Welcome, and thank you for joining us on the Q4 conference call for Cloetta. My name is Nathalie Redmo, and I'm head of investor relations. I'm here today with our CEO, Henri de Sauvage Nolting, as well as CFO, Frans Rydén. Henri and Frans will take you through our fourth quarter results, and we will then move on to a Q&A session. I will then hand over to you, Henri.
Thank you, Nathalie. Good to have you here again. A few key messages, the things we really believe are important for you to know. Of course, very happy to say that the branded sales was really great during the quarter. I mean, nearly double digits, and that doesn't happen so often in a Northern European-based company, I would say. It is also now that we are again above the 2019 level. Where we left it, you could say, before the pandemic, we're over that in absolute amounts. A lot of strong marketing, both on the innovation, but of course also on the continued journey to support our brands in a competitive way.
A lot of margin enhancing initiatives, which we of course already started before the pandemic, but we kept on going through the pandemic. Now of course, volumes also recovering on the Pick & Mix business, including with pricing to cover for cost. We now see that the total Pick & Mix business is close to break even for the full year, which of course we were planning to do. Also very pleased to say that now the Swedish Pick & Mix business, since the acquisition of CandyKing, is at break even levels in quarter four. That's quite important for us because we first want to have profit before we are going to grow Pick & Mix. As said, marketing investments exceeding last year's average quarter by around SEK 25 million.
It was a strong marketing spend quarter in Q4 compared to the quarters before. Of course, that needs to be funded, and the VIP cost program is also delivering, and we have increased the full-year savings on that program. Also really good to see. For those of you who remember our strategy and our initiatives to get to our financial goals, we have now added a new element which we're planning to do after the VIP savings initiatives was embedded, and that is the Net Revenue Management program. I'll talk a little bit more through that in the strategic update. We're on track to mitigate the current known headwinds on the input costs for 2022. A lot of pricing going on in all the markets.
Yesterday, the boards decided on a dividend proposal of SEK 1 p er share, which is back to where we were before the pandemic. Great sales, a lot of marketing initiatives and support to fuel that, which is all completely in line with the strategic agenda which we have with Cloetta. 14% in total, very good. 9% of growth in brands. As said, now above 2019 levels, so you could say we keep on going from where we left when the pandemic broke out in quarter two, 2020. Really good to see. Then of course, Pick & Mix now another quarter of strong recovery. From the top of my head, we're around now at index 85 versus the 2019 base.
I'll talk you through a little bit what else is going to potentially happen in order to bring that up further. Mobility, very important for us, for our business. It's a tale of two stories. I mean, Q4 was better than the previous year, so versus Q4 2020. We're still below the baseline of 2019, which is the year where there was no COVID impact. We could see towards the end of the quarter with restrictions like in the Netherlands and Denmark that in some areas it started to be impacted a little bit downwards again. You can see the retail and recreation, which of course is an important one. It worsened a bit compared to Q3 2021, but still better than 2020.
The transit and workplaces, you should maybe look more together. That is a little bit different picture, also worsened on the transit stations. That's of course traveling to work, but also traveling into the city for shopping or recreation, little bit worsened versus Q3. On the workplaces, an improvement, and that is quite important to keep tracking and keep on taking action on insights we develop over there, in particular for the Refreshment category. Yeah, if we then look at the Branded business, we've updated now the channel split. You can see there's not a lot of change. It's still 75% in food and 25% in other channels. Market data interesting, of course.
Let me say again, this is mainly food retail as all the other channels are more or less out, and we see Pastilles and Gums going up. That's positive. We see Candy bags going down, and that is all basically explained with the mobility figures we just looked at. What we're doing is a lot of attention for Pastilles and Gums because it's above average profitability, and of course, getting consumers back into that habit when they are traveling to work, when they're going out again into restaurants after restrictions are lifted is important. We see a little bit of different behavior between the two categories where Pastilles are going up faster than Gum in general.
We also can see that within Pastilles as a category that the Cold Care is coming back as a consumer need because now we have also a flu going on in most of the markets, whereas last year that was completely absent. Yeah, Pick & Mix continues to develop in the right direction. Channels are still all open. Not so much change on C onsumer Activation, although we had planned for more Consumer Activation, in particular promotionally in most of the markets. With the developments that didn't completely come through, but we expected that will now happen this year, and that will be a nice addition to the volumes, because in some of these markets, promotions are playing an important role.
