Good morning, ladies and gentlemen, a warm welcome to this analyst conference on Sika's results 2015. We have decided to have all our regional responsibles here as well this morning. Our agenda is a bit longer. I would like to take the opportunity to introduce to you part of our group management, Jan Jenisch, our CEO, Adrian Widmer, our CFO, Paul Schuler, who is responsible for the region EMEA, Christoph Ganz, responsible for North America, José Luis Vázquez, responsible for South America, and Heinz Kissel, responsible for Asia-Pacific. I like to start today's conference with a review on our strategy. We are now in the middle of implementing Strategy 2018, which was developed back in 2012 based on our new market approach through target markets. As you know, the strategy stands on the five pillars mentioned on the left of the chart.
Our target market concept has developed and proven to work very well. We can indeed go or address our strategy individual to each country and put priorities on the target markets depending on the opportunities an individual market, local market offers. It also turns out we've chosen the right target market, as all these target markets show growth thanks to the mega trends behind. Sika has always put high emphasis on innovation, since 2012, we were able to file close to 300 patents. Innovation is our most important differentiation compared to competitors. We have also decentralized our development efforts, in the meantime, we have 20 global technology centers. We develop our products very close to our markets and our end users. At the same time, developing emerging markets and going to emerging markets very early has always been a priority of Sika.
Since 2012, we opened 30 new plants, and we founded 16 new national subsidiaries. We have always supported our organic growth through acquisitions, bolt-on acquisitions. We could do, since 2012, 17 new acquisitions in all of our regions, with accumulated annual sales of close to CHF 600 million. The implementation of our strategy is founded by our values, strong corporate values, which mean a high accountability for the P&L. This P&L lies on each country manager directly, and this produces a very high ownership for the business and an entrepreneurial spirit. As you can see, quite successful in implementing the strategy, and this did bring us to a review of the strategy in the middle of the term. To continue with the values and our empowerment, we really do empower our managers.
We have done a strategy review country by country and target market by target market. To visualize that a little bit, our Strategy 2018 is an accumulation of seven target market strategies multiplied by over 90 country strategies. We have over 600 strategic fields, if you might say so. We have found more and additional growth opportunities during this review, and they've been brought forward by management, and the board has decided then to increase the targets compared to the earlier targets for the remaining part of the strategic cycle up to 2018. We've already published those new targets back in January. Let me go through those again.
We stay with the 6%-8% growth per year, We have refined the growth in emerging markets a bit better as strictly limiting it to sales with the devaluation of some of the currencies we found is not an appropriate target. We want to focus more on the growth dynamic in these markets. Our growth strongly depends on how local we are, as building materials cannot be transported around the world. The measure is the number of new plants per year, which we've defined to be at least 6-8 new plants, and the number of local companies, subsidiaries, and we want to be over 100 national subsidiaries by 2018. I am also very pleased that we could see a very positive development on the margin in the past three years.
We've decided to increase the targets for the EBIT margin to a range of 12%-14%. Same is true for the free cash flow, where we have put the target up to higher than 8%. As our business is not very capital intense, we already had quite attractive ROCE target at the beginning of the strategic cycle, and we are happy to also be able to increase those targets by five percentage points up to 25% ROCE by 2018. Quite ambitious targets, but when you compare to what we could report today, and knowing all the initiatives going on in implementing the growth strategy, both management and board, we are very confident we can deliver those targets and results. Let me, at this occasion, also do a remark on the takeover attempt by Saint-Gobain.
I'm very pleased that the operating results in 2015 and as well the implementation of the strategy is so successful. It gives us a legitimation, and also shows the importance of our activities to defend the business model of Sika and the continuing growth. We do this in the interest of all stakeholders. I also can report that we still have full support from public shareholders, from the unconflicted or non-conflicted board members, all group management, all 160 senior managers and all the employee representatives within Sika. We are now close to 15 months, after we have been surprised by this idea. Still up to now, Saint-Gobain could not convince us, nor other stakeholders of the industrial logic of this proposed transaction. I just want to show again a bit the picture, what the idea is.
There is a competitor to us, Saint-Gobain, intending to get 16% capital participation in Sika, Through 52% of the voting rights, plus a majority in the board, to take full control of Sika. Being competitors, this logically leads to conflicts of interests. Just imagine you have control of two companies, Weber, you own 100%, Sika, you own 16%. When there is a conflict of interest, it's very clear which company you are going to prefer, and this is for sure then not Sika. This transaction is also not in the other owners of Sika, the 84%, namely the public shareholders. There is no change in where we stand with regards to the situation and the defense. We are still waiting on the court decision on the application of the voting rights.
You remember that in our articles of association, the board has the right to limit the voting rights of a new shareholder if it is not in the interest, or the change of control is not in the interest of the company. It's exactly this point, which is now pending at the court in Zug. I can assure you that the non-conflicted board members and group management continues to ascertain that all stakeholders are respected in this situation, and is committed to defend the interests of Sika, the business model. We want to make sure that the growth path, which we now have proven to be successful over many years, can continue. This is my introduction, and I now like to hand over to Jan Jenisch, who will report on 2015.
Thank you, Paul, and welcome to our result presentation 2015. You can imagine we are quite proud of the results. We had quite a difficult year from the economic environment. We had the whole year, we had the huge appreciation of the Swiss francs, which naturally is not easy for a Swiss company to counterbalance this basically cost increase you have for factories or functions you host in Switzerland. We had, furthermore, very difficult currency situations in a lot of emerging markets from Brazil to Colombia, from Russia to other parts of the world, which was quite a strong headwind, which we had. Another big headwind is almost the market declines we had in China particularly, but also in Brazil, Russia, and some other economies were not easy.
You can imagine, I was very pleased to see that our growth momentum kept strong throughout 2015 and even was the strongest in the last quarter. We have seen a very good growth momentum. As you can see in our total growth of 6.2% in volumes or in constant currencies for the year 2016. This leads us to record results. We were able to offset all these currencies and other topics we had and convert this volume growth together with some efficiency measures, together with good solid pricing. We managed to further increase our margins, have record results on operating profit, on net profit, on free cash flow, and our EBIT margin reached, and I would say very strong 12.3% already in the year 2015. We are very happy with this. Even more excited I'm about our commitments for the future.
You have seen another year of many investment initiatives which we have taken. We opened three new countries in 2015. We opened another nine factories last year, and we had also five bolt-on acquisitions last year. More or less more than one key investment per month in 2015. That's very promising for the future. Even more promising is our review of the strategy. As Chairman Paul Hälg mentioned, we had a full review of the strategy. Not top-down. We do that bottom-up together with all our general managers in the countries, and we can confirm the functionality of the strategy and also as we are ahead of targets, we were very happy to raise our targets accordingly. When you look at the profit and loss sum, we had with the Swiss franc, our 6.2% growth becomes a small minus of 1.5%.
I wish we could show you the EUR results. In EUR, we would be growing more than 12% last year. Shows the huge impact we have from the Swiss franc. Even more important, I'm happy that we could deliver over proportional bottom-line results. You see here, EBIT is up over 6%, net profit up over 5%, and that is, I would say, an outstanding result for last year and makes us also very confident how strong our model is even in difficult environment. We look very confident in the future on this. A quick review on the markets. We will later about North America. We have a special speaker here, our regional manager, Christoph Ganz. He will excite us later about the U.S. We had the growth of 10% in the U.S.A. This also doesn't come from nowhere.
