Logista Integral, S.A. (LOG) Earnings Call Transcript & Summary

Hello, everyone, and welcome to the Logista 2021 Results Presentation. My name is Daisy, and I will be coordinating this call. [Operator Instructions] I will now hand over to your host, Gloria, to begin. So Gloria, please go ahead.

Good morning. I'm Gloria Martin, Logista's Director of Investor Relations. I should like to welcome you to this audio webcast and conference call, which will consider the results of the 2021 fiscal year, about which you will find more details on our website. Today, I am accompanied by Íñigo Meirás, Logista's CEO; and by Manuel Suárez, our CFO, who will lead this conference call together. [Operator Instructions] The document which accompanies this presentation and the observations which will be made as it progresses include forward-looking statements and projections concerning future results. I invite you to read the disclaimer which accompanies the document and which mentions the various factors that could cause the real results to differ materially from the projections of forward-looking statements. I'm now handing over to Íñigo Meirás. Íñigo?

Okay. Thank you, Gloria, and welcome, ladies and gentlemen. During this webcast, we are going to deal with the highlights of the results, a review of the businesses, our financial review and with an aim with an outlook for the forthcoming fiscal year. Afterwards, as mentioned by Gloria, we shall open a session of Q&A. In the fiscal 2021 fiscal year, which we can describe our understanding, our results become to growth again, following the slightly regression, which they have experienced in the previous fiscal year in an environment that was still affected by the new wave of COVID-19 and despite the fact that the pandemic began in the second half of the 2020 fiscal year. In this context and thanks to appropriate management of the businesses, Logista compensated in record time for the adverse effects of the pandemic and achieved a 6% increase in economic sales, a 13% increase in EBIT and 17% increase in the net profit from continuing operations and an increase of 11% in net profit, including both continuing and discontinuing operations. Throughout the fiscal year, [ I definitely ] will focus on adapting our operations and businesses to the new reality in which we find ourselves, wherein taking the business toward the areas with the greatest capacity for growth, continuing to support our customers through service of high-added value, which satisfy their needs and something which is innate at Logista, controlling costs while seeking maximum operational efficiency. Our successful business model with essential characteristics of flexibility, lightweight asset and customer engaged approach is the cornerstone which enables us to maintain a solid financial performance even in adverse circumstances. This year, we have also continued to increase transparency in our communication, this time in connection with ESG. In view of the importance which Logista attaches to the ESG agenda and the need to find a uniform benchmark for comparing companies in the same sector and geographical area and at the same size which will enable us to continue improving our standards in this field, we have decided to seek an evaluation from an independent rating agency. In early October, Sustainalytics conclude its assessment of Logista by assigning to us an ESG risk rating of 14.1 points, which signifies a low risk of experience material financial impact due to the ESG factors. That rating placed us at a #3 out of 75 companies evaluated in our sector, air freight and logistics. This rating can be added to our AA in the MSCI ESG ratings to our inclusion for the fifth consecutive year the CDP's A List for climate change and to have recently obtained recognition as a leader in supplier engagement also by the CDP. In addition to that, this year, we have again been recognized by the Financial Time (sic) [ Financial Times ] as a leader in diversity, and we remain part of the FTSE4Good Index. Disruption of the pandemic only a couple of months after my appointment as Logista's CEO obliged us all to focus our attention in our day-to-day activities in the short term. So as to ensure the normal functioning of our operations, almost all of which, as you know, in our particular case, we're regarded as essential activities in all the countries in which we operate. For this reason, and although it was never put aside, the implementation of the strategic agenda that we were setting up, centered on boosting Logista's growth by means of diversification, had to be slowed down during the 2020 fiscal year. However, since the beginning of the 2021 fiscal year, we have returned to that agenda, and its greater ambition for growth has become a priority in our organization. Starting with transport. There are opportunities in this sector that offer the potential of recording high rates of growth with the right positioning. In the case of Nacex, our partial subsidiary, we are concentrating on developing B2C distribution for sales made by the manufacturers via e-commerce. As for Logista freights, our long distance transport subsidiary, which has come to be regarded as a core activity within the group, using our strategy of