I wish you a very welcome. Good afternoon, and thanks for coming again. Each year we see us again, same location and same environment, more or less, and the results as well, I hope, are welcome on your side. What we will do today is to go through the results. I give a little bit an outlook and, let's say, on the high level. Afterwards, we will have Martin coming in, giving you the more details on the finances. Before I start, I just wanted to give you again an overview of what's around here. I think to my right you see milk range. This milk range, if you look back, we neglected it somehow and somewhat over the last years. I think it's a very attractive one.
It is premium milk as well, we know that there are lovers around that are really enthusiastic about this product here. With new innovations, we will make sure that we get here, again, additional buyers and consumers. There is, you have to try that guy, that is high cocoa and high milk. As well, something that Nestlé, actually, our competitor, is coming to the market with. Back there, my favorites, everything with hazelnuts. Here, the front there, we are going into a new packaging for Easter. The Easter egg. You might know those big, the Flame Eggs and everything. It was a little bit confusing as well for the trade. This is definitely much better as regards the arrangement and as well the merchandising. Not to forget the Chocolate Spread.
To the left here, just to give you an idea what's going on with EXCELLENCE. We are the leader in dark chocolate. This leader in dark chocolate you see with that range we have here, you never will find in the stores. It's just too many, except in our own stores. Here, again, feel free, please. The ones you haven't tried, the ones that look interesting to you can help yourself when you leave. Try, taste, and recommend, hopefully to your friend. With that introduction, I go over. Before I do that, I have to make you aware that we are going to record this event here. If anybody of you will have an issue with it, please just let us know. If not, we go on with it. The management, I just would like to present quickly.
We have Martin, whom you all know. Rolf Fallegger is responsible for the North American markets and as well, at the same time, for the function of marketing. We have Alain Germiquet. He is responsible for Southern Europe and what we call rest of the world. Again, we will get to that when we talk about these countries. He is as well for the sales function responsible. Mr. Lechner is Germany, Northern Europe, and Eastern Europe, and responsible for international retail. Guido Steiner is international operations. We start, I get into the agenda. The agenda, as I said, I go into the financial years. Mostly figures you already know, but quick summary. Market insights and highlights, going through the three segments.
Martin comes in as well with a sustainability update, outlook. We get as quickly as possible to your questions. The financial year in brief. I start with the confectionery landscape. As you are all following fast-moving consumer goods and confectionery and the big competitors, nothing new. I am sure about it. The general trends we have is, number 1, the trade, the consumers, and definitely as well operations getting more and more complicated. The trade part, we have the hard discounters coming in. We have private labels as well, filling their factories with just going overseas and as well into new markets. That leads again then to price pressures of our trade partners because their situation as well with e-commerce, with hard discounters, and consumer attitudes that are changing on a worldwide basis, definitely is not an easy one.
Now what we see as well, and that is the good thing for us, we see a continued trend to premium. We see as well a value that is increasing as regards sustainability and health, where again, we are well positioned. We have the issue generally of the supply chain. Supply chain, what I mean with that is, look at us as well. We are U.S.-based and Europe-based, our markets that are growing fast. We get to that. This is Asia, this is South Africa, this is as well Latin America. Again, nice challenges and good challenges, but as well, we are working on that one. This is only one thing, you see as well, the whole thing with the discussions about trade barriers and so on and so forth. Brexit. This is the general environment we are in.
Going to Europe, we see a moderate GDP growth. We have all those uncertainties, but last but not least, last year we had slightly positive consumer sentiment. That definitely helped us as well to get to the result we have achieved. Going to North America, then first, still the trade is in reorganizational mode. Let us put it like that. You have the drugstores takeover by Boots of Walmart's. Walmart's buying part of Rite Aid. Less traffic in the market due to the fact that there is a change as well, in the prescription drug sales. All that definitely weakens a little bit that sector. We have, at the same time, department stores like Sears and Kmart, I do not even know, probably now in Chapter 11 or close to it. I think that type of stores is not booming.
While we have, on the other hand, we have new trade channels coming up. The volume growth as it is in Europe is little to nothing, I have to say. Value, a small increase. Those two markets are a little bit similar. What we have still as well as in Europe is an unchanged trend to premium, where we are, again, well positioned with the three brands. Rest of the world, there, Lindt is used to volatility here, because we do that business already for 50 years and more. Foreign exchange, some trade barriers or import duties that are changing. The clear as well politics that are not always easy. We are used to that, so maybe we have the one market up, the other market down. At the end of the day, we have a very nice growth as well, again, last year.
We have as well in that segment, the biggest market is Australia. Thanks to the openings we had in 2011, 2012, and following years, we have now as well already a great base in the countries Brazil, China, South Africa and Japan, where we have not been or only at a very low volume up to those years when we opened the own legal unit. Those are doing well, but still, of course, growing well, but at relatively low sales. In all those countries, the good news is that we have income per capita growing, so that we have segments and groups of consumers in all those countries that are interested and as well are going to increase the sales in premium. Here again, the position of Lindt is a good one. That is the overall view. Here we are getting to these figures.
The first level, I don't repeat, you have seen that already in the sales announcements in January. Second row is our setup of the figures we published today only. Very good is, in our view, the operating cash flow with 10.3% up. That allows us as well in the future, number one, to finance our expansion and mainly expansion in CapEx we need in order to still the volume growth. Second is the buyback we have actually running. Last but not least as well, the dividend payment. We can finance that easily. Net income, CHF 7.6, and the dividend, same level, so we keep our payout ratio at 50%. The buyback program is progressing well, so you can be assured that we will be finishing with the CHF 500 million by July, latest 2019.
