Good afternoon, welcome to our investor seminar. Thanks for taking the time to join us today. As Hazel said, I'm Nimesh Patel. I'm the Chief Financial Officer of the Group. We're delighted to be able to host you here in the Chartered Accountants Hall in London, and to be broadcasting live to investors and analysts who are unable to join us in person. Today's session is focused on the largest of our three businesses, Steam Specialties, and follows a similar format to previous seminars focused on Electric Thermal Solutions and Watson-Marlow. As you will have seen in yesterday's RNS announcing this seminar, we will not be giving an update on trading today, and we will be reporting our first half results on the 10th of August.
Before handing over to my colleagues, I'll take a few minutes to give you some context about our group and the fundamentals that underpin our resilience and support our value proposition. First, let me run you through this afternoon's agenda and introduce the team who are with me here today. Our Group Chief Executive, Nick Anderson, is well known to all of you. Nick will talk about the important role that Steam Specialties plays in our group before handing over to our Managing Director of Steam Specialties, Maurizio Preziosa, who will provide an overview of the business and share more information on our business model and strategy. We'll then have a short 20-minute coffee break. When we return, Andrew Guthrie, Finance Director for Steam Specialties, will take us through how we drive sustainable growth in Steam Specialties and how we think about margins.
Now, as we have both a virtual and a physical audience, we're asking that you hold your questions until we've finished all of our sessions. We've allowed an hour for what we hope will be a lively Q&A session with all our speakers. I'm pleased to say that we have also been joined by two of our Steam Specialties executive team, Sean Clay and Jennifer Onofray. Thank you, Sean and Jennifer, and they're going to help also address your questions. We also have here today Jim Devine, who's our Group HR Director, so feel free to ask him any questions, too. Mal Patel, over there, is our Head of Investor Relations, and he'll be monitoring questions coming in from the webcast participants and asking those on their behalf. If you are online, feel free to type your questions into the Q&A panel as we go.
With that, let's begin. You are all familiar with this slide. Let me just reiterate where we are today. Three world-leading niche engineering businesses with combined revenues of over GBP 1.7 billion, focused on thermal energy management and fluid path technologies. With Steam Specialties, our original business today representing half of Group revenues. What this snapshot doesn't show is how we got here and the scale of the opportunity that lies ahead of us. We are often asked about our market share, and you'll be familiar with our response that this isn't something that we focus on, because what is actually important to us is growing our addressable market.
As you can see, over the past 10 years, our addressable market has grown from under GBP 5 billion to nearly GBP 13 billion, and our revenues over this period have grown from under GBP 700 million to over GBP 1.7 billion. What is noteworthy is how we have changed the shape of the group to create a long runway for sustained growth. For example, Watson-Marlow was a niche pump manufacturer when we acquired it, and 10 years ago it had an 18% share of a sub-GBP 1 billion market. Today, it still enjoys significant share, but of the much larger pumps and fluid path market, which includes specialist tubes and hosing used in multiple industries. 10 years ago, we did not have an Electric Thermal Solutions or ETS business.
Through our acquisitions of Chromalox, Thermocoax, and more recently, Vulcanic and Durex Industries, we now have exposure to a global market of just under GBP 4 billion. Steam Specialties is still our largest individual market of over GBP 5 billion. These addressable market sizes are before including the opportunity to decarbonize the generation of steam, in which we have a key role to play. How we address our various markets around the world has also changed over the past 10 years. You can see here how the group serves over 110,000 customers in 165 countries through our sales and manufacturing footprint. Our number of operating units, which represent our local sales and supply companies, has increased from 64 in 2013 to 146.
We have a direct sales presence in 67 countries and have increased the size of our direct sales force, which is engineer-led, sector-focused, and highly trained from 1,300 in 2013 to more than 2,100 people today, making it very difficult to replicate. We are continuing to expand our geographic footprint through increasing our coverage in countries where we are already present and where we see attractive market opportunity. As you can see, our scale and global coverage is unique in our markets, and allows us to share expertise and experience across our teams, increasing the agility with which we can anticipate and respond to our customers' needs. Our global coverage means we operate as a highly local business, building close relationships with our customers at a plant level. Let me touch on another important driver of our competitive advantage.
This slide explains our resilience through economic cycles. Over 60% of our revenues are derived from defensive, less cyclical end markets, such as pharmaceutical and biotechnology, food and beverage, and power generation, with over 85% of our revenues generated from our customers' OpEx budgets, and a small average invoice size of approximately GBP 3,000. Usually, these purchase decisions are made at the local plant level, and we do not typically feature in our customers' top 10 or top 20 suppliers in terms of spend. The most important thing, and the most interesting thing, is that 40% of our revenues are from self-generated solutions, essentially small project sales, also usually funded from customer OpEx budgets. Let me explain what we mean by that.
Our self-generated solution sales are driven by our direct sales engineers, who walk our customers' plants, understand the critical processes in those plants, and are able to find ways to improve their productivity, their reliability, and their sustainability. This is what we mean by customer closeness and meeting and exceeding their needs, both leveraging our applied engineering expertise and being supported by the broadest range of products and solutions. This highly local sales approach is supported by our manufacturing sites, which are also located close to our customers, ensuring short delivery times. As demonstrated by our strategic framework, we seek to leverage our direct sales business model and enhance customer bonding to focus on the customer's economics. We don't compete based on price or product features or lowering cost. Instead, we focus on improving our customers' performance and improving their economic or sustainability outcomes.
