Industria de Diseño Textil, S.A. (ITX) Earnings Call Transcript & Summary

Good morning, ladies and gentlemen. A warm welcome to the presentation of Inditex's results for 2020. I am Marcos López, Capital Markets Director. The presentation will be chaired by Inditex's Executive Chairman, Pablo Isla. Here today with us are also our CEO, Carlos Crespo; and CFO, Ignacio Fernández. As usual, the presentation will be followed by a Q&A session, starting with the questions received on the telephone and then those received through the webcast platform. Before we start, we will take the disclaimer as read. I'll now hand you over to Pablo.

Thank you, Marcos. Good morning to everybody, and welcome to Inditex 2020 results presentation. I hope you are all well. 2020 has been very unique for Inditex in 2 aspects. Firstly, the year has been marked by the pandemic. This has affected every one of us in unprecedented ways. It has also been a landmark period in Inditex's strategic transformation. The initiatives we have been implementing over a number of years now have enabled us to meet the challenges of 2020 headwind. First and foremost, our thoughts are with all those affected by the pandemic. Our #1 priority is the health and safety of local communities and our employees. We would like to thank our teams whose contribution in this difficult time has been inspiring. Let me highlight some of the key aspects of our performance. In 2020, Inditex executed remarkably in what was our most challenging operational environment. Over the year, lockdowns and restrictions seriously disrupted the operation of stores. Outstanding growth in online sales continued throughout. The management of operating expenses in a highly disciplined way allowed us to partially offset the worst of the trading conditions. In this context, we continued generating a strong cash flow, and we maintained a solid financial position. We continue developing the main lines of our long-term strategy to extend our fully integrated store and online platform, to complete the digitalization of the group and to push forward the goal of increasing our level of sustainability. Let me tell you that we have total confidence in our unique business model. As mentioned a few moments ago, 2020 was a landmark year in the strategic transformation of Inditex. The initiatives we have been implementing over quite a number of years clearly showed their worth during this difficult time. Let's cover a few of the key achievements. The integration of stores and online is now complete due to the total rollout of RFID and stock integration, SINT. The migration to the Inditex Open Platform is now 80% developed. Online sales surged ahead at an accelerating pace throughout the year, driven by the attractiveness of our offer and the prevailing market conditions. Online sales grew an outstanding 77% in constant currency. Customer engagement has been very strong. Online visits increased 50% to 5.3 billion in 2020. Gross space growth has been 2%, and the store optimization program is now in its final stages as planned. A total of 751 stores were absorbed in 2020. We now enjoy a higher level of flexibility and a lower inventory requirement in order to meet customer demand. The result is a more responsive, adaptable and agile company. Back to operations. This chart shows the number of stores with sales on a weekly basis. It also illustrates well the timing of the restrictions as the year progressed. In this chart, you can see the progression of sales over the year. This was marked by restrictions in stores and very strong online growth. To put the strength of the operating performance into context, restrictions reduced trading hours by 25.5% in 2020 versus 2019. This percentage does not take into account additional restrictions on floor space, maximum capacity and peak trading times that were present across many markets. Furthermore, 30% of the stores were in full lockdown at the close of the year on 31st January 2021, and 52% had trading restrictions. At the end of the third quarter 2020, just 8% of the stores were in full lockdown. The strong trajectory of online sales continued throughout the year. In 2020, global online sales reached EUR 6.6 billion. This remarkable performance was greatly helped by our fully integrated business model, our single inventory position and the attractiveness of the product offer. It is because of these features that our online operations enjoy sector-leading growth rates and profitability. Inditex online business is non-dilutive to margins and requires lower capital intensity going forward. Online sales in constant currency grew 77% in 2020. More than 95% of the growth in online in the year was organic. The contribution of SINT to online sales reached EUR 1.2 billion. Customer engagement is strong. Online visits reached 5.3 billion in 2020, an increase of 50%. The strong growth of online has continued into 2021. Not only are Inditex online sales in absolute terms leading the space, but also, the growth rates we have seen are very much at the top as well and with a markedly higher level of profitability. Now I would like to cover some of the aspects of our strategic transformation in 2020. Our competitive advantage will be further strengthened through the development of the fully integrated store and online model. Our priority remains to provide a stronger customer experience with improved management of stores, inventory, supply chain and sales conversions. We foresee a very strong progression of online sales up to and beyond 2022. This will be driven through a focus on high-quality stores which are, of course, fully integrated, digital and eco-efficient. We must also bear in mind that all this is being achieved with sustainability very much as a central part of the strategy. All this should help to generate higher returns and lower capital intensity. And now, I will hand over to Carlos to talk about digitalization and sustainability.

