Thank you for standing by. Welcome to the Prosegur Cash Q1 2024 results presentation. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star one one on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star one and one again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Miguel Bandrés, Head of IR. Please go ahead.
Good morning to everyone, and thank you for joining today's call. I'd like to welcome you to our 2024 Q1 results review that will be led by our CFO, Javier Hergueta, and myself. The presentation will last around 30 minutes, in which we'll share the main events that have taken place in the period and how they've affected us, as well as the drivers behind our performance. We will as well review our key financials, our geographical performance, and our transformation effort with a specific dive into our Corban initiative. After, we will open a Q&A session. Should we not get to respond to everything today, we'll get back on remaining topics on an individual basis.
I want to again thank you all for your attendance and remind you that this presentation has been prerecorded and is available via webcast on our corporate webpage that you can find at www.prosegurcash.com. Now, before letting the floor to Javier, I would like to share some news regarding cash that have lately appeared in the media. They range from the appreciation Germans have for cash to the predominance of cash in Latin America, the growth of fraud claims for banking transactions, or the widespread failure of digital payment systems, all of which only but increase the relevance of cash for the system. In the first news, we can read in el Economista on the strong preference Germans have for using cash over electronic payment means for their daily transactions. They rely so strongly that they carry on average between EUR 100 and EUR 150.
When asked on what they most value about cash, they underline it's the privacy it provides you with, and we can see this is a feature of growing importance among citizens across the world. Second, I'm now reading from Semana in Colombia, where we learn about a study from Bain & Company that in 2023, in countries as relevant as Peru, Mexico or Colombia, the use of cash exceeds 60% of the total transactions. This is particularly relevant since these are markets where digital payments are thriving, but showing them to be mostly competing amongst themselves for consumer preference. In the next piece of news, we can read from Cinco Días that the amount of fraud claims placed before the Bank of Spain related to banking transactions continue to rise and have more than doubled in the last year, exceeding EUR 6 million.
This is noteworthy, as this type of fraud is only increasing, showing the weaknesses of non-cash transactions for consumers. In the fourth news, we can see that digital payment failures continue to occur in a widespread manner. After the severe failures reported in Spain and Portugal, more important problems have occurred in all regions, from France or the U.K. to Colombia and Australia. These events call for the importance of having a robust cash infrastructure to assure the proper reliability of the payment system so the economy can keep on moving. The resilience cash provides for the system is definitely second to none. After this brief news update, I will share today's agenda. First, Javier will review the highlights for the period.
He'll then follow to review the key financials for the quarter, as well as updating on our transformation strategy with specific dive, as said, into our Corban business, after which I will review key aspects per region. Then Javier will share the key takeaways before opening the Q&A session. Without further delay, I turn to Javier so he can share with us this period's highlights.
Thank you, Miguel. Good morning to everyone, and thank you for attending. I will, with pleasure, share the highlights of this first quarter of 2024. We are reporting sales that are slightly below those we saw one year ago by 1.4%. The main reason behind this being the consolidation of our Australian operation. As well, there continues to be a relevant impact from currencies. When factoring out these effects, there are several very important aspects I would like to underline. First, the 2.7% growth of our sales when we exclude M&A effects, despite the mentioned currency impact. Second, the fact that we consistently see strong double-digit organic growth across all the geographies where we operate, both in emerging and in more mature markets. And thirdly, we start to see the important gradual compensation in Argentina for the devaluation.
After last year's December devaluation, we have seen how the currency has gradually devalued at a moderate 2%-2.5% per month, while inflation, despite being lower month after month, with January reaching +20%, February around 18%, and March at 11%, has been substantially larger than the former. The translation of this inflation will be captured as the year progresses. Regarding margins, we can see that in terms of EBITDA, this has reached 10.7% of sales. This figure is the result of an overall strong business performance that has been mainly affected by restructuring costs in Australia, which I remind, have no cash flow impact, and the important effort we are making to continue to open Forex stores in what is, by nature, its slowest quarter of the year.
