ÖBB Annual Report 2023

Group Management Report 54 Österreichische Bundesbahnen-Holding Aktiengesellschaft Consolidated Financial Statements | Group Management Report 9 A return to growth is expected in 2024, driven primarily by a significant recovery in private consumption. Accordingly, wage settlements in line with rolling inflation should ensure an increase in net real wages from 2024. Industry, however, particularly the construction sector, is likely to face another year of recession. In the manufacturing area, a return to growth is not expected until the second half of 2024 at the earliest. 18 The favourable labour market situation and the expiry of most COVID-19 aid improved the financing situation of the state budget as early as 2022. The revenue side also benefited from increased tax income due to high inflation. Conversely, the numerous measures taken by the public sector to cushion the rise in energy prices and general inflation as well as the higher financing costs due to the key interest rate trend had a dampening effect. Overall, new government debt is expected to fall in 2023 – to a level below the Maastricht upper limit of 3.0% of GDP. This deficit is expected to fall further in 2024, subject to new inflation compensation measures. 19 Capital markets and the state budget Since 2016, the funds required for ÖBB-Infrastruktur AG infrastructure investments have been raised on the capital market by the Austrian Federal Financing Agency (OeBFA). Financing costs are therefore determined by the interest rate level of federal bonds. The ECB’s significant interest rate hikes over the last two years have not left the bond markets unscathed. In October 2023, for example, the average issue yield of Austrian government bonds for the period reached a provisional high of 3.6% with an average term of just under twelve years. In 2023 as a whole, the figure was 3.1%, more than double the average for the period in 2022. The average yields of all bonds in circulation during the period developed more or less the same. Here, too, the increase in 2023 was 3% on average for the year as a whole, which represents a percentage increase of more than 100%. 20 Yields eased slightly in the fourth quarter of 2023. They are likely to have peaked for the time being. 21 In any case, Austria’s credit rating remains high and the outlook of all the major rating agencies is stable. 22 B.2. Political and regulatory framework GRI 201-4 ÖBB continuously analyses the social, political and economic framework conditions in order to identify the developments relevant to the company. These analyses form the basis for preparing information for decision-makers inside and outside the company. As a result, statements and amendments are formulated for relevant legislative proposals in Austria and at European level. The employees responsible draw on the expertise of internal specialists as well as the know-how of external stakeholders to ensure the quality and relevance of the documents. GRI 2-29 The negative economic impact of the pandemic on the company was overcome in the past year. The consequences of the war in Ukraine, however, once again presented the Group with major challenges – in several respects. On the one hand, higher energy costs put pressure on the contribution margins of individual Group divisions. On the other hand – in stark contrast to passenger transport – rail freight transport volumes fell significantly. It was therefore necessary to find solutions for both areas that would reduce system costs and prevent economic damage to the company. Irrespective of this, ÖBB employees worked intensively to support the Ukrainian railway in maintaining supra-regional rail traffic and freight transport. Another topic – a “perennial favourite” – is climate change mitigation with its major challenges for society and the economy. ÖBB once again worked intensively in this area to substantially improve the framework conditions for a climate-friendly transport transition. Quicker approvals for energy projects and railway expansion A milestone for railway infrastructure and traction current projects was achieved as part of the amendment to the Environmental Impact Assessment Act (UVP-G 2023). In future, quicker, simplified and better structured authorisation procedures can be used for energy projects and railway expansion. These so-called fast track procedures end the previous suspensive effect of objections to energy expansion projects by individual complainants. This is set to significantly speed up construction processes in future. The decisive factor for ÖBB is that this exclusion of suspensive effect also applies to railway expansion projects. 18 WIFO. 19 BMF. 20 OeNB. 21 Kurier, Tagesspiegel. 22 OeBFA. | MR9