differentiation through added value services going beyond its former profile, which was that on an activity that supported our other businesses. Moreover, the new reality brought in by the pandemic has prompted Logista to extend its strategy to include the opportunities presented by working in the public health system. This scenario has revealed the importance of growth that Logista Pharma can play in the public and private sectors and its potential for reputation in new geographical areas were, although Logista [ functions ] as a group, Logista Pharma is not. As I have told you, our strategic focus for the coming years will be clearly be on growth. We are convinced that Logista has the necessary capacity to grow at a faster rate than the single-digit rate recorded in recent years. So we are concentrating in exploring new avenues for growth other than tobacco distribution, which is today our most important business, but in which the trend is now towards decreasing volumes. This does not mean that we are [ ongoing to allow ] the distribution of tobacco. This line of business as well as being profitable enable us to provide our customers with undoubted added value as a result of our better understanding of the sector and of the efficiency that our operations have acquired over the years. But diversification towards new verticals will grow faster, will accelerate our transition to be a growth profile company and will offset the tobacco volumes decline in the future. But our intention is to increase the speed at which, organically, we achieve this objective of growth. And to help us to do that, we have a solid balance sheet, which enable us to tackle M&A transactions while maintaining the payment of dividends. We are aware that Logista has not completed any acquisition for many years. So in order to minimize any risk in execution or integration associated with this kind of transactions, our road map is based on the acquisition of medium-sized companies in an orderly manner. The focus will be on companies that provide complementary capacities and also synergies with the businesses in which we are already present and which enable us to quickly acquire critical mass to develop in Italy and/or in France. Some of the business in which we are currently only have a presence in Iberia. Let's now review the progress of the business, both open land and in this geographical area. Before we start the review, I should like to take a moment to explain to you the 3 changes that we have made in the way in which we have been reporting financial information, which, in some cases, have necessitated a restatement of the annual accounts and segment reporting of the 2020 fiscal year to enable the current fiscal year to be compared with the previous one. The full change, which will not bring about a restatement of accounts, but which did involve more transparency in relation to developments in one of our growth businesses, consisted in separating the report of Logista Pharma revenues and economic sales, which have to now have been reported together with those of our distribution, publication subsidiary in the subsegment of their businesses. This change only affects segment reporting. The second change affects the annual accounts and the segment reporting and consist of classifying our subsidiary, Supergroup, which deals with the distribution in France of convenient projects other than those of tobacconist as an asset available for sale. This classification means that this results in the fiscal year and the estimate of the cost assets that is strengthening as reported in the P&L account as a result of discontinued operation. So from now on, France will have only one reporting subsegment, tobacco and related products. As we mentioned at the close of the 2020 fiscal year, the poor results of that subsidiary, especially after the cases of the pandemic, led us to decide to discontinue Supergroup's activity and to concentrate on developing businesses, which are more closely aligned with Logista strategy. The third and final change only affects segment reporting and its concept of selling the cost of the corporate center among the other 3 segments, Iberia, France and Italy, and of including Poland's activities within the Iberia segment in keeping with the real reporting relationships of the business. In spite of the pandemic, the result of the fiscal year was solid, and the adjusted EBIT reached EUR 298 million compared with the EUR 263 million last year. The adjusted EBIT increased by 13%, thanks to the solid behavior of regular operations, combined with a change in the valuation of inventories, which amounted to EUR 5 million compared with minus EUR 2 million in 2020. And thanks to the improvement in the net impact of COVID, which we consider was not significant this year, but which was of minus EUR 14 million last year. Performance in Iberia was very positive. The recorded increase in economic sales being of almost 7%, which brought the total of EUR 634 million. By activity, the economic sales in tobacco and related products increased by 3.5%. There was a double-digit increase in the economic sales from the distribution of convenient products, thanks to the penetration of Logista retail into the points of sales and thanks to the