Good morning, all here present in the room, but also virtual. Gives me goosebumps when I watch this clip. It's an internal clip which has been produced, obviously, in the US for a US sales meeting which took place last November. It is for internal use, but Dominik somehow thought it may also be good to share how we internally are promoting our spirit, how we are aligned, and maybe you take out of these minutes more about our performance and also going forward than maybe Adrian and I can add in the next 1.5 hours about Sika's success story. I'm very happy that you are all here and that we can present our last year's result, including of course an outlook into the current year, 2023.
Summarizing 2022, it has been for us a year of records. Records where we are especially proud to first time reach above CHF 10 billion in net sales. I personally remember when we reached CHF 1 billion. That was in 1989, and it took us a bit of time, but now we are at CHF 10 billion, and the trend is going further up. To me, but also to the whole organization, it's a milestone to break through this CHF 10 billion, CHF 10.5 to be precise. At the same time, also, on the bottom line, on the EBIT level of above CHF 1.5 billion, that's an outstanding achievement given the challenges that we are facing last year. It has also been a year where we continued to invest in our inorganic and organic costs. We had 2 acquisitions.
We expanded our footprint, significantly across the globe. Also mid and long term, our investments into innovation with more than 100 patents and inventions, even at 168, are signaling that our pipeline is full and healthy going forward. Definitely the 6.9% CO2 reduction is another remarkable achievement if we consider our initial aspiration was to reduce 10% over multiple years, and we have achieved.
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more than double and are adding to this. It is the drive for a more sustainable future that we have here also achieved in 2022. Across the globe, our regions have delivered tremendous growth, especially here, Americas with above 25% or 27% to be precise, but also global business with above 20% growth given the slow recovery in the automotive production rate, clearly an over proportional growth there. Asia Pacific, almost 15%. Also many challenges, especially towards the end of the year with the China lockdown or the China lifting of the regulations, bringing this market very much into a, into a slowdown. EMEA, which had a very strong start last year. The Q1 was still a year where we had very nice volume growth, given.
With the war in Ukraine and all the other elements that you're fully aware, it's turned more into the negative area. Here again, it's not all of EMEA, it's especially Europe that has seen this challenge. The Middle East, Africa are extremely well-positioned and have grown and contributed nicely to the overall 15.8% growth rate. On the non-financial, I think we can be quite proud of the achievements here with the continuous reduction in waste, in energy consumption, in water reduction, safety improvements, and also to switch our own Scope 1 and Scope 2 demands on energy to renewable energy, reaching now almost 2/3 of our electricity coming from renewable sources.
An overview about the investments which I mentioned here, the 2 investments we did in Canada and in the U.S., as well as the 2 divestments that we did here in Germany and in Switzerland, and then the opening of the new plants with the last 1 added in China in Chengdu at the end of last year. A strong investment into future growth, into providing the footprint for expansion going forward. We like this chart a lot because it's not just year-over-year. It shows a very steady, continuous trend on top line and on bottom line, on the EBIT level, where we achieve double-digit growth and over proportional EBIT evolution. To me personally, it's clear we have a growth strategy, but it must come combined with also increasing our profitability.
We don't want to buy growth. We want to have profitable growth and therefore the over proportional EBIT ratio is a key factor in our strategy and important that we balance our growth in such a way that we, that we keep these principles high. I would like now to share a bit on what basis we achieved last year's result, but of course, also the indication what this year and the future is built on. As you know, we are going to present our new Strategy 2028 at the Capital Markets Day this fall. That's clearly based on the mega trends, which has been the foundation for our current and past strategies.
Here, if you just reflect the past 10 years and the mega trends that were the base and still are the base for the future, urbanization, climate change, digitalization, automation, the demographic changes and the emerging markets as the key, let's say, mega trends, resulting over the past 10 years to a 10.8% annual growth year-over-year in local currency. I think here the split, as outlined in the very early days when the strategies were presented, the split with 1/3 inorganic, 2/3 organic market support, market penetration, and the structural changes of the market. All these elements have over the past 10 years delivered or even over-delivered as we are at double-digit growth rates over these 10 years in total.
Of course, this is also what we expect that we can build on and then define also in our next Strategy, a strong growth element. To go a bit deeper in this, in this megatrends, the urbanization. The urbanization with the population growing towards 10 billion individuals. We are at 8 now. This is happening. If we want it or not, it's happening, and it happens not everywhere the same way. Here it's clear that where we have this growth and then the trends to go into these megacities, there's a huge demand. I'm here talking about emerging markets that need to have the infrastructure in place urgently. Here, an example from Latin America. It's water, it's drinking water, that of course, it also needs, let's say, wastewater management.
It needs infrastructure for transportation of goods, people, and so on. Here, urbanization has many, many facets that are, for us, great opportunities. In the emerging markets where we see 1st build, new build, infrastructure. When we go further and we look into established markets, into so-called mature markets like the U.S., like Europe, the infrastructure is also growing, but it has also a huge portion that is, let's say, from the past century or even more than 50 years old, that needs to be maintained, that needs to be upgraded, that needs to provide more capacity than ever before. Urbanization is also driving the growth potential in the mature markets. Examples are here. You know, it's commercial buildings, airports, it's the transportation. We are seeing here lots of investment.
Also somehow driven by some incentives like the stimuli program that the U.S. administration has launched as well as the EU is implementing. Another aspect is that a lot of our mature markets have a building infrastructure that is aging. It is aging in a way where the question comes up after 30 years, I think it's okay, 65%. After 30 years, many of these building are not up to the requirement of modern, let's say, living and working environments. Therefore, the question is tear down, rebuild, or maybe more sustainable, think about upcycling, and using the structure to an extent that you don't need to use new raw materials, but build on what is established. I think here we have shared this example of the QQT Tower in Sydney at the last Capital Markets Day.
It's to me precursor, and it's clearly a direction that we will see more and more, that buildings should not be torn down, but reused, upgraded, of course, doubling the space. This project here has doubled the space. It reduced the cost. It reduced the time to reopen compared to a new build, and it significantly has reduced the CO2 footprint. We will see much more of such projects, probably also when we look at the legislations that are going to be placed going forward, demanding that we have first to think about upcycling, then just tearing down and start from scratch again. Urbanization is also connected to this mega cities, these, these conglomerates. They need transportation, they need infrastructure, but they need also energy.
Energy going forward needs to be built on renewable energy. Here, 1 of the many options beside hydro is the wind power, which offers for Sika huge opportunities. Being in the tower build-up, being in the blade bonding, being also an enabler for much larger wind towers and blades, and here, especially the offshore, The wind towers are going to a new magnitude of dimensions. When we have onshore 160 meter diameters for wind towers, offshore, we are talking almost 500 meters. These are huge challenges for building up blades that are then still reliable and can, let's say, also manage the forces that such a huge construction brings. Here, smart solution. Here, an example, the blade bonding.
You see these huge blades, they are bonded together with our structural elastic materials. Materials which by the way originate from our automotive business where crash, as you may remember, crash-resistant adhesives replacing rigid welding. That's the technology that we are bringing here to construction or to these mega blades, because they need to be stiff in a way, but they also need to be able to take all the torch that applies in use to these mega constructions. Talking about mobility, talking about automotive, I think it's no secret we have very early on engaged in the battery manufacturing. Batteries are requiring a lot of our material to make them efficient, to make them safe. Batteries can tend to have runaways.
This needs to be managed. They need cooling. They need to be within the optimal range of operation. Not too hot, not too cold. I think you all know that when you have your iPhone with you on the slopes, and you wonder why the battery is low. That's because it's too cold. Here the batteries are for us an extremely nice area to expand our automotive competence. Since several years now, this goes beyond just car manufacturing. It goes, of course, you know, to all kinds of mobile vehicles. It doesn't stop there. It is also for storage purpose now very, very high in demand to have batteries at homes to feed from the solar plant and to have a possibility to balance the needs from the grids and from the consumer.
This is a huge market. It is 50% more potential for us in the automotive segments where we have traditionally with the sealants adhesives, with the acoustics already a very nice potential. This trend to go for e-mobility to build on batteries is for Sika promise into the future, but also contributing already quite significantly to today's or last year's results. Climate change, a huge topic. I think this topic has clearly accelerated over the past 5 years, and it is still further expanding. For us, we made our commitment at the last September to go for the Science Based Targets initiative. Our net zero pledge has been signed at that time.
We feel we have an obligation as leaders to support transformation for our customers, for our suppliers to be here highly engaged. I think it is important that we all together that are committed have this collaborative spirit. 4,200 companies have already committed to this. In construction, more and more companies are signing up to this commitment. This commitment means much more engagement with our suppliers, with new suppliers, with our customers to bring value into this transformation and not just cost. We need to have a positive spin to the transformation and not a punitive spin with, let's say, inferior performance and higher costs. Here I think we are doing great progress also in interacting and motivating our partners up and downstream to go this extra mile.
Of course it applies also to our own Scope 1 and 2 commitment that we have to walk the talk, I come to that in a moment here. This is how we visualize our progression to net zero. Here, I think this is also well shared with our own organization. It's already today that we have the choice to use our high-performing material to make existing or new construction more sustainable with a lesser CO2 footprint. To visualize and to simplify this, I mean, Sika is well known for its quality and high-performance materials that can live for quite some time. There is a market that is rather more short-term oriented and that doesn't care so much what is in 10 or 20 years. With this sustainability, with this expectation, this is elevated.
