Ladies and gentlemen, welcome to the Dufry's full year results 2020 conference call and live webcast. I am Alice, the conference call operator. I would like to remind you that all participants will be in listen-only mode, and the conference is being recorded. The presentation will be followed by a Q&A session. You can register for questions at any time by pressing star and one on your telephone. For operator assistance, please press star and zero. The conference must not be recorded for publication or broadcast. At this time, it's my pleasure to hand over to Mr. Julián Díaz, CEO of Dufry. Please go ahead, sir.
Thank you, operator. Welcome to Dufry's full year results presentation. There are Julián Díaz, Dufry's CEO, and Yves Gerster, CFO. 2020 has been probably the toughest year in the history of Dufry and the travel retail industry. It has been also an opportunity to reposition our company in a stronger position regarding profitability, cash conversion, liquidity, strategic setup, and growth initiatives. We implement strict measures with a significant personal effort in all levels of the organization. Thanks to the support and commitment of our colleagues across functions, regions, including landlords, suppliers, management team, members of the board, investors, and shareholders, we have reached a level of company stronger and more resilient.
We feel very proud of the achievements, especially the achievements by your employees, and the situation at the end of 2020 significantly overachieved what could have been expected at the beginning of the crisis with shop closures and nearly full standstill of operations. Now we are looking forward with a positive attitude towards reopening and growth. In today's presentation, we are going to use the one disclosed this morning on our website. As always, please go to page number four of the presentation. From the left to the right, first of all is in terms of turnover, we reached CHF 2.5 billion, - 69.8% organic growth, in line with the turnover scenario provided to the market. We have also confirmed an over-achieve in order to adapt the organization to the changed environment, a significant cost savings, CHF 1.3 billion.
A material part of this will be sustainable in the future, around CHF 400 million. In this CHF 1.3 billion, we can count in Minimum Annual Guarantees, CHF 552 million. Personnel expenses, CHF 527 million, and operational expenses, CHF 233 million. Regarding cash, what we commented on to the market, - 70% scenario, CHF -60 million, monthly cash burn in the second half of 2020, has been also overachieved. The real scenario has been - 78%, and the cash burn per month during the second half, CHF -46 million. In 2021, and we are going to comment on that later, we have also projected two scenarios, - 40% and - 55%. In 2021, we believe that the - 40% turnover levels compared with 2019 will generate equity free cash flow breakeven.
Regarding the inflow initiatives, it's very relevant to mention also that along the year, we have been able to successfully execute various financial initiatives. Share placement, CHF 151 million, convertible bonds, CHF 350 million, rights issue, CHF 820 million, convertible notes around CHF 69 million, and bank loans in different formats, CHF 602 million, with a total of CHF 1,993,000,000 . Finally, as a consequence, obviously, of these strong movements in terms of cost savings and also inflow finance initiatives, a significant level of liquidity as of December 2020, around CHF 1.9 billion. Cash, CHF 360.5 million, committed credit lines, CHF 1,441,000,000 , and uncommitted credit lines, CHF 104 million. Let's move to page five of the presentation. Again, from the left to the right, resilience of the business despite some introduced restrictions, especially across Europe.
However, reopenings in other regions, Central and South America, and the good performance in duty-paid North America, supported the level of sales with an opening of more than 1,300 shops. I think in addition to this reopening, other initiatives also successfully implemented, supported the reorganization of the company. The most relevant one, the delisting of Hudson, where CHF 20 million synergies are in the process to be materialized. It's also important to thank our shareholders, the current and obviously historical shareholders supporting us, and the new ones, Advent and Alibaba. Advent supported that investing with 11.4%, and Alibaba, including the mandatory convertible bond, around 8.7%. This is a very critical shareholder base for obviously evolving the company in the future. Continuing with part of the relationship with Alibaba, we could, and in the future, we will explain with more detail, develop two different initiatives.
One is the joint venture that considers as a scope the implementation of travel retail, either duty-free or duty-paid and online and offline in continental China and in Thailand. The second one is the digitalization and the support of Alibaba in the global digitalization. The reorganized group set up now for efficiencies. I think reorganization has been complete and Dufry's profitable reopening and growth, and the new regional, especially the new regional setup, will support the reopening of the shops along 2021. This reorganization also considered the remove of divisions, the mergers of commercial activities in platforms and in countries, a new Group Executive Committee, and the consolidation of finance management in financial service centers. Let's move to page six. Sustainability is an important element of Dufry's business strategy, aiming sustainable and profitable growth. Our ESG engagement aims to four key areas. These are described in this slide.
Customer focus, employee experience and well-being, environment protection, and being a trusted partner for all our stakeholders. In a sense, what we want is to have a positive impact within the scope of our stakeholders, ecosystems, and beyond. In page six, what we try is to list in each of the focus areas the most important highlights in environmental, social, and government. With that, we can move to page number eight. Organic growth evolution, already commented, -69.9%. On the left side, gradual and slight improvement from Q2, Q3, and Q4 organic growth monthly evolution. In January and February, -75%, -77%. We have a very resilient company in this level of sales, independently of the closings and initiatives restricting traveling. We have also realized a significant spend increase in spend per passenger and in spend per ticket.
In 2020, spend per passenger increased by 4% and average transaction value, sales per ticket, by 8.8%. Let's move to page number nine. Don't forget one thing, that the first 2.5 months of 2020 were very excellent in terms of business performance, probably the highest January and February that we have ever seen. The situation started to impact from Asia to Europe and then to America gradually. This is also reflected in the full-year performance. We are going to comment in full-year performance and also in the last quarter, fourth quarter performance. In North America, on the left top side of the slide, this region performing better than other regions due to the higher exposure to domestic traffic. Travel from Central America and the Caribbean to the U.S. were also supportive. -65.3% full year and -69.7% in Q4.
Our operations in Canada negatively impacted due to the exposure to international traffic. The performance was driven by Hudson convenience in Canada. On the right side, Europe and Middle East, -73.2% full year, -81.3% in Q4. The format obviously was very promising in July and August, from August, the travel restrictions limited the recovery. Central and North Europe, -68%, South Europe, -78%, collapsed due to the international traffic drop in Spain, mainly, and Mediterranean and Eastern Europe, -70%. Continuing with Central and South America, -65.8% in the full year, -69.5% in Q4, performed better compared with other regions, driven by traffic from and to the U.S. Cruise business heavily impacted. South America accelerated demand in Q4 with reopenings in Argentina, Brazil, Peru. Better performance in Central and South America, -60.8%, especially due to the traffic to the U.S. Finally, Asia Pacific, -75.4% in full year, -83.8% in Q4.
International travel highly impacted, and our business is geared to international traffic. APAC first impacted with the closings in Q1 2020. Majority of shops still closed, including Australia, Hong Kong, Indonesia, and Malaysia. Better development in Macau and China duty-paid since the reopening. Let's now continue on page 10 for talking about net sales by region and sector. In general, in line with the performance just discussed in the regional comments. Turnover share by region shifted slightly to North America, Central and South America due to the later impact of the COVID during the year, and also the importance of domestic traffic in the U.S. Domestic travel led the recovery, also respected short-term in better performance of duty-paid and also in the convenience in the U.S. Duty-paid gained 500 basis points. Now duty-paid representing this mix 44% and duty-free 56%.