The last row I show you here is just something we will get into later with the presentation of Martin. That is sustainability. Give you an example here. We have in total 72,000 farmers we have trained. We buy from, we know them, and we as well can check quality and we can check as well all the issues that are today very important and becoming very important for the consumer. Has to do with child labor, has to do with the sustainable plantation, and as well, logistics. 14,000 employees, total of 550 in retail sales and 460 in own stores and boutiques. That's the key figures. As well, we talked about retail, give you here a quick outlook and overview what we have opened. U.K., Mr. Federer and our maestro together opened a mall store in the U.K.
We opened a new one in New York. We have the one in Fifth Avenue, now we as well, just across the entrance of the Empire State Building, high traffic location. The third store in Russia, the store in Brazil, about one hour north of São Paulo. Japan, increasing in total by 10 stores, we have the Europa-Park Rust, the cooperation. We have a total of three stores within the compound of the Europa-Park. The next chart is going now into the details of the markets. I start here with the general overview where our sales are. Still close to 50% in Europe. The European growing countries growing 5.6%. We have North America, including Mexico, the three U.S. companies and Canada accounting for close to 40%, the rest of the world.
If you see the growth pattern here, 2, 8, 5, 6, 10, 3. This year, again, like last year, you will see definitely at the end of 2019, a growth of the rest of the world. Going into Europe and the market split in Europe, Germany has the biggest, followed by France, Italy, and the U.K. The ranking more or less the same over the last years. The one and upcoming country is definitely U.K. with a 10% growth, compared with in Italy with 3% growth. It could be that sooner or later, the U.K. company will get closer to the number two, that is France. The markets, as I said already, generally flat in volume and slowly growing only in the value. In all those countries, we see an expansion of hard discounters and as well, the private labels.
As you can imagine, and as you can read as well, Lindt is exposed to pressures from the trade to increase conditions. Here again, we are in a position, fortunately, that with our positioning, with the margins we already generate for the trade, we are in a relatively good position. Some highlights out of Switzerland. The consumption per capita in Switzerland the last two years is decreasing. As you can remember, there was always the Swiss consumers being number 1, named with about 12 kilos per capita. We always then as well said, this is a little bit not totally correct, and the reason is that in those figures, you have as well the tourists that are counted for. We always said that the Swiss without tourism may be at the level of eight to nine kilos. That is where we ended now.
The reason is not the tourists only. It has to do with high temperatures last year. Once you get over 30 degrees, your appetite for chocolate is going down a little bit. The second thing is still the border sales we have, and in the statistics, the sales of the discounters, Lidl and Aldi, are not included. At the end, I would guess that the consumption per capita last year was in the neighborhood of real consumption of about 10 kilos instead of what we had in the past, 12 kilos. Nevertheless, if you look at the Swiss company, that includes exports and duty-free, we were growing by 1.6% in sales. Could open a store, the number 10 in Basel, the first downtown store.
All other stores, except that one here that is close to Zurich at the back of the factory, all the other ones are more in tourist locations. We have the Jungfraujoch, we have the Titlis, we have the Interlaken. Tourist locations that are as well from a traffic point of view, there is natural traffic coming in. Now, I think we can see how that will work. The first experience we made over the last three, four months in 2018 were positive. We had opened a shop in shop at Bahnhofstrasse, Zurich. If you go to the first floor of Bachmann, you will see there a shop in shop of Lindt. At the same time last year as well, we had a pop-up at the train station in Lucerne. Innovations, you all read and accompanied and hopefully already tried our Chocolate Spread at the back there.
If not, please help yourself when you leave, and you hopefully will never again buy the competitor's product afterwards, but that remains to be seen. News on EXCELLENCE and what we had done as well is with Roger Federer at Circus Knie, a cooperation with Winterhilfe Schweiz, where we had a charity event. That's highlights on Switzerland, and if I'm right now, we have following this one, yes, a movie that will show you again the One. Number 2, this was not a TV production, this was a digital production. We did not air that on TV, just on digital, showing you as well that here we use all possibilities that we have in order to use different media. We try out, see on how it worked. That was last year. Going to Europe, and here again the highlights.
You see in a summary what you can read as well in the annual report. That is the sales growth of our different countries. U.K. as number 1 in Europe. Western Europe with 11%, followed by the other ones. We are very proud, of course, that in the single biggest market, Germany, we could grow again over 5%, with 5.4%. Definitely as well, Austria, another country where you can say it's a saturated market. It is consumption per capita, not growing, but Lindt able to grow 10%. Last but not least, clearly at low levels, we have Czech Republic, Poland, Hungary, and as well Russia, that were growing high double digit. We were focusing in all those new countries, but as well in the main markets like U.K., we were focusing our efforts on LINDOR and EXCELLENCE.
Those are the two products that are differentiated, where we can get into the trade and as well win the consumers with a differentiated product. What, of course, is not that easy with such a product because here you have mostly a lot of local competitors, mainly in the Anglo-Saxon countries. What other things are new? We have HELLO Bites. We revitalized HELLO somewhat in the market. We have Caffarel coming in with an artisanal product. We added LINDOR Mint, mainly in the U.K., where it worked very well, and there you have as well on here, EXCELLENCE 78. Last but not least, we as well in Europe, we launched in some countries like Spain, like Italy, as well Germany, we added the no sugar added products. You will find some here in the room, and I as well recommend you to taste it.
