Hello, welcome to the Loomis Q2 2020 report. Throughout the call, all participants will be in listen-only mode. Afterwards, there will be a question and answer session. Just to remind you, this conference call is being recorded. Today, I'm pleased to present the CEO, Patrik Andersson. Please go ahead with your meeting.
Thank you very much. Good morning, everyone, and welcome to the second quarter presentation from Loomis. As you heard, I'm Patrik Andersson, CEO, and with me here today I have Kristian Ackeby, our CFO, and also Anders Haker, Chief Investor Relations Officer. I will give a short overview of the quarter and then at the end, open up for questions. Let's start the presentation and turn to the next page, which is about the COVID pandemic. As everybody can understand, it's been quite a challenging quarter from many aspects. We have put the well-being of our employees on the top of our agenda and spent a lot of attention, money, and investments to safeguard the health and safety of our employees.
I also would like to say that all of Loomis employees have done a fantastic job in maintaining the high quality of our services despite the tough situation we've had. I'd like to thank all Loomis employees at this moment as well. I also like to highlight that there's been a lot of false rumors around cash, that cash is spreading the virus. These rumors have been denied by many experts, also by the European Central Bank, WHO, and many others, also the Swedish National Bank. They have confirmed that there is no heightened risk of using cash, and you can read more about all of that at our website. We also have a very crucial role in the infrastructure of a society, and we notice that every day that banks and central banks, they are really keen that we are operating our services.
I also would like to come back to that, as we have had the service on a high level there, many opportunities going forward for us, but I'll come back to that a bit later when I talk about the segments. All our branches have been running, but not everyone at full capacity, and we've been very focused on servicing our customers throughout the pandemic. Of course, we have cut all the costs we could and also postponed capital expenditure that you can see also from our P&L. I think that one strength we have had is the Loomis model, a very decentralized system that people on the ground take action every day to safeguard the service but also reducing costs and manage the cost.
As a consequence of the pandemic, we have postponed the dividend of SEK 11 per share. We have also signed a new credit facility of SEK 1.2 billion to strengthen the balance sheet. Having said that, we are in a very good position from a financial point of view. We have a positive free cash flow in the quarter of SEK 350 million despite the situation. I would say that we are very strong from an operational and financial point of view. We are well prepared for the rest of the year. I also would like to mention that we see very high cash levels in all countries, both in the U.S. and Europe. There's never ever been so much cash in the societies we operate in since the 2008 financial crisis. That goes for both Europe and U.S.
Having said that, let's turn to the next page and go through the highlights, and I'll come back to some of these highlights during my presentation later. Some bullet points. I talked about the dividend, but we also got the approval from the authorities, for the Nokas acquisition in Sweden, and the integration is ongoing as we speak. The regrowth was -18%, and we had last year the acquisition of the Prosegur business in France, that affected last year, of course. We have an organic growth of 20%, and we see, of course, significant negative effects from the pandemic. We see a larger negative impact in Europe compared to the U.S., and that has to do with the structure of the customer and structure of the contracts.
We have more retailers, smaller retailers in Europe, in U.S., we have bigger financial institutions and larger retailers. That makes a difference. The quality of the service continued to be very high level. As I said, we see future opportunities. Operating margin was 4.8%, again, of course, impacted by the volume losses we have had. The trend is positive. Looking at the U.S., of course, we are in a very good spot there. Europe has been recovering throughout the quarter. We see positive operating profits in June. April was the worst month, of course. Then it gradually been improving throughout the quarter. As I said, a very strong quarter from a U.S. perspective. Last but not least, operating cash flow 264% of EBITDA. Here we can see high cash conversion affected by lower capital expenditure and positive working capital movement.
That's been one of our focus areas throughout the quarter. Let's turn to the next page and go into Europe. I mentioned the acquisition in France last year. Of course, this integration has paused a bit during the quarter, but now we are up running again. That integration process has now been intensified. France is and will be a two-player market going forward, and we see that we can realize the synergies and create a very stable market in France. As I mentioned, the integration of Nokas is also initiated, and we expect positive results in next year. Organic growth was - 29%. However, clear signs of recovery during the quarter. More countries are opening up as we speak.