Our high-value, low-ticket products focus on critical components in our customers' critical processes. Together with our focus on customer economics, this allows us to pass through inflationary pressures in price, protecting our margins. Pulling all of this together across, one, our focus on niche markets, two, global coverage, three, diverse and defensive end market, and four, engineering-led solution selling, what we have built as a group is a deep and wide competitive moat. What I've been describing was the focus of Customer first strategy, introduced in 2014. This strategy drove the evolution of our Steam Specialties business, moving from a best product focus in 2014 to fully embracing customer solutions by 2020. Now, let's look at what this strategy and our business model has delivered. I hope this slide will help you better understand the basis of our confidence in our long-term growth prospects.
The arrows show both how total and organic growth have stepped up since we introduced Customer first strategy, and also began building our third leg, ETS. Sales growth was 9.5% from 2003 to 2011, slowing to 0.6% between 2011 and 2015, as a result of strong FX headwinds. 2015 onwards, sales growth has been enhanced through M&A, increasing to over 13%. Over the entire period, we have delivered a very consistent organic compound average growth of over 6%. Comparing our organic growth in the period, pre and post-implementation of Customer first strategy, the outperformance of this organic growth against industrial production growth, or IP for short, increased from 2.2 x to 3.1 x.
What this chart really demonstrates is that we have a track record through economic cycles of delivering organic growth in the mid-single digits. Now, we have three engines of growth rather than two, and a significantly larger addressable market, with an additional tailwind in the form of our customers' sustainability targets. That then takes me on to how the group has performed versus IP. The only point I want to make here is not just that the business has outperformed IP by over 2x , which it has done very consistently over the last 20 years, but that the rate of outperformance has stepped up. That's all I'm going to say about sales growth. Now let's have a look at profit and margin.
The dark blue bars on this slide show our reported adjusted operating profit margin, while the bars, including the light blue segments, show the underlying margin stripping out the impact of the two acquisitions we made in 2017, Gestra and Chromalox, both of which had mid-teen margins. Our group margin, excluding these acquisitions, has remained consistently above 25% since 2018. This is higher than the average of above 17% between 2003 and 2011, and the average of above 23% over the past 10 years. We remain on track to achieve greater than 20% margins in both acquisitions. In fact, in 2022, Gestra achieved the highest margin in its 120-year history, exceeding the 20% threshold, which it had achieved in 2021.
The key message here is that our margins have improved consistently, while we have also continued to fund revenue investments, such as increasing our direct sales headcount, new product development, developing our digital capability, and delivering on our sustainability commitments, all of which will support our future growth. Andrew will later share some examples of our revenue investments in Steam Specialties when he presents. What all this adds up to is the following: A large and expanding addressable market, driven by population growth, the growth of emerging economies, and increased demands for energy efficiency and decarbonization solutions. Our business model delivers consistent, greater than 2x IP organic growth at attractive margins with strong cash generation.
We have the capacity to reinvest the benefits from incremental operating leverage into future growth, thereby fueling a compounding growth model that helps us sustain our 55-year track record of dividend growth at an average annual rate of 11%. I will now hand you over to Nick to explain the role Steam Specialties plays within our Group.
Thank you. Thank you, Nimesh. Good afternoon, everyone. Good to see you here. Thanks for coming and joining us today. Nimesh has explained the evolution of our group and shared our historical performance, especially in relation to industrial production growth, or IP, as we like to call it for short, which demonstrates why we believe we are well-placed for the future. Before I hand over later to Maurizio to talk to you in detail about the Steam Specialties business, I'd like to spend a few minutes explaining the important role that Steam Specialties has, and will continue to play, within the context of the wider group. Steam Specialties comprises five divisions: three Spirax-Sarco sales divisions in EMEA, Americas, and Asia-Pacific, a global Gestra sales division, and a global supply chain division.
If it wasn't clear to you before today, I hope that one of the key messages you'll be taking away from today's session is that Steam Specialties remains a powerful engine of growth, as illustrated by this IP performance chart. Nimesh showed you how we performed as a group relative to IP over the last two decades, achieving organic constant currency growth over the last 10 years of more than 2 x IP. This slide shows Steam Specialties' performance against IP over those past 20 years, evidencing how this business contributes to underpin the group's organic growth. Just like the group as a whole, Steam Specialties outperforms IP at all stages of the economic cycles, growing by close to 2 x IP during the industrial expansionary periods and declining by close to 1 x IP during industrial recessions.
It is also important to note that over the last five years, through the disciplined implementation of our growth strategies, we have successfully improved our ability to outperform IP, and you can clearly see that as those two lines are continuing to expand in the latter part of the graph. Let's look at what drives this success on the next slide. Steam Specialties serves a resilient and growing market. As Maurizio will explain further in his section, Steam Specialty systems are always on. You know, they're running 24 hours a day, 365 days a year. They are, however, subject to wear and tear from constant operations, which means that customers often need replacement at short notice of the products that wear and tear or that break, to keep their critical industrial processes working effectively.
Customers also look to their system providers to help them increase overall asset performance and drive manufacturing process improvements. Steam Specialties has a direct sales presence in 66 countries through more than 1,300 direct sales and service engineers. These are highly skilled in the understanding of both our products and our customers' manufacturing processes. Therefore, our direct sales engineers play a critical role in self-generating sales, by identifying our customers and recognize needs and solving their difficult process challenges. An important part of our business model is to maintain regional manufacturing operations, quickly replenishing products that meet the applicable regional design codes. Across the group, we have 40 manufacturing facilities, with 11 of those dedicated to the production of Steam Specialties products in Europe, North America, Latin America, and Asia Pacific.
