bpost NV/SA (BPOST) Earnings Call Transcript & Summary

Hello, and welcome to the bpost Fourth Quarter 2020 Analyst Call. My name is Rianne, and I'll be your coordinator for today's event. Please note, this call is being recorded. [Operator Instructions] For now, I'll hand you over to your host, Mr. Jean-Paul Van Avermaet to begin today's conference. Thank you.

Okay. Good morning, ladies and gentlemen. I'm pleased to present you bpost Group's fourth quarter and full year 2020 results. First of all, welcome to all of you, and thank you for joining us this morning. With me, I have Leen Geirnaerdt, our CFO as well as our new manager of Investor Relations, Antoine Lebecq. We did post the materials on our website last night, and we will walk you through the presentation. And afterwards, as planned, we will then take your questions. So if you go to Page 3, you see that our full year 2020 group adjusted EBIT came in at EUR 280.6 million, and this is fully in line with our commitment to realize at least EUR 270 million. As we have last revised during our third quarter results release. COVID-19 drove outperformance versus our initial group adjusted EBIT guidance of EUR 240 million to EUR 270 million, and this through strong development in Parcels & Logistics on both sides of the Atlantic. In addition, this growth and results were supported by solid last-mile operations in Belgium. Mail & Retail contributed for EUR 171.2 million to the group adjusted EBIT and this with a margin of 8.7%. Year-over-year, the segment was impacted by accelerating mail volume decline of minus 12% and due to continued e-substitution, rationalization and also COVID-19 impacts mainly on advertising mail during the 2 lockdowns of nonessential retail in Belgium, meaning in spring and in November 2020. The segment also witnessed lower revenues from proximity and convenience retail network decrease due to COVID-19 related partial closure of the network and a reduced footfall and lower banking and finance revenues linked to that. Parcels & Logistics Eurasia's top line growth was driven by strong e-commerce development, both domestically and abroad. As to Parcels Belgium-Netherlands, year-over-year growth was driven by Parcel B2X volume growth of plus 56.2% and by DynaLogic. Volumes were fueled by the boost through online sales from COVID-19, as we know, and also to the 2 lockdowns of nonessential retail in Belgium. In parallel, growth in e-commerce logistics affected Ants and Radial Europe, together with growing cross-border activities, mainly driven by Asian Parcel volumes shipped by train since June 2020, also supported the revenue development of this business. Adjusted EBIT grew by 64.2% and and amounts to EUR 101.4 million with a margin percentage of 9.3. This EBIT margin grew solid versus 2019 and where the margin stood at 7.9%. When we go to Parcels & Logistics North America, Radial's significant growth of existing customers driven by COVID-19 as well as new clients launched in 2019, of which sales have more than tripled, combined with increased operating leverage led to an adjusted EBIT uplift of EUR 32.8 million, and this, with a margin of 2.5%. This excludes the impact of the ransomware attack of EUR 9.2 million in the last quarter of 2020. If we exclude that, it would mean that the adjusted EBIT would have been EUR 41.9 million with a margin of 3.1%. CapEx ended up at EUR 147.7 million, and this is in line with the revised guided cap of EUR 150 million to preserve cash in an uncertain year as 2020 was. Moving to Page 4 with the highlights of the fourth quarter. We see that group adjusted operating income at EUR 1.1944 billion increased by 7.2% versus last year. While the group adjusted EBIT at EUR 60.5 million was fully in line with our expectations and guidance. Business mix shift is further evidenced through combined adjusted EBIT contributions of the Parcels & Logistics business of EUR 36.4 million, and this exceeds for the third consecutive quarter, the Mail & Retail adjusted EBIT that amounts EUR 34.3 million. We did continue to benefit from driving g e-commerce volumes in Belgium, in Europe and in the U.S. as well as from positive operational leverage in parcels and e-commerce logistics. In Belgium, this was fueled by a growth of 67.4% in Parcels B2X volumes year-over-year, positively impacted, of course, by the November 2020 lockdowns and the end of year. On its peak, bpost managed up to 670,000 parcels a day, exceeding the previous record of 550,000 parcels which we reached during the Q2 first lockdown. The underlying mail volume decline at minus 11.8% was driven by less advertising campaigns due to nonessential retail lockdown in November, which resulted in an advertising mail volume declined at minus 20.4%. Remember that this minus 11.8% compared to a tough comparison base with Q4 in 2019, where the underlying mail volume decline was only minus 5.5%. Before I hand over to Leen, let me first give you an update on a couple of developments within bpost in the last quarter and also for the months to come. Now we go to Page 5. And on December 8, 2020, we announced our updated strategy, CONNECT 2026, which aims to accelerate bpost group's transformation into a customer-centric and sustainable omni-commerce group close to society and this while remaining an efficient mean provider in Belgium. A non-exhaustive list of concrete initiatives on Page 5 here, illustrates how bpost group implements and concretizes this strategy. As to omni-commerce growth in Europe, Active Ants will open 2 new highly automated fulfillment sites in 2021, one in Belgium and one in Germany, and Radial Europe is opening a third site in Germany in March. As we also want to be a reference sustainable and planet-friendly company, bpost has initiated a new material -- materiality assessment for the whole group. This new assessment is the next step in our evolution as a sustainable company. First phase consisted of reaching out to more than 2,500 of our stakeholders, inquiring which ESG topics are important to them. With over 50% of response rate, this exercise will help us to ensure our sustainable strategy is focused in the right areas and tackles every aspects of the evolving sustainability landscape important for our stakeholders. The methodology and the results of the new assessment will be published on our website in the course of 2021. In the same vein, we also entered a new phase test for our Ecozone in Mechelen in Belgium. This way, the city center is evolving into a complete emission-free distribution network and this by the end of this year, and into a complete emission-free distribution network shortly. And by the end of this year, 2021, we will have 5 to 10 over Belgium city centers but also will be supplied emission-free. Finally, bpost announced on December 23, 2020, and that bpost and BNP Paribas Fortis signed a nonbinding agreement on the future long-term partnership of bpos Bank. bpost would sell its 50% stake to BNP Paribas Fortis, but will continue to provide banking services through its physical network of post offices, thus ensuring high-quality service. This bolsters the ambition of our strategy to be an important contributor to social cohesion and society. And this also fits with the active portfolio management approach of our capital allocation framework, which we announced together with the CONNECT 2026 strategy update. I would now like to hand over to Leen for more details on the financials of the last quarter and 2020. Leen?

