B&S Group S.A. (BSGR) Earnings Call Transcript & Summary

Before we get started and get introduced, let me first get some general announcements out of the way about the disclaimer. Other than reported financial results and historical information, all statements included in this presentation are forward-looking statements and, by definition, based upon current expectations. And about the session, we have planned for Q&A session at the end of today's program with Peter, Ken and myself. [Operator Instructions] We will gather all these questions during the presentation and address them in the Q&A afterwards. [Operator Instructions] Please note that due to the time restrictions, it's possible that we will not get to answer all your questions. In that case, our Investor Relations Director, Anke Bongers, will get back to you afterwards. Good afternoon. My name is Tako de Haan, and I'm the CEO of the B&S Group. From the studio here in Amsterdam, we want to welcome you to our Capital Markets Day. It's very unfortunate that due to COVID, we are not able to meet you in person. But still, I'm very excited to be here today and share our 3-year strategic direction with all of you. With me here today in the studio is Peter Kruithof, our CFO.

Thank you, Tako, and good afternoon, everybody. I think familiar face to at least most of you. With the company since 2008 already and in the capacity of CEO since -- CFO since last year.

And with me here is also Ken Lageveen. He's new to our executive team. Ken?

Yes. Good afternoon and welcome, everybody. My name is Ken Lageveen, COO of B&S. I've been with B&S since 2003, first in commercial roles with our liquor business and later as a Commercial Director in our Beauty business. And from there, my shift to -- I focus -- my focus shifted to the strategic management of the beauty management and -- segment, with a leading role in the transition of the European wholesale to e-commerce and acquisitions within the beauty category. From 2013 onwards, I became more and more involved in our ERP implementations, automation and robotization of warehouses and optimizing of our operations. And since January, I fulfilled the COO role for the entire B&S operations and logistics in our new structure, which will be presented today.

We will also have the following guest speakers. Maurice Riegel, MD from our Food and Health segment; Martijn Spoelstra, MD, E-commerce; and last but not least, Thomas Slabbers, the founder of our strategic marketing partner, SOCIALDATABASE. The agenda items that we'll take you through today are the 2020 strategic review, the '21 to '23 strategic foundation, the commercial focus and the commercial focus in action. After the break, we'll talk about sustainability and culture; and the financial framework is what Peter will present to us; and last but not least, I'll take you through the key takeaways before we go to Q&A. But before we start, allow me to briefly share some personal notes with you. During my first 8 months as CEO of B&S, I have taken ample time to get my feet under the table and assess the teams and processes in our company. I must honestly admit I was very pleased with what I found. The willingness, drive, the expertise of the teams made me see what things we can achieve: to have already done a fantastic job by making a lot of progress in such a short time. They harvested a lot of low-hanging fruit even under the most difficult circumstances that COVID has brought upon us. But let me be clear. Of course, we found areas of improvement and implemented several projects to further increase efficiency and improve working capital. But we found even more great opportunities, white spots in the market where we think we can win with our products and services. Those things will all be addressed in this presentation. Peter will now take you through the 2020 review until August, my arrival. I will then take over to elaborate further on the time line of events until today. Peter?

Thank you, Tako. I'm sure I speak for all of us, COVID-19 is affecting everyone personally and professionally. The pandemic will have a lasting impact on society to change our everyday lives from how we travel to the way we work. Things have been difficult for all of us in the past year. But also, positive things have surfaced. I'm deeply impressed by the engagement and solidarity I've seen amongst our employees around the world. Also, global supply chains have proven to be resilient and adapted very quickly to the COVID-related challenges to meet customer demands. This showed in the growth of our online business. Moreover, impressive acceleration of digitization as well as the broad and more flexible use of technology is very inspiring and encouraging as we transition into the new normal. We also made sure to secure our financial position during the pandemic and worked very closely with our commercial teams to strictly manage the inventory levels that tied up working capital. We've adjusted our cost base in line with developments and reduced our net debt position above market expectations. While the organization was successfully working through the pandemic, we welcome Tako as CEO. With his experience and outside-in view, he was able to quickly identify commercial and operational opportunities to take B&S to the next step. Tako?

Yes. And if I may continue the same time line. In August, I took over from our previous CEO, Bert Meulman. Mr. Meulman worked many years closely together with Mr. Blijdorp to successfully grow the B&S to the EUR 2 billion company it is today. In 2020, he took the conscious decision to make time for his family and private life, the moment I started at B&S. I want to thank Mr. Meulman for his contribution and all the hard work for over -- more than 25 years. To continue on the time line, one of the key accelerators for efficiency is the increased focus on our Digital First initiative. This is where we assessed and compared the different B&S subsidiaries on their IT and process maturity. Consequently, we appointed functional experts from the advanced business units to support those who are less evolved in their IT and process development. A lot of great progress so far. Then, we made a statement, Business in the Lead, loud and clear to the entire organization. Because of self-imposed rules, some supporting functions were hampering the speed of our business. I've seen this before in fast-growing organizations. Collaboration between functions become more important in large organizations. That needs to be addressed and to take it to the next level for growth. Once -- one of the efficiency improvements we were -- was the creation of our corporate functional teams. We have placed the general support functions like HR, finance, legal, IT in a matrix structure. An internal expert was selected to overlook the function for all B&S companies. It created processes and process uniformity and functional expertise and made it available to everyone. By the time that the second COVID wave hit in last December, we were already implementing most of what we just discussed. B&S is fast on its way to become a lean, driven, high-tech company. By appointing Ken Lageveen as our new CEO -- COO, sorry, in January, we showed everyone that we were serious about our operational improvements. Business in the Lead, got next [ dimension ] by taking logistics and IT away from the business units. Those became a service to the business units so they can focus 100% on commercial activities. As we consolidated our activities and expertise by product segment, it made sense to have the reporting structure follow that same logic. Peter will explain later the new transparent reporting structure when discussing the financial outline. He will now continue with some detail on financial market feedback that we received since we went public. Peter.

Thank you, Tako. With our IPO in 2018 came expectations. And of course, with those expectations came feedback. I think in short, and we can sum it up briefly, we could say we hear you, and we took action. We are determined to act on this feedback. And in this presentation, we will inform you on the steps we've taken and will take. We will focus on the following points in this presentation: branding B&S and the B&S organization; a simpler and more efficient company with a clear strategic focus, sharply focused on shareholder returns and with financial predictability. I will now hand it back over to Tako to share some global trends we've noticed in 2020.

Thank you, Peter. Yes, I will take you through a couple of megatrends that we see globally. We should expect that certain of these megatrends will -- in society will surely change the dynamics of the markets we operate in. Due to COVID, international wholesale and retailers like us have looked for ways to mitigate their revenue losses by finding new commercial opportunities and spreading risk where possible. What we've seen last year is that if one country closes, another opens up. Thus, leave -- thus, having a widespread global network of clients and business partners helped us to minimize our revenue losses. We even found new opportunities in Africa, Middle East and Asia. It became clear that the bigger players and brands are all looking to expand their global footprint. The second one is probably even more interesting. Consider this: only online meetings, no more social events, no cinema visits, no store shopping. All these constraints have led to an accelerated digitization of society and businesses. And this also goes for B&S, of course. COVID has put the focus on electronic collaboration and e-comm business models. Digitization undercut the mechanistic way upon which organizations were created. It is clear the old ways don't cater to the needs thrown at us by this pandemic. We are rapidly connecting people, businesses, customers and consumers globally by digitization. In short, B&S is radically shifting to fully digitized business models. Disruption. Of course, we also seen disruption. We recognize the trend of growing sales in value channels like regional discounters and other off-price chains as price-conscious consumers keep looking for bargains. The value business also tries to find its way to online. But that's only possible if you maintain a very lean overhead. This drives companies to look for extreme efficiency gains. So the trend that everything and everyone is moving to online is disruptive to many internal and external processes. There will be new rules. For many, it's a totally new ballgame. But for B&S, it just meant picking up what we were already doing, finalize the build of our state-of-the-art online platform, a headless platform that's fully integrated with our AP system and seamlessly pushes and retrieves order data from 1 or 100,000 customers per minute. With everything we have in place, we have the power to make an impact on our industry. The last trend that I will discuss is one we noticed in the market, selected distribution. We see that many brand owners are trying to expand their footprint in different markets. They are looking for a capable and financially sound partner to help them grow their business globally. New markets mean new challenges. In markets where the brand is not a brand yet, many of these markets are almost impossible to enter without a proper local partner, a specialized service B&S can offer in many cases. By setting up a marketing department, we added marketing to our service package, and we are ready to play this role on a global scale. As of now, we offer this as an end-to-end solution to brand owners. And Maurice will tell you a lot more about this new service in a couple of minutes. All of these trends ask for a high-tech business partner with global reach. We already have a long history with hundreds of suppliers and millions of customers and consumers worldwide. This is, of course, a tremendous value to B&S. We are financially strong and rapidly becoming a highly digitized company, redesigned for speed, efficiency and scalability. We already have an extensive global reach and services. We're using the state-of-the-art digital platform and social media marketing to reach customers and consumers worldwide. B&S is ready to take on the future. So adapting to win is what we are aiming for. As you can see in the previous slides, this is exactly what we did. We are already adapting to win. With the transition towards a global brand. And let -- we are in transition, sorry -- we're in transition to a global brand. And let me explain how we do this and why we do this. When I started my position in the company, I held an abundance of interviews at all levels of the organization. Next to amazing enthusiasm, many ideas and lots of energy, there was one more interesting finding. On the question, who's B&S, I got different answers from each and everyone. It became clear that if we want to be a global player, we need to become a global brand. So we are strengthening our corporate identity, tell everyone who we are and what we do by telling one story. So we came up with the slogan, King of Reach. This may sound bold, but it's truly what all B&S businesses have in common: we bring our products to every corner in the world, from the most remote military site to that little house on the prairie that even the mailman has trouble finding. We can reach anyone anywhere and bring our quality products within reach of our customers and consumers. B&S is truly the king of reach. It is straightforward and needs to understand for all employees, shareholders, suppliers, customers and consumers we're telling one story, something everyone can relate to. And we will relentlessly promote our added value as a global player. So before diving into the commercial opportunities, we will share some detail about the fundament for these new commercial opportunities. These 3 pillars lay the foundation for what we call turbocharged decision-making. Let me tell you how we do this. When you go over the time line, I already briefly mentioned Business in the Lead. To make this happen, we streamlined the organization and made it transparent and easy to understand. Cut and reorganized loss-making departments, a business needs to show long-term profitability. And we simplified and flattened the structure, but we also simplified supply chain. No more duplication of activities. The business determines projects and prioritization. To make the organization transparent, we have identified 6 expert operating segments. So the 6 operating segments will bring segmental expertise and commercial focus. It is a much flatter structure with clear management, fast decision-making, very transparent and efficient. It eliminates the earlier mentioned overlap and streamlines reporting. Peter will get back to this when he talks about the financial framework later on. Next to that, we created corporate functions to support our business functions in detail. These function experts were recruited internally to head up the function at corporate level. We also asked them to execute functional projects because we can bring all these expertise into action. It brings standardization of policies and processes and so maximizing efficiency and profitability. Ken will now give a detailed example of how our simplified approach in the liquor business has been constructed.

