Yeah. Good morning, ladies and gentlemen. First of all, an update to the actual situation regarding the coronavirus. Number one is health and safety of our employees. This has absolutely top priority. We have established forward-looking measures such as strong restrictions on business trips and events. We limited the access of third parties to all Wacker Neuson locations. We have established a cross-location task force from all important areas such as procurement, production, and sales. We assure the operative business through the increased hygiene standards and safety precautions in production and administrations. We are reacting with so-called shift models also in the admin area. One thing which is usually not the best is the high inventory. In this case, the high inventory is positive because we have machines and spare parts available.
Furthermore, we made emergency plans for avoidance of delivery delays and reductions of impacts to a minimum. Medium-term restrictions or delays in delivery capabilities are likely due to the increasing government-imposed measures. Consequences due to the number of influencing factors are, from today's perspective, not quantifiable. We have to look day by day how the situation is developing. Then we have to react adequately. Coming now to the overview. The key figures, which are shown on page four, they show the first quarter 2019 as well as the full year 2019. From the revenue development, it was quite good. If you look to the EBIT development, you see a negative development, especially in the fourth quarter. The cash flow turned into a positive one in the fourth quarter.
It became EUR 87.0 million. Overall, the whole year altogether, we are here confronted with an unsatisfied negative free cash flow of around about EUR 116 million. Main reason for this, we will come to that later in more detail, is the net working capital. The net working capital is at almost 43%. The DIO, which are determining the net working capital, is 154 days. The equity ratio is still okay with around about 56%. What about the Strategy 2020? What can we give you an information regarding the progress in the year 2019? Coming to some highlights on the next slide. Streamlining the production network, we reduced the number of production facilities from eight to seven. We focus on core competencies. We have a significant reduction in the vertical integration in our main production plant in Menomonee Falls in the U.S. We are focusing on core products.
We sold some products here. We outsourced it. We have intensive inclusion of customers in the development of the new product. The headlines here are voice of the customer as well as voice of service events. We have developed a new eStore platform at Wacker Neuson. We are now rolling it out to more and more countries. New business models we are offering here, the module WeCare and EquipCare for more added value in service. We expand our fully electric production portfolio step by step. We were able, during the last couple of months, to increase our spare parts availability significantly. The employee survey, which we do every year, was showing quite a positive development in 2019. Almost 85% of our employees are proud to be employed at the Wacker Neuson Group.
We have expanded our dealer network successfully in North America as well as in China. We are now in the situation that we are rolling out the spare parts organization and the service organization worldwide. Furthermore, we are going to streamline the intra-group supply chain through the integration of the group's own logistic companies. That's what we did during the last two years, but there are further steps ahead. Coming now to the numbers, we see on the slides, page 10, something quite positive. When we look to the left-hand side, we see that we were able to increase our sales year by year by around about 8.4% every year, which is a good success. We ended in 2019 with EUR 1.9 billion, and we have increased the revenues by 11.2%, respectively, just for effects, almost plus 10%.
We saw the growth in all regions and segments with a quite positive development in the agricultural business, where it was over proportional with plus 21%. We are not very satisfied with the earnings situation. It all starts with the gross profit. However, the gross profit, you might have looked to the income statement on the left-hand side at the corner, the condensed one. There you see that the gross profit increased from EUR 458.4 million to EUR 474.9 million. The gross profit as a percentage of revenue, so the margin, declined from 26.8% by 1.8 percentage points down to EUR 25 million. This is a significant minus of around about EUR 34 million. What were the main reasons for that?
First of all, it was the reduction of the production program due to the targeted employee streamlining, especially in the second half, which cost us around about EUR 50 million. Furthermore, we did the restructuring of the North American production plant, which took us much longer than we originally thought. That also cost us around about EUR 7 million. We sold off inventory, especially in Scandinavia and in the U.S., and this altogether amounts to EUR 10 million. These are the main points why we were not able to achieve the same gross profit quality as we have achieved in the year before. Consequently, the EBIT is down. The EBIT margin is down by 1.4 percentage points. Besides the effect on the gross profit, we have increased sales and service expenses due to higher business volume, of course, because of the big trade fair, which we have had.
