Ladies and gentlemen, welcome to the Ditterrand twenty twenty Full Year Results Conference Call. I now hand over to Mr. Francis de Prey's CEO and Arnaud Labulet, the CFO. Gentlemen, please go ahead.
Well, good evening, everyone. Francois Dupre here and my colleague, Arnaud Labiolet, on this key highlights on the 2020 results and our outlook for 2021 for the Diterun Group. Three messages at the beginning. One is that we have delivered more than solid results in this very unusual 2020, driven by a record year at Belrom and a pretty resilient automotive business. Secondly, that we will propose to our General Assembly a gross ordinary dividend per share of EUR 1.35.
And that we will guide or that we are guiding for 2021 and that despite continued uncertainty and in the absence of any renewed or more severe lockdowns than what we know today, we expect our typical KPI, which is adjusted profit before tax group share to grow with at least 25% in 2021, driven by all three activities. Now I do want to qualify a bit more what I meant with solid results and driven by a record year at Belaran and resilient automotive. Solid results in the sense that we have increased our profit over 2020 with 11.2% on our PBT group share KPI and that despite a 10.1% decline in our combined group sales. So that shows that we have really done a strong and profitable recovery in the second half of the year compared to the numbers you may have remembered from August. And second, even more excellent or significant, I would say, is that in our free cash flow group share, we have seen a sevenfold increase, reaching about EUR $391,000,000 over the year 2020, which is a tribute to the strong emphasis we've been given on the cash preservation and on working capital management throughout the year.
And our net cash position as a group or at the group level, at the corporate level, if you like, is at DKK 1,455,000,000.000. Part of that is in intersegment loans, but we'll have more details on that in a minute. Record here at Belron and resilience at automotive. I think at Belron, and we'll give more details in a minute, what we've really achieved is to make another major profit and margin step up, and we were close to 10% last time. We're now at 15%.
Thanks to cost containment initiatives, improved productivity and continued since a couple of years contributions from recalibration on the one hand and value added products and services on the other hand. Automotive resisted well. It was obviously drastically lower car market, but we managed to increase a bit our market share to improve our margins, contain the costs and generate very high free cash flows. So a very strong resilience for automotive. And the activity that suffered the most is Moleskine, given that our own shops were closed for several months and the shops of our biggest customers were closed as well for many weeks and months.
Those lockdowns have, of course, impacted top line. And despite cost measures, which have, by the way, been quite significant in 2020, the adjusted operating profit ended up slightly negative. So these are the key highlights. So let me now go into a little bit more details on those things. In combined group sales, the minus 10% has been minus 7.8% at Belrom, minus 11.5% at Ituran Auto and minus 37.6% at Moleskine.
Interesting to note is the difference between H1 and H2. H1, we were still, you may remember, minus 18% year on year, while H2 was at minus 1.3%. So a very strong recovery and very limited impact if you see like that in our from the second lockdowns or semi lockdowns that we've seen from the October onwards. In our combined adjusted operating result on Page four, well, that's again the combined number, a jump of 20.7%. Very similar picture in terms of H1, H2.
There we had actually an even more drastic drastic decline of minus 20% in H1, but
a plus 80.3% increase in H2. So really a very strong H2. It's all carried by Belron really because there was a 40% increase on the adjusted operating result of Belron of 40%. Leeds and Automotive stayed around EUR 100,000,000, not far, let's say, 98,900,000.0, so very close to EUR 100,000,000, very decent and more honorable results. And Moleskine with minus 1.5% at a slight loss on this KPI.
The normal KPI that we guide with the PPD group share on Page five shows the 11.2% I talked about before. It comes in terms of increase almost entirely from Belron, the other two having declined a bit. But again, you see this H2 swing where we've done plus 85.3% year on year, which really overcompensated the decline of H1. And so we're happy that we can land with a higher and we have guided around, but it's a slightly higher PBT Group share at EUR 3 and 32,700,000.0. In terms of free cash flow generation, whether you take the 100% Belron or the more correct one, the 53.75% Belron, that one actually did a sevenfold increase or a six yes, sevenfold increase plus 600% from EUR 56,000,000 to EUR $391,000,000.
Not only Belron, by the way, also in particular, auto, it's in automotive. That still had a negative cash flow last year and a positive one of 172,000,000 this year. So a nice jump. And the translation of that on Page seven in terms of our debt and cash and so on at different levels of the group. As you can see, a positive number positive, it's minus 1,455,000,000.000 is the number corporate and unallocated on the right hand corner of the table on Page seven.
That's de facto our net cash position that we have here at the corporate level. It does include about EUR $456,000,000 intersegment loans, but this is the number that we have. It's about the level that we had at the end of last year. It's a combination of having acquired preference shares within Belaran for 150,000,000 in February, of having some liabilities, treasury shares, some dividend payment, of course, that we did as a group ourselves for 54,000,000 more or less, and then an intersegment loan with a dividend that we pulled up from Detourn Automotive. So this is what happened on that slide.
And then last but not least, before we go into the details of the activities, is that on ESG, we have really made a substantial effort in 2020, both on the way we look at potential acquisitions, where we now have become a signatory of the United Nations Principles of Responsible Investment, the PRI. And we will start reporting against that, of course, in our new annual report in April. And in terms of our active ownership of our existing activities, where each of the activities have now worked out a sustainability or responsible business strategy with a materiality analysis with priorities, specific KPIs, with ambitions that are becoming more and more concrete. And depending on activity, it's easier, we're very much focused on CO2 emissions, reductions and social assets like inclusion, diversity and so on and so on. But I suggest we go a little bit more detail on Belron Automotive and Wolfgang and wrap it up and open up for questions for Belron.