Solutions that provide twice the longevity are per se definitely much more considerate in CO2. We promote this with our portfolio very much also to the end consumer to think twice. I talked about the upcycling, I talk about the renovation. If we do this with higher performing-Longer durable materials, this is a win-win. We have already this portfolio of products. We are adding products with specifically lower CO2 footprint. Here, I think the cementitious products, where we have great efforts to reduce the cement content by 30%, 40%, 50%, or even go to 0 Portland cement solution. This is clearly our obligation to implement quickly and bring it to the market. Then in the longer term, we also must engage with our suppliers to get raw materials which are bio-based eventually, but definitely as well on a net zero base.
This can be done with different means, and here we are interlinked with our suppliers. It is also about efficiency. As long as we still have a very high waste rate in construction, waste is, let's say, CO2 that is, let's say, accepted. Efficiency means also to bring and make sure that the materials, the efforts to put in place are most effectively used and not wasted. Construction clearly is lagging here, and with smart solution, also that can be tackled and we want to participate there. We also took this topic up to the board level. I think this topic, sustainability, or we have now this sustainability committee, which is focusing very much on the environmental aspect as the more traditional NCC and the ACR, focusing on the social and on the governance aspects.
There is so much momentum there that the strategic alignment between group management and board is vital. This is not a one-time thing. We are done. This is evolving. Regulations are changing. The geopolitical trends must be reflected. This is something that will stay. Therefore, I'm very happy that we have been implementing this, let's say, ESG committees, so that we also can spend time on environmental discussion with the board in the forum of a committee. Here are some examples on how we can quickly make huge impacts to the current footprint. This is the Kiruna mine in Sweden, 1 of the largest mines for iron ore.
You can see here that traditionally, cement was used to reinforce the shafts and the concrete needs that this huge plant or this huge factory, so to say, has. Here, together with the mine owner, we were able to use a waste stream, which is a supplementary cementitious material with our material upgraded, and we could reduce almost all of the cement need of that of that mine, and reduce by 93% the CO2 footprint. Smart, simple solutions with win-win aspects. It's a win for us as we are contributing to this with our specialized admixtures. It's a win for the owner that doesn't need to buy expensive cement and can reduce it actually with something which was considered waste before.
This is a great story, and we are working on such stories around the globe and implement short-term. There's also a midterm element where we are questioning everything we are doing, starting from the raw materials. Raw materials traditionally are considered virgin materials coming out of a defined stream. The waste is our new raw material. The material that end of life has been put to a dumping station or has been burned or has been somehow, let's say, for low cost, been discarded. This is now becoming our new raw material stream. Here, our engaged innovation teams are working to open up a new form of waste streams, which are actually value streams that can be utilized in our products. I think here it's very clear.
We talk about cement replacement. We talk here also about waste streams that in the past were not considered, like the agricultural. The food industry is creating a lot of non-usable waste, which actually is value. Here, the cashew nut is 1. We have other from rice production. We have that almost everywhere. The part that we can eat, great. The part that we cannot eat used to be biomass that was then somewhere burned or was then somewhere dumped. This can be a waste stream for us as a raw material going forward. Digitalization, automation. I think digitalization, everybody has seen what happened in the past. For example, we have the latest ChatGPT that is coming forward. It's not stopping.
I'm not here to present what will be in 5 or 10 years. I think it will go much more beyond what we can imagine, just like 10 years ago. Here we see an example of a new way of construction. It's a ETH offspring that we are highly engaged to make smart construction, smart concrete elements with dimensional flexibility and the possibility also to reduce the consumption of CO2. This is a visualization on how we have worked on a construction site in the past. Now we had drawings, we were looking at a lot of paper, we were confused by the complexity. This has changed. You go to a construction site today, it is on a iPad. It is, they are connected to the internet. They have access, they have instant access.
That's today. Going forward, the construction site will always be very challenging, and it is up to the individuals to solve instant problems. Going forward, this will be much more done in a digital virtual way to solve problems in the early stage and not when they are already, let's say, combined with a lot of extra work and waste or eventually even reconstruction because things went wrong. I guess all of you have built somehow something, and it's frustrating to see how much can go wrong. With the digital means, this will definitely improve. Here, how can we link into this? You know, how can we help our construction customers to become more efficient and help them to be more data-driven than maybe experience and stomach or guts feeling-driven.
Here it goes down to the very simple elements of the everyday's job, apps that help them to automize their design on the job site for the concrete, so that they have the ideal optimal mix every day, always available. That they can control the quality, that they can rely on a consistency, that there are no, let's say, fail or eventually overseen in the transport or in the delivery of concrete to the site. This is just the beginning. There will be much more interlinkage between the data set that the customer is collecting, that we are collecting, to the benefits that we optimize and transform, again, the construction to a much more efficient industry. Similar to what, for instance, the automotive industry has done for decades to optimize and improve the efficiency and the waste management.
Emerging markets, a key topic for Sika. We expanded to over 100 countries in the meantime. Last time we talked about Africa, maybe a frontier continent. Now talking about Southeast Asia as another example, probably a bit more advanced than Africa. Here we see huge potential for us going forward. As you can see, we are covering almost all of Southeast Asia and with a footprint that is helping us to provide support for the growing demand for infrastructure, but also for the distribution business. Typical picture. You know, this is a picture out of Bangkok, I believe so. Yes. It's a typical picture. These cities are no different than our cities. There is no space above ground. Everything happens below ground. If you want to find a solution to transport goods, people, water, wastewater, you have to go underground.
This tunnel could be any place on the planet. It could be here in Bangkok, it can be in Bogota, it can be in New York. This is the way we have to build infrastructure in these mega cities. It's underground. There is plenty of room. It's a bit challenging, which we like. It needs a bit more of Sika than eventually the simple roads in the Midwest of the US to build. It is a challenge, and it is the only way forward, and it happens everywhere. If you talk about sustainability and CO2 and awareness, this is happening also everywhere. This is a large building complex that is built here in Southeast Asia or in Thailand.
It shows that the topic of building with a more, let's say, responsible CO2 footprint is everywhere a topic. Here in Thailand, I think this is a lead project. It is driven by high demands, and it's a great example also that it is not just happening in Zurich, in New York, in Tokyo. It happens everywhere. The awareness and the support for this is tremendous. As you can see here, we are contributing with dozens and dozens of products and solution to make such projects more sustainable and help to achieve the overarching goal that such projects have. This is a picture I like in particular, not only because how our distribution manager is smiling here. This is what we talked many times.
Our great Expansion activities in China, which is fueling China's growth in the past and coming years, expanding this to Southeast Asia. Here, this is the example of Indonesia that has take this retail leadership journey on couple of years back and is now on a great expansion move, doubling the points of sales from 10,000 to 22,000. It's not the size of China, where we talk about 100,000 or 200,000 point of sales, but it's Indonesia, it's a huge market. It's a 300 million population market, and this momentum that we have been able to achieve here is going to fuel future growth and our presence across this huge island country.
Of course, it's just 1 of the 18 countries in Southeast Asia where this can be implemented, and we are expanding to others, of course, as well. It's highlighting the potential in distribution with our offering, which is kind of originating back to this China story that we talked so many times before. This brings me back to the very beginning with the clip that we showed. How do we do that? I mean, there is a lot of rational and lot of facts and a lot of, you can say, hardware involved that is available to many, including our competitors. What really makes it then sound and effective and also being able to overachieve and gain market share is the people, is our organization, is the way we operate, the way we are collaborating.
You heard it's family. It's interaction. I was asked before, you know, are you glad you're doing this physical? For us, there's no other way. Business is physical. The interaction with you, the interaction with our customer, the interaction with our supplier, it's people to people. We believe strongly that this is something we should whenever possible do in person and use the virtual, let's say, surrounding as a add-on. It can be very effective, but it cannot replace. We want to have the interaction with you. Those that are virtually joining, you know, that's fine too, and we will also of course interact as good as we can. This is, this is the Sika way. This is the people way. This is, this is very important to our success story that this is understood and cultivated.
I hand over to Adrian that goes more into the details how we do this, and then, I come back to talk a little bit about the MBCC acquisition in a moment.
Very good. Well, thank you, Thomas, and good morning to all of you here in the room and also the ones joining virtually. As said, after the presentation of the highlights of 2022 and our strong growth drivers, I will now focus a bit more on the financials. I would say in a challenging environment, Sika has again delivered quite a strong set of numbers and new records in terms of sales, in terms of profitability. Certainly a milestone is, you know, reaching and overachieving here the 10 billion sales mark, with CHF 10.49 billion in sales. Local currency growth of 15.8%, and the Swiss franc growth of 13.4%. A strong EBITDA growth of 11.7%.
An EBIT increase of close to CHF 190 million to CHF 1.58 billion of EBIT, which represents a 13.5% increase with 15.1% of net sales. A double-digit net profit growth, CHF 1.16 billion, 10.9% growth, partially impacted by higher financial expenses and the slightly higher tax rate. Further improved capital efficiency, ROCE that increased by 1.5 % points to 21.6%.
While cash generation continues to be very strong and operating free cash flow of CHF 865 million, which was slightly down from the previous year level, particularly due to higher, you know, CapEx, but a very strong free cash flow of CHF 931 million, very strongly up from the close to CHF 600 million in 2021. This has also resulted in a further reduction of our leverage down to 1 times net debt EBITDA. Previous year was at 1.4. Here again showing quite a strong deleveraging profile. Lastly, this is then also leading to another attractive dividend increase that is proposed, an increase of 10.3% per share.
