Good morning. It is great to have you here. Warmly welcome. We do appreciate that you take the time to spend vital parts of the day with us, and it is so nice to be here, I would say in the product mecca of Husqvarna. This is a little bit the dream for many people to get the chance to touch and feel various types of products. I would like to start by introducing the team who is going to present. The day will be about profitable growth, but you will hear a lot about that. Let us start with the team. Here, Henric Andersson, President, Construction. Pavel Hajman, President, Husqvarna Division. Jan Ytterberg, CFO. Sascha Menges, Head of the Gardena Division, President of the Gardena Division. Jeff Hohler, President of the Consumer Brands Division.
These are the people who is going to be up on stage today, but we also have some other people from the group management sitting in the room, like Pär Åström, in charge of Business Development and M&A. Sofia Axelsson, in charge of Communication, Brands, and Marketing, and Francesco Franzé, who is the Program General for AIP and now another program that we run internally, which I am going to talk about under the headline of further efficiency improvements. Valentin Dahlhaus, who is in charge of Group Operations Support. These are the people from the group management that are present. You will have the chance to chat with them, hopefully, in a break or so. Before I get into the theme too much, what attracted me to come to Husqvarna was really a combination, on one hand, of, to some extent, an underperforming market leader.
If you look at the growth that the company actually achieved, the profitability the company achieved, versus the fantastic leadership abilities the company has. Great brands, great product innovation, strong channels to the market, and many other assets to explore. Really, the conclusion at the time was, I want to be part of the journey together with this team to get this thing in order and really capture the full potential of this company. This is where we are in the midst of doing. I would say we have just about completed one step of that journey. The core message for the day is really four bullets. Number one, we have actually delivered on what we have set out to do. You will see a little bit the proofs of that.
I will not spend a lot of time on that because we have talked sufficiently about it. We are right now in a situation where we can say, yes, we have proof of concept of the reorganization that is actually delivering what we expected. We have now a momentum where we move into the profitable growth. We have taken the journey up. Some of you will remember this illustration from 2014 Capital Market Day. We talked about profitability first and then profitable growth. It is exactly the same thing, all with the intention to get to the Market leadership 2020 aspiration by 2020. We are just at that turning point right now where profitable growth is becoming a core theme. Three divisions are actually in that mode, and have been working with plans, and have very broad initiatives actually supporting it, and are funding investments to support it.
One division still in the profitability improvement phase, and that is the consumer, you will hear Jeff talk about his 5% target 2018 later. Fourth bullet, we are accelerating also the innovation, that goes a bit without saying here. To support the market leadership aspiration, we are going to increase the pace of innovation we bring to the market. We will cover that to some extent as well. This is really the core message of what this day will be about. I think the real highlight for you, I would expect, will actually not be me, or maybe not even Jan, with all due respect, but rather to listen to the divisions today and get a feel for their agendas. You will see that there is quite some width of what we are trying to cover here. I think that is the true highlight.
Of course, combined with opportunity during lunch to take part of some interesting innovations, actually, that we have and are proud to present. Where to start for me now, if not to then really get to the bottom of how do we really view profitable growth? The way we define it is actually we say we want to outgrow the market with 1-2 percentage point per year. That is the reference. That is the reference we have when we look forward. We will talk about what that translates into given the historic development of the market. If we do that, if we have that type of growth, we will reasonably have a leverage on the profitability, and we will see a continuous improvement. That is what we expect.
Obviously, a little bit of a balance, how you emphasize the growth versus the profitability improvement, but I think the long and short of it is, it should be a continuous improvement of the EBIT margin. That is what we expect. Those two things are at the core of how we see actually the profitable growth definition. Let me, for pedagogical reason then, take you aboard the journey we have been on since 2013. The starting point here was, as you will recall, most have followed Husqvarna to some degree, that the Accelerated Improvement Program that was the vehicle to support our profitability improvement. Really, we launched it October 2013. We finalized it by the end of 2015 from an activity point of view. Yes, there are some full year effects that is really affecting 2016 P&L in a positive way. What was it about?
It was actually about some various bits and pieces, but the major chunks being, on one hand, focus on the core brands, Husqvarna and Gardena. It was about focus on the leadership positions, which are quite some few in this group. We talked about professional handheld, we talked about robotics, we talked about the mobile watering, we talked about parts and accessories. That was one chunk. Very important for us to drive the sales of that. Not really asking the question, what are we selling about product X? Rather asking the question about, what are we selling in these areas? Tell me. The rest will end up being whatever it will, but this is where we want to see the improvement. This is the focus. The other bucket which was hugely important was the cost out and direct material cost.
We actually took and allocated resources to a large degree to work with the cost reductions. Of course, the suppliers are hugely important for us. We're talking about some 40%+ of the P&L here that sits with purchase components. You can see that we were aiming to get out about 10% reduction of that. I would say by and large, we actually did that. The third one, which is more intangible, is the complexity reduction. The starting point is we are a great innovation company. The great innovation companies have a tendency to be better to phase in products than to phase out old products. We were looking at both the platforms and the SKUs, the stock keeping units. We took out more than 30% of the SKUs in this period of time. The exact contribution of that, I can't say.
It's positive. It supports everything from the amounts of suppliers we interact with, the amount of quality assurance we need to do on the incoming goods, the fixtures we need in the production, material planning complexity, all the way to pamphlets of products in the market. You realize this is cutting across the whole company, it's extremely difficult to put the hands around exactly a quantification of what that will bring. It's a good thing. It's like lead time in the manufacturing. It's a good thing to reduce, exactly what that means, that's a hard one to spell out. What results did we achieve? Well, we have used this some few times. This looks at the EBIT improvement, where we started with SEK 1.5 billion, quarter three that was rolling 12 months, and now we're up a bit above SEK 3 billion.
We have doubled in this period of time. Margin-wise, 8.6% reported. I think that is a great achievement. Still, we would have liked that to be 10, as you will remember. Jan will comment a bit around that later. Important to be aware of the focus we created through the accelerated improvement program definitely was one of the key success factors why we could execute so strongly on it. You could say the focus creates the conditions for a successful execution. Next step on the journey, strategy. We worked through the winter of 2013 to 2014 with the strategic questions. We actually took the consequence of that in the spring of 2014, in the board at least, and discussed about the requirements for a different structure to go forward. Let me come to that soon.
Let me first state that a company that has a heritage of 325, right now 327 years, needs a proud kind of ambition. We said we cannot really leave it with anything else than market leadership where we choose to play. With all the assets, with the heritage we have, we want to be the market leader where we play. That was how we defined it. We say, the way we see that is we can be number one, we can be number two, but then competing for the number one position. The way we see it is that we need to be an innovation leader to be credible, to be a market leader over time. We also see as a consequence of those things, you are supposed to outperform your competitors in terms of growth and profitability.
It's just a logical consequence of the other two things, if you do it right. That was the definition we took on and that we have worked with since then. The more we worked through the strategy process, the more we realized that one of the reasons why we probably underperformed was in the structure of our operations. We have a huge breadth, and we didn't find the right combination of combining that breadth with the right focus. When we talked about breadth, we talked about the different customer segments, everything from the professionals to the passionate gardeners to the mass consumer segments. We talked about the channels to the market, we talked about the portfolio brands, we talked about the categories of products.
All those created a lot of tension, and we tried to respond to that with one Husqvarna, and that actually wasn't successful. The proofs show that. We took a different stance. We say, "Let's look at the end customer segmentation here. Let's try to be customer-centric, and when we try to remodel for future success." We took the end customer segments as the starting point, and then we discussed about how do we meet those in the best way. We concluded the brand and the brand promise is the best way to meet them. That became the differentiated business models that we actually applied for those, the way to respond to those different customer expectations. In consistence with that, we choose to have not only the strategy based on those things, but also the resource allocation and the whole structure as such.
The full responsibility, profit and loss, balance sheet allocated into these divisions. What we were looking for was actually these things. Hard for you to see there, but we were writing at the time, this is from 2014 CMD, focus, speed, drive, energy. We had our own benchmark at the time. We had the Construction division, which actually was formed in this way, was a global P&L. We saw all those things, all those characteristics in the Construction division. We really wanted to sort out the forest and garden space here along those lines. Where are we right now? I would say we have the proof of concept. We are really actually seeing what we hoped and expected, which is we have a much sharper business focus.
We have a higher energy in the company, in the forest and garden space, and we have a lot more decision power and speed. Makes a lot more fun for the people to work in this setup. I can say without any hesitation, this is a success. We have also maintained, because the backside, the flip side of that, somebody can sit and think, I can imagine at least, "Okay, you got that, but you probably lost something. What about the scale and the synergies?" I would say we have maintained all the vital synergies and scale advantages we need. We have given up on the Pareto. If you think about the Pareto, the largest synergies and scale advantages here, and then diminishing down to something that become a very long tail. That's very inefficient to chase.
You will end up spending too much energy to chase those synergies. It will not pay off. You better concentrate on the big things that makes the difference, and we maintain those. Talking about technology, of course, we keep our hands around technology, and the last example of that, I think is the McCulloch robotic lawnmower that is standing here, which is about to be introduced for next season. Of course, we want to capitalize on the knowledge and the know-how in the group of robotic mowers as one example, and put that also into the consumer space. There are many other examples of technology. You can imagine two-stroke technology and battery technology, et cetera. IP, not to mention IP. Sourcing, we still maintain a sourcing program that we call Excite for the top 100-150 suppliers, still encompassing about almost 70% of our spend.
That now, to give you a proportion, 100-150 out of 2,000 in total. We do the right things when it comes to the things that is going to make the difference, but we leave the rest. Brand portfolio, of course, needs to be viewed from the total market opportunity point of view. If you go to examples like online platforms, should we invest in four divisions in parallel? Not necessarily that clever. We try to utilize those type of synergies where we see them. Those are some examples. We actually feel very confident that we have managed to find a good balance of the ownership accountability to get the drive, energy, decision, power, and speed with maintaining the vital few synergies. On a piece of paper, many consultants are over-believers of the amount of synergies you can capture.
In reality, you better do the things that makes difference and work with these other elements that we talked about because they, we are convinced at least, got to make a much larger difference. It is not only about those things, it is also about how do you build consistency, and how do you. I mean, people are driven by a cause. When we wake up in the morning, when we work long hours like many people do, what is it that make us do those things? It is not necessarily the financial targets. Maybe Jan is more powered by that. I might be as well, but to be honest, I think there are other things that help us with the motivation. Those things you need to capture and help people to see. You need to talk about what is the core purpose of what we are doing.
What is it that we have been doing that is part of our success, the DNA of the company, so to say, which is becoming popular to talk about, and that we will continue doing. How does our vision look like, the aspiration we have for the future? How do we want to behave versus each other? That is more important given the history we have and where we are right now. I think these things shouldn't be underestimated. It is not necessarily anything I bring up at each quarterly report, but I think an occasion like this, I want to mention it because it makes a difference. It is really about building consistency, and we have done that. Okay. Where are we right now on this journey?
We are in the midst of the execution of the business plans that the division were starting to work on during the fall of 2014, that they launched for 2015, and now that they're pressing on with. Actually, this is profitable growth. We just wanted to work with those things for some period of time. We wanted to formulate those plans and create those initiatives, and be in pace with the releasing or building, I should say, the financial power to fund those initiatives. Because if you're going to build profitable growth, you also need to inject energy, and that's equal to capital to a large extent. Costs. We're doing that. I'll come back to the acceleration initiatives soon.
Let me move out a bit now, because I talked about the journey here, and let us look a little bit at the market, so we don't lose sight of that here in this discussion. The market, as we define it, is altogether with the construction site here at SEK 210 billion. Growth 2%-3%, segments with a high profitable growth potential, but also segments of lower potential. Quite an array of different type of growth perspectives in different categories and sub-segments here. There's a high share of professional customers. There's a good opportunity to work with performance. There is a good opportunity for after-market sales. Innovation is rewarded, which is a good thing. From a distribution point of view, multi-channel is becoming more and more visible. We have a dealer base, which is very important for this group.
You will hear more about that a bit later. Also the forest and garden categories are important for the big box retailers. We are at least an important factor for these guys. We see a lot of consolidated, strong competitors, particularly Europeans, Americans, like Stihl, Toro, Deere. I guess we can also mention companies like MTD, Bosch. We also see Asians coming up on the lower segments, like WORX, Ryobi. Scale is important in this business. If you look at it with the distinction of forest and garden on one hand, and then Construction on the other, forest and garden, we assess 2015 to have been around SEK 185 billion, and the growth 2%-3% over a longer period of time. Very much in line, actually, with GDP.
If you look at the regional split, Americas is the largest market, a little bit more than half. EMEA is also substantial. APAC is still not that large in the overall scheme of things. This looks a bit different if you look at the Construction, but you will hear more about that from Henric later. That market is SEK 25 billion, and may be on a little bit higher growth, in fact. If you look at the trends then, what's going on in the market that's affecting us and will affect us going forward? I don't think any of those pieces of information is actually going to surprise you that much. We see a lot about battery technology. We see, of course, digitization. We see the big data coming in. We see the Internet of Things taking part. We see new consumer groups emerging.
Urbanization, big thing in the global scheme of things here. The change of economic gravity towards the Asian side. Changing customer values and purchasing behavior. We have new customer growths, particularly younger ones, which are very heavy into social media, expects omnichannels, much more open to rent, share. Maybe wants to identify with brands beyond product features, and look at more of the company. Obviously, environmental aspects is becoming more of an issue for all of us. Shortage of resources. All these things will affect our industry one way or the other going forward. Profitable growth then, which is the next phase, just being at the turning point between those arrows, as I mentioned. How does it look like?
If you look at the three divisions now that we describe being in profitable growth, Husqvarna, Gardena, and Construction, we have had 2.5% CAGR in this period of 2011 to 2015, and that's currency adjusted. The way we look then on this is we have the growth ambition of being 1-2 percentage points ahead of the market. If we assume the market then moves with 2-3, that brings us to 3-5 percentage points. We have achieved 2.5. You can see, yes, there is ambition, but we are still realistic given that we also will need to battle segments with lower growth. It's not all rosy. Some parts are less, let's say, inspiring. That's the way we see it actually with the growth development in this phase. These are the Highlights of the various divisions.
I don't want to steal their thunder. I just want to leave you with a visual impression here that it's quite an array of things, and you can also get a sense for if this would be one group. It's not an easy thing to execute with success on all those things at the same time. Each and every one of those areas, they have initiatives, activities, they have support in various degrees of resources. It's not nice things on a slide. It's something we have been working with for some period of time now, and we start to expect yield results. Husqvarna, very much about the prosumer focus, Gardena, about the passion and growth agenda, and the Smart Garden consumer space, building on the profitable core, and Construction working and pressing on being the preferred choice of their customers.
I think that's the true highlight of the day. Just to give you a feel for what I'm saying here. It's not quantified, but it gives you an idea of how we see it. Last year's result EBIT wise was around SEK 3 billion . We talked about the FX headwind sufficiently, I think. Let's quantify. We talked about it as something, Jan, between SEK 450 million and SEK 500 million. We have the orange box, which is cost for profitable growth initiatives. That's additional costs we are taking to support those strategic initiatives. We have the further efficiency measures. I mentioned that we are in a program form internally running that, and we're talking about continued direct material cost out. We're talking about the indirect material costs. We're talking about logistics. We're talking about right sizing of footprints, SG&A efficiency and capital efficiency.
All those things are ongoing in the same fashion as we used to do them with the AIP, that's to create the strength to be able to do these things. It's quite a heavy lifting still coming as an improvement from that piece than beyond what is attributable to volume, mix, price, et cetera. You know the story about this year, moving along sideways, then with the improvement momentum, we are a bit more upbeat about next year. I think this is a very important piece here. This is the way how we create the muscle to invest. Okay. Given the ambitions we have about market leadership, given that the strategy process we were running was end of 2013, spring of 2014, things happen around you.