Arnaud, can I ask you to maybe give us the highlights of 2021?
With pleasure, Francis. So good evening, everyone. So the highlights of Belron are relatively well, incredibly positive, I must say, with a sales decline of just below 8%. And that was substantially influenced by second half, which was much better than the first half with a decline of top line of only 3.2%. We have had quite a lot of negative headwind from volumes because the market was really impacted by the lockdown.
So a decline in volume of 13% for the group. But we've been able to compensate partially those lower volumes, thanks to a positive price evolutions of our average job prices, thanks essentially to the model and product mix and also thanks to the growth in ADAS and value added products and services. We've been able to increase substantially our adjusted operating profit by 40% to EUR $583,000,000, And that was really thanks to very much improved efficiency within the organization with cost containment programs, with of our capacities everywhere. And that led to a strong improvement of our margin operating margin, which landed at 15% on the full year and which was at 17% in the second half. And once again, positive tailwinds from price, ADAS and VAPS contributed to that improvement and also the better efficiency of our activities.
Profit before tax adjusted profit before tax group share increased also by quite a significant margin by close to 45% on a comparable basis despite higher financial costs due to the fact that we have supported the full refinancing of 2019 in 2020. The free cash flow has been very strong, very robust at EUR $429,000,000. That's an increase of EUR $264,000,000 compared to last year. Once again, that has been influenced by a stronger operating performance with EBITDA increasing significantly and also very tight control on working capital, very disciplined working capital and tight control on CapEx and also much more limited impact of acquisitions in 2020. We've ended the year with a very strong cash position with $618,000,000 of cash with undrawn revolving credit facility of EUR 400,000,000 and senior secured net leverage ratio of 2.36x.
On top of that, we've enjoyed quite record NPS. In a year which was not that obvious for the operations, we've been able again to delight our customers with a record NPS of 85%. If I look at the Slide 11 with the evolution of sales. So you see there the decline indeed of 7.8%, which was mainly organic with 7.5% decrease of organic sales, limited impact or an impact negative impact of FX and some positive contribution from acquisitions that have been done in part in 2019 and also in 2020. In terms of geographies, North America resisted quite well during the crisis or better than the other regions, with North America registering a decline of 5.5% of the sales.
This represents 55% of the group sales now. And Eurozone was much more affected by the lockdown with a decline of 11.3% and the rest of
the
world where The U. K. Suffered, but Australia and Scandinavia did perform very well, minus 6.1%. So the of course, the main reason for those sales declines are linked to the lockdown. And as you know, we had a very hard lock down in the first half of the year, especially starting in March and April.
And then we recovered quite nicely into Q3. And the second wave of the lockdown in November and December did impact negatively the business again, but we've been able to resist quite well. The VGR value growth linked to a very important driver of the business, which is the ever more sophisticated windshield, provide us with some price support due to the model mix and the product mix that has contributed to diminish the impact of lower volumes. And also ADAS recalibration, the penetration rate is now at 17%, so having increased quite significantly compared to 2019. And even with lower volumes of windscreen replacement, so it's important to register that we've been able to increase quite substantially the number of recalibration, the penetration rate and the sales.
And also, we've increased the attachment rate on value added products and services. We are now at 20%. That's not a homogeneous number across the region, so there is still room for improvement there. So we've had also negative effects with the average euro dollar, which was in the negative direction. So strong growth in operating results.
I've mentioned that, and it's really, once again, quite impressive already what we had achieved during the first half of the year. But after we entered the Q3, as we mentioned in August, when we presented the half year results full speed into the third quarter, that has confirmed. We delivered quite a strong performance there. We suffered a little bit at the end of the year. And notwithstanding that, we've been able to improve quite significantly the margin during the second half of the year, landing at 17 operating margin and a total margin for the full year of 15%.
Once again, strict discipline on costs, but also much better usage capability of capacity within the group has been the recipe for achieving those results and also positive tailwind from price ADAS and VAT. There was also a positive impact linked to the fact that the legacy management incentive plan didn't repeat itself in 2020. What I can add is all the cost lines of the P and L have been improving in 2020 compared to 2019 at in terms of absolute levels, but also in percentage of sales. So this explains, too, why the operating profit has been improving so substantially. I will come back on the summary of the results.
Then there are a few adjusting items in those results. Some of them are linked to amortization of brands due to the acquisition of TruHo that we've done last year. There have been some impairments on goodwill and other noncurrent assets, partially acceleration of impairments on some software in the group and also other adjusting items, which are mainly linked to some restructuring in different countries and also the cost of deciding to discontinue some activities in the service extensions. No goodwill impairment has been booked following the impairment review in the countries. That's important to signal, I guess.
And once again, a large part of the other adjusting items are there in order to really improve the performance in the future of this organization. Adjusted free cash flow and net debt, once again, very strict discipline. And what has been achieved in terms of operating profit reflect itself into adjusted EBITDA, then very strong control in working capital. Just to anticipate the question, at the end of the first half, we are we had deferred some payments to suppliers. We have regularized that massively in the second half of the year.
And so there is a remaining EUR 30,000,000 approximately that has to be still paid in 2021 in the working capital. Net CapEx, we've been there again very cautious, very disciplined in terms of sanctioning the right ones, which were absolutely essential for the business in 2020, and we're expecting a catch up for next year on that amount. Tax paid was increased due to the result the better results of the company. Increased net interest paid, it is linked to the financing that we achieved, refinancing dividend recap that we did in October 2019 and which had its full impact on 2020. And the ASP has been paid.
