Ladies and gentlemen, thank you for standing by, and welcome to the Techtronic Industries 2019 Annual Results Analysts and Investors Webcast. Please note that all participants are in a listen-only mode. I would now hand over to the host of TTI's webcast today. Thank you. Please go ahead.
Good morning, and good evening to all our investors. Before we begin, let me introduce to you the key management of TTI with us at the webcast today. They are Mr. Horst Pudwill, our Chairman, Mr. Joe Galli, our CEO, and Mr. Frank Chan, our CFO. On this call, our Chairman, Mr. Pudwill, will give us an opening remark. Mr. Frank Chan, our CFO, will walk through the full year 2019's results, followed by an operations review by our CEO, Mr. Joe Galli. Without further ado, let me pass the time to our Chairman for the opening remarks. Mr. Pudwill, please.
A warm welcome, thank you for attending TTI's 2019 Annual Results Announcement. Given the current circumstances, we have decided to present our annual results announcement via audio webcast. I'm pleased to announce that 2019 was another year of record results for the group, marking a decade of outstanding performance. The coronavirus is a global concern. We believe that we are in a good position as things currently stand. Given our diversified manufacturing base and supply chain to offset any challenges that may present themselves, and we are confident we will be able to deliver a solid performance in 2020. Frank Chan, our Group CFO, will now provide you with the 2019 financial overview, and Joe Galli, our Group CEO, will cover the business overview and our strategy to meet our exciting goals for 2020.
I will now hand you over to Frank Chan and Joe Galli for their presentation. Thank you.
Thank you, Mr. Chairman. As Chairman stated, we've achieved record profits and a decade of revenue growth. In 2019, we delivered an organic sales increase of 9.2% to $7.7 billion, or a 10.7% excluding currency impact, the 10th consecutive year of record revenue. This strong growth momentum was mainly driven by the launch of our new cordless products, expansion across all categories, verticals, and geographies. Milwaukee continued to be the major growth driver, delivering another 21.7% growth globally in local currencies, together with Ryobi cordless platforms also generating double-digit growth. The strategic cordless and carpet washing categories of our floor care division continued to make satisfactory progress, up 18.7% as compared to 2018. Gross profit increased by 10.6%, with margin further improved for the 11th consecutive year by 50 basis points to 37.7%, driven by high-margin new products, mix management, productivity gains, and volume leverage.
We will continue to execute this very proven successful strategy to continue to deliver further improvements in revenue and gross margin going forward. Our financial goal has always been high single-digit sales growth, continual gross margin expansion, investments in strategic SG&A, EBIT, and net profit growth faster than sales growth. We've been able to deliver all these objectives in 2019. Our EBIT increased by 10.9% to $673 million, and net profit increased by 11.3% to $615 million, both with a 10% margin expansion. Earnings per share increased by 11.6% to $0.337 per share. The board recommended a final dividend of HKD 0.58 per share, representing an increase of 16% over last year.
Together with the HKD 0.45 per share interim dividend paid, subject to the shareholders' approval to the final dividend, total dividend for the year will be HKD 1.03 per share, an increase of 17%, and a payout ratio of 39.46%, the eighth consecutive year of increase. As mentioned, it has always been our financial goal that EBIT and net profit growth must outperform sales growth. We've been able to achieve this target in 2019 again, with a 10-year compound annual growth rate of sales growth of 10%, while our EBIT delivered a CAGR of 17% and net profit of 23%. Power equipment division account for 88.6% of the group's total revenue, deliver a sales growth of 13% or 14.6% in local currency.
The growth mainly driven by Milwaukee and Ryobi One+, with Ryobi outdoor business also increased by 14.5%. We will continue to leverage our strong global product development resources, systematically generating innovations and breakthrough technologies which are core to our cordless leadership. With the launch of our new Milwaukee MX FUEL equipment system, together with our established M18 platform, we are confident that the strong sales momentum will continue. Margin of this division was slightly lower than that of last year, as we continue to invest in R&D, in store sales activities, and a one-time investment in supply chain diversification. Floor care division was down 12.3% as we exited certain European markets and discontinued non-strategic legacy categories. With our focus in growing strategic cordless and carpet washing categories, the floor care division sales performance is expected to improve.
