Other issues
Project risks
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 that these may be delayed. At the same time, however, there is also the opportunity to exceed the planned effects.
Infrastructure financing
At the beginning of 2020, we concluded 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 due to more traffic. Risks result from a potential failure to achieve the contractual objectives set out in the LuFV and from a possible reclaim by the Federal Government following audits of applications of funds for the intended purposes.
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.
Political risks
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 book value and, under certain circumstances, trigger further financial obligations.
Environmental risks
Unique environmental features, such as climate-neutral transport services in passenger and freight transport on the basis of renewable energies, improve our positive perception among our customers. Our climate protection activities have a positive effect on reducing greenhouse gases. Nevertheless, our mobility services must be climate-neutral from end to end in order to secure an environmental advantage. Strengthening of environmental protection laws poses opportunities and risks for DB Group. Opportunities arise above all for rail transport. However, measures such as bans on diesel may also lead to negative impacts on our activities.
Damage to our infrastructure from extreme weather leads, among other things, to loss of revenue, penalties and increased funding requirements for fixing damage and preventive measures. In order to focus the means of production on extreme weather events and to avoid restricted operating quality due to restrictions resulting from extreme weather, DB Group is working with national and international experts on the adaptation of external technical regulations with regard to altered climatic conditions.
For us, managing extreme weather events also means having to deal with rapid changes and complex impacts. Present-day disruptions increasingly occur nationwide and last for longer periods. Furthermore, according to a study by the Potsdam Institute for Climate Impact Research that we commissioned, 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 development of weather extremes and the simultaneous expansion of rail transport in Germany, we are also pursuing, in addition to active climate protection, the systematic development of resilience management in order to mitigate the consequences of climate change through the implementa-tion of appropriate measures.