That was the former LTIP plan for the management, has been fully paid in 2020, and that has negatively impacted the free cash flow, and that will not happen again. So I insist on the fact that our net leverage has diminished quite substantially from 3.77% at the December 2019 to two point at three six the December 2020. The latest development of Belhorn, you know the Fit for Growth acceleration program is really alive and kicking and delivered great results as you've been you've seen. The transformation work stream, we are making big progress there by really defining the size of the price by sequencing the program. So we've reached a kind of agreement there, and we should progressively see the results partially but modestly in 2021, but much more in 2022 and 2023.
There will be, due in in large part of the transformation program, massive IT spend in order to rejuvenate and modernize our IT. So that will be seen already in 2021. And as I've mentioned, we did some strategic review on some expansion initiatives, and we are currently revisiting our activities there. We've announced already the fact that we have sold Italy, and we are continuing on that avenue. We have also developed a new, what we call, responsible business.
This is the other word of ESG, I must say, and where we've made also progress where we've defined our objective, but more precisely, it's in terms of carbon emission, it's in terms of waste reduction, massive waste reduction and some social aspects. Health and safety is a crucial dimension of it and diversity and inclusion. Then the outlook. Well, assuming no more severe or no new lockdown, the outlook is quite a bit. I must say, we are expecting low double digit organic growth, and this is driven by progressive volume recovery as we enter into favorable period comparisons starting in March.
Once again, the mix is the model mix is always positive for us. We expect a continuation of increased ADAS penetration across the group and continued improvement in the VAPS contribution. And we are expecting, unfortunately, some headwind in terms of FX because the dollar is today depreciated compared to the average of last year. We are expecting an adjusted operating profit growth above 20%. And the adjusted free cash flow is expected to stabilize at a high level.
Once again, some elements of the performance of 2020 can difficult with difficulty be repeated, and I think about the working capital, but also about CapEx program.
All right. Thank you, Arnaud. On Detour and Automotive, what have been the highlights of 2020? It has, of course, been a drastically reduced new car registrations market with minus 19.7%. We managed to slightly increase our market share with 80 basis points to 23.6% in that one, delivered about 19.2% less vehicles.
All of that translated into 11.5% less sales and 17% less adjusted operating results. There was clear support of a positive mix, clear support of stringent cost management. As I mentioned already at the beginning, the cash generation has been particularly strong at Digital Automotive, reaching million, whether it was still negative the year before, thanks to great working capital management. We did finish or implement fully the acceleration of the transformation project, where you may remember, we had about two eleven positions in discussions with the social partners. Those negotiations were finished and implementation has been done at the December.
So as of January 1, those positions are not there anymore, and the first savings are starting to happen as we speak. And then last but not least, we have now also created the subsidiary called Ditron Automotive SR, a subsidiary of Ditron Group. You may have seen it that our logo has changed a little bit with the one you see at the bottom of the pages here is the Group logo, and Diteren Automotive is using a more modern look, leveraging the commercial name of Diteren, by the way, which, of course, in Belgium makes a lot of sense. Now on the Belgian car market, Page 19. Well, we had full lockdown for at least a couple of weeks there in March, April and May, a drop minus 19.7% in minus 21.6% even if you include registration of less than thirty days.
We increased our share and the commercial vehicles did also decline a bit less at 12.2%, and our share remained stable at 10.7%. On the chart itself of new registrations, you really see that the four thirty one, We had kind of always said we're going to land around $4.35. I think we're pretty close. Yes, we haven't seen a number like that since quite a while. That's for sure.
And on the market shares on the right hand side, you see that we've used that occasion to keep growing our share to a number that actually we also haven't seen in the last ten years. So we're pretty happy with this market share number both in the net and in growth market share. In terms of type of vehicles on Page 20, well, what's really clear is that the new energy part of the market has fully taken off. It used to be 7% last year. It's now 15%.
Of that, still hybrid is the biggest chunk, 71% of that, 15%. Electric is already about onefour of that. So there have been 14,968 fully electric vehicles sold in Belgium. And then there's still a bit of CNG and LPG, but really quite limited. Diesel had a very small uptick from 31% to 33%, and the rest have been petrol.
B2C is remaining a little bit smaller than B2B. No big change there compared to the year before. And the SUV mix keeps going in a direction where SUVs keep growing. They have achieved about 41% of the market in total. Now you talked about us.
The Deterrent on the next page, well, we have increased our share, as you can see, from 22.8 to 23.6%. All brands have grown except the Volkswagen brand. So the Volkswagen brand has actually suffered in its market share, given that there was a slowdown and a delay in the launch of the Golf eight and actually also the ID. Three was launched a couple of months later than planned. Also, big volume models like a Tiguan, for instance, are becoming a little bit closer to end of life, and so have contributed a bit less.
So the Volkswagen brand has really reduced share. However, very pleased with the uptick at Audi from 6% to 7.7%. Very pleased with SKODA, which has really done massive jump from 4% to 4.8%, thanks to the KAMIC, the new Octavia, the superb, running really well. SEAT stable at 2% and Porsche, despite what you might think, has actually also increased its share from 0.5 to EUR 0.7. The Taycan, of course, has been a nice contributor to that.
Within the mix, in terms of SUVs, we were always a bit underrepresented, but we're slowly but surely catching up. So we did see a decline of only of a good 11%. And in our mix, we are now above actually at 34.9% of our mix that SUVs are representing. In terms of new energy vehicles and SUV, by the way, have a market share of about 19.4% now. In new energy, well, in full electric, we're actually really the market leader.
