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.
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.
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.
20182017EBIT1,3541,528in % of revenue9.510.9Special items2756Legal cases-2117Restructuring4839Other00EBIT before special items1,3811,584in % of revenue9.711.3Net income 1)881980Special items2756Legal cases-2117Restructuring4839Other00– Tax effect 2)-7-14Net income before special items 1)9011.022Net financial debt2,5472,370/ EBITDA2,1752,295Net financial debt to EBITDA ratio1.21.0Net financial debt2,5472,370/ EBITDA before special items2,2022,351Net financial debt to EBITDA before special items1.21.0EBITDA2,1752,295Special items2756Legal cases-2117Restructuring4839Other00EBITDA before special items2,2022,351Free cash flow (FCF)222488-/+ Cash in- and outflows for M&A activities16227FCF vor Ein- und Auszahlungen für M&A-Aktivitäten384515/EBITDA before special items2,2022,351FCF Converstion Ratio (in %)17.421.9EBIT1,3541,528– Cost of capital825797Schaeffler Value Added529731EBIT before special items1,3811,584– Cost of capital825797SVA before special items556787EBIT1,3541,528- Cost of capital825797ROCE (in %)16.419.2EBIT before special items1,3811,584/ Average capital employed8,2467,966ROCE before special items (in %)16.719.9
20182017EBIT682951in % of revenue7.610.6Special items1122Legal cases-13-3Restructuring2425other00EBIT before special items693973in % of revenue7.710.8
20182017EBIT319333in % of revenue17.217.7Special items-325Legal cases-320Restructuring05Other00EBIT before special items316358in % of revenue17.019.0
20182017EBIT353244in % of revenue10.47.7Sondereffekte199Legal cases-50Restructuring249Other00EBIT before special items372253in % of revenue11.08.0
in € millions.
1) Attributable to shareholders of the parent company.
2) Based on the group's effective tax rate for the relevant year.