We are opening 40 stores in the first four months, compared to the 50 opened in the last year as a whole. I will outline the important growth in our net profit, as compared to the one reported a year ago, by 25.2%, fundamentally on lower financial costs and a more efficient tax performance. On the transformation front, which you all know is very relevant for our company's strategy, I am very proud to share that it now has a share of 31.7% of total sales. It continues to grow, clearly surpassing the 30% mark, and levered on the delivery of the key three solutions, being it Cash Today, Corban, and Forex, on whose growth we continue to invest, as I have just mentioned. Regarding cash flow for the period, we have generated EUR 1 million.
This figure is fundamentally affected by, on one side, the fact that the quarter close has been during Easter week, which has, to some extent, affected collections, and as well, by the investment required to grow on Forex. Other relevant events that have taken place in the period are our MSCI rating has been upgraded to BB , proving an important recognition to our ESG-related efforts and our active management of the risks associated to it. We have redeemed 2.5% of our treasury stock in the period, which evidently results in a higher participation of current shareholders in their company and has an accretion effect on EPS, and the fact that we will consolidate India from April first. This is a very promising market we know well, and where important development is taking place.
We are confident this will be a key pillar of our growth in the near future. I will now turn to the key financials for the quarter. When we look at this quarter's sales figure, we can see they have reached EUR 470 million, which is a slight 1.4% decrease over the same figure one year ago. It is important to note, in this environment, the very relevant organic growth of close to 52%, as well as the still significant currency effect impact of over 49%. It is, however, the negative impact of inorganic sales that brings the absolute figure to EUR 470 million, driven mainly by the deconsolidation of our Australian operations. It is important to underline that when isolating M&A, sales grow, despite the above-mentioned strong FX effect.
At the EBITDA level, we reached EUR 81 million, which implies a relative profitability versus sales of 17.2% and a decrease of close to 5% versus last year. This decrease is affected by restructuring costs of our Australian operation, the opening of new currency exchange stores, and the effect of Forex and country mix. Depreciation totals EUR 31 million, with an increase versus 2023 of EUR 6 million, due mainly to the exchange business. With this, we reach an EBIT of EUR 50 million, 10.7% of sales, and EUR 10 million lower than last year, due to the aforementioned reasons. We expect to see an improvement of the margin, beating last year's, levered mainly by the Argentinian, German, and Forex businesses' evolution.
Amortization remains at EUR 6 million, with which we reach an EBIT of EUR 44 million, representing 9.3% of sales. The financial result is of EUR 11 million, showing a significant improvement over the prior year, fundamentally because of a lesser currency impact. Earnings before taxes reaches EUR 33 million, 7% of sales, and a significant 13.5% improvement over the prior year. When turning to the tax rate, it is a relative 46.5%, showing an improvement of 500 basis points versus the one in 2023 first quarter. With that, we arrive to a net profit of EUR 80 million, which is EUR 4 million better than the one year ago, a 25.2% improvement, and represents 3.7% of sales.
It is in the bottom part of the P&L where we see a very substantial improvement, which we are confident we'll keep on seeing as the year progresses. With this all, we can as well see that our earnings per share have climbed by over 28% to EUR 0.01188. Turning to page five, we can see how our cash flow and debt position have evolved in the period. Departing from the EUR 81 million EBITDA we saw in the prior page, provisions and other items account for EUR 6 million. Income tax outflow totals EUR 16 million, and CapEx expenditure increases to EUR 22 million, and continues to be driven by an increase in customer-based revenue generating assets, such as Cash Today and Forex openings. And working capital amounts to EUR 35 million, a EUR 3 million increase over that reported one year ago.
The main reason for this is that the quarter close has taken place during Easter, having had a delay impact in some collections that have been already recovered in the first days of April. With these effects, we reach a free cash flow for the period of EUR 1 million. However, we expect free cash flow to significantly recover in coming quarters on the back of the business improvement and the recovery of temporary effects in working capital. Interest payments for the period total EUR 10 million.
M&A-related payments reach EUR 26 million, and the others line as well, experiences a substantial decrease to EUR 6 million, in line with what we anticipated in previous presentations. All in all, total net cash flow is of EUR 40 million, representing a EUR 4 million improvement versus that of one year ago, with higher impact from M&A payments, which go straight to reducing total net debt. With this, we reach a net financial position at the end of the period of EUR 664 million, as, notably, there is no exchange rates impact in the quarter. IFRS 16 debt has increased by EUR 7 million to EUR 122 million, driven fundamentally by the growth in the Forex business.