Now let's address these individual elements in a bit more detail. Again, starting at the top line, sales in 2022 was predominantly organic at 13.1%. With a pricing component of around 15% points and a slight volume decline close to 2%. Net acquisition growth contributed 2.7 % points for the full year. This is the impact of the divestment of the Industrial Coatings business. Obviously the many bolt-ons we have done in 2021 and 2022, about 9 of them here contributing positively.
Foreign exchange, almost, I'm inclined to say, as always, has had a certain negative effect of -2.4%, particularly also in Q4, where the effect was closer to 4% negative. This was primarily owed to a weak EUR, British pound and the Japanese yen. If we look a bit across the last 3 years, here, I think, it's very clear to see that we have continued our growth trajectory also in difficult market environments. You know, the COVID year, 2020, but also now more lately with, you know, a strong input cost increase and shortages with a 3-year CAGR of close to 12%.
Also, I think visible here, the variation in, let's say, the growth composition, I think being a testimony of our, you know, strong and resilient business model. Not always what is, not only what is driving the growth, but also in a geographic area, for example. Overall, organic growth over these 3 years has been about 8% per annum, while acquisitions contributed about 4%. Now let's have a look at the P&L and work down here from the top line. As just mentioned, 2022 was again characterized by continued supply chain challenges and further raw material price increases, particularly in the H1 year, but also into Q3, compounded by the energy crisis and the war in Europe.
As a result, our raw material cost on a comparable basis, you know, increased a further 20% compared to 2021. However, our pricing actions have been quite strong and started to overcompensate ongoing absolute raw material cost increases towards the end of Q2 with an increasing positive gap towards the end of 2022. Again, as I said, pricing was around 15% overall. Due to the base effect related to the strong pricing, our material margin still declined by 230 basis points organically, while acquisitions added another small dilution of about 15 basis points. As a result, material margins contracted by 240 basis points to 49.4% year down from 51.8% in the previous year.
However, November, December saw also here a turning point in terms of relative material margin, with a positive development compared to the same period of last year. On the cost side, the operating expenses, which include both personnel expenses as well operating OpEx here, increased under proportionally by around 6% compared to a top line growth of 13.4%. Here exhibiting, you know, good operating leverage, efficiencies, and also a positive one-time impact. Personnel costs with a 4.6% growth increased strongly on the proportionally, which is shown here.
If we break it down into some of the components, here typically, additional personnel costs from acquisitions are usually more or less in line with top line contribution from acquisitions, obviously not leading initially to any leverage. Organic growth, which is a small, you know, build-up, as well as cost increases overall were quite contained, resulting here in quite a sizable leverage and efficiency improvements. If you go back to the P&L and looking at other operating expenses, they also decreased as a percentage of sales from 15.1% to 14.4%, which was supported by a profit resulting from the divestment of the industrial coatings business in Germany.
Was also negatively affected by expenses in connection with the acquisition of MBCC Group, with a positive net impact of around CHF 88 million. Contribution of the many operational efficiency project continues to be in line with the targeted 50 base points of EBIT improvement, while higher logistics costs, but also travel costs and sales expenses, as well as the initial impact from the recent bolt-on acquisitions weighed negatively. As a result, as already mentioned, EBITA grew by 11.7% to CHF 1.96 billion. Depreciation and amortization expense grew by close to 5% overall, as capital investments were pretty much in line with fixed asset depreciation and intangible amortization related to bolt-on acquisitions only increased relatively modestly.
As a consequence, EBIT increased by 13.5% to a record of CHF 1,579.7 million, which represents a 15.1% EBIT margin. Summarizing, and translating this into, let's say, our, you know, profit drivers, and the respective margin drivers, the picture looks as follows. You know, big impact here on the organic material margin side, which as I said, was continued to negatively impact it due to the raw material cost increase in 2022.
From a percentage point of view, this was largely driven by a mathematical base effect due to the strong sales pricing, which leads to a relative dilution, even if, you know, price increases, you know, pass on the full absolute input cost increases. This is shown here. If it was just for this, basically our material margin as a percent would have suffered 4.7 % points. The additional price increases, you know, closing here the gap of what we have also incurred in 2021, added here a positive 2.4 % points, reducing here this, you know, relative gap to 2.3%. On the other hand, we have been able to mitigate here the material margin in percent reduction by another significant operating leverage, as just shown here.
Strong price driven top line was obviously supportive, but also the disciplined cost management overall, which mitigated here the inflationary pressure, particularly in the other OpEx line as just shown and with travel marketing spend being back to pre-COVID levels. Very importantly, as always, our operational efficiency and initiatives, which are very broad-based, which are on a constant basis, delivering here the 50 base points of additional EBIT contribution in a given year. These are initiatives across the value chain on local, regional, and global level here driving profitability. We also delivered the additional CHF 20 million of remaining Parex synergies, which we have targeted.
On a constant currency basis, we slightly overachieved the CHF 100 million targeted for 2022. That's also quite a positive element here, while the initial dilution of the newer bolt-ons, also, as this is regularly the case initially, have led to a small dilution in 2022. The remaining impact here is related to the described one-offs on the 1 hand, the gain on the sale of the Industrial Coatings business, but partially offset by MBCC-related transaction and separation costs, which in total, as I said, had an effect of CHF 88 million or 80 basis points.
here the, let's say the positive element is much more strongly skewed, you know, to the H1 year, particularly in the Q2 , while here the MBCC costs have or more, you know, back-ended, particularly with Q4 having a much, you know, stronger impact. Also showing here that overall year margin trajectory is moving in a clearly positive direction. Now if we move back to the P&L and have a quick look below the EBIT line, comparable debt level and higher interest income compared to previous year, have led to a decrease in interest cost, while on the contrary, quite a strong increase of other financial expenses from CHF 10 million to CHF 41 million.
This is largely driven by higher hedging costs due to increasing interest rate differentials, but particularly also to a substantially higher impact from inflation accounting effects, now with Turkey also falling under this accounting scheme on top of Argentina. As a result, net financial expenses in total increased by about CHF 26 million or 46%. On the income tax side, effective group tax rate saw a slight increase from 21.5% to 22%. This is particularly related to positive one-time effects in 2021, but also the fact that the larger part of the gain on the sale of the Corrosion Protection business is being taxed in Germany. Overall, net profit increase was substantial.
Still it's 10.9% to the CHF 1.163 million, which represents 11.1% of net sales, slightly down compared to the 11.3% in the previous year. Quickly looking at the balance sheet. The strong growth and good cash generation in 2022 is also reflected here with an under proportional increase in the balance sheet total of around 5.7%. On the asset side, growth and valuation continued to drive working capital balances, particularly in accounts receivable and in inventories, increasing by close to CHF 200 million. Under proportionally to sales growth, it's also reflecting here, you know, a small improvement here, particularly in the H2 of 2022.
Non-current assets reduced slightly to CHF 6.3 Billion, largely driven by foreign exchange, but also intangible amortization, which, exceeded new, additions. While growth in current liabilities mirrored here the accounts receivable growth year -on- year. financial liabilities increased due to the net issuance CHF 400 million . There was a repayment of CHF 200 million and a takeout of CHF 600 in anticipation of the MBCC, transaction. Also, we saw a, a smaller, you know, further conversion of the, convertible bond in Q1. This was all in Q1, 2022 of a CHF 122 million.
If you look at total financial liabilities at the end of 2022, they stood at CHF 3.9 billion. This is a small increase of CHF 215 million versus the end of 2021 because of these additional bonds. In looking at net debt, here net debt decreased quite substantially from CHF 2.55 billion to CHF 2.05 billion, about the CHF 500 million reduction. The equity as a result of the strong net profit and the dividend payout also increased close to CHF 500 million or 13% to close to CHF 5 billion, lifting the equity ratio to 44%.
Overall, as already mentioned, also here, capital efficiency improved further to 21.6%. Now turning to cash generation as mentioned. Another solid year in terms of cash generation. Here, slightly higher net profit and higher depreciation amortization were partially offset by higher tax payments and similar working capital buildup as in the previous year, has led to a slightly higher cash from operating activities. While operating free cash flow of CHF 865 million was slightly down from the previous year level, which was at CHF 908 million. This was driven by higher CapEx now moving back to sort of a more normalized level of around 2.5% of sales.
If we look at free cash flow here, this includes the impact or the net impact of acquisition and divestments here. Clearly, much a higher level compared to the previous year, given here a small positive effect, whereas last year we spent more on M&A. Here we have a strong increase from CHF 595 million to CHF 931 million.
Together with the dividend payment, a modest positive impact here of the net financing activities, particularly these bonds I was alluding to, a very strong increase in cash overall by almost CHF 700 million compared to a reduction of CHF 140 million of last year, which, you know, pushed the total cash position up at the end of the year to CHF 1.87 billion. As a result, as mentioned, you know, previously, we have continued to strongly de-lever, and this year is showing the de-leveraging journey since 2019.
Upon the initial consolidation of Parex, where we temporarily had a leverage of 3.4 times. At the end of 2022, we're down to about 1 time net debt EBITDA. A decrease of 0.4 turns compared to 2021. A strong testimony of a very good cash generation profile. Lastly, this brings me to the dividend proposal. The board of directors of Sika proposes another attractive double-digit dividend increase of 30 Rappen per share from CHF 2.90 to CHF 3.20, which represents an increase of 10.3%.
The payout ratio shown here, is on a fully diluted basis, of 44.2% on the basis of the currently issued shares, payout ratio corresponds to 42.3%, which is pretty much in line with the previous year. With this, I hand back to Thomas for the update on the acquisition of MBCC and also for the outlook. Thank you.
