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38 | | DEUTSCHE BAHN GroupOUTLOOKaaFurther economic recovery expected, but at a slower paceaaa Revenue and profit increases confirmed for the 2011 financial yeara Outlook remains uncertain, especially because of the sovereign debt crisisAccording to the estimates available at the time when this reportwas prepared, economic framework conditions will be favorablein 2011 due to the ongoing recovery of the global economy. Theforecasted growth for industrialized nations anticipates continuedeconomic recovery, though at a slightly slower pace throughoutthe year. For this reason we expect that we will again see generallyfavorable impulses for business in the 2011 financial yeardue to the economic development in Germany and the Eurozone,as well as from the continued growth of the global economy andinternational trade.Future direction of DB GroupThe future direction of DB Group is described on page 131 of the2010 Annual Report. During the period under review, the Group’sdirection has not changed in terms of either future businesspolicies or future sales markets.Economic outlookAccording to current estimates by economic research institutes,the global economy will continue to expand in the comingmonths; however, at a slower pace than in the second half of2010. Economic output will generally remain at a moderate levelin the industrialized nations. The economy will be burdened bya high level of debt in both the private and public sectors. Thetransition to fiscal consolidation in more and more countries willincreasingly slow down economic recovery as financial policiesbecome more restrictive. Economic development in the Eurozonewill be burdened by effects of the sovereign debt crisis in thefinancial markets, which is forcing affected countries to cut theirpublic budgets and in some cases to implement drastic savingsmeasures. Very dynamic economic growth currently seen in theemerging nations is expected to decline due to tighter monetarypolicies and partially because of more restrictive fiscal policies.On the other hand, the dampening effects of several otherfactors should decrease – for instance, the strong increase incrude oil prices and the manufacturing downturn in Japan dueto the natural /nuclear catastrophe.For Germany, the overall forecast for the year anticipates GDPgrowth of about 3.5 %. The upward trend will be largely drivenby the domestic economy. The strongest growth impulse willprobably be generated by investments, which will expand significantlyas a result of favorable financing conditions and animproved profit outlook. The estimated 1.5 % increase in privateconsumption is higher than it has been in years. Exports andimports will continue to increase notably, although the highgrowth rates noted in the previous year will not be reached. Thelabor market will continue to show favorable development.Wages and salaries will grow faster than in the previous year.However, the disposable real income levels will be restricteddue to higher inflation.Anticipated development in the relevant marketsPASSENGER TRANSPORTAgainst the backdrop of the stable positive economic frameworkconditions anticipated for full year 2011, coupled with risingemployment figures as well as improved income and consumptiondevelopment, we continue to expect that volume sold forGerman passenger transport will increase moderately in 2011.The same development is also expected for rail passenger transportin Europe, although there will still be clear differencesbetween the individual national markets.FREIGHT TRANSPORT AND LOGISTICSEven if the effects of the economic recovery weaken during thesecond half of the year, based on the developments noted inthe first half of 2011 we expect growth for the German freighttransport market for the full year 2011 to be at least as strongas in the previous year and expand by about 7 %. Ongoing dynamicforeign trade, as well as a strong increase in production acrossall industries, should reinforce demand correspondingly.Development of the freight railways should be stronger thanpreviously anticipated. We expect that truck transport will postabove-average development as well. So rail and truck transportshould expand its share of market – at the expense of inlandwaterway transport.
| | Interim Group Management Report39Following the continued favorable development noted in theglobal transport and logistics markets in the first half of 2011,based on current economic projections we anticipate a slightlyslower rate of growth for the rest of the year. While growthrates for the global air and ocean freight market should beslightly lower than our previous expectations, we continue toexpect that the European land transport sector will increase byat least 10 %.INFRASTRUCTURE IN GERMANYWe anticipate that growth in train-path demand – driven bysteady, dynamic development in rail freight transport – willcontinue throughout the year, and develop slightly better thanpreviously expected. We also still anticipate that the favorabledevelopment seen in the number of station stops during thefirst half of 2011 will be confirmed over the course of the year.Anticipated development in the financial marketsKey estimates made in the 2010 Annual Report regardingdevelopment in the financial markets can also be confirmedat this time. We also anticipate that uncertainties arising fromthe sovereign debt crisis in Europe will lead to greater volatilityin the bond markets. At the same time, companies’ issuingactivities will depend heavily on the extent to which a potentialworsening of the sovereign debt crisis affects their economicenvironment. We predict that, as a company with good creditworthiness,we will continue to enjoy good access to the capitalmarket.Anticipated development of importantbusiness conditionsThe expected development of business conditions of importanceto DB Group is described on page 134 of the 2010 Annual Report.These conditions remained unchanged during the period underreview.Anticipated profit situationDB GroupAnticipated development[ € million ]2010 2011Revenues 34,410 qEBIT adjusted 1,866 qROCE (%) 6.0 qGross capital expenditures 6,891 qNet financial debt 16,939 eq above previous year’s figure, e on previous year’s level, w below previousyear’s figureAgainst the background of the favorable development noted inthe first half of 2011, we expect revenues to increase by about€ 4 billion to substantially more than € 38 billion in the 2011 financialyear. This revenue growth will be driven by organic growthand the Arriva acquisition. This should also lead to a noticeableincrease in profits (adjusted EBIT) to significantly more than€ 2.0 billion. This means that our current expectations are slightlybetter than those stated in the 2010 Annual Report.In terms of the ROCE, gross capital expenditures and netfinancial debt, we are able to confirm the forecasts stated onpage 135 of the 2010 Annual Report.
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