Good morning, Welcome to the conference call organized by Vidrala to present its 2021 first half results. Vidrala will be represented in this meeting by Raúl Gómez, CFO, and Iñigo Mendieta, head of IR. The presentation will be held in English. In the Q&A session, questions will be also answered in Spanish. 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 2021 first-half 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 numbers, in the first half of 2021, we achieved as most relevant business figures, revenues of almost EUR 530 million, showing an organic year-on-year growth of 11.2%, an EBITDA of EUR 149 million, that represents an organic increase of 21.4% versus the same period of the previous year, and a net income equivalent to an EPS of EUR 2.88, + 31.5% over the previous year. Net debt at the end of June was, after a reduction of 41% over the last year, EUR 173 million, which is equivalent to a leverage ratio of 0.6x the EBITDA for the last 12 months. 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 529.5 million.
As it is shown in the graph, this figure is the result of an organic year-on-year growth of 11.2% that was obviously concentrated in the second quarter, where we saw our reported sales growth in the range of 27%, as the previous year comparison basis was fully distorted by the COVID outbreak. Following the order of key business figures referred to at the beginning, we analyze with the same breakdown the variation of operating income. EBITDA for the six months period ended in June amounted to EUR 149.4 million, reflecting an organic increase of 21.4%, mainly driven by top-line growth and higher capacity utilization rates. These operating figures resulted in an operating margin, EBITDA over sales, of 28.2%. This entails a margin expansion of approximately 240 basis points versus the same period of 2020.
Going down through the income statement, net profit obtained in the period amounted to EUR 81.6 million, equivalent to EUR 2.88 per share, which reflects an increase of 31.5% 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 accumulated for the last 12 months in order to fully normalize our annual cash profile. Starting from an EBITDA margin of 29.4% for the last 12 months ended in June, we have dedicated 12.6% of sales to CapEx and 1.6% to the aggregate uses of cash for working capital, financials, and taxes. As a result, free cash generation is equivalent to 15.2% of the last 12 months' sales figure.
Finally, as a result of the before-mentioned net debt at the end of June closed at EUR 173 million, 41% below year-over-year. This figure is the consequence of the aforementioned cash generation, which has been mainly allocated to debt reduction, 77%, and the rest, 23%, has been allocated to remunerate shareholders. As a result, the leverage ratio stands at 0.6 x last 12 months 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 consider appropriate.
Okay. Thank you, Iñigo. Good morning. Good morning, everyone. Thanks for your time today in attending this meeting. We really appreciate it. Well, it's almost a year and a half since the pandemic broke in, changing our lives, affecting the way we do our businesses, or modifying in any way the way we all consume. There is a number we want to start with of conclusions or learnings for all of us after all these different periods. Above all, people, consumers, as citizens, we have kept on consuming glass despite the very extraordinary closure of bars, restaurants, tourism, and the hospitality sector as a whole. Despite the many disruptions suffered on supply channels and despite the different restrictions, we all relied on social or normal activities.
All of us, as consumers, have quickly adapted the way we drink and the way we eat, while maintaining the preference for a healthy quality and sustainable material as it is glass. The conclusion for us is clear, and we wanted to share this with you. Glass has a bright future as a packaging solution for the modern world we are living. Also, under this context, Vidrala has captured the benefits of the geographical diversification of our diversified range of services and of our new business profile. Our historical business in Southern Europe, very competitive, is also very complementary with our modern business in the U.K. All this fits well in Vidrala to create a business prepared for the future trends that we are seeing in the consumer packaging market, the trends that our customers are driving.
In conclusion, the strong underlying fundamentals for consumption despite the pandemic, the progressive reopening of activities, the continued support from packagers, brand owners, and consumers to glass as the ultimate sustainable packaging materials, our stronger commercial positioning, all this helped us to increase our sales. Also as Iñigo stated before, the base effect explained the relevant part of our year-on-year growth sales in the second quarter standalone. Operationally, these, let's say solid sales conditions were combined with the results of our investment plans and our internal actions focused on first, securing customer service next, improving our manufacturing efficiencies, and finally, mitigating our cost inflation. As a result of the combination of all of this, Vidrala's operational margins expanded in the period to levels of 29% in the second quarter standalone, 28% in the first six months of this year, or 29% again in the last 12 months.
