MTD
#I wouldn't read too much into that.
We gave a guidance of 3% to 4%.
We said 4% for the full year, we said 4% for Q1.
I think it very much reflects our more detailed look at how comps are going to go; in particular we see China's probably got to do a little better in Q1 than we expect it to do for the full year, and I think that's largely explained by some specific comp considerations that they have.
So I am careful.
I think the word you used to position the question was deceleration.
I think to say the going from 4% to 3.5% as a deceleration is probably, I don't think the right analytical conclusion.
I think there's a little bit of a comp topic a Q1 that benefits us and we largely think that what we see today is playing out very much in line with what the information that we had at the time we updated you in November.
<UNK>, could you ---+ the word that you're asking, we both missed it.
I think I would also add, it's not easy to look at a trend on a monthly basis.
A month can be impacted by bigger projects, number of working days and so on.
So we don't necessarily look at monthly results to identify a trend.
I think we prefer to take averages across at least three months if not six months.
I think so maybe similar to where <UNK> finished up the answer to the previous piece, we don't read too much into the shorter period.
If we kind of look out on the China business, there is nothing that's happened, let's say, positive since we talked to you guys in November about the China economic outlook.
And I think we always have a little bit of a late cycle economically our business, so we are impacted by investment decisions and I don't think anybody is rushing to make positive investment decisions in China based on what they heard recently.
So we think it's prudent to be cautious, and we're happy it's going to be off to a good start.
We prefer that than trying to explain to you guys why we are going to catch up later in the year.
But we're not, we prefer what we got for the first quarter versus the alternative, but we are not so excited yet about a turnaround.
And we never ---+ we don't expect when the turnaround does come, <UNK>, that it's going to be a jump back.
It's got to be a bottoming for a while.
There is ---+ that overcapacity will take some time.
The fifth wave will not bring big revolutions.
It's like the first four waves evolutions, or we are strengthening all the different dimensions that we have been working on and bringing some additional sophistication.
So topics around key account management, iBase management, this install base topics, all will remain in the center.
I think where we get a little bit more sophisticated is in the area of big data analytics and leveraging it for sales and marketing initiatives.
And the example that I used in the prepared remarks, we're going in that direction that we are really applying more sophisticated analytics to the information that we have on the millions of installed instruments.
And the analytics allows us to better recognize the potential and based on the potential also use the right go-to-market approach.
So meaning, understanding if this is an opportunity where we use telesales or are we using a field sales person.
And with what kind of value proposition we approach the customers.
And there is certainly an area where we bring more sophistication with this wave of Spinnaker.
The latter one I can answer quickly.
The answer is no.
We didn't catch what you were asking for, the first one.
I think again we will have a good year.
Our material costs were down on an apples to apples basis about 3% in 2015.
I think we should have a good year.
It's important, though, to remember on commodity prices we are not buying that much, if you look at for example a machine part or a fabrication, labor time, machine time, would be a bigger cost element than the steel or the fabricating material itself.
So we didn't get hurt by material in any way, I don't mean to imply that.
It's certainly ---+ we like it going this way more than the other, but it's ---+ for example, of the 3% that we saved this year I think less than 1% is directly attributable to lower material costs.
So as we discussed it on the November call, we have done a very successful wave of field turbos in 2015, and we want to repeat that in 2016.
We are on track to implement about the same amount in terms of additional resources, so roughly 200 field resources.
We are very encouraged by the results that we had last year, and we also want to approach it in a similar way this year in terms of funding it also through cost measures that we have in other areas of the Company.
The projects or the field additions are very similar to last year in terms of the business priorities, but of course, the territories might be different, but the geographic focus remains on the markets that have reasonable growth momentum.
So we're adding again, quite a sizable number of resources in Americas as well as selectively in Europe.
So if we exclude China for a minute, in all the other emerging markets, I wouldn't talk too much industry specific.
I think actually it's more the geography than the industry.
We talk about Brazil and Russia and the challenges and the headwinds we had last year, it's actually very difficult to attribute that to a certain industry segment.
We saw it actually pretty much across the business lines and across industry segments.
And what we have seen is however that across the different emerging markets there are big differences.
We have seen actually emerging markets that did very well for us.
We talked about India, Mexico did well, Southeast Asia did actually well.
So we have multiple emerging markets that did well last year and I expect actually that this year it's also going to be mixed.
