Good morning. I'm Gloria Martin, L'Ogista's Director of Investor Relations. Welcome to this conference call and audio webcast to discuss the results of the first half of fiscal year twenty twenty one, about which you will find more Details on our website. I'm joined today by Manuel Suarez, our CFO, who will lead this event. After the presentation, there will be a Q and 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 these results and the end of the webcast. The documents that accompany 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 are forward looking statements. I'm now handing over to Manuel Suarez.
Manuel? Thank you, Gloria, and thank you to all of you joining this presentation. Lojista results during the first half of twenty twenty one 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 600,000,000 improving in all geographical areas. Adjusted EBIT lead to 23% to EUR 138,000,000 Reaching a margin of 23%, while EBIT grew to $110,000,000 which means a 30% Improvement that is even higher at net income level, plus 33%, €88,000,000 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-nineteen represented a negative impact in H1 2020 that we estimate between €5,000,000 6,000,000 and that we consider not to be relevant altogether this year. Even discounting this effect, The growth has been a solid one. The inventories' valuation represents in this period a positive result of €3,000,000 Last year, the impact in the same period was negative in around €6,000,000 The development of the regular operations has made the adjusted EBIT To grow by 10%. This growth is in general in all activities and countries with the sole exception of other businesses in France. Growth in regular operations has increased 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 none of them Because of changes in inventory valuation. Also, manufacturers requested more services as a way to offset pandemic restrictions Of most of the promotional activities.
And additionally, convenience did very well as a consequence of the growth in the number of customers And its penetration because of pandemic. All these together made the figure of economic sales of this segment to be practically stable. Transfer 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. Loan 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-nineteen has also helped Lojista Pharma growth this semester. Publication business keeps in a weak situation with decrease in sales. So other businesses have grown altogether 17.6%. The operating costs grew much less than economic sales, which boosted Adjusted EBITDA in Iberia to grow 17% to €66,000,000 Revenues in France Have gone up by 4.5 percent to €2,000,000,000 due to the good behavior of volumes, plus 0.7% And increases in tobacco retail sales prices. During this semester, it took place the last increase designed by the French government to take the price of a pack of cigarettes To €10.
This tax increase was not totally followed by tobacco manufacturers' increases prices correspondingly. So there was a negative effect in the valuation of our inventories of €2,000,000 That compares with a negative Effect of around €3,000,000 in the same period of last year. Electronic transactions and convenience products Show to the tobacones network showed also a good trend. And consequence of all these, economic sales of tobaccon 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%, 2 points less than the growth in economic sales, Which have made the EBIT to grow by 32% to €29,000,000 Revenues in Italy grew 11% to EUR 1653,000,000 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, This growth offset the 4.7% reduction of cigarettes.
The positive effect in the period of tax price movements was around €5,000,000 That compares with a negative effect of €3,000,000 last year. This, together with the growth in convenience products distribution and services manufacturers made the economic sales to grow by 9%, reaching €158,000,000 Total cost increased 4.2 percent that boosted EBIT to €50,000,000 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 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 increased 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 Restatsoine costs are slightly higher than last year, €4,000,000 versus €2,000,000 And on the opposite, We are benefiting from the disposal of a plot in the South of Spain that has provided EUR 6,000,000 cash and EUR 1,000,000 capital gain And also from a better performance of the book distribution business that, as you know, is consolidated by the equity method as Lojista participation accounts for 50%. This 30% increase in EBIT is Accompanied by an improvement of the financial revenues of Lojista. Consequence on one side Over the higher cash position that was mainly but not only concentrated in October as some governments adopted temporary measures related To tax payments, we invented COVID-nineteen measures and on the other, of the interest paid by the 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 percent to €88,000,000 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. And once the rule to pay taxes returned to normality, it went to more usual levels, affected by Our typical seasonality and by a change in a chemical method of taxes payments 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 Lojista has not been affected in a material way by the COVID crisis, and 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 improved operations.
Once the truck and trays have been fully deployed, Investments in infrastructures are focused on improving automation and gaining productivity. The high conversion of our results into cash It's another characteristic of Lojista. Once the IFRS 16 effects are normalized in both years And do not make for any difference, the increase in operations and financial activity in Go in its practical totality to normalize cash flow increases 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 mix is minimum during the first half of the year.
Anyway, if the working capital positions end of H1 'twenty one Versus H120R compare, we see that it has improved by more than EUR 200,000,000. The cutoff effect on taxes is providing a temporary positive comparison because of timing differences between advance and final payments of income taxes Mailing, Spain. All we've seen reinforces the main financial characteristics of Lojista, 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 reserves that supports the high dividend payout And provides the basis to finance our growth. Lojista 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 5th 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 CBP For the first time. Also, the rest of E and C Components Management is recognized by being included As part of the FTSE for Good index are 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.
And that is all in terms of the presentation we have prepared for you. I'm now passing the word to Gloria to continue.
