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Management of the Group

The indicators used throughout the Group for profitability, value added and liquidity form the basis for operational and strategic management decisions at thyssenkrupp. We use them to set targets, measure performance and determine variable components of management compensation. For us, the most important financial indicators – the key performance indicators in accordance with German Accounting Standard 20 (DRS 20) – are adjusted earnings before interest and taxes (adjusted EBIT), thyssenkrupp Value Added (tkVA) and free cash flow before divestments (FCF before divestments), and from fiscal 2015/2016 free cash flow before M&A (FCF before M&A).

As part of the annual strategy process we define long-term targets, also for the business areas. Based on these, management develops short and medium term targets for the budget and medium term plans to be subsequently prepared by all units.

thyssenkrupp – Key performance indicator

thyssenkrupp Key performance indicator

Adjusted EBIT

BIT stands for the profitability of a unit. It contains all elements of the income statement relating to operating performance. This also includes items of financial income/expense that can be characterized as operational, including income and expense from investments where there is a long-term intention to hold the assets. Adjusted EBIT is EBIT adjusted for special items, i.e. excluding disposal losses/gains, restructuring expenses, impairment charges/impairment reversals and other non-operating expenses and income. It is more suitable than EBIT for comparing operating performance over several periods.

Group EBIT, the EBIT of the business areas and the special items are described in detail in the sections "Group review" (page 51) and "Business area review" (page 60) in the report on the economic position.


tkVA is the value created in a reporting period. This indicator permits comparison of the financial performance of businesses with different capital intensity. tkVA is calculated as EBIT minus or plus the cost of capital employed in the business. To obtain the cost of capital, capital employed is multiplied by the weighted average cost of capital (WACC), which includes equity, debt and the interest rate for pension provisions.

Information on tkVA in the reporting year can also be found in the section "Group review" (page 51).

Source: Annual Report 2014/2015, p. 40

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