Good morning. I'm Gloria Martín, Logista's Director of Investor Relations. I should like to welcome you to this audio webcast which will consider the results of the first half of the 2022 fiscal year, about which you will find more details on our website. Today, I am accompanied by Pedro Losada, Logista's CFO, who will lead this audio webcast. During the question and answer stage, which will take place at the end of the presentation, we will read and answer all the questions received through the audio webcast platform. The document which accompanies this presentation, and the observations which will be made as it progresses, include forward-looking statements and projections concerning future results. I invite you to read the disclaimer which accompanies the document, and which mentions the various factors that could cause the real results to differ materially from the projections or forward-looking statements.
I'm now handing over to our CFO. Pedro, the floor is yours.
Thank you very much, Gloria. Welcome, ladies and gentlemen. Welcome to everyone. Really happy in my first result presentation. Excited to be part of this team and this great company, and haven't had the chance to meet you all yet, but looking forward to do so in the coming and near future. Well, let's go with the results. During this audio webcast, we are going to deal with the highlights of the results, a review of the businesses, a final review wrapping up everything, and we shall end up with an outlook of the forthcoming fiscal year. Afterwards, as mentioned by Gloria, we shall open a session for questions and answers.
Okay, during the first half of the year, 2022, the macro context in which our activity has been carried out has been described, I would say, not an easy one from a macro and geopolitical perspective. Inflationary trends that began to materialize at the end of 2021 financial year have been maintained since the beginning of this financial year, and have been worsened in the second quarter after the outbreak of the conflict between Russia and Ukraine.
In addition, although the situation of the pandemic at the end of the semester can be considered practically normalized in the countries in which we operate, the high rate of infections that was registered in the first quarter of the year, as well as the price increases and the uncertainties derived from geopolitical tensions, would be weighing on the rate of recovery of general economic activity in Europe, also in the second quarter. In this context, Logista has demonstrated, once again, its ability to maintain a positive evolution of the activity, even in difficult contexts. In the first semester, we have reached growth rates of 3% in economic sales and 6.3% in Adjusted EBIT, and of 9.1% in the net profit from continuing operations.
Even after considering the result of discontinued operations, the net profit has grown 0.1% over the first half of the previous fiscal year. In line with our strategy, and as we announced last February, we have acquired 70% of the Dutch company Speedlink Worldwide Express, a specialist in express deliveries, time-critical, with origin and/or destination in Belgium and the Netherlands. The agreement contemplates the acquisition of the remaining 30% of the business in the next 3 years. This acquisition favors the international expansion of Nacex services in Benelux, while strengthening Logista's position in medical, healthcare, in addition to high tech, automotive, and e-commerce, by expanding our portfolio of services outside the Iberian Peninsula.
Speedlink was founded in 1995 and has been Nacex's exclusive agent for the Benelux since 2006, making it a known partner for Logista. Speedlink Worldwide Express is based in Hoofddorp, very close to Schiphol Airport in the Netherlands, and has 30 employees. The transaction will be paid with cash for a maximum amount of EUR 18.5 million on the 70% stake, and the remaining amount will be depending on our key goals during the next three years. This acquisition allow us to advance in the internationalization of Nacex in the Benelux, a country that has the largest number of European distribution centers, while at the same time providing the group with potential growth in other areas, in the Netherlands, Belgium, and Holland.
In addition, it provides a platform from which to undertake a potential expansion in other activities carried out by the group. The fact that Speedlink has been Nacex's exclusive agent for the Benelux since 2006, as I mentioned before, has allowed us to get to know its business well and facilitates its integration within our company. Speedlink has a growing business with very attractive margins and no debt, fitting with our model. This year, we have continued to increase transparency in our communication, this time in connection with ESG.
In view of the importance which Logista attach to the ESG agenda and the need to find a uniform benchmark for comparing companies in the same sector and geographical area and of the same size, which would enable us to continue providing our standards in this field, we decided to seek an evaluation from a reputable independent rating agency. Early October, Sustainalytics concluded its assessment of Logista by assigning us an ESG risk rating of 14.1 points, which means a low risk of experiencing material financial impacts due to ESG factors. That rating places us at number 5 out of 80 companies evaluated in the sub-sector concerned, that of air freight and logistics, and number 9 of three hundred and fifty-eight companies in the transportation industry.
