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Welcome to Sonae's First Half 2021 Results Conference Call. [Operator Instructions] I will now hand over the conference to Mr. João Dolores. Please go ahead, sir.
Hello. Good morning, everyone. Welcome to our first semester results conference call. As usual, besides myself and the Investor Relations team, we have on the call today Rui Almeida from Sonae MC, Paulo Simões from Worten, Hugo Martins from Sonae Fashion, Luís Mota Duarte from Sonae Sierra and Cristina Novais from Sonae Investment Management. I will start by presenting an overview of our results in the first half of the year, and then at the end, as usual, we will have time for Q&A. So as you all know, 2021 continues to be marked by severe restrictions to all our businesses across several geographies in spite of the progress in the vaccination plan around the world. In Portugal, in particular, we had another lockdown from mid-January until mid-April. And since then, we have witnessed a gradual easing of the restrictions, but still with significant limitations, both in terms of store capacity and also opening hours. In total, we had 11 weeks of lockdown this year versus 7 weeks of lockdown last year. This being said, our businesses displayed a very positive reaction, and we are very proud of our operational results this year. Just before diving into the results, quick notes on portfolio management. As you know, these last 6 months have been important in a number of fronts in terms of capital allocation. I would like to highlight the restructuring of our operations in Worten Spain, the increase of our stake in Sonae Sierra, the launch of a partnership between Sonae FS and Banco CTT and, obviously, the ability also shown by Sonae IM to continue to invest in high-growth tech companies and crystallize value in the right moment, and also the agreement reached by Sonae MC to sell its 50% stake in Maxmat for EUR 65 million with an estimated capital gain of EUR 40 million. So the completion of this deal is expected in Q3. So let's go into the results. I will do this business by business as usual, and then I will talk about the consolidated results for the semester. Starting with Sonae MC. Sonae MC Had a tough comparable as last year, our food format benefited from the first full lockdown in Portugal that implies the shutdown of restaurants, and Continente significantly outperformed the market last year. Nevertheless, total turnover increased 4% year-on-year in Q2 with a resilient performance of food formats and with other brands such as Arenal and Well’s benefiting from a recovery from last year's difficult period in terms of restrictions. In the first half of the year, turnover amounted to EUR 2.5 billion, a 5.4% year-on-year growth and a like-for-like increase of 2.3%, a quite solid performance across different banners. And once again, Sonae MC was able to strengthen its leadership position with a market share increase in the period. A quick note to Sonae MC's online channel that registered very high growth rates in the first half of the year, around 45%, having also grown in Q2 despite the abnormal peak of demand levels in the same period of 2020. Regarding profitability, underlying EBITDA in the first half of 2021 improved by 7.3% year-on-year to EUR 235 million, representing a margin of 9.4%, 17 basis points above last year. This is the result of a strong turnover growth and also a sustained operational profitability profile diluting the extra COVID-19 directly related costs. In terms of store expansion, Sonae MC continued to open stores in its proximity format with new Bom Dia stores, a total of 6 new Bom Dia stores up to the end of June, and launched the first cashierless store offered by a European retailer, which is called Continente Labs. Free cash flow before dividends stood at EUR 156 million over the last 12 months, leading net debt to EUR 664 million at the end of June, only EUR 16 million above last year's figure, mainly impacted by the dividend payment of EUR 140 million in Q2 and implying a total net debt to underlying EBITDA of 3.3x. Moving on to Worten. At Worten, the dynamics were quite similar to Sonae MC with the Portuguese operation decelerating growth after the strong performance achieved during last year's lockdown. In Spain, obviously, total turnover decreased as a result of a downsizing of our operations in mainland Spain, but the evolution on a pro forma basis was quite positive. Overall, Worten delivered a very strong sales performance in Q2, reaching EUR 246 million, more than 4% growth versus 2019, and almost in line with 2020, obviously, with the latter benefiting