Good morning. Thank you everyone for being here for our Q4 revenues and full year 2018 results. Appreciate you being here. It is a full room, and we are also live webcast. Welcome to everyone online as well. Of course, we have Chairman and CEO, Jean-Pascal Tricoire, to take us through the business performance for 2018, and Deputy CEO and CFO, Emmanuel Babeau, on the financial presentation part, followed by a question and answer session. With the usual caveats on disclaimers on slide two, I think we can get started. Over to you, Jean-Pascal.
Okay. Thank you, Amit. I am going to go straight to slide five to go through the business highlights. Like to remember or remind you, sorry, that we have positioned Schneider Electric over time in what unique mission, which is to supply digital solutions to our customers, energy and automation digital solutions for efficiency and sustainability. We have done it by building two very strong businesses, EUR 20 billion in Energy Management, EUR 6 billion in Industrial Automation, that serves the two major transitions of the fourth industrial revolution, namely the energy transition and Industry 4.0. We do it to bring very tangible benefits to our customers in terms of efficiency, productivity, safety, reliability, and sustainability. We do it by focusing very strictly on four markets, buildings, data centers, industry, and infrastructure.
I will repeat many times today in a very balanced manner, where our commercial applications, say, building and data centers, are making roughly 50% of our business and our heavy duty application, industry, and infrastructure are making also 50% of the business. We are going to review 2018 today and speak about the future, 2019. We are going to try also to go beyond 2019 into the next three years. What we want to tell you here is that we have been. We want to be very consistent in the future in the way we keep growing, and making more profitable the business. Going on the next slide, which is a picture at the end of 2018 of our business, EUR 26 billion plus 7% of growth. Again, Energy Management, EUR 20 billion, Industrial Automation, EUR 6 billion.
Both of the businesses growing between 7%-8% in organic growth, and both of them improving their profitability by 60 to 70 basis points and the total of the company, delivering 15.1% of operating results at the top of the guidance we had given at the end of 2016 and repeated at the beginning of the year, and plus 50 basis points of operating result. If I go into the detail of 2018, I would say it has been characterized as a strong year in terms of growth, in terms of profit momentum. It is a year where we have reaffirmed a strong focus on our shareholders. If we start by growth, again, 6.6% of organic growth. Our growth of products is really in line with that.
Remind you that Schneider is the strongest company of products going through partners in the world. We keep expanding our network of partners everywhere in the world. Name them, contractors, OEM, integrators. We are the leading franchise in providing blocks of technologies that our customers are integrating together to provide solutions everywhere in the world. In the past years, we've triggered new sources of growth. The first one is services. Services this year growing 9%, growing strong, and it's just the beginning. I would like to say today, services represent 12-plus % of our turnover. Physical services, which we call field services, and digital services. We see still plenty of potential for that business to grow, as in many cases, only 10% of the install base is served as we speak.
Second axis of accelerated growth is digital, especially everything we do around EcoStruxure and software. Software growing above double digit, EcoStruxure growing easily above group average. Last point I want to mention that our system business is growing lower, at a lower pace. Here, our target is to increase the profitability on, again, in 2018, we score another 70 basis points of operating margin improvement on our system business. With such a growth that start from strong on leading position, we clearly gain market share in 2018. Going to the second part of the year, which is profit momentum. Very happy to, and proud to declare more than 10% adjusted EBITDA growth.
In percentage, growing 50 basis points, again, at the top of the guidance we had given. If you take a little bit more depth of review of what we are doing here, it's a steady and continuous increase of our profit, 210 basis points organically over the past three years, which results into an historically high net income, an increase of 9%, on an EPS, an increase also of 9%. We're going to explain later that this is just the middle point of our ambition. We want in the next three years to bring the level of profitability of Schneider to the next level, and are targeting an improvement of 200 basis points as we go forward in the next coming three years. You know that the story of Schneider has been done of 10 years of building the portfolio, which was 2003 to 2013.
Since 2013, we've been consolidating our capability and our portfolio. We have been very focused on shareholder return to give back to the shareholders who had accompanied us during the time of building the portfolio. 2018 is another strong year of shareholder focus. Strong cash flow generation, 90% conversion. Actually, a bit below that what we were expecting at the beginning of the year, the cash flow has been disrupted by some of tension on the supply chain during 2018. Such a strong growth has had impact, especially in H1. The operational cash flow is growing by 13%, which is a great sign for the future. Very disciplined on successful M&A. First steps of AVEVA, which is declaring today, great first steps.
Another company in software, IGE+XAO, in electrical design, is delivering strong results on ASCO in the field of Secure Power, in the field of microgrid is a great adding to our portfolio. We accelerated our buyback programs in H2 and realized the USD 1 billion that we are supposed to finish mid 2019 and 2018, and we are committing to another buyback program for the next three years of USD 1.5 billion-USD 2 billion. We are going to be proposing a dividend to the AGM of EUR 2.35, an increase of 7%, a progressively increasing dividend as per the commitment we took a few years ago. While we still do acquisition and while we are very impacted by the Forex, we deliver another improvement of the ROCE at 11.8%, an increase of 40 basis points before Forex.
Now I would like to review with you what are the foundation of such performance. The first one, and this is clearly a very strong point of Schneider, it's our global presence and the balance of our geographical presence around the world. Now, it's been the case for some time, but number one comes Asia-Pac, which is first our largest region. You know that it's a matter of debate at time in my country of origin, but this is our largest business, and that doesn't include the non-consolidated Delixi, for instance, so the reality is even better and higher. Asia-Pac is delivering 10% of growth in 2018, with China almost at 15% of growth. A very strong contribution of Asia-Pac. Second very good news, our second zone, North America, growing fast and strong at 8%.
West Europe back to growth, which is good news, at 3% of growth. On the rest of the world, namely Latin America, Africa, Middle East, and Eastern Europe, growing 5%, which is also a strong support for our dynamic. Second point also to underline is that you have a bit of an imbalance between H1 and H2. During the past years, we rebalanced our portfolio to more mid and late cycle business, expanding our technologies into the field of industry and infrastructure. You see that today we have a balanced portfolio between early and mid and late. Third point, the growth of our accelerated growth engines, services and software, which have been expanded inorganically and organically. I already spoke about them. You see that this is now more than 16.16% of our business.
Finally, we kept working on the flexibility of the structure of our P&L, with 70% of our cost being variable and being shouldered upstream on our suppliers, partner suppliers, and downstream on our partners integrators. A lot of what Schneider does is to be working with network of partners upstream and downstream to remain very flexible. What has paid a lot to deliver such a growth also is our focus on very key segments of Schneider. Double-digit growth in buildings, data centers, high double digit, very strong presence there. Consumer packaged goods is also a strong point of ours. Oil and gas, the rebound of oil and gas, we see it in our portfolio, in Energy Management, in Industrial Automation. Wastewater is also a strong place of ours. Mining metals and minerals was also high single digit. On machine solution, mid-single digit. All of those focus have been delivering.