Deferred payments have seen a reduction of EUR 24 million, totaling EUR 125 million, and we see as well a reduction of treasury stock to EUR 6 million after the aforementioned redemption. This treasury stock redemption is, as you can see, the main reason for the increase in net debt. With all this, we reach a total net debt of EUR 905 million. Our leverage ratio reaches 2.8x EBITDA, being temporarily affected by the 2023 fourth quarter currency impact. We are sure this is a set temporary effect, and despite it, we are well below our covenants, as well as we are maintaining our rating. With this, I will now go over to update on our transformation efforts, which we can see in page six.
Our transformation products continue to grow in a very healthy manner, and we are very proud to say that their penetration over total sales only continues to grow. They now amount EUR 149 million. When compared to one year ago, we have grown by 11.5% or EUR 15 million, while our penetration has increased by 370 basis points, and it now reaches 31.7% of total sales. Customers continue to show a very positive response to our transformation products, and this is the case across all geographies, all of which have already surpassed at least the 25% mark over total sales. All transformation products continue to show strong growth, but it is once again Cash Today, Forex, and Corban that are performing especially well.
Cash Today is growing strongly in all geographies, Corban is delivering strongly in Latin, and Forex is doing particularly well in Europe. In page number seven, I would like to share with you some further details of our Corban business line, which, as you know, is a pillar of our transformation strategy. With this business line, we are currently present in six relevant Latin American countries, these being Uruguay, Brazil, Honduras, Peru, Ecuador, and Colombia. We have developed capabilities of different types to serve these markets. The main benefits for our customers, mainly financial institutions, are that it provides a complete control of the cash cycle in one single partner. It provides with clear distribution network efficiencies, since we are able to attend markets in a more economical manner. Through pairing with third parties, we are able to substantially increase the reach of our partners towards their end customers.
We as well have increased the number of available services with which to attend end customers, and all of the above levered on a top-notch technological platform, as well as with a very developed operational platform, both of which result in greater efficiencies and scalability. All these achieved through three main Corban models we are offering to our partners. First, we have the robust model, under which we can run a dedicated facility for our partner and in which there is a clear, direct cost arbitrage. Second, we have the retail model, in which we partner a retailer to provide the Corban services in its own facility. Here, the retailer gains traffic into its business, as well as a fee for generated transactions, while our partner gains distribution reach and is able to diversify the services, and so do in a more efficient manner.
Third, we have the digital model, complementary to the previous ones, and where the customer interaction is fully digital. It is the latest, most efficient method, and it's an extension to digital banking. The key benefits for Prosegur Cash are clearly encouraging the use of cash in society, since it multiplies the points at which it can be made available, as well as it facilitates transactions that can be settled in cash. It allows for synergies with the core business, as servicing points are or can be within our logistics umbrella. It as well enables cross-selling other cash products and enables us to offer services both in physical and electronic environments in a similar operational scheme. It results in a scalable platform from which to continue growing once we have acquired and developed the needed capabilities.
Last but not least, from a Corban's standpoint, its current revenues are in the EUR 100+ million range and growing organically in a strong manner. From a profitability standpoint, average EBITDA margins are in the 14%-16% range, hence above our average level. We have so far established over 1,000 robust sites, as well as over 40,000 retail ones. We have over 10 banking partners for the robust model and thousands of partners to which we serve, for instance, allowing for the payment of utilities, telecom services, or other recurring expenses, generating over 164 million transactions yearly.
We are sure this business will be a key growth engine for our future, both in the physical and in the digital worlds. As of now, it's already a very established reality in Latin America, and we are confident that this model will be exported to other geographies, since the service and the cost it provides for banking partners is second to none. I will now turn to Miguel, so he can update us on our regional dynamics.
Thank you, Javier. Regarding Latin America, that accounts for 63% of total sales, revenue has reached EUR 297 million in this first quarter. This implies a EUR 7 million reduction versus the same quarter a year ago, driven by currency impact. I would like to highlight the healthy organic growth at all across the region. However, transformation in the region has improved, accounting now for 33.3% of its sales, after having grown by 7.8% and reaching EUR 99 million. When considering Europe, that makes up for 1/3 of total group sales, these have reached EUR 155 million in the quarter, implying a 14.3% increase and EUR 19 million more than a year ago.