from extraordinary sales resulting from the first and most stringent consignment period of last year. On a like-for-like basis, Worten posted sound growth of 1.5% in Q2 with positive performances from both the online and offline operations, including also the marketplace and services operations. In year-to-date terms, total turnover increased 7.5% year-on-year with a like-for-like of 14.4%, reaching EUR 518 million. We further reinforced our market share and consolidated our leadership position in Portugal. This positive top line performance and also the restructuring profits in Spain contributed to an improved underlying EBITDA that reached EUR 31 million at the end of H1 with a margin of 6%, growing 1.9 percentage points versus 2020. At Sonae Fashion, Q2 was a quarter of clear recovery following the losses experienced during last year's lockdown. Total turnover increased 41% and was practically in line with 2019, a year without any restrictions, obviously, in terms of pandemic. Sonae Fashion proved once again to be a solid performer in a challenging context, getting market share in its key markets. In year-to-date terms, Sonae Fashion's performance is also encouraging as top line stood at EUR 135 million, 3.7% above last year with a like-for-like of 5.1%. And this is particularly taking into account that in the first half of the year, as I mentioned before, stores were closed for 11 weeks, which compares to the 7 weeks of full lockdown in 2020. An important highlight for online sales, which continued to deliver high growth rates, having reached 17% of total turnover this semester. Overall, Sonae Fashion was able to post an improved underlying EBITDA, both in Q2 and in the first semester. And after a negative Q1, mostly due to the new lockdown in Portugal, underlying EBITDA reached EUR 5.4 million in Q2 and EUR 1.5 million in the first half of the year. Moving on to ISRG. ISRG is having a terrific recovery, already surpassing 2019 performance levels, a clear sign that even under this backdrop, the company's banners have truly unique selling proposition. As you know, we have a calendar mismatch vis-a-vis JD, so we consolidated the company's Q1 accounts, which saw a significant recovery, both regarding last year and the year before with all the banners presenting an encouraging positive evolution. Once again, the online channel played a critical role with a threefold increase and more than offsetting a weaker evolution of the off-line channel given the restrictions that we experienced. Overall, the last 6 months showed a very good performance, both above last year and also 2019 figures. This top line improvement in the quarter was able to fuel a significant improvement at the EBITDA level. This performance implied a much better equity method contribution towards Sonae's results. Apart from the operational performance, I would like to highlight the agreement between ISRG and Deporvillage's founders to acquire an 80% stake in this e-commerce player for EUR 140 million. Deporvillage is a well-known online retailer focused on the sale of specialist sports equipment, mainly for cycling, running and outdoor, with sales of EUR 118 million and a profit before tax of EUR 7.4 million in 2020. Post completion, the 2 founders will keep a 20% stake and their management roles as CEO and also Chief Purchasing Officer. And this acquisition will enhance ISRG's specialization in key sports categories while significantly increasing its digital capabilities in the sports equipment market and also complementing the ongoing positive developments in its existing banners, namely Sprinter and Sport Zone. Also in Q2, ISRG expanded into a new geography by acquiring SUR that operates in the Netherlands with the Perry and Aktie banners. This is also an important milestone for the company and an important international expansion move and a clear step towards achieving the vision of being a European leader in sports retail. As for Sonae Sierra, as you all know, 2021 continues to be a challenging year for the shopping center industry as lockdown restrictions across different countries continue to impact performance. Nevertheless, I would like to highlight that there have been positive signs of a return to normality every time restrictions are eased as there continues to be strong consumer demand for quality shopping center destinations. For Sonae Sierra, Q2 was also a quarter of recovery with encouraging sales performances in Portugal since the reopening of shopping centers in the middle of April and a sustained positive evolution in the remaining European countries. From an operational standpoint and considering year-to-date