expansion of the customer base in new channels. The added value services provided during the year and the variations in the value of the inventories following the manufacturer price increases helped to compensate for the reduction in the volumes of tobacco distributed in Spain, which decreased by almost 1%, mainly because fewer tourists arrive in Spain due to COVID. The economic sales from transport grew by 6.9%, performing well in all segments. In long distance transport, increase were recorded both in tobacco and in non-tobacco. And in Nacex, our business in parcel, there were double-digit increase, thanks to the large increase in sales through e-commerce. And thanks to the new B2C strategy, sales in industrial parcel again reached the levels of 2019. The economic sales from pharma distribution grew by 20% with the acceleration recapture of new customers from among those who we call traditional, and thanks to the launching of new services during the pandemic. But the pandemic also contributed to the development of agreements with the public sector, which had not previously being one of our traditional customers and which, in this situation, has become a new avenue for growth in the business, being associated with the need to distribute projects especially connected with COVID. Total operating expenses in Spain and Portugal increased by 4%, making the adjusted EBIT EUR 134 million, which was 90% more than the figure in the 2020 fiscal year. Performance in France was slightly positive. Economic sales amounted for EUR 225 million and were almost stable compared with those of the previous year. Economic sales from the distribution of convenient products plus electronic transactions were slightly positive, with a very positive performance in electronic transactions, which grew by more than 13% on top of a base that was already growing last year. The sale of the convenience products, which was facilitated during the new confinements as the tobacconists remained open, was adversely affected at the end of the period by the introduction of the health pass in the HORECA activity in the café tabac. Economic sales from the distribution of tobacco were less than those of the previous year, and volumes of distributed tobacco fell by 3.7% after the reopening of the borders and the increases in sales prices of the projects during the year. The changes in taxes and prices resulted in a variation in the valuation of the tobacco inventories, which produced an adverse effect of EUR 2 million on the results of the fiscal year. Last year, that adverse effect amounted to about EUR 3 million. As I explained to you at the beginning of my intervention, the results of the other businesses' activities is to be included among those of the continuing operations in the 2021 fiscal year. So the data reported in France for the 2020 fiscal year were restated in order to ensure that the 2 fiscal years will be correctly compared. Total operating expenses in France decreased by 0.8%, resulting in adjusted EBIT of EUR 66 million, EUR 1.4 million more than the figure obtained in the 2020 fiscal year. Italy's performance was very solid, recurring economic sales of EUR 325 million, an increase of 6.5%. The commercial effort that has been made to accelerate growth in the distribution of convenience products [indiscernible] are reaching a new agreement with manufacturers in the beverage sector. And this, combined with the good performance in snacks and sweets, has resulted in a double-digit growth in the economic sales of convenient products. The economic sales from tobacco distribution were also higher than those of the previous fiscal year due to the increased volumes of distributed tobacco started by the developments of the heated tobacco category and the services of greater added value to manufacturers, which were largely associated with the new generation category of products. The variations in the evaluation of tobacco inventories, which were the result of the change in tobacco taxes and prices during the fiscal year, have a positive impact of between EUR 5 million compared with EUR 1 million of last year. Cost control and restructuring measures, together with the gradual improvement in efficiency, resulted in an increase of 3.6% in total operating expenses, which produced an increase of 14% in the adjusted EBIT to EUR 98 million. Logista's operational performance in the fiscal year was very positive, demonstrating once again the resilience of our business model as well as the company's solid financial position. These characteristics are the basis for the commitment undertaken by the Board of Directors when the company went public and involving a high percentage of payout in every case of more than 90% of the net profit. In the last 3 years, the Board has [ solidified ] its presence for maintaining a dividend which is stable or working in absolute value and for that reason, has decided this year to propose to the general shareholders meeting the distribution of 95% of the net profit of the fiscal year, which represents an increase of 5.1% compared with the dividend distributed in 2020, converting it to EUR 1.24 per share. And now I give the floor to Manolo so that he could continue with the financial review of the fiscal year. Manolo?