Thank you, Tako. Before I start, I firstly want to say I'm very happy Tako has been with us for a few months here now, and I must say things are really changing in a good way. The introduction of his new approach away from this segmented, top-down structure towards a more simplified, fully digital product matrix channel concept supported by our corporate functions, that is what we really needed to bring our B&S to the next level. We needed a fresh and inspiring approach, and, well, thanks to Tako, we're working on that. In line with simplifying our structure and one company approach, we've started to consolidate our liquor businesses. And we started by integrating the back end and creating one ecosystem in our ERP for all the companies, as we did a few years before in our Beauty segment. And we used our experience to realize similar alignment. In the first step, we integrated our international distribution companies, and we are now implementing -- or adding on our European wholesale. We introduced a commercial insight application for all, and our commercial people have now the integrated information real time to make the correct decisions based on predictive data. The biggest difference is that all the 7 different companies are now contributing to our liquor concepts instead of merely pursuing their individual goals. They still operate as separate entities with specialized activities, but procurement, back end and market knowledge and data are now centralized. We created -- this new backbone, yes, also created the opportunity to start physically integrating our warehouses and optimizing our B2B activities and expanding our B2C; uniting our liquor activities on all levels, system adjustments and creating one ecosystem; creating a central hub where we can have a larger, long-tail assortment which is fitting the market and our new business concepts. And of course, this is resulting in structural working capital improvements as well. Furthermore, we are realizing a central long-tail warehouse with strategic hubs in the rest of the Europe and the world, and we are enlarging our global reach. Also, with our extensive knowledge on customs licenses and local taxes in the EU, we are empowering our business to consumer opportunities in our liquor business. Now Tako will continue with our Digital First philosophy. Tako?

Good. The second pillar in our fundament is Digital First. It's based on process optimization, documents and data flow and also data use to optimize our decision-making. To become a high-tech company, it requires a digital first approach. We assessed the 3 mentioned areas on this slide in detail and embedded digital capabilities throughout the organization. Next to that, we trained our workforce and embraced the lean methodology to simplify our processes. We hired digital-savvy people to support our high-tech environment. And we identified internal functional experts to train less advanced business units and so create a self-learning organization. What we achieved with this is as an organization, that we can implement new capabilities across the company very fast now. And I'm handing it over to Ken so he can explain how we are using the data -- the big data insights to make better decision-making and tell you about scalable operations.

Thanks. Our data science -- sorry, our data science team supports our daily decision-making process and measures our progress and effects of decisions taken. We have grown our team of mathematicians and economitrists (sic) [ economists ] and are working closely with our Dutch universities. We are making projections and predictions for our daily as well -- for our daily activities as well as working out on all possible scenarios for our projects. Basically, there are 4 major areas in our data science: signaling, predicting, simulating and optimizing. I'll give you a few examples. In one of our projects, as mentioned before, we are bringing the liquor activities under one roof in a long-tail strategic hub. Determining dislocation, calculations of the assortments and working capital reductions scenarios were supported by our data science department. Also, simulations of the new design and level of automation has been done by them. We managed to go from a classic warehouse environment to a warehouse ready for B2B, wholesale and B2C all in one. For the Beauty, liquor and Retail, we've developed algorithms for monthly and weekly purchase advice. For our retail distribution, we are now predicting more than 120,000 daily minimum stock levels, thanks to data science, reducing our complexity for the stores and taking care of redundant stocks per location. Replenishment issues throughout the rest of B&S have been catered for by using the same algorithm. What I'm trying to say is that algorithm development for us leads to better demand forecasting, accurate sales and operational predictions, resulting in cost reductions, better use of working capital and increased profitability. Our data science helps us, of course, in all our projects but also for our daily activities, for example in replenishment for internal logistics and store distribution, short-term workload predictions and people and cash planning but also put away an output-related predictions and advice. Another interesting example of a positive development of -- our team has been working on together with the team at FragranceNet is dynamic pricing. With these intelligent pricing strategies based on market data and pricing rules, we are able to save at a minimum margin target and meanwhile adjusting to the changing conditions real time. In this manner, we can optimize our sales and maximize the profit on our items on B2B and B2C level. Data science has become an essential part of our development strategy, and we expect our department to grow in the coming years. They enable us to be in control to make the next steps in digital business with an ever-increasing assortment. Reduction of complexity and increase of margin is key to us. This brings me to the next fundamental pillar of our redefined focus, which is Scalable Operations. To drive a high project success rate, we have put a Project Management Office in place. We've also given them a project management tool. We can now engage the business and prioritize projects and manage resources and time more efficiently on a group level. We've implemented our BRT ERP in almost all segments, and we are -- yes, and all the remaining ones are being completed this year. We strive for full automation of repetitive tasks, and we are connecting all companies. Lean methodology drives each process, like Tako mentioned before, and becomes part of our DNA. By connecting all these systems and resolving backbone differences, we managed to combine -- excuse me. Sorry. Our logistics is now becoming a responsible P&L segment. It is no longer supportive to our individual companies, but it's run as a business. We organize by activity and picking type on group level. We consolidate where we can, and we are maximizing occupancy rates of our distribution centers. We benchmark and strive to outperform the market. We make sure all KPIs per DC are met, and we installed the management for all locations, increasing efficiency and expertise. We are enabling e-commerce growth in all segments and increasing our working capital efficiency. By connecting all these systems and taking away previous backbone differences, we managed to start combining all the categories in an easier format. Further analysis made it clear that working capital improvement can be achieved by also physically joining stocks. Distribution is now concentrated by order and/or channel type and not by company or segment. In the same line of development, we are rapidly reducing our usage of third-party logistics and maintaining our own hubs where needed to create our pan-European deliveries. We are looking at global options for all product segments, and we are shortening routes to market where this can be achieved. Also, we are creating local presence in developing markets, allowing us to get closer to the end consumer and deeper into the end markets. To ensure success of our execution, we involved all levels of the company, top down and bottom up. We needed a rigorous and solid structure to implement and deploy, to deliver on our goals and increase our project success rate. Before, projects were organized on a more segment level, but this reduced the effectiveness on group level as we were not necessarily acting on our opportunities in the bigger picture. We introduced our Project Management Office with our experienced people to execute the strategy deployment process. The objectives of this PMO, or Project Management Office, is Business in the Lead. PMO schedules and follows up. They do an organizational end-to-end alignment and makes sure that management, sponsors and stakeholders are aligned in all projects. Secondly, alignment of project values with the organization's strategic objectives and priorities. Transparent and timely communication and prioritization of our projects. They're also driving synergies through process excellence, tools and best practice sharing. We discuss and align all new functionalities over all businesses. And we are [ leveling ] corporate digital performance at a rapid pace. And of course, we are driving the innovation initiatives. We've categorized all our projects in order of relevance, classifying them as boulders, rocks, pebble and sand based on people days, budget and, of course, return on investment. In this structure, we create ownership and manage the projects with all the relevant stakeholders involved. Thank you. Tako will now continue with our strategic direction.

