Good morning, and welcome to the conference call organized by Fitrada to present its 2020 Full Year Results. Will be represented in this meeting by Raul Gomez, CFO and Inigo Mendieta, Head of Investor Relations. The presentation will be held in English. In the Q and A session, questions will be answered in Spanish. Nevertheless, it's by telephone and via webcast.
In the company website, www.bitralla.com, you will find available a presentation that will be used as a supporting material to cover this call as well as a link to access the webcast. Mr. Mendieta, you now have the floor.
Good morning to everyone and thank you for the time that you dedicate to attend this call. As announced, Following this document, we will dedicate the first part of our exposition to briefly explain the figures released today, to devote afterwards as much time as necessary to discuss on the business performance in the Q and A We invite you to access the webcast through the link available in our web page. So starting with the main magnitudes. In the full year 2020, we achieved as most relevant business figures, revenues of €988,400,000 and EBITDA of 279.8 €1,000,000 and a net income equivalent to an EPS of €5.62, an increase of 12% versus the previous year. Net debt at the end of the year was below 230 €3,500,000 which is equivalent to a leverage ratio of 0.8 times their reported EBITDA.
Turning to Slide 4, we look at the top line performance analyzing the annual variation of revenue broken down by concepts to arrive at the reported figure of €988,400,000 As it is shown in the graph, This figure is the result of an organic decline of -1.7 percent and incorporating the effect of the currency, The reported variation amounts to -2.2 percent. Following the order of key business figures referred to at the beginning, we analyze with the same breakdown the variation of operating income. 2020 full year EBITDA amounted to €279,800,000 reflecting an organic growth of in the period. These operating figures resulted in an operating margin EBITDA over sales of 28.3%, which represents an expansion of approximately 110 basis points compared to 27.2% registered in the previous year. Going down through the income segment, net profit obtained in the year 2020 amounted to €159,500,000 equivalent to €5.62 per share, which reflects an increase of 12% over the previous Let's analyze now the free cash flow generation in detail.
We will do so with the help of the chart on Slide 8, which reconstructs the cash conversion starting from the operating margin recorded in the full year 2020. So Starting from an EBITDA margin of 28.3 percent, we have dedicated 13.6% of sales to investments and the remaining 0.5% to the aggregate of working capital, financials and taxes. As a result, Free cash generation in the year amounted to slightly more than €140,000,000 equivalent to a 50% conversion rate and a 14% cash conversion cash generation of our sales. Finally, net Debt at the end of the reported period closed at €233,500,000 This figure is the consequence of the just mentioned cash generation, which has been mainly allocated to debt reduction and the rest to remunerate As a result, the resulting leverage ratio stands at 0.8 times EBITDA. And now before turning to the Q and A session, I pass the word to Raul so that he can extract the main conclusions
Thanks for your time today. We know it's a busy day for you. Well, 2020 was an unforgettable year for all. Let me start with this. It was fully different than planned, fully different than the initially expected.
You can believe that in some Now as the year has ended, we want to conclude that we were able to manage these issues, while We kept on progressing on our long term action plan. Let me quickly use the highlights in this slide To better explain our conclusions from the year 2020. First, first point, our full year sales dropped finally 1.7% organically. This is a better performance than initially expected and officially guidance guided in June 2020. And there is some big learnings for us behind this behavior.
On one side, the demand Our products, glass containers for food and beverages began to recover at the end of the second quarter, remained Despite a better relevant shift between on and off trade channels, that means People, consumers have continued consuming on glass despite the unexpected unprecedented closure of Bars and restaurants all across our regions of activity. Probably the conclusion is that all of us as consumers have been able to quickly adapt the supply channel from on trade to at home consumption, While maintaining the preference for a healthy, quality and sustainable material as it is glass, the conclusion of this It's clear for us glass has a bright future as a packaging material. Also under this Very different demand context for us. Bitrala experienced the benefits obtained the results of the geographical diversification. So the conclusion in this point is glass has a future and Viderada's commercial positioning is today stronger than ever.
2nd point, our margins improved actually improved during the year of the pandemic. And this is mainly the result of internal things. This is mainly the result of Sorry, our last corporate actions entering the U. K. In 2015, acquiring competitiveness In Portugal in 2017, exiting from Belgium in 2019 and all the while developing a deliberate capacity realignment strategy and investing even in 20 more than ever for the sustainability of our future.