We have invested the last three years to build up the U.S. further with new factories, with acquisitions. Christoph will share some of the results with you later. In Latin America, we had a difficult year. Of course, you all are well informed about Brazil, what happened to the economy, how weak the currency is. The low commodity prices have also a big effect on other markets like Colombia, Ecuador, Peru, where we are also dealing with a slowdown in economy and of course, a decrease in currencies. Only Mexico remained very bullish throughout 2016. We had a strong double-digit growth in Mexico. Of course, they benefit from the U.S. investments into Mexico. We also based on our investments of the last year with new factories, we have a very good situation in Mexico. EMEA, so Europe, Middle East, and Africa.
I would say very solid results with more than 5% growth. Very stable, solid returns from the big markets, Germany, France, U.K. We have some double-digit growth from Africa, from the Middle East. Also here, Paul Schuler will excite us later on our Africa strategy, what our plans are and how the performance is. Asia Pacific looks a little bit sorry here on the slide with 2.1%. If we take our sales decline of China out, we are also double-digit growth in Asia. We have very good situation in Southeast Asia, in Pacific, also good returns in Japan. China is a special topic where our sales decline was -20% for last year.
I think you probably have some questions later. I think Heinz Kissel, our China expert, is more than happy to explain to you how fast we reacted in China and how our outlook is for 2016. The new factories in the emerging markets. Again, we hear more about this later. It's very exciting that with our leadership model, with modular plant concepts on the one hand and with a decentralized leadership style on the other side, that we are able to have such a high number of factory openings in one year. Also here, very exciting. Already in Dubai, we have the second factory. Same in Russia, we have already four factories. Argentina, also, I think the country is now opening up again. We, I think, opened the second factory in perfect timing. Besides the emerging markets, the U.S., I have one slide here.
This is our latest new factory in the U.S. in Philadelphia. A beautiful mortar plant, as you can see, and we are very excited to share more details with you later. We have new countries following our expansion. We officially opened Sika in Myanmar. Also in the Africa strategy, we have two new country members, Tanzania and Ethiopia, bringing our presence already now to 93 countries worldwide, where we have our own Sika subsidiaries for future growth. On the acquisition side, we are happy that we could close five acquisitions. Please note, three of them are in mortars, our fastest-growing technology with the highest margin. We are very happy that with Duro-Moza, we could acquire a mortar producer in Mozambique. With BMI in Northern California, we could buy a mortar company in the U.S.
With CTA, Construction Technologies Australia, we purchased two mortar factories in Australia. Also here you can see our strategy, how we are able also to add some acquisitions as growth platforms for a successful future. Last but not least, always good to see a little bit how good we are in line with the performance. I think our strategy works very successfully. You can see here over the last five years how we are able to grow the company, even in the difficult environment of 2015. We are in our range of 6%-8%. Maybe even more exciting for you, we are able to increase the margins, not because of one single factor, but because of our ongoing focus on margins and improvement.
You see already the fourth year in a row where we significantly step up our margin and already reached 12.3% for the last year. With this, I would like to hand over to Adrian, who gives you a few more details on our financial results.
Very good. Thank you, Jan, and good afternoon, ladies and gentlemen. After the highlights, I will now give you some more insights on the financial results 2015. I will also start with some of the financial highlights here. Very strong growth, as we have seen, of 6.2% in constant currencies, translating due to the strong Swiss franc in -1.5% in CHF. Over proportional EBIT increase and growth of 6.3% or CHF 40 million in absolute terms. Also here, in spite of very negative or adverse foreign exchange impacts. Only the lower interest costs were not sufficient to compensate for the higher hedging costs and translation effects below EBIT. This all resulted in a strong net profit increase of 5.4%. A record operating free cash flow of CHF 451.5 million. This is an all-time record level. Increased the cash position on our balance sheet to over CHF 1 billion.
Also a further improvement in capital efficiency, driven by higher profitability as well as efficient capital management. ROCE increased by 100 basis points to 24.3%. If you now look at the top line a bit more in detail, the 6.2% constant currency growth was very broad-based again, as we have seen before, and within our strategic target range of 6%-8%, in spite of the difficult market environments in some of the key markets like China, Brazil, and Russia. Organic growth was 4%, and this was complemented by an acquisition growth of 2.2%. Talking about the negative currency translation effect, of course, very strongly influenced by the abandoning of the Swiss franc Euro ceiling back in January 2015, but also due to a weakness of many currencies in emerging markets.
As a total or an average, this did result in a negative translation impact on the sales line of -7.7%. In terms of quarter-by-quarter development, our growth showed quite a good momentum throughout the year. In each quarter, at least 5% growth, even if we had some quite difficult comparables or high comparables in 2014, and had a very strong Q4 with 8.3% growth, with quite an acceleration there. If we move further to the P&L or down the P&L, in addition to the favorable price development, particularly also the good price development of raw materials, particularly also the good price management, continued innovation and product introduction we had throughout the year, all over the business, was able to overcompensate the negative currency impacts we had. As a result, material margin or gross result increased by 110 basis points to 54.1%. This for the fourth time in four years.
On the cost side, non-material costs, being personnel, other operating expenses, and depreciation, increased marginally over proportionally from 41.6%-41.9%. As a result of the unfavorable currency developments, wage inflation in some of the emerging markets, and also acquisition, personnel costs increased slightly over proportionally, whereas on the other operating expense side, the development was below sales growth due to disciplined cost management and efficiency improvements, for example, in transportation and logistics. As a result, EBIT, as I mentioned, improved quite strongly by CHF 40 million or 6.3%, and it is important to note that in all the regions, EBIT margins have actually increased in 2015. As far as the financial expenses are concerned, 2015 exhibited quite opposing trends. While on the one side, interest expenses decreased by CHF 5 million.
Other financial costs, driven by higher hedging costs and negative valuation impacts, increased quite a bit with a resulting overall increase in financial expenses of CHF 9 million. As a result, net profit grew strongly by 5.4%, or in terms of sales to 8.5%. This is up from 7.9%. Moving to the balance sheet, in looking at the balance sheet, also in 2015, we have been able to further strengthen our balance sheet with an improvement of all the balance sheet metrics. Due to a very strong cash generation, the balance sheet at the end of 2015 shows a net cash position of CHF 94 million. This is compared to a net debt position of CHF 82.5 million of last year.
Maybe one element here, the increase of the short-term liabilities and the corresponding decrease of the long-term liability is a result of the reclassification of a bond of CHF 250 million, which is maturing in March 2016. As already mentioned, this has also led to an increase of the ROC by 100 basis points. Looking at the cash flow statement, I already mentioned it, very strong cash generation to a record level in terms of operating free cash flow of CHF 451.5 million. This was driven, on the one hand, by a cash flow from operating activities.
