So welcome and good afternoon for our this year's investor presentation. And I'm very happy you followed us and you came. And as I know some of your colleagues, unfortunately, due to travel bans, had to stay at home. But nevertheless, as well, we will report this event and the presentations on the digital media. So that will allow as well for everybody to have a review or as well to follow it again.
Now it's 175 years of Linde and Sprungle. And I'm very happy that, of course, as well in this year, I can present you the results. And we will get back to the 175 years in a second, not in a second, but in about 40, 45 minutes when we talk about the invitation that you will receive as well for our Chocolate Competence center. Now looking at the results is one thing, but looking at the management and the team that is behind the results, and here, there are just some of them. I will be supported today by Martin, who you all know.
Then we have Rolf Fallek. Rolf is responsible for marketing international, the function of marketing and at the same time as well responsible for North America for the area. Then we have Alain. Alain is responsible for sales, for the sales function and responsible for numerous countries, mainly rest of the world, but as well U. K, France and Italy, so the Latin countries.
Then we have Mr. Lechner. Adalbert is responsible exec for CEO Germany and as well for the Eastern and Northern European countries, that is Nordics, that is Czech Republic, Slovak Republic, including as well Russia. Gido Steiner is operations, production, logistics, planning. And Jennifer Piccannoni has been announced in December as our new group management member, but of course, she is already for about 8 years responsible in our area for the function of the compliance and legal.
And as you look around, you see it not only with banks, you see it as well in the food industry. Legal compliance is getting more and more critical. If I just mention the labeling issues and labeling laws that we will be faced and are faced in Europe and as well in the U. S. A.
With that, I go to the agenda. And in the agenda, I go through the financials and markets, handing over to Martin that will do the financial figures and sustainability update, and I'll come back with the outlook and the question and answers. Now let's get into the financial year 2019. You have received this morning already the annual report or parts of the annual or not the whole annual report on Internet. But nevertheless, I would like to go through the confectionery landscape that we were facing the last year.
Number 1, we have an ongoing topic that is the changing trade environment. Now changing trade environment, we have our grocery partners that are under pressure on the one hand by discounters, hard discounters where we are not present. And on the other hand, they are as well under pressure by less frequency of the consumers going to stores. And last but not least, they are pressured by as well the online sales partners. So as you can imagine, they react and one reaction is forming international buying groups that even go and try to go cross country.
They have as well the whole initiatives they have themselves on e commerce. Trade conflicts, you know more than me, that is not helping, but I have to say it is not affecting us. I think it did affect us between the U. S. And Canada when the 2 were starting to play tic tac a little bit, I tariffed that one and the other one tariffs another product.
In the meantime, because the 2 signed it, that's gone. We had a little bit negative in the last year. And then we get to the chocolate markets overall. If you look at chocolate markets and you look at grindings, I think I always go when I look at volume growth, then I start with what is the grinding of cocoa. And once you know the grinding, it gives you an idea.
So in one or the other way, it ends up in a chocolate, maybe a little bit cosmetics, but that's a first indicator. If we look at that, then it's slightly positive, flattish to slightly positive. If we look at markets and global markets, then global markets from a value point of view, slight development positive. But that is as well a mix between emerging markets where we have some inflationary value up. And we have, on the other hand, we have the already developed markets where it is more or less flattish as well from a value point of view.
If I say flattish, I mean 1%, 1.5%, 2% we have in most countries, but most of you have as well access to Nielsen. So you know what the markets do. Then one thing that as well we realized last year is kind of more and more, it is not sustainability from a point of view that you say you have to make sure you get traceability out of the countries to your production. It goes much further. We are talking about now about the issue.
Deforestation is a big issue. We talk about the whole sustainability in packaging. And last but not least, of course, as well, the carbon output that we have to follow and we have to make sure. So I think that whole area is was, in my view, always very important, at least for Lindt, but now it became as well. If you look at consumers, this is even a more serious issue.
And the good news is we are well positioned in there. If we look at North America, then GDP growth positive. We have trade partners that are still suffering from less frequency in their stores. It's mainly the drugstores, mostly inner city and mostly now as well in competition for their subscription drugs by other companies and other trade partners, even online that take over a little bit their frequent consumers. Then price pressure.
Now we have a government of New Hampshire, for instance, where we have one of our factories that has increased the minimum wage of 10% per year over the next or the last year and the next 3 years. We will have logistics. We have trade price pressure, trucking getting more expensive. You see through the whole North America, you see basically an increase in prices that has not yet led to an inflation, even that, of course, we were getting last year to the 1.5%, 2% even as an overall inflation figure. But nevertheless, we are exposed to that with wage, with logistics and with other services.
If we go to Europe, moderate growth in GDP, supportive consumer, that was okay. And of course, what we have is all those separation efforts of different areas of the EU. Not an easy situation sometimes, at least, if we look at Spain or if we look at as well the U. K. Rest of the world, as usual, very volatile.
I'm mentioning that maybe for the first time, I'm very happy that we have lots of countries in there. And the more countries you have, as you know as well, the one or the other is really sky high, the other one is diving and at the end, it's balancing out. Again, from currency, from political issues, from GDP, that was the case again. The big mass is somehow then balancing. With that, I get to the figures.
First line already published in January 15, and the second line is indicated on the 15th January. So that means 6% EBIT growth, EBIT margin 20 basis points before one off effects. Net income margin before and after net income effects is the 11.4 and SEK 512,000,000. And the good news, I'm sure you have seen this morning, is we have a very good free cash flow, EUR 529,000,000 that easily then as well is financing the anniversary dividend that we have announced. It is CHF 175 years.
It's CHF 100 and and 75 for a PC. Somehow, it was an obvious one. Always assuming we get the cash, but that was still the question. And then we get the employees and the boutiques or the stores. We have roughly €500,000,000 at the end of the year.
Then I advance already some words on the U. S. And that streamlining where we I'm sure you're interested in that what happens here. I think the first important thing to understand is that we have 3 companies. Russell Stover came in 2014.
Now having those 3 companies, it is and was critical that we start getting the synergies between the 3. And I think getting the synergies, the one obvious as well is logistics. Now you can imagine each one had their own 3 warehouses, each one had their own transportation company, And each one as well was delivering from warehouse to the trade in full truck, half truck, 2 pallets or 1 pallet. And I think here, what we did last 12, 18 months is we brought that logistic together. We have now common 5 warehouses that are, of course, much bigger.
We go from warehouse to trade with full truck as much as we can, of course. And that at the end is now first good for the climate and second, hopefully then as well, once we have now finished that reorganization, will be positive for our bottom line. Now this means we have now some of those old warehouses we don't need anymore. We still have the 1 or the other lease contract that is open, and we have 2 excess capacity, and we just had taken the opportunity and said, okay, we now close those warehouses, we get out of the contract, and then we focus in making sure that the new setup is working. The next one is production footprint.