The conclusion here is that we have today a solid industrial And we are more competitive than in the past. And the 3rd and 4th conclusions And our results published today are a proof of this. But the relevant point is that we did it firmly committed to our long term industrial principles, what we name our 3 Cs, Customer cost and capital. In 2020, in the unforgettable year of the pandemic, We invested more than usual as it had been anticipated before. We executed CapEx, This high CapEx successfully despite the normal difficulties that we faced, And we did it in a financial manner that didn't deteriorate our cash profile.
And actually, cash Generation exceeded our initial expectations. This is the conclusion for 2020. Looking at 2021, well, it is still too soon to have a realistic visibility. You will agree with me that the business conditions are still far from normal. Social restrictions remain there.
They are particularly intense in some regions as the pandemic evolves. So unavoidably, the start of this year is affected by this. But the situation could become more normal sooner or later, and demand for our products will react to this process of normalization to this process of recovery to this process of reopening of activities. Of economic recovery will be our and yours best indication best indicator of our Above this, despite this, let's say, uncertain optimism At the top line, our levels of profitability look safe. Our margins will be consolidated in 2021.
This is a relevant point. This seems possible despite the very growing cost inflationary pressures that we are seeing. And this is possible in Midralla only because our margins are mostly grounded on internal actions executed to improve our cost base. Finally, in 2021, we will again invest More than average, we will invest to further expand our cost competitive advantages. We will invest to improve the environmental sustainability of our business And we will invest to ensure that we are fully aligned with the transformation we are living.
There is a need and there is an opportunity to invest now. But we engage, We make a commitment. We expect to do it keeping safe our cash generation in 2021, proving that our investment plans are Consistently defined and are current with our historical capital discipline. Well, that's all as an introduction, we just want to end this part thanking the team, the Virotta team for its Dedication thanking our customers for their confidence in our company and thanking all of you stakeholders and analysts for your continuous interest in our company. Thank you.
Thank you very
Okay. This completes our exposition. So now we give way to
Ladies and gentlemen, the Q and A session starts now. Questions by phone will be answered first. The first question comes from Jose Maria Canovas from JP Capital. Please go ahead. Thank you.
The next question comes from Iccacio Romero from Banco Sabadell. Please go ahead. The next question comes from Antonio Thank you. The next question comes from Manuel Lorente from Mirabaud. Please go ahead.
The next question comes from Bruno Pesa from CaixaBank BPI. Please go ahead.
Hi, good morning, everyone. Two quick ones from my side. The first one, if you could Even a plate on your factoring levels at the end of the year, this will be the first question. The second one, if you could give some Color on the capacity expansions that exist in the industry and how could this impact the evolution of prices and The industry's ability to pass through the higher inflationary costs in terms of finery over the coming years. Thank you
very much. Okay, Bruno. Thanks for your question. Well, the update on the first question is, our hedging for 2020 2021, sorry, is approximately 70%, slightly more than 2 thirds of our energy and raw materials consumption are hedged, prices Okay. That was the main point of discussion only weeks ago.
And we'll be finally only modestly down in 2021, okay? Almost all of this is done, is closed for us. And this performance, this variation negative modestly modest, negative variation are basically reflecting the real cost deflation experienced in 2020 and Transfer into formulas and into negotiations. But the fact that we are only modestly down, almost flat, also reflects the recent inflationary pressures that has helped us to close prices for 2021 Slightly better than we thought only 2 months 2, 3 months again. The question now is whether there That is going to happen in 2021, and structural external negative gap between prices That will be broadly flat or slightly negative.
And cost, where we are Seeing abnormal sudden inflationary pressures, and this is probably the question to understand the dynamics across Across the industry, across the consumer industry, across the packaging industry in 2021, okay? Under these dynamics, under these growing uncertainties and in some cases growing concerns, is particularly well protected with this 70% of hedging.
Thank you, Hal. I don't know if If I put correctly the first question, but I was referring to the levels of factoring that you have. I don't know if you could share with us That information.
Okay. We thought that you were referring to the level of hedging. No, there is no factory. Sales, the incomes That you are seeing in the working capital movement that you are seeing in the working capital is fully proportional with our average receivable period and our real sales. There's no factoring that you need to
Thank you. The next question comes from Patricia Zifuentes from Invest Inverse Securities. Thank you. There are no further questions by phone. I return the floor to Mr.
Komes and Mr. Mendieta.
Okay. So we have received a couple of questions via Webcast that we will answer now. The first one, Raul, refers to the possibility of seeing Entering into the Can business or Arab products like it is the case of other competitors?
