Hello, everyone. Please be seated, we'll soon start the formal CMD presentation. I'm Carl Gustafsson. I'm the IR of Hexagon. Glad to see you here, hope you've enjoyed the day so far. Just some housekeeping before we get going. We will have the presentation here. We'll take a short break, 15 minutes, then rejoin for Q&A. After that, we'll head to the tech park, the Zone. We'll have a cocktail event. You can see the products that we have, touch, feel, buy if you wish. At 7:00 P.M., we have the private CMD dinner at Emeril's. You'll see the sign, just follow them. Now, for those of you staying tomorrow, we have some suggestions. At 8:00 A.M., you'll have the private tour of the Zone. The entire Zone for yourselves. There are three football fields of products.
We have some representatives there, you can ask them in person of the product's capabilities. After that, we have some suggestions of what you can do, there's a wide array of sessions and demonstrations. You got the big tour guide in the welcome package. Just join that and feel free to browse the entire event tomorrow and on Thursday, if you're staying that far. Just briefly on our agenda for the day, we'll start with an introduction. We will discuss going forward. We will look at organic growth opportunities within a wide range of fields. We'll explain our M&A-driven strategy, focusing on the mining and ag vertical. We will discuss the margin expansion, make a summary, following the break, we will have the Q&A. With those words, I'd like to welcome our President and CEO, Ola Rollén, on stage.
Thank you. Good evening or good afternoon, everyone. I'll just put it there. This is a far cry from the first Capital Markets Day we ever held. There were three people listening, two of them were pensioners, they were there because it was a free lunch. That's why you're here as well, there are no free lunches in life. As we just said, we're going to recap what we said last time. Last time we held a Capital Markets Day was actually in this very room in 2012. We continued to build on our plan, which basically lasts till 2015, we stated that we're going to reach EUR 3.5 billion in sales and 25% EBIT margin. Let's look at what's happened between 2011 and 2013 when we launched the plan.
We said one of our targets is to grow at 8%, as you can see, we're 1 percentage point below that for this period of three consecutive years. Who is the culprit? Well, we believe it's EMEA. To be even more precise, we haven't really seen a slowdown until late 2013 for the engineering industry, it's construction. Construction has been slow throughout 2012 and 2013 in EMEA, we saw it picking up in the latter half of last year. If we look at businesses or divisions, we can see that metrology has overachieved over this period. Geosystems has been below, technology has been growing below the target. Geosystems is very linked to EMEA construction. 50% of Geosystems is EMEA, construction is, of course, the dominating industry for Geosystems.
If we look at technology, it's easy to forget these complicated words that you learn from global events that is happening around the world, but I learned sequestration. Sequestration in plain English, I guess, is budget cuts. This hit our U.S. SD&I business, and that's why we've grown below target. If we look at our M&A activity, I think it's important for you to remember this picture as we proceed through this presentation. The intention was never to do substantial acquisitions in 2011 and 2012 because we need to deleverage. We set a target for 2.5x net debt to EBITDA, and we reached that target in Q4, Q1 of 2012, 2013. Now you've seen a gradual increase in our M&A activities, and that's what you should expect going forward.
If we summarize our progress towards the EUR 3.5 billion target, we should have invoiced EUR 2.664 billion last year. This is a very theoretical model. I've just drawn a line between EUR 2.1 billion that we did in 2011 and EUR 3.5 billion by 2015. One has to remember this deleveraging of the group. M&A activity is naturally back-end loaded in this plan. Just remember that as we dissect this number. We actually invoiced EUR 2,369 million, so it's a gap of EUR 295 million against plan. If we dissect that further, we can see that we're lagging EUR 190 million. These are really the important millions in the year 2013, simply because of my comments on M&A. It's EMEA once again, and sequestration that are the major reasons why we're EUR 190 million behind plan on sales.
