2016 performance

  • Financial performance
  • Sustainability performance

Return on sales (ROS)

We use return on sales (ROS) as a performance indicator to reflect profitability relative to revenue. ROS as a financial guidance aims to focus management on delivery and quality of profits. is defined as as percentage of revenue.

Top end of the guidance

  • Structually improved the company with record levels of profitability
  • Focus on growth is delivering with volume up
  • Positive impact of continuous improvement

  Return on investment (ROI)

We use return on investment (ROI) as a performance indicator to reflect profit relative to . ROI as a financial guidance aims to focus management on delivering value through returns in excess of our cost of capital. is defined as EBIT of the last 12 months as percentage of average invested capital.

Top end of the guidance

  • Improved profitability as described in the ROS section
  • Average invested capital decreased compared with 2015 due to currency effects and continued focus on operating working capital

Indicates a positive development
Indicates a flat/negative development

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. Only a proportion of our products that have sustainability benefits meet this strict definition.

Achieved our 2020 target

  • Percentage of revenue from increased to 20 percent
  • Revenue increased from new and existing eco-premium solutions in all Business Areas
  • This was offset by “mainstreaming” of some of our coatings products and revenue growth from products which are not eco-premium

Cradle-to-grave carbon footprint

Our target is to reduce our cradle-to-grave 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 improved 6 percent since 2012. Solid improvements due to lower footprint energy sources and raw materials (including renewables), efficiency gains at energy intensive facilities, and increased sales of lower coatings products
  • Absolute cradle-to-grave product footprint is down 14 percent across our total value chain
  • Emissions from our production are 21 percent lower than 2012.
  • Since 2012, our upstream emissions have improved around 14 percent and downstream by around 13 percent. Our 2020 target remains a challenge as we continue to focus on working with suppliers and customers to deliver improvements across the value chain

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.

Stable performance

  • REI was 112, broadly flat compared with 2015, having improved from the 2012 base of 100
  • Some improvement in carbon footprint performance due to energy sourcing and efficiency gains, and sales of lower footprint products
  • Margin decrease and currency effects had a negative effect on the REI

Indicates a positive development
Indicates a flat/negative development

ROS (return on sales)

This is a key profitability measure and is calculated as EBIT as a percentage of revenue.

EBIT

EBIT is operating income excluding incidentals.

Invested capital

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.

ROI (return on investment)

This is a key profitability measure and is calculated as EBIT as a percentage of average invested capital.

EBIT

EBIT is operating income excluding incidentals.

Invested capital

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.

Eco-premium solutions with downstream benefits

A measure of the eco-efficiency of our products. An eco-premium solution is significantly better than competing offers in the market in at least one eco-efficiency criterion (toxicity, energy use, use of natural resources/raw materials, emissions and waste, land use, risks, health and well-being), and not significantly worse in any other criteria. Downstream benefits include a tangible sustainability benefit for our customers.

Carbon footprint

The carbon footprint of a product is the total amount of greenhouse gas (GHG) emissions caused during a defined period, of the product lifecycle. It is expressed in terms of the amount of carbon dioxide equivalents CO2(e) emitted.

Carbon footprint

The carbon footprint of a product is the total amount of greenhouse gas (GHG) emissions caused during a defined period, of the product lifecycle. It is expressed in terms of the amount of carbon dioxide equivalents CO2(e) emitted.