Thank you, Pablo. Key to all this is the continuous investment in digitalization of EUR 1 billion over the 2020-2022 period. Important projects include the completion of the Zara online studios and the full rollout of the Inditex Open Platform. The new online studios for Zara are finished. They are housed in a fully sustainable building, which is 67,000 square meters in size. In 2020, the SINT program was completed across all concepts. SINT was instrumental to the level of online sales we saw last year. We also continued to invest in digital integration with the goal ultimately being the rollout of the store in your pocket. The store mode aligns different functionalities, such as product discovery, geolocation, fitting room reservation, payments and customer service. As you know, sustainability has been a key part of our strategy for many years. Our commitment is basically illustrated in these 5 main areas: the sustainability of the supply chain; the use of renewable energies; the commitment to sustainable fabrics; the conversion into eco-efficient stores; and a zero waste and recycling policy. We're happy to tell you that we have achieved or exceeded all sustainability targets set for 2020, as can be seen in Join Life as well as in the use of renewable energy at our own facilities. We are fully on course to meet the targets set over the next few years. For 2023, we have set ambitious objectives: zero waste from our facilities; 100% use of sustainable cellulosic fibers; 100% free of single-use plastic; 100% of old packaging materials collected for reuse or to be recycled in our own supply chain. I'll hand you over now to Ignacio to cover the financial section.

Thank you, Carlos. In 2020, Inditex executed remarkably in what has been a challenging operating environment. Our stores, online and supply chain have [ reacted ] on a continuous basis to the volatile trading conditions seen throughout the year. Store sales recovering progressively, as lockdowns and restrictions were lifted. Online sales continue growing at an outstanding pace. Despite the restrictions, we have maintained healthy sales productivity. From a P&L perspective, the 3 points defined 2020: a very active management of the supply chain; a healthy gross margin evolution; and the meaningful reduction in operating expenses. We saw a strong recovery in the context of the challenging environment in the second half of 2020. We incurred exceptional costs due to the COVID-19 of EUR 394 million in the second half. As mentioned, the pandemic had a material impact on sales in 2020. This performance was marked by the timing of the temporary store closes and restrictions. Online sales growth in constant currency has been very strong at 77%. We also saw sales trends improved markedly as the store reopened. The sales performance by geographic area reflects currency fluctuation and the timing of the temporary store closures and restrictions. The gross margin was 55.8%. The flexibility of the supply chain has been key to the margin performance. In constant currency, the gross margin for the year increased 170 basis points to 57.6%. In the second half, the gross margin in constant currency increased 257 basis points. Efficiency gains have allowed us to exercise a high level of control over operating expenses in the period. As you can see, operating expenses decreased by a remarkable 17%. Operating expenses were very efficiently managed across all departments and business areas. This demonstrates our ability to react and adapt continuously to the changing trading environment. The main components of operating expenses have shown a very good performance. Depreciation, amortization was EUR 3 billion. This includes the chart for the completion of the store optimization plan in 2020 and 2021, as announced back in June of last year. The financial results line of the income statement includes interest on lease liabilities of EUR 120 million. As I mentioned, the various initiatives in place allow us to generate working capital efficiencies, even in the most challenging of environments. This chart shows the decrease in inventory requirements in our operations over recent years. We'll continue to require less inventory to manage operations. This is a result of the single inventory position. A key part of our business model has been further enhanced by the use of the technology, such as RFID and SINT, that allows in-store inventory to be used to fulfill online orders. Store optimization also improves inventory allocation and higher product availability, resulting in stronger full-price sales. This will drive a stronger cash generation going forward. The flexibility of the business model we run can be clearly seen in the evolution of working capital over this demanding period. Despite the very material impact of lockdowns on sales, we have been able to use the flexibility of our supply chain to adjust volumes. The single inventory position was crucial to achieving this performance. As a result of all this, inventory decreased 9% at the end of this year, excluding the effect of the provision charge in the fourth quarter of 2019. This has, in conjunction with the strong cash flow, took the net cash position to EUR 7.6 billion. With all of this, you can see funds from operations after leases was EUR 2.2 billion. Cash from operations was EUR 1.3 billion. Let me hand you over to Marcos now.

