Hello, welcome to the Verallia Financial Results 2020 presentation. My name is Patrick, and I will be your coordinator for today's event. For the duration of the call, you will be on listen only. However, at the end of the call, you will have the opportunity to ask questions. This can be done by pressing star one to register your question via the phone lines at any time. If at any point you require assistance, please press star zero on your telephone keypad, and you will be connected to an operator. I'm now handing over to your host, Michel Giannuzzi, CEO, to begin today's conference. Thank you.
Thank you. Good morning, everyone, and thank you very much for attending this call. I will be sharing this presentation today with Nathalie Delbreuve, Group CFO, and I'm very pleased to be able to report to you our 2020 financial performance. First of all, I hope that you and your relatives are in good health, and I wish you to stay healthy going forward. The first part of the agenda is about the highlights of the year, and as a reminder, just would like to remind you the global positioning of Verallia. Verallia is the glass packaging leader in Europe, and Europe represents about 90% of our sales in 2020. We are number two in Latin America, and Latin America represents 10% of our sales, and we are number three in the world.
If you look on the left-hand side of this chart, you see that we have a very diversified end market segments exposure. Of course, Still Wine is still the number one product category for Verallia, given our historical strong presence in the three largest wine-producing countries in the world, Italy, France, and Spain. Beyond the S till Wine segment, you see that it's very well spread in the other segments with good exposure to all these markets, which has enabled us to, of course, benefit from some more dynamically oriented markets last year rather than just suffering from the poorest performers last year. In terms of number of furnaces, as we speak today, this has changed compared to last year. We did have 57 furnaces last year, if you remember.
As of today, we are pleased to report to you that we are starting the two new furnaces that have been built two years ago and were put on hold last year due to the pandemic, one in Spain and one in Italy. We have also, as you know very well, decided not to reconstruct one furnace in France due to excess capacity we had in France, and therefore, today we operate in the company with 58 furnaces in the Group. These are still in the 32 plants we have. In addition to these 32 glass plants, we have three decoration plants and eight cullet recycling centers, which are very important for our sustainable strategy.
Moving forward, if you look at the shareholder structure as of end of December 2020, just remind you that during December, there has been a significant share in the ownership of the company with Horizon Investment Holdings, owned by Apollo, selling around 10% of the shares to BWSA. Now you've seen the split between the main shareholders of the company with a strong increase of Brasil Warrant Administração de Bens e Empresa, BWSA, our Brazilian investor in the company, who has clearly declared that they are a long-term investor alongside the management in this company. We were also pleased to see that Standard & Poor's upgraded two notches the company in December, and we are now rated BB+ by Standard & Poor's with a stable outlook.
Given also the change in the capital structure of the company, in the shareholder structure of the company, I would say, the Board has slightly changed also with Apollo leaving one Board membership to BWSA, and we welcomed Marcia Freitas on behalf of BWSA last year. Last but not least, I have to mention that Sylvain Artigau , at beginning of the year this year, decided to resign from his mandate, and we will be organizing, throughout the year, another election in France to elect the new employee representatives. Altogether, the Board members are 12 in total with two non-voting observers and five Independent Board Members. Each of the committees, the Audit Committee, the Appointment and Nomination Committee, and the Sustainable Committee are all chaired by independent chairwoman.
I would like also to remind you that last year was an important year for Verallia because during that year we redefined our corporate purpose, which you can read here. We want to reimagine glass for a sustainable future, this is really clearly embedded in our strategy and in everything we do in the company. This has led us on the 21st of January to present to you and to all the general audiences, our commitments to the sustainable development goals of the United Nations, which in our company, we've decided to focus on three main pillars. The first one is to enhance the circularity of glass packaging. The second pillar is to significantly reduce our CO2 emissions across our operations. The third pillar is to provide a safe and inclusive place of work.
We have detailed in the presentation, which is available on the website, a lot more, what it means for us in terms of concrete action plans and strategies and targets. I would just like to highlight a few slides from this presentation. The first one, I remind you that glass is a beautiful material. It's a healthy material, an infinitely recyclable material, and it's a perfect material for the circular economy because we can recycle it forever. Not only it's good because we avoid depleting the planet from natural and raw resources, we also, by doing so, can save a lot of energy and also reduce significantly our emissions. Every time we can increase our cullet usage rate, cullet is the name for the used glass, by 10 points, we can reduce our CO2 emissions by 5% and our energy consumption by 2.5%.
Not only it's good for the planet, it's also good for the P&L, and therefore, this pillar is very key for us to achieving our long-term sustainable goals, especially in terms of CO2 emissions. Because as you can see on this chart, we have built a very strong roadmap to achieve 27.5% CO2 emissions reduction by 2030, which is the target defined by or with SBTi, Science Based Targets initiative, in order to comply with the well below 2 degrees temperature increase agreed at the COP 21. This means for Verallia, in Scope 1 and 2, a reduction of 850,000 tonnes of CO2 in absolute value between 2019 and 2030. Our roadmap basically is focusing on three main areas. The first area is to improve the emissions of CO2 or to reduce the emissions of CO2 by using more cullet and less CO2-emissive raw materials.