Other factors that have impacted it, this is really the M&A portion of it, focus on deleveraging. Then we have a tiny positive FX effect if we measure the period 2011 through 2013. This is going to be a bit difficult to follow, because we're going to claim that going forward, we're going to have negative FX. For this period, which is the historic period, 2011 through 2013, we have EUR 20 million of positive FX in the group. If we look at EBIT margins, where are we versus the 25% EBIT margin target? We've actually lifted the growth margin by 10 percentage points since 2010. That's a fantastic improvement, 4% in three years. The EBIT margin has expanded by 3 percentage points since 2010. That shows our new investment in more than 1,000 engineers that we took.
We took this decision in 2011 to scale up our R&D activity, and hopefully you've seen part of it being paid back today. The main negative impact on the EBIT margin so far, that has really kicked in last year and the previous year, is roughly 1%, and that is FX. If we summarize the EBIT margin, we should have done 22% last year, we did 21%. We do see an improvement in our incremental margin. The mix is becoming richer, so we can actually claim 0.5% of improvement in incremental margin. That has to do with the fact that SD&I has not improved or has actually shrunk. Whilst PP&M has continuously grown and taken a larger share of sales in the group. Structure, this is a bit artificial. Other operations was supposed to be disposed as of 2011.
We failed to do that. We sold the last piece of other operations in the first quarter this year. FX, 1% negative impact. There are two factors that have played in when it comes to the FX effect. Earlier in this period, in 2012, we had a very strong Swiss franc. A strong Swiss franc is squeezing margins for Geosystems. That eased off during 2013. We had another impact, and that is the emerging markets currencies collapsing. I wouldn't call Japan an emerging market. Some people would say it's a declining market, but the JPY dropped by 30%. The BRL dropped by 35%, and the INR dropped by another 30%. We had a great impact from FX last year, and that shaved off 1 percentage point.
Going forward, that was the history. Now we're going to focus and we're going to talk about the future, because as Steven Cost said in his keynote speech, you didn't say, "Who gives a damn about the past?" You were not allowed to say that, but I'm saying that anyway. We're all about going forward. Let's look at what we're going to do in the coming two years, or one and a half years. First of all, I've been asked to give a brief business update on the second quarter. We see similar business conditions as in the first quarter. Americas is our strongest growing region, and within Americas, it's South America seeing the strongest growth. We do continue to see continuous recovery in EMEA, and EMEA is coming back to better numbers. We're still below the peak in terms of volume.
The last peak was seen in 2008. China is restructuring its economy. You might know this. We have a new government in China. It was a change of guards. This has caused a slowdown in the economy. Among other things, the new premier is focusing on reducing corruption in large projects and so on. That is having a negative impact on our business. We do believe that we see a recovery in the second half of this year, though. Other things that I think it's important for you to remember as we browse through this financial plan update is we calculate roughly 2% financial cost, and you can take that against the net debt. We calculate by the end of this period, we're going to have 360 million shares, and we calculate with a 20% tax rate.
When we do this plan looking forward, we use the FX rates that we've seen through May of 2014. The big question is, you've seen a number of keynote presentations from the divisions yesterday and today. The big question is: how can this company outgrow GDP? How can we grow twice the rate of GDP? Our target is 8%, and GDP is roughly 4%. Currently, it's probably below 4%, more like 3%. Let's start talking about what you saw from the Metrology presentation. It's all about productivity and efficiency when it comes to metrology. This 360° SIMS that we launched in connection to this conference is really about inline. Throughout the history of metrology has been not an enabler, but really a restriction to productivity and how fast you can run your assembly lines, because metrology has been offline.
Which means that if you want to inspect a part and see that you've actually produced the part you intended to produce, you need to bring it offline into a laboratory. That's what you can see on the right-hand side. That's the metrology laboratory, and it takes time off productive time. This is the first time ever you can measure good and meaningful measurements in an assembly line. This is a small revolution that we're quite proud of. I think we started this project 10 years ago, and this has been the dream for us. Finally, we can introduce it here today. How big of a revolution is it? We don't know yet, but we're starting with assembly lines in the automotive industry. We believe this is a very accurate number, but that's what you get when you deal with engineers.
