Hello and welcome. Thank you for being here in person and for the people who have joined it on the webcast. We're here for our Q4 revenues and full year results for 2019. Joining me, of course, here, Chairman and CEO Jean Pascal Koire and Deputy CEO and CFO, Emmanuel Babbo. The presentation is on the website and can be accessed if you're seeing it separately.
Without further ado, we'll get started. We will have Q And A after we finish the round of the presentation. John Pascal?
Thank you, Amit. Well, thank you all for being here. Thank you all for being with us today. Very happy in the next a session to go through, of course, a record performance of 2019, go through a perspective of 2020 that won't dedicate it to growth. On especially profitability and profitable growth and of course reiterators for our commitment to over 3 years increase the profitability of Schneider by 200 bps.
So I'm going to go straight into the presentation and start with the business highlights and move on to Slide 5, to comment the headlight of this exercise 2019. And I to say, well, it's a record performance in all directions. First time ever, we crossed a 1,000,000,000 revenue line, growing by 4% organically, but by 6% on the current perimeter. Not just at EBITA, our operational result, at 4,200,000,000 for the first time, over 4,000,000,000, up 9%. So of course, growing faster than the revenue, The adjusted net income at $2,900,000,000, so close to $3,000,000,000 growing by 14% double digit in 2019.
Antripe is the most striking signature of this year 2019 is a cash flow generation, which is always signature of quality on results at 1,000,000,000, you know that Schneider was a company generating a cash around 1,000,000,000 This time, we cross the billion line and it's up actually 65% or 50% according to to the impact of IFRS 16. So really record performance on all direction, proving or the consistency of the deployment on the execution of our strategy on this allows us, during the next AGM to propose a dividend of 2.55 per share of 8.5 percent. I'm going to speak about that later, but we are signing 10 years of progressive dividend. Without too much speaking about it, but progressively and persistently improving the dividend and the return to our shareholders And also, you know, that it's part of the, executives and, reward. Signing also an excellent total shareholder return, an increase of 60% in 2019, number 1 on the year 2019, number 2, other 3 years, but they are again giving an holistic picture on the return to our shareholders.
So great headlines for this year 2019. Now what I propose is to get a little bit into the details because those are just the results of the deployment of the strategy. Picture of the company at the end of 2019 to leading business, energy management, 1,000,000,000, very strong global position, growing of course, over the market at more than 5 percent organically, increasing its profitability by 80 bps above the line of the 18%, 18.4% and a strong coupling with industrial automation, 1,000,000,000, which in a year where Discrete Automation was under pressure for all the industry, manages to grow still more than 1% of growth, supported in that by the choice we did several years ago with the injunction of invences on AVEVA to rebalance our portfolio from discrete to discrete, on continuous and software. And therefore, We keep improving our profitability there and we cross the line there again of the 18% of profitability and increase the profitability by 30% on the top of growing. If we go into the detail of the 2 and I'm in Slide 7, ongoing drilling into energy management.
This is supported by the main factors. We keep growing mid single digit in residential and small building. And you know that it's a business that we have been developing in the past 15 years, but I'm really proud of the size it has reached. On the continuous beating of the competition, we realize that. So it's a business directed to home, small buildings, electricians, and it has been consistently growing every year over the past years.
Again, growth, which is supported by EcoStruxure for commercial and industrial building, the digitization of what we do in energy management is keeping on growing on developing another year of strong double digit growth in the field of data centers, both in large installations, which normally retain the attention on the headline but a lot more in small installations, especially as we see more edge computing developing. And there again, We couple what we do in energy management with digitization of the whole power chain on the whole power train. A more mixed picture in industrial and fracturing infrastructure is certainly very positive in many countries and we benefit from that. Industry suffering of the weakness of Discrete Automation, so that kind of well known in the industry. Very strong performance on contribution of our recent acquisitions of ASCO on IG XL.
Both of them growing strongly. And again there, high single digit growth in services, which is really just keeping on developing as we still serve only a fraction of the installed base. When we go into a more granular vision of what's happening by geography, very strong North America, at 8%, especially if you integrate that this is impacted negatively, but what is happening in Mexico. 1 of this is integrative of a minus 1.4% in Mexico with a sluggish market, which means the rest of the market is really our position on the market is improving. We are gaining market share in North America.
Come second, Asia Pac driven by China and as a strong year in China on the back of a very strong year in 2018. If you remember, that was a double digit growth in 2018. We are speaking about mid single digit, India, which is a good moment as we are moving to the conclusion of the Lawson Tuborg of acquisition is growing mid single digit in EMEA, which was complicated. It was an election year on Southeast Asia, on the whole of Australia, see good growth also. So Asia really still a major engine engine for growth for the company.
Then the rest of the world, which contrasted reality is very strong in South America, Africa, Sandfall And Eastern Europe doing well. The only place which is weak is Middle East, which has suffered of a lot of well turmoil on some issues on the utility market in Saudi Arabia on some issues in the Gulf. And then comes Europe, and I'm pleased to say that Europe is growing, which is good. So, well, very good growth in residential markets. Mainly supported by France, Italy, Spain, UK, doing well through the uncertainty of the Brexit, which is not an uncertainty anymore.
On good growth in Germany, especially in smart grid projects. So a very well balanced geographical portfolio, and you realize that in Energy Management as well in energy management, all regions are growing and we are taking share, I would say, everywhere. Now going on to Industrial Automation, Sonya of more moderate growth. You remember, we had a fantastic year in 2018, Certainly suffering in discrete automation of the trade tension between the U. S.
And China, delaying a number of decisions or where to invest Our feeling that people are getting more used to those tensions and are now coming to a point where it's they are getting used to that environment to make decisions, but made it nice here resilient growth coming from the rebalancing of our portfolio to long cycle business software business process on hybrid offer growing mid single digit with an order intake, which is actually growing faster. Slowdown, of course, in Discrete Industries, particularly touching the activity of our machine manufacturer customer, Very good progress in every joint value we develop with AVEVA to propose complete efficiency solutions with AVEVA, inclusive of Schneider controls and Aviva Software and very strong performance in services. Historically, our Industrial Automation had not developed so much services that is now over. We work on it and that has become a major engine on an installed base very often that needs more upgrading on more development of new functionalities. So when you look at geographies, strong performance the rest of the world, and this is everything we do in the resource industry, in emerging countries.