From these facilities, we produce an unmatched range of products, as well as a one-stop shop approach, which simplifies our customers' procurement processes. It is these drivers, our geographic coverage, proximity to customers, the quality and range of our products, and the highest number of direct sales engineers, that have allowed Steam Specialties to have the largest penetration of the global installed base of steam systems. Through the supply of high-value, low-ticket products that are highly critical to our customers' manufacturing processes, in addition to self-generating growth funded from the customers' operating budgets. We also work with our customers to support their capital investment projects, which is actually a smaller part of our sales, as you know that.
We do this by enabling our customers in the expansion of the global installed base of steam systems, as our customers build new greenfield operations or expand, you know, brownfield expansions of existing facilities. Let's look forward. It's these factors that support our confidence in multiple decades of future growth for our Steam Specialties business. We have strategies in place for sustainable and through-cycle growth, greater or equal to 2 x IP. There is the natural expansion of the market, which is driven by IP, and we've already demonstrated how we're capable of outperforming IP. There is our ability to self-generate sales and generate growth through our direct sales force, which is what actually drives outperformance of IP through the cycles. We're also investing to digitally enhance that business model and our capability to accelerate the outperformance of IP.
Finally, there's another strong driver of additional growth called decarbonization, to which we are responding with new products and solutions for the decarbonization of critical industrial processes. Nimesh talked earlier about the importance of geographic expansion for the group. I don't mention it on this slide, I do want to highlight that within the Steam Specialties business, the Spirax-Sarco global footprint is accelerating the geographic growth of its sister company, Gestra, that we acquired in 2017. I'm sure that by now you're familiar with this graph, with this diagram, that we use to explain what makes Spirax-Sarco Engineering one group. I presented it at the AGM in May, the slides are available on our website if you wish to further expand upon it.
What this diagram shows is how our shared purpose, values, business model, and strategic framework, which incidentally originated in the Steam Specialties business, enable our group to be greater than the sum of the parts and create sustainable value for all our stakeholders. On this slide, the four boxes on the right highlight some of the areas which demonstrate how Steam Specialties is central to our one group approach. Let me take you through those four boxes. First, by Steam Specialties sharing its established strategic and operating model. As I mentioned, our approach to direct sales, including the development of the academies and the sales excellence training, came originally from Steam Specialties. It was also the first business to develop clear customer value propositions, I shall expand a bit on that later, which are now widely adopted across the other two businesses of the group.
Our approach to self-generated growth through direct sales, sectorization, and go-to-market strategies were well-developed and honed within the Steam Specialties business. Second, Steam Specialties has been an enabler of growth for the rest of the Group. By leading the way in applying digital to enhance our business model, and through its established geographic footprint, we've been helping accelerate the global expansion of Watson-Marlow and ETS. Also, through the strong leadership role that Steam Specialties has in deploying the Group's sustainability initiatives. Thirdly, Steam Specialties supports the rest of the Group by also sharing talent and experience. Another way in which Steam Specialties has done this and with other parts, is by mobilizing some of the talent from Steam Specialties into ETS and Watson-Marlow.
One of the many, but more recent examples of this, includes the managing director of Thermocoax, who worked in Steam Specialties for two decades before transferring his skills and knowledge first to Chromalox, and now more recently to Thermocoax. Helping to establish some of those strategic and operational initiatives I've just been mentioning in those two divisions of ETS. Last but not least, Steam Specialties also adds value through to the rest of the group through collaborative product development. Of course, our favorite example of that is the way that Steam Specialties has led the way in collaboratively developing products such as the TargetZero solutions, together with ETS, to decarbonize critical industrial processes, including the rising of steam, the raising of steam.
Steam Specialties has also led the way in thinking about the impact that our business has on all six of our stakeholder groups. This is just a snapshot of some of the ways in which Steam Specialties business is living our purpose and our values, but hopefully you'll get the idea of the impact it is having on our Group at large. This now brings me to the end of my section. Before I hand over to Maurizio, who will get into more detail on some of these topics inside of Steam Specialties, I just wanted to once again reinforce the importance of Steam Specialties for all the reasons I've been explaining just now, and because, quite simply, steam is so important to our customers. On that, here's Maurizio to tell you a bit more why. Thank you.
Thank you, Nick. It's a pleasure to be here today, and to give you a bit more insight into the part of our company that I have the privilege to lead. As Nick said, my name is Maurizio Preziosa. I'm the managing director of Steam Specialties business in our group. I joined the group in November 2011 as a general manager of Spirax-Sarco, Italy, then progressed into the role of regional general manager for Southern Europe, before becoming the divisional director of Gestra in May 2017. I took on my current role in Steam Specialties in January 2021. Before joining the group, I held different managerial position in ABB Group in the electrification, instrumentation, and analytical measurement business.
Having introduced myself, I'd like to take a minute before we go any further, to talk about how steam is a critical factor in nearly everything we do today. At the start of a typical day, most people have breakfast. I don't know what you ate this morning, but, the cereal you ate or the bread you toasted, would most likely have been made in a factory using steam as part of the production process. In fact, every can of food, every ready meal, all of it relies on steam. When you travel, whether on public transport or driving yourself, oil and gas production uses steam in the refinery process. The tires are made using a vulcanization process in which steam is crucial. Now we can also say that steam is being used in part of the process for mining lithium and battery production.
Again, when you travel in an electrical vehicle, steam is involved. There are lots of other touch points in between the start of your day and the beer you perhaps enjoy at the end of it. Again, the quality of that beer is directly related to the steam control of the pasteurization process. In nearly every modern industrial process and every sector, uses steam in some way. The quality of the product and the productivity related to the process are directly impacted by the control and management of steam, which makes it a mission-critical element in today's industrial output. We'll get into more detail later, but before we do, I'd like to start by introducing my team.