That was the Bauma in the beginning of the year. It was in March. We have changed the reporting here in connection with IFRS 15. This reflects the situation that, especially in North America, we are more and more not only selling products like excavators and dumpers and other stuff. We are also selling new products, such like customer financing. Therefore, we have relocated from the financial result EUR 3.5 million in 2019. We adjusted for this effect also the year 2018, where it was EUR 2.6 million. However, when we look to the fourth last line here in the income statement, you see the profit for the year. The profit for the year is EUR 88.5 million compared to 2018, where it was EUR 144.6 million. Please still have in mind that we have sold a non-operational property in Munich last year, and the net effect was EUR 45.8 million.
If we deduct EUR 45.8 million from EUR 144.6 million, this is then a comparable number, EUR 98.8 million. This is exactly why we are not very satisfied with this situation, because we have increased sales, the top line, significantly by EUR 190 million, and our earnings are EUR 10 million operative behind the previous year. Coming now to the development region by region and business segment by business segment on the next slide. We see that Europe has increased top line by 10.4%. As I said already before, the growth is supported by most European countries and very nicely development in England, where we have double-digit growth despite a difficult market environment. We increased market shares here significantly. Also, the ag business was performing quite nicely with our brands, Kramer and Weidemann. The EBIT development was impacted by reductions of the production program.
We have achieved in Europe EUR 161.5 million compared to the last year number, where it was EUR 175.6 million. The revenue in the Americas, FX affected, were growing by 9.1%. We have had a high demand for products of worksite technology, significant higher sales also for compact equipment as it is here, the skid steer, which we are producing in the U.S., but also other compact equipment which we are importing, such as excavators, dumpers, and telehandlers. We made progress in the expanding of the dealer network. However, the earnings were again negative with EUR 2.9 million compared to last year where it was EUR -6.2 million. The revenue in Asia Pacific is +4.7%, as well as FX effect adjusted. The number of the previous year in 2018, we made a loss of EUR 5 million. Slight progress in this case.
Regarding the business segments, you see here that was +14%, that compact equipment is the main driver for this growth here. Coming now to the next slide, where we see the elements of the net working capital, inventories, trade receivables, as well as trade payables. The inventories are still too high with EUR 603 million. We were able to reduce it in the fourth quarter, our target still is EUR 500 million to be achieved. The accounts receivables are, with EUR 359 million, more than EUR 50 million higher than last year due to the higher volume on the one hand side and due to the fact that we are further expanding the dealer network in North America. We were not able to sign the ABS contract. That means a kind of factoring contract with a bank, as we have reported last year.
We are at the moment quite close to a final agreement, we will have this in place in beginning of May. On the right-hand side at the bottom, you see the trade payables. This development was not in our favor. We have reduced trade payables from EUR 213 million down to EUR 150 million. When you look to the days of payables outstanding, it is a reduction of roundabout 20 days from 56 down to 37 days. This is clearly going in this direction because of the reduced production in the second half and due to the fact that we have also decreased our engines, which we have had in there as pre-buy engines at the end of 2018. The consequence of this development follows on the next slide.
We see here the net working capital development with 42% absolutely too high, far away from our target being 30% of revenues. We were able to turn the development in the cash flow. We have a reversal here in the Q4 regarding the trend. It is positive due to the fact that we were able to reduce the inventories as well as the trade receivables. The investments were higher than last year with EUR 89.2 million compared to the year before where it was EUR 73.3 million due to the fact that we have significant investments into the future growth of the company. The main points were here the expansion of the European production site, which is still going on in 2020. On the next slide, we see how this is reflected in the balance sheet structure.
We see here on the first chart the net financial debt development, where we have increased year-on-year our net debt from EUR 205 to EUR 439. The gearing is with 36% not good regarding this development. The net financial debt to EBITDA is 1.7 and the equity ratio is at 56%. We now go to the next slide, we see how the markets reacted on the development of our company. You see on the left-hand side, the development was always okay during the first month. From late summer, we see that the dark blue line, the Wacker Neuson development, is below the curves of the peer group, the DAX and the SDAX and that was the reaction of the market regarding our win warnings. On the right-hand side, we see a positive statement from us from Wacker Neuson here.
We are suggesting together with our Supervisory Board for the AGM dividend of exactly EUR 0.60 per share. Due to the fact that we are really unsatisfied with the development of our performance with respect to the profits as well as to the net working capital situation, we have started a program to reduce costs and to improve the efficiency. We call it CEP and this has three key topics. One of these topics is the production and purchasing, where we are going to reduce inefficiencies in the production, where we get a closer integration of sales and production in our company and stabilize the production flow and avoid inefficiency. We have launched a software tool which helps us to look ahead, to look into the future. This is well established now since a couple of months.