figures, Sonae Sierra's European portfolio recorded an 11.6% year-on-year increase in terms of sales, a decrease of 12.3% year-on-year in rents, penalized by discounts in Portugal and occupancy rates continued at very high and stable rates of 97% at the end of H1.Looking at proportional management accounts, Sonae Sierra reported a net loss of EUR 4.6 million year-to-date, split between a positive EUR 11 million direct results and a negative EUR 15 million of indirect results, mainly due to property revaluations in the quarter. In any case, NAV actually increased for the first time in several quarters, up to EUR 911 million at the end of June with a net loss that I mentioned previously being more than offset by a positive FX impact in Brazil. For Sonae Financial Services, the second quarter was marked by the launch of the partnership with Banco CTT, as I mentioned before, and the implementation of the new business model for the Universo Card. Due to this business model change and as the credit back book only started being generated in December 2020, the company's turnover naturally shows a discontinuity that will be mitigated in the coming months with the growth of the credit stock. Nevertheless, in operational terms and with regard to Universo's market share, it's stood of 15% at the end of May, the latest data that we have, which compares to 14.8% last year. The company also continued its strong efforts to expand its digital footprint, surpassing already 500,000 customers -- digital customers at the end of June, a 39,000 customer increase when compared to the end of March. Regarding MDS, the insurance brokerage company, it continues to show a strong commercial performance across all channels and geographies. And this results in very strong growth, which is high single digit in Portugal and double digit in Brazil and a significant improvement in operating profitability. Similarly to the first quarter, in proportional terms, considering the 50% consolidation of MDS, Sonae FS continued to register a year-on-year decrease as a result of both the pandemic context and the business model change that I mentioned before with Banco CTT. Overall, H1 turnover stood at EUR 30.1 million, and underlying EBITDA follows the same trend, reaching a negative EUR 3 million in the first half of the year. At Sonae IM, the quarter was marked by the sale of parts of our stake in Arctic Wolf for EUR 36 million with a gross capital gain of EUR 12 million and the announcement of the sale together with the other shareholders of Bizdirect for just over EUR 12 million, which should be concluded in Q3. Bizdirect was already considered as an asset held for sale, and therefore, it is not considered both in 2021 and impact comparables. In operational terms, Sonae IM's turnover increased by 11% year-on-year to EUR 29 million, benefiting from the performance of the cybersecurity portfolio and underlying EBITDA also improved compared to last year. In terms of portfolio activity, the company's NAV reached EUR 305 million, and the parts from the already mentioned activity, Sonae IM entered into the share capital of portainer.io, one of the most popular container management platforms globally. In addition to this and also not less relevant, H1 was marked by relevant achievements in some of the minority stakes that we hold indirectly, namely Feedzai, Arctic Wolf and Outsystems, the 3 companies that reached already unicorn valuations. Regarding Arctic Wolf, the company recently announced a new financing round of $150 million by some of the existing and new investors at an underlying valuation of $4.3 billion. Despite being a relatively small transaction, it's also a good sign of the company's strong evolution and potential. Finally, NOS has already published its results last week. I would say, a solid set of results. The company continued to post solid operational performance in the telco segment and the media and entertainment segment was marked by the reopening of cinema theaters on the 19th of April. Turnover amounted to EUR 341 million in Q2, a growth of 6.2% year-on-year, the first quarter with growth since the end of 2019, supported by a 5% positive evolution in telco and a nearly 50% growth in the media and entertainment segment, driven by the reopening of cinema theaters, as I mentioned before. In H1, turnover stood at a total of EUR 678 million, a 1.8% year-on-year increase. Regarding profitability, Q2 EBITDA decreased 2.2% year-on-year due to an increase in direct costs as last year, these were unusually low due to some extraordinary accounting of content costs. And in year-to-date terms, EBITDA stood at EUR 307 million, a 1.3% decrease