Thank you. Over 2020, we continued our expansion. We have opened stores in 29 different markets. Global online launches took place in 25 markets. The weight of the different concepts on group sales remains broadly unchanged. We are seeing a progressive recovery across all concepts going into the Spring/Summer season, especially going into March. The differences in performance relates to each concept's specific geographic presence, location of stores and fashion profile. Online sales continued to grow remarkably. Oysho and Zara Home ranges performed particularly well in 2020. Store optimization activities across all concepts will extend into 2021. And now back to Pablo to comment on the outlook.

Thank you. In June of last year, we detailed to you a number of strategic initiatives to strengthen our global fully integrated store and online model. We plan to continue developing these key long-term priorities in order to maximize organic growth. The goal is to increase the differentiation of our business model to provide a unique customer experience. The strong online sales growth we have seen is expected to continue going forward. We will have invested EUR 1 billion in online capital expenditure between 2020 and 2022. A key focus is on high-quality stores, with the aim that they be fully integrated, digital and eco-efficient. Total capital expenditure over this same period will be around EUR 900 million annually, helping to drive lower capital intensity and increasing profitability. Let us not forget that we aim to achieve all of this with sustainability remaining very much a central part of the strategy. We expect to deliver higher returns and lower capital intensity. We see online, in conjunction with the stores, as a means by which to provide the very best customer experience and, therefore, to grow sustainably. As I mentioned a few moments ago, we have continued to see a strong acceleration in online sales to date. Over the course of the year, we had 5.3 billion online visits, 200 million followers on social media and 132 million active apps. This base affords us unparalleled growth opportunities with sustained profitability. One must always bear in mind our unique fully integrated business model. Spring/Summer collections have been very well received by our customers. In February, an average of 21% of the stores were temporarily closed. At the 8th of March, 15% of stores remained temporarily closed. Store and online sales from the 1st to the 7th of March were minus 4% versus minus 4% in the same period last year. Excluding the 5 most relevant markets in lockdown at the moment, sales grew 2%. According to current information, practically 100% of stores will be opened by the 12th of April. Inditex's dividend policy of 60% ordinary payout and bonus dividends remains in place. Inditex's Board of Directors will propose to the Annual General Meeting a dividend of EUR 0.70 per share for fiscal 2020. This will be composed of an ordinary dividend of EUR 0.22 and a bonus dividend of EUR 0.48 per share. This dividend will be made up of 2 equal payments on the 3rd of May 2021 and the 2nd of November 2021. The remainder of the bonus dividend, EUR 0.30 per share, will be paid in calendar year 2022. Thank you for attending. That concludes our presentation for today. And now, we'd be happy to answer any questions you may have.

Please go ahead, operator.

[Operator Instructions] The first question comes from Richard Chamberlain at RBC.

Could you -- can I start by asking a question on full-price sales, please, in Q4, whether there was obviously a currency impact on the gross margin? But can you comment on the level of discounting that you've been seeing, and whether you expect a higher rate of discounting in Q1 or the first half of this year, given the softer sales trends that we've seen recently?

Well, thank you. Well, the first thing I would like to say is that regarding the gross margin in the year 2020, or if we think about the gross margin in the second half of the year but globally for the year, we think it's very remarkable, the evolution of the gross margin during the year. Because if you have in mind that we have faced, first of all, the pandemic, of course; and second, a very strong negative currency impact during the year and particularly, in the second half, even with the pandemic, the gross margin in constant currencies, and taking out the provision of the previous year, has increased in constant currencies. So I think this is extremely remarkable. So gross margin in the second half is 50 basis points up, but if we take out the currency, it is 250 basis points up. So in a year marked by the pandemic, I think it's very remarkable, the execution, having in mind the evolution of the gross margin with all these elements in mind. I would also like to mention because you were talking about the future that in the year 2021, we are not expecting any currency impact -- any negative currency impact on the gross margin. In fact, at current exchange rates, we would have around 300 -- 3 points of negative currency impact in the first half and flat in the second but with no negative impact on the gross margin because we have, on the other side, the dollar helping the evolution of the gross margin. So the year 2021 in terms of currency impact on the gross margin would be neutral, I would say, which is completely different to what has happened during the year 2020. And answering your question, well, you see our inventory position, it's extremely healthy. At the end of the quarter, it is minus 9%, which is extremely healthy, particularly having in mind, and I come back to what I was saying before, we can never forget that during the fourth quarter last year, on average, 23.5% of our trading hours have been eliminated because of the pandemic, so 23.5% of our stores have been closed on average during the quarter. And this has been particularly relevant in the second part of the quarter. We were saying that at the end of January, 30% of our stores were closed, and 52% percent of our stores were having restrictions. So it means that only 20% of our stores were operating in normal conditions. But having said that, nothing particularly relevant to mention about discounts in the Autumn/Winter season. And from this point of view, no concern thinking about the Spring/Summer season. Our initial collections, as we were saying in the presentation, have been very well received by our customers. If you go to any of our stores, if you are in a country in which the stores are open or you visit our web, you can see how strong our collections for this Spring/Summer season, and we have a very healthy inventory position at the beginning of the season. So we have -- we don't have any particular concern regarding this point.