We see, of course, significant impact in Spain and France and U.K. When it comes to Spain and France, we actually see quite a bit of an improvement during June. I would also like to mention that this crisis also opened up a lot of opportunities for us, both in Europe and U.S. In Europe, especially when it comes to ATM fleets that are being outsourced, that we gain customer, we gain market share. There will be more opportunities for M&A going forward when some of our competitors are struggling in the market. Operating margin, -3.4%, of course, then impacted by lower volumes. Gradually an improvement during the quarter. Let's turn to next page, which is U.S. Organic growth was at -9%. We had a very good quarter when it comes to SafePoint.
Now continued Treasury accounts for 18% of the total U.S. revenue, which is also one of the factors behind the strong margin. I would say that from an installation point of view, it was also a strong quarter. We have a strong pipeline when it comes to SafePoint. We actually now just recently closed a contract on 350 SafePoint with one of the leading fast food chains in U.S., and that's very promising going forward. A very strong pipeline when it comes to SafePoint. Of course, some of our customers, we have offered them to postpone some of the payments, but that will be picked up later during the year. That's more of a timing effect. CMS, 33% of the total revenue, and of course then impacted by the pandemic, and that gives a shift in the business mix.
I would also say that we have had very high focus on the quality of the service that we are open, that we service our customers. We can also see an inflow of new customers coming to us. We also see that this event, the pandemic, is a trigger point for more outsourcing from the banks. Now it's a good opportunity to look at your own processes and then outsource what's not core business. We see that, and that is really happening as we speak. In that sense, it's quite positive for us. Operating margin was at 15.1% versus 13.7% the same quarter last year. That's a fantastic margin. That's all-time high in a Q2. Of course, there are a couple of factors that's influencing that margin.
One is that we have been able to reduce the overtime cost as the situation with employment in the U.S. is a challenge. We have been able to reduce the overtime and save quite a lot of costs on that side. We have a good expansion in the SafePoint business, but also we have a structure in the U.S. with more customers coming from the financial side, but also bigger retailers, which is in a way protecting the top line. We are focusing on our customers that are willing to pay for service, of course, as we always have done. We have been able, I would say, in a very successful way to drive efficiency in all our branches in the U.S. From that perspective, a fantastic result in the U.S. Let's turn to the next page. I'm not intending to go through the P&L.
You have heard my highlights during the call here. I will just say that we turn to next page, and I will open up. Operator, we will now open up for questions.
If you have a question for the speakers, please press zero one on your telephone keypads. Our first question comes from the line of Daniel Thorsen of ABG Sundal Collier. Please go ahead.
Yes, thanks. I start with a question on Europe, please. When you say that June was profitable, is that including the SEK 80 million governmental support you got in the quarter? How do you split that out through the quarter, please?
Yeah. That's a good question. I think that just to be clear on that, the direct cost we had to handle the pandemic, so in terms of furloughing or cleaning or protection and things like that, it's double the cost compared to what we got from the states. Net, we have more costs to handle the situation than we got money from the states, from the government to be specific.
I see. That is actually just compensating a bit of your elevated costs. That's how we should see it?
It's not driving up.
No. On the contrary, we have negative impact from direct costs of the pandemic. Yes.
Okay. Despite that, you did the profitable segment Europe in June?
Yes, that's right.
Okay, excellent. Then we'll see, in terms of organic declines per branches in Europe, where did you see the largest declines and what magnitude are we talking about in a single branch? Are we talking about 50%, 60%, 70% decline in a single branch, or what's kind of the magnitude here?
Well, it's quite a big spread in Europe. I think that it's directly connected to the close down of the society. In that respect, I think the U.K. has been hit the most, because U.K.'s been totally closed for many months. There is a direct correlation. Of course, also the countries which have quite a large FX business, foreign exchange business, has been impacted. Norway, for instance, has had quite an impact. The business mix and the closure in the countries, that's what's affecting.
Okay. The best performing countries in segment Europe, who are they in the quarter?
We have Turkey, for instance, which are actually showing growth in the quarter. We have the Latin American countries also in a very stable phase when it comes to the top line. Then on the other side of the spectrum, we have countries like U.K., Norway, depending on the large FX business. You have Belgium as well. Then in the middle, we have a large range of countries.