There are 2,810 assembly lines worldwide. Let's say 2,500+ . The beauty about this project from a financial point of view is this is the first time ever, and correct me if I'm wrong, Norbert, but you've done a payback calculation before you put the price on the system. We believe, and we calculated backwards, and we said, "What does this mean for an automotive manufacturer?" Installing SIMS 360 compared to the current technology that they're using, they would make a payback on the purchase price, which is roughly EUR 1 million for a dual system, EUR 1 million per year. That's how we come to a EUR 2.5 billion opportunity. If all auto manufacturers switch to this technology, this could be a EUR 2.5 billion market. Like all things in life, the good stuff doesn't happen immediately. It takes over time.
I think you should factor in a gradual penetration of this market. We will start with body in white. There are 40- 50 new cells per year. Line refurbishments, roughly 30- 35 per year. That's the initial market that we're going after. This is a quick video. You've seen it before, but if you think about these car bodies, if you had to take a truck and transport them maybe 200 m, 300 m away from the assembly line, then do the inspection, and then say, "Okay, the assembly line is fine. You can continue to produce." The novelty here is that we're being able to capture millions of points over fractions of time. That's how we can allow metrology to be integrated into the assembly line.
The big novelty is the sensor, the white thing that you see that a robot is holding, plus the software. Another little revolution that I think you're getting gray hairs, Bo, like me. When did we start this? 10 years ago as well. You see? It's not snappy-snappy. It takes time to do revolutions. That's what they never figured out in France. This is an optical probe. What do we mean by an optical probe? The current technology is tactile, which means you have to touch the object you want to measure. That is the restriction. The optical probe is using, we could say, laser beams or beams of light. By doing that, you can be much quicker inspecting various components. That's the background to this development. We saw an example with these blisks and blades, turbine engines for aircrafts.
Paolo showed you that we expect to build 30,000 new airplanes in the next 20 years. It's just an absolute necessity to measure each and every blade in this engine. This has been the bottleneck to produce 30,000 airliners. You've seen the backlogs of Boeing and Airbus growing. It's of course not only the engine parts, but this is a substantial part of the bottleneck in the entire workflow of construing an airliner. The benefit is that you can run this much quicker, and you need to inspect 100%, as I said. The benefit is speed and accuracy in combination. Here are some preliminary numbers for various applications. blisk is the new generation turbine blades that you use in aircraft engines. Turbine blades, the old technology, 70% improvement. Compressor blades, 60%. Camshafts and crankshafts, significant improvements as you can see.
We're going to show you a short video where we're running a chicken run between the old technology to the left and the HP-O. HP-O is done now. Instead of boring you and continue, we're fast-forwarding the video to the left. Here you can see the difference in time to inspect this little blade. That was a compressor blade. We're going to manufacture 10 million compressor blades. We can save one and a half minute per blade, and that is 120 man years. This was just a tiny component. You can think what we could do if you're an engine or a turbine manufacturer and you do this day in and day out. This is the small revolution that we're really proud of. We heard about MMS, Metrology Management System.
That is our new software product that we're launching in connection to this event as well. What is MMS? You could say that MMS is the large network connecting islands of information into something comprehensive that you can understand. Think once again of a large water plant or something. They might have up to 50 islands of information that are not connected in any way. What we do by this is we systematically connect these islands and bring them together to a dashboard so that you can see, you can create an overview, what's the actual situation, productivity and quality-wise, in your plant. It's going to sit in the center, as we can see on this picture, of the manufacturing cycle. It needs to connect to CAM, computer-aided manufacturing, and it needs to connect to the CAD system.
Around it can feed the PLM system, which is sort of wrapping your entire manufacturing organization. Now I'd like to talk a bit about Geosystems. I think Metrology is launching the largest novelties this year. Last year, we saw significant developments from Geosystems. This year, Geosystems is moving from focusing on the hardware only into solution selling. We heard Jürgen and his colleagues talk about the new sensors that we have collected over the past three, four, or five years. We have developed a mobile mapping device, which you see to the left. We've seen the UAV quite a few times. We've developed significant novelties in our airborne sensor portfolio. We can now see underwater. We can do high altitude capturing of data and so forth. We've seen the new scanners that we have in the MS50.
