DB Cargo hit by £100m loss

DB Cargo (UK), the UK’s largest rail freight haulier, has reported losses in excess of £100 million in 2015.

DB Cargo has posted a loss of £123 million before tax in the year to December 31 2015 according to its latest accounts. The rail freight company revealed last month that it is planning on slashing almost 900 jobs in its latest round of restructuring.

Turnover fell by £61 million to £387 million. It is presumed that much of this was due to a collapse in demand for coal transportation that fell at a much faster rate than the company or its customers anticipated.

The fall in coal demand has been put down to falling gas prices as well as the rise in the carbon price floor. This has meant that coal; fired power generation has fallen to its lowest levels since the 1950’s.

As a result of this slump, Doncaster based DB Cargo made a 7% reduction in its workforce. With this, asset impairment charges of £60 million have been brought in to reflect the surplus capacity that has come from reduced coal transportation. One off costs impacted the company to the tune of £84 million in 2015.

Last month (October), DB Cargo proposed a potential further reduction of its workforce by 893 roles, a downsizing of its locomotive and wagon fleet, and a revision of the number and locations of its operational sites.

Speaking at the time, Hans-Georg Werner, chief executive of DB Cargo UK, commented: “Responsible and successful businesses must evolve and reshape as their markets change and sometimes this means making tough decisions.

“Whilst this is a difficult time for all of us at DB Cargo UK, reshaping the company will enable us to build a business for the future and protect the majority of jobs.”
 
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