2017 Integrated Report – Departure into a new era

Economic

»Quality for us is the
key to the customer,
digitalization the key
to our future.«

On our way to becoming a profitable quality leader

Satisfied customers and high product quality are key preconditions for us if we are to be a profitable quality leader over the long term. To achieve this, we are continuously investing in our fleets, our infrastructure and innovative products – with the goal of further improving customer satisfaction and punctuality. From the customer’s point of view, what is important here is reliability, information, service quality and innovative products.

With our goal of becoming a profitable quality leader, our focus is clearly on making improvements in the quality of our performance and in customer satisfaction.

Dr. Manuel Rehkopf
Group representative Strategy & Railway of the Future

We aim to win over our customers with our products. To do so, it is important to create the necessary structures, processes and framework conditions to enable us and our employees to keep on winning over our customers each and every day.«

#QUALITY

About 1,000 participants worked in five Railway of the Future campaign workshops on jointly solving challenges faced by railway workers on a day to day basis, and shared formulas for success in an effort to further embed Railway of the Future into the Group and win over their colleagues.

Our quality program will continue to be implemented on a systematic basis

Railway of the Future is a centerpiece of the largest DB Group restructuring since the rail reform in 1994
The aim of the multi-year program is to sustainably improve quality, punctuality and focus on the customer. As a friendly service provider, our goal here is to win over our customers with cleanliness and comfort in stations, more punctual trains, more reliable customer information and more comfortable vehicles. Our internal processes, too, from faster decisions to non-hierarchical collaboration, are integral parts of the quality program. The strategic goal of the multi-year program is to ensure long-term financial success through improved quality of customer offerings. But Railway of the Future is even more that: the aim of the program is to increase the railway’s competitiveness in Germany – and thereby benefit the entire industry. To achieve this, a large number of improvements in service and quality will be implemented for customers in the next few years.

The high performance of the two competence centers (CC) and the executive center (EC) are key to achieving the Railway of the Future goals:

CC Operational Excellence
Achieving punctuality and quality goals through cross-business unit management

CC Digitalization
Digitalizing the customer experience throughout the journey and looking for the core business of tomorrow

EC Transformation
Increasing the performance capability of the entire organization

After the successful implementation in 2016 of many projects in Railway of the Future thanks to great commitment from our employees, who remedied a string of customer annoyances and increased punctuality, we lost a certain amount of momentum in 2017. Although we also implemented many measures, we were not able to completely achieve our quality goals, especially in terms of punctuality. In 2018, we are therefore focusing once again very strongly on punctuality management, improving structures and processes and further building up capacities to enable us to keep the performance and quality promise we have made to our customers.

Digitalization
Transformation picks up pace significantly#DIGITALIZATION

We aim to actively organize mobility and the logistics of tomorrow
Digitalization is changing the mobility market, as well as customer needs, means of transport, driving forces and platforms. The fundamental question remains: How do we get people and goods safely, reliably, comfortably and in an environmentally friendly way from A to B? We want to provide new answers to these questions and thus ensure corporate success in the digital mobility era.

Using the opportunities of digitalization
Promoting innovative digital technologies not only allows for further digitalization of the core rail business but also paves the way for new business models. We are also counting here on cooperation with start-ups and industrial partners as well as the entrepreneurial spirit of our own employees. The programs developed in 2017 for this purpose are an integral part of our digital ecosystem.

Digital DB ecosystem

Creating a digital customer experience
We want to offer our product range to every customer using digital solutions in a way that is easier, better and more cost-effective. The focus is on the further networking of modes of transport and physical and digital offerings. And so we are continuously developing not just our own digital products but, through start-up holdings, we are also promoting innovative business models such as the one from the ride-sharing segment or new navigational positioning systems.

Prof. Dr. Sabina Jeschke
Member of the Management Board Digitalization and Technology

Sensor technology, communication networks with real-time capability and artificial intelligence offer enormous potential for convincing our cus- tomers with high-quality mobility services.«

Creative and innovative ways of thinking about the future
The digitalization labs DB mindbox in Berlin and d.lab and Skydeck in Frankfurt am Main act as drivers for DB Group. In both the DB Schenker Enterprise Lab and the Asset and Maintenance Lab amspire, innovative solutions are being developed for the global freight transport of the future. DB Digital Ventures is making targeted investments in startups and new business models, such as the innovative address system of what3words, which assigns unique three-word addresses to geographical coordinates.

Our customers
stay connected#DIGITALIZATION

Connected everywhere
Since 2017 we have been offering free WiFi in both ICE classes. The quality of the WiFi offering has been significantly improved using new technology. In addition, with maxdome onboard an entertainment offering was launched in the ICE portal with free movies and TV shows. We are also gradually equipping our remote transport fleet with new cell phone repeaters that provide passengers with better reception when they make calls. We have also developed a WiFi concept for regional transport. In October, the green light was given to refit the S-Bahn (metro) fleet in Stuttgart. Over 150 vehicles are expected to be fitted with WiFi by the summer of 2019. In a pilot project “Digital in Regional” we are testing, along with our partners, an IT system to improve customer information. In the Hamburg S-Bahn (metro), we will by the end of 2018 be equipping all 68 stations with WiFi.

