Good morning, everybody. I am very happy with Benoit, Bazinet and to present you our 2020 full year results and the outlook for 2021. As you have seen in our press release, it is the last time I am presenting these results, which I will have done for 28 times. So I think It's good to have you will see a new face. As you have read, so Benoit Bazin will become our CEO as of July 1.
You know Benoit, he has been with us for a long time. In the industry, the one who has been there for a long time has been exchanging a lot with him when he was our from 2,005 to 2,009, then he was in charge of our distribution business, our construction products business, and You have seen him also started to see him in the last 2 years when he was our COO. So Benoit is ready. He has a long experience in Saint Gobain, and I am very confident. He is very well prepared to take the helm.
And I also think that as you will see in this presentation, We have delivered over delivered, I would say, on our TNG program in both aspects. We will are going to review that. So I think as it is completed, it is time to write a new chapter. And it makes sense, in my view, that the one who will have to deliver on this new chapter is the one who will elaborate and present it. So Benoit will present to you our new strategy roadmap in October 6 for an Investor Day.
So that being said, let me Yes. Let me start by the main highlights. Benoit will cover the main achievements of 20 2020, Sreedhar will go a little bit more in the detail, and I'll come back for a strategic update and the outlook. So the key figures that you have seen in our press release, sales €38,100,000,000 So a decline of 10.4% on the full year, which is 3.8% like for like, but a very good performance in the second half, 4.8 percent like for like. The operating income is also down on a full year basis because of the impact of the sanitary crisis on our Q2.
So the like for like a decrease is 12.3% on a full year basis. But you see that on the second half, we have a 22.4% increase in the operating income with a very significant increase in margin, 160 basis points. The EBITDA is up in terms of margin on the full year by 20 basis points. It's down in euro to €4,400,000,000 minus €9,300,000,000 The recurring net income is down 23.2%, but is up 23.4% in the second half and it represents €1,470,000,000 for the full year. And these results, I guess, We are not we are given the positive profit warning that we had to do in January are not very far from what we could expect it as that are slightly better.
The thing which we didn't talk about, and I think it's an important figure for the year is a record free cash flow at 60 at 3 point more than €3,000,000,000
up 64%
versus the 2019 figure. The main highlights of this year. First, I already said that, but looking back on the full year, I am very proud of the way we have handled The crisis, Benoit will come back on that. The health crisis with regard to all our stakeholders, of course, the health and our employees. But I think that the responsible manner, which is according to the value of Saint Gobain, has been really being able to develop this year very well.
We have made a lot of progress this year on our ESG roadmap with both achievements and new commitments. We validated in the fall our 2030 CO2 targets. They have been validated by the SBT initiative and in line with our net zero carbon goal for 2,050. In line with this new objectives that we have for 2,030, we have reduced our CO2 emissions by 4% this year. We have also increased our internal carbon price, which will be a good tool for investments to €50 per ton for the CapEx.
We have on circular economy, which is going to be a major topic going forward and when Saint Gobain is well advanced, we have increased our the main metric, which is the raw materials not extracted, thanks to our efforts, by 19% to 10,000,000 ton. We have I said that we have acted on a responsible manner. The mobilization of the team has been great, and they are quite engaged. The score that we got on our annual surveys this year, 82% is up and at a very high level, up 3% compared to 2019. And in terms of diversity, where we still have a lot to do, but we are increasing our ratios regularly.
We have reached the first target that we had, which is 25% of women in managerial roles within the group in 2020. And very importantly, as I said in my introduction, we have successfully completed despite, I would say a macroeconomic scenario and which was very, very adverse this year. We have completed our Transform and Grow program with in terms of the new organization, which is fully in place, delivered €250,000,000 savings at the end of 2020, 1 year ahead of schedule and starting to see real growth benefits. At the same time, we had the portfolio optimization. We completed and signed in since the launch of this program more than €4,600,000,000 of sales of businesses, when at the same time, we made some good acquisition.
And overall, this has a very positive impact on the operating margin. So if I come back to the main highlights in terms of the numbers, I gave you the numbers, but I want to insist on an excellent second half with a strong organic growth 4.8 percent with even an acceleration. You remember the 3rd quarter was at 3.2%. The 4th quarter is at 6.4%, so good acceleration and sharp rebound in operating income. And we have reached In terms of operating margin in the second half of twenty twenty, a record margin of at least for the last 20 years of 10%, which is significantly higher than the year before.
Our recurring net income for the second half, historical record for Saint Gobain at close to EUR1.2 billion. And as I said, we have increased our EBITDA margin over the full year. The main for the full year, the main highlight in my view is a record free cash flow of €3,000,000,000 which enabled the group to decrease significantly its net debt at EUR 7,200,000,000 at the end of 2020, this is including the adjustments with IFRS compared to €12,500,000,000 at the end of 2019. And now Benoit will go through the main achievements of 2020.
Thank you, Candre, and good morning, everyone. Let me now highlight our main achievements in 2020 In this very unprecedented year, very difficult year, we achieved both some very good operational performance and also we made some solid progress on key strategic initiatives. The main takeaway for 2020 is that our teams have delivered an excellent operational execution. For that, everyone focused on a small set of priorities. Our new organization by country and by market worked perfectly and allowed us to take quick decisions adapted to local situations throughout all the year.
1st, On health, to protect our employees and all the stakeholders with never lowering our guard 2nd, on cash, to strengthen our balance sheet. And Sreedhar will highlight the details of what we have done during the year on CapEx, on working capital, on Sika divestitures, allowing us to lower the debt by more than €3,000,000,000 in 2020 and third, on cost to minimize the COVID impact on our P and L with large structural and also discretionary measures for a total amount of €690,000,000 We have also executed all these short term operational actions, while making further progress on long term sustainable commitment for people and plant. For instance, improving by 20% our safety performance last year, beating the diversity target that Pierre Andre just highlighted of 25% women managers reaching out to our communities with many local initiatives towards health workers, hospitals and doubling the level of our donations and also making solid progress on our carbon footprint, lowering our absolute CO2 emissions and also reducing our waste by 14% versus 2019. All the Saint Gobain teams around the world have demonstrated an outstanding sense of unity, solidarity and commitment. They have shown who we are individually and collectively.
This trend gives a lot of confidence for our future. And I want to pause here to say a big congratulations And thank you to all Saint Gobain employees. Despite the sanitary situation, our teams have been also very active allocating our resources for growth to prepare the future. Altogether, this represents €1,700,000,000 of growth investment last year, €370,000,000 of growth CapEx on fast growing energy markets like glass in Mexico, in Poland, chemicals in Latin America, gypsum light construction businesses, capacity expansion in China, in India, Energy Efficiency Solution also in France, capacity expansion for our fast growing businesses in Life Science, in Construction Industry And also some significant investment on logistic, on IT, on digital for our distribution businesses, where e commerce, if I take e commerce, has increased by more than 30% last year for our French and Nordic distribution businesses. On the acquisition side, we spent a bit more than €1,300,000,000 with 13 acquisitions, The same three criteria that you know well in the Nordics, Benelux and France with bolt on acquisitions in distribution to further consolidate some leadership positions, some energy efficiency renovation through also distribution or exterior solutions in Europe, Latin America for fast growing interior solutions such as ceilings and also, of course, in our large Continental Building Products acquisition.
So a lot of growth investment despite the sanitary crisis of last year. Now looking back at the last 2, even full years since the launch of Transform and Grow end of 2018. We can say that we have successfully completed our Transformango initiative ahead of schedule. Remember that Transformango had 2 main pillars: 1st, a new organization, customer oriented, lean and agile and second, a dynamic value creating portfolio management. We have delivered on those two objectives above our initial targets and 1 year ahead of schedule.
Our new organization has been fully in place 2 years now, lean and agile with one line of command. Our teams show a high level of engagement, 82%, like Pierre Andre mentioned, accountability, ownership, alignment on the results are there. And to some extent, the COVID crisis also put into play for all our teams the power of our management principles around trust, empowerment and collaboration. We are more and more customer centric, working on growth acceleration and synergies either by application across product lines or with synergies across the different channels that we use. Those are All the Saint Gobain solutions bringing benefits on sustainability, on performance to our customers and to the planet that Pierre Andre will highlight and describe later on in the strategic part of our presentation.
On the cost side, Transamerica has delivered in 2 years the €250,000,000 targeted savings. So this is done and behind us. All segments, as you can see, have contributed in a timely manner with a bigger contribution from Europe and Central Functions, where the prior setup was a bit heavier. On the 2nd pillar, the portfolio management, we have been very active. We have delivered on our initial target of TransvaMango, which was €3,000,000,000 of sales divested.
We had already divested €3,300,000,000 end of 2019. And despite the sanitary crisis, which didn't make things easier, we have announced 7 new transactions for €1,300,000,000 last year. So this is altogether €4,600,000,000 of sales and over 26 transactions since the launch of Transform and Go. On the other side, We have been very active on acquisitions with 31 of them in the last 2 years and a solid balance sheet at the end of last year to size attractive opportunities going forward. You can see at the bottom of the slide the EBITDA margin enhancement coming from this portfolio rotation.
And going forward, we'll continue to selectively optimize the group structure being acquisitive to further strengthen our strong points, our growth and profitability profiles and divesting also with Notabu when the local position is not in line with our strategic or financial expectations. Now an update on our large acquisition that we closed on February 3 last year, Continental Billing Products. We are pleased with the excellent integration milestones that we have achieved in just 11 months last year despite here also the sensory situation. As you may remember, we have kept with us the top three former managers of Continental Billing Products, and they now run our combined U. S.
Gypsum operations. We launched quickly a common team. We put all the plans together under the same brand last summer with the same product formulation. We now run on the same IT system. All that allows us to further optimize the plant load balancing, improve and continue to optimize the customer service and also the freight optimization, which is significant in the gypsum business.
Synergies were at $20,000,000 in 2020, two times higher than expectation. Half of that was on SG and A, The other half being split between purchasing gains, best practice improvement between the former CertainTeed and Continental Building Products operations and also logistics savings. We can see their impact on the second half EBITDA margin above the second half of twenty nineteen Despite all the COVID related challenges, our target on synergies for 2020 is to add another $20,000,000 above $40,000,000 of synergies in 2021, which is well on track to move towards our $50,000,000 synergy by year 3. Altogether, the timing of acquisition was good with the further acceleration on housing starts in the U. S.