Yes. Thank you, Jean-Paul. Hello, everybody. I hope I can make it a better that it started. So we're going forward to your questions at the end of our presentation. I'm now on Page 6, showing the EBIT bridge for the fourth quarter. Adjusted EBIT showed a decline in net of EUR 8.7 million compared to the same period of last year. In Mail & Retail, the adjusted EBIT declined by EUR 17.2 million from COVID-19 impact on asset wise mail, like already explained by Jean-Paul and also on proximity and convenience business. This was visible through the domestic lane with a decline of minus 11.8%, which comprises a decline of 20.4% in advertising mail over the quarter and a monthly volume decline of minus 24.3% in advertising mail during the lookdown months of November in Belgium. Parcels & Logistics, they recorded an adjusted EBIT increase of EUR 8.6 million mainly driven by Parcel B2X volumes, up with 67.4% year-over-year, being positively impacted by November 2020 lockdown, and in addition to that, we have a [indiscernible]. The general mix in our Belgium operations was, however, more negative. That is driven by higher mail volumes in our integrated network compared to the second quarter 2020 lockdown. This has resulted in a high use of subcontractors for the parcel delivery. Parcel North America, adjusted EBIT increased by EUR 3.3 million versus last year fully driven by the continued strong momentum in e-commerce logistics, year-end peak volumes and also operating leverage. Excluding the EBIT impact of the ransomware attack that amounted for EUR 9.2 million in the first quarter, the adjusted EBIT would have more than doubled and increased by EUR 12.4 million. The corporate EBIT was EUR 3.4 million down versus last year, this coming from lower vacancy. So at group level, the reported EBIT of EUR 69.1 million, down versus last year, which includes also EUR 62.1 million of impairment charges. On the one hand, on Press and Retail within the business unit Mail & Retail with EUR 49.1 million related to Ubiway Group And then on the international mail as part of North America with EUR 13 million relating to the business. I will come back on that in a minute. Page 7 shows the key financials for the quarter. At group level, the total operating income was up by 7.2%, fully driven by continued strong performance in Parcels & Logistics, Europe and Asia and North America. More details on revenue and strategic developments follows in the breakdowns per business unit. As always, the EBIT was adjusted for noncash amortization charges on intangible assets. As we recognize following the purchase price allocation with the various acquired subsidies. Furthermore, as just mentioned, the reported EBITDA of this last quarter was also impacted by impairment charges on credit retail and on international yields, driven by COVID-19 impact of reduced footfall in traveling and partial closure of shops during the lockdown, the impairments that -- led to impairment on goodwill and intangible assets of the Ubiway group. This result represents EUR 49.1 million of costs, noncash, of course, interest and EBITDA within M&R. The decline in business mail also resulted in an impairment of the goodwill of international mail, which is a part of PaLo North America for the amount of [ EUR 20 million ]. Looking at the line of the net financial results of minus EUR 17.9 million, this improved by EUR 8.9 million switch in the fourth quarter last year. It is mainly due to lower financial charges related to IAS employee benefits. And last year's fair value adjustment of the purchase price of the remaining shares of [ Ants ]. Income tax expense decreased by EUR 20.7 million compared to the fourth quarter of 2019, mainly due to lower profit before tax, combined with lower statutory tax rate in Belgium at 25% and the recognition of the issued tax assets for U.S. tax losses carryforward. Below the EBIT, related to our participation in bpost bank an impairment of EUR 141.6 million has been met. As Jean-Paul already reminded in introduction, in December 2020, we announced the intention to sell our 50% stake in bpost Bank to BNP Paribas Fortis. The purchase price will be calculated based on the IFRS net value at the time of the closing, and it is expected to range between EUR 100 million and EUR 170 million. Based on the lower range of EUR 100 million, the carrying value was therefore reduced to the fair value less costs. These impairments like totaled EUR 203.7 million, they led to a group net loss of EUR 155.1 million in the quarter, whereas the adjusted group net profit increased by EUR 90.7 million to EUR 52.1 million. Adjusted free cash flow then. It is at EUR 117.2 million, and it increased nicely. I will come back on that later. The net debt, this decreased by EUR 284.7 million compared to end of 2019, supported by this free cash flow generation and the absence of dividend payments in second quarter and in the fourth quarter of the past Q. CapEx for this quarter amounted to EUR 60.9 million, which is a decrease of EUR 12.3 million compared to the same quarter last year, with expense primarily related to capacity expansion in e-commerce logistics at Radial North America and Active Ants as well, of course, in Parcels B2X in Belgium. Let's have a quick look at the contribution of the different operating segments in our results, which is seen on Page 8. You see the contribution per business in the fourth quarter, it is actually for the third consecutive quarter that the combined contribution of our Parcel business units to the group adjusted EBIT is higher than the one of Mail & Retail. In this, we see that Mail & Retail generated 57% group adjusted EBIT of EUR 60.5 million, following Eurasia was a second contributor at 37%, and Parcels & Logistics North America contributed for 23% due to group adjusted EBIT. So these figures prove that our business transformation is on the right track towards sustainable EBIT growth. We can move to Page 9. And there we have the external revenue bridge for Mail & Retail. Mail & Retail external revenues had declined by EUR 30.2 million to EUR 456.6 million. That's impacted by EUR 16.5 million revenue loss from domestic mail, of which EUR 12.7 million is relating to advertising mail and by EUR 14.3 million decline in proximity and convenience retail metric. Domestic mail recorded an underlying mail volume decline of minus 11.8% for the quarter, partly compensated by a positive price/mix effect. The mail volume decline for the full year stands at minus 12%, whereas the last quarter, we saw that perhaps we could catch up to minus 11%. With the additional lockdown, that proves to be not possible. Transactional mail noted an underlying volume decline of minus 10.8% for the quarter against a tough comparable base of minus 7.2% last year. Although the Christmas cards supported the volume trend, and they contributed positively to the price/mix. The volume decline remains impacted by new structural change. Advertising mail volume declines stood at minus 20.4% in the fourth quarter, also here a very tough comparable base of plus 0.5% in fourth quarter last year. This decrease was driven by the non-essential retail closures during the full month of November, impacting volumes, like I said, minus 24.3%, during that particular month. And a continued COVID-19 impacts with limited visibility ahead what fuels advertiser's hesitance to engage into advertising campaigns. The press volumes were down with minus 2.7% for the full quarter that shows a continuation of the e-substitution and the rationalization trend. Proximity and convenience retail network revenues had declined by EUR 40.3 million due to the impact of COVID-19 on the footfall in our Ubiway retail stores especially in the travel locations. Value-added services have increased slightly. We see that especially in the data and document management. Then moving to the P&L of Mail & Retail. The adjusted EBIT amounted to EUR 34.3 million with a margin of 6.5%. This is a net decrease of EUR 17.2 million compared to the fourth quarter last year. The decrease in total revenues is up of EUR 10.7 million and a EUR 6.5 million increase in operating costs, including the adjusted EBIT. Operating expenses, why did they increase? We see higher operational costs in the mail network during the nonessential retail lockdown in November 2020. And the new peak, driven by elevated parcels volume and therefore, also to a large extent, compensated by higher cost charged by Eurasia. The operating expenses were related to a significantly higher payroll and interim cost through increased headcounts. We have the regular salary indexation. And we also had a daily COVID-19 premium for the operational staff in duty from November 30 to December 24. In addition to that payroll and interim cost, we have higher transport costs from a high use of subcontractor and also a higher rental cost for the fleet. The operating expenses increase also driven by higher reinvoicing from Corporate linked to IT projects and some costs such as home days and trading had phased from the first half of the year to the fourth quarter of 2020, like we flagged earlier. Lastly, lower material costs of Ubiway retail and general cost containment on discretionary spend allowed to partially compensate the higher peak bookings. Reported EBIT. So reported EBIT is minus EUR 15.5 million, and that was impacted, like I said, by the impairment charges of Press and Retail of EUR 49.1 million. Then PaLo Eurasia. We recorded an external revenue growth of EUR 81.9 million. The positive revenue development across all the sub-segments was mainly driven by driving domestic e-commerce during the November lockdown and the end of year peak. Parcels BeNe recorded an increase of EUR 60.3 million or plus 55.9%. It is truly driven by Parcel B2X and revenue growth of, respectively, 67.4% and 69.9%, which indicates a positive price/mix effect of plus 2.5%. As mentioned earlier, the volume growth was fueled by nonessential retail closure in November 2020 and also a strong year-end peak. The price/mix, it was supported by peak surcharges and the favorable products and customer mix. Parcel B2X volume growth was at 56.2% for the full year 2020. Besides the strong volume and the revenue development at DynaLogic, the remainder of Parcels BeNe revenues, which are [indiscernible] in B2X, show the year-over-year revenue decline, resulting and should remember mainly from last year's closure of some nonprofitable business. Moving on to e-commerce logistics. Revenues increased by EUR 5.5 million, or even by EUR 7 million when we exclude last year positive effect of the contingent consideration reversal on the Dynagroup. This increase was mainly driven by strong organic growth at Active Ants from existing customers and new customers acquired to the MCS Fulfillment integration as of October 2019, and also Radial Europe growth, meaning in the U.K., from existing and also new customers and the public from the opening of a new fulfillment site in the third quarter 2020. Cross-border revenues increased by EUR 16.2 million. This revenue development was driven by a continued strong growth of premium parcels, linked to rail transport of containers as an alternative to Air freight but at a slower phase than we have seen in the second and in third quarter. We also saw growth in U.K. business driven by new customers and surcharges. This revenue development was however partly offset by the decline in cross-border postal business, where growth in inbound parcels will not compensate the decline in both inbound and outbound deals. On the next slide we see that the adjusted EBIT for Parcel Eurasia increased by EUR 8.6 million to 2020 [ quarter 4 ] that is an increase of 61.8%, and the margin is 7.8%. This was driven by top line evolution that is talked about, partly offset by higher volume linked to variable costs and the higher inter-segment operating expenses charged by the operation network for Mail & Retail, as mentioned on the previous slide relating to sorting and distribution costs. The channel mix in the fourth quarter was more negative, driven by higher mail volumes in the integrated network compared to the second quarter lockdown and therefore, resulting in a high use of subcontractors. Excluding last year, EUR 1.5 million earn-out users on Leen Menken, the adjusted EBIT will be up by EUR 10.1 million operationally. On a full year basis, for the full year 2020, the EBIT in PaLo Eurasia was up by 54.2% to 101.4% and the EBIT percentage increased from 7.9% in 2019 to 9.3% in 2020. Then let's have a look at North America. Despite the ransomware impact, the operating income of e-commerce logistics grew by EUR 34.5 million, up 9.3%, or it is recorded, with 17.9% when excluding the negative foreign currency effect. This growth was mainly driven by Radial North America recording an 18.5% increase from existing customers as well as significant growth from new clients launched in 2019. This was only to a small extent offset by churn. Our cross-border activity via Landmark, Apple Express and [ FDM ] also recorded strong volumes from existing clients and new customers, fueled by continuous e-commerce development. It will not surprise you that international mail saw a decline in external revenues year-over-year, driven by the unfavourable impact of COVID-19 on the Mail business. Overall, external revenues were up by EUR 13 million for the business unit. Looking at the profit and loss account, you see that PaLo North America adjusted EBIT was up EUR 2.3 million at EUR 13.9 million. The margin is 3.6%. For the third consecutive quarter, we have reached a positive adjusted EBIT at PaLo North America. And this quarter, despite the ransomware attack impact. In 2020, the net estimated impact amounted to EUR 9.2 million. As Radial has a cyberinsurance coverage, the foregoing constitutes also a a contingent asset towards the insurance companies. While we exclude the ransomware impact of 9.2, logistics EBIT would have more than doubled to amount to EUR 23.1 million with a margin of 5.4%, driven by operating leverage and cost containment in general. Reported EBIT is negative minus EUR 1.7 million. This is, of course, due to the impairment of The Mail Group with amounts to EUR 13 million. The corporate segment on Page 15. External operating income decreased by EUR 1.1 million, driven by lower building sales. The operating expenses, including the depreciation increased by EUR 9.8 million, mainly related by higher services to the operational business units, especially, like I said, for IT-related projects. As a result, adjusted EBIT decreased within corporate of EUR 3.4 million. Then moving to the cash flow. It's the cash flow in the quarter. The reported free cash flow stood at EUR 145.4 million, an increase of EUR 18.2 million versus the fourth quarter of 2019. Cash flow from operating activities stood at EUR 201 million, which is EUR 16.6 million lower than last year. If we split that, we have a couple of elements, a EUR 41.2 million decrease in the cash flow from what we call operating activities, before changing working capital and provisions at EUR 64.7 million. This is driven, of course, by a lower EBITDA generation, higher tax prepayments in the fourth quarter, because we made use of the postponement that we could make allowed by government due to COVID-19 and then the absence of receiving a dividend from bpost Bank. The second element is an improvement of EUR 24.6 million in working capital to EUR 136.3 million. This is mainly explained by EUR 15.1 billion higher cash outflow relating to collected pursuits due to Radial's customers driven by the high level of merchandise sales during the COVID-19 in the third quarter. Remember that the Q2 effect is excluded from the adjusted free cash flow presented in the key financials on Slide 7. Terminal dues outflow was more than compensated by working capital evolution, excluding those, being EUR 36.3 million better than last year at EUR 109.5 million. This is primarily driven by increased terminal dues extended payment term due to setup of temporary initiatives during pandemic. This is partially counterbalanced by some lower supplier balances due to timing of expenses in late 2019, and an increased DSO as a consequence of the mix impact on our receivables. Note that in the full year 2020, the change in working capital was positive at EUR 140.1 million versus EUR 18.9 million in 2019, so an improvement of EUR 121 million. As just mentioned, for the fourth quarter, this was explained by increased cross-border activities leading to higher payable dues and the positive impact of expanded payment terms in payables due to some temporary initiatives that we set up in the context of the pandemic. As expected, these temporary initiatives start to unwind in the course of the fourth quarter of 2020, and it will also continue to unwind during first quarter in 2021. Cash flow from investing activities improved by EUR 24.8 million year-on-year. This evolution was explained by the subordinated loan rent to bpost Bank in the fourth quarter of 2019 and combined with the lower CapEx. As a reminder, in the second quarter in 2020, we announced that we will be prudent and CapEx investment will be limited from EUR 200 million to EUR 150 million for cash preservation. The cash flow from financing activities at minus EUR 40.5 million in the quarter, it improved by EUR 121.9 million versus the same period of 2019, mainly resulting from the absence of an income dividend saving in the fourth quarter this year. The action stated reserve cash may bpost can start 2021 with a stronger position for the future and is for execution of its strategy. And that we also can see on the balance sheet. As a result, some main movers perhaps that I want to explain. As a result in the announcement made by bpost to sell its stake in bpost Bank to be BNP Paribas Fortis. The investment bpost Bank, which was previously booked in investments in associates and joint ventures has been classified as assets held for sale. The decrease of the value asset were mainly explained by the impairment charges on Press retail and international mail and also soft foreign exchange impacts. The increase of cash and cash equivalents, we explained in the cash flow statements. The net debt consequently decreased by EUR 284.7 million in 2020 to EUR 495 million. In 2020, we could preserve the strength of bpost balance sheet, the cash reserves and capacity to invest on the long-term to continue accelerating bpost's business transformation. I'm now also on Slide 18 to a complete detail of total available liquidity at the end of December, consisted of EUR 948 million of cash and cash equivalent of which EUR 779 million is readily available on bank's current accounts and at short term deposits. bpost Group also has 2 annual revolving credit facilities for a total amount of EUR 375 million. As to be expected, we saw no big changes occur in the quarter. The amount to EUR 984.1 billion, out of which EUR 809.9 million is long-term debt. Note that in December 2020, as we believe we take annual installment of EUR 9.1 million on the european investment bank advertising loan. The outstanding commercial papers amounted to EUR 165.1 million, stable with a maturity between 1 and 3 months. The current portion of the EIP advertising loan of EUR 9.1 million will be received next year in the fourth quarter. I will now hand over to Jean-Paul for the outlook and come back to you in the Q&A.