Of course, here, the platform of integration is EcoStruxure that allow our customer to bring into one solution energy management for energy efficiency and industrial automation for process efficiency into one complete solution, digital solution of efficiency and sustainability. The next one, beyond segment focus, has been what we do in digital. So a big progress in 2018 in digital, and we've spoken a lot about that in the past. So what we do at the level 2 and level 3 of EcoStruxure, which to speak in English is a control level and the software level of EcoStruxure, has been growing clearly above group average. The number of assets connected to our own cloud, hosted on our cloud for the sake of our customers, is now reaching 2 million assets, growing by 34%.
And what is also very interesting is to see that more and more of our interaction with our customers is purely digital. It's no touch. It's customers connecting with us directly, through the digital space. E-commerce growing by more than 20%. More and more of the customer support being generated digitally. And digital customer satisfaction score growing and progressing, to reach or to equate the one of our physical satisfaction. We are not yet there. But what you see here is that the number of connected customers has been multiplied by three since 2015, and it's exponentially increasing. The next one has been launch of numerous new products. Schneider is by and large a product company. We sell products, I call them bricks of technologies, that our customers integrate into local solution.
And a great strength of our company is to be by far the company that works the most with local partners around the world. And this is why we have to be so multi-local, because the products have to be adapted to the local partners. We have to be very capable on the field to serve those partners. We have to produce locally to be very fast to deliver. But we've had a flurry of new products launched in 2018, and actually, you're going to see most of the effect of those new products in 2019. Multiple recognitions in terms of innovation, and the multiplication also of what we call our Innovation Summits, the places where we gather our customers around the world. One was taking place in Paris this year, during the marathon.
Twenty thousand customers that were gathered into 14 world events, and 10,000 more people into the reduced formula of it, which is the Innovation Days. We've been also in 2018 keeping on working on our difference, respect to our competition. Why is Schneider different? Because, well, first, we want what we do to be very meaningful, our commitment to sustainable development, a commitment to the way we do business on our strict adherence to the principles of the Global Compact, and our mission in the world, which is to deliver cheap and green energy to everywhere in the world and help everybody in the world to save resources in their processes, in their life, in their work, so that on one side, we bring more while using less of the resources of the world.
Second point is our total commitment to inclusiveness and to local empowerment of our teams, which means that our model of operation, which is what we call a multi-hub, which means that, for instance, I'm based in Hong Kong and our teams are based within the operational teams, is targeting to be the most inclusive, the most diverse, and the most empowered company in our field. When I look at the growth we generate in multiple geographies, well, 2018 is a marker of the success of this organizational strategy. Finally, another year of strong commitment in sustainable development, which we measure in every part of the group through the Schneider Sustainability Impact. We are over-delivering respect to our initial target in this field, which means we're going to increase the initial targets we had.
That drives me into the second part of my presentation, which is more focused on the business performance. I like to start first by Energy Management. Energy Management, a EUR 19.5 billion business, growing in a compounded manner by 7%. The reality of the business we deliver here is a complete integration of medium voltage, low voltage, and Secure Power. You see that according to the target segments we have here, residential, small buildings, large buildings, data centers, industries, and infrastructure, the mix of those technologies vary, but in most of the cases, we deliver this as a complete integrated solution. What we have here as priorities is to focus on segments, on accelerating targeted segments. I spoke about that earlier, but that's also valid for automation. Maximize cross-selling. Further penetrate in terms of digital connection of Energy Management. Energy Management has a great potential of connectivity.
When I look at our two business, Industrial Automation, and Energy Management, Energy Management is vastly unconnected. While there needs to be connected, there needs to do predictive maintenance, there needs to put installations on the monitoring, is as high as what we do on the process side. If I go in the detail of the technology that we have in Energy Management, a great year in 2018. The first point I want to mention is a superb growth in low voltage. Low voltage is a very profitable business where we have a strong leadership position. We grow close to 10%. When you think at the mass volume that this business represents, on that we grow much faster than our competition, that means we keep increasing our advantage in a very visible manner, respect to our competition.
Second point I want to mention, you know that we had rebuilt a leadership in medium voltage, which is absolutely necessary in the Energy Management chain in industry, infrastructure, large buildings, on data centers. It's your entry door into the system. We had rebuild it with acquisitions, that we are mostly motivated by the acquisition of technologies. The problem we had is that some of those business that we had acquired were not profitable enough, respect to what we want to have in Energy Management. We've been constantly working on the improvement of profitability of medium voltage, and we score another year at 130 basis points. It's actually 400 basis points of improvement over three years, on which makes that now this activity is solidly anchored above 10% of profitability. More convergent in terms of profitability with the rest of Energy Management.
We can now make sure that we declare or report the reality of what we do, which is 90% of medium voltage and low voltage packages. Finally, a great year also for Secure Power, where the problem has never been profitability, but it was more growth. The growth was more tame in the past years due to the changes of architectures in some parts of the business. What we've seen now is a rebalance of architectures, and especially a very strong development of Secure Power in edge computing, and in securing all the IoT installations which are happening outside of the IT business. Therefore, you see that this is driving Secure Power is now growing in 2018 by 5% of growth. This is also the spearhead of a much higher growth in the field of data center.
Actually, it's a high double-digit growth in this space. What we do in Secure Power there is driving strong growth of low voltage, particularly, in the data center space. What we're going to do at the end of this year is to put in execution what we had pre-announced mid 2016, telling you that, which I repeat, that we had isolated in our reporting medium voltage and Secure Power, because 10 years before we had done acquisition, and we wanted everybody to have a clear picture of what was happening, in those verticals. Now we are 10 years after, we have brought those business at the right level of profitability, and we want to report our business as we do the business.
When we do the business, we don't report, we don't sell medium voltage on one side, low voltage on the other side, and Secure Power on the other side. We sell to our customers full powertrains by end markets and by segments. That's what we're going to transition to in terms of reporting. We're going to say, as always, transparent with you on answering your questions. We're going to be speaking now about Energy Management, and when you look at it reported by geography, our biggest geographies there is, North America. Second one is Asia-Pac. That's not inclusive of Delixi, so they would be probably at par, with the re-inclusion of Delixi. Then West Europe, and then rest of the world.
What we want to do is to keep working on the synergies that we have between those three parts of technologies and make sure that we deliver a full EcoStruxure Power for our customers, whatever their segment or whatever their application. Now I'm going to move on our second business, which is Industrial Automation, which is a more than EUR 6 billion business, growing once again in 2018 by 8%. A strong profitability delivery, 18% plus 70 basis points of improvement. Actually, a great H2 also in this space. I'm going to be very cautious about what I say because the whole team of Industrial Automation is in the room, okay? They were meeting in Paris, and they were kind enough to come and control what I'm going to say on their business. One of the things I want to underline here is that we are full liner.
We have organized ourselves and built the portfolios that Schneider is able to deliver on the whole spectrum of Industrial Automation, from machines to discrete automation to process automation, and of course, with the capability to build a very strong presence in hybrid automation, which is developing actually very fast in the middle of discrete and continuous. Very proud also by the constitution, the building in 2018 of AVEVA. Without talking about them, because they are talking about themselves as we speak today, it's been an absolute success. Think about it. It's only nine months after the creation of the company, strong growth, strong delivery, and plenty of synergies between the two parts of our software business, and the rest of Schneider. A great adventure and a great development as we keep going. Industrial automation, we are very solid here.
