Income development
Transition to the adjusted statement of income
The transition to the adjusted income statement is a two-step process. The reclassification and adjustment procedure has not changed.
Operating profit figures
The following presentation describes the changes in the key items on the statement of income, adjusted for special items. Overall, exchange rate changes had only a minor effect on income and expenses. Effects resulting from changes in the scope of consolidation were not significant.
The effects of the Covid-19 pandemic have significantly impacted the economic development of DB Group during the first half of 2020. As a result, the operating profit figures showed a significant decline, primarily driven by the integrated rail system. In the integrated rail system countermeasures could only compensate for a smaller part of the effects caused mainly by Covid-19-related declines in revenues, additional personnel expenses (capacity expansion and wage increases), as well as improvements in quality and digitalization. The development of DB Arriva was also significantly weaker, primarily due to Covid-19. The increase in the operating profit at DB Schenker had a positive impact, mainly driven by the development in air freight:
- The revenue development took a significantly downward trend, mainly due to Covid-19.
- Other operating income increased considerably, driven by DB Arriva. This was mainly due to the higher use of the provisions for contingent losses and the grants received by UK Bus in connection with the Covid-19 pandemic.
Operating expenses increased only marginally, mitigated by the decline in performance:
- Cost of materials fell slightly. In the integrated rail system, volume-driven lower energy expenses and purchased transport services at DB Cargo were partly compensated for by higher maintenance expenses at DB Netze Track. In addition to the Covid-19-related declines in performance, the cessation of the Arriva Rail North Franchise also reduced expenses at DB Arriva. At DB Schenker, lower purchased transport services due to declining volumes were mainly offset by higher freight rates.
| Transition to the adjusted statement of income (€ million) | H1 | Change | ||||||||||
2020 | Reclassifications | Adjust- ment for special items | 2020 | 2019 | absolute | thereof due to changes in the scope of consol- idation | thereof due to | % | ||||
| IFRS com- pound- ing/dis- counting | Net invest- ment income | PPA amorti- zation | ||||||||||
| Revenues | 19,423 | – | – | – | – | 19,423 | 22,013 | – 2,590 | – 24 | – 63 | – 11,8 |
| Inventory changes and other internally produced and capitalized assets | 1,695 | – | – | – | – | 1,695 | 1,490 | + 205 | – | – | + 13,8 | |
| Other operating income | 1,276 | – | – | – | –19 | 1,257 | 1,116 | + 141 | + 1 | – 1 | + 12,6 | |
| Cost of materials | – 10,767 | – | – | – | 1 | – 10,766 | – 10,876 | + 110 | + 13 | + 46 | – 1,0 | |
| Personnel expenses | – 9,155 | – | – | – | 78 | – 9,077 | – 8,902 | – 175 | + 3 | + 9 | + 2,0 | |
| Other operating expenses | – 2,380 | – | – | – | 5 | – 2,375 | – 2,307 | – 68 | + 3 | + 5 | + 2,9 | |
EBITDA/EBITDA adjusted | 92 | – | – | – | 65 | 157 | 2,534 | – 2,377 | – 4 | – 4 | – 93,8 | |
| Depreciation | – 3,375 | – | – | 26 | 1,412 | – 1,937 | – 1,777 | – 160 | – 1 | + 3 | + 9,0 | |
| Operating income (EBIT) | EBIT adjusted | – 3,283 | – | – | 26 | 1,477 | – 1,780 | 757 | – 2,537 | – 5 | – 1 | – | |
| Net interest income | Net operating interest | – 347 | 65 | – | – | 0 | – 282 | – 333 | + 51 | – 0 | – 0 | – 15,3 | |
| Operating income after interest | – 3,630 | 65 | – | 26 | 1,477 | – 2,062 | 424 | – 2,486 | – 5 | – 1 | – | |
| Result from investments accounted for using the equity method | Net investment income | – 9 | – | 0 | – | – | – 9 | – | – 9 | – | + 0 | – | |
| Other financial result | – 30 | –65 | 0 | – | – | – 95 | – 18 | – 77 | – 17 | + 1 | – | |
| PPA amortization of customer contracts | – | – | – | –26 | – | – 26 | – 32 | + 6 | – | + 1 | – 18,8 | |
| Extraordinary result | – | – | – | – | –1,477 | – 1,477 | – 97 | – 1,380 | – | + 4 | – | |
| Profit/loss before taxes on income | – 3,669 | – | – | – | – | – 3,669 | 277 | – 3,946 | – 22 | + 5 | – | |
- Personnel expenses increased. In addition to wage effects, the higher number of employees also impacted the integrated rail system. Mainly the cessation of the Arriva Rail North franchise and countermeasures at DB Schenker have had a mitigating effect.
