Morning, good afternoon, and good evening to everyone. Thank you for joining Bureau Veritas full year 2019 results on the webcast and on the call. François Chabas, our group CFO, is here with me to present our full year results. We closed the year with excellent operational and financial performance. Record revenues and cash generation were delivered. We achieved the highest quarterly organic growth for seven years, which took our revenues through the EUR 5 billion mark for the first time ever.
Cash generation was close to EUR 620 million, a record performance cementing our strong financial credentials. 2019 was the fourth year of the rollout of our strategic plan, and the momentum has continued. We made further significant steps in the diversification of our portfolio with selective bolt-on acquisitions and targeted disposals. The growth momentum across our businesses demonstrates the strong fundamentals that have been built over the past four years.
Buildings & Infrastructure grew 6.8%, Agri-Food & Commodities 7.9%, Industry 6.3%, while Marine & Offshore achieved 5%. We have delivered all the objectives we set for 2019. Bureau Veritas delivered 4.3% organic growth in 2019, accelerated compared to 2018. A margin of 16.3%, up 20 basis points at constant currency. A strong free cash flow of EUR 618 million, representing a record of 12.1% of the group revenue. Looking at our portfolio at the end of 2019, it is much more resilient than four years ago and is well-balanced from a cyclical perspective. We estimate that as of December 2019, 45% of the group revenue is from products and systems derived from existing assets. Here, we are talking about high visibility, repeat business driven by regulations or standards. 33% is products related. It comprises our Agri-Food & Commodities business, which is volume driven with notably healthy prospects in food.
Consumer Products, which relies on innovation and technological changes. Lastly, 22% of our revenue relies on our clients' CapEx decisions, a combination of new Buildings & Infrastructure spread across many geographies, new energy projects, and new ships. All these markets are today recovering with the visibility ensured by a solid backlog. A growing pillar to our resilience and building long-term relationship with our clients is in supporting their regulatory and voluntary CSR commitments. Ever since founded in 1828, Bureau Veritas' ambition has been to build trust between businesses, governments, and clients. In this field, we do far more than verify compliance. We act as independent, impartial guarantors and thereby play a crucial role in building and protecting companies' reputations. Our clients expect us to understand their complex business environment and risks.
For example, the traceability of their supply chain, concerns around the technological advances impacting their various industries, the regulations making them responsible for the recycling of their end products. They need impartial experts to ensure quality, safety, and sustainability vital to remaining competitive. To assume this role, Bureau Veritas must lead by example. To this end, we are focusing on four key CSR areas, safety, ethics, inclusion, and environmental protection. I believe that BV is uniquely positioned to shape the trust between our clients and society and to help them promote more responsible progress. François will now walk us through the external financial performance. Thank you, François.
Thank you, Didier. Before doing a deep dive into the numbers, a few words on the key financial achievements for 2019. We continue our active portfolio management strategy by divesting non-strategic businesses and contributing to margin improvement. We delivered another year of strong free cash flow, thanks to the continuing positive effect from our Move For Cash program. We contributed to a material decrease in our leverage ratio, down to 1.9 times, which is the lowest level since 2014. We pursued a proactive and opportunistic financing strategy, allowing us to optimize the cost of our debt, delivering a 20 basis decline compared to last year to 2.8%. We have also lengthened the average maturity of the debt and now have maturities which are no longer there until 2023.
Looking at the revenue bridge, we delivered EUR 5.1 billion in full year 2019, breaking the EUR 5 billion threshold for the first time, with an overall growth of 6.3%. Organic growth reached 4.3% in comparison with 4% in 2018. This illustrates the steady resilience of our portfolio. Indeed, we have consistently delivered above 4% organic growth over the past six quarters. External growth contributed 1.2% on net book basis. Finally, Forex had a slightly positive impact of 0.8%, which is mainly attributed to the appreciation of the U.S. dollar and other currencies against the EUR, while slightly mitigated by the weaknesses of some emerging countries' currencies. Turning to the revenue growth by business for the full year, five out of our six businesses reached a solid pace of organic growth of 4.9% on average. Only Certification remained indeed in negative territory.
Agri-Food & Commodities and Industry both clearly outperformed the average at +6.7% and +6.4%, respectively. We benefited here from strong drivers in Agri-Food and an excellent performance in energy-related activities. At the same time, our Marine & Offshore business recovered +4.9%, thanks to our positioning in the most dynamic segments. Consumer Products grew 2.3%, notably affected by the wait-and-see situation triggered by the tariff discussions. Finally, as expected, Certification declined -1.5%, reflecting the transitional year post-revision stand-up. In the last quarter, if we zoom on it, we delivered 5.3% organic growth. This is our best quarterly performance since the third quarter of 2012. In the quarter, all businesses grew organically without exception, with Industry the best performer, +9.3%, delivering the full benefit of the balance of its 10 CapEx-related activities.
Agri-Food & Commodities maintaining a strong 6.6% organic growth, notably fueled by the double-digit growth of our Agri-Food business. Finally, Certification was up plus 6.7%, benefiting from strong momentum on new deals. If we focus on the M&A now, we continue our active portfolio management with the objective of seizing attractive acquisition opportunities and divesting non-strategic businesses with below-par margins. In 2019, we added EUR 46 million of annualized revenue with five acquisitions, notably reinforcing our footprint in the U.S. and in Asia. They support our Buildings & Infrastructure and Agri-Food growth initiatives. In parallel, we completed the disposal of our consulting business unit providing HSE services in North America. We also divested a number of laboratories and offices, notably in North America and in Europe, and focused on underperforming units. Moving forward, we will continue to deploy a very selective bolt-on acquisition strategy alongside targeted disposals.
