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. The performance targets of the Group and the segments are based on selected financial indicators, as is the performance-based remuneration paid to managers. 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 KPIs used to manage the segments are order intake, revenue and adjusted EBIT. The KPIs are measured and made available to the Executive Board on a monthly basis as part of the internal reporting process. > TABLE 004

Alternative performance measures

The KION Group’s financial reports are prepared in line with International Financial Reporting Standards (IFRS). As well as reporting on the financial key performance indicators defined under IFRS, the KION Group also uses alternative performance measures (APM). APMs are company-specific indicators that are not directly based on any laws or accounting standards. Some are company-specific adjustments of certain financial KPIs, for example the adjustment of these KPIs for non-recurring items (e.g. ‘adjusted EBIT’). APMs are used both internally for management purposes and externally for communicating and reporting to a range of stakeholders.

KPIs used by the KION Group

The following is an overview of the KPIs used by the KION Group to comply with the reporting obligations prescribed by law.

Order book

The order book provides a record of all customer orders on a particular reporting date that are yet to be invoiced. In the Industrial Trucks & Services segment, this only includes orders for new trucks. For long-term construction contracts in the Supply Chain Solutions segment, services that have already been rendered are deducted from the total value of the contract with the customer. The order book is shown in the section ‘Financial position and financial performance of the KION Group’.

Order intake

Order intake comprises all orders received from customers within a specific period minus any cancellations. Order intake is 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 future revenue. The length of time between receipt and invoicing of an order varies depending on the segment, region and product category. Order intake is shown in > TABLE 004.

EBIT (earnings before interest and tax)

Earnings before interest and tax (EBIT) is a measure of performance that is adjusted for company-specific financing activities and the effects of differing international tax regimes. EBIT is shown in > TABLE 037 in the consolidated income statement.

Adjusted EBIT

The key figure used for operational management and analysis of the KION Group’s financial performance is adjusted EBIT. It is EBIT adjusted for company-specific purchase price allocation effects and non-recurring items. A reconciliation of EBIT to adjusted EBIT is presented in > TABLE 011.

Adjusted EBIT margin

The adjusted EBIT margin is the ratio of adjusted EBIT to revenue. It is shown in the section ‘Financial position and financial performance of the KION Group’.

EBITDA (earnings before interest, tax, depreciation and amortisation)

EBITDA is defined as earnings before interest and tax plus amortisation, depreciation and impairment minus reversals of impairment on non-current assets. EBITDA is a measure of performance that is adjusted for company-specific financing activities, the effects of differing international tax regimes and the effects of the company-specific application of amortisation and depreciation methods and margins of discretion in valuations. Amortisation, depreciation, impairment and reversals of impairment on non-current assets are shown in the statement of cash flows in > TABLE 041.

Adjusted EBITDA

Adjusted EBITDA is EBITDA adjusted for company-specific purchase price allocation effects and non-recurring items. A reconciliation of EBITDA to adjusted EBITDA is presented in > TABLE 012.

Adjusted EBITDA margin

The adjusted EBITDA margin is the ratio of adjusted EBITDA to revenue. It is shown in the section ‘Financial position and financial performance of the KION Group’.

EBITDA for the long-term lease business

EBITDA for the long-term lease business comprises the earnings before interest, tax, depreciation and amortisation generated by long-term direct and indirect leases in the Industrial Trucks & Services segment (with the Company as lessor) and is used to measure the performance of the lease business. EBITDA for the long-term lease business is shown in the section ‘Financial position and financial performance of the KION Group’.

Earnings before tax

Earnings before tax is a measure of performance that is adjusted for company-specific the effects of differing international tax regimes. Earnings before tax is shown in the consolidated income statement in > TABLE 037.

Net financial debt

Net financial debt is an indicator of the Company’s liquidity situation and capital structure. It is the sum of long-term and short-term financial liabilities less cash and cash equivalents. Net financial debt is shown in > TABLE 019.

Industrial net operating debt

Industrial net operating debt is an indicator of the liquidity situation and capital structure for the operating business excluding lease activities of the lessor. It is therefore defined as net financial debt plus liabilities from short-term rental fleet financing and liabilities from procurement leases. A reconciliation of net financial debt to industrial net operating debt is presented in > TABLE 019.

Leverage on net financial debt

Leverage on net financial debt is the ratio of net financial debt to adjusted EBITDA for the previous twelve months and is shown in the section ‘Financial position and financial performance of the KION Group’.

Capital employed

Capital employed is the working capital that is required to achieve the operational objectives. > TABLE 005 shows how the figure for capital employed is arrived at.

ROCE (return on capital employed)

ROCE is a measure of the profitability and efficiency of the capital employed. It is the ratio of adjusted EBIT to capital employed as at the reporting date and is calculated annually. ROCE is shown in > TABLE 005.

Free cash flow

Free cash flow is the main KPI for managing the KION Group’s liquidity and financing. It is determined by the KION Group’s operating activities and investing activities. Carefully targeted management of working capital and detailed planning of capital expenditure are thus important tools in the generation of free cash flow. Free cash flow describes the cash flow that is available to pay dividends and interest and to repay liabilities. It is the sum of cash flow from operating activities and cash flow from investing activities. Free cash flow is shown in > TABLE 004.

Capital expenditure

For the KION Group, this item includes capitalised development costs and spending on property, plant and equipment and excludes right-of-use assets. The KION Group’s capital expenditure is shown in the section ‘Financial position and financial performance of the KION Group’.

Net working capital

Net working capital is defined as the sum of inventories, trade receivables and contract assets less trade payables and contract liabilities. It is shown in the section ‘Financial position and financial performance of the KION Group’.

R&D spending as a percentage of revenue

The item R&D spending as a percentage of revenue is the ratio of expenditure on research and development to revenue and is shown in > TABLE 025.

Currency-adjusted changes

Currency-adjusted changes shows the percentage change in a KPI (e.g. order intake, revenue) during the reporting period excluding the effects of changes in exchange rates.

Projected KPIs

The projected KPIs reflect the Company’s expectations regarding future developments and are therefore forward-looking. They are calculated in the same way as the APMs that are described in this section.