Ladies and gentlemen, thank you for holding, and welcome to the CFO Food Group Event Call. During the presentation, all participants will be in listen only mode, and later, we will conduct a question and answer session. I would like to hand over the conference to Mr. Rob Van Der Slaes. Go ahead, please, sir.
Thank you. Welcome, everybody, to this call on our 2020 Annual World Figures. An extraordinary year Kindness in many aspects. So I will take you through the presentation, which is available on our corporate website, And I will give an introduction of about 25, 30 minutes based on this presentation. And afterwards, there's an opportunity to ask questions, of course.
So let me start by Going into the details on sales, I'm looking at the presentation Slide number 3. Of course, our sales figures already We're already published at the beginning of this month, where we reported a decline in sales of almost 19%, Largely organic and, of course, mainly the result of the measures in place in fighting off the COVID pandemic in the Netherlands and Belgium. We've seen significant differences between customer segments In the development, so company catering, events business and the hospitality sector in general were hit significantly, Whereas sectors like health care and the shops in the petrol stations were hit less hard. That provided quite a big mix impact in our numbers as well, but overall, of course, a significant decline. And if we look at the acquired turnover of the Quaker, so there were still 6 periods at the beginning of the year, Which were nonorganic.
And if we look at the increase of tobacco sales in the petrol segment, which is, of course, a service product for us, But if we exclude those 2, then we see that over €500,000,000 of revenue was lost in this year. There is a technical effect change in the reporting calendar from 2019 to 2020. We switched from 52 week Calendar to a normal calendar year, which means that in 2020, we have a bit of a prolonged book year and in combination with the additional day in February in 2020, we have 5 additional days of sales, of which the effect was approximately €20,000,000 this year. What is an important mix effect is the shift between delivery service and cash and carry. I see in the results presentation that it is reported backwards, but 43% is cash and carry, 57% is delivery service, and that's still a big shift if we compare it to last year.
So we see that the main negative effects Of the lockdown periods are in the delivery environment, and cash and carry has been doing quite reasonably. If we go to the next sheet, sheet number 4, We can see that graphically, the difference in the development of cash and carry and delivery, where we see that cash and carry throughout the whole of the year Has been outperforming the year before, so 2020 was better than 2019. I think also important to note is that also in the 1st months of the year. That was already the case, and that has continued after the lockdown periods So overall, a very good performance of cash and carry, partly, of course, also due to COVID, but For sure also because of the changes we are making in our cash and carry next gen program. In delivery, we see the immense and immediate drop in sales in the 1st lockdown period from which we never completely recovered.
Of course, we had a good Q3, as you can see here graphically. But then once September came, we saw again a drop in sales and with the lockdown effective as of December that this Continued into the New Year as well. And on the next shift, we see similar patterns for Belgium. There we have the combination of cash and carry and delivery, But also their underlying cash and carry has been doing relatively well, and the loss of sales is mainly in the delivery part of the business. If we go to sheet number 6 on the gross margin, these mix effects, of course, in sales have their immediate impact Also on gross margin percentages, so increased sales of tobacco with very low margin and lower services To our partner Heineken, for instance, which is usually 100% gross margin, That is both developments lower the percentage, and it had an impact of 1.3 percentage point on the overall gross margin development.
And the second effect also as a result of COVID is, of course, the increased shrinkage. We had to ramp down, ramp up, ramp down, ramp up again in the inventory levels, which means that, of course, with Pericivables that gives rise to additional shrinkage, that was an effect of SEK 3,000,000. And for those who have the half year figures in mind, at the half year mark, this was also CHF 3,000,000 and I think that reflects the fact That during the year, we got a better grip on the development and the ramp down process. So indeed, in the second half of the year, we hardly had any increased shrinkage as a result of COVID. But still, overall, for the year, it has a 0.4 percentage point Impact on the gross margin.