Beyond our scenario, the scenario we had a year ago, a bit more than a year ago, when we started to work on this acquisition. So we'll have a very solid contribution of Gypsum in the U. S. In 2021, and we are well on track to create value by year 3. Now if I wrap up all these actions with their impact on the margin target that we did set at the time of Transform and Grow launch end of 2018, more than plus 100 basis points in 2021 on a full year basis compared to the 7.7 percent operating margin of 2018 assuming similar volumes level.
When we dig into the second half of twenty twenty margin versus the second half of twenty eighteen, The jump is explainable through 2 main benefits. 1st, some extraordinary items at the bottom of the slide that we benefited from in the second half of twenty twenty and should not repeat themselves as is in 2021. 1st, an exceptionally positive price cost spread more than €110,000,000 Thanks to all the proactive actions and steps we have taken to increase prices in anticipation of the inflation of 2021. 2nd, some heavy temporary decrease in discretionary spending last year and third, some very good volumes in the second half, around 3.4%, partly due to catch up effect. We have seen that in August, in December, very strong months above normal.
So above the 2018 level and more than offsetting the negative mix effect coming from High Performance Solutions, which has been at significantly lower margin than in 2018. Now the second part On this slide is all the structural improvement on our margin, 60 basis points coming from the €250,000,000 of structural cost savings of Santamango, which will stay and 50 basis points, thanks to the successful portfolio optimization and various divestitures that we have already realized. Additional divestments announced recently such as Lapeyre And our distribution business in the Netherlands could give a bit of room on that depending, of course, on the timing of the closing during the year 2021. So to conclude on that, all the ingredients are there, our successful completion of Transform and Go and the impact demonstrated on the second half of twenty twenty margin and results gives us confidence that we'll deliver on our margin target on a full year basis for 2021 versus 2018. Now some personal words on the Governance Evolution.
I feel very honored that the Board has appointed me to take over as Group CEO in July 1. And I want to thank all the Board members and of course, to thank particularly Pierre Andre with whom I've worked for so many years and who has prepared me for the job. I'm very excited to take on this new challenge. You know I'm personally deeply committed to do my absolute best for Saint Gobain. I'm very proud of all Our team, very strong team, who has demonstrated how much we can and how fast we can transform ourselves and deliver great results together.
I'm very confident about St. Germain growth and profitability potential going forward. I will take the opportunity in the next few months to listen to our shareholders, to listen to our financial analysts, And then we'll come back to you with Sreedhar and all the team during our Investor Day in early October. Thank you. And I now turn to Sreedhar who drive you through our financial performance and results.
Good morning, everyone. Thank you, Benoit. So let me start with more details on the financial results. Starting with sales analysis. Our sales in the second half bounced back very strongly.
The like for like growth of 4.8% was driven by a good volume, up 3.4% due to increasing demand on the renovation market and good price increase, up 1.4%. Due to this excellent second half, A large part of the negative impact of COVID in the second quarter was reduced and the sales for the financial year decreased by only 3.8% like for like with a positive price impact of 0.9%. We witnessed the increasing impact of negative exchange rate in the second half mainly due to the U. S. Dollar depreciating against the Europe in addition to Norwegian, krona, Brazilian reals and emerging countries currencies.
The structure impact was negative 3.9% over the full year due to the divestments we have made as part of the Transform and Grow initiative. Here, we can see the quarterly organic growth trend split by price and volume. 4th quarter saw 6.4% like for like growth, benefiting from the sequential improvement in all the segments and an excellent quarter in the Americas and Southern Europe. This year, the month of December also witnessed a very high level of activity. The pricing effect has accelerated in recent quarters.
We successfully increased prices in most of our businesses and geographies in anticipation of inflation in 2021 in raw materials and energy cost. This proactive step taken by all the Sangaba team makes Sengaba very well prepared to deal with the inflationary trend, which has started to reflect in the P and L. If you look at operating income, the like for like increase was 22 0.4% in the second half and we are able to achieve 160 basis points improvement in our operating margin, leading to a record operating margin of 10% for the second half. This remarkable performance in the second half compensated a large part of the drop in the first half, and we could see At the end of the year, the margin was 7.5%. Main reasons for this excellent second half performance were a positive leverage impact with 3.4 percent volume growth, high level of tailwind coming from positive price cost spread of €110,000,000 in addition to €50,000,000 which we already saw in first half and continued significant cost reduction efforts amounting to €690,000,000 Here are the details of €690,000,000 cost savings for the year structural and recurring savings of €130,000,000 coming from Transform and Grow as already explained by Benoit.
We also delivered €320,000,000 savings as against €310,000,000 savings in 2019 through our regular operational excellence program to compensate salary and other fixed costs inflation. Then savings related to COVID crisis, €240,000,000 of which discretionary cost savings was €110,000,000 partial activity related savings were €80,000,000 And in addition, the post COVID restructuring actions to reduce the breakeven point of certain impacted businesses led to a savings of €50,000,000 in the second half and this will have a spillover positive impact in 2021 with additional €115,000,000 savings. Here in this slide, you can see the impact of successful execution of Transform and Grow as explained by Benoit. You can see throughout the consistent margin improvement in each semester, except in H1 2020, which was impacted by COVID. If you look at EBITDA margin, it has improved by 20 basis points for the whole year 2020.
And in the second half, the improvement was of 200 basis points. This was mainly on account of reduction in the non operating cost. The non operating cost has reduced from €421,000,000 to €342,000,000 mainly because there is no more cost related to U. S. Asbestos.
This year, we spent GBP 42,000,000 on account of restructuring related to TNG, that is Transform and Grow and also we had a part of restructuring costs related to post COVID adaptation measures. Overall, in 2021, the non operating costs should further reduce. Write down of assets include mainly the intangible assets of U. K. Distribution and businesses held for sale like Lape.
Net financial expenses you see here, excluding Sika, dividend improved compared to last year. Recurring net income of second half twenty twenty reached a historical record of €1,200,000,000 up 23.4% compared to the second half of twenty nineteen. Let us look at the free cash flow generation. We have set a new record this year with 3,000,000,000 euro cash generation and a conversion ratio at 81%. It was a concerted effort in every single area to structurally improve the generation of cash, be it prioritization of allocation of CapEx in the growing businesses, focus on quality of working capital, address the underperforming businesses and challenge the non operating cost.
Let me take a moment to explain different initiatives that were carried out to reinforce the culture of cash throughout the organization. We did a campaign communication campaign on the importance of cash, giving concrete examples of how each one good in the organization contribute to the generation of cash. 22,750 employees have gone through a training program on cash till now, sharing regularly the best practices, benchmarks and structure stories within the organization. If you look at the working capital, as you know, we always had a good focus in Sanga Bhaan, I used to always say throughout my interaction with you in the last 2 years, it was maintained below 30 days after a steep drop in the last financial crisis and it was maintained below 30 days. And now in 2020, We have achieved a new record level of working capital with a reduction of 9 days as compared to the end of 2019, which was already 2 days below 2018.
For example, a focus on quality of working capital enabled us to reduce significantly the overdue receivables from customers by 26% in 2020. We believe out of 9 days of reduction in working capital this year, at least half of it is structural reduction. I say only half because the working capital this year, specifically on the inventory level at the end of the year, was low due to unprecedented high level of sales in the last quarter and it's important to have a reasonable level of inventory to serve the customers properly. So let me take this opportunity to once again congratulate each and everyone in the organization for this stupendous growth progress. And this is a perfect example of a teamwork that we could succeed in creating a record cash generation.
And I must say that additional with all additional tools which we have implemented and specific action plans, cash has become even more a priority for all the country and market CEOs. Cash is reviewed in all the business meetings And hence, I'm very confident that we will continue to remain focused on this important metric in the years to come. Specific objective for 2021 on cash related to cash: Conserve the structural improvement of working capital achieved in 2020. CapEx should be kept at around GBP 1,500,000,000 in spite of steep reduction of close to KRW600 1,000,000 in 2020. Going forward, we will maintain a range of 3.5% to 4.5% of total CapEx as a percentage of sales.
And last but not the least, we will continue to reduce the non operating costs. Finally, turning to the net debt. We have seen a significant decrease in our net debt with a reduction of €3,300,000,000 as compared to last year. This is mainly due to the strong free cash flow generation of GBP3 1,000,000,000, which I explained just now. And the proceeds which we got from divestments, net of acquisitions for around €1,100,000,000 growth CapEx of around €400,000,000 Share buyback of €500,000,000 and accounting reclassification is an important point to note, that is the net debt related to the businesses under disposal has been reclassified in a separate line, which is €1,150,000,000 And overall, With all this, our balance sheet is further strengthened in a year where we faced a unique crisis due to COVID.
The ROCE and ROI ratios show a strong resilience in 2020 in spite of the negative impact of COVID. Now let me give you some details of results by segment. Starting with High Performance Solutions, the like for like sales in High Performance Solutions fell by 10.1% over the full year, but only minus 1.9% over the second half, benefiting from a sequential improvements. Mobility stabilized in the second half and recorded growth in the 4th quarter on an easier comparable basis. The mobility business has continued to outperform the automotive market, thanks to its increasing exposure to electrical vehicles.
However, the European market for conventional cars remain a challenge. Industrial markets are still down in the second half compared to last year. Even though there is a sequential improvement from quarter to quarter, Activities linked to consumables rallied gradually and returned to growth in emerging countries. However, in the context of coronavirus crisis, The slowdown in our customers' investment cycles is particularly impacting our ceramic activities with a negative mix effect on margin. Construction Industry held up better with virtually stable revenues on the full year and gains in market share.