We move to page 11, we are going to comment on net sales and performance by channel. No significant channel shift. Border shops, downtown, and hotel shops, as well as railway stations, better performance. An increase to turnover share compared with 2019 due to the collapse of passengers in many regions in airport retail. Cruise business most impacted with vessels largely grounded since Q2, but ferries are operating again, reopen again. Continued emphasis for the future with focus in diversification. Obviously, still airports represent 86% of the total sales. Cruise lines, seaports 3%, border and downtown is 5%, and railway stations 6%. We move now to page number 12. Net sales and performance by category. Demand for core categories remain better than other types of product mix because the recovery has been needed by general shops selling categories like confectionery, perfume and cosmetics, alcohol, and tobacco.
There is also a second important remark. Convenience stores selling souvenirs, food, bottled drinks, electronics, convenient products in general, due to the U.S. and other countries with this type of business, were always, and in most of the cases, resilient. In any case, still perfume and cosmetics, as is on the left side of this chart, represents 31% of the total business. Food and confectionery 19%, wine and spirits 17%, luxury products 11%, and tobacco products 12%. If we move now to page 13. Total number of square meters of commercial space open by December 2020, 470,000 sq m. We continued to open, especially in Q1, new floor space, adding 9,600 sq m or 2% of total retail space with our diligent CapEx deployment. We reduced our CapEx by 57%, meaning CHF 139 million below 2019, in close collaboration and also in agreement with landlords.
We secured or renewed important contracts also in 2020. Istanbul Sabiha Airport, St. Petersburg, Zurich, and Montego Bay in Jamaica. Also relevant is our first Hudson non-stop store. There is a picture there with Amazon's Just Walk Out technology for convenience contactless shopping at Dallas Love Field Airport in the U.S. This is the first one of the shops in collaboration with Amazon. The first results are very promising, but still it's very early. We move to page 14, the partnership with Alibaba and LDH in China. Announcement of our partnership with Alibaba only happened in October 2020, with first duty-free operation started in January 2021 in collaboration with Hainan Development Holdings, LDH, involving a successful opening of Mova Mall in downtown Kaifeng, Hainan. One of the most successful openings I have personally seen, with long queues and products sold out within hours.
Current shop size is temporarily 3,000 sq m. Final size with the start of full development will be in Q4 2021, Q1 2022, with more than 39,000 sq m of commercial space. Relevant is also to mention the online sales channel already implemented with around 25%-30% of sales through online in this new shop. We are convinced that we can contribute with our expertise to enhance the customer experience and brand position as partner of choice. Please allow me now to hand over Yves for presenting the financial summary. Yves, please.
Thank you, Julián, and welcome also from my side to today's conference call. Let me please start with some personal remarks before turning to the financial summary. I am convinced that you are not surprised to hear that the 2020 events were completely unexpected. What started as a local disruption became the perfect storm. Julián already talked about the various initiatives we implemented. Those reached from taking immediate actions and control costs and cash to short and midterm financing initiatives, implementing a new organizational setup, engaging with new and longstanding shareholders, as well as initiating projects for organic growth during and beyond the recovery. This brings me to the second development I would not have expected at the beginning of 2020. The crisis has resulted in changes which go way beyond surviving the next month. We fundamentally transformed the whole organization on all levels.
In this regard, the crisis allowed us to focus on organizational change, and we took this chance to act fast and decisively. For me, most surprising and at the same time most rewarding, was the dedication, commitment, and support within the different teams. Personally, I refer to my colleagues in the Executive Committee, within the finance function, of course, but also the collaboration, cross-functional, and on a global level. The willingness to work long nights and weekends while not knowing the outcome of your efforts and still acting as a team was incredible. I'm thankful for have been able to experience this positive energy and teamwork when challenged most. I'm also thankful for our shareholders, bondholders, and analysts, your continued support, interest, and the many interactions we had throughout 2020. With this said, let me please turn to our financial performance, starting with the income statement on slide 16.
Our income statement reflects the significant cost reductions we achieved throughout 2020. It also contains one-off effects caused by the unprecedented level of disruption in our retail operations. Gross profit reached CHF 1,377,000,000 in 2020, with a margin of 53.8%. Let's look at the key drivers for the drop in the gross profit margin. Around 260 basis points in margin drop were caused by lower selling prices due to promotions and the relative higher weight of our wholesale business. In addition, the lower level of sales affected the duties and freight ratio by around 30 basis points. Another 350 basis points relate to one-time inventory write-offs from our heavily impacted cruise business and liquidation programs performed during the year 2020.
I would like to emphasize that purchasing prices have not been affected by the pandemic, and we expect a normalization of our gross profit margin in line with sales normalization. These expenses reflected an income of CHF 8 million in 2020 and were decreasing due to the lower level of sales and MAG reliefs. Up to December 31st, we were able to close agreements releasing around CHF 551 million of lease obligations. Thereof, CHF 380 million were recognized in the P&L of 2020 as MAG reliefs. The remainder is subject to different IFRS 16 accounting treatments and recognized over time. We continue to be in discussions with our landlords to lease adjustments for 2020 as well as 2021, and have received verbal agreements in several cases, which are now subject to final documentation. Personal expenses decreased by CHF 527 million, or 42% compared to 2019.
Savings were driven by our efficiency program implemented early on. It included reducing costs on all levels, making use of government support schemes, as well as voluntary salary reductions. Personal expenses reported in the P&L also include CHF 73 million for restructuring, which were accrued in 2020. Other expenses decreased by CHF 233 million, or 42% compared to 2019, reflecting the initiatives to reduce as much as possible all operating expenses. We also implemented a centralized OpEx management as part of our reorganization. Depreciation, amortization, and impairments amounted to CHF 2,842,000,000 . The increase relates to impairments because of pandemic, which affected actual turnover as well as projections. It is important to note that an overamount of those impairments is related to depreciable and amortizable assets. The impairments, therefore, only represent a timing shift of amortizations, which would have happened anyway over time.
Put it the other way around, the impairments done in 2020 will lead to a significant lower depreciation and amortization charge in the future. Our adjusted operating profit reached CHF -1,562,000,000 in 2020. Our financial result, excluding lease interest and foreign exchange rate differences, increased due to one-off expenses for the various financing measures in 2020. We closed the year with zero FX impact. Income tax was positive with CHF 131 million, as most of our operations reported losses. adjusted net profit attributable to equity holders was CHF -1,658,000,000. Moving on to slide 17. Slide 17 illustrates that the drop in turnover of CHF 6,287,000,000 compared to 2019 resulted in a change of equity free cash flow of only CHF 1,411,000,000. The decrease certainly hurts.
However, the significantly lower drop throughout reflects our achievement in reducing expenses for leases, personal and other, and managing our cash flow tightly since March 2020. We also reduced CapEx related outflows by CHF 139 million, with an overall CapEx spend of CHF 106 million in 2020. We put CapEx investments on hold as much as possible while we adapted our overall approach to CapEx deployment. Therefore, we do not expect a catch-up in the short or mid-term. Net working capital saw a negative change compared to 2019. I will comment on that on the next slide. Moving on to slide 18. Changes in working capital reached CHF -314 million. Changes in our core working capital was CHF -73 million. The outflow was caused by the -70% in turnover and related decrease in trade payables, which decreased by CHF 491 million.
