Good morning, everybody. Very glad that you made it here that early to Biel. It's a pleasure to host you here in this location. My name is Alain Bollschweiler from Bossard and I'm Head of Communications, and I have the pleasure to host you and lead you through the agenda of today. First of all, I saw that you already had a coffee. The toilet is also outside to the left. These are some administrative things. We will have a coffee break afterwards, and of course, after the event, we have an [Foreign language] for everybody. First of all, I would like to guide you a little bit through the agenda we have today. We have a number of speakers. It's not necessary that you remember all the names, but you can see we have it from all over.
We're going to start with Daniel, our Group CEO, with a profile and a Strategy 200 review. We will continue with Erica Wong coming from Singapore, talking about our sales engine. We will continue to the operations engine with Gaetano and Angie, talking about it. Before the break, we have Remo Gander, our VP of Smart Factory, talking about the Smart Factory services. We have a little break, and we have a look at the financial performance and M&A by our Group CFO, Stefan Zehnder. We have a wrap-up, and of course, we have enough time to answer many questions from you. Before we start, I guess you're asking yourself, where are we? It looks a little bit crazy, very technical and so on. For that purpose, we have Stefan Pauli here.
He's the co-lead of innovation of the Swiss Smart Factory, and he will talk about this institution here.
Thank you very much. Also from my side, a warm welcome on the Switzerland Innovation Park here in Biel. Many of you may know that there are different innovation parks in Switzerland, six parks, and we are located in Biel. We focus on three topics. The first one is Swiss Advanced Manufacturing Center. It's about 3D metal printing, and you see the big machine back there is part of where we do research on this, such that you can print 3D metal. Then we have the Swiss Battery Technology Center. It's in the corner where you see some expeditions where they actually try to recycle car batteries. Then we have the Swiss Health Tech Center that's on top of there. There you don't see that much. It is about health tech innovations.
We're here in the Swiss Smart Factory where we focus on Industry 4.0, sustainability, smart manufacturing, and you will see a bit more about us. At the top levels on top of the building, there are some companies rented in, SMEs, startups, big companies. We also have education partners, the BFH and the HFTM, which are located here. We have the S3C. You saw the humanoid robot, which welcomed most of you. That's also here, and they focus on robotics. That's all in this building. We are here, as I said, in the Swiss Smart Factory. We want to lead the way towards smart and sustainable manufacturing. Our services are we do innovation projects, one of which I can shortly present, which we do with Bossard. We have the test before invest.
You can see how things work, Bossard systems, and then you can see them here, test them before you buy them for your own company. We have knowledge transfer. Already today, thanks to Bossard, we have some knowledge transfer. The innovation project, the Innosuisse project we do together with Bossard, is the Smart KP. It's promoting ideas and strengthening teams. You will see a demo today, and it's a user-oriented, GenAI-powered platform, which you will see live for today. Obviously, what we do here, we cannot do without partners. We have many partners. Thanks to the partners, thanks to Bossard for being partners, such that we can do things which you will see today. Now you will have a visit through the Swiss Smart Factory. We have organized two visits, the German one and the English one. The German visit starts here.
That's with Bastian, who will go there, and then there is the visit in English with Lucy, which will start behind the chairs.
Yes, with Bastian, the one who has a blue dot here, the German, they go with Bastian to this corner, and the one with a green dot goes to Lucy over there. Does everybody have a dot on the cart? Does everybody know where to go? We go and see each other back here in about 20 minutes-25 minutes.
Welcome back. I hope nobody was eaten up by a robot or any kind of machine. Everybody's back. Every seat neighbor next to you, healthy, I hope. A very warm welcome from my side, and thank you very much that you made your way to Biel. I know it's not just around the corner, although the Swiss railway connection seemed to be quite okay. Now you have immersed into the world of Smart Factory. Some have been greeted by a Unitree robot out there.
You have seen some of the applications that Bossard is involved in here. Welcome to the world that Bossard is operating in these days. This is happening around the world. I had the opportunity to be in China for two weeks in October, and I just wanted to share two, three things that I recognized during my trip. One was we went to see a customer called AgiBot. AgiBot is a competitor to Unitree, the guys who produced the robot you saw in the entry, one of the larger ones in China. We are serving them with screws. First, we started with prototypes three years ago. Now they start to produce 10,000 robots this year, and they are looking into Factor 10. They already built the factories. This is a fact. This is coming. They talk about mainly humanoid robots for different purposes.
One purpose is industrial assembly and manufacturing. Second is logistics and distribution, and that's where we try to connect and also experiment with cobots, which can help us to take boxes from the supermarket to the point of assembly. We're experimenting together with AgiBot, so we're a supplier and a customer. Third, they said they want to use humanoid robots for elderly care. I was wondering, do you use them for flipping people in the bed or what are you using them for? Their answer was mainly they use them for social interaction. I was like, social interaction, that's great. If you're old and then you have a robot and then you can talk to him or her or it, whatever.
I had a bit of a hard time to get that, but it seems like they're lacking people, so they need robots for all kinds of things. We went to see Tong Ming. Tong Ming is the largest stainless steel fastener producer in the world. They originated from Taiwan. Now they have several factories across China. They just built a factory for $56 million three years ago. We went through the production, and I was really impressed. Why? Because it was, I would say, two-thirds automated. You saw AGVs, like you see this one running all over. You had production lines, maybe 30 machines with only one operator. The AGVs would pick up the goods that were produced, put them into a distribution center, and the distribution center to serve customers was fully automated. I mean, it's 60% automated.
This is what happens now because they lack people. They lack efficiency. They need robots to help them to become more efficient and to serve customers in a speedier way. The third example is a company called GBB. This is a very small company, and they produce SmartBin, basically. First of all, I was not happy, saying, not nice. They compete with us. Yet they produce bins in a very reliable way. And Remo, Remo, where are you? You're going to visit them in December and see how we could potentially collaborate with them. They only produce scales and labels as we do, but seems like for a fifth of the price and same functionality. They also produce RFID gates to stock where they need to access, they need to do access control. They built these systems within five years.
Five years ago, nobody would have talked about it, and we were still state of the art. Now you go to China and you see those systems in already a number of customers. Fun fact, they also support Tong Ming for their internal tool distribution with an RFID gate rack. It is all interconnected somehow. These companies, Mushroom now, the robot companies, the service companies for logistics, but also the manufacturers bet big time on automation. This happens around the world. Like in the U.S., with the tariffs in place, many companies now are forced to shift to the United States. Guess what? They do not have people. They need to automate as well. That is what we see with our customers as well in the United States.
Also in Europe, now particularly Switzerland with our tariffs, there is a high pressure for automation and becoming more efficient. Again, welcome to the Bossard world. Welcome to the world we're operating in, day in, day out. What would I like to do today? You see Strategy 200. Just a reminder, we have defined the strategy and the initiatives in detail in our investors' handbook that you can download. If you miss something, if you think, oh, what is this? What is that? It's all online. It's all described in detail in our investors' handbook. If you miss something, you know where to consult. Strategy 200 is a strategy we follow by the year 2031 when Bossard turns 200 years old. That's why it's called Strategy 200. I'd like to give you a brief update on where we are because we're now halfway.
We started this 2020 and up to 2031, we're about halfway, and we thought it would be a good idea to share where are we, what happened, where do we want to go in the next couple of years. Before I do that, just a brief profile. I know Mark has seen it many times and knows maybe you could do the presentation for me now, Bossard. Just in short, for those that don't know Bossard so well, I tried to give an update. Sorry, Mark, didn't want to tease on you. Bossard is not a cheap provider of just products, but we really see ourselves as a strategic partner for customers in supporting them in their automation of the supply chain, but also in finding the best technical solution. As you know, we have many years of experience.
What's new here, I would say in the meantime, there is also an 8th generation that has started in the company in different functions of the Bossard family. There is also a 9th generation, but I guess since they're only two years old, they are not so much interested in fasteners yet. Maybe it will take some time. I can just say family is growing and there is also interest from the 8th generation to participate. The rest, I guess you pretty much know. One other factor is our resilience, which hasn't changed on the one side from a customer perspective and from a geographic perspective. We're not reliant on only one region, but we do serve customers in many regions across the globe. That means we can also shift. If one region doesn't go well, we can benefit from another region.
Doesn't help too much in a global recession, though. On the supply side, we always highlighted that we do buy from suppliers across the globe. For specific items, we usually use two or three different sources, not to be reliant on only one, one big source. You could imagine just buy at a big Chinese supplier, like I mentioned, Tong Ming. Then you get a better price. But what happens if they are in trouble? We always have multiple sources for key elements. Also here, a certain resilience because we're globally spread. The same for customers. Not only geography, but customers. We try to focus on customers that are growing. Some verticals you see here, for example, Aerospace. Aerospace is growing like crazy right now.
The good news about aerospace is that this is a very long-term business, for example, with Airbus and their sub-suppliers, Safran, Liebherr, the ones producing the landing gear and so on. They usually commit themselves for 10 or 15 years for the next models of airplanes. A fun fact here, we just visited our distributor near Toulouse. He wanted to show us an example of long-term orientation. He said, did you realize next time you travel in an Airbus, go to the toilet and look at the back door? There is still an ashtray. On top, it says no smoking. The reason is they are not able to out-design the ashtray because they're afraid it could be a structural problem. That sounds pretty strange, of course.
It shows that whenever we want to change a screw for an Airbus or airplane manufacturer, it's hardly possible. As long as it's designed in, we can benefit from that. It's really a long-term business. Data centers is an area which is growing fast, also through Belimo. Belimo, based on data centers, we serve Belimo, great customer. Also still EV in China. I took pictures of all kinds of brands. I think right now I read there is 97 car brands, and most of them have a green number plate, EV or hybrid. It's massive. It's booming. Probably there will be consolidation, but we're serving them in China through EMS, Electronic Manufacturing Services, as well. We also have, I would say, semiconductor, maybe VAT or semiconductor infrastructure with LAM Research, not LAM, LAM Research, which just became a new customer in Malaysia.
