Key economic performance indicators at DB Group

Financial stability is an essential prerequisite for DB Group to finance capital expenditures in its core business, further develop its business and take advantage of future growth opportunities. As part of our value management, we want to manage the profitability of DB Group in the long term so that capital expenditures in the core business can be financed and the assets retain their value. The financial management and management of DB Group – and thus 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, access to the capital market at good conditions at all times is essential. Achieving adequate key debt ratios is, therefore, a major objective. We use the debt coverage to manage indebtedness. We derive the target value from key credit rating figures and from annual benchmarking with comparable 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. To this end, we calculate the cost of capital as a weighted average of risk-adequate market yields for equity- and debt capital on an annual basis using market values. For the DB Long-Distance, DB Regional, DB Cargo and DB Energy business divisions, we measure the actual return, the return on capital employed (ROCE), 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) for investment decisions. The respective business characteristics result in different target values for our activities: in principle, the operating business is managed before taxes and, accordingly, the reporting of key figures is largely based on pre-tax figures.

The required rate of return against DB InfraGO will be measured on the basis of return on equity from 2025. In conjunction with the Federal Government, a claim was derived that both acknowledges the common good-orientation and allows for stable economic activity. The return on equity is derived from the ratio of net profit for the year to equity. The aim is to meet the return on equity target agreed with the Federal Government. It is determined as the average of the cost of equity calculated in accordance with the Federal Network Agency’s current methodology and the risk-free interest rate applied by the Federal Network Agency.