Thank you, Manuel. We now open the Q and A session starting by questions from participants on the line. The operator will give you access. Katie?
Of course. So our first question comes from Pablo Cuervo 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 either with 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.
But this fiscal year for you looks like it's going to be quite outstanding. So I would like to hear from you, will you I 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 year, It has been at least 90%. Or do 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 will be my first question. The second question is If you can share a bit more details on the pharma business, clearly, we'll analyze the figures we are seeing, 80% growth in economic sales.
And you mentioned 3 main areas here affecting positively the accounts, new clients, New services and the COVID fascination. I was wondering whether if you can break down a little bit that growth between these three elements, between client services and COVID. And the last question, I was wondering whether you can share with us as well what are you at the potential non organic growth in In auto bagu activities, particularly talking about opportunities in France and 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. 1st, in terms of dividends, we've always stated that, I mean, the growth we are foreseeing will not jeopardize the dividend. So you know, last year, The payout was 100%, and the policy remains sustained, being At least 90% of the net income to be paid as dividend and for the banking, that's how it Station, there's no plans to change that. In terms of Pharma, you're right, The growth is actually an important one.
We don't disclose so many detail on how are the figures? But 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 super one shot, but not the most important one by far. The growth in customers keeps on, and there are new contracts On the pipeline, I can mention, I think, the word I was forced to mention Almirall as a new customer to get to our logistics services. And the growth in basins and in helping in general with the COVID-nineteen is true that it's there, it's helping us, But we don't think it's going to disappear in the coming future to add this to 0.
And then in terms of non Non organic growth, we keep analyzing and we are closer to having one To finalize one some transactions together, nothing immediate that should be Announce or whatever, but we keep on looking and studying some real material investments.
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 your presentation. And 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 you think that how we should think on the cost to evolve during the year?
[SPEAKER CANDIDO BOTELHO
BRACHER:] Thank you, Francisco. On new services to manufacture basically, You know, as because of COVID crisis, many promotional activities from manufacturers Having spoke of the Paradise, they are acting towards the customer in other ways. In that sense, Always information is very important for us. As you know, also blistering is getting an increasing importance of our big base, but Being of increasing importance because of the times, so this kind of things are that is helping manufacturers to fight Again, it's the if you could say how to promote the activities. And then on costs, We have analyzed since the beginning of the crisis.
We always keep on analyzing Cost in order to improve operation, the opportunities were, I mean, very clear, the need to work Tough or harder. It becomes very evident when the restrictions start. So we work on that to identify opportunities I mean, I'm not implying a big, very serious investments. So far, this year, we have €4,000,000 versus €2,000,000 I expect globally this year to be in terms of this kind of restructuring Expenses to EBIT below last year, I remind you that last year, EBITDA expenses were EUR 12,000,000. It is true that this year there is One important question, Mark, on the wholesaling business in France, if we finally That I mean, we are analyzing, we're looking carefully at the several possibilities and some of them would result in [SPEAKER CARLOS ALBERTO PEREZ DE SOLAY:] In Santo, the commission understands any expenses in our P and L.
Anyway, it will be always done because it is profitable for the company to resolve.
[SPEAKER CARLOS ALBERTO PEREIRA DE
OLIVEIRA:] Sorry, Manuel. You said much higher than last year in restructuring costs?
No, no, no. I'm saying slightly below last year. So last year, it was EUR 12,000,000. I expect to be those to be Below on the ones of last year, with the question mark on what happens with the restructuring of wholesaling in France. But taking that apart, they will be lower.
Much, much clear. Thank you very much.
Thanks, Julian.
Our next question comes from Pedro Alves from CX Bank. Pedro, please go ahead.
Hi, good morning. Thank you for taking my question. First question regards M and I. Just wanted to know your view about The potential leverage of your balance sheet, I mean, are you ready to take on That for the right deal and if you would only resort to your available cash And if you were going to take on leverage, if you have any limit, what is your target leverage considering The business where you operate. And 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.
And the third question and last question. In transport, I think you mentioned in the presentation some pricing pressures in the first half. Could you elaborate a bit on that? Thank you very much.
Thank you, Pedro. In terms of M and 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. I mean, we think that with our present balance sheet, our firepower It's actually between €500,000,000 €700,000,000 and with the opportunities we have in front of us. This is enough to afford [SPEAKER DANIEL MARTINEZ VALLE:] Any particular acquisition with our own cash and without jeopardizing our dividend policy.
In terms of the potential impact, I mean, you're right, there will be a track and trace impact On the whole year, last year, at the end of the year, and if you remember correctly, there was an upgrade up to the year Of all the updating of all the Tracantres tariffs, but that's why I mean having this increase In the results we have in this first half, we are pointing to the increase of improvement of Loews, double digit growth that will be offset in this amount. Sorry, the third one, I forgot What was it, if you could repeat, please?