These customers are growing, and the beauty is we can really grow with the ones that are growing. You probably know this one. The key message here is we deal with complexity. Fasteners are many small parts, and they need to be designed. They need to be suppliers to be selected. Parts have to be ordered and then put to stock, taken from stock and assembled. We usually use the iceberg to depict that and say, okay, only about a minority, 15% of the cost is attributable to the part, and the rest is process costs. I think many of you have seen that before, so I'll fast forward that a little bit. That leads me to our business model, which is basically not only selling products, but moreover selling services, which is technical consulting, making sure customers use the right product.
For example, only one drive type for their applications and not four or five. They only need one screwdriver and not four different screwdrivers, for example. Smart Factory Logistics. Now we're in the middle of it, and my colleague Remo Gander will fill you in with much more information on Smart Factory in a minute. Altogether, we add value through services. That's why we do it. That's what we call creating customer loyalty or stickiness to make sure we can do something beyond just delivering products. Yes, today still 98% of our sales is attributable to product solutions. We sell products, and that's where the revenue comes from, 98%. The rest is fees, the fees from engineering consulting, the fees from logistics handling, which makes around 2% of our total sales.
That's the minority, and so far it's been the strategy to keep it that way. Just to underline the service with a bit of numbers, the growth rates over the last five years you see here for SmaFrt Factory Logistics, about 5% year-on-year growth that we had in installed smart devices and a similar picture, growth much faster, but coming from a very low level. For Smart Factory Assembly, again, something Remo will fill you in later, but just to show this part is growing and it keeps on growing and it will be growing in the future according to our understanding. We always said, you know, we want to grow organically and through acquisitions. Let me remain a bit on that slide to explain what it means.
Over the last 20 years, you see one, you see the steps growing from around CHF 400 million, CHF 600 million, CHF 800 million, CHF 1 billion-ish. All along the way, we did acquire companies. In the last five years, we bought companies in the value of about CHF 150 million sales. Stephan Zehnder, my colleague, will elaborate more on that later. What you also see is the EBIT margin development, but also you see the red areas, and that represents the economy. You know the PMIs. Now this is representing the global PMIs, which are published every month. Reality is we had one in 2009, as you know, in 2020, COVID. We had two years of growth. Whenever the PMIs are up, we benefit from it. That is very clear. If the industry is growing, we benefit from it. In 2023, we saw the normalization effect.
We saw also that customers just simply, you know, we did not lose customers, but basically there was a normalization, destocking, and along with the customers, we also lost some business. I like to compare the current situation a bit with a leaking bucket, you know, a bucket with holes. Today we have opportunities at hand of around CHF 500 million. Erica Wong will show you more in the dashboard and how we measure that and how we capture that. It is around CHF 500 million today. Our average conversion rate is 10% average. Some units are 20%, some are a bit lower, average 10%. 10% of CHF 500 million, basically we are winning new business in the value of CHF 50 million organically every single year so far. We want to accelerate that. Erica again will fill you in on that.
Now, unfortunately, if the PMIs are not up and customers simply have less to do, like we see it now with Komax, like we see it now with Thermoplan, yeah, obviously they just order less. We're not losing customers, but they just order less. Fortunately, we have other customers, but it's hard to, you know, once the water flows out of the bucket, we keep on filling new water on top. The problem is the acquisition time of a customer usually takes between six and 18 months. So if you talk to a new customer until you see it in your books, it can easily take up to 18 months.
We saw that with a customer in the U.S. recently in the agricultural sector, a new customer, which we won, but it took us more than a year now in order to really get started and to serve them with the first products. Why? They still had stock. They did not go so well. The economy did not go well. They depleted the stock. To change supplier took us around 12 months. We are much slower in seeing the new business that is coming in than what is pouring out immediately because if customers like Komax suddenly stop ordering, it stops immediately. That is what we feel and see here. It is not that we basically lost customer. Of course, there are a few that could change for some reasons, but usually we are quite sticky with our, or I would say customers are loyal.
Maybe sticky is not such a nice word. That explains a bit that curve and 225 is still in the red zone. As you know, we haven't seen a recovery. Stephan will talk more about this later. We also said we want to grow through strategic initiatives. I'm not going to go into all of them. The winning aspiration is kind of on top of the strategy. When I go into the first initiative, sales engine, I think I talked already quite a bit about the growth verticals. They are different by region. You couldn't even say this is a group thing. For example, we see humanoid robots growing fast in Asia. We see electronic manufacturing services for EV growing fast in Asia as well. We also see semiconductor equipment manufacturing in Asia.
Those are, for example, three areas which are growing fast in Asia. In Europe, it's probably aerospace, which is growing fast, Airbus. They're full over the next 15 years, I would say. Luckily, we're one of the key suppliers also for the sub-suppliers. Today we do about, what is it, EUR 80 million in Aerospace. Today really, I mean, if you have the part, you can sell it. The price doesn't matter. I mean, it's really, if you have the part, this is a booming market right now. We're benefiting from those acquisitions that we had in the past. Otherwise, railway, you know, Stadler Rail, Alstom, they still have full order books. Alstom, EUR 130 billion. Stadler, EUR 30 billion. They have some other problems, maybe on the cost side, but the order books are full.
Maybe we see also companies in healthcare still growing and the Belimos of this world, the following the data centers. In the U.S., we're also focusing on data centers. Dell, I would say Dell currently has growth problems. That's a nice problem. We're getting forecasts from Dell every month. I mean, you can really forget about those forecasts. They're so unreliable because they always order maybe the double or so. I mean, it's really, it's a nice problem, but it's also painful because then we cannot fulfill our promises. That's a bit challenging, but they're growing really fast, same as HP as well. Those companies are growing, whereas agriculture, if I could talk about this here, we're in a downward cycle. I talked to Roger Lemp before about this. Both agriculture manufacturers, which we're serving, told us they are in a downward cycle now.
The U.S. decided not to, or China decided not to buy soya beans from the U.S. Of course, this is a big chunk of business. If no soya beans, no harvesting, no tractors. You can do the math. There will be less demand for tractors. All of them say it will come back. Crop will still be needed. People will still eat, and this will still be going on. This is a bit the pictures, but we try to focus on growth verticals as much as possible. Deep and wide, what does that mean? It means deep that we want to penetrate into existing customers as much as possible with more products and more services. Other services, again, Remo will talk about Smart Factory in that arena.
We also launched a program called G60, which means we defined 60 large global accounts, which we want to leverage globally, which means, for example, we serve ABB Drives in Zürich, and they have a plant in the U.S. Why shouldn't we serve the same type of product plant somewhere else? We identified the global scale, the global map, and have teams who support now to go after the same customers globally to make sure we can win over basically customers that we already have globally. That is going on. Again, Erica will fill you in more on that. We shift more towards digital lead gen and higher conversion rates. I'm not going to say more here because again, Erica will go into some details showing you the dashboards of what we're doing. Smart factory, again, Remo's play later.
Operations, so far we have introduced Microsoft 365 in 19 business units across the globe. By the end of this year, we will have about 40% of our business covered in the new system. Currently, we're implementing the system in India. Four rollouts in Europe and Asia are planned by end of next year. We will have 60% covered across the globe. We continue to use technology to increase efficiency. On purpose, I do not mention AI because AI is one of many technologies. It could be RFID, it could be any digital solution software. We want to use technology to increase our efficiency, to make our, and to the last point, supply chain more efficient end to end. Smart factory, I don't want to lose too many words here, but one thing I want to highlight, Bossard is not inventing new screws.
Innovation for us does not mean we are inventing new products. That is not our business because we are a distributor. We work with companies who develop innovative products and then they can use our distribution network. Again, innovation for us means we are not developing products, but we want to develop and innovate services and use technology to make the flows internally more efficient, but also towards customers. On the cultural side, just one thing to highlight, collaboration. This is what we started with when we kicked off the strategy and said we need to collaborate much better across the globe. We introduced the guiding principles again. They are available also in the investors manual. We experiment, we empower, we talk real, we collaborate, and we deliver value.
Those are the five guiding principles which we want to highlight again and make sure we use those criteria in onboarding whenever we talk to people, but most important that we live up to it day by day. I think we can, you know, put a lot of slides on the board. We just have to do it. I think that's something we want to continue. Last but not least, we want to reduce our CO2 footprint. Now, despite Mr. Trump, we still believe it makes a lot of sense to do what makes sense and to also look into where can we help decarbonizing. On scope one and two, we have to target to reduce 50% by 2031. We're on a good track. We have a team under Tobias Bürgler focusing on also measuring our footprint globally. We have regional and local initiatives going on.
Annually, we want to reduce, if you do the math, by 8.3%. We are actually more than on track on this path. With that, I tried to give you a brief overview again on Bossard and the strategy, where we are. Now I'd like to hand over to our valued VP of Sales and Marketing, Erica Wong from Singapore. Erica, thank you.
Hello everyone. All right, thank you, Daniel. All right. Okay, I'm Erica Wong from Singapore, VP Sales and Marketing, and I am 27 years in the organization. All right, today I would like to walk you through our scalable and also very disciplined sales engine journey towards 2031 and beyond.
All right, so far we have transformed and then we also have a scalable sales engine that enables us to turn high-quality leads into lasting customer relationships, driving or expanding share of wallet, which is penetration rate against total addressable sales and long-term profitable growth. All right, so our transformation so far anchored on this strategic foundation. All right, we have a new user-friendly website, which has been optimized for SEO, Search Engine Optimization approved, and also Generative Engine Optimization approved. All right, that will give us better lead generation and sales conversion. All right, second, we have a resources hub, which basically streamlines and also consolidates fragmented touchpoints and platforms into one. All right, this is to bring efficiency gain, cost saving, visibility, and also global scalability.
We also unify end-to-end process and structure through watchlist management concept, which I will talk about that later. This gives us a predictable pipeline and global scalability. At the same time, through this unified process, we have an integrated collaboration from marketing to sales and products and services team so that we have measurable ambitions to increase share of wallet. That will boost our quantitative aspect. On the qualitative aspect, we also have a stronger focus on the customer satisfaction survey through metrics like Customer Satisfaction Index , net promoter score. All right, this enables us to look at the feedback from the customer and integrate into our performance cycle. Right now, this is just to show you our watchlist management, the end-to-end unified process. All right, if you look at here, we have lead progression to prospect and to become customers.