Good. Thank you, Adrian. I continue with a bit fewer numbers, but not less exciting information. MBCC is now in its final stage. I think we talked multiple time about it on 11/11/2021. We signed the deal, we presented the rationale and the excitement that we have with this transaction giving us so many different levers to create complementarity. We have to look at this on a country-by-country base, as we are quite diverse, they are quite diverse. Here you see those different elements on the product offering where we have great complementarity channels, where we have also outstanding opportunities to leverage 1 way or the other.
The geographical footprint which is even faster, let's say, reaching a new level of proximity to the markets and customer, as well as our own internal footprint on the supply chain. Let's say, let's not talk about that so much. Let's talk about where we stand in our quest to close the transaction. It's 15 months, and as you can see, we have many, many green check marks. Most important, I would say, is the acceptance of the remedies in principle. The assessment of the market led to some concerns in the 6 jurisdictions that I show on this slide here. It is related to the admixture business. I think we communicated multiple times about this, that the admixture business has been indicated by these 6 jurisdiction as critical.
Therefore, we have started a divestment process, centered around the remedies that we have agreed with those regulators. I think this is all well progressing. As Dominik mentioned in the invitation or in the slide as well, we are now approaching the finish line, but we still need to go through the processes of these 6 regulators. Now focusing more on what we don't sell. That's the CHF 2.2 billion that we are going to integrate pretty soon. That's a substantial business. That's a global activity. It affects all our region, all our target markets, except industry. This is a fantastic, beautiful proposition for our company to integrate soon.
I take a quote from Margrethe Vestager, the commissioner of the EC, which gave us last week the acceptance of the remedies. The quote is in multiple way telling. You know, you can read, of course, why we have to divest because the MBCC presence in admixtures, in the concrete admixtures and Sika are out of the Commission view, and I would share these are the transformational elements that the construction industry requires. That's clearly behind the divestment. At the same time, it's a reconfirmation what I have presented before, the sustainability drive, the transformation of the industry. We are strong. Sika is very strong in this regards.
With this, let's say, acceptance of the remedies, with the separation of the admixtures in Europe and in North America, as well as in Australia and New Zealand, I think we will be, let's say, still in a competitive landscape. We are not afraid of any of our competitors at all, so this is not a concern. Actually, when it comes to the point, what does it mean for our transaction? Oh, back here. Sorry. It means that our synergies are unchanged. We announced CHF 160 to CHF 180 million of synergies. With now CHF 2.2 billion as a base business, how comes? That's, of course, to the anticipated these synergies that a full integration would have brought with the transaction.
It was part of our game plan that we had some divestments included, but we also included, of course, in case we have to go to a further extent or lesser extent that some of the markets would respond where we have more of an overlap. Obviously this is in the admixture business more than in any of the other businesses that we are now going to integrate. I would then ask my team members, Ivo, Christoph are here, and Mike will then call in to give us a brief outlook by the regions before we then close with the global business and then go into the Q&A. Ivo, please.
Thank you, Thomas. I'm very happy this morning to give you a brief overview of our outlook in the region EMEA, how we see the year to come, how we see the opportunities which are given. We see a strong activity level in new construction and particularly also refurbishment of infrastructure projects. This leads to promising pipelines in the countries. We have heard it from Thomas in the morning. We have, of course, in EMEA, the more mature markets where it's all about maintaining infrastructure, refurbish infrastructure, extend structures.
Then in the emerging countries, like in Africa, for example, as we were speaking about at the last Capital Markets Day, there is a huge demand of new infrastructure in the water industry, for example, but in the energy production and in all sorts of other fields. Together also with MBCC, as we just heard before, we see here even a substantial strengthening of our offer in refurbishment of infrastructure, because it's all about also fast repair solutions. There we will see a great combination, great completion of the offer we can then provide to the market. This is also very important for us.
We can really differentiate here, and it's always our goal to be involved in the project as early as possible so that we can really contribute positively with the specifiers, with the owners, with the investors of projects. Energy efficiency is obviously clearly further accelerating. The trends with the high energy cost is of course even accelerating. This provides significant opportunities for us also in residential buildings, in renovation, in improving the insulation properties of facades and the whole building envelope and the whole structure in general. As you saw in Thomas' part with the great project from Sydney, that Sika enables to really keep existing structures and maintain them instead of demolishing. We see this in high-rise building.
We see this in car parks, multi-story car parks as an example, where maintaining the structure offers a great cost benefit. Of course, also a huge advantage on the sustainability part because it's clearly possible to avoid. Or not just avoid just, but reduce drastically the consumption of cement with obviously the positive impact on CO2. I show here on the 2nd picture the project Neom. I'm sure you have seen this giga city project. Very innovative, future-looking. I mean, sometimes, you know, where you can argue it may be still a little bit, you know, a vision, I can really here confirm that Sika is really involved here. The groundworks for this 170 kilometer-long city have started.
We supply our solutions in waterproofing solutions with membrane waterproofing solutions and also Shotcrete Accelerators. It's real. We are really starting. Besides the construction itself, we see this also as a great opportunity for our initiatives in the modular building, in the new ways of construction, in the industrialization of construction. Because the idea to plan to build this city in a relatively short period of time is only possible with new ways of construction. However this will then happen, we are strongly involved here with the key players who will then really, we believe, change the construction methods. We believe this is really a boost and we have to, and we will take part in this. I just mentioned before emerging markets in EMEA, Africa.
Our strategy there is well on track. We talked about it earlier, but it is really, a strong source of, for growth, in our region. Here I mentioned more the direct business, but obviously also the indirect business with distribution is growing, very strongly. The online channels keeps growing at a very high speed. We are positive, for 2023 in EMEA. With this, I would like to hand over to Christoph. Thank you.
Good morning, everyone. W e're coming out of a very good 2022. You have seen our results, 28.27% top line growth, equally nice EBIT growth. It was a challenging year, I must say . We had a lot of supply availability issues, exploding raw material prices, but we reacted very fast in Q1 last year, brought our sales prices up and introduced the supply surcharges. In the end, you know, this has led to a very strong year 2022. New year has started. Everything starts from 0 again.
I asked my guys, I'm just coming back from management meetings in the US, I asked my guys, "What should I tell the folks today about 2023?" They told me, "Look, the country, the economy might go into a recession, but, you know, we decided simply not to participate in this." It shows also a little bit the spirit that we have in the company. I mean, we've gone through all the recessions before, and I think we have always delivered. The reason is, I think Sika has a very strong market position. We have a strategy in Americas, which we call Go Where the Money Is. There is always money somewhere, and you know, of course, retail might suffer a little bit.
There are less Amazon warehouses being built. There is such an enormous amount of infrastructure projects throughout all of the Americas, not just in North America. There is plenty of room for us to grow. I think the advantage of Sika is we have a widespread offering to investors, to owners, to specifiers, not just 1 area, let's say not just roofing, but, you know, we have waterproofing material, we have sealants, we go inside the building now with interior finishing products, and that gives us the leverage, whatever happens in the macroeconomy actually, to still find segments where we can grow and make money. There are a lot of booming market segments right now throughout the Americas.
I would start here with the first one, it is sustainability. It's not just what Thomas said, that we're investing into reducing our own CO2 footprint, but many of our customers, they do the same. For example, all the companies and townships and cities that make the net zero pledge, many of them, they don't know yet how to get there. This is our great opportunity. We go there, our people in the field, we show them the Sika range actually that will help them to reduce their own CO2 footprint. We have lots of products, we develop new technologies now also to help them getting there. There are tons of projects happening. Green roofs. We bought the green roof company recently.
This is growing fantastically. Facade installation, hydropower plants, wind, solar, battery plants. I think we said this at the Capital Markets Day. We have 11 new battery factories in the U.S. alone that are being built right now. We're not just in the battery itself, but we're of course also helping to build these buildings. We see really this manufacturing coming back into especially into North America. It's coming back from Asia, and it's not just the U.S. profiting from that, it's also Mexico. The commodities that were earlier built in, let's say, China, for example, Vietnam, they're now being built in the north of Mexico. Of course the higher level technologies, they're building new factories like semiconductors, big projects that are being built in the U.S.
The infrastructure is probably the biggest opportunity we have. You see 2 pictures on the right, tunnels, bridges, several billion dollar investments that are going up right now. Wastewater treatment, you've seen it also from Ivo. There are $55 billion sitting in Biden's infrastructure bill that has passed actually just for wastewater treatment plants, new ones, refurbishment. We see this money now flowing into projects. Of course, this is a great opportunity for us, which we'll go after. We have lots of products for these kind of structures. Tunneling and mining. Tunneling itself, really hundreds of tunnels, new tunnels that are being built throughout all of the Americas, also in Latin America.
Mining, I think I said this in earlier times, that the whole lithium mining business in the south of Latin America booming, but also in the U.S. and Arizona, they opened now a new lithium mine. Which offers us also a lot of opportunities. Investments, I think this is 1 secret also of the continuous double-digit growth rate in all of Sika, but particularly, of course, also in Americas. We have right now about CHF 140 million under construction, new plants, new fiber plant in Peru, new mortar plant in the Northeast of the United States, biggest 1 ever. We're building plants in Colombia, in Ecuador, and this is basically preparing the growth of 2024 and 2025. The investments we've done earlier is helping us now to continue growing also this year.
We'll put a special focus on safety. We wanna improve our numbers there. As also Thomas showed, you know, CO2, our own footprint, we're putting a lot of money into bringing that footprint down into solar parks, renewable energy to run our plants where it makes sense or sand dryers that use a lot of energy. There are ways to bring down the CO2 footprint as well. People, I think I said this many times, I think this is really our main secret, I would say. You know, a lot of our competitors, they also produce high quality mortars or good PVC membranes or whatever, you know? I think the difference of Sika is really the quality of our people.