Thank you, Íñigo, and thank you to all of you attending this Logista fiscal year '21 results presentation. Financial achievements for fiscal year '21 were formulated by the Board of Directors of Logista Holdings in the meeting held yesterday and are already backed by clean opinion by our auditors, EY. Main commentary of changes in accounting methods, as Íñigo pointed out, is that our wholesale activity in France to other networks and telephones that is made through Supergroup has been classified as held for sale in our balance sheet, and its impact in the P&L is included as discontinued operations. Obviously, 2020 figures have been restated to make them comparable with 2021 ones. The activity of the company during the period has increased, both in revenues that reflect mainly the value of the routes we distribute and in economic sales that is a better indicator of the evolution of the value of our services. As it is typical in our company, the economic sales grew over revenues in almost two essential points, just 10% of the economic sales growth comes from inventory valuation changes. Especially remarkable has been the role of pharma, e-commerce and convenience drug distribution. The activity in June of countries and business lines, with the exception of travel distribution in France, were also offset by the growth of the activity in telecom and wholesale. The 5.6% growth in economic sales transforms into a 13.2% growth in adjusted EBIT to EUR 298 million, leveraging in a 3.2% operating expenses growth. Especially remarkable was one of the growing lines was in transport, where margins are typically lower. This is due to the effort made identifying and implementing optimization plans all across the company and is reflected in a margin increase of 170 basis points to 25.2%. COVID impact was valued last year in EUR 29 million in economic sales and EUR 14 million at EBIT level. We consider that the negative and positive effects compensate this year, while the valuation of inventories represents EUR 5 million in '21 and was minus EUR 2 million in fiscal year '20. The restructuring expenses have been splitted among the 3 main countries. Italy represented the largest portion, with the [ organization ] of the operations in the north of the country and [indiscernible] lower than last year by EUR 2 million that are not enough to compensate the impact of lower capital gains in EUR 11 million. So the reported EBIT grew 12.8%. Bottom line, net profit of the company has grown at 11% after the impact of EUR 11 million in discontinued operations because of Supergroup sale decision. This is a particular issue related to the realization of the activity in France. Net of it, the result of continuous operations has improved by 17%. Financial results have improved significantly due to the collection of interest on excess interest corporate tax payments in Spain during fiscal year '17 and '18 as declared by a Constitutional Court sentence and some [ lower league ] of provisions coming from a positive evolution of the [indiscernible] market. Tax rate for evolution is mainly due to a gain case in Italy and is the tax administration that allowed to release some provisions. Other than that, the effective tax rate is around 27%. Cash position was unusually high during October and part of November due to the temporary changes in the rules to pay excise taxes in some countries that soon were back to normality, assuming the customer seasonality of having lower working capital figures at the beginning and mid of the year to increase towards year-end and with increase in consumption brought by touristic season in the south of Europe. Also, the minimum cash position has changed due to the de facto delay in payment terms of the installment payments in one of the countries, resulting in an increase of the average balance. Investments are in line with the customary tier in the company, devoting a very important part to technology to support the development of products and services and the improvement in operations to improve margins. In 2020, technology investments were a bit higher because of the renewal of basic infrastructure in IT. The EBITDA has grown in line with operations to EUR 370 million, while financial revenues were already positively influenced by the interest collections from tax authorities on the excessive tax payment in Spain already mentioned and by higher minimum cash position. The normalized cash flow gives enough room for the EUR 165 million dividend the company will pay for 2021 results. Working capital figure is now up to a normalized situation after the extraordinary delay of excise tax payment measures undertaken by some governments due to the pandemic. Company policy stated during the IPO in 2014 is to pay at least 90% of net income as dividend, split in an interim one of 1/3 of previous year's total dividend to be paid in the fourth Q of our fiscal year and a final one in the second quarter of the following fiscal year. Last year, the Board took the decision to raise the payout close to 100% to offset the effect that the pandemic had in the net profit, so to keep the absolute dividend per share. This year being considered appropriate by the Board to show the commitment with shareholder remuneration via dividend by paying 95% of net income, EUR 1.24 per share, which means a 5% increase of total dividend. As consequence, the final dividend of EUR 0.83 per share will be paid during the second quarter of our fiscal year. During fiscal year '21, the share price moved from EUR 14.6 to EUR 18.2. Although this positive performance of 25% is behind that of the EBIT and other comparables during the period, it has gained momentum since the beginning of the calendar year, outperforming clearly IBEX 35 and Medium Cap Index in this period. Total shareholder return during the year was 33.7%. In summary, with our investment case, the resilience of our traditional business enhanced by the growth activity has delivered in this fiscal year a 4% increase in the value of the products in this period that has been translated to 6% in our tariffs after a careful cost management and utilization plan moved to 13% increase in operating results and 17% increase in continued operations that provides net income and normalized cash flows to afford the nonorganic growth without jeopardizing the dividend policy of the company. I now hand back the wording to our CEO for his final remarks. Íñigo?