All right, so these go through three stages from qualifying stage. This is managed by our marketers from leads to MQL, which is marketing leads, qualified leads to SQL, sales qualified leads, and will be assigned to the business development team. All right, so this is where the engagement starts. All right, so we turn this status into a watchlist for customers. That means this is the customer we must win. All right, and then we manage, engage, and then we get the first order and it turns into watchlist three. This is where in terms of penetration rate is 10% and below. Once it crossed 10%, all right, we have a deeper engagement with the customers. All right, and this is managed by the key account manager. It becomes watchlist two, must grow customer where we have more to gain from these customers.
As we grow and promote more than 25%, and this is the customer, this is our key customers that give us sustainable growth, and then we call it must watch customers. All right, through this process and promotion from four to one, all right, we want to gain higher share of wallet. All right, this is our unified end-to-end process. Now, with this, we also have a business intelligence that helps us to have full transparency. All right, first we have marketing Power BI. We call it internally, we call it global leaks optimization workflow. All right, it gives us full transparency, sorry, full transparency from the leaks to MQL to SQL until we get the first order. And there we build out the pipeline.
All right, so with this, this enables final efficiency, all right, higher conversion and also predictable pipeline that helps us, you know, accurate in our budgeting. Now, continue to sales. We also have a sales BI called gain, growth acceleration, insights navigation, right, that gives full transparency from watchlist four, three, two, one. If you can relate to the end-to-end process I showed before, this is to help us to gain higher share of wallet. All right, so with this transparency, we precise our customer segmentations, prioritize must win industry, all right, sunrise industries, and also accelerate early entry into high growth sunrise market. With this, basically we are moving from fragmented data into one very solid measurable data intelligence. Now, this just to give you a few key visuals.
All right, so if you look at here, all right, the left here, all right, so this is the triangle that shows you, you know, lead to sales conversion funnel. All right, so every stage is transparent and is tracked real time, all right, that gives you the conversion and the number of opportunity created in our CRM. All right, so with this, we manage our funnel efficiently. All right, next one. All right, as Daniel mentioned, you know, we capture every single opportunity into our pipeline CRM, all right, and then we have a full visibility on that. Year to date, we have captured close to CHF 500 million, but as of today, it's more than that. This number is growing every day. All right, with this, we have a predictable pipeline.
Now, the next one, all right, so this is the overview of our dashboard, all right, so that gives us a different perspective, right? First, if you look at here, this is where we are now and we are able to see our trend and margin trend. And then, you know, into the details, of course, you are able to click and look into a detail, much detail inside. All right, then we have how did we grow, right? We are able to know who are the customers give us a higher sales, new sales, lower sales, and lost sales. At the same time, what we sold, you know, in terms of product solution by products and services, and who do we sold to by vertical. Of course, there are much more details inside from here.
These are focused on current and we are also focused on future growth opportunity. What are the current pipelines that we have captured so far? With this, it gives us insight to grow in the areas that it matters to us. To support this, we have a Global 60 Program, all right? Basically focusing on 60 key accounts globally, which make up about 2,400 sites. These numbers are growing every day as we engage more and more. If you look at here, these are all the accounts that we have organized globally. With this coordinate engagement throughout all the three continents, we are not only converting opportunity in one region or in one market, but across all markets. With this, we improve, right?
We enhance our strategic partnership, all right, and scalable growth and also consistent synergy across all regions. In order to have a strong and solid sales execution, we also put in place a high-performance sales leadership coaching program that focuses on all the key leaders, all the sales leaders, and empowers every sales leader to have high performance tricks, both quantitative and qualitative, and also ambitions, growth plan, all right, to focus on in three years, in the next three years. All right, with this, we coach these key leaders to create impact and accelerate our growth. Now, to summarize, all right, we have efficiency that converts, you know, from top funnel to conversions and sales execution to expand our share of wallets. Second, insight that accelerates.
Both BI that you have seen, the key visual from marketing to sales, they're able to turn our data into growth. All right, and leaders that drive growth, coaching capability buildings that empower and embed in a high-performance culture. Finally, voice guide, we listen to customer voice. We integrate the customer satisfaction, net promoter score into our performance cycle. With this, we lay the foundation, approving the tools and also scaling our sales culture. All right, just in short, you know, Bossard's sales engine is to accelerate growth and also strengthen our global partnership and to achieve our Strategy 200. Thank you. Over to my colleagues again, Tano. Thanks.
Yeah, thank you very much, Erica. From Sales Engine, I would like to shift the focus quickly to our Operations Engine and the initiatives that we are running in order to improve there.
My name is Gaetano Pasta. I'm the program manager for our currently largest digital transformation initiative, which we call BOOST, Building Outstanding Operations Service Technology. I would like to show you real quick what that is all about. From my point of view, BOOST, so this new transformation program, is not only an IT initiative. It's actually a business initiative that we're running here. It is closely aligned to our strategic objectives of Strategy 200 that Daniel presented to you before. You can see that here on our short visibility on the line of sight of these two initiatives. BOOST grew out of Strategy 200. We have this one overarching goal of having one company that looks, feels, and acts the same globally. As Daniel mentioned, we're trying to win customers all over the place.
If we have one customer in Switzerland, why not serve that same customer in an example in the U.S. or in China? How to gain that or how to get there better than offering one consistent service level that delivers operational excellence to our customers in order to make them loyal to us, to keep them by providing great service. By having this new ERP system, and we're not only implementing a new ERP system, Enterprise Resource Planning with Microsoft Dynamics, but we're actually introducing a full solution suite, including ERP, CRM, a Warehouse Management System, stock optimization tools. There are plenty of tools that we bring in in order to optimize our company in supply chain, in collaboration, in communication, removing some bureaucracy by replacing it with smart, intelligent tools that we can use to drive our business globally.
Along with that, we're of course also looking into reporting these kinds of topics where we can gain insights. These actionable insights that we gain are, on the other hand, fueling our Sales Engine that Erica just presented you about. This is all interconnected in the end and also allows us to get meaningful customer insights. With new technology, with state-of-the-art technology, we're having opportunities to build electronic data interchange interfaces with our customers, with our suppliers, to automate our supply chain, to automate information flows, which again puts us in a position where we can put the customer at the center of our attention. Customer centricity, we deliver services that benefit our customers and benefit us because the customers stick to us because they want to.
With this vision in mind, we actually went on a mission as a team to create a team that can deliver efficiently what we're trying to introduce into this company. We managed that. We built a team that in the last five years rolled out this full solution suite in more than 19 countries and 23 locations so far. Next week, as Daniel mentioned before, with India, it will be actually 20 countries and 28 locations, sorry. Yeah, it's growing fast. Currently, we're holding about 40% of our sales share in D365 in our new BOOST solution suite. By end of 2026, it will be 61% and still growing. Now, why do all of that? What are we actually trying to achieve with this new initiative?
There are actually many reasons why to do it and many benefits that we're trying to gain here. One of them would, of course, be an example resource. If you have a tool that's available on the market, not only the tool's available, but also the people that you need to build your tool, to grow your business, to grow your, yeah, your entire operation in the end. This makes us scalable. With Microsoft Dynamics 365, we have a tool in place where there is a broad market of very skilled resources that we can hire as consultants, as internals, where we need them in order to grow our also support model, our operating model in this new IT business. Not only the resources are scalable, though, also the solution itself is scalable. We're switching to a Software as a Service model, so everything will be in the cloud.
This cloud model is also in terms of computing power resource that we need to host the solution scalable. It grows with us. We grow as a company. Our providers can grow their operation and can grow the solution for us in the hosting. That makes us very flexible. We are harmonizing our processes. Again, one Bossard, we are trying to be, look, feel, act the same globally, which is easier and better achievable if we have the same processes in place, the same services in place, and also gives us quantifiable results. If we work the same everywhere, we can compare, we can find potentials to improve, and we can implement them, which also gives us a good or a better speed to market, time to market.
If we develop something, a new service, a new tool, a new feature in one area, it's available for all because we work the same, we use the same system, same code base, it's there, which also gives us more agility to react on customer needs or things that could generally improve our customer relation and again create the stickiness or loyalty, as Daniel mentioned before, maybe the better term, create customer loyalty to us. At the same time, we're also very flexible or not flexible, but also adaptable in terms of industry standards. We are working with solutions that are state-of-the-art, that are modern, that are also used by other people, which also gives us the opportunity to diversify, which you can see in point six with the add-ons. There are many off-the-market solutions for different areas.
We can diversify our solution by taking different add-ons, different independent software vendors that we can actually implement and tie into our solution in order to provide different services in different areas, especially these arising markets that we've seen before, like aerospace, like railway, robotics. That's all things where we don't need to reinvent the wheel. There's plenty of things out there. If there's a problem you can use or a challenge, you can usually think or assume that you're not the first one or the only one dealing with that problem. Why don't use things that are on the market that we can use for a fast time to market to react on customer needs and be agile, including also opportunities to work smarter internally. One of them that we could integrate is an example, Artificial Intelligence, AI.
With that, I would like to hand over to my colleague Angie to tell you more about our AI opportunities. Thank you.
Thank you, Gaetano. Hi everyone. My name is Angie. I'm with Bossard already 18 years. I worked many years in sales, responsible for Swiss customers, and I'm now part of the Innovation and Technology team at Bossard. Our role is to explore how Artificial Intelligence can make our work simpler, faster, and more effective across all regions. I'll share how we use AI to drive efficiency and deliver more value to our customers. Our AI framework ensures that the AI adoption is structured, secure, and value-driven. It focuses on four dimensions. Number one, and that is key, productivity and efficiency. We want our teams to spend less time on repetitive work and more time on high-value tasks. I'll show you an example of this in a moment.
Secondly, we want also our customers to benefit from the AI initiatives. AI helps us to respond faster. For instance, when it comes to sending quotes to our customers, which increases customer satisfaction and loyalty. Third one is the global setup. We have established a global structure. This setup ensures that the AI solutions built in one region can quickly be scaled to all other regions globally. The AI council gives the strategic direction. We have developers who build the solutions, and AI ambassadors drive the adoption across all business units. A great example of using the structure was the global rollout of Microsoft Copilot. The last one is trust and compliance. We are working very close with our security department to make sure that all tools we implement are secure and compliant.
