Liberalization of the European rail market – a success story from the view of the operator?

4th European Regulation Forum

Deutsche Bahn AG Dr. Ralph Körfgen Corporate Development (GS) Florence, 19th of March, 2012

0/0/0 100/105/115 135/140/150 200/200/205 215/222/226 255/255/255 255/0/0 221/237/177 253/246/177 187/202/234 252/183/108 0/0/102 operates as an integrated mobility and logistics provider consisting of nine business units

Passenger transport: Infrastructure: Transport and logistics: Domestic and European-wide Efficient and future-oriented Intelligent logistics services mobility services rail infrastructure in via land, air and sea

DB Bahn Long Distance DB Netze Track DB Schenker Rail Long-distance rail passenger Rail network European rail freight transport transport1 DB Bahn Regional DB Netze Stations DB Schenker Logistics Regional/urban passenger Rail stations Global logistics services transport (Germany) DB DB Netze Energy DB Services3) Regional/urban passenger Traction current Integrated range of services transport (Europe)2)

1) Within Germany as well as cross border traffic; 2) In UK ‘CrossCountry’ as well; 3) Business unit is assigned to the Rail Technology and Services division Deutsche Bahn AG | Corporate Development (GS) | 19.03.2012 2

0/0/0 100/105/115 135/140/150 200/200/205 215/222/226 255/255/255 255/0/0 221/237/177 253/246/177 187/202/234 252/183/108 0/0/102 Since the reform of the railway system in 1994, DB has shown a positive track-record in its revenue as well as EBIT performance

Development of DB Group 34.4 Revenues in bn €

14.8 + 132%

1994 '95 '96 '97 '98 '99 '00 '01 '02 '03 1 '04 '05 '06 '07 '08 '09 2010 1.9 EBIT in bn €

HGB IFRS EBIT with compensation for legacy burdens - 3.0 EBIT As of December 31, 2011; 1) Revenue 2003 has been adjusted for effects from Stinnes acquisition Deutsche Bahn AG | Corporate Development (GS) | 19.03.2012 3

0/0/0 100/105/115 135/140/150 200/200/205 215/222/226 255/255/255 255/0/0 221/237/177 253/246/177 187/202/234 252/183/108 0/0/102 DB's financial performance is especially noticeable with respect to an increasing competition in its home market

Volume of competitor's traffic on German infrastructure 195 [in million track kilometers] +15% 170 161 +6% 146 +10%  Total competitor's traffic volume on German 128 +14% infrastructure increased 110 +17% to 19.1% in 2010

88 +25%  Competition especially on profitable trunk lines 70 +25% in freight transport and 50 +40% tendered regional 39 +29% services 26 +50% 20 +28%

1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 Increase year on year

Source: DB Netz AG; Wettbewerbsbericht 2011 Deutsche Bahn AG | Corporate Development (GS) | 19.03.2012 4

0/0/0 100/105/115 135/140/150 200/200/205 215/222/226 255/255/255 255/0/0 221/237/177 253/246/177 187/202/234 252/183/108 0/0/102 DB has made a significant effort increasing its profitability – however, we are not yet prepared to go public

EBIT-margin of European competitors1

Deutsche Bahn Best/Worst 15% Average 10.5% 8.8% 10% 8.1% 7.7% 6.6% 6.6%  Deutsche Bahn has a stable EBIT-Margin 5% 7.1% 7.6% 7.4% well above European average 5.4% 5.8% 5.4% 0%  Other European player with structural 2005 2006 2007 2008 2009 2010 challenges, i.e. high pension obligations

-5% -7.5% and supernumerous staff

-10%  Some state entities without clear aim to -13.2% earn money distort fair competition in the -15% -12.9% market

-20% -17.6% -20.2% -21.4% -25%

Source: Annual Reports, Press 1) 12 European public and private competitors Deutsche Bahn AG | Corporate Development (GS) | 19.03.2012 5

0/0/0 100/105/115 135/140/150 200/200/205 215/222/226 255/255/255 255/0/0 221/237/177 253/246/177 187/202/234 252/183/108 0/0/102 Competition in the German railway transport markets is characterized by railway undertakings in public ownership

Competitors in German railway transport markets1

 9th largest provider in regional passenger transport (Abellio),  Owner: City of Karls-  Owner: Federal market share: 0.8% (2010) ruhe Land Hesse  5th largest provider in  7th largest provider regional passenger in regional pass-  2nd largest provider in freight transport, market share: enger transport, transport (incl. Captrain, ITL), 1.8% (2010) market share: 1.4% market share: 5.7% (2009) (2010)  6th largest provider in regional passenger transport (), market share: 1.8% (2010)  Owner: City of  Owner: City of (51%) Cologne (93.8%)  4th largest provider in  5th largest provider regional passenger in freight transport,  4th largest provider in freight transport, market share: market share: 2.1% transport (OHE, TX Logistik), 1.3% (2010) (2009) market share: 2.7% (2009)  3rd largest provider in regional passenger transport  3rd largest provider in freight transport, market (), market share: share: 2.8% (2009) 3.3% (2010)  14th largest provider in regional passenger 1) Market shares in freight transport in terms of transport volume, transport, market share: 0,3% (2010) in passenger transport in terms of train kilometers Source: VDV Deutsche Bahn AG | Corporate Development (GS) | 19.03.2012 6

0/0/0 100/105/115 135/140/150 200/200/205 215/222/226 255/255/255 255/0/0 221/237/177 253/246/177 187/202/234 252/183/108 0/0/102 The railway sector needs some questions answered on how its future is desired by politics

Future requirements

Primary goal: Increase competitiveness and market attractiveness on the basis of fair competition and achieve system efficiency benefiting customers and public budgets to attract private capital to the sector

From our point of view, the following needs to be done:

 Full liberalization and nondiscriminatory market access

 Common standards of regulation in Europe uniformly applied by strong and independent rail regulators

 European framework to allow for efficient structural rail models and incentives for economic behavior of railway undertaking and infrastructure manager

 Removal of technical barriers (e.g. certification of rolling stock) and re-orienting relation with rail manufacturers (standardization, quality, cost)

 Long term stability in infrastructure finance and framework for fair intermodal competition

Deutsche Bahn AG | Corporate Development (GS) | 19.03.2012 7

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