Thank you, Manolo. During the presentation, we have reviewed the operational and financial performance of the group businesses, and we have brought attention to the progress that we have made this year in an area, which we regard as critical, namely, the ESG agenda. In all of this, we can conclude that the 2021 fiscal year was a very positive for Logista in spite of the still challenging environment in which all of these took place. Now I would like to dedicate a moment to our new brand identity. Since our foundation in 1999, the company kept the same logo. But this summer, we launched our new image that reflects the Logista evolution where retaining the company's essence and values based on innovation, flexibility, reliability and service excellence. At this time, that symbolize the Logista's evolution I have been sharing with you around today's presentation. I should now like to explain to you our outlook for the business over the coming year. The progress since the beginning of the COVID crisis as well as the current market conditions suggest that in 2022 fiscal year, there could be a mid-single-digit increase in the adjusted EBIT compared with the figure in the 2021 fiscal year. I should like to draw your attention to the fact that in accordance with our strategic plan, focusing essentially on additional growth and diversification of the existing businesses, the group continues to look for M&A opportunities of a small, medium-sized targets, which are both complementary, sorry, to and synergetic with our own [ business ] operations. In any scenario, the maintenance of the current dividend policy will be a priority. Okay. Let's now proceed with the Q&A session. Gloria?

We will begin with the questions received by telephone and finish with those received via the audio webcast platform. If that is the case, I will [ written out ] identifying the question, who formulated these questions. Operator?

[Operator Instructions] Our first question comes from Pablo Cuadrado from Kepler Capital.

I have 3 questions, please. The first one is looking to the reclassification that you have been guiding the results of the Supergroup and now reclassify as asset held for sale and undertaking new restructuring charges there. Which are your perspectives for these assets? Do you think that after making the new restructuring and putting out of the accounts, you may be achieving a sale or a disposal of that asset during the next few quarters? Or what, basically, to know either perspectives there. Second question would be on the M&A aspirations. I think you have explained and following the presentation that you just did, it seems like you are speeding up or at least the message towards opportunities of M&A out of tobacco and trying to grow. So here, I would like to ask if you can give a little bit more detail about assets or even areas, I don't know, between looking to transport or looking to pharma. If you think, at the moment, where do you think there could be more chances to grow? Or even when we talk about expanding out of Iberia into France or Italy, if you think any of these 2 markets have better options to achieve M&A alternatives? And the last question will be on the financial income segment. I mean this year, clearly, you have explained that you have this reimbursement of interest coming from tax payments linked to the past, but I was wondering if you can tell us, given that, that was for 2017 and 2019, if there are any pending amount that you think you should be receiving on the interest of the past assets that you did and if you think that, that's going to affect 2022.

Okay. Thank you for your 3 questions. I have to take the first and second, and probably the third is for Manolo. Regarding the Supergroup status today, I think that after the restructuring, I think, as you say, that we consider that an asset for sale. Clearly, our focus is to sell the company as soon as possible, which means that we are confident that there will be something there in the coming months, probably in the first half of this fiscal year, which means before March 2022. Regarding the second question on M&A. As you can imagine, I cannot say with you where we are exactly for different reasons. But as you say, we are steady enough our message that we are more productive with M&A opportunities. And I can share with all of you that today, we have at least 3 transactions in our pipeline. And if we are ready in our assumption, probably, we'll -- back to the market probably by the end of the first half of this year with news on that in terms of M&A. We are mostly focused in transport opportunities and pharma. Those are the 2 key -- at this moment, 2 key sectors that we are considering seriously, okay? And then we are open to consider on an opportunistic basis other operations. But as today, our focus is on transport and pharma, okay? And then regarding the third question, probably the answer is for Manolo.

Okay. Yes. Thank you. So the increase in financial revenues this year has been EUR 8 million. Half of it is due to this increase or collection of undue amounts collected by the tax administration. And you're fully right that having in just '18 and '17, but the practice continues. It's basically consistent on the internal -- [ international ] dividends collected are considered -- are not considered deductible when making the calculation of the interim payments of the tax, of the corporate income tax. But they are considered deductible at the moment or [ actually 95% ] of it when making the final declaration of the tax, creating then relevant accounts collectible for the company. That wouldn't be the case if that were, I mean, consistent in both ways. So as the practice continues, we are claiming the payment for all the remaining years. So it's '19, '20, '21 when we're going to pay it. It will be also course of claim. And also as the principle stays the same, we expect we will finally gain it in the dividends. So we expect to collect similar amount in the future. But I mean that's going to depend on when the [indiscernible] up on this if they are [indiscernible].

