SEB SA (SK) Earnings Call Transcript & Summary

Ladies and gentlemen, good afternoon. Thank you very much for being present here with us for this presentation of the annual results for SEB for 2021. So we had planned a meeting that would be quite enjoyable, fun, thinking of our 65th birthday. However, the international circumstances are such that we will be a lot more -- let's say, a lot more direct and sober and less playful in what we say. And I would like to start out this meeting simply by conveying that we are thinking of our staff who work in Ukraine and Russia. Of course, we are thinking of them hoping that they're all safe, and we will ensure that we do everything that is possible to make them safe. But the situation is very difficult. And simply, they are in our thoughts. So we're going to be giving you this presentation. And as per usual, I'll be giving the presentation with Nathalie Lomon, CFO, in charge of finance; and also Stanislas de Gramont, who is the COO for the group. Now without further ado, we're going to be going to go into detail on the figures, but we're also going to be able to talk in detail about our industry. And my aim is to highlight how the year has gone and what is going to be happening in '22. And we're going to be talking about the world and our industry. So to start out with, we'd like to show you a brief film with the main key figures. [Presentation]

That's perfect. So before we give you the figures, let's get started and give you an overview of our industry of our market for small domestic appliances. Let me talk to you about what we mean by this. We're talking about the nonelectrical products, cookware products and also electrical products. So by definition, at the French level, we call it small domestic equipment. This is a market that goes back a long way. I'll refer back to that. And it's a market that is structurally buoyant. It also creates value. And we'll use a tangible example, in other words, Supor in China. We'll then move on and talk to you about the results, notably with Nathalie. And we'll run things off with a few words as to our outlook for the future. So if I start by looking at this small domestic equipment market, as I said, the market goes back a long way because before electricity was discovered, people cooked with pans, without pans, with all kinds of cooking devices. So ours is one of the oldest businesses in the world. But of course, we have gradually developed our business following on from the Second World War. And gradually in France, all of the plants were rebuilt, redeveloped with consumer society developing in Europe and in the United States. The industry developed massively. And of course, the number of products, the range of products that we were able to manufacture, people moved from the countryside to towns and cities, changed their way of life as well. All of a sudden, both the men and women in the couple began to work. And hence, cooking methods changed quite considerably. We could add to that the gradual appearance of electricity. It was already present, of course, but gradually, households were modernized. And with the modernization of the households, it meant that we had a massive amount of potential for new technologies that were going to give us the opportunity to invent a lot of our products. So added to this, you have the appearance in 1960, 1961 of modern retailing hypermarkets, supermarkets as we know them today. Carrefour in France, Walmart in United States. I think it was '68 for Darty, for example. And this meant that gradually, we were able to capitalize on a booster for our business sector. And the result was that whatever the continent in the mature countries, whether we're talking about the United States, Europe or Asia, which at the time with Japan more than anything, it meant that it was a fantastic springboard for our products, for our market. And it led to a massive improvement in the quality of life for people in their homes. Hence, our role has always been to simplify the daily life of people who live in homes, male and female, in other words, consumers all around the world. But at that time, of course, if I look back in the past, we were in countries that are mature countries. And from these mature countries, it means that we all have virtually the same production cost. So gradually, our industry has stood out, thanks to its innovation. This is what makes our business extremely innovative right from the outset. Innovation is the buzzword. It's the key to the door. The second point I wanted to raise by way of introduction is that, of course, at the end of the 1980s, 1990s, a lot of relocations took place, a lot of relocation in terms of the American industry, because of the pressure from Walmart with its Every Day Low Price, that meant that prices drop systematically in order to offer to consumers the cheapest prices possible. And as a result, many, many American manufacturers, if not all of them, had to restructure their plants, close a lot of their plants and transfer them to other low-cost countries, more often than not China. One main consequence for our industry, and it's still true today, is that the American industry is now at weak or no level, very few manufacturers in the States. And hence, the market, fundamentally speaking, is dominated by production in countries such as China. And so we are quite exceptional in terms of our paradigm. There's a second consequence that I'd like to talk about that is obvious for China, but we can see in a lot of the emerging and developing countries is that this relocation process of industry that I'm talking about, it took place at different times, at different levels according to the country. But it led to a development of the industry in emerging countries with one whereby, once again, people moved from the countryside to the towns and cities. And hence, once again, the 2 members of the household began to work. So over the last 20 years in the developing countries, we've seen exactly the same thing as we saw just after the Second World War in our mature countries. And this is what basically explains why today the emerging countries have become a massive market with a great deal of potential for us. So what are the main characteristics of this industry that we operate in? I think that the first point I'd like to raise is, of course, that -- and this is a very interesting point, is the fact that we're very fortunate in that we're in a market that, structurally speaking, creates value. If you look closely at the slide, you can see the growth rate in relation to the revenue. And on the vertical axis, you can see the annual return for the shareholder over a 10-year period. And this illustrates very, very clearly that over the last 10 years, and let me stress that it will be exactly the same for 20- or 30-year period, you can see that ours is a business where growth is strong. And this is normal because we're talking about daily life. People's needs naturally evolve. And secondly, our profitability is very, very good. As you can see, our profitability is much better than many other services or industries. And if you look at the health sector and the technology sector, we're located somewhere in the middle of the 2. So a very attractive business. I think it's important to remember this notably when you're talking about a business sector that is structurally profitable and creates value. The second point that characterizes our industry -- sorry, I forgot to turn the page. So the second characteristic, and I think what I've said so far explains this and underpins what I'm about to say, what's important is that as you can see on this slide, you have the GDP on the horizontal axis, the GDP per inhabitant. In other words, the purchasing power. And then on the vertical axis, you've got the spend on small electrical appliances per inhabitant. Two points I'd like to raise. First of all, in an almost perfect manner, you have a direct correlation between the GDP per inhabitant and the spend on small electrical appliances in euros, for example. This basically means that, of course, it goes without saying -- sorry, second point, there are 2 markets that are very different. The first one is the mature countries. This means we have an environment where a lot of people already have a lot of household appliances, even if their income is very high, but they're spending more and more. So there is this desire to spend many on sophisticated devices and appliances. But you also have -- and this is what I'm going to focus on in the second part, you have high levels of development in the developing countries, seeing their purchasing power increase. And the more their purchasing power increases, the more they turn towards our types of businesses to improve their daily life. Third characteristic of this value creation is that we're able to see -- and here I'm talking about the market, I'm not just talking about Groupe SEB. We can see that there's a strong correlation between the market share that the group is able to achieve in a country and what we call the operating margin, the profitability of the different actors. So basically, the bigger an actor is on the market, then the better or the higher its profitability. So this is why it's in our interest to be a leading global actor as we are. But also it's in our interest to be a local leader in each of our markets. And we'll see slightly further down the line how we're doing in terms of our positioning. The second point that I wanted to raise, and that is important, and I'm going to home in on the mature countries first and then the developing countries. In the mature countries, everything is evolving and changing. Why? Because fashion changes, consumer message change, daily life itself is changing, is evolving. It all depends on the trends that are out there, the way in which new technologies evolve and lead us to evolve. There are many, many new consumer trends. It's clear today, for example, that ours is a development that we could call the cocoon economy. Everybody turns towards their homes, wants to make their homes more comfortable. The kitchen, for example, is an essential hub. There are so many cooking lessons on television nowadays. People want to cook with friends. To do so, they need a healthy kitchen, so they're careful about the products they buy. People love taking time to cook. Cooking is a pleasure. And in the same way, we all have to be able to drink a quick coffee, a good cup of coffee. And all of these trends don't just go hand-in-hand with cooking, but they go hand-in-hand with the need to look after one's family, to have comfortable settees in a healthy environment where we're able to breathe clean air, purified air, a clean apartment with good vacuum cleaners. So everybody is refocusing on their homes. And this gradually means that we're focusing also on care -- personal care as we call it. And this is a very important factor, something that means that we are present on all of these markets. We use the example of small household appliances in the Europe, Middle East and Africa zone. And as you can see on the screen since 2017, but we could have gone back