You see Consumer demand keeps on going upwards and also no early signs of the fourth wave now having an impact on the Consumer confidence. We executed the SF Anytime campaign, which went really well. The efficiency program is delivering and we have some constraints with third parties delivering and not being able to keep up with our increased sales, but we will manage that. We go to Frans for the financials.
Thank you. As usual, I'll start with a bit more details around the net sales. As Henri mentioned, we can report very strong growth across both our segments. For Branded Packaged sales, again, growth not only on prior sales but also on top of the pandemic or pre-pandemic. That's very nice. Overall, organic growth up 13.8%, almost double the 7.5% we grew in Q3 2021. This means that our Q4 sales, and here I talk about Branded and Pick & Mix combined, and on a constant currency basis, we're just about back in line with 2019 sales, just down by 0.3%. Total portfolio back to pre-pandemic levels.
Now, this phenomenal recovery was again driven by both Branded Packaged products on the back of strong investment in our brands, and more about that later, and by Pick & Mix. For the full year, organic sales were up 8.4% versus last year. Now, for Branded Packaged sales growing 9.3% in the quarter, close to double digits, as Henri mentioned. Now, that means that the sales, again, on a constant currency basis, were up again 5% versus pre-pandemic 2019. On the full year, we grew 5.8% in the Branded Packaged. That means that we're up almost 3% full year versus pre-pandemic.
Now, we know that part of that growth is cannibalization from Pick & Mix, but the branded packaged growth is coming shoulder to shoulder with Pick & Mix growing 32.4% in the quarter and 18.4% on the full year. That brings Pick & Mix in Q4 to an index of SEK 85 million versus pre-pandemic and an index of SEK 78 million on the full year. It's a great rebound, but I'd like to think that there remains room for more growth still. Looking at this segment over time, starting with the branded packaged sales by quarter on the top row. This is the fourth quarter of growth and with the strongest growth coming in the last two months .
I'm also pleased to say that within the Branded Packaged segment, sales of pastilles and gums again grew in the quarter, supported by the strong advertisements and sales activities with the easing of COVID restrictions, at least at the beginning of the quarter. Clearly, the concerns around COVID then picked up again. It's too early to say that we have, let's say, turned a corner on Refreshment, but maybe it would be fair to say that the reaction to the lower restrictions at least show that there is light at the end of the tunnel. That said, while growing, the Refreshment growth was not at the level of the rest of the Branded Packaged portfolio. There is still an unfavorable mix within the segment, and you can see that in the gross margin.
Similar to what I mentioned for Pick & Mix, that also means that there remains some room for a nice upside. Looking at the lower half of the slide and the Pick & Mix business at over 32% growth, that is again great, and as mentioned, gets us to an index of SEK 85 million up from an index of SEK 83 million in Q3 and an index of SEK 75 million in Q2. It's a steady improvement. Now, importantly, this growth is also a lot more profitable than it was pre-pandemic. Let's look at that. Looking then at the profit in the quarter on the 13.8% organic sales growth, we grew our operating profit adjusted by more than double over 35%. That is obviously very nice.
Margin was up 9.4%, so it was 9.4% up by 150 basis points versus last year and also very high quality. I want to say high quality because this increased profit was primarily driven by volume and margin enhancing initiatives in Pick & Mix. Despite a repeat of the strong push on marketing spend we did at the end of 2020 to bring the Consumers back in. Henri mentioned this, that marketing spend, it was up a little bit on top of last year, which was our, at that time, our highest spend quarter ever. Now versus what we spent in Q3, marketing of course, was up significantly. Importantly, if we look at the quarterly run rate that we had between Q4 2020 until Q3 2021, this quarter spend is up by about SEK 25 million.
Clearly that spend helps drive the strong growth, including some growth in Refreshment, and it will also help mitigate the impact that we see in Q1 2022 with Omicron and also help with the pricing of course, but momentarily at least it does suppress the operating margin. On a full year basis, our operating profit adjusted is also growing almost twice the rate of the top line. It's up 15% while sales are up 8.4%. With respect to what is driving that, it's very similar to the quarter with the growth coming from volume, margin enhancing initiatives, partly offset by increased marketing spend. On the full year it is a clear increase, but also partially offset by increasing other indirect costs to enable the continued growth. I'll cover that on a separate slide.