We keep developing EcoStruxure Machine, EcoStruxure Plant, strong links with the software. Clearly, what you have to understand is that the reason why we, from the beginning, I think from the inception, from 15 years ago, when I was personally appointed CEO of our company, I told you that in industrial and infrastructure applications, the combination of energy and automation was absolutely key to our customers to manage a full equation of efficiency. Automation brings a cockpit of digitization for every system we deliver in industry and infrastructure. We verify it every day as you see the sales on the split of sales that we do in the main segments that we have in this sector. We always say this is the place, industry and infrastructure, where the balance of automation and energy is the most equal or is the most realized. That's the global frame.
Now the real stuff. I would like to hand over the mic to Emmanuel.
Thank you, Jean-Pascal. Good morning, everybody. Great to be with you to talk about our 2018 performance. I suggest that we dive into our numbers starting with H2, because we've been commenting H1, of course, in detail already, and I would like to have a focus on what we did in H2, of course, starting with our sales. Our sales for H2 amounted to €13.4 billion. It's plus 6.6% in published term. If you look at the organic growth for H2, it's plus 6.2%. I would like to start talking about the Forex impact, which is still negative, around EUR 200 million negative in H2, but of course, the impact is much lower than the one we experienced in H1. Now when we are looking towards 2019, we see even based on the current parity, the Forex impact turning positive.
We expect based on today's parity, a positive impact on the top line that could be between EUR 200 million and EUR 300 million. We see on the margin a Forex impact that would be close to neutral. Scope, no surprise, I guess. That is, of course, the acquisition of ASCO and AVEVA, which is nicely contributing to the growth during the second half. Looking at the performance by region, a few interesting evolution and trajectory. The first certainly remarkable thing has been the performance of North America, growing +8%. H1 was already good. H2 is a further acceleration in North America. If we look at the U.S., we have been really growing across the businesses and the technology, and that is a confirmation that we are today having a very good run in North America, and business is developing in a very nice manner.
Good development as well in Western Europe. Western Europe is growing 4% in H2. It was actually growing 5% in Q4. We have been growing in most of our geographies in Western Europe in the second half and notably in Q4, which is good news. Asia Pacific, still a star performer, of course, +8%. China is again growing in H2 double-digit. If you just look at Q4, China is still growing at 8%, despite the fact that the comps are becoming much more challenging, and we start to face very dynamic growth in the comps. Outside China, great performance as well in India, in Southeast Asia. The whole region has showed a lot of dynamism. Rest of the world, +4%. The region has been growing through the year around 5%. Here, it is a bit more of a mixed bag.
I think we flagged the fact that Russia was a more difficult market, and it still is, and notably for the medium voltage technology. We have faced some tougher Q4 situation growing in the Gulf. First of all, as you know, we are exiting Iran, and that it is taking its toll on the growth of the region. Globally, Saudi Arabia, the Turkish country, of course, Turkey being difficult, that has been more of a drag on the growth of the region. Africa was good, the good news that we see South America accelerating as well and having a much better second part of the year. If we look at the performance by business, what is very interesting is that it is quite homogeneous actually, and we have been nicely growing across businesses and technology.
Look, Energy Management, 6.5%, Industrial Automation, 5.2%, facing higher comps in the second part of 2017. When you look at the three technology within Energy Management, here again, quite a nice consistency in the growth between 5% and 8%. Low voltage still flying at the highest altitude, but good to see medium voltage at 5% and Secure Power at 6%. Let us look at the margin evolution, which again is good everywhere, and especially maybe starting with Industrial Automation, 120 basis points of organic improvement. It is not as good at the published level because of a very strong negative Forex impact in the second part of the year. Industrial Automation has been very good in increasing price and also at improving the tension on the supply chain and decreasing the tension on inflation and cost of supply.
When you look at total Energy Management, it plus 50 basis points. Of course here the great performance is medium voltage, +130 basis points. Here the Forex has been positive quite nicely in H2, that's why the published performance is actually 190 basis points. Medium voltage at 13.4% in H2. Some of you may remember that we've been quite consistent in saying our objective is to have medium voltage above 10% in difficult time. When things will get better, we think it's possible to put medium voltage much closer to 15%. It's not the end of the journey, clearly we've been doing some very good inroads in that respect in 2018. Low voltage, 10 basis points organic. Of course, the biggest organic growth on margin is not going to come from low voltage, which is already at a very high level.
Here, the mix has not been helping the evolution of the margin because it's a lot of growth in low voltage put in system and in equipment, not at the same kind of profitability that a pure product sells. We've been also investing quite a lot. Let's be clear. With the star performance business, we want to ensure that we keep here leading. That has been in digital, in innovation, a lot of investment. That has been impacting as well the evolution of the profitability. Last but not least, because I think it's particularly interesting, the evolution of the margin on Secure Power, +60 basis points, nice growth, after several quarters of tension.
+60 basis points here reflect, first of all, the good work that I think the technology has been doing on cost management, also the fact that we've seen growth nicely resuming in distributed Secure Power, notably the small UPSs that are going through the IT channel. This is a business which is coming at a nice margin, that's helping when they see their growth accelerating. Now looking at the various blocks building the growth of our adjusted EBITDA for H2, which amounted to EUR 2.1 billion. The first one, of course, most important is volume. Everything start with top line growth, that's paramount. Second element, which I think is interesting not coming as a surprise is the fact that mix has been turning negative in H2. We are progressing through the cycle.
We see, as I said, more solution, more system, more equipment that is generating more negative mix impact. Of course, that is providing nice growth at the level of the top line. Net price, frankly, for me, that's the big great achievement of H2. That means that now globally on price, we have been turning positive in the whole H2. Of course, it's even better if you look just at the transactional part, because here you are seeing the net price impact, which is a mix of price on transactional the full raw material inflation impact on the entire business, including the solution. There is a kind of unbalance on what we are comparing. If you just focus here on transactional, the price increase in the second half is twice the raw material inflation.
Until now we were saying we want to match one with the other. Actually, we double up in price increase the raw material inflation in the second half. We think it just shows that we are putting our act together and we are moving on price. Last element, which is a nice contribution as well, China has been turning positive in term of price increase in H2, we have not seen that for quite a while. The productivity, EUR 180 million positive. It's a bit better than in H1. We start to, I would say, absorb the tension on the supply chain, but let's not be mistaken, there is still a lot of inflation in our procurement, there is still some pressure on the productivity. Altogether, of course, in 2018, we are not at the level of 2017 on the productivity.
Tariff started to kick in, it's playing here, of course, is going to bring more negative impact in 2019. We are still expecting nice productivity in 2019 in the future. We don't expect to be back to the 2017 number, which was quite exceptional, north of EUR 400 million of productivity for the full year. COGS evolution with inflation and R&D, here you have two element delivering this negative impact. The first one, of course, is inflation on our wages and it's impacting the cost of goods. The second one is that we keep growing our investment on innovation, on R&D, and that is also representing a negative impact. We are not generating our profit, the margin improvement, the growth to the detriment of building the future of innovation. We are doing both actually. The SFC growth, we keep investing, same comment.
