Deutsche Bahn to pay its first-ever dividend | Business| Economy and finance news from a German perspective | DW | 07.04.2011
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Deutsche Bahn to pay its first-ever dividend

The German government is collecting its first-ever dividend from rail operator Deutsche Bahn. The 500 million euros will help the budget deficit, but will ultimately flow back into the state-owned firm's infrastructure.

Deutsche Bahn headquarters in Berlin

Deutsche Bahn is wholly owned by the German government

German rail operator Deutsche Bahn will pay its owner - the federal government - 500 million euros in its first dividend since it was founded as a private joint stock company in 1994.

The company posted a profit of 1.06 billion euros in 2010. Dividend payments are expected to continue in future years, rising to 525 million euros from 2012 to 2014, and then to 700 million in 2015.

"We're trying to obtain the highest possible level of investment," German Transport Minister Peter Ramsauer said.

Transport and Construction Minister Peter Ramsauer

Ramsauer says Germany is trying to maximize its investment

Worldwide revenues

Deutsche Bahn, a worldwide logistics conglomerate, won't be left empty-handed, however. The money will ultimately circle back to the company as the government plans to invest a billion euros in railway infrastructure through 2015.

The state-owned company is currently subject to a European Union antitrust investigation alleging its control over national infrastructure gives it an unfair advantage over competitors. But the federal government has no immediate plans to separate Deutsche Bahn's transport service units from its infrastructure subsidiaries, which control rail lines, train stations, and the network's own electricity supply.

According to Vera Moosmayer, a spokesperson from the Federal Ministry of Transport, Building and Urban Development, the dividend is a way of ensuring the profits Deutsche Bahn nets worldwide are re-invested in the interests of the public.

"We're skimming profit from the entire Deutsche Bahn and ensuring that it is anchored in our budget," she told Deutsche Welle. "That way we can make sure it is invested in the rail network here in Germany."

Shared interests

While the German government is responsible for the construction and expansion of the country's rail network, Deutsche Bahn is tasked with organizing its operation and maintenance.

Rail tracks in Germany

Deutsche Bahn controls the rail infrastructure used by its smaller competitors

More than 5 billion euros are invested in the system annually, not including the money from the new dividend.

Deutsche Bahn spokesman Reinhard Boeckh said although the money is going to pay down Germany's deficit, the company has been assured it will be re-invested in rail projects.

"We're paying this dividend for the first time simply because the up until now the stockholders (the state) hadn't opted for a dividend," he said. "The German government has had this opportunity in the past, but didn't take it."

Ramsauer said on Wednesday there is a possibility Deutsche Bahn's operations could be separated from control over the rail network, but only after the European Union's new railway package is completed. The package is intended to guarantee fair competition, strengthen regulation and bolster investment in Europe's railways.

Author: Gerhard Schneibel
Editor: Sam Edmonds

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