Definitely, it's not the same taste, we know that. We address with the product some consumers that just would like to have products, no sugar added. How big is the segment? We will find out. We have the offering and of course, we try, hopefully not too arrogantly, to say it's the best no sugar added product, but you will find out. That was Europe. Now again, another example of a TV copy we made that is Champs-Élysées in France. The seasonal products, a lot of times we are not really putting a lot of emphasis here in this room or as well with you, be assured that Easter and as well mainly Christmas. Christmas with assorted products, assorted pralines are very important to us. See now the Champs-Élysées new TV spot for France that we aired in November, December.
Let's move from Europe to North America. As I mentioned already, there are three countries included here. There is a very tiny one you see that is Mexico with 0.3%, so it's not really a big one as you can imagine. The company was reactivated. It was dormant for one, two years, and we reactivated it again in March 2018. It's only six, seven months of activities, and on top we had to take over the distributor stock. It will grow. It will be much bigger this year, but it was a good start and we are very happy about the development there.
Canada with a total of 5.9% of total sales, growing double digit as we mentioned already, and the U.S. with the three companies, Russell, Ghirardelli, and Lindt. If we look at the total market, 2018 consumer sentiment, thanks to all the initiatives of the government, be it starting from tax to other things, was positive. We had, from that point of view, a positive consumer sentiment. At the same time, we had, as well, a premium segment that, again, was growing faster than the total market. We had on us only limited impact of all the trade disputes. Bear in mind that we have six factories in Europe and we have six factories in the U.S. The six factories in the U.S. are net exporters. The net comes from import Europe for seasonal goods and comes from export from the U.S. to Canada.
We are net exporters. At the end, definitely a good citizen from the U.S. point of view. If we look at the barriers, thanks to our split of factories, we are in a good position as well. We shouldn't be in any trouble, whatever happens there. That is for the introduction. If we go again into the highlights, we have 2.8% growth. You will say, "What is so special on that one?" It has to be seen mainly in view of what we achieved in 2017. We were negative in the whole area, and now we are positive to 2.8% . The first, let's say, step, and we get to that when we talk about Russell Stover in the next chart, was positive. We consolidated the logistic network in the U.S. in mid-year.
Definitely, as you can imagine, when you do something like that, it's a huge project. We, as well, we cannot deny that we had some issues. We had some issues on sales, and we had as well, some issues on cost. What does it mean? We had so far three companies that went directly from factory or one intermediate warehouse to the trade. That means we had, a lot of times, not full truckload to trade. Not full truckload means up to one or two pallets that were given to some distributor trucking that finally brought it to our end destination. Now what we did is we said we want to go full truckload from factory to five warehouses that are shared. From the five shared warehouses, we go again consolidated full truckload to the trade.
At the end, we should, once it works well, and we need some training here as well, we should be able to bring down logistic costs. What was going a little bit against the trend last year was that we had, again, driver shortage. We had the increase in fuel and so on and so forth. That came on top. Just to give you an idea, we had here a lot of work and as well, something that definitely will be an investment for the future growth and as well to bring costs down. Lindt and Ghirardelli were growing faster than the market. The good news here as well is that not yet consolidated, but I get to that, we had only a slight decrease in the Russell Stover sales.
We get to Lindt Canada, thanks to store network expansion, thanks to marketing initiatives and so on. Let's say premium growth again, market share growth, we were growing double-digit. Here now again, next is a movie I will show you. It's TV spot that we produced and aired for the Ghirardelli company for their famous and as well, well-sold Ghirardelli Square.
Rich, indulgent chocolate with a luscious caramel filling. With love from San Francisco. Ghirardelli Caramel Squares. Makes life a bite better.
That was for the first time, I think, November, December was aired, and as well, we are looking forward to investing some more money behind this TV spot. As you are very critical and you want always to know the details, we said we add here a chart just about one company we didn't mention a lot before. That is Russell Stover. Number one, the sales performance was in line with our expectation. That means we have only a small decline. Number two, what we had done is in 2017, we relaunched the sugar-free line. You will maybe ask, why are they talking always about sugar-free? The issue is that Russell Stover, when we bought them, and as well still today, we are the leader in sugar-free chocolate.
Deliberately, when we looked at the company before acquiring, we had some expectation that this will be a very important category we can get in thanks to Russell Stover. Last year, we relaunched in 2017. Last year, we extended distribution and had success. We were gaining share, this year now we will add some bars to the assortment. To the left, you see the activities we do for this year. For this year, we have redone the packaging. The packaging for the main product, that is the assorted box, has been the same for the last 20 years. We had to make a compromise between factory machinery and capabilities, that is the result. It is a copper range. It is an upgrade not only in packaging, but it is an upgrade as well in the pieces.
We made a huge survey with consumers, and I think you can do the same. If you take a Lindt praline box, you put it on the table with your family, there are always the same pieces being left. Now you can ask your question, which one is it and why nobody is eating it? In our family, it's mostly the coffee variety, because maybe 10% of all consumers like coffee, that is basically what is left with us. Here again, we did the same. There were too many pieces and bad ones. We had to rearrange that. We made less, and of the good ones, we doubled or tripled. I think, this is an assortment set up relaunch that we did, as well is now in the market and will have to prove itself on how it works.