Okay. Thanks for that. The final question from me on the U.S., if we look into Q3, we see that it looks like a second wave in some of the states in the U.S. Could that affect you negatively, or have we seen the largest negative effects behind us still?
That's a good question. We're following that day by day. You're right. We see that there is a second wave. How that is impacting, it's hard for me to say. I think that we will be on this level when it comes to top line, at least in U.S., give and take a bit. That's how I see the situation today. That can change, of course, from day to day. We see a relative stable situation. After that, we think that U.S. will be in a good spot going forward based on that society will open up, and as I said, many opportunities coming out from the SafePoint side, more outsourcing the ATM side and things like that.
Okay. Interesting. I'll just end up with one as well. SafePoint net installations in the quarter, is that a figure you can give us?
Yes. It's above 1,000. It's a very high number in a specific, given the circumstances.
Okay, excellent. The goodwill write-down in Europe, SEK 48 million, I think it was, what country did it relate to?
It's a mix of different countries in Europe. We're taking a bit here and there. We have goodwill of SEK 7 billion, so it's quite a small number in that sense. It's a mix in Europe.
Okay, thanks. That's all for me.
Thank you. Our next question comes from the line of Johan Dahl of Danske Bank. Please go ahead.
Yes, good morning. Just a couple of questions. I was just wondering if you could share possibly the organic growth in June for Europe when you claim to be profitable. Secondly, I was also wondering if you could describe a little bit in terms of FTEs, what you have been able to do in Europe in terms of permanent redundancies to mitigate the weak sales, and also what you expect in terms of furloughs going forward.
Yeah. The number in Europe, in June is about - 20%, about. There is a big spread, as I mentioned, from country to country. In that number, we're doing a decent profit. Then we see also that we expect also in July, that July from top-line point of view will be better than June. We are in a positive momentum in Europe going forward. When it comes to the number of FTEs, I'll hand over to Kristian. He has full control over that.
Regarding FTEs in Europe and during the quarter, we have furloughed a lot of people, of course, and at the most, we were at approximately 30% of the workforce within Europe. You see, when you look into the numbers in the report, we are now down on the FTE side slightly more than 15. There are currently still subsidies available in our largest countries in Europe, and they are available for Q3 as we can see right now. I hope that gives a summary of the situation.
What can you say, Kristian, regarding permanent cost out measures that decisions you have taken or plan?
Yeah. Of course, majority is furlough, but the FTE reductions also include permanent takeouts.
Thanks.
Thank you. Our next question comes from the line of Karl Bonnevier of DNB Markets. Please go ahead.
Good morning, good management of a difficult situation, I must say. You gave us the guidance that April was down, was it 30% or something like that, for the full group, or 25% for the full group, slightly more for Europe. Now you say June was down in Europe for 20%. Could you just give us April and May numbers or the indication for it, then maybe also give us some granularity if you're looking at, say, bigger markets like, say, in France that is now more out of this pandemic situation and the active closedowns, at least what kind of developments you have seen in, say, volumes coming up to the end of the quarters in those markets? How quickly do they recover, so to say?
I think that Europe was more hit than U.S. in the beginning and then during the whole quarter. I think we were down around 35%, 40% in the beginning of the quarter, and that's gradually been improving. I think that we see that the big countries in Europe like France, Spain, Austria, Switzerland, we see nice improvements during the quarter. I think that U.K. still it's a bit of a challenge due to the fact that it's been closing down. The big country, Central Europe, is recovering quite nicely.
I guess there is, as you pointed out, with the arguments of cash not spreading the virus and this, there is obviously a risk of some sort of permanent damage to the volumes in the segment due to this, that cashless society takes another step forward and so on. Is it too hard to measure that at this stage, or do you have any idea of what kind of recovery levels we will get back to, so to say?
I think that U.S. is not an issue as such. I think that we will see, as I said, a triggering of more outsourcing in the U.S. going forward. When it comes to Europe, it's a bit too early to say. It varies from country to country. I don't dare to speculate. We haven't seen any impact from that as we speak. It's a more general close down, and people are spending less money. That's what we see. We don't see any big impact of the virus and things like that. Of course, you can see signs on some shops in Sweden and so on and so forth, that's more as a sort of a specific country problem, I would say. In Spain and then in France and Switzerland and Austria, that's not an issue, I would say.