This contributes about to one-third of the improvement. The second area is to be more efficient with our processes. You know that the furnace we operate are running at around 1,500 degrees Celsius, and therefore, we are doing a lot of things to optimize the energy consumption, and therefore, the CO2 emissions reductions for these operations. The third pillar is to move towards greener energy, and we want to move from 20% green energy we have today to 60% by 2030. This is, of course, just a résumé of what we presented on 21st of January. This will require also some investments. We've quantified. You can see here how it will be split throughout the years. In the next 10 years, this will represent an additional EUR 220 million new investments to be able to manage and achieve this very ambitious goal of CO2 reduction.
Last but not least on this topic, we are very pleased that not only EcoVadis with the new referential has confirmed our gold rating, which is putting Verallia in the top 5% companies, for the first time, because last year was the first time we presented our results to CDP, the Carbon Disclosure Project, and we were rated A-, which I think for a first approach is quite a significant achievement. As I mentioned before, we also worked with Science Based Targets initiative in order to define our goals for 2030. Last but not least, we partnered also with Ellen MacArthur Foundation in order to work together to promote the circular economy in our industry. You can see here the other partnerships we have. This is very important for us to now focus on the deployment of our roadmap in the years to come.
Moving to just one example of what we are trying to do to promote a more inclusive place of work. There are many initiatives about safety, about the work of handicapped people in the company. One area which we are very proud of is how we share the benefits and the profitable growth of this company with our employees. I have to say that over the period 2016, 2020, over five years, we went from 0% employee ownership to 3.2% employee ownership in the company. Last year, like the four previous years, we offered to 80% of our employees the opportunity to invest in the company, buying shares. Altogether, we had a 42% participation rate to this program last year.
80% in France, which is quite remarkable. This means that as of today, 37% of our employees are shareholders of this company, which shows the trust of our employees in our company and in our strategy. As such, we have been rewarded by the FAS Grand Prix for our practice focusing on developing the employee ownership program. As we committed to at the IPO time, we will keep proposing in the years to come the same programs or similar programs to our employees to favor employee ownership. One program will be, of course, implemented in the coming months. All these are important highlights of last year. I think a lot has happened last year. This has, of course, translated also into financial results, which we are very proud to mention to you.
First of all, reported net sales dropped by 1.9%, actually. At constant exchange rate and scope, the organic growth was 2.1%, which I think you can appreciate is showing the resilience of our company despite the pandemic. Our EBITDA kept improving at EUR 626 million for the year, last year, compared to, if you remember, EUR 660 million the year before. This means an EBITDA margin of 24.7% for 2020 compared to 23.8% in 2019. Again, the 90 basis points improvement in EBITDA margin despite the pandemic, which I think the team is very pleased to report to you. As such, the net income drastically improved from EUR 125 million in 2019 to EUR 210 million last year.
You remember that last year we had, s orry, the year before, in 2019, we had quite a lot of one-off expenses due to the IPO and the refinancing of the Group debt, and the fact that also that our debt has significantly been reduced throughout the year as it has reduced our financial expenses. The earnings per share is now EUR 1.67 per share compared to EUR 1 the year before. This includes a negative impact of EUR 0.37 due to the amortization of the customer relationship that was booked at the time of the acquisition of the glass packaging division of Saint-Gobain in 2015, which is a pure accounting, I would say, impact.
The net debt last year has also very strongly improved to EUR 1,279 million at the end of the year, which means a 2 x leverage, which is really at the low end of our targeted range. If you remember, it was between 2x and 3 x. Thanks to very strong cash flow generation last year that I will let Nathalie comment in a few minutes. We would propose to the shareholders in our assembly in June to pay a dividend of EUR 0.95 per share, compared to EUR 0.85 the year before, and it will be proposed to pay this dividend all in cash.
Given the strong performance last year, we are very confident on the fact that we will be achieving our midterm objectives, not in 2022 as initially planned at IPO time, but as of 2021, including the strong deployment of our ESG roadmap that was presented a month ago. Now, I will let the floor to Nathalie Delbreuve, who will go through the financial results presentation.
Thank you, Michel, and thank you very much to all of you for joining this call. It will be my pleasure to walk you through our 2020 financial results. I will split my presentation in three parts. We'll be first looking at the revenue numbers, then the EBITDA profitability per segment, and finally, CapEx and cash performance. Moving to the growth slide, you can see that we posted turnover of EUR 2,536 million with a reported growth negative -1.9%, but in fact, organic growth has been positive throughout 2020, which is, as Michel mentioned, showing really the resilience of the Group. Volumes have been very erratic throughout the years. The second quarter especially was showing very significantly down volumes due to the first lockdown and the start of the pandemic.
We've seen a good recovery in the second half of the year, especially in the third quarter, as we already commented with the September results. Throughout the year, in fact, in our product, Sparkling Wines and Spirits have been the two categories really suffering. Food jars volumes, on the other side, have been increasing and steadily throughout the year. Price increases have been supporting the growth of the sales and compensated our cost inflation as I will show you later. Talking about the mix, we have seen a negative impact of the pandemic in the first semester, but a recovery in the second half of the year. Overall, throughout the year, it's basically flat. Now, the last pillar that you can see on this chart is the foreign exchange rates contributing significantly negatively, -4.1%, and it is mainly driven from LATAM currencies.