further, has shown regular growth amongst to 5% to 6% per annum with, of course, an acceleration in 2019 to 2021, where people spend a lot more time at home. So as you can see, fundamentally speaking, consumption is not related to COVID. It's a trend at the current time to look after the home. And hence, given that everybody is refocusing on the home, creating a better life-work balance, it simply means that people are renewing a lot of their devices, a lot of their projects. You can see this on the slides that are going to follow. You have all of these products that are very practical, are versatile. Vacuum cleaners, the connected vacuum cleaners, for example, all of the cookware articles, of course, Tefal pots and pans, I'm sure you all recognize those. The Thermospot, that is one of the main characteristics. That way, you know exactly when your pan is hot. More recently, you have the heater robots that you can see with our companion device, and we could refer to so many other devices that -- appearing on the screen. We have our latest vacuum cleaner as well that is absolutely fantastic. Everything that revolves around linen care as well. Everything is changing. Everything is evolving. People hate doing ironing, but it's still possible to use garment steamers to get the creases out. The coffee machines are evolving very quickly. So lots of new usages that simply make it possible for us to offer to consumers a new range of products. And all of this goes hand-in-hand with upgrading of the range. So let me talk about this now. It's the upgrading of the ranges, the upselling. Here you have 3 product categories, food preparation, espresso machines and vacuum cleaners. And we're able to observe that the volumes are increasing. If you look at food preparation, for example, you can see that the market share for the fourth quartile, as you know, in marketing, we divide the market up into quartiles. Each accounts for approximately 25% -- sorry, the price, we're talking about the price, not the volumes. We're talking about the price. It's 25% of the price. And so here, you can see that what we're able to observe, food preparation is that between 2017 and 2021, the top of the range, the fourth quarter has increased from 25% to 33% in volume terms and in value terms from 27% to 19%, 1-9, for the lower end of the range. So this basically means that consumers gradually are more and more interested in more expensive products. The same is true for espresso machines, where you can see that the average price has gone from 25% to 35.6%. That's the volume. And the same is true for vacuum cleaners, where the fourth quartile has increased from 25% to 35.6%. As you can see, it's very impressive to see that we're switching from 1/4 to 1/3 or even more, whereas at the opposite end of the scale, the lower end of the range over time is becoming less important. It's dropping from 25% to 19%. And this is really interesting. What is also very interesting is when you look at the next slide where you have the value. And here you can see that food preparation, on the fourth quartile that used to account for 33% of volume -- sorry, that accounted for 33% of volume this year accounts for 72% of value this year. We've talked a great deal about our companions, our heater robots and our competitors in this sector. But it would seem that we would hold -- that we would be threatened by the competitors' products. We wouldn't be able to achieve the sales that we wanted to achieve. And yet if you look at these results in terms of value, you can see that we're doing extremely well because the top of the range products account for 71%. It's true also for espresso machines, where you can see that the value of our top-of-the-range products is increasing. All of this is very important. It shows that there is value and that is in our interest to manufacture products with high-added value. Yes, the sales price is high, but the margin is also more high. And the icing on the cake is as follows. All of the products that we're talking about today, well, we're not talking about pots and pans much because everybody sells pots and pans, but we're talking about all of the electric cookware articles that we've gradually deployed and developed to our company, our pots and pans. We have lots of heating robots as we call them, and only 16% of households have this type of robot. So it means that there's plenty of room for maneuver, plenty of room to improve. And it's even better if I look at drinks preparation, for example, here, we're talking about espressos, we're talking about coffee. As you know, there's been a trend for the last 15 years to drink more and more coffee and to switch from filter coffee to dose-based coffee, whereby it's either filter coffee or Nespresso-type coffee. And as you can see, everybody now has new types of machines, and I'll speak more slowly so that the interpreters are able to follow. But basically, as you can see, we are doing very, very well in this market. Next, when it comes to vacuum cleaners, as you can see, few people have the more versatile vacuum cleaners. So we see here that there's also a massive amount of potential for growth in our industry if we focus on these. This brings me now to the emerging markets, and there are several points I would like to observe. First of all, we don't have one single developing countries. We have many developing countries, and they're everywhere across the board. Here you have our main positions. We're present in Colombia. We are very largely the leader notably in cookware article in electric products. We've made acquisitions over the years. We have a very strong business also in Egypt, of course, but also throughout Central Europe. In just a few minutes, you'll see another slide that will show you the growth rate for these countries. So I would simply stress that with the emerging countries, we have a massive amount of potential for growth. And this, as you can see on the next slide, isn't just focused on 1 or 2 small products. It concerns all of the product families across the board because in the developing countries, the emerging markets, the consumers, they don't want crappy old products, as one might say, that the mature market has given away. No, they want sophisticated, top-notch products whether it's for cooking or whether it's for electric ware and whether it's for their apartment or for personal care. So basically, there's a massive amount of potential for growth. Let me now refer back to a slide that focuses on correlating with the emergence of the middle class. As you can see, the purchasing power is increasing at the same time as households are gradually ramping up the number of devices that they have in their home. On the right-hand side, you can see all of the countries from Central and Eastern Europe, Poland, Slovakia, Hungary, Greece, Romania, Turkey, Russia. And you can see that -- and I'll say this now as I will say later on. For many, many years, we've invested a great deal of money in these countries. And over the last 2 years, notably, the average growth rate has amounted to approximately 30% in these zones. So these are great [ rebates ] for growth. And it's simply because these are countries that are -- that have emerged, that have developed because they're pretty close to the top of the curve. But it's important to think of the future. The future means China. I'll refer to China in a little while. As you can see, China is in a different part of the curve. And if we go to the left, we can see Morocco, India, lots of different countries that will grow, that have an extraordinary amount of space for growth. Thailand, for example, thanks to the Internet, and also Egypt, where we have a joint venture with a previous agent that now has a sizable plant. And they're going to be able to produce for the entire zone. Then you have Vietnam, Morocco that I mentioned, where we signed a joint venture. So basically, these are the countries of tomorrow. These are the countries that over the next 5 years are going to provide us with a massive amount of growth. Why do I say that this is the case? Well, there's one thing that is certain is that the middle class is going to continue to grow and develop in a very strong manner in the developing countries or the emerging countries as it says on the slide. This is an OECD document that dates back to 2010, and it has turned out to be true for 2020. And it gives you an idea of how many billions of inhabitants we consider members of the middle class in mature countries and also in the emerging countries. And it's in billions, billions of inhabitants. In 2010, you can see that there are 2 billion inhabitants on this earth that we're able to consider that they were members of the middle classes. In 2020, it was 1 billion still in the mature countries and 2 billion in the emerging countries. In 2030, we're not there yet, but we have the forecast that have been maintained and is said to be compliant with what they were in 2010. You can see an acceleration process. There will still be 1 billion in the mature countries. It's a little bit sad, notably for us, those of us who live in the mature countries. However, it will amount to 4 billion in the emerging countries. So in relation to 2010, there will be 4x more potential consumers for our projects in 2030 in the emerging countries. Of course, we mustn't take products from France. We must adapt products to the local markets, to their consumer habits in their countries. We need to respond to their needs, their specific needs. They won't necessarily want the same vacuum cleaner as us. It all depends on whether they have parquet flooring or different types of flooring. But at the end of the day, the products will be local products. And for this, it means local costs because we will have to sell at products -- prices that are adapted to the middle classes in these countries. And they have to be top of the range. So I repeat, we have to have local costs. We won't be able to produce in France for these middle classes, so we need sizable sales teams. In China, we have over 6,000 demonstrators every day and over 12,000 when we're in what we call the real promotional period. So it fundamentally means that we have to have marketing teams for the projects because it goes without saying, as I said, we sell products that are in line with local consumers' needs. And when we talk about tailoring our products to China, of course, as French people, we can work on the different devices. But it's better if you're Chinese, when you're manufacturing products for soya, you know more about the product, its history. And this is why it's been explained to us that we absolutely have to perform many acquisitions simply so that we're able to have the right teams in place. It doesn't mean that we need to have a factory in each country, but it does mean we have to have one in each region. And we have hubs for developing products for each sizable region. So basically, our business is growing with an extraordinary outlook for the future. Let me now talk to a certain extent about the creation of value. And for this, I'm going to pass the floor over to Stanislas.