EBIT margin of this division, despite the sales decline, improved it from 0.9% to 1.2% in 2019 as a result of favorable product mix. From a geographic perspective, all regions delivered double-digit growth in local currency. North America remained to be our major market, accounting for 77.1% of the group's revenue, with a 10.2% growth in local currency. Followed by Europe's 15.1% with a sales growth of 13.5%, and rest of the world, 7.8%, with Australia and New Zealand delivering a 12.1% growth in local currency. It's worth highlighting that power equipment sales of North America, Europe, and ANZ all delivered double-digit revenue growth in local currencies in 2019. Consistent with our strategy, we've continued to invest in strategic SG&A for growth and further margin improvements.
SG&A as a percentage to sales was at 29.1% as compared to 28.7% as we continue to reinvest our growth margin improvement into strategic selling expenses while leveraging the volume increase in distribution and transportation expenses. R&D spend for the year was at 3%, a 10 basis points increase over last year. The increase in the administrative expenses is our increase in the human resources, which we believe that is also critical to the growth of the company. Net finance costs were lower than that of last year despite our over 10% sales increase. Net finance costs were 0.16% as compared to 0.18% in 2018. With our diligent financial management, we believe that we can continue to deliver very effective and efficient finance costs. Effective tax rate was at 7% as compared to 7.1% in 2018.
We continue to maintain that our effective tax rate at this level is very sustainable, leveraging our efficient and yet prudent tax plan on our global tax presence. Our balance sheet remains very strong and healthy, with shareholders' equity at $3.3 billion, an increase of 11% over 2018. Net current assets increased by 12.3% to $1.8 billion. As at December 31st, 2019, our gearing was at 0.5% as compared to a small net cash position in 2018. The difference mainly due to the additional infrastructure CapEx spend during the year and the strategic inventory build. Through very disciplined working capital and financial management, we have been able to improve the gearing from 13.1% at interim to the current level. This demonstrated the cash-generating capability of our business. We are confident that the gearing, if any, will remain low going forward.
Working capital as a percentage to sales was at 14.3%, very comparable to that of last year. The small increase was mainly due to the strategic build of inventory with days increased by nine days, but financed by improvements in receivable days of two days and an additional four-day payable days. Working capital management is our major focus area, and we are confident that we can continue to be below our target level of 20% of sales going forward. CapEx for the year was at $375 million as compared to $259 million in 2018. That increase was mainly due to the infrastructure spent in R&D centers and distribution centers to support our sales growth and product innovation capabilities. Operating CapEx remained very much comparable to that of last year. We've always been taking a very prudent approach, managing our financial positions and to maximize our finance cost efficiencies.
During the year, we took the opportunities and arranged some very low-cost tax rate long-term debt to finance our infrastructure CapEx projects. Fixed-rate debts now account for 24% of our total debt portfolio as compared to 11% last year. The ratio between long-term debt and short-term debt was at 53%, 47%, very comparable to that of last year. We will continue to review our debt portfolio and structure to maximize our finance management efficiencies to continue to support the exciting growth ahead of us. Now I would like to pass the presentation to our CEO, Mr. Joe Galli.
Hello, everyone. I'm excited to share with you the outstanding results that we delivered here at TTI in 2019. First of all, our sales grew a strong single-digit level of 9.2%. We were delighted with this sales performance given the headwinds that we face in the environment we're competing in today. A highlight of our sales is actually the reduction, the planned reduction in sales in floor care is down 13.5%. However, that was by design, and we were able to grow the EBIT level of floor care up a cool 12.8%. We are now on track with floor care. Now that we've exited the Western European low-margin, non-strategic business, we are now on track to deliver an outstanding future in floor care financial results.