We felt that we needed to reinforce some of these areas even further than what we had in our plan. We said, let's find acceleration initiatives here that relate to sustainability, battery-based products, and digitization. I just quickly take you through how we see that. First of all, sustainability. Actually, it's hard to say that a sustainable market leader can be anything else than also a leader one or the other way in sustainability. We don't believe that's possible. We spent quite some energy on this in the management team and discussed it, the conclusion is we are signing up to the green path, the COP21 Paris, the scientific-based targets, ambitions of how do you actually need to reduce in order to take your fair share of the green path. We are taking on that commitment.
It's a huge commitment, we also will discuss about the process for scientific-based targets. We haven't finalized anything, we are in that dialogue. That's to show that we take this serious. It's not going to be a half-cooked type of case. We need to do this with continuous improvement, we also need innovation to make this happen. We need to take it from what historically might have been good examples and a bit of cosmetic efforts by some other people to something that is integrated to the business strategy and the way we actually act. Different targets, where, of course, the carbon target is the crucial one from a global perspective here. We're glad to talk more about that, more specifics if there are questions afterwards, something we take quite serious going forward.
We think this can really help us a lot also to do the right things. I mean, we have good examples. I don't know, Pavel, if you intend to talk about your new source chain factory, zero emissions. There are other things we can choose to bring up as examples. Digital. I was facing the question here, should I talk about the birds in the woods, so to say, or what we have in the hand, I ended up with the things we have in the hand. We are accelerating our efforts in this area, trust me. These are examples of what we have been doing, and there are still early days of what will come, still tangible.
If you say the Connect Smart connects to the Automowers, if you say fleet management that you will have a demonstration of during launch, if you say something that Sascha will talk more about as the Smart Garden. Many of those things are starting to come to the market. We have also built capabilities. Yes, there's some small technology acquisitions, but we have built back-end capability to be able to execute on these things, and we have formed partnerships for platforms that are required because obviously, needless to say, we can't do all these things ourselves. This is something where we put a lot of energy, and you'll see examples of it later.
I think the best example Sascha has with the Smart Garden, connecting automated watering and robotics, I think is a fantastic start of what all people living in a house dreams about when they have been on vacation. Battery. We view increasingly robotics and battery as one whole because they share a lot of the characteristics actually. One being the growth. Growth here is well above 20% in this area of the market. It still is not that huge in the SEK 185 billion forest and garden reference. Let's say it's 5%-6%. Our share of that is almost twice that number of our revenues. We are utilizing the opportunity in the petrol to battery shift, and we are determined to be equally attractive with battery-based products as with petrol-based products.
I think you will recognize that having the heritage from the petrol, this is a mindset change that we have worked on quite hard to get everybody to buy into and be equally glad to sell a battery-based product as a petrol-based product, depending on the customer need. The way we've done it is that we have used the application knowhow. We have started with a high performance, and then we will stepwise move into the more higher volume segments when it comes to the handheld equipment, to give one example. Robotics, you're well aware that we are at the forefront. We are the market leader. We were the innovator of the category 20 years ago. We are by far the market leader, and the fact that we now have a third brand with robotic mower for '17 season, McCulloch, is just logical because that customer segment is emerging.
It's just another way to show the determination of a market leadership ambition. We want to have a product response to all the major customer segments and demands in that area. We also released the information this morning that we are starting up a second production unit in Brno, in Czechia, in parallel to the existing manufacturing unit in U.K. That is from the '18 season onwards. Take the chance later to look at these nice things, and maybe Jeff will talk about it. Good. I think that's most important. The most important is, yes, there is an emergence of battery-based products that is strong. We are positioned to take part of that and not to lose out at it. It also includes, again, build-up of resources, an accelerated introduction launch plan of products going ahead.
It's a lot coming to the market, the fact of it is, and you will have the chance to see that we have already today benchmark products in terms of performance since a couple of years. It is happening. Good. Rounding up a little bit. You have heard me talking about that we have delivered, you have heard me talking about we have the proof of concept, the empowered organization. You have heard me talking about the profitable growth phase, and that we are moving into, which is really exciting, and the fact that we are accelerating now the innovation going ahead. Changing the phase, and this is my last page before I leave to Jan. Changing a phase here and the focus moving more to growth, and the board thought it was logical to also reflect that in the financial targets.
We maintain the margin target, in the way that growth, of course, should create value. That remains as a target margin-wise. We have then growth as a target, and you heard me talking about growing quicker than the market. We wanted two percentage point. It's also then getting into growth becoming more important of the capital efficiency. How do we grow with capital efficiency? With those comments, I leave it to Jan to be more explicit about it.
Thank you, Kai. Okay, sorry for the voice. I will try to do my best. When I started to work after university, there was a big poster in the office landscape stating the difference between a dream and a plan, and a target is a plan. When we are now establishing new targets, we have the plans to support that new financial targets for Husqvarna Group the coming years. You will hear more of these plans when we are listening to the different divisions making their presentations. With three out of four divisions now in a profitable growth phase and substantially above the 10% EBIT margin, it is time for us to shift focus as a group. The definition of profitable growth for us is to have over-industry average EBIT margin and growth, and to do this in a capital-efficient way.
The margin, the growth, and the capital efficiencies are the cornerstones in our financial targets. Before we enter into the new financial targets, let us make a short recapture of what we have as financial targets from the capital markets day in 2014 and up until including this year as well. The financial target should reflect the situation and the perspectives of a company. For Husqvarna Group, the task the last years has been to restore profit margin and to come back to double-digit EBIT margin that the group had pre-2008. At the same time, have a financial profile and position of an investment-grade company. With the strong market position that the Husqvarna Group has, and also with the brands we have, these are reasonable targets, and financial performance and position for such a company.
The financial targets were, and still are up until the end of this year, a dividend of at least 40% of previous year's net income, then a net debt to EBITDA that should be below 2.5, seasonally adjusted. Both these targets reflecting the ambition of an investment-grade-rated company. Also an ambition or an EBIT target of above 10% over a business cycle. If we take a look on where we are and where we will end this year, we can say that the dividend per share has been substantially above 40% of the earnings per share the previous year, and we have been below or substantially below 2.5 on net debt to EBITDA the last years. The EBIT margin has not been 10% during the last year, even though the target as such was put as over a business cycle.
We had put up a short-term target for ourselves that we should reach 10% EBIT margin in 2016, reflecting then the full effect of the closing of the AIP program that was closed in 2015. Conclusion, two out of three targets reached. We are of course not satisfied with not reaching 10% of EBIT margin. If we just reflect just a moment on that target and where we are, we can say, as I said, that from an activity point of view, the AIP program that we launched in 2013 has delivered, and we are happy with the activities, and also that we have been able to deliver substantial EBIT improvements. From a margin point of view, it has not really been enough.
On one side, how can we say that we're happy from an activity point of view, but we are unhappy from a margin development point of view? Why was everything sort of on track 2014, 2015, but has leveled out now in 2016? First of all, we have to understand that Husqvarna is very dependent upon certain currencies. For us then, U.S. dollar, as regard net sales, is a big part of the top line. If you remember in late 2014, beginning of 2015, we saw a substantial strengthening of the U.S. dollar in relation to all currencies, more or less. As a consequence, compared to 2014, we got an improvement of the net sales just from currency of SEK 3.5 billion , where $3.1 was related to the strengthening U.S. dollar.
For Husqvarna, the relationship of U.S. dollar is important from top line, but it's also very important for how it's affecting the EBIT, especially the relationship between the U.S. dollar and the EUR. We have a substantial net outflow in U.S. dollars despite the big net sales. The reason is, of course, that we have a big footprint, manufacturing footprint, especially related to our lawnmowers in North America. Those products are exported mainly into Europe and mainly into Euroland. Whereas we got an inflated net sales, we got the drag on the EBIT due to the transaction exposure we have. With the hedging policy we have, we are postponing the transaction exposures between 6 to 12 months. This means that from an EBIT point of view, we were affected mainly in 2016.
Kai mentioned the SEK 450 million-SEK 475 million negative impact that we expect for the full year this year, whereof SEK 350 already has hit us in the first half. From an exposure and volatility point of view, this is not an ideal situation, but it's our reality. This is how it is. We are slowly taking steps to actually move away from this by reducing the outflow in U.S. dollars, by trying to move away from purchasing in U.S. dollars, and also, of course, being able to improve our U.S. dollar sales and margins. The high dependency will continue to be there for the coming years, and especially as relates to Europe, we will have a big inflow of EUR.
If we just make an adjustment, not on EBIT, but only on the top line for 2016 with the effect of the U.S. dollar, we can see that we would have been close to 10%. This is an explanation, not an excuse. It is what it is. We didn't make it to 10%. The currency dependency is one of the characteristics of Husqvarna. Another characteristic is, of course, also our seasonality, reflecting our market footprint, where we are selling some 90% in our northern hemisphere. The good thing with the seasonality is that it's 100% predictable. The lawn and garden products, our main part of the business, are invoiced to our dealers, distributors, and retailers in the first and in the second quarter, whereas the sales of forest products are mainly happening in the third and in the fourth quarter.
They are, of course, then weaker than in the lawn and garden season. Construction, more evenly spread over the year, even though that the winter is somewhat lower activity in general in the construction segment, and thereby impacting us as well. This sales pattern is, of course, also reflected in the EBIT pattern. The cash flow actually follow the same logic as inventory for the coming season is gradually being built up during the fourth quarter, especially in the first quarter, sold, being accounts receivables in the second and third quarter, and also payments during these quarters. The seasonality is fully predictable, the weather is the unknown and can, to some degree, smoothen or amplify these seasonality patterns we have.
Unfavorable weather during high sales period will, of course, affect our EBIT, also the fact that we will carry more inventory into the third and the fourth quarter, which is then reflected in the pre-build in the fourth quarter for the coming season. The risk of obsolescence for the products, they are limited due to the fact that it's not like cars or anything like that. It's not model changes in that way, so it can be sold the coming season as well. It's more of a cash flow problem. Furthermore, there exists what we can call embedded weather hedges. What do I mean by that? It's also between division and segments. For example, where we had last year, the warm and dry weather in Central Europe in Q3, very positive for watering products and the Gardena Division.
On the other hand, negative for Husqvarna Division as regard lawnmower sales. Surprisingly often, when we have a strong and cold winter in the U.S., we have a warmer weather in winter in Europe. Leaving that and moving over, so to say, to the next step. We now shift, as Kai said, the focus from restoring profit to go to profitable growth to support Market Leadership 2020. By doing that, we also need new financial targets supporting the ambition of over-industry average EBIT margins and growth in a capital efficient way. This will, of course, also provide for continued momentum as regard operating income and cash generation the coming years, because in the end, this is about money.
The new financial targets for the coming years are an EBIT margin equal to or over 10%, which is similar as the earlier target, but the coming years, not over a business cycle. An organic growth of net sales of 1%-2% over the underlying market. When we say over the underlying market, the market we are calculating with being underlying is the 2%-3%, reflecting the GDP in the markets where we play. As a consequence, the range is between 3%-5% of compounded average growth rates, CAGR, and currency adjusted as well. Thirdly, the capital efficient target is then a net operating working capital in relation to net sales target, where net operating working capital is the inventory plus the accounts receivable minus the accounts payables. Those three targets are average number, season-adjusted over the coming years.
When we say over the coming years, we are instinctively thinking three years. We also know that the relevance of these targets could be also for two or for four years. These targets are valid as from 2017. The full year 2017 is the first full year we will actually have the summary of where we are compared to these targets. They are group targets, with the exception of the growth target, which is valid for the three divisions in profitable growth, whereas the focus of Consumer Brands Division will continue to be to get to a break even as soon as possible and to the 5% 2015. You can say that they are still in the restoring profit phase.
These three targets are relative numbers, in the end, we must also understand that this is about improving earnings in money, cash flow in money, and thereby also shareholder value. To assess a little probability behind and the probability to reach these targets and the development, we can take a look on where we are and where we have been the past. We have already explored the EBIT margin. A crucial part, of course, to reach this 10% or more. 10 is definitely not a ceiling. It's a floor where we should start. We should understand that we are at 8.6%. It's a thing to just go up to the 10%, 10%, as I said, is not the ceiling for us. It's the starting point for these coming years.
To be able to do that, we need to get to the turnaround in Consumer Brands and to get to the 5%. It is a crucial part of this. It also has to be balanced, of course, these targets, EBIT margin and growth, and find the best mix for us as relate operating income. In the end, as I said, it's about making money. If this will mean that we will get to 11, 12, 13, I do not know because it's a balance between growth and the margin as such. There is no contradiction between growth and margin. Normally they come together if it's done in a clever way. Putting out the 10% is also important for us internally, but it states for us that this is the floor.
This is the decent level we expect not to be under when we are performing our business. The growth target, the net sales improvement in local currency will, of course, also be very important to grow our EBIT in the nominal terms and our cash flow. This is the case for the three divisions in profitable growth and Consumer Brands has growth in their plans, as you will see, but it's not necessarily a growth plan for 2017 and 2018. It is an EBIT and profit plan. With the total underlying market 2%-3%, 1%-2% taking market share every year, it's not an easy task. I have not seen any of our competitors have targets of decreasing their market share. Of course, this is not a walk in the park.
We are talking about a mature market with well-established competitors, with well-established positions, this means that we have to bring improved products and improved services to the market and be better as an organization to respond on the customer's demand. Something we actually believe that we can with the new organizational structure and the traction we have there, also the growth initiatives and ambitions we have already provided for and taken cost for, or that are in the pipeline. As you can see, the last years, five years, we have been able to get 2.5% of CAGR in these three divisions together. To state the obvious, 5% is not the ceiling. We will take whatever market share or whatever volume we can to provide for a better cash flow and a better EBIT margin and EBIT as such.
To be able to secure improved cash generation while at the same time growing net sales, there is a need to focus on capital efficiency. Whereas the working capital are many small decision out in the operations on a day-to-day basis, the fixed assets and the development of that is more stepwise changes when we talk about acquisition, structure changes, divestments, et cetera. As the plans we have for the coming years that forms the base for these targets are organic plans, fixed assets are forecasted to be relatively stable over the coming years. The focus for the group due to that will be to reduce its net operating working capital in relation to sales, i.e., to become more working capital efficient. As I said before, for us, net operating working capital is the inventory plus receivables minus the payables.
Where we are right now is that we have in amounts, seasonally adjusted, rolling 12 months, around or slightly under SEK 10 billion of net operating working capital. We are at close to 27% of net sales. To reduce this with 10% more or less will then mean that we will be under the 25% of target of net sales, and that we will be able to release SEK 1 billion or close to SEK 1 billion to provide for the growth or to be dividend out to the shareholders if it's not needed.
To be able to improve the work with net operating working capital, we as an organization must focus more on eliminating waste in our flows and in our structure and in our logistic flows, because this is the big part related to our inventory, which stands for a substantial part of the net operating working capital. Also how we pay and how we get paid are crucial parts to reach the capital efficiency target. To sum up, I stated in the beginning that the difference between a dream and a target is a plan. We have the plans to enter into profitable growth phase, and we outlined that already back in 2014 that this was the time. This will bring us to 2020 Market Leadership. We define profitable growth as having over-industry average EBIT margin and growth, and to do this in a capital efficient way.
Delivering on these three financial targets the coming years as from 2017 will provide us then to deliver profitable growth to the shareholders and all stakeholders. By that, Kai, I ask you up on the stage to take some questions, hopefully we can provide some answers.
Questions, please. State your name and company.
Yeah. Hi. Johan Eliason, Kepler Cheuvreux. Just a question about this 10% margin target. You've obviously had it for a while. Now three of the divisions are above that one and one is below, and that one has a 5% margin target. Who is actually this 10% margin target for? It looks a bit unambitious for the already very profitable divisions. Do they have other targets internally?
