DSB in a competitive market. November 2013

Transcription

1 DSB in a competitive market November 2013

2 Trends & Facts ƒ Further liberalization in the EU is to be expected ƒ Political ambition to double public transport ƒ Rail is important for every society, but in isolation not a good business case ƒ Network- and scale economies are important ƒ Competition is mainly between state owned operators

3 Further liberalization in the EU is to be expected ƒ EU-legislation is shaping the liberalisation of the EU rail sector ƒ Level of implementation varies

4 EU-regulations are shaping the liberalization of the rail sector ? Directive 91/440/EØF ƒinfrastructure access Directives 95/18/EF og 95/19/EF ƒlicences ƒinfrastructure fees Railway package 1 (infrastructure) ƒ Liberalization of freight (2007) Railway package e 2 ƒcommon access to rail safety Revision (recast) of Railway package 1 ƒfree infrastructure and services ƒratification by mid 2015 TSI requirements ƒinteroperability for changes to existing or procurement of new rolling stock Directive 96/48/EF ƒsafety regulations Railway package 3 ƒliberalization of international passangertraffic and cabotage (2010) Regulation 1370/2007 (PSO regulation) ƒdefinition of financing of rail passenger transport (2009) Railway package 4 ƒoptions for competition on urban and regionaltraffic ƒ ƒ Separate budgets, accounts and asset ownership Separate accounts for infrastructureprovides and rail operators ƒ ƒ Access to transeuropean rail network Complete access to the freightmarket ƒ Cross borders offerings liberalized since January 2010 ƒ ƒ Regulation simplification and free access to transeuropean railnetwork Higher level of unified demands to rolling stock to ensure international competition and interoperability ƒ Liberalization to also include national passenger traffic Soruce: AT Kearney; EU Commission; DSB; BCG

5 Level of implementation varies Fit for Finland Model 1 Liberalisation Financiel transparency Cohesion of public transport Norway Ireland Great Brittain Denmark Sweden Estonia Latvia Litauania 3 Integration with holdingcompany X X Holland Germany Poland Belgium Chezh Republic Luxembourg Slovakiet Switzerland Austria Hungary Slovenia France Romania Separated with operator as responsible for maintainance X X Italy Bulgaria Portugal Spain Greece 4 Fully separatet 2 X X 1. Model refers to setup of rail operations and infrastructure is organised 2. Infrastructure is in most cases controlled by governement owned company, albeit a private company (Network Rail) in Great Brittain 3. Separation of nfrastructure into seperate company is ongoing 4. Rolling stock owned by Infrastructure provider OSE and not the operator TrainOSE S.A. Source: BCG "The 2012 European Railway Performance Index; Understanding what drives high performance by European railways" (2012); "Rail Liberalisation Index 2011" IBM Global Business Services 2011); BCG analyse

6 Political ambition to double public transport ƒ Robust customer growth in the rail sector is expected and is supported by significant infrastructure investments ƒ Public transport will cater for main part of the future growth in traffic

7 Rail operation is important for every society, but seen in isolation not a good business case ƒ Rail operations are dependant on government subsidies and is in most cases a natural monopoly ƒ Denmark is only large enough to attract competition for the tracks, not on the tracks ƒ Cherry picking is easy, but a minimum of service is required and unprofitable routes also needs to be serviced

8 Rail operation is dependant on governments subsidies Kr. per passenger km (PPP) 2,5 2,0 2,25 1 1,39 2,17 2 1,06 1,97 0,83 2,20 3 1,5 0,66 Passenger 0,82 1,83 1,0 0,5 0,86 1,11 1,14 1,38 1,17 Subsidy 0,0 U K N L FR D K Tysklan d Comparable countries 4 in Western Europe all receive subsidies 1. UK accounting (2010/2011) 2. Subsidy for Holland Passenger income in Denmark is for DSB per passengerkm i Austria og Switzerland excluded due to missing data Note: Subsidy (inclusive infrastructure) og passenger income from 2010 is normalised relative to PPP (baseline = Danmark) Soruce: "EVES-Rail, Economic effects of Vertical Separation in the railway sector" (2012); European Commission (Competition State Aid); Office of Rail Regulation (UK); UIC 'Railisa' Database; Eurostat; Danmarks Statistik; BCG

9 Cherry picking is easy, but a minimum of service is required and unprofitable routes also needs to be serviced Level of difficulty of selected routes... is dependant on capacity and utilzation Bottlenecks with high level of dependency increases compexity, f.i. "Røret" Kbh- H to Østerport and Ringsted Station # Route # of travellers 1 (mill.) IC & R trains (#/day 2 ) Freight trains (#/day 2 ) # of Tracks Difficulty level Hobro 4 1 Odense- Middelfart Randers 2 Lejre- Vipperød <1 1 Vipperød Copenhagen Middelfart Lejre Odense Ringsted 1 Næstved 2 3 Vordingborg 3 4 Næstved- Vordingborg Randers- Hobro < Weekdays both directions Source: "Trafikplan for den statslige jernbane " Trafikstyrelsen (2012); DSB; BCG

10 Network- and scale economies are significant ƒ Significant network synergies in IC and Regional amounting to 36 train sets and ~250 mill. kr. p.a. ƒ Network synergies achieved through varying peaks ƒ Network synergies for personnel estimated at mio. kr. for IC, Regional and Øresund ƒ Scale economies estimated at ~160 mill. kr. compared to a split DK operation