A few key points regarding the full year 2019 results. I will comment on the numbers after application of IFRS 16 on the business, as this is now the new norm. Adjusted margin increased by 50 basis points to 16.3%, of which 45 basis points are constant currency. It is fully consistent with our full-year guidance 2019. Adjusted net profit is up 8%. Free cash flow is up 29%, and we come back to the detail of cash flow in a minute. Adjusted net debt is down minus 14% versus last year, benefiting from the strong free cash flow performance of the year. Turning to adjusted operating margin in the full year 2019, it improved to 16.3%, which reflects a combination of 13 basis points of organic improvement, seven basis points of scope impact as a result of our targeted disposals, and five basis points positive Forex impact.
Finally, the 25 basis points from IFRS 16. An overall gain of 50 basis points versus 2018. Focusing on the businesses, three out of them posted improving margin at constant currency. This was driven by a significant improvement in Agri-Food & Commodities, +120 basis points. Marine & Offshore contributed +20 basis points and Buildings & Infrastructure, +30 basis points. This improvement is a result of a combination of operating leverage, strict cost control, restructuring payback, of course, and active portfolio management. For Consumer Products and Certification, lower organic growth margin and negative mix weighed on the performance. Looking at operating profit on slide 19, it is up 14.2% at EUR 721 million. In 2019, we further implemented structural margin improvement actions and continued to adjust our cost base. This resulted in a restructuring charge of EUR 24.4 million, massively down from EUR 42.1 million in 2018.
Actions were taken in quality-related activities, Buildings & Infrastructure operations, and Industry businesses. Net financial expenses increased in 2019, mainly due to IFRS, with a EUR 16.8 million impact. We have a slight increase in financial charges, mainly due to the higher average gross debt following early debt refinancing. Third, the depreciation of several emerging country currencies increases the Forex impact from -EUR 5 million to -EUR 10 million. Looking at the tax rate now, the adjusted effective tax rate of the group was down 20 basis points, at 33.1%. The decrease is mainly explained by the new rules for the tax deduction of interest applicable in France from 2019 onwards. For the full year 2020, we expect our adjusted ETR to remain at 33%. Moving now to the 29% increase in free cash on slide 22.
The underlying improvements beyond the IFRS 16 impact have been driven by an increase in profit before income tax, mainly led by higher operating profit and lower restructuring. A disciplined approach to CapEx, which stood at 2.4% of the revenue compared to 2.6% in 2018, and we expect it to be slightly below 3% for the full year 2020. Obviously, the growth acceleration in Q4 held back the working capital improvement. Focusing on this in more detail and looking at it on slide 23. In 2019, we continued to deploy our Move For Cash program. We further reduced our working capital ratio by 20 basis points versus December last year to 8.8% of group revenue. Since December 2016, our working capital ratio has been reduced by 120 basis points. Working capital reduction remains a top priority for the group. We will continue and reinforce our action moving forward.
Regarding now our financial structure, the adjusted net debt stood at EUR 1.8 billion, down 14% from December 2018. Our healthy financial profile at the end of the year reflects a strong free cash flow generation of EUR 618 million. A disciplined M&A strategy with EUR 99 million of spend net of divestment, and reduced dividend outflow of EUR 97 million given the strong coupon price from the scrip dividend in the first semester 2019. We close the year with a leverage ratio of 1.87 times, down from 2.34 times in December last year, and far below our 3.25 times bank covenant. As regards our debt profile, it's been lengthened to an average maturity of 5.8 years and with no maturities before 2023. We will propose a dividend of EUR 0.53 per share for 2019 payable in cash.
This corresponds to a payout ratio of 55% of adjusted attributed net profits. To conclude, after the strong set of 2019 results, margin focus and cash will remain our top priority in 2020. I now hand it back to Didier for the business review.
Thank you, François. Thank you very much. Let me now share with you the key 2019 highlights and 2020 trends for each of our six businesses, notwithstanding the COVID-19 impact. Starting with Marine & Offshore. The business delivered a solid 4.9% organic revenue growth in 2019, as it benefited notably from high single-digit growth in new construction. New orders grew 7% to 6.5 million gross tons at the end of December 2019. The group significantly outperformed the market, which was down double digits, which highlights our strong position in the most dynamic segments such as the LNG fuel ships. In 2020, we expect organic revenue growth in this business to be positive. For Agri-Food & Commodities. The business achieved strong organic growth of 6.7% in 2019. This reflected double-digit growth for Agri-Food, led by new services and new lab openings and high single-digit growth in metals and minerals.
In 2020, we expect the Agri-Food & Commodities business to deliver solid organic revenue growth, although at a slower rate compared to 2019. Let's move to Industry. Revenue accelerated to 6.4% organically in the full year 2019 from plus 3.5% in 2018. In the last quarter, the business delivered a strong 9% organic growth. This was driven by diversification into power and utilities, the repositioning towards OpEx, the improving oil and gas market environment throughout the year. In 2020, we expect the business to achieve solid organic revenue growth. Our strategy of OpEx services diversification will continue to pay off. Oil and gas CapEx markets will continue to improve. For Buildings & Infrastructure, the business achieved an organic growth of 3.2% in 2019, spread across Asia and Americas. Growth was particularly strong in China, led by energy and infrastructure project management assistance.