We will also get a new program installed mid of this year. It's called IBP and it's a product from SAP which will give us then a really integrated sales and production and inventory planning based on rolling forecasts, which are done more or less day by day. This part is roundabout EUR 15 million as we want to reduce our inefficiencies here compared to 2019. Next point is the reduction of material and procurement costs. This together amounts to EUR 12 million. We are going to avoid the further cost for the restructuring of the production site in U.S., which was costing us EUR 7 million. The second topic is the areas of sales and admin. We are going here to make efficiency-enhancing adjustments to the overall sales organization.
We are going to streamline our internal structures and review all activities of the subsidiaries with regards to customer benefits. This will bring us around about EUR 18 million cost savings here. Next point is the optimization of outbound logistics. We are going to make more and more drop shipments from delivery directly from factories to the customers. This will bring us around about EUR 4 million. We will avoid what we have done last year. We are not going to sell off and make rebates again as we did last year, which was costing us around about EUR 10 million. The third topic is, of course, the inventory reduction down to EUR 500 million at the end of the year. This brings me now to the outlook, which we find on page 19.
You see here the construction business barometers as well as the business barometers. We see a quite positive development. Until February, the curves are turning in the right direction. I think that this is clearly behind the actual development caused by the coronavirus. We will see how this will turn. We have large uncertainties with regard to the continued spread of the coronavirus and the effects of the related measures by states and institutions alike. We see from today's perspective that the consequences are not quantifiable. However, we made our outlook for the year 2020. We did this on the 9th of March. We expected our sales will be between EUR 1.7 billion and EUR 1.9 billion. We are expecting an EBIT margin between 6.5% and 8.5%.
The investments will be around EUR 80 million to EUR 100 million, depending on the further development of the capacity increase in our European production sites. We want to reduce net working capital, of course, but with such a sales top line, we believe that the net working capital as a percentage of revenue will be stagnant or to improve slightly relative to the numbers which we have seen end of 2019. Ladies and gentlemen, that was the short presentation. We are now open for questions.
Thank you, Mr. Trepels. I would like the operator to give instructions for posing questions.
Thank you. If you would like to ask a question, please signal by pressing star one on your telephone keypad. If you are using speaker equipment, please make sure your mute function is turned off. We will take our first question from Jonas Blum with Warburg Research.
Yes, good afternoon. Three questions from my side, if I may. Firstly, I was just looking at your guidance, and I mean, now you gave a range. Could you just give us a bit more color here on what makes you reach the upper end and what makes you reach the lower end respectively? That would be helpful. Secondly, you're still optimistic about achieving your Strategy 2022 goals. If I look at the midpoint of your revenue guidance, you need some 11% in sales growth within the next two years. You need a significant margin expansion, and also you need to reduce your working capital by over EUR 200 million. I was just wondering what happens if markets don't pick up. Are you still at least being able to achieve the margin expansion and the net working capital reduction targets? That would be helpful.
Do you also need some certain level of scale for this to be achieved? Thirdly, you're still targeting for a reduction this year in inventories of EUR 100 million. Just looking at the underlying markets, and they're obviously turning south. Do you still think this is possible to achieve this year? Do you simply achieve it by the supply chain bottlenecks, we can now sell off the inventory, or will there also be some further shutdowns in production, we should actually expect some margin pressure, at least in H1? Thanks a lot.
Okay. Your first question was regarding the guidance and regarding the lower and the upper end. Yeah, it's a good question. It would be great if I could answer your question, to be honest, from today's perspective, and you see that the spread is relatively wide with EUR 200 million. We are not exactly knowing what's going on. Our internal targets were, of course, a clear higher number. When we made our outlook in our first internal discussions we had, the outlook was absolutely higher than what we are showing here. It partly reflects the overall situation. We do not see or we have not seen a major impact so far in our numbers regarding the order intake.
The order intake was not so good in North America, but that was more or less due to the fact that we have pumped machines into the market in the last two months in North America to reduce our inventory. Overall, the order income situation is intact. We will now see what is the impact on the coronavirus. We have got first information that customers are going to postpone contracts. That's what we see. Regarding the shutdowns, let me take your third question now. It means that we have a situation that until end of March, beginning of April, we are fine regarding the material flow, and we are not going to have issues here. We have turned a lot of shipments from China, from sea freight to air freight. More expensive, but we have availability.