If you wanna continue growing at double digits, we need to continue bringing in these very good people from universities. We need to invest into them. Staffing in general has improved, I must say, which was a big challenge last year, but we easier find also people to run operations now. So people in general, this is a key factor for us, and we're really investing a lot of money. Last but not least, MBCC from region Americas, I guess, as well as from EMEA, we can report to Thomas, we already for quite a while, and I can tell you the MBCC folks are also ready.
They rather want us to sign and get this done or closed tomorrow than waiting maybe 1 more, 2 more months. I think we have really good plans in place now. People know where they're gonna be from day 1 on. It will bring us a lot of new horsepower also in the field. You must imagine this whole infrastructure trend that's happening. You know, we have decided to form new groups, new business units, you could say, for example, that go after the bridges, all bridges in the United States. You know, let's say we got 6 guys doing only this. I mean, now with MBCC joining, and they have a specific knowledge in this will help us a lot to be much faster with that. We're ready.
We also have a few other acquisitions we're working on, so you will be surprised what will come up. All in all, obviously, like in EMEA, we remain very positive. This is also our job to be positive. I think we should be able to report a very good result also for 2023. Thank you. Now, I guess, to Mike in Asia.
Okay, great. Thank you very much, Christoph. Friends, sorry I can't be with you there in Zurich today, send you my best wishes from here in Indonesia. In the Asia Pacific region, we had a really solid year overall in terms of growth and profitability. Despite the strong headwinds already discussed earlier by my colleagues and the unique difficulties here in Asia, the lingering COVID issues in China, in 2023, we are uniquely positioned now for further growth with a robust construction pipeline driven by infrastructure, investments around the region, and a rapidly developing retail distribution network that we already mentioned earlier, bringing us more new customers and increased brand awareness really every year. In 2022, China was really a very difficult market for us.
China's become a growth engine for the Asia Pacific region, not only in terms of sales, but also for our profitability. After the strict 0 COVID policy and constant lockdowns in many cities, affecting both our job sites and our production units, our China team was able to deliver a strong double-digit growth, and more importantly, an overproportional EBIT development in 2022. Now, with China's abrupt U-turn on 0 COVID policy and a rapid reopening late last year, the market is poised for a very strong recovery. The reopening turbulence is already beginning to fade in late Q1. This is much earlier than expected by our team and by our customers, and we now see a great confidence for a stable Q2 with a strong recovery momentum in the H2 of 2023.
We're very confident, our growth dynamic will return in China and continue our success story there. If we look now a little bit further south, India and Southeast Asia are both already in a very strong growth cycle for us. We've had exceptional growth here in 2022, with India as our growth champion leading the way with strong double-digit growth and Southeast Asia chasing, in the number 2 growth position. In 2023, the Indian government has doubled down on capital spending, budgeting a record $112 billion on large infrastructure projects. And while doing this, they prioritize green energy projects and funding for affordable housing.
This push is fully aligned with our targeted mega trends within the region and developing infrastructure projects for the area. We see a similar buildup in Southeast Asia as well. We see this as a huge opportunity to drive our sustainable solutions into these projects. We have a very promising construction pipeline across the region, with rapid urbanization as a running theme. Renewable energy requirements are building as the energy demand increases with the population, and underdeveloped infrastructure needs to be improved and expanded. The emerging markets and developing economies frequently use this infrastructure investment to drive economic growth, as evidenced by the massive infrastructure investments that are planned in the coming years throughout the region. Our very balanced position in direct sales and distribution business allows us to quickly access all market opportunities as they develop.
This balance really allows us to maintain strong growth even in difficult markets, as you've heard a bit from Christoph, to Go Where the Money Is. In the pictures here, you see some examples of road development and mass transit projects here in Indonesia, also some manufacturing opportunities in Southeast Asia. While Christoph said there are some business moving back to the U.S., we also have the China Plus One policy where we see more and more people produce in China for China, and they move offshore largely to India and Southeast Asia. Again, we see nice opportunities there to continue the growth cycle for those projects. As well as amazing sustainable projects that have already been shared by Thomas earlier in the program all over Southeast Asia.
Our retail leadership journey continues with really an ever-expanding network of distributors. This allows us to quickly respond to our customer needs. Really after really an amazing 40% increase in our points of sale in 2022 alone, we expect another 30% increase in 2023, with a strong focus on Southeast Asia and India, where a very dynamic part of our growth has come from. New digital pools are gonna allow us to interact better with our customers and keeps our hands-on sales force active and driving these new digitalization solutions. Finally, we'll continue our investments in production capacity with new installations in China, in India, Australia, here in Indonesia, and of course, really an excellent synergy with the addition of the MBCC platform.
This platform offers a presence throughout the region with a real focus, fantastic network in Japan, in India, China, and numerous locations in Southeast Asia. We're really excited for another great year in Asia Pacific and this MBCC team, while we have a great platform, we've had an opportunity to meet so many of their fantastic people. They bring a huge wealth of talent and experience into our group, which when we join that together with our fantastic Sika team here, we have really a very strong force to service our customers and keep that customer first here in Asia Pacific.
With that, I do tell you, we are very excited for another great year here in Asia Pacific, and I'd be happy to turn it back now to my friends in Zurich. Thanks, guys.
Thank you, Mike. I'm going to quickly talk about our industry business. We talked a lot about construction, but there's a beautiful business in industry and automotive that is worthwhile also to share our outlook for this year. A big part of that is automotive, which has seen some very difficult years with the transformation to the e-mobility, with the shortages on ships that have limited the output. Here last year, it was a 6% volume increase in produced cars. The expectation also going forward is that there will be another 3 million built. It looks like a steady recovery, but keep in mind, this is still 10 million short of what the volume was in 2018. That's also the volume that we expect also to come back over the coming years.
It's still restricted in output, but slowly but surely improving. As you can see, with our 22% growth in global business and the 6% on the build rate, clearly gaining market share on the new technologies. I talked about the battery, but also the cars are built in a different way, and they require different solutions. Here, our adhesives, our reinforcing structures are helping to make the new construction much more efficient and are gaining traction and new business awards.
Also in global business or in automotive, the addition of the Hamatite business is supporting our expansion to the Japanese OEM, and we have seen in the first 12 months of that acquisition, great recognition and drive from the JOEM customer to further bring our know-how and technologies to a higher degree into those car builds. We also need to talk about the automotive competence in running 24/7 operations at a high efficiency, which triggers then also the construction to move more into, let's say, modular building, offsite construction. Here, this expertise that we have in industrialized manufacturing, which means very precise, very process-driven solutions compared to very robust solutions manually applied from - 5 degrees to + 40 degrees. This is a different world in an industrial manufacturing setting.
This competence is a competence that is unique, how Sika can combine these 2 worlds and help also to make thisLet's say offsite construction, to be more efficient and, to be also, gaining traction. I think Ivo mentioned that it's a clear statement by the Saudi project to go new ways of manufacturing, to go more into offsite than assemble onsite, rather than build everything onsite. These competencies, this is a key, I would say, benefit that Sika can bring to this market. I think here also, sustainability is a key driver, not only for the battery, but also in all the other product offering to enable the transformation of the manufacturing industry, just like, in the construction industry. Now I would like to sum up our expectation, our outlook for 2023.
You can hear it from my regional colleagues, you hear it from myself, we are positive, we are optimistic. We see a range of 6% to 8% net sales growth. Absolutely, that's realistic. This combined with our drive for over proportional EBIT growth, that's our expectation of 2023. We close the MBCC transaction in the H1 . Stay tuned, this is coming, this is in its final shape. Besides that, we are still working under the Strategy 2023, and we are completely committed to confirm also those key targets that are outlined in our strategy. Probably towards the end of the year, we're going to share then the Strategy 2028 with some new elements, new flavor to it and hope to decide to then later this year.
With that, we would now move over to the Q&A. If there's anything not yet answered, then Adrian and myself are, of course, available for your questions. We need the microphones. Maybe. John, if you.
Thank you. John Fraser-Andrews, HSBC. 2 areas of questions, but there's a couple to each 1, if I may. The first on sales. Thomas, could you share with us your pricing strategy going forward, and within the 6% to 8% local currency sales growth? Perhaps you could give a bit more color on volume, from what's been said, within the regions and global business. It looks like that certainly Asia and global business have got some positive volumes ahead of them. Americas sounds like Christoph and the team are gunning for a positive outcome. Your EMEA probably remains the question mark. If you could comment on. Mainly, actually how you see EMEA volumes padding out.
Secondly, on net debt, the balance sheet. Adrian, you know, you're on record of projecting 2.5 times post MBCC. Does that still stand with the divestment within the business, the core business, the CapEx to sales, has that peaked, or is there more to come? The working capital inflow in the H2 , has that's now stabilized before any consideration of MBCC? Thank you.
Okay. Many comments there, John, I try to answer. On the pricing side. I think on the pricing side, a year ago, we talked about the delayed pricing catch up with the high increase of input costs. Now we see that the input costs, some of the input costs are trending down. We've still other input costs, like cement that are trending upwards. We have, of course, other inflationary costs coming in. Overall, now for 2023, we expect also that there will be some delayed, let's say normalization on the pricing side, which will add to this 6% to 8% growth in the magnitude of 3%, maximum 4% probably, in 2023. You asked specifically about the EMEA volume.