year-on-year. Overall, net income decreased by EUR 2 million to EUR 43 million in Q2 and more than doubled compared to last year to EUR 74 million in the first half of the year. I will now cover briefly consolidated performance. And so in consolidated terms, turnover increased by 5.1% year-on-year to EUR 1.6 billion in Q2, mainly anchored on the positive contributions from Sonae MC and Sonae Fashion, leading to a 5.5% growth in H1 to EUR 3.2 billion. Following this top line trend in Q2, underlying EBITDA increased 9.9% year-on-year to EUR 136 million, mainly driven by the recovery of Sonae Fashion and also the impact of the Spanish restructuring process at Worten. And at the end of the semester, we reached EUR 246 million, 11.4% above last year. EBITDA reached EUR 165 million in the Q2, a significant improvement versus last year, mainly backed by the operational recovery of the businesses harmed by the COVID-19 restrictions last year. Also a higher net result of ISRG when compared to 2020, and the capital gain from the dilution of Sonae MC's stake in Arctic Wolf.This performance led to a total EBITDA in the semester of EUR 292 million, a 15.5% increase year-on-year. Overall, direct results increased almost EUR 50 million in Q2 to EUR 55 million and more than EUR 70 million in the first semester due to the high level of COVID-19 extra costs and provisions registered back in Q1 of 2020. Direct result was EUR 10 million in Q2 this year, positively impacted by Sonae IM's portfolio valuations and the dividends increased -- the dividends received from direct stake at NOS of just under EUR 11 million, which more than offset Sonae Sierra's investment properties valuation decrease. All in all, Sonae's net results reached EUR 62 million, both in Q2 and also in the semester. In terms of operational cash flow, Sonae's portfolio released a total of EUR 123 million during the last 12 months. These last 12 months saw quite some activity in terms of portfolio management, as we discussed in previous calls, as Sonae reinforced its shareholder positions in NOS, Salsa and Sonae Sierra for a total consideration of EUR 323 million, also including Sonae IM's investments in the period. This was partially offset by EUR 109 million of cash proceeds from asset sales mainly related with Sonae IM and Sonae MC's sale and leaseback transactions. But all in all, Sonae's free cash flow for the last 12 months before dividends paid stood at a negative EUR 100 million, EUR 101 million at the end of June this year. Therefore, and after dividends paid, consolidated net debt reached just under EUR 1.5 billion, still a conservative level of leverage as Sonae continues to hold a solid capital structure with a comfortable financing position, which includes a low cost of debt of 1.1% and an average maturity profile of 3.6 years and an LTV of 15%. Additionally, if we look at the leverage profiles of our main businesses, they also remain quite solid and prudent across the portfolio. Sonae MC reached, as I mentioned before, 3.3x total net debt to underlying EBITDA ratio, NOS maintained its net financial debt-to-EBITDA at 1.8x, and Sonae Sierra currently holds a loan-to-value of 24% and has a very strong liquidity position. So overall, we are quite pleased with the results achieved by our portfolio of businesses this year. These last 18 months have been challenging, but we feel that we are now coming out of this dynamic strong and prepared for the future. That's it for me for now. Thank you, everyone, for listening, and you can now open the session to Q&A, please.
[Operator Instructions] Our first question is from José Rito from Caixabank.
Congrats for anticipating the release of the results. So I have some questions on Sonae MC. So first on the fact that -- well, you are facing quite difficult comps. So last year, it was a strong period, still you achieved quite decent like-for-like in Q2. My question is if this level of like-for-like that you are achieving, so slightly positive, could be a good reference for the upcoming quarters? So that's the first question on Sonae MC. And then the second related with the new business within Sonae MC. So these businesses are recovering fast because last year, they -- some of the stores were closed. So my question is if this business on a steady state are margin accretive to Sonae MC.And the third question on Sonae MC, if you think flattish margin is feasible over the coming quarters, even if competition seems to be picking up? That will be my questions on Sonae MC and then I can continue with another on Worten.
Okay, José, thank you for your questions. I will hand it over to Rui to cover those topics.