The Russell Stover had 4 factories or has 4 factories, and the oldest one is in Colorado. Now Russell Stover still has, and I'm sure you know, a lot of employees. And this lot of employees is because mainly as well there is a lot of hand labor involved in it. One way we have to go, and there is no way out of it, is we have to automize the production, and we are already automizing the production. That means there is one location too many.
So that means we have again announced that we will close this oldest factory. And I have to say, definitely not very proud. We cannot be proud. It's really we hesitate and said, is there a chance to avoid such a move because it's the first time in the 25 years I'm with Lindt that we have to close a factory. But I think if you look at investments, if you look at CapEx that is needed to maintain and on the other hand that we have less and less labor needed and we cannot do the automation in 4 factories.
We had to select 3 of them. So that's this reason. Here again, that will help us to go for more efficient production. Retail stores is another one. And now given what I said before, we have online sales increasing.
We have as well locations, and that is something that anybody that is in the U. S. And is doing retail, and I'm now for 25 years in that and always you open, you say that's the right location. Unfortunately, that right location over time may turn into not so so good location because environment is changing, population is changing, behavior is changing. So here again, there are definitely not that many, but we as well have to reorganize the store network in a sense that from Russell Stover, maybe 5, 6 we will close this year.
We have some 2 up to about 5, 6 that we are running out in Ghirardelli and Lindt. That means they stay open, but we said we already will close them in about half a year, 1 year or 1.5 year and had to build some provisions for that. Last but not least, here again, it is all three companies maintain a employees that are visiting stores. They are visiting and making sure that displays are built. They are making sure that as well the product that is listed is on shelf.
And last but not least, we don't have out of stock and well arranged because the image that we leave in a store is more and more critical for a consumer than you get in. Attention has to be a little bit like here. If you buy a product, you grab the Lindt product. So there were a total of 300, and now these 300, they have a, let's say, high time during Valentine's, Easter and Christmas. And we don't need them so much in the rest of the period.
During Valentine's, Christmas and Easter, you have to visit each store at least once a week. During the rest of the year, maybe twice a month is okay. So we want to become more flexible and you functions getting out to the stores. So that is a help for us that we can put more weight during the seasons and take out a little bit more weight during the rest of the year, again helping us to make sure that we have the right pressure and push during the season. So all that, of course, will make us fitter, will make us more profitable and as well will make available funds we can invest into growth.
Now and as you all know, and we will see afterwards, the whole operating profit of U. S. Needs as well some improvement, and that measure definitely will help. Now let's get to the market insights, and there I can be a little bit quicker if you get the next one. So here is the group sales split more or less the same as we had in the past.
And the growth rates, so 5.4 North America, 6.2 Europe and 7.6. But I'm sure you have seen that. Now let's go to the next one. That is market split in Europe. The remark I made here is that, again, here for 25 years, it's the same ranking.
Now I think it will become a little bit tight for Italy next year. So the U. K. Is behind. U.
K. Was growing 10% and Italy is lower. So I think Italy can take over. So we will U. K.
Will take over. So Switzerland here again, as in the last years, it's the green one, 3.7%, but I get to the growth rates on the next one. And here we have the figures by country. Of course, Germany has the biggest one growing 6.5%. That was a very important pillar for the whole growth for the group.
France, 3.7% U. K, 10% as I mentioned Switzerland, happy about 2% Austria, another 10% Nordics, 9% and then, of course, Eastern Europe. And here we are talking about Russia, Slovak, Czech Republic and Poland, they were all double digit. Now we opened a subsidiary in the Netherlands, March April last year, started well. And looking at the whole market, there is definitely potential there.
Then excellent Super Milk is a product we introduced in 3 countries. That's Germany, France and the UK. Now what is this? You realize yourself as well that going right away to the 70%, 85% cocoa. Some of you, I'm sure, it's too bitter.
It's not really that you say I go for a whole 100 gram bar in one go. So we have to find a way to make it easier to enter the high end of cocoa. And I think that's this product sought for. So it has a high cocoa content. Look at the 65.
It has as well a higher milk content, and it has a low or lower sugar content. At the same time, it comes a little bit in the way or in the trend to less sugar, but more cocoa and more milk in that case. So works well. Then Lindor with pistachio and of course, the usual seasonal performance that was going very well mainly for Christmas last year in Europe. Now the next one, we go to Switzerland, just 2, 3 words to that, 2% sales.
Store in Interlaken, we opened. So that's in the meantime, we follow the tourists that are actually a little bit missing, but I'll come to that later. And now we have Interlaken, we have Jungfraujoch and we have the airport. So basically, there is no way around us. And I think at the back here, there will be this museum.
So there will be airport, museum, Interlaken Jungfraujoch. Hopefully then, latest, everybody bought some chocolate. Then, we had a Christmas market here in Kilsberg. We have innovations. It's mainly the Excellence Passion.
That's a very dark packaging. You have it over there that we launched in Switzerland successfully. And I would like to show you a short TV movie on the Landes Museum Iluminati or whatever the name is. Consumer, our brand, and at the same time, it has been with light shows, you can do things that maybe 10 years ago were basically impossible, but I think it's great. Now going through next area, North America.
Here, you see the split between the 3 basically markets, U. S. A. 33 percent Canada, 5%, 6 percent and Mexico, still small with 0.4%. The whole market was growing 5%.
4%. And if we get to the individual markets, then you have on the next chart the split between Lindt, Ghirardelli and Rosselstover. And as you can imagine, we are very, very happy that finally Russell Stover that was decreasing over years Finally, made progress, and that progress is made on the base of new products, a relaunch of the boline, we call them. That's the assorted praline box. It is on top the sugar free range that is growing double digit already for the 2nd year.
They definitely as well are very innovative in new products they bring to the market. And so we are definitely hopeful that we now have seen the bottom. And with all the other measures we have in place, Russell Stover will increase. But as well, the other companies, you see 6.5 in Ghirardelli and 6.1 in Lindt. We're doing very well.
And Lindt has 30 years of celebrations, 30 years. We created it in 1989. We were starting to build the factory and create the companies. Now what I would like to show you here is now the first ever spot for Russell Stover. It has been out and aired in December and here again in time of Valentine, will come back in Easter, always adopted.
The one you will see is now the Christmas one. And I think it's as well in a certain way a milestone that we came in and as well now make efforts to increase the value of the brand with the U. S. Consumer that has been fading away a little bit over the last, let's say, 10 years. Now let's see.
First one, we would like to stress the point of gifting. So Russell Stover, the big sales is still in the assorted Praline box, number 1, and of course, the heart at Valentine's. And at the same time as well, Easter is a lot of gifting. So there are different occasions of gifting. You have seen some of them.
Take your time, think about your beloved ones and think about the Russell store next time you are shopping. Idea behind, there is a good start. We can improve. But definitely, I think it's something we will build on. Now let's get to the rest of the world, and the rest of the world is 13.3%.