Now before looking at the profit by segment, let me clarify what you do not see in this bridge, and that are the significant increases of input costs which are reported on daily in the media, nor do you see any supply chain challenges. Now for the increased input cost, given our contracts and inventories, the impact is still limited and we are committed and confident in our ability to offset the full absolute impact of all the currently known costs within 2022. As with supply disruption, some of our third party manufacturers have struggled a bit to keep up. Our own team are doing a phenomenal job in keeping our supply chain running free of material disruption, which frankly speaks to one of the advantages of owning your own supply chain as we do. Let's look at operating profit by segment.
For the branded packaged business on the top row, the key takeaway here is that for both the quarter on the left and the full year on the right, is that unfavorable mix due to lower Refreshment sales keep suppressing the operating profit and our strong focus on addressing that. Henri already spoke some of that. Now versus 2020 the comparator is tough because of the lower SG&A, which I'll detail separately, but it's worth noting here that in Q4 we again lean forward on marketing spend and at the lower average quarterly spend that we've had previously, our Q4 operating profit would have been at about the 14% we normally quote for the branded package segment. Now if you look at Pick & Mix at the bottom in Q1 we said we would get back to profit without all the volumes back.
Q4 is now the third quarter where we are just about or even above breakeven, showing that the recovery of profitability is really sustainable. Even on a full year basis, we are just about back to breakeven. I also mentioned before, and I want to repeat here that this result does include Pick & Mix, having first absorbed its fair share of common costs in headquarters, IT, supply chain, etc. The segment does provide a favorable contribution behind the reported profit. Of course, this is not where we stop. We will keep improving on this through fairer pricing, reducing costs, etc.
Before moving on to SG&A, I want to mention that in the material for this session, I have included a table that I promised in Q3 that details the impact of the new guidelines on accounting for software as a service or cloud computing services. Our reported numbers now reflect that and the 2021 impact is SEK 30 million, which is about 0.5% EBIT that we're down on the full year as a result of this accounting change. Now for the quarter, the impact is only SEK 3 million and you'll have all the details in the presentation and also in the report. Looking at sales general and admin costs. There's three drivers of this increase. First, where we are turning spend back on because that helps drive the rebounding growth.
I mentioned that before, and these are good cost increases, such as for higher merchandising or for fixtures, etc. , to get the Pick & Mix, which is now more profitable back up again. SG&A as a percent of sales as you see is down from 29.3% to 27%. The effect of that should be clear. Secondly, last year benefited from certain one-time cost avoidances. That includes there was no incentives at all, and you may recall that we detailed that out in Q3 2020. And that of course also impacts the quarter and the full year. Thirdly, we have continued to invest in marketing and marketing capabilities, and I already mentioned the step-up on the spend there. And all of this is partly offset by increased efforts on our VIP+ program.
I have a separate slide on that to show you what happened over the last two years. When we closed 2020, I was happy to report that the program had delivered 1% EBIT savings. Actually, the program had enabled SEK 130 million in savings, but we said about half of that, SEK 65 million, were dependent on COVID and lower volumes and was expected to start to come back, leaving the other SEK 65 million being sustainable savings. Now, to give you an update on where we are, the below bridge looks at the SG&A we reported on the left-hand side in 2019. Both indirect covered by the VIP+ p rogram and marketing spend, which of course is funded by the profit from the sales that it drives. Then on the right-hand side, you have our 2021 reported SG&A.
Within here, I'm pleased to say that the sustainable savings we brought from SEK 65 million- SEK 85 million through transition of our ERP system to cloud, through the finance shared service center, and through reorganization in the Swedish organization and many other initiatives. At the same time, I mentioned also that we're turning spend back on to drive the rebounding growth. Out of the total SEK 65 million we had saved last year, some of that has come back. A net SEK 120 million saving delivered as where we stand now. From these savings, we have continued to invest and strengthen our marketing and e-commerce capabilities, and we have, of course, also funded annual salary increases for our organization, bringing the net saving to SEK 60 million and the 1% that you see on the top.
Now, beyond that, other movements in SG&A are unrelated to VIP+ , but important to understand, they are largely offsetting for that +11 that you see. That includes a step-up in advertisement. It includes, of course, the restatement for cloud computing and also Forex benefits. Looking then at cash, we had again a healthy free cash flow in the quarter, delivering SEK 313 million, which is, and there is a theme emerging here, more than double the profit after tax for the quarter. This strong result is driven by operating profit, but also very strong Working Capital reduction built on top of already really strong progress when we closed Q3 year to date. Now, part of the strong delivery comes from a reduction of finished goods inventories from third parties mostly.