As you look at the P&L more closely, you'll see that once again, with a 9.2% sales growth, we improved our gross margin by 50 basis points. We were able to increase our EBIT at a level faster than sales growth. EBIT grew 10.9%, up to $673 million, and our net profit grew 11.3% to $615 million. We continue to relentlessly focus on reducing non-strategic, unnecessary, wasteful SG&A. We cut non-strategic SG&A by 10 basis points last year, while we invested aggressively in strategic SG&A. What is strategic SG&A for TTI? Well, we are hyper-focused on research and development, new product development, expanding our end-user conversion programs globally. We're focused on building our brands with our marketing programs, expanding sales coverage.
We're expanding with our in-store reps in key customers like The Home Depot, and we continue to successfully expand geographically throughout Eastern Europe and other parts of the world. I'm particularly excited about our continued investment in the Leadership Development Program, called LDP. Last year at TTI, we hired over 1,000 freshly minted college graduates worldwide. These are high-potential sympathizers that we handpick off campuses in the U.S. and globally. Now they're part of this TTI family. Can you imagine 1,000 new additions to the company? These are all, as I said, high-energy, high-potential college grads that will be an important part of this company's growth in 2020 and beyond. With that continued investment in strategic SG&A, we're continuing to drive our gross margin up to levels that are becoming increasingly impressive. In fact, last year we grew gross margin another 50 basis points up to 37.7%.
That's 11 years in a row of impressive gross margin improvement at TTI. As we have shared with you in the past, we plan to continue to improve our gross margin as a percent of sales, approximately 50 basis points a year for 2020 and really over the next five years. Our plans are in place and designed to deliver this kind of continuous relentless improvement in gross margin. We feel like, again, we have exciting plans in place to deliver just that. Our working capital management in our company, as you know, is considered to be world-class. We are particularly proud of what we achieved in working capital management last year.
We actually built up inventory in advance of the potential tariff issues that we faced, and of course our tariff mitigation has gone exceedingly well, and it's fortuitous that we now have a surplus, a stockpile of inventory, which will help us deal with the reality of the coronavirus if there are any kind of supply chain challenges in the short term. This is an excellent time for us to have an extra supply of inventory. Of course, we improved working capital in terms of receivables by cutting receivables two days last year, and we increased our payables by four days up to 104. Basically, our payables are funding the investment in inventory. The inventory couldn't come at a more opportune time, and again, we're delighted.
Anything under 20% working capital as a percent of sale is considered to be good. We are world-class and the best in our industry. As we now turn toward 2020, it's important to share with you that we continue to be confident in delivering our targets for 2020. Our outlook for this year will be, yes, we will grow our top line high single digits. We plan to expand gross margin this year roughly 50 basis points. We intend to improve our EBIT, to grow our EBIT at a faster rate than sales. We certainly plan to grow our Milwaukee business once again at a rate of 20% or better. We say that recognizing that the coronavirus is an issue that faces us today.
We believe that we are doing an excellent job working very closely with the Chinese authorities on the new requirements that have been put in place. We fully comply with all these requirements. We are pleased that we've, at this point, our employee base has been safe and protected from the virus. We also are pleased that we so far have seen minimal interruption in our supply chain, and based on what we know today, we feel like we are still in a position with this coronavirus to still deliver on our aggressive, exciting financial targets for 2020.
Let me share with you now some of the highlights of our new products and new initiatives that we will roll out this year to ensure that we deliver our numbers. First of all, as I mentioned before, Milwaukee had another extraordinarily strong year. We were up 21.7% in Milwaukee last year worldwide.
21.7% with all of the headwind, it's abundantly clear that we are significantly outperforming all of the competitors that we face in the global power tool space. In fact, I was very pleased that our performance in Milwaukee was consistent worldwide. Of course, the North American team had a terrific year, growing 21.3%. In the European theater, our team grew 24.6%. With many economic issues that you see in Europe, that 24.6% is just extraordinary performance. Of course, beyond Europe and North America and the rest of the world, we were still up 20%+ . We think that this consistency of Milwaukee's growth shows that we are clearly gaining traction. We have outstanding momentum. We are in a wonderful leadership position worldwide to continue our assault on the global leadership position in power tools.