The jury is out, we are very positive on that one. We have the big Valentine's heart sales. Here again, on a yearly basis, we are updating the heart assortment. Here again, we are doing improvements. Did improvements the last year. We were flat in share in Valentine's 2018. As well, we were flat in Easter 2018. We could stop the decline. If we look at 2019, we are expecting flat performance to a slight growth compared with 2018 in the running year. Rest of the World. This next, the third segment, it's only 13% of our sales, but the nice thing is it is growing 10%. It is dynamic in all markets we are there.
Of course, we are very proud that our recently opened, that means 2010, 2011, opened new legal units in Brazil, China, South Africa, and Japan are doing very well. If we go into the highlights here again, the double-digit I get later just in the next chart to it again. New distribution center in Tokyo, indicating to you as well the old one was too small. We had to move, always these things are not that easy, mostly a little bit chaos and confusion, we did it well. We have to adopt, be it products, fillings, formats as well, sizes of our offering. We have to adopt that in those countries to the local cultures. That means if we are going into Asia, there is tastes where you probably would say, "Hmm, I'm not really running for that." It's matcha.
It's a tea, matcha tea. It is well known, but in Japan and China, it works well, and we have to adopt as well and are able to adopt with our products to those products. A next thing we as well have to be able to adopt, that is talking about media. Here in Europe still, we know that TV media for what you invest per hit is still the cheapest you can do, and you reach most consumers that way. That is different in other countries where digital is already much more spread and as well used, mainly by the younger consumers. One example I would like to show you is now as well on the following charts. That is a video we did with a newly hired Chinese actor. This Chinese actor has, of course, already some millions of followers.
If you then bring the video to the millions of followers, then there is a replication effect that is quite big. What it goes as well in is that the Chinese consumers are used to watch these digital presentations on the iPhone or on the mobile phone. What we did is we had about two minutes TV-- or not TV, digital spot we were shooting with the lady. The lady has about five, six million followers, and it duplicated at the end to a total of 90 million clicks. I cannot promise you whether all the 90 million have seen the full movie, but at least it gave some exposure. I think that shows you as well, those markets, they work differently than we work here. We as well have to adopt not only in product taste, but as well in media.
Look at it. It's, as I said, it's quite a long one, but. We are not perfect and as well you can say a lot about that movie. Maybe it's too long, maybe it's not enough equity, whatever. I think at the end of the day, here in those markets, what counts is speed, not necessarily perfection in everything. I think what we are talking here is storytelling and storytelling, that is a story we have to follow up. Just to tell you, we made three movies of that type here within 12 hours. I think that shows you a little bit if we would do things like that here, we wouldn't be finished after three days. This is really, you entered into a gymnastic hall that at 10:00 P.M. the day before was just empty. Overnight it was filled up with everything.
In morning, 7:00 A.M., the lady was there, and she stayed there until evening at 7:00 P.M., and we had three to four different digital movies already made. This is a speed where you just have to get used to. I think it was really amazing. Again, we try just to show you, we have to approach those markets in a different way than we may approach them here. Last chart for that section of the segments is to come back to you with what we showed you last year. Same occasion here in March. We gave you a little bit an overview last year about those five markets, here again, I would come back to you, showing you we did what we promised and as well what we expected. We were growing between 20% and 40% in those five emerging.
Japan is not an emerging market, but the other ones. I think that as well will be the reason that I believe that this year again, we will have a 9%, 10%, 11% growth. We should have it in this rest-of-the-world markets that this will gain in weight again. I finished, and I will hand over to Martin for the financial results.
Good afternoon, everybody, as well from my side. Of course, I'm excited to present you the financial numbers. I think there were not too many surprises for you in terms of the set of numbers. You knew the sales numbers already. Organically, we grew 5.1%, within expectation. In CHF, 5.5%. I think the good news is we grew profit faster than sales. EBIT, we grew about 7%, EBITDA also about 7%, and net income even 7.6%. That of course means that our margins, EBIT margins, EBITDA margin, also net income margin, all increased by 20 basis points. Also within our expectations on the lower end of the 20 to 40 basis points guidance. I think overall, a very good set of numbers. What does that mean for our shareholder returns, for our dividends?
We are going to pay out a dividend of CHF 1,000 for the registered share, CHF 100 for the participation certificate. That's an increase of 7.5%. It means that we will have a dividend yield of 1.4%, again, very similar to the last year's. Payout ratio is again at 50%. I think also good news, our market capitalization is at CHF 16.5 billion at the end of 2018. We have been able to increase it by about CHF 700 million. In a difficult environment from a stock exchange point of view, certainly in December, we see also quite a turbulent month. I think good news that we were able to increase our market cap as well. Sales growth, we have seen quite a few details already from Dieter, 5.5%. We have seen in Europe, we had a very good year at 5.6%.
Of course, the two important markets, Germany and the U.K., once more, performing really well. Eastern Europe performing really well with double-digit growth. I think it also has to be mentioned in Austria, the double-digit growth, which is surely a very good achievement in a saturated market. Rest of the world, we have seen, as expected, fantastic results in Japan and in Brazil, mainly driven by our retail expansion. Those two markets are definitely two markets where we are really strong and really focusing on retail. Also very good performance in China, where we are really strong in e-commerce, as we have seen, and also good performance in South Africa. North America, the good news here, as Dieter said, we have definitely increased the performance. We have improved the performance.
