Strategic targets: 2015 performance
Return on sales (ROS)
We use return on sales (ROS) as a performance indicator to reflect profitability relative to revenue. ROS as a target will focus management on delivery and quality of profits. ROS is defined as operating income as percentage of revenue.
Exceeded our 2015 target
- Positive impact of process optimization
- Lower costs
- Reduced restructuring expenses as we move into a stronger emphasis on continuous improvement
Target 9.0%
Return on sales (ROS) development
Operating income in % of revenue
Return on investment (ROI)
We use return on investment (ROI) as a performance indicator to reflect profit relative to invested capital. ROI as a target will focus management on delivering value through returns in excess of our cost of capital. ROI is defined as operating income divided by average invested capital.
Exceeded our 2015 target
- Improved profitability as described in the ROS section
- Average invested capital increased compared with 2014 due to currency effects and temporary and planned inventory increase as part of the scheduled footprint optimization
Net debt/EBITDA
Net debt/EBITDA reflects our strategy to maintain a strong investment grade rating (or credit rating).
Exceeded our 2015 target
Target <2.0
Net debt/EBITDA
Ratio
Eco-premium solutions with customer benefits
Our 2020 target is to achieve 20 percent of revenue from products and services which provide customers and consumers in our downstream value chain with a significant sustainability advantage compared with the most commonly available equivalent commercial products or industrial processes.
Continued progress towards our 2020 target
- Percentage of revenue from eco-premium solutions with downstream benefits remained stable at 19 percent
- Revenue increased from sales growth from new and existing eco-premium solutions in all Business Areas
- This was offset by “mainstreaming” of a few of our coatings products and revenue growth from products which are not eco-premium
Target 20%
Eco-premium solutions with customer benefits
in % of revenue
For more details see Sustainability statements Note 4.
Cradle-to-grave carbon footprint
Our ambition is to reduce our cradle-to-grave carbon footprint by 25-30 percent per ton of sales between 2012 and 2020.
Some progress towards our 2020 target
- Carbon footprint per ton of sold product has decreased 3 percent since 2012. Absolute footprint is down 10 percent
- Solid improvements due to lower footprint energy sources, including renewables, efficiency gains at our energy intensive facilities, and increased sales of lower carbon footprint coatings products
- Our 2020 target remains a challenge as we continue to focus on working together with suppliers and customers to deliver improvements across the value chain
Target 25-30%
Cradle-to-grave carbon footprint
% reduction CO2(e) per ton of sales from 2012
For more details see Sustainability statements Note 5.
Resource Efficiency Index (REI)
The Resource Efficiency Index is defined as gross margin divided by cradle-to-grave carbon footprint – reported as an index. We are monitoring this index, and our aim is to use it to drive further improvements in resource efficiency across the value chain.
Improvement achieved
- REI increased to 113 from 2012 base of 100, though trend is variable
- Margin increases across the Business Areas from sales of higher added value products and positive currency effects
- Some improvement in carbon footprint performance due to energy sourcing and efficiency gains, and sales of lower footprint products
Resource Efficiency Index
gross margin/CO2(e) indexed
For more details see Sustainability statements Note 4.
This is a key profitability measure and is calculated as operating income as a percentage of revenue.
Operating income is defined in accordance with IFRS and includes the relevant incidental items.
Total assets (excluding cash and cash equivalents, investments in associates, the receivable from pension funds in an asset position, assets held for sale) less current income tax payable, deferred tax liabilities and trade and other payables.
This is a key profitability measure and is calculated as operating income as a percentage of average invested capital.
Operating income is defined in accordance with IFRS and includes the relevant incidental items.
Total assets (excluding cash and cash equivalents, investments in associates, the receivable from pension funds in an asset position, assets held for sale) less current income tax payable, deferred tax liabilities and trade and other payables.
Operating income before depreciation, amortization and incidental items.
Defined as long-term borrowings plus short-term borrowings less cash and cash equivalents.
Provide tangible material or energy efficiency benefits for our customers, compared with competitive products.
The carbon footprint of a product or organization is the total amount of greenhouse gas (GHG) emissions caused during a defined period, or across the total or part of a product lifecycle. It is expressed in terms of the amount of carbon dioxide equivalents CO2(e) emitted.
The carbon footprint of a product or organization is the total amount of greenhouse gas (GHG) emissions caused during a defined period, or across the total or part of a product lifecycle. It is expressed in terms of the amount of carbon dioxide equivalents CO2(e) emitted.