Life Sciences continue to see growth leveraging new capacities invested in the last few years. The operating margin recovered at 11.1% in the second half, a strong sequential improvement versus first half, but remains much lower as compared to second half of twenty nineteen. Now Northern Europe, like for like sales were down 3.1% over the full year, but were up 2% over the second half, marked by a return to good market trends across the region and a sustained level of activity during the month of December. The Nordics showed a solid performance with growth in every quarter of the year. In particular, Thanks to the distribution business, which continued to outperform the market with the success of its digital strategy with 25% to 30% e commerce sales for specialized distribution segment in the different countries and in the large exposure to the renovation market.
The UK was the most impacted in the region as second quarter sales dropped by nearly half compared to 2019. However, it is slowly recovering in the second half of the year and we are seeing the positive impact of the store rationalization in the distribution business, which we did in the UK. Germany limited its decline over the year, driven in the Q4 by its comprehensive offer of Light Construction Solutions. Eastern Europe progressed slightly over the year. The operating margin for the region stood at 6.2% nearly at the 2019 level, thanks to significant improvement in the second half margin at 7.9% driven by the full impact of the Transform and Grow.
But in terms of divestments and structural cost savings, The post coronavirus adaptation measures a positive price cost spread and volume recovery. Coming to Southern Europe, like for like sales decreased 4.9% over the full year with sales recovery of 6.7% in the second half, driven by a good performance in the 3rd and the 4th quarters, fueled by a supportive renovation market and additional activity in the month of December. The region's momentum in the second half was strongly driven by France with a steep increase in renovation market, showing very strong order book, fueling growth in our distribution business. Excluding the Netherlands, which reported a small contraction in sales, Other European countries in the region recorded sales growth in the second half with Italy and Spain particularly. Finally, Middle East and Africa returned to growth in the second half of the year despite different phases of recovery from one country to the other.
The operating margin for the region stood at 5.2% close to the level of 2019. Once again, thanks to the significant margin improvement in the second half at 8% driven by the full impact of transform and grow both in terms of divestments and the structural cost savings by a positive price cost spread and a good leverage on volume growth. The Americas reported 4.7% like for like growth over the full year with an acceleration at 15.7% in the second half of the year. North America rebounded sharply in the second half with 11.2% like for like growth driven by volumes in the construction market as well as a very strong management of prices. The successful integration of Continental Building Products, which Benoit explained to you, enables us to identify new growth synergies.
Latin America recorded robust momentum in sales in the second half, growing at 25.3 percent like for like. After a steep decrease in the first half, led by a significant local sales synergies and strong market gains in particularly in Brazil. The operating margin for the Americas region improved from 10.1% in 2019 to 11.5% in 2020, thanks to a second half margin improvement at 15.4% supported by a double digit volume growth and significant positive price cost spread. So Asia Pacific sales fell 7.1% like for like in the full year, but were up 2.1% in the second half, showing a progressive improvement month after month and a better environment in terms of prices. Since the Q2, China is posting a double digit sales growth, a significant margin improvement driven by a sharp increase in our construction solutions, which continue to capture market share.
India, which was one of the most impacted countries by COVID, it contracted both volumes and prices, particularly in solutions for buildings. Southeast Asia reported a mixed picture over the year with growth in Vietnam supported by again market share gain and a gradual improvement in other countries, however, still down versus last year. The operating margin for the region slightly improved at 10.7% in 2020 despite the contraction in sales, thanks to a second half margin improvement at 13.5% supported by a sharp decrease in cost and portfolio optimization. So to conclude, in a nutshell, even though the first half results were impacted by COVID, The group has bounced back very strongly in the second half, delivering operating margin, which is a record And the net recurring results, it was GBP 1,200,000,000 again, the record and as well as an impressive structural improvement on cash generation, Strengthening the balance sheet of the group. I would say that group is poised to deliver more than 100 basis points in operating margin improvement in 2021 compared to 2018 with a strong foundation to deliver consistent profitable growth in the years to come.
Now I hand over the floor to Kiran Ray, who will provide you more details about the strategy.
Thank you, Sreedhar. Now going forward, and I told you already that I see the world Post COVID, I don't know exactly when is post COVID. But to some extent, it has started to accelerate before and COVID in acceleration of the trend. I think To summarize, I'm using 3 words. I think the world is becoming more local, more sustainable and more digital.
And I think the relevance of our strategic decisions are reinforced by those trends. They are all three going to be beneficial for Saint Gobain. More than 80% of our business is local, actually from global supply chain disruption. So I think our T and G organization is totally fit with a more local world, and we are going to continue to build on our very a solid local position. Sustainability is a big opportunity for Saint Gobain.
We are very well prepared for a more sustainable world. We are reducing our environmental footprint, but even more, our solutions already and more and more will contribute to decarbonizing construction and industry. And concerning digital, we have witnessed, even if it was not the 1st sector to be digitalized, we have witnessed an acceleration in digital adoption in construction beyond our distribution business, which is at the forefront of that. And clearly, the trends are accelerated by the world in which we live with sanitary disruptions. So we are leveraging disruption we are leveraging digital.
We think in terms of customers' experience, empowerment of our end users. We also work on supply chain optimization, including what is going to become very important in the future is the last mile delivery. And we work on construction digitalization through BIM, through prefab, through all these new trends. As you know, at the heart of our business model is our corporate social responsibility roadmap. It is our compass to deliver on our promise and long term commitments.
As you know, we have a well established road map with which we have shared with you before with 6 pillars, And our progress is monitored and reviewed and recognized by important institutions such as the Carbon Digital Program or MSCI or the top employer institute, which very recently give us another recognition. And our objectives are also validated by decision in terms of climate like the science based target initiative. So let me go spend a few minutes on these Well, we are doing on these each of these 6 pillars. 1st, our governments and business ethics. We have high standards, and we have a number of metrics.
You see that we train all our new managers in principle of conduct and actions. We train them in terms of anti corruption. We have established this year a new whistle blowing line. We are responsible in our purchasing with contract with all our partners. And in terms of governance, this year, we have created a committee fully in charge of CSR, And we have also increased the ESG components criteria in our executive long term incentive.
They 15%. Now it's 20% of the incentives, which are based on ESG criteria, one of them being our CO2 performance, which has is now 10% of the criteria. 2nd pillar, health and safety. We have made considerable progress in terms of our safety performance, even though our goal is to have 0 accidents. But we have this year, we are at 1.8 in terms of the total recordable accident rate versus 2.2 last year, and we are committed to reduce well below 2 in the years to come.
We of course, health has been a very strong priority during the pandemic, we have adapted our processes to ensure a safe interaction amongst employees and with our suppliers. And we have welcomed our customers in strict compliance with health measure. As we have of course, this year, We have been very active on this front. And in particular, we have built very quickly four lines within our HPS business to produce 11,000,000 masks, which are we are used and are going to be used probably more than we thought initially. 3rd pillar, climate change.
This year has been a very important year. 1st, as you know, we our the main action of Saint Gobain in terms of climate change is through its solutions, and we contribute more and more. We are by far the biggest player in the world in terms of environmental product declaration with 1300 verified EPD in 33 countries. We have published our scenarios under the TCFD. We have improved with the metrics.
You see Benoit already talked about some of them. You see others here. And we have established a new road map, which has been validated by SBTI on with 2030 objectives in order to have milestone to prepare 2,050. Those objectives In terms of the CO2 emission on scope 1 and 2, minus 33% on scope 3, minus 16% versus all that is versus 2017 and it's based on an absolute basis. We have also objectives in terms of industrial water withdrawal with to reduce them by 50% versus 2017.
And we have set a goal to have 100% of our product ranges subject to life cycle analysis. Circular economy, which is very importantly linked with climate change. We have I already talked about the numbers for the virgin raw materials avoided, and we have also improved in terms of non recovered waste by 14%. And we have in all our businesses, trying to find new ways to contribute to services, And we are defining in all our businesses, 2,040, 2030 Circular Economy Roadmap. A lot of that has to be done by country.
So our new organization is very important from that standpoint. We have also globally as a group, we have set up our objectives. You see them in terms of virgin raw materials, plus 30%, non recovered waste, recyclable packaging and recycle our biosource content and packaging above 30%. The last two pillars, employee engagement and diversity. I told you we had reached the first target I set a few years ago in terms of Management diversity in terms of management for women at 20 5%.
We have increased regularly in the last few years. We have a broader diversity index where we stay at above 90%. And we are progressing. If I take the senior manager, we are at 19%. I remind When I started in Saint Gobain, it was very, very low.
And even in 2010, it was 5%. So we are conscious grossing. 19% is not enough. And we have set we have a goal then to have a 25% by 2025. We on our Executive Committee, we have improved in the last few years.
We are 25%. We are at 45% on our Board. And we have new objectives that I shared with you at our last AGM and to have to be at 30% in all our executive committee in the group within the group by 2025. And to do that, we have set up goals in terms of recruiting because we are in an industry which is historically not that's why we focus all type diversity are important, but we are focusing on this one because given the industry we are in, that's where I think we have the more progress to make. Engagement of our employees, I already shared the main the index.
We are very active in terms of social dialogue. And I think Our agility to react within this sanitary crisis has been Benoit already talked about that, facilitated by the very strong culture of social dialogue, which exists in Saint Gobain. And we have involved and that has been in terms of mobilization very important. We have involved more than 15,000 in the preparation and the definition of our new purpose. In terms of inclusive growth, We are you see a few statistics here, which are very important.
And I strongly believe that having the employees shareholders is a very important part of our strategy, and they are the first shareholder of Saint Gobain, and they are engaged into Saint Gobain. They respond to our surveys. And we have launched this year a program at the world level for a minimum of protections, which is being deployed for our employees and their families And within our communities and this year was very important even more than before because of the sanitary crisis, We are trying to be extremely proactive working in all countries also. And I think this is very important in this crisis to help the young generation, which are the ones who are the most affected. And we are as there is a need to increase the skills in our industry, we are contributing.
For instance, in France, we have opened our first own apprenticeship center this year. So a lot of actions and a lot of objectives. I believe that on CSR, it's important to have metrics. These metrics are reviewed regularly by the board, and I think they are diffused and they are part becoming part of the daily large for all Saint Gobain Managers. Just one more focus, As I said on our sustainability program, we are accelerating.
