2018 Integrated Interim Report – Departure into a new era!

Development in the first half of 2018

  • Slight performance gains in the rail line of business.
  • Significant burdens due to higher expenses for personnel and infrastructure utilization.
  • Delays in vehicle deliveries still necessitate replacement concepts.
  • Weak development of the bus line of business.

DB Regional

H1

Change

2018

2017

absolute

%

Punctuality (rail) (%)

94.4

95.0

Punctuality (bus) (%)

91.6

91.2

Passengers (million)

1,258

1,285

27

2.1

Volume sold (million pkm)

24,011

24,101

90

0.4

Total revenues ( million)

4,376

4,304

+72

+1.7

External revenues ( million)

4,325

4,254

+71

+1.7

Rail concession fees ( million)

2,009

1,934

+75

+3.9

EBITDA adjusted ( million)

530

634

104

16.4

EBIT adjusted ( million)

214

314

100

31.8

Gross capital expenditures ( million)

299

164

+135

+82.3

Employees as of Jun 30 (FTE)

35,876

35,631

+245

+0.7

Punctuality in rail transport has fallen due to lower values in regional transport and at the S-Bahnen (metros). The punctuality of bus transport increased.

The performance development was differentiated:

  • In rail transport, there was a slight increase in the num­ber of passengers, volume sold and volume produced.
  • The development in bus services was marked by negative development as a result of a loss in performance.

The economic development of DB Regional is particularly affected by the development of the higher-revenue and higher-performance rail line of business (share of revenues: 89%). Of the adjusted EBIT 95% is generated by the rail line of business and 5% by the bus line of business. The increase in expenses associated with the loss of income from compensations for damage and the reimbursement of the nuclear fuel tax led to a noticeable decline in the adjusted profit figures EBITDA and EBIT.

  • Revenues increased slightly. This was primarily driven by an increase in the rail line of business due to price and volume effects. The performance-based decline in the development of the bus line of business countered this development.
  • Other operating income (36.1%) decreased mainly as a result of the omission of compensations for damage for vehicles and the reimbursement of nuclear fuel tax in the first half of 2017.
  • The cost of materials (+2.4%) was in particular driven by price-related higher costs for infrastructure utilization.
  • Personnel expenses (+3.4%) were higher, among other things due to collective wage increases. Lower employee figures in the bus line of business had a slight dampening effect.
  • Other operating expenses (+6.4%) rose as a result of increased vehicle leases and higher procured services.
    The decline in the bus line of business had a dampening effect.
  • Depreciation (1.3%) fell as a result of the adjustment of the useful life for S-Bahn (metro) Berlin vehicles.

Capital expenditures increased mainly as a result of vehicle purchases due to tenders won in the rail line of business. Capital expenditures declined in the bus line of business.

77% of employees are employed in the rail line of business, with 23% in the bus line of business. The lower number of employees in the bus line of business as a result of performance losses was compensated for by an increase in the rail line of business as a result of the tariff-based election model.

Rail line of business

  • Performance gains from awarded transport contracts dampened by construction activity in the network.
  • Significant burdens due to higher expenses for personnel and infrastructure utilization.
  • Delays in vehicle deliveries still necessitate replacement concepts. 

Rail line of business

H1

Change

2018

2017

absolute

%

Passengers (million)

984.0

984.9

0.9

0.1

thereof rail

960.6

960.0

+0.6

+0.1

Volume sold (million pkm)

20,933

20,856

+77

+0.4

thereof rail

20,582

20,483

+99

+0.5

Volume produced (million train-path km)

229.6

228.6

+1.0

+0.4

Total revenues ( million)

3,879

3,823

+56

+1.5

External revenues ( million)

3,760

3,683

+77

+2.1

Rail concession fees ( million)

2,009

1,934

+75

+3.9

EBITDA adjusted ( million)

491

588

97

16.5

EBIT adjusted ( million)

203

292

89

30.5

Gross capital expenditures ( million)

274

126

+148

+117

Employees as of Jun 30 (FTE)

27,472

27,084

+388

+1.4

The performance development in the rail line of business was slightly positive. The increase in the number of passengers (rail), volume sold and volume produced resulted from additional services and the intra-Group takeover of services from the Usedomer Bäderbahn GmbH (UBB). Construction activities in the infrastructure had a counteracting effect.

Overall, the slight increase in income did not compensate for the burdens due to higher expenses, especially regarding infrastructure and personnel expenses and the omission
of one-time effects, so that the adjusted EBITDA and EBIT declined.

  • Revenue development was slightly better due to price and volume effects. The concession fees rose due to concession fee dynamization, among other things. Train cancellations and penalty had the opposite effect.
  • Other operating income (13.4%) decreased mainly as a result of the discontinuation of compensations for damage for vehicles in the first half of 2017 and lower reimbursements for vehicle upgrades at S-Bahn (metro) Berlin.
  • The cost of materials (+3.7%) was particularly driven by increased energy costs due to the omission of the reimbursement of the nuclear fuel tax in the first half of 2017, as well as higher expenses for the use of infrastructure due to higher volumes and prices. This was offset by lower purchased services and lower vehicle maintenance expenses due, among other things, to the conclusion of project measures.
  • Personnel expenses (+3.9%) increased as a result of the collective agreement and the higher number of em­­ployees.
  • Other operating expenses (+6.1%) rose as a result of increased vehicle leases and higher purchased services.
  • Depreciation (2.4%) decreased due to the adjustment of the useful life of vehicles at S-Bahn (metro) Berlin. In this area, it also becomes noticeable that sometimes other financing models are used for vehicles.

Capital expenditures increased due to vehicle purchases for awarded tenders.

The number of employees increased as a result of the tariff-based election model.

Bus line of business

  • Portfolio adjustments lead to performance losses.
  • Delayed implementation of optimization measures.

Bus line of business

H1

Change

2018

2017

absolute

%

Passengers (million)

274.5

299.7

25.2

8.4

Volume sold (million pkm)

3,078

3,244

166

5.1

Volume produced (million bus km)

247.2

253.8

6.6

2.6

Total revenues ( million)

611

613

2

0.3

External revenues ( million)

565

571

6

1.1

EBITDA adjusted ( million)

38

46

8

17.4

EBIT adjusted ( million)

11

22

11

50.0

Gross capital expenditures ( million)

25

38

13

34.2

Employees as of Jun 30 (FTE)

8,403

8,546

143

1.7

The performance development in the bus line of business was significantly negative as a result of performance losses due to a further intensification of the competitive environment.

The resulting decline in income was only partly offset by relief on the expense side, with the result that adjusted EBITDA and EBIT declined noticeably.

  • The revenue development was burdened by the per­­formance development. This was partly offset by rail replacement services.
  • Other operating income (16.0%) declined, particularly as a result of lower income from the sale of buses. An­­other dampening effect was a time lag for income from compensation payments.
  • The cost of materials remained stable. Price effects, including those affecting diesel, were compensated by performance-related declines.
  • Personnel expenses (+1.6%) increased as a result of collective bargaining agreements. The reduced number of employees had the opposite effect.
  • Other operating expenses (7.5%) fell as a result of a lower line of business charge.

Due to the performance losses, there was a decline in capital expenditure activities for buses. Capital expenditures were also postponed until the second half of 2018.

The number of employees declined as of June 30, 2018 as a result of performance losses.