I guess from your point of view, if it come to some sort of, say, change to demand patterns, your cost structure, will you allow you to balance that out to some extent?
Yeah. That's right. I think that the thing which is very important is that we are not living on the app. The cash level in the society is just one part of the equation. I think that the level of outsourcing is the most important. I think that, again, that this event can trigger much more outsourcing from central banks, from commercial banks, that ATM fleets will be outsourced. I think that that's something positive we at least bring with us, and I think that is what we're looking at, to being close to the customer to pick that up, that outsourcing that will come to the market.
Excellent. Fantastic development in the U.S. for you. You mentioned good customer inflow, and could you share some more light on that?
No, I think that our philosophy or strategy has been to have high quality. We're not the cheapest in the market, to be honest, but we have had high quality, and we have kept that high quality throughout the quarter and the pandemic. That means that some customers maybe are not that happy with some of the other providers, and we see that they're coming to us. That's a clear sign. What we also see is that more bigger banks and bigger retailers are now looking at continue or start outsourcing because they see that we can do this so much better than them, and it's clear signs of increased outsourcing in the marketplace.
Excellent. Just on the margin, very strong margins in the U.S., obviously, looking at 16+ in the quarter, and you're still alluding to that there is a negative mix in that, looking at CIT, CMS mix. Obviously, as SafePoint is helping, must be helping them being the big part of it. Or is there anything else happening underlying in the CIT, CMS mix we should be aware of?
No, I don't think so. No. The CIT volumes, the stocks go down for sure, but that's been compensated by more ATM work. It's been compensated, but we still have growth in the SafePoint side. In that sense, I would say that rather the mix is positive, less CIT, more SafePoint, more CMS, more ATM. That has helped the margin. We see that the ATM business. Because what's happening is that some bank branches have closed or they don't open up as many hours, and then the ATMs have been instead of banks in a way. That service has been increasing during the quarter in the U.S.
Excellent. Finally, a final dividend decision for the current year. Is that something we should expect to be announced around the Q3 quarter, or how should we see that?
One more time.
Yeah, no, coming back with a final dividend decision. Obviously, you're still calling it a postpone rather than fully canceled. Is that around Q3 we should expect that kind of communication?
Yeah, I think so. Around Q3, beginning of Q4, I would say.
Excellent. Thank you.
Again, that's the board of directors decision. That's not my decision, but of course, you're aware of that.
Excellent. Thank you.
Our next question comes from the line of Mikael Löfdahl of Carnegie. Please go ahead.
Yes. Hi. First, a couple of questions on the government grants. You're only mentioning Europe in this sense. Have you received any grants or subsidies in the U.S.?
Kristian here. We have not received any subsidies impacting the income statement in U.S.
No postponed payroll taxes or anything like that?
We have postponed payments in U.S. That we have, but nothing that impacts the income statement.
Okay. It impacts the cash flow for the quarter then?
Yes.
Okay. Could you magnify that perhaps?
I think in total, not going into segments, but in total, we estimate that we have delayed payments of SEK 200 million-SEK 300 million.
Swedish kronor.
The cash flow is helped by SEK 200 million-SEK 300 million, and that is only a loan that should be paid back in 2021, 2022 then, if I'm correct?
When they are due. Yes, that's true.
Yeah. Okay. Secondly, on the government grants in Europe, you're saying that it's still a net negative impact from COVID-19. As we are now opening up, we are in a new normal situation, how would you think that this is going to play out when these government grants runs out? There will still be some negative effects around, and it still is currently. I would assume that you're expecting negative impact throughout the year and perhaps even more than we currently see because the government grants runs out gradually during the next couple of months.
I think regarding when they runs out, there are specific country by country. Some runs for the full year, some ends in October, and some ends in Q1 next year. It's difficult to say exactly where they will play out. For sure, the COVID-19 for us this year will be negative because we don't get subsidies also for all the costs. We get subsidies for furlough and not also the total. There are certain rules what you get subsidized for, but not the direct cost. It will be a bit negative for us. At the same time, of course, we believe that this was some kind of low mark to have this net of minus approximately SEK 80 than if we say that the cost is approximately double the subsidy.
