Key performance indicators of the Group and its businesses

The three key performance indicators of net sales, EBITDA pre and operating cash flow (OCF) are the most important financial indicators for assessing our operational performance. Accordingly, we refer to these KPIs in the Report on Economic Position, the Report on Risks and Opportunities and the Report on Expected Developments. As the most important indicators of financial business performance, the KPIs are key elements of our performance management system.

Net sales

Net sales are defined as the revenues from the sale of goods, services rendered to external customers and commission income and profit sharing from collaborations, net of value-added tax and after-sales deductions such as rebates or discounts. Net sales are the main indicator of our business growth and are therefore an important parameter of both external and internal performance measurement. In addition, organic sales growth compared with the annual target is used for internal performance management. Organic sales growth shows the percentage change in net sales versus a comparative period, adjusted for foreign exchange and portfolio effects. Foreign exchange effects may arise as a result of foreign exchange fluctuations between the functional non-euro currency of a consolidated company and the reporting currency (euro). By contrast, portfolio effects reflect sales changes due to acquisitions and divestments of consolidated companies or businesses.

EBITDA pre

EBITDA pre is the main performance indicator measuring ongoing operational profitability and is used internally and externally. To permit a better understanding of the underlying operational performance, the operating result is adjusted to exclude depreciation and amortization, impairment losses and reversals of impairment losses, as well as adjustments. These adjustments are restricted to the following categories: integration expenses, IT expenses for certain projects, restructuring expenses, gains/losses on the divestment of businesses, acquisition expenses, and other adjustments. The classification of specific income and expenses as adjustments follows clear rules and is subject to strict governance at the Group level. Within the scope of internal performance management, EBITDA pre allows for efficiency improvements to be implemented in processes without the performance of the operating business being affected by exceptional items or restructuring expenses. In addition, organic EBITDA pre growth compared with the annual target is used for internal performance management. The following table shows the composition of EBITDA pre in fiscal 2025 compared with the previous year. The IFRS Accounting Standards figures have been modified to reflect the elimination of adjustments included in the respective functional costs.

Operating cash flow (OCF)/free cash flow as of 2026

Operating cash flow results from the company’s current business activities and describes the cash generated from operating activities. It is influenced mainly by EBITDA pre, income tax, financial income and expenses, and changes in net working capital.

As of fiscal 2026, free cash flow will replace operating cash flow as the key performance indicator. The more comprehensive free cash flow indicator aims to achieve holistic, sustainable cash governance and further strengthens capital discipline. Free cash flow is defined as operating cash flow less payments for investments in intangible assets and property, plant and equipment and plus proceeds from the disposal of intangible assets and property, plant and equipment and less lease payments. In order to provide the best possible understanding of the underlying actual cash performance, certain payments and proceeds in connection with the purchase and divestment of intangible assets and property, plant and equipment, especially those relating to collaboration and licensing agreements, are not included in free cash flow. This is because these are irregular payments that can significantly distort the performance indicator due to their potential magnitude and timing.