This rating can be added to our recently renewed double A in MSCI ESG ratings, to our inclusion for the sixth consecutive year, the CDP's A List for Climate Change, and to our renewed recognition as a leader in supplier engagement, also by CDP. In addition, this year, we have again being recognized by the Financial Times as a leader in diversity. We are member of the IBEX Gender Equality and continue being a member of the FTSE4Good Index. Before starting with the review, I would like to remind you that there have been two changes in the accounting and reporting methods at the end of last year.
First, the wholesale activity in France to other networks than tobacconist that has made through the subsidiary of Supergroup, has been classified as held for sale in our balance sheet, and its impact in the P&L is included as discontinued operations. Second, the changes that only affect segments reporting were separating the report of Logista's pharma revenues and economic sales, which were before had been reported together with those of our distribution of publication subsidiary in the sub-segment Other businesses, and the allocation of the costs of the corporate center among the other three segments, Iberia, France, and Italy, including the results of the Polish activity within the Iberia segment, in keeping with the real reporting relationship of the business.
Quarterly 2021 figures has been restated to make them comparable with 2022 ones, you can find them from the first to the fourth quarter in the Investors and Shareholders sections of our webpage. Let's now review the progress of the business, both overall and each geographical area. Performance in Iberia was very positive, recording a 7.5% increase in economic sales, which brought the total EUR 337 million. The activity, the economic sales in tobacco and related products increased by 10.7%. The volumes of tobacco distributed in Spain and Portugal grew 3.7% because of the cross-border movements normalization and despite the retail selling price increase on tobacco products in Spain at the end of last fiscal year.
The added value services provided during the period and variations in the value of the inventories following the manufacturer's price increases, supporting the increase in economic sales of tobacco distribution. Logista Retail recorded a double-digit increase in their revenues from the distribution of convenience products, thanks to the penetration into the points of sale, mainly in tobacconists and Repsol, and thanks to the expansion of the customer base in new channels. The economic sales of Transport grew by 4.1%, performing positively in Nacex and Logista Parcel. While experiencing a slight reduction in Logista Freight, that was because of the temporary difference between the tariff update of the outsourced fleet and the tariff update to clients. Basically, we are talking about a timing issue in this regard.
The recovery of the activity in Logista Parcel led to a mid-to-high single-digit growth, whereas the extraordinarily good performance of the e-commerce activity during Christmas 2020 provided a difficult comparison base for Nacex this fiscal year and translated into a low single-digit growth. As I mentioned before, the acquisition of Speedlink in the Netherlands will support the international expansion of Nacex and is a first step in Logista's plans to accelerate this growth through increasing diversification. It is also worth mentioning the ability of the three transport businesses to cope with the Spanish truckers' stoppage, which haven't had any significant impact in the results, although caused certain erosion in the activity and growth rate in the period.
The economic sales from pharmaceutical distribution grew 8% as a result of the capture of new customers from among those whom we call traditional and thanks to the launching of new services during the pandemic, despite the distributed volume reduction recorded by the products, specifically the ones connected with COVID. Total operating expenses in Spain and Portugal increased by 3.3%, making the Adjusted EBIT EUR 77 million, up 23.9% more than the first half of the previous fiscal year. Moving to Italy. Economic sales in Italy declined by 1.3% to EUR 156 million. Despite this apparently weak performance, Italy's operations performed positively.
However, the approx EUR 5 million positive one-off effect from the variation of valuation of tobacco inventories recorded last year disordered the year-on-year comparison base, and this year, the net effect of the variations of excise taxes and retail selling prices of tobacco products was not material. Tobacco volumes, including the significant growth of heated tobacco products, grew by 4.2%, and the services rendered to manufacturers in all categories recorded a very solid performance. The commercial effort made to accelerate growth in the distribution of convenience products aimed at reaching new agreements with manufacturers in the beverage sector and the sales force evolution process, targeting the expansion of the customer base by reaching new points of sale. For example, in hotels, restaurants, and cafeteria channel, has resulted in a double-digit growth in economic sales of convenience products in the first half of the year.