I don't lead the business on my own, of course, our leadership is comprised of regional and functional leaders from eight different countries and with diverse background, who work globally across the business. On the left of the slide, you can see our functional leaders, including Andrew, our Finance Director. You will hear from him a bit later. Charles Song, very recently took up the position of Global Business Development Director for Steam Specialties. He's a long-service colleague, who joined the company after completing his PhD. He rose to become president of our successful Chinese business before moving to the U.K. to take up the new global role. On the right side of the slide, you see the leaders of our five divisions, starting with Jennifer and Sean, who were introduced earlier.
Jennifer Onofray is Divisional Director for the Americas region, and leads on the customer sustainability initiative in our strategy. Sean Clay, Divisional Director for EMEA, whilst also leading on digital for our customers. Now you know a little more about who we are, I want to cover what we do. I'm going to play a short video, which explains how we use steam in those industrial processes I mentioned earlier.
Steam has played a critical role as a medium for transferring heat to industrial processes for centuries. It is as relevant today as it has always been. Today, and in the future, steam's unique thermodynamic properties will remain vital for diverse industries around the world. It starts with water, heated until it begins to create steam. This can hold five or six times as much potential energy as an equivalent mass of water. Under pressure, steam's temperature can be easily controlled and flow to where it is needed, without the need for expensive pumps. Steam gives up its heat at a constant temperature, a benefit that is unrivaled by alternative forms of heat transfer. Because its heat transfer properties are so efficient, the active area is relatively small, meaning less infrastructure is needed.
Steam recovery systems are also highly effective, returning valuable condensate to the boiler house and adding to the overall efficiency of the steam and condensate loop. Beyond the physics of steam, there are many more features that have led to its lasting relevance across multiple industries. It's intrinsically safe. It cannot cause sparks or fire. Modern steam plants are easy to manage, and with proper maintenance, can last 30 or 40 years. It's a secure, long-term investment. Starting with water and ending with water, it's environmentally benign. That's why our food, chemical, medical, pharmaceutical, power, heating, and oil and gas industries could not exist or perform as well without steam. In the food and beverage industry, steam can be found working virtually everywhere, from peeling potatoes by the ton to cooking potato chips, making instant coffee, milk, or cocoa powder, or exploding corn to make cornflakes.
It plays a critical role in making sure everything from baby food to bottled drinks is delivered to our supermarket shelves, fit for consumption, and with a long shelf life. Steam, in its clean or pure state, is recommended by the World Health Organization as the best means of sterilizing medical equipment using autoclaves. There is a very long list of industrial processes where steam has no viable alternatives. Steam is indispensable to so many industries. Each application in each industry needs specialist expert help to get the most from it. Spirax-Sarco and Gestra have built an unrivaled expertise in steam systems over the last century. Worldwide, our customers rely on us to optimize their steam systems and maximize their operational efficiency.
Increasingly, they have also come to rely on us to offer solutions that generate and transport steam more sustainably, so that they can reduce their greenhouse gas emissions. Steam's essential role in so many processes is assured. The laws of physics are immutable. As we all search for ways to become more efficient and sustainable, the demand for Spirax-Sarco's unrivaled experience and expertise in managing steam systems will continue to support our growth for decades to come.
Hopefully, that gives you a better idea about some of the sectors and application for steam in industrial processes. The benefit being the high energy content, as well as being sterile and environmentally safe. Our solutions control and manage the way steam is used in those processes. Steam has a direct impact on both the quality and output of the process, as well as on productivity. It becomes mission critical when we think about the food or pharmaceutical in medical settings, to just pick on three of the sectors that we work in. You will see in some of our product in the room outside before we came in, and in addition, we put all of this together in engineered packages. This means that Steam Specialties is really a one-stop shop for plant-wide applications of industrial steam systems, which deliver improved process efficiency and product quality.
Our business has always been focused on improving efficiency in our customers' processes and systems. Furthermore, our solutions help to reduce CO2 emissions, energy consumption, and water usage, as well as cutting down on waste and maintenance downtime, while continuously complying with industry standards. Having a look at what we do, I'm going to move on now to cover the market we operate in. Firstly, we define the market based on the installed base on industrial plants that use steam. The installed base generally increases, which drives the size of the market. Where we operate in that market, we provide value, and we supply products, systems, and services.
As you can see from the slide, we have about 17% of the global market share. Across regions, that share varies been with 12% in the Americas, 21% in EMEA, and 17% in Asia Pacific. When it comes to our competitors, we have a fairly unique situation in that there is not a competitor who offers the same range of solutions, operate in as many markets, or has the same scale in direct sales. We have therefore expressed a view of our competition in the table here. This is a market which has typically grown according to the installed base and its expansion, to which we can add self-generated opportunities. It may be further expanded by structural initiatives, such as the electrification of steam generation, for example, in our TargetZero initiative.
To focus on the end customer of steam in those markets, the first thing to note is that we have a broad exposure, and that exposure is largely to defensive markets. Some of our biggest customers include Nestlé, Diageo, Johnson & Johnson, AstraZeneca, Shell, BASF, Mars, or OEMs such as Bosch and Tetra Pak. As I mentioned a few minutes ago, we are opening up new sectors, including lithium batteries and biofuel across the energy sector. Ours is a direct business model, this is shown by our rules to market numbers on the right side of the slide. These are split in favor of direct, at 74%, based on Steam Specialties revenues for 2022, and 26% indirect through distributors.
In the U.S.A. and Gestra, we see a higher percentage of sales through distribution, driven by the traditional structure of those markets. We are working to increase our direct sales in those markets by creating demand downstream, while at the same time making strategic use of our distributors. Having looked at our market and our customers, I want to quickly cover our geographic spread before moving on. Here it is. The strength we have through our diverse customer sectors and markets is enhanced by our geographic spread. Our business model is to be close to the customer, wherever they are. In Steam Specialties, we have a global reach, but we sell and supply locally. Geographical expansion has been a part of our strategy for a long time.