It's clear that I talked to you about the footprint performance and the objective for 2,050, we need to have in mind that in terms of solution that Saint Gobain bring, we are a major contributor to fighting the climate change. It's a factor the tons. We calculated that the tons of CO2 avoided, thanks to our insulation solutions on a broad basis are sold in 1 year, it's 1200,000,000 ton. So I think we are a very important actor in this framework. Now I would like To go on a few prospects, building on those strong foundations, we see a few trends, which are growing, and I would like to talk to you Briefly, in our markets, which are evolving quickly.
The first one is that our customers are going more and more for end to end solutions, which are leveraging the full breadth of Saint Gobain of our portfolio. And I think this is a key differentiation for Saint Gobain versus its competitor. Facade and building envelope solutions from manufacturing all the way to distribution and marketplace services are good example in construction. And we see that also in mobility with blazing solutions from manufacturer to aftermarket services. So offering end to end solution is only possible if we deliver a high consistent level of innovation through the year.
And I am particularly proud of our recognition, which we have had in the last few years. And again, 2 days ago, There is a ranking of the 100 and most innovative companies in the world. Saint Gobain has been is one of them for the 10 years in a row, and there are only 29 who have been there for 10 years. I would say sadly, in my view, there are only 3 European companies and only 1 French company, and this company in France is Saint Gobain. So we are partly proud of that.
The second trend is energy efficiency. One stop stop for energy efficient renovation is a growing time. This is going to be enabled by digital investments in intermediation platforms, lead generation platforms, whether it is what we are doing in France, in Czech Republic or in the UK, whether it is also in our industrial activities with solution on refractories to optimize the life of our furnace and the furnace of our customers. And the 3rd trend, which we see is a trend towards more light construction. Lightweight facade in France, For instance, we have calculated unable to save almost 52% of the CO2.
So using our materials, gypsum board for partitioning provides great savings compared to traditional mold, both in terms of saving time, but also in terms of saving CO2 emission. Now if you I take a few examples of what I just said. I take the first example, which is an energy efficient reservation of a single family house in France. Since COVID, most people reported spending more time at home than before, And this is an important trend for us. So push by the public money available for renovations, let's take they decide to renovate their home.
They go to Saint Gobain termination platform, which is in a few clicks, will help them to connect them to select what they want to connect to a certified craftsman produced with pure material with Saint Gobain distribution where he has been digitally trained and certified on an aerial renovation in one of our outlets. The project is executed on a timely manner by the certified craftsman with warranties provided by the Saint Gobain term addition platform. And the result for this family using also the subsidies which are exist now is a decrease by on average, we have calculated more than 80% between 80% 90% in his energy bill with a more comfortable, enjoyable daily life and a higher value for their home. And all that you see the example of France that we are active at all levels to facilitate that. 2nd example, and this is something we are developing With these verticals country by country, thanks to our new organization, I take here the example of a hospital, where I think we are going to have massive spends in the next few years.
It's like other public building, it's a priority of the renovation wave at the European level. And of course, health is even more an important element. Our solution, whether it is high performance board, even in electronic glass, technical insulation, will deliver solution to hospital, which address their structural needs in terms of air quality, acoustics, partitioning and x-ray protection. And we are developing all that is developed within Saint Gobain to ensure better treatment, which we know is correlated when air quality is better and acoustic is better, increased well-being and better medical outcomes. It's a concrete example, and I think we are going to see additional growth from all these initiatives that we are developing country by country, as Benoit already mentioned, being a one stop shop, I would say, in Saint Gobain for sustainability and performance in these various verticals.
I can give you another example In mobility, where Saint Gobain is very active on everything, which is linked to electric Mobility solution, of course, with security, which clearly is a leading player in the world where as far as electric vehicle is concerned. And you see here a number of our application within our HPS businesses, which are growing, thanks to this trend and coordinating their actions. So we I think that it's these trends to our sustainable solutions and are growing and at a significant element of our future growth. All that is very much aligned with our new purpose. I told you that 15,000 people worked to develop this new purpose that we summarize with these statements, making the world a better home.
And I think it fits extremely well what I have been saying in the last few minutes. And I think it's also this purpose is helping the mobilization of Saint Gobain to deliver every day even more. Now a few words about our Outlook to conclude, 1st, a word about the dividend. This year, we have We mentioned in the Board took a decision a bit early in November, but it was confirmed yesterday. And the Board will recommend to the general shareholder meeting a dividend of €1.33 per share, which represent 48% of our recurring net income, so higher than our targeted policy in cash, which will be you see the details on this slide.
In terms of share buyback, we had a long term objective of going to 530,000,000 shares in outstanding, and we delivered that through significant buybacks during the year 2020. Now in terms of the outlook for our various businesses, driving on what Sreedhar has been saying of the latest trend, We are going to see continued sequential improvement for high performance solution in most industrial market. Having in mind that the business is related to customer investment should really even though They will not reach this year the very good level we had in 2018. In the geographic regions, Northern Europe has had a very good run lately and will continue supported by stimulus programs With good momentum in renovation in Nordic countries, in Germany, of course, and we all what I'm going to say about this outlook is provided there is no major new lockdowns in the world, especially in Europe. The U.
K, we are has done better than what we feared, I would say, in July. We had Much better second half than what we expected. I think that our actions are bearing fruit, and we should have reasonable 2021 in the UK, even though the environment remains uncertain. Southern Europe is going to be benefiting from strong residential renovation market In France and from the European stimulus in our various countries, in France, you know that the new construction market is not extremely healthy, but the trend in renovation is very strong. And we are just starting.
We have not seen in 2020 the impact of the stimulus plan and the energy renovation programs. So that should happen this year. In Americas, we are going to have good market growth, especially in the new residential construction. Beaudois shared with you some number with and I think the timing of Continental proved to be extremely good from that standpoint. Latin America, who has had a fantastic run-in the second half.
Saint Gobain is gaining share heavily, and I think we continue to have good prospect. The same with Asia. India has been the country which suffered the most in 2020. In the last few months, As Sreedhar told you, it is a big pickup. The beginning of the year is fantastic in India, and I think we are going to have a very strong recovery.
And China, I mean, since June, we are growing regularly, and this is going to continue. So This is all this is when we look at 2020, there have been high volatility, And there is still the visibility is not globally, I would say, is not extremely high. But the dynamics on our markets are, I would say, better than I would say the macro economy. Clearly, that was the case in the second half, and we expect that to continue. In this framework, our priorities continue to be to improve the group's profitable growth profile.
We will continue I said that TLG is completed. That doesn't mean that we are going to stop our portfolio optimization, both in terms of divestments and acquisition. We will continue, and I think the second half was very important in that, to outperform our market, Thanks to our integrated solutions, driven by the empowerment of the country CEOs And of course, a strategy of differentiation and innovation, which is a key element for Saint Gobain to develop solution for sustainability and performance. In terms of financial priorities, we confirm, of course, what we have already generated in the second half of twenty twenty. We confirm on a full year basis that we will have this 100 basis points in the operating margin compared to 2018.
So that means 8.7 plus and ongoing strong discipline in terms of free cash flow generation. With a constant and Sreedhar talked about it, focus on the price cost spread with rising inflation cost. We are very aware of that. Reduction in our cost, thanks to some measures we launched in some businesses we talked about in July, which are going to develop and reap benefit this year. Of course, we'll continue our operational excellence program.
And as Sreedhar explained to you, We'll maintain the structural driver to improve our operating capital working capital requirement. Let me say, I'm very happy of the work which has done by the financial team and all the managers at Saint Gobain with a stronger push from our CFO. Capital expenditure, we expect to have them going up. The drop in 2020, We committed to €500,000,000 reduction. In fact, we did a little more.
I would say that in some cases, we would have liked to do a little more. We were committed to €500,000,000 The difference between €500,000,000 is, I would say, in some cases, the COVID restriction has made Some for the teams to start up plants has been a little more difficult. So this year, we are targeting EUR 1.5 €1,000,000,000 which is below, I told you several years that we are at the peak in 2018 2019. So we 1.5 is more normalized level, and we will work on our non operating cost. We had some significant cost this year to on this adaptation measure on the businesses, which have been impacted by the coronavirus.
I expect they are going to decrease. So to summarize, for 2021, we are targeting Significant like for like increase. And from that standpoint, the first half comparison will be relatively easy in operating income with an improvement of more than 100 basis points in the operating margin compared to the 7 point 7 margin in 2018, assuming that the volume returned to their 'eighteen levels, which we think will be the case, but I bring that because if there is a major issue like we have had in 2020, of course, we will not don't see we will be able to, but that's not our scenario at this time. And of course, confirming the success of Transform and Grow. And as I already said, we are planning an Investor Day we are planning Benoit is planning an Investor Day on October 6, where The new leadership team will present its strategic vision.
I will follow that closely, but it's Benoit will be at the end and a new strategic vision and roadmap for profitable growth, leveraging a solution for sustainability and performance and with financial and ESG targets. So now with Benoit and Sreedhar, I am at your disposal for any questions you may have.
We have the first question from Yves Bromed from Exane BNP Paribas. Sir, please go ahead.
Thank you for taking my questions. I have 3 if I could. Number 1 is just on your margin guidance. Although last year, you were already guiding at around 100 basis points versus 2018 levels, it's quite unusual for Saint Gobain to guide in a quantitative manner, especially as early as it is in the year. You're referring to more than 100 basis points, sorry, now.
So could you just, first of all, give us a bit of color on why this level of optimism? And if The 100 basis points is a minimum achievement, and you could do more than that. Also, it's not clear whether this entirely depends on volumes getting back to 2018 or if you actually think that even if you stay slightly below that, you could get to that 8.7% margin? That's my first question. My second question is just on the governance.
So It seems that the CEO and Chairman role is now more independent. Is that just a transition phase? Or will it revert to the previous structure, which is typically that the CEO is the Chairman at Saint Gobain? And then lastly, just looking at the markets, can you comment on what you're seeing in LatAm? What is the boom in the underlying trends?
And in the U. S, it seems a lot of the margin and volume came from the roofing In Q4, how do you think about this as you transition into 2021? Thank you.