Thank you, Thierry. Now we've just had to look at the different types of leverage that exists, and these all explain why our market is a fast-growing market. It has been, and it will be in the future. It's basically because our markets are based on demography, based on consumer behavior and based on consumer expectations, and exactly what we do at service to take into account what our clients need. Innovation is very much at the heart of our growth dynamics. It's the start, the middle and the end of our product development. And if I talk about innovation, I think I could equate it with the fact that we ramp up our ranges, we improve the product mix, we invent new categories, new segments. But to basically summarize what innovation is about, we work on all of our product categories. We work on all of our markets. And very often, we have sizable innovations that are specific to a market or groups of market. And innovation can vary a great deal. Rather than giving you a long-winded speech on this, have a look at a film on the subject. [Presentation]

So innovation is very much at the core of our growth dynamics, at the core of our business. And every year in a very regular, consistent manner, we provide both innovations for ramping up our range and also breakthrough innovations, either through the introduction of a new function service or technology to serve our consumers. Here you've got different breakthrough innovations. Take factory in 2018, IXEO, that was the first garment steamer. Next, you've got the different ranges, Cookeo companion that came out in 2020, and they provide excellent service and support and assistance to consumers. And more recently in 2021, you have the X-O vacuum cleaner that was launched in 2021. And it's first -- it's the top vacuum cleaner that combines power with lightness and flexibility, very easy to -- handy, very, very versatile. And then, of course, you have the heating robots in China or the WMF coffee machine that no doubt, I believe, will be the great start of 2022. Now what's very interesting in this approach relating to innovation is how we actually go about responding to customers' needs and requirements and ramping up the range. Let's look at all of our product categories. And the question is, well, we have market trends, as Thierry has said. And do we manage to be one step ahead of these trends? Let's start with the cookware article, and let's have a look at our Tefal range, and you can see the prices, you can see how we've gradually ramped up the range. We have the average price index that amounts to 270. So if you look at the category sauce pans, for example, nonstick sauce pans and frying pans, you can see a gap between the low end of the range products and the high end of the range products. Then you've got all of the projects, for example, at about 330 where the handles come off. And then you've got WMF that have a price index that amounts to approximately 670, 100 being the reference. So even in a category that we ourselves describe as being not very open to innovation, or that's what some people say, we are able to innovate considerably. We see many, many opportunities for creating value, and the figures are a very good illustration of this. Now of course, it goes without saying that you can see the same phenomenon for kitchen electrics. You've got the starting price of 100 for the low end of the range products. Cookeo today has a price index of 150. And within the same Cookeo range, you can see the Cookeo Touch that amounts to approximately EUR 300 in terms of its price index. So we are basically capable within the scope of these 2 categories to ramp up the range quite significantly. And this applies also to the other categories -- the other cookware categories. You have food prep, for example. You've got Click Chef, the i-Companion, the i-Companion Touch XL. We go from 100 to 350 to 650. This is also -- this also applies to beverage preparation, where you have a starting price of 100 through to 400 for the WMF perfection machines. This is at 400. It's not only in the kitchen sector. It's also in linen care and in home care. When it comes to home care, if you can show the slide, let me now move on and say that the steam station has a price index of 100. And we also sell the Pro Express Vision products at 300. And then the last one is our X-O vacuum cleaner at a price of 300. And the price index for the start of the range is 100. [Foreign Language] is, of course, a leverage for growth. But not only for growth, the consumer today is waiting for us to enrich their experience with a multichannel approach. The consumer is very mobile and agile, what they do online and in actual retailing centers. And most -- 40% almost of our sales that are online. And this is true either with our own networks and those of marketplaces. And we have our own stores. For example, in China, we develop applications of different brands. And in 2021, we had 100 million connections of clicks. So more and more people are looking for connected products and looking for service and added value through connection -- connected product. We are one of the pioneers of the circular economy. We have 6,000-plus repair people. We have 4 years of stocks for replacement parts. And we have guarantees of 15 years now for many of our products. And we are looking at ways of making SEB one of the major players in the circular economy now and in the future. That's what I want to say in terms of SEB's actions. So what does that mean? It's true that when you innovate and you give the consumers increasingly sophisticated products and that correspond to their needs and that we also look at how they buy their products and use their products, we move forward in market shares. Here on this slide, on the bottom, you have all the products we're #1, we're talking about the world here, but where we are either #1 or #2. We have only 75% of our sales, which are in a country where we are the leaders. I showed you that profitability is proportional to the size of markets, and that's why we're always looking for an increase in market share. And in -- we're #1 in cookware everywhere in Europe. In purple, you see where we're #1 in small electric appliances, and blue is where we're best in both. So over the years, we are reinforcing our market shares. And we are succeeding because in 2021, we progressed in our market shares. Perhaps, a last example for Supor, which is nearly 20% of our sales and which is very important, we have been in China since 2006, and the acquisition was completed in 2017. And we consider that this is a very strong growth market. We're coming to the growth of the middle classes. In 2010, you had 400 million people. In 2020, 700 million, and 2030, 1 billion people. So you see that the population will continue to grow many, of course, in what the Tier 3, Tier 4 categories out cities, that means outside the bigger cities that are very developed notably in the East China. So we see that in the entire country, we see that there's still a lot of room for growth in equipment. There's a big difference between the East and the West of the country. And we see ourselves, because we have 12,000 of people. And then the demonstrators, we have 7 or 8 factories as well. So there will be more of a middle class in China who will want to consume more. So we see this rise in what -- towards the middle and high end. And I'd like to come to one thing, which is that China always traditionally had a main driver, which was the -- where it was the factory of the world, where it was the offshore country towards China, where there's textiles or -- and has developed where it was not the case before. And the second change was the infrastructure. If you go to China, you see how much China has changed for 20 years with airports, roads, fast-speed trains. And today, the regions are quite [ indebted ], and I should have said that before that the independence towards the bigger markets in the West are things that they are worried about in the future because of the economic war between the -- of China and the U.S. and the lack of confidence in Europe. So the driving force in the future is what the consumption within the country, which will be based on a growing middle class and growing purchasing power, and that's where we are. We don't -- we're not involved in exports, and we're very confident. We also are looking at a slowdown of China's growth. In 2006, when we signed our contract with Supor, we had about [ $2,000 billion ] with 12.7 growth per year, which meant 350,000 -- 350 billion in growth per year. In 2021, these are definitely -- will be at 14,000 billion to 15,000 billion, in other words, 15 trillion in China and a growth of 6%. That's 840 billion in growth of GDP in a year. So the rate is low in percentage terms, but much higher in value, which percentages are a good thing. But the main thing is it's really the actual cash that's generated. So this country will continue to develop. And their growth is exactly in line with what we know how to do. We see products here, which are really just as sophisticated as those in the West with infrared rice cookers; with blenders, which are high-speed machines; with woks, which, of course, a major part of Chinese cooking with titanium and antirust. And you see the Thermospot, which means that the sales price of Supor is above the average of the market, both online and offline. That creates a lot value for the consumer, but it would only be valuable if it was better for consumers. We don't see it very well on the slide, but we see what we did in -- with Supor mainly in 2000. They're very rudimentary machines. And then it became more and more sophisticated with spherical parts. And then we then had to be shallower, wider, and that meant that there was more contact with the heat and then a little bit of induction, infrared reduction, which means that the products are increasingly sophisticated and have better cooking results. Now this is better for the consumer, of course, means that there's an improvement in the price/mix because between a spherical part in 2013, where it was up 309 RSPs, where today with the latest shallow part, 2.0 with a product that is worth 2.3x more and -- which means it's more than double the price. So the price is higher and the margin is higher. And for the group, that's exactly what we're looking for. And of course, China will remain a strong market because of premium products, and in particular, in the East Beijing, Shanghai, [ Guangzhou ] want more and more sophisticated products. But they also are attracted by new product categories. We have the fryer, the oilless flyer. And then -- but now, the market has been created. We have the cooking food processors, which we have in Europe, which are slightly different because the food they cook is the same, but it's the same principle, the floor cleaners, and we have really way ahead. We have integrated gas stoves as well, and we have other products such as cleaning vacuum cleaners with mops, so you can clean the floors that are really huge lines of products. And our Supor products are developing in every single category, which allows us to increase our revenue sources. But of course, we're capitalizing, as Stanislas showed before on the transformation, which is very, very important. On this slide here, you have the amount of online sales that has gone from 2019 from 53% to 65%. It's a huge growth level. It's very different in terms of cookware and electrical appliances. But I think it's a country that's gone furthest in its online sales. And we began, like everyone else on T-mall and JingDong. And now we went, of course, to [ Fandango ]. And now we have all of the social networks, such as TikTok. So we are a major player on Internet sales. And in the 11/11, which are the days for bachelors, it's a huge, huge days for sales. And those have gone up by 15%, and the multichannel sales are a reality. The big groups are online and offline. We can no longer talking about people who are on one or the other, but everyone is in both, and a real success in direct sales with a fourfold increase in our own e-commerce platforms. And with the most important point is that our online sales today are more profitable than offline, which was not the case before, and one of the biggest leaders in China, like all the major leaders, were above all offline players. The last slide on China is to say that we're #1 in cookware and spontaneous awareness, #2 in domestic appliances. But we are #1, of course, in perception of innovation on the Chinese market. And we are very far ahead in cookware online with 22% with a very fragmented market, but 49%, where we have almost half one wok or pan or pot sold in China is Supor brand. I don't know if you can imagine how many products that means, which is a very solid #2 in kitchen electrics with 21% online and 30% offline. I think in offline, we are #2 as we say here. We have about 95 -- 90% of our product lines. So most other groups cannot enter into that market. That's why we can reassert regularly our confidence in the Chinese market. So I'm sorry, I've been a bit verbose here on this part, but important of what we did into 2021 within our business. Nathalie?