Well, I need to -- well, I will answer to the very first question. I have to understand the second one. And the third one, I will start by the third. Going forward, we are totally committed to maintain our margins. We have to report it. And as we said some years ago, during the actual [indiscernible] within our margin, we see that our margins will be stable in the years to come, at least until the end of this year. Going forward in the very first question, well, the -- as you said, the comps from the second quarter were very difficult. But we see -- actually after seeing very positive evolution in our side, in fact, in the last -- well, in July, we saw positive like-for-like. And we actively see that the -- we don't see any reason to not consider positive like-for-like until we have the [indiscernible]. Regarding the second question, I apologize because I didn't understand the question.
Yes. Yes. So this new business, I think this is around 10% of Sonae MC sales. If the margin is higher than the consolidated margin of Sonae MC or lower there.
Okay. Those new businesses, grow businesses as we call them, well, they are evolving quite well. In fact, they suffered a lot due to the lockdown measures in the last months. But they are working quite well. And in fact, there are several businesses, they provide us with very good margins. But still, as you said, it accounts for less than 10% of our sales, total sales. And the bulk is basically we have those businesses from the food formats and also from Well's, there, the sales volume are going quite well, and we see good prospects going forward. The other formats, they provide us with very good performance as well. But we have another format we consider in that dimension. For instance, like Zu or NOS, which are businesses that we are developing in the [ revenue ] space. That for us are very critical in the sense that they are reinforcing the pulling power of our food format. So we see those businesses as being very important too in large pulling power of the food format. And they are doing quite well, and we continue to see the margins evolving quite well in the future.
Okay. But if I...
Just before you go into your follow-up questions, may I just ask everyone to put the mics on mute because we're hearing a lot of noise. And Rui, if you could speak closer to the microphone, I think that would also help. Sorry, go ahead.
Okay. No -- just to understand if on a steady state, this business are already being accretive to the margin, not specifically this quarter or last year that it was impacted by the pandemic. But let's say, in 2019, if this new business were accretive or not to the consolidated margin of Sonae MC?
Yes. The businesses are -- all business are accretive. In [ Losan ], actually we have this versus budget in our coffeeshop in the businesses. We suffered a lot due to the lockdown measures, and we didn't sell as much as we -- for instance, we sold in the previous year. But the majority of the business are accretive to our portfolio. What with -- they were in 2019 and 2020. We are anticipating that this business will be more accretive in the future.
Yes, understood. Okay. Then I have a question on Worten for this market play strategy. How much is the marketplace in total of GMV? If you can share what are the average fees that you charge and what is the midterm target for this marketplace as a percentage of total GMV of sales? I'm not sure if you have any specific target. And what will be the strategy? So I noticed that you have been adding new products, new categories to the marketplace. So what should be the driver in terms of products? And if it's facing also possibility. So if you can elaborate a little bit more on the strategy will be great.
Okay. Paulo, do you want to take this one?
Sure. José, thank you for the question. Regarding the marketplace strategy. So we have -- we are in early stages of development of the marketplace. So the percentage of GMV represented by other categories is still small. But of course, we are looking to increase it going forward. Our strategy is to continue to develop new categories, and we should be launching new categories along the next months. What we are trying to do is to build strong verticals per category. So we will be looking into pets, for example, and develop a strong offer there and then market it and then continue to develop verticals as we go along. And with that, widening our offer so that we are a more comprehensive marketplace than we have today and guarantee competitive prices by acquiring sellers as much as we can in the following months. So overall, that's the kind of strategy that we are following.
Okay. Any 3-year targets for these?
I think it's too early to talk about those kinds of metrics, José, to be honest. It's at the early stage of development. We are very confident that it's the right way for Worten and very confident on promoting growth. We are currently the leading e-commerce website in Portugal. So we want to leverage that traffic base. And we are confident to be able to give additional elasticity to the brand so that we can grow. So we're very confident on future growth using this strategy, but it's quite early to say how often we will develop.
But can you say if the margin -- EBITDA margin is much higher than that also, right?
Well, it's a very different business from 1P electronics because we charge a commission and -- but then all the product costs and logistics, José, you also said, is billed by the seller. We don't have those kind of costs. The only thing we have is a central team that manages the business. So we do think it's a positive contribution to profitability going forward, mainly because it will also allow us to leverage some economies of scale, hopefully.