In Brazil, the currency depleted by 40% from the beginning of the year to the end. We suffer from that mainly in LATAM. Now moving to geographical segments. South and West Europe has been resisting quite well. Posting a slight decrease in sales, - 0.5%, and slight volume decrease as well. Italy has been very resilient and could support the segment. Food jars were quite strong throughout the region. In the Beer segment, we've seen a stable H1 and then even some good performance in the second half. Talking about Wine, in France we have negative evolution in the Wine volumes. It has been good, well compensated in Italy and Iberia. Here we really benefit from our geographical footprint that is well balanced in Europe and could mitigate the negative impact of France.
In fact, here in this segment, France is the country affected the most. Here we have the negative impact of the Premium and Sparkling and Spirits, which I already commented on top of it. In Northern and Eastern Europe, here we have a negative impact of the foreign exchange rates, which we didn't see, of course, in the South and West Europe. The Ukraine hryvnia, and Russian ruble devaluated also during the year. Except for that, we have also a slightly positive organic growth, +0.4%. We could see that volumes were down and in all the countries, but it was well offset by selling price increases and mainly in Eastern Europe. Here in this segment, food jars as well behaved well, not enough to fully compensate the volume drop in sales in other categories though.
In Latin America, Latin America has shown really strong organic growth throughout the year. Look at this quite impressive number, +23.4%. The market in all the three countries has been very dynamic, is still very dynamic. We've seen volume expansions in all the countries. Volume performance has been very good in Wine, in Spirits as well. We have been able to increase selling prices throughout the year. We mentioned particularly Argentina, as you well know, with the high inflation in the country, it's absolutely key to follow cost inflation in prices. You will see in our spread that is what we managed to do in the year. Unfortunately, the headwinds from exchange rates, but still a very good and dynamic market. Now moving to profitability and adjusted EBITDA. You will see in the presentation in the next slide, we will go through segments.
On the top right, you have the adjusted EBITDA margin. You will see that we improved the margin percentage at Group level, but also in all the segments, which is a very good achievement. Now if you remember the bridge, the EBITDA bridge, is showing you how our pillars deliver EBITDA. The first one is the activity one. Very negative this year with a EUR -51.3 million. Here we have the full effect of the volume decrease, of the market decrease we just commented. Also adverse impact of inventory variation. We've been destocking this year more than last year, much more than last year. This has a negative impact that you can see here. The spread and price mix cost pillar, as you see, has been very positive, very contributive to our profitability. Prices have been increased well throughout the year.
We've been benefiting from that all the year. As I mentioned, the mix, in fact, was negative at the beginning in the first half. Recovered well including improvement in Premium segment in the second part of the year. This is adding up to this very positive pillar that you can see here. The third, the net productivity is very important. You know this is in our strategy to reduce our production cash cost by an average of 2%. The target is 2% improvement per year. As you can see here, we've been able to deliver more with 2.2%. This is really an achievement in a year with such disruptions close to the pandemic. We are really proud of this achievement. You can see how contributive it is to our profitability. EUR 36 million net contribution.
The exchange rates, you can see unfortunately EUR -36.5 million, mainly LATAM currencies, but also in Eastern Europe as I already commented. To bridge the gap in the other, you can see a small number. It's mainly our COVID-19 direct incremental costs and also some positive impact as a compensation. This EBITDA performance per segment. In South and West Europe, you can see that we improved the percentage from 23.5% to 24%, despite the pandemic. On the positive, spread has been positive. We have delivered a good industrial performance. I was mentioning our PAP program. We had some negative impact in volumes. Here in this segment, the mix did not fully recover. We have the exposure in France to quite premium segments. We've seen improvements, but not back to the zero that we can see at Group level.
Here, mix is still contributing slightly negatively. The situation specifically in France has been quite difficult in 2020. The reduction in sales, even if jars managed to compensate slightly. The mix I mentioned, and also social disturbances linked to the transformation plan that is now carried out and impacting as well industrial performance. In Northern and Eastern Europe, here as well, on the right, you can see improvement of our adjusted EBITDA margin by 0.8 points. The margin improvement is due to positive spread and productivity. Really these pillars are the two ones which managed to compensate the activity impact throughout the Group last year. I mentioned already the negative impact that you can see here for the forex. All in all, the improvement in the adjusted EBITDA, excluding that impact, is 4.6%. Moving to Latin America, a really outstanding performance.
There is no other word. You can see 29.8% margin in 2019, up to 33.8% in 2020. A remarkable margin expansion and really, the three levels, our three drivers delivered fully. We've seen that the market has been dynamic. We were there to catch the growth. The price mix spread, everything has been positive here. We mentioned already the price increases well monitored, and the production action plan, Performance Action Plan is really contributing strongly to our EBITDA in Latin America, is one of the segments that is overachieving our 2% target. Moving now to CapEx and cash. Investments are quite significant in our business, very important to show and to prove that we keep them under control. You can see on this chart that recurring CapEx stayed in the 8% of sales range. That is our strategy and our target.