The U.S. benefited from strong dynamics in data center commissioning services. France saw some improvement in Q4. In 2020, the outlook for the business is expected to improve overall, thanks to the recovery of France, backed by the delivery of a healthy backlog of OpEx related services. It will be mitigated by the negative impact from the COVID-19 on operations. For Certification, as expected, the business recorded a slightly negative organic growth of 1.5% for the full year of 2019, following the end of the three-year standard revision period. In Q4, the growth resumed with a strong organic performance of 6.7%. Growth is driven by new services meeting the growing demand from customers for brand protection and traceability all along the supply chain. In 2019, social and customized audits, sustainability and organic food Certification grew double digits.
In 2020, the Certification business is expected to deliver a solid organic revenue growth, led by sustainability and ESG products, food schemes, and specialized standards related to risk management. Consumer Products. The business delivered moderate organic growth of 2.3% in the full year. Our softline business grew low single digits with very strong momentum in South Asia and Southeast Asia, continuing to benefit from an accelerated sourcing shift out of China. A new laboratory was opened in Vietnam. In hardlines, growth was stable, cosmetic experienced double-digit growth, and the momentum for social and CSR audits continued across all regions. The new international e-commerce platform for mass market suppliers gained traction among the group customer during the year. Electrical and Electronics organic growth was flat. The activity suffered from difficult trading conditions with large U.S. retailers and the effects of several bankruptcies.
In 2020, we expect positive organic growth with strong momentum in South Asia and Southeast Asia, moderate growth in Europe, and more challenging conditions in both the U.S. and China. As we regard COVID-19, we expect the growth of our Consumer Products business to be negatively impacted in Q1 due to containment measures. As the CEO of Bureau Veritas, I've been following news of the COVID-19 outbreak with deep concern. Safety is an absolute at Bureau Veritas. It means doing everything we can to keep our people safe and our clients' people safe. We are monitoring the situation every day in real time and have set up a dedicated crisis committee. We expect a material negative impact on the group's activity from the COVID-19 due to the economic inactivity, primarily in China, 17% of group revenue, and potentially elsewhere.
Both the group's testing-driven consumer goods activity and audit and inspections activities are affected. In the current circumstances, the impact on revenue is expected to be in the range of EUR 60 million-EUR 100 million. We are focusing on protecting our profitability. Our outlook now, the group's strong fundamentals remain unchanged and clearly demonstrate the soundness of the ongoing strategy. We have now a force majeure with the COVID-19 outbreak, which we will monitor. In the current circumstances, the first quarter of 2020 will be primarily impacted. Overall, for 2020, we expect to achieve solid organic revenue growth, focus on protecting the adjusted operating margin at constant currency, generate sustained strong cash flow. These strong 2019 results illustrate the extent of the transformation of Bureau Veritas since 2015.
We now have put in place much of the growth profile and cyclical resilience we were looking to achieve in our 2020 plan, together with cash flow generation and a deleveraged balance sheet. To conclude, we are extremely pleased with the strong momentum in the year 2019. With these strong fundamentals and restored financial profile, we can now look to the group's structural development, which we will share with you in September, precisely on September 29th in Paris. Thank you for listening. François and I are now pleased to answer any question you may have.
Thank you. If you would like to ask a question, please press star one on your telephone keypad. The first question in the queue comes from the line of Tom Sykes from Deutsche Bank. Please go ahead.
Yeah, good afternoon, everybody. Congratulations on the results, but clearly you're facing some headwinds now. Just to dive in a little bit into the COVID guidance.
Yeah.
I wonder what you can say how much of the suspected lost revenue is lab-based versus non-lab-based, and how much of it is sort of lost discretionary testing, if you like, and how much of it would be mandatory, which you would may expect to come back in the second half? Then obviously on cost mitigation, presumably the drop-through on this is going to be relatively high, especially at the early stages in your high margin there. What cost mitigation can you actually do? Is there differences in, I don't know, holiday provisions or something, or what degree of cost flexibility do you have? Then I have a follow-up on the U.S. retailers, please.
Of course, your question is excellent. In fact, all businesses are affected in China. If you think about the labs, because you asked a question specifically about the lab. I had a call this morning with the boss of the Consumer Products division, who is, as you know, Chinese, Catherine Cheng, based in Shanghai. Today 70% of the employees are back in our own laboratories. I do not see today, but again, in 1 month we may have a different perspective of the business. Today I do not see any real catch-up regarding the testing in our laboratories in China, because first, it's too early to talk about it. Second, I would say the reaction of our clients is still not clear, for instance, the next collection, the summer collection.
We are waiting for them as now all our laboratories in China are open again to see what they are expecting from us. Regarding the cost containment plan, maybe François, you could give probably more details.