Asia Pac Quite good, actually, saying that China is a strong machine manufacturer of countries that suffered from the trade war, but really rebalanced from what we do in the long cycle business of process automation, supported by strong growth in software, India growing Japan, of course, restructuring of Discrete Automation, our crisis. Western Europe, minus one with different realities, France, Germany, UK Growing, Italy Dam, it's a country of Machine Manufacturers, general slowdown in Discrete Industries, moderate growth in process and hybrid on good demand in our main targeted segments. PowerV is the only place which was weak, weaker than we thought is North America and really impacted by the lack of decisions in discrete automation, while the market was good in terms of continuous process on the associated software. So if you take a consolidated view, of our business at the end of 2019, well, everybody grows, every region grows, and it's driven by North America or it's led by North America, 2nd Asia Pac, 3rd rest of the world with again the massive view. I was disrupted.
Frankly, only Middle East was weak last year. And in Western Europe, most of our core countries are growing on keeping on growing and we gain or we develop new values, especially around energy efficiency on industry digitization. So that's about the detail of our strategy, we've been very public on the simple headlines of what we want to execute. And what we want to execute is more products which means that we channel more business through our partners and we want to be the reference company in our industry for integrators on the numerous partners out there on the market, more services, more digital and more software on better systems. On legalities, it's plus 3% on products, plus 8% in services, double digit in software and better systems, where we increase our profitability by 40 bps and the interest in seeing at least a noticeable thing is that while in this year's systems are growing faster than the average of the group, while we'll still manage to increase considerably the overall profitability of the group, which For me, you've been through that all development into solutions, which was a painful journey at the beginning, learning how to take the right projects on deliver properly the projects, the fact that we are really growing in professionalism in systems and we are being much more selective is a very encouraging factor for the future.
So going a little bit into more details, 2019, we launched 20, what we call eROfer, core offers, very innovative. We organized again a lot of Innovation Summit, gathering more than 70,000 customers in the dialogue, which is a private dialogue, a great year of launches on Riz that supported a lot of the growth that we do here. While more services, field services growing by close to 8%. Digital Services growing double digit. We are two examples of services like what we do in smart grid, which is knowing a lot of traction today.
And All the advisors that we have described in the field of EcoStruxure, we have a double digit growth in selected advisors like bidding adviser, asset adviser, power adviser. So the more we connect products, the more people want to give sense to the data, which is coming outside of those products. So sense is given by the analytics on the embedded artificial intelligence which is applied into the advisors and really a growing part of our the value we propose to customers is being the partner of our customers in sustainability at three levels, making sure that digitally, we help them understand their carbon footprint and their consumption of resources Second point is bringing them recipes and technologies to reduce their energy consumption on their carbon footprint. And third point, of course, is to source the greener source of energy on helping them through digital platforms to source the most efficient source of renewable for their installations. So field digital and sustainability growing to a total of 8% for the company.
Now we're going into the third part of our strong growth engine or our growth performance, which is around more digital. So we are connecting more and more products to our cloud for the account or for the benefit of our customers. Last year, you remember that in 2018, the number of connected products was increasing by 25% noticeable acceleration this year, we grow the number of connected assets by 50%. So that's the first point. On this base of more connected products, more data available, big progress in our software offering.
Of course, there is Avisa, but there is all the rest of the software on the advisors that we sell. So that's double digit growth in our portfolio. Third point is the communities, the digital communities that we develop around Schneider, around the office of Schneider, connecting people who are looking for solution, developers and integrators who are able to supply solution. And that's called exchange that was launched this year in Anova. Today, we have already 50,000 registered users, trading tips on solutions on the web on which is that growing, we have already 300 apps available on this community and it's developing by the day.
And the 4th point of our digital development is a digital interaction with our customers, what we call e commerce that can be while technical advice ongoing as far as a selection of product growing by 25% as well as the number of connected customers growing by 20% in the and software. That shows a significant transformation of the portfolio that we silently accomplished over the past 10 years. 10 years ago, we had very little services. We had 0 software. Today, if you put together those two parts of our portfolio, which have overlap, and this is why we group them together, that represents 25% of our end of year revenue.
And that's of course much more sticky with our customers because we are connected with our customers or we live with the customers, and that's generating recurring revenues. So it's growing faster than the group average, It's accretive in margin. It's of course a catalyst for more connected products, which come with a higher value that we can sell to the customer and it increases for innovation and for detection of new business opportunities our intimacy with the customer. So next track that we are developing at the moment for growth is we are really becoming in many instances the digital partner of our customers in their sustainability journey and actually it goes beyond digital 2020 will be a very foundational year where in the field of Medium Voltage, which historically has been attached to the use of gas which are not good for climate change. We are the 1st company to propose a solution, which is not only SF 63, but is also completely gas free.
So we think that the best gas is no gas. And we are coming with solutions that want to deploy in the next coming 5 years, which are completely air based. So be prepared for the launch of Airset which is going to be a major revolution in the field of Medium Voltage, that means a stage that links a grid to any kind of usage, any building any industry. Major step. 2nd point, you know that in our Schneider Sustainability Impact barometer, We had fixed ourselves the target to help our customers save 1,000,000 metric tons of CO2 over 3 years, At the end of 2 years, we helped our customers through visible project to save 19,000,000 metric tons which when you think about it is twothree of the yearly carbon footprint of Paris or it's a carbon footprint of Toronto or the one of Melbourne was equivalent of 9,000,000 cars for a full year in the U.
S. And that's a very strong contribution of Schneider. Our business is really contributing to the decarbonation of the planet. And finally, and we spoke about that already sustainability services up by 9%. Take the example of Canada with Maple Leaf where we are the partner of Maple Leaf to engineers, their trajectory to carbon neutrality on Agriall in France, which is a well known agricultural company that we help saving energy actually beyond the initial target we had fixed together.
