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Deutsche Bahn (DBHNGR; Aa1/AA-/AA+) FT flags concerns

TRANSPORTATION
  • Financial Times had a interesting piece on DBHNGR over the weekend with quotes from management that included "of course, it sucks...but it also spurs us on to make things better" and "for decades, we basically ran the system into the ground, and now we’re at a tipping point.".
  • Apparently traffic has not been a issue after the launch of the Deutschlandticket (€49/month for unlimited regional and local travel) but rather ageing infrastructure. Article does reference Schenker sale helping the capex funding: nothing new on details of that for read-through to DSV.
  • Reminder DBHNGR receives a 5-notch upfit from A3 baseline at Moody's and 4-notch uplift from BBB+ at S&P for German government (Triple A) ownership.
  • Performance last year was lacklustre (€1b EBIT loss) but delta for credit remains on how much it receives from the government for capex. Budget has boosted funding for rail infra from €10.75b to >€17b and will help in keeping the lid on net funding needs on a guided +€4b increase in gross capex this year.
  • The logistics unit sale (DB Schenker) will reduce co's scale and diversification and based on above seems earmarked for spending already. Schenker was 42% of group's revenue & 66% of EBITDA in FY23.
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