So it's true that this very high-growth market and the capacity of the group to create value allowed us to have fantastic performances in 2021. As you can see on this very first slide in -- for the finances, we have over EUR 8 billion in sales, which is organic growth of EUR 1 billion in 2020, in fact, EUR 1.79 billion. Operational results, ORFA, which is above 10%. So we're back to a double-digit figure, and we demonstrate the resilience of the group and its business model by having to compensate to $300 million of the headwinds that what we call such things as raw materials component. We took the increase of raw materials, components, freight and currencies. And despite that, we have compensated -- we'll come back to the operational results between '21 and '20. I would say EUR 8.05 billion, which is a constant term in constant currency; EUR 813 million in ORFA; EBITDA, EUR 1,041 million -- EUR 1.041 billion, which is a 22.3%, and net profits of 51%. For our balance sheet, we have -- we had capital expenditures of EUR 284 million, 3.5% of our sales. Our net debt is stable compared to December of 2020, despite the activity going down slightly. And our leverage between IFS at 1 -- IFRS is 1.3 and 1.5, which means that's 2.3 increase compared to last year. Let's look at sales first. When we look at the last year's sales and this year's sales, we've gone from EUR 6,940 million -- EUR 6.940 billion. We went to EUR 8 billion. We're talking billions instead of thousands of millions. And there's a currency effect of minus 22 and a scope of plus 62, which means that when we look at currencies on sales, it's minus EUR 22 million with the trend, which transformed itself during the third quarter. On the first 2 quarters, we were on a negative effect and then -- which improved and especially with the improvement of the Chinese yuan. In terms of activities, we have EUR 628 million in the Professional market, so a rebound that was confirmed in the second half of the year in Professional activities and a huge growth in retail sales, where we have EUR 16.4 billion increase. For Professional Services, we have -- to growth since the second quarter with 2 reasons for that. First, our current activity was based on innovation. We continue to put out new products for the Professional markets. We extended our portfolio of customers and also a certain number of deals, big contracts, which were a catalyst for growth, [indiscernible] and other deals in the U.S., which allowed us to have a very good fourth quarter at 14.4% in growth in the same -- in our existing structures. I've already said that there's been increase of all of our territories. We have had growth. Stanislas will talk about that -- for everything except for fans, with e-commerce remained a driving force for growth, the quality of sales because we benefited from the market that was less promotional than it was in 2020. The sales were, of course, sustained by driving forces. And then we had a much higher -- we try to limit our price increases because of cost of sourcing, and we improved our product mix.

Let me just comment on the sales in terms of the territories to perhaps underline 2 or 3 things. First, the contribution of the 3 regions of the world, the Americas, EMEA and Asia in terms of growth, we note plus 18.7% in EMEA, which is remarkable given the size of the market. Even the mature markets have a huge potential for growth. In the Americas, you have 2 comments, perhaps, is that these figures integrate StoreBound for EUR 62 million during the year, but it's still 13% to 14% of organic growth. You have a negative growth in fourth quarter because of the problem of supply chains, because of the closure of -- between August and October, where we had closure of our factory in Vietnam, which impacts these figures. And I will go back to Supor in Asia, where we have plus 10.7%, which has been very robust. When we look by categories, by product lines, the stars of the year was, first of all, home care. And with a big increase in versatile vacuum cleaners, especially in the higher end, also huge robot vacuum cleaners with a very high increase. And what we haven't seen -- we don't see in these figures yet, but X-O, which was launched in France where we have a huge potential. Then electrical cooking, that's a second category of work after cookware, the growth is driven by several categories of products, Cookeo, the automatic pressure cookers, the OptiGrill also has an extension and oilless fryers with EZ Fryer, which is being developed, not only in Eastern Europe, but also in the Americas. And here we have a very healthy growth through innovation and expansion of different categories and an increase in the level of these products. So there's a lot of growth that was driven by loyalty products, but that's not just the G6 product line was [indiscernible] over the year. Ingenio has had a fantastic year, a record year, innovation, higher-end products in all territories. And drinks which have gone up by about 15%. And we see large amounts of growth in coffee machines, which are fully automatic, which -- with our grinding machines. We're in 2022 with WMF, which will be very high end, and I think which has a lot of potential. So that's to give you the winning categories in 2021, cookware, appliances and floor cleaning.

We'll go on now to the results with this first gives this year the sales, the ORFA and the operational margin of the group. So we have EUR 813 million, which is once again a big growth considered to 2019, which means we have a 10.4% increase in operational margin. This slide explains clearly how we got to this operational profit level in -- compared to 2020. We had EUR 605 million in ORFA in 2020. We have a lot more volume, both in terms of Professional and general public for EUR 513 million. This year we had a great deal of comment. We saw huge cost in raw materials and, in particular, maritime transport, and that was a negative impact on our cost of sales of about EUR 120 million for the purchase of raw materials and components, and EUR 136 million in transport. This EUR 270 million of negative impact was really well compensated by overhead costs compared to what it was in 2020 and also by our increase in productivity on our production sites, which allowed us to