This is where we are today in terms of profitability. Finally, not least, as anticipated before many times, we kept on executing our intense CapEx program plan. That you know, an investment plan that includes more than investments for pure replacements, and that resulted in CapEx of more than 12% of our sales in the last 12 months. We did it in a manner that didn't deteriorate our cash profile. Indeed, you probably agree with that, our cash generation in the period slightly exceeded our initial expectations, supported on the solid operational cash generation and also on some non-recurrent cash inflows from working capital movements as we are running low on inventory levels. Probably more relevant, moving to the next page, looking at our guidance, look at how we see the remainder of the year. Well, first, our demand remains strong and structural trends discussed before look favorable.
Obviously, unavoidably, the real certain conditions will depend on the evolution of the pandemic for the next coming months. Moreover, please keep this in mind, the base effect within the second half of this year will be irrelevant, and it was very relevant in the second quarter. The group is operating today at high utilizations, short in inventories. As a consequence of this, our year-on-year variations on sales for the remainder of the year will be modest. In terms of margins well, cost inflation is here. The effects from the growing inflationary pressures we are seeing will somewhat limit the results of our internal efficiencies. The best we can say today is that margins are expected to remain stable at current levels during the rest of the year.
In any case, probably more relevant and surely more structural for us, we will remain firmly committed to our strategic long-term priorities. That means today that we will invest more than ever with our customers in mind to expand our capabilities and basically to invest more for our future, with the aim to supply or to make our business, to do our business or to make our products in the most sustainable way. To be sure, finally, that Vidrala's future is prepared for the transformation we are living in the consumer goods packaging industry. We will commit to do it securing a strict capital discipline. Thank you.
Okay, this completes our exposition. We now give way to the Q&A session.
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 Francisco Ruiz from Exane. Please go ahead.
Hello. Good morning, and thank you for taking my questions. I have three. The first one is, if you could give us an idea of breakdown of sales by product and by region, if we have seen something special in any region or any product that you could highlight it. The second question is, taking into account that you have part of your energy hedged, how do you see the energy inflation to perform in H2, and how you see the clients in order to assume big price increases for next year, taking into account these price increases? The third one is on the CapEx. If we look at H1 CapEx, it is relatively low compared to what your guidance of this above 10%. Even compared with last year, the CapEx is still below last year, despite the restriction that you have with COVID.
The first question is, should we see a speed up for the CapEx in the second half of the year? The second question is, if there is any investment above the normal one that you could already announce to us. Thank you.
Okay, Francisco. Thank you very much for your questions. I'll take the first one regarding sales in the second quarter and the first six months by different product and regions. We don't see much difference in the second quarter standalone by product segment. Just consider that comparison basis in 2020 was, as we said before, fully distorted. We see that in the second quarter of this year, everything grows more or less on a similar way, as last year was decreasing more or less everything similarly. If we take the picture of the first six months, we see in that case that some of the products that last year were performing worse for the whole year, probably those more related to on-trade channel, spirits and carbonates, are recovering more than average. This, I would say nothing especially remarkable. Growth is more or less generalized.
By region, we see more difference also in this case in the first quarter of this year, where we saw sales top line in the U.K., performing worse than the rest of the group. In the second quarter, everything more or less grew similarly. For the full year, we don't see big differences.
Okay. Thank you, Iñigo. I will take the second question and the third. Second question is energy inflation. Well, inflation is the topic today, is what we can say. Inflation is here, it is very real, and it is already hitting cost structures across many industries, many manufacturers, including us. That is not only just the case of inflation in energy, where we are very protected or particularly protected. We are seeing inflation in many places around the business. In the price of carbon emissions, in the cost of transportation, particularly for longer distances, in the cost of some other raw materials, above energy. Finally, we all are seeing general price indicators that could affect the fixed portion of our cost structures. I mean, inflation as a whole is increasing our cost by double digits, okay? Excluding internal efficiencies and excluding hedging. Okay?