It's important to highlight the strong performance of organic growth in the region, which reaches 11.3%, as well as the positive contribution of inorganic growth of 2.6%. Transformation as well shows a very relevant improvement in Europe, with sales of EUR 46 million, having grown by 34.1% and EUR 12 million versus one year ago, and reaching now almost 30% of regional sales. This strong transformation growth is driven by a very good performance of both Cash Today and Forex solutions. Lastly, when looking at the Asia Pacific region, which accounts for 4% of total sales, we can see they've reached EUR 80 million, a 15.2% decrease versus one year ago. It's important to underline that the fall in this region is driven by the deconsolidation of our Australian operations.
If we net this off, we can see that organic performance has reached a very healthy 12% growth. Transformation products have reached EUR 5 million in the period, which despite being almost 42% less than one year ago, it makes up for 25.6% of total sales in the area. This means transformation products' penetration has increased by 370 basis points. With this, I hand over to Javier, so he can conclude.
Thank you, Miguel. I would like to summarize what has been an important first quarter, where our net income has seen a very significant increase of over 25%. We have been able to grow our sales, when excluding Australia's deconsolidation, by 2.7%, while achieving double-digit organic growth in all geographies, and we have been able to gradually compensate in Argentina for devaluation. In terms of margins, we've reached 10.7% of sales in relative terms, affected by restructuring costs in Australia, which have no cash flow impact, and as well affected by the openings of Forex stores in what is its slowest quarter by nature. The idea behind being to continue growing business line and have more stores ready for the higher performing second and third quarters.
With different efforts on the transformation side, and with the support of our customers, transformation sales reach now 31.7% of total sales, levered in the above mentioned Forex business, as well as a very strong performance in Cash Today and Corban. In terms of cash flow, we have reached EUR 1 million in the period, affected by the calendar effect of closing the quarter during Easter weekend, hence affecting collections, as well as by the investment effort we are incurring in the Forex expansion. As well, it's important to remember that our ESG strategy has been once again recognized by, in this case, MSCI, upgrading its rating to BB . We have redeemed 2.5% of our treasury stock with the corresponding accretive impact to our shareholders. And lastly, India is to be fully consolidated from April first this year.
It's a country where we are being present for a number of years now, a market we understand well, and which we are sure will bring a lot of important growth opportunities in the future. As you can see, many things have happened, and we have the base ready for many more important things to occur. We are very confident that as the year progresses, our figures will recognize such an improvement. And now, I would like to thank you for your attention and open the floor for any questions you might have.
Thank you. As a reminder, to ask a question, please press star one one on your telephone and wait for your name to be announced. To withdraw your question, please press star one and one again. Please stand by while we compile the Q&A roster. We will now take the first question. Coming from the line of Miguel González Toquero from JB Capital , please go ahead.
Yes, good morning. Thanks for taking my question. I got three. Firstly, on your strategy to open new stores for Change Group, maybe you could clarify this a little bit, like how much you expect this could imply in terms of CapEx or leasing for this year? Secondly, on India, you mentioned you will be consolidating this division in April, so why this? Did you acquire any additional stake? And what impact should we expect in terms of sales or net income? And lastly, on Argentina, from what you just commented, the lower depreciation and higher inflation should have a positive impact on PNL.
But given the inflation this quarter, I wanna hold the path so it's going, and if you think we could see a strong rebound in terms of cash flow already in the second quarter? Or maybe you saw weaker volumes that might have set a little bit despite the Fed. And well, related to this, you think free cash flow for this year could be about EUR 100 million this year? Thank you.
Good morning, Miguel. Thank you for-
Yeah. Can you hear us, Miguel?
Loud and clear. Yeah.
Okay, great. Thank you.
Good morning, and thank you for your questions. We'll try to address all of them. So on the first one, related to the new stores on the Forex business, I would say that the strategy here is more on accelerating the openings in Q1, so that they are at full speed in Q2 and Q3, which we know are the strongest quarters for the business as it is pretty seasonal in nature. So the acceleration is not something we should be extrapolating going forward. There will be some more openings, but not at the same path that we have undertaken in Q1. So I would say that maybe this quarter, this effort created an additional CapEx, which could be in the region of, say, around EUR 3 million or so.
