Business development

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

ReclassificationsAdjust-
ment for
special
items

2020
adjusted

2019
adjusted

absolute

thereof
due to changes
in the scope
of consol-
idation

thereof

due to
exchange
rate
effects

%

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
(€ million)

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 (–)/
income (+)

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
(non-­­controlling interests)

– 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.

Hello! Thank you for your interest in the 2020 Integrated Interim Report!

I am Larissa, your interactive assistant. I am happy to help you and guide you through the report.

May I suggest some interesting contents:

Reading recommendation