I think you hopefully listened to my definition of the profitable growth. Continuous improvement of the EBIT margin in parallel to the market growth definition, so to say. I think those two go hand in hand. We are not explicit about saying Husqvarna should reach 15% or Gardena, et cetera. Those type of levels we haven't communicated. We do have those, as you will realize, but we don't go externally with that.
Okay. Thank you.
The target is not 10%. The floor is 10% for the group.
Anders Roslund, Swedbank. What is your target for Consumer Brands coming to growth, as you've excluded them from the group target?
It's not the primary objective. The primary objective in the phase they're in is a profitability improvement. It will encompass also a net sales growth component. You will see that little bit later, it's not the primary target as such.
Okay. Thanks.
Yeah. Hi. Rasmus Engberg, Handelsbanken. Hi. Here. Yeah. I was just curious as to who do you actually benchmark to when you say you're going to have better growth than margins?
We of course do our market assessments of the whole forest and garden space, just like the Construction space. We do that quite diligently, and it's a triangulation of various data, countries, industry associations, our own assessments and knowledge. So it's actually a triangulation exercise that is fairly accurate. So we have that data. Publicly, of course, we can rather refer to OPEI and other things, but I think we have a fair good understanding of that, also including the competitor profitability, in fact.
What type of profitability do you think on average that your peers have right now, more or less?
You would need to go into the divisional type of space to make that relevant. You will find the benchmarks in the Husqvarna space, surely to be Toro and Stihl. I think we are performing okay. We can do even better, but it's in line with those people. Not outpacing them, so to say. I wouldn't put it formulated as we are over-delivering on the profitability versus the benchmarks, like that example.
Björn Enarson, Danske Bank. Question on the outgrowth target of growing 1-2% more. Is that simply selling more products or the same products, or is it more in terms of value that you are more shifting into different products or selling more of the products you want?
First of all, it's value. We're talking value, not volume. That's what we talk about. You will hear. I think the best is actually to come back to that question after listening to the divisional presentations, because it is going to be driven, of course, by selective categories for select customer segments. There is a target here. The little, you could say, the methodology that we applied in AIP to go with the leadership areas is applicable for the various divisions, but means different things for all of them.
I stay for the day.
That's good, yeah.
On the 10% EBIT margin target, it's not for each and every year. It's still an average for the two to four-year period.
Average over the coming years. As I said, we think mentally three years, but you're right, it could be two to four years as well, depending on what's happening.
Do you have a view on next year already now? As it is quite a big leap from where you will end up this year.
I would say there's nothing new as to 2017, as to how we've communicated before. The thing we have said is we expect to reach the 10% margin target in 2017, latest 2018. That's how we formulated. That still holds. That doesn't change.
No.
Consequently.
You can say, Kai, that is also more or less continuing the journey we have had if we exclude the SEK 450-SEK 475 of currency. That could, of course, help us if it goes the other way around. It is what it is, and we have to handle that. We have a good underlying momentum of operating income improvement, and that we expect to continue.
Thank you.
Thank you for the presentation. Natalie Falkman from Carnegie. I have a question on Consumer Brands. It was a quite weak quarter volume-wise in the second quarter. Could you share with us how you look when you're going to bottom volume-wise and sales-wise in Consumer Brands?
I could share that right now, I would urge you for some patience because Jeff Hohler is going to talk about that and give some information in his presentation. I'd rather leave the thunder for him to, if that's okay, Natalie.
That's very good. Then a question on battery and electrical-driven products. Do you need another push in R&D to promote and develop and innovate within this area?
The answer is yes. We are undertaking that. We are bringing in new people to support the buildup of the resources required to accelerate the product launch plans. That's an important component, it's also equally important to build a momentum in the sales channel to be as convinced to sell these products as the traditional products. Not only with our resources, but equally on the dealer side. They also need to be convinced. The good thing is everybody who has tested these type of products, they are super impressed. I'm not exaggerating saying that. I'm a frequent user myself, and some of you probably are, and you will know that it's so convenient to work with those trimmers and other types of products.
It is a fantastic product category, and we do have very strong product, and we will accelerate launches to the market the next coming years. That requires people.
One remark. This does not mean that we take from petrol and put into battery. We have great plans also on the petrol side. Of course, this will mean more R&D.
Yeah, that's a good point.
Just last question on that. How much will you produce in-house, and how much will be more of assembly type of products compared to your current ones?
The added value will be lower on the battery, just for you to understand, it's more of a horizontal model where we specify, we might design. Just to give an example of the most high performance brushless DC motor we have in use, we do the design. We let somebody else produce it. You will see these type of cases, and the definition of what's, so to say, the core competence is a little bit different on that side than you will have on the petrol, where we do everything from the casted magnesium, aluminum, et cetera. We will be a bit more cautious here, a little bit more moving to be the ones who designs, specifies things, and others will probably produce to a large extent.
Over time, we will be very clear about which is the core competencies and capabilities we need to have to be competitive in this space. That I wouldn't say is fully cast in concrete yet.
Peter Agler from Lannebo. Just a question about the profit margins. If you had the 10% target that should be reached this year, besides the currency movements, what are the main reasons in your view that you actually haven't reached it yet?
Well, actually, it was for the full year of 2016. We are not there yet. That's number one. Let's be honest and say I think, and Jeff is not offended by that, the season, the peak months of the season, actually the weather was very poor in North America. That has been a huge volume drop as a result of that. The sell-through in the retail area has not been according to expectations, and hence they are not replenishing in the way we expected. With that situation, that's probably one of the key things that mixes in into this as well. There are other small bits and pieces, but actually, I think I want to put you back into where we were. We were at 5%, and we were putting up this very ambitious target of doubling the margin to 10 in three years.
That was maybe too ambitious also. I'm feeling really good about what we have achieved versus what we were setting up from an activity point of view. We were carrying through the activities that we were setting out, but maybe it was optimistic to some degree.
Thank you.
Rather being ambitious and a little bit too much tension than the opposite. Be sure that mentality is still in this management team. The will to show and demonstrate a good record going forward is there. I can reassure you that.
Yeah. Vincent Bourgeois from Zadig Asset Management. On battery powered, if you exclude robotics, how much of your business is in battery powered?
I wouldn't talk specifically because we will become very detailed. I like to rather aggregate it. That's why I say the robotics and the battery base together is about 10, give and take 10% of our forest and garden revenues-
Okay
if you relate to the-
From a margin mix standpoint, if I exclude robotics, which I understand is a good contributor, is the fact that the battery powered tools are growing faster a drag on your margins overall, or how does it compare?
No, I wouldn't say that at this point in time.
It's margin neutral?
I would say, yeah. If to give you a rough indication, yes, I would say so.
Okay. Thank you.
Of course. Let's talk about a bit more though, what's happening here, is that we have a whole bunch of actors entering the outdoor power equipment space. All the power hand tool actors, principally. You have the Bosch, you have the Makita, you have Hitachi, you have Stanley Black & Decker, DEWALT, et cetera. All these people are trying to utilize their technology and put them into applications of the outdoor power equipment. That reasonably will have some implication, and we better move quick in order not to get into a margin dilution type of situation. We are under pressure, I think it's fair to share with you. To be successful here, we cannot really sit on it for too long. We better move fast.
Coming back to the margin growth discussion, that does not mean that we are avoiding these products because they are increasing our operating income. Of course, when we talk about margin and growth, we have to take a look on the money, not only on the percentages.
Christer Magnergård from DNB. You talk about market growth of 2% to 3%, your high growth areas, handheld batteries and also robotics, what kind of growth do you see for the market for the next four years over those categories?
For-
For robotics and battery handheld.
Yeah, okay. Actually, it's a gut feeling, it's not fact-based, but I would say I expect them to remain very high in that region, about 20% until the period of 2020. I would say that's a reasonable expectation.
Thanks.
Yes. Hi, Rasmus with Handelsbanken again. With regards to your underlying improvement this year of, is it around SEK 600 million or so on EBIT? How much of that is passing through the negative FX or is that not a thing at all? Given what's real underlying improvement in EBIT.
I don't really understand the question. Kai had a good slide here, 2015 to 2016, where we saw the drag on FX. We saw the ambitions, the growth initiatives, and we saw both the cost side, the further efficiency improvement, but also volume mix, et cetera, being more or less on the same level. I think that's a good explanation. Also the size of them was quite in line with what they are in reality.
To balance those two elements of the currency and the increased costs for the strategic initiatives, there is a major piece here, of course, coming from the further efficiency measures contributing. That pace we do expect to carry with us into 2017 because we, as I mentioned, we run a program over two years, 2016, 2017. Even though we do not talk about it externally as a program, we treat it as that. The reason why we do not talk about it externally as a program, we do not want to reveal all the details, because then we would end up with divisional views of. That would be very beneficial for our competitors, not necessarily for us. The answer is, you have that type of factor of improvement, if that is Rasmus, what I am asking.
Can we repeat it?
Just trying to understand whether a part of this improvement actually is that you have managed to pass through these negative FX effects or not, or is it actually an underlying rate? That is my question.
To a minor extent, we have. Especially when we have flows from USD into EUR, where we have competitors in the same situation. Of course, this is a timing question. Everyone will increase prices sooner or later, we have done that to be able to offset some of that. That is the minor part. The rest we have eaten on the margin because we have competitors that have not the same footprint as we have.
Yeah. Hi, Johan Eliason again. Question about growth. I think you, Johan, mentioned the organic going forward.
Is that the sole focus today? I guess you might do some of these minor technology acquisitions you've done recently. The balance sheet is starting to look fairly okay.
If I start. The profitable growth strategy that you will hear a lot more about in the details is organic, but we are not excluding acquisitions. The base of it is organic. From a landscape point of view, it's more fragmented in the Construction space than it is in, for example, the Husqvarna space, to give one example. From that point of view, there are some areas that could be more, let's say, likely to materialize. I want to be clear, we have not worked over any longer period of time to have a huge pipeline of targets. That's why we are cautious communicating about, but we are definitely open for it. We have the strength to deal with it. We have the capability, I would say, in the management team to deal with it.
We will take whatever opportunity we think really fits the strategy. We will be picky.
The organic growth, obviously we hear about robotics, handheld battery powers. Adjacent segments like golf, is that sort of the agenda or?
Anything in those directions?
You mean lawnmowers for golf course? Actually, and Pavel could make a story about that later, that there are commercial applications for golf courses and other locations, and these will probably expand as we move ahead. I think that's a reasonable expectation.
Organically then, I take it.
The plans are organic, but also we have the plans and M&As could be also to make a leapfrog in those plans to reach the point quicker, but it could also be adjacent segments. That is how we view the M&A plan. This is organic and this is what we have been working with.
Do we find that adjacent robotics technology to support, as Jan alludes to? We will naturally be open for that and interested in that.
Thank you, Kai. Thank you, Jan, let's break for some 15 minutes of coffee.
I'm an early riser. Always have been. Love the quiet hours before it all starts. A hot cup of coffee before the morning light comes yawning over the treetops like it wants to join me for a refill. This is my office, a temple of 100-foot high, 100-year-old trees. A field that stretches for miles and miles and doesn't end till long after the day does. I wouldn't change it for anything. Every day it's the same. Anything can happen. When everything comes together, you trust yourself, trust your equipment, trust your team. You get that right, and you'll come to love what you do. Some people watch the weather reports. I just watch the weather. Sun, rain, fog, snow, fresh cut grass, leaves and sap. It just fills your senses. Time to call it a day. See you tomorrow in a couple of hours.
Good morning, ladies and gentlemen. Pleasure to have you all here, and welcome to the world of the professionals through this film and in this store. I will guide you through the Husqvarna Division, where we stand, where are our plans, and let me start out by having this picture saying a little bit about our current status. We have a very strong position in the market today. Global presence, well over 40 countries, most of those with our own people. Very strong brand recognition for the Husqvarna brand, and a very broad portfolio of products stretching all from handheld over to wheeled over to the modern battery and robotic products. Also, we have a financially strong and sound position with a good underlying sales growth as well as with a good underlying EBIT development.
In addition to that, we also have a very dedicated team of people who now have, so to say, a clear direction and a clear focus on the Husqvarna brand. What we have done during the last two years since the inception of the Division is to form our strategy. The strategic initiatives that we have identified are six. Those are the ones that we believe will bring us to the profitable growth going forward. This is mainly about focusing on the dealer development. This is mainly about focusing on commercial lawn and garden. This is about focusing on parts and accessories. This is about expanding our robotics presence and also expanding our battery presence. This is also about expanding our presence in the emerging markets.
Having that focus very clear, having that direction very clear for the Division, focusing on the professionals and the prosumers, we believe that we are well set for a good, so to say, trajectory for growth going forward in the next couple of years. If we look on the market, the addressable market, which is relevant for us where we play, it is approximately SEK 80 billion market, slightly adjusted since the last capital market day due to market growth, of course, and also due to the FX impact on this. The market is growing with roughly 2%-3%, the base for what Kai mentioned to you earlier. Stable growth, but we also see various pockets of growth that are higher. This could be related to specific products, but this is also related to specific geographies.
If you look on the split of the market potential, it is divided approximately 40% in EMEA, 40% in U.S., the remaining 20% is for the rest of the world, while also the emerging markets are part of this. However, the split of product potential within these geographies looks very much different. There is an even split between handheld products and wheeled products in EMEA, whereas the North America region is predominantly wheeled-oriented, whereas the rest of the world, and especially driven then by emerging markets, is actually predominantly handheld-driven. This also, let us say, sets the dynamics within the market slightly different depending on which market and which region we are in. The market is very much performance and service driven.
This enables us to sell value-add at a higher profitability. Both professional customers as well as prosumers request products with high performance, with high quality, with high reliability, and of course, the professionals are very much requesting the productivity within the products when it is. We are supported to meet the market requirements, not only through our organization and through our own product assortment, but of course, with the help of the dealers. It is a fragmented dealer market, but they are very much, so to say, aligned with us and supporting us, and they are providing both sales support in terms of application knowledge, but also, of course, service. The aftermarket is very attractive in terms of selling consumables, wear parts, but also protective equipment, as an example.
Looking on the market trends that Kai mentioned earlier a bit here that are happening, the general market trends, we also feel that they are supporting us in our ambition for growth. The increased urbanization into the cities, the older population growing is, of course, increasing together also with the need for sustainability, the request for sustainable products. This in whole is actually enhancing the potential for the commercial lawn and garden opportunity. It is also enhancing the potential for the new products, be it robotics, be it battery products, and the acceptance of those products we can see have increased very much rapidly in the last couple of years compared with how it has been earlier. Also, the emergence of the Internet of Things and the connectivity opportunities gives us good opportunities to provide value-add features, services for our customers.
I will come back to that later, but we are already involved in that part of the, so to say, offering since earlier also. Growth and profitability. There is, as I mentioned, stable growth with pockets of higher growth, naturally already discussed. Robotics and battery are some of them. We also see that there is a growth in the aftermarket. There is a growth in the CLG in general due to some of the things that I mentioned. We also see that there is a growth within the emerging markets coming back after the political and macroeconomic situations, which we see today, as an example, in Latin America, in Russia, partly in China as well. There will be a higher growth there.
The good profitability is again due to the performance request, where customers are requesting the high performance, the quality, the service, and as I mentioned, also accessories. There is a good opportunity for getting to that growth there. We have a good global geographical presence, spread out reasonably well to be able to balance both opportunities as risks when the macro economy changes all over. We have a strong market share overall, approximately 20% market share with a leadership position in chainsaws, in riders, and in robotics. We also have very highly over average market share, I should say, on the European markets versus the North American. We see clearly future growth opportunities in all of the regions, all of the geographies, even though the growth pace of this will be slightly different.
The base is really the macroeconomic, the GDP, the 2%-3% market growth, which then again, certain pockets, certain geographies will be higher over the years to come. Our focus is on the professional customers. This is a group of people who are dealing with forestry, the pro loggers. This is about the commercial lawn and garden, keeping the parks and the green areas clean. This is also about the arborists, the climbing in the tree and cutting. We have the prosumer, which are mainly two groups of people. These are the landowners, the private landowners, who need the products for dealing with their, let's say, land, but not on a professional aspect.