Thanks, Ken. Last year, we launched 3 business priorities for long-term value creation. The teams have further defined priorities in line with the strategic -- with the strategy into objectives and measurable targets. By doing so, we have to monitor and can monitor our progress and make transparent for ourselves and our external shareholders what we have achieved. While we -- while the only constant in life is change, we're still holding on to the good things of our past. Our commercial focus for the coming years is built upon the 150 years of B&S entrepreneurship and expertise. These 5 bullets that you see on screen explain the fundament that we've nurtured and developed further. We have a unique sourcing mechanism. It's worldwide. It's a global sourcing mechanism. We know to find all the opportunities worldwide. We have a widespread customer knowledge and regulatory expertise. We are digitized and automated, also our warehouses and all the processes in the company. We have a global scale and logistics expertise. But long-term business relations is what we have the best of, and it's all based on trust. Our commercial strategic choices are all driven by an in-depth PMC study, product, market and channel study. By doing so, we found white spot markets across the globe that we can enter now or in the near future. We created some guidelines on how we select markets and products. We will or can become frontrunners in those markets and bring true added value before we enter a market or we add a product. And we will only invest time and resources in markets where we can maintain or obtain a winning position. This may even include M&As to strengthen our position in markets, channels or regions. We have a successful track record, as you may know, in M&A with our latest acquisitions in FragranceNet and Lagaay. Of course, we will continue to look for other white spot opportunities in markets and channels. But we will refrain from activities that add no long-term value to our business portfolio. With these guidelines in mind, we assessed our Food segment because in our Food and -- business segment, we've seen severe impact last year from COVID. We had to cut certain activities and combine others. We made a clear and conscious decision to standardize assortments for similar customers. And for those small customers, we built a fully automated, self-service online order platform. And we will also refrain from low-margin businesses that require time-consuming capillary distribution models. Instead, our resources are all focused now on expanding business models, marketing services and driving multiple-year partnerships. So much for the commercial fundament. Our commercial focus aims to create a long-term value for our stakeholders by pursuing sustainable and profitable growth in diversified markets. We will do so by applying our network, product and marketing formula. If you look at B&S, we're like a global cable company with a connection in every household or business worldwide. Once you have the connection, you can use the cables to bring content to the markets. We have a wide assortment of products that we can push through these channels. By using our state-of-the-art marketing techniques, we maximize the conversion in each of the markets. So we want to further expand our global network and activate it in markets where we see biggest opportunities. If you look at where we are already today, you can see that we have a wide, extensive, global network. We have created hub structures where needed and feet on the ground to get specific market expertise and insight. Once we are in a market, we can reach our customers in multiple channels. We have B2B, B2R, reseller platforms but also B2C. And since only a couple of months, we have added marketing as a service to each of these channels. So we can reach our customers in every market through a channel supported by e-comm and also by marketing activities. If you look at how we do this as a total in our network, we can see our global reach brings experience for each opportunity in the region. We put feet on the ground. We have distribution and bring a brand-building role into the market, local marketing through SUPERAUDIENCES that we'll talk about later. We have in-depth knowledge and expertise of local markets. And we focus on local trends and time-to-market acceleration. Expanding our product portfolio. We will, of course, continuously look for products that complement our assortments in different markets. We can purchase and deliver any product anywhere. But it has to make sense before we add it to our assortment. Our PMC study will tell if there's demand or if we can create demand through marketing. Playing the long-tail game. If we want to be a serious online player in markets, we need a long-tail assortment. In brick-and-mortar, there's always limited shelf space. This disadvantage is taken away by moving to online. Long tail is even a necessity to get traffic if you're not only competing on price. But finding the right balance between how many different products to put on stock is not easy. For that, we have the algorithms in place that Ken explained to help us optimize and streamline our assortments also online. Handing it over to Maurice and Thomas. Maurice is the MD for both our Food and Health segment, and Thomas, as I mentioned earlier, is the founder of SOCIALDATABASE. They will show you and give examples on how we added digital marketing as a strategic weapon and how it results in higher conversion. Thomas and Maurice?

Good afternoon, everyone. My name is Maurice Riegel, one of the MDs within the B&S Group responsible for the Food and Health segments.

Hello, everyone. I'm Thomas, Founder of SOCIALDATABASE. I'm happy to be here today.

Together, we will demonstrate you how we are expanding our distribution model with a clear set of added values. As the world is changing, so is B&S. Accelerating out of this crisis through digital transformation is key in our renewed sales strategies. For us, this means innovation at all levels of our company to further connect with brand owners on the one hand, all the way up to end consumers on the other. COVID-19 has forced us all to rethink buying behavior and our customers' needs. One thing is sure, being consumer centric or even obsessed is key for future success in the next phase that lies ahead of us. Customer experiences and personalization are crucial factors in doing so. Hand in hand, both sales and marketing are meeting the speed of digital when targeting this new consumer. From the almost 8 billion people that live on this planet, let's say consumers, 4.2 billion potential ones are active on social media nowadays. COVID-19 has accelerated this trend exponentially, whereas 70% is spending more time on their smartphone since the start of the outbreak and 87% out of all e-commerce shoppers believe that social media helps them to make a better shopping decision. Of course, we all want to connect with these new consumers. It's about targeting, finding them, convincing them to buy our products, selling them our products, and then selling them more, which is even more difficult these days. And obviously, we all want to do this in the most effective, efficient and direct way possible. But how? That's the question many companies and brands are struggling with. At B&S, we realize and understand that modern logistics and distribution is more than just moving products from A to B. It's about delivering insights, understanding and a deeper relationship with consumers. It's about expanding markets, not just servicing them. It's about adding values that truly matter and make a real difference for our partners. And we have found our response. The connection of our global distribution network in over 120 countries with the access to over 1.4 billion social media accounts through our new partner has led to the strategic alliance we have formed with the Dutch company, SOCIALDATABASE. Our product, SUPERAUDIENCES, is a unique way to reach and engage with modern markets and consumers with incredible precision in a way we and our suppliers previously could have only dreamed of. It enables us to contribute effectively to brand growth strategies within all our models, from B2B, B2R and B2C, adding a whole new dimension to our distribution services. And on top, we're able to do so at a very low cost level, giving us a true new competitive advantage by reducing data and campaign costs for our partners and making the product very scalable. I'm very happy to have Thomas here with me, one of the founders of SOCIALDATABASE. He will elaborate more on the product and our partnership, but let's first have a look at a short intro. [Presentation]

At SOCIALDATABASE, we have spent the last years building a database that is unique in the world, understanding and reaching audiences at a relevance not seen before. And all of that based on publicly available data, which is especially beneficial in this era of privacy protection. Well, by analyzing 1.4 billion social media users and 21 trillion data points, we've created an entirely new segment, which we call Enriched Public Data. And we enrich data in such a way that Twitter is now buying Twitter data from us. So Twitter is buying Twitter data from us to help their largest advertisers reach the more relevant audiences on Twitter. And as one of the 45 official Twitter partners, we're now rolling out to the U.S., to the MENA region and many more regions to follow. And as mentioned before, all data that we have is based on publicly available data. So no third-party data, no other data sources, which basically means that our methodology can be fully GDPR and CCPA compliant. We're an official Twitter partner as well as a preferred Facebook partner. And recently, we joined the Techleap Rise program, which makes us one of the 10 high-potential startups in the Netherlands. Our HQ is based in Amsterdam, but we have offices in the United States and in Dubai. And basically, the core of what we do is building custom audiences based on specific characteristics. And then this exclusive alliance that we have with B&S, we have created a very unique combination because B&S is specialized in reaching specific audiences at a global scale whether it is B2B, B2C or B2R, and at SOCIALDATABASE, we're specialized in reaching specific audiences at a global scale on social media. And this combination makes that unique and also enables us to accelerate this partnership very rapidly and successfully at this moment. Well, all of the data brings a lot of targeting possibilities that were not out there on social media before. So we can help B&S to target based on job titles, seniority levels, B2B industries, interests. We can even build audiences based on specific geo locations to target consumers around a specific store, for instance, to increase in-store traffic. And as mentioned, this methodology applies both to B2B advertising as well as to B2C advertising. So on the B2B side, we help B&S to reach business decision-makers or key B2B audiences to generate brand awareness or leads. And on the B2C side, we are reaching consumers to drive e-commerce and sales. Well, the SUPERAUDIENCE product is already being used by some of the greatest marketers in the world. And I would like to give you a few examples of our other clients and make a comparison to what we do for B&S. So I'll start with Nike. We help Nike to reach football players in about 5 countries. And in a similar way, we help a client of B&S to reach gym enthusiasts and healthy lifestyle audiences in the MENA region. The second example is around Robeco. So we have helped Robeco already for a few years to reach business decision-makers, sometimes financial decision-makers, in different industries. And in the same way, we help B&S to reach business decision-makers around tenders within food services, for instance, to win more contracts. And finally, Nutricia. We helped Nutricia for more than 3 years already, reaching health care professionals in 71 different countries. And the way we have set up the partnership with Nutricia on the digital team side at Nutricia as well as the social media team side at SOCIALDATABASE is a great example and -- which we use as a blueprint basically to set up the partnership with B&S at the moment. And to give you an idea on how we build audiences and what the data looks like, I would like to give you 2 examples. So this is the spirits distributors U.K. example. What we basically did is we analyzed the community on social media, we looked at what they follow, who they follow, what they like and what they talk about. And we analyze this to understand the collective behavior of decision-makers within spirits distributors. And when we understand the collective behavior, we can find all decision-makers within spirits distributors in the U.K. as well as in any country in the world. The same works for the duty-free community. So we analyze the duty-free community globally to understand who are the business decision-makers in this field. And for B&S, we can now build the duty-free audience as well as different niche audiences inside of duty free. So we could zoom in even further into retail or airport, for instance, depending on the needs of the B&S campaign.