I think here we have seen a rollercoaster in the past 3 years. As I call it, the wild 20's. Who knows how the year will end. We know how it starts, and it can change. The rollercoaster has up and downs. We saw it in China, we saw it in the US, we saw it in EMEA. Last year, EMEA was starting quite strong on the volume side. The war came in February, just a year ago, probably changed a lot, so it's. Going forward, we expect that volumes are still in the H1 , somehow negative when we talk about Europe and distribution, but, we also expect that there will be a normalization in the H2 . Besides that, I think it's very important what also Christoph mentioned, you know, go where the money is.
In every downturn, there are also elements that are growing. With our broad range and with our segmentation across 8 target markets, you know, we can align our efforts there where the money is, where the growth is. I think Ivo mentioned that. It is maybe less on the retail side, it's more on the infrastructure, it's more in the renovation, it's more in the backlog of refurbishment of water treatment and so on. We are very positive, even if the environment may not be so rosy, because we have the possibility to pick and build on the elements that are attractive and still growing. EMEA is, of course, more than just Europe. We have outstanding growth, double-digit growth expectations for the Middle East and for Africa.
It is a combination of all these elements that make us also feel positive for EMEA as such. Maybe just like last year, not reaching the growth momentum of other regions. You mentioned Asia, global business, Americas. That's fine as we consolidate and we will also see it in other momentums in Europe going forward. Adrian.
Well, picking up on your 2nd question here, John, on basically leverage. I mean, you have seen the trajectory on the deleveraging, which is, you know, pretty much in line with what we had expected and also guided for. This is also the case for, let's say, the 2.5 annual terms guidance post MBCC. Obviously a little bit depending on exact timing, but overall also as, let's say, the divestment element is a bit more clear here now, also in line with what we have guided for. There's no change there. You mentioned the 2nd element, obviously, of, you know, driving this working capital.
We have also seen quite, you know, a sizable run-up in the last 2 years, primarily valuation driven, but also, more lately, again, here improving the efficiency and with sort of valuation impacts also easing. I think here we have an opportunity, going forward. You know, clearly from today's perspective, no change to that, to that outlook.
Good. Further questions? M aybe. The microphone, please.
Thank you. Remo Rosenau, Helvetische Bank. The guidance goes for an over proportional EBIT increase, but of course, without the impact of MBCC. Does this include or exclude acquisition-related costs like the CHF 78 million you incurred in 2022? Let's say, you will close the deal by the end of H1. In the H1 , there will be an additional cost like that. Will they be also excluded in this guidance or included? This is the 1st question.
Here all the, let's say, MBCC elements are excluded in that guidance. That's in that sense, the development without MBCC and in this regard also these one-time costs.
Okay. That means you will disclose the adjusted number then. I mean, you didn't so far.
I mean, we will obviously provide then, more guidance here generally on the outlook, including MBCC once, you know, the transaction is closed, as this is dependent on the timing also in terms of the development of the one-time costs. This will be disclosed.
Okay. Well, that is part of my 2nd question. Of course, we are most interested in how the situation looks with MBCC. Could you remind us, I mean, you gave some indications 15 months ago, how the profitability situation looks now at MBCC. Is it higher, lower? Probably some indication about the integration costs again.
Here on the development of MBCC, also here, I would say broadly speaking a positive development overall. As you allude to, there is, let's say, from an incoming profitability point of view, there is a dilution. I mean, we're at sort of, you know, 14% EBITDA in terms of incoming profitability. There is also an element of intangible amortization initially. So from an incoming point of view, there is a dilutionary effect. Obviously, over time with the strong synergy guidance and also as the business overall will continue to develop well, there is a clear improvement.
In terms of the individual elements also relating to, let's say the one-time cost from today's perspective, there is no change in the overall, you know, guidance of the, of the CHF 200 million. In terms of the phasing, which has been very much front-loaded, now, given the process, and the, and the separation, we will then give more, more granularity once this is done.
Okay, great. In the full year, you had about 2% lower volumes. Could you give kind of, you know, the development over the quarters? I mean, Q1 was presumably still pretty strong, and, how did it develop over the year?
Q1, as you rightfully say, that was mentioned, particularly also EMEA was actually still quite strong with a positive volume, which is then moved into negative territory in EMEA. Particularly, all the other regions have actually shown throughout the year a positive volume development. Q4 was the lowest also impacted hereby, some of the, you know, one-offs, particularly relating to China and the changed COVID policy. No, let's say, significant deterioration.
Clearly Q1 was the strongest. Obviously all these elements were felt throughout the year with, let's say, a slight reduction in Q4 as well. Mostly related to these specific effects.
Okay. Thank you.
Yes. Hello. Stefanie Scholtisek, Mirabaud. Can you maybe share with us a little bit how was organic growth of MBCC in 2022? I would have a 2nd question to the U.S. You were talking about reshoring, and can you quantify a bit how much was coming from reshoring? You were also talking about other industries than the semiconductor industry. What other industries are reshoring or nearshoring into the U.S.?
Maybe quickly on MBCC, of course, not being at liberty of, you know, sharing all the details here, but overall, also a strong, actually double-digit growth, and most of it organic, more, also a rather small positive FX impact compared to us, but a very similar development, and here, as with us, you know, a good solid. Obviously, this includes pricing, organic cost at MBCC as well.
Okay, maybe on the U.S. reshoring question. I mean, it's most pronounced in the automotive industry where it starts with the batteries. It's also continues with the chip manufacturing plants which are under construction. It's also base automotive factories. I mean, the U.S. market is a particular, or let's say North American market is a particular 1 where still 25% of the cars sold are imported. The expectation that this ratio, which has been for many years like that, is going to be reduced. There will be more, let's say, domestically or in the region produced cars. We see also activities on consumer goods, that's home appliance, where we have huge, let's say, production volume in Asia for North American market. Their projects are coming to the forefront.
I think this is just the start of a wave of, let's say, accepting that the global availability and the, let's say, the trade barriers of the past are probably not going to be reestablished and hedging risk of what we learned in the past 3 years are going to further bring industries back to North America, maybe not to the U.S. only, but I guess also Mexico will benefit.
Great. Thank you. I have a 3rd one, if I may. It's actually a clarification question from Remo earlier. EBIT is growing faster than sales. That's what you're saying. We had CHF 88 million from M&A transaction costs. Just to be sure, this faster EBIT growth, that's including this one-time effects or not. Is it fair to assume that this one-time effect will be higher in 2023 than it was in 2022?
Well, this one-time effect consists of 2 elements. It's basically the gain on the sale of the Industrial Coatings business. Here, the impact was CHF 166 million. Against this, a negative CHF 78. The balance of CHF 88 million, we basically have to overcompensate in order to be in this terminology, over proportional.
Good. More questions.
Daniel Pomeroy from Vontobel. This morning you announced that you will add a new management layer of regional and corporate senior managers to your organization, and also install a new senior management group that will increase the agility of your organization. Why do you believe that this is necessary? Is this just because of the size of the organization? How many positions will it be, and what are the expected short-term costs and long-term benefits? Thank you.
Maybe here I go a little bit back in history. The Sika senior management level was introduced, and the company was at the size of about CHF 4 billion. It's roughly 150 senior managers that at that time were, let's say, linked through common goals and also common, let's say, trainings and meetings and kind of an extension of the group management. Since we are now crossing the 10 billion mark and furthermore, we saw the limitation that we have a great management pool below the Sika senior management, and we felt it is the right thing to incorporate and expand. Now we have 450 senior managers.
Out of the 450, 150 are, let's say, the Sika senior managers, which are under my direct, let's say, wings. We have then the regional senior managers, which are under the wings of the region managers, and we have corporate senior managers, which are under the wings of Patricia and Philip, taking care. We are aligning those 2nd level of senior manager to align them to the group more closely in, include them in our decision-making, in the, in the strategy definition furthermore. It is, it has been announced early December. It has been become effective beginning of this year. We have outstanding responses from the organization that we have this expansion rate.
Let's say given the size and, we were at 70 countries at that time when it was introduced. Now we're at 100 countries. Regions today have the size of the company that has at that time. It is a natural progression, and I'm very happy that we, that we were able to introduce this in a smooth way, getting the buy-in and of course then build on it. This is not only a recognition, it's also in the course of the talent development, playing an important role, the alignment, the strategic discussion we have. This is to me the key element also to transform the and make sure that the company is well-aligned. It's 27,000 with this additional recognition of senior managements.
Thank you, Thomas.
Good.
Hi. Martin Flückiger from Kepler Cheuvreux. Thanks for taking my question. I've just got 1 remaining actually. You've been talking about input costs very briefly earlier on. Could you elaborate a little bit more on what you've seen in terms of raw material price development in early 2023 and what kind of trends seem to be establishing themselves short-term that you think are gonna be sustainable at least in the H1 ? Thanks.
Okay. Shall I? I mean, I can hear this is on the input cost, raw material. This is also a rollercoaster. You can say some of the restrictions, some of the limitations that were also on the petro-based raw materials are now lifted. We see there a clear trend that we come back from a very high level, not to what we have seen before it all started, but we see this trend. We have on the other hand, raw materials which were relatively moderate last 12 months, like cement going into heavy increases. Here we're not talking about single. This is in the neighborhood of 20% to 30% of cost increase. Input costs on the raw materials are also, let's say, a bag of different elements.
