Germany
revenue forecast for 2012 by ƒ1bn to ƒ39bn mainly because of the fall in freight traffic, although DB still expects to reach its Ebit forecast of ƒ2.6bn for the year. While gross capital expenditure
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increased by 13% in the first half of 2012 to ƒ3bn, net capital expenditure, which DB funds itself, soared by 34% to ƒ1.4bn. For the year as a whole DB expects to invest ƒ4bn out of its own resources compared with ƒ2.6bn in 2011. Net financial debt rose 2.2% in the first six months of 2012 to just under ƒ17bn, but Lutz says this was affected partly by paying a dividend of ƒ525m to the government. He expects to end the year at around ƒ16.6bn, which is about the same as in 2011. “The reduction in our debt level won’t be as good this year as it was last year, because of the level of investment, but I think it’s the right course to take,” Lutz says. Grube says that while it is important for DB to expand both organically and through acquisitions, expansion is being affected by the level of debt. “First, I want to reduce our debt to below ƒ15bn, and then we will be able to start acquisitions again.” Grube said in March that he wanted to double DB’s turnover to ƒ70bn by 2020, which equates to an average increase of about 7% a year, a target Grube describes as “ambitious, but not impossible.” But, as he explained to IRJ
“You can see we have a weakening, which started in the last quarter of 2011, but it is not a crisis.” Karl-Friedrich Rausch
last month, he expects some of the extra revenue to come from acquisitions: “We want to achieve turnover of close to ƒ60bn through organic growth, while acquisitions should take care of the rest.”
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“We are seeing a noticeable weakening of the economy, but I don’t think we’re on the brink of a global recession as we were in 2009.”
Richard Lutz
Looking at the outlook for the rest of the year, Grube recognises the challenges ahead, but he believes DB is well placed to withstand any further downturns in the economy. “We see the economic uncertainties, but we remain confident,” he told IRJ. “After a successful first half of 2012, we don’t see any reason to rethink our financial targets. Of course we are focused on how the coming months progress. The current economic outlook is extremely uncertain, and it goes without saying that we are aware of the risks of our economic environment. “We have areas of business [passenger and infrastructure] that are very resistant to swings in the economy and continue to reliably deliver stable revenues, good earnings, and provide liquidity even during times of crisis. We are not dependent on a single economy because we are well diversified in terms of risk.” Grube and his team seem to have done a good job so far steering DB through quite choppy economic waters, and railways generally are performing better than other modes, so provided the European economy doesn’t nosedive during the second half, DB should be able to achieve its targets for the year. IRJ
IRJ September 2012
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