So we are even higher than the overall market share that we have. So we have a 24.4 in full electric. And that's, of course, a combination of the eTon, the Taycan and the ID. Three and so on. So really happy with that.
In hybrids, our market share is a little bit lower because some of the other brands have almost all their models in hybrids. In our brands, you only have some models in hybrids. And so there, we have a bit of a lagging effect. And not mentioned here, but I think Eddy, our electric charging activity, has actually, of course, capitalized on this beginning penetration of electric vehicles. We installed about eighteen fifty five charging stations, either at people's homes or in their premises of work.
And so if you put that in combination to the 24.4% share that we have, that means that about 49% of all our electric vehicles, we also sold the installation of an electric charging station. And so this is, of course, just the beginning of a promising market that we're there. In terms of profitability at Eastern Automotive, declines I mentioned. So this is about 104,710 vehicles delivered. A big difference between H1 and H2 in sales declines.
So where it was minus 24% in H1, it's been a plus 3% in H2, a very nice recovery, mainly in Q3, slowing down a bit again in Q4. The margin gross margin actually went nicely up. Our adjusted operating profit margin landed 3.1% return on sales versus 3.3% the year before, so almost stable, more than honorable, I would say. And we did, of course, also have a substantial adjusting item given that we have done the restructuring around the two eleven positions. And so as part of a couple of other adjusting items, a big chunk of that is EUR 41,000,000 for the projects to accelerate the transformation.
The table on Page 23, I skipped because this is more or less what I have been talking about before. In free cash flow, the big swing you see from minus CHF 39,000,000 to plus CHF 172,000,000 comes from a couple of factors, mainly a nice cash inflow on the working capital management, lower inventories, trade receivables. Of course, some less CapEx in a year where there's less activity, some less CapEx. A bit of less taxes, given the results a bit lower. And Borg, partially offset by a lower adjusted EBITDA, so some counter effects there.
And the net debt increased from EUR 133,000,000 to EUR 167,000,000 because we've now organized an intersegment loan from the German group then partially offset by the strong cash generation to some degree. What are the latest developments? Well, the two eleven positions have been reorganized. We have the carve outs of the jury, I mentioned it before. Strategic objectives are still around transform, expand and innovate.
And we have now also clear responsible business objectives around emission reductions, 50% by 2025 and even more before 2020 and diversity in a relatively male driven organization at Automotive still is an important point of attention. The outlook, we anticipate a 450,000 vehicle market. So a little bit bigger than 2020, but not much, definitely not going back to the pre COVID days. I think we have mentioned that already last year. A different seasonality given that didn't have the classical auto fair, but a virtual auto fair, which given the circumstances, it's a bit too early to fully draw conclusions, but it has worked quite satisfactorily from our point of view.
But nevertheless, we will have a bit of a different sales seasonality than we would have typically. We do want to grow our operating results with more than 15%. Free cash flow will probably be a bit negative compared to the very nice numbers of 2020. They're not necessarily going to repeat the same working capital evolution every year. We do anticipate VDFIN, so our joint venture with Volkswagen Financial Services Group that offers leasing products to increase its PBT.
And we have and this is more a commercial item, quite exciting products in the pipeline, whether it's the Volkswagen ID. Four, whether it's the new e tron GT from Audi, by the way, is really worth looking at, but also the Cupra Formentor. So lots of interesting stuff to look at for sure. And I want to talk about the Enyaak of Skoda, which is going to blow everybody away in terms of a fully electric vehicle. Let's talk about Moleskine for 2020.
Thank you, Francis. What a tough year for Moleskine. We had announced a high pressure during the first half of the year. That pressure has diminished a little bit during the second half, but it has been really very, very tough. And the lockdown in so many countries have affected us quite massively.
So this translates into a sales decline of 37.6%, which means minus 61% of sales for Moliskina. We've made well, management did great efforts in order to try to compensate for that diminution by making very important savings and improving also the performance in the second half of the year, which has landed with positive contribution. The adjusted operating result for the year has not been able to end into positive territory. We had a negative EUR 9,500,000.0 operating profit in the first half, and we end the year at minus EUR 1,500,000.0, which means that the contribution of the second half has been of EUR 8,000,000. The adjusted PBT group share decreased quite substantially, and this is a consequence, of course, of the above.
When we do so much in terms of profitability due to the lost sales, it's really difficult to compensate. The adjusted free cash flow has remained positive with close to EUR 1,000,000. And once again, that's thanks to cost containment and CapEx control. The net debt at the level of Bodysky in that segment is of EUR 300,000,000. And we've supported our activity, showing confidence in the business by increasing our shareholder loan by EUR 55,000,000.
And very important, Daniela Riccardi has been able to join the company since the April 1. When I say join, she was in charge, but not yet in the middle of the troops because of the lockdown, which has been quite long in Italy. If I look at the top line contribution by channels and by countries, with the exception of e commerce, which has been performing relatively well with 16% increase compared to last year, all the other channels suffered quite dramatically from the lockdown. And the most affected one was retail because we closed stores definitely and temporarily because traffic was not there in quite significant locations like rail stations, like airports. Traffic was really diminished by 80% in those locations.
Also, high street retail has been suffering. So we closed there temporarily a lot of stores. So that's for retail, for wholesale and B2B. Wholesale, there are some of course, it's a decline of 32% in wholesale, but with some positive element with our customers, which had already a kind of strong offering online. And online for customers represent probably 30% of the wholesale sales that we have.