With the rise of AI, we need to make sure that users get customized training. They need to understand both its potential, but also its risks. The balance between innovation and responsibility is what makes our AI journey sustainable and trustworthy. That was the general part of it. Now let me share two promising ongoing projects that we are working on at Bossard. The first one is the document processing program. As a global provider in the fastening and assembly technology, we are the connection between our suppliers and our customers. There are so many transactions happening every day, going back and forth. In this business, we handle hundreds of thousands of documents. Our sales department receives purchasing orders. We have quality who does tests on products and store certificates. We have technical consultants reviewing drawings and logistics working with delivery notes.
AI gives us the opportunity to automate processes that come with these documents. A very typical document that I've already mentioned are the purchasing orders that come from the customers. For example, in 2024, we received around 1.7 million order lines via email, and they were put into our ERP system manually. As you can imagine, a huge potential for automation. Instead of handling this manually, sales reps can now forward the email to our tool, the document processing program, which automatically then scans, extracts, and validates all the relevant data. If needed, users can additionally review the results before sending it to designated systems, such as, for example, our new ERP system. This solution reduces manual workload, minimizes errors, and speeds up the document processing in our daily operations.
The second project is our own LLM, large language model platform, like Copilot or ChatGPT. Why is this needed? While tools like Microsoft Copilot already support us in our daily work in general, some use cases require more specialized solutions. Let me give you an example. An IT developer who spends today with coding has different requirements than a sales manager reviewing sales agreements. That is why we are building our own LLM platform where users, it is a secure centralized environment from Bossard where users can ask all their questions and choose their preferred model. The coder would go for Claude, for example. The sales manager would take GPT-5 and so on. They can also get features in the tool, for example, uploading whole documents and get them translated directly.
As you can see at Bossard, we use AI to drive efficiency and deliver more value to our customers. The journey has just started, but we can already see its positive impact. We're confident that the benefits will only grow as we continue to move forward. Thank you. Now I hand over to Remo, who will tell you about Smart Factory. Thank you.
Hi everyone from my side as well. My name is Remo. I worked a quarter of my life actually at Bossard. I'm responsible globally for our Smart Factory services. In the next 15 minutes, I'd like to talk to you why our services matter. They matter because they extend the customer lifetime. They matter because Bossard gets more efficient. They matter because we create value in terms of productivity gains at a customer shop floor.
First, I would like to talk to you a bit why we repositioned our organization, reshaped a bit our organization just recently. That is a picture for two weeks ago because we see huge potential globally, not just in Switzerland and Europe for our services. We want to be globally more aligned, globally more powerful. We have an over-regional leadership team which came together. What we did together design was also a bit what's a bit the vision moving forward because we have so many good products and services. We said we want to empower the factories of tomorrow. We do that by actually helping them to have simpler operation means also more intelligent in their operation. Operation means for us, obviously, the external logistics, but also the internal logistics is not, you know, is now not busy, but that's an internal logistics process, right?
Also the assembly. Obviously, everything built on proven productivity promise from Bossard. Maybe start a bit with one slide. What's a bit, in a nutshell, Smart Factory services for you? I put here the SmartBin. You already had a look at it. I mean, 20 years ago, we pioneered. Back then, there was no word of IoT, no word of Smart Factory. We already invented actually a scale, a so-called SmartBin. We measured the weight. We plugged in a cable in a normal huge PC back then and also an Excel, oops, an Excel at the back. We actually ordered. You can imagine 20, 25 years is a long time. We built a platform at the back called RMS. The platform was intentionally, obviously, made for us to fully automate the services. It grew and grew and got better.
I would say as of today, we're not just managing our part, we're managing every Kanban board possible for our customers. Basically, we kind of became, with our Smart Supply platform, actually the Amazon of C and B parts in the industry. 10 years ago, we were like, because we're always close to a customer and try to be customer-centric, we realized that a customer has huge problems. Once we deliver it, how do they bring it to the point of use? It was often very chaotic. We invented our last mile management software, which is the smart material flow, where we make sure that whenever it's needed in the smallest amount, it will be delivered on time. That's been 10 years ago.
Five years ago, we actually said, okay, now the parts at the right place at the point of use in the assembly, but how they actually get assembled was also a bit old-fashioned paper-based work instruction at best or a PDF. We created a platform where you can actually create smart work instruction connected to devices, what you need, and also interacting with the operator. That became then a platform where we actually can now manage the qualification metrics, where you can manage the line depending if you imagine someone builds, for instance, a coffee machine. He has hundred thousands of variations, right? To manage that, you must be very clear how to do that. We're helping basically our customers along the value chain from external logistics, from our suppliers, bring it, consolidate it, bring it to the point of use and into the assembly.
That's out-of-the-box modules and services proven, but it's much more than that. It's much more than that because you saw the global footprint we have. We have basically 200 people. We're not just a software company who deliver you a software. We actually have people on site who are making sure we do bring the parts to the supermarket if the customer wants, which the majority wants. We do the refill. If the customer wants, we bring it to the point of use. We bring them a service kind of outsourcing to us the whole operation. That's quite an impact. We have quite a lot of responsibilities. That's connected with our smart devices, which is obviously a SmartBin, a smart tool, a smart camera, especially now with the AI times. Everything is connected, plug and play. We don't need to talk about the data.
I think the data is the key. What we realized with having basically those modules, the data we generate, it's massive. It's structured. We can build reports, but we also can give them the data. They build it in their data lake and make their own reports. The data we deliver is unmatched and is powerful, yeah. That is a bit in a nutshell, the Smart Factory house. Why it matters so much? Of course, you all know financial and business people. Michael Porter always said there are two fundamental ways to actually win in the market. Either you are building on price leadership or you are building on differentiation, which means services. For us, it is clear we want to position ourselves actually at our customers that they think about us as a partner who helps them to reduce their complexity, to actually gain productivity gains.
That's with a clear focus on the industry. When we talk about a high mix, if you saw before, actually, I mean a drone. I talked about before a bit coffee machine maker, 100,000 variation. If you go to Thermoplan or it doesn't matter, there's 100,000 different variations of it. And the drone as well, just imagine customization happens all over the place. This one is red, the other one is green, and you have to mix it up all the time. You saw how the future or many of our customers already configure at the very beginning the customized drone. With the all-to-one linked system, you actually have the work instructions automatically created, the parts are picked, everything is one linked system. That's actually with such customers, you can create a lot of returns and productivity gains, extend the customer lifetime.
Of course, the margin is also better on our products. In your words, probably it's more about the return on investment capital employed. There are many strategic advantages within our services. I just like to pick up a few and also mention it afterwards. I already said a bit longer customer lifetime, expanding relationship, strategic partnership. That's all about the network we have within the company. We're not just a supplier. I'd like to showcase that a bit when we talk about a bit the customer's playground or where is the customer's manufacturing space. I start a bit with the purchasing. That's anyone who sells a commodity talks to the purchaser. Basically, that's our playground of our competitors and also ours, right? We talk to purchasers, strategic purchaser. They want to have the best price, ideally next year 3% lower than this year.
Our playground is quite bigger. That's exactly what I tried a bit to showcase before and afterwards with some example. We're not just a purchaser because we also manage all third-party items, Kanban items. We actually are a supplier of external logistics software. Suddenly, other people are interested here. We talk about intra-logistics. Purchasing doesn't talk about intra-logistics. It's about operation. Our key person here is the Head of Operation. Also then with our assembly platform, it's about how do we plan actually assembly line? Where does it fit? Where does it create value? What kind of technology do I need to use? You talk to production manager, quality manager, and that's the playground Bossard plays. That's the playground no one of our competitors has basically. Of course, there's also engineering where we support and so on.
Having this playground, I would say there are fearfully benefits out of it, customer sickness or loyalty. In the end, we see often that we have such a good standing. Even if the purchaser has some issue with the pricing, those people can overrule. We have cross-selling engine. It means obviously we start here. We can probably make sense to also then go up or down. We have the share of wallet. There are different wallets to capture, obviously. Also with the software as a service business, we are also in the reoccurring revenue business. Last but not least, but a huge thing is that we actually can also drive our acquisition process.
As you can imagine, if we go to any country and the Bossard brand is not really known in a certain country, we can go in and also not just go to the next seller of a screw, but we also can position ourselves as a provider of Smart Factory services and then get in, get entrance, get interest. I'd like to start with two examples basically of customers. I didn't choose the mega accounts. Within Smart Factory, we have mega accounts where we service quite a bit. Actually, it's also interesting to look at these 10,000s of small and medium-sized customers, especially in Switzerland. There are lots of them. I just tried to tell a story about Artidis. It's actually a cool name. They are 50, 100 employees here in Switzerland doing nanotechnology on the medical health side, on cancer.
What happened with this account, we provided some parts. Probably they went on the e-shop of us. It was such a small amount that our outside sales would not care to contact them, would not care to drink a coffee with them because it was roughly CHF 6,000. They saw our logistics system. Basically, they were like, "Oh, that's pretty cool. I can also do third party." They contacted us proactively. We put in the system within six months, we twelve-folded actually the revenue increase. It became suddenly a CHF 100,000 account, suddenly an interesting account. Yeah, we heard about our friend in the United States. Obviously, they are thinking about, "Okay, now we need to push a bit our manufacturing company in the United States." What is happening? Usually, they do not care about the screw supplier over there. They have the local production manager.
Because they have a concept of the Smart Factory footprint, they say, "Hey, Houston also used this concept." Suddenly, we kind of specced in from start. That is a pretty cool example. Even it's a super small company. The second example I would like to mention is a Danish company called HydraSpecma. What they do is doing those pumps. Usually on the location side, maybe 300 people-400 people, but they have a global footprint. What happened, we went to Denmark and got a project for like $100,000 starting. They were like, "Oh, we kind of like it." My Swedish colleagues want to make the same footprint there. Then, "Oh, the Polish as well." That happens also within months. We went to, we are now actually in India and China because they copied the same concept.