We have a comprehensive range of sensors, and we can cover all aspects of the real world. The idea now is to move from just focusing on the sensor, selling the sensor, but creating a business based on the sensor itself. If you're a surveyor and you buy a sensor, or if you are a company flying an area, buying an airborne camera, you can connect to our data exchange. It's going to be like an exchange. Let's compare it to iTunes, for example, and you upload your data there. You saw that lady that talked about the historic heritage, and they did laser scans, and they scanned St. Paul's Cathedral, and so on. Let's say you want to know something about St. Paul's Cathedral. They could upload that scan into this exchange, and I could browse.
We have a search engine, so you can find the latest scan ever done over St. Paul's Cathedral. The beauty about this model is, of course, the financial impact it's got. If you fly North America, we say that it costs, is it $4 per square kilometer, Jürgen? Where is Jürgen?
You take a good sense of it.
Yeah. Like yours. Instead of eight, let's use the number eight here. Costs $4 to fly a square kilometer. The good thing is, you sell it to the first customer, and you get a tiny margin. You sell the same data again, and again. The beauty about this data, if you think about your day-to-day life, is you're always going to need it. You're going to have to update your records. You buy a new property. Every time you buy a new property here in North America, you need to send out a surveyor to do a stakeout. Even if it was done a couple of months ago, if you change title, you need to send out the surveyor. With this exchange, we can have updated, fresh information at your fingertip, but we can sell it over and over again.
This is the idea with the HxGN Content Program. How does it work? Well, we can gather image content from satellites or airborne cameras. We can gather terrain content so that you can see altitude and the profiles of properties and so forth. Features. Are the buildings there? What kind of buildings are there? Assets and so forth. 3D content, we can build entire 3D models out of this data, if that's what you're after. But then we can add other content, other information layers. Let's say you're looking for where is the closest density in this city for 30-year-old professionals wanting to drink a cup of coffee on their way to work, and that could be the hotspot. You can find that. You can go to demographic records and match that with maps, and then Starbucks know where to put their next coffee shop.
There are all sorts of things you can combine maps with. This is what we're going to do. Hexagon Geospatial is working on information layers that we can collaborate with our customers and create a business from. Geosystems is working on content, to be able to sell content to customers that then build information on top. We also have a huge internal market via SG&I that will use this in their respective applications. That's another novelty from Geosystems. If we then move to Hexagon PPM, and we saw a presentation about big data management, and this ship is just astonishing, 500 meters. Projects are getting larger and larger, and they're becoming more and more problematic to control in the design process.
40 years ago, a large project was $1 billion a nd now we talk about $20 billion- $30 billion projects, and the complexity has grown exponentially. Another problem is that the world is becoming more global, and this is how the design teams are working today. You ship files between teams working around the clock, around the globe, and you try to figure out what's going on with your project. More complexity and design teams, more geographically dispersed. How do you tackle that? Well, with SmartPlant Cloud, sorry, this as well, there is a great need for digitizing information. I think you've seen that as a theme throughout the presentations during the course of today and yesterday. How do you handle over a large project like this with all the updates you need to do and all the nitty-gritty details?
With the traditional technology and design, we've seen that these challenges lead to costly delays, and projects are running over budget. This is becoming an increasingly important problem for the owner-operators and the EPCs to address. This is how the setup was in the past. We were supplying EPCs with software, and the EPCs were allocated certain sections or areas in a large project, and they worked exclusively with that area. Then finally, one of the EPCs or the owner-operator was responsible to merging area one through three together and make sure that it fit. We and our competitors in the software world were really two steps away from the project supplying the EPCs. With the cloud-based model, this would change. The cloud would sit in the center of the activity, and we would provide our technology into the cloud.