Thank you, Thomas. Clear. By putting this new methodology at our core of our services, we can maximize brand potential in any market or sales channel of choice, boosting sales and profitability with our social media campaigns. We monitor and review jointly each step of the way and adjust our specific content to each market and audience. We have developed a campaign dashboard to follow our campaigns at all time live as well. We can connect our partners to any consumer in a channel of choice and can also link the campaigns to their existing brand strategies. Most of our brand partners have great content around their products and extensive marketing teams but are struggling with getting the relevant data or knowing how to use that relevant data. For example, within the travel retail duty-free channels that we serve, we see the need to connect with travelers rising rapidly. Now the whole landscape has changed due to the pandemic. Together with our partners of industry and the retailers, we are developing new digital experiences at all levels of the customer journey of that same traveler, even up to the comfort in their homes, supporting the traditional retail once markets will open up again. So big data is becoming part of our sales DNA. We now have a great set of new added values in-house with which we are reenergizing our sales teams and partnerships. We can deliver marketing messages personalized to basically anyone in the world at the most relevant way. We optimize marketing budgets by getting a better value for every euro ad spend. We are bringing quality leads at our own and our partners' doorsteps. And by doing so, we can generate more direct sales and conversion in all channels that we serve, from B2B traditional as well towards e-commerce platforms. Let's have a further look at what this means for our business at B&S. We are at the early stage of introducing this new service within our network and is leading to improved and powerful partnerships already, making us a distributor of choice. Obviously, that may go without saying we offer the service exclusively to the brands that grant us the distribution right to the market channel in which we launched their campaigns. Let me now demonstrate a bit further with some few -- with a few clear examples. Beginning of this year, we got awarded a new global distribution role by Mars/International Travel Retail. The question of Mars was, how can we enlarge our footprint and market share in the niche channels, border stores, airlines and sea on a global level? Who can help us with a better end-to-end solution and a wider reach? And how can we drive sales with an optimal budget spend? Our answer and winning formula on this pitch, traditional meets the speed of digital. With SUPERAUDIENCES, we are now targeting new customers in Africa, Asia and Middle East and connect their Mars product portfolio and our sales teams to the designated retailers where currently they have limited presence to enhance their reach. Combined with our distribution capabilities to deliver products anywhere in the world, we developed an effective 360 approach. Traditional in-store marketing will still be executed by us where needed. But by shifting a larger part of the budget to our social media campaigns, we can attract and engage with the most relevant end consumers to increase sales of the Mars products at any moment of time on a very scalable way. We will launch new product campaigns and promotional benefits to both retailers, B2B, and, more important, to the end consumer, B2C, to create more awareness and conversion in the designated niche channels. Let's have a look at some more campaign examples. The first example you see here on the left is a lead-generating campaign for our African sales department rolled out over the capital of Rwanda, Kigali, branding and positioning our capabilities as a single-source supplier. We geo-target very specific on retailers and importers, where, in this case, as a result, within a time frame of only several weeks, new -- a few new customers have started to import mixed container loads through ourselves, all at speed and a cost level that for us was new and giving us a true, new strength. In the middle, for Perrier, for who we do the capillary distribution all over the Caribbean Island, we launched an awareness campaign to highlight their new flavored waters to end consumers. With a budget spend of only USD 3,000, we had a major reach of over 2.5 million views in 1 month's time at 23 key Caribbean sites. We use a mix of Twitter, Facebook and Instagram. For Heineken, we launched an exclusive promotional campaign around their 0.0 nonalcoholic beer within the maritime sector in Europe on Twitter, Facebook and LinkedIn throughout the summer of 2020. At that time, the overall maritime market was 60% down due to the pandemic, but we achieved an uplift in sales of their 0.0 beer of 30% compared to the previous year, a good example of direct conversion through social media. The combination between the exclusive brand content and the strengths as B&S that we can expose are giving us a clear reputation as brand builder within these markets. Obviously, we learn and we improve each step of the way. We continue to track our results, measure our successes, tweak our content and copy and move into even more powerful strategies. And it's not just servicing the A brands. It also builds upcoming brands of the future. Like we are currently running several campaigns in the Middle East around some upcoming health and protein brands with excellent results. The content you can see here is for a new healthy snack which we released into Saudi Arabia to health fanatics around all 13 major cities in the country. It's an awareness campaign in which we give the consumers information on the launch and direction to the nearest point of sale at the moment they see the content in their time line. So these campaigns are truly beneficial for the retailer as well. They generate more traffic and more sales along with it, strengthening their in-store proposition. As you can imagine, with our partnerships with over 500 brands globally, we are just scratching the surface of opportunities. This new approach gives us a powerful, new competitive advantage and a clear strategic direction towards the future. And as we are integrating this innovative service into all levels of our group, it all comes down to creating more value in the chain for all partners involved. Our renewed services will lead to more relevant brand visibility for our suppliers, reduce data costs and more insights where needed. We are bringing them closer to the desired end consumer. But also, we will generate more traffic and sales for the retailers we serve, making us their partner of choice beyond price and logistics. And for us at B&S, through more exclusive partnerships, we can build a sustainable model with a profitable growth on the long run not only delivering products but truly building brands around the world. With our new model that generate bottom line cost improvements and top line growth acceleration, we aim to become the go-to distributor for any brand that needs a true end-to-end solution. Thank you all for your attention. And I'm now giving the word to Martijn, who will elaborate further on our exciting digital commerce developments.