As I mentioned, they struggled a bit, but also, on account of high payables on the high marketing spend. However, this Working Capital delivery is also despite a huge amount of progress on the implementation of the new European UTP directive, which I flagged in Q3. Now, as we close the year, days inventory on hand are down another five days in the quarter. We had said we would reduce inventories. We did end a little bit lower, as mentioned that we had hoped for, but nonetheless, overall conversion is down 14 days versus last year, which is significant. For the investment in, Property , Pl ants and Equipment and intangible, it was SEK 55 million in the quarter, just below last year.
Now, here I want to call out that the cost for the new carton packaging technology is reflected in these numbers, but as I had also flagged in Q3, less than the SEK 40 million we thought we would spend this year has been spent, only about SEK 80 million on account of restrictions in traveling that has impacted the rollout. It leaves about SEK 112 million yet to be spent, of which we think about two-thirds will be spent in 2022. We also believe that the start up of the packaging line will remain as originally planned for Q2 2023. Now, on the full year, our free cash flow delivery is SEK 664 million, which is the highest we've delivered the last five years, and it's almost SEK 300 million more than what we delivered in 2020.
Which brings me to my last slide on our leverage and net debt, where on the back of the strong cash flow, we closed the year with Net Debt over EBITDA at 2.0 and well below our internal target of 2.5. Our net debt is at an all-time low since the Cloetta-LEAF merger in 2012 of only SEK 1.7 billion. You can also see from the bar chart on the right that we have additional unutilized credit facilities, commercial papers not yet on the market of SEK 0.6 billion and SEK 0.9 billion, and we held SEK 0.7 billion in cash as we closed the year.
In summary, very strong double-digit top-line growth, bringing total sales just about back to pre-pandemic level, with profit growing twice as fast as sales despite heavy marketing investment, and with free cash flow generation at more than double the profit. Brings leverage down to 2.0 and net debt to an all-time low. We're pleased that the board decided to propose a dividend of SEK 1 per share back to pre-pandemic level and at the upper end of the targeted 40%-60% of profit after tax. On that positive note, over to you, Henri.
Thank you, Frans. What more can I say? Few things to update on the strategy. You know that we have a strong CSR agenda. We are in dialogue with the Science Based Targets initiative. We think that somewhere in February or March, depending a bit on their ability resource-wise, that we will get a confirmation of our submission. Which is important because that will also then mark the point where we are then going to be able to really progress in this journey to reduce climate impact of Cloetta, but also in the Scope 1 and Scope 3.
That's an important one, which we'll also kick off actually this afternoon with our extended leadership team across the company to get everybody on board, because a lot of small actions make a big difference. If we then look at the marketing agenda, take you back a few years, Cloetta not been growing organically, very important to get this wheel going of growth, more volume, lower cost, more opportunity to invest, in order to get, again, more growth. It's also good to see that the growth is also reflected by us gaining competitiveness with our bigger brands in the company. That's really important. We both see that the visibility is going up of the big brands.
We see that the efficiency of the marketing is still going up and now close to where we want it to be. Next to that, of course, we see that our Innovation 2.0 agenda also is starting to pay off with a lot of real breakthrough innovations hitting the market. Of course, no surprise, they're really liked a lot by our consumers and as well our customers. We're winning quite some prizes with Best Innovation in the whole confectionery category of the year 2021. A lot of positive feedback. That, of course, is needed to keep this wheel of growth spinning. Very pleased to see that. As said, we have a financial goal of 14%. Frans showed you the fantastic progress on the VIP cost-saving program.
Now we are launching a company-wide new initiative, which is called Net Revenue Management. For those of you who are not familiar with the term, it is a systematic approach to look at the growth to net part of the P&L, where we're looking at channel profitability, portfolio profitability, pricing versus competition, versus consumer needs. A lot of money is going into promotions. There, the program is very important. To support the program, we're also implementing a promotional planning and evaluation tool so that the ROI of our promotions is going to be calculated on a permanent basis, making better investment decisions to either get more volume or to spend less. The last, of course, is trade terms.