Yes, thank you, Didier. There are practically two types of cost containment. The first one is what we are doing in China as we speak, which is by far the region which had the strongest hit. Here we've implemented a cost-containment program regarding travel ban, regarding hiring freeze. Anything that is not necessary is simply stopped. Obviously, as you understand, we are respecting the Chinese regulations here. The Chinese state has made it very clear that there should be no restructuring, no technical [Foreign language] chômage technique. We don't have any flexibility on the cost base when it comes to salaries, we respect this, obviously. There is a limited element of cost saving we can do here in China.
What we are looking more into we can now in discussion with the Chinese authorities on tour it has potential tax reductions and some reduction in the lease of our labs, which are owned by state-owned companies. Then we're implementing group-wide a number of actions on which we are currently working to protect as much as we can the margin. This is, in this case, beyond the Chinese geography and in practical terms, is actually affecting all non-necessary expenses while preserving the key investment for the group. Obviously, this is a very fine balance we keep on having with Didier and the Executive Committee.
Yeah, we were extremely reactive. Just for you to know, we started to implement this cost mitigation action already three weeks ago. Immediately, in fact, we thought that the situation could be serious, so we made some good decision to protect the margin. The second point I can make about China is more than 50% of the people in the Commodities, Industry and Facilities are back. I had a phone call also with the Commodities, Industry and Facilities leader this morning. They are back to work. The good news, we had two guys affected in the province of Wuhan. One is out of the hospital, and the other one seems to be okay and should be out of the hospital in the next day. As you can imagine, as a CEO of a company, your first concern is about the safety of its employees, of course.
Exactly. Well, that's good news. Thank you for the answers. Just to follow up on your comment on U.S. retailers and the issues that they may be having. Obviously, there's a couple of high-profile bankruptcies. Is this something that you're seeing some stress as you go down the tiers of suppliers? Do you think you're well-positioned as for e-commerce versus, I suppose, traditional retail when you look at the consumer business, please?
In fact, there is nothing really new. It was the case already in 2018. It continued in 2019. Of course, the online business is now becoming a competitor to these retailers. The good news, of course, is that now the consumers are looking for even more quality, even for the online business, meaning that clearly we are going to do more inspection, more audit, and more testing, even for the products which are sold through e-commerce.
Sorry, why do you pick it out now if it's obviously a peak in effect of e-commerce versus traditional retail for a period of time? Why pick it out now? What's particularly happened over the last few months?
We looked at it in detail. We feel that probably already something like 15% of the products which are sold through e-commerce are tested, inspected. We can clearly see now because of the strengthening of the regulations in most countries, an acceleration, and this acceleration will continue because, as there is more business through e-commerce, of course, consumers are more demanding in term of quality. We can clearly see now and for the future an acceleration in testing and inspection as well.
Okay, perfect. Thank you very much indeed.
The next question comes from the line of Paul Sullivan from Barclays. Please go ahead.
Yeah. Good afternoon, everybody. Just a couple from me. Firstly, just to be clear. I appreciate how difficult it is to forecast at this moment in time. In terms of the proportion and how we should think about the proportion of the EUR 60 million to EUR 100 million and where that falls by division, because I'm not sure how I'm trying to reconcile your comment about Consumer Products growth with the EUR 60 million to EUR 100 million. I'm struggling to see how that fits together, because I would imagine that the vast majority or high proportions of it impacts the Consumer Products business. Just in terms of the parameters of how you've calculated it, should we view that as a Q1 specific impact at this stage and largely related just to China? Are you seeing any other impacts in the Southeast Asia region, for example? Thank you.
Paul, it's a very good question. Today, of course, I'm talking about today. As of today, this is a situation as we see it. We are talking, of course, mostly about China, because it's quite, I would say, even if it's difficult, quite easy to understand what is happening in China, because after the Chinese New Year vacation, they prolonged it by one week. You know that our people were not working, there was no activity. Now people again are coming back progressively. It affected CPS, Buildings & Infrastructure, and Commodities activities in China. Again, now we have 70% of our people in our labs. All labs are open for Consumer Products division and even for the food business.
Regarding the Buildings & Infrastructure and Commodities, again, I had the boss of China this morning, and he told me that a little bit more than 50% are back working again for Bureau Veritas. Some people on top are going to come back progressively, as long as the projects are restarting. In fact, when you look at the range 60 to 100, it's quite a large one. We took some assumption, and we are still evaluating, of course, today what could be the assumption. Today, of course, Q1 is impacted, but we still believe that we should come back to a normal situation if you took Q3, Q4. In February, several weeks were lost. For the moment, again, maybe I'm too prudent, but I do not see any catch-up.
It's too early to talk about it, again, I'm probably too cautious. You want to add something, François?
No, I think, we've decided together with Didier to be very transparent to you guys and to the market, because we are looking at the situation in a very, very precise manner with, let's say, more than weekly calls, as you may imagine, with our team over there. This is a material part of our business, and we thought it was the adequate manner to tell you what our risk assumption is. When it comes to the assumptions, we factored in business disruption throughout all of February and a good chunk of March, and with a step-by-step ramp-up somewhere in the middle of March to get them to more of the normal by April. What we've put here is what we know as of today.
We can only say what we know, and this is what we estimate being the best assumption, with some signs of activity starting back again in China, as mentioned by Didier. It's still early, but we thought at this moment it was important to share that with you in the market.
Appreciate the transparency. Just to follow up, with your back to work rate between sort of 50% and 70%, would you say that's indicative of client behavior as of today, or is that clearly lagging?
