2018 Integrated Report – On track towards a better Railway

Business development

Value management figures under pressure

  • ROCE target adjusted.
  • Development of operating profit worsens ROCE and redemption coverage.
  • Indebtedness drives development of net debt/EBITDA.

Value management targets (%)

DB Group


and logistics


rail system








Redemption coverage 1)






Net debt / EBITDA (multiple)






1) Target values being revised in the context of implementing IFRS 16.

At DB Group, profitability is a material requirement for financing capital expenditures in our core business, further developing our businesses and seizing opportunities for future growth. Entrepreneurial leadership is indispensable for improving profitability.

In the context of our value management we intend to maintain, increase and guarantee DB Groupʼs enterprise value over the long-term so that we can finance capital expenditures on our core business. The financial leadership and management of DB Group – and therefore also the monitoring of the success of our targets for profitable growth – is performed on the basis of 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 management remuneration.

Profitability as an overarching target in value management ensures 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 from 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 income before interest and taxes (EBIT adjusted) to capital em­­ployed. The ROCE target is set higher than the cost of capital. The long-term objective is to achieve an ROCE whose multi-year average reaches the target value, ensuring that costs of capital are covered. This ROCE target corresponds to the minimum required rate of return (MRR). The different business characteristics result in different target values for our activities in passenger transport, in logistics and in rail freight transport as well as in infrastructure. The cost of capital and thus the expected returns from the infrastructure business units are lower than in passenger transport, logistics and rail freight transport owing to our projection of continuing low profit volatility. The target value for the integrated rail system was derived from the value-weighted return expectations of all business units in DB Group with the exception of DB Arriva and DB Schenker. The operating business is always controlled before taxes and the reporting of key figures is accordingly based mainly on pre-tax figures.

Financial stability is an essential component for sustainable economic activity. For DB Group as an asset-intensive company, it is essential that we have access to the capital market at all times under favorable conditions. A major objective is therefore to achieve adequate key debt ratios. Our key indicator for managing indebtedness is redemption coverag.

Target values for key debt ratios are derived from key rating figures and annual benchmarking with comparable companies with an excellent credit rating.

Gearing is by now only of secondary importance for the value management of DB Group and will therefore no longer be reported.