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Targets

Financial targets

Our goal is to increase the efficiency of all our business areas in order to generate stable positive value added and cash flow for the Group. To crystallize our vision, we have for the first time set a clear timeline for our financial targets. With our growth and earnings targets, the individual business areas and our share in the planned steel joint venture are aiming to achieve total free cash flow before M & A of at least €1 billion in the 2020 / 2021 fiscal year. The targets for the business areas and for Corporate are derived from comparisons with best-in-class peers and in their current configuration and taking into account the reclassification of Marine Systems are as follows:

  • Components Technology – Annual sales growth in mid single-digit percentage range through successful ramp-up of new plants and production lines for steering systems; increase in adjusted EBIT margin to over 7%
  • Elevator Technology – Annual sales growth in low to mid single-digit percentage range as well as efficiency and restructuring measures to increase EBIT contribution to more than €1 billion with an EBIT margin of over 13% (long-term target 15%)
  • Industrial Solutions (without Marine Systems) – Return to an adjusted EBIT margin of around 6% through refocusing of the division on smaller and medium-size orders as well as growth in highmargin service business
  • Marine Systems – Return to at least a positive adjusted EBIT margin through better project execution and continuation of the transformation process already underway
  • Materials Services – Improvement in adjusted EBIT margin to around 3% through continuation of the digitization initiatives with efficiency gains throughout the value chain; at the same time reduction in general and administrative costs
  • Corporate – Reduction of costs to clearly below €400 million
  • Steel Europe (discontinued operation) – Ramp-up of the dividend from the joint venture with Tata Steel to a low to mid three-digit million € amount through rigorous implementation of the synergy plan; until the closing of the steel joint venture, positive contribution to adjusted EBIT and normal seasonal build-up of net working capital weighing on free cash flow

We expect further progress will again be reflected positively in our key performance indicators in fiscal 2018 / 2019. Sales and earnings in large parts of our materials and components businesses may be subject to short-term fluctuations. Nevertheless for our continuing operations we expect a strong improvement in adjusted EBIT and free cash flow before M & A as well as positive tkVA for the Group.
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. In our strategic sustainability management we continuously identify the requirements of our stakeholders and develop corresponding targets and measures to improve our performance. Sustainability activities in the Group are managed by the Sustainability Committee. It consists of the Group Executive Board, the CEOs of the business areas, and heads of various corporate functions, and decides on measures and on our Indirect Financial Targets (IFTs). Implementation is the responsibility of the corresponding departments and business units, who report regularly on their progress.

Indirect financial targets to secure continuous improvement

The Sustainability Committee has set Indirect Financial Targets in the areas technology and innovations, environment, climate, energy, purchasing and people. Progress towards these targets is factored into variable compensation for the Group Executive Board and business area boards via the sustainability multiplier (more information can be found in the compensation report). In the reporting year most of the Indirect Financial Targets were achieved or are on track to being met.

A new target has been adopted for energy efficiency: in the 2018 / 2019 fiscal year energy efficiency gains of 100 GWh are to be achieved (continuing operations only). The R&D intensity target was also adjusted: the new adjusted R&D intensity target is 3.0% (continuing operations only).

Overview of indirect financial targets

Sept. 30, 2017 Sept. 30, 2018 Change Section
Annual energy efficiency gains of 125 GWh in 2016 / 2017
and 150 GWh in 2017 / 2018
GWh 330 253 - Environment, energy, climate
100% of relevant activities covered by ISO 50001
energy management system by 2019 / 2020
% 64 83 +17 %-p. Environment, energy, climate
100% of relevant activities covered by ISO 14001
environmental management system by 2019 / 2020
% 85 91 +6 %-p. Environment, energy, climate
Sustainable adjusted R&D intensity of around 2.5% % 2.7 2.5 (0.2) %-p. Technology and innovations
15% share of women in leadership positions
by 2019 / 2020
% 11.6 12 +0.4 %-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 3.1 3.0 (3.3)% Employees
100 supplier sustainability audits each year # 161 173 +12 Purchasing

Source: Annual Report 2017/2018, p. 38-40

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