And as the overall decline is 0.4% and these two effects combined is 1.7 And there are clearly compensating effects. For sure, that is the change in the customer mix, but also the ratio Cash and carry versus delivery in favor of cash and carry that really helps to boost also the gross margin percentage. And underlying, but less visible, of course, every year, we have procurement improvements, procurement condition improvements. That was also the case this year. So relatively, we improved.
But of course, as volumes were down, The absolute amount in euros were also down on that aspect. If we go to other operating income on sheet number 7, We see that 2020 is basically a more normalized year and normalized level of other operating income. So the specials were mainly in 2019, when we still had the service fees from the sale of Entei, and we had the sale of Our production company, Mison, Mison, Mison, Mison, and 3,000,000 benefits from that. So now these are excluded Then this level of other operating income is more or less normalized. If we go to sheet number 8, there, of course, we have the Fact of the compensating measures when the revenues drop, and that's, of course, the savings on costs.
And In a combination of government support but also cost saving measures, we were able to lower cost levels by more than 17,000,000. We have reduced our flexible workforce to almost 0. The vacancy that arose in our company, we have very limited to a very limited degree, We hired new staff on that. And the total compensation in the Netherlands and Belgium combined for €26,000,000 in government subsidies to cope with the loss in revenue. And in fact, the other way is Restructuring provision that we took in Belgium, where we decided to shut down our operations of Ocean Mare, a fish production company, And we decided to move those volumes to our Dutch fish production company, Smitvest, as per the beginning of 2021.
And that means a structural cost saving also in Belgium and for the group and a boost in volumes with Smitvice in the Netherlands. So that will have a longer lasting effect in cost efficiency. If we looked at logistics, of course, less efficient transportation as a result of the drop in volumes in the delivery area Means a relative increase in transportation cost, but in absolute terms, we were able to take out a significant portion of that. Of course, we know that once business restarts, we will fully rely once again on the transportation partners to service us. And in order to compensate them for their fixed cost base, we agreed on So a limited but still nice support efforts from our side, and we had a contribution of €2,000,000 on the fixed cost basis of our transportation partners, and that will help to ensure availability and access to Sufficient transportation and truck drivers once the business restarts again, a nice example of our partnership with these important partners.
What is not mentioned in this presentation, what worth mentioning Is that, of course, we decided a few years ago that we wanted to set up our own small transportation business, Not be fully reliant on everything outsourced. And with the acquisition of the Gregor, we acquired a small transportation company called VRC Transport with 45 truck drivers, 45 trucks. But given the drops In volumes, given the significant CapEx required to revitalize the fleet, we decided to bring this activity to 2 of our transportation partners and not pursue for the time being Our own transportation volumes. So 45 employees and the business of 45 trucks Was moved to our transportation companies who were better suited to cope with the negative effects of COVID. But also that means, at least for the short term, a reduction in cost and more flexibility once business restarts.
Then on the sales cost, I think the saving mostly on the marketing spending And in fact, the other way is, of course, increased costs for provisions for bad debt and loans. The effect today and our view is that our customers have really done a good job in meeting the agreements that we made. So we gave them the opportunity to postpone payments and to spread payments of their invoices because they were hit hard Also by COVID, and they did not let us down. They fully paid those invoices in the months After the 1st lockdown period. And I think overall, we see a very healthy picture in the outstanding debtors position today.
But given the increased risk, of course, also going into 2021, we decided to hold on to the increased provision for bad debt because we still believe there might be some damage in 2021 as a result of this. But so far, actually really content with the way This has been going in 2020 and a lot of goodwill created between us and our customers on that in that respect. We then go to the next sheet, depreciation and amortization. I think 1 or 2 things to highlight. Of course, we see that the right of use assets for leases has increased by €3,000,000 That is The result of the sale and leaseback transactions that we did of the big delivery centers that we rebuilt for the Heineken integration, Of course, that was a cash in this year in terms of net CapEx.