limit on -- the impact was EUR 180 million in terms of the cost. We had a very big premix, EUR 387 million with components that are very important. For example, we had the increase in price. We went systematically in all countries where the currency was going down compared to the euro. This is true for Brazil, for Russia, for example, Turkey, and other increases in prices that we wanted to pass on in a limited way. We work more on the enrichment of our mix, like Stanislas was saying in the first part of this presentation, both on renewal and innovation on our products. We also -- as I said before, we benefited from a market with more promotions. And so we had a sustained sales level throughout the year. And the other element is that we had a better mix in channels of sales with more direct-to-consumer sales for most of the group, which means that we have a unitary sales price that's higher because it's retailing directly. The other elements are quite simple to understand, the increase of the driving forces, things such as the other cost involved, administrative, for example, and the impact of currency, which is EUR 26 million, EUR 25 million, which is a negative -- which -- EUR 25 million in 2021. Most -- also a negative effect on the cost of primary raw materials and transport as we've talked about before. For the growth drivers, you see that the group continued to invest in innovation with a strong acceleration compared to what was spent, EUR 228 million. For advertising and marketing, 2019 and 2020 are pretty close together. There was a lot of acceleration at the end of 2020. We continued in this manner, and we spent 20% more in advertising and marketing compared to 2020 to sustain our growth on high-growth markets. I will now go to the operating profit EUR 813 million in 2021 compared to a huge growth, which is greater than that of 2019, which shows the performance of our activities in France, whether we're talking about retailing or production in France. The other products and our expenses are down by 20 -- by EUR 20 million decrease to minus EUR 59 million. And this is due to the streamlining and the closing of production sites in Germany and in Shanghai. When it comes to net profits, EUR 454 million for the group, EUR 301 million compared to last year, an increase which is very significant, 51% with our financial charges, which is very controlled, and with higher taxes with great growth, which, of course, means that this is because of our net results, but also a very small increase in the effective rate because activities in France are higher in the mix compared to the other group -- to the other parts of the group in 2021. Minority interest for EUR 54 million are mainly support and, to a lesser extent, [indiscernible] and our partners in Egypt. Now we'll go to the simplified balance sheet. As you've seen, an increase in our BFR for operations, which I'll comment soon. And I'll -- there is an increase of our results, of course, and -- because of positive currencies and which are diminished by the dividends, which were diminished in 2020. Concerning the need of BFR, our need in rolling capital, our WCR for operating cost, we look at the customer of clients was quite good. There was -- there were no problems on our receivables from clients, and we have better recoveries. And now we have less than 10% of our sales, whereas with 14% in 2019. Inventories have increased mainly because mechanically, there's been a fact that in value that the cost of components and raw materials and transport have gone up, as we've said. And you have also that, during the entire year, we had a policy of buying components and finished products to compensate for the supply chain problems. We preferred to make and stock rather than miss out on sales, which meant that this had higher sales. And the last, we still have self-financing from our suppliers with now more 18% of our payables, it's almost 19%, in fact. This meant that we had less of a need in working capital of EUR 267 million at current currency rates and the ratio of the working capital on sales in the 2020. This was due to the seasonal approach and COVID, which is unusual when compared to 2019, where we've improved of this WCR on sales. Now we'll go to free cash flow generation to comment on what has -- that impact this has on the balance sheet. The EUR 813 million in ORFA corrected by participation and interest, that's also with amortization, which means an EBITDA which is adjusted at EUR 1.041 billion. And then the change in operating WCR, the investments, EUR 284 million, which is 3.5% of our sales. The tax and interest paid of 174 -- minus EUR 174 million nonsignificant -- nonoperating, which means that we have free cash flow of EUR 306 million. That can certainly change in net financial debt with EUR 1.5 billion at the end of 2020. This improved because of the free cash flow, which allowed us to pay our dividends, starting on the right, EUR 120 per -- for the SEB shareholders and the rest for the small shareholders, but also meant that we bought back about 100 billion in the acquisition of our own shares. And the idea was to allow us to serve our medium-term actions. And there's also elements of revaluation of the acquisition debt for StoreBound, the investments in our venture capital, SEB Alliance, and then restructuring costs that we paid, which were EUR 72 billion -- EUR 72 million. The last element for our debt, the group today has EUR 3.337 billion in assets. You can see we are financed for both short and long term with 10 years for NEU CP. And then these financial resources, once we have means that the -- we have a debt in cash and equivalents at EUR 2.23 billion, which would mean EUR 335 million in IFRS and noncash by financial aspects, which means we got to EUR 175 million to allow us to have EUR 1.5 billion to EUR 4 billion. We also have a lot of headroom with the ability to have up to EUR 1.4 billion, and we have no -- any [ weight ] on this. To conclude, as far as I'm concerned, before I give the floor back to Thierry, the evolution of our financial ratios for the long term with a gearing, which is 0.5 at the end of the year and where we have 1.3 outside of our IFRS and 1.5 IFRS, which is -- means that we have [ 0.83 ] on the fiscal year. Thank you.

