[Non-English content] Good morning and welcome to the conference call organized by Vidrala to present its 2020 full year results. Vidrala will be represented in this meeting by Raúl Gómez, CFO, and Íñigo Mendieta, Head of Investor Relations. The presentation will be held in English. In the Q&A session, questions will be answered in Spanish.
Nevertheless, it's strongly recommended to pose questions in English in order to facilitate understanding of everyone. We remind you that questions will be taken both by telephone and via webcast. In the company website www.vidrala.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, Vidrala has published this morning its 2020 full year results. Additionally, we have also published the results presentation that will be used as supporting material to this conference call. 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&A session. We invite you to access the webcast through the link available in our webpage. Starting with the main magnitudes, in the full year 2020, we achieved as most relevant business figures, revenues of EUR 988.4 million, an EBITDA of EUR 279.8 million and a net income equivalent to an EPS of EUR 5.62, an increase of 12% versus the previous year.
Net debt at the end of the year was below EUR 233.5 million, which is equivalent to a leverage ratio of 0.8x the reported EBITDA. Turning to slide four, we look at the top line performance, analyzing the annual variation of revenue broken down by concepts to arrive at the reported figure of EUR 988.4 million. As it is shown in the graph, this figure is the result of an organic decline of -1.7% and incorporating the effect of the currency, the reported variation amounts to -2.2%. 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 EUR 279.8 million, reflecting an organic growth of +2.5%. In reported terms, EBITDA increased by 1.9% 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 statement, net profit obtained in the year 2020 amounted to EUR 159.5 million, equivalent to EUR 5.62 per share, which reflects an increase of 12% over the previous year. Let's analyze now the free cash flow generation in detail. We will do so with the help of the chart on slide eight, which reconstructs the cash conversion starting from the operating margin recorded in the full year 2020. Starting from an EBITDA margin of 28.3%, 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 EUR 140 million, equivalent to a 50% conversion rate and a 14% cash generation over sales. Finally, net debt at the end of the reported period closed at EUR 233.5 million. This figure is the consequence of the just mentioned cash generation, which has been mainly allocated to debt reduction and the rest to remunerate shareholders. As a result, the resulting leverage ratio stands at 0.8x EBITDA. Now, before turning to the Q&A session, I pass the word to Raúl so that he can extract the main conclusions or highlights and make additional comments that he considers appropriate.
Thank you, Íñigo . Good morning, everyone. First of all, 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 initially expected. You can believe that in some specific days in 2020, we faced, we suffered challenges that really tested the quality of our operations. 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 point, our full year sales dropped finally 1.7% organically. This is a better performance than initially expected and than officially guided in June 2020.
There is some big learnings for us behind this behavior. On one side, the demand for our products, glass containers for food and beverages, began to recover at the end of the second quarter, and remained basically steady, stable since then for the remainder of the year. This performance happened despite a very relevant shift between on-trade and off-trade channels. That means people, consumers, have continued consuming 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 is clear for us. Glass has a bright future as a packaging material.
Also, under this very different demand context for us, Vidrala experienced the benefits, obtained the results of the geographical diversification. The conclusion in this point is glass has a future, and Vidrala's commercial positioning is today stronger than ever. Second point, our margins improved, actually improved during the year of the pandemic. 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 2020, more than ever for the sustainability of our future. The conclusion here is that we have today a solid industrial footprint, and we are more competitive than in the past.
The third and fourth conclusions is that we managed the issues of the year, particularly during the most difficult days, firmly focused on protecting our people and securing the usual complexities of our operations. Our results published today are a proof of this. The relevant point is that we did it firmly committed to our long-term industrial principles. What we name our three C's: customer, cost, and capital. In 2020, an 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 circumstances, the normal difficulties that we faced, and we did it in a financial manner that didn't deteriorate our cash profile. 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. Unavoidably, the start of this year is affected by this. 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. Actually, this progressive normalization, any general evidence that you can find of economic recovery will be our and yours best indicator of our sales expectation for the year. It's that simple. What we know at this level is probably the same that you can imagine. 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. This is possible in Vidrala only because our margins are mostly rounded 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. 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 coherent with our historical capital discipline. Well, that's all as an introduction.
We just want to end this part thanking the team, the Vidrala 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 much.
Okay, this completes our exposition. Now we give way to the Q&A session.
[Non-English content] Ladies and gentlemen, the Q&A session starts now. Questions by phone will be answered first. If you wish to ask a question, please dial 01 on your telephone keypad. Thank you. The first question comes from José María Cánovas from JB Capital. Please go ahead.
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Thank you. The next question comes from Ignacio Romero, from Banco Sabadell. Please go ahead.
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Thank you. The next question comes from Antonio Manzano from Santalucía Asset Management. Please go ahead.
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Thank you. The next question comes from Manuel Lorente from Mirabaud. Please go ahead.