Depends on the clients. Some have already restarted full speed. I could take a good example on the food business. Of course, you can imagine that if they do not restart, it could be a disaster for China. On this type of testing, I'm talking about food, of course, it had to restart very quickly. Some other, it will take a little bit longer, but we can see, and again, daily call with our team in China, and there is a clear encouragement from the local authorities to restart, and to restart 100%. Again, in our assumption, we thought that February would not work at all, and up to March. This is the way we decided to work on it, to be as transparent, as François said, as we could.
Today, there is no indicative, I would say, decision from the client that they are not going to restart. It's the opposite now. They are really accelerating the restart. Of course, when you close a factory for two or three weeks, it depends on the production, because it can be more complex or less complex. Progressively, clearly, it is restarting.
Thank you very much.
Pleasure. Thank you for the question, Paul.
The next question comes from the line of Edward Stanley from Morgan Stanley. Please go ahead.
Thank you for taking my questions. I've got three, please. On the Marine division, can you give us an idea of how much the margin, the 55 basis point from organic margin upside, related to restructuring that you've done in the past, and whether there is more of this sort of restructuring benefit to come through in future periods? On the Industry division, clearly that certainly took me slightly by surprise in terms of how good the growth was there. Just to get a feeling for the sustainability of growth in Industry, could you give us more of a feeling on price and volume, both for the sort of OpEx markets you've got and the CapEx markets, just to see what the trends are slightly beneath the surface? Finally, you talk about several initiatives that allowed you to grow well ahead of the market.
Could you just quickly tell us what your view on how fast the market is growing, what your growth rate in food is, and what these initiatives are that allowed you to grow in excess of the market? Thanks.
Thank you, Edward. I'm going to start with the number 2 and number 3 question, and François will give an answer to you regarding the restructuring. On the Industry, it's clearly the consequence of the strategy that we implemented in 2015. As you know, we decided to work a lot on the OpEx solution and in oil and gas, but also in power and utilities. We won very good contracts in power and utilities, in particular in Latin America. When we talk about the contracts in Latin America, just to give you a size, we are talking about contracts which are between EUR 20 million-EUR 60 million over a period of three or four years.
In fact, we did so well that now we are replicating the successful receipt of what we did in the country, because we started with Chile, in other countries by going and meeting the client. The second reason of this very good result, of course, is the fact that for three years, the oil companies decided to freeze any investment on oil and gas, again, in terms of CapEx. In fact, it has restarted and clearly, we can see an increase, and we are talking about approximately 10%, 9.8% in 2019 to be precise. The good news for me that this CapEx is not one we entered in the past, meaning that there were very big CapEx in the past when we see peak, we have immediately a problem. In this case, it's not the case at all.
It's more, I would say, some big CapEx maintenance, because they did not do anything for three years. Of course, they had to work on the quality and safety control challenges. The second, of course, is that there are new CapEx just because we still need, if you think about the new CapEx, to work in particular on gas, in particular on LNG projects. There are strong gas field, and as you know, we have a very good leadership position on gas. It's the reason why we are doing so well in industry. On the food business, we did superbly well last year. We outperformed the market, 10% growth. The strategy that we adopted some years ago was to be essentially in Asia. We opened some lab in Asia and in the U.S., by the way. We also made some acquisitions.
We have now a very large hub in Singapore, and our footprint now is probably one of the best one on this Asian market. You remember we made this acquisition with DTS about milk product testing. Thanks to it, we are developing further with dairy products all across Asia. In fact, strategically wise, the fact that we decided to be in Asia, which is the fast-growing market today, was a good decision, knowing that in Asia, consumers are more and more demanding, as it was the case before in Europe. It's now clearly the case in Asia. Today, 80 labs for food across the globe. In 2015, the number was not at that level by far. We are now clearly a player in this domain. On Marine, there was a question from Edward regarding the margin evolution, François.
You spotted right there. That's a significant improvement, which was a little bit hidden, if you remember, at the end of H1, because at the end of H1, the margin was still down because of a comparable related to some releases occurring in 2018. By the end of 2019, we now see the operational full picture, and as expected, it has improved significantly. Like in any good story, it's a mix of actions. To try and answer your question the most precise possible, on slide 18, you have the split of margin improvement, whether it is scope or organic. You will see there that the scope part of Marine 35 basis points is, if I want to make it simple, practically the impact of our restructuring. The other part, which is the 55 basis points, is a combination of two elements.
The 1st element is a mix aspect. Our new construction activity, if you remember, Marine, 60% in service OpEx, 40% new construction. New construction activity has restarted strongly in 2019, thanks to good backlog we had in 2018 and despite the fact that the market was down. The 2nd element, we've used pricing power on the OpEx part of the business or the other 60%, for which we had implemented on the 1st of January 2019, and then again in July 2019, pricing increases on the surveillance inspection of the BV fleet. In a nutshell, this is really the key moving parts that explain the significant increase in profitability. Which, if I would conclude, I would say we are back to where we should be. A profit around 22% plus for Marine is the expected profit margin we have for this business.
Yeah. You are totally right, François. It's true that the fact that we are very well placed on technological ships, I'm thinking about LNG, where we are very strong market share, and the market is there. The dynamic is there, or the passenger ships is in pin rod because these ships, of course, as they are more sophisticated, the margin we can get is higher. We have a very good Everything is coming together in the Marine vision.