This is an interesting question. We are seeing dynamics across the packaging industry with more players Diversifying its business profile under different materials And this is just an example of the transformation that we are living and the transformation that we referred before where we were defending or supporting our Ambitious CapEx plans, but the likeliness of it to allow of doing something material different in the short term is very limited. We are happy with the product that we produce. We are happy with the very relevant diversification that we have obtained In the last years, geographical diversification and also diversification by type of business, please keep in mind that In our English factory, in our Manchester factory, we not only produce or manufacture glass We also provide logistic services and filling services, and this is a this represents an EU era for us. Okay.
That means that we feel comfortable today with our industrial footprint side by side With our level of competitiveness that has improved over the last years and with the Investments that we are going to do in the existing facilities focus on manufacturing glass and providing some collateral packaging services. It's very unlikely to see Vittrada diversifying by material, but who knows, who knows.
Okay. And there are A couple of further questions that some of them have been answered in Spanish We would ask in English. Regarding if there are some positive one offs impacts in Q4 2020, the answer is no. There are no relevant any relevant One off impacts in Q4 2020. But as Raul said before, this is the performance in terms of margins In Q4 is the result of a very particular context in terms of pricing, favorable pricing cost spread And also the comparison basis that is affected by the exit of volume that is relevant for the 4th And also the ramp up of the project, the expansionary project, the new line in the UK.
There are some other questions that have been also answered in English regarding energy costs and pricing. We have said that Despite the recent increase in energy costs, prices in 2021 will be finally only modestly down as a consequence of Or the combination of the cost inflation experienced in 2020, but also the recent inflationary pressures that have limited the decrease in The expected decrease in pricing for 2021. And finally, some questions left, Raul. We have asked if we see Some potential to create value through M and A at this point in the cycle. And if we are relaxed
on the capacity being added
by peers and the CTV being added by peers and the discipline of the market as we see inflationary inputs.
Thank you, Inigo. Well, with To ask you to the money question, well, as I said before, the message remains the same. Nothing has changed. And we do all keep Focused on our priorities that is investing in our existing facilities that is ambitious organic CapEx plans And that will be the main use of cash for the next couple of months as we have a plan on this point. In the meanwhile, you can be sure that we will keep our eyes open.
We will analyze any opportunity that could be interesting for us. But the liveness of something materially interesting to happen in the midterm is low. And this is because We will be more selective. And this is also because actually there are not many opportunities for a simple company like It is true. We know that.
We are aware of this. The industry or the packaging industry, I mean, is becoming particularly dynamic in terms of Corporate movements, and this is something that we will monitor very carefully, but We'll probably create some collateral effects in other players like us. In most of the cases, in my opinion, positive Collateral effects because this dynamization is good for the industry, basically shows a point of modernity. But it is unlikely that we take or we play an active role in that sense.
Okay. And final questions receiving via webcast. The first one says, could Plastic shortage of aluminum cans could support glass as the market recovers?
Well, The second question is becoming relevant. It is true that the industry, the grid consumer packaging industry, Particularly for beverage products is tight, tight on supply. And that explains that, okay, the pandemic has Had some positive effects, probably temporary, but positive effects in other materials, not only for glass. But soon, in my opinion, as things normalize, as things become more normal, I consider that the circumstances will recover some level of normality and we will keep on seeing Transfer, a transition against plastic in favor of glass and probably also metal cans. So In the sort of materials is something that could be beneficial for glass.
I don't think so particularly. What we need is a real recovery and a real reopening of activities And the end of the pandemic, okay. Simultaneously, what we see is that the market share today's market share
If the successful BO4 experiment in Northern Ireland could be scaled across other plants
Well, this is part of our environmental efforts, and this is a big this is becoming a big thing for us. This is a big point for us. This is a minor, a very minor part of our environmental strategy. And at this in this minor point, minor part, we are making our waste. We are dedicating time, money and cost To make trials to try to use alternative energies in our manufacturing process, but that one, we will try to repeat To replicate these trials in other sites for sure that will be part of our continuous process, but nothing of these will become materially relevant In our business, in the short term, this is part of a long term run.
In terms of In terms of our environmental strategy, okay, we want to keep on investing, Analyzing or trying to obtain a more efficient facilities in terms of energy consumption. And this is just a matter of The more we invest, the more efficient we become. And we feel optimistic About our potential future in that sense. And secondly, we want to further increase the usage of recycled materials in our process. Please keep in mind, when comparing the environmental impact of glass against plastics or against metal cans or Cartons that we have been granted by the unique properties of a product, glass that is the ultimate sustainable material, fully recyclable and unlimited number of times.
Okay. This is our first point of attention, energy efficiency and recyclability.
Okay. So we have now answered all the questions received via webcast. So once again, thank you for the time you dedicate to us and just remind you that we remain at your complete disposal for any Further questions that may arise. Thank you very much and keep safe.
Thank you.