Where, as a matter of fact, we run the server farm for Shell in this case. If you see on this picture, Shell can update itself online, day-to-day, what is the status of our project? I can look into area 1, area 2, area 3, whenever I want. The EPCs are no longer customers of ours. They need to log on to the cloud and buy hours, where they do all their computations and designs in the cloud, which is the property of the owner, the owner/operator. This is a fundamentally different way of doing business. Now, apart from the operational advantages like controlling delays, making sure that everyone is in sync, and so forth, we do have financial implications, and I'm going to come to that. Our current situation is that infrastructure is now in place in Ireland.
We have two customers in our current cloud, and that is Shell Oil and Eni, as you've heard earlier today. Two projects are running, and they're gradually going to ramp up in activity, in the second half of this year. Implications to think about is, as opposed to selling a piece of software, we're now billing per hour. We're not billing Shell, we're not billing Eni, we're billing the EPCs that are subcontractors to these owner operators. It's likely that we're going to secure a higher revenue per hour using this business model rather than selling software to the EPCs. We've talked about lifecycle asset management, over the course of the past two days. We've introduced SmartPlant Fusion. This was a survey that Hexagon PPM showcased in their keynote speech. People or operators don't know where they have their assets.
It's a big disarray out there. We got several brownfield plants that are looking like this. We spend too much time looking for data, looking for information, and we can't deal with the things we should be dealing with. Now, what is SmartPlant Fusion? It's a solution for brownfield assets, i.e., plants that already exist, might have existed for 40 years, to manage those assets in a more structured way. What we do is we combine Intergraph software with Geosystems laser scanning, and we rapidly find, we capture, and organize large volumes of unstructured information or data. Where does it add value for the owner/operator? We find content that might have been hidden in the past to the organization, enables offsite access. You can retrieve the data or access the data from anywhere in the world.
It increases, as we heard earlier today, safety and regulatory compliance. It can be deployed in a matter of weeks. We had a customer here last year that testified that it was a really good implementation, and it cost a fraction of the cost it would have cost using traditional technologies. What we do is we send out a crew with a laser scanner, and we scan the entire plant. What you see now is a point cloud. It's the model world below and the real world on top. Then to the right, you can see small icons or labels. If you click on one of those labels, you can retrieve data about that component, supplier, where can I get hold of it, what's the tolerances, and so forth.
You can understand from having an archive of files, how much easier it is for an owner/operator to use this asset or do simulations on capacity improvements and so on, compared to just having things in a binder all over the place. This is the customer I referred to. It was a project in Australia, and they believe that it cost them 10% of what it would have been costing them digitizing their plant compared to traditional methods. How big is this market? There are 3,000 plants globally, and the opportunity for us is around EUR 375,000 in software services and support. Then on top of that, we get to sell laser scanners.
The theoretical market is EUR 1.1 billion, and we believe that we can capture 5%-10% annually going forward, which means that this would be running at EUR 55 million-EUR 110 million per year. We've looked into other markets. We see the fabrication industries. They have similar problems. A mill product, like paper, pulp, steel, and so forth. They also have similar problems. All process industries do. Then we can see this moving into BIM, building information management. It's such a structured tool that we can see a lot of opportunities in other industries than just these power plants. Right now, the current status is we've had significant wins with Exxon, Santos, and Shell, and Eskom that we saw yesterday in the video, we're running pilots with several companies.
Even more importantly, I think is, you might have a good product, but you don't have a channel, a market channel. I think it was a really good strategic move to sign up Accenture to do the implementation, the training, and the execution of a project like this. Accenture has more than 200,000 consultants worldwide, not all of them are trained on our products, but we are training a significant group of engineers to be able to take a customer through this process. I think that's much better than us trying to build up our own Accenture. Conclusions, organic growth. Why would we grow double-digit or, sorry, double the GNP? You've seen the Metrology product. If you do your own calculations, you will come to that this could mean 1%-2% increased organic growth for the Hexagon Group.
We have similar numbers for Geosystems with content as a service, and the same goes for PP&M's products, SmartPlant Cloud and SmartPlant Fusion. In summary, we do believe that we can grow at 8% with the product portfolio we currently got. M&A, that is the non-organic growth to reach our target, and what we said last time was we are targeting EUR 200 million-EUR 600 million sales from acquisitions. Another important thing to do was to dispose of other operations. After March this year, we've done that. Just for your reference, other operations turnover last year was EUR 61 million with a 3% EBIT margin. M&A activity since 2012, we've done small acquisitions, quite a number of acquisitions, but they've been fairly small, and you can group them into different categories. Distribution is always going to be important for us.