Our inventories decreased by CHF 390 million due to inventory management, as we placed much lower orders in line with the reopenings. For 2021, we expect a working capital inflow with a full reversal with sales normalization. Moving on to slide number 19. As mentioned on slide 17, our cash flow metrics proved relatively resilient when you consider the significant drop in sales caused by the pandemic-related shop closures. Adjusted operating cash flow reached CHF -406 million, equity free cash flow stood at CHF -1,027,000,000 in 2020. As a reminder, adjusted operating cash flow can be considered as a good proxy to the former EBITDA. Net lease payments in full year 2020 amounted to CHF 401.8 million. The reduction was mainly driven by the reliefs received from our landlords on Minimum Annual Guarantees.
The graph at the bottom shows the bridge from equity free cash flow of CHF 383 million we achieved in 2019, to the equity free cash flow in 2020. In addition to CapEx savings, we benefited from lower taxes and interest paid, while changes in working capital were higher as already discussed before. Moving on to slide number 20, which shows you an overview of the various financing measures successfully executed in 2020. The objective was to strengthen our capital structure and liquidity position, which we clearly have achieved. To quickly recap, we generated total gross proceeds of CHF 890 million through a rights issue supported by Advent International and Alibaba Group. Already in April, we secured commitments from our lending banks for around CHF 397 million, which allowed us to convert uncommitted into committed credit facilities.
We also received access to a total of CHF 205 million of COVID-19 related government-backed loans in different jurisdictions. These include now also GBP 50 million from a U.K. loan granted in December 2020. We placed CHF 350 million in senior bonds due 2023, which are conditionally convertible into shares with a maturity of May 2023. We also placed five million new shares out of the existing authorized capital, as well as 500,000 treasury shares, and generated gross proceeds of CHF 150 million. We entered into an agreement with our bank consortium to waive the existing financial covenants until end of June 2021, and to assign a higher leverage covenant of 5x net debt to adjusted operating cash flow for the September and December 2021 testing.
Our shareholders agreed to cancel the dividend payment for the full year 2019 to strengthen our liquidity position amidst limited visibility, especially at the beginning of the health crisis. Moving on to slide 21. Starting with the net debt evolution on the left side. The measures just mentioned allowed us to strengthen our financial structure and resulted in a net debt increase of only CHF 242 million compared to the end of December 2019. As you can see on slide 21, net debt as of 31st December 2020 stood at CHF 3.3 billion. On the right side, you see our debt maturity profile. We have upcoming maturities in 2021 and 2022. The CHF 360 million liquidity facility maturing in April this year has a two times six months extension optionality built in. The facility is currently fully undrawn.
The $700 million and the CHF 500 million term loan will mature in November 2022. We are already in initial discussions with our lender banks to start the refinancing process. This process includes also the review of the financial covenants. We cannot comment more at this stage. I can confirm that based on what we know today and feedback we have received during the last couple of days and weeks, we feel comfortable about the next steps in that regard. Moving on to slide number 22, which provides the quarterly view for the net debt development through 2020. Changes in net debt is a proxy for cash consumption. FX effect on net debt and other non-cash items are also included. The aforementioned equity measures strengthened Dufry's balance sheet and improved the net debt position.
Q4 saw the inflow of the net proceeds from the rights issue and mandatory convertible notes of overall CHF 880 million. In December 2020, we successfully closed the merger with our subsidiary, Hudson, by acquiring the remaining outstanding shares not already owned by Dufry for CHF 275 million + CHF 4.5 million in transaction costs. Without this, Dufry net debt position end of 2020 would have even been below pre-crisis level. Moving on to slide 23, which displays quarterly cash consumption defined equity free cash flow. Cash consumption during the first half of 2020 was mainly attributable to inventory build and payments related to previous quarters. During the rest of the year, cash consumption was significantly reduced with a monthly average cash consumption of only CHF 45.7 million in the second half of 2020.
With this, we overachieved our target of CHF 60 million per month for the second half. Cash consumption underlies some seasonality based on sales, but also payment terms and certain one-off payments. For the fourth quarter 2020, this was mainly related to interest payments, one-off restructuring costs, and higher supplier payments. Dufry is well aware of those payments and plans cash flows accordingly. The same thing will happen during 2021, where we will see the highest cash out in the first quarter as part of the normal seasonality. Moving on to slide 24. Dufry's liquidity position at the end of 2020 amounted to CHF 1.9 billion, and we expect to be very well-positioned with this status. The amount is significantly higher than at the end of 2019, where we had CHF 1.25 billion.
Dufry is in a significant stronger position today concerning its availability in respect to cash and credit lines. Julián, I hand over to you for the outlook and the conclusion of today's presentation.
Thank you, Yves. Please let's move to page 26. We have here the global air travel passengers recovery forecast. I think a concern on 2021 passengers still obviously has to be said that the visibility is very short, projects between -24% and -49% compared with 2019. Different data providers project different recovery levels from 2022 to 2024. For the year 2021 compared with 2019, we can see in this column the different projections by institution. What we have seen, and this is a repeated event, following the announcements of governments lifting restrictions, what we expect is a resuming of travel and especially domestic and inter-regional travel by the end of Q2 and Q3 onwards.
The most recent experience is what happened with specific examples that we had with the U.K. and other countries showing a surge of bookings, and this is happening today when restrictions are lifted or they are in the process to be lifted. I think if we move to page 27, what we have here is the different scenarios that I mentioned at the beginning of my presentation. The situation is still with very limited visibility. We cannot provide guidance again because obviously there is not a specific support for that. We are going to approach at the beginning, especially of this year, again, and provide two number eight scenarios and the latest sensitivity analysis on expenses and cash consumption. We are aligned with the estimates from industry and industry associations and apply two scenarios for 2021, - 40% and - 55%. We have two columns.
On the left side, -40%. On the other one is -55%. Sensitivity on expenses is also clear here. What we have tried with concession fees is to put the pre-IFRS 16 in order to provide an information regarding what is the impact that we expect in terms of concession fees when the drop of sales is -40% and -55%. The other two ones, personal expenses and other expenses, as we said and repeated, are basically starting with a CHF 400 million sustainable saving, CHF 285 million for personal expenses and CHF 150 million for other expenses. There is still a set of initiatives that we have in order to protect the company in case the situation is not going in this range of performance. In terms of CapEx, we have also projected two scenarios, CHF 160 million in -40% and CHF 130 million in -55%.
Regarding the average cash consumption or cash burn per month consumption. In the first case, in -40%, we are expecting that full year 2021, we could reach breakeven due to the savings implemented with two different parts. The first half, CHF -50 million per month. The second part, around CHF +50 million per month. In terms of -55%, what we are expecting, especially with the trend today in half year, is CHF -60 million per month during half one, and slightly negative, -10% per month during the second part, with a total cash consumption per month or cash burn per month of CHF 35 million. Obviously, with all the restrictions and structural savings of this CHF 400 million, we expect to recover our cash flow levels based in 2019 faster than our turnover, but it will depend, obviously, on the evolution of 2021.
If we move to page number 28, reopenings and situation of reopenings. Performance improved, obviously, from the middle of June, July, and to middle of August last year due to the reinitiation of new restrictions. Sales proved resilient on a low but relatively stable between middle to high 70%s compared with 2019. This has been repeated over the past month. Independently of the importance of the restrictions initiatives, the company is quite resilient at this level. Sales performance improved in December and January due to the holidays and some leisure travel, but especially visiting family and friends, as well obviously as reopening in areas like Central and South America. Most important, the trends in February, as you see there, is - 78%. There are two aspects I would like to really remark.