But on the other end, of course, we have An obligation to lease those locations for the next 10 to 15 years, and that is reflected also in The debt position as a result of leases on the balance sheet and also here in the right of use depreciation. And the other item that was already explained at the half year figures is, of course, the impairment in Belgium. By the end of this year, things were looking better, of course, for Belgium. Also, Belgium will recover from COVID and return to positive results. And as a result, no additional impairment Efforts in Belgium in the second half of the year.
If we then move to the next sheet, the financial income and expense, Nothing particular to mention. Of course, also there an impact of the leases, a bit of increased costs for the funding as a result of higher leverage ratios during the year and, of course, the procedures that we entered into with our banks and financing Partners on increasing the leverage ratios for wafer periods, and those Increased costs were compensated by higher results of associates. And of course, in the taxes area, in a loss given Situation, we have a tax claim, which we can compensate in the next couple of years when we return to profitability. And as our Dutch government decided to reverse the decision to lower the corporate income tax rate in the coming years, We had to recalculate the deferred tax asset and deferred tax liabilities, which led to a one off correction of 3,000,000 And that was presented as a increased profit a few years ago. So within 2, 3 years' time, the decision reversed, so also the effect reversed during the taxes.
If we then go to the cash flow statement, which is, of course, the more important statement in a year like 2020, Our focus very soon in the year was moved from managing the results to managing the cash flows. And I think the cash flow statement as presented here shows that we have been successful in doing that. So despite decreasing operating results, we were able to manage our working capital in line with the developments in the market, freeing up capital in that respect. Partially, That was the result of the postponement of some tax payments, but that amounted to only, I would say, a €13,000,000 small Relatively small amount. But of course, in terms of CapEx, we really brought down the levels of CapEx, of course, helped by the sale and leaseback transactions and the sale of decommissioned assets.
But a net CapEx of only €8,000,000 is an all time low, I think, for Filgro in the last couple of years, especially after the investment peaks that we had seen in the last years before. So And this is the start of a period where we will go back to more normalized CapEx levels also going forward. So for 2021, we expect Our CapEx level to be below €50,000,000 €50,000,000 And for the midterm, think that CapEx levels will be around 2% to 2.5% of sales again because the major investment areas, The renewal of the delivery infrastructure and the big CapEx program for our ERP package And the new website, while they are ended or at least going down. So that means that we will get into a more normalized CapEx situation going forward. And that means that our free cash flow was €67,000,000 a big increase compared to last year.
And as there was the decision not to pay out dividends for 2019 and not grant any dividends for 2020, We could fully utilize the €67,000,000 to reduce debt, which is, of course, in situations like these, important to get ourselves in a more healthy situation when our markets are shrinking in such ways as they're doing now. Then on Slide number 12, we have split the first half from the second half of the year. And there, we see A good development. And of course, the absolute levels of profitability are not to our satisfaction, but we are very happy to see that we managed In the second half of the year to get to a profitable situation, although the impact of COVID was at least Just as severe in the second half of the year than it was in the first. So that means that we have things quite well under control in terms of the cost base, in terms of the CapEx base and resulting depreciation.
So yes, that's at least a good starting point going into 2021. No specific one offs in the H2 Results that triggered this. So from an operational point of view, I think a good development in the second half of the year. Then we have the segment cash flows. I think nothing specific to elaborate on that on Page 13 And also on the segment results on Page 14, nothing really spectacular, but I would like to note the developments in Belgium.
Of course, at the midyear, we took a one off impairment in Belgium. But if we look carefully at the numbers presented here on this sheet, we see that Belgium, despite a €60,000,000 reduction in turnover as a result of COVID, Managed to keep the losses at the levels of last year, including a €2,000,000 restructuring charge for Ocean Maray. So underlying even a little bit of improvement with €60,000,000 turnover less. And of course, still a long way to go to get Belgium into the right levels. And of course, we need to bridge to a profitable situation.