We need to find more routes to market, the overriding theme up till now has been the emerging markets where we can continue to build and improve our distribution structure. We're going to talk today about two M&A strategies that we're deploying in the mining and agricultural sectors. Content as a service has been a target for us to build up assets around being able to deliver content rather than product. Software will always be an overriding theme for this group. Going forward, our balance sheet is in very good shape right now. I believe that you will see increased M&A activity, and this is according to plan, going into the latter part of this year and also next year. We roughly have headroom of EUR 900 million to EUR 1 billion in our own balance sheet right now.
How could a strategy, an M&A-driven strategy look like for Hexagon? Let me take you through mining. We have a vision for mining, that is that we will want to have the ability to bring a comprehensive life of mine solution from designing mine exploration to operation, and finally, when you have to restore the nature. It started early on with our acquisition of Leica Geosystems in 2005. We got total stations, they look like this. What you use the total station for is to survey a mine. You basically measure the mine walls to see how much have you dug out. It's a productivity measurement tool, but also warning for maybe landslides or something that could be dangerous for the people working in the pit. That was really our introduction to the mining industry.
As we learned how a mine works and what the customer base is looking for, we realized it's all about productivity. We acquired a small software company called Jigsaw, and we merged that with Leica's mining business. Suddenly we could start to control these large vehicles. We put GPS on them. We could pinpoint their position. We could guide them through the mine. We bought Devex, which added even more capability to control a vehicle inside the mine. Later on, we added the Swiss company, SAFEmine, that you've seen videos showcasing their technologies. They got anything from fatigue technologies, where they measure the face of the driver to see are you becoming so tired that you should take a break, or are you fine and can continue, to automatic collision avoidance systems.
Now we're very close to, with all these assets, being able to create an autonomous traffic system in a mine. We can control the position, we can control the speed, we can make them break, and so forth. What we need now is a design system. That's why we acquired Mintec with the product MineSight. It's a CAD system that basically shows you what the mine looks like based on the measurements that a Geosystems is doing for the miner. When we combine this, we've created an enterprise system for a mining company. We can go into design, so we can help the miner designing an exploration plan. We can set about doing it and controlling the assets you use to dig out the mine. We go back to exploration and follow up again.
The whole idea is to have all this interconnected via database and links, radio links. All the vehicles in the mines are now linked to this system, the planners are linked to the system, and everyone can see the same thing. Another interesting thing is that we're repositioning Hexagon in the mining industry. Mintec is number two or number three in terms of size, CAD software to the mining market. We were number two in machine guidance. When we merge these two assets and we create this new thing, we leapfrog all the competitors out there. There is no one else that can do what we can do for the mining industry. Suddenly, we're number 1 in the mining industry.
What we're working on, as our competition is struggling to sell either CAD software or total stations or machine guidance systems, is we're focusing on going one step further and connecting into their supply chain system, which could be SAP, or their demand management system, which could be salesforce.com. We create a PLM system for the mining industry. This is really interesting. Mintec is now deployed in 500+ mine sites. We've got fleet management in 150 sites, and SAFEmine is only deployed in 50 sites. There is a huge opportunity for short-term cross-selling between these companies. This organization is going to be a vertical within Hexagon. The pro forma sales turnover is more than EUR 100 million.
We expect sales to be double-digit over the next few years, because now we think short term we can penetrate the 500 Mintec sites with fleet management and SAFEmine applications. Longer term, we're merging these technologies together, and we solve problems that no one else can solve. EBIT margins are running significantly above group average as well. You, as financial analysts, you read about the mining sector being in a recession. Is that an issue for us? No, not really, because we talk about mines that are up running. If we can improve productivity or reduce cost by at least 10% for that miner, they're going to scream to get us in there. We're not too concerned about the mining cycle. Let's take another example of our M&A strategy, our agriculture strategy. You've heard a lot about precision agriculture.
