
  • Depreciation (+ 8.1%) was higher as a result of significant capital expenditures in 2017.

Capital expenditures decreased significantly. This was mainly due to extensive vehicle purchases in the first half of 2017 in connection with transport contracts won in London.

The number of employees declined, largely due to the cessation of non-emergency patient transport contracts.

UK Trains line of business

  • Performance impacted by strike actions and severe weather conditions.
  • Positive passenger revenue development.
  • Weaker pound leads to negative exchange rate effects.

UK Trains
line of business

H1

Change

2018

2017

absolute

%

Passengers (million)

193.6

206.3

12.7

6.2

Volume sold (million bus km)

5,249

5,375

126

2.3

Volume produced
(million train-path km)

61.3

64.5

– 3.2

– 5.0

Total revenues (million)

1,147

1,103

+ 44

+ 4.0

External revenues (million)

1,123

1,086

+ 37

+ 3.4

EBITDA adjusted (million)

59

31

+ 28

+ 90.3

EBIT adjusted (million)

42

16

+ 26

+ 162.5

Gross capital expenditures (million)

25

21

+ 4

+ 19.0

Employees as of Jun 30 (FTE)

12,802

12,509

+ 293

+ 2.3

The performance development of UK Trains was impacted by strike actions, severe weather and the cessation of the Tyne and Wear Metro concession (March 2017). The delayed delivery of the industry-wide rail infrastructure program and the timetable change had an additional negative impact.

Adjusted EBITDA and EBIT improved as a result of revenue growth, partially offset by the impact of strike action and severe weather.

  • Revenue development was positive overall, including passenger revenue growth, but was impacted by the cessation of the Tyne and Wear Metro concession. Ex­­change rate effects had a significant dampening effect.
  • Other operating income is unchanged. Increases primarily due to funding income for project costs (offset by corresponding changes in other operating expenses) were fully offset by exchange rate effects.
  • The cost of materials (+ 4.3%) increased slightly mainly driven by rail refurbishment costs at Arriva Rail North. Exchange rate effects had a positive impact.
  • Personnel expenses (– 3.9%) declined mainly due to an accounting change with regard to pensions. Exchange rate effects had a positive impact.
  • Other operating expenses (+ 4.2%) increased due to pro­ject costs (offset by corresponding changes in other operating income) and a change in franchise payments at CrossCountry.
  • Depreciation (+ 12.5%) increased due to capital expenditures, driven mainly by Arriva Rail North.

The higher gross capital expenditures are mainly attributable to contractual capital expenditure requirements in relation to Arriva Rail North.

The number of employees increased primarily as a result of the impact of Arriva Rail North due to fulfillment of driver vacancies.

Mainland Europe line of business

  • Challenging trading environment, particularly in Northern Europe.
  • Strikes in the Netherlands and weather-related restrictions in Sweden had a dampening effect.
  • Positive effects from acquisition of Autotrans in Croatia. 

Mainland Europe
line of business

H1

Change

2018

2017

absolute

%

Passengers bus (million)

386.4

385.2

+1.2

+0.3

Passengers rail (million)

61.5

58.2

+3.3

+5.7

Volume sold rail (million pkm)

1,129

1,185

56

4.7

Volume produced rail
(million train-path km)

361.3

362.8

– 1.5

– 0.4

Volume produced bus (million bus km)

26.6

27.8

– 1.2

– 4.3

Total revenues (million)

1,097

1,071

+ 26

+ 2.4

External revenues (million)

1,050

1,028

+ 22

+ 2.1

EBITDA adjusted (million)

146

146

EBIT adjusted (million)

67

71

– 4

– 5.6

Gross capital expenditures (million)

94

76

+ 18

+ 23.7

Employees as of Jun 30 (FTE)

25,516

24,946

+ 570

+ 2.3

The performance development in the Mainland Europe line of business was mixed. The number of passengers increased in rail (mainly due to the removal of restrictions caused by construction work in Sweden in 2017) and bus transport (mainly due to the Autotrans acquisition) while volume sold and produced fell driven by operational difficulties due to strikes and weather conditions.

Adjusted EBIT decreased driven by weather-related restrictions in Sweden and strikes in the Netherlands. In contrast, the acquisition of Autotrans had a positive effect.

  • Revenue development was positive, mainly driven by the impact of the Autotrans acquisition, partially offset by snow impact in Sweden.
  • Other operating income (+ 9.0%) decreased slightly after adjusting internal effects.
  • Personnel expenses (+ 2.8%) increased due to the acquisition of Autotrans, higher expenses in relation to em­­ployee absence in the Netherlands and the increased minimum wage in the Czech Republic.
  • Other operating expenses (+ 5.0%) remained stable after adjusting internal effects.
  • Depreciation (+ 5.3%) increased mainly driven by higher contractual capital expenditures in 2017 and the acquisition of Autotrans.

Gross capital expenditures rose due to the Northern Lines rail contract renewal in the Netherlands, which will start in December 2020.

The number of employees increased, mainly due to the acquisition of Autotrans.

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