As we march into 2020, we have a lot of highlights that we're rolling out with Milwaukee. First of all, our M18 full-size 18-volts cordless platform of Milwaukee is the fastest growing cordless platform in the world. We plan on continuing to expand this platform with a myriad of new cordless products, some of which I'll just highlight today. For example, we have a new framing nailer system, a family of framing nailers that will outperform competition because these are actually ready to actuate in a moment's notice. This puts the end user in a position to be able to complete the job much faster because of the dynamic features we've engineered into these products. These are cordless nailers that, of course, replace the pneumatic nailers that have populated job sites for decades.
We also have wonderful features that will outperform other cordless framing nailers that you find in the market today. We will now roll out a family of these high performance cordless nailers in the Milwaukee FUEL family, 18 volts, that will extend our leadership in cordless to yet another facet of the market that we find to have a lot of potential. Another good example of our M18 leadership is this product we affectionately call the Hole Hawg. This Hole Hawg is an electrician's tool, and this cordless saw is actually engineered to be two pounds lighter than the other cordless products in its class. It's also more powerful, faster, and easier to use than the competitive units, competitive choices you have in the market today.
By the end of the first half of 2020, we will have over 200 different M18 cordless items that work off this platform. We're rolling out a number of products in the second quarter and in the back half this year. You can wait to see the exciting additional products that we will launch to extend the family of M18. We also have the global leadership position in subcompact M12 cordless products. These are subcompact, super light and convenient to use 12 volt cordless products. We will have over 120 M12 products by the end of the first half of 2020. As you look at this, we now have the global leadership position in full-size cordless with M18, and then we have a second global leadership position in the subcompact platform. Two leadership platforms in cordless today, highlighting Milwaukee product offering in cordless.
We are about to, this year, roll out a third platform with Milwaukee, and this is a whole different arena of opportunity for us. We're rolling out this year what we call MX FUEL. This is high voltage, super high performance product that's designed to target the massive global equipment market. Equipment is a whole different space than the power tools and the subcompact power tool areas that we've gone after in the past. This equipment line opens Milwaukee up our potential up to go after a market that's literally billions and billions globally. The MX FUEL is particularly exciting because the products that we're introducing here all are designed to replace either gas powered, petrol powered products or pneumatic products or AC products. There's no cordless in this class today. Let me talk about that first MX product.
This new product is a 14-inch Milwaukee cutoff saw. This targets a vast market that today is 100% controlled by gas or petrol cutoff saws. Our 14-inch cutoff saw is powered by the sophisticated MX battery, will literally allow the user to cut and perform jobs at a faster rate than the equivalent gas product because there's no irritating cord to pull to activate our unit. The power, the torque, the runtime is all exceptional on this product, and we expect to disrupt a massive gas-powered equipment product segment with the new cutoff saw. Next, we have an amazing power light, a lighting tree that's powered by our MX battery system.
Traditionally, if you see highway construction at night or mining construction and repair or power utility construction in adverse conditions, what you'll see is that there'll be a light that's attached to a noisy fuel-burning generator that has to be literally towed to the job site in order to activate the light so that workers can perform their task. We eliminate all that with our super light, super powerful MX FUEL-powered power light. You can use these on highway construction, mining, dozens and dozens of applications, and 100% of the displacement we expect to achieve here is against gas or petrol-powered or diesel-powered products that have populated job sites today. Next, we have a super cool cordless breaker, also known as a jackhammer.
