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Performance indicators and special items

The information on the Schaeffler Group's earnings, net assets, and financial position is based on the requirements of International Financial Reporting Standards (IFRS) and, where applicable, German commercial law and German Accounting Standards (GAS).

In addition to the disclosures required by these standards, the Schaeffler Group also discloses certain performance indicators that are not defined in the relevant financial reporting standards. The company presents these measures in accordance with the Guidelines on Alternative Performance Measures issued by the European Securities and Markets Authority, ESMA. Therefore, these indicators should be considered supplementary information. They are designed to provide comparability over time and across sectors and are calculated by making certain adjustments to, or calculating ratios between, line items contained in the income statement, statement of financial position, or statement of cash flows prepared in accordance with applicable financial reporting standards.

Performance indicators

These performance indicators include EBIT, EBITDA, the net debt to EBITDA ratio, ROCE, and SVA. The key indicators used in evaluating the company’s operations are EBIT and the EBIT margin. EBIT is defined as earnings before financial result and income taxes. The EBIT margin represents EBIT as a percentage of revenue. In addition to EBIT, the company calculates EBITDA, which represents EBIT before amortization of intangible assets, depreciation of property, plant and equipment, and impairment losses. It is primarily used to calculate the net debt to EBITDA ratio. This ratio is used to evaluate the financing structure and is the ratio of net financial debt to EBITDA, where net financial debt is defined as the sum of current and non-current financial debt net of cash and cash equivalents. The Schaeffler Group’s key value-based performance indicator is SVA as well as ROCE, which is closely linked to SVA.

See chapter "Group management" for more details on ROCE and SVA.

The Schaeffler Group also calculates certain additional performance measures not defined in the relevant financial reporting standards. These are defined and discussed in the relevant chapters.

Special items

In order to make the evaluation of the company’s results of operations as transparent as possible, the Schaeffler Group reports the indicators described above before special items (=adjusted). Special items are items that the Board of Managing Directors considers to render the financial indicators less meaningful for evaluating the sustainability of the Schaeffler Group’s profitability due to their nature, frequency, and/or size. Net income attributable to shareholders of the parent company before special items in EBIT is also presented in order to facilitate calculating the dividend payout ratio.

In addition to presenting special items, the company also aims to make the evaluation of the company’s results of operations as transparent as possible by presenting its revenue figures excluding the impact of currency translation. Revenue figures at constant currency, i.e. excluding the impact of currency translation, are calculated by translating functional currency revenue using the same exchange rate for both the current and the prior year or comparison reporting period. The company also reports free cash flow (FCF) before cash in- and outflows for M&A activities. M&A activities consist of acquisitions and disposals of companies and business units. To facilitate evaluation of the cash conversion cycle, the company determines the FCF conversion ratio, which represents the ratio of FCF before cash in- and outflows for M&A activities to EBITDA before special items.

Special items are categorized as legal cases, restructuring, and other.

  • 2018
    2017
    EBIT
    1,354
    1,528
    in % of revenue
    9.5
    10.9
    Special items
    27
    56
    Legal cases
    -21
    17
    Restructuring
    48
    39
    Other
    0
    0
    EBIT before special items
    1,381
    1,584
    in % of revenue
    9.7
    11.3
    Net income 1)
    881
    980
    Special items
    27
    56
    Legal cases
    -21
    17
    Restructuring
    48
    39
    Other
    0
    0
    – Tax effect 2)
    -7
    -14
    Net income before special items 1)
    901
    1.022
    Net financial debt
    2,547
    2,370
    / EBITDA
    2,175
    2,295
    Net financial debt to EBITDA ratio
    1.2
    1.0
    Net financial debt
    2,547
    2,370
    / EBITDA before special items
    2,202
    2,351
    Net financial debt to EBITDA before special items
    1.2
    1.0
    EBITDA
    2,175
    2,295
    Special items
    27
    56
    Legal cases
    -21
    17
    Restructuring
    48
    39
    Other
    0
    0
    EBITDA before special items
    2,202
    2,351
    Free cash flow (FCF)
    222
    488
    -/+ Cash in- and outflows for M&A activities
    162
    27
    FCF vor Ein- und Auszahlungen für M&A-Aktivitäten
    384
    515
    /EBITDA before special items
    2,202
    2,351
    FCF Converstion Ratio (in %)
    17.4
    21.9
    EBIT
    1,354
    1,528
    – Cost of capital
    825
    797
    Schaeffler Value Added
    529
    731
    EBIT before special items
    1,381
    1,584
    – Cost of capital
    825
    797
    SVA before special items
    556
    787
    EBIT
    1,354
    1,528
    - Cost of capital
    825
    797
    ROCE (in %)
    16.4
    19.2
    EBIT before special items
    1,381
    1,584
    / Average capital employed
    8,246
    7,966
    ROCE before special items (in %)
    16.7
    19.9
  • 2018
    2017
    EBIT
    682
    951
    in % of revenue
    7.6
    10.6
    Special items
    11
    22
    Legal cases
    -13
    -3
    Restructuring
    24
    25
    other
    0
    0
    EBIT before special items
    693
    973
    in % of revenue
    7.7
    10.8
  • 2018
    2017
    EBIT
    319
    333
    in % of revenue
    17.2
    17.7
    Special items
    -3
    25
    Legal cases
    -3
    20
    Restructuring
    0
    5
    Other
    0
    0
    EBIT before special items
    316
    358
    in % of revenue
    17.0
    19.0
  • 2018
    2017
    EBIT
    353
    244
    in % of revenue
    10.4
    7.7
    Sondereffekte
    19
    9
    Legal cases
    -5
    0
    Restructuring
    24
    9
    Other
    0
    0
    EBIT before special items
    372
    253
    in % of revenue
    11.0
    8.0

in € millions.

1) Attributable to shareholders of the parent company.
2) Based on the group's effective tax rate for the relevant year.

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