In 2020, it was fully achieved. We had strategic investments that impact our —over the two years, you have the Villa Poma and Azuqueca investments, capacity investments, which are the CapEx of these over the two years. The startup of these two new furnaces, one in Italy, and one in Spain, has been voluntarily delayed to the first quarter 2021 to adjust our capacity to last year's market. How did that translate into cash flow generation? On this chart, you can see that adjusted EBITDA overall ended up EUR 10 million above 2019, contributing positively to our operating cash flow. CapEx kept under control at a stable level. That is a cash conversion of 60% in 2020. Change in operating working capital contributed very positively, as you can see, with EUR 67 million. To comment here, stock levels.
Stock has been reduced significantly during this year. I mentioned already the EBITDA impact. It is contributing very positively on our cash. This is quite specific to 2020. We ended the year at extremely low level of stock, so 2021 will not see the same trend here. Important comment on overdues. We managed to keep overdues at exactly the same level as 2019, in amount and in percentage, so totally kept under control. Operating cash flow ended at EUR 442 million, to be compared to EUR 408.4 million in 2019. All in all, our net debt has been significantly reduced in 2020 thanks to this operating cash flow we've seen. Thanks to also reduction in some non-operating cash outs. As Michel mentioned, we had IPO, a specific cash out in 2019.
Also, let's not forget that, in 2020, the dividends cash out has been EUR 30 million, because some dividend has been given as shares. Out of a total of EUR 100 million, only EUR 13 million has been cash out in 2020. The leverage is 2.04x, to be very precise, and the de-leveraging of 0.6x. So as a conclusion, is very good but with some specific of 2020. Liquidity, at the end of the year, reached EUR 1,080 million, which is at a very good level and very comfortable level.
Thank you very much, Nathalie. Let's now conclude and give some perspectives about next year. First of all, as you can understand, we are very pleased to report these numbers to all of you, which have shown the strong resilience of our company last year. First of all, I have to recognize and the tribute from our teams, and engagement from our teams throughout the year, which made it possible. This is also the result of the strong health measures that we took as soon as the pandemic started, to protect our teams and keep improving both health and safety conditions at our plants and operations. We, in a nutshell, are pleased to report a positive organic growth of 2.1% and an increased EBITDA up to the level of 24.7% for the year.
The net income also significantly improved to EUR 210 million, with an earning per share at EUR 1.67. As the conclusion, we will propose to the general shareholder assembly, dividend per share of EUR 0.95 in all- in cash. If we look forward, for this year, 2021, we had a slight volume drop last year, a bit less than 2% drop last year. We will recover this volume this year, therefore going back to 2019 volume level. Of course, this will lead also to positive organic growth. Although, on the sales side, we expect sales prices to be more or less flat, given the fact that the inflation of costs in our industry has been more or less flat or slightly negative in some cases last year. The goal for us still is to have a positive contribution of spread to the improvement of EBITDA year after year.
We are aiming at an EBITDA of around EUR 650 million for the year, which will provide more than 25% EBITDA margin, which was the goal for 2022. We will be one year ahead of our goal. As you understood from Nathalie's comments, we have a very strong market in Latin America, and more specifically in Brazil. We are sold out. Despite the new factory we built two years ago in Jacutinga, we are now sold out in Brazil. Therefore, we decided to build a second furnace in our Jacutinga Factory, in Brazil, which will represent a strategic investment of around EUR 60 million to be spread over two years between this year and next year. Altogether, as, of course, the hotels, café, and restaurants will progressively reopen in many countries, as people get more and more vaccinated, we are hoping that the worst is behind us.
As you can see, for Verallia, last year was not such a worst year. Going forward, we have a positive outlook on the future growth of the company and the continuous improvement of EBITDA margin of this company, allowing Verallia to achieve its mid-term target one year ahead of the goal, which means in 2021, we shall reach all our targets except, of course, the organic growth target that has been abandoned already a year ago. This being said, now we are very pleased to end up this presentation and take your questions through the Q&A session.
Hi, this is your operator. If you would like to ask a question please press star one on your telephone keypad. Please ensure that your line remains unmuted locally. You will then be prompted when to ask your question. Our first question via the phone lines comes from Matthias Pfeifenberger from Deutsche Bank.
Hey, good morning, Nathalie, Alexandra, and Michel. Congrats to the results, and thanks for taking my questions. The first one is really on the pricing dynamic. As I've heard for 2020, you raised prices. That's what Nathalie said. I think you're doing it at the beginning of the year, and then the energy costs obviously deflated. This year, you're seeing flat prices, but energy prices recovered. Is that just basically saying for you it hasn't changed, and energy prices deflated last year, they are coming back now to these levels and pricing therefore can remain stable? Is that how to think about it?
Okay, Matthias, thanks for the question. First of all, you'll remember that we have a very strict hedging policy that was implemented now a few years ago, which basically covers all energy costs at October period time. October period, sorry, at October time, we cover the next year energy costs through our hedging policy. What happened during last year, which is the fact that the spot price of energy has dropped during the year, frankly speaking, we didn't benefit. On the opposite side, we have hedged in October 2020 the energy cost for 2021, therefore, should the energy price keep going up in 2021, we will not suffer from that. That's first, an important reminder for everyone to understand.
