Interim Results Press Conference 2011 - Deutsche Bahn · development seen at the two DB Schenker business units, where comparable revenues were about € 870 million higher than in

Interim Results Press Conference 2011 Deutsche Bahn AG DB Mobility Logistics AG Dr. Richard Lutz CFO – The spoken word takes precedence. –

−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−− Berlin, July 28, 2011

Deutsche Bahn AG / DB Mobility Logistics AG 2 / 18 Investor Relations Europaplatz 1, 10557 Berlin Tel.: +49 (0)30 297-64031, E-Mail: [email protected]

Disclaimer This information contains forward-looking statements or trend information based on currently known and available information, beliefs, and forecasts of the management of the Deutsche Bahn Group. This presentation solely serves for informational purposes includes statements which are forward-looking by reason of context, including without limitation, statements referring to risk limitations, operational profitability, financial strength, performance targets, profitable growth opportunities, and risk adequate pricing, as well as the words "may, will, should, expects, plans, intends, anticipates, believes, estimates, predicts, or continue", "potential, future, or further", and similar expressions identify forward-looking statements. These forward-looking statements are subject to certain known and unknown risks and uncertainties that could cause the Company's actual results or performance to be materially different from those expressed or implied by such statements. Many of these risks and uncertainties relate to factors that are beyond Deutsche Bahn AG’s/DB Mobility Logistics AG´s ability to control or estimate precisely, e.g. future market and economic conditions and the behavior of market participants. Deutsche Bahn AG and DB Mobility Logistics AG do not intend or assume any obligation to update these forward-looking statements.


Dear ladies and gentlemen,

I would also like to extend a warm welcome to all of you to our interim

results press conference today.

I would now like to take you through a more detailed presentation of

DB Group’s business development in the first half of 2011.

My presentation consists of three parts:

First, I would like to give you overview an of DB Group’s major

influencing factors and developments noted in the first half of 2011.

The focus here will be on the development of the markets and our

performance.

In the second section we’ll take a closer look at the development of

our key figures of revenues, profits, capital expenditures and debt.

And finally, I will present our current outlook for the full year 2011.

The core message of my presentation is that DB Group continued the

profitable growth it posted in the 2010 financial year into the first half of

2011. Once again Revenues and profits rose notably. DB Group

continues to stand for financial stability and reliability. All three rating

agencies confirmed respectively retained our excellent ratings of

AA/AA/Aa1 in the first half of 2011. The two bonds we issued in the first

half of 2011 show that we are a quality issuer who can tap the capital

market at any time at attractive conditions.


2DB AG / DB ML AG Dr. Richard Lutz

Sustained recovery of global economy (GDP world +3.0%)

In Germany economy stays strong (GDP Q1 +5.2%)

Prevailing insecurities as a result of the Euro-/debt crisis

High cost burdens due to increase in energy, personnel and maintenance expenses

General conditions

H1 2011 – At a Glance

Highlights H1 2011

Passenger transport

Transport and logistics

Infrastructure

Stable development of German rail passenger transport

Development influenced by one-time effects in H1 2010 as well as in current year

Rail freight transport continues its strong growth

Differentiated development in logistics:

Strong increase in European land transport, slightly weaker development in ocean freight, slight decrease in air freight

Greater demand for train-path, especially in freight transport business

Trend towards greater demand by non-Group customers continues

Our business again developed favorably in the first half of 2011.

This was driven by unchanging and strong economic development ‒

especially in Germany ‒ as well as the ongoing favorable progress of

markets that are relevant for our business.

The German rail passenger transport market developed stably in the

first half of 2011, although development was influenced by one-time

effects that took place in the first half of 2010 (especially severe

winter weather, and clouds of volcanic ash), as well as in the current

year (strike, end of compulsory military service, construction

activities). We were especially pleased by the increase in the

number of rail transport passengers, which rose again by almost

2%, or 18 million travelers.


In Transport and Logistics we noted renewed strong growth in rail

freight and the European land transport.

The air and ocean freight markets posted more modest

development than in the first half of 2010. Both markets experienced

a dynamic catch-up process in the previous year, which led to

weaker growth rates in the first half of 2011. Air freight volumes

even declined slightly.

In the Infrastructure area we again noted greater demand for train-

path, especially from the freight transport business.

The trend towards greater demand by non-Group customers also

continued without interruption in the first half of 2011.