The gradual improvement in efficiency resulted in a decrease of 3.6% in total operating expenses, and the Adjusted EBIT reduced to EUR 47 million, falling 3.1%. Moving to France. The performance was negative in the period, and the economic sales declined 3.9% to a total of EUR 106 million. The added value services provided during the period and the positive comparison based from the negative one-off effect of the variations in the value of the inventories last year did not compensate the 7.3% drop in tobacco volumes distributed in France. Once the cross-border mobility is normalizing, and therefore, the economic sales from the distribution of tobacco were below the previous year figure.
On the other hand, the growth of e-commerce sales from electronic transactions mitigated the negative performance recorded by the distribution of convenience products. The sale of convenience products recorded a regular performance depending on the categories involved. There was an increase in the food and drugstore products category, as well as in electronic cigarettes that offset the decline in products more directly related to rolling tobacco consumption, particularly the rolling paper, as a consequence of the sharp reduction, above 15%, on roll your own volumes in the period. Total operating expenses in France decreased by 0.5%, resulting in Adjusted EBIT of EUR 25 million, which means 15.6% below the figure obtained in the first half of 2021. Okay, now I will review the financial performance in the half year.
The Adjusted EBIT of the group increases by 6.3% to EUR 149 million, in line with this mid-single-digit growth guidance for full year results, supported by a positive performance of the activity, the net positive impact of the inventories valuation differential, and the limited rise in costs despite the general inflationary pressures. The growth recorded by all activities in Iberia and of convenience distribution in Italy largely compensated the decline in the activity in France and resulted in an economic sales growth of EUR 17 million, 3% up on last year's figure. Out of these EUR 17 million, around EUR 5 million resulted from the year-on-year differential of inventories valuation impact, being the remaining EUR 12 million increase, the result of the solid performance of the regular recurring operations in Iberia and Italy.
The 3% growth in economic sales transforms into a 6.3% growth in Adjusted EBIT, leveraging in a -1.9% operating expenses growth. This is due to the customary efficiency measures continually undertaken by the businesses and the effort made last year identifying and implementing optimization plans across the company, which was finally reflected in a margin increase of 80 basis points to 25%. From 24.2% to 25%. The reported EBIT grew at a faster pace than the adjusted EBIT, reaching EUR 128 million, 3.5% up from the EUR 113 million recorded last year, thanks to a better performance of results from our book distribution businesses and supported by high contribution from fixed assets, divestments, and lower restructuring costs.
The sale of non-operating fixed assets located in Spain, a facility in Madrid, in Coslada, and a land plot in Cádiz, generated a total capital gain of around EUR 6 million, which was EUR 5 million more than the capital gain materialized last year. While the lower restructuring cost than in the first half of 2021 contributed EUR 1 million to the year-on-year growth. Okay, moving to the next slide. Bottom line is net profit of the company grew 3.1% after EUR 12 million loss. Sorry, around EUR 11.1 million loss recorded from discontinued operation because of Supergroup sale, which is EUR 9 million higher than the impact of its operating results in the first half of 2021.
This one-off impact related to the reorganization of the activity in France has shadowed the performance on continuing operation, which has improved 9.4%, as mentioned, despite the lower contribution of financial results. Although the interest rates received from cash balances stood at 75 basis points, and the cash position was only slightly lower than in the previous year, the collection of interest on excessive interim corporate tax payments in Spain during the fiscal years 2017 and 2018 last year had a EUR 3 million negative impact in the year-on-year comparison of financial results. On top of that, the increase in profit before taxes, as well as the corporate tax rate of 26.8% compared to 26.6% translated into a EUR 3 million higher tax expense.
The EBITDA has grown by 6.7% in line with operations to EUR 185 million, and financial results contributed EUR 9 million to finance the EUR 49 million US restructuring and normalized tax payments, and the EUR 43 million net investment, which included, in this period, the payment for the acquisition of the 70% of Speedlink and the contribution to restore the balance between Subur Group's equity and capital prior to its sale. The total gross investment reached EUR 20 million in the first 6 months of this fiscal year, very similar to last year's figure. A great part of the 50% infrastructure investment was about to increase capacity in our growing business like Logista Pharma and Transport. In line with our group's plan to accelerate growth.
IT represents 25%, and was mainly dedicated, as usual, support to development of value added services and the improvement in operations to increase margins. The normalized free cash flow in the period reached EUR 101 million. The negative change in working capital year-on-year, amounting EUR 47 million, reflects last year's normalization of the extraordinary delay on excise tax payment measures undertaken by some governments due to the pandemic in 2020. This cash outflows was largely offset by the EUR 60 million collection of the reimbursement of the excess interim corporate income tax payments of fiscal year 2020. The free cash flow generation at the end of this first half was EUR 109 million. Finally, let's go to the outlook for this year.
