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Targets

Ambitious targets for our financial indicators and systematic improvements in strategic areas, including via Indirect Financial Targets, are important elements of the Strategic Way Forward with a view to achieving our minimum requirement.

Financial targets

We are confident that we will generate strong, stable positive value added and free cash flow before M & A again in order to provide the funds to expand our growth businesses and pay a solid dividend to our shareholders. For this we need adjusted EBIT of at least €2 billion related to the current continuing operations of the Group. We are convinced that we will achieve the earnings growth needed for this minimum requirement and beyond by strictly following the Strategic Way Forward in all business areas and at Group level. We have defined clear targets for this based on comparisons with best-in-class peers:

  • Components Technology - Profitable growth, medium- to long-term return to adjusted EBIT
    margins of 6% to 8% through successful ramp-up of new plants and continuation of efficiency and restructuring measures
  • Elevator Technology – Profitable growth and efficiency and restructuring measures for continuing improvements to EBIT margin by 0.5 to 0.7 percentage points per year to 15% and an EBIT contribution of over €1 billion
  • Industrial Solutions – With implementation of the “planets” transformation program, long-term sales expansion by on average 5% per year to an absolute target level of €8 billion and an adjusted EBIT margin of 6% to 7%; (details on “planets” can be found in the “Business area review” section of the Report on the economic position)
  • Materials Services – Return to higher margin levels of 3 to 4% with the recovery of the materials markets, through further efficiency measures and the successful restructuring of AST
  • Steel Europe – EBIT improvement through efficiency measures and differentiation initiatives to sustainably earn more than the cost of capital across the sector cycle

We expect that further progress on our Strategic Way Forward will again be reflected positively in our key performance indicators in fiscal 2017 / 2018. However, it must be borne in mind that sales and earnings in large parts of our materials and components businesses may be subject to shortterm fluctuations. Nevertheless we expect a further strong improvement in adjusted EBIT and tkVA and once again positive free cash flow before M & A.

More information on our key performance indicators can be found in this section under “Management of the Group”, and details on the forecast for the current fiscal year are provided in the forecast report.

Sustainability and indirect financial targets

Sustainability is a core component of our corporate strategy. As a diversified industrial group we aim to supply innovative products, technologies and services worldwide that contribute to the sustainable success of our customers.

Together with our customers we are looking to the future, and our decision-making processes include both business considerations and ecological and social aspects. The basis for this is a 360 degree view of our value and production chains. In this way we improve our performance and strengthen the future of our company.

Anchoring in the organization

Sustainability activities in the Group are managed and developed by the Sustainability Committee, which is made up of the Group Executive Board, the CEOs of the business areas and heads of various corporate functions. The interests of our stakeholders play an important role in the orientation of our activities. In the reporting year thyssenkrupp conducted an extensive stakeholder survey to obtain an assessment of the key issues from the perspective of customers and investors, for example. The findings of this survey were discussed, including at an internal sustainability conference, and are now feeding gradually into the development of targets, measures and reporting.

Indirect financial targets to secure continuous improvement

thyssenkrupp aims to continuously improve its sustainability performance. To this end the Sustainability Committee has set Indirect Financial Targets (IFTs) in the areas technology and innovations, environment, climate, energy, purchasing and people. Progress towards these targets is measured annually and factored into variable compensation for management via the sustainability multiplier (more information can be found in the Compensation report).

In the reporting year the IFTs for energy efficiency and occupational safety and health were adjusted. Details on the individual targets can be found in the sections of this Annual Report listed in the table and on our website.

Overview of indirect financial targets

Sept. 30, 2016 1) Sept. 30, 2017 2) Change Section
Annual energy efficiency gains of 125 GWh in 2016 / 2017
and 150 GWh in 2017 / 2018
GWh - 330 - Environment, energy, climate
100% of relevant activities covered by ISO 50001
energy management system by 2019 / 2020
% 54 66 +12 %-p. Environment, energy, climate
100% of relevant activities covered by ISO 14001
environmental management system by 2019 / 2020
system by 2019 / 2020
% 78 85 +7 %-p. Environment, energy, climate
Sustainable adjusted R&D intensity of around 2.5% % 2.7 2.7 +/-0 %-p. Technology and innovations
15% share of women in leadership positions
by 2019 / 2020
% 11.0 11.6 +0.6 %-p. Employees
2.0 accidents per million hours worked by 2020 / 2021
and improvement of at least 10% a year
Accidents per million hours worked 3.8 3.1 (18)% Employees
100 supplier sustainability audits each year # 179 161 (18) Purchasing

1) On comparable basis excl. Steel Americas

2) Continuing operations only

Source: Annual Report 2016/2017, p. 39-41

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