It's slightly lower in term of growth. We keep the differential of progression between the top line and the SFC evolution, but we absolutely acknowledge that we keep investing on digital, on services, on marketing for the future of the company. You have the traditional other elements that are difficult to classify, and then scope and ForEx, which are more or less offsetting each other. One element which we look with a lot of attention, that's the level of gross margin. Gross margin level is absolutely instrumental and defining for the future of the company, because that's what is going to bring our capacity to invest in our innovation, of course, in our priorities. That's what is going to bring, ultimately, the margin improvement. Look at the evolution of the gross margin from 2015 to 2018.
It's a net 200 basis point of improvement from 37% to 39%, it is a combination of organic improvement and inorganic improvement because indeed, we've been pruning the portfolio with businesses with lower margin. We've been making acquisition, AVEVA is one of them, with business with higher margin. Also we've been working on price, on productivity, and on improving organically our gross margin with the mix pushing product, pushing services, pushing software. That's a nice evolution, it is, of course, our intention to carry on in that direction. All right. Now let's move to the full P&L for the group for 2018. Revenue reaching EUR 25.7 billion, organic plus 6.6%, reported plus 3.9%. Gross profit north of EUR 10 billion, plus 5.7% in publish, plus 6.7% in organic. I talk about the gross margin, I don't come back on it.
SFC growing, +5.5%. Be careful, that is integrating, of course, the AVEVA contribution, which is accelerating the FC growth. Organic is 4.6%. We have two points of difference between the top line and the SFC. It is, of course, our intention to keep having this nice differential and to have the SFC on sales ratio decreasing in the future. It has been contributing a 50 basis points margin improvement for the full year. That gives an adjusted EBITDA of EUR 3.874 billion. It's a +6.1%, +10.3% organic. Remember at the beginning of the year, we were rather around 7%. We've been clearly beating our initial expectation.
The margin is at 15.1%. Now we moved, I would say, decisively in the high end of the lower part of the 13%-17%, I would say, guidance or bracket, where we see our margin. We have here today clear ambition to say that we want to head toward the 17%. As I said, all that is not down to the detriment of innovation or into our future. The R&D on sales ratio is growing. Without growing in our R&D, we would have been actually improving by a further 20 basis points our margin. Consistency, Jean-Pascal, you said it. I think that's a very important word for us. We want to be very consistent in what we do. Consistent, of course, on the top line growth. We said it, we are a GDP-plus company.
We can grow between 3% and 6% organically through the economic cycle. If you look at the last three years, we are at three, actually north of 3% without taking the selectivity impact on medium voltage. We want to grow very nicely the top line. At the same time, we want to grow the margin and look at the margin expansion, 70 basis points on average and quite dynamic over the last three years. What is interesting to note is that we managed to grow the margin in year, even like in 2016, where sales were going down, like in year where sales are more dynamic. We are also able to grow the margin when we are not growing the top line.
All that translating into a CAGR of our adjusted EBITA, organic growth of 8% over the last three years, quite clearly a nice dynamism for our profit. Let's move to the bottom of our P&L. Other income expenses, negative EUR 103 million. The vast majority of that is coming from our cost of doing M&A, acquisition, working on disposal, cost of integration. Then you have a much smaller part, which is coming from some impairment on asset and notably, something that we flagged on R&D that was capitalized, coming from the Schneider software business, and the merger of AVEVA made this R&D irrelevant, so that was impaired. Restructuring cost. We mentioned that we were targeting to be between EUR 150 million and EUR 200 million for 2018. We finish within this bracket.
It is clear that as we keep shaping Schneider to be a dynamic, high-performing company for the future, we'll keep investing on restructuring. For 2019, we think we're going to stay around this level of about EUR 200 million of restructuring. Amortization, depreciation of intangible. Here, this is just the natural impact coming from the acquisition. AVEVA and ASCO have some intangible, and we are amortizing this intangible so that the growth here. That give an EBIT of EUR 3.4 billion, it's up +6%. The financial cost, very nice news. We are decreasing, as you can see, very nicely the cost from the debt, and that translate into a EUR 57 million reduction of the charge of financial cost. Income tax, we keep delivering a low effective tax rate for the group, 22.5%. That was 21.1% last year.
We are still working in this range of 22%-24% of effective tax rate for the group. Discontinued operation. These are the solar business, and you have a mix here of some capital gain that we made on selling the mobile inverter business and still the loss of the year on solar plus a few depreciation of asset. We are focusing the solar business for the future on the commercial and industrial building. Equity investment and minority. Let's not get confused by the fact that it's turning negative. That's actually good news, because it's turning negative because of the very nice profitability of AVEVA, and we own 60%, so 40% of the net profit is given back to this line to the minority shareholder. The other big element on that line is the profit that we make with Delixi.
This profit has been reaching EUR 50 million of net income, and it's a 20%-plus increase for the year. Delixi keeps growing very well. That gives a net income of EUR 2.334 billion. It's a +9%. Adjusted net income, without the non-recurring element, is EUR 2.560 billion, +8%. Adjusted earning per share is EUR 4.62, +8%. Actually, because of the buyback, here it's rounding, but this is growing faster than, of course, the adjusted net income. On the cash flow, the free cash flow is slightly down at EUR 2.1 billion. We had flagged the fact that we were expecting the working capital to be negative because of the growth.
Actually, it's probably more negative than what we thought at the beginning of the year because of the tension on the supply chain, the risk of shortages, and making sure that we build some inventory of cautiousness, I would say. It's almost EUR 300 million negative coming just by increasing inventory. That's something that's going to be reversed. Certainly, we have a possibility to be back to a much more favorable contribution, some working capital, both on trade and non-trade. The good news here is that for me, we've been making a step, a progress here on the operating cash flow net of CapEx, north of EUR 2.6 billion, growing 13%. It just shows that before the working capital impact, which is a one-off, we are growing very significantly our capacity to generate cash in the future. That bodes very well for the coming years. Dividend, EUR 1.3 billion.
Acquisition, you know them, of course, mainly AVEVA. The net capital increase here is, of course, the buyback. It's first and foremost the impact of the Forex on our U.S. dollar debt, also some contribution to pension. We finished the year with a net debt at EUR 5.1 billion. We retain, as you can see, first, a very strong conversion rate of our net profit into free cash flow, 90%, but we are still, if you look at the last four years, nicely north of 100%. The net debt to adjusted EBITDA ratio remain extremely strong. We keep navigating at between one and 1.1 time. A very strong balance sheet. We keep improving the quality of our business.
First, organically, when it comes to medium voltage, that of course, a key technology that we own and we wanted, as you all know very well, to improve its contribution, its profitability, its quality. That's what we've been doing with the 400 basis point organic improvement over the last three years. We do that, of course, as well inorganically, pruning the portfolio for businesses which are not synergetic, lower performer, and who is very often a lower profitability. What we are signaling here is that very clearly, we are going to further accelerate on that. We have the ambition to put EUR 1.5 billion to EUR 2 billion of revenue under review. That compared to EUR 0.5 billion already announced in medium voltage. Here, EUR 1.5 billion to EUR 2 billion are across businesses and across technology, to be very clear.
