Sales for the year ended December 31, 2011 increased 8.4% over 2010 to US$3.7 billion as we outpaced the market in a demanding global economic environment. Gross profit margin increased to 32.6%, from 32.2% in 2010 and 31.3% in 2009 showing our ability to drive productivity gains in our operations and supply chain, despite the head winds from higher commodity prices and rises in other input costs. SG&A expenses were reduced from 26.9% of sales in 2010 to 26.8% in 2011. All these improvements drove 2011 earnings before interest and tax up by 30.6% to US$218 million, with margin improving by 100 basis points to 5.9%. Better interest expenses and tax management further lifted profit attributable to shareholders of the Company by 58.9% to US$151 million, while earnings per share rose by 58.3% over the previous year to US9.39 cents.
Sales at our largest business, Power Equipment, rose by 11.6% to US$2.7 billion, accounting for 72.6% of total sales, up from 70.5% in 2010. Floor Care and Appliances sales rose by 0.7% to US$1.0 billion, accounting for 27.4% of total sales. Despite a challenging market environment, we were able to grow our core North America and Europe businesses. Our geographic expansion program is gaining traction, delivering a 22.3% increase in rest of the world sales.
Combined sales growth and improvements in operational efficiency drove positive free cash flow of US$149 million for the year. Our debt and working capital position remains comfortable and in line with our targets. Working capital as a percentage to sales improved from 21.9% in 2010 to 18.9% in 2011. Gearing continued to decline, reaching 59.3% at the end of 2011 from 66.1% as at June 30, 2011.
I am pleased to announce that the Board is recommending a final dividend of HK7.75 cents (approximately US1.00 cent) per share. Together with the interim dividend of HK5.00 cents (approximately US0.64 cent) per share, this will result in a full-year dividend of HK12.75 cents (approximately US1.64 cents) per share, against HK10.00 cents (approximately US1.28 cents) per share in 2010, an increase of 27.5%.
We have a sound strategy with a dedicated focus on execution. We are delivering value to our customers and providing TTI with a scalable engine for growth.
TTI has a stable of powerful brands that occupy leadership positions in important markets across the globe. Our multi-brand approach in power tools, outdoor power equipment and floor care allows us to segment end-users. An example of the power of our brands has been the transformation of RYOBI® power tools and accessories into a leader in the consumer segment. Behind this success is the RYOBI® ONE+ System® of cordless tools, which continues to expand its customer base. The success of the cordless system has now been leveraged into the consumer outdoor portable tools segment, which had a successful 2011, firmly establishing another growth category for the RYOBI® brand.
We understand that exciting new products are fundamental to winning customers and that user-focused innovation creates strong brand loyalty. We have invested in R&D every year, even in times of economic challenge, resulting in new products contributing approximately one third of the Group’s sales, the level targeted in our Strategic Roadmap.
We have an enviable track record of enhancing our existing product platforms while each year producing ground-breaking new products. This is clearly demonstrated by the game-changing MILWAUKEE® lithium ion cordless power tool innovations that enhance end-user productivity. These range from their RedLithium™ with best-inclass power, to the newly introduced FUEL™, which is the leading edge in unbeatable durability, energy efficiency, long charge life and power. As a result, MILWAUKEE® has become one of the fastest growing industrial power tool brands in North America and other key markets.
Our dedicated focus on cost improvement and productivity follows a highly disciplined, company-wide process that delivers savings through value analysis of products, manufacturing and other supply chain efficiencies. This focus was an important contributor to our gross margin improvement in 2011, as it enabled us to offset rising input costs.
TTI has been growing its business, improving profitability, generating free cash flow, and strengthening its balance sheet. We have created a leading position with our strong brand portfolio, cost efficient production and stream of innovative products which are facilitating further expansion into new categories and new geographies. Global brands, rapid speed-to-market of new innovative products, and scale are necessary to achieve market leadership and superior growth. Our proven track record demonstrates that we have solid, executable plans in place to capture enormous growth potential going forward.
I wish to extend my appreciation to our many dedicated customers and business partners for their support during the year, to our people for their passion and hard work in turning TTI’s vision into the reality of well made, cost effective products, my fellow directors for their sound contribution and to our many shareholders for their commitment.
March 22, 2012