But you should not extrapolate that going forward. So I think that it's part of the strategy in the business, and that's something that we should be repeating every year in order to have all of the commercial space, as I said, running at full speed. But you should not extrapolate that going forward. Okay. Secondly, in relation to India, why this? It's just because certain agreements related to the governance of our joint venture in India have taken place right now, and that's the only reason for it. No additional estate being acquired or any other thing. It's purely an agreement that has taken place right now, and that's why it's first of April, the moment in which we are consolidating.
We think this is a very good opportunity for providing visibility for a very good business, which is significantly growing. And we think that that should be seen in the figures and the impact it may have in our numbers. In terms of sales, I think you might be assuming on a run rate basis that it could be contributing in the region of around EUR 80 million with double digit margin or close to double digit margin in terms of EBITDA. So it's something that should be quite significant itself. And in relation to Argentina, we feel very positive about Argentina right now. We think that there's a very promising context in the coming quarters, and that's the fact for several reasons.
First, because there's an ongoing catch-up, as we mentioned, an ongoing process in the inflation versus devaluation trade-off, which will significantly increase as the year progresses and should show the positive impacts of it in the coming quarters. But secondly, the pricing review mechanics, which are going pretty well, and the rule of passing through 100% of the cost increase is being made in all geographies. In the case of Argentina, we know that there's always a time lag in the implementation of the price increases, and the impact coming from the highest inflationary months, being the end of Q4 and the beginning of Q1 in 2024, is something that we are starting to see now in April and onwards, and therefore, this is in the coming months and in the coming quarters.
So it's not yet fully reflected in the numbers we are seeing today. And, and thirdly, one, one more thing to bear in mind is that, we know that there's an ongoing process of issuing higher denomination notes in the country. So the equivalent to EUR 10 will be there in Q2, and the equivalent to EUR 20 will be there in Q3, and that compares to, maximum face value of EUR 1 or very marginally, EUR 2 today. So that should allow us to generate very significant efficiency or efficiency gains that, will arise therefore, in Q2 and Q3 onwards. So, so all in all, when we put that together, we are very positive about Argentina, in the near future.
Very clear. Thank you.
We will now take the next question from the line of Francisco Ruiz from BNP. Please go ahead.
Hi, good morning, Javier and Miguel. Just one first to clarify, you say EUR 18 million or EUR 80 million in India, in sales?
We said EUR 80 million, pardon. EUR 80 million.
Okay. Okay, thank you. So I have two-- two more questions. The first one is also in Argentina. I mean, it's very visible, the possible impact of the current situation and according to the accounted rules on inflation in sales and with that. Do you think that it's gonna be the same in terms of cash flow? And the second one is from Australia. So could you give us what's the amount of the one-off in Australia, the impact, if they will continue in the future quarters? And also what is the contribution in associates? Thank you.
So, on the additional two questions, Paco, in terms of Argentina and feedback in cash flow, I think yes, we are also very positive in terms of the cash flow contribution that might be coming from Argentina. Because if you look at it, on an overall perspective, as 2024 versus 2023, what we see now is that the unofficial exchange rate is not very different from what it was last year. So we are seeing the business growing very significantly in local currency terms, so a lot of the cash flow that we repatriate, which is much more in Argentine pesos, is going to be brought at an exchange rate, which is not very different from the one last year.
So much lower cost inherent to the repatriation of the cash and more pesos being brought to the parent company. So, when you look at it net-net, then we could have a much stronger cash flow contribution overall. And, in relation to Australia, the impact in the quarter for this integration cost might be close to EUR 2 million, and I think we should still expect that to be there for the coming quarters, at least for a couple of quarters, till the integration process is 100% complete, which is ongoing right now. I didn't capture very well the last part of the question about contribution. Can you repeat that one?
Yeah. It's mainly on the contribution of Australia in your Equity Accounted in associates.
Okay.
Because you put it all together in and we'd like to know what it is.
Okay. Well, for the time being, I would say that most of the delta year-over-year is basically concentrated in this one-off cost. So, we shouldn't see a very significant impact, other than that right now. So, the integration is, as I said, ongoing. And we expect the contribution to be much more visible once the integration is fully completed.