One is the demand of travel retail resumes fast once the restrictions are lifted. The second one is performance driven by easing of containment measures is also gradually improving. The graph here shows, obviously, the evolution in general terms every week improve. If we move to page 29, we have also here the number of shops that we are planning to reopen. Global network and the diversified portfolio mitigate the effects of some reclosings with outlook trending toward openings and obviously increasing number of shops and sales capacity. What we are expecting is by the end of March, 60% of the shops that we are operating will be reopened, representing around 65% of sales capacity. In any case, we go step by step. We continue to align opening days and hours, number of staff, sub-categories, and assortment to passengers evolution and profiles per location.
If we move to page 30, couple of obviously insights of information that could be useful. Customer insight is an integral part of our commercial approach and operations. We do a lot of research, and we continue throughout 2020 to assert customer behaviors and preferences to supply, set up, and obviously offerings accordingly to the operations. On the left side, I think there are a couple of remarks that could be very important. This research was done in June 2020 and in January 2021. When you ask the question if the customers will engage the same or more with different airport activities, 92%, 91%, depending on the one that you choose, still is thinking that duty-free will be a priority.
Regarding the activities that probably they are more afraid of, when you try to obviously discover what are the concerns and what are the most difficult initiatives that they may think about, there are two aspects that I think are relevant, and we are using also, of course, in the development of the shops open. 88% is convinced that they need to pay with credit card or mobile payments, and 83% stay away from crowded areas. Those are obviously information that are used the new operations that we will open during 2021. On the right side, significant too, is activities done from a security control and until they board.
Most travelers keep obviously thinking duty-free as a buying destination, a preferred service compared with other services during the customer journey. There is not an evidence, and I want to remind that there is no one single evidence that free Wi-Fi or smartphones affect purchasing behaviors, and we ask this question. Shopping in duty-free also, in the second part, it's a main service with customers consider to spend more time around the airport. Also 60% of our customers consider that duty-free prices are cheaper compared with two years ago. I think the perception in the customers traveling so far remains very positive. Finally, we are also gathering insights into product preferences, purchasing motivations or value perception, and implement it as a part of the commercial offer for this reopening phase.
The elevated of spend per passenger and average transaction value, just per ticket, gives us the confidence that with the reopening and with the speed of the reopening, we will recover the business as soon as possible. Let's move to page 31. This is the company plan to maximize in the shortest period of time, the value creation and some examples about capital allocation. There are five key pillars we would like to present. On the left side, from the left to the right, we are continuing. It's important to remind that main priority still is obviously discipline, cost approach, and cash flow management. To control the CapEx, to control the OpEx, to control the personal expenses remains main priorities in 2021. These priorities are aligned with the reopening phases in the different countries. The second one is protect liquidity. Protect liquidity, not in the general term.
Protect liquidity with specific initiatives due to the limited visibility of the recovery. Currently, we don't have a dividend payment, and this will be subject, as is obvious, or condition to the renegotiation and depending on the recovery trajectory. As also mentioned by Yves, we have already started the renegotiation process for refinancing in 2021 and 2022 maturities. If we move to drive growth, what is the meaning of drive growth? I think there are two aspects here. One is reinventing operations to maximize the value of current portfolios. With three areas, retail excellence, portfolio optimization, and scan new opportunities of collaboration with airports. The second group is commercial initiatives, commercial initiatives for accelerating like-for-like growth. The first one is categories strategy and supply chain optimization, the second one is travel retail repositioning in collaboration with brands.
What we want is really to be at front of any recovery, understanding what is happening and the changes that are happening in order to accelerate growth when the business will be reopened. Accelerate scale on digital. There are five projects here that really are relevant in collaboration with Alibaba so far. They are moving from enhancement of Dufry's IT and digital platforms to continue with driving new in-store technology and building the smart shop, boost digital marketing, customer experience, and channel. I think the collaboration going with Alibaba is critical and will be a great element in order really to engage with the customers in this area. Finally, it's very important for us, we will continue stressing our sustainability project. We focus in four key stakeholders. The customers, the possibility to impact positively environment protection, employees, and to be considered a truthful partnership.
Let's move to page number 32. As a conclusion, I would like to repeat one thing that sometimes maybe sounds very often, but it's very relevant. 2020 has been the most challenging Dufry's and travel retail year in the history. We ended 2020 with an stronger than anticipated position at the beginning of the year, and obviously, especially at the beginning of the crisis. Due to a series of initiatives, including the CHF 1.3 billion fixed cost savings, generating a strong liquidity position by the end of December of CHF 1.9 billion, supported by current and new shareholders. We also would like to thank banks and bondholders for their support during the process. Dufry changed the organizational set up for creating a more efficient fixed cost organization.
CHF 400 million, excluding rents, are recurring. This will be reflected very quickly as soon as the business is recovering. The cash or the generation of cash will be recovered too. We will see the companies through certain disruptions because the visibility still is very short, while acting in opportunities and evolving for new businesses. We are not at this stage of the process still. What we are looking is good examples of using the capabilities we have in the group for expanding the business. The company plan is very relevant for us. The message is Dufry is set up for recovery. The growth obviously will depend. The evolution of the growth will depend on the evolution of the passengers. Well, we finish here with this full year 2020 results. Now we are looking forward to your questions and all that will come as always.
Thank you very much.
The first question comes from the line of Joern Iffert with UBS. Please go ahead.
Good afternoon, Julián. Good afternoon, Yves. Thanks for taking my questions. The first one would be please on digitalization. With your cooperation with Alibaba, can you give us one or two examples? What is in your project pipeline here linked to digitalization, which can really drive your revenues over the medium term? Second question would be please on the gross profit margin. You highlighted there's a higher average ticket spend at the moment in the shop, but you lowered your price points. Do you see the risk that due to the accelerating online retail trends we have seen due to COVID-19, your price points are lower for longer? The last question would be please on your scenarios, which are very helpful. When sales are down 40%, you said for the full year you had around EBITDA cash flow break even. I did the quick back-of-the-envelope calculation.
Can you help me here? Is there any cash inflow coming from net working capital or deferred concession payments which will fall into 2022? Many thanks.
Thank you, Joern. Yves, let me answer the first two questions. Then I will pass to you. Regarding the digital project with Alibaba, the scope of the collaboration is already defined. Both teams, Alibaba and Dufry, are developing several initiatives as follows. The first one is an assessment by Alibaba about what is the digital capabilities that we need to fulfill or we need to complement within the current setup of IT in Dufry. This is coming from obviously hardware, software, ways of using the technology. This is already one, obviously, is the basic starting point for them. We have been developing digital over the past four or five years. The next step that is happening today, that was planned in any case, with Alibaba, we have a great support.
The second and third one are the most affected in terms of how the business is going to be impacted. In the first case is we want to boost the digital marketing. The digital marketing means is how to use the data for understanding better the passengers' evolution and also how to engage with the customers even before they travel. Now, this is something that historically, as you know, we have comment on that in the past. We have been very concerned about, because when you travel, you can travel four or five times per year, but to engage with somebody that is going to travel in five months is very difficult because finally, you need to be engaged with the customers in the moment that they go through the airport or they are planning to travel.