Interesting fact here as well, none of them were actually Bossard customers, even though it was one in Denmark. Now with the system, we have entrance because they scale it. With the Smart Factory solution, they're scaling it, the concept basically across region. Now we can actually offer and sell products. That's another I find a very interesting angle on the side. All right. To maybe conclude a bit our outlook when it comes to Smart Factory, of course, automation and Danny said it at the very beginning, everyone is looking where to start, how to start, how to improve. Of course, the numbers out there with sales, there's a yearly 10% growth in this space. We want with our 25 years experience, we want to tap into this market. We want to tap into it stronger and more globally.
The way we're going to do it, of course, we also need to strengthen our Bossard. I mean, we want to be recognized also not just as a screw supplier, especially in Switzerland. My grandfather, when I started 10 years ago, so actually know now how old I am, 10 years ago he said, "Oh, you go to the Bossard screw builder." And I was like, "No, no, no, they have super cool systems and smart pins, right?" It's the perception. We also want that maybe in three years when you join as well, when you tell your colleagues where you're going, you say, "I go to Bossard, the Amazon of the B and C part supplier." Maybe I'm overdoing it, of course, but in the end, the perception is important. We also can scale the business more in the Smart Factory.
The second point is a good example with the HydraSpecma. Also, Erica showed with all our data, we can actually see better ideal customer profiles, how we can scale them globally, work better together, and not just the local units serve their customers. We know, hey, this one is interesting. Even though we have in this market 2% market share, we know exactly which one to attack and have a good value story behind. Last but not least, we are in a software as a service business. It never stops. It just doesn't. AI is another driving force behind. We want to have a repeatable and more scalable and more modular because it's so important that we get entrance in one way or the other. Is it at the Smart Supply? Is it interlogistic assembly? Then we connect and grow.
That's a bit the plan to go. All right. Thanks for your attention.
Good morning, everyone, and thank you for joining us today here in beautiful Wales for the Bossard Group's Strategy Day. In my part of the presentation, I will talk about two points. One will be the financial performance over the last four years. That means from 2020- 2024. I will say a few words about our M&A strategy and what we look at to find the right or the ideal target. As we transition from a period of investment into one of optimization and growth, we also have set ourselves a few financial targets as parts of our Strategy 200, which underlines our ambition of profitable growth in the coming year after a phase of investment. I guess you all know them in the meantime by heart.
Our ambition is to grow over the cycle organically the top line by more than 5%. We want to achieve a net margin in the range of 12%-15% to maintain an equity ratio of 40% and to sustain a dividend payout ratio of 40% of net income. As we all learned in the recent year again, a strategic roadmap is never linear. It can be influenced by capabilities of execution or it can be influenced by business environment. If you look or have with regards to the latter, if you look at the development of the PMIs, I think it illustrates quite well that our business environment has been anything than ordinary.
It all started in 2020 when we rightly were defining and fixing our global Strategy 200 when we were impacted or the world was impacted by a global pandemic, which had a severe impact on the global supply chains. It was followed by a sharp upswing, a sharp increase in demand, which then also pushed our growth additionally also by increasing inventory levels to sustain and secure the supply chains and the product availability. This went through 2022. In Europe, we faced an additional challenge with the Ukraine war. This has led to a major impact on the energy, so into an energy crisis, which led to sharply increased energy prices, which I guess we all felt too. Consequently, after that, when supply chains started to stable, we saw a normalization of demand, but we also saw a normalization of availability.
We came into the phase of destocking. That transitioned into a normalization of demand and into a recessionary phase. Both these factors impacted also our business, as you have learned also in following the Bossard business performance. In 2024, when things started to bottom out, everybody was hoping for the light on the tunnel and expecting a bit, you know, maybe there's a bit of an upswing. We got all disappointed a bit or the uncertainty remained. After that, the U.S. government put certain tariffs into place. I think what remained throughout the whole period is the uncertainty. I think if you just look today where we are, the uncertainty is likely to remain. Some might question whether we have been too ambitious with our goals and what we want to reach. I would say it's not proven yet, nor have we proven it.
That's also fair to say. What we can state is that in all these challenging times, Bossard has been resilient. I think we have been focusing at what we are best. It's building up partnerships with our customer base, managing the cost cautiously, and continue to invest in the future. Because it's a cycle which is now becoming pretty long. Opportunities, as I always say, opportunities are not going away and we need to continue to work on the opportunities. If we look at the financial performance from 2020- 2024, I think what I have shown or what's reflected in the PMIs is pretty much reflected also in our numbers and performance. In this phase also, we went or still going through a high cycle of investment, basically related to ERP system, as you have heard before.
Our sales and EBIT development has been influenced by different factors in this period. I think after we have seen on the top of the peak of the sales in 2020, yes, with the destocking going into the destocking, going into the normalization. Normalization means also we had customer segments which benefited overproportionally during the pandemic. Electronics, we have seen medical segments and also the bicycle. There was sharp demand, which also had to be depleted afterwards. We have seen lower value or lower volume due to the economic cycle. I think going through the cycle, we all experienced that the Swiss franc strengthened quite a bit. We are not talking just about few percentages. It is double- digit when we look at USD/ Swiss franc and it is high single- double- digit when we look at the Euro too.
This impacted also our consolidated top line as well as our consolidated bottom line from that perspective. We maybe hardly remember, but also when we went through the upswing and due to the pandemic, we saw high inflation. In our case, we talk mainly about salary or wage inflation. In 2021, our average increase for the group was about 6%. It went down to 4% and now it's lower again, but that's a high cost. It's about 70% of our operational cost or period cost, personal cost, which was also not in the game in the planning. On top of it, yes, we're going through this initiative with the rollout of the ERP system. Also here, pandemic, we had to slow down a bit because we couldn't travel.
We're catching up on that one, but that means a bit more cost because we're going to shut off the core system by the end of 2026, which was planned for 2025. Also, gradually, because everything is going into the cloud, with every rollout, you have higher cost too. That's something also which gave a bit the pressure going fast speed and not having the needed tailwind also from the market. Despite these headwinds, we maintained a solid EBIT. We kept tight cost control, and I think we protected the profitability wherever possible going through that challenging phase. If we look at the top line development in the four years in the comparable period, we can see that we grew in CHF 4.9% from 2020- 2024. In local currency, it was 7.5%.
If we exclude the impact from the M&A transaction, it was 3% in CHF, and it was 5.5% in local currency. From that perspective, we are still in this range of organic growth of 5.5%. Obviously, the trend is a different one, and I think the trend is not supportive, but I think the proof of it, whether we achieve our ambitions or not, it becomes evident is going through the cycle. We always said it is after a cycle. The proof is in 2031. Of course, we want to achieve that earlier and consistently also for the investor community and the capital market to become more predictable in our ambition, but there is always a reality out there as well. If you look at the EBIT margin or EBIT margin target range, in EBIT, we grew 3.7%. It was in local currency 6.4% without acquisition.
We had a slight negative trend in Swiss franc, though a slight positive trend in local currency without the acquisition. A look at the balance sheet when we talk about a sustainable 40% equity ratio. Despite the current market environment, I think I want to emphasize that going through this period, the financial position of Bossard remained strong. You can see throughout the cycle, we kept over the targeted level of 40%, which means that it gave us also the certain flexibility to act in the market. I think a solid balance sheet still reaching a 10% EBIT margin gives you the ability to manage your business yourself because it could maybe get impactful, and you might have some covenants topics with the banks. Why is it so important for us to have the 40%?
Because I think it gives us the healthiness and the flexibility to manage the balance sheet going through different cycles. This gives us also the room to act actively on operational tasks, whether it's on the upswing or the downswing. It gives us the opportunity still to invest in business, whether it's customers' opportunities or M&A transactions. As I mentioned before, it gives the necessary resilience if the top, if the business is weak. A quick look on the change in equity. If you look at the bridging statement, we operated in a very volatile market going through that period, but the profitability gave us the stability to maintain at the essence at the end of the day, the 40% equity ratio.
We accumulated in the four years almost CHF 350 million in net income, which we also returned partly back to our shareholders, which was almost CHF 150 million in the four years. What had a bit the negative impact, but that's very transparent, is that based on the accounting gaps we apply, we net the goodwill against the equity, which was almost CHF 100 million, which we offset. Therefore, again, we have a very solid balance sheet. There is no hot air in the balance sheet, which might come or have an issue with the impairment. There is a third factor which influenced the equity, which was the currency as well. The currency translation not only has an impact on the P&L, it also had one on the equity, which was negative due to the appreciation of the Swiss franc of CHF 40 million.
The profitability, the stable going forward, though despite the challenging environment, secured also a stable balance sheet. A quick note on the dividend. Our approach towards return to our shareholders remains unchanged. You all know that we have a profit-oriented dividend distribution, which is 40% of the net income. We are firmly committed to continued dividend payments even though we go through challenging times. I think that should also underline our confidence and our trust in our business going forward. Now a few words on the M&A. As you know, and you are familiar with Bossard, that's part of our strategy too. The philosophy from that perspective has remained unchanged. M&A, it's not just a transaction in its end. It's a tool to make Bossard better by acquiring talents, entering into new markets, but also gaining new capabilities.
Important to us, we are not looking only for size. I mean, we're looking for the right fit. Our idle target has three major, let's say, core qualities we look at. The first one is the strategic fit. We want companies that strengthen our position, whether that's in fastening technology, whether this is in assembly intelligently, or whether it's advanced logistics. The goal is to add capabilities which increase and make us better to serve our customer even more closely and become a better partner at the end of the day. If we look at the second one, which is shared value and cultural matters, we have learned that an integration works best when both companies which are coming together, if they both believe in innovation, if they believe in reliability on building up long-term partnerships. That's an important match.
Also, there was a learning curve in the past. That is why it became a focus point on our side. The third one is the readiness to integrate. The two companies we bring together should be ready to connect operationally, technologically, and culturally. Information and the onboarding must be faster. That way, we can also make sure that we create the value expected out of such transaction is becoming more quickly and sustainably going forward. The second view we have is the framework. It is actually a pretty simple assessment of the framework. It is either we look at the build, borrow, or buy.
