Good morning. I'm Gloria Martín, Logista Director of Investor Relations. Welcome to this conference call and audio webcast to discuss the results of the first half of fiscal year 2021, about which you will find more details on our website. I'm joined today by Manuel Suárez, our CFO, who will lead this event. After the presentation, there will be a Q&A session. First, we will be answering the questions from the conference call, and after, we shall read and answer every question received in the webcast forum between the publication of the results and the end of the webcast. The document that accompanies this presentation and the observation, which will be made as it progresses, include forward-looking statements and projections concerning future results.
I invite you to read at the beginning of the document the disclaimer, which mentions the various factors that could cause the actual results to differ from the projections or forward-looking statements. I'm now handing over to Manuel Suárez. Manuel?
Thank you, Gloria, thank you to all of you joining this presentation. Logista results during the first half of 2021 made evident once more the resilience of our business model, providing specialized distribution services and integrated logistics with exclusive added-value services to satisfy customers' needs in a flexible way and through an asset-light structure. Economic sales have grown at 6% rhythm to EUR 600 million, improving in all geographical areas. Adjusted EBIT did at 23% to EUR 138 million, reaching a margin of 23%, while EBIT grew to EUR 110 million, which means a 30% improvement that is even higher at net income level, +33%, EUR 88 million. These results increases were achieved over the previous year, in which the pandemic was present just in the last comparable month.
It is clear that COVID-19 represented a negative impact in H1 2020 that we estimate between EUR 5 million and EUR 6 million, and that we consider not to be relevant altogether this year. Even discounting this effect, the growth has been a solid one. The inventory valuation represents, in this period, a positive result of EUR 3 million, while last year the impact in the same period was negative in around EUR 6 million. The development of the regular operations has made the Adjusted EBIT to grow by 10%. This growth is general in all activities and countries, with the sole exception of other businesses in France. Growth in regular operations has been reached also through careful management of our costs that, in general, grew 1.5%, while economic sales did at 5.8%. Going now through a more detailed analysis by country.
In Iberia, the revenues decreased 1%, consequence of a 6% decrease in volumes of tobacco distributed, heavily impacted by the tourism and cross-border sales due to the restrictions of the pandemic. Retail sales prices of tobacco products were generally kept stable in both periods, so there is no impact in any of them because of changes in inventory valuation. Also, manufacturers requested more services as a way to offset pandemic restrictions of most of their promotional activities. Additionally, convenience did very well as a consequence of the growth in the number of customers and its penetration because of pandemic. All this together made the figure of economic sales of this segment to be practically stable. Transport segment economic sales grew 5.7%, boosted by e-commerce development in our courier activity and were negatively affected by the demand in industrial parcel and general price pressure.
Long haul offset the impact of decreasing tobacco volumes with the incorporation of transport services for another segment and better margins. Activity in pharma grew significantly, thanks to the incorporation of new customers and the development of new services. Fighting COVID-19 has also helped Logista Pharma growth this semester. Publication business keeps in a weak situation with decreasing sales, so other businesses have grown altogether 17.6%. The operating costs grew much less than economic sales, which boosted Adjusted EBIT in Iberia to grow 17% to EUR 66 million. Revenues in France have gone up by 4.5% to EUR 2 billion due to the good behavior of volumes, +0.7%, and increases in tobacco retail sales prices. During this semester took place the last increase designed by the French government to take the price of a pack of cigarettes to EUR 10.
This tax increase was not totally followed by tobacco manufacturers increases prices correspondingly. There was a negative effect in the valuation of our inventories of EUR 2 million. That compares with a negative effect of around EUR 3 million in the same period of last year. Electronic transactions and convenience products sold to the tobacconist network showed also a good trend and, consequence of all this, economic sales of tobacco related increased by 5.8%. The wholesale activity in other channels and tobacconists showed, however, decreases of 8% in economic sales, being this business very affected by the anti-COVID measures. Operating costs grew 2%, two points less than the growth in economic sales, which made the EBIT grow by 32% to EUR 29 million. Revenues in Italy grew 11% to EUR 1,653 million due to the increase of prices of tobacco products and the development of convenience sales.