These cordless breakers are designed to replace the corded units today and the old-fashioned pneumatic products, pneumatic jackhammers you'll still see on job site construction, highway repair, all over the world. Our unit is the first ever cordless breaker, and it performs beautifully versus the AC and pneumatic equivalents that you'll find on the market today. Next, we have a super cool carry-on power supply. This is literally a generator or a power supply where batteries supply the power. You pre-charge the battery, you carry this onto the job site, and now you have a portable power unit that's available on job sites for whatever power requirements there are. Interestingly, the number one item, the number one device that's plugged into these generators on job sites is a charger for cordless tools.
Now we have a battery powered source to charge your other batteries on the job site. We have this super cool, unique ecosystem of charging and power source that allows us to perpetuate the cordless revolution that's taking place today on global job sites. The batteries that power MX are amazing. The batteries are technological breakthroughs. We have an extended capacity battery, and we have a subcompact version. These two batteries allow the user to have plenty of power to replace petrol, and it provides a wonderful and accretive aftermarket for TTI as we build out our equipment business in the months and years to come. We have had amazing reception from targeted end users globally on the revolutionary MX system. This is an incredibly disruptive, innovative technology breakthrough.
Many feel this is the biggest breakthrough in power tools in decades. We expect to build on our MX equipment family of cordless in the years to come. You will see many, many highly innovative products that run off of this power source, eliminating the scourge of gas-powered equipment on job sites today. Okay, moving on. We have had amazing success with our mobile storage system called PACKOUT. One of the fastest growing requirements among the end users we sell is how you organize, store, and transport your power tool fleet. As time has gone on, because of cordless, end users own far more tools than they used to. They need a way to organize, to store, and to transport these tools. That's where PACKOUT has been an absolute bullseye solution for these problems that end users face. Here's a pretty cool picture.
This is an example of what you're seeing increasingly on job sites. Here are four users wheeling their tools to their work site in their PACKOUT mobile storage systems. Their tools are organized, easy to transport, and when they finish the job at the end of the day, they go back to their workshop, they plug PACKOUT into their larger PACKOUT storage system, and this becomes another network effect opportunity that we're propagating here at TTI. We intend to expand PACKOUT with a whole series of really cool additional products. One example is a PACKOUT radio.
This radio, which sounds terrific, powered of course by Bluetooth, it plugs into your PACKOUT system and allows the end user to enjoy the music they love on job sites or listen to the game, et cetera, and not having to deal with a separate radio that detaches on the rest of their fleet of equipment. Another exciting new area for TTI that is gaining traction like crazy is our rollout of safety equipment. A clear trend in the U.S. and globally is that job site safety is increasingly becoming a requirement. The requirements are more rigid, and we just think this is an incredibly important thing to enhance job site safety for our users. It's something we've worked on for years. Our safety equipment now allows us to really embrace the user with the proper network of safety equipment.
This rollout will have hard hats, it will have eye protection, a wonderful range of gloves, respirators, of course, lanyards, and a series of other safety equipment that you'll see rollout up in this family. I can tell you that the safety equipment is off to an incredible start. In fact, before the coronavirus, we were enjoying great sales in all these products. Of course, respirator sales are going crazy in the short term. This will serve to introduce the world's end users to the fact that Milwaukee now has entered into the safety equipment area.
Every single one of our safety equipment products has demonstrably better features than the incumbent competitors that have controlled this market for years and years with products that we think have become a commodity, and we intend to innovate, disrupt, and become global leaders in the safety equipment space. Another highlight of our Milwaukee businesses is our incredibly well-received and fast-growing hand tool business. Milwaukee hand tools have taken off like wildfire. We are incredibly excited about the potential as we go forward in our hand tool business. Because of that, we've actually decided to build a brand-new manufacturing operation from scratch in Wisconsin to build our wire cutters and pliers and screwdrivers and other tools that will be part of the Milwaukee family.