It is about the customer, the well affluent customer who would like to go for a premium product, who like the performance of a premium product, who has the trust and wants the reliability of the brand, and of course, who is affluent and can afford to buy the brand as such also. We are supporting this market with our dealers. We have approximately 25,000 dealers across the globe with whom we have long-term relationships since many years. The dealers, as I mentioned, are providing sales application and also services. However, they differ a bit in how they look like.
We have a part of the dealerships which starts to be very much more modern and more commercially oriented, whereas we still have a larger part of the dealership, which is the traditional dealers originating from the service aspect and moving more into the commercial aspects as such. Looking on the competitors and the competition situation here, there are traditional long-term competitors in the market here. They are, of course, all very competent in their area. However, the difference is that none of them really have the breadth of the product assortment we have. They are more niched into their specific niches where Stihl is oriented towards handheld product mainly, and where John Deere and Toro, for example, are niched into the wheel products very much. Yamabiko into the handheld, Honda slight mix though.
Basically, all of these are smaller than us in terms of the market where we play, with the exception of Stihl that has a bigger size. Also, we see the entrance of new competitors coming in very much mainly related to the new technology, the battery, and the robotics, of course. In some cases, they bring the, should we say, the battery technology with them, but they are, in most of the cases, actually lacking the application knowledge, which is our strength and still our benefit for these competitors. It is very much, as Kai referred to, we need to be on the edge regarding the R&D here to be able to be in front of these competitors entering us, because catching up, of course, goes much quicker today than what it did some years ago.
Looking on our financial performance over a period here from Quarter Four till Quarter Two this year in the rolling 12-month numbers, we see a stable growth. For the period, we've had a CAGR of around 5%, doing well. Of course, the margins are actually following this growth, even though you will, of course, react to the dip that comes in Quarter Three, which is very much attributable to the FX impact that started there and then continues throughout here. As Jan pointed on, we have a negative FX in the group and also in the division of a little bit more than SEK 200 million, actually, for the first half year. That also will continue. Underlying, there is a good improvement. If we add back the FX, there is a 1% point addition to the EBIT, slightly more even, which shows this.
The EBIT improvement is coming from various, so to say, contributors, strong development of leadership products where we have good profitability, focus on those, also geographical mix. There are certain price differences in the geographies, of course, which impacts this. We have, of course, volume impact, volume improvement from the growth. We have worked very much with efficiency improvement, cost out benefits, whether it is related to efficiencies in manufacturing, in sourcing, or in design R&D to simplify the platforms. We have also benefits from manufacturing footprint changes that was done some time ago, you know that we closed down a factory in China to consolidate our footprint.
During this period of time, we have started out to do the investments for growth. We see that we are able to offset the investments for growth are very much financed by a combination of the operational improvements, the growth improvements, as well as the savings that we can do. However, not fully for this period of time, managing to offset the FX that is there, as I mentioned, will continue also to be for a certain period of time here to the end of the year. We are very clear on the fact that we manage for the future to both manage growth, the investments that we need for growth, let's say, in addition to the organic growth, as well to work with cost savings that will finance these investments for the future.
Since the inception of the division, we have been focusing very much on the professional, the commercial customers, improving our sales activities, ensuring that we support sales, also ensuring that we support the customer satisfaction very much. We have created dedicated key account organizations for the CLG, which has helped us to enter into that market very much. Of course, helped by our wide product assortment and also some specifics that I will come back to. This has also been supported by operational improvements in availability, product availability, distribution availability to customers. The professional customers are requiring quick turnarounds on parts, quick turnarounds on their products, et cetera. That is something that we have worked on very much with.
We have also managed to start out with the robotics expansion into commercial applications, partly touched on by Kai from one of the questions here, where we see that the interest for that is now starting to be, and we also have a dedicated part of our organization working with that and also take that into account when looking into the future development roadmap for our products, of course. I think it's important to point out that we do have a very competitive battery assortment since some time now, which in the last years have been, let's say, fully completed with new products. We have also launched these products globally in a, so to say, directed global launch to all the markets, and we see good results from that as well. Digitalization, that is also something that is not entirely new to us.
Since some time ago, we have developed a fleet management system, which is a software that helps the professional customers to manage their fleet, to understand their utilization of their fleet, to understand when services has to be done on their fleet, to also understand how they actually run their products, and by that, making changes in how to operate and improving their productivity. This is a software that is constantly being developed further. You will have a demonstration later here today on that will give you more, let's say, insight into that, but that is one area. The other area is the Automower Connect, where we remotely can control our Automowers.
This was introduced already last year as an extra feature on the 330X, and this year when we released the 450X model, this came as built-in, which means that you can more or less completely control your robotic start, stop, program the times when you want to run it, change the cutting height, et cetera. It gives you a versatile, let's say, opportunity to remotely control. As well as you will get in case it would stop, which very seldomly happens, you get an SMS and you understand that it's also stopped for whatever reason. We also do other things here.
Actually, I don't think you might not see it today, but we have an, should we say application or a support here in the store where when you come in and you want to buy a robot, you can actually key in where you will find your house, Google Maps. You will set out your lawn, see the size, and that will also trigger you to give you certain indications on which lawnmower, and you will have an interactive discussion with the system to help you to find the best lawnmower. We are already there.
Right now it is very much about accelerating this or making sure that the organization is following this, making sure that we coordinate all our resources within these features so that we don't develop them single, and to build and to utilize them to build a common base, the common platform, which also was mentioned here before, earlier. Good. Moving ahead, we have a very strong innovation capability. In line with our premium position, we are focusing on R&D very much. Our R&D spend is slightly higher than the average for the group, enabling us to really develop state-of-the-art products and being in the forefront on this very much. We have in the recent time, we have developed several groundbreaking products that a couple of them will be mentioned here.
Overall, robotics, we have the leading portfolio in robotics, starting from the small robots, the medium size to the big size, taking 6,000 sq m, and now with connectivity, again, enhancing the user friendliness for the customer very much. The new robots are also equipped with new sensor technology. They work faster. They are much more reliable. We are really innovators in this area and continuing and keeping that position also. Battery, I mentioned that, complete assortment that has been complemented during the last period of time, among them with professional equipment, pole saws for taking down very high branches. This is trimmers, which now can be used with a steel cutting knife instead of a trimmer line. This is improved batteries with longer runtime. All of this is really supporting very much the requirements for improved productivity by CLG, but also sustainability.
We see that they come and ask for this because they want to start working earlier in the morning. They want to work later in the evening. They want to work in an environment where there is a lot of people and where they previously were not allowed to use petrol products at that point of time. Actually also from a, should we say, runtime, the electric products provide you with much better productivity. You don't need necessarily to stop and change the trimmer cord, fill in the petrol. With the backpack, you can work anywhere between 6-8 hours, really. Of course, you don't work that full all the time, but it gives the opportunity, it's very much improved. On the pro handheld side, especially on the chainsaw side, we are also continuing our development.
We have recently launched a new chainsaw, the 460 Rancher for the American market, which is the first prosumer saw with the AutoTune, the fuel management system, which is there, which previously were on the high-end professional products. We have also now launched, end of this year, an upgraded 560 model, one of our pro chainsaws. We have in the pipeline further development of new platforms to the professionals, mainly in the chainsaws, but also on the brush cutters. That is progressing very well. The collecting rider is something that we are completely alone of. We are the innovators of that right now with a rider that actually collects the grass through a patented auger system that goes across the rider. We have had or we have a very large rider assortment, which is fulfilling the needs both from prosumers all the way up to the pros.
The biggest and most complex model we have is in the corner over there. With this model, we actually open up a large, let's say, potential or market in, I would say, central and south of Europe, which is a collecting market and where the riders hasn't been suitable for that because it hasn't been collecting. This is one of our key products for years going ahead, and it has been presented to our dealer network already and met with great interest and excitement, and people are very positive. Next here is our new X-CUT chain. I'm very glad to say that we have done the launch last week, the official launch of the first own manufactured, own designed chain. The launch continues now throughout this period of the months here, where we're launching this firstly in the Nordic and the U.K. market.
This is for us a strategic investment. This is for us the opportunity to, in the future, really optimize the complete cutting experience for the professionals using the saw chains. A very large part of the cutting experience lies in the saw chain. By being able to design the saw chain ourselves, produce it by ourselves, combine that with our bars and the development we do there, and also with the engine, the power pack of the chainsaw, we can optimize the chainsaw and take it one step further to really be a very, so to say, performance-oriented tool for the professionals, and that's what we are doing here. Last but not least, a very important product addition for our commercial lawn and garden segment, and especially in the U.S. This is a zero-turn rider, but it's a stand-on. We have missed that.
That is actually a key product in the CLG operator setup of different kinds of products and tools that they are using. This is a product that will be launched very soon. It's still under development, but still wanted to point out here that this is very important. Overall, we do have the strong innovation ability within the division, and through the divisionization, this has also simplified us, ensuring us that we can have a focus on the professionals within our R&D, making it much clearer for all our people working in this, and really making sure that we deliver innovative products to the market in a good way. Coming back to the profitable growth strategy that I mentioned in the first slide to you a little bit. There are really six core elements of this. We have defined them in a good way.
We do have, so to say, detailed development activities behind these core activities. They are, in short, this is about dealer development, ensuring that we improve the commercial and the service ability of our dealers very much. This is for us also to become a business partner with the dealer, and making sure that we help him to sell out and not only from our side to sell in. It is about the commercial lawn and garden reconnect that I mentioned. We now have the products, both our traditional assortment as well as our new modern assortment that helps us to go into the CLG operators and have a unique selling points with battery, with robotics, with the fleet management, backed up by our broad general assortment that we have. This is about the parts and accessories focus.
For some time, we haven't really had the right focus in this area, which is a profitable area. We have a market share here, which is, so to say, below average of our reasonable and fair market share. This is not very much about developing new parts or accessories as such, even though the accessory assortment is something that is renewed all the time. It's more about having a very structured, let's say, back-end organization, having a very structured focus on these products on the front end, and we are adding both sales methods as well as people into this activity in order to be able to grow. We expand. We expand in robotics. As Kai said, we've been in the robotics market for 20 years. Is there more to do? Of course, there is much more to do.
There are a few countries which is providing our robotic sales today. Even in those countries, I would say that the penetration can still be much improved towards what it is today. If you look on the total lawn market, taking into account walk behinds, riders, tractors, et cetera. There is good opportunities there to penetrate that much more also. I'll come back to that. We'll have a couple of deep dives in the next slide. I'll explain more on that. Battery products, again, expansion. We've done the first rollout into a truly global rollout, and we see that that is giving results, but taking also the next steps here. Emerging markets. As I mentioned, we are present on the emerging markets today, basically all except for India.
As of fourth quarter, we are in operation in India as well with our own sales force, our own organization. We basically cover all of the, let's say, mature or the more mature emerging markets, if I may say so. We're also present in Africa and accelerating there as well with our efforts in terms of building the organization and bringing on more markets. As for the other ones where we exist, China, Russia, Latin America, this is very much about growing the dealer network and also about setting the logistics structure, the availability of our products, which can be improved with regards to the vast geographies that these markets represent also. For all of the emerging markets, an important part is, of course, the entry-level products.
To have the right entry-level assortment entering into these countries. These markets also actually contain another type of agriculture than the traditional, should we say, West European or American. This is specialized light agriculture, coffee beans, coffee bean harvesting, tea harvesting, et cetera. We're also adapting to that kind of market very much as well. Our target is to outperform the market in terms of sales. We do believe that we can grow this 1%-2% above the market growth that we have been talking about. We think that these strategic activities will take us there and also push us towards the market leadership in the right way. Making a few deep dives, and of course, dealer development is the key one for us. The dealer network is really fundamental for, let's say, our way of operating.
It's fundamental for our way of serving the customer and ensuring that we also have a future success despite the fact that e-commerce is coming. We'll come back to that last statement a little bit later. What we have done is that we have developed a program that strengthens the dealer's commercial ability, service ability. There is a, so to say, very structured, documented methodology where we look on the potential for a dealer in the area where we decide and support on the activities that the dealer has to do, and where we follow this up on a regular basis and open up the commercial opportunities for the dealers, as well as in service on how they can attract more service work through a structured way. We combine this with a shop profiling also. This shop here is actually not just a shop for sales.
We call it the concept store, it is very much a store that we use for developing methods and features for our dealers. How to display within the different categories, how to act towards the customer. Always sell one plus two, sell a product plus two accessories. There are methods that are being developed here that we then use and take out to the market. Key for us, of course, to succeed is very much to expand our dealer network in the urban environment. We still are not represented in the good way that we want to be in urban areas, also taking into account the urbanization that we see globally, which is also, let's say, pushing the demand for being present more and giving a better accessibility. Now, in this respect, we will look for more dealers.
In some cases, this will be the traditional style of dealers, maybe current dealers expanding, it could also be new kind of dealers that we find more specialized, let's say, shops or specialized chains, for example, high-end garden centers that could be. However, we are not really considering to moving into mass retail with the Husqvarna brand as we feel that the customer experience must be related to very high technological service and support as such. Yes, e-commerce, coming back to that. As I said, we see today a number of our dealers also working with e-commerce. It's not overwhelming, but it is there. We think it is a very good thing. It does actually provide an extra channel for our customers to shop our products.
Very good for after sales, actually also for some of the bigger real products, so to say, is being handled there. We are under development to develop an e-commerce solution for our dealers to support them. There are, as I mentioned, a number of dealers already active by themselves, we are also developing a platform that we will be able to offer to the dealers to help them to be more active on this and to actually do the business there. This platform will, of course, be integrated into our system, into our online marketing platform that we also have launched now in this year and rolling out an upgraded version of, let's say, all the information that is available on the internet, no matter which kind of device you are using. That is also something that we do.
When we look on the dealer business program that we have now started out, we see that for certain cases, we see that when dealers apply this, they can really grow much more than what is the normal. We see the dealers even grow 20%-30% when they really adapt to the program, understand it, and take advantage of it. We think that we are on the right way with this activity for sure. Commercial Lawn and Garden, this is our largest professional opportunity. We are fairly large already in the, let's say, forestry segment, whereas I would say that we have an under-average market share in the Commercial Lawn and Garden, and we see that this part also of the professional segment is growing faster than the professional forestry segment, of course.
For us, this has been very much to really make sure that we do have the organization that can meet the customer on a professional basis. This is another type of sales than towards the end users. We have organized us now with local key account organizations in a large part of the major markets that we have globally, and we also work actively including the dealers in this. We have a model which is ranging from all the way where we do business directly with the CLG operator in case they are large nationwide and wish to do it, whereas mid-size or small-size are being handled either together with us with the dealer or separately by the dealer. We have a good structure for how to work with this.
We do have the products today for meeting up with these Commercial Lawn and Garden market, but it's also very much about establishing ourselves as a visible partner, as a productivity partner towards these customers. We have seen very good success in many cases here. For example, in the U.S., we have several contracts now with nationwide suppliers of CLG operators. One of the big ones there is Asplundh, where we have that, and they are also moving in very much into landscaping, where we are the sole suppliers of the products for them.
We also, in the light of the sustainability effort that Kai mentioned, which is for us more of a larger scale than not only the CO2 footprint related to our own factories, but we also work very much with the silent city concept, where we bring out the sustainability aspect and of course, the benefits of our battery products towards municipalities. We have already pursued several of these events, and we continue to do that, and we have already several cities that have shown interest. City of Antwerp, for example, are completely going over to battery products, Husqvarna battery products, as their tools for their operation in the town, so to say. That is also for us a very good way of moving forward. We also see first installations of our robotics in commercial applications. Golf course is one of them, which was mentioned here earlier.