But I think this shows that the actions we are taking Already has helped to cope with the losses of sales in COVID and will help to get Belgium to a profitable situation in the next couple of years once the volumes return to the market. So a bit strange showing these losses and then saying there's a promising development. But Underlying, we are happy about the things that we are doing in Belgium and will help us in the future. Then on sheet number 15, a few words on the financing. Of course, also an important topic in 2020.
The debt position was reduced, Taking out of scope the leases, so the real interest bearing debt, I would say, That decreased from €235,000,000 by the end of 'nineteen to 165,000,000 by the end of 2020. So a big reduction in debt. And we were able, on our own to do all the repayments that were scheduled for this year. So in total, approximately €70,000,000 net effect that we had to repay, and we were able to do that on our own strength. But of course, we always have to anticipate.
And this year, Already with the half year figures, but also with the year end figures, together with our financing partners, which really helped us. We anticipated for worse, And that's what you can see here in the bullets on the right hand side on this sheet. We anticipated that things might get materially worse than they have been In the month of December 2020, fortunately, that didn't materialize, but it also meant that we did not meet the extended Covenant reached to 5.5 times EBITDA. We ended up at 2.8, which is even below the basic covenant levels. And besides that we are happy, of course, that we are in a healthy situation, it also means that there's no material Incremental interest charge for that, not in 2020 and also not in the first half of twenty twenty one.
And as you can see from the lower part of the bullets, also already an agreement is in place with our funding partners for The measurement at the 30 six-twenty 21 mark, that we can have an extended Leverage ratio up to 4.5 times EBITDA at that time. And our bank, Rabobank, has really helped us by Extending their revolving credit facility committed to the end of 2021, ensuring that there will be sufficient liquidity in case things get materially worse. So I think total package, Both our partners from the U. S. PPE market and the banks have really been supportive in that sense and have set scenes that we can also survive a tough start of 2021 And do the things that we need to do.
Well, that's summarized, I think, on sheet 16 in the results per share, But I think these speak for themselves. Then more qualitative review on the year in the sheet thereafter. It's quite a big set of sheet with a lot of packets, so I will run through them relatively quickly. Of course, should there be any specific questions later on, feel free to ask about it. I think the Overall economic developments in the Netherlands and later on in Belgium, of course, consumer confidence and the unemployment rates, Yes, they are moving, and they are, of course, at not very promising levels.
And we think that Because of all the support measures that our government has granted, there's still quite some hidden unemployment. So it's compensated now by these measurements. But once those disappear, I think a number of companies will be in trouble going forward. If we look to the market in the Netherlands on Page 19, we see that the market has shrunk by 39% in consumer spending in wholesale value. That's 9.33%.
We have done better than that number. And as a result, our market share has increased significantly. Part of that is technical effect, I would say, but also there's a real market share gain underlying. So we expect that by the end of this year, Over the 2 years measured, we will have a significant gain compared to 2019. Also, there's a table on the with the most important segments for Swedro, the share in the total turnover and the development.
And there you can see That traditional hospitality and catering were hit very hard, the institutional and petrol segments much less. And luckily, small, medium sized enterprises have compensated to some extent, specifically in the cash and carry area of our business. View on the market shift from foodservice to food retail on Slide number 20. I think that's logical. We've seen that the supermarkets have been really outperforming and been doing well as, of course, hospitality shut down, and that took a lot out of the professional market.
And on the next sheet, we show the developments in the Netherlands. I think a few highlights out of those. So On sheet number 22, you see that we have kept on investing in our new website, Our SAP new renewed website, which is also the platform for future growth, not only did we launch The platform and onboarded all of our delivery customers in new settings. We also introduced a lot of our solutions for customers. And that is a route that we will extend in the next couple of years.
We have a full program already in place, which we will implement step by step to improve our services to our customers. And Also, of course, the effects of the Heineken integration, where that's shown on the next sheet. We as we told a few times before, we were working towards situation where the customers in the combination of Sligro and Heineken could order all of their business on one platform, Get one drug delivery, and in the end, we see one invoice for the whole of the delivery. All the technology, all the integration that we have done In the last year, it's now fully finalized and everything is up and running. So once all the businesses restart, we can work in this new efficient environment, which is also much more convenient for our customers, which will help to fuel growth in the next years.