This market is characterized by the good performance of NGP category, whose growth offset the 4.7% reduction of cigarettes. The positive effect in the period of tax price movements was around EUR 5 million. That compares with a negative effect of EUR 3 million last year. This, together with the growth in convenience product distribution and services to manufacturers, made the economic sales to grow by 9%, reaching EUR 158 million. Total cost increased 4.2%. That boosted EBIT to EUR 50 million, plus 20% on year 2020. This semester is marked on one side by higher activity that is more important in economic sales than in revenues, reflecting the capacity of the company to develop additional services on distributed products. Main factors behind the growth in revenues are tobacco distribution and prices in Italy and France and convenience in Spain and Italy.
In economic sales, the growth is general in all countries and in practically all activities, with the exception of convenience in France, being especially remarkable in courier and pharma activities. On top of the growth in the activity, this period is also marked by a careful cost management, optimizing company resources. The consequence has been that total cost grew by 1.5% on a 5.8% economic sales growth that boosted Adjusted EBIT increase by 23.1%, which is remarkable even considering the impact of inventory valuation that logically hit in the same amount, both economic sales and Adjusted EBIT. Restructuring costs are slightly higher than last year, EUR 4 million versus EUR 2 million.
On the opposite, we are benefiting from the disposal of a plot in the south of Spain that has provided EUR 6 million cash and EUR 1 million capital gain, and also from a better performance of the book distribution business that, as you know, is consolidated by the equity method as Logista participation accounts for 50%. This 30% increase in EBIT is accompanied by an improvement of the financial revenues of Logista. Consequence, on one side, of the higher cash position that was mainly, but not only, concentrated in October as some governments adopted temporary measures related to tax payments within the COVID-19 measures and, on the other, of the interest paid by Spanish authorities because of the unduly high interim payments on income tax for the consideration of international dividends in fiscal year 2018.
The effective rate on corporate income tax is at the same level than last year, approximately 27%. All this together made net profit to grow 33.2% to EUR 88 million. To provide some more granularity on the available cash, you see in this graphic how the cash position was particularly high at the beginning of the year. Once the bill to pay taxes returned to normality, it went to more usual levels, affected by our typical seasonality and by a change in a technical method of taxes payment in one particular country that increases substantially the minimum cash position and, to a lesser amount, the average cash in the period. As commented, the activity of Logista has not been affected in a material way by the COVID crisis. That is also the case with our investment program.
That is fully in line with what was projected and very similar, even a bit higher, than in 2020. IT investments represent an important part of our CapEx plan, as they are very substantial to our strategy to develop services and improve operations. Once the track and trace have been fully deployed, investments in infrastructures are focused on improving automation and gaining productivity. The high conversion of our results into cash is another characteristic of Logista. Once the IFRS 16 effects are normalized in both years and do not make for any difference, the increase in operations and financial activity go, in its practical totality, to normalize cash flow increases as the CapEx payments are very similar to last year. Working capital generation in the period has been negative due to two effects.
On one side, the exceptionally high working capital position at year-end 2020 due, as explained before, to temporary changes in rules to pay taxes and, on the other, to the normal seasonality of our activity that makes this minimum during the first half of the year. Anyway, if the working capital positions end of H1 2021 versus H1 2020 are compared, we see that it has improved by more than EUR 200 million. The cut-off effect on taxes is providing a temporarily positive comparison because of timing differences between advance and final payments of income taxes, mainly in Spain. All we've seen reinforces the main financial characteristics of Logista. A resilient business model that has improved again during the pandemic, and that has been able to deliver growing results under very tough economic conditions.
A robust cash flow profile through a high conversion in cash of our results that supports the high dividend payout and provides the basis to finance our growth. Logista has always been committed to improve its impact in the community we are. Within that, the company is remarkably recognized because of its management of carbon emissions through its inclusion for fifth year in a row in the A list of CDP, being the only European distributor and within a bunch of Spanish companies. This effort is done internally and also engaging our suppliers on it, which has been also recognized by CDP for the first time. The rest of ESG components management is recognized by being included as part of the FTSE4Good index, or being rated as AA in the Morgan Stanley ESG index, among others.