These digital moves are basically talking about the information and the data that is collected by both organizations will be very useful, not only for Asian customers, will be for everybody. For example, if when the customer is going to travel, what are the plans they have in terms of destinations? What is the timing they have when they go through the airport? I think all these initiatives are dedicated and addressed to increase the spend per passenger. As a consequence, or better explain, first of all, the penetration rate, the spend per ticket, and the spend per passenger. The second group of initiatives is how to really step forward in the digitalization of what we identify as a smart shop. A smart shop is a reality. It's not a situation where we are obviously trying to invent something new.
Is using technology, how to really attract the passengers inside the shop, and how to increase the penetration. For example, this is something that also, I think I commented on in some conversations we had, is the idea is that the shop standalone will contact with the passengers detected by the system holding red application or other applications that we are also using or we want to use in order to forward these specific passengers promotions and/or discounts or offers based on the database that we have been building over the years. These two areas are very commercial and very specific. How is it going to impact the company in 2021? It's very early to say. I think in terms of what we try is increase the like-for-like in all the locations where we have been operating for years.
There are three other areas where we are talking in a second phase. The first one is digitalization of the supply chain. As you know, we are a global company. We deal with inventories globally. We have four distribution centers, and the idea is to use the digital technology, especially the use of data, for improving the efficiency and the deliveries. This will also impact the sales because we are talking about how to reduce as much as possible the out-of-stock situation in a global company operating global inventories. Two other projects that are still confidential that I prefer to keep it in. The second one is gross profit margin. Gross profit margin this year has been impacted for different obvious and non-obvious reasons. Let me explain. This drop of 600 basis points. An important part of this 3.5% is inventory liquidation and obsolescence.
For example, chocolate. For example, personal cosmetic or tobacco with obsolescence, due to the obsolescence policy in the company that we need to provide provisions. This is one-off, and it's not going to be repeated. The second part is around 3% or 3.1% of total. There are two aspects here. One is the mix of wholesale, because the retail part drops significantly. This is impacting around 1.5% of the margin in the wholesale mix. The only one that is probably the second part I want to say is the discounts and promotions in 2020 only represent 1.6% of the total margin. Meaning commercial initiatives dedicated to implement or drive sales were 1.6%. There are small differences with duties and freight, especially freight.
This is higher because the lowest level of volumes that we ever had happened in 2020, and the use of transportation increased percentage due to this inefficiency. This is also something temporary. Regarding the second part of the question. In 2021, and again, Joern, we are talking about 2021 with the visibility we have today. The margin will not recover the level of 2019. It will be probably, I don't know, between 100 basis points and 200 basis points below, depending on the mix of the wholesale, again, because we are now doing more wholesale. From the commercial point of view, at least that will be between 100 basis points and 200 basis points, depending how the recovery is happening. I cannot confirm anything, but the recovery of the margin is possible because conditions have not changed. If this is the situation, probably the margin will be recovered in 2022.
This is regarding your first two questions. Regarding the third question, Yves.
Thank you, Julián. Look, Joern, in respect to the third question you had, the cash flow in respect to net working capital. The scenarios we have provided contain a certain normalization of the net working capital. Yes, that's correct. In respect to the question about deferral of concession, no, this is not the case. We haven't taken into account any deferral of concessions in that regard. It's actually the opposite. What you see there is the concessions which we plan to pay, and we have not taken into account any MAG reliefs for the year 2021, which go beyond what has already been granted by the landlord. From that perspective, it's a prudent approach.
Thanks a lot.
Thank you, Joern.
The next question comes from the line of David Holmes with Bank of America. Please go ahead.
Afternoon, guys. Thanks for the call today. Just two questions. On your cash scenarios for the first half of the year. Yves, I think you mentioned you're expecting that to be front-loaded in Q1. Can you give us any indication of your expectation of the monthly cash burn in Q1 to start with? The second thing that I wanted to ask you was, you mentioned earlier you don't expect to see a medium-term catch-up in CapEx. Just wondering if you've found some efficiencies in the CapEx numbers going forward. Them are two questions. Thanks.
Look, in respect to the first question. Thank you very much for the questions. In respect to the first one, we cannot go as granular as providing monthly or quarterly cash consumptions. Obviously, as you know, if you defer a payment by a couple of days or an inflow happens a couple of days earlier or later, that has obviously some disruptions on the picture. What I can tell you is that for the first half, in the first scenario, the -40%, we assume that we have a monthly cash burn of CHF 50 million, and for the second scenario, the -55% scenario, of CHF 60 million in the first half in average per month. Having said that, you can assume that the first quarter, Q1, due to the seasonality of the business, the cash burn is higher than in the second quarter.
From that perspective, you will see a higher cash outflow in Q1 2021 than Q2 2021. That's normal, nothing unusual. To the second part, the catch-up in CapEx. Look there, if you look back or if you remember that already during 2019, i.e., before the crisis, I always mentioned that the historical CapEx level of 3%-3.5% per year in average does not hold true anymore, and that my assumption is that it is slightly below the 3%, i.e., between 2.5% and 3%. Yes, we have obviously optimized a little bit. You can assume that going forward, the CapEx level will be short of the 3% we have communicated before.
Got it. Thanks a lot.
The next question comes from the line of Jaafar Mestari with Exane BNP Paribas. Please go ahead.
Hi, good afternoon, everyone. I've got three questions, if that's okay. Firstly, just coming back on that cash burn for H1. I appreciate the exact quarterly sequence is difficult to estimate. Maybe looking at the type of outflows you're facing in H1. Across your guidance, we're looking at a total CHF 300 million-CHF 360 million outflow for H1. Are you able to break this down between what should be ongoing operating cash burn, and then separately, the more one-off payments in nature like the true-ups on the minimal guaranteed rents, for example, that come out around Q1, if I'm correct? Yeah, please.
No, please, go ahead. Sorry, I didn't want to interrupt you.
Secondly, still on free cash flow, just big picture. Before COVID-19, you had a few years in a row where you delivered equity free cash flow between CHF 350 million and CHF 400 million. Any major changes to the business model, to the assets, to the economics of certain contracts or relationships that we should have in mind, that would make this historical performance not a good indicator of future performance if we assume you return to peak profitability? Just lastly, on the minimum guarantees, we've seen the public proposals that AENA has made to all its retail partners. If I'm correct, as of February when they presented it looks like you had not accepted the proposal yet. Just to clarify, what's included in your 2021 guidance with regards to that, and what's the range of outcomes, please?
Perfect. Thank you very much for your questions. I will start with the first two and then hand over to Julián for the third one. Look, all the cash flows we have reflected there are ordinary business, so there is not any specific one-offs in that regard. You mentioned the concession fees or the true-ups. Look, let me repeat on how that works. There are concessions where we pay the true up after a quarter, so it's quarterly true-ups. In some other ones, it's annual true-ups. There is no significant cash outflow to be assumed for the first half of 2021 in respect to Minimum Annual Guarantees.
You need to bear in mind that we have achieved a waiver for around CHF 551 million of Minimum Annual Guarantees already for 2020. From that perspective, there is no significant cash flow included in the CHF 300 million-CHF 360 million in respect to MAG reliefs, which goes beyond the normal ordinary business in that sense. In respect to the free cash flow, or the equity free cash flow, you mentioned the CHF 350 million-CHF 400 million, and what potentially could have changed materially. Yes, indeed, there is obviously the restructuring and reorganization we did in 2020, which will lead to sustainable savings of around CHF 400 million, of which CHF 280 million are coming from personal expenses savings and around CHF 130 million from general expenses savings.