Okay. So I will take the first Benoit will take the 3rd one. So in terms of margin guidance, first of all, the way we No, we are not used to give a margin target. But given the way we express our objectives with transform and grow 2 years ago. We have been using the same language, which is more than 100 basis points.
And I must say that we are we have delivered more than that, as you've seen, in the second half of twenty twenty. But we confirm that those savings, as Benoit said, are there, and we will reach that in 20 2021. We have always said that it is based on volumes being close to At the level of 2018, I remind you what has been the volume evolution. In 2019, they grew by 0.6%. And in 2020, they declined by 4.7%.
So that means that going back to the level of 2018 requires growth of around 4% this year. That's and that's what we are more or less having in mind. So we expect to be there, but you think that we have been 4.7 below In 2020, so that's the first point. The second I wanted to make. So we assume that we will be there, but I think it's Not it's necessary to have a caveat given what has happened, But that's not our assumption today.
So I think we are going to get this volume. Now second point is that, that doesn't mean that we will be at the same volume of 20 2018 in all businesses. As you know, HPS has suffered more than the other business, and we will not reach the margin in 2021 of HPS that we had in 2018, which was very high. So we have a mix effect, which is negative. So when we say 8.7 is having in mind that we have this with the same volume, we have this negative.
But you have seen on the other hand that we were at 115 basis points from Transform and Grow in H2 2020. So we hope and we think we are guiding to compensate this negative mix that we may have in HPS with over performance elsewhere. Now the more than 8.7 doesn't mean more than 8.8% and doesn't mean 8.8% or 9%. At this stage, it's more than 8.7% means 8.7% something. That's our guidance at this stage.
Maybe we'll change that during the year, but that's where we are today. So 8.7 percent, that's slightly it starts with 8.7. But it's not more the second digit is not more. I think I have been clear. Now on the second question, the board has been reviewing governance every year.
And the board will continue to review governance, and it has made no decision. It has made a decision for what's happening this year. He has not made the decision concerning the future. And it will make as you know, My term as a director is ends in June 2022, And we have not made decisions on what happens as this time. The Board, of course, will make a decision in due course.
And I hand over to Benoit for the 3rd question.
On the third question regarding the market. So LATAM, it's across all product lines that we have a very strong dynamic, leveraging a lot of synergies. So I think we are clearly outperforming the market in Latin America, to the synergies. We were in the 25% organic growth in the second half. I think we'll come back to a double digit growth in 2021, not as strong as the second half where there was some catch up, but still a solid double digit growth at least in the first half.
We have a good visibility on that and again leveraging all product lines with a lot of synergies. In North America, it's clearly Not only roofing, we have a lot of growth on all the product lines servicing the residential market. So it's true for insulation, it's true for siding, it's true for roofing, it's very true for gypsum. So we have a strong dynamic. It's easy to explain, thanks to the big jump on the housing starts, and that momentum should continue throughout all the year 2021.
The nonresidential market, of course, is down. It does impact only our ceilings business in North America, which is much, much smaller. So a good solid dynamic on both businesses in North America. And for both markets, LatAm and North America, we have a very solid price realization. We announced some price increase, which did stick already for roofing.
We are going to announce another one for April And same in gypsum. We announced some price increase in gypsum for January with a good realization. And we'll announce another one for April, where we think based on the very strong market demand, we'll have a good price realization for North America. Frankly, in North America, our main The challenge today is to make sure that we run our plants in full capacity and we serve our customers. And clearly, we are Everything we can produce, we'll sell it.
Thank you so much, guys, and congrats again on the results.
Next question?
Next question from Helmut Du Ro from JPMorgan. Madam, please go ahead.
Congratulations on the results and congratulations, Dunois and Pierre Andre, on your new So my first question will be on the margin, but more specifically on the cost inflation side, you've had a positive price cost of EUR 160,000,000 in 2020. You do expect cost inflation to reverse and you've taken some price increases. But what is your expectation in terms of that price cost in 20 ask what is the price cost that you need to achieve to make the lower end of your margin guidance at 8.7%. Could you give yourself some cushion for a negative price cost, for example, to get to that minimum level of 8 0.7%. And if you could give us some color on the different price increases that you've actually passed through beside North America, even you've already commented on that.
And lastly, on capital allocation, you are comfortable on leverage. You have concluded your buyback program. So what should we expect from here? Would you consider a new buyback program? And in terms of acquisitions, are you looking at bolt ons or something more Potentially bigger.
Thanks very much.
So, Sreedhar is going to answer on the price cost. But Before that, Elodie, I correct you. There is no lower end of the guidance. I think I answered that before. The guidance is 8.7 Plus, let's say, 8.7% basic.
On the capital allocation, We are going to stay for the moment opportunistic on the share buybacks. We are going to buy The equivalent like we have done in the last few years of the share we issue for the employee share holder plans, And we are going to stay opportunistic like we have been. In terms of acquisition, We are constantly looking at acquisitions. You know the 3 areas, I think Benoit mentioned them. We have no we are looking the thing is that on those three fronts, at the moment, One issue we have is that multiples are quite high.
So we need to we have some strict criteria, and we need to find things we are which are fitting our criteria. I it has been the case with Continental, but there are other targets that we have looked at and where we thought we could not make it. So We are very disciplined on that. And on this capital allocation, I mean, more guidance on that We'll be of course, I guess, Benoit, you will be on your agenda to talk to at the Investor Day. So We are giving you some time to redefine the way we are you want to do capital allocation in the future until October.
Now the question on price and cost to Shreedhar.
Yes. So Elegy, you're right. We are getting into the inflationary mode. So we did have a big tailwind in 2020. So energy was one of the biggest contributor.
The gas is something which contributed close to €80,000,000 savings reduction in last year. So the other one big one was but both this is going to go up and we already see the trend. And all other raw materials is in an inflationary mode, Be it gypsum paper, resins, cement, soda ash, I mean, you take. I think it's so The point is we are going to see inflation much more significantly what we would have thought second half of this year second half of twenty twenty. Now I don't like to quote this figure, what is the estimated inflation 2021 because it's so volatile, things keep moving every week.
But just Give you an indication what I see today, it can change. I think we should see an overall inflation of something like to €400,000,000 for 2021. I think what is most important thing is that we need to keep focusing on price increase. I think the price cost spread is something which is important. And you know in Sangamon, we are extremely rigorous in monitoring this at a country level.
So there is a lot of pricing action. You would have seen that if you make a comparison of Q4 versus Q3, every single segment has improved price realization as compared to Q3. So that's a very positive sign, the fact that we have 1.8% price realization for Q4 and it puts Sangaba in a very good position to deal with a very high inflationary situation, which we are going to witness in 2021. So other question you asked is, okay, to give some color on the pricing initiatives we have taken, the steps we have taken. In Europe, we have increased price in almost everything.
Glass is clearly an impressive sequential improvement. You can see that in Q4 versus Q3, it has gone up by 6% sequential, 4 millimeters if I just take 4 millimeters as a reference in the market. If you look at U. S, we have increased in gypsum in the month of August. Again, we announced a price increase in January, and we are going to we already announced one more price increase from April.
Take roofing, we did the same. We announced the price increase in August last year. And again, this year in February, we have announced one more price increase. Latin America actually had a double digit price increase impact in Q4. So it's across.
In Asia Pacific, we are pushing the price, which is in the recent past, you would have seen, particularly Southeast Asia is a challenging market. We did succeed in improving the price in the Q4, which is 0.5% positive. India is pushing the prices up. So I think we are very much in action. We need to monitor this, And the objective would be to see how we can compensate this inflation?
We are confident we will do it. The CFO is always prudent. I'm very confident we will have said that. It's a
good start of the year. And even to add one additional business in distribution when you have inflation on raw materials, you pass it to the customers. And actually it helps to offset some cost, personal expense, rent, So the margin impact for distribution is not negative when you have inflation?
A
little more inflation, the distribution, people like it generally. Next question?
Thank you. And next question from Robert Gardiner from Davy. Sir, please go ahead.
Good morning. Thanks very much for taking the questions. I'll ask 2. So one, I noticed in the document there, you talk about your strong order book in France, renovation in France. I think you mentioned a 60% jump in work requests.
So if you want to give us a little bit more color around that, how much of that carries into 2021 and what products and areas? And secondly then, You mentioned in your CapEx guidance the need to invest in new capacity and that's to meet, I guess, or renovation wave in Europe. So to what extent do you have the capacity to need that in Europe if activity increases dramatically in places like insulation, glass, roofing capacity there? Or are you going to have to kind of step up again? Thanks.
I'm sorry. The sound was not extremely clear, so I hope I understood the question. On renovation in France, clearly, there are some very good trends. If you take our sales in the second quarter, they were up Very close to double digits. I think more than 8% in our distribution business in France.
Of course, in August December, we have had some very strong months. So the craftsmen have been working very hard. But I think the trend is very solid. We and we have not seen yet any impact Of the stimulus, whether they are at the European level, which are feeding through the so if you take in France, there is a new program called Ma Prim Renov. And we know that there have been for subsidies, there have been a lot of applications by householders.
And But the activity has not started. It is starting as we speak. So I think that the renovation trend in France is going to continue for quite a while and is very supportive. Do we have the capacity? It depends by business.
Maybe Benoit, you want to give some color?
Yes. Overall, yes, we have the capacity to service our customers. We are doing a lot of work as we speak to de bottleneck Yes. Our plans, because yes, we are sold out in quite a lot of activities, including in Europe. If I take plasterboard, you will see in some days that we have Some ideas to add some capacity in Europe in some geographies where we are gaining market share and doing very well.
We are also active On some investment for distribution on digital to reach out more customers, to bring customers to our outlet to service them very well. So yes, we have a lot of either debottlenecking, improving the yield of our plants or some additional capacity here and here. But overall, have the right setup in Europe to service our customers. On glass, we are not going to add capacity. And clearly, we are leveraging what we have on those heavy assets.
This CapEx are part of the EUR 1,500,000,000? And the guidance
is EUR 1,500,000,000 and that will Including what we have in mind. What we'll do for 2021, and we are fine with that.
Okay. Thank you.
Thank you. Next question from Arnaud Lehmann from Bank of America. Sir, please go ahead.