Thank you, Leen. As mentioned during this presentation, we can summarize Domestic Parcels volumes as well as in our international e-commerce activities, which progressively led to a shift in EBIT contribution by business units. By delivering on our ambitions for CONNECT 2026 and building on the recent development of our Parcels & Logistics activities for the year 2021, we expect the following. Our group total operating income to increase by a low single-digit percentage and our group adjusted EBIT for 2021 to be in a range of EUR 265 million to EUR 295 million. This is broadly in line with 2020 where, despite all challenges faced, COVID-19 had a net positive contribution to the result. For Mail & Retail, we expect a total operating income evolution to result from an expected mail volume decline of 9% to 11% and approved mail pricing increase of plus 6% and an expected post COVID-19 recovery in value-added services and proximity retail. Adjusted EBIT margin is expected to range between 6% and 8%. For Parcels & Logistics Europe and Asia, we anticipate a mid single-digit percentage growth in total operating income. With parcels and e-commerce logistics volumes expected to normalize from elevated COVID-19 levels observed during 2020. The adjusted EBIT margin is expected to range between 8% and 10%. Operating expenses will include investments to grow omni-commerce logistics in Europe as we told you before. Our Parcels & Logistics activities in North America are expected to grow at the operating income level by a mid-to-high single-digit percentage and this is driven by Radial existing customers' growth, and new client launches normalized for 2020 COVID-19 spend. Adjusted EBIT margin is expected to be here between 4% and 5%. We foresee a gross CapEx of EUR 200 million to EUR 220 million for the whole group in 2021. This CapEx envelope will be geared towards a priority set in the CONNECT 2026 strategy to grow omni-commerce logistics. The dividend relative to the results of the year 2021 will be in the range of 30% to 50% of IFRS net profit and will be payable in May 2022 after the General Shareholders' Meeting and this fully in accordance with the new dividend policy. Of course, due to continued COVID-19 uncertainties, visibility going forward remains limited and may still impact also the 2021 outlook. We are now ready for your questions. So operator, please open the lines.