Now 13.3% for the rest of the world, if you take now Europe and U. S. Out, that is, of course, still lots of potential behind. Reason is that we have a total of 45 €55,000,000 So I think there is still a lot to do. The good news is we had last year double digit Brazil, China and Japan.
We were doing okay in South Africa. We definitely had a good year in distributors worldwide. We were as well growing nicely in some other Asian countries with that. Duty free was last year more or less flattish, given as well already some issues in Latin America with supply chain and as well with demand. But overall, we got to the 7.6%.
And now you will say why only, I can't give you a hint. The single biggest country in here is Australia. And in Australia, we had to increase the prices. And if you look at the Australian dollar today and you imagine that the product is coming from Europe, We had to do something. And with that increase in pricing, we had some retaliation from trade that definitely did was not very enthusiastic about going up in the pricing.
So that was 1 year where we had a little bit to suffer. I think it was not negative, but it was not as positive as we had it in the past. Now lots of news here as well, but definitely the focus in those countries is always Lendor and Exelon that we want to establish before we introduce lots of other products. Now I would like to show you a campaign. We continued or we started with a new member of our ambassadors that is with Roger Federer.
So we found that the combination of our Chinese actor together with our ambassador, Roger Federer, that could be a good idea. And as you know, China is storytelling. Storytelling, it's digital, it's not TV. It's a little bit longer in the story. And I think we made 3 campaigns.
Total, all 3 in combination were seen by 500,000,000 consumers or shoppers. Of course, you have to maybe the same guys looking at it, so you maybe have to divide it by 3. But nevertheless, I think it was a good success and definitely one way of making sure that the brand is known in China. So if you look at the story, maybe I just bring it back. I as well have to think a little bit.
The 2 get to know each one on an elevator. He invites her to come to Kilchberg in the Schott Colateria. They are together. She goes home to China, thinks about in her dreams of the Jungfraujoch and the chocolateria and then he is ringing at the door. So you can say, if you have another idea for next time, please come forward.
And we learned in the meantime that he is very, very good in Chinese. So not only French, I did English, German, Chinese. Anyway, So that's the way we try to open that market now given as well the recent issues and topics we have in the market, given as well the fact that here it's not that you can assume that the culture of eating chocolate is basically just kind of mushrooming. I think it takes time, but I think we are well positioned. We are coming in.
We were growing nicely, but still on a very low volume. But I think this is a way in combination. Culture is different. Product is great, but you have to make sure that as well how to find a way to get to that consumer. And that is not necessarily the same one as we have here in Europe with TV, still the big media and as well, of course, the fact that the brand is already known.
And here, there, we start with 0, so we might need some help of some people that have a higher awareness in the country. One two words on global retail here, 11.8 percent sales growth, 600,000,000. Now we had 80,000,000 visitors again last year in our stores. We have store counts installed, so we know how many come in. We know the conversion rates, how many of those that are coming in are buying and so on and so forth.
And those are measures we follow closely and we make sure that we improve step by step. Now, numerous openings. I mentioned Interlaken. We are now Moscow, Strasbourg, Boston, Frankfurt, just to name some of them. Frankfurt in the main city, maybe next time you are there, have a look in there.
It started well in November, December, I think, last year. So that's it from retail. Now I hand over to Martin.
Good afternoon as well from my side. Welcome. And of course, I look forward to presenting you the numbers of 2019. Starting maybe just with a few key figures. Some of the most important KPIs, organic growth, of course, you have seen 6.1%, you've already seen it in January.
Acceleration here coming from the 5.1% in 2018, so really good news here. EBIT margin before one off effects at 15.0%. I'm going to talk about this a bit later on as well in detail. Net income margin, I think it's great to see that we have made progress here as well, 10 basis points. We should bear in mind here, and I'm sure you have seen that in other companies as well, financials, the leasing IFRS 16, actually because of its front loading effect, impacted our net income margin by 20 basis points.
So if you included that, our progress was even 30 basis points like for like compared to 2018. I think that's an important one to bear in mind when you look at this 10 basis points here. Then free cash flow, I'm sure this is also when you looked at the numbers this morning was a positive surprise. Hopefully, at almost 12% free cash flow as a percent of sales. We are coming 3, 4 years back from 6%.
So that's nice progress here. And then net debt, as a result of it, good free cash flow generation. And despite the fact that we had a share buyback of CHF 330,000,000 in 2019, we have been able to improve the net debt position by about CHF 100,000,000 So I definitely think these 5 key figures, definitely a very nice set of numbers. Dieter talked about the streamlining for growth initiatives in the U. S.
And what we have done there. Now what was the impact? And I've presented this already, okay, if you already some indication when we had a conference call in January. So we had CHF 59,000,000 impact net of tax, CHF 82,000,000 impact CHF 82,000,000 in terms of EBIT margin. We had 3 positive effects on the tax side.
Swiss tax reform step up there, created a deferred tax asset. Then we had also a Swiss Federal Court decision. So we got back some flat rate tax credits. And then there were also some other tax benefits in 2019. So this also resulted in about SEK 60,000,000.
Now of course, this was between EBIT and net income. So overall, it meant our EBIT margin actually came down by 180 basis points, but our net income was untouched. So was our net income margin, our earnings per share and also our free cash flow. On the next chart, you also see some details. You can actually also find this on our income statement.
So about the biggest impact came really from depreciation and impairments, euros 52,000,000. Of course, a lot of it coming from the closure of Montrose, depreciation of that asset. Some of it, those are coming from our assets in logistics and from the retail stores. Personnel expenses was also SEK 10,000,000, severance payments that we were already booking in 2019. And then the rest is about CHF 20,000,000 So CHF 675,000,000 is our EBIT before one off effects and slightly short of SEK 6.093 after the one off effects as shown in the annual report.
Shareholder return. You heard about a special dividend of CHF 700. So this brought our total dividend to CHF 17.50 for the share and for the PC, CHF 175. Dividend yield as a consequence of EBITDA 2.0 percent, so up from the last year's where it was always between 1% and 1.5%. The payout ratio is well up from last 5 years on average 50%, now above 80%.
Share buyback, I mentioned, we bought back CHF 120,000,000 CHF 120,000,000 in 20.18, CHF 337,000,000 last year. And market cap actually at the end of the year was almost SEK 20,000,000,000. So we increased it by about SEK 3,000,000,000. I think when you compare this with peers or also with other indexes, you will surely see that this was quite a good performance last year. Organic sales growth, 6.1%.
Again, here, when you look back the last 5 years, with the exception of 2017, we were always in the range of 5% to 7%. You should also bear in mind that in each single year other than 2019, Rostov Stover had a decline in sales. In 2017, it was double digit minus. Now good news that in 2019, we had this good result of above 5%. And of course, it had also a positive impact from the group sales, 6.1%, which is within our expectations, and I think it was a solid performance.