Thank you very much. Good morning, gentlemen. Three questions, if I may. Firstly, could you give us an update on potential for further asset disposals? I know you've been working on the pipes disposal for some time.
Nothing has been announced yet. So is it still on the card? And could we consider more disposals beyond pipes? My second question probably for Sreedhar. You mentioned A further reduction in non operating costs.
I think you've already done quite a lot around asbestos and the restructuring, but I'm assuming a bit more restructuring to be done going forward. So how do you find saving on non operating costs for 2021. And lastly, there's been a lot of headlines in the last months around the Grenfell to our inquiry and the implication of Silotec. So would you mind taking us through the internal measures that you may have taken to address the issues raised by this inquiry? Thank you.
Thank you, Arnaud. So Benoit will answer the first question and Frieder the last two.
So on asset disposals, we are actively working on different topics, again, by country, here and here to optimize our profile, growth and profitability by country as we speak. So there will be some in 2021. Specifically on the Pipe business, Pipe did suffer a lot in the first half of last year. So the priority was to put the business back on track. We had a much better second half.
And overall, we managed to be profitable last year in our Pipe business, which was not easy after the first half. So overall, it's a bit on hold for the total Pipe business. Long term, the Pipe business doesn't fit into our strategy. So we'll continue to look at various options for the pipe business in the future. But in the very short term, we are not going to do something on the whole for the pipe business.
Now we look at different or other options. So we are still active on asset disposals, and We'll do some during 2021 country by country.
Yes. So Arnaud, your question on non Operating costs, I'm happy that you recognize that we reduced significantly in 2020. In 2019, we were RMB421 1,000,000. It was brought down to RMB342 1,000,000. Yes, this is something which is For me, we need to constantly challenge ourselves.
We have I believe that we still have some scope to further reduce. And I think it's important that this is a cash, and we need to just remain focused on making sure that we reduced this cost without, again, making any compromise on this restructuring, any ideas because I think it's something which is extremely important. You're right that 2021, we still have a few things to do, and we are not going to stop that. But taking all into account, I would still believe I believe that we can further reduce what you have seen in as against 342. 2nd question on Grenfell.
I mean, Sangamo is a learning organization. I mean, each time, every time we see anything like this, we learn. We learned very quickly. We put in place the training modules, which we have in Sangiban. We have tried to articulate that any acquisition we do, we need to make sure that the new company, which add in Sangiban Group, it has to go through the same rigorous training process.
And it's important that we have these quality measures. The processes in the plants are more stringent. It's an ongoing process, and we keep reminding everyone, everybody in the world, part of the organization, Sangama family, that everybody, there is a 0 tolerance to the compliance, which is defined by Sangama.
Next question.
Thank you. Next question from Zane Edelfeldt
A few questions for me. I would like to come back on your CO2 emission. Pierre Andre, you mentioned the Scope 12 and 3 with direct and indirect CO2 emission with targets. Obviously, your product enabled substantial CO2 savings. And do you believe this avoided CO2 emission can be included in the scope 4 and is no.
I know there has been some discussion on this topic. So could you could we have an update on that front? 2nd question, On the €690,000,000 savings that you achieved this year, how much do you believe you can keep? Is it like 50% or 70%? That will be helpful.
Thanks.
Okay. So, Ushkader, you answered the second question. On CO2, yes, I'd love to see the various institutions and organization, we look at it to take into account this avoidance because it's obviously A very important element. We are working on these topics. But it's one issue is that it's not completely easy to calculate.
And we have had some measures, and we are doing a work at the moment to really quantify that on a much more detailed basis. And I hope we'll be able to have this work finished This year, so we can and but if you can help us in terms of which institution to take into account at this point, I think our investors are fully aware of this impact of our solutions. But the quantification is less easy than for Scope 1 and 2. Already, you know Scope 3 is not very easy to quantify. We are working hard, especially in our distribution business to quantify Scope 3.
I cannot say we are We are exact on our work and nobody is on scope 3 at the moment around us. So I think we are advanced, but it's more difficult, of course, on scope 1, which is the most obvious one. The next question is for Sreedhar.
So Sven, the EUR 690,000,000 consists of 1st is Transform and Grow. We had GBP 130,000,000 savings for the year. Last year, we had GBP 120,000,000, so total GBP 250,000,000. So Transform and Grow, you know it's structural and there is it's going to recur. The savings will be there in the into 2021.
2nd is the operational excellence program. You know, Zincangabang, we have this quite an elaborate program. It's very structured, and it's driven with a lot of discipline in every single industrial site. So this is something which we are quite successful in generating close to €300,000,000 savings. This year, we actually did €320,000,000 savings as against €310,000,000 last year.
This savings helps us to compensate the inflations we have in the fixed costs and the salty fixed costs. So that's something which we'll continue. We will keep the focus on operational excellence. Then the third part is you have the measures which we took due to the partial activities, net of the COVID cost, which is something like GBP 80,000,000 for the year, This is something which I don't believe that it will be there for next year. Rather, it will be negative because the COVID related costs will continue to be there.
We are not going to stop wearing mask. We are not going to stop doing all the gesture barriers, which we need to do for all the precautionary measures we need to take from a health point of view. The other one, which is, again, an important saving is a discretionary cost, which is 1,000,000. I believe part of this discretionary cost will come back. Certainly, we are not going to start traveling the way we used to travel in 2019, at least in the first half of 2021.
But this is a cost which will come back, certainly not at the same level. So part of this will still be there in 2021. And there's another important thing you need to keep in mind is that we took certain additional measures after the COVID of making certain restructuring in a business which is structurally impacted like Mobility, U. K, some of the industrial segment which are linked to automotive sector, which gave us €50,000,000 saving in this year. Next year, we expect €150,000,000 savings from that.
2021, €150,000,000 are already in 2021.
Yes, sorry. Okay. I'm talking about the results of 2020. Yes.
Okay. No, but just to make it clear for everybody.
Yes. So we have full year impact of DKK 200,000,000, the steps we took, DKK 50,000,000 you saw in second half of twenty twenty. The balance should be in 2021. Okay.
Next question?
Thank you. Next question from Eric Lemarie from Bryan Garnier. Please go ahead.
Yes. Good morning. Thanks for taking my question. I've got 2 actually, if I may. First one, you mentioned the positive forty basis will impact on margin from the $3,400,000,000 of sales already divested.
Could you maybe give us an idea of what could be the impact of the remaining $1,200,000,000 of sales that you need to be divested to Lapeyre and the Netherlands distribution? What could be the impact on the operating margin? And second question, still regarding this portfolio rotation policy. So I understand the impact on margin, but could you have an idea of the impact of this policy on regions, for instance, on return on capital employed? Because after all, I suspect that perhaps the capital intensity of the group has changed a bit with this asset relation?
Thank you.
Yoshida, you want to Yes.
So in terms of the impact of the divestments, which are in process, particularly the Lapeyre and the Holland related distribution business, It should have an impact of approximately 20 to 25 basis points. Again, you have to remember that it all depends on the timing. We don't know when it will closed. So I won't commit anything for 2021, but this is ROCE. You saw the number is much more resilient In spite of the fact that we had COVID, yes, this will gradually improve as we make progress, and it will be reflected based on the rotation of portfolio.
Okay, next question?
Next question from Nadeem Ahmed from Barclays.
Yes. Good morning, gentlemen. Thanks for taking my questions. I had 3 actually. First one about HPS.
Could you please elaborate maybe a bit more on what you see in mobility and industrial end markets in 2021. Clearly, you've done better than the automotive market, I think, since 2018 very clearly. Would you expect that to continue in 'twenty one? And maybe if you could comment on HPS profitability outlook. Do you think a return to 2019 level is feasible or even 'eighteen level given the adaptation actions you have taken.
The second question I have was on distribution. Clearly, it's been the vast majority of the assets you sold were in distribution, so now refocusing the business mainly on France, Scandinavia and the U. K. For the main countries. Two things here.
Have you experienced any negative synergies from disposing these businesses? If you take Germany as an example, any negative synergies from Rockwellshire disposal? And if not, what's the rationale of keeping distribution within Could you consider selling the business entirely? And finally, maybe more detail. Could you please date on the Lapeyre disposal process?
And what's the time line now in terms of when you expect to close? Thank you.
Okay. So on HPS, yes, clearly, we have done better than the automotive market. I would say mostly thanks to our presence on the electric vehicle, which is growing where we have a very significant share of this market and we have been focusing in the last few years. The outlook for this year is a bit complicated. Clearly, there will be an improvement in the car production.
I think we have been more optimistic in the last 6 months, month after month. And the last month or so, we have a little less more cautious because as you have heard, there are some supply chain issues mostly from the semiconductor. And I think we may see a dip in production In the Q2, that's what we understand from our customers. And on the other hand, the inventory levels are low. So I think we are going to see growth.
The magnitude of that is not completely clear at this time. But yes, we also continue to expect to do better than the average automotive market this year because the trends towards electric vehicle is going to continue. And we are positioned very well positioned in terms of models in this framework. In terms of the margin outlook for HPS, Yes, 2018 was a very good year, but and this business has been suffering more than others in the last 2 years. As you've seen an improvement in the 2020 between the first half and the second half, where our margin is 11%, We intend to be clearly above this 11% in 2021, but we will not reach the level of 2018 this year.
So it will be somewhere in this range. Medium term, yes, I have no problem to return back to that's the commitment I take for Benoit. But I think I see no problem to return back to the level of 2018. I would say one thing we have to have in mind is that And the reasons for the drop at the moment is that it's a mix issue. In fact, in our ceramics business, is where we have high margins.
It's very linked to the investment cycle of our customers. The cycle was good in 2018. It is low at the moment. We know that it's going to come back. At this point, it's not completely clear whether The comeback will be in the back end of 2021 or whether it will be more in 2022.
So I'm cautious. But I think medium term, We will see a bounce back in the margin of our HPS business. On distribution, I want to Maybe Benoit Just
to add that,
because Nabil was guiding also versus 2019 margin. And I think at this stage, we are not sure
Between the second half 2020 'nineteen, yes.
Exactly. Yes.