[Operator Instructions] So the first question comes from David Kerstens from Jefferies.

Three questions, please. First of all, when you compare your performance with some of your peers in Europe, what would you say are the most important factors that explain a relatively more sluggish performance? Is that something specific to Belgium or to bpost? I think most of your peers all had strong recoveries in the fourth quarter with strong growth in parcels compensating for pressure on mail. Then my second question, you highlighted a net positive impact on EBIT from COVID-19 in 2020. Can you please quantify that? Is that in line with the guidance upgrade that you put through in the autumn, around EUR 15 million? Or maybe even EUR 25 million when you consider the EUR 280 million realized results? And can you be more specific on what the impact has been on mail and parcel volume and EBIT? Then my third question is, can you give some indication on volume developments in the first quarter so far? And particularly, with regards to parcel volume and perhaps are you seeing already recovery in advertising mail?

This is Leen. As to the performance of peers, yes, I can only talk about ourselves. So we also -- you can see that we -- I think one thing that is very important thing to understand and what we try to flag, if you look at bpost's results, it's always that even between Black Friday and Christmas, that comes with higher operating expenses. And I'm talking Parcels in Belgium. It's something that we have always seen that at that point in time, we have external expenses for travelling costs and inflows. So that's an important area. Secondly, the EBIT margin was also driven by some COVID-19 related environment such as the premium that we payed there to the operational staff in duty that was a premium between November 30 and December 2024. This was to tackle absenteeism as much as possible. We had a cost savings in the first half of the year and to the fourth quarter. We flagged that before. I think everybody thought that probably that will not be the case, but samely this particular business unit, where we also report on parcels, we want to invest in the growth of e-commerce and omni-commerce. That obviously, also took place. And then lastly, like I indicated in the presentation, compared to the second quarter '20 lockdown, we witnessed higher yield volumes although being down year-on-year, especially on advertising, even volumes were higher than they were in the second quarter. That resulted in a high use of subcontractors. So that's very much in particular. And to your question -- so that explains probably -- so we were not at 11% of EBIT, might we were in the second and the third quarter because of those reasons. And in a a typical bpost, that's up to you to judge on that one. Despite also that peers could compensate the growth in e-commerce and parcels and that could compensate for the decline in mail. I think if you look at the revenue proportion of mail within bpost. It's true that it's still different. Our profile is different than the business peers. So we still have, let's say, a bigger dependency on mail. And on the other hand, this year, we clearly showed the potential that we have in the 2 follows and that we took all of the chances to grow that further. But it's true that our profile is still different. Jean-Paul?

Yes. With respect to your third question on -- is there any view we can give on the volumes starting 2021. What we can say is that on the mail decline, it's anyhow -- the comparison between '21 and 2020 will be very different because as you will know that the figures of 2020 have been very volatile, I would say, from month-to-month and linked to lockdown and not lockdown and recovery from lockdown and backup -- or backlog that was being done. But for the moment, the first 2 months where we have seen were, of course, normal months last year, I would say, and we see that the mail -- that the decline is in line with expectations. So it means that for the coming months, that there was a huge decline last year. It might also be less, of course. But okay, the average that we gave in our outlook is what we expect over the whole year. Taking into account, I would say, the volatility additives. But it's not a negative view what we have year-to-date on mail. Apart from -- and that's your question also, apart from the advertising unit, we have several actions in place to get that back on track, I would say, to get it growing. We feel that there's a lot of reluctancy on advertising campaigns, probably companies that are linked to savings, et cetera, because of COVID. So there is reluctancy, but we continue to work on that. So there, it is still lacking behind, I would say. As far as parcels is concerned, we can see -- but also there, again, the first 2 months of last year were of course, normal months as far as we can say, normal, they were before COVID. We are in year-to-date now at plus 50%. So we follow it very closely. To see, okay, and we all know that 2020 brought us in a higher curve and brought us in a -- brought Belgium and a higher level, I would say, of e-commerce sales and e-commerce business. So what we can say is that we see that for the first 2 months that we are at around plus 50% in the parcels volumes.

Sorry, the EBIT -- the COVID-19 related EBIT impact, if you can quantify that, please? Or did I miss that?

You mentioned an amount, can you perhaps say that. I think you -- if we look at it ourselves, and you refer to the initial guidance that we gave, it's from EUR 140 million to EUR 170 million. We withdraw that then afterwards. We now at EUR 280.6 million, if you would include the ransomware impact, we would even be at EUR 289.58 million. So yes, you could -- we think that the implied COVID-19 boost, it ranges between a positive impact of 80 to 20 and even up to EUR 49 million. It's difficult to say. That's why we also said we will not give the amounts anymore, because the tools will be for this year. We will see and refresh our policy . We know that we jumped to [indiscernible]. We know that some of the growth is there to stay, but it's difficult to say how much so also saying now exactly what the positive impact is, is extremely difficult.

So our second question comes from the line of Frank Claassen from Degroof Petercam.

Two questions, please. First of all, could you update us on your cost savings programs in mail? So the alternative distribution model? And last time, you also talked about Project Delta. So what are -- what is the latest there? And then secondly, you talked about working capital, unwinding of the temporary measures. How big is this effect? And what can we expect going forward for working capital? Will it be a negative? So any thoughts on that, please?

I'll first take the working capital, perhaps, assuming the -- if you look at 2021 overall, I think it will be negative, but it was on a positive. Like we said, we want to be sure when we started this option a year ago, I think everybody was sitting on its cash as much as possible. So these people expect to be prepared for worst. The negative impact will be the unwinding of those temporary initiatives that we have set at that point in time. We expect leases for the first quarter this year, this will be something like EUR 60 million. There's always the impact of the dues to customers, but that's also why we report a justice report. Not really have that impact because it's not really our cash. And then we also have the terminal user, which we spoke, which is now on a variability site because we wait for those to come. But it's -- timing is not easy to predict. On the other hand, working capital management, what I've seen from my teams at the past year was excellent work. So I think we can continue to do so and I think all in all, it will be more the unwinding of the temporary initiatives that we will see than anything else on particular. Perhaps also in the cash flow, if we elaborate on that to be explained about bpost bank in which we are now negotiating the SPA and looking into the closing phase. That's, of course, also money that will come in, which I cannot predict whether it will be 2020 or 2021. So I think that's also an important thing to add. And like Jean-Paul said, the CapEx expenditure will amount between EUR 200 million and EUR 220 million. So that's also an important thing to -- we're starting with a strong balance sheet to start off and let me repeat that. So we will see some unwinding. But there are also very much structured deals which' have been done in 2019. Jean-Paul, you take the other?

Yes. With respect to the alternative distribution model, as you know, we started the implementation at the same-day as the first COVID lockdown. We had done an evaluation period as we explained before, in my opinion. That started in mid-March and that took end of June, together with the units. For the reorganizations, we had a small delay linked to COVID. But we are now fully into it. The total cycle, as we informed you before, is taking about 18 months. And small delay we have taken in 2020. We will plan -- we have planned to catch it up during 2021. But of course, it takes, as I said, the cycle of about 18 months. We believe that there will be savings in '21, but they will be limited. And the full savings will definitely be in 2022. And the full effect will be in 2022, so to say. So yes, the speed of the reorganizations, according to what we have planned, we are, for the moment, on track, and it demands, of course, also social dialogue. But for the moment, as we have started, we are in the plan that we have foreseen for 2021. The limited savings are also included in our outlook as we are ranging till '20 -- until EUR 295 million from EUR 265 million to EUR 295 million. So it is included in that range.

And any new thoughts on this Project Delta, which you talked about last time?

Well, the Project Delta is ongoing. Project Delta is, in fact, we're still in the study phase for various possible operating models. We go step by step, and the last thing we have done is yes, look to the possible commercial effect of the models. So we expect to be able to present it to our Board in the second half of the year, and that's more or less what I can say about that. And then to start implementing also step-by-step as from next year. So it will be, I would say, on top of the AGM implementation, we will continue, and we will take steps definitely as from next year to further work on the operating model, which is a need, as you will probably know.