The point is that we are being able today to offset this through our sales growth, through our hedging policies, and through our internal efficiencies. The normal reality for a normal player in the industry under normal circumstances is more challenging. The eyes are now looking for us at our price and positions for 2022. It is true that most of these unusual inflationary movements will be reflected in the year 2021, and the base effect from the lows of the prior year is having an impact. Because of this base effect, the variation for 2022 should be more normalized. The question now for us is probably the same than for you, is whether inflation is temporary or it is more structural. In any case, we need to be prepared, and we will need to adapt our sales prices.
In terms of pricing, I should agree with you that the pricing environment should be constructive. Looking at the demand context, demand is growing. Prices are obviously unadapted, as were fixed before the inflationary pushbacks. On the other hand, it is also true that competition in our regions is very real, and we will see what are the priorities from our competitors, and we will try to start conversations with our customers on the smoothest way possible. We don't want our prices nothing but to reflect or to capture the abnormal inflation. We maintain the same hedges. The rest is our job, to keep on investing more, to keep on improving our internal efficiencies, and to try to keep on being one of the most competitive players, more sustainable for the long term. Trying to be more quantitative in terms of pricing targets that, Francisco, you question.
Probably too soon to say for us, and this is a critical management target that I cannot make public. I will probably help you using as a reference the theoretical result of a typical price adjustment formula that I calculated today is reflecting a result of a variation of around double digits in prices for 2022. Obviously, that can change before the end of the year, but this is where we are today. In the specific case of Vidrala, this doesn't mean that this is the minimum price variation we need to secure or to protect our margins. Internally we are going well, and there is a number of internal efficiencies that can be understood probably in our published results. The third question is related to CapEx. You are right.
The low CapEx that we are seeing in the first six months, lower than our target, is basically a matter of calendar. That means that CapEx for the rest of the year will be higher, and CapEx in 2022 will be similar to this, and that means that our new CapEx level is above 10%. Obviously, we are including in these CapEx things that are not pure replacement. Replacement CapEx for us remains at our historical levels, where we have our depreciation rates of 8%, 9%. We will invest this year and the next year above 10%, because we will include extraordinary investments to expand capabilities, to expand our logistics services or infrastructures to better serve our customers, and much more relevant, to make our business more sustainable on an environmental point of view. That means that we need to invest now more than in the past.
We know that. The figure is as clear as this, more than 10% of sales over the next coming months, probably over the next two, three years. Please keep in mind that this is not pure replacement. There is future behind or linked to these extraordinary CapEx plans. There is a business that should be better prepared for the future. Future that is linked to sustainability, and there is return behind these higher investment efforts.
Okay. Thank you very much.
Thank you. The next question comes from Luis de Toledo from ODDO BHF . Please go ahead. Mr. Luis, you have the floor. Please go ahead.
Hello, can you hear me now?
Yes. Go ahead, please.
Hello? Hi.
Hi, Luis. We can hear you.
Hello. You can hear me, right? I mean, in France and Spanish from Vidrala. My question refers to the Italy division, which has underperformed, and has put a stop to a positive evolution over the last quarters. I would like to know if there's something specifically there, if inflation affects this business more. It seems to not reflect increase in sales into operating margins. I would like to know if you're worried about this, if you could consider strategic moves as the last one in Belgium, and basically an analysis of the Italy business. Thanks.
Okay, Luis, thank you very much. Well, Italy is a different site for us. It's not the bigger site. Italy accounts for less than 10% of our profits of our sales, and is a different site in terms that it is smaller than the average in the group. It is a very well-invested, modern facility. It is alone in a big, wonderful market as it is the entire market. We produce there for a small number of big strategic customers. What we are seeing in Italy is probably an example of what is happening in the industry. Italy is less protected, more vulnerable to the inflationary pressures that we are seeing, and Italy is today under a normal year where prices were calculated before the inflation and costs are suffering this inflation.
The level of protection in terms of energy hedging, in terms of internal efficiencies of Italy is smaller than average in the group. That's the reason why Italy is today running at modestly lower margins. Please let me remind where was Italy only three, four years ago and where it is today, to complete your understanding of not only the year-on-year variations of margins. The future for Italy, obviously, is to see how we are able next year to keep on growing on sales, to keep on investing probably in this site. Finally, to reflect or to adapt prices that are particularly unadaptive. We don't feel uncomfortable or particularly concerned about Italy. Actually, as you can see, Italy is part of our D&A today, more than ever, on a strategic point of view.