We're are going to have emerging markets that do well and there are going to be emerging markets that will be more challenging.
Partially, I would attribute also the good results that we had in certain emerging markets last year to an excellent performance of our local teams.
I would, for example, highlight countries like Mexico and Southeast Asia that did really exceptionally well and that's certainly also attributable to programs that we have in place.
Some of the emerging markets, the economic environment might be a little bit more challenging, but we consciously want to invest in these markets because we believe also in the long term, I would name you for example Turkey but also Indonesia, Vietnam, and so on, where you can see a certain cooldown from a macroeconomic environment, nevertheless we continue to invest there because we feel we can win market share and in the long term these economies will continue to develop well.
So the beta testing wouldn't necessarily apply to Spinnaker.
The way we develop things is we go out to all the different market organizations and we study different best practices, and when we see that we have a best practice, a certain sophistication in an approach and so on, we qualify that in a toolbox which qualifies in training and then we roll it out.
So in that sense, it's not beta testing, it's already reality.
We have this pilot, this crusaders of teams out there that have done good stuff that we are scaling up and rolling out.
The scale-up takes place over about a year.
We go normally with these more sophisticated levels to the countries that are more mature, and then we follow up with the other countries.
There are a few things that we drive from the center rather than bottom-up from the units, like the big data analytics, things there are from the center.
And there I would say yes, we start with prototypes and then we industrialize the things so there I am with you with this beta testing.
I feel comfortable where we stand on that one, and I know we're going to have the results out of it.
Yes.
That's correct.
In this area it's also about ---+ we really try to innovate in this area.
We try to come up with new approaches, tools, various technologies, tools, databases, and all that stuff that we are combining, and there is a very small team that is leading the thinking process on that one, and that's the prototype part, and when we have cracked that analytics, scaling it up afterwards or industrializing is normally not the challenging part.
We had a good freight number savings year on year.
But I doubt it would be big enough to move the needle.
Could it be 5 basis points.
Maybe something like that.
It will impact earnings by 1.5% for the full year, and it will impact sales by 3% for the full year.
The 4.5% I think is Q1, and the 2.5% on EPS is Q1.
No, in the sense that we need to [constantly] come out with product innovations, upgrades to existing products and so on.
That's just part of our business model.
And it's typically an individual product helps us to increase pricing and have better models and keep the growth going, but it's not that it's going to really change our overall number.
An individual product will not really change the needle.
Even the new product categories, it typically takes multiple quarters that it adds up to millions of dollars.
150 basis points, so it's about the same as we guided already back in November.
Feel comfortable with that, even that the macroeconomic environments might have changed a little bit, I feel comfortable that we can execute on that one.
No, it's actually, it has much more to do with the customers.
We have good differentiated products and as long as we do price increases every year, actually, we operate almost below their radar and they accept that.
And of course, we differentiate significantly across the world by geography as well as the business lines.
And we are going to execute it in a very similar way as we did in the past.
Of course, every year getting a little bit more sophisticated, but the approaches that we use to it is very similar.
And it is a line that I've used many times, but the biggest obstacle for price increases are often not the customers' but our internal organization, salespeople, and that's something we can work on and can control.
So I feel comfortable from that end.
I think that there are things kind of going both ways, right, <UNK>, so I'll maybe give you two examples.
Because our industrial business has been shrinking, we're moving more towards the corporate (multiple speakers)
---+ versus the alternative.
But then, maybe to your point, <UNK> made this point on Masterkong cutting their CapEx levels, the largest food company in China.
And that certainly has slowed the move to more consumer safety in the food inspection area.
So probably both of us would say that if the economy was going better, the move towards more consumer safety food inspection considerations would happen at a more accelerated pace in China than it does now given the overall economic circumstances.
So a little bit of both ways.
So, we're going to have CapEx of $120 million or so next year and that includes some significant building programs in the United States and Europe, and I think a little bit in China as well.
China is a little bit more a story about we'll be consolidating with some other facilities there.
Yes.
Give me one second, we have that number.
It's ---+ so in Q4 service was 27% of sales, and if I include service and consumables ---+ oh, sorry, that was service and consumables, and for the full year it was 30%.
It's always a little less in the fourth quarter because that's the big quarter for product sales so it impacts the mix a bit.
Sure.