Okay. Thank you. Thank you very much.
Thank you. We will now take the next question from the line of Álvaro Lenze from Alantra Equities. Please go ahead.
Hi, thanks for taking my questions. Just looking at Latin America, it's been difficult to know the moving parts in Latin America due to the significant impact of Argentina and the lack of country by country disclosures. So if you could run us through how is the performance going in other countries in Latin America, other than Argentina, and if those are growing in euro terms, in terms of sales and profits? Then my second question would be on M&A, if I am not mistaken, most of the EUR 25 million M&A payments that you have done this quarter relate to pending M&A payments. If we could expect more payment of the pending earn-outs, or if we should see some additional M&A, or if instead you are going to focus on shareholder remuneration via both dividends and buybacks.
Thank you.
Good morning, Álvaro. With regards to the LatAm moving parts, I think a good reflection on that is that if you take out Argentina of the perimeter, the figures show that there's a significant growth in euro terms, and therefore the whole of the region is in very good shape all across the board. So I think that's the best reflection you can make out of that. And I would say that that's even accelerating when you take Argentina out. So very good behavior in all of the countries in the region. And I think that the figures we are posting on a - 2.5% are directly related to the impact on the exchange rate coming from Argentina.
But, when you take that out, I mean, it's, it's, as I said, a significant growth in euro terms. With regards to M&A, 100% of the EUR 25.6 million we are posting in the M&A line is related to payments from previous transactions, so related to the earn-outs. Going forward, I would say that, you should expect more payments in this line, again, related to the earn-outs of previous acquisitions. But, additional M&A, if any, should be marginal. I think that, the intention is for, most of cash flow within the, capital allocation mix to be, oriented towards shareholder remuneration and net debt reduction.
Thank you. And if you could please, as a follow-up, maybe provide us some ballpark numbers of what is the contribution of Argentina in a range, I don't know, between 10% and 30% of revenues in Latin America, or between 20% and 50%, something like that?
Well, you know, we don't disclose on a per country basis, but as you can imagine, the weight of Argentina within total Latin America is reducing due to this exchange rate effect we were mentioning before. You know, Argentina and Brazil were or have typically been the two main countries in the region, and after the devaluation, as you can imagine, Brazil is weighing significantly more than Argentina. So just to give you some color on that.
Okay, thank you very much.
Thank you. We will now take the next question from the line of Enrique Yaguez from Bestinver Securities. Please go ahead.
Good morning, Javier and Miguel. I have three questions. The first one is regarding your new strategic plan for the period 2027. I know that the Prosegur parent company said that the aim of this plan will be cash flow generation and efficiency, and that in turn, the objective was accelerating the new product development. But I don't know if you could give us some broad indications about, you know, the financial objectives of this plan, or at least when we shall know about those financial objectives in the case of Prosegur Cash.
Second, in terms of profitability, EBITDA margins for this year, I don't know if you could give us some guidance or at least an indication of what kind of profitability should we expect with the process of pass-through will be completed. And finally, in terms of CapEx, you mentioned, you know, expansion in new products that require some, some CapEx. And I thought my, my, my guess was that CapEx was going to increase this year, but CapEx remains flat in this first quarter. How would—should we look at CapEx for this year also? Thank you very much.
Good morning, again. So one by one on the strategic plan, I would say that the main pillars of the plan will be focused on efficiency and profitability gains, on the one hand, acceleration of the transformation on the second, and thirdly, and clearly a strong pillar, enhancing and focusing on cash flow generation. So when you put that into figures, I mean, we have not disclosed that, and we're not going to do it today. But I think that if you look at the 2030 guidance that we gave in the Capital Markets Day, it keeps being a valid reference as of today. So just take that and keep very in mind. In relation to the guidance, I think that 2024 we believe will be a very good year for us.
We are firmly convinced that we can beat consensus, which I think is now slightly over EUR 1,900 million for sales and around EUR 270 million for EBITDA. So that implies around 40% margin. So we think that the figures in the consensus are beatable, and we are firmly convinced about that. And all in all, we are pretty sure that we will deliver very strong EPS enhancement in 2024. And in relation to CapEx, I would say that on a full year basis, you should not be expecting an increase versus last year, so CapEx should remain more or less in line.