A glance at our key financial figures reveals that we can look back at a

successful first half of 2011:



Selected key figures (€ mn)

EBIT adjusted

Net profit

Net financial debt as of Jun 30, 2011/Dec 31, 2010

Gross capital expenditures

1,133

648

17,290

18,876

17,280

2,689

H1 2011 – At a Glance

Very good development in H1 2011

H1 2011

Revenues

Revenues comparable

H1 2010

846

392

16,939

16,102

16,102

2,502

+33.9

+65.3

+2.1

+17.2

+7.3

+7.5

ROCE 7.2% 5.9% -

abs. %

+/-

+287

+256

+351

+2,774

+1,178

+187

-

We achieved notable gains in revenues of about 17 % in the first

half of 2011.

Changes to the scope of consolidation contributed € 1.5 billion to

revenues, which mainly involved the inclusion of Arriva.

After adjustment for effects stemming from changes to the scope of

consolidation and currency exchange rates, the bottom line increase

in revenues amounted to 7.3 %.

Our adjusted EBIT figure surged by 34 %. This development was

mainly driven by the strong performance turned in by the DB

Schenker business units.

Our net profit even rose by 65 % to € 648 million. We were able to

notably improve our return on capital employed, or ROCE, from

5.9 % to 7.2 %.


The very favorable trend noted for our revenues and profits in 2010

thus also continued in the first half of 2011.

As of June 30, 2011, our net financial debt had risen by about € 350

million from the end of 2010 to € 17.3 billion.

However, when viewing this figure it should be taken into account

that we paid a first-time dividend of € 500 million to our owners in

the first half of 2011.

Furthermore, we increased our capital expenditure activities in the

first half of 2011 by almost € 190 million to about € 2.7 billion.

After adjusting the increase in net financial debt by the dividend we

distributed, it becomes clear that we were also able to finance our

capital expenditures from our own resources in the first half of 2011.

This brings me to the second part of my presentation.

First, our revenues and a glance at the breakdown of revenues by

business unit:



H1 2011 – Development of revenues

Revenue increase mainly at DB Schenker and DB Netze Energy

DB Group

Total revenues (€ mn)H1

2010

16,102 +1,178 +7.3%18,876

H1 2011

-1,535 -61

abs. %

+/- (H1 2011 comp. vs. H1 2010)

17,280

H1 2011comp.

DB Schenker Logistics 6,746 +661 +9.8%7,466 -1 -58 7,407

DB Netze Track 2,198 +71 +3.2%2,269 - -

DB Netze Stations 524 +13 +2.5%537 - -

DB Netze Energy 1,230 +218 +17.7%1,448 - -

DB Bahn Long-Distance 1,828 -8 -0.4%1,825 -5 - 1,820

DB Bahn Regional 4,288 +77 +1.8%4,365 - - 4,365

DB Arriva 87 +15 +17.2%1,632 -1,529 -1 102

DB Services 557 +91 +16.3%648 - -

DB Schenker Rail 2,268 +211 +9.3%2,481 0 -2 2,479

Other/consolidation -3,624 -171 +4.7%-3,795 - -

Cons. eff. FX effects

Adjustments

2,269

537

1,448

648

-3,795

Cons. eff. = Changes in scope of consolidation; FX-effects = Currency effects

The comparable increase at Group level was primarily driven by the

development seen at the two DB Schenker business units, where

comparable revenues were about € 870 million higher than in the first

half of 2010.

Both DB Schenker Rail, where revenues rose on a comparable basis by

more than 9 %, as well as DB Schenker Logistics, with a gain of nearly

10 %, were able to record notable increases.

DB Schenker Logistics saw its European land transport business

develop very favorably due to sharp rises in performance. However,

the air and ocean freight as well as the contract logistics business

also recorded substantial gains.

In contrast, the increase in revenues noted for our passenger

transport business (excluding Arriva) was more muted and

amounted to € 84 million. Increase revenues were mainly noted at


DB Bahn Regional, while revenues remained nearly at the previous

year's level at DB Bahn Long-Distance. It should be noted, however,

that the previous year's performance was positively influenced by

favorable one-time effects such as the severe winter and the

volcanic ash clouds.

Business units in the Infrastructure division posted a slightly

stronger increase in revenues of about € 300 million.

The change was due, particularly, to development noted for the

DB Netze Energy business unit where revenues rose notably.

This increase was influenced by factors including volume and

pricing effects in the traction energy segment (traction current,

diesel fuel) as well as higher revenues generated by energy

services.

The DB Netze Track business unit again recorded greater demand

for train-path, especially from rail freight transport. Train-path

kilometers rose by 2.5 % which was the major driver behind the

3.2 % increase in revenues.

The trend of growing demand for train-path on the part of non-Group

railways, which we have noted for years, continued again as

non-Group railways’ share of total demand for train-path rose

by two percentage points from 19 to 21 % in the first half of 2011.