Okay, good. Thanks. Again, in the U.S., it's an extremely resilient margin and very impressive, I must say. You mentioned reduced overtime compensation and the customer mix. Is it anything else here? Still volumes are down organically by almost double digits. It's hard to see how the margin can grow in that environment without any government grants supporting the profitability. Is there anything else here that we are missing or any big contracts that have run out, which I know that you have sort of sorted out your CIT portfolio, starting to do so already last year impacting the margin. Is there anything here that explains this very strong margin?
No. There is nothing strange. I just want to take that again. Top line, we have more, again, if we take the mix, less CIT in relative terms, and then more ATM, SafePoint, and CMS business. You get a positive mix. We have reduced overtime to large extent. We have been very good at handling the staff situation in each branch, sitting every day and really making that very visible to everyone. Cut all other costs.
There's nothing strange. It's just the mix and a fantastic cost management, I would say.
Okay, good. Also follow up on the shift to cashless or what we hear at least, especially from the U.K., that shops are not accepting cash and so on. Have you in Europe, and maybe this is predominantly in the U.K. right now, but have you experienced any smaller retail customers or restaurant customers actually any customer losses in that customer groups because they are no longer accepting cash? Is that anything you have seen so far? Maybe it's only the U.K.
No, we haven't seen that. Some of our customers gone bankrupt, of course. No one sort of terminating contracts. We have often long-term contracts. Nobody's stopping any contracts. No, we haven't seen that. No.
When you see the volumes coming from, for instance, in the U.K., smaller customers in the U.K., are you seeing a very large drop in volumes from those customers, even though I know that you have longer-term contracts, so it takes a while before they are potentially deleted or ends?
The issue in the U.K. is that shops have been closed. That's the big issue, of course, that's impacting the whole society, not us. We haven't seen anyone, I would say, in any substance, that customers have terminated the contracts. We haven't seen that, no. It's a closure of pubs and cafes and restaurants and all of that. Hopefully, that will open up, and then we have a totally different situation.
Okay. Okay, thanks. That's all for me.
Thank you. Our next question comes from the line of Dan Johansson of SEB. Please go ahead.
Thank you. Good morning. Two additional questions from me, if I may. First one on Europe. You have very efficient European operations, and despite this, you are at a loss in Q2. My question is really how is your smaller and often less efficient local competitors coping with this tough environment, and how do you view the potential for market share gains going forward here?
That's right. I think despite the loss in Europe, I think we've been quite fast in reacting. It's not always up to us. When you furlough people, sometimes you have to negotiate it with your unions. You have to follow some procedures from the government and all. It takes a bit of time. I think that, as I said before, I think there are two factors that talks in our favor when it comes to the competitive situation. One is that we have been open, we take market share. We see that in some of the countries. That's number one. Number two, I think that some of the smaller competitors will struggle. That could be a consolidation game going forward in some of the countries. We see signs of that already.
I think that will be even more obvious also in the later part of the year. I think that with our model, our service level, that is very positive going forward for us.
Thank you. Last thing on SafePoint again. Can you say something about your feeling around the order book and pipeline on SafePoint specifically going forward, given that it might be difficult to meet customers during this period, and many customers might be reluctant to enter into new longer term contracts and commitments? Could you give some flavor on that, please?
I see a very strong pipeline in the U.S. Also, the installation in Q2 was strong. Surprisingly strong, I would say. That's good. I see a very strong pipeline going forward. We have a good offer in the market. I think that also, as I said, many customers now take this opportunity to look into the processes, automate as much as they can. I'm very optimistic about the future when it comes to SafePoint in the U.S.
Okay, great. That was it for me. Thank you so much.
Thank you. Our next question comes from the line of Arash Aslani of Goldman Sachs. Please go ahead.
Hi, good morning. Just two from my side on behalf of Mattia Guerini. The first one, you mentioned the M&A opportunity in Europe and the consolidation opportunities. Are there any specific ones, regions that you think are looking interesting or specific market segments? That's my first one.
I think that some markets in Europe are quite consolidated, then it's more of a market share game. There are some markets in Europe that are not that consolidated. There are quite some players, smaller players left. I think that in those countries, there will be opportunities. Not being specific about all the different countries, there are opportunities coming up for sure. We are there. Of course, then we need to find the right price for that asset, that can be a bit of a struggle, of course, in these situations. There are opportunities for sure, the situation will trigger those opportunities.