We are now at around 3% last year, despite the fact that Russell Stover is slightly negative, which means that Canada was great, double-digit. It also means that Ghirardelli and Lindt in the U.S. have grown faster in the market, and we have gained market shares. For the organic growth of 5.1%, I think couple of things here. We have given a guidance of 5%-7%. Of course, the past does not always tell you what will happen in the future, but if you anyway look at the past, in all the years except 2007, we have at least been in this range of 5%-7%. 2017, of course, was the year where we lost quite a big chunk of sales in Russell Stover with 12%, around 12% decline in the sales in Russell Stover.
Definitely, this shows us as well, I think, that we definitely should be able to achieve this 5%-7% in the next years. For me, also a good picture if I look at the split between volume and price mix. Volume growth is the key driver in 2018. 95% of the total sales growth basically came from volume. That means that we have been able to recruit new consumers, so that's good news. If you want to gain market share, you have to grow volume at the end of the day, ideally, because it means that you are recruiting new consumers. I think also good news here, because I remember in many discussions I had with you, we always were discussing, okay, price mix, what happens there? Because of course, the competition has been very aggressive last year in terms of price promotions, especially.
As you can see here in the numbers, we have been able to keep price mix flat to slightly positive. I think in an environment with clearly lower raw material costs, that's really good news. That as a premium brand, we have been able to keep price mix flat to slightly positive. Forex, not so much in our hands. We had a slightly positive development in 2018, mainly driven by GBP and by the EUR, which both strengthened slightly against the CHF, and the U.S. dollar weakened slightly against CHF. In balance, slightly positive impact of 0.4%. I mentioned material costs. I think if you look at these numbers, basically total value, material costs are at CHF 1.43 billion, just a little bit higher than in 2017, 0.5% higher.
Bear in mind, as we have just seen, we grew sales by 5.5%. Of course, this means that the ratio of material costs to sales has improved by 170 basis points. We are lower than we have been in any of the last five years with 33.1%. Key driver, of course, the lower cocoa bean prices. I think we have bought at good levels relatively early. That was, I think, also a good management from that viewpoint. Packaging material is more or less stable in 2018. If you look a bit into the future, you will think, okay, what does it mean for 2019? I think from a packaging material side, we definitely have cost inflation. Packaging material is going up, not just for us, for everybody in the industry. There is some cost pressure from packaging material.
In terms of raw materials, I think the important ones are cocoa butter and cocoa beans. The black curve here is the cocoa bean future market in London. Over the last months, it has been basically trading between GBP 1,600 per ton and GBP 1,800 per ton. It has really been range bound in those two brackets. If you now look at the last 12 months, it's slightly increased. I would say overall, there is some pressure coming from cocoa beans. You can see here also the cocoa butter ratio. The cocoa butter ratio is slightly down, but the price of one ton of cocoa butter is the butter ratio times the futures price. The futures price is slightly up, the ratio is slightly down.
If you now did the maths, you can see that cocoa butter per ton is more or less the same as it was 12 months ago. In summary, butter, more or less flat. Cocoa beans, slightly higher. Which means in total, I think material costs, there will be a little bit of cost pressure, but it will not be huge. I think we are still at attractive levels if you look at the long-term average on cocoa bean prices. With GBP 1,600 to GBP 1,800, we are still at good levels. Personnel expenses. I think we have really two key drivers here. Number 1, our factories. As Dieter said, we have 12 factories, 6 in Europe, 6 in the U.S. We have some efficiency increases there, so that's good news. On the other side, we have opened 50 stores.
We are now at 460 stores, that's more than 10% additional stores. Owned stores or retail in general is personnel intensive, it means that we have higher margins as well because we don't have the trade margin, but it also means we have higher personnel expenses. This number here is really those two trends. On the one side, efficiency in the operations, on the other side, higher personnel expenses coming from the retail business. That means that we have slightly higher costs compared to the sales increase. The costs here are going up 6%, the sales are going up 5.5%. That's why a slight increase in personnel expenses as percent to sales. Number of employees. It's exactly the same story here, 600 additional employees. This is really coming from the additional stores mainly. Operating expenses. This is an interesting one.
I think we all talked about the increased marketing investment that we are planning on the one side, we have already heard from Dieter logistics costs. Those two things are in operating expenses. On the one side, very good news. We have been able to increase our marketing investment not only in the U.S., but also in the U.S., both in Europe, rest of the world. We have done more TV advertising, more digital advertising. We have done more consumer promotion, sampling activities. That's good news. On the other side, in the U.S. as you have surely heard, not just for us, for everybody, transport costs really increased extremely quite in a steep way. Shortage of drivers being the main challenge there and of course, some other factors as well. We also had to change to our new logistics network.
We always said in 2018, there won't be synergies because we were always asked, "Okay, will there be synergies?" We always said, "No synergies in 2018." We need some time to really start it up. It's normally in a big project like that to have some teething problems in the beginning. That's also what happened as we expected, more or less. That was really the second driver here. On the one side advertising, on the other side higher logistics costs. That meant 130 basis points higher operating expenses went up from 25.2% to 26.5%. What does that now mean for EBIT? It means we have been able to grow EBIT, as I said before, 7%, about CHF 40 million, and we are at 14.8%, 20 basis points improvement.