11 Competition is mainly between state owned operators ƒ Industry consolidation

12 Industry consolidation mainly by state owned operators Consolidation of rail industry in the EU... driven by the large state owned operators State owned operators Acquisitions Turnover bill. kr. (2011) DB SNCF NS ƒ Liyell Ltd - UK (2012) ƒ Grand Central - UK (2011) ƒ D&G Bus - UK (2011) ƒ Arriva - UK (2010) ƒ Laing Rail - UK (2007) ƒ Pan Bus - DK (2007) ƒ Unibus - DK (2007) 1 ƒ ƒ Syntus - NL (2012) ƒ Keolis - FR (2012) 2 ƒ WestBahn - AT (2011) 3 ƒ NTV - IT (2008) 4 ƒ Eurobus - BE (2008) 5 ƒ City-Trafik - DK (2007) ƒ Buslink - SE (2003) 6 ƒ Via GTI - FR (1999) ƒ ƒ Abellio - DE (2008) ƒ Probo Bus - CZ (2008) ƒ Travel London - UK (2009) DB/Arriva SNCF/Keolis 8 First Group Veolia Transdev Veolia Environnement put up share (50% ) for sale Acquired by Arriva 2. SNCF becomes majority shareholder with 70% 3. SNCF acquires 26% of Westbahns parent company. 4. SNCF acquires 20% of NTV 5. SNCF becomes majority shareholder 6. Acquires 70% 7. Includes all income 8. SNCF owns 70% of Keolis Turnover Source: Deutsche Bahn; Arriva; Keolis; Railgazette; Fundinguniverse; Abellio; Renfe; CapitalIQ; Bloomberg; DSB annual report 2011; BCG analysis Trenitalia OBB NS/Abellio Stagecoach National Express Go-ahead Renfe 9 DSB NSB CP

13 Healthy DSB preparing for fair competition ƒ The transformation journey ƒ Status ƒ DSB in a competitive market

14 The transformation journey /30 Split and out of balance EBITDA Net Result -694 Train km-cost 158 kr. Punctuality F&R 90,6% S-tog 94,8% Customers DK I alt Customer satisfaction F&R 7,7/6,6 S-tog 7,8/7,2 Image DSB S-tog Index Less DSB mio. 219 mio. 54/ /140 Economy in balance ƒ IFO 13/Savings ƒ Pricestructure ƒ Benchmarking ƒ Segment/line results ƒ One DSB Trains you can rely on ƒ Trafficinformation/One app ƒ Punctuality/reliability ƒ IC4/2 ƒ Rejsekort On target, every time ƒ Managing the DSB way ƒ A common approach ƒ IC4/2 delivery/settlement Preparation tracks ƒ New contract ƒ Future trains ƒ Infrastrukturprojects ƒ IT-infrastruktur Healthy DSB EBITDA Net Result 350 Train km-cost 142 kr. Punctuality F&R 94% S-tog 95% Customers DK I alt Customer satisfaction F&R 8,0/7,0 S-tog 8,0/7,5 Image DSB S-tog 180 mio. 186 mio Deserves a new contract Top 25% in Europe More DSB Source: DSB

15 DSB in a competitive market ƒ One company one strategy ƒ Customer focus and expectation management ƒ Top quartile amongst comparable operators in Europe ƒ DSB as a business - able and willing to compare on fair and comparable terms

16 One company one strategy ƒ Focus on core train operations in Denmark ƒ The greater context ƒ Basic story ƒ Common value set ƒ Cohesion not only DSB, but in public transport ƒ The common approach ƒ One strategy for DSB ƒ Standard and unified tools/approaches

17 Customer focus ƒ Customer Value Proposition ƒ Safe ƒ Punctual ƒ Easy ƒ Convenient ƒ Polite ƒ Expectation Management ƒ Deliver what you promise

18 Danes are the most satisfied with train operations, but expect improvements through liberalization Danes are generally satisfied with train operations but still want liberalisation with an expectation of better conditions Positive Negative Positive Negative DK Positiv Negativ DK 64% 67 21% % DK 76% 20% 1 Lower prices 77% 12% NL 64% 23% DE 75% 18% 2 Impr. punctuality 74% 12% FR UK 59% 67 22% % 55% 67 27% % EU UK 71% 21% 71% 21% 3 Frequency 67% 16% 4 Improved management 66% 17% 5 Service quality 60% 66% 19% EU 46% 67 36% % FR 66% 27% 6 Comfort & Cleanliness 60% 22% DE 45% 67 34% % NL 46% 52% 7 Increased security 42% 28% Could be an indication of missing expectation management with the Danish customers Source: "Rail Competition, Special Eurobarometer 388" European Commission (2012); BCG

19 Top quartile in Europe ƒ Benchmarking ƒ Contract covenants

20 DSB as a business ƒ Comparable terms for relevant parts of the business, i.e. benchmarking of train operations excluding historically determined costs such as special terms for civil servants, rail museum, stations and other functions performed for the sector ƒ Result oriented culture characterized by customer focus, openness and transparency ƒ Able and willing to compete on fair terms

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