Also here, quite strongly developing to CHF 585.8 million and quite a comparable investment and acquisition spend, which also led to quite a high free cash flow number, which all in all led to an increase of cash by CHF 175.6 million, and again, to a cash position of more than CHF 1 billion at the end of 2015. This brings me to the dividend proposal. Also here, good news. The board of directors of Sika proposes an increase in dividend of 8.3%, namely a dividend of CHF 78 per bearer share. This compares to CHF 72 in 2014, and a dividend of CHF 13 compared to CHF 12 for the registered shares. With this, I do hand over to Paul Schuler, the Regional Head of EMEA, for further insights on our successful strategy execution in Africa. Thank you.
I have the great pleasure to present to you our Africa strategy. It doesn't work. Our great Africa strategy for the world's second-largest continent. With the 54 countries around the continent, it's a very exciting and also quite diverse continent. It's mainly resourcing and economic growth driven by the raw materials, but it has a 15% global population. This population is today 1.1 billion, but also expected to double until 2050. A lot of mega countries around more than 300 million, which means like Nigeria in 250 million. It's a great, huge country to grow. The forecast in investment in infrastructure and energies is expected to go over CHF 380 billion. Quite exciting number for us.
According to the Strategy 2018, we decided to analyze Africa beginning of 2013, and we went to the 54 countries and analyzed the political stability, the demographic trends, the infrastructure spend, as well as the GDPs on one side. The other side, we went then to the micro criteria, where we looked at the cement consumption, on the market potential for concrete, as well as the mortar, tiles, and adhesives. We ended up with the 25 countries on a long list, and finally decided to go with 10 countries in the next three to four years to develop that. That was in 2013. As we have a strong presence already in Africa by six countries, starting with Egypt, where we enjoy great business since many, many years.
We also have two factories there, we have a very stable, strong organization, we grow by around 15% last year. Very stable market. We are many years in Tunisia. We also have a factory where we have a good growth rate. We went to Algeria. We have also a factory there. Extremely profitable and extremely good growing this year by around 32%. Outstanding growth in Algeria. We have a long-term commitment in Morocco since many years, where we also have a nice factory and a stable business over many, many years. South Africa, also since many years, where we have two factories. One in Durban and one in Jo'burg, where we added another additional mortar plant.
During 2013, we detected then that we want to go more in the Middle East than in the West Africa, where we started in Angola to build a factory and a country where we already enjoyed a sustainable good business. We had the great opportunity last year to acquire a company in Mozambique, where we could buy a mortar plant and already had existing customers and a lot of good new projects. Mozambique is very well established already. This year, or last year, we could open the Côte d'Ivoire and opened a factory as well as in Nigeria. Nigeria is also one of these exciting big countries with 190 million people. Many international projects, very good. Fortunately for us, we are one of the first to have their own company there who produces mortars and liquids.
For us, we see a huge potential in this country, as well as in Côte d'Ivoire, where we are number one in construction chemical to produce. We started to build Ethiopia. We opened the company, during this year, we will establish the mortar and the liquid production in Ethiopia. Kenya is active since two years, we have also a good business there already with an own factory. Tanzania, we opened the company, during this year, we will also open a factory. As we said before or I see, it's always timeline a little bit different in Africa. Sometimes it takes longer than you think. To open a bank account in Tanzania took us three months, sometimes it's not really easy. On the other side, in Nigeria, we really could open in six months the company.
It's not always the same and could change all the time. What are the results? The sales growth went by 22% in 2015. We opened new plants as explained. We are active in 16 subsidiaries, we added since 2012, eight. We have already 688 employees. If you look at the great prospect we have in Africa, it's unbelievable how many international projects are there. I just took four to explain a little bit how big they are. They build a new bridge over the Maputo Bay in Mozambique. On this bridge, we have a lot of concrete or liquid to sell. We have adhesives. We could also have proper for the bridge decks. Huge potential we have on a bridge like that. There is a big, huge fertilizer plant in Lagos. Unbelievable huge.
They pour concrete every day around 15 to 20 trucks arrives on this construction site with our liquids and with our products in the concrete. Huge potential and great business for us. There are so many projects in Lagos, unbelievable. In Luanda, they build the airport. You have to understand that, for example, airports always have to follow international standards. If you have the international standards, they need to have good products, and as we are one of the only, or the only one who produces in Angola the product, of course, we are in number one position to supply. We have a huge advantage in the supply chain and good support with local people, local management, and people they speak the language and train the people. Huge project also in Egypt, where they build a huge mall.
In a mall like that, we start from the roof with our PVC membranes. We have floors in there. We have sealing and bonding. We have the windows, the glass. We pour concrete. This is a project below the water level, they need a lot of Sikaproof and waterproofing products. Huge potential on a mall like that. That's only four projects where we have hundreds. It's huge, also you have to get it, and we don't know when they start to build. In future, I'm convinced that Africa will have a great future in the Sika world, and Sika will enjoy the business over the next 20, 30 years to grow. With this, I will hand over to Christoph. Thank you.
Thanks. Thank you, Paul. Good afternoon, everybody. After you heard about the emerging markets, I have the pleasure to present you a little bit our strategy about the real mature market. Mature, basically what you think. Sometimes we get the feeling about certain markets like Texas or New York, that these are kind of emerging markets as well in terms of activities and growth that these cities or states are producing. In Texas, it's like a gold rush happening right now. A lot of people moving into Texas from California. Taxes are lower and the state of Texas itself offers a very liberal, let's say, kind of policy to attract the companies from other states. New York, probably one of the fastest-growing single markets in the United States right now. Right now, we have 30 projects with a size of over $500 million, or 150 projects above $100 million.
Only on this very small area. It's huge. A lot of activities are going on. Once the U.S. came out of the financial crisis, we've seen this very early and we became very active. We defined our strategy, a supply chain strategy, a market strategy. The elements that were driving this strategy were, of course, first of all, the top 10 cities in the United States, starting with New York, but also L.A., a very fast-growing area, Dallas, Phoenix, San Diego, all these big cities. Then there is another list. It's actually an official list from Forbes, publishing regularly the 20 fastest-growing metro areas in the United States. You see on that list, four cities alone are from Texas, like Dallas, Houston, Austin, San Antonio, several million people living there. You find on that list also cities like Atlanta, Seattle.
For a long time, we've been really thinking about Seattle in the construction industry, but Seattle developing very fast. Still California, of course, as you can imagine, but also Florida, for example, where there is a lot of construction going on. All these elements, they have flown into our strategy, and this is basically where we say we want to get close to where the party is happening. That's how the Americans formulate this. We want to be there with factories and, of course, with our sales force. We, let's say, penetrate the U.S. market in a similar way like in Europe, considering Texas like an own company with, let's say, us offering or having our own production sites, own sales force, et cetera. We started to build factories.
In 2014, 2015, we opened, in Denver, Colorado, an admixture plant, and we were surprised how fast we could attract additional volume. There was no other of our competitors really active in that market with admixtures. They had to bring it in from pretty far away. Us just sitting right in the midst of this really fast-growing market, it was really quite amazing how volumes have exploded. A second factory we opened in Atlanta, Georgia. Also, a huge market. A lot of big corporations do have headquarters there, as you know. Coca-Cola, for example. There's a lot of construction going on. Also there, we were quite surprised, positively, how fast this factory could have been filled. For us, this is quite a big number. In the first 12 months, we could ship and produce from zero to 900 full trucks of mortars.