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Thank you. The next question comes from Bruno Bessa from CaixaBank BPI. Please go ahead.
Hi, good morning, everyone. Two quick ones from my side. The first one, if you could give an update 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 energy 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 2021 is approximately 70%. Slightly more than two thirds of our energy and raw materials consumption are hedged. Prices are protected, 70%. Second, your point with regards to prices in 2021 were the main point of discussion only weeks ago, and will be finally only modestly down in 2021. Almost all of this is done, it's closed for us. This modest, but negative variation basically reflects the real cost inflation experienced in 2020 and transferred into formulas and into negotiations. The fact that we are only modestly down, almost flat, also reflects the recent inflationary pressures that have helped us to close prices for 2021 slightly better than we thought only two or three months ago.
The question now is whether there is going to happen in 2021 a structural external negative gap between prices, that will be broadly flat or slightly negative, and cost, where we are seeing abnormal sudden inflationary pressures. This is probably the question to understand the dynamics across the consumer industry, across the packaging industry in 2021. Under these dynamics, under these growing uncertainties, and in some cases, growing concerns, Vidrala is particularly well protected with this 70% of hedging.
Thank you. I don't know 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, Bruno. We thought that you were referring to the level of hedging. No, there is no factoring. The income 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 do that or to include to understand the balance sheet, the debt, or the working capital.
Okay. Thank you very much for the call.
Thank you. The next question comes from Patricia Cifuentes from Bestinver Securities. [Non-English content]
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Thank you. There are no further questions by phone. I return the floor to Mr. Gómez and Mr. Mendieta.
Okay. We have received a couple of questions via webcast that we will answer now. The first one, Raúl, refers to the possibility of seeing Vidrala entering into the can business or other 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 to different materials. 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. The likeliness of Vidrala of doing something material different in the short term is very limited. We are happy with the product 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 Encirc factory, in our Manchester factory, we not only produce or manufacture glass containers, we also provide logistic services and filling services, and this represent a new era for us.
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, focused on manufacturing glass and providing some collateral packaging services. It's very unlikely to see Vidrala diversifying by material, but who knows?
Okay. There are a couple of further questions that some of them have been answered in Spanish, and we would ask in English regarding if there are some positive one-offs impacts in Q4 2020, the answer is no, there are any relevant one-off impacts in Q4 2020. As Raúl said before, 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 Belgium that is relevant for the fourth quarter and also the ramp-up of the expansionary project, the new line in the U.K. 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 expected decrease in pricing for 2021. Finally, some questions left, Raúl. We are asked if we see some potential to create value through M&A at this point in the cycle, and if we are relaxed on the capacity being added by peers and the discipline of the market as we see inflationary inputs.
Thank you, Iñigo. Well, with regards to the M&A question, as I said before, the message remains the same. Nothing has changed. Vidrala 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, and we will analyze any opportunity that could be interesting for us. The likeliness of something materially interesting to happen in the midterm is low. This is because we'll be more selective. This is also because actually there are not many opportunities for a simple company like us. It is true, we know that, we are aware of this.
The industry of the packaging industry, I mean, is becoming particularly dynamic in terms of corporate movements, and this is something that we will monitor very carefully, and will probably create some collateral effects in other players like us. In most of the cases, in my opinion, positive collateral effects because this dynamizing 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. Final questions receiving via webcast. The first one says could the successful bio-fuel experiment in Northern Ireland be scaled across other plants? The second one, if we think that shortage of polymers, plastic, shortage of aluminum cans could support glass as the market recovers?
The second question is becoming relevant. It is true that the rigid consumer packaging industry, particularly for beverage products, is tight on supply. 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 a transfer, a transition against plastic in favor of glass and probably also metal cans. In the short term, the shortage 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 at the end of the pandemic, okay?
What we see is that today's markets of glass as a packaging material is solid. Probably stronger than ever. Can you repeat the other question, please?
Yes. The first one was if the successful bio-fuel experiment in Northern Ireland could be scaled across other plants of the group.
This is part of our environmental efforts, and this is becoming a big thing for us. This is a big point for us. This is a very minor part of our environmental strategy. 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. 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 this will become materially relevant in our business in the short term. This is part of a long-term run. In terms of our environmental strategy, we want to keep on investing, analyzing, or trying to obtain more efficient facilities in terms of energy consumption, and this is just a matter of CapEx.
The more we invest, the more efficient we become. We feel optimistic about our potential future in that sense. 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 against cartons, that we have been granted by the unique properties of a product, glass, that is the ultimate sustainable material, fully recyclable an unlimited number of times. Okay. This is our first point of attention, energy efficiency and recyclability.
Okay, we have now answered all the questions received via webcast. 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.
Ladies and gentlemen, thank you for your participation. You may now disconnect.