Thank you for having me. My name is Martijn Spoelstra, and I'm the Managing Director for E-commerce within the B&S Group. I have joined B&S 14 years ago, and I've been working in various departments throughout the B&S Group. Over the last years, I've been responsible for transforming our classic beauty wholesale distribution into e-comm. It's my pleasure to take you through our vision on the role of digital commerce to drive scalable growth. We are entering an era where there's no separate physical or digital world, but a completely connected one. Customer traffic is also certainly never going to be the same again. There's already a huge shift to online due to the current situation. Some portion of that may or may not come back to stores as they used to. With latest technological developments and all innovations coming up in the supply chain, we have strong belief that the shopping will be an integrated and personalized experience. Please allow me to take you through the steps we are taking to further strengthen our business proposition. We see great opportunities here for B&S. Of course, we are not new to the success of e-comm. Our FragranceNet business selling fragrances online to consumers has flourished over the last years, a strong, growing concept that even further accelerated during the pandemic. The FragranceNet business model has been one of the key success drivers during the pandemic. In 2020, we further built on that success. We added a third warehouse in the U.S. to ensure fast deliveries throughout the entire geography, therewith expanding our reach in the region and strengthen our network. Also, we further expanded our assortment to build a unique, long-tail assortment in the category. Adding to our e-comm success, let me remind you that we also serve hundreds -- or even over 100 e-commerce platforms through our business-to-reseller model, mainly in beauty category. As you can imagine, this provides ample opportunity for further expansion with all other product categories as well. Overall, rolling out our e-comm models to all our business activities in all our product categories in every geography, combined with our digital marketing services, is a true game changer moving forward. So how do we play the game? In order to serve customers best, we do not only invest in operations, supply chain and data analytics, as shown to you before. We also focus on relevant product assortments. We take position in the supply chain by stocking relevant assortments of premium products. Due to the global reach, we strongly believe in an efficiently managed long-tail portfolio in different product groups to fulfill the needs of individual customers throughout different business models. Meanwhile, we have gathered lots of experience and have a clear understanding what we need to do. We will offer great customer experience, and we will do what we promise. This is all will -- this all will be done in a data-driven manner by utilizing our great assets in customs knowledge, logistics and warehousing, together with the state-of-the-art e-commerce platform for capillary and single-line distribution at a global scale. Over the years, B&S has built an extensive network of both suppliers and consumers. In parallel, we have aligned the internal organization by migrating the ERP systems, lining up our logistics and building a fundament of an e-commerce environment. Bringing both suppliers and customers to our digital platform, we are already making a big step into the digital future. In general, there are 2 different ways to digitally connect to B&S, either an end-to-end integration of systems or through a state-of-the-art e-commerce environment. In doing so, we believe that we have an easy-to-expand solution. We keep expanding our e-commerce platform where suppliers get connected and where we -- where they tap into the B&S ecosystem. Here, we offer suppliers a direct link to our global network of warehouses and customers in various business models. At the other end of the platform, we enable our customers to connect to our e-commerce platform for a true digital purchasing experience. Our B2B customers can order from various web shops. In B2R, where we sell -- where we -- where our resellers can use our e-fulfillment, in short, where they sell the products and we deliver the goods directly, they can connect it as well. The platform also caters for the B2C business model, offering goods directly to consumers. From the B2C model, we determine per product-market combination a specific route to market. All 3 business models are supported with our business-plus model, where we add marketing as a service. All data resulting from this digital activity will help us in further development in business models and improve relationships with suppliers and customers. I'd like to give you an example of how this vision is already getting into place. With Alibaba, we already had a long-term business-to-business relationship. We ship goods from our warehouse to their warehouse, mainly focusing on bulk items. During one of our business meetings, we discovered that this -- that there's a high demand for European products in the region. Consumers like the idea of buying goods in or from Europe directly. We connected the Alibaba system to the B&S digital platform. By doing so, the Asian consumer got direct access to the B&S long-tail assortment in beauty products from warehouses in Europe. Later, we connected our U.S. hubs as well. So the Asian consumer buys from the Alibaba platform. We receive the name and address and pick and pack the single-line pieces to consumers and deliver them to their doorsteps. It only takes us 4 days to do this. After this proof of concept worked, we made the connection to our other DCs with other product groups like liquors and electronics. Once these activities were recognized by our suppliers, we realized that these capabilities, we can -- that we can offer with these capabilities new routes to markets for brands and suppliers. And we already started with a few brands. By making these unique connections, we created a new, scalable business opportunity. Another great example of the previously described direction we're heading into is with our B2C activities with FragranceNet in the U.S.A. We have applied marketing activities and added SUPERAUDIENCES for online brand development. Together with SOCIALDATABASE, we are connecting to consumers, taking them by the hand and offer them great digital experience with relevant content, assortments and terms. We will do this with a mobile-first approach so we can adapt swiftly to the changing world. First campaigns added value to brand awareness with 4.8 million impressions to 1.4 million unique consumers. This led to 108,000 new web shop visitors. With -- we will further deploy this opportunity to either create awareness on brands we distribute and business models we operate. In the coming period, we fully focus on the development of the B&S digital platform. Meanwhile, we integrate both ends of the supply chain, upstream and downstream, step by step. To empower our current business models, all stakeholders will be taken through the digital transformation, getting adapted to the new digital organization. In B2B, all our existing businesses are being onboarded to the platform and the e-commerce solution. In B2R, where we do fulfillment for resellers, we will further expand our customer base in the Beauty segment. We integrate the business model in other product segments. And from there, we will start cross-categories offering. In B2C, we are taking online activities of FragranceNet into Australia, EU and China. And we are adding new categories like skin care, hair care and health products. And I'm proud to share with you that we have started building the first online liquor store, delivering goods throughout Europe. To conclude, we see ample opportunities for scalable growth in all segments. This ends my presentation. And with that, we're now taking a 10-minute break in the program. After that, the executive team will be back with you. [Break]

Welcome back to the second part of our presentation. We're aiming to increase long-term shareholder value by driving consistent top performance and supported by advanced technologies. With our commercial focus and great business cases, as previously presented by Maurice, Thomas and Martijn, we have clearly set foot on a new high-tech path. And as we explained earlier, by moving closer to the end consumer, the need for compelling brand identity becomes more vital than ever. Next to that, the pandemic placed even greater focus on the importance of responsible business. It provides opportunity for building trust and lifting confidence in the B&S Group as a brand towards all our stakeholders. This can only be realized if we commit to further developing our business for people, planet and not just profit. Embedding sustainable ways of working to enhance value to our stakeholders, we will do that by our business for our shareholders but also and especially for our employees. Handing it over to Ken to give you some examples.

Thanks, Tako. I recently started as COO, and sustainability has a high priority on my agenda. We have started with an extensive inventorization of all the initiatives already in place in the group. Here, we apply the same renewed corporate approach. We really need to step up our pace, and we have taken immediate action within our own operations to make a solid start in reducing our carbon footprint. We focus on energy use, packing solutions, transport movements and waste management. Also, our newly planned facilities are being built in line with our sustainability goals. We take sustainability very serious, and we support the U.N. Sustainability Development Goals. B&S is committed to further developing our business for people and planet as part of our strategy to make a positive contribution to our society for many years to come. As part of our -- of executing this strategy, we are assembling a sustainability team, and it will be in place before the end of 2021. They will create a road map defining our focus and determining our KPIs and targets linked to our strategy. Tako?

Yes. And we want to be an employer of choice, of course. We will become an employer of choice. There's no 2 ways about it. It's just a matter of time and a lot of effort. But we're in the process of doing an employee satisfaction survey as a baseline to know where we stand today. We need to attract the best workforce by defining a purpose beyond the business. Also here, it's the same. Attracting talent is supported by a clear brand strategy and story. People love to work for a company they can be proud of to work for. We are the king of reach, and that will surely help us with this statement. We want to nurture talent and drive engagement. If we can create brand ambassadors, we have taken it to the next level. So for our people and their development, we created a group-wide program, helping them making career steps. The end goal is to create these ambassadors that will drive our business to growth. We want pride, inclusion and success. To make this happen, we need diverse expert leaders across all levels in the organization. One of the most important things for us at the moment is that we need a digital-savvy workforce because we have such a heavy digital agenda. So I want to emphasize that importance. For this, we need digital-savvy talents, and to drive this forward, we have to act upon these 4 priorities. In the core IT functions, we need to also free our experts and resources that we have in the company, and everybody needs to embrace the lean methodology. And then we, of course, want to attract digital-savvy people to further build a culture. We're aligning the organization with our strategy, so we're rethinking the way we work. So we empower our people and we engage them, and then we help them grow. So we have a hands-on culture, and it's -- this is our secret sauce and the backbone of our organization. The strategy is built upon the culture. Everyone is involved in our strategy, and everyone loves to be part of it. Handing it over to Peter for the last time now to walk us through the financial framework.