This hedging policy that we've implemented three years ago is the one that allows us to give precise price increase targets to our salespeople in order to cover for the inflation of costs. The good news last year is in 2020, you know that mostly in Europe, it is not the case in Latin America where prices are negotiated on ad hoc basis, which means very often, up to every month in Argentina, for example. In Europe, usually the prices are negotiated once a year. The good news is that, when the pandemic arose last year, most negotiations were completed and there has been no renegotiations for the year. Our customers and our competitors and ourselves, we all stuck to our agreements and therefore prices did not move.
Moving forward, for 2021, taking your comments, it's true that we have, in some countries, a real deflation of energy costs. Therefore, in some countries, this could even lead to slight price decreases while still maintaining a positive spread. In other countries, it's not the case. In other countries, we still have an inflation of cost and therefore some price increases will be made. Altogether, we guess that prices will be more or less stable in 2021 compared to 2020, and still maintaining, sorry, positive spread despite stable prices. This is our goal.
Okay, thanks a lot. The second question is basically on current trading, especially on the Premium stuff, Champagne, Spirits, and then also whether you stand on FX in terms of year to date versus 2020 average. Thanks.
I will answer the question about the premium trend. As you've seen in our comments or as you heard from Nathalie's comments, the mix impact was quite negative in the first half of last year and has recovered in the second half of the year, meaning that the full year, our mix impact was more or less neutral. There has been no significant, throughout the year, on the full year basis, change in mix. If you look, of course, in more details, what happened last year is the two segments that have been the most severely impacted by the drop of volume has been Spirits and in Sparkling Wine. These are the two products that are usually used for celebrating parties and other events. As last year was not very eventful, unfortunately, they have been less consumed by the market.
These are usually segments in which you have quite a significant share, especially in the Spirits segment, significant share of premium products. You can read from our customers' already comments, some of our customers' comments in the spirits industry, they see a positive outlook for 2021 with a progressive recovery starting with China and Asia, which was, if you remember last year, the first country very strongly impacted by the low consumption of spirits and a progressive recovery in this area. On the Spirit side, we should see some recovery and some improvements. The Champagne this year, which is a small part of our business, but a very important and profitable part of our business, will still be in a difficult situation the second year in a row.
I remind you that last year Champagne dropped by 18%, and this year we expect C hampagne to drop a high single- digit. The Spirits and the other Sparkling Wines should recover and therefore we don't expect for the full year negative mix impact at company level.
Mm-hmm. Okay, thanks a lot.
For the forex, I can answer.
Oh, sorry.
You had the question. Average, in fact, the main impact for us is coming from LATAM as we said, the conversion impact, I would say, and average BRL conversion rate, financial rate, in 2020 was BRL 6.3 to be compared to BRL 4.5 in 2019. Quite a significant devaluation. In our outlook for 2021, we are cautious on this translation impact. As for today, I would say that the currency is behaving more stable, and we think that we have been cautious enough in our 2021 outlook. One comment on other foreign exchange exposure. Don't forget that it's pretty limited. We have local flows, in fact, and when we have specific exposure, for example, linked to CapEx, we do a hedge to limit this impact. The foreign exchange is really conversion of our financial statement.
Okay, thanks a lot. I get back in line. Thanks.
Thank you, Matthias.
Our next question comes from the line of Francisco Ruiz from Exane. Francisco, you are now unmuted. Please go ahead.
Hi, good morning, and congratulations for the great numbers. I have two questions. The first one is on the outlook. Mainly, if we take into account that the PAP will continue and could add something like EUR 30 million, and as you have said, you do not expect any negative price/ cost contribution and probably some positive contribution from volumes. I think that this EUR 650 million, it is conservative unless you think a very strong headwind in terms of FX. The second question is on the dividend that, clearly this is above the target that you mentioned on the IPO to do, or 40% or EUR 100 million, but given the good performance of the debt in 2020, do you expect that this dividend could be increased, I don't know, during the year or even at a higher pace in 2022?
Okay. Thank you, Francisco, for your questions. First point, I think you perfectly well understood our position regarding the outlook for 2021, and your math is correct. Therefore, if we do more than EUR 30 million of PAP, which is our goal, as you know, every year to generate more than EUR 30 million of net savings, and with, I would say, flat spread or zero plus spread, and a slight growth, we should be above EUR 650 million indeed. However, as you have mentioned, the last two years, we have been hit by negative headwinds coming from the Forex, and it's still very difficult to forecast. If we look at what the market consensus is about exchange rates, unfortunately we might still this year face negative headwinds on the FX side.
This is the one thing that we will, of course, monitor very carefully, and you can monitor as well as we do, because this is not under our control. That's the reason why we guide, if you want, towards EUR 650 million and not more. Of course, as the forex situation clarifies throughout the year, we'll probably be able to maybe adjust our forecast. Regarding the second point— sorry?
Michel, could you give us an idea of what's the impact on FX that you are assuming on the outlook?