This is going to be a great step in us building even more market share and momentum in the U.S. and globally as we crank up this manufacturing operation in 2020. Moving on to outdoor. The outdoor business for TTI had a remarkable year, growing 14.5%. That was all paced by the amazing line of cordless outdoor equipment we offer in the Ryobi family. This growth rate is indicative of what we think we can achieve for many years to come, because we are leading the global stampede away from gas or petrol and to the lithium-powered handheld cordless outdoor equipment. A great example of our technology prowess in outdoor is in the exciting new WHISPER SERIES of blowers. The blower, which has become a ubiquitous product in yards and job sites all over the world. A blower is a necessary cleanup tool for end users.
There are two ongoing issues that users continue to discuss when it comes to blowers. One is the user is tired of having to pull the cord and deal with an activation of a petrol or gas-powered unit. The end users don't like the fumes that come from gas blowers. They don't like the noise. They don't like the trips to the gas station or the maintenance and repair required. Cordless blowers solve a big problem. There's another problem that's significant here, and that's noise level. Blowers are notoriously irritating when they're turned on because the noise they make is unpleasant, it's loud, it's disruptive. In fact, there are many municipalities now that are actually outlawing certain blowers because of the noise level. We have created something very special. We call it the WHISPER SERIES.
We've engineered these products with intellectual property that we have patented that will allow us to offer a range of blowers that are much more quiet than what you've seen in the past. Let me now just give you a quick demo. I'm going to now turn on an industry-leading cordless blower from our competition. That's the lovely sound of a typical blower today. Let me fire up our Whisper blower. As you can hear, the WHISPER SERIES is not only a breakthrough in terms of reducing decibel levels, but the sound quality is a lot more pleasant than what you're accustomed to in your neighborhood when you hear those blowers fired up. We're going to roll out a range of three Whisper blowers this year.
We think this will be yet another catalyst for us to continue to outpace the market and grow our outdoor business at an exciting rate in 2020 and beyond. The final area I'll mention is floor care. As I shared up front, we're very pleased with the floor care, with not only our financial performance last year in 2019, but also the progress we're making in implementing a strategy to make money in floor care and deliver solid financial results in 2020 and really over the next five years. We have now repositioned our floor care line and businesses to focus on two areas, on cordless and on carpet washing.
In cordless, we have a unique system with a detachable battery we call Hoover ONEPWR, that gives you a floor care family where you can remove the battery from one product and use it in a series of other floor care products. We have very encouraging results so far in this cordless rollout with Hoover ONEPWR. We're building traction here as we speak, and we think that there's a bright future for cordless floor care with a detachable battery. We also are incredibly excited about the new generation of carpet washing we've engineered. We've completely redesigned our carpet washing family, and the new state-of-the-art carpet washers that we're now selling are gaining market share and doing extremely well, along with the detergents that we've engineered to work with our carpet washers.
In fact, we've had so much momentum here that we've decided to build our best-selling PowerDash carpet washer, and we decided to move it from manufacturing in China to the U.S.A. in the factory that we have in Tennessee. This is a great example of us diversifying our manufacturing base. It's a great example of producing a product in a market where it's largely consumed, and the retail acceptance of PowerDash so far has been very positive. We feel now that floor care is in a position to deliver increasing profitability for 2020 and the next five years. We have a good plan in place, and we really feel very confident that we'll deliver our profit target in floor care. Once again, as we wrap up this results announcement, 2019 was an exceptionally good year for the company.
We, like all of our competitors, we faced many headwinds. Our management team is outstanding, and the culture in our company is a real highlight of TTI. When we encounter issues beyond our control, like the tariff issue that we successfully mitigated and still delivered on our profit guidance. We believe that the culture we have is a culture where people find ways to overcome issues that are beyond our control and still deliver the numbers. At this point, as I said earlier, based on what we know today, we feel like the coronavirus is an issue beyond our control, of course, and we feel like based on what we know now, that we will be able to manage through that coronavirus issue and deliver an exceptional 2020 per the guidance that I shared with you earlier.
I'd like to thank you for your interest in TTI, and let me assure you that the best is yet to come.
Ladies and gentlemen, thank you for your participation. This concludes today's conference. You may now disconnect.