And we see that really on from the beginning, right? Remember that this has been the key topic of Schneider for the past 15 years, but we see a clear acceleration on the market. When you think about it, At the Climate Week in New York, last year, in September, you had 90 companies Multinational Companies who decided to go to a 1.5 trajectory, 1.5 Degree trajectory is a global compact science based target, while 6 months after in Davos, you had 200 of those companies and to reach your objectives, those companies have to take along and tag along all of their suppliers and all of their partners. So this is a movement which is becoming real and each company is getting interrogated by their customers like Schneider, when we want to work with a company, we question them on their carbon performance, by their employees, do you want to board a company that doesn't have ambitious targets in this one? So that's becoming really mainstream after 15 years have been loan preachers of the course as a company.
So going to the next engine of our growth, it's really we believe at Schneider that our customers need simplicity for their efficiency, energy and process efficiency solutions. And it's complicated because all of this is new technology. It's a lot of software, it's a lot of digital, it's a lot of connected products, things that we are not really existing some years ago. So We really believe that it's important to come together in front of the customer in each country with local characteristics And you've got examples here that customers, off customers, prestigious ones, very different countries, that come to ask us for energy efficiency, process efficiency together on the Oscars to advise them on resolves their issues, which our model of integration in the country is really serving well. I mean, nobody wants a split or bunch of uncalled edited products to come on their short floor, they need somebody to take their problem in hand and to solve it.
Another year in 2019 where I want to mention that, but we kept developing our differentiated DNA to be the most meaningful company in our industry in terms of mission, in terms of the way we do business, been one of the early adopters on 1 of the pioneer developers of the global Compact charter Being the most inclusive company and certainly the most multi local in our industry having a completely balanced presence from the turnover point of view, from the people point of view across the major part of the world and really being the company that allows our people, our associates to make decision and make impact on the market. So quick loops of decision on the market. And we've got multiple recognitions in the field of sustainability in the field of inclusiveness and in the field of innovation. In 2019. Another year where we, the whole company, works on a better performance social responsibility and in sustainability.
So we are ahead of our target. There I think it's been it has always been a major cause of engagement of pride, of commitment for every person at Schneider. So these are objectives that are ambitious, but we tend really to make sure we go after we overreach them. So 7.7 at the end of Q4, which puts us well on track to reach a target of 9 of 10 that we have for the end of the year 2020. We've also announced our objectives in terms of carbon neutrality to be net 0 operation by 2030, our net 0 supply chain, including everything from our suppliers by 2050.
And it's actually a great vector of innovation on the progress because we apply our technologies to every of our factories to every of our building and we learn a lot about the technologies and we learn a lot about new ideas that we can bring after to our customers. So looking at that, I'm trying to zoom out from 2019 and put you back on the GPS of the timeline of Schneider. Remind you, and I'm in Slide 22. I described the past 15 years during our last CMD in 2, 3 phases. The first one was building the portfolio for the best synergy management on the full digital solution for our four segments and that those were the years of acquisition 2003 to 2013.
That overlapped with 10 years of integration. From the launch of the first eco structure to where we are today, which is a much larger version of EcoStruxure, integrating everything we had put together into plug and play digital solutions and efficiency solutions for our customers but also a time where we pruned our portfolio and refocused on what we saw as essential. And from 2016, went into the phase of scaling, deploying what we had put together strategically. And you remember, we assembled you or we gathered together. At the end of 2016 on we took commitments.
We took commitments to you, which at the time were served with interest for sure, but sometime with skepticism, looking, are you able to do that? So we said we want to grow 3% on average. And we've grown close to 5% across those years in average organically. We say we want to grow our adjusted EBITA by 20 to 50 bps on average and we delivered 70 bps on average over those years. And we say want to grow our adjusted EBITA by 4% to 7% a year, and we've been delivering over the past 3 years 9% a year.
So very simple, simple strategic priorities, more products, more services, more software on digital, better systems, commitment to targets, focus on execution, on consistency and delivery. And at the beginning of 2019, we said on the base of what we told you in 2016, we want to change the level of profitability of the group focus on the quality part of the business of Schneider and increased by 200 bps over 3 years. And of course, the progress that we do last year of 70 bps puts us on the right trajectory to reach these 3 objectives. Also want to tell you that we have not forgotten the shareholders in the journey We are now completing 10 years of progressive dividend over the years. And actually, the dividend has been increasing over the past years at an average of 8 almost.
And the shareholder return, which is now part of our LTIP, the long term incentive plan, where we are number 2 among direct peers over 3 years are number 1 over 2019. So that concludes my presentation giving you a picture of the results of the way we produce them on the consistency respect to the commitments we had taken to you on our end over to Emmanuel for the details.
Thank you, Jean Pascal. Good morning, everybody. Very pleased to be with you to comment this set of numbers. And as you can expect, I mean, we are obviously quite pleased with the numbers. Well, first of all, because as Jean Pascal said it, I think it illustrates the success of the strategy that we have been implementing for many years now.
I think it underlines as well the quality of the execution. But I would say as important, it's good to see that all the evolution of the business that we are targeting, the evolution on the asset that we own on what we want to achieve and the evolution of the profile of the company, is really visible in these numbers in 2019 and not only in the P and L, but of course, if you look at the balance sheet and even more so in the cash flow generation, we think that this is very visible. So let's now go into more detail and let's start with the 3 pillars of a strong overall financial performance. It starts, of course, with The strong revenue growth here, you have all the indicators, growth of the revenue organic plus 4.2%. Jean Pascal said it more product, more services, almost 8%, double digit growth for software, more, ecostructure.
We are growing faster than the group average, which is, as you know, the target. And better system. We are pleased to continue to grow in system, but only if we manage to gradually keep improving the margin on the system, that has been again the case in 2019 with plus 40 bps on the off margin. 2nd pillar, of course, no interest in growing the top line if it's not coming with more profitability. And once again, that has been the case very neatly in 2019.
Adjusted EBITA growing plus 8.7%. It's above, of course, the last guidance that we gave. So we've been even beating our final estimate for the year. Adjusted EBITA margin is 70 bps. Remember the high end of the bracket we gave was plus 50 bps.
So we are above this high end of the bracket. We have an adjusted EBITDA, which is getting close to the 1,000,000,000 at +14 percent. And of course, in the Q and A will be happy to elaborate on the evolution of the definition of the adjusted net income. But probably what matters most is a on the performance. And that's why we think it's very important to look backwards.