The progress of the business so far, as well as the current market conditions, allow us to confirm our expectations at the beginning of the fiscal year and suggest that in 2022 fiscal year, there could be a mid-single-digit increase in the adjusted EBITDA compared with the figure in the 2021 fiscal year. In accordance to our strategic plan, we will continue focusing essentially on additional growth and diversification of the existing businesses, both organically and inorganic deals. The group continues to look for M&A opportunities of small, medium size target, as has been mentioned several times, and both complementary to and synergetic to our own operations.
Always bear in mind that the resources needed to face this growth will be financed by existing cash and on hand, given the foreseeable size of the deals and that is, in any scenario, the maintenance of the dividend policy, which is our priority, as has been mentioned several times, and we maintain in this outlook for 2022 as well. Okay, that was all from the presentations and figures side. Let's now proceed to the Q&A session. Gloria, please.
I will read out now the questions received via the audio webcast platform since the results were released, identifying the person who formulated each question. From Francisco Ruiz, Exane. The CEO anticipated a more active M&A role this year with a deadline for mid-size acquisitions by the end of first half. I understand that, as the only deal announced is Speedlink, this deadline was calendar H1. Should we expect more activity in the coming months? Is the current environment positive for acquisitions?
Thanks very much, Francisco, for your questions. Yes, it's true that that was stated by the CEO, and it's true that we maintain same message, same strategy. At some point in time, I think back in the full year results, it was mentioned that we had, at that point in time, 3 deals that we are analyzing closely. The first one has been already realized. That is the Speedlink that you have already mentioned. We hope to reach completion on the next one in the coming months. Bear with us. We obviously keep you posted as soon as is practical.
With respect to your question on whether we should expect more activity in the coming months, this is again the same answer. We are keep on focusing our efforts to improve our skills in non-tobacco activities. It's pretty much related to transport and pharma. Trying to find targets that improves our skills in the parcel, in courier, in long distance, in logistic freight, and as I said, in pharma. The same strategy remains and I can tell you that the company is absolutely committed to bring more deals and inorganic growth to the table. Whether the current environment is positive for acquisitions, I would say, short answer is, we haven't see main changes in terms of momentum.
I mean, what we are looking is quality, is synergy, is something that really complement our skills and our capabilities to keep on growing and offering value-added transactions for the shareholders. On that effort, we haven't seen the environment has changed, despite all the macro and geopolitical situation, haven't seen swings in prices so far. Thank you.
Next question from César Sánchez-Grande, Renta 4. There are press rumors about the possible reform of the tobacco law in Spain regarding tax increases and more limitations on consumption. How much do you estimate could be the impact on volumes?
Okay, thank you very much, César. As you mentioned, they're basically rumors and the short answer is the quick one is quite difficult to measure the potential impact when even we don't know exactly which could be those measures and at the end of the day, whether they will materialize. As a reminder, basically we see three impacts and based on what has happened in other countries that could affect volumes. Plain packaging that has proven in other geography that has not very material effect other than increased legal tobacco sales. Consumption restrictions that always help the reduction on consumption if I don't know you are not allowed to smoke outdoors or within your car or other type of restrictions.
Obviously, this should have an impact. Really difficult to give you any sense of the impact in volume without knowing exactly those restrictions could be. Obviously, increase of prices that, you know, this is not an inelastic business. The elasticity, the demand is not very high, but depending on the increase of pricing, as we have seen in other countries, could have an impact. Coming back to your question, again, this is still rumors. We have heard them several months or even more. We have not seen any movement and for that end, we cannot give you any sense of which could be the impacts on volume. Thank you.
Next question from João Safara Silva, Santander. Estimating that at the end of the year, net profit was flat versus fiscal year 2021, what could be expected in terms of dividend payments?
Thank you, João. Well, we hope to end up with higher net profit than 2021, but it's true that just suggesting whether we end up with a flat net profit. We will see. As a reminder, dividend policy remains the same, which is paying 90% of the reported net profit. If we look backwards in years where you have had this type of case of flat net profit, I think that the company sensitive enough with the shareholders and what they are expecting in terms of the growth in the dividend on a yearly basis has done efforts in the past.
