Okay. I hope everyone can see and hear me okay. I'm going to begin. Good morning and welcome to our FY 'twenty one results webinar. As you can probably see, we're having a slight technical issue.
This is the first time we've done that, but hopefully, you can all see and hear me okay, and you can see the first slide of the PowerPoint presentation that I'll be going through soon. I'd like to begin by saying I'm extremely proud of the leaders throughout the ScullarUP group and humbled by the extraordinary performance of the team, all the ScullarUP people in satisfying our customers through quite a tough year, and it's been a great result for all our staff and our shareholders. The overall growth in earnings is broad based, and that's very satisfying, of course. It's an outcome of our focus on working closely with key customers. As an organization, I believe we are learning and getting better at applying our knowledge of material science and combining that with our understanding of tooling and process.
And in that way, we're solving customer problems. At the same time, standards, in particular, potable water and food safety standards, are going up. And that combination is really a special source for our IP. I'm going to speak through the slides 1 by 1. It's very much the same format as previous years.
And I'll make some additional commentary and then welcome questions at the end. I'll get Graham at the end to explain how you can wave your hand and ask questions. So if we could begin on Page 2, scatter up key points. First of all, we had a record NPAT of 40,200,000 dollars It's 38% increase on the prior comparative period, and it's a result, as I said earlier, of the committed, talented and focused global team. I'll break down the 2 divisions later on, but it's a record industrial division EBIT at 32 point $7,000,000 As I said, it's broad based.
We have a bridge to show some of the where that growth has come from, but it includes the sale of a number of new products at higher margins. In particular, there's been strong growth in roofing and construction products, potable and waste water and marine has been particularly strong. And that's combined with our focus on operational improvements and tight control of indirect costs. It's a record agri divisional EBIT of $30,500,000 good growth in sales of dairy rubberwear to international customers very strong growth in footwear sales, particularly in the New Zealand hardware channel and good operational gains at Wigram and other facilities. So the improvements are not just at Wigram, but Wigram has been a big part of it.
Very pleasing to have record operating cash flow of 58,800,000 It's up $10,800,000 or 22 percent on the prior corresponding prior comparative period, sorry, and also a new record. Sorry, that was a record as well. We've had strong earnings, obviously, and solid working capital management, and that's the translation into strong cash flows. And that's funded CapEx, higher dividend payout and reduction in debt. The directors are pleased to approve the final dividend payout of $0.125 per share, which brings the full year payout to $0.17 per share, up 31% on the prior comparative period.
We have a very robust balance sheet. Net debt is now down to $8,700,000 which is 3% of total assets. We move on to Slide 3, which is the 5 year financial highlights. I'm just going to pick on some of the highlights from that. First of all, revenue is up $28,100,000 11% on PCP.
It's pleasing to see double digit growth there. We're very focused on future growth, and I'll come back to that later on. EBIT is up $13,900,000 33 percent on PCP. NPAT, as I said earlier, is up 38%, and that's up $11,100,000 The dividend of $0.17 per share is up $0.04 on the prior corresponding period. And the operating cash flow is up $10,800,000 22% on the PCP.
And that funded CapEx $7,100,000 dividends of $27,300,000 lease liability payments of $4,500,000 and net debt reduction of $19,800,000 Slide 4. This is the bridge, FY 'twenty to FY 'twenty one NPAT. The first three parts of the bridge are really related to agri. So I talked about dairy growth from increased sales and operational improvements. Footwear sales are up, particularly the New Zealand rural market and hardware channels, and we have the benefit of the full year's earnings contribution from Silclear, which was acquired in November 2019.
And the next few going from left to right, the next few green boxes are related to the market share gains from the sale of existing and new products. So this is the industrial side, of course. Existing and new products for potable and waste water, we've made good gains there. Roofing and plumbing and sport and leisure, in particular, and some appliance applications. We have a provision of $1,500,000 for costs of defending a claim against the business divested in 2,008.
We had assistance, dollars 1,200,000 in COVID related government assistance from mainly the U. S. But also Australia, not from New Zealand. The New Zealand dollar strengthened against all major crosses where net exporters, so of course, that didn't help. But Graham has run a very good hedging program, so that's partly offset that impact.