Would M&A be on the agenda for 2H, or is that something that's on hold during this uncertain times?
No, I think that some discussions have started up. I think that will be intensified after the summer in Q3, Q4. It depends, of course, how deep the situation is. Some of the competitors might struggle really, and then it will be even more speed. I think that those discussions will come up during the end of this year, Q3, Q4.
Okay. Understood. Very clear. Secondly, on SafePoint, you highlighted some restructuring of customer contracts.
Nothing in the rest of the app.
I was just wondering if the smaller size customers have had difficulties to pay? If you could give some details around the numbers there.
That's more a general comment that, of course, we want to keep these customers. Some customers struggling, they can postpone the payment. They don't need to pay the bill maybe for a couple of months. We help them with that, to support their cash flow. That's what I meant with that comment. That's, of course, impacting the growth of SafePoint in the quarter, that will come back. For us, it's more important to keep these customers and help them. My comment refers more to that situation.
Of course. There hasn't been many customers that have completely wanted to have gone bankrupt, that haven't been able to fulfill their contracts?
No.
Okay. That's very clear. Thank you so much. That was all for me.
Thank you. Our next question comes from the line of Thomas Graf of Handelsbanken. Please go ahead.
Yes. Hi, thank you for taking my call. Just as you mentioned, you expect improved margins in Europe going forward from the low point in April, and so on. On a timeframe, or if you could just give some flavor on how long it will take to You expect things to normalize in Europe, or is it normalized already? Or if you just could give some flavor on the current situation when it comes to, compared to the low point in April, where are we now?
We are in a much better place right now. Topline is coming back gradually. It's not where it should be, or it's not where it was before the pandemic, for sure, but it's coming back. We have taken action on the cost side. I think that given the situation, I think it looks much better than, of course, in April. We are not back, that's for sure. How long that will take, I don't know. I think that the traveling needs to pick up a bit as well. I think that we have quite a business in foreign exchange, and for obvious reasons, that's down. I think that the activities in the economy need to pick up even more. Again, as I said, if we look at countries like Spain, it's much, much better than it was in April.
Also when looking at France, Switzerland, Austria, many of the big countries.
Okay. Yes. Of course, traveling has been hit very hard. Now you see a bit that is picking up in pace, but still very slow. Do you get anything from travel now, or will that take long to recover, you think?
That will take some time before it picks up. I think that what we see now is that the local economy, the local tourism, the local consumption is picking up nicely. We want people to travel, of course. We need that to happen. As I said, bigger countries in Europe are in a much, much better position now than they were in April. That's nice to see.
All right. Thanks for that.
Thank you. Our next question comes from the line of Karl Bonnevier of DNB Markets. Please go ahead.
Thank you. I just want to come back to the acquisitions of Nokas and the Prosegur French operation. Do you feel that you're going to be able to complete those integrations during this year, or do you believe it will drag on into 2021?
I think that the integration as such, operationally, depending, of course, on the situation, but will be done this year. The financial effects you will see more next year. You will see them next year.
Excellent. On the Finnish ATM acquisitions, have you got any feedback on when that could be hopefully closed?
We expect that to be in September. That's the least information we have right now.
Excellent. Listening in to G4S the other day, they are obviously contemplating a major restructuring of their U.K. operation. Do you see any need for any structural big moves for you in the U.K. given the demand situation there?
It's a bit too early to say. Of course, we have all the different plans in the drawer, but it's a bit too early to say. We would like to have more facts on the table before we take any such decisions. I need to come back on that, but we haven't pulled any decisions right now on that one.
For you in the U.K., would you say considering being more of an optimizing on branch level than doing something structural to the footprints if you come to that?
Yeah. For sure, we're doing everything we can on the cost side. I wouldn't rule out that we do some structural things in the U.K., but it's a bit early to say right now. We need a couple of more months to look at the situation. As I said, I don't rule out that we do any structural things in the U.K. It's a bit early.
Excellent. On your comments on SafePoint and the installations that you're still seeing in Q2, it's not the fact that you have been forced to postpone the, say, installations and these kinds of things into the second half of the year. You have been able to basically do what you were supposed to do during the quarter.