In a layman's terms, you could say precision agriculture is when you put a very accurate GPS system onto a tractor, you can drive it in a straight line for mile and mile and mile. Our approach so far has been copying Trimble and Deere, which are the two leaders in this industry. We've worked with independent dealers, we've targeted the retrofit market, as we put it here, in all honesty, with modest results. We haven't been very successful. We went back to the drawing board and we said, "How are we going to conquer the agricultural industry?" Precision agriculture is becoming a de facto standard. In the next five years, we're going to see all the OEMs building GPS into the dashboard as you have in your cars. You're not going to buy a separate unit that you install onto your tractor.
You're going to get it delivered as you buy the tractor. This is the precision agriculture, and we're going to be a player there, we're not going to be a dominant player. What we're doing right now with the acquisition that we announced yesterday and with the Arvus acquisition we announced a couple of weeks ago, we're building a complete network of information on top of precision agriculture. We can use our drones to fly the fields. We can use our geospatial software to detect, using color coding, detect bad crop or where you need more fertilizer and so forth. We have a planning system with iLab, we can optimize how you proceed throughout the cycle, sowing, seeding, harvesting, and so forth. We're bringing an enterprise solution to agriculture. We're hardware agnostic.
We can build it on top of a Trimble solution or a Deere solution or a Hexagon solution. We're going to sign, and we're going to see that in the next coming months, that we're signing strategic partnerships with OEMs, where we use our hardware just to build it into the dashboard to get connectivity to our software network. We have an emerging markets focus because we believe that's the biggest potential for the future. It's really Brazil, China, India, Russia, and so forth that we're aiming at. We believe that you should treat agriculture as an open air manufacturing business. No more, no less. It's all about input and output. Our M&A history goes back to the Leica acquisition once again, where we got machine guidance. With NovAtel, we got position capabilities.
With the Veripos acquisition that we did around Christmas time, we now have a subscription service where you can do very accurate positioning using your GPS receiver. It's almost like subscribing to a mobile phone network. We did the Arvus acquisition and the iLab acquisition just yesterday, this is now merged into Hexagon Smart Agriculture. We've done preliminary runs in Brazil with sugar mill plantations, we believe that we can reduce the input of water, pesticides, and fertilizer by roughly 20%. We can increase the output from the same field by 30%. These are huge numbers if you think about the economy of a farm.
If you can reduce this input, which is your costliest input apart from your equipment, and still increase output, it's really meaningful for not only the farmer, but for all of us that are going to live on this planet. Road to 25% EBIT. We've talked about M&A, we've talked about organic growth, the third target is really reaching the 25% EBIT. It's important to remember some of you follow capital goods companies, I think it's important for you to always remember that we're not a capital goods company. The major difference is within our cost of goods sold. We don't manufacture things. Our manufacturing, you could say, sits with R&D. When we develop a new product, that's our manufacturing, but that's in OpEx. We do have a much higher gross margin than the average capital goods company.
We've invested significant resources in R&D, as I stated before, more than 1,000 engineers over the past few years. Our OpEx is much higher than the average capital goods company. The beauty about it is, if we do this right, we're going to have significantly more recurring revenue, and we're going to have a significantly higher EBIT. We do that already today, 21%, but the target is 25%. What we need to do to drive this business to 25% is to continue to expand the gross margin. For you to look at trends and indicators that we're on the right track, you should really follow the gross margin, because that needs to continue to go up. Our target is to reach 60% gross margin by 2015.
With the OpEx expansion that we do see, because what's happening is that our capitalized R&D is now, the capitalization and the amortization is leveling out. We do need to bring up the gross margin. That's how we're going to do it in a schematic view. What is happening to the business as we speak? Higher sales growth for software-centric businesses has pushed our incremental margin up. As you know, you can't expand your actual margin unless your incremental margin is running significantly higher. New product generations, I'm going to show you an example with Leica Nova, how new product generations is pushing up our incremental margin. Solutions have a real positive impact, but it's been limited up to date because we haven't sold that much solutions up till now.