As I said in the beginning, I think that's a very good result considering all the ups and downs I've just explained you. EBITDA, same story here, 7% growth, 20 basis points really driven by the better EBIT margin. Capital investments. When we were meeting one year ago, we explained to you CHF 185, of course, it's a low number. It's a low number also because we had some shifts of some of the projects from 2017 to 2018. When you look at the last five years, you can see the average is about CHF 230 million, between CHF 230 million and CHF 250 million actually, if you exclude 2017. The CHF 257 in 2018 is business as usual, I would say. It's just in line with expectation, in line with our expectations and in line with what I discussed with you as well in 2018.
When we look into the future here, I think it's very important to bear in mind that we have this big investment project in New Hampshire, Stratham, New Hampshire, in our Lindt factory in the U.S. We have communicated that we are expanding that factory and that we are investing between CHF 250 million and CHF 300 million over the next three years. That's between CHF 80 million and CHF 100 million per year, if you break it down. That means that our normal run rate of CHF 230 million to CHF 250 million on CapEx will be higher by this CHF 80 million to CHF 100 million, more or less, right? That's why we are expecting CapEx for the next three years to be between CHF 300 million and CHF 350 million. Tax rate. It's a bit slow here. Depreciation and impairments. Depreciation impairments is going up slightly from CHF 170 million to CHF 180 million.
You have seen the average CapEx for the last five years was about CHF 230 million to CHF 250 million. If every single year we invested CHF 230 million to CHF 250 million, of course over the long run, depreciation would also be CHF 230 million to CHF 250 million. The depreciation is catching up little by little. I expect depreciation over the next years to go up each year a little bit. Probably to about 4.3% next year. That's also is in line with our expectations. The tax rate, I think good news here. We have been able to decrease the tax rate further. If you compare it, 2014 we were at 27.5%, now we are 21.5%. I guided here for about 22%-22.5%, we were even slightly better. Two key drivers here for sure, lower tax rates in some countries, lower tax rates in the U.S. as well.
In the U.S., as you probably have heard, the tax rate went down from about 38 to about 28, so about 10 percentage points. In some other markets it also went down. We also, I think, the team did a good job in managing the taxes in general. A very good picture here. All this taking into account net income increased by 7.6%, so slightly faster than EBIT because of the lower tax rate. On the other side, we had also slightly higher financial expenses because of the higher interest rate in U.S. dollars, especially U.S. dollars interest went up as you know last year. That meant slightly higher financial expenses for us. In balance, I think very good number here, 7.6% higher net income.
Net financial position, I think it's also good to see that we are now basically debt-free, just minus CHF 13 million net debt. We have improved it by CHF 140 million. The big two things here are first and foremost, the free cash flow. The combination of operating cash flow and CapEx is about CHF 400 million, similar to last year. Last year was CHF 405 million. I told you last year that the years before, the average years before was normally about CHF 250 million free cash flow. Now last year, 2018 and 2017, we have been at CHF 400 million, which is a very good achievement. As you saw, when Dieter presented in terms of operating cash flow, it's an increase of more than 10%. We also gave money back to the shareholder, CHF 350 million, CHF 340 million, combination of dividends of CHF 220 million, the share buyback of CHF 120 million.
That brings us to minus CHF 13 million. If you now compare this with EBITDA of CHF 800 million, we are in a very comfortable and very good position in terms of this ratio. Definitely good news here. This picture is slightly changing in 2019 because of the new leasing standard, just the new definition of net debt, because we'll have to book the lease liability. We will book the assets and also the lease liability, and the lease liability will be part of net debt. This is just the way how we will present this. The numbers themselves will still be, of course, hopefully similar as the ones I'm just presenting you here. That's a new element that will be part of the calculation of net debt, not just for us, for everybody else, of course. Just a heads up. Okay.
Balance sheet, very strong as well. Not just the liquidity, also the balance sheet is very strong, more than 60% equity ratio. The equity is now at CHF 4.5 billion in total. Still a very strong balance sheet. With that, I'm now going through the next topic, sustainability update. Just a few key figures here first. A few years ago, we started the Lindt & Sprüngli Farming Program for cocoa, and we are currently working with this program in five different markets. Ghana, which is the biggest one, Ecuador, Madagascar, Papua New Guinea, and since 2018 as well, Dominican Republic. Our goal is on the cocoa beans to be 100% traceable and verified in terms of cocoa bean sourcing by 2020. On cocoa butter, same by 2025. On cocoa butter it takes longer because it's more complicated.
It has additional production steps compared to the cocoa bean, that's why cocoa beans, that's why the whole traceability, just to make sure that it's fully traceable takes a bit longer. 100% on beans by 2020 and 100% on butter by 2025 is the goal. On the beans, we are now at 86%. If you look at traceable and verified, if you just look at traceable, so without the verification process, which is done by a third party, we are at 97%. I'm very confident that by 2020 we'll get to 100%. It also means that between butter, chocolate, and cocoa beans, we are roughly at 50% now. We also have a goal for hazelnuts. By 2020, we want to source 100% of the hazelnuts either from Italy or from sustainability programs in Turkey. 100% there as well by 2020.