Excellent. Thank you.
My pleasure. Thank you.
The next question comes from the line of Suhasini Varanasi from Goldman Sachs. Please go ahead.
Hi, good afternoon. Thank you for taking my questions. I have two, please. One on the impact that you mentioned, EUR 60 million-EUR 100 million due to the virus. I wanted to ask, have you seen any slowdowns in Europe because of China among your client base in Europe? Secondly, if you think about the CapEx to sales number, it has been coming down quite steadily over the last four or five years, under 2.5% of sales in 2019. I think you're guiding for a little under 2.3% of sales for 2020. Given you're more OpEx based, is there a reason why it should not be around 2.5% of sales maybe? Are there any special investments you're doing in 2020 please? Thank you.
About your first question, maybe before answering it, I would like to reiterate the fact that thanks to the good job we did in the past four years, the fundamentals are clearly very robust today, and we are confident that after the situation, of course, we will be back to a good normal and I should say a better normal, in fact, than in the past. It's too early to say about any slowdown today. We have not seen any. Again, we are very carefully monitoring the situation. Cost containment measures are in place and taken all across the group. Today, I say today, we have not seen any other consequence elsewhere. The second question which was raised, François, about CapEx. Could you answer it?
Yes. CapEx, why? Percentage-wise, you're right. We went down from 2.6% to 2.4% and from 2.8% the year before. From a pure amount in EUR million in 2018, under EUR 23 million in 2019. What is sure very cautious when it comes to capital allocation. We made decision that we've communicated upon already for the past 18 months, that we are expecting payback in a very selective and disciplined manner. Project with a payback load in 15 months have a very hard time in our CapEx committee. Selective is one of the answer why we have managed to keep this level of CapEx around the EUR 120-ish million. Coming to next year, 2020, we still do expect to have a number of investment to make, which are around, I would say, three main areas. First area is 5G.
We have already a good chunk of the investment done in Q4 2019. There is another half in 2020. The second element is.
CapEx that we believe are bringing growth and margin in line with BV strategy. We are talking here mainly about food laboratories. Third, CapEx related to the digital transformation of the group, where we will accelerate. That's why we guide, and you're right, for something, I would say, in the area of 3% or slightly ahead of what we are doing today. We will still do it with the same very disciplined and focused approach when it comes to CapEx spend.
Thank you. Just one quick follow-up, please. When you mentioned you want to start a food lab in which regions in the world, where you want to start it?
We have decided to start some food labs in the U.S. for a simple reason, I can be very transparent with the financial community. If you think about the U.S. operations today, if you want to buy a lab, multiple is becoming totally crazy. I can tell you that the payback is a lot better when you go for greenfield. This is what we have decided to do. In Asia, it's a different situation, and we will probably have the opportunity to discuss it again before the end of the year. We are looking at starting greenfield labs, but also buying some other labs, in particular, of course, in China. We have two labs today and we want to have more. Not just in China. We know that the population of Asia will be probably 70% of the worldwide population in 2050.
Of course, we are now clearly working on extending our footprint there. Today in China, we have three labs, in fact, to be very clear, we are looking at making some other acquisition or again, why not, starting from greenfield.
Thank you very much.
Pleasure.
The next question comes in the line of Alexander Mees from J.P. Morgan. Please go ahead.
Thank you, Jasmine. Two questions, please. Firstly, on the consumer business. It's dropped off the headlines, I wonder what your clients are saying to you now about the U.S.-China trade access. Are they continuing to look to shift their supply chain out of China into South and Southeast Asia? I wonder if that has implications for your CapEx and M&A strategy if so. Secondly, I just wonder if you can give a sense for how material a part of your Certification business, your environmental and sustainability activities are. I can imagine you expect to see accelerating customer demand for these services in 2020, but I'd love to hear your views on that. Thank you.
Thank you for your question, Alexander. I'm going to start with the second question because I'm used to meet a lot of clients. I think it's part of the job of a CEO. Each time I meet a CEO of a company, he's asking me, "Didier, could you help me on the CSR? And could you" The point here, today, a lot of companies decided the KPIs and committed on some, let's say, numbers or achievements with their board and with their consumers. Now the boards are asking for evidence. We are very well placed to do the audits and propose certification level, or you see, showing that what they are saying is true, in fact. You are super right. The market is really booming, and we will have the opportunity to talk about it in our investor day in September.
You will see probably that in the next months, we will launch a very important certification around this business. Your first question about the consumer business. Even without the trade war, and even before, the supply chain was moving from China to Southeast Asia. In fact, when you think about the evolution of the salaries in China, it was obvious that it would happen worse. I'm talking mostly about the soft lines in this case. The good news is that we decided to build some labs in Vietnam, in Cambodia, in India. We opened a lab last year, for instance, in Vietnam. I could give you another example. I met a client in New York City. It was now one year and a half ago.
This very large client said, "Didier, could you accompany me in Ethiopia because we are going to open a big factory there?" We are opening a lab in Ethiopia. Clearly, you can see that even if this trade war not happen, the move would have accelerated. It's still the case, and we are following our clients. The good news is, in some cases, we were even before our clients, which is good news. We are totally ready to work, of course, with our clients with their new supply chain. After, is there an acceleration? Honestly, today, no, of course, because first, as you know, this war was a little bit, I would say, stopped or deferred, and there were some discussions. I did not see any acceleration.