Overall, the sum of the input costs on raw materials are clearly trending backwards, and we expect that this will also continue at least for the coming 2 quarters, sorry, until the middle of the year. We will see what other elements will play. Unfortunately, we not only have input costs from the raw material side, we also have energy costs in there. We have the labor costs in there, which unfortunately are still going in the other direction. We have to be cautious that we don't make too soon assumptions about how much the benefit from relaxing raw material costs are.
Speaking about labor costs, could you provide some indication on what kind of labor, what kind of wage inflation level you're expecting for this year?
Thank you. Do you want to-
In terms of if you look, let's say on a like-like basis or with, let's say the same number of employees, it's probably around, you know, 5% across the group, which is, you know, a bit up from typically sort of the, you know, 3.5% we have as we have been operating for a long time in more sort of, you know, high inflation environments. This is clearly an element that is a bit lagging, you know, given some of the structures, particularly in the mature markets. Also, let's say in the countries with higher inflation. That's currently our assumption.
This obviously also means continued, let's say improvements in the, you know, leverage on that side as well. That's the underlying expectation for, you know, salary increases.
Good. Maybe over here. You have? Maybe before we go into the virtual, there are many questions as well from virtual attendees, but of course there are as well questions from journalists. Benjamin , I've seen you from probably if you give the opportunity 1 before.
Thank you very much. J ust to add a bit of color to this, might a slightly different topic, if I may. Regarding competition, I assume you won't comment directly on the actions of other companies, but if we would assume that there would be a big Swiss concrete manufacturer, copying your kind of strategy, adding value-added materials into the portfolio, how would you react to that? Would you be honored? Would you be a bit concerned about growing competition? How would you take that?
Okay. You're right. We are not too much commenting on individual competitors. We have competitors everywhere. We have ones which we respect greatly because they are value driven. We have others that have different means to compete, especially in local fields. No, we are not afraid of our competition. In 1 way, the other way, we respect competition, we also are observing, of course, strategic moves of competitors, of potential competitors. Of course, we have this on our radar, and we take it into consideration. In regards to, let's say, new entrant or let's say, competitors that are expanding in our field, for us, we also consider what is their base business and how is the base business going to contribute synergy. Is this actually strengthening their position?
Is this something we should be afraid of? This plays a role, it's not only the, let's say, a Swiss company, it's also a French company that are clearly addressing the material or the chemicals as a core area. We take note, but we also see that we are not afraid that, let's say, their base business is giving them a strategic advantage. These elements are, let's say, we are taking note, but at the same time it doesn't really change so much the competitive landscape as most of that is through acquisition, which means that competitor was before under another name competing with us more or less, and is competing also today and tomorrow with us more or less the same way.
This may be just, yes, with a market leadership, we have 10% market share globally. We recognize changes, but we deal with that and this is to us, we don't look so much left and right. I think we need to advance our leadership role. Sika also demonstrate that we are allocating our resources, our hardware, our software, our innovation power, and then we say let it up to the customer to decide who is offering the best value for the price offered. Here, I think our drive to gain market share also going forward is indicative of our confidence that we have in our hands and are not dependent on moves of others or markets we can offset.
Great. Thank you.
Good. Probably, 1 question from the virtual attendees. Let's take up Cedar Ekblom from Morgan Stanley. She is here as well with a question. We cannot hear you. Not yet. I see her on the screen basically, but she's not yet in the loop. Probably we have another question now. Right. Christian, you jump in. Thank you.
Thank you, Christian Arnold, Stifel. 2 questions. As you're very near now to the closing of MBCC deal, you probably have now a clear picture about the financing costs. How much will that differ from 2022? How much is the impact here?
I can, you know, quickly take this. There is actually no change to, let's say, what we had communicated a few months ago. We will, you know, continue to, you know, finance the MBCC acquisition as a combination of cash. You have seen here the cash balance also unused, you know, credit lines plus additional bond issuance. The, let's say, incremental interest cost on an annual basis will be about CHF 90 million interest costs.
Okay. The quick 2nd question would be, coming back again on the integration costs or deal costs. Probably you had some CHF 10 million in 2021. We learned we had some CHF 78 million in 2022. MBCC is not even on board. You are talking still about CHF 200 million. We know that lawyers and consultants are very expensive people. The integration work has to be done now in the future, and you have actually just half of your budget left. How will that turn out?
As you rightfully point out, there is 2 elements, obviously. Let's say the process or the acquisition cost, if you will, and then the integration element. Clearly, obviously, you know, given the longer, you know, period here of the process side is having an impact on cost. At the same time, it's also a bit of a front load-loading given the separation, and in that sense, sort of advancing also here some of the cost which would have then more been realized in the integration phase. From today's perspective, we don't see sort of a meaningful deviation, but we'll also give here an update then, once this is also more clear.
I don't think it will sort of, you know, be massively different, compared to the initial indication.
Would it be a fair assumption maybe to divide this, the rest of the CHF 100 million?
For 3 years? I mean, more or less, or 2 years or something.
I think there will be, let's say, another sort of larger share in 2023, and in 2024, and probably in 2025 and relatively small.
Thank you.
Let's try it once again with Cedar.
Thanks, Dominik. Good morning, everyone. Hopefully you can hear me now.
Sure. We can hear you. We can't see you. Yes, now we see you as well. Super.
Good. Great. Thank you. A couple of questions, 2 of them just to understand a little bit the mechanics around how to think about the guidance. Can you confirm how much the M&A contribution is in the 6% to 8% excluding MBCC? You've obviously done some smaller bolt-on deals, so a bit of a guide on that would be useful. Is it a fair assumption to think that EBIT margins should actually be down in the H1 of the year before improving significantly in the H2 of the year if that volume growth potential comes through? Or do you actually think you can grow EBIT margins in H1? A specific question on US commercial roofing. It's been a market with fantastic volume and pricing growth over the last 18 months.
Can we get a bit of color on how you see that business developing today, if you're still growing volumes from here, and some view on the backlog and outlook as we extend through 2023? Thank you.
Good. Well, thanks, Cedar. I take the first 2 elements here. I mean, in the sort of the outlook, what is sort of implicit in it's sort of a, I would say, sort of a normal contribution which we typically have from bolt-on M&A, so 1.5%, 2%, that's sort of the implicit inclusion here on that side. In terms of the EBIT margin, as we have, you know, discussed here, obviously, volumes will be more challenged in the H1 year compared to our expectation for the H2 year. That's 1 element. Then obviously we have this significant one-time impact, at least on a half-year basis due to the sale.
For the H1 year, yes, EBIT margin are likely to be lower.
Okay. Maybe on the US roofing market, since Christoph just came back this week, I guess here we have firsthand some information back. To start with, you're correct. The roofing market in the US has seen outstanding 18 months, and we are also confident going forward. Christoph, if you would like to add a bit to this.
Actually, information right from the press, because that was exactly the question we also discussed, the last couple of days. I would say December, January, we see that a lot of our contractors in roofing, you know, they're consuming their inventory, which they built, because they were afraid, you know, they're not getting enough material. The last year, they built up inventory. December, January were not the strongest months in roofing. The bidding for new projects is as strong as ever before, let's say for March onwards, and that, let's say, keeps me very positive, that we will see a strong roofing year in the U.S. also in 2023.
The proof that this is true is that, you know, our factory in the US is producing at full speed. We're not reducing a shift or whatever. We produce 24/7, 3 shifts because we believe this volume will be easily consumed over the next months. We remain very positive, also for the commercial roofing market, I would say.
Thank you.
Okay. Further questions here in the room or-
Just a question on free cash flow. Your operating free cash flow as a percentage of sales stood at 8.2% this year, which is clearly below the target that you outlined above 10%. What will you take in order to bring this above the 10%? Could we expect this to be reached this year? Then maybe with the MBCC acquisition, how will working capital change? Currently, your working capital is about 18% of sales. Will this change significantly going forward with the consolidation of MBCC? Thank you.
Yes. On operating free cash flow, 1 of the key drivers, you know, has been your net working capital buildup, largely driven by, let's say, valuation, and, and growth, also price driven, but also a certain level of, I would say, inefficiency, relating to, you know, supply chains. Here clearly on the inventory side, in the last few months, we have seen quite positive progression as well. I would clearly expect, let's say, working capital buildup to be less strong in 2023. That will be, let's say, the main driver here of, you know, bringing operating free cash flow above the 10% line again.
In terms of capital expenditure, here we have also seen sort of a, basically coming back to a more normalized level. We're still a little bit below 2.5% of sales. A more normal level is between 2.5% and 3% in terms of, you know, CapEx, and that would be the expectation for 2023 as well. In relation to your question on MBCC, very similar, you know, ratios, obviously as the business in the very same way is less, is not capital intensive and quite, you know, cash generating.
Good. There are 3 further questions that I'd like to take from the virtual attendees. Let's start with Elodie from JP Morgan. She is raising her hand here. Please turn on your camera as you speak.
Hi, everyone.
Hello, Elodie.
Hi. Thanks for taking my questions. First of all, I'd like to come back to the guidance that you've provided and the follow-up from Cedar's question. You've said within that 6% to 8% growth, you have about 3% to 4% pricing impact. Then I think you said 1.5% to 2% acquisition impact. First of all, on that 1.5% to 2%, are these acquisition already announced? I think you only communicated on 2, which would actually account for about 0.5% of sales, if I'm not mistaking. Do you include some more bolt-ons to come into like further announcements in this guidance? Then if we understand that correctly, does that mean your guidance for volume is about 1% to 3%?