These are the terms of doing business we have with our customers, which of course, customers need to be able to earn money on our products, but we also want customers to take the right decisions, to put us on the right place on the shelf, to give us the best promotion spots, to pay us in time, to take full pallets, to reduce cost, and that whole package you call trade terms. The NRM program is going to be focused on our biggest markets, where we work with modern trade. We will take a few of these pillars and get some external support of a company which is well, very knowledgeable in this area. This is being all kicked off now as we speak in Q1 2022. Yeah.
Back to the last slide, the key business priorities. They're not changing. It's very clear for us, for internal people as well. The first one is the organic growth of the branded business. As we showed, of course, we want the profitability to go up further through the growth. The major thing we're working on, of course, is to get the Pastilles and Gums category to recover because it has above average profitability, so it will really help us in the mix. Maybe also important to say is that we're working constantly now on a complexity reduction program to take smaller SKUs out, take unprofitable SKUs out, and reduce cost in complexity, but also to get the marketing and sales forces to focus on the more profitable parts in the portfolio. That is one.
Pick & Mix, very good to see that we're now close to break-even on the totality. We don't stop there. We are going to go on with all the margin-enhancing initiatives and the premiumization which we're driving with Pick & Mix across the markets. We're also aggressive on price increases. We need to get coverage for the raw material cost, energy costs and etc. , that is really important, so we're not shy of coming through with the big price increases on Pick & Mix. Maybe then important to say one more time, it's really pleasing to see that the Swedish Pick & Mix business, you know, starting from the big minus when we acquired CandyKing is now at break-even level.
That's a big milestone for us, and we need to manage the third-party suppliers who are not always able to keep up with our sales rate. In the VIP+ cost program, great progress. On the efficiency, of course, we have the Perfect Factory program. If we look at 2021, on our key production lines, we have significantly improved our OEEs, so the amount of time these machines are producing big increases, I mean, more than I actually have seen before. That's a big applause, I would say, to the people working on our lines because it is those people who are making those progress and finding solutions for small stoppages or making changeovers faster.
I introduced the NRM program very quickly to you and I'm also pleased to say that we are having a proposal on the dividend of SEK 1. That was it, and then we open for questions.
Thank you. If you do wish to ask a question, please press zero one on your telephone keypad. If you wish to withdraw your question, you may do so by pressing zero two to cancel. There will be a brief pause while questions are being registered. Our first question comes from Nicklas Skogman with Handelsbanken. Please go ahead.
Yes. Hi, good morning. I have two questions, please. Thinking about the gross margin for the current year, 2022. You said you will offset cost increases in for raw materials, etc. , in absolute terms, which would imply some gross margin headwinds. On the other hand, I assume you will have a better absorption effect in 2022 compared to 2021. You're implementing price hikes, and you know, improving contracts in Pick & Mix. We may assume you will have some mix tailwind from the Pastilles category recovering this year. I guess the question is, where does all of that leave us in terms of gross margin outlook for 2022?
Hello. Good morning, Nicklas. Thanks for asking the question. I mean, starting point, we tend not to give, let's say, a forward-looking statement. I think it's very clear that we're saying that since many years we have a way of working with our customers, where when costs are going up, we can take pricing, and when costs are coming down, we're rolling it back. We're confident on that and also that we will manage to do a full offset of this within the year 2022. Although, you know, there's normally a bit of a delay here, but we still think that we can manage that. Now, arithmetically, it does have an effect on the margin, but I think you spelled it out really well here.
I mean, there's many other pieces that we will work on in terms of the absorption, cost reduction, the portfolio, being, you know, smart around those things to protect our margins.
There is still an opportunity to raise or to lift the margins in the gross margin in 2022 despite the headwinds from input costs?
Yes, of course. That's the direction we're working on without, you know, giving you a forward-looking statement. You know, step one, get the pricing and of course, then there's many other levers to work with to protect and develop the gross margin.
On the Pick & Mix contracts, I understand it's an ongoing process and so on. If we think about the original sort of plans in terms of exiting the bad contracts and getting the margin up, is that basically completed now and there's just this, you know, normal business price negotiations? Are there still contracts that are onerous?
No, it's not completely finished because a lot of that is our individual contracts with individual store owners. The majority, I would say, we have done, we have concluded in the last two years. On the other hand, I would say, you know, we are not stopping with just having break-even business. It cannot be the meaning of being in business that we are break even though to Frans' point, Pick & Mix is also taking a lot of the fixed costs in relation to the volume. We're continuing with this journey, but it will be more a combination of showing our customers that Premiumization, meaning, you know, more expensive products in there are able to carry a higher consumer price.
