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), which remained unchanged in the reporting year, 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. The KPIs used to manage the segments are order intake, revenue and adjusted EBIT. As a rule, the KPIs are measured and made available to the Executive Board in a comprehensive report each month. This enables the management team to take prompt corrective action in the event of variances compared with target figures. > TABLE 004
Key performance indicators |
004 |
|||||
in € million |
2018 |
2017* |
||||
|
||||||
Order intake |
8,656.7 |
7,979.1 |
||||
Revenue |
7,995.7 |
7,598.1 |
||||
Adjusted EBIT** |
789.9 |
777.3 |
||||
Free cash flow |
519.9 |
474.3 |
||||
ROCE |
9.3% |
9.3% |
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 categories.
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 purchase price allocation effects or any non-recurring items.
Liquidity-related KPI
Free cash flow
Free cash flow is the main KPI for managing liquidity and financing activities. It is determined by the KION Group’s operating activities and investing activities. Carefully targeted management of working capital and the controlling of capital expenditure are important tools in generating free cash flow. Free cash flow does not include interest arising from financing activities.
Profitability-related KPI
ROCE
Return on capital employed (ROCE) is another core KPI. It is the ratio of adjusted EBIT to capital employed. ROCE is measured annually. > TABLE 005
Return on capital employed (ROCE) |
|
005 |
||||||
in € million |
2018 |
2017* |
||||||
|
||||||||
Total assets |
12,968.8 |
12,337.7 |
||||||
- less selected assets1 |
–1,730.4 |
–1,547.9 |
||||||
- less selected liabilities2 |
–2,708.0 |
–2,413.3 |
||||||
Capital employed |
8,530.3 |
8,376.5 |
||||||
|
|
|
||||||
Adjusted EBIT |
789.9 |
777.3 |
||||||
ROCE |
9.3% |
9.3% |
Other key performance indicators
Besides the aforementioned core KPIs, the KION Group uses a wealth of additional financial KPIs. The main one is the adjusted EBIT margin, which is besides ROCE a relevant component of remuneration and is also a target in the KION 2027 strategy. 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.