0

stations throughout Germany offer passengers and visitors 30 minutes of free WiFi.

About

0

construction sites a day at peak times

More comfort and better service at stations
Between 2017 and 2021 a record amount of € 5.5 billion will go into modernizing our stations. We are investing in places where improvements can be felt directly by our customers: in accessibility, in a higher quality of waiting areas, in digital services and in elevators and escalators. In 2017, about € 700 million was invested, including in redesigning the main stations of Dortmund, Münster (Westphalia) and Frankfurt am Main. A great deal of capital expenditures is also being made in many smaller and mid-sized stations, for example in new escalators, elevators, information boards for passengers, benches, signage systems, floors and ramps for accessibility. In all, over 200 modernization initiatives have been completed.

Improved quality
in existing network#CONSTRUCTION

About € 28 billion will have been invested between 2015 and 2019 in modernizing the rail network, stations and power systems – more than ever before. This is provided for in the performance and financing agreement (Leistungs- und Finanzierungsvereinbarung; LuFV) II between the Federal Government and DB Group. Our largest infrastructure modernization initiative involved the renovation not only of bridges and tunnels but also of tracks, switches and interlockings. In 2017, about € 5.2 billion was invested in renovating and maintaining, among other things, about 1,650 km of track and about 1,800 switches as well as about 4,600 installations for command and control technology. This resulted in a large number of construction activities.

About

0

bridges were modernized between 2015 and 2017.

The focus of the capital expenditure activity in 2017, as in previous years, was on modernizing, securing and maintaining availability of the existing rail infrastructure. More than two-thirds of the infrastructure capital expenditure volume went into the existing network. The focal points were the refurbishment of the superstructure with about € 1.4 billion and capital expenditures in command and control technology of about € 0.6 billion, in bridges of about € 0.6 billion, and in stations of about € 0.6 billion.

Renovation of our bridges
The railway bridges are some of the most long-lasting structures in track infrastructure. In order to keep them in good repair, capital expenditures are made in their preservation and renovation. Be- tween 2015 and 2019, about € 4 billion will have been invested in modernizing railway bridges. By the end of 2019, 875 bridges specified with the Federal Government are to be renovated or newly built. As part of the modernization initiative, about 380 bridges had already been modernized by the end of 2017.

Expansion of the infrastructure#CONSTRUCTION

For higher quality and capacity
The record sum of over € 7.5 billion was invested by us in 2017 in the German rail network. This puts us on the right track to make rail the number one choice for mobility in Germany. We have invested nearly a third of this, about € 2.1 billion, in numerous new construction and development initiatives. Twelve construction initiatives in major projects were launched all over Germany. There were also 15 projects commissioned in 2017. These include the German unification transport projects (Verkehrsprojekte Deutsche Einheit; VDE) no. 8 with the commissioning of the last section Nuremberg – Erfurt–Halle/Leipzig, which has cut the travel time between Berlin and Munich by two hours since December 2017.

Management center Construction set up
In order to find optimal solutions for everyone involved in the trade-offs between travel and construction, the management center Construction has been assisting in construction site planning since July 2017. The goal is to minimize as far as possible the impact on current traffic. The sharp drop in construction-related delays in 2017 despite a rise in the number of construction sites shows the success of the measures taken. By separating the increased construction activities from negative customer impact we are increasing stability throughout the rail network.

Klaus-Martin Feder
Management center Construction

The management center Construction was successful in sharply reducing construction impact compared to 2016. What is driving us all as a team is the conviction that we are achieving improvements for our customers and thereby increasing the reliability of rail transport.«

Internationally
en route to growth

DB International Operations
To enable us to participate in tenders for rail operation and maintenance projects in rail passenger and freight transport outside Europe, DB International Operations GmbH was formed in 2017. As an innovation driver with technical and digital expertise, DB International Operations provides its customers with infrastructure and vehicle operation and maintenance. We use the know-how we have built up over many years in Germany and Europe to do this.

Participation in California High-Speed Rail
In November 2017, we won a consultancy contract for the North American California High-Speed Rail project. For the planned high-speed rail line between San Francisco and Los Angeles, DB International Operations will prepare an operating concept for the first portion of the track between San Jose and Bakersfield and develop the operation as an Early Operator.

Niko Warbanoff
Head of International Affairs

We are an internationally sought-after partner for the sustainable development, operation and maintenance of mobility systems. I am proud that we are making great strides in further developing the DB Group’s international reach with the DB International Operations.«

Expansion of logistics network
In 2017, DB Schenker among other things opened its largest logistics hub in Madrid (Spain) on a 60,000 m² plot. This involves pooling the domestic and international land transport and the project divisions as well as the capital’s air and sea transport. The terminal was built in accordance with the latest criteria for energy saving and sustainability.