We see now that we have some delivery problems from Italy getting the components from Italy. That's also a severe situation. We are steering here from one day to the other. What we will do is, we will react here proactive, and we are going to take the opportunity of the vacation to reduce our production in the next couple of days and weeks. The impact is, I would say, if we would be down by four weeks, that could have an impact in the top line of EUR 100 million. I'm still optimistic that we will overcome the situation. First positive signs are coming now from China. Our Chinese production company is up and running since a couple of days. 100% of people are on board again. The situation in China itself is getting much better than it was a couple of weeks ago.
What do we expect here? If we see the same development here in Europe, it will take us then probably another six weeks of uncertainty. Due to the fact that we are early in the year, I am still optimistic that we can make it, because we have sufficient time to get our numbers here done regarding the top line. It might be that we take our vacation and move vacation from August earlier. Whatever we do, as I said, we have to steer here from one day to the other. Regarding the outlook 2022, to achieve more than EUR 2 billion and a good EBIT, I believe that this is still absolutely doable. Why? I think that the markets for our products are there. The overall economy needs, especially our products, and we are in the infrastructure.
We have a lot of work to do in infrastructure all over the world. We are not depending so much on the big infrastructure projects, but maintaining the infrastructure is always key. Overall, the markets in which we work have developed by around about 3%-4% plus every year. Our target is to grow faster than the markets grow. Okay. Probably 2020 is a year where we see a stagnating situation, but overall, I am not afraid that we are not able to achieve that. When you look to the cost reduction program, which we have in place, it's exactly to bring us back to where we have been before. We are missing, or we have missed the EBIT expectations in 2019 by around about EUR 40 million.
With the measures which we have in place or what we are going to get in place now during this year will help us to turn this picture here in the direction to deliver 11% EBIT. Also net working capital is an issue, of course. As I said before, we haven't had the transparency so far. With EUR 600 million, we are EUR 100 million too high in inventory. Accounts receivables we will bring down also with the so-called ABS structure for North America. Then also from this perspective, the net working capital target is from today's perspective, absolutely reachable. Has this answered your question?
Yes. That's helpful. Thanks.
As a reminder, it is star one if you would like to ask a question. We will take our next question from Laurence Focke with Kepler Cheuvreux.
Yes, good afternoon. Just to try to understand in your EUR 50 million cost reduction plan, can you just remind us when the costs for that plan went through? Did I understand they went through in the second half of the year? How much were they? Do you expect further in 2020?
We said when we established the program that the measures will take some time to be implemented and that we will get the cost reductions down this year and the following year, so 2020 as well as 2021. We said that the cost for the program will be max EUR 10 million roundabout. That means for severance payments and others, and that our target is that with the installed measures, we are able to balance this negative effect. From today's perspective, I would be comfortable with this, what we said before. EUR 10 million costs as well as EUR 10 million savings.
As a reminder, star one if you would like to ask a question. We will take our next question from Jean-Francois Coste with Tocqueville.
Yes. Hi, can you hear me?
Yes.
Just-
We hear you.
I wanted to maybe, I know this is not the main focus, you've kept the dividend flat, you're going to pay out the dividend. Can you address liquidity situation and how the board and top management is thinking in these uncertain times? What makes you confident to keep the dividend flat?
Yeah. As I said before, we want to show here continuity, in this respect. Regarding the liquidity situation, we have sufficient credit lines. I told you also that we are going to establish the ABS structure beginning of May. From this perspective, I think we are okay, the reduction of inventory will also bring us, of course, liquidity into the company.
Basically credit lines, ABS structure. When is the debt due?
Sorry, say it again.
When is the main debt due? When are the main maturities? Hello?
You find this on page 33 of our financial statements. We have the promissory note, which was placed in 2017. It's EUR 125 million, and the due date is 2022.
Okay.
The other promissory note on the first tranche in US dollars in 2018, is EUR 77.5 million. The due date is 2023. The second part, the second tranche of this promissory note in US dollar is $22.5 million. Sorry, these are US dollars, both numbers, and it is due in 2025. We have the notes which we have issued in 2019. The first tranche of EUR 70 million is due in 2024, and the second tranche in 2019 of EUR 80 million is due in 2026.