Thank you very much.
Thank you. The next question comes from Iñigo Egusquiza from Kepler Cheuvreux. Please go ahead.
Hi. Good morning, Raúl and Iñigo. Thank you for taking my questions. I have four questions, if I may. The first two are two follow-ups to Francisco's questions. Just a clarification on the margin, because we know inflation is here, but I was expecting more negative impact for 2022. As far as I know, for 2021, Vidrala will cover on energy cost, if I am right, around 75%. This is the first question to understand the margin evolution in the second part of 2021. On the CapEx, just a small clarification on what is going to be the level of CapEx that you mentioned, Raúl. Just a small clarification. The third question on July sales, I don't know if you can share with us if the market continues as strong as it has been the second quarter.
Obviously, the comps are tougher, but just to know how is July performing. Finally, just a question on the Portuguese expansion project that you mentioned a few years ago, and you decided to put on standby because of the pandemic. I don't know what is exactly the situation today with this expansion project. Thank you.
Okay. Thank you, Iñigo. Well, your first question related to margins for 2021 and 2022 is, if we understood well, obviously behind our guidance, it's evident that the margins for the second half of 2021 are expected to be lower than the same period last year. Because we have inflation, because prices are unadapted, and more than this, because we are capped on potential growth on the top line as we are running at full capacity and our inventories are low, and this is a relevant point. A relevant point to be basically happy about, but that will limit or will cap our top line growth and our margins in the second quarter. Having said that, we are saying at the same time that we do feel protected, our margins at current levels. That means a lot.
I wonder whether that means a lot as long as some other players in the packaging industry is progressively announcing targets for the rest of the year. I repeat, inflation is a big point. Second question, CapEx, maybe Iñigo.
Yes. For CapEx, Iñigo, we are expecting both for this year and also 2022 CapEx in the range of between 10%- 12%. This means assuming sales of around EUR 1 billion, CapEx should be in the range of EUR 100 million-EUR 120 million, more or less for 2021, 2022.
Okay. Your third question, Iñigo, is how the business is in July. July is relevant month, is probably the last relevant month of sales for us in terms of our typical seasonality, and July is going well. It's basically following the same trend that we saw in June and that you can imagine having received the figures or the results for the first six months. There is nothing new. There is nothing that is changing. Structural trends look favorable for glass. Obviously, we are all trying to understand what the fourth, fifth wave of the never-ending pandemic could mean for our business in the short term. As of today, there is nothing that is changing, that is getting worse, despite what we can see in the global activity. Nothing new to say.
Please keep in mind that probably whatever happens in the short term in terms of organic demand trends will be particularly relevant for Vidrala because we are running at full capacity, our inventories are particularly low, and we can't, and we don't want to increase our sales volume significantly in the second quarter. Your last question is with regards to our CapEx projects and the particular relevance that behind this big CapEx plan has our Portuguese facilities. Well, we all know that Portugal is a very competitive place for us. It's strategic. It's a place where we have, in the same town, two sites, approximately 1/3 of our total production capacity. It is strategic for us to invest there because that help us to further increase our evident competitive advantages.
There is a big challenge for us behind this investment, because on a geographical point of view, Portugal is in the corner of Europe. We need to invest not only in glass manufacturing facilities, but also in services, in logistics, in our own fleet of transportation, and in many things related to the environmental impact or the sustainability of our manufacturing process. We have already invested a lot in Portugal. In one of the sites, we have already replaced three over six glass melting furnaces in the last couple of months, in the last two years. We have already created the new logistics infrastructures. We have created a solid logistic hub for the rest of our customers, including something that is extraordinary and usual and different for us in comparison with our competitors, including our own transportation fleet.
As you said, and this is, I know, what you refer to, we are, yes, it is true, planning a second phase, probably a bigger phase, probably more remarkable, that is still in discussion and to be announced before the end of the year. In this case, that will mean capacity expansion of about 5% of our capacity in the Iberian market is to be executed in the next two years, probably not before 2023. Something that this timing is strategic and is deliberate. We still don't know exactly if it will be there in Portugal or in any other of our Iberian facilities. Probably, it points that it will be in Portugal. Let's think that not before 2023. Let's think that this is really expansionary, and please keep in mind that that will be a project to further span our competitive advantages, not to increase our markets aggressively.