Although the main characteristic of the situation we are living is uncertainty, the way we have seen the activity behaving during H1 and the foreseeable behavior in front of us make us think that the company can deliver in 2021 a low double-digit growth in Adjusted EBIT, improving in that sense our previous guidance of high single digit. Obviously, in view of this situation of uncertainty, this guidance will be revisited at the end of Q3, being the dividend the priority whatever the final outlook is. That is all in terms of the presentation I have prepared for you. Now passing the word to Gloria to continue.
Thank you, Manuel. We now open the Q&A session, starting by questions from participants on the line. The operator will give you access. Katie?
Of course, ladies and gentlemen, if you would like to ask a question, please press star followed by one on your telephone keypad now. If you change your mind, please press star followed by two. When preparing to ask your question, please ensure your phone is unmuted locally. Our first question comes from Pablo Cuadra from Kepler. Pablo, please go ahead.
Hi. Good morning, everyone. I have three questions on my side. The first one will be, if you can share a little bit your thoughts on the dividend. You have stated in the presentation that clearly dividend is a priority and has been a priority in the last few years. This fiscal year for you looks like it's going to be quite outstanding. So I would like to hear from you, will you still be happy with setting up, let's say, a payout reference, always consistent with the last threshold that you have been using in the last years, which has been at least 90%? Or you prefer probably not to be very aggressive to make sure that in the long run you have a growing type of dividend profile? That would be my first question.
The second question, if you can share a little bit more details on the pharma business? Clearly, we analyze the figures, we are seeing 18% growth on economic sales. You mentioned three main areas here affecting positively the accounts, new clients, new services, and the COVID vaccination. I was wondering whether if you can break down a little bit that growth between these three elements, between client services and COVID? The last question, I was wondering whether you can share with us as well, where are you at the potential non-organic growth in not tobacco activities, particularly talking about opportunities in France or Italy? Have you been analyzing, do you see that there are things that may happen at some point?
Thank you. Trying to answer all the questions. First, in terms of dividends, as stated that the growth we are foreseeing will not jeopardize the dividends. You know last year, the payout was probably 100%. The policy remains sustained of being at least 90% of the net income to be paid as dividend. For the time being, that's how it stays, and there's no plans to change that. In terms of pharma, you're right, the growth has been an important one. We don't disclose so many detail on how are the figures, the growth is on the three areas. The thing is, I would say most of it is going to stay here to stay. Probably some of it is a one-shot, but not the most important one by far. The growth in customers keeps on. There are new contracts on the pipeline.
I can mention, I think we were authorized to mention Almirall as a new customer to get our logistic services. The growth in vaccines and in helping in general with the COVID-19 is true that is there, is helping us, but we don't think it's going to disappear in the coming future at least to go to zero. In terms of non-organic growth, we keep analyzing and we're closer to finalize some transactions to be there. Nothing immediate that should be announced or whatever, we keep on looking and studying some real material investments.
All right. Thank you very much.
You're welcome.
Our next question comes from Francisco Ruiz from Exane. Francisco, please go ahead.
Hello and good morning. I have two questions. The first one is if you could give us a little more details on the new services that you are doing for the manufacturers that you have commented during the presentation. The second question is on the cost side, as it has performed quite well and you continue to have restructuring costs slightly above market expectation, how we should think on the cost to evolve during the year?
Thank you, Francisco. On new services to manufacturer, basically, you know as because of COVID crisis, many promotional activities from manufacturers have been stalled or jeopardized, or they are acting towards the customer in other ways. In that sense, always information is very important for us. As you know, also blistering, be very clear, but I mean is being of increasing importance because of the times. This kind of things that is helping manufacturers to fight against the difficulty they have to promote their activities. On costs, we have analyzed since the beginning of the crisis, we always keep on analyzing costs in order to improve operations and the opportunities were very clear, the need to work tougher or harder on it becomes very evident when the restrictions start.