Our self-confidence has increased, as you can imagine. We opened, end of last year, a bigger factory in Philadelphia. Philadelphia is the 5th largest city in the U.S., always a bit in the shadow of New York City, but offers, of course, huge possibilities. This is a mortar factory that we're about to run up and make them operational. Out of that factory, we're also supplying into New York City. On this chart, you see our actual footprint. We're active with 17 plants in the U.S. and in Canada. 7 of these plants have been opened over the last 3 years. There are more plants to come. You see on the very upper left, in the next weeks, we're going to open a brand-new factory in Vancouver, in Canada. This factory, for mortars as well as for admixtures.
This factory is going to serve the Canadian market, British Columbia, as well as Seattle, what I have shown you before. A little bit further down, you see Northern California, San Francisco. Actually, right in the midst of Silicon Valley, we were able to buy a mortar plant. In Silicon Valley, you might know even better than I do, it's fantastic. It's a gold rush happening there as well. A lot of construction going on, and we just sit right in the midst of the cake and, of course, do very, very nice business there. Plus San Francisco, very important area, fast-growing. We don't have to bring products anymore from Los Angeles. This is quite a distance. We're sitting right in the midst of this Northern California market. Another dot you see is Houston in Texas.
I mentioned before, Houston is the glory land in the U.S. right now. Houston is an important port where a lot of raw materials are being brought in that also go into our products. Houston, or where we build our plant this year, is sitting just in the midst of a triangle of San Antonio, Austin, and Houston. We're building this plant this year. Of course, we're very hopeful that we'll see this plant prospering very nicely over the next time. Of course, all these investments into production capacity as well as into sales forces has to show its success also. Last years were very good years for us. 2015 U.S., Jan mentioned it, grew by 10%, we're very confident that also this year and in the future, we should see nice growth coming out of the U.S.
Beside what we call the commercial construction business, let's say high-rise buildings, bridges, highways, commercial buildings, we have also built up a very nice presence in the so-called residential construction market. This is what you know in Switzerland, let's say, it's called do it yourself. In the U.S., this is a huge market. There are two main chains there. One is Home Depot with 2,000 stores. We're active with Home Depot for many years, very successfully. Since the beginning of this year, we got the approval from Lowe's, which is the second largest retailer in the U.S., 1,800 stores, to roll out Sika products throughout all of their stores. They're looking for high-quality suppliers. They're looking for suppliers that are known in the professional, let's say, construction world.
That was, let's say, the argument that convinced them to take a lot of Sika products on the shelves beginning from this year. Being a European living in the U.S., and I worked before in France, one thing is really astonishing and amazing about the U.S., and this is the number and the size of projects. I mean, in Europe, there are not so many projects beyond $1 billion. In the U.S., it's a big list of such kind of projects. Some of them I've listed here on this slide. You see on the upper left the Apple headquarter. This is built right now. It's a $5 billion project. This for us is like gold rush, too, as you can imagine. I mean, we basically can supply all of our products into such a project, from the sealants, the roofing membranes, flooring products.
A lot of waterproofing goes into these buildings. They go for the highest quality products, as you can imagine. That for us was a very good opportunity. It's not done yet, so this is a continuous business during several years that we're able to ship there. Another project is the Tesla Gigafactory, it's called officially, where they produce batteries for cars, but as well as for homes in the middle of the desert of Nevada. It started also. We could supply already the floor. It's a huge building, as you can imagine, and there is now, of course, there are more opportunities to come for us. On the upper right, you see a project still going on. It's called the East Side Access in New York City, where they link the Grand Central Station with the Long Island Rail Road. This is a $5 billion project.
That goes over many years. Also for us, of course, very nice opportunity. Constant, regular, continuous supply for us. There are a lot of arenas being built in the U.S. every year. An arena in the U.S. is worth between $1 billion and $2 billion. The two arenas you see there, they are all $2 billion projects. For us, again, great opportunity for membranes. What you see on the roof there in white, these are white PVC membranes that we manufacture in Canton, Massachusetts, in our factory. On the left, you see at the State Farm Arena, this is a so-called liquid waterproofing. They do not apply membranes. They apply, it is like a paint. Of course, it is a coating. We call this to make the roof waterproof. A lot of shopping malls. Consumption in the U.S.
This is what drives the economy, this is a $1.5 billion project in Miami, new shopping mall, where we also could supply a lot of products into. I picked another icon project that is going on right now in New York City. New York City, by far the fastest-growing construction market by itself. This project is called the Hudson Yards. It is the largest single construction project going on in the United States right now. It is a more than $10 billion project. You never know. In the end, it is usually always more. That is what I learned. That is what is communicated. They started it now. 5,000 apartments will be built here in several towers, restaurants, shops. It is basically a city in the city itself. Once more, as you can imagine, this is a gold rush for us.
This is a very nice business over probably five even to 10 years. Sometimes we can sell all our products, again, from sealants, roofing material, waterproofing material, concrete. There is a lot of liquids going into concrete. In New York, especially after 9/11, they started to build so-called high-strength concrete, really the best. People told us there could be a plane flying into these high-rises, and the plane would not fall down or come down like the World Trade Center. It is highest quality concrete that is being used. Of course, this for us is best news, as you can imagine. We have one to two people working only on this project for the next years, as it offers so many possibilities. I hope I could excite you a little bit about a mature market of the United States.
Despite some pessimism I read mainly in European medias about the U.S. market, I cannot confirm this at all. We are tracking every single project, bigger project, in the United States, and the pipeline is full. There are definitely more projects around this year than last year, and last year was already a good year. Of course, also our pipeline is pretty full. We are confident that we can continue with our growth track. We will continue opening new plants, and we hope we can present you again very nice numbers in 2016. Thank you.
Yeah. Thank you, Paul and Christoph. I think after these exciting reports from how we build up the emerging markets, how we accelerated the U.S., I would like to come to the outlook for 2016. Again, when you look at our strategy, we have, I think, all reason to look very confident in our future. You have seen our track record over the last 4 years with continuous growth, with continuous improvement in margin. You have learned earlier in January how we reviewed our strategy and raised the targets here, and we are very confident also here. We will continue to open up new countries. We want to reach at least 100 countries with Sika subsidiaries by 2018. We have many plans for new factories, so we will keep the speed very high with 6-8 new factories per year for the years to come.
We are very confident, I think, to achieve all this. If we look a bit more specific for 2016, I think it's fair to say the market conditions will maybe not improve over 2015. Hopefully, the currencies will be more stable, at least concerning the Swiss franc. That will be, of course, a big help to us. However, we are very confident that even in these difficult or challenging market conditions, we will remain on track, and we will deliver our growth. We target 6%-8% growth for the year. We have plans for another 6-8 new factories and also another 3-4 new countries which we want to open. I believe we will also continue with the margin improvement in 2016. This is our presentation for today.
If you have any questions, we are more than happy to discuss with you in more detail now.
Thank you for this presentation. It's Patrick Rafaisz, UBS. I have a question for Mr. Jenisch, one for Mr. Hälg and one for Mr. Ganz. First for Mr. Jenisch. In January, you guided us for an 11.5%-12% EBIT margin, so you must have been surprised when you saw 12.3%. Can you explain to us what happened that didn't turn out the way you thought? For Mr. Hälg, there's a lot of cash, and we know from the media that you're trying to do an out of court deal with Schenker-Winkler Holding, maybe buying back the stake. To what extent does this influence your use of funds for acquisitions in 2016? Are you maybe hoarding a bit of cash just in case? Lastly, for Mr. Ganz, the U.S., very interesting with the commercial segment. How is the split commercial and residential now?