What I can see clearly on the soft lines is a change because of the costs in China and looking for countries where the cost is just lower. If you think about your second question about environment and sustainability, you have also a new market trend, which is accelerating a lot, which is brand protection. Each time there is a scandal with a problem with a brand, the brand could be destroyed. With the social media, you have a problem anywhere in the world, everyone knows the day after. Our clients want to protect their brands and their reputation. It's about sustainability, but not just sustainability. It's about the age of the people who are working for them, the diversity. We do sociologies, we do risk management, we do a quality assessment, quality inspection, and this trend is clearly accelerating faster.
That's very clear. Thank you, Didier.
Thank you for your question.
The next question comes from the line of George Gregory from Exane. Please go ahead.
Hi, good afternoon. 3, please. Firstly, going back to the coronavirus guidance, I think this question was asked previously, but just trying to reconcile the guidance of EUR 60 million to EUR 100 million with guidance of growth in Consumer Products. If we assume that say, half of that impact at the midpoint is in Consumer Products, you would need to offset over 5% dilution to your revenue. Just some help in reconciling that guidance would be helpful. Secondly, on the margins, Didier, in the past, you've given us some quantitative color of how you would expect margins to evolve over the coming year. If you're able to do that would be helpful. Finally, one for François. Obviously working capital progression this year was offset by the strong organic growth. Just wondered if you had any additional thoughts on the targeted reduction and expectations for 2020, please. Thanks.
George, on the margin, I'm going to give you an answer that could surprise you, but in fact, if we had not had this issue with COVID-19, our guidance would have been improving margin compared to last year. In fact, our guidance would have been probably to achieve the margin, which was in our plan when we launched it in 2015. It's not the case anymore, of course, because China is, as you know, the largest country for us. The second reason also is that the margin coming from China, mostly because of CPS, is a high one. It's too early to give a precise guidance, in fact. We put a lot of containment plan in place. We need to wait till the end of Q1 to really understand what's going to be the impact.
What you can be sure about is that we are really, I would say, implementing all action you could imagine to mitigate this Chinese COVID-19 issue. On the working capital, I'll let you answer in, Francois.
Yes. Thank you, George, for your question. Here I would say, in a nutshell, first, what I've indicated for now a year and a half, that our ambition is to achieve 8% by the end of 2021. One thing we could be happy about is that at least we've gone into the 8% area for the first time now after several years at the 9 and 10 level. You're right, frankly speaking, the strong organic growth hasn't really helped, especially when it's done at Q4, which is above 5%. Let me disclose you something that, Laurent, that you know well, will not be happy about, but December was even above 7 due to, I would say, number of days, working days, et cetera.
Again, I'm very consistent to what I've said, because you're going to have to go and say, if this group grow above 5% on a quarterly basis, that would be very tough to achieve the 8. Imagine we grew 7 in December. I am actually very proud of what has been done and the fact that we went down to 8.8%. That's for the first part. For the second part, it doesn't mean we're happy with it. It's a journey, and as I mentioned several times, there is no factoring. It's pure, healthy work with our cash collection team, with our suppliers as well. It's plain vanilla working capital reduction. As usual, when things are done in a normal manner, it takes a bit of time. That's why we haven't promised in 12 months to bring it back to 2%. It's a journey.
We're on it. We're well on track, and I'm very happy with what has been done this year.
Thank you, François. I'll come back on your first question. The EUR 60 million, EUR 100 million range is for the group overall, not just only CPS. Again, it is as it is today and with what we know today. It is for the group, not just for CPS.
If we take half of that or a proportion of that, it would seem to suggest quite a big chunk out of consumer revenues. I think we're all a bit surprised, I suppose, that consumer can still grow despite that sort of quantum of headwind in the first quarter.
We will see what the second quarter, third quarter, and fourth quarter will be. I can understand your point, but to date. At a certain point, our clients are going to come back in our laboratories for sure, and they are today already. Clearly, if you take the example of H2, for instance, we knew that the growth could be fueled by the 5G positive impact. There will be some positive impact. Clearly, for the moment, this is a guidance that we can give to you today, okay? At the end of Q1, when we communicate again in April, you will have more flavor.
Okay. Thank you very much.
Thank you, George.
The next question comes from the line of Pierre Chedeville from Société Générale. Please go ahead.
Yes. Good afternoon. I have two. One follow-up question first on the margin. You mentioned that without the COVID-19 impact, you would have been able probably to reach your target for 2020, which was 17%, but this 17% was with the ForEx of 2015 and with previous accounting standards. Could you give us the figure with current ForEx and current accounting standards? First question. Second question, regarding the number of the laboratories and offices that you have divested, could you give some colors about the impact on revenue and margin, if any? Thank you.
Okay. Pre-IFRS, 15.4%. It's very clear, and that we communicated last year.
Yeah.
15.4%. You are super right, by the way, Patrick Choston, it's because of the impact of the effects from 2015. We made the calculation at the end of last year. If we had, and we would have achieved 16.4% at constant rates, pre-IFRS, we would have achieved our number. I think this is a very clear answer.
That's clear.
16, the guidance would have been 15.6%, in fact.
Okay.
Regarding your second question, François.