Started out with having a few robots mowing on the fairway and now ending up, I think in the last info I have is that there's around 25 of those robots going in one golf course in Germany, also mowing not only the fairways, but the greens. Of course, that also gives us a fantastic, so to say, promotional effect on all the members that are playing golf there. They see these things, and they prefer to play golf and not to cut their lawns. That also gives us an effect of that, of course, which is very good. Also, some hotels, some restaurants with own lawns, et cetera, we have installations in. The interest is coming. I would say that this was not the case when I started a couple of years ago here.
There was no discussion about commercial applications at that point of time. I think this will move much more ahead. Also, at some point of time when the robotic installation will not be, so to say, dependent on the boundary wire, this will also give a larger flexibility towards the commercial lawn and garden operators of how to use their robots, which is, of course, the movable aspect, versus consumers that are, so to say, permanent installations on their yards. Good robotic lawnmower. Well, cannot have this presentation and discussion without really stating it is our largest prosumer opportunity. There is no discussion about this. Our ambition is to really continue to be the market leader, strengthen our market leadership, and this is really through increased market penetration on existing markets, but also on new markets.
It is about really continuing to focus on the R&D and developing new models, new platforms, new solutions. I mentioned one of the things here for commercial lawn and garden without boundary wire as one example of something that will come in the future. We are working very much for that. The prerequisite for this, really two things. One is the technical support capability. These robots, as we roll it out, we need also, of course, to make sure that we educate our dealers, that they understand how to work with the robots, how to support, how to program the robot. It's not that easy in the beginning when you have a very low sales, a low frequent sales. It takes time before you come into this.
We are putting a lot of efforts into supporting our dealers in this, and especially when we go into the new markets. It's also about educating our own organization in how to deal with this. The other one is, of course, the urban sales network. This is a product which is to a certain way, let's say, consumer-oriented and needs to be picked up in the way consumers shop in the areas of where the consumers are. That is also something that we are focusing in. Connectivity also helps us, as I mentioned before, no doubt about it. I would like to say that we also see clearly now that the acceptance for the robotic mowers is much, much better, and the reception is much, much better than it was earlier when we launched this on new markets.
An example for this is France, where we now have launched it for the second year, and we see basically that this has exploded and that the sales is up on a level where other markets have been, let's say, fighting 10 years to get to that level, while this is now happening in two years. We have also launched the robotics on the North American market, U.S. and Canada. Still very small sales, but very large interest. Also from media, TV, newspapers, commercial interest. Our dealers like this, and that is also a change very much versus how it was. I was in U.K. earlier this week, for example, visiting a couple of dealers, and they all also confirmed that the interest is much, much bigger now than it was earlier.
I think the overall acceptance for robotic as a mowing concept has increased. Of course this is. We grow good. We do grow faster than the market, and we maintain our market share in this segment without any doubt. Glad also to say that some of our new models have been received very well. The 310, the 315 launched last year, and the 450X, which is the flagship here on the far left side, has been very much positively received by the customers. They are all, so to say, selling very well, so we're glad for that. Coming back to the battery. The battery-powered products, we are in a good position, as I mentioned. No doubt about that.
We would like to transfer our application knowledge into these products, of course, towards the customer's recognition, but also gain battery application recognition, which we don't really have yet today, not being in that segment. We are on the way with that. I think what is really the key here is that the hesitance to battery products is really, will they do the job and will they last? As Kai pointed out, once the customers and the professional users take the products in their hand, once they use them, they see that these products are perfect for them and that they actually provide this kind of performance that they are looking for. That is what we do when we go to market with a global launch plan, bringing this out to the dealers, making sure that people can test our products very much.
This is much more about testing than when you come and you want to buy a new chainsaw. You have used that before, you know it, but you don't know the petrol products, how they are working. That is important, very much. In parallel, we of course accelerate the next generation product development. Looking for products which can have higher power, looking for batteries with longer runtime, looking for variable charging solutions for professional users as well. We do cooperate here very intimately with various suppliers of battery cells, engines as well. However, we do produce these products entirely within our own production unit. We feel that this is in line, again, with our position of being a premium supplier. We want to make sure that this is a top-of-the-line product coming out once it's ready.
We see a strong growth in this product group as well with the acceptance of these products also, which is very good. Rounding off, coming back to the first page again, summarizing and basically saying that we have a very strong foundation. We have a very strong brand recognition foundation. We do have a very strong financial foundation, which shows that we are able to grow and also have an underlying EBIT improvement through that. With the investments into the strategic six areas that we are focusing on
The dealer development, the CLG, the parts, accessories, and expansion of robotic battery in emerging markets. We truly feel that we are on a good path towards market leadership, not only in petrol, but also in battery and robotics for the future years, and really supporting the group for the profitable growth. Thank you. Questions will come after Sascha. Before that, I would like us to finish off and listen to what the professionals say about our new saw chain.
My first thoughts are, how is this different than any other chain?
As soon as you start to use it, you can feel the difference. A big difference.
If I hadn't had my visor down, you'd have seen my face, because as soon as it pulled down into the wood, I was really excited about it.
The new chain was amazing. I was a little skeptical at first coming into it. After cutting with it all day and really diving into it and have a real comparison side by side with each chain, it was pretty amazing.
The center of good work is always a sharp chain. With this chain, you have less vibrations in the cutting. You have more performance. I like it a lot.
It's pulling into the wood really nicely, using the power of the saw to cut, but not in an aggressive way. It wasn't trying to kickback at all, even when we were doing bore cuts.
This chain pretty much out of the box. It doesn't elongate, it just stays the same length.
We cut a lot of trees, and at the end, we check and the wood just really was black.
I think that will definitely benefit an arborist, that they don't have to send it back down or have it re-tensioned. They can pretty much go straight into work, straight off out of the box.
If I'm not cutting, then I'm not earning money. If I'm either sharpening or if I'm re-tensioning my chain, then I'm losing money. With the new X-CUT, I don't lose any money.
Overall, the chain was amazing.
I'm really pleased they let us try them. Really good. Yeah.
Good morning, also from my side. I would like to take you from the world of professionals to the world of passionists. Passionate gardeners. It's nice to be here and talk a little bit about Gardena for multiple reasons. Number one, I think we've got a story to tell. We had a good performance the last two years, and we're looking forward to continue this, of course. We're also celebrating actually a very important birthday or anniversary this year. 50 years of the Gardena brand. 50 years of success in gardening. 50 years of a brand for passionate gardeners. Let us dive into what this world of passionate gardeners is about. How we do this, and what are we doing, I would like to spend the next minutes on. Main takeaways for today that I would like you to take with you.
Gardena is the premium brand for passionate gardeners, we'll talk more about what these people and this target group is about and what they value. We're looking at, since the inception of the division, a very strong performance, both from a sales and an EBIT perspective, we're looking, of course, on continued development in that way. We have invested into growth and brand quite intensively, we continue to do so, and we do this by efficiency measures that we do internally, taking money from where we can afford and investing it where we want to grow.
Lastly, there's two main areas that are really driving the growth for this brand, that is geographic expansion and what we call the automated garden, specifically around robotics and the smart system, which has been alluded to before, I will get back to this during the couple of slides coming. What is this market about? We look at the market and estimate it to be about a SEK 35 billion market in the categories that we are playing in. If we look at the regional split, you actually see that this is a high share in North America, but we also need to be very careful on how we look at America, I think we've talked about this before.
The watering system specifically, which obviously is a stronghold of Gardena, is a very different system in the U.S., where the coupling world is not established as a big market. It's a very different technical standard with threads and metal, no system aspect at all to it. There's a different market and a different technical standard. Still, we like to define the market rather too big than too small for that sake. What drives this market? There's a couple of areas that I would like to point out. From a characteristics point of view, we are experiencing in this market, as in other more consumer goods-oriented markets, for sure, a polarization of premium versus private label. The two ends of the spectrum. Not only driven by the evolving multi-channel landscape and the resulting transparency, but also different business models emerging from an e-commerce perspective.
I would say it's not only e-commerce DIY. We will get back to this. It's also other channels that are interesting for this category. Passionate gardeners, however, value a lot innovation, quality, the system aspect of it, we get back to this of Gardena, we will get back to this. We actually believe that whilst there is changing fundamentals and dynamics in the market that the majority are more opportunities for the Gardena brand, such as urbanization. You could argue people moving into cities, they leave the gardens behind. That is one way to look at it. The other hand, there's a big need for green also in cities or in more urban areas, gardens getting smaller, the balcony, the terrace, having a much higher importance. We have a lot of opportunities also from a Gardena perspective.
Sustainability is, I would say, a core element, of course, from a Gardena perspective, the market is putting more focus on sustainability. An aging population, people getting older, having more time to spend in the garden, typically having more money to spend in the garden, is not a bad thing necessarily for us. We talked sufficiently already before about the Internet of Things and the digitization that is, of course, helping in multiple fronts, we will get back to this as we talk about robotics and smart later. From a growth and profitability perspective, we're also seeing a growth, as mentioned earlier, 2%-3% across the segments. Of course, they vary quite a bit between regions, countries, but also between segments. If you take a robotic versus other categories, for examples. Likewise, the profitability depends on which segments, regions you're playing in.
That is more relevant for a Gardena brand rather than underlying fundamentals than house builds, consumer confidence, and similar things, given the industry we're in. How is Gardena set up in this market? Gardena is extremely strong in markets that are, as we call it, driven by a European-inspired gardening culture. It is, of course, a lot in Europe, because there you have a lot of passionate gardeners who really enjoy gardening and see gardening as a pastime that is worth to invest money in, and actually, you enjoy to spend a day in your garden. It is not necessarily the same across the world. It is in many parts of the world for sure, Europe predominantly, but of course, also in other areas where Gardena is present, like Australia, Canada, South Africa, and other markets, which are of high importance and of high relevance to us.
We assess our market share to be at around 25% in Europe, of course, differing again by markets. Our strongest markets are the German-speaking markets, which is the historic core of Gardena, with lots of opportunities still to grow also within Europe, which is a part of our geographic expansion focus as well, of course. We're leading in multiple categories, whether it's robotic and retail, whether it's watering, of course, we are the dominant player in watering across Europe, whether it's in the Combi system that we offer, whether it's in pumps. There's multiple categories where we are the clear market leader. We created categories historically, and we will continue to do so, and we will talk about this in a second as well. There's also no competitor who is as broad from an assortment as we are.
Gardena is the only brand who really covers multiple categories across the gardening world, which of course, is a great stronghold for us and something we continue to develop. We talked about our target consumers, passionate gardeners, people who enjoy gardening, who express themselves through gardening, who take a specific personal joy to work and operate in the garden and see the developments, and a second group, which we call the practical optimizers. Gardena's historic strength is around systems. We operate in systems, which is a fantastic, of course, platform for continued growth. Systems like the watering system, underground watering system, the micro drip system, the Combi system, the battery system. Gardena is all about systems.
It's not only this, it's paired with superior and leading innovation, shaping categories, the design language of our product, which is very important for the identification also of the consumers, the joy of using these tools, and of course, the quality, which is very important to us. We are very well distributed across all the modern distribution around garden centers, DIYs, across Europe specifically, and also growing nicely within the online channel, where we see obviously interesting opportunities as well. It's an attractive market. We are well-positioned. How are we doing? Of course, you're aware of these numbers, but I would still like to pull them up as before. We've been growing nicely in sales with an average of an 8% growth. Also, EBIT has increased from the starting point by three percentage points since 2014.
With both, we are outpacing, at least specifically from a sales perspective, outpacing the market growth, of course, which translates into this EBIT development. As mentioned earlier as well, we also took to support this EBIT improvement efficiency measures to offset the currency headwinds, but also to have the ability to fund some of the strategic investments to drive further growth, whether it's around brand building, whether it's about new products, innovation, as mentioned before, and of course, capabilities and capacities. What's behind the numbers? What's the things that drive these results? We've been successful over the last two years to expand distribution with new customers. We're getting back to this in a second when I talk about geo expansion a little bit more.
Also new channels, whether it's food channel or loyalty programs or other areas where people think about gardening, but may not necessarily go because of gardening , but then they pick up our products, which is an interesting and good opportunity for us, of course, as a brand as well. Successful innovation, mentioned very important to us. To name a couple of examples, we revamp the complete range of watering system of the Gardena world. We started this two years ago. We are bringing, again, the last part this year, which is a frost-proof system, which is unique in the market, which means no more leakage after the winter if you left it out in your shed, which is a great brand builder for us and, of course, a sales driver. A complete new range of robotic mowers introduced with the SILENO range.
We have the most silent robotic mower in the market and the retail space. The GARDENA smart system, which we will talk about coming up as well. Design is important, and we are proud to have gained, for all new products, design awards. This, again, for the products coming for next year. Also recognizing the design leadership we have, which is important to us as we are receiving lots of good consumer testing from the various institutes across the markets. We were also benefiting from, as mentioned earlier as well, a good season last year, very hot and late summer Q3 in Central Europe, which also puts a lot of pressure on our supply chain, but I'm also proud to say that we delivered very well, and we could capture that potential, which for sure is a nice achievement as well.
All this is nice to see, but it's many people doing this in this division, and I'm proud to have a very passionate and dedicated team to drive this, and we're obviously continuing to build and develop that passion. All this together led us to also gain market share over the last periods. We will continue to do so, as mentioned earlier by the targets. The platform to do this, is what we call passion and growth. That's the division agenda we are following since early 2015, and this is around four key areas. Geographic expansion, growth from the core, which is right now more around the German-speaking countries and close by to the markets coming thereafter. Further strengthen the Gardena brand, of course, through innovation and specifically the automated garden.
Next to brand investments, all the other things you need to do, of course, but these are two very important elements of this. Expanding in the distribution, multi-channel, which means, of course, doing more with online partners, but also in alternative channels like mentioned earlier, food, loyalty programs, et cetera. Operational excellence. Number one, from a cost perspective to fund some of the good stuff we want to do with the first three areas, but also to continue to constantly improve quality, delivery, and other aspects of our business to really stay leading as we are today. Let me dive into a couple of examples. Taking geographic expansion, initially, we have selected a couple of markets where we said, "Here we really want to make a difference.
Here we really want to invest, specifically from an innovation perspective for products focused for these markets, front-end investments, meaning sales capabilities, capacities, and marketing, brand building." We strengthened our central organization to drive international and support international key account developments. This has been quite successful. We've been successful in expanding listings with existing customers in those markets. We've been successful in signing up new customers, which had not had us in a certain range or not at all. Of course, it helps to sell the sell-through of the existing listings already. All this bringing together that within the nice growth that we've seen, we actually do see above average market growth in our core markets, German-speaking countries.
We see an even stronger growth, double-digit, in these markets where we put a specific focus on and supports us in our strategy and convinces us that this is the right focus also going forward. Another very exciting and important part of our growth agenda, as it came up already before, is the launch of the Smart System. The system initially consists of the products you see on this picture. Robotic mowers, two models, the new SILENO range connected, a soil sensor, which gives feedback on temperature, humidity, light, et cetera, and a water controller. All connected via a gateway that connects to your smartphone and allows you to completely independently from wherever you are, control your garden. This is unique in the garden world.
As a market leader, we strongly believe that, of course, we will shape this market and take a strong leadership position and have successfully done so this year with the launch in the first five markets, Germany, Austria, Switzerland, Belgium, Netherlands, and the next markets coming. We will have a little demo later in the break. Let me say, you're all representing banks, funds, shareholders, but you're also all target group, and we're launching in Sweden next year. Great consumer acceptance so far. Great customer acceptance. Also great feedback interaction now with the consumer directly, which is a nice add-on of the system because it gives us completely different ability to interact with our consumers, getting feedback on how to improve, where to improve, learn, and also create a new way of doing business.