Thank you very much, Nathalie. Now given these excellent results, the Board of Directors of Groupe SEB that came together yesterday has decided to propose to the general meeting on the 19th of May a dividend of EUR 2.45 per share, up 14.5%. Let me remind you that any shareholder -- or rather all of the shares owned for longer than 2 consecutive years will receive a loyalty bonus of 10%, so EUR 0.045. Also on the slide that is on the screen, you have what we call the annual TSR over a period of 15 years. And as you can see, it amounts to 11.3%, so this is the dividend reinvested. So as I said a few years ago, it's better than a basic savings account in France. And so I hope that you agree with this. Our evolution is very healthy, and it gives us plenty of room to be ready for new adventures using our equity for new acquisitions. Let's look at the outlook now. I apologize for coughing. What can I say about 2022? Well, I'm not going to go into detail on our performance. However, of course, our 2021 performance was up markedly versus 2019. It's far too early, as you can imagine, for me to talk about what's ongoing at the current time with the crisis. However, I think, first of all, I repeat, let's start with 2021 and say that Groupe SEB is now stronger, thanks to these last 2 years, despite COVID. Our performance for 2021 is not only up considerably compared with 2020, but also up markedly versus 2019. 2019, that was a more standard year, a very, very good year, an excellent year if we look back. It's important to note also that we have growth in all our regions and in all our product lines. Our leadership has been reinforced in the small domestic equipment market. And I believe that it's quite possible to say that what underpins the group and has been for the last 20 years or more, it's our capacity to show resilience, strong resilience in terms of our business model. Because as Nathalie said, we've had approximately EUR 300 million in headwinds concerning currency, freight, raw materials. And despite all of that, our business activity has enabled us not only to offset all of these headwinds, but to make considerable progress in terms of our operating profit. And we have an operating margin level that is greater than 10%, which, as you know, is the group's main criterion to be between 10% and 11%. So for 2022, if I go back to my slide, we believe that we should be able to show growth in sales for both the Consumer and Professional activities. We are fully confident that we are going to be capable of absorbing any additional cost that come from supply chain and from currency also. Here we're talking about freight and raw material for the supply chain and current -- currencies globally speaking. They should be negative for 2022. And of course, we believe that we will be able to increase our operating result from business, increase our offer and continue the rollout of our strategy, one that now involves innovation and international development. And this is the business model that we deploy and that will continue to underpin all of the group's business activity. So that's what I wanted to say to you. Thank you very much for having listened to us, and we're now ready to answer any questions you might have.

Are there no questions? I just wanted possibly -- is everybody able to hear me? I just wanted to say a few words. [Operator Instructions] Christophe Chaput has a question.

Yes. I hope you're able to hear me. Yes. I have a few questions, in fact. First and foremost, I wanted to refer back to the last point that you raised. In other words, the fact that you have a very healthy balance sheet, and I wanted to talk about acquisition opportunities that you have in your sector. Do you believe at the moment that you have more opportunities than 2 years ago? Or is there very little change in terms of the landscape, the competitive landscape? The second question I have concerns the results for 2021 that are very, very good that have been impacted by the headwinds in terms of freight, currency and also raw materials. What do you consider to be the cost of these headwinds potentially for 2022? And next, the third question I have, if you don't mind, is as follows. What about the promotional intensity? Now of course, this was very limited in 2021 because demand was very, very strong. Do you think that it will be possible to reduce it further for 2022? Or is the level historically low already and maybe there will be less leverage in 2022 for this sector?

Now maybe I could answer the first question, Nathalie the second and Stanislas the third question. That way, it's all very well shared out. Your first question, let me refer back to that. I believe that the circumstance is not the most important element in our industry when it comes, let's say, to the M&A business activity. As you know, ours is a group where -- well, there are lots of family groups around, and some family groups suffer a great deal in the situation of a crisis. In the Consumer sector, we didn't really suffer. We did in the Professional sector for Professional Coffee. And basically, what happens in a lot of family groups is they change owners when, for example, the head of the company realizes that the children are not willing to take over, and that is when they sell out. And that's often when we're able to make acquisitions. Also funds own certain groups, certain companies. And then it's the fourth, fifth or sixth anniversary that brings about the change. But if you were asking me to talk about a specific moment, I don't think that now is necessarily more or less favorable. However, I'm sure there will be opportunities. There are opportunities. There are files that we're working upon. And so I hope that some of them will lead to a positive outcome in 2022 because, of course, as you said, our balance sheet makes it possible for us to look at acquisitions. And we -- as is standard with our group, we will continue to progress in this area.

Next, concerning the headwinds, yes, Christophe, just to refer back to the question that you put and, once again, without taking into account the impact that today we're not able to evaluate in relation to the current geopolitical crisis, we have prepared, of course, our budget for 2022, taking into account the idea that we would have EUR 220 million of headwinds approximately compared with 2021, roughly EUR 50 million for exchange rates. And the rest, we believe that will be spread over the freight or the transport sector and the purchase of components and raw materials.