So our next question comes from Sumit Mehrotra at Societe Generale.

5 Actually 4, I'll try to concise bit to three. On Mail & Retail, first, you did 8.7% margin this year. You're guiding for a decline, 6% to 8%. I'm more interested on the reasons on the bottom end of the range that why do you even look at the 6% bottom end of the range? What's your thinking there? Having considered that they are saving programs in the distribution model should give you some benefit. Secondly, on PaLo Eurasia. Again, when I read closely what happened in Q4, I understand that there are some extraordinary pressures on costs, year in peaks, COVID premiums and a lot of special pressures I see in Q4. What is your confidence that you will be able to do this 8% to 10% -- next year, your target, how do you think you can meet that? And lastly, your confidence level on dividend payments, considering you have got a higher CapEx outgo EBIT, you're looking at flat. So what is the confidence level on the payout ratio for this year? And lastly, bpost Bank, you take this revaluation loss. Why does it come at this time? And are there any reasons why it shouldn't have been adjusted in previous years, as I see even a halving of the book value with this? So why shouldn't it have been captured in the last year's year-end appraisals?

I'll start with the last one in bpost Bank valuation. Probably you do know, but you do know that last few week in March, we updated strategy. We're working on that already in 2019, too. And especially bpost Bank in the course of 2019, we were indeed looking to get into BNP Paribas what is the future of the bank, especially for ourselves, we're not bankers. We did have 50% share. And we did -- and we do service for the bank. But as you know, the compliance requests get extremely high, the capital requirement is yet extremely high. So if we look at our capital allocation, for people it did make sense to invest in e-commerce and our business transformation rather than investing in a bank where you have to put more money in. But on the other hand, as you know, the income is slowing. Last year, we were still in that exercises that we were making together with the bank, the long-term plan to see -- building with the long-term plan, which also has a value, of course, but requires more cash and more capital allocation. And we did not come to a conclusion yet in 2019. That's the reason why. We only decided that in the course of 2020. As to your question on Mail & Retail, the outlook. Jean-Paul can you speak to that? Yes, I'll start, yes. So your question was, if I remember well, we are at 8.7% margin and we guided for decreased margin of 6.8% We give the range because we really don't grow, right? The mid-volume decline, we have the main item that we have to flag any percent it's representing. I think you're absolutely right. We are working on the operating costs. Like Jean-Paul explained on the AGM, we -- due to COVID we cannot start up as what were seen in the course of 2019. So we do not have the full effect in 2021 yet. So that's also having an impact. But it's both sides, and we do expect very -- how much the volume decline would be. Then there is already a thing and one that we cannot catch up in instantly, in the post COVID. As to PaLo Eurasia.

Maybe to add on the Mail & Retail, I think the main challenge, we gave a range. If everything turns out positively, you will understand that we were at the upper side of the range. But it's -- I think the advertising mail is an important element, as I said. We do not see the recovery yet, but we do everything we can. But it's also economically, I think, an impact. The mail decline in general is, of course, an important element and can quickly change the results. And as per the operational cost savings, I think we are in line, and we will not be -- not really be able to go much faster than what we have planned. So that has been included in the range. So it's -- I think the main targets are keeping, of course, the customer control and continue the reorganizations as we have planned with full effect in 2022. And secondly, we need to bring up the advertising mail, and we hope that the other mail decline will not be as big as we expect and as we have calculated in this range. So these are the main elements in my view.

Yes, moving to PaLo Eurasia. I want to come back on the formal presentation. If you look at reasons, the fourth quarter, you're right, the adjusted EBIT margin in the fourth quarter is 7.5%. So if you compare that to the outlook, I understand your question. If you look at the full year 2020, it is so that in 2019, we had an EBIT margin of 7.9%, and we increased that to 9.3%. So that, for me, indeed, does confirm that the range that we indicate between 8% and 10% of adjusted EBIT margin for PaLo is within reach.

Yes, your question was, are we confident about that? I think we are very confident about that range range.

And then on the dividend, confidence level on dividends, I think you mentioned CapEx and things like that. Yes, in our outlook. As we will be paying dividends based on a new capital allocation policy, and there's no reason to believe why we would not be.

So our next question comes from Lotte Timmermans from ABN AMRO ODDO BHF

First a question on underlying assumptions of the partial Logistic Eurasia 2021 outlook. Are you assuming mid- to high single-digit growth? I think it's quite confusing if you say that you already have 50% volume growth in the first 2 months of this year. And I also think that Belgium e-commercial is relatively low compared to all the three countries and therefore would apply stronger growth. You also mentioned that you would expect to continue at a higher growth curve, I would say, this is clearly not in your outlook. Could you give some more color on the underlying assumptions also because there are, of course, non-volume related revenues in there. If that would direct down the '21 outlook growth guidance? Or do you assume other market participants stepping in? Or what is your view on that? That's my first question. Then second question, I couldn't 100% understand the first answer on operating expenses around Black Friday. I get that operating costs increase when how volumes are there. But you also see that margins throughout the years in Q4 were stronger. So -- and it was clearly not the case this year. What's your view on that and were there any significant one-offs in Q2, Q3, supporting the margin in Parcels, which drove the margin to 11% at that point? And which were not there in Q4 and are also not expected to continue going forward?

Okay. I'll take the last question first, getting ahead of me. So I think one thing you point out is that you say, normally in Q4, we have a better margin on parcels, that's not the case. I think physically within [indiscernible], it's always the quarter in which we experience that we have to make use of more subcontractors. So the way we work in Belgium is that we have an operational network that distributes as much as of that distribute in any case in new and as much as possible also the parcels. So that's what you have seen if you offer specifics in the second quarter, that's exactly what happened. There was a very little mail because of the lockdown. So as a consequence, more parcels could be distributed. And that made a need that we can make use of that synergy with that network far more than we can when we are in a normal business. That's normal thing we've seen in the fourth quarter new volume was down, especially advertising, but not that low as it was in the second quarter. So our capacity was fully used, and we had to hire extra [indiscernible], we had to work with subcontractors to be able to deliver all the parcels. That's what happened. It typically happens in the fourth quarter. But now it was more outstanding and especially when you compare it to the second quarter. if you say, if you have specific costs that you will not have in the future. Yes, let's hope that COVID-19 that we -- we will -- can manage COVID-19. And that indeed, we do not have to pay COVID-19 premium anymore. Like I said, we did it to -- you have to imagine that our mail men, they have to be out in the street there when people were asked to work from home. They had to deliver my parcel, you parcel at home. So we have it stimulated to go to work and to see that risk, which it was. So hopefully, that risk cost is no longer there in the future. I also talked about cost saving. That's in phasing. And so I think that's something in particular that kind of depressed the margin of OpEx fourth quarter. And normally, that would have been also in the second and the third quarter. So we have been spread over the year. But it's included, like I said, in the full year margin of 9.3%. So that's on the fourth quarter specifics compared to our other.

Maybe to add something on the fourth quarter. As you probably know, we had a second lockdown in Belgium for the month of November. So quite some weeks ahead of Black Friday, which was, of course, obliging us to deliver and to put extra costs on things that were not, I would say, planed in advance. I mean the lockdown, we did plan in advance. We did were able to fulfill and to keep our promise that everything would be delivered before Christmas at home. That's what we did. We were fully in the setup of the end of year peak operation model. But of course, we -- it was not ready on the first of November when the second lockdown came. So that has led to different OpEx costs than in the Q2 and the first lockdown. And as Leen said, the mail did not decline as it was declining in the first lockdown. The mail has a normal path as we had planned only the advertising mail had an extra decline again. But all the rest was in a normal, I would say, normal evolution and a normal planned type of mail which led to much more parcels to be distributed outside of the existing mail distribution network and in advance distribution network. So that means that at the site, we are running at a higher OpEx cost than normally. When your question on single digit assumption for the parcel growth of 2021. And in view of what I said before, and I would like to repeat what I said because January and February last year were non-COVID and were, I would say, at a lower growth, but on the lower growth curve than as from COVID as from March, April, mainly in April. So yes, do we believe -- is the assumption we took for 2021 for the parcels growth to low, when we will be able to say after the second quarter or during the second quarter. The first quarter mainly was still, I would say, last year was still a normal quarter with normal growth, according to 2019. It only jumped up as from end of March, beginning of April. And okay, the plus 50% is, I would say, the new normal level of the growth curve. But okay, we had percentages in the second quarter of, if I'm not wrong, 86%. So it means that, yes, we will not have another 50% of the 86% according to my opinion. So that's a little bit what we want to say about that.

