Margin recovery has been the priority for the Group in recent years. The aim of the Accelerated Improvement Program launched in 2013, has been to improve the Group’s margin, to reduce complexity and to increase focus. From an activity perspective, the program was closed at the end of 2015.
In 2015, the operating margin improved by 1.0 percentage points to 8.2 percent, excluding items affecting comparability. Following the close of the Accelerated Improvement Program, a set of additional improvement measures will be implemented in 2016 and 2017. The Group’s priority will gradually shift towards expansion and profitable growth with the goal to realize the full potential of market leadership by 2020.
Growth investments and currency headwind require further improvement measures
The global currency markets experienced rapid changes in 2014 and at the beginning of 2015. In particular, this relates to a significant strengthening of the US dollar. Compared with the situation at the time of the launch of the Accelerated Improvement Program in 2013, these changes have inflated the reported net sales, thereby diluting the operating margin. In 2016, the changes in exchange rates will adversely impact the operating income for the Group.
To mitigate the negative impact and to fund investments for initiatives to drive future profitable growth, the Group will implement additional measures to reduce costs and increase efficiency. These include continued direct material cost-out activities, reductions in terms of indirect material and logistics costs, right-sizing the supply chain footprint and improved efficiency in terms of selling and administrative expenses. The measures will support margin improvement and prepare the Group for a long-term focus on profitable growth.