Maybe if I can just add to what Paulo said. Worten's digital evolution has been quite outstanding over the last few months. As Paulo said, Worten today is the largest e-commerce player in Portugal. It's really a company that thinks digital-first with a fantastic omnichannel value proposition, while also leveraging the stores to serve our customers. And so the marketplace strategy is a key element of the strategy for Worten in the coming years, and we have a lot of ambition there. And so it's -- you are going to hear more about the marketplace strategy in the coming months and years.
Okay. Okay. Understood. And finally on that one, I just want to ask if the company could do further asset rotation or if the level of ownership is okay, and in this regard, the view on the Brazilian stake.
Luís, are you there?
I am here, yes. Thank you for the question. So in relation to our asset rotation strategy, we -- the largest chunk and the most important element of our asset rotation strategy have been concluded. Nevertheless, there are a few selected assets, which -- where we have a more significant stake than what we usually have on average on our assets, which we will try to seek to reduce over the coming years. We don't think the moment is appropriate right now to complete those processes and that strategy. And -- but once the market stabilizes, once we have normalized earnings, we will seek to reduce our positions in those assets. In relation to Brazil, Brazil is a strategic asset for us and Sonae is having a very good performance with a very dynamic and driven management team. There are meaningful synergies that we can extract through the interactions between both teams. So we do not do revisit sale of our stake in Brazil at this point.
Our next question is from João Pinto from JB Capital.
I have 3, 2 on Sonae MC. A follow-up on José's question. This positive like-for-like that you're seeing in July on the overall portfolio, you are also seeing a positive like-for-like in hyper-end supermarkets? The second question is, can you elaborate on how the competitive environment has evolved in the recent months? And finally, a question on capital allocation. You have been very active in terms of capital allocation and sold Maxmat, of course, Porto and Spain increased the stake in margin at Sierra. What could be the next big move for Sonae?Also knowing that you want to grow your international presence, if you could tell us in general terms what you're looking for, including if it is in the same sectors you've invested in or in new ones would be great.
Thank you, João. Rui, do you want to start with the MC questions and I'll take this last one at the end?
Sure. João, well, very like-for-like, yes. We see -- we felt that we see, well, that July isn't yet finished but we are seeing in the last weeks positive like-for-like in partners, both in hypers, both in shippers and the other format as well. Regarding the environment, pretty much the same that we were witnessing in the lockdown. But there are some players growing in terms of [indiscernible] like [indiscernible] between new that situation would happen as they announced publicly that we intend to continue to invest in the proximity format in Portugal. As proximity format and also convenience is the segment that's totally underpenetrated when compared to other European countries. And also this segment is showing very good prospects going forward in terms of growth. Well, basically, December, we don't see much difference between what is happening today and will happen in the next coming 20 months. But what happened, for instance, last year or the last month this year. The first question I think João will be more suitable to answer to you.
Yes. Very good. So on the capital allocation question, I would say that we are quite happy with what we have achieved in the last couple of years in terms of portfolio arrangement. I think it's -- the operations that we've done have better prepared us for the future and also better prepared our businesses. Many of our -- of the transactions that we did were critical also to achieve the level of results that we are achieving right now because it focuses the management teams on the right markets, on the right businesses. And so we are quite happy with what we've achieved. In terms of what will be the next big move, we will see. I mean we will remain active looking for opportunities that match our investment criteria. So high-growth opportunities that somehow leverage our existing assets and capabilities, also match our return targets and help us achieve the best possible balance geographically and sector-wise. And we will also remain active and attentive in looking for opportunities to maximize value in our existing assets. As you know, we have a flexible investment strategy. And we have companies in which we have partnerships. We have companies in which we are 100% shareholders. And so we will remain on the lookout for opportunities that help us maximize the value of our existing assets.
Our next question comes from António Seladas from A|S Independent Research.