This is just a theoretical approach because again, we will try to end up with a better net profit in 2022. Thank you.
Next question, Pedro Alves, CaixaBank. Good morning. Two questions, please. First, about guidance and cost inflation. I understand we could assume an acceleration of growth in Adjusted EBIT in H2, considering that you should incorporate cost inflation in clients' tariffs, negative time lag in H1. If so, and considering the EUR 8 million profit on inventory in H1, it looks like a high single-digit% growth in Adjusted EBIT for the full year before M&A is not illogical. Or is there any effect that could slow down the performance in H2? Second question: you booked an EUR 11 million loss to sell the Supergroup subsidiary and a EUR 6 million capital gain from disposals. Is there any foreseeable divestment under analysis until the GRN that could fully offset the Supergroup loss at the net profit level? Many thanks.
Sorry, I was on mute. Thank you, Pedro. Yes, several things. With respect to your first part of the question, well, the cost inflation passed through to clients reflects the past evolution of the cost, but this is. I mean, to offset the negative impact of cost increases, not to increase Logista profitability. In summary, in the best scenario, these movements should be neutral at financial fiscal year. The evolution in France is weak due to the number of uncertainties. Hope to give you a bit more color on this regard. Basically, the cost. Let me give you on with respect to cost inflation and how you should see this.
This is a pass-through that we make in most of the contracts, as well as on fuel price increases. We normally make this pass-through in contracts, as I mentioned in the presentation. This sometimes has a timing issue, and in this particular case is related more to freight business than in other ones.
With respect to the second question, the answer is yes, it is likely when you were talking about the potential compensation with other capital gains coming from other assets, it is likely that we can find a way to offset through that divestments the impact of the EUR 11 million impact loss on Supergroup for this year. Thank you.
Next question, again, Pedro Alves, CaixaBank. Can you please comment the double-digit decline in Adjusted EBIT in France? Should we expect any further disposal of these assets or restructuring costs to optimize the cost base?
Okay. Thanks again, Pedro. If the weak volume situation persists, we will analyze, as we always do, I mean, how we can reorganize the network to adapt the new scenario, which means adapting volumes with cost. At this point, I guess we cannot provide further details on what we are doing and also we are following closely the evolution of the volumes. Depending on those evolutions, we will act accordingly. Thank you very much.
Just to comment, if I may, Pedro, in general, as a guidance, probably for year-end, you could think on something similar to last year restructuring cost, always depending, as Pedro Losada said, on the evolution of the situation. Following question is Pablo Cuadrado, Kepler. Can you maybe detail which is expected level of the net investment for GRN, including Speedlink acquisition in the cash flow statement? Which is the level of cash outflow that you expect from the Speedlink acquisition? Second question, are figures in the Iberian segment during Q2 including any negative impact from the transportation strike that affected the Spanish business during last quarter?
Okay. Thank you, Pablo. Yes, with respect to your first question, the cash outflow as of today during 2022 has been EUR 15 million and before the end of the year we probably should reach a figure that should be below EUR 18 million regarding the Speedlink acquisition. On your second question, the strike, I mean, the answer is yes. We have included the negative impact. However, the outcome is that has been non-material. I mean, after roughly two weeks of strike, the impact has been very low.
Probably among other things, because of the way Logista has been also handled in advance, you know, anticipation, anticipating delivery and warehousing goods in advance, geo-localizations for secure routes, and also because probably the last mile has been less affected. Again, the impact has been very low.
A third question from Pablo. Can you maybe remind us, how hedged are you against fuel price increases in your key business segments? Are the bulk of the tariffs reflecting full pass-through of fuel cost?
Yes. Thank you, Pablo. Yes. Sure. We can remind you the way we work mainly with the major and more important contracts. We include the impact of fuel price increase in the tariffs from our suppliers. We also understood the difficulties that they are facing now with the Ukraine-Russia crisis. We are trying to understand the needs and the current situation. The price increases due to the Ukraine conflict might have as well temporary impact, as I mentioned several times during this presentation in our P&L, but that will be passed through in the following quarters.