The plan here is to partner or maybe to dispose some of those business, but certainly to make sure that we are focusing further on the best part of our business, the core part and the synergic part, with the highest future and profitability. M&A, of course, we receive very often a lot of question on the M&A part. I think we can be very pleased with the M&A that we announced recently. ASCO growing very nicely. AVEVA, we don't need to comment. AVEVA has been issuing a press release. The company is still growing very nicely. IGE+XAO, it's smaller, but I can tell you it's a very nice start and it bodes very well for the future. We are very pleased with the acquisition that we have been doing. We've been very consistent, once again, on returning cash to shareholder and maximizing the return.
Look, since 2014, 80% of the cash flow that we've been generating has been returned to shareholders through dividend and share buyback. We finish the share buyback, the $1 billion in advance and ahead of schedule. We are announcing a new share buyback, EUR 1.5 billion to EUR 2 billion over the next three years, so 2019 to 2021 period. On M&A, nothing has changed on our policy. It's a discipline approach. We don't need to do M&A. If we do M&A, like the few acquisition I mentioned, it will be on the core to further improve the quality of the business, and the acquisition are going to be focused on bolt-on.
What I think is very interesting and show the quality of the performance is that despite the ASCO and AVEVA acquisition, that of course has been increasing the capital employed, we managed before Forex to improve the return on capital employed in 2018 by 40 basis points, which show that we are both able to keep making some bolt-on investment for the future, and at the same time, improving the return on capital employed. In the very same order of idea, we of course, want to keep growing nicely the dividend, and we are going to propose to our shareholder a dividend of EUR 2.35. It is a growth of 7%, reflecting the performance of the year. If you look back to the last five years, the CAGR, the average growth rate of the dividend, has been north of 5%.
We have been very consistent in growing the dividend year after year in line with the performance. That is it for the finance presentation. Jean-Pascal, back to you for outlook.
Thank you, Emmanuel. I would like to try to take two horizons as we look to the future. The first one is, of course, the year, which we do traditionally at Schneider, not everybody does it. While we expect the following trends, the first thing is that China is clearly facing a very high base of comparison after such a fantastic 2018. We see a softening OEM demand in China, that is coming from the uncertainties arising from the trade war. Every kind of industrial decision is more uncertain. At the same time, we still see a lot of dynamism, in markets of construction, infrastructure, on other parts of industry, the industry is really looking for more efficiency, reducing the carbon impact, reducing the pollution, getting better on automating. That is for China. North America, we still see a continuing favorable environment.
We have got an exceptional presence in North America between technology, construction, industry. All of this is delivering on all cylinders, and Q4 was good. Large countries in Asia Pac, we are positive. They will continue good momentum. Western Europe will keep growing at a more moderate pace, the rest of the world economies are contrasted, but there are some good news, like the price of oil is better than what it used to be in the past, as well as the price of resources. All in all, when we put all of that together on benefiting from that balance of exposure in terms of geographies and in terms of segments, we target in 2019 an EBITA growth in absolute value between 4% and 7%, very well in line with what we had declared three years ago in 2016.
This would be achieved with a combination of a growth between 3%-5% on an adjusted EBITA margin between 20-50 basis points, in terms of organic improvement. We think, because of the base of comparison on a certain number of other elements, that it will be more pronounced in the second part of the year. Some elements also to integrate is that there are some day impacts as we speak about Q1, especially in China. We're going to every time correct the impact of that so that you have a clear vision of what is happening. If I take a little bit more distance, I try to project ourselves in the next coming 3 years. I'm quite optimistic. The reason is, the first thing that the world is coming to our direction.
You see a clear acceleration of electricity everywhere, so the world is becoming more electric. IT is one of the major drivers, and it's where we have a very strong position. Mobility is moving to electric, if you can say that of mobility, but it's clearly going electric, and just the start of it. When you see the world is also getting electric in the field of temperature control in buildings and residential. You don't always see that in all Europe, which tends to be more conventional and conservative. In the rest of the world, between HVAC, heat pump, the only way to decarbonize energy is to get electric, and you save a lot of infrastructure because you can use your plug on your electricity. You see a very strong push of electricity or more decorrelation between electricity and the total consumption of energy.
One, the world is more electric. No need to tell you that the world is getting much more digital. Right? We see exponential acceleration, and there again, we are well positioned. On third point, the world is getting more decentralized. Remember the good old times of the energy chain, where people were on the upstream, and then there was transmission, distribution and management of energy efficiency. We've positioned all of Schneider on distribution, on energy efficiency, on decentralized generation, and this is where the world is coming full time. At full speed, sorry. The second point is that somewhere our environment is distracted, because we have many people in our environment which are restructuring, splitting, selling, and things. We have the right perimeter.
Of course, we're going to trim our portfolio, to the magnitude of EUR 1.5 billion-EUR 2 billion, but this is something we can do by small blocks. We are already on the way to do. We are not speaking about major restructuring. We have the right organization. We believe in empowerment of our country organizations that speak the language and develop the right policies that are adapted to the local characteristics of the market. In a world which is still very global, but where the nationalism are expressing stronger claims, the fact that we are country-based at Schneider is a great asset for our future. Schneider is the stable company with a stable portfolio, with a stable organization, and we are just focused on our customers, on our operational efficiency.
Based on that, when we look at the future, we confirm our objective to be growing from 3% to 6% in organic as we go through a cycle. We really want to go, I think 10 years ago, I told you that the potential of Schneider is to have an operating result between 13% to 17%. It's time to go to the upper side of the bracket. We ambition to add 200 basis points of profitability by working on organic growth, as we say, benefiting from the fact that we are positioned, that the organizations are well-oiled, and they know how to cross-sell and bring solutions together. Working on the portfolio optimization, EUR 1.5 billion to EUR 2 billion that we mentioned.
Working on the simplification of organization, on building Energy Management as one is a great asset for that, because we're going to take some silos out from what we had created in the past. Working on our continued productivity on the base of our unique and integrated supply chain. This is where we want to go. If I want to summarize what we tell you is that, and it's been very consistent for the past 15 years, is we are committed to offer our customers digital solutions for efficiency and sustainability. At the time, those two are very strong on the agenda of our customers. Our strategy is to have more products, more services, more software, and better systems. We are benefiting from a very balanced exposure in terms of geography, in terms of end markets, or in terms of position in the cycle.
We base our growth on the energy transition, on Industry 4.0, which are the two major transition of the fourth industrial revolution, and we integrate those two into one, into packages of efficiency. We're going to work on our portfolio optimization. We want to increase our margin by 200 basis points, and we keep focusing on giving back to our shareholders. They have followed us for 10 years of construction of portfolio, and in the past five years, six years, we have restituted, or we are focusing on giving back to our shareholders who've been the loyal partners of the building of the new Schneider. That's where we are, and that concludes the conference. I just want to mention that on the 26th of June, we organize a Capital Markets Day in Paris, and you are all welcome to participate. Amit?
All right. Thank you very much. I think we move to Q&A. We try to make sure we take as many questions, all the questions. Of course, we start from the room here, for the folks who are in the room. We keep it to one question per analyst, and then we come back. Maybe we start with Gaël.