And of course, B2B has been affected by the fact that corporates didn't spend anything in gifting, organizing events, and that has affected us, as you can imagine. In terms of geographies, I would say that EMEA, so Europe and U. S, were globally affected at in the same proportion, while APAC resisted better to COVID and earlier in the crisis but got out earlier, too. And so we've been able to have still a negative performance, but much less impacted than the other two regions. In terms of adjusted operating results, when you lose EUR 61,000,000 of sales with the gross margin we have, which is around 75%, you lose close to 45,000,000 of gross margin.
And so it's very difficult to recuperate that. So the good message, I think, is that we've improved gross margin, which bodes well for the future because we need some pruning in terms of products. The adjusted EBITDA remained quite positive at $12,500,000 and we've been able to radically work on the cost. OpEx down 33%, people cost down 26%. So those are massive improvements, which once again creates a better environment in terms of cost for the future when volume will be returning.
So the decline in adjusted profit is, of course, a consequence of that negative operating leverage due to lower sales, and we've not been able to compensate with lower costs. In terms of adjusting items, it's mainly the impairment that we booked in the first half of the year, CHF 21,000,000. And due to the performance and the plans for the coming years, no additional impairment was needed at the end of the year. In terms of Slide 31, adjusted free cash flow and net debt. When you lose so much in terms of operating profit, you cannot compensate really with the EBITDA.
So the adjusted EBITDA has been declining more or less with the same proportion as the adjusted EBIT or operating results. We've been able to improve in terms of working capital marginally. We've been able to diminish the net CapEx in that year. And so we've been able to still generate a free cash flow of close to 1,000,000 during this period. And the net debt of EUR 300,000,000 includes EUR $254,000,000 on the corporate.
The latest developments, as I mentioned, Daniela joined us on the April 1. But more than that, she has been hiring a few talents from outside. So we reinforced the management team quite significantly. We have continued on what we announced you about the new strategy, Moto about fewer, bigger, better, where we work on the portfolio of products. We streamline that.
We reduce the number of SKUs in order to reduce complexity within the organization, which leads to better cost control, cost containment. We hope to be, at the end, much better and bigger in terms of sales and financial results. The trend in the Q3 Q4, sorry, has been improving. I think that the quality of sales was improved, too. And we enter 2021, it's very early days, with a good momentum compared to last year.
And last year, once again, it was not affected by lockdown for the first two years two months of the year. We are awaiting some big progress on the side of the e commerce platform. We renew. We'll be launching a totally new e commerce platform before summer. And also, we worked quite extensively on sustainability by progressively defining, developing eco friendly products for our customers, working on the value chain of the supply chain, reducing waste where we can and initiating carbon emission reduction program.
The outlook for the full year 2021, we are expecting to recover sales quite significantly. For the full year, we are expecting a sales growth of at least 20%, and our adjusted operating result is expected to land well above 10,000,000. For corporate and unallocated, very quickly, there is no big change there. The real estate activity has been performing well in 2020. There have been a few rent holidays, which have been given to some of our tenants.
We have and in terms of corporate costs, they were relatively stable, but with one impact, which is a solidarity program of EUR 8,200,000.0 that we have provided for in the accounts in 2020.
Right. So as a wrap up before we open up to questions, closing remarks. One, we're extremely grateful to all the people, our personnel, our customers, our suppliers, our stakeholders, shareholders, who have been really supportive during this demanding period. Two, we are very happy also that both the group and our activities were able to support respective communities in the way they can during both first and second lockdown. So a second big thank you, I would say.
Thirdly, we have used the year not just to show flexibility, agility and leadership to try and drive the results that we've just shared with you over the year, but at the same time, use the crisis as an opportunity to accelerate the transformation. And I think all three activities are now in a very strong position to start 2021 and hopefully get out of this uncertainty progressively with a strong strategy and a strong set of execution. We have added sustainability even more prominently to all our work and our reflections as a signatory of PRI and on concrete KPIs. And then last but not least, we coming out of this crisis stronger than ever, it is our anticipation to continue to grow our PBT group share KPI and the guidance we give for 2021 is at least 25%. And so with that, I suggest we open the floor for questions.
We have a first question from David Wachman from ING.
First question on the 2021 guidance. So and in particular, for Beltran, if I read for the 2021 guidance, so in terms of sales, so more than 10%. And then on the EBITDA, it's more than 20%. I ended, I think, to something like a 16% EBIT margin. You achieved 17% in H2.
So can you actually come back and explain us your conservative or your caution cautiousness on the 2021 EBIT margin guidance for Belron. What are the risks, the headwinds that we should have in mind? So is it FX related? Is it related to the IT transformation? And then also as a follow-up, let's say, on the 2021 guidance, could you explain the CapEx?
So the increase in CapEx, is it a new normal? Is it a particular just a specific one off on this IT transformation? So that's my first question. And then second, on 2020
you maybe present that one? Yes,
sure. Sure.
Long list otherwise. So your first remark on the EBIT margin, when you triangulate for 2021, you get to 16%, okay? That's your computation. And it's lower than the 17% of H2. So H2, I'm saying not that we cannot repeat that performance, but has been partially influenced by the fact that when we exited the lockdown in the Q3, we did it with a lot of positive benefits of what we had done during Q2, where we used furlough, we used temporary unemployment, did some restructuring.
And so we entered Q3 with a kind of optimized cost structure because we really massively brought that down. And with the best performing technicians, the most productive ones. So productivity was at its best during the Q3. And then in Q4, you start to rehire for when the COVID will be ending, you have more trainees. And so it weighs a little bit on the performance at the end of the Q4.