And if you have the 5 years vision backwards and you show It shows a gradual progression 280 basis point of organic growth over a 5 year period. And after Forex, it's 190 basis point reported. And it's really year after year that we are, as we are growing the top line, also working on the profitability. All that, of course, translating into a strong shareholder focus, I will come back with great detail on the cash flow generation, that's very important. Share buyback, 1,000,000,000, we're going to be very frank.
We wanted to do more But unfortunately, we had the approval from our shareholder on only until so we were stopped at the beginning of December, to do more in term of buyback. We're going to ask for a new approval with a lead price at the next shareholder meeting. And therefore, we're going to be able to resume the buyback, and we absolutely stick with the initial plan in term of of buyback. Jean Pascal commented the dividend. We are working on shaping our portfolio for the future.
I will elaborate on that. And maybe on the rocky, it's something that we are closely monitoring. We've had several years of progress of the Rocky with some Forex headwind. Well, this time, it's a significant bounce forward. 12.5 percent of ROCE in 2019 and it's plus 70 bps.
Okay. Now let's go into a bit more detail on the P and L and then we'll look at the cash flow and we start with sales. So sales amounted to 1000000000+5.67 percent. We have a negative scope impact, so in line with our a million program, that we have already implemented out of the 1,000,000,000 to 1,000,000,000 it's about 200,000,000 of negative impact on the top line in 2019. So Forex has been positive plus 2%.
It's largely the dollar progressing versus euro. And on the current ForEx situation, we are expecting for 2020, another positive ForEx contribution around 1,000,000. Regarding the margin, it has been negative to about 20 bps in on the margin in 2019, and we expect it to be about neutral on the margin in 2020. Now when we look at the performance by region, what the good news is that all regions have been growing. North America being the best performer at plus 6%.
Good to see Asia Pac at +4 percent and China was even a bit above the average of Asia Pac. Rest of the world, plus 4% contrasted, Jean Pascal talked about that. And Western Europe as expected, a more moderate growth at +2 percent. When you want to improve the profitability of a company, everything start at the gross margin level. And great companies have great gross margin because this is the ammunition that you have then to invest for the future and to make sure that you have the capacity to build further the future.
Here, you have the evolution of the gross margin rate since 2015 And that has been quite a regular and impressive growth from 37% to 39.5%. And let's be very clear. That is illustrating a company, the journey of the company, going towards more innovation, more differentiation, more technology, more digital, therefore, more capacity to price. And together with productivity and margin improvement on system, that accounts for this very nice growth. And 2019 is making no exception.
When you look at what have been the builder of the margin improvement here, you just have the H2 margin improvement, which has been even more spectacular because we've been moving from 39 percent to 39.7 percent. Well, you see that we have 2 big drivers, which have been incredibly powerful. 1st, the net price 0.9% of improvement in H2 coming from a mix of continuation of price increase and positive raw material deflation. And then the productivity that has accelerated in H2, and we certainly expect productivity to continue to be strong in 2020. And this really 2 engine account for the margin improvement.
Then in front of that, you have some negative impact coming from the ForEx We are investing on R&D, and we have some inflation on labor costs. The mix is negative. That was expected because system are growing faster products, so that was expected. And then as always, you have a number of scope impact and others. Now very good to have a great gross margin evolution, which is, once again, in line with our key, target.
It doesn't mean that we don't have to work on efficiency at the same time. So I've been talking about the productivity. We've been delivering more than 1,000,000 of productivity in 2019, we are targeting over a 3 year period to do 1,000,000,000, and we are absolutely in that journey. And at the same time, we have a huge challenge on SFC because as we shared with you, we want to invest on SFC. We want to make sure that we invest on our priorities which are as you know, more digital, more innovation, more services, more marketing, more news is in our Salesforce.
So that needs more ammunition to do that more dry powder. But to do that, And in order to contain the agreement of the SFC and to keep decreasing the SFC on sales ratio, we need to generate saving efficiency simplification on our SFC, and that's exactly what we did in 2019. You have more than 200,000,000 of savings, 240,000,000 which really enable us to invest for our future. So very, very important. Here, we wanted to clarify one element, which is about what we used to call our corporate cost, which in fact are, only for a minor part of that, you know, 30 percent of our corporate cost.
And that means that corporate cost on sales ratio is 0.8%. So I think we are pretty good in term of benchmark. And at the end of the day, what we are classifying here are things that are comment to the group like the cost of performance shares. Also, IT, digital marketing investment that we are making for the group. And that means that in fact, in terms of corporate costs, true corporate costs, we are a very lean company, but we wanted to make sure that we clarify that.
So that gives a full, P and L until the adjusted EBITA. So as you can see, an adjusted EBITA of 1000000000, growing a bit more than 9%. The margin on adjusted EBITDA 15.6 percent, 70 bps organic with a 20 bps negative on Forex. It's an improvement of 50 bps. And Once again, to summarize the growth between the 1,000,000,000 last year to the 1,000,000,000 this year, it's good to see that the performance is relying actually on 3 engines, which are almost equally powerful, I would say, the growth of the top line so that the volume impact, the net price, almost million of net price Roughly speaking, twothree is price increase.
One third is coming from raw material deflation. The productivity and all that, give us the capacity to innovate on innovation, to innovate on our future. To, sorry, to invest on our future, the capacity, of course, to face inflation and also some negative impact coming for the mix to generate this 9% growth. Going down to the bottom of the P and L, a few things that I would like to bring to your attention. Other income and expenses, it's a negative of minus 1,000,000.
Remember at
the end of June were already at minus 1,000,000. That was largely the PELCO disposal impact and negative impact of the disposal due to a loss and impairment on the disposal. On H2, a much more negative reduced amount. You have positive and negative impact coming from the evolution of the scope. Positive linked to the convert disposal, negative due to the deal on SESH, and then we continue to have a number of acquisition and integration costs in the second half of the year.
Restructuring amount 1,000,000, we are in the high end of the bracket that we give as the average of the year, but this is accompanying the very nice performance that we are delivering on our simplification and efficiency on the SFC and on productivity that I described. Another good news on the P and L financial cost at 2 1000000 versus 110,000,000. So we continue to decrease the line financial cost. And today, the average cost on our debt in 2019 has been 2% versus about 2.5% in 2018. So we continue to have a dramatic reduction of the cost of the debt that accounts for the decrease of the financial cost.