Our next question comes from Pedro Alves from CaixaBank.

Just coming back here to the M&A topic. Sorry for being a recurring topic. But we have been talking about acquisitions for a long time, yet none has been announced so far. So my first question is why? Is because are you seeing lack of opportunities at reasonable prices? And secondly, if you could be a little bit more specific on the opportunities you are targeting in transport, if it is more related to B2C e-commerce. And then in pharma, if it is more to distribution to pharmacies or to public administrations. And if this inorganic move would eventually dilute your margin going forward? And then my second question or the second topic is related to Supergroup in France. If you could just clarify a little bit better the expected outcomes. So should we expect you to receive any cash in from this business? Or should we think more of full restructuring and exit? And if you could clarify inside the EUR 19 million of negative results how much is the restructuring provision expense? And how much is the adjusted EBIT contribution?

Okay. Pedro, thank you for your -- for the 2 questions. The one regarding M&A, I cannot say with you exactly where we are on our M&A pipeline. But being a little bit more specific on transport. That's for sure that the focus there is to try to strengthen our capacities on B2C, first. And second, we are looking for opportunities in the long distance transport to add more volume and capacities to our current exposure, okay? Regarding pharma, I cannot be more specific. But as I say on my presentation, until now, Logista Pharma was only focused on the private sector. After COVID, we are now more hoping to work with the public sector, especially in Spain where you know this is a strong presence on that. Regarding the Supergroup, there are 2 questions. We think your question also Supergroup. The first one is related to the -- if you can -- or we are considering any positive outcome on the sale of the company. And the answer is here. No, I think that we cannot expect a positive impact on the disposal of the company if we achieve that. And regarding the breakdown of the EUR 19 million, probably I pass this question to Manolo.

Yes. Thank you. So looking at the [indiscernible] for those of you following closely the company, you've got a full disclosure of how this is booked in the annual accounts in Note 9 to the financial statements. As a, summary, I think that trading result last year for Supergroup was practically EUR 7 million negative. That what is there in the [indiscernible] operations. This year, those trading results are EUR 2.5 million. So it would be, I mean, a better result. However, we have considered a restructuring provision of EUR 19 million for the company and also make an asset impairment for the assets of Supergroup, which have then have 0 value, practically EUR 4 million. And this, together with the positive tax impact on all these measures are, accounting-wise, you have to do at EUR 6 million, providing discontinued results of EUR 19 million this year.

Manolo, quite clear. If I can just follow up on that. So basically, the way we should think about this Supergroup exit is that you are playing or you will play EUR 19 million to exit and to avoid having a business that would hardly breakeven and consume management time, is that it?

Yes and no, Pedro, because I think it is a breakeven, but is definitely one where we allocated in the course and others is EBIT negative business for Logista. And this serves [ our view ] in our business plan for the coming years. And in that context is where we took the decision to pursue the disposal and not to spend more time of our management in France trying to deal with this subsidiary.

Our next question comes from Francisco Ruiz from Exane.

I have 3 questions. The first one is on the Track & Trace. Remember that last year, we were talking about after implementation of the Track & Trace. There will be some opportunities in some markets in which you are not present. Could you give us an update on how is the situation? And if you could give us -- shall we have some market share data on Poland and Portugal? The second question is on your guidance. So you have guided to mid-single-digit growth in EBIT on adjusted EBIT. If we take into account the positive impact of the pricing or the higher prices in tobacco in Spain would have next year, excluding any kind of tax increase, you will be almost there. So could we see this guidance as conservative? And the third question is a follow-up on the accounting of Supergroup. First, if you could give us that book value -- what's the book value right now? Should be 0? And if you do expect any negative impact from the lower critical mass that you will have in France after the disposal of your business?