And so we are entering into 2021 with still a very controlled cost basis, but we try to remain realistic on what we can achieve. And 16% is already going into the right direction. For the CapEx, CapEx increase, is that the new normal? No, there is a catch up element. Really were very disciplined in 2020.
We just did the absolute necessary CapEx spend, and there is a little bit of catch up in 2021. And as we mentioned, for the kind of transformation leg of the Fit for Growth, we are fully conscious that we need to do some CapEx, especially in IT. And so we are sanctioning now new IT spend. What is the new normal? I think that going forward, if I think before IFRS 16, I think that our CapEx level should be around 2%, could go to max 3% if we've got some growth plans and can temporarily go into that direction.
And the transformation program will take some time. We'll be already investing in 2021, but that will be continued in 2022, at least.
Yes. Sorry, I was trying to unmute myself. I was taking a bit. On so my second question on this transformation plan. So you've been saying that most of the foods, let's say, of this transformation, you would feed them in beyond 2021.
What is the kind of long term guidance you can give us on EBIT margin side? So if understand that there is, if I understand you correctly, quite some upside to come beyond 2021? Or should we see the outlook beyond this year, which will be quite a particular year still?
So this year, you won't see a lot of benefit because we'll be, as I mentioned, investing in CapEx and OpEx in order to achieve the transformation in 2022 and 2023. And we have not communicated on the size of the potential improvement, but we are expecting indeed an enhancement of the margin going forward.
And that is can you explain a bit the transformation that is left to be done, given that you did already, if I understand correctly, quite a bit on the cost side in 2020, yes, last year, basically.
So there are various work streams in the transformation. One of them is in the support activities in HR. We will be moving to new the Growth U. The footprint in Europe and in The U.
S. In terms of operations, customer facing operations, where can we improve in terms of footprint, logistics
mainly. Digitalization, of course, is another one. And then so for several of these initiatives, you also need to do some kind of basic IT foundational work. Cellular is still a bit of a multi local company when it goes to IT systems. And so if you want to really get the full benefits, you need to create more common data architecture across several countries to reap that benefit.
It has advantages because you're going to streamline the licensing, procurement, those type of things. But you have to homogenize a number of things that are not necessarily homogeneous today. So there is a bit of upfront investment, therefore, before you will then see the digital customer interface benefits or the logistic chain optimizations that are driven by the IT intelligence parts, if you like.
And then last question from my part. On the new car sales, let's say, in Belgium, we've seen in January, February, some negative development, which seems to be to result from the global car chip shortage. Can you comment on that? I have the impression you don't see it as major risk.
So for Diturn Auto, you mean the
fact Yes. For Diturn Auto, sorry. Yes, for Diturn Auto.
Brands, I mean all the brands all the OEMs basically have some delivery issues for the moment. It started a couple of weeks ago with the semiconductors. There's a couple of other pieces as well that prevent cars from being fully finalized, if you like, the way they should be. Yes. So the factories of the Volkswagen Group tell us that for several models, there are some delivery delays.
We have the advantage as Belgium to always have the early in the year with our order book. Even with the virtual Salon de Lotto, we have a well filled order book. And so we typically are in a position to negotiate that when the deliveries start coming that we can be relatively high on the delivery list. And so it may affect our impact for a month or so or two months or I don't know what. But it's basically then a bit of a shift between a Q1 or Q2 that we anticipate except for one for some specific models that it may take a bit longer.
But otherwise, this is not that would, let's say, change our plan for the full year. It's more of a shift seasonality shift within the year.
Next question from Emmanuel Carlier from Kempen. Congratulations
with the very strong set of results. Few questions on Belrom. First of all, on the volume part. Did I hear well that the 13% lower volumes that is for the market, if I understood well?
No, that's for us. That's for us. It's a mix of both replacements and repair. So there's a number of jobs that we have done for customers. It's because, of course, several countries like France, Spain, Belgium, etcetera, we were fully closed from mid March till mid May.
In others like Germany and The U. S, we were not closed, but there was a lot less mobility. And so customers maybe stayed a bit more at home than normal. And so you have seen some drops in the number of jobs of people showing up in our service centers.
And Emmanuel, we believe that we've gained market share in nearly all our major markets, The U. S, for sure, in Germany, in France. So the market drop is than that.
Yes. Understood. And for 2021 then, based on your sales guidance, what is the kind of volume guidance volume assumption? Is that something like 5%, meaning that we're still a big tailwind as well probably in 2022?
Yes, approximately. That's the kind of range, a little bit more potential.
Yes. There has been a bit more frost days. And the number of frost was clearly higher in both Europe and The U. S. This year versus last year.
It's a bit early days to see the full impact of dynamic because people typically wait until the frost is over before they go and replace, even though it's urgent. So yes, difficult to put a precise number on it. But we are now going into the difficult volume months, yes, with March, April, May, and we don't we clearly anticipate them to be better than last year.
Okay. That's clear. And then leverage is very low at Belrom. Typically, if I remember well, the leverage target is if you are around 4x, you reconsider to pay a dividend. Is this something that we can still expect in the coming weeks?
Or what is your yes, what can
you are say on closer to 3x that we can reconsider dividends. It's not 4x. And on average, we are probably just above 3x. We are indeed now at a low level at $2.36. And we see what we will be doing with the capital structure, knowing that we want to make sure that the year will be satisfactory.
It's still early days. We are only March.
You may remember that last October, November, we that question also came from time to time. And then we really saw there was a beginning of a second lockdown, too much uncertainty at that point in time to consider anything. And so it's a bit the outlook, the uncertainty levels, what's really going on or the lockdowns slowly but surely disappearing or still lasting a bit longer. These are all elements. On top of that is the elements, of course, of the debt markets, what money does Belarus wants and needs for its own transformation programs, etcetera, PayPay and so on.
