Income development

• Special issues are eliminated in the adjusted statement of income. The transition to the adjusted statement is a two-step process: firstly, standard reclassifications are carried out, then the figures are adjusted for individual special items.
• The reclassifications essentially relate to two issues.
  • The first issue is the reclassification of net interest income components not related to net financial debt and pension provisions: predominantly the compounding and discounting effects of long-term provisions (excluding pension obligations) and long-term liabilities (excluding financial debt). The non-operational character of these components can also be seen in the fact that their influence on net interest income very much depends on the interest rates as of the balance sheet date.
  • The second significant reclassification relates to the amortization of intangible assets capitalized in the course of purchase price allocation (PPA) of acquisitions conducted during the assessment of long-term customer contracts. Existing transport contracts are an essential component of the purchase price valuation, in passenger transport in particular. In order to safeguard the operating assessment and to prevent these contracts from being treated differently from other contracts, these amortization components are eliminated from the operating profit. The amount reclassified resulted mostly from acquisitions in the
    DB Arriva business unit.
• Adjustments for special items involve issues which are extraordinary based on the reasons for them and/or the amounts involved, and which would effect a material change on operating development over time. Book profits and losses from transactions with subsidiaries/financial assets are adjusted regardless of their amounts. Individual items are adjusted if they are extraordinary in character, can be accounted for and assessed precisely, and are significant in volume.

Overall, income development was very positive:

• Revenues increased significantly.
• Other operating income also increased. This was impacted, among other things, by higher income from the sale of real estate at DB Netze Track and changes in provisions. The grants were roughly at the previous year’s level: declining effects, in particular at DB Netze Stations (previous year: support program of the German Federal Government for the renovation of stations) and DB Arriva (primarily at UK Bus and in the Netherlands) were almost completely compensated by higher grants at DB Long-Distance (in part including Covid-19-related train-path price support). At DB Regional, a decline in Covid-19 support services, among other things, exceeded positive effects, mainly from compensation payments for the 9-Euro-Ticket.

Expenses also increased significantly, due in particular to the business development at DB Schenker, increased energy costs and higher personnel expenses in the Integrated Rail System, though overall this increase was disproportionately small compared to income:

• Cost of materials increased noticeably, primarily due to higher freight rates at DB Schenker. In the Integrated Rail System, the main factors were price- and performance-related increases in expenses for energy and maintenance. At DB Arriva, higher expenses, in particular for energy, had a negative impact.
• Personnel expenses also increased. In addition to wage effects, the higher number of employees also impacted the Integrated Rail System. There were additional effects at DB Schenker from the positive development of business operations. At DB Arriva, cost-reducing effects, including from the sale of activities were partially compensated by measures to limit the effects of driver shortages.
• Other operating expenses increased due, among other things, to a higher demand for IT services. In addition, among other things, another increase in travel activity and higher rental expenses, in particular for freight cars and in connection with cross-border transport, had an impact that increased expenses.
• Depreciation increased slightly due to capital expenditures.

Adjusted EBIT and adjusted EBITDA improved noticeably as a result. Adjusted EBIT was again positive.

• The slightly weaker operating interest balance resulted from the development of interest rate levels. Higher ex­­pen­ses primarily in connection with pensions were largely offset by higher interest income.

Operating income after interest also improved noticeably and was positive again.

• Net investment income remained at a very low level, and the change was mainly driven by lower losses at GHT Mobility GmbH, and profit improvements at Aquabus BV.
• The significant increase in other financial result was mainly due to positive effects from the compounding and discounting of provisions. This was counteracted by the effects of hedge transactions concluded, which resulted in an expense on balance (previous year: income) and negative exchange rate effects.
• The extraordinary result declined significantly and was largely driven by the significant reduction in the Covid-­19-re­­lated train-path price support implemented (2021 Integrated ­Report). The extraordinary effects in 2022 also resulted primarily from restructuring measures, the revalua­tion of provisions and transactions with subsidiaries.

Profit before taxes on income was also positive again. However, the development of the income tax position had a very significant impact on development:

• Actual income taxes rose due to higher results for some foreign Group companies (primarily at DB Schenker).
• The high deferred tax expenditure (previous year: deferred tax income) resulted from changes in estimates regarding the future use of loss carry-forwards (due among other things to expected high burdens on profits) at DB AG. Using a shorter planning horizon also increased expenses.

The net loss for the year (loss after income taxes) recovered noticeably, but remained negative.