Okay, no imminent large maturities. Okay. That's very helpful. Thank you.
Again, it is star one if you would like to ask a question. We will take our next question from Alexander Holzhauer with HNA.
Yes. Good afternoon. Thank you very much for taking the question. I was just wondering if you could add some color on the situation with the anchor dealers in terms of inventories. What is the situation there? Do you expect to add more sales in 2020 through this channel, or do you expect first there to be a destocking of any kind? Thank you.
The situation with the anchor dealer program is okay. We fulfilled our internal targets in 2019, and we are also getting further anchor dealers on board in the year 2020. This is from our perspective, okay. Some of those dealers have pushed a little bit the brake regarding the speed of their growth, because on the other hand side, they all see that they need to finance it somehow. Yes, we are adding further anchor dealers here, and we are also looking to regional expansion. What does it mean? Today we are in the middle and on the East Coast, active, but we will also go to the West Coast more and more. Traditionally, we were not strong at the West Coast during the last decades, I need to say. That's a regional expansion where we hope that we can add further anchor dealers.
Smaller dealers, we have been successful to get in Canada. In both areas, U.S. as well as Canada, we are going further with this program.
Thank you very much for that. If you could talk a little bit about the rental business, how is this developing?
Which rental business do you mean? Do you mean our Wacker Neuson rental business?
Yes, correct. Wacker Neuson rental business.
The rental business was also positive in the development. I think it was a little bit below 10% plus last year. We have not significantly increased our assets here. We are around at EUR 150 million or EUR 152 million. From this perspective, we are not significantly increasing our rental fleet. What we do is we turn it faster, and that is quite positive. This year, we are expecting further growth in this area regarding sales and profitability.
Thank you very much.
We'll take our next question from Marc Gabriel with Bankhaus Lampe.
Yeah. Hello. Good afternoon, everybody. Two questions from my side. First of all, the free cash flow development was extremely strong in Q4 for the mentioned reason. Seasonality is in Q1 always a contrary development. What should we see here for this year in the first quarter? How is that developing? I mean 2018 was minus EUR 45 million. Last year was minus EUR 143. What could we expect here? Will there be a negative development too? Are you more insisting on to benefit from the measures which you have taken already in Q4 last year? That's the first question. The second question is on the CapEx. You mentioned EUR 80 million-EUR 100 million for this year. Could you remind us what was that for mainly? Are there possibilities to reduce this if the situation becomes even more severe? Finally, just on the rental.
You just said that the own rental business was up 10%. Could you elaborate a little bit on the rental business, especially in the U.S. and in the European main markets with the external rentals? What is their behavior at the current environment? Thank you very much.
Coming first to your question regarding the free cash flow. Yes, you are right. The seasonality is not in our favor in the first quarter. We will see such a development as we have seen also in 2018 in the first quarter. It will be most likely negative. The second question was regarding the CapEx situation that we are expecting here, the EUR 80 million plus. Your question was, are we able to reduce that to stop it? Yes, we are able to do that. We have just recently talked about it with our colleagues. We are now going through project by project, where we now react and postpone wherever we are able to postpone it. The number or the EUR 80 million, why is it so high? Because we have invested in Pfullendorf, in our Kramer production plant.
We have increased here the production facility as well as the R&D facility and the logistics areas. We are insourcing again our outsourced logistics. In Pfullendorf, we were at the beginning end of last year, where we are starting to build a center for admin and R&D office. As I said before, we are able to postpone here certain steps. We are just analyzing where we can stop it or where we are going to postpone it. We are just working on it. Your last question was regarding rental business. The rental business in Europe, we do by ourselves. We are partly here competing also with our customers because we sell also to rental fleets. The rental business overall in Europe, I would say, was good in 2019. The overall development also for 2020.
Despite the fact of coronavirus, we have had already orders from big rental fleets placed in 2019 for 2020. Also from this perspective, 2020 seemed to be a good year with respect to the rental business. In North America, we are not doing actively rental business here. We are selling to rental dealers or dealers who do rent business and do 90% roundabout rental business and 10% retail business. This business is also running quite good because we are here developing new sales channels. We are creating sales channels. With these new sales channels, we are creating business. These rental firms which we are developing, these dealers which we are developing, they take over market share from other organizations. That is the situation regarding rental business in the U.S. and Europe.
Thank you very much.