Thank you. Good morning, everybody. The question I have relates to the margin ambition. You have the +200 basis points. This would obviously take the margin to 17%, which is roughly 100 basis points above, probably the highest margin ever achieved by the company in the past. I think that was in 2007, quite a long time ago. What gives you confidence now that you will deliver a better margin improvement, let's say, than in the past? What will be the real drivers behind, if you could, well, break it down between productivity, organic growth, the effect of portfolio optimization, and all that sort of things? That'd be great. Well, in relation to that, but more near term for 2019, do you take into consideration a positive effect from IFRS 16?
All right. I think I just went through, Gaël. I just went through somewhere the explanation of how we would do it, right? I don't intend to break it position by position. If you look at, you are referring to a time where we are just a product company on a very different size at that time. In the meantime, we wanted to build a portfolio that was much more on digitization, making sure which today everything we do in the environment of IoT, connected products, edge controls and digital services is now 45% of our business. We've reached now a different size.
During the past 10 years, it was a learning curve, and it was a building curve where we had to build not only digital capabilities, we had to build EcoStruxure that was in V1, launched in 2008, but which has been developing in the past 10 years. When you go into digital in the field of industry and building in what we do, you have to build solution capabilities, that was a tough learning, right? We learned, and we took the brunt of learning that, now we feel very confident that we found the right monetization model. EcoStruxure is built to a large extent. We are keeping on working on it. We are investing every year more on digital, this is based on a strong momentum. We've developed new business like services, which there again, you have to learn and you have to invest.
If you look at why we are now in a good position to achieve the ambition that we had declared from the inception of the plan, it's because we have the foundation. It's done. We have the momentum. It's proven again in 2018. We're going to work partly on it through the portfolio, refocusing on the places that are the most value accretive and the most strategic for us, on keeping on rolling out or scaling up the initiatives that we have now well started. I mean, it's not like designing new things like we are doing five or six years ago. We are truly learning, it's now scaling up things that are well proven. On working on efficiency, building the portfolio was every time you divest, that you acquire one thing, it's very disruptive.
I see many of our competitors doing that at the moment. We are now in a position where we said in 2013, we have the portfolio. Now we integrate, and we are now in a position to have that strategic position, which is integrated and stable, that we can really deploy our strategy with a lot of serenity and with a lot of focus.
Just to complement what Jean-Pascal has been saying, we're very clear on the fact that we're going to use all levers to generate this 200 basis points improvement. Now, I guess the question is, how do you split that between what can be organic and inorganic? The only thing I can share with you is that I expect organic to be the majority contributor to the improvement, acknowledging that certainly, when we look at the EUR 1.5 billion to EUR 2 billion of sale, that we're going to put under review, their exit of the Schneider perimeter should have an accretive value on the margin. The majority of the 200 basis points will come from organic improvement. Regarding your question on IFRS 15, no, for us on the P&L, IFRS 15 is about neutral. No impact, whether positive or negative, coming from that in the guidance.
Andreas?
Thank you. Andreas Billi from JP Morgan. I have a question on Secure Power data center, where you've shown basically that Secure Power re-accelerated a bit in 2018. If we look at the comments from some IT companies that sell the servers or else from some of the internet giants, they expect a weaker 2019 compared to some of the very high growths they had in 2018 in spending. Maybe you could just give a little bit more information. What do you expect there also for the Secure Power division? Can it maintain the positive growth if we see in maybe the large data center space, a bit of a slowdown in 2019? What are the things that could help on the other side in terms of growth?
That's, of course, a very good question. Look, we start the year with a good backlog on that space. What I want to emphasize is that it's not only about large data centers. We do a lot in distributed IT. What we've seen after a period, which was a lot about cloudification of the IT, that the more people go on the cloud, the more they have now to reinvest on the edge to get the right latency and to get the right storage of data on computing on spot. You see that not only in the pure IT sector, but you see that in manufacturing. The more we do IoT, the more you need decentralized data centers, the more you do retail, for instance, the more you need a local data center to secure the process in case there is an interruption of communication.
What we've seen in 2018 is a redevelopment somewhere of the edge computing, which has been a great news because it's a sweet spot of what we do in Secure Power. We see as we go into 2019, a balance of those two, decentralized or what we call distributed IT. We see more Secure Power going into each and every of our application, including industrial application. When you set up more automation in machines and plants, you need to secure the power for that very sensitive and mission-critical application. We see still a large development of big data storage with massive plans of deployment that we are addressing. We have to address issues of mix, we're going to give you visibility on the impact of those larger projects on the mix of what we do.
Okay. Alasdair?
Thank you. Good morning. I was wondering if you just could elaborate a little bit more on pricing turning positive in China. That's quite a change, as you noted. I was just wondering how sustainable that really was, in terms of, is it just a high point in terms of the cycle, or are you seeing a change in competitive dynamics there? Then more broadly on pricing, Emmanuel, I think you said at the Q3 stage, obviously, pricing was a priority. You were thinking it more from a strategic perspective as well, perhaps not just kind of a reactionary pricing. I was wondering, is there an opportunity now to kind of price up through 2019 to get more of a kind of benefit for some of the value you're delivering to customers in areas like software and digitalization? Thank you.
Okay. Speaking about what we do in Asia, our Asia is not only China to start with, but if we look at China, of course, we are starting with a high base of comparison where we are at the end of 2018. We've kept investing in new business in China. The first thing is that China, as everybody knows, is a very large country. We keep on the base of the strong infrastructure we have there, on the very local capacity of servicing the whole country, we keep expanding our geographical position. China is many countries, if you will. Each province has a size of something that could be qualified as a country in many places.
Even if we've been there for the past 30 years, and we have a pretty deep penetration of the market, there are still plenty of towns that would qualify as large towns in Europe or anywhere in the world where there is still a lot of potential to tackle. The more local we get, the more R&D we do locally, the more we develop local products, which are well adapted to those more local places in China. That's one of the first vehicles for us to keep growing and developing in China. Second point is China is becoming a normal country where people are asking for services, and this is something we have barely scratched. In the past, we are too busy building China that we had forgotten serving China or service in China. That's another one which is important. The third one is digitization.
It's not called the same name as before. All of China is working on more efficiency to depollute the cities, to make factories more competitive. We see there again, a very sustained movement of equipment, of investment, on collaboration. We recognize that there will be probably some weakening or some doubts in some part of industrial investment because due to the tariffs on present discussions, you never know what will be open to a factory in China in the future. Globally, there are plenty of things which are local. One tend to forget that it's also a very big domestic market with huge needs. The other thing is that when you think about it, if the trade war is going in the wrong direction, it will drive China to localize more technology, therefore to build more capabilities by themselves.
On one side, either they keep exporting or they start building seriously for vertical integration in China. On both sides, we are ready to react and ready to support.
Take the one on pricing.
On pricing, I could not agree more. I think that, of course, for making our case clear, we talk about price increase versus cost. At the end of the day, price is the most strategic dimension of a business, and that reflect the added value that you deliver to the customers, the differentiation, and whether because you are coming with something specific, the consumer and the final customer accept to pay a certain price for it. Everything we do, and I think we're very clear, is investing, is being innovative, ahead of the pack in term of what we propose to our customer, starting with, of course, a unique digital capacity. You're absolutely right, that should enable us to further increase our pricing power in the future because we want to deliver something that other cannot deliver or not at the same level.