Thank you, Tako, for the last time. In order to come to our new segments, we took some steps. We consolidated the international liquor business, the liquor distribution within our organization. The personal care companies within the HTG segment have been combined. We divided the health and beauty category in a Beauty and a Personal Care segment. And we separated the food and the health categories. The Retail segment remained unchanged given its specific nature. In our Q1 press release that we will send out on May 17, we will elaborate on the market developments during the first quarter of 2021. I will now, however, briefly discuss the developments to put some color on the segments. We have seen our international liquor distribution pick up, both sales and margin-wise, as we already anticipated on in our full year press release. The liquor wholesale in Europe, however, is a little bit more complex with countries still in a lockdown. Within our Beauty segment, we've seen the Q1 sales ahead of Q1 2020. And as such, developments remained in line with what we've seen in the second half of 2020. With the value retail chains still close to a large extent, the sales in the Personal Care segment is still somewhat lagging. We have, however, seen in the past year that sales pick up rapidly once these stores reopen. Within the Food segment, we have seen the markets develop in line with what we've seen in the second half of 2020. The duty-free and other travel-related markets remain severely impacted. And also, the remote business is still lagging. Our international brand distribution is, however, starting to flourish on the back of the marketing campaigns, as indicated by Maurice. Health is showing mixed results. We remain to see a sharp decline in travel vaccines compared to Q1 2020, only partially compensated by the sales of COVID-19-related products. Unfortunately, we can still be short on the Retail segment since this market is still nearly in a fully lockdown given the third wave. Based on the trends we have seen in the markets and the strategic plans we have presented today, we have determined the following medium-term objectives. We forecasted an organic turnover growth of 7.5% per year, complemented by an acquisitive turnover growth of an average 7.5% per year, also. We expect our EBITDA margin to get back to the 6% level, increasing with 25 basis points per year as a result of the movement to the end consumer. This combined, of course, with the increasing operational efficiency. Our EBITDA and working capital focus are combined in the sort of newly introduced return on invested working capital metric, which divides EBITDA by working capital, a metric that we use internally already for capital allocation and to keep our segments focused under working capital. Our return on invested working capital is to remain above 25%. With our focus on working capital management and EBITDA growth, we will manage our net debt-to-EBITDA to remain below 3.0 even with our acquisitive growth in place. We will maintain our dividend policy with a payout of 40%, which we will increase when net debt-to-EBITDA is below 2.0. Before our Q1 press release, we will present a detailed set of figures on our corporate website containing the quarterly sales for the new segments as well as segmented profit and loss figures for both half year and full year 2019 and 2020. So there's no need to write it all down during this presentation. It will come available. The trends we see in the graph are as follows. Within liquors, we see the gross margin decreasing following the U.S.-China conflict in 2019 and the COVID pandemic in 2020. As indicated earlier, we have seen a reverse of this trend already in the first quarter of 2021. Within Beauty, we see the increase of business to consumer, mainly stemming from the FragranceNet acquisition in 2018, which has also been the main driver of our gross margin improvement. And although it appears as if turnover in the business-to-retail and business-to-business, Europe remained equal, there are 2 very noticeable trends. Business-to-business decreased in 2020 as a result of the store closures, of course, following COVID-19, and business-to-retailer increased. This resulted in an increase of gross margin given the movement towards the end consumer. Personal Care is benefiting from the rise of the value retail chains with gross margins increasing as a result of the addition of our private labels. Adding volume contracts in combination with a weakened remote business resulted in a decrease of gross margin for the food segment. Refocusing the assortment, however, in combination with a revised pricing strategy and the added marketing services that we discussed earlier will result in an increasing margin moving forward. Our health segment benefited from the COVID-19-related demand for health products. Retail severely struggled in 2020. As indicated earlier, we expect this market to remain impacted for the years to come. More on that later on. Given our strategic objectives and the trends we see in the market, we expect our organic turnover to increase with 7.5% per year. Please note that this graph only shows the organic expectations. On the back of this growth and eliminating the disturbances we have seen previously, we expect our gross margin to improve gradually, a forecast that further strengthened by our strategic focus shifting towards the end consumer, which comes at higher gross margins. As indicated, the details of 2019 and 2020 will be shared on our website. The Liquor segment has been hit in 2019 by the Chinese-U.S. trade war and in 2020, by the oversupply in the market, depressing our margins. We expect the market situation to normalize in 2021, as we've already seen in the first quarter. The Beauty segment has also been impacted in 2019 by the Chinese-U.S. trade war and the political turmoil in Hong Kong. In 2020, especially the online business-to-consumer, and B2R benefited from the shift from brick-and-mortar to online retail as a result of COVID-19. And although COVID and the related store closures impacted the Personal Care segment in 2020 as a result of the ongoing rise of value retail and the expansion of our private labels, EBITDA is growing ongoingly. The Food segment is facing overcapacity in its warehousing footprint, albeit on the short term, together with the severe COVID impact on the travel-related markets. And the impact at remote markets, the EBITDA severely declined with a focus on brand representation roles and as such, adding value, as we've shown earlier, combined with the strategic partnerships we have formed, we expect to reverse this trend. The Health segment was acquired in August 2019, and as such, the shown EBITDA for 2019 relates to 5 months only. In the first half of 2020, the Health segment benefited from the increase in demand stemming from the COVID-19 pandemic. In the second half, however, the sales were negatively impacted by COVID-19 since normally a significant part of the sales relate to travel vaccines. The Retail segment was, of course, severely impacted by the COVID-19 pandemic. This segment will, also in the coming years, be impacted. Despite measures taken for 2021, unfortunately, we expect this segment to still be loss-making given the ongoing impact of the pandemic. At sales levels of around 45% to 50% of 2019, this segment will break even. We expect our EBITDA margin, as indicated, to recover to 6% in 2021 based on the reorganizations carried out in 2020 of course, positively impacting EBITDA this year and the years to come, the recovery of the margins in the Liquor segment and a further shift towards the end consumer. On the back of the operational efficiency and the movement towards the end consumer, we expect an increase of our EBITDA margin of 25 basis points per year. We've seen a noticeable positive trend following our focus on working capital and especially on the turnaround of inventory. We've seen a clear improvement in most of our segments, although some of them could not maintain or work towards the desired levels yet, mainly as a result of COVID-related trends. Our Personal Care and our Food segment have seen outlets close. And as such, they could not clear the inventory positions they normally would have. Especially our Liquor and Beauty have a strong -- have seen a strong improvement. Although moving towards the end consumer will come with a long-tail assortment, this also comes with additional visibility and as such, predictability. As a result of the dedicated focus and the very hard work of our commercial departments, we've seen an improvement of our cash conversion cycle stemming from the focus on our working capital. We expect the cycle moving forward to remain stable or even slightly improved, where movements from centralizing warehouses will slightly outweigh through maintaining a long-tail assortment for our e-comm activities. If we look at our capital allocation, this sheet shows the capital expenditure in the previous years. In those years, CapEx mainly related to the acquisitions of FragranceNet and Lagaay Medical Group and the expansion of our logistical platform, especially in the Food segment. The other investments in intangibles mainly related to the further development and rollout of our bit ERP platform. If you distract those, then the maintenance CapEx as such, will be in the range of EUR 7.5 million to EUR 10 million per year. If we then look at our capital allocation and the capital allocation strategy for the years to come, as indicated earlier, our focus remains on both EBITDA growth and strict working capital management. This will boost our operational cash flow. This operational cash flow will partially be invested in our platform, of course, in line with previous years. Maintenance CapEx will be in the ballpark of EUR 7.5 million to EUR 10 million per annum. In contrary to previous years, our IT development will be expensed to the extent possible and as such, already been included in our EBITDA margin expectations. Furthermore, in the coming years, we will expand our logistical platform for our Beauty segment, both in the U.S. and the Netherlands, and we will centralize our Liquor platform. For the latter, we expect the cash outflow over the coming years to be neutral since we will replace current rented facilities with a newly established warehouse. Our free cash flow will, of course, be used for our dividend distribution in line with our policy. We will also pay dividends to minorities to upstream cash and to make it available for group purposes. Free cash flow is also used to pursue our M&A strategy. We continue our M&A strategy, where we want to add companies in adjacent geographies or product categories and as such, fulfill our wide spots. Our focus, given our strategy, is on new tech companies, strengthening our technological backbone. In all the acquisitions, we see synergy potential in turnover and gross margins. And in line with our previous successful acquisitions, we look for companies where management is willing to stay on board for at least the first 5 years. In other words, we're looking for a car with a driver in it. With this, we've come to the end of our presentation. And after a short wrap-up from Tako, we will be answering all the questions you may have. Tako?

Thank you, Peter. This brings us to the key takeaways for today. If you look at our strategy, adapting to win, there's 5 focus areas that we want you to go home with. The first one is a one-company approach, one vision and one brand. The second is that we want to lead where we can add value and invest where we can win. The third, marketing and digital innovation to drive our growth. And the fourth, cost effectiveness through scalable operations. And last, but certainly not least, expert and motivated teams empowered and ready to take on the future. So our theme for the Capital Market Day is adapting to win. We strongly believe that we're good on our way. B&S enters the next phase of its development with a leaner, more disciplined and expert-driven organization. We have positioned the company for sustainable innovation and driven growth. Growth drivers are based on high-tech operational backbone, extensive global network and product diversification. Our projects and resources are well defined to deliver on our promises. And we have highly motivated teams in place to follow through on all the initiatives. This concludes the presentation, and we will now gladly answer all questions as long as time permits. Thank you.

Let me remind you that you can still answer your -- get questions answered by hovering your mouse over the screen and click on the answer-your-question button during this whole time that we're live in the studio. We have a couple of questions that we already received on screen. First one, I'll take myself. It's an easy one. Will the presentation be available online afterwards? Yes, it will be on our website, and it will be downloadable even in -- as of tomorrow, I assume. So next question that I have here is if we have any intentions to do a share buyback given the current under evaluation -- undervaluation of our share price. Peter?

I think it's fortunate that at least one of our viewers find the share underevaluated. Let's start with that. I think we clearly indicated where we want to -- where we want to spend our free cash flow. We -- as indicated during the presentation, we are looking for, on the one hand, a dividend distribution, but we also want to pursue an M&A strategy, and that's why we want to use our capital forward. So at this stage, we definitely have no intention to buy back shares as a company.

The other one that we have here is how can we be sure that we remain flexible when using algorithms? By way of illustration, in 2020, it's not a representative year. An algorithm can potentially produce errors with these conditions. Ken, you want to give an answer to that?

Yes. Well, when using algorithms, we are not using one algorithm, and we're using data, which is dated back many years. And we take out all the extremes in our algorithm calculations. So in a little bit more detail. We use, on average, 10 different algorithm for, for example, our sales projection and our buying advice. And then we use some deep learning and AI to go over these algorithms and choose the best one for the suitable situation to make -- yes, to make an advice. On top of that, that advice is published in our systems, but it's still always a human decision to buy or not to buy and to make still a comparison with what we have. So that's the one side. On the other side, we have algorithms that work automatically, like I explained in my dynamic pricing model, but that's more to protect our margins. So I'm not too worried about that. Thank you.

Okay. The next question that we have here is, do you see Amazon as a competitor for your business? I will chip in here and if you guys have something to add, but -- we deliver a lot of our products to Amazon as well. So we see Amazon as an add-on business and not only as a competitor. Maybe you have done a lot of work with Amazon, but...

Yes, we've had a lot of experience with Amazon, and we are actually happy with them also as a customer. But they also learn us a lot. It's a very high-tech company, and we have seen how they work, and we study that. And with -- yes, basically a good relationship. But of course, they are very competitive and present in many markets. But we -- Amazon is not our only customer. So we focus also on other customers and our share in this -- on this side of the business is increasing. And as you explained, we're moving towards the customer ourselves more and more each day as well. So I don't think it has to bite each other that much.