- Other operating expenses in the integrated rail system increased significantly, mainly as a result of the Covid-19-related revaluation of the provisions for contingent losses at DB Regional. The decline in rents and travel expenses at DB Schenker, among other things, had a mitigating effect.
- Depreciation increased significantly in the integrated rail system in particular, due to higher depreciation on vehicles, among other things, as a result of capital expenditures.
Net operating interest improved, mainly due to a fundamentally lower interest rate level. However, this had no significant mitigating effect on the significant drop in operating income.
The decline in net investment income was driven mainly by the at-equity company Barraqueiro at DB Arriva and Covid-19-related depreciations of investments at, among others, Verimi GmbH.
The significant deterioration in the other financial result was mainly due to the net higher expenses from the compounding/discounting of provisions.
Extraordinary charges increased considerably as a result of an impairment at DB Arriva:
Extraordinary result | H1 | ||||
2020 | thereof affecting EBIT | 2019 | thereof affecting EBIT | ||
| DB Long-Distance | 1 | 1 | – | – |
DB Regional | 0 | 0 | 0 | 0 | |
DB Cargo | – 13 | –13 | – 2 | –2 | |
DB Netze Track | – 2 | –2 | – 2 | –1 | |
DB Netze Stations | 3 | 3 | 3 | 3 | |
DB Netze Energy | – | – | – | – | |
| Other/consolidation integrated rail system | –70 | –70 | – 68 | –68 | |
| Integrated rail system | –81 | –81 | –69 | –68 | |
DB Arriva | – 1,396 | –1,396 | – 26 | –26 | |
DB Schenker | 0 | 0 | – 1 | –1 | |
| Consolidation other | 0 | 0 | –1 | –1 | |
| DB Group | – 1,477 | –1,477 | – 97 | –96 | |
he extraordinary result in the first half of 2020 consisted primarily of the following special items:
- Impairment of goodwill as a result of the lower income and cash flow expected during the planning period due to Covid-19 (DB Arriva),
- restructuring measures (mainly under Other and at DB Cargo in the Netherlands and Germany), and
- positive effects from the adjustment of hedging transactions (DB Arriva) had a partially mitigating impact.
The composition of the extraordinary result in the first half of 2019 is shown in the 2019 Integrated Interim Report.
Net profit/loss (after taxes)
| Excerpt from statement of income (€ million) | H1 | Change | |||
2020 | 2019 | absolute | % | ||
| Profit/loss before taxes on income | – 3,669 | 277 | – 3,946 | – |
| Taxes on income | – 80 | – 72 | – 8 | + 11.1 | |
Actual taxes on income | – 80 | – 90 | + 10 | – 11.1 | |
Deferred tax expenses (–)/ | – | 18 | – 18 | – 100 | |
| Net profit/loss (after taxes) | – 3,749 | 205 | – 3,954 | – | |
DB AG shareholder | – 3,753 | 198 | – 3,951 | – | |
Hybrid capital investors | 13 | – | + 13 | – | |
Other shareholders | – 9 | 7 | – 16 | – | |
The significant decline in profit before taxes on income was not mitigated by the development of the income tax position, as the new tax losses incurred did not result in deferred tax income. The decline in deferred tax income was partially offset by a slightly reduced actual tax expense.
Operating profit development of business units
| EBIT adjusted by business units (€ million) | H1 | Change | |||
2020 | 2019 | absolute | % | ||
| DB Long-Distance | – 720 | 224 | – 944 | – |
DB Regional | – 597 | 186 | – 783 | – | |
DB Cargo | – 352 | – 132 | – 220 | + 167 | |
DB Netze Track | 170 | 379 | – 209 | – 55.1 | |
DB Netze Stations | 53 | 123 | – 70 | – 56.9 | |
DB Netze Energy | 16 | 23 | – 7 | – 30.4 | |
| Other/consolidation | – 471 | – 376 | – 95 | + 25.3 | |
| Integrated rail system | – 1,901 | 427 | – 2,328 | – | |
DB Arriva | – 153 | 101 | – 254 | – | |
DB Schenker | 278 | 238 | + 40 | + 16.8 | |
| Consolidation other | – 4 | – 9 | + 5 | – 55.6 | |
| DB Group | – 1,780 | 757 | – 2,537 | – | |
The development of the adjusted profit figures for the business units was mainly weaker:
- The business units of the integrated rail system saw a significant decline due to the collapse in demand caused by Covid-19. Moreover, additional expenses for employees, capacity and quality measures had a negative impact.
- The performance of DB Arriva was also significantly below the level of the first half of 2019, driven mainly by the negative effects of Covid-19.
- DB Schenker saw a positive development, driven mainly by the development in air freight. Price effects more than compensated for the negative effects of Covid-19.