Thank you very much. Ladies and gentlemen, let me remind you again, if you wish to ask a question, please press zero one on your telephone keypad. The next question comes from José María Cánovas García de Blanes from JB Capital Markets. Please go ahead.
Hello, good morning. Sorry because I had some connection problems, so apologies if any of my questions have already been answered. First of all, could you give us some color regarding transportation costs? Have you seen any significant increase at this point? My second question would be a follow-up on Italy. What should we expect in terms of profitability for the coming quarters? Finally, you were talking about capacity expansion now in Portugal, potentially. Is there anything that you can tell us regarding M&A? Do you believe that this whole situation could unlock any opportunity here? Are you seeing anything new lately? Many thanks.
Okay. Thank you very much. Well, first question with regards to transportation cost. Please keep in mind that transportation means approximately 10% of our operational cost structure. Transportation is the secondary effect of the energy of inflation. We started to suffer in energy, transportation costs are increasing significantly, and particularly for longer distances. What is happening in the world for transportation by sea, the cost of shipping containers, fortunately, this is nothing critically relevant for us, but it's a good example of what is happening in the world in terms of supply chains and in terms of the cost of transportation. It's something very remarkable. Probably that has some positive consequences for us because the longer distances are increasing more, and this is making imports from low-cost countries more difficult and protecting more our European regions. Okay.
Speaking about that, let's say that transportation today are increased by similar distances in similar regions from similar origins and similar destinations by about 10%, double digit, low double digit. Our real internal inflation is significantly below that, let's say half than this, but the market reference is this double digit. The reason for us to be better is that we are creating our own fleet, our own transportation facilities, and we are making able, because of our volume, to reduce significantly the cost of transportation that is being increased due to the increased cost of petrol price. Okay? The question now is what will happen next year? Probably what we are all intense manufacturers, intense industry like us waiting for is for new capacity to come in operations in the world. Capacity in all types of transportation because this is a point of potential concern.
Not dramatic for us, but it is evident that capacity is tight all across Europe in terms of logistic infrastructures.
Regarding, José María, your second question about Italy. As Raúl said before, it is true that Italy being a smaller part of our business, smaller division, and making, let's say, analysis quarter by quarter, this means that some quarters can be quite distorted by different effects. Okay. The reality is that levels around 20% in Italy of EBITDA margin seems more or less reasonable. We have seen some years it has been slightly above that, probably also exceeding our initial expectations and also reflecting the intense CapEx that we did in the years 2017 and 2018. It was also affected by, in some cases, by some specific one-off. Levels around 20% for us seem reasonable for Italy.
Your last question is with regards to M&A. Thank you. Obviously, it's not surprising, this question, and in this point, what I can say to start is that our principles remain the same. Let me please treat this point under a broader perspective, mentioning or starting mentioning our investment plans, our CapEx plans. We will, as I said before, and this is, in my opinion, remarkable to understand how Vidrala will look like in the future. We will invest more than in the past, probably more than ever, because we will invest for things different than replacements. We will add capacity, we will invest for sustainability, we will invest to improve our service and to improve the environmental result of our business.
We will do it now because it's the right time to do, because it's what us as consumers and our customers are requesting to us, because it is our obligation to create future for our business, and because there is a very real return and competitive advantage for us if we invest more now. This extraordinary CapEx will be our main use of cash in the next few years. As Iñigo said before, our CapEx will consequently increase from the normal levels of replacement, that remains the same, of 8%-9%, to new levels of more than 10%, probably close to 12% over the next two years, including this year. Next, after this priority, we have alternatives in M&A, in our corporate strategy. I can say that the language here remains also the same. We, Vidrala, want to grow the business.
We think that we are able to add value in some particular cases. I think that we have some credentials in that sense. We are first, and we will do it in a very selective way. Few transactions, few assets for sale are today attractive for Vidrala. Not many targets are to be attractive for our particular characteristics. Please be sure that we keep on today actively analyzing any opportunity. Please let me say that you can be sure that saying no is also part of our strategy. We do not consider that we are missing opportunities. We are taking decisions.