You know that 10% of our business is in Latin America, and as Nathalie said, it's purely translation impact. It's not a transaction impact, it's a translation impact. Let's say together, if all the currencies in Latin America drop by 10%, that's 1 point of EBITDA impact for the company. It's quite meaningful. You're talking about EUR 25 million of impact. 10% shift in exchange rates in those countries is not a big number, by the way. Of course, excluding Argentina, which is in hyperinflation, if you look at what Brazil currency, the Brazilian real, has devalued last year, we are talking about 33% devaluation last year of the Brazilian real. 10% is as good as anything. I don't have a crystal ball tell you what will be the exchange rates, but it's plausible. Unfortunately, it's possible.
Of course, if we are for the first year not impacted by exchange rate, we'll be more than happy to celebrate that. What I can do is, your math is correct, and I confirm the PAP target of at least EUR 30 million savings. Okay.
Okay. Thank you.
Regarding the dividend, this is true that with EUR 0.95 per share, this represents a payout ratio close to 55%, above the 40%. If you remember, when we guided at H2 time, we said that the 40% was a minimum, and the EUR 100 million of dividend was also a minimum. It was a floor in both cases. What happened is, given the huge cash flow generation of last year, given the fact that we've reached the low end of our leverage target, which is 2 x EBITDA, we thought it was appropriate to start increasing the dividend by EUR 0.10 per share. Going forward, this still leaves us enough and sufficient room for looking for acquisitions.
Let's be clear, this has always been our strategy, is we could increase, of course, a lot more the dividends to the shareholders, but we want to leave some room for acquisition should there be any opportunity during the year. Of course, if at the end of the year we find that we still have too much cash, we will keep doing what we've said, which is basically return the cash to the shareholders. Today, it's too early to say what will be done in the future in terms of the dividend policy.
Okay. Very clear. Thank you very much.
Our next question comes from the line of Lars Kjellberg from Credit Suisse. Lars, you are now unmuted. Please go ahead.
Thank you. Just wanted to focus in a bit on the final quarter performance, which were clearly above certainly what we had modeled and I guess market expectations. You had called out accelerated furnace activity and potentially longer stops. As you alluded to in your prepared remarks, clearly stocks are very low. I suspect production exceeded your own expectations, if you want to comment on that? Also, if you can walk us through how you think about furnace rebuild cycles and the activity in 2021. Clearly, you had a bias towards the second half in 2020. If you can walk us through how that should work through the system. The last question I have would be on the CapEx. Of course, you have your sustainable CapEx, part of which is strategic.
You now have the new plant in Jacutinga, and then the maintenance, I suppose still around the 8% mark. If you can share any color on how we should think about CapEx in totality in those various buckets in 2021, please?
Comments on the quarter four, and how we explain the overperformance. First, let's remember then when we last published and when we made the outlook for the year, it was in October. Just the day before or after, our president announced the second lockdown. It was again, quite an uncertain period, if you remember, after a very strong and quite back to normal summer, at least in Europe. We were again in quite uncertain times. The first comment we can make on the first quarter versus our outlook at the time is that yes, we were better first in sales volumes. The market has been better than expected.
The mix that we had in our outlooks was conservative, still negative, and in fact, as I commented, the mix did recover back to normal overall, or back to 2019 overall throughout the year, and it was also in Q4. One area which contributed much more than expected is LATAM. Latin America, we did not expect such a dynamic market with very high profitability. Again, the currencies, the FX impact was less negative. The devaluation we mentioned for the year was less acute in the fourth quarter. That is in a nutshell what we can comment. For the furnace rebuilds. In the second half of 2020, we had six furnace rebuilds, shutdowns for rebuilds. In 2020, it was basically out of the seven we have almost every year, six were in S2 in the second semester in 2020.
In 2021, we won't have the same pattern, as most of the rebuilds will be in S1 and even in Q1. We will have a very different shape this year.
Still around the seven furnace rebuild mark.
Right. Yes. Certainly, yes, exactly.
Yes.
I'm very focused.
We'll have seven furnaces as last year, this year. Again, the seasonality is changing every year based on the condition of the furnace, based also on the suppliers that are intervening to help us repair and rebuild those furnaces. Last year, there was a strong workload in the second half of the year. This year, the first half of the year will be the most loaded part because we will have five furnaces repaired in H1, in the first half, and two in the second half of the year.
Got it.
Regarding the question about CapEx. Clearly, the guidance of 8% recurring CapEx is still valid, and as you've seen last year, very well respected. On top of this, you have to add strategic CapEx. In the past, the strategic CapEx were the Azuqueca and Villa Poma furnaces, the two brownfields in Italy and Spain. There is, for this year and next year, a new strategic CapEx with the second furnace in Jacutinga for about EUR 60 million over the two years period. You need to add to the strategic CapEx, the CapEx that we presented on the 21st of January, which are related to the transition towards a greener company, I would say, with less CO2 emissions.
We've provided a kind of visual split or year by year of this CapEx, and you can see that every year it's around EUR 20 million-EUR 25 million of CapEx. Altogether, it's EUR 220 million over 10 years. This is what you can look at, and this CO2 related CapEx will be clearly isolated as strategic CapEx as well.
All right. Strategic CapEx, that's around EUR 50 million mark then, broadly speaking. Is that fair?
Sorry, say it again, please, Laurent.
About EUR 50 million in strategic CapEx, including CO2 related investments in 2021.