Yes. We're not going to
on a full year basis as of
No, no, no, no, no. It will be below 2019 and clearly the volumes in HPS in 2021 will be below 2019, that's I would say nearly sure at this stage. On distribution, I want to draw your attention on the number that we have not quoted, but you have asked us to continue to provide and we provide in the annex of this presentation. For those who have been following us for quite some time, the margin in our distribution business in Europe in the second half of twenty twenty was 6.2%. And I think it's an important number because it is Very close to the highest level we have had in 2,006, 2,007.
It's a number that we were guiding towards lower than that in our last Investor Day. Of course, the second half is always higher than the first half. But it shows that we are back to the best level, I would say, in our distribution. I always told you that we have very good businesses in France. We have very good businesses in Nordics.
But these businesses, and in France, it's completely obvious from the example I told you, are completely embedded in our strategy and the end to end solution. So the way we analyze our businesses, as I told you, is through our new organization. It's by country. Distribution, we know that we have to be very strong where we are. So that's why we are concentrated on the countries where we are.
But there is no idea at all to sell Our distribution business where we are very strong.
And partly when we are strong On distribution, we have strong synergies. Yes. So the fact that we divested Germany, because we were weak in Germany on distribution. So we had weak synergies. So therefore, there was no significant negative impact.
And we have even kept our rebates across several countries, even though The total volume of purchasing from distribution based on the diabetes teachers reduced.
The 6.2% in the second half is an evidence of that.
Maybe even while you want to On the LAPER process, we are right now working with the different parties In terms of consultation, that requirement in France to consult the different employee committees, we are there. The lapped structure is a bit complex, so it takes a bit of time. We knew that upfront. We are in this process. So no specific news on that.
In the meantime, the business is doing well. It's ahead of plan. So that's good news, ahead of plan. So benefiting also from our strong positions in France and a strong impact on the renovation spend in France. So no specific news.
We intend to close Lapeyre in 2021, Probably not in the first half, but we'll come back to you when we know more about that.
Next question?
Next question from Ceta Ekblom from Morgan Stanley. Madam, please go ahead. Thanks very much. Hi, everyone. I wanted to ask some questions
on your approach to selling solutions. If I look at Slide 42 and 43. It looks like you have a great selection of products that can deliver into energy efficiency like you're highlighting. I want to understand how much of your products are actually sold as a bundled solution instead of being sold on individual product lines? And where do you think you are in the transition from selling building materials to selling solutions, If that makes sense?
Benoit? It's a very good strategic long term question. And that's all the strategic move that we are working on as we speak, moving from different silos of products, which were a worldwide product line into a country organization leveraging those solutions. One caveat is that we don't bundle our product because as you know, legally speaking, it's not allowed to do that. So we have different synergies.
First, it's On key accounts, speaking to architects, to big contractors, to big owners together, offering the different product lines together as a solution for but adding the different solution. And second, we are progressively working with R and D, with application engineers to have facade solutions where you combine glass, deep ton behind it. We have a fantastic, for instance, external insulation In Switzerland, combining our insulation, our mortars business and the facade, our At Force Textile Solutions. We are doing that also with facades in Brazil or in France. So we are working on that.
In terms of actual number, it's still very low. But that's something for the next 5 to 10 years where we'll work on technical systems where it's faster to install. We have, for instance, a nice new product In France, combining for partition, gypsum and insulation, reducing the amount of steel frame, dropping by 40% the installation time for the customers. And that's those kind of systems that we want to generalize with a lot of efforts from marketing, from R and D to continue to work on that. And And prefab also is off-site manufacturing is one area that we target.
We made an acquisition in Germany. We have some initiatives in the Nordics where we can add all our solutions together on off-site manufacturing. Then it's a solution. And then it's a solution from Saint Bank. So we are working on that.
As a percentage, it's not huge today, but it's a growing trend. And on top of that, we have the commercial synergies that I refer when we work together towards the same customers.
Next question. Sorry, go ahead.
Yes, I'd just like to ask a follow-up. On the marketing point, which is obviously really important to go from a provider of materials to a provider of solutions. Do you think you've got the right framework already or is that what's the key that you need to work on? Because you've got all the products already, right, and you're stable. It's not like you've missing products.
What's the key step that we need to have for Sangoband to go from a provider of materials to provider of solutions on a much broader scale across the portfolio. Is it really marketing? Is that what we need to focus on?
It's Dijon thinks first, it depends a lot country by country because the routes to market are not the same country by country. And second, it's not only marketing, It comes also from the technical system, from R and D to invent the products which go together. After that, it's shifting the organization towards application I'm thinking in terms of partition, ceilings, acoustic solutions, facade, electrical mobility, if I take high performance solutions. So It's shifting the organization in terms of marketing, in terms of approach to customers. So it's a lot of areas of our organizations that are at stake into that move from product management to application engineers, application solutions.
And we are in the different countries working on those evolutions. Of course, it depends by application and it depends also by the vertical of market. We push our organization to think like Thierry has mentioned, if you think of hospital renovation, what does it take? What does it take from logistic coming from distribution, what does it take from technical prescription, coming from our key account management. And we bring all those parties and that's the very detailed work do country by country, but it does touch a lot of parts of the organization.
If you glue together our 2 products at the end of the line, It does impact manufacturing to glue the partition of transfer board and insulation at the end of the line. It does imply, of course, logistics when you deliver All different products to the same customer or the same point?
It's very important to address one point is that in construction, The people we sell to are not generally the one who choose what to sell them to them. So the prescription is very important. And on prescription, we are already Much more on solutions. And actually, when we sell to the distributors, sales to the we sell Manufacturing sell to distribution or distribution sell to the project developer.
And it's a very important question that you raise. And typically, we are working on it as we all together and we'll come back to you on those topics during the Investor Day because that will be a key pillar of our growth for the next years, if not decade, to accelerate on this evolution. So already a few insights.
Next question.
Next question from Joseph Pujal from Kepler Cheuvreux.
I have three questions, please. The first one is on the scope and ForEx effect that you see embedded on the 2021 figures Already with the sales or disposals of activities that you have already done, what you think it will be Dan, for example, Lapeyre, with today's scope sorry, forex effect, what is the change that you see in your sales as of now for 2021? My second question is on the cost inflation, I think that Schroeder mentioned an increase of, if I got it well, €300,000,000 to €400,000,000 This is for raw materials and energy. Is that correct? And can you remind us the base of comparison?
We are comparing these to which figure so in order we can calculate percentage of growth? And my last question still on Cost inflation, do you see some countries and if yes, which of them, where you start to see wage inflation? Or is it a phenomenon that you do not Yes. Thank you.
So, Sreedhar, I see Joseph is targeting you.
No problem. So ForEx and structural impact, if I have to take The current spot rate, as you rightly said, Joseph, because nobody can predict how the trend is going to be, if you just take the spot at this point of time. The sales could be still negative to a lower extent, I will say lower extent than what we saw in 2020 as a ForEx impact. And in terms of OP, it could be More negative as usual because the countries where you have the forest impact are of a high margin countries. In terms of structure, I would say that it all depends on Lapeyre and the distribution business when it will get divested.
So right now, it's still in our books. Otherwise, the other impact which you should see is the Continental acquisition, which was consolidated in Sangamon's books from February, so you have 1 month impact. And at the same time, you have also seen at the end of the year, we divested our distribution business in Spain and small bit in Italy. That should have a negative impact. So on Elona, it will be a marginal impact.
And if Lapeyre and distribution Holland distribution goes through, it will certainly reflect in the structural impact. 2nd question is The cost inflation, yes, it's raw material and energy. Again, I remind, I don't feel comfortable to give a number, but I have given because you all me to say something. It remains volatile, and this is with the base of close to €8,000,000,000 to €8,000,000,000 as the base you can take on which you look at these numbers. And the third question is, do we see any wage inflation very different?
No, we see a normal wage inflation. Again, it varies from region to region. Europe is a bit less than what you see in the U. S. And the emerging countries, the wage levels are higher.
Okay. Thank you, Rosette. Next question?
Thank you.
Next question from Gregor Kuglitsch from UBS.
Hi. Three questions. I know many have been asked, so I'll try to be brief. Just to be clear on your margin target, those exclude an assumption around those two remaining transactions closing? So in other words, excluding the SEK1.2 billion, is that is my understanding?
Or that Correct. The second question is and maybe this is for the Investor Day. Obviously, you're on the sort of margin improvement trajectory that has obviously started now for a couple of years. If and maybe this is a question for Benoit more than
well, probably for
Benoit, where do you think the group should be kind of on a sustainable basis? Obviously, I think you used to have a 10% margin target some years back. Obviously, that was never achieved. But is that still the right reference point to think about? And then finally on capital allocation and M and A, can you give us some assurance that you're not going to try to buy something large that is outside of your current core of product.
So, the reason why I asked that is obviously that adds risk to your investment case. So I want to understand whether your focus is to basically stick to what you've got rather than expanding the product portfolio. I'm thinking, for instance, something large on the environmental side. There's plenty of things one could in theory contemplate. So those were my 3 questions.
Thank you.
Okay. On the margin target, I don't think we are
Yes. I mean, I think, Piranha, you already said 8 point So I think we should not get
into big We're having to speculate that the margin we expect and Because The events will be what they will be. I said if we are the only caveat I have put is that if there is a big drop in volume because of a major crisis and we don't we are far from the level of 2018, then the margin target is not valid for the rest. I mean events will be what they will be. We are not going to answer, I'm sorry, to your second question because that's the main purpose of the Investor Day. I just want to correct what you said because 10%, we will have reached it in the second half I think the objectives for the medium term, I will leave that to Benoit.
And what was
the Last one was on the M and A and Capital Education. Yes.
To rule out any I mean Outside of our
core business.
Yes. You know our three directions for M and A, consolidation, growth in our businesses in outside of Europe. And by the way, Continental was ticking 2 boxes there. And the third one is adjacencies. On adjacencies, it's we are talking about more by country or adjacencies in HPS.
So they are generally small or medium sized acquisition. So yes, we are not we have not in mind to buy, I don't know what, a cement company or something like that.