Recently, we have seen examples of this focus continuing in Africa or in Malaysia, where we acquired the gas distributor, with our expansion in China being now longer lasting. Our manufacturing operations are in locations which are driven by demand. We currently have 11 factories. We are accelerating a global manufacturing footprint program to ensure that the majority of what we manufacture is made closest to the customer. Indeed, our competitive advantage is partially due to this closeness, because it drives our ability to respond quickly to the customer needs. In terms of capacity, we currently have enough to meet the growth of the next years, as well as having plans to add more in line with our progress for future growth. In the next slide, I'd like to give you a more detailed view of our business model.
As Nick said, as a group, we share the same business model that helps us focus on customer needs, enabling critical industrial processes. Steam Specialties is where the strategic and operational business model was established, with direct sales, customer value proposition, and self-generated growth being critical components of our original Customer first strategy. As a result, Steam Specialties is an enabler of growth across the group, also has the benefit of our ability to move talented and experienced people between our businesses and the group functions. We achieve that customer closeness through a sectorized sales force. Our sales engineers, wherever possible, are dedicated to our focus sectors, so that we understand our customer businesses and their processes through deeper engagement. This enables us to meet their needs, whether they are known or better, unknown, by combining our specialist team knowledge with industry and processes knowledge.
What are the drivers that made this approach so successful for us? Starting with our new Customer first squared, which is an evolution of the original business strategy for Steam, Customer first, which now informs our business model across the Group. In this new evolution, we continue to put the customer at the center of what we do, and we leverage global mega trends, such as sustainability and digital, as well as creating an inclusive environment for all of our colleagues. It's a five-year strategy, which runs up until 2025, and align with our Group purpose to create sustainable value for all our stakeholders as we engineer a safer, more efficient, and sustainable world. Through our strategy, we have the ambition to deliver growth greater than or equal to 2x IP, by combining a steady MRO demand with self-generated sales.
The key elements of that strategy you can see here, starting top left and moving clockwise around the slide. First, a focus on core industries with critical manufacturing processes, and as I said, a sectorialized sales force working closely with the customers in our focus sectors. Secondly, direct customer engagement through physical and now also digital connections. We have geographic breadth, delivering local sales and supply. A dual brand strategy with the two brands, Spirax-Sarco and Gestra, and wide product range to offer an an end-to-end solution. Best-in-class team applications knowledge through our extensive academy development program, providing knowledge and training to support consultative selling. We sell based on the value delivered by our solutions, that we are able to quantify and to use to support our sales. This being energy efficiency, productivity improvement, or sustainability benefits. Indeed, CO2 is becoming the new currency.
With this driver, we don't sell steam traps or valves anymore. Instead, we sell tons of CO2 reduction that we are able to quantify and use to drive our sales negotiations. Once we install the system, through our digital connection, we are able to monitor the result and prove that we can deliver what we promise, as well as identifying opportunities for further improvements. I'll talk a little more about this later in the examples. Talk about MRO now. That steady MRO demand come from installed base, and this is what delivers our baseline growth. Because MRO spend comes from a customer's OpEx budget, is therefore less cyclical and has the highest correlation to industrial production. We are able to maintain this level of growth because of our business model of direct sales presence and our proximity to our customers.
Our pricing power comes from the low ticket size of our sales, combined with their criticality and our brand strength. Let's talk about self-generated growth now. Our ability to generate growth ourself, which is greater than or equal to 2x IP, is delivered by our sales engineers being close to their customers. Their visit to a customer site may start from a point at which the customer has no identified sale opportunity for us. There are no spares needed, no expansion of the plant, no projects. On the face of it, nothing. By working the plant or by digitally walking the data with plant, and by using the expertise of a sales engineer, we discover opportunities that the customer was not even aware of.
From this point, we can develop a value-based offer and win the order, that often comes with a good margin for us, as well as a good payback for the customer. These solutions, funded from the customer's operating budgets, are very likely to be high value for the customer, but with a low average invoice size and with a short payback, as I said. Once installed, the expertise and the value we deliver creates a high level of customer loyalty, which in turn leads to an invitation for us to work with the customer to identify further opportunities. Of course, with our digital offer, we are now able to connect digitally with the customer's plant so that we can monitor and suggest further improvements in performance and in efficiency.
In this way, we are both a problem solver, based on the customer known needs, and a problem finder, based on their as-yet-unknown needs. Lastly, when we consider the general reduction in the knowledge of steam systems in our customer's operation. That trend is in our favor, as we can leverage our knowledge and expertise to support the customer even better. Customer value propositions. Our engineers sell to our customers using customer value propositions. They help us to deliver the right solution offering to the right person, by creating value in the areas which are important to them. These value propositions are core to our self-generated growth, and help us win new business with building closer relationship with customers. Each describes how we can create value for a specific type of customer base on their particular needs.
The methodology has been developed with supporting tools to understand the customer's pains, so that we can design the solution which provides the gains. Let's have a couple of examples. Here are two example of how we have added value to our customers using these customer value propositions. The first, on the left, is with a multinational food and beverage customer, which has been a key account for Spirax-Sarco in the U.S. for more than 15 years. In this case, they were facing a challenge in the form of a risk of contamination to the product, which was due to corrosion in one of the pump skid, caused by the cleaning agent used in the plant. Our consultative selling approach led to the redesign of the complete condensate pump package, solving the customer problem and eliminating the risk of corrosion.
