Our measures involve not only some large capital expenditure volumes, but also a large number of highly complex projects. Changes to the legal framework, delays in implementation (due among other things to more extensive public participation), necessary adjustments during terms often lasting several years, deviations from the ramp-up curve of funds for capital expenditures agreed with the Federal Government or changes to purchase prices may lead to project and liquidity risks. The networked production structure means that these can often affect a number of business units. For example, in such cases planned shifts in the mode of transport from road to rail will not be feasible. We keep up to date with this by closely monitoring projects.
When implementing planned measures from various programs, such as the Strong Rail Strategy for the integrated rail system, or Primus at DB Schenker, there is the risk that it will either not be possible to implement the planned effects at all, or only to a lesser extent and/or may be delayed. At the same time, however, there is also the opportunity to exceed the planned effects.
As a key element of the German rail reform, the Federal Government has the constitutional obligation to finance the capital expenditures in rail infrastructure. The key factor here is securing sufficient funding, but also the ability to plan the availability of funding for the existing network as well as new construction and expansion (requirement plan capital expenditures). A limited availability may lead to insufficient resources for maintaining the existing network or eliminating bottlenecks and therefore limiting the competitiveness of rail as a mode of transport.
We have an agreement with the Federal Government that sets out the financing of the existing network until 2029. The LUFV III and the associated securing of infrastructure quality and availability in the long term improve the attractiveness of rail as a mode of transport, which also results in higher revenues for infrastructure companies. Risks result from a potential failure to achieve the contractual objectives set out in the LuFV III and from a possible reclaim by the Federal Government following audits of applications of funds for the purposes set.
The economic sustainability of capital expenditures or financial contributions to capital expenditure projects funded with DB funds is essential if we are to ensure DB Group’s ability to invest in the long term.
DB Group is active in Great Britain through DB Arriva, DB Schenker and DB Cargo. The ongoing uncertainty about the future relationship with Great Britain after its departure from the European Union (Brexit) results in risks to our activities. In this case, a weakening of the British economy and new trade barriers may have a negative impact. DB Group is responding to this risk by preparing as best as possible.
The European Company for the Financing of Railroad Rolling Stock (Europäische Gesellschaft für die Finanzierung von Eisenbahnmaterial; EUROFIMA), Basel/Switzerland has given loans to state-owned railways in states that now have poor credit ratings. If these state-owned railways fail to meet their financial obligations to EUROFIMA, this could have repercussions for the carrying amount of the investment, and under certain circumstances trigger further financial obligations.
Unique environmental features, such as climate-neutral transport services in passenger and freight transport on the basis of renewable energies, improve our customers’ positive opinions and thus improve the external perception of the company. This results in considerable opportunities. Our activities have a positive effect on reducing greenhouse gases and may also have a positive impact on customer satisfaction and our market position. Our mobility services must be climate-neutral from end to end in order to secure an environmental advantage.
Strengthening of environmental protection laws also presents opportunities and risks for DB Group. Opportunities arise above all for rail transport. However, measures such as bans on diesel may also have a negative impact on our activities.
Weather-related damage to our infrastructure leads, among other things, to loss of revenue, penalty payments and increased funding requirements for fixing damage and preventive measures. In order to adapt the means of production to extreme weather events (expansion of vegetation management) and to avoid restricted operating quality due to weather-related restrictions, DB Group is working with national and international experts on the adaptation of external technical regulations to altered climatic conditions.
For us, managing extreme weather events also means having to deal with rapid changes and complex impacts. Today, the disruptions have increasingly cross-regional dimensions and a long-lasting impact. According to a study by the Potsdam Institute for Climate Impact Research commissioned by DB Group, we are more strongly affected by the consequences of climate change than any other large company in Germany. Against the backdrop of the expected future intensification and accumulation of weather extremes and the simultaneous expansion of rail transport in Germany, we are pursuing, in addition to active climate protection, a consistent adjustment to the consequences of climate change.
The Natural Hazard Management Department at DB Netz AG is engaged in the development of systematically forward-looking natural hazard prevention and sustainable climate change adjustments in order to be able to reduce the impact of natural hazards on the track infrastructure to a minimum. In the year under review, the focus was on storm prevention and heat adaptation.
DB Group is pursuing a holistic natural hazard strategy, with the impact of natural events on railway infrastructure and rail operations being recorded both by location and by time, and assessed and managed through prevention measures. The development and implementation of measures is interdisciplinary within DB Group. New scientific findings and procedures are being developed in external research collaborations, for example on the satellite-based detection of storm-prone trees. In collaboration with start-ups, European railways and the expert network of the BMVI, innovative solutions are being developed to further increase the resilience of the infrastructure against natural hazards and the consequences of climate change.
There are still no suitable alternatives for phasing out the use of glyphosate. DB Group is supporting corresponding developments.