And obviously, the reduction in debt has driven lower interest costs even though interest costs are relatively small. Moving on, let's go into the Industrial division. So one of the key measures I look at is EBIT as a percentage of sales. Obviously, that's an outcome number, but it is one of the key things I think about in helping us to analyze down into the business. It helps us to focus on the products that are profitable and the products that aren't profitable, and then we can make good decisions about that.
So the revenue is up 12% and the EBITDA is up 57% against PCP. This was particularly pleasing. Of course, round figures, the Industrial division is roughly twice the size of Agri. So you could argue we have twice the opportunity in that sense. Having said that, there's been a lot of work done in this area, particularly potable water and waste water over the last few years.
I encourage you to look at the CEO report in the annual report, we're this time, for the first time in the CEO report, we have little pullouts or we highlight articles. And there's a good article explaining a reformulation on the Australian market in particular that has given us a great opportunity future growth and infrastructure work there. So that's one example of how we do those things. And we have other good opportunities in the U. S.
Market, for example. Love to have opportunities in the New Zealand market as well. We've had very good growth from high performance foam applications, in particular, ultra long, new deep sales are up significantly in all markets. I'm really pleased it's been a hard slog that Paul Goddard, who runs this meeting, some of you have met him at the annual meeting, has developed a truly global product or material. And it is the feedback we get is that's the best in the world.
The only issue we have at the moment is that it's difficult to continue to make enough. We've had significant growth. And so we are gearing up for more growth, but it is seen as the best in the U. S. Market and Europe and, of course, Australia and New Zealand.
So I'm very proud of the effort that Paul and his team have put in here and the way they've managed to
satisfy customers in a pretty tough market. We've had
very good growth in a pretty tough market. We've had very good growth from decks, roof and ceiling products. And in particular, there's a call out to the rapid plastic type that was that's a lead free product. We see a lot of opportunity to move into the lead free roofing area, particularly where there's water harvesting. That's one example.
There are many examples of new products, and we've had a very good execution. I mean, Dex in Australia is based in Melbourne. They've had particular issues with lockdown, and I think Christian and his team have done a fantastic job. We also took the opportunity to exit some low margin business in the U. S.
We were supplying some so called bonded washes to Atlas in the U. S, and we've replaced that volume with growth and more profitable products. Interestingly enough, after exiting the business with Atlas, a new opportunity has come up with a different washer at much better margins. So we constantly review and expect to the comment I made about EBIT as a percentage of sales. We're constantly reviewing customers and products and deciding those that are marginal business, and we work with the customers to help improve things.
Vacuum system sales and margin are up following the COVID impact of FY 'twenty. We see continued growth in systems sales and winning first fitment with OEMs. Of course, this is mainly in the U. S, but we've also won some business in Europe recently. The oil and gas market is still relatively low.
Remember, part of the vacuum system sales is also into the main camps for other things, not just oil and gas. But at the same time, we are launching 2 key products. I've mentioned previously about the blower system. This is new for us, and we see that as having a big future. It's also far more environmentally friendly in the sense that traditional vacuum pumps expel some oil as part of the process, whereas blowers are oil free in that sense.
And we've also launched another high end pump targeting particularly the Texas area and water freshwater movement. So very pleasing result for the Industrial division, and that's an area where we see not just vacuum systems right across the board, we see good growth going forward. We'll move on to the Agri division. Excuse me for a minute, please. Sorry about that.
Okay. The Agri division, very pleasing. Our target EBIT for FY 'twenty one was 30%. EBIT as a percentage of sales, we're a nudge off that, sadly. But anyway, a great result and good growth in the business.
Strong growth in Europe and Asia, particularly. Obviously, we've had an increase in silicone product sales, not only from Silclear, which is tubing, but also we've seen growth in silicone liner sales. The New Zealand and Australian markets are up and the North American market is solid. We still do see opportunities through the Delaval acquisition of Milk Right and the changes in the market. We're working hard on all those.
It's always slower than you'd hope, but overall, very good result. Again, with little international travel on my sheet, you'll have spent quite a bit of time on the operational process and efficiency gains, and Widgren, but also in China, have done a very good job of reviewing business process, the operating levels. I used the XPression mechanization. Some of you recognize that. I'm not a big fan of just buying robots or cobots and throwing them in.
You actually need to mechanize this and standardize the process. We're making some good progress there, but there's a lot more to do. And business systems, that's the ERP systems. Again, I'll come back to that later. The really pleasing thing is for relatively low CapEx investments, we can increase production volumes quite a lot and reduce lead times.