Yeah. Well, the CO2 will be not every year the same, because some of these investments are linked to furnace repairs and furnace reconstructions. They will be not evenly spread out for the year. By the way, altogether, in terms of cash CapEx, you are closer to EUR 180 million rather than EUR 220 million, because some of the difference could be considered as a partnership with some suppliers, therefore, they are not CapEx that will be borne by Verallia, but by our partners. For Verallia, you're talking about around EUR 180 million of cash out or cash-related CapEx. You see that in 2021, we're talking about around EUR 15 million. 2022 will be much higher, around EUR 28 million. That's why I'm indicating it's around EUR 20 million per year on a regular basis.
Thank you.
Our next question comes from the line of Scotti, Charles from Kepler. Scotti, you are now unmuted. Please go ahead.
Yes. Good morning, everyone. I have three questions. The first one on the profitability target. You are on track to reach a 25% margin as of 2021. Basically, what's the next step for you? Any reasons why you should not be able to fully catch up with the Vidrala? The second question on the new furnace in Jacutinga. What is the size of the new furnace and how much additional capacities it will bring in 2022? Also overall, including the startup of Azuqueca and Villa Poma, what should we expect in terms of additional production capacity in 2021? Finally, it seems that you ended up the year with a very low level of stock at your level. It means that you will sell on production in 2021. Should we expect the profitability on incremental volumes to be in the high end of the historical range?
Thank you.
Okay. Regarding the first question on profitability, clearly, we will have to give ourselves a new target based on our three levers, organic growth, positive spread, and regular performance action plans improvements. We don't see any limit right now for us not to reach at some point in time, the level of margin that our direct competitor in Europe, Vidrala, has. Clearly, we will communicate probably later during the year, some midterm objectives, after having had our strategic reviews internally. Yeah, there's no fundamental reason why we should not be able as a company to reach this level of margin. Regarding the second furnace in Jacutinga, it's an average size furnace, around 100 sq m furnace, which will provide around, again, 100,000 tonnes per year of extra capacity on the market. The second question is in Europe, what happens?
We are starting as we speak, the two brownfield that have been invested in the last two years in Villa Poma and Azuqueca, so in Spain and Italy. We will enjoy with these two furnaces on an annual basis, again, more or less the same amount of If you take an average furnace, it's around 100,000 tonnes per furnace on average. On an annual basis, we have two new furnaces of two times 100,000 tonnes, minus the furnace we stopped in Cognac. All net-net, all- in, the capacity increase for Verallia is only, if I can say so, 100,000 tonnes on a full annual basis. This is to be compared with a European market of glass, just to have some numbers in mind, of 20 million tonnes. Basically the additional capacity of Verallia is very minimum compared to the size of the market.
Your last question is a bout inventory. You want to answer this one, Nathalie?
Yes. Inventory, you are right, we end the year 2020 with quite low inventory. As you said, we will sell mainly on stock in 2021. We also need to rebuild inventory. Sorry, sell on production, excuse me. My mistake. We will sell on production and we need also to come back to better levels of inventory, and we have the additional capacity we just mentioned to support that. In the beginning of the year, we are still in the ramp-up of these facilities, which means that some extra fixed costs not fully covered for the ramp-up. That is important to say that we will not be at full speed right from the start.
Thank you very much.
Our next question comes from the line of Jean-François Granjon from ODDO . Jean-François, you are now unmuted. Please go ahead.
Yes, good morning. The first question concerns the organic growth. Could you give us more color for what you expect for the organic growth in 2021? If I well understood, as you expect a higher volume, what about price mix? Due to the probably negative forex impact, do you expect growth for the global sales in 2021 compared to 2020? My second question concerns the EBITDA guidance. The slight improvement expected by more than EUR 650 million, will coming from more volume or from a more spread price mix impact? My third question concerns the CapEx. Taking into account the return on CapEx, the new investment for the new furnace in Brazil and the CO2 investment, could we integrate an average, I would say, EUR 250 million CapEx program for each year? Thank you.
Okay, Jean-François, good morning. Thank you very much for your questions. Regarding the revenue growth, this year in 2021, we expect to recover the less than 2% volume drop of last year, which means volume-wise, it's around 2% growth that we expect to see this year. As indicated, prices will be more or less flat, except in Latin America, where, of course, we have much more inflation in the countries. In Europe, which is 90% of our business, prices will be more or less flat, and mix should be slightly positive. Again, you are not talking about huge numbers. We expect price and mix to be slightly favorable, but without the same positive impact as the one we had last year.
As you said, and we commented before with Francisco, we still have a big unknown, which is the exchange rate impact that we will face, that we believe will still be quite negative, but probably not as negative as it was last year. Regarding the EBITDA improvement, again, same pillars. We will have the volume contribution to help improve the EBITDA. Spread should be slightly positive. That's the goal, but not as strong as last year, as we indicated before. You can count on the [EUR 30+ million] productivity coming from the performance action plan next year with still the negative impact of exchange rate due to the translation of financial statements in Latin America especially, and a little bit of Eastern Europe into euro. Nathalie, do you want to speak for the CapEx?