If we look to the cash and carry side on Page 24, that we have a program both improving on the offline and online areas So the cash and carry, we are really integrating the approach for the delivery business and the cash and carry business through the online activity, and we took big steps in 2020 to get that. If we look to the network, you can see Carey on Page 25. Of course, as a result of the measures We took in reducing CapEx. We postponed the plans to remodel cash in caries to 2021, And there are still scheduled for the next year, but very limited investment in the cash and carry area in 2020. On the next Slide 26, we see the focus on the returns in the delivery segment.
Also there, the physical integration of the distribution center of Heineken is a really important step there. Of course, for the more short term, we had to cope with up to 75% loss of volumes in the delivery area, And that will be compensated by reducing the flexible staff, but also more fundamental changes in cost structure in In terms of order picking, transportation and the infrastructure, which will materialize in the next couple of years once the volumes start picking up again in the And also there, in the network on the next sheet, C27, you see that specifically in the first part of this year, So in first half of twenty twenty, we have done considerable CapEx efforts. But of course, that was reversed with So all 13 locations are now observed in the network of SIN Group. If we look ahead for 2021, we have changed our annual logo from Give Me 5 to Hi 5 Because although we delivered on the promise and gave ourselves the 5 top priorities during the year, despite challenging circumstances, We did not get all the benefits out yet because we need volume for that in many aspects. So we continue on this line with these 5 top priorities, both in the Netherlands and Belgium.
And I think everybody can see and read for themselves what the most important Aspects are in the years to come. Then moving on to Belgium and going to sheet number 31, we see similar Developments in the unemployment rate and consumer confidence. On the next sheet, 32, we see similar developments in the foodservice market. Belgium market was hit even a bit harder than the Dutch one where we saw a 39% decrease. It's 51% in Belgium.
But overall, similar pattern, similar development between segments, a very tough situation in the market in Belgium as well. And as in the Netherlands, in Belgium, we countered that by strict cost reductions and lowering CapEx. And in the meantime, kept our eye on, of course, the preparation for the SAP introduction that is upcoming, but also further improving Strengthening our positioning in the market in terms of improving sales efforts and introducing new concepts to the market. If we then move on to Slide 35, also there, you see that the CapEx program was really light In 2020, and we have put in some ambition for 2021, we will prepare for a new delivery service center in the locations. But as I think explained before, first, we need to get all the right permits in place before we can start building.
And we expect So we do a lot of the preparation in 2021 and then hopefully start building at the beginning of 2022. So things in the pipeline will not be effective already in 2021, we expect. On sheet number 3637, you can see that we work on the similar priorities as we do in the Netherlands. These are now targets for the group as a whole, of course, with a bit of a different impact on both countries. I would like to fast forward then to sheet number 42, Which is the outlook for 2021.
Well, as we see it, we think that and we are experiencing as we speak Yes, of course, the Q1 in the Netherlands and Belgium, the lockdown situation that was introduced in the last periods of 2020 Are still continuing into the 1st months of 2021. So Q1 will be a tough quarter still in terms of revenue. And of course, we keep all the measures in place and look for new opportunities to compensate that by cost savings and to postponing investments. But yes, we set our hopes, like everyone, I think, on the success of the vaccination strategy, which will help to rule out COVID in the course of the year. So we expect a gradual recovery in the second quarter.