That's my 1st question. My 2nd question is on margins. First of all, on gross margins, are you comfortable going back to that 54% target in 2023 after the 49.4% in 2022? Within the EBIT margin guidance, you haven't actually specified, and you haven't really iterated that 15% to 18%, but we can assume that this is in place for 2023, right? Lastly, if you could comment on current trends after the one-off impacts that we've seen in Q4 on U.S. weather, but also in China, notably the trends on China project businesses. Are you seeing a recovery in these businesses right now? Thank you.
Thanks, Elodie. A lot of questions. I'll try to address them here, at least the first 3 here. In terms of M&A bolt-ons, the 1.5-2, that's I would say the element that is included here in the guidance is clearly not yet in the bag. I mean, you have rightly commented. I mean, what's the sort of the spillover is very small. This would be additional bolt-ons, very much in line also with the fact that we will certainly continue to do these bolt-on acquisitions going forward.
As to the margin question, I mean, 54% to 55%, we clearly see an improvement vis-à-vis 2022, with, you know, a trajectory and, you know, clearly an improved material margin, you know, above the 50%. I don't think we will be back to 54% to 55% in 2023. Obviously, as, you know, a large part of this is driven by sort of the mathematical effect I was alluding to, but that should clearly not be the expectation in terms of the percentage material margin for 2023. Again, here on MBCC, this is excluded from the guidance overall.
T here was a question on China.
On China.
That's a good question. If I knew that would be great. I mean, you heard Mike talking about China. We are quite optimistic. Our local organization is seeing that the Q2 will quite significantly show a rebound of the activity. We have, as you know, we have our direct business, and then we have our distribution business, which is in expansion mode, has been on expansion mode in the past years. It's also, let's say, over this difficult time, continuously grown. This, we expect to come back to that level as it was before. The project business, which is a business that we expect to be further supported by government initiatives to drive the recovery, to be seen. We expect this, yes. Our organization is expecting this.
The projects are there. You know, they were not able to execute. We expect a restart the and continue those projects and add new ones. For China, I would say I'm optimistic as Mike is. We will reconfirm during Q2. We will also first time after 3 years, go back to China and have in-depth discussion with our management there and realign physically on the China topic. So far, I don't see, you know, a real concern with the recovery of China. China is a self-sufficient market in many ways for us. Our solution and products are going into domestically utilized products. It's not export-dependent, therefore initiatives to keep the economy growing in China will benefit Sika's business 1-on-1. Here, I'm really. I'm positive.
I'm also maybe in general, our guidance 6% to 8%, I consider this guidance as a cautious guidance. I showed you in the past 10 years, we have grown 10.8% year-over-year. We are below that 10.8% in local currency for our, let's say, expectation for this year. You know, is it possible to reach that level? You know, who knows what positive elements we will see. Our guidance just in context and with all the elements that you have asked and questioned and so on, I think we have a cautious guidance. Of course if the sky is falling, if we have a complete disaster everywhere, it will be pretty tough. That's not the scenario that we take as our guiding principle so early in the year.
The 6% to 8% is in line with the strategic direction. In reality, when you look the past 10 years, across all the years, given also the COVID years, the supply chain and so on, that's the momentum that our company can deliver. We take the challenge. We are cautious, but at the same time, we don't see any reason why we should go into a negative mode into 2023. Dominik, more questions or?
Yes. There are 2 more questions. Please, Alessandro Foletti is the next 1, from Octavian, who has a question. Please turn on as well the camera. Then already ready is Yassine Touahri as the next 1 from On Field Research. That will be then the last 1 that we can take within this time. Thank you very much for joining online.
We see you. You're on camera sometimes.
Okay, good morning. Can you hear me?
Yes.
Yes.
All right. First of all, apologies for not being there. I'm sorry about that. I have 2 questions. 1 on the convertible conversion. I saw there was CHF 1.4 billion this year. There was CHF 400 million last year. Does it mean that the mandatory now is fully converted? Do you know that?
The mandatory bond has fully converted at the beginning of 2022 already in January.
Right.
We have outstanding is the straight convertible bond, and particularly due to the high share price, in 2021. The beginning of 2022, there was already early conversions, you know, triggered by the bond holder. There is about CHF 1.25 billion left. The instrument matures in 2025, there is a soft call option in Q2, to the extent the share price trades above CHF 245.
Right. Can you tell me how many shares then, will come on top then after that?
That's about 6.8
All right.
million shares. It's about 4.5%.
Right. Okay, great. The 2nd question is probably also for you, Adrian, maybe a little bit more complicated. Is on the MBCC synergies. Now, due to the disposal that you're doing, you are giving away some cost. For sake of example, let's say the EBIT margin before this transaction, i.e., if you had taken over everything, was 10%. Now you sell CHF 1.9 billion with some cost. Let's say the incoming margin is now 11% to 12%. The CHF 160 million to CHF 180 million are on top of the new 12%, or part of it is already cashed in?
Yeah
into this deeper trade.
No, it's on top. I mean, that-
All right.
you know, clearly communicated here, we maintain the CHF 160 million to CHF 180 million guidance on, let's say, the smaller perimeter, whatever comes in.
All right. I guess there will be then more information when you close the transaction and tell us the details.
Exactly.
Do you plan to maybe have a conference call then, when you close the transaction?
It will depend on the timing, whether we use a sort of a regular, you know, update, time.
Right. Right.
or specific, we'll keep you all informed.
Okay. Thank you.
Now as the last question from Yassine. If we can bring him to the screen and then we can start with your question, Yassine.
Thank you very much for taking my question. I would have 2 questions. First on the MBCC outlook and the outlook for cement and concrete admixture. What we see is that most cement producer are developing green concrete, and they are progressively replacing clinker by supplementary cementitious material. I'd like to know how do you think about this trend, and specifically, how much more cement additive or concrete additive do you sell when you're selling to a customer that's going to produce green cement or green concrete versus traditional cement and traditional concrete? That would be my 1st question. 2nd, could you give a bit more color on your expectations for Europe?
I think some investors are a little bit surprised between your guidance, which seems relatively optimistic, and I think there was an insulation producer last week which was suggesting volume potentially down by 10% to 15%. I'd like to understand what is your view on Europe, and do you see any positive trend related to energy renovation given the very high energy price that we've seen last year and the willingness of Europe to become independent from Russia in terms of energy consumption?
Okay. Yes. I take the questions. On the concrete side, it's in line with what I mentioned. The consumption of, let's say, Portland cement, so pure cement, is clearly in the interest of all to be reduced, replaced by SCM, but it's also in the interest to move from virgin aggregates to recycled aggregates. All these components together are requiring more chemicals to provide the same performance of the ready mix concrete. To give you a magnitude of that's kind of difficult. Depends on what grade of concrete you're talking. I would say as a guiding principle, probably to double the content of chemicals for clinker reduced and recycled aggregates containing concrete.
Here, clearly, yes, this is a field where I think also our lead customers, the cement and the concrete producers, we are highly engaged with them. This is the strategic alliance, as I mentioned before, under the net zero pledge. You know, we have to help each other. I think our contribution with the chemicals is key. I guess the statement that the EC commissioner made is very spot on, that it is crucial that there are different players providing this. This is clearly underlying the attractiveness and the future needs for admixtures to the cement and concrete. 2nd question was on Europe volume. Here, you know, we have seen in Q4 very steep volume decline, especially in distribution.
That was also under the impact of the uncertainty on energy availability. We see now some relaxation. We see some panic overreaction has calmed down to a more realistic view on the near-term future. Therefore, we take it up that, yes, this negative volume trend as we go into the Q1 is probably going to improve quarter-by- quarter, given more, let's say, positive or let's say more realistic outlook about the Western European economic recovery. Here we I would say the clouds were the darkest in Q4 when everything was kind of very, very open. Now we see also that the realization it isn't coming as bad as was anticipated gives us good inputs for the rest of the year.
To be confirmed, I mean, we are going to watch this of course. Also from the business side, from our people, especially in direct business where we have a better visibility with the projects that are pending, with the activities. The UK, for instance, is a market where almost the project came to a standstill during this crazy period where there was no leadership. The projects are ready for execution. The money is there. We see now also that this is going to be released and will boost demand in the UK, which had a very bad, let's say, 4 months behind on the volume side.
Does it mean that the volume in the Q1 in Europe could be declining at a pace which is less significant than in the Q1 , despite a much stronger, much more difficult base effect?
You mean in the last quarter?
in the last quarter, since you had a double-digit decline volume. Does it mean that in the Q1 the volume?
Chances-
Um-
Yes. Chances are realistic that it will improve from the Q4 volume trend.
Thank you very much.
Good. I guess with that, we have exhausted all the possible questions and angles to see how 23 is going to evolve. Let us close the MBCC deal. As soon as we have that also there, the facts together, we are going to update and also we are eager to provide you a guidance for the complete company. It's just too early. We don't want to communicate things that are still, let's say, quite variable on timing, on impact and so on. I ask your patience on this, but we are also excited to close the deal. I think came also from the regions. We are ready, but we have to respect also the, let's say, regulators need to follow procedures and check the boxes everywhere in all possible ways.
There are 6 regulators in the boat that are doing that in parallel. It is still not yet done, but soon to be then reported back and then also the integration and then the updated outlook for the organic as well as for the MBCC will then be shared once we, once we are there. For this, now I would like to thank you for your presence here or virtual presence, the support you have provided to the company, the challenges that you provide us in questioning how we are operating. We take it sportive. That's good. That makes us, that makes us also stronger.
Therefore, if you feel a little bit the need to reload and refuel, we will have some snacks and some refreshment in the back for those that are here in the room. All the others, thank for the participation and looking forward next time to talk about the topics as outlined, MBCC outlook update. Thank you very much.