For now, the best thing, as I said before, that we can do is to keep on the priority of investing in our business as it is today, rotating capacity, investing more in competitive assets, less in less competitive assets, including investment for sustainability and for logistics to better serve our customers. Please be sure that we are actively looking ahead, but with this level of selectiveness that will probably limit the likeliness of something remarkable to happen in the short term.
Thank you very much. Very helpful.
Thank you. The next question comes from Manuel Lorente from Mirabaud Securities Holdings. Please go ahead.
Hi, good morning, Raúl, Iñigo. My first question probably is whether you can give us the split between pricing and volumes on the 11% top-line growth for the first half? My second question is, we have been talking about a lot on inflation and base trends, but in absolute terms, this EUR 530 million revenues of the first half is a good indication for the second half? My third question is on emission costs that have totaled roughly EUR 26 million on the first half. Is this a good indication for the second half? Probably the last one on inventories that they have swing a lot in this first half. Whether you can give us some underlying trends there, is something about restocking or? Thank you.
Okay, Manuel. Thank you very much. Regarding volume and prices breakdown for the first half of 2021, you can assume that the organic growth of 11.2 is almost everything volumes. Prices, if you remember well, we were expecting for the full year some price acceleration in the range of -0.5% to -1%. The reality is that for the first six months, prices are more or less flat year on year. Regarding the expectations in terms of top-line for the second half of the year, as we probably explained in the press release and we reiterate this outlook, we're expecting top line to moderate in the second part of the year. In any case, if there are no special bad surprises, we still expect 2021 to be a year of moderate volume growth. Probably not at these levels of double-digit, but we should see some moderation, but still volume.
Great. With regard to the question of the cost of carbon emissions, this is also a big point of attention, and probably that only reflects the abnormal inflation that many industries are suffering, and probably this is the cost related to create a greener planet. For us, the increase of this cost is remarkable because this cost was nothing only 10 years ago, and today it's not dramatic, but it's a cost of between EUR 15 million-EUR 20 million directly on OpEx, directly reflected in our figures and in our guidance for this year, at market prices that are slightly above EUR 50 per ton of CO2. The result of this is that we have a structural deficit of around 350,000-400,000 tons of CO2 per year under the current business as Vidrala it is today.
The best we can do to reduce that is to keep on investing, to reduce our carbon emissions, to improve the efficiency of our business, and to be sure in the meanwhile that this abnormal cost is reflected, at least partially, in our sales prices.
You know, inventories.
Finally, Manuel, with regard to inventory levels, it is true that 2020, despite being a very unusual year, because of the actions taken to control capacity, we finalized the year at lower levels in terms of inventory days in comparison to 2019. We were at the full year 2020 at levels of 80 days of inventory days. We were in the second quarter of 2020, when we received the COVID outbreak, we were at levels of 90, which was quite high. We are today below 70 days of inventory. This means that we are at low levels. It could have, as you were mentioning, some effect of restocking after First quarter of 2021 and our customers seeing that everything started to reopen further of this year. This could have some positive effect behind it.
Just consider just to finalize at levels of 70 something, 80 levels at the end of 2020 are a reference, okay, as a normalized level.
Okay. Just a follow-up. To fully understand your narrative for the second half of the year. If volumes are better than you were expecting at the beginning of the year, and prices are performing better than you were expecting at the beginning of the year, why are you maintaining your expectation for the full year?
Well, there is a combination of effects, Manuel. First, because we are running at low inventory levels and we are operating at high maximum utilization rates. Sales volumes the second half of the year will be flat at the best case in comparison with the prior year. That will obviously limit any operating leverage coming from top-line growth. Sales prices were negotiated at the start of the year, are fixed, and are basically performing flat in comparison with last year. In combination, you have flat variation on sales in the top-line. Inflation. Sorry?
That's why at the beginning of my question, I was trying to avoid the conversation in terms of relative terms and talking in absolute terms. Usually in absolute terms, a good indication of the second half has been the absolute term in terms of top line on the first half. If we multiply by two your EUR 530 million revenues of the first half, right? We are moving to sales that are roughly 7%-8% above the ones reported on last year, which is almost double your current guidance. What are we missing here?
