The conference is now being recorded. Ladies and gentlemen, thank you for holding, and welcome to the Sika Food Group Conference Call. During the presentation, all participants will be in listen only mode. Later, we will conduct a question and answer session. I would like to hand over the conference to Mr.
Thomas Raj. Go ahead please, sir.
Thank you. Welcome everyone on the call on our half year results for 2019, as mentioned by the operator, I will start with a short introduction presentation and then there will be an opportunity for questions and answers. For my introduction, I will use the presentation, which you can find on the company website on the half year figures. So I will just start and, of course, first on the net sales. I'm looking at sheet number 2 of the presentation.
And well, what we see in the markets, in which we operate both in the Netherlands and Belgium, that there is a clear slowdown in the market compared to last year. In the first half of last year, we still saw market growth of 3.5%. This year, the market has come down to a growth of only 0.2% in the Netherlands and even minus of 2% to 3% in the Belgian market. And that's a clear slowdown, what, of course, does not only affect slee growth, but all our competitors, but it's more tough of an environment to operate in. Specifically within the market, we see quite a lot of differences between customer segments.
So, hospitality sector, restaurants, are still in growth mode. And also with Snego, we see that we are performing well in this, in that segment. On the other end, we see pressure in the catering sector in care and cure and in the drinks related sector. So barge and leisure outlets. And that is where we are hurt the most.
But all in all, in the Dutch market, we are more or less in line with market development. And in the Belgian market, we are doing a bit better than the market, both in the previously acquired businesses of YAVA and ISP see and our new outlet in Antwerp is picking up week after week in sales. Which causes a clear outperformance of the market in the combination in Belgium. On the next sheet number 3, there's the same information, of course, as in the previous slide, but then in the new segmentation, to the Netherlands and Belgium, with the comments as I presented before. And then we see that, how the first quarter was still okay, ish, specifically if we correct for the shift in Easter between the first and second quarter as compared to last year.
But on the other hand, we see a clear slowdown in the second quarter. And specifically in our market the month of May early weeks of June were, compared to last year, really weak and that has to do with, specific different weather circumstances. So, last year, in these months in our regions, it was already an average of over 25 degrees this year. It was below 15 and that has a big impact on the specific month. Of course, overall for the year, weather is a more or less neutral factor, but within a quarter, that then made the shifts as was this time.
If I then move on to the elaboration on the results of development, We do it a little bit differently compared to last year. And that has everything to do with the implementation of IFRS 16. As of January 1, 2019. I will elaborate on the shifts a little bit later in this presentation. But what it means that all lines are in the P and L more or less are affected.
So both EBITDA and EBIT are affected. Purely technical shifts in accounting principles, but the number profit before tax is most comparable. So that's why we focus for the remainder of this presentation on that line and the net impacts of all different line items. And what we see then on sheet number 4 is that these harsh market circumstances with little growth and significant cost inflation have also put pressure on our markets. But the main challenges that we face are not only caused by the market circumstances, but also as a result of number of big building blocks.
And one is specifically the overhead cost structure, as explained last year, we always had a combined headquarter for both food retail and food service with the divestment of our food retail activities. We had to scale down or we have to scale down the central operations because otherwise all of the costs will be put on food service. We are in the process of doing so right sizing the headquarters, taking out 200 in headcount in the central organization. But, although we still believe that we will complete the program in 2019, the speed of things is not progressing in the way we anticipated at first. So additional attention is needed to be able to complete that exercise.
And on the other hand, we are running a number of major programs in the organization. So we are, well underway of finalizing the Heineken integration which is a big effort and we are preparing for the interpretation of SAP first in Belgium, and that's means that we still need a lot of the capacity and people in the headquarters. So we can't scale down to the right level yet. And the last part is that we are still, are we have still been servicing the new owners of and pay on the number of central services, and that stops as per June 2019. So that means that as of this moment, and starts to dismantle also the functions related to those activities.