Income tax at 22% is also good news because we are in the low end of the medium term bracket that we give and that we keep for 2020 of 22% to 24%. And then on equity investment and minority, the good news is that it's pretty stable. You have the minority part of the AVEVA shoulder, which is growing with the performance of AVEVA But at the same time, we are growing fast with DDSI a 30% growth of the net income of DDSI for for the year. And that means that the DDC is contributing 65,000,000 to the net profit. That gives, in total, a net income group share of 1,000,000,000.
And if include the nonrecurring element, it's an adjusted net income of 1,000,000,000 because of the buyback, the EPS is even growing a bit faster than the adjusted net income. It's per share, and it's a growth of 15%. Now of course, let's spend some time on the cash flow because I'm sure that it's going to raise a lot of question on how do we increase the free cash flow generation even before the positive impact of the IFRS 16 by 50%. And we are coming with the fact that This improvement to a large extent is normative. Well, of course, everything starts with the operating cash flow.
So from 1,000,000,000 last year as we keep growing the top line and the profitability that generate a nice improvement of the operating cash flow And as you're going to see on the guidance for 2020, it is our ambition to keep growing the top line and the profitability. So that should continue to move in the right direction. Now when I was referring to the evolution of the the Schneider model and fundamental businesses, that's going to start to be visible at the level of the CapEx at the level of the working cap as well. Because the more we are growing on services on software, the more we are growing on a strong added value businesses, The more we are able to grow faster top line and profit and not grow the CapEx at the same pace. So that's creating a 1st favorable element on the evolution of the cash flow generation.
Then on the working capital, we're going to have similar positive evolution as we are moving for more services and software, we have a portfolio of customer who are also going to pay on average with shorter term. So that is allowing us to do good job on the receivable on sales ratio. And the same is true for inventory. So as we are growing on services, on software, on more added value type of businesses. The inventory are going to grow at a lower pace than the top line.
And on top of that, we believe that there is still efficiency that we can generate, on the management of inventory. So all that is bringing to the billion I think in addition this year, we have to recognize that we had some catch up on last year, which was particularly negative because of the disruption of the supply chain. So I'm not committing to have every year, that nice positive number on the change in the working capital, but we can certainly have a nice growth on the top line without having too much negative on the working cap, and that's why we believe that we can be in a sustainable manner around 1,000,000,000 of free cash flow in the future. And of course, the consequence of that is that we finish the year with a debt, which is nicely reduced from 1,000,000,000 last year to this year, 1,000,000,000. And here, we just wanted to illustrate the step change in terms of cash flow we've been quite regularly over the last 4 years between 1000000000 and 1000000000.
And in one go, we go to 3.2% and even 3.5% now with the new IFRS 16 impact. We are growing the adjusted EBITDA, which is around 1000000000. We are increasing the debt. So of course, the net debt on adjusted EBITDA ratio is decreasing, and we are coming with a ratio of 0 point a 7, a time. And all that is translating into a nice rocky improvement, and that's very good news because, of course, that means that We can continue to work on the return for our shareholders.
The buyback is, of course, continuing. I mentioned that. We are proposing a nice increase of the dividend, as well. And this good situation has already been anticipated, we guess, by Moody's, who has been upgrading us a few weeks ago on our rating. Now of course, we continue to shape the portfolio of the future.
Of our future. And as we do that, we need to do 2 things at the same time. So we need to invest, of course, for our future. Jean Pascal mentioned that the most recent investment have been very, very successful in 2019 with double digit growth on AVEVA as core IGXAO. And we keep building, the priority for the future, priority on geographical leadership on our core.
This is the LNT deal in India. That should close in the coming weeks. And of course, we continue to build our digital capacity and the REB offer to be able to be a big player in digitizing the building life cycle in the future. So that's for the new things that are joining the Schneider team. And of course, at the same time, as we are evolving in our model, things become less relevant, and you know that we have this billion objective of sales that should leave the group, we have done roughly 1 third of the journey with 1,000,000, and this is already contributing 2020, a positive impact on the margin of 20 bps.
So this million that are going to leave the group in 2020 generate a margin improvement of 20 basis points. Well, that slide is really to summarize the fact that beyond the very good results of the year, you can really see the evolution of the company on many line of our P and L balance sheet and cash flow generation. Of course, improve top line growth profile that I think we are demonstrating and notably versus peers the pricing power that has, I think, has been quite noticeable in 2019. The fact that we are also progressing on system, and that's because We are much better on the collection system, but we are also able to come with system with more added value for our customer. That translate with productivity on gross margin improvement.
Then everything we are doing on the investment. So the fact that we are able to generate significant investment on our future while still continuing the growth on our SFC. Then I mentioned the receivable on sales ratio and the inventory on sales ratio. I mentioned the CapEx evolution and all that, of course, magnified in the free cash flow generation. I think it's important to understand all this dynamic.
And, okay, as a consequence of that, Jean Pascal said it, we are once again coming with a proposal of a nice growth for our dividend, plus 8.5 percent at per share. And it's a CAGR of 8 percent over the last 4 years. We also are reporting because it's part of the LTIP for the management. The overall total shareholder return. So Jean Pascal was mentioning that we've been number 1 in 2019, in, in, in, in, among a group of 12 peers, We are, of course, measuring that over a 3 year period.
And it's interesting to see that we were a number 6 in the 1st year, and we've been gradually progressing through the ranking and over a 3 year period, we finish a number 2 is an overall 50% total shareholder return over this period. Thank you very much. And now Jean Pascal back to you for
So long a long page for, for, as a guidance for the year, but what we see is that we keep seeing a market which is very positive in North America car. So we're going to be impacted by the base of comparison for energy management due to some large projects. In Industrial Automation, we expect pressure and discrete to remain in H1, but we would expect a rebound that could be expected in H2. Mexico, we think we remain sluggish probably in the near term. Looking at China, which is a matter of lot of debates at the moment, Structurally, China remains for us a growth market where customers are looking for any efficiency, carbon reduction, digitization of older facilities, with dynamism in many end markets, on segments, including construction, of course, infrastructure, transportation, data centers, edge care, industry will look for probably more vertical integration due to the trade tensions, but it's been, of course, impacted by the present disturbance due to the virus.
