Firm behind Telford rail freight terminal suffers huge loss

Earlier this week DB Cargo announced that it was entering redundancy consultations over 893 jobs throughout the UK, blaming "unprecedented challenges" in the rail freight sector.

Now the extent of its struggle has been laid bare in a set of accounts which show a slump in revenues and a significant loss during 2015.

Revenue declined by 13.6 per cent to £387 million, operating profit – which excludes exceptional items – swung from a £2 million profit to a £34 million loss, and the final profit after tax showed DB Cargo went from a surplus of £170 million to a £113 million loss in a single year.

The coal and steel industries provided particular difficulties for the company, the results show.

In a statement accompanying the accounts, DB Cargo said: "The market demand for coal transportation declined at a much faster rate than the company and its customers in the power generation industry predicted. This market effect is the primary driver behind the fall in turnover of £61 million in the year."

The latest round of job losses follows attempts to restructure the business in June last year when the headcount was cut by seven per cent.

DB Cargo said its performance outside those areas of struggling areas had been strong, and it achieved its highest ever delivery performance, which may prove better news for Telford given it is not reliant on coal and steel.

It has won new contracts with the likes of BMW Mini, parts of whose cars are made in Telford, and Hope Construction, which has concrete mixing plants and quarries around Shropshire.

But the company also warned over the impact of Brexit on its overall performance.

"Since we made the business transformation announcements in 2015, the rapid decline in our traditional coal market intensified and we also began to experience structural changes to the UK steel sector which has impacted demand for rail freight services.

"In anticipation of the EU Referendum and since the Brexit result, investment decisions relating to major construction and infrastructure projects have been delayed or cancelled in some instances meaning some of our construction customers are reviewing their future demand for transport of materials.

"These factors have resulted in surplus capacity and a highly competitive market."

DB Cargo took over the running of Telford's £7.75 million rail freight terminal at Donnington in 2013, and it was hoped the move would give the town an economic boost.

The company has not revealed how many movements it is making from the site each day, although there is capacity for up to four.