We look at whether we either have the capabilities to develop this know-how internally or the way we form a strategic partnership with somebody or whether we acquire the business, the right business aligned with the long-term objectives we have going forward, which is always aligned also with the strategy. When it comes to acquisition, we are very clear about the target if we follow these patterns. The ideal targets are companies that not only complement at the end of the day our existing business strength, but also allow us to leverage on the know-how and capabilities they bring in and add to our business.
From a financial perspective, we maintain a very disciplined approach and looking when it comes to validation opportunities remaining below 10x EBIT, EBITDA to ensuring that our investments and the money we spend also delivers the expected return over a certain cycle of time. In essence, the M&A strategy we apply is about identifying the right partners from the very beginning to enhance innovation, but also to extend our market reach and to reinforce to the long-term commitment also from a profitable growth perspective. If you look at the M&A transaction or the activities we had over, you can say we included Ferdinand Gross in the beginning of five, so basically over the last five years.
Each activity represents not only a scale in itself, but also a step forward in realizing also our global vision to become a leading partner of intelligent solutions around the globe in the fastening technology sector. These strategic moves, which we executed buying these companies, have strengthened our position in key markets, expanded our technological capabilities, but also brought us closer to our customers in certain segments, but also in certain regions. Overall, we acquired almost CHF 160 million in sales. Last but not least, the financial discipline remains the backbone of our strategy. Our capital allocation priorities are pretty clear to us. We want to invest in organic growth and innovation, particularly in smart factory and digital supply chain solutions to pursue targeted acquisitions that accelerate strategic capabilities.
We maintain a solid balance sheet to ensure flexibility and resilience so that we always have enough water under the keel to maneuver and return value to our shareholders through a sustainable dividend and prudent reinvestment of the capital allocation. At the same time, we want to stay vigilant. We are monitoring the demand cycles very closely. We will manage the cost space also going forward so that we can ensure that we can stay flexible in our capital allocation and future investments. With that, I hand over to Daniel. The last slide, he will elaborate on the six reasons why Bossard might be an opportunity to invest before we go into the question. Thank you, Daniel.
Thank you. Yeah, I think it's a last slide, so thank you. Thank you very much. Let me, well, first, thank you, Stefan.
Use that maybe as a summary or create a bit of a summary of what we heard today. First of all, I think hopefully you saw that we are trying our best to create stickiness with our customer. That is through our services, engineering expertise. We are not only a product provider, but also a service provider, namely in the area of smart factory. The second one is resilience. Resilience because we are operating in multiple regions, we are operating in multiple verticals. With that, we can leverage our global footprint. We are resilient in many ways. Thirdly, I would say our smart solutions. Through that, we optimize logistics and reduce emissions. With that, becoming sustainable. Operational performance is driven by innovation. Innovation internally to become more efficient, but also innovation to provide most efficient customer solutions or make customers more efficient and provide proven productivity.
The solid balance sheet, hopefully Stefan could convince you that we're not short before bankruptcy. The sixth one, the sixth element, we still have plenty of opportunities. As you may have heard in the past, our market share today is about 3% globally. There is 97% that we don't have. There are opportunities not only with products, but moreover with a lot of services, be it in the field of smart factory, be it in the field of designing products. That's what we want to explore and exploit. The journey with Bossard is not finished, but I wouldn't say it has just started. Maybe that's a bit bold after 194 years, but there are still tons of opportunities out there to grow. With that, I'd like to open up for Q&A, taking the six points as kind of a wrap-up.
Stefan and I are very happy to take your questions before we then close the session. Stefan,
You mentioned your mid-term targets, the EBIT margin of 12%-15%, and you had in the title, you had an after phase of investment. Could you tell me again what this exactly means? When will this target range be reachable again? Maybe from 2027 on or 2028 or whenever. Thanks.
I think it all depends on the economic cycle and the environment. I think that we can reach a certain level or get into the range of 12%-15%. We have proven in the years 2021, 2022. I think that is also the case. We had also tailwind.
I think with the investments we're doing right now, that's why we said after a phase of investment, we're knowing the cost additionally to implement the ERP system and going through that transition will add additional cost. Going through that, we should also gain efficiency with the new system, which we didn't have. As you heard this morning, there are different drivers which help us to become more efficient. At the end of the day, it's sales. It's maintaining a solid gross profit margin and a scalable business. I think if we look at our global footprint, I don't see at the moment an expansion geographically. We have infrastructure in all the countries.
If we are able to execute even more and Erica talked about the pipeline, the potential pipeline, if we can increase, speed up the conversion rate and let's say if there is help from the market growing again, basically talk about PMIs generating tailwind, but also be able to address why we have the leaking buckets. I think that's when we get scales and that's where we should see again somewhere EBIT margin between 12%-15%.
Maybe to add to that and to give you a bit more confidence on the regions. Now, in Europe, traditionally we have seen EBIT margins much higher than that without mentioning any numbers now. We know it's possible. Looking at Asia, we caught up. Looking at the U.S., we managed to improve our margin significantly over the last three years. In that sense, we're on a good track.
Once we're through with our major investment, which is our ERP system and using the efficiencies that we're looking into and see some tailwind as well in the market, I'm very confident. Maybe I shouldn't now be too confident here, but that this is absolutely possible. So I'm 100% confident that we're on the track there. When exactly? There's a lot of factors influencing this still.
Thank you. You mentioned in your chart the period 2020- 2025, organic growth was 3%. I thought I read organic without M&A, without currencies 3%, I think, which is the true internal growth rate, right? Which is a bit flattering in a sense that because 2020 was a pretty low base, of course. Now you had another chart which goes back to 2005, I think, just very much at the beginning, yeah? With these three recessions in between and so on.
Have you also calculated or could you share this exact number from this 20-year period? Because this period includes three recessions and this is kind of a better proxy to your real internal growth, at least looking backwards. Do you know this number?
No. We have the numbers. We have the numbers. We haven't had the time to say what the average was from 2005.
That would be interesting, actually.
I mean, we went back to the last cycle, which we had like 210. In the period where we had limited, I mean, we started to have acquisitions and we will go back and neutralize, taking the acquisition now neutralized, then it was somewhere by 2.5%-3%. I think that's what we also stated to become more bold and ambitious on the top line.
One ambition is this sales engine conceptually, how we want to do it different. We want to generate more leads, digital leads. That means not classical, we go out and looking for the business, so it comes by leads. If we increase that potential pipeline by still having the same conversion rate, that should lead also to higher sales growth. The third part, the more internal part, is the collaboration also, which Daniel talked because also there it's a journey. We said even though to give you an exact number, it's almost not possible because material prices have fluctuated then too. That's why I say neutralize, there is always this material prices, there's always some demand, but it was somewhere between 2.5%-3%.
Okay. Given all that Strategy 200 includes, one of the most important targets is to get this number up, right?
I mean, from 2.5% to something like 3.5%-4%, which compound has a huge impact.
Yes, it's true.
Okay. Then you have these acquisitions on top. Of course, on the other hand, you have the currency negatively. Okay. Because 2.5% is basically given all the potential you have in this industry and it's a bit low.
That's why we want to change. We're happy to hire you as a key account manager.
A question on my side on the 10% conversion rate. How should we interpret that? Is it the customer has a project and it's one in out of 10 and you got selected compared to competitors? Or is it he's testing a project, he's not really sure whether he could kind of implement smart automation, smart assembly, smart bins and so forth. How should we read this? Where could this go?
The base is open opportunities. Maybe Erica will have to help me. That is customers which we see, okay, we're so close to actually we're negotiating, discussing a project. It could be a completely new customer or it could be a company like Belimo who has a new project and we regard this as an opportunity because it's a new project with an existing customer. It could be both. This combined, we said it's about CHF 500 million, which is something we're negotiating with customers. It depends on, one thing could be they say they stop the project or they postpone it and then we don't win it now. Or they simply, yes, there is competition out there. That's why we say, okay, either we win it or not.
10%, I would say it sounds very low, but of course it depends also on what do you capture as an opportunity. Because when we started this, we also had some very smart people who actually then said, okay, I only capture the opportunity once I'm already sure I win it. So then the conversion rate suddenly was much higher and you say, yeah, but how can that be? We had to really streamline and say, what do we define as an opportunity? That's as soon as we're starting negotiating, then it has to be captured. It's true. It may sound low. I would say in good units, Erica helped me, but maybe if it's 20%-25% conversion, that would be good.
We are aiming at doubling the conversion rate now in the next couple of months, years by also giving this transparency and knowing exactly where we are with the watch list. I would say what gets measured gets managed better. We have full transparency on that. That is the reality. Yes. Erica, anything to add? Okay. Thank you. Does that cover more or less? Thank you.
Yep. I got a couple of questions on the smart factory side. In the beginning of the presentation, if I got it right, you said that it currently adds around like 2% of the group top line. We expect that that number will be around that or that share will be around that in the future as well. Given all the growth rates that you have shown, why would that number be not a bit higher?
It would be the first question. The second follow-up to that one, can you elaborate a little bit about what your competitors are doing in that regard? Are they catching up? Are they doing something better? Are you learning from them or are they picking up from your side? The last thing is in the past, you often said that your customers are not really willing to pay for these sort of services. Has that in the meantime changed them? That would be my three questions.
On the growth potential, I agree with you. Now, of course, if we grow in our total sales, then if 2% remains 2%, we also grow with Smart Factory. It is kind of a relative term. Of course, we want to grow and we will maybe get to 3%.
My point was more we're not expecting or so far it's not the strategy to lift that to 50%, then we would have to do something completely different. We said, okay, we still consider ourselves as a product solution provider, but using Smart Factory Logistics and assembly as a shoehorn to boost that to create loyalty. Of course, we want to grow with there. The first one. The second one was, what was the second one?
What are the peers doing in that regard? Are they catching up?
Yes, yes. Maybe Remo has to help me here, but so far since we started to develop this some 25 years ago, I think we have been pioneering this for many decades. Yes, there are many competitive systems out there. There are camera systems, there are RFID systems, Turn Lock, SFS, for example. There are other scale systems.