If you take that into account, leaving any tax impact of the higher profitability and some other effects aside, yes, the performance of the free cash flow we would generate once the business has recovered is significantly higher than pre-crisis.
Anything major on the negative side?
No, there's nothing major on the negative side. Obviously, you can assume that there are certain small pressures on one or the other line, especially taxes. As I've mentioned before, if we are generating CHF 280 million of personal expense savings and CHF 130 million of general expenses saving, you can assume that profitability of the group is higher, and therefore there's a certain tax effect on that additional profitability. But beside of that, no, nothing material.
Thank you. Thank you very much.
Regarding the MAG, and especially the question was regarding Spain, in these projections of cash burn is the normal rent. We have not considered any discounts. Regarding the negotiation process, it's still ongoing. I don't see that this is final at this stage of the process. We can still negotiate basically due to the situation of the passengers in Spain.
Thanks. Just to follow up on that, it looks like what AENA is proposing is a formula that applies to every single retailer.
I think it is better that I say one thing. We don't comment on specific concessions. Regarding AENA, the cash flows that you have seen is already considering the full payment, the reality is that until we know exactly where we land, I cannot comment on that.
Okay. Fair enough. Thank you.
The next question comes from the line of Jon Cox with Kepler. Please go ahead.
Good afternoon, guys. Thanks for the call. Just a couple of questions. When you talk about this returning to 2019 equity free cash flow and adjusted EBIT. I'm just wondering, what level would the sales need to be to get there? Is it like you now assume that you can get that with a 20% decline in revenue versus 2019, or is it a 10% decline? Just to give us an idea of where you're coming from. Are you saying then that basically, if we get back to 2019 sales figures in the next few years because of that CHF 400 million cost block you removed, then in theory you would be, well, it's almost doubling what you were in 2019 at the equity free cash flow. Is that your expectations going forward, whenever that could be, five, six years or whatever it may be?
Just on the, you mentioned everything you're doing with the rentals and obviously it's more accounting, but what will that do to that amortization line, which you've had a big chunk there, is coming down. I wonder where you see that line would be, in the medium term. Just a final question. Just, and maybe I didn't catch it, but talking about these turnover scenarios you've given us the negative in H1 and looking better in H2. You've got, say, down 40% and down 55%. What are the sort of half year scenarios there? If you've given us down CHF 50 million in H1 with -40%, I'm guessing it's kind of you're thinking maybe -50% or so in H1 and then -30% in H2. Is that the way we should look at it?
For the other one, maybe 60 % H1 and then - 40% in H2. Is that your thinking on that? Thanks very much.
Thank you very much for your question. Looking respect to the equity free cash flow, when we reach again a similar level than in 2019, with the cost savings we have now implemented, a good proxy is probably around one third, 30% of drop in sales to reach a similar level. In respect to the second question, if we would double the equity free cash flow. Obviously once we have recovered sales, not entirely due to what I have mentioned before. Look again, if there is a higher savings in respect to personal expenses, or there are the savings in respect to personal expenses and also general expenses, obviously you have a higher profitability in respect to, or a higher EBT level, which results in some tax outflows in that regard.
What you can assume is that probably around 2/3 of those savings will end up in the equity free cash flow. In respect to the amortization, I'm not sure if I understood the question right. If you were talking about the impairments with it in 2020, then the answer is yes, that will lead to substantial lower impairment or amortization in future periods, which are obviously significantly lower than in 2020, leading to a higher profitability in future periods. In respect to half year one and half year two, you're absolutely right. I don't have the information right in front of me. I know it by heart, but you're correct.
In the full year scenario where we assume a drop in sales of 40%, the first half year is probably give or take at around 65% drop in sales, and the second half of the year is obviously then slightly better than the 40%, giving a full year effect of - 40%.
Thank you.
The next question comes from the line of Tom Gibney with BNP Paribas. Please go ahead.
Hi. I just wondered if you could comment on your plans with respect to your November 2022 term loan maturities. Would you consider doing a bond refinancing for those?
Look, in respect to the refinancing, as we have mentioned before, we have started the discussions. We are currently evaluating and fine-tuning different options. At this stage, I cannot tell you exactly what the plans are. We will only disclose that obviously once we approach the market. What I can tell you is that the discussions are advanced, and we have a very clear plan, and we will execute that in due course.
Great. Thanks very much.
The next question comes from the line of Gian Marco Werro with Zürcher Kantonalbank. Please go ahead.
Yes. Hi, everybody. Hi, Julián and Yves. Thank you for taking my three questions. First one on the JV with Alibaba and also the successful opening in Hainan. From the press release, I was not reading anything about Alibaba being also involved. Now in the presentation on slide 14, you also include that Alibaba is also involved in the cooperation with the Hainan Development Holdings and the opening there. Do I understand then right that the sales that you achieve there is not directly affecting your sales, it's more like an income from minorities as you hold a minority share in this JV? That's the first one. Thank you. Second one is in relation to your planned expansion in Food & Beverage in the U.S.
You again mentioned this target now. Did you also cut somehow your expectation in relation to expansion plans in this category now for even the midterm? A third question is really corporate governance question also. What I just observe is that you reduce your headcount by over 1/3 now year-over-year. At the same time, I just see in the compensation of the Executive Committee that you're paying out a special bonus especially for exceptional performance. For the whole Executive Board, this accounts for over CHF 11 million. Don't get me wrong, I really have high respect for your efforts, but it's also difficult for me to understand how you derive to the amount of the special bonus. Maybe you can also give us some more light there, please. Thank you.
Yes. Thank you for the questions. Let me start with the first one, the joint venture in Hainan. The joint venture in Hainan has been, since the beginning, a joint venture between the three parties, Alibaba, HDH, and Dufry. As you know, we cannot invest in duty-free in China. Still we cannot invest as Dufry, as international company. International companies are not authorized even to be investors or to be involved directly in the investment. As a consequence, what we are doing at this time is to provide services to the operation through three different levels. One will be intercompany charges, the other one will be management fees, and the other one will be, obviously, income from the joint venture company or dividends from the joint venture company with Alibaba. Alibaba is an important partner, probably the most important partner.
From the communication point of view, we have been all together, the three partners, thinking that in terms of the relationship with the brands, it's more relevant that Dufry, that has obviously these skills and this value in the joint venture, should lead the external communication. Regarding the plan for Food & Beverage in the U.S. and in expanding the business, I think we are specifically in a situation, and now even more important, and you have heard this from us many times, that diversification is one of the main areas where Dufry should step forward. You can do it in the airport retail, you can do it in the airport environment, you can do it outside airport environment. The most obvious, I would say, in terms of development in expanding this diversification, is probably Food & Beverage.
Is Food & Beverage a business where we are not familiar with? As you know, we have a significant volume of sales generated today in grab-and-go in the U.S. Internationally, we have also some restaurants worldwide. Restaurants, obviously fast food restaurants, not sit-down restaurants. One of the alternatives in order to synergize the presence in the different locations through relationship with landlords, number one. Number two, synergies that could also be created due to the structures we have in the different regions or globally, could be an identification of synergies and at the same time diversification and the use of cash in a very efficient way. When and how, this is obviously depending on the circumstances. We are not talking about anything specific. What we are talking about is within the diversification.