The next question comes from Rebecca McClellan from Santander.

And just -- I'd like to hear your views on the sort of absorptions or potential for absorptions post the sort of current accelerated phase going beyond 2021 into the sort of medium term. Do you feel that this current phase is now -- is substantially enough to mean that it's largely finished? Or what's your view?

Well, thank you, Rebecca. Well, as we were saying in June, in June, we announced that we were accelerating the store optimization plan. We believe very, very much in this strategy, as we have talked many times, this fully integrated approach between very high-quality stores and then fully integrated with online this year, 2020, and we were mentioning this during the presentation, has been, for us, very relevant in terms of the strategic transformation of the company. And we have been able to do that because of all the work that we have been doing in the previous years. The RFID implementation across the board, the SINT, only to mention to you that, and we were saying this in the presentation, that SINT sales have been EUR 1.2 billion, which is very, very remarkable. And 5 years ago, this would have been impossible because -- so this is the result of all the work of all the investment that we have been doing during the last few years and, of course, of all the work during this year. And I would like to mention here the commitment and the work of all our teams all across the world, of course, in the central headquarters of each of the brands and of Inditex, but then, in every country, in every market, in every store, the commitment of our teams has been unbelievable during the years -- during the year. And this is what has made possible, even in a so challenging environment. Never forget that more than 25% of our stores have been closed on average during the year. And in this context, we have a strong gross margin, strong inventory control, strong cost control, healthy cash flow is something really, in our opinion, which is very remarkable, and it is the result, of course, of the investment in the previous year, but then, also, of the commitment of our teams all across the world. But answering specifically your question, what I would say is that during this year, we will finalize this strong step in the store optimization plan that we announced in June last year. And we continue thinking about this around 2%, 2.5% gross space growth in the coming years. And we are not foreseeing any relevant additional amount of absorptions in the coming years.

Our next question comes from Georgina Johanan from JPMorgan.

I just wondered if you could update us on the proportion of your OpEx base that you see as being variable, please. I assume there's been new negotiations with certain landlords and so on over the course of the crisis and, of course, with the online evolution as well. So if you could update on that, please, it would be helpful.

Well, I think, here, what we can continue saying is that 50% of our cost base is variable. Of course, this year, we have been managing costs in a very active way as we have been talking during the year, all the different lines, of course, in every aspect of the company, trying to find all the possible efficiencies. You were also mentioning rental expenses. Of course, this is -- this year has been very exceptional because of all the store closures during the year. But of course, we have permanent conversations with the landlords in the different geographies in every type of stores, always, always, and I always say this, trying to find a reasonable agreements for both parties. So our approach is always thinking about long-term relations. We do the same with our suppliers. Another element during this year is how serious and how conscious or -- we have been about the relations with our suppliers all across the world because we -- and, of course, we think about the landlords in the same sense. We are always thinking about long-term relations with our suppliers from every point of view. And this is the type of behavior that we always have. And regarding rental expenses, of course, rental expenses, as a percentage of sales, will continue coming down in the coming years, but always trying to find balanced agreements and always thinking about long-term relationships with our landlords.

The next question comes from Olivia Townsend, UBS.

My question just builds on Georgina's question about OpEx, so specifically on personnel expenses. So I'm just wondering, how much of the reduction that you saw in personnel expenses this year has been associated with the sales decline and not rehiring in certain store roles on natural churn? And how much is a more structural change? Essentially, sort of how much of the personnel expenses would we expect to come back next year?