The OEM demand could, we think, could strengthen in H2. We're seeing some positive signs at the end of the year. But now it has been all kind of disturbed by the new issues. Now focusing on the coronavirus, which again, we should see as a problem of the moment, which is much less structural There will be an impact for us in Q1 2020 due to the loss of working days in January, on February. At this point, we estimate that the potential impact has been estimated at 300,000,000 mainly in China, but we also estimate that we should be able to catch up this within the calendar year.
The catch up would be operated during H2. Okay? So, on clearly, when while we are very close to China, of course, but what we've seen that in the past 2 weeks, the priority is now turning to being back to work. The absolute priority in the past before was about the principle of precaution, given priority to containing the contagion, new seems to be better on that front and now the priority is to be back to work. The rest of Asia as we look into the year is In India, in Southeast Asia, we continue to see growth.
The group we expect Western Europe to grow at a moderate pace on the rest of the world to be contrasted, which means that there are several realities that are very diverse around that zone. So in the current micro environment on integrating the full impact of the coronavirus, we expect positive growth in aggregate and we continue to deploy our strategy So we see a growth between 1 to 3 points in organic on an adjusted EBITA margin between 16 to 16.3, which is very consistent. If you think about it with the guidance we give over 3 years of increase by 20 actually over more years, 5 years of 20 to 50 bps a year, which add to a 20 bps improvement due to the scope that we are that we have operated last year by divesting 600,000,000 of dilutive business from our portfolio. And of course, we shouldn't look at this guidance only for the years that sets us in the right place to be on the trajectory of the 200 bps improvement within 3 years. So with that, I think we've been through a very extensive presentation of our results on perspective.
I thank you for your attention and we are ready to take questions.
All right. Thank you. We attempt to take all the questions, but we'll give priority to the folks in the room. So maybe we'll start with, I'll just say, we're going to keep it to one question first and then we come back.
Good morning, Alastair from SocGen. So very good margin progress again in 2019, but as you saying there. I think on an underlying basis, the guide for 2020 is looking for 20 to 50 basis points of margin expansion. So pretty much in line, as you said, with the last few years as well. And that's really despite obviously, I think if you look at the average over the last 3 to 4 years, it's been more like seventy basis points, you're also articulating a very positive message about the sort of mid to long term margin potential.
I was just wondering whether there was an opportunity maybe this year to upgrade the sort of annual margin guidance in 2020? And just whether maybe the reason you didn't was just a little bit of and whether you're sort of integrating a coronavirus impact in there as well and maybe some investments? And then maybe you could also just provide some color in terms expectations for the kind of main elements in the bridge around pricing, productivity and mix?
Well, so 70 bps has been indeed the performance in over the last few years. We are coming up this time with a guidance on the top line, which is, as you can see, a bit below what we have been achieving, in the last 2 years. And of course, top line is also helping the margin. I think it is today our best estimate of what we think we can deliver organically. And as always, we'll see how the years develop, but we are comfortable today with with the 22 to 50 bps.
Let's be clear, we have this 200 basis point objective. We have a roadmap to deliver that. We are absolutely within the road map and we are well in our journey to get there. And I think that 2020 with that guidance, is absolutely in line with our objectives. So we feel comfortable with that.
Now on the bridge, mean, if I can provide more color of 2020 and of course with limitation, we keep having the ambition to continue to price up. Certainly, the inflation is not at the level of 2018, 2019. So that's an environment that we'll need to take into account. So don't expect necessarily the same impact than in 2019 in terms of pricing. And based on the current situation of the raw material, it could be, once again, a bit positive on the margin.
So that's something that we we see for the time being, but of course, we're just at the beginning of the year and we'll see how the raw material inflation evolves. But that should be the situation based on the current price. And on top of that, we continue to, of course, expect significant productivity, on, in 2020. As I mentioned, we are in the 1,000,000,000 plan, which is absolutely still on the part of the journey.
All right. Thank you, Alastair. Maybe we move to questions on the web of phone lines. So operator, the first question please.
And the first question comes from Andrea Willey. Please ask your question.
Yeah, good morning, everybody. Thanks for your time. My question is about the energy management business, particularly here in the U. S, you had a very strong double digit growth in 2019. That slowed a bit in Q4.
Maybe you could just talk a bit more about that. And also that you said you keep growing market share. Maybe you could be a bit more specific if you, in terms of which areas drives that stronger than average growth. And what's basically a function of mix given your higher data center exposure and how that's doing relative to kind of mix adjusted market share gains you're seeing in the market?
I'm just taking the figures. I'm just noticing that we go faster than the other reported figures. So my conclusion is that we grow market share. Why is that? Well, first, we are putting together, not only in terms of technology, but also in terms of business model and approach to the market, a very cohesive approach in a world where people want a full powertrain.
Full powertrain that vehicles, the electrons, that is controlled by 1 suite of software, 1 suite of control, so that the first element. So it's a very consistent technological architectural and commercial approach that we put in front of the customer. The second point is that clearly, if you take what we've been putting together in EcoStruxure power, the way we've put things together, We have a system, which is completely integrated. I often share that. We have 2 business at Schneider.
Industrial Automation is almost all connected. Energy Management is almost all not connected, not really, but it's, there is still a lot, large potential of connecting everything. On, therefore, we are really pushing on our digital architecture because customers just want better safety, better reliability, preventive maintenance and they really want their power, especially in a country like the U. S. Where the grid Sometimes it can be weak.
They want to be able to predict and react very fast. A third point is that we keep developing services on its field services on its digital services. And that opens plenty of new possibilities. It goes as far as sustainability services where in front of the challenge of being better in terms of carbon footprint, our customers go from consulting into technological search and we are not Many people are wanting to advise people on sustainability, but we are not only doctors. We are also pharmacists.
We provide people with the remedies so that they can really improve their performance. And we do that with a very capital coverage of the market. From system people to service people. So all those elements, plus the fact that we have positioned ourselves on growing segments like data center being 1, but you have electric vehicle coming now electric mobility that has to retrofit revamp a lot of networks. Buildings are becoming more electric around the world and also in the U.