In Swiss francs, on the other side, of course, the Swiss francs has strengthened against the euro, against the pound sterling. This resulted in 160 basis points lower sales in Swiss francs at 4.5%. When we analyze our sales numbers, also pricemix and volume, I think it's really good news that we have been able to push through price increases in the U. S, especially. So our pricemix was positive, almost 2%.
Dieter also mentioned Australia. So in not in all markets, but in some selected markets, we have really been able to push through price increases strategically. It was also necessary. And then I think also good to see that our volume grew by 4%, so twothree of the organic sales growth is coming from volume. That also shows us that we have been able to push market shares in terms of driving penetration further.
Segment information, you've seen these numbers. I think the highlights are really in Europe, the acceleration coming mainly from the UK, Germany, again, great results. And then Eastern Europe, Russia and also the other Eastern European markets growing double digit. And Austria, you also saw double digit. So I think those are the highlights in Europe.
North America, you have seen that all the 3 U. S. Brands grew somewhere between 5% 7%, which was a good result. And really also an acceleration and almost doubling our sales ratio there. Now for the Rasa Storpe performance, we should bear in mind, I mentioned that actually in last July when we looked at half year, we had an extra ordinary kind of positive impact from Easter in Rausselstopper.
You may remember that. So if you take that off, the Russell Stover sales organically, excluding this extraordinary Easter effect, would have been around 3%. So that's just something to bear in mind also when you look now at 2020. Rest of the world also, Dieter very good results in our strategic core markets, Brazil, China and Japan. Australia was a bit on the slower side, also very hot summer there during the Christmas period, of course.
And then you also had a few markets like Latin America, like Hong Kong that from a political side, were not the most stable markets and had also, of course, some sort of impact there. But overall, 7.6% is in our guidance for Rest of the World and a good result. Now moving from the sales to the costs. So those numbers, of course, you have seen them first time this morning. When we look at the material costs as a percent of sales, we are at 33.6%.
Again, if you look at the average over the last 5 years, it's slightly better than the average. So still, I would say, a low level, still a good year from a material cost perspective despite the fact that cocoa has increased, cocoa prices have increased. Cocoa butter ratios have come slightly down, but because it also the cocoa future price has a big impact on the price of 1 tonne of cocoa butter. Cocoa butter prices in tonne per tonne did not really come down. Also had high sugar increasing sugar prices.
We had increasing hazelnut prices. We had slightly increasing packaging material prices. So I think in that context, the 33.6% was a good result. We have been able to buy cocoa to secure cocoa bean prices relatively early, which was, I think, a good move and resulted in this 33.6%. Now when we look forward, I think packaging material may slightly may come down slightly in 2020.
Hazel nuts will still be high, hazelnut prices. Sugar prices will remain high. And you see here the cocoa bean price has come up by about 15% since February 2019. It was at $1700 roughly. It's now close to €2,000 That does not take into account yet the living income differential for Ghana and Ivory Coast.
This is just the future price. So the future price has come up, as you can see here, by around 15%. And then on top of that, for 'twenty one, there will also be this living income differential of $400 per tonne. So that's another 15 ish percent higher costs for 'twenty one. I'm not talking about 'twenty, I'm talking about 'twenty one.
So I think in 'twenty, we are still okay. We will maybe see a slight increase in material expense ratio. And then 2021, I think the whole chocolate industry will be under pressure from a cocoa bean price perspective, obviously. And it's at least possible or likely that we will see some price increases in general in the in chocolate in 'twenty one at the latest. Then personnel expenses.
Again, here, if you look the development since 2015 is slightly positive, came down. And we should bear in mind that retail our retail business, of course, is a very personnel intensive business. So this is we have been able to offset that by more efficiencies in our supply chain, more efficiencies in logistics, in production, also in administration. So thanks to that, we have been able to bring this ratio slightly down over the years. You see that also in the number of employees in 2019, basically stable compared to 2018 despite the fact that we have opened another 40 ish ish retail own retail stores.
And operating expenses, there are different things in here. Advertising is in here. Logistics is in here. Fixed costs in our sales department are in here as an example. Now here, it starts getting a bit more tricky when explaining the numbers because we have 2 impacts here.
We have in the past, we also had the lease expense in here, lease of our retail stores. Now the lease of the retail stores in the new IFRS 16 accounting, they are split between depreciation and financial expenses. So it's not in here anymore. So that's out. And what is also impacting this is the one off effects.
So the two effects together are 150 basis points. So to do a real like for like comparison, you have to add this back, and you are then at 26.2% versus the 26.5%. So that's a real like for like comparison. So it means that this expense ratio came down by 30 basis points. On the one hand, we have spent more money in advertising.
On the other hand, we got efficiencies out of logistics. We got efficiencies out of planning supply supply chain planning as an example. So we had really those two effects. And obviously, the efficiencies are very higher than the increased advertising spend. And after so that basically brought us this benefit here of 30 basis points.
Depreciation. So here, you see the other effect now as well. Here, you see now the increased depreciation coming from leasing, SEK76 1,000,000 increased depreciation coming from leasing for this new standard, IFRS 16. And then we also have SEK52 1,000,000 effect negative from this depreciation I showed you before from this one off effect. So that brought the depreciation and impairment line to CHF 323,000,000.
So if you exclude those two effects to compare it against 2018, we would be at SEK 195,000,000 compared to the SEK 180,000,000. Million. And this SEK 195,000,000 is 4.4%. So we see a slight increase because our CapEx is about between SEK230,000,000 SEK 250,000,000. So against in the old world, against this SEK 180,000,000 depreciation, if we spend more CapEx, then the depreciation over time will go up and get closer to the CapEx, right?
So I think as well over the next years, we will see this certainly in the new world. And if you exclude even the one off effects, we will see a slight increase in depreciation over time. So this brings us to the EBIT of SEK665,000,000, that's 6% higher than last year before one off effects and is basically growing faster than our sales in Swiss francs, which grew at 4.5%. You can also see here since 2015, a constant increase of 20 basis points. So from that viewpoint, we have been quite predictable in the last 5 years from an EBIT margin perspective.
Now let's break this down, and let's look at the different segments and start in the middle here with North America. I think this is one of our concerns. Of course, we are doing our utmost to improve our EBIT margin in the U. S. As part of the overall EBIT margin improvement in the group.
And when we look at this before one off effects in the U. S, we have been able to increase our profitability in the U. S. From 7.8% to 9.0%, so 120 basis points. And I think this is really good news.
We have also been able to keep Europe at a high level flat, which is also good news. And same on Rest of the World, we have been able to keep it at a high level of almost 18%. You should bear in mind that as part of this Rest of the World, we have countries where we grow fast, where we grow double digit, where we invest in this growth. So of course, it's great to see that despite that, we have been able to keep it at a high level. EBITDA going up by SEK 100,000,000 to SEK 916,000,000, that's 12.2%.