Looking at the numbers, we have done excellently in the quarter when it comes to installations. I'm a bit surprised myself by the pace, but honestly, I think that I've seen less impact on the SafePoint side than I expected. Both revenue, installation, and the pipeline is in a very good shape.
Excellent. Thank you very much.
Thank you. May I remind everyone that if you wish to ask a question, please press zero one on your telephone keypad. Our next question comes from the line of Beltrán Palazuelo of Santalucía Asset Management . Please go ahead. Your line is open.
Hello, good morning. First of all, I would like to thank all the hard work from all the employees of Loomis. I have three questions. First of all, regarding to Europe, what kind of volume do you need in order to have the same margins as, for example, last year? It seems that all the financial community seems to look at your margins of Europe as permanently much lower. If you guys could give me a little bit of feedback. My second question is regarding M&A. You gave a little bit of color that it should be in the Europe region. If you could also give more color regarding, for example, M&A, what returns does that have, what strategic things you want to capture? For example, buyback, it seems that everybody thinks that nobody's going to use cash for the foreseeable future.
Maybe in the long-term targets you gave in London a couple of months ago last year, do you still think in a more normalized situation, maybe the revenue targets will have more to do with how the pandemic evolves, but maybe in the margins, you're still confident that with a more normalized year, you can hit the margin targets? Thank you very much.
Let me just start with, I don't take them in the same sequence that you mentioned. Let's talk about cash. I think that, as I said in the beginning, there's never, ever been so much cash in the system, both in Europe and the U.S. I think that I've been here now four years, and before that, my predecessors, they've all been asked the same questions. I think that already in 1950s, when the first Diners card came to the market, everybody said that cash is dead. I think that is to take it too far. We don't see that anymore. There are many people unbanked, many people that are underbanked, and cash is very resilient, has been for many, many years. I think that it's way too early, and it's not correct to say that we're going to the cashless society.
There are differences country by country, but in general, I think it's too early to get into those discussions. When it comes to M&A, I think that we are continuing our path, when it comes to focusing on Europe, U.S., and Latin, and also on technology. That has not changed for this strategic period. We will focus on that. I think that in all of these areas, there will be opportunity. There are already opportunities and will open up even more opportunities. I'm quite optimistic about being able to pursue an even more sort of aggressive M&A agenda going forward. When it comes to the targets, we haven't any new guidance. The targets for 2021 still stands. We are working day and night to get to those targets, and we haven't changed our mind in any way on those targets.
We're just continuing to pursue that route. When it comes to margins in Europe, I think that's why I mentioned the number. We are quite careful on mentioning revenue numbers and so on. That just to give you a flavor that on these numbers mentioned 20% down, we are doing a nice profit in Europe. That is the guidance I just want to give on Europe and the margin situation.
Sorry to interrupt, maybe you think you're doing a nice profit, but let's say if your volumes next year were, let's say, 7% or 8% down from the previous peak, would you be able to make, let's say, margins that are next to past year? What kind of volumes do you need in order to, with all the cost-cutting measures, to make the same margins of last year in Europe?
I think that's quite a difficult question right now to answer and maybe a bit too detailed. I'll stop there with the guidance I've given on Europe.
Okay. Of course, this company is always conservative, but you feel conservative when you see all the numbers from all my colleagues that are in the call, the analysts, but they don't own shares. You're comfortable with the share being, let's say, half of the value. With the margins over last quarter in the U.S., you're not comfortable by saying that next year margins in Europe should be, let's say, alike from 2019?
As I said, we don't guide on exact numbers. What we guide on, we try to give as much information as possible on the situation and the quarter. It's a very uncertain situation. It has to do with many things. How much subsidies do we get? What extra cost do we have? How does these cost measures beat and so on? I think that what we're guiding on is still that we will be on the margin for the group of 12%-14% for 2021. That we have given.
Okay. Thank you very much, and thank you again for the hard work of all the team. Thank you.
Thank you.
We have no further questions on the line at this time. Please go ahead, speakers.
All right. I would say thank you very much to everybody. Thanks for all the good questions. Thank you. Take care.
This now concludes our call. Thank you for attending. Participants, you may disconnect your lines.