Regarding the divestments, I would say the impact overall of these divestment operations are, to make it pretty simple, not material in term of revenue, as we are talking about EUR 35 million of divestment on a yearly basis, yearly revenue, annualized revenue. This is roughly 250 FTEs. At the bottom line, this improves the margin by 10 basis point. There is no big piece of it, no big division whatsoever. We have performed the portfolio analysis now several years ago, and we have identified already what isn't performing, what is not in the busy core business as per our 2020 plan with the growth initiative that you know. We are opportunistic about the divestments. If we find a good offer, we sell.
If there is no good offer on the market, which is because our businesses usually remain profitable, even though they are below, obviously, I would say, the group average, but they are still interesting assets. We go about it in a very detailed manner. That's the only way actually to make progress, and at the end of the period, to get a portfolio activity which is consistent with the ambition of Veritas, with our initiative of growth. I would say it's a healthy discipline. There is nothing exceptional here. It's the healthy discipline of a group that is in 140 countries, have been acquiring companies for the last 15 to 20 years, and on a regular basis, decide to divest what is not key any longer. Nothing more, nothing less.
Portfolio management.
Healthy portfolio management.
Thank you.
Thank you, Pierre.
The next question comes from the line of Andy Grobler from Credit Suisse. Please go ahead.
Hi. Three from me, if I may. First one, just on the CapEx, oil and gas CapEx, which performed very well through the year. Could you just talk a little about which regions were performing? Particularly one of your competitors in the oil and gas market seems to have a much tougher time through 2019. Secondly, just following up from a previous question on CSR, within that Certification division, how much of that division is really focused on CSR-related things rather than some of the more traditional Certification operations? Thirdly, apologies for going back to it, in terms of COVID-19, you've given the guidance of 60 to 100.
Pre any of the other things you're doing across the group in terms of travel bans and so forth that you talked about, how much of the cost within that EUR 60 million-EUR 100 million is fixed versus flexible? i.e., what is the drop through going to be on that EUR 60-EUR 100 as you see it right now? Thank you very much.
François, you answer the first question and then-
Yes, Andy, I don't want to disappoint you, but I will be quick and fast. It's too early to say. Frankly speaking, we're in the middle of implementing those measures. Contrary to some other companies, we are giving you, as we speak, very clear guidance about the impact in revenue. You understand that the margin part will be for later on. At the moment, as Didier mentioned, the company is focused in mitigating the impact, clearly. When you have the number of employees that we have in China, you understand that it's better the management is focused at mitigating the impact, more than making, I would say, a gut feeling impression about what the margin could be.
That's very fair. I thought I'd ask anyway, just in case.
I'm coming back on your first question, which is about oil and gas CapEx. Last year we grew this business by 9.8%, quite a good growth coming essentially from the U.S. and from LATAM, and also from Africa. When I say LATAM, it includes Brazil. When you look at it in the detail, it's a lot about gas and LNG. Again, it's because we have a great expertise in this domain, and our clients know it. It's the reason why they come to us for help on these big CapEx. We know already that we are working on CapEx projects, and there is a very healthy pipeline with this type of CapEx and good opportunities for the future. This is good news. It has not stopped. I don't see it stopping, because again, the production in some cases will not start before two years.
These projects have started, and I think that they will be completed. The second question was about the CSR. It's not an easy question. On the Certification business purely, I consider 8% of the Certification business, which is sustainability today. Sustainability is not enough. As we discussed, CSR is corporate social responsibility, and this is more than just sustainability. In fact, across the group, you could imagine that some other services are embedded. For instance, we do a lot of social audits for our clients in the U.S. and Europe with the Consumer Products division. I think it's a good example. If I take purely Certification of this 8% business linked to sustainability, last year, we grew it double digits, high double digits. We can clearly see that this market is moving very fast. Again, the demand from clients is very important.
We will have the opportunity to talk about it again as we launch a new product, and we'll have more details about it in the months to come.
Thank you very much.
My pleasure, Andy.
The next and last question in the queue comes from the line of Edward Steele from Citi. Please go ahead.
Thanks so much. Good afternoon, everyone. Only one question for me. The oil and natural gas prices have fallen a lot in the last few weeks and couple of months. The oil majors' share prices have fallen a lot as well. Presumably, their P&Ls are going to start coming under quite a lot of pressure as they start to print third quarter numbers and their cash flow statements as well. Why do you not think that will not have any knock-on effect for your 2020 guidance in your Industry division, please?
I'd say two main reasons. The first one, many projects remain profitable at that level. The second one is we are talking mainly about onshore CapEx. Maybe I would like to add the third one, which is the fact that some of these projects now are becoming mandatory. In this case, for two reasons. The first one, to replenish the reserves. The second one is because, again, in terms of reliability, safety of the platform, there are CapEx maintenance projects that cannot be postponed.
Okay. Obviously, in previous times that we've had these sorts of commodity price declines, companies have pushed out some of these obligatory inspection workloads. You think that won't happen this time?
You can do it for a while, but you cannot do it for so long. As they did it, and you are right about the past, for I would say it's too long time now, this is not becoming an option.
Okay. Thank you much, Didier.
You're welcome.
We have no further questions in the queue, so I'll hand back over to the host for any closing remarks.
I just would like to thank you for your attention, and I wish you good morning, good afternoon, and good evening.
Thank you for joining today's call. You may now disconnect your handsets.