Part of this journey has also been the acquisition of a company, a startup in Zurich, who's been in this field for a couple of years already. We've integrated this company completely now into the Gardena Division whilst maintaining the offices in Zurich as a think tank for this business. The former CEO of Koubachi is actually now heading a category that we've created in our organization, which is solely focused on the smart business model. That's Philip, and he will actually run also the presentations later in the break, so you will get to meet him. As we speak, we're continuing to further expand the range for the season to come, adding further features, further elements to the software, and also adding to our teams in order to drive continuous our leadership position that we have created here. Lots of words, sorry for this.
I'm getting excited about this product, of course, actually a short movie, which is the TV ad that supports the launch in the markets, to give you probably an even better impression.
The new GARDENA Smart System that connects both intelligent watering and lawn care. Out now only from Gardena.
This is how we launched. You see there's now two more products already there. That's for the 2017 season. We're connecting now a pump within the Gardena range, which is a very important part of our business as well. It's not only dispensing water, it's also the transport of the water that is added to the system now. Next, you see on the left side the battery, which is part of our new 40-volt range within the Gardena system coming out new next year. We will have a connected and a non-connected battery, and which allows you to connect all your battery products in the 40-volt range into the GARDENA Smart System. It gives you an impression of what else may come and will come going forward. As said, products are one.
The other piece is, of course, we have now products out there that we can constantly refine by working on the software and updating those products or our central intelligence via the application. As we speak and really create more customer value and new features going forward, which is a nice additional benefit. We're working on all these fronts as we speak. Smart is one very important, as mentioned to our growth journey. Products in general are of course, and innovation is key, and we're actually very proud to launch 60 new products into the market for the 2017 season. We are the innovation leader and we will continue to do so and have further ramped it up. You see some of the examples here.
To just name a few, on the right side, you see a completely new way of collecting fruit or nuts or cherries or apricots, whatever it is, by not bending down anymore. It connects to our Combi system. You just roll over them and you have them all collected. Fantastic product once you've tried it. Great for an aging population, if you think about it, and it's actually launched to the market this fall. As Sweden is a golf country, it's also for golf balls, by the way. Another very important part of our new products next year is new secateurs. It's the most used cutting tool in any garden environment, and we bring a complete new range of secateurs to the market. New battery and electric products, specifically around hedge trimmers as well as lawnmowers, also battery lawnmowers, which we are very proud about.
On the left side, you see a complete new segment we are moving into, and that is what we call city gardening. Understanding and respecting that the world of gardening is moving closer to terrace balcony with the urbanization, with gardens getting smaller. There are, however, also different needs of consumers in terms of product applications, some design language, packaging, channel as well, where you sell it. We're moving into this field first time next year with a complete new part of our assortment, whether it's a small balcony kit, a new way of dispensing water, et cetera, that is packaged under the GARDENA city gardening claim, and launched for next year to the market. Full pipeline, exciting. Let me sum up what I wanted to leave you with. Gardena is the premium brand for passionate gardeners.
We've been developing very strongly over the last two years and have all ambition and intent to continue. We're doing this by investing but also creating those investments ourselves into brand innovation and people in order to have the right competence and focus. As mentioned, and I hope it became clear that robotic and specifically smart is a huge platform for us, on the one hand, next to the geographic expansion that we're driving. With this, I'd like to end my part and welcome you up.
All right. It's time to go ahead with the afternoon session. Just to clarify, the next Q&A session, then we will have all the divisions on stage. Okay.
Hello, everyone, and good afternoon. Over the next 20 minutes or so, I'll give you some perspective for the journey that the Consumer Brands division is on. It's a little different journey, as you've already heard from Henric, Pavel, and Sascha. It's less of a growth journey, although I want to give you some perspective for at what point we start to get back to growth in this business. It is certainly a turnaround journey at this point. I thought it might be good for you to get some perspective, since this is my first time in front of this group, from my experiences relative to this turnaround activity. We call the turnaround of Consumer Brands the road to 5%. I have been on other roads. There was the road to sustainable operating income. There was the road to business simplification.
There have been other roads over the course of our last 20 to 25 years that were all around business turnaround. It's not unfamiliar territory to me. It's not unfamiliar territory with the team that we're beginning to surround the Consumer Brands business with, which I'll give you some perspective on. Just to, at a very broad level, take you through what this journey essentially is going to look like over the course of the next couple of years, and going back a year or so as well. About 18 months ago, we started to use the term value before volume, which I think is a good term to essentially say that not all sales are good sales in the Consumer Brands division.
A big part of beginning the turnaround is getting the mix right within this business, whether that be customer mix or product mix. That was really the first phrase, and I think it's a good, quick description of the task ahead of us. The goal then over the course of the next, call it six months, is to sustain the cost-out momentum that we've established in the Consumer Brands division, which I'll show you a couple pictures of in a few minutes, and start to regain a foothold for growth. We believe that in large part, the sales declines are now behind us. We think there could be some additional bumpy road over the course of the next six months or so. Starting in 2017, we intend to start to see a return to some growth, this time profitable growth, and that accelerates into 2018.
Again, I'll give you some perspective on that. Just real quickly on the market. It's a big market, about SEK 70 billion. About two-thirds of the market is in North America, with the U.S. obviously being the biggest part of that. The balance of the market is largely in Europe. I'll show you some perspective on the next slide for how we play within both of those large addressable markets. From a characteristic standpoint, I think the key takeaway here is that Europe is a little bit different from a retail marketplace standpoint than the U.S. There's some similarities, some differences. The U.S. is obviously a more consolidated market relative to big box retail, which is largely what we play in in Consumer Brands in the U.S. market. Still a little bit more fragmented in Europe.
The European retail marketplace is a little bit more drawn to private labels than the large U.S. retailers. The trend that ties all three of those market trends together, and you'll hear me refer to this a couple times, is this whole trend of web-enabled environment. Whether that is consumers seeking easy access to parts and accessories and service, to connected products, to the trend that we're starting to see, especially in the U.S., of women getting more involved in yard work and in gardening. One of the first places they're turning to is the internet to get information on our products. This whole kind of internet-enabled world is really what ties some of that trend together.
From a growth and profitability perspective, the Consumer Brands Division has not done a good job over the last few years in drawing off of innovation, which can come from the Husqvarna Division and the Gardena Division. That's something that we need to change, and that change is going on right now at a foundational level. You'll start to see that play itself out in areas like robotics, zero-turn mowers, and some other products that we'll talk about in a few minutes. The growth of online, I've talked about, and I'll talk about it again, I'll hit it a couple times, including e-commerce, is also influencing offline sales. Again, the consumer journey within these categories is quite often starting with the internet. Then feature innovation for margin uplift. We commonly refer to this as small i innovation.
It's typically a feature tweak, maybe a little bit of an industrial design change, something to bring new interest to the product. Again, it's an area that we've been behind on in the past that we're kind of playing catch up on in many of our product categories now. To give you some perspective for the division's sales split, you can see how dominant the North American market is for Consumer Brands Division. We're about in roughly an 80/20 split between the North American marketplace and Europe, with we approximate somewhere between 13%-14% global market share, largely retail-based, obviously. The consumer segments in this part of our business are interesting, because they range from three different segments that we call the practical optimizer, the convenience seeker, and the power performer.
The reason that they're interesting is because there's a very large degree of involvement from kind of the uninvolved consumer, to those that just want to kind of, as quickly as possible, as cheaply as possible, get their lawn mowed, to the much more involved consumer on the part of the power performer, as an example. Those that take a real interest in the product, that want to know the technical aspects of the product before they buy. It's a challenge to kind of market effectively to those three segments. From a channel perspective, we are starting to see some share shifting in the North American market. This has largely been brought about by some of the larger at-risk customers in the U.S. market, and some of the share that they're starting to push off to, whether that be other mass retailers or big box DIY retailers.
We've talked about Europe being a more fragmented market, which is kind of slowly starting to consolidate. The growth of e-commerce and the importance of online presence, just a couple of statistics here. At least in North America, where we've got some pretty good numbers around this, we know that almost 90% of all outdoor power equipment purchases start with some sort of a connection to the Internet. Okay? Whether that's someone starting to, they know they need to buy a new lawnmower in the spring, so they start to look at what their options are online in the wintertime, so they can make an informed choice come spring. We know that almost 80% of those purchase journeys go through a retailer.com site at some point. Okay? I would love to stand here and tell you that everybody is going to poulanpro.com, everybody's going to mcculloch.com.
We are getting increased traffic, a lot of that traffic is at retailer.com sites, our presence on those sites is critically important. We also know that from a unit volume perspective in North America, now one out of every six unit volume purchases is happening online. More and more, the actual transaction is occurring online, and a lot of it is going through either pureplay.com or retailer.com. Our competitive set, just very quickly, is wide-ranging. It ranges everywhere from large multinationals to fairly strong, in some cases, retailer private labels. If the EBIT line on the left-hand side of this chart looks a bit like a rollercoaster, it also feels that way some days. This really is the volume over value story. It is a story that we will start to change the trajectory on again, starting in kind of early 2017.
You can see the sales decline, largely, what that chart on the left-hand side indicates, is the early stages of our cost out programs starting to pay off, and some pretty big mix improvement stories throughout the organization. Bad mix for good mix into the business. Those are both roads on this journey that we need to continue to sustain. Like I've said before, the majority of the sales drop, we believe, is behind us. That sales drop, by the way, was exacerbated really in Q2 of this year, with a pretty poor weather outcome in the U.S. market, especially in April and May. We've started to see some of that sales come back, when you miss that real peak of the season, it's difficult to make all of that ground up.
Although we have seen some more favorable weather conditions in the U.S. market, especially over the course of the last 30 to 45 days. Like I've said before, really the beginning stages of the turnaround journey for Consumer Brands have been more around mix and cost out activity in its early stages. Some key achievements since the launch of the division, briefly. This first one seems fairly basic. You would think that account relationships would be kind of rule number one in any business. Realize that when you've got a turnaround situation going on in your business, that's juxtaposed against a retailer's growth journey, oftentimes those things are at odds with each other, and that can create some tension.
Job one really over the course of the last 12 to 18 months, is to make sure that we stabilize especially our large North American account relationships. I feel like we've done a pretty good job with that first job. A lot of our mix improvements in the early days of this turnaround have really come from our European business. They were the unlucky recipients of a lot of the FX issues that we suffered from over the course of the last 12 months, and they've done a lot of pricing in that marketplace. As a result of that pricing, they've been able to also kind of start to mix improve that business over the course of the last year or so.
We have a real commitment, and we're starting to see some progress on things like e-commerce, our parts and accessories business, and also battery product development. Again, some of that coming down from some trickle-down technology off of Gardena and the Husqvarna Division. The chart on the right-hand side really speaks to the next bullet point, which I'm particularly proud of, because this is, again, not an easy thing to do in a turnaround environment. We want to make a bigger deal out of what we believe are some very strong brands. They're brands with what I would call latent brand equity. It's equity that needs to be rebuilt, and we have to make some deposits against that equity soon. Brands like Poulan Pro, McCulloch, Flymo, and Weed Eater are arguably iconic brands in this space.
We want to make a bigger deal out of those brands. It's not to say that we're going to walk away from private label business, but over the course of the last year or so, we have shifted to about a 14-point degree, the emphasis in this business on our own brands versus private labels, which is a journey we want to continue to stay on. The successful execution of AIP, which I'll give you some perspective on here, I think on the next slide, then a new management team, which I alluded to earlier. About half of my leadership team has been replaced over the course of the last 12 months. The marketing leader for North America, our global supply chain leader, our leader in human resources, and our European business leader are all new to the business over the course of the last year.
That mix of newness, and those folks have all been involved in turnarounds before, with the historical solid mix of folks that we've had in the business for some time is creating a very powerful team to accomplish the turnaround. I'll talk about cost-out in more detail. This is really the challenge in front of us, and that is to continue this whole cost-out momentum that we've got going in the business, which is in its early stages, but has really shown at least the beginning light at the end of the tunnel on getting to the 5%, along with starting really the foundational work on capturing new opportunities. We'll talk more about what that broad phrase means, because it really has to do with where we go with product development and how successfully we can commercialize that product development. Oops, sorry about that. Okay.
Graphically, here's essentially what the waterfall looks like to get to the 5%. Starting at a slightly negative 1.2% in 2015, we need to get equal leverage out of both cost-out work as well as this capturing new opportunities concept. You can see that basically in the balance of those two bars. Offset by some contingency in FX, we get to 5% by 2018. Is this an easy path from where we're at today? No. This is a steep climb. It is a climb that we have started and that we will continue to gain momentum on. The big question for this business is, can we gain momentum fast enough to get to the 5% in 2018? We believe that that target is attainable, and I'll give you some better perspective on both of those bars over the next few minutes.
The first one, sustaining cost-out momentum, which is critical to this business. On the left-hand side, the first thing I'll talk to is designing the right organization to be able to get cost out of the business. We've done a pretty effective job at that in the early days. We've got project teams that we've built that are made up of key areas of our business, like R&D, operations, obviously, and sourcing, that are effectively getting to the cost pools of our business to get cost out. We've got some pretty good, I think, momentum in that area. Productivity investments. We're making much bigger investments in things like logistics cost out and in automation, as another example. We're doing this with sustainability in the front of our minds. We have an aspiration to get to a zero landfill waste outcome over time.
By 2020, we want that to be a 20% reduction in our business of the amount of waste that we actually throw away versus recycle somehow in the business. Lower energy use, and then emissions reduction, which I'll give you some perspective on an example of that one on the next slide. To talk to a couple of the points on the right-hand side of the slide. This is a business that from an operations perspective is maybe the most seasonal of any of our businesses in the group, in that there's a large part of this business that's in wheeled categories that are sold in North America that really ramp up from a production standpoint in, call it, the September-October timeframe, and then start to ramp down pretty hard in the May-June timeframe.
How we use our labor in that critical timeframe is a big part of how we make money in this business. Compensating those people right, making sure that you've got some commitment to their labor hours on a weekly, monthly basis, and actually letting them share in the success of the division. In other words, letting them share the success as they continue to get better in areas like quality, service, safety, is a big part of how we're bringing more labor efficiency to the Consumer Brands Division. Automation investments I alluded to a little bit earlier. You'll see an example on the next slide of one of the automation investments that we've made. We're also starting to invest in areas like automating the stamping of our decks for lawnmowers, which seems like a basic thing.
We're not as far ahead as the Husqvarna Division plants in Sweden, as an example, or the Gardena plants in Germany when it comes to automation, but we're playing catch-up, and that's a catch-up game that will start to pay off dividends in the years to come. The last thing I'd mention on this slide is supply chain for e-commerce and digital. The one thing that we're beginning to see, and I mentioned that one out of six unit volume purchases in North America now being transacted over the internet. What that means is we've got to get much better at delivering small parcels out of our distribution centers, whether that be to retailers' doors or to consumers' doors. We're putting more investment in distribution footprints to be able to do that effectively.
The best example I can probably give you of the cost outside of this journey to 5% and what stage we're at there, is what we call a footprint project that's currently underway at our Orangeburg, South Carolina plant. Realize, and how I just kind of told you that story about how we really ramp up production in the October timeframe, and we start to shut things down slowly in May and June. This plant is really at the epicenter of that sort of a production cycle. What we would do is we, in this largely what comes out of Orangeburg is tractors and zero-turn mower product. We would ramp up production and start to push that product to as many as seven different outside distribution centers during the peak of the season.
There was a lot of extra handling going on in that equation. As we've started to enable a new footprint project for Orangeburg, we're building a half a million sq ft DC adjacent to the factory. I talked about automation investments. From the time that tractor leaves the assembly line to the time it goes into the DC, it will be untouched. It'll all happen through an automated guided vehicle, which will load and unload the product in the new DC. I think it's a signal of the investments that we're willing to make in the business to get cost out effectively and get that journey going. You can see some of the reduction numbers relative to the footprint project, 328,000 km of inter-plant trucking is now gone. 317 metric tons of CO2 emissions are gone. 180,000 product inventory transactions are gone.