In 2018, we were at 90%. As well here, I'm confident that we will achieve that. We are investing more than CHF 10 million per year in the sustainability programs, and as Dieter said, we work with more than 72,000 farmers on these programs. I mentioned the 86% here as a key figure. If you look at it by origin, it's already 100% in Ghana since 2017. It's about 75% in Ecuador. It's also 100% in Dom Rep, where we have started the program. It's about 20% in Papua New Guinea and in Madagascar. As I mentioned, we are on track. In terms of the farmers, of course in some countries we work with more farmers than others. It depends on the size of farms those farmers manage.
If you take a farm in Ghana or in Madagascar, the average size of the farm that the farmer manages is about two hectares. In Ecuador and Dominican Republic, it's about five. That's why in Ghana we work with 60,000 farmers, in Ecuador, about 5,000. It really depends on the size of farm. Also very important is the training and knowledge transfer, because if you look at an average farm in Ghana, the output of it is much lower than Ecuador, for example. In a great farm, you can get up to about two tons per hectare. In Ghana, it's more about 300 kilos on average. Training is important. We are offering one training each month. The goal is that every single farmer is trained once per year.
The typical topics in the training are things like the fertilizing, how about organic inputs, deforestation, child labor, how to prune trees, et cetera. We have also more than 10,000 farmers benefiting from additional income opportunities. As I mentioned before, oftentimes the farms are not so big, two hectares, so the output it's not necessarily enough to produce enough income. The cocoa bean crop is not a stable crop. It's a seasonal crop, so it doesn't bring the same income every single month. That's why we work with the farmers to diversify, especially into other harvests like fruits, vegetables, et cetera. We also help the farmers with starting capital, basically to diversify. That's also a key initiative.
Even if we have a great crop in one year, and even if the farmer has diversified into other crops, they still struggle sometimes with the infrastructure of the community where they live. Oftentimes they or their wife has to walk for many hours to get to fresh drinking water. That's the reason why many years ago we have actually started to build new boreholes for fresh drinking water. We have already built 260 new boreholes, and alone in 2018, it was 60 new boreholes in Ghana. That's important. For infrastructure, there are other important topics. One example is our schools. Of course, we don't want the children to spend time on the farms. We want the children to go to school. That's why we also make sure that we refurbish schools so they're in a good state.
We are currently actually working on the refurbishment of about 30 schools in Ghana. That's another very important topic. For all of you who want to know more about sustainability at Lindt, please visit our corporate website. There is a tag where you can check on sustainability. We also have a sustainability report, which we publish in April. There you will find also all the details about sustainability. You know I talk now a lot about sustainability in cocoa. We have, of course, sustainability in other raw materials. We have environmental management. We have human resources, et cetera. There are more topics, please visit our corporate website.
In summary, we have seen on my financial slides, I think, in expectations our sales profit grew faster than sales, which is good news, as well in line with expectations with the 20 basis points improvement on the EBIT margin. I think on sustainability, we have also seen that we are where we want to be. We have targets 100%, especially the one on cocoa bean, which is more or less around the corner, and we are well on track to achieve that. With that, I'm now handing over to Dieter again. Thank you.
Thank you very much. I come now to the end, and the end is the outlook, and I have two charts to the outlook. Number one is environment opportunities. I go quickly through the environment. We don't expect that to change. In developed markets, the chocolate market consumption will in volume stay more or less flat. What we have as well, and what we see is the trend to healthy, low sugar, high protein snacking products. That is definitely a trend that we see in the market. The next one is emerging brands with specific sustainability. You have in a lot of countries, you have new brands that were not there for about five years or 10 years ago. They are positioning themselves on one topic, and that one topic can be, there is one guy in Holland called Chocolonely or Tony's Chocolonely.
Maybe you go to that website once. He's saying, "I'm selling slave-free chocolate." Seems to work, seems to grow, CHF 40 million coming up and popping up. There are brands in France that are coming up here as well, Ethiquable. They are just based, let's say now here on sustainability. They could be based as well on another topic. Here again, what is our answer? That will continue because the hurdle of having to go to wholesale, having to list a product, having to make sure that advertising is done, that hurdle is down, as you all know from your competitors or from our competitors you follow. I think that is now much easier to get to the consumer with a very specific positioning. We have omnichannel, here again, a big word. For what it is, at the end, it is get to know your consumer.
Know more about the consumer, about the preferences, about the wishes, and clearly as well about what they like and don't like. How to do that? You have to get as close to the consumer as possible. Omnichannel means how can you link all contacts you have with the consumer from whatever reason and whatever location it is that you get to know them better? I get to that later. Finally, increasing supply chain complexity. This complexity I meant before, 6 factories Europe, 6 factories U.S., but Brazil, South Africa, and as well Asia. We have to cope with that, and not only us, but as well other companies are in the same situation. Opportunities for Lindt. Flat chocolate markets, again, I repeat it and I repeat it again.
The good news here is that we are in a well-established segment that is the higher end of the market. The higher end of the market means, be it in packaging, be it in quality, be it in assortment we are offering, we are fortunately here still in a segment that is growing. I give you the example of Germany, where you have flat markets. We were growing last year 5%, 6%. I give you Austria, flat markets, again saturated. We were growing 10%, 6%. We have the U.K., where we gain shares as well in the U.K. It is not booming from a market point of view. We are able, with the assortment we have, to grow. That is in developed, but as well in emerging, as you have seen, we're making our first steps.