I have 2 questions, one related with Sierra. If you could provide more color on the traffic on Sierra, if it is evolving as we were expecting or not. So if you can share with us how it is the traffic on shopping centers because we've been talking a lot about online, the marketplace and so on. So should we be worried about the traffic on shopping centers in the coming future? And second question is related with the our problems on ZOPT, if there's any news on this subject.
Okay. Luís, do you want to start with the Sierra one?
Will do, of course. António, thank you for your question. In relation to shopping centers and the recovery of the current dynamics, the best way to think about us, and particularly looking at everything that is in the press, et cetera, but the best way to think about us is like a factory that currently is not allowed to operate 2 or 3 production lines. And we are not allowed to operate them because the health authorities or the governments don't allow us to operate. The machines are in very good form. The raw material is all there, and we're just not allowed to turn them on. And that's why when you look at our current performance, it's very difficult to make a judgment on how we can actually operate at full capacity. Having said that, maybe the best month to look for fundamentals is the month of May. The month of May was the first month post lockdown, it was maybe the month only partially impacted by the Delta variant. Nevertheless, it had material restrictions. But when we look at our portfolio, in the month of May, sales were down by 12% compared to 2019. 12%, so 1-2 percent at the European level, and this was relatively consistent across all geographies. We are also seeing in some centers an outperformance compared to 2019 and some other centers a bit below. But sales were only down by 12%. 12% might still look like a big number, and we would all like it to be much lower. But when -- if you take into account that, one, we have zero tourism right now, and tourism is a relevant part of our shopping centers. Two, we still have significant people working from home, meaning less people at the offices. Three, we have the harshest limitations in terms of number of people per square meter in our shopping centers, the harshest limitations in Europe, which means that the shopping experience is not very positive, which means, again, we're not allowed to utilize full capacity. Four, our -- the timing restrictions are very meaningful. Shopping centers have to close much earlier than they want. Again, a limitation on our full capacity. So if you take all of these limitations into account and you look at minus 12% of sales compared to 2019, I think that is a very, very good number. Furthermore, when we look at June, in June, things across Europe maintained the trajectory that we saw in May. Portugal was maybe the only country where things backtracked a bit, again, due to the severe restrictions that we witnessed in Portugal. But overall, I would say that the recovery is very satisfactory. We are very encouraged by what we see. But bear in mind that we still have a few machines that we are not allowed to switch on. And we are very keen to switch them on. Our finger is on the button. And once we can press it, the things are -- everything indicates that we will return to normality very quickly. We are also monitoring official forecasts from reputable market sources and the return to normality is not something that we say, the return to normality is something that market, especially independent resources, would also confirm will happen in the short term. So lots to do, lots going on, very keen on operating at full speed. We are just not allowed to do that. But we feel that the demand is there, and we have fundamental figures to prove that.
Okay. Just to clarify, minus 12% was on your portfolio, not just in Portugal? It was in your portfolio in Europe, yes?
That is exactly right. That is right, minus 12% across Europe.
António, on your second question. Unfortunately, the answer there is no. We don't have any relevant news on the legal proceedings in terms of change of decisions from the court. I think the good news is that the company is functioning well, operating normally. We are obviously monitoring the situation and actively engaging with relevant parties. But we do not have anything to announce as of this year yet.
There are no further questions from the participant lines. I hand the floor back over to Mr. João Dolores.
Okay. So if there are no more questions, I would like to thank everyone for listening. I would also like to thank José's initial remarks on commending us for presenting results this -- for the holidays. It was a huge effort on the part of the teams, but we are very happy that we were able to achieve this and present you with our Q2 results at this moment in time. So thank you, everyone. I would like to wish good holidays for those of you going on holidays. And I hope you all remain safe and healthy. Thank you very much and let's talk again when we present our Q3 results later in the year. Thank you. Bye-bye.
This concludes today's event. We thank you all for your presence. Ladies and gentlemen, you may now disconnect your lines.