Management system

Core key performance indicators

The KION Group’s strategy, which centres on value and growth, is reflected in how the Company is managed. It uses five core key performance indicators (KPIs) to continuously monitor market success, profitability, financial strength and liquidity. The performance targets of the Group and the segments are based on selected financial KPIs, as is the performance-based remuneration paid to managers. In principle, each month, the KPIs are measured and made available to the Executive Board in a comprehensive report. This enables the management team to take prompt corrective action in the event of variances compared with target figures. > TABLE 012

Key performance indicators

 

012

in € million

Order intake1

Revenue

Adjusted EBIT2

Free cash flow

ROCE

1

Prior-year figures restated to reflect the change in the order intake calculation introduced in 2015

2

Adjusted for KION acquisition items and non-recurring items

2015

5,215.6

5,097.9

482.9

332.7

11.9%

2014

4,771.2

4,677.9

442.9

305.9

11.4%

2013

4,489.1

4,494.6

416.5

195.6

–

KPIs related to business volume

Order intake and revenue

Order intake and revenue are broken down by segment, region and product category in the KION Group’s management reporting so that growth drivers and pertinent trends can be identified and analysed at an early stage. Order intake is a leading indicator for revenue. The length of time between receipt and invoicing of an order varies between business units and product groups.

Earnings-related KPI

Adjusted EBIT

The key figure used for operational management and analysis of the KION Group’s financial performance is adjusted earnings before interest and tax (EBIT). It is calculated in the same way as EBIT, except that it does not take account of the KION Group purchase price allocation or any non-recurring items.

Liquidity-related KPI

Free cash flow

Free cash flow is the main KPI for managing leverage and liquidity. It is determined by the KION Group’s operating activities and investing activities. Free cash flow does not include interest arising from financing activities. Carefully targeted management of working capital and detailed planning of capital expenditure are used to help in controlling the level of free cash flow.

Profitability-related KPI

ROCE

Return on capital employed (ROCE) has been used since 2015 as an additional core KPI. It is the ratio of adjusted EBIT to capital employed. ROCE is measured annually and reported to the Executive Board. > TABLE 013

ROCE

 

013

in € million

2015

2014

1

Lease receivables, income tax receivables, cash and cash equivalents, KION acquisition effects and several items of other financial assets respectively other assets

2

Sundry other provisions, trade payables, a major part of other liabilities as well as several items of other financial liabilities

Total assets

6,440.2

6,128.5

– less selected assets1

–1,126.7

–1,034.3

– less selected liabilities2

–1,261.9

–1,218.2

Capital employed

4,051.6

3,876.0

 

 

 

Adjusted EBIT

482.9

442.9

ROCE

11.9%

11.4%

Other key performance indicators

Besides the aforementioned core KPIs, the KION Group uses a variety of additional financial KPIs. The main ones are net debt, which is used to manage the capital structure, and the EBIT margin, which together with ROCE is relevant as a component of remuneration and as a target in the Strategy 2020. There are also non-financial KPIs, which primarily relate to customers, employees, sustainability and technology. Some of them are used operationally as leading indicators for the financial KPIs.

The KPIs used to manage the brand segments are order intake, revenue and adjusted EBIT. Earnings before tax (EBT) and return on equity (ROE) are the KPIs used to manage the Financial Services segment.