But all in all, a bit disappointing in terms of timing, but eventually, we will be able to scale down quite a lot of the central costs. And then on the next sheet sheet number 5 and 6. We see the impact of IFRS I won't go into much of the detail, but as you can see, instead of the lease payments, which were previously reported under expenses, we now see a shift of those elements to depreciation and interest expense. But that means that all the line items within the profit and loss account are affected. And you can see the bridges for 2019 displayed both on the approximately most accounts, but also on the balance sheet, of course, there's a major impact because all these future lease payments are now put on the balance sheet both as an asset and as a debt of, in our case, approximately 100 and 65,000,000.
And on the short term, the yearly lease amount 16,000,000. So that means that upon implementation, we also have a charge to equity of 12,000,000 which will run out in the next couple of years. But I think the bridge on the results is best represented on sheet number 7. Where we see that the profit before tax in the first half of twenty eighteen was $31,000,000, and we had a significant decrease to 16,000,000 in first half of this year. As already explained, the main items in that are the central overheads the ability or the inability to scale down sufficiently at this moment.
And on the other hand, the Belgian operations. And in the Belgian operations, there's a number of things happening. First of all, we are setting up our Belgian ore organization for further growth in future, which means that we are investing both in infrastructure and in central capacity and overheads That means an increase in costs, as you can see here. But unfortunately, we still can't bank on efficiencies. And that's because we still run different ERP systems in all of our Belgian operations And of course, upon the moment that we are implementing SAP, we can start to take out efficiencies there as well.
But for the time being, it is a relatively inefficient central operation, although we have centralized all the activities in one central headquarters today. And the other parts of the Belgian operational losses are the started losses of our outlet in Antwerp. We are progressing nicely in the turnover development in on prem, so week after week, the sales per week increases. But we built a flagship store in outlook with a relatively high fixed cost base So before we get to breakeven in Antwerp, we still need to grow significantly. And we think that we can end up at the breakeven level around the end of this year, beginning of next year, but that still means that also for the second half of the year, there will be further started losses in Oslo.
Also, I think important to note in this sheet, is where there is less of an issue and specifically focusing on the Dutch operation which is total here at 0. Does it mean that we're not progressing in the Dutch market? Yes, bottom line, that's true. But given the fact that the market development has slowed down to only a growth of 0.2% in the Netherlands, And we know there is significant cost inflation in both logistics, wages and energy. Then this shows that we were able to absorb these significant cost inflation.
In the Dutch operation, which we think is a good job and where we see some potential in the next 6 months to improve a little bit specifically because the comparison basis to last year in that sense is improving. But all in all, a meager performance in the first half of twenty nineteen. We still believe that we are doing the right things today. We are faced with a tough market in which we need to be very focused on keeping in the turnover on the one hand and reducing the cost levels and looking for efficiencies, but we still believe that we should continue on the major programs. Of course, the integration of Heineken and the setup of Belgium, but unfortunately, as a negative impact of those are now combined in the first half of this year and will be, to some extent, in the second half of this year.
But we are on the right track. We know where we should put additional attention, and that is also what we intend to do in the second half of twenty nineteen. Then on the sheets, following, we have more of a detailed breakdown, per element as just mentioned. So I will not repeat that. And I would like to skip to sheet number 11 that we see the development of the Antwerp store you also see the progress in the sales.
And what you can see is that we're now more or less halfway in terms of getting to the breakeven results. This is the results of 30 weeks of openings. So, we need another more or less half year to get there. And what will help in the second half of this year, we will, we will transfer the Belgian turnover that we're now still doing from the Dutch base actually into Belgium and actually into Antwerp. And that means that on a weekly basis, we add another 115 1000 per week to the Antwerp store, which really helps to reduce shrinkage there and to cover the cost basis, filing the Netherlands moving this away from the already crowded delivery surface in GILSA, will go mostly unnoticed.
So that will give huge impulse to the Belgian operation and specifically in Ambroke. If we then go profit before tax is down by $15,000,000 that we also see a big decrease in the net profit. We, however, still believe that This is a timing issue and a temporary negative impact on our results. And that the major and strategic programs that we are running are going to pay off in the future as expected. So we don't see a reason to adjust the interim dividend, as we have proposed with last year, and we will pay out similar interim dividend for 2019 or $0.55 per share on December 30th.