Now again, this is hopefully the last chart where I have to explain this one off effects in leasing. It had an impact of CHF 50,000,000. So I think again, to compare it like for like, you have to take this off again, and then you are at SEK 865,000,000, which is 19.1%. Still a nice improvement of 20 basis points like for like versus 2018. And then the free cash flow.
Before 2017, average about between SEK 230,000,000, SEK 280,000,000, so about SEK 250,000,000, between 6% 7% of sales. 'seventeen 'eighteen, we got to €400,000,000 roughly free cash flow, and that was around between 9% 10% of sales. And now last year, we got to SEK 530,000,000, an increase of 34%, close to 12%. We have achieved that thanks to good net working capital management. So good generation of operating cash flow and also a relatively low CapEx actually at SEK 235,000,000.
So we have been able to keep CapEx still at the level below SEK 300,000,000 despite the fact that we have started to approach. If you knew Hampshire, you may remember that over the next 3 years, we will invest above SEK 200,000,000 in our factory in the United States, in the Linde factory. And of course, that will have over time an impact on CapEx. But in 2019, the impact was not so big yet. And you see the number here.
So pretty much on average, 2019 was €235,000,000 Now sooner or later, of course, this investment will come. 2020, 2021, I expect this number to go up because of the U. S. Investment at the end of the day, this build out of the New Hampshire factory. So I expect this to be around SEK 300,000,000 going forward 2020, 2021, 2022.
And that will then also have an impact on our free cash flow, of course, which may come slightly down. We have still to see exactly what it may come slightly down because of the higher CapEx. The tax rate, you saw these three impacts of €60,000,000 of €59,000,000 in tax. That had an impact on our tax rate. So the tax rate was 8.8%.
Now again, if you take this out, the tax rate would be at 21.0 percent in 2019. Going forward, I think it will remain somewhere in the bracket between 21% 22% tax rate. We have higher taxes in Switzerland on the one side with the after the tax reform because the holding is this holding privilege is no longer valid. And then in the U. S, the more money we will make in the U.
S, the higher the tax rate will be because in the U. S, the combination of federal tax and the state tax is 27%. So that will over time will means that the tax rate will or may go slightly up. But for the next 2, 3 years, I expect it to be at 21% to 22%. The net income, I've mentioned, 5.1% growth here.
So again, growth slightly more higher than the growth in top line Swiss franc growth. And I think the important piece to understand here is this 20 basis points negative impact from the leasing, which means that in reality, organically, we have grown net income by 30 basis points. And then net financial position, we have improved it by SEK 100,000,000 coming from SEK 5.29 Now this is also if you compare it how this was done in the past, we also had a negative impact here from the lease accounting because we have now the leasing in the balance sheet. And for us, this is about SEK 500,000,000. It's part of this.
In the old world, we will be debt free now because we have to add you would have added back now this CHF 500,000,000. Now it's part of the new world, right? So we are showing like this. So improvement of $100,000,000 We had this positive free cash flow on the run side. And then we had we have paid back $570,000,000 more than $570,000,000 to the shareholders in the form of the dividend last year and also the share buyback.
So I think in this context of a share buyback of SEK 330,000,000, it's good to see that we have improved our net debt by SEK 100,000,000. If you compare this actually with our EBITDA SEK 900,000,000, we are leveraged 0.5x. So I think we are still in quite a good position from that viewpoint when you look at our liquidity. Of course, we are trying to avoid negative interest on the liquidity side. Therefore, that's also part of the reason, of course, why we are paying out a special dividend going forward now in 2020 for 2019.
And we want to keep a sound equity ratio as well, which we will see on the next chart. We are still at close to 60 percent equity ratio. I'm showing you here 2018 in the New World, you know, with the SEK 500,000,000 leasing, how it would have looked. So you can see we are relatively flat in terms of the equity ratio, always close to 60%. So this is a brief summary on the financials.
I will now also give a couple of thoughts here about sustainability and where we stand with sustainability. It's a growing concern as well of the financial community. I get more and more questions around it. So I thought it's also good in this forum to show you where we stand here. So starting with cocoa.
You should bear in mind that part of our DNA is the bean to bar production. So we actually control all the production processes from the reception of the cocoa beans, the roasting of the cocoa beans, the production of cocoa liquor, the production of chocolate mass and then also the molding and the packaging. So we control the whole process, which is different to most of our competitors who buy the chocolate mass in general, most of them. So as part of this bean to bar concept for us, the sustainability program in cocoa beans and in general in cocoa is very important. We are have started this at more than 10 years ago.
We are focusing on 5 origins. You can see here, the biggest cocoa origin is actually Ivory Coast. We are not sourcing cocoa beans from Ivory Coast. Our biggest origin is Ghana, then followed by Ecuador. And then there's 3 smaller origins: Dominican Republic, Madagascar and Papua New Guinea.
Our goal is by 2020 to get to 100% traceable and externally verified cocoa bean sourcing. In 2019, we were above 90%. So we are well on track to achieve the 100%. And we also track, okay, where are we including cocoa butter and powder, and we are close to 60% in 2019 all in. And you will see later on that our goal is by 2025.
By 2025, for all the cocoa products, we want to be at 100%. So for the beans, 100% by 2020 in terms of sourcing it from our programs, traceable, verified. And by 2025, for all the cocoa categories, 100%. We work with more than 80,000 farmers, and we spend more than SEK 10,000,000 per year on the programs. Now on the next, we will now show you 3 films from our cocoa farming program in Ghana, 1 around water supply.
Water, of course, is drinking water fresh drinking water is one of the issues. And we have invested there the second one about schools and the building of infrastructures. Again, if you want to fight against child labor, it's important that the kids are not on the farm but in the school. So investing there. And then the third one is also about productivity.
We are training the farmers. We are working together with the farmers, trying to really improve their productivity, which then again will lead to better higher living income.
Okay?
Water is the source of life. In the past, it was a challenge. We had to walk for hours, and we could only carry as much as our strength would allow. We often had to drink dirty, foul water, and our children were often sick. But today, we have access to clean drinking water.
Thanks to a borehole in our village. Now we're all healthier and happier. We have water. We have a better life.
One day, I want to become a doctor. I want to help my village and be a role model in my community. My mother says to achieve that, I have to work hard. I have to study in school. The journey begins in this classroom where I come to learn every day.
I read a lot of books to broaden my knowledge. My teacher's name is Mr. Nuan. He says my math is excellent and I should keep practicing. He also says if I keep working hard, I will succeed.
And that is what I want, to succeed and achieve my dreams.
When I wake up, all I think about is, how can I contribute? How can I help the cocoa farmer succeed? Today, we are part of the Linden Sprumley Farming Program team. We work hard. We are passionate, and our aim is to empower.
We work with the cocoa farmers. We teach them how to increase their yields and educate them in good farming practices. We are innovative and help the farmers and their communities to improve their lives. We are change makers.