How will that evolve with this new win, and how will that impact profitability? I don't quite understand. Is that price competition tough being in Lowe's or is it actually good for your leverage? Thank you very much.
Regarding the margins, we always try to inform you as soon as we can. We already gave some guidance on the 12th of January. I would say we were already positive that we can improve the margins further than the 11.4%, and this is what we wanted to share at that point. We had to then wait for all the finals and the consolidations. Of course, I tell you honestly, I'm very excited that we could improve the margin from 11.4% to 12.3% with all these currencies and devaluations ongoing. We had a very strong closing of the year.
Where was the difference?
There's not so much difference, actually. We had a very strong fourth quarter. As you mentioned, the fourth quarter was the biggest quarter, the biggest improvement we had last year. Again, very positive that our growth momentum didn't follow all the negative media or press releases of market observers. We had a very strong momentum, and then finally we could even translate that into the margins. Very good closing of the year.
To your second question. Since the announcement of this intent from family and Saint-Gobain, December 2014, it has been always our first priority to keep business going as usual. To protect the operational business from that defense. Highest priority is on implementation of our growth model. There's absolutely no cash reserves being built for any other scenario. Focus is our growth model. I can also say that our growth model does not need a lot of cash, really. Our investments typically are very modest. We're talking CHF 1 million-CHF 2 million to open up a new country. There is no impact on the growth model from whatever the offer would look like.
About the commercial residential market. From the market point of view, it's about half-half. In the U.S., of course, you can imagine you have a huge residential market. Sika's never been really active in that. We were focusing on that big commercial piece. Nevertheless, especially during the crisis, residential has not suffered that much. For us, it's an important element of the strategy moving to residential market as well. As I said, this is controlled by a few really big distribution chains. These guys, they really want to work with us because Sika is a pro brand, known among the pros and half pros. These guys coming to your home on the weekend and in the evening to fix things, these generalist craftsmen, and they all buy from The Home Depot and Lowe's.
The Home Depot and Lowe's, they were both very open to work with us. I'm pretty sure there are other companies being very much under price pressure. Us, we're in a more comfortable position because it's a small part of our business. We do not really need that business. Of course, it's a very nice business, and it's already some nice double-digit millions CHF of sales that we're doing with these guys. Margin's fine.
Thank you very much.
Christian Arnold, Bank Vontobel. I have two questions on your outlook for 2016. Maybe if you could be here a little bit more specific. First on growth, this 6%-8%, that also includes acquisition, as we know. You have to have some assumption about what's your external growth. Could you share this assumption with us? Maybe question for Adrian, the acquisition you made last year, that also contributes a little bit to this year's growth. It's between 0.5%-1%, I believe. Could you confirm that? On the margin side, this above-average improvement in margins, that can mean quite a lot. Could you specify a little bit on that? Of course, related to your expectations from the raw material side and from the gross margin side. Thank you.
On the sales side, with the acquisition, we have to be honest. If the deal is coming or not coming, this is very hard to predict. We have no forecast on the acquisition side. We always have a pipeline. We are in a fragmented industry for most our technologies. We have many ideas what we would like to do, but then you need two parties for this. This is very difficult to forecast. Based, again, on the recent years, and you have seen the initiatives from the country investments to the factories, we are very confident that we can achieve 6% plus in sales growth. On the margin side, don't get too excited. Don't get too excited at this point. When you look at the track record now, for the fourth year, we improved the margins quite significantly.
When I look at our plans we have, we feel confident that this shouldn't stop this year.
From the raw material side, how much tailwind would you expect?
I think the raw materials is always a bit over-stressed in our case. We have done this improvement of gross margin, of EBIT margin, over the last four years, with or without raw materials. We believe with the new products which we introduce into the market, with our value selling, we should always be able to have strong margins. Secondly, when you look at the raw materials, we have about, I would say, around one-third of our markets who had no tailwind at all because they purchased the raw materials in US dollars, the whole Latin America, and then they sell in pesos, in real, or even worse, in the ruble. We had about one-third of our countries had even a big pressure to increase prices to even sustain the margin. This is why I'm a little bit cautious with the tailwind.
I think we do a good job year-over-year with the pricing and the new products.
To your question on the acquisition element year of 2015 was 2.2%. This is, as we usually look at this also long term, one-third typically from acquisitions and two-thirds from organic. That was pretty average in that sense.
From the acquisitions you have made last year, how much is actually going also-
Going over.
Relatively small
relatively small part. Less than 1%.
Thank you.
Everyone can ask. We have time.
Hello. Daniel [Michlo].
I had lunch already, so please take your time.
Yes. I have a question first for you, Mr. Jenisch. It is, in that sense, what are your arguments that you don't see any opportunities with such a big shareholder like Saint-Gobain, that is also in the mortar business, and that maybe together you could be stronger. What are your arguments?
I'm running the company. I have no opinion on any shareholders. What the group management did is we evaluated the situation, and again, we have to see the situation. We are competitors in the mortar business. Saint-Gobain wants to buy only 16% of the company, however, wants to dominate the company. In the future, and again, you consider that half of our acquisitions, half of our new factories were in mortars the last 4 years. We grew 13% in the mortar business at the highest margins. In the future, I have to come to my board, and the chairman will be the construction manager of Saint-Gobain, and the majority of board members will be from Saint-Gobain. I have to get approval for my factories in mortars, for my acquisitions in mortars, with someone who's running my competitive business.
They own only 16% of the revenue of Sika and 100% of their own business. Honestly, I don't see how I can run the company under these circumstances.
Dan Pomeroy from Mirabaud. We've got an excellent assessment and outlook for Africa and North America. Could we maybe also get some ideas about Latin America and Asia? Obviously, currently everyone is quite negative on Latin America, unfortunately. Seems that after several years of fantastic growth, especially the economic situation in Brazil, has become pretty difficult. Obviously also, what is exactly happening in China, pretty difficult to understand for everyone. Chinese government is talking about 6%-7% growth. You now reported 20% sales decline. Leading indicators are also not looking very promising for Chinese construction industry. Some of your peers, I think, are speaking about inventory reduction. Other people are saying China has started to switch from a production-oriented economy to a service-oriented economy, and consequently, construction will never substantially recover.
If you please could give us some ideas about your view on Latin America and China and Asia. Thank you.
Latin America, basically, we have drive the situation. The situation, it was country by country different. Mexico, connected with North America, it was excellent situation. We have growth with not any problem monitoring with the pricing. The rest of the Pacific side of Latin America, it was facing the problem of raw materials. The commodity product, copper, silver, oil, coke, has been facing a serious problem. The government has been stable, excluded Ecuador. In Ecuador, the situation is difficult. The country is day by day with innovative system to guarantee that the dollar still is available. Nevertheless, we have maintained our situation, and again, price monitoring, it was the key to really maintain the margin or even improve the margin, even with very high devaluation like Colombia has facing trouble. Going to the Atlantic side, Argentina, it was exciting.