In the press release and in the analyst presentation, we gave the overview of the quarter. I think for the coming year, it's extremely important as we have the comparatives right. And so you find both in analyst presentation and press release the growth in Parcels & Logistics and for mail. That we have seen in more in 2020.

So our next question comes from the line of Marc Zwartsenburg at ING.

A couple of parts were a little bit difficult to hear, maybe is my line, so forgive me if I'm asking the same question again. But I first want to come back a bit in the outlook statements, which I find difficult to understand. The first one is the mail volumes. Already a few questions asked about it. But you're basically guiding from minus 9%, minus 11%. But I would say 2020 has had some significant headwinds from COVID, particularly in the advertisments. And if you're running in Jan and Feb, in line with your guidance, as you stated, and comps are getting a bit easier, then basically, you're assuming that the trend will become underlying worse towards the end of the year. Is that correct?

That all your question, Marc?

No that's my first question. It is better to take them 1 by 1 because otherwise, we forget probably a few.

So could I refer that everybody speak the 3 questions that you know.

Okay. Okay. Then we go ahead. The other one is, your outlook for the full year, you're basically seeing already 50% growth indeed in your parcel, then you come to a mid- single-digit guidance for the full year, assuming a little bit of operational leverage. But if I add up all your guidance, what you gave there in terms of margins, there seems to be -- well for PaLo North America, for instance, if you are adjust already for the one-off effect from the ransomware attack, there's basically very limited operational leverage in that segment. While I thought that PaLo North America was still a turnaround story, where margins would see -- or where we would see an acceleration of operational leverage over the years, and particularly then with some tailwinds from COVID, I would expect that to continue a bit faster in 2021. Same a bit for PaLo Europe and Asia. Your margin guidance there also assumes a very limited addition to your EBIT. And that all then comes down to a sort of midpoint similar performance in '21. Is there then underlying such an investment in OpEx, which I didn't see in the press release or in the presentation being mentioned, but I'm just curious if that's the case, because how should we think about this guidance? And then look into '22, what would drop out in terms of investment, where we would see an inflection point of really growth and as is? That's my second question. Then the net working capital, Frank did ask about it, but I didn't get it in full, but looking at the net working capital, we had a big inflow in Q4. And the guidance was to be a significant negative for the full year. That didn't happen. It was a big inflow. Will that be first then all in '21 or at least a significant amount. So we would see a sort of strong multi-million outflow for net working capital in '21? Can you give us a bit of stride on the net working capital outflow for '21? And then lastly, on the impairment of the EUR 62 million on the Retail and Mail business. I understand it's due to COVID, but COVID is just blip in the end. So in the end, the world will, at some point, go back to normal, you would see a reversal of that. But I assume that the impairments are based on [indiscernible]. So a lot of value also in the future. I haven't seen interest rate going up yet, although the market is a bit afraid of that. But how can I then call -- how should I understand that there will be such a significant impairment? Basically to me that suggest that the underlying business will be structurally less performing. Is that correct? Those are my questions.

Yes. Okay. As to the impairments and specifically you asked on [ Unilever ], what we've done in 2020 and you find it in the annual report. So we split actually the network in bpost retail network on one hand and Ubiway retail will compare because we monitor -- we want to monitor them separately because they have some of the same goals, but also some separate goals.

Can you speak a little bit louder, Leen? Because I can't -- I'm trying to just hear you.

Yes, it's a technical explanation, but based on organization steering. So what we do in 2020 is that proximity and convenience retail network part has been split in bpost retail network on the one hand and Ubiway retail network on the other hand. And that's because we want to monitor them separately. It's extremely important for us that the bpost network, that we can have a clear earnings model on that one. So that's why we decided to split. It is in line with Ubiway's strategy to deliver new neighborhoods that to see services through the bpost retail network different products are offered and differentiating it as much as possible from the Ubiway retail network. As a consequence, as you know, we have a technical thing that is split as and that you cannot profit from one or the other. So Ubiway retail was listing to a full -- a long-term plan, and that was used to be to cache. On top of that, it's absolutely true that COVID-19 is impacted this year results. So also the starting point going forward continues, so both are 2 ends. So it's technical because of the split because we want to steer them, separately. And as a consequence, it will not benefit from the whole, as to speak. As you know, we bought Ubiway. So we have to do on that one. We do have visibility on bpost post COVID network. I think that is helpful. And like I said, you can revisit in the annual report because it's a bit technical, which is a very nice question from analyst's point of view. So thank you for that. And then for the net working capital, yes, I'll review what I just said. So yes, we have seen some positive effects, which we expected to unwind already in the fourth quarter. They did a bit too, but we had some other positive things that came in. So going forward, what we expect is that about EUR 60 million of the unwinding happened in the course of probably the first

Or EUR 60 million outflow in Q1 as a reversal of that. But that amount in Q4 was way bigger. So will there be another reversal later on then?

We also have impact of what I explained the due to customers, but that's very difficult to predict how that goes. And we do not -- it's in any quarter but not adjusted cash flow. And then the terminal user that finding is really uncertain. So we do have, on the face of the balance sheet and that we await for some use settlements or invoices [indiscernible], and that's hard to predict when exactly that will come

How much was the term reduce element?

I'm not fairly sure. It was a net positive impact because we had some liabilities and some on assets. I cannot give the correct amount.

So for 2021, looking to net working capital, should we then assume an outflow of something like EUR 80 million, EUR 100 million, including some financing of your business? So on top of the EUR 60 million, an additional outflow for working capital as well? Or how should we think about the net working capital for '21?

Sorry, I didn't get the amount that were saying Marc.

Well, we have the EUR 60 million that will reverse in Q1, but there obviously will be an underlying net working capital movement as well in '21, apart from the reversal. So I'm yes. Can you give us a bit of guidance on the net working capital in total for the full year '21, what do you expect there? Is it bigger than the minus EUR 60 million or smaller?

I think best we can tell is the unwinding of the temporary initiatives, and that's it. The outlook on Radial North America?

Yes, the operational leverage, the lack of it predominantly.

So you may correct the in the assumption, so you include ransomware. And then I think we are at 3.1% of EBIT percentage and we indeed give an indication that we expect it to be 4% to 5%. So I think that's again a nice step. So -- but I do not see it really.

If I -- EUR 9 million is a bit more than [ EUR 1.2 million ], I think. Yes. So you say we go from 3.1 to 2 to 4 to 5?

That's a yes.

Okay. And then on the group level and because adding it all up together, the margins, the growth. And then at midpoint guiding for flat performance of the year. How much is then related to investments in OpEx that we might not see in 2022? Because in the end, you're growing on your top line, your -- particularly your e-commerce business? Is there somewhat cost then involved in P&L in '21?

I think in the development of Europe, we clearly say that we included the investments in OpEx and for the growth, of course, that's why we give a range. So if they would be less, we would be at the upper range. I think that's what you we are aiming at, and that's, of course, the case. So yes, we have foreseen to invest, so we would like to do it. But of course, if there would be some delay, it will definitely push the results in the upper side of the range. And to the mail volume, that was also a question, minus 9%, minus 11%. We did end at minus 12% in 2020, which was according to what we expected. Also there, we had between minus 9% and 11%, I think, predicted. So it's not that much higher. So the mail volume decline for 2021, we do not expect to be at that minus 4% or minus 5% because of minus 12% in view of minus 9% to 11%. And the advertising is the most vulnerable and liable. We do say that in the first 2 months, we are in line of that guidance. And a bit, I would say, even a bit better if we would look at it month by month. So it's very difficult to predict, as you know, but I think it in the first 2 months, it looks not that bad. But again, the first 2 months were comparison with the first 2 months of last year, which had no volatility linked to COVID.