In summary, we don't pay directly the fuel in the fleet that we use in our operations, but these costs are included in the tariffs from our suppliers. Just to give you a little bit more color and as a reference, the transport cost line in our P&L that are the tariffs we pay to our transport subcontractors represents around 30% of the total operating costs. We estimate that the fuel cost represents around a third of the tariff. Indirectly, fuel is approximately like 10% of our total operating cost. This is really a rough number. If we take this 10% as a reference, the 10% increase of the fuel price could imply 1% growth of our total operating cost.
The fuel variation is considered when tariffs are updated for the most important contracts on a quarterly basis, and in general on a yearly basis. Thank you.
Next question, Miguel González, JB Capital Markets. Pharma distribution business delivered a strong performance in the last quarters, but has been favored by the distribution of COVID-19 related products. How you see pharma distribution revenues in the second half of the year and beyond, once demand for these type of products declines? And second question, could you indicate your market share in the distribution to pharmacies, and whether you believe you could keep it after the end of the pandemic?
Okay. Thank you very much, Miguel. Well, with respect to your first question, the expectation is to continue growing in the pharmaceutical distribution business. We are working hard from a commercial perspective, trying to get more customers in our portfolio, working with hospitals, working with pharmacies. It's true that this increase in portfolios should compensate the decrease in business linked to COVID activity that obviously has been reduced over the last six or eight months. With respect to your second question on the market share, it's I mean, we continue to grow in pharmacies, probably close to double digits.
The idea is to keep on fighting to increase the market share, and we hope to do so in the near future. It's a tough market, but we are doing the appropriate things to reach better market shares than we have today. Thank you very much.
Sorry, I was muted. Next question from Isabelle Carvalho, Oddo BHF. Good morning. Could you please provide an estimate of the tax rate for the following, for the fiscal year 2022, second?
Okay. Thank you, Isabelle. With respect to the tax rate guidance, we maintain what we have said before. That should be in the area of 26.78%. Thank you.
Next question from Jorge Losa, Cartesio. Sensitivity on interest rates. Could you please guide us on the potential impact on a potential higher ECB interest rate if the standard balances with Imperial Brands decline significantly? Will you consider to do a similar scheme for other parties?
Okay. Thank you, Jorge. No, well, we don't have other agreement with other parties. The Imperial agreement remains the same with ECB lending rate plus 75 basis points. This is the remuneration that we receive on a quarterly basis. We are maintaining the same, more or less the same level of average costs with some up and down. We should be close to the run rate of financial income based on that remuneration. Now, if the rates keep on increasing, and we are receiving not only the 75 basis points in terms of margin, also we can have an additional remuneration because the base rate is increasing. That will have an impact.
I think at some point in time, but back in certain communications from Logista, I think that we may be the number of a hundred basis points could have an impact of around EUR 15-20 million on the financial income, something like that. Probably we are far from that situation yet. Thank you.
The last question, because the others have been already answered, is from Marc Gómez. He's an individual investor that is asking: Can shareholders expect a big M&A operation? For example, XPO is discontinuing operations in Europe and in U.K. Which countries can Logista be present in the near future? If we can expect a big M&A operation, a transformational deal.
Sorry, sometimes with headphones it's not easy to hear the question. As I said, we maintain the same strategy that has been stated and conveyed to the market in the last couple of years. We are looking for small, mid-single targets. Nothing transformational. Something that could be complement to our businesses, particularly in the non-tobacco activities. We think that we have the skills and capabilities to get advantage of the current subsectors that we've got to grow, looking for synergetic transactions, and that's the main aim. Among other things, because also we are conscious about the integration risks.
It's also one of the ideas of the company to start with this small to mid targets, understanding that we are capturing the synergies that we were expecting, ensuring that we are integrating with no issues or non-big issues the companies. Afterwards, it's all of these, you know, we can really bring the additional value added and value creation for the shareholders after those acquisitions. We will perhaps revise our strategy. As of today, the idea is not any transformational. In terms of countries, we are basically focused on our current markets.
Also when we look to pharma or long transportation business or parcel, we try to look to obviously to Europe, but particularly to our main markets in Spain, Italy, France and Portugal. Nothing new there. Thank you.
Okay, these were the questions received, and now we are finishing this audio webcast. Thanking all of you, your interest and attending this conference.
Okay, thanks very much, everyone. Really, as I said, eager to meet you all and if you have any additional thought, please, contact us, whenever you need it. Thank you very much.