And all of these elements together is something we talk as shareholders from time to time around the table to see what makes sense. But there's nothing more we can say for 2021.
Okay. And then maybe a last question before I give it to my colleagues. I didn't see anything on share buyback at Deterrent. Which you explained the rationale for that because with these strong numbers, stock is still trading extremely cheap. The share buyback seems to make sense.
So it's still on hold as it was in August when we had the previous results numbers. Yes, the on hold is driven by yes, there's a bit of uncertainty still around outlooks and things like that. And so that's where we are. And but of course, is also something we discuss and revisit from time to time.
And what could make you change your mind on that? Because on the one hand, there is indeed uncertainty. On the other hand, you are guiding for at least 25% PBT growth. So is it mainly driven by the fact that it may be a bit sensitive with respect to the use of temporarily unemployment, the restructuring that you did at Ditre and O2? Is that the yes, maybe the main reason?
Or That played a bit last year. That is true. This is looking forward a bit less immediate in attention. Yes, but it's as you've seen, we've also adapted a bit of dividend per share this year. That's a very positive signal for the market.
So these are also some aspects that play a role into that.
And we are happy to keep dry powder as we speak.
Yes. Indeed, you could also say that it means that you might be close to an acquisition. But yes, you cannot comment on that. So I leave the floor to my colleagues. Thank you.
Thank you. Next question from Chris Kupas from Degroof Petercam. Yes.
Good evening. Thanks for taking my questions. Still a couple of remaining on Belron. Firstly, on ADAS. Last year, the penetration was about 11% on the jobs.
This year, we already see a step up towards 17%. Does it imply that the 1% growth per quarter is speeding up? Could you give some guidance on that one? And secondly, on Belron, recently, we saw some news that potentially your co shareholder, CDNR, might move a little bit. Could you give some comments on that as well, please?
Yes. So on ADAS, it's true that it was a little bit more than 1% per quarter. There is no particular reason to deviate from our 1% per quarter, let's say, momentum. It's more, I would say, some factors that some markets that were less in lockdown than others and were maybe still a bit lower in ADAS penetration than others that you certainly see this overall effect on the overall portfolio in different countries. But I think the underlying trend on average between the countries remains to add more or less eight percentage per quarter.
So no real reason for a different momentum there.
And also, we've improved a little bit our equipment, and we are able to now do recalibration of more models of cars. And so we've enjoyed that in twenty twenty two twenty twenty. But we are not expecting to see that back again because we are already at quite significant numbers of what we can do in terms of So keep the 1% per quarter, 4% per annum.
And on the CDNR question, as you know, we have a lockup period until February, March 2023. And so this is what we are and all the rest that you may have heard of pickup or whatever are rumors, and there's no comments to be set on that. I mean not only us, not only we love Belron and Belron loves us, but I think also CDNR like Beron quite a lot. And so they are actually quite committed to stay around for quite a while. And so we'll see what that means.
Okay. And just a small follow-up. To be sure, on Molluskin, we saw, of course, difficult performance, but now things are getting better also on the market. But if you look at the leverage that you put on this entity, I know it's small, but what's the rationale for putting that €300,000,000 in that entity?
Yes. You know that part of history. And then you decide how you allocate equity under which instrument. And shareholder loan was the formula which answers really our needs because we can enjoy interest on that one. And the net leverage net financial leverage, if you take the bank debt, we are a little bit more than CHF 30,000,000 of bank debt, which is quite limited in terms of compared to the EBITDA.
Next question from Matthijs van Lejerhaus from Kepler Cheuvreux.
It's still regarding CD and R. Obviously, these guys have a certain investment horizon. And given that the lockup is in 2023, how do you look at this exit scenario of CD and R? Would you be interested? Or what is the strategy in case they would like to exit?
And the second question is, yes, obviously, you can't comment on M and A, but is there anything you can disclose? Is there any progress on that front?
I can maybe take the M and A question first. So I think when we spoke in last August, there was a bit of a kind of a lot of distressed situations and potential things like that, that you could look at. I think in the meantime, we've seen a very active M and A market, but not at all distressed. So there's been quite a lot of relatively high priced deals more and more. And so what we see is lots of activity, and so we are lots of activity underway, but not necessarily a situation where good assets are becoming any cheaper on the contrary.
And so that means that we continue with our discipline and systematic in looking in the fishing ponds that we're looking at and meeting many shareholders, investors and management teams to continue our work there. But that's about all I can say into that. So it's not a situation where certainly has become cheap on the contrary.
On CD and R, anything? As mentioned by Francis, they are delighted. We are delighted. So we would like to see that partnership lasting for we know that it will be for a different period of time, but it's impossible to opine now on how they will progressively get access to the facility. You can imagine various scenarios.
And this thing is, of course, at some point, one of them, but it's much too early to discuss and decide on that.
And as you know, we, as Deterrent, have also all the options to either stay at the stake that we are or to increase it or to decrease it. So we are not necessarily today having to have, let's say, a fully defined strategy that needs to be known today. So we still have some time to prepare ourselves for what we really want
to
We have a new question from Yes.
A few questions left from my end. On Belron, could you prevent an IP a potential IPO of Belron? So if CDN R wants to exit in February 2023 and you don't want to buy the stake, could you prevent an IPO?
First of all, prevent, it sounds like a very defensive and negative word, but there are, of course, alternatives to IPOs, of course. So in that sense, it's one of the options amongst other options.