And reduced lead times within the manufacturing process obviously assists with the disruption that we're facing in shipping and logistics. There's been very strong demand in Fort Weave sales so much that I got a phone call this morning. I wanted to buy some Red Bean gummies and couldn't buy them. So it's come all the way through to me, which is a good sign. At least the demand for Red Bands and other high end rubber boots in the New Zealand market is near.
Obviously, we've struggled to get the product into the country, but regularly containers are arriving. As as they arrive, they get booked in and go out. It is hand to mouth at the moment, but it's pleasing to see the loyalty and response from customers. We've had very good growth in the rural market and the hardware markets, and that is our priority market. We still have specialist boots, forestry boots, dielectric boots, and they're going into niche markets overseas, but our fundamental focus has been on the New Zealand market.
And that's been helped because we do have competitors in the New Zealand market, but certainly early on, they failed to supply in many cases. So we had unexpected growth, and it stayed high. So I think some people made a switch and have stayed that way. But it's for us to solve. Again, even in footwear, we've had a strong focus on range standardization and rationalization, and I've seen good impacts there.
That's not finished. We've got a lot more work to do in that area. And something we're all particularly proud of, Jane Boyd and the other team in Christchurch have done a fantastic job of the Pink Band promotion in support of New Zealand Breast Cancer. And also, I am Hope the company sponsored or provided a donation to IAM Hope. And overall, through pretty tough times, I think the engagement with our local community has been very good.
On to Slide 7. Right, yes. Okay. This is relatively new and there's more information in the annual report. So again, I would encourage you to look at the relevant pages on the annual report.
But just one thing from my point of view, it's pleasing to show a proven track record of earnings and cash flow growth. And you can see it in the earnings per share there as well. So I think it's starting to show what we can do. Focusing on 0.2. We have a track record now for rapid R and D.
I've given examples in the past, but we've introduced over 700 products. It's slightly greater than 10% of our revenue at the moment, but I see that accelerating as we go forward. And of course, in general, when we introduce new products, the margin is always better than the average margin. So that's always positive from a return point of view. Again, I mentioned earlier, but that's a case of applying our material science and understanding customer issues and standards and solving their problems.
So we're very much on the capability side of that. Our focus on our products in our key markets, I think the summary of that is simply saying our business strategy has been working. There's been a lot of work on OEM customers and talking about the relationships and things like that, but we have effectively implemented the business plan over the last 5 years, and it's pleasing finally to see some really good results. I think last year's result was credible given all the disruption that we had from COVID, but it's starting to show what we can do. And the most important thing, I believe, is that we are learning faster.
We have a highly experienced technical team, and that's around the world. We have strong interactions with our key customers, and that's an area of growth for us. So we operate strongly in 6 countries. Obviously, we operate in more countries than that but across 6 countries, and we have a team of 8 13 people, quite a large international group. So again, remember that 80% of our revenue approximately and 70% of what we make are done overseas.
So it's something that I think about a lot. We are a global business with global interactions in that sense. 0.5, I think the key thing here is not all of our customers are OEM, but a lot of the customers are. And they're great customers to have. In general, OEM customers tend to be big.
They have the ability to pay. They often our products are critical components or critical parts of their system. In some cases, we have a whole product, like I mentioned Paul Goddard's foam product, for example. But in many cases, some of the detailed parts like the inserts for the taps for Moen, it's the critical part of the tap. Of course, Moen would say it's the feel of the faucet, they would call it.
But anyway, the reality is we have to meet demanding and lifting standards for those critical components, and that offers a great future because we can change things. We can develop new products. And finally, we have strong relationships across global markets. I've given you the numbers, and we see that growing strongly. So one advantage, of course, is that if one particular market grows strongly, for example, if the U.
S. Market were to grow strongly, we can take advantage of that. We have people on the ground there, and we have a number of OEM customers. So overall,
it's a very pleasing result
given some of the So overall, it's a very pleasing result given some of the disruption, not just in New Zealand, but throughout
the world that we've had.
And I think as well as learning faster, we learn faster because we've got a stronger team. So a fantastic result for all people, including our shareholders, of course. Thank you, So a fantastic result for all people, including our shareholders, of course. And then talking about our people, we'll move on to Slide 8. Thanks, Graham.