Okay. Thank you, Francisco. I'll take the second question just regarding the guidelines for next year. And yes, I can accept that we are being conservative regarding our outlook for next year because you are right, after the prices increases in Spain, that should be more -- a little bit more positive. But at the same time, we are balancing in our guideline for next year. We are monitoring until now some cost important for the company like electricity costs and others, which means that we prefer to be a little bit conservative in our guideline because, today, we don't have a clear visibility of all our costs for the next 12 months. And until now, for example, I think to add some color to my answer, electricity cost increases didn't affect our P&L because we have fixed prices in next year, next calendar year. But in any case, we have to consider certainly the situation in the market in terms of some customers only with the utilities. And because of that, we prefer to be even more conservative than in the past. But let's see what happens. And then back to you with the first quarter results of this fiscal year to say we can be more positive or not. And regarding the other question, I pass to Manolo in terms of Supergroup and Track & Trace.

Okay. Yes. In terms of Supergroup, the value of Supergroup in our books is now 0. I mean having this provision on restructuring authority within [indiscernible] any way in the future as the workforce is there. And also in terms of Track & Trace, there have been no transaction. So it's very soon to see which is the end result of the Track & Trace because of all the -- I mean an announcement has been in this year with the pandemic to compare figures, which has been the final result in terms of market share of movement in correctiveness of this Track & Trace policy.

Okay. Just a follow-up on the cost. As you have already highlighted the electricity, how do you expect the transport cost to evolve next year, please?

Well, as you know, we are an asset-light company. But in any case, it is a question of fact to see what happens because you analyze the cost today of the diesel. This is picking up if you compare with 6 months ago and a year ago, but we don't know exactly. In our operation, we are positive, and we believe that probably now is the -- there is a peak on the price of the diesel as a good example of that. But having said that, this is a question of trying to see what happens there. We have some protection on that because in the case of our transport activities, especially in long distance, which is the business where we consume more diesel, we have the option, okay, to ask for annual prices increase to our customers. But as you can imagine, there is always a gap between did you start to suffer that increase in your cost and the opportunity that you have to back to the customer asking for a higher tariffs. But I think that we prefer to be conservative. But in any case, at this moment in time, we are not very negative in terms of a very negative impact in our cost of these different dynamics in the -- with the petrol, with electricity and with other important costs.

Our next question is from Joao Safara from Banco Santander.

Two very quick questions. The first one, just if you could give us the guidance for corporate tax rate. There was -- it was slightly below what I was expecting for this year. If you can guide what's the, let's say, the level for 2022. And then the second one, just on Pharma distribution. After a year of 20% growth, what is your expectation for next year in terms of Pharma? Do you still see growth coming in this division?

Well, regarding your second question, in terms of Pharma growth, our views for this fiscal year, of course, we are not considering in our internal budget a growth 20%. But still, we are very bullish with the evolution of our Pharma businesses, especially in terms of revenues and economic sales. But as you can imagine, we cannot say with you exactly the target for this year in our internal budget, but it's clear that still we are very positive with the Pharma evolution for the time being. And regarding your first question of tax rate, Manolo?

Around tax rate, the government is this year having a positive impact in the tax rate, coming because of the reevaluation of one issue, particular issue in Italy that are having gone one case in the dividend, allow us to release provisions there, having this tax rate around this 20%, 26%. But I mean, net of it, the effective tax of the company would have been 20%, 27%. And this is going to move slightly low for the year '22 because of the evolution in France -- regulatory reform in France, to probably going to 20 bps there for the effective tax rate and then a bit more aggressive in the year '23 to probably 26.2 are considered stable as the [ relation is now ].

We have no further questions on the conference call. So I'll hand over for any webcast questions.

Okay. Most of the questions that we received via Internet are already answered. So I will select some of them that have not been answered or not completely. And in any case, if you have -- if you need further clarification, please just drop me a line, and I will be more than delighted to answer them. Okay. So first question is coming from [ Juan Lopez ], [ Donat Capital ] and is regarding our firepower, okay? So do you have an amount in mind for M&A? And how would you finance it, consume balance, capital raise, debt, et cetera?

Okay. Manolo, correct me if I am wrong, but as you can imagine, I cannot say with you our firepower, our internal firepower. But in any case, it depends on the size of the transaction. But assuming that we already said that we are looking for small or medium-sized investments, we believe that we can digest with our own resources. But at the time that we have to take that decision, we need to consider all the options. If we can optimize the return of our investment with some debt, we are open to consider that option assuming that we don't need at this moment in time. But it depends on the financial analysis and the returns that we are expecting for.