We are investing into the new products, but we did so last year, so that should not be very differential from one year to another. So, that's more or less the level that you should be taking into consideration.
Thank you very much.
Thank you. As a reminder, if you wish to ask a question, please press star one one on your telephone and wait for your name to be announced. That's star one one, if you wish to ask a question. We will now take the next question from the line of Manuel Lorente Ortega from Santander. Please go ahead.
Hi, good morning. Just to follow up on India. Sorry, but I missed the explanation of why you're starting the full consolidation of India at this stage. And also to confirm that the EUR 80 million sales contribution is on a full year basis or starting for... Sorry, starting since the beginning of April.
Hi, Manuel. On the reasons for consolidating India, as we just said, it's simply because we have reached some agreements with our partners in India related to the governance of the joint venture that we have there, and that has happened right now. So that's the only reason for starting consolidation on April 1st. And with regards to the impacts, the EUR 80 billion I was mentioning was on a run rate impact. So if you look at the full year 2024, so from 1st of April till December, you should consider more or less something around EUR 60 million-EUR 65 million. That's what we should be expecting, more or less.
Up to April, how was this Indian segment consolidating?
It was consolidated under the equity method. It's been the case for a while already, since we invested in India.
Okay. So, my second question is on the core business volumes on the European market. 11% organic growth for Europe looks pretty solid. It's fair to say that, you know, the vast majority of that growth is coming from, let's say, new developments or transformation segments. But I would like to know whether you can give us an idea of whether the volume pricing trends for the armored transport and cash-in-transit business, because doing the math reversely, looks like that pure core business is roughly flattish or slightly down. But I wanted to double-check my feelings with you guys.
If you look at the numbers in Europe, in Q1, and what you can strike from there is that the traditional business is growing at a high single digit. And we can look at the math afterwards, if you want. And that is a consequence of inorganic activity from Germany one year ago, and the organic growth on a 50/50 basis, more or less. So the organic growth will be a very significant figure if you consider Europe to be a mature market. And there's of course a price volume mix into all that. So happy to take the math afterwards, if you want. But the impact is, as I said, more on a high single digit impact in traditional Europe, rather than flattish as you were pointing out.
Okay, but that high single digit is organic or also inorganic?
I said, so the high single digit is a combination of both organic and inorganic, and that's more or less 50% each. So the organic implicitly is growing at a healthy rate.
Okay. And excluding the inorganic contribution, the pure organic, let's say, low to mid-high single digit, it's pricing driven or a mix between price and volumes?
There's a combination of both the price and volumes.
Okay. And just my last question is on the net debt facing throughout the year. Do you believe that this roughly EUR 900 million is the peak of the year and we should gradually go down? And if that is the case, we will really appreciate an indication of up to what levels. Is it returning to the end of last year a reasonable assumption, or is there any specific situation whether the net debt should be clearly above or clearly below that level?
So in relation to net debt, as you know, our first quarter is typically seasonal in terms of net debt increase, and the pattern is more an increase in Q1 and then a reduction going forward. Actually, this year, the seasonal impact in Q1 has been lower, if you exclude the share buyback organization. So from now till the end of the year, you should be expecting a gradual reduction in terms of net debt. Typically, Q3 is the strongest in terms of Free Cash Flow generation, so you should see also similar impact in terms of net debt reduction, which could go down to a level around the one we had last year, bit below, around that figure.
Taking into consideration that the dividend we just announced will be paid in the coming quarters, and that also plays a role. So, but that's embedded into that gradual reduction that I was just mentioning. So we should be down to more or less where we were last year.
Okay. Thank you.
Thank you. There are no further questions at this time. I would like to hand back over to Javier Hergueta for closing remarks.
Thank you. Thank you all for taking the time. Just wanna highlight once again that this first quarter we have posted 28% increase in EPS, which we think is a very good signal, and this is just the starting of what we anticipate will be a very good year for us, in which we are sure that this positive trend will continue going forward. I'm happy to speak to all of you again in the coming quarters and hopefully review our figures and the delivery on those. And in the meantime, if you need any further clarifications, as always, our investor relations teams is available for any queries you may have. So thank you once again, speak next quarter.
This concludes today's conference call. Thank you for participating. You may now disconnect.