And let me add that as we said in the slides, we have growth that is scheduled in terms of our ORFA, our operating income, which means that we will compensate for these headwinds. And as a result, we will manage and we will measure the potential increase of the tension on promotional offers, so that we're able to manage all of this efficiently. Now if we look at what's behind your question, I would say, in relation to the first point, yes, it's true that I think given the economic climate, I would say, things are slowing down to a certain extent in terms of the benefits we can get from promotional offers. From a positive perspective, nevertheless, continuously, we are upgrading our product ranges. There's a tiny bit of inflation in terms of prices. So there is an improvement from our perspective in terms of our premix for 2022, even if it's a bit too early to say. It's very hard to say what the impact of inflation will be, what the impact of the retail networks will be, the price, the upgrading of our ranges and so on and so forth, and the impact of promotional offers.

The next question is from the line of Alessandro Cecchini from Equita.

Can you hear me?

Yes, we can.

Okay, okay. The first one is about actually what is, at the moment, the consumer sentiment in your major markets. So if you could elaborate a little bit on the start to the year in the Consumer business in your main geographies. My second question is about price hikes. I would like to better understand what kind of price hikes, so your pricing policy in your main product categories and, I mean, in your main geographical areas. And finally, my last question is just a little bit of follow-up. If I understood you correctly that you are basically assuming EUR 220 million of headwinds for 2022, excluding, of course, potential new geopolitical issues in Russia and et cetera.

All right. So Stanislas first then me, Nathalie, 2 to 3.

Yes. On Consumer sentiment, your question is around the start of the year. I would say that if I go around our geographies in Europe, the start is moderately positive, with some very good start in the Eastern part of Europe starting in Germany and some short-term tensions in France. I think one of our retailers have published their results, and they have mentioned that. China has a very positive start, much better than the market, and that's very positive. And the rest of the world is on a slightly positive number. So if you ask me, there's a lot of uncertainties on the way the markets will develop as the year unfolds and as we come across very demanding comps. But today, we are facing January up until mid-February, which is rather positive than negative or neutral. Nathalie?

Yes. So as far as pricing is concerned, I think what we will do will be very much in line with what we have done in 2021. So first, we are relying a lot on innovation and new ranges of products that we are putting on the market because it's a nice way to increase prices. Then there will be limited price increases on the current price list, and these are either currently being discussed or have already been discussed with our customers, depending on the geographies. Of course, as usual, there will be a compensation on price, which is more, I would say, mechanical in countries where we have devaluating currencies against the euro. And last, as I mentioned, already for this year -- 2021, I mean, we will also benefit from an acceleration of our direct-to-consumer business. As you know, when selling direct to consumers, we are having a revenue recognition based on the retail price and not the price to distribution. So that's also a way to significantly increase the price/mix for the company. So coming back on the headwinds, I mentioned EUR 200 million, EUR 50 million in FX, and so the remaining EUR 150 million for the purchase of components, raw mats and for the freight.

Is that clearer?

Typically, the situation in term of headwinds inflation, it seems better if your guess for 2022 is correct than 2021.

Well, it's adding up. So we have covered for EUR 300 million in 2021 compared to 2020, and it's an additional EUR 200 million. So if you were to compare with 2020, it's EUR 500 million that we will absorb.

You said steady pace of new product launches. Besides the WMF full auto consumer coffee machine, what else that are we expecting in 2022? Any new breakthrough products? Stanislas?

Breakthrough products, I don't know. Consumers will tell. We have this X-O vacuum cleaner, the canister vacuum cleaner cordless, which has the power of canister and agility and lightweight of a versatile that is going to be a hero. We have a very strong plan on Ingenio. We are developing substantially our electric pressure cookers, EPCs. And we are also expanding a lot in China and Asia with infrared rice cookers. So we have a strong innovation plan in Supor and in Asia. We have a new generation of high-speed blenders in Supor, which have a lot of potential. So all in all, I wouldn't say you're going to have a hero product. But we feel and we reckon we have a very strong innovation portfolio for the year to come, and we are very confident that this will deliver good results.

Nathalie, what about the question concerning our exposure in relation to Russia and Ukraine potentially?

Yes. Okay. For the rest, maybe it's less relevant. Well, when it comes to Russia and Ukraine, they account for just under 5% of our revenue, with the higher percentage being in Russia. In 2021, that was the case. And globally speaking, however, when it comes to 2022, even if we're not -- well, when we put together our budget, we, of course, didn't anticipate on the situation that we're currently seeing and that we've been discovering for the last few days. We were very cautious regarding our capacity to develop our business in Russia and also in Ukraine. So we were thinking that our business would equate to the business in 2021.

Do you want me to deal with the WMF question? Yes. We have 2 questions on WMF. Can you give us an idea on the level of profitability of WMF and how things will evolve in 2022 in relation to 2021? Then we have a question on Professional Coffee. How long will it take you to ramp up the business activity to former levels? And what's happening at the current time. So concerning WMF Consumer, let me say we're very happy with the progress made in 2021. The revenue is up. The profitability is up. For the Consumer sector, we're getting close to the results we want to achieve. And for the beginning of 2022, we've seen that things are quite dynamic. When it comes to Professional Coffee, as we said, 2021 was a year whereby since the second and third quarter of 2021, we started to see that the market was beginning to recover. It was a much better market. We're seeing that in the fourth quarter for 2021 in Germany, in particular, the levels were the same as those in 2019, which demonstrates very clearly that the business activity and the recurrence of the sales to our clients were there. We don't know whether in '22 we'll reach an all-time high. But we do know that in 2022, we'll make considerable headway, and we're counting on the Professional Coffee sector in terms of the margin and in terms of the sales to be a major contributor to the group's growth in 2022. As I said, will we reach an all-time high in 2022, 2023? We don't know, but we are heading in the right direction. Yes, and we're not worried at all about the Professional sector, which is extremely dynamic and is one step ahead as far as we're concerned in terms of intellectual property and in terms of innovation. So I think that it's a business activity that is doing very, very well. Yes, the business activities suffered in 2021. But the service contracts, the start-up again in Germany shows that we're doing very, very well.

Taking back market, can you give us more details on your indirect stake in Back Market? Has SEB taken a significant stake? Can you provide more information on your partnership as well? So what I would like to -- for those who don't know, Back Market is a start-up, which has been -- it is involved in the sale of the organization and sale of secondhand products in our industry. We are -- through our SEB Alliance, we have taken a stake in Back Market. It's a minor stake. It's just in order to be able to develop a partnership with the teams of Back Market and learn more how they operate. At the same time, we are also starting the sale of second hand through our own retail and especially the SEB store -- RépareSeb, I'm sorry. Thank you. RépareSeb, which is located in Paris and their teams are only small and -- which is basically a workshop, which where we -- consumers or retailers can bring their products, which have a problem of functioning, and we repair it. And we do -- we have started some sales of second hand. So it is just a start, but we strongly believe that the second hand sales will develop and will certainly be part as well as we are certainly leader in the repair of our product -- of the products. We will be a leader in the sale of second hand. A question over the phone that we are ready to take.