We work on that to identify opportunities that are not implying a very serious investments. So far, this year we have EUR 4 million versus EUR 2 million. I expect globally this year to be, in terms of this kind of restructuring expenses to be below last year. I remind you that last year restructuring expenses were EUR 12 million. It is true that this year there is one important question mark on the wholesaling business in France. We're analyzing, we're looking carefully at the several possibilities, and some of them could result in some recognition on restructuring expenses in our P&L. Anyway, it will be always done because it is profitable for the company to do so.
Sorry, Manuel. You said much higher than last year in restructuring costs?
No, I'm saying slightly below last year.
Okay.
Last year were EUR 12 million. I expect those to be below the ones of last year with the question mark on what happens with the restructuring of wholesaling in France. Taking that apart, they will be lower.
Much clear. Thank you very much.
Thanks to you.
Our next question comes from Pedro Alves from CaixaBank. Pedro, please go ahead.
Hi, good morning. Thank you for taking my question. First question regards M&A. Just wanted to know your view about the potential leverage of your balance sheet. Are you ready to take on debt for the right deal, if you would only resort to your available cash, if you were going to take on leverage, if you have any limit or what is your target leverage considering the business where you operate? Then second question, if you could guide us on the potential impact of the different timings of the track and trace charges that we'll have in H2 for your results. The third question, last question, in transport, I think you mentioned in the presentation some pricing pressures in this first half. Could you elaborate a bit on that? Thank you very much.
Thank you, Pedro. Going in lines, in terms of M&A and the need to leverage our balance sheet, well, you know perfectly our balance sheet, we're far from the need to do that. We think with our present balance sheet, our firepower is something between EUR 500 million-EUR 700 million, and with the opportunities we have in front of us, this is enough to afford any possible acquisition with our own cash and without jeopardizing our dividend policy. In terms of the potential impact, you're right, there will be a track and trace impact on the whole year. Last year, at the end of the year, if you remember correctly, there was an upgrade up-to-date of all the updating of all the track and trace tariffs.
That's why, having this increase in results we have in this first half, we are pointing to the increase of very prudent low double-digit growth, that will be offset within this amount. I'm sorry, the third one I forgot what was. If you could repeat, please.
Yes. The third one regards to the pricing pressure that I think you mentioned for transport. Not sure if I heard correctly, just wanted to be clear.
Yeah. Well, the pricing pressure is quite focused on the industrial parcel business in terms of us. What we are having is a very good growth, which is the main component of our transport results evolution, performance evolution. E-commerce, that is of growing importance, and the results are going very well and the growth is very well. On the industrial parcel, it is clear because it's the part that was most affected by the COVID-19. Growth is more complicated, and there is price pressure on that part of the business, particularly, being the only one of the three ones.
Okay. Just a follow-up on the first one, with regards to M&A. Just to be sure, if I understood correctly, what is the amount that you mentioned about your firepower with your own available cash for acquisition?
Looking at our balance sheet is not difficult to see. It's between EUR 500 million, EUR 700 million could be a figure we can afford of acquisitions without entering, A, into any debt. That means without our own cash. B, without compromising our dividend policy, which is key for us.
Thank you very much.
You're welcome.
Our next question comes from Alberto Lenz from Alantra. Alberto, your line is now open.
Hi, thanks for taking my questions and congrats for the good results. I wanted to know if you could provide us some more color on the transport business. I understand that with the pandemic situation, e-commerce has been benefited. Apart from this, whether you could give us some indication of whether the growth we are seeing on this division is sustainable going forward, or this is mostly a one-off for 2021? A second question would be on the news on potential increases in tolls in Spanish roads and probably across Europe, how can this impact margins? Whether this cost that is usually borne by the transport company, or whether you can pass through this to the final client, or how this usually works? Thanks.
Okay. Thank you, Alberto. Thanks for the congratulations. On the transport business evolution or e-commerce is clearly the key in the growth of this business. Probably participation of e-commerce that used to be something like 40% increasing 10 more points in the total transport figures. We see, obviously there could be some one-shot, but I think the change in behavior of the consumer is here to stay because of, it's true that it started with the COVID, but I think the habits have changed in the consumers of the big chunk of it are going to stay, and we'll see growth in the coming years, important growth in the coming years on this e-commerce activity also. In terms of transport and the potential increases because of tolls, I think it's very soon to start analyzing out that.