We believe going forward, our target incremental margin will be around 35%-40%. This has been the trend over the past few years. We're coming from a situation where our incremental margin was somewhere around 26%. Currently, it's running at 36%. FX. It's been a limiting factor for margin expansion up till now. First, we had the Swiss franc, you can see the gap between the green line and the blue line, that's really where we've had pressure, FX-driven pressure on our margins. Throughout 2011 and the first half of 2012, the Swiss franc was the issue for us. Going into 2013, the emerging market currencies became an issue for us. Over this period, between 2011 and up till the first quarter, it's cost us, not so much on sales, but EBIT minus EUR 38 million.
That's 1.6% if you divide it on our sales in 2013. It's almost 2% margin pressure over this period. What's the margin trend going forward? Well, Geosystems, as I said earlier on, we don't think the Swiss franc is an immediate issue right now. Geosystems has returned to margin expansion as of the second half of last year. With the new product launches that Metrology are doing here today, we're going to see a margin expansion in Metrology as well. PP&M has never had a margin problem, on the contrary. There, it's all about driving top-line growth to generate more profits. SG&I is a turnaround story, but I do believe that we've seen the light at the end of the tunnel, we could expect SG&I to improve going into the second half of 2014.
Hexagon Positioning is the merger of NovAtel, our GPS business, with Veripos, and it's all about integrating Veripos. Veripos will be a high margin business when it's run by Hexagon. Let's look at an example how a new product going into our current customer base can improve our EBIT margin. What you see here is the Leica MS50. As layman, you can say, "I don't see any difference from previous models," but it's all inside, under the hood, so to say. What you can see is that within the surveying community, when you launch a novelty like this, you drive growth. On the first chart, you can see the green. That is the contribution to organic growth that MS50 has generated for the entire Geosystems business since its launch. It's significant when we do new product launches, and it means increased organic growth.
On the bottom chart, you can see the gross margin for MS50's predecessor in the center, the entire Geosystems division, and the MS50. The MS50 gross margin is significantly higher than the predecessor as well as the entire Geosystems division. Every time we launch a new product, we try to bring up the gross margin a bit, a notch higher, and we drive organic growth. That's why product development is so important. The sales mix effect on EBIT. Geosystems is now having a positive trend. Metrology and PP&M are impacting our EBIT margins significantly in the next coming 12 months. SG&I is probably going to improve a lot, but SG&I's impact on the group is not that great.
Hexagon Positioning, we believe that once we get traction with the subscription model that we're going to launch onshore for Veripos technologies, it's going to have a great impact on our margins as well. The trend should be an increasing EBIT margin going forward. If we summarize what I've talked about and what you've seen throughout these two days, the financial target remains intact. We feel, and it's especially the top-line target, that with the things that have happened up till now in closing the gap of EUR 300 million, we need another year to grow. By 2015, we believe that we can grow EUR 300 million even organically. This is a sort of visualization of our business plan. We simply need to bring it forward one year, because it's not realistic to add businesses and M&A to reach EUR 3.5 billion in 18 months.
Why are we sure? This is a fair question. Why will you hit it in 2016 when you don't do it in 2015? We believe the worst is over. It's fair to say in 2011, when we launched the plan, we believed that the world economy was recovering much better than it actually did. We didn't see the U.S. sequestration. We didn't see the continuous turmoil that we've seen in EMEA. Now we've factored that in, and now we believe that with our own help, not external help, but with product launches, solution-centric strategies, and M&A, we can reach EUR 3.5 billion by 2016. Regarding margins, that's actually the easier target for us. The positive divisional mix that we've seen evolving is going to continue over the next 18 months.
Software is increasing as a percentage of sales. The M&A targets that we have in sight are to 90% software-based companies running at a higher margin than what Hexagon has. We also believe that the FX impact will subside, and it will level off in the second half. For the second quarter, it's probably going to be as great as in the first quarter, but then we're going to see a gradual easing off of the FX impact on margins. That's my presentation. Thank you very much for listening.