Finally, end of the year, we have had the surprise that we can transfer a lot of money that we have stored for the more than 40 years in the company. In this moment, we are already shipping to Sika in Switzerland. The special case of Brazil is public. Everybody know how we have the situation. The country is really in a serious issue. We are already established our logistic. We have in this moment present in about 80% of the population. We have factories already working in all the technologies of Sika, excluded PVC and polyurethane. We are running in a stable way, try to drive pricing because the devaluation, it was bigger than 50%. Today, the exchange rate is 4.3. One year ago it was 2. That it was the key.
Drive to improve and transfer to the market the devaluation of the local currencies. We have made the exercise, and we have very professional and very long-time people working in the areas, and we have really doing our job. For 2016, I drive the business monthly base, looking what's happening with the exchange rate, looking what's happening with the market, still we grow. We have maintained, even in the worst case, the number of tonnage. That means that we are empowered enough from supply chain point of view to do it our job. Any question?
No. Excellent. Thank you.
Good. I think a few comments to the favorite topic. When you look nowadays, it's China, China, maybe later on also a few comments about Asia. It's not only China. I think in China, I'm a little bit surprised that now everybody talks about crisis, the slowdown in concrete, but also in other businesses. Actually, with our management system and of course with our company culture, as you also hear from our chairman before, empowerment, P&L driven. Actually, we saw already quite a slowdown in projects, but also quite some difficulty coming in China end of third, beginning of fourth quarter 2014. We saw the liquidity issues, actually payment issues. Thanks, of course, to our fast reaction, our experienced management. Many of our managers also 10 years and plus in the company, which also shows actually our strong culture, company culture in a country like China.
We started actually with the credit policy. Of course, our main target is always to maintain our really strong financial situation in the company. Of course, as you hear, 20% sales drop in China is also for Sika a totally new situation, and especially for the people, because you are dealing with a generation of people, they never saw a decline. It went only in one direction. I think we've managed this quite well. Most of the restructuring of Sika China, we did already the first few months in 2015, mainly in the concrete business, to be precise. We have many businesses in China. They are still growing. Maybe they are not growing the same level like before, but we still have a lot of business opportunity.
I see as the outlook, I'm sure you will ask, this first half year, we will see, of course, in concrete. I don't think already a bottom, but I think it's getting better. We will see, of course, some of our efficiencies, we already did some impact. Even my management in China for the second half of this year, they see actually already a moderate growth. Again, we are in so many businesses active in target markets like in all the countries. We have a unique business model, unique opportunities. We were traditionally very strong in the industrial area of the business. When all this foreign investment came the last 20 years, building new factories. Some of these factories, you can imagine they are now also in a stage of renovation, new floors, some new roofs.
I think, there is, of course, also from our side, we need now to be flexible to adjust also certain business activities, not just restructuring. Because growth is clearly one thing we have to do in China, but we see not in all our businesses the dramatic drop in business. It was in concrete, I agree, but has a lot of reasons. As you can imagine, all these policy changes from the central government, anti-corruption Basically goes immediately into infrastructure projects. Of course, residential policy came already in 2014 with you can only own one apartment. Actually, it slowed down, of course, the investment in apartments, which is traditionally the thing Chinese people are doing. They don't hoard a lot of cash. They invest into property. These are really the areas, affect also our business.
This is only one part, the infrastructure business of our business. We have, of course, we have also businesses. Industrial business, adhesives and sealants, our traditional business, still going quite strong. Public transportation investments. Although it's not so negative like you always read in the press. Of course, our market shares. We still have a lot of room to grow also our market shares. That's for China. I'm always surprised about nobody talks about Southeast Asia. I think it's really an exciting area, starting from the well-established countries like Singapore and ends up with the frontier markets where we just recently built up new factories, as you could read in the media. We have a lot of exciting markets.
People always forget this, that the Southeast Asian corridor, how they call it, these people are getting very confident now with the slowdown of China. We talk about more than half a billion people living there, and there's a lot of opportunities. A lot of capital also went into these areas. Beside U.S., I think we have a lot of exciting business opportunities also in Southeast Asia.
Okay. Thank you very much. Very helpful.
Who is next?
Tobias Doskamp, HSBC. I have two follow-up questions and one you to Jan and Adrian. From you, I would like to know, you've opened up 30 new plants under the new strategy. Can you give us an idea of what the sales scope of these activities are and what is the growth rate of this cluster in particular? A follow-up question to Christoph Ganz. The highway bill that was recently approved in the U.S., do you already see signs of confidence on the ground that state level spending is picking up and is that mainly for the concrete business, or where do you see the impact on a target market level? A question to José Luis on Latin America. Can you give us some idea of what is the inflation rate for the local activities?
What kind of price levels or price increases do you need to achieve to compensate for that? Is there a tendency also in Latin America for governments to introduce stimulus measures to keep the demand in the countries up, or are these government finances in a too weak shape in most of the cases? Thank you.
On the new factories, of course, this is one of our main growth initiatives. We follow up internally on a monthly basis. We are well-informed how many tons we produce and how much sales we generate. It looks very promising. However, we prefer not to share this detail with you at this point. I think it's too much into detail, looks very promising.
The growth rate is something in the mid-teens, 20%?
The growth rate, you can imagine, if you build up a new market, we have quite a rollout plan. First, we start with maybe some project engineers with some sales coming as an import, then we establish a sales branch, and then at the next step, we establish a factory to make sure we establish a leadership position in the mortars, but also in the liquid products. The growth rates on a country basis is very dramatic. Overall, it's of course one element of our growth.
The infrastructure question. Looking at the last, let's say five, six years, infrastructure was rather flat or even minus. Now, the last two years has grown like 1.0-something percent. All of you have been in the U.S., I guess, and you know the infrastructure in what condition it is. I think there is a lot of need for improvement. It's a big topic now also at the presidential debates. Yes, there was a bill that has passed, and federal money will double now state money that is going into infrastructure. Yes, we have, of course, high expectations. We just haven't seen it yet. It's just starting. We're there. We have a lot of products that go into highways.
Starting with the concrete admixtures, we got to make sure we're present in all these ready-mix plants where these highways and bridges, et cetera, are being built. This is what we're doing, so that our products go right into that bridge. There are a lot of sealants being used, as you can imagine, and they usually use always really the high-quality sealants, not low-quality stuff. Then waterproofing. All these bridges need to be waterproofed. Rough weather in the United States. In general, infrastructure, of course, would offer huge or great opportunities for us. We just haven't seen it yet, but we're ready. That's for sure.
Would you expect the growth rate in the U.S., let's say maybe not in 2016, but is there potential to accelerate that?
Yeah. Infrastructure market was growing 1% in 2015. For this year, they forecast 3%. It's not huge. We will see. A lot of these forecasts, not always right.
About inflation. As you know, all the bankers offer us the revision of inflation for the year. Ourself, we are a flat organization, country-based, we run inflation based basically under the pressure of the trade unions. We increase the salary because it's mandatory according with the local regulation. We follow always the local regulation. Based on that and based on other situation, basically the exchange rates currency, that is really the much more affected during the year before. We have used some formulation to drive and support the countries to increase price. Simple like this. We have more or less our sales is 60% through distributors, the distributor using a price list of Sika. We are important for the distributor. We have a price list.
