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Targets

Despite the decline in adjusted EBIT reflecting the sharp downturn in the materials markets in the reporting year, the multi-year overview and outlook of our key performance indicators show that the measures under the Strategic Way Forward are having a clear effect. Nevertheless we are still some way from achieving our sustainable minimum requirement. Ambitious targets for our financial indicators and systematic improvements in strategic areas, including via indirect financial indicators, are therefore important elements of the Strategic Way Forward.

Financial targets

We are working hard to generate strong, stable positive value added and free cash flow before M & A again in order to provide the funds needed to expand our growth businesses and pay a solid dividend to our shareholders. For this we need EBIT of at least €2 billion. 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. We have defined clear targets for this:

  • Components Technology - Profitable growth, medium- to long-term return to 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% long-term and an EBIT contribution of over €1 billion
  • Industrial Solutions – After implementing the “planets” transformation program, long-term sales expansion by on average around 5% per year to an absolute target level of €8 billion with a sustainable 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 with recovery of materials markets and 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 cycle
  • Steel America – Further operating improvement with positive EBIT contributions

We expect that further progress on our Strategic Way Forward will again be reflected in our key performance indicators in fiscal 2016 / 2017. However, it must be borne in mind that sales and earnings in large parts of our materials and components businesses may be subject to short-term fluctuations. Nevertheless we expect a strong improvement in adjusted EBIT and tkVA and slightly positive FCF 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, thyssenkrupp provides innovative products, technologies and services worldwide that secure the success of our customers and make a positive contribution to global sustainable development.

Together with our customers we focus on the future and include economic, ecological and social considerations in our decision-making processes. This requires a 360° view of our value and production chains. In this way we improve our performance and strengthen the future of our company.

Indirect financial targets to secure continuous improvement

A key part of our Strategic Way Forward is the management of indirect financial parameters. Accordingly, thyssenkrupp has set itself indirect financial targets (IFTs) in the areas technology and innovations, environment, climate, energy, purchasing and people. Our progress towards these targets is measured annually by thyssenkrupp’s Sustainability Committee, which includes the Group Executive Board, the CEOs of the business areas and heads of corporate functions. The Groupwide targets are factored into the management’s variable compensation via the sustainability multiplier.

In the reporting year for example further progress was made in the areas energy efficiency, energy management, and occupational safety and health. More information on the individual targets can be found in the relevant sections and the detailed sustainability reporting on our website.

OVERVIEW OF INDIRECT FINANCIAL TARGETS

2014/2015 2015/2016 Change Section
3.5 TWh energy efficiency gains by 2019 / 2020 TWh 2.2 2.75 +0.55 Environment, energy, climate
100% of relevant activities covered by ISO 50001 energy management system by 2019 / 2020 % 25 53 +28%-P. Environment, energy, climate
100% of relevant activities covered by ISO 14001 environmental management system by 2019 / 2020 % 77 77 0%-P. Environment, energy, climate
Sustainable adjusted R&D intensity of around 2.5% % 2.3 2.6 +0.3%-P. Technology and innovations
15% share of women in leadership positions by 2019 / 2020 % 10.2 10.9 +0.7%-P. Employees
10% reduction in number of accidents per million hours worked every year Accidentsper millionhoursworked 4.6 3.7 (20)% Employees
100 supplier sustainability audits each year # 135 185 +50 Purchasing

Source: Annual Report 2015/2016, p. 39-41

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