And how would you look at the potential IPO? Would you be pro a potential IPO? Or would you prefer other options?
I think anyway, it's impossible to see what the mood will be around IPOs in the markets and so on at that point in time, whenever that becomes relevant. But we've always said that it's one of the options. And we've also always said that we would, at that point in time, after lockup, help and see how CDNR could somehow organize an exit or be part of an exit. That's how it's said. But that means that there are multiple options to look at and to think about.
Voila, that's about it. But prevent an IPO sounds like a strong statement. Yes.
And as an initial position, we are not against an IPO. So it's this is why we are surprised by the question, I guess.
Yes. No, no, good to hear. And then the final question is on free cash flow. So we had very strong cash generation in 2020. In 2021, you kind of say that at BellRoment might be quite similar.
Deter and Oto, there you will have, of course, the nonrecurring the working capital inflow. So the question is if you could give a little bit more guidance on where you expect free cash flow to land and on the big moving parts.
As we mentioned, yes, indeed, are expected to be relatively stable compared to last year in terms of free cash flow. O2, because of the payments of the restructuring plan, because also of negative working capital swing, we are expecting to stay positive in terms of inflow, but marginally positive. And Modestkin, quite a substantial free cash flow improvement. So all in all, the impact will be less pronounced than in 2021, but still with a very comfortable free cash flow for the group. I haven't got the number here available, but it will be still very comfortably cash generative in 2021 as a group.
And the working capital level at Ditr and Otto, is that now the right level in your opinion? Or do you see more improvement potentially in the long term?
In terms of inventory, I think we've made quite significant progress. We've made also some progress in the credit receivables from the factory. And there, I think we can still improve. We can still improve the performance there. In the speed of recovery of collecting those credit payables, there is some room still for improvement.
Next question from Bjorn Clerk from KBC Securities.
Maybe first, a quick question on Belgrade, on the outlook again. How do you derive the sales outlook? Do you make a distinction between first and second half? Or do you take the current like, say, semi lockdown situation still into account? I mean the double digit increase, how is it determined approximately?
We it's mainly thanks to recovery starting when the comparison period will be more favorable for us. As we mentioned, it started last year in mid March, and we continued at least till May and recover progressively from June onwards, but never into positive territory in terms of market volume. So market has been down from March till December onwards. We've been and what we saw was, as we mentioned during the first half call with the analysts, was a recovery of the volumes, but still markets being mid single digit declining even in the Q3. And we saw a deterioration of the performance in the Q4.
And we started the year 2021, of course, with some differences across geographies, but in negative territory in terms of volume growth. We are between minus 6% and minus 8% since the beginning of the year. It depends, of course, across the regions. So we are expecting a return to positive territory in starting in April and May, starting probably even in March, April and May. And of course, the timing of I may be going too fast here, but the end of the lockdown, it will come at some point, will have a positive impact on our volumes.
On top of that, the winter has been relatively harsh, which is beneficial for us. And so we could have a positive tailwind there.
Okay. Clear. Maybe just a last minor question about the ADDR and HDDR division. So it was put on hold a bit last year. What would be the strategy here going forward?
I believe it's not a priority, but do you plan to fully divest this segment or some flavor on that?
Yes. So exactly, it's not a priority, given that there's so much to do on recalibration on VAPS and all the other things. As you know, we were in five, six markets in some of those markets. We were not at all satisfied with the performance nor with the outlook of that performance. And so we ended up divesting already.
So in Italy, for instance, we were in a franchise for Caro City, and we have stopped that and sold that activity. In other activities, we also have closed the deal to get out and so on. But in activity in countries where it's okay ish, we don't necessarily rush to get out or something like that. You can just keep running at it. But what we will not do for sure is broaden the investments right now in these service extension activities.
This is not at all on the agenda, but it's a bit more to get out when it doesn't make any sense anymore or to control when it's okay and keep it like that. But you should not anticipate a big investment in service extension on ADRR and ACRR for the moment.
Next question from David Wachman from ING.
Just a quick follow-up. On the share buyback and the potential of Belron, to understand actually the timing, the potential timing, what is the type of situation? What kind of insurance do you need from the market? Is it really COVID related that you expect, let's say, to come back to normalization or semi normalization of the sanitary situation and the economy? Is it so is there a specific point?
And then we should expect in all logic you to restructure buyback and you to relever Belhorn? Or it's more complicated?
No, it's not more complicated. These are capital allocation questions. And so it's in a function of sources and uses of funds that we look, do we need somewhere cash for a certain allocation or a certain use at a certain level, either be it within Beleron or at the group level. And this is how we think about this. And so of course, share buyback is more from the group level to the outside shareholders and Beleron refinances between Beleron and the shareholders of Belron.
So it's really more a demand and supply of funds in function of the needs.
But I would have expected so thank you. I would have expected of CDNR to also have a say in the releveraging of Belgrom and then obviously pushing for such a releveraging, let's say, rather early than late?
No, no, we're quite aligned in saying all the parameters around the table have to fit demand and supply of funds that are being generated at Belaran. And so this is typically what we I mean, there, we do not differ from CDNR in the way we look at that.
So it's about the funding needs of Belvoir. That's what we're talking about
when Users you say that and funds at whatever level, yes. It's no, at all levels. It's an interplay. But everybody brings their point of view at the table and then we come to a conclusion.
Thank you. We don't have any more questions for the moment. Looks like we don't have any more questions. Back to you for the conclusion.
All right. Well, thank you all very much for taking the time to dial into this call. And really looking forward to meeting you either in person in the coming months or on one of our next calls So have a great evening, and talk to you soon. Bye