tegic and operative decisions at the Group holding, divisional,
and individual company levels.
Our goal is to achieve a sustainable positive AVA, that
is, to achieve operating earnings that exceed the cost of
capital. In each of the last few years, we have managed to
generate a clearly positive AVA.
Sustainable profitable sales growth forms the basis
for a long-term increase in our operating earnings and thus
in the value of the company. ALTANA’s goal is to outper-
form the general market growth in the most important sales
segments and thus to obtain market shares.
In the long term, we aim to achieve average annual
operating sales growth of 5 %. We seek to generate additional
growth through acquisitions, either by acquiring
supplementary activities at the level of our existing divisions or
through the possible integration of new business activities.
But growth should not be achieved at the expense of
profitability. Therefore, control of the EBITDA margin is
very important for the ALTANA Group (EBITDA = earnings be-
fore interest, taxes, depreciation and amortization). The
long-term target range for the EBITDA margin of the Group
is 18 to 20 %. Derived from this are long-term target mar-
gins for our four divisions, which may deviate from the average
target value for the Group due to the different business
activities and market characteristics. In the last few years, the
Group margins achieved were within or, in some years,
even above the target range.
In addition to achieving long-term sales and earnings
momentum, another focus to successfully increase the value
of the company is control of the operating capital. The
main factors of influence in this context are the development
of fixed assets and of net working capital.
On average over several years, our investments in prop-
erty, plant and equipment and intangible assets have
been approximately 5 to 6 % of our sales. Due to this continuity,
sharp increases in operating capital and resulting
short-term fluctuations of the AVA can be minimized. In addi-
tion, every important investment is examined regarding its
short- and long-term effects on the company’s value.
On account of the great importance of net working
capital for the development of operating capital, for a few
years continual measures have been taken to optimize
capital tied up in inventories as well as trade accounts receiv-
able and payable. These financial performance indicators
are analyzed and controlled by calculating ratios depending
on sales and the cost of sales.
Apart from the aforementioned essential financial con-
trol parameters, there are other financial key indicators
that help us analyze and control profitable growth and the
company’s value. The most important ones are cost figures
(cost of materials, personnel expenses, etc.).
To guarantee that all activities are geared uniformly to
the Group’s strategy, we also use nonfinancial key perfor-
mance indicators. These indicators, however, are not directly
relevant for control and focus on a qualitative evaluation
of activities whose financial measurability is limited. They in-
clude data for evaluating innovation and sustainability,
analyzing sales markets, and gauging customer satisfaction.
Integrated Planning Processes
All of the key performance indicators relevant for control
are compiled and analyzed within the framework of standardized
reporting processes. To be able to use these key
parameters effectively to control our strategy and possible
short- and medium-term measures, there is an integrated
planning process embracing different planning levels and
dimensions.
The planning cycle also has a strategic planning com-
ponent, which combines the analysis of the essential perfor-
mance indicators for future business development at the
product-group level with a detailed representation of the
changes expected in the market environment.
From this, strategic measures are derived enabling us to
react to expected developments at an early stage. These
50 Group Basics I Business Development