You can see the trend here. These are good, solid payback kind of investments that we'll continue to make in Consumer Brands. Switching to that same view, now looking at the second bar. Admittedly, we've got some good momentum going on in the cost outside. We believe in this business, we can get to somewhere between 2% and 3% of cost out of our total cost bucket year-on-year, which will really help guide that left-hand bar. Getting to the right-hand circled bar and capturing new opportunities, we're at the very formative stages at. What does that mean for this business? It means that we need to start to focus more of our attention on growing categories where there's some decent margin pools. In 2017, we'll introduce our first robotic mower in Consumer Brands. We affectionately call it the McCulloch ROB.
It'll be available in all European markets. We have every intention of putting that same product into the Poulan Pro brand and starting to look at some test markets in the U.S. for that same product. In a nutshell, this is a robotic mower that is probably a notch down on the technology and feature set level compared to Husqvarna and Gardena, available at a competitive price, and we feel like is going to be a great launch for the Consumer Brands division. We're also expanding our zero-turn assortment. There's a big trend that's been going on over the last 10 years or so in the North American marketplace, more away from tractors, and into zero-turn product. There's good margin in zero-turn, expanding our deck assortment, and our deck engine combinations will be a big part of reintroducing some excitement into zero-turns.
Battery product. All four of our brands, by the time we get to spring of 2017, will be playing in battery product. That's been a fairly quick journey over the course of basically the last 12 months. We already have a Poulan Pro 40-volt range in the U.S. market. We've got a 20-volt Weed Eater range in the U.S. market. We will soon have a McCulloch 40-volt range for the European market, and we're introducing selected products in the Flymo brand as well, in battery product. All of that product is not nearly as efficient as it needs to be without solid commercial plans behind it. Just briefly speaking to some of those plans, there's traditional demand creation. Just one example of this is we've started to reintroduce some investment in radio in the U.S. marketplace.
It can be a very effective medium for outdoor power equipment in the U.S., and we've seen some nice uplift from those tests. Cross-selling parts and accessories with the whole goods seems like a simple thing, not something that we've done very effectively in Consumer Brands over the years. Whether that's on retailer websites or even on our packaging, we're getting much better at the cross-sell. Expanded assortments and improved content for e-commerce is starting to pay off dividends, and investments in point-of-sale activity are also paying some dividends in the business right now. Here's another view of what has to happen to get to the 5%. Essentially, like I said, we maintain the momentum that we've established over the last couple of years in cost out. We continue to chunk away at 2% to 3% cost out of our total cost base year-on-year.
That's about half of where we need to go. The other half needs to come from some of the work that we're doing now to bring excitement into the product platforms, into the commercialization plans, and Consumer Brands. We believe we can get there. The target of 5% is a tough target. I would love to say that we had a great weather outcome in Q2 in the U.S. marketplace, and everything was going to be rosy. That threw us off a little of our road this year. We are quickly regaining some of that profit momentum as we get through, get into Q3, and we think that's sustainable momentum. Just to restate, broadly speaking, the road started with value before volume.
We're essentially still in the late stages of that game, intend to come out of it in 2017 with some slight growth, accelerate that growth hard into 2018, continuing out the cost out journey, getting to the profitable core of this business, which are the right customer and product combinations to get our margin mix where it needs to be, and then get beyond the 5% after 2018, and make this what I would call an investment-grade business as a part of the group. With that, I'll hand it over to Henric.
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Good afternoon. As you can see from the movie, now we are leaving the space of Lawn & Garden and Forest & Garden, entering the world of Construction. As you all know, Construction has been on a journey of profitable growth for quite some time, that's, of course, the agenda also going forward. Just one expression, trying to put words behind what we're trying to be and how we try to go about our business is really, we really want to be our customer's preferred choice. We are the people they want to deal with, that our products are the products that they want to use. That's really our overarching ambition, to make sure that our customers have us as their preferred choice. We have a very strong foundation. We have consistently been working on that for many years.
We have strong market positions on all the key markets. We are the innovation leader in the industry. We have two strong brands in the business, we have a highly engaged team. We have a very strong foundation. Very much like at least two of the other divisions, we work a lot on efficiency improvements, we can continue to invest heavily into product development and into building the sales and service network that we have. Our business is very service intense, really requires us out there with the customers, many times we even sell directly to the customers. It's very important to us. Two things that are very important as well that we want to emphasize even more in the future here is not just offering products, but also expanding more into selling service offers or having service offers.
Then, of course, the other piece is that we need to step up our activities in emerging markets. Ultimately, we are a market leader today, if we do this in a real good way, we will solidify that position. If we then look at the construction market, as you all know, the construction market is very, very big. IHS estimated last year the construction spend in the world to $8.8 trillion. It's a pretty big market, equipment is just a small part of that. In the equipment side, you can divide it into four very basic segments, we operate in a small portion or in one of the four segments. We have a very targeted approach.
Even if we have a broad offering, we have a very targeted approach in the business, really targeting the people, sawing, drilling, grinding, concrete, and those things very closely related to that. That market we estimate to be somewhere just south of SEK 25 billion. Our market is cyclical. Jan talked about in the beginning that we have a seasonal business, and it's weather dependent and so on. That is not as prominent for construction. We are less seasonal, we are less weather dependent. On the other hand, we are cyclical. We are very much more dependent on more financial and political aspects. We believe that our segment, this 25 billion market, is slightly less cyclical than the construction market in average. The reason is that we are not so much into new construction, more into renovation, about half of the market is consumables.
On top of that, most of our machines, even though they are expensive, they are considered small-ticket items in the construction world. Those three things seem to make this segment a little bit more resilient than the construction market as an average. There's some key trends affecting our business. From a growth perspective, there are several things really supporting this business. We have the urbanization, we have the emerging markets, and we also have a modernization in terms of work techniques where people start to work more and more with the kind of equipment that we are selling. There are other different kinds of trends, more technology trends, Internet of Things, of course, but we have stricter regulations, particularly when it comes to dust and slurry. There's also an element where we will see more of battery in our industry as well in the future.
There's some trends that will affect us. If you look at us in this context and how we do in this market, first of all, we are a market leader. We have a share somewhere north of 15%, 16, 17%, somewhere. That might not seem so big, but the thing is that the market is very fragmented. If you look at the competitive landscape, there are only two competitors that we actually compete with in more than one category. Whereas there are a lot of players playing only in one category, and then there's a lot of regional and local players. That's a little bit what this market looks like. The sales split, you can say that the construction spend, the majority is actually in the rest of the world, and the minority is in North America and in Europe.
Our addressable market is not like that. Our addressable market is much, much heavier towards the mature markets. That's back to a little bit the renovation piece. There's still predominantly new construction in emerging markets and less renovation. It's also the kinds of applications we're in, which is very much taking up a hole, taking down a wall, that you still can do fairly effectively if labor is low manually. There's just a different return on investment calculation in those markets for our kinds of tasks at this point. That will change going forward. That's why our sales profile is much more in the mature markets, but that's also how our addressable market looks like today. Of course, we have a very strong customer focus. All our customers are generating revenue using our products. They are extremely dependent on us.
We need to have a very strong customer focus to really understand our customers' everyday life. What is generating income and what is waste? We need to make sure we are an effective partner inside of all of this. There's a strong customer focus. At the same time, our application fits into that general light segment, and that basically means that there's a lot of different customers using that kinds of products. We try to segment it a little bit, and then you say basically, there's a lot of different kinds of building construction contractors. That's one group. Demolition is a slightly different group. Then we have specialty markets like rail, rescue, and those kinds of markets. Then for our stone business, we have the stone quarries and the stone processing operations. Those are our main customer segments.
We serve these customer segments through five different channels. The main one is, of course, regular two-step distribution, but we also do a big portion sell directly to our end users. We sell to rental depots that rents to our end users. We sell together with Pavel in the forest and garden dealers, and there's a little bit of e-commerce going on. If we leave the market as such and start to look at ourselves a little bit, and sometimes it's good to reflect a little bit on the past before you start to paint the picture for the future. This is a schematic way of looking at the journey we have been on. As a group, we stepped into Construction in 1981. We acquired Partner to get a hold of chainsaws, and we happened to get the power cutter.
That was then a very good side business for some 20 years. That was the first phase, if you would like. The second phase was around the millennium, we decided we want to build a position in Construction, and in less than 10 years, we've made 11 acquisitions. That was the second phase. As we all remember, we had a global financial crisis starting in 2008, and that was the first time in our 35-year history, we actually had a reduction, or the top line was coming down. Because it was the first time it was both a global crisis and it was a financial crisis, so it hit the Construction business really hard.
That was actually, even though us remembering that time, it was no fun, but it was a good opportunity for us to fully integrate ourselves, all the acquisitions we had done, consolidate ourselves, put the house in order, and really come out strong when the market started to turn around. In retrospect, we really seized the opportunity to turn something good about a very challenging situation. Oh, sorry, I forgot one important thing. That was in 2007, just before the recession, we did the final thing there. We for the first time introduced the Husqvarna brand into the Construction industry. We didn't have any Husqvarna branded products before, so we eliminated all the acquisition brands, some 11 of them, and turned them all into Husqvarna in 2007. That was a very important part in this journey.
Basically, since the global financial crisis, we have been growing organically in a pretty nice way. If we look at the last few years and more from a financial perspective, you can say that our market has been up around 3%, and we have been up about 5% in average over this time period. We are taking shares in this market. At the same time, our EBIT has been up about 15%, so that's also a good thing. However, important to say, even though I want to take credit for all of it, for us, a strong U.S. dollar is a favorable thing in different to the Husqvarna Division business. That could be an important thing to know. There's an element of that, of course.
We have been working on efficiency improvements, and they have partially offset the investments that we have been putting into growth, investments we have done into product development and into our sales network. A snapshot of today then is that we feel that we have a strong foundation. We are well-positioned to continue on this profitable growth journey. We are constantly been reevaluating ourselves from a where do we best spend the resources? Where do we spend the money? We have done quite some restructuring from less promising and attractive areas, either markets or products, and channel, what do you say, focusing it into more attractive segments. One thing that was important that we did here in the spring was that we acquired DTS or Diamond Tool Supply to really get the knowhow and the access to the technology on resin bond.
Basically, this so important floor grinding segment that you also outside, when you do those last steps in polishing, you need resin-based tools, and we were relying on a supplier before, and now that supplier is a part of us. It's a very important thing for a very important segment. We have launched a lot of new products. We'll cover that a little bit later on. We have also been investing a lot in the sales force. We have a lot of sales people out in the field living close to the customers. We have an iPad tool where they basically have everything at their fingertips, so they can be effective in what they are doing. In general, we have a very engaged team. I promised to come back to the product introductions. I will not go through them all.
Believe me, I would like to, but I won't. The key message is really that we are truly the innovation leader in our segment. It doesn't matter if it is in terms of machines or in terms of diamond tools. Now just recently, we are also starting to expand into service offers. Down to the left there, you can see UpCare, which is a program that we have where you can sign up for a service contract, so the customer knows exactly what it's going to cost him to operate our machine. You also saw something very similar to our PRIME system, outside here with a wall saw and the blade adapter. It's quite similar.
Basically, this is a very unique technology where we have taken a real step change in the market, where you have this power pack in the middle, and no matter what you connect it to, single phase, three phase, you will always have maximum output into the tool and optimized for the tool. With one versatile system, you always have maximum performance no matter what power you have in the grid and no matter what application you want to do. This is really state-of-the-art technology that nobody else can compare to in this industry. Looking ahead then, it's all about being our customer's preferred choice. The key elements going forward is that even though we believe we have a solid foundation, we can never become complacent. We can never become content.
We need to challenge ourselves every day that we are getting better and better in supporting our customers and how we run our operations. That's one important thing. We need to continue to chase efficiency improvements, so we can continue to invest in product development and in expanding our sales reach and support. Three things that just to highlight in terms of potential growth areas, we have some segments that are even more attractive than others and that have more upside than others, and we need to make sure that we put sufficient focus on those. We need to expand into service offers, and we need to step up in emerging markets. I will cover these briefly. One segment that is a focus segment is surface preparation that you saw a little bit outside.
The segment has profitability and growth above average in our industry, clearly above average. Which is a good selection criteria, of course, for our focus area. It's somewhat of an emerging segment, so even if the products and technology have been around for a long time, that kind of working and the way you make a polished floor instead of epoxy solutions, et cetera, is gaining share and is emerging. There's an opportunity there. We are very serious about the sustainability agenda. This is just one example. The good thing with polishing a floor is that everything in concrete is just purely natural, and you polish it, and you get a long-lasting floor. If you do epoxy, you need to add all the chemicals, and you need to do all these kinds of things, and you need to renovate a lot. It's a very sustainable method.
We are unique in this segment with having full internal capabilities in both machines and in diamond tools. We are well-positioned to do something about this segment. Service offers. In the end of the day, it's all about how can we provide additional customer value. We provide a lot of customer value today in terms of the products we offer and the service that we provide, but there is even more opportunities around us. Right now, what we have launched is service contracts, the UpCare, as I mentioned, and various financing solutions. Those are the ones we have done. We see more opportunities here going forward. For instance, it's easy to speculate. You saw what Sascha was doing on the Smart Garden thing. Of course, that kind of technology could also be used in our space.
The other good thing is, of course, we create additional customer value, but at the same time, we create new and repetitive revenue streams. You get the revenue stream through the life of the product. Another good opportunity that makes us well-positioned in this is that for these services to be meaningful, they need to cover a wide variety of the applications and the products that your customers are using. Otherwise, it becomes cumbersome where you have 10, 15 different systems or different services. Having a broad offering is actually a good enabler or a good position to be in going into service offers. The last area is the emerging markets. They are not so big in our segment today. They will become. We need to make sure we are ready, we are there.
We need to make sure we have the right footprint from sales, service, and distribution. We need to make sure we adapt our products, because in the end of the day, we need to make sure that our customers have a return on investment when they buy our products, and that looks different with a very different labor cost. We need to make sure that we make that calculation work. Part of that is also that we need to help to educate on work techniques. How can you do this work differently so you can make the return on investment calculation make sense? That's a little bit of our plans here when it comes to the emerging markets. Believe it or not, now we're at the last slide here.
Just to summarize, we believe we have a strong position, that we can continue on a successful, profitable growth journey. It's all about being our customer's preferred choice. We have a strong position in most of our markets. We have the broadest product offering. We are the innovation leaders. We have two strong brands with Husqvarna for Construction, Diamant Boart for Stone, we have a highly engaged and dedicated team. After the tough years of 2008-2009, we also streamlined, consolidated, and ready to go. We believe that we have a bright future ahead of us here. With that, I conclude my, I guess I can hand over to Jeff for the Q&A, I guess.
Sascha and Pavel.
Okay, all of us.
Tommy.
Yep.
It's a big group.
Yep.
Busy.
Make sure she don't flip it over.
Okay. Christer Magnergård from DNB again. A question on the Consumer Brands Division. You talked that you were a couple of years behind the other divisions when it come to automation. Can you give some numbers on, okay, how much is automated or how much automation do you have in Husqvarna Division, for instance, compared to your division? Is that possible to quantify in some way?
It'd be tough to quantify, I think. Only because I guess first thing to realize is that the type of operations are a little different. As an example, I think a lot of Pavel's business in Sweden, where he's got a lot of automation, is a lot of handheld product, professional-grade handheld product. A lot of my operations are more consumer grade, mid-price point wheeled products that come out of the U.S. factories. The nature of the factories are a little bit different. Also, the seasonality is a little bit different, so it's a tough comparison. I think the main message is that we haven't invested as much on the U.S. side. We're starting to catch up with some of those investments, and we think that the payoff can be fairly quick, especially when it comes to automated guided vehicles.
Also, one thing I didn't mention is that some of the automated deck stamping that we're starting to do now is in parts of our factories that are not the safest parts of our factory, and so it's nice to get human factors out of those operations and get machines into them. It's another offsetting benefit.