For the CapEx, indeed, we intend to keep the 8% recurring. As we target to basically go back to 2019 level in sales in 2021, that is our outlook. On top of that, we have the Jacutinga II investment, which we mentioned, that will be spread over the two years, so that is a EUR 30 million in average, and then the CO2 investment. Indeed, yes, if you do the math like that, the EUR 50 million, at least for the next two years, are quite plausible, even if there will be some timing for sure. The EUR 250 million are quite okay for 2021 and 2022.
Okay. Thank you very much.
Our final question comes from the line of Fraser Donlon from Berenberg. Fraser, you are now unmuted. Please go ahead.
Yeah. Hi, Michel and Nathalie. Just three questions from my side. The first would be if you could maybe talk a bit more about France and maybe in very approximate terms, how the margin there is looking versus the rest of Southwestern Europe and whether you feel like you've performed in line with the market in 2020 or whether some of the lower cost operators in Iberia in particular might have taken some share. The second question would just be on the carbon costs, and what does that mean for the glass industry in Europe in general? I know it's a factor for all operators, but do you see any risk of imports from regions outside of the EU ETS scheme? The final question is just on the discipline of competitors, in terms of visibility on capacity additions into 2021.
Do you think that your peers will remain sensible as we head into an inflationary cost climate where you probably will need to look to increase prices again into 2022, perhaps?
Okay. Thank you very much, Fraser, for your questions. First of all, if we zoom on France situation, as you probably understood from the previous calls and presentations we made, in the Southwest Europe segment. France is the lagging country out of the four countries there. It is possible Spain, Italy, and France. France is, in terms of margin, behind the other three countries. It's still an opportunity for us to improve. We don't know for yet because the statistics are not yet available about the French market last year. We don't know if we gain or lost market share. By the way, that's not a driver for us. We've never been driven by market share, as I said before.
Clearly, with the difficulty of last year linked to the transformation plan that took place, we believe that we are now in a much better situation in 2021 going forward, with a much more leaner, if you want, footprint, initial footprint in France, and a slightly more competitive cost base as well. We are pleased. Not pleased, because at the end of the day, it was difficult to implement. It was, of course, socially difficult. Although, out of the 150 jobs that had positions that have been eliminated in the seven French factories, only one factory had to go through forced dismissal. At the end, out of the 150 jobs that have been eliminated, only 20 people had to leave the company, were forced to leave the company.
The company has taken the commitment to support these people until such time they find a job close to their working place or living place. This is now behind us. This plan is over. It's been implemented. The last letters have been sent out this week. Therefore, France is now in a much better position, I would say, to regain the competitiveness and to catch up with the other countries that was necessary. Regarding the second question on CO2, as you've seen, the CO2 costs has gone up to EUR 40 per tonne now. Let's remind you that we've also very clearly indicated our hedging policy in terms of CO2 coverage. We are fully covered for this year. We were hedged a long time ago on 2021.
We have covered 75% of our shortfall of CO2 quota for 2022 in Europe, and we have covered 50% of 2023 shortfall already. So our hedging policy has proven to be quite useful. Should, of course, CO2 keep on increasing, I am sure the whole industry will pass this inflation cost to the customers through the annual negotiations, as we've done in the past, passing the final cost, inflation cost to the customers. Personally, I think it's not a bad thing that CO2 increases because it helps us justify the investments that we are making to move away from some technologies that are not as efficient as the most modern technology that we can have on the market in terms of emissions related to production.
Regarding your third question, it is clear that the market, if you remember before the pandemic, the market in Europe was short of capacity. This is what led Verallia to build both two of the new furnaces in Italy and Spain. That was quite different from one country to the other. France, we was not the same situation. We didn't have a shortage of capacity, just the opposite for Verallia. Many of our competitors, from what we understood from the public statements of our competitors, have also decided to postpone or delay. Some cases maybe even withdraw some future investments. As the market, I think, recovers, and the volume go back to the 2019 levels or above, the market will have to be served with new capacities coming from Verallia or others. That's a must to accompany this growth of the market.
We don't see a lot of projects right now, but surely as the market, I repeat, strengthens and grows again, we should expect some capacity increases in the future, which is normal and which is expected.
Allow me to take the opportunity of your questions, Fraser, to enlighten you on some cash patterns for 2021. You were mentioning the France situation and also CO2 and carbon costs. Have in mind that in 2021, the cash out of the transformation plan in France is for 2021. We are talking about around EUR 50 million. With our hedging strategy and the end of the phase III on the CO2 quotas, we'll have a specific cash out this year, in 2021, of EUR 28 million for this that we didn't have in the previous years.
Very clear. Thanks to both of you.
Right. In the cash pattern, sorry, to be fully complete, dividends, just to focus again, I mentioned that we did not cash out all the dividends in 2020, only EUR 13 million out of the EUR 100 total. Now the dividend we will propose to the shareholders meeting, we intend to have it cashed.
Which is an amount of EUR 117 million altogether. Okay.
I can confirm that we have no further questions in the queue, so I will pass the call back to your hosts.
Okay. Well, thank you all for attending this call this morning. I wish you all to stay in good health, and I look forward to talking to you very soon in the various opportunities that we will have. Thank you very much, and I wish you a good day.
Thank you.
Goodbye.
Have a good day.
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