Mercados De Consumo Y Comportamiento De Compra De Los Consumidores

Our profitability, value and liquidity-oriented performance indicators apply throughout the Group and represent the basis for operational and strategic management decisions. They are used for target setting, performance measurement and compensation design.

The key performance indicators are adjusted earnings before interest and taxes (adjusted EBIT), ThyssenKrupp Value Added (TKVA) and free cash flow before divestments (FCF before divestments).

As part of the annual strategy process long-term targets are defined, also at business area level. Based on these long-term targets, management develops short and medium term targets for the budget and medium term plans to be subsequently prepared by all Group companies.

Adjusted EBIT

EBIT measures the profitability of a unit. It is made up of the elements of the income statement that are operational in nature. It is calculated as operating income plus or minus income and expense from items of financial income/expense that are characterized as operational. This includes income and expense from investments where there is a long-term intention to hold the assets. Adjusted EBIT is EBIT adjusted for special items. In comparison with EBIT it ensures improved comparability in multi-period analyses. Special items include disposal losses and gains, restructuring charges, impairment charges as well as other non-operating expense and income.

Group EBIT, the EBIT of the business areas and the special items are described in detail in the sections “Group review” and “Business area review” in the report on the economic position.

TKVA

TKVA is the value created in a reporting period; it 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.

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Management of the Group

FCF before divestments

FCF before divestments permits a liquidity-based assessment of performance in a period by measuring cash flows from operating activities after capital expenditures. It does not include the effects from divestments contained in cash flows from investing activities. This increases the link to operating activities and facilitates comparability in multi-period analyses. FCF before divestments is measured as operating cash flow less the portion of cash flow from investing activities attributable to capital expenditures. More information on the development of FCF before divestments is provided in the section “Group review”.

Definition changes from 2014/2015

Beginning with the new fiscal year the definitions of EBIT, adjusted EBIT and capital employed are being modified with regard to the treatment of capitalized borrowing costs. In EBIT and adjusted EBIT, depreciation of capitalized borrowing costs is no longer reversed. Analogously, capitalized borrowing costs become part of capital employed again. In addition, from fiscal 2014/2015 we will include upward correction factors in capital employed which will lead to an increase in the performance requirements for positive TKVA. We will also no longer increase EBIT at business area level, especially at business areas with long-term construction contracts, by an imputed earnings contribution derived from net advance payments surpluses and the interest and financing effects attainable with them. The definitions of EBIT and adjusted EBIT will be adjusted accordingly from fiscal 2014/2015. Analogously, net advance payments surpluses will no longer be included when calculating capital employed. Likewise our adjusted EBIT forecast for the Group and the business areas is already based on the new definitions; more information on this is provided in the forecast report.

Adjusted EBIT after definition changes

million € 2013/2014 without definition changes pro forma incl. definition changes Change Components Technology 269 268 (1) Elevator Technology 751 674 (77) Industrial Solutions 738 420 (318) Materials Services 213 212 (1) Steel Europe 216 206 (10) Steel Americas (60) (68) (8) Corporate (424) (426) (2) Consolidation (370) 28 398 Group 1.333 1.314 (19)

Adjusted EBIT margin after definition changes

in % 2013/2014 without definition changes pro forma incl. definition changes Change Components Technology 4.4 4.3 (0.1) Elevator Technology 11.7 10.5 (1.2) Industrial Solutions 11.8 6.7 (5.1) Materials Services 1.6 1.6 0.0 Steel Europe 2.4 2.3 (0.1) Steel Americas (2.9) (3.3) (0.4) Corporate — — — Consolidation — — — Group 3.2 3.2 0.0

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Targets

TARGETS

The multi-year profile of our key performance indicators shows that the measures under the Strategic Way Forward are taking effect. Although we more than doubled adjusted EBIT in the past fiscal year and expect a further significant improvement in fiscal 2014/2015, we are still some way from our sustainable minimum requirement. Ambitious targets for the financial indicators as well as targeted 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 free cash flow again in order to provide the funds needed to expand our growth businesses and pay a solid dividend to our shareholders. This requires 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:

• 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 €1 billion

• Industrial Solutions – Sales expansion by on average more than 5% per year to €8 billion long-term through implementation of the new growth strategy with a sustainable EBIT margin of 6 to 7%

• Materials Services – Return to higher margin levels with recovery of materials markets and successful restructuring of VDM and AST

• Steel Europe – EBIT improvement through the efficiency program “Best-in-Class Reloaded” to earn sustainably more than the cost of capital across the cycle

• Steel Americas – Further operating improvement with positive EBIT contributions

We expect that further progress on our Strategic Way Forward will again be clearly visible in another significant improvement in our key performance indicators in fiscal 2014/2015. Against the background of significantly increased economic uncertainties and with visibility for large parts of our materials and components businesses in the current economic climate not extending far beyond a quarter, we aim to achieve adjusted EBIT of at least €1.5 billion, a significant improvement in value added (TKVA) and at least breakeven FCF before divestments in fiscal 2014/2015. The targets are already based on the new definitions. More information on the definition changes is provided in this section under “Management of the Group”, and more information on the forecast for the current fiscal year can be found in the forecast report.

Indirect financial targets

The systematic management of indirect financial parameters contributes to improvements in financial performance indicators. For example, sustainable increases in energy efficiency have a positive impact on production costs, which ultimately means earnings, cash flow and value added can be increased. Consistently high and efficient investment in research and development secures innovativeness, improves our product and service portfolio and opens up new markets. This creates significant potential for the financial targets. In the past fiscal year topic areas in which we aim to achieve ambitious target levels were identified in a structured process in the areas People, Technology and Innovations, and Environment, Climate and Energy. The indirect financial targets and strategic objectives defined in September 2014 by the Sustainability Committee are subject to annual review. The Committee is made up of the Group Executive Board, the CEOs of the business areas and heads of corporate functions.

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Targets

People

• Health and safety at work are a top priority at ThyssenKrupp. For this reason, the aim is to more than halve the accident frequency rate compared with fiscal 2011/2012: to 3.8 accidents per 1 million hours worked in fiscal 2014/2015. • Increasing diversity in our workforce and leadership team, particularly in terms of age, gender and origin, is key to our

management capability. In an initial step we therefore aim to increase the share of females in management positions worldwide to 15% by fiscal 2019/2020.

Technology and Innovations

• In recent years, research and development spending has been increased significantly to an appropriate level for the Group based on benchmarks with peer companies. By means of an R&D intensity of around 2.5% of sales (excluding trading and distribution businesses) we aim to secure continuing innovativeness and the efficiency of research spending.

Environment, Climate and Energy

• The energy efficiency potential of the operating units was identified in the reporting year and is now to be systematically leveraged. The aim by fiscal 2019/2020 is to increase energy efficiency sustainably by 3.5 TWh compared with 2012/2013.

• Operational energy management will be systematically improved. By fiscal 2019/2020 all relevant operations worldwide will have implemented ISO 50001 energy management systems.

• Existing environmental management systems will be further expanded. By fiscal 2019/2020 all relevant operations worldwide will have environmental management systems meeting the requirements of ISO 14001.

Purchasing

• ThyssenKrupp has documented the sustainability requirements it places on suppliers, e.g. in the areas of compliance and environmental protection, in a ThyssenKrupp Supplier Code of Conduct. Adherence to this code is to be reviewed by means of 100 supplier audits annually.

Information on improvements already achieved and the associated management processes can be found in the corresponding sections.

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Summarized assessment by the Executive Board