On top of that, the improved solution and processes also enabled a more effective condensate recovery, and this improved productivity, reduced operational risks, and delivered energy and water savings. We have been able to accurately quantify those savings for this customer. Here they are: 25,000 cu m of water. That's about 10 Olympic swimming pools. 37 billion BTUs of energy, which is the average annual energy usage of 400 people. Over 2,200 tons of CO2 reduction per year, the equivalent of 100,000 trees. The improved solution and the processes go with it, deliver a more effective recovery in condensate, and is now a standard solution for us. This, in turn, has enabled further self-generated opportunities as well. Moving to the next case on the right. The next case study is for our clean steam solution.
Here we saw an opportunity to develop a new market, creating a new application for our solutions. We opened our clean steam manufacturing unit in 2016, primarily focused on the pharmaceutical sector, where this solution is deployed most often. Based on the estimate of the pharmaceutical market size, we believe that the addressable market size for clean steam to be around GBP 163 million, with current sales at around GBP 36 million for us. Our clean steam business has been growing strongly at 11% CAGR over the last five years, with a spike prompted by the COVID-19 pandemic. I hope these two examples were helpful for you to understand better what we do. Our strategy.
Our strategy for growth is aligned with the key trends, and has a long-term growth drivers that will accelerate growth greater than or equal to 2x IP. Externally, we see climate change and resource scarcity, along with the need of greater energy efficiency, as clear and strong drivers for our growth, exacerbated by the current high energy prices. As we have already seen, steam is mission-critical in many industrial processes, and added to that criticality is a decline in our customers' own knowledge of steam systems. Internal drivers and enablers will give us incremental growth, starting with our self-generated opportunities. It is a unique methodology that drives our overperformance of the market. Our expansion into new territories or within existing markets, along with digital, where new data-driven insight can help to deliver increased efficiency in customer plant, are also enablers for our continued growth.
Add in our net zero solutions, and we have a clear and strong proposition for the current and future challenges our customers face. The increasing adoption of net zero targets, driven by demand from all stakeholders in society, will have a profound effect on industrial activity over the coming decades. The focus of our group for over 100 years, has been to help our customers make their industrial processes more efficient and to reduce their energy costs. However, we also have the opportunity to help our customers make their business more sustainable. Steam itself is a clean technology, but it's still mostly raised through burning fossil fuel. The International Energy Agency identified that heat accounted for 50% of global final energy consumption, with half of that consumption being for industrial processes. Heat, in total, also contributed 40% of global CO2 emissions.
We believe that the scale of the decarbonization opportunity is significant, as only 5% of industrial process heating is currently generated by electricity. Our group is uniquely positioned to capitalize on this unparalleled opportunity. Over the next few decades, we expect decarbonization of industrial processes to represent an exciting and incremental driver of revenues growth. Let's talk better on TargetZero, about TargetZero. I mentioned TargetZero before. It is the result of a multi-year collaboration between the Steam Specialties and ETS businesses, seeking to leverage the electrical heating technologies of Chromalox with a direct customer relationship held by Steam Specialties. At our ETS Investor Seminar last year, we explained how ETS provides the technology, and Steam Specialties leads the go-to-market approach. During 2022, we completed the development and the preliminary launch of the TargetZero solutions to decarbonize steam generation.
We are already securing orders for the TargetZero solutions from various external customers, as you would expect, we expect to fully decarbonize by the beginning of next year. The first of these solutions is SteamVolt, a zero-emission, low and medium voltage, first fit boiler solution that eliminates the need for a gas-fired steam generation through the electrification of steam. This is the first time that Chromalox patented DirectConnect medium voltage heating technology is being used for efficient steam generation at industrial scale. When the customer is powering the SteamVolt system with renewable electricity, they will generate zero scope 1 and 2 emissions, making this solution truly carbon-free. Moving on to ElectroFit.
In simplified terms, we have developed a solution that converts specific types of fuel-fired boilers into electric steam generators. This is easy to install and to operate, means the customer retains the existing boiler vessel and the steam infrastructure, which give obvious advantages in significantly reducing the timeline for electrification. Again, when combined with renewable power sources, a boiler using the ElectroFit solution will be free of scope 1 and scope 2 emissions. The third of our TargetZero solution is a Steam Battery. This is a zero carbon steam generation solution, which stores energy until the industrial process needs it. Steam Battery means that the mismatch between when renewable power is generated and when it's needed can be mitigated.
Compared to electrical battery storage, it offers approximately 60% more energy density, is 10%-20% more energy efficient, and has a lifetime 2.5-3 times greater than electrical battery storage. Let's see now two case studies where decarbonization is expanding our addressable market. The first one on the left is Diageo, a multinational no drinks company who have an ambition to achieve net zero emission across their direct operations in scope 1 and 2, and only to use renewable source of energy, all by 2030. Their business involves over 200 brands, with sales in 180 countries. Our global reach means that Spirax-Sarco has often helped with their steam systems wherever they happen to be.
One of their subsidiaries is a manufacturer of gin, the challenge was for us to eliminate scope 1 emissions from their gas-fired boiler system, with the aim of removing scope 2 emissions from the operations when renewable energy sources come on stream. We had to do that in a way that meant there was no downtime in the operation, and that any distraction from the new installation had to be kept to a minimum. Our local operating company and our central green tech team joined forces to meet this challenge. Firstly, we carrying out a thermal energy audit, which laid the foundations for our solution by identifying every option for improvements that would deliver safe, efficient, and sustainable practices. Next, the team focused on how to convert the existing gas fire system to take advantage of the geography's expanding renewable electricity generation.