Okay. Just to clarify this. The best thing we can do to understand our outlook or perspective is to compare periods with the same period of previous years. What we are seeing is that we consider sales in the second half of this year to be flat in comparison with the same period, the second half last year. As a combination of this, sales for the full year should maintain an increase. Okay. Some increase and not irrelevant increase. Okay. The reason why in the second half of the year we are to remain flat on sales variation is because we are running at low inventory levels, as we said before, and our prices are already fixed. Okay.
The resulting hope, this is clearing up, the resulting turnover sales for the full year 2021 will be higher than in 2020 because we are already accumulating interesting growth in the first six months. Okay? Second half in comparison with second half flat, full year in comparison with full year between +3% to +5%, this is the result of our guidance. Hope this is clear, Manuel.
Okay. Again, I don't want to be too insistent on this, but let's try to ask in a different way. Why you don't expect to make EUR 530 million of revenues on the second half of the year?
Obviously, because behind that there is the seasonality of our sales, typical seasonality of our sales. Okay. Sales in December are much lower than sales in June. Okay. This is structural, normal, and typical in our business. Okay. That's the reason different months are comprised by different demand fundamentals or demand conditions every year, okay, in every time in our history, and this is the same for our competitors, okay. That to better understand this seasonality that in this industry is relevant, you need to compare the same period of sales in the prior years, not any period of sales with the previous period of sales, okay, in the same year. That's the reason you shouldn't
Compare sales in the second quarter every year with our sales expectation in the last quarter of the year. The first and the last quarter of every year are the weakest periods, the weakest quarters, and the second and the third are the strongest, this year won't be an exception. Just to complete your question, the reason why our margins in the second half of the year are expected to remain slightly lower than the same period last year is because we are capped on sales. Our sales variations will be limited. We will have more inflation because of the lagging effect. Nothing different that you can imagine, that we have more inflation concentrated in the second half than in the first half, cost inflation, and our prices are expected to remain basically the same. It is true that internally, our efficiencies are running well.
It is true that internally, the results of our investment plans are having a result. All in included, we don't consider that the margin for the full year 2021 will remain basically the same than they are today, this 28% EBITDA over sales. Our obligation is to let you know this clearly. This is just the rest of a year that visibility is high, and obviously, all our eyes are, probably your eyes also, are now put on 2022. Pricing dynamics, demand dynamics, inflation, temporary or not, the result of our CapEx plans. All these, there are obviously many things happening at the same time in this industry. Probably the structural long-term things are very positive. The short-term things are more uncertain. We have a pandemic that is not yet ending. We have more inflation than we thought, but this is short-term.
Looking at the long-term, you probably will agree with me that after the pandemic, there is nothing but positives for the glass container industry in our regions, and particularly positive for Vidrala. I invite you to do this, if you compare our margins with those of our competitors.
Okay. Thank you.
Thank you very much. We have no other audio questions, ladies and gentlemen. I now pass the floor to the speakers. Thank you.
Okay. Thank you very much. We still have some questions to answer that we have received via webcast. There's one that speaks about operating margins in 2022, and the question is, what is your internal assessment as to pricing growth needed next year in order to try and consolidate current operating margins at levels of 28%? The second is, if we could also remind the levels of hedging for 2022. Regarding the first one, the level of pricing that we will need to maintain our margins at similar levels is today at a figure of between 4%- 5%, which is a remarkable figure. As Raúl was saying now, the challenges are probably more looking at 2022. That is if we are able to pass through this inflation via pricing, and if we are also able to mitigate the impact on our margins via internal actions.
The second one, regarding our hedging for 2022, we are currently at hedging levels of between 40%-50%, 4-0, 5-0. This is again, only energy. Energy hedging. That should see still some deflation versus the current levels that we are seeing, that are obviously higher than the hedgings that we have closed. Apologies because we have had some issues regarding the Q&A via webcast. If there is any question that we haven't answered, we ask you, please, to contact us after the call and we will be happy to answer all your questions. Once again, thank you all for the time that you have dedicated to us. Just remind you that we, as I've said, remain at your complete disposal for any further questions. Thank you very much, and enjoy your summer holidays.
Thank you very much, you all. Enjoy your summer, and please keep on consuming glass. Thank you.
Ladies and gentlemen, thank you for your participation. You may now disconnect.