I mentioned the company GBB in China now, which we're looking into a collaboration, which are mushrooming in Asia. I think these systems are coming out much more now because everybody's looking for automation. Absolutely there is competition around. I would say with our system and not so much the scale and the box and the hardware that you see, but the software and the logic behind, we're quite far because we have started this 25 years ago. Here we have a lot of experience already in the ARIMS, as it's called, the software, automated remote inventory management software. It's its fifth release. We have some, excuse me, some decent experience with this software. Is there competitive solutions around? Absolutely. Many. Have they been able to scale? Not really. Scale, that's actually a good wording. Not really.
For example, if we look at Würth, they started a labeling system and then they pulled it back again from the market somehow. They did not manage to really introduce it into the market on a broader scale. Is there other systems? Absolutely. The third one, sorry, I am getting older.
The third one was in the past you mentioned that customers are not that willing to pay for it.
Oh yeah.
Of course, you got to pay for themselves.
Yes. No, no. They are willing to pay and we charge them. Sometimes we at least put a price tag and we said this is the value. There could be situations where you trade it off and say, okay, given the business we are getting, okay, we trade it off from the business. It always has a price tag and we definitely charge the services.
There is no free lunch.
Yes, thank you. I mean, we were talking about a lot of end markets and temporary slowdowns. Do you see any markets or industries where you think that some of the business and some of the volumes is not going to come back? There are structural shifts or maybe moving into other regions where you would say like high-quality products are too expensive for these applications. Like all the effects that are not cycle-driven, but more on a structural side.
I would say, you know, it's difficult to say. You know, if I look at a customer like Komax, for example, today, they're not in very good shape, but of course they're in a supply chain of automotive and investment goods. If automotive doesn't invest in new machines, then Komax doesn't produce and then we don't deliver the fastener.
Are they in a permanent downward cycle? I don't think so. I think this will come back. There are many machine builders who particularly in Europe depend on the automotive industry, for example, which are now really in a down cycle. Are they down forever? I don't think so. I think this is really a matter of time till they will see some revival again. Maybe they have to shift a bit their focus on the product range. Are there areas where I see their debt, like sunset industries instead of sunrise industries? That's really hard to say. I mean, if Meyer Burger, maybe it's not exactly a growth case. There are maybe areas which were subsidized in the past, were not subsidized anymore. Even wind turbine business is a mixed picture.
We've seen, and I know that from another company, company TPI in the U.S., this is one of the largest wind blade manufacturers in the U.S., is now in chapter 11, but simply because Mr. Trump decided, okay, wind parks offshore are gone. They have fewer agreements. Whereas in Asia or in China, we also visited a company called Aeolon. They're growing 30% every year. It also depends on the areas maybe. It is very difficult to say, is there really one segment globally which is just going down? It is very specific, I would say. I think the important thing for us is to look at where do we see growth potential in the market and how can we quickest possible turn to those customers.
To give you another example in China, some two years ago with all the geopolitical tensions, we discussed, and also this was a group board discussion, should we pull out of China because it's dangerous? If suddenly the U.S. comes and says, you're not allowed to do business in China, what are you still doing there? We said, no, we want to stay there. We think the market is still very, very interesting. Our people started to shift from serving international customers to more national customers. We're now shifting from the ABBs, Schindlers, etc. We're still serving some of them like Belimo, which is a good growth case. We're serving much more the CRC, for example, or AgiBot, as I mentioned, a local robot manufacturer, a local customer. We're seeing a massive shift now towards local customer development in China.
Despite maybe international companies move out of China, either they move to Malaysia or India where we can capture them. We do. Now, India has another problem that suddenly with 50% tariff, some of them stopped, like Group Schneider. They stopped production, I think, one month ago. They said because they have so many sites across the globe and since 50% tariff is too much, they stopped whatever we delivered to them for their products and they produced it somewhere else in the world. You have these shifts now going on and then some countries suddenly one industry is going down and then you have to stay flexible. I think we have to stay flexible and the beauty is we're global. We can capture this business in Malaysia, wherever they grow. We're now open the facility in Vietnam, actually, with how many people, Erica? I forgot.
Maybe eight people or so to also capture the business which is coming into this country. Yeah, it's shifting.
Maybe staying on this tariff issue, if you could come back on the, so you gave to the market some figures during H1. If you could come back on your calculation, how you calculated this $35 million impact. Also, if you could come back on the supply, because in the past you said that you were local for local, trying to have suppliers that are close to the markets. It would be interesting to understand where are the suppliers, where are located the suppliers that are serving you in the U.S., in Europe, in Asia, how you can arbitrate in order to lower the impact.
On the tariffs, we simply said because the U.S. is the country most affected and we import roughly in the value of $150 million every year into, no, sorry, we buy for $150 million and we import about $50 million, which is one third. This part we have to pay tax on. There we pay 50% tax based on aluminum and steel. That part alone is like $25 million. Then there are other taxes which have to be added on to it. That's where we got to this kind of a $35 million. Every month we get a bill from the U.S. Homeland Security over about $2 million, which says, okay, pay. This is like in Monopoly, right? You stand on the right field and then pay. We have to pay that.
What we do is we convey that to our customers. We have started negotiations starting in April when the first tariff 25% came in place. They doubled it up to 50% in June. We kept on negotiating with customers. As much as we can, we pass on these tariffs to our customers. We do. Of course, we will see a benefit in the top line for the U.S. We also have to understand whenever we implement price increases, this always has a lead time. Whenever you negotiate in June, you probably agree to start, I do not know, in September or in October, because this is always a negotiation with customers.
Like for example, Siemens, a larger customer, they don't accept just an increase immediately because you look at your existing stock and then you say, okay, how much does it take to deplete? How much increase is reasonable? Then it's a negotiation. As much as we can, we pass on the tariffs. That's where the CHF 35 million each come from around. Shifting suppliers, I don't think our global supply strategy has changed. I think the good news is that for decades we have had a very global supplier strategy to make sure that we're not dependent and reliant on only one key supplier for one product across the globe. We still have that network of, I believe it's like 6,000 suppliers globally. Of course, it's 80/20. You have some which are the bigger ones, but they're mostly spread across different continents.
That has not changed. This allows us to also play a bit more flexibly. If in one region it does not work, we can buy from another region and we can be more flexible. The strategy has not changed, but maybe the suppliers we buy from have changed because of the geopolitical situations. In that sense, I am not sure if that answers your question.
Maybe it was more just, for instance, we know that Taiwan is a very large producer of screws and fasteners. What is your exposure to Taiwan, for instance? What is your exposure to China? What is your exposure to Eastern Europe? Just for us to have an idea of how flexible you can really be.
Taiwan is the largest market for special fasteners in the world.
Today, I think we have to split between standard fasteners, which are normed fasteners, DIN, ISO, NC, whatever, and we have specials. Today we do about 60% special fasteners. About two thirds of that comes out of Taiwan when it comes to value. We have started three years ago to reduce our dependency, but the point is there is hardly any opportunities outside Taiwan for this part because the volumes that are bought in Taiwan are so massive today that you can switch to Europe, Italy, and so on, but nobody, and also not in the U.S., has the capacity to compensate for that really. If Taiwan would go down, then the whole world would have a problem, not only for fasteners, but also for chips and bicycles and what I don't know what.
We're trying and we have always had a network and tried to shift, but to go away from Taiwan is kind of good luck. China also for standard fasteners, I would say this is an important sourcing market for us. I would say out of our standard product range, maybe one third comes out of China approximately. The rest, India, Eastern Europe, other more lower cost countries. There we keep up the supply base. So far it has worked well. For standard parts, we have more options and opportunities across the globe. As long as China is up, I mentioned Tong Ming this morning, the biggest and largest stainless steel manufacturer. I mean, they're growing now. How much was their growth rate? 8%. 8% every year. I mean, they go on, they deliver to the whole world.
As long as that works well, we have no reason to go away from them. We are monitoring it and we know the supply base. I would say starting with COVID, we became quite flexible. Suddenly you could not buy in China. Okay, you have to go to India. Luckily we could use the relations we had. I hope that answered your question a bit better.
Thank you. I just wanted to focus a bit on the organic revenue growth rate of 5%. Firstly, if you could just perhaps provide a bit of color on the different geographies, like how that would look like in Europe, U.S., and Asia. Secondly, I just wanted to know in Europe, would you expect to have any exposure to the defense industry?
In China specifically, you obviously mentioned AgiBot as being both a supplier and customer and GBB, which manufactures smart bins. I was just wondering whether you would need to sort of increase the pace of acquisition and innovation in China to sort of succeed there.
Maybe I'll start with the last two and maybe you can talk about the growth rate if that's okay. As Stefan presented on the Aimond A strategy, we're looking into new technologies and now there is a lot of new developments happening in China. That's what we need to look at, specifically in robotics and digitalization. That's what we do. Whenever we can, we would also partner up with those companies. We have also, by the way, partnered up with a company doing patching.
Patching is, you know, if you have a screw and the blue dot stuff on that, that's patching. Could be a glue, could be a special chemical to fix the fastener in the application. We joined a company, it's called Wenzhou, recently. It's a small partnership, but to make sure we're partnering with these patching companies because we see more and more in EMS and EV that this is used. This is also for us technology development. We continue to monitor that. Whenever there is an opportunity, we will go towards that direction. The second was, sorry. Yes, defense. Defense, this is a difficult topic because for us in general, we say we don't go into weapons and arms. That's clear and we will never do that.
We made some kind of an outline of different clusters in defense, for example, logistics, like conveyor belts for an army, or I would say bicycles for the Swiss army. I said that's probably not so critical. We can probably do that. There is nobody objecting to that one. When it comes to arms and guns and weapons, we stay out. We don't do it. We got quite a number of inquiries for machine guns and stuff. We just say no because we don't want to do that. When it comes to aerospace, it could be difficult because we're a supplier to Pilatus. Pilatus just got an order from the French army. Actually, I don't know where they have the money from, but anyway, for I don't know how many, 20 or so, PC-24 for training purposes.