S. So all of this makes that we have the right coverage that puts us into the right place. Now, and it was mentioned and it's mentioned in our guidance, We have strong base of comparison because we executed large projects in 2019. Now we are also pursuing new opportunities as we go into the New Year. But clearly, the base is more demanding as we go into the next year and especially in H1.
So that's where we are today. On let's face it also, we've probably benefited from some disorders on the market with other companies. While we were completely operational and completely organized in front of the customer, right? So that's what I would say about our performance here. All right.
Thank you, Andreas. Next question please.
Thank you. And the next question comes from the line of Ben Aglow. Please ask your question.
Good morning and thank you for taking the question. It's really around China, on 2 different ways. Firstly, there was a nice pickup, prior to the coronavirus in 4Q So the growth went from plus 2 to plus 4 in Industrial Automation. Could you give us a little more color on what's happening there? Was there any particular strength in any individual end market?
What drove that pickup? That's the first part. Second part, and I know Jean Pascal, you've talked about this before, but if we step back and look at the environment in China, and the trade tensions, etcetera. There's been a lot of speculation around, decoupling around supply chains. Around companies either pulling out or reorienting what they do.
Are you seeing any evidence of that at the moment? I realize coronavirus probably, you know, dampen things, but what's your big picture take on the decoupling idea, please?
Yes. So on the environment for industrial automation in China, we saw better environment at the end of last year. That's coming from a focus on the long cycle business, combination of process automation and on software, where we are getting traction. And we are relatively smaller because we are really performing well in discrete, so probably very focused on the growth here. So we've rebalanced our presence there.
And we saw, and I was mentioning that at the end of last year on the beginning of this year before the whole virus stuff started to happen. That there was a little bit more optimism on the more business on the discrete on the discrete market. So all of this is positive, which Let's just think that structurally they were seeing of at least troughing on discrete and rebounding on good dynamics on process automation. On the most structural part, which is decoupling of the supply chains between the continent, I look, it's we spoke about that last year. This is a long term trend, but clearly the tensions will push China to more vertical integration.
That's clear. And you're going to have more industrial investment in China probably as we go forward, and there's going to be probably more decoupling. We see already decoupling happening in the digital space where we are operating in 2 very different ecosystems. From that point of view, the model that we have at Schneider, which is decentralized in terms of geography, which is according to as a real meaning of decentralization, is well adapted to a world where geographies are more equal in terms of size of economy and have their own ecosystem in terms of digital and supply chain.
Thank you, Ben. We'll take the next question from the phone line, please.
The next question comes from the line of Cook Clifton. Please ask your question.
Good morning. Thanks so much for taking my question. I want to talk about capital allocation more broadly whether your appetite for M and A has increased maybe during 2019, how is the pipeline looking now compared to maybe 12 months ago? And just in relation to that, on the RIPS software acquisition, how should we view that in terms of is it a platform acquisition that you build organically from or is this AATs in the jigsaw that you continue to build out? Thank you.
Taking the wrong regard to doing that capital allocation? Yes. So on the capital allocation, I would say nothing as changed. And, I think we've been signaling for quite a while that we were open to opportunity on the core of the core and, of course, our ambition to grow into software first organically, but possibly inorganically could be one of the things that could lead us to do M and A. I think reap is exactly in that direction.
We have now 2 possible significant deal in the pipe. LNG, so I mentioned that we expect to close the deal in the coming weeks and then the offer on REB So that's something that is not coming as a surprise, I guess, for anyone. Quite true. Exactly. And for the rest, we have the same vision on M and A.
We don't need to do M and A. If we do M and A, it will be only on the core and certainly with a view to keep building leadership and notably in digital. So nothing has really changed in that respect.
Well, I really want to confirm that. I mean, when we finish the acquisition phase or building the portfolio phase of 2013, we are very picky on every new piece we add. So of course, our center walk ins has no surprise. It's establishes the leadership in probably the fastest, growing electrical market in the world, biggest needs in the world. And I'm concerning our IVs that we spoke about last week, quite at the extent, so I would say.
Well, the logic here is that it brings functionalities that we didn't have in our portfolio in costing planning on scheduling and remember that Schneider is part of multiple projects in the world in many applications And this industry is still operating with very basic tools in many cases. So we are we have developed a series of software in operations in the industrial field, in the building field. We have developed with AVEVA tools into the planned design field, and that has been great, as you can see from the performance of Aviva. But there is this break is around costing planning on scheduling that we are missing, which fits very good on our IVs, bringing also that brick of the construction feed, the build of the building, with the focus of the building segment that AVEVA, AVEVA does operate in the building space, but not so much on the design space, design build, but more so on the operation space. So that's a complementary approach in term of segment on a new approach in term of functionalities, but it's not a jigsaw thing.
It plugs really into what we do
couple of questions on the phone line come back then to the room. So next one on the phone line, please.
Question comes from the line of Wazee Rizvi. Please ask your question.
Yes, hi, good morning. Thanks for taking my question. I was interested in the detail you gave on the ecostructure exposure, actually, where you said the revenues were at 15%. Could you talk a bit more about that, actually? Is that products not specifically software?
Ecostructure enabled and the and you mentioned the growth was above average. How has that growth been over the last few years? And what's the margin profile of that business as well?
Yes, right. On EcoStruxure, we've given several figures on the real 80 by definition, EcoStruacher is a meeting of software, of connected products, of controls, on those services, in many cases, which comes as a consulting because customers rarely say, well, this is a list of product. I want to order to digitize my company, the long term for digital, they come for reducing my carbon footprint or improving decrease in my energy bill. Or increasing my productivity or increasing the safety of my operators on the field. So we come with complete on holistic approach.
It starts with consulting in many cases and then we go into digital solutions and then we mobilize our partners, integrators, pacifiers to define together solution. But I think what you refer to is a combination of what we call the level 2 or level 3 of EcoStruxure, which is software and digital services, which is the upper layer of EcoStruxure, combined with a control layer of EcoStruxure, and that makes a total roughly of let's say, 16% of the turnover. Now to give you a more holistic picture of what we are talking about, as there is overlap of digital services together with services more globally because Schneider and Schneider, when we deliver services to our customers They are really covered with digital. We use fully the potential of digital to provide a differentiated answer that combination of services and software and control, let's say, makes 25% of our business. If you want to have the full picture of EcoStruxure, you would have to go to the layer of connected products.
