to the capital employed. It is calculated by subtracting the
cost of capital from the return on capital employed (ROCE).
The calculation of the operating earnings starts with earnings
before interest and taxes (EBIT), which are adjusted
for acquisition-related and one-time special effects and from
which a calculated tax burden is deducted.
The capital employed, in turn, encompasses those components
of the assets and liabilities needed to achieve oper-
ating earnings. The cost of capital is determined from the
weighted average of cost of debt and cost of equity. We
regularly examine the weighted average cost of capital but
only adjust it for the calculation of the AVA if it exceeds or
falls below a certain range. For 2021, the cost of capital rate
remained at 7.5 %. No adjustment is planned for 2022.
Key performance indicators are used for measuring the
company’s success and as criteria for strategic and operational
decisions at the level of the Group holding company,
the divisions, and individual companies. In addition, the
key figure AVA is also used to determine variable compensation
Our goal is to achieve operating earnings that exceed
the cost of capital on a sustainable basis. In recent years, we
have managed to generate a 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 outperform
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. The long-term target
range for the EBITDA margin of the Group is 18 % to 20 %.
Derived from this are long-term target margins 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 years, the Group margins
achieved were within or, in some years, even above the
In addition to pursuing long-term sales and earnings
growth, 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 property,
plant and equipment and intangible assets have been
around 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 addition, every
important investment is examined regarding its short- and
long-term effects on the company’s value.
For the control of net working capital, which is of great
importance for the development of operating capital, we
use key performance indicators to analyze and control profitable
growth and the company’s value. These key performance
indicators concern the scope of inventories as well as
trade accounts receivable and payable.
Apart from the aforementioned essential financial
control 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 non-financial key performance
indicators. Significant control-relevant non-financial
indicators and thus key performance indicators for Group
management relate to the areas of occupational safety and
climate neutrality. To track the achievement of the goal of
continuously improving occupational safety, the Work Acci50