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DB Cargo rail freight trains

Return to profit for Doncaster Rail Freight company

The UK's largest rail freight haulier has reported a return to profit in its latest accounts. It follows the implementation of a restructuring programme designed to help it meet the challenges posed by the rail industry.

Doncaster-headquartered DB Cargo transports intermodal containers, metals, coal, biomass and aggregate, operating more than 5,000 trains each month including services to and from mainland Europe via the Channel Tunnel.

Recently filed accounts for DB Cargo (UK) show a pre-tax profit of £9m was achieved in the year ending 31 December 2017, compared to a £66m loss in 2016. Operating losses before exceptional items also reduced to £38m from £60m.

However, turnover reduced to £312m from £325m the year before.

In October 2016, DB Cargo cut 893 roles across its workforce, resulting in a year end restructuring provision of £43m.

In 2017, the company recorded an exceptional net credit of £24m from the release of surplus restructuring provisions and surplus onerous lease provisions. The release was due to there being more leavers through resignation than anticipated, as well as the payment in lieu of notice also being lower than estimated due to delays in the implementation of restructuring.

In their report accompanying the results, the directors said: "Competitive pressure in the UK rail freight market remains strong and the industry continues to face challenges. The company has seen significant decline in its traditional markets of coal and steel over the past few years, which combined with other market effects resulted in the company announcing a major restructuring programme in October 2016.

"The focus of 2017 has been the implementation of the restructuring programme to enable the company to reshape the business. Realignment of the cost base and focussing on more efficient ways of working now places the company in a stronger position in what is a highly competitive and rapidly changing market."

They added that the company has not seen the full benefit of the restructuring programme due to challenges in its implementation.

Looking ahead, DB Cargo is expecting to benefit from improved demand in the UK steel industry, and the reopening of Liberty Steel's Rotherham blast furnace earlier this year.

The company has also invested in doubling the operational capacity for the storing and handling of steel coils at its Wolverhampton steel terminal and secured planning consent for its Cricklewood aggregate terminal in North London, which is set to begin operations in 2019.

DB Cargo was founded in 1996 as the English, Welsh and Scottish Railway (EWS) from assets of the former British Rail freight business. It was initially owned by a consortium led by US regional railroad Wisconsin Central Transportation Corporation.

In June 2007, Deutsche Bahn AG acquired all EWS shares before the business was renamed DB Cargo UK in March 2016.

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