No. Okay. Next question is, can you specify the one-off negative impact due to COVID? Peter?

I think if you look at the trend moving forward, then we expect a 7.5% increase in sales on an annual basis. I think if you look at 2020 when we ended at 1.8 million or close to 1.9 million turnover, then normally, of course, you would have expected to increase when compared to last year. But I think especially if you look at the retail, as we've also, I believe, indicated clearly in our annual report, that we came from a turnover of, well, let's say, around 140, and we went to close to 40 million. So they already see an impact of 100 million. And on the other hand, of course, you clearly see that the travel-related markets within the B&S segment were severely hit, as also indicated.

Okay. Then I have 2 questions that are pretty related or similar. The one is 7.5% M&A equation cumulative of EUR 450 million in sales. Why are you so sure you can engage in M&A that brings in this amount of sales? Yes, we, of course, continuously look for more M&A partners and -- but it all has to add on to our business. There are plenty of M&A opportunities in the market. We don't try to harvest each and any of them, but we are very selective in which partners we look at and which partners we want to add on to our business. Maybe you want to...

I think we look at the different segments we have and we look at the M&A potential we see at the moment and the points where we, of course, want to grow our business. Especially if you look at the e-commerce business, then we see some clear targets in that part. But also, I think and I believe if you look at our Food segment, then we already have the backbone available. So we have the capacity within our warehouses, and I truly believe that there are enough market players that we -- I don't want to be too outspoken about it, but I think we have already seen some...

Plenty of opportunities.

Opportunities in the markets, be it some a little bit closer, some a little bit further away. And I'm pretty sure that we will not exactly meet the 7.5% each year. But in general, I definitely believe this is a feasible objective.

Yes, and...

Also, our local presence strategy in other parts of the world is contributing to that. So we have more...

And also, at the moment, of course, because of market conditions, some other businesses are also looking for partners to globally expand and we can also -- yes, connect them to our network. So also, there, we have an extra opportunity to do a piece of M&A. Next question is -- it's jumping. What is the view and progress of the potential divestment of unprofitable divisions, such as retail or cruise?

Want me to take that one?

Yes, fine.

I think for starters, let's again remind everybody that cruise was only a quite limited part of our sales. And we've indicated that before, but I just want to remind everybody again. That's one. Two, cruise was definitely another separate division or segment. It was just a team of employees within our company that we're actively engaging with these customers. As you can imagine, if the sales is completely down, then, yes, of course, you don't need a team any longer. That's why we replaced and repositioned as much people as we could. But unfortunately, as also earlier indicated, we also had to perform a reorganization in that segment. So for now, we are not -- there is no cruise business. So there's also nothing to divest because we don't have any -- we don't have any investments made, especially for the cruise -- or specifically for the cruise, I should say.

We redeployed also some of that staff to other departments.

Correct.

Where we do have a lot of extra business.

Of course, if and when as also earlier indicated, these clients come up again and if the cruise lines and the demand picks up again and we're, of course, more than willing to supply them within our current product portfolio, so within the revised assortment and also within our new business profile.

Yes. Our backbone supports this still perfectly. It's just the business needs to come back.

I think if you look at the retail segment, of course, we've been severely hit over there. There we also performed reorganizations. There we also had to cut our costs. There we also renegotiated our contracts. But I also believe that there's not a suitable business case to divest if we would have want to. The Retail segment, when the market is down, in other words, what are you getting for that segment. But let me be very clear, we also have no intention to divest because especially forward-looking with all the contract extensions we had and also with the potential contracts in the market, I don't see any reason why that shouldn't pick up moving forward. As indicated during the presentation, I think we are running at, well, between 45% and 50% of our 2019 volumes again, then we're at least at breakeven. And from that point, we will start picking up and growing again.

Yes. Next question. Will FragranceNet start selling other products? I think, yes. I think they will. They will -- I think, they will expand further in cosmetics, maybe not in a different segment.

Actually, we are already expanding step-by-step in our FragranceNet business with cosmetics and hair care products mainly, which is, yes, big chunk of our business in Europe as well. And we are connecting our backbone, as we've explained before, and this is, yes, helping in developing these assortments on the other side of the Atlantic as well. And also, for their Chinese customers, this is a nice add-on in their assortments.

Yes. Next question. Your EBITDA margin expansion is very precise, 0.25 basis points per annum.

25.

25 basis points per annum. To what extent can your M&A strategy impact this, both positive and negative as not all targets are operating on EBITDA margin of 6%?

I think in general, if we are looking at our M&A strategy, they were not defined at one single segment. So we're also looking for a mix in that. I think, of course, we are willing, and we want to buy companies that are already up and running and already profitable in line with what we've seen within our company. So we're not looking for turning around or companies that are currently running at 2% EBITDA margin or even loss-making. So we are also looking in the ballpark of 6% and maybe slightly above or maybe slightly below where we can add the synergies on the back to get to at least that 6% level. So of course, you cannot simply say, at this point, that all the acquisitions we will do will be exactly at 6% even when done in 2021; at 6.25%, if and when done in 2022. But on average, we believe that this will stand.

Yes. Maybe one for you, Ken. How profitable is delivering to individual consumers referring to your Alibaba case?

Well, too bad we had to prerecord Martijn because otherwise, he could have spoken with.

Yes. Well, actually, it's just as profitable as our other drop shipping businesses. And yes, we even have some advantages over the European business because we are also allowed to sell more goods and a wider assortment there. So in that sense, yes, it's a very profitable business. And we deliver in 4 days, customers are happy, and they are really...

We're trying then?

Yes.

So no complaints there. Next question about Liquor. Liquor faced tough years due to the trade war and, of course, COVID. However, also prior to 2019, margins were below company average, both in terms of growth and EBITDA margin. Hence, what is the attraction of Liquor in your portfolio going forward?

You want to pass it on to me? I see.

I [indiscernible] you. I was not here in 2019 and not before either.

That's an easy statement. I think in general, if you look at the Liquor then indeed, the last -- well, at least 2 years have been quite tough especially in the international distribution, the wholesale, of course, last year struggled a little bit with COVID-19 and, of course, the related closures of bars, restaurants, et cetera. If you look at the international distribution and if you look at the first quarter of 2021, there we already see a trend picking up, where we can indeed see the increase of the gross margin again. I think, in general, especially given the relatively high prices of the products as such and also the excise included in the sales, your EBITDA margin will always be a little bit lower than the EBITDA margin you will be able to manage within the other segment. But I still believe, and that's also shown in the positive EBITDA that this definitely contributes to our overall EBITDA and also to the return on invested working capital we want to make.

Yes, and also the consolidation of the warehousing, as I explained before...

Much more efficient.

Much more efficient and also interesting for the B2B customers because we -- of course, we added a lot more assortment to the total assortment, and they're buying extra products as they were not buying before. So it's...

Halo effect basically of having a wide and long-tail assortment.

Yes. I'm very, very positive about this long-tail developments. And also, our drop shipping activities are picking up, also with Alibaba, by the way. So...

I think also interesting to add in this, e-commerce wise, it's also still a very interesting and sort of unexploited market by the rest of the world where we can cross-border Liquors.

Yes, consumers.

Yes, this VAT and excise issues we started resolving already, and we -- yes. We already started in these activities and...

Rapidly expanding, I would say, in the course of this year.

Correct.

So another question. The new decision-making structure makes it more professional, ranking of projects, check the profitability, but does it not remove some agility in the decision-making and, hence, some growth potential for the company? I would say, on the contrary.

Yes, I will believe it's the other way around actually.

It's totally the other way around. This gives us 100% focused with the entire company. All the business units are aligned up with the projects and the strategy. And I think this will give us an enormous boost in delivering our projects and also delivering on all the promises that we already made for this year will be in far better shape by the end of this year then...

Yes, plus all the projects we do are all rolled out on group level and same with the digitization, like you explained, the level of digitization is rapidly increasing everywhere. And in logistics, it's the same idea that we -- with all these projects, we are rolling out rapidly for -- to be able to deliver for all the concepts and it's working out really well.

Yes. I think it's also really important to realize that if we do this all together, we don't have to do it 3 times or 4 times, right? If we do a B2C project, others can copy paste and learn from what we've already done. So I think this makes us extremely flexible.

And agile.

And agile.

I think -- I hope it was clear from the presentation that before we were more working on a company level. And now by joining all the concepts and working more from a concept level, we are able to, yes, speed up and get our pace more quicker and more efficiently and cheaper actually.

Regarding your over 6% EBITDA margin target for 2021, to what extent is that driven by gross margin, enhancement, cost reductions and sales growth? Could you...

I will.

Take the honor?