No, indeed, that's why I'm asking. You're guiding basically still within well is 9% to 11%, but you have easier comps ahead, and you're already trading a bit that I would have expected if you have 2% negative growth in '20 you could bring that range a bit down because it we suggest a bit that you're guiding underlying, let's say, minus 11%, minus 13%. That was a bit of feeling I had on guidance.

We also had months that if I'm not wrong, June was a very strong month, for example, where there was a recovery of what was lost in the months before. So it's very -- yes we, of course, is the exercise month by month and product by product. And we do come up in that range. If we see for certain months that you understand that yes, we have only minus 2% or minus 3% if we compare it.

We saw on Q2 and that's a whole thing in the third quarter, we had a catch-up so all in all, we believe that the minus 12% is quite representative to compare the 9% to 11%, with the exercise that you make to shift up from minus 11% to minus 13%. I cannot really follow that.

Yes, this is quite easy if you have 2% tailwind of headwinds in '20 from profit and that drops out. Then actually, if you guide for minus 9% to minus 11%, you should add that to the underlying sense. That was a bit the math behind it. But now I understand this is okay.

So our next question comes from the line of Muneeba Kayani from BofA.

A number of my questions have been answered. But just on the parcels, you raised your guidance of mid-single-digit growth. How are you thinking about volumes versus prices in this guidance? And would that positive price/mix continue this year?

We have 2 questions. You have 1 on the volume growth and 1 on the price mix, is that correct? It was not very clear. Sorry.

Yes. So on your guidance for parcels, what -- how are you thinking about it on volumes and pricing?

Yes. I think on volume, we explained on revenue beating mid -- to high single digits. That we do believe is that we jump the curve, but we see still strong growth in the beginning of 2020, and that we expect to see what period the new normal in the second quarter. But there will be that we, to take in account, of course, a rebasement for COVID-19, how much exactly we do we still have to see. That's also why we did the range. As to price/mix, I think they're also depending on the volume. I think on the time year 2020 price mix has been negative simply because of that the growth was still seeing at biggest customers. So in the mix. As you know, we were already working on the pricing. So we already negotiated before COVID-19 started with our customers to increase the prices for the pricing project. We charged and were in negotiation before COVID that we had some surcharges accretable. So those were executed. In addition to that, we also have in the second quarter some special surcharge for COVID-19. All in all, let's say, that probably in 2021, price/mix will be rather stable because something will be clear. Your mix will be different there, probably a bit less year to growing only in the bigger ones, but in the new customer, smaller customers, we find our way to e-commerce will grow. So I think the name of the game will be mainly on volumes rather than big shifts on time.

So our next question comes from the line of Henk Slotboom from The Idea.

Marc touched upon a thing that I had on my list as well, that's the operational leverage. When I look at Radial, and I'm trying to filter out all the one-offs on the back of the hat you had there. I see a margin and EBITDA margin of, well, anywhere between 7%, 7.5%. Now I know that it was your predecessor who once promised us 10% margins at Radial. I haven't seen any such statements from your side. But is this still achievable in your view? And what is the upside potential of Radial? If I look at -- yes, the 7.5%, which was achieved in a -- well, call it, a record year. My second question relates to Radial as well. I appreciate the fact that you can't talk about damage for insurance reasons and for security reasons, but I was triggered by an amount I found on Page 14 -- Slide 14 of the deck you presented, an estimated EUR 6 million gross margin shortfall in ransomware. Now I don't know exactly what the gross margin is like at Radial exactly. But could you give any idea what kind of sales level we are talking about? And I get the impression that we quite easily talk about an amount of tens of millions of dollars of revenue impact you had on your operation in this 1 or 2 weeks that you fell victim, that's definitely in the aftermath of the ransomware attack. Has that led to any commercial damage? Have there been any clients that left? Or have you seen clients or potential clients becoming more hesitant to join Radial as a client? And my last question is, and an indirect one. Recently, we had a new company listed in Amsterdam, which is specialized in lockers. Could you give me any idea -- you're a relatively large player in lockers in Belgium, what proportion of your parcels in Belgium is being delivered via QB? Those are my questions.

Yes. I'm big longer here then Jean-Paul. I feel like I have to take question on Radial. And you said that it was promised the EBITDA could be at 7.5% and you asked where we will be, like we said in December, we not -- and I'm sorry to that but we made a choice not to communicate on where we plan to land. But I think for radial, if you look at fees, you can see that there's still a nice spot ahead to grow in the EBIT percentage and in the EBITDA percentage. There's no reason why we do less than the peers as to percentages. And the loss will be done, of course, also of the mix as we have different kinds of products. We have the fulfillment, which is the largest part. But we also have inhibition to that the -- the order management systems, technology, we have the [indiscernible] business. We have the transportation obviously which we earn money. But also depending on how our product portfolio will evolve, will that have an impact on the percentage. So that's all that I can respond on that one. And then as to the ransomware impact...

The ransomware, a few elements. I think what we've seen is, of course, and the -- we have the EUR 6 million and the EUR 3.2 million, which is a specific cost in the Q4. And that's apart from some partial insurance recovery. The EUR 6 million is linked to sales during the ransomware attack period, I would call it. And sales that are definitely lost. Like in the customer care business and sales that are lost because some of the customers did find other solutions and some of the sales have been recovered afterwards in a later stage. But yes, it's a mix of a lot of things, but we estimate the EUR 6 million as a shortfall in EBIT because of the -- these lost sales, which, of course, which would understand immediately that yes, the costs have not been lost in the same moment. That was something more difficult. We recovered quite quickly and that we must say. But in total, that is the effect then. And the EUR 3.2 million has more to do with the costs really on the ransomware somewhere with the specialists that we took in the house with the expertise IT and legal people. So that has been the same. Do we have a long-term effect on, I would say, the churn of customers? I only know 1 customer who gave the ransomware attack as one of the elements of leaving. Of course, it's -- if you have another decision, if it is price, if it is something else, I can imagine that every customer would also put in is the ransomware attack. On the contrary, we have a positive, I would say, positive elements and positive discussions with the existing bigger customers that are well very understanding, but also the contracts have not been put into question because of the ransomware. And we do have new customers coming in. So there's a big new customer, which was already an existing customer for a part, but a big new customer that will be started up in April. And so that was also a customer that already worked with us during the ransomware. So I believe that we feel that there's no long-term negative effect on our image and on the possibility to gain new customers and that we will see in the coming months. And you will also hear about that in the coming months as soon as they are active. So no real effect, I would say, on medium or long-term on the contrary. We have -- I mean in troubles and in problematic period, you also get closer to your customers when you deal correctly with them. And that's what we have done.

Okay. And then my final question -- yes?

Well on the parcel lockers, I don't know by heart the percentage we know, but the percentage which is not delivered at home, I would say, which is in the pickup network. The total of that -- of our partners in Belgium is normally between 10% and 15%. And gradually, a bigger part is always coming into the parcel lockers. What we continue -- it has been lower during COVID because people were more at home. So -- and they were less interested in letting deliver their parcels into a post point or a parcel locker. What we do see in the best what we have in the Ecozone in Mechlan, where we have installed around 50 to 60 parcel lockers all over the city and small ones and bigger ones. Is that it's an interesting success and that people really, 85% of the people have picked up their parcel by foot or buy bike. And 15% have picked it up by car, passing as the lockers. So not specifically having driven to the lockers. So we continue to invest in lockers. And we -- yes, we want to continue to do that. The biggest challenge there is to convince people to let it deliver in the lockers and yes, the point there is that we want to continue to look with our customers centers, with the commerce players that how can we promote and how can we make sure that people choose even more than they do today. And how can we have much more people putting their orders in the parcel lock -- the rebates, can we get the rebate transferred to? Yes or no. That's not always the case. But it's definitely something we want to put extra attention on in the coming years because it also helps, of course, the end of year peak preparation.

So our next question comes from the line of Marco Limite from Barclays.

Two questions left for me. So number one, is that if you think that in 2020, you actually grew above the Belgium market? Or you think that was in line. I was just wondering if you actually try to boost your volume, just maybe with better pricing compared to the competition? And second, just going quickly back to your volume guidance for 2021. Do you see a scenario where in a few particular months, for example, November or during the lockdowns in Q2, you have a very high base. And as a consequence, you would sort of see negative growth year-on-year in 2021?