Then on the next sheet, you can see more details on the segment information the main messages we already covered that you see the numbers and percentages related to that Of course, keep in mind that in these lines, all these shifts of IFRS 16 are included. So, for instance, on the EBITDA level, the overall number looks better compared to 2018. But of course, if you take out the effect of IFRS 16 in these numbers, you see similar effects as presented on the previous sheets. Then maybe some words on the cash flow statement on sheet number 15. We see on the one hand, in the operating cash flow, the cash flow from operations would be down by, in line with the results as presented.
But this is compensated by the corporate income tax state, and that's the result of a restitution that we got in 2019 over 20 18, we prepaid corporate income taxes in February last year, not taking into account the impact of the divestment of food retail and the incidental costs relating to that later in the year 2018. So that meant that we had a significant tax refund of $14,000,000 in 2019. And that's already in the cash flow for this year. On the other hand, we prepaid the, an estimate of the corporate income tax for this year. And that is a net result of $7,000,000 only compared to $24,000,000 last year.
So that's, that covers in cash terms, at least the lack of cash from operations, so in total, more or less same level. Then investment activities, of course, there is the acquisition of the Crayker, which was in the first half of this year. We disposed of, meso Mustafaya, a specialty shop for, for some products in our cash and carry. And we see that net capital expenditure has increased also significantly compared to last year. There is a timing element in this net capital expenditure.
As explained before, we are rebuilding the distribution network for the combination of SUGO Inifin as we speak. And we intend to sail and lease back most of these new delivery service locations So for instance, the location in Davencure, which is almost finalized, it will be ready in September this year. We have, absorbed all the CapEx until now to a large part in this number, but in the second half of this year, we expect to do the sale on leaseback and then we get an inflow of roughly 1,000,000. So that reduces net paybacks again. So the overall CapEx number for 2019, we expect to be around $80,000,000 net.
So that's the outlook going forward. The change in-depth is related to, the acquisition of the Crayker. On the one hand, we, we took on additional amount, from the banks. On the other hand, we did some repayments. So a net impact of over 30,000,000.
And the dividend paid stated here is the closing dividend of 2018, which we paid out at the beginning of this year. If we then look at the free cash flow, And there is a, an error in presentation. So it doesn't relate to the number on page 14. If we look to the free cash flow, but the numbers on Page 15 are correct. And my apologies for that.
Free cash flow is minus 13, compared to minus 1 last year for the group. And while the net effect of that is mainly related to the increased capital expenditure that we have done, compared to last year. Then in, the sheets following are more detailed on the, on the developments in the Netherlands and Belgium, both for Belgium and the Netherlands you see on the sheet the market developments, developments of consumer confidence, unemployment and inflation and overall market dynamic. I think I've mentioned the most important elements of that but specifically the drop in consumer confidence as of last year compared to now are not voting well for the developments in our markets. So we expect going forward in more flattish markets with the information we have today.
And more importantly, we are focusing our internal efforts on the situation where we have a flat to a slightly declining market to make sure that we have the right focus and the focus should be on reducing costs and making things more efficient because growth will not be the way out for the foreseeable period as we think. So next steps in Belgium are described then the market dynamic for the Netherlands, but I'll go fast forward to the to an update on the Cracker. A few sheets further on. We have mentioned the developments around the Crater. The acquisition was completed at June 17th this year.
The opening balance sheet is part of our overall balance sheet, but consolidation of turnover and results only start from July onwards. So they will be in the numbers of of the second half of this year. Overall, on annual basis, roughly 130,000,000 sales of the Craykers fifty-fifty impression theory and distribution. We, will start the integration effort at the beginning of next year. First, we want to finalize the Heineken integration in the Amsterdam And then we can integrate the delivery business of the Greater into Amsterdam as well.