So I hope this gives you a bit of an insight of what we're doing in Ghana as well in the sourcing of cocoa. Apart from the sustainability in cocoa, we also work in other areas of sustainability. It's not just around sourcing of raw materials when you think about sustainability. And over the last 12 months, we have basically worked on a new strategy for sustainability. And we have worked on 11 commitments for Better Tomorrow.
And we call this our Linden Spring sustainability plan. And as you can see here, we are working on 4 different areas: improving livelihoods, contributing to an intact environment, performing together and delighting consumers. And I'm not going to read out all the 11 commitments. I'm just maybe picking 3 that just as an illustration here. 1st, what I mentioned before, by 2025, the first one, all the cocoa products will be sourced from a through our sustainability programs, so traceable and also verified from a third party.
So that includes cocoa beans, that includes cocoa butter, that includes powder also. The second one, in the area of contributing to an intact environment, of course, CO2 emission is an important one for us. And the current goal is by 2020, 10% less CO2 emissions than in 2015, and we should be able to achieve that. Now we are also working right now on a longer term commitment, and we will publish this as soon as we have it, which should be in the next few months. And then forming together, one of course, that this is also very important at Lindt is diversity.
And one of the parts of diversity is, of course, having more women in senior leadership positions in Kilgigberg but also in the subsidiaries. And our goal by 25% is to be at 40% in terms of the management teams. So 40% women in senior leadership. We are currently above 30%, close to onethree. So we're also confident that we should achieve that.
So that's a summary on sustainability. If you want to know more about it, we always publish a report on sustainability in April. So also this April, you will find a new sustainability report. And then also on our website, you will find or can find more if you're interested under the on the corporate website on the sustainability. You can read much more around this very important topic.
So with that, I will now hand over to Dieter, who will talk about the outlook. Thanks a lot for your attention.
Thank you. We get now to the last charts and then question and answers. And if we go to the outlook, the question that you will have, I already advance before we get to the rest of it, and that is what impact do you think will have the actual virus outbreak. Now I think here, I already advanced and say basically we are it's early in the stage. And now if there is one thing that is insecure, then it's this one.
So I can give you some hints. Now the first hint is that the sales in the most affected areas in our portfolio are relatively low. As you know and as you have seen, rest of the world is 13%. If we take out or extract Asia, it is, I'd say, still minimal, even that we were growing in China 35%, but it's still on a low base. So from a sales point of view, in the most effective areas, if you take South Korea, if we take China and if we have Asia as a whole, this is not really having a big impact on our sales.
Of course, as well, it can, depending on the duration of this whole topic. Now if we get to the question of production and supply chain, we are not a car manufacturer. We don't need tools. We need raw materials. We need milk, we need sugar and we need cocoa.
And here I can assure you that in all our factories, and those factories are in Europe and in the U. S. A, We do have stock. We do have enough that we can go on producing. So that's basically from a sales and production side of you, it's the answer.
Now if we get to the sales areas that are for the last 2, 3 weeks affected, that is wherever there are tourist streams. And tourist streams is duty free. So if you look at duty free over the last 2, 3 weeks, we have a decline in traveling. Now if all the fact companies like us as well, like the big multinationals, like the banks in the U. K, they say stop and ban of traveling.
Of course, it's much less traveling in the airports and at the same time, much less tourists. I think that is definitely an area that is suffering from less frequency. And I think that will have as well an impact sooner or later on our sales in that area. Here again, duty free is not if you look at the EUR 4,500,000,000, that is whether that is now 2, 3 months, a little bit more or less, that doesn't really impact us in a big way. I think the big concern is mainly our employees.
We want to make sure they are safe. And so for that reason, we as well have the usual safety measures, that is travel, that is meetings, that is hygiene, that is if feeling sick, stay at home, make sure that you can recover, don't put your colleagues into danger as well. All those measures are definitely impact introduced and as well implemented in our group. I think that maybe as a first saying to you as regards on how we approach the situation. Now if we get to the outlook from today's point of view, we are still confident to get into the 5%, 7% bracket for 2020 in sales and here again on the 20, 40 basis points on the bottom line.
And for that reason, there is not much more I can say on that one. You will have to watch it. We watch it. And I think from today's point of view, we believe that this is still a valid target. Now if we get to the next chart, I just come back on what I said on the 175 years.
175 years here, you have the 2 gentlemen here. Mr. Leechte, by the way, is as well the one out there. I think that is helping us with those presentations already for lots of years. Now the good news is that we have here as well not only 175 years, but as well we have the opening of this home of chocolate, as it is called.
It is a foundation, a charitable foundation that is independently managed from our Lindt Group. And the grand opening will be on the 10th May, that is Mother's Day. And I think we are really looking forward to that opening that will as well mark a very big milestone in the Lindt and Sperling history and mainly as well. It is really coincidental that we have it in 175 years and this home of chocolate. With that, I thank you very much.
And we both get now 2 questions. We get a mic. So yes.
Alain Oberruben, MainFirst. I have two questions. The first is regarding pricing. When could we expect that the chocolate industry as well as you are going to increase prices? Are you still waiting for Hershey to do so in order to compensate for the living income differential next year?
And the second question is regarding U. S. And product innovation. Could we see Witzman new products coming out this year? Because you mentioned that last time.
Or do we see anything else in U. S. In Rostov for this year?
So the first one is the increase in pricing. And I cannot tell you when that will happen and how it will happen, but rather sooner than later is my impression. At the end, it always depends on the coverage of the individual market participants. Now short coverage means you have to go, I would say, after Easter. And if you have a better coverage, you rather go kind of October, November for the New Year.
That's basically the time horizon I see. The degree of increase depends a lot on the product. Of course, if you have a 70% to 99% cocoa, it's a different one than if you have a milk product. But we will see what happens. But definitely, the whole industry will go up because there is no way around paying that living income differential.
So that's the one thing. The other one that, if I understood well, is mainly the question on newness innovation in the U. S. I think if you look at Russell Stover, they definitely will build out their sugar free series they have out there. They will go as well into baking.
They will go into chips. They will go into no sugar added. That's a little bit another product. And they see on Russell. We if we go into Lindt, it's the focus on Lindor and Exelance.
And I don't know even I think they as well will launch the Super Milk because their basic milk offering, that's milk, milk not milk, raisin is working quite well in the market. So they see an opportunity by as well extending that range, not under excellence, but under milk range and go into a little bit higher cocoa content. I think that's one of their big launches for the current year. And if we are going to Ghirardelli, I have to be very open. I wouldn't even know now what's in the range for this year, but I think they have enough to focus on.
I think the Square business, more gifting, more gifting mainly for the Christmas period, that is definitely one thing they will focus on.
Petri Treindevan, Zurich and Henalbank. What's the share of sales with tourists on a worldwide level? Just as a rough estimate.
The share of
Sales with tourists, so duty free and also other tourists. And also other tourists, I mean, the guys, Chinese which go to the town of Schloss, for example.
