UK Rail Freight Giant Reports £100m Losses

UK Rail Freight Giant Reports £100m Losses

The UK’s largest rail freight haulier has reported losses of more than £100 million for a year when the industry was rocked by rapid and unprecedented challenges.

DB Cargo (UK), which last month revealed it is planning to cut almost 900 jobs in its latest restructure, posted a loss of £123 million before tax in the year to December 31, 2015, according to newly filed accounts.

The loss was made on turnover which fell by £61 million down to £387 million as market demand for coal transportation fell at a much faster rate than the firm and its customers anticipated.

Falling gas prices and the rise in the carbon price floor meant that coal-fired power generation in 2015 fell to its lowest level since the 1950s.

In response to this slump, Doncaster-headquartered DB Cargo, which changed its name from DB Schenker Rail UK in March, implemented a 7% reduction in its workforce last year.

Along with the job cuts, asset impairment charges of £60 million have been brought in to reflect the surplus capacity arising from the reduced coal transportation. In total, the company accounted for £84 million of one-off costs last year.

Despite the initial restructuring undertaken last year, the coal market decline intensified into this year, while the build-up and fallout to Britain’s vote to leave the European Union has resulted in investment and infrastructure delays among DB Cargo’s customers.

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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