The price list is adapted every month or every two months or every three months according with the price need and the cost that we need to support to drive the companies. This is the system that we use it, we are supported by corporate financing. Maybe Adrian want to make some comment more. In order to really monitoring the situation country by country, month by month, in order to drive the companies in this simple way. Maybe, Adrian, you can support my comment or idea.
I think it goes in line that this is really managed on a country-by-country basis. With the local team taking the right actions to do. In terms of an outlook for 2016, many markets have slowed. We're probably rather looking sort of a mid-single-digit growth in Latin America.
Any question about?
Mid-single digits for the pricing?
No. You have to look at this country by country. In an environment like Argentina where you have inflation of 20%, 25% or ahead, we have to see now how this develops. You do every second week, you do a price increase. There, of course, it's a lot more. In other markets, it's considerably less. We really look at this and also execute this on a country-by-country basis.
Okay. Thank you.
In Argentina, especially, if you want to go a little bit more in depth, we drive in this way, we have growth last year more than 30%, and the margin has been increased step by step every month. The people have driven really in a very efficient way the country. It was not easy.
Hi, Andy Schneider from Z Capital. I have a question on Saint-Gobain. One of the cornerstones of their case is about synergies which are based on sales, some combined sales synergies, efforts you can make, and geographic complementarities you have. If I am not wrong, they mentioned Brazil, where they could benefit from the much stronger position of Sika. I think the other case was Australia, where Sika could benefit from the better position of Saint-Gobain. We heard before that you think that not a lot of synergies can be done with a collaboration here, but it would be probably interesting to hear from the regional heads how they see this potential collaboration and potential synergies and what the main problem on the ground would be.
Okay. The case of Brazil, as you know, Saint-Gobain has applied to the authority regulation to request if our companies are or are not competitive. They declare that we are not competitive. We admit that we are not competitive from the legal point of view. That means that if we merge the two companies, the end user will not be affected by the price. It will not be affected by the price because there is an atomized market. That means that there are hundreds of plants like this that are in the market. Our merger will not be affected. How will the case of Sika be in Brazil? We will close maybe all our plants. It is so simple.
The U.S. is a different situation. Saint-Gobain, yes, of course, they are active in the U.S., but not in our field. For example, they are not selling mortars. We do sell mortars, as you have heard. We have a very aggressive mortar strategy. We are basically selling the same mortars like these guys. This shouldn't sound arrogant, I just don't need them. Also, the U.S. market doesn't need another mortar brand coming into the United States. It's not up to me to decide this, but my factories, we don't need another company to fill our factories. It just doesn't make sense.
We have to understand that our sales force, thousands out there, every day see Weber as a competitor. They meet them all the time. We have to see that if they say we are not competitor, it's just annoying for our sales force because they fight every day for the business. We imagine the case in Mozambique. We have a factory, we have a sales force, we have a very strong position for Mozambique. What is the advantage for Sika, knowing that only 16% belongs to Saint-Gobain? For us to take the Saint-Gobain range and sell Saint-Gobain range in our factory, produce it, sell it. I don't see the logic of this deal. It's probably good for Saint-Gobain, but if we have a strong position, we have a setup. What is the advantage? Always keep in mind, they only own 16%.
It will probably be another story if they would own more. Still, the business is there. We are already there, and we kept the market. Not competitor is very difficult for our sales force and to have the synergies, only 16% they own from us, I don't see it.
Perhaps I can add here, there's a systematic issue with the cross-selling. When, again, the controlling or the controller who is Saint-Gobain, wants to do cross-selling, and one party here owns 100% and the other party owns 16%. We should do a combined offering because they also talk about cross-selling when they sell the façade, and we would sell the adhesive, for instance. Now, who has to give in pricing on the total package? For sure, they will not reduce their 100% margin. It will have to be the Sika margin to be reduced in order to get the full package. The cross-selling can only be to the disadvantage of Sika and yes, potentially to the advantage of Saint-Gobain. This group here defends the interests of Sika and does not have to defend the interests of Saint-Gobain.
Yes. Good morning, gentlemen. Martin Flückiger from Kepler Cheuvreux. Three questions, please. Firstly, I'd like to take a little bit of a top-down perspective on the individual growth contributors in 2015. I was wondering whether you could provide some insights on how you would say, judging from your best estimates, how the existing business, but also product launches and market penetration contributed individually to organic growth of 4% in 2015. If there were some strong differences by region, if you could highlight those too, please. That would be my first question. The second question would be on raw material prices in the first quarter 2016. I was wondering whether you could provide us with some update on how these have behaved from your point of view and what kind of outlook you would give for the rest of the year.
I realize that you'd say that raw materials, Mr. Jenisch, raw materials are not that important for margin expansion. Still, I was wondering whether you could provide us some color there and maybe also offer us some insights on how you're going to behave in terms of selling price increases for this year. Then my final question would be for senior management, the four gentlemen that have joined us today from the various regions. What their personal view is on the potential takeover by Saint-Gobain. We've heard some statements about the industrial logic, I was just wondering whether they could give us their personal insights into this deal and what they think about it. I guess all of them have signed these two letters of the 160 senior managers. Just wondering what their personal motivation was to sign these letters. Thank you very much.
Maybe on the growth contribution. If you look at our sales growth, which organic was 4% in 2015. It's basically almost all volume. These individual contributors, they differ very much from country to country, from area to area. It's really the mix of supply chain expansion, new products, replacing products, I cannot give you a detail in terms of the contribution. It's all sort of a long-term effort to build all these elements to more stronger penetrate the markets and focus on the areas where there is opportunities like the big cities with the supply chain.
For the raw materials. Well, I know you were hoping for more tailwind, I would happily agree and appreciate it. However, when we look a bit more detailed on the 2015 situation. Firstly, we have to understand that we don't buy crude oil or any derivative. We buy five production steps further down. Our raw materials we are buying are depending a lot on the capacity utilization, the chemical industry. I think I shared with you at another call that in 2015, we had a record number of force majeure. I think in Europe reached over 40 force majeure, where the raw material supplier for whatever reason, doesn't provide enough quantity into the market. Which is amazing if you consider the lower demand in the market. There's a lot of-
How do we say that things going on beyond crude oil, which is affecting the price? We had much less tailwind compared what you think we should have. Now, going forward, I think 2016, we should not have a raise in raw material pricing. Of course, we see at the moment a rather downward trend.
Any more questions?
Should I take the lead because I am the older? Simple. I have just expressed the situation of Brazil. That will be the case of Sika in Brazil. How I can express to the shareholders of Sika that I have spent several millions of CHF during the last year that I am in charge of Latin America, and now by luck is coming somebody that asking me to stop all business and just use it the factory of others, or it will be the way. How I can maintain my profit and loss, how I can maintain the sales force, how I can maintain the independency of the company. Any comment that I come in to the board, it will be difficult at the board, that it will be run with the Saint-Gobain people.
It will be difficult that he approve any idea or initiative to protect the area that we have already built. That is my comment. In this situation, I will be in position to have my rights and my obligation with my actual contract to fulfill my obligation as employee, a high-level employee. That will be my position.
