Key economic performance indicators

• Operating profit development leads to significantly negative development of ROCE and debt coverage.

¹⁾ Calculated using a capital asset pricing model (CAPM), as the Federal Network Agency has not set any weighted cost of capital (WACC), but system-specific costs of equity.

At DB Group, financial stability is a material requirement for financing capital expenditures in our core business, further developing our businesses and seizing opportunities for future growth. In the context of our value management, we intend to manage DB Groupʼs profitability in the long term so that we can finance capital expenditures in our core business and so that the assets retain their value. DB Group’s financial steering and management – and therefore also the monitoring of the success of our economic targets – is carried out via a value management system based on key figures. The results are an important factor for our strategic approach, our capital expenditure decisions and employee and executive remuneration.

• Financial stability is essential for sustainable economic activity. For DB Group with its asset-intensive business, it is essential that it has access to the capital market under good conditions at all times. A major objective is therefore to achieve adequate key debt ratios. To manage indebtedness, we use debt coverage. The target value is derived from key credit rating figures and annual benchmarking with companies with a strong creditworthiness.
• Profitability as an overarching target in value management aims to ensure a long-term reasonable rate of return over several economic cycles. On the basis of market values, we calculate the annual cost of capital as
  a weighted average of risk-adequate market returns on equity and debt capital. The actual yield, the return on capital employed (ROCE), is calculated as the ratio of operating profit before interest and taxes (EBIT adjusted) to capital employed. The ROCE target is set higher than the cost of capital. The long-term target is to achieve a multi-year ROCE average that reaches the target value, ensuring that the cost of capital is covered. The target value corresponds to the minimum required rate of return (MRR). The respective business characteristics result in different target values for our activities:
  • The cost of capital and therefore also the expected return in the infrastructure business units have been based on the capital costs approved by the Federal Network Agency.
  • The derived target value of the Integrated Rail System is based on the value-weighted return expectations for the allocated business units.
• The operating business is always steered before taxes and, accordingly, the reporting of key figures is based mainly on pre-tax figures.

The following ROCE targets were adjusted in 2023:

• Target values for the Integrated Rail System and DB Group fell, driven, among other things, by lower fluctuations in yields by the relevant peer companies compared to the market portfolio (betas) when determining the cost of capital. This was counteracted by the slight rise in interest.
• In freight transport and logistics, there was an increase in the target value as a result of increased industry-specific profitability requirements.
• The costs of capital (before taxes) approved by the Federal Network Agency are considered target values for the regulated infrastructure areas. DB Netze Stations showed a slight decline.
• The target value for DB Energy rose, as there was a slight increase in beta in addition to the increase in interest rates.