Thank you, Olivia. As Pablo has mentioned in the presentation, a key feature of this year has been that given the lockdowns, the hours we have been able to operate our stores has been significantly lower. And based on that, we have to adapt the hours work at the stores on that basis, while at the same time, we have made very, very little lease of any scheme because we, through SINT, we have been able to sell EUR 1.2 billion of -- through online. So clearly, in terms of the fixed element, our core teams remain the same. And obviously, according to sales, we will always try to rehire. But adaptability has been very, very crucial in terms of the variable hours we have used this year. What we hope is that as stores reopen and sales recover, we will continue maintaining our key teams.

The next question is from Aneesha Sherman at Bernstein.

Can you hear me now?

Yes, perfectly. Thank you.

Sorry about that. So my question is about gross margin. So you mentioned there wasn't a difference in the level of markdown in full-price selling. Can you shed a bit of color as to what has driven the underlying improvement in gross margin, stripping out the FX? If it hasn't been a difference in markdowns and hasn't been a difference in the mix, and therefore, should we expect that to come back to normal as normal shopping resumes? Or do you see it as being a more permanent benefit as a result of the way you're planning and doing inventory that we think will last through 2021?

Well, I think that it is the -- we have talked before about this, and it is the route that we are following as a company. We began to talk about this, I think it was in the second part of the year 2018, this idea of running the company with less inventories, this idea of inventories as a percentage of sales to come down progressively. And it has a lot to do with the full integration between stores and online with the single inventory position, with the SINT that is -- this year, of course, has played an incredible role because when the stores were closed, we were able to offer to our online customers the product that we are having in the stores. As I was saying to you, 5 years ago, this would have been impossible. So it's very, very remarkable, this EUR 1.2 billion of sales that we have achieved through SINT during a year in which 25% of our commercial space has been closed during the year. So it's a permanent work in terms of running the company with less inventories. This means higher full-price sales. But what I was answering before was, if there is something specific about the fourth quarter, it's a complete -- the different thing is the medium and long-term route of the company. So of course, we will always continue working in this direction, and we believe very much in this idea in this fully integrated approach between stores and online and running the company with less inventories.

The next question is from Anne Critchlow at Societe Generale.

You say that store and online sales 1st to 7th of March were down 4%. In local currency terms, is that more like flat?

No, that is in local currencies. So yes, that's in local currencies. Now what we think the trading update shows, and of course, this is a trading update of just of the beginning of the year, but it is shown -- if you think about the evolution of our sales during the year and you see the trading update we are providing, it is clear. Remember what was happening in the month of September and October. As soon as our stores reopened, the level of sales was moving to the same level of the previous year, even with the restrictions, because of the strength of the combined approach between stores and online. And this is something that is, again, shown. If you see our trading update for the beginning of March, of course, there are markets which are totally closed. Then we say, well, let us take out the most relevant markets, the 5 most relevant markets in lockdown. And the remaining part of the business is plus 2%, even with all the restrictions that we have in the stores. And this is what was shown in the months of September or October, or even in the fourth quarter that with 23.5% of our stores closed, the level of sales was decreasing 19%, or in the month of February, in which 21% of our space was closed and sales were only coming down 15%. So it is clear that as soon as we are able to reopen the stores, this combination is very strong between store sales and online sales growth in a very integrated way. So that is in -- and this is what has been going on during the year 2020. In a way, we can say that as a company, of course, we can do everything. Online sales can increase. We run the inventories. We control the cost evolution. We run the company in an efficient way. We have SINT. But the only thing that we cannot do is to sell in the stores when the stores are closed because of the pandemic. So -- but as soon as these stores reopen, the level of sales becomes very healthy. This is what the year 2020 shows and what the trading update also is showing.

The next question is from Warwick Okines from Exane BNP.

I just wanted to sort of clarify guidance for the year ahead. Is it fair to assume that you're aiming to stay in the gross margins. I think you've suggested that. And then in terms of space for this year ahead, is that 2% to 2.5% gross space, is that applicable? And then also on absorptions, you've left yourself between 250 and 450 absorptions to do this year. Can you give us some sense of [indiscernible] with respect from your [indiscernible] on the absorption, please?

Yes. Thank you, Warwick. In terms of gross margin, I think Pablo was very, very clear. There are always -- we will always try to improve things. But we believe that, at this stage, it's reasonable to take the gross margin of 2020 stable for the 2021. We'll always try to do things, as we have mentioned a number of initiatives in terms of reducing the inventory we need to produce sales. So start with this initial expectation as the currency will not have -- will not play a major role in the gross margin of 2021. In terms of space, I think we've also covered that. We have talked that we have accelerated the store optimization in 2020. For 2021, we still have 400 stores, more or less, if you check the plan we mentioned in June. And we expect as we, as Pablo has mentioned as well, 2%, 2.5% gross space growth, so very much as to confirm the guidance we have provided in recent months. Everything remains very much the same.