Of course, you could argue and say that's defense, that's harmful. We consider that, okay, this is supporting. By the way, defense as such is not a bad thing. I think nowadays when you see all the aggressions across the globe, I think it's fair that some countries want to defend themselves. If we can support with fasteners for radar systems, fasteners for logistics, for their vehicles, we would do that. We clustered that. We had out of eight clusters, we had two where we said no go. Others which are more like logistics and sensors and so on, or radar systems, we said we will do that. We're not going after it proactively, but we said that's fine. We can do that. It's a bit of a sensitive topic also with the family. The first one was regarding growth by region.
Maybe to add on the defense, what we can identify customers being that area, it's less than 1.5% of our sales. So it's still small and overseable. When it comes to growth rate, of course, we have different expectations. I think it depends also a bit on the size. The pace is a bit different. If you look in Asia, where we have 60% of the world population, which is still growing and also the wealth is growing, we have higher expectation of growth rate there. I think also if we follow a bit the geopolitical shifts, also technology, there's also shifts. If we say robotics, automation, it's more into Asia. It's also shift by industries. Whereas in Europe, we have 60% of our sales. It's highly served.
Nonetheless, if we look, of course, we have quite a good stake in Switzerland, we have in Germany or also in Denmark. There are still countries we have a smaller share. At the end of the day, yes, it is some time production, but we would expect definitely higher growth rates in the Eastern European countries, whereas in the highly served, there is more about defending what we have today. I think in the U.S. also we expect in there a bit higher because also our market share is low. The opportunities which are there are given, I think especially if we look into the footprint which we have, our own self in the organization selling services, I think there is quite some upside.
That is also where we have emphasis now going forward, having a focus on the services, smart factory, whether it's assembly, because also there, as Daniel mentioned, structurally there's more pressure. There might be a bit more receptive. Operating in the U.S., it's always by the kind or by the culture, very much profit driven. It's rather be a short term. Strategically to sell something which is more long term, it's sometimes not so easy. I think we have proven concept we can see. Obviously also when we look at the U.S., it continues to drive away also from the big guys because everybody wants to serve the big guys. We have quite good success with more the medium size customer, more similar to Europe, where we also achieve a similar gross profit range in that area. That is where we want to have the focus.
It is less silo. In big companies, they're always thinking silo. You're not going to sell a logistic solution to the purchasing department. I think that's also a focus shift, which we expect a bit higher growth rates also from the U.S.
Maybe a note on the defense. If now the takeaway is Bossard is not into defense and we're not participating from the growth in that industry, that's absolutely not true because there are many companies like Bosch, for example, producing an electric motor, which is dual use. It goes into any, can go into any vehicle basically. I mean, those parts, subparts, down the tier chain, they can be used anywhere. We see areas where we see additional growth, which ultimately may go into some kind of a defense use machine or something, but we don't know.
I mean, this is something then that these OEMs will have to deal with. In that sense, we're also participating. Also in aerospace, obviously we participate in the helicopter production, Leonardo. We just installed our first SmartBin with the U.S. Army in Texas, which is a long term project planned, which was not easy because of the RFID communication, which didn't allow us to use our network. These things were also engaged.
Yeah, maybe just coming back to your organic sales growth target and historical growth. Could you kind of segregate your organic growth into pricing, volume, market share gains? I mean, I believe in the beginning you said you were adding about CHF 50 million per year from new customers, that's sort of half percent . If you go back to the cycle with 2.5%-3% organic growth, yeah, what has changed?
I mean, you're clearly a very innovative company, right? You're doing the right things as you become a more strategic partner. You should probably also get more pricing power. If you just could help us, what was pricing, sort of volume over the last cycle and what has changed? Why would it double now if you really have supportive markets? Thanks.
Did you want to take that?
If you want to have a clear answer, that's a difficult question which we almost cannot answer. Why? Because we have more than 1 million SKUs. We have 6,000 suppliers who work. We have 47,000 customers and we operate in 15 different ERP systems. To get that information, we basically go back to the local levels. I would say if we look at the volume, volume has definitely increased because otherwise we would not have needed also additional warehouse space.
We're selling more volume to that customer base. We can clearly define, let's say again on the currency, but over the cycle with steel prices, it just becomes difficult to determine really the growth rate by segments and by price and volume. That's the answer. Anything else which I will tell you, it's rough assumptions. All right, if you lay out an organic sales growth target above 5%, right? Like you must have backed that up with some assumptions, right? Your finger in the air, what's my volume growth rate? What sort of price? What are your assumptions then? The 5% local growth, it's based on volumes. Because if we say, okay, currency stays the same, because at the end of the day, we measure also in local currency, the growth.
What we can assume is today, if everything stays the same, we only reach that if we increase 5% volume. We usually do not factor in price increases in our long term growth ambition because it can go up, but it can also go down. We are in this industry where you once you can increase price, but there will be phases where you decrease price. I think this is neutralized. We do not factor that into those 5%. The 5% is really looking into our opportunity and conversion rates. That is a rate where we think we will be able to grow. The reality will be there will be price increases, there will be currency exchange rate fluctuations, there will be recessions. It is hard to plan everything moving ahead with all the details because guess what? We will be wrong.
We have to kind of take that out and say, what are we doing to grow overproportionately in a market with what services? Then we take an assumption and say, we want to be above a usual market growth of 2.5% and 3%, which was 5%. That was the logic in the strategic discussion, not so much an eight year detailed split down on this is price increase, this is whatever currency. It was more that. Now you can say that's random. It's just how we approached it. There is hope, or hope, we are confident that exactly those questions you have are questions to ourselves as well.
With the standardization of the ERP, I think once we have, let's say, 80% or already with the 60% or 80% of the volume on the same system, we also get more data inside because with the system in itself and the product hierarchy, we also get more data, harmonized data.
But then sort of why do I as a customer choose Bossard? Just because you provide the cheapest screws and you lower your screws? Because during the whole presentation, you said we improve customer stickiness, right? You do all these phenomenal things. You're really innovative. But then your assumption is that you have zero pricing power. It doesn't really add up to me.
No, we do. Because we already are, as Remo said, in the more not the cheap jack, but rather the service leader. And with that, we already ask for a higher margin and markup.
That is what we want to keep. Plus, we want to add new customers by going different ways into the customer, as Remo said, with Smart Factory Assembly, Smart Factory Logistics, and win customers over new ways in just of providing commodity products and the price. Exactly the opposite from what you said. I think it is this one-stop shop approach. With Bossard, with the global footprint, with the global sourcing capabilities we have, and the consolidation also from a customer's perspective, it might start with the standard norm parts, which they also look to reduce, let's say, complexity. Every customer which we serve with standard norm parts, they also have the need for special parts, whether it is highly engineered, a branded product. With that, and there is their demand. We have the capabilities not, you know, the standard, it is a commercial selling.
That's you get the product, you can go into a shop, you see the price, you get price comparison within 24 hours. Then you have more the technical selling, which is more the engineering part. Either companies are usually more focused on the standard norm parts, the other ones more in the engineer parts. If you have both capabilities, and because it's also a different supply chain, I think that's where Bossard comes in and what we can offer with additional services. It's the consolidation effect, and it's also taking the complexity out and what drives it. I would say not every potential customer out there is a Bossard customer. If a customer looks only for products, that might be a short term opportunity.
If the focus is only on price, it's just a question of time he swaps whatever is the best price for him. I think that's a bit what we can bring to the table. Of course, with more products you serve and the capabilities you have, I think that's also where the customer sees the value and the readiness to pay maybe a bit more or a higher price, even though he benchmarks us with another competitor out there. It has to be seen a bit on the holistic approach of what we can bring on the table. At the end of the day, as you see from the business model, it's the total cost. It's not the product. It's everything below the iceberg, which is our value proposition to the customer. That's where the customer buys in.
Of course, at the end of the day, we need to be competitive with the product prices.
Okay, one last question. Okay, I think you were first in the back. And then, yeah, go ahead, Mark, as well. No problem.
No, we gave Mark a last chance too. Okay.
Thank you. I'll keep it short. In the beginning, you made a comment on pricing power in Aerospace. So where does that come from? Like, I guess these customers, they have also dual sourcing strategy. You said something about availability of parts. Like, where's the difference to other verticals and what are the bottlenecks in that space?
The difference is that I tried to explain on the example th e ashtray that they would never change a specification. It's not easy as a new supplier to come in unless you support it with exactly the same product.
Even as a supplier, they don't want to change because don't change a winning horse because it's so safety critical. Once you're in, you're probably in for decades unless you completely screw up and so on. This is one piece you're in. If demand is super high, obviously, then, I mean, everybody is grabbing for help and support and parts. That's the situation we're in right now. It's really a strong demand market right now.
Availability.
Mark.
Just coming back to the 5% targeted organic growth rates for the future, is it fair to assume that your total addressable market has changed in a more positive way, i.e., the bipolar world order, the need for automation, all these kind of secular drivers are structurally resulting in tailwind that has increased lately?
I would say we'd rather have more ways to embrace the customer.
It is not so much, as we said, that we are going to sell millions in Smart Factory fees. Would be nice, Remo. Maybe that is a new target. It is more that there is a new angle into customers which see an added value which they have not seen before. You may come into a customer which you did not have a chance before. In that sense, the potential is increasing, I would say.
Okay. Thank you very much. With that, I would like to thank you all first for coming here, for taking the time, for coming to Biel. We highly appreciate that. Whenever you have add-on questions, please contact us directly. We are very open to interact with you personally. If you want to come to Zug, for those who do not know Zug, it is not only known for low taxes, but also for Bossard.
I would like to thank our organizers. I would like to thank Eveline and the team for organizing everything around here. Help me with a big round of applause for them. I would like to thank my dear colleagues for coming here, for preparing for today: Erica, Remo, Angie, Gaetano, Ola. With that, Ola, can I ask you to come on stage, please? Ola decided to move on in his career. By mid of the month, he will leave us. Come up here. Ola has been supporting us for a very, very long period. You know exactly how many years. He has been extremely supportive for all these events. I always remember the, you know, hello, everybody. You know, this was his preferred wording, opening sessions. We highly appreciate that you have been with us.
Maybe something to forget all the sorrows you had with us, or maybe also think about some highlights that we could provide you. Ola, thank you.
Thank you.
Good luck. All the best. Okay, with that, we want to close, wish you all a safe journey home, and look forward to see you again on the next opportunity. Thank you.