I think you usually just kind of take that as an indication. I think duty free is around 2%. Is that right? Yes. Duty free, 2%.
And then you can add maybe the highly exposed locations like Jungfraujoch, Paris, Downtown, Interlaken now as well that are really just there because of tourists, maybe you get to 90,000,000 something, €90,000,000 to €100,000,000 in total. 2% to 3%.
2% to 3%. Okay. And also, I mean, you mentioned corona, we just saw also even in the Italian market, which is quite a larger market for you, so you didn't have had any impact yet?
No, we don't see an impact. I think it's as long as you have here in Zurich, we don't have tourists going shopping in that market here. I think it's not that we depend on them. If they are coming some, that's okay. But I think it's not that this is now vulnerable to that.
And regarding the pricemix, which was 1.9% last year, what's your best guess for the current year? And what's split between price and mix?
You mean price mix last year?
Yes. And also for the best guess
for the current year? It's roughly fifty-fifty last year price mix. And for this year, we will see a similar number, I think, somewhere between 1.5% 2% pricemix.
Okay. And last question regarding dividend payout ratio. You had the anniversary dividend. What shall we expect for the future in terms of payout ratio?
I think that is a good question. And at the end, it depends on the decision of the Board of Directors. But I think the point is that we assume that the free cash flow will continue at a relatively high level as well for the coming years. So that means at the end, we will have cash available. And the question is what to do with it.
And you know the usual answer is you make an acquisition, you make a dividend payment or at the end, you make a buyback. And if you look at buyback, then if the stock exchange stays where it is, it's probably doesn't make that a lot of sense. So we have 2 left. To degree how much and whether yes or no, that's always a decision by the Board.
So probably no dividend decrease next year then?
From where?
From EUR 175,000,000.
1,000,000. EUR 175,000,000 a decrease. Yes, I think if we wouldn't have to say Jubilee or special dividend. It is a special dividend. So assume that we go back on a base of €10.50 That would have been the payment this year.
And then comes the question, what more on €10.50 But I wouldn't take the €175,000,000 as a base.
John Cox, Kepler Cheuvreux. Just a couple of questions really on North America and the U. S. Specifically. What are you thinking about the growth for the overall U.
S. Market this year? And I'm asking this because obviously, you're going through sort of quite major restructuring with the factories. And how confident are you about maintaining production and logistics? When you're closing warehouses, you're going to close a factory there.
And you mentioned heavy staff numbers in the factory network in Russell Stover. So I guess we can assume the number of staff in the factory network is about half of the total. And of the 4 factories, we can just split that 4 ways, just get a feeling of what will happen to staff numbers overall. So that's the first question really about the U. S, what your thoughts are in terms of growth and being able to maintain growth while you're doing quite a big restructuring plan.
And then sorry, just to come back to the whole coronavirus thing, and I know it's early days. You're saying that of the $600,000,000 sales or the 500 shops, that only $100,000,000 is really impacted by tourism because I was under the impression that at least half of your network is in high transit tourist locations, Fifth Avenue or wherever it may be. And obviously, the Nevester case, we're looking at more a $300,000,000 impact if we see a drop in travel and tourism, which seems to have been the case in Asia? And it looks pretty obvious this is coming in Europe and North America over the coming weeks. Thank you.
I think on the last one, at the end, I mentioned it. It's a question of timing, it's duration and impact. And that is something it's just very difficult to predict nowadays given the situation we are in. Coming back on the point how many are in tourist areas. If you look at the number of stores, we're talking about Japan.
It's not tourist areas. We're talking about Brazil, both with at least Japan and Brazil are more than 100 in total. If we go then further and say Germany is another big market and in Germany, this is not tourist dependent. It's we are getting up to quite a big number of stores and countries. South Africa, you can discuss definitely as well, another area where we are operating stores, Canada.
It's not that when I look at the portfolio that I say, oh, there's lots of tourists coming there. It's lots of locals, domestic clients that we are addressing to. Switzerland, here again, I mentioned the 2, 3 that we have, definitely depending on Asian tourism, that is clear. But it's not that we made now a calculation and pinpointed and tracked which ones are most affected and which not, but we will see. But you might have might be right that instead of maybe 2% or 2.5%, it's 3.5%.
I just don't know yet. Now that is the one thing. And then the U. S. Operations, definitely, they have a big load in accomplishing all the changes that they have as a burden now running here.
The good news is it's not one function. It's the logistic function. And there, it's mainly optimizing the warehouse network, and they're pretty optimistic that this is working well and that shouldn't interrupt the rest of the businesses. Then we will have the closure of the factory that will happen in spring 2021. That as well shouldn't have an impact on the old year 2020.
That is another, let's say, process. The change of the merchandising force already happened on the 6th January. So we have now already now an outsourced merchandising force is in place. So that's basically done. It has to be optimized mainly if you have direct store sales or whatever.
I think there we are still working on. But basically, I'm optimistic there. One thing I can tell you as well, we will have Russell Stover is changing to SAP IT system. Again, something that was needed, necessary, and that will happen in April. So if you take that, I think I have more respect of that change than maybe of production or logistics or merchandising, I think.
But that is something that has been prepared over the last 2 years, and let's hope it runs.
I think it will be in the same ballpark as in 2019. If you take Russell Stover's growth, as I indicated, I think you have to exclude in Russell Stover disease to effect. So don't take the 5.4%. Take the base of 2% to 3% for Russell Stover. So if you take it or calculate it that way, it will be somewhere between 4% 5%.
Jean Philippe Versci, from Sorbonne. To come back on free cash flow, Dieter and the cash situation, you said you're expecting still a strong free cash flow in the coming years, but you're investing like 25% or 30% more. If you can share with us our views your view on that if you're expecting a decrease of the net working capital, for instance? In that context as well, I think you have to repay or to refinance €500,000,000 bonds this year. What are your view on that if you want to repay it or refinance it?
And the second one would be on Gerhardelli. Were you benefiting from some issues at 1 competitor in the baking segment? Or if you can split the growth of 6.5% between baking goods and the rest of the business? Yes.
I think I take the one with the Giro Deli. It's a relatively easy one and complicated. I'll leave up to Martin afterwards. I think the Giro Deli, they had some business with a customer in baking. And that customer, I can tell you even the figure, we had a gross profit of 7 percent on that business.
And so we decided, okay, we stopped that. I think that was a good thing to do. So we got rid of that relatively big. It was one of those, how you call it, where you have to pay the Costco type. Club channel?
Yes. It hasn't been Costco, has been another one, and there are not a lot left. But anyway, I think we stopped that business. And that was the reason, I think, for this year, if you exclude that movement, we should be okay. As well, we increased prices in that area, and that was as well something where our competitors came in and offered the one or the other good promotion.
I think, as you know, on the baking, the chips is the biggest and CHIPS is Toll House and Toll House is Nestle. So that's basically it, but
I think your other question, one, it about the bond? What do you do with the CHF 500,000,000 in October? We have CHF 1,000,000,000 in bond still outstanding. CHF 500,000,000 is expiring now in October. So one with 0.5 percent coupon.