Due to the collapse of the, especially cruise lines, we believe that Food & Beverage within the environment of an airport could be a very good allocation of capital for us. The third one, regarding the governance and the compensation. I think, just for reminding how the process of compensation happens, is normally every year, the remuneration committee prepares the targets for the company in a regular basis and in a non-regular basis. When we started to discuss about compensation in 2020, obviously we were absolutely in the middle of the collapse. We didn't have any shop open. The reality of the cash was very limited. We were under a significant stress. The idea run by the remuneration committee was to create a set of initiatives with two targets.
Number one is, let's try to do as much as possible in terms of the cost structure, reducing especially the most important lines of the cost structure. In terms of the special bonus, there were two. One, personal expenses, the other one was operational expenses. In personal expenses, what we tried, and obviously it's a consequence of the decisions rises by the Group Executive Committee, what we tried is to protect as much as possible the company for surviving. I think the second most important cost, as you know, after Minimum Annual Guarantees, or sorry, after rent, I repeat Minimum Annual Guarantees because everybody's asking me about Minimum Annual Guarantees. After rent in the P&L is personal expenses.
As a consequence, as you have seen and you have obviously analyzed the situation, the huge effort, and I am not talking about huge because compensation, I am talking about huge effort of all the levels of the organization, especially from the management team, achieved to reduce the number of people to 22,000 in nine months without creating a bigger problem. This secured, in my opinion, very secured the generation of cash and the huge losses that we have even reported today. In March 2020, I think if you comment on that to anybody in the world, including the remuneration committee, nobody could believe that this could be done in nine months, okay? Now the reality, obviously, we are looking back with one year difference. The second block is operational expenses.
In operational expenses, we have reduced a total CHF 233 million in nine months, cutting costs, discussing, especially obviously creating these relationships with landlords and other stakeholders. The last one, and I think it's also very relevant, is to generate CHF 2.3 billion cash through different cash flow initiatives. This cash flow have not been reflected in any compensation package of anything, but this has also been there. I think the remuneration committee that is responsible to approve these things, consider that the survival of the company, at that time, looking at the situation, is a very important, obviously, step in the relationship with all the stakeholders around Dufry, and they consider that this should be compensated. Is 2021 probably the clear picture what happened in 2020 is very difficult, because obviously this happened one year ago.
One year ago, the opinion of the remuneration committee, the Board of Directors, was a fair approach in order to create the, obviously, good environment and support for the company. That's the only thing I can say.
Okay. The absolute amount of CHF 11 million, how would you derive on that? Because just from my perspective, I think, what you did is really tremendous, but it was also part of your job.
Yes. Obviously, everything is part of our job. Everything. From the top to the bottom. The problem, not the problem, sorry, it's not a problem. The subject is always the same. How you could identify what is really critical in the life of anybody, and in the professional life of anybody, that happened in this time. I accept that you may consider it's too much. I don't know from your point of view, but I think what happened, CHF 1.3 billion reduction in costs structure in a company in a period of time of nine months, I think is a very great achievement. I don't like to talk about great achievements, believe me. I normally talk about different things. In this case, it's a one-off situation that has been compensated in relation with the size of the problem.
Okay. Thank you. All the best.
Thank you very much.
The next question comes from the line of Rebecca McClellan with Santander. Please go ahead.
Yes, good afternoon, Julián, and good afternoon, Yves. Just a couple of questions from me. Firstly, you talk about 60% sales capacity currently open, with the aim of some 65% by the end of March. If you were to look at that 60% now, what's its hours traded versus a normalized trading schedule?
Sorry, Rebecca. I cannot understand the question. Is regarding what we are performing now with a normalized performance?
In terms of the actual hours that the shops are open.
Okay.
60% of sales. Mm-hmm.
Okay. The shops are open normally between 60% and 70% of the time.
Right.
The shops that are open normally are open between 60% and 70% of the time.
Okay.
In a normal-
Sorry?
In a normal situation, if you consider normal situation 100%, which sometimes we open for 24 hours. The shops that are open so far are open between 50% and 70% of the time, independently of the number of passengers, because we need to obviously welcome any passenger going through.
Yeah. No, of course. By the end of March, do you expect that time component to increase?
In March? No. By the end of March, I don't think so. I think if the situation is in the way we think it will gradually normalize, I think we are talking about here beginning of May, and especially when the U.K., if theoretically will reopen on May 17th, that is announced by the government. I think this will be a trial in terms of intensive human capital in the shops.
Okay. the end of March, 65%, does that incorporate any major change in the U.K.? How much is open in the U.K. currently?
No, by the end of March, nothing. What it is now, 5% or 4% of the total. I think the plan for the U.K. is going to be with the reopening, probably, I am not sure now, but beginning of May, the shops in the U.K. will start to reopen.
Okay. Then we should see an increase in the hours traded as well, I suppose.
Yes, exactly that.
Yeah. My second question is more about going forward, we're talking about normalized equity free cash flow. Suddenly things potentially optimistically look quite good. The shape of the market, pre-COVID, you had interest in Asia, in building up footprint in Asia. Has there been any major change in assets on the market for sale? Have you seen any major change there that we should be following or thinking about?
There is one, Rebecca, that probably you remember, is our new operation in Istanbul, Sabiha. Probably this is the most relevant so far. Apart of that, not yet. Anything else, I don't think so.
Okay. Thank you.
The next question comes from the line of Iva Horcicova with Napier Park Global Capital. Please go ahead.
Good afternoon, Julián, and good afternoon, Yves. Thank you for the presentation. Two questions from my side. The first one is actually following up on my colleague who just asked a question about expansion to Asia. Does this relate mainly to all the initiatives you do with Alibaba in China, or do you also expect a significant growth in the other parts of Asia? If so, could you help me to understand the magnitude of your growth? Historically, obviously, Asia was underrepresented in your revenue split. In the medium term, should we expect that Asia will take a more prominent role in your revenue split, and will be more in line with some of the other regions? The second question is for you, Yves.
Coming back to the impairment, which you recognized in 2020, could you comment a little bit more to what this impairment relates to? Then quantify a little bit how much lower the amortization depreciation will be going forward. Thank you.
Regarding the first part of the first question, Maria. I think the expansion in Asia for us, it remains, and I think this is also in the presentation, remains priority number one in airport retail. The Downtown is a business that we have already developed, especially in Macau, and I think in Malaysia we have also the Downtown shops. What we want is not to just develop the retail. What we want to develop is the online retail in Asia. For something similar to that, Alibaba is probably the best partner possible in the scope of partnerships in Asia. The first step is clear, is China. China offline and online. This will have also an impact in the development of the other countries.
If everything is normalized, and I am also expecting that Chinese will play the relevant role that they have played over the past years in expanding the travel retail business worldwide, but especially in Asia. As a consequence, as you probably know, Chinese were the customers, I think number five or number four worldwide. In Asia were the number one customers. I think will be as critical the collaboration with Alibaba. As critical as, obviously, we are trying now, and this is something that I didn't comment when somebody asked me about the relationship with Alibaba. We are trying to connect the platforms, their platforms and our platforms, in order to reach obviously a better engagement with the customers. Is this a significant move in Asia? The answer is yes, with the current portfolio and how to increase the like-for-like in the current portfolio.