Secondly, what do you think is the main risk for not reaching 5% EBIT margin, apart from just weather, of course?
Yeah. There's the usual suspects, right? There's currency, there's weather. I think that although we believe that we are in a good channel position to offset some of this, if there were a large customer bankruptcy or exit from the category in one of our main markets, that would be a tough recovery to do in one year. That may take a couple of years to pull out of, but I think that's probably also another risk factor.
Okay. I'm going to finally ask the question maybe to Kai. Or maybe it's not you, but I hope it's you. When it comes to the launch of robotics in North America, what were the lessons that you learned from this year, and what can you do differently next year in order to really ramp up? Oh, sorry, I missed it.
Yeah. The launch in North America has been based very much on the experience that we have had in other markets, primarily first, so to say, and that is to be selective, to really find the right target customers where we think the product will fit, and also, of course, to have, should we say, an acceptance and the request from our dealers. Of course, supporting that very much with technical support. We have started in small scale in the U.S. to make sure that we are successful there.
What will you do next year and going forward to really ramp it up?
We will expand. Step by step, we will, of course, expand this.
The potential here, how big do you think the market is?
How big do you think the potential is? You know the U.S.
Bigger than Europe?
It's a large country. I would say you have equal potentials on both sides of the Atlantic.
Thanks.
Thank you for taking my question. Natalie Falkman from Carnegie. Just when you add new features to the products, how do you think about pricing? Is it there to sustain the current price level, or are you actually able to increase it, and for how long?
It's a very generic question. You will have many different answers to it. I think we normally talk about stable pricing, meaning that we are capable to maintain, and that probably includes a certain amount of feature addition to defend the positions. Of course, there are occasions, Sascha talked about his generations of water coupling hoses, et cetera, where you have an opportunity to do a bit more, potentially, new technology. It's a very tricky question to be specific about.
It's the same.
We're talking about stable pricing.
Yeah
By and large.
Just also a question on the emerging markets. Also maybe a generic question, but how different are the distribution and the channels of approaching distribution channels, supporting them in emerging markets versus developed markets?
I suggest we let Pavel and Henric talk.
Yeah. Of course, there is a difference in the, should we say, commercial ability of the distribution channel in the emerging markets. For sure, there is. They are not as highly developed. They are starting out with this, and we put in a lot of education. I would say also that in some of the emerging markets, which are geographically very vast, also, it's a question to build up the network fast enough, but also support with the logistics. It is not on the same level as we see today in West Europe or in the U.S. Again, it's moving fast as the economic development in those countries is moving fast, and also the distribution abilities is moving fast up.
Do you feel that you need to be more generous with discounts towards emerging markets distribution?
That is not really a question that I see related to whether the dealers as such are well developed. Of course, on a technical level. I would say that the products are different that we are selling initially on emerging markets. It's entry-level products. A professional in China, for example, or Southeast Asia, is using a mid-pro product and see that as a truly professional product or even an open price point product. It is more a question to make sure that we have the appropriate assortment for the appropriate market and move the customer up as the country develops, as the purchase power develops, we move our customers upstream our products.
I don't really have anything to add. I think you described it well.
Last question on the Construction. If you were to add something through an acquisition, what would that be? Could you give a geography, maybe some application or product?
Generally speaking, I guess the straight answer is no. I think the key for us, though, is that we have built a core. Even though we have a fairly wide range, we are very, what you say, focused on a certain customer base and certain applications. I think if we would build through acquisition or organically, we will try to do it close to that core and not spread ourselves too thin. No matter if it's an organic or a M&A thing, we would try to build something that really makes sense together with the other things we have.
Right. Hi, Rasmus with Handelsbanken again. I have a question first for Sascha.
You had a fantastic 12 months now, which basically started, to some extent, with the extremely long summer last year, which depleted inventories and so on. From an outside perspective, it's very difficult to know what we should be thinking in the coming 12 months. Are you comfortable with feeling that you continue to grow, or did you have three years growth in 12 months time, and we're sort of need to recover that? How should we really think about that?
It is obviously the case that we had a spectacular summer last year in continental Europe, this had also some windfall effect coming into this year, of course, plus some other one-time effects. We, and I think you've seen some of this, we've also seen some strong underlying improvements to really drive the growth platform. We are confident that this will also carry us through the next years.
Thank you. Then I have a question for Jeff. Did I understand it correctly that the entire sales decline is in private label?
No.
Okay. It was just a
Yeah
picture.
No. It's been fairly even across the business.
Okay.
No. That chart was more about our shift over the last 18 months or so from private label into our own brands.
Got it. Can you say something about where your gross margins? What have they reached? I know they were just about double digits originally. Have you managed to improve them significantly? Is that what we're seeing?
I can't say anything specific. Although I would say, the improvements that we have seen in margins and gross margins largely have come as a result of mix effect that we're starting to see the beginning stages of, as well as some of that cost out activity. In order to sustain the path and get to the 5% target, though, we've got to start to add in some growth elements to the business to augment those first two factors, and that'll drive margins higher.
So far, basically, the improvement in the EBIT margin is basically the improvement in the gross margin, I would assume.
Yep. Most of it.
Yeah.
Yes.
Björn Danske. Question on, for Husqvarna and the aftermarket business, if you can shed some light of the size of that business and also the chainsaw chains launch that you now have had, what kind of impact that will have on the aftermarket business, if that will be substantial. If you could also comment on the return on investment requirements for that investment as well.
The aftermarket, roughly our measurement on the aftermarket relating to my business is approximately around 20%. We have an under average market share, as we also communicated earlier, of course, that is one of the reasons why we are running the parts and accessories strategic initiative focus, as well as why we have done the long-term investment into the own saw chain development and saw chain factory. Both of these are a combination for us to be able to grow our market share in this area. The investment is large. You know about it since earlier. We see that it will give us a payoff over mid-term, long-term range, basically.
Thank you. The second question also for you is on emerging market, we touched upon it earlier here. Is it possible, or is it an intention to reduce seasonality through an expansion in emerging markets? Is this possible to get better load in your current plants through this, or do you need to have other plans or other sourcing for those markets?
I think you're reasoning correctly in the way that the emerging markets, especially if you look around the equator where they have an all year round season, of course, they give us that full year season and ability to sell. However, in our case, the emerging markets is still a small part. It's a low double digit number out of our total sales. It doesn't really give us that quickly, that effect, as you say. Over time, yes, it will improve and balance out the seasonality, but not from an organic perspective or in a short time.
Thanks.
Hi, this is Johan Eliason. Question on Husqvarna to Pavel. You mentioned focus on the servicing dealer network, and I think you mentioned the number of 25,000 in the network here. I've been following this company for more than a decade, and there's always been this focus on servicing dealer, and I recognize the 25,000 dealers as well in the network. What's the mechanics behind this sort of number looking for, if I remember the numbers correctly, fairly stable? Is it is so that you are gaining servicing dealers, but at the same time, there are fewer services dealers as they lose out to the big box retailer? Or how does the mathematics work here? Why doesn't this number grow 30,000 in over a decade, basically?
I think it is so that we do work actively with our dealers in the way that we try to develop them. At the same time, we see that some dealers are not performing well, and then it can be an active decision from us to take them out. In some cases, also, dealers decide to leave us for whatever reason that may be, so to say, over time. In general, we see that we are, so to say, increasing the number of dealers on a net basis slightly, but not that much. That why is the number you say also is pretty much similar. I think our largest opportunity also, as I mentioned, is to really start to establish the dealers in the urban areas, which we have not focused on earlier.
Is that something that you've seen Stihl doing already, or is this a new way to attack this problematic?
I think we haven't really seen Stihl making a very clear and active role in putting themselves more in the urban areas as such. What we have seen is that Stihl is acting partly into some retail, but not into specific dealer-like distribution channel in the urban areas.
Talking about retailers, for Consumer Brands, could you give us an update on the North American who's sort of losing out? What's your biggest exposure these days? There's been a big shift since Bob Cooke's times, I think, over the last decade.
Again, I'd be out of place to talk about specific retailers. As I mentioned earlier, though, we are seeing some shifting going on, both in wheeled and handheld, as a result of some at-risk retailers starting to close some stores. We're seeing that volume shifting primarily to mass and to big box DIY, and probably to some degree into the dealer channel, although it's tougher to measure that movement.
Is this trend for your category similar to sort of the overall trend we are seeing?
Yes.
Could you say where on the cyclicality of construction? Is the business peaks different from where it was in 2008 when we entered the drop? How do you see this business into a construction downturn, please?
The biggest year, so to speak, was in 2007. That was a peak for us in our market segment. At that time, we estimated the market to be bigger than the SEK 25 billion or south of SEK 25 billion that we now think. The market has not yet fully recovered back to 2007. Of course, to speculate in where it's heading in the future, including Brexit and other things, it's very difficult for time being, of course. The market has not come back to where it was before the crisis.
You reported separately. What was your margin at the peak in 2007?
Margin?
If I recall, I think it was 13 point something, low 13, if I remember. Probably others in here would know as well.
The mix was like 50/50?
Mix of what?
Aftermarket and new business.
Yeah, that was pretty much the same at that point, yeah.
Okay. Thank you.
This is Michael Bush from Swedbank. Question for Jeff. I'm curious about having a closer look geographically at the U.S. Are there any particular parts of the U.S. that you find are underdeveloped in terms of penetration, or are there particular areas where you feel a lot more well established?
Honestly, the U.S. marketplace, I think it's so developed relative to our categories, that I would say it's fairly stable, honestly. One of the things that I think the whole industry is watching very closely in the U.S. is what goes on in the West Coast in terms of water restrictions and some of the drag that we see at retail because of that on our products, but that's industry-wide. I think other than that, a lot of our sales strengths geographically in the U.S. follow where we have good, solid channel penetration.
Just one follow-on question. Obviously, with the launch of robotic mowers in the U.S. under the Husqvarna brand, that's one push. Do you as a company, make any implicit linkages between McCulloch technology being taken from Husqvarna? Are consumers aware of the linkages? If not, should they be? Do you see any benefits of basically then letting the market know that McCulloch is, say, cheaper or more less costly option to Husqvarna? It's difficult to say because obviously it's a new product in a market which is fairly entrenched with ride-on mowers and a different setup.
I'll start it and then Pavel, if you have a comment. Robotic mowers, especially in the North American market, are so new that I think consumers making any connections at all, it's just not happening yet. I can't speak as much to the European market. Sascha and Pavel, maybe if you guys have a comment on that market where you're stronger.
I think I can say that, first of all, I think it's the right move from our side to make sure that we are available in all the sales channels with the robotic mowers. There is no doubt about that. The customers are requesting this, and we need to be where the customers are shopping. We do share some technological aspects of the platforms, but we also try to differentiate the products very much with different features so that they are not perceived as being the same. They have different features, which means that if you pay a certain amount for one, you get a certain amount of features. You pay twice the price, you actually also get, I wouldn't say twice the features, but you get another set of features, which is there.
As to your question, whether we would like to market it so that McCulloch is a, let's say, low-cost Husqvarna, no, we don't want to market it like that. Whether the customers will know it, well, I think some customers understand based on the websites, there's some of the connections that they see that we are one joint company, so to say, operating under separate brands. It can also be the marking on the product. In some cases they can. In general, my understanding is that that's not the case, that the customers know or take for granted that it's a Husqvarna if they buy a Gardena product.
Thank you.
Yeah, another follow-up from Swedbank, Anders Roslund. The Consumer Brands, 50% of the margin increase up to the 5% is coming from new products. Is it mostly robotics or are there other areas you will?
Let me clarify, just in case that didn't read through correctly. It's that 50% is not all new product, okay? That's called capturing new market opportunities. There's a piece of that that's new product. There's a piece of it that is continued mix up in margin.
There's a piece of it that's actually price. It's a combination of all three really to get there. The new product piece of it, I would say, we want to primarily make it a story around robotics and zero-turn mowers and battery product. I think those are areas that we're going to lean on hard. We've got, as our margins continue to improve in what I'd call our core ranges, we want to lean hard on some of those categories as well to get some of that. I referred to that small I innovation.
You'll see more of that in areas like push mowers and tractors and basic handheld product.
Okay. Thanks.
Just one question about the balance sheet. With the de-leveraging we're seeing in the company, at what point is the right point to address the under-leveraged nature of the balance sheet that is approaching, especially if nothing is imminent in the M&A pipeline?
Well, I assume that's a question for the shareholders and the board to decide upon. Of course, we intend to follow the trajectory of improved margins and improved balance sheets. We have said if it's not for growth, then of course in the normal situation is to change the capital structure back to more leverage. Let's see how this evolves over the time.
Yeah. Hi, it's Rasmus again with Handelsbanken. Just now that we're switching towards more growth, I had a question for Kai, maybe, that the 2.5% average that we've had in the last few years of growth, what's actually been the volume? Has it been the same or has it been zero or negative? Just broadly speaking, what's your guess?
It's probably been rather slightly down on an aggregated level. Higher value.
I have a question for Gardena and the ongoing initiatives to expand the offering. You have been doing that for some time, is it a step change that we are seeing right now in the expansion?
You mean from a product perspective?
Yes. In a volume perspective, you're addressing more and more markets a little bit more aggressively now or
Yes, of course, we're stepping up. I hope that became clear, both from how we address geographic expansion and also how we address innovation. Now, of course, an innovation, of course, is a nice benefit because it benefits all markets immediately as we move into additional categories or new products. Also be real that innovation doesn't happen overnight. Of course, yes, we are investing more, but I think we will see gradual benefits coming from it.
And have you-
We see some of them already.
Yeah. It's been fantastic. Have you been sacrificing margin for growth and will we see more of that going forward? Should we expect a little bit weaker operating leverage on growth near term?
Well, right now you've seen, I think, a very nice margin improvement, first of all, while it's growing.
Yes.
I think we are at a quite good level now, and if we can keep this while growing, I think we deliver exactly the right balance. I would think about it this way.
Thank you. Last one, and on the geographical expansion within Europe, do you foresee that you can do that expansion for many, many years to come? It is quite a big area, and you are now mainly focused in the central part of it.
Yeah. I think for the timeframe we are talking about, I think this is still a sufficient opportunity for us.
Thank you.
I don't think that we have any more questions. Okay. Thank you very much for your attention today. I will not make a long summing up. I will be rather swift. You will have heard about how we delivered good results in the profitability focus phase. You will by now be pretty well aware of that we are at a turning point, really starting to talk about profitable growth.
I guess a relevant question is then, have we created the conditions for this profitable growth? I think the answer from our side is, we believe so. We have the right structure. I think you also realize when you listen to the agendas of these gentlemen that they're quite different. There are quite different end customers that they're trying to target. By having this right focus now, we create the conditions for growing, and for growing, hopefully, profitably. Have you heard about the strategic initiatives? You have heard about the plans that underpin them, and we are in varying degree into those. May that be 18 months or six months, but at least sufficiently far into it to have the confidence to talk to you about it. You have heard about the financing of them and how we will press ahead.
That's how we have dealt with it this year. This is also how we intend to deal with it for next year. On top of these efforts that we have done in 2016, we are, at least from a planning perspective, wanting to repeat that for next year, build on the strong momentum of further measures for efficiency improvements. With that, it's becoming quite a significant amount of investments into profitable growth that should yield. That's where we are. I think you've seen the team. I'm really proud that the team has been up here and talked to you. I think that was the highlight of the day, and you also hopefully got a sense for their pride and their determination to make this a success. That's where we are right now. I think I'll leave it there.
Thank you very much for your attention, and leave maybe for Tobias for a last word.
One final word. We have a small gift for you, so please don't forget to take that as you leave. It's on a theme of sustainability, and it's perhaps not the most sustainable, but one of the most sustainable fire starters that you can actually find. There's a really interesting story behind that product, which you can read more about in the little box. With that, thank you so much for coming, everyone, and hope to see you soon