Okay, I will not comment on the overall logistic strategic of the board, as is the board decision. However, from the management, imagine if you look at Sika, you see a fast-moving company. Everywhere we have lean, straightforward decision-making. We are very fast in making decision execution. Now imagine we have now a conglomerate that make arm's length contracts. We share R&D, we share administration, we share everything. Finally, what we go and ask for a computer to France, if we can buy a computer. This would slow down our efforts in pushing our fast speed dramatically. I cannot imagine how I can discuss the strategy in Germany, where we are huge, they are huge, how we can measure it. Always in mind they are in control, so what is my position towards the company? More important, what is the problem with our people?
What do we say now to our people if we not really sure how we manage? We have also now to ask and have arm's length contract. It will slow us down. You see the reaction from labors. They wrote to the family. They wrote to everybody. They also not agree on the concept. We never heard any feedback from them except empty shells. What happens to our workforce? To the management, you mentioned the 160 senior manager. They wrote and constructed the letter by themselves. It was not the management. The management did already their commitment and their knowing. They came up with own, and they wanted to have answer, and also they never got real answer. If probably the deals comes through like it is structured now, I'm quite pretty sure it will be very terrible to continue because they will look for other managers.
They will leave the company because it's just not workable under the condition they proposed.
I mean, from my side, a lot has been said already. What disturbs me the most, of course, is the structure of the deal that has been set. Over 60%, you want to control the company. Again, I was working in France before. Saint-Gobain or Weber was one of our biggest competitors. We were going against them every day. Regarding the U.S., I said it already, we don't need them in mortars. We were discussing, of course, internally about possible synergies. We just don't need them, and we should not sound arrogantly. Maybe a last point, what Paul said. I think from their side, the way it's being communicated, the way they don't talk to us is just I say it like this, is not acceptable.
This has damaged a lot, not only on our level, but a lot on the level of these 160 senior managers. I said it this morning to the medias, these are the important guys. We can be replaced here, but these guys really drive this business every day, down with our customers. There is a big frustration right now among these ones. Of course, we were impressed, that they kind of grouped themselves via electronic media, signed such letters. Not only one letter, several letters, addressing letters to the Saint-Gobain management. Never received an answer. In our culture, Sika has a very open culture of communication. We talk to each other without respecting all the hierarchical levels. Really business and result-oriented. This is something that we simply don't know.
They see there is a new culture or a totally different culture coming or trying to attack us. This is just provoking exactly a different, let's say, the situation that we have right now. The people just don't want that.
It's difficult as the last one to say something. Most of the things are actually already mentioned by my colleagues. Of course, when I talk specific for Asia Pacific, well known for people to have a little bit experience, very thin-skinned human being, very people-minded region. If somebody leaves, whole departments are leaving. Those people, normally, they work actually for leaders, for people, not for a company. I have to say, I cannot imagine with our strong P&L and entrepreneurial approach we have in these countries, especially also in these build-up countries. I cannot imagine that we can continue this success story with a centralized approach like we know. This is not a secret of a French company. I do not see that the success story in Asia Pacific can continue. I think it's also clear in related to me, what does it mean?
Probably also to some of the members of the senior managers in Asia Pacific. As my colleague said, the 160 senior managers, actually, these are the key people. Plus, of course, in all the countries, we have a lot of capable people. They do this. They do the execution of the strategy. They do crisis management like in China, fast reaction. I cannot imagine how I could handle China in a centralized approach. That's from my side.
Questions? Any more questions? Timeline?
Thank you. Just two follow-up questions on your outlook for Asia. In January, you gave more or less exactly the same outlook as you give today for 2016. In the meantime, one and a half months have passed. We have heard a lot in the region. If anything changed whatsoever in the way you perceive the market, and if yes, of course, what? That's the first question. The second question regarding the margin improvement. It's obviously a very big improvement compared to what you had before as target for your Strategy. I wonder if in these three years where we are now, between 2016 and 2018, there is anything that is also special whereby the margins could be a little bit higher than what is a normalized, let's say, sustainable level for the company, also looking forward beyond.
Meaning when I make the DCF, can I put the 14 forever or no? That's what we hear.
Why don't you stay with the 12% and be surprised positively each year? No. You can see also from the team, we are very excited about the business, what we do. With the track record we now have, also with these margin improvements, not a one-time shot. You see now fourth year in a row with the margin improvement. We feel quite confident that we have a good formula how we can deliver this. It's not 14%, 12%-14% we can deliver sustainably over the next few years. We are very confident to do that. The 14 is the higher part of the range, I don't know if we deliver the 14, but we are confident we stay in the range. Regarding China, I think Heinz Kissel confirmed what we have talked also earlier, that we went into the market crisis very early.
Fortunately, we have Heinz and his strong team there in China, who made already the adaptation plan in the last quarter 2014. We had a full execution of tightening the credit policy to avoid a high-risk position with outstanding customer debts very early. We took a full hit of -20% in 2015. Now, as Heinz said, we expect the bottoming out in the first half of the year. Then, let's say, myself, Heinz, we are confident we have a stable volume after that. The sales team in China is a little bit more optimistic. They want to grow again in the second half of the year. This needs to be seen. We are prepared for the situation.
Sorry. Maybe it's because I don't know the company so well, and I'm new as an analyst. Again, on both questions on the margin, what has changed from the 10% level?
Okay.
What's really new that really Sika is not the same company as five years ago?
Okay. I think we have done a couple of measures, of course, for the margins. I think the first one and probably the biggest impact is we have sharpened our profit and loss responsibility. In the past we had areas like production or other areas, they were not clearly linked to profit and loss. We have changed that four years ago. The regional managers, as they sit here, they have full profit and loss. As I say, from the raw material to production to the customer. We don't have any deviation between production or purchasing or the customer. This has brought a very strong result, especially as we give this responsibility, but at the same time, we have also introduced a very sharp performance management system on a monthly basis. They are evaluated market share, growth, margins, and also capital efficiency.
We have really sharpened this profit and loss responsibility, and we combine that with a very tough performance management. This is every manager has P&L transparency, clear targets, clear measurement. I think this brought probably the biggest step forward. We have, of course, also organized some things differently. We have, I think, sharpened our pricing. We have exchanged our best demonstrated practice in pricing. Also here, we measure the pricing on a monthly basis on a country level. We are really following up on pricing, on margins with a huge intensity. It's probably the single biggest KPI for each manager in Sika. Also from the organization side, I think we made a huge improvement in purchasing. We established a global purchasing organization. Which was very important to deleverage the power the big chemical players have.
In the past, we compared a European supplier maybe with a European supplier. Today, we compare the European supplier with the Korean supplier, with the Chinese supplier, with the U.S. supplier, and in some cases, we even ship raw materials around the world now because we get more favorable conditions in one part of the world. That's quite an array of initiatives and tools we put in place to come to a new performance level.
Right. Thank you. On the outlook, so I understand the situation in China. Has there anything changed in the U.S., for instance, or in Europe, since, let's say, in the last two months, let's say, since you gave your statement in January?
No, I think you have seen the exciting presentations of Paul and Christoph. We are very confident for the year. Even it will not be an easy year, but we are very confident with all these investments, all the new products we are pushing into the market. We are quite confident. Any more questions? Doesn't seem to be the case, so this brings us to the end of today's analyst conference. I thank you very much for your interest into Sika, and I invite you to a small lunch just outside. Thank you very much, and see you next year.