Yes. The third one is regards to the pricing pressure that I think you mentioned for transport, not sure if I heard correctly, just wanted to be clear.
Yes. Well, the pricing pressure is quite focused on the industrial parcel business in Tera and Tera. So what we are having is a very good growth, which is the main component of our Transfer Research evolution. E commerce that is of Growing importance and I mean, this was showing very well and the growth is showing very well. But on the industrial parcel, it It's clear because I mean, it's a part of this was affected by the COVID.
Growth is more complicated and there is price pressure On that part of the business particularly, maybe only one of the 3 ones.
Okay. And just a follow-up On the first one, with regards to M and 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.
I mean, looking at our balance sheet, it's not difficult to see, between €500,000,000 €700,000,000 We figured we can afford of acquisitions without entering a) into any debt, that means without our own cash and b) without compromising our dividend
Our next question comes from Alberto Lenz from Alantra. Alberto, your line is now open. Hi,
I wanted to know if you could provide us some more color on the transport business. I understand that with the Pending situation, e commerce has been benefited. But beside apart from this, whether you could You have some indication of whether the growth we are seeing on this division is sustainable going forward? Or this is mostly a one For 2021? And the 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. And thanks for the congratulations. On the first on the transport business evolution or in e commerce is clearly the key in the growth Of this business, I mean, probably participation of e commerce, I mean, just do something like 40% and inclusive, 10 more points in the total digital transfer figures. And we see I mean, obviously, there could be some one shot, but I think the change in behavior of the consumer He's here to stay because of it's true that we started with the COVID, but I think the habits Have changed in the consumers, the big chunk of it.
I don't understand we'll see growth in the coming years, important growth in the coming years On this e commerce activity also. And in terms of transport and the Potentially and the potential increases because of the tolls, I think it's very soon to start Analyzing about that on one side, it's not clear what is going to happen since the which has been the reaction The first ideas of increasing net loss. And then there are 3 agents here, one of the final customers, which has to support or not. I just in the middle of everything, and this is the actual transport company in there. I mean, It's a play of the 3 of them.
I mean, normally, the thing is that this should be finally Charging to tell you that we have to see this big question mark here and starting with question mark on is it going to happen or not.
Okay. Thank you very much.
And 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 $12,000,000 for the 2nd quarter and And $8,000,000 from positive one offs from the 2nd quarter this year. EBIT growth like for like will be close to 1% according to my numbers.
And could you also provide any guidance on EBIT like for like growth for the full year? And then my For instance, in which activity or which countries you expect to make these investments or even the potential size of This investment? And second last, what will be the adjusted net cash position as of March Based on a normalized working capital excluding tax payments? Thank you.
Okay. In terms of the like for like growth for Q2 21, I confirm the 1% figure you calculated is the right one. In terms of inorganic growth and countries, what we are doing basically is to analyze The existing businesses in which we are in the rest of the countries we are in, so I'm mainly to be more precise. Pharma, any comments in the rest of the countries, in the rest of Europe, mainly e commerce, in France and Italy, in the case of Pharma And in the case of tobacco, in a bit broader, because it's not a real project, we will not want to grow in tobacco, as you perfectly know, but there could be Some things that could be either tails or some complementary opportunities that could appear and obviously, I mean, it's a good business, so we are not
Yes, Manuel. And about the net debt position as
of March?
Sorry, I forgot. Yes. Yes, the net I mean, The net debt you know the working capital position is normalized in terms of the net debt as of At the end of March. So there is nothing special there apart from normal seasonality, which is Absolutely in line. So there is nothing special then.
And this should be taken as normal one. There's no one left to correct
Okay. I can confirm we have no audio questions. We've just had one come through. We have another question from Pedro Alves from Sciazza Bank. Pedro, please go ahead.
Yes, Manuel. Just a final one, if you can update us On your guidance for CapEx and taxes cash out for this year? Thank you.
Well, the Tempur's cap is absolutely in line with the last year and the normal ones of the Of the normal year of the company, it will be something between €30,000,000 €30,000,000 €35,000,000 €40,000,000 can be taken. In terms of tax, I can say in terms of P and L, I could say, is in the 27%. Great is the one that I expect to have. In terms of the cash in our cash out, it's impossible No, Collin, we are solely dependent on payments by the administration on return, Gimeli, On the cash declarations in Spain, 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 31.
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 1 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 well, 1st and only question so far I will read is from Yuval 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
[SPEAKER MARTIN PEREZ DE SOLAY:]
Gloria, this is going to depend heavily How the summer is going to be in terms of to this My first question is that probably it's going to be very similar to H1, but I mean, Once you enter here into uncertainties, if you go into details, uncertainty becomes much bigger. So this answer, yes, I expect it to be Quite similar, but we'll have to see and it's very dependent on producing during this summer.
Okay. We do not have any further questions. So, I just want to thank you all for joining us today in this conference call. Bye.