I would now like to move on to present details on profit development.

The following chart shows the “bridge” that you have seen previously

that presents the change between the EBIT and adjusted EBIT figures

(EBIT adjusted for special items), which we use as the metric to steer

the performance of our operations.



1,0761,133

846875

-57

+29

H1 2011 – Profit development

Adjusted EBIT improves by 34 percent

in Mrd. €EBIT and EBIT adjusted (€ mn)

EBIT Special items EBIT adjusted

H1 2010 H1 2011

+23.0%

+33.9% +287

EBIT Special itemsEBIT adjusted

The adjusted EBIT figure rose by € 287 million in the first half of 2011

to € 1,133 million; € 77 million of the increase was due to the inclusion

of Arriva.

Hardly major special items were recorded in either the first half of 2010

or the first half of 2011.

A deeper look at the development of profits by business unit reveals the

following:



Change by business unit (€ mn)EBIT adjusted (€ mn)

H1 2011 – Profit development

Overall positive EBIT development on business unit level

H1 2010H1 2011

-3446 80 -42.5%

+28477 449 +6.2%

+7758 -19 -

+60170 110 +54.5%

+680 74 +8.1%

+25262 237 +10.5%

124 123 +1 +0.8%

-1624 40 -40.0%

+66-179 -245 -26.9%

+2871,133 846 +33.9%

+7471 -3 -

DB Group

DB Schenker Logistics

DB Netze Track

DB Netze Stations

DB Netze Energy

DB Bahn Long-Distance

DB Bahn Regional

DB Arriva

DB Services

DB Schenker Rail

Other/consolidation

The overall development of profits was also favorable at the business

unit level.

DB Bahn Long Distance posted lower profits compared to the

previous yearʼs figure, while revenues, as earlier mentioned, were

close to the level of the first half of 2010. This means that profits

were primarily driven by expenses where all major cost categories

increased. This applies to energy costs, maintenance costs and

personnel expenses. The latter were impacted by a higher number

of employees and increased wages.

Profits grew slightly at DB Bahn Regional, where costs also rose in

comparison to the same year-ago period. However, costs were

more than offset by increased volume and price-related effects in

the area of concession fees as well as farebox revenues.


The most significant increase in profits was posted by the

DB Schenker Rail business unit (+ € 77 million). The additional

revenues posted here ‒ about € 210 million ‒ had a particularly

strong effect on the bottom line due to the heavy weighting of fixed

costs in the business unit’s cost structure. This also reflected that

the recovery process following the economic crisis remained intact.

The fact that in the interim all regions within this business unit are

generating profits was particularly pleasing.

The DB Schenker Logistics business unit also posted notably higher

profits (+ € 60 million). With a gross profit margin that increased

slightly to 29.6 %. The adjusted EBIT margin also rose from 1.6 to

2.3 %.

Within the Infrastructure division the DB Netze Track business unit

was able to raise its adjusted EBIT figure, despite higher expenses

for maintenance and personnel, due mainly to the higher revenues

generated by an increased demand for train-path.

Before I review our debt situation I would first like to take a brief look at

the development of capital expenditures by business unit.



H1 2011 – Capital expenditures

Noticeable increase of net capital expenditures

By business unit H1 2010Gross capital expenditures (€ mn)

H1 2011 abs. %

+/-

H1 2010 H1 2011

2,502

2,689

8651,049

Net:

+21.3%

+7.5%

2,689

135

97

1,872

190

40

116

39

89

72

2,502

147

51

1,921

136

13

128

32

61

9

39 4

+187

-12

+46

-49

+54

+27

-12

+7

+28

+63

+35

+7.5

-8.2

+90.2

-2.6

+39.7

-

-9.4

+21.9

+45.9

-

-

DB Group

DB Schenker Logistics

DB Netze Track

DB Netze Stations

DB Netze Energy

DB Bahn Long-Distance

DB Bahn Regional

DB Arriva

DB Services

DB Schenker Rail

Other/consolidation

We also continued our capital expenditures at a high level in the first half

of 2011 as we made outlays of € 2.7 billion.

The infrastructure remained the main focus of our capital expenditures

and absorbed nearly 80 % of the total.

Gross capital expenditures made in the Infrastructure business units

amounted to € 2.1 billion and were slightly higher than the previous

yearʼs figure. As investment grants increased slightly, net capital

expenditures in the infrastructure remained at about the previous

year's level.