And then we think these efforts should give us a at least a better market situation from Q3 onwards. And we think, given the experience in 2020, that the consumers are really anxious to go outside and use all the different elements in the outdoor, out of home market, Whether it's theaters, restaurants, bars, cafes or maybe even events or sports facilities that can reopen again, That market will return to reasonable levels in the course of the second half of the year. And we think with all the Things going on that, that might lead to a recovery to volumes towards the end of the year that are in line with pre COVID levels once again. That's of course, all based on a successful vaccination strategy and no new dangerous variants of a virus that Could, of course, put a lot of new pressure on the market. For ourselves, we will focus on the longer term strategic terms, those 5 that we mentioned We will keep our eye on cost saving opportunities and, of course, also hope to profit from further consolidation in the market, whether it's competitors that will cease to exist or whether there might be acquisition opportunities.
We hope, of course, that we can gain position in the markets, increase market share and improve our situation in the Netherlands and Belgium. And although in terms of profitability, that still gives us a very uncertain 2021, We think that with everything we already put in place and everything that's still coming, our longer term target of EBITDA of 7.5% is still very realistic. So far, my introduction, I would like to give you the opportunity to ask questions now. So if the operator would please take over again, Then question and answer could start.
Thank you, sir. Ladies and gentlemen, we will start with the question and answer session. And we have a question from Mr. Dirk Seyland, Cinco. Go ahead please, sir.
Perhaps You have muted your online. Can I hear
you? Sorry. Can you hear me? Yes. Good afternoon.
A question regarding the gross margin outlook. You mentioned already the drivers in 2020 with 170 basis points Negative impact and also positive impact from cash and carry. So my question is how do you see the dynamics for 2021 if we Again, some sort of normalization. And secondly, in terms of your long term outlook of 7.5% For EBITDA or midterm, what sort of gross margin does that assume? Thank you.
Yes. Well, thank you for your question. I think we try to that's also for Our internal plans, we use 2019 more as a benchmark than 2020 because of all these difficult mix effects. And we should be able, we think, over the years to gradually improve our gross margin by 0.2, 0.3 percentage points year on year. So if we take the 24.4% as a starting point from that level onwards, we expect to be able to improve by 0.2%, 0.3% this point year on year to get to a better level.
Towards the 7.5 percent EBITDA target that is mostly achieved by cost reduction activities. So relative cost reduction, which had to do with the physical integration of the infrastructure with Heineken, But also making the chain more efficient. For instance, the upsell potential with the combined Sligroheinke customers, We already service those customers today, so all the additional sales that we can make with those customers are relatively low in costs. And that should give us a clear advantage and improvement of profitability.
Okay. Thank you. And what where do you see the contribution of the Belgian profitability? Or I assume there you have To which it's more an issue of reaching certain revenues per year to get to the margin.
Yes. So that's a step by step approach, but This is an overall target for the group. So we think that we can achieve that, including Belgium, although Belgium will probably not be within 4 years at 7.5% stand alone. So but what we indeed see is that In Belgium, we should be able in a couple of years to return to a profitable situation. And to give you a little bit of an idea, of course, we are also challenged in Belgium and our individual customers are also under pressure there.
But our outlet in Antwerp was able to grow by 17% in the last year, So almost a 20% growth in a COVID year by attracting new customers, Partly that was private individuals, which is, of course, not a more structural group of customers for us. But to a large extent, that was new professional customers that were introduced to the cash and carry environment. And then for instance, in an outlet That means an 800 ks saving on shrinkage alone because we get more volume through the same outlet. And so volume really works as a big leverage in terms of cost and gross margin. So, yes, we believe that we can take big steps also in Belgium to contribute to that overall profitability target.
Okay. Thank you.
There are no further questions at this moment.
Okay. Then if there are no further questions, I would like to thank everybody for listening in on this call. We will publish Our full annual report next week on February 5, where there's, of course, a lot more background and details available on the stories that we've told. And we will get back to you, of course, after the Q1 with our trading update and at the midyear with another call on the semiannual figures for 2021. So thank you for now.
Stay healthy, stay safe, and speak to you again. Thank you.
Ladies and gentlemen, this concludes the Stichofus Group's agenda call. Thank you for attending. You may now disconnect your lines. Have a nice day.