There is always a kind of dimension of, anyway, I have to cover my cost, but that's just the beginning of the reflection on price. We have to go beyond that and make sure that we price for the value add that we bring to the customer. Now, for 2019, we're going to have some carryover impact of the work we've been doing in H2 that has started, as you have seen, to deliver in H2. Of course, there will be some nice impact in 2019. Certainly at the end of the journey on pricing, as we continue to grow on digital services, on software, on EcoStruxure, that is coming super differentiated, more added value for the customer, and we have to price for that.
Alex.
Thanks. Alexander Virgo, Bank of America. Wondered if you could just talk a little bit about the growth or acceleration in North America that you called out. Obviously, that's surprising. How much of that's data center related? Or maybe just talk broadly about the dynamics that have driven that and how that carries on into 2019. Thank you.
No, it's broad-based. Data centers are an important part of it, but they are not the only one. We see things happening in construction, residential and non-residential construction. A lot happening in Energy Management, by the way, making building greens on infrastructure green. We have, when we speak about the U.S., a very specific case of strong development of microgrids. As a grid is not that resilient, as you have multiplication of climate disasters or climate disorders, then customers want to secure their installation. It can be a municipality, it can be a more critical application. It's really a place where we are developing with pretty fast those kind of new capabilities. Of course, when you do that, it goes coupled with digitization because you have to well coordinate the part of demand on the part of supply.
It's also around industrial software and automation, because while a large part of the base of AVEVA and the base of what we do in automation, remember the legendary names of Foxboro and Triconex are based outside of the U.S., where we have very strong position. It's a sector of energy, which, by the way, is doing well also in the U.S., and it's the technology of all where we have a strong position there. Plus, there used to be some strong competitor there, which has been bought by others, and that's creating the right space for us to develop and take more share of the market. The U.S. has been a continuous progression during the year, and it's good.
All right. I think maybe we move to the webcast. I'm sure there's some questions there, let's take the first one.
Our first question comes from Ben Uglow from Morgan Stanley. Please go ahead.
Good morning, everyone. Thank you for taking my question. Jean-Pascal and Emmanuel. I wanted just to think about how you were thinking about the growth guidance, the 3%-5%. The reason being, obviously, that's a nice number, and it's maybe an ambitious number, who knows? When we look at some of the macro data, it seems to be pointing downward. If I think about GDP numbers coming out of Europe, if I look at industrial production data, even in the last few days, they're all going the other way. I guess what I wanted to know is, in terms of how you think about it, do you just feel that this is a soft patch? Do you think that you have enough internal momentum that you can still deliver 3%-5%, even if external factors are going against you?
How are you thinking in broad terms about the economic trends in 2019?
Well, Ben, of course, we have been taking what we think are reasonable assumptions on the global economic environment, and we'll see whether they prove to be right or wrong in the future. Our ambition for growth guidance is not just built on the economic environment. We are coming, and we are entering 2019 with a very nice backlog that we have been building. We know that some of this backlog is going to be flush in 2019. We have highlighted it, ambition on increasing price, that's also a contributor to the top-line growth. We have the ambition, we're not going to surprise you, to gain market share. You know, that's also contributing to the growth. That means that beyond the economic environment, again, on which we think we have taken at that stage, the best possible view and reasonable view.
You have some drivers that I would say are self-helped or coming from what we've been doing until now, and that explain the guidance that we've been giving.
You spoke about Europe, it's our third zone today.
Just generally, you're not seeing that weakness, obviously, in your business, right?
Well, look at our Q4. Europe is actually.
I know
Its best quarter for the full 2018. That clearly not something that we've seen in 2018 and certainly not at the end of the year. What's going to be the full 2019, again, I think we've been taking assumption in line with the most recent available information. We'll see what the final outcome of that is for Europe. As Jean-Pascal said, Europe is one zone among others.
We keep pushing on services, on digital, on the enlargement of our coverage of partners. It's all about us delivering or scaling up or deploying our strategy.
That's very helpful. Thank you.
Thank you, Ben. Next question, please.
Thank you. As a quick reminder, that is star one to ask a question over the telephone. Our next question comes from James Moore from Redburn. Please go ahead.
Yes, good morning, everyone. Thanks for taking my questions. They're on price and inflation. Obviously a very impressive acceleration in gross pricing in the second half to a point of gross pricing and the positive net. Could you help us a little bit with what the momentum will be into the first half or the full year of 2019? Do you think you can maintain that degree of gross pricing into the first half of 2019? Can you talk a little bit about the raw material and also wage inflation and what your net pricing ambition is for the year?
Yes, James, I can try. I think we've been talking a lot about price. As we said, it's a big priority to increase price, not just to offset cost, but just to reflect the value that we deliver to the customer. As I said, I expect a positive carryover coming from the action taken in 2018, in 2019. I won't elaborate more on that one. We certainly expect to have more price action in 2019 to reflect the global environment where inflation has not disappeared. Even more so, as we said, the fact that we keep increasing the value proposition for our customers. I'm not going to be more specific. I would expect price to perform well and deliver nice contribution to the top line through the year. I'm not going to phase that between H1 and H2.
For the raw material impact, I think that H1 is still going to be probably, let's say neutral plus in terms of cost. I still expect a little bit of raw material inflation in H1 based on the current copper price, for instance, which has been accelerating a little bit. We'll see in H2, I think at that stage, I want to be cautious on what's going to be potentially the impact in H2. We could have a bit more positive raw material inflation contribution in H2, but that remains to be confirmed. I'm going to stay at that stage more cautious. Having said that, of course, after a EUR 200 million negative impact on raw material inflation in 2018, we don't expect to have such a negative amount in 2019. We remain ambitious on price. The net differential should be altogether better in 2019.
I guess you had come by yourself at this natural conclusion.
If I could just follow up to the earlier question on the portfolio. The EUR 2 billion, are you able to quantify the margin, obviously less than the group, but is it 12% or 5%?
No, I'm not.
Yes, we are. We are not communicating on it.
The fact that we are giving a bracket means that we are still, of course, working on the perimeter. The only thing we can say is, yes, of course, it's going to be on average accretive for the group. What I also said, and I'm happy to repeat, is that nevertheless, the majority of the 200 basis points improvement will come from organic, and therefore that means that this work that we're going to do on the portfolio will bring less than 50% of the global improvement of the margin that we are ambitioning.
Yes, I heard that. Thank you very much.
Thank you.
Thank you, James. Let's take one or two more, actually. Next question, please.
Our next question comes from Simon Toennessen from Berenberg. Please go ahead.
Good morning, everyone. I've got more of a big picture question on your growth performance, which over the past six quarters or so has clearly been above where some of your peers are, and you clearly seem to have gained share. I've said to a lot of investors who always ask how sustainable that is going forward. Obviously, you've given guidance today. I've got more of a question on, related to Capital Markets Day, I think back in 2016, which you did in Paris, I believe, where you talked a lot about cross-selling and cost-sharing and the likes, and I think mutualizing front office across your divisions on a country level, et cetera.