Just overall, we have 8.15 people, as you know, very pleasing results on health and safety. In a funny way, COVID helped us to focus in on some of the things that we might have taken for granted, but I've been delighted with the learning that has been applied, started in China, and some of you have heard this, then it went to Italy. And ultimately, we've taken the learnings from each of those places and rolled them through the other businesses. And that happened again in New Zealand. Just, of course, the other day, we went to level 4.
It was really pleasing to see the level of preparedness. We were already operating at Level 3 in some instances, and everyone was fully inducted again, and we're back into the Level 4 process seamlessly. So through those processes of entry and induction, we've also reviewed critical processes and particularly our manufacturing sites, but also our distribution sites because the biggest risk in New Zealand from a health and safety point of view is being hit or it's about fork trucks and lift trucks and things like that and hitting people. So we've spent a lot of time really focusing on our layout and things like that. So very pleasing to see our total injury rate come down.
We're very focused on education, not just cyber security, but one important thing that we keep getting reminded of is the importance of cyber security training for all. And we have particular engagement, regular updates, which, of course, I have to do, Graham has to do. And that's been quite enlightening because the first stage of weakness is someone, of course, clicking on a link on an e mail. There's the gender diversity across the group, 48% female, 52% male. I guess that's obvious in some ways.
And just a little bit about the year's service for staff. So we have had in the past a lot of long serving employees. We still do in some places, but we have loyal staff. And I think the way I see this is we're building a stronger team. We are winning the hearts and minds of our team.
The feedback I'm getting is fantastic. They feel part of something bigger, and it gives meaning in life when sometimes the external things get a bit more difficult. It's always difficult to talk about operational efficiency because if you go too far, customers see that as an opportunity to hit price negotiations. But just to help you understand some of the metrics in general that we use, just focusing on Wigram for a second, we've had production volumes up 10%, but our staffing has increased only 2%. I know it's not like for like, but that's a good measure to help you understand.
Footwear volume is up 14% in Jiangsu and Vacuum Systems volume is up 38% with no increase in staffing. So that is true productivity, the way I look at it. We've done 3 ERP upgrades. Again, there's a call out in my CEO report, in particular, around 2. 1 was the upgrade of the ERP system in Wigram at Wigram called Project Vanilla.
The naming was very clear that it was to be a standardized implementation, very little, if any, and I mean none, no specialization of the software and things like that. We have seen huge gains there. And then another example is and again, it's in your report, and I encourage you to read the detail. It may sound relatively small. It's significant for us.
The elimination of cardboard packaging for vacuum systems, we've seen roughly 5,000 systems from China to the U. S. Of course, there's more than that, and we have eliminated completely cardboard packaging, which has been a huge saving, but also very good for the environment, of course. And then focusing on the environment and the community, I mentioned some local things that we've done, but I know that other teams are involved in their band fantastic success. I believe that the David Moore had officially got sold.
We were sold out. It sounds very similar to our Red Band situation at the moment, which is a bit unfortunate. But also, it's a way of bringing our broader community together, which is not just our staff but their family, their friends and getting good commitment from them to what we are trying to do. Specifically, greenhouse gases emissions. So compared to FY 'twenty, our greenhouse gas emissions have gone up.
And but as you can see, our volumes have gone up a lot more on the left hand side. So we're very focused on what we can do there. And also, our greenhouse gas emissions, sorry, as a percentage of revenue is 8%. So we're measuring that now. Pardon?
8% down, sorry, yes, of course, a reduction. And water reductions, now you may remember several years ago, we pointed out that Wigram near enough recycles all the water that they use. We've been very focused in China because there's a big focus in China on water usage and everything. And so the water reduction at our Jiangsu facility is 55% down, and that's been well accepted by the local council. So of course, more as we go forward, I'll be talking more and more about the team and what they do and also our impact on the environment.
So I'm at a sequence now. Yes, what we do. Thanks, Graham. So people in many parts of the world, they touch or see or use our products, but they probably don't know it. So on a daily basis, this diagram is to help people understand many of the things we do.
And again, it's more fully explained in the annual report. We're very proud of the annual report this year. Graham and the team have done a fantastic job with a whole lot of other things that have been focused on to produce an explanation of kind of how our products are used. So for example, the blue pipes at the bottom are freshwater and the red pipes are wastewater, those kind of things. So but it's just interesting.
I've always found sculler up a fascinating business. And I have to say, I've been CEO 10 years, I think, now just over 10 years. And I'm stunned that almost every week, I find something new that's interesting about what we do. There's a lot of detail there. I'll leave you to read through that.