That is their decision, of course, but a higher consumer price also means that we can raise our prices towards them. In order to start making a decent single-digit margin on Pick & Mix. That is one big one. The second thing, we still have a bit of volume to recover. Yeah, a market like the U.K., which was probably most severely impacted by all the closing down of stores, there more volume through the existing merchandising network is going to give us another real step upwards. If we look at a country like Denmark, where price promotions before the pandemic were something 30%-40% of the volume, and they're at the moment more or less still absent.
If that comes back in one way or the other without destroying value, of course, that could be another big efficiency lift for us. At the same time, as said, you know, we're still working to improve certain smaller contracts. We don't stop. That may be the short answer.
All right. Perfect. Then finally on the marketing spending in the current year, how is that gonna be a step up further? Or are we sort of same level as 2021 or lower?
No, I don't think it will be lower. I mean, it is a variable, yeah, and is not a fixed. I mean, let me say that first. And also when Frans said the quality of the result, I can only underline that three times. I mean, I rather spend my SG&A in marketing costs than that it sits in fixed indirect costs. Because marketing costs within two to three months, you could reduce a lot if we would have another pandemic or whatever. It's a much more variable investment than the fixed cost. The quality of the profitability with this high marketing cost compared to the past is a lot better, I would say, than having this cost in indirect.
It is variable because it depends very much on the amount of innovations we want to do. It depends on the quarters we plan those innovations. Also in all honesty, it depends very much on what our competition is doing because we want to spend and maintain our brands in a competitive way. If we would have one or two competitors who are upping their game in marketing support, we will most likely follow. On the other end, if some of them are getting under pressure due to raw materials and they're reducing their marketing expense, then we will reduce. Again, to Frans' point, we're not going to give you forward-looking statements. We've said the strategic agenda is to grow our Branded business.
In order to do that, we need to strengthen our top 25 brands. We do that among others by marketing spend, but there are many other things which are happening in there. In the marketing spend, we first took two years to improve the efficiency of the spend. Well, that's where we are now. 70% is working media. Then as a next step, we said that we will introduce probably more marketing spend in order to fuel more growth. That we've now done, and you can see the result of that with the +9%. The spend is in that sense delivering, but looking forward, it's probably not going to go down. That I think is something I can give you, unless something big would change.
It will vary quarter by quarter, depending on launches and the kind of jobs to be done, like for example, Refreshment's recovery.
Right. Thank you. I may have one more question, but I'll leave the floor to other people.
I remind you that if you do wish to ask a question, please press zero one on your telephone keypad.
Okay. Maybe we can take the questions which have come up in the questions. The first one is from Deepak, Eastern Europe geopolitical tensions. Do we see any risk to our business? We are not that big in Eastern Europe. I mean, it is part of our international markets. We follow this, of course, and we'll have to see what happens. That I think is probably for us limited if there would be big sanctions coming up. We can manage that. There is a question from Paul, which I think we've answered on the gross margin development in 2022 versus 2021.
That was the answer from Frans. Then we have a question from Trojan Trading that is acquisitions. There are of course many people who think acquisitions. We have a clear strategy, which says we are going to grow organically. That is our major strategic focus away from the acquisition strategy which Cloetta had before. I do not see any reason at the moment to deviate from that strategy. Priority one is to keep on growing the existing business organically and improve margins in that way.
However, we've said if there will be a right target, like you're saying, it should be an acquisition in one of our key core categories, in one of our key core markets, but it also should be a acquisition which is able to deliver on the EBIT journey we are on. We're not going to buy companies with 0% EBIT anymore, and then banking on a lot of synergies which then maybe are not coming through or only partly coming through. Why do I say this with so much confidence? There is still a lot we can improve with Cloetta, so I don't see that we're at the end of a growth journey. I don't see we're at the end of a growth margin expansion.
I don't see that we're at the end of further improving our supply chain operations. We don't need acquisitions to improve the P&L of this company. The last one is probably for Frans.