So it costs us euros 2,500,000 in interest rates per year in interest cost per year. Look, we have not decided yet what we will do with that one. It depends a bit on many other things, right, because we do not have to decide till June, July. Of course, it depends what happens with the interest rate environment, what happens with the economy in general. We certainly have the cash to pay back, but it really depends what else we will do.
So it's not something we can decide in isolation. Then your other question was around free cash flow generation. I said 5.30. But if you look back the last 5 years, we are coming from 2.50 right, from 6% of sales, then we increased it to 400 in 2 years. It was about 9% of sales.
Now we go to 530,000,000. This is almost 12% of sales. Can you now expect 12% of sales for the next 3 years? I mean, I would put a question mark behind that because as I mentioned, New Hampshire, we have to build it out. It's about CHF 200,000,000 over the next 3 years in total, so about CHF 70,000,000 per year.
So I would expect still a very positive and good free cash flow generation in the next years, but not necessarily 12% of sales because of this higher CapEx potentially. So expect something around 450 ish. And then, of course, we are doing our utmost to improve our net working capital management, especially on the inventory side, where there are lots of efforts in supply planning. The better you plan, the less stock you need to hold. And of course, that gives you a positive impact on your net working capital apart from other positive between disruptions and less waste, etcetera, etcetera.
So I think we will continue to have a strong performance, but maybe not quite as good as in 20 19.
Maybe there is another word of caution, and the reason is inventory. We talked about cocoa beans. We will hold cocoa beans inventory as well for security reasons. We need a certain stock, and that stock will have a higher value and absorb part of that cash. It's something to happen.
So that's the reason we are a little bit dampening expectations here.
So I have a few questions. One is a follow-up on the working capital. Can you maybe specify whether you think that the working capital level relative to the sales, where it stands for last year, whether that's sustainable or whether you think because of the inventory, it will go up or maybe whether you can decrease it further? Then the second question is regarding Amazon. What is your strategy there?
Do you work with them directly? Are 3rd party customers of yours allowed to resell on Amazon? And what do you think in general Amazon does to your brand? Then the next question is, when you think about mature markets, are you still able to gain shelf space there? Or is that something which is broadly stable or maybe even declining?
And then the last question will be on the number of stock keeping units, both for group and for us also. Is this something where you think you're at a good level? Or do you think you can do further streamlining there? Thanks.
Okay. I again, if you can't take over the cash one, I'll take the stock level one. I think if you ask any fast moving consumer goods company whether they are happy with the stock, the SKU level, I hope that you get always the answer, no, it's too many. And I think that's as well the case with us. If you ask me, is it the correct figure?
No, it's way too much. But if you look at it and you say you have consumers, that's going into a direction of personalization. You have trade partners that want to differentiate shade themselves from other trade competitors, and they want to be special starting from a display to a final product. So the demand from the trade of being diverse, I need something else. Here, look at the gold bunnies, and I better don't tell you how many bunnies we have.
That is 10 grams, 50 grams, 100 grams, 200 grams, 400 grams, 1 kilo and the whole thing in white, dark and milk. And to finish it, we go into the flower bunnies. And I don't know whether you have them on your desk here, but there are some then this is just kind of finally the wrapper. But at the end, we wouldn't do it if not at the end, the consumer wouldn't demand and as well the consumer wouldn't be enticed in buying those bunnies. They have different occasions.
Can be the table decoration, can be a gift, can be a small gift or whatever. At the end of the day, it's not that we really, by pure fun, invented, it is needed. I think that's an important one. Now that was this one, and then you have to Amazon was another one. The Amazon one, we have if we look at the whole online sales or the whole sales platforms or sales channels.
We have the typical grocery. We have grocery doing e commerce on their own. We have the e commerce platforms. That's the Amazons, Alibabas and the Tencent and whatever is around there. We have our own stores, and we have as well our own e commerce.
And the buzzword of that nowadays and for the next years will be omni channel retailing. I think that is a network that all belongs together and is interacting 1 with the other in one or the other way. And the platform you mentioned, Amazon belongs to that. Sooner or later, they get even more cross country, and we have to be aware of that, and we have to work with them and as well find a way on how we build those platforms into this omnichannel environment. And I think we are working on that one And that other third parties are offering in their own stores within Amazon the goods, that is a fact, and we have to find a way and as well working with them with Amazon on how we can manage this.
Then the 3rd question slipped me, I think, what was that?
Shelf space in mature markets.
Shelf space in mature markets, I would say, at the end, limited to slightly increasing if you really bring an innovation. If you have something that differentiates us from the rest of the crowd and we say, hey, come, this is a special offer, please give us the space, then we get in. If we bring, let's say, now I think the next level of Lindor balls with a new filling, in all likelihood, the trade will tell us, great, I'll try it out, but take out an old one. I think so there will be relatively limitations.
I think the other question was around net working capital. If you can further improve it, I think inventory, of course, is a question of 2 things probably. 1, planning, can we get better in planning? I would say yes. Like most companies, we are not perfect and can get better.
The better the planning, the higher the sales forecast accuracy, the lower you can go on the inventory. And the second one is also capacity. The higher the capacity, the closer to the delivery can we produce. And as an example, we are expanding our capacity in the U. S, as I mentioned.
It's not ready yet, of course. But over the next years, if you have again a bit more capacity, we can also keep less stock. So I mean to answer your questions, yes, of course, we can still continue to improve our net working capital management.
Thanks for taking my questions. The first one is, are you planning a production site in Asia in the next 3, 4, 5 years? Is this something which makes sense from a capital allocation point of view? And the second question, as it seems you can make your group EBIT margin with North America alone, but what is happening to the European margin going forward? Why exactly was it down in 20 19?
And what you are looking for in the future here?
I think the second one, if you say watering down, maybe what is it, 0.1% or 0.2%? Yes.
So flat basically, it's
yes. Yes. I think it's a little bit maybe exaggerated. If we look at it, we are good in planning and as well try as well to be credible and that you trust worthy. But I think this is now not anything where I could say that or the other thing is the reason.
I think what you have to consider as well is being and staying for the type of business we are in food at a level of 20%, it's not that bad. So that can be fluctuation between 1 and the other year. So that's the one thing. And then the other one, the Asian factory, yes, if you have a certain volume, then you can definitely look at planning something like that. But if you look at us, we are years away from this because the volume we have in Asia is still too low in order to justify building a factory.
Definitely would help in planning and supply chain, but it's not yet justified to build up. Okay. Thank you very much. And as always, there is a opera outside. I thank you once again in those troubled times that we are now in, that you took the time to come to us and hope that we could give you here again an insight into what's happening in Lindt.
And I'm sure you're on closer contact with Martin. Any question, you can ask anytime. Thank you very much.