And then, of course, we have the reconciliation of EBIT to Group NPAT, and it shows the 5 year trend. So look, overall, from my point of view, it's a very pleasing result. I'm pleased for our shareholders, and I think the dividend increase is very good and, of course, sustainable. And I guess I'd finally like to say just a couple of comments. One is we have a very small effective Board.
We had a Board meeting yesterday, of course, to approve the results. I think we have very good skills and experience that certainly helped Graeme and me as we manage the business. Again, the leaders have stepped up within the business, and I'm very grateful.
Thank you. Okay. We'll take some questions. Our plan had been to simply unmute you and allow you to ask a question, but we've had a few technical problems this morning. So I think the most effective way to do it would be for you to submit a question over the chat.
We'll be able to read that and then we'll give you a response. So apologies for that not playing out the way we had planned. But if you've got questions, just drop it into the chat and we'll respond. The first question we've got here from Christian Bell of Jarden. The comment, Christian, you've asked is 15 of the top 20 customers were the same in FY 'seventeen.
What was the earning contribution of these customers? I'm not sure whether you mean as in terms of what was the earnings contribution in FY 'twenty one versus FY 'seventeen, it's increased. So I'm not sure if that answers your question. In the annual report, we do disclose kind of the indication of the proportion of our customers and what revenue they comprise in the segment. Next question we've got here is from Guy Hooper.
Rising input costs and measures taken to offset that, have you increased prices to customers or has it largely been offset by operational improvements? I'll provide a
bit more of a detailed answer to that. I guess I break down input costs into 3 areas. 1 is material, obviously. And in many cases, we are able to pass on material price increases to customers. But we have the fortunate position where we may not have full control of the ability to pass on those raw material prices, but we can often develop and certify new materials, particularly in areas where, for example, I mentioned the pot of water standards.
And so we have an ability to create new materials that other often competitors can't. So that's the material side. But in general, yes, we are able to pass on raw material price increases through the it does depend on the customer, of course. Labor increases, so another input, I always think of labor increases. The only way you can afford to pay people more is through productivity gains.
We're actually in a good position where I believe we're actually improving productivity faster than that. So that gives us a bit of a buffer. It's always a race because normally, I've said this before, the first price you get with OEM customers is the base. It's not always possible to put prices up, and there's usually a delay in putting prices up. But anyway, I expect productivity gains to make up for the labor side.
So in other words, the material and labor added together, we have shown, I believe, over several years, our ability to maintain margins, if not improve them. There's a third thing, which you've heard us talk about earlier about investments. So there was the ERP, the large ERP reinstallation, but really like a new installation at Wigram, but also 2 others in the Industrial division, where systems can really reduce the need to increase your overheads. In other words, it enables you to scale particularly quickly by using those systems. Of course, that works a lot in distribution businesses.
But the other advantage in manufacturing businesses, if you have very good systems and you can use that to analyze your data clearly, then you can isolate customers and products that are not as profitable as others and you can make good business decisions about what you're going to do. So overall, collectively, I guess my message is we should be able to at least maintain margins.
Okay. The next question we've got is, are we seeing any constraints in supply of raw materials given there is
a rubber shortage worldwide? As always, the answer to a good question is it depends. Certain rubbers are in very dire shortage and things like that. Again, we've been lucky or you can say it's actually one of strengths of ScutterUp. It's part of our IP in that sense as we have the ability to reformulate and use other particular materials, but it's not just rubber.
We use quite a bit of plastics and specialist plastics and other. We combine materials a lot. So overall, yes, we are seeing constraints. And some of that, I think, is a way of getting prices up from some of the larger chemical companies, but that's just the nature of it. As I said, it's the actual ability to supply is more of a concern than actually the inability to source sufficient raw materials.
Okay. Next question from Guy Hooper. Market share gains made. Could you please elaborate a little? Is this new customer growth?
Or is it existing customers reducing the number of suppliers?
Yes, that's a good question. Some of it is new customer growth, although a lot of the new customers are coming on in the future and quite a bit is still existing customer growth. But the beauty of existing customer growth in general is that it's faster and easier to do. So I'll pick one example. When we started, I've said this before, our target with Moen was to be US3 $1,000,000 revenue, and we see we will be heading towards US5 $500,000 Most of that growth is on things that we had already designed in for the $3,000,000 but there might have been some changes and things like that.