Okay. Next question coming from [ Miguel Iwalala ] from [indiscernible]. Please confirm why fiscal year '20 figures explained on the presentation, do not match with those presented the last year. For instance, as shown, the last year were EUR 10.5 billion and in this presentation, sales are EUR 10.4 billion. The same concern applies to the other items of the P&L.

I think I take the question. I think, Miguel, this was answered during the presentation. The fiscal year '20 financial statements has been corrected or rewarded in terms to properly reflect the Supergroup transaction to make them fully comparable. Again, it's in the Note 9 to the financial statements. I mean [indiscernible] by directors of the company how this restatement is done. Basically taking out Supergroup results and impact on the balance sheet last year, classifying in the balance sheet as assets held for sale, liabilities also held for sale and the result being included as discontinued operations in the P&L investment.

Next question coming from Jorge Losa, Cartesio, and is only part of the question. Could you please clarify -- well, I think this has been answered, but is repeated several times, I wanted to go through. Could you please [ tell us ] how rising fuel costs impact the company? And are you experiencing any labor shortages that have not allowed you to grow faster?

[indiscernible] No, Manolo, you first, please.

All right. I mean in terms of fuel costs, I mean [indiscernible] is not a very important pressure. It's clear that is special. We count on it when we are providing this -- the increase in -- for next year in our results and even our margin. And we have there the power to also to talk to customers [ as we review our ] tariff as this is included in our contracts. And that's the same for the rest of the costs you mentioned.

Next question, [ Ruben Lopez ], [ Luna Capital ]. In Pharma, what is the percentage of COVID-related sales?

Well, I mean there is clearly one part of it [indiscernible] that is not very relevant, although it is this year. We've grown partially clear to it. We expect that -- I mean considering that [indiscernible] to disclose it, we are considering that for this year '22, even having a certain decrease of the issues related to COVID, we will show again growth in the Pharma activity.

Next question is from Jorge Losa, Cartesio, again. On Pharma business, just saw you announced a new initiative to boost medicine delivery to patients' homes. Could you please develop a bit more on the opportunity and other potential opportunities you see on Pharma going forward?

Can you repeat the question, Gloria, please?

Yes. Yesterday, you announced a new initiative to boost medicine delivery to patients' homes. Could you please develop a bit more on the opportunity and other potential opportunities you see on Pharma going forward? I think he's asking about the special services that we are developing for the sector.

Yes. Yes. Yes, I think that, and there are a lot of initiatives in the new world after the pandemic. But in any case, in the specific quest -- in the specific option that you mention, which is to serve medicines to the patients at home, I think it's a business that we are offering to our customers and to the hospitals, but clearly is not -- clearly is not one of our main drivers of growth for Pharma. I believe that the main growth of Pharma, in our view and in our current strategic plan for Pharma, are mostly related to work more with the Pharma industry because still, we believe that there are a lot of opportunities there. And we are adding customers year-on-year. And regarding the second driver of an opportunity for growth is to open more the opportunity to work with the public sector, okay? There are not huge investments in the public sector because of pandemic. But after the pandemic, our belief is that, in any case, the public sector have had to reallocate more money in the Pharma industry and in the Pharma as a sector. And because of that, we believe that there are lots of opportunities, take in the public sector, in the case of his point, a more important role on that, that they've done in the past.

Okay. The next question is an addition from Jorge Losa, Cartesio. Which are the impediments you are encountering when executing M&A views?

And this is a conceptual discussion but, as you can imagine, all the time are the same. But in this case, when you are looking for a small and midsized opportunities, usually, you have to deal with family-owned business in most of the cases. And if not, in any case, are companies in the mid-market, no public and sometimes you need to spend more time and money in a proper due diligence to be sure that you don't have a [indiscernible] after the acquisition. But this is something that is not only result in our [indiscernible] Logista. This is more like [indiscernible].

Yes. Okay. I think that's basically all. So with this last question, we finish the conference call today. Thank you very much for everyone. Enjoy the weekend.

Okay. Thank you.

Thank you, everyone, for joining today's call. You may now disconnect your lines, and have a lovely day.