2017 Integrated Report – Departure into a new era

Development in the year under review

  • Ocean and air freight, as well as contract logistics, are growth drivers.
  • Market and competitive environment with positive stimuli.
  • ◊ Rising freight rates in air and ocean freight.

DB Schenker

2017

2016

Change

 

2015

absolute

%

Customer satisfaction (SI)

74

71

Shipments in European land transport (thousand)

100,452

99,638

+ 814

+ 0.8

99,361

Air freight volume (export) (thousand t)

1,300

1,179

+ 121

+ 10.3

1,128

Ocean freight volume (export) (thousand TEU)

2,169

2,006

+ 163

+ 8.1

1,942

Total revenues (€ million)

16,430

15,128

+ 1,302

+ 8.6

15,451

External revenues (€ million)

16,345

15,059

+ 1,286

+ 8.5

15,390

Gross profit margin (%)

34.3

36.0

34.4

EBITDA adjusted (€ million)

676

599

+ 77

+ 12.9

589

EBIT adjusted (€ million)

477

410

+ 67

+ 16.3

395

EBIT margin (adjusted) (%)

2.9

2.7

2.6

Gross capital expenditures (€ million)

246

209

+ 37

+ 17.7

238

Employees as of Dec 31 (FTE)

71,888

68,388

+ 3,500

+ 5.1

66,327

Employee satisfaction (SI)

3.8

Employee satisfaction – follow-up workshop implementation rate (%)

96.0

94.7

Share of women in Germany as of Dec 31 (%)

30.8

31.9

32.1

Specific CO₂ emissions (European land transport) compared to 2006 (related to tkm) (%)

–20.2

–16.3

–20.1

Specific CO₂ emissions (air freight) compared to 2006 (related to tkm) (%)

–8.8

–4.8

–2.9

Specific CO₂ emissions (ocean freight) compared to 2006 (related to tkm) (%)

–60.7

–60.3

–50.3

Customer satisfaction has improved, largely caused by positive developments in the area of sales and customer service in many countries. We survey about 16,000 customers (annually starting in 2017) regarding customer satisfaction.

Volume development was very positive in air and ocean freight. It was slightly positive in European land transport.

The economic trend was encouraging. 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 even more positive. Gross profit (+3.5%) also grew, most markedly in contract logistics, although all lines of business recorded gains. In comparison to revenue development, however, gross profit rose at a lower rate therefore the gross profit margin declined.

Revenues were generated 40% in European land transport, 44% in air and ocean freight, and 16% in contract logistics.

The adjusted EBIT was generated 20% in European land transport, 55% in air and ocean freight, and 25% in contract logistics.

  • The main drivers of the positive revenue development were air and ocean freight as well as European land transport. Growth continued to be dynamic in contract logistics. Negative exchange rate had dampening effects.
  • Other operating income (+32.9%) rose due to higher income from damage claims, refunds of expenses and income from the release of provisions.
  • Cost of materials (+11.2%) rose particularly due to the volume and freight rate developments in air and ocean freight.
  • Personnel expenses (+4.5%) were significantly higher. This can be attributed specifically to a service-related increase in the number of employees in all lines of business and regions as well as to wage increases. The rise was even clearer when adjusted for exchange rate effects.
  • Other operating expenses (+3.6%) rose in part due to the leasing of new space and higher purchases of IT services.
  • Depreciation rose slightly at a low level.

Capital expenditure activities increased. The increase resulted primarily from the regions Europe and Asia/Pacific. Capital expenditures continued to focus on region Europe. 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.

At the end of the year under review, 28% of employees were employed in European land transport, 19% in air and ocean freight, and 31% in contract logistics. The number of employees increased. The main driver was the business expansion in contract logistics.

Employee satisfaction is measured every two years. In the year under review, the focus was on follow-up processes. The follow-up workshop implementation rate for the 2016 employee survey improved slightly on a very high level.

The share of women in Germany fell slightly in the year under review.

The majority of DB Schenkerʼs emissions are the scope 3 emissions of our subcontractors. We have therefore developed a comprehensive monitoring system to monitor our carriers’ target development toward reducing greenhouse gas emissions overall. In the year under review, the reduction trend in ocean freight was maintained in view of additional market consolidations. Emissions fell sharply in air freight thanks to fleet renewals. In land transport, significant reductions were recorded based on the new hub structure, in which freight is consolidated into larger transport units.

European land transport line of business

  • Within the system and direct transport areas, greater focus on international transport services.
  • Europe-wide cost reduction initiatives launched.