The € 187 million increase in gross capital expenditures and the

corresponding € 184 million rise in net capital expenditures are

mainly due to the first-time inclusion of Arriva as well as higher

capital expenditures made in the DB Bahn Long-Distance,

DB Schenker Logistics and the DB Services business units.


The level of capital expenditures made in the DB Bahn Regional

business unit stagnated at the previous year's low level. This was

due to delayed deliveries of new vehicles because of the absence of

certification documents from the Federal Railway Authority, defects

that hindered acceptance of vehicles and delays in deliveries of

vehicles caused by the manufacturers. We hope that the long

overdue vehicle deliveries will finally take place in the second half of

the year. However, in view of the experiences we have had in the

past months and years we shall have to wait and see just how

reliable the manufacturers’ statements really are.

This brings me to the development of net financial debt.



Dec 31, 2010 Jun 30, 2011

2,110

-1,049

-912

-500

Reconciliation of finance requirements (€ mn)

Cash flowafter taxes

Net capitalexpenditures

Financerequirements

Financial debt (€ mn)

Changes inworking

capital/Other

Dividend

16,93917,290

1,614 1,711

18,553 19,001

Net:

+2.4 %

+€ 351 mn

Cash and cash equivalents and receivables form financing

H1 2011 – Financial debt DB Group

Slight increase in net financial debt

-351

Our net financial debt increased during the first half of 2011 from

€ 16.9 billion to € 17.3 billion.

Cash flow amounted to € 2.1 billion or 20 % more than the previous

yearʼs figure of € 1.7 billion. This cash flow enabled us to finance the

higher net capital expenditures as well as other capital binding measures

in working capital, and other balance sheet items.

This surplus was, however, not enough to fully cover the first-time

dividend of € 500 million we paid to our owner.

This resulted in total funding requirements of € 351 million, which in turn

led to a corresponding increase in net financial debt.


I would like to end my presentation by briefly reviewing our slightly

adjusted outlook for the 2011 financial year:


(€ mn) 20112010

ROCE

Revenues

EBIT adjusted

Outlook 2011 financial year(as of July 2011)

6.0%

34,410

1,866

2011 financial year – Outlook

Further positive development in 2011 financial year expected

Continuing economic recoveryFurther performance growthFull-year inclusion of Arriva

Positive development of revenuesContinued cost management

Lower increase in capital employed compared to adjusted EBIT

Net financial debt as of Dec. 31

16,939 Increase in cash flowNoticeable increase in net capital expenditures First-time dividend distribution

Gross capex 6,891 Continued modernization courseRealization of capital expenditures initiative

Our outlook for the 2011 financial year has not changed and still remains

favorable. This outlook anticipates that the trends noted in the economy

and the markets remain intact on an overall basis, despite weakening in

the second half of 2011. This primarily is based on the assumption that

the current events in the financial markets (e.g. euro sovereign debt

crisis) do not have a sustained effect on the real economy and our

markets.

Based on these prerequisites, we are cautiously optimistic about our

markets and therefore the future development of our revenues and

profits.


We currently anticipate that full-year revenues for 2011 will rise by about

€ 4 billion to notably more than € 38 billion. Revenue growth will be

driven organically and by the fact that Arriva will be fully included in our

financial statements for the first time in 2011, following just four months

of inclusion in the 2010.

As far as profits are concerned, we expect our adjusted EBIT figure to

rise significantly higher than € 2 billion.

This means that our current expectations for revenues and profits are

higher than the forecast made at the end of March during the Annual

Results Press Conference.

Our outlook for the remaining key figures ‒ ROCE, gross capital

expenditures and debt ‒ remains unchanged.

Ladies and gentlemen, I would like to end my presentation with this

favorable outlook for the 2011 financial year.

We appreciate your attention. The entire Management Board would be

pleased to answer your questions at this time.


We appreciate your attention

Speech given by Dr. Richard Lutz, CFO of Deutsche Bahn AG and DB Mobility Logistics AG, on the occasion of the Interim Results Press Conference held on July 28, 2011 in Berlin.

The spoken word takes precedence.

Contact: Deutsche Bahn AG/ DB Mobility Logistics AG Corporate Communications Investor Relations Potsdamer Platz 2 Europaplatz 1 10785 Berlin 10557 Berlin Tel.: +49 (0)30 297-61131 Tel.: +49 (0)30 297-64031 Fax: +49 (0)30 297-61919 Fax: +49 (0)30 297-64036 E-Mail: [email protected] E-Mail: [email protected]

Documents

Interim Results Press Conference 2011 - Deutsche Bahn · development seen at the two DB Schenker business units, where comparable revenues were about € 870 million higher than in