Our next question is a follow-up from Rebecca McClellan at Santander.

Is the majority of the SINT sales sort of in Iberia, given the extensiveness of the store part?

Well, what I would say is that in terms of absorptions, as you know, it is a strategy that we are developing in all the geographies. And then, there are some geographical areas in which in terms of the number of stores absorbed, it could be more relevant. For example, you were mentioning is the case of Spain. In Spain, we have been absorbing stores during several years, and this has continued being the case during 2020. And it is because we used to have a lot of stores of small size coming from the expansion of the company in the '80s, in the '90s. And then what we are doing in many different cities is combining these stores in a more relevant store. We have mentioned different times what we did in the city of Bilbao, what we are doing in Madrid or what we are doing in many different cities. So what I would say is that the strategy is global, as I was mentioning. But then, of course, in the case of Spain, because of the expansion that took place in the '80s and the '90s, it has been -- we have been more active in terms of the store optimization plan.

I think your question also referred to SINT, if we have used SINT more in Spain, and then...

Sorry, Rebecca, I didn't understood you well. Sorry. Well, we have used SINT worldwide during the year. It has been -- I mean, the implementation is global. And of course, SINT, we have been using it when the stores were closed and also when the stores were opened. So it has been very, very global. There is no specific geography to talk about the use of SINT. Sorry.

Thank you very much. We are now finished with the telephone Q&A session to address the questions received through the webcast platform.

Good morning. We've had a few questions on the webcast platform. The first of which is, can you add some color on the online metrics? So any more color?

Thank you. Well, about the online metrics, of course, we have been saying during the presentation that online growth was 77% in constant currencies, that total online sales were EUR 6.6 billion, 5.3 billion visits, 200 million social media followers. But what I would also like to remark, and what we were saying during the presentation, is that we have 132 million active apps all across the world. I mean, I think this is extremely relevant because it shows how strong is the engagement of our customers with our brands. Part of this people that have downloaded the apps buy online. Some of them, others buy in the stores, but they like to see the product online. But in a sense is as to say that, of course, we have also many customers that are very loyal and they only buy in the physical stores. But in terms of online, we have 132 million loyal customers in the world, which is, we think, is very, very remarkable. It's a very remarkable figure, and it shows the engagement of our customers with our brands.

Thank you. Another question we've had is on fashion trends. What fashion trends are you currently seeing?

Well, I like this question in the sense that it's less financial and more commercial. Sometimes in these meetings, we only talk about, of course, financial things and less about commercial topics. I was mentioning before that if you visit one of our stores or our web, you will see this new Spring/Summer collections. I mean, it's full of bright colors. It's, I would say, very optimistic. It has been very well received by our customers, color, bright, completely new. It's like, I would say, very bright, optimistic and strong collections for the start of the season.

Thank you. The following question relates to dividends. Perhaps you could provide us some color on the dividend policy.

Well, I think it is something also very remarkable after the year 2020 that was very exceptional. What we are doing this year, what the Board of Directors is proposing to the shareholders' meeting is to come back to the dividend policy of the company, 60% payout ratio. And then regarding the extraordinary dividend, to use EUR 0.48 of the extraordinary dividend and then to reach a global dividend of EUR 0.70 per share in this year. And the remaining part of the extraordinary, which are EUR 0.30, to be paid next year, but will be a combination between 60% payout ratio and this remaining EUR 0.30 of the extraordinary dividend. So it is to come back to our dividend policy because of the cash flow generation of the company, because of the prospects for the year 2021 and of the strong net cash position that we have at the end of the year.

Thank you. And just finally, you covered operating expenses in your question to Georgina. Is there any further details you could provide on rental costs at all?

Well, I think we have covered that in my previous question that, of course, during 2020, we have been very active running costs all across the company. Of course, we will continue, during the year 2021, managing actively and carefully our costs, all the different lines of our costs.

Thank you very much. That concludes the webcast questions.

Well, thank you to you all. And of course, as always, through our investors -- or through our capital markets department, we are ready to answer any additional questions you may have. Thank you.

Thank you very much. This concludes today's call, and hope to see you very soon. Thank you. Bye.