About

0million

was invested by DB Schenker in the new logistics hub in Madrid (Spain).

En route to growth in Eastern Europe
In Croatia, DB Arriva has acquired a majority stake in the Croatian Autotrans Group (Autotrans). Autotrans is the largest private bus operator in the country and in 2016 generated about € 49 million in revenues. The number of DB Arriva employees in Croatia is increasing with Autotrans to about 1,400, the number of buses to about 600 and the number of annual passengers to 11.5 million. DB Arriva has been present on the Croatian market since 2013 and offers international connections in addition to regional and national transport.

Additional transport services at DB Arriva
DB Arriva will be running the transport services on the Pågatågen rail network in southern Sweden for another eight years. The number of about 21 million passengers (2015) in the Pågatågen network is expected to increase sharply in the coming years. DB Arriva is significantly expanding connections in the next few years and is developing the fleet of trains from the current number of 69 to 99. For the first time, DB Arriva will also be responsible for maintenance of the vehicles. A digital mobility portal is improving passenger information.

Expansion of digital
services#DIGITALIZATION

Nearly

0

million tickets were booked on mobile devices in 2017 using the DB Navigator app. That’s 47% more than in 2016.

DB route agent informs
The DB Streckenagent (route agent) is an app that individually provides a nationwide update to rail customers across Germany in the event of a disruption through a push notification on the current situation and provides information on possible alternatives. The customer signs up for their personal regional connections that they would like to have monitored by the route agent on an one-time basis or over a longer period.

Seat reservation in regional transport
To offer our customers enhanced travel comfort and quality, we are expanding seat reservation in regional transport in successive steps. Commuters and passengers buying individual tickets will in future be able to make reservations both in the first- and in the second-class car.

New comfort check-in service
2018 sees the rollout of our comfort check-in for our customers in Germany, following successful completion of the tests begun in 2017. The new service is already available to passengers who have bought tickets using their cell phone or online with a seat reservation and the DB Navigator app on selected lines. With tickets bought using a cell phone, under the tab “Travel plan” the customer clicks on the button “Comfort check-in” to confirm their seat and departure date. The information is displayed to the train attendant and there is no need for a ticket inspection.

DB Arriva starts new on-demand minibus service
DB Arriva has launched an innovative on-demand minibus service on the market. Customers can use the ArrivaClick app to order a minibus. The bus stops at a nearby street corner regardless of a timetable or a stop. The app automatically adjusts the data with those of other users whose destination is in the same direction. The buses have room for up to 12 people and are fitted with leather seats, tables, USB ports, free WiFi and power-charging stations. At present the ArrivaClick service is offered around Sittingbourne and Kent Science Park.

Cleaning service via WhatsApp
In our stations there is a new cleaning concept that eliminates dirt more quickly. This involves passengers and visitors using WhatsApp to report dirt in the station. By the end of March 2018, we shall successively expand the offering to about 240 stations and extend it to the whole of the Berlin S-Bahn (metro).

Digital in land transport
With the new digital platform for transport DB SCHENKEReasy, DB Schenker is catering for the future with the complete digitalization of the entire order and supply process for B2B in European land transport. The system is simple, responsive and innovative. All that’s needed is a few clicks to place the order. In 2017, DB SCHENKEReasy was successfully piloted in France. Early 2018 was the start of the Europe-wide rollout, beginning with Ireland. In the long-term it should be possible to also commission international transport services as well as to develop solutions for air and sea freight.

Improved service and
comfort at the station#QUALITY

New design for DB Lounge
At Nuremberg central station we showcase our new lounge design. In the 220 m² area an exclusive haven awaits our customers. The new lounge is split up into three waiting areas: the rest area invites customers to relax. In the bistro area guests can read the paper while relaxing over a cup of coffee or chatting with fellow passengers. Work counters provide the option of working on your laptop.

New platform waiting rooms
The new glass waiting room at the Wolfsburg central station allows travelers to wait in comfort. A digital display panel with a touchscreen displays timetables, car sequences and customer information. In the armrests of the bench seat there are USB connections for charging smartphones and tablets. The new development was initiated by customer satisfaction analyses. By 2018 about 20 stations will have the new waiting room concept.

First DB Information 4.0
We have completely reconfigured the central point of contact for travelers and visitors. In November 2017, the new DB Information service went into operation at Nuremberg central station. The new DB Information service has a large screen with information on altered departure times, timetable alterations and connections. Additional customer screens assist by providing individual advice. New self-service terminals enable online tickets or confirmation of delay forms to be printed or a mobility aid to be ordered. Eighty-two DB Information services are expected to be replaced across the country. The replacement is expect- ed to be completed by the end of 2020.

Hello,

I am your interactive assistant. May I suggest some content or would you like to explore the 2017 Integrated Report by yourself?

In order to get a quick overview of the central topics in the report, I recommend you to look at our 6 main topics/focus topics.