On one side, it's not clear what is going to happen since that which has been the reaction to the first ideas of increasing the tolls. There are three agents here. One are the final customers who have to support or not, then it's us just in the middle of everything, and there's the actual transport company in there. It's a play of the three of them. Normally the thing is that this should be finally charged into that, but we'll have to see this big question mark here and starting with the question mark on, is it going to happen or not?
Okay. Thank you very much.
You're welcome.
Our next question comes from Miguel Gonzalez from JB Capital Markets. Miguel, please go ahead.
Yes. Hi, good morning. Thanks for the presentation and for taking my questions. The first one, I would like to confirm the like-for-like growth at the EBIT level, in the second quarter. Excluding negative one-offs of almost EUR 12 million for the second quarter and EUR 8 million from positive one-offs from the second quarter this year, EBIT growth like-for-like will be close to 1% according to my numbers. Could you also provide any guidance on EBIT like-for-like growth for the full year? My second question is a follow-up on a previous question. It will be helpful if you could provide some details on inorganic growth. For instance, in which activity or which countries do you expect to make these investments or even the potential size of these investments?
Second last, what will be the adjusted net cash position as of March based on a normalized working capital excluding tax payments? Thank you.
In terms of the like-for-like growth for Q2 2021, yes, I confirm the 1% figure you've calculated is the right one. In terms of inorganic growth and countries, what we're doing basically is to analyze the existing businesses in which we are in the rest of the countries we are in. I'm namely, to be more precise, pharma and e-commerce in the rest of the countries, in the rest of Europe, mainly e-commerce in France and Italy, in the case of pharma. In the case of tobacco, in a bit broader, because it's not our priority, we not want to grow in tobacco, as you perfectly know. There could be some things that could be tails or some complementary opportunities that could appear and obviously, if it's a good business, we are not saying not to do it in case it appears. That's basically the thing.
Yes, Manuel, about the net debt position as of March.
Oh, sorry. I forgot.
Yeah.
The working capital position is normalized in terms of the net debt as of the end of March. There is nothing special there apart from normal seasonality, which is absolutely in line. There is nothing special there, and this should be taken as normal one. There's no one have to correct on our situation as of the end of March.
Okay, thank you.
You're welcome.
Ladies and gentlemen, as a reminder to ask a question, please press star followed by one on your telephone keypad now. When preparing to ask your question, please ensure your phone is unmuted locally. Okay, I can confirm we have no audio questions. Oh, we've just had one come through. We have another question from Pedro Alves from CaixaBank. Pedro, please go ahead.
Yes, Manuel. Just a final one, if you can, please, on your guidance for CapEx and taxes cash out for this year. Thank you.
Well, in terms of CapEx, absolutely in line with last year and the normal ones of the company, it will be something between EUR 35 million and EUR 40 million, can be taken as that. In terms of tax, I can say in terms of P&L, I could say it's in the 27% rate is the one that I expect to have. In terms of the cash out, is impossible to know, because we absolutely depend on payments by the administration on returns, mainly on the cash declarations in Spain, and they are free to do it either in October or in September, and that absolutely modifies the picture, as you can see in our cash flow statement as of March 31st.
Thank you very much.
Okay, I can confirm we have no further questions on the audio side.
Okay, now we shall read the questions received in the webcast forum. Please note that we will read only one question in the case that there are more than one on the same topic, and that we will not read questions that have been previously answered. Regardless, if you have further questions once this call is finished, you can contact investor relations as usual. First and only question so far I will read is from João Safara, Banco Santander. Do you expect the same run rate of growth in other businesses in Iberia for the second half of the year as in first half 2021?
Gloria, this is going to depend heavily on how the summer is going to be in terms of tourism. My first estimation is that probably is going to be very similar to H1, but once you enter here into uncertainties, if you go into details, uncertainty becomes much bigger. This answer, yes, I expect it to be quite similar, but we'll have to see, and it's very dependent on tourism during this summer.
Okay. We do not have any further questions, I just want to thank you all for joining us today in this conference call. Bye.