And all the efforts we have made On Transform and Grow over the last 2 years is to give you strategic visibility, financial visibility and to strengthen our strong points on the core businesses. So that's the direction going forward.
Thank you. Next question from Christian Kors from HBC. Sir, please go ahead.
Thank you very much and good morning and congratulations I have a few questions around CapEx. I think you said earlier that you plan a CapEx of 3.5% of sales. Is that the guidance for 2021 only? Or does this also include the coming years? Secondly, I would like to ask if you can quantify the capacity utilization 4 year plans that produce building materials.
So how much room for growth do we have left in these? And the third question is Related to CapEx in the medium term, so when you look at some of the drivers coming to the market like the European Green Deal and other initiatives from governments. Does this require a higher CapEx spending a couple of years down the road? Thank you very much.
So I take the first question. I think the level of CapEx for this year is exactly where I told you a few years ago that it would be We had a peak. We had a drop in 2020, but the 1.5 is the range we have guided for several years. Now going forward, I'm sorry, it's the same I will give you the same answer than previously. You have to wait for October if you want another long term guidance on CapEx.
And the second question was on capacity for building materials. It varies a lot country by country. But as you have heard, we are quite fully loaded at the beginning of year, whether it's glass, for instance, in Europe, whether it's big materials in the U. S. So we are running at full capacity.
But this full capacity assessment is a short assessment, because you can think of adding a shift, working on weekends in some plants. So we are, as we speak, moving from 3 to 5 shifts in some operations, whether it's in Europe or whether it's in the U. S. And also the main challenge we have is to make sure that we are still facing the pandemic and COVID cases is make sure that we don't lose one shift of production because of some cases in our plants. Last week, we had to shut down for 3, 4 days a small portion of foundry in trend because of sanitary measures.
So all the attention of our operational managers to make sure that we keep our employees safe so that also we can run full production. So yes, we are quite loaded, but there are also a lot of small CapEx to debottleneck in many areas and all our industrial teams are working on this activity with good ideas. And so we'll be fine in 2021 with our capacities going forward.
Thank you, Benoit. Next question.
Thank you very much. Can I just ask one follow-up, please?
Oh, yes, yes. Go ahead.
Sorry, apologies. Then when you say that like for 2021, it's the €1,500,000,000 What did the 3.5% of sales refer to?
Excuse me?
Yes, I
just Also for 2021?
No, I'll What I said is 1.5 is what we currently confirmed, it's for 2021. For the medium range, we said that we should consider 3.5% to 4.5% of the sales.
Historically, yes.
Historically, and that could be a reference point. And then Pierre Andre said that we will remain in that ballpark of 1,500,000,000. And again, why I said I gave a range is to just keep the flexibility. If we need specifically in a particular market, we want to grow and there is a good demand, we should not constrain ourselves not investing where it is required. So that's it.
And you have to keep in mind that as Pierre Andre said, last year we dropped by €600,000,000 more than the €500,000,000 And today, the challenge is to make sure that we have contractors on-site. We are going to open a 3rd float line in Mexico in the coming months. It's not an easy challenge right now to have everyone on-site, for instance, in Mexico. So you should think of this 1.5 as an average across cycle, we have been lower last year. Let's say, if 2022, we have a big growth, we have some good solid growth prospects, And we have to keep that room around the 1.5% that Shadr mentioned.
That is good. Perfect. Thank you very much.
Thank you. Last question by phone from Tobias Werner from Stifel. Sir, please go ahead.
Yes. Good morning. Thanks for taking the questions. Actually, 4, if I may. Number 1, probably to Sreedhar, working capital, You have 18 days at the moment in 2020 versus 27 in 2019.
Could you give us a sense of how you the working capital to evolve on a normalized basis? That's the first question. The second question, HBS Seems to take quite a bit of time to recover to the 'eighteen levels. That wasn't the case in the GFC. But is there anything else going on?
Thirdly, maybe you could just remind us of the Roofing business in context of energy costs in the U. S, how margins tend to develop historically ahead of and post energy price movements or cost movements? And then just lastly, I'd be very interested in your flat plus capacity utilization compared to The 2,008 level, I. E, where do you sit if you could run all of your capacities flat glass in Europe at the 5 shifts you talked about compared to 2,008? Thank
That last is not a question. I think the first one is not the last one is not there's not a question of shift. You run a float or you don't run a float. At the moment, we are fully loaded, but we have less capacity. We have less flow than what we had before.
We have been reducing Consciously, our footprint, as I told several times in terms of float glass in Europe and concentrated on the value added I think compared to 2,008, we have 5 float glass less in Europe. So it's a significant reduction, but they are fully loaded at the moment. On the question on HPS in 2010 versus Today, first, it's not it was not the same business. So HPM today, so you had our automotive glass, which was not in part of the comparison you are making, which we covered more typically, I would say, and it is a little bit the same This year, it's having an impact when you compare the 2. And then you have the cycle of investments, which may vary and was quite strong.
If I remember correctly, in 2010, We had a very high level of investments. I don't know what we may have a very good 2022, I don't know. It's we are not seeing it yet at the moment coming back, this investment cycle. So the other question we have for Frieder?
Yes. So on working capital, as I said, I believe that there's a lot of structural improvement has happened and 9 days of production, which has happened in this year, In addition to 2 days, which we already reduced in 2019, I believe at least half of that should be there even in 2021. So for me, I think having a working capital around 25 days is something which is reasonable in the medium term.
There was the question you want to take on energy for roofing, it's more asphalt than the engine?
It's asphalt. Yes, it's asphalt. Yes, we do we did have a good positive spread in 2020. We'll have to see. I mean, we have taken a lot of proactive steps in increasing the price.
So far so good.
Far, so we have to put on pricing and volumes without even thinking of storms. So we have to face the cold weather in Texas, but So far, we don't know what storms we'll get during the summer, but we
are still
sold out on roofing like, apparently, the overall market.
Thank you very much, gentlemen.
So we have finished with the phone. Now on the Internet, Vijay, I should read the question on the Internet? Yes. Yes. So the first question is from Jean Christophe LeFebvre Moulack from CMC If the price effect above 6% in the Americas on the second half, I would like more details on plasterboard insulation, shingles And Brazil, Sreedhar, you want to answer that you have already partly answered that question?
No, I have partly answered, but it's just that 6.6% is for last quarter And not for the H2, I mean, H2. So and I said that we have increased prices across. I think there has been a bigger impact in roofing and gypsum business, and we are making a good progress on pushing the prices up.
2nd question also from Jean Christophe. Flat glass float price in Europe at the end of December? And why does it go down in January 2021? 2nd question, I disagree, Jean Francois, the price is higher in January than in summer, and that's a very good trend at this moment. Generally, In the winter, prices go down.
And at the moment, they are going up months after months. So price at the end of December We don't follow that very much, sir.
And we are on January 21, above the 2019 level, actually. So that's the important point. We crossed
the growth in general. Question 3, margin in HPS in 2021, little bit disappointing in H2 2020. I think I answered that question. And I said the margin in 'twenty one will be above the H2 of 2020 and below 29. Question 4, On Porta Musso?
I think I answered that.
You answered
that question. I read the question. I want more lights on Porta Musso, Which is was back in profit in 2019, what is in 2020? But why do
you answer that question? Yes. Back to profit partly in the second
Some more details on the EUR 320,000,000 savings in with the W's operational excellence. Schirard?
I did mention about the operational excellence program. Basically, it's all productivity improvement, implementation of 4.0 in all our sites, helps us to improve continuously our operations, processes, quality, supply chain improvements. There are plenty of things we do. There are small, small, small projects. And I think it's a culture of world class manufacturing in the plants is something which is very much ingrained in the all the industrial sites.
Next question from Arnaud Pinnatell. You highlight stronger growth outlook as group improve its growth profile with reorganization. What could be the new normal growth rates per annum or what additional points of growth it could represent versus the past? No, I'm sorry. At this stage, I'm going to stay qualitative.
And I'll pass this question for Benoit for the Investor Day in October. Question 7, to capture the growth of the GreenWave, will you allocate more cash to organic CapEx in Europe? Will you favor organic CapEx of our acquisition as they often offer higher ROCE? Well, it depends. We have acquisition.
We deliver very high ROCE. But yes, I think Benoit answered the question on organic CapEx. We will do As needed, and we may have to we will announce probably some new plants in the coming weeks Because we need some in some businesses.
And we've got so invested in Europe. And it's also investment in distribution, on digital services, on IT, on logistics. So There are many initiatives, yes.
Jean Christophe, Lofebvre Mullin again. On Plastics Board, U. S, France, UK and Germany, have you improved our operational margin on 2020?
I can take that. You want to Yes.
We have improved Cross except U. K, I think U. K. Is the one that's the factor, yes. Yes.
And strongly in the U. S, strongly in France and Germany. And U. K. Was very tough in the first half, but improved a lot In the second half, you know, UK lockdown was very severe for more than 2 months, but second half was already much above.
And the last question from Ronak Patel from Luminous Management. How is the construction business seen In 2021 and coming years in India and in developing countries, infrastructure development will boom in years ahead. Yes, India is going to be to have a great year this year. And you see Sreedhar smiling. He's following what's going on in his country closely and he's very India has been our best country over the last 20 years, and it will continue to be the case.
We have and in India, we are adding capacity in in our businesses regularly, and we'll continue to do so. We have strong market shares, and we are very successful. And globally, developing countries, you well, we have I think we have answered. We have seen the run we have had in Latin America in the second half of twenty twenty, we have very strong position historically in Brazil. In the last two years, we have increased our coverage in other countries, whether it is in Peru, in Chile, in Argentina.
And we are continuing to increase our footprint. I think, Benoit, you'll continue to do that because it's quite good. Southeast Asia, globally, there are good prospects medium term. Short term, there are political events or It may be volatile. So it's a bit more difficult at the moment in Thailand and Indonesia.
It's back very good in Malaysia. It's exceptional in Vietnam. So but globally, I think we want to continue to invest in these businesses as we have done in the last few years. Okay. So if there are not more questions, the next our next meeting is I will fill this one, which is on the Q1 sales.
April 8.29. So we have our conference call on the Q1 sales. And then in July, Benoit will handle the first half results.