I think if you look at where we came from, I think in -- or I know that in 2020, we were running at an EBITDA margin of around 4.9%. We had some one-offs. So if you correct for those, then you're running at, well, around 5.2%. In order to come to the 6%, I think two things are important that we also indicated during the presentation. We want to increase our gross margin. Of course, that, on the one hand, comes from moving towards the end consumer. On the other hand, we've also seen the liquor markets pick up. So the disturbing factor is sort of gone or at least moving the right way. So that's one. What we have seen in if we look at the gross margin, then we also have some other factors in place, of course. If we look at the retail or retail, definitely, this year will not be there to the extent that we've seen in the past. Well, usually, the retail comes at a slightly higher margin. So that's still pressing on our margin in 2021 a little bit. We've also seen a trend that we've seen in 2020 already was that the remote business was decreasing. We've, of course, seen -- probably everyone in this call has seen the news this morning as well with NATO moving away, the U.S. moving away before September 11. Of course, that's a trend that we already saw coming that we already increased or inserted in our budgets and such also in the forecast, we've given here today. But indeed, moving towards the end consumer, adding our marketing strategy, that's where we see the increase of margin coming from. So all in all, to sum it up briefly, we do expect with the long term as well indeed. We expect our gross margin in general, to get above the 14% level in 2021. And the remainder of getting towards the 6% EBITDA margin is really coming from the efficiency on the one hand and of course, also from adding sales volume. Because you have -- to a certain extent, you have a fixed cost base. Of course, if your sales decrease, then your EBITDA margin decreases even harder. And that's a trend, yes, we expect it to reverse in the coming year.

But in scalable operations, I mean, we should -- yes, a contradiction to lesser revenue, we should see the EBITDA grow, right?

And that's one we expect the increase moving forward of 25 basis points a year as per our calculations.

And that's why we have been and will be so focused on operational efficiencies.

I feel the pressure, Tako.

Good.

Bear with it.

Okay. Another EBITDA question. You mentioned that you expect EBITDA profitability of more than 6% in 2021, which sounds quite promising. Do you expect to be able to realize absolute EBITDA in 2021 that exceeds that of 2019 of EUR 115 million?

I think, all in all, if you look at the medium-term objectives that we have placed, then we expect a sales increase of 7.5% per year, which also goes, of course, for 2021, with an EBITDA margin of around 6%. Well, if you add them up, then that would be in the ballpark of what we expect indeed.

Yes.

Or maybe a little bit above.

Yes.

Well, of course, small disclaimer, but of course, we all see COVID-19. Well, trends have been included, but of course, we are dependent on developments relating to...

[indiscernible]

Correct.

Yes. Well, related question, what are the underlying assumptions regarding the ambition 7.5% organic growth in sales starting in 2021? What do you assume for retail and the COVID-impacted segments within the B&S segment? I think that has all been forecast into the budget. So there's -- of course, we are careful in what we forecast in those segments because we don't expect that the retail business will come back 100%. But we hope that by the end of this year, Retail and Travel segments are back to 40% of what we've seen in 2019.

Hope a little bit more but...

We hope a little bit more on average because now we still are at a 20%, 25% level. So on average for the year, if we get back to an average of 40%, we should be in good shape with the budget but...

I tend to agree indeed. I think if you look at the retail segment, of course, that will be complex during this year, as we also already indicated during the presentation. I think in general, at this moment, we are still quite below the 40%, of course, by quite I mean, quite a lot because most of our stores are still closed. Of course, we have the holiday season coming and towards the end of the year, we also expect an increase. But of course, towards the end of the year, we'll definitely not be at most 50%, 60%.

Exactly. So you briefly mentioned a B2B platform that is live for Food. Could you take us through the way this works? And also, will it add to the current business or eat current business-to-business away? Yes. I can safely say it will add to the business because we now make Food available to a much wider audience because we can bring it to market anywhere in the world. We also added some tools. So we have a container-loading tool that you can see exactly how far the container is loaded so we make it more efficient for the customer as well. And it creates efficiency because it's a fully automated order. We can speed up the whole process from order to delivery because of it. I think the customers will find it much more convenient to really order online because all the pictures are there. There's little discussion about what content each of the articles have. I think we make it so much more accessible, and we can now spread it all over our network that we will surely see added sales.

And we see that also already happening in, for example, Middle East and African markets.

Absolutely.

And yes, it's a very digital market, and our customers are ordering -- yes, actually, we have a lot of new customers ordering and reordering.

Already.

Yes, already. So...

Yes. So -- no, I think it's really added-value tool. During the '20 Q4 conference, you said that matching the 2019 EBITDA level in 2021 might be a bit of a farfetched. With the 6% EBITDA guidance, it seems that matching the 2019 level is in sight. What changed positively since then? Peter?

I think good question. I think, of course, we've seen the trends during Q1. I think, in general, what we expected and what we also hinted towards was that we expected, especially the gross margin in our Beauty segment to start decreasing a little bit. Well, that's a trend we have not fortunately seen so far. In other words, we remain very competitive with the margins we were generating in the second half of 2020. So that's positively changed. On the other hand, what we have also seen is that liquors picked up a little bit faster than we expected, with the margins at already a little bit higher level than we anticipated on. So those things changed positively. On the other hand, what we've also seen is, and that goes especially for the value retail. We expected the markets to pick up a little bit earlier. But unfortunately, we still see that those stores are, to a large extent, still closed, and there we see a little bit of a backlog. But as indicated, we also expect that once these stores open up again and then we see a recovery of sales quite rapidly.

Okay. There's two more questions here. So do you consider shifts in your business portfolio as you move to be more an e-commerce company to sell or spin off your tax-free shops and cruise business? And as you like, to be the king of reach, move to king of value by selling low-multiple business to high-multiple businesses. No, I don't think so. I think having brick-and-mortar is an added value to what we already have. And it makes an omnichannel marketing technique possible. We have no intention at the moment to sell off any of these tax-free businesses or cruise. We are sure it will pick up again. And then we are ready in a better and more digitized way, more connected and much more efficient than we have seen in the past. So...

And also I think there's one thing to add. I think, of course, the market determines the valuation of the company. And if the market wants to determine a proper valuation, so a realistic valuation, then we need to present them the figures in a proper way. In other words, indicate to them, "Okay, this is what the retail is doing. This is what the B2C is doing. This is what, et cetera, et cetera." Then based on that, I think, of course, the valuation will pick up, and we will get to a proper valuation that suits the company as a whole, including the retail.

Yes. We certainly think that the new reporting structure will give you much more transparency into how the businesses run. So that will also help to determine whether -- yes, whether the value of the company is at the right level. And yes, we expect that you will soon see that the valuation is a bit below what we think it should be.

I didn't understand. Was there also a question about the brands, how they look at it? Or...

No. No. Now you're starting to make up your own question.

We're running out of questions, Ken. So this is also fine, of course.

Yes. Yes.

And the last question is addressed to me. So you guys can go home now. No. Now that you've been some time as CEO, what specific area of the company has most potential for improvement? And which area do you think has the strongest competitive advantage and why? Yes. I think the potential for improvement, I see a lot of improvement areas still in the whole operational arena efficiency gains. As Ken explained, the consolidation of our inventories in specific product segments. I think our IT platform can also get better connected to everything that we do and also to our B2C, B2B platforms. There are some improvements there, of course, and the strongest competitive advantage and why. Digitization by far will be our most strongest competitive advantage. We're quickly moving towards a high-tech digitized company. So we can speed up our scalability, our network rollout, product assortments and there's a lot of advantage.

And of course, I really believe that the plus model with the marketing will give us...

An extra boost.

An extra boost and also as a partner for the brands and for our customers. It makes us a much more attractive party and connecting also the different businesses, which was more difficult than before. Yes, makes us a lot more interesting to our customers and consumers.

Yes. Marketing as a new service is, of course, new to B&S. We have not done that before, but we're rapidly building the skills and the teams to roll this out globally, as I explained in my piece of the presentation. And it's already picking up. It's really rapidly picking up, and we're harvesting all the good things that come from it. So another question coming in. Could you say something on your expectation of what percentage of the net profit of the group will go to minorities over fiscal year '21 to '23, or how that trend over these years and compared to fiscal year '20?

Shall I take that one?

All yours.

Well, of course, I think if you look at full year 2020, then the part that was going to minorities was quite out of the ordinary, so far higher than what we've seen before. Of course, it stems from basically 2 main things. On the one hand, the loss in the retail segment, of course, or unfortunately, fully had to be carried by the owners of the company since that company is 100% owned by B&S. On the other hand, we also saw quite a decrease in -- on the one hand, the B&S segment and on the other hand, the Liquor segment. So the companies that flourished, especially during those years or during 2020, were, of course, the online with FragranceNet in the U.S. where we have quite some minorities. Going forward, we expect, and of course, that's also what we will see is that the share going to the owners of the company will, of course, substantially increase. What we will do also when we present the figures is clearly indicates what minorities we have in what segments so that you can clearly see, "Okay, in that segment, you have 25%. So if we move that line upwards, then what happens to the minorities?" So that it's better to forecast and becomes a more predictable number than it has been in the past.

Thank you, Peter. Thank you, Ken. This was the last question that we had for today. I want to thank you for your presence during this Capital Markets Day, and we hope to see you soon during the half year numbers. Thank you so much.

Thank you.

Thank you.