Seeing the opportunity to employ the revolutionary new TargetZero technology, we suggested the ideal solution would be ElectroFit. As the existing boiler infrastructure could be retained, this minimized the downtime and made use of an existing asset, immediately replacing the carbon-heavy gas-fired burners and removing scope 1 emissions. As a final note, the customer has moved to entirely renewable source of energy in this plant, which means, in addition, the full removal of scope 2 emissions. The second example, on your right, is in lithium battery production, which is a decarbonization-driven sector, enabling us to provide both traditional and, again, TargetZero solutions. Demand for these batteries is driven by the increase in electrical vehicles, and the current industrial base cannot meet that demand.
There are currently between 60 and 80 new industrial projects in progress to meet this demand, each of which will enable 20,000 tons of lithium production every year. Our opportunity is twofold: firstly, in supporting the lithium mining activities, and secondly, in the production of the lithium batteries themselves. I hope these two examples were quite clear to you. I'm now going to move on and look at how digital present further opportunities in our business. Today, our direct sales model is based on our sales engineers' ability to work the plant and identify, through our expert knowledge and understanding of steam, opportunities for efficiency, sustainability gains in the customer operations. The use of digital technology to build on our already deep customer knowledge is already paying off. This will continue to build as we deploy more of that technology into our customer site.
Our ambition is to enable and empower our sales engineer to virtually work the plant all year round. Support our customers with data-driven, actionable insights. We call this approach walk the data. We believe it significantly increases our opportunity to maintain and grow the customer relationship with tailored solutions that support our customers' increasing needs for a more sustainable operation. It also maximize our share of the customer's available maintenance spending, increase the solid foundation of predictable and recurring revenues, incrementally increasing the need of our core products and services. We are currently approaching a number of our customers to connect parts of their processes so that we can prove the concept. We are training our sales engineers to work with this new technology. Our belief is that it represents an opportunity with potential for incremental growth over the longer term.
To close my presentation, I'm going to show you a short video to demonstrate how our acquisition of Cotopaxi last year is contributing to our digital capabilities I just explained.
Acquiring Cotopaxi in 2022 strengthened our ability to help customers reach their sustainability and efficiency goals. Key to achieving these targets is knowing precisely what's happening, where things can be improved, maintaining those improvements, and accurately predicting future results. This is where Strata, Cotopaxi's market-leading, cloud-based IoT platform, delivers exceptional results, enhancing our ability to analyze steam and condensate systems. Strata enables significant savings across customers' management and use of steam, water, air, gas, and energy. Using Strata's advanced capabilities, we developed a digital platform, Expert Boiler, which connects meters and sensors across the steam loop to provide insights that will optimize steam production, performance, distribution, and end use. This integrates with our continuous steam trap management service, providing our customers with complete confidence that their system is protected and optimized.
The synergy between our Steam Specialties expertise and Cotopaxi's digital capabilities is helping our customers accelerate their journey towards a sustainable future today.
Okay, we now take a short break of 20 minutes, after which, Andrew Garfield, our Finance Director, Steam Specialties, will talk about how we are investing to drive our sustainable and profitable growth. Thank you for your attention so far.
Welcome back, everybody. I hope you're feeling suitably refreshed, ready for the second part of our Steam Specialties seminar. I'm Andrew Guthrie, and I'm the Finance Director of Steam Specialties. I joined the group in 2021 as the Head of Investor Relations, and it's great to be back in a new capacity, presenting to you all on how we're investing in Steam Specialties to drive sustainable growth. Our ability to deliver sustainable investment to support our long-term strategy is fundamentally underpinned by our strong track record of profitable growth. Since the introduction of our original Customer first strategy in 2014, we've increased our number of operating companies by 20%, or nearly 50%, as we built our global footprint to support our direct selling model.
This has included the acquisition of Gestra, but also our regional growth strategies, expanding our presence in regions with long-term growth potential, such as Southeast Asia and the Middle East and Africa. Including sales from the acquisition of Gestra acquisition in 2017, our expanded business has delivered 6% compound annual sales growth since 2014, despite the macroeconomic and operational challenges experienced since the COVID-19 pandemic. This translates into a performance of 2.1 x IP on an organic, constant currency basis over the period since we implemented Customer first. I will talk in a moment about how this outperformance supports our long-term investment in innovation and growth. This sustained delivery of sales growth demonstrates both the resilience of our direct selling business model and the attractive underlying growth drivers of our business.
Turning to profitability, also since 2014, Steam Specialties trading margin has increased by 160 basis points. As Maurizio highlighted earlier, our focus on customer value propositions and the economics of our customers enables us to realize full value from the products we sell, which is reflected in our margin. We've also built pricing tools and capabilities which enable us to ensure we're offsetting the impacts of inflationary pressures on our business. Furthermore, in 2021, we established a dedicated global supply chain division and are already seeing the benefits that a focused supply chain organization can bring across our manufacturing operations. Over the same period, we continued to invest capital into our business, but at a lower rate than the growth in sales.
Since the expansion of our facilities in China, the investment in a new manufacturing facility in India, and the acquisition of Gestra, our capital employed has remained broadly flat. As a result, our return on capital employed for Steam Specialties has increased substantially to 57.7% in 2022, reflecting both the high profitability and low capital intensity of our business. How do we translate the performance of the past into the growth of the future? As an organic growth-focused business, we're continuously looking for opportunities to reinvest in our business to build future growth platforms. Our approach, shown on the left of this slide, starts with IP, which drives underlying market demand. Our business model, through direct selling and self-generated sales, delivers outperformance of IP. Outperformance of IP creates operating leverage, which generates the funding to reinvest into the business.