And then we can also leave the infrastructure of the Great and the relocation of the cash you carry on their specific position in the Amsterdam market is going to be at the later stage, and we will continue to operate from your existing base in the Cash and Care restore, which they have today. But we intend to bank on a number of synergies, of course, in terms of purchase synergies. We can immediately start to converge in this year. We will also start to bank on the efficiencies on headquarter efforts. And so take the activities to our technical headquarters and reduce headcount in the Amsterdam region.
And also, the physical infrastructure is not needed anymore specifically for the delivery part of the business. So we intend to integrate the business in our Amsterdam delivery center and then sell off the buildings again into the which also saves quite a lot of infrastructure costs. For the short term, however, we have some work to do in Amsterdam So besides the food service business, which we find very attractive of the Greater, there's also a fruit and vegetable company, part the group, which is not performing very well, what's heavily loss making last year, so somewhere between $5,000,000 $6,000,000 loss on an annual basis. And we have made the decision either to sell off this business, as a whole, are in parts, or if there's no seller available to fully dismantle the business, One way or another, we want to have this finalized before the end of the year. So that means that some remaining operational losses and the organization charges will affect our P and L in the second half of this year as a more or less one off we took that also out of the acquisition price, but the way of accounting is such that these these costs will run through the P and L in the second half.
We will report that discontinued operations. So it's clear to everybody that this is related to this dismantling of this part of the business, but still, we expect an impact pretax of roughly 4,000,000, more or less, as a result of this exercise. And that means that with the integration effort that we need to do, the headquarters dismantling that we are setting up now, and the alignment of purchase terms that we are also setting up now that we expect a positive contribution to earnings per share from second half of twenty twenty onwards. So that's, more or less 1 year period of integration and restructuring before we can bank on the benefits for the Quaker. Then, a little bit on the new IT landscape.
On the next slide, this program is running well. And according to plan, also in terms of time and budget we are in line with the earlier communicated expectations, which means that the summer period and right after summer, we will start the prototyping phase of our new international SAP landscape We will do extensive testing and then implement in Belgium in the course of 2020. Which is as planned. And fortunately, now we have discussed with our implementation partner, what we exactly need and what the design is Also, the cost and CapEx related to this are within the ranges that we communicated earlier. So we are nicely on track in that sense.
So if we then go to the outlook for the remainder of this year and the months thereafter in 2020, we of course, can't predict the future, but given the indicators on consumer confidence and the way the market is developing, we anticipate continued pressure on the markets both in Belgium and Netherlands. We, as seen and we'll see, we think, still some cost inflation, which we need to absorb by partially passing on some of it in the pricing to our customers, but on the other hand, taking additional measures to increase efficiency. We need to speed up our process and give more attention to the reduction of the central overheads in the Netherlands specifically, we think we will be able to manage that. But in terms of timing, we have to run the remainder of the program in the second half of twenty nineteen. We think we can manage And we will stay very focused on the strategic programs.
So it means that on the short term, as we still anticipate some pressures, because Antwerp still has to grow into its breakeven model, the reduction of headcount will be gradually but it will be there eventually and still give some pressure on the shorter term. And of course, the and specifically, the food and vegetable company will give some pressure as well in the second half. But these are the most important effects and we won't give a full prediction yet on the end of the year completely because there's too many variables still also in market development to be taken into account. That concludes my production and wrap up of the sheet presentation, I'd be happy to now give the opportunity to ask questions.
Ladies and gentlemen, we will start the question and answer session now and can we register for the question and answer queue? You. No questions at the moment, Mr. Thomas Lars. Okay.
Thank you. Well, then I, if there are no further questions, then I would like thank all of you who dialed in on this call for your attention. In October, we will be back with a trading update on quarter 3 numbers. And should any of you have any further questions popping up at the labor stage feel free to contact us to ask for that. For now, I wish everybody a good day and for those we'll have to go on holidays, a good holiday, and we'll speak again at a later moment.
Thank you for your attention.
Ladies and gentlemen, this concludes the Slicherol Fullgroup event call. Thank you for attending.