If you look at your growth profile the past six quarters or so, and if you dissect kind of where the growth has been coming from, except obviously the underlying market growth, could you share a bit more light into how these cross-selling initiatives amongst your portfolio has really driven this? Obviously, EcoStruxure plays a crucial role in this too, but from the outside, it's sometimes difficult to grasp how cross-selling internally actually works. I think people understand how your divisions are related to one another, how you're selling Low Voltage also into data centers, et cetera. If you can share a bit more light how this actually has been succeeding internally, and whether you think there's more potential to drive this going forward or whether you've got this pretty much set up today. Thank you.
Well, it's fundamental for Schneider. The whole strategy that we have is to have an integrated portfolio, which is addressing the whole equation of efficiency with the ultimate goal of sustainability. For that, it's always about energy efficiency coupled with process efficiency. I've said it many times, but you can't disconnect the two. If you want to tackle the energy equation, you've got to tackle the process. If you want to deal with the process, you need to get the right energy to service it. The two are getting very intertwined, and the more energy is decentralized, the more this is getting connected together. If I try to summarize, I would say first point, we never sell by product. Zero. We always sell by customer. Therefore, the customer is looking for a simple life, for a speedy reaction.
The more you can come with something which is bundled and put together, the better they are, because nobody has time to lose in the world of today. It's true when you buy, but it's also true when you service an installation. For anybody installing anything in a remote place, you want to have solid partners that will help you when things are happening. Our cross-selling is happening in two manners. It's happening at the level of our channel on integrators, like we come with a complete catalog which is plug-and-play, and which is proven to be plug-and-play. This is where one person can sell more and more of the offer. That's one kind of cross-selling.
The second cross-selling is when you come in front of a segment, an application, which is now more and more integrated around EcoStruxure being the digital part of it, where it was very difficult before to integrate that whole equation of efficiency, and EcoStruxure makes it really on the shelf, plug-and-play, easy to implement and easy to put together. The biggest examples we have that, I would take one example that jumps to my mind, Zohr, which is one of the oil and gas field in the Mediterranean, where the customer cut the time to first gas by half, 5 to 2.5 years, and you can imagine how much money it is, by coming with an integrated solution of energy and automation. Those are the two cross-sellings that we put together.
The one by channel and integrator, which means that you can really leverage your sales force on a much larger scale, on a larger revenue, and that's applicable to everything. The other one is the capacity to deal with integrated solution. Another example, which is obvious, is the data center. The reason why we develop very fast and gain very strong position in data center is our unique capability to put together the whole powertrain from the grid to the server with the whole system of monitoring, which is now hosted on the cloud and gives to our customers the complete capacity of supervision. Those are the two things I would mention. The third point, frankly, is that I've never thought or I've never seen that the world would be completely global.
I think the world is multi-local. Today you have a resurgence of national characteristics, which we always saw as part of our strategy. On the fact that we have very strong local presence in all aspects, R&D, sales, delivery, execution centers, makes that we can stick to the local characteristics of a market. The fact that the leaders are spread out on the field makes that we can make very fast decision, including on cross-selling. That's a tremendous asset as we go into a more complicated world that we see developing today.
Thanks very much.
Thanks, Simon. Next question, please. Yeah.
Our next question comes from Wasi Rizvi from RBC Capital Markets. Please go ahead.
Yeah. Hi, good morning. Thanks for taking my questions. Just a few left for me, if I could. Just firstly, could you help us think about the shape of growth through the year? I know you don't explicitly guide on this, but you've talked about China having a high base of comparison, particularly at the start of the year. You also mentioned something about a day's effect. I was wondering if you could expand on that. My second question was just to follow up to the earlier question really, understanding the new structure. Are there any actual organizational changes required for the new organizational structure, or is it simply a change in the way the numbers are reported and actually everything continues as it always has done?
No, I'm going to take the second one, of course. One of the reasons also is that we have simplified our organization for the point of view. For us, organization is simple. P&L are integrated at the level of the regions, the level of, we call them the operations, so they are integrating Schneider solution by zones. We have now two big business, Energy Management and Industrial Automation, which are able to put together even more synergies in theirs. Those two divisions are organizing case by case, project by project, to make sure that we integrate energy and automation together. Yes, there has been one further integration that means today Secure Power, medium voltage and low voltage are part of one large organization of Energy Management.
On trying to help you with the phasing, I think we flagged in the presentation that you have about 1% negative impact coming from working days, both I think in Q1 and for the full H1. That's going to impact Q1 and H1, and that will be fully compensated in H2. For the year, I don't think we expect a net impact. Clearly, there are going to be a drag in H1, and that's going to be a booster in H2 for the growth. True, we have particularly high comps in the China growth last year for a number of reason that make the H1 more demanding in term of comp for China. That will have an impact on the growth for China, H1 versus H1, that's for sure.
Globally, what we are signaling is that in the ambition for the margin improvement, it is possible that H2 will be a bigger contributor to the margin improvement because of the working day impact that have been flagging, because of the phasing of some investment that could be more skewed toward H1 than H2, and also because the work that we are doing on the supply chain and recovering from all the tension will probably still be ongoing in H1 and therefore H2 could be more positive in that respect. For all those reason, we see today that possible phasing for our performance between H1 and H2. I hope it's helpful.
All right. Thanks, Wasi. I think we're coming towards the close. I just want to give one opportunity further in the room if there are any more questions, even if it's a repeat question. Okay, Gaël, go for it.
Yes. How are you thinking about the corporate cost, the central functions cost that have actually increased now gradually for the past few years? At 2.8% of sales, that seems to be a pretty big number to me. It seems to be going in the opposite direction of what some of your peers have been talking about recently in terms of reallocating more of these support function expenses directly into the business units.
That's a very good question, and I thank you for asking it because it allows to clarify the thing. I don't want to have fake reallocation, of course. There are two things which are growing in our corporate costs. It's our common IT and digital platform. And it's the strength of Schneider. I don't believe that EcoStruxure can spread into each vertical because our customers want a complete integration of the tool under that integration. On this, we could, of course, do like others. We could push that into the business, but that would be a fake kind of things. We are really developing in common for the common platform of EcoStruxure. The second one are our Innovation Summits, which are common marketing investment where the whole of Schneider is coming together to present our solutions for full machine, full segment.
On this one, we don't split it artificially. That's it. For the rest, frankly, I have been a long time in this industry. We can certainly do better, but I think we are pretty lean in terms of that probably looks out on our face because sometimes we are pretty tired. I don't think we are a big corporate organization at all.
No.
At all. On the fact that we have put the corporate inside our normal operations makes that we are kept on the tight control of our leanness by our operations, right?
Clearly, corporate cost is an improper qualification. These are much more digital transversal costs that we decide not to allocate, and that's a place where we are investing for the future, but for the benefit of our two businesses, to be clear.
All right. Just to check if there's any other question on the online. No. I guess with that, I just want to thank everyone for the time today. Of course, we are getting into the roadshow conference schedule, which is there. We look forward to seeing you shortly. The IR team, of course, is available for calls, meetings, starting immediately after this meeting. Thank you very much.
Thank you.
Thank you.