This supports our innovation investments, which act as accelerators of future growth. As you can see on the right of this slide, our innovation investments are fully aligned to the priorities of digital and sustainability, which are at the heart of Customer first squared strategy. This includes our investment in Cotopaxi as an enabler of future digital connections with our customers, in addition to the creation of regional digital hubs, which will enable us to support our customers through the use of data, complementing our existing direct selling business model. Alongside our customer-facing digital investment, we're also investing in the underlying systems required to support a more digital organization, including the global OPAL program, to harmonize our ERPs across Steam, integrated with tools to support customer relationship management and field service management.
We've invested in sustainability, in particular through the creation of a customer sustainability roadmap, which enables customers to optimize and manage their steam systems through the lens of sustainability, ultimately positions them to take advantage of our TargetZero product offerings. In parallel, we've been working to decarbonize our U.K. supply facility in Cheltenham, deploying our TargetZero solutions in our own operations. Alongside these new areas of investment identified Customer first squared, we've continued to invest in new product innovation and business development, building on our core strength of direct selling, equipping our sales engineers to be increasingly effective in a more consultative, solution-oriented selling environment. We're also building a central supply chain excellence capability to bring expertise in areas such as quality, procurement, supply chain planning, which can be leveraged across our global supply chain network.
We expect this new division to deliver a more responsive, customer-centric, and effective supply organization. We remain in the early stages of realizing the full benefits of this new organization. We are excited by the opportunities it presents to deliver further improvements in customer service and, in parallel, to support our own growth and profitability. Turning to margin, our business has seen its overall profitability improve over time, while achieving attractive levels of growth and continuing to invest in the business. On an annual basis, we have seen yearly fluctuations in margin as a result of both the level of new revenue investments in any year, in addition to the phasing of those investments in the prior year.
By way of example, in 2021, as it became clear that the global economy was recovering rapidly and IP was strengthening, we chose to implement additional revenue investments during the year. Most of the new colleagues recruited as part of those programs arrived in the second half of the year, and the full P&L impact was only felt in 2022. At the time, we indicated that had these colleagues been in the business for the full year, the impact on our trading margin would have been around 200 basis points, so much closer to the three-year trailing average on this chart. In 2022, we saw the full year impact of 2021 investments and further investments in the business, at least in the first half.
Since then, given the significant weakening of IP during the second half of 2022, we have moderated our revenue investments while we monitor the global outlook. Despite these annual fluctuations, you can see that over time, our average margin has shown gradual improvement and has reached the 23% level on a rolling three-year basis. Set against the reinvestment of margin into our business, our historical investments in Steam Specialties from a CapEx perspective have been more modest. Our last investments in new facilities were the phase two expansion of our China site in 2016, in addition to the construction of our manufacturing facility in India at the same time. These investments are reflected in the higher CapEx to sales ratio seen in 2016.
More recently, capital investment in Steam Specialties has been focused on our Future Factory initiative, upgrading machinery in our supply chain operations to increase output and improve efficiency, in addition to the OPAL program and the investment to decarbonize our U.K. manufacturing facility in Cheltenham. Since 2018, Steam Specialties CapEx has been running at approximately 4% of sales. Going forward, we expect to remain a low capital intensity business, but do have a pipeline of priorities for future CapEx. These include modest investments to support the delivery of our One Planet strategy, the ongoing investment in OPAL, expansion of our manufacturing facilities in Asia Pacific to meet regional demand growth, including India, where we have scope for brownfield expansion at our current site, and ongoing upgrades to our sales facilities around the world.
We have also recently secured a plot of land in Germany that would enable the renewal of the existing Gestra facilities at a site in Bremen. Looking ahead, we are excited by the potential for long-term sustainable value creation in our business. Through Customer first squared strategy, we're participating in global mega trends in offering sustainability solutions to our customers and increasing our digital connections. Supported by ongoing investment in the core of our business model, we expect to achieve sales growth at or above 2x IP over time. We will continue to reinvest operating leverage into our business to support future growth, but we will phase that investment over time, responding to both the external market conditions and our capacity to absorb that ongoing investment.
As a result, our margin will fluctuate year-on-year, we expect on average, to deliver a modest incremental margin improvement over time. We expect to remain a low capital intensity business, prioritizing CapEx over time to build the infrastructure that will support the delivery of our strategy. Through delivery of growth and the careful phasing investment, we expect to remain a business which offers very attractive returns on capital over time. I'll pass back to Nimesh to open the Q&A.
Thank you, Andrew. Now, before we move to Q&A, I thought I'd take just a few moments to wrap up. Firstly, thank you for your patience. There's a lot of material here for you to listen to and take in, so we really appreciate your attention. How would I sum it all up? Well, hopefully, between us, we've given you a good sense of our group business model and our strategy, how that is embedded in Steam Specialties, allowing us to continue to deliver compounding growth over the decades to come. For steam specifically, I hope you will leave with a greater understanding of how steam is a critical medium for transferring heat into industrial processes, and that demand continues to grow in applications which are mission-critical. How we have built a leadership position in the market with a significant competitive moat and plenty of opportunity ahead.
How steam is integral to our one group strategy, with ETS and Watson-Marlow already benefiting from the more mature execution of the group's business model. How our business model has delivered growth above IP for 20 years, and why we anticipate it will continue to outperform as we invest the benefits of operating leverage back into the business. How we are improving key components of our already powerful model through the use of digital tools. Why the market will continue to grow in line with IP and growing efficiency, regulatory and sustainability requirements, and how there is a multi-decade growth opportunity from decarbonization by leveraging our deep customer relationships and proprietary technology. All of this will enable Steam Specialties to deliver growth equal to or more than 2x IP over the long term.
Thank you very much again for having joined us today. Really appreciate, your time. Hope you got a lot out of the session, and look forward to seeing you all soon. Thank you very much.
Thank you.