The table below shows the 2020 ambition and the figures which have been realised for 2016 and 2017 for the Grundfos Group. KPI Sales growth (excl. currency impact) Customer loyalty Employee motivation and satisfaction Return on Sales (performance EBIT/net turnover) Return on Capital Employed (ROCE) 2016 0.5% 85 70 9.3% 15.4% 2017 2020 ambition 5.3% Avg. 3%* 86 86 70 78 9.9% 10% 17.6% 17% *Grow more than served market. strengthened our ability to meet customer demand, and have in parallel optimised our entire supply chain. Committed to sustainability Our commitment to driving sustainable development in our own company and beyond is a particular mindset and the way in which we want to conduct our business. We are strong supporters of and are very engaged in the 17 UN Sustainable Development Goals, focusing primarily on those goals where we truly can make a difference with our competencies, products and solutions. We firmly believe that doing business and doing good can go hand in hand with a strong focus on achieving results with Sustainable Development Goals #6 (water) and #13 (climate). Sustainability is embedded in our overall 2020 strategy. Social responsibility remains a strong focus area, and in 2017 we further strengthened our global activities aimed at providing relevant job opportunities for people with reduced work capacity. We have also launched initiatives aimed at equipping people with limited access to the labour market with relevant skills and competencies. Group Key Performance Indicators (KPIs) Our five most important KPIs are: • Average sales growth • Customer loyalty • Employee motivation and satisfaction • Return on Sales (performance EBIT/net turnover) • Return on Capital Employed (ROCE) With 5.3% sales growth in 2017, we exceeded the targeted average sales growth. Our Return on Sales ambition is measured on EBIT, and adjusted for non-performancerelated items. During the year, we improved the performance EBIT ratio to 9.9%, bringing us close to our 2020 target. In terms of ROCE, we are already meeting our 2020 ambition. We have improved our customer loyalty score one point to 86, thereby meeting our 2020 ambition. The score of 86 represents customer loyalty on par with the best companies globally. On employee motivation and satisfaction, we remain at a score of 70. The score is acceptable, but we still have an ambition to substantially increase motivation and satisfaction among our colleagues. Outlook for 2018 For 2018, we forecast continued sales growth (measured in local currencies) in the range 3-5%. Based on this we expect an increase in EBIT in the range of 10-20%. As a globally operating company, we see a number of financial risks including restrictions on free trade and unfavourable currency developments. Management’s report on the Parent Company Grundfos Holding A/S is the Parent Company of the Grundfos Group and holds the shares of all the other Grundfos Group companies – either directly or indirectly. The company’s activities include the majority of the Group’s R&D functions as well as group functions involving coordination, planning and management. In this capacity, Grundfos Holding A/S performs a number of overarching functions and services. Grundfos Holding A/S had 1,563 employees at the end of 2017. In 2017, the net turnover of Grundfos Holding A/S totalled DKK 3.3bn (2016: DKK 3.3bn), and the operating profit amounted to DKK 0.5bn (2016: 0.4bn). According to the equity method, income from the other Group companies amounted to DKK 1.3bn (2016: 1.1bn). Profit after tax increased from DKK 1.7bn in 2016 to DKK 1.8bn in 2017. The balance sheet shows an equity of DKK 15.2bn (2016: DKK 14.5bn), corresponding to an equity ratio of 62.0% (2016: 66.2%). Jens Moberg Chairman, Grundfos Holding A/S Mads Nipper CEO & Group President, Grundfos Holding A/S 6|7
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