So the really good thing about OEM customers is if they're growing, you get pulled through, but you also get the opportunity for new business. So I mentioned earlier that I framed it as greater than 10% of our revenue comes from new products. I didn't particularly talk about which customers in that. But we have enough growth with existing customers to grow just with them. But of course, we have 1 or 2 really interesting new customers.
And new customers come to us when they have a problem that their existing suppliers can't solve. And those are great opportunities for the capability that we have. Okay. What's the question?
Yes, next question came from Joshua Dahlog with David to break and respond to that one. And the question was around the performance of Agri in the second half of the year and whether it normalized from the overly strong interim result. We did highlight at the time of the interim result last sorry, in February when we released those results that there was a little bit of carryover into the first half of last of the year we just finished from the second half of FY 'twenty. So there was I guess you could call it a little bit of anomaly. The other thing to consider is the growth in our revenue in the agribusiness has mainly been from the international markets, which are not as seasonal as the New Zealand market.
So the pattern of earnings in terms of the first half, second half is going to change a little bit from perhaps what we saw 3, 4, 5 years ago on the agri side of the business. Yes. Our next question from Chris. David, do you want
to take that? I'll do this one. You have to think about the admin costs and explaining the change from marketing to admin. But anyway, how much capacity in terms of revenue growth do you have across your operations before you need to invest further? So I guess I gave an answer about Wigram in general terms.
I actually think, again, it depends on the product range. But at Wigram, we now have a program to increase capacity 50% to relatively low capital. A lot of the capital spent, I'm just going to check the number, I think it was $7,100,000 CapEx, that's right. So $7,100,000 CapEx in FY 'twenty one. About $5,000,000 of that was directly related to equipment, machinery in that sense to cater for increased volume growth.
But remember, a lot of our volume growth, 70% of what we do is overseas. So where we have contract manufacturers, they're responsible for paying for that capacity in that sense. And so in general, we don't have a capacity constraint in that sense. But of course, from our point of view, we want to be very careful about how we invest our capital into revenue growth. And I always take capital as 2 things.
So one is obviously the dollars. The interesting thing is once you buy a machine, you've done it. There's not a lot you can do with it if you've made a bad decision. A very important one is also our product development teams. It's more important to me to make sure we have been focused on the right when I say the right, the most profitable or based on key customers, the right projects.
So there's been a lot of work done on that in the last 3 years, and I'm pleased to see that start to show through in our earnings growth.
Okay. We've got a bunch of questions from Christian Bell. So I'll just run through them. Christian thought that admin costs are up this year quite significantly on the prior year. And that's true.
Marketing costs, expenses are down. And while some of that is genuinely down because of a lower level of travel and trade shows and the like, part of the explanation of the increase in admin is the reduction in marketing and that we've recharacterized where we spend some of the leadership costs, some of our businesses from marketing to admin. So if you look at it in aggregate, our overhead costs are down sorry, are up by a much larger proportion than what the admin costs imply. Secondly, due to the performance of the business this year, incentive payments across the group are higher, which has increased the admin costs year on year. And then I guess thirdly, we had the full year impact of the Silke acquisition, which not whilst not significant, is another factor in that cost going up.
Just going down through the rest of a number of other questions that Christian's raised here. Potable and wastewater sales were higher, but just saying when you look at the graph, it looks like it's actually slightly less than last year. There's a couple of factors there. The Kiwi dollar strengthened against the U. S.
Dollar by about 10% over FY 'twenty one when you compare it to the average of FY 'twenty. So from a New Zealand dollar point of view, that dampened some of the increase. But overall, the actual sales into that application area were up. Next question, construction and roofing strong, lead free product up 70%. How will we attribute growth between new products, market share gain or the strong construction sector?
David, do you want to respond to that one?
Well, our focus has very much been on this construction area for the DEX products. The market share gain is interesting because some of the market share gain we've seen has been the inability of our competitors to supply product. But how would we attribute the growth? I mean, I think of our growth as things that we actively do, not things that comes up sort of later on. These are things we actively drive towards as opposed to serendipitous sales that disappear because someone else can't supply something.
And they can go both ways, obviously. So I hope I'm answering the question, but how would I attribute growth between new products? Well, I said that more than 10% across the group of sales are from new products and that will continue to grow. Is that market share gain or is that growth within a customer? For large OEMs, we want to maximize the growth in an existing OEM as quickly as we can because, of course, that's easier than targeting new customers.