European land transport
Selected key figures
 (€ million)

2017

2016

Change

absolute

%

 

Shippments in European land transport (thousand)

100,452

99,638

+ 814

+ 0.8

 

Total revenues

6,608

6,358

+ 250

+ 3.9

External revenues

6,531

6,298

+ 233

+ 3.7

EBITDA adjusted

163

149

+ 14

+ 9.4

EBIT adjusted

94

82

+ 12

+ 14.6

 

Employees as of Dec 31 (FTE)

20,323

19,505

+ 818

+ 4.2

In a market environment marked by growing demand, volume development in European land transport was slightly positive overall. A decline in the parcel business (–3.2%) was more than compensated for by higher volumes for general cargo (+2.6%) and direct transport (+2.9%).

The economic trend was positive. The development of adjusted EBITDA and EBIT was better as a result of good business development.

  • The revenue trend was driven by the higher shipment volume and the increased price of diesel. Increases in general cargo and direct transport had a positive impact. This was offset by negative exchange rate effects.
  • Cost of materials (+3.8%) rose. This resulted especially from general cargo transports. But it was offset by the development in direct transport and the parcel business, as well as exchange rate effects.
  • Personnel expenses (+3.8%) increased as a result of staff reductions and collective bargaining agreements. The number of employees has increased as a result of business development.

    Air and ocean freight line of business

    • Significant effects due to freight rate development.
    • Focus in ocean freight on efforts to optimize capacity utilization, costs and purchase prices.
    • Focus in air freight on broadening the customer base and improving the cargo mix.

    Air and ocean freight Selected key figures (€ million) 

    2017

    2016

    Change

    absolute

    %

    Air freight volume (export) (thousand t)

    1,300

    1,179

    + 121

    + 10.3

    Ocean freight volume (export) (thousand TEU)

    2,169

    2,006

    + 163

    + 8.1

    Total revenue

    7,188

    6,257

    + 931

    + 14.9

    External revenues

    7,182

    6,249

    + 933

    + 14.9

    EBITDA adjusted

    277

    237

    + 40

    + 16.9

    EBIT adjusted

    263

    221

    + 42

    + 19.0

    Employees as of Dec 31 (FTE)

    13,368

    13,137

    + 231

    + 1.8

    Performance was positive in both air and ocean freight:

    • Volumes increased significantly in air freight. The largest relative growth was accounted for by transpacific services and the routes from Asia to Europe. In addition, the volume of transatlantic and Asian traffic and the routes from and to Latin America, among others, have experienced a distinctly positive development. 
    • The ocean freight volume also increased significantly. Here in particular, growth on the transpacific and intra-European routes and on routes to and from Latin America made an impact. Intra-Asian transport and transatlantic routes also contributed to growth. Only the routes from and to the Middle East showed a slight decline. The economic trend was positive in both air and ocean freight, and adjusted EBITDA and EBIT rose.
    • Revenue development was also positive in both air and ocean freight. The main drivers were freight rate and volume trends. Adjusted for exchange rates, revenue increased even more sharply.
    • Cost of materials also rose (+19.8%) in line with the volume and freight rate trends.
    • Personnel expenses (+4.6%) increased as a result of a higher number of employees and due to collective bargaining agreements.

    The number of employees rose because of higher staffing requirements, mainly in air freight.

      Contract logistics/SCM line of business

      • Good business development in the existing and new customer base.
      • Further business expansion.

      Contract logistics/SCM
      Selected key figures
       (€ million) 

      2017

      2016

      Change

      absolute

      %

      Warehouse space (million m²)

      8,0

      8,0

      Total revenues

      2,634

      2,514

      + 120

      + 4.8

      External revenues

      2,633

      2,513

      + 120

      + 4.8

      EBITDA adjustted

      167

      161

      + 6

      + 3.7

      EBIT adjusted

      120

      107

      + 13

      + 12.1

      Employee as of Dec 31 (FTE)

      22,081

      20,139

      + 1,942

      + 9.6

      The economic trend in the contract logistics/SCM line of business was positive. The development of adjusted EBITDA and EBIT was better as a result of good business development.

      • Revenue development remained steadily and markedly positive. The good business trend among existing and new customers was noticeable here. This was partly offset by negative exchange rate effects.
      • With the expansion in business, cost of materials (+6.8%) also increased due to the higher number of employees and personnel expenses (+6.8%). In contrast, exchange rate effects had a dampening effect.

      The dynamic business development was also reflected in an increase in the number of employees.