2019 summary

Return on sales (ROS)1

We use 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. ROS is defined as as percentage of revenue.

  • Revenue was flat, with positive price/mix of 4% and acquisitions contributing 1%, offset by 5% lower volumes due to our value over volume strategy
  • Adjusted up 24% at €991 million driven by pricing initiatives and cost savings
  • Progress towards delivering €200 million of savings planned for 2020: €80 million delivered in 2019
  • Progress towards delivering our Winning together: 15 by 20 ambition and continue creating a fit-for-purpose organization for a focused paints and coatings company

Target 15% by 2020

2019 progress 12.0%

Return on sales development

Adjusted operating income as % of revenue

Return on sales development (bar chart)

1 Excluding unallocated corporate center costs; assumes no significant market disruption.

Return on investment (ROI)2

We use 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. ROI is defined as adjusted operating income of the last 12 months as percentage of average invested capital.

  • up 24% at €991 million, driven by pricing initiatives and cost savings
  • Invested capital totaled €7.0 billion, up €0.8 billion from year-end 2018, mainly due to higher , the impact of the adoption of IFRS 16 and increased goodwill and other intangible assets due to acquisitions

Target >25% by 2020

2019 progress 17.2%

Return on investment development

Adjusted operating income/average invested capital in %

Return on investment development (bar chart)

2 Excluding unallocated corporate center costs and ; assumes no significant market disruption.

Eco-premium solutions

We use to track our performance in creating shared value for our business, our customers and society. We aim to maintain at least 20% of revenue from eco-premium solutions by constantly innovating, based on insights into evolving environmental concerns and societal needs. Eco-premium solutions need to exceed the reference in each market in terms of sustainability performance. It is therefore a moving target, as the reference is constantly improving.

  • In 2019, we achieved 22% of our sales from eco-premium solutions for the second year running
  • Initial assessments indicate that another estimated 20% of sales were from , which offer clear sustainability features and are overall on a par with mainstream alternatives. Total sales of sustainable solutions was therefore around 42%

Target 20% by 2020

2019 progress 22%

Eco-premium solutions development

in % of revenue

Eco-premium solutions development (bar chart)
ROS (return on sales)

This is a key profitability measure and is calculated as adjusted operating income as a percentage of revenue.

Adjusted operating income

Operating income excluding identified items.

Operating income

This is income excluding net financing expenses, results from associates and joint ventures, income tax and profit from discontinued operations. Operating income includes the share of non-controlling interests. Operating income includes identified items to the extent these relate to lines included in operating income.

ROI (return on investment)

This is a key profitability measure and is calculated as adjusted operating income as a percentage of 12 months average invested capital.

Invested capital

Total assets (excluding cash and cash equivalents, short-term investments, 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.

Adjusted operating income

Operating income excluding identified items.

Operating working capital

The sum of inventories, trade receivables and trade payables. When expressed as a ratio, operating working capital is measured against four times last quarter revenue.

Invested capital

Total assets (excluding cash and cash equivalents, short-term investments, 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

A measure of the sustainability performance of our products. An eco-premium solution is significantly better than the offer in the market in at least one mainstream criteria (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.

Eco-performer

An eco-performer is a solution offering clear sustainability benefits, but which is overall on a par with the mainstream offer in the market.