Yeah, Irvin, thanks for the question on the effective tax rate, and any color on that and guidance going forward. We tried to provide something in the commentary in the report to also explain, you know, the effect of some of these, let's say, one-time benefits that we've had. Yeah. I mean, we should be as normal as somewhere around 22%, 23%, you know, 24% as effective tax rate. Now, it's significantly down, and especially in Q4. That is largely because we've had in one of our countries, we've made provisions where the statute of limitation has expired, and based on updated tax advice, we've now chosen to release those provisions. That's the one-time benefit we're seeing in Q4.
Now, you know, subsequent years, there is other provisions that we will release, but this was sort of a catch-up that covers several years. You're not gonna see as big impact going forward. We should be going back to sort of our normal range of 22%-24%. With respect to Net Revenue Management, depending on which consultants you talk to, you can get quite big numbers out of this. I think for us, we would say that this will be an important step in our road towards 14%. But how much will come out of it will also depend on the countries. The maturity is different, you know, across our markets. Holland, for example, has already worked on this for a number of years, so we have internal knowledge to draw from.
It takes time, this, right? Because, as Henri, you know, when he elaborated on the different pillars there, you understand it's, you know, it's one thing is for us to identify what to do differently, then negotiate, and then get it implemented. The impact for this year 2022 will be limited, and it's investment in time and energy now that will serve us really well going forward afterwards.
The question on the innovations, the 12-18 months, we launched two years ago a program called Innovation 2.0, meaning that we were going to come not with line extensions only, but also with meaningful innovation like the Venco Choco D'rop or the Kexchoklad Vegan. What you could be looking at is how that we want the percentage of innovation of total sales every year to come close to 10%, probably more realistic 7%-8%. Of course, there is a strong growth margin, the creativeness demand of the innovation. Each innovation which hits the market should be margin Accretive to the average category growth margin in that country.
If we now have one year of margin Accretive innovation, then over a three-year period, of course, which is when the program will now start to roll out, we should be seeing a contribution of innovation to our growth margin journey, and that is going to be a continuing process.
Just maybe so that it's not misunderstood. I mean, if we talk about 7% or 10%, that's not sales on top of our [crosstalk] e xisting sales because, of course, what we're doing is attracting the Consumer back in with this offering. When they pick our innovation, you know, to some extent, they will also then deselect another product, and often, something they would have bought from us. That's what we call Cannibalization, so it's not a net increase.
Yeah. Share Buyback is not on the agenda of the board as far as I know. But of course, what we always see happening, and I don't know if that's going to happen going forward, is that quite often our biggest shareholder reinvest their dividends back into shares of the company, given that it is an Stiftelse, a foundation, with the goal to own Cloetta. So you could say that it's sort of a Share Buyback Program. Then the Working Capital Program, there is more to come.
We have done quite a bit on raw material harmonization, flavors and colorants, etc., a nd that program is still continuing. We're now, like I said, also really working on complexity reduction, meaning taking small SKUs out, which you maybe produce once every three or four months. They tend to have a relatively larger amount of stock because you have a minimum order quantity. Taking those products out and selling more of the existing bigger items will help us in order to drive that. We've also changed our internal transfer pricing, MOQ goals so that we penalize smaller products and give a credit to the biggest products, given the efficiencies they have in the factory network.
Yes, there is more to be done on the net working capital. Is there another question from the public?
Yes. We have a follow-up question from Nicklas Skogman with Handelsbanken. Nicklas, please go ahead.
Yes. Hi again. Thank you. I'm just interested to hear sort of your latest take on this cost inflation. Do you see any signs that it's tapering off, or is it still at a very high level when you look at sort of the very latest prices you quoted in terms of packaging and so on?
Yeah, I mean, I think that's public information, or at least available to everybody. If we take the basket of our biggest raw materials, we do not see an easing yet of raw material and packaging materials going upwards. I think that's the short answer. If I would know what's going to happen in the next six months, I would probably be a trader and not the CEO of Cloetta. As said before, we have a good model to take pricing based on raw material costs going up. If it keeps on going up, we'll just have to price more this year.
Okay, perfect. Thank you very much.
There are no further questions at this time. Speakers, please go ahead.
Very good. Well, then, we thank you for your attention. I'm pleased with the quarterly results. Great growth, great improvement of the profitability, strengthening the brands, regaining further competitiveness with the Pick & Mix business, break even, and of course, also a fantastic cash flow and on back of that, a good dividend proposal. We're entering stronger into 2022. Thank you very much for today. Thank you.