We are adopting, we are learning, and we are doing our best in order to get ahead there as well. If we look at the trend to healthy. This is clearly a very complex situation because at the end the question is what means healthy? Because you have here again, a lot of consumers in different pockets of interest. For the one consumer, healthy is no sugar added. Are then they okay if the no sugar added is added up with fat? That's an easy one. We could add cocoa fat and reduce the sugar, but I don't know whether that is good because at the end, 1 gram of fat has a little bit more calories than 1 gram of sugar. If it is not sugar against fat, the next question is, what is it? Is it in calories?
Here again, you need another pocket and you have to develop for all those consumers we would as well like to satisfy. You have to develop at the beginning, smaller markets or smaller products where you can satisfy those desires. If it is, for instance, snacking, high protein. Here again, I tell you we have it, because high protein means nuts, and nuts means 33% nuts in a 200-gram bar. It is there. Nuts, protein, cocoa as well, desirable and few sugar. These are the things we still have to analyze. We as well are willing to develop new products in this area, but first we have to understand the consumer and know what is the demand by the consumer. You have seen maybe already and if not, please try.
We have a no sugar added product here in the room that as well we are launching first in our own stores, but as well in some countries we are already on shelf. Satisfying the needs of one group that would like to have that kind of product, and there are other possibilities. Basically, we are in a situation that we are in a product that at the end you indulge yourself. You eat the product, you like the product, and you don't care so much about what is now the detailed sugar content or the detailed fat content. You know that it is an indulgence product. Even there we are well positioned. If you talk about the emerging brands, here again, Martin explained in detail what we do in sustainability. We invest a lot. We started more than 15 years ago with it.
We have the full traceability back to the farmer. We know where the products come from, and we produce bean-to-bar. I think that is a very important feature we as well in the communication we have to use much more than we did so far. The omnichannel, I started already explaining what does it mean? It means the consumer. Thanks to 460 stores, that is already the start. We have direct contact with the consumers. We know what they prefer. We put two years ago the bread spread on and said, "Maybe it works, maybe it doesn't work." Two years later we realized that the bread spread is ranking the product number 8 in our own stores.
You say, "Okay, if that is in the own stores, why don't we try and put it in the one or the other market in wholesale?" It's not another LINDOR, but it is definitely a chance to be as well present in the store, in wholesale now, in a new category. Getting to know the consumer. The same is with e-commerce, where we as well are active. The e-platforms of the Alibabas and the Amazons and the Ocados and who is around there already well established. Last but not least as well, of course, the e-platforms of our direct customers. That's the Tescos and the Edekas that are as well experimenting with it. This is all in all, you can say, omnichannel.
We are present in all those channels. We have to make sure that we get via direct contact to the consumer as much information as we can. Last but not least, the supply chain complexity we are seeing in the environment that is increasing, be it fuel costs, be it trade barriers, be it time to delivery. Here again, we have to get better. We work on it, but we have as well already good starting base. Planning is always the first thing, followed by optimizing purchasing as well from a point of view of cost. Last but not least, the logistics and the production. Opportunities are here. We are working on it. You can be assured that we have projects for all those topics. As well, we'll make progress.
If we have something that we can tell you, we'll do that latest in a year's time. That brings me now to this chart that is 5%-7%, as we have announced in January already, and an EBIT growth of 20-40 basis points. We did not have the chance in January to explain to you why we have reduced the sales forecast mid, long term. I think I just read in some of the comments that came after that adjustment. Number one, clearly, the last two years were already a sign that keeping the 6%-8% doesn't make sense. We want to be credible and as well, we want to be reliable that what we say, we as well can fulfill.
That is, of course, always the first and only issue we have to deal with because credibility is very important, mainly with you and as well the investors. The other thing is that when we established 6%-8%, that was in 2007, so it's some time back. At that time, there were still the lucky times where all FMCG producers could increase their prices, neighborhood of 1%, 1.5%, 2%, depending on the market. You had a lot of inflation in your sales growth. When we looked at that and when we established those targets, we were saying 1.5% price, 1% mix. The rest is volume. If you look at it today, then it is 0.1 mix, 0.2 price or vice versa. The rest is volume.
We are growing in volume only. We don't have a lot of impact from price. If you would add price, then we would again be back in the range. Despite all what you see and what you know in the U.S. I think that is maybe I wanted to use that opportunity to tell you here, why did they now decrease the sales goal? I think it has to do with that. On top of that as well, clearly the fact that in the U.S. we had the last two, three years a weaker environment. For 2019 financial year, we keep that bracket. As well, we do all efforts in order again to be as credible as we can so that we achieve those targets for 2019.
The last two charts that is about the Chocolate Competence Center to give you a last update on that one because you have seen the building. The building was finished in fall last year. I'm very happy that we finished that building without any trouble with the factory because if you do something like that, if you just look at the cement and the holes we dug and everything else, the train up there, the train line, there would have been a lot of things for disaster. Now the good news is nothing happened, and that's great.
It's up, and now once it stands there, the big trouble will be on how can we now fill the building with content, and that will take a lot of time because as you know, we are putting in there a pilot plant where consumers and as well visitors can look at what we do. We put in a museum, we put in a coffee, we put in a store, we put in a Chocolateria. A lot of, let's say, now software still to be put in in that hardware. The opening will be foreseen for the second quarter, in the second quarter 2020. I assume it will be towards the end of the second quarter. Some pictures of the ceremony when we raised the building and as well finished the building. With that, I finish.