Remember, a lot of our products are very specific to a customer and that's the strength of our business model. Clearly, it helps to hit back wins. I don't have a so it's interesting that in Australia, the view on construction is down. Not convinced that's going to happen, but that's the view. So and it does come down to the particular part of the construction sector that you're looking at.
So we're looking at particularly roofing and roof flashings and plumbing products as well, but roof flashings. Then I'll carry on, Graham, for a couple. How much of your budget over the next 1 to 3 years is already in the pipeline? Pretty much all of it. And the sense that for our industrial business, we've been very clear about the new products we're developing.
We're very clear on the customers we've targeted. And it's an interesting question in the sense that we have had some serendipitous opportunities. And if you're not careful, it becomes a distraction because the numbers sound big. But when you have a customer that comes to you because they can't get supplied, you don't want to lose focus on your existing customers and the growth they have. Otherwise, by definition, they get annoyed with you.
So I mean one way to say it is there are a lot more opportunities than we can. So the constraint is really product development. And so you can expect to see the spend on product development increase over the next few years. And of course, as I said, we're getting faster. So we can deal with more in the pipeline in a shorter period of time.
But certainly, Graeme and I are looking at at least 1 year, if not 2 years, in terms of some of the larger products that we see. And of course, in the meantime, there's a lot of smaller products coming through. In terms of dairy, we did see very good growth in Europe and Asia, and some of that growth is straight out market share growth where people no longer want to buy from Avon Milk right now that it's been bought by DeLaval. There are other reasons. I still think our bigger opportunity is in the U.
S. So in the last financial year, yes, Europe and Asia grew faster. But I think it's just a bigger single market in that sense. And so we have better control over the U. S.
Market. There's another obvious reason our competitors are basically based in Europe, so they have a bit more control there. How much of an impact will freight and raw materials hold you back this year? Freight costs have gone up, but the concern I have is simply supply. So we can live with freight costs up for a period of time.
The critical thing is not to starve our key customers of products. The raw material thing, I think I explained it earlier. I don't think it's holding us back too much, but I mentioned foam for Paul Goddard's part of the business. That is an issue. We've invested in capacity and everything, but at the same time, it takes time.
You can agree to spend more money or get your partner to spend more money on that, but it's not instantaneous. The health care team you've been talking about, will that come this year? It's expected to come in, in the Q4? Q4. Q1 next year or yes, calendar year.
Sorry, that's right. Capital management thoughts. Yes, our debt has gone down a lot. So obviously, we are looking at acquisitions, and we thought carefully about capital returns to shareholders. It's not easy to tax effectively give more money to shareholders.
Clearly, we've increased the dividend. That's part of it, but it would certainly help. And I have quite a bit of pressure from the directors to find suitable aligned acquisitions. And then from Guy Hu, but everyone, reasonable balance sheet headroom. Is there any update around the acquisition strategy?
Well, obviously, you hear about it when we announce. And what sort of environment are you looking for before you resume corporate travel to explore offshore opportunities? Well, I guess I'm fully vaccinated and proud. And so vaccination alone doesn't prevent you, as we're probably finding out in Auckland, it doesn't necessarily prevent you from getting or passing on. So I'm conscious of the impact you can have on other people.
The beauty of scutter up in that sense, identifying the opportunities can be done by the people in the market, but the actual DD involved in it, it's very hard to do an acquisition in my view without actually visiting. And we just don't acquire a business because it's there. There has to be an alignment with what we're trying to do. But practically, so if you have any good ideas, Guy, please let us know. I'm happy to go and spend some time.
We've spent a lot of time on businesses in New Zealand and Australia. Of course, we would really like to do an acquisition in the U. S. And aligned acquisition in the U. S.
Would be a game changer. But in the meantime, if all we could do is a bolt on here and there, I think we've shown we can do that well, then we'll do it.
So at this point, there's no further questions coming through on the chat. Maybe we'll just give it a couple of minutes to see if anyone else has got anything to add. Yes,
I'm sure it's a big day today.
And if they haven't, we'll wrap it up fairly shortly. So maybe last call for any questions. Doesn't like there's anything coming through. So maybe we'll wrap it up there. Thank you very much.
Yes. Thank you
very much, everyone. Sorry about the technical issues, but we managed to get through it at the last second. Thank you. Thanks.