Second part of the question is, if we are going to expand in Asia with Alibaba in terms of the same partnership that we are now doing in China, this is a different conversation. I think we have not touched this in terms of how to do it, but I think from Dufry's perspective, it could be very important if we can create in China a good test, an example of how to operate both worlds, online and offline. Obviously today it's very early to say if we can grow 5%, 10%, or 20% in Asia. Just one comment before the crisis. Before the crisis, the possible development in terms of passengers or customers in Asia was the highest in all the regions worldwide. We were talking about 9%, 10% per year. Again, when the traffic will be recovered, maybe will be recovered in 2023, in 2024.
From this moment on, I think the traffic as recovered may have again the same expectation between 9% and 10% per year. More than that I cannot say because it's very early and the development of the strategy is still ongoing.
Thank you very much. In respect to the second part of the question about the impairments done in 2020. Look, if you look at the specific lines where those impairments have been done, then you will see that it's coming mainly in the line of Right-of-Use Assets and Concession Rights. Both of those lines are subject to regular amortization. The impairments done in 2020 can be seen as a timing shift. Instead of amortizing it in the future, we have impaired it in 2020. Put it the other way around, and I think that's really important. As we have done the impairments in 2020, this will lead to a significant lower P&L charge in the future years, and therefore a higher profitability in that sense.
Thank you.
Thank you.
Thank you, Iva, for the questions.
The next question comes from the line of Edouard Aubin with Morgan Stanley. Please go ahead, sir.
Good afternoon, Julián and Yves . Two questions for me. The first one on the competitive landscape. I guess despite the crisis last year, none of the main players in the travel retail space, at least to my knowledge, have gone under. I was just wondering if you are expecting some rationalization or consolidation to pick up this year. That's question number one. Question number two is on ESG as well. As you know, yesterday was the International Women's Day, and I cannot help notice that in your Executive Committee you have no women. Correct me if I'm wrong, but I think it has been the case ever since the IPO in 2005. Just wondering why that's the case and how important is promoting diversity for you. Thank you.
Okay. Thank you for both questions. The number one is the competitive landscape has not changed yet. I think if the question is, are you expecting in 2021 will happen something? I will be very brave to say yes because I don't know. Okay. The reality is that the situation is very tough, especially in regions like Asia. I don't have information in order to confirm a straight question like that. The second one, ESG and women participation in the Group Executive Committee. Just let me remind one thing, is in the second level of the company, below the Group Executive Committee, we have more or less around 40% of the group management level that are women. The question regarding the Group Executive Committee is right. We have not had since the IPO one single woman in the Group Executive Committee.
We obviously consider the situation. The situation is not just to appoint somebody because we want to appoint somebody. The situation is how to create the base for not discriminating women in any position in the company. I can promise you one thing, this is happening, and it's confirmed because we want to do it in a proper way very soon because we started around four or five years ago with a program with the name Women at Dufry. The intention of this program is to really discuss, mainly this Women at Dufry is a group of executives in the [the cycle] level of the company. Trying to understand why in the company we don't have positions, or we don't have women in positions of the Group Executive Committee.
The consequence of that is, in my opinion, very promising. We have several today in the succession plan for the Group Executive Committee. We have around 35% of the total candidates that are women, meaning that within the near future, we will have the opportunity to appoint a woman in the Group Executive Committee. In any case, I accept what you said. I totally agree that this is something that should evolve in the right way and in the right process, and it is what we are trying.
Okay. Thank you.
Thank you.
The next question comes from the line of Yvonne Chow with Nan Fung Trinity. Please go ahead.
Hi. Thank you very much for the clear presentation. Actually, most of my questions have already been asked and answered. I just want to confirm because I think I missed it during the presentation. Can you reconfirm that about the 350 basis points write-off on gross margin? Is it 330 basis points on inventory write-off and then 20 basis points on promos? Can you clarify that? Thanks.
Yeah. Thank you very much for the question, and we clarify that. If in 2020, the 600 basis points more or less that the gross profit margin dropped, only is 1.5% of this has been due to discounts and promotions and especially impacting the commercial margin. All the other ones are due to the circumstances. For example, I mentioned 3.5% that is due to obsolescence and liquidation of merchandise. I put as an example, chocolate, for example, worldwide. The remaining part, the other 1.5%, is the mix of wholesale. Wholesale has a lot lower gross profit margin. Even that productivity or profitability level is a good business, but from the gross profit margin point of view, it's very different than the retail margin. As a consequence, because last year we had a significant drop in retail, wholesale had more importance in terms of the mix.
This is more or less due to 1.5%. Then I mentioned very small amount, 0.3%, that is basically due to the, let's say, the less efficient use of the transportation because volumes dropped significantly. I repeat then two things. One is we are not expecting in 2021, the gross profit margin will be recovered, will be dropped, will be lower 100 basis points, 200 basis points with 2019, especially due to the evolution of the sales. Maybe we have to use also gross profit margin for attracting more people to the shops and being more aggressive in terms of commercial activities. I also said the second part, that if everything is recovering in the way that we are talking here, 2022, we'll see probably a recovery of the gross profit margin we had in 2019. I remember it was 60.2%.
This is what I said.
Thanks. 350 basis points is for inventory. Actually, the whole impact is 3.5% + 1.5% + 0.3%, because I think in your revision, you only said [audio distortion].
Yeah, it's 3.5 % + 3.1% + 0.3%. More or less impact in 2020.
Thanks.
Okay.
The next question comes from the line of Volker Bosse with Baader Bank. Please go ahead.
Hello, gentlemen. Volker Bosse, Baader Bank. Thanks for taking my question. Thanks for all the detailed information you provided so far. Three questions from my side. First is for clarification. What are the numbers of outstanding shares at year-end 2021 we should calculate with? The second question is, given all the financial transaction which you successfully placed in the market, could you provide us a potential range of net debt or financial results for 2021? The third question is on covenants. I understand the covenants are on vacation, so to say. You also mentioned from September to December, you had a kind of test. There is now 5x net debt to adjusted operating cash flow. Could you clarify what does mean test and what is about the covenants going forward? Perhaps I also misunderstood something, a bit of course on that. Thanks.
Thank you very much for the questions, Volker. Look, I will answer the three questions. For the first one, the average number of shares outstanding is give or take, 80 million. To the second one, look, we don't give any guidance in that regard. I cannot give you an outlook for the year 2021, which goes beyond what we have disclosed on the slides with the scenarios. It's actually slide 2017 of the full year presentation. To the last question in regards to the covenant testing, this is actually the normal covenant testing we used to have in the past, i.e., before the covenant holiday. The only difference for September and December is that instead of having the normal 4.5x tes ting, it's 5x . It's a slightly higher threshold in that regard.
Having said that, it's important to remember what we discussed during the presentation. We have already approached the banks in regard to the covenants and also in regard to the refinancing. In that regard, we also address the covenants if need be. You can assume that over the next couple of weeks and months, we will have the discussions with the group of bank lenders, and if need be, we will address the issue with the covenant thresholds and take required changes if required.
Okay. Thank you very much. All the best, and yeah, stay healthy. Thanks.
Thank you very much.
Gentlemen, there are no more questions at this time.
Okay. Thank you very much for participating in the call again. I hope next year we could do it in a physical environment. It's always more pleasant, and also it's better to see face to face. Thank you very much for your support.
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