A question from a gentleman from BNP Paribas.

Yes, I've got 3 questions, in fact, that I'd like to put. The first question is as follows. In your statement of accounts, you've talked about the derivatives, the instruments that have increased considerably in 2021. I imagine that it's your hedging policy in terms of raw materials. So I simply wanted to have a bit more information on that, if you don't mind. Can you talk about your hedging policy? What do you hedge exactly, to what extent and with what horizons in mind? And my second question concerns the 2020, '21 ORFA results. You talked about the bridge, and you talked about the sales bridge, EUR 189 million. So it means that you've managed to offset the headwinds for EUR 300 million. Can you go into detail a bit on the enhanced absorption of these elements? And the third point is a more general question concerning demand. A lot of observers expected that there'd be a drop in demand after an exceptional year in 2021 and after a return to a more normal post-COVID life. It would seem that this isn't happening. So what are you anticipating? Do you think there will be a slow down? Or do you think on the contrary that the market is going to continue to grow?

Okay. So most of these questions are going to be answered by Nathalie. And maybe Stanislas, you can answer as well.

Yes. Concerning our policy, our hedging policy within the group is to -- our aim is to protect as much as possible the financial performance that we expect for the financial year and to look to the future. So we have a policy, a hedging policy, whereby we look at all of the different currencies that the group is exposed to. And we make sure that we take -- we adopt positions for up to 18 months in relation to the date on which I'm talking about. And this, fundamentally speaking, I would argue enables us to be less exposed when there are movements, major movements on the currency markets. Basically, it gives us the opportunity to absorb any impact, thanks to -- or because of price changes. So we have 2 long positions -- or sorry, we had 2 buy positions on the U.S. dollar and the Chinese yuan. These are positions where we buy components, and we also manufacture our products in a majority manner. However, we sell on all of the other currencies in our basket because the group performs retail action in virtually all of the countries around the world. So we sell for -- in a wide range of currencies, and we hedge them in most cases. Next, when it comes to raw materials, specifically, we either have hedging, direct hedging of our purchasing notably when it comes to aluminum, for example, when we make futures purchases. Here we have hedging that enables us both to cover for the price of the aluminum and also the currency. And in other situations, we perform hedging with futures instruments, and we make purchases on the physical market in an independent manner. We always do so, as I said, with a long-term vision. We also have hedging that gives us the opportunity through derivatives to cover a certain number of cost ratios for the group. Here I'm talking about hedging on the nickel for stainless steel. For the plastic materials as well, we do exactly the same given that we use a lot of plastic materials. So that's what I wanted to say to answer the first part of your question. Next, the second part of your question concerned our switch to offer between '20 and 2021. So with an impact on sales, a negative impact of EUR 190 million, this was offset, as we said, by the transport headwinds, EUR 270,000. We enhanced productivity. So this is in terms of the direct labor that we estimate at EUR 30 million compared to 2020, and enhanced absorption of the fixed cost for production that we consider to amount to approximately EUR 50 million. This is in relation to 2020. So it's all of this, the headwinds, better absorption, better productivity that has enabled us to have, as you said, a negative impact of EUR 190 million on the cost of sales.

Let me continue possibly with the answer to your third question. This concerned the trend for demand. I don't have a crystal ball. And as I said earlier on in my introduction, we are dealing with markets, some of which are very dynamic. Others, maybe a tiny bit more sluggish at the current time. But let me just remind you of 2 pieces of information concerning how we evaluate our markets. Fundamentally speaking, our markets are extremely sturdy. We wanted to spend a bit of time with Thierry de La Tour in order to explain to you exactly why we believe that our markets are growing structurally speaking and sustainably. Our fundamentals remain very, very strong. Yes, maybe there was a positive impact or speed-up impact because of COVID, but there is nothing in consumers' behaviors or attitudes that would justify us calling into question our fundamental growth in our market, both in developing and mature countries. The second point I wanted to raise is that we are confident as to the group's action plans in terms of innovation, in terms of ramping up our product range. As Nathalie said, we have moderate actions, but we do have actions in terms of prices. So fundamentally speaking, we have a whole range of actions that make us very confident in our capacity to maintain a level of business activity that shows growth. Next, of course, you can perform the analysis yourself. We could talk about the first half of the year and inflation. The question is, is inflation going to have an impact on demand? There are these persistent headwinds that could potentially have a multiplying effect on inflation as well and an impact on demand. Some people might say 2022 is a year where France is a massive market. Election year means that people spend less. But basically, we believe that 2022 will be a good year in terms of our turnover. We believe it will be a positive year in terms of our operating income as well because we think that all of the action plans that we're deploying should enable us to achieve our results, of course, in a context. Nevertheless, it's complicated from a geopolitical perspective. And 15 days ago, it wasn't the same one.

I would like to go into some detail about the CapEx. So do we include that in the figures in 2022 the IFRS? It's in the EUR 284 million, precisely for EUR 74 million. And concerning 2022, it would be a very different year with an acceleration of our investments, in particular for an increase of capacities, production, but also for inventory and logistics. You obviously heard about the decision that the group took to invest in a logistics center in the North of France, in Bully in the Hauts-de-France region for 180 -- for EUR 85 million. So a lot of the CapEx will be spent in 2022, and we'll also have an increase in IFRS. And so we'll have a CapEx for 2022, which should be close to 4.5% of sales, which is an increase -- which is a significant increase for the coming fiscal year, including IFRS, of course. Now generally, we say at the beginning of the year, we said the increase of sales and operational profits. Now what's happening in the world, allow me to not make too many comments here. We'll have many opportunities to talk about this. But at this stage, there is growth.

So no more questions? Who wants to answer? Maybe I'll -- maybe you'd like to conclude. If there are no more questions, perhaps, just to finish up or we think -- first of all, I'd like to -- the people who congratulate for our results. It's always a pleasure. I think 2021 was an extraordinary year for the first time for us that we went EUR 8 billion in sales and increased both in operating profits and EBITDA in a year that was complicated after 2020. So we're very happy that the group was able to reach this result of -- this level of results. So I'd like to thank everyone in the group because life has not been easy in the last 2 years with COVID. All the teams all over the world who are highly mobilized, I'd like to thank also. I would like to thank you as well for having participating here. We'll see you on the 28th of April for the financial results of the first quarter of 2022. And I thank Nathalie and Stanislas for their presentation. And all of the teams who organized this meeting, thank you very much. Have a good day and a very good weekend as well. Thank you. [Statements in English on this transcript were spoken by an interpreter present on the live call.]