Maybe I'll take the second question. Well, we gave you, I think, the figures on the volume growth, and that's why we also say it's very difficult. On the first -- last year, the Parcels B2X, we had 25% in the first quarter, about 80% in the second quarter, 50% in the third quarter. And 67% in the fourth quarter. Really, during the lockdown themselves, the percentages were even higher. And in the first lockdown, we were at 80%, it's the same as the second quarter. And -- but in November, for example, it was at plus 90%. So maybe we could have a nongrowth in 1 month or in a week or something like that. But in general, we believe that there will still be growth. And if you see that in the third quarter, which was -- yes, if we compare it for the whole year, we would say the third quarter was a bit normalized quarter which would be the new normal. We have plus 50%. If we then see what we said before, in the first 2 months of this year, we have plus 50%. I think we can more or less say that, that is the new normal and that we will have growth on top of it. So I think the percentage we predict, we are definitely confident about it. And we don't -- we do not believe that we will have negative percentages, yet. Maybe in 1 week or something like that, but it will -- on the year, we will definitely have an interesting growth still there. Even with these high levels, end of year peak will be, again, an end of year peak. And yes, we must -- we are in the new normal. So I believe that -- but having another growth of 56% as we had in 2020. Of course, you will understand, this will not be the case. But we don't expect anything negative, not at all. And then the first question was about?

Yes, the -- I think you asked that we buy market share. Marco is on mute, the year 2020 was a year of like newspapers write it, parcels bonanza. So why would anyone then buy market share? I think if we increased that particularly in Belgium, we could only have partial in Belgium with the incumbent. We performed extremely well. We kept our promises. And I think that explains the big growth, not that we were bargaining with the price, absolutely not. We have a business to run on the longer-term so that we have been in unwise [indiscernible].

The 1 thing we have done in 2020, and this we should say as well is that we did not accept any parcel. So we did accept every customer .

We accepted all parcel.

We accepted all parcels that came in here. And it means also that, of course, that gives us the extra costs I know that there are some players in the market that limit that and do not go further. And then, of course, here, I mean, that it's planned in advance. So we continue to ramp up and continue to accept and continue to do it. And which leads maybe to some extra costs. But I think that's also important. And is that gaining market share? Maybe next year. But in the year itself, it's just delivering the service you promise and being there for your customers.

Our next question comes from Andre Mulder from Kepler Cheuvreux.

Just a number of questions still left. Again, on parcel, if you look at the quarterly performance, it seems that when growth is becoming too high, you have extreme difficulty handling it. So the problem in Q4, better results in Q3. Looking at the current momentum of -- for 50%. So that more resembles the development in Q3. Would you say you are, let's say, better able to handle this kind of volume than in some of the other quarters I mentioned? Second question is on this convenient network. Are you still convinced that they have a fit to the group? Or is this impairment just say, upfront action for possible disposal there. I never understood that acquisition, but maybe you can explain that. On parcels, North America, did you include any amounts that you expect to get back from insurance in the target for '21? Those will be my questions.

Can you repeat the last question, again?

On the first one, maybe, I think the plus 50% is our network is fully fledged now for the plus 50%. That's for sure. But we did -- we're able to do the plus 90% and the plus 90 and plus 70 in the fourth quarter, and we did do it in the end of year peak. I will not hide that we are currently heavily evaluating and looking how we can further ramp up the capacity as well in sorting as in distribution, and that's what we do every year. And we definitely are going to make sure that we can handle even more volumes that we have done last year for the end of year peak of '21 we do expect also even higher volumes. And so we do expect to grow, and we will prepare ourselves for that so that we can handle and keep the same philosophy of not refusing any parcel that are being brought to us.

And to your question, will it come with less cost than in Q4, I explained what happened in Q4.You can draw your own conclusions there on as some particular year-end Black Friday costs we will have less because volumes can be more easily be absorbed, that's for sure. But we're not planning on giving quarterly outlooks that alone. And the convenience network, the question that you asked, you give me the opportunity perhaps that in general, we communicated in December during the strategy update that we are looking into our full year. That's a general comment I can make. Of course, I cannot make comments on for Q4.

Well, the EUR 9.2 million. I think we did say somewhere also that it constitutes a contingent asset towards the insurance companies and for PaLo North America.

But did you include that in your outlook, a certain amount of debt to be recouped ending in numbers?

No.

So our final question comes from the line of Ivar Billfalk-Kelly from UBS.

I had a bit of problem in my line for last few questions. Forgive me if I'm asking a question that's already been answered. But just related to your comments about accepting every single parcel, I think it's fair to say that you did struggle to meet the demand that you saw but was every single parcel that you actually delivered positive for EBIT? Or was there some negative impact because of the extra cost that you had to take on? And could you be better off refusing some of the parcels? Secondly, in terms of the CapEx, you talked about your gross CapEx between EUR 200 million and EUR 220 million, which is a little bit higher than I think consensus is expecting. But is that a level that we should expect in future years as well? And within that -- in terms of asset sales that you're planning, can you give us a level of how high they're expected to be? And finally, on the fulfillment centers that you're opening up, can you tell us a little bit about when you expect them to ramp up to full utilization? And any start-up costs that you're going to face in opening them?

But the line is extremely bad. So I think we heard the first question. But not the second one, the last I'll please start with.

Maybe if you can answer the question you did hear. I can repeat the other 2.

Yes, I will. First, profitability for parcel. It's a business that we run. It if you make copies, probably there will be which are more profitable than other ones. And like Jean-Paul said, it's definitely true that in the last quarter, we really plan to deliver all the parcels and build on our reputation and get things done, those result. But I think the numbers in Q4 tell everything. That indeed, it has been growing as to profitability, and I talk about percentage compared to last year. So I think that answers your question. And yes, it's lower than it was in the second quarter and third quarter. So I think that's the second question that there have been loss-making parcels. All in all, if we report on an EBIT margin that grew and it's more than 7% on -- than last year, the answer is no. As to the CapEx 2020, we said in December, we would every year communicate guidance. On CapEx, we also indicated that probably every year, it would be somewhere between EUR 150 million and EUR 200 million, but we will guide on that year-to-year, more in particular. And then the last question, Jean-Paul around? Could you repeat your last question? Sorry for that.

No, sure. That's okay. So in terms of the fulfillment centers that you're opening up this year, can you tell us a little bit about the start-up costs that you're going to face there? And when you expect them to be fully up and running into contribution that they might give towards EBIT in the year?

Jean-Paul?

Yes. So I think we announced that we would open up 2 new centers of Active Ants. 1 in Belgium and 1 in Germany this year. And then also, Radial is going to open up a new center in the region of Castle. So in total then, we will operate 7 sites for Radial Europe, 3 in Germany, 1 in the U.K., 1 in the Netherlands, 1 in Poland and 1 in Italy. And for Active Ants, we will then have 4 sites, 2 sites in the Netherlands and 1 site in Belgium and 1 site in Germany. So that's the footprint that will be developed this year for sure already.

Right. I meant do you have any -- any comments on how much they're going to contribute and the cost that you're going to face starting them up? And actually, is that what's leading to an element of the weaker margin that you're forecasting or guiding to?

But those sites have been included in outlook, yes? So that's, for example, where we say, "Okay, we have operational OpEx investments." So they have been included. So it's...

Okay. So you won't quantify that further. That's okay. I'm sorry, I might have missed it but in terms of asset disposals, I mean that you've had in the past, are you expecting them to run at the same rate in the future?

Yes, we continue to look into our assets and see if they're strategic or not, and I think you're talking still billion. So I'm talking we also got [ EUR 2 billion ]. And I think for next year, that will be more or less in line with current year.

We have no further questions in the queue, so I'll hand you back over to your hosts.

Okay. Well, thank you, everybody, for joining us and for -- I hope we have been able to to answer your questions. And I hope we gave you also a good flavor of how we look to the future. Although it is very difficult in these times, but I think we, at least, we look from our side, positively to the future. And that's also why we have this -- a range, which we gave you. And I hope you will join us in the, I would say, in this ride in 2021. So I'll talk to you later again after the first quarter, it will give us a more -- a bit more insight in 2021. And thank you for being here.

Thanks for your questions. Yes. Have a great rest of the day.