Right, which by themselves represent and take my figures as, right, as what they are. I'm not precise to the to the decimal, but roughly 25% of our business, which means that 50% of the business we do today is in the field of the all environment of EcoStruxure plus services, inclusive of the services, which has been silent but very profound transformation. When you think about it, that thing was not really with us 15 years ago. So it's a very large part of Schneider, which is developing and we still see a lot of potential behind that and the old things are feeding each other. The more you have soft where the more you want to connect products because the more you can gather data on the more you can get in productivity.
On the more you have connected products, and again, they were growing by 50% last year. The more you generate in our field of data so that you can train more AI and bring more functionalities on leverage at better. So that's what we are putting together.
All right. Thank you, Vazian. We can, of course, get into the detail of the calculations. As you see, the top 2 layers of EcoStruxure growing faster than the group, and the 25% categorization also growing faster than the group. One more question from the phone line and we come back to the room.
Thank you. The next question comes from Denise Molina. Please ask your question.
Thanks for the question. Yeah, just wanted to follow-up on that last question, actually, because I have a similar one. In terms of the breakout of the revenue within EcoStruxure, actually digital, if you look at Edge Control, software and digital services, field services, My guess is that, that edge controller is low margin components and that, the real, the real high margin business is at 6 sent in the middle of the software services. And I guess my question is really related to the fact that the if you look at the bridge on the, EBITDA margin, mix effect is negative, which I'm guessing is diluted by discrete being down. But I'm just wondering if you could just talk about the relative margin of those 2 components edge control software and digital versus field services?
So I'm not sure I'm going to elaborate more on the margin. I think we give a great deal of detail on many, many things already. So I'll let you make your assumption. I think everybody knows the kind of margin on software that can be done. And of course, the Aviva numbers among others are unknown.
Let's be clear, all our businesses are providing a good profitability some even better, but I won't elaborate more. I nevertheless want to clarify one thing on the mix impact. So you have one element coming from system, but the geographical mix is also important. So that's another dimension that you need to take into account. To explain the impact of the mix on our performance in 2019.
All right. Thank you, Denise. Thanks, Emmanuel, for that one. Just come back to the room. Is there a follow-up question here from in the room.
Alastair, maybe one more.
Thanks for the follow-up. So very helpful breakdown of the, I think the central and digital cost line. I think back in 2007, I think the corporate line was around 1.4% of sales. And I was just wondering whether it's plausible, really the entire move up to 2.7% was driven by the digital IT marketing bucket. And maybe even the underlying increase was even greater given that corporate costs were maybe on an underlying basis?
Which year
did you mention?
2007, I think it was around 1,000,000.
I was not born.
Congratulations for, I think, yes, we recall. No, in
your what I want to the whole journey on digital is quite paradoxical. On one side, you can be very fast on the market with new concepts. Entesence with very entrepreneurial. And at the same time, it has to be super discipline. So the big change that it implied for Schneider is a globalization of our IT on the one direction.
So probably the figures you are referring to are coming from the old Schneider all the way of doing things, we are things we are country by country entity by entity, many non compatible AT systems. And we are still have a lot of work to keep that to the complete homogeneity and consistency.
I think it is Jean Pascal that I mean, I wasn't there in 2007, but what I can tell you is that that was probably a true real corporate cost for sure at that time. So there was no There was no other digital cost because I see, I see at
the time was spread all over on much more costly, actually. And it was completely divergent from one place to the other one. So a large part to create the digital development on that has been airculean task and we are not finished with that one has been to drive that consistency. And frankly, I like common sense, right? We could account in words, we could push it down in the division.
But at the end of the day, this is a cost that we neutralized and reduced because it has been globalized. And this is where we report it, collectively. But Jean Pascal, if
I may, so a point on the digital cost on the corporate cost. If you allow me to come back on that one, I think it shows one thing is that we keep reducing corporate cost on sales ratio. And I can tell you every year, we make sure that corporate costs are certainly growing at a much lower pace than the other costs, which are reflecting the investment that we make. So we don't invest in corporate costs to be really clear. We're trying to be each year leaner And very often, we're just trying to go down actually in term of amount.
And that is probably reflected from this move from what was maybe 1.4to0.8 And I think it is a direction that we're going to keep following corporate costs should continue to decrease in term of corporate costs on sales ratio.
Thank you very much.
All right. I think, I think we have done the questions here. I just want to give the opportunity to see
if there's any is one question?
Okay. One more question from the Sundan.
Go ahead. So just Madison from Bank of America. Just one clarification on the free cash flow guidance. 3,000,000,000 number, does that include the IFRS impact or that is without the IFRS?
No, so it's not reached around 3. As a first clarification and does not include the IFRS 16.
I believe there's probably a question on the web, so we can have our colleague just read it out for us.
Okay. Yes, this question is from George O'Connor from Stifel. Can you give any thoughts or color regarding your shareholding of Aviva has your thinking changed since you first crafted the deal? And do you have any message for the other Aviva shareholders?
I think we're just very pleased with Aviso.
We had
a very pleasant amazing success. Since we closed the deal, I think that the share has been multiplied by 3, if I'm not mistaken or close to it, it has entered the FTSE 100,000,000,000 market gap 8. Something in pounds. And we thought that would be a great formula to have, at the same time, a pure, dedicated agnostic software company, generate plenty of great synergy with Schneider. Recruit the best people in software and have potentially a good vehicle to make acquisition to have the right valuation and right setup.
And I think we've been proven right on all fronts so far. So we are just very happy with the current situation and very happy with how things are developing.
We are very happy with the work of the team, and we see a lot of potential. I think this putting together our forces. We can open more doors for Aleviva on the value proposition we've put together as no equivalent. And as people go into their digitization journey, they are looking for the digital twin from design to operation, on Alibaba is an exceptional value proposition on the market.
All right. So I think on that note, we'll, we will stop there. You can probably see on your screens that we have, we have the agenda for H1. We're also thinking of some more events, maybe in the second half of the year, which we will share. What's not included here is that in the coming weeks, of course, we'll be seeing many of you on the road or otherwise to welcome you in the offices.
So thank you very much for your attention. Thank you very
much.